And what I mentioned in the opening remarks, the inevitability of litigation and the growing number of political will for legislation and the possibility for administration change. The reality is the provider community and most industry stakeholders and you can include us as part of that stakeholder group do not view this as a serious or a sincere policy. Then provider community has seen serious policy in the past and this is so far outside the realm of what’s possible and the fact that it’s unworkable and dated. I think Mark Parkinson has publicly referred to this, who’s the Mark Parkinson, the President of AHCA, has referred to this as a 20th century solution to a 21st century problem. One is left with no choice but to really view the rule cynically through an election year’s eyes as an attempt to cater to a specific constituency.
There’s no funding, the required staff are simply not available and there’s no plan or a pipeline that’s being built to produce the number of RNs that’s needed. So again, we’re confident the rule will not be implemented or if it does, it will undergo significant change. So I appreciate the question. It’s interesting to even speculate on it. But at this stage, it’s just — so there are so many hurdles for this to overcome. It’s — there has to be, to your point, at least a degree of thought put forth but the realities of it ever becoming overall are still, we believe, very slit.
Operator: Our next question comes from Ryan Daniels from William Blair.
Jack Senft: This is Jack Senft on for Ryan Daniels. Most of my questions have been asked already. But first, just back on the cash flow expectations. I appreciate that you’re reaffirming the $40 million to $55 million cash flow range. And I think you said second quarter cash flow is expected between zero [ph] and $15 million. So I guess how should we think about this for the remainder of the year, though? Has the Change Healthcare makeup kind of included in the second quarter guidance? I guess I’m just trying to see if you expect to make up a good portion of the Change Healthcare impact in the second quarter. Maybe it sounds like it will trickle into third quarter too. Hoping I’m on the right track there.
Ted Wahl: Yes, $5 million to $15 million was what we mentioned for Q2. And then second half of the year would be $40 million to $50 million from a range perspective. So trickle is one way to describe it. We’re working — we’re actively working on plans and outlining expectations with customers on making up the shortfall from Q1, that will be iterative. That will be over — not just Q2 but over the course of the rest of the year in a TBD type of way. But again, that’s what we reiterated the expectation that we’re going to deliver on our range of $40 million to $55 million.
Jack Senft: Okay. Understood. And then just a quick follow-up, too. I think it’s been a few quarters since you discussed the Education segment. Just kind of curious if this is an opportunity for second half of 2024 and into 2025. Can you just kind of talk about your expectations here? And then there are any recent updates on the education front.
Matt McKee: Yes. I would say we would certainly reiterate our commitment to the opportunity that exists in the education space. There is a bit of seasonality to that market with respect to selling and then obviously, the operations which largely coincide with the academic year. So there’ll be less of a first half dynamic in the education space in the way that we’re speaking about the growth opportunity that exists in our core market, the long-term and post-acute care at least in 2024. So we would view that as more of the longer-term linear growth opportunity. It still represents less than 5% of total company revenue. So with our firm commitment to the growth opportunity there with the compelling nature of the value proposition that we’re able to offer in that space relative to the competitive environment, we do still feel very bullish about the opportunity that exists in the education space.
So as that grows to be a more meaningful component of total company revenue, we would certainly begin to speak about that more specifically. But generally speaking, firm commitment and still very much a compelling opportunity.
Operator: Our next question comes from A.J. Rice from UBS.
Unidentified Analyst: This M.J. [ph] on for A.J. I would like to ask about whether there seems to be an industry expectation that there’s going to be higher ownership turnover at least in the SNF industry year-over-year in ’24. Does that propose a significant risk to any of the retention of your businesses? And how would the company think about quantifying that?
Matt McKee: Yes. We’ve not yet seen sort of a significant step up in transactions within the space. Operator changes, ownership changes are certainly a normal course and expected component of our business. We deal with those very well. While theoretically, you’re exactly right in the supposition that ownership changes would potentially put us at risk if there is an acquiring company that’s coming into a facility that we currently operate and they either are philosophically opposed to outsourcing or they choose not to specifically partner with Healthcare Services Group or from our perspective, we choose not to partner with them. So that is definitely where we’re most at risk. Ted reiterated our expectation that 90% client retention year-over-year remains the target.
That’s inclusive of any ownership or operator changes. I would point really to the flip side in the sense that typically when there are those owner or operator changes, we’re the beneficiary of those acquisitions, right? I mean we would like to think relative to the end market, we’re partnering with most of the strongest operators. So those tend to be the folks who are expanding their holdings, expanding their portfolios and acquiring facilities. So assuming we’ve demonstrated the benefit of our partnership as they go along and increase their holdings, generally speaking, there’s no guarantees or assurances but we’re along for the ride, right? They recognize the benefits of our partnership when they’re acquiring a facility, especially if it’s a turnaround opportunity.
