Chemed(US:CHE)2022-07-28 18:03Financial Data and Key Metrics Changes - VITAS's net revenue was $298 million in Q2 2022, a decline of 4.5% compared to the prior year, primarily due to a 3.8% decline in days of care, partially offset by a 0.8% increase in Medicare reimbursement rates [14][15] - Roto-Rooter generated quarterly revenue of $233 million in Q2 2022, an increase of $13.2 million or 6% compared to the prior year [17] - Chemed's full-year 2022 earnings per diluted share is estimated to be in the range of $19.30 to $19.50, compared to previous guidance of $19.10 to $19.50 [25] Business Line Data and Key Metrics Changes - VITAS's average daily census was 17,315 patients, a decline of 3.8% over the prior year, with total admissions down 12.5% [27][28] - Roto-Rooter branch commercial revenue totaled $54.8 million, an increase of 7.5% over the prior year, with growth in various segments including plumbing and water restoration [17][18] - The average length of stay for VITAS patients increased to 103.7 days, compared to 94.5 days in Q2 2021 [30] Market Data and Key Metrics Changes - The nursing home-based patient ratio in VITAS's average daily census increased to 16.4% in Q2 2022, up from 15.6% in Q4 2021 [11] - Roto-Rooter is experiencing a challenge in increasing manpower, with technician manpower expanding by 4.3% compared to Q2 2021 [12] Company Strategy and Development Direction - VITAS has implemented a targeted hiring and retention bonus program to address the shortage of licensed healthcare professionals, with an estimated cost of $37 million [9] - Roto-Rooter aims to expand market share by leveraging brand awareness and customer service advantages [12] - The company is focusing on community access initiatives to improve hospice patient identification and care [41] Management's Comments on Operating Environment and Future Outlook - Management noted that the ongoing COVID-19 pandemic and economic uncertainties are impacting financial modeling and guidance [22] - There is optimism regarding the hiring and retention program's potential to improve staffing and operational capacity in the future [39] - Management expects continued growth in Roto-Rooter despite a more sustainable revenue outlook due to economic conditions [48] Other Important Information - Chemed entered into a five-year $550 million credit agreement, with approximately $387 million of undrawn borrowing capacity as of June 30, 2022 [19] - The company repurchased 100,000 shares for $49.9 million during the quarter, with $125 million remaining under the share repurchase authorization [20] Q&A Session Summary Question: What offsets should be considered for the guidance raise? - Management indicated that while revenues are strong, there has been some softness in Roto-Rooter revenue growth, leading to a more realistic outlook for the second half of the year [33] Question: How much of the labor improvement is due to volume changes? - Management acknowledged that the inability to grow manpower as anticipated has impacted margins, with a focus on recruitment and retention efforts [34][35] Question: What is the long-term outlook for the community access initiative? - Management believes that increased awareness of home care will positively impact hospice patient access in the long term [55] Question: How should Roto-Rooter's revenue outlook be viewed entering 2023? - Management expects continued growth and market share consolidation for Roto-Rooter, despite a softer revenue outlook due to economic conditions [48]