Chemed Corporation (CHE) Earnings Call Transcript & Summary

Good morning, everyone, and thanks for joining us for the second day of the Home Care Conference of Bank of America. My name is Joanna Gajuk. I am an equity research analyst here at Bank of America covering some of the home health providers and other post-acute care providers. And now this session, I'm pleased to be joined by Chemed, who -- they own one of the largest hospice providers in the U.S. And from the company, we have with us Kevin McNamara, President and CEO; and also Dave Williams, our CFO. So we will go right into the Q&A and the comment to the audience is that if you would like me to ask a question on your behalf, please utilize the future question feature on the WebEx, and I'll be happy to pose your questions to our speakers. So Kevin, Dave, thank you so much for joining us.

Glad to be here.

Sure. So I guess, we'll go right into it in terms of the recent performance in the hospice business, right, the census declined 5% in third quarter, which the guidance for the year implied that number already. So can you give us kind of a view of how this progressed through the quarter? What was the exit rate and the more interesting part would be if you can comment on any trends you've seen so far in Q4 in October and November period?

Glad to be here.

Sure. So I guess, we'll go right into it in terms of the recent performance in the hospice business, right, the census declined 5% in third quarter, which the guidance for the year implied the debt number already. So can you give us kind of a view of how this progressed through the quarter? What was the exit rate? And the more interesting part would be if you can comment on any trends you've seen so far in Q4 in October and November period?

Yes. We're obviously very, very limited on what we can talk about intra-quarter. But without a doubt, I'd say -- so pre-pandemic, we're at 19,000 in change census. Now upfront round numbers were down 18,000, about 6%. And really, the majority of that happened, actually a big chunk in the fourth quarter of 2020, kind of accreted downward a little bit in '21, but still largely stabilized. We -- our assumption, actually, as we went into 2021 was the expectation that Labor Day 2021 was going to be a key inflection point, kids returning to school, parent or parents returning to traditional place of employment, and we'll -- we see a return to normality. And then an equivalent impact on senior housing as people are returning to place of employment, they anticipate -- can't take care of elderly loved one that they had been during the pandemic. Obviously, the variance has derailed that inflection point, and now things have been pushed out into 2022. We see stability and actually slight growth off of the current ADC trend, but not nearly as robust enough and consistent enough to us to have a trajectory of when do we get to pre-pandemic census? When do we get to pre-pandemic mix of the census? So things aren't getting -- things are improving. They're certainly not getting worse, but I don't see what I would call a significant recovery in census. I think that's going to be a 2022 story now as we unwrap all the complexities of the pandemic and health care and other areas that are impacting health care, full employment, people, again, returning to normal. But it's not going to happen by the end of the fourth quarter. It's going to take all of next year, I think, to return to normal.

Right. And I think that this is one of the things that we've talked about and it's important to mention what we've been working on as we've seen senior housing occupancy kind of fell dramatically all at once, going back 9 to 12 months ago. But as a result of that, we said, okay, look, we're -- our percentage of admits from hospital admissions was going up just because they were staying stable and the long-term care industry was going down -- or senior housing. So what we did is, we shifted. we shifted our effort. I mean we don't -- we still want hospital admissions or Medicare cap and every potential in every program. So we definitely want -- we don't want to eliminate those by any stretch of the imagination. But we said, look, we have a smaller pool of long -- of the senior housing long-term stay market. Those are key to maintaining it growing ADC. We shift our effort and do a better job make making sure that we get our share of those admits. And what Dave is saying is those efforts again, I have -- we're improving our position relative to, we call it, through the return of occupancy. Those efforts are helping a little bit. But we're still several months away from really being [ a vision ] where we would trumpet at those results. I'm just mentioning them because it describes a change in our orientation, maybe out of necessity a fair way to explain it. [indiscernible] makes a summary of kind of what we're doing about it.

Absolutely.

And I guess the last comment, right? The senior housing occupancy is surely starting to rebuild, but obviously still very depressed levels. So I guess that's hard to the comment about these are the patients that are coming with long stays to hospice. Can you talk about the trend of media and of stay? Obviously, that continues to decline? And also, what was that -- can you remind us what was the exit rate? And kind of any indications you're seeing of things improving of your [indiscernible] and implications for the length of stay?

Well, certainly, the median, I think hit a low of, what, 12 days during the pandemic, and we climbed from there. The median seems to be stable. I expect it to hang around, I'd say, a 14- to 16-day. Average length of stay is picking up a couple of days. But again, I almost hate average length of stay, even on a quarter, you really need to look at it 12-month period. But without a doubt, average length of stay, I think, is going to be solidify in the mid-90s. So I don't -- I'm not discerning any change in trend intra-quarter from that. My full expectation is median average length of stay in Q4 will mimic roughly Q3.

Yes. I would say, again, we -- I would say our -- we reported on the third quarter, and our fourth quarter is going in line with expectation. I mean there's -- the 1 comment you make about the hospice industry, it's very predictable. You bake your cake a couple of quarters in advance. So no big surprises. It just so happens that based on our schedule, we've been spending the last several weeks completing our budget and plan for next year. So I mean it's like we're already looking forward as it were for what's happened in 2021.

I will say, though, normally, we're fully concentrated, all over the market, we are just trying to take all appropriate patients. I'd say that's still a true statement, though. But without a doubt, we are having greater emphasis on trying to identify patients who have a statistical likelihood of be -- having patients would be around at least more than 30 days because if you remember, on average, 60% of our patients passed away in 30 days or less, 30% in 7 days or less. But anyone with less than 30 days in program, it's hard to recover the preadmission cost as well as the setting up a plan of care. Those were all negative margin. We certainly don't want to expand our negative margin patients during the pandemic. It makes things very difficult. We really are looking more for stability. But it's a challenge. Senior housing, statistically, has -- if you're in an assisted living facility, the probability you have a lot of comorbidities and you're very acute or low because if you have those conditions, you wouldn't be able to stay in there a lot. So senior housing typically does a good job of bifurcating the more well of the terminally ill for an oxymoron. That's what's been, to a certain degree, hampering some of our recovery. We're increasing our skills of identifying those type of patients who are not in senior housing, but in other locations. But frankly, for a sustainable increase in census, we really do need senior housing to return to normal.

That's definitely what we have been discussing before. And I guess the other piece is right the nursing homes. Right. No, agreed. -- sorry, go ahead...

That was it.

Okay. And I guess you mentioned, right, that you try to be more focused on finding these patients in the other locations, right? Because if they are not in senior housing, they're somewhere, right? So can you flash that out a little bit more to us in terms of what are you doing to kind of go after these other referral sources? Are you more aggressive in terms of physician relationships or going directly to the market or any kind of activity that is taking place.

Certainly, we're going after primary care physicians that specialize in elder care. We've always done that with more of an emphasis because obviously, a medical director in senior housing isn't playing that role when they're not in there. But it's multiple -- it's senior daycare centers that have opened up. But it has not been easy.

Let me put this, when I say, not been easy. And it's clear and the government publishes these percentages. And emerging concepts a little bit. But just started the most basic, the percent of people who die in the United States, who've had at least 1 day of hospice is declining. And as describing what -- and the reason it's declining, #1 is there's more depths of people beyond the super elderly and they're dying of COVID as opposed to some other -- some other disease state. But the real effect of that is it means that they're in -- they're dying and they're not being -- they're at home. As we say, they're not in nursing homes, they are somewhere. Well, this large group because they're not in a position to see the regular benefits of hospice. There -- they and their families are not -- they're not -- they're not going to the doctors often and the doctors are saying, "Oh, hey, your terminal and the other referral sources are not hearing of this patient. They don't -- and so we don't hear of the patient. And when I say we, I'm talking about the whole industry, I mean, just the overall numbers are down as far as that percentage of deaths and effective with hospice, about 6%. I mean that's the culmination of all these factors. The net effect of that is, I would say, because I say there's a lot of forces that work. The 55-year-old person who dies of COVID was not likely to be in hospice in any event, but net effect is the demographic changes that have been going on in our society are constantly helping the hospice industry. All these factors have made it slide down. And so instead of a slide up, it's been a slight detriment, but net effect is things are down a few percent, not totally disrupted and nothing has happened that would suggest a long-term trend is anything different than what we've come to expect.

This is a great segment because this is where I was headed in terms of the long-term view of the growth potential in the hospice industry, specifically for VITAS. So can you kind of frame how you're thinking about that in terms of any numbers. And I guess when you think about longer term, you mentioned 2022, potentially should be the year of recovery, so do you assume that Census would grow into next year?

The short answer is yes, we expect Census to grow into next year. The pace of that growth is still an unknown to us because we don't have enough data points to connect I mean, right now -- I guess you could say we do have enough and based on that, it's going to be a long recovery, but we do expect an upward inflection point to happen in 2022 as we return to what I'd call normal health care operating procedures in the U.S.

Let me start by saying I'll give you an indication of just so -- I don't know if it's going to happen, but there's a lot of chatter about extending the relaxation of sequestration. Why that chatter is existing is because that healthcare market [indiscernible] when chatter turns into an extension of it because that's just a recognition of reality. In addition -- one of the reasons that we've talked on previous calls is -- it's like for us, it would be great, not that we need the money it's equalized on the fact that there's a new concept out there that would be, which is inflation, we have a service level in VITAS where there is reimbursement is tied to largely inflation. And -- but just the way they calculate it, there's a lag, and that lag detriment would be about equal to the relaxation of sequestration for any relevant period. I just say that to the extent that that's a possibility, it's a pretty good indication by the power would be that the health care market is not back and is expected back for several months.

Yes. Another issue that it looks like it's dissipating now is the uncertainty on the mandate for all health care workers through CMS as well as the OSHA mandate both of which have been stayed with court orders. But I think the senior housing has been understaffed. The concern that they would be forced to terminate the unvaccinated staffing also put a damper on the recovery. That also seems to be dissipating. So once we get clarity from the court on what can and can't happen under vaccine mandates then I think we're going to be hopefully off and running on a stable licensed health care workforce and the senior housing can get the staffing level they need to increase their occupancy because that's also been a hindrance.

Yes, there are a lot of comments to unpack from this point. I guess I just come back to my original question. Just can you frame for us kind of the magnitude of the long-term growth for the industry in for VITAS?

Yes. Well, yes, you're talking about first '22. The long-term growth trajectory hasn't changed for VITAS. We have to get through the pandemic to return to, call it, pre-pandemic metrics. But prior to the pandemic, the growth rate happens on a service with and if you want to say, what does Hospice is providing is a day of care. And a day of care is really based upon a combination of 2 factors: growth in admissions, which for the industry as well as for us, absent disruption in things is -- 3% to 5%, call it, 4% growth in admissions. Then there's length of stay. For the industry as well as us, length of stay was hanging around 95, 97 days prepandemic, but growing about 2 days a year or about 2% a year. So if admissions are up 4%, length of stay is up 2%, that as a sustainable growth rate in days of care for the industry as well as for Chemed VITAS is about 6%. Then you layer on pricing that was going from around low 2% to 3.5%. But let's just call it, 6% growth in days of care, 3% growth in pricing gets you to a 9% revenue growth rate for the industry as well as for VITAS.

But with a margin that doesn't grow at that rate.

Yes. So I haven't got a mark that's absolutely. This revenue growth rate is high single digits. We think the industry as well as us will return to that. Once things stabilize, and I'm also talking about a stable mix of high acuity care versus routine home care. But I think high single digits is still very, very doable, and I don't see any reason why we'll deviate from that post pandemic in margin by any means. I would argue, aggressive as flat margin and conservative would be a slight decline of margin around 10, 15-ish basis points just because the government does shave a little bit of the economic inflation out of it. But so anyway, I expect that growth rate to maintain and to the extent inflation is higher than the prepandemic rate, that would also push up that sustainable revenue growth rate for hospice.

All right. I can see you point that a couple of these things you mentioned that I want to unpack here. In terms of -- you mentioned the cost inflation. Labor, obviously, has been the single business topic for the last couple of months for health care providers. I mean obviously, it's nothing really new in terms of shortages, broadly speaking, but obviously, things that are much more intense this year, I guess. So can you kind of frame for us how you think about the implications for your business going forward in terms of the labor cost inflation that you would expect going forward? Do you expect this to be growing faster than before the pandemic? And then, I guess, does that impact your margins more or your ability to take volumes taking your admissions?

Well, without a doubt, obviously, and even the Fed has kind of caved in terms of this transitory inflation may be with us longer so certainly we are looking at higher inflation. The way the hospice reimbursement works is, the annual increase we get is based upon 2 factors. But 2/3 of the increase we get a little less with a light rebasing that CMS put through. But about 2/3 of the increase is based upon the hospital wage index basket measured by core based statistical areas, CBSI or just -- they regionalize it. So 2/3 of the increase is based on hospital wages and the other 1/3 is based upon inflation in health care CPI. The increase we got this October 1 is based upon inflation measurements that Bureau of Labor and Statistics does from April 1 through March 31. So inflation measured as of March 31, 2021, then 6 months later, we actually got that increase of 2% change was put through this past October 1. The 6.2% headline inflation we all saw the way, I think, based upon all of the numbers through October and really we have only seen that kind of popping inflation over the last 4 months. So after March 31 of this year. So that's just my long-winded way of saying is the increase we get October 1 2022 will probably take that full 6.2 measurement into consideration, it will probably be higher because wages do seem to be growing higher in health care than the overall. But we'll see how that washes out. But I think -- and Kevin has been making this point. There was a natural hedge in hospice for inflation pressures through the way the BLS tracks it and then how the increase takes that into consideration. But there's a 6-month lag. You go 6 months with a 12-month measurement. So inflation that started in April, May, June of this year doesn't materialize in our reimbursement increase until October 1, 2022. So there is that lag. Frankly, that's the strongest argument the health care industry is giving government to continue to relax sequestration because the reimbursement increase most of us enjoyed on October 1 really didn't capture the inflation we're struggling with. Companies like VITAS that has an exceptionally strong balance sheet, extremely strong cash flow, we can weather this type of temporary disruption. Smaller, undercapitalized hospices can't as well as other health care plays outside of hospice. So that's why our internal -- our lobbyist in Washington has given it about a 75% chance. We'll see relaxed sequestration to fund these wage pressure on. But who knows. But right now, it's on a bipartisan, bicameral basis to extend the relax sequestration either through an extender bill or a separate bill. And I think we should have pretty good clarity on that by the end of this week.

Yes, we heard that so from some of the companies that [indiscernible]. There's, I guess, enough unity among the health care provider groups across the board, right? So yes. So there are still -- they are still pushing forward with that. Thanks for the update there. And I guess when you think about the -- I understand the dynamics around the rate increases, eventually will catch up to some part to fiscal '23 [ rate up ] which should be much better than 2022 rate up that we already have in place, but I guess how does it translate to your margin outlook? I guess you previously talked about post pandemic margins for VITAS, for the segment level, 17.5% to 18%. But then, yes, there's some -- you mentioned the labor shortages and some wage pressure. What margins would you expect for VITAS next year? And I guess, and afterwards, given those labor pressures?

We're not going to make any comments on next year because that's the actual guidance, and we're going to give that in February for next year. But what we are saying is, I think it will all equalize. So post pandemic, and I'm not talking 2022, Joanna, it's probably 2023, 2024. Whenever we're out of the pandemic, I fully expect sustainable margins to be in the 17.5% to 18%. Reimbursement increases would have caught up to the tale of inflation. And I do expect inflation to moderate down the road. I don't think we're looking at permanent mid- to upper single-digit inflation or we have a whole health -- wealth of issues to deal with nationally. But I'm not talking about for 2022, but the sustainable EBITDA margin, we returned to normalized mix on high acuity, and the BLS inflation measurement is caught up to reimbursement. So we're not dealing with spikes of inflation, but just stable inflation rates. No, I think that is a very doable 17.5% to 18% EBITDA margin. But it won't happen in 2022, and we're still wrestling with the impact of inflation on wages predominantly, but in other areas, in a lagging reimbursement, yes, that's a headwind manageable headwind. It's going to go away, but, yes, 2022 is going to be a transition year. And most things are headwinds. They're not -- I don't see any tailwinds yet in hospice, a lot of tailwinds in Roto-Rooter, not in the hospice, but it's transitory as well. It will probably create as much opportunity as problems for us down the road, but we don't see it as a major issue, Joanna. But no, no more -- no normalized margins in 2022, I'll state confidently.

Right. I know there's obviously uncertainty how this is going to play out next year, but I was just trying to get a sense for you, but I appreciate that we have to wait for the actual guidance, I guess, a couple of months maybe when you report Q4, but I appreciate the commentary about the outlook there long term after the pandemic. And also, I guess, if you can close that topic around labor and margins, even clearly margins were very strong this year. I guess the sequestration relief obviously helped. But even with that, there were some things that allowed you to actually maintain these high margins even with the census numbers being lower. So can you flesh that out how much of that is expected to reverse as we go forward from here?

I just would have to default to the 17.5% to 18% that we historically did. Margins are going to be depressed next year. If sequestration goes away, that's a loss of $24 million of EBITDA that we have to make up for growth. But the interesting thing on growth is, we want to grow admissions. So I'm going to use some numbers, for example, Joanna. These are not predictions for next year. But if we could have 5,000 more admissions in 2022 over 2021, that would be a very good year in terms of admission growth, that would lead to census growth. We actually had a loss of thousands of admissions in 2020 over 2019. But here's the weird thing on admissions. It's counterintuitive. When your admissions drop, your margins pop, they go up. Why does that happen? Well, 60% of our admissions will pass away in 30 days, 30% of admissions pass away in 7 days. But basically 60% of our admissions based on the mix we get, they die in 30 days or less, those are negative margin patients. So when you have a drop in admissions, that actually helps on a comparative basis on your profitability, but there's an offset to that. 60% of their patients are negative margin. 14% of our patients live past 6 months. Those turn out to be very profitable patients and it's necessary because those profits subsidize the 60% of patients we lost money on. So if we have a 5,000 pop in admissions, let's just make it up in January, it hurts us in the short-term negative margin. On the other hand, starting July 1, 14% of those 5,000 increase in patient 700 are very, very profitable. That's what we're facing in 2022, growing admissions as we've returned to normal, but that growth in admissions, abnormal growth compared to the prior year has a loss to them. So margins have to suffer until we fared out the 14% over the past 6 months. And then we keep those. 6 months later, we'll have another 14% who added to the over 180, but the recovery predicates depression on margins in the short term to return from an 18,000 census to 19,000 census.

I appreciate the comment. Actually, you mentioned Roto-Rooter, which, we, I guess, didn't talk about it yet, we have a couple of minutes. But there's a follow-up question from the audience bringing up the concept of the Chemed, as the organization wise, owes to where things entities, Roto-Rooter and VITAS. So the question is what is the long-term logic to have this combination, right? Obviously, both businesses, long term, have a positive growth ARPU. But I guess the question is here, what is the long-term logic to have this combination? And then would you be open for certainty to annual value if you would be trading a conglomerate kind of discount?

Well, let me start -- let me start by saying the long-term logic is that both companies -- when we -- 17 years ago when we had the opportunity to buy VITAS, we said, look, these are 2 very different companies. At that time you heard Wall Street loves pure plays. We said, "Hey, we're a company that has bought a lot of companies if it creates value, we're all for it. We didn't see -- we saw Roto-Rooter as a company that would get already owned for 24 years prior to the purchase of VITAS. So it was not a distraction. We said, look, we're going to have a health care orientation. We're going to go to health care investor relations meetings. We're going to grow both businesses. I mean it has turned out that both businesses, which are similar in their cash-generating capabilities, they both generate free cash flow equal to reported net income, but it's kind of paradoxical that they're very different companies. But over the 17-year period we've owned both, each one of them, they both have grown adjusted net income exactly 14.6%. So the answer is, there a logic to keeping them together. The answer is logic all along has just been -- they're both businesses that will consistently grow at a predictable rate with excellent cash flow, taking virtually no risk associated with growing either business. So that was the logic. We don't see that changing anytime soon. Now your last question is, would be -- are we willing -- would we be willing to consider separate them if it created value? We've been that way, we've been in that position from the start. But because of valuations and whatnot, we have -- and because they're doing well, and we've had -- there've been no necessity, we haven't been a motivated seller of either business. And I'll say we haven't been in the position to aggressively stiff-arm anybody who's been interested in making an acquisition that creates value for us. So I guess my conclusion on all that is, steady as she goes. I mean to the extent that I can look 5 years later and see them both growing another 15% per annum adjusted net income, I consider that a job well done, another success. But we've done it for a 17-year period. And there hasn't been any change in the landscape of either business. In Roto-Rooter -- I mean, again, relatively speaking, yes, Roto-Rooter has grown fast in the last few years, and it's now an equal to VITAS. And there have been some changes in their landscape that have been great improvements. But the hospice industry has been something that has been a very stable landscape as well. And there could be a change. I could say, the government because we want the carve -- or if there is a carve-out, we want to carve in the health care system, a Medicare Advantage insurance company could say we want hospice now because it's carved in. VITAS is the biggest one. They're in Florida. They dominate Florida. We want them. We're an aggressive buyer, [ Vola ] And that hasn't happened yet.

I'd say if and when we do separate the businesses, Joanna, highly unlikely it's going to be a conglomerate discount because we haven't had one of those -- we haven't had that type of discount, I think, ever because there's enough transparency on the economics of both of the pieces. So I'm not worried about a conglomerate discount risk. It comes up when all of a sudden the stock corrects 60, 70 points. People say, "Oh, it's a discount." Then it dissipates the discounts go on. Now it's back, no. If it's a separation, I think it's just fundamental changes in one of the pieces of the business. Probability is there'll be more fundamental changes in health care than the industrial Roto-Rooter business just because of the nature that we already see government reimbursement and, frankly, the vertical consolidation going on in the majority of the markets in the United States for health care, that is probably more likely to be a trigger of something transformative for VITAS than anything. But right now, there's no compelling reason to divest.

Thanks for the color. And I guess on this last comment in terms of consolidation, you haven't been really a consolidator, I guess, on the hospice side. I guess, on the Roto-Rooter business, much really maybe to consolidate. I mean, you took over a lot of the market share. But you're saying on the hospice side, we haven't done many hospice deals, so clearly in the past, you'd indicated because of the pricing of the transaction. But going forward, when the sequestration expires, I don't know whether you would expect things maybe change? And -- on your end, or maybe on the multiple side in terms of more M&A that you would be interested in going forward?

That is actually a possible scenario. And the reason I say that is some of the smaller hospices tend to be undercapitalized they're feeling the pressure on the pandemic driven we are. They are probably more dependent on that relaxed sequestration continuing because we're not remotely dependent on it. There might be the difference between profit losses for them. So I can't see an environment where inflation and reimbursement increased lags can -- could very well trigger some kind of mini consolidation in hospice, and we would participate if we think the risk-reward on valuation is there. I'd say -- for the first time in quite a while, I'd say the creeping inflation makes that scenario possible. However, there's a disconnect, right? We got a 30-day LIBOR that's at 9 basis points, and we have had line core inflation in the U.S. at 6.2%. So for this to play out, I also think we have to see the real rates that are significantly negative return to positive or a different -- once interest rates are running at inflation plus a spread, coupled with this inflation pressure that's lagged on reimbursement, that could very well trigger some kind of consolidation in health care and in hospice. But we only see 1 piece of that inflation. Interest rates have to climb correspondingly.

Yes. And I guess I have another question from the audience. I guess they want to come back to the fair discussion. We only have 2 minutes left, but I guess this high-level question, I guess, is about leverage at each of the entities. If they would be separated, how do you think about the optimal balance sheet for each business?

I'm not going to comment on what -- if you separate the business and leverage because that's not a discussion. But the cash flow characteristics of both businesses are very similar. So frankly, I'd be exceptionally comfortable with Chemed, owning both segments as we do now. if we had debt of 3x EBITDA, given the fact that we have incredibly low CapEx and very recession-resistant businesses, I'd be very comfortable with 3x EBITDA as our debt. But the question isn't leverage. The question is, if you create leverage, what do you do with that debt capital you raised to give a risk-adjusted quality return to shareholders. So it's investing in the leverage proceeds that I struggle with, not the leverage itself. Leverage is a great tool if used intelligently, but you got to deploy that capital risk adjusted for an adequate return. And I don't see that right now.

In fact, if I was asking about your appetite for acquisition. It sounds like maybe there's going to be a little bit more activity. So looks like we are running out of time, I want to Roto-Rooter a little bit more specifically, that's where things were tracking very well. But I get to ask, since this is a home care conference, we talk about kind of the long-term outlook being unchanged here. So any kind of last comment in terms of -- we try to ask the companies to describe in 1 word or maybe few words the future of conquer?

I would say our -- we try to run businesses on a sustainable basis to be measured in decades. And none of that has changed. And we think our conservative balance sheet and even with the disruption the pandemic caused to VITAS or a negative disruption, still phenomenally profitable, and I don't see any reason we're not going to return to historical profitability growth rates, including share repurchase that continues to boost earnings per share. So I think the headline is we can weather almost any hit that pandemic is going to provide us for both of our segments, and I fully expect to us emerge better positioned and stronger for both segments, post pandemic than we were pre pandemic.

Yes. And then one thing I'll say is I'll go to the bottom line and say after 2019, Chemed earned under $14. So let's say, $13 at a fraction. And based on our guidance for this year after 2 years of pandemic and disruption for a variety of reasons. We're reporting $19 a share. So when we talk about even returning to something on prepandemic level, it's we've had outsized growth in earnings per share. One of the benefits of that is we've had a lot of cash flow, and we produce share count. I mean we've maintained the businesses. I mean the results, even over the last 2 years in -- on pandemic, were excellent. And I would say the reason for that really is professionally managed businesses that zig when they had to zig and zag when they had the zag. With the operating executives, and I don't mean Dave and I having the people out in the field, when you have people like that and that quality they deal whatever comes in a way. And even in a very uncertain market, they've done great and -- So when you -- when you're asking us for kind of capital commentary on what we expect in the future, we expect that same professional management to zig zag appropriately and do better under more predictable conditions.

Yes. thank you for that and..

So far so good.

Yes, thank you for that. We unfortunately ran out of time. So thanks for everyone who join us, and thanks to Kevin and David. Have a good day.

Thank you.

Thanks. take care.