Good morning, and thank you all for joining us. I'm Sarah James, Emerging Healthcare Delivery Model and Provider Analyst at Barclays. We're really thrilled to have with us here today Amedisys. We've got pretty much the full management team here. We've got Chris Gerard, President and COO, Scott Ginn, EVP and CFO, and Nick Muscato, SVP of Finance. Thank you guys all for joining us here. Good morning. Thank you. Good morning. Wanted to open up with some questions on big picture. How do you think about long-term growth developing over the next few years? Sure. Yeah. Thanks, Sarah, and thanks for having us today, and good morning, everybody. You know, as we look at home health and hospice, kind of our two core businesses over the next several years, you know, we feel like we got a good line of sight that the industry is gonna grow. Home health about 5%-7% and hospice 6%-8%. When you layer in quality ratings such as our star ratings and our commitment to quality, we've definitely found direct correlations around, you know, additional growth on top of market growth and market share takeout opportunities when you leverage your quality. We see that we will be growing at the top end, if not a point or two above that in each of the lines of business over the next several years. You know, the one thing that will be the gating factor, we talk a lot, I'm not sure we'll talk about it again this morning as well, is, you know, the labor situation is probably the worst it's been in a while, if not forever. Being able to work through that, you know, is gonna require all of, you know, people in the post-acute care space to be able to really, you know, be nimble around how do you get more out of your labor. For us, that's why workforce optimization is our key strategy for us. It's gonna be unlocking capacity with our existing clinical staff as well as being able to attract and grow our clinical capacity over time. We're incredibly bullish on the market, the growth opportunities out there and our ability to capitalize on it. Great. A lot to unpack there. Let's start with local market share gains. How do you guys approach that, whether it's your referral process and what does it look like to you guys when you enter a new market versus where your ideal market share is? Yeah. If you look at existing markets, it's a pretty much formulaic approach. I mean, you have claims data to know where who's referring to our lines of business. You know where that business is going. You have a sales rep, what we call feet on the street kind of approach to it, so that you're building relationships with those referral accounts. Again, leveraging quality as kind of the entry point and being able to find opportunities to get patients from those referral sources and then basically, you know, walk the talk and provide great quality of care and good customer service. A lot of times you just find over time that just builds strong relationships that also allows us to take market share. You know, really, when you're looking at claims data, you see where the market share is, and the strategy is to go out there and basically win that over, you know, with those referral sources by utilizing your sales force. When we look at new markets, couple things we look at. First, you know, it's our desire to have home health and hospice in the same geographies where at all possible. If we have markets out there where we have home health and not hospice, we will look at either de novos or small acquisitions to get us into those markets and vice versa to be able to fill that map. We also, you know, tend to want to find CON opportunities out there as well. It's a little bit less competitive. It allows us to be able to continue to expand our geography, and we obviously look at the demographic data to make sure that it's gonna support, you know, a sizable location in those areas. You know, it's a multi-pronged approach to being able to find ways to enter into new markets. De novos has been our predominant strategy, you know, for hospice for the last couple of years after the deals we did in 2019 and 2020. We have a list of probably about, you know, 24 de novo sites that we would like to enter into if we don't find acquisitions. You know, we have a pretty good, you know, kinda roadmap to being able to expand our footprint. Okay. Does labor factor into new market evaluations? Yes, it does more now than ever. Okay. I think that, you know, two things, even in new market as well as existing market, you know, historically, we would shy away from doing acquisitions if we had significant overlap with a competitor with a target. You know, today, also thinking about 'cause typically one plus one does not equal two. When you start thinking about also the ability to amass some labor, and if you can retain that labor, then there's a premium, there's a value for that we're starting to, you know, kind of apply to our methodology. As we try to, you know, look at our existing markets, look at targets, then that's one thing we're thinking about is kind of, you know, hiring in terms of doing these deals. When we look at new markets, the labor environment is relevant. You know, also, you know, each state, there's data around clinicians that are in the workforce and what it looks like and how competitive it is. Obviously, you also look at wage index, things like that, to make sure that basically, you know, there we're not gonna be entering into a market where it's virtually impossible to hire staff and keep staff. You mentioned wage index, which is really interesting. Are you finding that on the reimbursement side and even with, you know, some of the private payers, that they are reflecting these geographic differences? How do you think about inflation, wage inflation being built into the formula? Yeah. On the wage index, on the geographic differences, yes. If you do, you know, local contract or contract with Medicare Advantage plans, a lot of times they will basically consider, you know, a San Francisco market way different than an Austin, Texas market. For us, you know, we see that baked into our rates, but obviously it's also gonna be part of our cost of labor as well. For that, you know, we definitely see that happens. On the Medicare side, you know, CMS updates the wage index every year based on labor trends, and we see movement every year. Some markets may get significant bumps and increases based on what's going on locally, and some markets may get reductions if there's, you know, lower cost of labor that's been present in those markets. In terms of seeing wage inflation come through, a couple things. One, you know, I think in our personal care business up in Massachusetts, which is lower wage personal caregivers, we did see significant kind of increases in reimbursement rates. Many of them are temporary, some are permanent to offset some of the labor issues. We're having some luck with Medicare Advantage plans and also, you know, acknowledging the wage inflation and giving some additional rates on top of what we've historically gotten, even if we're not up for renewal. We expect to have CMS as they come out with a proposed rule for 2023, final rule later this year, to probably have some of the inflation that existed in the last part of last year starting to come in, but we don't think it'll be fully baked in until 2024. With the Medicare Advantage plans and the payers in general, how often do you get a chance to renegotiate things like wage inflation? How reactive can it be? Historically, it's been typically like a three-year cycle, and we have a number of plans, and as they come up for renewal, basically we start the whole negotiation process. This year, given what we saw at the end of last year, we basically have proactively approached plans out there that we are not up on our three-year and just started. Some have been open to having some conversations, you know, about being able to acknowledge the wage inflation. For the most part, it's typically, you know, you sign a contract, it's good for three years. It typically has some escalators in there. What, you know, we're looking to do now is we're having conversations with the plans looking for tying annual updates to the CMS updates. As we start to see kinda fluctuation on the CMS side, on the rate side, you know, can we see that reflect in automatic updates with our plans, which I think will help us a little bit. Great. Private payers lag CMS generally as far as- That's correct. From your perspective. Can you talk about recruitment and retention, how you guys are approaching that right now and what your churn looks like? Sure. We've been very vocal about, you know, we're obsessive on retention. We feel like the most impactful lever in our organization is retaining our clinical staff. Our tenured staff, the longer they're here, they know we're committed to quality, they become the most productive, the most consistent, and you can leverage that, you know, kind of that capacity on organic growth and taking care of your patients. Retention is our, you know, something that we, you know, kinda live and breathe every single day to make sure that we have clinical capacity. We were able to drive down our nursing turnover 9% last year. It's still higher than we would like it to be. The whole industry is much higher than it should be, and there's a lot of opportunity in terms of being able to just drive down that turnover and get your clinicians to stay. We have a lot of things in place around that. We've talked a lot about a turnover prediction tool that'll tell us, and we run it through every one of our employees once a month, and it'll tell us with an 85% degree of accuracy if somebody's planning to leave in the next eight weeks. It gives us, you know, kind of the reasons why and allows us to engage in proactive conversations with them to be able to, you know, kinda find ways to keep that from happening. That's been very, very successful for us. We're looking to drive it down even further this year. We build turnover into our incentive plans from the clinical leadership at the local level all the way up to the C-suite, so that we basically know that we have to focus on what we can do to always retain and re-recruit our own people. From a recruiting perspective, obviously, it's getting tighter. What we've seen happen over the last year and a half is our yield and meaning our hires relative to our applicants has increased significantly, like 33%. What we've seen is the funnel has diminished quite a bit as well, and new applicants are harder to find right now. I think it's pretty obvious why when you think about the pandemic, you think about burnout, you think about a lot of nurses looking to go over to the gig work for a bit. We think that will come back. We think some of the nurses that have taken some breaks, you know, relative to, you know, burnout and the pandemic will eventually come back to the workforce as well. What we do is we have a pretty marketed approach of how we attract and hire our clinicians and our staff all together, in terms of, you know, setting targets every month by region, by location, measuring ourselves against that. We've had good success this year. We're on our targets for what we set out for this year. In terms of the growth that we committed to, you know, our turnover is in line with our ability to be able to absorb that growth as well as our recruiting yield is in line with us to be able to absorb that growth as well. Great. I wanna go back to this tool that you run every month on your employees. 85% accuracy is very impressive. Are you noticing any trends that are coming out of that, of what really makes the difference for recruiting? Sure. Yeah, it's changed. If you think about a year and a half ago, you know, it was pretty predictable, the top two or three reasons why somebody would wanna leave an organization. It'd be their boss, their supervisor, it would be scheduling flexibility or consistency, you know. Lower on the spectrum would be wages and how they're getting paid. What we saw happen in the second half of last year when basically the gig labor started to explode, the hospitals were paying incredible premiums for temp staffing to be able to have their hospital staffed for the pandemic. We saw just the payment gap in terms of taking a traveling nurse gig versus being a home health or hospice nurse became so wide that they could ignore it. I mean, you're talking nurses could triple their salary in half a year, and do that just for a temporary time and then basically go back and probably get their old job. What switched on us a little bit later last year was actually pay differential, not relative to our peers, because I think we're highly competitive. We benchmark ourselves all the time on that. Pay differential relative to other opportunities in healthcare, particularly temp staffing. What we've seen so far this year, though, is it seems like it peaked in January. February, it's coming down, starting to moderate, and I think that that's directly tied to the pandemic and Omicron. Now we're starting to see, you know, it start to kind of come back and fall in line with, you know, scheduling flexibility, consistency, and then, you know, supervisory, and then those are the areas that typically people would leave. Is it possible for you guys to be competitive with scheduling flexibility like the gig economy, whether it's clinician or it's unskilled labor? When I think about kind of the SNF at home opportunity. Sure. How do you get to that level of flexibility? Yeah, no, that's a great question. I think two things on that. One is our investment in a company called connectRN, which is a gig, you know, staffing company for facilities, typically SNFs. We invested in that organization, and we are alongside them working to co-develop a, you know, kind of a gig opportunity for the home health and hospice space, having clinicians that are basically credentialed into the system, have devices to be able to get into our EMR. Then literally, you know, through a tech-enabled, you know, platform, can say, "Hey, I wanna take this shift tomorrow, and it's gonna be these seven patients that I'm gonna see." Six of them may be from us, and one may be from another agency. They get a full day's work, and they get a full day's pay. We're optimistic that we're gonna unlock something out there that'll allow us to basically turn on and turn off nursing whenever we have short-term unexpected needs, which would be ideal. Versus what we do today is typically contract nurses, 13-week commitment. Basically, we're typically committing to 40 hours a week, even if we don't utilize them for 13 weeks. If we actually backfill whatever vacancy we have quicker, we're still on the hook for that contract, so it's a lot less variable than the gig side. We're real optimistic around that. You touched on the unskilled side, the personal care side, you know, and I think that what we've been focusing on is rather than being able to own personal care in all the markets where we want to do business and as we're starting to think about SNF at home and some of the other types of services we wanna provide, we're focusing more on our network opportunity with ClearCare as well as with BrightStar Care. We have these local relationships with caregivers that basically, in the event that we have a need for personal care, there's already prenegotiated terms and rates that we can actually leverage them without us owning it. We won't participate in the revenue side unless it's some sort of a bundled payment situation, but it will actually create an opportunity for us to be able to provide that service without having to own it. How do you think about the pacing of the opportunity for SNF at home or hospital at home rolling out? I think it's obviously the kind of momentum around hospital at home and SNF at home was sped up considerably during the pandemic. With the Medicare waiver for hospital at home, with hospitals not being able to take all the patients that they had coming to their doors, it created an opportunity for hospital at home to really get a good foothold, and then SNF at home starting to come along behind that as well. What we saw happen immediately before there was even really a SNF at home product when the pandemic first hit was hospitals couldn't discharge patients down to SNFs. SNFs were closed. They had to send them straight to the home, and we took care of those patients. It created this, you know, kind of reality of, hey, these services, higher level services, can be treated in the home versus in an institutional setting of some sort. I think that created the momentum. Now it's a matter of just scaling the businesses up as quickly as we possibly can. I think by having Contessa in our portfolio, I think that gives us a good opportunity to really accelerate the SNF at home, the risk-based palliative care, as well as the hospital at home service lines, which are all relatively new to us. You know, even since the acquisition in August of last year, the realm of opportunities that have come to our doorstep has been well beyond what we expected. You know, again, you gotta make the economic model work. You gotta tether together all the levels of service. It is also care delivery in the home, which is also gonna be subject to staffing constraints out there as well and challenges, which is what we're focused on making sure that we take care of today. Are those models contributing, positively to EBITDA at this time, or are we still earlier on in that process? No, still early on. Yeah. I think we've been very clear on the Contessa side. You know, basically the sequencing of events is you have a hospital, you know, JV partnership, which is the most difficult model. It requires some investments on the front end, a lot around systems and some, you know, and teams. Then getting basically to where there is actually flow of, you know, kind of in physician engagement. It takes a bit to get physician engagement at the ED. Once that does happen, you know, the path to getting to profitability is really only governed by, you know, kind of clinical access as well as the engagement. The demand is there. I think Nick said, I think it takes about 13 actual cases in a 30-day period to cover your costs. We're not talking about a ton of volume. We've looked at our locations. Once we get to fully staffed, being able to ramp to that 13 is pretty quick. The EBITDA drag is really around more new opportunities, which is causing us to burn more on the front end, that we'll start to see, you know, profitability from those a little bit later on. You know, I think this year we've got built into our model about $56 million in revenue and about $24 million EBITDA drag, which is actually not performance related. It's a little bit higher than expected, but it's more about because we had more opportunities come our way. As we kinda mature those into profitability, you know, we should be able to see this be a, you know, very strong EBITDA contributor to our organization. Okay. Wanted to look at that also from the perspective of your core business. As you're building these de novos, how do we think about initial cash outlay to go into a new market? What does the path to profitability timeline look like? Yeah. I mean, it's very low cost. Kinda similar to our own systems. It's not brick-and-mortar. It's, you know, you're hiring people. It's actually probably a little cheaper than getting our care center from a de novo perspective stood up, so very low cost. I mean, as we said, it's only about 13 risk-based admits a month that gets you to a breakeven. You know, capital to get this going is not gonna be a significant issue. It's getting JV contracts done, which we're way ahead of schedule. We're, you know, confident in that. That's why we're willing to take some additional investment on the front end this year, which impacted EBITDA in the near term, but we think that'll pay dividends for us. Okay. As you approach these JV contracts, what is that process like? Is it like an active RFP? Are you competing against others or is it a unique conversation? Yeah. In some instances it is. Often, we're just getting reach outs from, "Hey, we see the product." There's low competition out there. You've got some hospitals that have been active trying to start up their own type. You know, it's. When we acquired Contessa, they had a very nice pipeline of JV opportunities, and it's only filled up. That piece has just been very exciting to watch. I think one other positive thing we're seeing is that because we're a large home health and hospice provider, some of these systems, they're doing reach outs to us. They may have their own home health and hospice that they may, you know, be not getting the most out of. The conversation can go from originally, let's talk about a hospital at home joint venture to, "Hey, let's put all of our assets together in this market so we can manage, you know, kind of the full care continuum," and, you know, get to where we actually are picking up new geographies and new partnerships that in our home health and hospice side, that historically has not been our model, but it's started to create some opportunities for that to be our model. Great. On the hospice side, how do you guys think about the pacing of coming out of the current environment that we're in, kind of getting back to normal levels of volume for you guys? On hospice side? Yeah. Yeah. Without a question, we feel like, you know, the demand. A step back into the, you know, looking through the last two years, things that are indisputable is that there has been an acceleration of deaths. Patients who would normally be on hospice today may have already passed away, you know. The data clearly suggests in late 2020, and mainly, predominantly in 2021, patients passed away related to the pandemic that would probably be alive today. Patients passed away that would probably be alive today and likely to be on hospice. We did see kind of a market shrink for a bit. We think that will be replenished with the wave of baby boomers that are starting to age into our demographic. All these baby boomers, 1976, 1977. Today, our typical patient age is 78-82. We still see that there is going to be a replenishment of kind of the market size. The one thing that's really difficult to predict and, you know, and this is kind of our work that we kinda have rallied around is that, you know, the length of stay of patients has diminished greatly during this pandemic. The reason we feel like it is because, you know, the process of just getting your routine healthcare checkups and things like that has been impacted, significantly disrupted by the pandemic. There's more virtual visits, which could lend itself to misdiagnoses and issues with a patient. There are patients not going to the doctor because it's really out of fear or out of inconvenience or out of lack of access, that, you know, there may be something going on with them internally that's just not getting addressed and/or even recognized until later in that process. You know, we don't have data around this. We're trying to find ways to find this data, but we feel like there's really definitely a shrinkage of days from diagnosis of a terminal illness to days of passing. We have a lot of anecdotal kinda, you know, views of that on patients who we've taken on. For us, what we've seen happen is the admission volume is there. It's great. The median length of stay has bounced around from 26 days to 18 days. 42%-43% of our patients are dying within 14 days of being on service, which is not normal for our industry. It's not, definitely not normal for us. You know, we think the catalyst for us getting back to normal is people actually getting more comfortable getting out, going to their doctors, having their routine checkups, having their diagnosis done, and not delaying some of those things so that it's actually starting to accelerate their passing. We still are looking at elevated discharge rates today. We have that baked into kind of our model for this year, looking at kind of in line with 2021 discharge rates, which is considerably higher than 2019 discharge rates. As we see that may, you know, start to settle down with our admission volume, if we see discharge rates start to kinda get returned back to normal, we should start to see, you know, an ADC climb resulting from that and get back to normal. May not be till 2023, you know, fully normal, but, you know, we're hopeful back half of this year, we start to see that return to normal. Okay. Let's touch on capital deployment a little bit. How do you guys think about managing the opportunities versus where you want the balance sheet to be? What does the pipeline look like? Is it really different between home health and hospice out there today? Right. From a capital deployment, you know, I think one thing out there, and we've had it and we started doing this a few years ago, still we've got about $100 million authorization to buy back stock. We continually use that as a tool, you know, to reduce some of the dilution from when we give awards within our management teams. That's one area. From an M&A perspective, we're only about 1.4x levered. But mainly that came out of us deciding to term some of that Contessa debt. A lot of cash flow is still going out. I think, you know, from what we have, the ability to do is strong. I've said before, I'd be comfortable operating at 3x-3.5x levered. Doesn't mean we wouldn't do a larger transformational type of deal and potentially use some of our stock to offset some of that levered at close. Pipeline's in great shape. Feel good about it. We've been very active in order to generate some opportunities in there. It's probably more heavily weighted towards home health, which is our preference at this time, but doesn't mean if the right hospice deal shows up, we'd still be active there. It's you know in that strategy of simplicity around we did you know four pretty nice deals from 2019 and 2020. Let's get those to maturity. Certainly the pandemic has impacted the growth in those. We really want our operations to focus on getting those to at least there's a lot of opportunity that hasn't materialized yet in our financials. As you think about the puts and takes that are in overall revenue and EBITDA growth for 2022, you know, I think coming out of the fourth quarter earnings calls really broadly for the whole provider sector, consensus skewed a little bit more back-end loaded after that, but not by much, but just by like 100-200 basis points of annual earnings. How do you think about the cadence of 2022 playing out? Yes. You know, I think it's, you know, we kind of highlight a lot of the walk from Q4 to Q1. Look, it's a unique year for everybody because, you know, and especially for us. We think about and I've made comments around, you know, this is, you know, the bridge to from 2021 to 2022 and 2022 to 2023. You know, you've got a nice reimbursement coming into play this year, but you've got sequestration that goes away. You get 2% in Q1, 1% in Q1, so Q2. Naturally that comes off, which is gonna keep, you know, the first half of the year lower. That's gonna be an issue. We're resetting our incentive comp plans because we missed our targets last year. Mm-hmm. There's a lot of drags that pull in there. I think that you'll see there is seasonality doesn't go away in this business. Generally Q2 is the best quarters that we have, but we do see some better performance in the back half of the year. Okay. As we wrap up questions, I wanted to ask you guys what you think the street is missing or undervaluing about Amedisys? I think that if you look at, you know, kind of our history, our ability to execute our core businesses, I think that that's kind of undisputed out there. We've had a really good run. Even though 2021 was challenging, I feel like our performance relative to the market out there was, you know, above and beyond anybody else. And it's very sound part of our organization. You look at kind of our innovations and our investments around, you know, kind of medical logistics, connectRN, and some of the value that those are bringing to or will bring to the organization, I think is just gonna create better margin expansion opportunity for us over time, which is getting tougher and tougher to find. You know, those types of relationships, that's what they're built for, is to be able to help us, you know, even run faster and stronger, you know, in challenging environments. We, you know, our investment in Contessa and being more forward-thinking in terms of, you know, where is the puck going in terms of who's gonna be paying for our services? With Medicare Advantage, 45% of the senior population, actually Medicare fee for service is actually shrinking as a population today. We have to basically create an environment where we are a desired partner for these plans for more meaningful risk-taking arrangements. From our kind of menu of capabilities, if you will, of hospital at home, SNF at home, palliative care, home health, hospice, personal care, we feel like we have the components to be able to really provide a full continuum of care in the home that will be eventually, you know, predominantly paid for by Medicare Advantage out there. Having those capabilities and being able to scale those capabilities, I think that sets us up for several years of opportunity to expand our margins as well as position ourselves for protection from any kind of external, you know, kind of pressures like reimbursement. You know, I think that today, you know, more focus on how much does Contessa lose in 2022. For us, we think that, you know, that's actually a good story. That will actually play out over the next several years. When we're having these conversations five years from now, when Medicare Advantage is 55%-60% of the senior population, and they're wanting to do full capitated deals with us for entire population management, I think we will be well ahead of anybody else in terms of building those capabilities. Great. Yeah. Well, thank you so much for joining us. Yeah. Thank you so much. Appreciate your time. Yeah. Thank you, Sarah.