Good day, everyone, and welcome to Guardian Pharmacy Services' third quarter 2024 earnings call. At this time, all participants are on a listen-only mode. Later, you will have the opportunity to ask questions during the question-and-answer session. Today's speakers will be Fred Burke, President and CEO of Guardian Pharmacy Services, and David Morris, EVP and CFO of Guardian Pharmacy Services. Before we begin, I'd like to remind everyone that statements included in this conference call and in the press release issued today may constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act. These statements include, but are not limited to, comments regarding our plans, objectives, business outlook, and our financial results for 2024 and beyond. Actual results could differ materially from the expressed or implied in forward-looking statements because of a number of risk factors and uncertainties, which are discussed in the company's quarterly report on Form 10-Q and earnings release issued today. Guardian Pharmacy Services undertakes no obligation to update any forward-looking statements. Additionally, on this afternoon's call, the company will reference certain non-GAAP financial measures such as EBITDA, adjusted EBITDA, and free cash flow. Included in our earnings release, as well as on our website at investors.guardianpharmacy.com, are reconciliations of these non-GAAP financial measures to the GAAP measures reported in our financial statements. This afternoon's call is being recorded, and a replay of the call will be available later today. I am now pleased to introduce the President and CEO of Guardian Pharmacy Services, Fred Burke. Welcome to Guardian Pharmacy's first quarterly earnings call after we began trading on the New York Stock Exchange on September 26th of this year. On today's call, we will be discussing our third quarter 2024 financial results. I'm pleased to share strong results today, which include resident count at the end of the quarter of approximately 180,000, a 12% increase from the third quarter of 2023, revenue of $314 million, an increase of 20% year-on-year, and Adjusted EBITDA of $23 million, also representing an increase of 20% compared to last year's quarter. Before David shares additional information around these financial results, I'd like to give you a brief overview of the Guardian story, especially for those of you that we did not have the opportunity to meet on our roadshow. Guardian Pharmacy Services is a leading long-term care pharmacy facilitating the full life cycle of pharmacy administration and associated services for residents of long-term care facilities. Our extensive suite of technology-enabled services is designed to ensure residents are firstly on the appropriate drug regimen and then to promote medication adherence, both of which improve clinical outcomes and bend the cost curve. We are purpose-built to address the complex medication management needs of residents in long-term care facilities, including assisted living, behavioral health, and group homes. We also have robust capabilities to serve residents of skilled nursing facilities and other types of long-term care facilities. Our focus on assisted living positions us in an attractive high-growth market where residents require specialized care and the high-touch, individualized, consultative pharmacy services that each of our local pharmacies provide. Currently, there are more than 800,000 assisted living residents in the United States, a market that is growing around 5% per year. Guardian currently serves about 120,000 assisted living residents from our 50 locations across the country. We operate in a highly fragmented market competing with over 1,200 independent pharmacies. While we've come a long way from our original pharmacy in Phoenix, Arizona, there's still significant runway ahead of us. Specifically, according to the NIC MAP data, we are the U.S. leader in assisted living despite not yet having 100% geographic coverage, with a 12% market share, which means to us that there's 88% left. I'm excited to have you all following along with our progress. I want to point out that our pharmacies are not your traditional retail pharmacies stocked with a variety of non-pharmaceutical items on their shelves. These are closed-door institutional pharmacies in 10,000-20,000 sq ft of industrial space with an average of 50-100 employees in each location. Each pharmacy can serve residents in a two- to three-hour radius, operating on a 24/7 basis, continuously adapting to the needs of the facilities we serve and their residents. In the assisted living facilities we serve, the average resident is 87 years old and is impaired by multiple Activities of Daily Living, or ADLs. They are older and face many health challenges, but they are also financially capable, opting to live in newer, nicer facilities and doing so via private pay. Unlike traditional skilled nursing facilities, where the pharmacy is dealing with healthcare professionals, including RNs and a physician serving as medical director, in assisted living facilities, there are very few clinical professionals. Thus, the pharmacy needs to be able to provide a different type of service. Our consulting pharmacists work with each resident's multiple community physicians to help ensure they're on the proper drug regimen, and our technology platform enables the non-healthcare professionals in these settings to safely administer drugs to the residents and ensure adherence. As I mentioned, there's a lot of room for us to grow, and we have a strong track record of executing our multi-prong growth strategy that includes three organic drivers plus M&A, which David will discuss in more detail next. Turning now to a few business highlights from the third quarter. First, we completed our second quarter with Heartland Pharmacy, which we acquired in April of this year. This was larger than our normal course acquisitions and included four pharmacy locations, 8,600 residents, and brought us into the Intermountain West. While our acquisitions typically take two to three years to realize the full synergies of Guardian, Heartland is progressing well, and the local team is excited about continuing to implement the Guardian platform to achieve growth and operating leverage. Secondly, the recent hurricanes wreaked havoc on many areas we serve. I'm proud of how we successfully navigated the challenges brought on by both Hurricane Helene in the third quarter and Milton in the fourth. As the storm approached, Helene's projected path was broad, potentially impacting 13 of our pharmacies in six states. Out of an abundance of caution, each pharmacy implemented its emergency procedures to prepare for potential impacts of the storm. As many residents were evacuated, we ensured they left the facilities with all necessary prescriptions for an extended period of time. Our teams worked diligently and swiftly to ensure there would be no disruption to access or adherence for dislocated residents. Ultimately, while very challenging and costly for our pharmacy teams to navigate, this is the right thing to do to ensure continued care for the residents we serve. I'm pleased to report day-to-day operations have returned to normal in most areas except western North Carolina, and none of our pharmacies were severely impacted by these storms. Finally, I'd like to touch on the Inflation Reduction Act, or the IRA, which we spoke to many of you about on our roadshow. One of the unintended consequences of the IRA's negotiated maximum fair price provision is potential margin headwinds in 2026 on these negotiated drugs. We continue to work on solutions and are taking a number of steps to navigate this issue, including engaging in discussions directly with our PBM payroll partners and pursuing a possible legislative fix. We'll continue to keep you updated on this issue as we learn more. Before I turn the call to David to review the numbers, I want to take a moment to express my heartfelt gratitude to all of our dedicated employees. Their hard work and commitment to our cultural service have been instrumental in our journey. It's an exciting time for Guardian Pharmacy Services, and I'm thrilled to share our story with you all. Thank you for your interest in Guardian, and I look forward to updating you on our progress. David? Good afternoon, and thank you all for joining our first earnings call as a public company. I'm pleased to share more information on our strong third quarter operating results. In the third quarter, we generated $314 million in revenue, an increase of 20% compared to a year ago, driven by growth in our resident count due to organic growth and the Heartland acquisition, as well as a slight uptick in branded drugs. Our resident count at the end of the quarter was approximately 180,000, which reflects an increase of 12% year-over-year. From a gross profit standpoint, we generated $60.9 million of gross profit in the quarter, an increase of 16.6% compared to a year ago, and reflects a gross margin of 19.4%. In the quarter, we had some headwinds impacting our gross margin percentage. This can be attributed to two main factors which drove the majority of the impact. First, we experienced an increase in our self-insured healthcare cost for employees due to a lag in processing claims, which we attribute to the Change Healthcare issue earlier in the year. It's important to note that we finished on budget for the full plan year ending 9/30, and we don't anticipate a significant impact from this issue moving forward. Second, a portion of the decrease can be attributed to the Heartland Pharmacy acquisition. As Fred mentioned, this was significantly larger than a typical acquisition with approximately 8,600 residents, and we expect it will take two to three years to fully implement Guardian's platform and ultimately achieve normalized operating metrics, including gross margin percentage. Additionally, and to a lesser degree, the business overcame a couple of other items impacting gross margin percentage. This includes the impact of Hurricane Helene with incremental labor and courier expenses. We also experienced a spike in COVID cases in the quarter that drove an increase in the usage of branded COVID therapeutic drugs such as Paxlovid. As a reminder, these drugs are no longer subsidized by the federal government now that the pandemic-related mandates have expired. Therefore, we are feeling the full financial impact, which is a lower gross margin percentage on a higher drug cost, but contributing nicely to revenue and gross margin dollars. Historically and consistent with this year, we are experiencing volatility within quarters related to gross margin. Despite the volatility, we believe gross margins will remain consistent with prior years on an annual basis. Despite these factors negatively affecting gross margin percent, we achieved adjusted EBITDA of $23 million in the third quarter compared to $19 million in prior year, a 20% year-on-year growth and steady adjusted EBITDA margins of 7.3%. Included within the adjusted EBITDA is an add-back of $122 million in share-based compensation expense related to the corporate reorganization and IPO, which resulted in negative net income and EPS for the quarter. Certain of these awards carry an additional one-year service period, resulting in a total of approximately $13.5 million of unamortized share-based compensation expense as of September 30th, 2024, which will be recognized ratably over the next four quarters. The required accounting treatment has no effect on cash and is non-recurring. As a result of the corporate reorganization and IPO, we have 230 employees owning over 35% of the company. Together, this team is focused on continuing to execute and grow the business as we have historically done. As Fred mentioned, we've continued our strong growth profile. Let me recap our growth strategy. Our first organic driver is the addition of new residents serviced by existing pharmacy locations. This can occur in two ways, the first being servicing new long-term care facilities on our existing markets. We have a sophisticated sales force at the national, regional, and local level actively working to onboard new facilities, and occasionally, we add new residents to an existing pharmacy through a small opportunistic bolt-on acquisition where long-term care residents are acquired from another pharmacy operator in our footprint and integrated into our existing pharmacy operations. Our second organic driver is increased adoption within long-term care facilities already serviced by Guardian Pharmacy. When we start as the preferred pharmacy provider of a new facility, we typically begin serving about half of its residents, and by implementing our pharmacy adoption toolkit, we have been successful in increasing our adoption rate to 90% over time. Our final organic driver is when one of our existing pharmacies launches a new greenfield startup in a geographically contiguous market. In addition to organic growth, we also utilize M&A to augment our organic growth strategy. We expand our geographic presence through acquisitions by forging new partnerships in additional territories. We have made 30 since our inception in 2004, 24 of which were in the last 10 years. I'd now like to give a couple of updates on these growth initiatives, beginning with our contiguous startups. We have launched eight of those in the last two years, which are coming up to scale. As it relates to our M&A strategy, Fred's already touched on the Heartland acquisition, which we're now six months in and pleased with the integration process and operating results we're tracking with expectations. Additionally, earlier this month, we completed a smaller acquisition of a pharmacy near Morristown, New Jersey, which represents a new geographic market for us. While this location currently services a relatively small number of residents, it has an excellent operator and capacity to grow in this large, robust market. Turning to the balance sheet, we ended the third quarter with $37.2 million in cash, which includes net proceeds from our IPO. Additionally, we ended the quarter with minimal net debt and are well-positioned to execute our growth plan moving forward. Finally, I'll touch on our guidance outlook before opening our call to questions. We're providing our initial guidance for the full year 2024. We now expect revenue to be in the range of $1.205 billion-$1.215 billion, Adjusted EBITDA to be between $86.5 million and $87 million. Longer term and consistent with our message on the IPO roadshow, we believe we will continue to generate high single-digit organic revenue growth with EBITDA leverage going forward, augmented by our robust M&A pipeline. In conclusion, I'm very pleased with our third quarter performance and am proud of how hard the entire Guardian team has worked to reach this point. I believe these quarterly results demonstrate the company's continued growth and our year-to-date results set a solid foundation for future success. I'm excited to be in the public markets and look forward to keeping you all updated on our success over the future quarters and years to come. With that, Operator, let's open the call to questions. At this time, if you would like to ask a question, please press star one on your telephone keypad. You may remove yourself from the queue at any time by pressing star two. Once again, that is star one to ask a question. We'll go first to David MacDonald with Truist. Your line is open. Please go ahead. Yeah, good afternoon, guys. Congratulations. Fred, I guess just wanted to start with, I know you probably can't get into a ton of detail, but is there any additional comments you can make just in terms of the conversations with your payer partners and do some of the changes that are taking place with the IRA potentially present an opportunity in terms of tweaking how you contract with some of your partners? Yes. We can let you know that we are having conversations. I'll let David brief you in a little more detail. Obviously, these are sensitive and we're not prepared to disclose specific details, but we've socialized the issue. We're engaged in very productive discussions. David, I'll add to that. As As we talked about on the roadshow and with the analyst community, we're talking about 25, 26, and all the things that we're working with our payers on from a partnership standpoint and are having very productive conversations and continue to be very confident that we'll work our way through this with really no issue. Okay. And then just a couple of others, guys. I'm just curious, is there any hurricane impact that you would call out that you're absorbing in the guidance in the fourth quarter of note? And then I guess just my last question would be, anything incremental that you'd call out with regards to Heartland now that it's been a couple of quarters, either the markets that they're in, growth, just anything other than the prepared comments that you'd kind of strike out as maybe better or worse than when you acquired the property? David, I'll start first with the hurricane. And we had minimal impact in Q4, similar to what we had with Helene in Q3. So there's nothing significant that we'll be dealing with there. And then from Heartland, as Fred said, we continue to be very excited about the business. It's making great progress coming up on our platform. We'll start to see more and more synergies as we go through 25. And there's tremendous growth opportunity starting to manifest, and it'll be a key piece of our continued growth in 25. So we're very excited and optimistic about the opportunity with Heartland. Okay. Thanks very much. We'll go next to John Ransom with Raymond James. Please go ahead. Hey, good afternoon. Congrats. A couple of questions for me. First of all, I'm just kind of intrigued. The company has capital, more capital. You've got 230 new shareholders. You've got a public currency. A year from now, do you think we'll look back and say just that setup causes the behavior to change just a tad in terms of external growth execution, which, to be fair, has been fine, but do you think that that might accelerate some of the unmodeled external growth opportunities? John, it certainly provides us with resources to do so. I cannot say for sure whether that will happen because we've got our head down doing what we've always done. 20 years of track record here, putting one foot ahead of the other, and we're going to continue to operate just exactly that way, but we're going to have our peripheral vision scanning the horizon for other opportunities that may come our way. I'll add to that, and Fred touches on 12% market share. We're excited about taking that 20 or 30. And from an investment community, we're going to continue to do what we've done for the last 15, 20 years, be great stewards of capital. And we're going to continue to manage the business with low leverage. I think that really helped us get where we are today, and then you touched on the collapse. I think we're excited to have over 230 employees owning over 35% of the business, and I think that will really coalesce everybody focused on growing the overall company. And I think that will have a positive effect. So we're very excited, John, about where we're headed. Great. And then the second one is a little bit follow-up on David's question. This is more focused on 25. So a lot of turmoil in the Part D market. So as you executed your 25 contracts, was the degree of difficulty notably higher? Is there anything else you'd call out there? John, first of all, our contracts are more longer term, so there's nothing specific to 2025, and then we're working on 2026, 2027, so no obstacles for 2025, and we're very encouraged about navigating any impact our ROA will have in 2026 or 2027. Okay. Thank you. We'll go next to Scott Fidel with Stephens. Please go ahead. Hi, thanks. Good evening. First question, just with the elections having just played out, Fred, interested just as you think about some of the strategies around addressing the IRA headwinds for 26 and beyond, and in particular, just the legislative strategy given potential for the Republicans to take over Congress. How do you think that sets up for potentially a larger technical corrections bill that could be sort of set up to address the IRA and have the opportunity to get your considerations included in that? And then similarly, potentially a larger type of corrections at the CMS level as well as relates to the IRA. Just curious around, obviously, I know that you guys are very active on the market-based solutions with your payer partners. Just curious how you think about the opportunity now on the legislative side post the elections. Thank you, Scott. Great question. Let me see if I can get out my political crystal ball to answer it. We certainly, with our trade group, are assessing that very situation. I was on a call literally this afternoon thinking about any changes in our constituency and the Congress. And by and large, the supporters of our activities are still in place and still very interested in finding solutions. So I feel comfortable that we'll be able to move forward on that front seamlessly, even though we've got a new majority over on the Senate side. Okay. And then just as a follow-up, just wanted to ask about sort of two observations on the business that were called out. One, you had mentioned in the press release just around the trend of serving higher acuity residents and that driving some of the higher sort of volumes that you're seeing on a per-resident basis. Anything more that you would highlight around that? Is that just this trend of general higher acuity that we've been seeing really across healthcare? Or just interested if there's been any sort of nuance to that in terms of how that's been affecting your business. So that's the first question, then I'll have one more follow-up. Yes. I believe that you're exactly right. Our experience in assisted living is tracking right along with healthcare in general. Our residents are aging. They're impaired with multiple ADLs, and that's leading to a few more prescriptions per resident and use of some of the newer branded products. And as David mentioned, we also had some COVID therapy going on in that spike in August, September that you read about in the news with COVID. So that's what was driving that. Okay. And then just one last one from me. Just on that higher branded drug utilization that you had mentioned and that David had called out, the COVID, the Paxlovid being one of the drivers of that. Just interested, there's been some sort of mentioning amongst at least one of the very large payers that they've seen some pull forward of 2025 IRA changes driving some branded drug volume trends with drug manufacturers, for example, pushing rebate strategies around that. Just interested if that's something that you've observed that's maybe playing into this higher branded drug volume that you've seen, or is that just more related to the COVID effect that David had mentioned? I believe it's the latter. I cannot point out any specifics that we see that's driving increased utilization of brands. Okay. Thanks. And as a reminder, if you'd like to ask a question, please press star one. It appears we have no further questions at this time. This does conclude today's question and answer period, as well as the Guardian Pharmacy Services third quarter 2024 earnings call. Thank you for your participation. You may disconnect at any time.