Operator: Our next question comes from Andy Wittmann from Baird.
Andy Wittmann: Lots of questions on the SG&A. I’m going to add another one too, just for a little bit of a clarification. Ted, you talked about near term, you’re making these investments and those make sense. You talked about getting back to your targeted level in some period of time. You didn’t talk about how that happens. Does that require offsets in the cost structure to get there? Or do you think that it’s just going to be leverage from the revenue growth that you’re expecting in the second half and beyond?
Ted Wahl: Leveraging the fixed portion of our SG&A more than anything else, Sean. And I would also be remiss if I didn’t point out that it’s not a coincidence that we’re seeing our cost of services performance improve, while our SG&A perhaps offsets a portion of that but we’re still benefiting from the improvement in our cost of services. And one does directly relate to the other.
Andy Wittmann: Okay, that makes sense. And then, as it relates to that expected second half ramp in organic growth. I was hoping maybe you could just give us a little bit more detail and will be curious actually, if there’s one of your particular segment that’s expected to see more growth than the other. And really, just the visibility that you have into this — are these contracts that are basically signed already and then just waiting for the transition to happen? Anything that you can give in terms of confidence as to why you feel like the second half is going to show that ramp. I think would be helpful for us.
Matt McKee: Yes Andy, this is Matt. I’ll take this one. And we described last quarter the fact that our ramp back to growth will likely not be a clean linear sequential step-up but directionally we expect ongoing revenue uptick and certainly year-over-year revenue growth. And realistically, we expect to onboard more new business in the back half, as we mentioned previously as compared to the first half. So that’s sort of how we’re thinking about it, having offered the revenue range expectation in Q2 of that $420 million to $430 million certainly suggests a first half compared to second half step-up in the back half of the year. We did on board, as Ted mentioned, a modest amount of new business in Q1. But more importantly, we’re in the midst of prospect discussions that will amount to more meaningful adds in the back half and the coming quarters even beyond that.
So while we have improving visibility into the pipeline business that will convert likely this year, the timing of those adds obviously has an impact on our quarterly top line projections. So in as much as we lock in start dates and have a sense for increasing top line targets, we’ll share those. But as it relates to the top line and Bill Sutherland asked about this, we’d be remiss if we didn’t remind everyone that a component of top line growth is retaining our existing business. And as we sit here, we don’t foresee any significant exits on the horizon but it’s worth reiterating that we’re still in the final stages of an ongoing industry recovery. Changes in facility operations or ownership can alter our view on a piece of business. And we have to remain nimble if we believe that it’s in our best interest, both in the near term and the long term to exit a client group about whom we might have concerns.
But overall Andy, net-net, we definitely have confidence in our ability to grow the top line year-over-year. The expectation would be that, that growth comes from not only greenfield housekeeping opportunities with new customers but also the ongoing cross-sell of dining into the existing customer base. We talked last quarter about the benefits of that cross-sell in the sense that we’ve had an opportunity to really understand the intricacies from an operational perspective as to the dining operation within an existing piece of business, an existing facility with whom we partner on the Environmental Services side and we’ve established that track record of payment which obviously, in this environment is more critical than ever. So we do expect that the primary driver of growth will be organic growth within the long-term and post-acute care segment, our primary segment.
But we remain committed to the education space as well. And we’re sort of in the tail end of what would be described as the selling season in the education space. So we’ll probably have greater visibility into growth opportunities in that segment in the coming months here as well.
Andy Wittmann: I appreciate the detail on that answer. And then just my last question here has to be — we have to talk about the minimum staffing requirement given that the way this is going to play out. So I guess, Ted, obviously, this isn’t new. This has been something that’s been proposed and talked about for a long time and at nauseam. Obviously now finalized and heard your comments about your challenges, administration change, all that, that makes sense. What are — when you’re talking to your customers, I mean they have to do a degree of planning, assuming that this is going to get phased and I recognize it’s 3 or 5 years and taking some time. But what are they telling you about how this can affect the way they interact with you or the propensity to stay on with you or sign up with you?
Ted Wahl: Yes, it’s a great question Andy. And I think broadly, not just this but any sort of uncertainty that’s introduced into the industry or the sector creates a demand for our services for no other reason because we provide certainty. Certainty is a central part of our value proposition. Peace of mind, cost certainty, operational certainty and being able to be that partner that allows the operator to focus on the lifeblood of their business which is really patient care and patient mix. So from that perspective, that’s how we believe it could or would impact at least the demand for our services but more poignantly before you even talk about the theoretical or the hypothetical that ever being implemented, we do believe that the rule will not be implemented or at a minimum, will undergo substantial revision during the phase-in period.
