Labcorp Holdings Inc. (LH) Earnings Call Transcript & Summary

Hi, everyone. Thanks for joining us for the next presentation. We're very happy to have Laboratory Corporation of America as our next presenter, Adam Schechter, Chairman and CEO; and Glenn Eisenberg, EVP and CFO. I think this is the day of the executives with injuries. Every executive that's coming up here has got some health repair issue. So that may be good for the system there, I guess. But anyway, we really appreciate you guys participating again in our conference.

What I would love is maybe just talk about since we're 11 months into the year, what have been some of the wins for Laboratory Corporation, Labcorp, and maybe some areas of challenge, if you want to highlight that.

Yes, absolutely. Good afternoon, everybody. It really is a pleasure to be here with you today. As I look at this year, there's been a lot of things that have gone really well. If I look at our diagnostic underlying business, the trends look really strong. And the Base Business has come back really well. If you look at Drug Development, the fundamentals remain very strong, whether it's the book-to-bill, the number of RFPs, our win rate of RFPs. The underlying fundamentals of our Drug Development look well. If you look at the spin, we've made significant progress on the spin of our Clinical Development business, and we announced a couple of weeks ago that we're going to accelerate that to the middle of next year. And then also, if you look at some of the acquisitions that we've done, particularly in the hospital health systems like with Ascension, with Prisma, with RJWBarnabas (sic) [ RWJBarnabas, ] we've made some real progress with the hospital system. So all of those things are good, and it bodes well for the momentum that we have as we move into 2023. Now there's been some real macro issues that we've had to face, whether it be Russia-Ukraine, whether it be inflation, whether it be the ability to forecast as we've gone through COVID and looking at the COVID-related work. And we've had to overcome some of those issues with things like our LaunchPad initiative to reduce costs where we can to help offset inflation. We are continuing to work to provide additional information so you can better understand the fundamentals of our business and give you more information about the COVID work and the COVID-related work that we're doing. And we're going to continue to stay focused on the underlying business so we have that strength and momentum as we move into next year.

That's great. That's great. As you said, the diagnostic business came back -- has come back nicely. And it almost looks like you're back to prepandemic levels, maybe in some instances, a little bit ahead. Do you think we're at a normalized place for the Base Business at this point and it's back to growing from here? Or is there anything that still needs to normalize?

Yes. So if you look at revenue, we've seen good strong revenue growth versus prepandemic levels, and we had about 4% revenue growth versus prior year, and we gave guidance that we expect to be between 6% and 7% revenue growth for the full year because that includes the revenue that we expect from the hospital acquisitions in the fourth quarter of this year. But if you look at the volume, the volume has come back. It's not yet at prepandemic levels. It's just above prepandemic levels, but it's not yet as strong as we would have expected if there wasn't COVID. But the good news is each quarter, it continues to improve. We're seeing very strong improvement in the fourth quarter versus the third quarter. So there's no doubt in my mind that, that business is coming back, that the fundamentals are strong and that the volume will be back to prepandemic levels with the growth that we would have expected as we go through next year.

Is there any area of testing that has lagged or -- and other that have outperformed as you bounce back?

Yes. So we've seen strong performance in both routine and esoteric testing. Esoteric testing has grown a bit faster than the routine. So you've seen a slight change in our mix, but no trend changes or anything like that. Those businesses are coming back well.

Okay. I'm sure you're looking forward to the quarter when you don't have to talk about COVID testing and how that's trending. But I think coming out of the most recent quarter, you guys talked about continued step-down, 24,000 tests per day in 3Q. Where do you think that settles out as an endemic business? And it sounds like you probably won't include very much in your '23 guidance when you give that? Is that -- did I hear that right?

Yes. So if you look at what we're predicting for the fourth quarter, it's between 15,000 and 20,000 tests per day. So even in the fourth quarter, we're predicting less than what we saw in the third quarter, which was significantly less than we saw in the second quarter. As we go through the flu season and RSV season, we'll have to see what happens to volume. Is there a chance that volume could increase significantly? The only thing we've learned from COVID is you can't fully predict what's going to happen. So right now, even though we're only expecting to do 15,000 to 20,000 tests per day, we are prepared to do significantly more than that if there is a significant outbreak of COVID as we go through flu and RSV season. Frankly, so far, it's been a pretty rough start to the RSV and flu season. If you look at other countries in the world like Australia, that's a leading indicator because their winter is during our summer. It was a very tough flu season in Australia. So it's something that we'll watch very closely. We are predicting over time, there will be very little COVID testing that will be part of our growth in the future. 15,000 to 20,000 per day is not very much as you look at the end of this year. And if you ask me to predict next year, I think it's going to continue to go down. Then the other thing is the health emergency. Once the health emergency is no longer declared, then the price will go down as well. So we'll continue to break out what our expectations are for COVID so you have an appreciation for what we believe at the time that we provide guidance. But with everything COVID, we've not gotten it right once yet. So we'll give you a range, and then we'll see where we end up within that range.

You mentioned the RSV and flu. We're getting decent amount of discussion about that here at the conference. It's been in the popular media at this point. You probably haven't had a normal flu season in a couple of years. Is flu and all of the associated illnesses with that a step-up typically for you to the fourth quarter? And it sounds like you're seeing at least a normal, maybe early -- maybe it's just too early to know. But what would you say...

Yes. We don't typically do a lot of business in flu, frankly, in the past. A lot of flu tests are done in a doctor's office, and they'll test patients there. It's never been a significant amount of business for us. But with COVID, we launched our COVID, RSV and flu test, which is a 3-in-1 test. So if a physician or a consumer, they can order directly from Labcorp OnDemand, wants to test all 3 at the same time, they can do that either in their home with our at-home collection or in their doctor's office. So at this point in time, it's not a significant amount for us, the triple test. But as we go through the season, we'll have to see. We do kind of monitor the rate of positivity, and we're seeing a much higher rate of positivity for RSV than what we've seen in the past.

Interesting. Okay. Obviously, as you mentioned, one of the recent successes has been some of these large health systems that you've signed. I think you've talked about Ascension being about $150 million in quarterly revenues starting in the fourth quarter, maybe it won't be fully up and running in the fourth quarter but next year. Just comment a little bit on how onboarding that type of business works, how quick -- how long it takes to get to sort of a normalized margin trend for you there and so forth.

I'll give you some context. I'll ask Glenn to jump in as well. So first of all, Ascension is the largest hospital deal that we've ever done. So it's 100 hospitals in 10 states. And it's about 4,700 people that we're bringing over into Labcorp from Ascension. So it's been a very, very big undertaking. So big that we have a separate team that is managing the integration of Ascension. First and foremost, it's all about patient care and ensuring consistency for the physicians so that when they order a test, they get the results back as quickly as they got it before, if not faster. So you don't start to kind of harmonize things, you don't start to look for ways to reduce costs in the beginning. It's all about patient care. Then over time, you begin to find ways to use our ability to standardize machinery, to use some of our other laboratories to run tests, to be able to find ways to use our procurement capabilities to reduce cost. And that's why in the beginning, the margin in the fourth quarter, it's very little, if any, margin. It gets a little bit better as we go through next year. But it takes a couple of years before the margin fully gets to the level that you anticipate it to be. I think we said in the fourth quarter, it's about $115 million of revenue for Ascension because it does take a while to ramp up as we do the testing. But the number that you said for full year, $550 million to $600 million is what we're predicting for full year, realizing that it will be dilutive to our margins in the beginning and then over time, it will actually help us with the margins. I don't know if there's anything you would add, Glenn?

Just that Ascension -- with the hospital system being an integral part of our strategy, what's unique about Ascension in particular is the size. In a typical hospital system deal we would do, we're acquiring the outreach labs. So it's very similar margin profile, meets all of our financial criteria because we're effectively taking that business and absorbing it into our existing labs. With Ascension, you have a much higher percentage of the overall transaction being managing their in-hospital rooms. And so with that, given it's a higher percentage, it's at a lower margin. So still a very attractive overall financial profile from a return on investment and the accretion to earnings, but it does mix down the overall margins for Diagnostics. And especially given its size -- that's why you saw the impact in the fourth quarter. You'll see the full year impact as we go into 2023 as a headwind on margin, but a tailwind on revenue and a tailwind on earnings.

So if you think about these deals, it's been a while now that maybe they've been willing to sell their outreach business to you. Doing the in-house has been a lot tougher to get, but now we're seeing some of that. What is the discussion pipeline? How much is this pandemic -- coming out of the pandemic driving this? How much is driven by labor issues? Give us a sense of what you're seeing out there.

Yes. So the pipeline is stronger than I've seen it in my 3 years here. Even when I was on the Board, I used to get updates on the hospital deals. And there's no doubt the pipeline of the deals that we have now is the strongest that I've seen. I think there are several issues. One is the pandemic certainly had some impact. Hospitals realized that their laboratories weren't as state-of-the-art or up-to-date as they needed them to be. They wanted to run COVID tests, but they had no ability to do it with the machinery that they had or if they could do it, they had to do it at such low volumes that we had to help them anyway. So they realized that to keep those laboratories up to date, they have to put significant capital in. I think they'd rather put the capital in other areas. The second thing is they worked very closely with us through COVID, and they saw our turnaround time. They saw the benefit of our scale. So they had a new appreciation for the work that we do and how well we can do it. And they said, if it's not strategic to us, why wouldn't we think about outsourcing. And I do think that our ability to use our scale in terms of helping to attract talent and develop talent, to have career paths for people helps with what they're struggling with. And I'd say the last thing is, I mean, almost every hospital system in the country is struggling right now. And if there's a way for them to monetize some of their assets or ways for them to actually reduce their costs over time, we can actually help them do that. Now we have a great pipeline. We continue to make huge progress. But the thing that's always been surprising to me, even with all that momentum, it still does take time. So some of the things in our pipeline right now, we've been talking about for almost a year. So the pipeline continues to look good. It continues to be strong. It just takes time to get these deals done.

Okay. And I know you're bringing Saint Barnabas on, and that's not an insignificant -- it's not Ascension, but it's a big system, too, in New Jersey. Is there any -- and you said you had a separate team for Ascension. Is there any capacity constraints or things we should think about in your ability to onboard these to the extent that there's more deals to be done? Can you pretty much take on...

We look at our financial criteria. Are they accretive in the first year? Do they return their cost of capital in 2 to 3 years? And are they easy for -- relatively easy for us to integrate? If the answer is yes, we have the capacity to do that. So RWJBarnabas, we have our team that's in the Northeast working on that. Prisma, we have our team in the Southeast that's working on that. Ascension, like I said, it's so many hospitals across so many regions. We have a separate team working on that. We know how to do this. We know how to scale. We know how to integrate them. So I'm talking to hospital CEOs at the beginning of this trip and at the end of this trip because there's just a lot of discussions that people want to have with us.

A lot of activity.

Yes.

Maybe just to step back and talk for a minute about the nuts and bolts. We talked a little bit about volume. The price/mix dynamic and what you're seeing there, there's been some discussion that maybe managed care with some of the value-based arrangements becoming a little easier from a year-to-year perspective. What's your view on that? And then we said the mix is going to esoteric, which I think you would say is favorable. But give us a little bit of a sense on what you're seeing price/mix-wise.

Yes. I'll give a high-level sense, and I'll ask Glenn to jump in again. But in general, taking price in health care is really hard. You're typically trying to get volume. And then with that volume, you get increased revenue and increased margin and NOI. But there are times where you can try to take price. And if those exist, we try every which way we can. But it's not typical to -- and I don't count on that. As I look at the headwinds for next year, the biggest headwind, frankly, is PAMA. And if I look at PAMA, we figure there's about an $80 million impact, maybe as high as $100 million, but I think it's closer to the lower end of that. But at the end of the day, we're still fighting to see if there's a way to either get SALSA enacted, which is legislation that does the calculation in a different way than current PAMA, or if there's a delay or something else that we can do. But that will have the biggest impact when you think about our margin and price/mix. And then esoteric testing, as we make that shift, it is good in terms of dollars in particular. In terms of margin, it helps, but doesn't really help that much. It's more you do less tests at a higher dollar rate. Anything you would add, Glenn?

No, I'd just say that in the current environment, we're still not fully recovered. So that's why volume should grow at, call it, a higher clip than it normally would be. So if you think about our growth kind of to the prepandemic levels, we've grown at around 4%, and the mix part of that would be around 3% price/mix and 1% volume. So as Adam said, volume levels are now above prepandemic levels but still not at the normalized, call it, 1% to 2%. The flip side is we've seen more favorability on the price/mix side. So growing at 3%, where historically, it would be 1%, not because unit pricing is higher. It's still a little bit of a tailwind, but we're seeing favorable mix. And especially during the pandemic, you've seen a lot more tests per session. Fewer visits, but more testing. So as we now -- coming through the pandemic, we're seeing volume levels that are now coming back to more normal levels, call it, that 2%-ish to 3% and pricing falling back more to that 1%, but again, all primarily mix-driven, still seeing tests per session growing, still seeing esoteric tests growing. Acquisitions tend to mix us up there as well, but unit pricing relatively a little bit of a headwind.

What drives that increase in tests per session? Is that the tests themselves? Is that the nature of the patients that the doctors are seeing? They need -- they haven't seen them in a while. They need to test them for more. Is that a sustainable trend or something that you see as short term?

Yes. I mean frankly, A.J., we've been watching that for a while now. And we have a hypothesis, but it's almost impossible to know exactly. Our hypothesis is that because people were not going in for routine exams while we're going through COVID and doctors' offices were so crowded and they can't even see as many patients today as they did in the past, that when they actually did go into the doctor, that they were testing them for more than what they've done in the past. So that's our hypothesis. You would think that over time, it would get back to where it was prior to COVID. But at this point in time, it still continues to be higher than what you would have anticipated without COVID. So we're watching it carefully. That's our hypothesis.

I'm going to pivot over to Drug Development, but one last question on Diagnostics side. There's all this debate about where the margin settles out ultimately. Obviously, COVID's propped it up, and that's been normalizing. I think you were 19.9% in the most recent quarter, if I have it off the top of my head. Where do you think it will settle out? And what would be -- is it just more COVID roll-off that gets you to where you think you'll ultimately end? Is there anything else in the margin dynamic to keep in mind?

Yes. So we mentioned PAMA, and we'll see what happens with PAMA. We also mentioned that the hospital systems, in particular, one the size and scale of Ascension will have a negative impact on our margin. Over time, that margin will grow, but it doesn't get to the level of what our typical margin was, would always be slightly dilutive. But if you were just to kind of look at our Base Business in 2019 versus what it should be doing in the future, I'd say margins will be about flat, maybe slightly down, but nothing too significant. But then you have to think about where we are with PAMA and with these hospital systems. Anything you would add?

Yes. No, I think especially as we go into '23 and with the expectation we're still not fully recovered. So volume will be up, and that's obviously -- we'll be able to leverage well on that. We'll still have favorable price/mix. Margins overall, we would say in diagnostics at that kind of level of revenues would be up. So what's constraining that being up, and Adam hit the 2. PAMA, which again, we'll know within the next couple of months, whether or not we'll have another year of it. But if not, that won't be the headwind. Ascension, clearly will have a year's worth versus a quarter. But the underlying business, the margin profile actually is -- even in an inflationary environment, should be positive were it not for that headwind of PAMA.

Okay. Pivoting over to Drug Development for a minute. You've had good order flow. Your book-to-bill has been pretty steady on a positive level. You had 2 things this year, the continued impact, Ukraine-Russia, COVID-related work rolling off. What -- when does that normalize? Is it, do you think, at this point?

Yes. So I'll talk a little bit about the COVID-related work because we're using those words very specifically. COVID-related work, what we mean by that is, one, we were doing a lot of vaccine trials, and we were also doing a lot of antiviral trials, particularly in our central laboratories. If you look at the first quarter of this year, we were still doing a lot of COVID trials. But after first quarter, we've not been involved in any new trials. Now there's still a tail of the COVID trials that we were working on. So we'll have to overlap that as we go into next year. So there'll be some of a headwind from the ongoing COVID trials that we're involved in, but there hasn't been many new trials or any that we've been involved in. Separate and distinct from that, when we do a clinical trial in central laboratories, we send kits to physicians. A kit is a way that they enroll a person into a clinical trial. It includes everything you need: needles, swabs, petri dishes, whatever they need to take samples from the patient. Then they enroll the patient in the trial, take the samples. They send them back to our laboratory, and we run all the tests. So we call those kits sent out and kits received. Last year, during COVID, there were a lot of supply issues across all parts of the supply chain, but including some of the supplies that we needed for the kits. So for example, butterfly needles for a while were back-ordered. And doctors' offices couldn't get butterfly needles. We think some physicians were actually ordering kits and using the components for things that they needed to be done. In addition to that, we believe that when typically you order a kit, it takes 2 to 3 days to get it. Sometimes it was taking 1 to 2 weeks because we were handbuilding the kits as the supplies would come into us. So then when those kits became available, investigators ordered much more than they needed. So we had many more kits going out last year due to the COVID-related issues that we're facing. We get paid for each of those kits. So if you look at this year, we don't have supply issues. We don't have any issues with the kits, and we don't think that people are ordering more than what they need at this point in time. So therefore, that makes it a very tough year-over-year comparison. But for kits out, I feel like we're kind of stable now. The second part is the kits coming in. Last year, during COVID, when they're doing COVID trials, those kits were coming in at record rates because everybody was doing COVID trials. It was so easy to find patients. We were overkitting. We were overenrolling because we all wanted to get those trials done so quickly. But we've always said that about 90% of the sites were open, that means 10% of sites are still not open. And what we've seen is the kits coming back to us outside of COVID are not coming back at the rate that we had seen historically. We believe that, that's going to come back. It's just a matter of time. But at this point in time, we still are seeing kits back to us at a lower level than what it was prior to COVID. Now the kits that come back to us, we actually get a lot more revenue than the kits that we send out because when they come back to us, we run all the tests on all those samples. So that's the part we don't know exactly when that's going to stabilize and come back to us. I think part of it will be once all the sites are open, once COVID is no longer an issue. Because you heard earlier this summer, there were breakouts in the U.K., and there were breakouts in other parts of Europe. When that happens, I think the kits coming back to us slow down for a bit of time until that clears up. So that's going to take us a little bit more time to work through. But ultimately, it's got to come back to normal. It's just a timing issue. That's why I feel good that our underlying demand is good. Our orders are good. Our book-to-bill is good. It's just a timing issue with these kits going -- coming back to us now.

Is there any way to quantify how much of a revenue differential that is if you're getting the normal amount back versus what you're seeing today?

Yes. It's really difficult. And if I had a do-over -- I know there's no do-overs in life. But if I had a do-over, just like we broke out COVID testing for Diagnostics, I would have broken out COVID-related work for Drug Development. And the reason we didn't do that is for Diagnostics, it was literally billions of dollars. It was so massive. For Drug Development, it was hundreds of millions. It wasn't nearly as big. And I don't think with the hoarding that we're seeing of kits, we didn't realize that right away. It took us a while to figure out what's happening because we never had to track it at that level because it's never happened before. So the reason I say that is because if we would have broken it out, you would have seen our underlying business remain strong. But it's this COVID-related forecasting that we're doing in kits that were like just really hard for us to get our arms around. And it really depends on kits back. What are the types of trials? A kit that comes back to us for an oncology trial has different tests that you would run than for a cardiovascular Phase IV trial. So it's really hard to kind of give you a sense of that magnitude without having the specific trials in mind. I don't know if you'd add anything, Glenn?

No, just that the year-over-year comps for what Adam said with the COVID related, the lower vaccine kind of cloud the issue. So we always go back and look at how are we compared to the prepandemic level. So if you look at our guidance for the segment, we're still at around an 8% compound annual growth rate from where we were. So mid- to high single digits with our backlog tells us that this year's revenues are relatively normal for where we would expect them to be with still some -- the headwinds, Ukraine-Russia will go away. But frankly, we're still doing -- while it's lower year-on-year, we're still doing COVID-related vaccine work that we'll continue to see as well. But overall, yes, the growth rates are in line with where we would expect them to be at this point in time.

And like you said, your order book has been good, and you talked about some wins going into next year that -- or new contracts that may offset the one that you lost and highlighted on the third quarter. What -- I mean, we get questions about mid-cap biotech funding and so forth. That doesn't seem to be very impactful to you all, but maybe just make a quick comment on that.

Yes. So if you look at the 3 parts of our business, the breakdown of how much business comes from large pharma and medium versus small is very different. In the Clinical Development business, it's heavily skewed towards larger pharma. In the early development business, it's heavily skewed towards small and midsize. But net-net, our book-to-bill in both of those segments are very strong and very good. Our orders are very strong and very good. So we haven't seen a decreased number of RFPs. We haven't seen a change in our cancellation rates. And that's why we feel, overall, the underlying business remains very strong.

That's good. That's good. I always get the question about, this year, at least, inflation and also the macroeconomic backdrop, which tends to be more about the economic slowdown. Maybe take a minute -- I mean, you've talked about inflation. Is the trend -- it impacts you early in the year. It's sort of been steady, it seems like to me. It hasn't gotten worse as the year has progressed. Maybe I'm wrong, but give us a sense of where you think you are with that. And how would an economic slowdown, if at all, impact your business, you think?

Yes.

So I'll start. Glenn, jump in. But if you look at inflation, I mean, it's obviously significantly higher than we would have expected coming into the year. We've accelerated some of our LaunchPad initiatives to try to reduce costs wherever we possibly can. And if you look, for example, in Drug Development, you saw our margins improve quarter-over-quarter in the first, second and third quarters of this year. A lot of that is due to the expense and the acceleration of some of those LaunchPad initiatives. I think going forward, I don't see a discontinuous trend of inflation, but I don't see it getting any easier. And therefore, the message is that we have to continue to find ways to reduce costs, reduce expense wherever we can. And LaunchPad is going to be a very big part of what we're focused on as we go into next year.

Okay. And from an economic slowdown perspective, any thoughts on that?

It's -- there's no doubt that we've seen some economic slowdowns, and different markets in the world are facing different issues. I think we have to be prepared for that. At this point in time, we haven't seen it impact our business. And if you look historically, the diagnostic business that we've had in previous economic slowdowns has actually sustained itself very well. And if you look at Drug Development, I think there's enough targets, there's enough funding in pharma that we should be okay. If you ask me for my canary in a coal mine, what I do is I look at the early development work. Because if there's going to be a significant downturn in pharma and they're going to have to cut costs in that field, the first place they go is not in their Phase III trials. They're going to go to the earlier trials. I've not seen any impact on RFPs, cancellations or so forth in early development. So far, I feel very good about it. But we're certainly in very strange economic times for sure.

You mentioned that you accelerated the time frame a bit on the spin-off, and that's working toward progress there. What are the big milestones? I guess, naming a CEO would be one. What's the updated time frame and thought on that? But -- is there any other things that we should keep an eye on?

Yes, yes. So we did announce that we [ moved the ] time frame up. We accelerated it. Originally, we said it was going to be the end of next year. We've now said it will be the middle of next year. And the reason we were able to do that is we established a spin realization office. We have full-time employees. We brought in some external consultants that have done many spins before. We developed a very thorough time line. And based upon everything, we feel confident that we can hit the middle of next year, of course, with the customary approvals and so forth that you need. I'm working on Board, working on CEO, other management things. I would expect there to be announcements in the coming months on those things. And then at the same time, we're going to have to make sure that it's tax-free, the spin is tax-free. So we have to get consultations done. We have to do filings. And I think a lot of that is what's going to be the rate limiting step for us to launch the new company.

How about just -- there are some filings you will make, and you're not spinning off the entire Drug Development division. So there is interest on -- would central have been -- the stuff you're retaining versus the stuff you're spinning off, when will some of that financial disclosure likely come out?

So first, yes, the spin is just for the clinical business. Adam said the time line that we're doing, and to your point, we need a private letter ruling with the IRS. That's underway as well as the SEC review of the Form 10. So all the things that we can effectuate are in motion to get done. Ultimately, we'll look at segment reporting, if that's kind of -- post spin when the clinical business is on its own, and the remaining will be our Diagnostics, our early development research labs and our central labs business. So we'll look at the segmentation. Currently, we're also -- because we only report margins on a Drug Development segment basis, we will provide 3 years of audited financial numbers, if you will, for the clinical business before we file the Form 10. So the investors will be able to see not only the historical revenue growth but also the historical margins of the business fully burdened, including the burden for the public company costs. Obviously, the remaining Labcorp business will have the same, and we'll talk through the profitability and potentially any changes to our segmentation. But at this point, all we're looking at is effectuating the clinical spin.

So if the spin is done July 1, when does some of that filing that -- I'm sure that doesn't happen until we're well into '23. But is there -- do you know when that...

That's right. So a lot of it is what are we filing that won't be public versus ultimately what will be publicly disclosed to our investors. So we're well underway for preparing all the information, again, by, frankly, when you think about just a limiting factor of 3 years of audited financials, which will include 2022, we won't have the audit for the stand-alone business for '22 until the early part of '23, so call it February. So we'll be well underway. And as Adam said, once we're further along, for each facet where we can provide more information that's meaningful to investors, we'll be providing it as we go forward.

That's great. All right. Well, I really appreciate Labcorp presenting at our conference this year. Adam and Glenn, thanks so much. And the talk about the spin-off here at the end is a good segue to our next presenter, which is Enhabit, which is a spin-off of Encompass. And thanks again.

Yes.