Chemed(CHE)2024-10-30 19:56Financial Data and Key Metrics Changes - VITAS net revenue was 73.1 million, reflecting a 33.1% increase, with an adjusted EBITDA margin of 18.6%, up 212 basis points from the prior year [22] - Roto-Rooter generated quarterly revenue of 56.4 million, a decrease of 15.8% compared to the prior year, with an adjusted EBITDA margin of 26.3%, down 275 basis points [28] Business Line Data and Key Metrics Changes - VITAS admissions totaled 16,775, a 6.3% improvement from the same period in 2023, with average daily census (ADC) expanding to 21,785, an increase of 15.5% [8][33] - Roto-Rooter's call volume was down 11.7% year-over-year, impacting overall revenue performance [12][55] - Roto-Rooter experienced a sequential improvement in commercial revenue, which increased by 5% over Q2 2024 [16][26] Market Data and Key Metrics Changes - The acquisition of Covenant Health contributed 11 million in revenue for VITAS in Q3 2024, translating to net income of approximately 2 million [23] - The impact of Hurricane Helene on admissions was estimated to be a reduction of 60 to 100 patients, with expectations of a more significant impact in Q4 due to additional hurricanes [10][11] Company Strategy and Development Direction - VITAS is focused on sustainable expansion of its workforce and patient capacity, marking nine consecutive quarters of growth in clinical workforce capacity [31][40] - Roto-Rooter is implementing a new marketing strategy to improve residential and commercial revenue, with a focus on increasing call volume as a key metric for success [49][55] - The company remains optimistic about VITAS's growth potential, expecting above-average historical growth rates in the coming years [41][74] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in VITAS's ability to maintain strong admission and census growth, despite challenges faced by Roto-Rooter [17][80] - The company anticipates continued pressure on Roto-Rooter's residential side, with hopes for improvement in commercial revenue [72][74] - For 2025, VITAS expects high single to low double-digit growth in days of care, while Roto-Rooter is projected to have flattish revenue with no significant margin expansion [74][76] Other Important Information - The company has reduced its full-year 2024 earnings per diluted share guidance for Roto-Rooter, estimating a range of 23.15, reflecting a 13.3% to 14% increase from 2023 [29][30] - The integration of Covenant Health was completed smoothly, both operationally and culturally, enhancing VITAS's service capabilities [36] Q&A Session Summary Question: Long-term growth expectations for census and regional considerations - Management indicated strong occupancy levels and demand across markets, with expectations for growth above pre-pandemic levels [44][48] Question: Hurdle rates or benchmarks for the new marketing strategy at Roto-Rooter - Management emphasized that call count will be the primary metric for success, with current call volume down significantly [55] Question: Details on the new vendor managing online searches for Roto-Rooter - The new agency is expected to bring fresh ideas and strategies to improve online visibility and call volume [58][60] Question: Guidance for Roto-Rooter in Q4 and overall revenue expectations - Management expects similar revenue numbers for Roto-Rooter in Q4 compared to Q3, with no significant improvement anticipated [64] Question: High-level comments on growth for Roto-Rooter and VITAS in 2025 - Management is cautious about Roto-Rooter's residential side but optimistic about VITAS's growth potential, expecting above-average growth rates [72][74]