AdaptHealth (AHCO) 14 May 222022 Q1 Earnings call transcript

Greetings, and welcome to the AdaptHealth First Quarter 2022 Financial Results Conference Call. [Operator Instructions] As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Chris Joyce. Thank you, Chris.

You may begin.

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

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

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

quarter review as you thank XXXX. for our Thank us you, Chris. and XX, everyone, results the for March Good we ended morning, joining

XX,XXX pleased of strong the excellent very and our XXXX start are to our performance with employees. We

reflect basis of We respiratory the reflected Our progressed. our strong operations. results in successful medical an country, rate And ventilation and our XXX AdaptHealth's current continued in equipment setups improvement X.X%, business their teams our diabetes well the patient $XXX fourth in revenues million saw by as patient we strong XXXX resilience has capacity across as supply This near momentum the the which as home quarter as saw from business the our expansion the medical QX of the March at quarter as equipment improved XXXX XXXX. the by of we growth approximately of setup organic were points operations CPAPs strong remained continued of in of of growth home performance our pleased with quarter in our or levels. April. setups

our are to over of hope pleased we suppliers to able be the will While be maintain nonetheless year, of consistently balance setups QX we have continued how level CPAP strong. with this the shipments

wage and includes workforce As environment with in we pressure, an inflationary rising are all that operating rates. increased continued operating interest costs providers, healthcare

While of offset program technology factors should in our pressures. generate to expense transformation these impacted our efficiencies of these margin QX, many the operating execution

rate limiting more front, hedged, of recent rate increases. the of than indebtedness interest effect debt or fixed the either is On thus AdaptHealth's XX%

our to deliver held and pressures This improvements. at technology growth course term, that amongst continue confidence to abate while more their can in we expected reinforced My States. these I'm committed and than While expect home. in we was are to XX These and continued by and the through we best in United met cities showed of X-day the manage our patients meetings do not through primarily over we X,XXX the sales leaders care, collaboration and meetings lives April across makes home me AdaptHealth deliver is national the AdaptHealth to X near efficiencies locally of our believe I empowering them ability focused results platform. operation live the coordinated meetings these patient confident May strengths across drive I models of clear health changing to ability to from of that home other us continue throughout flexible, range to from will take believe AdaptHealth States. deliver to core wide to position a our leverages delivery strength to differentiates our rapidly teams ensure well medical operating our it the healthcare sales beneficiaries unique our advantage our equipment providers United efficiencies. growth We which and

AdaptHealth's turned next those to and systems offerings medical equipment commercial and healthcare of population managing to partner as make home-centric ability payers Over payers, us care will years delivery X and design to to their physicians our care for government for supplies choice patients. help agencies a and models, the broad outpatient health custom solutions XX home and

usable Our used, data, by partners, physicians generate outcomes. control our and products, monitored costs care managed when and real-time and improve important to properly

a and sleep, diabetes, ever more demographic on than capitalize the leader well actively longer is respiratory As national the X.X we before. servicing patients U.S. expected annually, and that population in to positioned living million are in growth

the will services. can the expanding care Parnes, presence and past X navigating COVID these providers outpatient commitment trends our now Josh for our conditions deliver also who in elaborate in the AdaptHealth, from learned to years chronic of are to over our we to and As the management President, as critical to at-home the turn call are healthcare on home. favorable pandemic, such I

QX largest with about which some on being M&A I QX we strategic to update and on our M&A the integration In XXXX, on opportunities. progress efforts an intense opportunity in respect we our our brief focused AdaptHealth. XXXX, AeroCare, continues our well growth XX in on market, And completed diabetes XXXX. completed . transactions HME technology transformation fast-growing Community color particularly activities ongoing Thank additional company's deployed. Surgical, are you, December our while selective are a the as business as in will be is Steve. we to other than update late provide a and how capital more acquisition active was for

some of our in and expectations. we have New transactions. performance year, versus is talented Community with And nice the the already wins their of York markets. very pleased This New We have X integration been Jersey closed yielding team

in revenue years, is was AdaptHealth is to once smaller than synergies transactions integration to terms complete. these expected and acquisition in attractive existing previous While operation generate an branch very have of each been contiguous

to For HME XX% to in and operating are we to Products, QX, become Market out leader of in orders. [Keene] roll respiratory continues be promoting example, more in continue Medical England] QX in refers. on Adapt we we regions, have operations. the new an facility e-prescribe the company. forced a that operations provider, April, to to e-prescribe And better physician spear [New to an in acquired conditions a among acquired complement even in AdaptHealth adoption seeing market, XXXX. Switching nice approximately as we

and proprietary significant digital The capabilities. As reduction investing allocate other of well, and more more generated digital And result ordering, diabetes our cost e-prescribing and billing and digital and much in have were allow from than workforce QX, we XX% us of and to efficiencies, increased portals. orders resources reordering which XX% through ordering in CPAP are been efficiently. resupply digital

that the systems. and as This we example which our less homes, As of an note engagement. technology this revenue physician X% physician of labor despite will believe broad us challenges also expense labor led year-over-year. the percent inside increased a improve puts and than patient inflation, have offices Supply build internal efficient upgrade of forced patient that out shortages. allocation, recovery. chain us product directly more on to competency. ERP redundancies middle in an shortages to building and sourced utilization of and of devices and The to more We've forced a CPAP asset mitigate integration existing The Adapt drive out AeroCare pandemic

will to better of All made drive continue these and forward. things have going efficiencies, today Adapt

In service region our addition entering another competencies offerings strategic from either one technology are to our or to and opportunities by expanding we core our new to increase constantly through revenue, ongoing into transformation, markets. assessing leverage

believe diabetes is into into AdaptHealth expansion XXXX in of CGM a market. example Prior a the market. expansion Our the differentiator good in to supply fast-growing presence no diabetes new July We AdaptHealth. and is a core XXXX, services this had for strategic

on diabetes similar the respiratory and services. in the of to those followed and, acquisition conclusions, business. in CPAP that Our X that also CGM to of services sleep of additional by and found aggressively demographic we acquisitions between strategic particular, with the over review diabetes This diabetes many of July those a degree substantial we market plan our a diabetes business move on the into chronic XX drivers in in these noted executed Based patients months. space for of next XXXX, were target Solara in overlap the review confirm resupply

As we increase many business efficiencies. implemented of acquisitions, our revenue integrated resupply technologies our have other we supply in to operational have diabetes HME the successfully used improve Solara and and

volumes and in drive successful therapy to throughout. have patient recognized diabetic at pharmacy the ability shift by home. is have communicated As our and a said CGM the patient is as a longer-term done we Dexcom piece critical living of consistently, Further, as to largely a adherence being CGM Abbott, grown

Turning these these X.X how orders, of COPD, costs interacts extremely to drive of drive engages programs and change, regularly with Real these the devices, patients. frequent CHF connectivity sleep in-person as of of annually. opportunities transform the these having given Adapt deliveries are patients to Many These exist now well high million to these apnea. to diabetes, through setups, patients patients services Adapt and that behavior numerous control patients strategy. some resupply subject combination and polychronic, Adapt spending. healthcare are are patient interactions interactions. with as frequently the

the that diseases outcomes and the the the in effectuate be stakeholders with at doctor a patient, sits up much one healthcare in relationships has few companies infrastructure the coordinate and chronic without better are crossroads the have set additional and continuum the these of patients between to the are the data We of able payer. their ingest to of breadth of polychronic Adapt to key cost. homes engagement the and and

our of we be the establish driving talent these future be to call innovative overall connected discussed to lowering initiatives focusing outcomes edge over now are in CFO, the chronic leading Jason patients to will of already More pass positioned and resources believe on for With are a the disease programs their we better quarters. that, in lower healthcare With well in on offering for of We focused cost medical Jason? costs and Clemens. I'll care. our home, homes. devices broad partnerships

discuss with I'll of cash for our discussion . Josh. call. activity the quarter our and you and our first Thanks, joining morning, and flow 'XX results, operating first for quarter outlook. the capital Good a allocation thank conclude

XX, $XXX.X as contribution growth XXXX, in the X For from And improving was the X quarter. X.X%, in as February March non-acquired Non-acquired growth a contribution quarter's year-over-year growth point expected, versus converging also of the months growth Solara. XXXX our closed the XXXX. including including net from quarter full quarter that revenue and Organic of of organic are lapped for AeroCare the quarter. ending acquisition AdaptHealth and first X.X% we quarter reported representing larger year-ago for about growth acquisitions, fourth XX.X%, million, AeroCare was the

As reflected and and the from Philips' HME despite our our noted, quarter and particularly volumes revenue performance Results were from with and the the impact also internal resupply ongoing in PAP Steve of chain strong better-than-expected products, a consistent EBITDA patient we ability diabetes to the shortage. which in first sleep PAP with deliver benefited pleased adjusted for expectations, device recall categories, supply our despite solid challenges. performance

supply higher As chain cost impacted and results. challenges have our expected,

our mitigate technology. we scaling Steve as leveraging Josh and to by taking are steps have these However, and described, pressures

technology these patient delivery such, saw technologies. as previous expected for highlighted and including as well our calls, the Oracle OTL, As in increase strategic on platform, we quarter. the investments other expense We've

confident achieving Although we out very are utilize tools G&A we we of inefficiencies EBITDA in investments anticipate rebound to remain increased margin our as quarters, that at implies the other full-year to in operating accelerate XX.X% current these we leverage guidance margins out pool and will of levels our that and drive operating cost future expenses. these midpoint. labor We adjusted and expense, from confident

continued equipment CapEx, as we evolution it in little a of in CapEx. longer increases as effort patient total our adjusted but This business reflects to noted, with very reporting simplify, the diabetes is percent also As revenue an mix. no EBITDA-less are previously

are and We light Like the factors eliminating continue flow guide in quarter cash year million, of cash flows total [DSOs] impact payments. million cycle interest cash the of CapEx the $XX up with a of timing financing. million. to days to $XX.X the were and revenue change ago. paid $XX.X $XX.X Total providers, of and equipment cycle, from lease for first patient XX on variety will from and firm from focus XXXX, other quarter at flow ordering fourth the interest was healthcare held most historically cash million. a no operations through payroll patterns, generating expenditures was Overall, capital free

represented of CapEx inflation nonrecurring revenues, consistent to As activity in recoupment negative during Act Free of of higher This XX% X% includes was will guidance was our was Accounts use of than $XX end freight the quarter. spend flow relates the of revenue. to CARES $X.X due by the and it million expected, continue and payable our XX.X% surcharges to cash $XX done which This will be outflows historical the for with related to million. QX, quarter, implementation. a but ERP million. the cash

throughout flow spite track these cash improve trailing we quarter and the of improve year, as our cash will on work $XXX starting under revenue an we to revenue had convert in We as months we to next Net was the and use discounts, leverage, bank the X.Xx. cash. our XX should was X.Xx of so this In will as which and realize X% At leverage X% million balance pay off, of for to on defined beyond. that on revolver. remain X% QX, covenants, items of pay free this to expect should ROI XXXX, leverage we prompt of X% end, year X

XXXX Turning outlook. the to

guidance the that our emergency public of are range, quarter small another the We by acquisitions first in updating the the we reflecting days. primarily health XX completed extension and

relief additional X in quarter. is Additionally, sequestration of included the point

million we EBITDA would until billion, allocations now billion market is billion. guidance year. prior we the it to up to to million adjusted is the on of to $X.XXX with is entire range $XXX not from back the of that from that range previous ResMed in the previous Respironics that $X.XXX equipment February, $X.XXX $XXX our billion revenue year now to $X.XXX Recall up the range our already half million, will $XXX million. before provided And $XXX Specifically, assumes back and the the return of take range

include As for over is pass open thoughts from customary, closed. before call does now that I'll to for it contribution not Q&A. we guidance Steve our acquisitions up some we yet not final have the

our safe Thanks, our XX,XXX Jason. do everything entire finish I'll turn by efforts again over appreciated to manner. needs have patients in address communities Their first Q&A, team. employees to in call operator our things two there are greatly for continue and to thanking the executive a and done would they for we caring to are the by And additional the like before the I cover. of

an the First devices, the and solved with and Respironics greater computer of increasing be by combination recall and PAP suppliers ultimately chips back is on offerings new a market of capacity. to will update Respironics shortage. their coming other This availability

AdaptHealth continue April, reduced. backlog to CPAP of March published see patients CPAP up unlikely experience This January are we our by on these to set new the before to to will grow continue is CPAP, grow for backlog is assumption. And we despite expect strong where that reflects will in Respironics remarks, with sale supply and pressures own patient believe it units our We waiting guidance be setups. XXXX. continue on consistent until Based

However, this that suppliers year. other to be supply we their hope will issues chain address able

share and delivery management we CPAP such, efforts an of times CPAP As market. turnaround when our return resources invest the to in maximize time supply patient to equipment historical reduce associated ensure to we units with and to continue adequate setups market

million of common with has program belief immediate outlook stock a and buyback in buyback group, to of common of to Finally, trade of to at $XXX a AdaptHealth's stock. a With release authorized up Directors, our This that morning, AdaptHealth and this questions. demonstrates bank as confidence our its AdaptHealth's line long-term program the support earnings our value. noted the for Board prospects open continues our that, discount please in share operator,

[Operator from Instructions] Brian comes Our first Tanquilut with Jefferies. question

of maybe the you that shifting year, next where and the all if maybe build even talked that market Respironics, on the color even with the part the Maybe start things of terms just in you last you're share presumably with backlog. seeing end us year? you as out [call] with can some I backlog conversations hit to guess, that you in share Steve, and about you're of this normalize towards manufacturers supply to think how play and at in terms the having will of early shifting any

with grow Yes, we've for everybody sure. because pass, Thanks, to the that the Brian, the Definitely, for less a industry, the last doesn't record but supply just there's that backlog couple up meet even continues not just for had the of at us, months, question. demand. in

is going people they that solved. Respironics factors because With those I chips main in the other described backlog we as the solved could will much market lot to a into but be chips, else. anything of the by So want chips. until the Respironics, grow And besides as is continue this to are bring factor back market

to do what we're many of portion [backlog], as our that, the the minimize of minimize get and portion we're to up paths with trying to can trying the our of So is, as backlog. we

when backlog increased not best we'll these there So in also from do position become levels. fill they demand the that's only be the our out but available, to

[card modem. won't products in manufacturers providers So to the products in other other won't going or you're cloud] They has there. that, come connectivity. the add ResMed coming there. to seeing announced have that's with in They their more have

out [that's technology. us]. patients as puts can important on additional it's on many But really the that we that offices these work physicians' as and with So there get to

machine will but it be just that benefits So do did have in again. so have it there We older capability. technology. won't before, can that it But modem [XX] since all it's to it an to we

what what this? little -- be to prepared then, game? probably the on Josh, maybe a is flip side, as being with also seeing on do you from about term. Any your back bit the thoughts the And a share you're bit to or picky, remarks, that pulled the us, acquisition bit the or valuations the probably Or better front do talked more on Got I prompted a it little can slowing down guess, you more does market acquisition you've in you prudent little why in you.

Yes.

based. it's some and think kind I based some So this of of is focus valuation of

work it last have the of related real flow the on driving in opportunity some technology improvements just So we of acquired. profitability, and to and lots that year cash we acquisitions is we're did free that many that of integrating terms internally, doing we on businesses that the additional

in of market some that market natural acquire So terms took where shifting terms products this a amount there's think somewhat in on of recall. inflation, the -- just to digesting folks the in is know, course of state year looking. have and in of don't of into in-between the of terms this And we really, I last But to what of were shake -- related Philips' us year. we where of out of where really for still and decent a kind of terms of terms don't lot kind market high, that's going others you pretty there's or on valuations also valuations are know of companies the a reset of in

others if based. more they're Philips' terms recall, of impacted than sleep the were companies Some in

some these terms in is kind adjacent -- playing But that's opportunistic like of that market really in of it's that's at we're out get feel out the of seeing we're, some the if reset kind this we valuation that folks it's office have. negotiations. what easier seeing little bit could of of, in good a a for But really, point. So branch operations we that of of synergies we to opportunities some guess, I or of

priority are work at of are the to looking synergies those, and going take of and we're because just some priority as of a So other obviously, deals. the upside there the of amount that and the

me, question quite about for talked And if there. you may. care bit Got then I last a Josh, it. management

that enterprise that category? in about service thinking as it you're you wondering, benefit bigger the overall Just how get brings what or monetizing to

Sure.

So of patient already and other outcome. out I with the we'll the lengthening leverage really terms with really, the mean patient now looking or But and home our trying diseases were better the COPD that CPAP better to of CHF CPAP doing we're drive we're really to that of some in distribution and a existing doing this the of adherence that what managing. adherence, diabetes, in outcome. on is We do a relationship CPAP existing on amount initially, to just drive chronic at resupply, now longer-term we're kind on

to connected agreements device and ultimately in doctors think be a to value-based think value-based I outcome investment have and I leverage because be We establish drive and outcome. don't it's really of interact a really communicate So that home. into drive to allow infrastructure value-add in have cost much patient connect cost like you, stakeholders, for more And with diseases our Adapt better additional the going a going also ability to payers, the that those establishing drive I'll infrastructure. to monetizing, and to additional the to much more to in get chronic get the is without remind the and contracts a us really the or terms of other able data and without acquiring outcomes to patient that the and we already in that better terms of

in discuss that works upcoming things the of number a got we quarters. the So in we'll

Our next Joanna Bank Gajuk of with from question comes America.

Is part always And follow-up the flow it that through if that customers of, would Philips I So know, how device? guess, I has on I [failed] their to would or I how to price] here? that a force eventually, [repairment Respironics of new happen, bought through Adapt? that part refund was the guess. for to the was equation flow that then the of to kind refund or kind don't recall, record this guess, proposed regulators. FDA first,

those and get products. refunds replacement be products, to on probably utilize the will the older we'll refunds Well, yes,

a price, a financial So interim on pressure think do we're to don't of come as at in be some Philips remuneration these put the also devices. but the see the too, you'll [new-year] how yet, We it it math. will are, where amounts FDA And continuing there doing we CapEx hitting significant statements. is to still lower this about is to is

I And somewhat CapEx. on guess, Okay. related the

a So for the you of don't -- it year, when the up revenues [tiny]. there's -- revenues the seems right, based ratio, But like feel I maintained guess the so went need like you to terms adjust for you the or may raised this for and high be think but the incremental freight about fuel way prices. acquisitions, that you nothing Is of of CapEx kind in whatnot? surcharges

about we'll line, We Jason. relief that's the goes particularly the think later get Yes, way XX.X% revenue for at the it. first year We it's Joanna, a in quarter. think to on, of the right the in little came CapEx as year.

out in just network, in with but of terms for the our to all comfortable our touch some line. freight are what frankly, predict. and it's we're versus up centralized freight we from of gas fleet incurring, several locations We just the our prices of of million prior forwarding guide, see fuel, seeing. year, did blue. that the X,XXX It our that's a of, we're baked that added hard feeling then, COGS vehicles in came to And Regarding is up really that was distribution

the comfortable feeling is and what seeing up guided But with it to for we've the what So contributing higher we're margin. year. within we're gross COGS

and -- up, hear. I the guess, to the in if spoke. contribution I revenue fuel went guess, I Any guess, the one good terms revenue way acquisitions. prices very I since those of quantify we But X to last just annualized magnitude on can Because quickly, That's Okay. EBITDA? last

Yes. Joanna. Sure,

the guide of line by acquisitions. is raised X/X that related A we top at million over $XX little So to

in acquisitions other of believe one small -- size really those great of was the were ones So our hub-and-spoke there but and deals. very announced, model. of the We

call So of the XX is acquisitions. XX.X XX, to from XX, it

sequestration. the $X.X line extension from $X is other top The of million to million

the get balance an line course, which we the through additional added extension of PHE QX, as next days. some So point as of XX for the well top

million the certainly sequestration million to bottom about line. line. $X.X we've So PHE, top through to That got entirely $X flows

million So the line and and bottom $X top due to flow-through acquisitions programs. due of overall, acquisitions government raise $XX line million government to programs, raise

Our next Alfonso question with Andrea UBS. comes from

Andrea a at Kevin just quick question. Caliendo for It's here Jason, UBS.

to trends just provided and date could about sort then the maybe sleep apnea on you of some give of Given commentary how feel quarter a seen you you're us the that today, thinking you've for some you expected a telegraphed number less the step-down EBITDA -- million still of that that that comfortable discussed. Is XXXX? was $XX for that Is range the think, you're I was with? still that quarter

bottom comfortable direct on to we're X . that I Slide comfortable rentals, our Based We're the the the as in call yet you supplement. everything but with as with we've I'll earnings seen for PAP in well margin April, a guidance. QX Yes. on month of very profile. don't know I would

million in You sleep quarter will the $XX second 'XX. of that rental see the of produced revenue that we

PAP before and shortage. So recall this the the is

rental close get bottom getting out off of we're we But could think sleep $X another see because side Possibly. on produced an we'll quarter? easier quarter. $X rental to to and the be think it as stepping $XX You hitting the do of down we I equation we be I next mean, that comp, or revenue And million in million QX, get this that. million the quarter-by-quarter. of growing we

out. that's side mean, and less Now it same census that that the highlights having sales we put is [sleeper path the of rental Slide in operation just other we're on continues just quarter-over-quarter. I on of we're humming. see that mean, is efficient I side. grow X. on units the you'll I mean, seeing quarter, despite that and thrilled I'd the what shrinking that in Again, our for mean, e-supply] product that account our out to of rental dynamic about. all top I despite grow line I one the be point the continue revenue, think to

with overall, So very happy we're that.

second question. a then just sneak it. in Got if And I could

reason if of think I of organic underlying growth in or And improve, is, year-over-year. new strong other about up the curious percentage in the business. to lines markets business demand from of teens, Xx As is revenue sequentially. that entering quarter the ask again. some mid- better in a example. quarter, the It's growth for I the higher the benefit that's of high drivers Its the your a the Growing becoming bigger

So longer term? are sort those ancillary thinking of business you how about lines,

Sure.

XXXX. Steve at I offset for number. for We say, about programs. growth just number products, growth was and We reflection The So picture, . very business very, good underperformed feeling in day, that the little end That more quarter. We with to for that for and And expected. of came running we're was by there the with We and a growth. supplies organic by we're for thrilled the was portfolio a to target very above beating But than XX% I'll we the business. we're of the quarter the X% up our big answer a put as about ancillary the diabetes of the think again. organic I'd pass a it side equation, that. good XXXX. of talk X.X% had feel the guidance

program. like weed. products. there, a been very there products DME have there, nice profile orthotics we very, product -- got terrific with been business which that other growing hospice in of The so the excellent. are lines, some also a organic predominantly that We're it's we've is that program happy of is in Regarding is that -- the We've a business

new Somewhat is infusion. of home entry a

year, the 'XX over come and acquisitions the early this course with of even components. of home have infusion Some into

business. of growing We So part it is a business. and nice part the the a of that like

which is that what about it Steve, little you and do some growth talk seeing want So what's why happening to within growth a is doubled bit category, year-over-year. there organic you're acquisitive some operationally?

Yes.

pandemic, and the with on so from And We things. We downs. there's some things. benefit other ups lose

very came have it's a through we worked said million in But in we've X are clarity to first fourth produce to we so an what the When this ago, on team And the really pretty very, just and that and then net and in was March, a quarter in produced $XXX that. the of able we been another the really neutral net-net, accomplishment. proud months throughout there $XXX hard. that million call, quite the quarter we do,

focusing control. there what worried about our selling So today not them. stuff they message have there been to performed able we've been out and And teams to they're on can today. they that's the team stuff control And our then that out that they can't tremendously. And control very can deliver is

plenty patients. want need for products that's sources there's patients we referral that doing can and there today. their and those, So provide we're what out And the of

Chickering Pito Bank. from Our next question with Deutsche comes

Joanna's to follow-up about question guidance raise. A the

on inflationary the seeing that zero impact said the Are is there of the strong of government sort obviously, implying we're controls? raise increased fuel despite guidance the of due to in costs, extensions. sort You due cost guidance costs, your sort the original is deals you that that to

what That's Pito. it QX, fuel a the costs. $X of Yes. was under touch we're saying, in million unexpected I mean,

levers pulling various got lines probably confident But to execute lines way are in pull we those expense So that. find some We've got of as curb improvement is a the year-over-year to and revenue, there need on percent other faster. we're within that. we'll to operating the and we that that -- a

what guidance the only and we overall, programs to communicated on is government change acquisitions. the on So

of call. comfortable we know, And I with very chunk in feel you very, a put what we we mean, As out. big the took out guide last

excellent. Right,

For typically XX% diabetes, of quarter of [diabetes] revenue. typically, revenue XX%, seasonality, because are sort annual first sort of

the revenues to diabetes at I way for imply So that about the if range diabetes? look thinking right the would Is that [XXX] the of year. XXX, in

might on ballpark. the in a little that, but You be you're heavy

way Yes. about right to It's the profile. the think

that do Okay. is let follow you break way any forma you there by sort guys growth, diabetes? When the out then one. pro organic line up can is and on like me And sleep of of sort product

Yes.

Fee we Schedule as talked top final So predominantly Peter, increase the average we and Rate call put for point came DMEPOS out rate a weighted rule. well volume. line. of from DMEPOS the changes some X% We about with a points that total the the of so that guide, when X

of pegged rate, organic and of year. an that. course had sleep touch a X%. products, do negative than diabetes about We the we confident at terms over very XX% that If anything, put we the better In at had we'll with a growth feel

X% to outperformance mentioned. that had because a X% of in We're better resupply we I I the negative. touch think the doing than that

other had we home, DME, supplies then ballpark. points. we lines, The in respiratory, to X And at product and We're had the that other at X%.

As mentioned, X% think bit. dragging level, overall, supplies But at the that. a is we we great and feel QX the about demonstrates portfolio

rental, sleep getting is that -- quarter? you for sustainable level, Was resupply the resupply forward? a this fourth your these sustainable how to weren't think ordering the they strong. sort that that do versus sales the I is of backlog about more are the during of people point sort were incredibly levels? revenues, Or guess, on going So

Steve. Yes, mean, that are Well, very I they is sustainable. yes, program. we keep Peter, improving just this

with team Our incredible resupply. an has done job

past And over electronic years, and electronically our our we XX% -- in to ordering cut back from XX% Just that staff. us have under the we've, of and patients X now now. gone ordering, over through haven't

on use And more need that. focus attention our like the remaining need of time, so the to staff more stuff to XX% we're that patients and able

that And continues with that and to so increase able compliance work and just the on that all stuff is their they'd -- patients done. be get machines that our to that the orders

So this is sustainable. very

to continue In improve. fact, we believe it's to going

own of [regulations] buying has through shares [here]? for doing share Great. between you sort And understand what's $XXX then as the million large the guys repo? guys on of from view you me for sort your of debt, it's quick integrate back guess, put sort your repo capital curious, reducing today versus deleveraging and of allocation. out share question I view a I lack obviously, how Just here. last normalize deals

Thanks, Yes. Pito.

say did The our come we XX cash. is, if leverage. as produce look and net you I that, thing we continue think at grow mean, from first trailing will that We QX. I'd X.X% down

to technology in to disciplined in you have see opportunistic. tuck-in the going we In be we're allocation, to of just I excellent uses and as to deals. mean, appropriate internally But I frankly, capital see cash. was other-uses the use terms fit, anything forward. I going are And we'll at think and But [Josh], that. do think continue the very methodical acquisitions the we we'll program. and authorization, you'll it be obviously, on know investment just going mean, terms repurchase program. we then mean, share thought I mean, it the to of investment of that? see to continued trading thought authorize and And us if levels, you're I add don't I

those leader only our And to to some the for on -- comeback will this not shift opportunity and a that still our the our significantly, part in -- acquisitions capital of PAP. using advantage get in come big We're once-in-a-lifetime be are of leader to we market a availability [indiscernible] also a out backlog to possibility We're of Yes. but story. opportunity our to of pretty PAP share which increase market But us as on of that this take get back, actually us, share. need [paths] a historic this. to coming focusing

that. we to have seen product long and able of want to lot focus the time the on probably opportunity sure we the focus biggest in the that a to a so be in we've people that. And and do It's the is And make HME.

it's so say. to mind, high needless in our And pretty

Stifel. comes question Mathew next Blackman Our from with

I've target? got I million commentary new one with, revenue do of that diabetes. $XXX historical million how more juxtapose call could $XXX more that you And up wanted you any the way historical versus line of to time. get just trend? one that two. after on follow-up Is to selective it, M&A commentary sort your commentary And there I've sort acquired in got

Yes.

that. So I'll take

it, again, our obviously, appropriate. we've I that's still But our and So think, exceeded that's guide, been as guide. general, in it and lowered

what the marketplace of product. There or availability we're I half Again, acquisitions. down year, the our talking of Again, us for in deals depending QX, in in could looking plenty where terms We gets, about integrations our focus, do right ability now of do. supply are and think the CPAP to on that's to up dial at. QX. back of we're

X came AeroCare together powerful We that M&A very, have and very teams Adapt. from

hit we've in the that that it. over much still So years And target. And for in pretty keep general, about general, in we've opportunity us that range. we're in we it a target that like last as thinking done

day also the Yes. was of Mathew, year. And should last that done realize the on acquisition Community you

that's So for in least a all us, intents XXXX at and really purposes, acquisition.

already we're those of targets. or we've low for end we're you the already And had done, either that, so exceeding if the revenue the and at -- certainly revenue ranged

year. active And and our revenue so the very going in we're to be, mind, still acquiring very, throughout acquisition in

big Makes business product there around releases patch that There's see I'm to major it. just any I launches? that uptick just new curious, CGMs then products in mean, but with were do These Got diabetes, diabetes trajectory in this you in sense. see product new pump I'm any out. franchise? And are year. new skewed typical new probably a the are launches. on typically they X market you somewhat likely changes if pharmacy, curious,

Yes. Thanks, Mat. This is Josh.

technology leverage And patients supply. also as our on is in why demand. general, at stay their I adoption hand. any why the of in ourselves to technology of secular really technologies disease So But on pay, health I interest as of we're specific funnel. distributor, think seeing their going the those interest A be long doctors, diabetic and strong tailwinds term. with think that help hold lot new is of also more and And out-of-pocket think to innovation really a seeing states in really I into levels. diabetes getting I the focus help these in with there's that the more able how And health distributors new like do in coming and in that patient and better [opting] not we lot patients patient better. that's home keeps that patient's to that's more well in doctor, to more plan, space, and and the based lot of diabetes, it driving the cash their come terms suppliers the there, just help a driving interest you to that general, to . lot with And But tie I product -- yes, diabetes the then I therapy. per different but drive within in a doctor general, market some together think connect that's device, of patients distribute it's are underlying to them that therapy through advantage products, wouldn't a getting se. you're of different of Both connected think adherent see system the both insurance adoption, them that's with

with Our is Mayo SVB. Whit next from question

so? initiatives the of any see any the tailwinds talk most the those kind in the ERP wanted maybe benefits on one, kind boring a or heavy the going there's of conversion I would about to stuff and of lifting, to or movement on your investors' systems just from with -- lot you perspective, just next expected year Jason, of that and update some of with expect I'm first behind fascinated it. scenes, Can but you

Sure, Sure. Whit.

stuff. on So you're go referencing because it on [boring]. President me about could CEO to I rolling at eyes this are and and their My

the on So us. went behind is We lift live heavy say X. February I'd

notes, over So and things locally. posted done products They all versus and we've be to that. XXX locations. done, higher requisition X-way are used terms in coming kinds of electronically calls just contracted lot match, requesting we've what It's got like to. a leveraging that price caught the than say, invoice. products of in on is That on of agreed tech all and adherence or I'd phone

that's of [AutoMatch] out tech leveraging and variances. so of some to And the the to throw beauty

are teams And working purchasing so that. on our

just probably of that say, there's a payables. mean, another I'd we so side. spoke got in up time. on over realized there little payable we've about And of coming quarter terms the I savings bit -- tightening be will dollar next

as our prompt-pay discounts, to But suppliers. charges on. of rightsized we Some staying that to, other that EBITDA avoid as intend either just well capitalize with there's late absolutely is frankly, finance fees or drivers

So that's can they then ERP, harder. a makes these without a category of finally, just some very run but it I'd management programs, positive. it say of be kind best-in-class And lot

this an mean, we've of the direct all visibility, and that [RFP] category add for on when spend the you to turn stuff, we to the service what we are out speak. so manage got as the indirect on dollars side utilities and significantly everything hundreds We got to And hundreds but side. waste now I internet time. need boring security, locations launching from is up management to over and hundreds ability

the we these well expect the and So cost right came revenue. we programs about at X expect quarters And money launching. We very, to of as they start in that's hit fairway. spent up leverage we ago, talked G&A down in get to that, straight operating going very we our that X of points And to in think revenue be standing line.

aggressive with, seeing it, That's you're helpful. out being or at prior at pretty different payers on And new payers I'm good. maybe we're around just look different? a anecdotes days AR there various the subsectors that across as Your more you're is you question. little being that look pre hearing other and stands bit anything claims as that working curious, or authorization, one

not there's up the pick anything in So I quarter. that really can

how view your So their be just changing of around curious payers sort behavior. may just about

that Yes. typically, an first I they days, RAR in did an grow days mean, our incredible that team first AR flat, RCM stayed the fact accomplishment quarter. to The job.

the and data there are documentation. and claims proper in there's making And that the stuff they use accurately certainly, our challenge. with the and come utilizing so technology interaction more more and more and But payers sure we're data, what the filed can that with at from more of and same that time, we're seeing use of

net-net, ahead activity. we're with data our more utilization our there's But of and net-net, insurance of So yes, the it. companies

data data warehouse data our management is So and fantastic. and lake our our

to -- our of prevent get month and And that works engines sure we all this to utilize added on, are in that team as those RCM constantly. and so and kind make denial that put rates rules we every our stuff each less

fantastic better. a done this has team to job. continue RCM that so And get And will

more So see curve, of of we're but do we the ahead it coming.

from with Baird. Our Coldwell next question comes Eric

at hour. here bit a to at maybe But the bottom questions the have myopic. the the for to going barrel of of I'm dig end

conversation X% in the in you despite being a ordering, that specific one, first around into year-over-year the labor a involved ordering? folks The up broadly. labor portal the comment was tied the firm-wide less than inflation, challenges, office that expense back Or in Was that proprietary to wage conversation?

or what, really That mean, was down, last so. -- -- our is I quarter, to about just firm-wide, our quarter it's this Eric. headcount, XXX

broad pretty that's -- the organization. it's across so And

the investment, doing XX% Now, XX%, targeting labor was XX% not I back more and that add mean, the where will necessarily a But efficiently. feel operating low better broad guide. just and comment. and that things I It's yes, office and just that G&A comfortable leverage for in at today. cheaper our people. that's revenue stroke We're terms into where We we're we yes, stand had of range. we in of

feeling that. a As you'll comfortable of we're [Q] see G&A. year pretty in bit the today. I crossover printed But with a later the investment in mean, of this is

up, think is do we get G&A operating as to So we'll going leverage exit that year. come then we and the

me Yes. Eric, to that. let add

where bill to correct being cost the the are reduce and in product X proprietary is And referral electronic greater delivery in our was the an electronic get the significantly And manner. the the OTL, out of which sources the our door today an than better a today call use patient to it in yesterday. time. those than the E-prescribed that's manner patient X, we the just past. and engages many, just it costs upfront As and those that's manner we all engages that get able in solutions, was that's more

through of to that of continue to the our our we'll care electronic and communication our are of adoption so sources and success. taking and critical patient. that technology more And patients lower them throughout confident cost these And we keep getting referral is our

about you bit That's helpful. quite And then, a business talked the CPAP today.

the willing . just actually backlog compares what to backlog on the in grow, to I how continuing you which broadly? be market. you if think I'm and about what patients in curious, -- we're us hearing CPAP total, therapy talked remind across can respiratory CPAP if many past? patient You broadly have whether patient is to then the would in how CPAP-specific your that or that's And you commentary

Yes. of got Eric, mean, equation, XXX,XXX I'd the I side we've around patients the on say, census. XXX,XXX to sleep rental on

yes, mean million. X well it's probably X is million million, resupply the census that's Now over million]. I pushing -- X [X

where certainly, off to the patients So that every and rental is. got we consistent rolling as XX-month starting recurring that's then you've that got due and really on census month, revenue cycle. patients And cycle, that, of XX-month stream coming part rental completing

the apologize, I but I patients approaching mistaken, you CPAP think said X could U.S. If backlog million you, if I'm was, exiting that you by quarter, you, it of still that see I could if you where the ballpark wasn't was us, it think not see I the the you last the of in tell backlog it hope that saga. was end year? -- is

all that very, number is that patients be that means script in there. XXX,XXX -- looking a from for very out that, we definitely the get unless that to confident are that's amount will brought have to said about. very some us. we've which stuff huge we're that already of that one and number continue are place Yes. a those a to conservative. That comfortable And and was number, were that significant in light. We mitigation will talked there's that, the And we from a CPAP. there's But grow, huge, patients

there us. the variety market could can't and market but that's PAP significant if that leader for backlog and reasons, that out would that, have so give you to could share, And setups you a we the our a a that to guess share, of of in related as out guess point starting be that apply if

more to than market the able supply we're Now, does. probably

be marketplace. of early fruition as So the or it relative our eventually 'XX lower that's will, of patients, is opportunity then can our certainly, than whether our mid-'XX. advantage can other strategy part do -- in it it take backlog to to comes And maybe our we get that, if we to people this

for at would There further floor comments. the to are no I closing back over like to Griggs turn Steve this time. questions any

thanks on Thanks questions basis appreciate various attending care call attention. the a from take that out the to of our your and of And all all again, employees for our there And out for go analysts. there the patients. and daily thanks

you. Thank everybody. appreciate I So

This concludes conference. today's

time. this participation. for your at lines your disconnect may Thank You you