Good morning, everyone. Welcome to Enhabit Home Health and Hospice's fourth quarter 2023 earnings conference call. Today's conference call is being recorded. If you have any objections, you may disconnect at this time. I will now turn the call over to Crissy Carlisle, Enhabit's Chief Financial Officer. Thank you, operator. Good morning, everyone. Thank you for joining Enhabit Home Health & Hospice's fourth quarter 2023 earnings conference call. With me on the call today is Barb Jacobsmeyer, President and Chief Executive Officer. Before we begin, if you do not already have a copy, the fourth quarter earnings release, supplemental information, and related Form 8-K filed with the SEC are available on our website at investors.enhabit.com. On page two of the supplemental information, you will find the safe harbor statements, which are also set forth on the last page of the earnings release. During the call, we will make forward-looking statements which are subject to risk and uncertainties, many of which are beyond our control. Certain risks and uncertainties that could cause actual results to differ materially from our projections, estimates, and expectations are discussed in our SEC filings, including our annual report on Form 10-K, which are available on our website. We encourage you to read them. You are cautioned not to place undue reliance on the estimates, projections, guidance, and other forward-looking information presented, which are based on current estimates of future events and speak only as of today. We do not undertake a duty to update these forward-looking statements. Our supplemental information and discussion on this call will include certain non-GAAP financial measures. For such measures, reconciliation to the most directly comparable GAAP measure is available at the end of the supplemental information and the earnings release. With that, I'll turn the call over to Barb. Thanks, Crissy. Good morning, and thanks for joining us. Persistent focus on our company strategies drove our positive fourth quarter results. payer innovation success, including the execution of another new national contract, continued success with our people strategy, and strong performance and quality outcomes are but a few of our high points for the end of 2023 and our start to 2024. I cannot thank our employees enough for the high-quality care they provide to our patients every day. Our strongest factor in negotiating with payers and conveners and in creating strong referral relationships remains our 30-day hospital readmission rate that is 20.5% better than the national average. This quality is a solution to the challenge of rising healthcare costs and helping payers manage their MLRs. Helping to control emergency room visits, hospitalizations, and readmissions results in higher patient and family satisfaction and control of healthcare dollars. Significant dollars are also spent at the end of people's lives. High-quality hospice care, and in particular, consistent and attentive clinician visits during the last days of life, are critical in preventing revocations and unnecessary hospitalizations because of the benefit it provides our patients and their families. We are proud that our team provides hospice visits in the last days of life 53.2% better than the national average. We anticipate our home health and hospice quality will continue to drive our future growth as well as employee retention. Now let's talk about some of our key 2024 focus areas and how the fourth quarter set us up for success. With our traditional medicare mix of home health revenue now in line with peers, we expect the continued decline in our traditional medicare volumes to slow at a rate consistent with the industry in 2024. Episodic admissions are beginning to stabilize as our sequential episodic admissions were down only 0.8% in the fourth quarter compared to the third quarter. With our strong quality metrics and our increased list of the payers we can accept, we expect an increase in referrals as we improve our status as a preferred provider. Our payer innovation team continues to succeed in demonstrating our value proposition to Medicare Advantage payers and has set us up for success with these payers in 2024. We had another strong quarter negotiating a total of 11 new agreements, with eight of those negotiated at episodic rates. Specifically, we are extremely excited to announce a new national agreement that became effective January 1, 2024. This new national agreement is an advanced episodic model that allows us to prioritize access to home care for patients discharged from institutional settings. Said in another way, it aligns our incentives with the payers' needs for member access to skilled home care for a successful transition to home following an institutional admission. This contract allows us to further increase our focus on moving volumes away from the lower-paying agreements that do not recognize the value of our high-quality outcomes. Since the inception of the payer innovation team in the summer of 2022, we have successfully negotiated 59 new agreements. Over 2/3 of those are at episodic rates. Our home health business development and branch operations teams continue to be successful in moving volume to our payer innovation agreements. In the fourth quarter, approximately 25% of our non-episodic visits were in new payer innovation contracts. That is up from 5% in quarter one, 2023. We are confident in our ability to make continued improvement in Medicare Advantage pricing and in the shift of our Medicare Advantage admissions to these improved contracts. With an advanced episodic model added to our payer contracts versus a traditional episodic structure, we will now update how we report our payer groups in 2024, separating traditional Medicare from all other episodic contracts. Our rollout of Medalogix Pulse to all of our branches was complete by the end of quarter three. Our visits per episode in quarter four was flat year-over-year at 14.3 and down sequentially from quarter three 14.9. We continue to work with our leaders on how to best use this tool for clinical resource management based on our patient's acuity and complexities. In regards to hospice, moving to the case management model has helped us recruit and retain our hospice staff, resulting in the elimination of all contract nursing and eliminating staffing capacity constraints. The sales teams can now focus on further referral source development. We continually analyze our hospice business in an effort to increase efficiency in the referral-to-admission process and improve our ability to respond quickly to our referral sources. Recently, we reallocated certain hospice resources to form centralized admission departments with a sole focus on those efforts. We complement our organic growth strategy with our de novos strategy. This allows us to enter a new market with low capital costs. The main investment is in staffing as we hire the clinical team to build the patient census to obtain our licensing survey. We added one home health and 1 hospice de novos location in quarter four, bringing our 2023 total to eight. Two additional locations are complete with the necessary preparation steps and are awaiting regulatory approval. We expect to finalize these two from 2023 and open another 10 de novos locations in 2024. Our operational and sales teams are focused on ramping up referral and admissions growth in the de novos locations opened in 2023. Continued progress with our people strategy remains a priority, and we believe we're winning the battle for labor. During the fourth quarter, our full-time nursing candidate pool increased 21.5% year-over-year and resulted in the addition of 119 net new full-time nurses. Given our strong nursing hires in 2023, we eliminated all hospice nursing contract labor by the end of quarter three and all home health nursing contract labor by the end of the year. Our focus in 2024 will be on employee engagement so we can continue to improve retention. In particular, we are focused on our clinicians' satisfaction with their schedules. Given our success with nursing hires, we are now able to turn some talent acquisition resources to recruiting additional therapists as our improved nursing workforce is allowing us to grow and add therapy team members. Before I turn it over to Crissy, I want to remind everyone that the purpose of today's call is to discuss our financial and operational results and outlook. The board, with the assistance of our advisors, is being comprehensive in its assessment of strategic alternatives, and discussions with interested parties are ongoing. We are in the later stages of our strategic review but don't intend to disclose developments unless and until we determine further disclosure is appropriate or necessary. We will not be commenting beyond that, and so we ask you keep your questions focused on our business and our results. In summary, our success in our payer strategy, in our ongoing payer innovation contracting, in our people strategy, in hospice growth strategies, and our de novos are examples of our continuing investment for the future to meet the growing need of home health and hospice services. I will now turn it over to Crissy to further discuss the quarter's results and 2024 guidance. Thanks, Barb. Consolidated net revenue was $260.6 million for the fourth quarter, down $2.6 million or 1% year-over-year. Adjusted EBITDA was $25.2 million, down $5.1 million or 16.8% year-over-year. We estimate the continued shift to more non-episodic payers in home health decreased revenue and adjusted EBITDA approximately $8 million year-over-year, net of the impact from improved pricing of payer innovation contracts. In our home health segment, total admissions growth of 3.9% year-over-year was driven by 34.2% growth in non-episodic admissions. Our non-episodic visits grew to approximately 33% of our total home health visits in the quarter. While we are making significant progress demonstrating our value proposition to payers as we negotiate new agreements with improved rates and are successfully shifting Medicare Advantage volumes into our payer innovation agreements, the revenue and Adjusted EBITDA impact from this volume shift has not been enough to overcome the financial impact from the erosion of Medicare fee-for-service volumes. Our home health team successfully managed cost of services, resulting in cost per visit flat year-over-year as the reduction in nursing contract labor offset the impact of merit market increases. For full year 2023 compared to 2022, cost per visit increased approximately 2%. That's less than the 3% average merit market increase for the year, thus demonstrating our ability to control costs through productivity and optimization of staff. In our hospice segment, revenue increased $3.7 million or 7.8% year-over-year, primarily due to an increase in revenue per day that resulted from changes in our estimated recoverability of net service revenue in the fourth quarter of 2022 and increased Medicare reimbursement rates that went into effect on October 1st of 2023. Admissions decreased 1.5% year-over-year while average daily census decreased 4.3% year-over-year. Sequentially, our average daily census increased 1.3% over the third quarter. Adjusted EBITDA increased $6.1 million year-over-year, primarily due to the increase in revenue per day and a reduction in general administrative costs for the segment. Cost per day improved sequentially to $76 after stabilizing at $77 for the prior three quarters as the elimination of nursing contract labor and increased census helped gain leverage against the fixed costs associated with the case management staffing model. General and administrative expenses decreased $2.1 million year-over-year, primarily due to changes in back-office staffing needs as a result of implementation of the case management staffing model. Our home office general and administrative expenses increased $4.3 million year-over-year to 10.3% of consolidated revenue, primarily due to a declining revenue base, investments in information technology and talent acquisition, and annual merit increases. Our standalone company cost in 2023 approximated $23 million, which is less than the $26 million-$28 million original estimate at the spend date. At this time, we have transitioned all services from Encompass Health except for our PeopleSoft financial and HR systems, and we expect to complete the transition of those services by the end of Q1 2024. Let's transition now to the balance sheet. Information on our debt and liquidity metrics is included on page 17 of the supplemental slides. We ended 2023 with a leverage ratio of 5.4 x, well within our covenant maximum of 6.75 x We have available liquidity of approximately $61 million, including approximately $27 million of cash on hand. We believe this is adequate to support our operations, including our de novos strategy. We generated approximately $59 million of free cash flow during 2023, which equates to a free cash flow conversion rate of approximately 60%. Let's now turn to 2024. Our 2024 guidance and related guidance considerations can be found on pages 19 and 20 of the supplemental slides that accompanied our earnings release. Our 2024 guidance range for net service revenue is $1.076 billion-$1.102 billion, with adjusted EBITDA in a range of $98 million-$110 million. Within our home health segment, and as Barb mentioned in her remarks, we are focused on achieving growth through the stabilization of Medicare as a percent of total home health revenue, continued progress with our Payer Innovation strategy, and increased utilization of our clinical resources. We expect our Medicare pricing to increase approximately 1.2% in 2024 based on the Home Health Final Rule, and we expect our Medicare Advantage pricing to improve based on the success of our payer innovation team, including a full year of impact from the national agreement that became effective May 1, 2023, and the additional benefit of the new national agreement that became effective on January 1st of this year. For volumes, we expect the success we've had with our payer innovation team and our recruitment and retention of clinical staff to drive volume growth. With our Traditional Medicare mix of home health revenue now in line with our peers, we expect the continued decline in our Traditional Medicare volumes to slow to a more industry-like rate in 2024, and the new Episodic Payer Innovation contract will provide an avenue of growth to offset some of the continued erosion of Traditional Medicare. For our hospice segment, we are focused on growing census, which will also allow us to gain operating leverage against the fixed cost structure associated with the Case Management staffing model. For pricing, we expect our reimbursement rate will increase approximately 2.9% for the first three quarters of the year based on the Hospice Final Rule effective October 1, 2023. For volumes, we are clinically staffed to grow, and we are working with our talent acquisition team to further build our business development team for growth. On the cost side of the equation, we face two primary headwinds in 2024: wage inflation and increased costs associated with durable medical equipment. A 3% average merit and market increase results in an approximate $10 million net headwind for our company year-over-year. This represents the impact of wage inflation above the net reimbursement rate increases we received from Medicare in both segments. In our home health segment, we believe we can partially offset wage inflation through productivity and optimization improvements and currently believe our cost per visit will increase between 2% and 3% year-over-year. In our hospice segment, we estimate our cost per day will increase 2%-4%. This increase is primarily due to service issues we encountered with our durable medical equipment provider in the fourth quarter of 2023. To avoid disruption to our patients and to ensure they receive the equipment they need, we made alternative arrangements in the affected markets. We estimate these new arrangements will result in an approximate $2 million of additional costs associated with durable medical equipment year-over-year. We expect patient volumes to increase without the need to hire a significant number of additional staff, resulting in operating leverage against the fixed costs associated with our case management staffing model. We expect our home office costs to stay relatively flat as a percent of consolidated revenue as merit increases and increased incentive compensation year-over-year are partially offset by the implementation of cost structure and other savings in 2023. As we've noted previously, our greatest challenge in forecasting relates to the shift of Medicare eligibles into Medicare Advantage and forecasting not only the mix of traditional Medicare admissions versus Medicare Advantage admissions but also forecasting the shift of Medicare Advantage admissions into our payer innovation contract. With this in mind, the difference between the low and high end of our guidance range primarily is dependent upon our payer mix. We expect to generate $36 million-$62 million of free cash flow in 2024. As shown on page 21 of the supplemental slides that accompanied our earnings release, free cash flow in 2024 will be impacted by our return to cash income tax payments, which represents a $12 million-$14 million dollar swing in uses of free cash flow year-over-year. In addition, free cash flow generation will be dependent on the timing of working capital, specifically accounts receivable. With that, I'll ask the operator to open the lines for Q&A. The floor is now open for your questions. To ask a question at this time, simply press star followed by the number one on your telephone keypad. We ask that you please limit yourself to one question and one follow-up question, and re-queue if necessary. We'll now take a moment to compile our roster. Our first question comes from the line of Brian Tanquilut with Jefferies. Please go ahead. Hey, good morning, and congrats on the quarter. I guess maybe, Barb, my first question, you announced that national episodic contract and sounds like you're gaining traction with expanding or shifting the contracting strategy a little bit here. So just curious, number one, how are you thinking about the remaining opportunity there and what it would take to ramp that business up or that relationship up? And then maybe broadly speaking, how are you thinking about how the pressures on Medicare Advantage plans are translating to you guys, and how does that impact your ability to negotiate or renegotiate your biggest Medicare Advantage relationship? Thank you. Sure. Well, I think the ability to particularly ramp up with the new national agreement is strong. It's been good that we have always had that care transition coordinators that are inside a facility so they actually can help us really ramp up quickly in being able to accept this payer, particularly from these institutional settings. So I think there's already the ability and the staff there to take advantage of that. I do think actually some of the challenges that the payers are facing almost work to our benefit as we're sitting at the table, particularly because of our high-quality outcomes. I think if they're really looking to control those high-cost areas like hospitalizations and emergency room visits and things like that, we can help with that, but a provider has to have the high quality to be able to help with it. It really has given us, I think, an advantage sitting at the table with these payers. And then maybe, Crissy, my follow-up, just as I think about guidance, right? So just curious what your assumptions are in terms of I know you said you're still expecting payer mix shifting there, but how should we be thinking about the moving pieces on payer mix shift, maybe a little bit on wage inflation? I know you talked a little bit about cost per visit, but what are you seeing there? And then the other area would be what does the recruitment pipeline look like for both nurses and therapists? Thanks. Yeah. So I'll take kind of the guidance part of that and then turn it back to Barb for the recruitment and retention aspect of the question. When I think about 2024 and guidance and kind of bridging 2023 to 2024, I'm really focused on the expected increase due to increased reimbursement rates in both segments, volume growth, efficiency improvements in our cost per visit and cost per day. And then some of that will be partially offset by wage inflation, that new DME contract that I just talked about, as well as some of that payer mix shift. Again, Brian, we're not expecting what I've historically referred to as the Enhabit cliff. Remember that we've now entered that zone where our Medicare fee-for-service and Medicare Advantage mix is very similar to our peers. So we're expecting a more industry-like shift. We're not saying that Medicare is not going to continue to decline. They continue to choose Medicare eligibles, continue to choose Medicare Advantage plans, but we're saying we shouldn't have those same double-digit declines that you've seen for us because we made that shift over 12 months-18 months, whereas the peer group made it over seven years-eight years. So we think that we've kind of, again, normalized ourselves into the peer group now. And so the $30 million of payer mix impact that we saw in 2023, we don't expect to recur at that same level given where we are with our volumes in the payer mix as well as just the improved rates that we're getting. And I think it's also important, Brian, to remember that we're starting 2024 with two national contracts. We weren't in that position at the beginning of 2023. We'll have the full benefit from the national agreement that became effective May 1 of 2023 and then, of course, the one that we announced last night that became effective January 1st. So we feel we're in a much better position. And then on your question, Brian, on labor, it was good to see quarter four tends to be a slower quarter on labor, just folks just don't look to switch over the holidays. So we were pleased to see year-over-year that our applicant pool was up over 21%. So that was really good to see. And then again, we had another successful quarter with those full-time net new hires. Awesome. Thank you. Thank you. Our next question comes from a line of Jason Cassorla with Citigroup. Please go ahead. Great. Thanks. Good morning. Maybe just a follow-up on Brian's question. Just any other color or consideration for us as we think about earnings cadence, right? You discussed fee-for-service kind of volumes, kind of returning closer to industry norms, but I guess are you at the position kind of exiting 2023 and into 2024 where that should develop kind of in line with that expectation, or do you think that you're going to still see outsize kind of moderation in that context? Yeah. So anything else on the earnings cadence would be helpful to start. Thanks. Sure, Jason. So we expect what I would call a moderate Adjusted EBITDA build throughout the year. I think when we attended your conference last spring, we talked about a steep ramp in 2023. We're not really expecting that in 2024. Again, it's more of a moderate Adjusted EBITDA build throughout the year. Q1 and Q4 tend to have higher volumes a little bit. I think one of the things that we're excited about in 2024 is given the success we've had with the recruitment and retention of our clinical staff, when you have more staff, you're able to manage through some of those summer anomalies around paid time off and vacations and such. So we expect to be able to manage those labor needs in Q2 and Q3 around PTO just via increased staff and productivity. And then, of course, there will be a slight ramp of some of these new Medicare Advantage contracts, especially the new one that came into effect January 1. Okay. Great. Thank you. That's helpful. I guess thinking about the 59 agreements you signed, right, and the 25% of your non-episodic visits, do you think maybe just building on your comments, Barb, but just do you think perhaps you're in a strong position to really bulwark against taking volumes from these lower-paying contracts kind of without sacrificing the volume density within your markets, or how should we think about that balance between generating volume density against kind of the reimbursement dynamics within your overall book? And then just really quickly on a follow-up, on the hospice cost per day, can you give us a sense on what that would have been otherwise if it wasn't for this DME issue just for us to get a sense? Thanks. Sure. On the volume as it relates to the contracts that we've signed, I do think that there's an ability to grow the volume. A lot of it, particularly the regional contracts we've signed, has really been based on feedback from the field on which thing could make a meaningful difference for them with their referral sources. I also think an opportunity for us now, if you think back to last year this time, we had a really short list to bring into referral sources on the payers we could take. And frankly, what we'd hear from our referral sources is we need to have a partner that can really help us take almost all of our patients, not just one or two particular kinds. So I think we're entering referral sources today very differently with a much longer list, and that should help us to be able to, frankly, grow all volumes, but particularly focused on those in the Payer Innovation contract and fee-for-service Medicare. On your question regarding the hospice cost per day, I think what you're asking me is the 2024 number because this new DME contract was really a Q1 2024 effective date. So I think it's fair to say, Jason, that if it weren't for this durable medical equipment agreement that we had to sign, that instead of our cost per day guidance consideration being 2%-4%, I think it would have been in the range probably of 0%-2%. Okay. Great. Thank you. Our next question comes from a line of Joanna Gajuk with Bank of America. Please go ahead. Hi. Good morning. Thank you. So hi. Good morning. Thank you for taking that question. So I guess first, the follow-up when it comes to the episodic. So you said you expect the episodic admissions to stabilize going forward since the mix is some of the peers. But still, when I look at the payer mix in terms of the revenues, and I assume the mix, you're shifting and growing the MA that you did not have, but then still the Medicare revenues is down 14% for the year and I guess 16% in this quarter, year-over-year, and down 7% sequentially. And when I look at the peers, they show either much smaller class or even some show growth year-over-year. So I guess the question is why Enhabit is losing market share? Joanna, I don't think we're losing market share. Again, I think it's part of this Medicare eligible choosing to enroll in Medicare Advantage. And if you go back in history, as you well know about this company, historically, this company did not pursue Medicare Advantage. And again, we made that shift over the last 12 months-18 months to pursue that business, whereas the peer group's been doing it over six to eight years. So their drop in the traditional Medicare wasn't the Enhabit cliff, as I refer to it, over the past year. So I think that's what you're seeing when you try to compare us to peers. And what we're saying now is that we're not saying that we're going to suddenly start increasing traditional Medicare in 2024. Again, there has been a market shift, and it continues to more Medicare eligibles choosing Medicare Advantage. What we're saying is that we think that we're starting to get in a path where we're not on that cliff anymore, and it's starting to stabilize more like the industry. Okay. I guess another follow-up or maybe that's a new topic, but related to this payer mix situation here, when I look at the average revenue per visit for the non-episodic visits, right, versus the revenue per visit for the episodic portion, which that includes, obviously, Medicare and the MA, but still that average is 43% below. The non-episodic average, 43% below the average for the episodic volumes. How should you think about that metric? It sounds like maybe you're going to change some disclosures, and we will be able to kind of clearly see Medicare and then some other episodics separately. Is that what you're trying to do to kind of give us more visibility? Yeah, I'm still surprised that that average is still that much lower. I guess how should we think about this going forward? Yeah. So I think one thing is part of the numbers you're seeing, of course, after revenue reserves, and those can sometimes cause noise, as you're well aware, in any quarter and for the year as well, especially given the adjustment we had to make in the fourth quarter of 2022 and then throughout 2023 as we enhanced those controls and updated our reserve methodology. Yes, going forward, as Barb mentioned, especially given the fact that we now have this national agreement that is an Advanced Episodic Model, when we start reporting Q1 later this year, instead of just getting episodic admissions and non-episodic admissions and information that way, episodic will be broken out between Traditional Medicare and then everything else that's episodic. We believe that's important, again, primarily being driven by this new national agreement. If I may squeeze in just on that national agreement anyway to help us quantify incremental, I guess, revenue or volumes from that contract, it sounds like some of these markets you've already been serving. So you kind of keep the volumes, but rate is higher, but then it sounds like you also added more markets. So kind of anyway to help us give some size of that incremental. Thank you. Sure. So we did not aggressively pursue that volume in the past. I would say when we look back in 2023, it was about 5% of our admissions historically. And to your point, now we do have coverage throughout the country, and so that is certainly going to give us better access to those members. One thing that we've consistently said in our Payer Innovation contracting is that we were looking for rates that were much improved over the historic contracts. And so this does align with the focus of the Payer Innovation team from a rate perspective. Thank you. Our next question comes from a line of A.J. Rice with UBS. Please go ahead. Hi. Good morning. This is Enjia on for A.J.. Morning. Good morning. In Q4, the company got to around 25% of visits as a percentage of total non-episodic visits in these payer innovation contracts. I mean, just run-rating that, it would be a degree of a tailwind for next year. Does the company expect the fast pace to continue in 2024 as well? Just trying to size the momentum of getting more visits into these higher-paying contracts. Yeah. I think it's a reason why it's going to be important for us to give you information as it relates to episodic fee-for-service and payer innovation and non-episodic because as we are having more success getting these payers signing with episodic, you may see some moderation in this non-episodic move mainly because our addressable market is becoming now greater in where we have our episodic contracts. So I think, again, as Crissy mentioned, that's why it's going to be important for us to give more detail on those various groups into 2024. Got it. I guess a follow-up on that would be in these MA episodic contracts versus the non-episodic contracts, how much of a rate increase would that create for the company in 2024, I guess? So I think historically, we have talked about a 0%-10% rate differential to Medicare fee-for-service for our episodic MA contracts, and we talked about kind of a 25%-30% discount for the non-episodic MA contract compared to Medicare fee-for-service. Well, now this is part of that shift. Given that we now have a national advanced episodic model contract, we no longer can talk really about episodic versus non-episodic. It's just got to be what's in these payer innovation contracts as we refer to them. So I think the answer to your question is that all of our contracts currently have somewhere between a 0% and about a 25% discount to Medicare fee-for-service. Got it. Thanks. Maybe one more just to clarify. On the hospice side, there seemed to be an estimated recoverability of net service revenue in the quarter. Is that a one-time benefit, and how much of a revenue and EBITDA effect did that have? Thanks. Yeah. I think that that is more about Q4 of 2022. You may recall that there was a rather significant adjustment made to our revenue reserves in the fourth quarter of 2022. For the total company, it was about $12 million, and $7 million of that went to the hospice segment. So that's the noise that we're talking about. In the slide, it's talking about a year-over-year change for the segment. And so that estimate and the change in recoverability really relates more to Q4 of 2022 and the entry we made then more so than anything that happened in Q4 of 2023. Great. Thanks a lot. Our next question comes from a line of Ryan Langston with TD Cowen. Please go ahead. Hi. Thank you. Just two quick ones for me. Maybe I'll try the payer innovation question a little differently. Obviously, it's jumped from, I think, 5% to 25% a year, which is pretty good success. Maybe just more broadly, what do we think about that percentage maybe into 2024 into 2025 given maybe where your staggered contracts are up for renewal, or you can go for maybe outside of normal renewal schedules? And then can you maybe give us a little sense? I mean, you've already had two months of experience now this year. Just maybe more generally, where the mix shift has moved from fee-for-service to MA between 4Q and 1Q just to maybe give us a little help with the modeling. Thanks. Sure. Well, as it relates to that, we do think there continues to be opportunity to move those non-Episodic visits in the Payer Innovation contracts. So as you mentioned, going from 5% to 25%, we felt was really good improvement this year. The piece that's the hardest to determine what 2024 looks like is really because of the success in getting the Episodic contracts and, in particular, a new national Episodic. So as you think of the move, it may be the move into Payer Innovation contracts, not necessarily the non-Episodic into non-Episodic Payer Innovation contracts, if that helps. So that's why it's a little bit hard to talk about that percentage because historically, we've been focused on moving from kind of our really low-paying, which were all non-episodic in the past, and improving that, whereas now we're going to have a much more broader market to go after, including a fair amount of episodic contract patients. Got it. And then I don't know if you can give us a sense on just the first two months of this year just in terms of the mix. It sounds like you're obviously expecting that to moderate, and I would expect that too. But any sense on where that's actually gone into the first part of the first quarter? I mean, I think we'll obviously have a lot more of that when we report quarter one because, again, breaking this out in different buckets, I think, is going to be helpful. I would say as it relates to quarter one from a financial perspective, that does take time because you still have a fair number of patients that are on your census that started sometime within quarter four, many that could still be in maybe what would have been our least desirable contracts. And so it takes time for those patients to be discharged and replace those with the higher-paying contracts. Okay. Thank you very much. Our next question comes from a line of Jason Cassorla with Citigroup. Please go ahead. Great. Thanks for the follow-up. I just wanted to hone in on capital deployment priorities, more specifically around your leverage. I guess how should we be thinking about the uses of your free cash flow for 2024? Do you anticipate using the bulk of it for paydown off your revolver, or are you just anticipating leverage would just naturally kind of improve as EBITDA grows, just any color around priorities and debt repayment? Yeah. So we are more focused on deleveraging. Our free cash flow will go toward $20 million of required amortization on our term loan A. We also have the de novo strategy, which is probably $2.5 million-$3.5 million as disclosed in our supplemental slides. But again, we think that's ample to do that. Anything above that would likely go towards revolver paydowns. And that's kind of the easy way to think about it, Jason, is to think assume 50% free cash flow conversion. You got $20 million of required amortization on the term loan, that money for the de novo spend as well, and then everything else is a potential revolver paydown. Okay. Great. Thanks. If I could follow up with one more, just on the de novo side. The de novos that you will put up in 2023, just curious on how the ramp has progressed across those locations so far. And in the past, you've mentioned a focus on hospice buildout just in context of building your co-location strategy. 2023, the de novos are about evenly split between home health and hospice. I guess for the 10 that you're planning on for 2024, how should we think about those locations? Again, are they evenly split between home health and hospice, or just any color there would be helpful on the de novo front? Yeah. They continue to be geared a little bit more towards hospice, with our strategy being opening up hospice wherever we have an existing home health. So they're geared a little bit more towards hospice. The de novo s that we opened up in 2022 and 2023 are doing well. Some are running at plan. Some are running ahead of plan. And so in 2024, I think it's fair to say that the investment that we continue to make in the 10 will be offset by the earnings of those that we opened up in 2022 and 2023. Okay. Thank you. Our next question comes from a line of Joanna Gajuk with Bank of America. Please go ahead. Hi. Thank you for taking a follow-up here. So I guess I have two. One is on this payer sources Slide 31, where you have the fourth quarter hospice and then managed care is 6.5%. So can you explain why there's such a big number? Because it also talks about, yes, an increase in the non-Medicare operational revenue, but it also, again, talks about this estimated recoverability of the revenue. So can you help us understand what this 6.5% really represents? Yeah. So it represents exactly what it says. It is managed care in our hospice, some of the VBID contracts, and other contracts that were in 2023. You'll notice that the 2022 column is blank. It's zero. And again, that's because a lot of that reserve for hospice that we made in the fourth quarter of 2022 went to that line item. Okay. Thank you. And my other question, I guess, when it comes to regulations, so what do you expect to see in 2025 home health proposal that's going to be coming out, I guess, still in a couple of months? But any initial thoughts around productivity adjustments and recoupments? And also, I guess, first, we're going to get a hospice proposal for 2025. So also anything around what do you expect to see in that one? Thank you. Sure. I would say for home health, I mean, I think they already kind of signaled last year that they would go after the other half of the adjustments that they ended up cutting in half last year. So I think that we anticipate that being part of the proposed rule. I think it's a good question on the temporaries. I don't know at this point. As you know, in the previous rules, it hasn't been discussed or mentioned yet on how, if, and when, what that would look like. So I think that is a big question mark on whether that will appear in the proposed for 2025 or if that's something that will happen after they finish the permanent adjustments. So I think for sure, we would expect to see something about the permanent continuing, but a big question mark, I think, on the temporaries. And then on hospice, at this point, don't really anticipate there's going to be anything different as far as their proposed rule. Thank you. There are no further questions at this time. I would now like to turn the call over to Crissy Carlisle for closing remarks. Thank you, operator. Thanks to each of you for joining today's call. If you have additional questions, please email investorrelations@ehab.com. This concludes today's call. You may now disconnect.