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LHC Group Inc (NASDAQ:LHCG)
Q1 2021 Earnings Call
May 7, 2021, 9:00 p.m. ET

Contents:

  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:

Operator

Good morning, and welcome to the LHC Group First Quarter 2021 earnings conference call. [Operator Instructions] [Operator Instructions]

I would now like to turn the conference over to Eric Elliot, Senior Vice President of Finance. Please go ahead.

Eric Elliott -- Senior Vice President of Finance

Thank you, Robert. And good morning, everyone. I'd like to welcome you to LHC Group's earnings conference call for the first quarter ended March 31 2021. We issued our earnings release last night and I would like to also highlight that we have posted some supplemental information on the quarter on the quarterly results section of our Investor Relations page.

The supplemental deck as well as a copy of the earnings release the 10 Q and ultimately a transcript of this call when available can be found on this page as well. Our supplemental deck includes our full year 2021 guidance assumptions, the impact of COVID-19 detail on a breakdown on one sector performance and a significant amount of detail on the monthly trends. All of our non GAAP reconciliations and breakdown of adjustments are included as well. We will reference this information or remarks today.

We expect today's prepared comments from Keith Myers Chairman and Chief Executive Officer Josh profit president and Dale mackel chief financial officer to run for approximately 20 minutes to allow time for q&a. Before we start, I would like to point everyone to our forward looking statements on page two of our supplemental presentation and encourage you to read them carefully. They apply to statements made in this goal in our press release in our supplemental financial information.

Now I'll turn the call over to Keith.

Keith G. Myers -- Chairman and Chief Executive Officer

Thank you, Eric. And thank you everyone. As always, I want to begin by thanking our more than 30,000 LSE group colleagues who daily live out our mission vision of caring for people in need and communities we are privileged to serve throughout our country. I also want to acknowledge our recently published environmental, social and governance report that is available on our website. since our founding nearly three decades ago, our goal has always been to be an invaluable asset, responsible contributing citizen of each community we are privileged to be part of and sever well beyond being a valued community healthcare provider.

This new ESG report brings to light the many activities and actions our team members throughout the country have undertaken to provide an even broader positive impact and 1000s of communities. We are privileged to serve throughout our country today. Now I'd like to begin by providing some perspective on how our policy efforts and current legislative and regulatory activity are providing tailwinds that are shaping our business and that of the broader and home healthcare services industry in a very positive way.

We do 2021 as the beginning of a new extended period of perhaps unprecedented opportunity for LTC group. Important you due to the heightened awareness in the wake of COVID of our full range of capabilities. As a high performing in home healthcare services provide our organization with a national footprint and legislative and regulatory tailwinds including innovative waivers from CMS flexibilities for remote certification of homecare telehealth continued legislative relief from the 2% sequestration cut throughout the remainder of 2021.

And broadly supportive in supporting policies that aim to significantly increase access to in home healthcare services. As I mentioned on our last earnings call, we are encouraged by the current administration's plans to increase funding by up to $400 billion dollars over the next 10 years to expand healthcare services delivered in the home. In addition, in addition, at least one legislative trap circulating on the hill by Senator Casey tariffs aging committee, and Senator Hassan and others exceeds this goal by creating a new entitlement under the Social Security Act for home and community based services.

Among other things, this proposed proposal increases the Fed Medicaid Assistance Program, our F mat funding to 100% from home and community based services, and for the first time, proposes to nationalize a presumption for him home healthcare services. We are particularly encouraged by the administration, the Senate and the House is focused on ways to improve coordination of the traditional Medicare home health benefit with Medicaid and Home Services.

For decades now, proven and time tested. Innovative state Medicaid programs, such as the passport program in Ohio that you've heard me mentioned before, and the Oregon Health Plan, have given seniors the choice to age in place of being cared for in the comfort and privacy of their own homes as an alternative to more costly long term institutional care.

Our choose home legislation builds on the successful state programs, which are being seen as eligible for in home healthcare services as a first option, blending the traditional home health Medicare benefit with Medicaid non skilled services. We continue to build congressional support for this legislation and expect it to be introduced later this year. I would also point out that the proposed rules for fiscal 2022 related to hospice and elpac are also very positive for us, and will provide additional momentum later this year and in 2,000.2.

For more details on our policy efforts, and policy related focus areas, I would point you to the policy tailwind summaries we have provided on pages seven and eight of our supplemental patent. On January 8 2021, CMS formally recommended expansion of the home value based purchasing demonstration from its current nine states to a nationwide program. We strongly believe that given our proven capabilities as a national and home healthcare services provider, consistently delivering higher quality outcomes and patient satisfaction at materially lower costs, resulting in consistent incremental earned performance based incentives.

Expand expansion of home health value based purchasing would provide additional opportunities for us to leverage our proven efficient and effective in home healthcare services delivery model to drive organic growth share additional light on the significance of this opportunity. There were over 9 million attributed acio allies in markets lasd served through our current footprint of home health providers in 2000 points. Of these 9 million acio attributed lives. Roughly 925,000 approximately 10.3% received home health services in 2020.

We LFC group providing home health services to only 9% of those individuals that receive home health. From a provider performance perspective, however, la C was a top performer with an average home health and probation in excess of 18% below the average home healthcare for patients. And for all providers 1.4% below the average total cost of care for the entire 925,000 patients ever seen in home health. all that to say our proven ability to consistently deliver high quality outcomes and higher patient satisfaction and consistently low across Lower Falls across our footprint that currently serves over 60% of the population in our country.

We have good reason to be confident in our ability to significantly grow our market share as performance based payment models. A more popular and traditional fee for service models transition models that place a greater emphasis on objective objective measures of effectiveness, outcomes, quality and patient satisfaction and away from reimbursement models a solely on the volume of provider activity.

Turning to MMA, our active pipeline of acquisitions and hospital joint venture opportunities we are pursuing at this time, total slightly over 500 million trailing 12 month revenues with over 300 million are 60% of that amount being opportunities where we have currently an exclusive discussions with selling out the 500 million in trailing 12 month revenue. 71% is hospice 28% is home health. And the remaining roughly 1% is home and community based services on personal care.

With the amount of high quality and high probability, m&a opportunities in our pipeline today, and the overall m&a momentum we see at this point in early May. We are confident that we will surpass our budgeted target range of 150 million 200 million of acquired revenue in 2021. We also expect 2021 to be a record year for our hospice segment. As a result of the increased acquisition volume, of course, but also due to additional investments we've made over the past year in our hospice segment. Our commitment to hospice services as part of our continuum of care is nothing new.

How I gender and our founding clinical leadership team opened our first hospice location in 1998, which was co located in the same market as our first home health agency that opens just four years earlier in 1994. The vision of our clinical leadership team from day one has always been to provide hospice services in each community we serve as a part of our continuum of care with home health. With a higher volume of anticipated m&a growth in 2021 and beyond.

We look forward to making vehicle strides toward fulfilling our founding vision of providing home health and hospice as a coordinated continuum of care. In each community we serve suffering the significant advances we see on the legislative and regulatory front.

Combined with our continued organic growth, significant expansion and m&a activity of 9.1% year over year increase in admissions from our growing national network of physician referral sources, and hospital JV partners, in addition to a CEOs and payers of affairs demonstrate that we have managed through the COVID pandemic with a level of professionalism and dependability that has resulted in an even higher level of trust, respect and loyalty among the many patients family members, provisions, discharge planners, hospital partners, community referral sources and payers who collectively make up our customers.

Without question, today, we are a better, stronger, more agile and more responsive organization than we were at the beginning of 2020. Our experiences, lessons learned and improvements implemented over the past five quarters have created a new normal day to day operations throughout our organization that will continue to benefit our organization and more importantly the patients, families and communities we serve in the future. We will never rest on our laurels.

Never take success for granted. We are continuous learning organization committed to continuous improvement and a relentless pursuit of excellence. And all that we do at every level of disorganization every day.

And now I'll turn it over to Josh to provide more color on growth and operations and daily grind, more detail related to financial results and guidance before we began q&a, Josh.

Joshua L. Proffitt -- President

Thank you, Keith. And good morning, everyone. Thank you for your time this morning. I'm very excited to provide more details on our strong start to the year and while we are so bullish on our current operational and growth trajectories. Following up on these comments continued inorganic and organic growth, as well as increasing tailwinds from a legislative and regulatory perspective. Our perfect starting points for my prepared comments today.

Last quarter, we set the table for the strategies we have created to deliver differentiated growth in 2021 and framed up our near and long term growth potential. Today, I want to focus on how well we are executing on this growth potential, our confidence in the trajectory over the next several quarters and the strength of the sequential improvement. Ensuring we generate quality growth has been a top priority. And as you'll see on slide 10 of our supplemental Dec, we are delivering with joint ventures continued and sequential growth and episodic admissions continued momentum with bringing on new referral sources, and the continued build out of our couple locations strategies.

As highlighted on slide 11, and 12, we are pulling multiple organic and inorganic growth leavers to hit our objectives. In particular, the labors on earning chair from competition, executing on the CO locations, driving margin growth from jayvees and recent acquisitions, and capitalizing on the upside opportunities afforded in connecting with the movement to more value based reimbursement models, which I will touch on more in a few moments.

We've received positive feedback since last quarter on the data we provided on these slides to help model out the growth opportunities this year and going forward. With the exception of the m&a pipeline increasing 20% from the fourth quarter, those assumptions remained unchanged from q4. To put this quarter and the next several in the proper context, it's important to note that we are now past the one year anniversary of operating under pdgm and a year of living and operating within the coronavirus pandemic.

While those are two distinct events that have permanently altered our industry, we have used each as an opportunity to tap into our LFC group DNA to always learn from change and improve upon our clinical and operating models in ways that will always prioritize patient outcomes and satisfaction and proof, sustainable and valuable for years to come. Thank you so much to our frontline workers, and all of our quality operations and growth leaders and support team members all across the country for such stellar execution in the face of such historic change.

We are better today because of you. Let's shift gears now with some of our key metrics. The year over year comparisons are still a little muddied while the sequential comparisons. Despite three successive waves of COVID-19, including the most recent post holiday season surge are positive and more indicative of our underlying growth. This will likely be the last quarter where we break out the pdgm specific metrics because they have remained within a tight range of expectation in the last several quarters. Given how meaningful they are to our expectations for the year, I now want to spend a moment on our sequential trends.

Slide 14 and 15 show the progression over the last five quarters as well as March and April. We wanted to break down the last two months in particular because we overcame the post-holiday COVID surge in December in January. The number of clinicians on quarantines are on the first quarter in the eyes and snowstorms that occurred during the quarter. They will share more details on these trends on our key metrics in a moment. But I want to highlight in particular, the fact that despite all the headwinds, our home health admissions for the first quarter, were essentially flat with our q1 2020 admissions at that point, and all time high in lacs history.

And when you peel back the data a little further, you see a couple even more impressive indicators to our home health growth. One thing that our admissions per day in q1 this year were higher than they were in q1 last year. And to that our total home health admissions in q1 2020 was 12.4% higher than in q1 of 2019. So to be back on that pace, after having that hurdle rate for this quarter. With all the headwinds is a true testament to the growth momentum we currently have in our home health segment. We're also pleased with the fact that our hospital admissions are cracking above pre pandemic levels as well.

I would now like to share one additional option A nation that not only further speaks to our sequential momentum, but also provides additional evidence to the environmental momentum that is leading to more care shifting to the home. Although during the early months of the calendar year home health census has historically performed well and experienced growth, you would typically see it's starting to flatten out and then have a modest seasonal decline.

For example, in the non COVID year of 2019, for the 60 day period from the start of march to the beginning of May, our home health census decline from 78,003 20 to 77,000 107, for a 1.5% decline, however, this year over that same 60 day period, we've actually grown home health census from 85 994 at the start of March to 87 696, at the start of May, which is a 2% increase. Our full year guidance is based on achieving home health and hospice organic admissions growth of eight to 10%. Each. we've outlined in the quarterly breakdown of organic growth across the two segments on slide 15.

And we are on track to achieve these targets. The q1 admissions per day trend, particularly in March, after getting past all the headwinds, and again in April, give us the strong confidence to be very bullish on our second quarter trajectory, and thus the momentum we expect for the remainder of the year. One point I will make here is that hospice we have seen similar trends as others in the sector with average length of stay impacted during the quarter by the same headwinds, and the fact that patients are being discharged later from institutional settings.

And our percentage of referrals from ALS, iOS and smis are two to 300 basis points below pre pandemic levels. Since exiting the quarter, we have seen hospice length estate begin to stabilize. In addition to the Ph. D, and Medicare sequesteration extension that we'll discuss all these trends in home health and hospice give us confidence to raise our full year guidance. Our confidence is also based on how well we are performing and other areas too. In addition to the leading quality scores an increased amount of unique physician referrals, including nearly 5200 new physician referrals in q1 that we have highlighted in recent quarters.

I want to call out on slide 13. When our recruiting and hiring trends of men across our service lines, we've had two consecutive quarters in which we have hired a record number of frontline employees. While our turnover has continued to decrease. and home health alone we hired 19 116 new frontline employees this quarter, compared to 12 125 hired in q1 last year. These headcount statistics have a direct correlation and validation with our differentiated culture, continued census growth, and unwavering focus on patient satisfaction and quality outcomes.

Turning quickly to our inorganic growth leavers, I want to focus on our jayvees and acquisitions. As Keith mentioned earlier, we remain very bullish in delivering or exceeding against our target of 150 to 200 million and acquired annual revenue this year. Our m&a pipeline is now over 500 million, with several exclusive deals in various stages in negotiation and due diligence. The last topic I want to briefly touch on is our value based strategy which continues to benefit us as well as our partners and the players we are engaged with.

We have a unique assets and the right mix of quality based program innovation and rigorous clinical protocols to create care plans that deliver what payers need to reduce readmissions, lower length of stay and episodes, while improving the patient experience and outcomes. We continue to be the only one of our peers with an ACL management business and the unique insights that experience brings. The value we are delivering is also evidenced by the approximately 14 million in value based awards we earned in 2021. other point I would like to make on our SEO management business builds on what Keith described earlier.

There are over 9 million attributed acio lives in the markets we serve. of the acio attributed lives in the markets we serve approximately 10.3% received held held last year as we continue to harvest and educate on the learning from our value based arrangements and the learning from our acio management company's subsidiary and demonstrate the evidence base correlation between reduction and total cost of care and high quality outcomes. When appropriately utilizing care in the home. We expect that the size of the opportunity will also continue to grow beyond the current endpoint 3% utilization with more home health utilize for patients that are appropriate to be cared for with home health.

Now, I'll now turn it over to you so that additional color our results on our guidance.

Keith G. Myers -- Chairman and Chief Executive Officer

Thank you Josh and good morning everyone. We are pleased to report first quarter results that we're ahead of our expectations. Specifically, on a year over year comparable basis, net service revenue increased 2.3% to 524.8 million adjusted EBIT da increased 61.3% to 61.5 million and adjusted net income increased 86.7% to 43.6 million or $1.39 per diluted share. Our first quarter performance coupled with our exit velocity places is right where we need to be to deliver on our full year projections.

Our revenue was above the midpoint while adjusted earnings and adjusted EBIT da exceeded the top end of the range is your all the more impressive when you consider the significant headwinds we face from the post holiday COVID surge, the percentage of our staff on quarantine, the impact of the ice and snow storms and the related closure of 218 of our agencies for multiple days during February. But the detail we have provided in our earnings release and supplemental back I will spend most of my time on the key metrics and trends supporting our guidance and growth initiatives and then turn to our raise guidance along with our strong capital liquidity position.

I would first like to call attention to pages 14 and 24 in the supplemental deck, where we've broken out two key revenue factors for home health, hospice, home and community based service segments for home health. The sequential improvement in our revenue for Medicare episode continued through the first quarter, with March exceeding pre pandemic levels and April trending ahead of March. While the percentage of institutional admits was down this quarter, due to the resurgence of COVID, which caused softer hospital volumes.

We've seen this percentage start to climb back in April and believe this momentum will continue to do electric procedures starting to open up again. Our looper percentage on pdgm episodes continues to hold in line with their expectations of eight to 9%. In our case next will not get back to pre pandemic levels is improving. Josh mentioned it a moment ago but I want to dig in a little more into the hospice performance for this quarter. Similar to other hospice hospice providers, we saw a decline in our length of stay during the quarter from 79.6 days in q4 to 78.1 days in the current quarter.

We attributed this decline to patients being discharged from institutional settings much larger than in the past, and also to the fact that many patients are not seeing their primary care physicians as regularly as they used to, and consequently are being admitted to hospice much later in their disease states. Additionally, emissions from senior living facilities and sniffs continued to lag free COVID levels, a hospice EBITDA margin of 10 and a half percent, while up 60 basis points year over year, down from 13.2% sequentially in q4, primarily due to three factors.

One lower length of stay to the 70 basis point seasonal impact of higher payroll taxes, and 300 basis point impacts for how to period implicit price concessions. As we have communicated Previously, we believe the sustainable EBITDA margin target for this segment is in the 13 to 15% range, we expect incremental improvement is second quarter, while returning to the normalized margin range of 13 15% and the second half of 2021. Our personal care business experienced a decline in billable hours of 4.2% versus first quarter 2020.

We did see a sequential increase in billable hours of 1%. Despite all the headwinds presented in January and February. The biggest challenge for the personal care business remains staffing while stimulus checks continue to be mailed. Demand is very robust, and we're working several initiatives to increase labor supply and capture the unmet demand. Looking at the first quarter compared with the previous guidance, recall that we had called out the following differences bridging sequentially from q4 to this quarter. The seasonality we typically experienced around the holidays and the slower start to be here. We have in January.

The percentage of our clinicians on quarantine, which reached a high of 4.1% January, stayed in the range of two and a half to 4% the balance of January February, before dipping below 1% in March closure of 218 agencies due to severe while winter weather in February, affected revenue associated with new admissions managed care for visit patients and personal care of billable hours. Higher payroll taxes compared with q4, which were approximately 4.5 million higher in q4. And the lower effective tax rate due the excess tax benefit from the vesting of restricted stock which resulted in a tax rate of 21.4% for the quarter.

We also projected we would experience a disproportionate share of COVID expenses in the first quarter relative to the rest of the year. As you can see, from slide 14, we started 20% sequence Until the increase in the admission of COVID-19 patients in home health, then 34% sequential increase in hospice. This corresponds directly with the most recent COVID surge, and combined with a higher percentage of clinicians and quarantine, the higher expenditures for PvE medical supplies hazard pay and an increase in health insurance claims.

We had projected 8 million to 12 million of COVID related expenses for the first quarter, and we were right at 12 million. Looking ahead to the full year, we are still comfortable with our original guide range of 20 to 25 million for COVID expenditures and as incurred will be adjusted out of our results. We will revisit our COVID spend view at the end of q2 and communicate any changes to our estimates if applicable. Furniture the full year guidance outlined in our earnings release. Now on slide 30. at the midpoint of our new range, we are projecting 8.6% revenue growth 25.7% adjusted earnings growth and 43.6% adjusted EBIT EBIT now growth last non controlling interest.

Our core assumptions remain largely consistent with our initial 2021 guidance outlined during our q4 earnings call and documented in our fourth quarter of 2020. supplemental that updates to our full year guidance include our q1 operational performance and V uneven not an APS c sequestration waiver extension through 1231.

Extension of the public health emergency through July 20. Given we are still early in the year, helping with ongoing residual uncertainties related to the pandemic, we have allowed for a prudent level of caution in our guidance as relates to one the pace of elective procedure recovery to hospice length of stay in three personal care billable hours owing to labor supply constraints.

Lastly, I want to highlight our strong balance sheet. We have 556 million total liquidity, and that's net of the Medicare advance payments and the provider relief funds, the latter of which we previously announced we intend to return to the federal government. On that note, I will mention that on April 13. CMS began recouping the accelerated payments that were distributed last April. Details on the schedule those repayments are in our earnings release.

We intend to fully repay the advanced amounts along with provider relief funds before any interest will accrue or day sales outstanding increase to 57 days in q1 or down from 62 days in the first quarter of 2020. DSO is up sequentially from 52 days in q4. The sequential increase is directly related to the no pay rap implementation, which eliminated the remaining 20% of the request for accelerated payment. This CMS payment program adjusted the adjustment resulted in an impact to cash collections and cash flow of approximately $34 million.

Even with the impact of the no pay rap, our business has produced a robust $42 million of free cash flow in the first quarter. The strength of our liquidity combined with sustainable and strong free cash flow is a significant competitive advantage and the ability to execute on the wealth of growth opportunities at our disposal. We look forward to reporting our progress to you with respect to inorganic opportunities in the coming months. That concludes our prepared remarks.

Operator, we are ready to open the floor for questions. Thank you.

Questions and Answers:

Operator

Thank you. [Operator Instructions] The first question comes from A.J. Rice of Credit Suisse. Please go ahead.

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

Thanks. Hi, everybody. First, I appreciate the update information on the deal pipeline. I just wondered if you would comment on what you're seeing. I know a lot of those do sound like they're exclusive to you. But in terms of pricing dynamics competitive landscape, we're hearing about others pursue an activity that may not be new from your perspective, but I just wondered what your latest thinking is on the competitive landscape for details.

Keith G. Myers -- Chairman and Chief Executive Officer

I think the question is key. I'll I'll start by saying, you know from my perspective you know, there's To go on hospice Aviva start with that, so, so Hospice is, is competitive, but I do see, you know, I've seen multiple variation, depending on market. And, and then just concentration, you know, in certain markets and volumes. But for us, we look at it a little bit different, we're building out a continuum of care.

So when we looked at a hospice, knowing that multiples are going to be high, we're focused in markets where we have a significant amount of home health, because we know that we have volume to bring to the table, from our home health operations and from hospital partners. And so everything, obviously, all the acquisitions, we look at, we model out. But we'll also build that into our models as we look at it. So multiples are high.

And in some markets, you know, we have, we can model out the combination and make it work nicely for us. And others, we just have to walk away from the dashboard. And Okay, thank you, thank you very well said, I mean, I have the ones AJ that were, you know, currently working, many of them fit the exact mold, but he just described. So I would just, you know, reinforce our history of discipline, you know, due diligence, rigor, all the things that we're known for in the bills that we do close, and then we execute upon.

And even with, you know, somewhat higher multiples on some of the transactions, we're still going to be ensuring that those deals have growth potential and outside, and we're not just you know, acquiring a static business, or one that doesn't have a lot of upside and growth in it. So I feel really good, AJ, about what we got going on in our pipeline.

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

Okay, that maybe for the follow up question, it seems like referrals, and this seems like it's for both businesses, home health and hospice, are from snap senior housing, that's the one area that is still sort of depressed, relative to pre COVID levels.

I guess it's probably two dynamics there. One being sort of a census in those facilities at this point is depressed and hasn't fully come back and may not for a while, there's also just getting access to the facilities. I wonder which of those Can you parse out is? Is it really just the sensors and data come back? Or is there some element of getting access to the patients that says reopened?

Joe? Yo, you'll see some pickup and then can you comment on? I would think in home health, at least you might see the referrals, coming from other sources, all these new referral sources you're getting, so maybe those that buy in, they would have come to you from those sources coming elsewhere. But is it more of a home health issue or a hospice issue? You'd say, what were you seeing with those senior housing properties?

Keith G. Myers -- Chairman and Chief Executive Officer

Yeah, so Josh yakattack, came out again, together. Let me just start with home health, with home health. You know, we're looking at a lot of data from hospital partners. And we feel that we're getting a lot of patients that were previously gone to snip that just come in directly at home. But we can see that we're dealing with a higher acuity patient population, that are being discharged from hospitals.

And, you know, we assume that these are the patients that were on a snap and have been straight to Home. Hospice is a is a little more difficult. I mean, we're I know, we're seeing some of that in hospice as well. But But I don't know, I don't know if we have enough data to be less certain about that as we do at home now.

Joshua L. Proffitt -- President

Yeah, so I would say, AJ, it is, it's some of both, you know, sensors and the facilities. It's a diversion around the facilities, which Keith has mentioned, and access on the access issue, I will tell you, you know, talk with our, you know, growth leaders quite regularly just to see how that's going. And I am encouraged that that seems to be getting better and better almost by the week, you know, as, as we, you know, have more adoption of the vaccine throughout not only our workforce, but in the markets where you know, we have stiff relationships.

So so I am saying the access gets better week over week. I'll give you a few data points. It just really kind of drove home the point you're making. For home health. We're down about 350 basis points of the percentage of our referrals from sniffs So if you want last year, my 11 and a half, or 11 and a half percent, and we're about eight and a half percent right now, on the, on the reverse, we're up 300 basis points on physician referrals. So a lot of what we've been talking about on the new referrals coming from physicians.

So I think the diversion around some of the congregate settings is not only, as Keith mentioned, coming directly out of hospital, but also coming from the community from some of those new physicians we've been able to develop. And then on hospice, we're down about 300 basis points there as well, when you look at sniffs ALS and iOS now for about 11% q1 last year, so right around 8% this year.

So the good news with all that AJ is if you know the as the the trends improve, as the census levels increase as the app access improves, then if we can continue to stickiness of those new physician arrangements, or hospital electives are mounting back, and then you throw in a increased trajectory from you know, sniffs aisles and aisles. That gives you a lot of confidence in the growth and you know, the last three quarters of the year.

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

Okay, great. Thanks a lot. v

Keith G. Myers -- Chairman and Chief Executive Officer

Thanks.

Operator

Next question comes from Scott Fidel of Stephens, please go ahead.

Scott Fidel -- Stephens -- Analyst

Hi, thanks. Good morning, everyone. First question, just wanted to go back in the fourth quarter, you have provided us with a really helpful bridge from four q two to Q 21. In terms of drivers of revenue and EBIT, da, just wanted to just get your sense on you had called to have a target to get 550 million in revenue by two Q. You 100 9 million worth of headwinds from Medicare sequesteration and a PAC that that now has been extended.

So just interested, you know, when that that target laid out for the 550 million in revenue, and then more specifically, the three segments components that you have sort of called out, you know, for the home health, hospice and HCBS in terms of the the growth that you're anticipating, and how you're feeling about each of those buckets at this point, relative to one good, has initially provided that in the fourth quarter. `

Keith G. Myers -- Chairman and Chief Executive Officer

So thanks, Scott, for the question. This is Dale. Yeah, we feel very good about the bridge that we put together from q1 to q2, we're still right on that trajectory. The only differences that would update to it would be the change in sequence duration and PHA extension, right. So when you look at that, you look at the bridge we provided you look at those changes. And you can see where we're now we're looking at a jhana adjusted basis with that. So I think everything's set up really well for that, I would say in terms of the three segments to really good about home health, the exit velocity out of q1 was extremely strong.

And I'd say we're probably looking at some overperformance on them going into this bridge, a little bit of underperformance and hospice, because of the length of stay challenge, right, that's been something that's kind of come up with everyone. We're not as directly impacted by it, as we're not as exposed to the senior living facilities from an emissions basis. But as john said, We're from 11%, emissions down to eight. And that affects our length of stay.

So that we still feel good about hospice, we feel like the margins are going to be in the 11 to 12% range for that. But that's probably a little softer than than what we had projected. And I'd say personal care business. Again, I'd say a little change there, maybe, I mean, we expected that business to have the most difficult climb back from the pandemic, because of the the labor supply and things like that. So I think we had tempered our expectations in q2 quite well for that. So I would say, you know, we're pretty much in line with that. But when you put that all together, we feel very solid about the q2 Bridge.

Joshua L. Proffitt -- President

Yeah, Bill. And Scott, this Josh, maybe the only other two kind of beta points, I would give you time back because specifically on home health, since that's, you know, the lion's share of the bridge, we had signaled we needed to home health sensors to be at 75. And as I mentioned in my prepared remarks, we're already north of that. And we've been, you know, between 87 five and you know, knocking on the door of 88,000. Now for the better part of the last two weeks, which you know, gives us a lot of confidence into that.

And then if you look at our admissions per day run rate, so the sustainability of that census, our admissions per day are higher than they've been ever so last Do you want to have last year pre pandemic, we were just under 1200 admins per day in home health. And now we've had two consecutive months of north of 1200 admins per day in home health. So you've got to really like where we're at census and the admission throughput that we're having. tried it a good caller on that.

Scott Fidel -- Stephens -- Analyst

And then, just as my follow up question, I guess, would be more of a strategic question around positioning around some of the policy dynamics. And, Keith, I know you've, you've called out, you know, the proposed enhanced 400 billion in a CVS funding and Medicaid that Biden's proposing.

And some of the other things that I'm interested in for for Lh CG, how you would think about the best way to position for this if, if that spending ultimately is passed, or something even even close to that, with the strategy needed to ramp up more of your direct PC exposure capability, through Medicaid funded HCV actual or you're ultimately looking at trying to drive more on the policy side toward ensuring that Medicare providers are are eligible for for a lot of that funding as well. Just just trying to get sort of how you're thinking about it, I get those two different sort of strategy elements relative to this enhanced proposed funding?

Keith G. Myers -- Chairman and Chief Executive Officer

Yeah, it's a really good question. So you know, right now, where we're focused on, on trying to see that we're trying to bring the two programs together, gather Medicare, and Medicaid. We know, we know, that combination, how that works, well, improvement and other state models that we're very familiar with. So it's easy for us to plan in that direction. You know, with the 400 billion that's proposed and spending, it's difficult now, because, you know, there's a number that's out there, but there's not a lot of detail around how it's going to be structured.

And, you know, it could mean a lot of things, you know, we don't know how much union activity is going to be involved in that. You know, so I think we're, we're taking a we take a conservative approach and everything. So we're staying very close to it from a policy perspective. And, and we're just gonna evaluate it as there's more color around. I'm not opposed to are not ruling out expansion into more expansion into personal care services. You know, we think that's a vital service.

It's been the most difficult one for us to manage, because of how it how it's delivered, is there's a different program, every state different rates are to, you know, have stable staffing part, you know, all those sounds. And, and we're not big risk takers. I think you all know that.

So, I would say that we're keeping a close eye on it. And, and, you know, if there's an opportunity there and the risk profiles, good enough for us, we'll move in that direction. But for right now, we're spending the majority of our time trying to work toward the coordination of Medicare and Medicaid Services together. For for patients in through this choose home legislation or anything structured remotely similar to that.

Operator

The next question comes from Mr. Justin Powers of Deutsche Bank, you may go ahead.

Justin Powers -- Deutsche Bank -- Analyst

Thank you for the steam introduction operator. Hey, I, I want to just kind of follow up on ages and Scott's questions and ask it a little differently. But if we take your, your 20 your to Q bridge, and, you know, add back to sequesteration in the PHP benefit, and annualize that, just just run that out for the next three quarters. We did at you know about 234 million of EBIT da you take your one to print of 61 and a half that takes us to like 295 296 right in the middle of the current guide.

And it sounds like you're tracking now. Like you You know, slightly above the pace for to queue or at least feeling good about that. Are we thinking about that the right way? And is it fair to say it's kind of your April, census kind of holds for the rest of the year that, you know, you're right at the midpoint of the guide with maybe a little upside of things improve? Is that my oversimplifying things there?

Joshua L. Proffitt -- President

Justin, This is Dale, I don't think you're oversimplifying. I think this is how I would sort of look at the guidance at this point in time. Right. So midpoint, the midpoint, we've raised revenue 10 million, and we've raised eat that that's 41. Right. So let's, let's talk about the revenue context, there's three things we're keeping our eye on, we really related to the residually from the pandemic, and one is pace of elective procedure recovery.

If you think about our guidance from the beginning of the year, right, we, we have assumptions around elective procedure recoveries, we had half the length of stay assumptions, and we had, you know, personal care, bullet billable our assumptions in there. I think we're all still seeing some slowness around the pace of elective procedure recovery. Obviously, we all understand that dynamic around the hospital length of stay right now.

And that's the one thing that that we're keeping ourselves a bit of caution around, as we look forward, we expect it to come back. But you know, timing of that is, is a little variable. And then personal care, billable hours, same thing, right, slower to recover. So when you look at what we originally guided, from a revenue perspective, we're pulling back about 10 to $12 million of revenue around those three data points. And letting q2 play itself out, see how those indicators start to play out for the next 2332 to three months before we are our view of that we think it's an appropriate stance to take.

But when you look at the margin, I think you're right on in the margin, right, our margin print was really strong in q1. And that was evidenced by our q1 results. And that showing up firmly as flowing through in our guidance, right, so we've got the full margin, flow through in there, despite holding back about 10 to 12 million of revenue. And, Justin, this is Josh, and, man, that was a pretty impressive introduction. So maybe I need to talk to the operator, see if they can introduce us that way.

That was pretty good. But well, I had is, I really want to put a fine point on what I said my prepared remarks around the fact that during what is traditionally a seasonal decline, flatness to decline, over the months of for the end of March and into April, and then as you get an amazing boom, and you're in the kind of that late spring summer. And I mean, I went back and looked every year from stop looking at 2014, just because it proves itself out every year.

You've seen that kind of trend, what we're seeing now we've had a 2% growth in our census, when historically wouldn't have done that. So I think your point is very well made that if that were to continue, and now that's an IV because we're living in a new normal. But if that were to continue and census continues to increase throughout those months, then I do think you do have some potential for upside there. I don't want to, you know, make that in just yet. But that's another reason. I'm pretty bullish. Got it, and then maybe just on our follow up on home health and some of the nuances in the volume there. Can you one, you're seeing like an APR, it's it's pretty obvious to the activity is increasing there.

Justin Powers -- Deutsche Bank -- Analyst

Along with the institutions, is that is that more? Is the institutional side? Is that all hospital or is it some of the other modalities? And then is there a way to help us think about, you know, the deferred and kind of elective volume, maybe from four to 212. And, and I know it's early, but how it's how it's trending now. And I'll just, I'll hop back into after that.

Keith G. Myers -- Chairman and Chief Executive Officer

Yeah, so this is Dale get? I'll take that. Yeah. So when you look at the sort of bounce, first of all, always say as the APR, we want to give you guys as up to date indicators as we can. The caveat and the footnote is, you know, on the pages, it's an estimate, we're not close with APR at this point. So we'll make that caveat. But obviously, we're very encouraged by what we're seeing during the closed process here. But I'd say the the uptick in the institutional is probably some of the rebound. That's Coming around hospital, I mean, their volumes, I think are starting to recover.

So that would make sense in line there. When when you look at the your question around the electives, I mean, I think this is pretty well known, but I think we view it the same way. We're at about 75% of pre COVID volumes around the lactis. And, you know, we fully expected that so that to get back toward pre pandemic levels over the course, of the balance of these three quarters, probably more a little more heavier in the back half of the year. But for us, about 10% of our emissions come from, from the elective procedures. So that's about 250 basis points of opportunity for us that as that process comes back of those volumes, come back that are, you know, additive to us.

Justin Powers -- Deutsche Bank -- Analyst

Understood. Thank you.

Operator

The next question comes from Brian Tanquilut of Jeffries. Please go ahead.

Brian Tanquilut -- Jeffries -- Analyst

Hey, good morning, guys. Joshua, nice follow up, or I guess, yeah, I'll follow up on the comments on margin. So obviously, pretty strong this quarter. As we've seen visits, kind of like bottom out, it feels like that's 12.6 visits per episode. How are you thinking about where that lands once Lupin normalizes? And, you know, how are you thinking about that pace of recovery?

Joshua L. Proffitt -- President

Yeah, Brian, good morning, I would say you know, the 12 and a half to 13 is now been pretty sustained and pretty consistent. And what we would have expected in our pdgm modeling for the patient population and the acuity that we were seeing, as we see casemix increase, and as we see patient acuity go up, I think you could see, I don't necessarily want to call it a rebound, because I think it's appropriate where it's at. But as you see more, you know, post elected post surgery, you might see that go up to 1313, and a half.

But you know, as we've said before, when that occurs, case, mix goes up, and the revenue comes with it. So I still feel very confident about the margin throughput. Under each of these, we've got some sensitivity analysis that we've done on visits per episode and how it relates to the different HHR G's and the comorbidity stack and what all that looks like. So as the VP word a tick up, you know, the the margin would still be sustainable in that way. So I feel really good about that.

And then the other thing I have to mention, as we're talking about VP, is, you don't want to give a cat tip, no doctor, no gay and you know, AMG and our entire clinical leadership team, as well as our operators that have just unwaveringly not taking their eye off the ball on our quality outcomes, star ratings, patient satisfaction, throughout not only pdgm execution, but the pandemic. And we continue to monitor those results monthly and feel really good, you know, how we're facing there as well.

Brian Tanquilut -- Jeffries -- Analyst

And then that's just a follow up to your point on on ABC. First census being the driver, right, so as I look at your admissions transfer the quarter, versus what ADC trends were, and as I think about pushing that going forward, where do you see the research rate movement going? Will we be able to sustain this elevated levels of research? Or is it just the new normal post? pbcm?

Joshua L. Proffitt -- President

Yeah, I think, Brian, our restart rate somewhere around 36% or so I wouldn't necessarily say that elevated, there was a little bit of elevation earlier on in the pandemic, if you go back and look at it quarter over quarter, but you know, 35 to 38% or so is about what we would expect and about what we would you know, run. So I think that's pretty solid. So if your length of stay and your, you know, restart rate is, you know, pretty stable and solid, then you're just looking at the correlation between the admin throughput and the census.

Brian Tanquilut -- Jeffries -- Analyst

Got it. Okay.

Operator

The next question comes from Matt Larew of William Blair. Please go ahead.

Matt Larew -- William Blair -- Analyst

Hi, good morning. I just wanted to talk a little bit on your comments on the m&a pipeline. I think you mentioned that that's largely creating more overlap markets, maybe could us confirm that that's where the majority of the pipeline is versus anything you've seen on the footprint expansion side. And then are you starting to see anything sort of pdgm related start to pop up? You know, in any of your discussions are returned from the inbounds you saw before all the care thoughts are flown out.

Keith G. Myers -- Chairman and Chief Executive Officer

Yeah, Matt. Good morning. I would say on both of those that, yes, and yes. So the majority of the acquisitions in the pipeline, especially those that were, you know, pretty far along in our, you know, diligence and discussions are more overlap, either, you know, colocation overlap, which is the strategy that Keith described earlier, or, you know, just market density opportunities in the state that we currently operate. There's not a lot of geographic expansion or, you know, footprint growth in that kind of a way. And then, on your second question, which was, remind me again, that the second point that I said yes to already?

Joshua L. Proffitt -- President

Yes, you're just, you know, you had mentioned, pre COVID, that you were looking for pdgm opportunities come and just started coming back. Yeah, no, I'm glad you did ask that one. Because if you look at our pipeline right now, and even if you look at the difference between what we reported last call, and this call, there is an uptick in home health in the pipeline. So last call, it was, you know, 80 or so percent waited for hospice, and now it's 70 or so percent way for hospice about 30%. Home Health.

And you know, even this week, we've had to inbounds us on, what I'll call, you know, small to medium sized home health opportunities that were already kind of modeling and looking at so definitely since then seen a uptick in home health specific activity over the last two months that we were not saying do in the fourth quarter.

Matt Larew -- William Blair -- Analyst

Okay, that's helpful. It's a question on the hiring side, you know, obviously been sort of hiring your record numbers to try to meet record demand. But I'm curious, is the availability of some of these clinicians? Is it in any way related to other providers, you know, not paying COVID bumps may be a reduction in some of the travel payer bonuses that staffing agencies might have been using? Just curious if there's any sort of, you know, different supply side dynamics that are, you know, sticking up with with your hiring?

Keith G. Myers -- Chairman and Chief Executive Officer

Yeah, that's a hard one to answer. No, I can, you know, speculate and give you my gut on it, which I think it, you know, might be some of a lot of things. You know, I still continue to believe that, you know, just the, the flexibility and, you know, the type of work we do is very attractive. And then when you're doing it in a pandemic setting where everyone is just, you know, going through fatigue and burnout throughout all levels of settings of healthcare.

Yeah, I think we are a, a good place for a lot of the clinical workforce. But But I, I want to spend maybe more time talking about just our processes and what we have really focused on and improved over this last year. From the efficiency of our onboarding and orientation process, to the way we you know, more closely monitor our speed of higher metrics.

We've got daily top line reports that go out all throughout our operations and sales teams, for their open positions. And the velocity of hiring, we've had back to back quarters that just keep jumping themselves in the higher number of being historical highs. Last week alone, we have the strongest week in the company's history. So we were watching this one closely, and had just another record week last week in hiring.

So I'm really I didn't know we would meet here by frankly, Matt, we, we put a lot of process in place we added to our talent acquisition team, most of the leadership and at the kind of tactical level, and you know, in hopes of building up capacity for growth, but honestly, we're a little bit ahead of pace from what we would have expected to do. The next question comes from Frank Morgan of RBC capital markets, please go ahead. Good morning. I guess I wanted to stay on the m&a side for just a second.

I think when I hear your numbers of five day increase in dsos and $34 million dollar, you know, use of cash from the whole rap elimination. You just got to think it's going to hurt at some point. So I guess, is it the deals these recent deals that have come in or are people talking about that or people talking about what happens after sequesteration ends? I'm trying to figure out what scares mom and pops enough to actually want to, to actually consider selling your assets.

Eric Elliott -- Senior Vice President of Finance

Yeah, I mean, I think on on home retirement home health, primary Yeah, yeah. Yeah. So, you know, I think the, I think the decisions of home health of mom and pops the sale was made in 2019. And then the COVID pandemic, and the stimulus money here, you heard us say this, and they were all saying the same thing. I mean, I think it's true, you know, provided some relief and postponed, you know, that they're the urgency. But, you know, there's just so much changing in the way home health is delivered.

And, and I mentioned, in my prepared comments about value based purchasing, that's a really big deal. You know, when, when I look at the, you know, at our data, and I'll see how far we're outperforming home health agencies that are getting 91% of the business, in places where we are, that's just, that's gonna get found out and brought to light. And, you know, so to take that home health agencies from where they were, and how they were operating.

And really, as a cash cow, probably we're living out of, I just think that decision to sell is, is just as just in May. Right, and, and so now, we're just their long term view. I mean, I want to let me just say a couple other things, this, this, probably two weeks, you know, and I don't want to mention any names and stuff. But there are people that, you know, that that started these, like gender and ideas.

And, and they grew them to a certain level, not at the end, these are real, I'm thinking of really, people now that I know, that we're talking to them didn't have the good fortune to end up in an LLC type situation, but they grew a good business started from something from something very small. And so they don't have any debt. And so it's their nest egg that they're going to retire at. And so, you know, their late 50s, mid 60s, and, you know, just just looking to move on. And just think is that is that simple.

Matt Larew -- William Blair -- Analyst

Gotcha. In the midst of the backlog, is that more a function, or the size of the deals in total on the hospice side? Are these just like larger deals and therefore represent a larger percentage? How would you characterize the backlog from that perspective? Yeah, so that so the hospices that, that we have in the pipeline now aren't of that of the park, the con that I just described, the ones that we're looking at now we're more invest our own, where our investor back.

And so they've done quite well, with them to a point in this in the in the five to seven year window, where they're going to flip out of it and, and move on. So, you know, we're not. They are some of the hospices that fit in them. The other model that I described, that our relationship type deals, the ones in our pipeline now or don't think, right, yeah, just a couple small but significant ones on.

Keith G. Myers -- Chairman and Chief Executive Officer

Yeah, and on the size question, Frank on the hospice deals, you're right, they are no little chunkier. You know, ranging, you know, from medium size to, you know, pretty good size for us on the Home Health. Those are, you know, I would say more smaller to medium size, as we're, you know, consolidating that for pdgm, as we just discussed. Gotcha. And then the last one here, just obviously, you had management viewer already commented on Brian's question about the, you know, the visits per episode is beyond visits per episode, is there anything in terms of labor mix, substitution labor between nurses and lpns?

Or, you know, eating any mix opportunity left in the cost of labor, the cost structure or from here is PGM, which is a function of refining coding, and with more top line, thank you. Yeah, Frank, I would I would tell you that, you know, you know us quite well and we've been, you know, very public with our LPN, Rn, MCs and rpga pt MCs. And, you know, we continue to feel like we are operating very effectively there and efficiently and has monitor those metrics, has the VP had, you know, evolved through pdgm.

But again, you know how to, you know, sound like a broken record going back to all of our preparation work before we executed on pdgm. But, you know, we knew what those were going to look like before the calendar flip to 2020. And the team has executed quite well. So I wouldn't say that there's a lot of upside, or, you know, further improvement, there were still you know, 45% or so, mix on LPs, and probably 50 55% on PGA. And Frank,

This is Dale, what I would say we grow the opportunity is, is around contract labor portion. As Josh mentioned, with us, you know, the strong hiring strong retention,

You know, we're starting to create, you know, in our clinicians off quarantine or capacities starting to get back to where we were very comfortable within. So that creates an opportunity to displace some of the more expensive contract labor, we're a little bit overweight and contract labor yet and home health and hospice, that it's gotten better and altech. But we feel that we're at a pivot point where it's starting to get better for us. Yeah, that's a prank. I mean, isn't that a mix?

So we're talking about visits, per per episode, I think it's time for us to start talking about how the delivery model came as a result of pdgm. And then, and then was also influenced by COVID. So when we think inside la FC group is so so you know, we we don't we talk about this. But we make focus on on patient and talents, and minutes, minutes of time with patients. So our patient encounters, and the time that we spend with patients is at an all time high.

But we're only having this discussion around around business, empathy, you know, what I think makes it would make it easier for all of us non clinicians to understand is, how differently we functions today, post COVID. And how we have virtual meetings, if someone would have tried to convince us that there was value in a virtual meeting two years ago, not many of us would have, would have thought that made much sense.

But today, we're, you know, a significant amount of the time that our nurses and with patients are, or through telehealth, and those are all in addition to the visits we're making. So at some point, we're going to need to bring that up, keep talking about just as it gives the impression that we are spending less time with patients in the spa. And we're actually not, you know, we're spending more time so how are we going to communicate that market? tracking?

Matt Larew -- William Blair -- Analyst

Okay, if Let me ask one, follow up. So what's the difference between a visit and in an encounter? Did you get to count things like telehealth for other things to create the encounter? And then I'll hop off? Yeah, so so these are not things that we put on a cost report. And, and so you know, we've always put visits on. And we've talked about home health in terms of visits.

Keith G. Myers -- Chairman and Chief Executive Officer

And we honestly didn't do much of this much of this pre COVID. And, you know, pre pdgm or pre COVID, they will happen at the same time. But But now, you know, we we monitor all encounters with patients. So, in the past, if, if a patient at some, you know, had some issue, and spent 30 minutes on the phone with a nurse during the course of the day, let's just say five years ago, that wasn't something we would have practice. And today we track all of that. All of that, as part of a encounter time with with patients is just to learn how the models work. It doesn't have any financial impact or so that we can bill for anything.

Matt Larew -- William Blair -- Analyst

Okay, thank you.

Operator

Last question today comes from Kevin Fischbeck of Bank of America. Please go ahead.

Kevin Fischbeck -- Bank of America -- Analyst

Hi, thank you, I guess for sticking around. I appreciate taking the question here. So I guess the follow up is on the I guess the forgive marks that choose home legislation that you seem to be even more I guess come fidelity could be introduced this this year. They know if this past way, which we don't know, like, maybe next year if things go right. Or maybe this year, I don't know, if you can talk about kind of the timing of things.

And also, more importantly, you know, this is probably increased the sniff at home benefit, essentially, you know, how big of an opportunity Could this be, you know, for the industry and the company kind of any way you could frame it for us? I mean, obviously, you have a decent exposure in personal care. Right. But can you? Would you acquire more of these assets? Or would you partner to be able to kind of implement this in your market?

Keith G. Myers -- Chairman and Chief Executive Officer

So, we start with this question about, you know, choose home. You know, we let the model is nothing new, it's, it's, it borrows from Oregon Health Plan and the passport program in Ohio To be quite honest, maybe as a little more skilled side to take higher acuity patients. But, you know, so when we proposed it, I think we were surprised by the receptiveness to it. And I think the reason that we've been surprised by the positive wave of reception is because of the COVID experience, we all just went through, it shined a light on the need to have an alternative to, to institutional care for that patient population.

So, you know, so we're building champions on the hill, and both on both the House and Senate side. And that is exceeding our expectations, recency bias techniques. Pretty conservatives always plan for the worst. But the surprise that the champions that are getting behind this, but I just think it's the right thing at the right time. So, so I am pretty confident that it gets introduced later this year. Now, where does it go? Does it doesn't get passed?

I just I just don't know. So that's where I am on, you know, on the legislation. I mean, every all policy in Washington DC right now, if you show up in wants to talk about ideas to shift care, to the home, everybody wants to talk to you, and make a lot of it has to do with, you know, just the COVID experience. But But I'm sorry, but the second question about if it does pass was sitting at home?

Joshua L. Proffitt -- President

Yeah, what was popping his opportunity to write? And then would you would you need more personal Kurt, I guess, coverage? to do that? What would you have to you know, oh, no partner. So, so we would have to have more personal care activities, because the fuse home legislation incorporates, you know, an element of personal care with the traditionals, Medicare skilled benefit. So and I would say, and, you know, in markets where our volume is lower, we would, we would probably con contract with a personal care provider if we didn't already have that service in that market.

But in, in larger markets,let's just say, like a Dallas market, where we have the thr joint venture in that kind of market, who would probably acquire or build personal care, you know, just just economies of scale, you know, volumes and make the market. You know,

I think, in the regular home health model, you know, without this combined service, we have proven out that 40% of the patients being admitted to step 50 cared for at home with just a traditional home health benefit.

And we were doing that already. So, when we looked at this benefit, I think we're, I think we're talking about another 30 or 40%. So 70, which, which means, you know, 70 to 75% of patients that were going to sniff you know, two or three years ago Could be cared for in the home setting with a combination of those services.

Kevin Fischbeck -- Bank of America -- Analyst

Great, appreciate the call that gets on and here is the only time Thank you.

Keith G. Myers -- Chairman and Chief Executive Officer

Thank you.

Operator

This concludes our question and answer session. I would like to turn the conference back over to Mr. Keith Meyers for any closing remarks.

Eric Elliott -- Senior Vice President of Finance

Thank you, operator. As far as closing remarks, just as always, thank you for for your questions. Thank you for participating in the call, and know that our management team will always be available to you between calls contact Derek Elliot, and if you'd like to speak to myself, Dale or Josh, will, will set time aside and we'll be glad to speak with you and ask any questions you may have.

Operator

[Operator Closing Remarks]

Duration: 81 minutes

Call participants:

Eric Elliott -- Senior Vice President of Finance

Keith G. Myers -- Chairman and Chief Executive Officer

Joshua L. Proffitt -- President

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

Scott Fidel -- Stephens -- Analyst

Justin Powers -- Deutsche Bank -- Analyst

Brian Tanquilut -- Jeffries -- Analyst

Matt Larew -- William Blair -- Analyst

Kevin Fischbeck -- Bank of America -- Analyst

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