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spk00: Hello and welcome to Hanger's fourth quarter and year-end 2021 earnings conference call. My name is Adam and I'll be coordinating the call today. If you'd like to ask a question during the Q&A portion of the call, please press star followed by one on your telephone keypad. I will now hand over to our host, Kevin Ehrlich, Managing Director at ICR Westwick to begin. So Kevin, please go ahead when you are ready.
spk03: Good morning and welcome to Hanger's fourth quarter and year-end 2021 earnings conference call. With us today are Vinith, Arthur, Hanger's President and Chief Executive Officer, and Thomas Kurali, Executive Vice President and Chief Financial Officer. Some of the information discussed today will include forward-looking statements in the meaning of the Private Securities Litigation Reform Act of 1995. These statements are subject to risks and uncertainties that could cause Hanger's actual results to materially differ from those we discussed today. Those risks include, among other things, Matters we have identified in the forward-looking statements portion of our latest earnings release and in our filings with the FEC. Hanger disclaims any obligation to update forward-looking information discussed on this call. And now, I'll hand the call over to Vinic.
spk02: Thank you, Kevin. Good morning, and thank you all for joining Hanger's fourth quarter and full year 2021 earnings call. Joining me in today's call is Tom Karawi, Hanger's Chief Financial Officer. This morning, I will provide high-level thoughts on our fourth quarter and full year 2021 results, including some of our operational highlights and ongoing strategic initiatives. I will also discuss the current operating environment and touch on our outlook for 2022 before I pass the call to Tom, who will provide details on our financial results for last year and our guidance for this year. Yesterday after the close, we reported fourth quarter revenue of $312.4 million, which increased 12.6% and adjusted EBITDA of $37.2 million, which increased 4.9% over the prior year period. These results were consistent with our free announcement on February 7th. Although revenue for the quarter grew nicely on a year-over-year basis, our results were negatively impacted by the spike in COVID infections driven by the Omicron variant during December. For those of you who have followed us for a long time, you know the importance of the last few weeks of the year. We experienced seasonality in our operations and increased volume in our clinics towards the end of the calendar year, which we believe is due to patients reaching annual deductibles as they approach the conclusion of their benefits year. This generally results in the month of December and fourth quarter being our largest period this year for both revenue and adjusted EBITDA. Not only did Omicron adversely affect referrals and patient visits during the latter part of the fourth quarter, but we also experienced a significant increase in sick leave by our employees who were infected. The safety of our employees and patients are our priority. And unfortunately, the number of increased infections due to Omicron had a negative impact on our ability to deliver on our 2021 earnings guidance. We saw some continuation into the early part of the new year, but it appears the number of cases related to the Omicron variant are normalizing, and we believe that the worst is behind us. Our business has also been impacted by cost pressures, inflation, and the labor shortage that has affected the U.S. economy generally, really more in the second half of 2021. which resulted in wage pressure, especially in certain job roles such as our administrative and technical areas. With that being said, the results from our two business segments had some bright spots. Patient care revenue increased 14.4% year over year during the fourth quarter, and it grew 13.4% for the full year. Same clinic revenue increased 5.8% and 9.1% for fourth quarter and full year 2021 respectively compared to the same periods of the prior year. Turning to our products and services segment, fourth quarter 2021 revenue increased 3.2% year over year and 4.5% for the full year compared to 2020. A couple of things to highlight for our products and services segment. First, the team has done a nice job growing its business with the Department of Defense and the VA. Sales of new products we added to our distribution business in 2021 contributed $3.6 million of additional revenue year over year, despite COVID and a challenging operating environment. Overall for Hanger, while our full year results were clearly affected by COVID, we were still able to grow our revenues by 12% and adjusted EBITDA by 13%. Now, despite the challenges posed by COVID in the last couple of years, I'd like to take a moment to put the progress we have made at Hanger in perspective. During the last three years, we have increased our footprint from 780 to 875 clinic locations. With the recent clinic addition in Alaska, we now serve patients in 47 out of 50 states plus Washington, D.C. Currently, we believe that one out of every four O&P patients in the United States seek care at a Hanger facility. which is an improvement from one out of every five patients a few years ago. Over the last couple of years, we have added dynamic leaders like Pete Stoi, our chief operating officer, to our leadership ranks. Pete and his team have been keenly focused on market-based growth strategies that will help drive continued growth and organic share gains in the patient care segment. Our investments in infrastructure spanning our EHR system and our ERP system. Combined with the strength of our revenue cycle and supply chain enhancements have positioned us well to continue to scale this growing business in the coming years. As I told our employees, the pandemic has set us back on our growth plans only in terms of timing and not in terms of realizing the true potential of our business model and growth plans. While we have encountered some near-term challenges primarily due to external factors like Omicron, and the inflationary environment, I want to talk about some of our accomplishments for 2021. First, we went live with our state-of-the-art 150,000 square foot distribution center in Alvareta, Georgia, which will enhance the in-stock availability of componentry and reduce delivery times in the eastern half of the country. The expansion of our distribution capabilities in Georgia has also allowed for the consolidation of the number of distribution centers from five to two by mid-year 2022, which is in line with the long-term supply chain strategy we had previously outlined. I also want to commend our supply chain and fabrication teams who demonstrated incredible resolve during the fourth quarter, making sure we had adequate inventory and substantially on-time deliveries despite the worldwide supply chain interruptions. We successfully implemented the financial module of our ERP with the move to an Oracle cloud-based system. It was a seamless transition with no disruptions, which is a testament to our finance and IT teams and all those involved in the implementation. Third, in November, we fortified our balance sheet by refinancing our revolver, resulting in a greater capacity, a lower interest rate, and an extended maturity. Given the inflationary and rising interest rate environment, it was timely and a great move by Tom and the finance team. Lastly, our acquisition pipeline remains robust. We acquired eight independent ONC businesses during the fourth quarter and, as a result, continue to welcome high-level clinical and management talent into Hanger. Our M&A pipeline remains active, and we will continue to deploy capital to grow and add to our business supplementing our organic growth efforts. In addition to these 2021 accomplishments, we have been pushing a few strategic initiatives that will further support our growth plans. Beginning with our pediatric strategy, Dr. Jim Campbell, Pete Stoy, and their teams have started to implement a highly effective network approach for our pediatric cranial patients and their families. This is the first step in ensuring we drive growth in this area. while enhancing the care provided to these children. This initial focus on our cranial patients, which began earlier in 2021, has clearly demonstrated strong results that we are building on as part of an overall pediatric strategy. Another strategic initiative I want to highlight is our partnership with Zimmer Biomed. This small pilot program using Zimmer Biomed's MyMobility platform links with a personal device to provide targeted education, exercise guidance, and insights into daily activities for our prosthetic patients. There is a lot we can learn by collecting data in this manner to improve outcomes for our patients. Speaking of data, every healthcare company is now a data repository of sorts. As such, our clinical outcomes programs and data strategy are increasingly informing our business model and care pathways. As an example, Hanger recently published the SafeAMP manuscript in the Journal of Assistive Technology. The insight from this analysis provides guidance on the appropriateness for providing microprocessor needs to patients with diabetes, mitigating the cost associated with injurious falls that are more likely to occur when patients are fit with a non-microprocessor need. In a separate study, our research confirmed that individuals who received a prosthesis earlier post-amputation had significantly lower total healthcare costs compared to those with no prosthesis within 12 months of amputation. Additionally, early receipt of a prosthesis following amputation results in reduced healthcare utilization, noting specifically the odds of ER department visits are reduced by 32%. It is these types of findings that we are using to communicate with payers and referral sources to further validate the need for outcomes-driven care and appropriate reimbursement. As a result of our efforts in recent years, we believe Hanger is now in the unique position of having the largest clinical outcomes database for prosthetic patients in the world. Our intent at Hanger is to use data to drive actions which lead to better clinical outcomes more efficient care delivery, and lower healthcare costs. We continue to be encouraged by the progress we are making. Before I provide some high-level thoughts on our 2022 outlook, I want to applaud our team for weathering another year of the COVID storm. It has been a challenge, and the team has sacrificed and risen to the occasion. While 2021 wasn't exactly what we expected nor wanted to be, we were able to continue to make investments in areas that will help lay the foundation for years to come. I believe 2022 will be a year for Hanger to begin to show its true potential. With our pre-announcement on February 7, we introduced 2022 revenue guidance, which represents 6% to 9% year-over-year growth, while our adjusted EBITDA guidance represents 7% to 11% growth over 2021. We expect same clinic growth in our patient care segment to be approximately 5%. Given the current operating environment, coupled with cost pressures, inflation, and labor issues, we believe this to be a prudent outlook for the year. Tom will provide more details on our 2022 guidance shortly. In closing, before I turn the call over to Tom to discuss our financial results, I want to thank our entire organization for their effort, dedication, and sacrifices to generate these financial results. In early February of this year, Hanger was named Forbes List of Best Midsize Employers. This is a great accomplishment for our company and illustrates the commitment and dedication of the entire organization. Although 2021 didn't quite play out as we expected, I am appreciative and truly amazed by the things we accomplished during the second year of this pandemic. We continued to strengthen the foundation for Hanger through hard work and focus, coupled with investments that strategically position us to gain share and provide the highest quality care for our patients and customers. Now is the time to focus forward, and I truly believe that we can begin to unleash the full potential for Hanger in 2022. I want to thank everyone on the call for your continued interest in Hanger. And with that, I'll turn the call over to Tom, who will provide more details on our financial results and guidance. Tom?
spk05: Thanks, Bennett, and good morning. As Bennett shared, while fourth quarter results fell short of expectations, I think it's important to recognize the significant growth in revenue and earnings which were achieved despite the continuing adverse effects of COVID-19. Our fourth quarter net revenue of 312.4 million reflected growth of 12.6% over the prior year period. Adjusted EBITDA of 37.2 million reflected an increase of 4.9% for the quarter. When looking at the full year, reported net revenue was 1.12 billion, which reflected growth of 119.3 million, or 11.9%. Adjusted EBITDA was 118.9 million, which reflected an increase of 13.8 million, or 13.1% over 2020. In looking more closely at our performance by business segment, the results for our patient care segment offered an even more favorable underlying comparison to the prior year period. Fourth quarter patient care revenue grew by 33.6 million, or 14.4% as compared to the fourth quarter of 2020. An adjusted EBITDA grew by 5.5 million, or 12.1%. Same clinic revenue increased by 5.8% over Q4 2020 on a day adjusted basis. and was 95% of the level reported during the fourth quarter of 2019. As we've discussed, results for the quarter were primarily affected by the emergence of the Omicron variant and secondarily due to increases in labor costs. We believe the disruption caused by employee absences due to Omicron infection and the related quarantine contributed to the loss of approximately 6 million to 8 million in revenue in the fourth quarter. This also resulted in the buildup of undelivered work and process devices at the year's end. Given the patient care segment's high flow through for each incremental revenue dollar, you can see how significant the impact was on fourth quarter results. For the full year, same clinic revenue growth over 2020 in our patient care segment was 9.1%, and same clinic net revenue was 97% for 2019. Volume growth constituted 8.5% of our 9.1% growth rate for the year. The relatively strong growth rates in patient care revenue and earnings over the fourth quarter of 2020 were partially dampened by a relatively stable performance in our products and services segment and an increase in corporate expenses. The product and services segment reflected revenue growth of 1.4 million, or 3.2%, and a modest decline in adjusted EBITDA of 700,000. The overall margin in products and services declined from 17% in the fourth quarter of 2020 to 14.9% in the fourth quarter of 2021. This margin decline was primarily due to growth in lower margin distribution services revenue and an increase in personnel and travel costs within the segment. During the fourth quarter of 2021, corporate expenses increased by $3 million over the prior year fourth quarter. This was primarily due to the recommencement of a corporate financial and supply chain systems implementation project, increases in other technology spend, and increased personnel expense. Now I'll spend a few minutes discussing the effects of inflation on our 2021 results and our 2022 outlook. As discussed in prior calls, Throughout 2021, we have been able to manage our material costs in a manner that, for the most part, has mitigated increases in our unit componentry costs. We also have not experienced any noticeable disruption due to stock outs. As we enter 2022, we currently do anticipate that we will begin to experience some increases in underlying material costs. To mitigate these increases, we have put in place certain new clinician formulary and purchasing preference programs which should enable us to moderate the effects of inflation. From a labor cost perspective, as is common in today's business environment, employee turnover and rising labor costs are also increasingly affecting us. This is occurring particularly in our clinic administrative and technical roles, as well as in our distribution center positions. We currently estimate that wage inflation has increased our average salary growth by 100 to 150 basis points over our past rate. In 2022, we believe we can effectively manage these inflationary trends by offsetting them with what we estimate will be an average price growth of approximately 3%. This is reflective of the 5.1% Medicare rate increase for 2022 which affects approximately 50% of our patient care reimbursement, coupled with increases from commercial payers. Through these pricing increases, along with the benefit of approximately 2% volume growth, we should be able to maintain our overall adjusted EBITDA margin in 2022. Now I'll provide some comments on the company's cash flow from operations. In the fourth quarter of 2021, Hanger produced $35.6 million in operating cash flow, which compares favorably to the $30.3 million generated in the fourth quarter of 2020. Operating cash flow was aided in 2021 by a decrease in disallowances and patient nonpayment, which declined from 4.5% of adjusted gross revenue in 2020 to 4% in 2021. During the year, free cash flow also benefited from lower than planned capital expenditures. In 2021, capital expenditures were $24.9 million, which was roughly $5 million less than the $30 million range we had originally planned for during the year. As of December 31, 2021, we had $61.7 million in cash and cash equivalent. When coupled with our newly-upsized revolving credit facility, this provided us with available liquidity of 191 million. This level of liquidity was achieved despite using 80.1 million in cash for acquisitions and our increased investment in working capital during the year. As a reminder, we took some strong working capital reduction actions in 2020 in light of the pandemic, and we reversed those during 2021. which has now brought it back to more normal levels. In connection with our management of cash flows and increasing revolver capacity, we were pleased that Moody's noted our improved liquidity position in the February analysis and release on the company. With this new level of cash and liquidity, we are in an excellent position to both continue our acquisition strategy during 2022, as well as support our desire to gradually reduce leverage. With net debt of 461.5 millions of December 31st, 2021, Hanger's net leverage ratio was 3.9 times trailing 12-month adjusted EBITDA and is 3.6 times the midpoint of our 2022 guidance. Shifting to our 2022 outlook, we believe the revenues Hanger produced in 2021 will serve as the new base for future growth. As we announced on February 7th, We currently estimate that our same clinic growth rate will be approximately 5% during 2022. This is comprised of the price growth of approximately 3% that I spoke of earlier, coupled with 2% in volume growth. We believe that the volume growth of 2% will be supported by generally more favorable referral and patient conditions, more stable operations due to future variants having a less disruptive effect, and the benefit of current sales and marketing initiatives. Overall, patient care revenue growth will be aided by approximately 35 million in the annualized revenue effect of acquisitions completed in 2021. These and other operating trends have led us to estimate that our 2022 net revenue will be in the range between 1.19 billion to 1.22 billion. and adjusted EBITDA will be in the range between 127 million to 132 million. The midpoint of our guidance reflects total revenue growth of approximately 8% and adjusted EBITDA growth of roughly 9%. With that, I'll turn the call back over to the operator to open it up for any questions that you may have.
spk00: Thank you. As a reminder, if you'd like to ask a question today, please press star followed by one on your telephone keypad now. When preparing to ask your question, please ensure your headset is fully plugged in and unmuted locally. That's star one on your telephone keypad. Our first question today comes from Brian Tanquerloup from Jefferies. Brian, please go ahead. Your line is open.
spk06: Brian from Jefferies, your line is open.
spk00: Please ask your question.
spk06: Can you hear me okay?
spk01: Yeah.
spk06: Can you guys hear me?
spk01: Okay, perfect. There you go. Thank you. Good morning, and I appreciate you taking the question. Thanks for all the color on the growth plans and the growth initiatives, but I wanted to see if you can give us more color on some of the things that you're doing in terms of, I think you talked about the Zip or Biomat and a few of the other things you're working on. So just maybe if you can share with us how you're thinking about this will all play out in terms of driving growth acceleration, number one, and how it seems like you're gaining market share. I mean, is that where this will come from? And just trying to get a gauge of or get a sense of how this will all shake out.
spk02: Sure. Thanks, Brian. So, you know, our strategy over the years has been fairly consistent in terms of focusing on the organic growth side and the inorganic growth side. Um, you know, this year, what we're sharing with you all is a little more color on, especially in the organic growth side. So, uh, you know, one of the, uh, I'll touch on three of the initiatives we've got going. One of them is we've got this market-based approach. We've looked at all the MSAs across the country and the O and P dollars spend in all the MSAs. And we've put in place, you know, strong leadership in some of the key markets, the key MSAs and given them, you know, resources. to go out and do their own local growth strategies and capture share in those specific markets. So this market-based strategy that Pete has implemented is picking up steam at the current time. I'll touch on the pediatric strategy. As I touched on during my prepared remarks, we believe there's opportunity here in focusing on the pediatric segment of O&P. During 2021, we announced a national network of our pediatric cranial specialists. And we really saw terrific results in 2021. So we're going to build on that pediatric approach in 2022, focusing on the pediatric side of O&P as well. And then just to touch on, in terms of our approach on the commercial side, we also believe that given our footprint and our infrastructure and the clinical talent we have, we're really well positioned to support the workers' comp providers. So we've put in a team that's going to be focused on providing support to workers' comp providers and patients that come in through that angle as well. So that gives you a sense for how we're focusing on organic growth. We believe that's helped us gain market share in 21 and that will continue to help us gain organic market share in 2022 and beyond. And then, of course, we supplement that with our acquisition strategy that we've shared with you.
spk01: I appreciate that, Collier. I guess just to that last point, as I think about capital deployment, as the business stabilizes and you return to a growth trajectory, how are you thinking about capital deployment priorities right now between acquisitions, debt pay down, and whatever else is out there?
spk05: Yeah, Brian. As you know, when you look at the return on investment from the M&A strategy, it's It really is superior to the company's other alternatives. And in addition to that, probably more importantly, you know, the M&A has been very strategic in terms of our ability to really concentrate key markets and build economies of scale in those markets to really improve patient access and to lower our overall cost structure. So M&A continues to be an attractive use of capital. Now, with that said, A very, very important parallel objective is our ability to reduce debt, and we're very sensitive to the amount of leverage the company's carrying. We've had a commitment and continue to have a commitment to bring it down. We've primarily been focusing on doing that through EBITDA growth, but I wouldn't set aside the possibility that with the company's free cash flow, we take more proactive measures to address debt as well.
spk01: Got it. And then Tom, last question for me, as I think about, you know, just the comments that it made on growth, the market share gains that you guys are seeing and try to reconcile that with the guidance that you gave, you know, 2% volume, 3% rate. So is that just conservatism? I mean, cause I'm guessing the market's growing in that 2% range as well. Right. And then maybe the follow-up to that, just on pricing, you know, you're getting a 5% rate increase from the government. So, backing into kind of like 1% commercial, is there opportunity to bump up commercial rate growth given the inflationary environment that we're in?
spk05: Yeah, so on the market share side, you know, it's difficult to judge the market growth rate, but we've traditionally felt that given the broad base of the market, it grows at the rate of population. And as we know, population is growing pretty modestly, you know, half a percent to 0.8%. So when you look at that additional growth, you know, that's clearly market share expansion. That's clearly the company taking ground. And when you look at, you know, 1% growth, you know, call it $10 million in round terms, you know, that's about a quarter point of market share if you call the market about $40 million, you know, per 1%. So that's a pretty meaningful organic commitment. And certainly if there's a natural recovery in the market, that helps us achieve the 2%. But I would characterize the 2% as being a very realistic estimate at this point. We could outperform it, but we could underperform it as well. And then, you know, from a standpoint of the second question on the commercial carriers, you know, they obviously are the more difficult side of our reimbursement equation. We're having constructive discussions with them. We have baked in a certain amount of the commercial, the achieved commercial rate growth into our guidance for the 3%. But we've got more work to do, and we're very heavily committed to being very assertive with the payers on the importance of them recognizing the value of our care to their members.
spk02: Awesome. Thank you. Thanks, Brian.
spk00: As a quick reminder, that's star one to ask a question. The next question comes from Larry Solo of CJS Securities. Larry, please go ahead. Your line is open.
spk04: Great. Good morning, gentlemen. Perhaps a couple of follow-ups to Brian and maybe on some of your initiatives. Maybe they're more blocking and tackling and swinging for the fences, but more just on the investment side. You guys touched on it. I know you've switched over to the Oracle cloud-based system and you said you've also re-implemented some of your supply chain investments. If I look back, if I remember just before, I guess in late 19 or early 20, you were going to spend I think somewhere between 30 and 35 million in 2020 and 2021 on supply chain and IT investments. It sounds like those are being accomplished. I'm just trying to tie it all together, timelines and stuff. Now that the ERP system is up and running, how does this help you guys from a financial point of view and just everything put together? Are you still going to spend what you were planning on spending and do we start to see some of those, you know, are there actual tangible benefits, you know, we can look forward to down the line in a couple of years?
spk05: Yeah, Larry. So in fact, we, you know, we have been spending underneath all of this and despite COVID, you know, we've remained committed to that strategy and have been realizing the benefits from it. You know, we spent in total probably around 13 million, all those various initiatives, you know, during 2021 and, you know, about, you know, just about five and a half to 6 million, was spent through the P&L on primarily the ERP spend, which we don't capitalize, which we do expense as we're installing that. And we had probably about $5 million of CapEx that we incurred primarily with our fabrication facility. So we've been committed to that investment, and it is an ongoing operating investment, I would say, in addition to an investment. As a company, we're transformative, and we're going to continue to go and advance our systems and advance our processes. Now, from a return standpoint, we are realizing the benefit of this investment. One of the things it's enabled us to do is to really cut our freight expense and enjoy some good freight savings and some better efficiencies in terms of the way that we distribute product to our clinics and to our third-party provider customers. So when you look at that, it's been a beneficial effect. It does get shadowed or overcome a bit by this overall COVID effect. and some of the inflation that we're seeing in freight rates and things such as that. But so far, we've been very pleased with how the underlying investment has paid off.
spk04: Okay, great. And a follow-up on the 2% volume growth for 22, and perhaps sort of some of the revenue that was sort of pushed out into Q1. Maybe that's a rounding error for the full year, but I'm assuming you're including... that sort of in Q1? And I guess, you know, part B of that question is, you know, does this impact the normal cadence at all? Because I know normally we're, you know, Q1 is barely profitable. Does that, I suppose it still will be the least profitable quarter of the year or perhaps supplemented a little bit by this push out or, you know, but then obviously there's some world COVID early on in the quarter. So just trying to shape that all out, maybe give us a little more color on that.
spk05: Yeah, Larry. So absolutely, when you look at the six to eight million, we did incorporate that into our guidance. It is one of the factors that's assisting us, you know, with the two percent volume growth from the overall revenue estimate. Now, the challenge is we were also affected in January by Omicron. So Omicron did affect adversely the first quarter. That six to eight million should positively offset that or assist us in that. So it's very hard to look at Q1 and say that it's going to be anything other than sort of balance on balance a normal quarter. And to your point, a normal quarter for Q1 for us, because of seasonality, typically is that we get maybe 5% to 10% of the year's earnings in the first quarter. So it's a very low earnings quarter due to that extreme seasonality. And it's really not determinative, as we've seen in past years, of how the company is going to do on the full year.
spk04: Right. And how about just touching again on the acquisitions? I'm looking at C-SPAC, $40 million in Q4, $80 million for the year. So that's a real step up from what your company normally spends. I guess my question there is it sounds like the pipeline has still got a lot of opportunities, but I suppose you can't keep spending this amount, putting this amount of capital into acquisitions and also want to reduce your debt load. That would be a challenging task.
spk02: Yeah, we're clearly balancing the two, Larry. We do have a pretty solid pipeline, as I indicated in the prepared remarks. There are some really good regional players still out there that we believe would make good fits to join the Hanger Clinic network. So we believe the acquisition pipeline is strong. We believe we'll continue. We're balancing, of course. This issue around leverage that Tom pointed out. And we'll keep making prudent acquisitions. A lot of times we like these acquisitions because they're a good fit geographically or culturally. And sometimes we do walk away from them. So we're very selective in the acquisitions that we bring in. But right now the pipeline's pretty solid.
spk04: Great. If I just may throw one last question. Just on the old ARP system business or I guess the therapeutic piece inside the hospital. It looks like, you know, I haven't heard too much about it. Is that, you know, business, has that held up through COVID? And I guess, you know, it looks like CapEx and that business has dropped significantly over the last few years. Is that, you know, a sustainably lower level?
spk02: Yeah, that therapeutic solutions business, you know, is highly dependent, as you know, on the skilled nursing facility environment. That hasn't, you know, that environment hasn't stabilized, but the business, appears to have stabilized during 2021. We've expanded the portfolio of product offerings, and that's been recognized by our customers. So, of course, it's a small piece of our overall business, but we're monitoring what goes on in the skilled nursing facility environment in this coming year.
spk05: And then, Larry, as to the second part of your question relative to the CapEx, the reason that the CapEx came down there is we had done an equipment refresh several years ago and change out all that equipment and we're done with that refresh now so you're looking at a more normal level of equipment investment for that business got it great appreciate the color thanks guys thanks larry as we have no further questions this concludes today's q a session and thus concludes today's call the team thank you very much for your attendance you may now disconnect your line
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