Good day, everyone, and welcome to Guardian Pharmacy's fourth quarter and full year 2024 earnings call. At this time, all participants are on a listen-only mode. Later, you will have the opportunity to ask questions during the question and answer session. Today's speakers will be Fred Burke, President and CEO of Guardian Pharmacy, and David Morris, EVP and CFO of Guardian Pharmacy. Before we begin, I'd like to remind everyone that statements included in this conference call and in the press release issued today may constitute forward-looking statements within the meaning of the Private Securities Litigation Reform Act. These statements include, but are not limited to, comments regarding our plans, objectives, business outlook, and our financial results for 2024 and beyond. Actual results could differ materially from those expressed or implied in forward-looking statements because of a number of risk factors and uncertainties, which are discussed in the company's quarterly report on Form 10-Q and earnings release issued today. Guardian Pharmacy undertakes no obligations to update any forward-looking statements. Additionally, on today's call, the company will reference certain non-GAAP financial measures such as EBITDA, adjusted EBITDA, and free cash flow. included in our earnings release as well as on our website and reconciliations of downgap financial measures to the gap financial measures reported on our financial statements. This afternoon's call is being recorded and the replay of the call will be available later today. I'm now pleased to introduce the President and CEO of Guardian Pharmacy, Fred Berg.

Welcome to Guardian Pharmacy's fourth quarter and full year 2024 earnings call. On today's call, I'll share financial highlights, review some of the accomplishments we achieved in 2024, and share some commentary on what to expect for 2025. Starting with the fourth quarter highlights, I'm pleased to share strong results today, which include revenue of $339 million, an increase of 20% year-on-year, resident count at the end of the quarter of approximately $186,000, a 14% increase from the fourth quarter last year, an adjusted EBITDA of $26 million, representing an increase of 30% compared to last year's quarter. And for the full year 2024, we generated revenue of $1,228 million, million, an increase of 17% over last year, an adjusted EBITDA of 91 million, up 19% year over year. In terms of 2024 milestones, Guardian Pharmacy achieved several significant milestones. We expanded our footprint by adding nine new pharmacy locations through a combination of and Greenfield startups, and began the process of bringing them up on the Guardian platform. David will update you on progress in these new markets. We continue to operationally streamline our COVID flu vaccination clinics that our facility operators expect us to provide for the residents and staff. Historically, the process was a huge operational challenge for our organization and a significant profitability headwind. After the 2023 vaccine season, we formed a cross-functional task force to address the issue. David will elaborate, but I am very proud of that team and am pleased to report we turned a profit headwind into a slight profit tailwind, a significant improvement for the recently completed 2024 vaccine season. I'd be remiss not to mention that six months ago to the day we began our new life as a public company with the successful launch of our IPO. The organization has responded nicely and is enjoying this new challenge. The core business remains strong as we saw high single-digit organic growth augmented by significant M&A, stable gross margins, and operating leverage. These accomplishments demonstrate a strong start to our time in the public markets, and we feel confident that this success will only continue to grow over time. Looking ahead to the rest of 2025, David will speak to our guidance momentarily. However, we're very optimistic about 2025 and beyond. We're excited to be the leading long-term care pharmacy in the nation for assisted living and memory care and further believe we are positioned well. We have a 12% market share, which to us means 88% to go. One important topic for 2025 is the potential impact of the Inflation Reduction Act on 2026 and beyond. We're working diligently on navigating this possible headwind to 2026, taking a multi-pronged approach to finding a solution, including working closely with federal policy makers and our PBM partners. All parties seem amenable to working with us to find a viable solution, and we remain confident that we can successfully mitigate any head and ends. We'll continue to update you on our progress. Let me take a moment to recap Guardian's secret sauce. Our solutions focus on the specific and differentiated needs of residents in assisted living and behavioral health facilities, both attractive and high growth in markets. These types of facilities require a completely different array of services than skilled nursing, which is what most long-term care pharmacies are set up to serve. In contrast, Guardian is purpose-built to serve the very different needs of assisted living. We provide an extensive suite of tech-enabled services designed to help ensure the residents adhere to their appropriate drug regimen, which helps reduce the cost of care and improve clinical outcomes. We execute on a successful multi-pronged organic greenfield and acquisition growth strategy to increase our market share. Our management team is highly experienced with a legacy of industry thought leadership and operational excellence. Our company is 35% employee-owned, which we feel drives our teams to provide outstanding service to our customers and excellent financial performance. We believe very deeply in the power of human capital to drive growth. One unique, and I think underappreciated, aspect of Guardian is the emphasis we place on developing the talent of our operators and the focus on alignment of their goals with the company's overarching mission. I was just in Phoenix last week for our national management meeting and got to spend time with our pharmacy management teams. It was incredibly uplifting to be with such a dedicated group who care so much for the residents we serve and who are dedicated to making sure Guardian is an ongoing, sustainable business, which in turn will allow us to continue these important services we render to our frail and elderly residents. I am impressed with the experience and ability of our team members. Each pharmacy is run by a core group made up of a president and three functional directors. This team is responsible for sales, marketing, staffing, operations, logistics, billing, collections, et cetera. Essentially, they are general managers running their own business with its own P&L. I truly believe that this decentralized entrepreneurial approach is unique in the pharmacy industry. We seriously consider culture and fit when bringing on new team members and also when making an acquisition. The average tenure of our pharmacy leadership is north of a decade, and we have experienced virtually no voluntary turnover. We invest in training of our teams. Each of our operators are fantastic clinical professionals in their own right when they come aboard. We then focus on building business skills, creating top-notch general managers. In terms of the alignment of goals, we recently rolled out our new long-term incentive plan. Remember that our employees own roughly 35% of the company. This structure ensures alignment in striving to grow the business. As an example, over the past two years, we've launched greenfield startups in six contiguous markets. And those opportunities were both identified and driven by our local operators who saw the need and organically opened up a greenfield startup pharmacy in a contiguous market. In fact, over a dozen of our key management teams have launched expansions into 20 contiguous markets in the history of the company. As a result of this deep bench and close alignment, we're confident in our ability to execute on our growth strategy. Our team is enthused and aligned, leaving us well-positioned with a team that's ready to take on the exciting opportunities of the future. In conclusion, all in all, I'm pleased to have another positive report for you all. We're proud of the results we delivered and are very excited for the year ahead with lots of runway to execute on our plans. Now I'll turn the call over to David to review the quarter in greater detail.

David. good afternoon and thank you for joining the call today i'll share the highlights for the full year 2024 the fourth quarter and then provide additional color on our 2025 guidance for the fourth quarter of 2024 revenue increased 20.5 percent to 338.6 million driven by organic growth, the Heartland and Freedom acquisitions, and the vaccine clinic seasonality that Fred had mentioned earlier. Residence count grew 14% to 186,000. Adjusted EBITDA grew 30.3% year-over-year to 25.9 million, representing a margin of 7.6%, including over 1 million in public company costs versus none in the course of 2023. Turning to the balance sheet, we ended the fourth quarter with $4.7 million in cash. The outstanding balance on our credit facility ended the year at zero as the term note and a lot of credit were paid off with IPO proceeds. Looking forward, we have $40 million available under our line of credit, with the ability to increase the overall credit facility up to $75 million. Now turning to a look at our full year financial highlights, revenue reached $1.228 billion, million, a 17.4% increase, driven by organic growth, acquisitions of Heartland and Freedom pharmacies, and seasonal vaccine clinics. Our gross margin remains stable at 19.9%, adjusted EBITDA grew 19.2%, year-over-year to $90.1 million, representing a margin of 7.4%, and as I mentioned before, this includes over $1 million of public company costs versus none in 2023. Let me remind you, we added nine locations in 2024. These locations are various points of scale and are contributing very little to the bottom line. And as I mentioned before, we successfully paid off our term loan. In addition to the strong financial results, I'd like to expand a few of the key initiatives that Fred mentioned. We expanded our footprint by adding nine new pharmacy locations through a combination of M&A and Greenfield startups. We completed two traditional M&A transactions, adding five new locations. The first, Heartland Pharmacy, added four operating locations in the Intermountain West, Idaho, Utah, and Colorado, and the other, a single location in the New Jersey market. Additionally, we added four new locations via Greenfield, Bolton transactions, and contiguous markets. We are pleased with the progress of the new pharmacy locations. We're on track and slightly ahead of our typical three to four-year timeline for new pharmacies reaching mature guardian profitability levels. We created a COVID flu cross-functional task force that transformed an expected operationally complex, unprofitable vaccine process into less onerous, slightly profitable venture that greatly benefits the communities and residents we serve. Post-COVID, LTC pharmacies were expected to administer flu and COVID vaccines, which added an extremely complex operational challenge for our pharmacies and, historically, a profitability headwind. In 2024, Guardian launched a vaccine task force focused on improving supply chain logistical and reimbursement challenges. We're proud of that team's work and glad to report they were successful. The $12 million of revenue from the operating clinics in Q4 of 24 was a slight increase year on year, but the more meaningful financial impact relates to profitability and the year on year swing from a profitability headwind to one of being marginally profitable in 2024. for. We expect vaccine dispensing to grow and remain profitable. However, as the business grows, we do not expect comparable year-on-year improvement in profitability. Finally, I'll touch on guidance before opening the call to questions. We will be reiterating the guidance outlook that we provided in our preliminary release on March 3rd. For the full year 2025, we expect revenue of $1.33 to $1.35 billion, an adjusted EBITDA of $97 to $101 million. To add some additional color, these guidance ranges take into consideration the following. The midpoint of this range suggests a growth rate of 9%, and this guidance only includes current pins on the map. It doesn't include future acquisitions or contiguous startups, which both are an essential part of our growth strategy. Our pipeline remains strong. Historically, we've completed about two acquisitions a year, which results in new pins on the map and territory expansion. Keep in mind, this broader market landscape consists of approximately 1,000 independent pharmacies in the U.S., but given our strict M&A criteria, only a couple of hundred meet our standards to be considered actual targets. We remain highly selective, focusing on human capital, regional sales alignment, and operating metrics when evaluating potential opportunities. We are confident high single-digit organic growth coupled with M&A will yield a long-term growth rate in the mid to low teens. Gross margins remain fairly steady, approximately 20% on an annual basis. Additionally, we plan to continue to achieve leverage in 2025, even though the year will include a full year of public company cost of around $4 million, compared to just one quarter of those related expenses in 2024. In concluding, I'd like to reiterate Fred's sentiment that we are proud of the strong 2024 results and are looking forward to the remainder of 25. The business continues to scale in many ways. Acquisitions continue to be integrated into Guardian operations. Continuous startups continue to mature. And we continue to leverage the core business platform. We have the people and operations in place to ensure sustainable organic growth in the years ahead and plan to execute on the plans we've laid out for you. With that, I'll open the call to questions. Operator?

Ladies and gentlemen, we will now begin the question and answer session. Should you have a question, please press star followed by the number one on your touchstone phone. You will hear a prompt that your hand has been raised. Should you wish to decline from the polling process, please press star followed by the number two. If you are using a speakerphone, please make sure to lift your handset before pressing any keys. One moment while we prepare the Q&A roster. Your first question comes from the line of Parker Sner from Raymond James. Your line is now open.

Hey, how's it going, guys? Yeah, this is Parker on for John Ransom. Um, so just as we think about the earnings bridge from 24 to 25, um, what are some of the puts and takes that we should consider? Um, obviously, as you mentioned, the, you know, annualization of the public company costs, um, is there anything else that we should consider in there? You know, the Heartland acquisition, I know you did another deal in the fourth quarter that you mentioned, uh, anything else that you would call out in that bridge?

Hey, Parker, how you doing?

Doing good.

Good, good to have you on here. I think, you know, we've laid out, you know, strong organic growth in the high single digits coupled with our M&A activity yields something in the low double digits. We're comfortable with that. It's pretty much steady as we go, looking from 24 to 25 and continue to push to achieve additional leverage.

Okay. Jeff, and then maybe if you can just expand on some of your conversations you're having with your PBM partners related to some of the IRA issues and just some of the other things looking out. I mean, maybe just speak, you know, a little more broadly how you're feeling about the progress there and anything else that you would note.

You know, as it relates to the IRA, obviously we've, you know, been talking about this for some time, beginning in, you know, summer of 24, and as Fred laid out, we continue to be, you know, comfortable with the process, we're engaged discussing it, issues have been acknowledged, and we're, you know, comfortable that we're going to be able to mitigate and work our way through it.

Okay. And if I can just get one last one. From all data points that we can track, it seems like the flu season persisted much longer than normal, well into kind of mid to late February. Is there anything that we should consider there in terms of first quarter modeling or seasonality or how that might impact your business?

I don't think so. If you look at how our population, you know, works with the flu vaccine, we inoculate almost every resident that we serve in our communities. You know, therefore, the severity of the season, whether it's more severe or less, doesn't really impact how many people actually that we administer the vaccines to. So I don't think there's anything material related to severity of the season.

I'll add one other comment, which is certainly someone could receive a prescription for Tamiflu or in the case of an infection, an antibiotic, but it's at the margin.

Okay, great. Appreciate it.

Your next question comes from the line of David McDonald from Truist. Please go ahead.

Good afternoon, guys. A couple of quick questions. Wanted to come back to the IRA just for a second in kind of a different angle. I'm just curious if some of the changes there has in any way impacted your pipeline of potential M&A opportunities or any other impacts that you'd call out just on the pipeline, whether it's, you know, seeing more opportunities, potentially seeing pricing move around a little bit? Just anything that you'd call out there.

Hey, David. This is David. I think, you know, as we talked about, our M&A pipeline continues to be robust with the select operators out there that fit the criteria that we're looking for.

And I would say that, you know, the IRA, you know, hasn't affected it greatly. i know it's on people's mind as we're talking to them about it so i would i would say it hasn't hurt but it could have helped slightly but our you know our pipeline remains very robust okay and then just to follow up on parker's question just with regards to your pbm partners um you know i don't know if you guys want to get into this level of detail but just curious you know has there been any tweaks to how you guys are contracting any conversations around that you You know, any kind of movement more towards generics? Just, you know, any high-level comments that you would make with regards to that?

I'll jump in, David. Good to hear your voice. Thank you for joining today. Obviously, it would be inappropriate for us to comment on details related to our negotiations with the PBMs. but yes all those things are on the on the table that we're considering and discussing with them the the the takeaway for you i think is very importantly that the pbms are acknowledging the issue and are engaged with us in solving it so we're we're heartened by that we'll keep you posted as we move forward okay and then guys just one uh one other quick year over year question with regards to the improvement, you know, some of the vaccine stuff.

I'm just curious, did that ramp over the course of the year? Or was that, you know, improvement in 2024? Basically, what I'm asking is, is there some annualization of that year over year improvement that creates a modest incremental tailwind in 2025 relative to 24? Heard your commentary about, you know, not same rate of change, but is there a little bit of a tailwind benefit from just the annualization of that?

You know, the benefit of the flu COVID vaccine was majority in Q4. So, and as it ramps into 25, we'll see the flu. We talked about the 12 million of revenue.

That'll grow at the same rate of the overall business and the profitability is you know slightly less than our core business so there there's not a huge tailwind that would need to be factored in okay thanks very much we're calling it out to help you understand the performance in q4 um moving from a negative to a positive, you know, was an influence on our Q4 EBITDA growth.

Okay.

Thanks very much.

Your last question comes from the line of Scott Fidel from Stevens. Please go ahead.

Hi, this is Rajon for Scott. Just had a quick one on kind of observe, you know, drug mixed trends in the quarter, maybe anything to call out there and kind of what's embedded from a pricing perspective in the 2025 guidance.

Hey, Raj. It's good to hear your voice, and thanks for joining here. You know, as we look to 2025, nothing substantial is changing on the horizon. You know, the drug mix, reimbursement, everything is relatively steady as we look to 2025.

Great. Thank you. And then just as a follow-up, I know, you know, the company has some kind of more pilot initiatives around more kind of clinical intervention types of services and, you know, something like fall risk management and disease state management. Maybe kind of update on that playbook so far and, you know, what kind of progress do you guys expect to make there on that front in 2025?

I'll speak to that, Raj. We are so proud of our data analytics team working closely with our clinical team to bring these value-added services and products, you know, to our customers. And it is so exciting. They're continuing to move forward with that, making great progress, and I think our customers are enthused about it as well. So we're excited about that.

All right, great. Thank you. That's all for me. There are no further questions at this time. I'd like to turn the call over to Fred Burke for closing comments.

Sir, please go ahead. just a quick word of thanks to everyone who's joined we really appreciate your interest in our company and for you uh joining the call today thanks very much and with that we'll say goodbye this concludes today's conference call thank you very much for your participation you I may now disconnect.