Guardian Pharmacy Services, Inc. Class A

Good afternoon, ladies and gentlemen, and welcome to the Guardian Pharmacy Services second quarter 2025 earnings call. At this time, all lines are in listen-only mode. Following the presentation, we will conduct a question and answer session. If at any time during this call you require immediate assistance, please press star zero for the operator. This call is being recorded on Monday, August 11, 2025. And I would now like to turn the conference over to Ms. Ashley Stockton. Thank you. Please go ahead.

Good afternoon. Thank you for participating in today's conference call. My name is Ashley Stockton, Senior Director of Investor Relations for Guardian Pharmacy Services. I'm joined on today's call by Fred Burke, President and Chief Executive Officer, and David Morris, Chief Financial Officer. After the close today, Guardian posted its financial results for the quarter ended June 30th, 2025. A copy of the press release is available on the company's Investor Relations website. Please note that today's discussion will include certain forward-looking statements that reflect our current assumptions and expectations, including those related to our future financial performance in industry and market conditions. Such forward-looking statements are not guarantees of future performance and are subject to risks and uncertainties that could cause actual results to differ materially from our expectations. We encourage you to review the information in today's press release as well as in our quarterly report on Form 10-Q to be filed with the SEC, including the specific risk factors and uncertainties discussed in our SEC filings. We do not undertake any duty to update any forward-looking statements which speak only as of the date they are made. On today's call, we will also use certain non-GAAP financial measures when discussing the company's financial performance and condition. You can find additional information on these non-GAAP measures and reconciliations to their most directly comparable GAAP financial measures in today's press release, which again is available on our investor relations website. And now I will turn it over to Fred for commentary on the quarter.

Thank you, Ashley. Good afternoon, and thank you all for joining us today to review our second quarter earnings results. I'm pleased to report that the quarter was another strong one for Guardian. marked by continued momentum across our core growth levers. Our performance underscores the consistency of our earnings model, the strength of our local pharmacy leadership, and our disciplined execution across the organization. We continue to deploy capital with intention, investing to expand into new markets and strengthening our organization to facilitate long-term durable growth. For the quarter, Revenue, resident account, and adjusted EBITDA each grew double digits year over year. Adjusted EPS came in at 23 cents. Importantly, we maintained adjusted EBITDA margins at 7.2%, consistent with the prior year, even as we folded in three acquisitions, launched several Greenfield startups, and continued integrating Heartland. Collectively, these pharmacies are not contributing to EBITDA. Additionally, we had approximately $1 million in costs associated with being a public company that did not exist in the prior year quarter. In parallel, we continued to strengthen our balance sheet, increasing our cash position by close to $5 million from the previous quarter, even as we invested in growth, namely two acquisitions during the period. We remain confident in our ability to fund future growth with internally generated cash and continue to view M&A as an attractive use of capital, especially given the long-term potential earnings accretion embedded in these newly added pharmacies. In light of our strong year-to-date performance, we are raising our guidance for the full year. We now expect revenue in the range of $1.39 to $1.41 billion, up from our prior range of $1.33 to $1.35 billion. We're also raising our adjusted EBITDA guidance range to $100 to $102 million, compared to our previous forecast of $97 to $101. This updated outlook reflects better than expected organic growth in the first half of 2025 and the revenue contribution of new pharmacies added year to date, including our most recent acquisition in Oregon announced last week. Now, I'd like to dive a little deeper into some of the highlights from the quarter, starting with acquisitions in Greenfields. A core component of our growth playbook is disciplined expansion into attractive, high-growth markets. This quarter, we advanced that strategy by adding three new pharmacies to our platform, two via acquisition and one Greenfield startup. I'll start with our Greenfield. In April, we announced a new Greenfield startup pharmacy in Naples, Florida, which will serve to further strengthen our position in a state where we already hold a leading market share. This addition reflects our commitment to regions where we have a strong foundation and opportunity to scale further. As for acquisitions, both met our sweet spot in terms of size and market dynamics. As we announced on our first quarter earnings call in April, we welcomed Senior Care Pharmacy in Wichita, Kansas into the Guardian family. expanding our presence in the state and complementing our existing pharmacy in the Kansas City area. In June, we brought Mercury Pharmacy in Seattle into our network, marking our first physical footprint into Washington, a dynamic region with growing demand for our services. Both acquisitions align well with our longstanding commitment to operational excellence and customized service tailored to the communities we serve. While organic growth remains a key focus, M&A will continue to play a meaningful complementary role in accelerating our expansion, as evidenced by our recent acquisition in Oregon. These types of investments strengthen our leadership position in the ALF segment and provide attractive opportunities for strong return on investment. Now, I want to talk a little bit about our clinical innovation. At the heart of our success is a clear focus on investing in what sets Guardian apart for our facility customers and payor partners. On the clinical front, we deliver meaningful value through high-impact, outcome-driven programs powered by Guardian Shield, our proprietary suite of clinical and data analytics tools designed to improve resident outcomes and reduce total cost of care. This quarter, I'm proud to share that we entered the second phase of our Falls Management Program, a major initiative in collaboration with our facility partners aimed at proactively reducing one of the leading causes of injury and hospitalization in senior living communities. We are now live testing the program in select Florida markets, and early feedback has been highly encouraging. Community staff report that the platform is intuitive to use and provides clear, actionable insights to help reduce fall risk among residents. This builds on the success of our other clinical initiatives we offer, including our antibiotic stewardship and psychotropic medication monitoring programs, each of which has delivered meaningful improvements in quality of care and cost control. Other key metrics gathered from our data analytics are Guardian's overall clinical interventions, which stand at over 50,000 year-to-date, with over half being med reconciliations. Additionally, through our insurance optimizer program, which helps our seniors with insurance complexities, we have saved residents over $24 million year to date. These efforts reflect our commitment to being more than a pharmacy. We're a clinical partner helping reduce overall healthcare costs while improving resident outcomes. Before I touch on industry and policy developments, I wanted to say a brief word on capital markets. This quarter, we completed a non-diluted secondary offering, a key milestone in Guardian's evolution as a newly public company. The transaction nearly doubled our public float from 9.2 million shares to 17.8, resulting in improved trading dynamics, broader institutional participation, and increased ownership opportunity for both new and existing investors. Importantly, the offering provided long-time employees and early investors an opportunity to realize some of the value they helped create. Even after the transaction, employees continue to hold about 30% of the company, underscoring the deep alignment and long-term commitment across our organization. Going public has given our teams a tangible way to track the company's performance. combined with our long-term equity and CINI program is driving enthusiasm and a heightened sense of pride across our pharmacy network. Now, turning to the broader policy environment, the Inflation Reduction Act is changing drug pricing across the industry, with the most significant impact for Guardian expected in 2026. Guardian, along with other sophisticated long-term care pharmacies, delivers essential value-added services that are critical to the broader healthcare continuum, particularly as we care for a rapidly growing senior population with increasingly complex healthcare needs. We believe the impact to our sector is an unintended consequence of recent policy changes And we think leaders recognize this and support our endeavor to protect our quality care for the assisted living communities we proudly serve. With that said, we're proactively working to address these changes on two fronts. First, through our direct relationships with payer partners. And second, by pursuing a potential legislative or policy solution in collaboration with other industry leaders on Capitol Hill. With the PBMs, we've been deeply engaged in proactive and constructive discussions. Our value add is being recognized, and we continue to make tremendous progress in our negotiations. Moreover, given our market share, we believe we remain in a strong position to resolve this issue. It's important to note new challenges aren't new territory for us. We've successfully managed prior pricing challenges, including inhalers this year and insulin in 2024. On the legislative and policy side, we're actively helping to lead the industry's efforts on Capitol Hill and with CMS, working to shape a more sustainable long-term policy solution for long-term care pharmacies. We are confident policymakers will work to ensure patient care isn't compromised. Regarding the One Big Beautiful Bill, we do not expect any material impact to our business. Specifically, our exposure to potential Medicaid cuts is minimal, as less than 10% of our scripts are Medicaid, and the cuts do not affect our specific patient population. Turning to MFN, There's still a high degree of uncertainty around if and how this will ultimately play out. That said, the IRA is already set to lower pricing on about half our branded drug volume over the next two years. As with the IRA, we don't believe long-term care pharmacies who provide critical services and help bend the healthcare cost curve are the intended target. Again, we are confident policymakers and payors would work with us toward a practical solution to ensure patient care is not compromised. In summary, we have had great performance this year, and I'm highly proud of our team's hard work and initiative. Looking ahead, our long-term growth thesis remains firmly intact. We continue to execute across organic growth within our local markets. strategic greenfield opportunities in contiguous markets, and a robust acquisition pipeline. Together, we believe these three pillars will support sustained growth and ultimately margin expansion as we bring pharmacies and early integration up to consolidated profitability levels. The strength of our year-to-date performance, combined with ongoing execution across all areas of the business, gives us confidence heading into the second half of the year. Now, I will turn it over to David to review the quarter in greater detail.