Q2 2021 Chemed Corp Earnings Call
Good day, and thank you for standing by.
Welcome to the candid Corp, second quarter 2 and.
'twenty 1 earnings conference call at this time, all participants are in a listen only mode. After guest speaker, Brett and patients. They will be a question and answer session to ask a question. During the session you will need to press star 1 on your telephone I would now like to hand the conference over.
And your speaker today Ms Sherri.
Yeah, the wiring of Investor Relations. Thank you. Please go ahead.
Good morning, Our conference call. This morning will review the financial results for the second quarter of 2021 ended June 30th 2021, before we begin let me remind you that the.
Safe Harbor provisions of the private Securities Litigation Reform Act of 1995 apply to this conference call.
During the course of this call of the company will make various remarks concerning management's expectations predictions plans and prospects. The constitute forward looking statements actual results may differ materially.
Overtly from those projected by these forward looking statements as a result of a variety of factors, including those identified and the company's news release of July 27th and and various other filings with the SEC. You are cautioned that any forward looking statements reflect management's current view only and that the company undertakes no obligation.
<unk> revise or update such statements and the future. In addition management May also discuss non-GAAP operating performance 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.
Got it and the Companys press release date of July 27th 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 of Chemed Corporation, Dave Williams, Executive Vice President and Chief Financial Officer of Chemed.
And Nick Westfall, President and Chief Executive Officer of Chemed be tasked health care Corp subsidiary I will now turn the call over to Kevin Mcnamara.
Thank you Sherry good morning.
Welcome to the Chemed Corporation's second quarter 2021 conference call I will begin with highlights for the quarter.
And David and Nick will follow up of additional operating detail.
And we'll then open up the call for questions.
Operating 2 distinct business units during a global pandemic has been exceptionally challenging Fortunately, we have begun to return to normalcy the pandemic had created.
And Nick problems logistical hurdles and forced our operations to make significant changes and field and home office procedures.
Many of these changes have been institutionalized and will become part of our normal operating procedures post pandemic.
I could not be prouder of our management team both VITAS.
The way that you would ever met these pandemic challenges head on and produced excellent operating results and are well positioned for growth and the coming years.
And April 2020, the first full month of the pandemic really experienced and immediate and severe drop in demand for all of plumbing and drain cleaning services.
Rose.
This drop was short lived.
Starting in May 2020, Roto rooter saw a spike and residential plumbing and drain cleaning demand. This increase in demand was sustained throughout 2020 and has continued unabated and the first 6 months of 2021 <unk>.
Commercial demand has also improved of pandemic lows.
And as of now normalized close to pre pandemic levels.
For the remainder of 2021, I anticipate roto rooters residential demand to remain at the current run rate coupled with increased commercial demand as the country returns the normalized pre pandemic consumer behavior day.
David.
For the 5 more detailed guidance metrics later in this call.
Over the past 20 years, the country has phase 9 of 11, the great recession, and now of global pandemic and each of these crises roto Rooter remained operating and materially increased market share revenue and operating margin just as important.
Rover has held onto the increases of revenue market share and margins and past crisis.
Roto Rooter is well positioned post pandemic and we anticipate the continued expansion of market share by pressing the our core competitive advantages in terms of brand awareness and customer response time.
We will provide for 7 call centers and Internet presence.
For VITAS for the most significant issue of remaining from the pandemic is that the disruption to senior housing occupancy and the related hospital referrals.
Recent admissions data suggests senior housing has entered into the early stages of.
And <unk> and our updated guidance anticipates steady improvement and senior housing and the senior housing referred hospice admissions and the second half of 2021 with a further acceleration of the senior housing admissions anticipated in the fourth border.
With that I would like to turn of this teleconference over to David.
And <unk>.
Thanks, Kevin.
I will turn the VITAS VITAS is net revenue was $312 million and the second quarter of 2021, which is the decline of 4.7% when compared to the prior year period.
This revenue decline is comprised primarily of of 6.3% reduction and our.
Care.
Offset by a geographically weighted Medicare reimbursement rate increase of approximately 1.8 per cent.
Acuity mix shift did have a net impact of reducing revenues of approximately $3.8 million and the quarter for a 1.2 per cent.
And the combination of the lower Medicare cap billing limitation.
Days of and the other contra revenue charges offset a portion of the revenue decline by roughly 90 basis points.
VITAS did accrued $2 million and Medicare cap billing limitations and the second quarter of 2021, and this compares to a $5.7 million dollar Medicare cap billing limitation and the second quarter of 2020.
And.
Of our 30 Medicare provider numbers right now 27 of these provider numbers have a Medicare cap cushion of 10% or greater and 1 of our provider numbers as of cap cushion between zero and 5 per cent and 2 of our provider numbers currently have of fiscal 2021, Medicare cap billing limitation.
Liability.
Let's take a look of roto rooter Roto rooter generated revenue of $220 million and the second quarter of 2021, which is an increase of $45.6 million or 26, 1% over the prior year quarter.
Total Roto Rooter branch commercial revenue totaled.
<unk> dollars 3 million and the quarter and increase of 31, 8% over the prior year.
The aggregate commercial revenue growth consisted of our drain cleaning revenue, increasing 39, 8% plumbing increased 32, 4% and excavation expanding 25, 8% water restoration and also increased <unk>.
8.
<unk> on the commercial side.
And the residential side total residential revenue and the quarter totaled $149 million and increase of 23, 7% over the prior year period.
The aggregate residential growth consisted of a drain cleaning and increasing 26%.
Plumbing and expanding.
And the 37% and ex of excavation increasing 22, 4%.
Water restoration and also increased 23, 1% basically increases across the board all segments, both commercially and residential and.
Now, let's look at chemed on a consolidated basis.
During the quarter Kennedy.
<unk> repurchased 250000 shares of stock for roughly $122 million, which equates to a cost per share of $487 and 53.
As of June 32021, there was approximately $312 million of remaining share repurchase authorization under this plan.
We've also updated our 2021 earnings guidance as follows.
VITAS is full year 2021 revenue prior to Medicare cap is estimated to decline approximately 4.5% when compared to 2020.
Our average daily census in 2021 is estimated to decline approximately.
<unk>, 5%.
This guidance anticipate senior housing occupancy will begin to normalize to pre pandemic occupancy starting in the second half of calendar year 2021.
VITAS is full year adjusted EBITDA margin prior to Medicare cap is forecasted to be 18, 3% and we are currently.
The estimated $7.5 million for Medicare cap billing limitations and calendar year 2021, that's an improvement from the initial $10 million of Medicare cap, we estimated at the start of this year.
Roto Rooter is forecasted to achieve full year 2021 revenue growth of 15% to 15, 5%.
Originally the adjusted EBITDA margin for 2021 is estimated to be between 28 and 29%.
So based upon this discussion our full year 2021 adjusted earnings per diluted share, excluding noncash expense for stock options and a tax benefit we received from stock option exercises.
While as costs related to litigation and other discreet items is estimated to be and the range of $18.20 to $18.50.
The revised guidance compares to our initial 2000 and 'twenty 1 guidance of adjusted earnings per diluted share of $17 to $70.50.
I'll now turn the call.
As Nick Westfall, President and Chief Executive Officer of our VITAS subsidiary.
Thanks, Dave.
And the second quarter, our average daily census was 17995 patients of decline of 6.3% over the prior year.
This decline and average daily census was a direct result of pandemic related disruptions.
All of it and entire health care system.
This negatively impacted traditional hospice admission patterns starting in March of 2020.
Our hospital generated admissions have largely normalized of pre pandemic levels referrals from senior housing, specifically nursing homes and assisted living facilities continue to be disruptive.
For uptick.
During the second quarter, we have seen admission stabilization and pockets of improvements and senior housing and missions. However, it remains too early to accurately project the pace and timeline for senior housing and missions to fully return to pre pandemic levels.
And the second quarter of 2021 total VITAS.
Submissions were 16840 this is the.
The slight improvement when compared to the second quarter of 2020 of emissions.
More importantly, admissions and the second quarter of 2021 exceeded discharges by 315 patients.
This is the first quarter since the pandemic began that our patient admissions.
Ceded patient discharges and this is the strongest indication to date that we are now beginning the process of rebuilding sensus to pre pandemic levels.
And the second quarter, our hospital directed admissions expanded 7.8%.
And of emergency room admins decreased 9%.
Total home based pre.
Admit admissions decreased 9.3% nursing home admissions declined 9.9%.
Listed living facility admissions declined 17, 5% when compared to the prior year quarter.
Our average length of stay in the quarter was $94.5 days. This compares to 99 days and the second quarter.
And have a clean and 'twenty and 94.4 days and the first quarter of 2021.
Our median length of stay was 14 days and the quarter.
Which is equal to the second quarter of 2020 and has a 2 day improvement when compared sequentially to the first quarter of 2021.
When the reiterate Kevin's comments and thank our.
Order of towards the team for their unwavering dedication and over the last 17 months to deliver these results and the quarter as well as continue to provide high quality of care and every community we serve throughout the country with that I'll turn the call back over to Kevin.
Thank you Nick.
It's now time for us the consider any questions of come before the teleconference.
VITAS yesterday as a reminder to ask the question you want me to.
The press Star 1 on your telephone to withdraw your question you asked of him.
And our first question comes from the line of Frank Morgan from the RBC capital markets.
Your line is now open.
Good morning.
And I was hoping maybe you could give us a little color you talked about the recovery and the.
Missions of our exceeding discharges, but.
How would you characterize that momentum across the months of the quarter would you generally say it got better as you went through the quarter any general color there and I think you also commented about.
Some pockets of and improvement in referral patterns could you give us any additional color on where youre seeing most of that and I guess I'm, especially interested in the Florida market.
So Frank to address your first question on pace inside of the quarter.
Did see strengthening of the.
Admit versus discharge differential inside of the quarter and granted we're inside of the summer months and going into the fall that has some monthly seasonality to it but all in all we felt good and comfortable with the momentum that appears to be building inside of the quarter and is included in our projections for the remainder of the year and just with regard to Florida.
The degree that the admissions and Florida are stronger and have been stronger flow through.
The entire year as compared to the rest of the country. So.
Very important and Florida market is for them.
And rock solid and that's right and so the Frank that was the second the point I wanted to reiterate Kevin's comment on we're seeing.
The <unk>.
Throughout the entire state of Florida, but also regionally.
And we're starting to see some momentum actually in the Midwest southwest and northeast and California continues to ebb and flow and certain pockets of California because of some of the differences and local municipal.
The strategy actions and enactment throughout the community and Frankfurt just for an abundance of clarity. So if you look at the quarter April May and June April we saw slight negative where and discharge of slightly exceeded admissions and April may was actually positive where admissions exceeded discharges and and.
So may improved over.
And as of June improved over May where he had a significant gap between admissions and discharges. So the momentum and the trajectory is going the right direction I don't expect it to be linear, but without a doubt I would say I am exceptionally competent and saying is a word that bottom and we're off the bottom and we're seeing recovery.
Of our AOS comment frankino to correlate it back to the senior housing and Youll see it I'm sure with the publicly available national data. When you look at just even small, 1% and 2% incremental occupancy moves across the board throughout the country that helps to sort of correlate some of that ongoing momentum specifically in the senior housing sector.
Got you and as I look at.
And we get asked a lot about the labor markets and.
Availability of labor. So I'm just curious what what is your strategy through this period clearly census is.
Has been pressured through the pandemic, but.
What is your philosophy relative.
Relative to labor are you willing to sacrifice margin and the near term to keep the labor or how much of an issue is getting labor for you in your key markets.
So that's sort of 2 questions built inside of there right.
The approach throughout the pandemic and we continue to exit and execute upon it and the second quarter was we.
We recognized in certain select markets, yes, we had certain skilled disciplines, where maybe we were slightly overstaffed and we would've been with an expectation of that return towards normalcy and a real focus on retention of high quality employees throughout throughout the pandemic, but with extreme.
Focus here in 2021, and I'm happy to say in the quarter. We've we've continued to see success with that on a very intentional effort.
And we think it positions us well going forward with that being said there are specific markets and specific disciplines that we're very aggressively continuing.
To recruit for not only for our existing care needs, but for our anticipated future care needs and I hate to make Blake and statements, but we've had no.
Noticeable success with some of the internal metrics and the way in which we.
And we garner that but recognize the same commentary that's.
Thats coming from the entire market it is a very competitive.
It's a very competitive market, we have tried to take some unique approaches for really.
Articulating what the value proposition to the candidate basis to join the tasks as opposed to some of the other other providers and the space I've made it and fragrances.
And these competitors is talking about are paying substantial cash bonus of signing bonuses.
2.
Sure.
And in order to.
It's a certain disciplines that all but it's been it's been a struggle, but it's not getting worse.
It's been it's been.
Suddenly tough.
But you know the other component baked inside of there Frank as we sit today across the board and there may be some market nuances to this but across the board we don't see staffing as an impediment to day, that's impeding our ability to grow on a go forward basis.
Gotcha.
Maybe 1 just last 1 on the ties.
Obviously with the the <unk>.
Recent surge, we're seeing from the variant and I'm just curious.
And.
How would it be different this time versus the past.
For the past surges.
I mean, obviously the most of the nursing.
Oh and population now vaccinated, but.
How do you think your business would react if this variant hangs around for a while.
So I think there is a host of differences as we sit here today as compared though when we entered the pandemic. The first 1 is our internal.
Knowledge and comfort not only knowing.
The vaccination rates and the ability for us to continue to educate our team members right to be fully vaccinated, which I think.
You understand the.
The nuances with the second wave of being highly concentrated on the on vaccinated population as well so.
To provide the degree of.
Comfort to the staff to be able to be out in the community to provide that degree and level of care also for unvaccinated or testing requirements. We also have the testing capacity to be able to execute and conform to those rules and so between the combination of those 2.
So it helps along with sufficient PPE, we should be able to successfully navigate any access restrictions or.
Potential existing or new patient and family and health care partner concerns to be present out and the marketplace in a safe way to respond to the ongoing needs. So we're.
Said differently.
Better equipped with information to be able to react nimbly as well as the materials and protective supplies to do so without without any pause.
Frank I personally think the most of them just rough the potential element of the <unk>.
Belt of variant.
As to the extent that a.
The things state.
And where to require.
All of service providers like us to.
The only vaccinated employees.
That would be of disruptive factor because readouts like a lot of every company.
<unk> has employees that don't.
Wanted to be vaccinated and.
And.
To the extent that.
And that we were dealing with that that would be of disruptive factor, we're not likely to do it and.
I think that if you look at the various states.
Florida is probably the last state that would do that.
Because it's got 1 of the highest percentage of <unk>.
<unk> and health care worker.
Groups and the entire country, so I don't anticipate that happening.
And to the extent that.
It did happen.
Like what happened in Florida, which is.
Which would be our biggest circle.
And we're watching it very carefully I think the real answer to it is as the Delta variant which is significant.
And maybe a little of steadily.
Is that.
And as persisting and the real issue is we've been as the country has been through at once.
And we know that there were certain over reactions and maybe some other reactions and they have a better chance of getting it right. So.
From a commercial standpoint, we're less concerned now than we were previously.
Got you and 1 of ADL rotary of your question and I'll hop back in the queue, but just with the.
Interest and your comments.
You made about the commercial side of the business is having.
Zane and back close to baseline and just curious have there of any any changes and the mix of business on the commercial side.
And.
And then I guess on the residential.
<unk>.
And the sustainability of this of this really incredible performance.
Like Youre pretty confident the that continue.
The data points, there would be appreciated and I'll hop in the queue. Thanks.
Yes, so yes, without a doubt commercials coming back close to pre pandemic level, not there and certainly not there and all markets.
And so we're we now have 3 weeks.
Sales and in the month of July and I think 1 of those 3 of its Kevin was another record week. So yes, we have a high degree of confidence that the momentum is going to continue and as long as that momentum continues and thats, where Kevin and I are getting our confidence we'll hang onto the share and Thats why he pointed out the last 2 times we had described.
Reported 90, 11, and the great recession, we did keep all of the the share growth we obtained during the crisis and the fact that this continues now and the momentum has continued on roto Rooter is where we're getting our confidence we will maintain the share post pandemic, but we're watching it very very carefully the great story frankly is the margin.
And they have of 29 EBITDA margin for Roto Rooter and Q2.
Unheard of.
We're trying to be somewhat conservative, but recognize we are dealing with significant demand momentum, but we're watching roto rooter very very very carefully, but we think we're in great shape in terms of demand cost structure.
<unk> and our positioning.
And basically what we look at is obviously the story of the last couple of years for rotor Roto Rooter is strong growth and what we call the ancillary services the Scott.
Excavation number 1 and <unk>.
Water restoration.
And number 2.
The feed off of.
Strong growth and the core businesses and that's what we're getting so.
Gives us a lot of confidence.
Starts with the core business growth and then it's just.
Getting the throughput for the other services.
Yeah.
Our next question comes from the line of Joanna Gadget for.
From Bank of America.
Hi, good morning, Thanks for taking the questions here. So so like as far as the if we can come back to VITAS and <unk>.
And the question of <unk>.
About the.
Margins for the segment so for the year of you reduced the guidance versus your initial expectation for the market for the margins for VITAS, but despite the fact that now and cause this sequestration of left over the extended it wasn't in the share of the debate it.
And so what what is driving this dynamic.
Thanks for the first question.
Yes, so there's a couple of levers inside of it from when we provided initial guidance and what we've now been able to observe from a trend perspective, that's reflected as you alluded to.
Think.
Yes.
2 of the primary pieces, which have always been the largest cost drivers get tool.
But as you know not only salary wage and fringe.
Spread across.
Days of care, but also you know ongoing ancillary costs, particularly in the medical supplies as well, specifically and so where do we able to take targeted.
Tore actions to continue to maintain and improve those things and the second half but really.
We have much more experience now obviously 5.6 months in 2 of the year and so what we did was update our cost drivers with it and make sure of that.
We are prudently managing that on a go forward basis those of the 2 primary drivers there.
Joanna and along with high acuity really looking at overall high acuity mix and what realistic expectations look like for the remainder of the year and Joe and I'd say that from a management standpoint, as we've looked at ourselves we said we had.
The administrative support.
In place for we're very expected.
Very reasonably expected to be 20000, plus.
Patients and.
And.
No.
With a flip of a light switch.
The.
The felt.
The number of the 17000 number and 1 of the middle of pandemic.
Not a real good time to be ripping employees and.
<unk>.
Making changes and let's say, our overall capacity to deal with the with that call. It that 20000.
Number for the patients, but that's something that we're we've now had a little more time too.
Begin to chip away at and I think and to right size.
And on the administrative side so it's.
From a management standpoint to say something to say.
Margin has fallen and yeah.
And that's never a good thing to.
And to the extent that we say that now we have some.
And some levers to pull the put it back into perspective, I think Nick is doing a great job doing that and.
As we alluded to throughout the pandemic and prior quarters. There were some components of margin that were 1 time and non sustaining not sustainable and I think we did a pretty good job of highlighting that when it came up and and obviously.
So we feel.
I feel like we have a pretty good handle on the.
On the go forward basis at this point.
Okay.
Last time, we were talking about.
You're getting some efficiencies in the business in terms of how you are.
Alright and.
And I guess you can.
And I alluded to like 18% of margin I.
Yes.
And.
After things normalize so you can still kind of how we should think about it. So the despite the fact that you know sequestration.
Perhaps we'll come back at some point the 18th.
And the margin is still kind of the target for that business.
Yes, I think and the prior commentary and it was 1.
And I commented on it was it was it was that piece really talking about it in our 2022 time frame and you obviously will come out and that provide that updated guidance. When it gets the 2022. So you know.
I think it's it's consistent but the number I seem to recall was about 17 of the half component.
<unk> with it and and obviously there are other efficiencies that get to be garnered win.
As median length of stay and other components would begin to build back towards pre pandemic levels and a normalized distribution that then play into that but that's really a <unk>.
2020 to second half of 2020.2 time period at this point.
David right because of <unk>.
You made some comment about the.
And our acuity churns, so kind of I guess, you still assume I guess the SaaS. This.
And this year of acuity.
The lower is that correct.
It is and that is correct and when you look at it.
Total acuity and the quarter and as Dave.
Alluded to in his comments was 3.2% total days of care compared to $3.5 in the first quarter of 2021, and when you break that down further and there is stability inside of the general inpatient component, but continuous care still continued to be impacted and keep in mind some of the continuous care impact.
Betting wise is inside of senior housing and Theres no.
Until occupancy admissions and the ability to provide care of returns to normalized levels and senior housing it would be foolhardy to believe that when a physician determines its appropriate period of crisis. The continuous care would be it would be appropriate in that setting.
Alright, and just I guess the.
And we spend sometime talking about the senior housing.
And dynamics and.
And <unk>.
For the second half of more.
So in from fourth quarter specifics, but can you talk about.
I guess the business outside of that.
All of that so.
The setting for you.
And that's all ex from other settings.
And doing something different and they are getting traction and Quebec yoga apparel sales.
And Africa or some other sorts of so can you kind of talk about that dynamic.
The short answer is yes.
Sure.
And the other 2 segments, we primarily report on hospital business. We mentioned has returned to pre pandemic levels and frankly, it's it's above pre pandemic levels is that symptomatic of patient flow and the health care system traversing the hospital system more than other settings potentially but we.
And we feel good about our approach there are dedicated focus over the last few quarters has really been and some of the what we'll call. The Homebase, which is primarily a lot of the physician office.
Settings, because as we watch the pandemic evolve and people.
Re access the health care system, we found they did.
And through those markets and so while that.
While it takes more of a distributed education approach to tone hone in and really prioritize our time, that's what we've been that's what we've been focused on because we have more.
More accounts than we can service and any given market and we're really making sure we're focusing on.
So and on those that.
Understand the hospice benefit and want to really help.
Help work towards providing appropriate access to patients and the communities when and when that need as presented.
Alright, and I guess here shortly.
Just last question on that.
Our top of the house.
The carbon and demonstration of with M&A and.
Update there what do you see and how are you participating.
Let's talk about the sounded like no sales.
So kind of any any color you might have of what are you hearing and the market has how's that going.
Yeah, no we're not participating.
The day for any of the year 1 components.
I think you're aware of this but the participants that chose to chose to join year, 1 and 7 of the 9.
And our of the non insurance companies own their own hospice company of the year, 1 demonstration and as year 2 begins to unfold and.
And full participation and what markets and stuff becomes publicly available here and a few months time will tell but we've been public I've spoken about it at a few conferences here recently, we continue to have concerns related to the design of the demonstration and would recommend.
<unk> team and my considered.
Lang, it and working with some of the provider community to help work through some of those design concerns and I know others feel the same way, but time will tell and we'll continue to navigate it but the appetite for participation from the insurance plans for and your 2 will will help to.
Determined the right.
Circuit reaction to it.
Okay, I see sort of thing.
Right here.
Or in the future from the.
Participants that.
Is there some sort of cycle of where you might hear back from the system and I.
Uh huh.
I guess the commentary from the industry.
Yeah.
And.
Part of their request, we continue to be active participants and providing providing dialog with them towards the intent of really what the purpose and and what they're trying to achieve for the country and time will tell and we'll be we'll continue to make sure we're available to provide any.
The information we have.
And as well as others, whether its trade associations and other providers as well so I think it's something.
To keep an eye on but as we sit right now really as it broadens to every geographic territory and.
You know more plans would consider participating and the demonstration.
And time will tell how that gets implemented on the market by market basis, but there is like I mentioned, some some design concerns with how the hospice benefit would be delivered on a localized basis when it can effectively be potentially redesigned by each insurance plan.
Okay. So so that the other requests.
We're seeing the line to kind of change the belly for AR.
Lance to create their own benefit design for hospice that the main pushback.
That's 1 of that's 1 of a few and there.
And they are aware of those are those ongoing recommendations.
Our recommendations as well as concerns that we have as well.
And as other providers and the community.
Alright, Okay. So I'll stop here with this but the 1 question on under whatever of this day of exceptionally strong results and then you raise here.
The margin guidance.
Guidance for the year 2 you pointed out Peter was very strong margin.
So essentially.
And the saying Hey, you know we.
We see already July being so strong so and kind of assume that the residential.
Kind of outperformance or strong performance is going to continue the second half and that's what's going on because that gets multiple times of kind of set of you're confident enough in your market share gains being sustainable.
And the claim so so you're kind of day, Hey, this margin could actually sustain at least for the next quarter or so is that how you think about it.
I'd say for certainly for for the second half of the year and odds are on a go forward basis, obviously, we're watching to see if there's any softening sequentially. We would of thought if there was we would.
A thought several months ago and it has not and if anything it's slightly increased in terms of the momentum so really Joanna that's where we're getting and our confidence that like the other 2 crises Kevin mentioned, we're going to hang on to this uptick and share revenue and margin, but we're watching it we would say that.
We certainly expect the margin.
All of the same range, but we were a little surprised that it ticked up quite as high as it did to the 29% of Q2, and yes, yes, mhm and typically the fourth quarters of our highest margin and we think were appropriate and our guidance if not a tad conservative.
And I see cause the cause I guess, if you would say.
And we've now at some point the stress and then show up you're saying you had been expecting like at some point, it's going to soften.
Because if it went down and I guess the margin switch went below it but the fact, it's a strong.
And I suggest that he of pace.
And that businesses remain strong and so even if you would have assumed that you know.
At some point at the.
The residential normalizes from commercial coming back like what kind of kind of target margins for the segment would you expect that.
Basically hanging around that the.
29%.
8 of the half the 29 of the half.
And with that range.
Okay.
And pretty good margin and the and the last question sorry about that.
And for our free cash flow priorities, I guess, any any changing views around acquisitions or or anything else you might be.
And you know characterizing.
Yeah, it's really going to maintain the same that we anticipate acquisitions still remain exceptionally pricey.
Hard pressed to see of true economic return given those valuations, so really it's going to be share repurchasing and our dividend.
As you saw we purchased 250000 shares and Q2, we purchase.
The cash of 1000, and Q1 and so the first half of the year 350000 shares we've actually and a primary basis have finally dropped below the 16 million Mike what are we at $15.815.9 million shares outstanding non a primary basis.
And the second half of the year again nothing is guaranteed.
<unk> will watch everything including issues outside of Chemed, but we would not be surprised to deploy somewhere between another 2% to $400 million and the second half of the year, but again, we watch things very carefully, but we feel very good about the sustainability of chemed, producing cash flow, which basically.
Just 1 and 1 of the things we look at in terms of continuing our share repurchase program. So definitely are going to put to work now.
9 figures in the second half of 2021 and share repurchasing.
Great I appreciate the comment I'll hop back in the queue. Thanks.
<unk>.
And your questions at this time.
And I'll hand, the conference over to Mr. Kevin Mcnamara.
And just want to say, thanks, everybody for their kind of attention.
And we were.
We felt they had a good quarter.
And for <unk>.
And happy with the results and.
We'll be back approximately 3 months from today. Thank you.
This concludes today's conference call. Thank you for participating you may now disconnect.
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[music].
And.
Uh huh.
That range.
[music].
And for Canada.
[music].