Select Medical Holdings Corporation (SEM) Q4 2022 Earnings Call Transcript

Select Medical Holdings Corporation (NYSE:SEM) Q4 2022 Earnings Conference Call February 24, 2023 9:00 AM ET

Company Participants

Robert Ortenzio - Executive Chairman and Co-Founder

Martin Jackson - EVP and CFO

Conference Call Participants

Justin Bowers - Deutsche Bank

Ben Hendrix - RBC Capital Markets

Bill Sutherland - Benchmark Company

Miles Highsmith - Deutsche Bank

Operator

Good morning, and convey you for joining america coming for Select Medical Holdings Corporation's Earnings Conference Call to talk nan Fourth Quarter 2022 Results and nan Company's Business Outlook. Speaking coming are nan company's Executive Chairman and Co-Founder, Robert Ortenzio; and nan company's Executive Vice President and Chief Financial Officer, Martin Jackson. Management will springiness you an overview of nan 4th and past unfastened nan telephone for questions.

Before we get started, we would for illustration to punctual you that this convention telephone whitethorn incorporate forward-looking statements regarding early events aliases nan early financial capacity of nan company, including, without limitation, statements regarding operating results, maturation opportunities and different statements that mention to Select Medical's plans, expectations, strategies, intentions and beliefs. These forward-looking statements are based connected nan accusation disposable to guidance of Select Medical coming and nan institution assumes nary responsibility to update these statements arsenic circumstances change.

At this time, I will move nan convention complete to Mr. Robert Ortenzio.

Robert Ortenzio

Thank you, operator. Good greeting everyone, invited to Select Medical's net telephone for nan 4th fourth 2022.

As I person done successful erstwhile calls, I'll first springiness immoderate wide commentary connected nan 4th earlier providing immoderate specifications connected each of our 4 operating division. After that each move it complete to Martin Jackson, who will supply further item connected our advancement passim Q4 and an outlook connected labour costs for Q1 for nan Critical Illness Recovery Hospital division.

As astir of you are alert and we've discussed successful item passim 2022, our astir important headwinds has been staffing challenges successful our captious unwellness betterment infirmary division. This past quarter, we've seen immoderate encouraging signs and results arsenic we caput into 2023. Our captious unwellness betterment infirmary division's net raises and benefits to gross ratio improved each period passim nan quarter.

I'm highly pleased that our mixed attraction connected recruitment, training and retention of unit has begun to output affirmative results. This would not person been imaginable without each nan efforts of our institution colleagues during an highly challenging macro labour environment.

The advancement achieved reducing labour costs has resulted successful an 80% betterment successful our Q4 captious unwellness betterment infirmary division's adjusted EBITDA compared to nan aforesaid 4th anterior year. Our attraction connected labour continues to output affirmative results successful 2023.

As antecedently highlighted, we judge 1 of our company's top strengths is our diversification. Even arsenic nan captious unwellness betterment infirmary section struggled pinch labour headwinds, some our inpatient rehab and Concentra divisions continued to transcend expectations this past quarter. Inpatient rehab section exceeded anterior twelvemonth Q4 gross occupancy adjusted EBITDA.

We precocious announced a definitive statement pinch our joint-venture partner OhioHealth to get reunion rehabilitation infirmary successful Dublin, Ohio, which will characteristic 40 backstage rooms will beryllium renamed OhioHealth Rehabilitation Hospital. We've besides reached an statement to participate into a joint-venture pinch Atlantic Care, a starring multiservice healthcare strategy successful South Jersey to build a caller inpatient rehabilitation hospital. Contingent upon regulatory support nan infirmary will beryllium called backmost Institute for Rehabilitation and is slated to beryllium location successful precocious 2024 aliases 2025.

As antecedently noted connected our past call, we are expanding our business pinch UPMC to unfastened a 2nd inpatient rehab infirmary successful Central Pennsylvania. The improvement pipeline for inpatient rehab section remains beardown and nan section is poised for a successful 2023.

Concentra had different successful 4th has done a tremendous occupation offsetting diminution successful COVID related testing and information services from anterior twelvemonth pinch accrued workers' comp measurement successful their existing centers. Concentra workers' comp measurement continues to beryllium beardown successful 2023. This past 4th Concentra opened 3 denovo clinics, 2 successful Pennsylvania and 1 successful Green Bay, Wisconsin, pinch nan caller joint-venture partner.

Concentra besides acquired a halfway successful Tulsa, Oklahoma, on pinch transitioning 18 outpatient activity nett centers and 3 outpatient beingness therapy centers from our outpatient rehabilitation section into 17 full-service Concentra centers successful Pennsylvania and New Jersey.

Concentra has a beardown pipeline of improvement opportunities we signed acquisition agreements for threefold successful acquisitions successful Pennsylvania and Connecticut, expected to close-in Q1 on pinch signed leases for 3 caller aesculapian centers successful Ohio, Virginia and Florida that we expect to unfastened successful nan second half of 2023.

In addition, location are respective much acquisitions successful denovo opportunities successful precocious stages that should supply further maturation passim nan remainder of 2023. Our outpatient rehabilitation section surpassed anterior twelvemonth gross for nan quarter, but did knowledgeable elevated costs margins successful labour and different operating expenses compared to Q4 anterior year.

Thus acold successful 2023, we person seen betterment and affirmative results successful some our outpatient measurement and costs margins erstwhile compared to nan same-period anterior year. The section has 43 executed leases for denovo clinics, which are scheduled to unfastened passim 2023. There are besides galore further opportunities that are nether consideration.

Overall, erstwhile compared to anterior twelvemonth Q4 we knowledgeable gross maturation of 1.4% and a 7.6% summation successful adjusted EBITDA. The effect of nan restatement of nan Medicare reinstatement of Medicare sequestration was $9 cardinal headwind erstwhile comparing Q4 to anterior twelvemonth same-period. For nan quarter, full institution adjusted EBITDA was $148.9 cardinal compared to $138.4 cardinal successful nan anterior year. Our consolidated adjusted EBITDA separator was 9.4% for Q4 compared to 8.9% nan anterior year.

CARES assistance income was recognized successful Q4 of this twelvemonth arsenic good arsenic Q4 anterior year. This quarter, we recognized only $630,000 assistance income compared to $8 cardinal anterior twelvemonth Q4. This point, I'll supply immoderate further information points arsenic commentary connected each of our operating divisions. Our captious unwellness betterment infirmary division, adjusted EBITDA separator was 8% for nan 4th compared to 4% successful anterior twelvemonth Q4 and 2% successful Q3 of 2022.

Our net wages and benefits to gross ratio improved 10% compared to anterior twelvemonth and 8% compared to anterior sequential-quarter. Nursing agency rates decreased 33% and nursing agency utilization decreased 52% erstwhile compared to anterior twelvemonth Q4.

Nursing agency rates accrued 7% while nursing agency utilization decreased 17% compared to Q3 2022. Orientation hours accrued 28% compared to anterior twelvemonth Q4, but decreased 22% compared to Q3 2022. Nursing sign-on an inducement bonuses dollars decreased 35% from anterior twelvemonth Q4 and 24% from anterior quarter.

Revenue decreased 3% compared to anterior twelvemonth quarter, chiefly related to volume, occupancy decreased from 71% to 70%, while our gross per diligent time remained accordant compared to anterior year. Thus acold successful 2023, we person seen an summation successful occupancy compared to nan same-period anterior year, arsenic ICU volumes wrong our referral short-term acute-care hospitals person increased.

On nan improvement beforehand successful January, we opened a rehab chopped portion part successful our Springfield, Missouri captious unwellness betterment infirmary and successful February, we opened a 31 furniture outer of our existent fleet infirmary captious unwellness hospital.

We'll beryllium opening 3 hospitals pinch JV partners successful nan first half of this twelvemonth successful Jackson, Tennessee; Tucson, Arizona; and Alexandria, Virginia. We besides person an statement to unfastened a captious unwellness betterment infirmary pinch a rehab chopped portion part successful Chicago pinch our associated task partner Rush University System for Health successful 2024.

As antecedently noted, our inpatient rehabilitation infirmary section continues to execute very good compared to anterior twelvemonth Q4. Revenue accrued 10% pinch diligent volumes expanding by 4%. Occupancy was 85% compared to anterior year, which was 83%. Revenue per diligent time accrued $123 from $1,888 to $2011. The adjusted EBITDA separator for inpatient rehab was 23.6% for Q4 compared to 18.2% successful nan anterior year.

Concentra continued their beardown capacity pinch gross expanding complete anterior twelvemonth by 1% in-spite of nan diminution successful request for COVID related testing and information services. Prior twelvemonth Q4. These services generated $10.4 cardinal successful gross and $4 cardinal successful adjusted EBITDA compared to $1.6 cardinal successful gross and $600,000 successful adjusted EBITDA successful Q4 of this year.

The gross diminution from COVID testing services was offset by affirmative capacity successful our centers. Center measurement accrued complete anterior twelvemonth successful some were comp and user wellness that was offset by simplification employer services visits resulting successful a sojourn alteration of little than 1%. Concentra adjusted EBITDA separator was 15% compared to 17% successful anterior twelvemonth Q4.

Our outpatient rehabilitation section knowledgeable an summation of 1% successful nett gross pinch diligent volumes, expanding by 3% compared to aforesaid 4th anterior year. Net gross per sojourn remained level astatine $102, successful spite of a 3% diminution successful Medicare reimbursement rates. Adjusted EBITDA separator decreased compared to anterior twelvemonth pinch nan alteration successful separator to 6% from 10%. The alteration successful adjusted EBITDA separator is chiefly related to an summation successful some labour and different operating costs. The summation successful labour is chiefly attributed to a alteration successful objective productivity successful Q4 compared to anterior year.

The summation successful different operating expenses is chiefly comprised of an finance successful our outpatient electronical aesculapian grounds systems on pinch recreation expenses returning to pre pandemic levels. Thus acold successful Q1 of this year, we person seen improvements successful volume, gross and disbursal margins compared to nan same-period anterior year.

Earnings per fully-diluted stock were $0.22 successful nan 4th fourth compared to $0.37 per stock successful nan aforesaid 4th anterior year, anterior twelvemonth Q4 had a taxation benefit-related to our acquisition of centers remaining rank liking on pinch little liking disbursal connected our debt, which had a affirmative effect connected Q4 anterior twelvemonth EPS. For nan full-year. Earnings per fully-diluted share, aliases $1.23 compared to $298 per stock successful nan anterior year.

In regards to our allocation and deployment of superior already our Board of Directors declared a rate dividend of $0.125 cents payable connected March 15, 2023 to shareholders of grounds arsenic of nan adjacent of business connected March 3, 2023. This past quarter, we did not repurchase shares nether our board-authorized stock repurchase program. We will proceed to measure banal repurchases, simplification of indebtedness and improvement opportunities.

That concludes my prepared remarks and pinch that, I'll move it complete to Martin Jackson for immoderate further financial specifications and past we'll unfastened nan telephone up for questions.

Martin Jackson

Thanks Bob. Good morning, everyone.

Consistent pinch nan anterior 2 quarters, I'd for illustration to supply immoderate further specifications pinch nan advancement we've made regarding our labour costs wrong nan captious unwellness betterment infirmary division. This past quarter, we had a sequential simplification from Q3 to Q4 and our full RN agency costs and our utilization of agency.

We did person a humble summation successful our RN agency complaint from Q3, Q4. The reductions we realized complaint percent successful agency costs. This representing a simplification of $2.5 cardinal connected quarter-over-quarter ground and 17% drop-in utilization of agency from 21.9% beyond 18.1%.

Agency hourly rates summation sequentially by 7% from $86 to $92. Consistent pinch anterior quarters, we did acquisition a simplification of our agency utilization arsenic nan 4th progressed from October to December of 13%.

Ending nan past period of nan twelvemonth astatine 16.8%. We up and down wrong nan 4th successful some RN agency costs of $9.3 cardinal successful October, $9.5 cardinal successful November and this decreased $8.4 cardinal successful December. And our agency rates, which were $88 successful October, $99 successful November, and this decreased to $91 successful December.

This 4th we saw a 21% diminution successful predisposition hours compared to Q3 of '22. We knowledgeable a 39% diminution successful predisposition hours arsenic nan 4th progressed from October to December. Other areas, we saw betterment compared to sequential compared to nan sequential-quarter wasn't declining nursing sign-on an inducement prize offers of 24%. And area of opportunity we mentioned past 4th was infirmary management costs and we did acquisition humble use from nan third-quarter.

We expect a continued diminution successful this area complete nan adjacent respective quarters. Overall, our SW&B to nett gross ratio improved complete 8% compared to nan third-quarter from 64.7% to 59.8%. We knowledgeable a 11% simplification successful our SW&B to gross ratio from October to December, it dropped from 62.7% down to 55.8%.

With nan strides we've made successful nan past 4th and nan advancement we person seen frankincense acold this 4th we are assured successful our expertise to execute our previously-stated target for captious Illness betterment infirmary SW&B to gross ratio of 55% to 57% for nan first-quarter of this year.

Moving connected to our financials. In Q4, equity successful net unconsolidated subsidiaries were $6.8 million, this compares to $11.2 cardinal successful nan aforesaid 4th anterior year, chiefly diminution successful net was nan consequence of decreased net of a fewer of our unconsolidated joint-ventures.

Net income attributable to noncontrolling liking was $10.2 million, this compares to $60.5 cardinal successful nan aforesaid 4th anterior year. The alteration is chiefly owed to our acquisition of nan rank liking successful Concentra successful Q4 of 2021 betwixt 100% of nan voting interest.

Interest disbursal was $47.3 cardinal successful nan fourth-quarter. This compares to $33.3 cardinal successful nan aforesaid 4th anterior year. The summation successful liking disbursal was chiefly attributable to an summation and nan 1 period LIBOR complaint compared to Q4 of 2021, arsenic good arsenic borrowings made connected our revolving in installments facility.

The interest-rate connected $2 cardinal of our word loans is capped astatine 1% LIBOR positive 250 basis-point dispersed done September 30 of 2024, which provides america pinch nan level of protection and predictability moving guardant nan existent interest-rate environment.

At nan end-of-the quarter, we had $3.9 cardinal of indebtedness outstanding, $97.9 cardinal of rate connected nan equilibrium sheet. Our indebtedness equilibrium astatine nan end-of-the 4th included $2.1 cardinal of word loans, $445 cardinal successful revolving loans, $1.2 cardinal successful nan 6.5% elder notes and $104.7 cardinal successful different various debt.

We ended nan 4th pinch nett leverage for our elder secured in installments statement of 5.96 times. As of December 31st, we had $148 cardinal of readiness connected our revolving loans. For nan fourth-quarter, operating activities provided $12.5 cardinal successful cash-flow of which included $1 cardinal recouped successful nan 4th related to repayment of Medicare advances. As of nan extremity of 2022, each Medicare advances person been repaid.

Our operating cash-flow successful nan 4th was besides reduced by $53 cardinal for repayment of deferred for illustration taxes each of which person been repaid. Our time income outstanding aliases DSO was 55 days astatine 31st 2022 compared to 52 days astatine December 31st, 2021 to 53 days astatine September 30th, 2022.

Investing activities utilized $57.2 cardinal of cash-in nan fourth-quarter. This includes $55.3 cardinal nan acquisition of spot and equipment. $5 cardinal nett acquisition and finance activities, little $3 cardinal of nan proceeds from nan waste of assets for 4th quarter. Financing activities provided $34.4 cardinal of rate from nan fourth-quarter. This was chiefly owed to $65 cardinal nett borrowing connected our revolving lines of credit, offset in-part by dividends connected our communal banal of $15.9 million.

As stated previously, we did not repurchase immoderate shares nether our committee authorized repurchase programme this quarter. But person nan capacity to acquisition an further adjacent to $400 cardinal shares. This programme remains successful effect until December 31st, 2023, unless further extended aliases earlier terminated by.

We are issuing our gross outlook for 2023 and expect gross to beryllium successful nan scope of $6.5 cardinal to $6.7 billion. Capital expenditures are expected to beryllium successful nan scope of $190 cardinal to $210 cardinal for 2023. We will reside our business outlook for adjusted EBITDA and net per stock -- per communal share, later successful nan year, arsenic labour marketplace further stabilizes and is much predictable.

This concludes our prepared remarks. At this clip if you'd for illustration to move it backmost complete to nan usability for nan telephone for questions.

Question-and-Answer Session

Operator

[Operator Instructions] Our first mobility aliases remark comes from nan statement of Justin Bowers from Deutsche Bank. Mr. Bowers, your statement is open.

Justin Bowers

Hi bully greeting everyone. So conscionable starting pinch LTAC, it sounds for illustration there's a batch of improvement activity going into 2023 and into 2024. Can you conscionable springiness america a consciousness of really overmuch - really galore further beds are planned for 2023? And past I conscionable wanted to explain what nan SW&B was successful 4Q and past nan exit complaint successful December, I deliberation you said 55.8%. Is that benignant of wherever you're trending now successful nan conception for -- during nan first mates of months?

Robert Ortenzio

Thanks, Justin, it's Bob. Let maine reside nan first portion of your question, which is improvement connected nan captious illness. Yes, I deliberation that complete nan past year, we person seen an summation successful improvement opportunities and deals that we're signing. Interestingly, galore of those, you'll announcement are besides associated ventures, which is simply a spot of a departure of what we've seen successful nan past. To your circumstantial question, I don't person precisely nan number of beds that will travel on.

But astir probably, you've sewage to deliberation astir 110 to 120 caller beds that will beryllium coming connected pinch existent signed deals. And our expectation, conscionable based connected what we're seeing retired location is that we whitethorn spot much improvement opportunities connected nan captious unwellness side. In nan norm, they will beryllium a infirmary wrong a hospital, but location whitethorn beryllium an occasional freestanding. But if we do a freestanding, it will typically beryllium successful conjunction pinch a, rehabilitation infirmary chopped portion units.

So if you look astatine nan exemplary for that, not needfully of this size, but if you look astatine our task successful Chicago pinch Rush, that is what we're characterizing arsenic a post-acute attraction building that has some rehab and captious unwellness beds successful nan building. And we person a fewer much of those that are successful advancement successful nan improvement pipeline passim nan country.

So I do deliberation that, that's a grounds to an appreciation of nan domiciled that LTAC or, successful our case, captious unwellness plays successful nan continuum of attraction successful a post-pandemic world wherever you person a greater nickname of nan value to decompress nan intensive attraction units of ample acute attraction hospitals, and they are much willing successful having those successful their marketplace and successful their continuum of attraction connected a go-forward basis. So connected nan salary, wage, I'll move it complete to Marty and fto him reside nan 2nd portion of your question.

Martin Jackson

Yes, Justin, connected nan SW&B arsenic a percent of revenue, we are experiencing what we saw successful January and for nan astir portion of February, we are successful that 55% to 57% range.

Justin Bowers

Got it. And past possibly conscionable a follow-up connected outpatient rehab. It sounds for illustration volumes and margins are improving year-over-year. And nan mobility would beryllium is - do we expect that trajectory to persist successful 2023? And benignant of what changes person you made successful nan conception location to guarantee that, that happens?

Martin Jackson

Yes, connected nan outpatient side, what we've seen is we've had immoderate trouble really passim nan full twelvemonth of '22 pinch a batch of COVID call-offs. And what we've seen is that's really trending downward now. So pinch that trending downward, we'll beryllium capable to spot - we judge a batch much patients. I deliberation nan different point is conscionable nan objective efficiency, which we've really focused a batch on, which is erstwhile we talk astir that, we're really talking astir visits per therapist per day. We're seeing that increase.

Robert Ortenzio

Yes, I deliberation it's due your characterization of america emotion assured astir nan trajectory and what we spot successful nan early portion of nan twelvemonth gives america immoderate bully assurance that we person immoderate bully momentum connected nan outpatient side.

Justin Bowers

Appreciate it. I'll jump backmost successful queue.

Robert Ortenzio

Thanks. Operator, do you want to fto nan adjacent mobility through? Operator, are you there? For nan participants connected nan call, we're showing - nan telephone is still connected. So if you carnivore pinch america arsenic we get nan usability to fto nan adjacent mobility successful nan queue through. For nan participants connected nan call, it looks for illustration we're having a problem pinch nan operator, nan head of nan call. So why don't we springiness it different infinitesimal aliases two, if we tin get - admit group into nan telephone to inquire questions.

Okay. For those connected nan call, while we're waiting to admit much questions, why don't -- Marty and I springiness immoderate much commentary and possibly we expect immoderate of nan questions that we've sewage - we person gotten immoderate questions successful nan past astir nan seasonality of nan Concentra segment. And Marty, you want to reside that?

Martin Jackson

Sure. One of nan things we've noted pinch immoderate of nan expert reports that they're talking astir nan drop-off from Q3 to Q4. If you return a look astatine Concentra pre - nan pandemic, historically, what we've seen is astir a 390 ground constituent drop. So - and erstwhile I opportunity that, I return a look astatine years 2016 to 2019. And that's really conscionable a reflection of seasonality. So we thought that was important.

Robert Ortenzio

The different mobility that we typically get - and conscionable arsenic an update, we do person immoderate group connected nan telephone statement that are moving connected restoring nan expertise to fto questions in. But while we proceed - we deliberation - Marty, I do get questions from time-to-time astir allocation of capital. Certainly, arsenic we advancement done 2023 pinch nan accrued EBITDA procreation complete past year, we do expect that leverage will proceed to travel down.

But we do person a target complete nan adjacent twelvemonth aliases 2 to bring leverage down considerably from wherever we are correct now. At nan aforesaid time, we do person - we are allocating superior to improvement activities. And I deliberation what you tin expect to spot done 2023 is not immoderate large transactions, thing that could successful immoderate measurement beryllium perceived arsenic transformational, but we're seeing awesome opportunities for one-off transactions successful each of our divisions.

You noticed I commented connected nan individual transactions and deals that Concentra is doing pinch fold-ins. We surely would for illustration to motion a mates of nan large rehab associated ventures pinch ample systems. And connected nan LTAC side, we'll proceed to spot opportunities to do a infirmary wrong a infirmary and outpatient tin proceed to turn done de novo, signed leases arsenic good arsenic mini acquisitions. So I deliberation we're fresh to fto successful nan adjacent question. So if someone's successful nan queue. I deliberation we've restored nan mobility line.

Operator

Thank you. Our adjacent mobility comes from Ben Hendrix from RBC Capital Markets. Your statement is open.

Ben Hendrix

Hey acknowledgment guys. Given nan staffing advancement and captious unwellness and nan roll-off of training hours, really do we deliberation astir nan clip statement from present to pre-pandemic margins? And what are those cardinal levers that you tin propulsion to impact that timing past related? What do we request to spot earlier you get capable comfortableness to supply afloat twelvemonth guidance? Thanks.

Martin Jackson

Yes, Ben, this is Marty. We expect for '23 that we will astir apt stay successful that higher range, 55% to 57% successful '23. Remember, it's not conscionable nan expenses that we see, but it's besides nan increases that we're getting connected our - contracts. So we would expect that, that would spell into '24 and perchance moreover '25 to spot america get backmost to humanities range, which is successful that 52%.

With regards to comfort, I deliberation that we're continuing to summation comfortableness pinch wherever we are connected nan labour side. And I deliberation we're going to measure this first quarter, spot wherever we are and past make a determination arsenic to whether we supply guidance connected EBITDA and EPS moving forward. And whether its adjacent 4th aliases nan 4th aft that, we'll person to hold and see.

Robert Ortenzio

And arsenic we consciousness comfortable, moreover if it is earlier nan adjacent quarter's net release, I mean, we would surely see putting guidance retired aft nan first quarter, but moreover earlier we revenge nan Q. So we - that's a taxable of chat internally astatine nan institution because we do admit nan expert organization would for illustration to spot america springiness immoderate much guidance connected EBITDA and EPS.

And erstwhile we consciousness comfortable, we conscionable don't want to spell retired prematurely and past person to perpetually revise it and update it. So - but I do deliberation that you will spot it astatine immoderate constituent during nan first half of this year.

Operator

Thank you. Our adjacent mobility will travel from William Sutherland from Benchmark Company. Your statement is open.

Bill Sutherland

Hey bully greeting guys. I was curious, Bob, arsenic you look crossed nan 4 groups, are you - is hiring been an rumor arsenic acold arsenic being capable to benignant of tally those groups astatine nan productivity levels that you'd get location built to do?

Robert Ortenzio

Well, it's a awesome question. And I deliberation nan reply is that it varies successful each of nan divisions. I mean it's benignant of very evident really difficult it has been successful nan captious unwellness betterment infirmary section because we're we were competing pinch short-term acute attraction hospitals for highly trained adjacent ICU-level nursing staff. And I deliberation it's good known that, that has conscionable been a really large situation successful nan past year.

Now connected nan rehab side, you'd think, well, specialty hospitals, particularly hospital, but nan rehab employment tends to beryllium a spot much sticky because of nan quality of nan activity and nan longer tenured labor that are location being a small spot much therapy-driven arsenic good arsenic immoderate nursing. So nan rehab infirmary section hasn't been adjacent nan challenge, anyplace adjacent nan situation that nan captious unwellness has been.

Outpatient has been a small spot of a surprise. I mean, and for a different reason, it is impacted by nan macro labour environment, peculiarly connected our beforehand table people, but it's besides because of nan smaller quality of outpatient clinics that a telephone disconnected for unwellness aliases suspected unwellness aliases pre-COVID trial really disrupts nan ratio of that business model. So that -- and I deliberation you've seen that to a lesser grade successful nan outpatient, but it still exists.

And arsenic we commented earlier, we look to beryllium coming retired of that present now. And past that leaves Concentra. Concentra because of nan quality of that business, they person had their staffing challenges. Of course, they person arsenic each employer has. But nan quality of nan Concentra Medical Center is that it puts accent connected nan existing unit erstwhile they're short staffed, but nan measurement does not autumn disconnected because it's a walk-in business. So what we spot location is perchance accrued hold times and those benignant of difficulties, but you haven't seen it show up successful nan gross aliases nan separator line.

But each of these businesses, person a small spot of a different dynamic. -- statesman of Concentra, nan we've talked astir this successful nan past, they will person a bigger situation successful a really down economical cycle, that will beryllium a spot of a headwind, which we surely person not seen to date, chiefly because that immoderate downturn of nan system we've had, it's really not deed labor. And arsenic employers are still hiring, consents going to proceed to person a robust business so, I dream that answers your question.

Bill Sutherland

That's adjuvant color. What - really should we deliberation astir nan precocious and debased extremity of nan gross scope benignant of, I mean, I cognize a batch of things get thrown successful arsenic you put together your model, but what would beryllium immoderate of nan cardinal factors for being astatine 1 extremity aliases nan other?

Martin Jackson

Yes. It's really senses, Bill. When we return a look astatine consciousness particularly nan infirmary side, surely and nan measurement connected nan outpatient rehab broadside Concentra is astir apt beautiful predictable. But I mean, that's nan logic we put a scope successful location is because of uncertainty there.

Bill Sutherland

And I deliberation - I admit your hesitancy to guideline connected EBITDA earlier you person a existent handle. But it feels for illustration pinch each nan accusation you provided that there's a scope location that I deliberation you guys person a consciousness of. And I'm conscionable benignant of funny what other you benignant of request to spot astatine this point.

Martin Jackson

Yes, Bill, we conscionable request to spot consistency. If you return a look astatine what transpired astatine nan extremity of '21 and each done '22, location was a batch of fluctuations. And we conscionable request to spot a play of clip wherever we tin benignant of foretell what's going to hap successful nan adjacent mates of quarters.

Robert Ortenzio

Yes, Bill, arsenic I mentioned earlier, this has been nan taxable of a adjacent magnitude of chat internally pinch nan guidance and pinch nan Audit Committee of our Board. And of course, wherever we guidelines here, we could springiness guidance pinch a reasonably wide range, and we consciousness beautiful assured connected that.

I mean I deliberation it's conscionable much of a philosophical point internally that if we're going to travel retired pinch guidance, we'll effort to make it successful a small tighter scope arsenic we've done successful nan past. And we conscionable don't want to travel retired pinch guidance and past person to revise it. So I deliberation that, that's conscionable a style point for america comparative to different companies that whitethorn beryllium providing guidance now alternatively than a position that we person that overmuch uncertainty astir nan business.

Bill Sutherland

Right truthful it doesn't really person immoderate - it's not an issue, it sounds for illustration successful position of your wide position of nan business. So that's appreciated. All correct that's it for me.

Robert Ortenzio

No, it does not. And that's good said and that's clear. I mean this is not a awesome that we deliberation that nan business is going to be. That's volatile crossed 2023. It's really conscionable much of a awesome that since we suspended guidance that we conscionable want to beryllium beautiful comfortable and person a beautiful tight scope earlier we rumor again.

Bill Sutherland

Right, convey you guys.

Operator

Thank you. And our adjacent mobility will travel from Miles Highsmith from Deutsche Bank. Your statement is open.

Miles Highsmith

Hey bully greeting guys. Thanks for taking my questions. I had conscionable a fewer clarifications and past a mates of questions aft that. I deliberation you gave it, truthful I apologize if I'm re-asking but I was hoping 4 numbers for nan afloat 4th of Q4, if you'd beryllium capable to springiness maine nan agency rates connected a dollar basis, nan afloat 4th utilization rates percentage-wise? And past nan Q4 connected a dollar basis, nan full agency costs successful nan Q4 finance caregiver costs connected a dollar basis? And past I person a mates of follow-ups?

Martin Jackson

Sure, Miles, let's see.

Robert Ortenzio

You sewage a batch there. Come connected Miles.

Martin Jackson

Okay. Okay, Miles. Get your pen and insubstantial ready.

Miles Highsmith

I'm ready.

Martin Jackson

Q4 RN expenses, was $27.1 million. The Q4 RN hourly agency staffing rate, $92 and nan utilization complaint successful Q4 was 18.1%.

Miles Highsmith

Okay great. And did you quantify nan Q4 dollars related to investments successful nursing?

Martin Jackson

No, we did not.

Miles Highsmith

Okay, thanks. And past conscionable a mates of others I guess, is location immoderate measurement you'd beryllium capable to conscionable qualify nan proportionality of your much caller hires that are successful that benignant of 7 to eight-week play wherever they're training and you person immoderate plagiarism still possibly Q4 versus Q3 aliases nevertheless you mightiness beryllium consenting to qualify it.

And past conscionable lastly connected nan imaginable for EBITDA guidance I decidedly heard what you said successful nan past telephone aliases response. I'm conscionable wondering, seeing that stability. Is that mostly LTAC still aliases captious unwellness still? Or is it now a usability of needing to spot benignant of wherever productivity is besides connected nan outpatient rehab broadside aliases different variables?

Robert Ortenzio

While Marty is looking for that earlier stuff, fto maine - I'll remark connected nan 2nd portion of your question. I would say, yes, it's astir apt captious unwellness and outpatient. Those are nan areas that we would spot nan top improvement. I mean, if you look astatine nan business and moreover complete nan past mates of quarters, nan rehab infirmary business and nan Concentra has been beautiful stable.

And captious unwellness obviously, is nan 1 that would person nan astir betterment complete 22 because of nan labour environment, which is, arsenic you see, and arsenic Marty pointed out, we're giving you monthly splits connected really that has increased. So you tin spot that nan betterment successful nan staffing and captious unwellness is, I think, reasonably dramatic.

And truthful if that continues, that's evidently going to beryllium nan biggest mover - outpatient to a lesser extent, but nan aforesaid thing, you're going to spot much betterment successful nan outpatient and successful captious unwellness than you will spot successful inpatient rehab and Concentra, which has been beautiful stable.

Martin Jackson

Miles connected a sequential Q3 - Q4 complete Q3, we saw a 21% diminution successful nan number of predisposition hours. So obviously, it's coming down. And past wrong nan quarter, from October to December, we saw a 39% decline. So a batch of that is moving off. Now there's still going to beryllium predisposition retired because we're going to proceed to person hiring, but we're getting backmost overmuch much towards normal processes arsenic opposed to what we saw complete nan past 5 quarters.

Miles Highsmith

Got it okay, that's ace helpful. Thank you truthful overmuch guys. Appreciate nan detail.

Robert Ortenzio

Sure.

Operator

Thank you. And I americium showing nary further questions from our telephone lines. I'd now for illustration to move nan convention backmost complete to guidance for immoderate closing remarks.

Robert Ortenzio

Okay. Thank you, everybody, for joining america and we apologize for nan achromatic abstraction location successful nan benignant of nan mediate of nan Q&A, and acknowledgment for your questions, and look guardant to updating you again adjacent quarter.

Operator

This concludes today's convention call. Thank you for your participation. You whitethorn now disconnect. Everyone, person a awesome day.