Leo Holdings Corp. II

The company did not state quarterly revenue or EPS in the transcript, but it did give 2022 guidance context: implied adjusted EBITDA margin of about 11.1%, long-term consolidated EBITDA margin target of 13%–15%, and operating cash flow conversion of roughly 64% from EBITDA. Management said 2022 operating cash flow should be about $180 million before CARES Act recoveries, with roughly $106 million of Medicare advance payments still to be recouped and one additional deferred payroll tax payment, leaving about $30 million after about $20 million of CapEx before M&A. On labor, management said contract nursing utilization was 4% in Q3 and 3.8% in Q4, with further improvements expected to about 1.8%–2% in the back half of 2022. Organic growth guidance was given as 5%–7% for home health and 6%–8% for hospice, with a cost improvement initiative expected to contribute about $25 million in EBITDA, including $4.9 million in Q1. On capital allocation, management said 2022 looks like a 'pretty benign debt year' and there is no additional buyback contemplated beyond what already occurred.

Keith Myers framed the business as operating in a favorable policy and demand environment, saying there is broad consensus that patients want care at home and that Congress and CMS are increasingly supportive of home-based care. He highlighted strong referral demand, record growth in new position referrals, and said the current challenge is not demand but short-term labor disruption. His tone was confident and strategic, emphasizing that many COVID-era flexibilities could become permanent and that the company is positioned for another strong year through organic growth and M&A.

Dale Mackel focused on margin, cash flow, and leverage. He said 2022 guidance implies about 11.1% EBITDA margin, while the longer-term consolidated EBITDA opportunity remains 13%–15% as COVID fades and acquisitions are integrated over a 12- to 18-month period. On cash, he said EBITDA-to-cash conversion is about 64%, or roughly $180 million of operating cash flow, but CARES Act recoveries and deferred payroll taxes will reduce that to about $30 million after about $20 million of CapEx, making it a mostly flat debt year. He also noted 2021 included about $212 million of Medicare advance payment recoupments and about $26 million of deferred payroll tax payments, underscoring the temporary cash drag.

Analysts focused on long-term margin potential, 2022 cash flow, leverage, labor shortages, hospice trends, non-Medicare growth, PDGM risk, and the impact of COVID-era policy changes. Management said hospice length of stay around 85.6 days looks sustainable, Q1 hospice admissions are pacing to just over 10% organic growth, and the 2021 leadership realignment was already helping. On labor, management said net hires were up about 5% across full-time clinicians, contract labor should decline toward pre-pandemic levels, and staffing remains the main limiter to growth rather than demand. On policy, Keith Myers said CMS and Congress support many home-based care reforms, the Choose Home legislation is being scored by CBO, and management does not expect the harshest proposed cuts to ultimately stick.