AdaptHealth (AHCO) 8 Nov 222022 Q3 Earnings call transcript

Greetings, and welcome to AdaptHealth's Third Quarter 2022 Financial Results Conference Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference is being recorded.

It is now my pleasure to introduce your host, Chris Joyce, General Counsel. you. Thank

begin. may You

like If our presentation I'd the call welcome ended slide for earnings should copy highlight XXXX. operator. AdaptHealth morning. September to Relations website. XXXX QX results Corp. well Everyone this of a received conference on to the the section the our as Investor as that have release like I'd not, you, supplemental regarding earlier everyone to today's release XX, earnings is Thank posted third of quarter

In we'll Chief Jason AdaptHealth. moment, of Josh have a of from some and Steve Executive Parnes, prepared Griggs, Clemens, AdaptHealth; AdaptHealth; Officer comments Chief Financial Officer of President

We will call questions. then open the for

financial materially length risk Actual our begin, everyone These uncertainties results annual forward-looking number beyond. to of are for remind constitute factors and projected limited I'd of in statements that comments SEC quarterly within and we because the our a this statements but Private include, at discussed those regarding like to, Act. release and forward-looking which Reform press from Securities Litigation our of meaning may XXXX included Before differ in and not in could are the statements filings. results statements in conference call

obligation on update such provided AdaptHealth reflect Corp. shall have no call this to to the information subsequent events.

EBITDA, later non-GAAP such will a Additionally, free all and reference are the on today. call we'll this being which adjusted This measures. financial be EBITDA and as morning's call, of financial measures certain flow, of call replay recorded, available morning's cash is

Officer, Executive Steve our now I'm introduce pleased to Chief Griggs.

to X.X patients. of serve at and full X,XXX my joining to appreciation our than to in our community, home employees, services daily their empowering I'd service thank XX,XXX to for you million nationwide AdaptHealth who call. morning, like work our more patients lives. for is healthiest care and live including the health express them and professionals our a products provider Good

very million record reported quarter revenues net $XXX that I'm pleased third of the XXXX. for AdaptHealth today of

growth with X.X% XX.X% strong the of X%. period. and revenue performance the XXXX, This of over year growth growth quarter of our full from improvement expectation our non-acquired of quarter third approximately Our second sequential reflects supports for the reflects same non-acquired

were highlights in better-than-expected for due ground strong we The lost recall. category, the in continued supplies and to much to Philips Sleep regain in to business, our we the the In performance quarter previously diabetes home. the the our growth continue increase Sleep have the

in setups quarter, year the third record resulting company. the number the a During we first XX% starts than quarter more in of of had for the

in record, census addition, their future revenue over PAP will PAP on and XXXX. In bodes basis. the as XX% continue increased a lowest to our census, well for point February supplies machines an grown patients need also ongoing use the has the The

in the based to demand, supply performance we continued setup of expect setups year. balance and Our PAP on PAP for the has in continue October, strong and

to QX units. quickly was serve up our been waiting. our ability allowed This performance PAP driven our setups in especially us by have to more PAP to Our who ramp patients, those setups source

as of a and a benefit which in growth the setup, resulting result, commissions efforts As incurred especially costs, are the bottom our some line going we but in and expedited sleep pressured us have additional market. forward in our delivery share believe will that we

and a that diabetes, from report pleased growth to we growth rate. notable mid-teens second quarter resumed this also increase in our I'm reflects

CMS' CGM. and further, growth coverage reflected given sustained related in potential to expansion confident diabetes as and managing expanding of diabetes of in the acceptance proposed the critical for component be CGM in a We continue in comorbidities,

of foundation continued lead to the $X to our build a strength lines our the of the reach supplies revenue upon commencement increases supply business with an solid business. value-based hope and of of in revenue supply across to broader billion. target to payer confidence us arrangement our give due These Our expectations a exclusive XXXX net will arrangement to also outperformed lines that home more product we

are manufacturing pleased with QX product very and in recalls. next deal providers strength facing with quarter confident our immune fourth into chain business and the head health to AdaptHealth's we today, general and inflationary While our disruptions to pressures continue we delays results all into in we supply aren't year, for the care the of from

the addition the deficient Philips setups, August. mask quarter's to to of the safety results recall pressured related labeling incurred in PAP increased expedite In PAP unexpected to were costs by

mitigate While for plans we we mitigation minutes, QX third were few did PAP the to in quarter. improvement margins are to provide more on a In gaining color supply results, our that sequential will say of adjusted loss a able Jason see in financial and quickly while traction. our pleased those we were I the disruption, recalls EBITDA can see revenue

in as margins. as was liked, improved confident in in Although team initiatives fourth the the much will would not quarter we improvement result further the for have has our I'm place

Finally, to provide Josh over update I'd recall. Philips as I the Parnes, turn the an ongoing result like on the before PAPs call to President, of a supply our of

And by pre-recall our to to to XXXX, begin impacted us This partners PAP shortages of the exceed capacity. August patients PAP work saw past of have levels. the their backlog months. As supply allowed equipment XX in has we expected, over PAP continued beginning expand our to begin units our manufacturing through

XXXX. backlog continues of address level and in will, November, indications they for early this to substantially Assuming supply past expect that suggest December, manufacturers current our we

Josh strategic Now on to provide I'd update developments. an call and over further like details turn to to the

Steve. you, Thank

model. what make the presence, operating efficient Day product mid-September, it conversations with broad amount As our in Capital during and clear can we value-based care interest AdaptHealth its ongoing bring discussed patient payers through growing combined data with our there to that marketplace a is national in Markets offering, an and of

have initial results with in and satisfaction. time, promising amount value-based very in greater technology with a resulting and higher integration two patient levels are recent transparency grown markets of short agreements nicely high-level Our of large care in metropolitan payers very

in opportunities, example, one an order AdaptHealth's allowing and with the patient these portal payers' connection design team and care seamlessly to integrated monitor of teams developed services. claims management application For

reduce opportunities on increasing administrative innovative is is have parties allowed care home. with proprietary XX,XXX expense associated focus technology and models the integrations in care for both and the Accordingly, to on deploy scalable This payers. providing These more additional available than additional of to Adapt behalf its of patients.

communication as recently ability well technology comprehensive of facilitate a coaching. clinical and to which track myApp, as the map Consistent we at orders rolled road patient the with place Capital patient out the Day, enabling is channel AdaptHealth choice Markets with shared and app

stores launch for downloads digital with part medical diabetes patients Apple Android plan and strong our orders allow our lower of with devices, of their will close clinical is from will all investments adoptions the AdaptHealth's data the outcomes complete patients. and at strategic patients to their which patients. are initial on our app access hundreds These to for MyApp connected help to XX-day by X,XXX digital path constituents. costs data our showing X.X a improve processed and physicians Initial in million facilitate

it's MyApp, will as e-prescribing to AdaptHealth to respect being well delivered By use what's transparency AdaptHealth This will better with while outcomes the reduce full the service data information on and physicians, being collaborate allow to provide and technology connected of costs as and care ordered patients devices. drive health the clinical of to to the patient. to administrative maintaining payers payer we allowing access expanding where and portal our when

and efforts And even part These underway our the into continue are productivity head at we new part become revenue the work of reason that ever. year. employee, increase is of expect today, per to $XXX,XXX efficient to employee all the we level initiatives more highest streams approximately to its across as per

market as leverage be continue, benefit pressures from less our to efficient scale will to from its will cost take technology As competitors. we Adapt share able

that, With call our results. pass CFO, Clemens, over I'll review to financial to Jason our the

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

For XXXX, of year-over-year net the representing September ending growth third XX, reported $XXX.X AdaptHealth million, revenue of quarter XX.X%.

At to quarter. in to than largest the exceed following where higher within forecast. XX% pleased our our X.X% trends XXXX, our continues growth the previous revenue non-acquired continued the PAP Non-acquired Sleep, the was the end were for growth census month of improvement our net census was category, XXXX, PAP rental product We Respironics rental February see since recall. this in September June lowest XXXX

us growth census and our business resupply nature rental revenue XXXX. for gives confidence in PAP the PAP of the guidance Our increasing compounding

quarter. non-acquired growth, reflecting sequential category relative delivered digit diabetes to Our mid-double last improvement

cases. COVID revenue. sequential QX in decline Accordingly, raising XXXX category see due While we QX non-acquired We to to guidance elevated levels. growth, our expected growth census the were net for respiratory was our modest experienced XXXX from are encouraged an

profitability. Turning to

EBITDA inflationary quarter. headwinds XX.X% that we negatively in XX.X% were pleased the XXXX quarter, modest margin versus we second able in adjusted QX sequentially to While EBITDA expand were adjusted impacted the to margins

This PAP was delays to our in resupply do in shipping mentioned certain due by from fourth Steve several related August EBITDA PAP earlier, products of adjusted revenue by recall dollars, and operations chain expect impact million the warning deficient labeling. this in supply we to results to negatively related impacted but As impacted negatively also resupply XXXX the not lost quarter. recall disruption Respironics

costs fuel of by goods Within vehicle distribution some incurred by suppliers fleet remained specifically our couriers. elevated, our cost sold, and and of expense

the anticipate normalize to costs Although months, for next XX over do EBITDA fourth we on negative cost expect we this quarter. elevated the related fuel adjusted to pressure

setups. increased overperformance be next On added increased quarter, but record setups offset related our in our revenue the costs side, quarters expenses the labor over with by rental the to associated for cost few PAP will this the

we pandemic medical employees continued in elective as of has employee to year the resulted of Additionally, over more COVID increase normalized in the benefit care. decline and our preventative in utilization believe the an return utilization that prior impact

to of trend continue As expect added in season, announced expense the in our this optimize quarter, we increased guidance the this offerings dynamics open we labor million the XXXX through $X the update combined enrollment morning. The balancing resulting we quarter, while plan working about utilization. we are enter fourth this to and

of procurement pleased defined XXXX, flow operations for the less $XXX CPAP expenditures cash $XX.X in expenditures activity, the million very and For cash availability million. Capital reflected was QX flow from considerable from with as million. operations quarter. we're quarter, cash CPAP Free was $XX.X capital flow

results. was The XXXX. the of an technology third undrawn of third Turning times, DSO the of third the and from with days XX year months end XX the second days to cash had quarter and investments XX% are quarter, driving consistent capital. on past million quarter debt at At XX these made X.X the trailing our leverage down of on end was We working fixed workflow quarter. hand revolver $XXX.X for over quarter, the rates. of we in with

increase to continue we claims and are We hardening claims, in rates resulting additional engines. denial adoption made investments cash. of cleaner and more lower These in e-prescribe changes editor our

Additionally, e-delivery AutoPay. we get our patient to deploy improve rates as collection pay more workflow our to e-ordering on and accounts continue

quarter, typical from prepare in million $XX.X the quarter. that up demand for was the Inventory occurs reordering second and the we fourth

During we program. repurchases million completed share buyback our the in $XX.X third under quarter, previously announced

guidance. XXXX our to Turning

to previous million noted We $XXX guidance billion range and revenue This As EBITDA $XXX we a have mentioned of $X.XX now does range $XXX reflect million labor million periods, billion updating million performance QX the our our from versus $X.XX temporary to earlier. contribution $XXX $XXX not of revised include closed. press impact to are billion adjusted of yet acquisitions year-to-date XXXX EBITDA million million. with of to the previous in translates to to ongoing and million versus $X.XX guidance an adjusted revenue of COGS our of to million. $X.XX Consistent and previous the range $XXX release, and from $XXX billion not $XXX anticipate that anticipate to outlook issues

before I'll now final pass for we Q&A. call it Steve to the open for over some back thoughts up

Jason. Thanks,

and of business. to, both complicated like the would a thank and a has other with impact of to loss major the were Over large employees challenges. by combination tremendous our the years, AdaptHealth again, undergone transformation, their patience COVID-XX of starting and significant these Sleep our as past pandemic which for two persistence We overcome we of a a further supplier once have organizations, two

have fourth forward the we challenges XXXX, look the we quarter these As this and company recede. for to as of year high expectations to

normalized adoption to the expect us We opportunities our to continued Diabetes business return important to for business Sleep continue growth and acknowledgment benefit to of from with regulatory this and therapy. greater

of pre-COVID a suppliers patients. critical of growth return care greater our expect and clinicians its to appreciation business levels, in HME also We important respiratory but role Respiratory regulators with an to play the as

that supplies from ensure our our HME a for that the will the meet optimistic payers home provider, AdaptHealth. benefit sustainable full-service needs ability business and will broad are partners also fact HME to of the its are We of and preferral growth we

please Operator, the open line for questions.

[Operator will our your Our the from line Tanquilut Please session. question-and-answer proceed Instructions] begin We with first now is question. of question with Jefferies. Brian coming

Hi. Good morning.

for Philips Brian. You on (ph) have Taji

just is that back that segment, growth to So happy see into thinking to back range. diabetes up mid-double your digit picking

Thank expect that number. pick Just curious what it, annual tracking and If to the again of allow in QX out growth a if from growth solid you was that's to given guidance. can QX up you to it how changed you. how year to QX has discuss QX towards kind round for that's that at your uplifting

the Thanks for question.

there. folks Steve. Yes. This And sorry the for is delay, out

an a bunch other the for confluence us And rate So things the quarter. happened fourth people just expect nicely, rates and think come in within reduced diabetes, QX we that everybody we the of that was has a growth back and same marketplace. of that and anomaly both for seemingly,

of our of on shy increase in remarks, the a that. line Yes. discussed it we revenue making for in in up we we everyone, side, that product touch balance full round as come remind And resulting had I'll in the year. We'll we're this had for year. the XX% growth -- for Jason. But likely an non-acquired To guidance the projected PAP the terms out, of is prepared diabetes in

coming Deutsche Thank you. Chickering is to the with our line with from of move proceed on question, which your question. next Please Pito We'll Bank.

sounds trying sort out lot Can break back Philips in CPAP XQ of Hey. onetime relates Just like the into aware? a XQ Good costs help XQ morning, these should bridge guys. margin better. the -- to expedited are to incurred Thanks there or we setups be for recall? you costs a there during as coming It one-time Just taking questions. else to associated my is with trying anything guidance margin of it online. understand

Sure, Pito. Jason. is This

of call I pegged but it in surprise and we really million labor increased get we'll us. areas. don't I about was I'd that talked a on what three out, guess, benefits don't $X about We half So think worse QX, will benefits get know for that About seeing. there utilization. relief based we're

than PAP there was could every one we We patients. we product other to ensure we associated our The setups. night, up getting more thought, than out are more very We got with set over weekends thought. spent and late we dollar folks on that

So it. spend we to glad obviously were

remarks, at will bucket, recall believe our We second about so million our bigger talked We think QX. think will that we In several dollars us next couriers a we revenue. $X spoke of of to PAP of million will Philips bottom that we're QX. in operations impact by pegged on for and But in he continue the operationally prepared hump $X resupply. it over picture believe finally, suppliers. line, we about as don't million. And year, kind for costs trend and distribution the that led these costs there. then percent abate fuel We disrupt

$X.X CPAP million said Okay. CPAP then Philips just you on benefits, sort setup next, was much onetime quantify, additional? this expedited mean, Great. half labor recall. I the costs for And of quarter? and What million to labor, the $X cost was the those the how of

Yes.

Philips. $X comes So overall million. $X.X it to million when then for And labor, it was

that benefit that utilization, associated setup. labor of PAP of half with So half

much XQ the assumes about, All the you your Fair guidance details that guidance a of enough. Okay. spike us on normalization just can quarter. in more why you then and give so fourth CapEx in right. talked And increase

we down I not a it EBITDA sort which XQ be of of what percent should guess, in I So better about only and I a -- mean, faster, would revenue growing that CapEx question to why should of is thought continue is happened in sort diabetes CapEx how going conversion. and as with 'XX? think

Pito. Yeah. Good question,

many I'd available surprised AdaptHealth. were we were and say thrilled how So to that, at PAPs bit a firstly,

that's be money PAPs, what spend And increase CapEx glad to all related long. to huge that seeing so we'll we're which is day in

during So been $XX million, maybe quarter, about million the would normalized, something million, CapEx it have $XX of more for like probably $XX that.

you're So the seeing increase. that's is what

that continue expect would in in will I we're that chain. of We first on seeing would the QX continue half based XXXX. what the supply expect in

come half spend to levels. to second Now CapEx as normal will think down that get we we back 'XX,

So certainly, think spend. the our of that's CapEx roll-off the coming but guidance the to we'll release part CapEx the in way weeks, guide about as of

Thanks so Great. much.

from Our Please question. next with proceed with Kevin the coming is UBS. line of Caliendo question your

taking Hi. Thanks my question. for

talked You've the size and for past. devices about backlog your in script

I should thrown closer number have been couple was the backlog all? through we now think maybe changed some it progresses? we of million to a or year 'XX, that of think $XXX,XXX of about, or around. about numbers way the 'XX Has and that fulfilled at course that maybe impact how $X is we're how And months the how the should think that

Yeah.

that from was the we was year So and obviously year. backlog, to beginning Those that when mentioned that backlog industry the $XXX,XXX, have dramatically. assuming changed continued of of the of end operations the an that

mid the really, to probably not this -- year, enough So the getting pretty ended August-ish. market much

the so a you by third could industry. cut And back maybe probably that for backlog

that are into out XXXX. speak backlog it we be our early eating we we'll as and suspect So today of

where other were you're able at you we along successful minimizing mitigate backlog, to ours. where your much are the suppliers, how pretty way, on on depending Depending with at

longer bit to may Some have take through other get little may theirs. a people --

enterprise should backlog how how normalized this might in you've context helpful. that this sort impact we about of asking 'XX, growth? the how for that just guidance progressed about, played I'm think outlined but against does impact In growth the has way and sort that the X%-ish how not enterprise X% your thinking for of That's out, the of past,

Kevin, are you with still us?

Yeah. Could me? you sorry. I’m hear

did lose Operator, Kevin? we

No, the is line. on Kevin

able are to as to confirm, Just hear you well? me

Can hear you you. can hear I Yes, me?

Yeah. Kevin, yes. the with It speaker can I maybe some line. hear having we're like you, seems issues

Just please. one moment,

we lose there? did Kevin Operator,

me hear now? you Can

you. hear we Yes, can

Yes.

Okay.

Sorry.

in So think that about you've the I'm how 'XX backlog does than how versus X% a not about way the progressed the the to normal how is think guidance. backlog about you've question traditionally that enterprise described what just I'm was, and would past? just -- the asking your as that's that more growth growth trying out, played what what your normally you've way talked impact normalized typically for enterprise expect? outlined you would this has enterprise be we

Great Kevin. Sure, question.

with, outlined, path That non-acquired would guidance year. X% start original for the I'd be our the as down. So and target assumed we growth

QX, Sleep high-single I down the Well, year. So we about digits. the overall would or mean, for for we I X% were just thrilled were X% mean, be full with up performance.

way And we're the that quarters outperform sleep, to a I think growth then in several X% next backlog as for about typical working and so will would more normalized of through X% range. it our the down is likely to come

specifics that's again, So give to the about it. right when way but I we'll think mean, guide, we

Great. Okay. you. Thank

you. Thank

Please with line Close your is question coming question. next Richard Our from of proceed Canaccord with the Genuity.

impact expansion Yes. diabetes and the the CMS thoughts growth. just Thanks quarter. a coverage on you potentially and congratulations how going little about could to in proposed for talk the bit on Maybe questions that's

Yeah. is Steve. Sure, Richard. This

And expanding proposed, are for coverage so type it X passes. diabetics the they're and assuming

And will that suspect just Medicare we suit. up commercial are avenue the of So plans a of that available many on patients that basis. follow then new whole opens

will past on the two growth throughout as not So in two CGMs three that quite three I the continue high still maybe rates everybody seen continue, we've believes or the that they'll or but years next the think years.

that HME. go payer and highlighted? can just little you that? that bit Okay. how And And with you into then, about was like more came that to opportunities other maybe the exclusive I detail a in think respect relationship

is Josh. for This Kevin. Sure, question. Thanks the

providers doing mean, our two are both in connect the terms something how getting we contracts and -- coasts less portal. that traditional fairly trying payer in we're at on fee-for-service something, with they're really large yes, water, value interested than with through seeing of in them I a could So looking these payer foot actually

looking management on experience the side, for anything Really management. the what utilization, better payer a more patient, better on side better better were they the than was customer of case claims and

perspective. really a of around discussions them lot So what could do we for the technology started a from

And us, it's expense And case, had savings like in really, and the out there take we in other admin we of both that prepared functions mentioned there. from that other base to it's typically having payer, into provider they're well, some we're sides happens the this of a with good and similar prior could the a to terms really, some feel and if between remarks, payers And I be admin authorization be costs evolved were looking discussions structure. around gone and very with the expand a

Is those opportunity savings? there share any to in

we're Sure, their taking model, where the sharing essentially, share we're shared yeah. with savings payer but wallet. by integrating expense the directly the and with getting in This broader then a savings of also admin is out payer, a

Okay. Thank you.

Thank you.

America. with next proceed of question. Gajuk coming with Please the Our is your line from Bank question Joanna of

Thanks. morning. Good you. Thank

couple So follow-ups. a of

you So understand the I I on guidance, the revenues margins. raised guess and lowered

PHE the emergency, about private guidance? there. does that in about What the talked items expansion, health change anything your You the

It's Yes. Hey, Jason. Joanna.

PHE. So last $X we had from similar improvement quarter, to million to a million about $X mentioned

rolled -- this So that's is that for quarter. forward

So about that's PHE. think how to

Okay. And the guidance. on second part

of the lot raised of Obviously, a about X% So how supply I think we revenue. cash you flow? your good. should guess the to CapEx. But is talked X% previously you've machine free of about you have

But that's free think when about X% guess to for package change things flow? your coming you long-term I X% does So down. cash

In short CapEx free the in results bigger changes cash term, in nothing flow. term. Certainly, obviously right, the No. long less

about PAPs. $XX at printed, the look million you If due spending we of CapEx of the called quarter to that $XX accelerated million

net, take maybe quarter. free And -- at the X% of as a revenue a X% you're for so touch you those numbers about looking of percent cash over when kind

And and I'd so typically cash is of you, like remind much it's QX quarters, QX, quarter. lower our interest one a

we're feeling our view. about cash to overall out throw QX, good nothing strong the mixture quarter. And big picture, change typically It's on So a there's and

end, some will And improving that Great. supply previously be there done at improve. deals we also visibility with point guess more to talked I Okay. sleep to about that because the would the be

So around commentary any that?

mean, in far I seeing we're what QX a back what the I QX and of quarter to so a supply looking or normalizing market. Yeah. think we're on sellers we're hope really is the forward their from probably saw sleep what we in good -- two Again, somewhat start before normalizing, and we businesses feeling market. putting about

in market rates. deals terms I just on obviously just not going think a what that us, less the are with lot -- M&A, but dynamics interest there's rising on of

are pursuing pipeline We actively deals.

still terms deals we're of pipeline So in working M&A opportunities.

lines. drive regionally for could ability From in synergies opportunities right also both and integrate, of an looking we're product to very well, we're what I the and positioned good terms think

in So we're the market of see year. sellers, you'd next online involved of But out deal PAP market. We're there kind some I in from just available lot come around seeing looking the think now. of PAP the perspective, back what's probably and a in mid a

Thank Great. you much. so

Eric Coldwell is question. the your [Operator Instructions] question Robert you. line from Baird. with Please Thank coming proceed of with W. next Our

is basis net And slides, of well adjustment very one following Medicare CPI-U maybe CMS' more the a XX.X% thoughts the at Thanks. Good have morning. in next are sales a Thanks. and expectations payers coming after your looking year? then what gross too. after basis follow-up or on as what How are December lead hoping hit update of on much I you factors, CPI-U I to the also you're was tied that Thank government. that, indirectly? directly as for expecting. much. your to commercial And on

This data calculation that the is Thanks. our is that right X%. inflation the our for Steve. Yes. From DME on space around see we

bring to that get than less expect that, adjustment sort of down we so that. And that'd would some to

the providers wait I data. folks common of what So to that similar in kind get around consistent is to again, calculations going to light think we're agreement us. But X.X%. seen with look amongst for we've That's that

suspect or the... that. So you of way point I it's of And to other then, (ph) within Jason, the to going one want comment tens a be on

I play Yes. in just is That we could but will our $XX mean, month. your in upwards who out. on line the XXXX, knows to that kind on based how million mean, I rank on We'll this know this another math, flow-through. top everyone the of -- is view, caution of question

And a more market in the of some that adjustment I've points just or had benefit maybe was on because then the suggested adjustments flow-through compatriots this down Yeah. it the to bring your year a couple so. have of other maybe net bigger PayCo X could or

So I'm just curious if you have that similar thought process.

what there's industry non-roll million areas. has non-bid, the million, the some for us. had, we'll call Well, (ph), about That benefits in particularly end $XX that when the is that $XX PHE

would is so that -- but if extends And that some doesn't that go it, there's go away legislation proposed unless that through.

that care go That's happens. nothing health delayed. the to to People that that sequester, that, But $XX now, would away expect as law And then working whole us. industry the going a says X%. be million-plus from of generally for and X% that there's or be on is another

factors. it'd to be being So up those three make are smaller factors Those the much differences three depending net the in up a Medicare benefit, on adjustment. end that still the but

There's product increases wholesale more adjustments seen we're a And as we've line-by-line payers, as some and that commercial basis. yet. some increases and getting on no far

negotiate We mentioned. been with more them. continue already has it's about to but other things Josh that

topic and the system. of making of more better that's efficiencies in the the improvements now just think I kind and

-- that to committed more they're me, think I today. given and or decreases increases, price excuse

because competitive I bring I'd been the a bidding. I'm bidding getting give aware -- get thoughts. to more than we'll have some. at more thought it. in some be the reimbursement weeks you've regulatory this from government has updated I've I'm 'XX been probably But would that But still seen that up constructive 'XX. I'm on in framework maybe competitive looking recently something and my judgment, despite seven one mean, to really for on Yeah. better you I not environment now, questions a little on love an 'XX,

-- say impossible, XXXX, XXXX. say but I beginning logistically it would I Yeah, happen to wouldn't in impossible close to in for

the at that. once it over, month think notice. to them still XX end and give The we'll know industry health this the committed to days' extended. pandemic gets of administration They're care I whether is committed the pandemic So of to is out

have transition might think to post-pandemic then of be of at start for looking from they they I pandemic happens once able that and patients post-pandemic, -- kind to stuff. to post-pandemic

they looking at it I me. in mid-'XX excuse So -- 'XX, guess start

And possibly post But so. so mainly discussions in many guess They that have something work other Predominantly right they on. now. on 'XX? now happen right need their on pretty with in it's so mind back our things pandemic, happens to is I what far burners. CMS, I could think,

All right. guys. Thanks very much

the the CMS bidding, price again. Kevin. or that because bidding don't bidding Yes, XXXX dynamic for thing roll reality went that's prices that it just even in add year, Just with Steve to out they potentially I on up. to happen thought basically if competitive see theoretically saw know competitive (ph) is 'XX competitive says, other back that doesn't people were out with over I we to pulled how they came in it's last 'XX. happened one inflation think important that the when is like

being inflation, see rates don't suppliers coming much are pressures, don't I that that prices, product the not current really gas -- know lower than what is with there's up, reality now, are. in prices price The I and

in to rates, there. but there's more So for giving room something terms back. and there's a like of see, go the floor that consider we'll again, people that general our sense that's But else is not to really to much

that I guys. Yeah. too. entirely agree appreciate I the on Thanks, comments.

Thank you.

question coming next your is of Our question. Please from line Mayo SVB with Whit the proceed Securities. with

from into the the was Jason, was coming you million sized year. that million Thanks. PAP is I Hey. thought earnings? $XX it year range. the range, $XX or tailwind circling you around last you're the this for think What the in headwind number I headwind today million, PAP either think, what $XX the Maybe

Yeah.

I XXXX. will mean, probably the if still it Whit, million at pegged -- $XX that I to We that think I'd $XX about full year. had headwind touch. we million So it a for a be beat million in by peg that, we'll recall, $XX But at

backlog And through get so. about and how the back I over time? anticipate But million working that about XX could working wouldn't through as point time, headwind or you that think you that $XX at months in think this of the next you do over XXX%

$XX think Josh it's as starts I I how or to formal Yes. kind me. to of million that's a if discussion. feels a safe have guidance $XX very it. different that be But million linking XX% year about to Steve but want I headwind, it's to careful just view it to this conservative think of there, into assume XX%,

right. that's think I No,

at the of As us, top took it time then on resupply takes but time -- hit back the to it's pretty will this time effect and continuous setup of it for recall take the CPAP the the it ramp that, powerful. as of level Philips up, adding for ramp

given that's range So I you. he's think, that pretty a Jason, good

increase number? the influencing the you $XX it's bit that for was on I looking lot than a inventories little up over Anything mean, framed think, PAP million that else for, the I on balance increased higher sheet, the sequentially. million purchases. CapEx Jason, $XX a that's

Sure. I if QX. history, look typically our we do inventory I at you hot on mean, run mean, Yeah.

up we're prior So over year.

the across $XX reorder in cash quarter. occurs think and million million, supplies for the PAP that home in I diabetes the usage. typically fourth to terms planning activity it up was of that's $XX large Really, resupply,

we all of or liquidate sales quarter. the fourth into And for most to that expect so

have so? over like or for efforts for today and we to to been is hit of obtain the your the months last reprioritization thinking play starts? new to the the to I've of kind year patients one able have been market sort sort about percentage focused given four, five I'm think sort been that replacement impact on on census PAP an the where size upgrade the out XX replacement haven't one see on and a kind And next me that one you census current of of the view PAP trying how about on they're of just mark Do today Okay. might trying cycle. how start of have due but

prioritizing giving certainly, quarter. to we we start give last year I five for But were percentage. think out were year and five new But a some we're Well, quarter over XX-month little don't patients to this patients. prepared able replacement bit machines a

rapidly the nine three of backlog next will months. over that I also So to think start mean, our I part fairly decreasing

guys. Thanks, All right.

you. Thank

you. Thank

next your proceed from Chickering Bank. Deutsche with is of Our line Please coming the Pito with question. question

Thanks for in. Hey, letting guys. back me

at So XQ of is point. wide. quick a of couple pretty ones this range EBITDA sort

hit range, Just what it where think be and of wanted of modeling? takes to range to you the we the understand bottom high the end should the

Pito. Yeah. question, Good

with start is at hit implied that I'd QX $XXX mid, the million, number. I I that believe, So

million. gross line, believe feels a put So on at $XXX our line land $XXX us. margin $XXX of through bottom million, to the top We that of There's assumption. to we mid XX% the to million comfortable we'll about is flow

of you of in and million first pretty of million did kind So week the of $XXX continue utilization October despite both costs big from the we operating to out countermeasures and make that bridges from $XXX to in expect we in benefits change expense. kind printed that changes some labor and of kind to or QX, other QX

pick million we getting so And $XXX a the rest to of expect mid. for up the year there the

pretty will. risk incur benefits that in you kind what costs, downside, we think low seeing feel So incremental Possible. a To than But to if it's risk. But we the case, that's that's fuel, base setup QX? we further the PAP costs our downside. we're could utilization, of

we side prior year of on QX think, those, than COVID did over in levers a continue really I'd in respiratory the get and side a if from grow upside, clean mean, line. terms we QX, really say the the if spike to kind the on in outperform, for beat. exit it's sequentially we I respiratory top of top are I of kind we more

to And then sort And is help today should think XXXX? machines of through how 'XX? fast. Okay. Great. the just of first the it's us CPAP able great sort we news say, versus, as pricing crank pricing this for I'm can about CPAP new that for ResMed quantify quarter backlog you curious, what is

Well, they've had -- we're contract. under

not until is up next of So January our year. contract

base I had -- $XX that. which unit, or for $X, thing. some it's They've remember for exact we had number. I the like surcharges mean same where still we're those. So in believe They've the can't freight, something there, which is $X,

product we've freight now That around that That's million try a We've to $XX to to faster. to improve will our pretty costs tune, incurred move $XX some next discontinued. also numbers had CapEx year significant million.

to we're But beneficial I our coming up think that's So all looking forward few negotiations for interestingly a months. contract us.

do a much any that just headwind guess next for could ballpark? color you of on a be I pricing you year, how think of sort if had

Well, it's conversation. interesting an

to hate give friends I'd any So my hints.

enough understandable. I new things should All the starts, tailwinds, is right. next normal. there question guess, how curious of PHE in mean, the totally about sort giving CPAP out here, know Fair of you're guidance, aren't 'XX I headwinds to the again, sort when theory year and I last just not but versus help PHE we think

you the of much. CPAP be headwind we bridge as all Just or new ramp-up it's Thanks with to trying a them viewing out should as the irrelevant so if 'XX if to starts? figure

Yes.

affects I different so it products And think PHE, ways. different

the on that than more I PHE it's supply, CPAPs, think obviously. much is factor, think think playing I of a

now so out. And that comes

return and to should be supply fantastic. normal ample sleep have we growth So rates,

the kind this at for and I QX. year, of to beginning down PHE I last of post year. sequential since had come respiratory, It's some then. it of QX peaked think end We've think from improvement oxygen

normality that gets to think in I So XXXX. back

to forward. right And proposed think bit, now I diabetes that's PHE this little helped diabetes, regulation it a but going should help

good. DME, time discharging having are they're because now a right hospital constrained I think should hard that be So discharges people. Basic

So get I resolved. going think to that's

So our Supplies the headwinds with to DME should we feel home, like making payers. back. and we're great come partners

think and product and for as both all 'XX our opposed ups 'XX. outlooks to XXXX I of in up they're categories So have positive downs

normality. back I So more think it's to

efficiently. We and more because much more And ability be have we're do to [indiscernible] so have control the for ability operating us do we to able that's cost things -- get operators.

of been going be haven't our control from able away. We some that supply chain, appears stuff to to external and

So forward business should it as it. XXXX, back so usual be to we're to looking in

I Pito, it's throw of if it would jump-off are coming sequestration top 'XX, high about assume wash, that's ins a if I right? mean, and There's you thinking a I all But upside outs. there's on PHE headwind. in a line, you say mixer point lot out probably likely There's mean, the DMEPOS the schedule. Theoretically, headwind there's wash. of a and level,

there, as forward way certainly and I bottom million million coming range $XX from you think then Whit top XXXX, operations in a or a growth think in the to business. the And about the it's him. specific That's decent I add we'll you that's provided gave the whether then based numbers and we're And improvement $XX a weeks. non-acquired so across think to margin PAP, when it normal here said, And good you we comes on looking and just be line jump-off to to on point.

guys. much Great. Thanks so

And the management with to to the our floor concluding back of question-and-answer end over time comments. gentlemen, would and ladies for reached that, I like have turn the we session. for

do of our and a normal They've our for over again, we're like thank everybody, sources for once Yeah. morning. can referral We attending years, appreciate support. past lot for couple great Thanks, through everybody. our the environment call And fantastic appreciate good the to where a our employees all payers. and been and patients things looking or there. this we'd Thanks out more we the again,

for disconnect and your does Ladies may today's and you webcast. conclude time. We participation this teleconference you at gentlemen, this and thank