Norwegian Cruise Line Q4 2024 Earnings Call Transcript

Quartr
Provided by Quartr
March 4, 2025

There are 8 speakers on the call.

Operator

Good morning, and thank you for joining us today for Concentra Group Holdings Parent Inc. Earnings Conference Call to discuss the Fourth Quarter and Full Year twenty twenty four Results as well as some important company updates. Speaking today are the company's Chief Executive Officer, Keith Newton and the company's President and Chief Financial Officer, Matt Decanyo. Management will give you an overview and then open the call for questions. Before we get started, we would like to remind you that this conference call may contain forward looking statements regarding future events or the future financial performance of the company, including without limitation, statements regarding operating results, growth opportunities and other statements that refer to Concentra's plans, expectations, strategies, intentions and beliefs.

Operator

These forward looking statements are based on the information available to management of Concentra today and the company assumes no obligation to update these statements as circumstances change. At this time, I would like to turn the conference call over to Mr. Keith Newton.

Speaker 1

Thanks, operator. Good morning, everyone. Welcome to Consensory's fourth quarter twenty twenty four earnings call. If you recall from our conference call in January, we touched on three key developments: the preliminary release of our Q4 and full year 2024 financial results, the signing of the Nova Medical Center's acquisition and our financial outlook for 2025. Today, we'll provide updates and more color on each of those topics and set the stage for the year ahead.

Speaker 1

Before we do that, I'd like to express my sincere gratitude to all of Concentra's colleagues, patients, employer customers, ecosystem partners and investors. Twenty twenty four was a transformative year with our successful IPO, a spin off from Select Medical, solid growth and financial performance and continued execution on our strategic initiatives. As the largest provider of occupational health services in The United States by number of locations, we are relentless in our mission to improve the health of America's workforce one patient at a time. That is the key driving force behind our success and continued pursuit of excellence. Switching to our fourth quarter twenty twenty four performance.

Speaker 1

Concentra ended the quarter with five fifty two occupational health centers and 157 on-site health clinics at employer worksites for a total of seven zero nine locations, which is 15 more than Q4 twenty twenty three. In the quarter, revenue was $465,000,000 compared to $440,700,000 in the prior year, representing a 5.5% growth year over year. Adjusted EBITDA was $77,500,000 in the quarter versus $68,300,000 in the same quarter prior year or a 13.6% increase. Adjusted EBITDA margin increased from 15.5% in Q4 twenty twenty three to 16.7% in Q4 twenty twenty four, a result of revenue growth and improved cost of services. All of this is consistent with our pre release announcement back in January.

Speaker 1

Net income was 22,800,000 and earnings per common share were $0.17 for the fourth quarter twenty twenty four. Net income was slightly better than the range we provided in our preliminary flash in January due to the timing of the finalization of our tax expense entries. Net income was lower than the same quarter prior year, primarily due to the IPO recapitalization. From a patient visit standpoint, year over year trends in Q4 twenty twenty four were very similar to recent quarters. Total visits per day were 46,800, a 2.1% decline compared to the same quarter prior year.

Speaker 1

This was driven by a 4.8% decline in our employer services visits, which was expected and consistent with the variance we had been seeing in earlier quarters. The decline in employer service visits were partially offset by a 1.1 increase in our workers' compensation volume. As we've discussed before, the foundation for our employer services and workers' Employer service visits are more correlated to job creation and Employer service visits are more correlated to job creation and churn within the workforce as hiring events are the key driver of these type visits. Hiring rates and equip rates in The United States are starting to show signs of stabilization and bottoming out. While we continue to manage these employer service trends to still drive revenue, profit growth and stable margins, we are optimistic and expect that a more stable growing economy and labor market will help boost our employer services volumes from current levels.

Speaker 1

So far, we are seeing some better trends in these type of visits early in 2025. From a rate standpoint, we had a strong quarter with 5.8% increase in revenue per visit in Q4 twenty twenty four compared to the same quarter prior year. The growth was driven by increases in both workers' compensation and employer services revenue per visit, as well as a slight shift in mix between these categories. Beyond the financial metrics, we continue to execute on the strategic initiatives and growth objectives we established for ourselves. For example, the spin off from Sablack Medical was completed.

Speaker 1

We made further progress on our separation. We continue to advance our various clinical, operational and technology initiatives and our development pipeline, all while achieving strong satisfaction scores from our patients and customers and improving our colleague retention. This concludes my overall company remarks. I'll now turn the call over to Matt to provide more color on our operating segments, key operating metrics, cost and expenses, cash flow and balance sheet. We'll then wrap the call with further insight into the Nova transaction and the previously provided guidance for 2025.

Speaker 2

Thanks, Keith, and good morning, everyone. I'll begin with some additional commentary on our operating segments in our major expense categories, as well as other key performance indicators. In our Occupational Health Center operating segment, revenue of $437,000,000 in Q4 twenty twenty four was 5.4% higher than the same quarter prior year. Keith outlined our visit decline year over year, driven by the continued and expected lower employer services volume, which are lower revenue and lower margin visits, and the 5.8% increase in revenue per visit from $137 in Q4 twenty twenty three to $145 in Q4 twenty twenty four. Within the Center Operating segment, workers' compensation revenue of $289,100,000 was 7% higher than prior year.

Speaker 2

Q4 twenty twenty four work comp visits per day increased 1.1% from prior year. Q4 twenty twenty four work comp revenue per visit increased 4.4% versus prior year. Workers' compensation revenue represented 66% of our total center operating segment revenue in Q4 twenty twenty four versus 65% in Q4 twenty twenty three. Employer services revenue in the center Operating segment of $137,200,000 increased 1.3% from prior year. Employer services visits per day decreased 4.8% from prior year, in line with expectations and continued trends from recent quarters.

Speaker 2

The Q4 twenty twenty four Employer Services revenue per visit increased 4.8% versus prior year. On-site revenue of $17,100,000 in Q4 increased seven percent from the same quarter prior year. We had a solid business development quarter in this operating segment winning 10 new on sites that will open in the coming months and we continue to build out an exciting growth pipeline. Other business revenue of $10,900,000 increased 8% against same quarter prior year. Our cost of services expense, excluding depreciation and amortization, a major component of which is personnel costs, includes all direct and indirect support costs related to providing services to our customers.

Speaker 2

Cost of services was $344,900,000 or 74.2% of revenue in Q4 twenty twenty four, down from 75.1% of revenue for the same quarter prior year. General and administrative expense includes corporate overhead such as finance, legal, human resources, marketing, corporate offices and other administrative areas. Our general and administrative expenses were $45,500,000 or 9.8% of revenue in Q4 twenty twenty four compared to 9.6% of revenue in the same quarter prior year. For the fourth quarter, we had strong cash flow generation with operating activities providing $93,700,000 in cash flow and our days sales outstanding or DSO was forty three days at 12/31/2024, which was two days better than prior year. Our cash flow metrics continue to improve over historical levels.

Speaker 2

Investing activities used 16,700,000 of cash in the fourth quarter almost entirely from purchases of property and equipment as our teams continue to successfully manage to healthy levels of capital expenditure for maintenance and growth each quarter. Financing activities used $30,600,000 of cash for the fourth quarter and we ended the quarter with a cash balance of $183,300,000 Our net leverage ratio at the end of twenty twenty four was 3.46x, down from approximately 3.9x at the time of our IPO last July. This is a good proof point of our ability to generate strong cash flow and delever. With the strong financial performance, we are pleased to announce that on 02/28/2025, Concentra's Board of Directors declared a quarterly cash dividend of $0.0625 per share. The dividend will be payable on or about 04/01/2025, to stockholders of record as of the close of business on 03/18/2025.

Speaker 2

We continue to recognize the importance of our dividend as a means to return value to shareholders, but our two highest priorities for capital allocation in the near future remain our growth efforts and delevering. Switching to our corporate development efforts, we continued our successful de Novo strategy with three new occupational health centers in the fourth quarter. We opened our fourth center in the Greater Orlando area, an especially exciting development with the increase in the Florida work comp fee schedule that went into effect on 01/01/2025. We opened a center in DeSoto, Texas, a highly industrial section of the Dallas Fort Worth area, bringing our total count to 19 centers in Greater DFW. And we opened our first center in Knoxville, Tennessee, an exciting growth area for Concentra.

Speaker 2

Our De Novo efforts will continue in 2025 as we have already opened an additional center in the Dallas Fort Worth area in January and we have five additional leases signed for centers expected to open this year. Our acquisition pipeline remains robust as well as we continue to execute on our core M and A strategy of highly accretive occupational health practices and on-site additions across The U. S. We will talk more about the Nova acquisition here shortly. And now I'll comment on our separation process from Select Medical highlighted by the completion of Select's spin off of Concentra in November.

Speaker 2

We have continued to make solid progress on these efforts as we execute on key leadership hires, building out specific teams in certain functional areas and separating certain support functions and vendor contracts from Select. There is much work remaining, but the takeaway is that we will remain on track with the process of operating completely independently from Select Medical by the time our TSA with Select ends in late twenty twenty six. With that, I'll turn it back to Keith to provide an update on the Nova transaction.

Speaker 1

Thanks, Matt. Our acquisition of Nova Medical Centers for $265,000,000 was officially closed on March 1. To give a brief recap of the business, Nova is a leading provider of occupational health services that is aligned with Concentra's clinical philosophy, service offering, growth strategy and mission. Nova operates 67 occupational health centers across five states that are very similar to Concentra's. Forty six centers are in Texas with the remaining centers located in Georgia, Wisconsin, Tennessee and Indiana.

Speaker 1

Nova's locations are in attractive areas with a footprint that is complementary to our own. Nova sees over 3,500 patients per day and generates approximately $130,000,000 in annual revenue and $28,300,000 of pro form a adjusted EBITDA. The EBITDA figure is comprised of $21,300,000 of trailing twelve month adjusted EBITDA plus an additional $7,000,000 in projected and annualized synergies that we expect to capture by Q1 twenty twenty six. For clarity, we do not expect to generate the full $28,300,000 over the next twelve months as synergies will be phased in over time and there will be one time integration costs associated with capturing those synergies over the remainder of 2025. We expect to continue capturing incremental synergies past year one and ultimately achieve an effective multiple on the transaction of less than 7.5 times by year three.

Speaker 1

We expect the transaction to be immediately accreted in the first year of operation. We have a proven history of successively executing on acquisitions of all sizes and we are already progressing well on our transition plans to integrate the Nova practices and colleagues into Concentra. We would like to once again extend our gratitude to Nova's leaders and entire team as we are extremely excited to have them join the Concentra family. I'd now like to touch on the funding for the NOVA transaction, our broader company financing and our current leverage. The NOVA transaction was funded with an approximate $102,000,000 incremental term loan, a $50,000,000 draw on our revolver and the remaining with cash on hand.

Speaker 1

We repriced our term loan B of $950,000,000 inclusive of the approximate $102,000,000 incremental at SOFR plus $200,000,000 down from SOFR plus $225,000,000 with a 25 basis point step down at net leverage of less than 3.25 times. In addition, we upsized our revolver capacity from $400,000,000 to $450,000,000 and repriced at sulfur plus $200,000,000 down from sulfur plus $2.50 We're very happy with these outcomes and the economic benefits in 2025 and beyond. Inclusive of the Nova transaction, our pro form a net leverage ratio is 3.9 times, the same level as the time of our IPO. We have a target goal of approximately three point zero times net leverage within the next eighteen to twenty four months. I'll now turn it back to Matt to add some additional comments as it relates to our previously provided company outlook for 2025.

Speaker 2

Okay. Thanks, Keith. Regarding Nova, all I would add is that our team is very excited about the integration efforts and the opportunities that exist. It will take time, but we have a proven playbook and we are looking forward to adding the NovaCenters to our network of locations across the country. When the integration is complete, we expect a consistent delivery of care and a consistent approach to doing business with our customers.

Speaker 2

We've talked a lot about our value proposition and the investments we are making in the occupational health services industry. And now we will be able to drive an even greater impact with more medical centers. And to round out our call in advance of questions, we want to share additional commentary on the 2025 guidance we outlined back in January, including some of the underlying assumptions and the contribution from our core business versus the Nova acquisition. In total, we expect to deliver approximately $2,100,000,000 in revenue in 2025, an approximate 10.5% increase over 2024. The core business revenue projection includes the impact of all known fee schedule changes, including Florida.

Speaker 2

It also assumes relative improvement in the recent employer services volume trends over the course of the year, as well as maintaining the recent growth trends of our work comp visit volumes. For adjusted EBITDA, we expect to deliver a total of four ten million dollars to $425,000,000 in 2025, an increase of approximately 11% over 2024 at the midpoint of the range. The projected adjusted EBITDA for the core business includes the estimated separation costs from Select Medical. As it relates to Nova and its contribution in 2025, first, we assume ten months of Nova within our adjusted EBITDA outlook. Second, as Keith noted, the integration efforts will take time with synergies phasing in over time.

Speaker 2

Third, there will be a fair amount of transition related expenses, both at the center level and within G and A. For these reasons, calculating Nova's contribution to Concentra's twenty twenty five guided adjusted EBITDA is not as simple as taking tentwelve of $28,300,000 which is a figure that annualizes synergies that we expect to realize by the end of year one. We expect Nova's actual contribution to Concentra's twenty twenty five adjusted EBITDA to be $15,000,000 plus We feel that it is important to clarify this as we want to ensure that we're clearly communicating the strength we see in our core pre Nova business in 2025. For capital expenditures, our outlook of $80,000,000 to $90,000,000 includes a material amount of one time spend for the Nova centers. CapEx for the core business is fairly close to our spend in 2024.

Speaker 2

And finally, for our net leverage ratio, we expect to end the year at approximately 3.5 times. In summary, we feel good about our core business outlook in 2025 and layering on Nova will bring many opportunities with time needed to execute, but overall we are very excited. Back to

Speaker 1

you, Keith, to close out the call. Thanks, Matt. It's an exciting time for Concentra and we believe we are very well positioned to further our success. This concludes our prepared remarks and we thank everybody for the time today. We'd like to turn it back over to the operator to open the call for questions.

Operator

Certainly. At this time, we will be conducting a question and answer session. Your first question for today is from Benjamin Rossi with JPMorgan.

Speaker 3

Hey, good morning. Thanks for the question. So regarding the Nova integration, you mentioned some traits about Nova that make for an easier integration here, including overlap in services offer, their facility sizes and then their favorable margin profile. Just regarding integration, how do you approach larger transactions like Nova? And then what are you baking into your 2025 expectations regarding integration costs here?

Speaker 3

I think you mentioned CapEx including some one time spend.

Speaker 1

I'd say for expectations for the larger transactions, we've had several of these over the years and learned how to do them very well. The size and the footprint that we're at these days allows these things to be very accretive to us. Once we get through the process of integrating, deploying our systems, our people, we've got a footprint with Nova that is very overlapping. So the infrastructure that will support those centers in those five states is already there. Our people on the ground today, we're not having to deploy them from other states.

Speaker 1

So it should go fairly well for us based on our history of integration of these type entities. This is probably the second, the third largest we've done. U. S. HealthWorks by far the largest.

Speaker 1

We integrated a similar sized company called Oh and R based on the Northeast back in the early 2000s and Nova will be about the similar type size of that.

Speaker 2

Ben, I would just add, hey, good morning, it's Matt. We've been planning for this integration for six plus months. We've got a good playbook. We'll do similar to what we do on all the small fold ins and add ons. We'll follow that, but just obviously larger scale here.

Speaker 2

But we did this in 2018 with U. S. HealthWorks and we're going to basically repeat our process there.

Speaker 3

Got it. Thanks for the commentary there. And then just as a follow-up, just on your deleveraging pathway, following the Nova close, you mentioned a 3.9 times pro form a net leverage. You're expecting to take that down about effectively a half turn decrease in 2025 and then another half turn in 2026.

Speaker 4

Can you

Speaker 3

just kind of walk us through your pathway here and how you're kind of contemplating pure earnings growth and debt pay down with maybe some of your incremental M and A and your de novo activity along the way?

Speaker 2

Sure. Yes, I think the story is very similar to the story at the time of the IPO. We were 3.9 times levered back in July. We de levered to 3.46 times at the end of twenty twenty four. Now with this Nova transaction, we're back up at 3.9 and we our guidance is that we'll get to 3.5 times by the end of the year.

Speaker 2

And then we'll have we're still targeting roughly three times net leverage or below within the first eighteen to twenty four months. So it will be a combination of cash flow generation, but also some EBITDA growth as well. And I might add, this

Speaker 1

is Keith, that based on the nature and the seasonality of our business, the slower months are typically fourth quarter and first quarter. So our cash flow coming off those months is a little less than what happens as we get through the summer months, which are busy months. So the cash flow in the second half of the year accelerates. So there's a little bit of seasonality in the cash flow. So we would anticipate an acceleration as we kind of get to the summer and start building some of those revenue months.

Speaker 3

Got it. Thanks for the comment there. Appreciate it.

Operator

Your next question is from Ben Hendricks with RBC.

Speaker 2

Hi. This is Michael Murray on for Ben. With 67 Centers, Nova was one of your largest competitors. You've noted before that any one of your largest peers could be an acquisition target. Are there any particular regions that you're targeting for your next major acquisition where you would say you're under penetrated in favorable reimbursement markets?

Speaker 1

No, I'd say that we really cast the net far and wide at this point in time wherever the opportunities are, we're interested in it. So there isn't any real specific region, so to speak, from that perspective.

Speaker 2

Yes. And I would just add, we're looking to continue to grow our footprint with our occupational health centers in pretty much every state across the country, but we're also looking to expand our on-site portfolio as well. So there's opportunities there in the future. Okay. Thank you.

Speaker 2

And just switching gears, just with all the tariff talk, how do you assess the exposure of your employer clients to tariffs? And do you see any meaningful impacts to volumes or employment overall given these headwinds? Thanks.

Speaker 1

No, at this point, we don't. I think there's a lot of uncertainty around them really for all businesses to see how this plays out. But we at this point, I would based on the nature of our business and what we're doing, I don't really see much of a headwind from it.

Speaker 2

All right. Thank you.

Operator

Your next question for today is from Jamie Purce with Goldman Sachs.

Speaker 5

Hey, thank you. Good morning. Keith, you talked a little bit about just the economic drivers of the business and that being tied to employment growth. I'd love to get a better sense of how you got to the comments on guidance for 2025, which I think included improved employer services growth and maybe more sustainable growth trends in the workers' comp business. Is that being underpinned by just broad view on the economy or a more micro approach based on hiring plans at your customers, new customer wins, new openings, etcetera.

Speaker 5

Would you just love a little more color on how you're thinking about the volume trends progressing from here?

Speaker 1

Yes. It's a combination of several things. I think as we went through 2024, a lot of uncertainty. I think with the election results that was holding employers back to some extent relative to their growth or hiring plans. We've seen some better trends, as I mentioned early here in 2025 on the Employer Services.

Speaker 1

I think there's still some uncertainty out there as we read every day And we continue to watch that and play it out, but we're happy early what we've seen in 2025 relative to some of the year over year comps that we've seen with some of the employer services visits at this point in time versus what we've seen in the past.

Speaker 5

Okay. And then maybe for Matt, can you talk about P and L considerations for 20 performance in the fourth quarter. The second is G and A also given the $8,400,000 step up sequentially that you saw in the fourth quarter. It looks like there has historically been some seasonality there, but anything you can tease out and whether that's a good indicator for G and A in 2025? And then lastly, just the timing and how we think about the select medical TSAs rolling off versus the standalone costs, which I think you've previously sized about $13,000,000 So any help on the line items for the P and L for 2025 would be great.

Speaker 2

Yes, sure, Jamie. So I think three parts to your question, cost of services, G and A and then the PSA costs. So in our guidance, we assumed very consistent levels of cost of service and G and A. If you look at our full year 2024 over full year 2023, Both of those were very stable. There was some seasonality in Q4, particularly on the G and A side.

Speaker 2

And that's pretty typical Q4 when we're closing out the year. This year, we had some transaction costs in the G and A number. We also accelerated some long term cash compensation plans as we replace that with public company stock grants. And I think we've talked about that in the past. So that was a little bit of the driver here in Q4.

Speaker 2

Other than that, we see stable costs for both cost of services and G and A through '25. On your question on select TSA, the total estimate by the end of the TSA hasn't changed and it's in line with the numbers you just quoted. We're going to obviously have less than that in '25, maybe two thirds of that number or so roughly and then we'll finish out the TSA costs. The incremental costs will be in '26.

Speaker 5

Okay, great. Thank you for the color.

Operator

Your next question is from Stephen Baxter with Wells Fargo.

Speaker 4

Hi, thanks. Just to follow-up on an earlier question about the Employer Services business. Trying to understand when you say improvement, like any kind of context you could give us on how much improvement you're expecting? Like I'm trying to understand whether the exit rate embedded in your guidance for Employer Services is closer to what you'd view as maybe normalized growth for Employer Services or whether it's still something a little bit more modest than that? And then I have a follow-up or two.

Speaker 2

Thank you. Yes, sure. Steve, it's Matt. Here's what I would say. We don't want to comment too much on the 25 numbers that we haven't reported yet, but we felt it was important to note that we are seeing improving trends in Employer Services as we get a lot of questions about that visit category.

Speaker 2

The last three quarters have been in the minus 4%, minus 5% range. And we're seeing something that's a decent bit better here in January and February. So what's implied in our guidance and our assumptions for '25 is those trends will continue and then they would get to flat year over year and then slightly positive growth later in the year. Hopefully that helps.

Speaker 4

Yes, that helps a lot. Thank you. And then just in terms of the rate side of the business, I know obviously you had a large update in the workers' comp business in Florida, but maybe if we think about rate updates that you're seeing sort of on a normalized basis or maybe excluding Florida, I would love to just hear a little bit of color about how those look versus what you've seen in the past couple of years? And then the same type of question for employer services, any kind of change in trend on the rate side we should be thinking about? Thank you.

Speaker 2

I would say both of those are slightly elevated over long term periods of time. Obviously, as inflation continues to be higher than longer periods of time, a lot of our work comp rate increases are tied to that, either CPI or MEI adjustments and our employer services pricing follows that same approach. So even if you were to exclude the outsized Florida rate increase, we're still expecting a very good year for both work comp and employer services rate in 2025.

Speaker 1

Yes. And this is Keith. I would say that we would anticipate something a little bit stronger than what we've been seeing on the core from the last year or so.

Operator

Your next question is from Justin Bowers with Deutsche

Speaker 6

Bank. Hi, good morning, everyone. So a lot of milestones and activity over the last six months. Can you just refresh us on the long term growth algo of the business in terms of like volume, price, same store for those new to the story?

Speaker 2

Sure. Good morning, Justin. We included a page in our investor deck too if anyone wants to reference, but story is very consistent to what we've talked about historically from a revenue growth standpoint mid to high single digit growth broken down by low single digit visit growth at our centers, plus or minus 3% rate growth across both the main visit categories. And then we'll continue to do M and A. In that number, the mid to high single digit growth rate is just our core de novo and M and A strategies.

Speaker 2

It does not include anything more sizable. So those are really the three components that drive our long term revenue outlook.

Speaker 6

Okay. And then in terms of development activities, so in the prepared remarks, you mentioned one AUC health center that's come online in January and then five leases and then also 10 on-site health centers coming online. Is there additional development activity in the guide ex the Nova deal or is that sort of the jump off point for the year?

Speaker 2

No. Included in the guide is only the one center we launched, the five centers we have signed leases that we plan to open this year, and then just normal growth for our on-site business. There's no additional M and A in that guide.

Speaker 6

Okay. And then last, just a quick follow-up. In terms of payer mix, how much, like government pay exposure do you have Medicare, Medicaid, etcetera?

Speaker 1

It's roughly 1%, less than 1% from Medicare, Medicaid perspective. Next to nothing, we just had some sprinklings of it out there that we picked up through transactions over the years, but we don't do any active marketing or solicitation of those visits.

Speaker 6

Okay, got it. Thank you.

Operator

Your next question for today is from Joanna Kajuk with Bank of America.

Speaker 7

Hey, good morning. Thanks for taking my questions. So couple of follow ups. First, on the Florida rate, I don't recall you actually helping us quantify. So how much I guess is that left from these rates in Florida in the guidance?

Speaker 2

Hey, Joanna. Yes, Florida, I think as we've mentioned on previous calls, it went into place oneonetwenty five. We're already seeing that early this year, obviously. We are not going to quantify the rate increases on a state by state basis, but all of that and all other states are all included in our total guidance for '25.

Speaker 7

All right. Is there any other states, North Florida, that

Speaker 4

has

Speaker 7

not updated the reschedule for several years or that was the only one really?

Speaker 1

That was the only one that we would anticipate this year. The majority of all the others have been on somewhat of a regular basis. And as we mentioned in the past, the majority of our states are on a regular basis of either automatic fee escalators that go into play every year, typically January 1, or they'll review it and make some adjustments to it periodically. But Florida was probably the largest at this point in time. There's several others we're working on.

Speaker 1

We would be hopeful in the future. We might get something, but I wouldn't anticipate it being like on the

Speaker 7

rate update in Florida, fee schedule update being, I guess, bringing these rates to a point where the margins are kind of comparable to other markets. Does that mean that you have some active plans to add more locations in the state?

Speaker 1

Yes, absolutely. Some of the de novo projects that Matt just mentioned earlier have been in Florida, a couple in Orlando, Miami, Fort Myers, just over the last several months. Addition, definitely M and A activity evaluating that in Florida. So it's made it a much more attractive state for us to deploy capital in at this point in time.

Speaker 7

Thank you so much for taking the questions.

Operator

We have reached the end of the question and answer session. And I will now turn the call over to Keith for closing remarks.

Speaker 1

Appreciate everybody joining us today. And that concludes our remarks.

Speaker 3

Thank you.

Operator

This concludes today's conference and you may disconnect your lines at this time. Thank you for your participation.

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