David Castille - Managing Director, Finance Paul Kusserow - President and CEO Scott Ginn - CFO Chris Gerard - COO Dave Kemmerly - General Counsel and SVP, Government Affairs.

Matt Larew - William Blair Whit Mayo - Robert W. Baird Jason Plagman - Jefferies Joanna Gajuk - Bank of America Dana Hambly - Stephens Bill Sutherland - The Benchmark Company.

Greetings. And thank you for calling in for the Amedisys Fourth Quarter 2017 Conference Call. At this time all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference is being recorded.

I would now like to turn the conference over to David Castille, Managing Director of Finance. Thank you. You may begin..

Thank you, operator, and welcome to the Amedisys Investor Conference Call to discuss the results of the fourth quarter and year ended December 31, 2017. A copy of our press release, supplemental slides and related Form 8-K filing with the SEC are available on the Investor Relations page on our Web site.

Speaking on today's call from Amedisys will be Paul Kusserow, President and Chief Executive Officer; and Scott Ginn, Chief Financial Officer. Also joining us are Chris Gerard, Chief Operating Officer; and Dave Kemmerly, General Counsel and Senior Vice President of Government Affairs; and David Pearce, Chief Compliance Officer.

Before we get started with our call, I would like to remind everyone that statements made on this conference call today may constitute forward-looking statements and are protected under the Safe Harbor of the Private Securities Litigation Reform Act. These forward-looking statements are based on information available to Amedisys today.

The company assumes no obligation to update information provided on this call to reflect subsequent events other than as required under applicable securities laws. These forward-looking statements may involve a number of risks and uncertainties, which may cause the company's results or actual outcomes to differ materially from such statements.

These risks and uncertainties include factors detailed in our SEC filings, including our Forms 10-K, 10-Q and 8-K. In addition, as required by SEC Regulation G, a reconciliation of any non-GAAP measures mentioned during our call today to the most comparable GAAP measures will also be available in our Forms 10-K, 10-Q and 8-K.

Thank you, and now I'll turn the call over to Paul Kusserow..

the extension of the home health rural add-on payment for four years; home health payment reform parameters most notably including budget neutrality; a statutory setting of the 2020 market basket payment update; a four-year extension of the rural add-on is great news for Amedisys and the patients we serve in rural markets.

Maintaining the 3% add-on for 2018 and 2019 is a big positive and reduces our 2018 reimbursement impact from approximately 1.4% to approximately 0.7%. On the payment reform provisions, we feel these changes are a positive especially considering what the industry was facing last summer with the HHGM proposal from CMS.

Congress's desire to shift to a 30-day payment period is one that we can and will manage. HHGM also called for a shift to a 30-day payment period, but was not budget neutral.

Congress mandated reform in the payments system in 2020, but also mandated that the move to a new payment system in 2020 be truly budget neutral without relying upon unidentified behavioral adjustments.

Congress mandating that payment reform must not be implemented until 2020 and that it be budget neutral has given the industry time to prepare and provided some needed parameters around payment reform.

In addition, the delay until 2020 has provided time for the industry to continue our dialogue with Congress and CMS on the final design of payment reform.

We also believe the statutory setting of the 2020 market basket update at 1.5% although a reduction from the projected market basket update of 2.9% is a substantial improvement over cuts that would have come from HHGM or cuts previously considered by Congress.

In fact, the 1.5% update in 2020 is greater than home health agencies have received since 2013. Finally, after almost a year of uncertainty around reimbursement, we now have much more clarity into future home health payment redesign and rates.

There is still work to be done and we will spend all of 2018 diligently continuing our dialogue with CMS and Congress around home health payment reform. With that, I'll turn it over to Scott, who will take us through a more detailed review of our financial performance for the quarter and the year.

Scott?.

revenue grew $39 million or 11% which is inclusive of the Personal Care segment acquisition that closed on October 1. EBITDA increased $7 million or 22% and EPS increased $0.12 or 27%. Before turning to our segment saving, I'd like to add some additional color on our adjusted consolidated results for the quarter.

There were three items that were impactful to our quarter results in comparison to prior year. First, the net impact reimbursement was approximately $4 million was inclusive of the rate changes for 2017 and 2018. Second, health insurance and workers compensation expenses increased approximately $6 million.

The increase in health was driven by high cost claimants. Increased in workers compensation was driven more by the severity of claims versus frequency. Lastly, planned wage increases were effective in August impacted the year-over-year comparison. Two of these factors also impacted our sequential performance.

Health and workers compensation expenses increased almost $6 million and we had one additional month of planned wage increases in the fourth quarter versus the third. As we're self-insured, it is typical to see higher claims in the second half of the year particularly in Q4.

However, we experienced a more pronounced shift from third to fourth quarter in 2017. Now turning to our fourth quarter adjusted segment performance. In home health, revenue was $287 million up $20 million compared to prior year.

Revenue growth was driven by 6% increase in same-store episodic volumes, which includes both admissions and reserve certifications and excludes our Florida foreclosures. This is our highest volume growth for the year and was the third consecutive quarter of improvement in this metric.

Same-store total admissions were up 4%; same-store episodic admissions were up 3% and same-store non-episodic admissions were up 7%. Our Medicare recertification rate was 38%, 250 basis point improvement from prior year. Segment EBITDA was $37 million up slightly less than $1 million over prior year.

Cost per visit decreased $0.10 compared to prior year, increases in clinician productivity helped to offset the impact of planned wage increases and raising health workers compensation cost in the quarter.

The items impacting the fourth quarter as previously mentioned, the home health segment saw a reduction in reimbursement of approximately $5 million and $4 million increase in health and workers compensation expense over prior year. These increases impacted gross margin and G&A expenses.

Our planned investment in additional business development [voice] [ph] is also added to our G&A costs compared to prior year. Sequentially reimbursement changes reduced revenue and gross margin by $1 million while health and workers compensation increased approximately $4 million.

Our G&A as a percentage of home health revenue was 24.4% for the quarter, which is the lowest for the trailing five quarters. Now turning to our hospice segment. This segment continue to generate strong growth and margin expansion. For the fourth quarter revenue was $98 million up $13 million over prior year an increase of 15%.

Same-store average daily census was up 12% and same-store admissions were up 8% segment. Segment EBITDA was $27 million an increase of $5 million or 25% versus prior year. Net revenue per day was up approximately 2% to $149.12 and cost of service per day was up 2% to $75.74.

The hospice segment benefit from an increase in reimbursement of 1 million offset by increases in health and workers compensation expense. The segment expanded EBITDA margin by 210 basis points despite additional G&A investments in our business development staff and administrative employees who drive and support continued growth.

Sequentially, the segments growth in revenue was offset by increases in health and workers compensation expenses and the addition of commissions and BD staff to support our growth. Our Personal Care segment generated approximately $19 million in revenue in the fourth quarter representing growth of 47% with over 782,000 billable hours.

Including these results are possibly $6 million in revenue, contributed from our home staff and inner city acquisitions that were not in prior year numbers. Additionally these acquisitions added slightly over $1 million in G&A cost during the period.

As we've indicated previously because of the rapid pace of acquisition in the Personal Care segment, we're spending the first half of the year investing in the platforms infrastructure to allow future growth and are pleased with the progress we have made thus far. Turning to our general and administrative expense.

On an adjusted basis total G&A was $123 million or 30.3% of total revenue. As we alluded too in the third quarter call, we anticipated G&A expenses will increase sequentially, but will remain relatively flat as a percentage of revenue. Total G&A was down 180 basis points as a percentage of revenues compared to prior year.

Sequentially G&A increased $5 million. Significant drivers of this increase were $2 million related to health and workers compensation approximately $1 million relate to our intercity acquisition with the remainder of the increase, lay the full quarter plan wage increases and the addition of BD resources in both the home health and hospice segment.

From a cash flow perspective, we generated $32 million in cash flows from operations for the quarter and $106 million for the year. Total capital expenditures were $2 million for the quarter and $11 million for the year. Our balance sheet continues to be in great shape without setting debt net of cash of $4 million for the net leverage ratio of zero.

Day sales outstanding were 44 days at December 31, 2017, which is an increase of 3.8 days compared to prior year and 3.3 days sequentially. The Florida ZPIC payment hold is at 1.6 days and the regulatory delays relate to the change of ownership process for our Tenet acquisition in May added another 1.5 days.

Adjusting for these two items DSO increased 2.9 days sequentially was up slightly compared to prior year. At December 31, 2017, we got a cash balance of $86 million and $160 million available on our revolving credit line providing total available liquidity of approximately $253 million under existing credit facilities.

Our priority for deploying capital is for acquisitions with a preference towards hospice and personal care tuck-ins. Turning now to our annual guidance. For fiscal year 2018, net revenues are expected to be in the range of $1.6 billion and $1.64 billion dollars, while 2018 guidance for EBITDA is between $158 million and $163 million.

Finally, 2018 earnings per share is expect to be in the range of $2.97 to $3.08. There are several key factors impacting 2018 guidelines outlined on Slide 23 through 27 of our supplemental slides.

First, as a result of the Congressional reinstitution of the [rely down] [ph] payments, we now estimate the home health reimbursement cut to be approximately 70 basis points compared to our previous estimate of 140. In hospice, reimbursement is up 1%, which was effective for services provided at the beginning on October 1, 2017.

There is no pricing assumption change for our personal care segment. Also included in our guidance is a planned wage increases of 2% to 3% that will be effective in the second half of the year. Additionally, we're anticipating a 5% to 6% increase in our benefit expenses for 2018.

Our effective tax rate assumption for 2018 is between 26% and 27% percent as a result of tax reform passed late last year. We estimate our cash tax rate will be approximately 5% as we fully utilize our net operating loss carryforwards in 2018.

We will retrospectively adopt a new accounting standard relate to revenue from contracts with customers effective January 1, 2018. Amounts previously recognized as provision for doubtful accounts will now be included in net service revenue resulting in decreases in net service revenue, gross margin and provision for doubtful accounts.

These changes will offset each other with no impact on EBITDA or earnings. This retrospective change is detailed in Slide 26 of our supplemental slides and a revenue guidance for 2018 is inclusive of this change resulting from a new accounting standard. Finally, this guidance assumes a fully diluted share count of approximately 34.85 million share.

This will conclude our prepared remarks. Operator, please open the line for questions..

Thank you. We will now be conducting a question-and-answer session. [Operator Instructions] Our first question comes from the line of Matt Larew with William Blair. Please proceed with your question..

Hi. Good morning. Thanks for taking my questions. First, I wanted to ask about the -- something in the slide deck which is -- focus again in 2018 on underperforming care centers on the home health side.

Just wondering, if you can help us understand in the first quarter what kind of drag those underperforming care centers provided and what that size that bucket is of care centers today versus maybe 12 months ago and now you plan to attack that in 2018?.

Sure. I'm going to turn it over to -- this is Paul. Hi, how are you doing Matt? I'm going to turn it over to Chris. He can talk to you about what our efforts are going on there..

Sure. Hey Matt. Its Chris. As we looked at setting our priorities for 2018 throughout Q4 of last year, we did notice that we had a subset of care centers out there that were not meeting our expectations with regards to performance and we set some internal benchmarks that we measured them against.

We have roughly about 13% of our care centers that are coming in below kind of our expectations in those benchmarks.

So what we've done is, we've put a heightened focus on those care centers developed weekly scorecard, having monthly discussions around these and just really kind of getting in and diagnosing the issues and looking to -- looking to move those back into where they should be. So it's just something that we have the bandwidth to do this year.

We really didn't have the bandwidth to do it last year. But it's an opportunity for us to really capture some opportunity. As far as quantifying the opportunity these care centers underperformed to the tune of about $2.7 million in Q4 in terms of EBITDA. So, we've seen that as an opportunity for us to go out and get [indiscernible]..

Okay. Thanks, Chris. That's helpful. And then, just as a follow-up, on the third quarter call you talked about a 5% increase in visits per week in terms of clinicians from homecare home base. Just wondering how you expect that to trend throughout 2018 and how that might have factored into your guidance that you're not providing for the first time here..

Yes, sure. So we had a good experience last year increasing our clinician productivity up 7% actually is what we were able to capture those two visits -- two visits per week. I still see that we have some opportunity to move that a little bit further throughout 2018.

A couple of ways, one, getting a little more aggressive with our paraprofessional our LPN and PTA utilization can bring up our clinician productivity as well as it really is a factor of function of being more familiar and proficient in using home care home base.

As longer you're on the system, typically the more productive you're able to be utilizing your time in an efficient manner.

Or what you're asking that is, are we -- how confident are we in that growth number for 2018?.

Right.

That's a piece of it is sort of based on the momentum we are seeing with the business versus incremental gains from productivity gains?.

Yes. Well, clearly we're doing well on the productivity front.

I think from the incremental gains that we're starting to see in the market particularly as we've -- as some of the BD folks that we've hired which are reflected in the $9 million cost is -- we have over 100 people and we're hiring to drive sales beyond clearly what we -- clearly what we delivered this quarter.

So we're confident in our ability to hit the 5% that's part of what our projection is. Chris and his team have been doing a nice job going out there. And so we're feeling good about our trajectory in terms of our ability to averaging on that growth rate.

Chris any?.

No. I mean that I think the foundation has been set in 2017. We carried a good number of reps into 2018 that are ramping nicely we'd have historical data that shows what we expect ramps to be in -- in there in line with that.

So hitting the 5% we have a foundation in place we have the clinician capacity and so that's -- the confidence is good that we're moving in the right direction..

Okay. Thanks guys. I'll jump back in queue..

Thanks Matt. Appreciate it..

Our next question comes from the line of Kevin Ellich with Craig-Hallum. Please proceed with your question..

Hey Kevin..

Thanks. Good morning. This is [indiscernible] for Kevin today..

Hi, [indiscernible]..

Good morning. Paul I wanted to come back to the M&A priority discussion. I think you clearly articulated your priorities there being hospice, personal care and then home health sort of being third among them. How much of that is, I guess call it profile of hospice specifically versus other factors that might be related on the home health side.

Whether it's regulatory, whether it is pricing or scarcity of assets or potentially operational from the standpoint of wanting to see some more of your home care home base efficiencies take foot before you pursue that more aggressively?.

Yes. So that's a great question. So appreciate it. I think from an M&A perspective, we've had our hospice team now running really well, really clean. Just growing the business, hitting the fundamentals and the results you see there are quite incredible. They have fundamentally done this on a same-store basis since I've arrived. So over three years ago.

So I believe that this team is humming, cooking with gas doing a great job. I believe they can take on more, Chris believes they can take on more. We also like, so one we believe and we're the fourth or fifth largest hospice out there. So we think we can continue to add on and drive business that way.

The other thing is, it's important for us to -- and part of the reasons why we're in three businesses is we want to have a balanced portfolio and our belief is now is a good time to look at the portfolio and to drive more growth in hospice. They're ready for it. We've got a good team. Demographics are really good.

The regulatory environment based on what we know seems quite good. Our ability to deliver from the quality side is very good. So we're feeling very good about this home help. We've created a lot of change. We've reorganized. We brought on home care home base really starting to see some nice things from a revenue perspective.

But, I think to throw in an integration early on is something that would be difficult. We want to let them get their groove for a while they're doing a great job doing that. In the personal care we need to grow further in that particularly in overlap markets.

So our strategy is that the issue is that we're seeing out in these markets is -- the pricing is pretty difficult in terms of the multiples these folks are trading at particularly when you've got private equity involved. So we want to be -- we understand the realities of the marketplace.

We also have as you know a tremendously available balance sheet to take on some new acquisitions. So we're excited. We're excited about that but we're trying to be sensitive to pricing and make sure that we can generate strong fundamentals in terms of return on invested capital.

So we're out looking and we've got -- we like our three-pronged approach in hospice. We've activated some really good folks we know in the market to find a smaller asset particularly in overlapping geographies where we have home health. We also are starting to do de novos now, which is a good way to start.

And then, we're constantly out there looking at some of the other assets -- that are larger assets that are out there that most people know about..

That makes sense. You kind of answered one of my potential follow ups there. So I'll actually ask a different one then. On the home care home base side you delivered on your efficiency target your operational improvement target for fiscal 2017 with the 46 million.

I think you've characterized there being a lot more juice in the lemon I think is -- is the turn of phrase I've heard you use. Without putting you to a number as you're thinking about that additional level of productivity that you can work toward with the subsequent versions of home care home base.

Is there a set of goalposts that we can put around and a next layer of efficiencies, if you will beyond the 46?.

Yes. I'm going to let Chris answer that. Really happy to be honest with you that we've been able to get two extra visits per week in terms of productivity.

The one thing though that we're also very, very sensitive about is making sure that our clinicians in -- what's becoming an increasingly tighter labor market don't feel that we're running the engine too hot or running their engines too hot.

So we want to make sure that the benefits that there's an equilibrium there that we can move forward judiciously and we believe there's an opportunity. And Chris is a real expert at home care home base and [Tiani] [ph] as well who runs home health. So we feel very comfortable that they are going to start to pull some of these levers.

I mean we've just started 2.0 is occurring in home care home base. We're very happy with what we're seeing there. We think we can -- I expect to see more productivity but I also want to do it in a meaningful way that doesn't drive people out the door. I don't know.

Chris?.

Yes. I think he said it well. What we're looking at now is, as we're looking at our clinician mix where we see opportunity to utilize again as I mentioned paraprofessionals and some of the markets where it makes sense, freeze up our registered nurses capacity for admissions and recertifications and discharge discharges in the [indiscernible] visits.

When I first got here -- when I first got here I thought that we were underutilizing that that level of service. So we see opportunity to do that. Again home care home base is meant to make the care centers very efficient. I think that we're getting better at it every day.

We've got it about a year in our rearview mirror in terms of the final care centers that implemented. I still think that we're using only a portion of it. I think we'll be able to unlock throughout this year.

So we anticipate better clinician productivity to continue to move throughout this year as well as some other efficiencies that we should be able to get out of the system..

Excellent. Thanks for the color..

Thanks, [indiscernible]. Appreciate it..

Our next question comes from the line of Whit Mayo with Robert W. Baird. Please proceed with your question..

Hey, Whit..

Hey. Thanks guys. Is there any way you could share the EBITDA by segment within your guidance..

We really haven't -- we've been kind of just looking at that and then holistically -- we really haven't focused down on -- by segment perspective. I mean I think you can kind of look at it by and I think through -- we've given kind of admission top line growth pieces of that and kind of broken down the BD perspectives as well as the rates impact.

If you think about rate, home health is going to be about 7 million negative, hospice about $4 million positive so it's about net 3, [EBIT 7] [ph] and 4 in those segments. Those are two items that we've talked about that I can be specific around. We're talking that improvement around Florida in the home health segment.

We're talking a full year pick up around $7 million to $9 million, if we think about how that runs for a full year of 2018, it's probably only about half of that probably around $4 million to $5 million primarily just because it was -- we saw deteriorating performance in that market across 2017 because as we move forward eventually it'll be full 7 to 9 run rate.

Those are the bigger pieces that really haven't stuck to specific by segment guidance..

Baby steps, we'll get you there..

Yes. This is a big step. But, it's 2013 so, we have to be where we're right now..

We haven't done this since 2013. So we're getting those muscles back in shape..

I totally understand. And Paul just the improvement in turnover at the clinician level is pretty noteworthy and the BD level just stepping back and thinking about just the dramatic changes in the organization that you've seen in the past few years.

Are you at a point where you're tracking employee satisfaction and if so is there anything that you can share with us?.

Sure. We track employee engagement. So we believe -- we're nothing as a company I always say this -- we're nothing but people. And so we take very seriously and we deal with and we have -- as our 18000 employees. We have people who are very, very sought after. And so for us we review this on a weekly basis.

Understanding who's coming in the door who's left. We track all the reasons why people leave. We are building we know why people leave. We've just done a bunch of primary research on it. So we were actually taking steps to correct some of the things that are driving people away. One of them is orientation.

The other one is on-boarding, we need to bring people in better. The other one which is frankly is balance -- work balance making sure that we don't overload people particularly when they are just getting used to it. So we kind of know all the things now what we're trying to do is put this in place.

We believe that if we can get the turnover number into the teens -- the low teens obviously is a huge ambition of mine. I don't know if we'll do it. They're gagging over here.

But I think we -- I think we can do it by really focusing on making sure that our folks are engaged and that we remove any obstacles we're putting in people's way that that are unnecessary..

That's helpful. And maybe can you help me understand some of the dynamics of the field level that are impacting the research rate now and the whole sector is just -- the trends all over the board, I'm just sort of curious on your perspective.

And I'm going to have slide one more in there for Scott, just I know you don't guide to the first quarter, but the last two years you've reported roughly 22% of your full year EBITDA in Q1, any reason with payroll taxes or any other factors that would be considerably different? Thanks..

Sure. You want to take him to the last two..

Yes. Let me talk to that first, and I will let Chris come back and tag on with this piece. But, if you kind of look at, we've included on page 27 of our deck, our EBITDA seasonality view of what we look like for 2016 and 2017.

So the answer that I don't see anything particular that will change in that trend perspective that's kind of what we're seeing and as we forecast into 2018. You can see major -- we did have a weather of it in Q1, which we had one in prior years as well.

But, yes, you see higher payroll taxes, a shorter February month and a little lower revenue perhaps coming out of the gate. And then we rebuilds hospice centers. So I think that that's fair. Look at it that way and you can see that from the trends we've put out..

Chris?.

Yes. So on the research, we think it's just a combination really of two things. One, we had the home care home base kind of chop further behind us and our clinicians were getting better use of the system. And therefore, we're also seeing increased capacity by way of the increased productivity from the clinicians.

We also noticed that going through the transition of home care home base, we saw our research rate dip pretty significantly. So when we started looking into that we saw that we were discharging patients a little prematurely without all goals being met and we were missing some opportunity.

So really I think as we put a little bit of a spotlight on it and we had enhanced case conferences starting having discussions about what's appropriate for our patients. We saw that come back and we really just now getting to kind of our pre home care home base implementation levels.

Don't anticipate it to see it grow much further from where it is now. I think it's in appropriate range, but I think it's just now that we've got -- we were able to get back to kind of where we were before we rolled out home care home base..

And especially Whit as we focus on rehospitalization rates, which we think are going to be increasingly important and which are -- we are putting it -- we're taking a lot of time to focus on that. We believe that will enable us to move into some risk arrangements.

So when we are focused on that what we see is -- we really want to make sure the patient is completely stable and so increasingly we strive to make sure that's the case. So I think that's also as we continue to focus on ACH grades. I think you'll see that the research probably remains stable or maybe [indiscernible]..

Yes. Very helpful thanks..

Thanks Whit..

Our next question comes from the line of Brian Tanquilut with Jefferies. Please proceed with your question..

Hey guys. It's Jason chiming in for Brian. First of all, I want to compliment you on your whole music and really enjoyed the references to Nashville and every song. But on to the question. So I think there's some confusion in the market a little bit about HHGM and some of the changes in 2020.

A lot of -- I think people are under the impression that there are still could be a change in that episode length from 60 day to 30 day. But I think you referred to it as a episode or a change in length of service.

So can you clarify, are you expecting a change in episode length in 2020 from 60 to 30 days or is that no longer on the table?.

Dave Kemmerly is here, who runs our government area as well as being or GC. And yes, we like the Lovin Spoonful, so Nashville Cats we want to make sure you all heard that. So anyway I'll turn it over to Dave..

Yes, Jason. I mean all goes bottom-line based on our conversations we'll see a [indiscernible] and congressional step we're very confident that the entire Congress and the continual resolution was for CMS to implement a 30-day payment period and not a 30-day episode.

So I'll take the confusion out there was the language used in seeing resolution was 30-day unit of service. But we've had those conversations and done a lot of homework on. So we're still very confident of the payment period.

Now I can let Scott talk to you about what a payment period is versus an episode, if you want to get any further detail, but we're still confident -- very confident there..

So, that change would conceivably speed up your cash collection period, but it wouldn't change the episodes?.

In theory that's what would happen. We've got to get to the devil's in details as always, but in theory that could be an added benefit around there..

Okay. Thanks. That's helpful..

Some complexities around billing processes, but we are more concerned about the patient, so staying with the 60-day episode and being less impactful to our commissions will be a win for us and we'll deal with any other issues around from a process perspective around billing..

Okay. Thanks for that clarification. And then, a couple on the embedded assumptions and guidance.

So the assumption is 5% to 6% increase in benefits does that assume any improvement in the workers comp and health insurance trends you saw in the second half of 2017 or what kind of baked in from any changes in standard, what you saw your experience in Q4 that's in your guidance for 2018?.

Well, certainly what happened in Q4 is influencing our guidance in 2018. We had a late break on that. Overall, it was still up for the year. We're not as aggressive on 2018 -- 2017 was and 2018 that 5% to 6%. Look that's something we pay a lot of tips into, cost these people, over $800 million of our spend is people related.

So we're always focused on health and workers comp and we will try to drive that down. But, there's no meaningful take down and what we would expect to happen. So we're kind of building up where we exited but we'll hope to see how we can drive that number down..

Yes. To be clear -- this is going to be a big initiative of our folks who run this. We can't have these things pop up in surprises like they did. And we work too hard to do that. So we have -- they are digging in -- we've got a lot of really interesting solutions, we are going to look for, but, our expectation is this won't happen again next year..

And then, the outlook for corporate G&A in 2018, I don't know you have commented on that. But, should we expect something similar to the recent run rate has been kind of pretty consistent in the $27 million, $28 million per quarter for corporate overhead..

Yes. I think that's fair. I think that I'm trying to think through what we're giving on that. We expect kind of from where we're exiting to remain -- put investments back in, but done expect anything other than what we've given around the raise increases and so forth to impact that number.

So we think we're in a pretty good level right now and look to expand our capacity as we grow. We think we have capacity to grow our numbers that we reported right now..

Okay. That's it from me. Thanks guys..

Thanks Jason..

Our next question comes from the line of Joanna Gajuk from Bank of America. Please proceed with your questions..

Hi, good afternoon. Thanks so much for taking the question here. So, in terms of the quarter and I guess as it relates to the guidance, I want to ask about the volume performance.

So, the same-store episodic admission was up 3%, so that was below, I guess that 5% sort of guidance you had for Q4 and I guess that it seems like the Medicare admission, which still down actually in the closures and also your expected growth.

So, can you flash out, what were the drivers for the shortfall and what gives you confident that you can get the 5% in 2018 in terms of the -- I guess, I assume the comparable number in terms of organic episodic admission growth in 2018?.

Yes. Hey, this is Chris. I'll give you some color on that. So, we -- although we did come in a little bit shy of our -- the low end of our expectation for Q4 at the 3% episodic growth.

The encouraging signs where that were continuing to add these additional reps throughout to quarter to where we ended the quarter at our target number of reps to carry into 2018. The Medicare although did not grow in Q4, but if I look at it sequentially quarter-over-quarter, we've started to -- the needle is moving in the right direction.

So, we've got the right -- directionally we've got the right momentum carrying into Q1 of this year, we have the reps in place out there and we have the history on how they typically ramp and they are holding the line in terms of what they're doing.

So getting to the 5% that's in our guidance for 2018, I have a good level of confidence that where we've done a little right things to get there. Now we should go out and execute..

And Joanna just to make sure, I think there is and reporting with same-store with export in our earnings call deck. I just going to run through the numbers real quick to make sure everybody is on the same page around this.

So for Q4 excluding the foreclosures, our same-store Medicare admissions were basically flat really about negative 0.5%, so basically flat.

Our episodic admission same-store were 2.9% roughly 3% and we saw total admissions right around 4% for Q4 with that total episodic volume which includes admits and research right a little bit over 6%, just to make sure everyone is on the same page around that number..

Great.

So just to follow up, so in terms of the outlook for 2018 for Medicare you expected those admission as well, we grow rate essentially?.

That's correct, yes..

To get to the 5%, because also in that number, what do you have assume for non-Medicare episodic growth?.

The 5% is total admission growth, so that includes episodic, Medicare business as well as the non-Medicare episodic business..

But, overall if you think about -- Q4 about 3.8% and we're flattish at Medicare, we were looking to move that number, which will move that's our biggest base within the total admit volume. So certainly we're moving that number and will have greater impact in the total growth for the year to get to that 5%.

So we certainly are needing and signaling those that we are going to grow that number..

Great. That's what I was trying to get it, because that's still the biggest piece of the business.

And if I may on the -- I would relate to volumes and I guess how it flows through to the margins for the home health segments, so I guess somebody was trying to ask a question what's your outlook or what's embedded in the guidance, so maybe ask another way, given the Medicare rates still down in 2018.

So, I guess that is a major headwind for margins, but then when we look at I guess, what have you given guidance for 2019, but that's the way it stand now for 2019 those rates are seem like they could be pretty nice assuming there is no coding quick adjustment, or when you add adjustments added to it.

So, if there are no surprises in the rack and the rates are up 2% call it, what the margins for the home health segment would look like if that will be the case?.

We really haven't started looking into 2019. We'll wait and see what happens around that. But, if you think around, what we've done as we ended 2017, I mean we've performed in the phase of probably almost, if you look at our how exited from our book of business.

We are quite close to 2% rate cut and we're able to grow margin, keep cost per visit on the control.

And then, you come back around looking at 2018 we're looking at 70 basis point reduction, which is about $7 million for the segment, which in terms of what we've seen in the past, we'd certainly like to be getting increases, but that's certainly a number that we think we can manage through from a margin perspective and still have some opportunity from the things we talked about early around admission mix productivity to expand margins..

Thank you. I'll hop back to the queue..

Great, thanks..

Our next question comes from the line of Dana Hambly from Stephens. Please proceed with your questions..

Hi Dana..

Hey thanks for squeezing me and Chris, you mentioned early in the call about, I think it was 13% of care centers being below benchmarks.

I was just curious, are the issues fairly common across those care centers and what's the degree of difficulty in rectifying those issues?.

Yes. Hi, Dana. So, the degree of the difficult is really not that much, it just really takes more time and resources and just kind of focus. When we get in and kind of start diagnosing these, it really comes down to a handful of issues, sometimes its volume, sometimes its contract labor or a tight labor market, sometimes it's that facility management.

And then so, what we do is, we have a key metrics reports that we work off and really kind of identify on a care center by care center basis, what's driving the underperformance. And then, we just kind of hit it with some laser focus.

So it's not that difficult to chose something that we didn't not necessarily have the bandwidth as the management team to really deal with last year or look at the level that we were this year. But, I anticipate what we're setting today that we'll see some re-bounce in these care centers..

Okay. That's helpful. And then, Paul have bigger picture, Humana is in the process of acquiring a home health platform, I assume that you don't really view that as a threat to your business, but correct me if I am wrong. But, I guess my other question would be on, I think within that asset there is a sizable hospice and a sizable personal care segment.

Does it make sense for you that Managed Care would be in those lines of businesses or would it make more sense for folks like you to be doing that?.

Well, obviously, we'd love it if it made more sense for folks like that should be doing it. But I think, I don't know what the philosophy from, I'm going to add Humana for over four years.

So, the philosophy then was hospice wasn't something that the Managed Care particularly did, although United did it, maybe I've heard that that attitude is changing, I mean I think the bigger thing that we're seeing is, is the industry overnight in the fourth quarter is changed.

And see you now have three of the big five companies in some sort of dating function if you will. I mean you've got, Kindred being acquired, you have LHC and AFAM getting together.

So, we view this is opportunistically, frankly we view this is an opportunity while they are working on those things to go out and get some share and to go out and really fight for share and, so view this as a very good thing. We also think, the Kindred thing is great, I wish them all the best.

I think it shows that, that Managed Care does value home health, does value the ability to keep people in their homes and values that ability to do it chronics and some of their difficult folks, well, that's what I worked on when I was there. So, I'm glad that they put their money to work in this space.

I think it adds value to everybody in this business..

Okay. And just last one from me Paul, the - that you recently announced an agreement with or a partnership with Availity and it sounds like a small, but I think you quoted in the releases saying that this type of innovation changes the game for everyone.

So, I feel like I should know a little bit more about it?.

All right sure, well we - so I used to be involved in Availity when I was at Humana. Availity fundamentally is a pipe and what it allows us to do, it were talks that allows payers and providers to talk to each other and very quickly and easily have the payers building rules, so that they can adjudicate claims without getting people involved.

And so, we've looked at how for us part of taking Managed Care business, part of the problem has been, that's a manual process.

And so, right now we are looking forward to automating this process, the more we can automate the process, the better that does in terms of cutting our back-office costs and we believe that automation is going to be really important.

So, we're -- and it's also again, it's working with payers again to try to automate things to try to make sure that we can cut some of those cost down, because right now they pay us, payers pay us less or they hold up, they heard our AR, they heard our bad debt.

So, at this point, this is what we're trying to clear up and that's why we're very excited about our partnership with Availity..

Thanks. I appreciate all the time..

Thanks Dan, I appreciate it..

Our next question comes from the line of Bill Sutherland with The Benchmark Company. Please proceed with your question..

Hi Bill..

Hey thanks good morning everyone.

I'm just curious if you are seeing some benefit in the markets where you're co-located with hospice and home health I guess, and as you're going to be primarily for hospice and is this the case is that, informing kind of how you are looking at your asset acquisition?.

We see benefits and we work, started working on this before we saw those, before we started to really work on this we had about a 15% of, 15% to 20% of the eligible people that were on our home health were going to our hospice. And we started to focus on saying, we think that it provides better continuity care for that number to change.

We're now up around 60% in the mid-60s. And so, we were very happy with the progress we've made there. People on home health do go into hospice and we believe that it's important that if we do a great job on the home health side that people will move into hospice with us. And so, we believe there are captures there that we can do that.

We also believe in when personal cares involved that there is an ability particularly with some of the folks that we talked about in our script do eligible some very chronically old folks that come in and out of home health that we can use personal care to provide some of that in between time, well they are going back and forth into home health.

So, we believe all three, you can really capture the patient and make sure that they are getting good care through the continuing..

And then, I was thinking about, you've talked about clinical excellence, obviously mostly focused on just the quality measures, but are you all, kind of focused on programs to emphasize those kinds of clinical programs that could really increase the kinds of volumes that you can get in the home, I'm just saying, some of the breakthroughs that are happening with remote monitoring and with -- well, you know better than I do, I'm just curious what you're looking at?.

Yes. So I mean in terms of the new innovations and technologies that we are looking, one is we believe and we've done this with congestive heart failure, we have a congestive heart program that's out there that's we're seeing some nice results from.

The idea is from our perspective the more, the better our clinicians are in terms of the tools and the training that we can provide the better, the quality, our ratings are going to be and also we think ultimately importantly because again this is important to Managed Care, it's also important in terms of the quality ratings, is readmission rate.

So, we believe that the more we can do to drive down readmissions the better. So, yes, we keep an eye on remote monitoring tools, the sensors that are out there. We participated in that. We also are tracking what's going on in telemedicine to provide more continual care. At this point there is a lot of noise in the system.

So there is a lot of false alerts that are going on out there. So we are having to part of the algorithms have to get cleaner to make it really worth our while, otherwise we have people showing up unnecessarily which is very costly..

Do you have anything in beta that on sort of the [tele] [ph] care side?.

Yes. I mean we have been doing some work in that space. We actually withdrew from that space in congestive heart failure where we were using scales because there were too many -- too much noise in the system that was turning our costs -- driving our costs very high when we were using it.

But, we still believe in it and so we are going to be continually testing it particularly again if you we are going to take risk. And we do have a couple of risk programs that we are very small with small plants and we are looking at that and we are having a lot of conversations with big plants do about what we can do in the space. It's important.

But, you drive down hospitalization rates. In this business you are gold. So, that's what we are really focused on, what can we do to drive down ACH..

Sounds good. Thanks again..

Thanks Bill. Appreciate it..

There are no further questions in the queue. I would like to hand the call back over to Paul Kusserow for closing comments..

Great. Thank you very much Doug. Appreciate it. Thanks to everyone who joined us on our call today. We appreciate your interest in Amedisys. We'd also again like to thank our employees who delivered these great results. We hope that everyone has a great day and look forward to updating you on our progress on our next quarterly earnings call in early May.

Have a good day everybody..

Ladies and gentlemen, this does conclude today's teleconference. You may disconnect your lines at this time and have a wonderful day..