Ladies and gentlemen, thank you for standing by. And welcome to the Chemed Corporation's Second Quarter 2020 Earnings Conference Call. At this time, all participants are in a listen-only mode. After the speakers' presentation, there will be a question-and-answer session. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Sherri Warner with Investor Relations. Please go ahead, ma'am.

Good morning. Our conference call this morning will review the financial results for the second quarter of 2020 ended June 30, 2020. 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 July 29, 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 July 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; Dave Williams, Executive Vice President and Chief Financial Officer of Chemed; and Nick Westfall, President and Chief Executive Officer of Chemed's VITAS Healthcare Corporation subsidiary. I will now turn the call over to Kevin McNamara.

Thank you, Sherri. Good morning. Welcome to Chemed Corporation's second quarter 2020 conference call. I will begin with highlights for the quarter, and David and Nick will follow up with additional operating detail. First, let's start with the obvious. Operating two separate and distinct service business segments with 17,000 employees during a national pandemic brings unique, unpredictable and abrupt challenges. Fortunately, VITAS and Roto-Rooter have been classified as essential services allowing Chemed to operate during the pandemic. Maintaining operations in this environment is far from business as usual. First and foremost, our number one focus has been and will remain on the safety and well-being of our employees, patients and customers. We will maintain this focus regardless of the cost to safely operate during the pandemic. April 2020 was probably the most challenging month, we have ever seen significant operating issues emerge daily, triggered primarily from incredibly fast-moving and sometimes contradictory federal, state and local government regulations. Logistical operating issues were identified, analyzed and solutions were put in practice immediately. We were able to develop and continuously refine effective workarounds on supply chain issues, labor and scheduling issues, patient access restrictions, employee safety, healthcare protocols, technology solutions as well as information security protocols allowing our employees to continuously serve our local communities in a safe agile manner. We closely followed the myriad of federal, state and local regulations in the development and implementation of infrastructure necessary to safely allow our field, support and corporate support staff to safely limit as much as practical, physical interaction among our 17,000 employees. On the VITAS segment, the federal government and specifically HHS and CMS have been exceptionally supportive in terms of relaxing regulations, allowing the use of telehealth capabilities where appropriate and providing pragmatic flexibility in caring for our 19,000 plus patient census. As most of you are aware, on March 27, 2020, the CARES Act was signed into law. The CARES Act includes financial support for health care providers to maintain operational capacity as well as assist providers with issues caused by the coronavirus pandemic. On April 10, 2020, VITAS without application received $80.2 million of CARES Act funds that was formulaically determined by the federal government based on our 2019 Medicare fee-for-service revenue. These CARES Act funds are specified to be used to prevent, prepare for, and respond to the coronavirus and shall reimburse the recipient for healthcare-related expenses or loss revenues that are attributable to coronavirus. The ability of VITAS to retain and utilize the full $80.2 million from the relief fund will depend on the magnitude, timing and nature of the economic impact of COVID-19 within VITAS, as well as the guidelines and rules of the relief fund program. This financial support is material for VITAS in maintaining its operational capacity to safely care for our 19,000 patients. In our first-quarter earnings conference call, I stated we anticipated disruption within our patient referral and admission patterns due to significant healthcare system service restrictions in the coming quarter. This disruption did materialize in our second quarter 2020 admissions, which declined 3.8% over the prior year. However, the admissions trend did materially improve throughout the quarter. Our April 2020 admissions were challenging and had a decline of 6.6%, then improved slightly with an admission decline of 5.8%. June showed significant improvement generated in admissions growth of 1.1%. Nick will provide additional detail on the admissions trend later in this call. Roto-Rooter operations were also severely impacted at the start of the pandemic. In late March 2020, we observed significant disruption in our Roto-Rooter commercial business. As a reminder, historically, commercial services represented approximately 28% of Roto-Rooter's consolidated revenue. We made the decision for Roto-Rooter to maintain full staffing and operating capacity with no employee layoffs as we entered the second quarter. This decision to maintain our full operating strength was potentially an expensive strategic move and we monitored our demand metrics daily. The decision to operate at full capacity is a classic risk-reward calculation weighing brand awareness, customer satisfaction and the financial needs of our employees. We also wanted to be positioned to capitalize on any potential snapback in commercial and residential demand, both to protect existing market share as well as maximize our opportunities to grow market share. I believe this has proven to be the correct strategic course. Roto-Rooter services demand began to show weekly improvement beginning in the later part of April, and had strengthened unabated throughout the remainder of the second quarter. This is reflected in our monthly performance with Roto-Rooter unit-for-unit commercial revenue declining 38.6% in April, improving slightly to a 31.8% decline in May and declining 19.7% in June. Our residential services have proven to be exceptionally resilient, with our unit-for-unit residential revenue declining a modest 1.6% in April, increasing 11.7% in May and 18.7% in June. Overall, Roto-Rooter’s consolidated unit-for-unit revenue declined a modest 1.6% when compared to the prior year quarter while generating consolidated revenue growth of 8.6% when including acquisitions. Roto-Rooter's adjusted EBITDA in the second quarter of 2020 totaled $46.8 million, an increase of 20.7%. The adjusted EBITDA margin was 26.8%, which is a 269 basis point increase when compared to the prior year. The increase in Roto-Rooter’s adjusted EBITDA margin is attributed to our residential services, having a higher margin than commercial services, as well as increased residential excavation and water restoration services which have a significantly higher direct contribution margin compared to commercial plumbing and drain cleaning services. I'm very appreciative of the hard work, creative solutions and willingness of our 7,000 employees to adjust our operational routines and embrace new procedures. Their shared dedication made it possible for us to provide care to our patients, families and customers in an incredibly difficult environment. I personally thank every one of our employees for these incredible efforts. With that, I would like to turn the teleconference over to David.

Thanks, Kevin. VITAS' net revenue was $327 million in the second quarter of 2020, which is an increase of 4.7% compared to our prior year period. This revenue increase is comprised primarily of a 2.8% increase in days of care, a geographically weighted average Medicare reimbursement rate increase, including the suspension of sequestration on May 1 of 2020 of approximately 5.4%, and acuity mix shift, which reduced the blended average Medicare rate increase by approximately 310 basis points. The combination of increased Medicare Cap and a decrease in Medicaid net room and board pass-throughs, as well as reductions in other contra revenue activity, reduced total revenue growth by an additional 42 basis points in the quarter. Our average revenue per patient per day in the second quarter of 2020 was $194.02, which, including the impact from acuity mix shift, is 2.3% above the prior year period. Reimbursement for routine home care and high acuity care averaged $165.22 and $985.23, respectively. During the quarter, high acuity days of care were 3.5% of our total days of care, 69 basis points less than the prior year quarter. This 69 basis points mix shift and high acuity days of care reduced the increase in average revenue per patient per day from 5.4% to 2.3% in the quarter. VITAS accrued $5.8 million in Medicare Cap billing limitations in the second quarter of 2020, which includes approximately $2.3 million of cap liability attributed to the pandemic. The suspension of sequestration resulted in an additional 2% increase in reimbursement effective May 1 of 2020. In Medicare, provider numbers that were in a Medicare cap liability situation saw that 2% reimbursement increase effectively eliminated by a corresponding increase in Medicare cap liability in those markets. In addition, disruption in Medicare admissions in these Medicare cap liability markets resulted in a further increase in the projected fiscal 2020 Medicare Cap billing limitation. The second quarter 2020 gross margin excluding Medicare Cap increased costs for personal protection equipment or PPE, disinfecting facilities and increased costs for additional paid time off or PTO for our front-line employees was 27.2%, which is a 352 basis point margin improvement compared to the second quarter of 2019. This increase in gross margin for VITAS is attributed to increased reimbursement from the elimination of sequestration on May 1, 2020, a level of care mix shift to higher margin routine home care, and efficiencies from utilizing telehealth where appropriate, as well as cost reductions from reduced admissions volume intake and reduced high acuity hospital referred admissions that have short length of stay and in some cases negative gross margins. Now, let's turn to the Roto-Rooter segment. Roto-Rooter generated quarterly revenue of $175 million in the second quarter of 2020, an increase of $13.9 million or 8.6% over the prior year quarter. On a unit-for-unit basis, which excludes the Oakland and Hoffman Southwest acquisitions completed in July 2019 and September 2019 respectively, Roto-Rooter generated revenue of $158 million for the second quarter of 2020, a modest decline of 1.6% over the prior year quarter. Total Roto-Rooter commercial revenue, excluding acquisitions, decreased 29.1% in the quarter. This aggregate commercial revenue decline consisted of drain cleaning revenue decreasing 31.2%, commercial plumbing and excavation declining 28%, and commercial water restoration declining 20.3%. Total residential revenue, excluding acquisitions, increased 10.4%. This aggregate revenue growth for residential consisted of residential drain cleaning increasing 10.2%, plumbing and excavation expanding 14.4% and commercial water restoration increasing 4.3%. Roto-Rooter's gross margin in the quarter was 51.2%, a 247 basis point increase compared to the second quarter of 2019. Now, let's look at consolidated Chemed. As of June 30, 2020, Chemed had total cash and cash equivalents of $20.4 million and no long-term debt. In terms of our guidance, historically Chemed's earnings guidance has been developed using previous year's key operating metrics, which are then modeled and projected out for the calendar year. Critical within these projections is the understanding of traditional pattern correlations among key operating metrics. Once we complete this phase of our projected operating results, we then modify the projections for the timing of price increases, modifying commission structure, wages, marketing programs and a variety of continuous improvement initiatives that our business segments plan on executing for the coming year. This modeling exercise also takes into consideration anticipated industry and macroeconomic issues outside of management's control but are somewhat predictable in terms of their timing and impact on our business segments' operating results. The 2020 pandemic has made accurate modeling and providing meaningful earnings guidance for Chemed exceptionally challenging. Federal, state and local government authorities were forced to make swift decisions within our healthcare system, labor pools, and general economy. These governmental decisions have the potential for an immediate and material impact on VITAS and Roto-Rooter's operating results. However, over the past four months, Chemed has been able to successfully navigate this rapidly changing environment and produce operating results that we believe provide us with the ability to issue meaningful guidance for the remainder of the calendar year. However, this guidance should be taken with the recognition that the pandemic will continue to materially disrupt all aspects of our healthcare system and general economy to such an extent that future rules, regulations and government mandates could materially impact our ability to achieve this guidance. With that said, revenue growth for VITAS in 2020, prior to Medicare Cap, is estimated to be in the range of 5% to 7%. Our Average Daily Census in 2020 is estimated to expand approximately 2% to 4%. Our full-year adjusted EBITDA margin prior to Medicare Cap is estimated to be 19% to 20%. We are currently estimating $17 million for Medicare Cap billing limitations for the calendar year 2020. We also anticipate that the $80.2 million of CARES Act funds that Chemed just described earlier that were formulaically calculated by the federal government based on our 2019 Medicare fee-for-service revenue will be adequate to cover our increased costs specifically related to operating our healthcare unit during the pandemic, as well as any incremental Medicare Cap billing limitations that are triggered from declines in Medicare admissions. I should also note that Chemed's full year adjusted earnings per share guidance eliminates any financial benefit from the CARES Act funds that relate to lost revenue. We anticipate returning any unused CARES Act funds to the federal government at the end of the pandemic measurement period. Roto-Rooter is forecasted to achieve the full year 2020 revenue growth of 9% to 10%. Adjusted EBITDA for Roto-Rooter for 2020 is estimated to be in the range of 23% to 25%. Based on this discussion, our full-year 2020 adjusted earnings per diluted share, excluding non-cash expense for stock options, tax benefits from stock options, costs related to litigation, CARES Act funds used for lost revenue and other discrete items, is estimated to be in the range of $16.20 to $16.40. This 2020 full-year calendar guidance assumes an effective corporate tax rate of 25.2%. As a comparison, Chemed's 2019 reported adjusted earnings per diluted share were $13.96. I'll now turn this call over to Nick Westfall, President and Chief Executive Officer of our VITAS Healthcare subsidiary.

Thanks, Dave. Before I discuss our second quarter metrics, I want to reiterate Kevin's earlier comment and thank all of our VITAS team members for their continued perseverance throughout this pandemic. The interdisciplinary team approach that is the foundation of the hospice benefit has never been more evident for our organization across the country than through this entire pandemic. Coordination of our entire team from our sales team providing pandemic relevant education to our disrupted healthcare partners through our admissions teams responding to referrals, enabling our clinical care teams to provide care around the clock with the support of our care coordination centers, home medical equipment division, and back-office support has been remarkable. All of this enabled us to care for 19,185 patients each day within the quarter, while bringing on the service 16,822 patients who needed high-quality hospice care during this pandemic. We lived our internal model that we've been sharing during the pandemic, which is, yes, we can, and together we will. Now let's discuss our second quarter 2020 operating metrics. As I mentioned in the second quarter, our average daily census was 19,195 patients, an increase of 2.8% over the prior year. Total admissions in the quarter were 16,822. This is a 3.8% decline in admissions when compared to the second quarter of 2019. Admissions performance in the quarter was primarily impacted by the level of disruption that occurred at each of our referring partners across the healthcare continuum. For example, admissions from hospitals were pressured due to the reduction in available bed capacity and elective procedures, resulting in fewer patients accessing and subsequently being discharged from hospitals. Admissions from physician offices, which were disrupted but able to remain operational through telehealth interactions, saw an increase due to the number of patients choosing to access the disrupted healthcare system through their primary or specialty physician practices along with medical offices. Lastly, placements of admissions in the nursing homes and assisted living facilities were significantly impacted due to barriers and restrictions on access to new residents. These types of admission difficulties are reflected in our actual admission results based on our patients' pre-admit location. In the second quarter, our admissions increased 7.1% in our home-based pre-admit locations. However, this admission growth was more than offset by the combination of hospital admissions declining 4%, nursing home admissions decreasing 22.8%, and assisted living facility admissions declining 10.2% when compared to the prior year quarter. Our average length of stay in the quarter was 90.9 days. This compares to 91.1 days in the second quarter of 2019, and 90.7 days in the first quarter of 2020. Our median length of stay was 14 days in the quarter, which is two days less than the 16-day median in the second quarter of 2019 and equal to the first quarter of 2020. Median length of stay is a key indicator of our penetration into the high acuity sector of the market. Before I turn this call back over to Kevin, I want to provide some additional color on what VITAS will continue to do operationally to ensure we are successful and navigate this pandemic. First, we will continue to prioritize the safety of our employees, patients, and their families as we have successfully done since March. We have and will continue to source PPE and we are comfortable with the inventory levels to sustain employee need based on patient and local circumstances. Additionally, we will continue to utilize the infrastructure we put in place to manage testing requirements for certain facilities across the country to allow us to safely access our partners' facilities to care for existing patients and placement of new patients when appropriate. Our entire team will continue to collaborate safely with our local healthcare partners to successfully navigate patients and their families onto the hospice benefit during this unique time. Lastly, and most importantly, our team will stay committed to persevere and provide care to all the patients and families in need in the communities we serve. With that, I'd like to turn this call back over to Kevin.

Thank you, Nick. I will now open this teleconference to questions.

Our first question comes from Kevin Fischbeck of Bank of America. Your line is open.

You actually have Brad Bowers on for Kevin today. So I appreciate you guys offering guidance. And the guidance kind of implies that Q2 margins are not really sustainable. And the way I understand it is, VITAS would be doing less routine care and Roto-Rooter would be doing more commercial. Is there anything else that you would highlight on that?

Well, let me just start by saying, I don't know that our guidance suggests that the margins won't be sustainable. I'll say that historically high levels… I mean, when you look at VITAS, some of the issues that we referred to were accommodations the hospice industry started with telehealth, the sequestration relaxed during the period. Coverage for any unforeseen COVID-related expense for the CARES Act. I don't think there's anything to suggest that the margin for VITAS for the second quarter was unusual or unsustainable. In regard to Roto-Rooter, the suggestion is made it. I don't know how high is up. It's one thing that seems to be very clear with Roto-Rooter as we keep a fully unfurloughed staff ready and spend very aggressively on Google paid search. One month just keeps getting better than the next. So we've made our guidance not with the idea that any element of our current performance is unsustainable, but with the idea that in this type of environment, every time a company plans to lapse. I mean, to the extent that we want to get too specific about the coming months. We are reluctant to do that. We reinstated guidance, but there is no element of our guidance that we think is reflective of a slowdown in our business. Anything to add there, Dave?

Yes. The only thing I would add, Brad, is it's very easy to do a carve-out example for increased PPE I'd say Roto-Rooter. And then we're going to carve that out for our adjusted earnings per share. However, then you start getting granular in terms of excess staffing, whether it's in our call center or infrastructure or anything else related to volatile demand and revenue coming in, we can't carve that out cleanly intellectually honest. So when you look at our full-year guidance in terms of margins. Yes, that is actually a little below what we did in the second quarter because we're thinking we're being intelligently conservative, that we can turn around and take just increased staffing, increased expenses that can't be cleanly carved out related to the pandemic and still achieve our guidance. As well as we're prepared to have a mix shift within Roto-Rooter where we did quite well with excavation and water restoration, which has a fixed cost component, so when you have increased revenue in that regard, a lot of it drops to the EBITDA line. We could have a negative mix shift within Roto-Rooter but still achieve our forecasted revenue, but margins might be a hair lower. So we're very comfortable with our guidance. If you wanted to say, do you think it's more likely that you'll fall below the bottom end or achieve the high-end, we would probably say achieve the high end, but we are dealing in an environment we've never dealt with before. We don't know what California is going to do with their current state of economic lockdown and critical commercial businesses for us. We can take the hit. It's in our guidance, but we don't know. But we have a great degree of confidence on our overall free cash flow. We have a great degree of confidence on sustainability and we're probably somewhat conservative in the second half of the year as the average revenue growth and the average margins are projecting, but we think we're being very prudent given guidance in these uncertain times that also explains why we had a three-minute caveat and how we developed our guidance for you guys to gauge the risk. But we're very comfortable for both VITAS and for Roto-Rooter on excellent performance in the second half of the year. And more importantly, we think we're better positioned than the vast majority of our competitors in hospice and in industrial services in 2021. So I don't think we could be better positioned for the worst black swan any of us have seen in our careers.

Yes. That color is very helpful. And again, appreciate you guys putting guidance back out amidst all the uncertainty. So then I guess on the cash in the quarter, cash is really strong. So I was kind of just asking to see if there were any advance payments baked into that and then how we should think of cash for 2020? And then 2021, is there anything you can go back, such as payroll taxes, etc., that you could maybe quantify and then the uses of the cash there? Thank you.

That's right. So, if you look at our first six months of this year, our cash from operations was just a hair under $278 million. So whenever you do a quarter of $1 billion of free cash flow from operations in this environment, you kind of know it's been boosted. It was about $109 million of cash related to CARES Act issues or pandemic issues. For example, we got $80 million from the CARES Act. We've had hard cost expenditures out to outside vendors of $4 million. So we picked up $76 million from the CARES Act funding. We also turned around to have about $11 million of payroll tax deferral on our balance sheet as of today. We have about $19 million of federal income tax deferrals that we normally would have paid. And we have another $3 million of state tax deferrals. So differently, $109 million of excess cash from operations, so that $278 million would really drop to more than $168 million, which is still phenomenal. And what do we anticipate doing with that cash? We're certainly always looking for strategic opportunities and acquisitions, but we anticipate using the Roto-Rooter free cash flow probably to continue our share repurchasing program. And the cash flow generator from VITAS will continue to pile up on our balance sheet and be prepared to take whatever steps necessary to keep our employees safe and maintain our operating capacity for terminally ill patients.

Got it. That's incredibly helpful. A lot. Good quarter. Thank you.

Thank you. Our next question comes from Frank Morgan of RBC Capital Markets. Your line is open.

Good morning. So I was hoping we could get a little color. Obviously, you highlighted the sequential improvement across the second quarter by month. But I'm wondering if you can maybe give us some color about how those trends extended into the current quarter? And I guess starting out with just on the hospice side, maybe trends around admissions or a return to normal and either hospital-based referrals or high acuity days or SNF days? That's my first question.

I'll hand it over to Nick to address specific questions, but overall, we want to note that it’s early in the quarter, so anything we say should be taken with caution regarding projections. However, we wouldn’t mention the sequential improvement if we believed it was temporary. We believe the trends we highlighted in the report are genuine and robust, suggesting that they are likely to continue in the near future rather than being isolated data points. Nick, could you provide details on the specific effects related to admissions?

So just to build upon that, Frank, the trend Kevin alluded to, by breaking down the months, we continue to see in July and related to some of the hospital or skilled nursing flow, obviously much of that is specific to the community and where that community is not only in reopening but also whether it’s having an outsized pickup in positive patients. The one thing that we're continuing to see and it's anecdotal is because we continue to operate and care for and educate all these partners, both COVID and non-COVID patients, we're seeing scenarios of partnerships that we historically had not been receiving many referrals from, reaching out because other members of the community are choosing not to service those patients or the partner as successfully as they used to, and so we're able to establish new relationships and pick up share. If history tells us anything once we establish a new relationship, we do a pretty good job of continuing to maintain that relationship because of our ability to differentiate not only from a response but in overall quality resulting in an elevated outcome for those patients and families. So we're seeing pockets where we're really able to be picking up new business and we're hoping to continue to maintain that business for the foreseeable future. I hope that answers your question.

Okay. And then, you referenced that use of telemedicine. I mean there was a lot of labor management, productivity management, but also the use of telemedicine. Can you maybe elaborate on that a little bit more and talk about what has become a more permanent part of your clinical practice?

Yes. So from an overall visit perspective that we always look at on a day-to-day, week-to-week basis telemedicine definitely has played a role in it. We are appreciative of CMS' recognition of how that can add additional incremental value. I think the one thing to highlight, so it's not overstated is our total visit frequency and plan of care while we moderated it down accordingly earlier in the pandemic is coming back towards pre-pandemic levels meaning, we're able to be out servicing our patients and their families. They want a face-to-face interaction for the most part. And when there is some scenario where that's not allowed, we're either replacing that with a telehealth visit or adding complementary telehealth visits to that in-person interaction, just because of the value of communication support and dialogue right now through the pandemic. So, while it is a complementary value-added service, it's not one of the main drivers from an efficiency perspective at all.

Related to head count management supporting our people and like Roto-Rooter, we have not furloughed or laid off a single employee throughout this pandemic. And it's really helped to build morale and rally everyone. I couldn't be any more proud of the entire team since March for what we've been able to accomplish.

That's very helpful. Regarding Roto-Rooter, I appreciate your comments about free cash flow and the impact of CARES on buybacks. Considering your observations about some competitors possibly not re-entering the market, do you see opportunities in gaining market share from these weaker competitors, or do you believe there could be potential for acquisitions for the Roto-Rooter business?

I think more of the market share. I mean there are a few franchisee locations that are would be considered plums, but that's not our focus. The decision to buy those is not – I mean we're almost always have an appetite for those, but the rationale used by the sellers are more tied to somebody retiring or dying, they're not financial considerations. So we had to plan for those. But no, Frank, to answer your question, we're piling up all this cash, particularly when you look at our stock price even presently how far below it is from various analysts' 52-week targets. We think it's a real buy; it's a good use of our capital, both of which is a program that we started when the stock was $33 a share and we'll continue it.

Frank, if you think about it, on the Roto-Rooter side, we now operate with the acquisition of Oakland and HSW call centers. Having those call centers available, live people to take concern, our customers' calls as well as maintaining our employee base, our plumbers and drain cleaning technicians has given us an awesome competitive advantage against the mom-and-pop businesses in all our local markets. So it's not a debate whether we're picking up share we are, the debate is how sustainable is that and how much will we keep once the pandemic ends. We suspect it's going to be significant, but it's really, really hard to measure. But I think between the great recession of 2009 and the pandemic today and how well Roto-Rooter has performed in both of those very difficult operating cycles really shows the sustainability of our industrial business, as long as water and raw sewage is going someplace it shouldn't go, our customers want to talk to a live person to find out where the technician is and when they will get to their residential business to fix it. And the infrastructure we've developed really can't be touched by mom-and-pop competitors. So we're very, very comfortable with the sustainability of Roto-Rooter as of today.

Okay. Thank you very much.

Thank you. And I have a follow-up with Kevin Fischbeck with Bank of America. Your line is open.

Hi, everyone. I have one more question. You briefly mentioned this, but other companies have pointed out that missed nurse visits have positively impacted the hospice margin. I'm curious if that was true for this quarter as well. Also, where do the current visit numbers stand, and what kind of improvements do you anticipate? Thank you.

So, Kevin, enough of your had opportunity to hear the response to Frank. It was diluted inside of there. Our overall visit frequency is still just slightly down from our pre-pandemic levels. It's been picking back up. And when I referenced that it's the combination both of in-person visits, as well as telehealth in the combination accordingly. What we're seeing and experiencing and able to successfully still manage through our patients and families continuing to strongly desire in-person visits with a complement of telehealth due to the fact that they are comfortable and continue to be comfortable with the safety measures, our staff continue to take not only for themselves, but for all the patients and families. And so, while there was an impact in the second quarter with a reduction in physical visits, when you think about the overall fact we did not furlough or lay off any staff. It really goes into some of our flexible variable labor models related to per diem employees and part-time employee utilization. So said differently, we are deploying the labor needs that are appropriate for those patients and families, whether it’s in-person visits, whether it’s telehealth visits, whether it’s complementing in-person visits with telehealth to make sure we're continuing to prioritize patients and families' needs and by evidence with our performance in the second quarter, we were able to do it. Have a little bit more efficiency with it from a marginal perspective and we’ll continue to navigate that depending on the local circumstance.

Okay, that's very helpful. That's all from me. Thank you very much.

Thank you. And I'm currently showing no further questions, I'd like to hand the call back over to Mr. McNamara for closing remarks.

All right. My remarks will be brief. Just to summarize, we were very happy with the quarter obviously, at least early out very difficult operating conditions, but our two businesses did well. And I want to thank everyone for their kind attention and we'll try this again in about three months. Thank you.

Ladies and gentlemen, this concludes today's conference call. Thank you for your participation. You may now disconnect. Everyone have a wonderful day.