All right, we're gonna start with our next session here with Amedisys. I'm Steven Valiquette, the healthcare services analyst here at Barclays. With me to my right, we have Paul Kusserow, the company's President and CEO. For another month. A little more time here. We have Scott Ginn, CFO, and also Nick Muscato, the Chief Strategy Officer. This will be a fireside chat. I guess we'll just dive right in with some of the questions. Welcome, guys. Thank you for having us. Appreciate it. Maybe we'll just kick right off with that new CEO announcement from Monday. You guys hired, you know, Richard Ashworth, you know, assuming that role about a month from now, like we just mentioned. Given his background at a couple different public companies, you know, Tivity Health and Walgreens, how do you know view the selection process conclusion, any additional color you can offer, why he's the right person for the job, and also just the maybe transition plan from here? Sure. That's wonderful. Thanks for having us. When I came back, we went right to work in terms of looking for someone to succeed me. We got some very good candidates in the search process. Amedisys is a good company, very attractive opportunity. We had a lot of good candidates, we went through the process pretty rigorously, Richard came to the top very clearly. A couple of things that I think are important that he brought to the table. One, he's run a public company. Did a nice job with a public company, which was Tivity, grew it six times in value before he took it private. Also is a clinician, which I think is very important for us. Then also some of the work he did at Walgreens was very important in terms of, one, understanding labor, the labor environment, understanding how to hire and retain clinical labor as well as non-clinical labor, as well as putting all that together. At Tivity, he also spent some time with payers, which increasingly is becoming something that we're, you know, two of us are from the payer world, but it's important to have that skill set, as well as good operational discipline and good innovations in terms of growing businesses. Those are our four pillars in terms of what we're looking for, and remarkably good at execution. I think our strategy is very, very good. We know what we need to do. We know, we're getting there. Scott's doing a phenomenal job, and we're pushing forward. I think the key thing is we need to accelerate faster, and he's the right person to do it. I think that was a, somewhat of a surprise, that it came as quickly as it did. When you find the right person, you grab onto them and you make the change. That's what we're doing. My role is I'm moving back to the chairman's role, but I'm also gonna be spending considerable time with Contessa, which was an acquisition that we all made and, very strongly believe in. There's a lot of BD opportunities that we believe we can bring to the table. We wanna erase as quickly as possible the, you know, the operating deficit they have and move to profitability as fast as we can. We believe there's a couple ways to do that, and a lot of that involves someone with the skill set that I have. Great. I think when I introduced Scott, I short changed him on one of his titles, I think, so I apologize for that. Yeah, he's a man of many talents. That's okay. Yeah. Any update on the dual role there? Is that for foreseeable future gonna remain that way or just curious any update around that, if there is any update? Richard will come in and, you know, we'll spend some time together. He and I have talked about it, and we'll figure out. I mean, I won't keep that, both titles. Obviously, that's a lot of work to do long term, but we'll figure out where I fit best for the company. At this end of this month, I'll be here 16 years. Certainly loved working here, and we'll figure out what's best for Amedisys, and we'll go from there. Okay. All right, great. Okay, maybe diving in on the business a little bit. You guys reported your fourth quarter earnings and provided the initial 2023 guidance about exactly one month ago. As usual, you guys had, you know, a lot of details in your financial supplement, and the EBITDA bridge from 2022- 2023, I think, was pretty useful for all of us. Right. In the investment community, so appreciate that. That's Nick's. Yeah. incredible talents. Just to dive into some of those components on that EBITDA bridge, you know, maybe a framework for some of our dialogue, you know, in this discussion today. You know, first, on the positive side, you alluded to the that $52 million in additional EBITDA in 2023. Right. You know, driven by the, you know, 5% home health volume growth and 3% average daily census growth in the hospice segment. For that 5% on the home health side, just curious if you could maybe break that down a little more detail, any color maybe just on the delta between the MA volume growth versus Medicare fee for service volume change within that guidance. Maybe just dive into that a little bit deeper. Sure. Yeah, if you really to break it down and, you know, certainly Medicare Advantage penetration rates have been moving. I think most of that growth you'll see in the private business. I mean, we're looking as penetration rate and utilization of Medicare took a decline in that back half of 2022. We're continuing to gain market share, but there's just less of the utilization out there and less of a population under Medicare. It's pretty, I would say, flattish type of a number that you'd be thinking about on Medicare. The rest of it's gonna be really driving per visit and really focusing on, as we talk about our mixed management, really our better paying private business business. That's where we have to stay focused with a, with a somewhat of a capacity constrained market right now. Okay, great. Also within that same $52 million bucket that you guys call, you know, revenue growth and margin improvement. We're still maybe a little unclear just how much the new, you know, MA, VBC deal with CVS Aetna as part of the home health growth outlook for 2023. My thought was, I think you guys disclosed that, you know, Amedisys had, you know, a pretty small number of dollar amount of business with CVS Aetna in the last year. It might have been under $15 million or somewhere in there. Just given the size of that large customer, my thought was it could ramp pretty fast, maybe be a major contributor. I don't know if there's any, you know, guardrails on the ramp of that in 2023. Any color on how much that contributes in 2023 might be helpful as well. Without, you know, specific numbers, which is. Yeah, I mean, we've enjoyed the partnership, and we've been excited about it. You know, the governor there once again is just with the geographies it covers, we'd love to be expanded more aggressively. I'd say we're doubling that business right now from an admission perspective. We're pretty pleased with the development around it. We've, you know, we've kind of got that. Those numbers are buried within our per visit stats. I think we're trying to be pretty careful as we negotiate with other folks about what we're given from a details perspective. I would say very pleased, and the volume of doubling is a good way to kind of describe it. I think that's quite extraordinary for something that's as complicated as a case rate model. That's a good rate for us. obviously good partnership for us, and we're pretty excited by what this can mean in terms of us driving our own utilization and working with partners and then redeploying that capacity back to them. Everybody wins in this process. Yeah. I would say, just to close the loop on that, I mean, part of the work's now on us. The volume's coming in strong. It's If you go from, you know, we talk about the stat on Medicare around visits per episode. This is about visits per admin, so it's gonna include the research and the length of stay of the patient. We've got to continue to work on that and getting that to optimize the margins around that business. That's on us. The benefit of is it also, you know, we can take higher volume, and we can free up capacity as well. As far as some of these, you know, case rate or admissions-based, MA deals, I mean, my assumption is probably that for 2023, we're probably, you know, we'll see more of those types of deals being announced as the year progresses. Is that kind of a safe assumption? We're working pretty aggressively on it. A lot depends on, you know, the how fast the payers wanna move on this. Considering some of the constraints that we're seeing that they're seeing in the marketplace for their availability and ability to get home health, the market's very much shifting towards those people who are supplying the labor versus those people who are contracting for it. I think it puts it very much into a new flux. We like case rate. We believe, again, it benefits everybody. We get paid fairly. They get extra capacity. When you look at some of the factors that are out there that they're dealing with, higher post-acute costs, hospitals are dealing with greater lengths of stay. It's something that it's a problem they need to solve. Yeah. If you could just add some more stats to that. If you look at that, the referrals for the home health are up 33%. Yeah. What we're accepting as an industry is down 15%. There's a, you know, there's a. Huge demand. Push and a pull around that. That's, you know, if demand's not getting met. case rate models help us solve that. Yeah. Well, hopefully, we can move forward. All right. Great. That's a big shift, obviously, to have such high demand in the market and then have the inability to staff that. Again, what that then means for us is how do we optimize what we staff towards. That puts us in a better negotiating position in terms of particularly with MA, which is growing faster than fee for service. It puts us in a good negotiating position and allows us to work with partners who really wanna pay us fairly and deliver good care. Okay. All right. That's helpful. One of the other positive variables in that 2023 EBITDA bridge was just, you know, $17 million from clinical optimization and reorg initiatives. Right. I think the question around that really just, you know, is this generally low-hanging fruit that should be pretty easy for you guys to capture for this year? Is that gonna require some additional hard work to recognize that? I'm confident we'll capture it. I feel good about it. We've already captured. I mean, I think by the end of the year, the run rate around that will be $30-ish million. We did some of that in Q4. If you roll back and look at our Q4 results, a lot of that was in hospice. We improved hospice EBITDA 220 basis points. You know, everything's getting it done is certainly, you know, it impacts people. That's never easy. We know how to get it done, but the effort is around doing this in the same time and not disrupting the rest of the business, right? As you know, we centralized intake around home health, which we saw great referral increases, but you gotta be careful to make sure you're not impacting anything negative there. Are you missing referrals in that translation over from a, everything happened at the care center to a centralized. That's where I think the effort is about being smart about it. We're doing a lot of pilots in order to proof of concept first, I think the effort's around not disrupting the business versus getting the dollars out. You know, I mean, we're highly decentralized. We have 550 care centers in 39 states. You look at these can range from 10 people, you know, all the way up to hundreds. It's really key that as we, you know, deal with the nuances of a pretty diverse group over a wide geography that we get this right. We've built a methodology that's good for implementation on this. Yeah, there's been some, we spent a fair amount of time in the care centers, and we saw that they need to be spending more time recruiting for labor, optimizing the mix, and then making sure the quality is there. Okay. Great. Okay. again, not to beat to death the EBITDA bridge, but the You guys had a positive. You like that EBITDA bridge, but. Yes. You got a positive component there too on the you know, net reimbursement contribution for 2023. More of that really comes on the hospice side. Right. As investors are aware of the, you know, not so great rate update on the home health side that, for 2023, but also even preliminarily for 2024 already, you kinda have at least one component that might be working against you a little bit. Maybe a quick two-part question around that, maybe, you know, for you guys, but also for Nick too, would just be, you know, that's because I just, you know, reissued a coverage on the company after not covering it for a couple of years, it's hard for me to gauge how much investors are focused on 2024 already. Separate from that, I guess, is there anything you guys can do right now to, you know, overcome anything incrementally you would already plan on doing in 2024 to offset, you know, another year of maybe a mediocre rate update on the home health side that you're, you know, not doing as much in 2023? Just, you know, thinking ahead to 2024, what are you guys doing in relation to that? Yeah, I can Scott can talk about the operational initiatives. I think there's very much a focus right now on, you know, the 2023- 2024 EBITDA bridge, even though we're, you know, in the first couple months of 2023. The concern is, you know, flattish EBITDA 2022- 2023. What can you do from 2023- 2024? Given your comments around, you know, it looks like the second half of the behavioral assumption being layered into 2024 rates offset largely, but maybe not 100% offset by a market basket update. There's a high level focus on that. Obviously, we'll get some more intel around what that could look like in the July proposed rule. We'll have a better insight into what hospice rate's gonna be here coming up in the, in the hospice proposed rule as well. Still think 2024 rates for hospice look pretty strong, just like they did in 2023. You know, things we can do to offset 2024 impacts, you know, what Scott and Paul talked about and what is, you know, paramount to our success is continued ability to renegotiate our per-visit contracts in home health and move into more value-based arrangements like, you know, CVS Aetna case rate. Even if we don't get more case rate models done, every dollar that we negotiate from a per-visit revenue perspective is straight drop for us. Moving some of those larger payers into higher revenue per-visit contracts will be important to be able to offset that rate pressure in 2024. Right. Yeah, that's the leverage. I mean, I think what Nick said. We're, we're back fairly aggressively with large payers and making sure that we get good increases. Where we anticipate the fight will be with CMS will be on the market basket, making sure that it's appropriately putting the right inflation numbers in there because there has been some. It clearly wasn't reflected this this past year. To wrap that out, how do we manage with 2024 going into pressure? We've kind of covered a couple topics. Certainly, just to close it on, you know, the per visit negotiations are going to be important. If you think about it, we do about a little over 2 million, probably about 2.4 million per visit visits a year. On average, that's running around the $128-130 per visit. We've got a group of, we call them our target or more favorable payers, that is about $166. You think about every dollar to Nick Muscato's point that you add 1 x 2.4 is $2.4 million. As we can move that up, that will certainly be helpful to us. You know, the hospice is important. We think we've got another good rate coming to expanding EBITDA margin. I talked about that. The centralization efforts as that rolls in, that's certainly something else that'll help us offset 2024. Those are important. I would say from an M&A perspective, I think our views around is this now the time to go look for higher quality EBITDA, you know, I mean, operations that are driving higher EBITDA. Do we go buy some EBITDA as we move into challenging years? I think that's something that's important to us. Most of our M&A activities have been around what we would call fixer uppers. In a challenging market, you know, maybe we stretch a little bit in buying some EBITDA going forward. That's, that's our plan. I think, you know, that we're seeing good deals out there. I think the other thing that we're starting to see with Contessa is, we're actually seeing a whole new element of the pipeline. That so we've got some things that we're looking at that we'd normally never see. Hopefully, some of those will come in as some of these big systems that want all the types of services that we bring to the table are actually calling us up. We think there's some real potential to get some good deals done there. Scott's right. I think we'll be able to negotiate good multiples out there. They should be coming down, at least that's what we're seeing in the initial looks. Okay, great. Maybe we'll focus on the labor topic for a couple minutes here. The good news is in home health, there's pretty strong demand for the service. You guys have more of a high-class problem of. High-class problem, right. Yeah. Of not being able to, you know, hire as fast as I think you want to capture some of that demand. True. A little bit different than some of the other provider companies that we cover. A couple things around that. I don't know if there's any color just on, you know, is it just an issue that for the home health industry is having maybe a little more difficulty hiring full-time nursing staff versus other areas of the healthcare provider continuum? I don't know if you'd phrase it that way or not, but I'm just trying to think about. No, yeah. ... you know, the challenges on hiring to, you know, capture more of that volume. Just any way you wanna sort of give more color on that might be helpful as well. I think we've shown some improvement in terms of... I mean, the way we look at it is we look at full capacity, and there's a continuum. I'll turn it over to Scott to talk about that. We're seeing really good numbers in terms of recruiting. We've seen an increase, I think we stated this, of about 26%. Aspirationally, we're moving and getting some good results in terms of turnover. Aspirationally, we're trying to get it up to turnover reduction for registered nurses. Clinicians are down 30% this year. We think, and we know what all the drivers are. We have that targeted. Obviously, what we wanna try to do is take that capacity and enlarge it. The issues I think is what, and Scott talked about this, is there's, you know, some people are sliding into PRN status. We're still hiring, but we still need to measure the capacity by FTE growth, I don't know. Yeah, no, that's exactly it. As we would see, you know, even in last year when we saw declining really clinician base, what was happening is we were still doing fairly well in hiring. We started off better this year. If you hire even less turnover, we should have been plus. We were plus heads, but we had a lot of folks, you know, in the other category that were going from full-time to part-time to PRN, which means that a, you know, full-time is gonna get a one count, part-time is half of that, and then a PRN is 0.25. I had maybe more heads, but I had less capacity from a visit perspective. That's the dynamic out there that we're managing through. That's why we talk about our Connect All In investment that we made. We're looking for ways and tools to help us better manage this population. Managing a population that now looks different to us. You know, my belief is we're gonna, in order to cover the same number of visits, I'm gonna need more heads, you know, pay per visit, so that shouldn't impact me from a cost perspective, but I have to be better at how I manage a different looking workforce. That's what our focus is part of our centralization efforts as we go forward. Okay. Okay. Tying some of that together, can't remember if you guys gave a number on this or not, but as far as just if you had to sort of estimate or put a number on the amount of lost EBITDA for, let's say for 23, just related solely to the, you know, the foregone patient volume that you're not capturing due to the, you know, short labor staffing, etcetera? It's called NTAC, not taken under care. Yeah. What's the dollar range around that? Not just on an EBITDA perspective. Yeah. We really, yeah, we haven't quantified it. I think that is, you know, as we've had several questions around that this week, as it turns out. We'll, I think we'll probably give some more color on that because I do think it's an important concept to lay out to your. You know, I'd much rather be in a world where my demand's incredibly high and I have to solve the having a labor issue. It's not fun, but that surely is a pretty good place to be in. I think we'll give more dynamics around that. We still have markets that I'm not taking Medicare patients because of staffing. It's not across the board, but we'll have hot markets that are, we've got to have the trifecta where I have the growth that happens to be Medicare, I need the staffing. Okay, got it. Okay. I think that's gonna mean on the other side is making sure we optimize our mix, in terms of the business we're taking, where it's coming from as much as we can. We'll take, you know, we obviously will do the right thing when a patient's presented to us, we'll take it. There's ways that we can work so that we can optimize our mix, in terms of payer mix. That's important. On that last comment then, maybe somewhat tied into that, I mean, you had your Medicare fee-for-service business where the, you know, the reimbursement is sort of here. You got your Medicare Advantage, which is here, then you have your Medicare Advantage value-based care, which is somewhere in between. Right. You have case mix, which is in a little higher than in between. Right. sort of, again, not to come back to that EBITDA bridge, but you guys had, you know, the $14 million hit year-over-year in 2023 just on this ongoing migration of volume mix away from Medicare fee-for-service and more to Medicare Advantage, which kind of works against you. Right. My question around that is really how does that $14 million number trend versus, you know, the size of that in some of the prior years? Is that kind of similar each year? You gotta absorb roughly that much or, you know, is that getting slightly worse because there's maybe just an accelerating conversion from fee-for-service to MA? Just trying to think a little more about the how much you're absorbing, you know, in 23 versus other years around that whole phenomenon. Yeah, I think it's pretty strong this year. I mean, it really hit us in that second half of 2022, where you saw a pretty good shift there. We also had a dynamic within there that we had some, if you remember about our reimbursement, we've got, we call it episodic payers. We get paid episodically. We have Medicare, we also have some Medicare Advantage payers that paid us episodically. We had a conversion of some of those that went down and changed. Some of that's in that mix as well. That's putting pressure as well on that $14 million. I would say this is probably a higher year. I think we'll continue to fight to maintain our Medicare business and get better rates on per visit to hopefully stabilize that. It's a higher year than what you've probably seen. I think last year we talked about the convener impact, where we had convener business showing up, so that was impacting more on the volume side of the business. They come in and pull back visits. So that's another phenomenon this year around this mix shift. You know, we're hopefully gonna put that as a low watermark there. What we're also doing is, you know, the demand is so much higher, as Scott articulated, coming out of hospitals. The payers are gonna need to lock up more business from us in terms of contractually, and that's why the case rate model is so good. We redeploy that capacity back to the payer that we negotiate the case rate with. We're going back to all the payers and basically saying, "This is a good way to work." 'Cause ultimately, if the discharge planners can't send their patients to a home health setting and have to send them to an institution. That's a big cost increaser on their post-acute spend. That's what we're hearing from the payers. The post-acute spend overall is going up pretty considerably. Okay, great. We got maybe one final minute here. Just one last question I wanna touch on for a second is, it's not really as new of a topic now versus, you know, the last six, 12 months overall. Obviously, you know, two of your larger, competitors have now been acquired by a couple of the larger managed care companies. Right. People know which ones those deals are, so I don't have to re-announce them. Just remind us kinda your latest thoughts on the pros and cons around this as far as, you know, that ownership by those two largest, you know, Medicare Advantage players on the managed care side. On the one hand, you have the independence, which is on the plus side. On the risk side, maybe, I don't know if you would have maybe, you know, less volume with them, but also there's the risk that, you know, maybe they're taking share. Just wanna get your thoughts on just the pros and cons, and at the end of the day, is it, you know, net neutral, net positive? How are you guys thinking about the overall net impact right now? It's extraordinarily positive. There were three big players who were independent. There's now one, that's us. There's scarcity value. It allows us to move in ways and serve a lot of clients that are out there. If you look at it as a musical chairs game that, you know, two big players grabbed a seat, and there's one seat left, and that's us. There's a lot of people coming to us and saying, "Okay, how do we work something out with you?" We find that it's a wonderful position to be in. The other thing is when you look at the two players, they're large. They're 11% of the capacity in the home health market. If they decide to deploy that into the two large players, the two large insurers, that would create even more demand. These are the hardest payers to us. They, you know, we work with them, obviously. We're delighted to work with them. They are on a per visit basis, they're the most competitive in terms of their rates. If that was all absorbed by the folks that were acquired, that would leave a lot better mix for us. We view that as very positive. Okay, great. With that, I think we're over time by one minute here. Appreciate you guys taking the time to go through all the questions and enjoy the rest of the conference. Thank you. Great. Thank you so much. Thank Thank you.