Chemed Corp

Good day, and thank you for standing by. Welcome to the ChemEd Corporation's third quarter 2022 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 the session, you will need to press star 1 1 on your telephone. You will then hear an automated message advising your hand is raised. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today. Holly Schmidt, please go ahead.

Good morning. Our conference call this morning will review the financial results for the third quarter of 2022, ended September 30th, 2022. 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 31st 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 31st, which is available on the company's website at chemmed.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 Westfall, President and Chief Executive Officer of ChemEd's VITAS Healthcare Corporation subsidiaries. I will now turn the call over to Kevin McNamara.

Thank you, Holly. Good morning. Welcome to ChemEd Corporation's third quarter 2022 conference call. I will begin with highlights for the quarter, and Dave and Nick will follow up with additional operating detail. I will then open up the call for questions. Our third quarter 2022 operating results released last night reflect good earnings performance for VITAS and Redwooder. Both operating segments' financial results continue to exceed our internal estimates despite continued disruption from the pandemic. For VITAS, this disruption remains concentrated on the hiring and retention of licensed healthcare professionals. I believe this industry-wide shortage of licensed healthcare workers will persist for the foreseeable future. Accordingly, VITAS implemented a targeted hiring and retention bonus program effective July 1, 2022. This program is focused substantially on licensed nurses, nurse managers, home health care aides, and social workers. These one-time retention bonuses range from $2,000 to $15,000 per licensed health care professional. The total estimated 12-month forward-looking cost of this program, including payroll taxes, and government mandated overtime calculations will be approximately $38 million. All retention bonus payments are individually cliff-fested after the employee has successfully completed 12 additional months of continuous employment. During the quarter, VITAS expanded our licensed healthcare professional staff by 172 employees, the majority consisting of licensed nurses. This is the first significant expansion of our clinical workforce and related patient capacity since the pandemic began in early 2020. We continue to see disruption to senior housing occupancy and related hospice referrals. Our recent admission data continues to reflect a recovery in senior housing-based patients. Pre-pandemic, nursing home-based patients represented 18% of our total average daily census, or ADC. The nursing home ABC ratio hit a low of 14.3% during the pandemic. By the fourth quarter of 2021, our nursing home-based patients increased to 15.6% of total ABC. This increased an additional 110 basis points to 16.7% in the third quarter of 2022. Our 2022 updated guidance anticipates continued improvement in the senior housing-based census. For Roto-Rooter, our most significant challenge has been to increase manpower. Technician manpower on September 30, 2022, expanded 1.8% when compared to the average Q3 2021 headcount. Roto-Rooter is well-positioned post-pandemic, and we anticipate continued expansion of market share by pressing our core competitive advantages in terms of brand awareness, customer response time, 24-7 call centers, and internet presence. With that, I would like to turn this teleconference over to David.