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Operator: Good morning and welcome to the Community Health Systems Third Quarter 2023 Earnings Conference Call. All participants will be in listen-only mode. [Operator Instructions] After today’s presentation, there will be an opportunity to ask questions. [Operator Instructions] Please note, this event is being recorded. I would now like to turn the conference over to Anton Hie, Vice President, Investor Relations. Please go ahead.

Anton Hie: Thank you, Gary. Good morning and welcome to Community Health Systems third quarter 2023 conference call. Joining me on today’s call are: Tim Hingtgen, Chief Executive Officer; and Kevin Hammons, President and Chief Financial Officer. Before we begin, I’d like to remind everyone that this conference call may contain certain forward-looking statements, including all statements that do not rely 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-K and other reports filed with or furnished to the SEC. Actual results may differ significantly from those 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. We’ve also posted a supplemental slide presentation on our website. All calculations we will discuss on today’s call exclude gains or losses from early extinguishment of debt, impairment expense as well as gains or losses on the sale of businesses, expense from government and other legal matters and related costs, expenses related to the employee termination benefits and other restructuring charges. With that said, I will turn the call over to Tim Hingtgen, Chief Executive Officer.

Tim Hingtgen: Thanks, Anton and good morning and thank you for joining our third quarter conference call. Our performance in the third quarter included solid same-store volume gains overall, reinforcing the confidence that our strategic initiatives, targeted market development plans and investments continue to strengthen our competitive position. Year-over-year for the quarter, same-store admissions were up 3.7% and at the highest level since the fourth quarter of 2019 or pre-pandemic. Same-store adjusted admissions increased 4.2% and also reached record levels, demonstrating the strong demand for care in our markets and the favorable impact of our outpatient access point growth investments. We had our strongest ER volumes so far this year in the third quarter, and we had a record quarter for physician practice visits, which is typically a leading indicator for future procedural volumes.

Surgeries grew 1.6% year-over-year but sequentially reflected more normal seasonality, including more vacations by physicians and patients. Since the middle of 2022, we have been discussing our near-term priorities or our roadmap for navigating the overall industry and macroeconomic environment. I want to give you an update on these activities as we move towards the end of the year and prepare for 2024. As outlined in our supplemental debt, this organization-wide focus covers four main categories. They are: accelerate growth, strengthen the workforce, control expenses and advance safety and quality. First, we remain optimistic about our growth prospects and the ability to accelerate growth as we invest in our core markets and implement a number of operational initiatives to create more capacity for patient care.

Our campus expansion projects in Knoxville, Tennessee and Foley, Alabama are on schedule with the Knoxville project expected to open early next year and the Foley expansion on track to open at the end of 2024. Due to the high occupancy rates in both markets, that our admissions are integral to achieving our market share growth opportunities. Upon their completion, we will have added more than 500 incremental beds across our portfolio since 2018, all initiated to advance growth prospects and high opportunity markets. We are intensely focused on length of stay and capacity optimization work. Our efforts to safely and promptly discharge patients ready to leave the hospital and return home or move into a post-acute care setting resulted in an improved length of stay compared to last year and sequentially.

This resulted in strong admission growth in the quarter with a favorable net 1.3% reduction in total patient days. Strengthening our workforce remains another key priority. Our nursing and clinical recruitment and retention strategies continue to perform well, enabling further improvements in contract labor in the third quarter. In terms of our work to insource hospitalists and emergency medicine programs in select CHS hospitals, we have now more than 500 ED and hospitalist medicine providers working under this model. We are pleased with the strategic and financial benefits from this effort in the third quarter. We are confident in our ability to scale this solution as needed, and planning is currently underway to in-source anesthesia services in select markets as well.

Finally, a couple of notes about our safety and quality initiatives. Our clinical scorecard designed to better leverage clinical data at a market and company-wide level was launched just over one year ago. This resource has provided great insights into areas where we can further advance and excel in patient safety and quality, leading to very targeted areas of improvement. For example, the majority of our hospitals are now in the top quartile nationally for prevention of certain hospital-acquired infections, and a company-wide initiative to stop sepsis has resulted in a sustainable reduction in mortality due to sepsis. Healthcare providers continue to face headwinds, including reimbursement challenges, inflationary pressures, regulatory hurdles and evolving consumer behaviors, and all of which are areas of dedicated focus for our management team.

As we navigate through these industry dynamics, we will continue to exercise control where we can and adaptability when we need to in order to further strengthen our results. With that, Kevin, let me turn the call over to you.

Kevin Hammons: Thanks, Tim and good morning, everyone. We are encouraged by the continued return in core demand for healthcare services, the progress from our ongoing investments and further reductions in contract labor as well as the early evidence of success in Project Empower and our physician in-sourcing initiative. Moving on to quarterly financial results. Net operating revenues were $3.1 billion, representing a 2% year-over-year growth on a consolidated basis. On a same-store basis, net revenue increased 5.1% over the third quarter of 2022, driven by a 4.2% growth in adjusted admissions and a 0.9% increase in net revenue per adjusted admission. Commercial mix was flat sequentially at 47.9% of total net revenue, while Medicare Advantage was down 60 basis points from the second quarter.

Commercial volume grew faster than the company average from the second quarter as expected. However, growth in medical admits outpaced surgical admits as Tim noted. Adjusted EBITDA was $360 million, representing 11.7% margin. When excluding the $115 million of benefit from provider relief funds from third quarter 2022 results, margin was up more than 200 basis points year-over-year and declined only 30 basis points sequentially as CHS stepped over the typical third quarter seasonal pressures on profitability. We were very pleased to deliver strong labor cost management as strong nurse recruitment and retention helped us outperform expectations and driving down the contract labor expense, which was $54 million, improving sequentially from $72 million and versus our previous expectation for $60 million to $70 million exiting the year.

Our average hourly rate for contract labor also improved 10% sequentially. Additionally, overall wage inflation came in slightly better than expected, up approximately 3% year-over-year versus our forecasted 5% for the full year. Medical specialist fees as reported in other OpEx line, increased slightly from the second quarter, which included a gross up of expenses for physicians in-sourced from the former APP contract. When factoring in the net revenue associated with in-sourcing those physicians, we estimate we benefited by approximately $4 million sequentially compared to the subsidy payments previously paid to APP. As Tim noted, the progress with our in-sourcing initiative has been very encouraging and we expect further improvement in the coming quarters as we scale this effort.

Moving on to the cash flow statement. Cash flows from operations were $29 million compared with $137 million in the third quarter of 2022. The cash performance was temporarily affected by more than $100 million in various items that should reverse in the fourth quarter. Most notably, billing delays related to clinical system upgrades in two of our markets and our physician in-sourcing initiative as we work to get certain providers credentialed under our network agreements. Importantly, these have been successfully completed and related claims are being submitted. So we expect to begin receiving these payments in the fourth quarter. Capital expenditures for the quarter were $130 million, and for the first nine months were $357 million, on track with our guidance of $450 million to $500 million.

We continue to expect significant improvement in free cash flow performance in the fourth quarter as is typical. However, in light of the performance to-date and the current legislative environment, we are updating our guidance for operating cash flows to $400 million to $450 million. Net debt to trailing adjusted EBITDA at the quarter end was 8 times and with $91 million of cash and equivalents on hand, and approximately $680 million of borrowing capacity under our ABL, we remain well positioned from a liquidity standpoint to meet our needs going forward. Additionally, we continue to expect proceeds from the planned divestiture of the Bravera Health assets in Western Florida to be used primarily to pay down debt. We continue to receive inbound interests in certain of our assets, and we will consider the transaction when it makes financial and strategic sense as we recycle capital towards achieving higher returns with lower risk, including debt reduction, capacity and service line expansions and potentially select acquisitions in certain key markets.

Project Empower, our enterprise-wide modernization and optimization initiatives kicked off October 1st, and we are very pleased with the early results. As part of our first wave of deployments, we have implemented our new workflows and the Oracle Supply Chain and finance functionality at 15 of our facilities and have stood up our shared services with no disruption in patient care. We are increasingly confident in the business case for Project Empower and believe that the significantly improved visibility and insights will reveal opportunities within CHS’s markets and business lines from which our operators can capitalize upon to drive further shareholder value. We look forward to providing you further updates as we press forward with Project Empower in the coming months and quarters.

As we noted in last night’s press release, we are updating the guidance range for 2023. Specifically, we now anticipate net operating revenues of $12.4 billion to $12.5 billion and adjusted EBITDA of $1.45 billion to $1.5 billion. We remain confident in our three to five-year targets in the longer-term opportunities in our markets and our continued volume growth and recovery gives us reason for optimism heading into the fourth quarter. However, we believe this update is prudent with just one quarter remaining in the year. With that, I’ll turn the call back over to the operator to poll for questions.

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Operator: We will now begin the question-and-answer session. [Operator Instructions] The first question is from Ben Hendrix with RBC. Please go ahead.

Ben Hendrix: Thank you very much. I was hoping for some more color on the magnitude of the cash flow guide down versus the EBITDA revision. Can you help us bridge from the prior to current cash flow guidance I think you flagged a number of items there. I was just hoping you could quantify those and help us get to the new range? Thanks.

Kevin Hammons: Sure. Thanks, Ben. I appreciate the question. Yeah. So if we think about the new guide for cash flows, it really starts that we’re at the lower end of the EBITDA range. And then there are a couple of items that are really more timing related than anything. But we did expect a cash tax refund, a federal tax refund in the current year. This actually goes back a couple of years that we now know will not come until 2024 that represents about 30% of the reduction. We also became a cash taxpayer predominantly in the second half of this year as a result of the interest deduction limitation going into effect this year, that’s a 163(j) is the IRS code on that. That is also approximately one-third of the guide down.

And we do expect that interest limitation deduction to be rolled back. And if so, that would turn into another refund that we would expect to get in the coming year. Another item that is included in guidance is, we made some retirement and deferred compensation payouts this year. This actually has a net zero impact on our overall cash, but the accounting rules require us to include the outflows in operating cash flows. And then there’s a corresponding inflow in investing section, because we had investments on hand that we sold to make these payments. So that was really a net zero cash impact. But to reflect the accounting in cash flow from operations, we included that that was about 20% of the guide reduction. The other couple of items in there, we called out an increase in some governmental litigation reserves during the quarter as an adjustment to EBITDA of about $24 million that the payment of that is expected in the fourth quarter of this year.

So we’ve included that. And then as we mentioned, the billing related to the in-sourced physicians has been delayed a little bit as we ramp up, get those physicians credentialed. There’s some cash flow drag, but those bills are going out, as I mentioned, and that we would expect that to turn around either partially in the fourth quarter, maybe flowing into the early part of ‘24 and that’s probably about 5% of the guide down. So, I think that covers substantially all of the adjustments and majority of those are just timing issues.

Ben Hendrix: Great. Appreciate that. And with regard to the very last one with the billing for the APP physicians you’re bringing on, can you give us an idea of how much revenue that accounts for? And how much top line exposure you have related to billing. And are you guys asking for subsidies from other providers in that regard? Thanks.

Kevin Hammons: Sure. So all of the physicians are practicing in our hospitals. So we are either have completed or in process of getting those physicians credentialed under our agreements with the payers. So there are no subsidies from other providers involved in that. In terms of kind of the magnitude of this for this quarter, for the two months this quarter represented only approximately $20 million of revenue and cost expenses, approximately $25 million. So a net $5 million kind of EBITDA impact related to those physicians that we in-source. So not overly material, but that is approximately a $4 million benefit compared to the subsidies that we were previously paying to APP.

Tim Hingtgen: Yeah, Kevin, I’m going to add on to that. And Ben, good morning. As we said in our comments, we’re really pleased with how this transaction has taken shape and our ability to, I think rapidly in-source these providers in the last two months of the quarter, we see a lot of opportunities looking forward. I think some of the key wins in that regard are, we have now an internal group of leaders who are operating that hospital-based component of our finish and practice enterprise, which is uniquely different from our past experience of just running more traditional medical practices. And the team has just done an outstanding job of stemming that up. We are also now adding to that functionality, some resources to help us tackle anesthesia, medical specialist fee clients that we’re experiencing.

Again, it won’t be an across-the-board initiative for the company. But having those capabilities, those competencies and those resources, we think, really helps us balance out our approach to managing the medical specialist fee spend.

Ben Hendrix: Thank you.

Operator: The next question is from Brian Tanquilut with Jefferies. Please go ahead.

Brian Tanquilut: Hey, good morning, guys. Tim, maybe I’ll follow-up with that last point that you made. So, as we think about physician outsourcing or physician staffing as a whole, how are you thinking about, number one, the decision to in-source versus outsource, because it sounds like this is turning out to be a modest positive? And then second, what are we seeing in terms of subsidies? And what are your expectations in terms of subsidy payments going forward to third-party outsourcers? And how difficult would it be to, if you decide to bring some of those in as we see some of these pressures, what are those processes and moving parts to like bring all this in-house at some point if that’s a possible option? Thanks.

Tim Hingtgen: Good morning, Brian. Yeah, I’ll start that and then head up to Kevin for some of the financial implementations of that type of plan. I mean as we said last quarter, when we were starting to really pursue the in-sourcing opportunity, I mean it’s not our end-all and be-all. We don’t expect to have every single one of our hospital-based contracts serviced by an in-source model. So we have not set our sights on a 100% transition to that type of work. However, again, building it over time, if that’s what happens. I think we’re inclined to say we would be able to do that. We, like the in-source model for the financial purposes that Kevin called out, we think there was a slight EBITDA improvement as a result of our first two months under the in-sourced model.

But we also like it from an ability to align those hospital-based providers more closely to our patient safety and clinical initiatives, our throughput initiatives it’s really still early to see how much benefit we can glean from that type of affiliation with in-source providers. But it’s something we’re keeping a close eye on. I think there is tremendous upside down the road. I should point out that for our traditional hospital-based contracted providers, I don’t want to characterize that if we don’t have good relationships and that they’re not partnering with us on those same types of initiatives. Hence, the reason we don’t really believe we have to make this 100% of our approach to our hospital-based physician contracting or spend process.

Kevin Hammons: Yeah. And maybe just to add on a few kind of financial metrics around that. Our current medical specialist fees represent approximately 500 basis points of net revenue they did this quarter. That’s about a 100 basis point increase over the prior year. Although we had expected the first quarter, as we previously indicated, we thought the first quarter was our high watermark for the year in the medical specialist fees. They’ve been harder to reduce than we had previously anticipated. They ran relatively flat sequentially, just a small increase sequentially. I would expect the fourth quarter to be pretty much in line with where we are in the third quarter, and so not expecting a material reduction kind of in the near-term as we continue to work on a number of things, as Tim mentioned, and we look to either further in-source, further renegotiate contracts to try to get these down going forward.

Brian Tanquilut: That makes sense. And then maybe, Kevin, as I think about your guidance, the implied guidance for Q4 is showing kind of like a 13.7% margin at the midpoint. I know in your slide deck, you still point to kind of like a mid-teens margin target. So, how are you thinking about driving that sequential margin lift and then incremental margin opportunities going forward to get to that mid-teens target?

Kevin Hammons: Sure. I think there’s a number of things. So as we’ve mentioned a number of growth initiatives, investments in expanding capacity, as we continue to grow and leverage fixed costs, a much bigger portion of that growth will flow through to the bottom line, which will add to our margin. We expect our rate lift to be a little higher next year. Our Medicare rate, if you think about this year, although the base rate was fairly significant in 2023. A big portion of that was offset with take backs. The majority of those take backs by the government are completed now. So we should have a better Medicare rate lift going into 2024, and we’re seeing similar commercial rate lift kind of in that 4% to 6% in 2024 that we had in 2023.

So I think there’s some more runway there on the commercial side as well. And then the work we’re doing on expenses, we continue to manage expenses really well. Our Project Empower as that continues to be rolled out into 2024. And then into 2025, we think there’s – that’s going to lengthen the runway on us being able to capture additional kind of margin improvement in expense reduction.

Brian Tanquilut: Awesome. Thank you, guys.

Operator: The next question is from A.J. Rice with UBS. Please go ahead.

A.J. Rice: Thanks. Hi, everybody. Just on your payer mix trends. I wanted to just ask about two things. I know in your slide deck, you comment on a little bit of an uptick in self-pay you’ve seen off a very low base. Is that really related to re-verifications dynamic? Or is there something else going on there? And then also on the commercial side there, you generally – you’re sort of flat year-to-year in your percentage from commercial or I think, call it, managed care and other. Some of the other companies are pointing out that they’ve got a lift from the public exchange enrollment. Is that – are you seeing that as well in your markets? And does that then say that the rest of the managed care and others somehow off a little bit and anything behind that if you have it?

Kevin Hammons: Sure. So I’ll point out a couple of things and Tim, feel free to jump in. Relative to self-pay, it is a very small base, and there’s nothing really there. There was a small adjustment just on collectability that we had good collectability this quarter on some self-pay, but again, a very small amount and nothing really there. We’re not seeing any material increase in self-pay volume. And as it relates to redetermination, we’re not seeing a decline in – a significant decline in Medicaid volumes either. So we don’t believe that that’s having a negative impact on us. Relative to the commercial, we did see kind of year-over-year increase in both commercial business and Medicare business in terms of volume.

Some of the commercial rate was offset because of – we did have more outpatient business this year so that it’s more of a mix between inpatient and outpatient that had an effect on the net revenues, but we are seeing a lift in commercial volumes as well –

A.J. Rice: Okay –

Kevin Hammons: Medicare side, we are seeing continued shift out of Medicare fee-for-service into MA business and that always continues to pressure the revenue, because we collect less on MA compared to traditional fee-for-service.

A.J. Rice: Okay. And then my follow-up, you mentioned that you’re running at least in this quarter, the 3% year-to-year trend in underlying labor cost, wage increases, et cetera. I mean that sounds like it’s back to sort of pre-pandemic levels in your mind? Is that something we can carry forward an expectation for next year that you’re in that sort of 3% zone on wage increases?

Kevin Hammons: Yeah. We’ve been very fortunate, and I think we’ve managed wages this past two quarters. If you recall, Q1 was closer to 5.5%. Q2 was about 2.8%, Q3, 3%. So we had kind of guided towards about a 5% for the year. We’re currently running averaging all that out, approximately 4% so a little bit below our guide or expectation in terms of wage inflation. Still seeing some pressure in markets around wages. It really differs market-to-market. I would anticipate as we look into 2024, still being a little bit elevated over historical trends and probably, at this point, thinking something in the 4% range is probably more reasonable into 2024 as we obviously will continue to work hard to keep that in check, but also wanting to make sure we’re taking care of our nurse staff and all of our employees for that matter, appropriately.

A.J. Rice: Okay. Thanks a lot.

Operator: The next question is from Jason Cassorla with Citi. Please go ahead.

Jason Cassorla: Great. Thanks. I wanted to ask about Medicaid reimbursement. It just seems that a greater number of states are building out Medicaid supplemental payment programs including the potential one in Mississippi. And I know those program dollars can fluctuate year-to-year in aggregate. But I guess in that context, do you see the Medicaid reimbursement backdrop generally improving? Or how are you thinking about that?

Kevin Hammons: That’s a great question. And I think probably you’ve all have seen a number of reports coming out of Mississippi generally, that would obviously be a positive for us. But those programs do have to go through approval by CMS. And at this point, we have – CMS has not approved what has been submitted by Mississippi. But generally, I think you’re right, there are other states like Texas and Florida as well as some others that have over the past few years have adopted the supplemental payment programs, generally very helpful or helpful for the people to state who are covered by their Medicaid and it does make an adjustment to increase reimbursement for the providers who are providing services for the Medicaid patients. So, we would see this as a positive. But it’s too early to tell at this point on exactly what will be approved and what the quantification of that program will be.

Jason Cassorla: Okay. Fair enough. And I guess just as a follow-up, I wanted to ask about surgeries in the quarter, up about 1% against overall volume of over 4%. It seems like that book, the trends so far this year on surgery is outpacing overall volumes. I guess are you talking that up to a difficult comp. And I know you noted seasonality in your prepared remarks, are there other factors that drove that surgery growth in the quarter? And then just a follow-on to that, you have this 2% to 3% normalized volume outlook over time. I’m curious how you’re thinking about how surgery growth fits into that paradigm just given your investments in high acuity service lines and the investments you’re making in the outpatient setting, too.

Tim Hingtgen: I’ll start with our view on the seasonality impacts in the third quarter. We don’t really see anything other than increased provider and patient vacations that we called out in our opening remarks as being the key driver I think last year, it was a good comp for us. It was a high comp for us. And we made a good surgery performance quarter in the third quarter. So I think it’s really just kind of the timing of people’s vacations. And as we always anticipate, we expect the fourth quarter to be a strong surgery quarter, hopefully, a better commercial mix than that, which is what leads to our confidence in sequential earnings opportunities in the fourth quarter. We’re really pleased, frankly, with our ASC growth strategies, our ambulatory strategies in general for surgery.

We had really good growth in our procedural volumes for cardiac cases, for select surgical specialties like colorectal and spine. So just really pleased with what we saw in our overall numbers. It’s just a more challenging comp that we were facing from prior year.

Kevin Hammons: Yeah. I think that’s right, Tim. I just want to maybe reiterate, although we saw that decline in surgery sequentially, it was positive over prior year. Second quarter was also a very strong surgical quarter for us. And with the continued sequential improvement in both admissions and adjusted admissions, we still saw continued growth with the only softness being in surgeries that we kind of saw in the third quarter, but we are attributing that to just kind of normal seasonality, and we expect that to pick back up in the fourth quarter.

Tim Hingtgen: I think the last comment I’ll make just to kind of, I guess, support our confidence in the surgery growth opportunities across the portfolio. And we are exceeding the pre-COVID baseline. Certainly, I think that bodes well for us and the acuity of our surgical business, the inpatient business is growing as we invest in provide a recruitment in the specialist that drive that. And then the last thing I’ll add is, the new, I guess, I’ll say, input to our surgical growth opportunities, with more capacity, we are seeing record transfer center volumes as well. We are up sequentially and over prior year, I believe, by 7% and 8%. So again, still great demand out there for us as we open up capacity and invest in the right service lines and providers.

Operator: The next question is from Stephen Baxter with Wells Fargo. Please go ahead.

Stephen Baxter: [Technical difficulty]

Operator: Mr. Baxter, we’re having trouble hearing you. Is your phone muted or you have a good connection?

Stephen Baxter: Yeah. Sorry about that, I think problem on my end –

Operator: Thank you.

Stephen Baxter: Hope it resolved. Yeah. So I just wanted to ask a couple of, I think, in a related question, just to make sure I’m tracking correctly. We had the quarter a little bit below, but generally right in line with where our model was. I think you’re pretty close to consensus as well for EBITDA in the quarter. So I would love to just hear a little bit more about understanding the guidance revision at this point and what that reflects? And then just to make sure I’m tracking the seasonality comments correctly, it sounds like as best I can tell, that you’re suggesting you saw something closer to normal seasonality in the third quarter and thought that you might see something a little bit less than that. But I just want to clarify that that’s the case and not that you saw seasonality excess of typical levels in the third quarter? Thank you.

Kevin Hammons: Sure. And I’ll start with some comments on our guidance. So our guidance update around EBITDA really just wanted to reflect kind of that where we are year-to-date. We started off the year with a very soft first quarter. Now that we’re through the third quarter, and only have – we caught some of that miss back, I think, in the second quarter, we kind of came in line with the expectations on the third quarter, but did not have outsized performance that really clawed back much of the miss in the first quarter. So the update is really reflective of just our year-to-date results. If you think about what the implied fourth quarter is now from our updated guidance, it’s still – at the midpoint, $407 million of EBITDA, $3.142 billion of net revenue, that would be our highest EBITDA quarter of the year.

As we had expected, it’s a 13% margin at the midpoint implied which is the highest margin quarter of the year. So I still think reflects continued growth and reflects again where we are coming out of the third quarter and just an update with only one quarter to go in the year. In terms of seasonality for Q3, I think it’s really just kind of the normal seasonality that we had experienced kind of pre-pandemic in terms of kind of patient behavior and physician behavior around vacations and so forth. What I would just, again, maybe point out is, I think we stepped over some of that with continued growth, particularly in the outpatient side and then with some cost management. So we did not experience maybe the normal pressure on EBITDA sequentially that we had historically from that seasonality, but in terms of kind of volume of business and type of business and patient behavior, it was a much more seasonal quarter than we – more so than we anticipated at the beginning of the year when we thought growth may be a little more straight line throughout the year and recovered from the pandemic.

Operator: [Operator Instructions] The next question is from Josh Raskin with Nephron Research. Please go ahead.

Josh Raskin: Hi, thanks. Good morning. Just wanted to touch a little bit on sort of same-store revenue and just sort of overall same-store business. So you guys mentioned the weakness in the first quarter. And then in 2Q, it was up at 9% sort of back down to that 5% number here. Is this more of a – do you think we’re kind of through the normal path and that 5% is kind of a number to think about as we go through 2024? And then maybe just some color on what’s created some of the volatility this year?

Kevin Hammons: So thanks, Josh. I do think kind of that 5%, as we think about our longer-term, medium-term goals of delivering kind of mid-single-digit net revenue growth, that 5% fits right into that, and that’s where I would expect kind of same-store revenue growth to be kind of as we look – go into next year and that’s what we would target. In terms of some of the volatility, part of that is – was due to the comp. We had significant softness in the second quarter of 2022 kind of as – you can go back to April 2022 and restrictions on masking and so forth were lifted, restrictions on travel were lifted. And that’s when we saw the real kind of exodus in some respects from the healthcare system, people are going about doing other things and not coming into the healthcare systems since they were free to move about and return to more normal behaviors.

So we had a little easier comp in the second quarter in terms of that volume. So I think that contributed a little bit to the kind of percentage growth. But as I think about, again, sequentially we continue to grow. So stepping over that in terms of admissions, adjusted admissions into the third quarter, very helpful. The normal seasonality on surgeries, not unexpected now that we’re seeing were kind of getting back to more normal behaviors and the recovery is setting in.

Josh Raskin: Got you. That’s helpful. And then just on payer mix. I know you mentioned it to A.J.’s question, but you can sort of talk a little bit, Medicare was down a little bit. So again, is it just sort of moving parts on rate that impacted self-pay and some other stuff that kind of drove Medicare down? Or was there anything in there?

Kevin Hammons: The Medicare – the fee-for-service was down, but Medicare Advantage was up year-over-year. So that’s maybe just a shift of that Medicare’s population out of the traditional fee-for-service programs into MA programs. Commercial business was up year-over-year and then kind of Medicaid and self-pay were relatively flat.

Josh Raskin: Okay, thanks.

Operator: This concludes our question-and-answer session. I would like to turn the conference back over to Tim Hingtgen for any closing remarks.

Tim Hingtgen: Thank you, Gary. I want to close by expressing my appreciation for healthcare workers across CHS and across the nation. I remind it daily about how much we rely on and appreciate those who have devoted themselves to healthcare careers. And I just want to say I’m very proud of our healthcare workforce. As always, if you have additional questions, you can reach us at (615) 465-7000. Thank you, and have a great day.

Operator: The conference has now concluded. Thank you for attending today’s presentation. You may now disconnect.