U.S. Physical Therapy Q1 2023 Earnings Call Transcript

Quartr
Provided by Quartr
May 4, 2023

There are 8 speakers on the call.

Operator

Good day and thank you for standing by. Welcome to the U. S. Physical Therapy First Quarter 2023 Earnings Conference Call. And CEO, please go ahead, sir.

Speaker 1

Thank you very much. Good morning, and welcome everyone to our U. S. Physical Therapy First Quarter 2023 Earnings Joining me on our call this morning from our executive team are Carrie Hendrickson, our CFO Rick Binstein, our Executive Vice President and General Counsel Eric Williams and Graham Reeve, our COOs Jake Martinez, Senior Vice President, Finance and Controller. Before I make some opening remarks, I'll ask Jake to cover a brief disclosure statement.

Speaker 1

Jake, if you would, please.

Speaker 2

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

Speaker 1

Thanks, Jake. I'm going to make some brief high level comments this morning on various aspects of the business, And then I'm going to turn it over to Carey to cover the numbers. She does a great job with that. I want to start out by just thanking our team Middle of last year, really, probably beginning in late May into June, Seemed like the world changed having come through a couple of years of the pandemic and working our way through that well. And then we got hit in the head with massive inflation.

Speaker 1

It affected everybody. Police scarcity largely everybody. It was a tough year. Just want to thank our team for keeping their head down, working their way through it, Being very positive, our partners, our staff, our leadership team, marketing Support group, everybody's just done a phenomenal job and I really think that that showed up quite well this Q1. Volume has been excellent.

Speaker 1

It's been as strong as it's ever been. And interestingly, this time, Q1 in 2020 2, at that point, was our best ever first quarter visits per clinic per day quarter in the history of the company. And then we blew last year's Q1 away. So our partners, our staff, the care that they're giving the patients, Marketing folks, all of the support that is helping us drive Strongest volume ever in the history of the company. It's just exceptional right now.

Speaker 1

We've made progress. We're not done. We've made progress in our salary and our total cost per visit. Carrie is going to share some of those Numbers progressions with you. Again, this is helped by volume, still in an inflationary period, but we're making progress, as you'll note in a couple of the key areas that definitely I think ultimately impact these cost numbers as well.

Speaker 1

On the rate side, Our rate renegotiation continues to progress. Our team is doing a very good job. It's kind of a process that takes some time. We're working our way through a very, very large Portfolio of contracts, but we're getting some good, really nice increases. And while it might not It might not seem to some of you that rate has been impacted, particularly when you look This first quarter number, you have to remember that we're in another year where we're in the middle of a Medicare cut a couple percent.

Speaker 1

We've had the sequester relief phase out, which was done last year. So that's another 2% this quarter. And if all things have been equal and you look at our rate this quarter really up 2% against the backdrop. And so again, We're making progress. We're not done.

Speaker 1

More work to happen there. So We've had mid teens, upper teens revenue growth before. But Considering the market that we're in right now and considering some of the macro influences, they come away with nearly 16% revenue growth in PT, along with double digit operating income improvement and highest ever Q1 EBITDA, Really pleased with that right now. And there's been a tremendous amount of work to get to Saturn, more work, More opportunity actually to happen. Some of that revenue growth has come from our most mature facilities, in fact, Our same store this quarter, again, benchmarking against probably the best Q1 we'd ever had a year ago.

Speaker 1

Our same store numbers were up 6%, which is really strong number for us. So when you combine that with the really good acquisitions that we've done, We've done some phenomenal acquisitions with great people. I got to see some of them last Friday when they were in for masters. But whether they were here last week or are still in the field just working really hard to expand and to grow and to make a difference, I've been really, really pleased with the people and really pleased with the progress and the effort. So we talked a little bit spoke a little bit last call about us No longer going to accept low margin business or no margin business And particularly pointing to some of our Medicare Advantage contracts, I think are kind of a plague to our industry right now, Particularly considering how much money these managed care payers are making to take care of Medicare Patients under their advantage plans.

Speaker 1

And they're not paying providers enough. Some of them are in some markets, sure, Some of them are not. And so we've undergone a process to drop those contracts. For those of you who listen from other Places, other companies, industry, somewhere within the industry, I would just encourage you to Continue to evaluate the contracts. We do as a profession a phenomenal job for our patients.

Speaker 1

We should be the musculoskeletal gatekeepers and we should be paid accordingly in order to do and produce the kind of care and results At the cost levels, frankly, that we produce. And so the only reason that these companies will Continue to pay us at low rates just because people accept low rates. So it's kind of the status quo and that really frankly needs to change. So we talked about volume. Again, even through the quarter, on the other Keep that going.

Speaker 1

We've made progress on our front desk automation rollout. It's nicely underway. We'll be rolling out and expanding as the year goes on. It's going to take a little time to do that. But we think that that is also Going to help with our employee retention at the front desk, which has improved also dramatically.

Speaker 1

In fact, Our turnover for clinical physicians, licensed clinical physicians is as low as I can remember in Many, many years. It's gone down a lot. And while our front desk and our related hourly turnover It's not at that level yet. It's improved considerably from where it was last year. Now let's shift gears for a second and Talk about our injury prevention business.

Speaker 1

That business has been incredibly strong and incredibly resilient. We've added to it over the period with a number handful really of really nice acquisitions. That business continues We're going to slow a little bit this year, I think, just as I look out. We're seeing some particularly in the tech CEOs and CFOs of some of these large companies be concerned about whether the economy is going to have a hard or soft landing. Some of those are pressing pause on contracts or pending the rollout of the start of contracts, Getting new business, some of our business is incredibly resilient with a number of our customers and not just resilient, but Continuing to expand and that will happen regardless of what happens with this economy as we look forward.

Speaker 1

But this year, we're going to have some wins and losses and that's going to Susan, that's going to level us out a little bit more than we've seen in the past. And that's already built in. That's as Carey will cover the Q1 numbers, That's kind of where I expect this year's going to look like. I think we'll achieve our budget for the year, but we'll We'll be a little lighter on the growth side than we have been unless we could get a deal done. So I'm going to kick it over to Carey.

Speaker 1

This feels like a really good start to the year. Again, I want to thank my team. We're excited about it. We have some great things we're working on that We're not going to talk about yet today, but it will be a little bit later in the year that I think will be meaningful for our company. And so with that, Kerry, I'd ask you to go ahead and cover

Speaker 2

Great. Thank you, Chris, and good morning, everyone. As Chris' remarks reflected, we had an standing first quarter by most any measure. We had record high volumes. We had strong growth in revenue.

Speaker 2

We had a continuing downward trend in our salaries and in our operating costs on a per visit basis, we had growth in our physical therapy operating income and in our operating income margin And year over year growth in our total company adjusted EBITDA, so a really good start to the year. We reported adjusted EBITDA the Q1 of $18,500,000 which was an increase of $1,000,000 over the $17,500,000 that we reported in the Q1 of 'twenty two, Our operating results, which includes the impact of the higher interest expense was $0.59 per share in the Q1 of 2023. Our total company revenues increased 12.8% in the 1st quarter, growing from $131,700,000 last year to $148,500,000 in the this year and our total company operating income increased $2,000,000 from $15,000,000 in the Q1 of 'twenty two To $17,000,000 in the Q1 of 2023. Our average visits per clinic per day in the Q1 was 29.8. That's the highest first quarter volume in the company's history and it's the 2nd highest volume for any quarter vested only by the Q2 of 2021 When our average visits per clinic per day was 30.0 and each month in this Q1 was a record high for that respective month, Our average visits per clinic per day was 28.9 in January, it was 29.8 in February and then 30.7 in March and that 30.7 in March was the highest volume for any month in the company's history.

Speaker 2

Our net rate that Chris referred to was $103.12 which was an increase of $0.12 over the Q1 of last year. Despite differences in Medicare rates year over year, we had a 2% Medicare rate reduction that was put in place at the beginning of this year. And then in the Q1 of last year, we still had 2% in our commercial rates versus the Q1 of last year. As Chris noted, we still have a lot of work to do here, but we expect to continue making progress in increasing our commercial rates And we're continuing with our plan to renegotiate or terminate contracts that reimburse us at a rate that's less than what it costs us to serve our patients, Which is primarily related to a subset of our Medicare Advantage contracts. And we expect the impact of that work, The reduction of the Medicare Advantage contracts that are at low rates to begin showing up in the second half of twenty twenty three.

Speaker 2

Our physical therapy revenues, they were 100 $27,400,000 in the Q1 of 'twenty three, that's an increase of $17,000,000 or 15.6% from the Q1 of 'twenty 2. The revenue increase, as Chris noted, at our same store clinics was 5.8%, driven by an excellent 6% increase in our visits versus the prior year. Physical therapy operating costs were $100,600,000 which is an increase of 13.9% over the Q1 of Cheer, we're very pleased to see our physical therapy operating cost per visit decrease versus the Q1 of last year, declining from $83.09 per visit in the Q1 of 'twenty two to $81.97 per visit in the Q1 of 'twenty three. Our physical therapy operating cost per visit peaked in the Q3 of 2022 and they've come down each quarter since then. Our total operating costs were $85.14 in the Q3 of 'twenty two and decreased to $84.05 in the first quarter Q4 of 2022, excuse me, and then they declined further to $81.97 in the Q1 of this year.

Speaker 2

Our salaries and related cost per visit were up just 0.7% in the Q1 of this year versus last year And they've also continued to trend down since the Q3 of 2022, from $60.99 in the 3rd quarter Down to $60.04 in the Q4 of 'twenty two and then down further to $59.14 per visit in the Q1 of this year. The increase in physical therapy volumes and revenue coupled with our stabilizing expenses resulted in improvement in our physical therapy margin as well improving to 21.0 in the Q1 of 'twenty three compared to 20.0 percent in the Q1 of 'twenty two. Chris provided color on our industrial injury prevention business his remarks, our revenues for that business were $19,400,000 in the Q1, up $300,000 from the Q1 of 2022. Our expenses in that business were $15,600,000 which is an increase of $700,000 resulting in industrial injury operating income of $3,800,000 and our margin in that business was 19.5% in the Q1 of 'twenty three as compared to 21 point 8% in the Q1 of 'twenty two. Our interest expense was $2,600,000 in the Q1 of 'twenty three, which an increase of $2,000,000 over the Q1 of last year.

Speaker 2

The higher interest expense is due to an increase in our debt related acquisitions closed during and since the quarter of last year and then of course higher interest rates in the Q1 of this year than they were last year. Our balance sheet remains in an excellent position. We have a $150,000,000 term loan with a 5 year swap agreement in place that fixes the 1 month term SOFR rate on that $150,000,000 2.815 percent including the applicable margin based on our leverage ratio, the all in rate on our $150,000,000 of debt Was 4.915 percent in the Q1, a very favorable rate in today's market and below the current Fed funds rate. In the Q1 of 2023, the swap agreement saved us $700,000 in interest expense. At March 31, our agreement had a mark to market value of $3,600,000 meaning that the current expectation is that we will pay $3,600,000 less in interest expense of the remaining approximate 4 years of our swap agreement than we would have paid without the swap.

Speaker 2

In addition to term loan, we also have a 100 $75,000,000 revolving credit facility and that had $38,000,000 drawn on it at March 31, and we had cash on our balance sheet of $32,600,000 March 31. The borrowings on the revolver that $38,000,000 that's at a variable rate. The weighted average variable interest rate on our debt On that facility in the Q1 was approximately 6.8% and that put our total overall effective interest rate for the Q1 to get 5.5 including the term loan. The strength of our results in the Q1 and the continuing strong volumes we're seeing in April Give us continued confidence in the adjusted EBITDA guidance range provided at the beginning of the year of $75,000,000 to $80,000,000 That guidance excludes the impact of potential acquisitions in the remainder of the year. In closing, we've had a very solid start 2023 and we'll continue to work hard to produce the best results possible for all of our stakeholders this year.

Speaker 2

And with that, Chris, I'll turn the call back to you. Hello, Chris.

Speaker 1

I'm sorry. I'm sorry, Carrie. I was muted.

Operator

We'll take our first question from Larry Solow with TJS. Please go ahead.

Speaker 1

Good morning, Larry. Good morning. Good morning, guys.

Speaker 3

I have that problem with the mute button sometimes here. So really good start to the year. Obviously, I think weather Or lack of bad weather across most of the country. I know some parts had some bad weather, but probably certainly helped you guys with a good guy for you. But again, 6% same store volume growth is really, really remarkable a great comp too.

Speaker 3

So just looking at I know you don't guide quarterly, but we're kind of in the heart of a good part of the year, right? You did almost 31 visits per day per clinic. Any reason to think that wouldn't continue at least assuming weather remains Fairly on your side? Yes.

Speaker 1

I'm not going to I'll say this, Volume continues to be very strong. I'm not going to go out and predict. We certainly shouldn't have Major weather events, certainly not winter weather events going forward. And I am hopeful that we can continue to grow as we have most every year since I've been here with the exception of The second half of last year. And so, we're certainly going to work to do that.

Speaker 1

We'll have to see how it shakes out. But, we like where we sit right now.

Speaker 3

And do you think labor, obviously labor still higher price of course, but it feels like Your access to and availability is a lot better. Has that did that help? Were you leaving some revenue on the table or Enable to serve as many patients per day just because of labor issues that have gotten better. Is that part of The year over year improvement you think?

Speaker 1

Yes, sure. Absolutely. Now I will say this. Q1 of last year, we weren't feeling the labor issues that we began to fill late in the second quarter and into the 3rd Q4. And so I think the quarterly comparison access The labor was not as much of an issue a year ago.

Speaker 1

I will also say that right now, our time to fill open positions has decreased dramatically From where it was in the second half of last year, it's improved a lot. I think it will continue to improve. That's my sense. And that's both for position as well as front desk position. I have to believe that some of the 20,000 people who left the profession at Some point in the pandemic or during the pandemic, a lot of those folks, I think, I said early on, I thought They all wouldn't stay out forever.

Speaker 1

I think a lot of those folks will come back. And yes, certainly, I think that will help us as the year progresses On a comparative basis.

Speaker 3

Got it. And just last question, one follow-up. Just on the total clinics, it I think you grew 7 sequentially. I think there's only one acquisition of the one larger clinic, right? So looks like 6 net new clinics, if I'm not mistaken.

Speaker 3

So that's pretty good De novo activity at least at the start of the year, if my math is right.

Speaker 1

Yes. We've got good de novo activity. We've got across A swath of great partnerships. We've got more acquired activity, which is coming, And it should be another very good year. At least that's what we're working to produce and expect that that will Happened by the time we lap this year.

Speaker 1

So development right now, we feel confident We can deliver a good year both de novo as well as acquire.

Operator

And we will take our next question from Brian Tanquilut with Jefferies. Please go ahead.

Speaker 4

Hey, good morning guys. Congratulations. Good morning. Thank you. Good morning.

Speaker 4

I guess, Chris, I'll start with, obviously, strong quarter here. Larry said a strong start of the year. It's really nice Do you think you're gaining market share or is the whole industry seeing kind of like a recovery and an uptick in demand for physical therapy Yes.

Speaker 1

I don't know yet, Brian. I mean, I think Select reports tonight, after So the market closes, I think ATI reports next week. We'll see how they do. I have a lot of friends who are CEOs of these other companies, but we tend not to put each other in a position where we're sharing Detailed inside baseball. Look, I think last year was a tough year And last year was one of the first years that we didn't grow our visits per clinic per day.

Speaker 1

It was a little bit more muted, more Flattish. And so I think with staffing improving, we're seeing some pickup. Whether we're moving that from competitors or not, I Got to believe that in some cases we are. Look, when we do acquisitions and we bring on really good companies to begin with, We can provide and some of those resources are directionally enabling these companies to grow at a faster rate than they would have otherwise. So I think that's coming from market share, but I don't have a good way to measure it to be absolutely Precise, and so it's just my guess.

Speaker 4

Got you. And then, yes, Gary, as we think about rates, just curious, You talked in your prepared remarks about how you're going to walk away from some of these underpaying contracts. You've already been vocal and public about it since the last quarter So just curious what those conversations are like or what the feedback or reception has been from those payers as you're having those conversations?

Speaker 2

Yes, I'd say it's mixed. In some cases, they're willing to come back and renegotiate rates with us and sometimes they're not and that's fine with us. And we're going to move forward. It's not good business for us. And as Chris noted, we're just not going to take that any longer.

Speaker 2

So we're fine with walking away from it. We have they don't represent that much volume for us and it's volume that we can easily replace especially with the strong volumes we're having This year, so we feel good about it.

Speaker 1

And look, in a tight labor market no, I'm sorry. In the tight labor market, and it's still a little tight, it's getting better, but it's not easy. You can't you just can't afford to be looking and hiring staff to take business where you don't have a margin profile. And so when we talk about market share movement, we're going to move that market share to our competitors. We're going to let them take it at $0.60 on the dollar and there's going to be no margin there.

Speaker 1

And so we're going to replace that with much better margin business. And Whether they come back or not, they have in some cases, they haven't in other cases. I'm okay with that right now.

Speaker 4

Yes. No, actually my next question Chris was related to that. I mean, you called out in your prepared remarks how your turnover at the clinician level is That is Lois. And so just curious, I mean, I know you're very in touch with a lot of folks in the industry and we're hearing turnover rates that are higher, notably higher than yours some of your competitors. So just curious, what are you hearing from your own clinicians as maybe you do survey work that allows you to Maintain this industry low turnover rate for clinicians.

Speaker 1

Look, again, I can't say absolutely with Precision, but I definitely feel like it has to do with our partner model. It has to do with What they hear from leadership in terms of our values and what's important, and I think that resonates with people And it helps people be stickier in terms of understanding the big picture. I think when we have challenges, We go about those challenges in a certain way. We're not beating people up. We're not slamming on the table and it's not a threatening environment, it's a supportive environment.

Speaker 1

And I think all that ultimately filters through. And I have to believe some of it is the fact that when you look throughout the organization from a leadership perspective, whether it's our regional presidents, Our COOs or even maybe to a lesser extent me having Long term industry experience and not just coming from Another business segment or working with the private equity group that flipped the business In another totally different kind of an area, I think it resonates with people that were about this from a care The first and foremost, and I think I have a good team and they do a good job carrying those messages and Embodying those things that are important and I think ultimately it makes a difference. I hope that's what it is.

Speaker 4

All right. Thank you, guys. Congrats again.

Speaker 1

Thanks, Mig. Bye.

Operator

We will take our next question from Matt Larew with William Blair. Please go ahead.

Speaker 5

Hi. This is Madelyn Bowman on for Matt. Hi, guys. On the net rate, I'm trying to think about how do you expect the net rate to change throughout the year, Especially as like sequestration impact rolls off in the second half of the year. I think in the past you said you expected it to be kind of roughly flat with the 4th And wanted to see if you were still thinking that way?

Speaker 2

Yes. I think for the full year, Madeline, that's where we would still expect to be. We'll grow from where we would expect the rate to move up from here for sure. I mean, we feel really good about the fact that our net rate was up over the Q1 of the prior year despite that 4% cumulative Medicare rate differential year over year, so that's good. Our commercial rates were up Over last year by 3.2% in the Q1, Q1 to Q1, they were relatively flat from the Q4 to the Q1.

Speaker 2

They're always a little lighter in the Q1 of the year and then we'll grow from here. So I think we're still in good shape from a rate standpoint. But we've got a lot of work to do as we've mentioned. I mean, This is not easy work, doing these rate negotiations and pushing for increases. And you'll push for them, you'll get them, but it'll take a little off of them to come into effect.

Speaker 2

So, but we're on a good trajectory I think, Madeleine.

Speaker 5

Great. Thank you. And then I think you mentioned last quarter that your group purchasing order was rolling out in February For your pilot, any insights from the pilot or takeaways that you can apply as you roll it out more broadly?

Speaker 1

Yes. Graham, you're going to add this?

Speaker 6

Yes. So we've got it active right now in about 200 locations and It's really too early yet to give you any analytics feedback on it. That would probably be more at the end of this quarter to the end of Q3. But We're rolling it out in a systemic fashion and we're going to continue to do that.

Speaker 5

Great. Thank you.

Speaker 2

Thank you. Madeline?

Operator

And it does appear that we have oh, I do apologize. We do have a question from Mike Petusky with Barrington Research. Please go ahead.

Speaker 1

Hey, Mike. Hi.

Speaker 7

Good morning, Mike. Good morning. I pressed star 1 three times. I'm about to hang up. Anyway,

Speaker 3

thought we got it. Okay.

Speaker 7

That's right. I'm in very good company. All right. So on rate renegotiations, Chris, you know I'm a baseball fan. In terms of just the 9 inning baseball game, how far along are you guys in terms of what you're trying to accomplish

Speaker 1

We're early in the second inning, I think.

Speaker 2

Yes. That's what I think. Yes.

Speaker 1

We're a little farther along than we were 9 months ago, so I can't continue to say first thing. But I think we've got a lot of baseball left to go.

Speaker 7

Yes. I mean considering you sort of called out a 3% Up comparison in your commercial rates, I mean that's great, but there's still that much left to get after.

Speaker 1

Well, we have a lot of contracts. We have a lot of partnerships and individuals across the 40 state network. And so It's a lot to get through and we are still early. So That's a reality, but that just means that we're going to be at this for a longer period of time and it should have effect for a while.

Speaker 7

So I wanted to ask on the revenue that you guys are sort of willing to walk I know you don't Want to, but you're willing to walk away from on certain MA contracts, maybe some other contracts as well. I mean, I think you may have alluded to, hey, it'll start to impact second half. I mean, is there any way to sort of think about magnitude? I mean, are we talking $1,000,000 Are we talking more than that? I mean, what just from a modeling perspective, I don't want to not Take that into account.

Speaker 7

Is there anything you can say to help on that?

Speaker 2

I mean, they're not big dollars, but There's I mean, it's I would say several million, something like that in revenue. But On every one of those dollars, the margin is 0 to slightly negative, right? And I'm absolutely willing to walk away from that. And we as Chris has noted and we've talked about, we're going to be able to replace that volume With better paying volume and that will make a difference. So but that's all kind of baked into, if you will, into our And kind of our expectations for the year, it takes a little while for the termination notice.

Speaker 2

Once you provide the termination notice for it to take effect, they're usually about 90 days. And so that's why I said we'll probably see more impact from that in the second half of the year because we've done that in the Q1. It will mostly be in effect by kind of June, July where we're no longer taking that business.

Speaker 7

And I know you didn't want to predict blue skies For the foreseeable future, but just in terms of what you guys said about April,

Speaker 6

would you be willing to

Speaker 7

share did volume did patient it stay above 30 or near 30 if you have that data?

Speaker 2

Yes. I mean we've seen we do weekly visit reports and it has been, I'd say, Chris, pretty similar to what we saw in March.

Speaker 7

Outstanding. And then I guess just in terms of your commentary around the injury prevention business, Chris. I mean, does the sort of the state of things make it less that you guys might engage in any kind of M and A in that area? Or does it make it more likely maybe opportunities that open up. Can you just speak to that?

Speaker 1

Yes. I don't know that I can hand it certainly doesn't make us less Likely. We love this business. We love the teams. We love what it does.

Speaker 1

Understand that over the, what, 6 years that we've had it, We've added programs and products and services in a pretty considerable way. Some of those are cyclical, some of those are counter So right now, for instance, in the last year even, our testing business, which the year that we bought the testing business, Which I want to say was 2019, you rebought that business, testing was slow. Everybody was kind of nervous and we just asked everybody to hang on. We knew there was going to be some cyclicality with this. Since then, last year and this year, testing has been on fire.

Speaker 1

Our injury prevention business, By virtue of some expansion that we've had among existing clients, it's been really strong, but there are parts that have been affected We've got to make some adjustment for. One of those is office ergonomics and it's lost on nobody that the offices right now, many are not full anymore, at Right now, many are not full anymore, at least not on a 5 day a week basis. And so we're making some adjustments there to to do more things remotely and in people's homes and adjust that business a little bit. And nobody can control When I say nobody, I mean us. We can't control what the Fed does and we can't control whether this ends up being You know, a plane that lands softly or a little bit of a harder landing in terms of the economy.

Speaker 1

And so CEOs and CFOs, they're trying to judge For themselves, what that looks like in the coming period. So, it's a people are kind of Waiting to see before they make big investments in some cases, particularly newer customers. Existing customers business has in this space. We like it just as much as we ever have. We're just trying to guide you toward our expectation for this short term period, Which we think will be a little bit more tepid than it has been.

Speaker 1

It's literally since the time we've acquired it, kind of been on fire. It's grown at a really, really fast pace. This year will slow a little bit. It doesn't mean it's bad business. I think we'll get it picked back up again, but for right now, it's going to be a little slower.

Speaker 7

Can I just ask real quick on the agreements that you have In place in that business, are they annual renewals or how does that work?

Speaker 1

Yes, they're mostly annual renewals. Look, the reality is when things happen and a company that you've had a good relationship with asks you to pause, and I'll give you a great example of this. This beginning of the pandemic, we were to roll out a big contract with Uber. And we all know that Uber kind of disappeared that 1st year in the pandemic. Nobody Nobody was out ride sharing a whole lot.

Speaker 1

And so, we paused it. Now, we had a contract, But it doesn't make sense to force the customer into something that they don't want. And There's definitely a balance there. These are longer term contracts, usually annual. But when they're major points in their collection, We tend to defer to the customer and make adjustments accordingly and that keeps business around for a long time.

Speaker 1

Now that Uber story, which got Pause at the beginning of 2020 was massive for us in 2021 2022. And so, Again, we're trying to do the right thing and trying to be good stewards. And so, we have to make adjustments when the customer wants to make adjustments. We may not have to, but we do.

Speaker 7

That story is a perfect example of why you guys have been as successful as you have the last 20 years. Great job. Thank you.

Speaker 1

Thanks, Mike.

Speaker 7

Hi.

Operator

And there are no further questions at this time. I will turn the call back over to the speakers for

Speaker 1

Okay. Thank you very much. Thanks everybody for your time today. Appreciate all the questions. Sorry for my early fumble on the phone.

Speaker 1

We look forward to talking with you. I know we have some post call follow-up with some of you. If you have any questions, just give Carrie and I a shot and we'll be happy to tackle those offline. Thanks and have a great day.

Operator

Thank you. And this does conclude today's program. Thank you for your participation. You may disconnect at any time.

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