Yahoo Finance Chemed Corp (CHE) Q1 2024 Earnings Call Transcript Highlights: Diverse Performance Across ...
VITAS Revenue: $354 million in Q1 2024, up 14% year-over-year.
Days of Care Increase: 11.5% rise in days of care.
Medicare Reimbursement Rate: Approximately 2.6% increase.
Average Revenue per Patient Day: $203.8, up 212 basis points from previous year.
Adjusted EBITDA (VITAS): $60.7 million, up 67.2%.
EBITDA Margin (VITAS): 17.0%, 544 basis points above prior year.
Roto-Rooter Revenue: $235.2 million, down 5.8% year-over-year.
Commercial Revenue (Roto-Rooter): $53.7 million, down 10.5%.
Adjusted EBITDA (Roto-Rooter): $60.7 million, down 15.6%.
EBITDA Margin (Roto-Rooter): 25.8%, 299 basis points below prior year.
Admissions Growth (VITAS): 4.5% increase in total admissions.
Average Daily Census (VITAS): 19,665 patients, up 10.3% year-over-year.
Acquisition: Completed $85 million acquisition of assets from Covenant Health and Community Services.
Release Date: April 25, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Q & A Highlights
Q: Roto-Rooter call volume has declined in the high single digit, low double digit range for the past 4 quarters. How much of the weaker call volume is attributable to the weakening consumer? And how should we think about this for the rest of 2024? A: Kevin J. McNamara, CEO, President & Director of Chemed Corporation, explained that the sector is experiencing general weakness, which could be due to pandemic comparisons or other factors. He mentioned significant changes by Google in their service offerings, which impacted call volumes. Chemed increased its paid search spending temporarily to counteract this but plans to reduce it back to normal levels. McNamara expressed confidence in Roto-Rooter's ability to adapt and overcome these challenges.
Q: Are you still seeing commercial customers asking for significant price decreases, and how is this affecting Roto-Rooter? A: Michael D. Witzeman, CFO, noted that the commercial sector continues to struggle, but Chemed is taking steps to improve service and customer engagement to mitigate these challenges. They are implementing new strategies like sending cameras with technicians to drive add-on sales, which should help improve performance in the short term.
Q: How did VITAS' strong ADC growth compare to your internal expectations? Are there any changes in the competitive landscape? A: Nicholas Michael Westfall, EVP of Chemed, stated that VITAS' ADC growth slightly outperformed internal expectations. He attributed this success to the company's focus on cultural enhancements and retention, which have continued to perform well even after the end of their retention program. He sees no significant new changes in the competitive landscape.
Q: Can you provide details on the recent acquisition of Covenant Health and Community Services? A: Westfall explained that the acquisition added 680 patients and was immediately accretive. He highlighted the opportunity for further growth in both new and overlapping markets by applying VITAS' strategies. The integration of Covenant is proceeding smoothly, with significant operational synergies expected.
Q: How should we think about the guidance given the Q1 results and the acquisition of Covenant Health? A: Kevin J. McNamara noted that while Q1 results were slightly below expectations, they did not change the annual guidance. He mentioned that the acquisition would be included in the Q2 guidance update. The company remains confident in its full-year outlook despite the Q1 variance.
Q: What is the outlook for hospice M&A activities, and how are valuations in the current environment? A: Westfall and Witzeman discussed the active M&A environment in the hospice sector, noting that many providers are evaluating their positions due to various challenges. Chemed is actively looking for acquisition opportunities, particularly in restricted states like Florida, and is optimistic about the potential for deals in the next 18 to 24 months.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
This article first appeared on GuruFocus.
