For those of you joining us in person, I'm Adam Ron, for those of you who don't know me, filling in for Joanna Gajuk, who couldn't be here today. We're hosting Amedisys, and I'll give them a chance to introduce themselves and give a very brief overview of what they do for those of you who don't know. Yeah. Great. Thanks, Adam. Good afternoon, everybody. Hi, everybody. I'm Chris Gerard. I'm President, Chief Executive Officer here at Amedisys. Amedisys is a nation-leading care in the home company with over 530 locations, treating over 450,000 patients per year. Services we provide are skilled home health care, hospice end-of-life care, palliative care. Some new additions, we added a hospital at home capability, SNF at home capability, and now a risk-based palliative care at home capability through our acquisition of Contessa last year, as well as personal care. Servicing, again, like I said, about 530 locations, 38 states across the country, and we're certainly happy to be here and answer whatever questions you guys might have. Scott, you want to introduce yourself? Scott Ginn, President and Chief Financial Officer. All right. Great. Yeah. I think we'll just jump right into some of the more topical stuff. I think you made a comment recently about the second quarter, about EBITDA declining slightly quarter-over-quarter, and it kind of implies a steep ramp up, from the first half into the second half based on the guidance. If you could quantify the elements expected to drive that growth and what's giving you confidence in the rebound? Yeah. I think the key driver we expect to see is hospice ADC growth. It started off a little rougher than we thought. The discharge rates coming out of the Omicron and into Q1 were higher than expected, but we see some recovery there. We ended March nicely, and that's trending much better. That's will be a big driver for us into the second half of that continuous rebound. The other aspects will be Contessa losses. As we said, they would lose about $26 million this year. About 60% of that is probably in the first half of the year, so we'll see improvement in that over the back half. The next right now we're scheduled to get a hospice rate increase somewhere around 2.7%. We expect that to move up, which will also help us in that back half. All right. Great. Yeah. I think the 2022 guidance calls for EBITDA to be down a bit and ex Contessa and, you know, there are some headwinds from Omicron and de novos, but how much of that is organic growth underneath? What do you expect the COVID-related costs to be, and are you still gonna exclude them from your adjusted EBITDA? I'll start with the COVID costs and then let Chris finish on the growth side. COVID costs, we are going to continue to treat those as a one-time item, so to speak, even though they haven't been. You know, our plan moving into this year, kind of before Omicron spiked, was to not do that, but the uncertainty around that, the rampant increase in our number of clinicians under quarantine within that first quarter just has made it an unpredictable number. We will continue to add that back. We added back about $4.2 million, and the bulk of that is around quarantine costs, some contractor labor, and some testing costs. You know, that ramped down to about $900,000 in March. That run rate will come back down a little bit here. We're already seeing April to be lighter than that. Still we'll add it back. Too unpredictable to try to break that into a guidance number, but we expect it to get to a softer number as we move forward. Yeah. As you mentioned, the Contessa drag on EBITDA, in addition, we're losing sequestration, which is another bit of a headwind. We talked also a little bit about some convener activity with Medicare Advantage plans. That's gonna create a little bit of a drag for us as well this year. Our core business is home health, expected to grow about 5% year-over-year on the admissions side, which also should drive some of the EBITDA growth for that line of business as well as hospice. We got it to about 13% admission growth, which should lead to upper single digits ADC growth for the year, which also should see some considerable drive to the bottom line as well. I think hospice saw a higher discharge rate kinda heading into the end of 2021 and into the beginning of 2022, and so just curious what the main factors of those are and if it's maybe related to the referral source mix and if you're seeing it kind of normalize in recent weeks or if there's any leading indicators that might give you higher confidence. Yeah. We saw our highest discharge rate in January this year, 39.1% of our December ending ADC discharged in the month of January, which was considerably higher than what we had built into our plan as well as what we've seen in the past. We've seen that moderate. It came down to the mid-30s in February and March and ended up in April at around 32%, which is a good sign, and that's actually below what we have modeled into our plan. What we built into our plan for this year was a little bit elevated, looking more like 2021 discharge rates, which was considerably higher than 2020 as well as 2019, which was pre-pandemic. Seeing April discharge rates come down below that level is a positive sign. We think the contributing factor, I mean, it's globally, it's pandemic related, it's COVID related, but you know, what we're seeing is you know, patients are getting diagnosed later in the dying process. That could be a function of just you know, delays in actually getting diagnostic testing, going to their practitioner, getting checked out. You know, once they have a terminal diagnosis, typically you know, there is some aggressive treatment that takes place for a while before the family and the patient will choose to seek end-of-life care. We feel like there's just a delay getting actually diagnosed and starting that process. When they actually do choose to go and seek end-of-life care, it's typically a little bit later, and we're seeing that just impacting kind of the discharge rate for the hospice. Relative to referral sources, we haven't seen a lot of movement around our segment referral sources. I'd say, discharge rate's gonna go up as well because those are typically lower length of stay patients. Over the last nine quarters, we've been pretty tight between the 32% and 34% of our admissions have come from hospitals. Yeah. I guess around that volatility in admission and maybe impact on length of stay, just how should we think about that recovery or change in admission growth translating into revenue for the rest of the year. Yeah. As you get the stabilization, again, with that discharge rate, if it continues, you know, if April continues throughout the year, we're in line or better than what we have built into our model. Given our current admission rates, we should see accelerated ADC growth. We're already seeing sequential ADC growth where we bottomed out in February from the high discharge rates in January. It grew in March, it accelerated in April, and it's looking strong in May as well. We're starting to see the benefits of that moderation of the discharge rates, and if that does continue, then you should start to see, you know, accelerated ADC growth as well. Yeah. I know it's still early, but talking about, I guess, 2023 for a second for home health and hospice, is there any expectation of pent-up demand maybe being carried into next year? Yeah. I think so. I mean, I think that number one, if you look at kinda the aging baby boomers now, the oldest baby boomer is 76, 77 years old. Our average patient age is around 78, so it's starting to get into where more members of the senior population are moving into that age demographic that should also increase the services. Medicare Advantage has certainly recognized the value of care in the home and how that can help them control some of their costs with their memberships, so there are more, you know, kind of patients being pushed into the home from that, you know, aspect as well. We feel like as things kinda normalize around this, you know, the long-term kinda demand for services of care in the home, you know, should actually accelerate over time. Yeah. Obviously, labor is a big theme. We have, like, nurse staffing companies that we cover talking about how billing rates might come down from, you know, the COVID peaks, but still end up about above pre-pandemic levels. Curious, you know, how much of what you're seeing in terms of labor pressures do you consider more near term, and how much of it is here to stay for maybe the medium or longer term? Yeah. We built in probably just you know probably a 10%-15% type of increase in those contractor rates moving into this year. We you know we wouldn't expect that to decrease dramatically. I mean, our goal is to reduce utilization of contractors. We saw that you know peak up in closer to pushing 5% at its highest. You know, now we've kind of exited Q1 was about 4.2%. We're exiting sub 4% right now, and so we're pleased with the movement there. We'll continue to push that. We have seen moderation in rates, but our goal is to reduce utilization. Yeah. I would just add, you know, we feel like Q1 was a little bit of an anomaly. It's almost a perfect storm. When you had Omicron come on as quickly as it did, there was such demand for clinicians. Hospitals were really driving up the demand because they needed capacity to be able to treat the patients in their beds. That drove up the rate, it drove up the demand for the clinicians, and there just weren't enough. Also, we saw some clinicians start to move to that kinda temp staffing model because it was an opportunity for them to make, you know, kinda more money as well. You know, we feel like if another kinda Omicron surge were to come across or something like that, there'd probably be a little bit more discipline around how, you know, we respond to that. For us, we went from like 0% of our clinicians on quarantine to 7% almost overnight. We were hiring contractors, you know, as fast as we could. You know, we may take a little bit different tack with that because, you know, number one, your clinicians on quarantine are typically around five days, and you might find other ways that you could stage through that without making all these strong commitments on these longer term contractors. Maybe shifting a little bit to the COVID impact on Contessa. Is there any clear impact there? On one hand, the surge could mean maybe more admits, but you know, there are also labor shortages. Yeah. I would say the labor side is probably the biggest gating factor on Contessa as well. The demand for services is there, where we do have our established JVs out there, where there's good engagement from the hospitalists in the ED emergency room departments at the hospitals. You know, the diversions are happening pretty nicely. Having the clinical capacity to treat those patients in the home is also something that, you know, we're having to staff up for. It's a relatively unknown kinda role. It's an acute care RN that's actually treating patients in the home. We feel like we're starting to get good recognition around that, and our staffing has improved considerably in Q2 over Q1. I see that as a good sign for demand of services in the home. Yeah. You mentioned the JVs, so I was just curious if you could talk about maybe the pipeline for new partnerships, if you're seeing any increased interest? Yeah. Since the acquisition, you know, when we did the acquisition, it already came with a pretty good pipeline, and activity around that pipeline that we felt good for in visibility around this year's performance. What we did see after that is a couple of things. Number one is existing JV relationships. After the Amedisys acquisition of Contessa, we've been approached by some of these partnerships to expand the relationship to either adding more service lines, maybe them adding their home health into the JV, or hospice into the JV, or us adding additional markets into the JV. I think that's been a positive sign. Then there was a good number of systems out there that were not necessarily in dialogue with Contessa before the acquisition, but based on our market presence, have now kinda come to the table and wanted to explore ways that we could partner together as well. We're very encouraged by the level of interest that we're seeing from the hospital systems out there in terms of wanting to work with us in a broader JV format. Maybe talking about the economics, like what is a typical timeline of ramping a JV to profitability? For the broader segment, when would you expect to be, you know, breakeven, and would that require a certain scale? Just from a top line. Yeah. We kind of talked about breakeven into the back half of next year is where we saw. I mean, I'd say, from a JV, I think it's somewhere around 13 admits a month gets you to breakeven. It's really. It's similar to our home health model, not a lot of build-out costs to get it going. It's actually probably a little bit better because you don't have to pre-hire staff and be staffed up to get going. It's really a short ramp for it. Could you help size for us, like, the potential upside if the Medicare waiver for hospital at home is extended or? I mean, the mix there, and it's been a little bit, you know, we've seen higher volumes at that. There's a little trade-off in the revenue per episode on those. It's probably about 60% of what a full risk type would be. You know, we never built that in any of our models that would be continued on. It certainly could give a volume upside as long as we get the staffing in place. We would, you know, we'd really like to push some of the higher risk type patients in. You know, we'll see where that goes. What about the SNF at home opportunity if Choose Home Care Act is finalized? Like, how should we think about sizing of that? I mean, you know, we've looked at that, and really, you know, our plans around that aren't really contingent on Choose Home. I think we still believe we can build that out. I think anything within that, we put a pretty lofty revenue ramp around Contessa as is. I think anything's on the table, it's gonna take all those elements and we expect to hit those pieces between SNF, palliative, and our hospital at home to get to that ramp in revenue. Yeah. I think I'd summarize, if you look at the waiver for hospital at home and also what's embedded in SNF at home in the Choose Home, you know, neither one of those were built into our rationale and our model in terms of when we acquired Contessa. In the event that the waiver does become permanent, we see that as nothing but upside opportunity for us. In the event that Choose Home comes through, again, that's another area of opportunity that, you know, we weren't contemplating at the time of the acquisition. A third piece was around the risk-based palliative models that now has started to emerge with Contessa, you know, and there's opportunities in certain states where we're actually taking on risk from membership in markets on a palliative care perspective that is not part of a JV, and this would actually be something that would be exclusive to us, that we're not sharing with a JV partner. We see that as opportunity that was not part of our original model as well. To add to that, Chris, yeah, so it's not a JV relationship. It's really the first time you could see all elements of the services come together with the palliative patients potentially ending up in the hospice, needing home health services during the stay. It's really a nice proof of concept for us, as we think about what our vision of Contessa was. Yeah. Maybe shifting topics a bit, to Medicare fee-for-service versus Medicare Advantage rates. Now that, you know, a lot of the major payers are buying home health companies, and they clearly value the services, if you could talk about why there's still such a big disconnect in rates and if maybe, you know, with the labor shortages and the fact that managed care wants their patients to be treated by Medicare, if there's maybe an opportunity to close that gap. Yeah, we definitely think there's an opportunity, and I think it's the labor that's gonna be driving that and access to care. You know, Medicare Advantage plans, number one, I firmly believe that they see the value of care in the home and what that brings to them and to systems. There's still a little bit of a disconnect in terms of, you know, how contracting happens for care in the home, and it's happening really at an ancillary level within the Medicare Advantage plans, and that's really kinda where, you know, the contracting agents are really trying to get the best rate that they possibly can and not really seeing the full cost of care picture for the patients. There's still a bit of a disconnect of let's drive the best pricing that we can on a contracting basis, regardless of the outcome or the quality of services that are provided. Given the fact that this is such a fragmented agency with over 11,400 agencies across the country, there are plenty of takers out there that will take substandard rates under the notion that they can also, you know, kinda solidify relationships with referral sources for a better margin Medicare fee-for-service rate. What we do think is happening, and there's an opportunity, is because, you know, about 55%-60% of Medicare Advantage patients that are referred to home health are typically being admitted today, and that number is getting worse because of the capacity, and the plans are starting to really fully, you know, appreciate the value of the care in the home. There is a different dialogue that's happening about let's find some opportunities and ways that we create a mutually beneficial relationship to where not only do, you know, are we getting paid fairly, but we wanna take more of that business and dedicate more of our precious resource, which is our clinical capacity, to take in that business. At the same time, you know, they're able to achieve some savings off the top. You know, there's some new models that we're working on that we think we can have, you know, kinda contracted for and be able to be announced this year that we think can actually change that whole dynamic to where, you know, we are seeing margin expansion on that type of business. We're seeing the ability to take our existing clinician capacity and actually unlock additional capacity with the same number of clinicians, take more of that business that will actually generate organic growth for us. At the same time, where the plans are gonna save their cost over, you know, relative to past costs for the same patients. You know, we think that's the next dynamic unless, you know, if we continue down the path of just driving down and trying to keep a lid on your revenue or your reimbursement rate per visit, what's gonna happen with plans is they're gonna run into less access to care, and then the patients are gonna go, their members are gonna go without care, end up in a higher cost setting. All right. Then, yeah, shifting again, seems like there was a slowdown in M&A. You've announced a few small home health deals, but do you expect to see any more assets for sale? Anything to announce? Yeah, so yeah, just, you know, we closed on two deals right around the first of April, which we're happy with. It's about $50 million in annualized revenue on those two assets. You know, still have an active pipeline. Are pushing it pretty hard. We expect to see some more come through in the second half of the year. You know, sequestration is beginning to fall off right now, so we're gonna put some more pressure. We're staying pretty active. You know, we're always looking at deals. I tell people we kiss a lot of frogs in these exercises. There's a lot of deals we've looked at and can't get through. You know, we're stuck with a provider number, so we have to make sure their documentation is strong. That's always gonna be a barrier to doing a lot of things quickly. You know, we still have the same regional approach we looked at, I think, a couple of years ago. We still have that in play. A lot of this is about building relationships to pick the right assets. If you go back and look what we did with the hospice side, it was the same exact approach, but we had CCH. We had that relationship for over two years. AseraCare was probably closer to three years that we worked on that. Some of these larger ones that we wanna get to build a relationship, that have higher quality, that'll take some time. You know, we're still in the hunt for good deals. We have a strong balance sheet. We're ready to do deals. Sure. Yeah. Kind of on that topic and how I mentioned earlier that, you know, United is buying home health assets and Humana's been talking about potentially re-accelerating purchases of home health assets now that they closed Kindred. Especially on the larger end of those deals that you mentioned, is there potentially a chance that there's gonna be more competition for these types of deals as payers get interested and maybe increase the multiples? I mean, you know, you haven't seen the Humana. They did one deal. We don't, you know, think they're buyers of home health assets. I think they have what they were looking for, and we'll see where they go. You know, private equity still is primary competition. We have some other, you know, nice sized players out there. I don't think anything's dramatically changed for us. Yeah. Maybe last question about M&A. Do you think the labor challenges have maybe made it harder to buy something, and maybe especially on the hospice side of things? I don't think hard. I mean, on the hospice side, when we kind of pull back a bit from hospice, I think what you're probably seeing there is, you know, what everyone's seeing in discharge rates, and you're buying or you're contemplating selling something off of a following ADC. You've got the seller dealing with that. You've got a buyer contemplating where is the bottom of this ADC issue. Certainly that's affected deals. You know, I think the labor issue, I think it's kind of maybe changing our dialogue. We've always talked about with larger deals, we run, you know, our geographies run across a lot of different competitors, and when we put them together with the overlap, 1 + 1 doesn't equal 2. It's 1 + 1 = 1.7, roughly. We shied away from some of that. I think this labor dynamic may say that you may wanna go deeper in some markets, and maybe that's something we're willing to do if we can get the pricing, the modeling around it right. I think it's just, you know, another challenge out there. I don't think it slows us down at all. I think it. You may see some deals open up. Maybe some of these smaller deals don't even come to market if enough pressure is there around labor and reimbursement from a MA perspective. If the rates are tight and you're overpaying, you know, we may absorb some assets without doing a deal. Is it fair to say multiples haven't come up, or? I wouldn't say they've come up at all, no. Okay. Yeah. Switching topics, how are you thinking about maybe the hospice carve-in into MA, and is that a long-term risk to rates, or do you maybe see it as an opportunity to take volume? We haven't seen a lot of uptake on the carve-in so far with plans participating. Even one of the more active participants was Humana, who actually has one of the largest hospice. It's actually the largest hospice out there. In terms of in the event that it does become a permanent part of the Medicare Advantage offering out there, we don't see it being a threat in terms of really rate or our ability to access more patients. I think that the plans see the value of end of life care being the most appropriate setting for people that wanna have that care, and I don't think that they're gonna get in the way of that. I don't see that they're gonna treat it the same way that they do in home health and try to, you know, more commoditize the service. It's such a you know, essential benefit for people to receive in their last days of life. You know, there could be more kind of bureaucratic kind of hurdles to go through and things like that we can work through. Either way, we still see, you know, hospice as an underutilized benefit, where more and more people are starting to appreciate the value of hospice from a consumer perspective as well as from a payer perspective. We're very optimistic that, you know, hospice will continue to see, you know, strong growth into the future and stable, you know, kind of reimbursement around it as well. The Medicare 2023 proposal for hospice rates was like something like 2.7%. Right. Obviously, CPI and wage index is growing a lot faster than that. Is there any assumption you have around the final rate or any commentary there? I think we believe that, you know, if you go look at the Federal Register, that it would suggest that that rate's gonna move up. You know, the base rate, absent any kind of productivity adjustments or anything like that, would suggest that's gonna have a three on it. You know, we'll see where it ends up, but you can see as every quarter is added in and updated, the rate increases. In terms of hospice reimbursement, any additional risk of rebasing or likelihood of the Medicare cap being reduced? I mean, we've heard, you know, you've heard some stuff around the cap that may impact that. You know, we haven't heard a lot of noise around that. I mean, in preliminary rule, nothing was in that, so we'll see. Yeah, there could be some adjustment on the cap side. We've looked at kind of what's been discussed out there. We don't feel like we have, you know, much of any exposure to that. But, you know, the intent there is really kind of to move away from longer length stay patients, and avoid kind of the super long length of stay patients, you know, getting into hospice too early. You know, we don't see really any kind of real overhang or looming threat to hospice kinda rates, you know, in the near future for us. This is kind of like a smaller component, potentially, but what is your exposure to maybe rising oil prices or the volatility around it? How big is transportation as a piece of your P&L? Yeah, we spend about $4 million a month on fuel and fuel-related type of costs. We have a fleet out there, so that number's run through automatically. The rest is gonna be through reimbursement. You know, on a per mile, so probably a penny increase in reimbursement is about $1 million for us. We've added a stipend into our clinicians to help them out through this. It's based off the change in the prices, so it'll flex back down. Maybe for your hospital referrals, are you seeing, you know, feedback that elective procedures are coming back? What is your assumed pace around that? Yeah. We saw it come back pretty strongly at the end of last year, first part of this year, and then slowed off a little bit, you know, when Omicron came through in Q1. We see it kinda stabilizing. We're about 8% of our episodes are a result of an elective procedure, and we're close to that level right now. We're not hearing anything that would suggest that it would go much north of that. Like, there's a lot of pent-up demand that's gonna come online really quickly and flood, you know, kind of the market with those procedures. We think it's gotten close to, if not right on, the pre-pandemic levels. Yeah. We cover, like, Humana, and they're talking more and more about taking risk in the home. Curious if you could maybe talk about your take on that, and potential to participate in ACOs or direct contracting, and what your positioning is relative to, like, a Humana or what UnitedHealth is likely to do. Yeah. I mean, we think that that's ultimately where it's going. I don't know that there's gonna be any really, you know, kind of aggressive movement in that in the next, you know, kinda, let's say, 12 months or so. I think that finding the ways to, the ability to really tether together multiple service lines in the home to be able to completely drive down a cost of care as well as prevent hospitalizations is where it's going. You know, our longer view is if we look at kind of our assets that we have with home healthcare, with hospice care, with palliative, hospital at home, SNF at home, in personal care, to be able to really find ways to leverage across all of those lines of service to get a more comprehensive care plan in the home. I think there's gonna be fair payment for that. I think there's also gonna be, you know, benefit to the healthcare system as a whole from a cost perspective, and Medicare Advantage will definitely benefit from it as well. You know, I think all of the signs are moving in the right direction on how do we take more capabilities and broader capabilities in the home to be able to really prevent more expensive, unnecessary care when at all possible. You know, we think that we're all trying to accomplish the same thing. Given the mix of fee-for-service, why not do something like direct contracting? Yeah. Well, you're exactly right. I mean, but in terms of doing that, you still have to have, you know, a party to partner with. So that's kind of where the dialogues are happening now. You know, if we can actually be, you know, the ones that are the care delivery model in the home that's driving that level of service or driving that outcome, you know, that's absolutely where we should be going. All right. I think you have pretty low leverage today, so just talk about potentially the ability to lever up and what you think about, you know, the proper leverage level, and would you do it for the right deal? Yeah. I mean, you know, we're somewhere around 1.4 times levered right now, so pretty low levered. You know, we're gonna, you know, we have a $100 million authorization to buy back shares, so we'll continue to do that. Yeah, we would lever. I've talked before, I wouldn't be uncomfortable operating at 3 and 3.5 times type of a leverage. If we had to do a larger deal, we would, you know, we could take it up and see where we go from there. We wouldn't be uncomfortable for the right deal. I guess around free cash flow, is there any plans for specific uses this year beyond the share repo authorization? Just in M&A. I mean, we would save any debt power for that. You know, certainly we set a good model of doing deals and paying them down rapidly other than, you know, we took Contessa just, you know, as it's a different type of model and terms than that. But anything else we would do, we would do under a revolver type of structure. We've been able to pay that down relatively quickly. All right. I think we're at the end of time. Appreciate the quick responses, which is straight to the point. We'll end it there. Great. All right. Thanks. Thanks.