Guardian Pharmacy Services, Inc. Q3 FY2025 earnings call

Key Points - Fred Burke noted the quarter was a strong one with double-digit growth in revenue, resident count, and adjusted EBITDA. The company marked its first full year as a publicly traded company and has delivered on its promises. - Addressed policy issues like the Inflation Reduction Act by working with peers and payers, aiming to offset EBITDA headwinds. - Highlighted the role of pharmacy entrepreneurs with clinical expertise and entrepreneurial drive, who are key to the model. - The company is the clear leader in serving assisted living facilities with 13% national market share and strong local market presence. - Expect to benefit from demographic tailwinds and continue growth through new facility partnerships, higher resident adoption, greenfield expansions, and targeted acquisitions like those in Oregon and Washington, which are tracking as expected.

Revenue grew 20% to $377 million. Adjusted EBITDA grew 19% to $27 million. Total resident count ended the quarter at 203,766, up 13% versus a year ago. Gross profit increased to $74.7 million with a 19.8% margin. Adjusted SG&A was 13.7% as a percentage of revenue. Adjusted EBITDA margins held steady at 7.2%, down roughly 10 basis points year-over-year due to the dilutive impact of recent acquisitions and greenfield startups. Revenue contribution from acquisitions included a full quarter of revenue from Washington and 2 months of contribution from Oregon.

Guidance - Raised 2025 revenue guidance to $1.43 billion to $1.45 billion, up from prior range of $1.39 billion to $1.41 billion. - Raised adjusted EBITDA guidance to $104 million to $106 million, up from previous $100 million to $102 million range. - Q4 SG&A expected to trend slightly lower as percent of sales due to seasonal revenue lift from vaccine activity. - Stock-based compensation expected to decline meaningfully in Q4 to ~$1.1 million. - Reported income tax expense expected to be lower in future quarters.

Risks - Unintended consequences of the Inflation Reduction Act remain an issue for the industry. - Policy uncertainties and the need to thoughtfully navigate them while controlling what the company can influence.

Q: About the fourth quarter vaccine program comparison to last year?

A: Steady as we go. Started the clinic season with a stronger September this year, some total perhaps pulled forward into Q3.

Q: On resident count and acquisitions?

A: Acquisitions completed recently are included in the Q3 number. Expect steady in Q4 on resident count as some loved ones are reluctant to move residents in November/December.

Q: On Medicare Part D negotiations?

A: Sensitive discussions covered by NDAs, taking shape and growing confidence to offset headwind.

Q: On margin impact from acquisitions?

A: 4- to 5-year locations performing at or above consolidated adjusted EBITDA margin, 2- to 3-year locations tracking toward that level. Recent acquisitions still dilutive, without them margins closer to 8%.

Q: On 4Q margin dilutive impact?

A: Q4 will tick up slightly due to vaccine seasonality.

Q: On mature pharmacy margin ceiling?

A: Hoping to optimize acquisitions to enhance overall margin, leverage platform to improve margins.

Q: On Part D plan changes and drug consumption?

A: Seeing steady growth in acuity, but not noticing big shifts in Part D deductible impact yet; may take more than 1 year to see impact.