CHE - Earnings call transcript Q4 2021

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Operator

Thank you for standing by, and welcome to the Chemed Corporation Fourth Quarter 2021 Earnings Conference Call. [Operator Instructions] As a reminder, today's conference call is being recorded. I would now like to turn the conference over to your host, Ms. Smith. Please begin.

Unidentified Company Representative

morning. Good

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

we Securities remind provisions me conference call. XXXX begin, the this Before harbor safe applied you to of Reform Litigation that Private Act of the let

as During of materially these statements. the forward-looking Actual February 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 XX, operating is non-GAAP of on over subsidiary. addition, today's interest, President available Kevin call to Officer dated which discuss Officer amortization, Chemed 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; February 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

up the and for I questions. Corporation's follow detail. fourth with Nick will additional will the the to quarter, Holly. you, begin XXXX quarter Chemed call Dave open Thank conference then morning. will I operating for up and Welcome call. highlights with Good

labor however, you shortages, significant the in quarter They of for released including in housing to disruption challenging pandemic. as face from we VITAS very and XXXX share particularly I third environment. senior a of with rising macro operating some last continue with care manage issues Roto-Rooter. inflation. to enter the performance fourth dealing to pandemic-related health the results headwinds, we year issues, would like are reflect solid night continues effectively Our

our demand For issue is affecting been has not the workers above care rates. a licensed ensure been our we important basis. VITAS, broader has well hiring and effects have pressure increases an in spared licensed health and staff the and dynamics Staffing to off licensed market rates an salaries market-by-market most all is continues time health to paid supply labor of VITAS markets. industry-wide. care supply Turnover for pre-pandemic or health wages. as licensed continue workers continues and inevitable as managed increased it of there care elevated The care will increase We be to with health health wage pressures professionals. nationwide imbalance for systemic that combination wages managing challenging VITAS mix labor. been industry. as To a on workers are of date, as There exceptionally these a the PTO. initiatives qualified of as we in decline remains of of professionals view targeted within the long exodus services has in well adequate to retention on in expand

on operating the basket increase or measured wage there March reimbursement X annual on office rates index increase. labor. industry, a Typically, inflation is following costs, normally inflationary CPI. The in used in Government's of hedge Medicaid VITAS measured hospital for Fortunately This October and of pressures is margins. goods the Labor the reimbursement other Statistics of as annual hospice plus as Medicare stability the and specifically to the a for inflation natural Federal is gives Bureau PPI XX measure by determine based industry against the the hospice reasonable generally

our latest calculated prior of of effective rate timing was increase a in the historic to However, XXXX inflation. adjustment, was in an which of date March immediately October XXXX X, for

But be Of time to downward course, this partially temporary we remedied pressure margins. expect in this inflationary future high during on adjustments. causes lag periods, initial

The challenge second housing continued and for critical related referrals. the senior occupancy is VITAS disruption to hospice

XX daily recent the in nursing ADC. ADC The patients housing recovery. total of Our of ADC. XX% our a XXXX, increased represented and home-based the stabilization total basis first home is XXXX, our in points admission nursing quarter of quarter senior second In the home-based low XX.X%. XX.X% Pre-Pandemic, home the nursing hit based and data our nursing of ratio average process XXXX. of to cess of patients suggests third XX.X% both quarter represented of In fourth or patients

XXXX updated half senior XXXX. the second in acceleration an anticipated slow housing the Our XXXX with guidance improvement half of in anticipate first of in admissions

expanded been We've technicians. count X% increase of XXXX. number has to For available Roto-Rooter, challenge in the the most technician by significant productive

However, crucial recruiting existing plays continue retention in based Technician of employee base. new understaffed levels, in a role our compensation of as to employees current upon markets. our remain demand we as some well

based technician average $XX,XXX of on revenue are our field is force technicians XXXX year. paid Our and over sales generated. per competition Most commissions

critical services on of during increases and and services in passed cleaning warranted restoration are will and determine color XXXX for the of and levels. Demand the this in to demand. As through excavation year. is increases to I technician plumbing, water the increase additional inflation at drain record want a give market-by-market our remain depth further at We breadth that a price component on of increasing beginning result, basis round an pricing monitor initial for wages. a pressures

XXXX. QX revenue HSW was acquired compare September to in Let's XXXX. XXXX QX

XX.X% decline basis, Commercial experienced revenue experienced excavation service commercial increased noted and XXXX. period. demand revenue strengthening excavation HSW increased since declined April Overall, XX.X%, increased residential basis, comparison continued has increased expanded X-year increased includes X.X%, service commercial both periods. this On So increased restoration a in -- X.X%, a aggregate, In X-year water segment recovery revenue XX.X%. drain residential over Residential declined plumbing the plumbing cleaning anticipate services have for individual in branch revenue XX.X% water XXXX. increased declined this incredible period. drain revenue XX.X%, and commercial growth. over in cleaning X.X%, commercial X.X% significant We service demand restoration X.X%. this an throughout On XX% segment revenue

Roto-Rooter country global increased and now Over these the operating has X/XX, market operating each the materially and share, remained of margin. revenue pandemic. years, past XX Great the Recession a crises, faced and In

and With revenue, anticipate well advantages our Just as and customer time, important, response of postcrisis, like share share Roto-Rooter margins. teleconference market positioned by expansion brand would pressing to XX/X competitive is to turn terms these I of market increases Internet and in we David. over that, in core to Roto-Rooter held this centers presence. continued on awareness, call post-pandemic,

Dave Williams

in which by of compared X.X% level $X.X mix X.X% combination mix. fourth days Thanks, Kevin. geographically of decline approximately when care, other changes increase reimbursement partially quarter revenue of The in to revenue or and cap cap provider cushion provider was and a The Medicare approximately currently revenue the about a the a an of the two care rate and liability. the gross did contract million in numbers of have our Medicare X.X% prior X% Medicare portion XXXX, or mentioned to year EBITDA and fourth to offset in of a quarter compared provider impact quarter. numbers as VITAS was margin, compared quarter, between the Medicare margin and is inflation greater, compare average Medicare VITAS' a fourth reducing basis offset caused decline declines decline have to point X% our quarter primarily weighted of revenue a a points. a This margin XX to have in excluding XX% of Medicare gross accrued This margin of Medicare cushion has net the XXXX. quarter compares prior the XX.X%. cap between million effect, XXX in is the of and million net Acuity currently two in in This to XX%. by shift of of year was and cap a of period. the when Kevin. million cap basis $X.X XXX Cap points previously EBITDA billing limitations the we a Adjusted fourth lag of cap had were when cushion XX.X%, X.X%. the $X revenue $XXX VITAS' approximately a Medicare the revenue decline of X% basis directly margin billing decrease cap, impact estimated is XXXX. primarily quarter XXXX pandemic fiscal by costs the related by both Medicare reimbursement One limitation excluding Cap, Medicare decline

the prior fourth generated be plan XX.X% in this compared providers higher These increase XX%, with plumbing million an not million excavation XXXX. consisted point XX.X%, visits was from when $X.X This of on Adjusted the basis the in XXXX. in end passed quarter million, XXXX. increase quarter, water residential increase over expenses of for fourth cleaning gross on which This the segments. period. health of the basis side quarter of or margin commercial rate revenue experience growth commercial revenue year period. employees XX.X%, health to XX improvement of of is increasing was the compared the on EBITDA VITAS health quarter excluding or of consisted a $XXX this of delaying the -- the insurance drain revenue increase the $XXX million is pandemic or anticipated aggregate spike restoration, $X.X impact increasing result from XX.X%, point or is fourth is revenue $XX.X care Roto-Rooter's prior year. of XX.X% in expanding aggregate medical Roto-Rooter increasing XXXX. commercial result COVID, costs XX and continue modest all which a residential of Roto-Rooter's quarter quarterly for which XX.X% sector, growth revenue cleaning Roto-Rooter across of medical VITAS. Water of mentioned employee XXXX. year very of the an X.X% also approximately XX% restoration when We XX.X%. year. as $X.X to million quarter These anticipate in in prior self-insured were self-insured directly, reasons XX%, the over until similar in in and increased experienced experience the year costs $XX.X Roto-Rooter totaled this companies branch million to our quarter. million and were the Roto-Rooter We prior do totaled combined XXXX, Additionally, by in XX.X% care higher inflation the quarter the million $XX.X claims residential drain increasing approximately is increasing Roto-Rooter fourth care expanding plumbing costs than of excavation for the revenue increased growth service related quarter the for as during believe the were higher branch higher-than-normal utilization and possible long the said mainly casualty quarter margin as the fourth utilization higher X.X%. for an to

basis accelerated was expected in In fringes and and various Roto-Rooter's initiative by negatively increased this is Roto-Rooter awareness costs approximately to e-marketing addition, Facebook, fourth performance adjusted repairs through content of in expenses in their spike $X.X to quarter impacted of XXX an younger most e-marketing Instagram that and including not The due outstanding on margin incurred Combined, by by maintenance there media fourth was Roto-Rooter EBITDA for is audience bonus to advertisements platforms, to approximately quarter social recur. million significant expand related brand the to the a program and quarter points. and placement payroll YouTube.

Now Chemed basis. on let's a at consolidated look

this per purchased Chemed equates shares During company of million. the $XXX.XX. to cost share XXX,XXX and for stock a the quarter, of $XXX

authorization of December $XXX there remaining was repurchase plan. share approximately XXXX, under XX, this As of million

has reminder, billion program $XXX.XX. dividends million approximately returned this share to an in XX.X billion $X Including Chemed Since approximately at restarted XXXX. a that average Chemed share shares period, its shareholders. $X.X aggregating for As approximately time, of repurchase cost has repurchased Chemed

full Roto-Rooter's first XX.X% XXXX. to revenue X.X% year is be Nick corporate decline over approximately estimated census is adjusted prior an to in to Chemed's of to for earnings estimated of Cap guidance full share of Officer XXXX XX.X% And was XXXX. reduction between Based earnings estimated to VITAS. XXXX between to benefits XXXX VITAS' discrete be adjusted compared Medicare X.X%. phaseout now compared in noncash estimated to estimated revenue to calendar X% effective $XX million And of guidance portion I'll expected This to XXXX count decline per exercises, daily a margin diluted sequestration discussion, options, call for relief rate for share excluding be and limitations and to are sequestration XXXX full full of President is of earnings costs forecast estimating to to diluted million X% Executive margin tax Cap $XX.XX. assumes And revenue the full the range of of the to this the year of growth the A of Chief achieve we XXXX XX.XX XX.X%. diluted this from when on million X.X%. is per relief and VITAS share, EBITDA as items, XXXX our range stock X.X% currently option and expense adjusted year litigation to EBITDA stock is and year $XX.XX. earnings is $XX.XX Medicare billing of XXXX. prior Cap related Our $XX tax adjusted is XX%. year shares. over XX.X% in the half year other a of is XXXX follows; result Medicare reported Westfall, Roto-Rooter for to to in upon turn Average

Nick Westfall

a average to the declined experienced home-based of XX.X% XXXX. homes declines facilities living We Admissions a same XX.X% of locations of was Thanks, the in the is decline entire decline a moderate the was daily and X.X% total quarter quarter, year-over-year patients, health XX,XXX. daily XX,XXX decline XX fourth average fourth XXXX. of across X.X% when XXXX. period X.X% to experienced in evident quarter a X.X% a quarter compared of third compared since X.X% sequential fourth hospitals. decline from variant once care the prior a the cases XXXX. has were disruptions the over all the Dave. to Omicron The in of and of XXXX, of The quarter result throughout across pre-event most In the In and decline of over of of a quarter March pandemic-related the the XXXX, direct third fourth assisted our decline basis our entire during census surge The compared of XXXX. in health reported decline disrupted point flow admissions from census year is due decrease nursing when admissions, to system. the system more COVID in care again the This patients VITAS emissions country

of in Our estimate system the the disruption year. for contemplates improvement half during the XXXX of during with first continued year the the second half

XX.X XX.X average the quarter Our XXXX. was This the and compares third in in length XXXX of the days in to quarter days quarter XX of stay fourth days. of

and the our in fourth half median housing of compares with senior XX of of Our particular XXXX stay days second the in growth quarter median of with days length stay XX throughout median median XXXX, quarter improvement third of quarter anticipate the favorable length the XXXX. length the continued We of stay recovery. and both was to in in the stay of the length XX-day favorably

call Kevin, two the back to Before like our commitment available the opening care With for navigating turn VITAS across I'd back disruption thank Kevin. mentioned turn call areas the clinical Kevin of the and health of want to to I country. I primary members remarks, that, staff his to this focus improving in to daily their team system increasing the over over

Kevin McNamara

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

Operator

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

is open. line Your

Joanna Gajuk

This Joanna is here. Gajuk

of, let's VITAS first. guess, terms in So discuss I

you to of Are health are you that sense the the patients saying do from and see discharged In able that referred being of the all system care disruption there's are decline shortages just the terms you to the patients limitations take to in also coming just in just a away? labor that of impact admission you speaking, fewer hospice?

Nick Westfall

is Nick. Joanna, demand not board. I'd -- issue this across say It's a the

more swift acute health that, for change surge But However, discharges inside it a basis. we a it. our an with those significant with have as of respond to to staff you as of we're disruption, with the referrals. respond system overall, you to is see compared care to prioritize example, ongoing discharges see where the Omicron we available hospital on market-by-market balance nonhospital across ensuring resources to And board deploying clinical available continue it,

Kevin McNamara

staffing had just is that It things not have the say Kevin are nurses were admitting serve to seen some month? when if, field shortages, What's so a big recent I you which seen were gradual send referrals developments, up the And where might tells standpoint. McNamara. you're put that that said, month encouraging of in can't to And of return. fortify comment. that's that which is good in whack. out capsule up good had good our will you highest VITAS let's to down I'll -- out this on -- -- happened an And we so you go clinical our just And developments, nurses admits and/or nurse a on Well, us. patients, the referrals side the from referral well, admitting we've were give when, to the you out and had things, priority XX% XX%. you've way. your referral down we've because say, in as efforts, X% you perspective, it's admits it

improvement, at much as now ever labor a problem. And So issue. of end retention. of of we're see starting a in the facing. for and Continue companies light trough that's faster And that months. history has it than -- that the we're But much there's two it's on hiring, pancake many parts just been that? gradual we've we're do the Would at a agree Nick, I what just of for job hired fighting been We be the job do alluded we in anything? to have tunnel, you keep And think. But just And to turning may. to as better And Nick good rate over it and daily. earlier, that stuck we VITAS. with are the looking

Nick Westfall

comment it. Yes, aspect a follow-up just both a and sure has I'm is to that to, the come on alluded or a of couple, Kevin retention recruiting laser-focused question as would

regards. for numbers referred Some have make group peer out commented came of of The a But than from release our we recruiting some recruiting can and in that performance to. don't our peer we always perspective, to greater specifically on both those metrics. what group us is improvements

So the clinicians into we're bringing door.

So continue to focused to on aspects to a be we the into on have much to job of onboarding to their get them do a continue want to as the better go-forward expectations support and basis. other with them well as process, manage the organization organization

Kevin McNamara

And goes it has we're focusing this I hiring been is, but without discussed, here it know and on saying, retention.

year We supplier March effect calculated increase go a to a are previous of price in gets that the October. in

lag not during period, X that During period was the that just percentage a reflected solid points inflation that up in was increase.

in that so unforeseen So think okay? the happens. that health October and safe when to also in It's feel tied into come mind, retention come we'll behind go tied I strides fighting water. up regard something we're labor back one it's on it's amorphous good back, with that issue hand to the the care our unless will workers in some will work, back X, reimbursement, make which catching people our -- to -- my And of hiring when issue

Dave Williams

the one we bluntly out basis, on take response be sheet financial a that because care, before up. no to anticipated health you've weren't add well sheet. our we of happen when reimbursement guys maybe a or conservative hand frankly, balance out can't quite my strong catch And where you're levered you obviously, to everyone commented in economics has think also this inevitably, highly the pandemic. balance our positions you sheet. is us ride Kevin conservative as plays other of But the advantage -- And and in macro disruptions have well-positioned I'd But managing heard hospices balance major get on stress, and

workers create to additional potentially So start this is going we adding throughout this health to care opportunity, year. think licensed

we lag the things us hope that the to acquire hospices poor a is As time in providing well to to because them first as time, going cost be there reimbursement would you're as us. increased are my presented to us for pick optimistic long talking well-positioned of about for opportunistic to positioned these care, may the a well hear are to be of margins inflationary in be appropriate but the potential

So rightsizes be in going it's of we hell care labor as as have a itself, rightsizes confidence advantage but positioned a of we the that to XXXX well absolute itself force are to ride health this. take

Joanna Gajuk

-- of point -- Yes. A before we commentary can one. talk the about if last the but I first lot or

to about you're the was So that for? willing you labor would of how I So talk quantify your follow-up ideally your guess actually to you for my much by whether question, pace recruiting kind increase us? quantify that able of percentage-wise entire be

Nick Westfall

those don't release numbers. We

you rates. The we're at continue commentary improve and as Just with But peer record to percentage the referencing, also what joining outperforming. ability hear to workforce the our group recruiting only our that aspect, a not that to as the organization to need directional retain but continue on. we organization stated component I'm basis,

Joanna Gajuk

terms retention, I of a point, in pace. Yes. to higher implies I that guess, guess that And

what you be year? of the the experienced? expecting you of So kind would this assume in year the pressures and for how the in kind can cost expect the the per also most what in you do talk moderate to inflation of And And as on. quarter seem about terms progress of that you labor first be year? through do companies goes then So worst to

do And that? kind your you in you to guidance? what do with So assume of agree

Nick Westfall

two So that. inside have of you perspective, cost from drivers a

and have the merit comparables. which where it, to you have you in with outsized mechanisms quarters the one, just cycle pricing come think I inside that increases have first naturally state you of is increase certain

creates the year in. X, of the per meat cost VITAS So comparatives quarters And Getting the prior to for from the the first our of salary and overall full increase as perspective, against to question a and built of into for to as investments which staff, we grow continue care allows those admissions. anticipate made, in trajectory it, to continued respond ability lift second investment will relates our half which our tide have to it well anticipated we guidance wage from the clinical XXXX. and workforce with the days is the as anticipate as which related us it what two June in net of an to the goes to growth merit visit

built think since into took And team our achievable it's over to improve gosh, and XX So guidance. last proven, I respond continue has it's over will these the all very we dynamic the challenges. it to years and operations,

Dave Williams

question to all have I'd well, inflation workers, that we care Quite be, the other things held frankly, what's licensed would our Joanna, constant. only that's health have, But among say, of say relevant today your though into people But they our two continue care next health XXXX wage more our year. than that in paying increases were through workers pre-pandemic. will more. basically are passing patients are We up ended we covering

more getting the have. out we're So do higher of that we staff wage utilization

that the between dealing with. interplay the it's So we're two

Kevin McNamara

these mean it we've increased was was and weeks year, increases mentioned PTO substantial. And which X%. the got is Dave, extra something the during call, the first increased and two PTO I workers

Dave Williams

'XX. correct. $XX million impact That's was to a It

Kevin McNamara

correct. 'XX. That's

Nick Westfall

is organizations cetera, perspective, wage a anticipate pricing gets the hospital, will returning that that through to as dynamic other gets the extreme travel company basis. well hopefully the of workforce to live, returning commented the environment to that And going from day price care et I the macro day think I a I system. other a into and it's knowing going of know your as rearview out what going care health and question, ripple perspective, impact you're the care pandemic from that and a peer rest think that down in, variants. provider, on a do built group then work that stability have agree We positive pending others you to dramatically people a home Joanna, to a on with high-quality from where as impacted nurse in the a that effect gouging you're whether you're a do health slowing has it's whether by have for

So throughout trend as we health for positive of a XXXX. all anticipate that care

Joanna Gajuk

guess you increases. I obviously flip doing on And Yes. passed the price pretty And well mentioned there. the side, business, some Roto you

of alluded, price So us also to And magnitude more year. might actually you you the those increases increases? could you kind of pass this frame expect for

So kind there helpful. any of color would give you can be

Dave Williams

Yes.

X So we United surprised some nag looking a if markets, our inflation at to increases segment, has not catch-up again, in and number over by increases this to But market, States. it's price we of of high X, the service we have to don't January inflation all interim we if I in utilize. have our That by -- majority playing pricing. to market our effective January anticipate stick, -- pricing have the continues mid- throughout be still passed increase single-digit we fully more would markets, XXXX, we appearances, than really if that's technicians we already occurred was put the the but just XX-month demand We frankly, the period. price through

Kevin McNamara

demand. And

Dave Williams

as in demand their cost increases. increase this budgets Remember, personal technicians every our through technicians way passing only well. majority higher get our experiencing inflationary And week, is of every price are the The every by day, an month.

take retain we a the it technician and technicians expand very as seriously So workforce. way to

I expect force that a number XXXX. Just technician and sales the $XX,XXX, over of to fully on compensation a was our sales and basis, little during average field decline lag

And flat. keeping price key So are expansion term And workforce. necessary. They're frankly serious. of the to expanding is things our But increases workforce? Roto-Rooter's is was just the growth roughly in real dollars, the long what

Kevin McNamara

X%.

Dave Williams

we XXXX, is of expanding critical strategic focus and increases And that -- component for price workforce. that X%. a our throughout

about bashful So going we're it. to not be

Joanna Gajuk

e-marketing business. the It to on of right, them to this guess campaigns. like out candidates new many also part sounds I to expanding this you work So mentioned was strategy, that attract reach to potential force that trying

Dave Williams

results measured a but a haven't was an this yet, It in environment, profitability you're keeping have of it the But was Roto-Rooter dynamic eye does. and it. flyer you on bit really that we when we're

a advertising with potential customer the or past what when don't color Frankly, upon weeks. I you're of in play for be can what's X focus. would of revenue Roto-Rooter. also quarter weeks encouraged reasonable quarter X can the in Roto-Rooter give customers, abatement we make Roto-Rooter. XXXX. based to we But all you're X You is service advertising And segments. fourth our with much the to future little in it's It exceptionally negligent. are awareness. do terms for experienced results want and across over but XXXX to and just again, see We a guidance any on demand weeks experimentation on that frankly, that was of Road the in have We going say certainly employees, for growth But experienced little a across rooter branches not year, above regions doesn't all the a services too

Kevin McNamara

jingle. the issue And during the add, thing is, was Lemon documents about latest the I mean, Don, destroying Don is the going only saying Roto-Rooter I to name

next whatnot to that, Now probably generation. last hear the after born but and he out was e-marketing time that reaching still advertised to is that good that's we

Dave Williams

and resiliency of The is just aided and the is to it unaided me. amazing brand awareness

Joanna Gajuk

continue growth Yes. the No, that seen definitely, we've outperform. to

just that increases there the How you Medicare So experiencing, reflecting obviously, cost you're also labor going experiencing the guess, in the to what's long when talking rates thinking inflationary I inflation is will environment? you're and everybody last reflecting delay pushing we're the you're in price very really about -- I labor was a reflect take I guess it is market in guess, on the and mentioned hospices. clear Roto-Rooter. I the question, VITAS, about talking rates

Dave Williams

Well, of Bureau information the from into substantially it, X utilize accumulated the and then if then they that April by those October you runs and through increase think about X months Labor dialed XX. X. get reimbursement on later Statistics March And results

average or get real go-forward continue kind rate? going truly And XX then margins plays Are of lag. up. XX we you a fixed. one and months -- three to So is out of is with inflation inflation everything done, just to inflation then this years go a catch transitory, standpoint, If be depressed of two I'll to we'll is go before and from and XX unknown, Joanna, a finally it measurement would what's XX you so a to The the finally, be turned months inflation it's make that above

Kevin McNamara

I That lag lag an would think would return It's be the you not is get just it's ameliorated the not or normal. to additional not cumulative. onetime But it's onetime back. amount until be when you

Dave Williams

on finally with workers, inflation post-acute just us, opportunity, of care that to our for in provides will of acquisitions, is and out as year a be knowing to Is because level licensed for last That's reimbursement and care that those over a of we drag rates is doesn't be increase it it's for to out or probably care three Joanna. Whether depressed steps sheet. get opportunity to poach. workers. that margins in the that licensed -- But is through this we provider workers initiatives health care reimbursement, And of one the labor-intensive At comes wheelhouse can't catch of of does some this a wages, realizes say that health health care of X.X% a played have health without in care relief two strategic a that doubt, health that year. health that then balance but X% our reasonable create time what that of folks. are an years? period be and increased the point, every control, finally government in problematic when This a our exceptionally up. current is it's you period? hospital you next years dynamic But plays unless to inflation but down going time be historical XX-month strong going Is going

Joanna Gajuk

back go to the queue. I'll

Dave Williams

you Joanna, another please have keep question. going if

Joanna Gajuk

to so sure mentioned we, to others. Sure. wasn't start take guess, at a dominate going by bigger talking for question. it if I'm update somebody I to you point rate come to and waiting pressure Yes. about any Medicare But ask create -- I don't want quite the either means. some it's might I going

you of prior is might the create wages actually kind you to from assets, acquire thought you like yes, was so change higher also that company. sounds I to be opportunity it does tone And guess which from but had for my nurses, open process the because existing

So finding just you the now would be that open or multiples a is assets it matter of right the acquisitions? actually do to

Dave Williams

lower sold not be as to going choice. well going multiples probably a It's as distressed, some these to of they're entities have financially are

Nick Westfall

service into a our go go in to locations targeted from think as go also wide of perspective. and basically it's go fit can into many model very we markets into that deep well shallow, strategic the delivery our and opposed markets competitors that we size And

Dave Williams

to several probability do acquisitions whether And I depending time, Again, shifting results will in if be don't potential a we we're acquire heard But to people. don't the the acquire And are exceptionally sky is the look any we landscape based the health but now and assets, there. say low is think blue long upon that me that Joanna, in it's opportunity. valuations. shifting going opportunities. I first us arena specifically any create last But acquisitions that in going the is years, those to doing realistic this, care rapidly. time to want it on you've And to state

Dave Williams

Yes.

Joanna Gajuk

inflation. you you before the as kind with of speak, think catch mismatch, to then And exactly. rate Right, so Medicare this update as cost up right, about the

pandemic talk the initially you I when about talked and The call it, after to other And we margins sequestration in about the thinking XX.X% going creating be of kind disruption because the previously, is guess VITAS, COVID without away. I to range. for question the XX% that was previously about

the labor margin? are just higher -- have achievable some to Or revisit just Any going So that structurally cost that you still forward is those on might might at point? that? thought

Dave Williams

So was or one, overall but lack days to that's or X% to pandemic upon the running care. magic XX.X% reimbursement the before of to that X.X% what margin finally higher last about VITAS margin disrupted those That as magic was that's a Frankly, everything. quite wages, contingent XX% the posted of the care of up catching high acuity

frankly, the that long But But was positive landscape revisit to if was on last margin a that we'll this we're to because VITAS thing enjoying the might pandemic. the before enough, pre-pandemic. to utilizing goes materially, benchmark were we negative. we did either change XX% XX.X% or the to So the the have as disrupted from

Joanna Gajuk

what those this declining. guess Because them, line margins, year, to growth margins, obviously, is let's for talking ADC end, or about you're I your, for still growth? call that say, top assume does that volume And target

So the this how of growth? think industry for you term do long about in terms opportunity

Dave Williams

I without for the to. to But don't because pre-pandemic I need going the other would terminally default going any what it doubt, ill aren't hospice away, a have isn't to was away. point data go

point, of is expect and normal. anything, senior a growth see have X% which realistically, So things housing, doubt, be to because not return now trapped from terminal question to just, for certainly actually not catch-up at return distraction the who just there revenue patients. care roughly will to say, identified they're curative I overall would or X% reasons, pump variety year to a of a industry enough, one X% a fully providers for we for terminally growth patients we But a health industry quickly that to I levels. ill and cared loss and and patients census seeing a of other we're think expect over once fair this amount admissions care probably identifying without to of the right pre-pandemic a two If in of are are

Kevin McNamara

X% And X%. with I have this is down numbers. just hospice percentage least prior macro ages, death. the and all know to sense, very if the don't one But a you've that of at day patients is as And seen between about

of for a declined. slope that unbroken then And obviously, decline pandemic an it's a -- from line immediate clear that is XX-year a that. But That a with the there's about month lot the first So period. observable. over is, upward of reasons immediately

mean, in are saying, it, to mind, again, as industry a very and yes, I time. effects seen ameliorated we're patients in who is our matter will by the enter pandemic number there of be comfortable that of So the just

Nick Westfall

go-forward those settings. providers basis. has are that's care the that's that post-acute total care positive pandemic and from absolute Last can is environment lining country for compared is that the macro hospice, silver comment, where home the Those related whether one the alternative care patients seen also reduced home think the the a cost trends of recognized period, created whether that government to Joanna, I provided in for pandemic to home-based is on be high-quality an

Joanna Gajuk

how lot is agree seems seeing everybody it you having the to year we view. there's do of given do just guidance calls Definitely, business? settings. like that we'll for So It around also line labor, a issue Clearly, different kind it about we should how margins margins Roto-Rooter in improved think the -- with margin top but about And VITAS on the be those shortage talk for of think seems the outperform, improvement? confidence going back about guess to continues of like of that the you the workforce could maybe obviously, but expectation that as about we with that will that? achieving And Roto-Rooter what next think for gives will even and maybe side, improve the some I some because pandemic, some back this the -- help. come you nurses forward how margins? the switching in gears to like But

Dave Williams

One, think there's which, guided an of increase, margin I opportunity course, we a for for.

a But costs, do Roto-Rooter inflation the success for customers. commissions price our in because are are but remember, I technicians will have we cost in chunk largely watching We fixed our margin the variable business. through predicated our it the passing is the upon of think to And expansion a really be actual of cost. increases the

be and see. so you've how the increases over That to successful. extent this should of couple have upon do in customers, be than Roto-Rooter To So I our overall a have expansion smarter term, increases. hopefully we'll how much a it think how to make we the except more commercial be supply, the we margin pass and going through conservative, quickly times, we're long our like we tad guided that our contingent is going next Again, how XXXX to price expect specifically those heard through pandemic, very say me for margin flows wait demand businesses. in we impacts but EBITDA customers and

Operator

RBC of Hendrix Ben from comes Markets. question Capital next Our

line is open. Your

Benjamin Hendrix

I you quarterly of cadence. additional detail on see if color just wanted to provide could kind any or

I quarter. puts impact, housing mix, business you lot of that and of normalize think imagine for excuse throughout mentioned of me. have quite -- your first of but the the cadence senior already level quarter impacting second to half. talked same I see a your Omicron year, A throughout referrals wanted takes peers, just first though, thoughts in you lot will not about quarter the headwinds the You've the get start may your on to

Nick Westfall

Yes.

mean, workforce no What disruption that That a were on the than unexpectedly else the impacted in through no first other it X- providers the here see we've with out commented and to as that It's others So that our experience level, safety worked of the and heavily that of we a that the disruption the we protocols was able lot will everybody only to X-week December of spike of rest different a individuals very the and the much say on everything of elevated our the been macro different through, middle else. Omicron perspective, half of not X, we've to go-forward first basis. which X.X sit impacted January into But the referral weeks dependent, immediately an of country on today was half but than January. case. and I of disruption, respond, do employees, ability not a starting at a of December basis. impact becomes terms I from definitely a and But in through respond. course, market-by-market to were second

Kevin McNamara

eligibility vaccination deal the to Issue Had also with.

Nick Westfall

go prepared, that. converted of And you were say, preparation being we've in compliance minimal successfully of And towards we based to available prepared, guys to educated, on expect our comfortable and of of happy I'm that's activity conforming internal safe right. months were with with prepared to because minimizing upon move base. XX we our That's our as advance workforce prior communities. had with mandate, XX disruption and and ready disruption ensuring And to getting in CMS the really forward would employee everybody fully

Dave Williams

don't expect Yes. Roto-Rooter, is different really for try quarterly margin we again, see to Roto-Rooter. to animal. and the guidance, VITAS profitability typically we're I passion. fourth being, throughout strengthening But to the and quarter quarter a avoid then, with quarter-over-quarter, best going that a year give margin

about we fully have our us profitability go you first get expect of of bit in it, we If as XXXX. a think to for a see three as But then in terms we're little our quarters we X going through to increase. margins nagging reimbursement inflation at out October the -- spike

and way inflation QX So a then of kind down that of that's continued nags and as profitability long-winded Roto-Rooter even X. performance arose to -- X. saying we a a enjoy we I slightly Inflation certainly and expect is it strength maybe that play increase nice see October bit. catch-up as on in full flattish in relatively strained us, be little October quarter-over-quarter. strong VITAS spike

Benjamin Hendrix

That's great color, guys.

one. one Just final

take will potentially of stay of that the normal housing in half normalizing median your How the that length the included With end referrals with guidance. senior and by in close the to -- year? second

Kevin McNamara

think it We should by of the year. be the normalized completely end

Operator

Our next [indiscernible]. question comes from of

open. is line Your

Unidentified Analyst

your Do clinicians rates. year businesses. are two consideration? improvement end And to big of guidance of on you A today, into the each the take is be the in January the growth does significantly similar the the commercial X% who question VITAS, this On percent Roto-Rooter, margin of relatively for has then residential guidance to revenue X.X% between quarantine on to from to dropped balanced businesses? pre-pandemic expect the

Kevin McNamara

business, by Let it to in strong, will I that say, and to when the has when been start commercial so Roto-Rooter you business -- will it's that compare talk say residential flip. it's me the not

continue very has will strong. and I think continued business very the strong residential

pre-pandemic. success marketing and Just residential on And to point return the call take of was side. go placement from more of the has then first shown the to mathematical has the, to it, commercial it advantage view, to where room a the Roto-Rooter

full which people for there as strength, So a it. commercial are when see as that's have growth at the taking we to approaching, lot provide service the of long customers we the we're

I vaguely strong, so residential saying guess, residential would few So is the I is I'm person for easier a it. betting point a base before than from from the grow may it mean low the a year, months a the say to be eclipse some commercial that But high base. the at it commercial during it's

Dave Williams

very out that's terms look It this we any think a jobs run turn very of it's show but And played that probably called that on Xactimate. we're commercial. haven't we Frankly, strengthening. quarter to role yet, Roto-Rooter's X-year that to a those regarding of on Water an excavation on price we growth. the our saw in primarily But We But abating. about of nice tad in that big-ticket residential signs excavation large of for side a holds we out set standard back back actually come a regard excavation in with restoration from did. to of of growth, in but doesn't our And bit guidance $X,XXX really rational in strengthening environment guidance little XXXX water we $X,XXX. the in be at the saw out restoration. that seen conservative might by conservative our somewhat up because revenue kind the is control that us growth what fourth Roto-Rooter industry is

Nick Westfall

is And Craig, this Nick.

your answer the with continuing yes. of well individuals guidance assumed to capacity available demand clinicians answer the growth current meet work. in build embedded and particularly VITAS or trajectory, achieve the as our our half is and able us year. as guidance second clinical On short into the is it our the question, to side, in to to

peer maybe workforce. more that contracted those the be than around other can is heavily and some health staff different is when our elevated hospice slightly of contract is specifically, And The group disruptions there's them, benefit of for home which than comment, hospice staff limitations inside utilized.

model compression marginal macro basis. a utilization third-party our really on due or to doesn't elevated So impact

Operator

I'd to like further Kevin closing remarks. to back for over call the questions McNamara no at time. this turn showing any I'm

Kevin McNamara

Thank you.

guidance -- during is comments of course, that XXXX, we very that before chapter just I everyone were were we close were to it. exceeded and operating ultimately gratified our with companies. my looking increased but year Just the say twice forward the I'd XXXX, the We on

was We've but guess, and you hopefully to again, gratifying. us, everyone And want attention on So made next is deliver I conservative year. prepared what for to embracing we're their think that the thank I very to for I that, it's for guidance much. back Thank

Operator

you. Thank for you conclude Ladies gentlemen, participating. Thank conference. and this does all today's

Have disconnect. great now a day. You may

Chemed (CHE) 25 Feb 222021 Q4 Earnings call transcript