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01/11 03:08
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Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
The earnings call presents a mixed picture. Positive elements include VITAS's revenue growth and strategic acquisitions, while negative aspects involve declining Roto-Rooter EBITDA and margin concerns. The Q&A session revealed management's efforts to address issues but also highlighted uncertainties, particularly with Roto-Rooter and VITAS admissions. The lack of detailed guidance and unclear responses create uncertainty, balancing the positive impact of share buybacks and strategic focus. Overall, the sentiment is neutral as the positive and negative factors counterbalance each other, leading to an expected stock price movement within the -2% to 2% range.
VITAS Admissions 17,545 admissions in Q2 2025, a 1.2% increase from Q2 2024. Excluding 600 patient transfers from the April 2024 Covenant Health acquisition, admissions increased 4.9%.
Average Daily Census (ADC) 22,318 in Q2 2025, a 6.1% increase compared to Q2 2024.
Hospital Directed Admissions Increased by 9.1% in Q2 2025 compared to Q2 2024.
Home-Based Patient Admissions Declined by 6.2% in Q2 2025 compared to Q2 2024.
Nursing Home Admissions Declined by 2.9% in Q2 2025 compared to Q2 2024.
Assisted Living Facilities Admissions Declined by 1.4% in Q2 2025 compared to Q2 2024.
VITAS Net Revenue $396.2 million in Q2 2025, a 5.8% increase compared to Q2 2024. Revenue growth driven by a 6.1% increase in days of care and a 4.2% Medicare reimbursement rate increase. Negatively impacted by a 71 basis point acuity mix shift and 379 basis points from Medicare Cap and other contra revenue changes.
Average Revenue Per Patient Per Day $207.3 in Q2 2025, a 3.5% increase compared to Q2 2024.
High Acuity Days of Care 2.5% of total days of care in Q2 2025, a 15 basis point decline compared to Q2 2024.
Average Length of Stay 137.1 days in Q2 2025 compared to 100.6 days in Q2 2024. Increase attributed to the community access initiative.
Median Length of Stay 20 days in Q2 2025 compared to 18 days in Q2 2024.
Adjusted EBITDA (VITAS) $66.8 million in Q2 2025, flat compared to Q2 2024. Adjusted EBITDA margin was 16.2%, a 163 basis point decline due to admitting more short-stay patients.
Roto-Rooter Revenue Increased by 0.6% in Q2 2025 compared to Q2 2024. Branch residential revenue increased by 0.9%, driven by a 16.9% increase in water restoration, offset by declines in drain cleaning, plumbing, and excavation revenue. Branch commercial revenue increased by 4.4%, driven by a 24.4% increase in excavation and an 11.7% increase in water restoration.
Independent Contractors Revenue (Roto-Rooter) Declined by 4.4% in Q2 2025 compared to Q2 2024.
Adjusted EBITDA (Roto-Rooter) $48.6 million in Q2 2025, an 18.7% decrease compared to Q2 2024. Adjusted EBITDA margin was 21.8%, a 517 basis point decline due to inefficiencies in labor force, higher commission rates, increased casualty and workers' compensation costs, and higher costs for paid search leads.
VITAS Admissions: Admissions at VITAS during the quarter totaled 17,545, a 1.2% improvement from the same period of 2024. Excluding transfers from the April 2024 acquisition of Covenant Health, admissions increased 4.9%.
Roto-Rooter Revenue: Roto-Rooter revenue increased 0.6% in the second quarter of 2025 compared to the same period of 2024. Branch revenue grew less than 1%.
Medicare Cap Billing Limitation: The consolidated Florida program is projected to end the 2025 Medicare cap year with a $19 million billing limitation. Management is implementing initiatives to mitigate this risk for 2026, including admitting short-stay patients and ramping up new locations.
Roto-Rooter Operational Challenges: Roto-Rooter faced inefficiencies due to weaker residential revenue in April and May, leading to idle technicians and higher commission costs. Paid searches now represent over 50% of leads, increasing marketing costs.
VITAS Patient Mix Adjustment: VITAS is adjusting its patient mix in Florida to address Medicare CapEx issues, aiming for long-term growth despite short-term disruptions.
Roto-Rooter Workforce Strategy: Roto-Rooter selectively increased its workforce in high-performing branches based on earlier revenue trends, but this led to inefficiencies when revenue weakened.
VITAS Florida Medicare Cap Billing Limitation: The company faces a $19 million billing limitation for the 2025 Medicare cap year in Florida due to weaker-than-expected admissions in April and May. This limitation impacts revenue and requires adjustments in patient mix and operational strategies to mitigate future risks.
Roto-Rooter Residential Revenue Weakness: Roto-Rooter experienced weaker-than-expected residential revenue in April and May 2025, attributed to reduced consumer confidence following the Liberation Day tariff announcement. This led to inefficiencies in labor utilization and higher commission costs, negatively impacting EBITDA margins.
Higher Casualty and Workers' Compensation Costs: Roto-Rooter faced increased costs for casualty and workers' compensation claims, which negatively impacted margins by approximately 220 basis points. This is due to actuarial estimates assuming higher costs for settling claims.
Increased Dependence on Paid Internet Marketing Leads: Roto-Rooter saw a higher percentage of leads coming from paid searches (over 50% compared to the historical 40%), increasing marketing costs as a percentage of revenue and pressuring margins.
VITAS Acuity Mix Shift: A shift in acuity mix negatively impacted VITAS revenue growth by 71 basis points in Q2 2025, reflecting challenges in maintaining a balanced patient mix.
Roto-Rooter Independent Contractor Revenue Decline: Revenue from independent contractors declined by 4.4% in Q2 2025, reflecting challenges in smaller markets and limited capability to perform add-on business, which is a key driver of growth.
VITAS Revenue Growth: Full year 2025 revenue prior to Medicare Cap is estimated to increase 7.5% to 8.5% compared to 2024.
VITAS Adjusted EBITDA Margin: Full year adjusted EBITDA margin prior to Medicare Cap is estimated to be 18.2% to 18.7%.
Medicare Cap Billing Limitations: Estimated $28.2 million in Medicare Cap billing limitations in calendar 2025, with $19 million related to the Florida combined program and $9.2 million for all other VITAS programs. No Medicare cap billing limitation in the fourth quarter is included in the guidance related to the Florida combined program.
2026 Medicare Cap Year Outlook: Management does not expect a significant level of Medicare cap billing limitation in the Florida program for the 2026 cap year. Detailed rate information related to the reimbursement increase in Florida for 2026 will become available during the third quarter, and assumptions will be updated in the third quarter earnings release.
Roto-Rooter Revenue Growth: Roto-Rooter is forecasted to have a 1.25% to 1.75% revenue increase in 2025 compared to 2024.
Roto-Rooter Adjusted EBITDA Margin: Roto-Rooter's adjusted EBITDA margin for 2025 is expected to be 23.5% to 24.5%.
Earnings Per Diluted Share: Full year 2025 earnings per diluted share, excluding certain items, is estimated to be in the range of $22 to $22.30. This assumes an effective tax rate of 25.3% and a diluted share count of 14.7 million shares.
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The earnings call highlights mixed results: strong revenue growth projections for VITAS in 2025, but declining EBITDA margins in both VITAS and Roto-Rooter. Management's optimism about future margin improvements and revenue growth is offset by current financial declines and vague guidance for 2026. The Q&A session reveals concerns about elevated DSO and unclear responses on strategic improvements. Overall, these factors suggest a neutral sentiment, with no strong catalysts for significant stock price movement in the next two weeks.
The earnings call presents a mixed picture. Positive elements include VITAS's revenue growth and strategic acquisitions, while negative aspects involve declining Roto-Rooter EBITDA and margin concerns. The Q&A session revealed management's efforts to address issues but also highlighted uncertainties, particularly with Roto-Rooter and VITAS admissions. The lack of detailed guidance and unclear responses create uncertainty, balancing the positive impact of share buybacks and strategic focus. Overall, the sentiment is neutral as the positive and negative factors counterbalance each other, leading to an expected stock price movement within the -2% to 2% range.
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