Chemed Corp

Hello and welcome to the ChemEd Corporation fourth quarter 2024 earnings conference call. At this time, all participants are in a listen-only mode. After the speaker 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 that your hand has been raised. To withdraw your question, please press star 1 1 again. Please be advised that today's conference is being recorded. It is now my pleasure to introduce Assistant Controller, Holly Schmidt.

Good morning. Our conference call this morning will review the financial results for the fourth quarter of 2024, ended December 31st, 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 February 26th 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 February 26th, which is available on the ChemEd'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 Westfall, Chairman and Chief Executive Officer of ChemEd's BPAS Healthcare Corporation subsidiary. I will now turn the call over to Kevin McNamara.

Thank you, Holly. Good morning. Welcome to ChemEd Corporation's fourth quarter 2024 conference call. I will begin with highlights for the quarter, then Mike and Nick will follow up with additional details. I will then open the call for questions. PTAS continued its strong operating performance during the fourth quarter of 2024. Admissions during the quarter totaled 16,427, which equates to a 3.5% improvement from the same period of 2023. Our average daily census, or ADC, expanded 2,827, an increase of 14.6% when compared with the prior year quarter. These historically good metrics were positively impacted by the $85 million acquisition of Covenant Health, which was closed on April 17, 2024. Through the end of the fourth quarter, the Covenant Health acquisition is meeting all of our internal financial projections that were developed at the time of the acquisition. Early in the fourth quarter of 2024, our new program in Pasco County, Florida, accepted its first patient. During the quarter, VITAS had slightly more than 40 admissions, to the PASCO program. We believe this program offers an exciting growth path for VITAS in 2025 and beyond. We're also very pleased that in December, VITAS was awarded a certificate of need in Marion County, Florida. Marion County includes Ocala, as well as a significant part of the Village's retirement community. VITAS is currently working on a timeframe for opening the new location, but we believe this is another significant opportunity for growth in the coming years. As Mike will discuss in more detail, our 2025 VITAS guidance assumes continued above-historical average growth by all measures. However, that growth will be slightly tempered by headwinds associated with working to mitigate potential Medicare cap limitations in certain of our programs. Now let's turn to Roto-Rooter. Roto-Rooter generated quarterly revenue of $229 million in the fourth quarter of 2024, a decrease of 2.9% when compared with the prior year quarter. While we were never satisfied with the decline in revenue or adjusted net income, the fourth quarter performance did exceed Roto-Rooter's internal estimates for both metrics by between 4% and 5%. Residential revenue at Roto-Rooter declined 2%, while commercial revenue increased four-tenths of a percent. Overall, our call volume was down 8% when compared to the prior year quarter. Conversion rates from calls to paying jobs continue to be at or near Roto-Rooter's all-time highest levels. For our residential business, conversion rates continue to improve for our add-on services, particularly water restoration. During the fourth quarter, Roto-Rooter Management identified eight branches that had lagging conversion rates in residential water restoration. Improvement in conversion rates for those specific branches was a major cause for the 2.8% increase in water restoration revenue in the fourth quarter. The commercial business initiatives that we've discussed during the course of 2024 have begun to gain momentum in many of our branches. We are winning business from key accounts based on our renewed focus on the local sales process at each branch. Our initiative to review the root cause of each sewer drain cleaning issue through the use of cameras has resulted in an increase in excavation work related to commercial customers. The commercial business ended 2024 with positive momentum. We are optimistic this gives Rotorua Business a nice springboard into 2025. Our 2025 guidance assumes that momentum accelerates with the Roto-Rooters commercial business. It also assumes that the deterioration seen in the 2024 residential business does not continue into 2025. To summarize, the strong results at BTOS are continuing. BTOS management has consistently demonstrated the ability to hire and retain licensed healthcare professionals at an appropriate pace. This is translated over an extended period of time of strong growth. Two new locations in the state of Florida provide a nice growth opportunity for the next few years. We are cautiously optimistic that Roto-Rooter has turned the corner despite some continued difficult operating conditions. We are confident that 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 teleconference over to Mike.