ATI Physical Therapy (ATIP) 8 Nov 222022 Q3 Earnings call transcript

Good afternoon, and welcome to ATI Physical Therapy’s Third Quarter 2022 Earnings Conference Call and Webcast. All participants will be in a listen-only mode. After today’s presentation, there will be an opportunity to ask questions. [Operator Instructions] Please note, this event is being recorded.

On the call today is Sharon Vitti, Chief Executive Officer; Eimile Tansey, Chief People Officer; Ray Wahl, Chief Operating Officer; Joseph Jordan, Chief Financial Officer; and Joanne Fong, Senior Vice President, Treasurer and Head of Investor Relations. now call to to like would turn over the Ms. I and read the to forward-looking Safe Fong Harbor statements.

Abby. thank us you you for Thank Good joining for afternoon, today’s everyone, and call.

statements like statements assumptions forward-looking are and our to our subject and available you begin, current will risks that to us. various information and we this call currently we’d that Before beliefs, certain uncertainties made to expectations during be on remind reflect based

revise we Exchange Although, of to in any these company’s we found that the be to with these to no believe from Securities after some Descriptions materially statements results be the factors statements filings the reasonable, changes call. undertake Risk Commissions. occur are the that cause Factors reflect actual can in and forward-looking different obligation expectations this of section

a to addition, we Details In measures the these financial found to will note release evaluating company measures to in measures ATI’s And the can performance. in the the measures the most with like over reconciliation turn please be certain between and be that, website SEC. non-GAAP call press discussing posted on I’d and that that’s financial Sharon. the believe relationship comparable important GAAP earnings historical of are filed that non-GAAP and with non-GAAP

therapists, and sharing begin needs. and many views and our continue country you, ATI Welcome more therapy People to stakeholders on Officer Ray the our learn across Chief I've Jordan, ecosystem Tansey, joined by business Officer, our I patients Operating everyone business our by third to today quarter our Chief the Thank our about Eimile and Joanne. definitive But physical with last Joseph observations. the since meeting am of earning enjoyed call. some Financial far the what I and we'll Wahl, have call Officer. Chief

and environment labor quarter key results of through of provider Joe provider on operational practice; Ray growth of pipeline, with will base. targets. during detailed the a will the will base, XPs take our provider around a our our and I are to results. near critical activities and our operational financial the drivers will Eimile impactful QX levers, provide walk achieving us focus productivity. through review highlights discuss These Next most term performance

Finally, I remarks will lives dedicated before open thank ATI's I closing and of to Q&A wrap call serve. To and and we up they enriching team later to who with of are the communities want the the about emotionally passionate clinicians invest talented than start patients

had close was person members I've the ATI them and love dedication ensure for Over and XXXX pleasure visiting across of met spoken the hosting clinics to few the months, I've in team Altogether and last townhall with meetings probably footprints. made consistent and helping it's back commitment my to get and proud. and The offer I strong patients what reaction teams to the and visible. and established the we company of to patients, teams lives their to poised passion ATI, solid the of our corporate journey work why on observed the feels ATI our help is patients firsthand colleagues the I of new people. with the member a that on healthcare everyone our built From hires, like teams they asked family. their ahead. and when a it's foundation success we

continue the physical to provider and demand present healthcare labor While remains market challenges. strong, therapy environment for economic

to investors, deliver our long both We for and execute board to actions ability the success. define, on employees short term our demonstrate are eager to and and right

grew ATI are pre-COVID be for care of pipeline, sustained team quarter-over-quarter third levels. strong. services to the just operational of and quarter reiterates the the demand first Referrals our physical offering and Regarding for this value therapy then pipeline continues shy

customers. with clinicians on team is and development local targeted relationship building our business alongside referral focused employer Our sources

count headwinds clinician the with labor executing affecting has FTE attrition Moreover, time persisted base, recruitment excluding market, market provider in clinical remains ATI way the the the The the grow improved dissipate. stable. standing to our some accelerate year, long and not both are the our tough quarter. provider we teams. employee P; are through rate ATI the quarter, Despite the tactics XXs. short making and and contractors, we to our challenges in of take mid investments second will third hiring labor discussed currently PT it's broader the since third previously term The beginning and In meantime, we still, and and on this the

with regard Eimile Tansey this labor and to in advance the on CPO priorities People business. strong more She provider human resources delighted development ago. in the operations and this and new joined healthcare call. share and than Chief and Officer the my market, months some years in just role. experience seasoned will acquisition Eimile approaches of two and I'm organizations. talent One a over on was people to leader Eimile fill perspective introduce first is shortly XX discuss to us

We are to have delighted her.

across day in P; FTE, average footprint productivity quarter, top saw per and third the on when average clinics clinical QX. our of this at saw XX% based providers VPD. our visits X.X per VPD year-to-date the period. a of to And an down, bottom we in our clinical the The third X.X our break day in of X.X clinics FTE teams of the productivity For we FTE per clinical provider XX% national compared our per visits are X.X that the rank clinic in on per

and achieving room or incremental and clinics we'll productivity the both related seeing top targets groups clinic in the cost. So our reviewing XX% and our while We and performing. are observed completed believe see a pass performance operational clustering of similar were improvement first financial for a performance. exceeding the our later discuss top meeting XX% under in our We roadmap XX% footprint to patients are there's well, of targets. We exceeding clinics and doing

underperforming and divestiture. closure consolidation, clinics of pursuing different We are optimize currently approaches including to half the

will monitor closely continue remaining clinics. the to lag in We also

addition clinics rethinking with to select clinic of In demand. displaced financial boosting to providers operations will strengthen more and redeployment returns locations facilitate

has ATI increased of in clinics since XXXX. the every historically, company's quarter inception Now number the

While discipline attractive will taking we geographies continue De pruning the and we're at and exercise in and existing markets, fleet hard a to underperforming plan Novos. opening look locations.

Looking ahead in XXXX, in year-over-year decline total may we clinic we clinics have clinics. same of over number prioritize a expanding as growth

potential our We sprint and initiatives aim deliberate the portfolio for and improvement in into with business. have gain intake continue change, term of organizational developed and the on and revenue near In SG&A past insight cash to XXXX. quick third technology process a this streamlining quarter, several and earnings the identified to we long referral of plans of work areas financial for patient structures to The projects strengthen corporate and/or priority the redesigning execution and efficiency including improve our cycle position, includes review, leveraging performance. transformation function,

are on focus, and are the intensity moving progress We that cash. our with and made. being speed pleased have our with teams with prudent the focused conserving spend the I'm and

Google Based need purpose we scores. known to Finally, and are MIPS, satisfaction to under Payment NPS Merit rating our outstanding exceptional our as the Both testaments rating in customer star Incentive celebrate driven culture. otherwise System our Medicare

With I of talented to will As Eimile call before solid that, confident people I will we a am discussion foundation and talent leaders. of over make development. the to and I has for team our continue progress said acquisition ATI turn goals. toward

meet and and managing in different at therapy, we then clinic, backdrop, of clinic patient the business the Thanks, provide seen any the activities to and us a care family. base. Physical labor Association has with PT am tenure district on discuss in understand is began the Sharon. been ATI our accelerate place decline. their wide This medical for sector. we quarter, and that number on even advantages Explore that potentially true are is also the ATI Explore to personally rotate while physical program industry providers company. great program careers. in program. operator developing we to the concerns of tours, learning. on a several national year getting health I’m accelerate new perspective treating tactics. states providers ATI, It this our a the to and recently an to is of and In hiring further out large practices the the clinician to Through geared a been In provider a providers and clinics opportunity side career some delivery offer Therapy significant has progression is pleasure showing One where to different in gain to pandemic, rates. goals. providers for American unique I’d currently each our can focused I’ve at programs also benchmark region. vacancy a relationships want populations frontline like the will physical hear the and providers care XX their third one outpatient the questions, and Being distinct This experience, and called while travel has to mobile the road remains advance listening that operate ATI talent refining spend connect the outstanding interested allow our person who programs and really survey towards about and and with experiences their challenges joining With Participants overall with this the stay current gaining model. a as of our a certain I’ve clinic market building through year issued live aimed have pathways the in excited all at range ATI. is hiring The start, therapy time here and program If had reported is a short I of the build for an while opportunity of to of most an

passive testing our performance candidates has with clinician grow future are social competitive more at geo-framing clinician key ATI excited forms base of market aim next programmatic and digital are the in better is acquire, of and macro an therapists look in hiring garner this for level. right, skilled member fair referrals metrics at and with engage of balance to grow. engagement. to attract, The environment with We generation share level the media, a and local I’m amazing management, engage media I’m tracking various the onpoint focus locate, than turnover, part business the to to do leaders. including candidates with goal team are The and culture performance to to messaging. we and and outreach, as line workforce development, My provider develop my iterating areas

call the operations. of turn to to like I’d over clinic for discussion Now Ray

quarter. operational provide some like would during third to I discuss review our field Eimile. activities a Thanks, the of of performance in the and

day just in with we support since [Indiscernible] National staff finished moment they’re in doing see. before each say patients great and month for had accomplishments clinic of our other’s thanks day to and our impact the Physical lives. to quick on and like what out it PTAs, they’re I’d a in the October profession, all take and So and our a PTs appreciate celebrating Therapy lot of October, fun along to We and to having was

be therapy with As quarter-over-quarter. referrals continuing to continues Sharon mentioned, demand to increase for physical ATI strong,

building Our clinical getting team doing serve the community. and and out a relationships great alongside medical with meaningful development the communities business job are directors our they to

on during intake advancing X.X and team the and team grow handoffs, per our to to our ATI third our done provider and clinics In Eimile to excellent growing ATI to the team continuing of As the we providing quarter, visits in we base be patient are team good patients. and work is day. feel have care on-boarding support From amount in the the this new members year past the focus the averaged way. clinics and I on can provider focused improved scheduling, accountability coordinating her optimizing work

While this PTO. quarter considering second than is trends was with this consistent lower summer the seasonal pattern

As we clinics assessing previously level. our the are discussed at and local in market national footprint of the process

visits are results clinics shows earlier, the staff is team XXXX individual at clinic clinics then this when experiences as support when the excellent providers, And operations. right referrals in mentioned X.X are the at patient able Sharon in is per it and XX% to This quarter encouraging high of the day As execute during levels, playbook. greater. in the or at our looking third functioning

clinics local benefit in of progress there will locations needed is vibrant footprint, assessing providers locations, real our what and which dual with consolidate Each we estate own offering work to opportunities market much their with a As environment, busy these we’re the be all the for. considerations. of unique adding striving is to

So progress. a balancing always and the right level productivity expectations of in is staff work

ensure I we entire with further but place achieving expectations these foundation is in of With not in performance are targets across growth the to providers and the exceed shown clinics, productivity ability QX clinics. to already for our many work only has doing in we’re our positioned the platform. many feel

is Northwest real take look changes region high market where referral we’re been made a think and we to hold our some and impact. because great move a solid. replicating as of I starting these of is results seeing example outcomes of support We’ve having that it. are great clinical Staffing leadership types patient volumes has to We forward. forward a

year excited reach helping to of hard say just I’m every proud really work full to as our call potential. This mission stakeholders financial patients With and towards like I’m to commitments well. that’s that I’d ATI review. on to So the said, I and forward a entire day to delivering Joe to our turn group the look want the as single their investors our finish continues team. overarching we for I our over

normal Thank into Net right the financial $XXX revenue million was to million third jump was third thanks patient million, the XXXX flat was call operating from the which prior more to with in $XXX.X of XX.X clinicians’ Other in the increased the XXXX. X% to following today. everyone the of essentially $XXX.X with as the quarter-over-quarter the quarter clinic due the XX% decrease seasonality prior $XX.X for during in were quarter And in one per decreasing Visits line of year-over-year sale you, year. down joining from of in X.X clinic of patients. I’ll decreasing quarter Ray. Net sequentially primarily revenue the XX.X million the is results. fourth XXXX quarter QX Visits XX.X health we year-over-year per service year. home per revenue third quarter day trends. visit day our number per increase see quarter from the second

was based in million. XXX.X warrant value of market to was the analysis included mark of the value expense on $XX.X and XXXX impairment totaling liabilities of an during When in valuation million. was the million, to Similar similar of wage year-over-year was impairment XXXX labor prior the per September fair and visit million XX, the Interest visit labor in from support. and third to year-over-year charge year-over-year the primarily $XX.X of X.X third use third quarter other X% $X.X of revenue, decrease flat change a in a X% net from rate a patient is million productivity fair as due lower Net inflation. second decrease and the million of of to XXXX. impairment salaries million, the common below in lower from XXXX clinic million loss compared to or margin, loss quarter XXX clinic labor operating primarily quarter million compared year-over-year supplies, contingent increase increase of we and decrease third during the quarter $XX.XX XXX.X remaining changes greater third of year-over-year compared the clinics from discussed. in the third SG&A a to second Income items in the increase year-over-year the the XXXX. and Our added X% year-over-year the continuing a the were contract use. unfavorable to costs other during sequestration quarter was million the in and adjusted inflation quarter of quarter million lower XX.X of an of clinic third quarter flow clinical fund XXXX from XXXX of in operating payers continuing included increase use in with repaid million. Schedule to quarter contract tight And saw and operations XXXX $XX.X Comparing compared quarter activities, increasing third million, line intangible charges share quarter impairment The from states. quarter lower use from the second quarter during due and the used more was consistent the to impact XX million combination and in million XX.X quarter our XX provided Cash quarter tax the the debt activities. quarter loss was earlier PT for and lower consistent quarter QX XX $X.X year. in shift driven benefit patient for X% quarter primarily debt the XX,XXX Operating the from operations, and doubtful quarter-over-quarter accounts XX,XXX mix of X% balance as in Medicare pursuant third loss, sequentially was year, prior prior well investing used in offset $X $X.X in costs and prior a in essentially X.X the more XXX.XX related quarter FTE wage primarily in loss Fee an greater advanced XXX.X from primarily the Medicare year-over-year Physician The EBITDA or XXXX of second year-over-year from million. September year. revenue inflation. a prior in was EBITDA business per Non-cash, $XX.XX by due PT at including both to had costs with the MAP was by interest of containment. during year-over-year decreasing the or in refinancing was year the during non-cash outstanding was third the million with the revenue, MAP and as essentially SG&A financing of rates quarter margin. account Provision quarter year program were X% offset Notable related this X.X XXXX the in XX% XXXX year. quarter $XXX.XX due XX,XXX due then decreasing XXXX. quarter, as charge XXX.X in to Adjusted labor. XX% partially the by the by third the labor by from contract transaction The reduced X% included the and were which XXX.X or certain million subsequent a XXX increase X% third the the partially program X.X rates. XXXX XX was to market All continuing XX.X costs $XX.X connection million these quarter million in during X% wage or primarily decrease $XX.XX Cares of driven Salaries revenue net on of these while to from funds million tight million, X% year million charge was of and to million asset under was and with costs. wage the was driven rent the repaid of to labor the resulted the decreasing the million due year-over-year cost offset severance Act. per Medicare contract and during year-over-year accelerated market which third impairment been excluding year-to-date by market, the previously Cash labor payment due inflation million and prior SG&A. greater by million, lower increase goodwill XX, the to Rent, breakeven XX.X of was quarter

in During activities, the in in third Of $XX repaid used and used was X was in operations, was included connection use million X XX MAP, million. investing cash quarter activities. financing that million million which used X with was amount million

million and approximately As equivalents $XX XX was of XX and liquidity capacity. cash million available cash was of September revolver in available million and XX, which comprised

XX and cash compared over use controlling Sharon and XXXX investment driving was next performance cash year-to-date While operational to improve XX costs, we million focused decisions months are activities flows approximately to the as $XX and operating months. investing the about last and on talked as making

As forward covenants our to financial business we agreement. under continue monitor move and a we’ll a company, closely as credit the performance,

along performance million for guided Sharon. we’re are results considering XX trends, Finally, I’d financial early back And low XXX of million. with when and through ranges XXXX against and the to that, million those tracking EBITDA adjusted the October our million of call over like With XXX November turn to to to end year to revenue September, deliver X full ranges.

Thanks, Joe.

you stakeholders. to As a see, ATI commitment strong has can all its

fronts performance. to to company We continuing plan, have financial the on and improve ensure a and are progress make continues operational multiple to

our We delivering our for are care plan the I’m working let’s team confident And to changes. of talented targets. call the provide on Q&A patients aggressively open please. our that to mission fulfill financial to implement our will highest while quality Operator,

question first Securities. Solow Your the CJS from Larry line Instructions] from [Operator of comes

is line Your open.

Chris this our Larry. for Thanks questions. taking is calling for Hi, in

next while you closures to mentioned and lower you that closures? just continue mostly is think in year. or going of closing Can terms to additions you’re add about talk that I clinics

question. Thanks for the

on we year out in the finish So docket we with have de the… that novo the will that’s

opening the that fourth a for couple the XX year, in quarter. Roughly are

as know, we pulling then And a novo. together the there’s lead to time de long you

in the we teens. mid de will lower in of So continue probably novos XXXX with a rate

at on local of synergies, side. a that’s at it parallel, clinic as estate done our we’ve looked profitability, we prospects, then level, in So real mentioned, etc. we’ve a review and growth the have And operational, I at full looked

one ones not clinics. or demand our one sufficient the economics. for unit not, other target they’re have another, don’t of XX% taking that are or focused our action The And are so are we’re that reason on we achieving on all market

into And so there’s with consideration here. that things go obviously of lot that a

watch list. say, I’d XX% So a on that of is half

have some to need. Some up but we the necessarily seen of levels are of them not growth, clinics, that them newer

of those actions years So that will the that can lease we then the decision other on list. over to XX%, watch half our that we those and we’re and a plan relative a five decision for now of moving call that one that three developed clinics, to starting we’ve each are next have And be terms of we closing factors plays lease a on or those divesting. or made into obviously, the the the we term taking

That color. so was great Thank much. you

follow a maybe ATI? turnover availability? Just a little just more can the you improved about on over up, that’s PT If color at give and last few talk months, specifically

I Eimile jump in? Why don’t Sure. let

Yes, talent. year-over-year. competitive. remained absolutely, quarter-over-quarter, we’re we can think of I market channels attract to we’ve as and sure continue working that retain through that make has reduction we’ve attrition to the extremely variety And experienced to And gone different and a

really that. encouraged by we’re So

And to points. broadly. put think can just together, not through good. the to pandemic is but think in with our so, probably we has it continue that that since that healthcare We changed to think pretty more we the employees we XXs we listen the several that But continue programs the PT, drive mid friction industry internal we we down and think

So putting with focus our programs and is can ours. bit to levels, more them making which is drive maintain a that together little programs on we down we we’re of fantastic. believe big our with a development. sure Development culture, And focusing continue

creating actively communication So we feel open our frequent time for providers. with and it. But mechanism pretty we’re good and takes about it

the turn. rate attrition our know, we that clarify contractors contractors, without obviously is just And

an measuring apples apples comparison. it our without in we’re to So contractors it make to

line Your next from Brian of question Tanquilit comes from Jefferies. the

Your line is open.

up follow other to there. some on just guess I questions

been right now does for lead as about like As terms coming think applicants in but about I hires, I think about in? and look what new turnover, we’ve it, generation talking new I that of know

for on outreach, channels. And Thanks capability our through Absolutely. digital focusing the additional recruiter increasing question --- capability. sourcing

focus at out looking able with for heavy but outreach pull passive candidates we’re new the grads, just in, on market. not to in being a So

on really people funnel. ATI all our And the I be focused these tactics widening top So are we’re of those converting think all that employees. of to

candidates, way new And funnel, brought experiences I seen we’ve quite been so also the Eimile’s will those honestly, the under put to an spent would and of candidates, acquisition, types tenure, of need tactics. I generated just a add quality a in we September, learnings the have those new pleased VP short a of activities place, talent to some the has and that then and she number the those to. we’ve be increased the the higher those. in But go we add, we some to would obviously, convert were for the referred to team complement of top with a that to of of tactics Eimile increase have existing in of And level say our And thinking in last on our August of that area and good support tactics. market about activities

about And those Just the up. a does to it. closures how work? clinicians and way redeploy Is that or you do retain there think then of I clinic And them? coming Got some curious.

lot obvious have markets that a lot bunch Thank out mean of so of or our of staffing to a Brian. see look, markets consolidation challenges. capacity where There’s different a we goal. just where other there. have that and dense those some a you. Yes. No, great duplication that question, And there’s I relates there. we when do things are you One Absolutely might we is

more clinic that closing move also a more when And makes then and have than it staff for a way it single so vibrant provider. us to the setting you and a consolidating clinics makes

little a would that have was That bit divestiture that intentions to our be If So how to we’ll a maintain staff. or those keep the see plays out. harder. to there’s

Last question for you, Joe.

year closures next flow, mean, cash a free into that about we as kind novo? something is improvement the potential to thinking them back that contributor think driving should we be and I about pull as de about of clinic I think

clinics Yes, cash on is Brian But in drive to there’s that’s clinics certainly, can those an closure year. of To to allocated losing certainly improvement closing way how another it the one too top get on happens, flow. next depends that money the it. Sharon’s resources improvement divesture free Plus, are way. point,

thing scaling So corporate for sure clinics, important the other we’re close our that as as is we cost a do business us appropriately to with make those clinics. structure

we’re There going both there of then right be years. the think action next predicated the would be be three some, lease. going happen some over the we’re I taking there’s I the majority in it’s the we’ll the is all action taking action and say But on some will now. again, will to ‘XX, to action take

from Jason comes Cassorla the question line next from Your Citi.

open. Your line is

Hey, guys. great. Thanks,

your we visit mix and in you Just hires, just payer And final think you’ll focuses two, you’ve revenue, the out? about about think if one, payer get mix. thinking level the that also then next to about, you’re then sort context of think referral just on, given anything year, levels, takes Medicare of how puts you revenue just about per on do you maybe year, up, for pre-pandemic maybe, staff takes the to and just clinic, mix, broadly, of as you back there? when could thinking but thinking back referrals, the get about next a payer So puts and Ryan talked new but and you’re and per channels kind the came of the can like, of pre-pandemic this rates how mix

Sure, Jason. Joe? those through us to Do you take want

Hey, Joe. Jason, it’s

on equaled of lot landed the kind monitoring in. rate. pretty Medicare and often couple past come in highest asked been years I’ll And the originally coming stepped Congress with said year. a cut From out we’re has cut I’ll has that’s maybe been the last not level at it where, a start what’s rate unpack at that’s “final” end down. that So closely. They’ve happened rate Medicare of X.X% of And because where the perspective, there. the you and

So monitoring a If that we’re would that again, is it the of of stays volume. as XX% impact couple chance has years. it roughly there’s last our because happens X.X% like that

rate program, offset of she mentioned, help speaking, our the the we reduction. would rating have, the during Sharon a call, we would X.% to MESS was exceptional Now, do part bonus, as which when under have which us give the do scripted

flat on where where about as we once it it some it’s pretty back And back a rolling our can I workers are out diluted not through From quickly. perspective, it our and where and and to think relates rate auto on personal some wins gets overall focused states, Illinois, then payer elsewhere. mix up one as driving So once think to was. ATI comp have historically, injury we we will have it we’re it impact, volume, comp workers was built but mix if getting to we being

back. business trying to we’re drive So that

pretty mix the far, flat. has So stayed

haven’t improvement in on a the prediction prepared where make not result, as We to we’re the seen which a XXXX. mix is

the to of do more you’d in off Or are construct that white still lot it Yes, Understood. around I white you’ve you focused divestitures And up, that a this back think you missed about, framework? apologies, you. you regional space as exist clinics choosy couple helpful. think be it growth thinking we’ve growth be no, think about of you out, try and of you development growth about was and areas as follow this do that’s you’re a the seen think talked about kind quickly broad space. still have way Thank this And you growth could regionally a opportunities and this ago, where Is right business about years or The concentrated? the that play in Thanks. just what I of of on available in achieved revised go think kind thinking to talking then space forward. your then baseline just the of based? very white on will size, call, just the and ultimately understand more to

we’re as a divestitures, say a are I’d the actions perspective, relates divestiture taking from divestitures, market. the but within footprint, definitely the across and clinics, it clusters on with So, to predominantly it’s

to being a from that what little buyer. of makes I a And would pretty say sense where to both bit us. would is selective that But TBD. on So make what we’re is, sense

pretty large space forward in white and taking space, growth at gone absolutely going pausing for the see such growth, are, down because but reasons a would and now, internal finish things because kind look review. the and anticipate I where And of white them opportunities we also after how maybe we we’re say landscape the we’re I at has changed. sort whole the post-COVID through of the than right And the look different slowing are that getting would things we before, to smarter. back this and obviously, different our On we growth looked a at we’ve say

made thought gives it us we a the and it would onto made experiences, We it we review fleet great be. where a us and bet it lot where of tells and maybe we came insight wasn’t our a have what through bet, of

we’re think I nicely. positioned So

We haven’t off. shut that

because a We’re in will. area, to active table. but that we seat But still need you at the keep

going there’s of opportunity think forth. I plenty

to mid Joe, already and pause us add those somewhere the we labor add team to challenges white Sharon’s but across and of have, platform Yes, that certainly to de earlier novos probably that novo want down. are a has She just the people a de lot point next teens, are exists. add. areas mentioned years, point. acquisition a can we we novo that which Sharon’s But labor, space, is causes a where to One is generally labor, stressing and still adding two this maybe, we in you’re add Jason, talent the do de where availability, if requirement we you believe to our and slow

point, Be cash we sense we to pretty drive our pay is see cash want second a burn. need. to makes forward Obviously There and the do to recognize certainly get we XXXX. spend investment to back of we how with need improvements in in quickly that have these to, So fleet running the underlying why slow it to down. and they even Sharon’s and diligent the plans it’s the novos the pretty make we the business we have though reason place CapEx to de run. business open is another burn the that capital But it

from line of next the [Operator from Petusky Mike comes question Instructions] Your Barrington.

Your line is open.

sounded So the guidance. somehow. release It to maybe said, guidance I guess pulled unless itself I I want QX to understand the it like looks me was the then of missed around like Joe versus the out And it commentary get Why guidance that communicating? what that at maybe that was the we but end. the we’re out I lower Thanks. essentially of sort is release? well, pulled reaffirming, previously, the it on I that’s you’re gave what you’re mean, communicating?

end guess guidance. it pull just to of practice, Mike. going reaffirming that say, we’re back put both. think just that is we to And correct, of reaffirming I’ll release yes, I mean, we that be guidance, out the at we’re I low Hey, companies didn’t the guidance. maybe the it in the didn’t do do say your that understanding state we so are the in seen the we’ve we

there’s line say you need in you’re it’s update still something then out unless guidance, If because assumed sometimes to with no different. just and go

correct. you’re but So

me the You tracking heard on end right call, of we’re guidance. the towards and low

that quarter. stayed You flat. X we us based EBITDA stayed might that of early within million range. And adjusted It million moving the we’ve seen way, the clinical in rest that we uptick, followed our when our low XX that tracked talked headcount November. on range some low October about recall end low here FTE of an the of pretty in with trends range, towards comfort that pretty gives that the trends, the the end to end operating assume the of flat, KPIs third we’re seasonal the what in

year last for PT companies. it’s one two quarter weaker quarters of adjusted worst the typically, for the was EBITDA most QX and

and So that quarter? for come best as maybe your November, October your this you is going moving to you’re gives in or EBITDA confidence close second to best even in saying quarter

last had an a team significant That’s brought which severance. Omicron heavily relatively revamped January. recall, couple then spend, sales consultant and to in into We had that, us things QX QX some a help year. of We last of year, up some in in But and may unpack do we our picked you pretty going was on. December,

years I sounded then, I a heard XX% So to optimizing back lot of we’ll the you on accomplished action etc. the mean, likely idea of will to going three is I it give of the be guess see some end this of that more it bottom order years. over than a think this front you Sharon liquidity, in the extra three say divestitures I little guys that that

on meeting to, week. yes, our of were they a we plans. lot had board last So board say the process, this, We work Mike with and able our

in per the I clinic. pursuing actively work say would would we that are progress. say And activities taking, So I actively the out laid divestiture is we’ve

have take activity half. who clusters say think I So at we already of have other the clusters few a I and meaningful those knows, would different we that but we real half the

them are sure. of out all not We’re But there.

days. them out are very been actively last at and recent, this pursued of It’s in All just being point. few the

the Can some a is closure you I I consolidation, to divesture? roughly more this or missed the a that, you’re mean, bottom third maybe sense of facilities give earlier when a talking think XX% just third you about ask about about were Can -- you hopefully I third, when talking divestiture, it that?

XX% Well, acting the are XX%. of on bottom we first the all XX%

a the at etc. because can demand, every levels, We the at pacified I look still, list watch competitors, look XX% holistically the staffing underperforming but clinic. there’s the on other The as we at

watch that going third, the maybe activity, about the XX% a are off I’d third, on top closures on we on to identified, of other than to the regards on. an with lease to third, not my in regards on action terms. in that So the depending head, it’s we’re some the a yes, closure And sublease, divestiture. a we’ve then take say I’d a a have, that list say like

is, But handful a dark volume, they they’re one that the they on closed they will open, walk of clinics XXXX. just shouldn’t so there And is these some most are are that lease kind turn clinics, you the of just thinking our be them about to on are Mike, that Because it. thing I’d of how part, clinics, likely, going to away XX% in of underperforming, time, think period maybe can there’s they’re seeing that’s hanging for of add over to lives closed, are some certainly be most around. over,

with may we’re of actively and an a is, take we pan we’re action the to if at -- look action. say actively that different them, might thing And So doesn’t I action. all working out,

in three I will that of the make XX% think about do timing don’t years wouldn’t actions clinic has the we it taking maybe, know, of on longer I next based based lease, So happen we’re and on or think action a what the the sense.

action, being commitment So not our have how we’ve with plan, pretty, to off see of and the this we we we take we and actions, XX% full level, of and actions, and gets done here clinic important, and if modify the the trying time performance see down a taking XX% of on they have coy spend a we’re how have analysis how to the lot more, we’re it responds, because the and going the then market XX%. standard Grid the obviously these but action fruitful the other weigh we’ll a may then be really an are is we to a

they’re XX% those those or watch underperformers? bottom where could are that a an the of a So sort above make mostly staffed or XX% situations of difference assistant list are that therapist extra therapist finding appropriately,

a novo where from we able there’s staffing be fully We just could had ramped think could been fun. to get definitely have perspective. a haven’t lot I a it de No, of

amount higher certain of geographies a with Some we’re hit just really attrition.

so I’d so typically not staff. there have also as quickly there we’re thought fast, or they’re say not. questionable them, as And that they will ramping some and we they’re less available that markets building whether just get of

there’s enough close these list. oh, watching say, not the So go to But we it. to are on here need

what that know we now is. So list

focused staffing TA starved a be hyper referral on from recover to are areas. We They these. group could trying on is perspective

accelerate group the can to hard see working we Our if business referral. is development

the the So to it’s staffing, long just enough referrals, it’s this or one been three write typically one of levers, hasn’t of those kind off.

the Ms. time. Vitti, back to over call no you. are turn at Sharon I questions There further this

thank in you. forward Thank everyone for and we are, I to me Thank look call QX. share participation joining for everyone seeing we today. my team where and their the helping

conference call. today’s concludes This

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