U.S. Physical Therapy (NYSE:USPH) Q1 2021 Earnings Call

0:00 Good day and thank you for standing by. Welcome to the U.S. Physical Therapy Q1 2021 Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during the session, you will need to press star 1 on your telephone. Please be advised that the day's conference is being recorded. If you require any further assistance, please press star 0. I would now like to hand the conference over to your speaker today, Chris Redding, Chief Financial Officer. Please go ahead. Thanks, Shalon. Good morning and welcome, everyone, to our first quarter 2021 earnings call. With me in the office or on the call today include Carrie Hendrickson, our CFO, Graham Reeve and Glenn McDowell, our COOs, Rick Binstein, our General Counsel, and John Bates, our Vice President and Controller.

0:52 As we typically do, Carrie and I have some prepared remarks ahead of taking your questions. John, will you start by covering our brief disclosure? Thanks, Chris. This presentation contains forward-looking statements which involve certain risks and uncertainties. And these forward-looking statements are based on the company's current views and assumptions and the company's actual results can vary materially from those anticipated. Please see the company's filings with the Securities and Exchange Commission for more information. Thanks, John. Okay, this morning I'm going to have Kerry cover the meat of the release, but I do want to start out with some overall color on the quarter. along with some important key aspects of how we are doing and how we look at the year ahead at this point. First of all, I can't say enough about the fight in our team.

1:38 They fought through last year with the unknowns of COVID, keeping patients and each other safe as we worked our way through a difficult time, driving volume back through their great care and great work while creating a safe, clean, and upbeat environment for the care of our patients. Those efforts resulted in a meaningful recovery by year's end, not quite the pre-COVID levels, but within spitting distance certainly. As we entered the new year in January, volume, as it often does in January, was slower, although throughout the month we continued to gain steam. By the end of January, we finished the month at 26.1 visits per clinic per day. February started strong and was progressing nicely when we got hit with that Southern Storm that had us idle in Texas and most of Tennessee for a full week. And that was a very big impact for us, but our team bounced back strong. We finished the month with a nice volume pickup.

2:36 And in spite of that setback, which had a major impact on visits, we finished February at 25.6 visits per clinic. March and since has been on a tear. Really strong volumes of new patients and visits, producing a record month for us. March for operating earnings, revenue, visits per clinic per day, where we finished at 29.3, which is an all-time high for us. But I'm betting that record doesn't last long. Our team continues to do a great job, and our facilities and our patient volumes remain strong, in spite of the world not being fully upside right yet. Very solid volumes for the quarter coupled with continued excellent expense control produced some really nice results as well. Total combined salaries in both parts of our business were only 56.8% of net revenues in this first quarter. It's been a pretty long time under normal circumstances when we have been that low. That combined with the volume drove our gross profit for the quarter 33.4%.

3:45 Our overall gross margin was 23.1% for the quarter, up 590 basis points compared to Q1 2020. Gross margin for PT clinics, excluding closure cost, was 22.9%, 560 basis point improvement. The gross margin for our injury prevention business, which has performed so very well throughout the entirety of this time, came in at 27.2%. up over 1,000 basis points as compared to 16.8% in Q1 a year ago. A few other highlights for the quarter before I review updated guidance. Our team has been successful in renegotiating a good number of our lease contracts, and they have been working on that for some time with good fruit coming to bear. Additionally, our pair contracting team has secured a number of positive pricing adjustments with We believe more good things to come in this area.

4:45 A combination of those efforts will certainly help us for the remainder of this year and for years to come. As a result of a number of positive factors, management is raising guidance for the year as follows. The guidance is increasing from a previously stated range of 240 to 252 to a range of 268 to 278 for operating results per share for 2021. The increase to our guidance is primarily attributable to three items. First, our performance in the first quarter was better than expected when we initially provided our guidance. Our patient volumes and revenues increased significantly as the quarter progressed, with March finishing as the strongest month in the company's history from a volume, revenue, and operating income standpoint. The volume continues to be very strong, along with terrific cost control.

5:41 We added a five clinic physical therapy practice at the end of the first quarter that we expect to add three to four cents to our operating results per share in the final three quarters of the year. And finally, the 2% sequestration relief on Medicare payments that was scheduled to end at the end of March 2021 has been extended through December 31st. which we expect to add $2 million to revenue and which equates to approximately 10 cents per share on that basis. As per our usual practice, this updated guidance range does not include any additional acquisitions that we expect to make in 2021. On that topic, speaking of acquisitions, the partnerships that we've acquired recently as well as previously have done incredibly well through this difficult period.

6:34 We've been supremely blessed with incredibly bright, talented, hardworking, dedicated individuals of extremely high character. We continue to attract similarly committed individuals whom we expect will join our company as our current deal flow progresses. We have a clean balance sheet, and in spite of some materially large outlays in this quarter, the carry will cover. Our cash flow this quarter was excellent, and our borrowings and our credit facility unchanged. We have a lot of dry powder at the moment, but with our activity thus far, we expect to get a lot of good things done as we move through the year. In closing, I just want to thank our team again for the yeoman's work they've done this past year since COVID-19 came to our front door.

7:23 They've been exemplary in all respects. and they know with the hearts and resolve that we have within our group that we will continue to fight forward through the remainder of the year. Thank you for your time and attention this morning as well as your support and belief in our team throughout this past year. It means a lot to all of us. With that, I will turn things over to Kerry to cover our results in a little bit more granular detail. Great. Thank you, Chris, and good morning, everyone. Today we reported first quarter 2021 operating results per share of 64 cents, which was 34 cents higher than the 30 cents per share that we reported in the first quarter of 2020. As Chris noted, our February volumes bounced back quickly after the significant weather-related event we had in February, primarily in our two largest states of Texas and Tennessee, and our operations team finished the first quarter very strong, producing record high results in the of average visits per clinic per day, which were at 29.3, physical therapy revenue, which is at $40.3 million, total revenue, which was $43.9 million, and operating income at $8.6 million.

8:35 Our adjusted EBITDA was $15.6 million for the first quarter of 2021, which was up $7.6 million from our adjusted EBITDA of $8 million in the first quarter of 2020. Revenues in the first quarter of 2020 were $112.4 million, which was down only slightly from the first quarter of 2020, even though we had one less business day in the first quarter of 2021 than we had in the first quarter of 2020. And we also had 24 fewer clinics open on average in the first quarter of 2021 due to the sales and closures of clinics that we completed at the onset of this pandemic in early 2020. Our physical therapy patient volumes per day per clinic were 27.1 in the first quarter of 2021, which was higher than both the first quarter of 2020, which was 26.2, and the first quarter of 2019, which was 26.9.

9:26 That's particularly remarkable given the weather event in February where we basically lost a full week of visits in our two largest states. A month in the first quarter of 2021 visits per clinic per day was 26.1 in January, 25.6 in February, which was impacted by the weather-related event, and then it increased to 29.3 in March of 2021. Our net rate for our physical therapy operations was $104.72 in the first quarter of 2021, which was up 1.6% from $103.11 in the first quarter of 2020. The first quarter of 2021 rate was 0.9% less than the full-year 2020 rate of 105.66, reflecting the Medicare rate reduction of approximately 3.5% that went into effect in January of 2021.

10:16 Our physical therapy revenues were $102.4 million in the first quarter of 2021, which is a decline of only 0.5% as compared to the first quarter of 2020. This slight decline, again, was the result of having one less business day in the first quarter of 2021 than in the first quarter of 2020, and also having 24 fewer clinics open on average in the first quarter of 2021, as I noted earlier. On a same-day basis, our physical therapy revenue was up approximately 1%. Revenues for the industrial injury prevention business were $10 million in the first quarter of 2021, a 1.3% increase over the first quarter of 2020 revenues of $9.9 million. As Chris noted, our team continues to do a great job managing our costs.

11:01 Our operating costs, excluding closure costs, declined to $86.4 million in the first quarter of 2020, from $93.3 million in the first quarter of 2020, which was a decrease of 7.3%. Our costs were 76.9% of net revenues in the first quarter of 2021 compared to 82.8% in the first quarter of 20. Our gross profit increased $6.5 million in the first quarter of 2021 when compared to the first quarter of 2020. Our gross profit margin was 23.1% in the first quarter, which was up 590 basis points from the gross profit margin of 17.2% in the first quarter of 2020. In the first quarter of this year, our corporate costs were also lower.

11:46 They were $800,000 lower than the first quarter of 2020, which was a decrease of 6.9%. And as a percent of revenues, our corporate costs were 9.7% in the first quarter of 2021, which is down from 10.4%. as a percent of revenues in the first quarter of 2020. Interest expense in our debt was $246,000 in the first quarter of 21, which is down from $427,000 in the first quarter of 20 due to reduced borrowings under our credit line. Our weighted average interest rate in the first quarter of 2021 was 2.95% with all in. A portion of our gross profit attributable to non-controlling interest was $3.7 million or 14.3%. in the first quarter of 2021.

12:32 Our balance sheet remains in an excellent position, and our cash generation remains strong. We began and ended the first quarter with $16 million drawn on our $125 million revolving credit facility, and we had cash of approximately $18 million at March 31, 21, giving us a net cash position of about $2 million at quarter end. During the first quarter, we paid back $14.1 million in Medicare advance payments we received last year, We previously noted our intent to pay that back, and we did so in the first quarter. We also funded our first quarter 2021 acquisition at $11.7 million. As a reminder, we deferred $8.3 million in payroll taxes in 2020 under the CARES Act, and we'll repay half of that balance by the end of 2021, and the other half is due by the end of 2022.

13:21 In closing, our people and operations have proven to be resilient over the last year plus, and they're clearly focused on the continued growth and success of our business as evidenced in our first quarter results, which we know will result in increased shareholder value going forward. We're pleased with the positive momentum in our business, and we look forward to continued strong performance in 2021. Now, Chris, I'll turn the call back to you. Operator, if you would go ahead and open up the lines for questions. Thank you. As a reminder, if you have a question, please press star 1 on your telephone keypads. Once again, that is star 1. Your first question comes on the line of Larry Solo from CJS Securities. Hey, Larry. Good morning. Good morning, Larry. Good morning, Chris. Good morning, Carrie. Good morning, guys. Thanks for taking the questions.

14:06 I guess the first question, just from a high level, if we just look at the visits per day, it almost looks like you're back to pre-COVID level, at least on an absolute basis, but I suppose there are still some pockets of the population and that you see you're not fully back and perhaps there's, you know, this is just a little bit of actually growth on top of, you know, some good numbers there. So maybe you can just, you know, give us, you know, your thoughts on that, you know, where we stand in terms of COVID impacting volumes and or maybe, you know, not so much. Yeah, no, I think COVID still, I mean, so first on a, just if we look at the numbers, were back ahead of where we were on a pre-COVID basis.

14:52 Now, that said, COVID is still impacting our volumes. We still have people, less people, but still some people in quarantine on an every week basis. We still have, you know, activities, gyms and some sports and certainly recreational sports that Just for the time of year and where we are in the COVID process, haven't come back yet. We expect they'll be back fully by fall, we hope. But we're driving really good volume right now. The team's done a great job, and we think the restoration of some of those normal activities will continue to be a little bit of a tailwind for us, given where we are currently.

15:44 Just sticking with the COVID theme, it certainly proved your ability to hunker down and roll back variable and maybe even some costs that we at one time thought were fixed costs. You took a lot of costs out of your business, but you've come back, obviously, a lot on the volume side. Just trying to figure out what you learned, your ability to maybe be more effective in Do more with less. And it seems to be proving itself out, at least if we look at a small microcosm, obviously, of your overall performance. But just in Q1 alone, your gross margins are up close to 600 basis points. So just talk to perhaps the sustainability of some of this efficiency improvements.

16:32 Right. We don't want to waste a good crisis. And so we – everybody – When I say we, I mean our partners, our staff, everybody, you know, dug deep last year, and we tried to get out any cost that, you know, to your point, we thought was necessary, but we've learned to live without it. And so there will be, Larry, some things that do come back. I mean, Graham, you know, did a road trip this week out to see some of our largest partners, and we haven't done that in the better part of a year. and so that's, you know, travel that cut out last year and some of that will come back. Maybe not to the full extent that we had before because we can use technology and we've all gotten comfortable with that but there will certainly be some of the variable cost things.

17:25 On the people side, We are pretty lean still. As we drive volume, and volumes are really good right now, where we need to, we'll incrementally add people just as we normally would. And so the only thing I would tell you on a quarter basis, you're going to have to remember last year we took a lot of Not only did we have people reductions, but we had a lot of salary reductions. So second quarter, third quarter, pretty good margins last year in spite of all this, particularly in the third quarter, I think. And that was still when we had the board and the exec team and all of our staff here and a lot of folks around the country who were still working. taking pretty meaningful salary reductions.

18:22 And so on a quarter-to-quarter comparative basis, you won't see the basis point differential for the rest of the year. I think that you saw this first quarter, but we still should hold on to a good bit of the cost savings overall, if that makes sense. Yeah, no, absolutely, absolutely. And then just last question, if I may, just on the injury prevention business, which kind of held its own during the pandemic. How do you feel that that's positioned today in this macro environment? Do you feel like you lost some time? You were just sort of sideways last year in terms of gaining new clients. Is there some pent-up demand? Is there any sort of change in the outlook on that side of the business?

19:10 No, I would say if we dial back to where we were in 2019, we still think that business has a ton of room to grow organically and through acquisition. It's great business. It does what it's supposed to do in terms of keeping people healthy and safe. We did kind of move sideways last year, but sideways was a pretty good position to be in. I mean, we actually finished the year up for that business. We had to press pause a little bit in 20 just in terms of, and it wasn't that we pressed pause, but people were kind of on pause with respect to trying to make decisions about whether to implement these programs depending upon how they viewed COVID and what the impact was in these various industries. We're seeing development activity pick up.

20:02 Our development team's done a wonderful job. We had some contracts that were set to go in 20 that got, you know, the pause button pressed, and we think we'll get some of those back. And we're still working through it. I mean, you know, in various industries there's more impact than others. And so we still feel some COVID impact, but it's definitely getting better. Gotcha. Great. Thanks, guys. I appreciate all the callers. Thanks. Thank you. Your next question comes in the line of Matt LaRue from William Blair. Hey, good morning. Just wanted to make sense for as... Yeah, good morning. As the visit trend really picked up in February and March, if there's anything to share in terms of sort of what the mix of those patients were, potentially areas that were bouncing back faster than others.

20:55 And then, do you have any sense for How much of that is kind of a snapback and pent-up demand versus potentially taking some share if any of your operators have reported to you that maybe smaller, under-scale competitors that were around last year maybe aren't around this year to pick up those referrals? Yeah, I don't have any way to really clearly measure particularly small competitors and how many are in or out. I think a lot of those Competitors got PPP money last year, which was the bridge to the other side. In terms of the mix, it's really across the country. We still have some areas that are a little bit more impacted. We really get down to a state basis. States like Oregon still having some struggle and some trouble and, in fact, dialing back some business openings here recently with with some virus pickup.

21:55 But notably, there are fewer, much fewer of those than there are places where business is really strong. In terms of snapback or market share, again, it's a little bit tough to measure. I think there has been, you know, people have put things on pause, and I think for the most part, as people have gotten vaccinated, roughly 50% now of the population or a little better has their first vaccine. People are beginning to do the things that they had put on pause. I don't think there's a big pent-up surgery demand, though. I do think we're moving some market share, and my guess is we're probably moving as much of it from smaller competitors as we are from hospital campuses where people don't really want to go to a hospital campus.

22:45 It's not particularly efficient. and traipse their way through medical office buildings and just campus in general. We're just easy to dive up to and walk in and go straight back and be seen. So I think that's certainly part of it. We've got a great team. We've got a lot of good resources, and we're very focused on moving that business into our door and not having it go somewhere else. Yeah, that makes sense. And then just a follow-up on IIP. You noted on the last quarter call that, you know, the sales cycle is a bit longer. It would take some time to rebuild the pipeline. You alluded to, obviously, customers potentially pushing pause on the decision to implement the programs.

23:32 Just curious, you know, what the kind of discussion level activity and new business development activity has been like here in the last month or two as As Chris, you mentioned vaccines really rolling out, cases now coming down, people starting to think about return to work. Yeah, our team there has done a really good job. And so we are seeing things thaw out. We're seeing things getting done. And, you know, we expect to have a good year this year, which is, you know, part of our guidance update. So but things are things are improving there as well. Okay, then I guess just the last one would be on the M&A pipeline, both with the Medicare cut and then, you know, the bevy of COVID cash that was given to providers to help bridge the difficult 2020. Just curious if sort of the inbound activity has changed at all, anything you're hearing, Chris, potentially from, you know, partners or potential partners you may have spoken to in 19 or 20 that that decided that wasn't the right time. Just kind of curious what that activity level's been like.

24:41 Yeah, the activity level's really brisk right now. But I think it's different than what people think. These aren't people that, you know, got really badly beat up in 20. These are all, for the most part, people who did pretty well. We have seen, and it's been a little bit challenging, we have seen more broker activity right now in some cases. Sloppy broker activity where we don't even get financials for last year. They reflect where the company was in 19, and so we're a little circumspect about that depending upon what level of information we can get. But we're out and around continuing to make contacts, and we're going to get good things done this year as we always do.

25:31 We're not kind of a bottom-feet group. We're not – Thanks for the questions. Yeah, thanks, man. Your next question comes online to Brian Tranquillet from Jefferies. Hey, Brian. Hey, good morning. Good morning, guys. Chris, I'll just follow up to one comment you made in the prepared remarks on pricing bump with the negotiations with payers.

26:22 I think that's kind of a new angle to the story that we haven't heard in years. So I just wanted to hear your thoughts and what's driving that. Is this finally the point where local density is growing? is a leverage point for a skilled PT provider like yourself. So if you can just walk us through the pitch to managed care and trying to get price increases. It's really easy pitch, Brian, and we're talking about non-Medicare. The pitch is you're paying a hospital three times more than you're paying an outpatient provider. We're infinitely more efficient. We get people to a higher level. We get people out quickly and back to their life, and they don't have to, you know, deal with the logistics of trying to navigate hospital campus. The differential is just large.

27:11 And we've been beating that drum for a while. And that coupled with market presence, national geographic footprint that covers basically 40 states. And I think we've just said, okay, enough is enough. I'm personally tired of Having Medicare and others devalue our business, which contributes so very much to society and in cost savings in general, and we're tired of taking it, and we're going to push back. That makes sense. To follow up on that, do you think, is it more national scale, or does it have to be local scale where you feel like you need that to drive that negotiating power harder?

28:00 I think it's more national than local. I mean, most of these companies, and I won't name them, but I mean, you're dealing with large national companies, and so they're not just looking at any more, you know, a Houston market. I mean, back in the day when I was in the clinic, you had companies that were, it was a much more fragmented industry. and you had companies that just handled Virginia or maybe even companies that were just in Richmond where I was and that's not the case anymore. These companies want simplicity, they want uniformity and that's provided by having a bit of a national footprint in my view.

28:47 Now, locally having the local footprint certainly helps with name recognition and customers and other clientele. But contracting, I think, is more national. Now, that makes sense. And then just to follow up on Matt's questions on acquisitions, right? So would it be accurate to say that your appetite for deals right now is probably greater than in the past? And, you know, you talked about some of these broker deals. Just curious what your willingness is or appetite for something larger. Yeah, our appetite's always been to find good deals with the right people, and we've not been afraid to do things various sizes.

29:36 It's about finding the right people. But yeah, we have a good appetite right now. So what I don't want anybody to read into that is that we have different criteria today, less critical criteria in terms of the integrity and the quality of the people that we are searching out. That hasn't changed, but we want to grow. We feel like we've got a team that's capable of growing, and you know what our balance sheet looks like, and so we certainly can. And so we're going to put it to work as best we can. Gotcha. And then last question for me, Chris, labor costs. both on the clinical side and the non-clinical side. I mean, what are you seeing there?

30:23 You know, it's a mixed bag. I think in some cases we're having some trouble filling and getting front office people who maybe by nature still have kids, you know, in school or homeschooled because of COVID or whatever. Maybe you can't get and many more. You know, we're certainly busy and so we have open positions right now, but we seem to be doing a good job. The team seems to be doing a good job of keeping those filled as evidenced by the fact that, you know, we're seeing volume pick up.

31:16 And so I do expect over, I was going to say I expect over a period of time, you know, to see a little salary pressure But a lot of it depends on what the government continues to do and dole out and how many people really want to get back in the workforce. I suspect there's a pretty large number of people who need to get back to the workforce who aren't working right now. And that should help maybe take some pressure off at some point. But right now we're still kind of straddling the fence on that. Awesome. Thank you. Thank you. Your next question comes from Mitra Ramagopal from Sedoti.

32:04 Hey, Mitra. Yes. Hey, Chris. How's it going? Again, just wanted to follow up on a couple of things that you talked about, you know, maybe some costs coming back as you continue now to get back to a more normal environment. And I was curious on the furloughed employees you had, I think, you know, a few hundred you had furloughed. I was just wondering if They're all pretty much back, or you're still gradually going to be looking to bring them back. I think the people that we were looking to bring back are now back. And so the – and Kerry's got the numbers, I think, in front of him. So, you know, as we grow and as we add people, we're going to be, you know, we're going to be adding staff potentially for growth, but not for – Not just, you know, to bring people back to a referral.

33:01 Okay, that's great. That brings me actually to my next question in terms of the growth. If you can remind us where you are in terms of the sales force and if you're, you know, in terms of just the coverage and maybe looking to expand on that front. Yeah, I'm going to have to kick that to Glenn and Graham to maybe give an update on exactly where we are in sales because I know it's changed a little bit over the period and may not be current. So, Chris, this is Graham. We've got currently 72 sales reps covering over 400 locations, and we've increased that by about 14 positions in Q1. Okay, perfect. And then I'd missed the number, the impact of the storm for the quarter.

33:47 I know previously you'd have made it close to about $3 million of lost revenue or about $0.30 a share. Just remind me how it came in. Yeah, that's right. Those are the right numbers, and that is what the impact was, $2.8 million, 13 cents per share. Yeah. Okay. No, perfect. And then, finally, as it relates, again, network expansion, I was just curious in terms of COVID, if it's kind of changed your perspective in terms of maybe some markets you were initially looking to get into or some states and maybe some others, if there have been any changes on the geographic front. No, no real changes there. No real changes in our direction. You know, the states that we're in tend to be higher reimbursement states, and there are a few states that we're out of, maybe one or two of which we wouldn't mind being in, but have some strong anti-corporate practice statutes.

34:49 Other states that have a combination of regulatory burden and and extremely high tax burdens and other things, California and New York being among those two. But, no, there's no COVID impact to what we've planned in terms of, you know, development. Okay. Thanks again for taking the question. Thanks, Mitra. Thanks, Mitra. As a reminder, if you have a question, please press star 1 on your telephone keypads. Your next question comes from the line of Microsoft. Patusky from Barrington Research. Hi, guys. Hey, Mike. I may have missed this if you addressed this, but did you guys talk at all about sort of the impact of COVID in terms of just therapists being out of work and sort of the update from, you know, November to February and then to sort of where we are now in terms of if there's been, I assume there's been some progress on that front, but anything you can talk about on that would be great.

35:49 Yeah, so hang on one second. Let me just see. Is that it? Are you familiar? Yeah. Yeah. So, you know, we really the peak of having employees out due to quarantine was in the November, really November, December, some in January. But then it scaled back significantly since then in February, March and April. were down quite a bit. We don't have that many. We have about 40 people out due to quarantine as opposed to the peak in November, which was over 300. That's 40 in a month. 40 in a month, over the month. Our quarantines are running much shorter just based on updated guidelines and a host of other things.

36:34 So we're running about 10 people at any given point in quarantine. But I will say we're probably much like the general population. We're trying to get above that 60% mark in total people fully vaccinated. And we've slowed down a little bit. So we're pressing as hard as we can. We have some pockets that are, at this moment, a little bit more challenging. So I suspect we're going to continue to have some people from time to time into quarantine, but to Kerry's point, it's gone down a lot. I want to make sure I understood. So when you're saying you're pressing towards that 60%, are you talking about you have less than 60% of therapists, clinicians that are currently vaccinated?

37:26 I don't have it. No, I didn't break it out from therapists. Total employees, and that includes, you know, part-time, pool, you know, PRN, the whole deal. I suspect By next call, I'll have this. We'll get a breakout just for the clinical folks. My guess is the clinical side is much higher, but overall, we're not where we'd like to be, just like the country's probably not where it would like to be. I'm actually a little surprised that any of the treating therapists wouldn't be, I mean, maybe there are states where they can't get that done, but I know here locally that virtually anybody working with patients in terms of hospitals, et cetera, they're all sort of mandated. You've got to go get vaccinated.

38:17 You would be surprised. Most of the hospitals haven't mandated. Most of the employers haven't mandated. until FDA approval, you know, full approval occurs, you know, I think that that's going to be a challenge for employers who decide to mandate. I think they'll lose people right now. So we're working this on a variety of different fronts, and, you know, I think we'll continue to make progress as time goes on, but we're not fully there yet. Okay. Chris, earlier you alluded to briefly sort of some renegotiated leases. Do you have any color you can add on that?

39:02 I mean, what percentage of the leases were renegotiated? Any quantification of, hey, we think this will save us X amount over the next few years? I mean, is there anything you can just add to that general comment? Yeah, these get straight-lined. So, I mean, I don't know what it is on a yearly basis, and I don't have the – The total in front of me right now, but we've recently made some decent progress. Graham, I don't know if you have maybe a round number in terms of overall adjustments. If you don't, that's fine. Yeah, I mean, we're sitting at about 350K in overall adjustments, Chris. Okay.

39:49 And can I just ask roughly what percentage of all the leases that you have did you actually renegotiate? It's a moving number, so I don't really have a percentage number for you. I mean, is it closer to like 10% or 50%? No, it would be not 50%. Okay. Okay. All right. Very good. Well, good job, guys. Fantastic momentum. Thanks. Thanks, Mike. And at this time, there are no further questions. Okay. Listen, thanks, everyone. Carrie and I are available if you have any follow-up questions over the next few days. We appreciate your time this morning, and have a great rest of your week. Thank you. Bye now. Thanks.

40:39 This concludes today's conference. You may now disconnect.