DaVita Inc

NYSE:DVA

Earnings Call Transcript 2023-Q1

[Operator]

Good evening. My name is Michelle, and I will be your conference facilitator today. At this time, I would like to welcome everyone to the DaVita First Quarter 2023 Earnings Call. Today's conference is being recorded. If you have any objections you may disconnect at this time. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question and answer period. [Operator Instructions].

Thank you, Mr. Eliason, you may begin your conference.

[Nic Eliason, Group Vice President, Investor Relations]

Thank you, and welcome to our first quarter conference call. We appreciate your continued interest in our company. I'm Nic Eliason, Group Vice President of Investor Relations and joining me today are Javier Rodriguez, our CEO and Joel Ackerman, our CFO.

Please note that during this call, we may make forward looking statements within the meaning of the federal securities laws. All of these statements are subject to known and unknown risks and uncertainties that could cause the actual results to differ materially from those described in the forward looking statements.

For further details concerning these risks and uncertainties, please refer to our first quarter earnings press release and our SEC filings, including our most recent Annual Quarter on Form 10-K, all subsequent quarterly reports on Form 10-Q and other subsequent filings that we make with the SEC.

Our forward looking statements are based on information currently available to us. And we do not intend and undertake no duty to update these statements except as may be required by law. Additionally, we'd like to remind you that during this call, we will discuss some non-GAAP financial measures. A reconciliation of these non-GAAP measures to the most comparable GAAP financial measures is included in our earnings press release furnished to the SEC and available on our website.

I will now turn the call over to Javier Rodriguez.

[Javier J. Rodriguez, Chief Executive Officer]

Thank you, Nic, and thank you all for joining the call today. 2023 is off to a strong start for DaVita. We entered the year with a cautious balance of optimism about our ability to execute against our plan and uncertainty about treatment volume in a challenging labor market.

In the first quarter, we performed well on our key metrics and our results benefited from an improving macro environment. While some external uncertainties remain, the continuation of current trends would put us on a path to deliver strong results for the full-year.

Before I get into the details about the quarter, I would like to elaborate on an area of our long-term strategy, which is to connect transitions of care through solutions for our patients across each step in the kidney care continuum. That leads me to our clinical highlight around CKD education.

Periodically, we have provided updates on our community education program called Kidney Smart, raising awareness through education in the kidney care community is critical, particularly given the fact that 1 in 7 American adults have chronic kidney disease and the majority of these people are not aware.

Our Kidney Smart program is designed to help those patients understand and manage their kidney health and is frequently recommended by nephrologist as a go to resource for patient education. To help remove the barriers to health equity, we've offered these classes in 10 different languages. In 2022, over 33,000 CKD patients attended the Kidney Smart class a best ever for the 12 year history of the program. Moreover, in 2022, DaVita patients who attended Kidney Smart classes were more than twice as likely to choose a home modality in consultation with our nephrologist and care team.

Transitioning to our financial performance, in the first quarter, we delivered adjusted operating income of $352 million and adjusted earnings per share of $1.58. As we discussed in prior quarters, we implemented a number of initiatives in the second half of 2022 to respond to the pressures associated with lower volumes and higher costs. These plans combined with a strong operating rigor translated into positive results in the quarter, and we're now seeing some of the operating metrics that impacted margin in 2022 begin to normalize.

I'll start with the biggest driver of Q1 outperformance, labor. We made good progress on labor costs in the quarter, which reflected a combination of operating diligence and improvement in the overall labor environment. As we have said in the past, successful labor management requires effectively managing the interplay between wage growth, contract labor and training costs. Our operators continue to improve on the permanent staffing levels within our clinic, which has enabled us to drive further reduction in contract labor costs during Q1.

We're tracking ahead of plan in our efforts to cut our full year contract labor expense in half relative to last year. The increase in permanent teammates combined with elevated turnover resulted in training cost in the quarter above historical norms, although below the peak we saw last summer. This is in line with our expectation, and we anticipate improvement in our training productivity in the back half of the year. This will largely depend on successful teammate retention which has historically tracked closely with the health of the broader labor market.

Moving on to treatment volume. Quarter-over-quarter treatments per day were up approximately 1% and better than the middle of our expected range. This was driven by net census gains due to both higher admit and lower mortality. Because of the annualization of excess mortality from 2022, we still anticipate a reduction in overall treatment volume on a year-over-year basis and we continue to assume excess mortality over the balance of this year. That said, we're encouraged by our first quarter volume results. What we saw in Q1 proves to be a trend, we would expect to finish the year in the top half of our volume forecast range of down 3% to flat relative to 2022.

Transitioning to a couple of strategic topics. On April 1st, DaVita and Medtronic announced the launch of Mozarc Medical, a new independent device company focused exclusively on innovative kidney health technologies. Mozarc current products and its R&D pipeline ranging from kidney access technologies to advanced home dialysis and acute therapies are intended to improve the overall patient experience and increase access to home based care. This investment reaffirms our commitment to realizing scale transformation in kidney care and allow us to fuel innovation in partnership with Medtronic, a global leader in healthcare technology.

And finally note on integrated kidney care or IKC, We continue to make progress consistent with our business plan and demonstrate that our model of care is improving the health and well-being of our patients.

I will highlight two examples of this. First, across our IKC program, more than half of our patients achieve an optimal start, which means the patient initiates dialysis treatment at home or appropriate vascular access in place. Optimal starts reduce costly and difficult hospitalizations and on average lead to a reduction in the continuing cost of care in the month and year that follow. Second, recent data continues to show an encouraging differentiation in hospitalization rates from patients in our IKC program versus our overall patient population. As we continue to scale our IKC business, which is measured by the total dollars of medical spend in our program, we will continue to focus on driving our net saving rate while pursuing a cost efficient model of care.

In summary, looking across our most important operating metrics, we're seeing progress at a faster rate than assumed in our initial forecast. Therefore, we are revising our adjusted operating income range of $1.4 billion to $1.6 billion to a range of $1.475 billion to $1.625 billion and revising our adjusted earnings per share range of $5.45 to $6.95 to a range of $6.20 to $7.30.

Aside from the COVID disruption in the labor market, other important factors for the remaining of the year include continued progress against our cost saving initiatives which Joe will elaborate on and of course our continued effort to restore patient benefit protection to our advocacy efforts.

I will now turn it over to Joe to discuss our financial performance and outlook in more detail.

[Joel Ackerman, Chief Financial Officer]

Thanks, Javier. I'll start with some additional commentary on first quarter results and then I'll add detail on our expectations for the remainder of the year. As Javier said, Q1 adjusted operating income was $352 million adjusted EPS was $1.58 and free cash flow was $265 million. Overall, the results were at the high end of the range of our expectations for the quarter, driven roughly equally by three things; first, strong operating performance in the U.S. dialysis business; second, timing of certain items in our IKC results, and third, some normal positive variability in a couple of cost items that we are not forecasting to recur in the rest of the year. With that, let me provide some additional detail.

First, U.S. dialysis treatments per day were up almost 1% in Q1 compared to Q4. As Javier mentioned, this was due to higher patient census. Mistreatment rates remained elevated compared to pre-COVID levels and were consistent with our expectations. Revenue per treatment was down $0.16 quarter-over-quarter, driven by normal seasonal impact of high patient responsibility offset by annual increases in Medicare fee for services rates that begin in January, growth of MA and seasonal increases in acute treatment.

On a non-GAAP basis, patient care cost per treatment decreased by $1.18 sequentially. The biggest drivers of the change were pharmaceutical cost savings from anemia management transition to Mircera, reductions in our contract labor spend and positive variability in health benefits and insurance costs. These were offset by higher compensation costs and two fewer treatment days in the quarter. On a non-GAAP basis, G&A expenses were down $24 million quarter-over-quarter largely due to normal variability in our G&A spend.

IKC's adjusted OI for the quarter was approximately the same as Q4 and better than expected. The quarterly IKC results benefited from revenue that was forecasted to hit later in the year and the deferral of certain expense items that we expect will be recognized in Q3 and Q4. Excluding these items, IKC results were in line with our expectations.

International adjusted operating income was up $12 million relative to Q4, driven roughly equally by foreign exchange and acquisition related expenses in Brazil during Q4. Looking at our capital structure, we ended the quarter with a leverage range of approximately 3.9 times EBITDA. We did not buy back any shares during the quarter as our focus continues to be to get back to our target leverage ratio of 3 to 3.5 times EBITDA. In the last week of April, we closed on a successful $2.75 billion refinancing of our revolving credit facility and term loan A despite a challenging capital markets environment.

Looking forward, we still expect interest expense of $100 million to $110 million per quarter for the rest of the year. The April first launch of Mozarc Medical, our partnership with Medtronic will result in approximately $20 million of pre-tax losses below the OI line in Q2. This is less than previously shared due to timing shift of certain stand up costs.

In the back half of the year, we still anticipate $15 million of negative impact on other income per quarter and as we shared previously, we expect Mozarc's OI to trend towards breakeven in approximately the next three years.

Regarding the savings initiatives we've talked about in the past, we're on-track to realize year-over-year savings within the range of $125 million to $175 million consistent with prior expectations. This is primarily driven by a reduction in pharmaceutical cost and our ongoing facility consolidation. During Q1, we initiated our conversion to Mircera, which will continue to roll out over the remainder of the year.

Additionally, in Q1, we consolidated 20 centers and currently anticipate consolidating another 40 to 50 centers over the remainder of the year. We continue to achieve high patient and teammate retention rates related to these shifts as the majority of patients at consolidated centers have transitioned to nearby DaVita facilities.

That concludes my prepared remarks for today. Operator, please open the call for Q&A.

[Operator]

Thank you, sir. [Operator Instructions]. Justin Lake with Wolfe Research. You may go ahead, sir.

[Justin Lake, Wolfe Research]

Thanks. Appreciate all the color. Joel, maybe you could talk a little bit about what you're seeing. You talked about higher turnover and lower temp labor costs. What's going on with turnover there? What are you expecting for the rest of the year? And how are labor cost tracking versus kind of the headwind that you had laid out for us? And then maybe given the upside in the quarter, what are you projecting for the rest of the year relative to Q1? And if you do hit these numbers, when do you think you get back to kind of your target leverage ratio and therefore the potential of buyback shares? Thanks.

[Javier J. Rodriguez, Chief Executive Officer]

Okay. Well, there's a lot in there. So let me just pull up for a second and then Joel can answer some of your follow-up questions. Justin, this is Javier. First, on labor, we started to give a little more color when we had more volatility in some of the underlying metrics, but I think it's a good time right now to pull up as you ask, which is a bigger number, but just so we're clear on all of the metrics.

When you talk about SWBs, you take into account wages, productivity, benefits, training and contract labor. Within wages, there's obviously you can double click on that. You've got over time shift differential and other things. But let's stay with those five.

In the third quarter of 2022, we had a spike in training and contract labor that we called out because they were outliers to our historical numbers. But then as we fast forward to today, we worry that people aren't fast enough with the math to calculate the interplay between the five. So let me see if I get to your number and if not, you can follow-up a question.

So from 2018 to 2022, we had a CAGR of roughly 2% in SWBs. In 2022, which course had that outlier that we were just talking about, that number went to roughly 8% growth. And in 2023 over 2022, we expect that number that incorporates all those variables to be more in the 4% to 5% growth. So does that answer the question on labor or do you want to ask a follow-up on that?

[Justin Lake, Wolfe Research]

Yeah. Just mostly on labor, what I'm trying to figure out is versus that 4% to 5%, if you continue at this pace, where do you think you end up?

[Joel Ackerman, Chief Financial Officer]

I'd say, Justin, we're thinking we're about $25 million ahead of where we thought we would be on the total labor cost. So if you think of our guide increase at the middle of the range of $50 million I'd say half of that is labor and half of that is volume. And that's how I get to $25 million.

[Justin Lake, Wolfe Research]

And is that just for the first quarter, Joel? And I'm kind of trying to think about like if this continues, does that mean you're 100 better?

[Joel Ackerman, Chief Financial Officer]

Well, in the labor line itself, there were some items that we don't think will recur. They were good guys in lines like benefits in workers' comp that I'd strip out as you think about annualizing things. So the $25 million would be a full-year number. In terms of where we need to go from here, we're expecting continued wage pressure as the year presses on. There will be a little bit of improvement in contract labor, but we've seen most of the improvement in contract labor that we're likely to see because it just happened faster than we thought. And on the productivity side, we haven't seen much. We're off the peak that we saw in the middle of last year, but we're still well above pre-COVID levels. And what we're currently building in is some progress in the back half of the year, but ending the year still above pre-COVID levels. And that's really driven largely by the turnover that we're seeing.

[Justin Lake, Wolfe Research]

That's helpful. I'll take the rest of my questions offline, Joel. Thanks.

[Operator]

Thank you. Our next caller is Kevin Fischbeck with Bank of America. You may go ahead, sir.

[Unidentified Analyst]

Hi. This is actually [Nimea Gutierrez] (ph) on for Kevin. Thanks for taking the question. I have just another quick question on labor. You said you expect continued wage pressure in the year? What are you assuming for wage inflation this year? And how does it compare to last year and pre-COVID levels? Thanks.

[Javier J. Rodriguez, Chief Executive Officer]

Yes. I think it was really answered a little bit with Justin. So let me make sure we're asking the same thing. So we just basically said that if you take all of the variables into account that we think that SWBs will be 4% to 5% higher, 2023 over 2022. Does that answer your question?

[Unidentified Analyst]

Yes. Thank you. And that's all. Thank you.

[Operator]

Thank you. Our next caller is Andrew Mok with UBS. You may go ahead, sir. Hi.

[Unidentified Analyst]

This is Thomas on for [Andrew] (ph). Thanks for taking the question. Could you walk us through the underlying drivers of the treatment growth beat in the quarter as well as provide an update on how mistreatment rates are tracking sequentially? Thanks.

[Javier J. Rodriguez, Chief Executive Officer]

Thanks. Sure. Thanks for the question. So I like to use the treatment per day number and you'll see that that number is up about 90 bps quarter-over-quarter. That is largely driven by census increases and that's the result of admissions increases in Q1 offset by continued excess mortality, which is way down relative to prior years, but remains higher than it was pre-COVID.

In terms of mistreatment rates, it continues to trend well above the pre-COVID number. It can move around from one quarter to the next. There's a lot of seasonality and other impacts in it, but we are still seeing it running roughly 100 basis points higher than what we saw pre-COVID.

[Unidentified Analyst]

Got it. That's helpful. And a quick follow-up. I wanted to ask about the ESA switch to Mircera, specifically, are there any KPIs you can share to track the transition and do you have any update on the cadence of the rollout? Thanks.

[Javier J. Rodriguez, Chief Executive Officer]

We do not have any disclosures on it. All I can tell you is that the rollout is going as well as we expected and that from a clinical perspective, we are seeing the results that we wanted. So it's going as planned.

[Unidentified Analyst]

Great. Thanks again.

[Javier J. Rodriguez, Chief Executive Officer]

Thank you.

[Operator]

Thank you. [Operator Instructions]. Our next caller is Pito Chickering from Deutsche Bank. You may go ahead.

[Pito Chickering, Deutsche Bank]

Good afternoon guys. So a follow-up here on Justin's question, on the $50 million operating income raise, you said half of the labor and half of better volumes. You added almost 60% new lives into IKC. I guess any changes on how that is tracking versus your previous guidance And then on the guidance raise, can you walk us through what $50 million of operating income is transitioning in $100 million of free cash flow? Is that just working capital or anything else in there?

[Javier J. Rodriguez, Chief Executive Officer]

Let me take the first part of that and Joel can take the second part of that. On IKC, as you can imagine, it is a growing business and while we're making really good progress, it is clearly in the investment phase of the business. And so there is no change what we see the full year, we had a bit of timing in there. So the number looks a little better on a quarter-to-date than it will on an annualized basis, we're still on target to what we've said.

[Joel Ackerman, Chief Financial Officer]

Yes, Pito, on the free cash flow as you pointed out, obviously, an increase in OI helps that. The other two things are one cash taxes are trending better than we expected. And the second is working capital. You see the DSOs were down considerably. So, we think we'll get a bit of a tailwind to that as well for the year.

[Pito Chickering, Deutsche Bank]

Okay. And then just on IKC for a second, realizing that when you add on 50%, almost 60% new lives, that's going to be sort of a drag as you guys think about those coming online. But any sort of color and sort of how the medical trust trends are tracking for your people that you had come into the year. I mean, we've seen spikes of utilization in other areas of healthcare, just curious kind of how that class of 2022 was tracking during the first quarter?

[Joel Ackerman, Chief Financial Officer]

Yes, as you said, we agree. It's a little hard to say because we have so much noise and volatility because of COVID. And so there's not a lot to report what we're seeing is that the savings are coming in line to where we expect the model of care is a little less efficient than we want. We need to build more scale and we need to standardize a whole bunch of these things that right now are manual. So we're still work in progress. We're going a lot of things that we want to be and we're still expecting to be breakeven in 2026.

[Pito Chickering, Deutsche Bank]

Okay. And then so one last question here which won't shock you looking at the net growth sort of flat year-over-year definitely a lot better, sort of trending than we've seen sort of in the last several quarters, specs we're talking about sort of similar normalization of utilization. I guess any color you can give us on how many patients you guys added this quarter? How did that sort of track versus say 2022 versus pre-COVID? And then any more color you can give us on where mortality is tracking on current patient base today?

[Joel Ackerman, Chief Financial Officer]

Yes. So let me walk you through some numbers, Pito, here. So the net census growth in Q1 was about 1,350 patients. If you compare that to what it was in Q1 of 2022 that was negative almost 500 patients. So an almost 2,000 patients swing, most of that is explained by the change in excess mortality although some of it is also the result of a better admit quarter this quarter than we saw last year. So on both the mortality side and the admit side, we saw progress.

[Pito Chickering, Deutsche Bank]

So on the admin side, I guess, can you give us a color of sort of the 1Q 2023 new ads and how that was, say 1Q 2019 just some comparison on a pre-COVID?

[Joel Ackerman, Chief Financial Officer]

If you were to look at this excluding excess mortality, I don't have the numbers in front of me, but I can tell you it was definitely higher this quarter than it was Q1 of 2019. That said, I would be cautious before we start extrapolating this out. This is one quarter of data, this metric historically has been variable quarter-to-quarter and I'd want to wait to see what happens for a few more months before we're ready to really declare a trend here.

[Pito Chickering, Deutsche Bank]

So just a last question on that one. So sorry to sort of keep going there, but you're looking at the U.S. RDS data, we go back for many years, the incidence rate of end stage renal disease has been fairly consistent for, I mean, nearly a decade. Are all signs you're seeing that we are returning to normalization of incidents rates and it's just too soon to lead to call it at this point?

[Javier J. Rodriguez, Chief Executive Officer]

It's a little too early to call it. We've been studying and evaluating all different data sources and we're not ready to draw any conclusions. But there's a lot of movement upstream on the CKD population in particular with COVID. And so we will look because as you know there's some things that are making progression slower. On the other hand, there's things that are expanding life expectancy. And so our math is not leading to any conclusion at this point.

[Pito Chickering, Deutsche Bank]

And then last piece here, I promise I will stop here at least for now is on mortality, I guess, any color on sort of where the normal mortality was in excess mortality and sort of how we should think about both of those continuing in the back half of the year? And I'll stop there.

[Javier J. Rodriguez, Chief Executive Officer]

Yes. So excess mortality was about 900 patients in the quarter. We have brought down slightly our expectations of excess mortality for the balance of the year but we're still looking at a number somewhere between 2,500 and 3000 patients. In terms of what's built into the middle of our guidance range.

[Pito Chickering, Deutsche Bank]

Great. I'll stop there.

[Javier J. Rodriguez, Chief Executive Officer]

Thank you.

[Operator]

Thank you. Our next caller is Gary Taylor with Cowen. You may go ahead, sir.

[Gary Taylor, Cowen]

Hi, good evening. I think just two quick numbers, once for me, Joel, you had mentioned or at least in the release, some favorable items in G&A, including advocacy refund. Just wondering if you could size that for us? And then on IKC, I know there's a ton of moving parts there, but I'm just trying to sort of foot how the revenue was down $4 million sequentially from 4Q, but you said you had better than -- or some early revenue there and some delayed expense. So just trying to sort of foot down, but still including some early revenue recognition?

[Joel Ackerman, Chief Financial Officer]

Sure. So, $6 million is the ballot number you're looking for. In terms of IKC, we saw about $20 million roughly half in the revenue line, half in the expense line that we were expecting, we were just expecting it later in the year. In terms of the timing of the revenue, we generally view IKC revenue to be back half of the year loaded.

As you think about the claims lags filling up or maturing and then ultimately the calculations on shared savings being done, that usually happens in the back half of the year and that's when we'll recognize the shared savings dollars. That's why you see the decline from Q4 with still call it a positive timing surprise.

[Gary Taylor, Cowen]

Got it. Perfect. Thank you.

[Javier J. Rodriguez, Chief Executive Officer]

Thank you, Gary.

[Operator]

Thank you. Our next caller is Pito Chickering with Deutsche Bank. You may go ahead, sir.

[Pito Chickering, Deutsche Bank]

Alright, sorry, guys. I just had a couple of things I wanted to come back to you on. So ready for treatment sort of flattish sequentially primarily due to sort of seasonal copays. Just curious -- two questions, I guess, what are you seeing from managed care on cost limiting updates? And then how should we think about revenue per treatment sort of going for the rest of the year?

[Javier J. Rodriguez, Chief Executive Officer]

Yes. Thanks, Pito. A couple of things. We're not seeing anything to report on from the managed care negotiations and just to refresh you, we've talked about our contractor multi-year in any given year, we negotiated roughly about 20% or so of our portfolio and we're not seeing anything different in this year.

What we've talked about in Q4 last year is that we said we would get a revenue per treatment increase year-over-year from 2% to 2.5%, 2023 over 2022.

[Pito Chickering, Deutsche Bank]

Okay, great. And then, so on efficiencies from closing centers. You had sort of closed 20 this quarter. You talked about consolidating another 40 to 50 centers. I guess how much sort of savings do you think you're going to realize in 2023 from those center consolidations just solely on that line? And how much of that then should trend through for 2024?

[Javier J. Rodriguez, Chief Executive Officer]

Yes. So we haven't quantified the number. We've always said it will be part of the $125 million to $175 million but not the biggest piece. The biggest piece of that is Mircera. We'll get -- so that'll be in 2023. There'll still be some amount that will rollover into 2024, but we'll get most of it in 2023.

[Pito Chickering, Deutsche Bank]

Okay. And then sort of last one here for me. What – I may have missed it, but what was the contract labor dollars this quarter? What are you seeing for the rest of the year? And then any color on what you're hiring was and net hiring was in the first quarter?

[Javier J. Rodriguez, Chief Executive Officer]

Yes. So I think what we said was that in the year, last year, remember contract labor was running around hundred million and we said for the year this year, we'd be half of that and now today we move that -- we are moving better -- at a better pace. So that number will be more like $35 million. But again, I would point you to the beginning of the conversation where we said the most important part is the interplay between all the variability of all those metrics because, of course, training productivity wages, benefits and contract labor are all intertwined, but that's the number.

[Pito Chickering, Deutsche Bank]

And I guess the second part is just can you quantify for us the number of hires you had in quarter and what the net hires was after turnover? And how that should trend throughout the year? Because you mentioned about lower trading costs as this batch sort of comes online just how you’re thinking - quantify the first.

[Javier J. Rodriguez, Chief Executive Officer]

Yes. So here's the way I'd think about the training cost. They peaked last year as a result really of two things, higher turnover combined with the need for us to net add staff and those combined to a high training level. As we sit here today, the turnover remains elevated. It's gotten better on with some class of late birth than others. But it still remains elevated. So we're expecting continued high training levels until that comes down. We're modeling the back half of the year but we are much closer or at fully staffed. So some of the training associated with getting the staffing levels back up is now done and that will mitigate some of the training costs relative to the peak we saw in Q3 last year.

[Pito Chickering, Deutsche Bank]

So, when you talk about sort of the 4% to 5% increase in SMB, I guess, how much of that is sort of more of a one -- it comes from the training costs that are embedded within the guidance that should roll off as you think about 2024?

[Javier J. Rodriguez, Chief Executive Officer]

Not a lot. The change in contract labor is a much bigger tailwind relative to 2022 in the training productivity. And that's -- it's partly because we're not going to see the training productivity improve till the back half of the year. It's also partly because in the beginning of 2022, training productivity was still low. So we saw the spike in Q3, but that was only one quarter.

[Pito Chickering, Deutsche Bank]

Okay, great. Thanks so much, guys. I appreciate it.

[Javier J. Rodriguez, Chief Executive Officer]

Thank you, Pito.

[Operator]

And at this time, I am showing no further questions.

[Javier J. Rodriguez, Chief Executive Officer]

Thank you, Michelle, and thank you all for the questions. As I hope you've heard today, we have some positive momentum to start the year that the results of Q1 proved to be sustainable trend. We're excited about the implications for our patients, our teammates, and our financial performance in 2023 and beyond. Thank you all for joining the call and be well.

[Operator]

Thank you. This concludes today's conference call. You may go ahead and disconnect at this time.