AdaptHealth (AHCO) 6 Nov 212021 Q3 Earnings call transcript

Good day, ladies and gentlemen, and welcome to your AdaptHealth Third Quarter 2021 Financial Results Conference Call. [Operator Instructions] At this time, it is my pleasure to turn the floor over to Chris Joyce, General Counsel for AdaptHealth. Sir, the floor is yours.

Thank you, operator. I'd like to welcome everyone to today's AdaptHealth Corp. quarter XX, the for Call ended XXXX. September Conference copy earnings release should have this our a received Everyone earlier of morning. QX supplemental If that not, section presentation of a Investor the highlight is regarding slide earnings release our on I'd as well Relations like the XXXX results to posted website. as Chief some comments Josh AdaptHealth; of Parnes, Steve moment Financial of Chief Griggs, Clemens, AdaptHealth. Officer a In prepared Executive we'll President and have from Officer AdaptHealth; Jason of call the then questions. We'll for open

those annual to differ are filings. uncertainties, remind conference Act. quarterly like the and beyond. that results statements call projected our forward-looking Before could release not this risk number I'd we on Litigation subsequent forward-looking These provided of everyone included in our but statements which AdaptHealth financial to are for a update will the results no limited call press materially reflect XXXX this in Reform begin, events. because include, and of Private Securities such length in obligation of meaning in to, and Actual to have and the statements our factors statements information comments Corp. may constitute within SEC discussed at from regarding

Griggs. the will we call is Chief CapEx, being as EBITDA to less Steve call, will introduce financial Executive morning's now Web pleased This all non-GAAP available call morning's of site. measures. be on certain EBITDA our our patient of recorded, this and on a financial measures, such equipment reference later adjusted Additionally, I'm EBITDA, adjusted which Officer, replay today are and

resurgence Since to the how and X, AeroCare, the our more a we've organic happy the past today, of of including challenging completed line employees market million supply quarterly an accomplishments HME for And over and Philips XX of record recall, growth pleased a everyone we completed navigated you, Thank tightening report the joining and adjusted for and labor on AdaptHealth. with future senior to of today's the the of thanks revenue of quarter the July operating acquisitions X.X%. X,XXX integration rate are we're Chris. of $XXX call and to discuss opportunity And COVID-XX, issued environment, and debentures disruption. net and EBITDA diabetes the chain providers,

of providing ability near continue will to many we've Although the likely for impact and optimistic accordingly, to guidance an efforts in the challenges this And None to we've the them. for in confidence initial they and us members raised are patients get need. without our overcome access the to XXXX possible responding the increased unusual of ensuring is circumstances XXXX. outlook our our team extraordinary of therapy term,

We on resources of scale deployment towards advantage across product continue and increased lines our our and to attractive best-in-class the organization significant position our talent of to take the markets. tools to of retention capitalize ahead to and opportunities invest right us addressable of

future. we And opportunities continues of acquisition its exceed performance, remain the very year ago, with the well which More business, expectations the we with a health XX Over respiratory continue pandemic the Within the to lines, HME our delivered and the last months, part to has significant HME entered and our operating efficiency we into of continuum. Solara. demonstrated XXXX. for than are pleased the home care diabetes that growth product see organic COVID-XX a critical services to

application strategic our as of continue processes technology grow capabilities. bringing innovative over business and benefits as the this acquisitions, We AdaptHealth's e-prescribed the resupply to with well of

identification create integration. process complement business accretive that transactions through acquisition pursue from M&A an have in teams operational and continue AeroCare both will to target aggressively our AdaptHealth The HME to diabetes. We existing and combined efficient

million the of addition this more $XXX we've to year, February in than in In completed acquired date. to and AeroCare AdaptHealth annualized merger of revenue

remains targets acquisition diabetes and HME accretive, robust. of pipeline Our

We the Looking over and right pillars strategic and pass efficiency Parnes. to that shareholder the right so. capital of accretive we structure beyond, growth, right to organic the create Josh technology acquisitions. do now I have people, ahead by operational confident XXXX to our will and on continuing to key our remain value will President, we focus the call

quarter all and on Steve. some Thanks, to front. working through face full teams start integration by pipeline like delivering also would I operating a of employees, integration well for as as challenges and of the market activity thanking M&A particularly our our M&A the a solid in

has acquisitions July acquisition our target more X, in $XXX Steve This to $XXX have acquired of of activity which revenue million. is our mentioned, well XXXX million. As since XX than annualized excess we brings completed XXXX stated

platform, may ownership you Brightree recall, already operating as integration the revenue of well the allows ease easier risk which for on are transition many an and As process. of and as cycle helps lower targets processes our

workers, amid tight efficiencies. it some some noted, these to some some have has wage point forcing companies us better are and have to labor market staffing is be affects openings This challenges leverage that not meet pressure including cases, good in our wage more the positions. back-office that and personnel ability but flexible news financial our resulted technology rates to the other unfilled delivery in As certain guidance. to hourly conditions, The on create adapt, shortages, primarily in upward we experienced and

source of efficiencies some their build these the better with of recent to weeks, drive use conditions. chronic of and experience through our In better enabling investing as the million ultimately on to these X.X outcomes which manual frontline from automation to of we processes employees recall communications in have begun more supply We example, enables our challenges connected better due focus to for our adherence patient-facing with issue. referral plan by needs technologies disruptions patient success as technology, and separate on to well devices employees. more enhances increased our For chain patients Philips

implementing These shipped XX% from and expertise to into suppliers, DME challenge which our we product categories procurement to categories approximately entering and these contracting delays, these us. most opportunity issues national our For shipping into the are multiyear scale from and currently and limited We several view impacted in airfreight. lines, revenue. the mitigate products expect part, directly strategies, alternate from which and shipping backlog related these within XXXX. arrangements, including represent as issue is Nevertheless, context temporary include persist total issues we with expedited including the Asia, Despite by benefited ahead of our port this certain delays. sourcing manufacturers of a to of this are

embrace markets innovation We continue a the to we been advanced have which to technologies. leader bringing historically in serve, slow be to

reflected our orders are coming helps a just in to in of ago. that half operating referring the than up this from rates. easier to e-prescribe facilitate via is shortening now physician dramatically addition year cycle e-prescribed, drive more efficiencies, community CGM uptake technology physician on instance, our better CGM For an rapid strong time diabetic get by the growth believe in X We helping the therapy of experience in patients and

statistics than This technology to they and been arriving locations will continuing supplies homes accordingly. well more bringing to our for patients, XX% has provides out technology, roll and received ride-sharing has we exactly will now of proprietary increasing many be them when rolled to very their who which been tracking driver allowing equipment into be a customer Adapt where to see are, and their Additionally, are apps. them transparent similar satisfaction out experience with

of have also connected almost care A technology chronic and XX% We key we and patients to leverage Diabetes care disease registered significantly factor downloaded as approximately XX,XXX connected by continue engagement. patient orders interacting. our have to have plus we And engaged and placing advance digitally who these, in Adapt And on management. app. end, is Care that

getting follow adherent physicians' to As to be a and for a them and directives well, their patients focus resource AdaptHealth core at staying devices connected their therapy. to is

value to our additional supply will base We the Clemens. CFO, continued opportunity well Combined and for a to an explore pass strategy can and to we the we payers, on Jason and now with the we ever-increasing advance emphasis I'll as ways patients. HME as leveraging call add have providers exciting continue an patient growth chronic with transform to over conditions, continue believe industry. diabetes help

thanks full allocation trends during our and wrap quarter capital morning, activity up for our joining third I'll our and the Good with XXXX flow then cash quarter, update, discuss Josh. the guidance supporting year Thanks, XXXX call. guidance.

$XXX For despite million the with X.X% the of third growth, global quarter revenue outlined XXXX, as the for recall million, of pleased quarter business $XX our in chain. headwind reported AdaptHealth the representing net challenges in and our ending supply September sleep the Philips We're organic supplement. resiliency earnings overall of

business the performed growth outlined early representing unprofitable supplement, as after over and Additionally, our revenue, expected non-acquired our the from PCS our second high-growth improved, entered business $XXX over contracts and Solara million reflects the as reported the million an HME of in we X.X% $XX prior elimination non-acquired portfolio, quarter products. year. That in of as XXXX of increase

Turning to profitability.

Our that of pleased ongoing chain this recall of market. EBITDA the in we million supply profile for maintain a from We're EBITDA and very labor up the $XXX and the tough adjusted margin an XX.X%, resulting adjusted second quarter, the was challenges quarter. margin net slightly impact regarding

chain the continued the raising fourth guidance the Although year. in in the related balance continued we're supply expect the quarter, of and recall challenges for headwind still we to

in-year performance improved revenue potential adjusted of $X.XX fourth today of billion, $XX in our and to additional third $XXX net This acquisitions estimate million. million $X.XX shortages for are our For million, revenue and of equipment our $XXX $XX revenue of quarter, increasing million EBITDA $XXX updated of EBITDA of less CapEx the patient million for million announced we the XXXX, $XXX now Philips guidance Respironics includes increase to billion for the adjusted quarter. to to

$XXX cash over million, during with recoupment amount advanced of operations of flow For represents recouped The XXXX be quarter payment the $XX from that year-to-date, of of the CARES September by XXXX associated Act. second million and was will third CMS. recouped approximately the our half net

with expect operations temporary we connection trend. DSO the flow the anticipated lower quarter. normal reflecting third and was cash We've pull spike year. exit improvements a to by AeroCare, October to were since in collections into billing variety claim the due this the the we consolidating integration second normal already in DSO of run As in to quarter than a rates time There of cash holds back related noted

on about in to XX% under of and debt aimed our was revolver. quarter, $XX leverage $XXX investment was with revenue. X.Xx third just supply follow the a for quarter EBITDA $XX general balance million, million of We chain sheet considering approximately and cash At our to the fourth million planned on over adjusted end mitigating X% the of our liquidity Capital expectation at undrawn the was also to available quarter disruption. spending inventory an line executed and net

a few are There guidance. assumptions to XXXX focus to Turning on.

about for planning to to at we the are company very our across supplies XXXX, believe organic we're First, will about and emergency will it is sleep We will our believe into benefited continue We from the product public growth continue It suspension and X%. accordingly, diabetes improve believe will We DME and believe these grow and lines. benefits funding. In to will remain XX% excited our health normalize business, least programs X% such guidance. we growth. X% unclear excluded sequestration home from around XXXX. to respiratory whether and grow X%, all the

the we not know and increase therefore In an not is the DMEPOS we included expect it to do although fee our in schedule, magnitude guidance. addition,

years announced in and be December as to it will previous refresh accordingly. future in expect guidance We

we adjusted XXXX, million guiding EBITDA $X.XX to $X.XX of $XXX to net and to billion, For $XXX revenue billion million. of are

revenue. We seasonality total inherent of be capital result continue net expenditures is XX% first revenue. of a most to in in estimate represent anticipate to We XX% full diabetes, XX% as year of our the quarter which will business, the to that X% to pronounced

that. any As each turn Steve. years, yet include few contribution to annualized With acquisitions being of have said, we existing not to have certainly we'll capital I'll That least next and revenue $XXX acquire a at over reminder, our that, that guidance from the over does confident back do closed. that it we remain the not of million

this And queue questions. Jason. thank turn to At and the over commitment. again, we, we'll operator Josh hard back across time, focus XX states to Thanks, to for call all of our want for the their employees work, and

from our take [Operator Instructions] We'll Brian question for Tanquilut Jefferies. first

on quarter. good Congrats a

out quarters? be first question, few the Philips few it do to my going guess Just And over think we what I back does how months will So operationally? play thinking discussion, you the next about just to how the that P&L? should or

not if get going are to think mid-next the it's throughout just how into issues and fast least can question So replacement last they equipment their patients to Philips, at produce a full I year, resupply. And year. of

do our now. we've allocations historic, get from same our inventory able us, to now are up the they than it, is, less to what didn't for exactly ResMed, but us the been at So they time. caught and it utilize which They've allocated

pretty those produce feel to reduced confident we allocations that So be and manage our at able amounts. to be we'll able inventory

has recovery, back In recovery people the asset improved with aren't fill addition, suppliers to our using assets third, gap. patient from that And of dramatically them. we've engaged other that getting

to our the level. feeling back short just for very we're increase. about fourth able So October was very, pretty setups, good about a good month of us quarter being for June

So we're feeling pretty good.

continue to can the shape -- that to send kind able product has happens, really. patients been ResMed think in increase for and pretty new allocation patients. continues other should and we to make And their to to to of so suppliers us be industry, back Respironics good until And all equipment I if

number originally to XX. million we'd million that today. very narrowed to add, that guided $XX the confident is We're of up $XX We've risk of the half I'd second XXXX. in revenue

see it we're expecting It was QX, of $XX in million So $XX QX. million we in impact in P&L. our

see Looking of get growing as half think to 'XX, about 'XX. of million we ahead into be out of second first we'll we'll 'XX, half the headwind we're but of in confident this. the we $XX

businesses some are as should then, AeroCare, out, we some how base thinking Jason, hit thank the right the acquired are XXXX. for you plays acquired in But growth store thinking about will seeing for AeroCare? that we're about now? the early just are -- how that giving versus that you update same squeezing the we guys about about such of guidance thinking how you between as out organic of Any of And synergies rate cost that? that think on guidance maybe in be the then difference And the businesses what growth --

will question $XX the we'll synergy, synergy 'XX. first of is So various our on million that is in dollar in exit included IR on that. we've million our Page year introduced today for non-acquired million our To in XXXX believe versus $XX the find we The achieve guidance the every get a and we'll can included XXXX period growth of of we the website. of entire slide supplement -- is refreshed you million. $XX and guidance synergy, broken to cost X, On businesses, in your out $XX new from posted the reaffirm of in that earnings our coming we've the growth rate stub acquired.

pages. seeing And that white on black so in those and difference you're

prepared in we've the I our remarks. coming well portfolio, a the For dynamic the as for in non-acquired non-acquired up QX, that stated on I high-growth quite the year-over-year. portfolio as as including PCS Solara grown reason That's bit remarks prepared discussed HME, the cited, against X.X% into

the to acquired turning Now businesses.

X.X% As year. prior a the portfolio, over they grew

And course, anniversary we part those acquisitions. to the numbers Philips that. of calculations dates lap to are of those converge as the both of continue going Of as have

We'll Deutsche Chickering take our next Pito with question from Bank.

the that on about question. XXXX follow-up of bad next us So us how the can you bridge XXXX the of a year? revenue guys then XXXX X% with you sort from bridge. revenues of Can guidance what create you Just revenues help through us from comes And guys much remind talked more from sort M&A? are this dealing you XXXX? organic, Brian's for help that are Just

point by Jason. to start is for you XXXX. this Sure. jump-off exiting I'd bridging Pito, probably a

at is pro here of published couple the a see you'll days, midpoint $XXX you revenue be when if so of guidance XX-Q our take $X.XXX will in the billion, million. And forma revenue the

bridge And that So When and $XXX you organic in to good jump-off growth or million you morning. get add into X% to point we billion. that going you're QX $X.XXX that next call acquisitions a That's then going get $XXX million, to announced it, you 'XX year. to apply as got number, a about add you've in so. this you're touch the over

that's on all if factors, To you full at throw the and will, for them a are there we're risk, in So good mix we've view the revenue to the all that accounting kind and risk built few, you give you how guide. of or guidance. question going a within the of of your

So the first is sequestration.

sequestration is I think not. just still from excluded, no you're dollars relief will relief. all aware, is if assumes that it there's unclear it or sequestration guide The continue and

rate fee a be published do fee will guidance. that's we've Secondly, is our on We DMEPOS assumed the schedule We the first December. week in that it anticipate schedule, increase second published. but X typically or when anticipate got of

so those And PHE. all. then will last. those from become ongoing out the you again, we just as numbers long the It's, unclear will come clear, for benefit is how refresh numbers thirdly, and And it

We from are benefit in assuming X get that it effectively terminates. the We PHE XXXX.

of all guidance. a accounted again, the guess, our those, expectation government very of schedules the outs fee ins so with and conservative And programs for we've and I within

sort And then of together. follow-up I guess, questions I'll here. open X

saw much guys chain And in XQ? question pressures you XQ impact labor. the you On the XXXX? in much about for the pressure and can How supply staffing seeing excluding in see for guys do do And pressures, you side, XXXX same into the XQ? in guys that fill-ups, continued much talked from are What of the you how you chain you traction -- also quantify, assume XQ? guidance? supply which how How labor on

we're level the handle of kind seeing on kind there. high what I'll just of

more us to expedite in coming things from bit So the backlogs surcharges chain, particularly. product, increased product, ahead of CPAP Coast of Asia to we for particularly as costs, also trying around kind supply get poor the but to again, of the referenced on getting a as paying well things on trying some related the to little related West

in is but that into continuing impact in next of mostly year, of some kind kind of So cost. QX We built QX. that guided to and increased some of

more for that We've delivery that drivers back-office on will On side, how kind kind increases and in to definitely days of the workers able the everyone's mitigate hourly of the and some been wage with trying seeing we're as of into model. to with and additional labor some But numbers, competing and and side, the particular functions. automation talk kind do technology less. to of Jason some these drivers fits we're labor --

we've we And successful a the a far, those at I'll particularly. where so wage largely guidance. kind talk bit been positions, to of seeing that, let in of although are that increase into little But creep fits Jason

So chain. were patient just overall first overall CapEx. and Those costs flowing through CapEx on supply really equipment

note that CapEx might you next year on expectations up as QX So for our touch. well a as we've inched

rather X% at XX%. to So to than our we that XX%, put traditional X%

this and we year, and into costs but expectation As next essentially through early freight to a expect year for think that, surcharge we account to acquisition the deeper get refresh forwarding. numbers, that's those conservative we very

QX, higher bps fall on about It's labor, in kind QX. out revenue. Philips. $XX XX, of XX terms million forget, In we of had revenue ran XX.X% for But we of of don't

expect that continue than it's the that a more touch. that expectation is to over we up no QX, expect XX% of through course XX%, labor So of XXXX revenue. ballpark our and be I'd to

with Fischbeck of Kevin America. from comes question next Our Bank

for on Kevin. Courtney actually is This

CapEx be X% guidance. quick XXXX follow-up expected to of your disclosed revenue. the to one guess, XX% I So had noticed just total I on you

would And So out, that that could non-patient-related break helpful. that I CapEx. you this confirm just to includes wanted be if

equipment in patient it does CapEx So include that number. yes, the

frankly, maturing. I the into and free is We our I flow. assess easily investors complete guidance how a that help going we providing think picture at to investors and cash internally, company approach can CapEx are We how our that a is think mean get more look evolving changing it 'XX, is total company. because many

Nothing's which number. be know. patient roughly or will In We of a as as going continue. more I XX% And going revenue so change. the our revenue, standard that flowing really changed picture appropriate XX% of that it's rental there. expenditure. to equipment of is no capital of revenue, mean CapEx. It's at I CapEx, follow that terms take think for It's think just you continue to rental to X/X old to patient equipment total

follow-up. sure for from saw we CGM quick but a one this? insight And guys extent guess, not have devices, months ago, qualify your I into these for I to really the then, which how patients CMS any And for volumes qualification. you device to guess lift material I'm few qualify have the you seen relaxed standards --

the question CGM. on handle I'll

just existing the qualifications relaxed clarify previously. help place of providers that the really of some processes kind So were kind in of with

as prescribed to patients change anything really in that we these it actually these were really these didn't definitely of patients. really but of documenting kind it for down physicians and total of more such. burden applicable devices ease and else, or these it's And document made actual meaningful terms universe the So either than orders way, didn't easier the patients. it therefore, But administrative of qualified being any up kind it, numbers of of administrative kind just that see

Our comes with Mathew next question Stifel. Blackman from

couple Maybe start guidance. for on a the 'XX Jason

bit us sense, to the nice and a the guide? might couple job can can But give of you us EBITDA a did follow-ups. here of give flex calling more be of a some a little the some then of upper optimistic out factors revenue it the risks. a maybe that of You bounds you sense And

of DMEPOS DMEPOS it the we fee it year I schedule. you literally schedule. the with points. starts was that consider schedule, when fee this in with fee that basis start inflation I'd go up the XX would factor. first, say zero you factors assuming tell I'd really into the year, are change I that mean calculation Last

in previous this that through number over the X%. that's urban CPI case, year XXXX. so And I of June the was June mean of or

assuming high be what again, number. that be to you a will between assuming somewhere as but and look will X.X we're there So impact will change], could try of be, as if that adjustment. I'm estimate we're tell X.X It labor in in [and that to terms you sequestration, zero. possible, not I'll but going zero.

days, likely we'll have we'll next know numbers, that in XX we'll those accordingly. report by the And in time think be. QX, to I that maybe refresh and what days, we XX following will the

every you Finally, as The not. determination is PHE continue made days. refreshed if know, the public the health XX emergency. That, will or

And for and year, so have what numbers periodically, on every could we quarter will updates you all next mean. those

And G&A, quarters running at much last clip of at lower the than then a couple on it's been least thinking. we were

on of going is reasonable there? X what's think to quarters forward? So And going rate sort run the a last about

I'd in is ballpark this EBIT about lower the more of you're say frankly, that for referring likely, so to X probably in for that points growth as percent X% We've up between, revenue for gearing some we've we're quarter. is go just G&A, touch the guide next it SG&A revenue. maintained revenue to mean ex adjustments, somewhere X% a I there. this X.X% of I to be expect on would think or I revenue a got mean, or should that our I showing quarter. on G&A, year. getting we're what

if just a squeeze bigger last then just M&A, on And picture. one one could I

your efforts there. all on adding interested filling you or white targets? sort focused Just in you're something focusing still an the on in where lines, terms product Just getting in Is what above of else? prioritizing of are geographic it of update space,

they pretty stuff. and and of think opportunistic. to who's can't I we kind that mean what for do we're want sale I predict

market. we advantage have love opportunistic So of that we to are the do. in smaller take that. Obviously, be Those are to transactions that in and easy

out There's we lot we're assets at and that and diabetes in And so HME a along. of those will both come there like. looking

really expanding not As But them. products, looking always a that's at focus today. as far we're

diabetes There's so now, and Somebody that. pretty bringing right But them. idea on and we'll is at bringing us often, assets. look a focused an the we're every banker that's to HME

comes Our Whit with Leerink. next SVB question from Mayo

Is Just way you a a normalized of frame category. as let's been? the organic say, a a as to appreciate reference ones to organic growth Jason, that a categories would provided just what the here. quick of have by of of each sort of more the get any compare numbers what I sense the baseline there of growth environment, XXXX couple to,

Whit, sure.

I x I'm that at, as But call the diabetes follows into closely guess, what we've at X%. because electives, business lines until -- So as well you know, are that minute to pre-pandemic know, a well going as DME, product expectations. talk didn't for got we'd we in operate you that XXXX. And pretty performing been against as growth profile, of therapy. with general Medicare frankly, Respiratory, and important an expected. being age is and part of DME just oxygen 'XX, populations. the of that operating mean, we've it's I category over as discharges the account in of guide course And actually up of COVID what got our on COVID treatment

XXXX drag probably of to and of growth. normalizes for of what Sleep, a X% mean respiratory. expectations a a categories at going the in into see all for we that we guided I we've rate think 'XX, So run 'XX. touch

probably in look to XXXX, you I think higher, back if X%]. closer touch it's to [X% a

then based right we're his as think think the prepared line So get think We on just share continues mean, capturing we pandemic in with we're And diabetes. I last I end drag. points out the to still Josh that growing Frankly, we have that growth of market grow several of over comments in that that census about to the in a market very talked well we couple rapidly. in remarks. years, 'XX. end of diabetes

to something. going think were mentioned mean this determination mean second, requirements us I in forward? a anything that, coverage the CMN growth national there the the should this anything Does changes about since oxygen, to around think for On you? you relaxing some or home as Or we oxygen

to important I oxygen I definitely. make need more it And of criteria. just going short-term document think oxygen. allow I the And us going think the doctors to it's that's they're Yes, for to on easier mean patients.

So be of will business. yes, growth help it the -- it that will

factor of But long X.X option, continue to it's past look You you by the out on over just a if the all COVID oxygen. term, the offset going years. patients increase activity some to yes,

just of numbers One through one, we my was looking $XXX had my and at make circled acquired million notes, third just quarter, here. I the sort trying I'm I Jason. thought to up last of annualized revenue. add

other the deals for to And million, gap you've trying so subsequent to quarter closed account the bridge just here. that $XXX the the

That the there. was in detail

we was So $XXX acquired quarter to annualized $XXX bit over It million, a million $XXX probably $XXX that, of said, revenue. million above closer -- last quite million.

difference seeing. that's so you're the And

I would you the bring comparison but So same use logic, your [indiscernible]

UBS. from with [Operator Andrea next Alfonso Instructions] We'll our question take

filling It's Kevin Caliendo. for Andrea Alfonso

I you sort a supply -- bit of So little just outlined. and to granularity get put labor on the wanted that costs a more

we about maybe wherewithal contracts costs just your if to existing is are through -- mounting that As to discuss heightened think qualitatively customers? pass within ability perhaps pressures, there there those or

yes, costs of surcharges some backlogs, short-term mentioned we of we and cycle I feel to I scale and in And over a obviously they passing going the that. like pain poor in And to in supply quicker didn't and some for our -- see little purchasing some get definitely terms those, some larger, the at of increased to those particularly a some power comments going able payers. more bit of my directly about clearly, bypassing things trying 'XX. long of longer increased costs be we'll particularly we're the term. of and looking long of But there like any mean, term, manufacturers, temporary on of opportunity guide those the go. mitigate is terms discussion to build mitigate earlier the we're these of We're We products. into that through the those our larger, to chain our So gets where really these cost, the just obviously, ultimately, as over It's having conversations.

So and that costs of some pressure kind short- on medium-term on there. the

a really a then put you has And of of 'XX the of of EBITDA. underlying sort But that implicit that. mentioned the that's organic puts point think guys sort improving think about good trends. bit that just margin and within help some the sort you been to on of when expansion you've -- little bridge I want takes, business, to we guess I of the finer part business I the [merit] 'XX including keep

I think that better or Could maybe within that sort you of implicitly the examples much you to more forward? going take sort you through some diabetes expansion you outlined rather margin of that me make to of drivers prescribing walk get efficient. the

think really labor the doing the is terms we of So in that, the platform, some obviously, more spend efficiencies I technology organic like technologies I drives doing that increased companies manual and that mentioned our details what drivers with across are, more the testament additional a are operational of more organization. But operational margin efficiencies leading innovative, a less, haven't of really, in like drive particularly you much expansion. with just drive fact to seeing of what on efficient with kind is, less And line lot we're a more think, processes. other to to growth

patient job base. monetizing of going to And we're our So a existing improvement better doing means see that. operational also then

issues these we're have So we diabetes, think monetize comorbidities. lot have early we're us, have million have product other how a who be also from may issues, better of can lot vice of products patients, them COPD, from across out a X.X patients, to And starting with kind situations but of but getting diabetes us. patients platform related getting innings, I have CHF, figure to our clinical versa sleep are of still and -- of many sleep COPD, be kind these and they X

offer ability going also of time. as margin the in an monetizing our base, to So over of to that's arms but drive kind patient view we're expansion more to strategically, get around products starting we're that as that ever-growing terms that thinking We about more opportunity customers. ourselves to

we're Andrea, see And a next into for scenario worst-case 'XX going as X% into PHE, And showing I I schedule year, margin mean, add, that would that's sequestration, what we expansion change. for of DMEPOS absorbing net fee for from 'XX. a

are become the dollar-for-dollar revenue programs that -- into those from and guide, we those I EBITDA. as So them clear drops bring will into mean,

And so we clarity these margin to programs. that as on improve we expect would get

into margin expanding 'XX. we're that, with even So

jump And the that related. is I jump? quarter. a pretty question What which sizable was last I revenue me, cause the for number guess just for other noticed exactly in one had the housekeeping that

business. of that product it lines, a pretty new represents other into entrant So represents orthotics. We're series a

jump. about That's it of haven't growing We very that a but talked part yet, big a of lot rapidly. it is

Secondly, it's externally. headwinds things think, despite, our is of quite inside we're hospice I other, and other performing business hearing nicely and

have on is performing hospice part business got of a a that other revenue here, programs might as and Our We've in very infusion infusion home that stream line growing running bit and of acquisitions little there. nicely. here we're that we're small bringing in

about also this getting pilot very, we're a and those formal inside and go rapidly. that probably of I'd say at that's more out category so formal but programs. point, very it's And growing

the as to pie, happening but programs what's out, part that's other. So of you'd inside a us break these expect them become larger

our Close next from Richard Genuity. take with question Canaccord We'll

of competitive for the whether bit lot environment? driving a have this impacting you been my Adapt see and talk questions supply acquisition just But maybe addressed. opportunity? Do share on can A gains you it's the chain, the little increasing

particularly size, probably Certainly, yes, from where these we for the somebody product. definitely -- reason that it's And so on another is in joining -- particular with benefit family happens. time consider say another this and have acquisition to enough just some side, it our things they the need company. then But or to DAP we get markets

that yes, think, I So both into those. plays

to more. and out? that several point and And Has you whatnot. last over the Anything with said quarters? bit the to a composition DME appreciate then dig meaningfully diabetes little respect change pipeline, the to into I just

love but lot more bigger. that. HME of business, No, There's We not there. not There's business. in the assets in really. that assets We the a we're diabetes business what is love doing

line with now, mix. in So falling right our seems current to business it be

significant So other. shifts one or way don't the we see

questions the There floor appear pass management this remarks. at no be I'll time. to further back for closing to

is delivering our this everybody for and And continued Thank Yes, out again, thank you. interest thank employees just support. our their to to care patients. Steve. there once I fantastic want

again, thank teleconference. your conclude does for today's you, participation. We This

your disconnect may You day. lines at great this time a and have