U.S. Physical Therapy, Inc. (USPH) Q1 2021 Earnings Report, Transcript and Summary

Good day and thank you for standing by. Welcome to the U.S. Physical Therapy Q1 2021 Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speakers’ presentation, there will be a question-and-answer session. [Operator Instructions] Please be advised that today’s conference is being recorded. [Operator Instructions] I would now like to hand the conference over to your speaker today, Chris Reading, Chief Financial Officer (sic) [Chief Executive Officer]. Please go ahead.

Thanks, Chelan. Good morning. And welcome everyone to our first quarter of 2021 earnings call. With me in the office or on the call today include Carey Hendrickson, our CFO; Graham Reeve and Glenn McDowell, our COOs; Rick Binstein, our General Counsel; Jon Bates, our Vice President and Controller. As we typically do, Carey and I have some prepared remarks ahead of taking your questions. Jon, will you start by covering our brief disclosure?

Thanks, Chris. This presentation contains forward-looking statements, which involves certain risks and uncertainties, and these forward-looking statements are based on the company’s current views and assumptions, and the company’s actual results can vary materially from those anticipated. Please see the company’s filings with the Securities and Exchange Commission for more information.

Thanks, Jon. Okay. This morning I am going to have Carey cover the meat of the release, but I do want to start out with some overall color on the quarter, along with some important key aspects of how we are doing and how we look at the year ahead at this point. First of all, I can’t say enough about the fight in our team. They fought through last year with the unknowns of COVID, keeping patients and each other safe, as we worked their way through a difficult time, driving volume back to their great care, great work, while creating a safe, clean, and upbeat environment for the care of our patients. Those efforts resulted in a meaningful recovery by year’s end. Not quite the pre-COVID levels, but within spitting distance certainly. As we entered the New Year in January, volume, as it often does in January was slower, although throughout the month, we continued to gain steam. By the end of January, we finished the month at 26.1 visits per clinic per day. February started strong and was progressing nicely, when we got hit with that Southern storm that had us idle in Texas and most of Tennessee for a full week and that was a very big impact for us, but the team bounced back strong. We finished the month with the nice volume pickup and despite of that setback, which had a major impact on visits we finished February at 25.6 visits per clinic. March and since has been on a par. Really strong volumes of new patients and visits, producing a record month for us, March for operating earnings, revenue, visits per clinic per day, where we finished at 29.3, which is an all-time high for us, but I am betting that record visit lasts long. The team continues to do a great job in our facilities and our patient volumes remained strong in spite of the world not being fully upside right yet. Very solid volumes for the quarter, coupled with continued excellent expense control produced some really nice results as well. Total combined salaries in both parts of our business were only 50 -- I am sorry, yeah, 56.8% of net revenues in this first quarter. It’s been a pretty long time under normal circumstances when we have been that low. That combined with the volume, drove our gross profit for the quarter at 33.4%. Our overall gross margin was 23.1% for the quarter, up 590 basis points compared to Q1 2020. Gross margin for PT clinics, excluding closure cost was 22.9%, a 560-basis-point improvement and gross margin for our injury prevention business, which has performed so very well throughout the entirety of this time, came in at 27.2%, up over 1,000 basis points, as compared to 16.8% in Q1 a year ago. A few other highlights for the quarter before I review updated guidance. Our team has been successful renegotiating a good number of our lease contracts and they have been working on that for some time with good fruit coming to bear. Additionally, our payer contracting team has secured a number of positive pricing adjustments, with, we believe, more good things to come in this area. Combination of those efforts will certainly help us for the remainder of this year and for years to come. As a result of a number of positive factors, management is raising guidance for the year as follows. The guidance is increasing from a previously stated range of $2.40 to $2.52 to a range of $2.68 to $2.78 for operating results per share for 2021. The increase to our guidance is primarily attributable to three items. First, our performance in the first quarter was better-than-expected when we initially provided our guidance. Our patient volumes and revenues increased significantly as the quarter progressed, with March finishing as the strongest month in the company’s history from a volume, revenue and operating income standpoint, and volume continues to be very strong along with terrific cost control. Second, we added a five clinic physical therapy practice at the end of the first quarter that we expect to add $0.03 to $0.04 to our operating results per share in final three quarters of the year. And finally, the 2% sequestration relief on Medicare payments that was scheduled to end at the end of March 2021 has been extended through December 31st, which we expect to add $2 million to revenue and which equates to approximately $0.10 per share on that basis. As per our usual practice, this updated guidance range does not include any additional acquisitions that we expect to make in 2021. On that topic, speaking of acquisitions, the partnerships that we have acquired recently, as well as previously have done incredibly well through this difficult period. We have been supremely blessed with incredibly bright, talented, hard working, dedicated individuals of extremely high character. We continue to attract similarly committed individuals who we expect will join our company as our current deal flow progresses. We have a clean balance sheet and in spite of some materially large outlays in this quarter that Carey will cover. Our cash flow this quarter was excellent and our borrowings under our credit facility unchanged. We have a lot of dry powder at the moment. But with our activity thus far, we expect to get a lot of good things done as we move through the year. In closing, I just want to thank our team again for the yeoman’s work they have done this past year since COVID-19 came to our front door. They have been exemplary in all respects and we know with the hearts and resolve that we have within our group that we will continue to fight forward through the remainder of the year. Thank you for your time and attention this morning, as well as your support and belief in our team throughout this past year. It means a lot to all of us. With that, I’ll turn things over to Carey to cover our results in a little bit more granular detail.

Great. Thank you, Chris, and good morning, everyone. Today we reported first quarter 2021 operating results per share of $0.64, which was $0.34 higher than the $0.30 per share that we reported in the first quarter of 2020. As Chris noted, our February volumes bounced back quickly after the significant weather related event we had in February, primarily in our two largest states of Texas and Tennessee, and our operations team finished the first quarter very strong, producing record high results in the month of March and important key metrics of average visits per clinic per day which were at 29.3, physical therapy revenue which is at $40.3 million, total revenue which was $43.9 million and operating income at $8.6 million. Our adjusted EBITDA was $15.6 million for the first quarter of 2021, which was up $7.6 million from our adjusted EBITDA of $8 million in the first quarter of 2020. Revenues in the first quarter of 2020 2021 were $112.4 million, which was down only slightly from the first quarter of 2020, even though we had one less business day in the first quarter of 2021 than we had in the first quarter of 2020 and we also had 24 fewer clinics open on average in the first quarter of 2021 due to the sales and closures of clinics that we completed at the onset of the pandemic in early 2020. Our physical therapy patient volumes per day per clinic were 27.1 in the first quarter of 2021, which was higher than both the first quarter of 2020, which was 26.2 and the first quarter of 2019, which was 26.9. That’s particularly remarkable given the weather event in February, where we basically lost a full week of visits in our two largest states. A month in the first quarter of 2021 visits per clinic per day was 26.1 in January, 25.6 in February, which was impacted by the weather related event and then it increased to 29.3 in March of 2021. Our net rate for our physical therapy operations was $104.72 in the first quarter of 2021, which was up 1.6% from $103.11 in the first quarter of 2020. The first quarter 2021 rate was 0.9% less than the full year 2020 rate of $105.66, reflecting the Medicare rate reduction of approximately 3.5% that went into effect in January of 2021. Our physical therapy revenues were $102.4 million in the first quarter of 2021, which is a decline of only 0.5% as compared to the first quarter of 2020. The slight decline again was the result of having one less business day in the first quarter of 2021 than in the first quarter of 2020 and also having 24 fewer clinics open on average in the first quarter of 2021, as I noted earlier. On a same-day basis, our physical therapy revenue was up approximately 1%. Revenues for the industrial injury prevention business were $10 million in the first quarter of 2021, a 1.3% increase over the first quarter of 2020 revenues of $9.9 million. As Chris noted, our team continues to do a great job managing our cost, our operating costs, excluding closure costs declined to $86.4 million in the first quarter of 2020, from $93.3 million in the first quarter of 2020, which was a decrease of 7.3%. Our costs were 76.9% of net revenues in the first quarter of 2021, compared to 82.8% in the first quarter of 2020. Our gross profit increased $6.5 million in the first quarter of 2021 when compared to the first quarter of 2020. Our gross profit margin was 23.1% in the first quarter, which was up 590 basis points from the gross profit margin of 17.2% in the first quarter of 2020. In the first quarter of this year, our corporate costs were also lower. They were $800,000 lower than the first quarter of 2020, which was a decrease of 6.9%. And as a percent of revenues, our corporate costs were 9.7% in the first quarter of 2021, which is down from 10.4% as a percent of revenues in the first quarter of 2020. Interest expense and our debt was $246,000 in the first quarter of 2021, which is down from $427,000 in the first quarter of 2020 due to reduced borrowings under our credit line. Our weighted average interest rate in the first quarter of 2021 was 2.95% with all in. Portion of our gross profit attributable to non-controlling interest was $3.7 million or 14.3% in the first quarter of 2021. Our balance sheet remains in an excellent position and our cash generation remains strong. We began and ended the first quarter with $16 million drawn on our $125 million revolving credit facility and we had cash of approximately $18 million at March 31, 2021, giving us a net cash position of about $2 million at quarter end. During the first quarter, we paid back $14.1 million in Medicare advance payments we received last year. We have previously noted our intent to pay that back and we did so in the first quarter. We also funded our first quarter 2021 acquisition at $11.7 million. As a reminder, we deferred $8.3 million in payroll taxes in 2020 under the CARES Act and will repay half of that balance by the end of 2021 and the other half is due by the end of 2022. In closing, our people and operations have proven to be resilient over the last year plus and they are clearly focused on the continued growth and success of our business, as evidenced in our first quarter results, which we know will result in increased shareholder value going forward. We are pleased with the positive momentum in our business and we look forward to continued strong performance in 2021. Now, Chris, I’ll turn the call back to you.

Yeah. Operator, if you would go ahead and open up the lines for question.

Okay. Thank you. [Operator Instructions] Your first question comes from the line of Larry Solow from CJS Securities.

Hey, Larry.

Hi. Great. Thanks.

Good morning

Good morning, Larry.

Okay. Good morning, Chris. Good morning, Carey. Good morning, guys. Thanks for taking the questions. I guess first question just from a high level, if we just look at the visits per day, it almost looks like you are back to pre-COVID levels at least on an absolute basis. But I suppose there are still some pockets of the population and that you see you are not fully back and perhaps those, this is just a little bit of absolute growth on top of some good numbers there. So maybe you can just give us your…

Yeah.

… thoughts on that where we stand in terms of COVID impacting volumes and/or maybe not so much?

Yeah. No. I think COVID still, I mean, so first, on a -- just if we look at the numbers, we are back ahead of where we were in a pre-COVID basis.

Right.

Now that said…

Right. Right.

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

And just sticking with the COVID theme and actually -- it certainly proved your ability to hunker down and roll back variable and maybe even some cost that we at one-time thought were fixed costs, so you took a lot of cost visits. But you have come back, obviously, a lot on the volume side and yet it’s -- and so just trying to figure out what do you learn, your ability to maybe be more effective, do more with less? And it seems to be proving itself vital if we look at small -- it’s a small microcosm overall performance, but just in Q1 alone your gross margins are up, close to 600 basis points. So just talk to perhaps in sustainability of some of this efficiency improvement?

Right. We don’t want to waste a good crisis and so we -- everybody. When I say we, I mean, our partners, our staff, everybody, dug deep last year and we tried to get out any cost that, to your point, we thought was necessary, but we have learned to live without it and so there will be, Larry, some things that do come back. I mean, Graham, did a road trip this week out to see some of our largest partners and we haven’t done that in better part of a year. And so that’s travel cut out last year and some of that will come back. Maybe not to the full extent that we had before, because we can use technology and we have all gotten comfortable with that, but there will certainly be some of the variable cost things. On the people side, we are pretty lean still, as we drive volume and volumes are really good right now. Where we need to, we’ll incrementally add people and just as we normally would. And so, the only thing I would tell you for the, on a quarter basis, you are going to have to remember last year, we took a lot of not only did we have people reductions, but we had a lot of salary reduction. So second quarter, third quarter, pretty good margins last year in spite of all this particularly in the third quarter, I think.

Yeah.

And that was still when we had the Board and the exec team and all of our staff here and a lot of folks around the country, who were still working, taking pretty meaningful salary reductions. And so on a quarter-to-quarter comparative basis, you won’t see the basis point differential for the rest of the year. I think that you saw this first quarter, but we still should hold on to a good bit of the cost savings overall, if that makes sense.

Yeah. No. Absolutely. Absolutely. And then, just last question, if I may, just on the injury prevention business, which kind of held its own during the pandemic. How’s that position -- how you position -- how do you feel with that position today in this macro environment? Did you feel like you lost some time, you couldn’t -- you were just sort of sideways last year in terms of gaining new clients, is there some pent-up demand, how is -- is there any sort of change in the outlook on that side of the business?

No. I would say, if we go -- dial back to where we were in 2019, we still think that business has a ton of room to grow organically and through acquisition. It’s a great business. It does what it’s supposed to do in terms of keeping people healthy and safe. We did kind of move sideways last year. The sideways was a pretty good position to be in. I mean, we actually finished the year up for that business. We pressed pause a little bit in 2020 just in terms of and it wasn’t that we pressed pause, but people were kind of on pause with respect to trying to make decisions about whether to implement these programs depending upon how they viewed COVID and what the impact was in these various industries. We are seeing development activity pick up, our development teams done a wonderful job. We had some contracts that were set to go in 2020 that got the pause button pressed and we think we’ll get some of those back. And we are still working through it, I mean, in various industries, there’s more impact than others. And so we still feel some COVID impact, but it’s definitely getting better.

Got you. Great. Thanks, guys. I appreciate all the color. Thanks.

Yeah. Thanks.

Thank you.

Okay. Your next question comes from the line of Matt Larew from William Blair.

Hey. Good morning, guys. Just wanted to...

Good morning.

...get a sense for as -- yeah. Good morning. As the visits around the globe picked up in February and March, if there’s anything to share in terms of sort of what the mix of those patients were potentially areas that were bouncing back faster than others? And then do you have any sense for how much of that is kind of a snapback and pent-up demand versus potentially taking some share if you have -- if any of your operators have reported to you that maybe small or under scaled competitors that were around last year maybe are around this year to pick up those referrals?

Yeah. I don’t have any way to really clearly measure, particularly small competitors and how many are in or out. I think a lot of those competitors got PPP money last year, which was the bridge to the other side. In terms of the mix, it’s really across the country. We still have some areas that are a little bit more impacted. We really get down to a state basis. States like Oregon still having some struggle and some trouble. And in fact dialing back some business openings here recently with some virus pickup. But notably there are fewer or much fewer of those and there are places where business is really strong. In terms of snapback or market share, again, it’s a little bit tough to measure. I think there has been -- people have put things on pause and I think for the most part as people have gotten vaccinated, roughly 50% now of population or little better has their first vaccine. People are beginning to do the things that they had put on pause. I don’t think there’s a big pent-up surgery demand though. I do think we are moving some market share. And my guess is, we are probably moving as much of it from smaller competitors as we are from hospital campuses where people don’t really want to go to a hospital campus, it’s not particularly efficient and traipse their way through medical office buildings and just campus in general or just easy to drive up to and walk-in and go straight back and be seen. So I think that’s certainly part of it. We have got a great team. We have got a lot of good resources. And we are very focused on moving that business into our door and not having it go somewhere else.

Yeah. That makes sense. And then, just a follow-up on IIP, you noted on the last quarter call that the sales cycle is a bit longer, it would take some time to rebuild the pipeline. You alluded to obviously customers potentially pushing pause on the decision to implement the programs. Just curious what the kind of discussion level activity, new business development activity has been like here in the last month or two. As Chris you mentioned, vaccines really ruling out, cases now coming down, people starting to think about return to work.

Yeah. Our team there has done a really good job and so we are seeing things die out. We are seeing things getting done and we expect to have a good year this year, which is part of our guidance update. So --but things are improving there as well.

Okay. And then, I guess, just the last one would be on the M&A pipeline both with a Medicare cut and then the bevy of COVID cash that was given to providers to help bridge the difficult 2020. Just curious if sort of the inbound activity has changed at all, anything you are hearing, Chris, potentially from partners or potential partners you may have spoken to in 2019 or 2020 that said that that wasn’t the right time. Just kind of curious what that activity level has been like?

Yeah. The activity level is really brisk right now. But I think it’s different than what people think. These aren’t people that that really badly beat up in 2020. These are off for the most part people who did pretty well. Now we have seen -- it’s been a little bit challenging, we have seen more broker activity right now. In some cases sloppy broker activity where we don’t even get financials for last year. They reflect where the company was in 2019 and so we are a little circumspect about that depending upon what level of information we can get. But right on around continuing to make contacts and we are going to get good things done this year as we always do. We are not kind of a bottom-feeder group. We are not just trying to look for people that are in massive distress. We like partners that think like we do, that want to be around for a long time and grow, and see this as an opportunity to move market share and go forward.

Yeah. No. I don’t see you, guys, doing a lot of deals on a pro forma run rate adjusted for X, Y and Z basis. So I would expect that will continue. Thanks for the questions.

Yeah. You bet. Thanks, Matt.

Okay. Your next question comes from the line of Brian Tanquilut from Jefferies.

Hey, Brian.

Hey. Good morning.

Hey, Brian.

Good morning, guys. Chris, I’ll just follow-up to one comment you made in the prepared remarks on pricing bump with the negotiations with payers. I think that’s kind of a new angle to the story that we haven’t heard in years. So just want to hear your thoughts on what’s driving that, is this finally the point where local density is a leverage point for a provider like yourself? So if you can just walk us through the pitch to managed care and trying to get price increases?

It’s really easy pitch, Brian. We are talking about non-Medicare. The pitch is you are paying a hospital 3 times more than you are paying an outpatient provider. We are infinitely more efficient. We get people to a higher level. We get people out quickly and back to the life. And they don’t have to deal with the logistics of trying to navigate hospital campus. The differential is just large and we have been beating that drum for a while. And that coupled with market presence, national geographic footprint that covers basically 40 states. And yeah -- and I think we just said, okay, enough is enough. We are -- I am personally tired of having Medicare and others devalue our business, which contributes so very much to society and in cost savings in general and we are just -- we are tired of taking it and we are going to push back.

Yeah. No. That makes sense. So to follow up on that, right, I mean, do you think is it more national scale or does it have to be local scale where you feel like you need that to drive that negotiating power harder?

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

No.

Locally…

Go ahead.

Locally having the local footprint certainly helps with name recognition in customers and other clientele. But contracting I think is more national.

No. That makes sense. And then just to follow up on Matt’s questions on acquisitions, right? So would it be accurate to say that your appetite for deals right now is probably greater than in the past and you talked about some of these broker deals. Just curious what your willingness is or appetite for something larger?

Yeah. It’s -- our appetite has always been to find good deals with the right people and we have not been afraid to do things of various sizes. It’s about finding the right people. But, yeah, we have a good appetite right now. So what I don’t want anybody to read into that is that we have a different criteria today, less critical criteria in terms of the integrity and the quality of the people that we are searching now. That hasn’t changed. But we want to grow. We feel like we have got a team that’s capable of growing and you know what our balance sheet looks like and so we certainly can. And so we are going to put it to work as best we can.

Got you. And then, a last question for me, Chris, labor costs, both on the clinical side and the non-clinical side, I mean, what are you seeing there?

It’s a mixed bag. We are -- I think, in some cases, we are having some trouble filling and getting front office people who may be by nature still have kids in school or home school because of COVID or whatever, maybe can’t get or don’t want day care. Maybe they have gotten government assistance and so working is not as big a deal with all of the other complexities. On the PT side, I think, it’s -- we are certainly busy and so we have open positions right now. But we seem to be doing a good job. The team seems to be doing a good job of keeping those filled as evidenced by the fact that we are seeing volume pickup. And so I do expect over -- I was going to say, expect over a period of time to see a little salary pressure. But a lot of it depends on what the government continues to do and dole out, and how many people really want to get back in the workforce. I suspect there’s a pretty large number of people need to get back to the workforce who aren’t working right now and that should help maybe take some pressure off at some point. But right now we are still kind of straddling the fence on that.

Awesome. Thanks guys.

Thank you.

Your next question comes from Mitra Ramgopal from Sidoti.

Hey, Mitra.

Yeah. Hey, Chris. How is it going? Again, just wanted to follow-up on a couple of things that you talked about, maybe some costs coming back as you continue now to get back to a more normal environment. And I was curious on the furloughed employees you had, I think, a few hundred you had furloughed. I was just wondering if they are all pretty much back or you are still gradually going to be looking to bring them back.

I think the people that we were looking to bring back are now back. And so -- and Carey’s got the numbers I think in front of him. So as we grow and as we add people, we are going to be adding staff potentially for growth but not for -- not just to bring people back who were furloughed.

Okay. Well, that’s great. That brings back to me to my next question in terms of the growth, if you can remind us where you are in terms of the sales force and if you -- in terms of just the coverage and maybe looking to expand on that front?

Yeah. I am going to have to kick that to Glenn and Graham to maybe give an update on exactly where we are in sales, because I know it’s changed a little bit over the period and I may not be current.

Yeah. So, Chris, this is Graham. We have got currently 72 sales reps covering over 400 locations and we have increased that by about 14 positions in Q1.

Okay. Perfect. And then I had missed the number the impact of the storm for the quarter. I know previously you had made it close to about $3 million of loss, revenue about $0.13 a share. Just if you can remind me how it will [inaudible]

Yeah. That’s right. Those are the right numbers and that is what the impact was $2.8 million, $0.13 per share, yeah.

Okay. No. Perfect. And then, finally, as it relates again network expansion. I was just curious in terms of COVID, if this kind of changed your perspective in terms of maybe some markets you were initially looking to get into or some states and maybe some others, if there have been any changes on the geographic front?

No. No real changes there. No real changes in our direction. The states that we are in are tend to be higher reimbursement states and there are few states where out of maybe one or two, which we wouldn’t mind being in, but have some strong corporate practice statutes. Other states have a combination of regulatory burden and an extremely high tax burdens and other things, California, New York being among those two. But no, there’s no COVID impact to what we have planned in terms of development.

Okay. Thanks again for taking the question.

Thanks, Mitra.

Thanks, Mitra.

[Operator Instructions] Your next question comes from the line of Mike Petusky from Barrington Research.

Hi, guys.

Hi, Mike.

Hey. I may have missed this if you addressed this. But did you guys talk at all about sort of the impact of COVID in terms of just therapists being out of work and sort of the update from November to February and then to sort of where we are now? Just in terms of if there’s been -- I assume there’s been some progress on that front, but anything you can talk about on that would be great?

Yeah. So hang on one sec. Let me just see. Is that it? You have some -- you…

Yeah. Yeah. So we really -- the peak of having employees out due to quarantine was in November -- really November, December, some in January, but then it scaled back significantly since then. In February, March, and April, we are down quite a bit. We don’t have that many -- we have about 40 people out due to quarantine as opposed to the peak in November, which was over 300.

That’s 40 in a month...

40 in a month, over the month.

Our quarantines are running much shorter…

That’s right. Yeah.

… based on updated guidelines and a host of other things. So we are running about 10 people at any given point in quarantine. But I will say, we are probably much like the general population. We are trying to get above that 60% mark in total people fully vaccinated and we have slowed down a little bit. So we are pressing as hard as we can. We have some pockets that are at this moment a little bit more challenging. So I suspect we are going to continue to have some people from time-to-time into quarantine. But to Carey’s point, it’s gone down a lot.

So I want to make sure I understood. So when you are saying you are pressing towards that 60%, are you talking about you have less than 60% of therapists, clinicians that are currently vaccinated?

I don’t have it. No, I didn’t break it out from therapists. Total employees and that includes…

Okay.

… part time, full, PRN, the whole deal. I suspect and by next call I’ll have this. We’ll get a breakout just for the clinical folks. My guess is the clinical side is much higher. But overall, we are -- not where we would like to be, just like the country is probably would like to be.

Yeah. I am actually a little surprised that any of the treating therapists wouldn’t be -- I mean, I don’t know, maybe there are states where they can’t get that done. But I know here locally that virtually anybody working with patients in terms of hospitals, et cetera, they are all sort of mandated, you got to go get vaccinated.

You would be surprised. Most of the hospitals haven’t mandated. Most of the employers haven’t mandated until FDA approval or full approval first. I think that that’s going to be a challenge for employers who decide to mandate. I think they’ll lose people right now. So we are working this on a variety of different fronts and we -- I think we’ll continue to make progress as time goes on, but we are not fully there yet.

Okay. Chris, earlier you alluded to briefly sort of some renegotiated leases, do you have any color you can add on that? I mean, what percentage of the leases were renegotiated, any quantification of, hey, we think this will save us X amount over the next few years or is there anything you can just add to that general comment?

Yeah. These get straight lined. So, I mean, I don’t know what it is on a yearly basis and I don’t have the total in front of me right now. But we have recently made some decent progress. Graham, I don’t know if you have maybe a round number in terms of overall adjustments? If you don’t, that’s fine.

Yeah. I mean, we are sitting at about $350,000 in overall adjustments, Chris.

Okay.

And can I just ask what -- roughly what percentage of all of the leases that you have that you actually renegotiate?

It’s a moving number. So I don’t really have a percentage number for you.

I mean is it closer to like 10% or 50%?

No. It would be not 50%.

Okay. Okay. All right. Very good. Well, good job, guys. Fantastic momentum. Thanks.

Thanks, Mike.

Thank you.

And at this time, there are no further questions.

Okay. Listen, thanks, everyone. Carey and I are available if you have any follow-up questions over the next few days. We appreciate your time this morning and have a great rest of your week. Thank you. Bye.

Thanks.

This concludes today’s conference. You may now disconnect.