And so that’s where we are. Obviously the markets changed. They are dynamic, and we have to adjust to those. But we’re seeing positive signs with respect to turnover, with respect to hiring, and even the number of new students who are populating our Galen College of Nursing programs is very encouraging, suggesting that there’s a sufficient pipeline of new nurses who want to be educated and go into the workforce. So we’re pretty encouraged by the macros that we’re seeing. There are obviously issues that we have to pay attention to, and we are, but we’re reasonably encouraged with our overall agenda as it relates to our people and the efforts that we have in place.
Operator: Our next question comes from Jamie Perse with Goldman Sachs. Your line is open.
Jamie Perse : Hey, thank you. Good morning. Just a bigger picture question for you guys. You’ve talked about longer term margins, 19% to 20% being a fairly sustainable range for you. A lot of moving parts right now. So just at a high level, is there anything you see in the business right now that can take you off of that trajectory more permanently and just your level of confidence in getting back to that margin rate and sustaining it going forward? Thank you.
Bill Rutherford: Yes, I mean – this is Bill. I think we have a reasonably long track record of producing margins that are in a pretty tight range. Even as we’ve dealt with periodic cost pressures, whether it be contract labor before or maybe bad debts in the previous cycle or physician costs now. So I think as a team, we have confidence we can continue to operate the company at reasonably strong efficiency levels. We’ve spoken in the past, we have a number of initiatives around technology and innovation on resiliency programs that continue to target the opportunities to operate even more efficiently in the future. So I think our historical performance is a reasonable expectation for us and we’ve got opportunity to continue to drive efficiency through the organization.
Operator: Our next question comes from John Ransom with Raymond James. Your line is open.
John Ransom: Hey, good morning. If I take your $380 million of Valesco, I think you did a little over $220 million in 2Q. So that means the revenue dropped sequentially by like $60 million. I know you’re talking about this revenue problem, but in your guidance going forward, maybe you could clarify kind of your revenue and cost outlook to get you to that minus $50 million. And again, why was it such a – I know seasonality, but why was it such a steep ramp in 3Q or decline in 3Q in revenue? Unless I’m doing my numbers wrong, thanks.
Bill Rutherford: Yes John, I alluded to this in my comments. We did make some revisions to our revenue estimates in the third quarter. In the second quarter, it’s still new. We were putting providers on new contracts billing. We had not received a lot of claims being paid as claims started to be adjudicated and paid. So I think it’s better to look at that on a year-to-date basis on there. It’s roughly $200 million a quarter, somewhere around that neighborhood. It’s kind of what we think the model will be going forward. Again, it may fall on either side of that, but I think it’s best to look at the year-to-date. We understand the third quarter drop, but it was really just because we had no history on there and as claims started to be paid, we were able to revise that. So that’s why it’s $100 million EBITDA for the quarter. It was about the same year-to-date. It’s kind of tied into our $50 million going forward.
John Ransom: So its $200 million revenue, $250 million cost business is what’s embedded in your guide going forward, just to be clear.
Bill Rutherford: Yes, if you want to think very broadly, that would be pretty consistent.
John Ransom: All right, thank you.
Bill Rutherford: Yeah.
Operator: Our next question comes from Justin Lake with Wolfe Research. Your line is open.
Justin Lake : Thanks. Good morning. I’m going to pile on with this physician stuff. So just, I’ve never seen a business kind of be off this far from like you guys are obviously very, very good at what you do. I know this is a new business, but to be $50 million of revenue on a $250 million baseline, 20%. So I just the like, can you triple click on that for me and just say like, what did you think was going on versus what is? And then the, for – when you gave your headwinds, tailwinds for next year, the only headwind you talked about was that payment, which makes sense. But you’ve given some numbers around the subsidy costs right, the physician costs that run through other operating. And they do seem like they’ve been a pretty big drag on margins.
My estimate is somewhere around $300 million bucks, give or take year-over-year, versus kind of revenue growth. Are you assuming that that’s not going to grow at anywhere close to that pace next year or do you think you could like – and therefore it’s not another $300 million headwind next year? Or are you just assuming that we can offset it? And so, we kind of grow normally ex-$145 million. Thanks.
Bill Rutherford: All right, Justin, well a couple of things. One, literally we talk about ’24. We’ll give you our ‘24 guidance assumptions, some of that on the Investor Day in more details as we go through the planning on there. But as I said, we are expecting the pro-fee growth rate trends to lower going forward and we’re working diligently to make that happen. On your opening question around Valesco, just to emphasize what Sam said, this was a very complex and large integration of 200 programs, 5,000 providers that happened very quickly. And we were operating maybe on some incomplete historical data. And as we started to see claims being paid, the revenue was just clearing at lower rates than we anticipated. And again, I think we’ve got a number of initiatives to try to offset that and so we’re working on both of those.
But so, that’s how I would address the Valesco shortfall right now. And then, we’re continuing to work on the pro-fee and do expect that growth rate to decline going forward.
Operator: Our next question comes from Sarah James with Cantor Fitzgerald. Your line is open.
Sarah James : Thank you. So, when I look at the moving pieces in the guidance revision and the change in the Valesco revenue, it looks like you guys are implying core is doing a little bit better, especially if I use midpoint. So can you give us an update on what you’re seeing so far, the first couple months into 4Q volumes and how we should think about what 2023 guidance implies for the volume transition from 3Q to 4Q?
Bill Rutherford: Yeah. So, as you know, we don’t comment on the current quarter. We’ve made, I think, several comments on the core business trends we’re seeing with really strong volume, reasonable pricing, the core operating expenses of the company are doing well in labor market supplies. I think as a broad brush, it would be our expectation those trends generally continue going forward. We don’t see anything from a macro perspective changing that. But again, too early and we’re not commenting on kind of inter-quarter, early quarter activities. But as I said, and Sam mentioned in his comments, we’re pleased with the core fundamentals that we’re seeing. Good demand in the market. We’re positioned very well, and our same facility operations is going pretty well.
