What changed in this filing

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Item 1A. Risk Factors

2024-02-29 compared with 2023-02-28 · 124 added, 160 removed, 238 unchanged (54% of the section changed)

RISK FACTORS.

Our business, operations and financial condition are subject to various risks.

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The Medicare program reimburses outpatient rehabilitation providers based on the Medicare Physician Fee Schedule (“MPFS”).

For services provided in 2017 through 2019, a 0.5% increase was applied

to the fee schedule payment rates before applying the mandatory budget neutrality adjustment.

For services provided in 2020 through 2025 no adjustment is expected to be applied each year to the fee schedule payment rates, before applying the

mandatory budget neutrality adjustment.

For services provided in 2024, we expect our reimbursement rates under the

MPFS to be approximately 3.5% less than the applicable reimbursement rates during 2023.

Statutes, regulations, and payment rules governing the delivery of therapy services to Medicare beneficiaries are complex and subject to interpretation.

The Company believes that the Company is

in compliance, in all material respects, with all applicable laws and regulations and are not aware of any pending or threatened investigations involving allegations of potential wrongdoing that would have a material effect on the Company’s

The Company believes that the Company is in

compliance, in all material respects, with all applicable laws and regulations and are not aware of any pending or threatened investigations involving allegations of potential wrongdoing that would have a material effect on the Company’s

financial statements as of December 31, 2023.

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Medicare program.

For the year ended December 31, 2022 and 2021, respectively, net patient revenue from Medicare were approximately $154.9 million and $134.4 million, respectively.

Given the history of frequent revisions to the Medicare program and its reimbursement rates and rules, we may not continue to receive reimbursement rates from Medicare that sufficiently compensate us for our services

or, in some instances, cover our operating costs.

For the year ended December 31, 2023 and 2022, respectively, net patient revenues from Medicare were approximately $170.7 million and $154.9 million, respectively.

Given the history of frequent revisions to the Medicare program and its reimbursement rates and rules, we may not continue to receive reimbursement rates from Medicare that sufficiently compensate

us for our services or, in some instances, cover our operating costs.

Limits on reimbursement rates or the scope of services being reimbursed could have a material adverse effect on our revenue, financial condition, and results of operations.

Additionally, any delay

or default by the federal or state governments in making Medicare and/or Medicaid reimbursement payments could materially and, adversely, affect our business, financial condition and results of operations.

We expect the federal and state governments to continue their efforts to contain growth in Medicaid expenditures, which could adversely affect our revenue and profitability.

Medicaid spending has increased rapidly in recent years, becoming a significant component of state budgets.

This, combined with slower state revenue growth, has led both the federal government and

many states to institute measures aimed at controlling the growth of Medicaid spending, and in some instances reducing aggregate Medicaid spending.

We expect these state and federal efforts to continue for the foreseeable future.

Furthermore, not

all of the states in which we operate, most notably Texas, have elected to expand Medicaid as part of federal healthcare reform legislation.

There can be no assurance that the program, on the current terms or otherwise, will continue for any

particular period of time beyond the foreseeable future.

If Medicaid reimbursement rates are reduced or fail to increase as quickly as our costs, or if there are changes in the rules governing the Medicaid program that are disadvantageous to our

businesses, our business and results of operations could be materially and adversely affected.

Additionally, any delay or default by the federal or state governments in making Medicare and/or Medicaid reimbursement payments could materially and, adversely, affect our business, financial condition and results of operations.

Revenue we receive from Medicare and Medicaid is subject to potential retroactive reduction.

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audits by regulatory and governmental authorities, could adversely affect our financial condition and results of operations.

Additionally, from time to time we become aware, either based on information provided by third parties and/or the results of internal audits, of payments from payor sources that were either wholly or

partially in excess of the amount that we should have been paid for the service provided.

Additionally, from time to time we become aware, either based on information provided by third parties and/or the results of internal audits, of payments from payor sources that were either wholly

or partially in excess of the amount that we should have been paid for the service provided.

Overpayments may result from a variety of factors, including insufficient documentation supporting the services rendered or medical necessity of the

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require us to incur significant legal and document production expenses as we cooperate with the government authorities, regardless of whether the particular investigation, audit or review leads to the identification of underlying issues.

As a result of increased post-payment reviews of claims we submit to Medicare for our services, we may incur additional costs and may be required to repay amounts already paid to

We depend upon reimbursement by third-party payors.

Substantially all of our revenues are derived from private and governmental third-party payors.

In 2023, approximately 63.4% of our revenues were derived collectively from managed care plans,

commercial health insurers, workers’ compensation payors, and other private pay revenue sources while approximately 36.6% of our revenues were derived from Medicare and Medicaid.

Initiatives undertaken by industry and government to contain

healthcare costs affect the profitability of our clinics.

These payors attempt to control healthcare costs by contracting with healthcare providers to obtain services on a discounted basis.

We believe that this trend will continue and may limit

reimbursement for healthcare services.

If insurers or managed care companies from whom we receive substantial payments were to reduce the amounts they pay for services, our profit margins may decline, or we may lose patients if we choose not to

renew our contracts with these insurers at lower rates.

In addition, in certain geographical areas, our clinics must be approved as providers by key health maintenance organizations and preferred provider plans.

Failure to obtain or maintain

these approvals would adversely affect our financial results.

In recent years, through legislative and regulatory actions, the federal government has made substantial changes to various payment systems under the Medicare program.

See “Business—Sources of

Revenue – Physical Therapy Services” in Item 1 for more information including changes to Medicare reimbursement.

Additional reforms or other changes to these payment systems may be proposed or adopted, either by the U.S.

Congress or by CMS,

including bundled payments, outcomes-based payment methodologies and a shift away from traditional fee-for-service reimbursement.

If revised regulations are adopted, the availability, methods and rates of Medicare reimbursements for services of

the type furnished at our facilities could change.

Some of these changes and proposed changes could adversely affect our business strategy, operations and financial results.

Our facilities are subject to extensive federal and state laws and regulations relating to the privacy of individually identifiable patient information.

HIPAA required the HHS to adopt standards to protect the privacy and security of individually identifiable health-related information.

The department released final regulations containing privacy

standards in 2000 and published revisions to the final regulations in 2002.

The privacy regulations extensively regulate the use and disclosure of individually identifiable health-related information.

The regulations also provide patients with

significant rights related to understanding and controlling how their health information is used or disclosed.

The security regulations require healthcare providers to implement administrative, physical and technical practices to protect the

security of individually identifiable health information that is maintained or transmitted electronically.

HITECH, which was signed into law in 2009, enhanced the privacy, security and enforcement provisions of HIPAA by, among other things

establishing security breach notification requirements, allowing enforcement of HIPAA by state attorneys general, and increasing penalties for HIPAA violations.

Violations of HIPAA or HITECH could result in civil or criminal penalties.

In addition to HIPAA, there are numerous federal and state laws and regulations addressing patient and consumer privacy concerns, including unauthorized access or theft of personal information.

State statutes and regulations vary from state to state.

Lawsuits, including class actions and action by state attorneys general, directed at companies that have experienced a privacy or security breach also can occur.

We have established policies and procedures in an effort to ensure compliance with these privacy related requirements.

However, if there is a breach, we may be subject to various penalties and

damages and may be required to incur costs to mitigate the impact of the breach on affected individuals.

We are subject to risks associated with public health crises and epidemics/pandemics, such as the novel strain of coronavirus (“COVID-19”).

Our operations expose us to risks associated with public health crises and epidemics/pandemics, such as COVID-19 that has spread globally.

public health crisis may lead to disruption and volatility in the global capital markets, which increases the cost of, and adversely impacts access to, capital and increases economic uncertainty.

A future public health crisis could have an

adverse impact on our operations and supply chains, including a temporary loss of physical therapists and other employees who are infected or quarantined for a period of time, an increase in cancellations of physical therapy patient

appointments and a decline in the scheduling of new or additional patient appointments.

We expect the federal and state governments to continue their efforts to contain growth in Medicaid expenditures, which could adversely affect our revenue and

profitability.

Medicaid spending has increased rapidly in recent years, becoming a significant component of state budgets.

This, combined with slower state revenue growth, has led both the federal government and

many states to institute measures aimed at controlling the growth of Medicaid spending, and in some instances reducing aggregate Medicaid spending.

We expect these state and federal efforts to continue for the foreseeable future.

Furthermore, not

all of the states in which we operate, most notably Texas, have elected to expand Medicaid as part of federal healthcare reform legislation.

There can be no assurance that the program, on the current terms or otherwise, will continue for any

particular period of time beyond the foreseeable future.

If Medicaid reimbursement rates are reduced or fail to increase as quickly as our costs, or if there are changes in the rules governing the Medicaid program that are disadvantageous to our

businesses, our business and results of operations could be materially and adversely affected.

As a result of increased post-payment reviews of claims we submit to Medicare for our services, we may incur additional costs and may be required to repay

amounts already paid to us.

We are subject to regular post-payment inquiries, investigations, and audits of the claims we submit to Medicare for payment for our services.

These post-payment reviews have increased as a result of

government cost-containment initiatives.

These post-payment reviews have increased as a result

of government cost-containment initiatives.

These additional post-payment reviews may require us to incur additional costs to respond to requests for records and to pursue the reversal of payment denials, and ultimately may require us to refund

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For a further description of this and other laws and regulations involving governmental reimbursements, see “Business—Sources of Revenue” and “—Regulation and Healthcare Reform” in Item 1.

An economic downturn, state budget pressures, sustained unemployment and continued deficit spending by the federal government may result in a reduction in reimbursement and covered

An economic downturn, state budget pressures, sustained unemployment and continued deficit spending by the federal government may result in a reduction in

reimbursement and covered services.

An economic downturn, including the consequences of a pandemic, such as COVID-19, could have a detrimental effect on our revenues.

Historically, state budget pressures have translated into reductions

in state spending.

Historically, state budget pressures have translated into

reductions in state spending.

Given that Medicaid outlays are a significant component of state budgets, we can expect continuing cost containment pressures on Medicaid outlays for our services in the states in which we operate.

In addition, an economic

downturn, coupled with sustained unemployment, may also impact the number of enrollees in managed care programs as well as the profitability of managed care companies, which could result in reduced reimbursement rates.

In addition, an

economic downturn, coupled with sustained unemployment, may also impact the number of enrollees in managed care programs as well as the profitability of managed care companies, which could result in reduced reimbursement rates.

The existing federal deficit, as well as deficit spending by federal and state governments as the result of adverse developments in the economy or other reasons, can lead to continuing pressure to

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Such actions in turn may adversely affect our results of operations.

Our debt and financial obligations could adversely affect our financial condition, our ability to obtain future financing, and our ability to operate our business.

We may be required to comply with a put right in one of our acquisition agreements, related to a potential future purchase of a majority interest in a separate

One of our acquisition agreements includes a put right for the potential future purchase of a majority interest in a separate company at a purchase price which is derived based on a specified

multiple of the separate company’s historical earnings.

The exercise of the put right is outside of our control.

In the event the put right is triggered, we are required to purchase the aforementioned equity interest at a calculated purchase

The resulting purchase price may be greater than the fair value of such equity interests at the time, and we may or may not have the capital necessary to satisfy such contractual purchase obligation, in which case we could be in breach.

Our debt and financial obligations could adversely affect our financial condition, our ability to obtain future financing, and our ability to operate our

We have outstanding debt obligations that could adversely affect our financial condition and limit our ability to successfully implement our business strategy.

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Our ability to meet our debt service obligations will depend on our future performance, which will be affected by the other risk factors described herein.

If we do not generate enough cash flow to pay

our debt service obligations, we may be required to refinance all or part of our existing debt, sell our assets, borrow more money or raise equity.

If we do not generate enough cash flow to

pay our debt service obligations, we may be required to refinance all or part of our existing debt, sell our assets, borrow more money or raise equity.

There is no guarantee that we will be able to take any of these actions on a timely basis, on

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If we fail to satisfy our debt service obligations or the other restrictions and requirements in our loan agreements, we could be in default.

Unless cured or waived, a default would permit lenders to

accelerate the maturity of the debt under the credit agreement and to foreclose upon the collateral securing the debt.

Unless cured or waived, a default would permit lenders

to accelerate the maturity of the debt under the credit agreement and to foreclose upon the collateral securing the debt.

Our outstanding loans bear interest at variable rates.

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transactions.

We depend upon reimbursement by third-party payors.

Substantially all of our revenues are derived from private and governmental third-party payors.

In 2022, approximately 62.7% of our revenues were derived collectively from managed care plans,

commercial health insurers, workers’ compensation payors, and other private pay revenue sources while approximately 37.3% of our revenues were derived from Medicare and Medicaid.

Initiatives undertaken by industry and government to contain

healthcare costs affect the profitability of our clinics.

These payors attempt to control healthcare costs by contracting with healthcare providers to obtain services on a discounted basis.

We believe that this trend will continue and may limit

reimbursement for healthcare services.

renew our contracts with these insurers at lower rates.

In addition, in certain geographical areas, our clinics must be approved as providers by key health maintenance organizations and preferred provider plans.

Failure to obtain or maintain

these approvals would adversely affect our financial results.

In recent years, through legislative and regulatory actions, the federal government has made substantial changes to various payment systems under the Medicare program.

See “Business—Sources of Revenue

– Physical Therapy Services” in Item 1 for more information including changes to Medicare reimbursement.

Additional reforms or other changes to these payment systems may be proposed or adopted, either by the U.S.

Congress or by CMS, including

bundled payments, outcomes-based payment methodologies and a shift away from traditional fee-for-service reimbursement.

If revised regulations are adopted, the availability, methods and rates of Medicare reimbursements for services of the type

furnished at our facilities could change.

Some of these changes and proposed changes could adversely affect our business strategy, operations and financial results.

Some of our acquisition agreements contain contingent consideration, the value of which may impact future financial results.

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recognized, the amount of which may be material and could cause volatility in our operating results.

One of our acquisition agreements contains a Put Right related to a potential future purchase of a majority interest in a separate company.

One of our acquisition agreements includes a Put Right for the potential future purchase of a majority interest in a separate company at a purchase price which is derived based on a specified multiple

of the separate company’s historical earnings.

The exercise of the Put Right is outside of our control.

In the event the Put Right is triggered, we are required to purchase the aforementioned equity interest at a calculated purchase price.

resulting purchase price may be greater than the fair value of such equity interests at the time, and we may or may not have the capital necessary to satisfy such contractual purchase obligation, in which case we could be in breach.

Impact on the business and cash reserves resulting from retirement or resignation of key partners and resulting purchase of their non-controlling interests (minority interests).

Impact on the business and cash reserves resulting from retirement or resignation of key partners and resulting purchase of their non-controlling interests

(minority interests).

As described in Note 6 to our financial statements included in Item 8, the redeemable non-controlling interests in our partnerships are held by our partners.

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At the federal level, Congress has continued to propose or consider healthcare budgets that substantially reduce payments under the Medicare programs.

See “Business—Sources of Revenue” in Item 1 for more information.

ultimate content, timing or effect of any healthcare reform legislation and the impact of potential legislation on us is uncertain and difficult, if not impossible, to predict.

That impact may be material to our business, financial condition or

results of operations.

See “Business—Our Operating Segments – Physical Therapy Operations-Sources

of Revenue” in Item 1 for more information.

The ultimate content, timing or effect of any healthcare reform legislation and the impact of potential legislation on us is uncertain and difficult, if not impossible, to predict.

That impact may be

material to our business, financial condition or results of operations.

Our operations are subject to extensive regulation.

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We face inspections, reviews, audits and investigations under federal and state government programs and contracts.

These audits could have adverse findings that may negatively

affect our business.

These audits could have adverse findings

that may negatively affect our business.

As a result of our participation in the Medicare and Medicaid programs, we are subject to various governmental inspections, reviews, audits and investigations to verify our compliance with these

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If adverse inspections, reviews, audits or investigations occur and any of the results noted above occur, it could have a material adverse effect on our business and operating results.

Our facilities are subject to extensive federal and state laws and regulations relating to the privacy of individually identifiable information.

HIPAA required the HHS to adopt standards to protect the privacy and security of individually identifiable health-related information.

The department released final regulations containing privacy

standards in 2000 and published revisions to the final regulations in 2002.

The privacy regulations extensively regulate the use and disclosure of individually identifiable health-related information.

The regulations also provide patients with

significant rights related to understanding and controlling how their health information is used or disclosed.

The security regulations require healthcare providers to implement administrative, physical and technical practices to protect the

security of individually identifiable health information that is maintained or transmitted electronically.

HITECH, which was signed into law in 2009, enhanced the privacy, security and enforcement provisions of HIPAA by, among other things

establishing security breach notification requirements, allowing enforcement of HIPAA by state attorneys general, and increasing penalties for HIPAA violations.

Violations of HIPAA or HITECH could result in civil or criminal penalties.

In addition to HIPAA, there are numerous federal and state laws and regulations addressing patient and consumer privacy concerns, including unauthorized access or theft of personal information.

statutes and regulations vary from state to state.

Lawsuits, including class actions and action by state attorneys general, directed at companies that have experienced a privacy or security breach also can occur.

We have established policies and procedures in an effort to ensure compliance with these privacy related requirements.

However, if there is a breach, we may be subject to various penalties and damages

and may be required to incur costs to mitigate the impact of the breach on affected individuals.

In conducting our business, we are required to comply with applicable laws regarding fee-splitting and the corporate practice of medicine.

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contractual arrangements with our affiliated physicians and other licensed providers.

We are subject to risks associated with public health crises and epidemics/pandemics, such as the novel strain of coronavirus (“COVID-19”).

Our operations expose us to risks associated with public health crises and epidemics/pandemics, such as COVID-19 that has spread globally.

Since early 2020, the continued spread has led to disruption

and volatility in the global capital markets, which increases the cost of, and adversely impacts access to, capital and increases economic uncertainty.

COVID-19 is having, and will continue to have, an adverse impact on our operations and supply chains, including a temporary loss of physical therapists and other employees who are infected or

quarantined for a period of time, an increase in cancellations of physical therapy patient appointments and a decline in the scheduling of new or additional patient appointments.

Due to these impacts and measures, we have experienced, and will

continue to experience, significant and unpredictable impact on employees and reductions and cancellations of our patient visits.

We may be adversely affected by a security breach, such as a cyber-attack, which may cause a violation of HIPAA or HITECH and subject us to potential legal and reputational harm.

We may be adversely affected by a security breach, such as a cyber-attack, which may cause a violation of HIPAA or HITECH and subject us to potential legal and

reputational harm.

In the normal course of business, our information technology systems hold sensitive patient information including patient demographic data and other protected health information, which is subject to

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technology systems and subsequent mitigation activities, or regulatory action taken as a result of such incident.

We provide our employees training and regular reminders on important measures they can take to prevent breaches.

We provide our employees with training and regular reminders on important measures they can take to prevent breaches.

identify attempts to gain unauthorized access to our systems.

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Our revenue generation is dependent upon referrals from physicians in the communities our clinics serve, and our ability to maintain good relations with these physicians.

Our therapists are the front

line for generating these referrals and we are dependent on their talents and skills to successfully cultivate and maintain strong relationships with these physicians.

If we cannot recruit and retain our base of experienced and clinically skilled

therapists, our business may decrease and our net operating revenues may decline.

Periodically, we have clinics in isolated communities that are temporarily unable to operate due to the unavailability of a therapist who satisfies our standards.

We may also experience increases in our labor costs, primarily due to higher wages and greater benefits required to attract and retain qualified healthcare personnel, and such increases may adversely

affect our profitability.

Our therapists are the

front line for generating these referrals and we are dependent on their talents and skills to successfully cultivate and maintain strong relationships with these physicians.

If we cannot recruit and retain our base of experienced and clinically

skilled therapists, our business may decrease, and our net operating revenues may decline.

Periodically, we have clinics in isolated communities that are temporarily unable to operate due to the unavailability of a therapist who satisfies our

We may also experience increases in our labor costs, primarily due to higher wages and greater benefits required to attract and retain qualified healthcare personnel, and such increases may

adversely affect our profitability.

Furthermore, while we attempt to manage overall labor costs in the most efficient way, our efforts to manage them may have limited effectiveness and may lead to increased turnover and other challenges.

Failure to maintain effective internal control over our financial reporting could have an adverse effect on our ability to report our financial results on a timely and accurate

Failure to maintain effective internal control over our financial reporting could have an adverse effect on our ability to report our financial results on a

timely and accurate basis.

We are required to produce our consolidated financial statements in accordance with the requirements of accounting principles generally accepted in the United States of America.

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As part of our growth strategy, we intend to continue pursuing acquisitions of outpatient physical therapy clinics and industrial injury prevention services businesses.

Acquisitions may involve

significant cash expenditures, potential debt incurrence and operational losses, dilutive issuances of equity securities and expenses that could have an adverse effect on our financial condition and results of operations.

Acquisitions involve

numerous risks, including:

There can be no assurance

that we will be able to successfully identify or complete future acquisitions.

Acquisitions may involve significant cash expenditures, potential debt incurrence and operational losses, dilutive issuances of equity securities and expenses that

could have an adverse effect on our financial condition and results of operations.

Acquisitions involve numerous risks, including:

the difficulty and expense of integrating acquired personnel into our business;

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In our industrial injury prevention services business, we perform services for large employers and their employees pursuant to contracts and other services agreement.

These contracts and other services agreements

are able to be terminated by the employer-clients on little or short notice, and either a breach or termination of those contractual arrangements by such clients could cause operating results to be less than expected.

Similarly, in our

rehabilitation business, we have management and other services agreements with hospitals, physician groups and other ancillary providers;

either a breach or termination of those contractual arrangements by such clients could cause operating

results to be less than expected.

These contracts and other

services agreements are able to be terminated by the employer-clients on little or short notice, and either a breach or termination of those contractual arrangements by such clients could cause operating results to be less than expected.

Similarly, in our rehabilitation business, we have management and other services agreements with hospitals, physician groups and other ancillary providers;

either a breach or termination of those contractual arrangements by such clients could

cause operating results to be less than expected.

RISKS RELATED TO OUR COMMON STOCK

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The number of shares of our common stock eligible for future sale could adversely affect the market price of our stock.

At December 31, 2022, we had reserved approximately 185,117 shares for future equity grants.

On December 31, 2023, we had reserved approximately 513,193 shares for future equity grants.

We may issue additional restricted securities or register additional shares of common stock under the

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shares of common stock eligible for future sale under effective registration statements, under Rule 144 or otherwise, could adversely affect the market price of the common stock.

Provisions in our articles of incorporation and bylaws could delay or prevent a change in control of our company, even if that change would be beneficial to our stockholders.

Provisions in our articles of incorporation and bylaws could delay or prevent a change in control of our company, even if that change would be beneficial to

our stockholders.

Certain provisions of our articles of incorporation and bylaws may delay, discourage, prevent or render more difficult an attempt to obtain control of our company, whether through a tender offer,

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These provisions include the charter authorization of “blank check” preferred stock and a restriction on the ability of stockholders to call a special meeting.

UNRESOLVED STAFF COMMENTS.

We lease the properties used for our clinics under non-cancelable operating leases with terms ranging from one to five years, with the exception of the property for one clinic which we own.

to lease the premises for any new clinic locations except in rare instances where leasing is not a cost-effective alternative.

Our typical clinic occupies 1,000 to 7,000 square feet.

There are 19 clinics occupying space in the range of over 7,000

square feet to 13,500 square feet.

We also lease our executive offices located in Houston, Texas, under a non-cancelable operating lease expiring in February 2028.

We currently lease approximately 44,000 square feet of space (including

allocations for common areas) at our executive offices.

LEGAL PROCEEDINGS.

We are a party to various legal actions, proceedings, and claims (some of which are not insured), and regulatory and other governmental audits and investigations in the ordinary course of our

We cannot predict the ultimate outcome of pending litigation, proceedings, and regulatory and other governmental audits and investigations.

These matters could potentially subject us to sanctions, damages, recoupments, fines, and other

The Department of Justice, CMS, or other federal and state enforcement and regulatory agencies may conduct additional investigations related to our businesses in the future that may, either individually or in the aggregate, have a

material adverse effect on our business, financial position, results of operations, and liquidity.

Healthcare providers are subject to lawsuits under the qui tam provisions of the federal False Claims Act.

Qui tam lawsuits typically remain under seal for some time while the government decides

whether or not to intervene on behalf of a private qui tam plaintiff (known as a relator) and take the lead in the litigation.

These lawsuits can involve significant monetary damages and penalties and award bounties to private plaintiffs who

successfully bring the suits.

We have been a defendant in these cases in the past, and may be named as a defendant in similar cases from time to time in the future.

Prior Florida Legal Matter

In 2019, a qui tam lawsuit (“the Complaint”) was filed by a relator on behalf of the United States against the Company and one of our Florida majority-owned subsidiaries (the “Hale Partnership”).

This whistleblower lawsuit was filed in the U.S.

District Court for the Southern District of Texas, seeking damages and civil penalties under the federal False Claim Act.

The U.S Government declined to intervene in the case and unsealed the

Complaint in July 2019.

The Complaint alleged that the Hale Partnership engaged in conduct to purposely “upcode” its billings for services provided to Medicare patients.

The plaintiff-relator also claimed that similar false claims occurred on

other days and at other Company-owned partnerships.

In January 2022, the Company entered into a settlement agreement with the plaintiff-relator.

In the settlement agreement, the plaintiff-relator released all defendants from liability for all conduct

alleged in the Complaint, and the Company admitted no liability or wrongdoing.

In connection with the settlement, the Office of the United States Attorney for the Southern District of Texas agreed to a dismissal of the claims against the Hale

Partnership and the Company.

Under the terms of the settlement, the Company agreed to make aggregate payments to the government, the plaintiff-relator and her counsel of $2.8 million.

MINE SAFETY DISCLOSURES.

Not Applicable.

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 1A. Risk Factors