Chemed (CHE) Jefferies 2024 Global Healthcare Conference summary

Business overview and segment history

• Operates as a holding company with diverse businesses, including Roto-Rooter and VITAS, acquired through personal relationships and strategic investments since the 1980s and 1990s.

• Both segments are leading service providers in their industries, generating strong cash flow and have been successfully managed for over 20 years.

Hospice segment performance and trends

• Hospice demand remained strong through the pandemic, with referral demand accelerating and median length of stay compressing to a low of 11 days.

• Census peaked at 19,378 in March 2020, then stabilized at 17,100 by late summer 2022, followed by eight quarters of sequential clinical and ADC growth.

• Recruitment and retention programs, along with a mission-driven culture, have driven clinical capacity growth and high retention rates.

• Industry advocacy and studies have highlighted hospice's cost and quality benefits, supporting earlier access and value-based care.

Growth outlook and financial guidance

• VITAS expects low double-digit volume growth, driven by admissions and length of stay, with optimism for 2024 and 2025.

• Hospice industry forecasted at 9% CAGR, with VITAS planning updated guidance to reflect outperformance and recent acquisitions.

• Roto-Rooter anticipates 5%-7% normalized top-line growth, though 2024 is expected to be flat due to macroeconomic headwinds.

• Combined, the enterprise targets high single-digit revenue growth and 10% annual EPS growth, supported by ongoing stock buybacks.

• Hospice pricing is stable and predictable, tied to the Hospital Market Basket Index, providing model stability.