Roto-Rooter’s Q1 2025 Earnings Call: Navigating Contradictions in Revenue Growth, Medicare Cap Strategy, and Cash Flow Dynamics

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VITAS Healthcare Performance:
- VITAS achieved 18,139 admissions in Q1 2025, a 7.3% improvement from the same period in 2024.
- The company's average daily census expanded to 22,244, a 13.1% increase from the prior year quarter.
- The growth was driven by the successful execution of strategies to navigate Medicare caps, notably by increasing hospital-based admissions.

Roto-Rooter Revenue and Growth:
- Roto-Rooter generated a total revenue increase of 1.8% in Q1 2025 when compared to the prior year quarter.
- Gross branch revenue increased by 3.1%, with branch residential revenue up 1.7% and branch commercial revenue up 7.3%.
- The improvements were attributed to focused sales approaches, maximizing leads, and quicker response times to residences.

Covenant Health Acquisition Impact:
- The $85 million acquisition of Covenant Health positively impacted VITAS' revenue, adjusted net income, and EBITDA by 3% to 4%.
- The acquisition met all internal financial projections, contributing to VITAS' strong performance in Q1 2025.

Medicare Cap Management Strategy:
- VITAS is managing its exposure to Medicare Cap by increasing hospital-based admissions, which represented 49% of overall admissions in Q1 2025.
- This strategy, though moderating revenue and margin growth, provides additional cap cushion in key locations.