Operator: Our next question comes from the line of Kevin Caliendo with UBS. Your line is open.
Kevin Caliendo: Thanks. Thanks for taking my question. I think the math on the fourth quarter would suggest a little bit of a step down in productivity per doc. I know there’s a bunch of new ads, and you also called out the holiday season. I’m just wondering what the net impact is of the calendar in 4Q in terms of days? And also, was there any calendar impact in Q3 year-over-year?
Dave Bourdon: Hey Kevin, it’s Dave. Good morning. Thanks for the question. In regards to the fourth quarter, I think you nailed it around the reason for the step down sequentially in revenue. It is the result of less, you know, we call them effective. We think of them as effective business days because of the holiday vacation season for our clinicians. So as a result, we do expect to see a step down in productivity or visits per clinician in the quarter. That’s partially offset by the pickup in rates, which is what’s driving – adjusted EBITDA almost doubling when you think about fourth quarter this year versus last year. So that’s the primary dynamic of what’s happening.
Kevin Caliendo: Okay. That’s helpful. And again, these rates are really just kind of kicking in now. This is what you were holding the claims back for, that gets added back. That’s the delta. Is there any way to quantify the rate increase or the net rate increase? I know that’s a difficult question.
Dave Bourdon: Yes, we’re not going to dimension that, but it’s – what you said is accurate, which is the rates came in or kicked in the middle of the quarter. So we’re going to get the full effect of those in the fourth quarter. And we also have some additional contracts that are being updated for improved rates in the fourth quarter as well, which also helps.
Kevin Caliendo: Great. This is a little bit more sensitive, perhaps, but when you have a compensation model sort of class action suit, how does that impact? How has that impacted internally your churn rate or anything else? Has it had any impact? And you gave us the net number, which was fantastic. I’m just wondering if there was – if you saw any increase in churn because of these headlines that you have to deal with and just wondering what it does internally operationally, how do you manage something like that, because obviously it can be challenging?
Danish Qureshi: Yes, this is Danish. I can speak to that. So, our clinician retention continues to remain stable. Our ability to attract new clinicians continues to be strong as indicated by our 286 net clinician ads in the quarter. So though there will always be background noise in anything and this has always been a competitive or a highly competitive market, we still believe strongly that our value proposition continues to resonate in both our ability to attract and retain clinicians.
Kevin Caliendo: Great. Thanks, and thanks for all the color on the litigation stuff. Super helpful. Thanks, guys.
Operator: Next question comes from the line of Jamie Perse with Goldman Sach. Your line is open.
Jamie Perse: Hey, thank you. Good morning. I wanted to go back just to Center level margins and Danish’s comments around another 30 centers that can be consolidated over the near term. Should we think about the progress you guys have made on Center margin and as you consolidate those incremental centers, a similar type of benefit or just any color on how to think about the contribution from consolidating those on gross margin?
Dave Bourdon: Hey, good morning. Good morning, Jamie. It’s Dave. Thanks for the question. So we’re going to – as Danish mentioned in his prepared remarks, we’re going to close approximately 70 centers this year. The financial benefit, we’re only getting a partial this year. So think of that in the two to three million range for favorability or favorability to our expenses this year. In regards to 2024, that run rate is more over $5 million. So that’s what we think of in the contribution to improved Center costs for 2024.
Jamie Perse: Okay, perfect. And then just going back to, I guess, the initial kind of strategy for the company a few years ago and going into new states. I just wanted to ask about that if that’s still an opportunity for you guys as you are shifted away from M&A or if you feel like you have enough opportunity in existing states to continue to grow?
Ken Burdick: Jamie, this is Ken. We think we have tremendous opportunity within our existing footprint. It doesn’t mean we will not expand into greater states, but more emphasis for the foreseeable future is going to be building out our presence in the 33 states that we already reside. And as it relates to M&A, I’m glad you asked. We’ve been very clear that we’re really going to hold off on tuck-in acquisitions until we have solidified our platform and can move acquired practices onto that solid stable and high performing platform. We also look to do that when we can fund it out of free cash, so that is on the horizon, but not on the near term horizon.
Jamie Perse: Okay, great. Thank you.
Operator: Next question comes from the line of Brian Tanquilut with Jefferies. Your line is open.
Brian Tanquilut: Hey, good morning guys. Congrats on the quarter. I guess my first question. I know in your prepared remarks you touched on NPS and some of the things that you’re doing to improve patient experience. Maybe if you can just elaborate on some of those things and what you’re doing to address some of the concerns that are out there in the market on cancellation fees and things like that patients are having to face as they approach your clinics and try to get the care?
Ken Burdick: Yes, Brian, I’m going to give you my thoughts and then I’d love for Danish to weigh in. We’re certainly aware of some of the noise that’s out there. We’re not going to dignify it with a direct rebuttal. But what I can tell you is that the thought that somehow we are inducing cancellations and no-shows is absolutely nonsense. As Danish has reported every quarter, it’s been a priority for us to reduce cancellations and no-shows. And we’ve done that in a meaningful way over this past year. So the way I would describe it is we have been in a hypergrowth mode since our founding. We’re now conducting approximately six million patient visits a year. As we share in these calls, our operations are not as buttoned up as we will be going forward.
So I’m not going to say that every patient experience meets our standard. But what I will absolutely say is there is no strategy or systematic approach to try to make the patient experience anything other than exceptional. And frankly, we’re offended when somebody suggests otherwise.
Danish Qureshi: Yes, I think that’s very well said Ken. The only thing I would add is – as we look at continuing to improve the overall experience for our patients, we’re very proud of the NPS that we’re delivering today of 80. But we will remain focused on any patients or clinician experience that is not positive to looking to mitigate that and improve that overall feeling where and when we can. I think some of our very direct investments in increasing staffing and service levels on our billing solution centers to be able to ensure that patients when they do have questions have easy and quick access to someone who can help them understand their bill or any concerns they may have as related to. That’s what it’s a fees as well as our increases in frontline staffing so that at the center level, our patients and our clinicians feel a more direct level of support in their local market rather than trying to navigate a call center.
