Q4 2024 Chemed Corp Earnings Call
Speaker Change: Hello, and welcome to the ChemEd Corporation 4th Quarter 2024 Earnings Conference Call.
Speaker Change: At this time, all participants are in a listen-only mode. After the speaker presentation, there will be a question and answer session. To ask a question during the session, you will need to press star-one-one on your telephone. You will then hear an automated message advising that your hand has been raised.
To withdraw your question, please press star 1 1 again.
Speaker Change: Please be advised that today's conference is being recorded. It is now my pleasure to introduce Assistant Controller Holley Schmidt.
Speaker Change: Good morning. Our conference call this morning will review the financial results for the fourth quarter of 2024 ended December 31st, 2024.
Speaker Change: 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.
Speaker Change: During the course of this call, the company will make various remarks concerning management's expectations, predictions, plans, and prospects that constitute forward-looking statements.
Speaker Change: 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 of February 26th and in various other filings with the SEC.
Speaker Change: You are cautioned that any forward-looking statements reflect management's current view only and that the company undertakes no obligation to revise or update such statements in the future.
Speaker Change: 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.
Speaker Change: A reconciliation of these non-GAAP results is provided in the company's press release dated February 26, which is available on the ChemEd website at chemed.com.
Speaker Change: I would now like to introduce our speakers for today, Kevin McNamara, President and Chief Executive Officer of TemEd Corporation.
Speaker Change: Mike Witzeman, Chief Financial Officer of TemEd, and Nick Westfall, Chairman and Chief Executive Officer of TemEd's BPAS Healthcare Corporation subsidiary. I will now turn the call over to Kevin McNamara.
Speaker Change: Thank you, Holley. Good morning. Welcome to ChemEd Corporation's fourth quarter 2024 conference call.
Kevin Mcnamara: I will begin with highlights for the quarter, then Mike and Nick will follow up with additional details. I will then open the call for questions.
Kevin Mcnamara: PTAS continued its strong operating performance during the fourth quarter of 2024. Admissions during the quarter totaled 16,427, which equates to a 3.5% improvement from the same period of 2023.
Kevin Mcnamara: Our average daily census, or ADC, expanded 2,827, an increase of 14.6 percent when compared with a prior year quarter.
and Kevin McNamara.
Kevin Mcnamara: These historically good metrics were positively impacted by the $85 million acquisition of Covenant Health, which was closed on April 17, 2024.
Kevin Mcnamara: Through the end of the fourth quarter, the Covenant Health Acquisition is meeting all of our internal financial projections that were developed at the time of the acquisition.
Kevin Mcnamara: Early in the fourth quarter of 2024, our new program in Pasco County, Florida, accepted its first patient. During the quarter, VITAS had slightly more than 40 admissions to the Pasco program. We believe this program offers an exciting growth path for VITAS in 2025 and beyond.
Kevin Mcnamara: We're also very pleased that in December, VITAS was awarded a certificate of need in Marion County, Florida.
Kevin Mcnamara: Berrien County includes Ocala, as well as a significant part of the village's retirement community.
Kevin Mcnamara: VITAS is currently working on a timeframe for opening the new location, but we believe this is another significant opportunity for growth in the coming years.
Kevin Mcnamara: As Mike will discuss in more detail, our 2025 VITAS guidance assumes continued above historical average growth by all measures.
Kevin Mcnamara: However, that growth will be slightly tempered by headwinds associated with working to mitigate potential Medicare cap limitations in certain of our programs.
Now let's turn to Roto-Rooter.
Thank you.
Kevin Mcnamara: Roto-Rooter generated quarterly revenue of $229 million in the fourth quarter of 2024, a decrease of 2.9 percent when compared with the prior year quarter.
Kevin Mcnamara: While we were never satisfied with the decline in revenue or adjusted net income, the fourth quarter performance did exceed Rotary Brewers' internal estimates for both metrics by between 4 and 5 percent.
Kevin Mcnamara: Residential revenue at Roto-Root declined 2%, while commercial revenue increased 0.4%.
Kevin Mcnamara: Overall, our call volume was down 8% when compared to the prior year quarter. Conversion rates from calls to paying jobs continue to be at or near Rotary's all-time highest levels.
Kevin Mcnamara: For our residential business, conversion rates continue to improve for our add-on services, particularly water restoration.
Kevin Mcnamara: During the fourth quarter, Rotary Management identified eight branches that had lagging conversion rates at residential water restoration. Improvement in conversion rates for those specific branches was a major cause for the 2.8 percent increase in water restoration revenue in the fourth quarter.
Thank you.
Kevin Mcnamara: The commercial business initiatives that we've discussed during the course of 2024 have begun to gain momentum in many of our branches.
Kevin Mcnamara: We are winning business from key accounts based on our renewed focus on the local sales process at each branch.
Kevin Mcnamara: Our initiative to review the root cause of each sewer drain cleaning issue through the use of cameras has resulted in an increase in excavation work related to commercial customers.
Kevin Mcnamara: The commercial business ended 2024 with positive momentum. We are optimistic this gives road-to-road business a nice springboard into 2025.
Kevin Mcnamara: Our 2025 guidance assumes that momentum accelerates with the roto-brewer's commercial business. It also assumes that the deterioration seen in the 2024 residential business does not continue into 2025.
Kevin Mcnamara: To summarize, the strong results at BTOS are continuing. BTOS management has consistently demonstrated the ability to hire and retain licensed healthcare professionals at an appropriate pace.
Kevin Mcnamara: This is translated over an extended period of time of strong growth. Two new locations in the state of Florida provide a nice growth opportunity for the next few years.
Kevin Mcnamara: We are cautiously optimistic that Roto-Rooter has turned the corner despite some continued difficult operating conditions. We are confident that Roto-Rooter maintains its core competitive advantages in terms of excellent brand awareness, customer response time, 24-7 call centers, and aggressive internet presence.
Mike Witzeman: With that, I would like to turn this teleconference over to Mike.
Thank you, Kevin.
Speaker Change: VITAS net revenue was $411 million in the fourth quarter of 2024, which is an increase of 17.4% when compared to the prior year period.
Speaker Change: This revenue increase is comprised primarily of a 14.6% increase in days of care and a geographically weighted average Medicare reimbursement rate increase of approximately 3.5%.
Speaker Change: The acuity mix shift negatively impacted revenue growth 119 basis points in the quarter when compared to the prior year revenue and level of care mix.
Speaker Change: The combination of Medicare cap and other contra revenue changes increased revenue growth by approximately 44 basis points
Speaker Change: Average revenue per patient day in the fourth quarter of 2024 was $206.23, which is 244 basis points above the prior year period.
Speaker Change: Reimbursement for routine home care and high-acuity care averaged $182.94 and $1,125.61, respectively.
Speaker Change: During the quarter, high acuity days of care were 2.5% of total days of care, a decline of 22 basis points when compared to the prior year quarter.
Speaker Change: Adjusted EBITDA excluding Medicare cap totaled $93.2 million in the quarter, an increase of 11.8%.
Speaker Change: Adjusted EBITDA margin in the quarter, excluding Medicare cap, was 22.5%, which is 112 basis points below the prior year period.
Speaker Change: The fourth quarter of 2023 EBITDA margin was positively impacted by a one-time change in VITAS vacation rollover policy.
Speaker Change: This change positively impacted the 2023 EBITDA margin by 135 basis points and did not recur in 2024.
Speaker Change: The financial results just discussed include the impact of the Covenant Health acquisition in April. Covenant Health contributed $11 million to $12 million of revenue in the fourth quarter of 2024.
Speaker Change: adjusted EBITDA in the quarter attributed to Cohen Health is between $2.8 million and $3 million.
Thank you.
trained a Roto-Rooter
Speaker Change: Roto-Rooter branch residential revenue in the quarter totaled $160.5 million, a decrease of 2% from the prior year period.
Speaker Change: Roto-Rooter branch commercial revenue in the quarter totaled $54.3 million, an increase of four-tenths of one percent from the prior year.
Speaker Change: Adjusted EBITDA of Roto-Rooter in the fourth quarter of 2024 totaled $60.3 million, a decrease of 7.2% compared to the prior year quarter.
The adjusted EBITDA margin in the quarter was 26.3 percent.
Speaker Change: The fourth quarter adjusted EBITDA margin represents a 120 basis point decline from the fourth quarter of 2023.
Now let's discuss the 2025 guidance.
Speaker Change: VITAS revenue prior to Medicare cap is estimated to increase 10.5% to 11.3% when compared to 2024.
ADC is estimated to increase 8.5% to 9%.
Speaker Change: Full year adjusted EBITDA margin prior to Medicare cap is estimated to be 18.4% to 18.9%.
Speaker Change: This compares to the 2024 adjusted EBITDA margin prior to Medicare cap of 19.1%.
Speaker Change: We are currently estimating a Medicare cap billing limitation of $9.5 million in 2025.
Speaker Change: 2024 represented an all-time high watermark for VITAS in terms of ADC growth, revenue growth, EBITDA growth, and EBITDA margin.
Speaker Change: The 2025 guidance assumes a slight moderation to those levels of growth while still maintaining increases that are significantly above average historical growth.
Speaker Change: VITAS's weighted average Medicare reimbursement rate increase received on October 1st was 3.5%.
Speaker Change: The per admission Medicare cap protection covering the same period increased 2.9%, which is the overall national average reimbursement rate increase.
Speaker Change: This 60 basis point average differential between the reimbursement rate increase and the Medicare cap increase has reduced Medicare cap cushion in our programs for both the trailing 12 months and our projected fiscal year 2025.
Speaker Change: The actual basis point differential in certain of our programs including the Florida program
exceeds the overall 60 basis point average.
Speaker Change: VITAS management is taking the necessary steps in 2025 to ensure a significant Medicare cap issue does not arise.
Speaker Change: These steps are expected to have the effect of slightly moderating the all-time high level of growth seen in 2024.
and Kevin McNamara. Thank you.
Speaker Change: Roto-Rooter is forecasted to achieve revenue growth of 2.4% to 3%.
Kevin Mcnamara: As Kevin mentioned, Roto-Rooter Management expects to achieve this revenue growth by continuing the momentum in the commercial business sector while stopping further deterioration in the residential sector.
Kevin Mcnamara: Roto-Rooter's EBITDA margin for 2025 is expected to be in the range of 25.7% to 26.3%. This compares to Roto-Rooter's EBITDA margin in 2024 of 26.3%.
Thank you.
based upon the above.
full year 2025 earnings per diluted share.
Kevin Mcnamara: excluding non-cash expense for stock options, tax benefits from stock option exercises, costs related to litigation, and other discrete items, is estimated to be in the range of $24.95 to $25.45.
Kevin Mcnamara: This compares to full year 2024 adjusted earnings per diluted share of $23.13.
Kevin Mcnamara: The 2025 earnings trajectory is weighted towards the second half of the year.
Kevin Mcnamara: Roto-Rooter's revenue and associated income is expected to accelerate during the year as Roto-Rooter Management's business improvement initiatives continue to accelerate.
Kevin Mcnamara: Additionally, the first quarter of 2024 was Roto-Rooter's strongest quarter, making for difficult comparisons at the beginning of the year.
Kevin Mcnamara: VITAS's revenue growth and EBITDA margin prior to Medicare cap in the second and third quarters will be adversely impacted by the initiatives required to moderate the impact of the Medicare cap rate differential previously discussed.
Kevin Mcnamara: The impact on the first quarter for VITAS will be mostly offset by the results of the covenant acquisition which occurred in April of 2024.
Kevin Mcnamara: The 2025 guidance assumes an effective corporate tax rate on adjusted earnings of 24% and a diluted share count of 14.8 million shares.
Kevin Mcnamara: Thanks, Mike. I continue to be very pleased with our overall operating performance over the past few years.
Kevin Mcnamara: In the fourth quarter of 2024, our average daily census was 22,179 patients, an increase of 14.6% compared to the prior year period.
Kevin Mcnamara: VITAS has generated quarterly sequential ADC growth over the last nine quarters.
Kevin Mcnamara: In the fourth quarter of 2024, total VITAS emissions were 16,427.
Kevin Mcnamara: This is a 3.5% increase when compared to the fourth quarter of 2023.
Kevin Mcnamara: This overall performance was slightly below our internal expectations in the quarter. This was partially due to the disruptions caused by the hurricanes in the early part of the quarter. However, I was very encouraged with the sequential acceleration of admissions within the quarter across all regions.
Kevin Mcnamara: In the quarter, admissions increased in three of the top four pre-admit location types.
Kevin Mcnamara: Our nursing home admissions increased 7.3%, hospital-directed admissions increased 9.8%, and our home-based patient admissions expanded 3.6% when compared to the prior year period.
Admissions for assisted living facilities declined by 5 percent.
Kevin Mcnamara: Our average length of stay in the quarter was 105.5 days. This compares to 105.9 days in the fourth quarter of 23.
Kevin Mcnamara: Our median length of stay was 18 days in the quarter and compares to 17 days in the fourth quarter of 2023.
Kevin Mcnamara: As Kevin mentioned, we are excited today to be providing services in Pasco County and soon in Marion County, Florida.
Kevin Mcnamara: We believe our entry into these two territories is a win for both the people we will serve and for the future growth potential of ETOS.
Kevin Mcnamara: Kevin McNamara, Holley Schmidt, Nicholas Westfall, Kevin McNamara, Kevin McNamara, Dennis
Speaker Change: Florida and our southeastern locations experienced two significant hurricanes in late September and early October with Helene and Milton.
Speaker Change: While we experienced a temporary slowdown in referral volume, I'm very proud to say our collective team enacted our emergency response protocols and successfully supported one another while providing exceptional care to our patients in the impacted communities.
Speaker Change: As both Kevin and Mike mentioned, we have implemented strategies that we began preparing in 2024 to successfully manage any additional exposure to Medicare cap in 2025.
Speaker Change: Knowing the average reimbursement increase for our locations was going to be 60 basis points above the national average only helped to reinforce the proactive approach needed to manage this industry factor.
Speaker Change: The primary component of this strategy is to increase our emphasis on hospital-based admissions in select programs.
Speaker Change: Generally, hospital-based referrals come later in a patient's disease trajectory and therefore result in shorter lengths of stay.
Speaker Change: This has the overall effect of moderating both revenue growth and margin growth, but also provides additional cap cushion in those key locations.
Speaker Change: With the current Medicare cap rules, this is the right thing to do for the company to ensure long-term sustainable growth.
Speaker Change: In 2024, we also demonstrated the ability to partner with and successfully integrate other providers through acquisitions to ensure communities continue to receive the best possible patient care.
Speaker Change: As a result of these efforts, VITAS achieved all-time highs in ADC growth, revenue growth, EBITDA growth, and EBITDA margin.
Speaker Change: While we briefly celebrated these accomplishments, our team is focused on continuing our 47-plus year commitment to fulfilling our mission of positively impacting patients and families across the country while delivering solid financial performance.
Speaker Change: As you can see from our 2025 guidance, we are optimistic about the ability of VITAS to maintain above-average historical growth, both organically and through accretive acquisitions over the next few years.
Speaker Change: With that, I'd like to turn this call back over to Kevin. Thank you, Nick. I will now open this teleconference to questions.
Speaker Change: Thank you. As a reminder to ask a question please press star 1 1 on your telephone and wait for your name to be announced. To withdraw your question please press star 1 1 again.
Speaker Change: And our first question comes from the line of Ben Hendricks with RBC Capital Markets
Speaker Change: Hi, this is Michael Marie Antrobin. Thanks for taking my question.
Speaker Change: Well, 4Q Rotary Revenue came in better than our expectations. It's still declined 2.9% year-over-year. You're guiding the revenue growth of 2.4% to 3%.
Speaker Change: I just wanted to hear what gives you confidence in the Roto-Rooter turnaround and how much of this improvement do you attribute to switching to a new marketing agency?
Speaker Change: First, let me say that obviously when we give guidance, we
Speaker Change: you know, take a look at, you know, kind of how we're getting started in the year and that is, generally speaking, because obviously it's, we're in the midst of it.
Very strong support, you know, for the growth in Roto-Rooter.
Speaker Change: You know, December and January are usually the strongest months for Roto-Rooter. That can mask, you know, some issues from time to time, but it seems like we're, Roto-Rooter's showing strong growth.
Speaker Change: It's just not that's it when I say core business not down to its sewer and drain cleaning But with pretty much everything else, so I guess the first answer question is no. I don't think it's aggressive I do not think Roto-Rooter's guidance is aggressive We initially You know
Speaker Change: We expected to start a little behind the eight ball because the first quarter last year was the strongest and we thought we'd fall a little behind the eight ball and make it up for the rest of the year.
Speaker Change: Just generally speaking, it doesn't look like that's going to be necessary.
Looks like
Speaker Change: We're pretty much hitting on most of the cylinders at this point, not all.
Speaker Change: Now, let me go to the second part of your question, which was...
Speaker Change: How much do I attribute to the new marketing firm? I'd say not a lot. It's early. I mean, the issues with Google are not going away.
The
pandemic period drew a lot of private equity money.
you know, into the sector. It's still very competitive.
Speaker Change: with Google. I could talk for an hour on this call about the issues and initiatives with Google. We're a very good partner of Google and whatnot, but it's still tough. But I can't say – it's not as though –
Speaker Change: were maybe a little smarter in that regard, and I attribute that largely to the new firm. But there's a long way to go.
Mike Witzeman: Mike, anything else on that? No, thank you, Kurt. The only thing maybe I would add is even during the fourth quarter, we saw some accelerating...
metrics, some improvements, even intra-quarter as the quarter went along.
So...
Mike Witzeman: say, you know, December was better than November and November was better than October. So, as Kevin mentioned, 25 has got off to a good start.
We also saw improvement sequentially intra-corridor.
Mike Witzeman: And so I think we feel pretty comfortable that the commercial business, which is a little more repeatable on a year-to-year basis than maybe the residential business, is really creating a strong foundation for 2025.
I think we feel very comfortable with this guidance.
and Kevin McNamara. Thank you.
and Kevin McNamara. Thank you.
Speaker Change: Thank you. Just switching to VTAS, you expect another strong year of census growth, even accounting for the covenant acquisition year of your comps there. I wanted to hear your thoughts in the competitive environment. Do you believe you're capturing share and does your guidance contemplate any census in Marin County?
Thank you.
Speaker Change: Let me answer the last part of the question first. The guidance does not incorporate any census in Marion County.
for 2025.
Speaker Change: It's still being worked through in terms of the exact time in which we're going to be able to enter.
enter that market.
Speaker Change: As it relates to stealing share and how much of that is driving overall growth. I think it definitely is contributing
continues to
Speaker Change: offer, you know, great opportunity for us in each of the markets in which we operate and we're able to identify new opportunities where other providers maybe haven't met expectations of long-standing partners in the community and our team's off trying to capitalize and execute on each of those, but it's very much a market-by-market, account-by-account battle, as you might imagine.
Speaker Change: The only thing I would add is that to understand, at least from my perspective, what's going on is the state of Florida is very important to VITAS. Obviously, it's the best hospice state, you know, it's great demographics, VITAS has always been, you know.
Speaker Change: preeminent in Florida. As you just can pick up over the last couple years, we continue to get
new CONs, we're growing.
Speaker Change: were adding staff. I mean, it's a powerhouse in the best state, and, you know, the effect of that tends to be, you know, have good things on your reported results, and it's almost like we look at it as two businesses, Florida and everywhere else.
Speaker Change: Florida's doing very well. Right. And the good news, to complement Kevin's comments, is everywhere else is as well. So we see, you know, good, strong growth throughout almost every market in the country, and it's what gives us the optimism that we've been discussing and now have formally put into our guidance for 25 and beyond.
Speaker Change: Okay, that's helpful. If I could just sneak in one more in on just on capital allocation. How are you thinking about share repurchases moving forward and are any share repurchases built into your guidance? Thanks.
Thank you.
Speaker Change: No sherry purchases are built into the guidance. We don't try to forecast that going forward. We don't build in things like acquisitions either. It's sort of a...
Speaker Change: We're not sure how 25 is going to play out on those fronts, and so we don't build any of that. Right. We never have. The way we think about share purchase in general isn't going to change, I don't believe.
Speaker Change: We are intending on a quarterly basis to do some level of programmatic share repurchases.
Speaker Change: with our free cash flow. I think that and the dividend we think is a good a good opportunity to return cash to shareholders.
while still maintaining zero leverage.
Speaker Change: And then, as you might have seen with our fourth quarter, when there's an opportunity with the stock price and maybe with the interest that we get on the cash on the balance sheet, we will take a bigger swing. But the overall philosophy has not changed, and I don't see...
It's changing any time in the near term.
All right, thanks so much.
Speaker Change: Thank you. And our next question comes from the line of Joanna Gajoo.
with Bank of America.
Speaker Change: Hi, this is Christian Porter on for Joanna. Thank you guys for taking our question.
Speaker Change: My first question was about VITAS margins. So margins were solid, but they were below our model, and the 2025 guidance calls for margins to decline year over year. So I was just wondering what is causing the margin pressure when the top line is growing double digits?
Speaker Change: Yeah, you know, Christian, just as a reminder, and I think it's something we've talked about for the last few quarters and included in our prepared remarks,
Speaker Change: 24 at 19.1% adjusted, even a margin X cap was an all-time record high for the history of the company. Our new range of 18.4 to 18.9 we had been discussing on a preliminary basis, just as you're managing all the factors such as Medicare cap management in this year that
Speaker Change: force us to think about heavier emphasis on hospital-based emissions in select markets that tend to have shorter lengths of stay that
Speaker Change: provide pressure to both top-line growth as well as marginal growth.
Speaker Change: but it doesn't change the overall effect of, you know, outsized performance compared to any historical norm, both from a top-line volume growth standpoint, as well as from a predictable, you know, marginal range that led to our collective guidance. So it really is just...
Speaker Change: the moderation as we move into the next Medicare year of looking at it on a market-by-market basis and ensuring we have a sustainable business on a go-forward basis.
Let me say, this is summarizing and reiterating, but
Speaker Change: You know to the extent that we got even more of these admits or the Medicare
You know cap limitation was changed
Yeah
legal constraints and you know our goal is
Speaker Change: As Nick says, if we can get enough hospital-based admissions, we won't make as much money. Our margin will be in the short term.
Speaker Change: negatively impacted, but by less of a percentile, or less of one percent.
Speaker Change: And from that, that really gives us our growth in Florida. So it's a threading the needle exercise is the best way to do it. But there's nothing in the business itself, the underlying business itself, that would constrain growth.
can be touched. Thank you.
Speaker Change: Thank you guys. I just wanted to follow up on the Medicare cap, because it seems like that would be a significant headwind for the year. That will force you guys to change your mix, so I was wondering if we should assume that this headwind would continue beyond 2025?
Thank you.
Speaker Change: I think it'd be a fair assumption. I don't know if I'd categorize it as a headwind, as it is just part of normal business operations.
So, you know, it's always on a market-by-market basis.
Speaker Change: The overall price increase compared to what it correlates on a market-by-market is a year-by-year phenomenon.
Speaker Change: And just as a reminder, the Medicare cap limitation at which we're forecasting in our guidance at $9.5 million is effectively the equivalent we came in with last year. So there is no anticipated...
Speaker Change: substantial differential in 25 as it relates to Medicare cap liability as compared to where 2024 ultimately came in.
Speaker Change: In 2024, it was all California, all driven not by patient mix, but by the very high reimbursement rates.
Speaker Change: That's right. That's right. I mean, Christian, at an overall level, and it's a philosophical level that comes along with it, but the Medicare cap formula was put into place in the early 80s as a way to protect, you know, overall growth.
Speaker Change: for what was an experiment at the time for the Medicare trust fund.
Speaker Change: If you just look at the current Medicare reimbursement rate and divide it by our average revenue per day, that means that you're able to recognize revenue for 167 days of a patient's stay.
Speaker Change: And when you combine that with something like the NORC study that illustrates any patient that outlives their original prognosis of greater than six months.
irrespective of disease.
Speaker Change: saves, on average, 11% or greater total cost of care to the Medicare trust fund, it sort of becomes counterintuitive as to what we're trying to accomplish across the country, which is counterproductive in terms of earlier access, early awareness.
Speaker Change: greater quality for patients and families and a total cost of care reduction for the Medicare Trust Fund. But that's neither here nor there, as are the rules of the road, and us and every other hospice provider inside the country will continue to manage accordingly unless there was ever a change in the future.
Speaker Change: We've been managing the Medicare cap since we purchased VITAS in 2004, so this isn't new. I would tell you that maybe the 2024 growth rate...
Speaker Change: is probably not a long-term sustainable growth rate. What we're projecting for 25 is a little more sustainable for the long term. But Nick and his team looked at the Medicare cap cushion that we had two years ago, implemented the community access program to maximize
Speaker Change: to maximize our performance, but we knew that that wasn't something that could be done forever.
Speaker Change: And so, this has been on our radar, it's just we now need to make sure we moderate 2024 where we took an opportunity to grow probably higher, more quickly than is a long-term sustainable path.
Speaker Change: So we wouldn't categorize it as a headwind. It's part of normal business that's incorporated in 25.
Thank you guys for this.
Speaker Change: I was just going to say, it alleviated, you know, when you think about long-term and you're looking out beyond just the next year, was what your question, getting...
Speaker Change: New CONs in populated, great demographic counties in Florida is, you know, helpful. It's wonderful.
If I could sneak one question about Rotoin really quickly.
Speaker Change: Your guidance assumes two to three percent, sorry, two to three percent revenue growth, which is better than prior comments. So I was just wondering what gives you guys the confidence that revenues are going to grow to that level. And also, if you could remind us of the seasonality that you're assuming in 2025.
Speaker Change: Let me just start by saying what gives us confidence is what we saw in the
Speaker Change: second part of the fourth quarter and clearly, you know, as we start the first quarter of 2025, our guidance, you know, we don't, we're not willfully blind to what we see going on in the weekly sales numbers. So, you know,
I'm very confident of that.
Speaker Change: with regard to seasonality, what we project is what we see every time. I mean, there's some weather.
Speaker Change: conditions that are better for a company like Roto-Rooter, that is cold weather, hopefully without so much snow that the whole city's not shut down, but that tends to lead to frozen pipes and a lot more emergency work.
than a normal plumbing issue.
You know so what we're projecting basically is you know
Speaker Change: First quarter will probably be a very strong quarter at that point. We'll start comparing against What was in 2024 much weaker results?
Speaker Change: We don't anticipate, you know, in the second quarter being, you know, maybe quite as busy as the first quarter, but, you know, no reason to think it won't, you know, be a nice improvement over the first quarter.
Speaker Change: And there's a seasonality factor also in the fourth quarter. But I guess what you'd say is, even though we're on a good side, what we anticipate is still what we said in our comments.
A building positive comparison as we go through the year.
Speaker Change: So, you know, I guess what I'm going to say is we don't want our analysts just to take the first quarter and multiply it by four.
Speaker Change: But we do see growing positive comparisons to the second, third, and fourth quarter for Roadrunner.
Speaker Change: Historically, always, the second and third quarter revenue, just absolute dollars, are lower than the first and fourth quarter for the reasons Kevin talked about. So there is definite...
Speaker Change: Easier comparisons, you know, I'd say even the first quarter based on what we're seeing is that, you know, again It's it's not a negative comparison really as we're looking at it. So, you know, we see much easier comparisons as we go through the year
All right, thank you guys so much.
Speaker Change: Thank you. And I'm showing no further questions at this time. So with that, I'll hand the call back over to CEO Kevin McNamara for any closing remarks.
Speaker Change: Thank you. I have no subset of closing remarks other than to say we're pleased with, you know,
Speaker Change: The results of both companies. I mean it's last couple years. We've gone through the seesaw of
Speaker Change: Rudder were doing great during the pandemic and VITAS for good reasons, you know, suffering.
Speaker Change: And then we saw the switch, and now we're getting back to what I think is a normalized operating situation for both companies. And I think we'll go back to our historic growth rates, to be honest with you, which have been very solid, I mean, over a 20-year period.
Speaker Change: ChemEd's net income has grown over 20% per annum on a K-year basis.
Speaker Change: It's good to return to a period of normalcy. But with that, we'll just say we'll reconvene in about three months, and thank you for your attention.
Speaker Change: Ladies and gentlemen, thank you for participating. This does conclude today's program and you may now disconnect.