Andrew Mok: Got it. That’s helpful. And then just wanted to follow up on the free cash flow. How did that trend relative to your internal expectations? And it seems like there’s still some seasonal elements here that are impacting that or timing elements. Can you — can we get a refresh view on expectations and cadence for the balance of the year?
Dave Doherty: Yes, for sure. As you know, 2023, we generated positive operating cash flow and free cash flows for the first time in the company’s history. And we continue to expect that operating and free cash flow will exceed prior year amounts for the full year. Prior year and current year quarters purely impacted by timing-related items, which we expect to normalize on a full year basis.
Operator: Our next question is from Sarah James with Cantor Fitzgerald.
Sarah James: You talked about the back half of the year being more driven by volume than revenue per case, but it also sounded like strong revenue per case was related to acuity, including hiring mix, so things that would continue. So wondering if you can clarify why you would expect revenue per case to normalize down? And if there was any kind of onetime benefit that inflated revenue per case in 1Q like [DPP] or anything else?
Wayne DeVeydt: Just a reminder, as I mentioned earlier, I think first and foremost, it’s important to recognize that as we get closer towards the end of the year, we will have, obviously, the same level of higher acuity cases we have in many situations. But we do have extra business days and the number of Mondays and Tuesdays, again, do affect a lot of procedures, specifically GI and ophthalmology, and there’s a lot more volume on those days. And again, the number of Mondays and Tuesdays will disproportionately affect that mathematical calculation in any one quarter. The second thing I would just remind you is as we continue to grow in these high-acuity procedures just the math of it, if we grow quite a bit in the fourth quarter as we did last year and then you move to the fourth quarter of this year, we’ll continue to grow on those, but the incremental growth in terms of how the math of that calculation works gets somewhat abated.
So the way I would look at it is not to look at any one quarter, but to look at the algorithm for the full year and as Eric mentioned earlier, we expect to exceed or at least be at the high end of that 2% to 3% on volume for the full year biased towards exceeding that in the back half of the year due to the extra days. And then I would also say that relative to the rate, I definitely believe we’ll be well above the 2% to 3% targeted rate. So same-store is probably going to finish closer to high single digit for the year, but a little more balanced as we get to the full annualized basis.
Sarah James: That’s helpful. And just on thinking about the calendar, given we did have that calendar pressure in 1Q for planned procedures with spring break and Easter. Did you see that come back in April? Have you already seen it come back into the system?
Wayne DeVeydt: Look, I don’t want to get ahead of ourselves. It’s one month, but we are not disappointed with April.
Operator: Our next question is from Gary Taylor with TD Cowen.
Gary Taylor: Most of my good questions asked, so just a few detailed ones. Just first, on supplies, really good performance there, I think, flat dollars and supply cost per case down 1.4% year-over-year, best result in a few years, I think. Anything unique to call out on supply expense?
Dave Doherty: No, nothing unusual.
Gary Taylor: But I wouldn’t — I mean, would we be modeling this as good for the rest of the year, or think about having some modest level of inflationary growth or mix growth in that, I would think.
Dave Doherty: No. Our inflationary growth factors that we built into our guidance would be marginal and well contained within our revenue growth.
Gary Taylor: But mix growth would be the factor if we see that, right?
Dave Doherty: As a percent of revenue, it should be neutral.
Gary Taylor: Okay. And then can you just elaborate for a second on the AR growth in the quarter? I think you highlighted that in the release. Anything related to change or is it state program accruals that aren’t yet paid? Like any comments there?
Dave Doherty: Yes. Thanks for pointing that out. That is not specifically related to the items that you mentioned. It’s almost purely related to the growth in the organization, both from recent acquisitions and from growth in revenue and then typical seasonal patterns for the first quarter billing cycles.
Gary Taylor: Last one for me. On the acquired practice as part of this system deal is that orthopedic practices or any detail you could provide there?
Eric Evans: Yes. So it is — yes, it is orthopedic-related practices. As you know, I mean, we are primarily an enabler of independent physicians. And even when we do this type of arrangement, we do it in partnership even at the practice level, and it’s tied to our surgical facilities. But yes, those are MSK-related practice.
Operator: Our next question is from Bill Sutherland with The Benchmark Company.
Bill Sutherland: Curious, Dave, if given you’ve gotten to the target already in April for the capital deployment for the year. Clearly, even they closed a little bit more. You said $200 million to $250 million. But kind of how are you thinking about it at this point from an opportunistic perspective? Or is this really kind of [indiscernible] the year?
Wayne DeVeydt: The short answer is I’m optimistic it won’t be the last acquisitions for the year. As Dave mentioned earlier, at the end of the quarter, we have over $800 million available at the consolidated level plus the undrawn revolver. And as Dave mentioned, we plan to grow into our free cash flow as the year progresses. And so the pipeline is robust. It’s — despite the number of acquisitions we completed, it continues to be in that high $200-plus million still of many transactions. And I would anticipate we have an opportunity to get a few more done this year. But we haven’t baked any of that into our outlook because again, it can be fickle and these things can change as the year progresses. But right now, I think there’s a very reasonable chance we’ll do better than the $200 million.
Bill Sutherland: That’s good. Eric, can you kind of go through the de novo progression? I mean, you hit it during the prepared comments, but — and perhaps how it will flow through to the income statement as these get developed?
