Chemed(US:CHE)2025-04-24 19:57Financial Data and Key Metrics Changes - VITAS net revenue was $407.4 million in Q1 2025, an increase of 15.1% compared to the prior year period, driven by an 11.9% increase in days of care and a 3.2% increase in Medicare reimbursement rates [18][19] - Adjusted EBITDA for VITAS, excluding Medicare cap, totaled $70.3 million, reflecting a 15.9% increase, with an adjusted EBITDA margin of 17.2%, up 13 basis points from the prior year [20][28] - Roto Rooter generated total revenue growth of 1.8% in Q1 2025, with gross branch revenue increasing by 3.1% [13][21] Business Line Data and Key Metrics Changes - VITAS admissions totaled 18,139, a 7.3% improvement compared to Q1 2024, with an average daily census of 22,244, up 13.1% year-over-year [8][30] - Roto Rooter branch residential revenue increased by 1.7% to $167.2 million, while branch commercial revenue rose by 7.3% to $57.7 million [22][23] - Revenue from independent contractors declined by 6.4% in Q1 2025 compared to the same period in 2024 [24] Market Data and Key Metrics Changes - Hospital-based admissions represented 49% of overall admissions for VITAS, the highest level since the pandemic, with a 12% increase compared to Q1 2024 [36] - The average length of stay for VITAS patients increased to 118.7 days, compared to 103.9 days in Q1 2024 [32] Company Strategy and Development Direction - VITAS is focusing on increasing hospital-based admissions to manage Medicare cap exposure, which is expected to provide a cushion for revenue growth [10][34] - Roto Rooter is refining its excavation pricing model to balance revenue growth and EBITDA margin, responding to feedback from its commercial sales force [26][28] - The company is expanding its operating scope in Florida, with new locations in Pasco and Marion counties expected to drive future growth [16][37] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in VITAS's ability to maintain above-average growth through organic means and accretive acquisitions in 2025 and beyond [39] - The company acknowledged that the growth path seen in 2023 and 2024 may not be sustainable due to Medicare cap constraints, suggesting a more moderate growth trajectory moving forward [53] Other Important Information - The Covington Health acquisition positively impacted revenue, adjusted net income, and EBITDA by 3 to 4% [20] - Cash flow dynamics were affected by the timing of accounts receivable, particularly related to a $48 million refund and a $57 million PIP payment [56][58] Q&A Session Summary Question: Long-term cap management strategy - Management discussed the importance of managing Medicare cap cushion and the impact of hospital admissions on revenue and length of stay [42][44] Question: Cash flow dynamics and working capital - Management clarified that the increase in accounts receivable was due to timing issues rather than cash flow collection problems [54][60]