Question-and-Answer Session
Operator
Thank you. (Operator instructions) Your first question is coming from Art Henderson with Jefferies & Company. Please go ahead.
Art Henderson – Jefferies & Company
Hi, good morning, and very nice quarter. A couple questions for you. The guidance that is the renewed guidance that you've given, the $1.36 to $1.43, what are the swing factors that get you to the high end versus the low end, John?
John Potapchuk
Art, I think a couple things. One is certainly the revenue range as we get closer to that higher end of the revenue range, that helps. I think if we maintain the current interest rate environment that certainly would help, meaning that we wouldn't have increases in our LIBOR rate as the year continues. And I think if we continue to push on changing that mix, and granting more Medicare and Medicare like services with higher margins, that certainly will help also.
Art Henderson – Jefferies & Company
That's helpful. My follow-up is kind of a two-part question. Ron or Tony, could you characterize sort of what the M&A environment is looking like now that you've got increased visibility, I guess, with Medicare reimbursement, and you've had a real full quarter of adjusting to the case mix reforms. And then also, Tony, if you don't mind commenting on as to how long it might take or at least what your steps are to getting clinicians on that variable comp structure. I think you said you were at 53% now but what are your expectations over the next couple quarters? Thanks very much.
Tony Strange
Okay, I'll address the first part. As it relates to acquisitions, the pipeline is – I think we talked about on our last call that that continues to be pretty robust. There is not a lot of big deals out there. There's not a lot of – there's just not a lot of big home health companies but that small to medium-sized range acquisition, there seems to be plenty of opportunity. We haven't seen really a decline in multiples. I think that there is just probably more opportunity.
As it relates to the second part of your question, if you recall probably over the last couple years, we've talked about migrating clinicians to a pay-per-visit basis based on as need. And so I don't think we've given any kind of indication that says okay, by the end of next year we will be completely done with that, because we may have some markets where going to a pay-per-visit structure may actually be harmful to the business as opposed to helpful. I would expect that 53% to continue to increase. Matter of fact, most of the net clinician adds that we had in Q2 were on a pay-per-visit basis. Matter of fact, more – we had a reduction in the salaried adds and more hires in the paid per visit adds, so the net of 140 might have included say 200 that were actually moving to a pay-per-visit model. So as time goes on, 53 will continue to increase, but there is not necessarily an end date in sight that says by this date everybody is going to be converting.
- To read the full transcript on Seeking Alpha, click here »
