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, Holley Schmidt, Chemed Assistant Controller. Please go ahead. Good morning. Our conference call this morning will review the financial results for the third quarter of 2024 ended September 30, 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 25 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 29, 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 Nick Westfall, Chairman and Chief Executive Officer of Chemed's VITAS Healthcare Corporation subsidiaries. I will now turn the call over to Kevin McNamara. Thank you, Holley. 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 17, 2024. Through the end of the third quarter, Covenant Health's 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 Roto-Rooter declined 6.3%, and commercial revenue declined 5.9%. Our residential core 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 positions and related job leads. Residential demand and the resulting revenue varied 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. Thank you, Kevin. VITAS' net revenue was $391.4 million in the third quarter of 2024, which is an increase of 17.3% when compared to the prior year period. This revenue increase is comprised primarily of a 15.5% increase in days of care and a geographically weighted average Medicare reimbursement rate increase of approximately 2.6%. The acuity mix shift negatively impacted revenue growth, 144 basis points in the quarter when compared to the prior year revenue and level of care mix. The combination of Medicare cap and other contra-revenue changes increased revenue growth by approximately 64 basis points. Average revenue per patient day in the third quarter of 2024 was $199.16, which is 139 basis points above the prior year period. Reimbursement for routine home care and high acuity care averaged $175.82 and $1,094.97 respectively. During the quarter, high acuity days of care were 2.5% of total days of care, a decline of 26 basis points when compared to the prior year quarter. Adjusted EBITDA, excluding Medicare cap, totaled $73.1 million in the quarter, an increase of 33.1%. Adjusted EBITDA margin in the quarter, excluding Medicare cap, was 18.6%, which is 212 basis points above the prior year period. The financial results just discussed include the impact of the Covenant Health acquisition. Covenant Health contributed $10 million to $11 million of revenue in the third quarter of 2024. This revenue translated to net income of approximately $1.8 million to $2 million. Adjusted EBITDA in the quarter attributed to Covenant Health is between $2.4 million and $2.6 million. Now let's turn to Roto-Rooter. Roto-Rooter branch residential revenue in the quarter totaled $146 million, a decrease of 6.3% from the prior year period. Based on Roto-Rooter's disappointing revenue results over the past few quarters, a decision was made to look for a new marketing agency to provide a fresh look at how Roto-Rooter's paid search program is operating. That process culminated in Roto-Rooter's transitioning to a new SEM in early July. The ramp-up time required by the new provider caused some of the softness in demand and residential revenue experienced in the third quarter. Roto-Rooter management believes that the new provider will provide more positive results on a go-forward basis. Roto-Rooter branch commercial revenue in the quarter totaled $53.5 million, a decrease of 5.9% from the prior year. The commercial revenue results in the third quarter were within the range of our expectations, as given in our revised 2024 guidance from July. This represents a 5% sequential improvement over the second quarter of 2024. Roto-Rooter management has put a tremendous amount of effort into improving the commercial revenue trends, including hiring more salespeople, contacting new and existing customers through a variety of channels, and implementing targeted initiatives specific to struggling branches. Adjusted EBITDA at Roto-Rooter in the third quarter of 2024 totaled $56.4 million, a decrease of 15.8% compared to the prior year quarter. The adjusted EBITDA margin in the quarter was 26.3%. The third quarter adjusted EBITDA margin represents a 275 basis point decline from the third quarter of 2023. Of this decline, approximately 95 basis points relates to the ramp-up of the new SEM, as previously discussed. Additionally, Roto-Rooter invested more in different non-Google advertising channels, such as billboards and radio spots. This represents approximately 40 basis points of the margin decline. Based solely on Roto-Rooter's continued softness, we have reduced our full year 2024 earnings per diluted share, excluding non-cash expense for stock options, tax benefits from stock option exercises, costs related to litigation, and other discrete items, estimate to be in the range of $23-$23.15. This range represents a 13.3%-14% increase from Chemed's 2023 reported adjusted earnings per diluted share of $20.30. This guidance assumes an effective corporate tax rate on adjusted earnings of 24.3% and a diluted share count of 15.2 million shares. Chemed's previously issued 2024 guidance range was $23.55-$23.80. I will now turn this call over to Nick. Thanks, Mike. I continue to be very pleased with our demonstrated sustainable expansion of our workforce and patient capacity. The third quarter of 2024 marked our ninth consecutive quarter of expanding our clinical workforce capacity in disciplines identified as part of the retention program. The expansion of headcount during the quarter was in line with our expectations and similar to the headcount expansion as we discussed in prior quarters. We believe that this predictable level of headcount expansion is, for the foreseeable future, VITAS' new operating normal to continue to meet elevated demand for our services across the country. In the third quarter of 2024, our average daily census was 21,785 patients, an increase of 15.5%. VITAS has generated quarterly sequential ADC growth over the last eight quarters. In the third quarter of 2024, total VITAS admissions were 16,775. This is a 6.3% increase when compared to the third quarter of 2023. In the quarter, admissions increased in three of the top four pre-admit location types. Our nursing home admissions increased 8.2%, hospital-directed admissions increased 9.4%, and our home-based patient admissions expanded 10.3% when compared to the prior year period. Admissions for assisted living facilities slightly declined by 0.2%. Our average length of stay in the quarter was 102 days. This compares to 103.1 days in the third quarter of 2023. Our median length of stay was 18 days in the quarter and compares to 17 days in the third quarter of 2023. Our teams have now completed all aspects of integrating the operations of Covenant. The integration went smoothly both from an operational and cultural perspective. I'd like to thank our collective VITAS team members, including those that transitioned over from Covenant for this successful integration. It would have not been accomplished without the unwavering commitment, dedication, and focus each team member showed towards fulfilling our mission in every community served across the Florida Panhandle and Alabama. As Kevin mentioned, we are very excited about the opportunity to provide service in Pasco County, Florida. We admitted our first patient in October. We believe our entry into Pasco County is a win-win for both the people we will serve in Pasco and for the future growth potential of VITAS. As Kevin also mentioned previously, Florida and our southeastern locations experienced two significant hurricanes in late September and early October with Helene and Milton. While we did experience a temporary slowdown in referral volume, I'm proud to say our collective team enacted our emergency response protocols and successfully supported one another while providing exceptional care to our patients and the impacted communities. In certain instances, we assisted in caring for patients who were displaced from evacuation areas from our competitor hospices to ensure these patients and their families received the care and attention they deserve. Our locations and teams were available throughout the storms and immediately back out in their communities once it became safe to do so. Over my career at VITAS, these natural disasters, while unfortunate, have been unifying events for our team with inspiring stories of heroics, compassion, and companionship, which invoke a great degree of pride for what we do each day. To quickly recap what our team has accomplished, we have now generated nine quarters of sequential net growth in licensed healthcare workers and eight quarters of sequential growth in ADC. We have also demonstrated the ability and interest in partnering with other providers through acquisitions to ensure communities continue to receive the best possible patient care. We are extremely optimistic about the ability of VITAS to maintain an above-average historical growth both organically and through potential acquisitions over the next few years. With that, I'd like to turn this call back over to Kevin. Thank you, Nick. I will now open this teleconference to questions. Thank you. At this time, we will conduct a question-and-answer session. As a reminder, to ask a question, you will need to press star 11 on your telephone and wait for your name to be announced. To withdraw your question, please press star 11 again. Please stand by while we compile the Q&A roster. The first question comes from Ben Hendricks with RBC Capital Markets. Ben, your line is now open. Thank you very much. Maybe a first question here for Nick. Clearly, you guys are seeing really good traction with the community access strategy, with that strong census growth you referenced and the margin contribution from that. Perhaps there could be a little bit of pressing some cap limits in some areas. We're still seeing a lot of good occupancy momentum among kind of referral settings. Could you maybe talk about all that in terms of your long-term growth expectations for census, how we think about it, and if there's any kind of regional considerations we need to think about going forward? Thanks. Yep, sounds good, so I'll start at the end of the question. In terms of regional considerations, I don't think there necessarily is any that are new. Of course, certain markets, particularly California, have their own expected operating level given the dynamic of how Medicare cap is calculated out in that market. As it relates to community access, we can continue to see, as you alluded to, strong occupancy levels and strong demand across every market throughout the country, and while we'll continue to execute on our community access strategy, I just have to reaffirm that throughout that entire time period where we've talked about it, in no way, shape, or form have we de-emphasized our commitment to our hospital partners and others. And so that continuity, as you can see through the third quarter performance of the hospital segment, admits being up almost 10%, I would continue to expect and anticipate. And that's for two reasons, right? One is that's who we are, that's how we operate, and it's what the community needs. And then secondarily, as you point out, both short, mid, and long term, it continues to be part of our effective strategy of operating a hospice company and ensuring we're managing Medicare Cap. As you're, Ben, as I know you're aware, we ended the Medicare Cap year because when this quarter completed and started a new one as we lifted it up. And as you can see in the results, our Medicare Cap forecast came right in line, actually, with where the Medicare Cap year ended. And we anticipate that being the same case for 2025 and beyond. So we'll speak about long-term growth trajectories when we come out with 2025 guidance, but we feel good that they'll continue to be above pre-pandemic historical growth levels from a volume standpoint. That range was four to six. It will be above four to six, but where it exactly lands, we'll fine-tune as we get into our guidance for 2025. Really appreciate that. Thank you, Nick. And then just maybe switch over to Roto-Rooter real quick. With this new marketing initiative and the marketing investments you have kind of on the residential side, can you talk about, and also commercial too, I guess, can you talk about just any kind of hurdle rates or benchmarks or any kind of milestones that are set to achieve in the near term underneath this new marketing strategy? Or are there any kind of measures of improvement you're looking for kind of in the near term from that marketing? Thanks. Well, Ben, let me start before I turn over to Mike, but just say it's a tough one. We don't expect any big breakthroughs. I'll tell you that the shortfall in Roto-Rooter this quarter, if you ask me from my perspective in big picture, it was two things. It was kind of the ramp-up costs and marketing expenditures in July, the first month of the quarter. And it was kind of the poor performance of the residential market, just about, it was 4% worse than we thought just in one quarter. Not tied to anything, just in demand, if you just say the number of telephone calls we were getting were fewer than expected. And we just blocking and tackling on a market-by-market basis, approaching that. I think that in the short term, the improvement that we're going to see, to the extent we see it, is going to be on the commercial side because that's an area that we're putting a lot of effort in, and it can have two things. It can have some short-term positive impact because you tend to get, let's say it's a big apartment complex, you might get 25 jobs over the course of a month and a half as opposed to one every 14 months on the residential side. So it's a tough one. But really, to answer your question, not to shrink from it, is that we don't expect any big breakthrough. We just think that as I'll put it in our mind, it's this. This is the process we're going through. When all the jobs came from the Yellow Pages, Roto-Rooter had an ideal position. It was listed in the first two pages in every plumbing section of every Yellow Pages book. As the internet became the preeminent source for job leads, we went back to square one. We were just fighting on a daily basis on the internet for placement. Given our size and our structure, it wasn't long before we became very dominant on that spectrum. To the extent that we'll bore you with this call, the changes made on the marketing side, the nature of paid search, whether it's just normal or some of the other facets that Google has added, it's something. It's a process we're going through. I have no doubt that we're positioned to be dominant, more dominant. We're still dominant, but we're more dominant in the near future. But I guess what I'm really saying, it's a process. It's not like it's not a blip. When something's happened for three and a half, four quarters in a row, you can't describe it as a blip. And it's got full attention, to say the very least. Mike, anything else to add there? Yeah, Ben, I think—I mean, to be direct—I think we will believe, and it doesn't boil down, as Kevin is saying, it doesn't boil down to one specific metric or one specific thing. But if there was one thing that we will judge the marketing program successful by, it's call count. As we talked about, it was down 11.7% year over year, and that's a tough metric to overcome for a revenue perspective. As Kevin also said, we're doing a lot of other things, and I think we're doing them well at Roto-Rooter. Our conversion rates are good, in fact, historically good, so we're doing a lot with what we get. But until that call count number starts to grow, or at least not decline significantly, the residential business is going to struggle. Thank you. I guess next question. Please stand by for the next question. The next question comes from Joanna Gajda from Bank of America. Your line is now open. Hi, thank you. Thanks so much for taking the questions. So I guess maybe first on Roto, in terms of that last comment around the change in your vendor to manage the online searches, so what exactly can they do differently versus the prior vendor? So I understand the goal is to obviously increase the call volume coming through and then convert those. But if the problem was really the Google algorithms were preferring the local providers, what do you, I guess, this new vendor can do differently? Joanna, I'll be the first to say that no one in this room is an internet marketing expert. So we'll start there. But when we talk to Roto-Rooter management, they talk there's more dependence, for instance, between paid and non-paid and how Google algorithm puts that all into one bucket. And I think the new marketing agency is going to be experimenting on how that interdependency works. And is there a way, for instance, if we increase our paid advertising, does that also move us up or down on the non-paid? And I think it's just they have new ideas that our old agency didn't have. I think at the end of the day, I think to some degree, we view it as, call it every three to five years, it's good to go out, get a new agency with new ideas, different strategies, and see if they can drive something that maybe the old agency has overlooked. Let me put it very simply. A former agency assigned three full-time people to our account. We now have seven at the new agency working full-time, making sure it is a constantly changing, I mean, changes every minute or so as far as placement in all the different cities, and you just have to stay, and it's a bidding, and you bid for a position, and the bidding is constantly evolving depending on time of day, day of the week, whether it's raining or not. And I mean, again, it's the better mousetrap is able to capture prime position at a reasonable cost more often than not, and to the extent that we think that we're doing a better job of that, there's no doubt in our mind that we're doing a better job of that. But as the overall conditions are tough, that is, the information you've supplied shows that just total searches on the plumbing side are not up. They're down a little bit. You have intensifying competition for those number of leads currently. And it's a battle, but we have more people fighting over the few that are there. And again, I think that over time, Roto-Rooter has demonstrated they have the staying power, the commitment to throwing more and have the ability to throw more resources at it. And ultimately, there's no doubt in my mind. I mean, put it this way. I mentioned this. I don't want to. We don't share some information that we've looked at much closer. Roto-Rooter has a dominant position in every market where we have a branch, every one. And it's just a question of returning to a higher level of dominance. And again, when you're talking about whether you have a 50% advantage over the second best competitor, you got to return it back to a 60% dominance. I mean, that's the area that we're talking about here. And I have confidence we'll be able to do that. Okay. Thank you. That's helpful. But I guess staying on Roto, so you said you've used your EPS guidance essentially on the Roto, but you did not give us details that usually you do. But if we refer to some in your guidance, you have some kind of similar revenue declining, Q4 and also margins, I guess, how to think about it. So you called out those two items. So should we think about those two combined kind of reversing and then Q4 margin, I guess, tends to be better seasonally? So kind of what do you assume for revenues and margins in Q4 for Roto? So Joanna, VITAS's guidance hasn't really changed. There might have been a couple of tweaks, but really hasn't changed for the fourth quarter. So the entire decline in EPS is relating to Roto-Rooter. If you want to call out specifically what we're talking about in the fourth quarter, if you want to put it into your model, I would expect a similar revenue number as the third quarter from a year-over-year comparison. We didn't really project a significant amount of improvement in the fourth quarter for Roto-Rooter compared to its third quarter year-over-year comparison. So that's the revenue side. From a margin side, I would say we projected not spending 150 basis points on extra marketing. That was mostly the transition to the SEM. So the margins will be back at the levels they were early, call it second quarter EBITDA margin level, which was 125 basis points down from 2023. And that's purely a volume, revenue volume covering fixed costs issue. And Joanna, one other thing I'd like to add. The kind of things that are kind of causing mixed shifts is when we miss the number on the residential side. That has almost a multiplier effect because we get much more ancillary service, but many more excavation jobs and water restoration jobs on the residential side. So if you miss there, again, it has a multiplier effect. Just another factor that we haven't talked about a lot. Basically, when we talk about Google's changing strategy, and I saw they just had record results yesterday. I mean, part of their change of strategy is to have fewer people search on the natural basis, that is, where there's no fee. And they prefer to drive traffic on the paid side, not surprisingly. Just order of magnitude, in the last 12 months, the percentage of our jobs that are free, that is, that came from somebody looking on a natural basis, is down about 5% from its high. Now, you can imagine if 5% of your business, you're paying a substantial marketing fee, whereas before they were free, that has an effect on margin. And their strategy is to deal with that. And we're pushing back on some of Google's efforts in that regard. But that's another thing that has affected margin. Again, despite, in Roto-Rooter, from their perspective, very good operating metrics. That is, we've been able to retain at very reasonable levels our service force. We've done a much better job of retaining our good branch managers, whereas two years ago, we were losing all the PE firms. Our close rates, as Micah said, have been very strong. I mean, all those aspects are very good. We're just dealing with some overarching issues that are not susceptible to easy fixes. But it's got our full attention. And when I look back at the 44 years that Roto-Rooter, that its management has been dealing with problems like this, it's just an unbroken, unparalleled story of success. So it gives me a lot of confidence. Okay. And I guess thinking about next year, I know you don't have guidance yet, but I guess just high-level comments on Roto-Rooter and I guess VITAS too when it comes to top-line and margins. It sounds like maybe on the Roto-Rooter, the margin pressure could continue, I guess, when it comes to that, what you just described around the paid searches and such. But how should we think about both businesses into next year, high level, in terms of the growth algorithm? Thank you. So I'll start, and then Nick will give probably a little more color on VITAS. But from a Roto-Rooter side, we are cautious about 2025. We see some actual green shoots and some positive things coming from commercial. And we are hopeful that that continues and the momentum actually gains steam in 2025. We think that is well within Roto-Rooter's management to fix a significant portion of that. The residential side is a little more uncertain, and we haven't put pen to paper, so I can't really give you numbers. I would say we've seen some articles that are about industries that are sort of adjacent to our industry that suggest that there's going to be a change or a return to some growth by mid-2025. But those are sort of anecdotes. And so I think our hope is that by mid-2025, we start to see some strengthening just in the demand in the overall industry. We would not expect, again, with, let's call it, flattish revenue in 2025, we would not expect any significant margin expansion at Roto-Rooter, but not deterioration either. On a VITAS side, I think Nick mentioned it before, but we expect above historical averages growth. I don't know that we expect 15% to 16% days of care growth like we're seeing at the moment, but certainly high single, low double-digit day of care growth, and then a little bit of margin expansion potential from there. We haven't put pen to paper to anything, and you'll get more details when we give guidance in February. I guess with 25, the Medicare rate out there is also maybe a little bit better than historical average. So that helps too. So combined with the high single- to low double-digit census, there's maybe a couple% from pricing, so to speak, for the rate update, right, into next year. Yeah. Since the rate update is now done and finalized, as you're aware, October 1, basically, our anticipated, if we look at our current blend, everything created equal, we're looking we would anticipate about 3.9% like we had alluded to, which is about 100 basis points above the national average, just given where we operate today. Yes, that provides a little additional upside that is included in our fourth quarter guidance this year and will be incorporated in 2025 for the first nine months. We'll use all available public data to inform our fourth quarter of 2025 as that rate increase matures and gets issued in early fall of next year. Great. Thank you so much. I'm showing no further questions at this time. I would now like to turn it back to Kevin McNamara for closing remarks. Thank you. I just wanted to obviously restate that it's a little bit tough quarter for Roto-Rooter, a little tougher than we expected. Still have a lot of confidence with VITAS doing great. When you look at our current guidance, we're still expecting our adjusted net income to be up 13%-14% over last year. Not a bad year as we're expecting it to come in, but tough sledding to get there, no question. But I'd like to thank everyone for their attention. And I guess we'll reconvene after we have the fourth quarter and our guidance for next year. Thank you. Thank you for your participation in today's conference. This does conclude the program, and you may now disconnect.