Hey, good morning and welcome to the fourth day of the Jefferies 2021 Virtual Healthcare Conference. I'm Brian Tanquilut, I'm the Healthcare Services Analyst here at Jefferies. Our first company today is Amedisys. They are one of the largest providers of home care, home health, hospice, and personal care services here in the U.S. and joining us this morning are the company's CEO, Paul Kusserow, company's President, Chris Gerard, and the company's CFO, Scott Ginn, as well as Nick Muscato, SVP of IR. Paul, thank you again for doing this, and also thanks again for sitting at our value-based panel yesterday. I really appreciate your time. Of course. Yeah. I guess I'll just throw the first question at you, kind of as an intro. Amedisys obviously has done well over the last several years, but COVID, as was the case for a lot of companies, was a challenge. Anything you can share with us just in terms of where Amedisys is on the post-COVID recovery, maybe what you're seeing out of the hospitals and your other referral sources, just anything you can share with us to kind of level set where things are for the company? Sure. I think what we're seeing in general is good post-COVID recovery, particularly in home health. We've seen very strong volume growth. We saw a lot of market share come our way. We were good citizens. We were able to gain lots of accounts, despite the fact that a good portion of our business came from SNFs. In hospice, it was more of a roller coaster ride. We saw incredible growth. The growth we saw was a lot of COVID patients. It drove our median length of stay down quite considerably from about 26 days to 18. We came in, as I think you'll recall, in the third quarter, 9%, 15% fourth quarter, January came in, we were well above projections. We were, I think, disappointing to us. We came in at about 5%. What we saw was just incredible natural volume growth, and what we allowed to have happen was we lost some salespeople in the process just through attrition. Now that our numbers have come back in terms of ADC numbers, back to their original place at 26, which is very good. That's important to us. We need to really drive the admit fee. Everything's going really well. We're bringing on, I think, probably 40 new salespeople, 30, 40 this month, 30, 40 next month, and I think that's going to get us right to where we need to be from a sales perspective. We're looking at very strong admit growth in the second half of the year in hospice. We feel very good about where we're at. We feel that in the pipeline for M&A, that we've got a nice pipe. We have some money we'd like to spend, and we're looking at some really interesting deals, so we feel good about that. The business, in general, seems to be going well. Chris, if you want to talk about some of the specifics in terms of hospitals, SNFs, and where we're seeing a recovery, that'd be great. Hey, good morning, Brian. On the segment side, our hospital referral volumes are back at pre-pandemic levels, maybe a little bit above. They came back the quickest during the pandemic. We've also seen physician referrals back at or a little bit above pre-pandemic levels. Our business coming from SNFs is still down significantly, maybe about 15% today. What we've seen on the electives is, we look at it on a weekly basis, and right now in the last seven weeks, it's bounced between 90%-100% to pre-pandemic levels, just kind of up and down a little bit each week. The interesting thing there is of those electives, many more of those are coming from ASCs versus from the hospitals. Given the fact that hospital electives has not come back to pre-pandemic levels, but we do have our hospital referrals at pre-pandemic levels, suggests that we're also getting share out of those hospitals from some of our competitors as well. We see the second half of the year's upside. We think electives will continue to come back. We've heard a lot of conversations about deferred electives through the summer, for vacations, things like that. I don't think that'll necessarily impact our business, the demographic that we're looking at that end up on home health, but keep an eye on that. Then maybe also with some practitioners, physicians, surgeons, things like that, some pent-up demand for vacations may be happening this summer. That's the area that we're keeping an eye on as we move through the summer. Encouraging signs of where we are today on the volumes, even more so in the back half of the year. Yeah, lots of stuff to nibble on there. Paul, I'll just go back to you really quickly. You mentioned in hospice that your length of stay is, or median length of stay is now back to 26, so it's a matter of bringing in the sales force. Does that mean that you're tracking at or slightly above the assumptions that you had baked into your guidance in terms of the recovery in the hospice business? I think what we're seeing now is we had pretty aggressive growth rates in terms of admit growth at 18%. I think that's going to be a big challenge for us in terms of hitting that. Our ADC, which we anticipate at 8%, we feel good about that. ADC is the most important because that shows revenue growth. I think we feel very good about where we're at in terms of that. We're seeing some very good candidates come in now on the sales side. We're seeing some stability there. We saw some instability in our sales force. Maybe it was such rapid growth that was just naturally coming in due to COVID. We were seeing 15% in Q4, and we anticipated this would continue to go through, but it was just we couldn't keep up. Potentially, we're thinking maybe there was a little burnout, maybe there was a little malaise, thinking, oh, this is just going to continue. We started out in February, March, with about a 10% deficit in our sales force. We like a 3% deficit. We're filling that back up. That will be done by the end of this month, beginning of July. Then we can get our rep there. We feel good about that. Chris, did I miss anything on that side? No. I think, just again, Q1 was a disappointing number for us. We've been pretty public about that from an admit perspective. The gap in BD FTEs is something that we're on top of. We'll have it closed, but getting the actual pull-through will take just a little bit. We think coming out of July, going into the last part of the year, we should see that momentum. We will definitely have the feet on the street refilled by the middle part of next month, and then when we do that, we should see the actual admit volumes come in. The good sign is w hat is ahead of plan is the recovery of median length of stay back to 26 days. It got there in March, which is a good sign. That was earlier than we expected. The other [audio distortion]. Go ahead, Paul. Yeah, the COVID shakeout was very dramatic that way, and going from 18 in January back in March to 26 was really extraordinary. Yeah. No, that makes sense. Chris, while I have you, shifting gears back to the core home nursing business. We've noticed, and I'm sure some investors have noticed, how your Medicare admission trends have been relatively strong, definitely positive, and certainly a good bit above your peer group. What has been the driver of that, and how do you think about the sustainability of that strong admission trend in the traditional Medicare book? I think there's a number of drivers. As Paul mentioned, being good citizens during the pandemic, I think actually gave us an opportunity to take share and take it in a permanent way, really deepen relationships with hospital referral sources out there. It was a move we decided to make early on. I think that's absolutely paying off. We've been very diligent over the last couple of years in really utilizing claims data to identify referral opportunities in markets, invest in additional reps in those markets, go deep into those, procure new referral sources. We added 3,200 new referral sources in Q1 alone. That strategy, there's plenty more runway for that for us to continue doing that. I think that's certainly something that's paying off. I think that, without a question, being able to claim that we're the top of the hill in terms of quality out there now. We have 99% of our care centers are 4 stars and above. Quality is the easiest thing to sell on, and so that's paying off for us. That gives me some good encouragement over the next couple of years as we see even the market expand. We're well positioned to continue to drive strong growth on the home health side. That makes a lot of sense. Paul, we've talked about how Medicare Advantage is kind of like the next growth area in Medicare as a whole, right? You guys have done a good job growing your MA book and also narrowing the gap between fee-for-service rates and MA. As we look ahead, you know, some of your peers are trying to change the discussion that whether we should be looking at volumes or admissions more as a total number rather than buckets of fee-for-service and MA. How do you feel about that, just thinking about your business as you run it? Is total admissions now the right number to think of, and where do you see Amedisys going as you grow your MA book? That's a great question. We still separate. There's still enough difference in the way, in the business, and the way we incentivize our sales force, that we have to track them differently. Until we get to par, we're going to always track them differently. Remember, MA asks a lot more for the gain share that we get and our ability to negotiate. I think what's really helped us in the negotiation has been, one, coverage, which is good. They want the easy button. Home health, it's very hard to get the easy button, it's a lot of contracting pain. If we can continue, I think as the industry continues to consolidate, that'll put more power into the larger players in home health. Two, the ability to have quality and deliver quality, and then start to take some risks on things that are very important to them, which are fundamentally readmissions, and take risks on readmissions rates. Quality and readmissions are the ones that drive it, but it's still a considerable ways away. We're getting to about $130 a visit with managed care plus the gain share, and that's about 25% of our book. We have an opportunity to earn $10, $15 more on that, but we're still at $165-$200 on fee-for-service. Remember, managed care, we're talking about we still have some bad debt there, particularly with the conveners, we have bad debt. We don't have bad debt with the government in general. The government pays in 22 days, managed care pays in about 70 days. Big difference. They pay us less, they pay us late, and sometimes they don't pay us at all. Since I'm in Nashville and I have aspirations to be a country music star, that's going to be my first song, Brian. No, I appreciate that. Scott, I don't want you to get bored there in Baton Rouge, so let me ask you the next question then. Your organic growth targets were pretty strong for this year, for both the hospice and home nursing businesses, right? Some of that, obviously, is just easy comps. As we exit 2021, how are you thinking about the long-term growth outlook for the business? I know the overlay, obviously, is CMS has pretty robust spending targets or spending expectations for home health as a whole, right? Just want to hear your thoughts on the long-term organic growth outlook for the business. Yeah, we still think they're strong on both sides of the business. If you think about hospice, we already know that's growing in that 6% range, just as the market goes. We've got acquisitions that are going to come on and continue to grow as we take these four acquisitions we did and take them against the size of our care centers and our legacy book, which that's really what fueled our hospice growth. We were hitting double-digit growth numbers back when those were getting to maturity. We think we're pretty excited about the opportunities there to be in that kind of a range, that high single digits. Same on home health side. You've seen we've had great growth. You talked about total admit growth. We're seeing that. We're certainly going to manage our margins, we have the opportunity as we continue to take share to consolidate the industry to be in that high single-digit number as well there. I think the future's bright for us there. We can continue to do that. The margins will take care of themselves, and that makes us feel good moving into 2022 and beyond. Gotcha. Paul, since Scott talked about M&A, shifting gears to acquisitions, that's obviously been a part of your strategy. You've done some good hospice deals in the last few years. As we look at the pipeline today, some private companies that we've talked to are saying that the market is tight for good assets and good acquisition targets. What are you seeing and how are you thinking about the ability to do deals over the next 12-18 months? It comes under Scott, and I think Scott and his team have done an extraordinarily good job of proactively. We work off pretty strictly off of a strategy plan. We have very specific targets of who we want to acquire in very specific areas with very specific criteria. We're in touch with all those people, and we're talking with them. What we found, though, is when we are proactive, and in the four deals we did in hospice, that we found that it takes longer when you're proactive. An auction process, everybody's ready, everybody runs at it. The deals we've seen at auction, particularly in hospice, are nuts. The prices that people are paying for these assets are twice what we paid, easily more than twice. We feel very fortunate when we went out, we spent $600 million+ out to do four deals over the past two years or so. Actually, AseraCare closed about a year ago now. We felt we got in nicely, we got in proactively, we got really good pricing. Those things, they're all fully integrated now. They're going to start to kick in. The market is very, very tough if you go in at auction, and we've seen some of our friends and competitors pay prices that are extraordinary. We want to zig when everyone else is zagging, we're focusing now much more on home health, some capabilities plays, that sort of thing. I know, Scott, did I miss anything? No, I think that's right. Our focus, as you just said, was home health. We certainly have seen the market, if we look at deals that closed from the last quarter, sequential trends there have been pretty meaningful and the multiples being paid. Quality assets are important. We spend a lot of energy on deals. Our M&A team only gets real credit probably when we close a deal, but a lot of times the deals we don't do are our best deals, and unfortunately, we can get down the road and just have to walk away. We'll continue to stay disciplined there, but we'll find the deals. We'll have to just take a strategy we took on the hospice side, where we're being more aggressive in seeking out folks and trying to get them to move earlier and come to market earlier than maybe they planned. Look, eventually, we do think as sequestration goes away and money gets paid back, we still fully believe that the opportunities for consolidation are going to be there, and we're going to see more and more opportunities as time moves on. Yeah, to follow up on Scott's point, Brian, to follow up on his point, I think as we were talking to your bankers yesterday, a lot of people now terrified of the capital gains increases are starting to come to market. In home health also anticipating a shakeout, someplace between the potential of 20%-30% of the agencies actually being severely challenged, potentially going out of business, means that the fluidity of the home health market should drive some decent pricing in home health. The skill sets are going to be, if you really want to consolidate and grow share, home health's probably the place to be looking. You have to have extremely good filters because you can pick up a lot of junk and a lot of liability in that process. Yeah, no, I appreciate the diligence there, obviously. Scott, just sticking to this discussion, right? You bought back stock in Q1. You're generating a lot of cash. The balance sheet is clean as heck. As we think about that, how are you thinking about capital deployment in the meantime while we're waiting for the deals to show up? Would you be open to doing more buybacks, or would a dividend be a consideration given the cash flow that you're generating? Yeah, I think we had authorization for $100 million in buybacks. I think if anything, we would look at upping that authorization. We spent about $73 million in that Q1 timeframe. We'll watch things there. I think we're going to see if we get some deals done. If we've got confidence through this year, we'll re-look at our plan. We move into 2022, we'll rethink that. If we want to authorize more, I think we will. We'll just look at where the landscape is on deals. You're right, cash flow is going to be strong. We're going to have to figure out something to best deploy this capital that makes the most sense for us. Really, we think we've got a great operation here. The home health segment, what they've done with those margins has been impressive. Hospice, we're going to right-size that from a growth perspective. Our ability and desire to consolidate is going to continue to be strong, and we'll figure out how to get deals done. Got you. You should feel sorry for us, Brian. We're low on leverage and we're generating incredible cash, and we don't know what to do with it all. Well, just to that point, right, I guess you're kind of shifting gears a little bit, but related to it. Yesterday, we had a good discussion, Paul, on value-based and the emergence of the payvider, right? Obviously, the world is changing in healthcare, especially in Medicare and Medicare Advantage. As we think about the evolution of healthcare, how are you positioning Amedisys strategically to be ready, proactively position Amedisys to be ready for that? Do you need to do acquisitions in that area that would prepare you for things such as SNF at home, some of these ACO models or home hospitalization? Yeah, I think we have to be prepared to play in it. I think we're out there looking at those deals fairly regularly. There's small companies out there that are doing it. It's early days, but we have to innovate. Having come from the payer side of the world, it's very, very clear that Medicare Advantage is well outpacing fee-for-service, and that at some point is going to be the coin of the realm. If you really want to make money in Medicare Advantage, you have to fundamentally take care of people over a longer period of time, not just an episode. You also have to take some risk on it, and you have to show value in terms of squeezing out the cost. The great thing about it is most of the people coming into Medicare Advantage, it's true, about 90% of the population, almost 90% of the population now is chronically ill, and therefore they aren't acutely ill. Fundamentally, the best place for chronics is in the home, and the best place for polychronics is in the home. That's where you get the best reimbursement. If you can stabilize them in the home, those are your best MA patients or your best MA members. That's why the payer world is starting to come this way. Clearly, with Humana going to be absorbing Kindred at Home. There's been a lot of interest with Navi going to United and then myNEXUS is going to Anthem. They're trying to figure out ways to play in the home, and we're a good solution. We know how to do this. We're anxiously waiting for the payers. I think they're the slow ones on this to say, let's find out ways to really take some good risk in the home in a sub-cap way and work that way. I think also, as we talk about Oak Street, some of the other players that are out there, Privia, CareMax, Iora, JenCare, these folks are going to be taking more and more patients. There's going to be more proliferation of people like these folks. They're going to want to. Landmark's another great example of wanting to have these people and keeping them in the home and doing more and more of it. I think we're in a wonderful part of the world, aligning with value-based, aligning with risk-taking, aligning with Medicare Advantage. Just to that point, as I think about SNF at home and then just the SNF world in general, right, it feels like you guys are gaining share, continuing to gain share away from SNF. Is that still a theme that investors need to be thinking about as we think about share gains for the industry that translates to incremental growth for you guys? Yeah, again, I think the diversion and the diversification of where people are going outside of institutions. COVID has made people scared of institutions. 40% of the deaths that have occurred have occurred in SNFs. Right. We've had 15+ months of referral sources changing their referral patterns, putting as many people as they can into the home because the families are pressuring it. They want the best for their patients. They choose the highest quality player. We're the highest quality player. We've seen a lot of share gains that way in terms of when people can pivot to the home, they will. We also think with the move, there's much more moving now towards ambulatory, so ASCs. As those people elect to get surgeries outside of hospitals, and they're cheaper there as well, so the plans are pushing them as they start to move into total joints, into spine, into cardio, like you've seen with Surgery Partners, for example, that's been growing very well. These folks are going to want to skip the IRFs. They're going to want to go straight to the home. They're going to want to construct bundled deals where they do the surgery and send them home. We've been having a lot of good conversations there. Again, COVID has created that high decentralization, distrust of institutions, plus you got the baby boomers now who this is all happening to. The last place they want to be in is these loving no institutions. That's what they're looking for. We think that we're going to benefit from that big time. We're at time. I was going to say we're at time with that high note. I think that's a good way to conclude this. It sounds very exciting, and it sounds like you guys are seeing improvement and have a very good outlook going forward. Thank you again for taking time today for the whole team and to the audience, thank you again, and we'll chat soon. Thanks, Brian. Appreciate it. Thanks, Brian. Thanks.