Matt McKee: Yes, I’m glad you asked that question, Tao, because make no mistake, we are absolutely committed to continuing to play in the core market, and that remains massive opportunity there. We think about defining opportunity within the long-term post-acute care space is being about 23,000 facilities or so only 20% of whom are currently outsourcing. The housekeeping and laundry services and by our calculations, less than 10% are outsourcing, they’re dining and nutrition services. So certainly significant runway of opportunity that exists in that core market and we remain very much committed to that space, this may go without saying, but with respect to top line considerations, it’s worth reminding everyone that our revenue considerations include not only new business additions, but also retaining the existing business.
And while we certainly remain bullish about the industry recovery and our own ability to execute operationally we’ve always allowed the fact that exiting business is sometimes the best course of action for the company, whether that’s a distressed or uncooperative client, or if it’s the result of an administrator or operator or ownership change. We remain nimble and though certainly not cavalier about leaving business, if that makes sense. So, having said that looking forward to Q1, we’d anticipate that revenue would likely be in the $420 million to $425 million range. It’s essentially projecting relatively flat sequential revenue. We’ll get a bit of new benefit from the contract modification price increases kicking in, but this will be offset by exits related by the completion of that exercise as well as allowing for normal course of business type facility exit.
So, while our pipeline is certainly robust and growing and we’re very much committed to further cultivation of that pipeline, the new facility add that we’re anticipating are not quite mature enough to onboard in earnest in Q1. So we’ll continue to focus on management development and positioning ourselves to resume our growth posture, but on-boarding new facilities in a more meaningful way Tao to likely would occur beyond Q1.
Tao Qiu: Got you understood. And just some clarification point on the $8.6 million increase in AR reserve, could you break that down into kind of dining and housekeeping?
Ted Wahl: Yes, we don’t have that information available. And typically, that’s not how we look at it. The bad debt is – and the AR reserves are more calculated based off of each specific customer irrespective of services. Tao, it’s more customer-driven than it is service driven.
Tao Qiu: So is it spread out across multiple clients or is it concentrating a few?
Ted Wahl: It’s spread across multiple clients. And that’s really driven. If you recall, pre-CECL, there was – it was a highly qualitative approach taken towards bad debt analysis and review. CECL has introduced what I would describe as a highly quantitative approach that’s really based off of aging buckets and customer specific aging. So it’s different than it had been conducted, say, pre-2020 or pre-2021, but we’re – it’s obviously the accounting guidance that required to year two, and we’re doing just that.
Tao Qiu: That’s helpful, thank you.
Ted Wahl: Thank you, Tao.
Operator: Your next question comes from the line of Andy Wittmann with Baird.
Andy Wittmann: Great, thanks guys sorry for some background noise here. I guess I wanted to dig in a little bit on the $9.8 million benefit from the workers’ comp. Certainly, having your employees injuries trending downwards is a good thing, there’s no doubt about that. But I just want to understand the accounting here. I suspect that this is the actuarial review that you guys have to do annually that look back a number of years?
