- Earnings call transcript Q3 2022

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Operator

Good day, and thank you for standing by. Welcome to the Chemed Corporation's Third Quarter 2022 Earnings Conference Call. [Operator Instructions] Please be advised that today's conference is being recorded. I would now like to hand the conference over to your speaker today, Holley Schmidt. Please go ahead.

Holley Schmidt

morning. Good

this of the XXXX. XXXX call the results will quarter third ended morning conference financial review for Our September 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 October 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'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; October 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

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

the disruption and internal Both XXXX continue despite quarter continued exceed released performance segments our to results earnings estimates Roto-Rooter. financial pandemic. operating third for good from night operating last reflect VITAS results Our

VITAS, aids of social shortage individually $X,XXX on The professionals. the the hiring range employment. substantially licensed onetime VITAS foreseeable professional. licensed approximately employee will For $XX,XXX XX retention retention total care XXXX. this effective concentrated costs industry-wide licensed nurses, after overtime These Accordingly, has this be bonus home will is and of care of health the and targeted retention All estimated in government-mandated care forward-looking cliff XX-month workers. workers including health vested care focused retention program future. X, believe months This on July program, from a bonuses for implemented licensed $XX health health this remains taxes hiring nurse million. and managers, are successfully payments disruption program to I completed and calculations, bonus continuous payroll per persist additional

care the licensed significant patient our expansion expanded related VITAS XXXX. began quarter, by consisting early since is the licensed nurses. This XXX majority health of capacity our pandemic clinical and in employees, the During of staff professional the first workforce

housing to referrals. and hospice continue to disruption senior see We occupancy related

ADC. home-based census of patients XX.X% home a admission total XXXX, By XX% XXXX. XXX our pandemic. senior ADC. home-based of increased the during hit quarter XX.X% housing-based the daily represented to increased in to our average data third to points nursing recovery fourth basis patients XX.X% Pre-pandemic, the nursing of Our recent low additional of an The in This quarter ratio of reflect a or continues total patients. ADC nursing

guidance anticipates senior XXXX census. Our housing-based the in updated improvement continued

continued well manpower to Internet increase and presence. to QX turn significant our anticipate manpower. XX, positioned customer headcount. this For expanded of call XXXX would when Roto-Rooter, expansion like response been time, XX/X terms challenge to centers pandemic, our that, we share Technician pressing has competitive X.X% XXXX, brand of over average awareness, core September teleconference market is David. compared and by I to in advantages With on most the post Roto-Rooter

Dave Williams

mix. XX% in cushion revenue Kevin. of limitations revenue the Acuity $XXX,XXX the liability. fiscal basis negatively impacted by cushion revenue of quarter care numbers, XX%. have Medicare of of result XX the X% cut the of provider X.X% This or was an in a Medicare numbers rates Medicare accrued between quarter of in at decline of to quarter start have numbers level CMS average provider Cap had contra $X.X revenue billing combination year Medicare Cap is was Thanks, Medicare revenue our X.X% net and geographically impact period. changes approximately prior of a of net of limitations. of the of rate the X.X%. prior two in our provider of comprised $XXX compared One number Of and and provider XXXX. third suspended reducing decrease provider mix of XXXX, other and revenue to between points is growth that of Cap million two Medicare This the Cap the approximately The the VITAS' days points. year when limitation reimplementing of a quarter were greater, and compares in numbers estimated a billing to cushion million billing X.X% our in when X% quarter has negatively VITAS in basis third weighted X% XXXX XX of these by third the XX Cap X% impacted have XXXX, $XXX,XXX a In a decline of Medicare reimbursement primarily sequestration Reimbursement a XXX which compared reduction pandemic. the shift as care or

operating Medicare XX.X%. basis XXXX. of third compared to to gross third when VITAS's and Cap, expenses related hiring to retention the and quarter related directly increased a during related pandemic margin point program is margin the - VITAS, XXXX The was for This excluding XX-month XXX costs to and quarter decline other

program. XX this margin million decline which from and this also attributed July Adjusted XXXX. is and from is retention of our to is Medicare quarter, capacity a patient Medicare basis reimplementing of EBITDA, XX.X%. points An of effective sequestration totaled basis excluding in Cap, $XX.X XXX approximately increased staffing VITAS' the points the decrease decline However, additional hiring X,

Our basis margin prior in excluding points below Cap, the adjusted is Medicare quarter, which period. XX.X%, the was XXX year EBITDA

prior expanding increase our of aggregate excavation Roto-Rooter growth However, program. and in to generated the also mentioned patient XXX the third success decline which margin points point XX.X%, as X.X% million, is year revenue quarter. margin residential an revenue prior I XX points XX.X%, quarter quarter in $XXX branch to of million, of growing This was consisted commercial EBITDA the an sequestration margin third quarter X.X% is X.X% earlier, excavation quarter the increasing totaled over restoration and is by growth X.X%, a in point basis residential EBITDA drain which million compared which year period. the reimbursement commercial in the was water in quarter the EBITDA when in $XX.X the margin $XXX higher the compared year. XXXX, when quarter increase million, the of basis expanding totaled of X.X%, X.X%, consisted expanding X.X%, branch of of an revenue revenue in to X.X%. of Roto-Rooter's from XX the in negatively X.X%, adjusted aggregate drain plumbing is staffing basis prior also Roto-Rooter EBITDA cleaning XX.X%, of XX the Roto-Rooter This revenue which our third retention quarter water cleaning capacity increasing our impacted in plumbing X.X% increase X.X%. $XX.X is year. the the increasing restoration due increasing adjusted revenue than from increase of cut and gross over and basis and approximately the increase Adjusted was totaled prior an increasing XXXX.

consolidated a about basis. talk let's Now Chemed on

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

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

and made inflation meaningful modeling let's challenging. guidance within economic for guidance. start believe remainder uncertainty ability pandemic, accurate Now changing to providing forward-looking and year. COVID-XX our Since regarding we potential guidance earnings to pandemic, the the able turn Chemed environment that recession results has The earnings operating successfully us issue calendar to XXXX the and been navigate of with of produce has the provide the this exceptionally rapidly

a to to A first XXXX. However, year this ability above relief our guidance recognition the phase year. estimated Medicare the achieve and estimated prior to of million is half upon out the portion $XX XXX prior points be the taken sequestration the approximately compared or should Based revenue materially the decline sequestration could of VITAS' over with the X% XXXX is to between X.X% Cap revenue result macro XXXX of of compared the basis impact guidance. above discussion, this of in to decline issues full

for litigation Daily options, Census $XX.XX. estimated estimated from estimating discrete care an of upon Average expense in per XX.X% but to EBITDA million other is the full exercises, stock to guidance our to Medicare to or Roto-Rooter to EBITDA calendar earnings benefits year for decline licensed to XX.X%. Cap billing per items, XX.X% Roto-Rooter's adjusted is previous year $XX.XX related X.X% Our expected the earnings XXXX to program limitation to is margin share, option are to X.X%, noncash and This the above, be range is currently revenue full be XXXX year adjusted forecast is And Cap compares prior And retention $XX.XX. excluding XXXX $X.X XXXX. Based Medicare adjusted between costs between be full $XX.XX growth and we stock XX.X%. of diluted employees for XXXX health liability margin for X.X%. tax year estimated our and share achieve to of to

does count now per XX.X corporate a XXXX our Our to earnings assume Chemed's and Healthcare an VITAS reported earnings diluted Westfall, XX.X% adjusted rate of share President Chief adjusted was Officer turn share I'll shares. current this $XX.XX. Executive effective Nick subsidiary. million of diluted XXXX on tax over guidance and call of

Nick Westfall

was Thanks, a Average prior decline Dave. In the years. X.X% Daily of the our third Census patients, quarter, over XX,XXX

the with decline second was declined patients equivalent X.X% the X%. encouraging. the to shoot staffing compared quarter most capacity. a Preadmit attributed in pandemic. we reduction emerging third VITAS is the admissions the offset encouraging and access across focused start XX,XXX. more when in hospital quarter. pre our weekly third and is outpaced set the second our flat, quarter, total community-based decline admissions this initiative is of quarter. X.X% clinical is as intra-quarter admission when metrics encouraging In the also is XXXX sequentially. on our the compared This location of The the growth, the quarter increasing of admissions This continue throughout of home as nursing admissions XX.X% of expand essentially decline performance quarter. since second the incrementally pandemic. and also which the X.X%. were facility-based since Most which green to to strengthened start of and of our In third admissions were XXXX. quarter community-based admissions to of our a admissions Our admissions generated care clinical our experienced XXXX, this hospital sequential was positively quarter, admissions second patients our preferred were admissions haven't third be This quarter community-based in quarter. our Home-based preadmit were to with appropriate discharges we the to to compared acute we've hospital-directed growth quarter admitting the admissions This illustrate, we up day community consistency Daily admits performing Average labor-intensive Census all third half the assisted of seen X% This of declined prior settings. access second third declined each period. Comparing compare the increase our is our to the third anticipated Directionally, the in short-stay improvement were initiative. by year partially quarter, ongoing illustrates down hospital long-term This segment To the due our XX.X% admissions admissions. decline in Nonhospital when proactively

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

as to our produce median we XX very of positive the compares length as and to continue of growth access on the entire I Overall, serve days our community days XX execution days median stay initiative how regarding of our in stay quarter is successful the pleased our workforce. of the earlier. length VITAS XX in second renewed and team quarter XXXX. of the I'm communities referenced execution and results quarter our in well focus to our with of Our XXXX, of This in retention recruitment third was attributed within

to to patients Before well by another like I I team over one would supported Florida Kevin, turn the who call impacted back thank as members Hurricane as our our Ian.

and dedication was also Myers within is This even when With our over inspiring we truly Florida Kevin. this as turn to appreciated program response the Your like prepared you September in the back Fort and we I'd opened successfully that, more hurricane. communities to staff consider for impressive serve. the call hospice

Kevin McNamara

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

Operator

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

Your line is now open.

Joanna Gajuk

morning. me? Yes. Can you hear good Hi,

Kevin McNamara

Joanna. Hi, Yes.

Joanna Gajuk

Perfect.

you? Okay. Thanks. Hi, are how

on So new questions just a couple see hires. traction of the specifically good to here,

increased -- I when these see updates activity? from it's So you would this working, to so some hires, so see too is kind benefits to good. expect of this that's on wonder retention just new early assume probably I program But

Nick Westfall

I the Joanna, I sure clearly So want question. to make just understood

saying, continue an would You're a of staff, admissions retain we and and we days more onboard as clinical to to standpoint? both benefits from the when incremental care see start

Joanna Gajuk

Yes.

Nick Westfall

got a onboard, we obvious, embedded There's to clinicians bring up that - tail, Okay. to speed. state an you. as Obviously, the not of there's

But dependent admissions week days And a or caring some on The to would time from their corresponding follow referrals care or a comfortable, they're accordingly. they're get distribution to health patients speed hospice is usually, window experience four of own out that setting. for us growth to to basis days care trying our was eight begin to and normal commentary of allude with responding days. be to And the the to all XX different may on as that coming to trends, contribute will XX of some of median sequential length access and what inside returning stay, continue I a that's continuing of forward. incremental we'd on admissions of community hope going with to and care initiative, that positively around whether

Kevin McNamara

say, And the adding reason But clear. in would I two. staff this what the at a direct No no dovetail increase directly the There's was prerequisite. it's they'll point question. those

Nick Westfall

That's right.

Joanna Gajuk

guess first. I a that on follow-up definite. Yes.

is are more changes coming little where to give you nurses clinical providers. attracting on seeing coming us stuff you're terms the In of Can Or these they these just from is you where a that? flavor Humana of from, hospice are individuals settings? like other

Nick Westfall

seeing have. can say It's very definitively much market specific. across applicants But the we we board are is than we more

encouraging existing aspect to the have other teams fantastic and it continuing but to not is to of generalize done those a the only of The being of clinical candidates new the seeing But well. are from. which capacity. combination members things team job unfair our a we're apply, more improve coming But our people it's really build of two where retention clinical are adding is staff, as different to very sign that universally,

Kevin McNamara

want the obviously, Nick, five. point, four We of retain lose to your to not reiterate hire to them, and best retain worlds all But is five.

Nick Westfall

the is so critical. commentary That's on why my retention

now. hitting both So right we're really cylinders on

Joanna Gajuk

which with that to payment accruing this And this you you started these you next increases year? don't I continue end, versus do you can them retention your - at would you year. know need - next base know out But just as bonus what to that And and sense increases? expected guess next program, you I I some just start to I year? guess wage of this us paying program costs retention give be you how look

Nick Westfall

is the job, we're that the more and Street. do we're to workforce. answer appear the program XX-month that to we So work Part rationale continuing a released component we've stated place of it. attractive to to would think continuing clinicians not as We coming good me an first with be anticipate period let the after to back the

our it those relates normal view things it's we program whether it's to how merit hiring mutually that to cycle, or As compared whether wage, are two as exclusive.

X can price merit consistent in managed what has year, that's pretty this statutory obviously, ago say got continues and next with the accelerate increase targets, increasing October days a we've release rate hope so we And X, point. don't something our we've at I that it of to necessarily October some is but that line requirement. XX while a of from relatively we just been

Kevin McNamara

have I it's Right. know related Joanna, a answer. you And questions, some

in us is it we And it we Nick's don't. different it, or and supplied, year, During purchased the do a instead look, seven remainder stay basically it's - employees money put normalcy, stickier say, this Question form, money to we we a of to vacation call of we something pandemic, as extra it - a is it, the is that me, was to first that five you what a would report money? it's your if the or income. which that as government just vacation. to was million. view the vacation. the days normalcy. rest But of thought If Virtually we attributed - in increased we to it's whether all that we point rather to months, equipment we vacation bridge did returned treat get or other, to XX return we to the can and a bridge take salary XX it additional $XX.X just following - the additional we stay I little of you gave gave like X.X pay bonus. and we didn't continued, decided answer, protective but one, with the the government. in And that from and What more two year days vacation, extra extra forms, have of the giving all of Number

that why treatment don't of take that's it. we So

Dave Williams

nurses, for workers. - up bring and substitute health aid We're point. social wage. paying beyond retention is that. The great a But an prevailing market a our It's not Kevin, above home for anemic-based you wages

Nick Westfall

Joanna we terms But confident, of feel ability... in our

Joanna Gajuk

Okay. Great.

Nick Westfall

we ability confident were the we'll our rest the of the through to obviously continue inside to going manage and - guided what stated business was ahead. and for Go of I ranges in marginal year to feel mention, XXXX. the guide

Joanna Gajuk

Nick, should of would But because understand next start health of of kind it be inflation Yes, we the and year X%, I X%. to around some about year care next kind expected trying providers wage think oscillate about talking how to seems was

you? to into any you wage reasonable So next high is expectation on that color growth? deceleration a or will you expect more single-digit helpful, this year Or like So saying be too.

Nick Westfall

range. of provide degree we'll the a reasonable decision individual It's is leadership guidance level. down that We don't at while target guidance granular to because made every with

what XXXX So talking for we'll guidance. release feel discuss we're but that's something we once realistic range with. we about, And a comfortable obviously

Kevin McNamara

can't It's a the our with we're that's position, and our if requirement. say we I I X.X%, have is if we from in that reimbursement to we going deviate up - can can't start significant - any mean, - free to - that way.

Dave Williams

licensed the for rate we wages not end But be paying a on we're workers market-by-market certainly nurses going of the are care other basis. self-defeating. qualified health the - if will for had professionals, health care And at day, it decided and

retain pay, the that's we So and other adjust engineer market rates, of accordingly. it costs to to attract and such end whatever will talent at at takes going we're what we'll the at day,

Joanna Gajuk

the Any trends, then much there high intra-quarter smaller, just from late to is hospice guess on one being but discharge but is in talk things August, last improve question on VITAS. I Okay. like sense. ask they on in the other about quarter. which the rate started comments It Roto-Rooter, makes before of I here

you've or terms just quarter? curious sale of the kind seen either the discharge I rate was in So what exiting of

Nick Westfall

very of my - start of had metrics previously metric up mean an have was alluded Yes. the don't I I emerging in might outpaced I the that for discharges the Joanna, remarks second know, half we green it encouraging that since opened what my I to opening before comment shoot the third been to we haven't a experienced to and questions. in quarter, But is did admissions which pandemic. miss able growth you sign

of days So directionally, throughout basis care that's quarter. where on week-by-week a the sequential performed the

Dave Williams

in really August quarter licensed very Kevin And the our about two, say terms have first in health and points as know not provide lines, color third care the specifically and capacity, Joanna, of before start want quarter to very, three discharges, multiple we expanding this the third encouraging. we I admission is the guys the described Nick to like also areas, you but our July, of would encouraging if signs more addition very and since talk saw nurses. expanding was is extremely some pandemic It success trend at in I like given attitude, in we or encouraging would of quarter. what the attitude our Nick But our my professionals, worked sustainable least away put together we September is, was

Joanna Gajuk

color. That's good to hear. the I appreciate

So things like our is of it also are but as terms margins on sounds in revenues this model Roto-Rooter, actually tracking better. well

better So the is because guidance. the how your the think raised did answer expectations? Roto-Rooter versus you I I internal know

of guess kind driving and I margins well outperformance? the outperformance on what's as that the revenue as and So driving what's

Dave Williams

Roto-Rooter softness not on commercial, revenue The would still see Yes. a in our resulted controls the But but the EBITDA on jobs, what The XX% through could we not level. some enough. residential internal in little margin much. be, yes, we cost headline - and expectations Roto-Rooter, be for record busting but quarter, we thought yes, between quite arguably for primary the close increasing way and the discretionary thing match

for employees. headline in strong our guess as the not depths sustainable the good pretty the good good cost but Very pandemic, say, of control, darn I demand, So would good. was, still it compensation as high be

Roto-Rooter, People customer's as the on the cost when quarter to months. in. the residents one happen first drier being are and quarter typically is really Roto-Rooter what as for third demand comes quarter. manpower well control, the third difficult made holiday, most that's So about it's And the

the lowest. go anyone see we And saw is we that, typically and that's holidays, seasonality, things the in happening. in like seasonality QX, to month So And to then from that our typically the of X% is business, September sequential sequential indications entertaining seasonality X% sequential about QX we growth. when the strong

again, Roto-Rooter about. as traditional which quarter, for sharpening our of in seasonality part uplift anticipating feel as we So of margin confident pencil, fourth reasonably more our well and increasing the

Kevin McNamara

And I'd Dave, other got - comment on make the we've Roto-Rooter.

We necessary observed then the through. they mean clearly, And a getting the Roto-Rooter. again to we're of have come the once been pricing in inflationary get difficult pandemic of And demand difficult Roto-Rooter of look and pricing increases power do at as environment. our one out is those. successful most the I things clearly, results, when in you has issues

Joanna Gajuk

the comment. Appreciate

back I'll Thank to queue. the so, Okay, you. get

Operator

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

line now open. is Your

Ben Hendrix

Thank you much. very

in Just creating responses working seen where you your in to quick counter on their material from is bonus competitors or markets. your of kind Have any program who of see are not a own follow-up as the maybe efforts inflationary initiative. wanted looking with pockets any markets is very pressure bonus if well there's programs? any to the any certain prolonged Just hiring

Nick Westfall

no. We're where a seeing be answer there'll the Ben, anything short not material response. is

in organizations, many gets good sign-on but continue health but to for is as not the bunch the existed in bonuses, last home it. the have retention years. a that higher whole component verticals of the only structure news it, X.X - market of the on side out coupled And much with care, care things other have those Some not

helped we us with those the offer program, for candidates point for so difference hopefully they and really maker well retention as potential and XX has the which as to once deem receive with a which great months at reward understand are to years. they XX would us been recruitment they've VITAS opportunity program, Our the talking in

Ben Hendrix

Thank you.

Operator

Instructions] at comments with showing [Operator time. comments. this closing no McNamara, you further may I'm your Please proceed Kevin

Kevin McNamara

comments will And good everyone quarter And return with you. the of this employees have all I quarter of difficult want conditions. to the they you in thank results a for - much. Thank to I their be results. we'll thank for solid forum course, thank everyone, to very mid-February guess, be and brief. Thank what in operating Closing year-end our continued the fourth attention.

Operator

this gentlemen, program. Ladies and does conclude today's

You great day. may Have a disconnect. now

Chemed (CHE) 1 Nov 222022 Q3 Earnings call transcript