U.S. Physical Therapy (NYSE:USPH) Q3 2021 Earnings Call

0:00 Good day and thank you for standing by. Welcome to the U.S. Physical Therapy third quarter 2021 earnings conference call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. In order to ask a question during the session, please press star key followed by the number one on your telephone keypad. Please be advised that today's conference is being recorded. If you require any further assistance, please press star then zero. I'd now like to turn the call over to Chris Reading, President and CEO. Please go ahead, sir. Thanks, Priscilla. Good morning and welcome, everyone, to our U.S. Physical Therapy Third Quarter Earnings Call. With me today on the line include Carrie Hendrickson, our Chief Financial Officer, Graham Reeve, and Eric Williams, our Chief Operating Officers, Rick Binstein, our General Counsel, and John Bates, our Controller.

0:57 Before we start our discussion around our earnings and operating performance this quarter and year to date, we need to cover a brief disclosure. John, if you would, please. Thanks, Chris. This presentation contains forward-looking statements which involve certain risks and uncertainties. These forward-looking statements are based on the company's current views and assumptions, and the company's actual results can vary materially from those anticipated. Please see the company's filings with the Securities and Exchange Commission for more information. Thank you, John. We're going to change things up a little bit from how we typically do them. Rather than me start out providing select points of performance and color, I'm going to ask Carrie to walk through the entirety of the financials in detail.

1:43 Now we have the complexities as a result of this pandemic and some of the related secondary issues where we feel like we need to span three years in order for you to have the clearest possible picture, which is certainly what we want to have. I will say I think Carrie and the team have done a wonderful job trying to present this information in a cohesive way that provides the most clarity and really in linear continuity so that you can see how we did on a pre-pandemic basis in 2019 right through the current period. And then following Carrie's review, I'll provide some brief comments related to our performance along with maybe a few key points Thank you, Chris.

2:35 And good morning, everyone. Our financial performance in the third quarter of 2021 and through the first nine months of the year has been very strong, as outlined in today's earnings release. We reported third quarter 2021 operating results per share of 85 cents. which was 21.4% higher than the 71 cents we reported for the pre-pandemic third quarter of 2019, and it also equaled our record high third quarter operating results per share of 85 cents in the third quarter of 2020, excluding relief funds, which, as we noted in the release, had benefited from significantly reduced costs related to the COVID-19 pandemic. Due to the impact of the pandemic on all of our 2020 results, I'll provide comparisons of our key metrics to pre-pandemic periods in 2019 in addition to comparisons to 2020 periods.

3:24 We reported adjusted EBITDA of $19.9 million for the third quarter of 2021, which was $300,000 higher than the $19.6 million, excluding relief funds that reported in the third quarter of 2020, and it was $3 million, or 17.6% higher than the pre-pandemic third quarter of 2019. Revenues in the third quarter of 2021 were $125.9 million, which was an increase of $17 million, or 15.6%, from the third quarter of 2020. Our third quarter 2021 revenues were $8.6 million or 7.4% higher than the third quarter of 2019. Our physical therapy patient volumes per day per clinic were 29.5 in the third quarter of 2021, which is the second highest volume level in the company's history, bested only by the 30.0 that we reported last quarter.

4:17 And it's also a record high third quarter volume level for the company. Our previous third quarter high was 27.5 in the third quarter of 2019, which we beat this year by 7.3%. Our volumes per day per clinic were 14.3% higher than our 25.8 average visits per day per clinic in the third quarter of last year. Our average visits per clinic per day exceeded 29.0 for the first time in the company's history in March of this year, and they've continued at that level or higher for seven consecutive months now. and based on the activity levels we've experienced in October, we would expect that to be the case again for the eighth consecutive month. Our net rate for our physical therapy operations was $102.93 in the third quarter of 2021, which compares to $105.91 in the third quarter of 2020.

5:03 Our third quarter 2021 rate reflects the 3.5% Medicare rate cut that went into effect in January of this year, as well as some shifts in the mix of our business. We've had increases in all categories of our business from the third quarter of 2020 to the third quarter of 2021, but some have increased at a greater rate than others. Our total visits increased 19.9% from the third quarter of 2020 to the third quarter of 2021. Notably, our workers' comp visits increased approximately 9.2%, while Medicare visits increased approximately 27.3%. So as a result, higher rate workers' comp decreased as a percent of our total mix, and Medicare, which is paid at a lesser rate than our overall average rate, increased as a percent of our total mix, and that put downward pressure on our overall net rate.

6:00 Our physical therapy revenues were $112.3 million in the third quarter of 2021, an increase of 16.5% from $96.4 million in the third quarter of 2020, and an increase of 7.6% from $104.4 million in the pre-pandemic third quarter of 2019. Revenues for the Investor Reel into Prevention business were at an all-time high, $10.5 million in the third quarter of 2021, which was a 4.8% increase over the third quarter of 2020, and it was a 5.5% increase over the third quarter of 2019. Our team also continues to do a good job managing our cost and keeping our cost increases aligned with our growth in revenue. Our operating costs, less closure costs, were $96.1 million in the third quarter of 2021, or 76.3% of net revenues.

6:50 This was 40 basis points better as a percentage of revenue than our 76.7% in the pre-pandemic third quarter of 2019. Our operating costs, less closure costs as a percent of revenue, were at a low point of 72.1% in the third quarter of 2020 as a result of the significant steps we took to reduce costs during the pandemic, including temporary salary reductions, furloughs, and other similar measures. Our 76.3% in the third quarter of 2021 is consistent with the first quarter of 2021 when operating costs less closure costs were 76.9% of revenues and a bit higher than our 73.0% in the second quarter of 2021. Looking specifically at salaries and related costs, there were 56.0% of revenues in the third quarter of 2021 versus 52.8% for the third quarter of 2020, which was lower than normal due to temporary salary reductions and furloughs that were put in place as a result of COVID, as I mentioned a moment ago.

7:48 Salaries and related costs in the third quarter of 2019 were 56.9%. So we were better in the third quarter of 2021 by 90 basis points as compared to the pre-pandemic third quarter of 2019. Similar to our total operating costs, our salaries as a percentage of revenue in the third quarter of 2021 at 56.0% was lower than the 56.8% for the first quarter of 2021 and a bit higher than our 54.3% in the second quarter of 2021. Our gross profit was $29.8 million in the third quarter of 2021, which compares to $30.4 million in the third quarter of 2020, which again benefited from those lower costs due to COVID. Our gross profit in the third quarter of 2021 was higher than the third quarter of 2019 by $2.4 million, or 8.9%. Our gross profit margin in the third quarter of 2021 was 23.7%.

8:46 and that compares to $27.9 in the third quarter of 2020 and $23.3 in the third quarter of 2019. Our corporate office costs were $12.9 million in the third quarter of 2021 as compared to $10.4 million in the third quarter of 2020. Corporate office costs were $10.6 million in the third quarter of 2019. Our third quarter of 2021 corporate office costs include $1.3 million in incremental equity compensation expense for the accelerated vesting of restricted stock previously granted to our Chief Operating Officer of the West Region, who retired in July. Excluding that incremental equity compensation expense, our corporate costs were 9.2% of revenues in the third quarter of 2021, which compares to 9.6% in the third quarter of 20 and 9.0% in the third quarter of 2019.

9:39 Our other income includes $1.2 million for the positive resolution of a payer matter in the third quarter, and our interest expense and our debt was $268,000 in the third quarter of 2021, which is down from $351,000 in the third quarter of 20. Our weighted average interest rate in the third quarter of 2021 was 2.19%. Our net income attributable to non-controlling interest was $4.1 million in the third quarter of 2021. are non-controlling interests worth 13.3% of our profits, including the favorable resolution of the payer matter in the third quarter of 21. This compares to 16.0% in the third quarter of 2020. The reduction in the non-controlling interest percentage is primarily due to the purchase of non-controlling interest from our existing partners.

10:28 Through the first nine months of 2021, we've purchased $16 million of non-controlling interest from our existing partners. Our balance sheet remains in an excellent position and our cash generation remains very strong. We ended the third quarter with $33 million drawn on our $125 million revolving credit facility, which includes $3.3 million drawn on September 30 to fund the acquisition of an industrial injury prevention services business. The $33 million is $5 million less than we had our revolving line of credit at June 30. We had cash of $19.2 million at September 30, 2021. Our net debt at September 30, 2021 was $24.4 million, which includes the $33 million on our line of credit, $8.3 million in payroll taxes deferred in 2020 under the CARES Act, and $2.3 million in notes payable net of our $19.2 million in cash. Our net debt position at December 31, 2020 was $11 million. So in the first nine months of this year, we have funded acquisitions totaling $22.6 million.

11:35 invested $6 million in fixed assets, paid back $14.1 million in Medicare advance payments that were received last year, purchased non-controlling interest from our partners of $16 million, paid dividends of $13.9 million, and paid off $4.7 million in notes payable, all of which total $77.3 million, but our net debt position has increased by only $13.3 million. Our leverage and our strong cash generation provide us with tremendous flexibility and sufficient capacity for the right growth opportunities as we identify them. With that, Chris, I'll turn the call back to you for your remarks related to our operations and third quarter performance. Thanks, Kerry. Great job with that. I'm going to make some candid comments and go off script a little bit. I think you guys deserve that. I think also, I hope, Some of our partners and our staff will listen to this call at some point. You know, for those of you who followed the company for a long time, you know that we follow historically at least a pretty distinct seasonal pattern.

12:44 We have winter storms, and so January with new deductibles, we start out a little slow. Second quarter, really beginning in March and continuing through early to mid-June. which I understand spends both quarters. But beginning in March, we see rather distinct pickup as spring comes and people get outside. And that continues until about school is out. And then things slow down a little bit in the summertime. People take vacations and doctors take vacations and school is out. And we, for every year that I've been here, which is 18 years, we've slowed down in the summer. This year, that didn't happen.

13:30 In fact, we delivered, again, Kerry mentioned for the quarter, a record third quarter for us. Even in spite in some of these markets in the summer, in fact, in some big markets like Nashville, where we had hospitals who had put off elective surgery again just because of the COVID push. In spite of that, we delivered 29.5 visits per clinic per day. which is just a fraction of a visit off our all-time record which was Q2. And in spite of a few hurricanes that heavily affected us hitting Louisiana with our new acquisition partners there who are doing a great job, by the way, and all the way up the coast.

14:16 So in spite of that, the best third quarter in our company's history. And I just want to let our partners know and our clinical staff know, and they hear me say it, but I want to say it on this call, they're doing a phenomenal job. They're taking great care of patients. They're doing it under still difficult circumstances, keeping people safe as they should, as we should. But it's tough. It's tough to get through a day with masks and goggles in some cases. And to do that now... to do that now for the last year and a half, going on now two years. Pretty extraordinary.

15:03 And again, I just want to thank them. They're doing a terrific job. And our result this quarter is directly related to their ability, and they have great ability and they have great delivery in terms of how they care for our patients because that's the most important thing that we do. Everything comes from that. The continuity we have with referrals, the visits that we get, which are related to the care of our patients, we were doing a bad job. We wouldn't have that performance. And so hats off to them for that. On the Bariatric side of the business, we're growing. We're still making our way through this whatever this transition is toward, I hope, toward normal.

15:55 It's still a tough employment market, not just challenging for us, which I'll address in a minute, but also for the companies that we serve. But we delivered record revenue, record earnings performance this quarter. We're beginning to see new business come in. And so I continue to have great confidence in that team and at At the end of the quarter, the last day, as Kerry mentioned, we added a nice tuck-in deal to that business, which should further strengthen and actually widen our service offerings. And then finally, I want to make a couple of comments relative to the employment environment right now, because I know there's a lot of talk about that.

16:40 It is, in my view and in our view, challenging. I think there's some important color to provide. First of all, all year this year, really, if you want to look at beginning, I guess, spring and forward, which is when the market really seemed to be more difficult, we've had more inflow than we've had outflow. I'll say it again. We've had more inflow and then we've had outflow. Right now, our licensed clinical turnover on a percentage basis is in line with our historical rates.

17:26 And when I say historical, I factor out the 2020 period because we furloughed and we did a lot of crazy things to get through that period. So it goes back to 2019. Our headcount's down from about 5,400 and change in 2019 to a little over 5,000 now in 2020. And I will say it is tough, particularly front desk and non-licensed positions, licensed positions as well. But our team's done a great job. I had a conference call the other day with our recruiting department. We've added our VP of HR. and recruiting in that entire area. He's done a phenomenal job bringing key people.

18:17 The energy of that team is better than I've ever seen it. We've added some great people. They're doing a terrific job working with our partners. Our partners are working very hard to make sure that we have the right clinical staff. If we didn't have the right clinical staff, we wouldn't have delivered the visit volume that we delivered this quarter. I want to give you one more stat, and then I'll be quiet here and we'll open up for questions. Just as a point of reference, our salary and related costs, if you go back to 2019 Q3, our salary and related costs was $58.30. Beginning this year, first quarter, was $57.80. Second quarter, again, record quarter for us in terms of volume in earnings, 5520 per visit. I'm sorry, that's a per visit number.

19:17 So it's 5830 in Q319, 5780 Q1, 5520 Q2, 5660 Q3. Will the fact that the labor market's tight show up in our financials at some point? Yeah, I think probably will. But we've held very steady through this period. Again, that's not a testament to me. That's a testament to the team, to our partners, to the staff locally who care so much about what they do, and to our recruited team. and all of our various support functions and operations that help to make all this stuff work. And again, I just want to say thank you to all those folks.

20:06 So that concludes my prepared and lots of prepared comments. And with that, I'd like to open it up for questions. At this time, if you would like to ask a question, please press the star and one on your touchtone telephone. You may remove yourself from the queue at any time by pressing the pound key. Once again, if you would like to ask a question today, please press star and one. And we'll take our first question from Larry Solo from CJS Securities. Your line is open. Good morning, guys. Thanks for taking the questions. We'll start with the labor and the headcount. And Chris, you mentioned more inflow than outflow.

20:51 And obviously, you had some big furloughs in 2020 and and looks like you haven't brought everybody back. Some of these, you know, margin gains are an ability to sort of keep your margin in line where others are struggling. Are you able to, have you learned, you know, an ability to do more with less, just be more efficient? You know, because I imagine some of your salaries are higher. So, you know, what do you attribute towards, you know, you still, your revenue doesn't seem to have suffered at all with a little bit less headcount and your margins are obviously even higher. So, Just trying to get a little bit more color on that. Yeah, I think, you know, 2020 was a great learning experience for all of us. And I think our partners particularly, but really across the board, we've learned, like any other semi-crisis that you go through, you learn to focus on what's important and you get rid of and the rest. And when I say get rid of the rest, I'm not talking about people. People are always important, but you learn what you can live with and what you can't live with. And we're still adjusting, Larry.

22:02 We're still in some of our corporate support departments. You know, we've added staff and added more staff in their areas to support some of the programs and initiatives that we have that we are investing in. There's been some of that for sure. I think there's been a much tighter control locally in terms of managing not big FTE changes, but very small FTE changes that do add up over the course of 600 odd facilities. And so I think it's that combination. Our margins were a little tighter this quarter. Our net rate was down ever so slightly. from where it was previously.

22:49 But our cost per visit, as I mentioned, our salary-related cost per visit has stayed pretty steady. And so, you know, I just think it's all those things working together in small increments that have added up to where we are right now. And we're still making some adjustments. This isn't, you know, do one thing and you're done kind of a process. But we're, you know, we're working our way through. Great. How about just on the volume trends? You're really strong, even as you mentioned, a little bit of seasonal slowness at 29 and a half per day. I think like sort of that magic number, 30 visits per day. Is that like, you know, I know that's sort of what everybody strives for, but could this go above that? Or do you kind of reach some, you know, these therapists reach sort of capacity constraints above, you know, a certain number?

23:45 Well, therapists do reach capacity constraints, but clinics have generally flexibility. And so what I mean by that is there are arguable points when a therapist gets busy enough or so busy they can't see more patients unless they add more hours. And I'm sure there's some of that happening, you know, just to cover the volume because business is good. Clinics, however, and that's that number. It's a clinic number, not a therapist number. And so the clinics can go above 30, I think, certainly on average. Now, there's some clinics that, you know, in that mix that are capped out or relatively so. Yeah, probably. And we go through in any given year a number of expansions and relocations that we do in order to to grow those facilities just because the chaos factor in some of our biggest facilities, you know, get to a point where it gets a little high.

24:51 And so you need more footprint. But I don't think that 30 is the be-all, end-all. Now, it's a good number, and it's the highest number we've ever delivered. And so I'm not suggesting that becomes an easy number to get to or to sustain. But as Kerry mentioned, we've stayed above 29 now every month this year. And I'm hoping that's the new watermark. We'll see, you know, as time goes on. But I don't think 30 is a ceiling either. And I think we can, over time, slowly grow through that. That'd be my hope, at least. Right. Okay. And just last question, if I may, just on the industrial injury prevention business. You know, you mentioned a pretty good quarter this quarter.

25:37 I don't expect to get back to the rapid growth we saw in 18 and 19. I know some of that was inorganic. But in order to draw considerable growth, I guess my understanding is a lot of these new contacts are garnered at trade shows and whatnot. Is that sort of the hindering factor? And once trade shows start going again, you can start picking up some growth? The sales team there, Bob Patterson and the rest of the sales team, they've done a great job in what is otherwise very challenging circumstances, as you mentioned, with no trade shows to speak of this last year and a half. And I do think that will be a little tailwind that we haven't experienced yet.

26:27 But it's not like they're not working at this point to try to create opportunities. Otherwise, they are. and we're seeing that happen. It's just a little harder, frankly, because it's harder to get face-to-face and some of these companies, people are still working remotely and so you're dealing with that as well. And so it is going to take a little time. As you mentioned earlier, in 2019, for instance, we did the BTE deal and I will mention that that deal we brought on, it had what we thought would be The heavy kind of counter-cyclical program in our employment testing, post-offer testing, that business is on fire right now.

27:18 And so that's helped the rest of the business kind of stabilize where some of the ergonomics testing business, which is heavily done onsite, is down at the moment. But I expect it will come back as things further normalize. And so, as we mentioned, we did a small deal at the end of the quarter. We continue to look for opportunities in that space. We expect to get more done in that space. And I expect that, you know, you'll see that play out over the, you know, the coming year as well. Got it. Great. I appreciate the call, guys. Thanks so much. Thank you. Thanks, sir.

28:04 And we will go next to Stephanie Wissink from Jefferies. Your line is open. Hey, Steph. Hey, thanks. Good morning. I'm actually Chris Bonasson for Steph. Appreciate all the incremental clarity. It's definitely helpful, and congrats on another strong quarter. I just wanted to touch on the strong volumes. Are you gaining those volumes from a greater pool of more referral sources? So are you seeing that contribute to kind of these elevated levels? Maybe just talk about what you're hearing from referral sources and maybe anything incremental from sales reps that are maybe suggesting that new referral sources are more heavily contributing to this mix. Or really, I guess, at the end of the day, is it really just a greater number of referrals from existing sources?

28:50 Yeah, that's a great question. It's a little bit hard for me to answer just because of how we aggregate this information. and I'm not sure that I have the complete color or transparency around that in detail to be able to give you an absolute final answer but we're always working on new referral sources and our sales team does a great job at that. I would tell you that I think it's a broadening of referral sources and it's a broadening of our ability to go direct to consumer and not have to rely exclusively on referral sources. And then I think thirdly, it's probably moving some market share from less focused, less capable, whether it's small local providers or hospitals who are focused on other things right now or don't have the resources devoted to this. And so I think it's a smattering of things.

29:55 What I don't think it is, and it's my belief, is that suddenly our finite group of referral sources who've always been with us are busier than they've ever been. I think that industry-related stats around that would suggest otherwise. So I do think it's a broadening. I do think it's struck the consumer, and I do think we're moving some market share forward. across a growing referral base is how I would put it. Yeah, that's great, Culler. And then I got to ask just a fun one on Medicare and recognizing there's just still potential for things to change. How do you think about that and the relationship between Medicare rates versus the pricing in your commercial books moving forward?

30:49 And if you look through those contracts, What's the anticipation for commercial rates to more kind of index towards Medicare? And then the last one on that would be anything else in your commercial contracts that can move price one way or another on an annual basis on things like inflation adjustments or annual escalators? Yeah, so as I answer these, if I've missed something, please redirect me. So first of all, I was disappointed but not surprised when Medicare came out with their final rule update on Tuesday. I think with CMS, it's kind of the path of least resistance.

31:34 I know that they got a massive outpouring from the communities that we serve and from therapists in general and practices around the country. You know, we lead a group called APTQI, Alliance for Physical Therapy Quality and Innovation. We've been very, very active both in messaging and directing communication to CMS as well with our congressional constituents. You know, we represent now over 14,000. I think that's the number of facilities across the country and in virtually every state. And so we've been, and I've been personally on a number of these, and so have all of our CEO board members.

32:28 Each week we have congressional calls. And so I still think there's opportunity, as we did last year, to get some congressional overrule on this. I think it's short-sighted and wrongheaded to deliver a cut like this to a subset of the Physician Fee Schedule and Physical Therapy, which we know through studies that we've commissioned, independent studies done by Beltway Analytics Groups, that indicate that when somebody comes to physical therapy early, for instance, for low back pain, their entire downstream cost for their healthcare spend, not just for that issue, but for all their issues, is less The reason behind that, I believe, is because we get people moving again.

33:17 And when you move, you can exercise, you can be active, you can garden, you can walk, you can do the things that cause other health issues to improve. Diabetes, obesity, even mental health is significantly improved with activity and exercise. And so I think it's wrongheaded. I think our congressmen and women understand that. We're not done fighting. There's a lot of fight in this group, and there's a lot of good resources, and so we're going to continue to work at that. I do think it creates a challenge for us, right? I mean, we're fully productive at this point with our labor force, but it was a challenge for us at the beginning of this year as well when we had a 3.5% cut at the beginning of 2021, and we've been able to overcome that.

34:10 and we're going to have to figure out how to overcome this and we're going to have to grow through this if this is where we end up. I'm not sure this is where we'll end up, but if it is, we'll have to grow through it. And I think this team's been there before and we'll find a way. In terms of the commercial side of the business, we have some wins recently that will kick us off for the new year. and will there be some follow along? I think not as much on the Medicare rate. We may get some follow along on the PT assistant differential payment rate. And so I think to be determined there, working our way through that right now in terms of, you know, with Eric and Graham and and our HR department have done a lot of work on modeling around that for the new year. And so more work to happen there as well.

35:08 But I think it's a little bit too early to tell yet whether we'll get some follow along, working the contracts aggressively to see if we can, you know, create some offset right now. I have confidence our team can do that, at least in part. And I will point out that Although Medicare pays everybody the same, commercial payers still pay hospitals disproportionately high rate compared to what they pay outpatient providers. It doesn't make any sense. And we certainly, I think, are a much better entry point to deliver care to those patients and having somebody navigate through a hospital campus logistically and probably with much lower experience and clinicians, typically where new grads gravitate compared to our outpatient facilities. And so I think actually we should get the higher rate. And so we're working on making sure that we can articulate our value proposition and make some progress there.

36:17 But like anything, we've got work to do and the team's focused on it, you know, very urgently at the moment. Yeah, definitely agree with what you're saying. Really solid color. Congrats again. Thank you. Thank you. And as a reminder, if you would like to ask a question today, please press star and 1 on your touchtone telephone. We'll go next to Mike Petusky with Barrington Research. Your line is open. Good morning. Hey, Mike. Just to clarify, In terms of the final reimbursement, I know there was some initial confusion around whether 2% or 3.5%. What do you all and the industry judge the final rule impact to be in 22 at this point?

37:05 Yeah, we're still working through some modeling. There were some increases on the initial evaluation, some decreases on some other codes. Really, a lot of it comes down to code combination and selection. But we think at this point, Mike, it's around three and three quarters, 3.75, we think, is the percent reduction. And, Kerry, I may have missed this earlier. Forgive if I did or if I missed it in the press release. But have you commented on the EPS guidance from Q2? Have you affirmed that or in any way talked about that? I may have missed it earlier. Sorry.

37:50 Yeah, no, we did not mention it here. We have kept the guidance where it was at the end of the second quarter. Chris, you may want to add some color to that. Yeah, no, Mike, you know, I think, listen, I'm really, really happy with how the team's performed all year long. And volume has continued to be strong through October. And so, But I will tell you that it's been a tough year to predict exactly how we're going to go. You know where we started at the beginning of the year. I think we've outperformed, at least even compared to some of our early expectations.

38:36 But it's been another crazy year. And we typically don't update unless we feel like we're going to be meaningfully outside the range, one direction or another. So we think the best thing right now is for us, just given some of the uncertainties, is to stay put where we are with the range that we have, and we'll see how we do. And just on the really good color, the inflow versus outflow on clinicians, which was Terrific. Are you seeing any difference just in terms of sort of full-time versus PRN in terms of recruiting? I would suspect maybe PRN is tougher, but can you just speak to that?

39:23 Yeah, I don't know if PRN is tougher. I know full-time is tougher. And so in some cases, I'll make a few specific comments on the caller. Number one, were seeing and experiencing less involuntary terminations than we did, let's go back to 2019. And so translated, that means we might have somebody who's a little bit weaker, we feel highly confident we can replace that person, and we separate from somebody. So those are down. The interpretation that I would provide for that, and I'm interpreting, but, you know, we're probably hanging on to people a little bit longer than we might normally and otherwise, you know, more balanced labor market.

40:23 And, you know, we'll see if we can, you know, add up the right person later, you know, and then separate. So involuntary terminations are down. and although we're filling a good number of full-time positions, I know that even when we have full-time, if we can get a part-time person, we'll take a part-time person and continue looking. The other thing I will tell you, and our recruiting department is doing a fantastic job. We have some new people, newer people who I didn't know as well, and I'm really impressed with the call that I had with them earlier. Thank you for joining us.

41:35 So they're busy. They're really busy. And it is a tough market. But they're doing a really what I think is a really good job overall. And, you know, I don't mean to minimize it in any way because it's different than it was pre-pandemic for sure in terms of the difficulty. But I think the team's adjusted pretty well. And I think it shows up in our numbers. Just sort of on, I guess, semi-breaking news, the Biden administration put something out today essentially saying, hey, we want large companies and healthcare workers to be vaccinated within the next month or two. You feel like you guys have, well, first of all, would you, I am assuming you guys would fall under that, and then I guess secondly, if you do, I mean, do you feel like you have many therapists, clinicians that at this point aren't vaccinated?

42:35 Yes and yes. So, a little color. So, yes, I do feel like we will fall under that. I didn't see it specifically this morning, but, you know, I was aware that it's been coming I think it's going to be heavily... And look, my personal belief is I think we should all be vaccinated. I think it's science-based and I think it's smart. Having said that, I know we have a percentage of people who, push comes to shove, don't want to be vaccinated for one reason or another. And I'm not even going to go into the reasons. The reality is I don't think that changes anything for any of us.

43:20 because I think, and we'll see, as we're dealing with this on a state basis, in some cases we have a handful of states, and it's been mandatory for a while. And whether this is, be careful what I say, but what happens, the people who don't want to be vaccinated, many of them will lay down a religious exemption card. and say it's because of their personally held religious beliefs. And when that happens, at least to date, what we have to do, document that, go through it, and then there's usually a testing element that comes into play where they have to be tested on a certain frequency pattern.

44:07 And so we think that that's probably, again, I didn't see what came out this morning because I was preparing for this call. and whether there's any nuances from where we were before. But I think that's still going to be an exemption on the religious side. And I think it's going to be hard to work around. And therefore, I think the alternative is we're going to be testing these folks on a pretty regular basis and administratively having to keep up with that, which I don't look forward to. But I think that's going to be everybody's reality. Chris, do you know approximately what percentage of your clinicians aren't vaccinated? Like, is it a third? Do you have any sense of that? Yeah. Yes, but not on what I feel like is a completely or highly accurate basis. We have a learning management tool where we've asked people to upload first and second vaccinations, you know, and the rest.

45:07 and we know that the vast majority of people have done that. We also know there's a subset that don't want to do that and don't want that to be recorded as part of the record for the company, again, for whatever reason. And so we think the vaccination rate compared to the reported rate we know is higher. I think it's somewhere in the 20 to 30% range if you're asking me what I think. I think the unvaccinated rate actually for the non-licensed people is the highest.

45:53 And again, you know, I think clinicians with a science background are more inclined to do it for themselves in their own exposure as well as their patients. and then our non-licensed folks, maybe a little bit less so, but I would say in aggregate it's probably in the 30% range, still not vaccinated. Thanks, guys. Again, great progress. Thanks. Thank you. Thanks, Mike. I am showing that we have no further questions at this time. I'll turn the call back to management for any additional or closing remarks today. Okay, well, listen, thanks, everybody. Again, we appreciate your time. Carrie and I are available if you have follow-up questions.

46:40 I know with some of you, we've already got that scheduled. Thank you for your time and attention today, and we hope you have a great day. Stay safe, and thanks for your support. Bye now. This does conclude today's program. Thank you for your participation. You may disconnect at any time.