Addus Homecare Q4 Earnings Conference Call: Full Transcript

Operator: Good morning and welcome to the Addus Homecare Corporation's Fourth Quarter 2015 Earnings Conference Call. Today's call is being recorded. This presentation will contain forward-looking statements within the meaning of the Federal Securities Laws. Statements regarding future events and developments, the Company's future performance, as well as management's expectations, beliefs intentions, plans, estimates, or projections relating to the future are forward-looking statements within the meaning of these laws. These forward-looking statements are subject to a number of risks and uncertainties including factors outlined from time to time in the Company's most recent Form 10-K or Form 10-Q, earnings announcement or other reports filed with the Securities and Exchange Commission and available at the SEC's website. The Company undertakes no obligation to update publicly any forward-looking statement whether as a result of new information, future events or otherwise. I would now like to turn the call over to the Company's President, Chief Executive Officer, Mr. Dirk Allison. Please go ahead sir. R. Dirk Allison: President, Chief Executive Officer: Thanks Scott. Good morning everyone and thank you for joining us for our fourth quarter conference call. Today I am joined by Don Klink, our Chief Financial Officer; Maxine Hochhauser, our Chief Operating Officer; Darby Anderson, our Chief Development Officer; and Zeke Zoccoli, our new Chief Information Officer. I would like to begin with some general comments and observations and then Don and I will discuss the fourth quarter results that we issued yesterday afternoon. After that, we'd be happy to respond to questions. Let me start by saying how excited I am to have joined Addus Homecare as the President and Chief Executive Officer. Many of you know that I have been in the healthcare service industry for over 29 years. During that time, I have been associated with many great companies in various parts of healthcare. Based on that experience I know that Addus is a great company that is providing services that are desperately needed by our consumers. It has a long and successful history, which I appreciate and respect. Addus also has a solid management team and I am pleased to be able to work alongside each of them. I not only appreciate their hard work but also the hard work and dedication of each Addus employee. The management team and the quality of the organization were important factors in my decision to accept the CEO position. As you may know, I have been on the Addus Board for six years and served as Chairman of the Audit Committee for the last three years until becoming CEO. During that time, I saw that Addus was extremely well positioned to capitalize on the post-acute care trends in healthcare. This knowledge along with the strategy and culture of the Company were also important reasons why I was excited to take on this new position. After six weeks at the Company, I now believe that we can continue to offer high quality care while at the same time reduce our cost allowing us to meet our strategic goals. Going forward we will continue to focus on organic growth in our current markets and we will look for acquisition in new markets that have a strong need for home and community-based services. We will strive to provide the highest quality of care for our consumer, while we seek to be great partners for our state and governmental customers, and we will be a value-added partner to managed care organizations as they become more involved in community-based care. I strongly believe that Addus has the market opportunity to become a much bigger company while continuing to be a market-leader in the personal care industry. Whenever there is change in the CEO position, people understandably have questions. However, I want repeat that believe that Addus is a strong Company with a sound strategy. We will continue to move Addus in this direction. That said, we believe that there is opportunity to execute more efficiently and effectively than we have in past. Our primary initiatives at this time will center on the enhanced capabilities and effectiveness in our IT function, the simplification of certain operational processes in order to best serve our consumers and employees in a highly efficient manner, and the development of consistent procedures which will enhance our ability to serve our consumers' needs. In the past several weeks, we have begun to implement a number of operational changes, and are pursuing additional initiatives to ensure that we have proper return on the investments we make as Company. Our team is focusing on our expense structure to ensure that we are obtaining the proper operating leverage as we continue to grow our revenue. Our overriding objective is to invest in and build an organization that can provide high quality care, and support growth while maximizing shareholder value. In order to help drops some of these changes, we have made an important addition to our senior management team. Zeke Zoccoli who I introduced earlier, has joined us as our new Chief Information Officer. Zeke has a solid background as an Executive Officer in various healthcare service companies, including a number of companies which had a distributed service model such as the one we have at Addus. Zeke understands the importance of IT functioning as a partner with our operations team to help us meet our goals, particularly around the increasing use of information technology to improve care and lower cost. In addition, Zeke has in-depth experience in acquisition integration, and he is already involved with the integration team for South Shore. I've worked directly was Zeke in years past and want to welcome him into our team. No doubt many of you are aware of the budget conflict underway in Illinois between the Governor and the Legislature. Their differences are broad-based and extend to virtually every aspect of state funding including healthcare, and thus personal care. As a result, Illinois' politics have negatively impacted our accounts receivable balance for those of our consumers funded solely by the state. However, to-date it has not affected our Illinois Medicaid or managed care business. For some time, Addus along with other companies that provide personal care services in Illinois, has been talking to representatives and officials of the state and at all levels about possible solutions, and our management team remains focused on doing what it can to resolve the issue before it becomes a major problem for Addus. We hope to be able to update you further during our first quarter conference call in approximately 60 days. Now let me turn to our financial results for the fourth quarter of 2015. Revenues for our fourth quarter were $84.8 million as compared to $82.6 million for the same period in 2014, an increase of 2.6%. Our adjusted EBITDA for the fourth quarter of 2015 was $5.1 million, or $7.1 million in the fourth quarter of 2014. Our adjusted EPS for the fourth quarter of 2015 were $0.29 compared to $0.36 in the same period in 2014. Don will cover our financial performance in more detail in a few minutes. In past quarters, we've discussed our recent conversion to a new HRIS platform. This conversion was not without issues and as such has caused a large increase in our annual cost to provide payroll services to employees. At the same time, we have had a number of issues with both the system as well as our payroll process. These difficulties led to the weakness in our internal controls for 2015. As a company, we are taking these issues very seriously. Starting in mid-January we created a focused taskforce which is now being led by Zeke, which will recommend ways we can both improve the process of delivering paychecks while at the same time reduce the ongoing expense for this function. While this is a big project, we are confident that we will be able to reduce these costs and strengthen our internal controls by the end of 2016. I'm very pleased that we are able to complete the acquisition of South Shore effective February 5, 2016. This transaction gives us a great platform as we enter the New York City Metropolitan area. We are excited to have Eileen Gerard and her team at South Shore as part of Addus and I want to publicly welcome them to our company. Before I turn this call over to Don for a more detailed review of our fourth quarter performance, let me again say that it is great to be at Addus at a time of such great opportunity. Our company provides a much needed service to over 31,000 individuals. I know that our employees agree with me when I say we are confident about where we are as a company and although we recognize there is hard work before us, we look forward to continued growth in the future. With that, let me turn the call over Don. Donald K. Klink: Executive Vice President and Chief Financial Officer: Thanks Dirk and good morning. For the fourth quarter, net service revenues increased 2.6% from the fourth quarter of 2014, as Dirk mentioned earlier. Of this overall 2.6% increase, approximately 1.6% came from higher volume, 0.6% from increased hours per census, and 0.4% from higher reimbursement rates from our North West region and our fourth quarter acquisition. For the full year 2015, revenues increased 7.6% with higher volume representing 5.6% of this increase, increased hours per census at 1% and increased reimbursement rates in the North West region and acquisitions at 8.9%. The adjusted diluted net income per share results for 2015 exclude $0.05 per diluted share from an increase in workers' comp and reserve expense, $0.03 for the South Shore acquisition transaction expense, $0.03 for an expense accrual related to an IRS audit of prior years. In addition, adjusted results for 2016 exclude the positive $0.09 per diluted share impact from the worker opportunity tax credit that relates to the first three quarters of 2015, which reflects the renewal of this legislation in the fourth quarter of 2015, for 2015 until 2019. Due to the longer term extension of this WOTC legislation, our ability to consistently qualify for these benefits through ongoing hiring practices and the meaningful tax savings these benefits provide, we included an in-period WOTC tax credit in our adjusted results for the fourth quarter and for the full year 2015 and we'll continue doing so going forward. As we discussed in the last call, we exited certain underperforming locations during the third quarter, all of which were in our same store base. Adjusting our revenues to remove the impact of these closed locations, total company revenues increased 6.1% and same store revenues increased 2.9% for the fourth quarter. Adjusting revenue for these closed sites for the full year 2015 and 2014, total company and same store revenue growth are 10% and 6.8% respectively. Gross margin for the fourth quarter of 2015 was 26.2% for the quarter, down 120 basis points, primarily due to a mistake in the third quarter workers' comp reserve that was corrected in Q4. If you adjust Q3, the GM percent would be 27.2% and Q4, 26.9%. Q4 also had approximately a 20 basis point charge for two large auto claims related to prior year incident. The margin percentage trend is still positive on a full year basis, up 30 basis points. And lastly, we put in place safeguards to prevent this type of mistake in the future. G&A increased 150 basis points as a percent of revenue, primarily due to the expense accrual related to the IRS audit and an increase in our accounts receivable allowance reserve. Our IRS accrual in Q4 covers prior years, 2012 through 2014, we expect the final IRS settlement occur later this year. With regard to our allowance, Illinois has slowed our cash collection since June 1 of 2015 when the state no longer had an approved budget. The Illinois accounts receivable at the end of this year is approximately 54 million and has the DSO of 101 days. Our overall DSO is 92 days, an increase of 12 days from Q3 and is primarily due to Illinois. We did achieve some Q4 expense reductions in our discretionary cost areas from Q3 excluding the M&A and IRS expenses. We had a WOTC tax benefit in the fourth quarter of 2015 due to the renewal of this program late in the year, which forced most of the tax credit to following Q4. Q4 had a tax benefit due to this WOTC credit compared with the tax rate of 27.8% for the fourth quarter of 2014. With the multi-year renewal of the WOTC program, we would expect the credits to occur each quarter and be more consistent in 2016. Impart due to our increased account receivables with the state of Illinois, we had net operating cash used for the fourth quarter of $4.7 million and net operating cash generated for the full year 2015 of $4.1 million. Our cash at year-end was $4.1 million. We had $58.3 million of availability under our revolving credit facility. During the fourth quarter, we expanded our credit facility to $100 million from $55 million previously giving us access to a term loan of up to $25 million and a revolving credit facility of up to $75 million. We borrowed $22 million on the term loan facility in conjunction with the completion of the South Shore acquisition in February of 2016. This concludes our comments. Operator, would please open the floor for any questions Question & Answer Operator: Thank you, ladies and gentlemen if you have question at this time please press the star then one key on your touch telephone. If your question has been answered or you wish to remove yourself from the queue, you may press the pound key. And once again, if you do have a question, please press the star then one key on your touch tone telephone. One moment for questions. And the first question is from Mitra Ramgopal of Sidoti. Your line is open Mitra Ramgopal: Sidoti & Company: Yes, hi, good morning. First, I just wanted to get your sense of going forward as you look at what's going on with Illinois, could you let us know first back in the South Shore acquisition, what percentage of your revenue comes from Illinois, and would it make you more aggressive in terms of looking to diversify away into other states? R. Dirk Allison: Yes, Mitra, thank you. Let me talk a little about what are going to do looking forward from this way of acquisitions and then I will let Don talk to you the about percentage of revenue from Illinois. Clearly, our goal as a company is continue diversify away from the dependence on one state, and so, as you saw with the South Shore acquisition, we were able to bring in approximately $50 million of revenue from New York. You will continue to see us in the future as we look to enter into new areas, and as we look to our acquisitions, we will be moving away from the state of Illinois, not because it's bad business, but because we believe very clearly that we need to make sure that it is a lesser percent of our overall revenue going forward. Donald K. Klink: And Mitra, just to give you a little bit of numbers on it, excluding the MCO of Illinois, that revenue with the state programs are about 50% of our revenue, just to give you an idea, at the end of '15. Mitra Ramgopal: Okay, so if we add a full year of South Shore, it should be even less then? Donald K. Klink: Yes, it should. Mitra Ramgopal: Okay, oaky. And I don't know if you could give us an update in terms of the pace of transition. I know the last quarter you had mentioned that it has slowed in terms of moving people over to managed care, and if you have an update on that. R. Dirk Allison: Yes, Darby, why don't you talk about that? Darby Anderson: Executive Vice President, Chief Development Officer: Mitra, this is Darby. Yes, we are pretty much through those transitions here and Illinois. I will say though that we did see good growth within the MCO line, which is very favorable given the state of payments otherwise. But we are through the bulk of the transitions and so new members would be assigned to us as they enroll with the help line. Mitra Ramgopal: Okay, thanks. And recording the expense reduction initiatives, I don't know if it is possible for you give us a sense, how much you think you can sort of take out of this system that right now might be consider redundant? R. Dirk Allison: Yes, let me handle that Mitra. You know it's a little early. As you know, I have been on board six weeks working with the management team. We have identified a number of areas where we feel confident that we can reduce expenses. We run a little over 21% as combined G&A for the company, up around 21, almost 21.5. And while we're not ready to give real targets of what we believe, we can achieve until we may get together in another sixty days, we do believe that during this year it would be the goal of our management team to get our combined G&A down below the 20% level. Mitra Ramgopal: Okay. And finally, Don, I was wondering if you could give us a sense of what we should be modeling for tax rate 2016? Donald K. Klink: So, Mitra, I think we do expect these credits to continue like I said more evenly I think in 2016. I would probably go high 20s, low 30s as probably the range of where we will fall in the tax rate given these credits. They will still be a little uneven because it's a matter of how they process and they're not exactly even, but that's probably the range I would pick. Mitra Ramgopal: Okay, and finally on the payroll system, again you pretty much expect to have that resolved by the end of the year, and right now there are no other issues you're concerned about? R. Dirk Allison: Well, obviously one of the big issues for us is the payroll system, not only because of the additional expenses that's created upon the company, but also it created process problems. So just we've had to struggle this last year in just some of the basics that you would normally associate with creating payroll. So, we're going to work on that. And then as was mentioned, it did have a weakness in our internal controls that revolved around the payroll systems. So this needs to be a complete relook at our payroll system from start to finish. And we are in the process doing that. We do believe we'll be able to do that during 2016. Mitra Ramgopal: Okay. Thanks for taking the question. Operator: Thank you. The next question is from Dana Hambly of Stephens. Your line is open. Dana Hambly: Stephens Inc.: Hey, good morning. Thank you. Dirk, just on the -- I know you're not giving targets right now, do you plan on giving targets and timelines for reducing G&A in 60 days or maybe is that as early as we could expect? R. Dirk Allison: Dana, I would expect that we will have more information to share with you in 60 days. We will at that time share some of the procedures that we're undergoing, some of our tasks to reduce these costs and we'll be able to share with you some of our goals at that time which would include numbers and timelines. Dana Hambly: Okay, thanks. And then on the organic growth, Dirk, you called that in the press release, billable hours per day and I would think organic growth would be primarily driven by census. So I just wanted to get an update on where the key drivers for organic growth, should we be thinking about billable hours per day as the drivers or really more in census? Maxine Hochhauser: Executive Vice President, Chief Operations Officer So, Dana, we've always had billable hours and in the past we tended to focus more on census, but as we expand outside into other markets, in order to do a better comparison and really look at the variance between authorized hours in different programs throughout the country, we're really moving the focus more to billable hours per day because that normalizes and you really get to see the shift in, particularly with New York that also has the higher billable hours per day than we have experienced in some of the other states, whereas continuing to focus on census growth because the hours per day are a factor of both the census growth, it's the hours that were authorized and ensuring that we're providing the services to authorization. So that really becomes a cleaner metric for comparative purposes. Dana Hambly: Okay, that's helpful Maxine. And then maybe to get straightaway, Maxine, to New York, just given its size, can you lay out maybe the growth that that agency has seen and any metrics around billable hour per day or price margins, anything you can provide will be helpful . Maxine Hochhauser: It's a little early for us to provide that, Dana. I mean, historically they have experienced growth and even in the first six weeks that we've been with them, they have continued the type of growth that they've seen. But I would expect next quarter to have more visibility into exactly some of our projections for ongoing growth. But as I said, it's been about six weeks since we closed, we closed on February 5th. And they have consistently grown each week, so we expect that to continue. Dana Hambly: Okay, alright, we look for more detail there. And lastly for me, a technical question on the managed care, in Illinois, the managed care AR, is that separate from the state AR or that all lumped together? R. Dirk Allison: Yes, that's separate Dana. It has nothing, at least not from our standpoint, our AR is specifically with the managed care organization. Dana Hambly: You are again paid for the managed care organization in Illinois? R. Dirk Allison: That's correct. Dana Hambly: You are. Okay, great. Thanks very much. Operator: Thank you. Once again if you do have a question please press the star then one key on your touch tone telephone. The next question is from of Toby Wann of Obsidian Research Group. Your line is open. Toby Wann: Obsidian Research Group: Hey, good morning, thanks for taking the questions. Could you maybe detail the operating changes that you recently begun implementing or is it's still too early to get more details on that? R. Dirk Allison: Good morning, Toby. It's a little early to give details. Listen, we talked about during my comments some of the areas that we are going to focus on. We're focused on process improvements and cost reduction revolving around our payrolls system in particular. We are also looking at things such as our centralized contact center, and where it fits in as part of our company growing forward, making sure that we have the most cost-effective way to deliver the efficient services to our consumers and customers that we need. We will continue to focus in IT. It's an area of big expense in the company, and we want make sure that those dollars that we're implementing into IT or putting into IT are effectively driving the operations of our company to be more effective and more efficient. So those are two or three areas of general concern that we're looking at, and we will have some further detail for you about this in about 60 day. Toby Wann: Okay, thank you, and then with regards to the payrolls system or HRIS system implementation and the issues that have been uncovered there that led to the weakness in the financial controls, could you maybe give us a little bit more detail as to were those weaknesses present before the new HRIS systems was installed or were they a result of the new system, just maybe expand on that a little bit. And then given that the upgrades have been ongoing for almost a year now, where does that stand? Do you have any recourse with regards to going back to the vender, selecting another vender or just kind of an update on those sorts of issues. R. Dirk Allison: Toby, those are all great questions, and things we are looking at, honestly as a team and as a focused task force, how we correct it. Let me go to the first part of the question. If my history serves me correct, when I was on the Board, we actually -- the first year that we were a faller as far as SOX is concerned, we had material weaknesses and those revolved around the payroll system and the lack of controls, and if you remember, we grew in size and become a faller about mid-year of that years. So, we didn't have a lot of time to actually make sure the controls were working. The following year, which is believe is 2014, we actually put controls in place and we no longer had material weaknesses at the end of the year. So that controls were in place and were effective. What happened when we converted to the UltiPro system, it did not work as we had expected in a number of areas, and so there where difficulties early in the year getting paychecks out on time and correctly, and so the decision was made by management at that time to really focus on getting those checks out to the people and in doing so, some of the segregation of duties that you would normally associate with the system were lightened up a bit to allow people to get in there and get the paychecks out. The failure I think of the team, and we recognize that now, is that after that period past, there was not a tightening back of those controls that had been in place and had been effective. So by the time you're enrolled around and there was a review, we decided that those things need to be corrected, there just wasn't time to get those tested and passed as they needed to in a normal SOX environment. So I would say to you today even with the difficulties we have with the UltiPro system, we do have controls in place, they have been effective in the past. I believe we can make them effective now and in those areas where there are some gaps in the controls, we have a team in place to start working on those and make sure we don't have a problem at the end of the year. Toby Wann: Okay, that's helpful and I appreciate the additional color on that. That's all for me at this point. Thanks. R. Dirk Allison: Thanks Toby. Operator: Thank you. The next question is from Gary McCasco of Montrose Advisors. Your line is open. Analyst: Yes. Thank you, could you talk a little bit about the diversification? It sounds like a good strategy, I believe you are in 22 states now or perhaps more. Is that the right number and when you look to diversity, have you ruled particular states out, are there states that are particularly attractive at this point? R. Dirk Allison: Yes, we have looked at the various states. Darby works with us. He is the one of our management team is most familiar with the states, he and his team, and where we would like to move. There are, in the 22 states where we're in, we're pleased to be there. We're happy, we believe that we have good sites. However, we do believe that there are additional states that we can look at as a team, and would be proper and actually be a very good things for the company entering those state. So Darby and his team are focused in those areas where, if we enter into a new state we can go there with enough volume to make a difference and to give us a good base to enter into those states. Darby, would you like to add to that? Darby Anderson: No, just a couple of fundamentals that if you look at in states just from the demographics, that Dirk alluded in terms of volumes, but payment rates and program requirements in the funding for primarily Medicaid personal care services, but as we've been I think pretty consistent, we're also targeting those markets that are transitioning their traditional Medicaid and Medicaid waiver services to managed care. And so increasingly states are doing that, new states all the time, doing RFPs and other programs to transition those populations. So we'll continue to focus on those states as well as other states that have the right demographic and rate profiles for us grow the business. Analyst: So those states that are more interested, growing faster in managed care, I am assuming, would be more attractive than other states. Could you talk a little bit about managed care? I am assuming it's more in general has a higher profit percentage or is it more because it's where there is more security in collecting the accounts receivable? Darby Anderson: Well, I guess uniquely I would say in Illinois, it is better for us to be contracted managed care companies as we are getting paid more timely there. But generally I wouldn't necessarily drive too higher probability overall, what it is, is the opportunity to increase volumes. There are states out there with very, very large networks of personal care providers, and we foresee in the future that managed care companies will narrow those networks, and narrow them to providers that have a broader and deeper geographic footprint in those markets, and the technological and other capabilities to really serve as a partner to them to help avoid other costs of physical health through the use our very low-cost services in the home. Analyst: And I believe you have, well, at least you had 127 sites and you exited some. Are you -- at this point have you made a decision or have you exited all, other than on an ongoing basis, is that number at good point right now? Maxine Hochhauser: So, Gary, this is Maxine. We ongoing evaluate our various sites, we did exit three during Q4, right? And we will continue to evaluate, as Darby has just touched on, we look at things like payment rates, we look at the ability to gain market share, we look at what our cost basis is in those markets and that's an ongoing process. So we continually take a look at that and ensure that we are able to grow within those markets and that they make sense for us to continue to be in. Analyst: And finally, just with regards to sites, clearly acquisitions is a key part of growth, but if I look on a longer term basis in terms of your site growth, would the majority of those be coming from acquisitions or do you expect more openings as we look out for the next few years? R. Dirk Allison: Honestly I would say that you could probably look to more of our location additions coming as a result of acquisition. It is difficult to de novo in this business, used to be not the case. So my answer, ten years ago might have been different, but I think you can look to acquisitions as the major growth of our location. Analyst: Thank you very much. R. Dirk Allison: Thank you. Operator: Thank you and as a reminder if you do have a question please press star then one on your touch tone telephone. And the next question is from Brian Ross of -- and Company. Your line is open. Analyst: Hey guys, thanks for taking the question. Just on the AR reserve increase that was mentioned in the press release, just curious if you can quantify what that delta was and also just the genesis for that increase, my understanding was at least on the Medicaid payments that was a – leads to have that paid by states, was a matter of just when if you get paid, so just curious what's driving that higher AR reserve? Donald K. Klink: Yeah, I will take that. This is Don Klink. The AR is really a function of, it's really two things; for us it's the collection rates in the aging and what we've seen is and particularly in Illinois is the slowing of the payments, so it's aged out more and it increases our AR allowance. We've also had a couple of other states that have changed their system a bit, which slow their AR as well. We expect that to return back to normal, but that again is because the AR is aged a bit, the allowance gets increased. Analyst: Alright, okay. And then, when you talked about the balance sheet, you mentioned you have increased the facility and use part of the term loan facility for South Shore because thinking about some of these AR issues ,which may be short term in nature, but considering also a desired efforts through M&A, what's your comfort level or your flexibility to execute on maybe you are sitting on, feel that the size of South Shore a larger, is there available just over the next 12 months, what's your comfort level and your ability to do that? R. Dirk Allison: Well let me take this, this is Dirk. Obviously the first thing we have to do as a company is be prepared from a working capital standpoint to protect the company should state of Illinois continue to not pay the bill on the 40% of our business, which is non-Medicaid. And so we as a team have been looking at that and we are developing plans that will allow us to deal with that and again as I said in my comments, something that hopefully we can share in greater detail in about 60 days, but it is our goal and our desire to have the capital in place that allows us to not only make sure we have the proper working capital because of the payment issue, but also allows us to continue in an appropriate manner to acquire companies as they present themselves. One of the things we are doing now just to make you feel comfort is we are trying to put together a better process for acquiring and transitioning acquisitions in the future. We are very proud of the South Shore and it's one that due to the long timeframes we had between announcing it and actually completing it where our teams have been able to work together. And even so, it's difficult to in transition to do, to get it done in a timely manner, largely because the company in the past 3-4 years has not done a lot of acquisitions until the last couple of years. And so, we are working as a management team to develop a refined process for acquiring due diligence and transitioning in to the company. So because of that, again, while we will be looking for additional acquisitions this year and hopefully come about, it will probably be a few months before we are ready to do that. Analyst: Okay, thanks guys. Operator: Thank you. The next question is from of Toby Wann of Obsidian Research Group. Your line is open. Toby Wann: Hi, thanks for taking the follow up. Just one follow up, quickly on Illinois. The Governor and the Legislature fall apart on getting that budget deal done. I think this fiscal year probably ends June 30th. So I guess my question is with regards to that since we've got, what, four months left before the fiscal year expires. I mean, do you guys anticipate having a big AR balance come down through one big payment or just kind of – what you're all thinking on that and I know I am asking you to speculate on what the government is going to do which is always a dangerous proposition. But I am going to do it any way. R. Dirk Allison: Toby, what we would prefer occur is that the Governor and the Legislature get together and resolve their differences and develop a budget at which time they can take care of their responsibilities they have from a payment standpoint for everybody that is servicing the state, including Addus. So that would be our desire. Should that occur over the next four months, then obviously we would receive a large payment from the state as funds are available and that would make obviously our financial situation as it relates to our balance sheet better. The unfortunate thing is nobody can really know for sure when and if the Governor and the Legislature are going to get together and solve their differences. So from a management standpoint, we are having to develop plans that allow us to operate in the environment in which we currently operate. Toby Wann: Okay. And then remind me, I know the Governor is a Democrat. Is the Legislature controlled by the Republicans, so is that the stalemate? R. Dirk Allison: It's actually the opposite. The Governor… Toby Wann: Okay, alright. R. Dirk Allison: The Governor of Illinois is a Republican and the Legislature is by and far Democratic. So, that's the challenge. Toby Wann: My apologies to the Governor. I was confused him with the Mayor of Chicago. Thanks. R. Dirk Allison: Alright. Thanks Toby. Operator: Thank you. Once again if you do have a question please press the star then one key on your touch tone telephone. I am showing any further questions in queue at this time. I will turn the call back over to Mr. Allison for closing comments. R. Dirk Allison: Thank you very much operator. We really appreciate your interest today in our call. We look forward to updating you in about 60 days on our progress. And thank you very much, have a great day. Operator: Thank you. Ladies and Gentlemen, you may now disconnect.