USPH - NYSE

Good day, and thank you for standing by. Welcome to the US Physical Therapy fourth-quarter 2023 and full-year earnings conference call. [Operator Instructions]. I'd now like to turn the call over to Chris Reading, President and CEO. Please go ahead, sir.

Thanks, Shelby. Good morning, and welcome, everyone, to US Physical Therapy's earnings call this morning. With me on the call today include Carey Hendrickson, our CFO; Eric Williams, our Chief Operating Officer; Rick Binstein, our Senior Vice President and General Counsel; Jake Martinez, our Senior Vice President of Finance and Accounting. Graham Reeve happens to be on a plane this morning and won't be joining us. Before we begin with some prepared remarks, I'll ask Jake to cover a brief disclosure statement. Jake, if you would please.

Thank you, Chris. This presentation contains forward-looking statements, which involve certain risks and uncertainties. These forward-looking statements are based on the company's current views and assumptions. The company's actual results may vary materially from those anticipated. Please see the company's filings with the Securities and Exchange Commission for more information.

Thanks, Jake. I'm going to go ahead and start this morning with particular thanks to our clinical teams led by our capable partners around the country for their efforts in delivering exceptional care, returning a record number of patients to the things that they enjoy the most and to our prevention partners for weathering what we expected to be a more challenging year in '23, with great continued success in keeping thousands of workers and companies that we serve healthy and injury-free. They finished the year in really strong fashion with 9.7% revenue growth in our final quarter and a 330-basis-point improvement margin in what has been a seasonally slower quarter for this subset of our business, all of which sets the table for good growth year ahead in 2024. Past year was one of persistently high demand for our physical therapy services. Each quarter in 2023 produced a record for volume across a growing network of clinics finishing the year for the first time in our history at 30 visits per clinic per day visits, grew to more than 5 million for the year, up 11.6% in 2023. Demand remained strong throughout the year. Coming to meet this demand, our clinical teams did an exemplary job caring for our patients, which in turn creates additional demand from happy customers who refer their colleagues, friends, and neighbors to us. Despite a rather tight labor market, we were able to attract and hire therapists to enable us to achieve these record volumes. Our team led by our locally strong partners around the country helped to limit turnover at a time when demand has remained at record levels. And our clinical cost efficiency improved in 2023 despite significant inflationary pressures. I am particularly proud of our ops team and their efforts to keep these many factors and forces in bounce throughout the year, all while juggling numerous initiatives, including opening and tucking in 35 clinics and working to integrate an additional group via acquisitions in both PT as well as injury prevention. Additionally, we worked to overcome the Medicare cuts, which made our lives more difficult these past few years despite physical therapy saving the system significant cost when compared to more expensive, invasive, and often unnecessary musculoskeletal procedures. Our team renegotiated a significant number of payer contracts in 2023, which is bearing fruit for us in and across our commercial contract base. And we have a good work planned for 2024 to carry on that work and to impact rates further. Finally, you saw in the release that we announced a small dividend increase, which started this year with the majority of our attention focused on deploying capital through carefully vetted acquisitions in the quarter in years to come. The partners we added in 2023 are ahead of plan and doing terrific, including the industrial injury prevention partnership that brought us our first software product, which is getting strong reviews [Technical Difficulty] great overall year in injury prevention. On the PT side of things, we are busy at varying stages of diligence and completion, several opportunities that we have included in the guidance we provided in our release. While the environment isn't easy by any stretch [Technical Difficulty] by a fantastic team whom I love and respect, and I can assure you everyone is working very hard to produce a good year ahead. We have a lot of detail to cover. Carey always does a great job with that, so I'm going to turn it over to him to dive in before we open up for questions.

Great. Thank you, Chris, and good morning, everyone. Despite challenges as we enter 2023, including the 2% Medicare rate reduction that we've talked about on a tight labor environment, our team produced strong results in 2023. As Chris noted, we recorded the highest patient volumes in the company's history in 2023 at 30 patients per clinic per day. Our physical therapy revenues increased more than $50 million in 2024, which was a 10.6% increase over the prior year. Our physical therapy operating costs decreased by $0.55 per visit for the full year. Our industrial injury prevention business strengthened as the year progressed, with fourth-quarter revenues up 9.7% over the prior-year fourth quarter and IIP fourth-quarter operating income up almost 30% over the prior year. And we achieved year-over-year growth in both adjusted EBITDA and operating results. We added 46 clinics, the acquisitions and de novos in '23, 31 on a net basis after closures, and we added to our IIP business as well. Further, we strengthen our capital structure with a secondary offering in May 2023, which was done on an accretive basis, providing us with cash to deploy the growth opportunities. So despite the challenges as we began the year, our team produced some very good results, and there was a lot of good work done in 2023 that positions us well as we go forward. We reported adjusted EBITDA for the fourth quarter of $19 million, an increase of $1.1 million over the fourth quarter of the prior year. Our operating results were $0.59 per share in the fourth quarter of 2023, which is an increase over the $0.58 reported in the fourth quarter of last year. Our total company revenues increased 9.6% in the fourth quarter, growing from $141.2 million in the fourth quarter [Technical Difficulty] to $154.8 million in the fourth quarter of '23. And our total company gross profit increased $2.7 million or 9.6% from $27.8 million in the fourth quarter of '22 [Technical Difficulty] in the fourth quarter of '23. Our average visits per clinic per day in the fourth quarter were 29.9, which is the highest volume in the company's history for fourth quarter. October was at 29.9; November was at 30.3; and December was at 29.5. All three months were higher than the same month in the previous year. Our net rate was $103.68 in the fourth quarter of 2023, which was a meaningful sequential increase from $102.37 that we reported in the third quarter of '23 due to the cumulative impact of progress in our rate negotiations and some operational efforts we've been working at all year. [Technical Difficulty] from the $104.28 reported in the fourth quarter of 2022 due to the reductions in Medicare rates, which represent about one-third of our payer mix. All other payer categories increased 2.1% on a combined basis over the prior year. Our physical therapy revenues were $134.6 million in the fourth quarter of '23, which was an increase of $11.8 million or 9.6% from the fourth quarter of '22. The increase was driven by having 45 more clinics on average in the fourth quarter of '23 than in the fourth quarter of '22, coupled with record fourth-quarter average patient visits per clinic per day, which was partially offset by the decrease in net rate. Our physical therapy operating costs were $108.4 million, which was an increase of 10.3% over the fourth quarter the prior year also due to having 45 more clinics on average than in the fourth quarter of '22. On a per-visit basis, our total operating costs were $84.09 in the fourth quarter, which is basically flat with the $84.05 that we had in the fourth quarter of '22. For the full year of 2023, our operating costs were $82 -- excuse me, $83.34 in full-year '22, and they moved down to $82.79 per visit for the full-year 2023. Our salaries and related costs decreased to $59.72 in the fourth quarter, down from $60.04 in the fourth quarter of 2022. For the full year, salaries and related costs were down $0.33 per visit versus the previous year. Our physical therapy margin was 19.5% in the fourth quarter of 2023. That was down slightly from the 20% we had in the fourth quarter of '22, with the change to the decrease in our net rate versus the prior year. Even with the decline in our net rate versus last year, our PT gross profit increased 7% in the fourth quarter. As I mentioned earlier, our IIP business saw nice growth. In the fourth quarter, IIP net revenues were up $1.8 million or 9.7%, and our expenses were up only $800,000 or 5.3%. So that resulted in a $1 million increase in IIP income in the fourth quarter of '23, which was an almost 30% increase over the prior year. Our IIP margin increased from 17.9% in the fourth quarter of '22 to 21.2% in the fourth quarter of '23. Our balance sheet remains in an excellent position. We have $144 million of debt on our term loan with the five-year swap agreement in place that places the rate on our debt at 4.7%, and we expect to remain at that rate going forward. As you know, that's a very favorable rate in today's market and well below the current Fed funds rate. In the fourth quarter of 2023 alone, the swap agreement saved us $900,000 in interest expense with cumulative savings of $3.3 million for the full year of 2023. Our interest expense was $2 million in the fourth quarter of '23. In addition to the term loan, we also have a $175 million revolving credit facility that had nothing drawn on it during the fourth quarter, and we have approximately $120 million of excess cash over and above what we need for working capital ready for deployment into the growth initiatives. We also noted in the release that our Board raised our quarterly dividend rate by $0.01 per quarter in 2024. At the new rate, our full-year dividend paid would be $1.76 per share, which is a dividend yield of approximately 1.7% based on our recent stock price. As we noted in our release, we expect our EBITDA for full-year 2024 to be in the range of $80 million to 85 million. The 3.5% Medicare rate reduction that went into effect on January 1 results in a $6 million reduction in revenue and a $5.3 million reduction in EBITDA net of minority interest. So the $77.7 million of EBITDA reported in '23 becomes $72.4 million as we begin 2024 due to the Medicare rate reduction. The 2024 EBITDA range is an increase of roughly 10% to 17% from this starting point. We have tremendous confidence in our team to produce EBITDA growth in 2024. We'll benefit in '24 from the full year impact of rate negotiations that we completed in '23 and in the partial year impact of negotiation work that we do during 2024. We also expect to continue to increase volumes at our existing clinics in '24 and will maintain our discipline in expense control. We'll also been benefit in '24 from the full-year contribution of our acquisitions that we completed during 2023. In addition, we have several acquisitions that we expect to close in the near term by roughly the middle of 2024. So we've included the expected EBITDA contribution from those acquisitions in our 2024 guidance. The acquisitions we're including are similar in size of those we've completed in the normal course between $1 million and $3 million of total enterprise EBITDA with us purchasing between 50% and 90% of those companies. We expect our 2024 EBITDA by quarter to lay out a little differently than it did last year. As a reminder, we had no significant weather events the first quarter of 2023, which resulted in the best first-quarter volumes we've ever had by a sizable margin. In January of this year, we did have some significant weather events, which was more in line with our historic experience. So we'd expect our year to get off to a little slower start than it did last year. And then to gain momentum as we layer in rate increases, volume growth, and acquisitions as the year progresses against the backdrop of our normal seasonal patterns. As a reminder, we expect our outstanding shares to be a little over $15 million shares in each quarter of 2024 and for full-year 2024, which is where it has been since we issued the $1.9 million shares with our secondary offering in late May of 2023. That will impact our comparisons for our per-share metrics in the first couple of quarters of 2024. In closing, we feel very [Technical Difficulty] growth in 2024, and we look forward to producing strong results for all of our stakeholders in 2024. With that, I'll turn the call back to Chris.

Yeah. Thanks, Carey. Great job. Operator, let's go ahead and open it up for questions.

[Operator Instructions]. We'll take our first question from Brian Tanquilut with Jefferies.

Hi, guys. Good morning, and congrats on the strong quarter. Maybe for both Chris and Carey, as I think about the fact that you included some M&A -- expected M&A contributions in the guide, just curious in terms of your visibility into the timing of the deals that you embedded in the guide? And then maybe Chris, more broadly speaking, how are you thinking about the M&A landscape this year in terms of what you're seeing in the market in terms of competition for deals and also like the deal flow that you're seeing within your own pipeline?

Yeah. In terms of the timing, I think we've tried to speak to that. I mean, one of the reasons we added it into our guidance this year is just due to the relative proximity to when we were going to do this announcement, this release. So I would say between now -- and because these sometimes aren't certain between now and July is what we're looking at for the ones that are in queue right now. In terms of the broader landscape, we're as busy as we've ever been. Competition is changed or changing some because some folks have more sidelined than they have been for quite some time just because of leverage and the rates that some of these companies are having to carry. And so it's a good opportunity for us. That said, we continue to be selective, and we continue to look for our kinds of partners and attributes. And so that part isn't changing. We'll continue to be disciplined, but it's good opportunity right now. We expect to be busy this year.

No, it's awesome. And then maybe, Carey, as I think about the gross margin side, you highlighted your success there, and it obviously is very impressive. So just curious in terms of what you see as the remaining opportunity either to hold the gross margin line steady as you grow volumes this year, or are there remaining opportunities to drive some margin expansion?

Yeah, I think it's going to depend on how much we can do on the rate side this year. We expect to do well there. I think we'll be able to at least maintain our margins where they have been, if not grow them slightly in 2024. Yeah. But it's going to really give me a function of how much we can push on the net rate side. And then to the extent we're able to keep our costs in line. So it's either flat on a per-visit basis or slightly better than that. And if we do that, if we push both of those really well, I think we can see a little margin improvement.

Maybe Carey -- for Chris, actually, as I think about just that last point that Carey made on the ability to drive rate growth from commercial payers? How are you thinking about that in terms of what the discussions are, and what inning are we in terms of trying to get more rate growth across the portfolio of contracts that you have in the different markets that you're in?

But yes, so we've had really good success in these in these discussions, I'd say they're based around outcomes, and they're based around the value that physical therapy provides. And the fact that it's a way to actually decrease cost of the overall patient's care. And we've been successful in those conversations. We have of a team that [Technical Difficulty], and we're working on our most -- the ones we concentrate on the most are the five largest carriers and our top partnerships. And we're going to keep it that work during 2024.

So what inning would you say?

Inning? I would say we're probably in the -- maybe the fifth inning or so. We've made some good progress so far in the last 18 months, I'd say. But we still have some more we can do. We still have -- we definitely have work we can do. The good thing is, Brian, we've built in step increases. As we've renegotiated these contracts, we've been trying to build in one, two -- I mean three-year step increases so that we're not having to revisit all these contracts each year. Because we have, as you know, look, 1,700-plus contracts that we're always having to come back to and renegotiate. So the three-year step increases have really helped because we get that automatically as the one year lapses. So that's been good.

And I would say that [Technical Difficulty] when we get to the ninth inning, we're not done. We're going to play a new gam. So we're going to start over. So this is going to be a perpetual thing, and I think over time, how we get paid maybe changes, and maybe we have a little bit more latitude to focus on the results and not count minutes like we do right now. It's just crazy way to do it, but I think we've got continued opportunity.

We'll take our next question from Larry Solow with CJS Securities.

Good morning, both of you. I guess just continuing on just on that line of question, just on the commercial side, you mentioned a nice 2% increase this quarter or 2% ex the CMS impact. Do you have what it was for the full year, and you expect a similar improvement or maybe even a little bit better in '24? I think using that baseball analogy of we're in the top of the fifth inning, you get some stuff from the bottom of the fourth that wasn't necessarily in '23 and --

Yeah, for sure.

Yeah. So for 2023, if you take all the categories except for Medicare and combined them on a combined basis, they were up about 1.5% in 2023. So it obviously accelerated in the fourth quarter being up 2.1%. So it's been accelerating as years gone along, and I think -- I'm sorry. Go ahead, Larry.

No, go ahead.

Yeah. And I think as we look at '24, you asked about that. I mean, I think we can -- if we do somewhere between -- just from a math perspective, right? If Medicare is going to be down 3.5%, if we do 1.5% to 2% of an increase in these other categories combined, that would make our rate next year flat. And I think we can do that or maybe even a little better.

Got it. Okay. And then on the CMS rate cut, I guess, 3.6%, it sounds like there will be no relief on that. Congress is probably not going to get together in a couple weeks to do anything there. But Chris, can you just remind us -- I know these cuts elevate the physician fee schedule and shifts more to the general practitioner while maintaining budget neutrality. But what's the outlook going forward? Are we pretty much at the end of that? Do you expect more cuts potentially in '25? How do you guys see that?

Yeah, I don't know Larry. I mean, trying to predict what CMS does or the federal government does is a little bit of a hard job. But I think we're at the end, and I think we'll get back into a more normal pattern as we go forward with small increases every year. I think people understand that they're picking on their own guys and that this isn't sustainable to three sequential years of cuts. And that's what I believe, so we'll see what happens.

We'll take our next question from Joanna Gajuk with Bank of America.

Hi, good morning. Thank you so much for taking the questions here. So I guess a couple of things. When it comes to these assets that you outlined, so you listed a contribution from deals that you expect to close later this year or this year through the first half, maybe July. I listed out one of the items, but it's one of the last items on that list. So should we read into this as implying the assets you're talking about here versus the $5.3 million, I guess when you have to overcome year over year that the deal contribution from those features is kind of smaller item? So are you willing to quantify that or quantify some of these other things you listed there as assets?

Yeah, Joanna, as you can appreciate, there's a lot of puts and takes, and we didn't provide specifics about any of the items and their dollar amounts and impact. Just know that there are things -- and some we'll get more on than we would anticipate and then others we may not be quite as much on. So we didn't want to specifically talk about dollars in each one of those items. I will say on the acquisitions, I've talked a little bit about that in here, just that these are ones that are in kind of our normal course, if you will, between $1 million and $3 million of EBITDA for a total enterprise basis. And then we are going to have our ownership percentage of those, which typically is somewhere around 60%, 70%, 80%. And so I think you can get some feel for what the amounts are there related to that. But it will have -- we believe we'll have ones beyond what we have put in the guidance beyond the first half of the year that will close later in the year. And those can have impact. Their impact won't be as significant, though, because the later in the year you go, the less impact those have in '24.

Okay. That's helpful. And I guess on the guidance, I guess, how should we think about -- what do you assume essentially for volumes here? So I appreciate you highlighted that Q1 will have a tough comp, but I guess what was the same-store, I guess, volume growth for '23, the full year? And then how do you think about volumes, same-store volumes that is growing for the full-year '24?

Yes. I mean we think we can -- we hope to have strong volume, really. That's going to be -- that's one of those factors that we have an amount in the plan. And it's a nice mid-single digit kind of growth number, 3% to 5% probably growth for our existing clinics. And we think that's achievable in 2024.

Okay, thank you. And last one, a follow-up on the discussion around pricing. Good to see the commercial traction there. Can you talk about workers' comp? I guess two things, what rate increases you're getting there? And also, the mix, are you improving or increasing the workers' comp mix? And I guess that will be helping that average rate as well, right?

Yeah, the mix has stayed pretty consistent. The good news is we're growing the other categories well too. So workers' comp is growing. It had really nice increases, but so is commercial, so is Medicare. We've had a just a lot of patient volume growth across the mix of categories. So mix hasn't changed that much. And the workers' comp rate, though, is continuing to improve. It's higher in '23 than it was in '22. And we're hoping it'll continue to be like that as we go forward. We're negotiating rate on workers' comp just like we are in others now as well.

If I may just squeeze a very last one, sorry about that, and thank you for taking the question. The comment on margins, so these were gross margin when you talk about keeping this level, maybe even expanding. Any comment around the corporate level costs? How should we think about that number going forward? I guess it ticked up a little bit in Q4. I guess maybe this is not the $13.9 million corporate office cost. So how should we think about that number going forward? Thank you.

Yes, I think -- consistently, we've been between 8.5% and 9% of total net revenue on that corporate cost number for several years. And I think that's how to think about it is as a percent of revenue because we do have to add some additional costs [Technical Difficulty] some clinics that we add as we go forward. So I think thinking of it in that 8.5% to 9% of total revenue number [Technical Difficulty] Joanna?

We'll take our next question from Jared Hoff with William Blair.

Jared?

Thanks for taking the questions. Just first one from us, and maybe just sticking with levers from a margin perspective, and maybe thinking over the next couple of years, I was curious to think about just how you -- the trends from a hiring and staffing perspective. I think in recent quarters, you talked about a little bit of a shift in mix to PT assistance. So I'm just curious to hear how you're thinking about that mix and the availability from a staffing labor perspective. Any trends there to call out from an operating cost perspective?

Yeah, I would just say this, the market continues to be tight, but I wouldn't call it unforgiving. [Technical Difficulty] recruiting team here combined with some partners locally, our ops folks, everybody is working together to do a good job, to get new clinicians into the company. We've always been a PT-centric company. More licensed therapists considerably more than PT assistants, to also licensed physician. But look, if we have a good opportunity with a great PT assistant, we're not going to probably pass on it either. So the relationships have been reasonably steady between PT and PPA the last year. If we can improve those a little bit, really where we just have to be sensitive to it is on the schedule more than anything with respect to federal patients. But market -- it's competitive market, but we're doing okay. Eric, anything you want to add to that?

No, I think you summed it up pretty well. We'll continue to invest in additional resources as the company grows to help us from a recruiting perspective. And our clinical turnover number this year was the lowest number we've had in five years. I know it was a 1.5 percentage points better than 2022, which also helped us from a business per-day perspective. So we continue to get better from a retention perspective, and we continue to get better in terms of our ability to source license staff across the organization.

Helpful on. And then sticking with this theme of levers for margin expansion, another area I was hoping to hear an update on was, in the past, you talked about rolling out group purchasing across the platform. Just was hoping to hear a little bit more color in terms of just how penetrated that is across your footprint of clinics and then to what extent you see any incremental leverage opportunities from continuing to consolidate purchasing?

Yeah. Well, I mean, you have to unfortunately divergent tractor. You have the rollout of group purchasing, which we've done, and that's pretty complete. And then you have overlaid on that just general inflation. And so I think it was the right thing to do. I think it was smart to do. We didn't get it done day one last year, so it rolled out across the year. So we'll see that carry forward. You saw some of that, probably a small part of that show up in our total cost per visit last year. But look, we were -- inflation has been a little challenging to. And so I'm sure that what we got, we gave some of that back in inflation. So that's not a big lever. Our big focus is driving additional volume through our facilities, which give us a little overhead coverage and help us be a little bit more efficient. And that's really what it comes down to more than anything else.

Yeah. And Jared, just to add on that, I will say that you do gain operating leverage as you increase your volumes at our existing clinics because the fixed costs remain relatively the same, right? So the incremental margin on those extra visits is higher than your overall margin. So that should help us as we go forward if we can keep those costs in line or maybe even a little bit better on a per-visit basis as we go forward, which I think we can do.

Again, very helpful color. And the maybe we've talked around some of the puts and takes to the outlook in 2024. I guess, maybe just to put a fine point on, when we think about the low to high end of the range for adjusted EBITDA guidance in 2024, is the biggest swing factor in your opinion just timing related to when you complete the M&A deals that are assumed in that outlook? Is it potentially some variance in your assumptions around the rate trends for the year? Just would love to unpack a little bit about that in terms of just what kind of drives that variance from the low to the high end?

Yeah. Let me give Carey a break, and I'm going to take that. I mean, guys, when you run a company, there are things every day that happen, and you try to control as many things as you can, and you try to have a great crystal ball. And when you're running close to 700 facilities, and you're delivering care, I mean, it's not all one plus one equals two every day. And so we have a series of things that we're very familiar with that we have to do well. We have to drive additional volume, volume that we're projecting for July and August and September of the year ahead. We have to get contracts updated and renewed and carry those contracts forward and bring in relatively the same mix or a slightly better mix of patients than we've had. None of that is certain. All of that requires an ordinate amount of work on everybody's far clinically, locally, and operationally. And then we have the timing of acquisitions which, as you point out, has some effect. You roll that all together, and we've given you the guidance that we've given you. We think we can do better than the bottom, and we think we'll be somewhere in that range. And we'll update as the year goes on according to how things are going if we feel like we need to guide the market in a particular direction. So that's really all I can tell you right now. We're early in the year. We're off to a reasonably good start, albeit a little weather in January, but I think we can overcome that. We plan to overcome it as the year goes on. I wish I could tell you more about bucket, but it doesn't really work that way when you're in real life.

[Operator Instructions]. We'll take our next question from Mike Petusky with Barrington Research.

Good morning. Can I actually get the -- I don't think you guys mentioned the actual payer mix for the quarter.

Sure. Yeah. For the quarter, it was pretty similar. We had about 48% commercial, 32% [Technical Difficulty] workers' comp, and then the other three, Medicare, personal injury, self, they make up the rest.

Carey, I'm sorry, at least on my end, you broke up on workers' comp. How much was workers' comp?

Workers' comp was 9.5% and then -- so 48% commercial, 32% Medicare, 9.5% for workers comp and then the other categories make up the rest.

Okay. And then I guess maybe for Chris or somebody else in the room. On workers' comp, I know you guys have expressed maybe over the last two to four quarters some optimism around possibly changing the trajectory there and getting that back up into the low double-digit range. Is that optimism still there or is that just a tough needle to move? Because at one time you did have that probably 12%, 14% of overall revenue.

Yeah, it's not dead yet, Mike, but it's a tough lift. And when you're growing, and we've been able to grow the whole business, it's tough to outgrow just one category, but we've done a lot of training. We've signed a lot of new contracts that should drive additional volume. Our partners have focused on it. Eric, do you want to weigh in?

Yeah, there were a lot of new agreements that were signed and a lot of those took place at the tail end, late Q3 and Q4. So we actually did see a pickup in Q4 last year. In Q4, work comp was 9.2% of our mix, so up slightly from where we are. And I think the work and the things that we executed on late in '23 are going to pay dividends to us in 2024. And there's a handful of additional agreements that are in process that will also get executed as we go through first quarter into second quarter that will pay dividends for us we believe in the back part of the year. So this is an area that we continue to really focus hard on, not just from a volume perspective, but from a rate perspective as well. And we did get a nice pickup in rate year over year for work comp business. So opportunity there, but as Chris pointed out, when the whole business is growing, it's really hard to out check those other categories on a significant basis. But we are making progress here, and we expect better things in 2024.

Okay. All right. Great. And then just a quick question, I guess, on the lack of action in Washington and just the CMS cuts this year. I know, Chris, that you're very connected and a leader in the industry. I mean, is there an argument to go back to CMS? If you look at '25 and essentially say, look, we've really taken it for the last few years here and essentially make the argument that there was no relief in '24, and that this streak should end at this point? I mean, has there been any talk I guess within the industry that that there's got to be an end to this?

Yeah, there's a lot of talk in the industry. I would tell you CMS is a frustratung place. We seem to have a lot more empathy in Congress. We're actually going to be in DC, Nick and I, Nick who serves as our Executive Director for APTQI, who also works with us and a lot of our member companies. CDOs will be in Washington in another month or so. And we'll meet with MedPAC to talk about some of their scoring and their lack of ability to score true savers and assist on like, for instance, fall prevention is a saver. We know that if you can prevent a fall, we know measurably what the downstream savings look like in there, spectacular level of savings. Based on the rules, again, we're talking about federal government now, and everything's got a million rules associated with, based on the rules, MedPAC isn't able to score saver as a saver. They have to score that the coster. It's like it's a new [Technical Difficulty] in the prevention of a massive downstream expense. It doesn't make sense. And so there's a lot of coordination that needs to occur between the law-making side and the rule-making side of government and CMS. So yeah, we're going to continue to beat the drum. We're going to continue to work with the APTA and APTQI and all the constituents and all the good people that I get to work with in those two organizations to push hard. And I think we will come out the other side and be okay. To say it's not frustrating would be an understatement. I mean, it's been a frustrating period, but I think in everyone's heart, they know that physical therapy and statistically according to a lot of good studies that are out right now, physical therapy should be the entry point for musculoskeletal care. If it is, it saves massive amount of cost. And so we're going to continue to beat that drum. My ability to absolutely predict what happens I would say is not great, but you know we're [Technical Difficulty] --

No, I think I lost you. Thank you. That's great. And just one quick one on the M&A that's included in the guidance, I'm assuming that's all PT and no injury prevention, is that correct?

Don't make that assumption.

Okay. Fair enough. Thank you so much and nice a nice finish to the year. Thanks.

No, I will say that for everybody's benefit, I mean, statistically speaking, while we've been active in injury prevention and expect to continue to be active, the majority of the deals that we get done are in the PT space, but you can expect us to be active and both.

And it appears that we have no further questions at this time. I will now turn the program back over to our presenters for any additional or closing remarks.

We really truly appreciate your time and attention this morning. Carey and I are available later to answer questions either today or later this week or next week. We appreciate your interest, and we hope you have a great day. Bye now.

Thanks, everyone.