Chemed Corp. (NYSE:CHE) Q2 2019 Earnings Conference Call Transcript

Jul 26, 2019 • 10:00 am ET

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Chemed Corp. (NYSE:CHE) Q2 2019 Earnings Conference Call Transcript

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Presentation
Operator
Operator

Hello, and welcome to the Chemed Corporation's Second Quarter 2019 Earnings Call. [Operator Instructions].

It is now my pleasure to introduce, Sherri Warner with Chemed Investor Relations.

Executive
Sherri Warner

Good morning. Our conference call this morning will review the financial results for the second quarter of 2019 ended June 30, 2019.

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, the Company will make various remarks concerning management's 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 of July 25th and in 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 to revise or update such statements in 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 in the Company's press release dated July 25th, which is available on the Company's website at chemed.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's VITAS Healthcare Corporation subsidiary.

I will now turn the call over to Kevin McNamara.

Executive
Kevin J. McNamara

Thank you, Sherri. Good morning. Welcome to Chemed Corporation's second quarter 2019 conference call. I will begin with highlights for the quarter, and David and Nick will follow up with additional operating detail. I will then open the call for questions. The second quarter 2019 results were very solid. At the higher end of various operational metrics for both VITAS and Roto-Rooter. In the quarter Chemed generated revenue of $474 million, an increase of 7.2%.

Our consolidated net income in the quarter excluding certain discrete items was $3.36 per diluted share, an increase of 19.6%. VITAS's admissions were solid in the quarter, increasing 3.8% over the prior year. Our average daily census expanded 5.9% and our adjusted EBITDA excluding Medicare Cap increased 25.6%. Roto-Rooter generated solid growth and continues to show excellent growth in our core plumbing and drain cleaning service segments. I was also pleased with our water restoration service demand in the quarter, expanding 14% when compared with the prior year.

As I discussed last quarter, there are a number Roto-Rooter initiatives that in the short term increased our expenses primarily in the areas of field-labor, as well as increased costs related to training, as we expand our technician commission based force. I anticipate the margin impact from these initiatives, will continue to be reduced over the coming quarters. As most of you are aware, earlier this month