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AMEDISYS Inc (NASDAQ:AMED)
Q2 2020 Earnings Call
Jul 29, 2020, 11:00 a.m. ET

Contents:

  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:

Operator

Greetings, and welcome to the First Quarter 2020 Earnings Conference Call. [Operator Instructions]

It is now my pleasure to introduce your host, Nick Muscato. Thank you, Mr. Muscato, you may begin.

Nick Muscato -- Vice President, Strategic Finance

Thank you operator, and welcome to the Amedisys Investor Conference Call to discuss the results of the second quarter ended June 30, 2020. A copy of our press release, supplemental slides and related Form 8-K filing with the SEC are available on our Investor Relations page on our website.

Speaking on today's call from Amedisys will be Paul Kusserow, President and Chief Executive Officer and Scott Ginn, Chief Financial Officer. Also joining us is Chris Gerard, Chief Operating Officer and Dave Kemmerly, Chief Legal and Government Affairs Officer.

Before we get started with our call, I would like to remind everyone that statements made on this conference call today may constitute forward-looking statements and are protected under the safe harbor of the Private Securities Litigation Reform Act. These forward-looking statements are based on information available to Amedisys today. The Company assumes no obligation to update information provided on this call to reflect subsequent events other than as required under applicable securities laws. These forward-looking statements may involve a number of risks and uncertainties which may cause the Company's results or actual outcomes to differ materially from such statements. These risks and uncertainties include factors detailed in our SEC filings, including our forms 10-K, 10-Q and 8-K. In addition, as required by SEC Regulation G, a reconciliation of any non-GAAP measure mentioned during our call today to the most comparable GAAP measure will also be available in our forms 10-K, 10-Q and 8-K.

Thank you. And now, I'll turn the call over to Amedisys' CEO, Paul Kusserow.

Paul Kusserow -- President, Chief Executive Officer

Thanks, Nick, and welcome to the Amedisys' second quarter 2020 earnings call. Before we get started, I once again want to give a heartfelt thank you to our frontline caregivers, who without hesitation and throughout this pandemic have cared for the most frail and vulnerable patients in the country including and especially those with COVID-19.

The dedication and courage of all our incredible people highlights our unwavering commitment to our mission of caring for all patients in their homes and delivering the highest quality care to our patients. I'm truly proud and amazed by each and every one of you and once again, thank you everyone for all you're doing.

This quarter, our call will once again be structured differently, so that we can spend time making sure you thoroughly understand our underlying business performance and COVID-19's impacts on second quarter results, as well as our outlook for the remainder of 2020 and beyond.

During this call, Scott Ginn and I will cover the following. Our performance in Q2, which vested our internal modeling and Street expectations and highlights just how important, essential and resilient home health, hospice and personal care are to the healthcare delivery system. COVID-19, and how it has impacted our business, how we are successfully managing through it and what we've learned and gained from this challenging experience. Post-COVID, what are we doing to position ourselves for a strong 2021 and why the future value proposition of all our business segments looks even more promising than it did pre-COVID.

The reimbursement outlook for both home health and hospice, which will set up 2021 to be our best reimbursement year in recent history.

Finally, AseraCare and our other hospice acquisitions. How our prodigiously strong cash flows have us paying down our debt to one times by year-end and we are actually back in the market looking at new deals and de novos for late 2020 and 2021, as well as how we are progressing on and integrating on our four hospice deals.

Now, I'm going to turn it over to Scott, who will run us through our second quarter performance and full year 2020 guidance. Scott?

Scott Ginn -- Chief Financial Officer

Thanks, Paul. I'm very pleased with our Q2 results which exceeded our internal and Street expectations in the face of challenges created by COVID-19. These results combined with our continued successful implementation of PDGM, our ability to close on material hospice acquisition and strong cash flow generation during these challenging times made these results even more impressive.

For this call, I'll start off by reviewing our financial performance for the quarter, discuss our progress on PDGM and provide highlights of our full year 2020 guidance ranges. I'll then hand it back to Paul, who will conclude with the impact of COVID-19 on our business, trends we are seeing through July and for discussion of our focus and expectations for the remainder of the year.

For the second quarter on a GAAP basis, we delivered net income of $1.04 per diluted share or $485 million in revenue, a decrease of $8 million or 2% compared to 2019. Our GAAP results include our recognition of CARES Act funds, which is included at the other operating income in our statement of operations for the three months and six months ended June 30, 2020. We've chosen to apply our CARES Act funds only to direct cost associated with COVID-19. The majority of these costs are included in cost of service and consists of the following.

Increased cost related to PPE of nearly $11 million as you'll see -- as you'll recall, we had been paying nearly 5 times a normal cost for PPE. However, costs are solely moderating and continue to do so as equipment becomes more available through traditional PPE suppliers. $9 million in bonuses to our caregivers during the quarter for their service during the pandemic and quarantine pay of approximately $2 million.

Our results were impacted by income or expense items, adjusting our GAAP results that we have characterized as non-core, temporary or one-time in nature. Slide 15 of our supplement slide provides detail regarding these items and the income statement lined items each adjustment impacts. You'll note that adjustments include the recognition of CARES Act funds and direct cost associated with COVID-19.

For the quarter on an adjusted basis, our results were as follows, revenue declined $13 million or 3% to $485 million. EBITDA increased $5 million or 8% to $66 million. EBITDA as a percentage of revenue increased 140 basis points and EPS increased 11% to $1.34 per share. Once again, keep in mind, our adjusted results do not include any other CARES Act funds are COVID-19 direct costs.

Our decline in revenue is due to the impact of COVID-19 and volumes in reimbursement totaling $30 million as well as PDGM reducing reimbursement by $7 million. These reductions are partially offset by acquisition revenue of $16 million and $5 million from the suspension of sequestration effective May 1st. The variable nature of our cost structure mitigated the impact of COVID-19 revenue disruption on our operating results.

Additional items impacting our Q2 2020 performance are as follows. Health and workers' compensation decreased $6 million, driven by the COVID-19 disruption to health insurance claims. Strong cash collections resulted in lower revenue adjustments and reductions in utilization and a continued shift in clinical staffing mix helped to offset the margin impact on PDGM and COVID-19 disruptions.

Sequentially, EBITDA increased $13 million on a $7 million decrease in revenue driven by COVID-19's impact on all three segments. The $13 million increase in EBITDA consisted of a $7 million increase from sequestration relief and COVID-19 rate increases in our Personal Care segment and a $7 million decline in G&A expenses, excluding the AseraCare acquisition.

Now, turning to our second quarter adjusted segment performance. Keep in mind, segment level EBITDA was pre-corporate allocation. In Home Health, revenue was $290 million, down $28 million or 9% compared to prior year driven by COVID-19's impact on admissions and reimbursement during the quarter. Revenue per episode declined 2.3% driven by a $7 million impact to revenue due to the 2.8% reduction from PDGM and higher LUPA in loss billing periods as a result of an increase in missed visits due to COVID-19. These were offset by $3 million of additional reimbursements from the suspension of sequestration. Visiting clinician cost per visit increased 1.5% over prior year. The increase was driven by planned wage increases effective August 1st of 2019 and lower visit volume. These impacts were offset by a significant decline in health and workers' compensation.

Our gross margin improvement of 190 basis points was driven by the variable nature of our business model along with the year-over-year reduction in visits per episode of 1.9 and continued shift on our clinical staffing mix. Segment EBITDA was $53 million, down $3.5 million with an EBITDA margin of 18.3% representing a 50 basis point improvement.

Other items impacting the second quarter results of our Home Health segment include, G&A decreased approximately $3 million despite an increase in business development resources and raises effective August 1, 2019. The decrease was primarily due to COVID-19 related disruptions in travel and training, health costs and sales incentives.

I will provide a little more color on our PDGM performance and observations. Our revenue per episode was down approximately 2.3% from prior year, which reflects both the impact of PDGM and COVID-19 offset by the suspension of sequestration effective May 1st. COVID-19 drove the increases in LUPAs in loss billing periods during the quarter, which negatively impacted revenue per episode. As you recall, we estimated the impact of PDGM to be 2.8% for the full year of 2020. As a result of our focus on operationalizing PDGM, we continue to see rate improvements in -- on episodes in progress, which gives us confidence in our ability to mitigate a portion of the impact of PDGM, as previously planned once COVID-19 subsides.

On the cost side, we continue to make excellent progress on both of our levers, clinical staffing mix and utilization. On clinical staffing, we ended the quarter with a 45.4% LPN utilization, up from 40.1% in the second quarter of 2019 and a 47.9% PTA utilization ratio up from 42.6% in the second quarter of 2019. This continued progress keeps us on track to achieve a 50% LPN and PTA utilization ratio of our fourth quarter of 2020. Keep in mind that every 1% shift in the utilization equates to approximately $450,000 of cost savings.

On utilization, we ended the second quarter at 15 point visits per episode, which was down 1.9 visits year-over-year and 0.4 visits sequentially. During the quarter, we made significant progress on the Medalogix Care roll out and now have approximately 75% of our home healthcare centers utilizing care and expect to have a hundreds to center of care by the end of August. As a reminder, the care product uses analytics to create a patient specific care plan to drive the most optimal outcomes. I want to spend our care centers and information teams on their progress and performance as COVID-19 had an additional complexities to training and implementation. Great job to all involved in this initiative.

Turning now to our Hospice segment adjusted results. Revenue was $177 million, up $18 million over prior year, an increase of 12%, which includes the addition of two acquisitions closed during 2020, Asana on January 1st and AseraCare on June 1st. Net revenue per day was up 2% to $155.51. Hospice cost per day decreased 5.4%. The decrease was primarily driven by the time of visits performed by variable cost employees. Lower transportation costs and lower health insurance cost all due to COVID-19, as well as a reduction of pharmacy costs.

G&A as a percentage of revenue was up 90 basis points or $6 million over prior year. The increase is driven by our hospice acquisitions, which added $4 million to the segment. Excluding acquisition activity, G&A is up $2 million driven by addition of approximately 80 business development FTEs since Q2 2019, offset by reductions in travel and training. EBITDA was $46.5 million, up approximately $10 million, an increase of 26%.

Our Personal Care segment generated approximately $18 million revenue in the second quarter and improved EBITDA margin by 230 basis points over prior year. COVID-19 impacted billable hours and client served in Q2, however, the segment benefited from approximately $2 million in COVID-19 related rate increases.

Turning to our total general and administrative expenses. On an adjusted basis, total G&A was $151 million or 31.2% of total revenue was just up 160 basis points over prior year, largely driven by the COVID -- impact of COVID-19 on revenue and includes approximately $5 million additional cost related for our acquisitions, $4 million in our Hospice segment and $1 million in corporate. Sequentially, G&A was down $3 million and $6 million, excluding the AseraCare acquisition. We continued our impressive cash flow generation in the second quarter, producing $134 million in cash flow from operations. This increase in cash flow was driven by a 4.6 day reduction in DSO bringing DSO to 42 days down from 46.6 days at the end of the first quarter and $20 million in payroll tax deferrals under the CARES Act.

I want to thank our care center staff and our corporate billing and collection teams for their efforts around the significant change, our billing processes associated with PDGM. We expect to generate approximately $280 million in cash flow from operations for the full year 2020. This will result in a third straight year of generating cash flow from operations in excess of $200 million and result in our ability to significantly pay down our outstanding revolver or fund additional acquisition activity. Keep in mind, our estimated strong cash flow generation for the full year will be aided by an estimated $60 million in deferred payroll tax as allowed under the CARES Act, which is payable in 2021 and 2022.

As Paul mentioned in his opening remarks, we are happy to reissue our full year 2020 guidance. Our new guidance ranges represent our best view of the business at this time. There are numerous factors that could materially impact our ability to achieve these ranges including the continued increase or decrease in the number of COVID-19 cases nationwide, the pace at which elective procedures begin and return to normal levels, return of patient confidence in our hospital or doctor's office, access to our patients at home, in homes and facilities particularly SNF analysis, and any future or prolonged shelter in place orders.

In our supplemental slide deck, we have provided our geographic -- geographies in our care center accounts so that you can see areas where we have more or less exposure. Additionally, our guidance includes the impact of approximately $30 million and increased costs in the second half of 2020 laid to plan raises and increases in health claims. Our new guidance guidance ranges are as follows, revenue of $2.04 billion to $2.07 billion, adjusted EBITDA of $245 million to $255 million and adjusted EPS of $4.84 to $5.06.

Now I'll turn the call back over to Paul, for discussion around COVID-19's impact on our business, what we are doing for our patients and employees and our recovery plans. Paul?

Paul Kusserow -- President, Chief Executive Officer

Thanks, Scott. There are a few topics I'd like to cover with our remaining time, which are, the effective COVID-19 on our business during the quarter and our recovery plans which we are executing upon, the regulatory outlook including the proposed home health and hospice rules, the AseraCare acquisition and our integration efforts on our four hospice deals we have closed in the last 18 months, and the tremendous opportunity in front of us that will propel us for outsize future growth and innovations for 2021 and beyond.

Now turning to COVID-19's impact on our second quarter and the trends we continue to see. As we discussed during our last call, home health admissions in referrals hit a low point the week of April 5th. Since that time, I am happy to report that we have seen a steady V-shape recovery, a sharp bounce back instead of a prolonged trough. In fact, total volume at the end of the second quarter was approximately 98% of our pre-COVID baseline and is holding strong at those levels excluding July 4th, the July 4th holiday.

Keep in mind, that total volume includes both admission and recertifications. Total admissions at the end of Q2 were at 91% of our pre-COVID baseline. Also, some interesting data points, we have not seen a material recovery in elective procedures. Yet we have seen a significant recovery in our admissions, which means we are winning market share and new referral sources. Our admissions would also suggest that we are starting to realize the trend of patients wanting to avoid admission into SNFs and other facility-based settings. It is without a doubt that the home is the safest place to care for patients. And as we continue to innovate, as an aging employees company, we believe, there is compelling post-acute market share capture proposition from offering a SNF-at-home product and finding other ways to capture patients that historically would have received care and facilities.

Our efforts are under way on this front and we fully expect to be caring for more acutely ill patients in the home over the coming months. In fact, we're already seeing it now. In hospice, referrals hit their low point the week of March 22nd, but comparatively it was a minor drop. As we discussed last quarter, hospice admit volumes have significantly improved, however, the slowdown in March impacted both legacy and CCH, ADC early in the second quarter, particularly, with short stay COVID patients. That said, we have shown very solid performance and are projecting nearly 6% admit growth in July.

As you can see, the rapid response BD plans we implemented in Q1 are paying off. As a reminder, we are rolling out focused area action plans created by specific BD role, VPs, AVPs, account executives and care transition coordinators to take advantage of the two molds [Phonetic] in the market and show we're better and different. We've been tailoring call routing based on sophisticated referral source segmentation for physicians, hospital, long-term care, ambulatory surgery centers and other settings. We're continuing to hire and onboard BD FTEs during the slowdown, they're trained and hitting the Streets.

We've developed patient and family facing talking points. We're working through objections to home health and hospice out of fear of exposure, and we've been leveraging the fact that we've been good citizens. I know, we have been open to taking COVID-19 patients since day one resulting in building up new referral sources and partners, this is paying off particularly well.

Let's talk about patients and employees. Employees are always our most important asset, and patients and their families, our most important commitment. These have been at the forefront of our decision-making during this pandemic. As such, I am proud to say that during the quarter, we gave out over $9 million of bonuses to Home Health, Hospice, Personal Care and all frontline caregivers that have seen patients during the pandemic. Our caregivers are the heartbeat of our company, and this monetary token of our gratitude and appreciation is most definitely well deserved. When we take good care of our employees that care is passed along. We will continue to aggressively invest to make sure, we have the best employees, with the best tools, delivering the best care to our patients. It's our strategy and mission in a nutshell.

On the legislative and regulatory relief front, there is very good news here. In early April, CMS released the full year 2021 proposed hospice rule which was comprised of a 3% market basket update offset by a 40 basis point productivity adjustment for a net proposed rate update of 2.6%. CMS also proposed increasing the cap amount by 2.6%. We expect our impact to be in line with the 2.6% rate update.

Though, this is a proposed rule and not yet finalized, positive rate updates in hospice are increasingly impactful to our business, as we continue to grow hospice, both organically and inorganically. We expect the final rule to come out any day now. Similarly, in late June, we saw CMS issue the calendar year 2021 Home Health Prospective Payment System rate update wherein CMS proposed to increase payments by 2.6% beginning in January 2021. In addition to this positive payment update, CMS also proposed to make permanent, the telehealth flexibilities it has previously granted to Home Health agencies during the current public health emergency.

We applaud CMS for it's proposal to extend telehealth flexibilities, and we look forward to working with them on this important policy. We think this modality could be a highly additive tool in care provision. These two payment updates will be significant tailwinds for our company, as we enter 2021, producing approximately incremental $40 million in 2021. Now, let's discuss why we continue to be very excited about our future, 2021 and beyond.

To begin with demographics, macro trends are very much in our favor. As the baby movers age, they're now between 56 and 76, more people are turning 65 years old than ever before, over 10,000 a day. The aging population coupled with ever increasing healthcare costs put us in a very advantageous position as an aging in place company, delivering the highest quality care at the lowest cost to seniors, wherever they call home. 9 out of 10 boomers want to age and die home. Many of such scene we witnessed at the end of the first and this quarter, have continued and will continue beyond the time period of this public health crisis. Prior to COVID-19, over 90% of seniors prefer to receive care in their home. Given the devastatingly sad impact COVID-19 has had on seniors in-facility settings, it is safe to assume the percentage of seniors preferring to receive care in their homes has only increased.

Finally, given our scale, M&A chops, cash flow and integration capabilities, when the true impact of PDGM is finally felt within our industry, we will be ready to continue our organic and inorganic expansion in home health and are well positioned to capture more and more market share. Finally, I'd like to highlight the closing of the AseraCare acquisition on June 1st. AseraCare is an extremely high-quality hospice asset with 44 care centers across 14 states, a census of approximately 2,100 patients and approximately $117 million in revenue. This asset is a great addition to our portfolio and integration is well under way.

Once again, none of the money we received as part of the CARES Act was used to fund this transaction. We have grown our hospice assets significantly over the past few years and now, with AseraCare, we operate 190 hospice care centers in 35 states while caring for an ADC of approximately 14,000 patients. Hospice is an important benefit in the care continuum and I'm proud of the work our hospice team has done to bring their incredible care and compassion to more and more patients and families.

We have four great hospice assets under varying parts of integration and all are going well. We're also active on de novos and we're innovating on new ideas. SNF-at-home, dialysis in the home, telehealth, palliative care and our national personal care network. It is truly an exciting time to be a part of Amedisys and I'm thrilled at all of the future potential for our company, our associates and our patients.

This will conclude our prepared remarks. Operator, please open the line for questions.

Questions and Answers:

Operator

Thank you. [Operator Instructions] Our first question comes from Brian Tanquilut with Jefferies. Please proceed with your question.

Paul Kusserow -- President, Chief Executive Officer

Hey, Brian.

Brian Tanquilut -- Jefferies & Company, Inc. -- Analyst

Hey, good morning, good morning guys and congrats, I mean I know it was a tough quarter. So...

Paul Kusserow -- President, Chief Executive Officer

Yes, yes, you will.

Brian Tanquilut -- Jefferies & Company, Inc. -- Analyst

So, Paul, I guess, I just would hit on the recovery right away, right. I mean you talked about the V-shape recovery. And as I look at the slide deck, eyeballing it, it looks like in July, you're trending coming in the 5% same-store admissions range for Medicare. So how should we be thinking about your perspective or your view on where you think organic or kind of like same-store admission trends or volume trend should be as we see some recovery? And then factoring the fact that you're not, in fact, as you know quarterly in -- you're in Georgia and Tennessee where, here in Nashville obviously there has been a big bounce in COVID or a big pickup in COVID volume -- COVID cases. So just wanted to see your thoughts on the acceleration of volume, especially post-COVID.

Paul Kusserow -- President, Chief Executive Officer

Yeah, I'm going to -- I'm going to have Chris answer most of this because I think he's more equipped to. I think that what we're seeing though is we've at -- one of the things we've done that has been very purposeful over the first half of this year is to continue to invest in business development resources to continue to expand in BD to continue to bring our expertise in BD to put out additional incentives, to bring additional tools, so the growth piece of this is something we're very, very focused on.

We're starting to see it. I think one of the issues that we're starting to see is making sure that our staffing keeps up with our growth, so that's where we've been focused slightly. We've been seeing very nice growth. And even in the tough market, we've been offsetting that by markets that are clearing up. For example, the Northeast is recovering very nicely, while we're having more difficult times in Florida and Georgia. But, Chris, anything you want to add on that?

Chris Gerard -- Chief Operating Officer

Yeah, thanks. Thanks, Paul. Hey, Brian. The wildcard really is kind of the resurgence in certain markets. So, as you mentioned, some of the Southern states where we have some density, Florida, Georgia, Tennessee, South Carolina, we're seeing some impact there, but as Paul mentioned, it's been fully offset by some good growth in some of the less impacted markets or the ones that are still on a rebound like in Northeast. So the challenges is around kind of when these flare-ups happen, it's not so much the referral flow that slows down. I think the patients who are over the anxiety of not going on the home care, and I think we've gotten good protocols in place we had facilities to be able to access them, it's more around the exposures happen, you have employees going on quarantine while waiting on testing and things like that, so it challenges your capacity a little bit.

All that said, I think we're thinking about the balance of the year is just to factor those kind of nuances in and think about mid single-digit growth whereas, we know that hospitals are not back to near full occupancy and we know that one of our strongest referral streams about 80% [Phonetic] of our home health business comes downstream from SNFs and many SNFs are really still struggling to keep kind of their occupancy up. So we think that there is still some demand that has not been released and we don't know that it will happen by the end of the year based on just kind of the penetration of COVID-19, but we do feel like growth is in the cards for us the balance of the year and we're just kind of thinking mid single-digits, but we're obviously very pleased with where we are now, and we very well could be higher than that at the end of the year if we continue to execute.

Brian Tanquilut -- Jefferies & Company, Inc. -- Analyst

Yeah. All right....

Paul Kusserow -- President, Chief Executive Officer

[Speech Overlap] I guess, I'll give a shout out to our Central and Western divisions who've in the past have really struggled there, they've come around incredibly well and we're seeing strong results out there. Northeast is coming back very strong. So it's whack-a-mole in a good way, this is where geographically diverse has been actually very beneficial to us. As certain areas -- as this thing moves around, we have very strong performance when it dissipates. And even when we're in the midst of it, as Chris said, it's mainly an issue of making sure we have enough staff because there is an increase in staff we're quarantining as these -- as COVID increases in markets like Florida and Georgia.

Brian Tanquilut -- Jefferies & Company, Inc. -- Analyst

Yeah, that makes sense. So I guess without going to guidance, as I think about 2021, right, just looking at the growth algorithm. So you've got AseraCare, it adds about 6% to your revenue already, rate growth proposals are in the 2% to 3% range, you're growing organically 5% to 7% and then with some cost cuts that you've put in, in Q2 and I think maybe Scott can give us a little more color on that, if possible. I mean I put all that together and I'm getting an EBITDA growth trajectory of 15% or higher for next year that from where we sit today, is that the right way to think about that?

Paul Kusserow -- President, Chief Executive Officer

Your lips to God's ears, we'd love to do that, but I'll let Scott tap that down a little. Scott?

Scott Ginn -- Chief Financial Officer

Yeah. Well, now I think that it's hard to run from that number. Brian, thanks for the question. I mean, when you think about alone from the rate good guys that's somewhat around $40 million when you look across those segments, that's certainly a great opportunity for us. You mentioned AseraCare, we have CCH which we still, we're happy with what's going on there, we certainly -- COVID has impacted that, we've added a lot of BD heads there, so we're -- in April, we passed kind of where we want to be on CCH headcounts.

So we think there is a lot of energy, and as we exit and hit our exit rate here, yeah, I think we feel wonderful about 2020. We certainly -- you're seeing the benefits of what we've done in monitoring utilization under PDGM, the shift in staffing, so all those things we ended up taking a hard look at our staffing. In the quarter, as we look at -- our visits are coming down. When you take on two visits an episode, you think we're averaging 75,000 episodes a quarter, that's a lot of visits, that's almost 600,000 visits. So, we take that in account and get our mix shifts correctly. We made some adjustments there in staffing that we think really haven't been reflected in these numbers. So we feel great about where we are and where we're headed.

Paul Kusserow -- President, Chief Executive Officer

Yeah. We feel very good about what you throw out, Brian. I mean, Chris, you want to just -- Chris, did a lot of good work in the AMED home health, pulling costs out, that we had -- we were heavy on some PT populations. We turned some folks from salaried into per visit, so really good job there. So our cost structure is very, very strong and obviously we're pushing very hard on the growth piece, so we feel very good about next year in particular.

Brian Tanquilut -- Jefferies & Company, Inc. -- Analyst

Awesome. Thank you.

Paul Kusserow -- President, Chief Executive Officer

Thanks, Brian. Appreciate it.

Operator

Thank you. Our next question comes from Matt Larew with William Blair. Please proceed with your question.

Paul Kusserow -- President, Chief Executive Officer

Hey, Matt

Matt Larew -- William Blair & Company -- Analyst

Hi, good morning. Before I get 2021 and maybe I just wanted to ask about the back half of 2020. And so, Scott, you alluded to I think $30 billion [Phonetic] of increased costs in the back half. But could you maybe help us understand a little bit better just how some of these dynamics flow through, whether it's the medical, some of the staffing adjustments you made? And at the end of Q2, that we will get the benefit after the back half of the year in terms of the -- in PTA mix. So just -- if you could just help us a little bit on the model in there, because I think even layering at $30 million, I'm still kind of getting toward the higher end of the guidance range. That first blush.

Scott Ginn -- Chief Financial Officer

Yeah, I mean if you think about that and what we did for cost-per-visit, the only thing I'd caution, Matt, and I think that what way these numbers get really large and I really point to our Hospice segment that that higher gross margin. We did benefit from, if you think about how we get paid for hospice patients still in service, we get paid -- pay per day, I'm sorry. And in some of the visits especially from the hourly type folks are aged, they weren't able to get out there. Now that's swinging back around, they're coming back, so I think that margin is probably a little inflated, so I would tap that down a little bit as we move into the second half of the margin, we're still, and right now, in the gross margin perspective. So it's one thing to keep in mind.

We'll see how this -- I mean that typical, you'll see the health cost higher in Q4, we still got a pretty big gap up there. I think the rate impacts roughly again, which will be effective August 1st and then you've got the health flowing through, which we're expecting from the turning [Phonetic] perspective, while the dollars are down, it should look similar. We'll watch out even closely as this leaves through. So it's been interesting. I mean it's -- it got earlier back to some typical patterns we see, one thing is a little different. Typically, our EIP rate we're exiting this quarter out is extremely high compared to what we've normally are at this point, because we saw a bill and then you just saw those June numbers late, we saw a strong recovery there.

So we kind of have lumped a lot into that second half of the year, but I think the takeaway and you're looking at your modeling is out [Phonetic], but I think that gross margin is close to around the 43% on a go-forward basis.

Matt Larew -- William Blair & Company -- Analyst

Okay, thank you. And then maybe Paul and Chris, wanted to follow-up on some of the share taking and SNF diversion. Is there any way you can help us to maybe put some numbers around what the various referral source components were pre-COVID? And then what you've seen as volumes have come back? And then maybe on the longer-term sense to put it in opportunity, how do you kind of bucket, maybe patients you're taking today that were an easy land grab and just needed some convincing versus the longer-term opportunities that might involve capability, expansion in terms of what you offer?

Paul Kusserow -- President, Chief Executive Officer

Yeah, I think just to start this off, I think from a SNF perspective -- and I'll use Chris' terms, about 10% of the SNF business we estimate between 8% and 10% is what we call jump ball, so we think a lot of the jump ball business that may be went 50-50 is probably coming to us. There is another maybe 10% out of the SNF business that if we can utilize custodial care or personal care, so we're probably going to have to work that through with the MA, if they want to do more work there. Clearly, when you -- it's been a highly publicized area where -- but we also do a lot of business in SNFs, 30% of hospice at this point and we've got about 18% of home health, we do work in SNF. So we want to make sure, we're the ones going into these SNFs, but at the same point we compete with them. They went through their own version of PDGM, which ultimately makes it more profitable and better for them to move up the acuity scale.

So what we're seeing is as the SNFs are moving up and taking care of sicker patients, they're kind of leaving more acute, what we would consider more acute patients. So we're seeing our level of acuity go up as some of those patients that are less interested in taking care of in the SNF. I don't know, Chris, did I grab most of it or any comments?

Chris Gerard -- Chief Operating Officer

Yeah, yeah. Just, you got it Paul. Just to kind of give a little more detail behind the numbers and what we're looking at now. Our physician referrals rebounded quicker through COVID-19, both our physician in hospital our institutional referrals dropped to the same level, but physicians came back quicker, which really kind of helped with our recovery and our rebound. And in fact, we actually added 1,490 new physician referrals sources in Q2 from Q1, sequentially, which was -- which added quite a bit. But hospital and institutional referrals got back close to a 100% at the year -- as we exited Q2, but our elective procedures only got back to about 75% of pre-COVID level, so that will suggest we're getting a little bit of a different type of referral from the hospital in the institutional referrals.

We are also seeing case mix weight [Phonetic] come up on our patients as well, that would suggest a little bit different type patient and we feel like that's really going to be a diversion from these patients landing into a skilled nursing facility person than coming to us -- coming to us directly. So we're going to get tighter about around quantifying that, but we think that's a sign of some opportunities still to come that we can take advantage of.

And then longer-term, the bigger play on really "SNF-at-Home" business. We really see that model as being a realistic future for us and for home care in general. It's going to require some new thinking around payment models that really kind of will also support unskilled care just presence in the home, technology, meals, transportation, some of the other things that are kind of going to needed to be bolted on and paid for to be able to do this, but if it could be done in the right way, you can see a complete shift of the type of patients that normally will spend weeks in the SNF before they go home can actually go home and get their same care in the home. But I'd say that this is really starting to put focus on that, it's early stages, but now it's up to the industry to kind of try to take that forward.

Scott Ginn -- Chief Financial Officer

Hey, Matt, and one other thing real quick on that second half, just wanted to -- in our -- you'll see that the acquisition revenue for the quarter which includes the AseraCare care Asana roughly did about $6 million in revenue. We talk about some adjustments in there, so those combined drove about $1 million of EBITDA for the quarter. Thinking about AseraCare going into the rest of the year within that guidance, which wasn't in our original guidance because we hadn't closed until June 1st, that's probably additional $5 million coming out of AseraCare.

Matt Larew -- William Blair & Company -- Analyst

Okay. Thanks, Scott. Appreciate all the details.

Paul Kusserow -- President, Chief Executive Officer

Thanks, Matt.

Operator

Thank you. Our next question comes from A.J. Rice with Credit Suisse. Please proceed with your question.

A.J. Rice -- Credit Suisse -- Analyst

Hi, everybody. Maybe first on the turnover rate, you highlighted about 16.8% I guess, below that I'd be just curious as to what you're seeing in terms of staff availability, how people are responding? I know you've mentioned some bonus pay etc. that you -- COVID-related that you've given. But just availability of workers, the turnover rate, where do things stand in light of the crisis? And has that presented challenges or opportunities in any way?

Paul Kusserow -- President, Chief Executive Officer

Yeah, we think we'll bring that down, but Chris [Phonetic] why you comment on why it's at the rate it is? It's -- we think it's a little high at this right due to all the turmoil, but Chris, you can take people through what's -- how are you thinking about it.

Chris Gerard -- Chief Operating Officer

Yeah. So turnover has been a focus of ours for several year, we've continuous to -- continuously driven that down. I think we did a good job during kind of really the heart of the pandemic to make sure that we were keeping turnover at a good level. We even saw some areas where we had to make some staffing adjustments that we actually alluded to in our prepared comments.

What we find now is that the biggest challenge around staffing and capacity just comes with where we have a flare-up and you have a number of employees go on any kind of quarantines leave for up to two weeks or those that may unfortunately get infected by the virus. What we have found is just that, we did slowdown a little bit on our requisition during the trough of volume and we've ramped that back up in new hires, we have good pipeline. And if we have good hiring kind of pipeline in place right now that we're bringing onboard. So I feel like we're in good shape. We do have, as always, this is no different in this environment than a non-diff environment. You do have certain areas where it's really tight on labor, but in those areas we also find other ways like utilizing contract labor where possible to make sure that we can effectively and safely treat our patients. So we don't feel like staff and staffing levels any kind of constraint for us and again, we put turnover at the top of the list of things that are high on our priorities as a management we need to continue to focus on that.

Paul Kusserow -- President, Chief Executive Officer

Yeah. We expect that to...

A.J. Rice -- Credit Suisse -- Analyst

Okay, great.

Paul Kusserow -- President, Chief Executive Officer

The other thing A.J that I think is really important is considering, all that's going on in facilities and institutions, recruiting is getting better and better. So we have a opportunity to go after some very good people who want to start to work in their home. So we're starting to see that pretty intensively. And remember when we first started this effort, we were in the -- five years ago, we were at 40% turnover rate, so we feel very good, but I think our goal is to get as close to kind of below 15% as we can get and we're -- we anticipate we'll get there.

A.J. Rice -- Credit Suisse -- Analyst

Okay, that's great. The second, the other thing I wanted to just ask about was you talked about the COVID impact on the hospice of being short stay hospice. I wondered how many, can you flush that out a little bit? Obviously, to the extent you take COVID patients that would boost your admissions in hospice, but what kind of effect is that having on the business? Do most COVID patients that ultimately end up in that? Do they -- do a lot of them go on hospice? And how else is that rippling through the business and impacting the business?

Paul Kusserow -- President, Chief Executive Officer

Chris, you want to take that?

Chris Gerard -- Chief Operating Officer

Yeah, I'll take that one. So we've been meeting almost thousand COVID patients on our hospice, average length of stay is 8 days on service, typically the discharges if they pass away. So, in a normal world when we've been averaging about, let's say, 97, 98 average length of stay for a patient and have kind of a more normalized environment, as you have growth in admissions, you're going to see your census ADC grow over time as well.

So during Q2, it was a shift in terms of the types of patients that we were getting these very, very low length of stays, so it did not really support any kind of ADC growth in Q2. Now in Q3, our admissions in hospice for COVID-related patients declined sequentially throughout the quarter April, May and June and continues to do so in July. So from that we see that we're back to more of a normalized admission I guess mix if you will, that should start to support kind of ADC growth as we go through Q3.

Paul Kusserow -- President, Chief Executive Officer

Yeah. And I'd say there is one other thing that...

A.J. Rice -- Credit Suisse -- Analyst

Okay.

Paul Kusserow -- President, Chief Executive Officer

We want -- that we're starting to see A.J which is the good citizen piece which we mentioned in our remarks, which is, there's a lot of hospice who wouldn't take COVID, we have since day one, so we're going back and talk to these people about other referrals other than COVID and having a lot of good success.

A.J. Rice -- Credit Suisse -- Analyst

All right, great, thanks a lot.

Operator

Thank you. Our next question comes from Justin Bowers with Deutsche Bank. Please proceed with your question.

Paul Kusserow -- President, Chief Executive Officer

Hey, Justin.

Justin Bowers -- Deutsche Bank -- Analyst

Hey, good morning everyone, and thanks for the question. So just sticking with hospice, what's kind of -- how are you thinking about the trajectory of that through the rest of the year? And I'll pause for the next one.

Scott Ginn -- Chief Financial Officer

Well certainly, as our numbers are and as we've talked to you -- when we did some conferences post Q1, we're expecting to get to certainly, where we originally thought our exit rates will be for hospice. So we could expect continued -- a continued increase in that ADC through the -- talked a little bit earlier and Chris has given some numbers, but certainly around CCH, we've added a lot of staffing, so we expect that to continue to see. From a margin perspective, I do see that we'll certainly get some expansion, but you'll have some costs return as we get more of those hourly type employees back out there, really transportation around for those folks as well as our hourly pay will come back, but we're expecting to see an increases in ADC across the board on our Hospice segments. I mentioned that a stair-care will add another $5 million roughly to the back half. So we continue to see that up into the right as we approach that year end and really are certainly pushing to hit our targets as we exit and really get a nice run rate heading into 2021.

Chris Gerard -- Chief Operating Officer

Hey, Justin...

Justin Bowers -- Deutsche Bank -- Analyst

Great.

Chris Gerard -- Chief Operating Officer

This is Chris. I'll give you one quick...

Justin Bowers -- Deutsche Bank -- Analyst

Hey.

Chris Gerard -- Chief Operating Officer

Data point really quickly as sequentially, we added 25 hospice BD FTEs in Q2 over Q1 and year-over-year Q2 to Q2 was 93. So we have 432 BD FTEs as we enter into, as we entered into Q3 and that's where we feel pretty bullish. It takes a little while to get those reps up and productive, but once they get there and we retain them then we see that that's going to help support the growth.

Justin Bowers -- Deutsche Bank -- Analyst

Got it.

Scott Ginn -- Chief Financial Officer

Yeah. And just to add that. I mean, which is, if you look at our cost structure I mean, we're carrying all that extra cost year-over-year, which is you see our G&A number is really held and fairly well and actually coming down. One thing I would say, still I mean, we saw a big fall off of course is what everyone expected, travel and training, that's another number that will probably keep up -- creep up a bit for us depending on opening in stages. We need to get our operators, our ADPs and so forth back out there, give some training on some of these new head, so that's just one item to keep in mind.

Justin Bowers -- Deutsche Bank -- Analyst

Yeah. Appreciate that. And then on home health, Chris, I just wanted to understand some of the referral dynamics a little more, because I think, as you guys said like admissions are trending nicely into the third quarter up in the mid single-digits and you're seeing Medicare come back nicely. And then based on your earlier comments, it sounds like acuity is going up a little bit too, so is that a fair deduction? And then the shifts from institution are coming back a little stronger? And then...

Chris Gerard -- Chief Operating Officer

Yeah.

Justin Bowers -- Deutsche Bank -- Analyst

I think, kind of maybe, OK, I'll pause there.

Chris Gerard -- Chief Operating Officer

Yeah, I think you're looking at that right. So what we're watching is kind of our clinical coding, our case mix way for our patients, functional levels and seeing how that is trending over the course of the year and we're seeing a very consistent ticking up. You're also seeing our Recert rate came up a bit, it came up quite a bit in Q2, we think some of that is driven by higher acuity patient that may have typically landed again in the SNF for maybe so let's say two weeks, planning to stay at their home and then we're taking care of them, just taking a list a little bit longer to really get them fully recovered about to independent living. So we feel like we're getting a different type of patient. We're going to put some more quantification around that and give some more color as we dive into the data, but we certainly feel like that's an aggregate statement.

Scott Ginn -- Chief Financial Officer

That's correct.

Justin Bowers -- Deutsche Bank -- Analyst

Okay.

Scott Ginn -- Chief Financial Officer

Just add a little bit more. I mean you just got to keep in mind too that you're not seeing it in our rate yet, but we certainly, as Chris has said, we're seeing that from a patient base, but it's been somewhat masked by -- we did see higher, if you look at our numbers Recerts versus admits, kind of climb up where we're having our completed numbers, a higher percentage of Recerts that we normally run. We think as you see our admit growth return that's going to flip back, a Recert episode is going to average about 80% of what an admit episode will be from a reimbursement perspective. So you'll start, as we move through and that normalizes, you'll see our rate start to come up around that.

Justin Bowers -- Deutsche Bank -- Analyst

Yeah. Okay, and -- just -- and then just a couple of quick follow-ups on that. Chris, I missed it, what was the percentage of referrals that from SNFs, you mentioned earlier?

Chris Gerard -- Chief Operating Officer

Yeah. Go ahead.

Justin Bowers -- Deutsche Bank -- Analyst

And then the other kind of -- the other one was just on the electives. Is there a kind of a category that's not coming back or is it pretty spread out?

Chris Gerard -- Chief Operating Officer

Yeah. On the second one, it is spread out. So I mean, we're looking at it and it's kind of that's -- it's evenly distributed across all of the types of admissions that we have gotten. Again we're back about 75% of the pre-COVID level. So,...

Justin Bowers -- Deutsche Bank -- Analyst

Okay.

Chris Gerard -- Chief Operating Officer

That's -- what we do see is geographically, there is some of the areas that are back well at 100% or even greater than 100% and that really have something to do with states opening up in kind of the current environment around COVID-19 and we have some states that are still well below 50%. So we think that there is still some time to go before that gets back to a normal level.

Also, pre-COVID about 18% of our home health referrals came from SNFs and that -- those would be kind of downstream from acute to SNF and then SNF to the home and then the referrals come from there. That is still significantly below pre-COVID levels. So that would suggest that even though we're at the -- because we're at the volume levels we're at today, and that's an area that's down plus the elected procedures that are down, let's just suggest that we're getting share of these patients that would normally spend time in a SNF bed.

Paul Kusserow -- President, Chief Executive Officer

Yeah, we also...

Justin Bowers -- Deutsche Bank -- Analyst

Got it.

Paul Kusserow -- President, Chief Executive Officer

That there is some potential for diversion. For example, on certain types of surgical procedures that people are going to ASCs and other places. So that we're keeping our eyes on that our BD folks are seeing if they're going from the hospital into an ASC, we're going to obviously we're talking to quite a bit of ASCs pretty intensely now. So again, we're following this volume, if it's leaving the hospitals and going elsewhere, we're tracking it.

Justin Bowers -- Deutsche Bank -- Analyst

Okay, thanks so much. I'll hop back in queue.

Paul Kusserow -- President, Chief Executive Officer

Great.

Operator

Thank you. Our next question comes from Kevin Fischbeck with Bank of America. Please proceed with your question.

Paul Kusserow -- President, Chief Executive Officer

Hi, Kevin.

Kevin Fischbeck -- Bank of America Merrill Lynch -- Analyst

Great. Hey. So I guess maybe just kind of following back up on this kind of share commentary around nursing homes. When you said I think earlier that maybe 8% to 10% of SNF business was kind of a jump ball, do you mean volumes coming out of the hospital, that 8% to 10% of the time if the jump ball, whether it goes to you or that goes to a nursing home? I am just trying to kind of...

Paul Kusserow -- President, Chief Executive Officer

Yeah.

Kevin Fischbeck -- Bank of America Merrill Lynch -- Analyst

Tie some of the numbers. You got that 10% to you or is that a different percentage you see in your volume that you were able to get that 10%?

Paul Kusserow -- President, Chief Executive Officer

Yeah. The jump ball business basically on a clinical basis, where could people will be taken care of. And the idea of the current -- our current ability to take care of patients would allow for a physician to choose between us or a SNF. And so, we now think obviously, that these physicians or these caregivers, when they're doing discharges are probably increasingly sending people to the home because they could send them either place.

We also think that there is probably another 10% business of the business, where if we could add custodial care i.e., unskilled care through our personal care network, we believe that a lot of this is just eyes on work, it's dealing with activities of daily living that fundamentally we could take care of these patients more in the home. And also from a higher acuity perspective, we've developed a SNF-at-Home business that we will go and give people that option to do it. So we really have three plays here that we believe will attract more of this business, higher acuity, more complexity in activities of daily living as well as the jump ball business. So we think we have some more opportunities there. I don't know, Chris, you -- anything I missed?

Chris Gerard -- Chief Operating Officer

No. You got it.

Kevin Fischbeck -- Bank of America Merrill Lynch -- Analyst

But I guess I'm just trying to I think, if you get 10% more of the hospital volume that's why, is that 5% to your volume because -- are there volumes coming from other sources or how do we think about what that opportunity is to your growth?

Paul Kusserow -- President, Chief Executive Officer

I know, yeah. Scott, Chris I don't know what that would. I mean, we haven't...

Scott Ginn -- Chief Financial Officer

Well...

Paul Kusserow -- President, Chief Executive Officer

Actually sit pass through and cut through the numbers, but we believe, out of this -- out of some percentage of that SNF business, we will start to migrate. The SNF business is approximately, according to the way we looked at it last about a $30 billion business, it's about twice what home health is in terms of spend. So we're about equal SNFs to a little more in terms of post-acute, we're at about 16% SNFs or about 18% of post-acute discharges. So we think we'll start to nip into that and we think the referrals will start to lift on that.

Kevin Fischbeck -- Bank of America Merrill Lynch -- Analyst

That's helpful. And then I guess, these number that you're talking about as far as taking share, makes sense. I guess, do you have any color as to whether the fact that your hospital volumes are back to normal, even though the electives aren't? Is that because the industry is seeing that or is that because you were disproportionately able to accommodate those patients? Just trying to figure out how much is fundamental shift of where cares could be provided versus market share within location of care?

Paul Kusserow -- President, Chief Executive Officer

I think you're going to see a dynamic with one is and I give us -- I can't emphasize how much I've been hearing about our good citizenry, and the idea is that we've been out there, aggressively out there taking patients during this and being very flexible and that's a testament to our people. So we are starting to see good payback from that more conversations. As you mentioned, that there were 1,500 new referral sources or something, it's just extraordinary what we've been seeing from new business. So we anticipate we're going to grow market share.

We also anticipate once PDGM kicks in, in full and this kind of shifts the part of the conversations, but there will be a significant shakeout in this industry and again we will, we anticipate we're going to keep growing share, one, through just doing better than everyone else, but two, once PDGM kicks in, because you'll remember as of 11/21, the RAP payments will completely disappear and a lot of the subsidies that are out there are going to go away.

Kevin Fischbeck -- Bank of America Merrill Lynch -- Analyst

If I could just sneak in one last one. You mentioned at the beginning that 90% of people before COVID wanted to -- a preferred care at home. I guess, how durable do you think this switch will be? People who are already predominantly looking for home and we had a basically 50-50 split as far as post-acute discharges out of the hospital than between your nursing homes. Why wouldn't it go back to that same split ones COVID's gone...

Chris Gerard -- Chief Operating Officer

[Speech Overlap] I think it just explain -- I must give you -- I'll give you anecdotal to that. And the anecdotal answer is, when I go talk to physicians which I used to do a lot of pre-COVID and I'd say why are you referring this to SNF when you can refer them to the home, they said safer. They would say it's -- I cover all my basis, they needed continuous care. I think what they're going to start to do now, hopefully, reimbursement will follow this, I'd look for it more in MA than CMS at this point, but I think what people are going to say is, physicians and those referral sources are going to try to keep people out of these institutions because there has been the second surge of this has met this thing keeps popping up.

So they're having to go through a whole new round of saying, we want to avoid sending people into institutions. We think at some point it will settle into some of their long-term memory and they'll get more used to referring and hopefully having successful referrals into the home. So we think that this pattern of COVID coming back although dreadful frankly is helping us, and the second way that's helping us because it's generally younger people, but it's still changing the habits of a lot of our referral sources.

Kevin Fischbeck -- Bank of America Merrill Lynch -- Analyst

Thanks. Perfect, thank you.

Chris Gerard -- Chief Operating Officer

Sure.

Paul Kusserow -- President, Chief Executive Officer

Thanks, Kevin.

Operator

Thank you. Our next question comes from John Ransom with Raymond James. Please proceed with your question.

John W. Ransom -- Raymond James & Associates, Inc -- Analyst

Hey, good afternoon. If we look at the 2H guidance, what's the implied volume kind of year-over-year volume assumption in both home health and hospice?

Paul Kusserow -- President, Chief Executive Officer

Scott, you want that?

Scott Ginn -- Chief Financial Officer

Sure. I would tell you that's kind of -- as we move forward, you're looking mainly at a kind of low single-digit type of a number so it's in the home health side, I think hospice ADC as it recovers it's kind of in a similar kind of that lower number. I think there is some overly aggressive numbers there. We'll expect to see that ramp-up really on ADC in hospice in that back half of fourth quarter. So on average, it's not an over aggressive top-line number.

John W. Ransom -- Raymond James & Associates, Inc -- Analyst

And you talked about the $30 million of costs, how do we think about the gross margin or the -- how are we going to talk about the segment level EBITDA versus G&A? How do we allocate that extra costs between the two businesses and G&A?

Scott Ginn -- Chief Financial Officer

Yeah. I would say that, 30, John, I'd put about 80% of that, that they'll hit the gross margin lines, so well in cost of revenue because that's mostly the clinicians there, our higher population which will hits, both health claims as well as the raised piece of it. So 80% is probably a safe number to use.

John W. Ransom -- Raymond James & Associates, Inc -- Analyst

Just proportionately distributed between hospice and home health.

Scott Ginn -- Chief Financial Officer

I would say it's probably 60% home health, if you kind of break that number back down. So starting with that $30 million, 60% be home health and then second, 80% to get you to roughly what should roll through gross margin.

John W. Ransom -- Raymond James & Associates, Inc -- Analyst

Okay. And maybe I missed this, but what is your projection for COVID costs and other type acquisition spend? What kind of adjustments should we think about in the EBITDA line, such like...

Scott Ginn -- Chief Financial Officer

Yeah.

John W. Ransom -- Raymond James & Associates, Inc -- Analyst

Like you had in the second quarter?

Scott Ginn -- Chief Financial Officer

Yeah. So if we think about it, starting to look at from a COVID perspective, I think, and that's going to be somewhere around $11 million in the second half where it's -- we'll treat that and take that income against it. I think you'll see probably a continued level of that acquisition integration, we really have kind of pushed off some of the acquisition because of integration because of COVID-19, so it'll probably be at a similar level I would say, through the rest of the year.

John W. Ransom -- Raymond James & Associates, Inc -- Analyst

Okay. And then just last one from me, and this is, I know this a little bit of a, out of the field, but if we think about some of the rapid tests that are going to be more and more available in the market that give you a point of care answer in less than a half hour, is that something that Amedisys would look at as a is a must-have to avoid this kind of two week quarantining? Or is it -- are you going to stick with the institutional LabCorp, Quest, where we just see our increasing stories about backlogs and seven-day turnarounds and that sort of thing?

Paul Kusserow -- President, Chief Executive Officer

Yeah, I think one of the key things that we are looking at in the future, John, is testing, so that's a really good question. I think the idea is that more and more of the institutions that we do call in, call on one, for setting up these kind of variable rules for us, what we're trying to do is rest of them down to one continue with one rule that we can abide by which is -- which we think is going to affect testing. So we've been out there looking at a variety of different methodologies for testing, so that we can be, obviously, what we want to say is we're -- all our folks are COVID free going into these institutions. So that's a huge advantage for somebody out there, so good question and we're pushing on this pretty hard. I don't know Chris...

Chris Gerard -- Chief Operating Officer

Yes.

Paul Kusserow -- President, Chief Executive Officer

You leading with any other thoughts?

Chris Gerard -- Chief Operating Officer

Well, I think your instinct is right, John. The rapid is the way we'd like to go, quicker turnaround, but we're running into it's reliability and accuracy issues with that, so it's going to be really dependent on that improving. We are running into some spots with our big vendor that we're using for the traditional testing with some backlogs and it just prolongs kind of this lack of access to caregivers while we're waiting for answers. So, we're hopeful that there is some good progress made in the rapid testing side and also availability and that's an area that we would love to transition to.

John W. Ransom -- Raymond James & Associates, Inc -- Analyst

Yeah. And I'll add, where were the -- what was the LUPA? How many episodes were subject to LUPA adjustments in 2Q versus 1Q? And what do you -- how are you thinking about that from the back half of the year?

Chris Gerard -- Chief Operating Officer

Yeah. So I'll give you kind of the sequence of bloopers by -- through Q2, it hit an all-time high of 11.2% in of all episodes. In April, 8.7%, in May 8.4 % and June we're trending down a little bit from there. And so far in Q3, our normal rate is around 8% that's where we'd like to get to that's pre -- that's our pre-PDGM, pre-COVID level, so that's what we're moving back toward. We feel like we got a pretty good handle on it. The things that will continue to impact is our, just really kind of the flare-ups, and if we run into any kind of issues getting business down in some of those markets. But the trend is very good and I think we've got our arms around it really quickly. And I think if you think about it, our model is up, out in around the 8% range.

John W. Ransom -- Raymond James & Associates, Inc -- Analyst

Okay, thanks so much. Appreciate it.

Paul Kusserow -- President, Chief Executive Officer

Thanks, John.

Operator

Thank you. There are no further questions at this time. I'd like to turn the floor back over to Paul Kusserow for closing remarks.

Paul Kusserow -- President, Chief Executive Officer

Great. Thank you, Victor. And I want to thank everyone who joined us on our call today. I'd also like to, again, thank all of our frontline employees, who are out there in the field battling the corona-virus, as well as all of our back office and corporate staff who help to enable our folks on the frontlines. It is because of your daily actions that we are going to get through this together. Keep doing what you're doing, taking care of the people who need us the most. We hope that everyone has a wonderful day and we look forward to updating you on our ever evolving progress and purposeful work on our next quarterly earnings call. Have a great day. Thank you very much.

Operator

[Operator Closing Remarks]

Duration: 71 minutes

Call participants:

Nick Muscato -- Vice President, Strategic Finance

Paul Kusserow -- President, Chief Executive Officer

Scott Ginn -- Chief Financial Officer

Chris Gerard -- Chief Operating Officer

Brian Tanquilut -- Jefferies & Company, Inc. -- Analyst

Matt Larew -- William Blair & Company -- Analyst

A.J. Rice -- Credit Suisse -- Analyst

Justin Bowers -- Deutsche Bank -- Analyst

Kevin Fischbeck -- Bank of America Merrill Lynch -- Analyst

John W. Ransom -- Raymond James & Associates, Inc -- Analyst

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