Financial Data and Key Metrics Changes - In Q3 2025, the company's revenue was $820.3 million, an increase of 1.8% from the prior year quarter, with organic revenue growth at 5.1% [5][16] - Adjusted EBITDA for Q3 2025 was $170.1 million, up 3.5% from the prior year quarter, with an adjusted EBITDA margin of 20.7%, reflecting a 30 basis points increase from Q3 2024 [6][19] - The company reduced its debt by $50 million in Q3 2025, totaling a year-to-date debt reduction of $225 million, with a net leverage ratio of 2.68 times [6][20] Business Line Data and Key Metrics Changes - The sleep health segment net revenue increased by 5.7% year-over-year to $354.8 million, with sleep health starts up 6.8% [17] - The respiratory health segment net revenue rose by 7.8% to $177.0 million, despite lower-than-expected oxygen new starts [18] - The diabetes health segment net revenue increased by 6.4% to $150.1 million, marking the first quarter of revenue growth since Q1 2024 [18] - The wellness at home segment saw a decline of 16.0% in net revenue to $138.4 million, impacted by the divestiture of certain non-core assets [18] Market Data and Key Metrics Changes - The company operates 640 locations across 47 states and enters nearly 40,000 homes daily, indicating a significant operational footprint [7] - The company is focusing on enhancing patient service and operational efficiency through a standardized operating model and technology solutions [9][10] Company Strategy and Development Direction - The company is strategically positioned to leverage its technology infrastructure and operational capacity to enhance patient care and reduce costs through capitated agreements [12][13] - The focus on operational discipline and service excellence is seen as a key differentiator in a competitive market, especially with upcoming changes in CMS's competitive bidding program [14][15] - The company aims to replicate the success of its existing capitated arrangements by expanding partnerships with integrated delivery networks [12][28] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's ability to manage the ramp-up of new capitated contracts, emphasizing the importance of having the necessary infrastructure in place before patient onboarding [26][41] - The company anticipates revenue growth of 6-8% for full-year 2026, driven by core product growth and new capitated contracts [22][59] - Management highlighted the importance of service excellence in maintaining loyalty among hospitals and physicians, which is critical for future growth [13][36] Other Important Information - The company is maintaining its full-year 2025 revenue and adjusted EBITDA guidance, expecting to come in modestly above the midpoint of the revenue range [21][22] - Free cash flow guidance remains at $170-$190 million, despite potential delays in cash collections due to the government shutdown [22] Q&A Session Summary Question: Insights on the large capitated deal and growth expectations - Management clarified that they are being conservative with growth expectations for the ramp-up of the new capitated contract, ensuring all infrastructure is ready before patient onboarding [25][26] Question: Impact of competitor announcements on business - Management noted that the competitor's exclusive agreement does not change their trend lines or expectations, emphasizing their commitment to service excellence [27][31] Question: Market dynamics regarding capitated agreements - Management discussed the growing interest from payers and providers in capitated agreements, highlighting the benefits of strong partnerships for patient care [34][36] Question: Details on investments related to new contracts - Management outlined the significant investments in infrastructure, including recruiting and training staff, procuring vehicles, and securing new locations [38][41] Question: Updates on diabetes segment performance - Management reported improved retention rates and a focus on executing better in the diabetes segment, with expectations for stable growth moving forward [46][50] Question: Revenue growth expectations by segment for 2026 - Management provided insights into expected growth rates across different segments, indicating a balanced approach to organic growth and new capitated arrangements [56][59]

Financial Data and Key Metrics Changes - The reported operating ratio for Q1 2025 was 60.7%, flat compared to the previous year despite a 90 basis point headwind from fuel and leap year effects [5][16] - Earnings per share for Q1 2025 was $2.70, reflecting a $0.19 or 7% headwind from fuel and leap year [6][16] - Net income for Q1 2025 was $1.6 billion, essentially flat versus last year, with operating income also flat despite a 7% volume growth [7][16] Business Line Data and Key Metrics Changes - Freight revenue grew 1% year-over-year to $5.7 billion, with a 4% increase when excluding fuel surcharge impacts [9][10] - Bulk segment revenue was up 1% due to a 2% increase in volume, while industrial revenue decreased by 1% on a 1% decrease in volume [24][26] - Premium revenue increased by 5% on a 13% increase in volume, reflecting strong customer demand [27] Market Data and Key Metrics Changes - AAR car loadings were up just over 7% compared to last year, indicating a solid start to Q2 2025 [29] - Challenges are anticipated in the food and beverage sector, particularly in the U.S. beer market, while coal volumes are expected to remain strong [29] - Grain exports into Mexico are expected to remain robust, supported by business development efforts [30] Company Strategy and Development Direction - The company aims to maintain its three-year targets set during the Investor Day, focusing on EPS growth in the high single to low double-digit range [20][21] - Continued emphasis on service and operational excellence is a key part of the strategy, with a focus on maximizing pricing and efficiency [8][21] - The company is actively pursuing business development opportunities, including new customer acquisitions and expansions [35][36] Management's Comments on Operating Environment and Future Outlook - Management acknowledged the uncertainty in the marketplace but expressed confidence in the company's ability to adapt and perform [21][60] - The first quarter performance was viewed positively, with strong volumes and service metrics heading into Q2 [22][57] - Management remains committed to long-term guidance despite current market volatility and challenges [21][72] Other Important Information - Operating expenses for Q1 2025 were $3.7 billion, flat year-over-year, with productivity gains offsetting inflation and volume-related costs [13][16] - The company returned $2.5 billion to shareholders in Q1 2025 through dividends and share repurchases [19] - The adjusted debt to EBITDA ratio was 2.8 times at the end of the quarter, maintaining an A-rating from credit agencies [19] Q&A Session Summary Question: 2025 Guidance and Uncertainty - Management acknowledged the uncertainty in the market but reiterated confidence in achieving long-term targets, emphasizing the importance of operational efficiency [56][61] Question: Revenue Growth Assumptions - Management indicated that while the first quarter was flat, they are optimistic about achieving high single-digit earnings growth, contingent on volume and pricing strategies [68][72] Question: Pricing Strength and Sustainability - Management noted that the strong pricing in Q1 was a result of both inflation catch-up and improved service performance, with expectations for continued pricing strength [80][84] Question: Impact of Tariffs and Trade Policies - Management highlighted the need for clarity regarding tariffs and trade policies, emphasizing the importance of maintaining customer relationships and adapting to changing supply chain patterns [121][123] Question: Resource Management for Volatility - Management confirmed that they maintain a buffer of resources to manage volatility and ensure service delivery, utilizing technology for efficient decision-making [132][136]