Ardent Health, Inc. (ARDT) Earnings Call Transcript & Summary

Great. Well, good morning, everyone. I'm Craig Hettenbach, I cover the health care technology provider space for Morgan Stanley. Very pleased to have with us Ardent Health this morning. So CEO, Marty Bonick; and CFO, Alfred Lumsdaine, so welcome.

Thanks. Thanks for having us.

Thank you.

Before we kick off, I do have to remind investors for disclosures, you can find them at the Morgan Stanley website, www.morganstanley.com/researchdisclosures.

So with that and on the heels of your recent IPO, I think for investors that are new to the name, Marty, maybe we can just start with a big picture intro to Ardent Health.

Yes. Thanks, Craig. It's great to be here. This is our first conference as a public company. So this is a great way to sort of kick off our new existence. But Ardent for those that are newer to the story, is a hospital health services company. We cover 8 markets in -- 8 markets across 6 states, highly concentrated in the South Central, Texas, Oklahoma, New Mexico being our largest markets. And we've got 30 hospitals, over 200 sites of care through a combination of clinics, ASCs, urgent cares and the like and over 1,700 providers, which are -- clinics are an important part of our story. We service sort of mid-market -- middle-sized urban markets where we can have a multiple hospital footprint with a hub-and-spoke strategy, and we go really deep in those markets. The markets that we're in are sort of high growth. They're growing 3x faster than the U.S. average. And we've seen the benefits of that play out in terms of utilization and volumes.

Got it. And when would you just say differentiate Ardent from some of your public and private competitors?

Yes. From a differentiation perspective, we have grown our company through a series of joint venture relationships, and we've got partners with academics and nonprofits across multiple markets, and we see that as an expansion opportunity. These partnerships allow us to go into a new territory, partner with an academic. Most recently, our latest acquisition was a group of hospitals in East Texas, a very fast-growing MSA, but we took on a challenged group of hospitals. This is back in 2018, we partnered with the University of Texas and UT Health East Texas now, is a predominant brand across East Texas. We've got a very dense footprint in that market. And that's an opportunity for us to take advantage of what the university can bring, the name reputation, their brand, their ability to recruit specialists, and subspecialists in East Texas. Most recently, we opened up an ECMO program, which is an advanced cardiac life-saving procedure. And we were able, because of the strength of the university and people wanting to have those academic affiliations and appointments to recruiting subspecialists, to be able to provide that service. We're the only hospital in all of East Texas to offer that. And previously, those patients did not have any availability for ECMO services in East Texas. And so now we're able to be that regional destination center. And so just one of the examples of that partnership. But the clinical recruiting, nurse recruiting and training programs, there's a lot of benefits that happened as a result of partnerships. And for the academic partner, we're able to help them expand their brand across the states and really bring the strength of our management team and our ability to manage community hospitals, which is very different than managing an academic center.

Great. And can you touch briefly just on your relationship with your largest investor, EGI and then also Ventas?

Yes. EGI has been a great investor. They have a very long-term philosophy. EGI and Ventas purchased the company from Welsh, Carson back in 2015. And obviously, they've been involved for 9 years. They're our largest shareholder, and we expect a long relationship with them. But most importantly, they've always had a long-term vision. They focus on sustainability. So when you look at our balance sheet and our leverage profile, we are very appropriately levered for a company of our size and expect that to continue to improve as our guidance has suggested. And they're really focused on long-term sustainable relationships, sort of slow and steady growth. And as you look at the trajectory of the company since they've owned it, it's had a nice growth pathway, and we're looking forward to continuing that.

Great. A few months since you came public, but just curious to kind of get feedback in terms of within the company, at the Board, how you thought IPO process went and where we stand today?

Yes. It's really an opportunity to just really thank our team. I mean we wouldn't be here without the hard work of everybody across the company. What we do is people caring for people every day in our hospitals and our clinics across the country. But our management team really deserves a lot of credit, as you all know, going through an IPO process is not easy. We appreciate our partners, our banks that helped us to sort of navigate that pathway, which is as long and arduous, but we're excited to be here on the other side of it and excited to see the investor interest in what we're doing. And most importantly, the care we're providing and our ability to take that care and grow that across the country.

We excited about the access to capital that it brings as we think about executing on our growth strategy. It just -- we find ourselves at a point in time -- coming out of the pandemic, a period of time where there wasn't a lot of M&A activity, and now we really see a much more active pipeline. And we think by being public, we're in a position to execute on that strategy more effectively.

Excellent. When you talk about the road to get here, and it takes a lot. The important thing is once you get there is first quarterly report, and it was a strong one -- to get your thoughts in terms of what you thought were the key highlights for Q2.

Sure. Q2 is very much consistent with what our overall expectations. We've all seen good return to good robust volumes across the industry. We think of it internally as really a return to normal. And so that was really the primary impetus of good, strong volume growth and really an abatement of some of the inflationary pressures that we've seen through the pandemic. Certainly, contract labor has come much more back into line with historical levels. I think as a percent of salaries and wages, we were down to 4.3% from 5.7% a year ago. And we kind of think we're getting to that new normal level, while that's still elevated above where we started the pandemic, it's sort of at a level and at an hourly rate that we think is sustainable. And we see that in our nurse wage rates as well where those extreme market adjustments have abated back to, what I'll call, normal [indiscernible] type levels where we were prior to the pandemic. And that's also a dynamic that's influenced by our overall nurse turnover -- clinical turnover below 15%, actually below 14% in the most recent quarter, which is even below pre-pandemic levels.

That's great. And on the call, you introduced kind of long-term targets of how you're thinking about the business, kind of mid, high single-digit revenue growth, low double-digit to mid-double-digit EBITDA growth and kind of mid-teens EBITDAR margin. Can we just spend some time just talking through those building blocks and how you see the business evolving there?

Sure. There are a couple of dynamics at play. Marty has already touched on the strength of our markets in terms of overall population and wage growth as being above U.S. averages, over 3% on average, which is a driver of -- as we think about the growth algorithm, sort of that rising tide of population growth is a built-in tailwind in the markets that we're in. And then we think about commercial rates. Clearly, the last 24 months, we've been able to get above historical rates to help offset some of the inflationary pressures that we saw through the pandemic, and that's been a tailwind as well. I'm sure, over time, that goes back to a more normalized, again, call it, 3% -- 3% to 4% type increases. But you compound that to our population growth in our markets as well as our efforts to grow our ambulatory access points in our markets. Historically, we think there is a big opportunity to create more access points to create more sites of care and to capture the patients where they want to be seen and build, grow our market share inside of our markets. We think that's been an underpenetrated opportunity. So from a top line perspective, we think that's the algorithm to mid-to-upper single digits. And then when we think about our EBITDA growth, a couple of dynamics at play there. One, historically, the states we're in have been underrepresented from states with DPP programs. I think before the Oklahoma program went live this April, only about half of our beds were in states with DPP programs. Once New Mexico's program gets approved, which has been submitted to CMS, will be like 90% of our beds in states with DPP programs. And that's -- we'll call that a onetime adjustment in our margin profile, but it gets us much more in line with where our peers operate from a margin perspective. And then lastly, we think we have a -- still have opportunity. We spent the last several years creating an operating platform, Ardent had grown through acquisition and hadn't done a full integration of those acquisitions until the last, call it, 3 to 4 years, and we spent the last 3 to 4 years creating that operating platform. We still have leverage to get out of that, not fully scaled today, but we think there's still margin opportunity over the coming, call it, 3 or 5 years to create more margin uplift there.

Got it. Alfred, maybe just building on that in terms of are there any specific operating initiatives or things that you would call out that should help margins over time?

Sure. One I'll point to is we've had a big effort this year on our supply chain initiatives, and that is to create really operating improvements across our -- all the blocking and tackling, inventory levels, obsolescence, physician preference items. And we've seen that already in our supply chain as a percent of our revenues down year-over-year over 100 basis points. And we still think there's -- we're not complete with those initiatives yet that will run into '25. So we think there's still opportunity inside of supply chain as one example.

Got it. Marty, I'd love to talk about just some current macro conditions. There's been a nice strong rebound. I think the investor debate is just durability on these trends. And so what are you seeing in your markets from a utilization perspective? And anything you'd call out in terms of acuity?

Yes, I think there's a lot of conversation about this and coming out of the pandemic, obviously, the last few years have been anything but normal. You've always got seasonal variation, but the highs and the lows were accentuated during different periods of the COVID pandemic. We feel that we are back to a pre-pandemic sort of normal volume trajectory. Again, our markets are growing faster than the U.S. average, and we were seeing positive growth rates before the pandemic, and we see ourselves getting back on that track, firing across all cylinders. This year, we've been benefited a little bit by the two-midnight rule and payers coming into compliance with that. And so that's been an increase in our admissions year-over-year. But absent that, which tend to be lower acuity, everything else has been sort of back to what we would consider sort of pre-pandemic normal level.

Got it. And you touched on before, Alfred, in terms of just kind of rates coming up a bit. How are you thinking about where things stand today? Any insight you can give in terms of expectations as you kind of leg into next year?

Yes. It's been, like I say, a couple of years of really negotiating hard at the table in terms of getting adjustments that are more reflective of the type of inflationary environment that we were operating in with nurse wages, contract labor, hospital-based providers and the significant acceleration of those costs and trying to get some offset to that. And we've been successful in getting above historical average increases, call it, over the last 24 months. We haven't really seen a trend down yet. However, I think we all hear the same things in terms of -- and see where the MLRs are landing with payers. And I'm hearing commentary that there's -- and expecting there to be more pushback on the types of increases that we've been able to get over the last 24 months. Again, we're at the negotiating table every day. And we still believe we haven't fully been -- received the types of rates to offset those inflationary pressures that we felt historically. And we also understand we're likely going into a more difficult negotiating environment in the upcoming 12 months.

Got it. So let's talk about some kind of bigger picture trends for the industry, like you said, Marty, so much change kind of through COVID and coming out of it. What are you seeing in terms of patients, how they're accessing care. I know you're building out ambulatory. How are you positioning for -- the business as we go forward?

Yes. I mean, obviously, coming out of the pandemic, you had a period of time where it was difficult for patients to access care just because of either the number of COVID patients in the hospital and/or some of the fear of going in for elective procedures and such. And that really opened up something that was already there in terms of the ambulatory environment, but I think it really poured gasoline on that opportunity. And so you've seen this proliferation and a shift from inpatient to outpatient in some lower acuity surgeries, but just the accessibility. And so for us, we did a lot of M&A sort of in the late teens years and we're really focusing on integrating that. We have a tremendous amount of opportunity to expand care in our markets, whether that's urgent care access points, freestanding ER, imaging centers, ASCs, perhaps even micro hospitals, in some cases, in some of our high-growth markets. They've become an and strategy for us versus an or. We're going to continue to focus on high acuity service line growth and making sure we can take care of those really complex needs that patients have inside of our hospitals. But at the same time, we want to make sure from a value-based care perspective that we've got easily accessible, affordable options for patients to receive care in the most appropriate setting for their condition. And so for us, this is really a growth strategy on both sides that we see to take advantage of how the populations have shifted. Telehealth and virtual health has been another thing that was around before the pandemic, but we were seeing maybe 1,000 patients a month pre-pandemic. That went to about 60,000 patients a month. The first couple of months as clinics shut down and people were looking for options. So 60x growth is really nice, but obviously it wasn't sustainable, and you've seen those numbers come down. But we're still in sort of the low teens, what we've seen, and that's a growing business. Now that people see that I don't have to necessarily get in my car and go wait in line in an office or an urgent care for something simple when I need that care. That's an option for them that they have. And so we see that as an integrated part of our offering of meeting the patients where they're at, creating access points that are going to help them and creating sticky relationships with them. We want to have relationships with patients that span the gamut. And I think the focus that we are doing is building that integrated health system that allows us to provide that longitudinal care in whatever the appropriate setting is versus some of our competitive companies and some of the "disruptors" in the industry that have come in and sort of highlighted the opportunity but can't connect the dots. And so patients don't tend to live in point solution worlds. And so we want to be able to provide the primary care, the specialty care, the virtual care or the facility care that they need, so we can care for them across their life and their continuum of care.

Got it. And maybe just building on this, and you've been in the industry for decades, right? So you've seen a lot of change as the space has evolved. And what's important in terms of for you to make sure that you're positioning Ardent to capture these changes in terms of patients, how they're getting care and building out the overall strategy from an execution standpoint?

Yes. For us, it's about truly -- we've heard about consumer-focused care for decades. We've been talking about it. But I think this is really the inflection point where we can deliver on it. The technology is evolving. The affordability is getting more in line with things that we need to be looking at. And if we don't do it, you see people coming in and showing that it can be done. And so for us, it's really connecting that dot from a consumer strategy and really putting them at the center of the universe. As you said, I've been in this industry for 25-plus years, and it was always we have built these big, large hospitals and facilities and you must come. And patients still do come and they're going to need -- always need that higher level of access to care, but you don't necessarily need to come to -- it's kind of the equivalent of the big-box shopping mall, if you can drive up to the strip mall that you can go directly to the store you want. Same thing. People want the same thing in health care that they want in their day-to-day lives. They want access. They want convenience. They want it now. We focused a lot on the consumer engagement side from a technology perspective and making it easier for them to schedule appointments to talk with their doctors, to pay their bills. Everything that you can do from your phone in your normal life, people want that in health care. And historically, this industry just has not provided that, but we put a lot of money and effort into that. We spent $0.25 billion, putting Epic in, which -- Epic is the KLAS-leading electronic health record and really clinical operating system backbone for our company. We did that as a private company, and we see that paying dividends now and will continue to pay dividends as they continue to evolve their ability to help us engage and stay engaged with our patients and meeting their care needs, often before that they even know what they need. And so being able to connect the dots and create that seamless consumer experiences is where a big focus of ours is, and how do we touch more people in each of our communities.

Got it. Just building on that, you mentioned there's disruptors in this space. You have large, diversified health care companies, you have tech companies getting in. How is Ardent positioned relative to what's this changing environment? What are some of the things you're best leveraging today? What are some of the things you want to be kind of on the front foot, if you will, to make sure you stay ahead?

Yes. No. I mean, we see technology as an enabler for us as well as a partner. We're not going to be able to do everything ourselves, and we've got some really great partners that are helping us to sort of pilot in, what I call, sort of the next generation of care delivery. We have the same challenges and pain points that the industry has. You've got physician burnout issues. You've got nurse recruitment, retention issues. There was a lot of people that left the field or retired early during COVID. And we're still grappling with the aftereffects of that. And so how do we make it easier for our caregivers to deliver care at the bed side. How do we make it safer and more effective for our patients to receive care in our facilities and access our clinics and services. So things that we've invested in, we've got a partnership with BioIntelliSense, and they make -- I usually have one with me, but something about the size of your watch that's a little patch that sits on your chest and it replaces the EKG box that we typically put around a patient's neck and the blood pressure cuff and the pulse oximeter, we put you in a hospital bed and you're connected to all these wires, it's uncomfortable, you turn, they're alarming, they rub off. This little device is just a small wireless patch that's communicating and electronically transmitting your vitals. So it's taking that care burden and taking some of the burden of collecting the vitals away from our caregivers, but they're also collecting that information once a minute now versus 4 to 6 times a day, which is what typically happens in the med-surg environment. So not only are we making it easier for our nurses to do their jobs, we're giving them better information. So if a patient is deteriorating during their stay, we're going to notice that quicker, and that's going to prevent somebody perhaps having to crash and go to the ICU and end up in the hospital for a longer period of time, we can medically intervene much more quickly because we're giving nurses information they can act upon. We've also invested in virtual nursing services, where we can bring nurses in remotely and really change the dynamics of the care team that we offer. And so this is a little bit of back to the future for those like me that have been around this industry for a long time. We used to have LPNs, RNs, nurse techs and aids, and it became much more of an RN-driven model where there's not enough nurses to go around. So how do we augment the care model? It's not about replacing nurses. It's about bringing the right nurses and the right support to the patient to care for them. So now we can Zoom nurses into their room through the TV, and they can help with the admission process. They can help with discharge instructions, medication reconciliation. And these are all really important tasks that our nurses have to do, but they're time consuming. And you don't want to rush the patient, you want to get a good history on their admissions, so you're treating them effectively and a good medication list. Well, these virtual nurses can now Zoom in and spend the time with those patients, and we're seeing patient satisfaction go up. We're seeing nurse satisfaction going up, early results, we expect that turnover in our nursing units to come down because we're bringing more support. But we're also able to augment with LPNs and aids at the bedside to provide the right level of care and make sure we've got the right number of patients -- or the right number of caregivers roaming the halls and helping our patients where that's needed. And so a lot of investments in technology, not for the cool innovation side of it, but really for the practicality of addressing the pain points that we see in the industry and what our nurses and doctors are telling us.

Got it. Alfred, I wanted to go back to just -- you commented briefly on kind of Oklahoma and New Mexico, and that puts you on kind of more of an even setting here. It has been, I think, an investor debate around these programs, and particularly, we have an election coming up. And so can you just touch, bigger picture for the industry, just the importance of these programs, how they work and just the sustainability?

Sure. Well, I'll speak from Ardent's perspective, we think these are very important programs, I believe, with New Mexico's program, when that goes live, it will be the 44th state to have a DPP. So it is really organic to how Medicaid programs are paid for and reimbursed, really all across the country today. It is important to note the programs were started under a Republican administration, have continued under a Democratic administration. I know there's always a lot of conversations in an election year. But we think the most important thing is that appropriate funding is being provided to care for Medicaid patients. And when I think about -- while Ardent has had a good year and a good quarter, we still are in an industry that is struggling with something like 30% of all hospitals losing money. And these programs really have been a lifeline to -- again, to the cost of care across the country. So our perspective is that it's important for patient care and that these are very durable programs. CMS has put out guidelines beginning, I believe, in 2028 around to bring some conformity to how these programs are structured because there is a lot of variation across the country. And I think conformity would likely be a blessing, be easier to administer. But yes, our perspective, again, is very much that for us, it just allows us to invest in those markets and communities.

Got it. And you mentioned New Mexico would get you to kind of 90%. You still have kind of Kansas and Idaho out there. How do you think about that in terms of handicapping timing or...

Yes, because as I mentioned, with 44 states with a program, I think we are at a tipping point. This isn't my own perspective, it's likely a when, not an if. I'd be loath to kind of predict timing. There is a nuance to how these programs get implemented. You need a managed Medicaid structure, and that can take time. It certainly did in the state of Oklahoma to first stand up a managed Medicaid program before they put in the DPP program. So -- but I think our perspective is that we think over time, I would expect all states will have a program.

Got it. Marty, I wanted to come back to -- you mentioned the JV and partnership strategy, which is unique. And more broadly, M&A was put on hold. Alfred, you talked about the pipeline is robust now. So how should investors think about kind of the opportunity set out there and the potential for inorganic growth as we go forward?

Yes. I mean for us, our last acquisition was 2018, it was a sizable acquisition. And as the company was digesting that, COVID hit. And so our caregivers were taking care of COVID patients, and Alfred and I entered the company about that time and really focused on getting this company ready to scale to that next level of growth, which a lot of hard work was done behind the scenes to make that happen, finishing our installation of Epic, really centralizing and standardizing our management teams and functions in terms of how do we operate to take advantage of the size and scale that we become. And we believe we're at that point now where the M&A -- the window has opened back up. Our balance sheet is in a good spot. We've got the appropriate leverage to be able to take on strategic M&A of the right size for us that we're not going to do something that's too big that's going to risk that profile, but we see the opportunities out there. During the early years of COVID, there wasn't a lot of M&A happening really across the industry, period. And we're starting to see those windows open up. Alfred stated and you still have about 30% or so of the hospitals that are losing money. And again, there's -- not every hospital is going to be a target for us. We've carefully talked about these midsized urban markets that we're very focused on. There's a lot of them out there. We've quantified that in terms of what we see as the opportunity universe, and we're going to be very selective inside of that window. We want to go into a market where we can get a sizable foothold of facilities, hospitals, and then continue to expand our strategy through the physician clinic expansion, through the ambulatory expansion and make a sizable impact. We're not looking to grow dots on the map. But we believe that, that's going to offer a lot of opportunities for us to look at M&A. Our pipeline is as robust as it's been since Alfred and I have been here. We've got a number of conversations. We do have ongoing conversations with some of our current partners about expanding in the states that we're in as opportunities come up as well as some new academic partners that have taken note of the model that we have and the success that we've had in Texas, in Kansas and New Mexico with our JV partners and see that as an opportunity for them to grow their footprint. And so we're excited about the pipeline. I don't have anything to talk about today. But given the conversations, we would expect to see some M&A in the not-so-distant future.

Got it. And you mentioned a lot of hospitals are hurting today in terms of losing money. And so how does that enter the equation in terms of as you view the opportunity set in terms of a health system that may be financially isn't sound, but there's things that you can do operationally or to help that? How do you...

Yes. And that's where I think that -- not that we would exclusively enter a new opportunity through a JV partner, but we do see that as a strategic advantage that we have. Why is that particular asset struggling? Is it under-management or underperformance? Is it lack of recruitment? Is it positioned in the market? Is it a perception in the market there? Understanding the dynamics of what ails that system is what leads us to say, "Okay, where can we really help." But we believe that academic partnership and go back to the Texas example, coming into that market, all of the hospitals were significantly negative EBITDA. By the end of the first year, we had brought that to cash flow positive by the second year, improving margins, and they've continued to improve since that acquisition. But that was really the strength of a strong partner that had a brand image. Texas, everybody loves the University of Texas, I guess, unless you're an Aggie. And so people have really gotten behind that brand. But as importantly, we have to deliver on quality. We have to deliver on service and bringing new specialists to town, offering new and expanded clinical services, bringing services that were formerly only available in Dallas or Houston or San Antonio to East Texas, those are the things that, that partnership allows us to do. And we're able to help bring our management expertise, to bring our Epic platform and our ability to operate against that. But having an academic partner that can bring some of those intangible factors like that physician recruitment and the brand and perception with reputation are all important ingredients that we think will allow us to go into a market that may have been struggling and bring the solutions to what -- will help that situation turn around.

Got it. I want to talk about the mix of the business and in the remaining minutes also for investors, open it up if you have a question, we'll bring a mic around. But when I think about kind of 90% inpatient, 10% outpatient, how do you see that evolving over time? What are some of the key strategic initiatives from a mix perspective?

Yes. And just for clarity, that the outpatient revenue is a higher percentage than the 10% sort of pure-play outpatient facilities, but it just is indicative of the growth opportunity we have in our markets. It's not that the outpatient care doesn't exist. It's just where our -- historically where our focus wasn't. But again, as we've improved our balance sheet, and we've improved our operating performance, we've expanded and very carefully crafted the organizational structure to have co-presidents, one for the hospital side of the equation and one for the health services, the ambulatory, the physician clinics, the value-based care initiatives, we want to press accelerate -- press the accelerator down on both of those. We want to continue to grow and strengthen their hospitals, but we want to grow that outpatient performance. And we see the opportunity to do that. We've had historically sort of low 20% penetration, total inpatient share of the wallet in our markets, but historically, we've had sort of low single-digit percentage exposure on the outpatient side. So it just shows the opportunity for us to grow, whether that's through de novo adds because the growth of our markets are continuing to build just through the natural organic growth or through M&A, as we have the right opportunities come about where we can see an accretive acquisition to go further faster on accelerating that outpatient strategy. We're going to look at both of those opportunities.

Great. Are there any questions in the audience? As we wait for that -- there's one there. Just -- they'll bring a mic.

You mentioned your [indiscernible] so just as you're looking at the market landscape and your payer mix, what aspects of value or risk arrangements are you leaning in to pursue? And how do they fit with your overall model and the delivery capacity that you have set up?

Yes. Great. Great question. We've got 80-plus different value-based arrangements in our current managed care contracting landscape and about, call it, about 225,000 lives that we cover through a combination of commercial, managed Medicare, managed Medicaid plans. And we're very focused on those. That's part of the reason we have such a robust infrastructure on our physician primary care network, growing specialty network is to be able to service those patients and grow. From a continuum, and if I asked everybody in this room to explain value-based care, the definition, we'd get 50 different answers. But you've got from fee-for-service all the way to full risk capitation, we're kind of in the middle. We're focusing on shared savings plans, MSSP programs and approaching sort of that shared risk. But we're carefully wading into those waters. And what we're seeing through our ACO partnerships that we have in each of our different markets. is that we are achieving those shared savings, not life-changing economics at the current state, but we do see the opportunity to grow that shared savings as we continue to just improve our processes, continue to deploy our technology and make sure that we're giving information to the physicians and have that right specialty network to actually manage that population health. We see that as a future growth lever that we have that's still in its early stages. But we are staying away from sort of that full risk capitation, we don't want to put the company at risk. Again, given the midsized markets, you want to make sure you've got an actuarial base that can support that, and you've got a network that can manage that effectively. And we're not going to push that agenda into a point where it's going to put the company financials at risk, but where we can see that pathway and trajectory where we're seeing those improved clinical outcomes that are driving contractual value back to the system, we're going to continue to expand in that area.

Great. I think that takes us to time. So Marty and Alfred, thank you so much for spending the morning with us.

Thanks for having us, Craig. Appreciate it.