And I think you heard Matt talk about north of 70% is where we want to be, we ended the year at 74% episodic. That’s exactly where we want to be in that business. And so really proud of that team as we run into 2024, Raj.
Raj Kumar: Great. And as my follow-up, just kind of thinking about just cash flow and with the framing of being — or operating cash flow positive, how would you kind of frame the working capital dynamics in 2024 and the ability to further expand upon the EBITDA conversion rate to operating cash flow?
Matt Buckhalter: Yes. Great question. And kind of combining the idea of cash flow and liquidity here, all in one. I think we’ll — I know we’ll experience moderate headwinds in Q1. We addressed that in the script as well. But then we also have just normal seasonality that occurs for us in Q1 in the business itself with just EBITDA with headwinds of state taxes, just a little bit of reengagement with the workforce right out of the holidays as well. And then just our third-party liability season, TPL season, which just extends DSO out a few days in Q1. That kind of rebounds back into Q2 and Q3 as that cash starts coming in. And so you’ll see a dip in Q1 a little bit as it starts to then add it back in Q2 and Q3. We look forward to increasing our overall liquidity in 2024.
It’s a great opportunity for us to do so. What we’ll do with that, we’ll see how that kind of plays out. We are interested in the idea of small M&A tuck-ins where appropriate, when appropriate in the market. We continue to look at deals when they come up, but that’s probably more in the back half of this year or into 2025. Right now, we’re going to focus on operating our business effectively, efficiently converting that EBITDA into cash and growing our overall liquidity position.
Jeff Shaner: That’s well said, Matt. And the one thing I’ll add is there’s been a tremendous amount of conversation nationally over the last 22 days on Change Healthcare and UnitedHealthcare. I couldn’t be more proud of Matt, our team, our billing leadership team. Although Aveanna doesn’t build claims directly through Change Healthcare directly, some of our vendor partners do, and our team has done an amazing job of getting bills out the doors, ensuring that Aveanna continues to be paid for the great work that we have done. And it’s been a lot of hours, it’s been a lot of overtime, it’s been a lot of work and workarounds. But it’s a relatively low impact to Aveanna, specifically the Change issue, but our team has worked incredibly hard in the last three weeks to ensure that our liquidity, our cash flow is solid. And I’m proud to say that it is. And so kudos to our RCM billing teams who’ve really just worked to make that a reality for Aveanna. Thank you, Raj.
Raj Kumar: Thank you for all the color.
Operator: Thank you. Our next question comes from the line of Pito Chickering with Deutsche Bank. Please proceed with your question.
Kieran Ryan: Hi there. You’ve got Kieran Ryan on for Pito. Thanks for taking the questions. Apologies if you’ve touched on a few of these things, I just wanted to confirm a couple of points. First off, on the margin expansion for 2024 guidance implies 20 basis points. Is it fair to say from your commentary that we should expect that to come through the SG&A line with maybe some potential for outperformance on gross margin. But as far as what’s guided, that’s most likely to come in SG&A, correct?
Jeff Shaner: Yes. Good morning, Kieran. Yes, I think the answer is that, yes, we have set up our infrastructure to allow us to be able to grow and leverage our growth. And I think if you take the Q3, Q4 performance of the company and transform that into 2024, probably gives you a better idea of where our gross margins would be specifically because the comments are on Home Health & Hospice and their improvement. But yes, Kieran, I think our feedback would be that there’s moderate — minimal to moderate improvement and opportunity in gross margin where we think we’ll be able to overperform in the year is really growth, our ultimate revenue growth rate, volume growth rates, rate improvements that we win within the course of the year and driving that through the EBITDA adjusted EBITDA line. Matt, anything you would add to that?
