Chemed Corporation (CHE) Q1 2021 Earnings Report, Transcript and Summary

Good morning. Thank you for standing by, and welcome to the Chemed Corporation First Quarter 2021 Earnings Conference Call. [Operator Instructions] After the speakers' presentation, there will be a question-and-answer session. [Operator Instructions] I would now like to hand the conference over to Sherri Warner with Investor Relations. Please go-ahead ma'am.

Good morning. Our conference call this morning will review the financial results for the first quarter of 2020 ended March 31, 2021. 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 April 27 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 April 27, 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.

Thank you, Sherri. Good morning. Welcome to the Chemed Corporation’s first quarter 2021 conference call. I will begin with highlights for the quarter and Dave and Nick will follow-up with some additional operating detail. I will then open up the call for questions. At the outset I would like to say although I am very gratified by the company’s results in the first quarter, comparisons to the pandemic year of 2020 are analytically difficult. The pandemic clearly disrupted the hospice industry. The U.S. Government stepped in to help with the relaxation of sequestration and several other operational modifications. The net effect of the pandemic and the government’s actions was to allow VITAS to report an increase in adjusted net income of 25.7% in 2020. The VITAS had a patient base in which median length of stay fell to 11 days. The complexities still facing VITAS is the disruptive impact the pandemic has had on traditional hospice referral sources and low occupancy in senior housing. This disruption continues to impact our admissions and traditional patient census patterns. Fortunately, admissions in hospitals have largely normalized and some of our senior housing referral sources are beginning to show improvement in occupancy and related referrals. I firmly believe senior housing will recover. However, senior housing is in the early stages of recovery, and we do not have enough data points to accurately predict when senior housing referrals will return to pre-pandemic levels. With that said, VITAS is performing in line with our previous guidance. Roto-Rooter operating results continue to be exceptional. Strong residential plumbing and drain cleaning demand has been more than adequate to compensate for the slight weakness we continue to observe with our commercial accounts. We have now had three consecutive quarters of record demand for our Roto-Rooter residential services. Residential revenue totaled $144 million in the first quarter of 2021, an increase of 32% when compared to the prior year quarter, and a 7.2% sequential growth when compared to the fourth quarter of 2020. Commercial revenue totaled $46.9 million in the quarter, an 8.4% decline when compared with the first quarter of 2020. Although our commercial demand has not yet normalized to pre-pandemic levels, this decline has shown significant improvement when compared to the commercial unit per unit revenue declines of 29.1%, 11.6%, and 9.8%, in the second, third and fourth quarters of 2020, respectively. Aggregate Roto-Rooter activity, which includes branch operations, independent contractors, as well as franchisees and product sales, Roto-Rooter generated consolidated first quarter 2020 revenue of $212 million, an increase of 18.9%. With that, I would like to turn this teleconference over to David.

Thanks, Kevin. Let's turn to VITAS segment first. VITAS’ net revenue was $316 million in the first quarter of 2021, which is a decline of 6.5% when compared to the prior year period. This revenue decline is comprised primarily of a 7.1% decline in days-of-care. Our days-of-care was negatively impacted 111 basis points by the 2020 leap year. Our first quarter 2021 revenue included a geographically weighted average Medicare reimbursement rate increase, including the suspensions of sequestration on May 1, 2020 of approximately 2.8%. Offset by acuity mix shift which reduced revenue by approximately $9.1 million or 2.7% in the quarter when compared to the prior year revenue and level-of-care mix. In addition, the combination of a lower Medicare Cap and other contra revenue changes offset a portion of the revenue decline by approximately 50 basis points. Our average revenue per patient per day in the first quarter of 2021 was $198.95, which including acuity mix shift is basically equal to the prior-year period. Reimbursement for routine home care and high acuity care averaged $170.14 and $991.77, respectively. During the quarter, high acuity days-of-care were 3.5% of our total days of care, 71 basis points less than the prior-year quarter. In the first quarter of 2021, VITAS accrued $1.5 million in Medicare Cap billing limitations. This compares to a $2.5 million Medicare Cap billing limitation we recorded in the first quarter of 2020. Of VITAS’ 30 Medicare provider numbers, 27 of these provider numbers currently have a Medicare Cap cushion of 10% or greater, one provider number has a cap cushion between 5% and 10%, one provider number has a cap cushion between 0% and 5% and one provider number currently has a fiscal 2021 Medicare Cap billing limitation liability. This is based on actual Medicare revenue and admissions in the first six months of the Medicare Cap fiscal year. VITAS’ first quarter 2021 adjusted EBITDA, excluding Medicare Cap, totaled $58.3 million in the quarter, which is a decrease of 3.3%. Adjusted EBITDA margin in the quarter, excluding Medicare Cap, was 18.4%, which is a 66 basis point improvement when compared to the prior-year period. Now let’s turn to Roto-Rooter. Roto-Rooter generated quarterly revenue of $212 million in the first quarter of 2021, an increase of $33.7 million, or 18.9%, over the prior-year quarter. As Kevin noted earlier, total Roto-Rooter branch commercial revenue totaled $46.9 million in the quarter, a decrease of 8.4% over the prior year. This aggregate commercial revenue decline consisted of drain cleaning revenue declining 5.8%, plumbing revenue declining 5% and excavation declining 19.5%. Water restoration for commercial increased 8.8%. Our total Roto-Rooter branch residential revenue in the quarter totaled $144 million, an increase of 32% over the prior year period. This aggregate residential revenue growth consisted of drain cleaning increasing 29.5%, plumbing expanding 34.9%, excavation increasing 35.8%, and water restoration increasing 28.7%. We anticipate providing updated 2021 earnings guidance in July of 2021 as part of our second quarter 2021 earnings press release. I'll now turn this call over to Nick Westfall, President and Chief Executive Officer of our VITAS subsidiary.

Thanks, Dave. In the first quarter, our average daily census was 18,050 patients, a decline of 6.1% over the prior year. As Kevin discussed earlier, this decline in average daily census is a direct result of the disruptions across the entire healthcare system that impacted traditional admission patterns in the hospice starting in March of 2020. Our hospital generated admissions have largely normalized to pre-pandemic levels. However, referrals from senior housing, specifically nursing homes and assisted-living facilities continue to be disrupted. As Kevin mentioned, we have seen stabilization and pockets of improvement in senior housing admissions. However, it remains too early to reasonably project, the pace and timeline for senior housing admissions to return to pre-pandemic levels. In the first quarter of 2021, total admissions were 18,135. This is a 2.5% decline when compared to the first quarter of 2020; however, these 18,135 admissions in the first quarter of 2021 compare favorably to the sequential admissions of 16,822, 17,973 and 17,960 in the second, third and fourth quarters of 2020. In the first quarter, our home-based pre-admit admissions decreased 1.5%. Hospital-directed admissions expanded 2.4%. Nursing home admins declined 26.2% and assisted-living facility admissions declined 13.1% when compared to the prior year quarter. Our average length of stay in the quarter was 94.4 days. This compares to 90.7 days in the first quarter of 2020 and 97.2 days in the fourth quarter of 2020. Our median length of stay was 12 days in the quarter, which is two days less than the 14-day median in both the first quarter of 2020 and the fourth quarter of 2020. Before I turn this call back over to Kevin, I wanted to, again, thank our VITAS team for their continued commitment and perseverance and providing high quality of care to over 90,000 patients and their families since the start of the pandemic. With that, I'd like to turn this call back over to Kevin.

Thank you, Nick. I will now open this teleconference to questions.

[Operator Instructions] And our first question will come from the line of Joanna Gajuk with Bank of America.

Thank you. Good morning. Thank you so much for taking the question. So just I guess I missed this last comment about the admission patterns from these different referral sources. So can you repeat that? And I guess also, can you talk about kind of how this progressed through the quarter. Just thinking about – because to your point, you're seeing some pockets of improvement when it comes to the referrals from senior housing and, I guess, normalization in hospitals. So can you talk about kind of how this trended over the quarter, say, January and then February and March? Just thinking about these referral sources.

Joanna, I'm going to turn it over to Nick in a minute here. But just – I just want to put it in a general context. What we saw during the pandemic was senior housing was particularly affected, that is. But – and I'll focus on Florida for a minute. But in Florida, very specifically, the nursing home – I mean there's no admissions, that is people going into nursing homes for obvious reasons were falling. Activities in nursing homes were curtailed. The access to the nursing homes by family and our caregivers was severely restricted, which also meant that it was impossible to talk to people, to families of people who act like senior housing who were generally interested in a hospice but had no face-to-face access with VITAS or hospice providers during that period. Net effect is that our – the hospice admissions that we were getting were largely coming more than normally from hospital discharge planners, which have a shorter length of stay. Let's say, maybe an average length of stay from 30 or less from that type of provider. And the net effect is we saw our medium length of stay just consistently fall during the period. So that's the general context, which I know you understand. I'm going to turn it over to Nick and say – and he's going to give you the numbers and say we're observing that. But it's out of our hands in many respects. The – we need all those things to happen. Occupancy in senior housing isn't going to return to pre-pandemic levels until all the activities they have, all the visitation they have, all the services are available. I think those are – with the vaccination, those are coming in large measure. But the timing of which is outside of our hands, and we don't really make – we don't make any projection of it. But Joanna, as requested repeat the numbers that can go in, but I just wanted to put it in that context.

Yes. So going on it in terms of the first quarter, just real fast, the home base preadmits were down 1.5%. Hospital was up 2.4%. Nursing Home was down 26.2%. And assisted living was down 13.1%. Only other additional comments to piggyback on what Kevin was articulating. If you go to the non-nursing home senior housing segments, ALS and other subcomponents, throughout the quarter, there was some evidence in certain states and pockets of ongoing improvement. But it's very early in those trends, and it's why the macro comment of continuing to observe, ensure we're there to support as well as analyze all available information, both internally as well as externally, impacts our forecasting that we'll come out with and continue to provide further granularity on, as was alluded to in the comments at the end of the second quarter.

Right. So I guess what you're saying, so of the 13% – I guess declines – 13% declines for assisted living, so is it fair to say that like the exit rate in March was better than that?

Yes. There's progression throughout the course of the quarter, but with the volatility. And it's really market-specific. When I say markets, it's local. But also on a state level as well, there's a lot of things that impact it, not to state the obvious. And where the state is and the comfort level with the community for not only safety and all the other social components that Kevin was talking about really influenced, not only occupancy, but also net new lives coming into those settings as opposed to leaving those settings as well, that has consideration towards how many new referrals we get from those settings as opposed to the ability for us to continue to access existing patients in those settings to provide care.

Right. So on this last point, so is there kind of all clear? Or are there still markets where you are not allowed to go in?

At a national federal level, if there is an all clear component. The adoption on a state-by-state level, and particularly, on a facility-by-facility level. Sometimes, the pandemic has taught us there's unique adoption. But what we've been successful in is really – it's a macro statement, providing education differentiation and an understanding of every single one of those facilities, that VITAS as a provider, we show up with our staff who are committed, as well as with all appropriate PPE and safety protocols to protect, not only their staff, but all the residents inside of that facility. So…

There's still restrictions. To answer your question, Joanna, it varies, but there are different levels of restriction. In Florida, is there any nurse home where we are prohibited from being on site? The answer to that is no at this point. But there's still levels of restrictions.

Right. And I guess it also – is related and goes hand-in-hand with the cost that you mentioned before, Kevin, in terms of just how open these communities are to – for these residents in terms of attracting new residents. I guess that's more relevant for the senior housing in terms of the social aspect of what's going on there. So kind of what are you seeing there on assisted living? Because it sounds to me like you guys thinking that, that part of the long-term care is going to be the area where the improvement will be occurring faster than nursing home. So can you talk about kind of specific senior housing, any indications there? And how does this compare with nursing homes in terms of where things are tracking for their occupancy and referrals from them to you?

Not too much outside of a macro level, Joanna. I mean I hesitate on some of the macro commentary because it really is unique on a community-by-community basis. What we're alluding to, which we hear consistently across the country. And everyone here is inside of the earnings calls for the publicly traded companies is, it's not only a safety perspective, it's not only an access perspective, but it also is the evolution back towards the new residents and the attractiveness and comfort level for those residents and their families to place their loved ones in that setting of care to continue their care continuum and meet their care needs on a go-forward basis. And that's going to take some time to continue to evolve. And it's something we're looking at and being there in lockstep as a partner to help support on a daily basis.

And I think maybe one element to your question is, we don't have and we don't rely on any information on – based on our observation of what's going on with senior housing, is to diffuse. We rely on these kind of things. You probably would look at the industry reporting, which the problem with that is there's a lag in the actual situation to the reported number. So we're looking at the same numbers you might look at, if you're looking at those numbers and the problem is there's a lag. And we don't have enough data points to suggest that we're really a reliable indicator of something else or a precursor to what's going on.

But directionally, to reinforce Kevin's comment when he opened the call, we feel confident in the rebound. It's a matter of just timing and trajectory.

Right. And I agree with that. And also, I guess this is just a portion of your referral sources and the hospital referrals seems like stabilizing there because there's activity coming back to the hospitals. But also, can you talk about kind of your strategies around maybe going after new referral sources, more from physicians? Because I guess if these seniors are not in a – in those institutional settings, they are somewhere else, like the home. So kind of is there a strategy to kind of access and educate these patients of where they are?

Yes. We've pivoted that strategy in the middle, the early part of the pandemic last year. We will moderate proactively and reactively of where we focus our educational needs based upon where patients are accessing the health care system. And so the piece that pandemic has taught us in quick order is physician offices became the first point of a lot of that access, where maybe they went to other avenues in the past. And so we have doubled and tripled down our efforts of continuing to support that and bridge and grow those relationships. And it's going to be an important factor for us on a go-forward basis, that, hopefully, there's a stickiness towards the relationship we established and the confidence those physician offices now have in VITAS to provide high-quality care to the patients that they're seeing that are appropriate and eligible to receive hospice services.

And just to close the loop, in terms of the guidance for the year, so you're saying that you don't have enough visibility on the VITAS side to address the guidance. But clearly, the sequestration of relief expansion, and you guys talk about this being like a $6 million per quarter benefit, is that the right way to think about it for like three quarters this year, right?

Yes. That would be correct. As well as we anticipate lower cash than we have usually anticipated. But again the key is also going to be the trend line of recover of senior housing. So we really do need three more months of data points to be able to give accurate projection for the second half of 2021.

As a company policy, we just – we give guidance – when we report earnings in the previous year, we say – we just kind of go dark on guidance till the end of the second quarter. It's just – unless something dramatic has happened. That's just our company policy. I'd avoid the situation for reporting quarterly guidance.

Right. Because then to my last question, sorry. In terms of Roto-Rooter, then, right, that segment did much better than we were modeling, and it sounds like also better than what you were expecting and the revenue growth, I guess, much greater than the guidance – the prior guidance for the year. So can you kind of explain to us the drivers for that? And how sustainable that strength in Q1 was? Thank you.

And Joanna, I do appreciate the question, but we really, at this point, we'll address guidance on a go-forward basis. Certainly, we saw a strong momentum in Q1 as well as – and it's across the board on residential in all four critical areas. So we're talking plumbing, drain, clean and water restoration and excavation. But we will update the guidance in July. But without a doubt, momentum seems to be – have even strengthened from the fourth quarter of 2020, and we'll talk about this more in detail in July after we release the second quarter earnings.

And I guess – so you're saying the kind of the weather – the unusual weather in some of the parts of the country March, that wasn't a big part of?

I don't think it was. Yes. Sometimes, we run into like a pull or vortex or something, and that causes huge problems. I think that absent something like some of the Texas markets where they had crazy weather, snow and freezing temperatures for an extended period of time. There was less weather-related things this year than maybe a typical winter period. So it was just strong as the – we've been asked many questions. Do we think that what is the – is the fact that the pandemic has people at home more, do they have us focusing more on getting things fixed at their home faster and more completely? Maybe. We just know that the phone is ringing off the hook. And really, if you talk about – when we talk in terms of sequential growth for Roto-Rooter, sequential growth is a given. We say that our advertising reach through Google and the Internet is such that we have a competitive advantage that the phone is going to be ringing, the sequential growth is going to be dependent on adding more skilled manpower, which is a constant battle. The success in the quarter is an indication that they – that Roto-Rooter was able to do that. And sequential growth will tie to continued success in that regard. So, it's hard to say, I can't really give a clear description of why it's happening other than the phone is ringing. And our job is to get an ever-expanding workforce out to answer those calls.

All right, so I guess I'll go back to the queue. Thank you.

[Operator Instructions] And the next question will come from Frank Morgan, with RBC Capital Markets.

Good morning, I hopped on late so I apologize if this one was already asked. But as I looked at your results, it looks like calls management was really extraordinary and nice margin expansion. So, I'm just curious how much room is really left in terms of productivity management or anything else you're doing on the cost side or from here is it really more just a function of seeing a recovery in the top line growth again? And then my second question and I'll hop is, obviously Humana announcing that they are pulling in the Kindred at Home piece and spinning off hospice as a separate company. Just any commentary about what you think that means for the industry? And how often do you see them in the marketplace? And do you think anything changes as a result of that? Thanks.

The first one, Frank, this is Nick, I'll take it. The answer is sort of the same as it has always been. It's always going to be a combination, right, of not only managing growth from an admin, but also ongoing expansion of median like this day and days of care that comes with that, and continuing prudent cost control measures. And the two actually go hand in hand, meaning as we continue to bring on more patients and find available staff, as we look for not only efficiencies, but really full utilization of all of our clinical disciplines to provide that care. Like every hospice organization, there's always opportunities for continued growth there, and evolution of that, as well as leveraging to complement but not replace, some of the relaxation that the government has appropriately put in that really elevate care, like telehealth provisions. So that's really an opportunity for us to really further elevate our engagement with the families as well as the patients and balance out, the physical needs as well as the remote or quick question needs that we've been figured out how to navigate throughout the course of the pandemic. So, it really is the ongoing combination of growth, while staying on top of, it's not cost control, but it's prudent utilization of all the dollars in which we receive reimbursement for.

Would you say, Nick, there was some productivity improvement as well as you had scarce labor, you got more efficient throughout the pandemic and you anticipate keeping those procedures in place?

That's right.

So that's what we're honed in on.

Now, your other question on Humana is an interesting one, Frank. And I would really – if you think about the hospice business that they effectively acquired, that was largely the Odyssey and VistaCare acquisition that kind of worked its way through multiple acquisitions up the food chain. And right Odyssey acquired VistaCare, that was all hospice, then Gentiva acquired the Odyssey VistaCare, then Kindred, and then go to Humana. But it is our understanding, those were still kept relatively separate, getting a little dangerous. Now, I'm speculating on the total integration strategy. But I think it was an easier play for them to focus on home health. But beyond that, it's hard to really discern what their logic was on just taking in the home health and leaving the hospice piece where it's at with a co-ownership.

In fact, Kevin it is really to show you this is a pure speculation. But there's something in there that you have to remember that hospice patients coming from – to me hospices patients are coming from a hospital setting are much more likely to be short-stay patients, much tougher to make a profit on as far as the care and service of them, when you are talking about a full service, hospice. So, it doesn't shock me too much, that a hospital system sees those elements or a hospice within their control. So, it’s kind of what I expect is certainly what Nick expected to see – expected to see happen.

Yes.

And the rumor. So, it's consistent with everything we've thought was going to happen over the last six months, probably.

Yes. Frank, the last comment, this is Nick. Not fear too far out from speculation perspective, but it is something that gets discuss dialogue, whether it's VBID with CMMI and the demonstration model, what it further helps to go illustrate when you have a capitated full risk model like Medicare advantages from an insurance plan perspective. And you couple it and try to think about how it's going to operate with the hospice benefit, which effectively was the first full capitated at-risk model. There is clinical care considerations and everything else that goes into that and both are efficient ways to deliver care to the population. And so, you have all the care delivery implications that get wrapped around that as it relates specifically to hospice that as home health may migrate more and more towards that, but it's still as much a fee-for-service, volume-driven component as well, even with PDGM to certain degree.

Thank you.

And our next question is a follow-up from Joanna Gajuk with Bank of America.

Yes, thank you. So just a couple of follow-ups. Also on admissions slide, you mentioned that the year-over-year comp was difficult, but quarterly numbers been improving the last couple of quarters. So, can you also similarly talk about any progression through the quarter in terms of admission trends?

So, Joanna, you are alluding to the quarterly – the sequential quarterly growth that you alluded to in my comments, and how that would have played out on a month-to-month basis since I recorded in March?

Yes.

The only thing I would say is the median length of stay actually showed a steady increase from January, February to March, going from 11 to 13 days, averaging 12. And the other point I would also like to make is a 2.5% growth in admissions from hospital in Q1 of 2021, in my opinion, is incredibly impressive, because remember, last year, in the first quarter of 2020, the last two months of March, hospitals largely flushed their patients, and we had an abnormally huge influx of hospitalized pre-admit location for hospice patients. So, the fact is that we do 2.5% actually was exceptionally positive over the course.

And Joanna the reason I don't really get into the monthly component of it is because he can become very scientific related, how many days – which days of the week, what was the concentration, Monday through Friday, every setting has historical patterns around when we would – when we typically receive referrals that are coincidental with that business model. So, it's best to spread and look at it over the course of the quarter, so we don't get into interplay of how many Fridays were there in a month, as opposed to that.

And I would make one other comment in this milieu, we always know that all missions are equal, but in a normal situation, we just say, well, this is what we expect, it will all come out in the wash. Right now, we are hypervigilant on admission from various sources, and less concerned with hospital admissions that is with it, or more likely to be short stay. So, now from our perspective, we're looking at it pieces of what we normally port for admissions. So, we're less concerned. First, I'll give you an example. If our admissions from the senior housing market were to be strong for a month and hospital admissions were to contract a bit, we wouldn't be concerned. We'd say that would be fine. Number one, we don't have – we have a big cap cushion in Florida. We'd be using our focus our sales focus on the senior housing opportunity. So, over the next six months or so the admissions number is going to be less important than it normally at least from our perspective. It's where we're getting the admissions is more, that will be significant.

Right. And just to follow-up on something, you mentioned about, I guess, some leaner, I guess, labor force. The labor force was scarce, and that creates productivity. So can you flesh it out to us in terms of what's happening there, and kind of what implication it has for, I guess, going forward in terms of any changes, you anticipate, as I guess, this pandemic – as, I guess, go beyond that, where we are now.

So, the flush out on the go forward by nature will be incorporated into any guidance, as we're anticipating that. And absent spending another two hours going through the dynamics of how we think about the operating model with it, there are things that we've learned through the pandemic that will continue to memorialize that not only make us more efficient, but also drive quality of care to the patient and family up I was alluding to. Secondarily, I don't want to discount this. There are pockets and needs as we continue to not only retain our existing staff, which we've done a good job of throughout the pandemic, but also bring on at the appropriate time new clinical disciplines as we continue to grow and get back towards a growth trajectory of the business. And the difficulty and the competitive nature of identifying and being able to bring in those resources is something we're also homed in on as other healthcare providers and systems are all competing for that same resource at this time, many of whom exited the healthcare system for a variety of reasons to the point of the pandemic. And so, everyone will be, I'm sure speaking about and focused in on that for the foreseeable future.

I was doing a lot of granular changes, Nick, how many hospice teams you currently have in place 300…

Over three 317.

We have 317 hospice teams. And there’s a lot of granular changes, that individually aren't much that accumulate up to what we would consider on a go-forward basis, material productivity impact, but we really do need to wait to get to the other side of a pandemic, to truly measure it.

Okay, I understand. So, there is little changes that are kind of aggregate because I guess that was also to the Frank’s question about the margin that was so strong in the quarter. I’m just thinking about what it means for the future? And I guess…

It's a high margin, there's no question about it. I mean, it's – but then again, I look at Roto-Rooter’s margin, almost twice that percent. If you had asked me a couple years ago, whether that was even possible, I would have said no. So, it's proven difficult for us to predict margin, just because everybody thinks they are doing as well as they can. And just seemingly, both companies have had big improvements, almost quarter-over-quarter.

And to really close on a high note, and we've seen this on multiple crises, whether it's the Great Recession, actually, whether it was 9/11, or now with a great pandemic, and both Roto-Rooter and VITAS have every time there's a crisis, we actually emerge better position, and stronger post that crisis than when we entered into it. So frankly, we actually are exceptionally satisfied with the way our operating management team right down to the field level has reacted to these and have figured out a way to make changes to make us more productive without sacrificing quality of care or quality of the customer experience at the Roto-Rooter level. So, we think will emerge from this as well, much stronger than we went into the pandemic, in terms of operating practices.

Yes, clearly the margins were impressive. And just the last note in terms on the hospice, the proposed regulation from CMS includes a new quality measure the Hospice Care Index, and also the hospice star rating, similar to home health. So, kind of how do you see your position then in general, kind of any high-level comment there for me about that. Thank you.

So, Joanna we've always been hesitant to comment on proposed rules until they get finalized in August. I think the macro comment is the ongoing recognition of the value of the hospice benefits baked into the proposed 2.3% price increase related to it or encouraged to continue to see the stability there. As it relates to the evolution of how quality will continue to be defined and shared on a public level, there's a lot of detailed nuances inside of it. But all in all, of course, we are in advocate for the ongoing transparency and the desire to really figure out both qualitatively and quantitatively how hospice, and quality and value to the overall system is going to be defined and reported on a go-forward basis. So, it's not an unanticipated continued step in the right direction. And we'll respond accordingly like we always do to the proposed comments.

Great, thank you so much for all the colors.

Thank you. I would now like to turn the call over to Kevin McNamara for his closing comments.

Well, I just want to thank everyone for their attention and their questions. And we were, as I mentioned earlier, gratified with the results in the first quarter. It's still difficult conditions. And I thank everyone for listening and back at the end of the current quarter. Thank you.

Once again, we'd like to thank you for participating in today's Chemed Corporation first quarter 2021 earnings conference call. You may now disconnect.