Good day and thank you for standing by. Welcome to the Community Health Systems Second Quarter 2021 Earnings Call. Please be advised that today's conference is being recorded. I would now like to hand Conference. Over to your speaker for today, Mr.
Ross Comeaux, Vice President of Investor Relations.
Thank you, Jay. Good morning and welcome to Community Health Systems Second Quarter 2021 Conference Call. Joining me on today's call are Tim Hinchen, Chief Executive Officer Doctor. Lynn Simon, President of Clinical Operations and Chief Medical Officer and Kevin Hammonds, President and Chief Financial Officer. Before I turn the call over to Tim, I'd like to remind everyone that This conference call may contain certain forward looking statements, including all statements that do not relate solely to historical or current facts.
These forward looking statements are subject to a number of known and unknown risks, which are described in headings such as Risk Factors in our Annual Report on Form 10 ks and other reports filed with or furnished to the Securities and Exchange Commission. As a consequence, actual results may differ significantly from these expressed in any forward looking statements in today's discussion. We do not intend to update any of these forward looking statements. Yesterday afternoon, we issued a press release with our financial statements and definitions and calculations of adjusted EBITDA and adjusted EPS. For those of you listening to the live broadcast of this conference call, a supplemental slide presentation has been posted to our website.
We will refer to those slides during this earnings call. All calculations we will discuss also exclude loss from early extinguishment of debt, impairment expense as well as gains or losses on the sale of businesses, expenses from government and other legal settlements and related costs, Expenses from settlement and legal expenses related to cases covered by the CVR, expenses related to employee termination benefits and other restructuring charges, and Change in Tax Valuation Allowance. With that said, I'd like to turn the call over to Tim Hinchen, Chief Executive Officer.
Thank you, Ross. Good morning, everyone, and welcome to our Q2 2021 conference call. We are pleased with our 2nd quarter results, especially as we continue to see volume recovering, net revenue growth and margin improvement. During the first half of twenty twenty one, we further advanced Growth oriented strategic initiatives that continue to strengthen the company. Before we walk through the details, we would like to thank all of our providers, nurses and caregivers and our employee and leadership teams who continue to provide safe high quality care in the communities we are so fortunate to serve.
And this has been great to see firsthand. With more people vaccinated and because COVID case counts had declined in the 2nd quarter, Many of our executive leaders were able to spend time visiting our markets over the past several weeks. We have had the opportunity to tour capital projects that have come online, witness operational improvements and of course to hear heartwarming stories of patient care and positive outcomes. There is a tremendous sense of pride across our organization, especially as we reflect on the essential services and value provided to our communities, while we've worked together to fight the COVID pandemic. We are currently seeing an uptick of COVID cases in some markets, We remain confident in our dual track operating model and the ability of our teams to safely and effectively manage COVID surges, while also meeting the increasing demand for our services and to meet the healthcare needs of non COVID patients.
Now switching back to the 2nd quarter, Positive COVID-nineteen case counts were lower than the Q1, following the peak numbers we experienced in January. In the Q1, we provided care for approximately 9,500 inpatient COVID admissions. In the second quarter, our inpatient COVID admissions were 3,000, which represented about 3% of our total admissions. And as COVID cases declined during the 2nd quarter, We experienced a solid rebound in non COVID volumes, driven by our efforts to attract new patients and to reengage and retain patients who have previously used our healthcare systems. For the Q2, on a same store basis, net revenue increased 30.2% year over year, driven by the easier comp, which was the result of the government restrictions on elective procedures that impacted net revenue last year.
For the full quarter, year over year same store admissions increased 17%, while adjusted admissions were up 28.5%. Surgeries increased 43.7 percent and ER visits were up 39.2%. In terms of our patient volumes, All volume growth rates meaningfully improved sequentially compared to pre pandemic levels. And looking at our 2nd quarter results compared to the same period in 2019. We are pleased with the improvements we've delivered over that benchmark period.
Compared to 2019, same store surgeries were slightly higher, increasing approximately 1%. Admissions and adjusted admissions were down approximately 4% 2% respectively. ER visits have strengthened throughout the quarter, that continued to lag other volume metrics compared to pre pandemic run rates now down 6%. On a consolidated basis, 2nd quarter adjusted EBITDA came in at $453,000,000 with adjusted EBITDA margin of 15.1%. Compared to the Q2 of 2019, consolidated adjusted EBITDA increased to $453,000,000 from $402,000,000 an increase of 12.7 event, even though the company operated 23 fewer hospitals this quarter.
And it's worth noting that we expanded our EBITDA margins by 2 90 basis points during that timeframe. The transformation we began a few years ago is continuing to drive the expected growth and development across the portfolio and with very good momentum. We have strengthened our organization in a wide variety of ways, Positioning the company for incremental same store growth going forward. To highlight some of these initiatives, We introduced the company's strategic imperatives and have made notable improvements across each area of focus, those being safety and quality, Operational Excellence, Connected Care and Competitive Position. Net revenue initiatives such as the transfer center, Investments into higher acuity and patient services, ongoing outpatient access point development and our ACOs are generating growth.
The strategic margin improvement program is adding value across the enterprise and our current portfolio of hospitals positions us in stronger markets, primarily across the Southeast, South and Southwest areas of the country, where there is population growth and economic expansion. Over the past few years, we have continued to deploy capital in our core markets to drive long term inpatient and outpatient growth with recent investments including bed and service line expansions in markets including Birmingham, Naples, Huntsville and Knoxville, the opening of our 15th freestanding ED in Gulf Shores, Alabama, which is part of the fast growing Baldwin County market, the recent opening of 2 new hospitals in Arizona and Indiana, And we have 2 more hospitals nearing completion, 1 in Downtown Fort Wayne that is scheduled to open in the Q4 of this year and another de novo hospital in Tucson, Arizona that we plan to open in the Q1 of 2022. We are also excited about recently announced partnerships and joint ventures that will expand access to post acute and behavioral health services. During the quarter, we opened Knoxville Rehabilitation Hospital in our Tanova East market in partnership with Kindred. We also announced a de novo JV project with Select Medical in Tucson, which includes acquiring a 47 bed long term acute care hospital and we will break ground next week on a behavioral health facility in Fort Wayne as part of a joint venture with Acadia Healthcare.
And we continue to invest in joint venture ambulatory surgery center partnerships in key markets with the de novo center opening in our We will continue to invest in our considerable pipeline of inpatient and outpatient opportunities over the next several quarters, which will further strengthen our core markets for the long term. Since the start of the year, we have demonstrated progress in terms of net revenue growth, expense management, EBITDA growth, EBITDA margin expansion as well as our capital structure. We're certainly pleased with this progress and the momentum it provides as we execute our strategies and capitalize on all of the opportunities that we see over the next several years. In the medium term, we continue to target 15% plus adjusted EBITDA margin, positive annual free cash flow generation and reducing our leverage below 6 times, which we believe will add value for all of the company's stakeholders. Kevin?
Thank you, Tim, and good morning, everyone. As Tim highlighted, it was another strong quarter for the company, During which we delivered solid financial performance and made progress across multiple fronts. During the second quarter, We delivered a strong volume recovery, good expense management, positive free cash flow, further capital structure improvement and additional progress across our strategic initiatives. We also adjusted our full year guidance to reflect the company's strong start to the year and our outlook for the back half of the year. Looking at the Q2 performance, net operating revenues came in at $3,700,000,000 on a consolidated basis.
On a same store basis, net revenue was up 30.2% from the prior year, due largely to the prior year impact of COVID-nineteen. This was the net result of a 28.5% increase in adjusted admissions and a 1.3% increase in net revenue per adjusted admission, which faced a difficult comp from the prior year. Excluding non patient revenue, which was lower year over year, Net patient revenue per adjusted admission was up 3.3% compared to the prior year. During the Q2, we drove a strong sequential recovery in non COVID related patient demand, and we delivered improved volume performance on a sequential and year over year basis. Adjusted EBITDA was $453,000,000 Comparing to the pre pandemic baseline period of the Q2 of 2019, this represents a 12.7% growth and adjusted EBITDA despite having 23 fewer hospitals.
Excluding provider relief funds, this also represents Sequential 9.4% improvement over the Q1 of this year. During the Q2, we recorded approximately $1,000,000 of pandemic relief funds. If you recall, in the Q2 of 2020, we recognized $448,000,000 of pandemic relief funds, which represented substantially all of our prior year adjusted EBITDA. The pandemic relief funds have helped to offset a portion of lost net revenue and incremental expense related to the COVID-nineteen pandemic. During the past 6 quarters, we've experienced a number of ways of COVID, which have impacted our volumes and operating expenses.
Our hospital leadership teams continue to adjust extremely well to this evolving operating environment And we expect to continue to utilize our dual track strategy in the back half of the year as we care for both non COVID related healthcare demand as well as additional COVID-nineteen patients. It's also worth noting that our strategic margin improvement program has remained on plan. The program has helped to drive savings the past few quarters and we expect the plan will reduce operating costs in the back half of this year and over
the next several years.
Switching to cash flow. Cash flows provided by operations were $280,000,000 for the 1st 6 months of 2021. This compares to cash flows from operations of $1,700,000,000 during the 1st 6 months of 2020. Excluding the received and repaid Medicare accelerated payments, cash flows provided by operations were $414,000,000 for the 1st 6 months of 2021 compared to $552,000,000 in the prior period. Looking at the year over year decrease, Excluding the Medicare Advance Payments, the change was primarily due to changes in networking capital, which also included the pandemic relief fund grants.
Declining net revenue in the first half of twenty twenty It was a benefit to working capital last year as accounts receivable declined, while strong net revenue growth during the first half of this year Has resulted in a net increase to accounts receivable and therefore a slight net working capital drag to start the year. Moving to CapEx. The 1st 6 months of 2021, our CapEx was $212,000,000 compared to $192,000,000 in the prior period. Our CapEx was up 10% in the first half of 2021, again despite operating 13 fewer hospitals than a year ago. Going forward, Over the next several years, we believe our current portfolio of markets is well positioned to benefit from continued economic and demographic growth.
In addition to recent capital investments, we plan to continue investing in a strong pipeline of development opportunities in our existing markets $1,250,000,000 of cash on the balance sheet, which is essentially unchanged sequentially compared to the Q1. During the Q2, $116,000,000 of previously received Medicare accelerated payments were returned to CMS. As part of CMS' planned recoupment that started in April. As of June 30, 2021, the company has $947,000,000 of Medicare accelerated payments remaining to be repaid. These are recorded as a liability on the balance sheet.
Also as it relates to liquidity, we continue to have no outstanding borrowings and approximately $762,000,000 of borrowing base capacity under the ABL with the ability for that to increase up to $1,000,000,000 Turning now to the capital structure, We continue to make meaningful progress. On Slide 12 of our supplemental slide presentation, we've included our debt maturity profile The end of 2019 compared to the end of the Q2 of 2021. During the past few quarters, we've significantly extended debt maturities, paid down debt and lowered annual cash interest. Most recently in the second quarter, we extended 1,400,000,000 2nd lien notes from 2024 to 2,030, while lowering our interest rate 200 basis points. This transaction further lowered annual cash interest, and now our next debt maturity is not due until 2025.
Through 2020 and the first half of twenty twenty one, we lowered our debt by over $1,300,000,000 reduced our leverage ratio by over 2 turns, down to 6 times compared to over 8 times at this point last year and lowered annual cash interest by approximately $210,000,000 Now I would like to walk through a few updates to our full year 2021 guidance. Net operating revenues are now to be $11,900,000,000 to $12,300,000,000 as we narrowed our full year range, but maintained the midpoint. Adjusted EBITDA is anticipated to be $1,700,000,000 to $1,800,000,000 as we raised the low end of guidance for the 2nd consecutive quarter. As a reminder, our 2021 adjusted EBITDA guidance does not include any previously recorded pandemic relief funds or any pandemic relief funds that may be recognized in the future. Cash flow from operations is anticipated to be $700,000,000 to 850,000,000 which is an increase of $100,000,000 from our original guidance.
And net income per share is anticipated to be $0.60 to $0.80 based on weighted average diluted shares outstanding of 129,000,000 to 130,000,000. Overall, we delivered another strong quarter as our 2nd quarter performance came in above our internal expectations. As we think about the balance of the year, we expect our EBITDA performance to have similar seasonality to prior years, with some seasonal softening in the 3rd quarter followed by a good finish to the year in the 4th quarter. Ross, I'll now return the
call back to you.
Thank you, Kevin, and thank you, Tim. At this point, Jay, we're ready to open up the call for questions. We will limit everyone to one question this morning,
Thank Our First question comes from the line of Brian Tanquilut of Jefferies. Your line is open.
Hey, good morning, guys. Congrats on the quarter. I guess my question for you for both, I guess for Kevin, primarily. As I think about the guidance, I appreciate your comment on seasonality, but you put up a 15% margin number in the quarter and it sounds like you're seeing the recovery. You feel confident in your ability to drive growth and you beat the number in Q2 pretty well.
How are you
thinking about that? I mean, is that just conservatism? I guess, as I look at both the back half guidance and your medium term guidance Maybe if you can touch on just some of the cost factors as well that we should be thinking about.
Sure, Brian, and thank you very much. So let me touch on a couple of things there. So first, as we, I guess, think about In the beginning of the year, we kind of expected and did our guidance, Expecting a recovery from COVID that kind of extended throughout the year. And as we sit here today and we have a little more insight, Of course, that recovery occurred a little bit quicker in the Q2 than we anticipated. And we have a little more insight into the Q3 and we see some things Again, returning to a little more normal seasonality as people are getting back active again, school will be starting and so forth.
In terms of kind of net revenue, we think kind of our net revenue per adjusted admission We'll look somewhat similar in the back half of the year to where we exited the second quarter. And then in terms of kind of cost Improvements in our margin improvement program. That, as I mentioned, is on plan and we believe that there's still some opportunities With margin improvement and cost savings opportunities initiatives that we're working on to deliver further cost improvements in the back half of the year as well as into next year and beyond. As we're looking at that, all things equal, we're pretty comfortable with where we're at in that guidance range. And then the big unknown and certainly included in that guidance are a number of scenarios around what may happen with COVID case counts.
Yes, Brian, this is Tim. I'll add on just real quick. I think Kevin summed it up very nicely. I'll add on some of our investments back into the business. Kind of going back to that seasonality we've talked about historically, but we have about 30% more employed doctors coming into the portfolio in the 3rd quarter.
So there's certainly be some investment into that as we ramp those practices up, but that's all for the long term growth and development of the entire portfolio along our service line In our primary care development strategy. So again, that's factored into our guidance as well, but we believe it's a good thing for the long term prospects of the business.
Our next question comes from the line of Frank Morgan of RBC Capital Markets.
Good morning. I guess I'll stay on that same subject. So I guess before I go back to the cost side, When you appreciate the color around the utilization across your service segments versus the pre pandemic levels across the or for the quarter in its entirety. But could you give us any color on really how you exited the quarter relative to some of those 2019 pre Pandemic levels of utilization, whether it's admissions or ERs, surgeries, those kind of things. And I guess Just for a clarification, I guess what I'm hearing you say is that the reason the seasonality here is probably going to be more driven by the cost side and the volume side, is that correct?
Thanks.
Sure. Let me kick that off and then Tim may weigh in here as well. And thanks, Frank for the question. I guess starting off here, I would say that The second quarter, we started off with low higher COVID case counts and those Came down throughout the quarter and the non COVID cases increased throughout the Q2. So as we exited the quarter, we were probably Fairly even or a little bit above that 2019 base period exiting the quarter.
I agree, Kevin. Thanks for that. And then Frank, good morning. In terms of the volume progression, we certainly did see throughout the course of the previous waves of the pandemic, When inpatient COVID cases subsided, we were able to bring back the elective or non COVID care back and we saw that trend continue into the second quarter, Frankly, with a really strong bounce in the months of May and throughout June and heading into July. So we're pretty Optimistic in terms of our ability to manage surges of COVID, maintain our access for our non COVID patients through that dual track strategy we referenced, Working to demonstrate that our priority is obviously to be there when our communities need us, but we become more proficient at managing elective care to the point that we would hope that governments wouldn't feel the need to restrict our ability to do so.
We'll kind of be the arbitrator if we can of of where we put our resources to make sure we take care of both COVID and non COVID care.
And then maybe the Finally, circle back on the last part of your question in terms of the Q3. I think seasonality, what we typically see is a little bit lower volume in the 3rd quarter And then picking up in the Q4 and through the end of the year, and that's kind of what we're Expecting to see in terms of the return to maybe a more normal seasonality or seasonal softening In the Q3, but we believe we'll still have a good strong expense management throughout the remainder of the year.
Thank you. Our next question comes from the line of Josh Raskin of Nephron Research. Your line is open.
Hi, thanks. Good morning, guys. Just a quick clarification on those Medicare repayments. I heard the $947,000,000 remaining. Is that $125,000,000 or so a quarter going forward until it's repaid or I guess what's the number quarterly?
Yes, that's about right. I think we were estimating $400,000,000 to $450,000,000 this year with the remainder Paid back in 2022.
Thank you. Our next question comes from the line of A. J. Rice of Credit Suisse. Your line is open.
Hi, everybody. I might just take a minute to ask you about the labor dynamics. We are hearing a lot about that across The provider world, what are you seeing in terms of turnover rates, use of contract labor? And how about just thinking about wage increases over the next year or so for your permanent employees? Do you have an early read?
Is that going to step up or is that sort of consistent with where it's been?
Sure. Thanks, A. J. This is Kevin. Let me start this one off.
We are seeing a little bit of higher inflation costs with respect to our labor. This does kind of vary market by market and it's been a little bit above maybe what we've experienced in previous years. But at the same time, we are seeing some easing on both the rate and utilization of contract labor That came down pretty significantly from the Q1 to the Q2 sequentially. We're also seeing some improvement in our employed labor retention. So we saw improvement retention sequentially as well.
So net net, I think we believe we'll be able to kind of manage through this through the current environment without any material impact on margin through the back half of the year. Good morning, A.
J. This is Tim. I'll just add on to what Kevin mentioned in terms of our management of labor. Throughout the quarter, as Kevin said, sequentially improved from the quarter, tied to some of that decrease in COVID case counts, reduction of contract labor expenses and improved retention hiring of our core staff. We plan to continue obviously with that going forward into the future with some very specific initiatives here at CHS.
First of all, we've had some centralized RN recruitment success in a few of our markets that we piloted in 2019 2020. We're now scaling that across the organization. By the end of this month, we'll have about half of our hospitals up on a centralized nursing recruiting support function and by the end of the year about 90% of our hospitals. And what that entails is really leveraging the digital marketing and sourcing of nurses From a corporate standpoint, similar to what we do for physician recruitment, handing over qualified candidates to the local HR teams and having them complete the hiring process and then on the back end working with some very specific preceptorship and orientation programs. The other thing that we're doing to support the supply side of nursing in particular, I mean, I believe we mentioned this in our Q1 earnings call, We've initiated a relationship with Jersey College.
We now have 2 fully functioning nursing programs in our markets that are fully staffed and have a full enrollment of new nursing students. We have 2 more programs launching By the end of the Q1 of 2022 and by the end of 2023, about half of our hospitals will be supported by our own affiliated nursing program. The other benefit of this is not just on the supply side, but as these Candidates, these students are going through the nursing program. They are getting experience in our hospitals and supportive care functions as certified nursing assistants, patient care What have you, which we believe again gives them an early entry into our healthcare system, so that when they're completed with their program, Passed their test and they're already ingrained into our healthcare delivery systems and will come on full time as nurses.
Next question comes from the line of Ralph Giacobbe of Citi. Your line is open.
Thanks. Good morning. Just I guess wondering with COVID cases up recently with the Delta variant, I I was hoping you can give us a sense of what you're seeing in your markets in terms of magnitude of that lift of COVID specifically and whether You're seeing any corresponding slowdown in non COVID volume in surgery? And then just to clarify, is the volume seasonality in Q3, your expectation or are you already sort of seeing some of that of late, whether it's sort of in core or related COVID. Thanks.
Good morning, Ralph. I'll start this off and then hand it over to Doctor. Simon for some more color around our current COVID experience. In terms of the current surges impact on elective business, we've obviously been monitoring that very closely And we have not seen a material impact and it goes back to our, I guess, experience with managing the previous waves of COVID That dual track strategy, our staff is really well equipped in terms of how to manage COVID care safely and distinctly from the elective care And our physicians and caregivers again very grateful for their commitment to this, but believe they've really made our communities and our patients feel safe. So we have not seen You know why drops in elective care.
So in terms of the actual pandemic, I'll turn it over to Doctor. Simon.
Thanks, Tim. So the current surge that we're seeing is we're seeing an increase in cases, but still running at a lower rate than we were seeing July, so not quite up to those levels. I think people have much more confidence now in managing the protocols and how these patients are treated. We continue to have our corporate command center running and then we continually reach out to our teams and make sure that they have the support that they need As we see these COVID cases increase.
Thank you. Next question comes from the line of Steven Valiquette from Barclays. Your line is open.
Great. Thanks. Good morning, everybody. So a lot of key topics have been touched on already in relation to the acuity mix margin trends for the remainder of 2021. And that's a little early to talk about 2022, but I guess I'm just curious that given all the puts and takes in your upcoming pivot from this year to Next year, if we do ignore the $83,000,000 of government stimulus relief that you received this year, is there any preliminary view on whether you would expect EBITDA Grow next year from the 'twenty one base, just given your growth initiatives.
I'm curious on any directional thoughts around that at this early stage. Thanks.
Sure. It's probably a little early and we haven't given out any guidance on 2022 yet. But I would say a couple of things Relative to that point, one, that we're now that we're done with our divestiture program, and I think we've said we've turned 100% of our attention towards growth. We're making a number of investments in both inpatient and outpatient areas and a number of service line enhancements to really grow Our net revenues, and if you look at our medium term goals that we put out, and I think it's on Page 15 of our slide deck, Our goal is to grow net revenue, to increase our margin above 15% And to reduce our leverage below 6 times, medium term being over the next 2 to 4 years. But if you think about kind of the trajectory to get there, Hopefully, you can use that to kind of give some idea about the direction of 2022.
Next question comes from the line of Kevin Fischbeck of Bank of America. Your line is open.
Great, thanks. I wanted to ask about The volume, your expectation in the back half of the year, I think if I heard you right, you said that you expected the rate to largely be similar to the first half of the year. I guess, we might expect That as volumes continue to normalize, it would be lower acuity volume. And that it seems like government volume has been more depressed, so that would be volume that comes back. So I guess just want to, I guess first touch on that dynamic.
But then secondly, How are you thinking about it, if you agree with that comment, the ability to kind of maintain or grow margins if you're bringing in lower acuity government volume, which historically is a lower volume a lower margin than the volume source.
Sure. And I'll be happy to start that off. So There's a lot to unpack there and there's certainly been a lot of noise in the prior periods as we have Are coming out and seeing declines in COVID cases. But if you look at our net revenue Per adjusted admission compared to 2019, we're up about 10% over the 2 year period. And I think that if you think about maybe normal rate lift and a little bit of acuity lift off that, We're pretty comfortable that we can kind of maintain that level of Net revenue per adjusted admission going into the back half.
Certainly, you're right, there's probably some lower acuity service That isn't back yet. However, there's still some higher acuity services and we've been over the past couple of years making investments and higher acuity service lines and making other improvements and adding services that we think will offset some of that What might be some downward pressure as we continue to grow. Yes, Kevin, this is Tim. I'll just add on
to what Kevin said. In terms of our prospects for growing net revenue, we really have had a very balanced approach to how we want to build out the business, expand our markets and The balanced approach being investments in the ambulatory care settings, our access point strategies, our freestanding EDs as we mentioned continue to expand. We have another That will be opening up yet this year. We have our pipeline that has additional ones in place. And while some of those visits may be lower acuity, it is an expansion of Some of our higher acuity service lines along the orthopedic and cardiac service lines.
So it's all meant to really help us further bolster that inpatient side of the business. In some of the core markets where we're adding beds, we still see tremendous opportunity to expand and augment service lines, Growing more of that inpatient business, taking more of the inpatient market share. So we can we see that balanced approach is serving us quite well, making sure we're positioned well to where care is migrating on the ambulatory side, but still being able to drive the higher acuity inpatient services.
And our last question comes from the line of Josh Raskin of Nephron Research. Your line is open.
Yes, I appreciate the follow-up. The real question I had was just the changes that you're seeing, I know we just about sort of COVID and Delta, but I'm curious on the treatment and cost per patient sort of impact on operations. So Are you seeing differences in the treatment of the Delta variant patients relative to others? Are there differences in length of stay, difference in cost to treat? I'm assuming You don't have PPE issues and other impacts on the rest of the facility, but I'd be curious on the inpatient cost per patient.
Sure, Josh. This is Tim. I'll kick it off with more of the operational side and have Kevin weigh in on the cost side. But in terms of the operation side, your theory is correct. We're not having the same pressures on PPE.
As we pointed out, in the second Quarter, we saw a drop in contract labor. We are bringing in more contract labor. So you may see some increase in that And as we support our caregivers, our full time and part time caregivers with more nursing resources to manage the surge and Maintain that dual track of elective non COVID business coming into the hospitals. In terms of any other expenses, In terms of drugs or lab, those are relatively stable to what we saw in the previous wave.
Yes. So I would say it's A little early, but right now what we're experiencing is not any significant difference in the cost of treatment for the current wave of COVID patients compared to previous waves.
Yes. And this is Lynn. I'll just add. With this wave, like everyone is talking about seeing a little younger patient and probably less ventilated patients. So that's a trend at least now that obviously is subject
Thank you. We will now turn the call over to Mr. Hinchen for closing comments.
Thank you, Jay, and thanks to all of you for spending time with us today. In closing, I want to once again thank our physicians, Caregivers, employees and hospital leadership teams who consistently demonstrate their true purpose and commitment and service to their communities each and every day. I also want to thank our regional presidents and the company's entire leadership team for their continued strong support of our markets. We are pleased with our strong first half of the year and we look forward to updating you on our progress throughout the rest of 2021. Once again, if you have any questions, you can always reach us at 615-465-7000.
Have a great day.
Thank you. Ladies and gentlemen, this concludes today's conference call. Thank you for participating. You may now disconnect. Have a great day.