Good morning. Our conference call this morning will review the financial results for the second quarter of 2023 ended June 30, 2023. 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 26 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 26, 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 Healthcare Corporation subsidiary. I will now turn the call over to Kevin McNamara.

Thank you, Holley. Good morning. Welcome to Chemed Corporation's second quarter 2023 conference call. I will begin with highlights for the quarter then Dave and Nick will follow up with additional operating detail. I will then open up the call for questions. Our second quarter 2023 operating results released last night reflect significant improvement in VITAS’ operational metrics post-pandemic. In the quarter, our admissions increased 5.9% over the prior period. These strengthening admissions continued to drive higher patient census. In the second quarter, our average daily census or ABC expanded 1,077, an increase of 6.2% when compared to the prior year, and 3.2% when compared with the first quarter of 2023. VITAS’ improving operating metrics are a direct result of our retention and hiring program launched July 1 of last year. This program was designed to stabilize turnover in our tenured staff as well as expand patient capacity. Since July 1, 2022, our staffing has methodically increased on a sequential basis over this 12-month period. This increase in staffing and related patient capacity has been converted into increased admissions and census. The retention program has generated an aggregate increase of 784 licensed healthcare professionals, the majority of which are licensed nurses. Over the last four quarters, VITAS has increased bedside professionals on a net sequential basis by 172, 103, 200 and 309, respectively. The majority of the expanded capacity from the 309 net hires in the second quarter of 2023 is forecast to benefit admissions and census growth in the second half of the year. On June 30, 2023, our end of the month census was 18,542 patients. This compares to our June 30, 2022 ending census of 17,360 for a net increase of 1,182 patients. This raw patient increase translates into $84 million of annualized billable revenue. Our revised guidance does assume sequential ABC growth to moderate in the second half of 2023 when compared to the first six months of the year. Now let's turn to Roto-Rooter. By all indications, Roto-Rooter is encountering what I can only describe as headwinds on consumer spending. As noted during our first quarter teleconference call, in the last few weeks of the first quarter, we observed an increase in weekly revenue volatility, indicating a potential softening in consumer demand. Since March, we've observed increased weakness in weekly call volume and revenue. This weakness has continued throughout the second quarter. Overall call volume is down approximately 13% when compared to the prior year quarter. Although call volume is a crude measurement, it does indicate consumers are moderating their behavior in terms of discretionary plumbing and drain cleaning services. Roto-Rooter has offset a portion of the softening demand with material increases in close rates. Our call center's conversion rate, the rate at which a call is converted into a technician-scheduled ticket, has increased by 230 basis points. Our technician conversion rate, the percentage of time a tech arrives at the home or business and converts a scheduled ticket into billable work, has increased by 160 basis points. These improved conversion rates have materially reduced the impact of softening consumer demand. We've seen some recent signs of improvement in overall demand over the last few weeks. Whatever our guidance assumes, Roto-Rooter continues to be modestly impacted by consumer spending headwinds for the remainder of the year. To summarize, I am pleased with the accelerated improvement in VITAS post-pandemic. Our increased growth in licensed healthcare professionals, strong admissions, and corresponding growth in patient census have positioned VITAS to return to normalized operating metrics in early 2024. Roto-Rooter is well positioned in spite of economic headwinds on consumer spending. We anticipate continued expansion of market share by pressing Roto-Rooter’s 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 this teleconference over to David.

Thanks, Kevin. VITAS' net revenue was $321 million in the second quarter of 2023, an increase of 7.8% when compared to the prior year period. This revenue increase is comprised primarily of a 6.2% increase in our days of care, a geographically weighted average Medicare reimbursement rate increase of approximately 2.7%, partially offset by 100 basis points from sequestration. The combination of Medicare Cap and other contra revenue changes negatively impacted revenue growth by 10 basis points in the quarter. Average revenue per patient per day in the second quarter of 2023 was $197.02, which is 178 basis points above the prior-year period. Reimbursement for routine home care and high acuity care averaged $172.91 and $1,031.58 respectively. During the quarter, high acuity days of care were 2.9% of total days of care, essentially equal to the prior-year quarter. The gross margin and adjusted EBITDA for VITAS were both negatively impacted by CMS re-implementing sequestration, which reduced these margins by 100 basis points when compared to the prior year quarter. Gross margin in the second quarter of 2023, excluding Medicare Cap and the retention bonus program, was 22.7%. This is a 143 basis point increase when compared to the second quarter of 2022. Our adjusted EBITDA, excluding Medicare Cap, totaled $50.7 million in the quarter, an increase of 1.4%. Adjusted EBITDA margin in the quarter, excluding Medicare Cap, was 15.7%, which is 101 basis points below the prior year period, really all of which has contributed to sequestration. As Kevin noted earlier, VITAS increased the licensed healthcare staff by 309 professionals in the quarter. This results in total licensed staff increasing by 784 professionals since the inception of the retention program on July 1 of 2022. The increase of 309 net professionals hired during the quarter of 2023 is estimated to have negatively impacted margins in the second quarter by approximately 80 basis points. Now let's turn to Roto-Rooter. Roto-Rooter generated revenue of $233 million in the second quarter of 2023, which is a decline of 0.2% when compared to the prior year quarter. Roto-Rooter’s branch commercial revenue in the quarter totaled $55.5 million, which is an increase of 1.3% over the prior year. The aggregate commercial revenue growth consisted of drain cleaning revenue declining 3%, plumbing increasing 5.4%, excavation increasing 2.9%, and water restoration increasing 9.7%. Roto-Rooter branch residential revenue in the quarter totaled $158 million, which is a decline of 1.1% over the prior period. The aggregate residential revenue growth consisted of drain cleaning decreasing 8.6%, plumbing declining 2.8%, excavation expanding 3.8%, and water restoration increasing 2.5%. Roto-Rooter’s gross margin in the quarter was 52.3%, which is an 89 basis point decline when compared to the second quarter of 2022. Adjusted EBITDA in the second quarter of 2023 totaled $65.9 million, a decrease of 4.5%, and the adjusted EBITDA margin in the quarter was 28.3%, 128 basis points below the prior year period. Now, let's take a look at our guidance. VITAS’ 2023 revenue, prior to Medicare Cap, is estimated to increase 8.5% to 9.5% when compared to 2022. VITAS’ forecasted full year revenue growth is negatively impacted by 75 basis points as a result of the sequestration relief in the first half of 2022 compared to a full year of sequestration in 2023. ADC is estimated to increase 6.5% to 7.5%, and the full year adjusted EBITDA margin prior to Medicare Cap and accrued bonuses related to our retention program is estimated to be between 16.5% and 17%, and we're currently estimating $11 million of Medicare Cap billing limits in calendar year 2023. Roto-Rooter is forecasted to achieve full year 2023 revenue growth of 1% to 2%, and Roto-Rooter’s adjusted EBITDA margin for 2023 is expected to be between 28% and 28.5%. So based on this discussion, our full year 2023 earnings per diluted share, excluding non-cash expense for stock options, tax benefits from stock option exercises, costs related to certain litigation settlements, and our retention bonus program is estimated to be in the range of $19.90 to $20.10. Current 2023 guidance assumes an effective corporate tax rate on adjusted earnings of 24.7% and a diluted share count of 15.2 million shares. For comparison, Roto-Rooter’s 2022 reported adjusted earnings per diluted share was $19.75. I'll now turn this call over to Nick Westfall, President and Chief Executive Officer of our VITAS Healthcare business segment.

Thanks, David. As Kevin discussed, we implemented a targeted retention hiring bonus program at VITAS effective July 1 of 2022. This program was focused on licensed nurses, including admission nurses, nurse managers, home health aides, and social workers. These one-time retention bonuses ranged from $2,000 to $15,000 per licensed healthcare professional. The total 12-month forward-looking costs of this program, including payroll taxes and government-mandated overtime calculations, is estimated at $43 million. All retention bonus payments are individually clip vested and paid out after the employee has successfully completed 12 months of continuous employment. From an economic perspective, approximately $37 million of this retention program was to maintain existing staffing levels. The additional $6 million in estimated retention bonuses represents bedside capacity expansion. This additional $6 million in retention bonuses has helped to contribute to ADC increasing 1,182 when comparing the month of June to its prior year. On an annualized basis, this 1,182 increase in patient census will generate annual revenue of approximately $84 million. During the second quarter, we expanded our licensed healthcare professional staff by 309 employees, bringing the total licensed healthcare staffing expansion attributed to this program to 784. In the second quarter of 2023, our average daily census was 18,392 patients, an increase of 1,077 or 6.2%, when compared to the prior year, and an increase of 562 or 3.2% sequentially. The sequential monthly ADC growth in the fourth quarter of 2022, the first quarter of 2023, and now the second quarter of 2023 is very encouraging, given the timing lag of increased staffing which then generates subsequent admission and census expansion. In the second quarter of 2023, VITAS admissions were 15,611. This is a 5.9% increase when compared to the second quarter of 2022 and a 5.3% improvement when compared to the fourth quarter of 2022. In the quarter, our nursing home admissions increased 13.7%, assisted facility admissions expanded 3.9%, hospital-directed admissions increased 4.5%, and our home-based patient admissions expanded 3.8% when compared to the prior period, all four segments increasing positively. Our average length of stay in the quarter was 99.5 days. This compares to 103.7 days in the second quarter of 2022 and 99.9 days in the first quarter of 2023. Our median length of stay was 16 days in the quarter in comparison to 17 days in the second quarter of 2022, and 15 days in the first quarter of 2023. To recap what our team has recently accomplished, we have now generated four quarters of sequential growth in licensed healthcare workers, and three quarters of sequential growth in ADC. We have developed what I believe is a very sustainable path to building back our capacity, patient base, and overall operating performance to pre-pandemic levels and beyond. With that, I'll turn this call back over to Kevin.

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

Thank you. And our first question comes from Ben Hendrix of RBC Capital Markets.

Hi, this is Mike Murray on for Ben. Starting with Roto-Rooter, could you remind us of your mix of discretionary versus non-discretionary jobs? And do you believe this deferred maintenance could become a tailwind in 2024 or do you think more people are doing the jobs themselves?

Well, Ben, or Mike, the definition of discretionary is in the minds of the consumer but with that said, well under 10% of our volume, we consider discretionary, well under; but, again, it's up to the consumer to decide. What we have seen is an increase, though in non-discretionary jobs and discretionary jobs on a relative basis. So what we're doing is, the more severe phone calls are still coming in, again, that's well over 90% of our volume. But the customers are clearly self-selecting on the annoying toilet that's constantly running the upper tank, because of a bad seal or valve; those are the things that you could defer or attempt to do yourself, so the small, annoying projects. But we have actually seen an increase in bigger jobs over really the last six months, but very little is discretionary. We're a grudge purchase in the first place. No one gets this purchase satisfaction of getting your house back to where it was two days ago. So the fact is, people call us out of necessity, and that's just down just a hair.

And I would say, David, that what you have is what we describe as discretionary, or putting something off; it's putting somebody off a couple of months, not permanently. So it's hard to say, you're getting at a question, which is a tough one when you look at a drop in call volume like we had. I mean, again, our best thinking on it is that we had a period of 18 months where wages were not keeping pace with inflation and there was a significant gap. And that had – also I think that had an outsized effect on consumer decisions. We take comfort in the fact that that's turning around at this point, and we have a very, very basic business in Roto-Rooter. There's no sense in any way that we're losing market power or door share. Our close rates are higher than they've been, not surprisingly, because people are more incentivized to push for every sale. It's something that we look at. We look at the softness as being not confined to one region, which would suggest to us that it's – if the issue is outside of our control, it's not – the softness is not due to having turnover at a couple of big branches; it's more pervasive than that. But at the same time, what David is really suggesting is to the extent we have these really non-discretionary problems, it's going to take somebody to fix it eventually, and there's no reason for us to believe that they're any less likely to call Roto-Rooter.

And I just have to say, the call volume is up significantly from pre-pandemic levels, I mean, obviously, double digits. But it does look like the consumer is a little exhausted. And I think this has happened a couple of times in the last 20 years. I think I can point to kind of post the Great Recession in 2010 and there was some disruption around 2001, but this doesn't happen very often, and it does take kind of a – it takes a very, very broad geographic disruption, and I think that's what we're seeing in all four of our regions throughout the country; the softness is everywhere.

Yeah, that's another thing. A question you haven't asked is, it seemed like it came on pretty quickly. I mean, obviously, from our previous call three months ago, we said we noticed that in the last month of the first quarter. Many of the effects were probably already starting to land for Roto-Rooter; however, it was covered up by unusual weather patterns, which had business going through the roof in the first two months of the first quarter. So some of these forces that we see at work are more than – they didn’t just pop up in the second quarter; they were probably already having some effect by the first quarter, but again, some unusual weather in the first quarter kept everybody working around the clock. So when the weather moderated, we had a fairly severe difference. So again, one good thing about having the Roto-Rooter business is, as David indicated, it has really great brand awareness and marketing position. One thing we haven't said is that one of the biggest limitations to Roto-Rooter business is the workforce, and our workforce has never been stronger. We're prepared for an uptick. We probably have a larger workforce given the current call volume, but again, there's been a lot of effort and expense in developing that workforce. So, we're not alarmed in any respect with the Roto-Rooter business.

Now – and Ben, to your question on a tailwind, the answer is probably these jobs will come to us, but in light of what we've seen, call it in March and then in the second quarter, we have gotten conservative on the Roto-Rooter guidance. We're actually guiding to – typically we see seasonality where Q3 tends to be – all the quarters are relatively significant, but Q3 tends to be down a couple of points from Q2. Q4, actually, on average, has been up as much as 7% for seasonality from Q3 to Q4. We were also very conservative and we guided that sequential growth from Q3 to Q4 of this year to be only up a little under 3% because we don't know what's happening with the consumer spending. We think we put forward conservative but realistic guidance for Roto-Rooter. We are encouraged by what we see in July relative to our guidance; but, with all that said, we are waiting to see a sigh of relief in other consumer spending categories to say this was just an anomaly, but, Ben, we haven't seen that yet. Right now, we're going under the assumption that consumers are a little exhausted, and they're going to avoid spending on Roto-Rooter to the extent they can, but like I said, 90%, 95% plus of our volume is unavoidable.

Okay, thank you. And just a follow up to that. How does the magnitude of the decline in call volumes compare to past consumer cycles? And in those instances, how quickly did it take for demand to return?

The call volume is unusually – we have never seen call volume with the kind of spikes we've had, so, yeah, actually – this is actually the unusual drop. And we've never seen weakness in demand go beyond 12 months.

Okay, cool.

Since you mentioned that’s outside.

But I am just throwing one out there. It's always been a very short-lived cycle, and it doesn't happen often, but it does happen. Like I said, the Great Recession, and 911, and then kind of dotcom blow up in 1999, 2000 as well, those are the ones that come to mind, but it doesn't happen often.

Okay, alright. Thanks for the color. Just real quick shifting to VITAS. You just hit the one-year mark on your hiring retention program. Have you seen a pickup in turnover for the tenured employees so far? And then on the flip side of that, has hiring slowed materially since the retention program ended?

So Mike, this is Nick. The answer to both of those questions is no. So, we have not seen a material pickup in turnover. What I will say is, we're still in the first month related to it. So we always like to say one month never makes a trend, but we feel good about it. All the things that weren't relegated to just the financial payment but cultural enhancements, other items that tend to keep people with an organization is what was the driving force for some of those confident comments in the prior quarters about the exploration of the program. And then in regards to hiring, the hiring rate has – we've been able to hire successfully where we need to on a market-by-market basis, and so we feel confident in our ability to do that going forward.

And like nothing stops Nick where it's appropriate to have a small retention program in a market for certain disciplines. It's just not going to be necessary to carve it out or even call it out. At this point, we believe we can do it where necessary on a very small basis that you guys won't even see.

Okay, alright. That's helpful. Thank you. And just one final one, given the repayment of your debt during the quarter, how are you thinking about share repurchases in the back half of the year?

We still think share repurchase is what appears to be the best way to return capital to shareholders. At the same time, with what the Fed did yesterday, we're now getting about 5.5% pre-tax on our overnight money, and so, from that standpoint, it's no longer that 10 basis points of nothing we used to get two years ago. So we actually aren't penalized by sitting on cash because of the overnight return. That's basically right now all kept with JP Morgan Chase. But share repurchase is a continued part of our capital deploy.

Maybe we will do so.

Yeah. Every quarter, we anticipate it.

Okay. Alright. That’s all I had. Thank you.

Thank you. And our next question comes from Joanna Gajuk of Bank of America. Please proceed.

Yes. Good morning. Thank you so much for taking our questions here. So I guess first on the VITAS. So many things are going there pretty nicely and you raised your guidance and now expect a 9% revenue growth, call it, year-over-year. So how should we think about growth going forward? Is it a sustainable growth rate? And also with this vote of theirs when it comes to returns to 2019, which seems like you are already very, very close to that. How should we think about margins, if that were to happen?

Regarding margins, very, very encouraged with where we are now. If you actually think about the headwinds we created by excess capacity, unutilized labor because that'll be utilized in Q3 of this year, the 309 people we hired, it does look like we're going to get to our target, fairly comfortably to that, call it, that 17.5% adjusted EBITDA margin we enjoyed in the fourth quarter of 2019 seems very achievable within 2024. I don't want to get too optimistic beyond that, but it's encouraging. And regarding our guidance for the second half of the year, we actually assumed census growth moderates in the second half of the year compared to the first where we'll add about 75% of the census we added in the first half. We're assuming under guidance, we add pro rata throughout the second half of this year. So we expect the momentum to continue, but we conservatively estimate it to slow a little bit from the first half. Nick, anything else we should add on it?

No, I don't think so. Just as a reminder, if you start comparing pre-pandemic to exiting pandemic dynamics, there are a lot of different variables inside of it, right? Just to not to recap it, but it's about a three-year window. And one of the other aspects, and you can see it through the distribution of pre-admin institutions, while we continue to service the entire community of where we're at, the Community Access Initiative will continue and is effectively baked into our approach on a go-forward basis in every market. We'll see what that translates into for 2024 and beyond, but it puts us at a good – it should put us at a good jump off point at the end of the year.

I'd also say, we've talked about this in past quarters. When we look at census, we actually follow it in buckets, and we look at it in tenured buckets. So how many patients have been with us 0 to 30 days, 31 to 60 days, 61 to 90 days, and we do that all the way out. And obviously, during the pandemic, when we had weak admissions, the 13% of our patients who lived past six months, that actually got bled off during the past three years, or really two years. And really, over the past three quarters, Nick and his team have really started material growth in all of those aged-out buckets. So the path that we're returning on, and we lose money on half of our patients, 13% or so make it past six months, we are doing a great job of refilling the statistical outlier buckets or beyond 180 days. So that's another indirect way of saying that the momentum we've picked up in the recovery is on a really, really solid foundation of census.

And last comment, just to relay why that's important, not only for VITAS, but the overall industry and also for the Medicare trust fund, is there's recent independent literature out on the Hill today continuing to educate. And what it helps to further illustrate is for the entire hospice industry, there's a need for earlier access, and the more there's earlier access, there are more total cost of care savings to the Medicare trust fund, including the past 12 months with almost 11% cost savings. So I bring it up because hopefully that trend continues consistently for the overall industry because it's significantly beneficial for the Medicare trust fund.

Great, and I guess if I may, just to follow up on that point, the Medicare came out with this pushback from the industry clearly arguing this should be sort of a one-time adjustment for the market basket outlays being below close inflation to the prior two years. So it gets to things, any traction on having CMS actually act on it? Or do you need Congress to do something along these lines? And what do you expect in the final regulation that should come out any day?

So I think that commentary with it we'll see it's fully within CMS’ authority to do so. There's all indications the final rule itself will be issued in the very near future, and so as opposed to speculating, we'll sit back and see. The ongoing calculation, as we've alluded to, significantly lags reality. Since it's pegged against the hospital Market Basket index and impacts more than just the hospice industry, right? It impacts the hospitals by definition as well, and time will tell. I think the important piece, going back to the value of the study, is the fact that hospice is one of arguably the only industries that returns money to the Medicare Trust Fund inside of healthcare is one that we hope CMS hears, and congressional leadership hears, so that they continue to support ongoing reimbursement because of the value of the benefit for the overall country and to the Medicare trust fund.

Yeah, but Joanna, your point is a good one, our association estimates with a proposed rule that CMS put out a couple months ago, they've held back on a little over 5% of increase based on an inflation measurement on the market basket. Obviously, that impacts the entire industry, but it's existential for the small players who lack scale, which is over 50% of the provider numbers out there. So, frankly, one of the reasons we are picking up licensed healthcare staff and expanding our census is because our small mom and pop competition, which exists in every market, they're truly struggling because they lack scale and that 500 basis points of inflation is kicking their butt. And right now, CMS by holding back on reimbursement is creating opportunities for the players who have scale to expand market share, and that's what we're going to do; but we really wish CMS would draw up the inflation; we'll take the share, but it is a tough way to get it.

No. And I guess that’s the question, would you be interested in buying out some of these providers, or I guess at this point, you should say that it's cost-effective or more cost-effective to just hire the workers.

Massively more cost-effective. As Kevin said in our prepared remarks, it cost us $6 million incremental in this retention bonus to expand our workforce. And that creates – based on just the expanded census we've enjoyed through today, that's 84 million of revenue that it costs us $6 million to acquire. If we had – under pre-pandemic, we would have paid anywhere from $100 million to $120 million for $84 million in revenue, which obviously we didn't do because we thought those were crazy valuations. But right now we're getting it through competition.

And the problem with buying the hospices is, they are almost always too small to be profitable based on what we think it is. We think it's tied to quality, but to the extent that we're a big public company, we have to have safeguards and provide all levels of service, and whatnot in the two lowest census base that's just not economically feasible.

But acquisitions aren't off the table, Joanna. We could see doing a footprint that that gets us in an area we're not in. And it would even pay a multiple for that, but then we have to average down that multiple by basically increasing the size or whatever we acquire through market competition.

So, maybe, any county in Florida that we're not in now.

Yeah, actually, California and Florida typically are very successful in that regard. But we're not opposed to it, but at the same time, you know we're very serious about protecting shareholders' capital; if we put it at risk, there better be a commensurate return.

Right, that’s for sure. That makes sense, obviously, and I am sure before you alluded to it, and obviously, sitting on the cash is not a bad idea, I guess, as of now. Just switching to the Roto-Rooter, so appreciate the comment there that you assumed a weakness, I guess, continuous, but I guess it sounds like July may be indicating some changes there. So, yeah, what would have to happen, I guess, in your mind for kind of the call volume, I guess, to return or kind of reverse this trend? What are you looking out there in the market to be able to say like, oh, this is happening, or it will happen soon?

Well, this is a tough – that's a tough one. That comes down to why does the phone not ring. Sometimes we know why the phone does ring; it's because it's raining in some part of the country and whatnot, causing all sorts of havoc, which is good for the Roto-Rooter business but tough on the people. But generally speaking, why does it ring, why does it not ring? The only thing we can point to is, let's say internet marketing that drives the sales that we have. To the extent that we have various measures, I mean, of course, I don't want to get too far in the weeds, but there's the natural search, which is free, which you hope Roto-Rooter pops up and that's tied to their algorithm. And there's all sorts of things that you do; you have bricks and mortar stores to get better coverage, you do well on that. There's paid search. There's one measure of paid search, which is you want to make sure that you show up on the first page more frequently. The vexing thing is that we're doing better than that, than we ever have. In other words, we're showing up on the first page of paid search more often; we're just continuing to refine that and hope to even improve that. But to the extent that search to the entire category is we believe down substantially, it's the reverse or the converse of the phrasing or the rising creek covers a lot of stumps. The creek is in the whole category is down for people starting the search, but to answer your question, one thing we can do is we can have our fingers crossed, and hopefully economic conditions improve so that there's more people searching for plumbing and drain cleaning, number one; but then number two is something that we continue to do, and we've had some success with based on some of our recorded metrics, being better placed on the internet, to capture more of the eyes to consider Roto-Rooter. So your question is a tough one. It's vexing for Roto-Rooter. And I say with some trepidation that if it comes down to running a business that involves keeping your fingers crossed and hoping demand comes back, that's a tough way to run the business. We're putting that aside right now and doing what we can on the marketing side.

You certainly can't ignore the significant increase in call center close rates and technician close rates at the residence, has, like I said, materially offset that weak demand, but not completely.

And that just shows that we set in, in Roto-Rooter – Roto-Rooter has been around for a long time. They have good management that goes, in essence, right to the field. If you had said to us six months ago, that what are the issues at Roto-Rooter, we’d have said we had an unprecedented 18-month period where we had some of our top branch managers hired away by private equity. Now, that's largely stopped for a variety of reasons. And we said the time softness, really the fact that we had new managers in the number of locations, an unusually high number of new locations where we had new managers. And, again, time has helped settle that, but the softness we see is more pervasive, more tied to overall economic conditions. And we think, based on kind of our research, that some of the factors that cause that are ameliorating, but we don't kill ourselves. We're talking about big economic conditions; it's hard to draw too many conclusions based on what almost by definition is insufficient data.

And the last question here to that. So would you expect cost cutting? Are you doing anything differently, given the COVID volume being down? And I guess, what are -

You got to remember, Joanna, one thing about Roto-Rooter is we do not quote a price over the phone; we don't advertise a price. I mean, the way that – in other words, somebody calls us, they have no idea what Roto-Rooter is going to charge for the issue. We send somebody out, they give a written estimate for what it costs; that is the first time that the customer sees the price. And actually, as David said, our close rate once – first of all, when somebody calls, the close rate, the conversion rate by the person on the phone is higher than when we send a technician out who mentions price for the first time; those close rates are going higher. So now, the cost-cutting side, we think an important aspect of Roto-Rooter is to make sure that we protect margins, and especially in inflationary periods, we make sure we get price increases that reflect the inflation. And again, that's another success area; we think we have gotten that price increase. Price cutting doesn't really work for Roto-Rooter; we don't advertise – some plumbers advertise, we will fix any drain for $99. Now, that's not the case. I mean, then they find out that there's a $50 charge for this and a $50 charge for that, and they say, well, then that your drain – no, your drain is an exception, but we don't do that. So cost-cutting on the Roto-Rooter side would only come from something I referred to earlier, and that is we've built our workforce through a lot of training and expense, and we're probably a little too high given our current call volume. And to the extent that we're not going to lay anybody off or cut anybody, but to accept that the turnover would be a little less aggressive in filling those spaces caused by the termination probably. I mean, if you said – if our workforce was up 4% year-to-date, it trended down to being up 1% or 2%, I think that would be very reasonable and that would be the call cost-cutting; of course, for a company like Roto-Rooter, labor is everything, so that would have the effect of cost-cutting, but it would be passive rather than active.

Yeah, and generally it's semantics, but I mean, our approach on cost-cutting is we don't cut costs; we reengineer costs out of the system, what can we do for less money or hopefully less money and do a better job doing various things. But reengineering is the sustainable way to drive down your expenses, not just through stress. You start whacking expenses; that usually helps in the short term and hurts you in the long term. So we're big fans of three, six, nine months engineering various costs downward but not just whacking.

Appreciate the color. Thank you so much for taking the question.

Thank you. At this time, I'd like to turn the conference back to Kevin McNamara for closing remarks.

Okay. My remarks are limited to thanking everyone for your kind attention, and we'll continue to work and, again, make recovery from an unusually tough quarter for us. But again, we think we're still on a winning wicket. And thank you, everyone.

This concludes today's conference call. Thank you for participating, and you may now disconnect.