Chemed Corp

Good day, ladies and gentlemen, and thank you for standing by. Welcome to the Kimmett Corporation third quarter 2026 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 at this time, you will need to press star 11 on your telephone keypad. As a reminder, this conference call is being recorded. At this time, I would like to turn the conference over to your host, Ms. Holley Schmidt. Ma'am, please begin.

Good morning. Our conference call this morning will review the financial results for the third quarter of 2026, ended September 30th, 2026. 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 27 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 date at October 27th, 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 Witzeman, Chief Financial Officer of ChemEd, and Joel Wherley, President and Chief Executive Officer of ChemEd's VITAS Healthcare subsidiaries. I will now turn the call over to Kevin McNamara.

Thank you, Holley. Good morning. Welcome to ChemEd Corporation's third quarter, 2026 conference call. I will begin with highlights for the quarter, then Mike and Joel will follow up with additional details. I will then open the call for questions. VTAS continues to perform at a very high level. The combination of ADC growth and cost containment, particularly with respect to central support costs, drove significant revenue and income growth at VTAS during the third quarter of 2026. VTAS revenue increased 12.2% during the quarter, compared with the third quarter of 2025, and adjusted net income increased 44.7% over the same period. Admissions at VITAS during the quarter totaled 18,995, which equates to a 7.2% improvement from the same period of 2025. Hospital admissions, as a percent of total admissions for our Florida combined program, were 42.3% during the third quarter of 2026. As we've discussed previously, an appropriate balance for sustained long-term stability in the is that between 42% and 45% of total admissions that come from hospitals. Equally as important as Joel will discuss in greater detail, admissions from all other pre-admission locations increased 11.1% compared to the third quarter of our 2025 in our Florida combined program. We ended the 2026 Medicare cap year with a cushion of more than $34 million in the Florida Combined Program. We do not anticipate any Medicare cap billing limitation for the Florida Combined Program in the 2027 Medicare cap year. Additionally, as a result of strong admissions, our Medicare cap billing limitation relating to all non-Florida programs ended the 2026 year approximately $3 million below our original projection. Now let's turn to Rotary. In the third quarter, were very pleased with the revenue growth generated by Roto-Rooter. Total revenue grew 7.5% during the quarter compared to the third quarter of 2025. Revenue grew across all major service lines in both our residential and commercial businesses. Mike will further provide information on the impact of our recent acquisitions. However, it is important to note that Our same store revenue increased 5.5% during the third quarter of 2026, which exceeded our internal expectations. Similar to the total revenue growth metrics, we saw strength in all service lines from same source sales. Our commercial business manager program continues to perform at a high level. There were 36 productive commercial business managers in place for the entire quarter, contributing to a commercial revenue increase of approximately 10.9% in their respective branches. This compares to a commercial revenue increase of 4.8% in branches without a commercial business manager. Centralization of the water restoration, billing, and collections function continues and has resulted in improved collections. Total write-offs improved by $2.9 million during the third quarter of 2026 compared to the third quarter of 2025. Equally as important, average price per job in the water restoration business increased 2.8% over the third quarter of 2025. This is a reversal of the multi-quarter downward trend in average water restoration price per job. Lead generation and the resulting cost of customer acquisition remained a challenge in the third quarter. Total leads during the third quarter of 2026 were essentially flat compared to the third quarter of 2025. Consistent with trends observed in prior quarters, free leads generated from Internet searches declined 11.8%, while paid leads increased 5%. Of all leads generated during the quarter, approximately 60% were paid compared to 56% in the third quarter of 2025. This change resulted in increased marketing spending of $4.3 million in the quarter compared to the third quarter of 2025. Rotorooter is building revenue growth momentum through improved operations supplemented by strategic acquisition activity. Rotorooter continues to explore every opportunity to contain and potentially moderate marketing costs. Rotorooter has demonstrated a long history of growing margins through cost containment so long as revenue growth is stable. We fully anticipate Roto-Rooter to return to that historic pattern through 2027 and beyond. We are very happy with the performance of VITAS in the quarter and its prospects for the remainder of 2026 and beyond. The combination of the two business units drove an increase in total ChemEd revenue of 10.6% and an increase in adjusted delivery earnings per share of 28.1% in the third quarter of 2026. as compared to the same period of 2025. Additionally, over the first nine months of 2026, the consolidated business generated cash flow from operations of more than $229 million, which along with minimal leverage allows us the flexibility to pursue strategic acquisitions and meaningful share repurchases as the opportunities arise. With that, I would like to turn this teleconference over to Mike.