Greetings and welcome to Tenet Healthcare Corporation First Quarter 2022 Earnings Conference Call. At this time, all participants are in a listen-only mode. A brief question-and-answer session will follow the forma presentation. [Operator instructions] As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Will McDowell. Thank you. Will, you may begin.

Good morning, everyone and thank you for joining today's call. I am Will McDowell, Vice President of Investor Relations. We're pleased to have you join us for a discussion of Tenet's first quarter 2022 results as well as a discussion of our financial outlook. Tenet senior management participating in today's call will be Ron Rittenmeyer, Executive Chairman; Dr. Saum Sutaria, Chief Executive Officer and Dan Cancelmi, Executive Vice President and Chief Financial Officer. Our webcast this morning includes a slide presentation, which has been posted to the Investor Relations section of our website tenethealth.com. Listeners to this call are advised that certain statements made during our discussion today are forward-looking and represent management's expectations based on currently available information. Actual results and plans could differ materially. Tenet is under no obligation to update any forward-looking statements based on subsequent information. Investors should take note of the cautionary statement slide included in today's presentation, as well as the Risk Factors discussed in our most recent Form 10-K and other filings with the Securities and Exchange Commission. With that, I'll turn the call over to Saum.

Thank you and good morning, everyone. We had a strong quarter and exited Q1 with significant momentum for the year. Our operators effectively managed through Omicron and accelerated in their recovery month by month after the last surge. We are, of course, pleased that COVID cases have decreased significantly and overall community health should improve as a result. We delivered net -- enterprise net operating revenues of $4.7 billion and $888 million of adjusted EBITDA in the quarter. This is a 14% increase in adjusted EBITDA from prior year. Even after normalizing for a gain on sale, Texas Medicaid supplemental revenues, and a little bit of incremental grand income, which were not assumed in our Q1 guidance, we delivered $756 million in adjusted EBITDA, which exceeded the midpoint of our Q1 guidance. In a quarter marked with speculation about the sector's performance, our core operations performed and delivered ahead of our expectations. The additional items adding to the earnings are attractive upside in the quarter. Let's turn to the business units. We had a great quarter at USPI with $282 million in adjusted EBITDA. Same facility system-wide cases grew 8% and adjusted EBITDA grew 15% excluding grant income, both from prior year. January was challenging given the high transmissibility of Omicron that drove higher cancellation rates. Despite that there was a substantial rebound in February and March with volumes exceeding 2019 on a same store basis. USPI has increased its portfolio by roughly 50% in the last 18 months. Integration of our nearly acquired SCD and Compass facility is on track and these centers are performing well. Physician's receptivity to our buy offers has been very good and additionally, the progress under our new partnership and new center development agreement with SCD is ahead of our expectations. We are truly…

Thanks Saum, and good morning, everyone. Let's start on Slide 3. Our financial results in the first quarter were significantly above our expectations. Despite a strong COVID surge early in the quarter, and the continuing inflationary wage and labor availability pressure providers across the industry are facing. As Saum mentioned, all three of our businesses performed well. In the quarter, we generated a consolidated adjust of $888 million, our strong results were driven by continued high patient acuity and effective cost control in a challenging environment. Also, our results included $69 million gain from the sale of certain medical office buildings for net cash proceeds of $147 million at a very attractive multiple as Saum mentioned. In addition, we were able to recognize $57 million of revenue in the quarter as a result of CMSs approval of the Texas Medicaid supplemental funding programs that we assumed in our 2022 guidance would be approved in the second quarter or later. We were pleased that Texas and CMS were able to resolve this and that CMS approved the programs earlier than we anticipated. Even if you exclude the gain on sale and the Texas Medicaid revenue, as well as the $6 million of grand income we earned in the quarter, we produced consolidated adjusted EBITDA $756 million, which exceeded the midpoint of our guidance. Now I'd like to highlight a few key items for each of our segments, beginning with USPI. USPI continues to deliver strong growth and provide high quality clinical care to our patients. In the quarter USPI produced a strong 8% increase in surgical cases compared to last year, demonstrating continuing volume recovery from the pandemic, particularly orthopedic and GI cases and their volumes improved as we moved through the quarter. Surgical cases were 100% of pre-pandemic levels despite…

[Operator instructions] Our first question comes from Josh Raskin with Nephron Research. Please proceed with your question.

Hi, thanks. So good morning. I heard some of the commentary around value-based care, and so I know Tenet and more so legacy Vanguard had some risk-based entities, even health insurers, I think in the past. But is Tenet really focused as acute care footprint and the market continues to look for more and more value based care. Is there a strategy in place, at Tenet broadly now to test more ACO-like arrangements to use all of your assets in sort of these targeted markets or other sort of risk based ideas?

Hey, Josh it's Saum and yeah, I did refer to value-based care in my comments related to manage care in particular. So let me first explain what I was referring to. A primary strategy for us in value-based care of course, is site of care optimization. Not surprisingly, we embrace the utilization of the most efficient site of care in many cases that's outpatient care, not only in our hospitals, but of course, the entirety of USPIs and enormous value-based care opportunity because of the cost -- the lower costs that are incurred in performing surgeries and procedures in a very high service outpatient-based lower cost environment. And that is a primary value-based care strategy for us nationwide. In addition to that, we are active in the Medicare advantage space. We do have certain markets, larger, more integrated markets that have risk based arrangements with payers, accountable care organizations that exist. But we participate in those selectively where the risk is balanced and it's not a transfer of risk entirely from one entity on to us.

Perfect. Thank you.

Our next question comes from Justin Lake with Wolfe Research. Please proceed with your question.

Thanks. Good morning. Wanted to ask about the labor and inflation environment specifically. What did you see as you went through the quarter, especially as COVID started to moderate, and then, you mentioned a couple of new managed care contracts. One of the big questions, we've gotten out there is around managed care contract, I think, and how your rates might start to increase to reflect some of the inflationary pressures that are out in the market today. So maybe you could tell us how those -- how those newer contracts might have changed versus what you've been signing over the last few years to reflect that. Thanks.

Hey, Justin, thanks for the questions. Let me address labor and then I'll pass to Dan on the managed care question. The primary driver of our performance in labor costs during the quarter was really our continued focus on day-to-day operating discipline, length of stay management, productivity management and a month to month, a goal of improving the utilization of premium labor costs. The contract labor market in particular, didn't moderate that much little bit, didn't moderate that much as the Omicron -- as the Omicron cases dropped pretty precipitously after the end of January. So again, our performance was really more driven by the operating platform that we've described over the past few quarters that were utilizing to keep our total SWB costs in check as the volume recovery occur.

And Justin, it's Dan. We were obviously very satisfied that we were able to enter into new contracts with Blue Cross of Texas and Aetna, I would describe it as a very collaborative process negotiations. Your point about inflation, we always take inflation expectations into consideration when we're negotiating contracts. And these are multi-year contracts across the country and covers all of our facilities and providers and for a number of years, as Saum mentioned in his remarks and we're obviously very pleased to have concluded Aetna signed new agreements with both of those parties.

Right. Thanks.

Our next question comes from A.J. Rice with Credit Suisse. Please proceed with your question.

Hi everybody. I might just try to understand some of the comments you're making about how you saw trends develop in the quarter, and it sounds like you perceived, there's at least in the surgery area, some backlog of volumes. I know in some of your slides, you show that admissions and outpatient visits step back in the first quarter versus which you saw in the fourth quarter, but alternatively, in your prepared remark, you're talking about surgery volumes being strong and overall volumes in February and March being better than pre pandemic. I guess. Can you give us a sense of what the trajectory is toward the end of the quarter, how once COVID dynamics of January eased off, what the business looks like, both from a surgical perspective and then overall volumes, and do you need a further step up to maintain -- to hit your volume targets for the rest of the year? Or are you on a glide path to get there, given what you saw as you exited the quarter?

Hey, A.J., thanks for the question and I'll reiterate, in both the hospital segment and the USPI segment, we were pleased to month over month over month improvement in our performance. Our focus on surgeries is consistent with our long-term strategy related to acuity and high acuity procedure-based care. We were, pleased to see both emergent and elective surgeries and obviously mostly elective surgeries in the USPI environment continue to grow and improve each month in that environment. So we feel good about the way we're exiting the quarter. I'm particularly pleased at how rapidly USPI recovered in their surgical case volume. I would say it's been the fastest of prior COVID surges in terms of the ability to really recover those cases and continue to move forward. We also from a volume standpoint, I would highlight that emergency department visits were in particular where we saw the environment lagging in terms of recovery through the quarter, as opposed to our high acuity strategic service lines and that was correlated once again, less to the Omicron cases disappearing, but more to the states, which were more locked down rather than those which were less locked down. And as the state locked down have continued to abate, the recovery has improved.

I'm sorry, just real quick, a little bit more color on USPI, as Saum and Dan mentioned, we were obviously very pleased to see 8% year-over-year growth in our cases, especially considering we had one of the highest cancellation rates we've ever seen at 22.8% in January and overall cancellation rated 19.3% in the quarter compared to 17.8% in Q1 of 2021. So our volume levels have returned to pre-pandemic levels at a 100% of 2019. Volume levels with the acuity normalizing and when we think about volumes going forward, we think will continue to increase our volumes compared to pre-pandemic levels, just really because of the addition of 1500 new physicians across our portfolio this year and of course we continue to focus on service line expansion activities across the portfolio, as well. That said, we believe the volume growth will be consist with our full year guidance at 3% to 4% for the year.

And AJ, the only other thing I'd add is in addition to volumes improving as we move through the quarter, earnings improved as we move through the quarter.

Right. That was a point I was going to ask, is that your commercial percentage improved in the quarter and year to year? Was that more the January COVID volume or is that more the volume you're talking about here with the surgeries coming back that's helping the commercial mix?

It's a little bit of both. As well as that line item also does include that Texas money does get routed to manage Medicaid based on the structure of the program. But no, the commercial volumes have been solid, I'd say. We're not back to pre-pandemic levels, but they've been -- those trends have been -- have recovered stronger really throughout the pandemic. But Medicare volumes are beginning to continue to strengthen so that's nice to see as well.

Our next question comes from Jamie Perse with Goldman Sachs. Please proceed with your question.

Hey, good morning guys. Saum, you touched on your approach to guidance just being prudent, given all the factors that are going on. I just wanted to get a sense if there's any particular areas that you're leaving yourself some more room, whether that's more persistent labor pressures, that lasting for a bit longer than previously anticipated recovery dynamics that maybe being a little bit behind where you might have thought you were at this point, or just the comment on having more information before you update guidance. What are you looking for to have a little bit more confidence in the trajectory?

Yeah, thanks Jamie. And I appreciate the question. Look, the approach here is to be as transparent and straightforward as possible. We recognize the outperformance in the quarter and we recognize that we will need to update guidance at some point. And again, I would tell you the primary driver, goes back to what I said around the best approach to making assumptions around that guidance. And, exactly a year ago, we all sat around talking about how COVID with the vaccines in place and the surge disappearing from the holidays, this could be the end of the COVID environment and 2021 was dominated by Delta and then surprisingly after that, Omicron. So, I think this is just more about prudence and transparency around what may lie ahead, given that there are other variants that seem to be circulating the globe already. The only area which we have noted that we are obviously watching carefully is we would've expected contract labor rates and the labor market to have normalized a bit more by the end of this quarter, relative to where we are today. Again, our response to that of course is operating discipline, which we have demonstrated in this first quarter. But I think until we see that materially improving, yeah, as I said, keep our heads down, operate with the same discipline in Q2 and update the guidance coming outta the second quarter.

Our next question comes from Pito Chickering with Deutsche Bank. Please proceed with your question.

Hey, good morning guys. Thanks for taking my questions. A few ones on the ASE side of the business, I guess looking at the first quarter of '21, how much revenue and EBITDA came the urgent care business and the diagnostic imaging business, just so we can understand the baseline growth how did care do in the first quarter versus your expectations, and then to dig in on A.J.'s questions on volumes, can you remind us what you're assuming for ASE volumes for 2022 and what was the extra rate [ph] versus those assumptions?

Hey, Pito, it's Dan. In the first quarter last year, as a reminder, the USPI urgent care business was in the numbers and in terms of the revenues associated with the urgent care business that we ultimately sold in the second quarter as well as the imaging centers of ours were under the USPI umbrella last year in the first quarter as well. We subsequently transferred those to the hospital business in the second quarter last year. So in total, those two businesses in the first quarter last year had over $50 million of revenue associated with them. So that's in, Q1 '21's numbers last year that obviously aren't in this year's first quarter.

And then on surge center, I guess, how did that do in the first quarter versus expectations and then sort of to AJ's question volumes, what were you assuming in your guidance for 2022 for ASC volumes and kind of, where did you exit the quarter with that? Thanks so much?

Yeah. Hey, Pito, related to the ASC facilities look, the portfolio is performing as planned and the physician interest as Saum, mentioned in the buyouts with than the portfolio is strong. We already completed a significant number of buyouts, and we have a large pipeline of buyouts to complete in Q2 and is importantly, we remain confident about achieving the year three multiples we communicated when we announce the transaction.

And Pito, the surgical case growth that we're assuming for this year, the entire year is 3% to 4%. Obviously we did a lot better in the first quarter.

Our next question comes from Kevin Fischbeck with Bank of America. Please proceed with your question.

Great. Thanks. Just wanted to follow up on that labor point that you were making that contract labor, I guess, I think you said was down 20% by March, but not as down as much as you thought. Why think that it hasn't come down as much as you thought so far. And are you still confident in that trajectory as far as yearend and I guess what has to happen between now and yearend for that to get to where you originally thought it would go?

Yeah. Hey it's Saum and then I'll start and I'll pass to Dan. I think it's hard to speculate exactly why the contract labor market isn't normalizing more quickly? One reason that we've thought about is that over the past four or five months, some of the contract labor terms have involved, 12 of 13 week contracts and we may be just on a cycle of coming off of those assignments before we start to see even more moderation in the contract labor rates. Again, I think this is a situation where we would've hoped that the contract labor rates would've come down faster. The thing about it is when the contract labor rates come down, that will reduce the incentive for nurses to travel, which will then help to settle down local market nursing supply relative to demand, which will allow more hiring and more permanent nurse placements into the markets and so these things are linked together in the way that it seems to be working.

And Kevin this is Dan. Just a couple numbers and just say you have them, before the pandemic, our contract labor, as a percent of our SWB was typically in the 2% to 3% range last year for most of the year, was running, around 5%, 5% to 6% in the first quarter due to the surge from Omicron. What we saw for the entire quarter was about, 6% to 7% contract labor costs as a percent of consolidated SWB. Well, listen, we did see some moderation. It's just, we'd like to see, more of it obviously as we move through the rest of the year,

I just want to confirm you guys haven't changed your view about where labor ultimately settled out this isn't a sign in your view that they might end up settling out at a higher rate of just a delay in getting there.

No, not at this point. No.

Right. Great. Thanks.

Our next question comes from Jason Cassorla with Citi. Please proceed with your question.

Great. Thanks. Good morning guys. There's a number of moving pieces between the contract labor that you're discussing now and the inflationary cost backdrop and the continued cost management performance. But I guess I was hoping you could help with maybe just a margin progression expectation for the hospital segment as we move through the rest of 2022. And then just to follow up on that as we lap many of these cost pressures in '22, how should we think about the longer term margin opportunity for the hospital segment specifically in 2023 and beyond if you have any commentary there, that'd be very helpful. Thanks.

Hey, Jason, it's Dan. Obviously, we were we were very pleased with how we manage costs in the quarter in all three of our business units. As I mentioned in my remarks, our SWB costs as a percentage of our revenue were flat year over year, just despite I think it's fair to say a much more difficult labor environment this year, and that's attribute to some of the operators and very effectively managing labor spend as well as Brett and his team and our Conifer team. Listen, margins have improved significantly and even if you exclude the $69 million gain on the sale to medical office buildings, so we're -- obviously we're optimistic about our ability to drive margin improvement. As volumes continue to recover and our focus on higher acuity service lines, whether that's in the hospital business or the ambulatory business and our ability to effectively manage costs we're obviously optimistic that there's opportunities there for further margin improvement.

Our next question comes from Whit Mayo with SVB Leerink. Please proceed with your question.

Hey, thanks. Dan, just looking at the composite pricing in the quarter 4% growth and the hospital revenue per adjusted admission, and it's a good number, but I think that's a little bit distorted based off the timing of some of these Medicaid supplemental programs. Is there a good way to kind of wrap our head around a clean number to have a better understanding of sort of like a normalized underlying, pricing revenue adjusted admission number?

Hey, yeah certainly the Medicaid money is coming through had somewhat of an impact on our net revenue per just adjusted admission. But one thing, to keep in mind, we did have some of that money in last year's first quarter as well, but so how I would think about it is probably, we've been talking about in terms of our revenue growth on a per adjusted mission basis is, probably, 3% type of area and driven by our managed care contracting strategy as well as our focus on higher acuity service lines.

Okay. That's helpful. Just squeeze one quick one, just curious, like looking at the return in the ED visits, can you just maybe comment on, level one, two, three, four, five, what sort of happened within the quarter where you're seeing pockets of strength or weakness? Thanks.

Yeah. Hey, Whit. It's Saum. Obviously, the higher acuity, ER is volume is less quote elastic, right. And so that's the case. We track that through hospital admissions that go through the emergency department and surgeries, but even those were slow a little bit slower in the quarter in particular when there was that mostly, kind of as you came out of the Omicron surge. I think consistent with what we've seen over the past year and a half markets, which opened up quickly, and I mean opened up, kind of the overall economy, not healthcare economy, recovered more quickly even in emergency department volume and those that were more locked down are recovering more slowly, including in lower acuity ER volume.

[Operator instructions] Our next question comes from John Ransom with Raymond James. Please proceed with your question.

Hey, there. The Texas Medicaid payments September to now, how are you -- was that just basically a accrued on a level basis per month? And then what's the go-forward accrual of that for the rest of the year? Thank you.

Hey, John Stan the Texas Medicaid monies in our guidance, we assume the programs would be approved. But we did not assume it. It was in Q1. As I mentioned on our last earnings call the previous program funding for us was, roughly $75 million and then as we thought about our guidance for this year, we did assume that the program would be approved retroactive back to September 1. So our guidance did include the four months of revenue that we were not able to recognize in 2021. So if you look at $57 million, it's it covered a seven month period. So the annual funding on a go-forward basis, roughly a little less than a $100 million.

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

Hey, good morning guys. Hey Brett, just a quick question, just on the ASC side, Brett. Any color you can give us in terms of where you're seeing the most growth and then with the backlog looks like by specialty, maybe, and then I guess kind of follow up just to the SCD questions, now that you've had it, the full asset for a few months, how are you, what are you seeing in terms of the synergy opportunities that remain, whether it's purchasing or on the labor side, or just any color you can give us on the progress you're seeing with SCD. Thanks.

Yeah. Hey, Brian. So yeah, just a little bit on some of the recovery in cases, we continue to see strong recovery in cases around musculoskeletal MSK, ortho spine. I think of particular interest was recovery in some of the lower complexity cases in Q1 specifically, ENT for example, increased, the cases increased 34% year-over-year, and our GI cases increased 14% year-over-year. And we also saw a pretty significant similar increase in our ophthalmology and retina cases in Q1 as well. So when we think about the 8% growth we saw in Q1, a lot of that was driven by some of those lower complexity cases coming back compared to Q1 of 2021, when we saw -- really saw some of the more complex cases come back and the lower acuity cases just took a little bit more time to recover. What, was your second question, Brian?

On the SCD side, obviously there's a lot of focus on that. You put up a good same-store number and people are looking at, kind of like top line performance and margin performance as a whole. So maybe any color you can give on what you're seeing at SCD and then the synergy opportunities, are you finding more whether it's supply chain or other operational items.

Hey, Brian. In terms of synergies, we based on our experience so far we're very comfortable with our synergy estimates that we've talked about when we announced a transaction. There's been no surprises there at all.

Yeah, no only other thing I've add Brian is just related to the integration more broadly. The integration of the first trench of SCD facilities that was completed at the end of 2020 is essentially complete. And they're operating the same fashion as the legacy USPI facilities. The integration of the tranche complete at the end of 2021, is going very smoothly. We continue to hit key milestones and really overall is pleased with how the facilities are operating. And the good news is, there hasn't been any significant surprises. And I think that's largely a result of the due diligence that was done on the portfolio prior to proud of both transactions being completed.

Our next question comes from Stephen Baxter with Wells Fargo. Please proceed with your question.

Hi, thanks. Wanted to ask your initial thoughts on the proposed Medicare inpatient role. I guess, thoughts on the initial update itself, and then obviously there's a number of moving parts. One of these, there seem to be some confusion about whether the publicly traded hospital companies are actually seeing a benefit from the higher outlier payments in 2022, that CMS is describing. So I guess, any color on that would be helpful. And then in general, how you're thinking about the prospects for maybe potential approval as we get to the final. Thank you.

Hey, Stephen, it's Dan. In terms of the Medicare update, as you saw the market basket adjustment that was announced was roughly 3.2% for hospitals. However, there are two other items somewhat offset that namely the outlier threshold was increased quite a bit, which was surprising as well as the disproportionate share funding levels. So all in what we're projecting for us is roughly about a 2.3% net increase under the existing proposal that would go into effect October 1. However, we and others will be working with the appropriate parties to see if there can be any further improvements to that given the environment that we're operating in.

Our next question comes from Ben Hendrix with RBC Capital Markets. Please proceed with your question.

Thanks. just wondering if you give just a little bit more detail on specific labor cost management measures that have helped you keep SWB flat in this increasingly difficult backdrop in Omicron, and also the extent to which those measures could present a run rate tailwind going forward in a more normalized neighbor or baseline labor backdrop. Thanks.

Yeah. Hey, Saum. I'll comment on that briefly and then pass it to Dan for anything he may want to add. Obviously, it was our intention a few years ago, as we redeveloped our operating strategies in the company, including deployment of hospital by hospital, floor by floor analytics for our cost structure including labor that we were building a foundation to utilize for the long term. This wasn't -- this is not a platform that is somehow COVID-specific.. Utilization of the platform during COVID has been very, very helpful because as you know, the labor environment became more complex very quickly with the utilization of contract labor with high rates, and then a lot of other premium pay and retention strategies that were required as well as active decisions about which capacity to staff and which to take down when the volume may not have been available. So, look, I appreciate the question because it is very much our intent to continue to operate with this kind of discipline and utilization of the analytics platform that's been built in order to manage a complex SWB line in the hospital segment. In the short term, until the contract labor rates begin to normalize, we will continue to employ the strategies that we have around productivity, length of stay management, and ultimately, some proactive decisions not to bring capacity back online yet when the marginal cost of that labor is incredibly high.

Our next question is from Sarah James with Barclays. Please proceed with your question.

Thank you. So your guidance implies a little bit more front end loaded EBITDA and consensus was expecting, and I want to make sure I understand some of the assumptions transitioning 1Q to 2Q. So you talked about a month over month improvement in surgical volume in February, and again in March. Do you expect that to continue to trend up monthly through second quarter? And then on the temp labor utilization being the 7% to 8%, are you assuming any kind of improvement on that in your 2Q guide and what are you assuming for supply cost pressure?

Hey, Sarah, it's Dan. Let me lemme try to address that. Yes, we are assuming further moderation in contract labor, as we move through the year. The question ultimately becomes the timing of that, but assuming there's no other significant COVID surges that we would expect that there would be moderation as we move through the year. It's just in our mind, it's just a question of timing. Will we get back to pre-pandemic levels by the end of the year? We haven't said that, and we're not assuming that, but we do expect some moderation as we move through the year. In terms of…

Supply cost and surgical volume…

Well obviously, we're up to a good start from a surgical volume perspective, particularly on the USBI side. As I mentioned, we're assuming 3% to 4% growth this year. We outperformed that in the first quarter and so we'll obviously keep evaluating that and once we close the second quarter, we'll certainly reevaluate our guidance at that point. Operator, next question. Is there anyone have a question?

Our next question comes from Andrew Mok with UBS. Please proceed with your question.

Hi, good morning. Maybe just a follow up to the SCD question. Can you quantify the inorganic revenue contribution from the second SCD deal in the quarter, and how should we think about the timing and progression of SCD revenue synergies for the balance of the year? Thanks.

Hey, Andrew, it's Dan. We're not going to get into to the specific numbers related to each one of our centers or, or group of centers. As we mentioned at the beginning of the year that you we're estimating approximately $140 million this year of EBITDA related to the SCD centers and as Brett and Saum have mentioned, integration is going well and we remain very optimistic about the synergies. Ultimately those centers, it, once they're fully ramped, we're sticking with our estimate that it'll be roughly $275 million of EBITDA once the centers are fully ramped by year three to four. So very pleased with a great transaction and this five year partnership and development agreement is also very optimistic as well.

Yeah. And Dan, towards that point, we're actually, we, said at the beginning of the year or when the transaction was done, that we expected to do probably 10 centers -- de novo centers a year in partnership with SCD without getting into specifics, we're ahead of or already ahead of plan at the end of Q1, as it relates to those 10. So, very pleased with not only the number of facilities, but the quality of facilities that SCD is bringing to us as potential partnership opportunities.

We have reached the end of the question-and-answer session. This concludes today's teleconference. You may disconnect your lines at this time, and we thank you for your participation.