Chemed(US:CHE)2022-02-25 21:32Financial Data and Key Metrics Changes - VITAS' net revenue for Q4 2021 was $316 million, a decline of 4.8% compared to the prior year, primarily due to a 4.2% decrease in days of care [22] - Roto-Rooter generated quarterly revenue of $225 million in Q4 2021, an increase of $23.8 million or 11.8% compared to the prior year [26] - VITAS' gross margin, excluding Medicare cap and pandemic-related costs, was 28.5%, a decline of 109 basis points from Q4 2020 [24] - Roto-Rooter's gross margin, excluding COVID impact, was 52.7%, a 77 basis point increase from Q4 2020 [29] Business Line Data and Key Metrics Changes - VITAS experienced a decline in average daily census by 4.2% year-over-year, with total admissions down 9.5% compared to Q4 2020 [36] - Roto-Rooter's residential revenue increased by 11.2% to $152 million, with growth across all service segments [26][27] - Roto-Rooter's commercial revenue totaled $53.9 million, an increase of 14.8% over the prior year [28] Market Data and Key Metrics Changes - The nursing home-based patient ratio in VITAS' average daily census stabilized at 15.6% in Q3 and Q4 2021, up from a low of 14.3% in Q1 2021 [14] - VITAS anticipates a slow improvement in senior housing admissions in the first half of 2022, with acceleration expected in the second half [14] Company Strategy and Development Direction - The company is focusing on hiring and retention initiatives to address labor shortages in the healthcare sector, particularly for VITAS [9][10] - Roto-Rooter plans to continue passing through price increases to maintain technician compensation and expand its workforce [16][62] - The company is open to potential acquisitions of well-positioned hospices due to the changing landscape and lower multiples in the market [50][82] Management's Comments on Operating Environment and Future Outlook - Management noted that the healthcare labor market remains challenging, with staffing shortages impacting VITAS' ability to respond to referrals [9][42] - The company expects inflationary pressures to continue affecting margins until reimbursement rates catch up, which is anticipated to occur with the October 2022 adjustments [11][73] - Management expressed confidence in the long-term growth of the hospice industry, expecting a return to pre-pandemic levels of admissions and revenue growth [88] Other Important Information - Chemed repurchased 495,529 shares for $246 million during the quarter, with approximately $202 million remaining under the share repurchase authorization [32] - The full-year 2022 earnings guidance for VITAS anticipates a revenue decline of 1.5% to 2.5% compared to 2021, while Roto-Rooter is expected to achieve revenue growth of 8% to 9.5% [33][34] Q&A Session Summary Question: Discussion on VITAS admission decline and labor shortages - Management clarified that the decline is not solely a demand issue but also due to healthcare system disruptions and staffing shortages [42][43] Question: Clarification on recruiting and retention metrics - Management stated they do not release specific metrics but emphasized improvements in recruiting performance compared to peers [45][52] Question: Impact of inflation on labor costs and guidance - Management acknowledged that inflationary pressures are built into their guidance, with expectations for continued investment in clinical staff [55][57] Question: Roto-Rooter pricing increases and demand - Management confirmed mid- to high single-digit price increases were implemented, with further increases anticipated throughout 2022 [62][64] Question: Expectations for senior housing referrals and median length of stay - Management expects normalization of senior housing referrals and median length of stay by the end of 2022 [101]