As previously announced, we completed our $85 million acquisition of certain assets from Covenant Health and Community Services on April 17. Our teams are currently hard at work in integrating the operations of Covenant. I am pleased to say that approximately 680 patients were reevaluated for eligibility and chose to transfer on the VITAS service as a result of this transaction. We have also successfully retained practically all of Covenant’s licensed workforce who were identified during diligence as part of the transition. The Covenant transaction could not have been accomplished without the unwavering commitment, dedication and focus of each of our existing and new VITAS team members what they showed during fulfilling our mission in every community we serve.
This transaction illustrates what is possible when two longstanding mission-focused organizations collaborate irrespective of tax status to ensure we collectively serve the evolving needs of our communities. This opportunity was born out of the relationships and mutual respect amongst our organizations. I would like to thank the Board of Directors and executive team of Covenant for ensuring a continued focus and cultural alignment that allowed for the integration to proceed seamlessly. I believe these types of opportunities should continue as the hospice and palliative care industry carries on its 45-plus-year mission across the country of focusing on the patients and families and the communities we serve without allowing for items like tax status to impede progress.
To recap what our team has accomplished, we’ve now generated seven quarters of sequential net growth in licensed healthcare workers and six quarters of sequential growth in ADC. We now have a sustainable and predictable approach to continue methodically building our clinical capacity and patient base that has taken us past our pre-pandemic levels and forward into 2024 and beyond. We have also demonstrated the ability and interest in partnering with other providers through acquisitions to ensure communities continue to receive the best possible care. With that I’d like to turn the call back over to Kevin.
Kevin McNamara: Thank you, Nick. I will now open this teleconference to questions.
Operator: Thank you. At this time, we will conduct a question-and-answer session. [Operator Instructions] Your first call comes from the line of Ben Hendrix of RBC Capital Markets. Ben, please go ahead.
Michael Murray: Hi. This is Michael Murray on for Ben. Roto-Rooter call volume has declined in the high-single-digit, low-double-digit range for the past four quarters. Obviously, you grew a lot during the pandemic and you’re going up against tougher comps. But, how much of the weaker call volume is attributable to the weakening consumer? And how should we think about this for the rest of 2024?
Kevin McNamara: Well, let me just jump in there. Let me, misery loves company. Let me say that what we’re seeing through basically everyone who we talk to in the sector, we see softness in the sector, which is as you say could be pandemic comparisons could be — people had a lot of work during the pandemic which drained the swamp as it were. I don’t know. I mean — but I’ll just say that the sector has weakness generally speaking. We don’t want to go into it too much. But because of this weakness, a key marketer, Google made some changes to their service offering. That is when we call up, let’s say, plumbing Cincinnati. They made some significant changes, which I will bore you with in what shows up on the phone, had the effect of spreading the meager number of calls across a much broader base that had an impact almost immediately late last year in our call volume and we’re dealing with that.
In this quarter we had desperate times meant desperate measures. We did a lot of paid search, which is now relegated to the third level, which is first, there’s a section that we call the LSA. Then we have a map that we have paid search, we dramatically increased aggressive bidding in the paid search, which we said temporarily. We wanted to test the limits of the benefits of that. And we — they weren’t there. And so, we pulled back that extra advertising as it were which had that — which we referred to as a temporary impact on the Roto-Rooter margins. But we’re fighting a new battle. It’s a little bit like when they change the — when people basically went to the Internet instead of going to the Yellow Pages. We had a dominant position in the Yellow Pages, and that was gone, because people no longer went through the Yellow Pages.
And with the Internet marketing, it took us a while but we’ve developed a dominant position on the Internet. And again, with changes in various algorithms, it’s a new battle, which I’m of confident Roto-Rooter will be the winner again. But it’s — if you see from any of our verbiage, I mean it’s a little bit outside of our hands. Our operational metrics at Roto-Rooter have never been better. I mean our — we’ve got our price increase. Our manpower is good. Our close rates are good. We’re just — we’ve got to get the phone to ring. Now that’s all on the downside. The good side is that the fact that there’s difficulty, generally, we’ve never had a better environment for buying in the kind of the relatively small Roto-Rooter franchises that are always kind of on our list to buy.
They’re suddenly becoming available because of the softness. So we’ll try and take advantage of it, and then do the blocking and tackling that will load us up to the top of the — on the Internet appearance network. But it’s a slog. I think that when you look at what we’re doing, I mean some of the negatives in Roto-Rooter for the quarter I think were temporary. And we’re taking actions that I think are much more likely to bear fruit. Mike anything to add on that?
Mike Witzeman: I think it’s hard for us to put a number — a specific number on what we think the consumer sentiment, consumer demand macroeconomic environment is causing. But as Kevin said we have a lot of indications that we are certainly not the only home residential service provider that’s struggling not only from people outside of the Roto-Rooter network, but also we know our franchises are struggling as Kevin mentioned. We know that our contractors are struggling. The other thing I would tell you is we see this struggle across all five of our regions. It’s not sort of at one region or centered around one location in the country all of which is to say we do definitely think that there are still consumer headwinds that we’re facing that are underlying some of the softness in demand.
