Thank you for standing by, and welcome to the Option Care Health Fourth Quarter 2021 Earnings Conference Call. At this time, all participants are in listen- only mode. After the speaker's presentation, there will be a question-and-answer session. To ask a question during the session, you'll need to press star one on your telephone. As a reminder, today's program may be recorded. Now I'd like to introduce your host for today's program, Mike Shapiro, Chief Financial Officer and Senior Vice President. You may begin. Good morning. Before we begin, please note that we will make certain forward-looking statements that reflect our current views related to our future financial performance, future events and industry and market conditions. These forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially from our comments. We encourage you to review the information in the reports we file with the SEC regarding the specific risks and uncertainties. You should also review the section entitled Forward-Looking Statements in this morning's press release. During this call, we will use non-GAAP financial measures when talking about the company's performance and financial condition. You can find additional information on these non-GAAP measures in this morning's press release posted on the investor relations portion of our website. Finally, I wanted to highlight that we have posted a brief presentation to our investor website to augment our comments on this morning's call. With that, I will turn the call over to John Rademacher, Chief Executive Officer. Thanks, Mike. 2021 was quite a dynamic year, to say the least, and despite many challenges, the Option Care Health team continues to deliver extraordinary care for our patients and strong financial results for our shareholders. As Mike and I will discuss this morning, we continue to manage through a challenging environment, but nonetheless, we could not be prouder of the dedication and focus of the thousands of Option Care Health team members. We continue to build on our reputation as a trusted partner for payers, health systems, physicians, and patients, as well as a team that delivers on our financial commitments while expanding access to care and setting the standard on patient care in the industry. We entered 2021 in an environment of optimism as COVID-19 vaccines and improved treatments were being introduced, and yet we exited the year in an environment that in many ways was more disruptive. With the emergence of the Omicron variant, we experienced more widespread disruption in our labor models and volatility in our referral patterns. As we sit here today, we continue to manage through a difficult environment with broader labor disruptions and challenges in engaging with our referral sources. The resurgence of COVID late last year clearly impacted our results as we exited December and has also resulted in a disruptive start to the first quarter. Despite all of the challenges the team has faced, we are very pleased with the financial results we delivered in 2021. For the year, we drove mid-teens top-line growth with improved performance across both our acute and chronic portfolios. Our chronic therapy set continues to be the biggest contributor to the top line growth as we expanded our therapy portfolio and increased our engagement with referral sources to ensure unsurpassed clinical care for their patients. At the same time, we've translated top line growth into leverage earnings growth with EBITDA margins expanding to over 8% for the year, which is up approximately 200 basis points since the merger and an Adjusted EBITDA growth of over 30% above the prior year. As Mike will expand upon, we've dramatically improved our capital structure and leverage profile while deploying over $100 million in capital investments and M&A in 2021, with more progress to come in 2022. While we continue to focus on near-term execution, we also continue to invest for future growth. In 2021, we invested in improving our existing Care Management Center footprint, opened three new state-of-the-art facilities in Chicago, Cleveland, and Northern New Jersey, and opened 11 new Standalone Infusion Centers, increasing our infusion care capacity by 10% to more than 500 chairs across the country. These centers offer logistically convenient and aesthetically pleasing infusion suites for our patients and are a critical component to both our clinical and operational efficiency strategy. We continue to make progress on expanding this network of connected and technology-enabled facilities. With the merger integration squarely in our rear-view mirror, we pivoted in 2021 from integration to acceleration by focusing our M&A efforts to expand our capabilities, and I'm very pleased with our progress. We've executed on three complementary acquisitions and have one more in flight as we sit here today. In December, we acquired Wasatch Infusion, the infusion center market leader in Utah, which is highly complementary to our existing operations in Utah and the Mountain West. The Wasatch team has created a unique patient experience across their network of four infusion centers, and we've already learned a great deal from the Wasatch team. Although this acquisition is relatively new, the early read is quite encouraging. As previously announced in October, we acquired Infinity Infusion Nursing to broaden our clinical capabilities and increase access to clinical resources in support of our growth objectives. While assimilation efforts are ongoing, the progress to date has been tremendous. Again, Infinity's focus on nursing excellence at the point of care is complementary to our pharmacy infrastructure and will allow us to capitalize on additional vectors of growth. This business has a unique care model that supports other market participants and uses its network of highly qualified infusion nurses to meet aggregated market demand. As an organization that is built by infusion nurses for infusion nurses, it improves access to alleviate some of the labor pressures we are experiencing in nursing resources. On the heels of the Infinity acquisition, this morning, we've announced that we have signed a definitive agreement to acquire Specialty Pharmacy Nursing Network, or SPNN. SPNN is a national leader in providing infusion nursing services, and it's highly complementary to Infinity, and we anticipate closing on the acquisition later this year. SPNN's additional focus on providing clinical services in support of biopharmaceutical manufacturer collaborations broadens the aperture of nursing services we can provide, while clearly expanding our network of infusion nursing resources at the same time. Upon the consummation of SPNN, we will have created a unique national nursing network that will support our growth and deepen our relationship up and down the pharmaceutical administration value chain. We have achieved solid progress on our M&A efforts to date and executing our strategy to help transform healthcare by reimagining the infusion care experience that improves outcomes, reduces costs, and delivers hope to our patients and their families. We expect the momentum to continue in 2022. Before turning the call over to Mike, I wanted to spend a few minutes on the current pandemic and labor situation. As we have stated previously, there isn't a simple uniform statement to describe the pandemic situation on our enterprise. In late Q4, we saw considerable variability in referral patterns with the onset of Omicron, with numerous referral sources closing doors and several acute care facilities reverting back to delaying procedures. We also saw and continue to experience broader disruptions to our labor force given the nature of the Omicron variant and the widespread infection rates. We have attempted to the best of our ability to lean on our redundant operational network and dynamic staffing model, but it has impacted us, nonetheless. At the same time, we are not immune from the labor scarcity dynamic that has affected almost every enterprise across the economy. This is impacting access to resources and also placing pressure on wages. We remain proactive in managing our labor force, with particular focus on our pharmacy and nursing resources, but it remains a very challenging environment. We continue to take steps to recruit and retain our talented team members daily and to remain an employer of choice through our diversity inclusion initiatives, health and wellbeing programs, and various employee support and training programs. Given the commitment of our team and our focus on working closely with our referral sources, thus far, although we have had some market-level disruptions, we continue to build on our reputation as a trusted partner. We will continue to actively manage through the situation to try to minimize the impact. Significant investments in Wasatch, Infinity, and SPNN are clear examples of how we are taking proactive steps to have a nimble and resourceful operating model. While we are very encouraged by the strong results in 2021 and the platform we are building, we remain cautious as we enter the new year, and the Adjusted EBITDA guidance range of $310 million-$330 million we communicated this morning reflects the dynamic environment in which we find ourselves. With that, I'll turn the call over to Mike to review the results in a bit more detail. Mike? Thanks, John. Fourth quarter revenue of $927 million represented 15% growth over Q4 of 2020 and was led by our chronic portfolio, which grew in the high teens, while our acute portfolio grew in the low single digits. The chronic portfolio continues to perform well, and we saw balanced growth across established therapies as well as solid contribution from newer therapies for MS, myasthenia gravis, and chronic inflammatory conditions. Despite mix shift towards lower margin rate chronic therapies, we held the line in Q4 on gross margin rate of 22.9%, which expanded 10 basis points over the prior year. The team continues to focus on operational efficiencies to offset inflationary pressures and mix headwinds, but we do not anticipate sustainable gross margin expansion going forward. Adjusted EBITDA of $86.8 million grew 28% over prior year or almost 2x revenue growth. EBITDA margin exceeded 9% for the first time at just under 9.4% and reaffirms the leverageability of the foundation that we've established. Noted in reported net income and earnings per share this morning, we've recognized a one-time gain in the fourth quarter resulting from the utilization and reversal of most of the valuation allowance on deferred tax assets on our balance sheet with a net impact of $30 million. As required, we regularly reassess our ability to utilize deferred tax assets. Based on our improved profitability, we have reversed substantially all of the reserves in Q4, resulting in the one-time gain. Cash flow continues to be very strong, and for the year, we exceeded $208 million of cash flow from operations. We thoughtfully deployed most of the inflow through capital expenditures, reduction of indebtedness, and deployment of more than $80 million across three acquisitions. We feel really good about where we exited the year from a capital structure perspective. With the recent maturity extension and improvement of our debt profile and the fact that we exited the year with a net debt to EBITDA ratio of 3.4x. As we developed the guidance as articulated this morning, we obviously incorporated many of the dynamics that John articulated earlier. On a preliminary basis, we expect to generate $3.65 billion-$3.85 billion of revenue or 6%-8% top line growth. Our EBITDA range reflects the top line expansion as well as continued inflationary and operational challenges that emerged in later 2021. We are yet to fully contain some of the inflationary cost pressures, which go beyond just labor and include everything from corrugated to transportation to medical plastics and PPE. Also note that our guidance does not incorporate any contribution from the pending acquisition of SPNN as that transaction has not yet closed. Finally, we expect to generate at least $230 million in cash flow from operations and would anticipate the primary use is to continue to be capital expenditures in our infrastructure as well as continued focus on M&A opportunities. We will naturally provide updates to our guidance throughout the year. With that, we will open the call for Q&A. Operator? Certainly. Ladies and gentlemen, once again, if you have a question at this time, please press star then one on your touch tone telephone. If your question has been answered and you'd like to remove yourself from the queue, please press the pound key. Our first question comes from the line of David MacDonald from Truist. Your question, please. Good morning. A couple of questions. First, just on the staffing, can you guys just provide a little bit more detail on, you know, what Infinity has done for you since the acquisition? Then, you know, SPNN, it sounds like, has some capabilities that may angle a little bit more towards the chronic book on the specialty side. Can you just talk about, you know, kind of the incremental capabilities those bring in and how it complements Infinity? Hey, Dave. Good morning. It's Joh n. First and foremost, really thrilled with Infinity and the announcement this morning with SPNN. You know, first and foremost, we know firsthand that you know, having access to nurses is a critical path of our growth trajectory. You know, the ability for us to have access to a broad network of qualified infusion nurses is front and center part of our strategic imperative. You know, these two moves really augment the strength of our existing team and give us a lot of flexibility. We've talked about the, you know, the model that we operate with having full-time, part-time, per diem, and then the utilization of these agencies to augment and to really fill in, especially where we don't have density of patient census, to be able to utilize these resources. You know, early stages of the assimilation with Infinity, but we've seen really positive, you know, access with that and being able to utilize that team more fully. You know, as you called out with the team at SPNN, a little bit different angle that they had, certainly focusing around the biopharmaceutical manufacturer collaborations that they have, just opens that aperture and gives us an opportunity to participate up and down the value chain in a much greater basis. Guys, just a couple of other questions. One on chronic, you know, just the strength in terms of the growth there. Wondering if you're seeing any further narrowing of networks as part of this, you know, the sales team. I know you guys made some, you know, some investments there in 2021, increasingly hitting stride. Just anything that you'd call out in terms of the ongoing strength in chronic. Yeah. Look, I do think, although a disruptive year, with you know openings and closings and you know some strains on the referral patterns, you know, I think the team did a very good job of increasing reach and frequency, which was part of the investment that we made in that chronic sales team. I would say, look, there still is a movement towards the home as being the center of care, in which we've gotten you know some of the benefit of that, given the position that we hold. You know, in working with our payer partners in continuing to have the conversations at that level, Dave, they are looking to right-site care wherever they can and look to get that balance of cost and quality. I think we've been able to capitalize on the position that we hold, and the strength of the platform, and the reach that we have to be able to reach 96% of the U.S. population. Okay. Mike, just a couple of quick numbers questions. It looks like the infusion suite number will pick up in 2022. You know, CapEx, should we think about it still in that kind of $25 million-$30 million range? Secondly, you know, just with what sounds like is a little bit of chop, you know, coming out of year-end. I think last year, Adjusted EBITDA in the first quarter was, you know, 17%-18% of the full year. Should we think about that being a touch lower in terms of just kind of the percentage of full year EBITDA? Yeah, sure, Dave. You're spot on on CapEx. We would expect CapEx to be in the $25 million-$30 million range. You know, we're on offense around expanding our infusion suite capacity. These are relatively efficient builds, so we can absolutely accommodate that within our base run rate. You know, in the first quarter, you're going to expect my normal caveat that we don't give quarterly guidance. But yeah, I mean, look, for Q4 is typically the strongest, Q1 is typically the lightest. Again, given some of the sluggishness at the beginning, I think that trend will hold true for this year as well for sure. Okay. Just last question, guys. Look, with some of the pressures we're seeing out there, have you seen? I've got to imagine this is killing some of the smaller and regional folks. Have you guys seen a noticeable uptick in terms of just, you know, incoming phone calls and potential M&A activity? Yeah. I mean, as you can imagine, I think one of the things is John really touched on in his remarks is the redundancy and the scalability, you know, so that if we have disruptions in certain areas, we've got the interconnected network, which really just gives us a higher degree of confidence to be that dependable partner. I think frankly, you know, that's something that a number of participants are lacking. I think a lot of folks are having more challenging environments. Obviously, one of the keys is access to clinical labor, and we've remained on offense to ensure we have the best and the broadest nursing team in the industry. I think that has posed challenges. As you would expect, you know, the number of inbounds remains robust for sure. Okay. Thanks, guys. Thanks, Dave. Thank you. Our next question comes from the line of Joanna Gajuk from Bank of America. Your question please. Good morning. Thanks so much for taking the question. I guess just a couple different follow-ups here on different topics. I guess you know, good to see you doing these acquisitions and I guess you expanding your access to nurses, which is great. Obviously, you flag you've seen some pressure on labor. Can you give us a sense of you know a magnitude of things you've seen in your business? I guess is it correct to assume you know labor is maybe you know 10%-12% of your revenues? I guess, within that year, kind of what trends have you seen, how bad I guess it got in terms of, you know, employees in quarantine and how you're seeing it, you know, so far in this quarter? Yeah, Joanna, it's John. Look, we, as everyone else, is feeling a bit of the strain of some of the challenges in the labor market. I'll start first with the last part of your question. Look, with the community level of infection rates that we saw with Omicron and how quickly that spread, needless to say, that had impact on our team members as well as either our team members themselves or family members, you know, were diagnosed with the Omicron variant. You know, what we had to do for quarantine and the disruption that that created, I certainly need to call out the great work that our team did in the field in being very nimble and responsive, in really a situation that was not in their control, not knowing who the next person that was going to be out on quarantine. You know, we have a dynamic model. We've got a technology-enabled platform that allows us to kind of be effective from that standpoint. The overall inflationary pressures, look, we feel it as everyone else does. You know, as we outlined in my comments, we have a lot of programs going on, more broadly than just wages, to make certain that we're an employer of choice and that our team has access to training and education and development. You know, we'll continue to focus on that. We have a saying around here where we recruit our team members every single day. That's the expectation of the leadership team and our managers. You know, we're going to continue to effectively manage through that process. We will feel pressures from increased wages. As Mike also outlined, inflationary pressures on other aspects in the cost of goods that include med supplies and other aspects. Would you be willing to share kind of your views in terms of the overall, I guess, labor cost outlook for this year? Are you expecting kind of you know a meaningful acceleration versus historical? Yeah. Look, I mean, we're not in a position to specifically, you know, articulate what our labor inflation rate is because there's a lot of moving pieces with that. I mean, look, we're very thoughtful around, there are certain disciplines, especially around our clinical teams, where frankly the labor inflation is a little bit higher than other categories. It's also a rally cry for us just to continue to drive more efficiencies and try to offset that. Look, like every other enterprise across the economy, we're struggling with, you know, labor inflationary pressures, which again is just the rally cry to continue to drive more efficiencies. Okay, great. Thank you. Thanks for that. I guess when you mentioned this acquisition, the pending acquisition, that it's you know complementary to the asset that you acquired previously, Infinity, so you know any way for us to kind of understand the size of it or any similarities in terms of the margin profile or the multiple you paid or you expect to pay for that asset? Yeah, Joanna, as we mentioned, you know, we signed a definitive agreement. We'll naturally be in a position to provide a little more color once we actually consummate the transaction, which again, we would hope would be here in the not too distant future. Hang tight and we'll definitely provide more color on the specifics around on SPNN when we actually get into the end zone. Okay, that makes sense. I guess my last question, you know, chronic business growth rate, and I see you touched a little bit about the efforts there in terms of the sales force. The other side of this equation, any updates on payer contracting in terms of the rates? You know, I guess, has your business with United grown as they also grow their own infusion capabilities? Kind of any update on payer contracting? Thank you. Yeah, Joanna. The thing I think I would be most pleased about is the fact that we've seen growth across all of our payer platforms. You know, when we look at the top 10 payers that we have and really all of the national payers, you know, we've seen growth across all of those. That has been, you know, I think a testament to just the team and the platform that we put together. We don't necessarily go into you know, the rates at a payer level, given the fact that there's a lot of moving pieces. We have over 800 payer relationships and over 1,400 contracts. There's give and takes that happen with all that, you know, as prices, you know, in the marketplace. Overall, we're really pleased, and we feel like we have strengthened the relationships across the entire portfolio of payers, given the work of our market access team. Great. Thank you so much for the question. Thanks, Joanna. Thank you. Our next question comes from the line of Pito Chickering from Deutsche Bank. Your question please. Hey, good morning, guys. Thanks for taking my questions. The first one is on own EBITDA margins for 2022. Those are guided to be flat versus 2021. Can you walk us through if there are any changes to the acute gross margins versus chronic gross margins within guidance, and how we should model the natural gross margin pressure as chronic grows? On the same topic, can you refresh us on the fixed versus variable component of SG&A costs? In 2021, you got 40 basis points in margin expansion in SG&A. How much pressure should we see there from labor or supply pressures? Okay, Pito. Hey, it's Mike. One question in 15 parts. Keep me honest to make sure I talk to you here. Look, I mean, obviously our EBITDA margin, you know, we're treading cautiously as most folks, given some of the dynamics of this year. We still believe in the leverageability of the business. But one of the things that, you know, we're expecting going forward is that obviously, as John mentioned, chronic's going to continue to outpace the acute. The acute portfolio we see is growing in the low single digits. We had some nice growth in 2021 because frankly, we had a lower base in 2020 with the initial onset and disruptive nature of the pandemic. We don't provide gross margin guidance, but you know, and not to sound defeated because the team fights for every basis point of cost leverage. Clearly, with that slice growing significantly faster with the margin profile over time, I think it's realistic to expect, you know, some modest gross margin rate declines, even though, again, we still expect robust gross margin dollar growth. To your question around the fixed versus variable. Look, within our SG&A base, given the investments we've made, and especially on the technology infrastructure, we estimate that approximately 80% of our SG&A is relatively fixed. Now, that's fixed in terms of, you know, functional support. There are some inflationary pressures around wages, et cetera, within that component, but overall, that gives us the confidence that, you know, the SG&A will continue to grow at a pace significantly lower than those gross margin dollars. That again gives us the confidence that, you know, over time, we will continue to expand and accrete to a better EBITDA margin. I think, you know, as we outlined our initial guidance today, again, that doesn't undermine our confidence in that leverageability. I think it just reflects a cautious tone given what, frankly, is unprecedented inflationary pressures facing all of us. I guess for two sub-questions. Just to follow back to the last one, what% of your total costs come from clinical labor? We don't break out that specifically. You know, we've talked about you know, having you know, more than 1,500 nurses, again, which that's combined with our you know, the per diem folks that we added with Infinity. You know, the majority of our team is of a clinical nature, including you know, not only nurses, but pharmacists, pharm techs, registered dietitians, respiratory therapists, et cetera. It's more than half of our team are comprised of clinicians. Okay, last question here. There's definitely been, you know, a lot of disruptions due to COVID the last sort of, you know, year and beginning of this year. I guess, what% of your revenues came from chronic versus acute in 2021, and kind of what are you assuming that for 2022? Yeah, we're right around 70/30, chronic, acute, and again, that was around 60/40 at the time of the merger. Again, we don't give guidance around those two, but we have said, and obviously, if you interpolate that we think the acute portfolio is going to grow in the low single digits. That implies obviously the other end of the barbell where chronic will be growing faster. Okay. Last, just quick numbers question. D&A sort of ticked down throughout 2021. As you're building more infusion suites, just you know curious what, you know, what was your modeling for D&A in 2022? Yeah, I think D&A will continue to decline modestly. I mean, I think if you modeled flat to down slightly, and again, it's not that we're under-investing, it's just that we've made so many significant investments in the technology and pharmacy infrastructure over the last several years that, you know, we're in a state where, you know, $25 million-$30 million of CapEx is more than adequate to maintain the infrastructure we've built, as well as continue to invest in growth initiatives. I think just given that, I don't expect D&A to increase from where it is right now. Okay. The two deals that you announced today, are you including those in guidance and kind of how much will they have added to 2022 guidance? Thanks so much. Obviously, Infinity, as well as Wasatch. Really excited about the Wasatch acquisition. Again, as we disclosed this morning, we paid $18 million. You can think that we paid low double digits. From an overall impact, it's not so much around the immediate benefit, but as John mentioned, it's just an extraordinary team and, you know, we're really excited about incorporating their patient experience and their model into our broader infusion suite strategy. Yes, the short answer, Pito, is both Infinity as well as Wasatch are incorporated into our guidance. As I mentioned, SPNN is not to date because we have not yet closed. Great. Thanks so much, guys. Yep. Thanks, Pito. Thank you. Our next question comes from the line of Matt Larew from William Blair. Your question please. Hi, good morning. Your comments around disruption on the labor side, I'm curious, did you actually have a challenge filling referrals that you were getting and did that lead to any uptick in contract labor? That would kind of be part one. The second piece of that would be, have you yet been able to preferentially allocate any of the Infinity resources to Option Care referrals to deal with those staff shortages? Hey, Matt. Yeah, John. First and foremost, look, we have a pretty dynamic model, as we've talked about, and the ability to move work across the network is one in which, you know, the operations team has gotten very adept at. You know, as we kind of outlined, look, there were some market level disruptions where, you know, you come in on a Monday and everyone's there, and you come in on a Tuesday and, you know, 1/3 of your team is out because they have the Omicron variant. Needless to say, that puts a little bit of strain on that local market, and there may have been some referral disruptions at that level. We quickly responded behind that and certainly prioritized any of that work to make certain that where we could work with our referral partners to delay a start or to kind of move things around, we did and did that very effectively. As we said in the comments, we believe that we continue to be a partner, a trusted partner for those referral sources. As for the Infinity question and what we have there is, look, we are continuing to work very aggressively to assimilate them into the organization. As we said, part of that model is that it does you know support market participants beyond Option Care that allows us to aggregate market demand. You know, we're continuing to work down that path. We certainly utilize them wherever there is capacity and tap into their broad network of nurses that are qualified for infusion services. We've seen great early uptick on that, and needless to say, we'll use our full-time and part-time that are on the Option Care side of the house first wherever we can and utilize them fully to maximize and leverage that incredible asset that we have. Quickly behind that, we will be working with Infinity and then post-close with SPNN to be able to augment that and continue to you know feed our growth trajectory. Just in terms of utilization of the ambulatory suite, I think you exited Q3 at about 20%. You've talked about 25% longer term. You know, maybe just give us a sense for where you exited the year and kind of what we should be expecting for 2022. Yeah, Matt. Look, we continue to add more facilities into the mix, as you know, we entered and exited the year and we're going to continue in this year. You know, it's a little bit dwarfed in the sense of you got startup and other things that are in there. I mean, look, I think we saw really strong progress on working toward achieving those goals, bringing those additional facilities online. We think it's fantastic, and we don't see anything at this point in time that would change our perspective around the amount of utilization that we could drive towards. Okay. I'll check back and let others ask questions. Hey, thanks, Matt. Thanks, Matt. Thank you. Our next question comes from the line of Lisa Gill from JP Morgan. Your question please. Thanks very much. Good morning, John and Mike. Mike, let me just start with the guidance. I just want to understand, you know, when I think about that range on each side. You know, what are the key drivers to getting to the upper end of the guidance range for both revenue and EBITDA? Sure, Lisa. Good morning. Look, obviously there's a broad array of variables we're trying to model as we enter the year. The short answer is the two key things are referral patterns and the inflationary pressures. You know, with the onset of the Omicron, we saw, as John mentioned, a pretty quick disruption around, you know, some of the referral sources shutting doors, restricting access, et cetera. One of the benefits of our chronic portfolio, as you know, is, you know, that's a longer duration therapy, so you have more forward look. The things we're watching here in Q1 as we think about the various scenarios that get us to the higher or the lower ends of our guidance range are primarily the referral patterns, how quickly our commercial teams can get back in front of referral sources and replenish those new patient referrals. On the other side of that, obviously it's real-time management on, you know, the disruptions to the supply chain, managing through transportation costs, cost of corrugated, et cetera. And many of our suppliers aren't without supply chain challenges that they're facing. Those are the key things that we're trying to model out. We're admittedly, you know, being a little cautious entering the year. Historically, you know, we've tried to tighten and narrow our thoughts as we move throughout the year, and we'd expect to do that as well. As we sit here at the end of February, obviously, hopefully, Omicron feels like it's kind of moving in the rearview mirror. Who knows if we'll have another variant. Are you starting to see referral patterns pick up, as the virus starts to wane a little bit in different areas of the country? Yeah, Lisa, it's John. Yeah, look, as things start to go back to normal, we start to see that rebound. There's a little bit of latency, as people start going back to the hospital or things get rescheduled, you know, with out-of-office visits, et cetera. Yeah, we normally see that pattern, you know, kind of follow a little bit behind what you're seeing in the infection rates within the local markets. Again, as we've said before, it's not consistent across the country, so it's really market by market. We, you know, we start to see that and it's following the pattern that we saw before with Delta and other of the variants. Okay, great. Just one last question for me. Just two areas of how do I think about them, limited distribution drugs for 2020, and then biosimilars. Do either have any kind of meaningful impact as we think about 2022? Yeah. Look, I think as we've always said, the limited distribution drugs, you know, as they launch, they have a limited impact on the year, but they kind of build as they move forward. We've got a dedicated team that's working it from a business development standpoint upstream with biopharma in order to help with those launches and really to support them through that process. We expect, and we've you know said before, we normally do two to three a year on that. We expect that pattern to remain as we go through the year. On biosimilars, look, you know, as they get introduced, it certainly has you know opportunity and impact for us. You know, continues to move those forward and given the portfolio of therapies that we have, those kind of move in. Again, they don't follow the traditional pharmaceutical generic event given that they are kind of a unique product through that process and not the equivalent. But we do see that and we expect we'll manage that through as those get launched and be able to provide them as part of the overall portfolio in the different therapy sets that we provide service to. Great. Thanks for the comments. Yep. Thanks, Lisa. Thank you. Our next question comes from the line of Jamie Perse from Goldman Sachs. Your question please. Hey, good morning, guys. I wanted to start with just the comments on 4Q, the labor disruption and the referral patterns from Omicron. How much did that impact top line growth in 4Q, or were the impacts, you know, more weighted to the first quarter just given the timing of when infections started picking up? Yeah, Jamie, it really affected. I mean, if you think about it was really in December and really the second half of December when we saw the astronomical increase in the infection rates. It really was impacting more of our late, call it even late December referral patterns, which again, that's the rolling momentum into Q1. It really didn't affect the reported results in Q4 as much as it did the momentum. Okay. That's helpful. Just on labor, can you talk about what you're seeing from a turnover perspective, you know, across the last year and more recently? If you can comment on if staff that are leaving are leaving within healthcare or exiting healthcare? Yeah. Look, you know, we monitor and manage that, you know, all the time. Look, we continue to make investments into our team. We put in place programs for bonus programs and other aspects that, you know, allow our team members across the organization to participate in the value creation that we've had as an organization. We continue to monitor that as we move forward. We saw, you know, some really good turnover rates post-merger as we really consolidated the organization and got everyone focused around the mission and vision that we had articulated. Look, we've seen a little bit of an uptick as others have seen. Certainly, there's different job categories that have the different turnover rates there. All in all, I think, look, we're managing it effectively. We're investing in our people. We really focus around making certain that we are an employer of choice. As I said, we focus on trying to recruit our team members every single day. We believe we got a great cause as an organization, knowing the care that we deliver and that there's a loved one on the receiving end of every dose that we're dispensing. We know that we've got to be competitive from a compensation standpoint, and we know that we've got to create an environment in which our team feels like they're cared for and that we're helping them develop and really being able to meet their career aspirations. We're investing in all of those areas, and knowing that as an organization, our team rallies around the fact that what we do, you know, it helps to change lives for the better. That's a really good mission and a north star that drives us. Okay, great. Then just on the EBITDA guidance, you know, I know you're adding a bunch of centers last year and this year. Can you give us a little bit of detail on what the EBITDA headwind from those is in year one as you ramp up, and relative to 2021, is it greater, smaller in 2022? Then kind of same question on sequestration and any other government, you know, headwinds you expect in 2022 in guidance. Sorry, Jamie, I missed the first part of your what the headwinds were on the guidance. I missed the first part of your question. Just as you add new centers, the impact. Oh. On EBITDA, like what's the drag? Is it greater in 2022 than 2021 or smaller? Just comments on impact there. Then for- Yeah, it is. Sequestration and government programs. Okay. Yeah. No, I got you. Look, as we ramp these up, it's a good question. I'm glad you asked it, because as we bring new centers online, there is a fixed cost. You got the rent, utilities, CAM charges, the infrastructure for the turnkey. These are typically break even around 18-24 months. The new centers we're bringing online is really around fueling future growth. Not a big burden. It's a couple of million dollars of SG&A that we'll be bringing on incrementally in 2022 relative to 2021, which was million dollars to bring online the centers that we've opened. It's a little bit of a lagging benefit up in the gross margin efficiency. Yeah, there will be a couple million dollars of incremental cost for that infrastructure. Okay, great. On the sequestration, we're not assuming any major change in. Again, you know, as you know, there's not a material slice of our business that has direct pen stroke risk, since 88% of our revenue are with commercial counterparts. We're not expecting any material impact from any government programs. Okay. Thanks for the color. Thanks, Jamie. Thank you. Our next question comes from the line of Mike Petusky from Barrington Research. Your question please. Hey, good morning, guys. A couple questions. Mike, on... It looks to me like, based on your guidance and commentary this morning, maybe about $200 million of free cash flow. Can you just talk about, you know, priorities of debt pay down, M&A, internal investment, just how you would stack rank those, priorities in terms of your, free cash? Sure, Mike. Good morning. I think as I mentioned, I think our top priority, and we think the best way to create value for our shareholders is primarily through M&A deployment. You know, we've brought the capital structure just to an extraordinary level with, you know, no maturities now until 2028. Our cash interest burn is now around $50 million or maybe a nudge less, and at a leverage profile of 3.4x. With growth, we're going to continue to, you know, just naturally drift southward. We've said that we are very comfortable operating in the 3-4x range. Look, with a very capital efficient model, we expect CapEx to be around $30 million, maybe a little bit less this year. That affords us, you know, considerable capital to continue doing what we're doing, which is looking for both strategic and economic opportunities to leverage the platform. We think there's a robust universe of opportunities out there for us. Would you guess that the absolute total debt number would be lower, though, at the end of 2022 than it was at the end of 2021? You know, given the leverage profile that we have, you know, we've got a pretty straightforward, you know, we've got $600 million of loans and $0.5 billion of the senior unsecured notes. I don't know that paying down additional gross debt is a top priority at this point. Just given the fact that we've got considerable cash, you know, I don't see paying down additional indebtedness at this point as being a top priority of ours. Okay, great. That's helpful. Then, just, you know, we've talked a lot about COVID and related headwinds and inflationary pressures, et cetera. I think there's a thought, or at least I have a thought that possibly you guys benefited in 2021 from site of care, sort of shifting from hospital to home or alternate site. I guess, did you? If you did, is there any way to quantify that? As you think about 2022, if any of that's true, you know, how does that impact 2022? Could you actually see a reversal on the on sort of that site of care shift? Thanks. Yeah, Mike, it's John. Look, it's hard to quantify it, in totality, as you'd expect. But anecdotally, yeah, we believe that, you know, both from a preference as a patient standpoint, as well as some of the site of care initiatives from the payer perspective, there were some forces that helped move those patients out of the hospital and hospital outpatient department, for service in the home or one of our infusion suites. We're well-positioned to, you know, take on that volume as it came available. We also know, though, that, you know, the number of office visits have been constrained, the number of new diagnoses have been constrained. You know, I think as we move through the year, you know, expectations are those puts and takes are going to still be out there. And we fully expect that some of the hospitals are going to try to pull some of that business back. We expect that integrated delivery networks that are looking at, you know, how they operate within the communities are going to continue down that path of identifying where they can play. We will still be a partner of choice. We think we've got an incredible offering. We think that from a consumer-centric, you know, point of view, that patients want to be served in the home or one of our infusion suites. Look, we're going to continue to operate as we have. We're going to continue to have feet on the street and be out there to capture the market demand that's being created. We feel like we're in a really good position, but we also recognize that it's a competitive environment and we've got to fight for every referral, and we've got to fight for every start. All right. Very good. Thanks, guys. Yeah. Thanks, Mike. Thank you. This does conclude the question-and-answer session of today's program. I'd like to hand the program back to management for any further remarks. Yeah. Thanks, Jonathan. Look, as we outlined today, we're very proud of the performance of our team and pleased with the progress we've made in 2021. We look forward to a very productive 2022 as we work through the near-term market dynamics and capitalize on the platform that we've created. Thank you for joining us this morning, and please stay safe. Take care, everyone. Thank you, ladies and gentlemen, for your participation in today's conference. This does conclude the program. You may now disconnect. Good day.