Chemed(US:CHE)2021-07-28 17:33Financial Data and Key Metrics Changes - VITAS' net revenue was $312 million in Q2 2021, a decline of 4.7% compared to the prior year period, primarily due to a 6.3% reduction in days of care, offset by a 1.8% increase in Medicare reimbursement rates [16][23] - Roto-Rooter generated revenue of $220 million in Q2 2021, an increase of $45.6 million or 26.1% over the prior year quarter [19] - Chemed repurchased 250,000 shares for approximately $122 million, with a remaining share repurchase authorization of about $312 million as of June 30, 2021 [22] Business Line Data and Key Metrics Changes - VITAS experienced a decline in average daily census by 6.3% to 17,995 patients, with total admissions at 16,840, slightly improving compared to Q2 2020 [27][29] - Roto-Rooter’s commercial revenue totaled $50.3 million, an increase of 31.8% year-over-year, with residential revenue reaching $149 million, up 23.7% [19][21] - Roto-Rooter’s adjusted EBITDA margin for 2021 is estimated to be between 28% and 29% [25] Market Data and Key Metrics Changes - Senior housing occupancy is beginning to recover, with expectations for steady improvement in hospice admissions in the second half of 2021 [14] - Hospital-generated admissions for VITAS have largely normalized to pre-pandemic levels, while referrals from senior housing remain disrupted [28] Company Strategy and Development Direction - Roto-Rooter is positioned for continued market share expansion by leveraging brand awareness and customer response capabilities [13] - VITAS is focusing on improving referral patterns from physician offices and other settings to enhance admissions [63] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the recovery trajectory, noting that admissions have exceeded discharges for the first time since the pandemic began [29][36] - The company anticipates that Roto-Rooter's residential demand will remain strong, with commercial demand expected to increase as consumer behavior normalizes [11][25] Other Important Information - The company updated its 2021 earnings guidance, projecting VITAS' revenue to decline approximately 4.5% compared to 2020, while Roto-Rooter is forecasted to achieve revenue growth of 15% to 15.5% [23][25] - Management highlighted the competitive labor market but noted that staffing is not currently impeding growth [40] Q&A Session Summary Question: How would you characterize the momentum across the months of the quarter? - Management noted that there was strengthening in the admit versus discharge differential throughout the quarter, with improvements observed in May and June [33][36] Question: What is your strategy regarding labor availability? - The company is focused on retaining high-quality employees and actively recruiting in specific markets, despite the competitive labor environment [38][40] Question: How would the business react to the recent surge in COVID-19 variants? - Management expressed confidence in their preparedness due to higher vaccination rates among staff and sufficient PPE, allowing them to navigate potential challenges effectively [41][42] Question: Can you provide insights on the commercial side of Roto-Rooter? - Management confirmed that commercial revenue is returning close to pre-pandemic levels, with strong momentum continuing into July [46][48] Question: What is driving the reduction in VITAS margin guidance? - The reduction is attributed to increased costs related to salaries, wages, and medical supplies, with management taking targeted actions to manage these costs [52][54] Question: What are the expectations for VITAS outside of senior housing referrals? - VITAS is seeing growth in hospital business and is focusing on physician office settings to enhance referrals [64] Question: Any updates on the hospice carve-in demonstration with MA? - The company is not participating in the first year of the demonstration but continues to engage with CMMI regarding design concerns [66][70]