Chemed Corp Q1 FY2024 Earnings Call

Good day, and thank you for standing by. Welcome to the Chemed Corporation First Quarter 2024 Earnings Conference Call. Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker for today, Holley Schmidt. Please go ahead, Holley.

Good morning. Our conference call this morning will review the financial results for the first quarter of 2024 ended March 31, 2024. Before we begin, let me remind you that the safe harbor provisions of the Private Securities Litigation Reform Act of 1995 apply to this conference call. During the course of this call, the company will make various remarks concerning management's expectations, predictions, plans, and prospects that constitute forward-looking statements. Actual results may differ materially from those projected by these forward-looking statements as a result of a variety of factors, including those identified in the company's news release of April 24 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 April 24, which is available on the company's website at chemed.com. I would now like to introduce our speakers for today: Kevin McNamara, President and Chief Executive Officer of Chemed Corporation; Mike Witzeman, Chief Financial Officer of Chemed; and Nick Westfall, Chairman and Chief Executive Officer of Chemed's VITAS Healthcare Corporation subsidiary. I will now turn the call over to Kevin McNamara.

Thank you, Holley. Good morning. Welcome to Chemed Corporation's First Quarter 2024 Conference Call. I will begin with highlights for the quarter, and Mike and Nick will follow up with additional operating details. I will then open up the call for questions. We are very pleased with the strong operating metrics at VITAS in the first quarter of 2024. In the quarter, our admissions increased 4.5% over the prior year period. These strong admissions continue to drive higher patient census. In the first quarter of 2024, our average daily census, or ADC, expanded to 1,835, an increase of 10.3% when compared to the prior year quarter and 1.6% when compared with the fourth quarter of 2023. VITAS' continued improvement in operating metrics is a result of our continued strength in hiring and retaining licensed staff. In the quarter, net bedside headcount increased by 173 licensed professionals. This exceeded our internal projections for the quarter, which more than offset the slight weakness we experienced in the fourth quarter of 2023. Now let's turn to Roto-Rooter. As we discussed during our fourth quarter earnings call, we knew the first quarter was going to be a tough comparison for Roto-Rooter. The nationwide deep freeze at the beginning of 2023 resulted in six consecutive weeks of record revenue for Roto-Rooter. Not surprisingly, this phenomenon did not recur in 2024. Overall, our call volume was down 9.1% when compared to the prior year quarter. Close rates at the call center at the time of dispatch and when our technician reaches the customer location remained consistently strong compared to historical levels. Residential revenue at Roto-Rooter declined by 3.5%, while we are still seeing demand headwinds related to consumer sentiment and concerns about the macroeconomic environment. The residential revenue decline was within our range of expectations for the first quarter. As a result of changes made to various aspects of Google search algorithms, Roto-Rooter temporarily increased spending on paid advertising in late 2023 and early 2024. This additional market expense is the major cause of Roto-Rooter's lower margins in the first quarter of 2024. Commercial revenue declined by 10.5% during the quarter, which was a disappointment to us. Some of the same issues we discussed related to residential revenue, including difficult comparisons, macroeconomic concerns, and internet marketing disruption also impacted commercial revenue. As Mike will discuss in further detail, we also had more demand than we could service during the pandemic. As a result, our branch personnel did not spend as much time cultivating commercial relationships as we historically have dedicated to that part of the business. We have analyzed the causes of the decline and are executing strategies to improve commercial revenue performance. To summarize, we are pleased with the continued strong results at VITAS. Our growth in licensed health care professionals, strong admissions, and corresponding growth in patient census have returned VITAS to normalized operating conditions. As Nick will discuss further, we're also excited about the recently closed acquisition of Covenant Health and Community Services. We believe this will be a big win for us, both from an operational and financial perspective for 2024 and beyond. We believe Roto-Rooter is still well positioned despite the difficult operating conditions that it faces. Roto-Rooter maintains its core competitive advantages in terms of excellent brand awareness, customer response time, 24/7 call centers, and aggressive internet presence. With that, I would like to turn this conference over to Mike.

Thanks, Kevin. VITAS' net revenue was $354 million in the first quarter of 2024, which is an increase of 14% when compared to the prior year period. This revenue increase is comprised primarily of an 11.5% increase in days of care and a geographically-weighted average Medicare reimbursement rate increase of approximately 2.6%. The acuity mix shift negatively impacted revenue growth by 60 basis points in the quarter when compared to the prior year revenue and level of care mix. The combination of Medicare Cap and other contra revenue changes increased revenue growth by approximately 50 basis points. Average revenue per patient day in the first quarter of 2024 was $203.8, which is 212 basis points above the prior year period. Reimbursement for routine home care and high acuity care averaged $177.67 and $1,074.78, respectively. During the quarter, high acuity days of care were 2.8% of total days of care, a decline of 10 basis points when compared to the prior year quarter. Adjusted EBITDA excluding Medicare Cap totaled $60.7 million in the quarter, an increase of 67.2%. Adjusted EBITDA margin in the quarter excluding Medicare Cap was 17.0%, which is 544 basis points above the prior year period. The expense attributable to the retention bonus program in 2023 resulted in a 370 basis point improvement in the 2024 margin. Now let's turn to Roto-Rooter. Roto-Rooter generated quarterly revenue of $235.2 million in the first quarter of 2024, a decrease of 5.8% when compared to the prior year quarter. Roto-Rooter branch residential revenue in the quarter totaled $162.9 million, a decrease of 3.5% from the prior year period. Roto-Rooter branch commercial revenue in the quarter totaled $53.7 million, a decrease of 10.5% from the prior year. As Kevin mentioned, this was below our expectations for the first quarter. The commercial business is experiencing some of the same issues we have seen with residential revenue in the first quarter, including a difficult comparison with the prior year and continued internet marketing challenges. We also continue to face some issues related to certain retail customers. In addition to those factors, during the pandemic, we had more demand than we could service. As a result, our branch personnel did not maintain as much focus on cultivating commercial accounts as we historically have done. Accordingly, Roto-Rooter has embarked upon a company-wide push to reemphasize the behaviors that are necessary to develop and retain commercial customers. We are increasing the number of touchpoints with key accounts, both through our national call centers and locally in each branch. We have also implemented strategies to maximize revenue for the leads we currently receive by training our commercial technicians to be acutely aware of upselling opportunities at every job they perform. We believe that some of these strategies should provide short-term help while other efforts will take longer to show results. Adjusted EBITDA at Roto-Rooter in the first quarter of 2024 totaled $60.7 million, a decrease of 15.6% compared to the prior year quarter. The adjusted EBITDA margin in the quarter was 25.8%, which is 299 basis points below the prior year period. As Kevin mentioned, the decrease in margins was driven mainly by higher internet marketing costs. Before the end of the first quarter, we reduced our overall marketing spend back to more historical levels, and as a result, we anticipate an improvement in operating margins starting in the second quarter. I will now turn this call over to Nick.

Thanks, Mike. I'm very pleased with our continued sustainable expansion of our workforce and patient capacity through the first quarter of 2024. As Kevin mentioned, we expanded our bedside headcount by 173 licensed professionals during the quarter. The first quarter of '24 marked our seventh consecutive quarter of expanding our clinical workforce capacity. In the first quarter of '24, our average daily census was 19,665 patients, an increase of 10.3% when compared to the prior year and an increase of 313 or 1.6% sequentially. VITAS has generated quarterly sequential ADC growth over the last six quarters. On the last day of the quarter, March 31, we had over 20,000 live patients on service, which was an exciting milestone for VITAS. In the first quarter of '24, total VITAS admissions were 16,911. This represents a 4.5% increase when compared to the first quarter of '23 and represents an increase across all four of our reported preadmit segments. In the quarter, our nursing home admissions increased by 4%, assisted facility admissions expanded by 2.1%, hospital-directed admissions increased by 3.2%, and our home-based patient admissions expanded by 12% when compared to the prior year period. Our average length of stay in the quarter was 103.9 days. This compares to 99.9 days in the first quarter of '23 and 105.9 days in the fourth quarter of '23. Our median length of stay was 16 days in the quarter and compares to 15 days in the first quarter of '23 and 17 days in the fourth quarter of '23. As previously announced, we completed our $85 million acquisition of certain assets from Covenant Health and Community Services on April 17. Our teams are currently hard at work in integrating the operations of Covenant. I am pleased to say that approximately 680 patients were reevaluated for eligibility and chose to transfer to VITAS service as a result of this transaction. We have also successfully retained practically all of Covenant's licensed workforce who were identified during diligence as part of the transition. The Covenant transaction could not have been accomplished without the unwavering commitment, dedication, and focus of each of our existing and new VITAS team members, which they showed during fulfilling our mission in every community we serve. This transaction illustrates what is possible when two longstanding mission-focused organizations collaborate irrespective of tax status to ensure we collectively serve the evolving needs of our communities. This opportunity was born out of the relationships and mutual respect amongst our organizations. I would like to thank the Board of Directors and executive team of Covenant for ensuring a continued focus and cultural alignment that allowed for the integration to proceed seamlessly. I believe these types of opportunities should continue as the hospice and palliative care industry carries on its 45-plus-year mission across the country of focusing on the patients and families and the communities we serve without allowing for items like tax status to impede progress. To recap what our team has accomplished, we've now generated seven quarters of sequential net growth in licensed health care workers and six quarters of sequential growth in ADC. We now have a sustainable and predictable approach to continue methodically building our clinical capacity and patient base that has taken us past our pre-pandemic levels and forward into '24 and beyond. We have also demonstrated the ability and interest in partnering with other providers through acquisitions to ensure communities continue to receive the best possible care.

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

Your first call comes from the line of Ben Hendrix of RBC Capital Markets.

This is Michael Murray on for Ben. Roto-Rooter call volume has declined in the high single digit, low double digit range for the past four quarters. Obviously, you grew a lot during the pandemic and you're going up against tougher comps. But how much of the weaker call volume is attributable to the weakening consumer? And how should we think about this for the rest of 2024?

Let me share what we’re observing in the sector. There seems to be some softness overall, which might be due to comparisons with the pandemic or because consumers had ample service done during that time. It’s uncertain. However, the sector is generally experiencing weakness. We don’t want to dwell too much on it, but this weakness prompted a significant marketer, Google, to adjust their service offerings. For instance, when we call about plumbing in Cincinnati, they implemented changes that affected how calls are distributed, leading to a noticeable decline in our call volume that started late last year. In response, we resorted to more paid search efforts, which we now categorize differently, as we prioritize certain advertising sections. We made some aggressive bids in paid search to test its effectiveness but eventually realized that the results weren’t there, leading us to scale back those additional advertising efforts. This had a temporary impact on Roto-Rooter's margins. We’re now facing a new challenge, similar to when consumers transitioned from yellow pages to the Internet for services. We had a strong presence in yellow pages, but that marketplace vanished. While we’ve established a strong position online, ongoing changes in algorithms present new hurdles, and I believe Roto-Rooter will emerge successful again. Despite these challenges being somewhat out of our control, our operational metrics have never been stronger. We’re seeing good price increases, have strong manpower, and our close rates are solid. We just need to generate more phone calls. On a positive note, the current environment, despite its challenges, has provided great opportunities to acquire smaller Roto-Rooter franchises that have become available due to the softness in the sector. We’re looking to capitalize on this situation while focusing on enhancing our online presence. While there have been some negatives this quarter, I believe they are temporary, and the steps we’re taking are more likely to yield positive results. Mike, do you have anything to add?

Yes. I think it's hard for us to put a specific number on what we think the consumer sentiment and macroeconomic environment is causing. But as Kevin said, we have a lot of indications that we are certainly not the only home residential service provider that's struggling, not only from people outside of the Roto-Rooter network. But also we know our franchises are struggling, as Kevin mentioned. We know that our contractors are struggling. The other thing I would tell you is we see this struggle across all five of our regions. It's not sort of at one region or centered around one location in the country, all of which is to say we do definitely think that there are still consumer headwinds that we're facing that are underlying some of the softness in demand.

Okay. That's really helpful. Just one more on Roto-Rooter, multi-part question. So last quarter, you said that commercial customers were coming to you asking for significant price decreases, which caused you to walk away from some jobs. Obviously, if those were nondiscretionary, those were going to someone else. Are you still seeing this? And then just the next part, at the same time, Roto-Rooter, you guys saw significant margin expansion for the past few years. Do you think the margins need to go back down to where we saw them in pre-pandemic 2019-2020 levels in order to drive revenue growth? And then how should we think about the balance between revenue growth and margins for Roto-Rooter?

Sure. On the retail thing that we mentioned in our February call, retail is definitely still part of the problem. It's still down...

Commercial.

Commercial, yes. The commercial retail business is still down. It's still part of the problem. But as we kept asking questions and delving into it, we discovered it's a little bit of a bigger issue than just the retail sector.

That's the first part. In other words, that was the first group that was struggling, and it really stood out. Is that continuing? Yes. To illustrate, when a large property manager faces challenges and sees rising bills, they might consider hiring their own plumber or opting for a discount plumber. Over time, we've observed that while people explore these alternatives, there are numerous reasons why a company like Roto-Rooter is a better choice for them. However, this exploration phase is ongoing, and we initially noticed this trend with some of our larger commercial customers. Although they were the first to experience this, it turned out to be more widespread than we recognized in the beginning. Regardless, it's a challenge, but we've owned Roto-Rooter for 44 years, and they've consistently risen to the occasion. We have every confidence in that.

Regarding margin, we need to account for the additional marketing costs incurred during the quarter. We believe that the guidance we provided for Roto-Rooter’s margin remains appropriate and there’s no reason to change that at this time. In the first quarter, the main factor affecting the EBITDA margin was the marketing costs, as Kevin pointed out. With revenue slightly behind, we may not reach the high end of the margin range we provided, but we believe we will stay within that range. This is especially true since, as we have often stated, most of our technicians work on a commission basis, making us less sensitive to revenue decreases in terms of margin percentage.

Okay. That's really helpful. Just shifting to VITAS. So really strong ADC growth. How did that compare to your internal expectations? Obviously, this is partly a byproduct of last year's retention program and better referral partnerships. But is there anything else to highlight here? Any changes in the competitive landscape?

Yes, sure. The first quarter slightly outperformed our internal expectations regarding overall census growth. The one thing I just want to highlight and reinforce, while we referenced the retention program that goes all the way back now, we're in nine months since the expiration of that. So while that formed a catalyst associated with it, all the activity that built the cultural enhancements, the things we've talked about over the last quarter has what's allowed it to continue to perform absent that program being in place for what is 10 months right now with great performance. So from an outlook standpoint, I feel very good about it and feel very good about the census outlook, not only with same-store operations but the successful integration of Covenant that has been occurring over the last week or so. So I feel very good about the remaining forecast for '24 and beyond. Regarding other competitive factors, I don't think there's anything necessarily new and unique in the first quarter other than sometimes success tends to compound upon itself, and we're seeing that and experiencing that. And so when you start thinking about the ability to continue to very strongly attract new team members to come to the organization, they're looking at it and really seeing a place that is hitting on all cylinders but, just as importantly, has a very strong cultural tie that's led to continued improvement in retention. And so it's sort of compounding upon itself, which is a great situation and what gives me the confidence I was referencing about before.

Awesome. Just one last one on VITAS. You made your first sizable VITAS acquisition in quite some time. Congratulations. What was the census that you added from the acquisition? I think you mentioned 600. Was that the census we should think about adding moving forward?

I mentioned in the transcript that 680 patients were transferred, which isn't exactly the same as census or days of care translation. We will provide more details along with updated guidance by the end of the second quarter. However, I wouldn't consider it a one-time increase that you simply add to your model. We see additional opportunities by leveraging both the existing markets we share with Covenant and new ones where we can apply our approach to not only boost admissions but also educate those communities about referring patients to us earlier in their disease trajectory, which would also contribute to expanding overall days of care. I am very optimistic about the future in those markets, the prospects of the acquisition making an immediate positive impact, and what it implies for the rest of 2024 and into 2025 and beyond.

The 680 is basically the starting point to be able to start calculating live patients.

Okay. And just a quick follow-up. Could you talk a little bit about the hospice M&A environment? How are valuations? And are you continuing to look at opportunities?

I'll start at the end of that question, which is yes, continue to absolutely look at opportunities. Valuation ranges. Obviously, there's a larger range, and a lot of it has to do with the circumstances of those existing providers, the markets in which they operate as well as whether it is a platform or whether it is just a desirable location that maybe has restrictions around accessing the market that really influence those multiples. With all that being said, not just multiples from an attraction standpoint, but really the environment which we're in is a lot of providers looking at their outlook and where and how they're operating today. And for many providers, particularly those that have been in the business or in the industry for a long time, and that's why I go back to long-standing mission-focused providers, I think it's one in which we're looking amongst one another around that mission and cultural alignment to find the right partnerships. And so it's less about multiple components as it is what's the right partner to look to continue to fulfill that mission and service the community. And we think we're very well positioned. And obviously, my opinion is biased, but we do things the right way. We have since our founders founded not only the hospice benefit, but VITAS as part of itself. And so we believe we're really well positioned, which leads us to continuing to look at those opportunities.

We would be interested in any opportunities, but as Nick mentioned, particularly in restricted states. Particularly Florida, we would be even more interested.

The next question comes from the line of Joanna Gajuk of Bank of America.

So I guess I have a couple of follow-ups here. So maybe first, we didn't talk about guidance. So maybe you can frame to us. It sounds like VITAS was better, Roto-Rooter was lower than your internal. But how would you characterize overall at the consolidated level against the results versus your internal expectations? Because in the press release, you said you reiterated guidance. So should we read into this as saying that Q1 was roughly in line or maybe it was inside the range? So maybe let's start there.

We do not provide quarterly guidance; we only give yearly guidance. Sometimes our estimates do not completely align with analyst expectations due to seasonal factors. To address your question directly, we believe we fell about $0.12 a share short of our expectations. Regardless, we did not alter our guidance, as our quarterly performance was unusual for us, and we rarely fall below analyst estimates. More critically, we were about $0.12 to $0.13 below our own projections. Mike, feel free to add any additional insights.

Yes, Joanna. I think that at the moment, with the VITAS outperforming and Roto-Rooter maybe a little disappointing but certainly plans in place, we didn't feel like changing our range that we gave back in February made a lot of sense. Having said that, there's no doubt that, as Kevin alluded to, in the second quarter, we're going to change certainly the components of how we get to that range, and certainly the range might change. But at the moment, given the differing ways that VITAS and Roto-Rooter are going, we didn't have any reason to say we don't think that the original range was still within the realm of reason.

Okay. That makes sense. And I guess the other piece of this, I assume, is the deal that you closed, right, in mid-April. So I assume you're going to include it in your updated guidance. So thank you for giving some color on the top line when it comes to the number of patients and potential offset over time. But how should we think about margins there? Because obviously, this asset was a nonprofit. So I would assume that maybe different margin profile there. And so how do you think about how quickly those margins will kind of get to the VITAS segment level, essentially?

Yes, Joanna, as you mentioned, we will include it in our second quarter update. Considering the outlook from a marginal expectation standpoint, keep in mind that we are already operating in two of the markets. Therefore, there are numerous operational opportunities available. Additionally, our market approach may differ slightly from Covenant's approach in this case. We are prepared, making investments, and have all of that factored into our internal guidance, which makes us feel very positive about it. To address your question regarding the overall marginal profile, it will appear relatively similar once everything is integrated. Given the scale of what we are discussing compared to the overall enterprise, there won't be a significant impact on the total company marginal outlooks going forward. This deal presents a great opportunity for us, and we are excited about serving both the existing communities and the new communities we entered into last Wednesday.

Our models at the moment, I would tell you that because of some of the uncertainty just with the integration and the short-term integration costs, I would tell you that '24, we've been a little conservative from a margin perspective. But going forward past '24, certainly, we expect margins to come in line to the rest of the VITAS company as well.

When considering SG&A, call centers and back office operations can be integrated immediately without any additional investment. This presents an opportunity with any acquisition.

They have a shorter average length of stay, so the margin would be a little bit lower.

Yes. As I alluded to with the previous question for Michael, I think we have an opportunity for days of care expansion as we look at execution of our strategy to help the community and the referral sources better identify patient eligibility earlier in their disease trajectory. So we're very encouraged about the outlook of that acquisition. And just as importantly, just as excited about bringing on those team members that are now part of our VITAS family going forward.

Okay. So I guess it sounds like the margins will look pretty close to the similar margin in '25. So I guess, would you say, is it going to be kind of exiting '24, kind of already close to that margin? Call it, I guess, Q4 is also the best quarter of the year. But I guess it sounds like you're going to get there fairly quickly.

Correct. It will be integrated very quickly. Our team is doing a fantastic job with that. As we've mentioned, we will manage the business in line with our usual approach and we are confident about the predictability of our marginal outlook.

It seems like your balance sheet and cash flow provide a lot of opportunities for more of these actions. Is it reasonable to expect a couple more this year?

I don't think we would set any expectations. However, as you pointed out, the balance sheet is strong, and there are definitely opportunities available. We hope they will come to fruition and align with what we're discussing now. That's why I mentioned that it's not only about traditional transactions. There are also long-established providers who are no longer viewing tax status as a barrier and are instead focusing on aligning organizations to meet their evolving needs and missions, allowing them to continue serving the communities we have committed to for over 40 years.

We're very bullish on the pipeline, the potential for these kind of deals over maybe not just '24, but the next 18 to 24 months. But we're very bullish on the potential to be able to do these kinds of deals over the next couple of years.

Right. To your earlier point, the market is open, so to speak, with assets for sale. This relates to my last question about VITAS and its hiring. I'm very impressed by the progress. Although the bonus program has ended, performance remains strong. So what's happening? Are you attracting nurses and other clinicians from competitors or different hospice agencies, or are these workers coming from other settings?

Yes. It's a little bit of everything, to be quite honest, and it's somewhat market-by-market specific. But what I will say is the strength of our candidate pool has never been stronger and our continued focus on retention of our existing staff is exactly the same way. So we feel really good about the outlook and our ability to continue to methodically add team members when and where we need them to support our growth forecast. And as you see in the first quarter, we outperformed just our internal quarterly growth forecast. And hiring and retention will not be an impediment towards growth on a go-forward basis. Demand from a referral standpoint is still extremely strong.

If I may, on the Roto-Rooter side, a couple of follow-ups. On the commercial, so that revenue is much worse. You said you have some plans in place already to remediate some of these issues. And it sounds like some are maybe faster to kind of resolve versus others. So any way to help us how to think about when, I guess, you would expect to see the benefits of these remediation actions?

Well, Joanna, I want to start by mentioning that we've attributed many of our challenges to macroeconomic factors over the past 12 to 16 months. On the residential side, we believe those issues are starting to ease, but they still persist in the commercial sector for various reasons, as we've indicated. The changes we mentioned are mostly happening. To break it down, commercial accounts require much more attention and communication. They expect to be prioritized when their issues are urgent. During the pandemic, when demand exceeded our capacity, these customers were challenging to manage due to resource shortages. In summary, our approach is returning to more personalized service and placing greater importance on commercial projects. These initiatives have already started, and we are optimistic about their outcomes, which have historically been positive. Coupled with the gradual improvement in macroeconomic conditions, we anticipate short-term gains in the commercial sector. Mike, do you have anything to add?

Yes. As Kevin mentioned, establishing connections and engaging with potential commercial customers at a local level will take some time. To illustrate our efforts, we are now providing cameras with every jetting opportunity for sewer and drain cleaning, which we haven't done before. We believe this initiative will help drive additional sales quickly, and we are in the process of implementing this program to evaluate its effectiveness. As noted in the script, we have some short-term strategies that we hope will lead to immediate improvements. However, the more in-depth support and broader economic factors that Kevin referred to will take longer to materialize.

And I guess, the other piece in that segment you talk about on the margin side, right, so like some of the revenue is not there, which I guess should be reflective in the EBITDA because of the commissions and how, I guess, these employees are reimbursed. But I guess, the margins for us, it sounds like advertising cost, but then you kind of lowered that at the end of the quarter or by the end of the quarter, it was more normalized. So should we expect the segment margin to essentially bounce back close to 28% or so in Q2? Is that what you're trying to tell us?

Yes. Definitely.

And I guess, kind of a longer-term question in terms of just, yes, this Roto-Rooter weakness. It sounds like there's some macroeconomic things that are normalizing there or maybe improving there. And then the other, I guess, situation you identified, you're trying to remediate. How does this continued weakness, I guess, in the segment change your view of the long-term growth potential for this business?

It doesn't change our long-term growth potential outlook at all. Roto-Rooter is a great business, very strongly positioned, and the best brand name in the industry. We don't have any long-term concerns about the outlook for Roto-Rooter.

This now concludes the question-and-answer session. I would like to turn it back over to Kevin McNamara.

Thank you. I just wanted to thank everybody for your kind attention. And we've got some things to work on, but as we've indicated, I think matters are well in hand. Thank you.

Thank you for your participation in today's conference. This does conclude the program. You may now disconnect.