I think we'll get going. Good morning and welcome to the 2023 RBC Capital Markets Healthcare Conference. My name is Douglas Miehm. I'm one of the company's international healthcare analysts with a focus in Canada right now, and it's our pleasure to host dentalcorp, Canada's premier and largest dental company. Today we have couple individuals from the management team, including Graham Rosenberg, who is the CEO, and also Nate Tchaplia, who is the CFO. I'm gonna let you talk a little bit just to introduce the company, and then we'll get into some Q&A, if that's okay. Perfect. dentalcorp is a owner and operator of dental practices across Canada from coast to coast. We have representation in every province. We have close to 600 locations, generate about CAD 1.4 billion of revenue and approximately CAD 220 million of GAAP EBITDA. I started the business 11 years ago. Nate's been with me for eight years and also runs, in addition to being CFO, runs all of our external growth agendas, everything around M&A. We operate in a market that is an CAD 18 billion market growing anywhere between 2%-4% a year, depending on inflation. Some of that is price growth and some of that is headline patient growth. There's a large amount of and increasing amounts of immigration into Canada. It's really like that from a market perspective, it's constructive around patient growth and so on. When we acquire a practice, we generally sign the vending dentist up to a long-term contract. The average age of the person we acquire is somewhere around late 40s, early 50s, so they have longevity in their careers. We support them with everything administrative as one would expect from a DSO, but we also support their growth agenda. We do all their marketing, recruiting, training and development, HR management, finance, take everything over so that they can focus on their patients. We're a double-digit grower. We've grown at double digits every year since I started the company. Most recently posted a, I think it was 20% up on revenue, 30% up on EBITDA quarter-over-quarter. This quarter end of March over last year. We see a long runway for double-digit growth, driven by an organic balanced growth approach, organic growth, acquisitive growth, and focusing on continuing to get operating leverage out of the significant investments we've made in our corporate infrastructure over the last few years, including our technology stack, marketing, and talent teams. Feel really good about the growth opportunities in the business. It's an under-consolidated market. Only 6% of the market's consolidated. We've consolidated about 3.5, a long runway for double-digit balanced growth. Okay. I have no questions. Is that it? We can now go. Perfect. Nice seeing you. No. One of the things I wanted to start with are those competitive advantage that your company seems to hold that makes you so attractive for the selling dentist to want to work with you. Maybe you could talk about some of those items. I'm gonna throw this over to Nate, but at the end of the day, it's all about alignment of interests. Yeah. When we partner with somebody, or a particular dentist, they continue to have equity or growth incentives at their own practice level, as well as at the Dentalcorp level. In that, we use about 20% of the purchase price is funded by stock in Dentalcorp. It creates that alignment all the way from TopCo down to BottomCo, and then it comes down to execution as well. Do you want to say a few words? Sure. I think from an acquisition structure perspective, and then we can talk a little bit what we bring to the table. We do acquire 100% of the practice. There's alignment in the Dentalcorp equity, but there's also alignment through the four walls of the practice. Dentists in Canada get paid on a commission basis. And as a rule of thumb, it's roughly 40% of their personal billing. They're aligned to their personal contribution in the practice. They also have a profit share in the growth of the practice beyond that acquisition date. They're aligned in the four wall growth of the practice. What is also key to our model is alignment on the downside. They also stand behind the 10% of decline. Through the entire piece, both from the TopCo organization as well as within the four walls, we're fully aligned. What we've done over the last 11, 12 years since founding in 2011 is really invested heavily in our corporate infrastructure and our technologies and our people and our know-how that really enable the clinicians to focus on what they do best, which is dentistry, and allow us to fully insource their marketing. We do their talent and recruitment. We've spent a significant amount of time negotiating vendor agreements with all the key suppliers and all the key names that you guys all know, ensuring that we're able to give the best service and best pricing to our practices, which ultimately again, they share in a percentage of that growth. When you take it all back, is that business administration, and that time that they would spend outside of the chair, they're now able to spend in the chair and offload all of that growth to us. Okay. That's really helpful. We've seen multiples move dramatically, you know, higher at one point, you know, through last year. Now, you know, you just posted a, what, a 7.1x acquisition multiple last week, which was, in my opinion, quite attractive. Can you talk then about how do you think about this balancing equation between the amount of acquisitions you do and paying down debt and buying back shares, how are you going to look at that? Right. look, at the end of the day, nothing's gonna detract from our focus on driving headline double-digit growth in both revenue and EBITDA. That'll come through a variety of factors, including organic growth, where we're seeing really nice price increases. There's a whole fee guide regime in Canada, but let's just talk about price and simplify it. Price taking with it really offsetting last year's inflationary pressures, and we're expecting prices to go up next year as well. Mm-hmm. I'm sure offset some of the inflationary pressures we've been getting this year, driving operating leverage in the business. Yes, acquisitions. We think from time to time, I think especially now, that our stock is significantly undervalued. To the extent that we're able to balance that growth, first and foremost with deleveraging, number two priority or equal priority, we will take anything excess and allocate it towards buying back our stock. Okay. Great. On an opportunity basis. Yeah. Not looking to steadily do a massive buyback but, you know, take a way to take advantage of fluctuations. Just to build on that slightly, if you look at over the last 12 months, our free cash flow was CAD 130 million. At the acquisitive pacing and that CAD 20 million-CAD 25 million that we messaged for the year, a significant portion of that is gonna be funded from the free cash flow of the business versus the last year, which was our banner year of CAD 55 million of acquired EBITDA. It allows us to continue to grow, focus on the buyback, as well as focus on our organic growth in a very balanced manner. It's funny how you guys are sort of leading into my next questions, but this is helpful. When you talk about buying CAD 20 million-CAD 25 million a year right now of EBITDA, you know, dental practices, when would you expect to reach self-funding, where you're gonna be able to acquire these and potentially start to allocate money to buying back stock? Right. yeah. If we look big picture at our, you know, steady state where we have been historically and where we'll likely, you know, we may end up. Mm-hmm. Right? If you take CAD 30 million-CAD 35 million of acquired EBITDA a year, we get to self-funding within the next 24-36 months, at CAD 20 million-CAD 25 million rather than the next 8-24 months. Right? Okay. We'll get there quite quickly. Again, you know, we've gone from being a very aggressive consolidator. Over the last 11 years, we've built our base. You know, we've done all the math we need to do to realize that if I'm, if I'm growing at 10% or 15% or 20% other than scale on the terminal end of things, right, terminal valuation in terms of a multiple in today's environment, keeping it steady, and modest for the time being is the right way to go. Okay. We can always talk that up. Like, last year, we bought CAD 50 million plus of acquired EBITDA. We have the infrastructure and the technology stack and the integration capabilities to get that done. Sure. Grew them by 20%. Right. Right. I wanna talk about operating leverage a little bit. When you acquire these facilities, the practices, generally, you think you can take out 100-200 basis points of costs. Yeah. When you think about the operating leverage within the total business, I think we're at around 18.3% EBITDA margins this year. Yeah. Growing, you know, maybe by 30 or 40 basis points. Can you talk about how that process works and if it's fully a function of the acquisitions, which I don't think it is? It's obviously other parts of the business, but maybe you can go into a bit more detail on that. Yeah. Sure. When we look at the practice level, 75% of cost of the practice are variable. Ultimately, we're getting operating leverage at the practice from the fixed costs of rent. There's some, call it janitorial and other items which aren't going to increase. Largest component of cost in a dental practice is obviously the human capital piece. Dentists are paid on a fixed commission, and most of the staff are hourly. From a leverage perspective, incremental expansion on a year-over-year basis. As we look to the greatest area for operating leverage, that's our corporate infrastructure. We've made significant investments over the last 24 months, specifically in our technology, which those investments are expected to come to an end really over the next couple of quarters. That's where we're gonna see the greatest lift, where now the investments for every 40 to 50 practices is gonna be nominal, and we're gonna see that drop-through come through. Just to build on slightly, what Graham was saying around price. When we're in a flat environment of, call it, 2% inflation year on year, the increase that we get on an annual basis, that's not going to change from year to year. When we're in an inflection point of inflation, that price ultimately is really with reference to the prior year. If we look at the price we received in 23, it's with relation to 22. If we really overlay those two things together, we would have had margin expansion in 22. It just we're a year behind in that until things level out. Okay. An important part of this model is going to be free cash flow generation. Right now it's sitting at just over 10% or so, I believe. How do you expect that number, the 10%, to increase over time with the leverage you're going to see, let's say, at the EBITDA level? Are there any puts and takes that we have to consider as it relates to free cash flow? I think as far as free cash flow, there's two levers. One is obviously in the interest rate environment that we experienced over the last 12 months. That's had a negative effect. To the flip side, we've fixed near 75% of our debt at a very attractive rate of 6.5%. That's gonna continue until the term of our loan over the next three and a half years. Feel really good about that. As far as CapEx, it's a very low CapEx business. We expect the conversion from our EBITDA to continue to remain in that 60%-65% range as it relates to free cash flow on a go-forward business. Okay. Okay. Good. Now, Graham, one of the things I wanted to do, you're very familiar with this market. You've touched on the size of the market, but I wanted to go into a little bit more detail. It looks like maybe 6%-7% is consolidated today. How many practices would turn over each year, and what market share of that percentage do you think you have today? Roughly 500 practices turn over every year. Mm-hmm. We have, you know, anywhere from 10%-20% of that market, depending on how hard we wanna push, to get deals done. Okay. That's just a function of a combination of retiring dentists and folks looking to. The place we focus, we're not really looking for somebody who's for sale. We never have. We have a business development team from coast to coast, and we work with dentists who are quite happy with where they are and offering them a value proposition that's more compelling than doing it alone. Okay. The current funnel, as you think about it, how large would that be? As far as our overall pipeline, it's remained fairly consistent over call it the last 12-18 months. If you go from the very top, over 700+ conversations, as we come down further down that pipeline, continue to maintain 100-150 in more advanced stages, which really allows us again to flex up and down the volume of acquisitions that we'd like to complete. It really comes back to very different from the DSOs in the U.S. We don't deal with brokers. We don't participate in auctions. The lion's share of all of our acquisitions are homegrown through our business development team. Those are relationships that are built over years and conversations that take place over years, which allows us to really be in charge of our own destiny. Okay. We've really got, you know, if we break that down, we've got two years of visibility. Mm-hmm ... where we can go in and accelerate those conversations, and make something happen. Okay. Perfect. Then maybe we can spend a second on the competitive marketplace in Canada right now. You know, we saw some news last summer with the respective, you know, merger between some of your competitors with some, you know, big international PE backing and strategic backing. Can you talk to us about how you think they fit into the market today and why you're still gonna be able to maintain your share of the acquisition content? I think we both have points of view on that, we'll share accordingly. Suffice it to say that 11 years ago, we were an idea on a piece of paper. They've been in business 30 years. We are where we are today. Mm-hmm. Our model has remained consistent, and our value proposition and how we do our deals, has remained consistent all the way through. Theirs has, you know, moved back and forth and tried to adapt to what we've been doing. We see no change in the operating environment, and we see no change in the M&A environment, which would suggest that we are going to be in any different a position in five years from where we are today. Okay. I think as for a market that is as fragmented as the dental industry in Canada, having only two real competitors, again, we have great visibility for years to come on our acquisitive pacing. I think what's also important to note, if we look at our capital structure, albeit for the capital markets, a four handle of debt is high. We're probably one of the lowest leveraged acquirers in the healthcare industry, and probably by a factor of two less than our competitors. As we sit here today with a rising interest rate environment, with a fragmented market, we're really positive as to our outlook. Actually, that brings up another point. When you compare and contrast the dental business in the U.S. versus Canada- Yeah ... there are some key differences. Yeah. One of them is that you can almost work at a negative working capital in Canada because of the way the payment system works. Could you walk through that for us a little bit? You should think about Canadian dental the way you would when you take your pet to the vet. It's cash pay at time of service, to the extent that people, about 65% of our payments are covered by insurance, but it's at the individual level. We don't have contracts with payers or insurance companies. It's with the individual patients. We get paid at time of service, and to the extent that they have insurance, they get reimbursed. Around 65% of the attributable revenue. About 70%-80% of Canadians have some form of insurance provided to them by their employers. It's extended benefits. It covers dental, covers physiotherapy, prescription drugs, and so on. We're just part of that basket. That's the main difference. The other difference is just the focus on Canadians on their dentition as a preventative care and a preventative treatment. We probably have the highest visit rates on the globe as it relates to patient visits on an annual basis. 87% of our revenue is recurring. About 85% of people in Canada population goes to visit the dentist at least once a year. There's a very high compliance rate as it relates to dentistry. Those two factors, we think make it a more compelling business than in the U.S. although we do like the U.S. business for other reasons. Meaning? Size. Size. Size of market. Of course. Yeah. Have you looked into the U.S. market before? We have. We've looked a lot at the U.S. market. Obviously, our, you know, capital markets and the like are not supportive of any kind of a transaction. It is something that, you know, we continue to look at, and at the right time may or may not choose to do something. Like we like the Canadian market. Again, 76% consolidated. We have a long runway for growth. We know the markets and all that, we like it better. I wanna circle back to the capital markets in a second. Nate, I wanna go back to the debt side of things. We are sitting a bit above 4x in terms of debt to EBITDA. You're comfortable with that. Can you talk about what the profile looks like in terms of your ability to pay down debt, but at the same time, do this level of acquisitions? Yeah. Yeah, absolutely. I think we saw that come through. Where we ended Q4 was at 4.5x. We ended Q1 here at 4.4x, with completing just over CAD 5 million of acquired EBITDA. Again, coming back to the strong free cash flow profile, we are funding the majority of our acquisition cash spend from free cash flow, which will allow us again to continue to grow at those double digits, continue to focus on our organic growth profile, as well as de-lever through the year at roughly call it 0.05 to 0.1 per quarter. Okay, perfect. When we look at it, this is just commentary, like we're in a capital market, it is where it is. That's a function of the market we're in. Not all EBITDA is created equal. You know, we're converting 60%-70% of our EBITDA into cash every year. We feel that we are a utility-style business with the recurring revenue that we have and controllable costs. We will not go down to a three handle, just some commentary that not all EBITDA is created equal, and ours is pretty close to cash. Okay. let's talk about capital markets- Exactly. What happened, you know, last week to a degree in terms of the strategic review process. Yeah. Finish this all off. Mm-hmm. The other way. Went through the review process. It's gonna be business as usual. Obviously from the date you started that review process, things have changed dramatically. Yeah. I think that's the answer to, you know, not having an outcome that perhaps you were hoping for. When you think now, right, in terms of you've spoken to a ton of people out there, institutions, private equity. You were in private equity, Graham. You understand these people. What is it? You're trading at a multiple now well below your peers. Yeah. Those that aren't your peers, what are you hearing is the potential issue, and what can you do to fix it? I don't know. Why don't you tell me? Yeah. I thought you'd say that. I think it's. Look, we've come through two very difficult or actually four very difficult years with COVID. Right. Admittedly, there's been noise in the industry. There's been impacts. There's been inflationary impacts that we haven't been able to offset until now. There's been impacts on, you know, changes in behavior on our patient base, our provider base, which is starting to revert back to pre-COVID levels. You're seeing it in the results. We're starting to give guidance. We're maturing as a public company. We think with time, our story, as it becomes better known, will reflect better value. Okay. I have to end off by saying I agree with you. I think that it's very attractive where it is right now, and that, I believe that things are gonna look better after last week. Perfect. Congratulations. Appreciate that. Thank you for coming. Thank you. Thanks for having us. Good point. Thank you. Hello, welcome to the 2023 RBC Capital Markets Global Healthcare Conference. I'm Ben Hendrix, RBC's Healthcare Services and Managed Care Analyst. We're pleased to host acute care hospital operator Community Health Systems. With us this morning from management is Kevin Hammons, President and CFO. We also have Michelle Tice, Senior Director of Investor Relations, and I'm pleased to introduce my former colleague, Anton Hie, as Community's new Vice President, Investor Relations. Let's start off with a question on the quarter. When Q23 results came in well below consensus estimates, though the company affirmed full year guidance. A lot of moving pieces there and components. Could you give us a broad overview of what you believe contributed to the miss and what gives you confidence that you can still hit your full year guidance? Sure. Absolutely. Thanks, Ben, for having us here. Appreciate you hosting us. A couple things occurred in the first quarter. We saw tremendous kind of recovery of volume, and I think is really that return of core demand into the healthcare system that we see as being very positive. We believe that, you know, that was a sign it carried over from the fourth quarter, and that's a sign that, again, core demand's returning, and that will continue through the year. What we did experience in the first quarter, though, is a deterioration in payer mix. Particularly from the fourth quarter. Volume started to return in the fourth quarter. In the first quarter, the payer mix deteriorated, and sequentially, all of our increased volume was Medicare Advantage. As we incurred really an increased level of cost to treat some of that volume coming in, and then with the payer mix deteriorating, it was a, you know, a bigger headwind on EBITDA. We also had a couple expense line items that increased kind of year-over-year and sequentially in medical specialist fees. We had some one-time malpractice, some professional liability expenses in the first quarter. That's kinda, again, a one-time item. We don't think that's gonna continue. Med spec fees, I believe we hit our peak for the year in the first quarter. As we go throughout the year and, kinda back to the payer mix issue, the only real structural change between the fourth quarter and the first quarter, relatively short period of time, was a reset of co-pays and deductibles. That's where we see, that reset, it was still a barrier for some of the commercial patients coming back into the healthcare system. With overall demand returning, we believe throughout the year, those commercial patients will come back, similar to everyone else coming back into the system. That payer mix will improve throughout the year. If we dig just a little bit deeper into the Medicare Advantage mix sequentially, as MA continues to grow in popularity, we continue to see the penetration rates expand and people select MA increasingly over fee for service. Do you think that this is gonna be a longer term thing you're gonna have to manage through or headwind, or are there strategies in place to kind of get rid of that lumpiness, I guess? Yeah. I do think that it's something that the industry will deal with over time. Mm-hmm. I believe that this quarter was an outsized impact because we actually had the decrease in commercial business with a corresponding increase in the Medicare Advantage business. With the Medicare Advantage patients, there's really no barrier for them at this point to come back into the healthcare system. With the pandemic being largely over, generally no co-pays and deductibles. There was no economic barrier for them coming back in that exists in a bigger way for the commercial patients when you have high co-pays and deductibles. I think we'll manage through that. In terms of the commercial mix, I think you mentioned that you expect, you know, to see kind of a corresponding higher mix and maybe later in the year. Is that correct? Mm-hmm. You had seen, you know, some momentum in March, April. Is that continuing in May? How are we thinking about mix kind of thus far into the first half? Sure. You know, I think it's still gonna be a little bit of a headwind in the first half of the year. We did see some improvement in March, which has continued into April, but not back to, you know, where we expect it to be. I think the back half of the year, though, gets much stronger in terms of payer mix. If we could just talk about demand more generally. First quarter volumes, well ahead of expectations. Adjusted admissions in 9.4%. Surgical growth, 10.6%. In the call, you attributed the volume growth to consumer returning to healthcare settings. Can we just any general thoughts about how you're thinking about volumes through the rest of the year and demand across the various healthcare categories? No, there was a tremendous amount of disruption in second, third quarter of last year, which was the big headwind last year. I think the overriding question was, you know, will that demand ever come back, or is it going to someone else in our markets? I think we've shown in the fourth quarter and the first quarter that the demand is going to come back and we're gonna capture it. We are capturing that demand as it comes back into the system. I think we have some easy comps in the second and third quarter in terms of overall volume. I do expect and what we've seen so far, in April is the volumes we saw in the first quarter, you know, in terms of levels of volume, has been generally the same. It's continuing. There's a lot of focus on volume expectations into second quarter, and, but following the very strong first quarter comps, how much visibility do you actually have into future volume, whether it be the surgeries on schedule or other indications? You know, how far out can you realistically see? That's a great question. There's not a great leading indicator of volume out there in terms of, you know, you have surgery schedules, but it's relatively a short window that you have visibility into. I think the bigger indicator out there is we saw a return of your clinic visits, your screenings, kind of diagnostic procedures, as people during the pandemic had stayed away from the healthcare system, weren't going to see their doctor or primary care doctor. Those visits that are returning to the primary care physicians, the office visits, and then your normal routine screenings, as those start to pick up, and we are seeing, we started to see that in the fourth quarter, seeing it in the first quarter. It's lower acuity. It's moved some of a little more of our revenue to the outpatient side. I think that is a leading indicator that as people stayed away from healthcare system for a period of time, they come back, they finally see their doctor again, their conditions may have deteriorated. That's gonna lead to the higher acuity services being performed down the road. Gotcha. In terms of your inpatient volume that you are seeing, how is acuity playing out there? acuity of the inpatient was up a little bit year-over-year. Mm-hmm. Particularly, you know, overall acuity was down because you had COVID in the first quarter of 2022. Non-COVID business, you saw acuity improve year-over-year. Gotcha. If we could, maybe skip to rate a little bit. Could you update investors on commercial contract negotiations for 2024? Do you anticipate a higher than historical reimbursement rate, kind of given the ongoing inflation that we're still dealing with the labor issue? A little early for us to say much about 2024, and where we're at, other than to say our expectation is that, we would see higher you know, continued, elevated increases in commercial rates. We see that in 2023. We're about 100 basis points higher than we've been historically, on the commercial rates in 2023. I believe that continues into 2024 and maybe even 2025, 'cause there's about a three-year cycle of renegotiating contracts. Not every contract's up for renegotiation every year. So it'll take us a couple years to get through the cycle. With the inflation we've seen over the last couple years, I think there's still some runway that we'll see continued elevated increases on the commercial side. Does that 100 basis points gets us to mid-single digits, or? Yeah. We're at 4%-6%. Okay ... on average. That's averaging everything that's rolling over, plus those that aren't being, you know, renegotiated, plus the new contracts coming into place. If we could shift to labor. you know, contract labor expense increased slightly from Q4. Is a reasonable run rate where we are at the rest of the year, or what do we have baked in for the outlook? Yeah. We saw a slight increase in Q1 over Q4 of contract labor. I think that's, you know, probably goes down from here. I think we're at the peak- Mm-hmm ... for the year. I would expect us to exit the year, in the $60 million-$65 million range for the fourth quarter. Mm-hmm. I do expect some decrease. I think we estimated contract labor down 40%-50% for the full year over 2022. I think that's still a good estimate, so we should see some declines. Is that supported by more nurses coming into the system? How's hiring going? It is. Hiring was very good in the first quarter, although more of our hiring in the first quarter, were new graduates, 'cause you had a December graduating class. Mm-hmm ... Coming out. We hired a higher percentage of new graduates in the first quarter. We'll see that again probably in the third quarter with June graduates. Second quarter and fourth quarter will be hiring more experienced nurses. There's a little in the first quarter, a little longer ramp-up period for new graduates to get on board. The onboarding process a little bit longer. We use preceptors. They spend more time with them before they're just turned loose and become fully productive. That kinda delays some of the benefit we'll get in taking out some contract labor. But we should start to see that then in the second quarter. In terms of the retention, any special programs to call out and how that's going? Are you offering a lot of retention bonuses this year that are kind of helping people stay on? Yeah, not so much in terms of retention bonuses. That, that should be a benefit because we were doing more of that last year. We have put in some initiatives to improve retention. One of them, which we call our Pathways program, which is paying for student loans for any of our clinical, you know, nurses and other clinical positions. As long as they stay employed, we have the employees work through SoFi to refinance their student loans, and then as long as they stay in employment, we'll take over student loan payments. That's been a great tool for both retention and recruiting. We're seeing great success. I believe we've reduced turnover by about 500 basis points over the past year. Where does that get us to right now, about? Yeah, we haven't given... You haven't given. Yeah. Yeah. Right. We're still elevated over where we were pre-pandemic, but we're getting close. We've talked this morning, one of your peers about HCA with Galen School, and I know. Mm-hmm ... have had partnerships in the past with Jersey College. Jersey College. What, how's that going, and is that expanding, and what other programs do you have? It is expanding. We're getting ready to open our eighth location. Mm-hmm. We have a couple more locations that will open up. Because we're not opening one in every hospital, but, you know, we're targeting markets, so some of these locations actually serve multiple hospitals within a market. We'll have a little over half of our hospitals covered with Jersey College program nursing schools. Those schools actually are doing the education within the four walls of the hospital. We're targeting not only members of the community who come in, but also our employees are often students in the program. They can do all their clinical work in our hospital and becomes a nice transition for them to be hired full time. We graduated our first class, our first cohort, graduated in January in one of our markets in Florida. We'll have our next one coming up, I think, in December. We'll have a cohort, a couple cohorts graduating. It'll start to ramp up. By 2024, I believe we'll be graduating about 1,000 nurses a year. Mm-hmm. That we expect to get a very high percentage of those retained as employees. We also have programs with other local universities that we have affiliations with and, you know, connections with. The program with Jersey College is the one that's most directly tied with our facilities. Great. Just to change gears a little bit, I wanted to touch on the patient migration to acuity migration to outpatient... Mm-hmm. particularly in MSK. Can you give us a recap of kinda how you have positioned ASCs in your markets, what the plan is for the future, and if you're capturing all of that volume that's kind of migrating outpatient? Yeah. We are capturing substantially all the volume. We talk about migration from inpatient to outpatient. We're not losing that business. We're just capturing it in our outpatient settings. In our markets, we don't have a big presence of like any of the national ASC groups that are competing against us. We have ASCs in about 85% of our markets that we own. Mm-hmm. Are part owners of. Sometimes we're joint venturing with physicians, but generally, we have a majority ownership position in those. We are looking at expanding, you know, somewhere in the neighborhood of five to 10 per year. I think that as we look at the outpatient or the Ambulatory Surgery Center space, there's a little less value proposition for the patient in our markets versus a larger urban area. Because our hospitals, by their nature, are in a suburban area. They're easier to get to. They're easier to access. You're not having to navigate, you know, a large 800,000-bed facility that's hard to find parking and that sort of thing to navigate for outpatient procedures. Some of our outpatient, a lot of our outpatient procedures are done from the hospital. We could have a wing, a separate entrance, just as easy to navigate as an ASC. Where it makes sense, we're then targeting and opening, you know, freestanding kind of ASCs as well. Got you. Kind of the requisite question on redetermination. How are, how are you thinking about that, particularly, you mentioned your markets in Florida earlier? Mm-hmm. you know, how do you think you're positioned and what are your latest expectations for the pacing of that? You know, I think we're positioned well for a couple reasons. One, it's too early to tell. You know, the states, this will kind of come in over a phased approach. Different states are going through it at different times. I think it's generally neutral is how we're thinking about it. two of our largest states, Texas and Florida, have the highest enrollment in exchange- Mm-hmm. program enrollment, and which increased significantly in those states. If I recall correctly, about 3.2 million incremental enrollees in the exchange programs in those states, and those are two of our largest states. We would expect, although, you know, there will be patients that lose coverage. Mm-hmm. during redetermination, some percentage of those will be picked up through exchange programs or other commercial programs that will offset- Mm-hmm. you know, those losses. At this point, kinda how we're looking at it is fairly neutral to us. Gotcha. Then, kinda more broadly, put this question to one of your peers earlier. Since we've seen kind of expanded subsidies under the ACA exchanges, and we also know that you operate in the kind of Medicaid expansion holdout states, to what extent is the, from an economic perspective, are these expanded subsidies kind of filling the hole? I know that we still have a lot of uninsured folks in those states, but to what extent are economically is that kind of, that expanded ACA benefit or subsidy backfilling the hole for you? Yeah. Yeah. You know, I think it is. I think there's some real opportunity, that we see for a couple of these states to still expand Medicaid. Mm-hmm. I think that would be beneficial for us. A couple of those holdout states are starting to talk more about it, I think we're getting much closer in a couple states for Medicaid expansion. I think there's, you know, Alabama, for one, is a state that's, you know, previously hadn't talked about or previously had resisted, that's now, you know, probably extending conversations about it, getting much closer. Mm-hmm. I think once you see, you know, one or more of these former states that had resisted, start to expand, I think the others will follow suit. If we could shift gears a little bit to the intermediate term revenue growth and EBITDA margin targets. You know, kind of where are you seeing that growth and comprised of, and then what do you believe, you know, you'll see the most leverage to hit those those EBITDA targets? Yeah. Certainly, payor mix improvement is gonna help significantly. As contract labor continues to come down, that'll certainly be a benefit to margin. We see, you know, a pretty clear path that contract labor continues to moderate and come down. We don't ever get back to pre-pandemic levels, but certainly able to do that. We implemented this margin improvement program. Really, we started back in 2019-- late 2019, I think it was fourth quarter of 2019. It's been very effective. We've held from an absolute dollar spend a lot of our non-labor costs, you know, relatively flat in considering inflation. We think there's still runway to continue to take out costs in the system, gain efficiencies through technology and through other means to improve efficiencies. There's still some work to be done in our supply chain area. Mm-hmm. That we can take out some costs and gain some more purchasing efficiencies in supply chain, all of which will be helpful. Then as, you know, we still get some leverage on managed care rates over the next couple of year. I think Medicare rates, although the base rate increase for 2023 was like 3.8%, when you factor in all the take backs, is really about 1.9% on Medicare, which was nowhere near inflation. I think going forward, those take back programs are largely done. Mm-hmm. I think Medicare rates probably are, you know, at the higher end of the historical range of 2%-3%. Probably something closer to the higher end next year. With the lag of inflation getting built into Medicare rates, I think that probably continues for a couple of years, which is helpful as well. All those combined will lead to improved margins. Just speaking of margins this year, you had noted earlier that medical specialist fees kind of peaked in the first quarter. Kind of, what does your visibility look like through the rest of the year, and what gives you confidence in that coming down? You know, we saw that start to go up really back half of last year, largely as an impact from the No Surprises Act, and more of the physicians, you know, passing some of those costs on to us. We do not have a big presence with the national providers, like a TeamHealth or Envision. We're more contracted with regional players, local players. We have a little more flexibility. We started to take some action. It doesn't happen overnight, but in some cases, you know, there's really three approaches we're taking. One is insourcing, where we'll hire the physicians instead of using a third-party provider. One is just renegotiating a contract, and the other might just really be going out for bid and putting RFP out and look for other providers. As we work through those by the ones, we really kicked that off late last year, and so didn't have time to really get the benefits of that yet through Q1, but we're seeing the results of some of that work already start to come through. So we'll see some reductions kind of sequentially going forward. We've asked, your peers this morning about the Envision Chapter 11, who have exposure there. Do you see that being a systemic issue that's also weighing on your regional providers, or are they in pretty good shape overall financially? I think they're probably in better shape financially. you know, it's hard to say across the board because there's a lot more, you know, regional providers. I think many of them may not have had the debt load. Mm-hmm. That Envision had. I think generally speaking, they're in a little better position. It's a headwind for the whole industry. If we could shift in the last couple of minutes to capital. The company just recently closed on a sale of West Virginia facility. Mm-hmm. An agreement to sell two facilities in North Carolina. You've also noted your discussions about the other transactions. Can you discuss the thought process of divesting these and kind of use of proceeds and are these in non-core markets? Yes. You know, whether some of these others come to fruition or not, it's a little early to tell, but we are still receiving some inbound interest on a number of facilities and where it makes sense, whether it's a non-core market or... You know, since the pandemic, the economic dynamics of certain markets, whether it's demographic or economic, have changed. I think we're continuing to go through, you know, some detailed reviews of all of our markets and looking to see what the outlook is, and actually extending our horizon out a little bit farther to see what a three and five-year, you know, growth profile looks like. In many of our markets, we think that's improved significantly. Maybe we're deciding to, you know, we wanna double down in a market because now with some economic and demographic shift, there's more opportunity. We wanna refocus effort there. In another market, it may, you know, be more muted. If we get an inbound offer that's accretive to leverage, we may, you know, be more inclined to take a look at that and then reallocate resources somewhere else. I think generally speaking, any proceeds we get would be used to de-lever the company, so, at this point. Great. Well, I think that brings us to time. Thank you very much for joining us today. Ben, thank you very much. Appreciate it. Thank you.