Tenet Healthcare Corporation (THC) Earnings Call Transcript & Summary

Good morning. Thanks for joining us. We're continuing in our health care services segment. My pleasure this morning to introduce Tenet Healthcare. Tenet, as most of you know, diversified health care services company, 3 distinct but related businesses, acute care hospitals, USPI and Conifer. This morning, we have Executive Chairman and CEO, Ron Rittenmeyer; Chief Financial Officer, Dan Cancelmi; and the Chief Operating Officer, Saum Sutaria. And I'm going to turn it over to Ron to start the presentation. I'll come back on for Q&A about halfway through.

Thanks, Gary. Good morning. We are pleased to be here today. And as you see us on the screen, although it may not appear, to be so due to the camera angles, we are definitely greater than 6 feet apart in a large room, so we have strictly followed the social distancing guidelines. Before we get started, let me direct you to the caution language regarding forward-looking statements on Slide 2. Please take a moment to read this. Additionally, you may have noted the 8-K filed last evening regarding our affirmation of the EBITDA expectation the market has identified for the fourth quarter as well as the expectation we will have an additional $300 million in grant funds that will be recognized in the fourth quarter. These grant funds were a result of the most recent legislations signed in late December of 2020, and while we recognize these in the fourth quarter, it will cover and represent losses we incurred throughout the pandemic. We're very appreciative of that support in such difficult year. And since we've not finalized the fourth quarter, we will not be able to comment beyond what we published in the 8-K until our earnings release in early February. Now turning to Slide 3. The agenda for today is our view of the company driven by really what started 3 years ago in our transformation, the impact of 2020 in the pandemic, the continued evolution of our portfolio and operating model and insights into our approach on ESG and how our business and social purposes are linked and how they serve an important part of our overall platforms. Looking at Slide 4, the map displayed as of today showed you the makeup on geographic diversification of the business. We've used this approach in the past, but today's map really represents a material of different view of the company. At the JPMorgan conference in January 2018, we presented a similar map of Tenet. While there may have been just as many dots, these locations were not necessarily part of the broader strategic plan related to the future of the company. The hospital markets were not necessarily structured to maximize return with a strategy focused on the transformation of the company to a stronger, more robust ambulatory business, both streamlining and maximizing assets also such as Conifer. Simply put, the business was not aligned at that time with the right points of care and the high-growth areas of the future. The underlying components simply needed better structure, direction, decision and action regarding their position in the portfolio and the cohesion that we needed within the enterprise. We did share an ambitious and aggressive agenda that may have seemed complex to many at that time, but frankly, it was always about simplification. We needed to transform and recenter the company with transparent and accountable objectives while building a stronger foundation to support the enterprise as it moved in a new direction. And we stayed very true to these commitments. While each of that hasn't been perfect and we had a pivot, we did what we said we were going to do, and more importantly, the transformation really established the platform where change has become part of our new normal. While we didn't realize it when we started, the new normal really provided us the basis for addressing the pandemic effectively and consistently, maintaining our true north throughout the many ups and downs during this last year. And efficiency, which we set an aggressive goal and then increased it twice from $250 million to $450 million, and now that's fully been realized. Our efforts around cost control are no way completed. And throughout the pandemic, we have questioned, many of the methods we used and how we can be more effective. It's really taken our view of the possible, even deeper than we had originally expected. And these changes are now are not temporary, but now part of our transform fabric. The hospital business, we advanced top-tier clinical programs to serve growing acute and chronic care needs in strategic markets. We became more engaged with consumers through better marketing channels. We divested 11 hospitals and our entire U.K. footprint, consolidated, eliminated markets and operations that were no longer aligned with our future direction and delivered solid continuous performance. USPI, we extended the portfolio depth every year through acquisitions and de novos. We delivered significant value through organic growth and efficiencies, and we took actions to acquire up to 95% ownership way ahead of schedule. Our industry-leading position has been further cemented in these last few years and our most transformative move came last month when we completed the addition of 45 quality ASCs in the fast-growing musculoskeletal market. We took Conifer to a new and improved level of EBITDA and margin performance. Conifer really has effectively undergone an internal restructuring, and we have substantially improved sustainable performance while pursuing the different strategy paths for the assets. We've enhanced leadership, and we prepared the business to spin off into an independent entity later this year. Our Board is almost entirely new, deep experience across every dimension of business, including areas like cyber and the public sector. It has a shared vision of an ongoing transformation and an expectation that ensures we remain aligned with our objectives. Internally, we've addressed aggressively improvements across all of our talent base. The current leadership represents new thinking, innovation, and most of all, an intellectual curiosity that appropriately questions every aspect of the business, and we've instilled an underlying never quite satisfied mentality that drives us differently than in the past. And finally, we have a sense of purpose that is much more ingrained in our daily culture. We have a stronger mission that resonates and a more productive workforce. We believe it's important to frame the change that we've continued to take place so we can set the vision for the next 3 years. We fully realized the pandemic has in many ways, slowed us down. But in others, it really provided a burning platform to take the extra steps ahead of what we might have done to further restructure the enterprise. We also believe we followed the notion of simplification and consistency in how we apply changes to our structure. All of this sets the next chapter in where we move the company. We are now a set of closely linked health care businesses, driving a vision of growth and improved returns. So where are we? And where do we go next? On Slide 5, we've illustrated the unique positioning of each segment of our business as well as the strong fundamentals supporting the future growth. It also shows how we're accelerating diversification of operations and earnings streams. We used 2019 to eliminate the noise of 2020. But clearly, we believe the performance, as we stated, in 2020 and the continued strong fundamentals across every other aspect of the business continues to show great promise. As we view the 3 segments of the business in 2019, each provided a solid contribution to the overall enterprise, which you can see on the chart. Our 3-year goals are also shown. And while these are goals, we believe we've developed and we are executing the strategy and tactics necessary to make these a reality. The most important line is the continued change in the portfolio EBITDA mix, where over the next 3 years, we expect our hospitals to contribute 35% of this mix compared to the current mix of 53%, and our ambulatory mix to move from today's 33% of the portfolio to approximately 50%. Conifer would remain at 15%. We've shown Conifer to ensure we have a view for each of the current segments for the next 3 years. We did this for consistency and transparency. There is no message in this regarding the proposed spin, which we discussed in the past, regardless of the spin timing. We continue to take the steps to prepare for the spin and we remain aligned with that strategy. And as I've stated before, the market elements and the regulatory environment must be aligned as we will wait until we believe the timing is best to maximize the action. Slide 6 captures the elements of our resiliency and performance in 4 key components. Our results in this last year underscores the operational discipline we have put into action on an ongoing basis. As the pandemic has continued to evolve in waves, we met each sharp turn carefully coordinated with active response. Utilizing the analytical tools we've developed to inform every decision and the accountability at the right level to ensure execution. Tenet as an enterprise is a learning organization, both operationally and structurally, and as such, has and will continue to evolve. We've proven we know how to pivot, flex and adapt, and we've beaten the midpoint of our own EBITDA projections for every quarter, except one since the third quarter of 2017. And while the CARES Act has significantly closed the gap on the pandemic incurred losses, our fundamental performance has responded effectively and efficiently. Having a team engaged in the transformation allowed us to seize these opportunities, fueled by the demands that COVID created, faster and more effectively. We've also maintained our focus on cash flow. And at the end of the third quarter, our free cash flow was 26% above 2019 before the CARES Act, [ France ] and Medicare advanced payments, and we've successfully addressed our capital structure during this past year, allowing us the opportunity to become more efficient and effective, such as the recent ACS -- ASC acquisition. Slide 7 includes volume metrics that many of you are already familiar with. Given the COVID-driven volatility in our volumes, we've been very transparent, providing monthly updates of how volumes are recovering. The chart's a good description of how rapidly we've recovered. While inpatient outpatient admissions are important steps, more importantly, is the acuity we are addressing during these interactions. Our trends remain strong in higher acuity as patients in lower acuity settings have either sought alternative solutions or more likely have foregone care until it becomes more severe. This has allowed traffic into the ARs to be more representative of the higher needs for patients and we've added additional representatives of the higher needs for patients, adding specialties as well as enhanced our medical teams to meet those needs. The pending sale of the urgent care business reflects our continued strategic move to align with higher demand specialties versus lower acuity needs as we do not see the urgent care business as necessarily important feeders to our hospitals. While we will serve everyone who enters our facilities, we are designing our operations to be responsive to the higher acuity demand. And while our numbers are not final for the fourth quarter, we did show this estimate, which reflects the comments that I think I just covered. It's also important to note that our most recent trends on COVID emissions represents roughly 11% of our admissions. Length of stay on COVID remains at about 8 days, which given the very few pre-deemed contracts we have, we'd make COVID typically not significant in terms of profitability as many seem to think. We've handled the increase effectively, and as such, we manage it reasonably well. We expect as the COVID pandemic decreases, we will see the space filled by patients with a mix of acuity needs. We do not expect this change as it occurs to dramatically affect our performance. Slide 8 references our improved financial position. We identified really 4 major blocks. We took actions starting with a deeper and immediate focus on Conifer and cash collections, resulted in a significant restructuring of the process and addressing opportunities faster and more effectively. We increased our revolver capacity by $400 million, and then we issued $1.3 billion in Notes to further enhance our liquidity. All of this was done within that first 3 months of the pandemic and taken as a method to ensure liquidity remains solid during those unknown early days. We acted as soon as we saw a window to restructure our 2022 Notes, and by doing so, reduced our annual interest payments by over $50 million. And eliminated all significant debt maturities until 2023. We executed a solid cash acquisition with SCD, improving our secured debt capacity by another $900 million. And we anticipate proceeds of $140 million through divestiture of our urgent care business and an MOB sale. All of these actions were taken from the summer through December and improved our overall financial stability. I spoke earlier of the commitment we have made over the past few years to optimize our portfolio. Slide 9 outlines 4 key pillars of our overall commitment to portfolio evolution during this transformation. We're shifting the enterprise portfolio, where our hospital business is not the primary driver and is effectively balanced with a robust and growing ambulatory platform that provides a unique and effective partnership in patient services. Our care model embraces both the acute care setting, so vital to our communities and the more affordable ambulatory care setting to provide excellent care in these specialty areas. And as I noted, we've been putting the elements in place to ensure Conifer is prepared to spin into an independent entity. Slide 10 represents a continued growth trajectory in USPI's EBITDA, and that supports the statement of how we believe the evolution of our overall portfolio will continue to change demonstrates the evolution of our EBITDA mix towards the higher growth, higher-margin USPI business over time. Prior to our acquisition of USPI in 2015, EBITDA from ambulatory was just 4%, and now we expect it to be more than 40% by the end of this year. Moving to Slide 11. We're pleased to have closed at the end of 2020 on all 45 centers we announced in December. These are premier centers in the fast-growing musculoskeletal segment of the ambulatory surgical market. We showed a version of this slide as part of our call last month on the acquisition. The SCD centers, similar to USPI, have performed extremely well, with annual EBITDA of roughly $210 million, and an EBITDA margin percentage in the mid-40s and $130 million of EBITDA less NCI. The transaction also yields meaningful run rate synergies, and we expect to be around $40 million to $50 million by end of year 3. These centers will be in network, similar to USPI, and our extensive due diligence has affirmed the quality of earnings is in line with our expectations. And we have set -- that we have set in the past for the USPI portfolio. We're confident with the numbers we're showing, and we're confident this transaction will be an excellent fit with the USPI structure. Slide 12 is a great example of some of the centers and different type of market opportunities. On the left side, we've added 10 centers in Palm Beach, where we have a strong presence on both the acute care side as well as with USPI. These are all complementary, and they will not cannibalize any existing operation, and it will further strengthen our position in this very important market. In Ohio, near Columbus, White Fence Surgical Suites recently surpassed a major milestone and performing over 10,000 total joints, a great example of the center with national recognition. Indiana, a small state for us, we have 2 ASCs, but now we have immediate scale through the addition of 7 centers in the state. Again, entry builds our overall strategy to have both scale and presence in important markets and continue our expansion plan. Slide 13, together with SCD, our network has reached an incredible milestone. Despite pandemic and disruption, we've remained diligent about operational programs to enhance offerings across the network. In addition to the 45 SCD centers, we have 16 more acquired and new facilities, including a handful under construction. Beyond the facilities, we continue to grow the business with new services. We added 73 lines in 2020, service lines across the areas like ortho, spine, robotics, bariatrics. All were needed in the communities we serve and designed to improve our offerings. And in total, we have now added in 2020 over 3,700 physicians to join our USPI medical staff. As you can see on Slide 14, we expect our growth in USPI in 2021 to come from both M&A and continued organic growth. We're going to deploy about $150 million or more in acquisitions, should net out to 25 to 40 facilities, in the form of tuck-in acquisitions and de novos and we anticipate surgical revenue growth of more than 6% this year. As you can see on Slide 15, across the hospital, we also spent this year, despite the pandemic, continuing to develop high-quality clinical programs. San Antonio, Phoenix and Palm Beach, we achieved total achievements in their neuroscience programs, including comprehensive stroke certification. In El Paso, we launched the Bariatrics program and a market-wide internal fetal medicine program serve the needs of a growing community. In Desert Care network, we are recognized for 30 years of award-winning care at the comprehensive cancer center. And we began construction of the new 100-bed hospital in Fort Mill, South Carolina, which we've already discussed in the past. On Slide 16, across the system, you can also see our commitment to attracting and maintaining quality physicians. This slide just shows a small study -- a small number of the truly talented and highly qualified physicians who joined our medical staff in different markets throughout the year, and it covers some -- so many key service lines. These are the type of individuals where we can continue to add to meet the needs of our community and that bring with them notable skills and experiences to ensure the services we provide are truly exceptional. Slide 17, Conifer continues to prove reliable and consistent operations. As you could see on Slide 17, during 2020, they were faced as everyone was with numerous challenges. We recently hired a new CEO, added 2 excellent individuals to head up operations, client relationships and sales and continue to expand rapidly our presence in the Philippines. We optimized performance as I made earlier in cash collections and Conifer roasted a challenged and handled them very well for all its clients. We've moved to a more focused growth pipeline and established a best-in-class coating service with quality above 97%, and we've moved to customized offerings and continued to smartly invest in technology. And we established an excellent financial support service based in the global business center that focused payroll, AP and accounting. And we believe that's a potential co-branding with health systems, and we can operate an extension of their financial organization as a more efficient and effective manner. Much of this was developed and dependent on Tenet's expertise in this area, which has been partnered with Conifer. Net, Conifer continues to strengthen as an entity and continues to expand, develop and perform, fully engaged and developing the needed skills and staff to keep it moving forward in support of its main mission. On Slide 18, the same way we evolved our portfolio. We also realized that same transformation was needed in our overall enterprise model to be successful. 4 main pillars are highlighted as part of this global transformation, includes our global business center, our commitment to continuous improvement through the use of real-time data and analytical tools that inform guide and enhanced decision-making, including predictive analysis and our ongoing investment in talent and culture that provides people we need going forward. Slide 19, as you can see, our global business center continues to thrive. We had less than 50 individuals when we started. At the end of February, we had about 600. We're going to close -- we did close 2020 with 1,600 associates. We hired those during the pandemic, when they were home, we stood them up and trained them at home during the entire process. To date, we've passed performance, and we expect to have about 5,000 members covering Conifer, USPI and our hospital business and our global business center by the end of 2023. Slide 20 highlights the importance of a sound strategy that can only be effective with the right people in the right place. We continue to elevate strong performers, and we have found that those outside perspectives by bringing in new talent has built exactly what we need to reset and guide us to a better path forward. We continue to formally recognize the individuals and teams who have gone above and beyond the call of duty through our dedicated long Tenet Heroes program, and we focused on supporting our employees who have increased financial needs through our Tenet care fund very successfully. In Slide 21, we wanted to highlight that while these opportunities are important to us in our day-to-day efforts, we respect the planet, and we fostered our culture of inclusivity where everyone belongs and rallies behind causes that matter. By fighting the hunger, further in education for the underserved and using our voices to advocate for critical health screenings that save lives. Slide 21 speaks to our views on the various elements that contribute to our enterprise offerings on ESG. So let me just take a minute to touch on that. Slide 22, sustainability means for us, we understand and embrace our commitment to create the best place to deliver and receive care. We're focused on reducing resource consumption, improving physical environment as well as generating community alignment in partnership with others. On Slide 23 and 24, we've included a snapshot of our focus on diversity through our overall enterprise. Slide 23 speaks to our belief that the workforce must represent the community it serves, and our overall leadership must have a similar profile. We've improved our Board diversity where 58% of our Board reflects diversity by gender or ethnic backgrounds. Our focus on new hires continues to show improved diversity as does our leadership. This is not a program, but rather an active engaged part of how we're going to continue to do business. Slide 24, snapshot of Detroit, El Paso and Orange County, all of which serve a very diverse population. We believe we have made significant progress in improving the representation to be reflective of the community, and we set the right goals to ensure that continues. Slide 25 speaks to our commitment to sound governance. First, our Board of Directors. We have an incredibly strong board with 9 new directors since 2017, and our diversity starts with our Board. On Slide 26, we outlined the numerous structural changes we've made to our governance in the last 3 years, all of these have been received very well, and we're proud to note our governance practices have received the top rating by leading proxy advisory firm, placing us in the top 10% of our peer group. I'm going to detail much more of this in our upcoming annual report, which we have a dedicated ESG section. And we plan to create a special committee of our Board of Directors in 2021 to meet semiannually and review our progress and specifics on the evolution of ESG within our enterprise. So in conclusion, on Slide 27, our performance in 2021 will be shaped by our continued strategy and ability to maintain our competitive edge. It starts there and will be executed by aligning on priorities. Operating with transparency is a key value that will drive our culture along with strict accountability to the goals we set. And looking at the portfolio right now, I'm confident we're putting the pieces in place to become a more capital-efficient and greater free cash flow producer as we align ourselves with higher growth areas in the future. Thanks for attending today. And now I'll turn it over to Gary for questions.

Thank you for that presentation. [Operator Instructions] Maybe I'll start with -- I just want to clean up a couple of things on current trends. Obviously, with your 8-K out last night, you've got pretty strong EBITDA performance in the fourth quarter, nearly reaching what you earned last year despite the fact that you're managing through this pandemic. Is there anything within geographies, market is very oriented towards sort of the surge in cases in South Florida and some of the elective deferrals that the governor ordered there? Or is there anything sort of in the month-to-month that investors should care about? I know -- I think in the 3Q, you had a really strong trajectory and when COVID surged, it clipped it just a little bit. So I'm just wondering inside of that big picture, is there anything else worth calling out just in terms of how things are trending right now?

Yes. Look, Gary, I'd like to get into all kinds of detail that we don't -- we have early reads on a lot of things, that's why we put those -- the fourth quarter estimate up. It's not fully accurate because we haven't closed the books. And if I go off here and start talking about markets in detail and et cetera, et cetera, the lawyers will be here in a few minutes to drag me out in cuffs. So frankly, I've got to stay with what we said in the 8-K, we're sensitive to that. We're a couple of weeks away from our earnings announcement. I guarantee you, we will spend time going through that. But I think the earnings or the 8-K speaks for itself in terms of our performance. And behind that, obviously, has to be the appropriate trends and numbers. So I...

Fair enough. Yes, fair enough. Going to the kind of the topic of hospital acuity. So you have a specific company effort to drive higher acuity really in both segments, and you're seeing some traction on that. The pandemic has accelerated acuity for everyone. You're 17% net revenue for just admission in the third quarter, more typically, would be 2% or 3%. What do you think? And maybe this is more for Saum, too. What do you think the enduring aspects of kind of this change of acuity are? Obviously, we've seen lower acuity falling away, and everyone's trying to figure out, does that continue to stay away? Have people just shifted? Is ER not going to come back? So just interested in your thoughts on what you think might be sort of the more enduring aspects of the acuity trend?

Yes. Thanks, Gary. Let me make a few comments. First of all, I do think that there's a fair amount of low acuity demand that was there in 2019 and before that's been deferred or it's just not there right now. So the example that you often think about is emergency department visits related to sports injuries or other things that may happen given the lockdowns around the country are simply in lesser demand right now. One of the things that we follow is related to the emergency department is the acuity that comes from admissions that flow through the emergency department. That's been quite strong and really it has recovered much, much more actively to pre-COVID levels than the low acuity business. So that's the emergency department channel. Secondly, as we've pointed out, both in the USPI business and in the hospital business, we have continued to expand some of our high acuity service lines through the pandemic and we've learned a lot, even if you think about the Q3 spike in COVID cases, the Q4 looks similar and has had spikes, as you know, what we're living through right now, but we've gotten better at managing length of stay, creating capacity in the hospital, continuing to allow appropriate elective surgeries to continue when they're medically necessary and have seen sequential growth in surgical care despite the growth in COVID cases. And that's basically a result of really getting better at managing the facilities operationally. And so if you can create capacity, you have the ability to safely continue to diversify care. By the way, that's going to be necessary going into 2021. Because this is just so long, people with other chronic diseases can defer their necessary procedures and other things. And we obviously want to be well positioned, both with the physician talent that's required and the infrastructure and capacity to service that demand as it returns. So as I look forward, both from an emergency department perspective and from what we've been doing with respect to our elective programs and where we've been focused, we expect acuity to remain strong into 2021.

And thinking about USPI specifically with the change of the inpatient-only list, but maybe more impactful is the approval of Medicare knees this year and hips next year, how much are those 2 procedures specifically in the USPI line of business, how much of those are going to drive some of the projected EBITDA and revenue growth you have in USPI, material portion? Or how do you size it?

Yes. Well, as you know, USPI is a very diversified ambulatory surgery business. And musculoskeletal is a large proportion of what has recovered more quickly through 2020. I mean when you talk about scale in that environment, the company as a whole performs over 0.5 million procedures a year in the musculoskeletal space. So the amount of scale that Tenet health care with USPI has achieved in this arena surpasses, I think, anything we've seen in this environment under a single entity. I mean 0.5 million is a very large number and growing quickly in the musculoskeletal space. And to your point, it's growing more quickly in the ambulatory environment than in the hospital environment. And that's why we thought the importance of the SCD assets plus the broad platform that USPI already had in multi-specialty care was very important as the line of investment for us, given where the trends are in terms of the growth. Now the pandemic happens to have created a situation where that business has come back faster than some of the lower acuity procedures, and that's just an accelerant to what's going on.

But those lower acuity procedures, we expect will be back.

Well. Yes. I mean, one thing to note here is that when we're sitting at 95% of prior year in USPI, from a surgical procedure. The vast majority of those things have come back, the lower acuity procedures. I mean it's not like we're sitting here in a position where only 50% of our work and some of those other specialties has come back, vast majority has come back. The real question is, we believe many of those services that are not musculoskeletal, given the physician community we're partnered with, there is a significant runway for growth in those procedure areas as well. And we believe, we'll return to that in 2021 as the pandemic hopefully subsides.

I just want to separate the notion of the ERs from the USPI.

That's right.

Thank you. Investor question online asking about your Slide 5, where you show your 3-year goals in terms of EBITDA growth by segment. The question is, are those using 2019 as a base year and do the growth rates, do they include any M&A?

Gary, it's Dan. The -- certainly, when we think about the growth over the next 3 years, we were looking at 2019. In terms of the -- from an M&A perspective, certainly, in the ambulatory segment, we've been very clear that we will invest roughly $150 million a year in M&A or de novo develop and depending on the opportunities, we might invest more if there's an attractive opportunity out there. The hospital portfolio doesn't necessarily reflect M&A, although as Ron mentioned, we do plan on completing the construction of new hospital in South Carolina, very good market, and we're very optimistic that, that's going to be a very strong facility to add to the portfolio. But really, other than the net new facility coming online, it's pure organic growth.

And it's all consistent with what we've said in the past. So...

Another question we have is just on the possibility of divestitures in the acute care portfolio, you've executed a really successful program, as you discussed in your presentation. I guess, maybe not just in general or more specifically, what happens to the Memphis hospitals now? Is there the potential there could be another buyer? Or are you firmly committed at this point, that Tenet will continue to own and operate those? Can you talk about the acute portfolio?

Well, a couple of thoughts for you. I mean, first of all, with respect to Memphis, this was an opportunistic transaction. The Memphis hospitals are strong hospitals, the staff and physician community are very committed to the facilities. So we plan on operating them at this point. And we've always maintained them as part of the Tenet family in terms of the support that has been provided through the potential sale process so there's not a lot that's going to have to change. I mean, we just continued to proceed down the path and invest behind those facilities, and we think they'll perform at expectations -- at the expectations we have of our facilities in the acute care portfolio. In terms of the broader portfolio, as we've said, we're always looking carefully at the portfolio and making judgments about where we see opportunities, both to look at facilities that might be -- may have better natural owners. And obviously, selectively, facilities that might be added to markets in which we have positions that are strong, and we can diversify our service offerings. So we're constantly looking at both.

I wanted to ask just a little bit about the Conifer spend. So I'll do my best to aggravate Ron and ask some questions.

That's the only problem I get is, I don't know what else to say.

I know. So I'll make another attempt. I'm sure there's been 100 attempt and it said. I just wanted to make sure I understand. So the 2 things that you continue to talk about waiting for is IRS decision and market conditions. So on IRS, so you're just saying literally the final decision from the IRS this qualifies as tax-free spin, that's just a...

Well, there's -- and there's other -- I mean there's other regulatory things we had to file. So all of that has to get done and completed and packaged. So the one that is obviously a, probably the most important is the IRS decision.

And in terms of market conditions, just in general, markets at an all-time high. A lot of health care service valuations are high. R1, if it's the primary comp for Conifer has doubled since you've announced the spin. So it seemed like pretty favorable market conditions. The things that I've just cited. I mean that when you talk about market conditions, those are the kind of things that you're thinking about and talking about?

And equity markets, I think, are important to us for obvious reasons. The issue always comes down to Gary. We've set it up to happen. The question of when it happens is really kind of on us. The pandemic obviously created some issues, right, both in getting the approvals and not knowing what the market is going to do. And we've invested a lot of time during the pandemic in Conifer, both in building the global business center and in ensuring that, that was stable and it proved out to be even better than we ever expected. And then in the management changes we've made in trying to boost it up. Look, I mean, Conifer is as an operation. I don't think anybody can look at it over the last 3 years and say it's not been a success story. But there's another wave here of how do we make sure it's successful when it leaves. So I mean, we are spending time in that. We are spending time. We're fully aware that on the revenue side, growth revenue side, it needs to do more than it's done. And we've invested time and effort in that. And we've -- the pandemic obviously is not the best time for us during that. But anyway, it's a good asset, and we're going to -- we said we're going to do that. I don't see a reason why we wouldn't. But at the same time, I also want to be smart about when we do it. So that's all I'm trying to say.

Appreciate it. We're at time. Gentlemen, I want to thank you very much for joining us and our investors, and we'll see each other later on. Thank you.