Prepared remarks
Good morning, and thank you for standing by. Welcome to the Accendra Health Second Quarter 2026 Earnings Conference Call. Please be advised that today's conference call is being recorded. I would now like to hand the conference call over to your first speaker today, Will Parrish, Vice President, Strategy, Corporate Development and Investor Relations.
Thank you, operator, and good morning, everyone. I'd like to welcome you to Accendra Health's second quarter earnings call. Our comments on the call will be focused on the financial results of the second quarter of 2026, all of which are included in today's press release. The press release, along with the second quarter 2026 supplemental slides, which we will refer to throughout the call are posted in the Investor Relations section of our website. Please note that during this call, we will make forward-looking statements that reflect the current views of Accendra Health about our business, financial performance and future events. The matters addressed in these statements are subject to risks and uncertainties, which could cause actual results to differ materially from those projected or implied here today. Our expectations, beliefs and projections are expressed in good faith, and we believe there is a reasonable basis for them. However, there can be no assurance that our expectations, beliefs and projections will result or be achieved. Please refer to our SEC filings for a full description of these risks and uncertainties, including the Risk Factors section of our annual report on Form 10-K and quarterly reports on Form 10-Q. Any forward-looking statements that we make on this call, in our earnings press release or in our supplemental slides are as of today, and we undertake no obligation to update these statements as a result of new information or future events, except to the extent required by applicable law. In our discussion today, we will refer to non-GAAP financial measures and believe they might help investors to better understand our performance or business trends. Information about these measures and reconciliations to the most comparable GAAP financial measures are included in our press release. Today, I'm joined by Ed Pesicka, Accendra Health's President and Chief Executive Officer; Jon Leon, the company's Chief Financial Officer; and Perry Bernocchi, the company's Chief Operating Officer. I will now turn the call over to Ed. Ed?
Thank you, Will. Good morning, everyone, and thank you for joining us on the call today. Before I dive into our second quarter results and the outlook for the balance of the year, I'd like to take a moment to address the announcement included in today's press release that I have informed the Board of Directors of my intention to retire by the end of 2026. The decision to retire is never easy. However, after discussions with my family and careful thought, I've decided that now is the right time. It has been an honor and privilege to serve as President and CEO for nearly eight years. During that time, we initially stabilized the company when I joined, enabling us to successfully guide the company through the unprecedented challenges of the COVID-19 pandemic, then navigate the company through the post-pandemic environment, complete the sale of the P&HS segment and most recently execute our balance sheet optimization and debt realignment. Together, these milestones have transformed the company into a focused pure-play home-based health care business with a strong strategic foundation. With these important milestones largely behind us, I believe the company is well positioned for its next chapter. The timing is right to begin a thoughtful leadership transition that allows the next CEO to build on the foundations we've established, capitalize on the opportunities ahead and create long-term value for our patients, customers, employees and shareholders. The Board has a long-standing succession planning process, and I'm confident that we will have a successful CEO transition. In closing, I would like to personally thank the Board of Directors, the company leadership team and our 6,000 teammates for all the dedication, hard work and support over the last eight years. Now, let me turn to the business updates. Looking at our second quarter performance, our results did not meet the expectations we set for ourselves. At the same time, the quarter reflected continued progress in several areas that are critical to our long-term transformation. We successfully advanced our separation from Owens & Minor, remained on schedule with the transition away from a large commercial payor earlier this year and continue to strengthen the operational foundation of the business as Accendra Health. That said, our results also demonstrate that we have additional work to do to optimize our cost structure and improve execution. As I'll discuss in a moment, we have already implemented a number of these initiatives and have additional actions planned that are designed to streamline our operations, improve efficiencies and reduce costs. We also experienced several discrete headwinds during the quarter that we believe are temporary in nature and affect our near-term financial performance and cash flow. I'll provide more detail on these shortly. Importantly, the quarter also included several accomplishments that reinforce our confidence in the future. We made meaningful progress in a number of strategic initiatives that we believe have the potential to drive attractive growth beginning in late 2026 and continuing into 2027. Turning now to the key drivers of our second quarter performance. There were three primary factors that contributed to the variance from our forecast: one, revenue growth below our expectations; two, the timing of planned cost reductions; and three, slower-than-expected recovery of our collection rate. Starting with revenue: while we were pleased to see revenue growth improve sequentially from the first quarter to the second quarter, excluding the impact of the large commercial payor exits, overall growth remained below both our expectations and the level this business is capable of delivering. To accelerate growth, we have made targeted changes within our commercial and operational organizations to improve customer responsiveness, strengthen execution and reinvigorate our sales force. We are already seeing positive momentum, and several important initiatives are either underway or expected to begin contributing over the coming quarters. Starting with the renewal of our largest soft good contract with our largest commercial payor, which we discussed during the last earnings call but was formally executed during the second quarter. This provides greater stability across an important portion of our commercial payor portfolio for years to come. Building on that success, we also signed a new sole-source agreement with a regional health system that is expected to launch in early 2027. In addition, we executed a broader enterprise-wide fee-for-service agreement with another payor that we believe will drive additional patient volume, improve capacity utilization and create meaningful value for both organizations. Moving now to cost reductions. Following our separation from Owens & Minor on December 31 and the transition away from the large commercial payor during the first quarter, we identified and eliminated more than $125 million of annualized costs. Soon after completing this takeout, we identified the need to allow the business to settle and stabilize from these changes before introducing additional cost reductions, which could have created disruption while we were, one, settling in as a new pure-play home-based health care business; two, completing the exit of the large commercial payor; and three, executing our balance sheet optimization. In addition, while our transition service agreements with Owens & Minor continue to wind down on schedule, those temporary interdependencies have limited our ability to fully optimize our organizational structure during the first half of the year. Although the timing has been somewhat later than originally anticipated, our commitment to improving our cost structure has not changed. Approximately one month into the third quarter, we have already executed the next phase of targeted cost reductions, and we'll continue evaluating additional opportunities in the coming months. Another example of our ongoing efforts to reduce our cost to serve is the pursuit of new arrangements with leading logistics providers for inventory management and fulfillment across select product categories. We expect the arrangements to go live later this year and believe they will both lower our operating cost and reduce inventory, thereby improving cash flow. Looking further ahead, continued investment in technology, automation and process improvement should enable us to operate even more efficiently while supporting future growth. Continuing with the theme of operational efficiencies and cost reductions, we continue to advance our national rollout of our Sleep Center of Excellence during the second quarter. While there is still work to complete, we remain optimistic about this program's ability to contribute to both growth and profitability beginning in late 2026 and continuing into 2027. Finally, moving on to slow payment of collections from payors. We continue to see reimbursement collection rates below the historical norm of the business' typical performance. This has negatively impacted our revenue and adjusted EBITDA in the range of nearly $20 million in the first half of the year. The underlying cause is related to several factors, including growing pains associated with recent technology investments and slower payor payments. Jon will discuss this further in his prepared remarks, specifically related to some discrete inefficiencies with specific commercial payor processes that affected collections and increased accounts receivable. Importantly, we have already implemented mitigation plans with those payors and are seeing encouraging progress, and we expect this issue to recover towards the end of the year and into next year, but we acknowledge that this is taking longer than we initially anticipated. Looking ahead, as I mentioned earlier, we are excited about the commercial and operational changes, the logistics arrangements as well as several strategic agreements that we believe can increase throughput with key commercial payors and further strengthen our competitive position. It is also important to recognize the significant work completed this year to strengthen our financial foundation. In June, we successfully completed our balance sheet optimization, significantly reducing debt. In closing, while we are not satisfied with our second quarter financial performance, we are encouraged by the progress we continue to make in transforming the business. The operational actions underway, the commercial opportunities we have secured and the investments we are making today give us confidence in our ability to improve execution, accelerate growth and expand profitability over time. As I look forward to the remainder of the year and into 2027, I believe Accendra Health is well positioned, and I remain excited about the opportunities ahead for the company. Let me now turn the call over to Jon. Jon?
Thanks, Ed, and good morning. There is much to cover this morning, and I'll begin by reviewing results for the second quarter. Then, I'll cover a few final details of the successful balance sheet optimization transaction that concluded in June, our outlook for the remainder of the year and I'll wrap up with a couple of actions to be taken that will further strengthen our financial profile. As is now the norm, unless otherwise stated, my remarks today will focus on the continuing operations. The continuing operations financial statements represent the total of Accendra Health. And please also note that any discussion about the financial results and outlook for the company will cover only non-GAAP financial measures. You can find GAAP to non-GAAP financial reconciliations in the press release filed a short time ago and residing on our website at accendrahealth.com. In the second quarter of 2026, we faced headwinds in top line growth that was below our expectations and a collection rate waterfall model impact on income that is improving at a slower rate than we had expected. However, during the quarter, and since the end of the quarter, much of the activity that we believe will positively impact our results late in the year is in flight and should benefit the top line, margin, adjusted EBITDA and cash flow. As I walk through the quarterly results, I will speak to them excluding the impact of a large commercial payor that rolled off in Q1 so that everyone has a true like-for-like comparison. Our reported results, of course, include the impact of this payor in the prior year second quarter and its absence in the second quarter and first six months of 2026. With that backdrop, working through detail for the quarter beginning on Slide 7, you can see that revenue in the second quarter, excluding the aforementioned impact of the commercial payor, grew at 2%. The improvement in growth rate from recent quarters was driven by the large and very important sleep category. On a like-for-like basis, we saw good mid-single-digit growth in sleep of about 5.5%, including a marked improvement in sleep equipment and continued strong growth in sleep supplies. Diabetes grew 4%, which was a 500 basis point improvement in the year-over-year growth rate compared to Q1. But like recent quarters, in Q2, we saw a very strong year-over-year growth in insulin pumps, partially offset by weakness in CGM. Also, similar to recent quarters, the Respiratory and Wound categories are yet to recover and were down year-over-year. On the positive side, Ostomy and Urology, which have been growing nicely for some time, once again posted high single-digit year-over-year growth rates. These revenue trends are expected to continue through the third quarter before the impact of our improvement efforts begin to take hold. We are laser-focused on improving the underperforming categories, especially the higher-margin sleep and respiratory categories and are encouraged by improving sleep growth rates and believe there's still plenty of upside. Looking at Slide 8. Second quarter adjusted EBITDA was just over $60 million, and there was a small margin rate improvement versus the first quarter. Adjusted EBITDA less patient service equipment, or PSE CapEx, was $16.3 million and down slightly from the first quarter as PSE CapEx was higher due largely to an improving outlook for sleep starts in the coming months. However, the lower-than-expected growth rate and expenses as a percentage of revenue, which continued to run above historic rates, some of which is category mix related, were a drag on adjusted EBITDA and are a focal point for the second half of the year and 2027. The impact of our collection rate waterfall once again hampered revenue and earnings. The overall adverse impact in Q2 of the change on collections was approximately $10 million and was $20 million for the first six months ended June 30. It is important for everyone to understand that the income statement impact of the collections waterfall is derived from a rolling look-back analysis and is always reflective of current cash collection activity. And as a reminder, the collection waterfall is a revenue cycle tool, which creates adjustments to gross revenue, which fall straight through to the bottom line. During the second quarter and carrying into the third quarter, the collection rate income statement impact and cash receipts have been affected by recent inefficiencies beyond normal audit activity among certain key commercial insurers. Additionally, higher cost of net revenue and delays in cost reduction efforts has limited EBITDA expansion in the first and second quarters. As Ed mentioned, actions are planned and underway to address both cost of net revenue and SG&A. From a working capital perspective, we saw the change in accounts receivable worsen in the second quarter and was largely driven by the spate of inefficient audit issues with certain insurers that I just mentioned. While payor audit issues are not uncommon for us and the industry, what we are temporarily dealing with is well outside the norm. Efforts are constructively trending toward resolution in the third quarter, and we believe realized cash flow will improve upon conclusion. Looking back at Slide 6 of the quarterly supplemental slides, which details free cash flow for the second quarter and six months ended June 30, it is worth noting that cash interest paid in the second quarter includes $12 million for the payment of interest that had been accrued for the exchanged 2029 and 2030 unsecured notes, which had to be cash settled with the exchange of those notes. Also, looking ahead, we will not experience the cash impact of higher interest rates from the balance sheet optimization transaction until December, when we make the first interest payment on the new first lien and second lien notes. Turning to the balance sheet. With the successful completion of our balance sheet optimization transaction, total debt of $1.72 billion was down by almost $400 million since the end of March, and net debt was more than $55 million lower over that period. And recall that we have doubled the weighted average life of our debt structure to nearly 5.5 years and have no maturities until 2029, and the recurring revenue nature of the business backstopped by committed revolving credit facilities will continue to ensure plenty of liquidity. As a reminder of the successful reset of our capital structure, please see Pages 9 and 10 of our supplemental slides. Free cash flow fully levered, as defined on Slide 6, is now expected to be breakeven to slightly positive for the full year 2026 due to the change in expected annual adjusted EBITDA and the higher cash interest I just described. While cash flow will not be what we expected in 2026, our confidence in the cash generation strength of the business and a consistent ability to generate around $100 million annual free cash flow in a less muddy year remains unchanged. Additionally, at the end of July, we closed on the sale of a small noncore asset and expect another small noncore asset sale to close in late Q3 or early Q4 that will provide incremental cash flow. As we think about the remainder of 2026, we have to recognize the second quarter underperformance as well as the now later timing of the benefits of revenue growth, productivity gain projects and cost savings actions. Sitting here over one month into the third quarter, we are seeing some positive signs, particularly around expense reduction and the collections waterfall income statement impact, but it's not enough in the remaining five months to catch up with previous guidance. As a result, and as shown on Slide 11, we have revised the 2026 full-year outlook for revenue to be between $2.45 billion and $2.55 billion, and a full-year adjusted EBITDA to be between $300 million and $320 million. Unsurprisingly, we expect the fourth quarter to be much stronger than the third quarter, which will provide a kickstart to 2027. In the coming weeks, we expect to be launching actions that will better position the company's balance sheet and protect key assets. First, we expect to activate a small at-the-market equity program. We're still finalizing the details of the program, but we expect to have the ATM effective in the near term. We intend to use the proceeds from these sales to reduce outstanding indebtedness, which will allow for a deliberate, continued deleveraging of the balance sheet through the occasional issuance of equity into the market at prevailing prices. Also, the business has significant tax attributes that are often forgotten about. The quantum of net operating loss carryforwards alone going into 2027 will exceed $200 million. This has meaningful value, especially at the currently depressed market capitalization. As many companies in similar positions do, we want to help ensure protection of that value. There are counterintuitive and confusing rules around deemed ownership changes caused by trading activity that could inadvertently jeopardize those tax attributes. So in order to help avoid very costly foot faults by one or more shareholders, we will be putting a net operating loss, or NOL, rights plan in place. Not only will this help protect shareholders from an inadvertent and adverse impact on the valuable NOLs, these types of plans do not need to limit planned or desired shareholder activity since certain shareholder activity can be exempted from the NOL rights plan. And the plan is limited in duration, and it can be easily and quickly canceled if and when desired. Following the successful balance sheet optimization transaction, the NOL rights plan and anticipated ATM program are additional steps to further improve and preserve the financial strength of the company. Finally, with the earlier announcement around Ed's intention to retire in the coming months, this could be Ed's last earnings conference call. In the event it is, I want to make sure to take the opportunity on behalf of all 6,000 Accendra teammates to thank Ed for his guidance and leadership over the last several years. The company looks very different than when Ed arrived and walked into a bit of a storm, and it's been a very active eight years, and Ed has been the right person to guide us through. Personally, I want to thank Ed for his mentoring, partnership and always reminding me, through his example, that no matter how hectic things are to never take yourself too seriously and to stop and laugh. Thanks, Ed. With that, I'll turn the call back to the operator for Q&A.
Questions and answers
Your first question comes from the line of Kevin Caliendo from UBS.
Ed, congratulations on the retirement. I hope that all works out well for you and the company, and congrats. There's a lot to digest here, obviously the payor situation. I don't quite understand how that evolves over time, but maybe if you can talk a little bit in specifics around what happened there. And then, have there been any other items? I'm looking at the numbers and what it's implied in the second half, and obviously the fourth quarter is a bigger ramp — is there anything else affecting what's implied for the second half of the year? One of your competitors talked about their contract being ripped up and having a negative impact with a price increase on supply. Is there anything like that impacting the second half of the year? And then, lastly, should we take what's implied for the fourth quarter as any sort of run rate? Is that a more normalized thing? I'm not asking for '27 guidance, but given the seasonality in your business, what puts and takes or one-timers are in there — what's the proper way to think about the run rate going forward?
Thanks, Kevin. I'll start. I think there are three things you want us to help you digest: one, the payor collection issue; two, supplier impacts; and three, whether Q4 is representative of the run rate going forward. Let me start with suppliers, and then I'll hand it over to Jon and Perry to add additional commentary on the other topics. When I think about our suppliers, we really do have good relationships with our suppliers. We have not had a supplier come to us and say, 'Hey, we're tearing up the agreement; we're going to move on and go in a different path.' We work with our suppliers to find ways to grow their share, and suppliers are looking to find partners that can help them do that. As a company, you have to balance that, especially in categories with many suppliers, with what's best for the patient as well as finding ways that we can win together. That may be an overused phrase, but finding ways that we can help them grow their share while managing our supplier portfolio can help offset some of the costs we have as well as the normal reimbursement pressures. Competition within categories is actually good for the business and for the industry. We don't see any suppliers that have come to us and torn up an agreement. We also know when most of our contracts expire and plan well in advance to renew or make different decisions if necessary. That's where we are. I can't speak to how others manage it, but that's how we think about our supplier community. Let me turn it over to Jon to cover a bit more on collections and the waterfall.
Yes. Thanks, Kevin. The payor audits, whether commercial or government, are constant in our business, so that's nothing unusual. What was unusual is that a couple of months ago we started seeing the number of items audited begin to increase at an exponential rate. That had a twofold knock-on effect. One, we weren't getting paid as claims were under audit for a lot of these issues. And secondly, the volume we were seeing required us to take resources — people — off other projects, like our automation work intended to improve collections. It's a very manual process: a payer will question a delivery or a signature and we have to find the documentation, prove it to the commercial payors. As the volume increased to unprecedented levels, we weren't getting paid and we were spending more time and resources to actually solve these audits. So it impacted both our improvement efforts and cash collections during the quarter, and it's running into the third quarter. The good news is we've made significant progress in the last couple of weeks with these payors. We have a plan to resolve the issues and are confident we'll wrap them up in the third quarter, which will bring more cash back into the company and allow us to focus again on automation issues, which are critical to improving overall collections. From a P&L perspective, as these items age into older AR buckets, they go through the waterfall calculation and run through the P&L in addition to collections. So this was unprecedented and unusual, but we believe it's a temporary blip that will be solved in the coming weeks.
And then I'll wrap up on Q4. Yes, we expect Q4 to be our best quarter and the jump-off point for 2027. We recognize seasonality in the business. We saw sequential revenue growth from Q1 to Q2. We have new agreements: the sole-source agreement with the regional health system that will go into place late in 2026 and carry into 2027, and a larger fee-for-service agreement with another payor that will take effect later in the year and is expected to narrow the network and drive volume. We also made adjustments within our selling organization to reinvigorate the team, which we expect to show up later in the year. Additional factors impacting late 2026 into 2027 include expansion of our Sleep Center of Excellence and cost reductions. Finally, resolving the payor collection issues will have a delayed but positive waterfall impact once fixed. Those are the items we expect to drive the late-year and into-2027 performance. Hopefully that addresses the three areas you asked about.
Your next question comes from the line of Michael Cherny from Leerink Partners.
I have two questions. Building on the Q4 dynamic, as we think about the moving pieces in the build, what do you think you have within your control versus factors that depend on customers or the market? If you can risk-weight those, it would help us understand the bridge to Q4 even though you don't explicitly provide quarterly guidance. Second, on the tax matters: I heard you, Jon, on the dynamics behind the NOL rights plan, but why now? The net operating losses have been in place for a long period. What was the Board's rationale for doing this now?
Great. I'll take the first part and Jon can take the tax question. On levers within our control: first, we have cost reductions we have already started implementing; we took out over $125 million of annualized cost earlier this year and paused to let the business stabilize. We've started additional cost reductions about a month into the third quarter. Second, revenue growth depends partly on implementation speed — once contracts are finalized, we need to move patients to us, which is a sales execution matter. We're making targeted changes to improve sales execution. Third, logistics arrangements with third-party providers can reduce operating costs and working capital; speed to implement those matters. Finally, our business development team continues to pursue new commercial agreements to fill the pipeline. Those items can begin to deliver before 2027. With that, I'll turn it over to Jon on the tax aspect.
Mike, two drivers answer why now. One, as we were wrapping up the balance sheet optimization transaction, we asked advisers what else we should do to clear up the financial profile. An NOL rights plan came to our attention as a tool to protect tax attributes. The rules around deemed ownership changes and Section 382 are convoluted. Second, in the last few months we saw large shareholders come into the stock, and because 13Fs and 13Gs are delayed, we did a high-level Section 382 study and saw we were about halfway to potentially having a problem if shareholders continued to buy. After consulting outside tax counsel, we concluded an NOL rights plan was a prudent protective measure for shareholder value. It's a common and relatively straightforward step to protect those NOLs, and it can be limited in duration and exempt certain shareholder activity if desired.
Your next question comes from the line of John Stansel from JPMorgan.
Can you spend a little more time on what drove the need for a pause in some of the cost-outs? As we think about resumption and going full speed into cost-outs in the back of the year and into 2027, was the pause driven by the need for increased audit support that was more manual, or anything else?
Sure. To simplify: we took out more than $125 million of annualized costs. A significant portion was related to the transition of the large commercial payor contract and removal of stranded costs. We were also in the middle of divesting the P&HS segment and completing transition service agreements. The combination of these major changes led us to step back and let things settle to make sure we didn't break anything while executing the changes and then reset to identify additional cost opportunities. The pause was not driven primarily by the collections issue. The collection issues, as Jon described, did require moving resources to address payor audits, which was separate from the decision to let the prior significant cost actions stabilize.
John, on the noncore assets question — there are a couple of small assets we sold or expect to sell. One is a legacy business that we inherited in the Halyard acquisition back in 2018 and was not of interest when we divested P&HS; it is small and outside our current core business. The other is also not in the same realm as our current business and is very small. We had an attractive opportunity to sell at a fair price and capitalize on that business. These were small, noncore items that provided incremental cash flow at an opportune time.
Your next question comes from the line of Daniel Grosslight from Citi.
I'd like to focus on free cash flow. Your guidance implies getting back up to breakeven, around $27 million of free cash flow in the second half. Can you walk us through the pacing of that free cash flow improvement in Q3 and Q4? Also, your cash balance is now around $8 million. Are you anticipating drawing down on the revolver? You're putting an ATM in place, but that could be dilutive at these share prices. How are you thinking about near-term liquidity?
Daniel, the biggest driver of free cash flow will be EBITDA, and much more of that improvement is expected in Q4 than Q3. We don't need a large amount of free cash flow to reach breakeven or slightly positive, but it's going to be EBITDA-driven, largely in Q4. On the ATM, it's a small program and takes time to execute; proceeds are typically executed in small daily volumes, so dilution occurs over a long period. On cash and the revolver, most of the cash we had previously went to debt reduction. Expect fairly low cash balances going forward, with occasional draws on the revolver for lumpiness in working capital, such as timing of large supplier payments. We will not be continuously drawn as in the past; draws will be occasional and episodic.
Got it. And Jon, you mentioned confidence that the business can generate around $100 million of free cash flow in a normalized year. Is 2027 going to be a normalized year? Do you expect $100 million of free cash flow next year, or are there still costs and working capital improvements needed before you generate that level?
It's a fair question. The only major timing item we know of now is the last payment on transaction costs to the new owner of Owens & Minor in Q1 2027. Other than that, the activities Ed mentioned that will bear fruit late this year should be fully operational and reflected in our run rate for 2027. We remain confident in the business's ability to generate around $100 million in a normalized year, assuming these improvements and the absence of unusual items like the recent payor audit spike.
Your next question comes from the line of Allen Lutz from Bank of America.
First, Ed, congrats on the retirement. It's been great to work with you over the past several years. A question for Ed or Jon on the sleep business: you talked about a marked improvement in sleep equipment and continued strong growth in sleep supplies. As we think about the transition from the first half to the second half of the year, can you dive into the drivers of the improvement you're seeing in sleep equipment and your expectations into the second half? And then moving on to the payor collections commentary: I assume we're talking about large payors — is this one of your top three payors? Is it just a single payor or multiple? Do you think your peers are also dealing with the same issue?
I can start and let Perry add color. For sleep, we saw sequential improvement with year-over-year growth rates improving from Q1 to Q2. Sleep supplies continue to perform very well and carry the bulk of the category. Sleep starts and equipment showed a nice improvement in growth year-over-year from Q1 to Q2. We're also streamlining operations around our Sleep Center of Excellence, which should improve process, efficiencies and adherence, supporting further growth. I'll let Perry provide additional detail.
To piggyback on Ed: the back half of the year is really the acceleration and completion of the Center of Excellence so that our entire sleep organization operates within the Center. That will improve the customer experience, create more efficiencies and improve overall adherence rates for our sleep patients. Regarding the payor collections, it's more than one payor and I would call them large. I don't know that the process they've demonstrated shows a lot of sophistication. There's clearly a lot of pressure on payors to identify waste, fraud and abuse in healthcare, which we support, but we need to work with our payor partners to ensure the process is efficient.
There are no further questions. I will now turn the call back over to Edward for closing remarks.
Thank you. Well, thank you, everyone, for joining today. As I think about the future into late 2026 and into 2027, we already have multiple operational actions underway. I discussed commercial opportunities we've secured as well as additional opportunities in planning. Look at the investments we're making; they give me extreme confidence in our ability to improve the business as we move forward. One of the things we must focus on is improved execution. That improved execution will help us accelerate growth and continue to expand profitability over time. It gives me tremendous encouragement and excitement about the future. Regarding retirement, there's never an easy time, but after conversations with my family, now just feels right. As I said in my prepared remarks, we have a long-standing succession planning process with the Board. I am confident and committed that we'll have a successful CEO transition and that we'll get the right candidate to carry this forward as the pure-play business we are today. In closing, again, I want to thank the Board of Directors, the company leadership on this call and those not on this call, the 6,000 teammates that are part of Accendra Health and the 15,000 teammates that were part of P&HS who moved on, for all their dedication, hard work and support over the last eight years. With that, thank you, everyone, and have a great day.
This concludes today's conference call. Thank you for your participation. You may now disconnect.