Enhabit, Inc. (EHAB) Earnings Call Transcript & Summary

Good morning, everyone. My name is Joanna Gajuk. I'm the healthcare facilities manager analyst here at Bank of America, and I have lead coverage of home health and other home care names. And I want to welcome you to our Second Annual Home Care Conference. Hope you enjoy the day, and we have also more to come tomorrow as well so hopefully, you can join us then. But now it's my pleasure to host this session with Enhabit, one of the largest Home Health and Hospice providers in the U.S. And today with us is Barb Jacobsmeyer, President and CEO; and Crissy Carlisle, our Chief Financial Officer. And the ladies agreed to go right into Q&A. [Operator Instructions] So please use this and I will be more than happy to post these questions on your behalf to Barb and Crissy here. So first, welcome again, Crissy and Barb.

Thanks. Thanks, Joanna.

And I guess I want to start with a big picture question and a question that we get a lot around reimbursement, obviously, very topical for home health. And with the final regulation specifically where it came better than expected, better than -- rather than proposal, but actually not as good as maybe what the industry really wanted here. right? So a question to you. How will you manage through this period of time when the rate at base will be lower than an inflationary pressures here? So to be seen next -- into next year, can you flash up maybe any offsets or cost optimization strategy you might utilize here to try to offset that situation?

Sure. So as you mentioned, it certainly is not the rate update we would have preferred, but it does give us a little bit of reprieve with having at least a slight update compared to a negative impact. The focus for us will be on the things that we've historically done very well in, and that is productivity management and optimization of our staff. If you think back the last few years with some of the labor shortages, many times, it was about getting a clinician out to see a patient. And now with some of that stabilizing, we can focus on productivity and where we have a real opportunity is optimization, making sure that we have staff working to the top of their license so that if a LPN can do the work, the goal would be to get LPN out to make the visit versus in our end. So those are the types of things that we'll be focusing on, as we enter the new year. The other thing we'll do is that we're getting more success with Medicare Advantage agreements. We'll be evaluating our sales structure. It frankly doesn't take as much sales effort to be able to get the Medicare Advantage patients. So it's going to allow us to look at the sales structure and how can we better align the sales needs in each local market.

And I guess on the [ front ], is there a kind of framework when you think about next year, given the flattish rate -- Medicare rate out that you mentioned? And also, you mentioned MA, obviously, it's a lower paying player here. So with this negative mix shift and the Medicare rate being sort of flattish up slightly, is there a scenario that actually EBITDA is growing next year?

Well, that's a great question, Joanna. And it's certainly one that I know is top of mind for everyone in the investment community and certainly something that we talk about a lot here. You've got the two big drivers, right? You started off with just the simple fact that Medicare is giving us a 0.7% update in a period of rising costs, and it's not going to be able to fully offset those costs. We've also got the continued resumption of sequestration in the first quarter at 2% and the additional 1% in the second quarter. So we do have some headwinds right out of the gate. Do I see a path to growth? Yes, there is a path. It's going to involve our continued success with Medicare Advantage plan, more contracts as well as improved rates and getting episodic payment under those contracts. So there's a path, but it's certainly timing and uncertain at this point as far as the continued negotiations with the MA payers.

Understood. And just following up on the regulation, right? Because clearly, the fact that it came in better than proposal was that the CMS kind of said, hey, we want to phase it in when it comes to behavior adjustments. So is it your -- also your expectation that or your understanding that CMS means to implement the second half of this behavior adjustment in 2024? And also when it comes to the temporary adjustments, right, the recruitments of $2 billion or so overpayments that CMS has estimated, would they also be trying to start it in 2024? Or do you expect this to be more pushed out in 2025?

I think it's a fair anticipation that they would look at bringing in the other half of that permanent adjustment. I think I'll obviously know a lot more when the proposed rule comes out for 2024, which will be early summer next year. And as it relates to the temporary adjustments, the anticipation would be there'd be some phase-in for that could start in 2024, but would anticipate that, that would be a phase-in over time.

Right, exactly. In the phase-in, I guess, even MedPAC themselves said that it could be 4 years or so of the phase-in because it will be a meaningful reduction. And I guess the other piece of discussion around this final regulation and the outlook for reimbursement is also the congressional action rate. So clearly, the industry is lobbying with Congress to try to delay the implementation of these cuts. So can you kind of frame what the industry stands on that front? What kind of traction are you getting in Congress? And kind of where do you put the likelihood of actually Congress, including something like the fix in the Omnibus bill?

Yes. So I think obviously, there's been a lot of support, bipartisan support ,on the bill that had been introduced. One of the things that we're looking at now is just really asking in the final package of the year to have where there would be a pause for a year with some accountability and transparency language in there that we would ask CMS to be transparent with the methodology that they used to come up with the current rate adjustments. If and when it will be included in the final package, I think it's really hard to say. But certainly, there is a lot of support to at least get a 1-year pause. So I think we're all waiting in anticipation for that.

No, thank you for that. That's good to hear that I guess there's still discussions going on. And I guess we just have to wait and see. And the other big topic here, not just for home health, but across the healthcare services sector really is labor, right? That's the single biggest topic here. And I guess in the past, you had said labor shortages impacted volumes. So when it comes to thinking about next year, do we expect the labor shortages to be a bigger headwind to margins or to your ability to grow volumes?

So I think as it looks at the labor, we'll certainly have some pockets of markets that will continue to be challenging. Some of those markets are markets where we may have to do additional market adjustments. But I would say when you look at the labor challenges as a national challenge that I would say we have felt over the past few years, I do think that's improving. So as we look into next year, the margins are going to be more challenged, I think, by Medicare Advantage growth than really what we're going to anticipate feeling from the labor front.

And you also mentioned in the past rate at the labor market, and I guess you just mentioned you expect this to improve. But so far this year, the kind of commentary from across the board from the providers that it's been slower than expected, right? So do you see -- do you expect a significant improvement into next year? I guess on the front, like you mentioned, you expect some easing from the very difficult environment the last 2 years or so. And so can you frame for us the expectation for the wage growth that you would expect into next year? Are you expecting to kind of decelerate from the fast growth that you're expecting now for home health, I guess, the latest that had assumed 6% to 7%, for hospice 3.5% to 4.5%. So can you frame for us the matter and the things that you would expect when you think about going into next year?

Sure. When we think of going into next year, we will anniversary some of the large increases, the market adjustments, the mileage rate adjustments. So some of the things that we really felt, particularly in 2022, we will anniversary next year. We do anticipate hopefully getting back to what I would think of as more normal kind of that 3% to 4% labor increases. But we will, as I mentioned earlier, have, I think, some pockets of the country where we may still have to do a market adjustment. It just won't be the national market adjustment that we had to do really in 2021 and 2022. When you look at things like your question as it relates to hiring, if you think back in 2021, we actually had quarters in 2021 where we had negative net new hires. In 2022, we have been fortunate that each quarter thus far has been a positive while there's been variation. Quarter 1 was only 30 net new full-time hires for nursing. That does tend to be slower with the holidays. Then we had a strong quarter 2 with over 95 net new hires, and then quarter 3 was back again at 55. So again, some of that slowness around the summer. The good thing is, in October, we did see an increase in the candidate pool after coming kind of off of a slow soft candidate pool in the summer. So again, really, for us, it's continuing to make traction on those net new hires, which means not only the recruitment efforts being positive, but also retention.

Great. And you mentioned -- so there was some slowdown in Q3 from Q2 to 55. So can you talk about is the seasonality -- and I guess it sounds like October did improve. So any commentary, what's been happening in November? And also, I guess, can you talk about when it comes to hiring -- clearly to see the positive numbers you put versus the negative numbers? So can you talk about whether the competition is easing to some degree? And also are you specifically competing with other home health providers? Or is it also that you're competing with hospitals and other settings?

Sure. Well, we do compete with all settings. What I would say is, obviously, it's helpful when we can recruit clinical staff that have experience in home health and hospice, for two reasons. One, the ramp-up for orientation tends to be shorter when you find someone experienced in home health and hospice. But also, it's a setting that they enjoy. One of the things that we did see during the pandemic is as we were hiring staff that did not have home health and hospice experience, we did see that first year turnover uptick. And a lot of it was because someone that's never worked in the setting, may be attracted because of the flexibility of working in home health and hospice, but then realize that really going into a home is not something that they prefer. You're not surrounded by colleagues. So really your clinical expertise, they're the one there in the home, making those decisions. So it's not the right setting for every clinician. And so for us, really, the competition is everywhere, but we really do try to recruit some of the individuals that have the home health and hospice experience.

And I guess to that end, I was just also asking whether any kind of commentary on the most recent trends in terms of November, how things are tracking versus October?

Yes. We don't have our final November reports because we do, do the net new hires as it relates to terms and higher. So we don't have those, but we were happy to see the uptick in October as it related to the candidate pool. So again -- and we do anticipate usually around that December, January time frame, you see a slowness again just because you don't see as many people out there interviewing and looking to switch jobs over the holidays.

Right, exactly. And actually, we have a question from the audience here a little bit different topic in terms of M&A. Do you see any room for additional deals? And what criteria for these deals you would be looking at? And also, I guess, on a different angle, what is the rationale for managed care companies to be becoming vertically integrated. So I guess 2-part questions in terms of M&A outlook from Enhabit's perspective, but also on the other hand in terms of the managed care companies becoming vertically integrated and rational for that from your perspective, too?

So I'll take the first part regarding Enhabit and M&A and then maybe Barb can address the second part. I would say that early in 2022, our pipeline of M&A opportunities had slowed a little bit. I think A lot of that had to do with the uncertainty around the strategic alternatives review and what this company going to look like longer-term. As the spend date drew upon us and then of course, effective July 1 when the spin happened, the pipeline really, really picked up. I would say at this point, it's a little bit more geared towards hospice. Of course, some of that did have to do with the slowdown in home health sellers coming to market when the proposed rule was out. They didn't want to come to market during that uncertain time. Starting to see a few more home health opportunities come to market. Of course, we just completed one last week in Florida, where there's very strategic opportunity geographically for us. I would say that it's still fair though to say the pipeline is skewed towards hospice, and we may be a little bit more biased towards those opportunities for a couple of reasons. One, there's more reimbursement certainty around hospice than there is for home health. And then two, trying to do a little diversification of our total mix. Right now, we are 80% home health and 20% hospice, and we'd like to see that change. No specific targets just again, as opportunities present themselves. We want to make sure that we're being strategic about those opportunities and putting hospice where we already have existing home health operations and playing off of the strong brand recognition and administrative efficiencies that we can get by doing so.

And then the second part of the question as it relates to the integration with payers looking to acquire home health. I think a lot of that -- we use that as we're actually sitting at the table talking to MA payers because I think what it does is it recognizes that it is the lowest cost setting for home care as well as it can be a great asset to use towards trying to reduce those emergency room visits, the hospitalization, the rehospitalization. So I think it speaks to the tool that it can be to help control overall cost. But again, whether it's owned by a payer or used by a payer, I think it reinforces the value of home care.

And I guess from this second part of the question, a follow-up -- my follow-up here in terms of -- does this create a different kind of competitive dynamics where you have payers owning some of these providers when it comes to Enhabit operating in those markets where the situation like the success, does that change a managed care vertical integration? Does that change your business?

It's a good question. I mean, we look at just, obviously, the more recent one with LHC and United. When we look at the markets where we're in that LHC has a presence, it would be hard to imagine that they could overnight bring in enough staff to take care of even the demand for the UHC patients in those markets. Even if they were able to do that, I think it would be difficult to take care of those patients and their traditional Medicare. So what we've told our teams is that if the focus becomes taking care of United patients by LHC, then we'll be there to take care of the fee-for-service and the others. So it can maybe change the dynamic in the market, but -- so I don't think there's enough of us out there to take care of all the needs that are there.

Right. Exactly. So this will be interesting to see how that plays out. But also another follow-up in terms of M&A strategy here. So you mentioned, obviously, the home health assets and those transactions were sort of on hold because of the pending proposal. But now we have a final -- final regulation in the [ laws ] as you were just saying not such a great rate update. So how quickly this providers -- smaller providers will realize that this is really not enough. So do you expect kind of this home health deal activity to pick up early in the year or sort of kind of it's going to take couple of months or maybe 6 months to really for the smaller guys to realize what's going on?

Yes. Joanna, it's going to take a few months. I don't know if that's 2 months or 6 months or 9 months. But the challenge here is going to be getting the seller and the buyer to agree upon a price, right? For the seller to acknowledge there is uncertainty regarding Medicare reimbursement and coming to a price that both the buyer and the seller can support. And that's just -- it's just too early post the final rule and pending legislation, let's call it, to see where we are with that.

And I think even though a final rule is out there, there still remains so much uncertainty on the rest of the permanent adjustment as well as what -- the clawback. So to Crissy's point, it's going to be interesting to see what are the sellers willing to take into consideration as it relates to continued uncertainty.

Right. And you also mentioned that when it comes to acquiring hospice assets and you would like to diversify your revenue mix, but also to co-locate those assets with the home health assets that you have in the market. So can you talk about this co-location strategy? And can you give us some examples in terms of -- have you seen in the past volumes and margins better in those markets or any kind of metrics to track in terms of the reasons for this co-location strategy actually working?

Sure. So from a co-location strategy, it's something obviously, as we look even at our De Novo goals, that's an area where we put some priority for some of the De Novos. And a lot of that's because you have brand recognition in those markets for your referral sources. You have it not only for the referral sources, but for your candidate pool. So where we have a presence for home health in the market that does help you with that brand recognition kind of out of the gate for hospice. It also helps you with the referral sources seeing as kind of a one-stop provider because you do have patients that are sometimes on home health services that start trending in a direction that may make them more applicable for hospice and it allows those home health clinicians that know the patient well to have that conversation with the referring primary care physician on the patient's potential for hospice. We do tend to see better margins in those co-locations, but really, that's because hospice does tend to have a higher margin than home health. But I would say that brand recognition and those referral source recognition is probably one of the key areas for us on the co-location.

Right. And I guess we were talking before, we touched on the Medicare Advantage strategy, right? And you said that you focus on getting these better -- or contracts with better rates. So I guess there were some contracts, right, you just signed these new contracts, right? And you mentioned some of these contracts and these actually are very close to fee-for-service. So can you try to kind of frame for us is the size for these contracts in terms of the magnitude versus the entire portfolio or the MA business? And how much volumes really do we expect these contracts could add potentially to your existing business over time?

Sure. So as you mentioned, we had -- in the third quarter, we had 9 additional contracts that we had negotiated. These were all regional contracts. 6 of them were negotiated at episodic or small 10% discount to episodic. The others were the per visit, but at a better rate than our current average per rate per visit. And so the 9 that we have right now covers about 1 million MA lives. When you look at -- we don't really have a number for MA, but when you look at Medicare, about 10% of Medicare beneficiaries receive home health services in a year. So even if you look conservatively for MA and had that be around 5%, kind of tells you the magnitude of having 1 million lives. The goal for us though as these are new for us, is to really know the referral sources, the physicians that participate with these plans, the main facilities that have these patients so that our sales team can go out and make sure that they are now aware that we're able to accept these patients. And that's how we start to access them is really making sure we know the key referral sources that take care of those member lives in each market.

And I guess a question from the audience, just a follow-up to this discussion around [ pay ]. So you mentioned these 9 contracts were with regional players. So I guess the question is about -- does your scale allow you to have a seat at the table, so to speak, with the national MA providers? Do you have enough scale to really yield better rates on these contracts? Or also, is the company in a position to come after other home health national contracting deals when it comes to MA?

Sure. So we do have, obviously, the scale to be able to be at the table. We are at the table with all of the national payers. What I would say is some of the challenge with the national payers is that while I feel they understand the value proposition for home health, and again, how we can help control the cost as it relates to hospitalization and rehospitalization, and ER visits, it is sometimes difficult to get past the unit cost of home health so that if you -- if we are successful in negotiating a better contract or for somebody's a first-time contract with a national payer, that could make the home care unit costs go up. And so it's difficult for them to do that, even if they know that, that could ultimately drive down other costs. So some of what we've said is if it helps them to have us pilot that in a certain region where maybe they're challenged today with member access or high rehospitalization rates, then let us do that on a regional basis with some of these national payers to prove that value proposition so that we could ultimately get to a better national agreement. So those are the discussions with the national payers at this point. It's why we are continuing to be at the table with them, but we are also spending time and energy with these regional payers because we do seem to have faster success with the regional plans.

And I guess to that end, so it sounds like the arguments are there. So it's clear that home health can save money over time, but I just -- to have a kind of overcome that the first hurdle of them understanding the value. So what gives you confidence for it that you can succeed? And also with that, how long will it really take to improve the majority of your MA book of business to kind of get better rates on average?

Well, I think the one thing that is a benefit for us is that the MA penetration, right, MA is growing at such a fast rate right now. So where some of these plans could have been successful in the past when maybe they were the most penetrated in a market, they didn't struggle with the member access that they're currently starting to feel. So I think as we have seen Medicare Advantage grow in these markets, that's also put a pressure on member access. And those that are going to be the slowest to the table in negotiating fair rates I think are going to continue to field member access issues. And sadly, that's going to work in our favor. So that's what gives me optimism that we'll get there because I think these patients need the care and those referral sources are going to want timely initiation of care, and that means paying the providers fairly.

Great. So are you seeing more responsiveness from these MA plans based on the labor shortage? Is that's what you're saying?

Yes.

Okay. I guess that's quite encouraging. And I guess before we move to the next up, there's also another question unrelated. But I guess, a question from the audience about any updates on the litigation related to the separation and former management team? And what do you -- do we expect to recover is successful there? I don't know how much you can share, but I guess there's a question about the pending litigation.

Yes, there's no update. I mean it's pretty early in. So there's really no update. Obviously, these things take a lot of time. So at this point, there's really no update to give on that.

All right. And so I'll have a topic that I wanted to reach here. So obviously, we spent all this time on home health because this is the vast majority of the business, but also hospice, right? So actually census grew quarter-for-quarter, right? But you still said that the improvement there has been below your expectations, right? So can you give us a little bit more color there? Is it already labor constraints? Is there something else that's happening there? We have -- some providers having some issues around turnover among their salespeople. So any situation that you experienced on that front? And also to wrap it up, can you talk about what the implications from this -- the current trends are for next year? Are you thinking about organic growth into next year in hospice census?

Sure. So what I would say is early on, it was very much labor. When you look at early 2022, and that was really -- even into April and May, the bulk of the impact was really -- and that's when you saw kind of that census really drop because at that time, we were having so many labor challenges that when you have a patient die on census, you just literally didn't have staff to be able to readmit the volume. And so the beginning of 2022 is really all about labor. Then the issue became is once we were starting to get more staffed. If you look now in the third quarter, we had 11 of our hospice locations capacity constrained. That was improvement from 17 in quarter 2. So we continue to make progress on the labor front. However, now it's about really getting back to the referral sources and regaining those referrals. And when you think of early in the year as maybe a salesperson would leave, there were many markets that we didn't replace the salespeople because it really frankly didn't make sense to have a salesperson out there when the answer was so frequently no. And so when you look now year-over-year in third quarter, we had about 12 less salespeople on the hospice side than we did last year, same time, but sequentially had improved by 6. So we are continuing to hire now the sales folks as we -- as the labor has improved on the hospice side. So it's really about getting back to those referral sources, also diversifying the referral sources so -- because we need to have an increase in those admissions to get that ADC back up to where it was historically.

So I guess, to that end, as you work to improve the admissions, do you expect the census [ flow ] to grow into next year? And I guess, as it relates to the other part of this equation in terms of length of stay, can you give us a sense how it's tracking versus historical trends for your patients?

Sure. So we do anticipate, and that's the goal is to grow the census. I will say that fourth quarter always tends to be a little bit of a challenge because as I've learned from our team, you don't have as many patients elect to go on hospice services over the holidays. They kind of want to get through the holidays before making that tough decision. So it does tend to be a time of year where you don't have as many elections. But obviously, that is the goal is to have the emissions to improve that census going into the new year.

And I guess you mentioned earlier in terms of hospice and you're looking out to do more M&A in that specialty in terms of hospice. And you mentioned specifically the reimbursement stability there versus home health. I guess there is the demonstration that's going on, right, the carve in of hospice into Medicare Advantage benefit. So can you give us a sense of your expectations for this demo, whether it would be expanded nationwide? And I guess if it was, then what it would mean for the operations in hospice?

Sure. I think right now, we only actually participate in two of those. So it's a very small number for us right now. But certainly, as that would potentially expand, it is something that we would work to expand as well. And that's something that we do get in discussions with as we're sitting with some of the payers, particularly those that are part of the demo today.

But I guess if it was to expand or I guess maybe you can also tell us how the experience has been in terms of the rates that these MA plans are obtaining to hospice providers in those markets where they take the carve in?

Well, currently, through the demo, they have to provide the same level, the same rates as we get through Medicare. So currently, during the demo, it's as if it were a fee-for-service patient.

Well, but I guess at some point, it's supposed to be switching when they have contracted rates? Or is it going to stay at a fee-for-service level?

At that point, it's still to be determined. And I would say at the point that they would be able to negotiate, then that would be the point that we would decide, obviously, if we wanted to participate or not depending on how aggressive or not the payer would want to be in changing the current structure.

Great. And I guess there's also a question here from the audience around, I guess, also M&A, and specifically, the capital allocation strategy, given the reimbursement incentive we mentioned in home health, and on some of the headwinds we mentioned on the MA. Are you adjusting your strategy in terms of cash usage, in terms of debt reduction versus M&A? And what level of debt reduction, the rest of the companies, if clawback ends up producing rates?

So in terms of our financial flexibility is really what we're focused on. We do think that the long-term thesis for investing in Enhabit is a growth strategy. And so we want M&A to continue to be our priority. We do, however, recognize that in today's market that the investment community is a little bit leverage shy, if you want to call it that. And so if we start approaching 4x, we're going to take a little bit different approach, maybe a more conservative approach in regards to that capital allocation. But for now, the main priority, we do want to continue to spend it on M&A. We do have a substantial amount of free cash flow. So our free cash flow can fund that $50 million to $100 million of acquisitions that we generally talk about, the tuck-in type style acquisitions. So I think that's what we'll continue to focus on as we head into 2023.

Thank you for that. And I guess another topic I want to be able to touch on that is common across the health care services universe is around value-based care. And I guess we touched a little bit around MA. So maybe kind of flesh out to us in terms of what you're seeing there, how much of your MA business has any kind of quality metrics or any kind of traction you're getting in terms of entering into value-based contracts with good payers?

Sure. As our entry into really negotiating with MA really started growing over the last year, we don't have as many the value-based contracts in place today. Probably about 1/3 of our contracts have some sort of language as it relates to quality metrics but it's certainly something that as we sit at the table with all of these contract negotiations today, we're very interested in putting in value-based arrangements, particularly with our success with hospitalization rate. So it is something that is part of every discussion that we have today. It's certainly not a large part of what we have currently in our revenue mix.

And what would you expect this to look like, say, in 5 years? Do you expect a meaningful percent to have some sort of value-based contracting structure when it comes to your MA book of business?

I would think that in the future, we would be looking to have the majority of it really to have a value base because it is something whether it's something that you could earn back at the end of the year or something that is part of what sort of rate update you get during the contract cycle, I would anticipate that it would be a part of the majority of our contracts particularly as it relates to the payers really looking at differentiating between those that provide that high value of care.

And I guess the other part of your business, right, on the fee-for-service, there's also the home health value-base purchasing that was -- is being expanded nationwide. So can you talk about the company's positioning in this construct? Do we expect to be in a position to get some bonus payments in the future under this new model that's being rolled out now?

Yes. So we did have some of our states that or some of our branches that participated in the demo with that and did well with that. So we would anticipate as we continue to focus on the main drivers of the value base. And again, those relate back to things like the rehospitalization rates. And the things that we do really well in, we would anticipate that we would do well in a national value-based model.

And also just kind of coming back to the prior discussions around your capital allocation strategy and your focus on growing the company. And in the past, you talked about your long-term growth targets for home health around admissions growing 10% plus and hospice growing 10% to 15% -- so could you talk about what percent increase to labor to your staff where -- did you need in order to grow volumes in that range? And I guess, as it relates to M&A, how much of this target is really from acquisitions? And I guess, also De Novos being considered here when you talk about these long-term growth targets.

Sure. I'll touch on the staffing part and then let Crissy touch on the long-term growth target. So when we go back and look at when we were having that historic, significant 6%, 8%, 10% growth we had 250 RNs more than we have today. So that is our target is to get back on having that net new hire of 250 million so that we can get back to the strong growth that we had -- that we've experienced historically. And I'll let Crissy kind of talk to the growth targets.

So you said the target is about 10% plus for home health and then 10% to 15% admissions. These are volume-based targets for hospice and for home health. I think it's fair to say that in both segments, you're talking mid-single digits, maybe creeping up a little bit beyond that from an organic perspective with the rest coming from acquisitions and De Novo. Our De Novos are a little bit more geared towards hospice again as part of that co-location strategy, but that's kind of how the numbers are falling out right now.

And I guess, to that and so the 250 RNs that you're targeting in terms of net new hires, so do you think is it reasonable to expect you can get there next year? So that means 2024 is when you might be growing at these -- close to these targeted ranges?

Well, certainly, if we could keep the traction that we started here this year, again, not only the importance of recruiting but also how important that retention piece is. And if we can continue with the traction that we've experienced in 2022, then that would be the goal to be able to have those in place throughout 2023.

All right. And I guess the last question. We are almost out of time. But the one question we also like to ask all the participants during our conference is how would you describe in one word, the future of home care?

Growth.

Perfect. I appreciate the time, and thanks, everyone, for joining us. And hopefully, you can join us for the following sessions today and tomorrow. And again, Barbara and Crissy, thank you so much for the time, and I hope to speak to you soon and maybe next year, we'll do it in person.

Sounds good. Thanks, Joanna.