Earnings Call: Q2 2021

Aug 4, 2021

Good afternoon, and welcome to Apria's Second Quarter 2021 Earnings Conference Call and Webcast. All participants will be in a listen only mode. After today's presentation, there will be an opportunity to ask questions. Please note that this event is being recorded. Leading today's call are Dan Stark, Chief Executive Officer and Debbie Morris, Chief Financial Officer. Before we begin, we would like to remind you that certain statements during this call will be forward looking statements as defined by the Private Securities Litigation Reform Act. These forward looking statements are subject to various risks and uncertainties and reflect our current expectations based on our beliefs, assumptions and information currently available to us. Although we believe these Descriptions of some of the factors that could cause actual results to differ materially from those forward looking statements can be found in the Risk Factors section of the company's annual report on Form 10 ks for the year ended December 31, 2020, as supplemented by Apria's quarterly report on Form 10 Q for the period ending June 30, 2021, which is expected to be filed later today. In addition, please note that the company will be discussing certain non GAAP financial measures that they believe are important in evaluating performance. Details on the relationship between these non GAAP measures to the most comparable GAAP measures And reconciliation of historical non GAAP financial measures can be found in the press release that is posted on the Investors section of the company's website at www.apria.com. With that, I'd like to turn the call over to Apria's CEO, Dan Stark. Please go ahead. Thank you, operator. Welcome and thank you all for joining us this afternoon to discuss our Q2 2021 earnings results. I'm joined today by Debbie Morris, our Chief Financial Officer. I'll begin my remarks with some high level comments on our results from the quarter and context around our activities, and Debbie will provide a more detailed review of the financials later on the call. We delivered a strong second quarter, continuing to build on the momentum from the Q1 and delivering financial results ahead of our expectations on all three of our key metrics. 2nd quarter revenue grew to $286,300,000 a 6.4% increase over Q2 2020. Adjusted EBITDA grew to $64,400,000 a 15.5% increase over Q2 2020. And our adjusted EBITDA less patient equipment CapEx grew to $44,100,000 a 2.2% increase over Q2 2020. Our performance during the first half of twenty twenty one is reflective of continued recovery in new patient volumes As a more normal patient flow returns to the healthcare system and our Apria team performing at a high level overcoming the challenges I'm proud of the entire Apria team. We have executed at a high level on the plan we laid out and expect to continue to execute at a high level in the future. I'll spend the bulk of my time today sharing some updates on priorities, Operating efficiencies, some recent M and A activity and of course some external issues that have been a large focus over the last couple of months. 1st and foremost, increasing our organic growth rate has been a top priority. We realized a 6.4% Year over year total revenue growth in the 2nd quarter, which is ahead of where we thought we would be in the progression. Now albeit Q2 of 2020 was the 1st full quarter of the COVID impact. In Q2, 2021, New patient volumes were strong as a more normal patient flow continued to return to the healthcare system. Our new patient starts on oxygen remained elevated above historical run rates and new sleep patient volumes ran above business continued its strong performance and we began to see increasing levels in the other equipment category as we progress through Q2. We view the consistent volume growth as a very positive sign, although we are not without challenges. The challenge that has recently emerged and most are aware of is the Philips Respironics product recall. In June, Philips announced a voluntary recall for continuous and non continuous ventilators, certain CPAP bilevel positive airway pressure and ventilator devices related to polyurethane foam used in those devices. The Food and Drug Administration has since identified this as a Class 1 recall, the most serious category of recall. The recall instructed CPAP and BiPAP patients to discontinue use of their device and consult with their physicians to determine the benefits For ventilation patients, the recall instructed patients to not discontinue the most Appropriate next steps. Thus far, despite the recall, we have not experienced Significant amounts of patients stopping their therapy, either CPAP, BiPAP or ventilation, although that could increase over the duration Our customer service teams have done an excellent job working with patients and physicians to manage this complex process. The recall did not have a material adverse impact on our consolidated operating results for the 6 months ended June 30, 2021. As you can imagine, the recall has generated significant disruption in the market and will create a situation where demand for devices CPAP, BiPAP and ventilators will likely exceed supply for a period of time due to the substantial market share that Philips possessed. To add more difficulty to the situation, Manufacturers are facing component shortages as a result of COVID, thus negatively impacting device Production capacity. We are monitoring the supply chain closely as well as exploring opportunities with other manufacturers for supply of devices. As I said earlier, in Q2, we did not experience any material effect from the recall on our business. And while the situation could be somewhat temporary in nature, the duration of the recall and the supply constraint of devices is likely to impact us in Q3 and Q4. Continuing with growth, we have been clear that our intent is to grow organically and supplement our growth with strategic acquisitions. Earlier today, in conjunction with 2nd quarter earnings, We announced the definitive agreement to acquire Airway Breathing Company, a provider of respiratory care services, sleep equipment and supplies And DME, serving patients in the Hampton Roads region, Charlottesville and Richmond, Virginia. Airway is a strong competitor in Virginia and we believe it fits squarely with our goal of acquiring strong local competitors that will enable us to build share In specific markets, as mentioned, Airway Breathing Company has strong presence in attractive Virginia markets and strong relationships with the local healthcare systems. We expect the Airway Breathing Company acquisition to close before the end of Q3 of this year. More broadly on M and A, we continue to have a robust active pipeline and our M and A team continues to look for opportunistic deals of varying size. And while we take a diligent measured approach, we expect to see more strategic opportunities arise throughout the remainder of the year. Lastly, I'll proactively address our Kaiser Permanente status. I've said before and I'll reiterate, We have a long standing and very strong relationship with Kaiser. In fact, earlier today, Apri was recognized as an exemplary partner to Kaiser Permanente in the COVID-nineteen response. Specific to our contractual relationship, Our long standing agreement contains an auto renewal feature that was executed in early July. We also continue to work toward the successor agreement, which we expect will add multiple years to the Kaiser Permanente Apria relationship. Turning to our operational execution. Earlier this year, we laid out some growth objectives. And as discussed earlier, we've executed well on those objectives. We also continue to execute on operating efficiencies and leveraging our cost structure. As we've experienced the return of higher patient volumes and the subsequent revenue growth, We continue to leverage our cost structure and lower our SD and A as a percent of net revenue. Leveraging technology also continues to be a theme of ours. We continue to invest in technology in order to improve our operating efficiencies, Whether through telehealth, moving to paperless processing or through automating manual steps of our revenue cycle management processes, Each advancement drives incremental value to the company and allows us to continue to increase our productivity and throughput. Prior to turning the call over to Debbie, I'd also like to share a quick update with respect to the current regulatory environment. Since our last call, we've received more clarity around a few aspects of the interim regulatory environment modifications that exists today due to the COVID-nineteen pandemic. First, the public health emergency has been extended through the end of October. As discussed before, the PHE provides an interim price increase for Medicare patients in the non bid, non rural areas of the country and keeps intact the fifty-fifty blended rate in the rural areas of the country. While the PHE extension was largely expected, The extension still needs to go through the mandatory process and this is done in 90 day increments. In early July, Medicare issued a revised national coverage determination for oxygen that would expand home oxygen coverage and potentially reduce some of the administrative burden. The NCD still needs to go through the comment period. However, on the surface, it appears it could be positive for Medicare beneficiaries and the DME industry. As a reminder, The suspension of sequestration was extended through year end and CMS permanently removed the budget neutrality rate adjustment for oxygen equipment that has resulted in a reimbursement rate increase for some oxygen systems. Both of these factors are tailwinds for Apria And we had already factored them into our guidance. To sum things up, we reported solid second quarter results and continue to build on momentum from Q1 last year. We're executing at a high level and driving operational improvements. The regulatory environment is stable and we expect to see some benefits for the remainder of this year. I'd like to thank the entire Aphria team for their dedication and hard work helping to drive these results. They are the heartbeat of Aphria And they are the individuals that deliver our mission every day, improving the quality of life for our patients at home. I'll now turn the call over to Debbie to review our financial performance in more detail and provide our outlook for 2021. Thank you, Dan, and thank you to everyone who joined the call today. We had a strong second quarter delivering solid year over year results and exceeding the high end of our guidance ranges across all three key financial measures. As Dan said earlier, Our strong performance was driven by executing against the plan we laid out and through achieving higher volume, higher cash collections and continuing to Adjusted EBITDA of $64,400,000 and adjusted EBITDA less patient equipment CapEx of $44,100,000 each exceeded the high end of our guidance ranges for the Q2. From a volume perspective, We saw higher than projected sleep patient census and we saw increased volume and oxygen therapy continue. We also continued to see very strong cash collections through the Q2, resulting from a combination of improvement in revenue cycle management business process, including investment in tools such as predictive analytics around cash collections as well as modified documentation The final factor contributing to results coming in above the high end of our guidance was lower operating costs. Labor costs, facility costs and insurance costs were favorable to our estimates Transitioning to the 2nd quarter results on a year over year basis, net revenue of $286,300,000 increased 0.4%, the vast majority of which was organic growth and a de minimis amount was from a small deal we completed in the Q1. Organic growth was largely due to continued growth in oxygen and sleep supply as well as in sleep therapy, together with higher cash collections. Adjusted EBITDA in the quarter of $64,400,000 increased 15.5% from $55,700,000 in the Q2 of last year. The combination of top line growth, namely in oxygen sleep and sleep supplies, Improved cash collections and continual variable cost management while the patient census rebuilds drove the year over year 2nd quarter improved results. Adjusted EBITDA Less Patient Equipment CapEx of $44,100,000 increased 2.2% from $43,100,000 Patient equipment CapEx was very low in the Q2 of last year, Given the onset of the pandemic and thereby driving the lower year over year growth. Wrapping up Q2 comments, We did not see a material impact in the Q2 in connection with the Philips Respironics recall that was announced in June. Moving on to the balance sheet. As of June 30, we had $206,000,000 in cash and total debt of 391,000,000 Okay. Let's turn to the outlook for 2021. As just covered in my remarks around the 2nd quarter, We've been performing ahead of guidance through the first half of the year. During the quarter, we experienced further volume recovery for sleep, Non invasive ventilation and negative pressure wound therapies. The public health emergency has been extended through October. Rate adjustment for oxygen equipment that resulted in a reimbursement rate increase for some oxygen systems. And lastly, we have continued to operate with lower operating costs than projected. On the flip side of these positive tailwinds, The Phillips recall is driving time and coordination of recall related activity to support our patient needs. The recall may cause us to incur significant costs And we're closely monitoring the impact of the recall on our business and the uncertainty surrounding the availability and supply of CPAP and ventilators due to the recall. For the Q3 and full year, we've taken into consideration the following factors. First is our strong first half performance. 2nd, improving Sensus rebuild, particularly in sleep and the continuation of higher volume for oxygen therapy. 3rd, improved operating margin and lower CapEx as a percent of revenue. 4th, Extension of the public health emergency. While it's formally extended through October, we are now estimating it will remain in place through the end of the year. These favorable tailwinds are, however, partially offset by the uncertainty around costs to be incurred to address the Phillips recall and the availability of product due to the recall, which will likely impact sleep volume. For the Q3 of 2021, we expect net revenues of $282,000,000 to 290,000,000 Adjusted EBITDA of $57,000,000 to $61,000,000 and adjusted EBITDA less patient equipment CapEx of $35,000,000 to $38,000,000 For the full year 2021, we are increasing our guidance The following: net revenue of $1,120,000,000 to 1,150,000,000 up from $207,000,000 to $216,000,000 and adjusted EBITDA less patient equipment CapEx of 130 Our updated 2021 outlook combines our strong financial results to date as well as the improving census and volume trends we've been experiencing, Coupled with the uncertainty and potential supply issues caused by the Phillips product recall, which is relatively in early stages, We think this is a thoughtful and prudent approach as we try to factor all of the moving pieces into our guidance. To sum things up, I'm pleased with Aperit's performance during the first half of the year. The Aperit team historically has performed consistently And especially well in difficult situations, and I remain confident that our team will be able to navigate and manage through the latest challenges we face. To close out our prepared remarks today, I too want to thank the entire team for their commitment to Aphria and to our patients and for delivering on our mission of improving the quality of life for our patients at home. Operator, we will now open the call to questions. Our first question comes from Ralph Giacobbe with Citi. Your line is open. Great. Good afternoon. This is Jason Casola on for Ralph today. Thanks for the question. I guess just to go back to the 2021 guidance, It looks like you increased the high end of the revenue range, but EBITDA and your margins are up a bit more. Can you just help unpack what's driving the better EBITDA and margin expectation on a relatively similar revenue base from before? Yes, sure. What we've seen is operating efficiencies and we've been able to Continue to operate at higher margin through the first half of the year. So as we said last quarter, we would be looking as we exited Q2, Looking at coming out of or moving to the next stage of COVID, where we were landing and reevaluating our guidance. So that's what you see reflected in the numbers. Some further improvement that we expect in EBITDA and also in CapEx. CapEx benefits from a few things. One is the rate changes that go through obviously have no CapEx Associated, we also have product mix favorability where growth in sleep supplies also has No CapEx associated with it. So those also provide some incremental contribution towards that improvement that you're seeing in Adjusted EBITDA and adjusted EBITDA less CapEx. Got it. Thanks. So I guess just along those lines on the operation operating efficiencies. Just thinking looking forward, given the macro backdrop, are you seeing any inflationary pressures on your business? I mean, either from like the labor side or The Phillips with the supply cost, but anything that you're seeing on inflationary pressures? Then maybe if you have discussed those strategies that you have in place to help mitigate anything along those lines, that would be helpful. Yes. So we're seeing we're clearly seeing costs increase in the delivery side of the business. So fuel costs are up. So they are to mitigate some of the fuel costs, we're continuing to optimize routes and evaluate how much inventory we store to reduce trips. That's also a mitigating factor for labor. Thus far, we have had favorability on labor, some Offset in overtime, some offset in couriers. But here again, because of some of the efficiencies we've gained, we've been able to manage through that pretty On the kind of the product cost side, we've seen some increase in some of the bent metal, as we call it, On the HME side wheelchair, other than that, from the PAP side and the ventilation side hasn't really been an increase and we're not actually Contemplating significant increase there given what's going on with the Phillips recall. Got it. Thanks. And I guess the last one for me. Just going back to the deal you highlighted in the quarter, and then nice tuck in there. Can you maybe break out more details around that And then separately, can you just can you delve more into your M and A strategy and how you're seeing the pipeline develop? Maybe if you can comment on what you're In terms of multiples in this space, that'd be helpful. Thanks. Yes, Jason, this is Dan. Just I mean, we have the deal is not closed. We signed the agreement Late last week. So we'll talk just briefly about it. Its revenue is a little bit north of $20,000,000 a year. So it's a nice sized deal. And a very they have a very strong presence in that area. So we feel very good about Being able to support that team that's coming aboard and continue to grow, both the Apria brand as well as the ABC brand. So A very strong competitor and happy to have them join the Apria family. Just from a broader M and A strategy, I think What that deal is reflective of and that company is the types of deals that we want to do. We've Again, want to grow organically and supplement with acquisition. And we feel like that deal specifically because of their density And their strong name in that area, that's really the type of opportunity we're looking for, where we can really gain in a specific market. From a multiple standpoint, and I'll have Deb chime in a little bit on this as well. The multiples are There's high expectation from sellers, which we would expect. And our job is to figure out whether or not we believe that the combination of Apria and that company really brings At the end of the day, the justification of the multiple and certainly on this one that we did, we're very pleased with it And are looking forward to getting that one to close. Got it. Great. Thanks. Thanks, You're welcome. Thank you. Our next question comes from Jamie Purce with Goldman Sachs. Your line is open. Hi, Dan and Debbie. Thanks for taking the question. I wanted to just start with the Phillips recall and See if that's impacting your guidance at all. If you're contemplating any potential headwind In guidance in the second half of the year and that's just being masked by some of the underlying strength. Just any comments or quantification around that? Yes, Jamie, good afternoon. I think you just summed it up in that sentence pretty well. Yes, we have contemplated some uncertainty around And it varies across the range, obviously, because there's a range of possibilities we believe Could happen up to, call it, dollars 30,000,000 in revenue. So we have contemplated that. And as you noted, The first half performance where we were performing expecting and still continue to expect to perform in the second half, Coupled with a little bit extra there from the PAT, that's why, as you suggested, it's all incorporated into the guidance. Okay. Okay, that's helpful. And then just on margins, they're really strong this quarter, kind of 22.5% or so. Was there anything unique about this quarter? Can you just put that kind of performance that you had in this quarter in context for us as we think about The rest of the year and how sustainable this might be? Yes. We continue to perform strong. If we look at the quarter and look particularly year over year where we were, we obviously have some rate favorability. Some of that is budget neutrality that will stay with us. Some of it's temporary, but it's relatively minor in the grand scheme of things or maybe 20 basis points Related to rate that is expected to go away. Really the combination of the improvement on the rev cycle process, The investment we've made there, we've continued to see really strong solid performance. And it's a combination Three things. It is investments we've made in Rev Cycle and we have for it's continual workforce workflow Improvement, it was Project Simplify as we've talked about at length on other calls and its contribution towards accountability And business that we take and then investment in predictive analytics that I mentioned. And so we believe that Those are sustainable. I guess the other one I would say would be there is some benefit obviously from documentation. It's unclear if some of that will stay. We haven't factored that assuming that will factor into our guidance at this point, but there's some variability that could occur. So the combination of the rev cycle and cash coupled with on the flip side the labor and operating improvement. We've had some increases I mentioned in delivery costs offset by some favorability in labor driven by some of the Labor shortages, I don't want to say shortage is too high because we manage effectively through it. And then we've obviously also had the incremental go So I think we continue to see and as you can look at the guidance where we're guiding It's a higher margin and we originally had estimated that that would be a little lower this year Coming out of COVID and such, but we're continuing to see the operating efficiencies that we established stick. We're continuing to see that trend. So we do expect them to be, I'd say, in the low 20s. Okay, great. And last one for me, just wanted to get your thoughts on how you're thinking about the Delta variant, if you're seeing any impact in some of the regions that are more impacted Right now, and if you could just remind us how that benefited the respiratory business, if we should expect something similar to the extent This wave kind of sticks with us for a little while. Yes, Jamie, this is Dan. We are absolutely seeing The effects of it, we're a little bit downstream, maybe a week or 2 removed or behind it, if you will. But when we think about kind of the areas that are most heard of Florida, kind of Missouri, Texas, some of the Southern California and Southwest states Where the variance really picking up, we certainly see our new patients on oxygen start Have started to increase really they increased in July over June, which is not normal in this time of year. And We saw the COVID patients number of COVID patients on service tick up a little bit. From how it impacts it is, Really, it's generally a shorter term patient than a long term COPD patient. However, We have some level of capacity at each location. And so the marginal On the margin, it's a very good business for us to have high volume and to continue to utilize our equipment that we have purchased. So it's been positive for unfortunately for the country, it's been positive for our industry. Okay. Appreciate the color. Thank you. Yes. Our next question comes from Kevin Fischbeck with Bank of America. Your line is open. Good afternoon. Actually, this is Joanna Gajuk filling in for Kevin. Just a couple of follow ups. So you mentioned That in your guide, you assume a range obviously of potential costs related to the vehicle and you said that could be up to $30,000,000 I guess You said to revenues? So I just want to clarify because first you were talking about cost and then you said revenues because I thinking about like there's 2 different things. One is, yes, the cost, I guess, we're dealing with it. But then, I guess, if you can talk about Whether this includes this other dynamic around the shortage of supply to meet the new demand. So can you kind of break it or how much I guess Of each or if it's including in both of these? And then also in terms of how you're thinking about it, because clearly you said Q2 not impacted, but then should we expect kind of Q3 and then Q4 being a higher impact because you start to see the impact of the Yes, Joanna. Yes, so starting with the revenue, roughly the range of $30,000,000 on revenue. When we look at adjusted EBITDA, obviously, there's a portion of that we don't disclose detail in the margins, but a portion of that flows through To adjusted EBITDA, there are some incremental costs, while they could be significant, They are not significant at this point. So on a relative basis, we have assumed some level of cost in our guidance For that, and then on the CapEx side, obviously, there's a wide range of scenarios. On the worst case scenario, if you want to call it that at $30,000,000 obviously, there's CapEx savings that are greater than other scenarios So that's somewhat of an offset when you get down to the adjusted EBITDA to CapEx. So we factored in the revenue, We factored in obviously the margin on that factored in incremental costs that we expect to have to incur And incremental CapEx savings associated with a shortage of product, potential shortage. And for your Q3, Q4 question, We would expect the impact in Q4 to be greater than Q3 if it should continue. And so you now have our Full year and Q3 guidance both. So you essentially have Q3, Q4 and full year. And as we report on Q3, we'll Certainly be updating on where things are at and where we see Q4, but should the product shortage through the recall or the Product availability due to ship shortage continue, it actually gets greater it could get greater. The other piece of this is besides the equipment is patient behavior. So the sleep resupply business, we've assumed there'll be some level of patients that choose Not to continue to be on their devices, even though we're not seeing much of that now. We're expecting there could be some level of that, Therefore, they would no longer resupply. So that would could also as more patients learn of it, it could potentially accelerate or increase. And therefore, the combination of the rental period extending through Q3 and Longer in Q4 missing those and then the supplies. Q4 could be potentially worse if it lasts out, work to do different scenario modeling To contemplate everything that we could in that regard. Okay. That's how it was. Dollars 30,000,000 is the revenue head and that includes The dynamic around just the shortage of equipment, so that's why I was saying we should think about it being Q4 being A higher number than Q3 because things start to kind of compound, so to speak, right, because you have The supply, you don't have the resupply if you didn't have the new patients in Q3, right? So then I guess if this persists Then I guess into 2022 then the number become even bigger because of this dynamic of just compounding that you didn't get patients and then you don't get the resupply too? Yes. That's the guide. I think the impact really is really about duration, Right. So you've got the Phillips recall that issue, but then the other manufacturers have chip shortages as well. So There is a basically is and going to be somewhat of a shortage of equipment. The other manufacturers combined, Even if they were had full chips couldn't make up the Phillips capacity. So there There's some metering effect here and the faster the chip shortage gets resolved, at least for that small sector of manufacturing, Will really impact whether it's a big, small, again, we think it's probably larger than 0 from an impact, But we don't think it's bigger than what Debbie described. Okay. And I guess talking about added manufacturers, so is this something you're trying to Flor, in terms of purchasing different equipment or that's I mean, it sounds like it wouldn't be even enough, but I guess is there something you're Trying to pursue to kind of try to minimize the headwinds? Yes, we are in active discussions With the with other manufacturers. Okay. But kind of what is the realistic scenario here? Because like you mentioned, it's all about impact, like How long it's going to last? So is there something you're kind of looking out to kind of say, hey, now XYZ happened and now we know, okay, this This is going to be over in whatever period of time. Is there something that we should be also looking out for in terms of how this situation could be resolved? Yes. So I think the first thing, Joanna, is approval from the FDA for Spironics remediation of the recall. So they're in the process of having that reviewed. And once that is Approved through the FDA, that's going to at least take the overhang of uncertainty off of production and or repair. And then as well as the other manufacturers' ability to get back to historic even historic capacity, let alone build on top of that. So we are actively monitoring the situation With Philips and all of our manufacturers on a daily basis and the best news that anybody could have is that the FDA has approved the fix And that the remediation process can start. Okay. Because you're saying that in your $30,000,000 worst case scenario, You're assuming like there's no resolution this year, right? Yes. So we have assumed in our Worst case, I would say, ROWRFE case, it is through the end of the year. Yes, that's correct. Okay. Because then to your point, it could be that it's sooner, right? Or because the easy fix, so to speak, right, is that You just did the replacement of the foam or some other fix to that, right? So that would be kind of the best case scenarios in this situation? Yes. And yes, And a lot depends on sleep resupply as well. So if patients continue to use equipment, then the impact could be less Because of the continued resupply, right? There's two sides of it. 1 is new patients and the growth that we contemplate, how we Support that growth and the others is the existing patient base, which is very large and as patients continue to use, Which is what we've seen to date. Again, we don't know if there'll be some slowdown, but if patients continue to use and continue to resupply, Right, the impact is less. So there's a wide range of impacts and as Dan said, duration. So I'd like to say dose and duration, Those are both going to dictate where this goes. No, I appreciate the color. And if I may, Last clarification on the deal that you announced, and you said it's about $20,000,000 or actually north of $20,000,000 annual revenue. Just want to confirm, it's not included in the guidance, correct? Correct. Yes, because we've signed a definitive agreement, we'll include it in the guidance once we actually close the deal, which we expect in Q3. Okay, great. Thanks. Thank you. We have this question from Jeff Garo with Piper Sandler. Your line is open. Yes. Good afternoon and thanks for taking my question. I'll follow-up a little bit there on The Airway Breathing acquisition, you've given some nice detail about its level of revenue You expect on an annual basis, but could you give a little bit more detail on the expected growth and profitability profile of that business? Sure, Jeff. I think, I mean, it's not something that we would disclose from that aspect, But I think we're going to be able to, from our perspective, help from a few things, mostly synergies around cost of goods sold And as well as some of the potential opportunities from a headquarters perspective. But Well, we they have grown nicely over the last couple of years from a top line perspective. They're a profitable well run business And we expect that it will be helpful to our bottom line as we move forward. Excellent. That helps. One more from me asking about the guidance and The impact of COVID and the delta variant, you mentioned the positive impact so far into Q3 on revenue. Just curious whether your guidance assumes any type of acceleration of That increased delta variant prevalence into Q4? If we haven't assumed a Spike like we had in the beginning of the year. We have assumed that oxygen continues or respiratory continues to be above plan. What will happen if there's a spike is I suspect very similar to what we've seen thus far and what Dan was talking about a little. We'll see a shift around the products and we'll see oxygen surge more. We could potentially see sleep slow if it surges, Which may be okay right now with the product shortage, those could time. And so we may see a mix in product, but the benefit we have at Aperry is with a large rental base. We're 75% rental. So that rental stream on the census continues with a low level of cost to support. So I see it more as a movement in product and continue a leverage of variable costs just like we saw last Thank you. And I'm showing no other questions in the queue. I'd like to turn it back to Dan Stark for any closing remarks. Thanks, operator, and thank you everybody. We just want to thank you again for joining today. We appreciate Your interest in Apria and we understand that everybody's time is very valuable. So we certainly appreciate you spending the last 45 minutes with us And we look forward to keeping you up to speed and look forward to talking to you all in the near future. Take care. Thank you. This concludes today's conference call. Thank you for participating. You may now disconnect.