Ladies and gentlemen, thank you for standing by. Welcome to the 1st quarter 2023 earnings conference call. At this time, all participants are in a listen-only mode. Later, we will conduct a question-and-answer session. Instructions will be given at that time. If you should require assistance during the call, please press star then zero. As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Mr. Charles Lynch. Please go ahead. Thank you, Greg, and good morning, everyone. I'll quickly read our forward-looking statements, and then we'll get into the call. Certain statements and information during this conference call may be deemed to be forward-looking statements within the meaning of the Federal Private Securities Litigation Reform Act of 1995. These forward-looking statements are based on assumptions and assessments made by Pediatrix's management in light of their experience and assessment of historical trends, current conditions, expected future developments, and other factors they believe to be appropriate. Any forward-looking statements made during this call are made as of today, and Pediatrix undertakes no duty to update or revise any such statements, whether as a result of new information, future events, or otherwise. Important factors that could cause actual results, developments, and business decisions to differ materially from forward-looking statements are described in the company's most recent annual report on Form 10-K, its quarterly reports on Form 10-Q, and its current reports on Form 8-K, including the sections entitled Risk Factors. In today's remarks by management, we will be discussing non-GAAP financial metrics. A reconciliation of these non-GAAP financial measures to the most comparable GAAP measures can be found in this morning's earnings press release, our quarterly reports on Form 10-Q, and our annual report on Form 10-K, and on our website at www.pediatrix.com. With that, I'll turn the call over to our CEO, Dr. Jim Swift. Thank you, Charlie. Good morning, everyone. Also with me today is Marc Richards, our Chief Financial Officer. Our first quarter results were largely in line with our expectations, with some variances that Marc and I will discuss this morning. As you'll see in our release this morning, we're maintaining our full year outlook for adjusted EBITDA of between $235 million- $245 million. In terms of business trends, patient volumes were stable to positive against relatively strong year-ago comparables. This was particularly the case for our office-based services, where same unit volume grew 4% against a nearly 5% prior year comp. Within our hospital-based services, same unit births and NICU days declined year-over-year, but this was also against a difficult year-ago comp, and both metrics were up on a two-year compounded basis. As you'll see in our release this morning, same unit pricing was also strong. Keeping in mind that in last year's first quarter, we recorded roughly $10 million in CARES funds. This pricing growth partially reflects modest improvements in our revenue cycle management activities, which I'll detail in just a minute. On the cost side, our practice level expense growth continued to hover above historical trends, similar to what we've discussed in the last few quarters. We expect this expense growth to normalize through the course of 2023. Lastly, our G&A expense declined year-over-year and continues to reflect efficiencies we have created, primarily in the area of net staffing, and we will continue to seek further efficiencies in our corporate services. Turning to revenue cycle, I'll classify the progress we've made as encouraging, but by no means complete. Throughout the beginning of this year, our internal focus has been on highly targeted staffing additions, both to address the gaps we had identified in front-end activities experienced to date and to bring in the necessary subject matter expertise that matches the nature of our clinical services, particularly in the hospital-based care. Our internal team has worked very closely with our vendor to ensure that we are tracking the right metrics, quickly identifying any variances to benchmarks, and ensuring that the improvements that we have had to make to date can be built upon as we go forward. Overall, we're pleased with the steps that we have implemented to bridge the front-end gaps that we identified and have spoken about in the past. We also believe that supplementing the extensive services we receive from our vendor with an internally staffed function is not only proving effective but will also be necessary on an ongoing basis. What we found is that in our business, a hybrid solution is the most effective at or near the point of care. While I emphasize that it is still early, we nonetheless believe that this hybrid, a higher touch front end working in tandem with our vendor, has enabled us to reduce our unbilled AR, get claims moving through the process, and as Marc will detail, generate improvements in our DSOs, our accounts receivable, and ultimately our revenue. With that, I'll turn the call over to Marc Richards. Thanks, Jim. Good morning, everyone. I'll start with details of how our RCM activities flowed through our financial results. As you'll see in our earnings release and our 10-Q file this morning, both growth and net AR have declined since the end of last year. Overall, our DSOs were 51 days as of March 31st, down two days from year-end and down eight days from a year ago, but still above the high 40s range that we would consider to be historically normal. On the P&L side, our net same unit pricing increased by 40 basis points year-over-year, despite a 2.2% headwind based on the CARES funds we recorded in Q1 of 2022. In the first quarter of '22, we highlighted that our same unit pricing was burdened not only by core RCM activities, but also by a temporary issue surrounding our private pay collections, the latter of which represented roughly half of the pricing headwind we discussed on last year's first quarter call. Accordingly, despite a notable improvement in same-store pricing, core RCM activities continue to burden our P&L. Similar to our discussion last year of our full year outlook for adjusted EBITDA, additional and sustained improvements are a component of that outlook. Turning finally to our balance sheet. We were a net borrower during the quarter, as we typically are in Q1 based on the timing of incentive compensation payments and employee benefit plans matching. We ended the quarter with net debt just over $750 million, and net leverage of three times. With that, I'll turn the call back over to Jim. Thank you, Marc. Operator, let's now open the call for questions. Okay. Ladies and gentlemen, if you'd like to ask a question, please press one then zero on your telephone keypad. You may withdraw your question at any time by repeating the one, zero command. If you're using a speakerphone, please pick up the handset before pressing the numbers. Once again, if you have a question, please press one then zero at this time. One moment please for your first question. Your first question comes from the line of Kevin Fischbeck from Bank of America. Please go ahead. Great. Thanks. maybe just to start on the cost side of things. you know, you said that you expected that the cost growth will moderate as the year goes on. Can you just kinda tell us what's gonna be driving that and when we should start to see I guess it's just a comp issue, so when we'll start to see that getting better year-over-year, and then how you think about cost growth once things are normalized? Hey, Kevin. Marc Richards here. Why don't I jump in, and then I'll flip it over to Jim. You are correct. Looking at both the discrete comp item in the P&L and same-store comp, sequentially and quarter-over-quarter, we did see an outsized growth in clinical compensation. That is consistent with our projection for the quarter, and we also expect that to revert back to a more normalized increase as the year progresses. I think that's important to note. We saw that coming in the first quarter. We expect it to slowly revert to normal as the year continues. Jim, I don't know if you wanna. Yeah. Kevin, you know, we talked about this last quarter. You know, some of this with our organic growth activity, as practices have come on and this de novo growth does add some cost in as we ramp up. Generally, we see a lot of growth that occurs in the last quarter and then into the first quarter, and that will smooth out over the year. We think, again, this will return to normal. Okay. Great. Just on the pricing side, obviously, you know, No Surprises Act still a concern from some. Just wanna hear the latest and greatest from what you guys are seeing, how that process is working, and whether the backlogs that are happening have any kind of input on DSOs or skewing any of the metrics? Thanks. Well, I'll start. You know, we have not seen, you know, further activity from the payers that, you know, gives us pause. Nonetheless, the IDR process, and this came out recently with CMS reporting what's been going on in the IDR process with the backlog. We've been able to, you know, successfully push many of these claims through the IDR process, and we're still, you know, winning about 72%-75% of these. On individual basis with some of the payers, we're winning 80%. I think that was a trend line in the CMS report for Q4 that just came out that providers on average were winning about 71%. We think that's an important, you know, infrastructure piece that we've built to be able to manage the IDR process and succeed that sends a message to the payers that we want this on a fair and balanced level. You know, we think that hopefully this will bring those payers we're out of network to the table, and we've had substantive conversations with some of them. All right. Great. Thanks. Your next question comes from the line of Brian Tanquilut from Jefferies. Please go ahead. Hi, good morning. You've got Taji on for Brian. Thank you for taking my question. First, I just wanna circle back on your commentary around same-store pricing growth, right? As we reconcile that with, you know, considering persistent RCM pressures, also looking at negative comp from 2022, how should we be thinking about how that will trend throughout the year? Hey, good morning. Marc Richards here. I think that's a great question, and there are a lot of pieces in the first quarter relative to pricing as we've seen marginal improvement relative to our RCM efforts. Same unit pricing for the quarter up about 40 basis points. That was burdened by about 220 basis points of CARES in the first quarter of last year. With taking that into account, there's 260 basis points of same-store accretion there, which is partially offset by issues we saw on the private pay side in the first quarter of last year, which accounts for 100 or so basis points of that. Picking through the first quarter, looking atPricing in the 150 basis point area is probably consistent with expectations going forward. I would note also that in that pricing analysis, there's probably some component, a smaller component of some catch-up from prior year activity. To the extent that we still are creeping in that 150 basis point range as the year progresses, I'd say that's consistent with our expectation. I know that's a lot. No, I appreciate the color. As I shift to the balance sheet, you know, I see you, ended Q1 with $6 million of cash on hand. Just curious about your outlook on, you know, improving, you know, your cash balance on hand. That's a good question. We in the first quarter of the year, we're a net borrower. Our compensation arrangements with our practices require annual incentive payments in March of the year. Accordingly, we drew on our revolver and funded that. However, we do expect, as the quarter and the year goes on, that position will change, cash will continue to build up, and our net borrowings will decline over the next quarter or two. Thank you. Your next question comes from the line of Ryan Daniels from William Blair. Please go ahead. Hi, good morning. This is Jack on for Ryan. Looks like you guys had some nice office-based patient service growth year-over-year, with maternal-fetal medicine being a strong area this quarter. Any comment on the growth or contribution from some of the other service areas such as pediatric, primary, and urgent care? Any additional color here would be great. Sure. Hey, it's Charlie Lynch. I will give you a couple pieces, and I'll work backwards. On primary and urgent care, we've continued to see fairly strong growth in patient volumes in that service line. The caveat is that in aggregate, it remains a relatively small piece of our total volume and net revenue. In terms of impact to our overall same store volume growth doesn't move too much. You know, within the office-based service lines, looking at the first quarter, the strength we saw was primarily in some of our pedes subspecialties, but also within cardiology and maternal-fetal medicine, which are our largest office-based service lines. You know, we saw growth that was just under the 4% that we quoted for total office-based services. Okay, that's all. Thank you. Your next question comes from the line of A.J. Rice from Credit Suisse. Please go ahead. Hi, everybody. Maybe first on the comments around the revenue cycle management. You're at 51 days and hoping ultimately maybe to get back to the high 40s. Any timeframe on that? Also with respect to this issue, you've added staff to support everything that's going on there and make sure you're getting it right. Is this a sort of run rate that you think of expenses associated with the revenue cycle management side that will go forward? As you get things on track, you see an opportunity to reduce some costs you're incurring there beyond just getting the DSOs in a more normalized fashion? Hey, A.J. Thanks for the question. It's Jim. I'll start and Marc can speak to it as well. I think what we found and what I commented on is, you know, there's a fair amount of high touch, really at the point of care, you know, especially in the hospital-based side, where we need to get the information, that can be, you know, a little bit challenging at times, in an automated fashion. We've put some folks back forward-facing. Actually, some of these folks used to be within the organization doing other activities. We have them forward-facing almost at the bedside, if you will, to get some of this information. It's a small amount of people that we're focused on, but that has smoothed out the front-end side of the business in terms of the RCM. We, we are gonna keep those people in line right now because we think that's part of the solution to what the challenges are. We are working with the, with the vendor on some of the areas beyond the front end and then also on the back end. We think for the future right now, we're gonna keep these folks in mind, but it's not a significant cost for what we're providing. Marc, to you. Yep. A.J., just real quick on your, on your DSO question. I would note that our guidance expectation for 23 does anticipate continued improvement in the DSO. We would expect to be in that high 40s as we approach year-end this year. Okay. All right. It will need to triangulate with our continued efforts surrounding improvements relative to RCM. Okay. Just on the business development arena, what are you seeing with respect to potential opportunities to add more areas where you manage NICU, where you're already in the NICU, adjacent women's health services. Can you talk a little bit about the pipeline that you see out there and, maybe the opportunities for growth in that direction? Yeah, A.J., thank you. Listen, I think from an organic standpoint, we still have a, you know, very robust pipeline of organic growth. It probably breaks evenly across the ambulatory specialties and the inpatient specialties. Some of those may be tilted more towards the newborn service lines and pediatric critical care, but we do have some NICU opportunities in there. On the non-organic side, we feel we have a pretty good pipeline that we're actively working at this time that is inclusive of some opportunities in Level III NICU. More to come on that, but we feel it's a pretty balanced approach both on organic and inorganic. Finally, when I hear people, I hear the hospitals reporting they are calling out, some fees associated with hospital-based services increasing. That sounds like it's mostly emergency room, maybe anesthesia a little bit. Is there any dynamic going on with what you're doing in terms of changing year-to-year fees that hospitals would have to pay you for any reason? I think our approach to that, A.J., has been pretty flat. You know, there are some services that do require fees to support, especially in smaller volume or, I know sometimes in the OB hospitalist arena, that's one that requires some contract a stipend with the hospitals. Again, we haven't seen a big change in our approach. As you know, we're largely have our practices do not have stipends with it. Again, we haven't been at the forefront of that discussion. Okay. Thanks a lot. Your next question comes from the line of Pito Chickering from Deutsche Bank. Please go ahead. Hi there. You've got Kieran Ryan on for Pito. Thanks for taking the question. I saw that commercial and non-government mix was down about 70 basis points year-over-year, so not a huge move, but was wondering if you could just talk about, you know, any impact on pricing that had there. Just given the broader, you know, give puts and takes within pricing, do you still see that up in the 1%-2% range this year? Hey, Kieran. It's Charlie Lynch. I think Marc gave a good reference around that, you know, essentially a core trend in that mid-1s range when you pick through the pieces for this quarter. You know, I think you're relatively on point there. On the payor mix side, yeah, we did see a 70 basis points increase by volume year-over-year on the government side. It had a modest impact on our net pricing for the quarter, a little bit of a headwind for this quarter. I would back up, though, and say that on a gross basis, looking at our mix, we're still looking at a multiyear trend line here that is stable to very slightly improving. Given that there are some variances quarter to quarter, you know, we like to call those out. You know, smoothing that out a little bit, we've got a meaningful amount of stability in our, in our overall payor mix, and in fact, it has a very slightly favorable trajectory. Got it. Thank you. If I can just get a quick follow-up. Obviously, the improvement on the RCM front. I just wanted to check in and just see, are you still sizing that impact at about $15 million this year, like, weighted towards the first half? Just wanted to see. That's right. weighted in that. That's still consistent with our expectations this year. That is correct. Got it. Thanks so much. Your next question comes from the line of Whit Mayo from SVB Securities. Please go ahead. Thanks. Good morning. Just a few clarification questions here. Marc, did you guys recover any AR in the first quarter that you had fully reserved in prior quarters? Well, Whit Mayo, it's that component of really any recovery really flows through the rate analysis. There's not a significant component of that. My comment was, you know, to the extent that the first quarter rate is, on its face, positive, that may contain some additional efforts related to last year that are flowing through. That's the extent of it. Okay. I think you guys also referenced in your prepared comments some efficiencies that you expect to see in corporate this year. Can you maybe just elaborate a little bit more on some of those efforts? In terms of our overhead? Yeah. I think you said, you know, seeking some efficiencies in our corporate expenses this year. I wasn't sure if that's a number that we should, you know, circle as being, you know, sizable or if that's. Yeah. just an ongoing effort. Yeah. No. I would say that was, you know, relative to what we have done over the past year or two, there have been significant changes. We continue to seek efficiencies. As we indicated, right now we don't have a significant program in place or the expectation of material cuts to that throughout the remainder of the year. I think that's our. Right. Overall take on that, Whit Mayo? Okay. No, that's helpful. I may be overreading this sentence in the press release, but I just wanna make sure I get it. It indicates that SWB was offset by a decrease in incentive comp in the quarter. Just not sure that I'm reading that. That might just be a comment more about the prior year incentive comp. Yeah. Whit, it's Charlie. That's a little bit specific, and it largely references the flow through year-over-year related to the care dollars we received in the first quarter of 2022, which accrues down to the practice level and it will impact incentive comp and variable comp there, and that didn't recur this year. Okay. Last one, sorry. I know that you guys don't want to be in the habit of providing guidance for every specific quarter. I wasn't sure if there was anything, Marc or Charlie, that you'd care to call out or share just as it relates to sort of your internal expectations. I would say that to the extent that in the, in the quarter ahead we noticed anything in consensus expectations that we would want to address, we did not notice that related to Q2. Perfect. Thank you, guys. If there are any additional questions, please press one then zero. At this time, there are no further questions. Thank you, operator. We'll end the call now. Ladies and gentlemen, that does conclude your conference for today. Thank you for your participation and for using AT&T Teleconferencing. You may now disconnect.