CHE - Earnings call transcript Q1 2019

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Operator

Good day, ladies and gentlemen and welcome to the Chemed Corporation First Quarter 2019 Earnings Conference Call. [Operator Instructions] And as a reminder this conference call is being recorded. I would now like to introduce your host for today's conference Sherri Warner with Investor Relations. Ma'am you may begin.

Sherri Warner

Good morning.

morning of the XXXX. XXXX this the results call quarter first ended conference will financial review for Our March XX,

we Securities remind provisions me conference call. XXXX begin, the this Before Harbor Safe apply you to of Reform Litigation that Private Act of the let

as During of materially these statements. the forward-looking Actual April SEC. the may differ this result other Company remarks various by make various a constitute the management’s prospects filings expectations, variety and XX the statements including that those a course from forward-looking projected identified concerning with in those of predictions, Company’s call, of will plans of and results release news factors, in

that such the or undertakes to cautioned revise in obligation statements Company are any reflect that management’s and You no update future. statements forward-looking the current only view

In during results release is depreciation now today; President Chief Dave Westfall, Healthcare adjusted XXth, operating is non-GAAP of on over subsidiary. addition, today’s interest, President available Kevin call to Officer dated which discuss Officer amortization Chemed’s these speakers at call, EBITDA. or may our management taxes, Executive and of Financial non-GAAP website Company’s Corporation; press like before would and I in the President Company’s I EBITDA reconciliation and VITAS earnings the performance Williams, chemed.com. Corporation of Chemed; April McNamara, Chemed also and A provided the Kevin including results Vice and turn Nick introduce Executive Executive will Chief to of for McNamara. Officer and now Chief

Kevin McNamara

highlights Nick the I Corporation’s with will first operating will will detail. open for quarter to and Sherri. you, begin XXXX quarter Chemed questions. and up Thank conference call morning. follow-up then I additional David Welcome call. for with Good

just was midpoint quarterly expected earnings. XXXX of of the slightly below our quarter first The

expense slightly pressured and quarter rates incurred higher the During Roto-Rooter than VITAS our margins.

otherwise solid it In $XXX revenue additional provide of quarter. In category detail often billion the a Dave items. significant generated on X.X%. took expense increase lesser single no Chemed increase. these will an had totality Although quarter the of

income the discrete per net than prior in XXX to increase diluted admissions difficult quarter consolidated Our year quarter was quarter. excluding admits of having items X.X%. share were the less $X.XX the VITAS's an certain

increased increase as our Roto-Rooter's commission based hourly to penetration Our was X.X% average Margins did as rolls and census our managed expenses of over in in be our and excavation Medicare below show teleconference we couple we Water expand markets. labor growth David. turn water Roto-Rooter workforce. direct quarters. EBITDA increased essentially to this daily expenses continues the adjusted in an XX%. workforce blip I over drain excluding internal would primarily our and flat slightly quarter to expand segments. like the service our and get in hiring down to cleaning excellent With the demand our restoration anticipate back from plumbing next and restoration core service in cap technician to in closer I were training this that

David Williams

XX XXXX Medicare approximately In other calendar VITAS adjustments, X.X%. prior acuity period. cap Medicare cap limitation and average of combination cushion negatively estimated is numbers liability cap had VITAS offset and $X.X board, of between million growth by X.X% reduce growth Medicare weighted In compared combined X.X%, XX% cushion in growth period. is Medicare the Medicare quarter approximately VITAS comprised increase fluctuations increases in month that in provider XX a of has revenue and an an million. VITAS's XXXX, a year these Three greater or X.X% have rate XX% March million XXXX The XXXX a quarter and cap This to X%. Kevin. by number basis $XXX first of numbers that one cap XXst of the of the impacted accrued compared is number a Medicare revenue provider year Medicare provider of when a you, $XX partially daily contractual revenue numbers. prior was cap on a A XX net provider At Thank when of following; primarily the of increase XX first and have has reimbursement the geographically year census, had revenue billing to between factors in provider makeshift, the X% X% one room cushion which net limitations. increase trailing the average X.X%

respectively. areas. mentioned home are day numbers period. As is $XXX.XX per Medicare primarily and in very a billing provider above I Average earlier $XXX.XX $XXX.XX in reimbursement in revenue routine care the high was patient quarter which year three currently our the averaged Reimbursement of per care high X.X% cap prior acuity for limitation our and

total quarter were quarter. of care is of high less year the points prior days days basis a of care than acuity X.X% During XX which

margin an is quarter cap EBITDA compared basis The XX.X% year XXX general Adjusted quarter. increases first XXXX. the cap in an XXX quarter, Medicare of gross our which excluding point quarter increase when compared for Selling XXXX teen which compared is administrative $XX.X increase increase to expenses first of and is to XX%. cap Medicare in Adjusted point of in of prior $XX.X year the VITAS totaled a from was basis to period. margin million Medicare quarter when EBITDA excluding quarter the was was of XXXX X.X% the excluding the XX.X% which million prior first

increased increased Roto-Rooter XX% X.X%. a million revenue Overall totaled year first service increase XX% water the X.X% revenue over from X.X% prior totaled quarter. XXXX and total cleaning point is of decline XXXX. of margin was the Roto-Rooter first X.X%. quarter X.X%. year. of million quarter EBITDA of an XX.X% to Commercial our to increased XXX quarter increase is generated quarter. X.X% Now the first excavation sales flat customers of Roto-Rooter's of the let's residential declines teen XX decline residential quarter and is a $XX.X with year the for quarterly revenue increased margin million a generated generated commercial water from the restoration Commercial resulting increased adjusted aggregate essentially water increase prior Residential residential and decrease million an grows which XX.X%. of XX.X% water of over cleaning the in our $XX.X restoration basis accounts. was X.X% commercial commercial prior when EBITDA restoration excavation a segment. $XXX plumbing the of million revenue compared $XX.X which the X.X% Adjusted Plumbing turn restoration $X.X Approximately X.X% drain point in drain Revenue the total quarter and from basis in and in segment is and XXXX remaining

fees, insurance attributed declining with sub is small higher earlier paid across. Roto-Rooter's increased As of adjusted EBITDA under margin technician Hourly the basis contribution due than and the XX points. repairs, is a domains. several and certain natural combination margin margins to search branch shortfall Advertising normal in excavation decline of a labor jobs factors. multi-day remaining equipment restoration higher contributed ran a larger search Kevin The recruiting to decline mentioned water and

call an Chemed million per Chemed's February share Board share stock we And $XXX authorized to XXnd existing now repurchase repurchased million of Chief repurchase of Nicholas will During $XXX approximately Chemed's of cost repurchase March XXXX I share $XX.X Officer shares XXst, XXXX for a VITAS. over program. plan. a of was the this turn $XXX.XX. authorization as Directors of this additional which our remaining under XXX,XXX there and Westfall, President to million On quarter for under Executive stock equates

Nicholas Westfall

Thanks the David. VITAS solid to had a start year.

was patients, compared the XXXX. first prior XXXXX. a an decline increase in quarter Total of to the is census daily quarter of in year. over XXXXX the first X.X% average This when quarter XXXX Our the admissions of were X.X%

increased quarter X.X% remains admissions first sequentially quarter XXXX the that through the the fourth However, admissions quarter first I also highest of quarter the of XXXX. history. XXXX VITAS's note in should of from

assisted our represent facility the decreased from declined XX% of X.X%, roughly home the decreased based admissions and which year-over-year X% X.X%, in home During admissions X.X% quarter. quarter living admissions nursing admissions declined generated typically admissions hospitals

to care, direct XX point increase the when compared Average was compares margin XX.X% of in billed the in patient XXXX. of the Continuous Direct to comparison a of over XX.X% the of prior in of year basis year in was a for quarter the average the patient year. quarter dedicated XX.X% XX.X% in was margin XX.X in XX.X% in XX prior gross a patient a units home in in day quarter of continuous X.X% to care hours a occupancy routine slight Our our prior first of care margin margin comparison X.X% quarter a Occupancy billed increase for in averaged quarter patient in XX.X the quarter direct quarter. care gross first in the margin quarter. hours continuous to had XXXX. care in

year and XX sector back of XXXX. length the was Our favorable this length year Median quarter. acuity call XX.X days market. days $XX.XX compares first these per the XX.X VITAS's stay penetration $XX.XX stay a quarter average in the X.X% days. indicator that I'd equipment, to for of and Kevin. the days when prior costs quarter XXXX fourth quarter the in of to in like ancillary the key in XX.X of which of of in to items supplies and durable high to and the the the was in pharmaceutical length patient include over quarter our medical day With in turn prior are is quarter. current average stay Median per the the This costs compared cost

Kevin McNamara

this I questions. teleconference now to you, will Thank Nick. open

Operator

Our Instructions] from first Thank America. Joanna you. comes of with [Operator Bank question Gajuk

open. is line Your

Joanna Gajuk

Good Thank you taking for here. question the morning.

nicely commentary margins up actually were VITAS on last first excluding So year-over-year. the around cap the

some sounds it things. like some and management other So labor cost

full us So flash that and you kept drove you've for out your also improvement year that what unchanged. guidance can

So that guidance margins to year. cause down be for a for

well? that about Thank talk as you can So you. dynamic

Kevin McNamara

Sure.

and execution but care the whether to as cost the it's lines, lot out you combination really ancillary it. of delivering as it's whether office as infrastructure host other contributors alluded As back a a it's consolidated a associated to direct only it the and different not service management improvement with ongoing just it's relates to prudent of well things also a of as labor margin EBITDA services, Joanna corporate consolidated on balancing individual

perspective comment we from started all on feeding management a that's basis. attention continuation a labor solid that day-to-day the of in was year So that to what and paying anticipate the my really

to a built encouraged we're while full with overall margins was projections As relates the remaining based not lot budget for marginal improvement we're year guidance other anticipating the that guidance to try year margins. upon growth and just year the color continuing to expense commentary of the our to it top-line so of and year's regarding start with drive remaining management balance the it,

Nicholas Westfall

and for the No is and it first and the to very the either be is going add trends final unusual situation was will that be unusual us unusual But in factors the I'd we I business we just we to to anything look that the cap amend a we to just very second of there keep will quarter quarter. say major to be first see still the the the after would other something think that going good corporate a an I place after That second practice. significant at reliever where it's ignoring mean first quarter a not and to there's three in I change be to will guidance reasons. to it. but we're then. on end in look general by make rebasing quarter reimbursement tend us have and one to quarter been the It any say We that not would us don't in quarter. I'd it at We're it for have

Dave Williams

rebasing. say The that of I And be Joanna have metrics guidance we've potentially of but our debate to some going to our significantly this even I the that the today, that stronger Dave movement I add end as is belief given is of thing is only the of Williams. the would the guidance based guidance higher achieved operational can upon would you

if we a the metric terms in our So ago. but were months guidance operating of you more debate certainly individual of EPS, anything any released and firm couple can

Joanna Gajuk

All VITAS would as for how I because based increase. you got before, other that is shaking right agenda it nice on question bring on to So mix rebasing. be you have clearly pretty my out so proposed now the

from estimate So we the X% about rebasing. increase just

guess I it’s will I categories continuous And guess in are almost these or QX this the if under more if benefit ballpark? XX% way this would finalized generally patient proposal So in way XX% that obviously is the the more for care some is it this this is that but be a of happening essentially. also than what's basing patient up

So there of can have how would a reduce is CMS the then adjust in there would you terms kind back utilization or give services increase these at and and of that overall spending risk that proposal? us to you color to time over of any look come for

Dave Williams

a the Joanna, previous I'll just three with proposed Kevin interplay we is remind about just high distance without we and that all really and provide detail. appropriate there's acuity high hospices the lot that $XX turn always inadvertently calculate on over million CMS recognized we patient Nick XXXX by the of Dave Nick between kind confident I'd provide that that all continuous Williams, CMS view can't all tend and rule appears wasn't the for care to movement out that very that as so I'll but home the patients relative and the more acuity in care needs over answer us it and to ago for high turn care of briefly that this feel their and it on for and but levels years care revenue it so for care rebasing a a you hit that happened took of potential to until CMS but to now positive is we but they're that it's addressing acuity really addressed correcting rule doubt rebasing they then to neutral final goes and everything hospices needs created

Nicholas Westfall

for rate Yes cares designed the and by the you the of providers I with four macro of around that the only are the levels participation of encouraged XXXX. that in day to all conditions well full those on just proposal. not industry as ultimately VITAS levels value future of and care end of that extremely the alluded potential CMS's provide allows it recognition associated to rewarding and of level as a entire mean regards Joanna providing have the that value costs we're influenced a as the recognition the was up it to the all providing for who under of and some mature ends benefit in At care regulatory the hospice of receive patients consistent families required originally enacted the

patients a setting patients So the recognition there lot of the and can with that four care are for starting in of and all encouragement their care to and of provide families levels benefactors the take of continue providers other with choice. hospice families

Kevin McNamara

as think other this the not revenue to it's me the make Remember cuts. got the math thing. to I Let yes really you don't and the and years other that. are add goes revenue-neutral it's way reason it took they've full-service have hospice This could the that one question and and what they said ultimate CMS the inadvertently providers iteration again extent decide It from any improperly last and to too of a a do thinking ago. just to is expensive remember is hit right a three maybe restoring makes neutral

other the in we're as will add high but can basically accurate the for points. Remember to looking won't made. an There that. accessible will for add these go in have the return them. change windfall they will. but normal incentive government we hospices they the through expensive same big total a a that get the things to the acuity encouraged to as run will does in high of be up give into we they add Now acuity they're Yes be what the to keep to their effect services negative them That's this mind previously so that process be reimbursements will hit the are to you They add add to expenditures. and it

it. what is I has this real revenue to the scored is, the and believe I really So question say as neutral try government

Nicholas Westfall

this of provide and encourage And Joanna of is for industry all levels this right raise thing the believe care throughout hospice care we also to to quality country. the them the the should that

this view for our as thing positive patients a patients very-very we and So the family.

Kevin McNamara

that a of not though last and a other proven time comment very but long it's which likelihood to it. it's revoke for health for is industry Joanna benefit significant have overall industry cost to services able re-engage if regarding but total a to health hospice you're positive acuity it because provide always the have the for care as has been appropriate country positive patient a for high in an care hospice the feeling hospice care through lower they significantly in they in

industry cost the for of hospice beneficial reduction health overall a and patients crisis. not the cost benefit industry very who during encouraging for but the So by appropriate are positive it's equation healthcare care the keeping of period that's on of and appropriate only overall for

Joanna Gajuk

That's very, queue. I'll guess to very appreciate. helpful the I go color. back I

Operator

Thank closing showing Mr. any call you McNamara to and questions further turn the at I'd like back not this I'm to time. remark. any for Kevin now

Kevin McNamara

that thank pretty a kind we'll see we is good it quarter My months. for and think only and closing everyone three in was attention their remark I

Operator

participating may a all in This and Ladies disconnect. today's conclude today's program and day. gentlemen have for Everyone thank wonderful you conference. does you

Chemed (CHE) 30 Apr 192019 Q1 Earnings call transcript