Chemed(US:CHE)2025-04-24 15:02Financial Data and Key Metrics Changes - VITAS net revenue was $407.4 million in Q1 2025, a 15.1% increase 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 [12] - 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 [13] - Roto Rooter generated a total revenue increase of 1.8% in Q1 2025 compared to the prior year, with gross branch revenue increasing by 3.1% [8][15] Business Line Data and Key Metrics Changes - VITAS admissions totaled 18,139 in Q1 2025, a 7.3% increase from the same period in 2024, with average daily census (ADC) expanding to 22,244, a 13.1% increase [6][21] - Roto Rooter branch residential revenue increased by 1.7% to $167.2 million, driven by a 3% increase in excavation revenue and a 12.5% increase in water restoration [15] - Roto Rooter branch commercial revenue increased by 7.3% to $57.7 million, supported by a 38% increase in excavation and a 14% increase in water restoration [15] Market Data and Key Metrics Changes - Hospital-based admissions represented 49% of overall admissions for VITAS in Q1 2025, the highest level since the pandemic, with a 12% increase compared to Q1 2024 [24] - The average length of stay for VITAS patients increased to 118.7 days in Q1 2025 from 103.9 days in Q1 2024, reflecting the impact of community access initiatives [22] Company Strategy and Development Direction - The company is focusing on increasing hospital-based admissions to manage Medicare cap exposure, which is expected to provide a cushion for revenue growth [7][24] - VITAS is expanding its operating scope in Florida, with new locations in Pasco and Marion Counties, which are anticipated to enhance growth potential [10][25] - Roto Rooter management is refining its excavation pricing model to balance revenue growth and EBITDA margin, particularly in the commercial sector [19] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in VITAS's ability to maintain above-average growth both organically and through acquisitions in 2025 and beyond [26] - The company acknowledged that the growth path observed in 2023 and 2024 may not be sustainable in the mid to long term due to Medicare cap constraints [36] Other Important Information - The financial results for Q1 2025 were within expectations and guidance, with plans to provide updated earnings guidance in the upcoming earnings press release [20] - The company experienced a significant increase in accounts receivable due to the timing of cash flow related to a previous audit refund [39][40] Q&A Session Summary Question: Details on long-term cap management strategy - Management discussed the importance of managing Medicare cap exposure and the impact of regulatory changes on revenue growth [30][31] Question: Insights on cash flow dynamics and working capital - Management explained that cash flow dynamics were affected by the timing of receivables and a significant refund related to an audit, clarifying that these do not indicate collection problems [37][39]