Good morning, and thank you for joining us today for Select Medical Holdings Corporation's earnings conference call to discuss the first quarter 2022 results and the company's business outlook. Speaking today are the company's Executive Chairman and Co-Founder, Robert Ortenzio, and the company's Executive Vice President and Chief Financial Officer, Martin Jackson. Martin will give you an overview of the quarter and then open the call for questions. Before we get started, we would like to remind you that this conference call may contain forward-looking statements regarding future events or the future financial performance of the company, including without limitation statements regarding operating results, growth opportunities, and other statements that refer to Select Medical plans, expectations, strategies, intentions, and beliefs. These forward-looking statements are based on the information available to management of Select Medical today, and the company assumes no obligation to update these statements as circumstances change. At this time, I will turn the conference call over to Mr. Robert Ortenzio. Thank you, operator. Good morning, everyone. I'd like to welcome you to Select Medical's earnings call for the first quarter of 2022. I would like to first commend and thank all of our operators and clinicians for their continued professionalism and dedication during the last two years of the pandemic. The prolonged challenges we have faced resulted in us emerging, I believe, as a stronger and more unified organization. Every day, we continue to be amazed by the stories we hear from grateful patients and employees giving back that reaffirms our vision of improving the quality of life for the communities in which we live and we work. Our clinical teams continue to overcome obstacles and provide exceptional patient care. I wanna preface my remarks today by noting that we are modifying our format this quarter to provide more commentary on each of our four business segments. The financial details we normally provide on this call are available in our earnings release in the Form 10-Q that was provided last night, and I will only provide highlights in my remarks. From a broad perspective for the quarter, all four divisions of the company experienced revenue growth with an increase of 3.4%, even as we continue to operate in a very challenging labor environment. Labor costs continued to put pressure on performance, primarily driven by elevated nursing agency costs and incentive bonuses for employed staff in our critical illness hospital segment. For the quarter, total company adjusted EBITDA was $163.8 million, compared to $258.3 million in the prior year. Our consolidated adjusted EBITDA margin was 10.2% for Q1, compared to 16.7% in the prior year. I would note, however, that the results of Q1 of prior year included $16.1 million of CARES grant income and $17.9 million related to the positive outcome of litigation with CMS within the critical illness segment. Excluding these items, the adjusted EBITDA margin would have been 14.5% for Q1 2021, compared to 10.2% in Q1 of this year. The delta in EBITDA margin is entirely attributed to increased labor costs within both inpatient segments and our outpatient rehab division. As the quarter progressed, we experienced improvement in our labor costs, which has continued into the second quarter. We remain optimistic that the labor environment will stabilize as the year progresses. In regards to our allocation and deployment of capital, our board of directors declared a cash dividend of $0.125, payable on June 1st, 2022 to shareholders of record as of the close of business May 19th, 2022. We will continue to be optimistic and evaluate stock repurchases, reduction of debt, and development opportunities. Now I'll provide some data points and commentary on each of our operating divisions. Our critical illness division experienced an increase of 1.2% in net revenue due to a rise in revenue per patient day from $2,024 to $2,075. This was offset by a decrease of our average daily census of 43. Our case mix index remained consistent with prior year, while our occupancy decreased to 71% from 75% in the prior year. Many of our referral short-term acute care hospitals had lower volumes in their ICUs, which contributed to the decrease in our census compared to prior year for the quarter. Our census in April, however, was right in line with prior year. The relationships that we have built with the short-term acute care hospitals and our community partners, we believe are stronger than ever. It's our expectation that when the ICU volumes in many of our referring hospitals increase, we will continue to see those patients in our facilities. EBITDA margin for the critical and the rehab or recovery hospitals was 6% for Q1, compared to 19% in the prior year. As I mentioned earlier, the results of Q1 of prior year include $17.9 million related to the positive outcome of litigation with CMS. Excluding this item, the EBITDA margin would have been 16% for Q1 2021. The increase in nursing agency costs, along with incentive bonuses for employed staff, were the drivers for the decrease in our EBITDA margins. The salaries, wages, and benefits-to-revenue ratio for critical illness increased 18% from prior-year Q1, but improved by 2% from Q4 2021. Nursing agency rates and usage levels significantly increased from prior-year Q1. In Q1, the RN agency rate per hour increased by 21% from prior year and by 4% from Q4 2021. Additionally, the utilization of RN agency nurses increased by 36% from prior-year Q1, but remained consistent with Q4 2021. Within the quarter, our agency utilization was relatively consistent. However, we did see a decline in the agency rates for RNs as the quarter progressed, with the improvement continuing into April. In Q1, we opened a new critical illness recovery hospital in Nashville as part of our joint venture with Ascension. In addition, we are expanding our footprint in Youngstown, Ohio, market with a two-hospital acquisition expected to close at the end of the second quarter or early Q3. We have also signed agreements with joint venture partners to open four hospitals in Jackson, Tennessee, Tucson, Arizona, Venice, Florida, and Alexandria, Virginia, all expected to open by the end of this year or the first half of 2023. Finally, in April, the long-term acute care hospitals proposed rules were posted by CMS. If adopted, we would see an increase in the standard rate of 2.77% and an increase in the high-cost outlier threshold. We expect the rule to be finalized in August after the required comment period. I'll turn to the inpatient rehab division, which experienced an increase of 6.2% in net revenue, with patient volumes increasing 1.3%. Our occupancy remained consistent with prior year at 84%. Revenue per patient day increased $90 from $1,853 to $1,943. The EBITDA margin for the inpatient rehab was 19.2% for Q1, compared to 24.3% in the prior year. The decline in EBITDA margin was attributed to elevated agency costs along with an increase in nursing incentive bonuses for employed staff. The overall salary, wage, and benefit to revenue ratio for the inpatient rehab hospitals increased by 8% from prior year Q1, but improved by 1% from Q4 2021. Nursing agency rates and usage levels also increased significantly from prior year, but our agency rates did improve from Q4 2021, and this trend has continued in April. The increase in agency within our inpatient rehab division was predominantly in California and New Jersey, and North Jersey. In Q1, we expanded our West Gables inpatient rehab hospitals in Miami by 30 private beds and opened our third hospital with Banner Health System in Phoenix, Arizona, in April. CMS also posted their proposed inpatient rehab rule in April. If adopted, we would see an increase of 2.66% in standard federal rate and an increase in the high-cost outlier threshold. These rules are expected to be finalized in August after the required comment period. Turning now to Concentra. Concentra had an exceptional quarter, experienced a slight increase in net revenue from Q1, while EBITDA increased significantly by $7.5 million. Concentra patient volume increased by 11.5%, but was offset by an expected decline in the need for COVID-related testing and evaluations. Concentra's work comp net revenue per visit increased 3%, and reimbursement for employer services increased 4%. Concentra's overall net revenue per visit of $125 remained consistent with prior year as our employer services mix increased, which has a lower level of reimbursement than work comp. The EBITDA margin for Concentra was 21.1% for Q1, compared to 19.4% in the prior year. Concentra experienced an improvement of 3% of their SW&B revenue ratio from prior year Q1, and a 5% improvement from Q1 2021. Improvement in labor was attributed to improved clinical and back-office efficiencies as visits continued to increase within our centers. In Q1, Concentra acquired one new center in Gary, Indiana, and have executed leases for two de novo clinics. There is a very attractive pipeline for potential de novos and smaller acquisitions, and we continue to expect strong volumes in this segment. Turning to our outpatient division. Outpatient division experienced an increase of 7.9% in net revenues, with patient volumes increasing by 10%. The improvement in patient visits was slightly offset by a decrease in net revenue per visit from $104 in Q1 of last year to $102 this quarter. The decline in net revenue per visit was primarily driven by a 3% decrease in Medicare reimbursement. In addition, we also experienced a slight increase in our payer mix toward payers with lower reimbursement, such as Medicare, as our volume grew. EBITDA slightly increased compared to prior year, with a decrease in margin to 9.8% from 10.4% in prior year same quarter. The decline in EBITDA margin is due to an increase in our salary, wages, and benefits to revenue ratio. In the first quarter, the outpatient division experienced a 1.5% increase in salary, wages, and benefits to revenue ratio compared to the prior year Q1, but improved by 1% from Q4 2021. We have seen significant improvement as the quarter progressed in our outpatient salary, wages, and benefits to revenue ratio as the Omicron variant dissipated and our volume continued to climb. In Q1, we expanded our clinic count by 20 via acquisitions and de novo growth. We look forward to the remainder of the year and have signed agreements to acquire an additional seve clinics, along with leases that have been executed for 42 de novo clinics. Earnings per fully diluted share were $0.37 for the first quarter, compared to $0.82 per share in the same quarter prior year. As previously stated and noted in our press release, our board of directors has declared a quarterly dividend of $0.125 per share. This concludes my remarks. I'll turn it over to Martin Jackson for some additional financial details before we open the call up for questions. Thanks, Bob. Good morning, everyone. In Q1, equity and earnings of unconsolidated subsidiaries were $5.4 million. This compares to $9.9 million in the same quarter prior year. The decrease is a result of lower earnings in our minority-owned inpatient rehabilitation hospitals due to elevated nurse agency costs and the recognition of CARES Act income recorded in Q1 of our prior year in our non-consolidated JVs. Net income attributable to non-controlling interest was $6.8 million. This compares to $26.7 million in the same quarter prior year. The decrease is partially due to the repurchasing of membership interest in Concentra in Q4, 2021, which we now own 100% of the voting interest. In addition, we experienced lower earnings in a few of our large joint venture hospitals, again, primarily as a result of elevated nurse agency costs. Interest expense was $35.5 million in the first quarter. This compares to $34.4 million in the same quarter prior year. At the end of the quarter, we had $3.8 billion of debt outstanding and $130.9 million of cash on the balance sheet. Our debt balance at the end of the quarter included $2.1 billion in term loans, $340 million in revolving loans, $1.2 billion in 6.25 senior notes, and $94 million of other miscellaneous debt. We ended the quarter with net leverage for our senior secured credit agreement of 4.34x. As of March 31st, we had $253 million remaining availability on our revolving loans. For the first quarter, operating activities provided $69.2 million in cash flow, of which $62.9 million was recouped in the quarter related to the repayment of Medicare advances. At the end of April, there was only $12.5 million remaining of Medicare advances to be repaid. Since April of last year, we have returned over $312 million of the Medicare advances. Our days sales outstanding, or DSO, was 53 days at the end of the quarter. This compares to 52 days at the end of 2021 and 56 days at the end of the first quarter last year. Investing activities used $55.3 million of cash in the first quarter. This includes $46.8 million in purchases of property and equipment and $8.5 million in acquisition and investment activity during the quarter. Financing activities provided $105.6 million of cash for the first quarter. This includes $180 million in net borrowings on our revolving line of credit, offset in part by common share repurchases totaling $51.7 million. This amounts to about a little bit north of 2.1 million shares purchased, and dividends of our common stock of $16.7 million. We have the capacity to purchase an additional $533 million worth of shares under this program, which remains in effect until December 31st, 2023. We are reaffirming our revenue outlook for the year and expect revenue to be in the range of $6.25 billion-$6.4 billion in 2022. We are reaffirming our previously issued three-year compounded annual growth rate target for revenue to be in the range of 4%-6%. We still expect capital expenditures to be in the range of $180 million-$200 million for the year. As stated last quarter, we will readdress our business outlook and target growth rates for adjusted EBITDA and earnings per common share when we believe the labor market has stabilized and is predictable. This concludes our prepared remarks, and at this time, we'd like to turn it back over to the operator to open up the call for questions. Thank you. As a reminder, for today's conference, to ask a question, you will need to press star one on your telephone. Again, that is star one to ask a question. Your first question comes from the line of Justin Bowers from Deutsche Bank. Your line is now open. Hi, good morning, everyone, and really appreciate the new format and all the details. Just wanted to make sure I understood a lot of the development activity, it for LTAC. It sounds like there's two more hospitals expected to be acquired this quarter and then four, you know, developed by four de novos by the end of this year or into 2023. So six total, I think you called out. Then on Concentra or sorry, outpatient then, 40 more de novos through year end. Can you give us a sense of, you know, how do you expect those to phase in, if I understood all that correctly? Yeah, Justin, it's Robert. On the critical illness side, I think what you're seeing is something that we talked about a couple quarters ago when, you know, through the pandemic, I think there was an increasing recognition of the value that long-term acute care hospitals or our critical illness recovery hospitals play in the continuum of care of decompressing ICUs. I think the recognition of that and with a little bit of delay has seen more requests and developments. There's a couple things that I think are noteworthy about the critical illness development is they are in the main hospital within a hospital. Unlike the history of the company where we really did most all of our joint ventures on the inpatient rehab side, the critical illness projects in the main are now joint ventured as well. I think that is what we've been saying is a recognition to the importance of that segment in the overall continuum. Those hospitals are being developed in our HIHs. We do have a two-hospital acquisition in one of our markets, which is Youngstown, Ohio, and we did sign that and expect that to close. One of those is an HIH and one is a freestanding, and we already have a presence in that market. That's a further consolidation of that market. On the inpatient rehab side, we will continue to selectively do large, primarily freestanding hospitals, usually from the ground up with large partners. We recently had one open with the Banner Health, and we'll continue to do those probably at the same cadence and pace as you've seen over the last couple years. Turning to the outpatient rehab division, I think again, a couple quarters ago, Marty and I talked about our renewed focus on growing that division, and we said that we would do it selectively in small acquisitions and in de novos. We are in a lot of markets. We have over 1,800 clinics, so that 40 de novo clinics really represents us expanding primarily in markets that we're already in, where we know the markets very well. It's a better use of capital to sign a lease and open a new outpatient center than to acquire something. Where we can do smaller sized outpatient acquisitions, we'll do that. On Concentra, while they have a we only commented on one de novo and I think an acquisition, their pipeline is really robust. While that will be lumpy in terms of the announced de novo or acquisitions, I think by the time year end, you'll see that they've grown significantly through acquisition de novo. I hope that gives you a kind of a good sense. Martin, I don't know if there's anything you want to add to that. No, I think, Robert, you covered it very well. Yeah, very robust update there. Then just a follow-up on Concentra. That's. I think that's just continued to exceed everyone's expectations throughout the pandemic and now. Is there anything to call out specifically there, any, you know, new service offerings or is it just, you know, the economy taking share? Well, Concentra will always do better in a strong market for employers, employee hiring and a good in a good economy. Having said that and having consolidated the team at Concentra, having consolidated Concentra and U.S. HealthWorks, they just continue to do an amazing job of focusing on deepening their relationship with employers and doing a really good job on delivering, you know, short term results, but also some really good strategic thinking, whose efforts have led to just stronger and stronger market share in the long term. You know, Concentra, as we've said in the past, will always be under pressure in a recessionary environment when employers are not hiring. The combination of their clinics and their on-site employer services and what they're doing, I continue to believe that the Concentra division will continue to outperform most people's expectations. Appreciate all the updates. I'll hop back in queue. Your next question comes from the line of Ben Hendrix from RBC Capital Markets. Your line is now open. Hey, guys, this is Michael Murray on for Ben. So obviously your results came in a bit better than consensus, yet. Your comments indicated that agency utilization was essentially flat through the quarter, which, you know, the quarter was also flat from 4Q. Just could you give us a sense of how this is trending in April? Are there any indications that you know, the utilization is beginning to ease for you guys? Are retention metrics improving given incentive compensation? Any color would be helpful. Thanks. Yeah, Michael. This is Martin Jackson. As we indicated in our statements today, we are seeing some positive trends. We're seeing some reductions in the overall agency RN rates. We saw that start to occur post January, so February and March rates were lower and April continues to decline. We continue to see those declines. You know, and it's really two components we need to take a look at. One is the overall rates, and the second one is utilization. Utilization through the first quarter has remained relatively constant. That has remained relatively high in April, but we're starting to see that decline. We expect to see that decline over the next couple of months. Okay. That's helpful. Just another quick one. How much did testing and back to work revenue contribute to Concentra's Q1 revenue? What contribution do you expect moving forward? When you say testing, Michael, are you talking about the testing for COVID, which was really predominant in the first quarter of 2021, but there was really nothing in my recol- Yeah. No, there was really nothing in Q1 of 2022. It was really a function of what we saw was basically replacement of that testing by the 11.5% growth rate in volume in Q1 of 2022. Okay. Yeah, that's helpful. All right. Thank you. Your next question comes from the line of A.J. Rice from Credit Suisse. Your line is now open. Hi, everybody. Just to pursue a little further, the question about labor and the LTACs. What are you seeing with your core staffing? Is turnover rates stabilizing at this point, or is it elevated, your open positions? What about updates on wages with your permanent staff? How's that trending? Yeah, A.J. For the first time we have seen some positive trends in Q1 as far as hires versus people leaving as far as RNs are concerned. We did have a positive number in the first quarter, and we see that trending well. We saw that trending well into April. Okay. Go ahead, I'm sorry. No, your second part of the question was? I was just gonna say, if you're starting to see improvement there, shouldn't that bode well for lessening your demand for the temporary staff? Or is that? Doesn't sound like you're necessarily forecasting that over the near term. Yeah, you're absolutely right, A.J. We should see a decline in utilization of agency nursing. Remember, as we're onboarding the nurses, there's training that takes place for, you know, typically in that four-six week timeframe. We'll continue to utilize agency during that period of time. That's why I was suggesting that, you know, in the, you know, probably in May and June, we're gonna start to see utilization of agency nurses go down. Right. The other question I was gonna ask is about the joint venture and from the acute or health system partners, potentially both I guess in rehab and in the LTAC side, they're facing their own labor issues. Is that resulting in them being more open, more willing to talk to you about JVs as a way to manage some of the labor issues they have? Are you seeing discussions post-pandemic pick up? Well, to answer your second question is discussions have picked up, but I would say that it doesn't have anything whatsoever to do with labor. That's really not part of the conversation. I think that the joint ventures on the critical illness side are a function of a recognition after the last couple years that a lot of very large systems feel that they need to have this part of the continuum in their markets and recognizing that it's not perhaps their core competency. Bringing in Select, that really is, I think the acknowledged leader in this segment of care and being able to have proven to be able to take care of very high acuity patients that come out of the ICU, that's important. I would say that staffing is irrelevant to those conversations. Okay. Thanks a lot. Sure, A.J. Thanks. Your next question comes from the line of Bill Sutherland from The Benchmark Company. Your line is now open. Thanks. Good morning, everybody. Just to take a whack at the dead horse on labor a little bit, one more time. What was the utilization ratio prior to the pre-pandemic, the agency RN to total your total workforce? Yeah. We really haven't provided that nominal number. What we can say is that prior to the pandemic, if you compare those, what we're seeing today is at least 100% greater than what we had historically. Okay. Do you think there's sort of like a different new normal as to where it can return to? Or is there any reason not to think you can have pre-pandemic kind of ratio in the future? Yeah. I wish we had a crystal ball to tell you know, what it would be. You know, I think we would anticipate that it's probably gonna be maybe 100 basis points higher. Mm-hmm. Maybe. Okay. I can't imagine that in this environment, in this general labor environment, that we could say that it would return to levels pre-pandemic. On the other hand, I think we would say is we don't need it to return to pre-pandemic. I mean, what we need is just to be able to move away from these agency levels that are just unsustainable. And I think that the message that you've heard from other companies that have released is the same thing. Yes, rates are up. Even comp is up. Comp is up for our mature staff. It's up for new hires, which is, you know, understandable and we can handle that on a go-forward basis. It's just the extreme of the agency rates that I don't think that there's many people in healthcare services that believes that those agency rates are sustainable. We're seeing them come down, so do they return completely to trend on agency? I think they could, but you're still gonna have increase in, I mean, minimum wage is up across the entire United States. I mean, you know, salaries are up. Yeah, Bill. I think the way you should think about this is really take a look at SW&B as a percentage of revenue. Mm-hmm. There's really, you know, three large levers that we take a look at. We take a look at rate, we take a look at utilization, but in addition to that, we're also taking a look at what are the increases that we can get on the revenue side. I mean, we don't expect to see 2%-3% increases in our rates. We expect to see higher, in particular on the commercial side. That will play a role also. That's how you kinda recapture that EBITDA margin, even though you have permanently you know structurally obviously everyone's got a higher labor cost structure. Okay, that's very helpful. On Concentra, remind us how much the COVID comps are a factor for the, you know, for the growth comp for the balance of this year. Yeah. With regards to COVID comps, you know, if you take a look at Q1 of 2022, I mean, there's almost no COVID in that. Right. The increase- I actually didn't ask the question correctly, Martin. I'm sorry to interrupt you. I meant to say that your growth is only held back by the fact that you had, you know, the testing and so forth activity. I mean, it didn't hurt your EBITDA, but just kinda curious on the revenue comps. Yeah. I think the way to think about it is think about it in terms of the 11. You know, as Robert mentioned, the operators have done a great job bringing in incremental business in existing locations. That 11.5% volume increase in existing locations, the incremental EBITDA margin is substantially higher on those dollars, and that's basically replaced the COVID benefits that we had last year. Oh, okay. That's the way to think about it. Yep. Yeah. Okay. I got it. Thanks, everybody. Have a good day. Yep. You too. Your next question comes from the line of Kevin Fischbeck from Bank of America. Your line is now open. Great. Thanks. Thanks. I wanna go back to the comment you made about one of the levers to offsetting labor being the pricing. How do you think about your overall ability to get the price increases that you need? How long does it take for that to flow through the system? It seems clear there's a little bit of a lag on the government side of the equation. Yeah, Kevin. That's a very good point. I mean, when we take a look at Medicare is typically an 18-24 month lag with regards to seeing that incremental cost come through. Commercial is obviously going to be, you know, quicker than that. But, you know, it's going to be, you know, as I said, you know, probably. Then we probably won't see that for 18 months on Medicare. Yeah. I guess a lot of the companies talk about their commercial contracts being 2- or 3-year type contracts or yours more annual, so you can get the commercial up quicker. Well, in most of our contracts, we have COLA adjustments. Okay. You see it relatively right away. Then it was helpful to kind of hear your impact on the Medicare, your expectation of the rate update. Do you think it's gonna be a higher number by the time that we get the final rule, assuming we get a little more data coming in? Or is this more or less what we should be expecting for the final rule? Kevin, you know, you never know. I mean, comment period. Well, I mean, you've been around this business for a long time, so, I mean, your guess is as good as ours. There'll be a lot of input. There'll be a lot of people that give input to those proposed rules. Yeah. They never change dramatically, but they sometimes on the margin change, and it can be meaningful, which is why we tend to not comment on the proposed because they do change. Yeah. No, that's helpful. Then I guess maybe the last question. It wasn't 100% clear what you were saying about the LTAC occupancy. Obviously, like COVID itself was high. Are you just basically saying that COVID acuity wasn't high, so there's just less ICU occupancy during the spike during prior spikes? I guess in the past, you've kind of indicated that a lot of your LTAC occupancy strength was not really COVID-related. Just trying to understand that trend a little bit better in Q1. Yeah. You know, a lot of our LTAC volume during the height of the pandemic was COVID, and we did treat probably well over 10,000 COVID patients in our critical illness. In the main, the LTACs were used to decompress very busy ICUs in the acute care hospitals. What we saw now in some of our markets, it's hard to make a blanket statement across over 100 hospitals. With all of the extreme pressure on acute care hospitals and as the pandemic and the incidence of COVID and the hospitalizations for COVID has gone down relatively dramatically, some of those hospitals are still gearing up on their, what I will call, return to traditional profile of their business because their ICUs have been stressed like all are. The elective surgeries are less. They maybe have less volume in their ICUs, and that will translate into less volume for us. I would say we mentioned a 44 ADC. I mean, that is not gonna continue. There is a lot of pent-up demand for acute services. ICUs are probably the single most underbedded segment of healthcare, and so there's gonna be a lot of demand for ICUs on a go-forward basis. As that demand and those ICUs fill up, there'll be more demand for our services and our critical illness recovery hospitals. That will happen. We were just trying to give a little bit of color on the reduction of the ADC. Now, I would still say that there was a time when we would have said 71% occupancy was pretty good. We had 75% a year ago, which does reflect a little bit of COVID. I can't say that I'm disappointed with a 71 ADC on our critical illness side, but it's been 75, and it can probably go higher from here as we see more demand. Yeah. Kevin, I think the other thing that's important to note here is that pre-pandemic, case mix index was substantially lower than it is today. The pandemic actually accelerated the acute care hospital, sending these critically complex patients to us. One of the things that we're very pleased to see is as the pandemic goes away, our case mix index continues to remain high. We're continuing to get those higher acuity patients. All right. That's helpful. Thanks. There are no further questions at this time. I would now like to turn the call back over to Mr. Robert Ortenzio. Thanks, operator. Thanks everyone for joining us. This concludes today's conference call. Thank you for participating, and have a wonderful day. You may all disconnect.