Chemed Corp

Good day and thank you for standing by. Welcome to the ChemEd Corporation first quarter 2024 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 one one on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 1-1 again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker for today, Holly Schmidt. Please go ahead, Holly.

Good morning. Our conference call this morning will review the financial results for the first quarter of 2024, ended March 31, 2024. 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 April 24th 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 April 24th, 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, Mike Wittsman, Chief Financial Officer of ChemEd, and Nick Westfall, Chairman and Chief Executive Officer of ChemEd's VITAS Healthcare Corporation subsidiary. I will now turn the call over to Kevin McNamara.

Thank you, Holly. Good morning. Welcome to ChemEd Corporation's first quarter 2024 conference call. I will begin with highlights for the quarter, and Mike and Nick will follow up with additional operating details. I will then open up the call for questions. We are very pleased with the strong operating metrics of BTAS in the first quarter of 2024. In the quarter, our admissions increased 4.5% over the prior year period. These strong emissions continue to drive higher patient census. In the first quarter of 2024, our average daily census, or ADC, expanded 1,835, an increase of 10.3% when compared to the prior year quarter, and 1.6% when compared with the fourth quarter of 2023. BTAS's continued improvement in operating metrics is a result of our continued strength in hiring and retaining licensed staff, In the quarter, net bedside headcount increased 173 licensed professionals. This exceeded our internal projections for the quarter, which more than offset the slight weakness we experienced in the fourth quarter of 2023. Now let's turn to Rotorooter. As we discussed during our fourth quarter earnings call, we knew the first quarter was going to be a tough comparison for Rotorooter. The nationwide deep freeze at the beginning of 2023 resulted in six consecutive weeks of record revenue for Roto-Rooter. Not surprisingly, this phenomenon did not recur in 2024. Overall, our call volume was down 9.1% when compared to the prior year quarter. Close rates at the call center at the time of dispatch and when our technician reaches the customer location remained consistently strong compared to historical levels. Residential revenue at Roto-Rooter declined 3.5%. While we're still seeing demand headwinds related to consumer sentiment and concerns about macroeconomic environment, the residential revenue decline was within our range of expectations for the first quarter. As a result of changes made with various aspects of Google's search algorithms, Roto-Rooter temporarily increased spending on paid advertising in late 2023 and early 2024. This additional market expense is the major cause of Roto-Rooter's lower margins in the first quarter of 2024. Commercial revenue declined 10.5% during the quarter, which was a disappointment to us. Some of the same issues we discussed related to residential revenue, including difficult comparisons, macroeconomic concerns, and Internet marketing disruption, also impacted commercial revenue. As Mike will discuss in further detail, We also had more demand than we could service during the pandemic. As a result, our branch personnel did not spend as much time cultivating commercial relationships as we historically have dedicated to that part of the business. We have analyzed the causes of decline and are executing strategies to improve commercial revenue performance. To summarize, we are pleased with the continued strong results of BTAS. Our growth in licensed healthcare professionals, strong admissions, and corresponding growth in patient census have returned VITAS to normalized operating conditions. As Nick will discuss further, we're also excited about the recently closed acquisition of Covenant Health and Community Services. We believe this will be a big win for us, both on an operational and financial perspective for 2024 and beyond. We believe Roto-Rooter is still well-positioned, despite the difficult operating conditions that it faces. Roto-Rooter maintains its core competitive advantages in terms of excellent brand awareness, customer response time, 24-7 call centers, and aggressive internet presence. With that, I would like to turn this conference over to Mike.