Joanna Gajuk

Joanna Gajuk of BofA Securities followed up on the TEAM model, asking if the included procedures have a different average revenue per discharge, if there's an EBITDA headwind in 2026 guidance, and if acute hospitals taking more risk in future years would dramatically change dynamics. She also requested a breakdown of volume growth by diagnostic categories for the quarter.

Answer

EVP and CFO Doug Coltharp stated there's no significant margin stratification across patient categories, and net revenue per discharge for TEAM categories is generally in line with the average, with any potential impact reflected in 2026 guidance. EVP and COO Patrick Tuer added that most TEAM-impacted markets have minimal exposure. Regarding volume breakdown, President and CEO Mark Tarr reported broad-based growth, with brain injury up 8.7%, cardiac up 5.1%, neuro 4.5%, major trauma up 5%, and stroke up 3.8%, with brain injury being the largest mix mover.

Joanna Gajuk asked for clarification on the TEAM model, specifically if the included procedures have different average revenue per discharge, if there's an EBITDA headwind in the 2026 guidance, and expectations for acute hospitals taking more risk in future years. She also requested a breakdown of volume by categories (cardiology, neurology, orthopedic cases) for the quarter.

Answer

Doug Coltharp (EVP and CFO) stated there's no significant stratification of margin across patient categories, and while reimbursement is tied to acuity, comorbidities and longer lengths of stay balance the margin profile for TEAM-subject patients. Patrick Tuer (EVP and COO) confirmed no anticipated margin impact and that net revenue per discharge for TEAM categories is in line with the average, with any potential impact reflected in 2026 guidance. He noted that most TEAM-impacted markets have minimal discharges tied to the diagnoses. Doug Coltharp further explained that acute care hospitals might offset TEAM-related diversions by reducing length of stay for non-TEAM patients. Mark Tarr (President and CEO) provided Q4 discharge growth rates: brain injury up 8.7%, cardiac 5.1%, neuro 4.5%, major trauma 5%, and stroke 3.8%, with brain injury being the largest mover in patient mix.

Joanna Gajuk asked about the impact of Encompass Health's accelerated bed addition plan on future volume growth and its alignment with the company's 6% to 8% long-term growth algorithm for 2026.

Answer

CFO Doug Coltharp explained that the increased bed expansions validate the business model and strategy, reflecting strong de novo performance and unmet IRF service needs. President and CEO Mark Tarr added that bed additions to existing hospitals offer the highest return on invested capital and help increase private bed complements, supporting rising occupancy rates.

Joanna Gajuk asked about the impact of Encompass Health's accelerated bed addition plan on future volume growth and its alignment with the company's 6%-8% long-term growth algorithm for 2026 and beyond.

Answer

CFO Doug Coltharp explained that the increased bed expansions validate the business model and strategy, reflecting strong de novo performance and unmet market need. He noted that bed additions to existing hospitals offer the highest return on invested capital and are a response to rising occupancy. President and CEO Mark Tarr added that prioritizing private beds in expansions also contributes to overall occupancy.

Joanna Gajuk of Bank of America asked about the potential for acquisitions outside of inpatient rehab and the key drivers behind the strong same-store volume growth.

Answer

EVP & CFO Doug Coltharp stated there are no plans for acquisitions in adjacent service lines, as the focus remains on de novo projects which offer superior returns. He attributed the strong same-store volume growth to success in treating medically complex patients, with significant increases in neurological, stroke, and brain injury cases.

Joanna Gajuk from Bank of America sought more detail on the strong demand drivers, the competitive landscape for capacity expansion, and the comparative returns on bed additions versus de novo hospitals.

Answer

CEO Mark Tarr attributed the broad-based demand to aging demographics. CFO Douglas Coltharp highlighted the long-term supply-demand imbalance in the IRF market and noted high barriers to entry, including significant capital outlay, clinical expertise, and compliance needs, which favor scaled operators. He confirmed that bed expansions offer the highest return on capital by leveraging existing infrastructure and established market demand.

Joanna Gajuk asked for more color on maintenance CapEx projects and inquired about the drivers of the strong 2024 adjusted free cash flow, which resulted in guidance for a year-over-year decline in 2025.

Answer

CFO Douglas Coltharp explained that maintenance CapEx includes programmatic asset replacements like patient beds, wheelchairs, and drug dispensing systems to ensure quality. He attributed the strong 2024 free cash flow to better-than-expected EBITDA and favorable working capital, noting that some of the working capital benefit was a pull-forward from 2025 related to group medical claim liabilities.

Joanna Gajuk followed up on cemetery preneed sales, asking if single-digit growth should be assumed for next year in line with the 8-12% EPS growth target. She also inquired about growth opportunities with cremation consumers and the performance of the Rose Hills location.

Answer

Tom Ryan, Chairman and CEO, Service Corporation International, confirmed expectations for low to mid-single-digit growth in cemetery sales, including large sales. He identified cremation consumers as a significant growth opportunity, noting a lack of awareness but high interest once educated, and the potential for higher growth rates in this segment. He also praised Rose Hills' double-digit growth, attributing it to strong inventory, lead generation, and team efforts, expecting it to be a key growth driver.

Joanna Gajuk followed up on the robust cemetery preneed sales, asking about the expected single-digit growth for next year and the company's strategy for the cremation consumer market.

Answer

Tom Ryan, Chairman and CEO, Service Corporation International, confirmed expectations for low to mid-single-digit growth in cemetery sales, acknowledging volatility in large sales. He highlighted the significant opportunity with cremation consumers, particularly in cremation gardens and niches, noting consumer research indicating high interest once educated on available products. Joanna also inquired about sales trends at Rose Hills. Tom Ryan reported that Rose Hills is performing very well, achieving double-digit growth, and is expected to be a key driver of growth into 2026 and beyond due to strong inventory, people, and team.

Joanna Gajuk of Bank of America sought clarification on the low-to-mid single-digit growth outlook for preneed sales, asked for the specific value of large cemetery sales in Q2, and questioned how the increased cash flow guidance might alter capital deployment strategy.

Answer

Chairman, President & CEO Thomas Ryan clarified the growth guidance was for the second half of 2025 and revealed that Q2 large cemetery sales were a strong $52 million. Executive VP & CFO Eric Tanzberger stated the capital deployment strategy remains consistent, focusing on M&A, greenfield investments, and share repurchases. He also expressed confidence in meeting the full-year M&A investment target of $75-$125 million, citing a strong pipeline.

Joanna Gajuk inquired about the decline in cemetery preneed sales production, the performance of the Rose Hills location amid regional wildfires, and the potential impact of tariffs on merchandise costs.

Answer

CEO Thomas Ryan explained that the decline in cemetery sales was primarily due to timing issues with large sales, which are historically volatile, and expressed confidence in the pipeline, citing a strong April. He noted that sales at Rose Hills remain strong. CFO Eric Tanzberger addressed tariffs, stating that about two-thirds of merchandise is sourced domestically and long-term contracts should mitigate near-term impacts, making any effect immaterial to current guidance.

Joanna Gajuk of Bank of America sought color on January funeral volume trends, the potential impact of California wildfires on the Rose Hills location, and the rationale behind the Q4 restructuring charge.

Answer

Chairman and CEO Tom Ryan stated that January funeral volumes were down about 3%, in line with expectations against a tough comparison. He noted the California wildfires caused a temporary disruption at Rose Hills but expects sales to be deferred, not lost. Executive Eric Tanzberger explained the $11 million restructuring charge was primarily related to enhancing efficiency in corporate and back-office functions through technology, with expected cash savings in 2025.

Joanna Gajuk sought clarification that the flattish funeral volume forecast for 2025 is on an organic basis, asked for a comparison of current large preneed cemetery sales to pre-pandemic (2019) levels, questioned the sustainability of improved funeral margins, and inquired about the recent slowdown in the cremation rate shift.

Answer

Chairman and CEO Thomas Ryan confirmed the funeral volume forecast is for same-store organic volumes. He stated that large sales production is now running around $160M-$170M annually, a 60-70% increase from pre-COVID levels of about $100M. Regarding margins, he attributed recent improvements to the core business and SCI Direct, and anticipates the new insurance contract will be a much bigger positive factor in 2025, potentially lifting margins by 100-150 basis points. On the cremation rate, Ryan noted that while it ebbs and flows, he believes an annual shift of around 100 basis points is still possible.

Joanna Gajuk of Bank of America inquired about the sustainable margins for the Roto-Rooter segment, considering the pressure from increased marketing costs, and asked for a longer-term outlook. She also sought clarification on the top-line growth trajectory for Roto-Rooter and the basis for VITAS's assumption of no Florida Medicare cap liability in 2026, including the impact of short-stay patient mix and seasonality on VITAS's margins.

Answer

CFO Mike Witzeman projected Roto-Rooter's long-term EBITDA margin at 25% to 26%, expecting to absorb higher marketing costs through operational improvements. President and CEO Kevin McNamara explained that increased lead volume improves pricing discipline, reducing discounting and boosting margins. Mike Witzeman anticipated better growth and margin improvements in 2026, potentially reaching mid-single-digit top-line growth. For VITAS, Joel Wherley, President and CEO of VITAS Healthcare, clarified that the no-cap assumption for Florida in 2026 is based on the strategic shift to higher hospital-based admissions driving shorter lengths of stay, combined with new market openings. Mike Witzeman added that the average length of stay has normalized, and Kevin McNamara highlighted that the 2026 Medicare rate increase differential (30-40 basis points) is significantly more manageable than the prior year's $22-25 million headwind. Mike Witzeman attributed VITAS's sequential gross margin improvement to rate increases, efficiencies, and targeted cost-cutting, with SG&A down year-over-year. Kevin McNamara reiterated confidence in achieving the upper end of guidance.

Joanna Gajuk of Bank of America questioned the sustainable EBITDA margins for Roto-Rooter, given current marketing cost pressures, and whether mid-single-digit top-line growth is still achievable. She also sought clarification on the assumption of no Florida Medicare cap liability for VITAS in 2026 and the factors contributing to expected Q4 margin improvements.

Answer

CFO Mike Witzeman reiterated a long-term Roto-Rooter EBITDA margin target of 25%-26%, expecting to overcome marketing cost pressures through operational improvements. CEO Kevin McNamara explained that increased leads enable better pricing discipline, reducing discounting. Mike Witzeman projected Roto-Rooter's 2026 top-line growth in the 3-5% range. For VITAS, Joel Wherley and Kevin McNamara attributed the expected absence of 2026 Medicare cap liability to a strategic focus on hospital admissions (driving shorter stays), a more favorable rate increase delta (30-40 bps vs. 200 bps last year), and moderating long-stay patients. Mike Witzeman added that Q4 VITAS margin improvements stem from the rate increase, SG&A efficiencies, and targeted cost-cutting.

Joanna Gajuk questioned why the weakness in short-stay admissions in Florida occurred specifically in April and May, the potential impact of new Florida CONs on the cap situation, the persistence of Roto-Rooter's insurance costs, and any changes to capital deployment strategy.

Answer

EVP & CFO Michael Witzeman noted that while the cause for the April-May dip was unclear, June-July trends have returned to expectations. CEO Kevin McNamara added that new CONs, like Pinellas County, represent significant future opportunity but are not included in the current models for resolving the cap issue. Regarding Roto-Rooter, Witzeman clarified that the second-half guidance includes a conservative $4 million accrual for higher insurance costs. He also confirmed no change in capital deployment strategy, with both acquisitions and share buybacks remaining priorities.

Joanna Gajuk of Bank of America asked for details on Roto-Rooter's new marketing vendor and what strategies it could employ differently to increase call volume. She also requested specifics on the Q4 outlook for Roto-Rooter's revenue and margins following the guidance reduction, and inquired about the high-level growth and margin expectations for both VITAS and Roto-Rooter in 2025.

Answer

CFO Michael Witzeman and CEO Kevin McNamara addressed the marketing change, noting the new agency brings more resources and fresh ideas to navigate the complex, bidding-based online search environment. For Q4, Witzeman guided to a similar year-over-year revenue trend as Q3 for Roto-Rooter, but with margin improvement as one-time marketing transition costs will not repeat. For 2025, management is cautious on Roto-Rooter, expecting flattish revenue, while for VITAS, they anticipate high-single to low-double-digit census growth. VITAS CEO Nicholas Westfall added that the finalized Medicare rate update provides a ~3.9% tailwind for VITAS heading into 2025.

Joanna Gajuk asked about high-level tailwinds and headwinds for the upcoming year, beyond the Amedisys/LHC accretion. She also questioned BrightSpring's ability to sustain the fast growth seen in the pharmacy segment (20-25% this year) into next year, particularly in infusion.

Answer

CEO Jon Rousseau expects consistency, highlighting tailwinds such as accelerating infusion, strong hospice performance (with a Q4 rate increase), continued LDD launches and generic conversions, and improvements in home health (acquisitions, automation, new sales team, record admissions in September). He also noted the home and community pharmacy's biggest customer win quarter ever and ongoing investments in lean, efficiency, automation, and AI. Mr. Rousseau emphasized significant balance sheet improvement, with leverage declining from 3.64x to 3.31x, targeting 3.0x by year-end (and well below 3x pro forma for divestiture/acquisition), and increased operating cash flow expectations. CFO Jen Phipps expects specialty to maintain its growth pace and infusion to accelerate, providing a tailwind for next year.

Joanna Gajuk asked for high-level tailwinds and headwinds for BrightSpring heading into next year, beyond the Amedisys/LHC accretion. She also inquired about the sustainability of infusion growth and the ability to grow on top of the fast-growing pharmacy segment into next year.

Answer

CEO Jon Rousseau highlighted consistency across service lines, with infusion and hospice performing well, LDD launches and generic conversions as tailwinds, and home health showing strong admissions with new sales leadership. He emphasized heavy investments in lean, continuous improvement, efficiency, and AI, alongside significant balance sheet improvement (leverage down to 3.31x, targeting below 3x post-divestiture) and strong operating cash flow. CFO Jen Phipps added that while specialty's growth pace is stable, infusion's acceleration provides a tailwind for next year.

Joanna Gajuk of Bank of America questioned the sustainability of the high growth rate in the specialty pharmacy business. She also asked if a Medicare proposal to equalize drug payment rates in hospital outpatient settings could create an opportunity for BrightSpring.

Answer

CEO Jon Rousseau stated that the strong, broad-based growth in specialty pharmacy is the result of a long-term strategy and investments, and he sees no change to the growth trajectory given the large market and innovation pipeline. Regarding the Medicare proposal, Rousseau commented that it was uncertain if it would present an opportunity, as BrightSpring primarily operates outside the hospital setting.

Joanna Gajuk sought clarification on the drivers of the high gross profit per script, asking if it's expected to accelerate with future generic launches. She also asked for comment on reports naming BrightSpring as a buyer of assets divested from the Amedisys acquisition by United.

Answer

CEO Jon Rousseau explained that gross profit per script is a function of product mix, payer mix, and procurement, with favorable trends in product mix and internal sourcing. He noted the generic pipeline remains robust. CFO Jennifer Phipps added that significant growth in the specialty business also contributed to the mix. Regarding the Amedisys assets, Jon Rousseau stated he was bound by confidentiality but noted the situation was unique, fit their platform's strength, had no geographical overlap, and would not impact their transaction until the primary deal closes.

Joanna Gajuk requested clarification on the potential impact of the Inflation Reduction Act (IRA), asking why management views it as a potential downside risk when aspects like the Part D redesign could be a tailwind. She sought to understand the specific dynamics that make it a 'swing factor'.

Answer

Executive Jon Rousseau explained the dual nature of the IRA's impact. While lower patient out-of-pocket costs are a positive for utilization, the risk lies in the price negotiations for eight specific drugs in the Home and Community pharmacy business. He stated that while CMS guidance has been favorable toward a margin true-up, the final mechanism is still pending. Rousseau quantified the potential downside as a 'couple percent of EBITDA,' which he is confident the company's diversified model could absorb and grow through, but noted the industry is actively seeking a permanent fix.

Joanna Gajuk of Bank of America asked if lower patient costs under Medicare Part D were driving specialty drug utilization and could accelerate in 2025. She also questioned if the STELARA manufacturer's pricing strategy might set a precedent for future biosimilar launches.

Answer

CEO Jon Rousseau confirmed that lower Part D costs are a positive tailwind for volume and expects another increase in January. He characterized the STELARA situation as "idiosyncratic," likely influenced by its inclusion on the IRA list, and not a precedent for future biosimilars. He emphasized the overall attractiveness of the infusion market due to its deep pipeline and high barriers to entry.

Joanna Gajuk from Bank of America inquired about the On-site segment's 10% organic growth rate (excluding Pivot) and whether that represents a new sustainable level. She also asked for clarification on the long-term organic volume growth expectations for the core business.

Answer

CEO Keith Newton expressed bullishness on the On-site segment, stating that the introduction of an advanced primary care product is enabling them to win new business and should drive a core growth rate faster than historical levels. For the core business, President & CFO Matthew DiCanio reiterated the long-term algorithm of low-single-digit volume growth, while Newton added that an uptick in hiring rates would specifically benefit employer services growth.

Joanna Gajuk sought clarification on whether the updated guidance includes the Pivot acquisition, questioned the sustainability of the strong workers' compensation revenue per visit growth, and asked about the deceleration in organic workers' comp visits.

Answer

Executive Matthew DiCanio confirmed the revised guidance includes both the Physicians Health Center (PHC) and the pending Pivot acquisition. He stated that while the long-term average for workers' comp rate increases is 3%, it could remain higher in the near term if inflation persists. DiCanio clarified that the company was not signaling a concern with the 0.2% organic workers' comp visit growth but was providing transparency to separate core performance from the one-month impact of the Nova acquisition, noting the real highlight was the positive turn in employer services visits.

Joanna Gajuk of Bank of America requested a quantification of the Florida fee schedule's impact on 2025 guidance, asked if other states were similarly overdue for rate updates, and inquired if the Florida changes would spur more expansion in that state.

Answer

Executive Matthew DiCanio stated that while the Florida rate increase is included in the 2025 guidance, the company does not quantify impacts on a state-by-state basis. Executive William Newton added that Florida was the most significant overdue state, as most others have regular fee schedule reviews. He confirmed 'absolutely' that the rate update makes Florida a 'much more attractive state' for capital deployment, evidenced by recent de novo projects and active M&A evaluation.

Joanna Gajuk of Bank of America sought confirmation on the workers' comp rate outlook for next year, asked if industry exposure differs between business lines, and requested more details on the new advanced primary care offering.

Answer

Executive Matthew DiCanio affirmed the long-term workers' comp rate expectation of +/- 3% annually, likely higher next year due to the Florida increase. He noted the industry mix is highly diversified and similar for both workers' comp and employer services. Regarding the new service, DiCanio said the advanced primary care offering is in its early stages but is expected to be a significant growth contributor. Executive William Newton added that M&A is also an opportunity in this area.

Joanna Gajuk from Bank of America asked for details on the drivers behind the decline in total operating cost per visit, specifically seeking updates on labor management strategies, wage trends, and clinician turnover. She also requested an estimate of the impact from the proposed 2026 Medicare physician fee schedule increase.

Answer

President & COO Eric Williams attributed the cost control success to 2024 investments in recruiting systems, increased student rotations, a new applicant tracking system, and a strong focus on mentorship, which has led to the lowest turnover rates in seven years. CEO Christopher Reading and CFO Carey Hendrickson addressed the Medicare proposal, estimating a positive rate increase between 1% and 1.75% for 2026, which would be a welcome tailwind after years of cuts.

Joanna Gajuk inquired about the drivers behind the year-over-year decline in mature clinic revenue, specifically asking about the impact of weather and calendar effects on visit volumes. She also asked about the company's historical performance during economic downturns and the potential impact of a recession on staffing.

Answer

CEO Christopher Reading explained that severe weather in major, long-established markets like Nashville and Texas significantly impacted mature clinic volumes, but underlying demand remains high, as evidenced by a strong rebound in March. He noted that during the 2008-2009 downturn, the company had a playbook that allowed for continued growth despite a minor dip in same-store volume. CFO Carey Hendrickson confirmed that the weather impact was disproportionately felt at mature clinics. Reading added that predicting staffing in a future recession is difficult, though there was more labor availability in the last major downturn.

Joanna Gajuk asked about the company's rate assumptions for 2025, specifically for the non-Medicare book of business and the overall net rate. She also inquired about the cash flow performance and the outlook for 2025, as well as the M&A pipeline, particularly regarding capabilities in home therapy.

Answer

CFO Carey Hendrickson stated she expects the overall net rate to increase in 2025 versus 2024, projecting an underlying non-Medicare rate increase of around 2% or better. She also anticipates cash flow growth in 2025. CEO Christopher Reading added that for home care expansion, the company is evaluating both organic growth with existing partners and potential acquisitions to build out capabilities.

Joanna Gajuk sought confirmation that the full-year EBITDA guidance remains unchanged and includes the Metro acquisition. She also asked for details on Metro's operational metrics, key headwinds and tailwinds for the upcoming year, and the potential future mix of the workers' compensation business.

Answer

CFO Carey Hendrickson confirmed the 2024 EBITDA guidance of $80 million to $85 million is unchanged and already included the Metro deal. She noted Metro's clinics are larger with higher visit volumes but a similar net rate and adjusted EBITDA margin profile to USPH's existing PT business. Executive Christopher Reading identified the pending Medicare rate cut as a key headwind for next year, offset by tailwinds from a full-year contribution from Metro and continued success in commercial rate negotiations and growing the workers' comp business, which saw revenue increase nearly 19% YoY.

Joanna Gajuk questioned why adjusted free cash flow guidance was not raised alongside the higher EBITDA guidance and asked for quantification of additional costs incurred in the quarter to drive occupancy.

Answer

Interim CEO & Chairman Denise Warren explained that free cash flow guidance was held steady due to working capital variability, including accruals for severance and activist-related costs. Regarding costs, she clarified it was less about incremental spending and more about the timing of incentives; the expense was recognized in Q2, but the full economic benefit from the resulting late-quarter move-ins will be realized in Q3.

Joanna Gajuk from Bank of America sought to confirm if the EBITDA guidance raise was solely due to the Q1 beat, asked about the cautious macro commentary, and requested specific examples of actions taken by the 'SWAT teams' and their sustainability.

Answer

EVP & CFO Dawn Kussow confirmed the guidance raise was driven by Q1's outperformance but is balanced by caution around macroeconomic uncertainty, not current operational weakness, citing strong April occupancy. She explained the 'SWAT teams' succeed by removing barriers—such as accelerating CapEx or hiring—to get quicker results. Both she and EVP & General Counsel Chad White affirmed these actions are sustainable and learnings are being scaled across the portfolio.

Joanna Gajuk sought clarification on Q1 occupancy expectations given the severe flu season and asked for a breakdown of the drivers behind the ~$50 million year-over-year EBITDA growth guided for 2025. She also inquired about the expected run-rate for G&A costs following the disposition of 55 Ventas communities.

Answer

EVP & CFO Dawn Kussow highlighted strong January occupancy performance, noting a smaller sequential decline than in recent years. She explained the 2025 EBITDA growth is driven by favorable flow-through from RevPAR growth and solid expense management, with the NOI and rent impacts from the Ventas transition expected to be largely offsetting. President & CEO Lucinda Baier added that the company is always proactive in matching its G&A infrastructure to the size of the business.

Joanna Gajuk from Bank of America asked for an explanation of the implied sequential EBITDA decline in the Q4 guidance, even after adjusting for one-time items. She also sought clarity on the occupancy growth assumptions for Q4 and the potential trends for 2025.

Answer

Dawn Kussow, EVP & CFO, attributed the sequential pressure to normal expense variability, noting a 1% variance is about $5 million. She specifically highlighted higher-than-expected employee health and insurance costs. While not providing a specific figure, she stated Q4 occupancy is expected to increase sequentially and guided analysts to use the year-to-date RevPOR growth of 4.3% to model RevPAR. For 2025, she reiterated the goal of steady occupancy growth and improved adjusted EBITDA and free cash flow, deferring specific guidance.

Joanna Gajuk sought clarification on the 'One Big Beautiful Bill Act,' asking why only a portion of supplemental payments are at risk, and questioned if the Q4 volume growth outlook remains at mid-single digits.

Answer

CEO Christopher Hunter confirmed that the risk applies to states where supplemental payment program rates are above Medicare. CFO Heather Dixon affirmed that the higher-than-expected Tennessee benefit is due to rates moving closer to commercial levels. Dixon also confirmed that a mid-single-digit volume growth expectation for Q4 is still reasonable due to easier comps.

Joanna Gajuk from Bank of America sought the specific dollar amount expected from the Tennessee DPP program, asked about any out-of-period payments in 2024 for comparison, and requested an update on actions being taken to improve the underperforming facilities.

Answer

Executive Heather Dixon clarified that a specific dollar amount for the Tennessee program has not been disclosed, only that total net supplemental payments are guided to be flat to up $15 million for the year. She confirmed there was a $10 million out-of-period payment in 2024. Executive Christopher Hunter detailed the multi-faceted approach to improve facilities, including direct outreach to referral sources, talent reviews, and enhanced quality control.

Joanna Gajuk from Bank of America requested details on the margin profile of the newly acquired Helping Hands Home Care and the strategic rationale for expanding in Pennsylvania. She also asked about the potential long-term impact of reconciliation bill cuts on state budgets and personal care spending.

Answer

EVP & CFO Brian Poff estimated the acquisition's EBITDA margin profile would be around 13-14%. President & COO Bradley Bickham added that they like the Western Pennsylvania market and see future rate increase potential. Regarding budget pressures, Bickham noted the cuts are not effective until 2028 and expressed confidence that states would be reluctant to cut essential services for the elderly and disabled, which could ultimately increase their costs.

Joanna Gajuk of Bank of America sought clarity on the 2% same-store hour growth in Personal Care, questioning if underlying growth was stronger after accounting for early-quarter weather headwinds. She also inquired about the drivers behind the strong hospice census growth and its sustainability.

Answer

W. Bickham, President and COO, confirmed that weather events in January were offset by a rebound in February and March, and he expects Personal Care hours to grow in the 2% to 2.5% range going forward. For hospice, he attributed the success to strong ADC growth and leadership changes, projecting revenue growth at the higher end of the 5% to 7% range for the year.

Joanna Gajuk of Bank of America inquired about the financial impact of the Gentiva acquisition on average hourly rates, the drivers of organic volume growth in Personal Care, the strategy to accelerate that growth to 2%, and the potential effects of Medicaid work requirements.

Answer

CFO Brian Poff confirmed that Gentiva's lower-rate Texas operations would reduce the average hourly rate, partially offset by an Illinois rate increase. President and COO W. Bickham attributed recent volume softness to Medicaid redeterminations, which are now subsiding. He outlined a path to 2%+ hours growth through normalizing admission trends and deploying a new caregiver application. Bickham also stated that potential Medicaid work requirements pose no direct negative impact and could even increase caregiver supply.

Joanna Gajuk of Bank of America asked for details on the 0.6% organic personal care census growth, questioning the impact of factors beyond Medicaid redetermination and the company's confidence in reaccelerating to 2% growth. She also inquired about the drivers behind disappointing hospice admissions and the operational changes being made to improve census growth.

Answer

President and COO Brad Bickham clarified that the New York operations were already excluded from same-store figures and that the primary headwind was the Medicaid redetermination process slowing new client intake, which he expects to normalize by Q1 2025. Regarding hospice, Bickham noted recent leadership changes in sales and expressed optimism that new sales training will help the segment return to a mid-to-high single-digit admission growth rate.

Joanna Gajuk from Bank of America sought clarification on the portfolio optimization strategy, asking if 'partnerships with systems' could mean selling stakes to hospitals and whether the company would consider divesting surgical hospitals. She also asked for an update on achieving the 6% same-store revenue growth target for the year.

Answer

CEO Eric Evans confirmed that they are open to various partnership structures, including selling stakes to health systems, if such actions accelerate deleveraging and free cash flow growth. He also stated that the entire portfolio, including surgical hospitals, is under review. Evans reiterated confidence in achieving same-store revenue growth at the high end of the 4% to 6% range for the full year.

Joanna Gajuk from Bank of America asked for clarification on payer mix trends, current commercial rate negotiations, dynamics with Medicare Advantage payers, and any changes in claim denials.

Answer

CEO J. Evans confirmed there has been no adverse payer mix shift and that commercial payer negotiations remain constructive, with good rate visibility for the year. CFO David Doherty added that revenue cycle improvements have successfully mitigated denial pressures seen in prior quarters, leading to a two-day improvement in Days Sales Outstanding (DSO).

Joanna Gajuk asked for the revenue contribution of the recently divested assets and the rationale for the sales. She also sought clarification on the bottom-line EBITDA impact of the potential 1% revenue loss from site-neutral reforms.

Answer

CEO J. Evans explained that divestitures are part of ongoing portfolio optimization to exit markets where they are not the best owner and reinvest in higher-growth areas. CFO David Doherty clarified the revenue impact is included in guidance and represents less than a 2% headwind. Regarding site neutrality, Doherty reiterated the 1% revenue impact is not material and the bottom-line effect would be even more negligible after factoring in non-controlling interests and potential cost actions.

Joanna Gajuk of Bank of America asked for quantification of the hurricane's impact on Q3 and Q4 volumes and whether the year-to-date same-store case growth is a good proxy for 2025. She also questioned if headwinds from Medicaid redeterminations were affecting their business.

Answer

CFO David Doherty stated the hurricane impact was marginal and too small to quantify, though one facility was still on a partial schedule. He noted it's too early to provide 2025 guidance but highlighted that year-to-date same-facility growth exceeds their long-term algorithm. CEO J. Evans added that due to their minimal exposure to Medicaid and ER business, they have not felt the impact of redeterminations seen by peers.

Joanna Gajuk requested more details on the advanced practitioner model's progress, including patient types like oncology and Alzheimer's. She also asked about infusion suite utilization, margin impact, and preparations for potential tariffs on European drugs.

Answer

CEO John Rademacher noted the advanced practitioner model is expanding to serve oncology and neurology patients, though it's not yet a material part of the portfolio. CFO Mike Shapiro explained that mature infusion suites see over 20% nurse productivity uplift, creating capacity and value. He also stated that the company has proactive procurement strategies to manage potential tariff impacts, which are not expected to be material in 2025.

Joanna Gajuk sought clarification on the Stelara headwind, asking if the minimal $5 million impact in Q1 was expected. She also asked about tariff exposure from non-drug items like medical supplies and questioned the company's capital deployment strategy, balancing M&A with share buybacks amid market uncertainty.

Answer

CFO Michael Shapiro confirmed the muted Q1 Stelara impact was anticipated due to inventory timing. CEO John Rademacher sized the annual medical supply spend at roughly $100 million, with less than 10% sourced from China, viewing the risk as manageable. Shapiro affirmed they will continue to deploy capital via both M&A and buybacks, focusing on smaller, complementary acquisitions like Intramed while remaining judicious.

Joanna Gajuk of Bank of America sought to confirm that the recent guidance increase was primarily due to the Intramed acquisition. She also asked for details on the advanced practitioner model and inquired about contracting dynamics with Medicare Advantage plans, given the cost pressures they face.

Answer

CFO Michael Shapiro confirmed the guidance revision was 'for the most part' due to the Intramed deal. CEO John Rademacher elaborated on the advanced practitioner model, explaining that their 15 current sites allow for more complex clinical services, broader market access (especially for Medicare FFS), and deeper pharma partnerships. Regarding Medicare Advantage, he described relationships as constructive, positioning Option Care Health as a key partner in helping plans manage their medical loss ratios by providing high-quality, lower-cost care.

Joanna Gajuk asked if the company could still grow EBITDA in 2025 despite the STELARA headwind and whether the issue alters the company's long-term growth algorithm. She also requested an update on the infusion suite network.

Answer

CFO Michael Shapiro stated that 2025 guidance would be provided in February but affirmed the situation does not change their conviction in their medium-term growth targets of high single-digit revenue and low double-digit enterprise growth. CEO John Rademacher reported adding three infusion suites in the quarter and noted they continue to drive efficiency and are being used to experiment with new service models, such as for Alzheimer's therapies.

Joanna Gajuk requested specific assumptions underlying the Q2 guidance, particularly for Nurse and Allied volumes and bill rates. She also asked for the key drivers of the Q1 gross margin outperformance and the rationale for the stable to slightly improved Q2 gross margin outlook.

Answer

CFO and COO Brian Scott declined to provide specific segment metrics but indicated that the Q2 forecast assumes 'normal seasonality' for nursing, implying a low single-digit sequential volume decline, and stable bill rates. He attributed the Q1 gross margin beat to a combination of small items, including a favorable $1.5 million workers' compensation adjustment and better-than-expected VMS revenue. The Q2 guidance reflects the absence of this one-time item, with underlying margins remaining stable.

Joanna Gajuk from Bank of America questioned if more hospitals are raising bill rates to fill positions, sought confirmation on the Q1 EBITDA margin as a baseline for 2025, and asked about risks to the international business recovery timeline.

Answer

CEO Caroline Grace noted that while some systems adjust rates for critical needs, a significant uptick has not yet been observed. CFO and COO Brian Scott confirmed the Q1 guidance of ~8% adjusted EBITDA margin is a good starting point for the first half, with improvements expected later in the year. Regarding international business, they explained the outlook assumes modest visa date improvements, and any delay would primarily push the recovery into 2026 rather than significantly impact 2025.

Joanna Gajuk asked about demand trends compared to 2019, the gross margin outlook for the Nurse segment amid competition, and the potential for industry consolidation.

Answer

President and CEO Cary Grace noted that while Travel Nurse demand has increased, it remains about 35% below pre-COVID levels, whereas Allied and Locums demand are above 2019 levels. She expects Nurse gross margins to eventually improve as market overcapacity rationalizes and the international nurse business recovers in 2025. She also agreed that industry fragmentation and tech demands will likely drive consolidation, an area of interest for AMN.

Joanna Gajuk from Bank of America followed up on M&A, asking about the timeline for a potential transaction this year, and also requested an update on the expected timing for the New Mexico DPP program approval.

Answer

CEO Martin Bonick stated there is a mix of near-term and exploratory M&A conversations and reiterated his hope for a transaction within the calendar year. Regarding the New Mexico DPP, he expressed confidence in its approval, noting other states are seeing renewals, and is hopeful for a Q2 decision. CFO Alfred Lumsdaine added that state-level feedback indicates a normal approval process.

Joanna Gajuk sought to confirm that Q4 2024 volumes benefited from an easy comparison due to a prior-year cybersecurity event, and asked about Q1 trends and the potential impact of site-neutral payment reform.

Answer

Executives confirmed the easy Q4 volume comparison. CEO Marty Bonick and CFO Alfred Lumsdaine acknowledged a strong respiratory season is boosting Q1 2025 volumes but noted these are lower-acuity cases. On site-neutral reform, Marty Bonick estimated a potential impact of less than $10 million for Ardent, given its current smaller outpatient footprint.

Joanna Gajuk asked how much of the approximate 200 basis point improvement in the final 2026 rate notice could be expected to contribute to achieving the 2027 breakeven free cash flow target.

Answer

CEO Steven Sell described the final rate notice as a clear tailwind but cautioned that its full benefit depends on other factors. He cited disciplined growth and quality incentives as additional tailwinds, but noted the full implementation of V28 would be a headwind, along with uncertainty in macro utilization trends. He concluded that assuming all else is constant, the benefit would flow through, but that is a significant assumption.

Joanna Gajuk from BofA Securities asked about the future outlook for Medicare Advantage rates, questioning if they will continue to improve and whether there is any indication of further risk adjustment model changes from Washington D.C. She also asked how such changes might impact Alignment.

Answer

CEO John Kao emphasized that Alignment's business model was specifically built to thrive in any rate environment, whether increasing or decreasing. He explained that when rates are compressed, their focus on being a low-cost producer of high-quality products provides a competitive advantage. When rates rise, as expected in 2026, their relative advantages remain intact, creating opportunities for margin expansion.

Joanna Gajuk asked about the specific drivers of the earnings outperformance in the CenterWell segment and whether there were timing-related factors involved.

Answer

CFO Celeste Mellet attributed about one-third of the company's quarterly earnings beat to CenterWell, primarily from its PCO and pharmacy businesses. She explained that while some of the outperformance was due to the timing of admin expenses, a portion could be durable, driven by a favorable drug mix in specialty pharmacy and higher-than-expected patient growth.

Joanna Gajuk asked for commentary on the medical cost trend outlook for 2025 compared to 2024 and inquired about the assumptions for the MA rate notice that are embedded in the company's guidance.

Answer

CEO James Rechtin stated that Humana is forecasting a 'normalized' trend for 2025 following an elevated trend in 2024, with early data supporting this view. Regarding the MA rate notice, he commented that the retrospective component reflects recent industry trends, but the forward-looking component likely underestimates future trend. He noted they would not comment further ahead of the final notice.

Joanna Gajuk asked about medical utilization trends, noting that hospital companies are guiding for continued high volume growth, and questioned what utilization assumptions are baked into Humana's 2025 outlook.

Answer

CFO Susan Diamond responded that utilization has been tracking in line with the updated estimates from Q2. For 2025, she said the company has assumed a normal utilization trend on top of the higher 2024 baseline. She expressed confidence in these assumptions, noting the absence of major regulatory changes that created uncertainty for 2024.

Joanna Gajuk followed up on the strong Q1 results, asking for more detail on the drivers of the Hospital Segment's significant margin outperformance, beyond the disclosed prior-period Medicaid revenue.

Answer

Saumya Sutaria, Chairman and CEO, attributed the performance to a combination of factors, including successful expense management initiatives, a strong growth environment, and improved staff recruiting and retention, which allowed for volume growth without adding significant contract labor. Sun Park, EVP and CFO, added that strong acuity, favorable payer mix, and broad operating discipline across labor, supplies, and other operating expenses were key contributors.

Joanna Gajuk questioned the USPI same-store revenue growth guidance of 3-6%, asking if this seemingly normalized range was conservative after a strong 2024 and requested a volume versus pricing breakdown.

Answer

Dr. Saum Sutaria, Chairman and CEO, explained that the 4-6% range is their long-term target, and recent years have been exceptionally strong. The 2025 guidance represents a return to this historical average. He noted that the mix of volume and acuity can be lumpy year-to-year, and the plan is to continue shifting towards higher-acuity procedures.

Joanna Gajuk inquired about acquisition multiples in the ASC market and whether there is increased competition. She also asked if the reduction in hospital revenue guidance was solely due to the Alabama divestiture or if it included any hurricane impact.

Answer

Chairman and CEO Dr. Saum Sutaria responded that Tenet focuses on post-synergy multiples and has not seen any notable changes in ASC purchasing multiples. EVP and CFO Sun Park confirmed that the Q4 hospital revenue guidance reduction was "primarily driven by the divested hospitals" and does not include any material impact from hurricanes.

Inquired about commercial rate negotiations, whether states are changing their behavior on psych rates due to federal uncertainty, and confirmed that new DPP programs are not included in the guidance.

Answer

Commercial rate negotiations are tracking as expected, and while payers are aggressive, the company is managing the process effectively. States are not yet changing their rate-setting behavior based on potential future federal changes. The company confirmed that potential new DPP revenue from Tennessee and D.C. is not included in its guidance or results.

Asked for the 2025 acute care revenue growth assumptions, observations on wage inflation trends, and further details on the forecasted decline in DPP payments.

Answer

Acute revenue growth is projected at 5-6%, split evenly between volume and price. The wage environment is seen as stable, with moderation in inflation. The year-over-year decline in DPP is primarily driven by approximately $60-80 million in non-recurring prior-period payments that were recognized in 2024.

Joanna Gajuk asked for the 2025 growth assumptions for the acute care segment, specifically the split between volume and pricing. She also inquired if UHS is observing the wage growth acceleration seen in recent national data.

Answer

Executive Steve Filton outlined an expected 5-6% revenue growth for the acute division, split evenly between 2.5-3% volume growth and 2.5-3% pricing growth. Regarding wages, Filton and Marc Miller stated they have seen moderation and a stable environment, not the incremental pressure suggested by some national surveys, partly due to a reduced dependence on higher-cost temporary labor.

Joanna Gajuk of Bank of America inquired about the 2025 growth assumptions for the acute care segment, whether UHS is experiencing the wage inflation seen in national data, and for more detail on the forecasted decline in DPP payments.

Answer

Executive Steve Filton projected mid-single-digit acute revenue growth for 2025, split between volume and pricing. He and Marc Miller noted that UHS is not seeing significant wage pressure and that the labor environment has stabilized. Filton clarified the 2025 DPP decline is mainly due to roughly $60-$80 million in non-recurring prior-period payments recognized in 2024.

Sought clarification on the 2025 outlook for the psych business, market trends impacting psych volumes like Mental Health Parity, and confirmation that the 2024 guidance is unchanged.

Answer

The executive indicated that while not formal guidance, the expected trajectory for behavioral is mid-to-upper single-digit revenue growth, skewed to pricing (4-5%) over volume (3-3.5%). Volume recovery has been slow but is improving as challenges like labor scarcity and Medicaid disenrollments dissipate. The new parity rules are helpful but not expected to be a landscape-changer. Finally, they confirmed the 2024 guidance is unchanged.

Joanna Gajuk from BofA Securities sought clarification on the 2025 outlook for the behavioral business, the impact of mental health parity rules, and confirmation of the 2024 guidance.

Answer

Steve Filton indicated that while not formal guidance, the behavioral business is expected to see mid-to-upper single-digit revenue growth, skewed towards 4-5% pricing and 3-3.5% volume. He believes strengthened mental health parity rules are helpful for appeals but unlikely to create a landscape change in volumes. He also confirmed there is no change to the revised 2024 guidance.

Joanna Gajuk sought clarification on the $80 million year-over-year increase in state supplemental payments, asking if it was expected and how it impacts the full-year outlook for this item, particularly regarding the status of the Tennessee program.

Answer

CFO Mike Marks explained the Q1 increase was driven by a reconciliation payment and a new program accrual in a specific state. He updated the full-year 2025 guidance for these payments to a range of a $50 million year-over-year improvement to a $200 million decline. He clarified that this wide range is largely dependent on whether the Tennessee program, for which no benefit was recorded in Q1, receives CMS approval.

Joanna Gajuk asked about the professional fees line within Other OpEx, inquiring about the drivers of continued pressure, particularly from radiologists, and how this is factored into 2025 guidance.

Answer

CFO Mike Marks stated that professional fees are about 24% of other operating expenses. He expects cost pressures to moderate further in 2025 but remain above normal inflation. While radiology saw pressure in 2024 and will continue to in 2025, it is a smaller portion of hospital-based physician subsidies and is not expected to be a material impact.

Joanna Gajuk of Bank of America requested a more detailed breakdown of volume growth by payer for the quarter, specifically asking about exchange, Medicaid, and commercial volumes.

Answer

CFO Mike Marks provided a detailed breakdown of Q3 same-facility equivalent admission growth: Medicare was up 5%, Medicaid was down 8.5%, managed care (excluding exchanges) grew just under 4%, exchange volumes surged 43%, and uninsured volumes increased 7.2%, for a total growth of 4.5%.

Joanna Gajuk asked about performance in the Medicare Advantage book, questioning if medical cost trend expectations had changed from the previously guided 2.7% for the year.

Answer

CFO Mark Keim responded that the Medicare business is performing as anticipated and the company remains confident in its full-year 89% MCR guidance. He confirmed that key factors like utilization and Part D costs are tracking in line with the original 2.7% trend assumption.

Joanna Gajuk followed up on the Medicaid rate outlook, asking for any updates on the important July rate renewals and when the company expects to have clarity on those updates.

Answer

Felicia Norwood, President of Government Health Benefits, confirmed that the January and April rate renewals were in line with expectations. She stated that while early discussions for the July renewals—which represent about one-third of the membership—are underway, it is too soon to comment on the outcome. She assured that the team is working closely with state partners to ensure go-forward rates align with current cost trends.

Joanna Gajuk from Bank of America noted that the company's long-term target slide no longer appears to show a 6.5%-7% operating margin goal by 2027. She asked if this interpretation was correct and, if so, what the new timeline and drivers for achieving that margin target are.

Answer

CFO Mark Kaye confirmed the observation, clarifying that while the commitment to long-term EPS growth of at least 12% is unchanged, the margin timeline has evolved. This is due to the faster-than-projected growth of the Carelon business, which is positive for earnings but temporarily shifts the consolidated margin profile as new contracts mature. He stated the underlying earnings power remains strong and more details will be provided at the next Investor Day.

Joanna Gajuk of Bank of America sought to confirm if the outlook for stable Medicaid margins in 2025 implies that the rate-to-acuity mismatch will be fully resolved by the end of that year.

Answer

CFO Mark Kaye did not confirm a full resolution by year-end 2025. Instead, he characterized 2025 as a 'first half, second half story,' where the rate versus acuity mismatch in Medicaid is expected to narrow as the year progresses and as state rates continue to improve. He noted it's too early to provide more specific guidance.

Joanna Gajuk of Bank of America asked if inpatient rehab (IRF) start-up costs were the primary reason for the forecasted decline in 2025 consolidated margins, questioned the outlook for LTAC margins given reimbursement changes, and sought details on the growth drivers for the outpatient rehab segment.

Answer

Executive Martin Jackson confirmed that IRF start-up losses are the primary driver for the 2025 consolidated margin outlook. He expects LTAC margins to be 'relatively stable' as the company effectively manages through the high-cost outlier threshold changes. For the outpatient division, Jackson attributed the positive outlook to improved commercial contract rates, which have increased net revenue per visit, and enhanced clinical productivity from new technology rollouts.

Joanna Gajuk from Bank of America inquired about the 2025 treatment volume forecast, seeking a specific range and clarification on the 2024 comparison. She also questioned the wide guidance range ($0-$50M) for the operating income contribution from oral phosphate binders.

Answer

CFO Joel Ackerman explained that DaVita is not providing a range for 2025 volume growth, instead focusing on the flat midpoint. He clarified that 2024 growth was 0.47%, and the 2025 forecast is lower due to headwinds from fewer treatment days and lost peritoneal dialysis admissions. CEO Javier Rodriguez attributed the wide oral drug OI range to uncertainties in drug mix, patient volume, and adherence, noting the midpoint is most likely.

Joanna Gajuk asked for a framework to model 2025 volume growth, details on the home dialysis mix and the impact from the Baxter supply disruption, and clarification on the magnitude of 'elevated' revenue per treatment (RPT) growth expected for 2025.

Answer

CFO Joel Ackerman outlined a 2025 volume model starting with a 50 basis point base, which would then be subject to mortality trends. CEO Javier Rodriguez clarified the home mix is 15.5% total (13% PD, 2% HHD) and expressed confidence in retaining patients despite the temporary PD supply issue. Ackerman confirmed that while 2025 RPT growth will be elevated relative to historical norms, it is expected to be lower than the 3.5% to 4% range guided for 2024.

Joanna Gajuk of Bank of America asked about the margins in the Medicare Advantage business, specifically how 2024 margins compared to targets and whether margins are expected to improve year-over-year in 2025.

Answer

Executive Timothy Noel stated that the company remains consistent in its long-term view of targeted margins for Medicare Advantage. He explained that their pricing approach for 2025 was consistent with prior years, which allows them to focus on providing benefit stability for members rather than needing to engage in significant pricing 'catch-up' to restore margins.

Joanna Gajuk of Bank of America inquired about the margins in the Medicare Advantage business for 2024 relative to targets and whether margins are expected to improve in 2025.

Answer

Executive Timothy Noel stated that the company's approach to targeted margins in Medicare Advantage remains consistent. He indicated that for 2025, their planning does not require significant pricing 'catch-up,' allowing a focus on providing stability for members, implying their strategy aligns with achieving long-term target margins.

Joanna Gajuk asked about the sequential revenue decline in OptumHealth, questioning if it was due to portfolio streamlining, the degree to which margins benefited from investment income, and the margin outlook for next year.

Answer

John Rex, President and CFO, confirmed that the sequential revenue decline in OptumHealth was primarily due to ongoing refinements of the business portfolio and legacy contracts as the company continues to focus its strategy.

Joanna Gajuk of Bank of America Merrill Lynch asked for a breakdown of the 5% home health volume growth target between Medicare fee-for-service and other payers, and inquired about the necessary net growth in clinical staff to achieve these volumes.

Answer

EVP, CFO & Acting COO Scott Ginn stated that the 5% is a total admit growth target and that they are conservatively assuming only slight growth in Medicare fee-for-service, given recent utilization trends. He confirmed that staffing will need to grow, with a focus on specific markets like the Northeast. The strategy involves targeted hiring, reducing turnover, and maximizing clinician efficiency through optimization initiatives to support the volume growth.

Joanna Gajuk sought clarification on the mechanics of the new case rate contracts, asking if rates start at a discount and improve with bonuses, and requested details on the timeline for margin expansion.

Answer

President and CEO Chris Gerard clarified that the contracts begin at a slight discount to historical per-visit rates. The significant margin expansion, to a target of 40-42%, is achieved by optimizing care delivery and reducing visits per admission, a process expected to take six months to a year. This optimization, rather than back-end bonuses, is the primary driver of improved profitability.

Joanna Gajuk of Bank of America Merrill Lynch asked for metrics on net new clinical hires and current hiring trends. She also questioned the risk of a behavioral adjustment cut in the upcoming home health rule, similar to what was proposed for the SNF industry.

Answer

CEO Chris Gerard reported that Q1 hiring met 98% of its target, and coupled with lower turnover, this helped build clinical capacity. Chief Legal & Government Affairs Officer David Kemmerly addressed the regulatory question, distinguishing home health from SNF by noting home health already received a behavioral cut in 2020. He cited independent MedPAC and Dobson | DaVanzo studies showing a decline in 2020 home health spending, which weakens the case for further cuts.