Q2 2020 Chemed Corp Earnings Call
[music].
Thank you for standing by.
Welcome to Chemed Corporation's second quarter 2020 earnings conference call.
At this time all participants are in listen only mode. After the speakers presentation. There will be a question and answer session to ask a question. During this session you'll need to press star one of your telephone. Please be advised that todays conference is being recorded if you acquire any further assistance. Please press star zero I would now like to hand, the conference over to your speaker today share.
Hey, Warner with Investor Relations. Please go ahead ma'am.
Good morning, Our conference call. This morning will review the financial results for the second quarter up 2020 ended June Thirtyth 2020, before we begin let me remind you that the safe Harbor provisions of the private Securities Litigation Reform Act of 1995 applied to this conference call. During the course of this.
All the company will make various remarks concerning managements expectations predictions plans and prospects that constitute forward looking statements actual results may differ materially from those projected by these forward looking statements as a result of a variety of factors, including those identified in the company's news release.
As of July 29, and various other filings with the FCC you are cautioned that any forward looking statements reflect management's current views only and that the company undertakes no obligation to revise or update such statements in the future. In addition management may also discuss non-GAAP operating perform.
Since results during today's call, including earnings before interest taxes, depreciation and amortization or EBITDA and adjusted EBITDA. A reconciliation of these non-GAAP results is provided in the company's press release dated July 29, which is available on the company's website at Chemed Dot com.
I would now like to introduce our speakers for today, Kevin Mcnamara, President and Chief Executive Officer up Chemed Corporation, Dave Williams, Executive Vice President and Chief Financial Officer of Chemed, and Mick Westfall, President and Chief Executive Officer of Chemeds, VITAS healthcare corporations subsidiary.
I will now turn the call over to Kevin Mcnamara.
Thank you Sherri good morning.
The Chemed Corporation's second quarter 2000 towards 20 conference call.
I'll begin with highlights for the quarter and David and that will follow up with additional operating detail I will then open up the call for questions.
First let's start with the obvious upward in two separate and distinct service business segments.
With 17000 employees during an actual pandemic brings unique unpredictable at abrupt challenges.
Fortunately VITAS and Roto rooter have been classified as a central services along came at the operating during the pandemic maintaining operations in this environment is far from business as usual first and foremost our number one focus has been and will remain on the safety and well being of our employees patients and customers.
We will maintain that focus regardless of the cost to safely operate during the pandemic.
April 2020 was probably the most challenging month, we will we have ever seeing significant operating issues emerged daily triggered primarily from incredibly fast moving and sometimes contradictory federal state and local government regulations.
Logistical operating issues right identified analyzed as solution for prune practice immediately we're able to develop and continuously refine effective workarounds on supply chain issues labor scheduling issues patient access restrictions employee safety health care protocols.
Technology solutions as well as information security protocols, allowing our employees to continuously serve our local communities in a safe agile manner.
We closely followed a myriad of federal state and local regulations, and the development and implementation of infrastructure necessary to safely allow our field support and corporate support staff to safely little bit as much as practical.
Physical interactions among our 17000 employees.
On the retail segment the federal government had specific HHS have CMS has been exceptionally supportive in terms of relaxing regulations, along the use of tele health capabilities, where appropriate and providing pragmatic flexibility in caring for our 19000 plus patient census.
As most of you aware on March 27, 2020. The cares Act was signed into law. The cares that concludes financial support for health care providers to maintain operational capacity as well as assist providers with issues caused by the conservative virus panic.
On April 2020, VITAS without application received $80.2 million of care SEC funds those formulaically determined by the federal government based on our 2019 Medicare fee for service revenue.
These cares that funds as specified to be used to prevent prepare for and respond to the quarter virus.
And shell reimbursed the recipient for healthcare related expenses or lost revenues that are attributable to quarter virus.
The ability of be faster, we pay them to utilize the bull $80.2 million from the relief fund will depend on the magnitude timing and nature of the economic impact of Cobot 19 within the test as well as the guidelines and rules of the relief Fund program. That's been answers for is material for video for VITAS and maintain.
I mean, its operational capacity at the safely care for our 19000 patients.
In our first quarter earnings conference call I stated, we anticipated disruption within our patient referral and addition patterns due to significant health care system service restrictions in the coming quarter. This disruption did materialize in our second quarter 2020 admissions declined 3.8% hope over the prior year.
Yeah.
However, the emissions trend did materially improve throughout the quarter. Our April 2020 admissions were challenging and had a decline of 6.6% may improve slightly with admission decline of 5.8% June showed significant improvement generated ambitions growth of 1.1% Nick will provide additional.
Detail of the admissions trend later this call.
Roto Rooter operations were also severely impacted at the start of the pandemic in late March 2020, we observed significant significant disruption in our roto rooter commercial business.
As a reminder, historically commercial services represented approximately 28% Roto rooters consolidated revenue.
We made the decision for road to maintain full staffing and operating capacity with no employee layoffs as we entered the second quarter. This decision could maintain our full operating strength was potentially and expenses strategic move and we monitor darden demand metrics daily the decision to operate at full capacity.
As a classic risk reward calculation weighing brand awareness customer satisfaction and the financial needs of our employees.
We also wanted to be position to capitalize on any potential snap back in commercial and residential demand both to protect exertion marketing share as well as maximize our opportunities to grow market share I believe this is proven to be the correct a strategic course.
Roto Rooter services demand began to show weekly improvement beginning in the later part of April and had strengthened unabated throughout the remainder of the second quarter. This is reflected in our monthly performance with Roto Rooter Eurs per unit commercial revenue declining 38.6% in April improving slightly to a 31.8.
Precept decline in May and declining 19.7% in June.
Our residential services to proven to be exceptionally resilient with our unit for unit residential revenue declining a modest 1.6% in April increasing 11.7% in may and 18.7% in June.
All this translated into rotor unit 300 basis, having the second quarter 2020, commercial revenue declining 29.1% Reggie residential revenue, increasing 10.4% and road. We were consolidated unit for unit revenue declining a modest 1.6% when compared to the prior year quarter.
Although we did have a modest decline in unit for unit revenue in the second quarter.
Including acquisitions Roto Rooter generated consolidated revenue consolidated revenue growth of 8.6%.
Overall, roto rooter solid revenue growth with excellent adjusted EBITDA margins and adjusted EBITDA growth.
Revenues adjusted EBITDA in the second quarter of 2020 totaled $46.8 million an increase of 20.7%.
Adjusted EBITDA margin was 26.8%, which has a 269 basis point increase when compared.
[music].
Sure.
Yes.
Excuse me.
The increase in revenues adjusted EBITDA margin is attributed contributed to our residential services, having a higher margin than commercial services.
As well as increased residential excavation and water restoration services, which have a significantly higher direct contribution margin compared to commercial plumbing and drain cleaning services.
I'm very appreciative of the hard work creative solutions and willingness or so in thousand employees to adjust our operational routines and embrace new procedures. They are shared dedication made it possible us to provide care to our patients families and customers an incredible.
Personally. Thank every one of our employees for these incredible efforts with that I would like to turn the teleconference over to David.
Thanks, Kevin.
The taxes net revenue was $327 million in the second quarter, 2020, which is an increase of 4.7% when compared to our prior year period.
This revenue increase is comprised primarily of a 2.8% increase in days of care, a geographically weighted average Medicare reimbursement rate increase including the suspension on sequestration on May Onest of 2000 plenty of approximately 5.4% in acuity mix shift, which reduced the blended average Medicare rate increase.
By approximately 310 basis points, the combination of increased Medicare cap.
Decrease in Medicaid net room, and board pass throughs as well as reductions in other contra revenue activity reduce total revenue growth in additional 42 basis points in the quarter.
Our average revenue per patient per day in the second quarter of 2020 was $194 into sands, which including the impact from acuity mix shift is 2.3% above the prior year period.
Reimbursement for routine homecare and high acuity care averaged $165.22 and $985 in 23 cents respectively.
During the quarter high acuity days of care were 3.5% of our total days of care 69 basis points less than the prior year quarter.
This 69 basis point, Nick and high acuity days of care reduce the increase in average revenue per patient per day from 5.4% to 2.3% in the quarter.
Because accrued $5.8 million in Medicare cap billing limitations and in the second quarter 2020, this $5.8 million of Medicare cap includes approximately $2.3 million of cap liability attributed to the pandemic.
The suspension of sequestration riddled did result in an additional 2% increase in reimbursement effective may onest of 2020.
In Medicare provider numbers that were in a Medicare cap liability situation, there's 2% reimbursement increase was effectively eliminated by a corresponding increase in Medicare cap liability in those markets. In addition, disruption in Medicare admissions and these Medicare cap liability markets result.
Good enough further increase and the projected fiscal 2020, Medicare cap billing limitation.
The second quarter 2020, gross margin, excluding Medicare cap increased costs for personal protection equipment, or PE disinfecting facilities and increased costs for additional paid off or PTCL for our front line employees was 27.2%, which is a 350 type.
The margin improvement when compared to second quarter of 2019.
This increase in gross margin for Vitaros is attributed to increased reimbursement from the elimination of sequestration on May one 2020.
A level of care mix shift to higher margin routine homecare as well as efficiencies from utilizing tele health where appropriate.
And from costs from reduced admissions volume intake and reduced high acuity hospital referred admissions that have short length of stay in in some cases negative gross margins.
Now, let's turn to the Roto Rooter segment Roto Rooter generated quarterly revenue of $175 million in the second quarter of 2020, an increase of $13.9 million or 8.6% over the prior year quarter.
On a unit per unit basis, which excludes the Oakland and Hoffman southwest acquisitions completed in July 2019 in September of 2019, respectively. Roto Rooter generated revenue of $158 million for the second quarter of 2020, a modest decline of 1.6% over the prior year quarter.
Total roto rooter commercial revenue, excluding acquisitions decreased 29 29.1 person in the quarter.
This aggregate commercial revenue decline consisted of drain cleaning revenue decreasing 31.2% commercial plumbing and excavation declining 28% and commercial water restoration declining 20.3%.
Total residential revenue excluding acquisitions increased 10.4%. This aggregate revenue growth for residential consisted of residential drain cleaning, increasing 10.2% plumbing and excavation expanding 14.4% and commercial water restoration increasing 4.3%.
Roto Rooters gross margin in the quarter was 51.2% a 247 basis point increase when compared to the second quarter of 2019.
Now, let's look at consolidated Kemet.
As of June Thirtyth, 2020, Chemed had total cash and cash equivalent of $20.4 million and no long term debt.
And our guidance historically Chemed earnings guidance has been developed as in previous years key operating metrics, which are then model than projected out for the calendar year.
Critical within these projections is the understanding of traditional pattern correlations among key operating metrics.
Once we complete this phase of our projected operating result, we would then modify the projections for the timing of price increases changing a commission structure wages marketing programs and a variety of continuous improvement initiatives that our business segments plan on executing over the coming year.
Modeling exercise also takes into consideration anticipated industry and macroeconomic issues outside of management's control, but are somewhat predictable in terms of their timing and impact on our business segments operating results.
The 2020 pandemic has made accurate modeling and providing meaningful earnings guidance for chemed exceptionally challenging.
I will state and local government authorities are forced to make swift decisions within our health care system labor pools, and general economy. These governmental decisions have the potential for an immediate and material impact on VITAS and roto Rooter operating results.
However over the past four months Chemed has been able to successfully navigate within this rapidly changing environment and produced operating results that we believe provide us with the ability to issue meaningful guidance for the remainder of the calendar year.
However, this guidance should be taken with the recognition that pandemic will continue to materially disrupt all aspects of our healthcare system in general economy does such an extent that future rural regulation, the government mandate could materially impact or ability to achieve this guidance.
With that said revenue growth for Vitaros in 2020 prior Medicare cap is estimated to busier in the range of 5% a 7%.
Our average daily census in 2020 is estimated to expand approximately 2% of 4%.
And our full year adjusted EBITDA margin prior to Medicare cap is estimated to be 19% at 20%.
We are currently estimating $17 million for Medicare cap billing limitations for the calendar year 2020.
We also anticipate the $80.2 million of cares Act funds that Chemed, just Kevin described earlier that our former format for Haley calculated by the federal government based upon our 2019 Medicare fee for service revenue will be adequate to cover our increased cost specifically related to operating our health care.
Our unit during the pandemic as well as any incremental Medicare cap billing limitations that are triggered from declines in Medicare admissions.
I should also note that kemets full year adjusted earnings per share guidance eliminate any financial benefit from the cares act funds that relate to lost revenue.
We anticipate returning any unused cures Act fund to the federal government at the end of the pandemic measurement period.
Roto Rooter is forecasted to achieve their full year 2020 revenue growth of 9% to 10%.
Adjusted EBIT adjusted EBITDA for Roto Rooter for 2020 is estimated to be in the range of 23% to 25%.
Based upon this discussion our full year 2020 adjusted earnings per diluted share excluding noncash expense for stock options tax benefits from stock options cost related to litigation Cares Act funds used for loss revenue and other discrete items is estimated to be the in the rain.
Of $16 in 20 cents to $16 in 40 cents. This 2024 year calendar year guidance assumes an effective corporate tax rate of 25.2% and as a comparison Chemeds 2019 reported adjusted earnings per diluted share or $13.96.
I'll now turn this call over to Nick less fall, President and Chief Executive Officer of our VITAS healthcare subsidiary.
Thanks, Dave.
Before I discuss our second quarter metrics I want to reiterate Kevin's earlier comment and thank all of our top team members for their continued perseverance throughout this pandemic.
The interdisciplinary team approach that is the foundation of hospice benefit has never been more evident for our our organization across the country than through this entire pandemic.
Coordination of our entire team from our sales team, providing pandemic relevant education to our disrupted healthcare partner through our admissions teams responding to referrals, enabling our clinical care teams to provide care around the clock with the support of our care coordination centers home medical equipment Division.
And back office support has been remarkable.
All this enabled us to care for 19185 patients each day within the quarter, while bringing on the service 16822 patients who needed high quality hospice care during this pandemic.
We lived our internal model that we've been sharing during the pandemic, which is yes, we can and together we will.
Now, let's discuss our second quarter 2020 operating metrics.
As I mentioned in the second quarter. Our average daily census was 19195 patients an increase of 2.8% over the prior year.
Total admissions in the quarter were 16820 to.
This is a 3.8% decline in emissions when compared to the second quarter of 2019.
Admissions performance in the quarter was primarily impacted by the level of disruption which occurred in at each of our referring partners across the health care continuum. For example, admissions from hospitals were pressured due to the reduction in available bed capacity and elective procedures, resulting in fewer patients accessing and subsequently being disk.
Charge from hospitals.
Emissions from physician offices, whom were disrupted but we're able to remain operational through telehealth interactions song increased due to the number of patients choosing to access the disrupted healthcare system through their primary or specialty physician practice, along with medical offices.
Lastly, placement of admissions ended nursing homes and assisted living facilities were significantly impacted due to the barriers and the restriction of access towards new residents.
These types of admission difficulties are reflected in our actual admission results based upon our patients preeminent location.
In the second quarter, our admissions increased 7.1% in our home based Friedman locations. However, this admission group admission growth was more than offset by the combination of hospital admissions declining, 4% nursing home amendments decreasing 22.8% and assist.
Good living facility admissions declining, 10.2% when compared to the prior year quarter.
Our average length of stay in the quarter with 90.9 days. This compares to 91.1 days in the second quarter of 2019, and 90.7 days in the first quarter of 2020.
Our median length of stay with 14 days in the quarter, which is two days less than a 16 day median into second quarter of 2019 and equal to the first quarter of 2020.
Median length of stay as a key indicator of our penetration into the high acuity sector in the market.
Before I turn this call back over to Kevin I want to provide some additional color to beat US we'll continue to do to operationally allow us to continue to be successful and navigate this pandemic.
First we'll continue to prioritize the safety of our employees patients and their families. As we have successfully done since March.
We have and will continue to source PB.
And we're comfortable with the inventory levels to sustain employee need based upon patient and local circumstances.
Additionally, we will continue to utilize the infrastructure, we lifted up to manage testing requirements for certain facilities across the country to allow us to safely access our partners facilities to care for existing patients and placement of new patients when appropriate.
Our entire team will continue to collaborate safely with our local healthcare partners to successfully navigate patients and their families onto the hospice benefit during this unique time.
Lastly, and most importantly, our team will stay committed to persevere and provide care to all the patients and families in need in the communities we serve.
With that I'd like to turn this call back over to Kevin. Thank you Mick I wouldn't I will now open this teleconference to questions.
As a reminder to ask a question you'll need to press star one of your telephone.
A question please press the pound.
Please standby when we compare.
Our first question comes from Kevin Fischbeck of Bank of America. Your line is open.
Hi, there should we actually have Brad Bowers on for Kevin today. So I appreciate you guys offering guidance and the guided kind of implies that.
Q2 margins and not really sustainable way I understand it is.
Cost would be doing less routine care and that it would be doing more commercial is there anything else that you would highlight on that.
Well, let me just start by saying I don't know that.
Our guidance suggests that the margins, we won't be sustainable ill say that historically high levels I mean, and when you look at VITAS with some of the.
Some of the.
Issues that we referred to that.
We are accommodations to the hospice industry.
We started with.
Ill health.
The sequestration relaxed during the period.
Yeah.
Coverage for any unforeseen cobot related expense for the care Zack.
I don't think there's anything to suggest that up.
The margin for Vitaros for the second quarter were.
Unusual or on sustainable regard to roto rooter.
Of the suggestion was made as I don't know how high is up.
It's one thing that seems to be very clear with roto rooter as we keep a wheel of full and furloughed staff at the ready and.
Thats been very aggressively.
The.
Google paid search.
[music].
Good.
One month, this keeps getting better than that so.
We've made our guidance not to be I'd, not with the idea that up.
And the element of our current performance is unsustainable, but with.
The idea that in this type of environment.
Yes.
It's like every time.
Ill paraphrase every time, a company plans God lapse I mean.
To the expense that.
We want to get to specific.
About the.
The coming months, we're reluctant to do that we reinstated guidance.
But.
There's no element of our guidance that we that we think is reflective of it.
Have a slowdown in our business any bad there Dave yes, the only thing I'd add Brad is.
It's very easy to do a carve out example for you know increased PBF say roto Rooter and now we're getting a carve that out for our adjusted earnings per share. However, then you start getting when you start getting granular in terms of excess staffing whether it's in our call center, our infrastructure or anything else related to volatile.
Demand in revenue coming in.
We can't carve that out cleanly intellectually honest. So when you look at our full year guidance in terms of margins, yes that is actually a little below what we did in the second quarter, because we're thinking we're being intelligently conservative so that we can turn around and take just increased staffing increased expense.
Does that can't be cleanly carved out related to pandemic and still achieve our guidance as well as we're prepared to have mixed shift within say roto rooter, where we did quite well with excavation and water restoration, which has a fixed cost components. So when you have increased revenue in that regard a lot of it drops to the EBITDA line, we could have a new.
Negative mix shift within roto rooter still achieve our forecasted revenue, but margins might be a hair lower so we're very comfortable with our guidance. If you wanted to say do you think it's more likely that you will fall below the bottom end are achieved the high end would probably say achieved the high end, but we are dealing in an environment, where we've never done.
Dealt with before we don't know what California is going to do with their current state of economic Lockdown on critical commercial businesses for US we can take the hit its in our guidance, but we don't know, but we have a great degree of confidence on our overall free cash flow, we have a great degree of confidence on the sustainability and we're probably.
The somewhat conservative in the second half of the year as the average revenue growth. The average margins are projecting but we think we're being very very prudent given even giving guidance. In these uncertain times that also explains why we had a three minute caveat and how we developed our guidance for you guys do gauge the risk.
But we're very comfortable for both VITAS and for Roto Rooter on excellent performance in the second half of the year and more importantly, we think we're better positioned than the vast majority of our cats, our competitors and hospice and industrial services in 2021 so.
So I don't think we could be better position for the worst black Swan any of us as seen in our careers.
Got it by close very helpful and again appreciate you guys put in guidance that got it.
Middleby uncertainty. So then I guess on the on the.
Cash in the quarter. So cash is really strong. So I was kind of curious just asking to see if there were any advance payments baked into that and then how we should think of cash for 2020, and then 2021 is there anything you back such as like payroll taxes et cetera that you could maybe quantify and then the uses of the cash there. Thank you.
Thats right. So if you look at our the first six months of this year, our cash from operations was just a hair under $278 million.
So whenever you do a quarter of a $1 billion of our free cash flow from operations in this environment. It kind of know, which then goes.
And it was about $109 million all cash related to cares at issues or pandemic issues. For example, we got $80 million from the cares Act, we've had hard cost expenditures out outside vendors.
A 4 million so we picked up $76 million from.
The cares act of funding.
We also turned around have about $11 million of payroll tax deferral on our balance sheet as of today, we have about $19 million UV ink of federal income tax deferrals that we normally would have paid we have another $3 million of state tax deferrals said differently 109 million.
Collars of excess cash from operations, so that $278 million would really dropped more than $168 million, which is still phenomenal and then if you back out the $32 million of our Capex expenditures for the first six months of the year, we're still Sydney not.
We generated $130 million roughly in free cash flow for the first six months of the year, excluding the positive cash flow impact from the pandemic. So exceptionally strong and what do we anticipate doing with that cash we're certainly always looking for strategic opportunities and acquisitions, but we have.
Dissipate using the roto rooter free cash flow probably to continue our share repurchasing program and the that cash flow generator from detox, we'll continue to pile up on our balance sheet and be prepared to take whatever steps necessary to keep our employees state and maintain our operating capacity for terminally ill patients.
Got it that's incredibly helpful.
Thank you.
Thank you.
Our next question comes from Frank Morgan.
Capital markets. Your line is open.
Good morning.
I was hoping we could get a little color. Obviously, you highlighted the the sequential improvement across the second quarter by month, but I'm wondering if you can maybe give us some color about how those trends extended into into the current quarter.
Yes, starting out with just on the hospice side.
Maybe trends around admissions or.
A return to normalcy in either hospital based referrals are higher acuity Asurs if days that's my first question.
I would I'll turn this over the next to answer your specific question, but as an overall guidance obviously, we don't.
Yup.
It's early in the quarter everything we say is this is not that that that would make too many projections of this but we wouldn't as mentioned the sciquest sequential improvement.
If we thought it was short lived okay. I mean, we think that yes things the trends we highlighted in this report we just read to you.
We see is real solid and.
Something at least for the near future.
To be a trend rather than a straight datapoint, but as far as through this was the liquid prices to the questions. What are you failed admission so just to build upon that Frank that trend Kevin alluded to by breaking down the months, we continue to see in July.
And related to some of the hospital or skilled nursing flow obviously much of that is specific to the community and where that community is not only in reopening but also whether its a.
It's having a.
Outsized pick up in positive patients.
The one thing that we're continuing to see and its anecdotal is because we continue to operate and care for and educate all these partners, both covance and non cobot patients.
We're seeing scenarios of partnerships that we historically had not been receiving many referrals from reaching.
Sorry about that because other members of the community are choosing not to service those patients or the partner as successfully as they used to and so we're able to establish new relationships pickup share in its history tells us anything once we established a new relationship we do a pretty good job.
Continuing to maintain that relationship because of our ability to differentiate not only from response, but an overall quality and and resulting in an elevated outcome for those patients and families. So.
We're seeing.
Pockets, where we're really able to be picking up new business and we're hoping to continue to maintain that business for the foreseeable future.
If that answers your question.
Okay, and then you referenced the use of telemedicine there was a lot of that labor management productivity management, but also.
The use of Tele medicine can you maybe elaborate on that a little bit more and talk about what has become a more permanent part of your.
Okay.
Yes.
Yeah. So.
From an overall visit perspective that we always look at on a day to day week to week basis Telemedicine definitely has played a role in it.
And.
We are appreciative of the.
The CMS recognition of how that can add additional incremental value I think the one thing to highlight so it's not overstated is our total visit frequency and plan of care, while we moderated it down accordingly earlier in the pandemic.
Is.
Coming back towards pre pandemic levels, meaning we're able to be out servicing our patients and their families. They want face to face interaction for the most part and when there is some scenario where that's not allowed were either replacing that with the telehealth visit or adding complimentary telehealth visits to that in person interacted.
Interaction just because of the value of communication supporting dialogue right now through the pandemic. So while it is a complimentary value added service. It's not one of the main drivers from an efficiency perspective at all.
Really even then I can really be not related to head count management supporting our people and like Roto Rooter, we have not furloughed are laid off a single employee throughout this pandemic and it's really helped to.
Building around and rally everyone in as well that's why I was alluding to it can be any more proud of the entire team since March for what we've been able to accomplish.
That's very helpful and then I guess over on the Roto Rooter side.
Certainly they appreciate your your commentary around the free cash flow net of.
Of carriers impact.
In the mentioned for buybacks, but as you think about it I think you mentioned earlier remarks about.
Potential.
Potentially seeing some of your competitors not really reenter the market and so when you think about opportunities. There do you think if you will rely more just on trying to just continue to gain market share from some of these weaker competitors or some of that disappear or you think it presents many opportunities for acquisitions on the on the road.
For the Roto Rooter business.
I think more the mark gaining market share I mean, there there are a few.
Franchisee locations that are would be considered plumps, but that's that's not our focus we have in that the decision to buy those is not but I mean.
We're almost always have an appetite for those.
But the rationale used by the sellers are more tied to.
Sorry retiring.
Dying.
Not financial considerations, so we hired to plan for those.
But no.
Prior to answer your question, we'll get it were piling up all this cash.
We don't particularly when you look at.
Our stock price, even presently how far below it is from various.
Analysts 52 week targets.
We think it's a real whether it's a robot it's producing good use of.
Our capital.
We will continue which is a program that week started when the stock was $33 to share it will continue it.
Frank If you think about it on the Roto Rooter side, we now operate with the acquisition of Oakland Hs W. 324, seven 365 call centers.
Having those call centers available lives people to take concerned customers calls as well as maintaining our employee base, our plumbers and green cleaning technicians has given us a awesome competitive advantage against the mom and Pops in all of our local markets.
So it's not a debate whether we're picking up share we are the debate as how sustainable is that and how much will we keep launch the pandemic ends and we suspect it's going to be significant.
But it's really really hard to measure, but I think between the great recession of 2009, coupled with a pandemic today and how well Roto Rooter has performed in both of those very difficult operating cycles really really shows the sustainability of our industrial business as long as well.
Water and raw sewage is going someplace that shouldn't call our customers want to talk to a lie person to find out where the technician as and when they will get to their resident or business to fix it and the infrastructure. We've developed really can't be touched by mom and pop competitors. So we're very very comfortable with the sustainability.
Roto rooter as of today.
Okay. Thank you very much.
Thank you.
And I have a follow up with Kevin Fischbeck with Bank of America. Your line is open.
Hi, guys. One more question you guys touched on this little bit, but other companies that kind of call not Miss nursing that this is helping the margin hospice I was kind of curious if that was the case in the quarter here and also where MS visits currently set and whether what kind of improvement you see there. Thank you.
So Kevin and enough yet opting to hear the response to Frank It was alluded inside of there. Our overall visit frequency is still just slightly down from our pre pandemic levels, it's been picking back up and when I referenced that it's the combination both of in person visits as well as tele health and the combination accordingly.
What we're seeing and experiencing and able to successfully still manage through our patients and families.
Continuing to strongly desire in person.
Yes.
With a complement of tele health due to the fact that they're comfortable and continue to be comfortable with the safety measures. Our staff continue to take not only for themselves, but for all the patients and families and so well there was an impact in the second quarter with a reduction in physical visits when you think about.
The overall fact, we did not for low or lay off any staff. It really goes into some of our flexible variable labor labor models related to per diem employees in part time employee utilization. So said differently. We are deploying the labor needs that are appropriate for those patients and families.
Whether it's in person visits whether its telehealth visits whether its complementing.
In person visits with Tele health to make sure we're continuing to prioritize patients and families needs and by evidence with our performance in the second quarter were able to do it have a little bit more efficiency with it from a marginal perspective, and we'll continue to navigate that depending on the local circumstance.
Okay. That's very helpful. Thats, helping me thank you very much.
Thank you.
Currently showing no further questions I'd like to hand, the call back over to Mr. Mcnamara for closing remarks.
All right my remarks will be brief.
Just to summarize we were.
Very happy with the quarter obviously.
No.
We certainly are very difficult.
Operating conditions, but.
Our two because it did well and I want to thank everyone for their kind attention and.
We will try this again at about three months. Thank you.
Ladies and gentlemen. This concludes today's conference call. Thank you for your participation you may now disconnect everyone have a wonderful.
[noise].
[noise] [noise].
[music].
[music].
[music].
[music].