Ladies and gentlemen, thank you for standing by and welcome to the U.S. Physical Therapy Q4 Year End 2019 Earnings Call. [Operator Instructions] I would now like to hand the conference over to your speaker today Mr. Chris Reading, Chief Executive Officer. Thank you. Please go ahead sir..

Thank you. Good morning everyone and welcome to U.S. Physical Therapy's fourth quarter and year end 2019 earnings call.

With me today include Larry McAfee our Executive Vice President and Chief Financial Officer; Graham Reeve and Glenn McDowell, our Chief Operating Officers; Rick Binstein our General Counsel; Jon Bates our Vice President and Controller. Before I begin my prepared comments I will ask Jon to cover brief disclosure. Jon if you would..

Thanks 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 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 Jon. So I am going to start with some prepared comments. I'm going to kick it over to Larry and I'm going to have some final comments before we open it up for questions. I'm going to focus initially on operating segments. Overall you will see our various operating segments performed extremely well for the year as well as the quarter.

Later in my discussion I'll also cover a few challenges we encountered this year which impacted our overall results especially later in the year plus some highlights on the year. Gross profit grew by 10.6%.

Additionally and outside of our operating results for the year we produced a gain on sale of a partnership announced earlier in the year of over $5 million. Gross margin on the entirety of the business improved 90 basis points to 23.3%.

Our partners in our ops team worked hard to increase our PT gross margins for the year to 23.6% and we finished the year in strong fashion with our PT gross margins further improving by 290 basis points 25.4% on continued strong same-store sales and higher visits per clinic per day than the prior year quarter.

Our management contract’s gross margin improved for the year by 270 basis points and in spite of significant integration and infrastructure related costs we made excellent forward progress in our industrial injury prevention business improving margins 200 basis points to 22.4% for the year.

Also some additional perspective on just how far we've come on our IIP business that's our injury prevention business. Since we started with Briotix in early 2017. That first year we finished with a 13% margin. So in just a couple 2.5, almost 3 years we've gone from 13% margin in that business now to over 22%.

Our entire Briotix team has done a truly exemplary job and continues to create opportunities which we are all very excited about. Additional perspective. We started up that first year with just under $15 million in revenue, ended this past 2019 year just under $38 million in revenue.

Our year-over-year change was a very healthy 47% and there's a lot more opportunity to capture as we look ahead. Other highlights for the year.

Our total company operating income increased 11.8% and our operating margin improved by 70 basis points in spite of a few meaningfully large out of the ordinary cost for us this year including a very large healthcare claims expense overrun for the year.

Moving on, our same store volume and revenue for the year or what I believe is the best ever result for the current team of 5.8% and 6.3% respectively. And our visits per clinic per day increased to an all-time high of 27.6 for the year.

Hats off to our sales teams, our partners and all of our leaders who assist in driving and supporting those efforts that enable us to touch and positively impact more lives. We finished 2019 in our final quarter in strong fashion as well. Our industrial injury prevention revenue increased over 46%.

IIP margins improves the whopping 760 basis points in spite integration and infrastructure related costs necessary for the BTE deal integration and all of the growth that has been created over the past few years. Our PT margins improved 290 basis points to 25.4% despite the impact the additional healthcare costs felt especially late in the year.

We are addressing that important aspect of our business and we have moved our pharmacy plan already with embedded and guaranteed cost savings and we're making further adjustments in our health plan which will allow us to continue to offer an excellent benefit to our employees and their families while addressing some of the funding issues which worked against us in 2019 year.

Finally a management contracts business saw margins improve 660 basis points for the quarter and 270 basis points for a year. I also want to mention that yesterday we closed and funded what would be an excellent partner driven acquisition for us with a very special and gifted team we're very excited about.

Our dealer activity has been strong keeping us very busy. We've invested additional resources in this development area, expect to have a very good year to come in both organic as well as acquired opportunities. That concludes my prepared comments.

Larry will have some additional comments and color and then I'll make a few other comments and we'll open up for questions. Thank you..

Thanks Chris. I may repeat a few of the highlights of Chris hit, but I'll try not to. First I’m going to talk about the year ‘19 versus ’18, overall revenue increased 6.2% just under $482 million, a lot of that was internal growth as Chris mentioned.

It wasn’t a particularly robust M&A year and we also sold an entity and despite that we were able to produce increases in total revenue and even PT revenue. PT revenue for the year increased by $15.6 million despite having sold an entity that contributed $11.6 million in the year before.

Our total company operating costs in 2019 were 76.7% that was a reduction of 90 basis points. Total salaries and related costs at $56.9 were reduced by 20 basis points from the prior year. Rent, supplies, contract labor and other costs were reduced by 70 basis points. So in almost every operating area we saw an improvement in the cost structure.

The gross profit for the year grew by $10.8 million to $112.5 million. The corporate office costs were 9.3% of revenue ‘19 versus $9.1 in ‘18. As Chris mentioned included an operating and corporate cost for 2019 was approximately $1.8 million and higher employee healthcare costs than planned after tax EPS impact from that was $10.5.

Operating income for 2019 increased 11.8% to $67.4 million and as a percentage of revenue improved by 70 basis points to 14%, there was a gain at $5.5 million which is not included in operating results from the sale of the partnership interest at June 30..

The provision for income taxes as a percentage of income was 25.4 in ‘19 versus 24.6 in ‘18 and as we get to the quarter I really want to go into that a little more depth and show you the magnitude of the difference in the tax rate. Same-store revenue for de novo and acquired clinics open for a year or more increased 6.3% as Chris mentioned.

Visits increased 5.8% while the rate increased a 0.5%. Now I'll talk about the quarter revenue and overall total revenue increase 4.1% to $122 million despite the loss of revenue from the clinics within the partnership that were sold at $5.9 million in the fourth quarter of ‘18.

Patient revenue from physical therapy operation in the fourth quarter ‘19 actually grew by $1.1 million. Revenue from physical therapy management contracts was pretty consistent between the two quarters. Industrial injury prevention jumped dramatically 46.3% to $10.3 million.

Company’s total operating costs for 77.9% of revenue in the fourth quarter and improvement of 60 basis points. Total salaries and related costs were consistent for the two quarters 57.8% while rent supplies, contract labor and other improved by 50 basis points.

Provision of doubt for doubtful accounts was pretty consistent 1.2% in the fourth quarter of last year versus 1.3% a year earlier. Overall gross profit grew by 6.9% in the fourth quarter to $27 million.

The gross profits percentage increased by 60 basis points to 22.1% and as Chris mentioned the gross and the gross profit of the physical therapy clinics was pretty amazing at 290 basis points.

Management contracts also -- for PT operations also did a lot better, increased to 660 basis points to 14.3% and the industrial injury prevention jumped by 760 basis points to 18%. Corporate office costs were higher in the fourth quarter last year as compared to the year before.

We had to do a catch up on our accrued incentive comp because frankly the operations teams were doing such a good job. So overall incentive comp for 2019 was lower than 2018, it was higher by about 600,000 in the quarter.

In the fourth quarter alone we incurred more than a million dollars in higher employee healthcare costs than planned that's about a $0.06 hit. So we missed the consensus estimate by $0.04 but honestly it wasn't from operations and this is something that we can fix. We've already changed our pharmacy plan effective January 1.

The savings from that will be over a million dollars and in May we will make substantial changes to our healthcare plan and I expect seven-figure savings from that as well.

Operating income for the fourth quarter of 2019 increased 3.3% to $15.3 million and I mentioned the taxes provision for income taxes was 23.4% in the fourth quarter of ‘19 versus $20.2 in the fourth quarter of ’18, that's an $800,000 tax differential or [$0.06].

Same-store revenue for acquired clinics open for a year or more increased 4.7% in the quarter mostly on volume increases as the revenue was -- the net rate was pretty flat. Our adjusted EBITDA for the year increased 8.5% to $67.3 million. In the release management provides earning guidance.

This is from existing operations and excludes future acquisitions. At the current time we expect operating results to be in the range of $38.1 million to $39.8 or $2.90 to $3.10 per share.

We increase the quarterly dividend to $0.32 per share at that quarterly rate the total dividend expected to be paid for 2020 would be 12.2% higher than what we paid in 2019..

Thanks Larry. Larry hit on some of the comments and I just before we open up for questions some of the comments I was going to make before we open up for the questions I just want to reiterate a couple of things.

Our ops team which extends down to our facilities extends to Briotix team, extends to our corporate support folks in this final quarter and I recognize that it was a bit of a messy quarter on the surface a miss. Our ops teams didn't miss across all our segments. They had an outstanding quarter. We had some things on top that were out of ordinary.

We had $640,000 kind of quarter-over-quarter additional incentive accrual compared to the year prior even though our all-in accrual for the year ‘19 was less than ‘18 that was an impact. This healthcare thing we've got our arms around it. We've made a huge amount of progress.

Jeff Todes, our VP of administration, Larry has done a really good job in outlining and being able to tweak as we go forward, our health plan ever so slightly. Fact of the matter is it isn't something that we can in the year control. We had a bunch of unfortunate, really significant cases which caused us to bleed at the end.

We're able to make some subtle adjustments in the form of benefit adjustment is already paying off and so that will impact us. Then the fact that we had in ‘18 an artificially low fourth-quarter tax rate and a benefit that extended the majority of what you extended back into the ‘17 period.

So in a quarter-over-quarter basis those don't reflect the operating strength and each of our operating divisions but that did impact obviously our overall result. So I just think it's important to understand where those issues were, what's addressable and I think it's all fairly addressable and understandable. So with that that concludes my comments.

We'll go ahead and open up for questions..

[Operator Instructions] Your first question is from the line of Brian Tanquilut with Jefferies..

Hey Brian good morning..

Hey good morning, it’s [Jason Plagman] on for Brian. So I just wanted to ask about the strength in the same store volume.

Obviously, as you mentioned very strong performance -- record performance what would you say is driving that is, investments in your sales force? Is it the strong economy, adding capacity? What would you say are kind of the factors that are allowing you to deliver that performance?.

Yes. So I think the economy's been what the economy has been. It's been strong for a while. This is the best ever performance for us this year. I think it's a combination factors. In ‘18 we added a new region. We added some additional resources focused specifically on support of our sales and marketing.

We've continued to make investments in those individuals and in training. Our partners are doing a great job. They're also doing a great job in terms of the care.

We focus more on our direct consumer marketing from a variety of different fronts and so we're driving more direct business directly from the consumer that's not coming through a referral, doctor referral. So that's helping. So I think it's a combination of those things good people working hard and making a difference.

I think the economy's been great but it's been great for a few years and we've been able to eat this up. So really pleased and I'm proud of the team for the work they did this year and we're going to work hard to see if we can keep it going..

Okay. That makes sense and then 2018 was a little bit slower on the PT M&A -- just wondering the number of conversations you're having with new partners.

Is that how is that trending directionally and also any areas of interest on the IPI side as far as acquisitions? Are you focused on the integration at this point?.

Yes. So 2018 on the face does we get credit for we get closed right for [2019] we had some things that we expected to close both earlier in the year and for instance deal we announced yesterday we originally thought we'd get done. I'm sorry 2019 the deal that we just announced yesterday. We originally thought we'd get done this year.

And the better right thing to do was to take the time they took and to get it done when it was ready to be done instead of trying to force it. So we're a busier right now in discussions and active process than any time since I've been here. It'll be I think hopefully a good, a very good year.

Pricing continues to be strong and very healthy, very good for sellers. We continue to be selective. I think we just had a board meeting and looked at our inception forever to date performance and including deals that we've done in the last four or five years and performance continues to be really strong. So I expect to get a lot done in PT.

On the Briotix side we'll see -- we expect a really good organic year. We've had to digest a lot through these three acquisitions since we started and we'll see how the year progresses. I'm not going to provide much more color than that. We may have activity there from an M&A perspective and we may focus on organic growth.

So we will wait and see how the year unfolds..

Okay. Fair enough. And then last one for me is just the cash flow in 2018 seemed like it was impacted by some working capital headwinds in 2019.

Larry any thoughts on operating cash flow for 2020?.

Well, we're at cash machines. I don't ever feel particularly apologetic about the cash flow. We rolled out Braintree and EMR, our clinics our spend on software and hardware was normal, was higher than normal and we had a really good year in terms of de novo openings which is a good thing. Early on they lose money but they quickly get in the black.

So that was higher in ‘19 than ‘18 but I mean we set an analysis that shows that if we didn't do any new clinics or acquisitions you pay off your debt in less than a year. So we have strong cash flow..

Great. Thanks for the questions. .

Your next question is from the line of Larry Solow with CJS Securities..

Hey Larry..

Good morning. Thanks guys. Just a couple of follow-ups. So obviously the same-store sales especially volumes have been running a little bit above what we thought was sort of normal highs I guess if you will or peaks last few years.

What are you guys baking into sort of going back to that sort of 2% to 3%-ish baked into your 2020 outlook? Is that a good starting point?.

Yes, that's a good starting point..

That's what we normally use in the budget, is 2% to 3%. I think we used 3% of this year. We assumed 3% this year, just because we've been running higher than that..

Right. So hopefully -- potentially if things -- it seems like the environment is pretty stable obviously. Who knows what happens. If corona gets into the U.S. -- and I would view that as a short-term issue, hopefully anyhow. Okay.

What about on the healthcare cost side? So it sounds like -- you guys called out, it looks like -- maybe it's operational, but not certainly related to volumes or anything at your clinics. It seems like you have it pretty much on the control. Unless I guess if costs continue to go up, right, I guess things -- healthcare costs seems to be --.

Let me go through it. There is two items. One are pharmaceutical cost were significantly higher than we expected and I'll be honest with you is these name-brand drugs that are advertised on TV that are now being used for ten different purposes other than they were quite they're originally supposed to be used for.

So we changed plan administrators as of January 1st and put in a gatekeeper so you can't buy these $10,000 prescription drugs without getting making sure there's not a generic alternative or less expense –.

Right. Much more scrutiny out there. Yes..

And then we increased co-pays on drugs too. And then for the healthcare plan, we try to provide a healthcare plan that is really solid, because oftentimes we're competing with hospitals for -- they normally provide superior benefits on the healthcare side. But we're going to make some design changes there.

And just frankly, what everybody else is doing, we're going to have to increase deductibles and co-pays. But again, we're going to try to do it such that we still maintain a top-tier health plan, but there are design changes that we already know will save us seven figures.

And so we're going -- I'm not going to have a recurrence of what we had last year..

I think part of the issue last year, we've -- randomly we've had -- relatively speaking, we've tweaked our healthcare plan a little bit year-in and year-out. We had a rash of really, really tough, big spend cases, much beyond normal including young people and preemies, and accidents that --.

Yes, you just can't avoid, yes. Absolutely..

We're self-insured up to $300,000, and then we have an individual case stop loss, and then we have an aggregate stop loss. Both of those got triggered by the end of the year. Our cases over $150,000 in claims jumped 62% from the prior year. Typically, you would normally expect something like that..

But we will make some adjustments, and we'll....

Certainly. It seems like an extraordinary little perfect storm against you, guys. A couple of things that were impossible to sort of predict and probably don't repeat. And you're offset in the other higher stuff.

Does that -- I guess that shows up in what, in salaries and related cost? Where does that show up in the P&L?.

It shows up an operating costs, in the clinics, and corporate G&A, and corporate..

Okay. So it's sort of spread out a little bit..

And just to point on that even though it shows up in operating cost and clinics we had one of the best fourth-quarter operating margins in PT that we've posted in really long time even with those cost push down. .

Right. So hopefully, you got a little room for improvement too, once you get some -- once you offset some of these higher costs. What about -- on the industrial prevention side, Chris, you mentioned, you've obviously done a great job integrating. I guess two questions there.

I know you had some increased expenses in Q4, sort of to complete I guess the integration of the most recent acquisition. Is that sort of pretty much complete? And then on the margin side, what do you think the ultimate -- not an exact number, but you're up to the low-20s today.

Can that continue to climb?.

Yes. This is a young business. And we've taken margins from 13% to 22%, and I understand how that graph plots out. I would encourage everybody not to get too far ahead of us. We've kind of budgeted for the year around where we are right now. We'll see what we can do with that. The focus is on growing the business.

We have had to take and kind of rescale some support, particularly around our financial team and IT, because there's a lot of IT resources that need to be deployed to both manage the company and support these contracts. So we'll see. I think right now, where we finished the year is kind of a good watermark.

And we'll see if we can take that forward, but I wouldn't model it right now at least, but asking not to..

No, no. Fair enough. Just last question. Just -- I know Larry has [indiscernible] do it too fast, although I would like to see him here longer. But I know -- I think you're leaving I think in October.

Do you expect to have a replacement at some point before you leave to sort of help the transition process?.

Yes, we're not going to do without a CFO. Larry has been an amazing CFO. So that process is well under way. We've got a good slate of people to talk to. We're still early in the process, but we expect to have somebody, I would say broadly by the summer time situated with overlap with Larry, and then a nice smooth transition.

And Larry is going to be around to help support and transition as we need to..

Got it..

I should overlap with the new person for several months. We obviously have a deep accounting financial admin team. Now, we'd warn the new CFO not to take calls from Mike Petusky, but other than that..

Alright. Sounds good. I appreciate it guys. Thanks..

Your next question is from the line of Matt Larew with William Blair..

Hey Matt..

Hey, good morning. Wanted to actually ask about IIP again. Obviously, the most recent acquisition added, some slightly different business mix with some of the POET testing.

Could you maybe give a sense for growth in 2020 here, whether you think there's a bigger opportunity penetrating existing customers like you've done with Cosco versus now that you have a broader suite of services going out and acquiring new customers? And then just any update on the cross-selling opportunity with PT?.

Yes. So two different questions. So on the BTE part with post-offer testing, we spent a lot of last year just on integration. And to be honest, we've got a great BTE team and a lot of great folks. And so we're excited about that.

It's been a little bit of a tough market for the POET, especially with their concentration in transportation, railways and some other industries that got hit a bit hard in '19 with China tariffs and all the craziness that was going on around the world, particularly centered around tariffs.

And then secondarily to that, in such a hot employment market, while we've kept all these contracts, some of the people, because they can't find even warm bodies to fill their positions, they are temporarily at least not screening everybody because they don't have enough people that -- even to look at the hire.

It's a good problem, but I would say the POET business is kind of counter cyclical. And so in a super hot economy, it's a little bit tougher. Now having said that, we have seen a pick up, more recently, in that volume. I'm hopeful and it's early, that we can continue that into the year. We were little slow frankly in the latter part of '19.

We have a great team. We've started the work to cross-sell and do that. We're early and I don't really have commentary on how that looks yet because I really truly don't know. And then on the PT business, we're still early in that.

We've been -- as I mentioned to you when we were traveling to meet with shareholders recently, we've been really slow on trying to and very careful on trying to keep these businesses between PT and the prevention side a bit separate. Now there's lots of opportunity to cross-sell within Briotix.

Our folks do such a good job on the prevention side, frankly. If they do their job and they do, there isn't a ton of PT business. Now there is a relationship there.

And over time, we believe those relationships will benefit our customers, maybe not necessarily on the comp side but on the group health side because most of these companies are large self-insured employers. We're in the first or second inning there.

We're moving slowly so as not to create the impression that we've done this just to suck out PT and visits by doing a bad job on prevention. So we're not doing that. We're doing a great job on prevention. And so this is a long-term play and we're still early. So it's going to take a while..

Yes. Understood.

And I just wanted to get any sort of update in terms of 2021, any discussions you've had with the industrial group in terms of positioning with CMS? How we should be thinking about in terms of our own 2021 models, kind of the rate impact from the proposed changes? And then whether you think some of the disruption it could create in the industry, could likely accelerate M&A? So I guess a few different questions in there..

Yes, the easy part of that first. Any disruption in industry absolutely accelerates M&A. That's just been the pattern. As I say, if everybody is in the same storm, but if you have a much bigger boat, you feel it a little bit less and it feels a lot better. And if you're in a small boat, it gets a lot rougher and people will want on board.

And that's going to happen. Our industry group, the alliance -- our alliance has continued to grow and strengthen. I'm really proud of that group, APTQI. We've added a number of more companies here in the last few months. Great companies. We've been very active.

We've had six or seven congressional dinners over the last two or three months, focused around the 2021 issue. We've been to CMS. We've been the CMS a few times for a few different things. We started out the year also with kind of a bungle of CCI edit process, which affects code combinations. It was a mistake. It shouldn't have happened.

It affected January, and a little bit of February, half of February, actually, but we've got that resolved and corrected back to where it was. And so that was an effective initiative that APTQI participated in directly with other industry groups and leaders. We're still working on the 8% issue, how to model it.

Until it changes, you're got to model it like it is. It's 8% for 2021. We're working really hard to blunt and to mitigate that, but it's not done yet. So, that's about as clear as I can make it..

Okay, thank you..

Thank you..

[Operator Instructions]. Your next question is from the line of Mitra Ramgopal with Sidoti..

Hi, good morning. Thanks for taking the questions. First, I just wanted to start with the IIP business. Chris, I know you talked about the cross-selling opportunities that are out there.

And I was wondering if you also need a dedicated sales force to drive incremental revenue or can you do it with just the cross-selling initiative?.

No, we do have a dedicated sales force and we have a great sales force. So Bob Patterson heads that up for us. Bob is a partner in Briotix Health. He's got a great team that's made up of Briotix folks and folks from InSite acquisition as well as BTE. And so that's been a growing force for us.

And they're doing a terrific job, as our client managers and other people have embedded throughout our Briotix Health workforce, who are involved in client relationships and cross-selling, and all those things, leadership team, all the way through the organization. So, we've invested a lot in that.

We work with that team together, and so that's not new for us. But it continues to be a significant part of our success. They're doing a really good job..

Okay. That's great. And then just commenting on the acquisition today, it seems like obviously just based on a number of clinics and the revenue generated, these are very nice size clinics.

And I was wondering in terms of, as you look at opportunities out there, is it just a question of balancing the four or five clinics versus maybe to 10-plus clinics at a similar revenue? If you have a preference for one versus the other?.

Yes, I mean, these come the way they come. And we get attached to really good people. The one we announced this morning, some outstanding folks that we're really excited about. And they come in different shapes and sizes. Some are bigger and more advanced, and some have more clinics and – [or more average] -- in average clinic volumes.

This happened with a smaller footprint to be really, really nice size facilities that run an amazing schedule including through the weekend. So they do a great job, affinity one for the other, they're all different.

And so we have an affinity for great people of integrity that love the business, and then people that also understand how to run the business and have an appetite for growth. And those things combined, they look and feel all little bit different.

And so it starts with us, with the people, and once the people fit, is there -- there is a healthy business and there's a healthy appetite to grow. We're interested. The size of the clinics don't matter as much to me, at least not right now..

Okay. That's great. And then just on the guidance, I'm assuming it's already factoring in the savings from the pharma side.

I was wondering if it also was including some of the savings you expect to get once you tweak some of the healthcare plans?.

Not really. A little bit, but mainly we're trying to make changes that covered the miss for last year. That's the way we look at it..

Okay, thanks. And then finally, I'm not sure if you mentioned it already, Larry, I was wondering if you had the payer mix for the year..

The year, --..

No, for the quarter; the quarter is actually fine..

Okay, for the quarter. So private managed care, really commercial insurance was 47.4%. Workers' comp 14%. Medicare and Medicaid was 31.1%. And then other was 7.4%. [indiscernible] if you look at our total revenue, and workers' comp and industrial injury prevention [together 21%] of our revenue now..

And we may start to report that on a re-cut basis, factoring in Briotix, which we'll do probably as quarters roll out here going forward. We think that's meaningful piece to the marketplace. So we expect that as we go forward..

Okay, sounds good. Thanks again for taking the questions..

Thanks, Mitra..

Your next question is from the line of Brian Tanquilut with Jefferies..

Hey, Brain..

Hey. One quick follow-up. On the PT side, are you seeing any change in ease of hiring or compensation, given some of the reports out there reduced therapist utilization in some other sectors, post-acute from nursing homes and home health seem to be cutting back on therapist utilization somewhat.

So I was just wondering if you're seeing an increased supply of candidates, when you have open positions..

I personally don't have particularly clear optics on -- I don't get a report on how many applicants we get per advertise location. I can tell you that the group has done a really good job filling up positions. Our partners have done a good job in staying connected and creating reputations, where people want to come work.

I don't know that particularly we often hire typically folks that are coming out of the long-term care business, not necessarily. But when we think about in terms of being a great fit for orthopedic or sports medicine business. But I don't know that I'm aware of.

It may be easier here recently, but we seem to be able to fill positions generally where people live. On the pricing side, I will tell you unfortunately five or six, or however many years ago, our association made the decision to have everybody come out with a doctor degree, people come out with more debt.

And so I think that's a full employment market, and I don't think therapists are waiting tables right now. So the pricing -- there is pressure there. The group in '19 did what I think is an exemplary job in getting some margin expansion and relatively flat net rate. But eking out some margin improvement, but it's not because we're paying people less.

That's not the case..

Got it. Thanks, Chris..

Thank you..

There are no further questions..

Alright, everybody. Thanks for your time and attention today. Larry and I are available for your follow-up questions, so pretty give us a buzz. Have a great day. Bye, now..

This concludes today's year-end earnings call. Thank you for your participation. You may now disconnect..