Chemed (CHE) 2025 Conference Transcript

Summary of Kemet's Conference Call Company Overview - Kemet is one of the largest hospice providers, with a significant focus on its VITAS business segment [2][41]. Key Industry Insights - The hospice industry is experiencing growth, but there are concerns regarding the Medicare cap, which has been in place since 1983. This cap is seen as a potential limitation on growth due to its impact on patient admissions and revenue [3][5][6]. - The company has been proactive in managing the Medicare cap, utilizing analytical capabilities to forecast and strategize around it [5][6][30]. Financial Performance and Projections - VITAS has experienced a 15% growth in average daily census (ADC) over the past two and a half years, but the company is now projecting a more sustainable growth rate of 8-10% for the foreseeable future [6][22]. - The average length of stay for patients has increased due to staffing challenges during the pandemic, but the company is working to return to its historical admission rates from hospitals [10][12][22]. Medicare Cap Discussion - The Medicare cap has been a topic of concern, with discussions around its implications for the business. The company has been transparent about its Medicare cap cushion, which is lower than initially anticipated [17][22]. - The company is engaged in ongoing discussions with MedPAC regarding potential changes to the Medicare cap policy, advocating for adjustments that would better reflect the current healthcare landscape [30][31]. Recent Developments - Kemet has made its first acquisition in years by acquiring Covenant, indicating a shift towards a more aggressive acquisition strategy, particularly in Florida [41][49]. - The company is actively pursuing additional acquisition opportunities and has been more proactive in reaching out to potential targets [51][52]. Operational Strategies - The company has emphasized the importance of maintaining a strong workforce and has been successful in growing its net clinical capacity over the past 11 quarters [39][40]. - Kemet is focusing on enhancing its market presence by applying for new licenses in various states, including North Carolina, and expanding its operations in Florida [47][48]. Challenges and Market Dynamics - The company faces challenges related to staffing and competition from healthcare systems that have their own hospice services, which can affect referral patterns [8][10][35]. - There is a recognition of the need to adapt to changing market conditions and to manage costs effectively, particularly in light of potential tariffs and supply chain issues [54][58]. Conclusion - Kemet is navigating a complex healthcare environment with a focus on sustainable growth, proactive management of regulatory challenges, and strategic acquisitions to enhance its market position [41][51].