Chemed Corp

Good day, and thank you for standing by. Welcome to the ChemEd Corporation third quarter 2024 earnings conference call. At this time, all participants are in 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 11 on your telephone. You will then hear an automated message advising your hand is raised. To withdraw your question, please press star 11 again. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your first speaker today, Holly Schmidt, Kim Edd, Assistant Controller. Please go ahead.

Good morning. Our conference call this morning will review the financial results for the third quarter of 2024 and it's September 30th, 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 October 25th 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 September 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. Mike Witzman, Chief Financial Officer of ChemEd. And Nick Westphal, Chairman 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 2024 conference call. I will begin with the highlights for the quarter, then Mike and Nick will follow up with additional details. I will then open the call for questions. We continue to be pleased with the exceptional operating metrics at VITAS. In the third quarter of 2024, Admissions totaled 16,775, which equates to a 6.3% improvement from the same period of 2023. Our average daily census, or ADC, expanded 2,926, an increase of 15.5% when compared to the prior year quarter. These historically good metrics were positively impacted by the $85 million acquisition of Covenant Health, which was closed on April 17th 2024. Through the end of the third quarter, Covenant Health Acquisition is meeting all of our internal financial projections developed at the time of the acquisition. Nick will provide further commentary on the Covenant integration. Hurricane Helene, which impacted the panhandle of Florida and other parts of southeastern United States in late September, did not result in any significant property loss or damage to VITAS. However, as with other similar events, we did experience a slowdown in admission activity while our healthcare partners prepared for the hurricane then dealt with the aftermath. We estimate that admissions were negatively impacted during the quarter by approximately 60 to 100 patients. We also believe that the Florida admission impact will be more significant in the fourth quarter with a combination of hurricanes Helene and Milton. Finally, we're excited that Early in the fourth quarter of 2024, our new program in Pasco County, Florida, accepted its first patient. We believe this program offers an exciting growth path for Florida in 2025 and beyond. Now let's turn to Roto-Rooter. We continue to be disappointed in Roto-Rooter's results. Roto-Rooter generated quarterly revenue of $214.8 million in the third quarter of 2024, a decrease of 6.9% when compared to the prior year quarter. Overall, our call volume was down 11.7% 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 Rotoroot declined 6.3% and commercial revenue declined 5.9%. Our residential beer business experienced a very choppy quarter we continue to believe that there is lower demand across the entire industry, resulting in high levels of competition for both Internet marketing position and related job leads. Residential demand and the resulting revenue vary significantly on a month-to-month basis during the quarter. In early July, we replaced our search engine marketing firm, or SEM, responsible for managing our paid search marketing program. There was both a transition time and ramp-up cost that we believe led to some of the disruption during the quarter. Finally, we don't like to talk about weather as a general rule. Weather patterns tend to normalize over time and therefore do not have a significant impact on the business over an extended period of time. However, in the summer of 2024, there were parts of the Midwest and Northeast regions that were abnormally dry. This includes the location of some of our largest branches, We believe this contributed to an overall residential softness of the quarter. Turning to the commercial business, we did experience some sequential improvement in our commercial revenue. Our third quarter, 2024, commercial revenue was a 5% improvement over the second quarter of 2024. Historically, there is little to no sequential growth in revenue between the second and third quarters of a given year. This trend gives us some optimism that our action plans implemented earlier in the year are starting to show positive results. To summarize, we are excited about the continued strong results of VITAS. VITAS management has consistently demonstrated the ability to accelerate hiring and retention of licensed healthcare professionals. This has translated into continued strong admission and census growth. We are very bullish on the prospects for VITAS for the remainder of 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 the conference over to Mike.