Greetings and welcome to LHC Group's Q4 2021 Earnings Conference Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. Please note this conference is being recorded. I would now like to turn the conference over to your host, Eric Elliott, Senior Vice President, Finance and Investor Relations. Thank you. You may begin. Thank you, Rob, and good morning, everyone. I'd like to welcome you to LHC Group's earnings Conference Call for Q4 and year ended December 31, 2021. Last night, we issued our earnings release and posted a copy of our prepared commentary and a supplemental deck on the quarterly results section of our investor relations page. In addition to the earnings release and supplemental information, a copy of the 10-K and ultimately a transcript of this call when available can be found on this page. Our supplemental deck includes our full- year 2022 guidance assumptions in detail and breakdown among sector performance. All of our non-GAAP reconciliations and breakdown of adjustments are included as well. We will reference this information in our remarks today. Consistent with the approach we began last quarter, the majority of our time on this morning's call will be devoted to Q&A. With me today is Keith Myers, Chairman and Chief Executive Officer, Josh Proffitt, President and Chief Operating Officer, and Dale Mackel, Chief Financial Officer. Before we start, I would like to point everyone to our forward-looking statements on page two of our supplemental presentation and encourage you to read them carefully. They apply to statements made in this call, in our press release, in our prepared commentary, and in our supplemental financial information. I'll now turn the call over to Keith. Thank you, Eric, and good morning, everyone. Before we begin, I'd like to take just a moment to thank our LHC Group family of nurses and caregivers, physician extenders, allied health professionals, and administrative and support staff. They work tirelessly on behalf of the growing number of patients, families, and communities we are privileged to serve. I just can't thank them enough for their commitment to those entrusted to our care and for their commitment to continued improvement and excellence in all we do. To everyone on the team, thank you and know that you are valued and appreciated. I hope everyone had a chance to review the commentary and supplemental information we posted last night. We received a positive response from this practice last quarter and trust it will allow more time for Q&A today. When I try to summarize our year, what's ahead of us and the current state of the industry, there are a few things that come to mind that I'd like to share in just my brief opening comments. The first is a clear policy consensus that patients want to be treated in the safety and comfort of their home. This is evidenced in part due to unprecedented regulatory flexibility for at-home health in the wake of COVID, as well as important legislative initiatives from Congress. Innovative waivers from CMS regarding the homebound requirement, flexibilities for remote certification of home care, telehealth, and continued legislative relief from the 2% sequestration cut were actions of targeted relief and sustained policy for our sector during the current public health emergency and beyond. Notably, CMS is giving consideration to making many of these waivers permanent reforms. Likewise, we saw the House pass and send to the Senate the President's initiative to expand HCBS services by a proposed $150 billion, and we saw solid progress with our signature legislation, Choose Home. 48 members of Congress from both chambers, from both parties, and from committee jurisdiction, including committee chairs, are now co-sponsoring this groundbreaking legislation. Every month, at times weekly, we see Choose Home and other home-based reforms the subject of op-ed articles in newspapers across the country, in social media, and in discussion at national conferences. Congress likewise is considering additional opportunities to expand telehealth benefits. The Hospital at Home program is gaining traction, and CMS is poised to implement nationally value-based purchasing in 2023. Never before have we seen such a sustained and significant emphasis from Congress and from CMS in expanding in-home healthcare services. More importantly, we can see this consensus also reflected in polling data. Third-party polling data shows that 86% of adults and 94% of Medicare beneficiaries prefer to recover at home after a hospital stay. While 85% of all adults and 90% of those over age 65 say that expanding home healthcare options should be a government priority. You can also see it in the increasing demand for our services. With new patient referrals at an all-time high for us, along with an increasing number of existing and potential partners reaching out to manage their post-acute programs, our challenge right now is certainly not demand. That leads me to my second point, which is the difficult challenges we face in the recent past have been short- term in nature. We saw a large spike in the percentage of our clinicians on quarantine in late Q4 and early Q1 due to COVID variants, compounded by lower availability of labor overall as the industry struggled to fill open positions. We have a number of initiatives that Josh will talk to later on the way that we've outlined and we'll review in more detail during Q&A. Finally, my last point is that even the growth we experienced in 2021, we expect another strong year in 2022 as we remain a long-standing industry leader in quality patient satisfaction and employee retention, and our proven ability to deliver on the multiple levers we have for organic growth in each segment and continued M&A activity. I'll stop there with opening comments. Thanks again for joining us this morning. Now I'd like to open the call up for questions for Josh, Dale, or myself. Thank you. At this time, we'll be conducting a question and answer session. If you'd like to ask a question, please press star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star two if you'd like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment please while we poll for questions. Our first question comes from Scott Fidel with Stephens. Please proceed with your question. Hi. Thanks and good morning. First question, just wanted to sort of think about long-term adjusted EBITDA margins. If we look at the 2022 guidance that embeds an implied adjusted EBITDA margin of just a bit over 11%. You know, as we think about one scaling the margins on all that acquired revenue in 2021, the $300 million that you acquired, and then, you know, if we assume we can move you know past the pandemic at some point here into more of a normalized environment, can you talk about what you think is more of an obtainable long-term target margin for the business? Yeah, sure, Scott, this is Dale. I'll take that. You're correct. Our guidance for 2022 is about 11.1% EBITDA. As we think about kind of clearing 2022 and getting further removed from COVID, integrating our M&A business, right? We've been very deliberate, and we're on about a 12- to 18-month program for institutionalizing our M&A to the corporate standards. We get out into the 2023, you know, 2024 timeframe, we're still very much of the opinion that, on a consolidated basis, we're looking at that 13%-15% EBITDA range for the business. Okay, perfect. On my follow-up question, I'm just interested if you could talk a bit about what the operating cash flow expectations are for 2022, and then how you're thinking about leverage. Looks like you exited 2021 at just around 2.5 times. Obviously I know that sort of what you're gonna do with M&A is gonna probably drive that, but you know, sort of how separate from M&A, whether you've got sort of a year-end leverage target for 2022. That's it for me. Thanks. Yeah, absolutely, Scott. If you think about cash flow for 2022, we have about roughly a 64% conversion from EBITDA to cash. That puts us at about roughly $180 million of cash flow, operating cash flow. From there, you have to remember, we're still kind of clearing ourselves of the CARES Act, Medicare advanced payment recoveries and deferred payroll taxes. I think it's worth mentioning that in 2021, we paid back about $212 million of the Medicare advanced payments, or they were recouped from us, about $212 million. Then we paid our first installment of deferred payroll tax, which is about $26 million. A heavy year of CARES Act recovery there. As we look at 2022, we've got about $106 million of Medicare advanced payments to be recouped yet from CMS and one additional deferred payroll tax to be paid. We're in the low $130 million for kind of closing out the CARES Act money, if you will. If you take that off the cash flow, you're at about a $50 million cash flow. We expect roughly $20 million of CapEx. That leaves us about $30 million. Then obviously, as you mentioned, depending on M&A, we'll go from there. If you take all those components into consideration, we think it's a pretty benign debt year for us, quite honestly, pretty flat year-over-year. Okay, thank you. Our next question comes from A.J. Rice with Credit Suisse. Please proceed with your question. Hi, everybody. Maybe just ask about the hospice business for a second. I think the length of stay is now at about 85.6 days, it looks like from Q4. Is that, in your mind, normalized, or do you still think there's further to go there? Generally comment on the status of the hospice business relative to pre-pandemic levels. I know you highlight also that you've made some leadership realignment in the hospice business. Maybe talk a little bit about what you guys have done there. Yeah, A.J., good morning. This is Josh, and good morning, everyone. As you think about our hospice business, I'll try and hit it in the order that you just laid it out. From a length of stay perspective, you know, being up in that mid-80s, you know, we've been tracking in the low 80s for the past, you know, couple quarters, which we've been really pleased with. That got us back to what I'll call kind of pre-pandemic levels, if you will. Now that, you know, we're seeing that more in the 85-86 day range, I think that's very sustainable, number one. With our current patient mix and, you know, kind of site of care mix, wouldn't see that changing much. You know, our assumptions have that kind of hanging in right there in those mid-80s. Then kind of stepping back and looking at just hospice performance, you mentioned our realignment. You know, obviously last year was a huge year of acquisition and, you know, really, kind of forming up and firming up our platform, if you will, for hospice. We alluded to this kind of midway through the year as we were building through our acquisitions. In Q4, we did do some realignment in both sales and operations. I believe on our last call, I even alluded to really, kind of reorganizing some of the geography and looking at real growth-minded leadership, both operationally and from a sales perspective. We executed all of those changes in Q4 to be effective January 1. There was some disruption in the quarter due to some of those changes as you might expect. A.J., I'm extremely pleased with the results that we're already starting to see from that change. We're pacing to just over 10% organic admission growth in the quarter right now for Q1, and that was over a Q1 of last year that was right around 8%. We've got a decent hurdle for Q1 and have a lot of growth momentum going on in our hospice business right now organically. From a sequential standpoint, you know, we're gonna be way up in the high- double- digits, you know, probably 18% or so of sequential growth in the quarter. All in all, really pleased with the results we're getting from that change. Okay, great. Maybe just to follow- up on the guidance for 2022. You've got a line item, cost improvement initiative, to contribute about $25 million in EBITDA. Can you maybe expand on that? Does that come in evenly over the course of the year, or is that gonna be back-end loaded? Yeah, A.J., maybe I'll first take us back to some of our prepared remarks and what we described in November of last year when we were setting the stage for 2022 preliminarily. We had talked then about a $10 million-$15 million cost initiative effort that we had scored at that time. Back then, the majority of those savings were, I would say, in three categories. First was some of our strategic sourcing efforts, things like pharmacy costs, things like med supply costs. The second would be reduced dependency on contract labor utilization, and we've already seen a slight improvement there in Q4 over Q3 and feel pretty good with you know, lessening of quarantine employees, of how that's continuing to trend here in Q1. Then the third area of cost improvement that we described back then was, you know, moving more of our extender utilization, you know, LPNs, PTAs, and so forth. I would say from then till now, we've also, you know, taken a deep look at our non-clinical G&A. I'd say that's where the other $10 million-$15 million comes from. You know, when you have as much acquisition activity as we've had, really not just last year, but over the last three years, you know, coming into this year, looking at the higher cost for direct labor, you know, us being very disciplined from a G&A perspective. We looked at areas that we could be more efficient and make some, you know, very targeted savings opportunities in the non-clinical G&A area. By doing that's also gonna help us, as we grow our revenue this year, better leverage our G&A when you look at how we've guided to our G&A as a percent of revenue, kind of in that 28%-29% range. I think you asked how it smooths out over the year. In our supplemental deck, we broke down all three components of COVID spend, incremental acquisition improvement, and at least on the contract labor utilization, how we expect that to smooth over the year. Some of these other ones we did execute in Q4, and we're gonna get some benefit in Q1, and some of the G&A we're continuing to execute here in Q1. Okay, great. Thanks. A.J.- A.J., this is Dale. I'll just add a little more color onto that. If you look at, I think it's appropriate to go back and think, in 2017, the company was $1 billion in revenue, and now in 2022, we're looking at $2.5 billion. To Josh's point, you know, it's really a fresh deep look at over that period of time and that growth, really digging into our admin costs, right? We have good opportunities there. When you look at the cost savings, as Josh just mentioned, in the bridge on page 40 of our supplemental deck, you'll see that in Q1, we've got about $4.9 million in there. That would suggest a run rate of $20 million. There's a little bit of back-end load and not a lot of second half loading. That would really probably be more towards what I would call the med supplies section, because right now supply chains are tight. The benefit from med supplies is gonna probably come more in the second half. Okay, that's great. Thanks a lot. Our next question comes from Justin Bowers with Deutsche Bank. Please proceed with your question. Hey, good morning, everyone. Can you characterize kind of labor environment and, you know, some of the ways that you're winning with regards to recruiting and retention? You hired a ton of staff last year, but also just trying to better understand some of the dynamics where maybe where you're sourcing some of your new hires and if you're seeing any differences in terms of your ability to hire across the different categories, whether it's like RNs, LPNs, therapists, et cetera. Sure. Justin, good morning. This is Josh. I'll start out with that one. I'll break it really into the two key areas. You alluded to both. There's recruiting and then there's retention of the staff you have. You know, if you look on our supplemental deck, I'm extremely pleased with our, on the full-time clinical staff perspective, the net hiring momentum that we experienced all throughout 2021, even in a very tough labor market. The net hiring that we track really balances the scales of both recruiting and retention. On just the recruiting front, we've now had five consecutive quarters of the highest numbers of hires we've experienced in our company's history. We're doing a lot of very specific things there. I'll touch on just a few before I pivot over to retention. On recruiting first, I'd mentioned this last quarter, and we've seen even more of an increase here, and that's you know the growth in our talent acquisition team. As we've described in the past, we have a centralized talent acquisition model, but they are deployed in many ways out into the local markets that we serve because recruiting is very localized along with your branding and other areas. We've grown that from 34 when we entered last year to 62 when we exited. We've had an 80% increase in our dedicated staff just for recruiting efforts. A couple other things we've done. We did roll out last year, in January, our employee referral program that I talked about on the last call as well. We closed out the year right around 2,000 hires from that program alone. We've also made some real good process improvements in our velocity of hiring. We've got very specific performance metrics not only for our recruiting team, our talent acquisition team, but we've got very specific metrics for our hiring managers on time from application to get the candidate, on speed to provide feedback and schedule the interview, and all of those types of process measures. I've watched and continued to see really good sequential improvement every quarter in those areas. The last one I'll mention under recruiting that I may even dovetail and use as my lead in for retention is really all of our areas in DE&I under diversity, equity, and inclusion. You know, we have a Chief Diversity Officer that leads that effort for us, but she is very, you know, engaged and integrated into all of our recruiting efforts. Even at a local market level, a lot of those, you know, local targeted talent acquisition team members are also armed with and targeting to make sure from a DE&I perspective that we're the employer of choice in those local markets for all of our team members. You know, shifting gears to retention, you know, I'm pleased that we continue from all the data that we have access to not only for the industry, but across our peers, to be the leader in the industry when it comes to voluntary turnover for our frontline staff. Although it has been up a little bit throughout the pandemic, it seems to have stabilized, and we're continuing to perform well there. The efforts around retention, I would point to our DE&I efforts there also have a retention element. I would point you to our culture. You know, we've recently been recognized as best company to work for for women as well as best company to work for from a company culture perspective. Two specific areas I would highlight for retention, one is all things employee engagement. We have a program internal and third-party external partner on our employee engagement efforts. Internally, we call them engagement conversations, but we've embedded this into the process with all of our managers throughout the organization. Last year, we completed over 40,000 engagement sessions with our employees and had an overall engagement score of 4.5 out of 5, which is extremely solid if you look at that across, you know, other kind of reporting sources from an employment perspective. We've also engaged a third-party engagement partner, where we're doing consistent pulse surveys for employee satisfaction and engagement there. I feel really good about the efforts on that front. Lastly, from a frontline perspective, I think anything you can do to streamline and improve your workflow processes, your scheduling practices, to find ways to automate and make things more efficient for your frontline workforce in today's environment of, you know, employees really comparing a lot where they wanna work, I think is another big leg up for us that we've put a lot of effort into. I know that was a long-winded answer, but I know this is such an important point right now in our industry, and I just wanna say kudos to all of our operations team members that are out there leading this charge 'cause they're doing a great job. Yeah, appreciate all the detail. Then maybe just a high- level one. There are some concerns about a potential cut in 2023 or PDGM. Was just curious kind of what the conversations are in D.C., kind of what some of the partnership initiatives are and how we should be thinking about handicapping that as the year progresses. Yes. Good question. I mean, I'll take that one. I mean, you know, we certainly hear of that. You know, naturally we're pushing back on that and with data to support our arguments. Other provider groups are facing the same thing. I know the hospital association, you know, is very active in that, as well on their own issues. I mean, as it relates to home health and hospice, we're obviously very engaged in that. I don't see what's being proposed as being something that we'll ultimately get in the end. Worst case, we negotiate something that's lower than what's proposed. Best case is our arguments are strong enough to have no, you know, no cuts. That's the way it works out most of the time. The first thing that's proposed is very egregious, and we have a long track record of being able to mitigate that to some degree. Understood. Appreciate it. The new format and all the detail in the supplemental deck. Thank you. Our next question comes from Joanna Gajuk with Bank of America. Please proceed with your question. Good morning. Thanks for taking the questions. Just a couple of follow-ups on this latest topic on labor and recruiting. Clearly, a positive trend there where you're talking about the high-end producer, over 20% more new hires compared to any other year. That's a pretty strong number there. To keep things in perspective, can you give us a sense of, you know, the net new hires that you disclose of over 700 or 720 for the year 2021? What% is that to your base? Also, just talking about, you know, where the shortages are, you know, it's mostly nurses, so should we assume these are mostly nurses? I guess, when you think about that type of staff, you know, what does this number represent in terms of, you know, increase in the overall pool you have? Sure, Joanna, this is Josh. The 722 home health, 53 hospice, so call that just shy of 800. I'd say that's about 5% increase in our full-time clinical staff because this is a full-time metric. We're not talking about PRN staff. So if you look at our full-time clinicians across those two service lines, that's about a 5% year-over-year increase, which is stronger than what we had been, you know, kind of running years previously. The other, you know, kind of point to capacity, and this, you know, lends itself to growth potential, and really taking advantage of a lot of the demand that we're seeing come our direction. If we can continue a 5% or greater net increase in employee workforce while also maintaining our current very low- level of employees on quarantine, to go from north of 6% of employees on quarantine down to around a 0.5%, that's another 5% influx of workforce and capacity for growth that we've experienced in the last month alone. You know, if you correlate that to what we've seen in census, our census on January 15 was roughly 83,000, and earlier this week we eclipsed 89,300. We've had over a 7% increase in our census growth in home health in a 5-week period due to this increased employee capacity. You can imagine our top priority right now is continuing that momentum in net hires, so that we can take on all this growth. No, definitely. That's good to hear. The 5% is a good number to think about, I think, here. I guess just another follow-up on that topic, 'cause in on the prior call or it was Q3, you talked about labor costs kind of overall growing, you know, 3%-5%, for the year. Is it still in the same ballpark when you think about this year? Yeah, Joanna, this is Dale. Take that. Yeah. You know, going back to that, we referred to historically, we were seeing 2%-3%, and we felt like we were in an environment where 3%-5% was more the norm. We still feel 3%-5% is that range. I think we're anchoring ourselves now in 2022, as we've got 3 or 4 more months of empirical data around the labor market. We're anchoring ourselves to the higher end of that 5% range. Obviously, that includes bonuses, right? It's inclusive of base wage adjustments as well as bonuses. I think we're still very much of the opinion that we're towards the higher end of that 3%-5% range. To that point, how should we think about this in the future? Would this be a number to think about going forward, or there's a way to think about it that, you know, it should moderate, maybe go with the lower end of that 3-5? Yeah, no, I think we very much feel that there's moderation to come, right? The further we can clear ourselves of COVID, right? I think that there's a very direct correlation, obviously, between COVID, the variants of COVID and labor, you know, supply and demand and availability and cost. So the further we can remove from COVID, you know, the more normalized we can get back to that 2%-3% range, obviously, we feel. So, you know, we're planning on 2022, like many others, still being a year of, you know, disruption around that. But kind of getting into 2023 moving forward, we feel that there should be some stability coming back in and getting back to more normalized wages. Yeah. Joanna, it's Josh. Maybe a couple nuggets I would add to that. We talked about it earlier in our cost initiatives, but everything Dale just described on kind of the cost front of labor in general, if you just isolate our contract labor utilization, every 100 basis points we can reduce our dependency there gets us about $1.5 million of savings per quarter. Then as we shift to more LPN and PTA utilization, there's also some really strong savings. To tie that back to what I just described on quarantine, now with all of our workforce kind of back and not in quarantine, we can reduce our dependency. We can, you know, better leverage LPNs and start realizing some of those savings. Long- term after COVID, Dale, I think some of those savings are much more sticky. No, that's a great call. If I just may squeeze the last one. You talk about PDGM, but I guess on the other end there's also the Choose Home proposal that you know has a lot of support. Obviously, D.C. is busy with a lot of other things. Any updates there in terms of the timeline for seeing some movement on Choose Home? Thank you. Yeah, Joanna, it's Keith. I'd be hesitant to try to put a timeline on it because there's so much uncertainty in Washington right now. I mean, what we know is that we know of the strong support that I shared in my opening comments. We know that the bill is now being scored by CBO, and that score is expected in a matter of days. And that was at the direction of or request of Senator Wyden. You know, so those are all positive. But then, you know, then it'll be about choosing. It'll be about what vehicle that Choose Home legislation would attach to. Great. Thank you. Our next question comes from Andrew Mok with UBS. Please proceed with your question. Hi. Good morning. Your slides indicate that contract utilization will decrease in each Q2 and Q3 of 2022. First, what's the normalized level of contract labor utilization in the back half of 2022 if you deliver on that improvement? And second, what level of full-time net additions do you need to realize that improvement? Do you have the capacity and staff to execute on that today? Andrew, this is Dale. I'll take the first half of that. What we're referring to there specifically is the nursing, contract nursing utilization. We were at 4% in Q3 in home health utilization, 3.8, as we mentioned, about 20 basis point improvement in Q4. To your point, further improvements in Q2 and Q3 of about 1% each quarter, right? That gets us down to you know, high ones, 1.8%-2% utilization. Our normal—if you think about pre-pandemic, normal utilization was probably in the 1.5% range. Starting to get closer to that normalized utilization pattern as we get to the back half of the year. What was the second part of your question? What level of full net additions do you need to realize that? Do you have the capacity to do that today? Is that simply just a function of quarantine rates coming down, or do you need to hire more to execute on that? It's primarily a function of quarantine rates stabilizing. You know, with the increase in the net hires, I don't wanna be overly bullish here, but, Dale and I have done a lot of modeling around this area, and we feel really confident in that 1% Q2, Q3 with the run rate we're on. Honestly, Andrew, there could be some betterment and upside there that will just lend itself to more growth, if we can keep the hiring velocity going. Got it. That's helpful. Just a follow-up. Visits per episode ticked up almost half a point sequentially to 13 in Q4 2021. What drove that sequential increase, and what are the expectations for VPE in 2022? Thanks. Yeah. I would say, you know, this is Josh. Our expectations for VPE still remain in that 12.5-13 range, which they've been in, you know, pretty consistently. A slight uptick in Q4, but, you know, nothing, I guess, was like 0.4 visits or what have you. I would emphasize, as we continue this journey of higher acuity care in the home, you're likely going to see continued uptick, to a certain extent, but with that will come higher, you know, reimbursement, higher revenue to offset any costs that go with it. So I continue to feel throughout all of PDGM and even through the pandemic, very confident in, you know, our VPE consistency and the quality results that it's yielding. Great. Thanks for all the color. Yep. Our next question is from Matt Larew with William Blair. Please proceed with your question. Hi, good morning. Just one more question around labor, which is it sounds like your perspective is that with your employees largely now vaccinated and case counts coming down, that your shortages really are just related to quarantines. Obviously, there's been some discussion more broadly about the demographics of the nursing workforce and whether there might be longer-term shortages that have been pulled forward. You know, now a couple of years into the pandemic, would just be curious whether you're seeing the pressures you think on a go-forward basis, strictly tied to quarantines, or whether there is a broader shortage and issue that's gonna be a problem for the industry. Yeah, Matt, this is Josh. Great question. I would say, you know, the notion of, you know, nursing shortages isn't new and didn't, you know, arise just because of the pandemic. I think the pandemic exacerbated it and, you know, really shined a light on it when you then start having large portions of your workforce that are unavailable, because they're in quarantine. So I think, you know, that's a headwind that the overall, you know, healthcare ecosystem has been, you know, faced with, for a while. You know, for us, though, I do think in-home healthcare has so much momentum, and even in the workforce in general, due to the flexibility, due to a lot of positive attributes of being part of that particular segment of healthcare, if you will. I think for us, over the next 2, 3, 5 years, we've got a real good path to sustainable employment growth, as long as the quarantine stays sustained, which, to your point, I think you alluded to kind of the vaccination percentages. You know, we're in a really good spot when it comes to employee workforce that's both vaccinated, as well. You know, we track how many have had first dose, second dose, boosted. I really think it's just the macro environment at this point, which I really like our chances in competing in that world. Okay. Second one here, a couple of different parts to it. 2022 is the first year that at least by some high- math, you had more non-Medicare home health admissions than Medicare admissions. Your non-Medicare business now has doubled over the last three years, but your segment margins have continued to improve. Just curious, you know, first of all, what's driving this growth? Is it benefiting from narrow or preferred networks? That would be piece one. The second piece is, how do margins compare between Medicare and non-Medicare home health business today versus perhaps three to four years ago? Yeah, Matt, this is Josh. I'll start there and, Dale, you know, definitely feel free to jump in and provide any additional color. I would say, you know, yes, there is growth in MA and MA penetration. You know, we're all seeing that across the industry. But we've been talking about this for a handful of years, Matt, and, you know, you've been, you know, so close with us along that journey. You know, we've talked a lot about our continued effort on the non-Medicare business to move more and more of that business to vehicles that reimburse in a mechanism outside of just per visit. That can be more episodic, that can be case rate, that can be value-based. You know, at a high- level, you know, the growth we have experienced in our non-Medicare episodic admissions, I wanna say it was around 18% in Q4, and you know, it was north of 20% year-over-year, 2021 over 2020. That's fueling a lot of that growth. You know, you think about quality of your payer arrangements, and quality of the admission you're taking in and balancing that in a prudent way across kinda how you know, manage your referral sources and whatnot, for keeping a good healthy mix of those types of, you know, reimbursement vehicles. In that regard, I'd say we're very kinda focused in two areas. One is just our sales efforts, you know, all the way to how we, you know, identify and target certain referral sources, up through how do we incentivize on certain of that activity. Secondly is our contract discussions and new arrangements. We've been, you know, over the past few years, you know, at the table and having more and more productive conversations with payers. Here recently, we're, you know, sitting at the table having, you know, even more fruitful conversations around kind of the future of how we get reimbursed. So I would point to that at a kinda high- level. I would say, like, when you boil it down to margins and rates, all in, when you take all of our non-Medicare, we've increased the reimbursement by almost 17% over the last five years, which is really contributing to how we're able to balance the margin growth of the overall business, and we've not seen any margin compression with that growth in non-Medicare business. Josh, I think you covered it well. Just looking at it, I mean, you have to look at it holistically too, around how efficient do we operate wholly, you know, in a consolidated basis at an agency level with all the volume together, right? There's clearly an operating leverage around all of that volume combined together. When you look at our non-Medicare episodic, it's running about 97% of our Medicare per PDGM rate, right? I mean, back to Josh's points, all the efforts that have been going on around, you know, focus on increasing rates, focus on alternate reimbursement methods, driving more value-based and risk-sharing components and dynamics into the arrangements, the greater focus on the non-Medicare episodic space, it's all kept margins very stable. Okay. I appreciate all the detail. Thank you. Our next question is from Whit Mayo with SVB. Please proceed with your question. Hey, thanks. Good morning. As we think about the public health emergency, when this you know ultimately goes away, which it could be extended, I'm wondering how you guys are thinking about the impact from the relaxation on things like face-to-face and the homebound status, all of the telehealth rules. I mean, is this gonna be an issue for you guys? I mean, I think that some of the LTAC changes around patient criteria could be a little bit of a challenge. I guess I'm just trying to make sure I think through what the implications are sort of internally, how you prepare for this or maybe it's really gonna be just a non-event. Yeah. Let me start with that, and you guys can jump in. What I mean, here's how I think about it. I think that a number of these initiatives, I mean, like the flexibilities around telehealth, for example, I think a number of these are likely to be permanent at some level. You know, maybe some restriction from the flexibilities we had during COVID. There were a lot of learnings during COVID that we routinely hear that these are good ideas and that we, you know, they should go forward. They have to be reimbursed appropriately. They have to be measured and, you know, and regulated appropriately, of course. I do feel like a lot of that'll stay in place to some degree. Was there another part of your question that I just wanna make sure I answered that? Well, I guess, I'm just trying to think, you know, operationally in the field. I mean, take something like the face-to-face, right? Like, if we go back to the physical in-person documentation, getting all the support documentation, you know, in the hands of the clinicians submitted back to you. I mean, is this operationally going to be a challenge to sort of pivot and get the physicians to, you know, go back to their normal workflow? Or is this something that you don't believe will be a cha... I'm just trying to make sure I'm checking the box of all the things- Okay. that we should be thinking about. Right. Well, yeah, perfect. Let me give you a really good example of that. You know, prior to COVID, we know that there are a lot of things we did during COVID to adjust to the challenges that we'd never thought of before COVID. One of those was around face-to-face nurses going into a patient's home and scheduling an appointment with the physician at the same time. When our home health nurse is in the home, the physician joined by telehealth. Patient, you know, nurse and physician have a three-way conversation. That's become a norm now, you know, for us operationally because of the value it provides. I think that capability is just good policy. You know, I don't know why anyone would, you know, oppose that. Okay. No, that's helpful. Maybe just not exactly a follow-up, but sort of an extension of that question is, you know, the audit contractors were kind of put on hold for a period of time, and we hear from calls with operators that we're seeing some activity, at least, you know, today more so than prior quarter. This isn't really a reserve or a compliance question, but just can you maybe comment on the level of activity that you're seeing with some of the audit contractors? Is this more prevalent in home health or hospice? You know, any themes or things that you can share would be helpful. Thanks. Yeah. Josh? Yeah. Whit, this is Josh. Good morning. I would say, you know, we've seen, you know, it tick back up a little bit in both home health and hospice. Nothing unusual or outside the norm in either of those, you know, kind of service lines. What we're seeing, you just see, you know, the activity ticking back up. I know you said you didn't want this to be kind of a compliance, you know, audit-type question or reserve question, so I won't go there. You did afford me an opportunity to at least acknowledge and recognize, you know, kind of our industry-leading compliance program efforts here. All of the governmental audit activity, whether it's ADRs, RAC, ZPICs, really kind of funnels through that portion of our organization. We've got some very experienced, you know, home health and hospice clinicians that engage on all of those. Our success rate continues to be really stellar. Other than just having to, you know, kind of manage through more volume, really no concerns there on our end. Okay. Thanks, guys. Our next question is from Sarah James with Barclays. Please proceed with your question. Thank you. I appreciate all the progress you guys are making on the skilled labor side for nurses and clinicians. One area of weakness seems to still be on the personal care business staffing, and I'm just wondering how you think about that affecting the timeline for SNF diversion or skilled nursing at home opportunities? Yeah. Josh, I'll start there. I almost wanna say, were you in our MORs 2 weeks ago when we had monthly operations reviews? Because that is the number 1 focus area for us as it relates to our HCBS business line. We definitely have pent-up demand and opportunity to grow our billable hours in that service line. You know, through the course of the pandemic, it has been maybe even more impacted. Honestly, on a scale perspective, it's not as large. But you know, when you look at the underlying metrics, that workforce has been even more difficult throughout the pandemic. We've done some real, you know, specific things with our leadership all the way down through the local leadership and pairing them with some of these talent acquisition team members as well to get, you know, more innovative in how we solve for this in the local market. You know, I'm confident you're gonna see us have some good results to report and discuss throughout the course of this year. You know, the piece to your question about how that ties to SNF diversion and higher acuity in the home, you're absolutely right. In some of the markets where we're going to be, you know, doing more of the high- acuity work, this workforce is going to be, you know, very important to driving that total cost of care savings. It impacts not only our HCBS service line, but for us to get some of that growth momentum in that employee workforce will also benefit our acute care in the home efforts. Yeah. Sarah, this is Dale Mackel. Just add onto Josh's comments, that is, you know, we've also committed, you know, some dedicated recruiters specifically to home care or to a personal care business. As you know, personal care is very much a state-by-state business, right? Some states are better than other states. I think where we're deliberately focusing those recruiting efforts are where it makes sense to do so, where the rate environment supports the labor environment. 'Cause there are some states where the reimbursement environment does not support the rate environment. We're being very deliberate about where we focus that. That's very helpful. Just to follow- up on rates, as you think about just the mechanics of how home health rates are put together by CMS and the look back that they have for forecasting wage inflation, how do you think about how many years it takes in an inflationary environment to get that fully baked into the rates that CMS provides? This is Keith. You know, that is one of three top priorities that we're working on in the Partnership for Quality Home Healthcare, which is, you know, a subset of the larger home health providers. We've been doing that in coordination with the National Association because it affects everyone. What we're providing is third-party data that's real time and current. We collect, you know, data from providers, and it's collected by the law firm that we use for the industry. Then they provide it to an actuary that does the work, and then we provide that to CMS. We have a, you know, I think a long track record of being accurate in data that we provide in that way. We are having those conversations about that lag. The lag is, you know, has always been problematic. You know, given what we've experienced in the last two years, and then finding out where this new norm is gonna be, it's gonna be very important for home health to be reimbursed adequately. Again, the feedback from CMS is that they welcome the data, and it's helpful to them and those things. We don't have an adversarial relationship with CMS. As an industry now, you know, it's more like a partnership. I would say 20- years ago, it was adversarial. You know, through a steady drumbeat of third-party data that proves out to be reliable, you know, over 10- years, you know, has changed that dynamic. I know that's a lot, but that's what I think about it and more importantly, why I have the confidence I have. Well, I think, Keith, we'd all say too is we're optimistic on that front as well, because we saw them reflect some of the inflationary pressures in the current year increase, right? That was a quick reaction on their part. We believe there's more to be recognized, but at least they reacted quickly to that. Yeah. That's helpful. Thank you. Our next question comes from Bill Sutherland with The Benchmark Company. Please proceed with your question. Hey, everybody. Just following up on Sarah's question about the personal care, staffing challenges. Can you give us an update on how the program with SCP is going? Yeah, Bill, it's Josh. It's quite well, honestly. You know us, we're not gonna get out there and you know, have a whole lot of public fanfare around it until we've you know, really started rolling out some of the programs and have some tangible results to give you. But I'll tell you a lot of the work we're doing you know, we've got teams from our clinical executive team and you know, revenue cycle management leadership that engages with them on a weekly basis. We've got this kind of work stream that's putting all of this together. You know, we're very active in our I'll call it dev efforts around that. In some ways we are having to moderate that because the volume and number of our JV partners that are asking us to help with those efforts continues to grow. All in all, I'm real pleased with kind of the momentum we've got there. In some ways, the pace of it may have been moderated some due to the pandemic again. You know, when you've got some spikes, whether it was Delta and Omicron, some of our hospital partners were really kind of focused there as they should have been. Real pleased with how we're improving that partnership and some of the plans we have kind of going into kind of Q2 into the back half of this year to start growing that. You're gonna stay kind of in stealth mode for the time being and we won't have announcements in the immediate future, you think? I'd say, you know, probably Q2 is where you would see, if I'm sitting here looking at where we're at in some of the development of them, with a few key JV partners, I'd say you'd see that start in Q2. Okay. Just wondered if we could dig a little bit into the organic growth assumption that you have in your 2022 guidance layout. Just a little color on what goes into that. Thanks. Yeah. I mean, you see we've got a 5%-7% for home health and a 6%-8% for hospice. What I would point to when you say what goes into that, you know, obviously we look at our current momentum as we were exiting the year. We try and, you know, kind of factor in all the things around the quarantine and the pandemic and, you know, project out where we're gonna be. If anything, Bill, there's potential upside to that when you look at the demand. Our growth in new referral sources has eclipsed 20% each year, the past two years. We've got a lot more, specifically in the area of physician referral sources, that continues to grow for us. The demand for our services, I'll just, you know, stick with home health for a moment, where we've got the 5%-7% growth assumption. The referral demand was up 12% in 2021 over 2020, and that's on top of 9% in 2020 over 2019. You definitely see more momentum and shift in the demand for our services. As long, I don't wanna rehash everything I said earlier on the labor front, but as long as we moderate quarantine, keep that consistent and continue with the net hires, I think you've got some upside to the growth in what we're modeling. That's kind of what I was getting at in my sort of back-end way of doing this. You're limiting your growth expectations based on simply the supply issue, the clinicals, you know, the clinicals. Absolutely. Yeah. Absolutely. All right. Thanks, guys. Appreciate it. Thanks. Our next question comes from Brian Tanquilut with Jefferies. Please proceed with your question. Hey, good morning, guys. Thanks for squeezing me in. I just have one question. You know, saw the buyback activity during the quarter, and as I think about, you know, just the level of M&A that you did in 2021, how should we be thinking about your focus this year in capital deployment and kind of like the integration efforts that you need to put in for a lot of the deals that you did last year? Thanks. Maybe Josh and I can tag team that. I'll maybe you can take integration. Let me just start by saying, you know, it's a great question, I appreciate it, about where our focus is right now. Let's start with home health. You know, with home health, we're now in the neighborhood of 65% of the population that we're licensed to serve. In cap dev, we're identifying the counties that have the population. We're ranking them by population. We're also looking at payers and how much volume payers who pay us episodically now have in those markets. It's by county. If you know, if I sum that up and give you a state overview, it probably wouldn't be a surprise. I mean, you know, the states are New York, New Jersey, Michigan, Wisconsin, Iowa. You know, Virginia is one that we still have some open areas in. You know, again, of course, Texas. I mean, Texas has. In the early years, we stayed away from Texas because there were so many providers per capita in Texas. Now that's changed quite a bit because we can differentiate ourselves by our, you know, capabilities in general, but also, you know, our consistent record as a high- quality provider, you know, and low employee turnover. You know, those things allow us to contract differently with payers. It gives us an advantage. That's our strategy. It's very targeted. On the hospice side, you know, with the acquisitions we made last year and especially Heart of Hospice, really beefed up our management and leadership team. Hospice will be a combination of, you know, some small hospice acquisitions in markets we don't currently serve, mixed with de novo startups, you know, in markets where we already have home health and have relationships with referral sources. It's pretty targeted and low- risk, and which, you know, fits us well. Josh, maybe. Yeah. I'll be brief, Brian, on the integration front. I alluded to some of the things we implemented in Q4 to be effective January 1 that I'm extremely excited about in the area that will drive more growth for us. In addition to the growth potential in our hospice segment now and the things Keith just mentioned, I also just wanna kind of say operationally from a strategic perspective, we're stepping back and really thinking about all things end-of-life care. Whether it's, you know, palliative care, whether it's transitioning into hospice, whether it's supportive care, we've really, you know, to Keith's point, added a lot to our leadership and our management team that's helping us to think fresh and new on all areas of end-of-life care, which, you know, honestly is just so important to our healthcare system, but is going to help us continue to grow that segment in a real more strategic way than I would say maybe we have in the past. Brian, just to tell what I No, go ahead. Yeah. What I was just gonna add on to, you know, Keith's comments there is, so to your deployment question, that signals a much more capital efficient deployment year for us in M&A, right? Those are very capital efficient opportunities. Got it. I guess, Dale, just to follow- up on that, so is there any buyback contemplated in the guidance, in the EPS guidance? No, there's no additional buyback contemplated in the guidance aside from what's already occurred. All right, awesome. Thank you. We have reached the end of the question and answer session. I will now turn the call back over to Keith Myers for closing comments. All right. Thank you, operator. Thanks everyone for participating this morning, and thank you very much for the various good questions that you presented this morning. One of the best that I can recall. Really appreciate that, and look forward to talking to you in the near future. Thanks again. This concludes today's conference. You may disconnect your lines at this time, and we thank you for your participation.