Gen Digital Inc.
Q4 2018 Earnings Call Transcript

Published: 18 Mar 2019

[Operator:]

Good day. My name is Shelby and I will be your conference operator today. At this time, I would like to welcome everyone to the Genesis Healthcare Fourth Quarter and Year End 2018 Conference Call. All lines have been placed on mute to prevent any background noise. [Operator Instructions] Thank you. Ms. Lori Mayer, you may begin your conference.

[Lori Mayer:]

Good morning and thank you for joining us today. We issued our earnings press release earlier this morning. This announcement is available on the Investor Relations section of our website at genesishcc.com. A replay of this call will also be available on our website for one year. Before we begin, I would like to quickly review a few housekeeping matters. First, any forward-looking statements made today are based on management’s current expectations, assumptions and beliefs about our business and the environment in which we operate. These statements are subject to risks and uncertainties that could cause our actual results to materially differ from those expressed or implied on today’s call. Listeners should not place undue reliance on forward-looking statements and are encouraged to review our SEC filings for a more complete discussion of factors that could impact our results. Except as required by federal securities law, Genesis Healthcare and its affiliates do not undertake to publicly update or revise any forward-looking statements or changes that arise as a result from new information, future events, and changing circumstances or for any other reason. In addition, any operation we mentioned today is operated by a separate independent operating subsidiary that has its own management, employees, and assets. References to the consolidated company and its assets and activities, as well as the use of the terms we, us, our and similar verbiage are not meant to imply that Genesis Healthcare has direct operating assets, employees or revenue or that any of the various operations are operated by the same entity. Our discussion today and the information in our earnings release and in our public filings include references to EBITDA and adjusted EBITDA, which are non-GAAP financial measures. We believe that the presentation of non-GAAP financial measures provides useful information to investors regarding our results because these financial measures are useful for trending, analyzing and benchmarking the performance and value of our business, but such non-GAAP financial measures should not be relied upon at the exclusion of GAAP financial measures. Please refer to the company's reasons for non-GAAP financial disclosures and its GAAP to non-GAAP reconciliations contained in today's earnings release. And with that, I'll turn the call over to George Hager, CEO of Genesis Healthcare.

[George Hager:]

Thank you, Lori. Good morning and thank you for joining us today. I would like to make a few brief comments regarding our performance for 2018. I would then turn the call over to Tom DiVittortio, Genesis's Chief Financial Officer for more details on our numbers and other updates. Over the past several years, the post-acute care industry has gone through revolutionary change with increased focus on value, cost efficiencies, outcomes, care coordination and patient centered care. These were monumental changes. And with each of these changes, Genesis had to redefine many aspects of our business. I am very pleased to report that Genesis has successfully reacted to the constantly changing post-acute landscape. I am most proud of how our frontline care givers and our supporting management team has reacted to these challenging times. Through their efforts, we achieved significant improvement in virtually every significant patient outcome metric. Including hospital readmissions and our five star ratings. Additionally, through a combination of well executed strategic portfolio of management transactions, significant restructuring of many of our landlord relationships, as well as improving business fundamentals we also achieved positive census and organic EBITDAR growth that we haven't seen in several years. I would like to highlight a number of important milestones we reached while we repositioned the company in 2018. In the second quarter of 2018 following our financial restructuring, we saw absolute year-over-year growth in adjusted EBITDAR less cash lease payments for the first time since the fourth quarter of 2015. In the third quarter of 2018 and in no way impacted by negotiated rent reductions adjusted EBITDAR on a same-store basis grew over the prior year quarter by 2.6%. We had not seen same store organic year-over-year growth at adjusted EBITDAR since 2015. And now in the fourth quarter of 2018, despite having 46 fewer facilities compared to the fourth quarter 2017, adjusted EBITDAR grew 40 basis points on an absolute basis and 6.5% on a same store basis. Last and perhaps most encouraging, we saw a 30 basis point increase in same store occupancy this quarter over the same quarter last year, marking the first period of year-over-year occupancy growth since 2014. I would also like to share that through last week, we are continuing to see improving year-over-year same store occupancy metrics. It appears we may have reached an inflection point and we expect to see marginally improving census levels throughout 2019. On the topic of portfolio optimization, I'd like to discuss the modifications we made to our portfolio in 2018 in a little more detail. Over the past year, we have been primarily focused on optimizing our portfolio with particular focus on exiting those markets where we do not have the local market density or meaningful acute-care payer relationships to compete. During the year, we divested, exited or closed the operations of 55 facilities and completely exited the state of Texas. These facilities generated annual net revenue of $488 million and adjusted EBITDA of about $11 million. These transactions reduced annual cash lease payments by approximately $21 million and reduced funded debt levels by a $100 million. At the same time, we were exiting non-strategic markets. We're also adding density to core markets. In November 2018, we acquired the operations of eight skilled facilities and one assisted living facility in New Mexico and Arizona. Our first significant acquisition in three years. These properties increased our already significant presence in New Mexico allowing us to take advantage of our scale and strong relationships in that state. In 2018, we also entered into a creative transaction that involved the re-tenanting of 12 facilities to a new landlord resulting in reduced leased escalators and most importantly fixed price purchase options to purchase the underlying real estate in the future. Already in 2019, we have entered into a partnership to buy back the real estate of 15 facilities historically leased from WELLTOWER. Through this transaction, we were able to acquire a 46% ownership interest in the real estate partnership and obtain a fixed-price purchase option to purchase the real estate at a 10% premium above the original acquisition cost. The new lease also has no rent escalators over the first five years. Today, we own the real estate of 11% of our facilities under our operation and another 6% are subject to fixed price purchase options in the future. A key long-term strategic objective for Genesis is to own more of our real estate, which will allow us to minimize the burden of lease escalators, reduce our overall cost of capital and participate in greater levels in the future value appreciation of the real estate. Looking ahead, we will be focused on additional transaction that allows us to participate in the ownership of real estate. In conclusion, 2018 was a pivotal year for Genesis. We made great strides in strengthening many aspects of our business. And I'm encouraged by what I see with respect to improving business fundamentals. In 2019, we will continue to execute on transactions that will return us to our original strategic model that emphasizes strong local market density and meaningful acute-care and payer relationships. Whether that is continued portfolio pruning or selective market acquisitions we are keenly focused on those transactions that will generate consistent and positive clinical, operating and financial outcomes. Finally, before I turn the call over to Tom, I would like to extend my gratitude and congratulations to our leadership team and the thousands of nurses, CNAs, therapists, physicians and advanced practice providers and the entire Genesis team across the country on an outstanding year. With that I'd like to turn the call over to Tom DiVittortio. Tom?

[Tom DiVittortio:]

Thanks George. Good morning, everyone. Today, I'll focus my comments on operating results and trends, provide an update on PDPM and discuss the new accounting lease standards that become effective for us January 1, 2019. So starting with the top-line. Revenue in 4Q, 2018 of $1.19 billion declined $141.9 million OR 10.7 % from 4Q, 2017. $28.4 million of this reported revenue decline is attributed to our January 1, 2018 adoption of topic 606 the new revenue recognition accounting standard. If the provisions of topic 606 were applied on a pro forma base to the prior year quarter ended December 31, 2017, the year-over-year reported revenue decline would have been $118.2 million or 9.1%. Of that's roughly $118 million decline in revenue, $100 million is attributed to the impact of divestitures net of acquisition and $27 million is attributed to lower revenue in our rehab services segment following the cancellation of low-margin therapy contracts. These revenue declines were offset by approximately $9 million or 85 basis points of top-line growth in our inpatient services segment. The first such growth since the first quarter of 2015. Adjusted EBITDAR of $144.1 million in 4Q, 2018 increased $600,000 or about 40 basis points from 4Q, 2017. Offsetting this year-over-year growth was $8.8 million of reduced EBITDAR from the impact of divestitures net of acquisitions implying same-store adjusted EBITDAR growth of $9.4 million or 6.5%. This compares to 2.6% of same-store adjusted EBITDAR growth reported in the third quarter. This growth was fueled by improved labor efficiency and a series of permanent cost reductions implemented this past July. In total, we executed on $50 million of annual cost reductions which will be fully realized on a run rate basis by the end of the second quarter 2019. Approximately $8 million of these reductions were realized in 4Q, 2018. Our ability to drive organic growth was also fueled by the improving occupancy trend which I'll touch on in greater detail shortly. With respect to earnings margins, our leaner cost structure, improved labor efficiency and successful divestiture strategy expanded adjusted EBITDAR margins in 4Q, 2018 to 12.2%. This compares to adjusted EBITDA margins of 10.8% in 4Q, 2017 and 11.5% in 4Q, 2016. 4Q, 2018 adjusted EBITDAR less total cash lease payments of $38.8 million exceeded fact set consensus estimates and increased $15.5 million or 67% from 4Q, 2017. In addition to the organic earnings drivers previously discussed, significant growth in this measure was further fueled by the rent reduction is realized in our 1Q, 2018 financial restructuring. On the topic of all -in nursing labor costs versus reimbursement rate growth. 4Q, 2018 wage inflation from non over time hours worked by our employed nursing staff grew 3.2% over 4Q, 2017. Including over time hours and agency costs, our all-in nursing wage cost per worked hour grew 3.5% in 4Q, 2018 over 4Q, 2017. I want to be clear that this rate of wage inflation is specific to our nursing function where today we see the greatest pressure on wages. The nursing function represents about 50% of our labor force. Wage inflation and the other half of our labor force is estimated just below 2%. So in the aggregate Genesis's wage inflation rate in 4Q, 2018 is estimated to be approximately 2.7%. This overall inflation rate compares to approximately 2.8% of same-store weighted average reimbursement rate growth we received from our payers over the same period. Another improving trend for us is that reimbursement rate growth is increasingly matching the rate of wage inflation. On the census, with respect to patient mix and occupancy, skilled days mix in 4Q, 2018 of 18.1% decline 60 basis points from the prior year quarter. Within the category of skilled days mix, Medicare mix declined 70 basis points from the prior year quarter, while the insurance category which largely consists of managed Medicare days grew by 10 basis points. During the fourth quarter of 2018, we experienced the 3% decline in skilled patient admissions as compared to the fourth quarter last year. The 3% skilled patient admission decline was driven by a 6.2% decline in Medicare admissions offset by a 50 basis point increase in managed Medicare admissions. This is the lowest rate of year-over-year decline in skilled patient admissions in seven consecutive quarters and this is the fifth consecutive quarter of improvement in this measure. The average length of stay of Medicare and Medicare Advantage skilled patients discharged to home remain relatively flat over all quarters in 2018. Operating occupancy in 4Q, 2018 of 85.6% increased 90 basis points from the prior year quarter. We estimate that about 30 basis points of this increase represents same store occupancy growth and the remainder represents the changing complexion of Genesis' go-forward occupancy levels as we have systematically been divesting underperforming properties having below average levels of occupancy. Our 4Q, 2018 operating occupancy of 85.6% is the highest occupancy level reported since the first quarter of 2016. As George mentioned, the fourth quarter of 2018 also marks the first time since 2014 that Genesis has reported year-over-year same store occupancy growth and this trend has continued and has gained some strength thus far in the first quarter of 2019. On this point I encourage you to review our Investor deck which can be found on EDGAR. In particular, I draw your attention to slide number 13 which illustrates our same store average daily census trend by month from January 2015 through February 2019. And on slide number 14 where we have updated this key performance indicator through March 11th, 2019. To summarize our operating trends, we remain very encouraged by the improving fundamental drivers of occupancy growth, flattening length of stay, a deceleration in the decline of skilled admissions and reimbursement rate growth that better approximates wage inflation. We believe the portfolio of assets under our operation today which is more concentrated in our core markets than any time since 2012 will continue to produce solid and consistent results, giving us confidence we are well-positioned to build on our momentum in 2019 and beyond. Moving on to PDPM. With respect to the patient driven payment model, we continue to make good progress in our evaluation, planning and readiness for an October 1, 2019 effective date. We're fortunate to have tremendous depth in our clinical, operations, finance, regulatory and systems infrastructure capable of taking on a fundamental change to the way we are paid under the Medicare Part A program. PDPM will however in no way impact the types of patients Genesis admits or the care that is provided to them. We're clinically appropriate. Some Medicare Part A patients may participate in group and/or concurrent therapy sessions similar to the treatment protocols for our Medicare Advantage and commercial insurance patients. Financially speaking, our work continues to study and estimate the impact of PDPM. At this time, we continue to believe PDPM will have little impact on the overall top-line of our skilled nursing facilities, but will result in some cost efficiencies around the provision of therapy services. We also believe that other changes resulting from PDPM will allow our frontline staff to focus more time on direct and indirect care activities and less time on paperwork. We currently estimate that PDPM will reduce the top line of our rehab segment between 10% to 12%. This revenue contraction is related to the expected use of more cost-effective methods of delivery such as group and concurrent therapy. And will come with a corresponding reduction in operating costs that will substantially mitigate the impact of lower revenues. Overall, we continue to see PDPM as a positive for patients and providers. The last topic I'll cover before we go to questions is the new lease accounting rules commonly referred to as ASC topic 842. We elected to adopt the new rules prospectively effective January 1, 2019 [Technical Difficulty] historical financial information will not be retroactively adjusted for periods prior to January 1, 2018. Instead, the cumulative effect of initially applying the new rules will be recognized as an adjustment to our opening shareholders equity to be reflected in our first quarter 201 9 financials. We currently estimate adoption will result in an increase in long-term assets of approximately $700 million, a decrease in long-term GAAP basis lease and financing liabilities of approximately $200 million and a resulting increase in shareholders equity of approximately $900 million. On the income statement, we expect our annual GAAP lease expense will increase approximately $265 million. Interest expense will decrease approximately $260 million and depreciation expense will decrease approximately $65 million. Resulting in a net increase to pretax income of approximately $60 million. We do not expect the adoption to materially change our adjusted EBITDAR. Adoption of 842 will have no impact on our financial covenants or the manner in which the company and its lenders and landlords view the economic performance of Genesis which focuses solely on cash basis rents regardless of accounting treatment. With that Shelby, please open the line for questions.

[Operator:]

[Operator Instructions] Your first question comes from Chad Vanacore of Stifel.

[ChadVanacore:]

Good morning, George and Tom. All right, so you had another positive quarter in terms of occupancy and I think I'm remembering right last quarter you were cautiously optimistic. But this quarter you seem incrementally more positive. So how should we think about occupancy trend in 2019?

[TomDiVittortio:]

Sorry, Chad. I - we had on you mute. Look, we expect -- look it's early in the year. We're encouraged by what we see. We've seen some strength in here in March, in the month of March, we continue to ride above the levels we were riding last year in terms of occupancy. Look, it's tough to say will that growth trajectory continue. I think we feel much better that we're seeing stabilization in occupancy that exceeds the levels that we were running at this time last year. So I think there's cautious optimism that we're not going to cross below that line any time in 2019. I think the question for us is will we see continued acceleration and growth or will we just continue to see the improvement that we’re excited to report this quarter.

[ChadVanacore:]

All right. And on the cost-saving side, you expect $50 million by the end of the first half. How much have you realized year-to-date beyond the $8 million that you said in the fourth quarter?

[TomDiVittortio:]

So in the third quarter we realized $4 million and then that moved up to $8 million by the time we got to 4Q and the run rate level is $12.5 million that will hit by the June quarter of this year.

[ChadVanacore:]

All right. Ad then just one more for me. When does the heavy lifting of adjustment ahead of PDPM begin for you?

[TomDiVittortio:]

I'd say the heavy lifting really will start in the next couple of weeks. We're developing all of our training and education material. There's a lot happening on the system's side to reconfigure systems. So at this point, it's been a relatively limited group of people that are focused on this day in and day out. Limited meaning over a hundred but as we get closer and closer to implementation date, obviously we've got to bring the field staff in and get our training protocols together. So and as the months wear on, Chad, the heavy lifting will mount as we approach October 1 and obviously it won't be over when October 1 passes. So I would imagine we'll have a number of months past October 1 that we're still working the learning curve of a very new system.

[ChadVanacore:]

[Indiscernible] to think maybe by mid-year you'll have all your training systems in place and you'll be rolling out whatever changes that you need to?

[TomDiVittortio:]

Yes. Well, I think we'll certainly have our training materials and protocols ready to go. You don't want to train too early because again it's all new and you want to time your training relative to implementation. So you can imagine leading up to October 1 those four weeks maybe six weeks prior is when you're at your most intense sort of phase of training.

[Operator:]

Your next question comes from Joanna Gajuk of Bank of America.

[JoannaGajuk:]

Good morning. Thank you so much for taking the question. Just so the follow-up first on the last topic. So which you said there will be an incremental cost associated with those preparations with the training and changing the protocols or not for 2019?

[TomDiVittortio:]

Joanna, I think that there'll be some frictional costs particularly leading up to the implementation. It's tough to put your arms around what that will be. We'll be very sure to call it out. So that you're aware of what that cost is. I don't think it's going to be all that material keeping in mind that Genesis has chosen to do virtually its entire implementation in-house. We're not relying on any outside third parties to help consult or implement. So that will help control the cost to some degree.

[JoannaGajuk:]

All right. It's helpful and then I guess as it relates to PDGM and your rehab therapy business. So the revenues declined down in Q4 and I guess you said that you need to cancel some of the low margin contracts there. And then going forward, I appreciate a comment about your estimated impact on the revenue reduction. So you are saying you already kind of preparing for the PDGM as you are looking at these contracts or you saying there could be some incremental reductions even before the kind of expected reduction in as I guess the PDGM rolls in October 1st.

[GeorgeHager:]

Joanna, I think the impact of revenue on our rehab segment in the fourth quarter is very different than our expectation of any impact of PDPM. As we looked at our portfolio of customers, we had some business that was very low margin even pretty effective negative gross margin. We also had some customers that we were increasingly concerned about from a credit and collection perspective. So we have been I'd say very vigilant in evaluating our customer base in GRS and I will say that GRS had a spectacular 2018 with significant organic growth in EBITDAR despite revenue contraction, as I said that's a function of selective pruning of our customer base where we saw inadequate margin and/or significant collection and/or credit risk. Looking forward under PDPM, we have been spending a significant amount of time with our third-party customer base as we look at implementing PDPM [without third party] [ph] rehab customers. We do expect and we know that our customers expect that we will look to optimize the use of lower-cost modalities where they are clinically appropriate. And with that you can expect that we will have some revenue contraction, or top line contraption in the therapy segment. We've estimated that in a range of 10% to 12% top-line impact, but unlike the skilled nursing business where the cost structure is substantially fixed. The cost structure in the rehab segment is entirely variable. And we do believe that we will mitigate virtually all of the top line hit with lower cost of a direct therapy cost, both in our own gyms and our third-party customers.

[JoannaGajuk:]

Thank you. That's really helpful. And if I could squeeze one last one in terms of your average weighted pricing slightly improving. So I guess Medicare rate update is obviously better fiscal 2019 versus fiscal 2018. So what it's going to be for Genesis because I guess for the industry is estimated to be at 2.4%. So is it in that range or something or lower? And if lower than why? And also I guess within that I guess what's the Medicaid rate outlook going forward? Thank you.

[TomDiVittortio:]

Joanna was your question what do we expect our Medicare rate increase to be October 1?

[JoannaGajuk:]

Right. Effective -- right because I think it varies by the company based on the mix and geographies and whatnot.

[TomDiVittortio:]

Yes. Little bit tough to project that. I mean right now we expect that there will be a normal market basket offered regardless of the PDPM implementation and given where wage inflation has been in the past year, we would hope that would be a very strong market basket that we get. We won't know until we see proposed and final rules. And as it relates to PDPM itself, looking at that in isolation we continue to believe that the effect on our Medicare rate will be negligible. Obviously, we continue to study that. We're seeing very good results in terms of Medicaid rate growth. Probably the strongest quarter that we've seen in quite some time. And that's been improving quarter after quarter. We're looking at somewhere in the neighborhood of a 3% growth that we experienced in 2018. I'm hopeful that we can match that in 2019. We've got a couple of positive developments in some states. But I would say there are still a number of states out there where we haven't seen their state budgets yet for July 1. So it's still a little bit tough to telegraph, but I think the good news for us is that as we've been monitoring reimbursement rate growth now and trying to match that up against inflation in our cost. We're increasingly seeing that gap close to the point where this quarter, our reimbursement rate growth actually exceeded our wage inflation for the first time in quite some time. So that's a good trend and we hope it continues.

[Operator:]

Your next question comes from A J Rice of Credit Suisse.

[AJRice:]

Hi, everybody. Couple quick questions here maybe. One is obviously second quarter of occupancy pickup. I'm just wondering if you could dissect a little bit. I know there are initiatives that you're pursuing that are probably helping that. I wondered about the underlying tone of the overall market or a competitive landscape. Can you sort of parse out where you think you see in the pickup and the strength and what a little bit more about what's driving it?

[GeorgeHager:]

AJ , look, I think it's obviously incremental. We're looking at census levels about a percent higher. It's really hard to identify any one item that is contributing to that census growth. I will say this I think we're continuing to see as no secret, the industry still is financially challenged. We've continued to see an acceleration of beds coming off line, closure of facilities related to some of the previously announced restructuring. So we continue to see bed supply in many of our markets decline. And that is obviously healthy, just a fundamental supply demand equation in the industry. Overall, so I will also say that this industry has been intensely focused on the short stay Medicare Part A and Medicare Advantage population for at least the last decade. And the industry has I think refocused its efforts in looking at developing programming that is focused on the long-term population. Those patients that have more chronic care needs especially in areas like dementia where you're looking at attracting a longer-term care patient. And the industry at least, Genesis, in particular has focused on attempting to increase total occupancy once again back to this notion of the cost structure, the nursing business being substantially fixed. The variable margin on that one patient increase filling that one additional bed is very, very significant since there's a nominal impact on your cost structure. So I think there's a renewed focus on attracting the chronic patient that will be a long-term care patient that reduces some of the burden and the overhang of that short stay patient with average length of stay of 20 days reduces the drag of significant bed turnover. And then I think also where we have specialized clinically whether it's power back, whether it's dialysis, whether it's ventilator services, other types of high end clinical capability. I think that also has marginally impacted our census levels. But so a lot of small things that are showing incrementally positive results on census.

[AJRice:]

Okay. Maybe you sort of piggybacking off of that I was going to ask you about the trend and your skill mix. There's an underlying dynamics for the marketplace but there's also as you mentioned today in several quarters now for a while the long-term care patient you're more actively marketing for those. I wonder if is that -- how is that impacting your skill mix trend and would you say the percentage of the residents that are -- patients that are coming in day one that have a long-term care diagnosis as opposed to starting out on a Medicare insurance and then converting into long-term care. Is that initial admitting of long-term patients? Is that percentage increasing meaningfully at this point?

[TomDiVittortio:]

AJ, this is Tom. I would say that we have been I would say more active in trying to target direct long-term care patients. And to George's point, all of these things are incremental and very tough to put your finger on how many average daily patients have you picked up as a result of that. But in our really very diverse census development strategy direct admins of long-term care is one of the prongs of that strategy. But I do think that maybe back to George's point, in the past when we were just I would say almost exclusively focused on the short stay patient population. There might have been times where we might have shied away from a particular admission because it was viewed that that patient might not be with us in a short stay capacity for very long in that bed would turn and we would often want to keep a bed open and not lock it up with a long-term care patient necessarily. So that we could keep that free for the next skilled admission. We've really changed the mindset there really focused on George's point of the fact that an empty bed obviously is doesn't generate any free cash flow at all. And over time I think we've been able to change the mindset such that when our census of development folks are looking at admissions, patients that they might not have been interested in three years ago, two years ago or patients that we are admitting today, they may stay with us with their Medicare benefit for a short period of time, but then quickly convert to a long-term care patient. And I think that strategy is starting to bear fruit in this occupancy growth picture that we're seeing.

[AJRice:]

Okay. And then maybe one last avenue of questions on the labor data that you provided. I'm not particularly surprised by the nursing comment that needs to be consistent with what we're hearing from others. I am a little surprised by the 50% of your labor that's non-skilled or non-skilled nursing that that's only growing 2% in a relatively full employment economy. It's pretty interesting. Do you have any further color or would you -- I'm a little surprised you're not seeing a little more wage pressure there. What do you think is going on?

[GeorgeHager:]

Well, look, we've seen wage pressure outside of the nursing function for some time. This time last year that was probably closer to 1% - 1.5% and we've seen it creep up closer to 2%. We just don't see quite the same challenge in most of our markets in filling non-nursing positions as we do in the nursing function. So I recognize that the job market is very hot. And we see it again particularly acute wage inflation among nursing and I would say it's been growing on the non-nursing front, but for us still at that 2% or below mark.

[AJRice:]

I know that non-nursing turnover rate is always pretty high but is it been relatively stable year-to-year or is it there any trend there that you would I like --

[TomDiVittortio:]

I would say that it's been relatively stable maybe a little bit of an increase over the last say 6 to 12 months as the labor market has shown some strength. But nothing where we've had challenges filling and shifts in the building. We do have those challenges in some markets with respect to nursing. Generally speaking, we have not had those challenges in the non-nursing positions. End of Q&A

[Operator:]

And there are no other questions in queue.

[George Hager:]

Thank you everyone for joining us today. Tom and Lori and I are obviously available throughout the day for any questions as you continue to look through our filing. And as Tom said our 10-K will be --being filed today as well which provide additional color around our 2018 results. Thank you again for your interest and your support of the company. We look forward to talking to you in a month or so after our first quarter numbers released. And as both Tom and I had said, we encouraged by what we're seeing going forward in 2019. Thank you.

[Operator:]

This concludes today's conference all. You may now disconnect.