Vitas—Chemed Corporation’s (NYSE: CHE) hospice business—posted sturdy second-quarter financial results Wednesday, partially thanks to increases in both its average daily census and admissions levels.
Cincinnati-based Chemed’s Vitas segment is recognized as one of the nation’s largest providers of end-of-life care, employing about 11,500 professionals who operate across hospice locations in 14 states and Washington, D.C. It’s one of two main business lines for Chemed, with the other being Roto-Rooter, a plumbing and drain-cleaning services provider.
Vitas’ net revenue in the second quarter of 2018 checked in at $297 million, an increase of slightly more than 6% compared to the same period in 2017. The hospice provider’s financial and operational performance exceeded expectations, according to company leadership.
Overall, Chemed posted a second-quarter revenue of $442 million.
Vitas’ second-quarter average daily census was 17,643, up by more than 4% compared to the same period a year ago. The vast majority of that figure—nearly 13,600 individuals in total—was attributed to patients receiving routine home care. Vitas’ average daily census marks for inpatient and continuous care were 318 and 467, respectively.
Chemed leadership reported that Vitas’ admissions levels were up slightly as well. The hospice provider saw admissions of about 16,900 this quarter, a roughly 3% upswing from Q2 of 2017. About half of Vitas’ admissions came from hospital referrals.
The average length of stay for Vitas hospice patients was 89 days, while the median length of stay was 17 days.
As of June 30, Chemed had total cash and cash equivalents of $13 million and debt of $103 million. Chemed will primarily use those resources to pursue internal growth opportunities, though it will also keep watch on possible M&A options, CEO Kevin McNamara said Thursday during a conference call with investors.
“Both [Chemed] companies are working on, like they usually do, relatively small acquisitions,” McNamara said. “We still have cash to put to work.”
Despite promises by regulators to further investigate the hospice industry for fraud and other forms of wrongdoing, Chemed foes not foresee any significant challenges on the horizon for Vitas. Last year, Chemed and Vitas agreed to pay $75 million to resolve a U.S. Department of Justice case related to false claims allegations.
Chemed stock sat at $322.06 per share nearing end-of-day trading Thursday.
Written by Robert Holly