Chemed Corp

Ladies and gentlemen, thank you for standing by and welcome to the ChemMed Corporation third quarter 2020 earnings conference call. At this time, all participants are in a listen-only mode. After the speaker's presentation, there will be a question and answer session. To ask a question during this session, you will need to press star 1 on your telephone. Please be advised that today's conference is being recorded. If you require any further assistance, please press star then 0. I would now like to hand the conference over to one of your speakers today, Ms. Sherry Werner with Investor Relations. Ma'am, please go ahead.

Good morning. Our conference call this morning will review the financial results for the third quarter of 2020, and it's September 30th, 2020. Before we begin, let me remind you that the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 apply to this conference call. During the course of this call, the company will make various remarks concerning management's expectations, predictions, plans, and prospects that constitute forward-looking statements. Actual results may differ materially from those projected by these forward-looking statements as a result of a variety of factors, including those identified in the company's news release of October 29th and in various other filings with the SEC. You are cautioned that any forward-looking statements reflect management's current view only and that the company undertakes no obligation to revise or update such statements in the future. In addition, management may also discuss non-GAAP operating performance results during today's call, including earnings before interest, taxes, depreciation, and amortization, or EBITDA and adjusted EBITDA. A reconciliation of these non-GAAP results is provided in the company's press release dated October 29th, which is available on the company's website at chemed.com. I would now like to introduce our speakers for today, Kevin McNamara, President and Chief Executive Officer of ChemEd Corporation, Dave Williams, Executive Vice President and Chief Financial Officer of ChemEd, and Nick Westphal, President and Chief Executive Officer of ChemEd's VITAS Healthcare Corporation subsidiary. I will now turn the call over to Kevin McNamara.

Thank you, Sherry. Good morning. Welcome to ChemEd Corporation's third quarter 2020 conference call. I will begin with slides for the quarter, and Dave and Nick will follow up with additional operating detail. I will then open up the call for questions. When we reported our second quarter 2020 operating results, I noted that the pandemic and related economic lockdown severely impacted our April 2020 operating results. Since April, both VITAS and Roto-Rooter have re-engineered their operating procedures to safely care for our patients and customers during the pandemic. These operational changes have allowed ChemEd to generate sequential operational improvements starting in May 2020, and this improvement has continued and has, in fact, accelerated throughout the third quarter and continued into October. David will provide updated earning guidance later in the call. Our hospice segment operations continue to be impacted by the pandemic. Fortunately, the federal government, specifically HHS and CMS, have been exceptionally supportive in terms of relaxing regulations, allowing the use of telehealth where appropriate, and providing pragmatic flexibility in caring for our 19,000 patient census. The severe initial disruption within our patient referral and admission patterns we noted in the second quarter has noticeably dissipated throughout the third quarter. This improvement is reflected in our third quarter admissions. Our July 2020 admissions increased 4.3 percent, August increased 5.9 percent, and September admissions expanded 4 percent. Overall, our third quarter 2020 admissions increased 4.7 percent. Our average daily census did decline two-tenths of one percentage point in the quarter. The slight decline in census is a result of soft admissions from the second quarter as well as depressed referrals from nursing homes and assisted living facilities. We anticipate admissions to normalize when these types of facilities return to their pre-COVID occupancy levels. Nick will provide additional census and admissions detail later in this call. As I discussed last quarter, we made the strategic decision for Rotorua to maintain full staffing and operating capacity early in the pandemic. This strategic decision to maintain full capacity was designed to capitalize on any snapback in commercial and residential demand, both to protect existing market share as well as to maximize on opportunities to grow market share. I believe this has proven to be the correct strategic course. Rotary services demand began to show weekly improvement beginning in the later part of April, and has strengthened unabated throughout the second and third quarters of 2020. This is reflected in our monthly performance. Unit for unit commercial revenue declining 38.6% in April, improving to a 31.8% decline in May, and a decline of 19.7% in June. Third quarter 2020 unit for unit commercial demand did decline 11.6% when compared to the prior year quarter. This third quarter commercial demand is a significant improvement when compared to the 29.1% decline in the second quarter 2020 commercial revenue. On a sequential basis, third quarter 2020 unit-free unit commercial revenue totaled $39.5 million, an increase of 26.8% when compared to the second quarter of 2020. Our residential services have proven to be exceptionally resilient, with our unit-for-unit residential revenue declining a modest 1.6% in April, increasing 11.7% in May, and 18.7% in June. The third quarter residential demand set all-time records, with July 2020 unit-for-unit residential revenue expanding 22.8%, August revenue increased 24.1%, In September 2020, residential unit-for-unit revenue increased 26.6%. This translated into road reader on a unit-for-unit basis having third quarter 2020 commercial revenue declining 11.6% and residential revenue increasing 24.6%. Total road reader third quarter unit-for-unit revenue increased 12.9% when compared to the prior year. Including acquisitions, Roto-Rooter generated consolidated third quarter 2020 revenue growth of 20.4%. I anticipate continued strong operational and financial results for both VITAS and Roto-Rooter as we operate during the pandemic. With that, I would like to turn this teleconference over to David.