Q1 2025 RLI Corp Earnings Call
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Speaker Change: Good day, and thank you for standing by. Welcome to the Choice Properties Real Estate Investment Trust Annual Meeting of Unit Holders.
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Speaker Change: Please be advised that today's meeting is being recorded. I would now like to hand the meeting over to your speaker today, Gordon Curry. Thank you. Please go ahead.
Please be advised that today's conference is being recorded.
Holly Schmidt: Please be advised that today's conference is being I would now like to hand the conference over to your host today, Holly Schmidt, Assistant Controller. Please go ahead.
Holly Schmidt: I would now like to hand, the conference over to your host today Holly Schmidt assist.
Speaker Change: Assistant controller. Please go ahead.
Speaker Change: Good morning, Our conference call. This morning will review the financial results for the first quarter of 2025 ended March 31 2025.
Speaker Change: Good morning and welcome to the 2025 annual meeting of unit holders of choice properties real estate investment trust. I'm Gordon Curry and I serve as chair of the Board of Trustees. It's my pleasure to welcome you to our annual meeting of unit holders.
Kevin Mcnamara: Good morning. Our conference call this morning will review the financial results for the first quarter of 2025 ended March 31, 2025.
Speaker Change: Before we begin let me remind you that the safe Harbor provisions of the private Securities Litigation Reform Act 1995 apply to this conference call.
Kevin Mcnamara: Before we begin, let me remind you that the safe harbor provisions of the Private Securities Litigation Reform Act 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 23rd 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.
Speaker Change: For this year's Virtual AGM, our goal is to once again approximate the experience of a meeting held in person, including the opportunity to participate in the meeting and for unit holders and proxy holders to vote and ask questions.
Speaker Change: 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.
Speaker Change: 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 23, and in various other filings with the SEC.
Speaker Change: I'm joined on the webcast today by rail diamond, our president and chief executive officer and a member of the board, Aaron Johnson, our chief financial officer, Nile Collins, our chief operating officer and Simone Cole, our senior vice president, general counsel and secretary. Dr. Terry, Dr. Terry, Dr. Terry.
Speaker Change: 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.
Speaker Change: Other members of the board of trustees and senior management team and the senior management team are also attending remotely. I would now like to call to order this annual meeting of unit holders.
Speaker Change: 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.
Kevin Mcnamara: 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 23rd, which is available on the company's website at chemed.com.
Speaker Change: I will begin today's meeting by outlining how voting and questions will be addressed.
Speaker Change: Reconciliation of these non-GAAP results is provided in the company's press release dated April 23, which is available on the company's website at Chemed Dot com.
Speaker Change: Boeing during today's meeting will be conducted through the online platform.
Speaker Change: I would now like to introduce our speakers for today, Kevin Mcnamara, President and Chief Executive Officer of Chemed Corporation, Mike Whitman, Chief Financial Officer of Chemed, and Nick Westfall, Chairman and Chief Executive Officer of Chemed to VITAS Healthcare Corporation subsidiary.
Speaker Change: When we are ready to table an item of business for a vote, you will see voting options appear on your screen. Usually, and this year is no exception. The majority of unit holders have submitted their proxies or voting instructions in advance of the meeting. [inaudible]
Kevin Mcnamara: I would now like to introduce our speakers for today, Kevin McNamara, President and Chief Executive Officer of ChemEd Corporation, Mike Witzman, Chief Financial Officer of ChemEd, and Nick Westphal, Chairman and Chief Executive Officer of ChemEd's VITAS Healthcare Corporation subsidiary. I will now turn the call over to Kevin McNamara. Thank you, Holly. Good morning.
Speaker Change: I will now turn the call over to Kevin Mcnamara.
Speaker Change: I wish to thank all those unit holders who exercise their right to vote in advance.
Speaker Change: Thank you Holly good morning welcome.
Speaker Change: Welcome to Chemed Corporation's first quarter 2025 conference call I will begin with highlights for the quarter, then Mike and Nick will follow up with additional details.
Speaker Change: If you have voted in advance of the meeting by submitting a proxy and do not wish to revoke your vote, then you do not need to do anything.
Kevin Mcnamara: Welcome to ChemEd Corporation's first quarter 2025 conference call. I will begin with highlights for the quarter, then Mike and Nick will follow up with additional detail. I will then open up the call for questions. PTAS continued its strong operating performance during the first quarter of 2025. Admissions during the quarter totaled 18,139, which equates to a 7.3% improvement from the same period of 2024. Our average daily census, or ABC, expanded to 22,244, an increase of 13.1% when compared to the prior year quarter. These historically good metrics were positively impacted by the $85 million acquisition of Covington Health, which was closed on April 17, 2024.
Speaker Change: The scrutineers will tabulate all the votes cast during the meeting and we will report on the results of each resolution at the end of the meeting
Speaker Change: I will then open up the call for questions. Please.
Speaker Change: <unk> continued its strong operating performance during the first quarter of 2025.
Speaker Change: Emissions during the quarter totaled 18139, which equates to a seven 3% improvement from the same period of 2020 for.
Speaker Change: If you wish to submit a question in writing, select the messaging tab on the top of your screen. To ask a verbal question, click on the request to speak by con at the top of the broadcast.
Speaker Change: Our average daily census, or ADC expanded to 22244, an increase of 13, 1% when compared to the prior year quarter.
Speaker Change: When submitting a question, please identify whether it relates to a motion being considered as part of the formal business of the meeting or whether it is general in nature.
Speaker Change: These historically good metrics were positively impacted by the 80 $85 million acquisition of Covington Covenant Health, which was closed on April 17 2024.
Speaker Change: We will address questions directly related to a particular motion at the appropriate time of the meeting and save general questions until after the formal business has been completed
Speaker Change: Through the end of the first quarter. The Covenant Health acquisition is meeting all of our internal financial projections developed at the time of the acquisition.
Speaker Change: Simone Cole, our Corporate Secretary, will receive and read the submitted questions and either I or a member of the management team will respond.
Kevin Mcnamara: Through the end of the first quarter, the Covenant Health Acquisition is meeting all of our internal financial projections developed at the time of the acquisition. As Nick will discuss further, VITAS management continues to successfully execute the strategies required to navigate the Medicare cap at certain of our locations. A major part of that strategy is to increase our hospital-based admissions. Admissions from hospitals generally come to us later in their disease trajectory. These short-stayed patients put a limiting factor on our ability to grow revenue in the EBITDA margin, but do provide additional Medicare cap cushion. Despite this headwind, PTAS continues to achieve above-average growth in revenue in EBITDA.
Speaker Change: As Nick will discuss further VITAS management continues to successfully execute the strategies required to navigate the Medicare cap at certain of our locations a major part of that strategy is to increase our hospital based admissions admissions from hospitals generally come to US later in their disease trajectory. These short stay pace.
Speaker Change: If you were logged into the meeting as a guest, you will be able to listen to the meeting, but you will not be able to vote or ask questions as only registered unit holders and duly registered proxy holders may do so.
Speaker Change: I will now proceed with the formal part of the meeting. I would ask Simone Cole to act as Secretary of the Meeting, TFX Trust Company is acting as Screwed Near the Meeting by way of its representatives, Emma McKenzie and Laurie Grinton.
Speaker Change: <unk> put a limiting factor on our ability to grow revenue and EBITDA margin, but do provide additional Medicare cap cushion.
Speaker Change: Might this headwind VITAS continues to achieve above average growth in revenue and EBITDA.
Speaker Change: Our new programs and the Florida counties in Pasco and Marion counties are also a key part of mitigating Medicare cap issues in 2025 and beyond.
Speaker Change: Only unit holders of record at the close of business on March 10, 2025, or their duly appointed proxies, are entitled to take part in and vote at this meeting. To make the best use of our time certain unit holders have been asked to move and second the motions, which are called for in the notice of meeting. This meeting will take place on March 10, 2025, or their duly appointed proxies, which are called for in the notice of meeting.
Kevin Mcnamara: Our new programs in the Florida counties of Pasco and Marion counties are also a key part of mitigating Medicare cap issues in 2025 and beyond. We continue to grow admissions in Pasco County. We anticipate taking our first admission in Marion County in mid-May.
We continue to grow admissions in Pasco County, we anticipate taking a first submission in Marion County in mid May.
Speaker Change: A copy of the notice of meeting and proof of its mailing have been filed with the records of this meeting.
Speaker Change: Now, let's turn to Roto rooter.
Speaker Change: We are happy to report that Roto Rooter generated a total revenue increase of one 8% in the first quarter of 2025, when compared to the prior year quarter.
Kevin Mcnamara: Now let's turn to Rotary. We are happy to report that Roto-Rooter generated a total revenue increase of 1.8% in the first quarter of 2025 when compared to the prior year quarter. Gross branch revenue increased 3.1 percent, consisting of branch residential revenue increasing 1.7 percent and branch commercial revenue increasing 7.3 percent. Total leads were down 7.8% in the first quarter of 2025 compared to the same period of 2024. The revenue improvements during the first quarter of 2025 are the consequence of the variety of initiatives undertaken during 2024. As we discussed throughout the course of 2024, those initiatives include a more focused sales approach for our commercial business, maximizing opportunities from the leads we do receive, and an emphasis on quicker response times to residences with possible water restoration opportunities.
The Screwton News report indicates that a quorum is present.
Speaker Change: I now declare that this annual meeting has been properly called and is duly constituted for the transaction of the business for which it has been called.
Speaker Change: Gross branch revenue increased three 1% consisting of a branch.
Speaker Change: Residential revenue, increasing one 7% and branch commercial revenue increasing seven 3%.
Speaker Change: Today's agenda will begin with remarks from the Choice Properties Management Team.
Speaker Change: These will be followed by the submission of the 2024 annual financial statements.
Speaker Change: Total leads were down seven 8% in the first quarter of 2025 compared to the same period of 2024. The revenue improvements during the first quarter of 2025 are the consequence of the variety of initiatives undertaken during 2024 as we discussed throughout the course of 2020 for those initiatives.
followed by three resolutions.
first to elect the Board of Trustees.
Speaker Change: 2nd to appoint Joint Choice Properties External Auditor for the fiscal 2025 and to authorize the trustees to fix the external auditors' remuneration and 3rd to consider an advisory resolution on choice properties approach to executive compensation.
Speaker Change: Include a more focused sales approach for our commercial business maximizing opportunities from the leads we do receive.
Speaker Change: At the conclusion of the formal items of business, we will move to our general question and answer period and the announcement of voting results.
Speaker Change: And an emphasis on quicker response times to residences with possible water restoration opportunities to.
Speaker Change: To summarize the strong results at VITAS continue VITAS management has consistently demonstrated the ability to hire and retain licensed health care professionals at an appropriate pace. This has translated into an extended period of strong growth two new locations in the state of Florida provided a nice growth opportunity for the next few years.
Kevin Mcnamara: To summarize, the strong results at VITAS continue. VITAS management has consistently demonstrated the ability to hire and retain licensed healthcare professionals at an appropriate pace. This has translated into an extended period of strong growth. Two new locations in the state of Florida provide a nice growth opportunity for the next few years. We continue to work diligently to expand our operating scope within Florida as well as other states that have some form of Certificate of Need restriction. We are pleased with Roto-Rooter's turn towards a revenue growth trajectory. We are confident that Roto-Rooter maintains its core competitive advantages in terms of excellent brand awareness, customer response time, 24-7 call centers, and aggressive internet presence.
Speaker Change: I would now like to bring your attention to the notice appearing on the screen. On behalf of those speaking today, I would like to note that today's remarks may include forward looking statements and references to non-GAAP financial measures. Actual results could differ materially from the forecast projections and conclusions in the forward looking statements.
Speaker Change: We continue to work diligently to expand our operating scope within Florida as well as the other states that have some form of a certificate of need restrictions we.
Speaker Change: Details regarding forward-looking statements and non-GAAP measures can be found in Choice Properties 2024 Annual Report, as updated in the 2025 First Quarter Report to Unit Holders.
Mike: We are pleased with Roto Rooter has turned towards our revenue growth trajectory. We are confident that roto rooter maintains its core competitive advantages in terms of excellent brand awareness customer response time 27 call centers and aggressive internet presence with that I would like to turn this teleconference over to Mike.
Speaker Change: I should also note that during the meeting, we may pause from time to time to review messages from the secretary. Thank you in advance for your patience as we do so.
Mike Witzman: I would like to turn this teleconference over to Mike. Thanks, Kevin. VITAS net revenue was $407.4 million in the first quarter of 2025, which is an increase of 15.1% when compared to the prior year period. This revenue increase is comprised primarily of a 11.9% increase in days of care and a geographically weighted average Medicare reimbursement rate increase of approximately 3.2%. The ACQUITY Mixed Shift negatively impacted revenue growth 112 basis points in the quarter. The combination of Medicare cap and other contra revenue changes increased revenue growth by approximately 112 basis points. Average revenue per patient day in the first quarter of 2025 was $207.58, which is 221 basis points above the prior year period.
Speaker Change: Sure.
Mike: Thanks, Kevin.
Speaker Change: Before I hand things over to Rail, I'd like to take a moment to reflect on 2024 and acknowledge the efforts of the team and choice properties over the last year.
Speaker Change: VITAS net revenue was $407 4 million in the first quarter of 2025, which is an increase of 15, 1% when compared to the prior year period.
Speaker Change: 2024 was another year of positive momentum for our business as we significantly advanced our strategic agenda, continued to demonstrate the stability of our portfolio and strength
Speaker Change: This revenue increase is comprised primarily of 11.
Speaker Change: A 11, 9% increase in days of care and a geographically weighted average Medicare reimbursement rate increase of approximately three 2%.
and made meaningful progress on our transformational development pipeline.
Speaker Change: As board chair, I'm proud of our ability to deliver strong financial and operating performance and progress on our commitments to all stakeholders. I am confident in the team of choice properties and look forward to building on our positive momentum in 2025.
Speaker Change: The acuity mix shift negatively impacted revenue growth 112 basis points in the quarter. The combination of Medicare cap and other contra revenue changes increased revenue growth by approximately 112 basis points.
Speaker Change: Average revenue per patient day in the first quarter of 2025 was $207 58.
Speaker Change: With that, I'd like to now call up on rail, Aaron and Nile to present an update on the business.
Speaker Change: Which is 221 basis points above the prior year period.
Speaker Change: Thank you, God. Good morning, everyone. We're delighted to have you join us for a 2025 annual meeting.
Speaker Change: During the quarter high acuity days of care were two 6% of total days of care, a decline of 22 basis points when compared to the prior year quarter.
Mike Witzman: During the quarter, high acuity days of care were 2.6% of total days of care, a decline of 22 basis points when compared to the prior year quarter. The adjusted EBITDA excluding Medicare cap totaled $70.3 million in the quarter, an increase of 15.9%. adjusted EBITDA margin in the quarter, excluding Medicare cap, was 17.2%, which is 13 basis points above the prior year period.
Speaker Change: We are proud to have achieved another year of strong operational and financial result in 2024.
Speaker Change: Adjusted EBITDA, excluding Medicare cap totaled $73 million in the quarter, an increase of 15, 9%.
Speaker Change: A market leading portfolio demonstrated its resilience and a disciplined approach to financial management enabled us to focus on both updated day business and long-term strategy.
Speaker Change: Adjusted EBITDA margin in the quarter, excluding Medicare cap was 17, 2%, which is 13 basis points above the prior year period.
Speaker Change: In 2024, we delivered on our financial outlook and strategic priorities. We'll continue to strengthen our foundation, which includes our industry leading balance sheet, our commitment to ESG, our strategic relationship with our largest Senate Law Law, and our talented team.
Speaker Change: The financial results. Just discussed include the impact of the Covenant health acquisition, which positively impacted revenue adjusted net income and EBITDA by 3% to 4%.
Mike Witzman: The financial results just discussed include the impact of the Covenant Health acquisition, which positively impacted revenue, adjusted net income, and EBITDA by 3 to 4 percent.
Speaker Change: As a result of our strong performance and our solid financial position, Bill please to announce a third annual distribution increase in the first quarter of 2025. Jim, it's reading a commitment to sharing burning spread with you, our unit holders.
Speaker Change: Now, let's turn to Roto rooter.
Speaker Change: Gross branch revenue increased three 1% in the first quarter of 2025 versus the first quarter of 2024.
Mike Witzman: Now let's turn to road order. Gross branch revenue increased 3.1% in the first quarter of 2025 versus the first quarter of 2024. Roto-Rooter branch residential revenue in the quarter totaled $167.2 million, an increase of 1.7 percent from the prior year period. The residential revenue increase was driven by a 3% increase in excavation revenue and a 12.5% increase in water restoration. Roto-Rooter branch commercial revenue in the quarter totaled $57.7 million, an increase of 7.3% from the prior year. The commercial revenue increase was driven by a 38% increase in excavation and a 14% increase in water restoration.
Speaker Change: Roto Rooter branch residential revenue in the quarter totaled $167 2 million, an increase of one 7% from the prior year period.
Speaker Change: In 2024, we continue to enhance the quality of our portfolio through a capital recycling program. We completed over 425 million of real estate transactions, including 260 million of acquisitions and 165 million of dispositions further optimizing our portfolio.
Speaker Change: The residential revenue increase was driven by a 3% increase in excavation revenue.
Speaker Change: The 12, 5% increase in water restoration.
Speaker Change: Roto Rooter branch commercial revenue in the quarter totaled $57 7 million.
Speaker Change: An increase of seven 3% from the prior year.
Speaker Change: The commercial revenue increase was driven by a 38% increase in excavation and a 14% increase in water restoration.
Speaker Change: featuring 12 retail intensification projects, a lot more inertial ground needs, a choice, Kallon Business Park, and one purposeful rental residential property.
Speaker Change: Offsetting the three 1% gross branch revenue increase revenue from our independent contractors declined six 4% in the first quarter of 2025 as compared to the same period of 2024.
Speaker Change: A total investment of approximately 236 million was delivered at an average yield of 7% resulting in significant nerve creation.
Mike Witzman: Offsetting the 3.1% gross branch revenue increase, revenue from our independent contractors declined 6.4% in the first quarter of 2025 as compared to the same period of 2024. Our independent contractors are generally smaller operations in middle market cities. In most instances, they do not have the capability to perform the add-on business that is currently the primary driver of revenue growth at Roto-Rooter Branch. Adjusted EBITDA at Roto-Rooter in the first quarter of 2025 totaled $59.2 million, a decrease of 2.4% compared to the prior year quarter. The adjusted EBITDA margin in the quarter was 24.7%. The first quarter adjusted EBITDA margin represents a 108 basis point decline from the first quarter of 2024.
Speaker Change: In 2024, we made significant progress in environmental, social, and governance strategy as one of Canada's largest real estate companies, we uniquely positioned to make people, communities and environment.
Speaker Change: Our independent contractors are generally smaller operations in middle market cities and.
Speaker Change: In most instances they do not have the capability to perform the add on business that is currently the primary driver of revenue growth at Roto Rooter branches.
Speaker Change: This year, we advanced a pathway to achieving in zero by 2050 and enhanced our social impact on focusing on community prosperity.
Speaker Change: Adjusted EBITDA at Roto Rooter in the fourth quarter first quarter of 2025 totaled $59 2 million a decrease of two 4% compared to the prior year quarter.
Speaker Change: Our ESG program is in payroll task strategic framework supporting our tenants, strengthening communities, and building resilience through the business. I encourage you to read our 2024 ESG report available on our website.
Speaker Change: Adjusted EBITDA margin in the quarter was 24, 7%.
Speaker Change: First quarter adjusted EBITDA margin represents a 108 basis point decline from the first quarter of 2024.
Speaker Change: Looking ahead to 2025, we are positioned with a portfolio platform that are built to withstand economic cycles.
Speaker Change: The seven 3% increase in commercial revenue and a slight decline in EBITDA margin during the fourth quarter of 2025 were driven by the same factors.
Mike Witzman: The 7.3% increase in commercial revenue and the slight decline in need without margin during the first quarter of 2025 were driven by the same factors. Overall, commercial business is generally performed at a slightly lower margin than residential business.
Speaker Change: our discipline approach to capital allocation and balance management provide us with capacity to continue to pursue growth opportunities distinguishing us from our peers.
Speaker Change: Overall commercial business is generally performed at a slightly lower margin than residential business. Additionally.
Speaker Change: Additionally.
Speaker Change: Before I pass it to now, I want to express my thanks to our colleagues. Everything we achieved this past year would not be possible without you. I'm especially proud of our deep culture of collaboration and our team's ability to continue to deliver best in class service attendance.
Speaker Change: Roto Rooter management received feedback from our commercial sales force that we could potentially drive additional excavation work, if we price to that work less aggressively.
Mike Witzman: Additionally. Rotary management received feedback from our commercial sales force that we could potentially drive additional excavation work if we priced that work less aggressively. Commercial excavation is one of the most price sensitive aspects of our business. as they are some of our largest jobs, frequently exceeding $50,000 per job. Due to the size of the job, it is more likely that a commercial customer will get quotes from multiple vendors. In the first quarter, Rotor Rooter Management reduced the price structure for selected large commercial excavation jobs. This is a key factor that led to the 38% increase in commercial excavation revenue.
Speaker Change: Commercial excavation is one of the most price sensitive aspects of our business.
Speaker Change: As they are some of our largest jobs frequent frequently exceeding $50000 per job.
Speaker Change: I'll now pass it over to Nob to provide more color on our existing portfolio and our development program.
Speaker Change: Due to the size of the job it is more likely that a commercial customer will get quotes from multiple vendors.
Niall: Thank you and good morning. Israel mentioned 2024 was a strong year for our business, a market-leading portfolio of essential retail, industrial, mixed use and residential is an exceptional shape and operates at near full capacity.
Speaker Change: In the first quarter Roto Rooter management reduced the price structure for selected large commercial excavation jobs.
Speaker Change: This is a key factor that led to the 38% increase in commercial excavation revenue.
Speaker Change: Road, 2024, Leasing Activity across the three asset classes remains strong.
Speaker Change: Due to the reduced pricing those jobs were done at a slightly lower margin than our other business.
Speaker Change: supported by the location, quality of our assets, the resilience of our operating platform and the depth of our tenant relationships.
Mike Witzman: However, due to the reduced pricing, those jobs were done at a slightly lower margin than our other businesses.
Speaker Change: Roto Rooter management intends to refine its excavation pricing model during the second quarter until the balance between revenue growth and EBITDA margin is achieved.
Speaker Change: Our 44.5 million square feet retail portfolio continues to provide steady cash low growth as one of the largest and most resilient in Canada.
Mike Witzman: Roadrunner Management intends to refine its excavation pricing model during the second quarter until a balance between revenue growth and EBITDA margin is achieved.
Speaker Change: Our grocery anger necessity based retail assets performed exceptionally well. Our national footprint of neighborhood centers delivered rented roles with rates comparable to poor urban areas and our national tenants continue to seek out markets located which Canadians live and work. [inaudible]
Speaker Change: The financial results in the first quarter of 2025 are well within our expectations and related guidance for both VITAS and Roto Rooter we.
Mike Witzman: The financial results in the first quarter of 2025 are well within our expectations and related guidance for both VITAS and Road Riders.
Speaker Change: We anticipate providing updated earnings guidance is a part of the June 32025 earnings press release.
Mike Witzman: We anticipate providing updated earnings guidance as a part of the June 30th, 2025 earnings press release.
I will now turn this call over to Nick.
Speaker Change: Our 20.9 million square feet well-located industrial portfolio, all to perform well in 2024.
Nick: Thanks, Mike.
Nick Westphal: I will now turn this call over to Nick. Thanks, Mike. I'm pleased with our start to 2025, which is in line with our guidance and on the heels of the strong operating performance of the past few years. In the first quarter of 2025, our average daily census was 22,244 patients. an increase of 13.1% when compared to the prior year period. VITAS has generated quarterly sequential ADC growth over the last 10 quarters. In the first quarter of 2025, total VITAS emissions were 18,139. This is a 7.3% increase when compared to the first quarter of 2024. In the quarter, admissions increased in all four of our preadmint location types.
Speaker Change: I am pleased with our start to 2025, which is in line with our guidance and on the heels of the strong operating performance of the past few years.
Speaker Change: On a rent and growth rates have moderated after several years of gross growth, demand for high quality industry elastics remains strong, and supply and key markets is never so strong.
In the first quarter of 2025, our average daily census was 22244 patients an.
Speaker Change: Across the portfolio, we continue to benefit from ranking growth on renewals based on our low in place rents and adjusting to market rates.
Speaker Change: An increase of 13, 1%.
Speaker Change: When compared to the prior year period, VITAS generated quarterly sequential ADC growth over the last 10 quarters.
Speaker Change: We also increased our retail, our residential portfolio, delivering mountain flood and village development, consisting of 302 purpose-built rental units, and 142 combo units, in which choice zones are 50% ownership.
Speaker Change: In the first quarter of 2025 total VITAS admissions were 18139. This is a seven 3% increase when compared to the first quarter of 2024.
In the quarter admissions increased in all four of our pre admit location types, our nursing home admissions increased three 9% hospital directed admissions increased 12%.
Speaker Change: As Rayl mentioned, we completed several development projects in 2024. In addition to the residential projects at Mount Pleasant Village, we transferred a lot of ground leads.
Nick Westphal: Our nursing home admissions increased 3.9%, hospital directed admissions increased 12%, home-based patient admissions expanded 4.2%, and the assisted living facilities admissions increased 5.2% when compared to the prior year period. Our average length of stay in the quarter was 118.7 days. This compares to 103.9 days in the first quarter of 2024. It's important to remember that length of stay statistics for the industry are calculated based on discharged patients, not active patients. The increase in average length of stay between quarters represents the effect of the patients admitted during our community access initiative, which was designed to identify appropriate patients earlier in their disease trajectory being discharged.
Speaker Change: Home based patient admissions expanded four 2% in the assisted living facilities admissions increased five 2% when compared to the prior year period.
Speaker Change: At Shoys, Caledon, Business Park, totaling $9.21,000 square feet, and 12 retailing intensifications, totaling $980,000.
or three.
Speaker Change: Our average length of stay in the quarter was $118 seven days. This compares to 103 nine days in the first quarter of 2024, it's important to remember that length of stay statistics for the industry are calculated based on discharge patients non active patients the increase in average length of stay between quarters.
Speaker Change: Beyond the project delivery in 2024, our team is actively advancing a pre-developed pipeline.
Speaker Change: At the end of 2024, we had 20 active development projects.
Speaker Change: In addition, we have a substantial pipeline of future developments with two multi-phase industrial projects totaling 4.2 million square feet and 12.6 million square feet of mixed-use residential projects at different stages of the pre-development process.
Speaker Change: The effect of the patients admitted during our community access initiative, which was designed to identify appropriate patients earlier in their disease trajectory being discharged.
Speaker Change: This development pipeline continues to provide what a meaningful opportunity to fight
Speaker Change: I believe we continue to successfully manage our exposure to Medicare cap in 2025, our median length of stay was 16 days in the first quarter of both 2025 and 2024. Additionally.
Speaker Change: I will now turn the floor over to Aaron to invite an update on a financial position.
Nick Westphal: I believe we continued to successfully manage our exposure to Medicare cap in 2025. Our median length of stay was 16 days in the first quarter of both 2025 and 2024. Additionally, our median length of stay in the quarter decreased sequentially from 16 days from 18 days in the fourth quarter of 2024, which illustrates the intended impact of increased hospital admissions. As Kevin mentioned, the primary Medicare cap management strategy is to increase hospital-based admissions in select locations. Hospital referrals traditionally come later in a patient's disease trajectory and therefore result in shorter lengths of stay. This has the overall effect of moderating both revenue growth and margin growth but also provides additional cap cushion in those key locations.
Aaron: Thank you, Nile. We are very pleased with our 2024 performance, delivering financial metrics that met or exceeded the financial targets reflected in our outlook.
Speaker Change: Additionally, our medium length of stay in the quarter decreased sequentially from 16 days from 18 days in the fourth quarter of 2024, which illustrates the intended impact of increased hospital admissions as.
Aaron: Supported by the strength of our portfolio, tenants, and team, in 2024, we maintained high occupancy, ending the year at 97.6%, and we deliver strong leasing spreads of 20.2%.
Speaker Change: As Kevin mentioned, the primary Medicare cap management strategy is to increase hospital based submissions in select locations.
Speaker Change: Hospital referrals traditionally come later on a patient's disease trajectory and therefore result in shorter lengths of stay. This is the overall effect of moderating both revenue growth and margin growth, but also provides additional cap cushion in those key locations.
Speaker Change: In the first quarter of 2025 hospital based admissions represented 49% of our overall admissions, which is our highest level since the pandemic.
Nick Westphal: In the first quarter of 2025, hospital-based admissions represented 49% of our overall admissions, which is our highest level since the pandemic. Hospital-based admissions increased 12% compared to the first quarter of 2024. With the current Medicare cap rules, this is the right thing to do for the company to ensure long-term sustainable growth. As Kevin also mentioned, we're excited to be providing services in Pasco County and soon in Marion County, Florida. We believe our entry into these two territories is a win both for the people we will serve and for the future growth potential of ETAS. These new locations also provide Medicare cap cushion in the near term.
Speaker Change: Hospital based admissions increased 12% compared to the first quarter of 2024 with the current Medicare cap rules. This is the right thing to do for the company to ensure long term sustainable growth.
Speaker Change: As Kevin also mentioned, we're excited to be providing services in Pasco County, and soon in Marion County, Florida.
Speaker Change: We believe our entry into these two territories is a win both for the people, we will serve and for the future growth potential of VITAS. These new locations also provide Medicare cap cushion in the near term.
Speaker Change: To quickly recap what our team has accomplished we've now generated 11 quarters of sequential net growth in licensed health care workers and 10 quarters of sequential growth in ADC.
Nick Westphal: To quickly recap what our team has accomplished, we've now generated 11 quarters of sequential net growth in licensed healthcare workers and 10 quarters of sequential growth in ADC. Last year we demonstrated the ability to partner with and successfully integrate other providers through acquisitions to ensure communities continue to receive the best possible care. As a result of these efforts, PTAS continues to achieve higher-than-historical averages in ADC growth, revenue growth, EBITDA growth, and EBITDA margins. We are optimistic about the ability for VITAS to maintain above-average growth, both organically and through creative acquisitions in 2025 and beyond.
Speaker Change: Last year, we demonstrated the ability to partner with and successfully integrate other providers through acquisitions to ensure communities continue to receive the best possible care.
Speaker Change: As a result of these efforts VITAS continues to achieve higher than historical averages and ADC growth revenue growth EBITDA growth and EBITDA margin.
Kevin Mcnamara: We are optimistic about the ability for VITAS to maintain above average growth both organically and through accretive acquisitions in 2025 and beyond with that I'd like to turn the call back over to Kevin.
Kevin Mcnamara: With that, I'd like to turn the call back over to Kevin. Thank you, Nick.
Nick: Thank you Nick I will now open this teleconference to questions.
Unknown Executive: I will now open this teleconference to questions. As a reminder, if you'd like to ask a question at this time, please press star 1 1 on your telephone and wait for your name to be announced. To withdraw your question, please press star 11 again. Please stand by while we compile.
Speaker Change: As a reminder, if you'd like to ask a question at this time. Please press star one on your telephone and wait for your name to be announced.
Speaker Change: To withdraw your question. Please press star one again please.
Hawaii homeowners premium grew by 37%, which includes a positive 18% rate increase.
Speaker Change: Please standby, while we compile the Q&A roster.
We continue to benefit from our competitors pulling back in this market after the Hawaii wildfires more.
Ben Hendrix: Our first question comes from Ben Hendrix, with RBC capital markets.
Ben Hendricks: Our first question comes from Ben Hendricks with RBC Capital. Hey, thank you very much.
More recently, we are seeing a change in appetite with some markets. We are entering the space to varying degrees.
Speaker Change: Okay. Thank you very much.
Speaker Change: To ask a little bit more go into little more detail about the longer term cap management strategy I know that you have right.
Kevin Mcnamara: I just wanted to ask a little bit more, go into a little more detail about the longer term cap management strategy. I know that, you know, you have rate, rate updates that are at wage index, the cap is not, and makes sense that you're focusing selectively on the shorter stay patients, but just wondering how that plays out over time, and how we would expect that to evolve as we kind of go in through different rate setting cycles, and how that resets every year. And if this is something that's just going to continue to accelerate, and we're going to see continued cap pressure for the intermediate term, or if we're going to see a reset.
Yeah property is experiencing the most competitive market conditions in our product portfolio with premium down 14% in the quarter.
Speaker Change: Rate updates that are wage index the catheter not.
Reinsurance market is known for large catastrophe and short memories and the current market conditions reflected.
Speaker Change: And it makes sense that youre focusing selectively on the shorter stay patients, but just wondering how that plays out over time and how we would expect that to evolve as we kind of go in through different rate setting cycles, and how that resets every year and if this is something thats just going to continue to accelerate that we're going to see continued cap.
Competitors, particularly mga's two are compensated on topline growth.
Aggressive in the Florida wind market.
The increased line capacity and expanded terms and conditions, while slashing rates.
We continue to refine our underwriting guidelines to provide our underwriters the flexibility to compete on the best accounts.
Speaker Change: Sure for the intermediate term or if we're going to see a reset in the near term.
Although we saw a 14% decrease in win rates in the quarter. We believe this business is still very well priced.
Speaker Change: I'm going to have Nick answer this question, but let me just start by giving you very generally I mean, ideally you would like cap cushion to be zero, you want to take advantage of all the opportunities available by your level of add minutes.
Kevin Mcnamara: I'm gonna have Nick answer this question, but let me just start by giving very generally, I mean, ideally, you would like cap cushion to be zero, you want to take advantage of all the opportunities available by your level of admins. And, you know, there, there are a couple things that we're going to talk about that, keep in mind, during the pandemic, when our staff was short, you know, the Our emphasis from hospital admissions was necessarily changed a little bit just because of the acuity levels that a lot of the hospital-based admissions, the acuity levels that the patients come with.
Earthquake market is also challenging given the increasing tendency of insurers to take those risks.
<unk> rates were down 6% in the quarter on the earthquake business.
Speaker Change: And.
New business, it's hard to win in the E&S property space, but we are continuing to stay in front of our producers and letting them know we are a consistent long term reliable market for their customers.
Speaker Change: There are a couple of things that are going to talk about that.
Speaker Change: Keep in mind.
Speaker Change: During the pandemic when our staff with short.
Speaker Change: Our emphasis from <unk>.
As I mentioned in the property segment performed well with a 57 combined ratio despite a heavy quarter of catastrophe losses for the industry.
Speaker Change: Hospital admissions.
Speaker Change: Was this necessarily.
Speaker Change: A little bit.
We will continue to look for areas to grow in the segment. Despite the increased competition.
Speaker Change: Because of the acuity levels that.
Speaker Change: A lot of the hospital based admissions.
Sure thing as premium was down 1% in the quarter, while posting a 69 combined ratio.
Speaker Change: <unk> levels that the patients come with and it had the effective increasing are real.
Bottom line improvement was due to benign loss activity in the quarter. This year compared to one large commercial energy loss posted in the first quarter last year.
Nick Westphal: And it had the effect of increasing our real... average length of stay. It was just out of necessity, just based on the staffing levels we were able to maintain. Nick knew that was going to be, you know, it was going to cause some, you know, mid-course corrections as the, as we expanded into the coming years, and these are the corps that have been... The second thing is if you look at the reimbursement that you made reference to for Florida for this year, for this government plan year, in Florida it was a little bit higher than we anticipated.
Speaker Change: Average length of stay just there was a.
Speaker Change: Just out of necessity just based on the staffing levels, we were able to maintain.
Top line was challenged because contract surety premium decreased by 10%.
Speaker Change: I was this businesses business focuses on public construction projects, we saw a slowdown in bid activity for larger multiyear projects influenced by tariff uncertainty.
Speaker Change: Nick knew that was going to be it was going to cause some.
Speaker Change: Mid course corrections as the.
Speaker Change: As we.
Gordon Curry: Our band Count actually increased which means we're still seeing plenty of opportunity on smaller quick turning jobs, which was our target appetite.
Speaker Change: Expanded into the coming years.
Speaker Change: Then of course it has been.
Speaker Change: Doing that okay. The second thing is if you look at the reimbursement.
Gordon Curry: Our commercial and transactional businesses, we're able to grow due to some new regional bonding requirements and our continued marketing efforts.
Speaker Change: But you've made reference to for Florida for this year or for this government plan year in Florida, It was a little bit higher than we anticipated okay. So that.
Speaker Change: Overall, we're very pleased with this quarter's results in a quarter of elevated catastrophe loss activity for the industry and continue the auto severity, we were able to post an eight two combined ratio.
Speaker Change: That used that's good that's more profitability use a little bit more of a cushion we're talking about it a little bit more but.
Kevin Mcnamara: So that's good, that's more profitability, used a little bit more of our cushion. We're talking about it a little bit more, but I'm just saying very generally speaking it's a good thing. And if you ask me, it's a good thing to have no cushion at the end of the year, it's a bit of a high wire act, but that's how you take best advantage of the opportunities provided to the business.
Speaker Change: We're continuously improving our portfolio, while focusing on bottom line results.
Speaker Change: I'm, just saying very generally speaking.
Speaker Change: It's a good thing if you ask me what is it.
Speaker Change: Our underwriting teams are navigating an increasingly difficult market conditions.
Speaker Change: It's a good thing to have no cushion at the end of the year, it's a bit of a high wire Act, but.
Speaker Change: Regularly interacting with our producers in person to address their needs and by working with our claim and analytical team to incorporate the trends and feedback they're hearing to ensure we continue to maintain discipline and writing profitable business were available. This is what we do.
Speaker Change: That's how you can take best advantage of the opportunities provided to the business, but like why don't you talk I just want to give that overview.
Nick Westphal: But Nick, why don't you talk, I just want to give that overview and just say in a sense we meant to do this, but Nick, why don't you just talk about the kind of programs, things you are doing and you will be talking about over the next six to 12 months. Yeah, I mean I think the most important piece is that this is all part of normal business and has been for the last decade plus of running and operating. and any hospice provider. So yeah, from a year-to-year basis with, you know, five, six years ago, a regulatory change that dislocated the annualized rate impact compared to the individual market rate adjustments, you may see an acceleration or a reduction over a 12-year window based on the differential between that national wage rate and the local market components.
Speaker Change: And just say in a sense.
Speaker Change: We meant to do this.
Speaker Change: But Nick one should just talk about kind of the programs that things you are doing and we will be talking about over the next.
Speaker Change: And now I'll turn the call over to the moderator to open it up for questions.
Speaker Change: Okay.
Speaker Change: Thank you a question and answer session will begin at this time, if youre using a speakerphone. Please pick up the handset before pressing any numbers should you have a question. Please press star one on your telephone if you wish to withdraw your question. Please press star two.
Speaker Change: Six months to 12 months, yes, I mean, I think the most important pieces.
Speaker Change: That this is all part of normal normal business and has been for the last decade plus.
Speaker Change: Running and operating.
Speaker Change: Questions will be taken in the order received.
Speaker Change: VITAS and any hospice provider, so yes from a year to year basis with five six years ago, a regulatory change that dislocated the annualized rate impact compared to the individual market rate adjustments you may see an acceleration or a reduction over a 12 year.
Speaker Change: For your first question.
The first question comes from Bill Kirk harsh with Wolfe Research. Your line is open. Please go ahead.
Speaker Change: Thank you good morning, Greg following up on your comments around having managed the business through many business cycles, if uncertainty caused by tariff policy where to push the U S economy into recession could you give a little bit of insight into the ROI playbook, what would you adjust what stays the same where we are.
Speaker Change: Window based on the differential between that national wage rate and the local market components, but all it ultimately means at the end of the day is a mature hospice provider thats looking at it evaluating it and monitoring it on a month to month basis.
Nick Westphal: But all it ultimately means at the end of the day is, you know, a mature hospice provider that's looking at it, evaluating it, and monitoring it on a month-to-month basis, you know, has a fiduciary responsibility just to manage and think out about the future trend. So it's not anything that materially changes anything in the near term or the long term. And quite frankly, one of the reasons I think we've been talking about a little bit more over the last six to nine months is answering some of the questions when we have outsized top-line and bottom-line growth as to why our guidance, which was above historical average, didn't have marginal expansion necessarily inside of it.
Speaker Change: Or would you expect to see greater opportunities.
Speaker Change: Any color would be helpful.
Bill: Thanks Bill.
Speaker Change: <unk> has a fiduciary responsibility just to manage and think about think out about the future trend. So it's not anything that materially changes anything in the near term or the long term and quite frankly, one of the reasons I think we've been talking about a little bit more over the last six to nine months is answering some of the questions. When we have.
Speaker Change: Yeah, I mean, we've also manage your way through recessions in the past as well.
Speaker Change: The big advantage, we have obviously is a very diversified portfolio of products. So some are more impacted than others by recession.
Speaker Change: Do have a significant presence.
Percentage of our portfolio in the construction space. So obviously if construction.
Speaker Change: Outsized topline and bottom line growth as to why our guidance, which was above historical average didn't have marginal expansion necessarily inside of it and it really that's.
Speaker Change: <unk> significantly.
Speaker Change: It would put some pressure.
Speaker Change: On us, although I would say construction is a big.
Speaker Change: Segment for most specialty companies I'm not sure it would be out.
Speaker Change: The underlying factor and so while you have a huge queue of.
Nick Westphal: And it really, that's sort of the underlying factor. And so, you know, while you have a huge queue of active existing patients, and constantly admitting new patients, you know, with a median length of stay of 16 days, there's a long tail to all these things, and I think we just try to be more proactive of talking about those different factors, all of which should have, you know, minimal to no P&L impact, you know, in the near term, as you can see from 25 guidance, or in the mid and long term. It's just a function of the industry from a rule that got put in place when the benefit was enacted in 1983, when almost every patient was a cancer patient, with a very predictable prognostication and outlook.
Speaker Change: Outsized pressure on us, but certainly there would be pressure on exposure basis because.
Speaker Change: Active existing patients and constantly and many new patients with a median length of stay of 16 days, there's a long tail to all these things and I think we've just tried to be more proactive.
Speaker Change: Sales and revenues would be going down of our underlying insurers, which will drive prices down.
Speaker Change: Our premiums down anyway.
Speaker Change: Talking about those different factors all of which should have minimal to no P&L impact and.
Speaker Change: So you.
Speaker Change: But that but also decreased activity also slows.
Speaker Change: In the near term as you can see from 25 guidance or in the mid and long term. It's just it's a function of the industry from a rule that got put in place when the benefit was enacted in the 1983.
James: James as well so.
James: From a profitability standpoint, I don't know manage your way through these before I expect we will manage our way through that again.
Speaker Change: But certainly that would create pressure on exposures, it's not limited to the construction of the on the auto side as well transportation side things like that so.
Speaker Change: Almost every patient was a cancer patient with a very predictable prognostication that outlook.
Speaker Change: And the only thing this is Mike the only thing I would add is.
Speaker Change: The insurance industry insurers the economy, so the way the economy goes away.
Mike Witzman: Ben, the only thing this is Mike, the only thing I would add is, as sort of as Kevin mentioned, we, we knew that the the growth path that 23 and 24 looked like was probably higher than what was sustainable for the midterm and long term only because of the Medicare cap. So I think that if you're looking, you know, 26 and beyond the, the Operating metrics that we're showing in the first quarter and have sort of guided to for twenty-five are probably the more sustainable growth trajectory versus what we saw in twenty-three and twenty-four. Again, only because of the Medicare cap.
Kevin Mcnamara: Sort of as Kevin mentioned.
Speaker Change: We knew that the growth path.
Speaker Change: We go I guess, the offsetting that is yes.
Speaker Change: <unk> three and 'twenty four it looked like it was probably higher than what was sustainable for the midterm and long term only because of the Medicare cap.
Speaker Change: The end result.
Speaker Change: I guess the uncertainty that's been created today by tariff policy.
Speaker Change: So I think that if youre looking 26 and beyond.
Speaker Change: It would increase.
Speaker Change: Building more at home investing more at home in America.
Speaker Change: The.
Speaker Change: Operating metrics that we're showing in the first quarter and I've sort of guided to for 25 years is probably the more.
Speaker Change: We are exclusively in the U S. We would also be.
Oh proportions I guess.
Speaker Change: Sustainable growth trajectory versus what we saw in 'twenty three 'twenty four again, only because of the Medicare cap.
Speaker Change: The benefactor of that as well so.
Speaker Change:
Speaker Change: Honestly more building in the U S would create more opportunity for us so.
Speaker Change: Great that makes perfect sense. Thank you for that for that color.
Speaker Change: That's pretty much what I would have to offer there.
Ben Hendricks: Great. That makes perfect sense. Thank you for that color.
Speaker Change: I guess, Mike Dean with you for a second just wondering Derrick we could get a little bit more color any details you can offer on cash flow dynamics, particularly our working capital looks like.
Mike Witzman: And I guess, Mike, staying with you for a second, I just wondered, Derek, if we could get a little bit more color, any details you can offer on cash flow dynamics, particularly working capitals, like we had a step up in AR. I just wanted to get your thoughts there. Sure, there's there's two things that really affected, you know, cash flow and working capital at the end of the first quarter 25.
Speaker Change: And that.
Speaker Change: <unk> of the impact of tariffs on loss cost inflation trends.
Speaker Change: Overall net.
And I just wanted to get your thoughts there. Thanks.
Speaker Change: But.
Speaker Change: Usually that's in place.
Speaker Change: Sure there is two things that really affected.
Speaker Change: And during the recession drive loss costs inflation that probably a help to us it would probably offset.
Speaker Change: Cash flow of working capital at the end of the first quarter 'twenty. Five first one is Nick can talk in great deal detail about it if you want but we disclosed in the past we had.
Speaker Change: Some of the inflationary things that are going on right now however.
Mike Witzman: First one is, and Nick can talk in great deal detail about it if you want, but we disclosed in the past we had a Strange case with the OAS where they did an audit of a very select few patients, extrapolated it across some crazy three-year window and said that we needed to refund $48 million. We had refunded the $48 million, I think, two years ago. We found out in the first quarter of this year, we were getting it all back. Plus, except for $8. Yes, except for $8 that we had to pay. But otherwise, we were getting it all back.
Speaker Change: From a legal system abuse standpoint, that's a little more isolated from materials and labor inflation, so that needs to be addressed in the different different ways to move toward reform as you've seen in Florida. Most recently saw in Georgia, although the impact of them.
Speaker Change: Strange case with the OAS where they.
Speaker Change: And did an audit of a very select few patients extrapolated across some crazy.
Speaker Change: Three year window, and said that we needed to refund $48 million.
Speaker Change: I felt yet.
Speaker Change: We had refunded the $48 million I think two years ago we.
Speaker Change: Seeing I think in Louisiana. They are trying to do that as well I think that that is what.
Speaker Change: We found out at the in the first quarter. This year, we were getting it all back that accept.
Speaker Change: We'll help most.
Speaker Change: Newt.
Speaker Change: The inflationary pressures on casualty business.
Speaker Change: Yes.
Speaker Change: For $8 that we had to pay but otherwise we're getting it all back so over the last two years that $48 million has been sitting as a long term receivable.
Speaker Change: That's really helpful. Thank you and then separately John following up on your commentary around seeing MGA is willing to more aggressively underwrite business had lower rates with broader coverages.
Mike Witzman: So over the last two years, that $48 million has been sitting as a long-term receivable because we actually got the cash back, I believe, on April 1st. It got moved to a short-term receivable in the first quarter. And so receivables are $48 million higher because of that. The other thing is always that affects our cash flow is the timing of the PIP. And so we got a PIP three days into the quarter this year, or into the second quarter. So the PIP payment that we got at the end of the first quarter in 24 didn't come to the beginning of the second quarter in 25.
Speaker Change: We actually got the cash back I believe on April <unk>.
Speaker Change: It got moved to a short term receivable in the first quarter and so receivables are $48 million higher because of that the other thing is always that affects our cash flow is the timing of the Pip and so we got a pip.
Speaker Change: Are you viewing this as a bit of a harbinger of disciplined market behavior that could lead to more widespread challenges for the industry down the road.
Speaker Change: Ultimately something that could potentially present, some more opportunities for.
Speaker Change: Three days into the quarter this year.
Speaker Change: For your business.
Speaker Change: Into the second quarter, so the Pip payment that we got at the end of the first quarter and 24 didn't come to the beginning of the second quarter, and 25 and $57 million and so those are the two things that are affecting both the receivable balance as well as the cash flow during the quarter, but we have the cash app.
Speaker Change: Yeah. So bill we're very used to <unk> in our space, we deal with them every single year I think it's more here in a moment property because they are affecting the market. So aggressively and it was such a great market that was going on so they have them. So definitely after the business is really.
Mike Witzman: And that's $57 million. And so those are the two things that are affecting both the receivable balance as well as the cash flow during the quarter. But we have the cash now. We have the cash now. And neither of those are any indication of cash flow collection problems or anything like that. It's just timing. Great, thank you very much guys.
Speaker Change: Putting a dent in what's available there, but we do experience MGA competition on the gallium property site on a regular basis every year, our business model and as you know, we're a very consistent market right.
Speaker Change: We have the cash now and neither of those those are.
Speaker Change: Any indication of cash flow collection problems or anything like that is just timing.
Speaker Change: Long financing so we're there for our producers and our insurers over time, they know what we offer them to stay in front of them, we have a pretty consistent risk appetite, we do treat.
Speaker Change: Great. Thank you very much guys.
Speaker Change: Our next question comes from Rakesh with Bloomberg.
Speaker Change: Get over time, but because of our results, we're able to stay consistent and not make drastic.
R. Prakash: Our next question comes from R. Prakash with Bloomberg.
Speaker Change: Drastic moves from a pricing or in terms of condition standpoint. So what happens is an MGA comes in they start taking our business.
Speaker Change: Okay.
Bloomberg Your line may be on mute.
Speaker Change: They tend to blow up overtime and casualty for a longer operating sometimes you see that a little faster and so that after they go off the producers ends up shifting that business back to us because they know we're still here and that's why sometimes our top line is not as consistent.
Speaker Change: I'm showing no further questions in queue at this time I'd like to turn the call back to Kevin Mcnamara for closing remarks.
Unknown Executive: I'm showing no further questions in queue at this time.
Kevin Mcnamara: I'd like to turn the call back to Kevin McNamara. Thank you. Thank you for your attention.
Speaker Change: Thank you.
Speaker Change: And does.
Kevin Mcnamara: Thank you for your attention I thought.
Speaker Change: It can actually be reduced in some market conditions, but again, we're focused on the bottom line and the consistency and being there for our producers and insurers and so that's kind of how the macro cycle plays out for us based on our business model.
Kevin Mcnamara: I want to congratulate both our operating units for.
Kevin Mcnamara: I thought I want to congratulate both our operating units for exceeding our internal projections from which we provided guidance. We maintain that guidance and Again, looking at the stock price, it seems to be a bit of a dislocation in the market for our stock for some reason, but in any event, I want to thank everyone for their attention and we'll renew these discussions three months hence. Thank you.
Kevin Mcnamara: Exceeding our.
Kevin Mcnamara: Internal projections from which we provided guidance.
Kevin Mcnamara: We maintain that guidance and.
Speaker Change: I guess I would just add to that.
Kevin Mcnamara: Again looking at the stock price it seems to be sort of a dislocation in the market for our stock for some reason, but in any event I want to thank everyone for their attention and we will.
Speaker Change: Beyond <unk>, while you can see some unrated carriers.
Speaker Change: That has come back into the market, particularly.
Speaker Change: Particularly in Florida.
Speaker Change: You seem willing to come back much more aggressively.
Kevin Mcnamara: Renew these discussions.
Speaker Change: I'll say as aggressively as they were before.
Kevin Mcnamara: Three months, hence thank you.
Kevin Mcnamara: This concludes today's conference call. Thank you for participating you may now disconnect.
Speaker Change: As such.
Speaker Change: Someone's sitting a little bit removed from from this was getting the reports on the ground I mean, theres a bit disheartening, how quickly the discontent rises in the insurance marketplace.
Unknown Executive: This concludes today's conference call. Thank you for participating. You may now disconnect.
Speaker Change: The market full of people that seem to be too smart for their own good.
Speaker Change: And many of the same people that created the contraction and the loss capacity.
Speaker Change: Drew from the market.
Speaker Change: Because they lost their capacity from the reinsurers just a couple of years ago.
Speaker Change: They also were screening of the Sky's going fall in Milton you bought in openings is going to hit possibly Tampa last year.
Speaker Change: And that just happens to be the same market that's doing what I would say some things right now so.
Speaker Change: The lack of discipline is starting for those companies that are a little more discipline I would say.
Speaker Change: That's very helpful. Thank you so much for taking my questions.
Speaker Change: Thank you Bill.
Speaker Change: The next question comes from Michael Phillips from Oppenheimer <unk> Co. Please go ahead. Your line is open.
Speaker Change: Thank you good morning, you've talked to.
Speaker Change: We mentioned a little bit this quarter and certainly last quarter you expanded on their personal umbrella auto book.
Speaker Change: Frequency flat severity up cautious view on that can you just kind of maybe hit that again, if I say frequency is still down we've heard that before from others, but.
Speaker Change: Can you just remind us if that's still the case and what is severity. It looked like in your personal umbrella book.
Speaker Change: Well, if I look at first umbrella, we've been experiencing severity for a few years to increase a very I'll say for three years now.
Speaker Change: And it is not subsiding I think from our standpoint, we are trying to address those in various ways. One is the obvious which is right.
Speaker Change: And we continue to regularly go back to each state with the final product. So you have to go to each state and a rate increase we worked through that process on at least an annual basis, but if we can if we need it.
Speaker Change: And we can we go in and try to get it even within a year and that's what we're in the process of doing again, we got.
Speaker Change: Our annual filing Mr.
Speaker Change: Been approved in most states are effective mid year.
Speaker Change: And so we start with rates. We also look at trends within what claims are again, what's driving the claims.
Speaker Change: And that's why we've made some other changes.
Speaker Change: Currency increase in attachments, we see certain venues as being more problematic and so we're working with our producer partners.
Speaker Change: And as much new business in that venue.
Speaker Change: Let me more is the quality of the underlying insurers do they have prior accident or other issues or larger exposures that we're not as comfortable with.
Niall: Going down.
Speaker Change: Ensuring those new business opportunities in those particular venue so that feedback loop between claim our analytical folks and underwriting is critical in informing our marketing teams on where we want to target Roes and marijuana pull back on so we continue to do that.
Speaker Change: From a claims standpoint, we've ramped up our staffing and if anybody knows any excellent personal umbrella claim examiner to begin specialized byproduct, though we'd be happy to talk with them.
Speaker Change: <unk> hired a few folks and our ramping them up to train them and how we do claim handling which is to thoroughly investigate.
Speaker Change: The claims and make sure that we are paying.
Speaker Change: Paying what we owe but are also addressing the shenanigans that the plaintiffs attorneys pushed.
Speaker Change: Put forth in the various plays that are.
Speaker Change: Are presented to us.
Speaker Change: So it's a number of factors that we work on with personal umbrella to stay ahead of it.
Speaker Change: Have a regular conversations almost daily between those different groups to make sure that we're addressing things that come up as they do.
Speaker Change: So I guess I would just add just to be clear that those conversations are going on between the underwriters that manage that business and find people that are dedicated to that business. I mean, obviously, we participate from time to time as we get reports out on what's going on but we're not driving that behavior that would be driven from the ground up with people on these <unk>.
Speaker Change: They get paid based on the underlying profit delivered in these products. So.
Speaker Change: They have a keen interest in trying to make sure that this product remains profitable. It's been one we've been in for a long time.
Speaker Change: And it's one that's been a very profitable product for us but.
Speaker Change: We have seen an increase in locked up inflation in them. So.
Speaker Change: I do think I would just expand upon Jim's point on the attachment points.
Speaker Change: They come with the higher this has reported usually theres a credit associated with the past, but in a side benefit of having a higher attachment point as you have more skin in the game from your underlying claim examiners.
Speaker Change: We're saying that about personal umbrella for us obviously, that's a different company because ours is standalone personal but also this is having.
Speaker Change: Other people that are right in the underlying coverages, they're cleaning down we're selling a lot more skin in the game with regards to the outcomes when they have a bigger limits exposed.
Speaker Change: For the smaller limited exposure. So we think there are some additional benefits to that.
Aaron: And I also would note on the new businesses, we have grown a lot over the last several years in this business.
Aaron: And we see great opportunity, we've leaned into this opportunity.
Aaron: We also know that in this business, particularly there is a call it a new business penalty associated with living in.
Aaron: We know that our new business has a higher loss ratio than our renewable business. So if we were to slow new business growth.
Aaron: We will probably get a benefit from that over time.
Aaron: Accounts season.
Aaron: Insurance fees.
Aaron: I might add.
Aaron: One more thing.
Aaron: With that I think if we talk about the cautious approach.