Care Finders Total Care LLC (MODVQ) Earnings Call Transcript & Summary

Greetings, and welcome to ModivCare's call to discuss the CareFinders acquisition. [Operator Instructions] As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Jonathan Bush, Senior Vice President and General Counsel for ModivCare. Thank you. You may begin.

Thank you, operator. Good morning, everyone, and thank you for joining ModivCare's conference call to discuss our signing of the merger agreement to acquire Care Finders Total Care LLC. With me today from the company are Dan Greenleaf, President and Chief Executive Officer; Heath Sampson, Chief Financial Officer; and Dave Middleton, President and CEO of our personal care segment. During this call, members of the management team may reference the presentation that can be found on the Events page in the Investors section of our website at www.modivcare.com and the current Form 8-K, which was furnished to the Securities and Exchange Commission. Before we get started, I would like to remind everyone that during the course of today's call, the company's management will make certain statements characterized as forward-looking statements under the Private Securities Litigation Reform Act. Those statements involve risks, uncertainties and other factors, which may cause actual results or events to differ materially. Information regarding these factors is contained in today's press release and in the company's filings with the SEC. We'll also discuss certain non-GAAP financial measures in an effort to provide additional information to investors. A definition of these non-GAAP measures and reconciliation to the most comparable GAAP measures is included in our press release, investor presentation and Form 8-K. We've arranged for a replay of this call, which will be available approximately 1 hour after today's call on our website, www.modivcare.com. With that, I will turn the call over to our CEO, Dan Greenleaf. Dan?

Yes. Thank you, John, and thank you, everyone, for joining us on such short notice. We are excited to announce a meaningful addition to our business with the acquisition of Care Finders Total Care. This transaction broadens access to in-home personal care solutions for patients and supports our strategy to be the partner of choice for caregivers, payers and states as we continue to advance our goal of creating the industry's first truly national personal care platform. Once the acquisition is completed, ModivCare's personal care segment is expected to include nearly 16,000 caregivers across 7 states, expecting to provide approximately 30 million hours of care to more than 18,000 patients annually. The transaction also delivers considerable value to ModivCare shareholders, with estimated mid- to high-teens earnings accretion and meaningful cost savings. Today, we will walk through the strategic and financial benefits of this acquisition, while also highlighting the considerable opportunities that still exist for ModivCare as we continue to expand our footprint. The acquisition is complementary as it meaningfully enhances our scale where we already have a significant presence. CareFinders is one of the top personal care providers in the Northeast and operates in New Jersey, Pennsylvania and Connecticut. CareFinders employs more than 6,200 caregivers, who provide approximately 10 million hours of personal care services per year to over 7,500 patients. Annual revenue at CareFinders is approximately $200 million, pro forma for recent acquisitions, and with more than half of that coming from New Jersey. The payor mix is predominantly Medicaid and Managed Care, which aligns well with ModivCare's existing payor mix. The regulatory and reimbursement environment remains favorable in the CareFinders' markets. In 2020, each of CareFinders' states implemented rate increases. And in 2021, New Jersey implemented a further 10% increase from $20 per hour to $22 per hour effective July 1. Simplura will also benefit from the recent New Jersey rate increases. We may also see higher reimbursement in Pennsylvania and Connecticut over the next year. Following this acquisition, we expect that our top 3 personal care states, New York, New Jersey and Pennsylvania, together will generate around $575 million of annual revenue on a pro forma basis. Having a dense regional presence in these states gives ModivCare several strategic and operational benefits. First, it broadens our scale and enables greater access to care for underserved patient population, allowing us to continue to transform how, when and where patients are cared for. Creating healthier community means providing connections to more reliable care. And with the acquisition of Care Finders, we're incredibly excited about advancing health equity for those who need it most. Second, it strengthens ModivCare as the partner of choice for caregivers, payers and states. We expect that this transition will help provide our caregiver recruitment and retention with our larger combined regional footprint. Caregivers are a vital part of our organization and being able to successfully increase our caregiver count will allow us to accelerate our organic growth and meet the strong demand that exists for personal care services. Our strong regional presence will further bolster our partnerships with the state payers and managed care organizations we serve as we become a one-stop shop for supportive care services that address the social determinants of health. ModivCare has excellent long-standing relationships with its states and payer partners in the markets in which CareFinders operates, and we expect this transition to strengthen these bonds. An example of this is in New Jersey, where ModivCare is the largest nonemergency medical transportation provider in the state as well as the partner for several food delivery programs. During the pandemic, ModivCare partnered with CareFinders to remove the barriers of transportation for its caregivers by providing more than 85,000 rides, which greatly assisted CareFinders in continuing to care for their patients in the home. Further, ModivCare provided more than 2 million rides, approximately 175,000 personal care hours and delivered over 2 million nutritional meals to the New Jersey patient population. We expect the acquisition of CareFinders, which is the largest personal care provider in the state, will allow us to create even greater partnership with the state of New Jersey. By combining transportation, personal care and food delivery, 3 critical services for vulnerable populations, we can support improved health outcomes for Medicaid members. The future of health care involves providing value-based care and bundled arrangements, and this acquisition is another step in ModivCare's journey to provide these arrangements for our payers and patients. We look forward to having discussions in New Jersey and other states as we offer these important services going forward. Lastly, the dense regional footprint that we have built demonstrates a potential growth opportunity for ModivCare as we build out our national personal care network. Following this transaction, our personal care segment is expected to generate over $650 million of annual revenue, primarily in the Northeast, which puts us well on our way to reach our near-term goal of generating $1 billion of revenue and $100 million of EBITDA from our personal care business. In summary, I'm very excited about the acquisition of CareFinders. It broadens access to care for our patients and further solidifies ModivCare as the leading personal care operator in the Northeast with regional density and scale. It strengthens our partnerships with the payers [ in ] states we serve, strategically aligning with our vision to be a one-stop shop for addressing the social determinants of health and underserved patient population. It is expected to be meaningfully accretive to ModivCare's earnings. ModivCare is leading the transformation to better connect people with care through transportation, personal care and nutritional meal delivery. We are constantly evaluating growth opportunities. We believe the possibilities are limitless as we continue to expand our footprint, and we look forward to continuing to disrupt the way supportive care is delivered across the U.S. in order to improve health outcomes for vulnerable populations. So with that, I would like to turn it over to Heath Sampson, our Chief Financial Officer, to discuss some of the financial aspects of the transaction. Heath?

Thanks, Dan. On Slide 7 of the presentation that we filed with the SEC and posted to our IR website, we summarize the financial highlights of this compelling transaction. The total purchase price of the all-cash transaction for CareFinders is $340 million, subject to customary purchase adjustments. The transaction is expected to generate $34 million in present value of estimated tax attributes. The purchase price, net of tax attributes, is $306 million, representing a 10.3x multiple to trailing pro forma adjusted EBITDA of approximately $30 million, including synergies. We anticipate the forward EBITDA multiple to be below 10x as we expect a recovery in EBITDA growth following the impact of COVID. We intend to initially finance the acquisition of CareFinders with cash on hand and borrowings from our undrawn $225 million revolving credit facility. Our credit facility includes an option to increase the borrowing capacity to as much as $300 million. As we continually evaluate our capital allocation opportunities, we may consider financing a portion of the purchase price with long-term debt. On a pro forma basis, net leverage is expected to increase 2.1x. Similar to ModivCare, CareFinders is an asset-light business with minimal CapEx requirements, which will result in strong free cash flow generation. This will allow us to continue to fund technology and other growth initiatives across our business as well as continue our disciplined pursuit of future M&A opportunities. Lastly, we anticipate the transaction will be significantly accretive to ModivCare with an initial expectation of mid- to high teens earnings accretion in 2022 and beyond. With that, we'd like to open the call to questions. We will be announcing our second quarter financial results on August 6, so we will not be taking any questions regarding the current quarter at this time. But we are happy to answer any questions you have regarding this transaction. Operator, please open the call for questions.

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

Congrats on the deal. It looks like a good asset. So Dan, I guess my first question for you. Obviously, this is in some of your key transport markets, right? So just walk us through again, like maybe the strategy on how you intend to layer home health and how that will operationalize over time to kind of get social determinants of health offering? And what are your views on why you're putting this together? And again, how will that all play out over time?

Yes. Thank you, Brian. So number one, our customers, and when I say customers, I mean, our states, our payers and our members are asking us for one-stop -- if you will, a one-stop shop. And so from our standpoint, our customers want one person to go to. So I think that's really important, Brian. And the market is evolving. Now if we think about it more from a practical standpoint, and I've shared some of this before, we very much see the day where -- and you've seen some of this, frankly, as we talked about, the 85,000 rides we gave to caregivers. But we certainly see the day where a ModivCare transport company will take a patient from the home -- or excuse me, from the referral source to the home, and then there'll be a patient aide waiting for that patient at the home. That patient aide will do -- will look at things like medication management. That patient aide will also play a role in assessing the nutritional aspects of that person's life. That personal aide will also play a role in rescheduling or scheduling follow-on visits with the doctor. But so our view is that all these things play very well into our view of where the industry is heading. We're -- the beauty of what we're doing, whether it be in transportation or whether it be in personal care or food or whatever else we're going to be doing, is that we already own this channel, Brian. I mean we already have the relationships with the payers and states. And so as we think about how do we collaborate together, one of the beauties of it is the fact that we actually already have the relationships in place. And again, I think it makes a major difference. So that's what I would say at this point in time, Brian. And what are the economics of combining all these? We haven't figured out yet. But one of the beauties of what we're doing is that we are getting paid for personal care. We are obviously getting paid for NEMT, and there's also a mechanism to be paid for food. So -- and then ultimately, I think we'll be bundling these things, Brian, is the plan.

No, that makes sense, Dan. I guess a follow-up to that, just as I think about the states that these guys are in, what have you seen as the penetration of managed Medicaid versus state-run, I guess just in the context of interest in value-based care and kind of like a universal payment model for SDOH?

So you're asking about Managed Medicaid...

Managed Medicaid versus institutional, yes.

Versus state. It still felt -- again, I think it's largely about 50-50, Brian, is what we see. I think that's a good way to be thinking about it. When we bought Simplura, it was a little over 50% was payer versus state. In the NEMT space, it's about 50-50. The good news is there's really, in many respects, about 6 payers that -- 6 to 7 payers that are driving most of, if you will, the value-based care change, Brian, and we have partnerships with all of them. So again, as we add things to our platform, we're in a very good position to launch and to do other things with them as a result of the long-standing relationships we have by them.

Got it. And then, Dan, the asset looks really good as I look at the margins.

Yes.

Just curious, what was the growth rate like for this business prior to the pandemic? And then how are you thinking about those margins? I mean anything to call out specifically in terms of service lines or geographies that drive fairly healthy margins for the business?

Yes. I don't know, Heath, do you want to comment on that?

Yes, no, Brian. So as we said, this asset has also been put together by many acquisitions and some recent as well. So the growth rates are consistent with what we've seen before with Simplura and across the board. So healthy growth rates. And as we move into the latter part of this year and next year, we'll give you kind of growth rates in combination. The EBITDA margins are healthy too and consistent with that 10% to 12%, what we've put in place here.

Got it. Okay. So you're assuming a slightly kind of like more conservative 10% to 12% margin range?

Yes. Yes. Yes. As you know, both -- we're in COVID, right? So when you think about this and similar to all personal care businesses, the assets that we have today and, of course, with CareFinders, they've all been depressed because of COVID and the wage crisis that we have out there. So as that rolls off, we're excited to see that growth come back. And again, Brian, just also, this may be a follow-up question, but when you think about how to value this, obviously, this is accretive because of how we're financing it a lot with cash. But really, for the way to think about it, we're at that 10.3x and that includes -- that's LTM, 12 months LTM with synergies only. So think about when we come out of COVID and then with the New Jersey rate that we talked about, we feel really good about the valuation and the multiple around that.

Got it. Okay. My last question for you guys. Dan, I think in the past, you've mentioned that you had a pretty good pipeline of deals. I think 10 acquisition opportunities at one point, I think, is what you've mentioned. So how does that look now with this fairly large transaction that you're completing? And then I guess, Heath, just views on long-term delevering of the balance sheet or to pay down the cash portion of this deal or the cash that you're drawing from the revolver.

So the first [Audio Gap] one of the...

Dan?

Beauties of -- one second, guys. Can you hear me?

Yes, we can hear you now, Dan.

Okay. Sorry. Yes, I guess I was walking around the room here. But no, I think one of the beauties of this acquisition, Brian, is that, frankly, we have -- we've owned Simplura since November. We've learned a lot. And we're very blessed to have someone like Dave Middleton, who's a world-class CEO, who's done 10 to 15 acquisitions himself in this space as the CEO of Simplura. They also have, I think, a very strong management team with Jim Robinson as their CEO. Jim comes from a background at Amedisys and really has a very strong background. So we feel really good about the senior leadership between the 2 organizations, and I can't speak enough about how important that is. Again, as I said, we've learned a lot, Brian, from the original acquisition of Simplura that we think we'll be able to rapidly employ in this acquisition. And yes, the pipeline is rich. It's a fact. We're targeting as much as 20 companies at any point in time, Brian. So it's something I don't think we're going to shy away from. I will say, though, that we are going to spend time, energy and effort making sure that we optimize the combination of Simplura and CareFinders, and that's got to come first. And that being said, are we going to continue to look for opportunities? Absolutely. Our goal is to have a company that's going to [ generate ] $1 billion in revenue and $100 million in EBITDA and is a national platform. And that -- we believe, given what we're doing, that's sustainable. And again, we have, I think, 2 of the best assets in the industry. And again, I think you also think about, Brian, one of the beauties of this is the overlap. We basically overlap in all 3 states we do business with. And so we already have a working knowledge of the markets that CareFinders is in. Again, I can't underscore how important that is. And moreover, you think about layering in a management team or combining a management team that already coexists in the marketplace is a really, really powerful aspect of this acquisition. So with that, Heath, I'll turn it over to you.

Yes. Yes. So your question around capital allocation and deleveraging. So consistent with what Dan was just talking about and what we've said in the past, growth in our strategy to move people to and from care and also having care into the home, that is a top priority for us, and we'll continue to look at opportunities in there. With that, our ultimate goal is always to be within that 3x leverage. So whether we are, we're going to get back to that as possible. But again, first priority is to be -- take advantage of growth and making sure that we're adding assets to fulfill our strategy. And then, of course, getting back down to that 3x is always a good goal.

Awesome, guys. Congrats again.

Yes. The only other thing, Brian, I would also mention is around just this national platform idea and how important that is because, again, we're in 7 states right now. Tremendous overlap. But we see a significant opportunity to continue to find overlap in all the other markets we're in. And they're fairly concentrated. But again, we think there's significant opportunity to do more of this. And we're excited about, obviously, what we're building and where all this is headed. So thanks, again, Brian.

Our next question comes from the line of Bob Labick with CJS Securities.

Congratulations on the attractive acquisition.

Thank you, Bob.

Great. So maybe just taking a half step back, can you just compare and contrast the service offerings of CareFinders with Simplura? And then I think you touched on it briefly, but the margin profile, obviously, it looks like they're a little bit higher, in the 13% to 15%, including synergy, range. So what's kind of the difference there? And getting it back to the normalized 10% to 12%, what will go on to revert to your 10% to 12% goals on margins?

Heath, do you want to handle -- take that one?

Yes. So from a margin perspective, we're at that 10% right now, right, in the middle of COVID. So we feel really good about coming out of COVID and the wage crisis that's going on hiring aides and getting them back to work because we know the demand is there, right, we know that across all of personal care and specifically within our personal care business and now CareFinders. So we feel really good about the 10% to 12% EBITDA margin. So I'll repeat again just make sure around the multiples that we paid for this specifically, we disclosed that it's 10.3x. And again, that is for a trailing 12-months number, which includes the tax attributes, which are real cash to us and then a really reasonable synergy number. So that 10.3x is a good way to look at it. But the other thing, again, and I said this before, to look beyond that is the coming out of COVID and then also the changes that are happening and has happened in New Jersey around the rates so -- the rate changes. And we expect that to continue in certain other states. So again, we feel really good about what the future looks like here. And again, obviously, this is accretive to us based on obviously paying a lot of cash for this.

Yes. The other thing, in terms of service lines, Bob, they look very similar. I mean you think about we're in Eastern PA, similar markets; New Jersey, similar markets; Connecticut, similar markets. The only thing I would point out that's different is our [ work in the waiver ] program in New York, and whether that be in the areas of traumatic brain injury or the work that's been done in terms of transitioning patients from institutional care to the home. But I think those -- from a service line standpoint, they look very, very similar.

Got it. Great. And then can you tell us or discuss how this helps you with your food service aspirations and just your path to growing that business? Or maybe it's a little early. I think on the last call, you discussed potentially talking about it later this year. So if I'm getting ahead of us, I apologize. But maybe as...

I don't think it -- yes. No, listen, we're making tremendous progress on our [ first ] food service offering. And certainly more to come on that in the very near future, I will say that. And how does this all play into what we're doing, again, we think the combination of supportive care services, food, transportation and NEMT is just absolutely critical to patient management. And so I just would -- I think from my perspective, Bob, they all overlay. And again, you think about the role that an aide can play in the home [ and ] how they can be kind of that air traffic controller to additional services like food and can do it -- help that patient, if you will, identify what their food needs are. And in fact, with the technology that we have, the aide can play a role in ordering that food. So I think they all play very well in together, Bob. And again, more to come on that. But we certainly believe that having more concentration in the markets we're in [ and ] being able to overlay that with our transportation and [ ultimately ], our food business is going to be a real differentiator for the company going forward.

Okay. Got it. Great. And then last one for me. And this seems relatively obvious, but I figure I'll just ask anyway in terms of paying cash and then using the revolver. If there's a monetization of Matrix, then you could obviously reload your balance sheet and repay the revolver. And I guess the question is, you're not taking on necessarily all long-term debt that's locked in. You can repay anything with potential funds from the monetization of Matrix. Is that correct?

Yes. Thanks for the softball question, Bob. That is correct. I really appreciate it. Yes, we -- again, we have a strong balance sheet, and then you couple that with Matrix, a lot of flexibility to pay down debt.

Our next question comes from the line of Brooks O'Neil with Lake Street Capital Markets.

I have a couple. First, since this is sort of the first meaningful addition after Simplura in the build-out of your personal care business, can you just help us think about how you view sort of the integration and the management of that platform over time? Is Dave likely to be the team lead in that business? Or how do you think about standing this up and turning it into a national platform as you described?

Yes. So I think Dave is the team lead. Dave is an exceptional CEO. He's done an exceptional job for us and has been an exceptional partner. So that's what I would say about Dave. But at the end of the day, the beauty of bringing these companies together, Brooks, and given their overlapping geographies is the fact that we can take the best from both companies. And when you think about while there -- everybody looks at kind of like the financial aspects of bringing 2 companies together and the financial engineering about bringing 2 companies like this together. But the real value is bringing the teams together and really being in place where like, hey, this person should be in that market, this person should be in that market and really being in a place where we can get the best from both organizations. And that can come in the form of new resources, in the form of IT, in the form of legal, in the form of compliance, in the form of any number of things. And we're committed to that as an organization. We're kind of -- for lack of a description, Brooks, and I know this will sound a little bit like hyperbole, we're exploding in a very good way. And we need top talent across the organization to help to continue to further our growth. And so that's what I would say about that. And we really, really like the management team at CareFinders, as we did at Simplura. And again, as I said, Dave Middleton has proven time and time again, he's a world-class CEO.

Yes. That's great. Okay. Second question, Heath was talking a little bit about the impact of COVID, and I'm sure it's many and varied in the geographies, et cetera. But can you guys talk just a little bit about what you're seeing now? I'm thinking in particular about labor shortages, caregiver availability. Is that an issue? How are you dealing with it? And what are sort of current COVID and maybe post-COVID effects can you guys foresee at this point?

Well, let's face, we're dealing with what everybody else is dealing with, Brooks. I mean the stimulus, the unemployment, the child -- payments per child. I mean they're all impacting our caregivers' availability. There is just no question about that. Until that truly subsides, which we believe will be the September time frame, recruiting is going to be difficult. This is a business of recruiting in hours. The demand is there. That's the -- and I think that's one of the promising side of this is there's just tremendous, tremendous demand. And I will say this, over the last weeks, last few months, we are seeing an uptick in recruiting. And there's no -- I would say there's no real silver bullet to this. I mean Dave Middleton is on the phone, and he can talk about just what you have to do every single day to continue to recruit people. You have to take a kind of surround sound approach, which might be e-mail, which might be technology, which might be going out and reaching out to people who've been caregivers previously. It's any number of things. But we're still facing some of the macro headwinds. So that's what I would say. I don't know, Dave Middleton, if you had anything you'd like to add to this?

You summed it up very well, Dan. But one thing that's very, very important is you really need to concentrate on your legacy caregivers that have taken themselves out of the market, and we're starting to do that. And we're starting to see a lot of aides is starting to come back to the workforce. And I think that's the important thing, but you really have to be working it every day.

Okay. Great. And then last question I have is, obviously, you guys have talked about accretion in 2022, and I'm just curious if you would be willing to share any thoughts about the balance of 2021, the impact of deal expenses, et cetera. And whether you think this thing will kick in right away Q1 as an accretive positive acquisition at the level you described? Or should we think about a build sort of through the quarters of 2022 as you complete the integration and all of that?

I'll let Heath and Dave comment on this, too. But if I was looking at it, just given some of the uncertainties that we're seeing, I mean, related to COVID, it's difficult to say anything, but it being a build. And I wouldn't want you to forecast anything but that just because now if --- again, as the stimulus, unemployment, the childcare subsidies start dissipating, I mean, I could see employee -- aides coming back very, very rapidly. And I just don't know exactly when that's going to happen. But like we've talked about, demand is there, and it's just a matter of getting the aides back to work. So sorry, Heath, I didn't mean to interrupt you there.

No, no, you said it. We're expected to close here in the Q3. So that earnings will come on this year. And 2022, when the aides come back, we feel really good about the accretion. And again, for us, as a reminder, it's important for us for every deal we do that it meets our true cash returns, our true earnings returns, and this portfolio asset really does that. So it will be earnings and cash and accretive in 2021 because we're adding it. And then really, we feel good about what it's going to do for us coming out of COVID and the wage challenges that Dan articulated into 2022 and beyond.

Yes. I don't -- I would say they're not -- just for clarification, they're not wage challenges, it's really labor challenges. The wage is not the issue. It's getting people back to work, is the issue.

Our next question comes from the line of Mike Petusky with Barrington Research.

Interesting deal. Congratulations. So actually, Dan, I wanted to take up on just your very last comment. And I guess my question is, understanding that the primary challenge does appear to be finding folks to do this work, I do wonder if that now eventually does sort of pivot into a wage inflation challenge to sort of staff up at the level you need? Like I guess, essentially, I'm asking, have you guys sort of considered that maybe the next couple of years, you may have to push on wages to staff at the level that you guys would like to?

Yes. I think that's right, Mike. I don't think we can be, frankly, ignorant about that. And the good news is, take New Jersey, for example, I mean they gave us a $2 rate increase. So in many respects, there's flexibility there potentially. You could -- Dave will tell you in the State of New York, they're already built in. So if wages go up, rates go up. So there's already built-in mechanisms through, I think, 2022, Dave, that address that occurrence, if that happens. So yes, it's -- I can't say it would be unlikely, Mike, under any circumstances, but I would say that there are mechanisms in place and rate increases that have already occurred that put us in a very good position in the event we need to do that. And that's what I would say to that. Dave, I don't know if there's anything else you'd add.

The only thing I would say, Dan, is that under the American Rescue Plan, there are dollars to expand home and community-based services, which would include rate increases for us to give to our workers. So I think that's an important thing as we go forward. And many states are looking at that and presenting their plans at CMS as we speak.

Okay. Great. And I guess another question I have is, if -- given your previous experience with sort of making the adjustment on COVID and personal care, if this delta variant, God forbid, but if this delta variant becomes a thing and truly starts to impact, and you're already seeing some local and states making some moves towards masking again, I mean, are there things that you all have learned with Simplura and CareFinders that essentially would make a delta variant spike less impactful than the initial COVID?

Oh boy, that's a great question, Mike. I think, first and foremost, we've got people vaccinated. And we know that vaccinations make a difference for the delta variant, too. So we're already -- I think our baseline is much better than it was previously. I would also say that Dave and his team did an exceptional job of protecting the aides. And it was -- first and foremost, how do we protect the aide? How do we make sure that they have the right equipment in the event they are in a home so that they feel as safe as possible? And so I think those are things, again, I think we can be proactive about. But again, it's -- that's a difficult one. I wish I had some magic wand or something or crystal ball I can look into that -- I think that's what I would say at this point in time. We've got vaccinated people. We're going to put the interest of the aides first. They know that. A lot of these -- a number of these, I shouldn't say, home health companies, they don't have the resources to even protect the aides at the level I think they need to be. So I think that's also something I think we've really taken a hard stance on and certainly, I think, supports just who we are as an organization. But Dave, I welcome anything that you might have about that.

One thing to keep in mind is that in the beginning of COVID, we started providing our caregivers with PPE equipment that we have never stopped. I mean, basically, we order as much today as we had before. We're making sure that they all have masks, they have gloves, they have aprons, they have face shields to keep them safe. We even provide some of these PPE equipment to our patients to make sure that they continue to be safe. So I feel really good. As Dan said, the vaccination, a lot of our aides have started to get vaccinated. That's a big plus. And I think the continuation of the PPE equipment is a big deal as we move forward. So we'll see how it stands...

So you all -- yes. So you all never sort of -- essentially, you took your COVID precautions and those have continued to sort of be the mode of operation for your aides when they go into homes?

That is correct. We haven't stopped. We continue that process, and we continue it today.

Our next question comes from the line of Scott Fidel with Stephens.

First question, actually, just wanted to follow up on the comments on the enhanced benefits of the enhanced FMAP that was included in the American Rescue Plan. And specifically, just interested if you've had a chance to evaluate yet the proposals that were submitted in any of the 3 key states for CareFinders. And then also, just given the importance of the New York market for the company already, I know New York did already submit their proposals. So interested if you have any thoughts on whether you think that these proposals are being structured well in terms of being able to address these issues around trying to increase -- use these funds to increase recruitment by caregivers in the market.

Dave, do you want to take that one?

Sure. I mean basically, what we see right now is all 3 states are looking to enhance care holders' hourly pay rates in a big fashion. So that's one thing that we're focused on. All 3 states have a little bit difference, as you can imagine, approach to how they want to spend the money. But the key is that they're really after under that act to expand home and community-based services, and they will do that with rate increases and some of that will go into the hourly increase and the hourly rates for these caregivers. So there's a lot here that's very, very good for Simplura as well as CareFinders as we move forward.

Okay. And then just -- yes, go ahead.

Scott, as a reminder, too, how we are talking about this acquisition, it really is on a LTM basis. So the numbers that we have are right in the middle of COVID and the labor challenges that we have. So what you -- the question you asked and how Dave responded, which is why we feel good about coming out of this in the future.

Got it. And then just a follow-up question. Just interested, you have the longer-term strategy of really becoming more of the national -- the nationally scaled PC provider. You've got this concentration that you've been building in the Northeast in particular. You talked about a really robust deal pipeline that you believe you still have. Just interested if you can maybe call out for us, if you think about ultimately pivoting into additional geographies to start to move forward on that, more of that national scaling, as you've done some of the work, are there any particular geographic regions that you would call out as you see as offering some of the most attractive prospects of where you would look to -- potentially sort of look to add on your next couple of geographies?

Yes. I don't know if I'll comment on that because that's -- I think that's tipping my hat a little too much, Scott. But suffice to say, if you look at where we are and you look at where there are significant Medicaid populations, and we're just -- we're east of the Appalachian Mountains. And so I would say that anything that's kind of west of that where there's high levels of Medicaid concentration is going to be places that we're going to look at and look to expand it. I mean we also -- while we have a presence, for example, in Florida, it's small. So I think in some markets, some of this expansion might be doubling down in markets that we're already in. We also think there's opportunities potentially in -- even though we have a tremendous concentration in Pennsylvania, we think there's potentially more to do on the western part of that state. So while we believe that we do want to get into those markets where there is significant Medicaid concentration, where we have the NEMT business, there's also opportunity, we believe, in the markets that we're currently in as well. So again, Scott, I don't mean to be not transparent with you, but I hope you understand that it's -- some of these things are a little sensitive.

Ladies and gentlemen, that concludes our question-and-answer session. I'll turn the floor back to Mr. Greenleaf for any final comments.

So anyway, I just want to thank everybody again. I know this was short notice. But this is -- I think this is an incredibly exciting opportunity for the company. We're fulfilling what I would describe as our mission to be the company in the area of social determinants of health. And I think we're building a platform that's going to be like no other. And I even think about things like once the platform is built, it continues to be built. And the technology that we're continuing to build and create for the marketplace, there may be components of this from a data perspective that might even have more meaning than what we're currently doing. So with that, we look forward to reporting back to you on August 6 when we release our second quarter financial results. And again, we really appreciate you taking the time to be with us this morning. I hope you all have a wonderful day and a wonderful weekend and -- or what's left of it, I guess. We're back -- Monday, oh my God. So anyway, I just hope everybody has a wonderful week. Okay. Take care.

Thank you. This concludes today's conference. You may disconnect your lines at this time. Thank you for your participation.