Q4 2024 Guardian Pharmacy Services Inc Earnings Call

Good day, everyone and welcome to Garden pharmacy fourth quarter and full year 'twenty 'twenty four earnings call.

Operator: 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.

At this time all participants are in a listen only mode.

Operator: Later, you will have the opportunity to ask questions during the question and answer session.

Later, you will have the opportunity to ask questions. During the question and answer session.

Operator: Today's speakers will be Fred Burke, President and CEO of Guardian Pharmacy, and David Morris, EVP and CFO of Guardian Pharmacy.

Friedberg: Today's speakers will be friedberg precedent N C E O olive garden in pharmacy.

David Morris: And David Morris, EVP, and CFO of <unk> pharmacy.

Operator: 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 statement.

David Morris: 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.

David Morris: These statements include but are not limited to comments regarding our plans objectives and business outlook and our financial results for 'twenty 'twenty four and beyond.

David Morris: 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.

David Morris: Garza and pharmacy undertakes no obligations to update any forward looking statements.

Operator: 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 non-GAAP financial measures to the GAAP financial measures reported on our financial statements.

David Morris: Additionally, on today's call as the company will reference certain non-GAAP financial measures such as EBITDA, adjusted EBITDA and free cash flow.

David Morris: In our earnings release as well as on our website and reconciliations of non-GAAP financial measures to the GAAP financial measures reported on our financial statements.

Operator: This afternoon's call is being recorded and a replay of the call will be available later today.

David Morris: This afternoons call is being recorded and a replay of the call will be available later today.

Fred Burke: I'm now pleased to introduce the President and CEO of Guardian Pharmacy, Fred Burke. 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. and adjusted EBITDA of $26 million, representing an increase of 30% compared to last year's quarter.

Friedberg: I'm now pleased to introduce the president and CEO of Gaza and pharmacy Friedberg.

Friedberg: Welcome to Guardian pharmacies fourth quarter and full year 2024 earnings call.

Friedberg: Today's call I will share financial highlights review some of the accomplishments we achieved in 2024 and share some commentary on what to expect for 'twenty five.

Friedberg: Starting with the fourth quarter highlights Im 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 186000% to 14% increase from the fourth quarter last year.

Friedberg: And adjusted EBITDA of $26 million, representing an increase of 30% compared to last year's quarter.

Friedberg: And for the full year 2024, we generated revenues of $1.228 billion, an increase of 17% over last year.

Fred Burke: And for the full year 2024, we generated revenue of $1,228,000,000, an increase of 17% over last year. and adjusted EBITDA of $91 million, up 19% year over year.

Friedberg: And adjusted EBITDA of 91 million up 19.

19% year over year.

Friedberg: In terms of 'twenty 'twenty four milestones Guardian pharmacy achieved several significant milestones, we expanded our footprint by adding nine new pharmacy locations through a combination of M&A and Greenfield startups.

Fred Burke: 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 M&A and Greenfield Startup. and began the process of bringing them up on the Guardian platform.

Friedberg: And began the process of bringing them up on the Guardian platform.

Fred Burke: 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.

Friedberg: David will update you on our progress in these new markets we.

Friedberg: We continue to operationally streamlined our COVID-19 flu vaccination clinics that our facility operators expect us to provide for the residents and staff.

Friedberg: Historically the process was a huge operational challenge for our organization.

Friedberg: The significant profitability headwind.

Fred Burke: 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. turned a profit headwind into a slight profit tailwind. a significant improvement for the recently completed 2024 vaccine season.

Speaker Change: 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 I'm pleased to report.

Speaker Change: We turned a profit headwind into a slight profit T O with a significant improvement for the recently completed 2024 vaccine season.

Fred Burke: 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 Levels.

Speaker Change: 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.

Speaker Change: Organization has responded nicely.

Speaker Change: Enjoying this new challenge.

Speaker Change: The core business remains strong as we saw high single digit organic growth augmented by significant M&A.

Speaker Change: Stable gross margins and operating leverage.

Fred Burke: These accomplishments demonstrate a strong start to our time in the public market. and we feel confident that this success will only continue to grow over time.

Speaker Change: These accomplishments demonstrate our strong start to our time in the public markets.

Speaker Change: And we feel confident that this success will only continue to grow overtime.

Speaker Change: 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.

Fred Burke: 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 believed we are positioned well.

Speaker Change: Believed we are positioned well, we have a 12% market share which to us means 88% to go.

Fred Burke: We have a 12% market share, which to us means 88% to One important topic for 25 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 headwind. will continue to update you on our progress.

Speaker Change: One important topic for 25 is the potential impact of inflation reduction at our 2026 and beyond.

Speaker Change: We are working diligently on navigating this possible headwind to 2026, taking a multi pronged approach to finding a solution, including working closely with federal policymakers and our <unk> partners.

Speaker Change: All parties seem amenable to working with us defend a viable solution.

Speaker Change: And we remain confident that we can successfully mitigate any headwinds.

Speaker Change: We'll continue to update you on our progress.

Speaker Change: Let me take a moment to recap Guardians secret sauce.

Fred Burke: 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 market. 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 readiness. which helps reduce the cost of care and improve clinical outcomes.

Speaker Change: Our solutions focus on the specific and differentiated needs of residents in our <unk>.

Speaker Change: Living a behavioral health facilities, both attractive and high growth end markets. These types of facilities will require a completely different array of services than skilled nursing, which is what most long term care pharmacies are set up to serve it.

Speaker Change: Contrast, Guardian is purpose built to serve the very different needs of assisted living.

Speaker Change: We provide an extensive suite of tech enabled services designed to help ensure the residents adhere to their appropriate drug regimen.

Speaker Change: Which helps reduce the cost of care and improve clinical outcomes.

Speaker Change: We execute on our successful multi pronged organic greenfield and acquisition growth strategy to increase our market share.

Fred Burke: 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.

Speaker Change: Management team is highly experienced with a legacy of industry thought leadership and operational excellence.

Speaker Change: Our company is 35% employee owned which we feel drives our teams to provide outstanding service to our customers and excellent financial performance.

Speaker Change: We believe very deeply in the power of human capital to drive growth.

Speaker Change: <unk> unique and I think underappreciated aspect of Guardian is the emphasis we place on developing the talent of our operators.

Speaker Change: Our focus on alignment of their goals with the company's overarching mission.

Speaker Change: I was just in Phoenix last week for our National management meeting and got to spend time with our pharmacy management teams.

Fred Burke: I was just in Phoenix last week for our national management meeting and got to spend time with our pharmacy management team. 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.

Speaker Change: He was incredibly uplifting debate 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.

Speaker Change: Which in turn will allow us to continue these important services, we render two are frail and elderly residents.

Speaker Change: I am impressed with the experience and ability of our team members.

Speaker Change: 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 Sensually.

Fred Burke: This team is responsible for sales, marketing, staffing, operations, logistics, billing, collections, etc. Essentially, They are general managers running their own business with its own P&L.

Speaker Change: They are general managers running their own business with its own P&L.

Fred Burke: 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 management. In terms of the alignment of goals, we recently rolled out our new long-term incentive plan.

Speaker Change: Truly believed that this decentralized entrepreneurial approach is unique and the pharmacy industry.

Speaker Change: We seriously consider culture and fit when bringing on new team members and also with making an acquisition.

Speaker Change: Average tenure of our pharmacy leadership is north of a decade, and we have experienced virtually no voluntary turnover.

Speaker Change: We invest in training of our teams each of our operators are fantastic clinical professionals in their own right when they come aboard.

Speaker Change: 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.

Fred Burke: 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.

Speaker Change: Remember that our employees own roughly 35% of the company.

Speaker Change: This structure ensures alignment and striving to grow the business as an example over the past two years, we've launched Greenfield startups in six contiguous markets.

Speaker Change: And those opportunities, where both identified and driven by our local operators to solve a need and organically opened up a greenfield startup pharmacy in a contiguous market.

Speaker Change: In fact over a dozen of our key management teams have launched expansions into 'twenty contiguous markets in the history of the company.

Speaker Change: As a result of this deep bench and closer alignment, we're confident in our ability to execute on our growth strategy. Our team is enthused NOI, leaving us well positioned with a team that is ready to take on the exciting opportunities of the future.

Fred Burke: 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.

Speaker Change: In conclusion.

Fred Burke: 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 plan.

Speaker Change: All in all I am pleased to have another positive report for you all.

Speaker Change: 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.

David Morris: Now, I'll turn the call over to David to review the quarter in greater detail. 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 guide. For the fourth quarter of 2024, revenue increased 20.5% to $338.6 million, driven by organic growth, the Heartland and Freedom Acquisition and the vaccine clinic seasonality that Fred had mentioned earlier. residents 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 non course of 2023.

David Morris: Now I will turn the call over to David to review the quarter in greater detail.

Speaker Change: David.

Speaker Change: Good afternoon, and thank you for joining the call today.

Speaker Change: I will share the highlights for full year 2020 for the fourth quarter and then provide additional color on our 2025 guidance.

Speaker Change: For the fourth quarter of 2024 revenue increased 25% to $338 6 million driven by organic growth, the Hartland and freedom acquisitions.

Speaker Change: And the vaccine clinic seasonality that Fred had mentioned earlier.

Speaker Change: Residents count grew 14% to 186000, adjusted EBITDA grew 33% year over year to $25 9 million, representing a margin of seven 6%, including over $1 million and public company costs.

Speaker Change: Versus none in the course of 2023.

Speaker Change: Turning to the balance sheet, we ended the fourth quarter were $4 7 million in cash.

David Morris: 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 line 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, 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.

Speaker Change: 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.

Speaker Change: 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.

Speaker Change: Now turning to a look at our full year financial highlights revenue reached one point to two 8 billion, a 17, 4% increase driven by organic growth acquisitions of Hartland and freedom pharmacies and seasonal vaccine.

Speaker Change: <unk> clinics.

Speaker Change: Our gross margin remained stable at 19, 9% adjusted EBITDA grew 19, 2% year over year to $90 1 million, representing a margin of seven 4%.

Speaker Change: And as I mentioned before this includes over $1 million of public company costs versus none in 2023.

David Morris: 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.

Speaker Change: Let me remind you we added nine locations in 2020 for these locations are various points of scale and are contributing very little to the bottom line.

Speaker Change: And as I mentioned before we successfully paid off our term loan.

David Morris: 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 Startup. 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.

Speaker Change: 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.

Speaker Change: We completed two traditional M&A transactions, adding five new locations.

Speaker Change: First Heartland pharmacy added four operating locations in the Intermountain, West, Idaho, Utah and Colorado.

Speaker Change: And the other a single location in the New Jersey market.

David Morris: Additionally, we added Fortnite locations via Greenfield, Bullet Throne 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.

Speaker Change: Additionally, we added four new locations via Greenfield bolt on transactions in contiguous markets.

Speaker Change: 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 time line for new pharmacies, reaching mature gardy and profitability levels.

David Morris: We created a COVID flu cross-functional task force that transformed an expected operationally complex, unprofitable vaccine process into less on or a 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.

Speaker Change: We created a COVID-19 Blue cross functional task force that transformed and expected operationally complex unprofitable vaccine process into less onerous slightly profitable adventure that greatly benefits the communities and residents we serve.

Speaker Change: 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.

Speaker Change: In 2020 for Guardian lost a vaccine task force focused on improving supply chain logistical and reimbursement challenges. We're proud that team's work and glad to report they were successful.

Speaker Change: 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 in the year on year swing from a profitability headwind to wind up being marginally profitable in 2002.

Speaker Change: Forward.

David Morris: 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.

Speaker Change: 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.

David Morris: 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 and 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 percent, 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.

Speaker Change: We will be reiterating the guidance outlook that we provided in our preliminary release on March 3rd.

Speaker Change: For the full year 2025, we expect revenue of $1 three three to 135 billion and adjusted EBITDA of $97 million to $101 million.

Speaker Change: To add some additional color these guidance ranges take into consideration the following.

Speaker Change: The midpoint of this range suggests a growth rate of 9% and.

Speaker Change: This guidance only includes correct pins on the map it.

Speaker Change: It doesn't include future acquisitions or contiguous startups, which both are in a central part of our growth strategy.

David Morris: 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.

Speaker Change: Our pipeline remains strong historically, we've completed about two acquisitions, a year, which results in new pins on the map and territory expansion keeping.

Speaker Change: Keep in mind. This broader market landscape consists of approximately 1000 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.

Speaker Change: We remain highly selective focusing on human capital regional sales alignment and operating metrics when evaluating potential opportunities.

Speaker Change: 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.

Speaker Change: Gross margins remained fairly steady approximate 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.

David Morris: 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.

Speaker Change: Expenses in 2024.

David Morris: 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 2025. The business continues to scale in many ways. Acquisitions continue to be integrated into Guardian operations. Contiguous 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.

Speaker Change: And concluding I'd like to reiterate Fred's sentiment that we are proud of our strong 2024 results and are looking forward to the remainder of 'twenty five the.

Speaker Change: The business continues to scale in many ways.

Speaker Change: Acquisitions continue to be integrated into Guardian operations contiguous startups continue to mature and.

Speaker Change: And we continue to leverage the core business platform.

Speaker Change: 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.

Operator: 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 touchtone 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 key.

Speaker Change: With that I'll open the call to questions operator.

Speaker Change: Ladies and gentlemen, we will now begin the question and answer session.

Speaker Change: Should you have a question. Please press star followed by the number one on your Touchtone phone.

Speaker Change: You will hear you prompt that your hand has been raised should you wish to decline from the polling process. Please press star followed based on number two.

Speaker Change: If you are using a speaker phone please make sure to lift your handset before pressing any case.

Operator: One moment while we prepare the Q&A roster.

Speaker Change: One moment, while we prepared the Q&A roster.

Speaker Change: Okay.

Par Kersner: Your first question comes from the line of Par Kersner from Raymond James.

Speaker Change: Your first question comes from the line of Parker Shneur from Raymond James Your line is now open.

Par Kersner: Your line is now open. Hey, how's it going guys? Yeah, this is Parker on for John Ransom. Just as we think about the earnings bridge from 24 to 25, what are some of the puts and takes that we should consider? Obviously, as you mentioned, the, you know, annualization of the public company costs. 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. Anything else that you would call out in that bridge?

Parker Shneur: Hey, How's it going guys. Yeah. This is parker on for John Ransom.

Speaker Change: So just as we think about the earnings bridge from 24 to 25, what are some of the puts and takes that we should consider.

Parker Shneur: Obviously as you mentioned the annualized <unk> of the public company costs.

Speaker Change: 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.

Parker Shneur: Else that you would call out in that bridge.

Parker Shneur: Hey, Parker How're you doing.

David Morris: Hey, Parker, how you doing? doing good. Good, good to have you on here.

Parker Shneur: Oh good.

Parker Shneur: Got it good to have you on here.

David Morris: 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.

Parker Shneur: I think we've laid out strong organic growth.

Parker Shneur: In the high single digits, coupled with our M&A activity yields something in the low double digits, we're comfortable that it's it's pretty much steady as we go.

Parker Shneur: Looking from 24% to 25.

Parker Shneur: And continuing to push to achieve additional leverage.

Parker Shneur: Okay.

David Morris: 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 at. I mean, maybe just speak 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 the 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.

Parker Shneur: Okay.

Parker Shneur: And then.

Speaker Change: Maybe if you can just expand on some of your conversations you're having with your P. B M partners.

Speaker Change: Related to some of the IRA issues into some of the other things looking out I mean, maybe just speak a little more broadly how are you feeling about the progress there and anything else that you would note.

Speaker Change: As it relates to the R E.

Speaker Change: Obviously, we've.

Speaker Change: <unk> been talking about this.

Speaker Change: For some time beginning in the summer of 'twenty, four and as Fred laid out we continue to be comfortable with the product process. We're engaged discussing.

Speaker Change: Issue has been acknowledged.

Speaker Change: We're comfortable that we're going to be able to mitigate and work our way through.

Speaker Change: Okay, and then if I can just get one last one from me.

David Morris: Okay.

David Morris: 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, you know, kind of mid to late February. Is there anything that we should consider there in terms of first quarter modeling or seasonality or, you know, how that might impact your business? I don't think so. If you look at how our population works with the flu vaccine, we inoculate almost every resident that we serve in our communities. 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.

Speaker Change: 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.

Speaker Change: Is there anything that we should consider there in terms of first quarter modeling or seasonality or how that might impact your business.

Speaker Change: I don't think so if you look at how our population works with the flu vaccine, we inoculate almost every resident that we serve and our communities.

Speaker Change: Therefore, the severity of the season, whether it's more severe or less it doesn't really impact how many people actually that we administered the vaccines too. So I don't think theres anything material related to the severity of the season.

David Morris: So I don't think there's anything material related to the severity of the season.

Speaker Change: Yes.

Speaker Change: Red bar.

David Morris: 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.

Speaker Change: I'll add one other comment which is certainly.

Speaker Change: Someone could receive a.

Speaker Change: Prescription for tamiflu or.

Speaker Change: In the case of an infection and antibiotics, but it's at the margin.

Speaker Change: Okay, Great I appreciate it.

Speaker Change: Your next question comes from the line of David Macdonald from Truest. Please go ahead.

David MacDonald: Your next question comes from the line of David MacDonald 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 a 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 seeing more opportunities, potentially seeing pricing move around a little bit. Just anything that you'd call out there.

David MacDonald: Good afternoon, guys a couple of quick questions.

David MacDonald: Wanted to come back to the IRA just for a second and it kind of a different angle I'm just curious if some of.

David MacDonald: The changes there.

David MacDonald: Has in any way impacted.

David MacDonald: Your pipeline of potential M&A opportunities.

David MacDonald: Or any other impacts that you'd call out just on the pipeline, whether it's you know.

David MacDonald: Seeing more opportunities potentially seeing pricing move around a little bit just anything that you'd call out there.

David: Hey, David This is David.

David Morris: Hey, David, Mr. David, I think, you know, as we've 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.

David: As we've.

David: Talk about our M&A pipeline continues to be robust.

David: With the select.

David: Operators out there that fit the criteria that we're looking for and I would say.

David: Alrighty.

David:

It hasnt affected it greatly I know what's on People's mind is we're talking to them about it.

David: I would say it hasn't hurt, but it could have helped slightly but our pipeline remains very robust.

David Morris: And then just to follow up on Parker's question, just with regards to your PBM partners, 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 know, any kind of movement more towards generics? Just, you know, any high-level comments that you would make with regards to that?

David: Okay, and then just a follow up on Parker's question, just with regards to your P. B M partners.

David: You know I don't know if you guys want to get into this level of detail, but just curious you know.

David: Is there been any tweaks to how you guys are contracting any conversations around that.

David: <unk>.

David: Try to move a bit more towards generics just any high level comments that you would make with regards to that.

David Morris: 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 table that we're considering and discussing with them. 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 heartened by that. We'll keep you posted as we move forward. Okay.

David: I'll jump in and David Good to hear your voice. Thank you for joining today.

David: Obviously, it would be inappropriate for us to comment on details related to our negotiations with the pbms, but yes. All of those things are on the on the table that we're considering and discussing with them the.

David: So the takeaway for you I think is very importantly that the.

David: Pbms are acknowledging the issue and are engaged with us and solving it. So we're heartened by that we will keep you posted as we move forward.

David MacDonald: And then, guys, just one other quick year-over-year question with regards to the improvement, you know, some of the vaccine stuff.

David: Okay, and then guys just one one other quick year over year question with regards to.

David: The improvement in some of the vaccine stuff.

David Morris: 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 2024? 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, and as it ramps into 2025, we'll see the flu. We talked about the 12 million of revenue.

David: I'm just curious did that ramp over the course of the year or was that.

David: You know improvement in 2024, basically what I'm asking is is there some annual <unk> of that year over year improvement that creates a modest incremental tailwind in 2025 relative to 'twenty four heard your commentary about you know not same rate of change, but is there a little bit of a tailwind benefit.

David: Just the utilization of that.

David: The benefit of the flu Covid vaccine was.

David: Majority in Q4, so okay and.

David: And then it ramps and 25, we will see the flu we talked about the $12 million of revenue that will grow at the same rate of the overall business and the profitability is.

David Morris: That'll grow at the same rate of the overall business, and the profitability is slightly less than our core business, so there's not a huge tailwind that would need to be factored in. Okay. Thanks very much, guys.

David: Slightly less than our core business. So there is not a huge tailwind.

David: It would need to be factored in.

David: Okay.

David: Very much guys congratulations.

David Morris: We're calling it out to help you understand the performance in Q4. Moving from a negative to a positive, you know, was an influence on our Q4 EBITDA growth. Okay, thanks very much.

David: Selling it out to help you understand that.

David: Performance in Q4.

David: Moving from a negative to a positive.

David: <unk>.

David: Influence on our Q4 <unk>.

David: EBITDA growth.

David: Okay. Thanks very much.

Speaker Change: Your last question comes from the line of Scott Fidel from Stephens. Please go ahead.

Scott Fidel: Your last question comes from the line of Scott Fidel from Stevens.

Raj: Please go ahead. Hi, this is Raj on 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.

Speaker Change: Hi, This is raj on for Scott.

Raj: Just had a quick one on kind of.

Speaker Change: Observed a.

Speaker Change: Mixed trends in the quarter, maybe anything to call out there and kind of what's embedded from a pricing perspective.

Speaker Change: In the 2025 guidance.

Speaker Change: Hey, Raj good to hear your voice and thanks for joining here.

David Morris: Hey Raj, good to hear your voice and thanks for joining here. You know, as we look to 25, nothing substantial is changing on the horizon. You know, the drug mix, reimbursement, everything is relatively steady as we look to 25.

Speaker Change: As we look to 'twenty five nothing substantial is changing on the horizon. The drug mix reimbursement everything is relatively steady as as we look to 'twenty five.

Speaker Change: 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.

David Morris: Great, thank you.

David Morris: 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, some like fall risk management and disease state management, maybe kind of what 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?

Speaker Change: Services, and you know something like fall risk management and disease State management, maybe kind of what 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.

Speaker Change: I'll speak to that Raj.

David Morris: 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 customers are enthused about it as well. So we're, we're excited about that.

Speaker Change: We're so proud of our data analytics team working closely with our clinical team.

Speaker Change: Putting these value added.

Speaker Change: Services and products to our customers and it is so exciting.

Speaker Change: They are continuing to move forward with that making great progress and.

Speaker Change: Our customers are enthused about it as well so we're excited about that.

Speaker Change: All right great. Thank you that's all for me.

Raj: Thank you. That's all for me.

Speaker Change: Yes.

Speaker Change: 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.

Operator: There are no further questions at this time.

Fred Burke: 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 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 may now disconnect.

Speaker Change: Just a quick word of thanks to everyone Who's joined US we really appreciate your interest in our company and for you.

Speaker Change: Joining the call today, thanks, very much and with that we'll say goodbye.

Speaker Change: This concludes today's conference call. Thank you very much for your participation you may now disconnect.

Operator: Thank you for watching this video.

Speaker Change: Okay.

Speaker Change: Okay.

Speaker Change: Yeah.

Speaker Change: [music].