Chemed(CHE) - 2024 Q4 - Earnings Call Transcript

Financial Data and Key Metrics Changes - VITAS net revenue was $411 million in Q4 2024, an increase of 17.4% compared to the prior year period [21] - Roto-Rooter generated quarterly revenue of$ 229 million, a decrease of 2.9% year-over-year [13] - Adjusted EBITDA for VITAS was $93.2 million, an increase of 11.8% [23] - Adjusted EBITDA margin for VITAS was 22.5%, down 112 basis points from the prior year [23] Business Line Data and Key Metrics Changes - VITAS admissions totaled 16,427, a 3.5% increase from Q4 2023 [8] - Average daily census (ADC) for VITAS expanded to 22,179 patients, a 14.6% increase year-over-year [37] - Roto-Rooter residential revenue decreased by 2%, while commercial revenue increased by 0.4% [13] - Roto-Rooter adjusted EBITDA totaled$ 60.3 million, a decrease of 7.2% compared to the prior year [26] Market Data and Key Metrics Changes - VITAS experienced a geographically weighted average Medicare reimbursement rate increase of approximately 3.5% [21] - The average revenue per patient day for VITAS was $206.23, which is 244 basis points above the prior year [22] - Roto-Rooter's call volume was down 8% compared to the prior year quarter [14] Company Strategy and Development Direction - VITAS is focusing on hospital-based admissions to manage Medicare cap exposure and ensure sustainable growth [42][45] - Roto-Rooter is optimistic about its commercial business growth and aims to stop further deterioration in the residential sector [30] - The company plans to continue its strategy of acquiring new locations and integrating other providers to enhance patient care [45] Management's Comments on Operating Environment and Future Outlook - Management expressed cautious optimism regarding Roto-Rooter's turnaround despite challenging operating conditions [18] - VITAS management is confident in maintaining above-average historical growth through organic growth and acquisitions [45] - The company anticipates a slight moderation in growth rates due to Medicare cap management strategies [28] Other Important Information - The Covenant Health acquisition contributed$ 11 million to $12 million in revenue during Q4 2024 [25] - The company is not incorporating share repurchases into its guidance for 2025 [67] Q&A Session Summary Question: What gives confidence in Roto-Rooter's turnaround? - Management noted strong support for growth in Roto-Rooter, with December and January typically being strong months [51][52] Question: How does VITAS plan to capture market share? - VITAS is focusing on differentiated offerings and attracting high-quality clinicians to capture market share [61] Question: What is the outlook for share repurchases? - No share repurchases are built into the guidance, but the company intends to do some level of programmatic share repurchases [69] Question: What is causing margin pressure for VITAS? - The margin pressure is attributed to a shift towards hospital-based admissions and managing Medicare cap limitations [75] Question: Will the Medicare cap be a headwind beyond 2025? - Management indicated that the Medicare cap is part of normal operations and does not anticipate substantial changes [82]