Chemed Corp (CHE) 2012 Q2 法說會逐字稿

Good morning, ladies and gentlemen. Welcome to the Chemed Corporation's Second Quarter 2012 Conference Call. My name is Shawna, and I will be your conference call facilitator today. Please, note that today's call is being recorded. (Operator Instructions).

I would now like to turn the call over to Ms. Sherri Warner with Chemed Investor Relations. Please, proceed.

Good morning. Our conference call this morning will review the financial results for the second quarter of 2012 ended June 30, 2012.

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 25 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 25, 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 Tim O'Toole, Chief Executive Officer of Chemed's VITAS Healthcare Corporation subsidiary.

I will now turn the call over to Kevin McNamara.

Good morning. Welcome to Chemed Corporation's second quarter 2012 conference call. I will begin with some highlights for the quarter, and David and Tim will follow with additional operating detail. I will then open the call up for questions.

Chemed consolidated revenue in the quarter totaled $354 million, and net income was $21.3 million. If you adjust for certain noncash items and items that are not indicative of ongoing operations, adjusted net income for the quarter totaled $24.3 million and equated to adjusted earnings per diluted share of $1.26. This is an increase of 15.6% when compared with adjusted earnings per diluted share in the second quarter of 2011.

During the quarter, our hospice business segment generated revenue of $265 million, an increase of 9.1% over the comparable-year period and provided adjusted EBITDA of $37.1 million. This equated to an adjusted EBITDA margin, prior to Medicare cap, of 14%. Admissions in the quarter totaled 15,912, an increase of 4% over the prior year.

We have four new start initiatives in process that have reported aggregate losses of $1 million. These losses negatively impacted the quarterly margins by 36 basis points. We opened two inpatient units in the quarter and have two additional units under development.

Of VITAS' 35 unique Medicare provider numbers, 30 provider numbers have a Medicare cap cushion of 10% or greater during the first eight months of the 2012 Medicare cap year. Two provider numbers have a Medicare cap cushion between 5% and 10%. And three provider numbers have a cap cushion between 0% and 5%. VITAS generated an aggregate cap cushion of $203 million during the most recent 12-month period.

On the litigation front, we've had no significant developments on preexisting claims.

However, in June 2012, we received an administrative subpoena from the office of the Inspector General of the US Department of Health and Human Services, focusing on our southern California hospice program's Medicare claims and seeking documents from January 2007.The OIG has requested information related to procedures and policies surrounding admission, recertification, and documentation of long-stay patients.

We also received a subpoena from the state of Florida in July of 2012 that seeks documents concerning similar issues over the same time period.

We are unable to estimate the timing or outcome of these investigations or our potential liability, if any, with respect to these matters.

VITAS takes great pride in its systems, admissions programs, and patient documentation policies. This is the foundation for supporting our Medicare and Medicaid billings. We have invested significant resources in creating and maintaining this infrastructure that maintains detailed, contemporaneous documentation for every patient. We believe this is the most appropriate way to ensure all our patients receive appropriate care and our Medicare and Medicaid billings are appropriately supported.

Now let's turn to our Roto-Rooter business segment. During the second quarter of 2012, Roto-Rooter's plumbing and drain cleaning business generated sales of $89 million, a decline of 1.4% from the prior-year quarter. This 1.4% decline in sales is directly attributable to soft demand. Call volume is measured at our two 24/7 call centers. This volume has declined approximately 10% from our prior year call count, and aggregate job count declined 3.1% when compared with the second quarter of 2011.

We continued to achieve solid growth in the commercial sector, expanding commercial jobs 4% in the quarter and 4.1% on a year-to-date basis. However, this growth in the commercial sector was offset by weak residential sewer and drain demand, which declined 7.9% in the quarter and 8.9% on a year-to-date basis.

Job count performances in both the first and second quarters of 2012 have noted strong correlation to geographic location. Roto-Rooter branches located in temperate climates, primarily the south and west, have generated commercial and residential year-to-date job growth of 7.5% and 0.6%, respectively. Branches located primarily in the east and Midwest experienced a year-to-date commercial job count growth of 1.7% but residential job count declines of 11.2%.

The impact of unusual weather patterns on our residential demand is an explanation, not an excuse. I view it as management's responsibility to offset the impact of weather -- that the impact of weather has on our job count with stronger commercial activity, which tends to be less correlated to unusual, seasonal weather patterns.

With that, I would like to turn this teleconference over to David Williams, our Chief Financial Officer.

As Kevin noted, the net revenue for VITAS was $265 million in the second quarter of 2012, which is an increase of 9.1% over the prior-year period. Excluding the impact of Medicare cap, our revenue increased 8.9%. The revenue growth was the result of increased average daily census of 6%, driven by an increase in admissions of 4%, increased discharges of 4.4%, and Medicare price increases of approximately 2.5%. Our revenue growth was further enhanced by a geographic mix shift within the patient base and the favorable comparison of Medicare cap.

Average revenue per patient per day in the quarter, excluding the impact of Medicare cap, was $206.54, which is 2.8% above the prior-year period. Routine homecare reimbursement and high-acuity care averaged $163.18 and $717.63, respectively, per patient per day in the second quarter of 2012. During the quarter, high-acuity days of care were 7.8% of total days of care, 6 basis points lower than the prior-year quarter.

The second quarter of 2012 gross margin, excluding the impact of Medicare cap, was 21.6%, which is a decline of 35 basis points from the second quarter of 2011.

Our homecare direct gross margin was 52.4% in the quarter, essentially equal to the second quarter of 2011.

Direct inpatient margins in the quarter were 12.7%, which compare to 13.3% in the prior year. Occupancy of our inpatient units averaged 75.1% in the quarter. It compares to 74.2% occupancy in the second quarter of 2011.

Continuous care had a direct gross margin of 19.7%, a decline of 50 basis points when compared to the prior year. And our average hours billed for a day of continuous care worked out to be 18.9 in the quarter, a 3.6% decline of the average hours billed in the second quarter of 2011.

Our selling, general, and administrative expenses was $20.5 million in the second quarter of 2012, which is an increase of 3.7% compared to the prior-year quarter.

Now, in the Roto-Rooter segment, Roto-Rooter's plumbing and drain cleaning business generated sales of $89 million for the second quarter of 2012, which was a decrease of 1.4%.

Roto-Rooter's gross margin was 44.3% in the quarter, a 66-basis-point decline when compared to the second quarter of 2011.

The adjusted EBITDA in the first quarter of 2012 totaled $14.4 million, a decline of 8.7%, and the adjusted EBITDA margin was 16.2% in the quarter, a decline of 128 basis points when compared to the prior year.

A little more detail on the unit-for-unit job count that Kevin mentioned was, in the second quarter of 2012, it did decline 3.1% compared to the prior year. During the second quarter of 2012, our total residential jobs decreased 6%, as residential plumbing jobs declined 2.1% and residential drain cleaning jobs decreased 7.9% compared to the prior-year quarter. Residential jobs represented 69% of total job count in the quarter.

Our total commercial jobs increased 4%, with commercial plumbing and excavation jobs increasing 9.2% and commercial drain cleaning increasing 2.1% when compared to the prior year.

The all other residential and commercial job category, which represents just 1.6% of our aggregate job count, decreased 9.2%.

On our consolidated balance sheet, we have total debt of $171 million at June 30, 2012, and this debt is net of the discount taken as a result of the convertible debt accounting requirements. If you exclude this discount, our aggregate debt face value is $187 million and is due in May of 2014. Our total debt equates to less than 1 times our trailing, 12-month, adjusted EBITDA.

As a reminder, in March of 2011, we entered into a five-year credit agreement that consists of a $350-million revolving credit facility. Interest rate on the credit agreement has a floating rate that was currently LIBOR plus 175 basis points. In addition, we have an expansion feature in this credit agreement that provides us the opportunity to increase the revolver and/or term loans for an additional $150 million. At June 30, 2012, this facility has approximately $321 million of undrawn borrowing capacity, after deducting $29 million for letters of credit issued to secure our workers' compensation insurance.

Capital expenditures through June of 2012 aggregate at $18.5 million, and it compares to our depreciation and amortization during the same six-month period of $14.9 million.

And then, during the quarter, we purchased 199,900 shares of Chemed stock at an aggregate cost of $11.1 million. We currently have $64.1 million remaining under our previously announced share repurchase program.

Our 2012 full year guidance is as follows. VITAS expects to achieve full year 2012 revenue growth, prior to Medicare cap, of 7.5% to 9%. Admissions in 2012 are estimated to increase approximately 3.5% to 4%. And our full year, adjusted EBITDA margin, prior to any Medicare cap, is estimated to be in the range of 14.5% to 15%. Effective October 1, 2011, Medicare increased the average hospice reimbursement rate by approximately 2.5%. Our guidance assumes VITAS will incur $2.5 million of estimated Medicare contractual billing limitations for the remainder of calendar year 2012. Also, just recently, we did receive notice from CMS that the national hospice rate is estimated to increase 90 basis points commencing October 1, 2012.

Roto-Rooter expects to achieve full year 2012 revenue equal to the prior year. The revenue estimate is the result of increasing prices of approximately 2%, favorable mix shift to higher-revenue jobs, which outcome estimated to decrease approximately 2% to 4%. Adjusted EBITDA margin for 2012 is estimated in the range of 16% to 17%.

Based upon the above, we are reiterating our prior quarter guidance for 2012 earnings per diluted share, excluding noncash expense for options, the noncash interest expense related to the accounting for convertible debt, and other items not indicative of ongoing operations, will be in the range of $5.35 to $5.50. This compares to Chemed's 2011 reported adjusted earnings per diluted share of $4.78.

I'll now turn this call over to Tim O'Toole, our Chief Executive Officer of VITAS.

We continue to put a high priority on the education, training, and overall expansion of our field-based sales and marketing personnel. These individuals are critical in providing our referral network with the latest information and education on hospice and VITAS. As of June 30, 2012, we have 335 field sales and marketing personnel, 164 admissions coordinators, 366 admission nurses, 84 community liaisons, 23 long-term care liaisons, and 37 admissions liaisons.

VITAS generated 15,912 admissions in the second quarter of 2012, an increase of 4% over the prior-year period. Admissions increased in each of our four largest referral categories. During the second quarter, home-based admissions increased 6.9%, and our hospital-referred admissions increased 6.7%. Assisted-living facilities increased 0.4% in the quarter, and nursing home admissions increased 1.2%.

VITAS' average length of stay in the quarter was 74 days, which compares to 77.1 days in the prior-year quarter and 79 days in the fourth quarter of 2011. Average length of stay is calculated using total discharges during the quarter.

Median length of stay was 14 days in the quarter. Median length of stay is a key indicator of our penetration into the high-acuity sector of the market.

Our days of care totaled 1,284,105 days in the quarter, an increase of 6% over the comparable, prior-year period.

Non-nursing-home, routine homecare days increased 8% in the quarter, and nursing home, routine homecare was flat in the second quarter. Nursing home days of care currently represent 21.5% of our total days of care.

On any given day, approximately 22% of our average daily census, or about 3,000 patients, reside in a skilled-nursing facility. Approximately 80% of our total nursing-home-based hospice patients reside in a skilled-nursing facility, where we have three or less patients within that nursing home. This illustrates our diverse referral network.

Continuous care days of care increased 6.1%, and inpatient days of care increased 4.1% when compared to the second quarter of 2011.

At June 30, 2012, we had four programs classified as startups. Total operating losses for these startups totaled $1 million in the quarter and compares to losses of $366,000 for locations classified as startups in the prior-year period.

With that, I'll turn the call back over to Kevin.

I'll now open this teleconference to questions.

(Operator Instructions). Darren Lehrich, Deutsche Bank.

A couple questions here. I guess, just maybe starting out with Roto-Rooter, I know you've described the geographic impact, and we can clearly surmise there's macroeconomic links here. I guess I just wanted to be sure that there isn't any other factor, turnover of plumbers, anything associated with just sort of overall business and how it's -- how those regions stack up.

Darren, that's a good question, and it's something we've looked at very closely. And, as indicated in our presentation -- we're relieved in many respects. As you drill down the details, as much as we hate to say, well, weather -- it sounds like an excuse. I would say, as we drill down, we see a couple factors.

Number one, it's a tough operating environment with respect to consumer demand. Unemployment is over 8%, and the real number when you add people added to disability and/or out of the job market -- it's -- they're high numbers. We predicted tough consumer demand in that regard.

When you look at the fact that, in the Midwest and East, we had virtually no freezing pipes and then an unusually dry spring for those periods, it's not that surprising that we have that slackening in demand in those markets.

I'll say that, again, our biggest relief is that, with regard to the markets that are less subject to those variables, we see pretty good execution. We see a lot of activity on the commercial front. We see good close rate. And, to answer one of your specific questions with regard to retention of employees, it's at or near historic best. Now, some of that's the positive side of the economic situation.

But, no, there's nothing particularly alarming from our perspective the further down we drill, although, again, it's not a positive. There's no question about that. I'll just say one comment that -- speaking generally. As you get into the months of -- let's say the summer months, which aren't necessarily Roto-Rooter's best, we would have expected to see more normal comparisons to past periods with consumer demand. And we're seeing that. So it's another validation of our -- call it our preliminary conclusion on that point.

I'd also add commercial business is showing some great strength. Obviously, all the Roto-Rooter operations are hungry, so they're searching for commercial business. And that's why we're seeing the strength. Again, the fact that our job count -- 69% to 70%, historically, is residential. It's basically impossible to offset with commercial business all of the soft residential demand due to this -- our temperate weather. But they've actually done a pretty good job in that regard.

So I'd say we're certainly disappointed that we're going to probably be closer to a $60-million EBITDA for full year 2012, which will probably make it roughly tied for the third-best year ever. But the fact is, given the softness of -- call it emergency-based demand business, we actually are very pleased the way the Roto-Rooter numbers are holding up and still producing pretty good cash flow. And I guess, arguably, we're set up for a pretty darned good comparison in 2013.

Yes. That makes sense.

And, if I could just shift gears to hospice, a few questions, if I could. The first -- as it relates to the administrative subpoenas you've received, do you have any visibility as to whether it's an industry-wide type of investigation? Maybe, if you could, just clarify what the difference that you think is between what you got in southern California versus what you got in Florida.

Well, let me start by saying we don't know. First, you (inaudible) question. We don't know anything more than we said. As you know, these things move very slowly. For instance, the 2009 matter in Texas ended up being a qui tam action, and we still haven't been served with it. So these things play out very slowly.

Having just said that I don't know too much, I would say that there's every indication the southern California one is just a -- is not just a, but it's a qui tam probably, based on, in all likelihood, any broader approach than that.

In Florida, we don't know. I would say that one point of reference is -- part of all these, because they take so long, there's something known as tolling agreements, which are supplied. We got a different form of a tolling agreement in Florida, which probably indicates that the previous tolling agreement they gave in all matters they're looking at in Florida -- that somebody probably questioned one of them, so it's an abundance of caution, at the very least, on their part.

But, other than that -- that is part speculation, part information, but everything we know on those. And we're not likely to know much more for a matter of years.

But, again, I don't want to leave the subject without saying that VITAS -- as I mentioned in the call, a lot of money on administrative practices and support for documentation. We're a little bit unusual in that approximately 95%, even higher back in the periods we're talking about -- over 95% of the patient referrals came from entities that have no connection with VITAS, not admitting nurses, not part-time physicians; generally, the John Q. Public. And, when you combine that with the fact that I think we have good systems, it's not surprising that we've never made a settlement. We've never paid a dollar in one the settlement of one of these matters.

So it's part and parcel of -- we're in a business where 95% of the sales, approximately, are to the federal government, directly or indirectly. And we know that you're always going to be under a microscope. We have been working for years, basically, to prepare all our records and documents to support that business. And it's expensive to defend it. But we'll see. We'll just watch it play out. But, again, it's -- I expect -- to the extent that this continues over the next ten years, we'll have ten more investigations or qui tam actions. That's just -- it's part and parcel of the business.

It makes sense. Last thing. Maybe just a question for Tim, if I could. You do seem like you're growing faster than market in hospice. And, obviously, that's part of your infrastructure -- what you've built out there. But any commentary on what you're seeing in the environment in terms of growth -- what do you think market is right now? How much better do you think you're growing than market?

Well, it's hard to say. And, again, when we talk about markets, markets are very different in different parts of the country, various regions, and so forth. But I think we probably are growing higher than the market. I think we're putting a lot of resources into the Company that other competition, other hospice companies have not matched. I think our quality of the care we provide is second to none, which is the number-one reason we're growing faster than the market. And we have an excellent management team that's doing the job. So hard to say what market is. We're probably growing a little faster. But we're very pleased.

Okay. Thanks, guys.

Jim Barrett, C.L. King.

Kevin, is Yellow Page advertising still the primary form of marketing or advertising for Roto-Rooter?

Jim, I'm glad you asked that question. I'm glad you've raised that general issue. The answer is yes. It's declining. There's one element, which, again, as we look as an explanation of some of the issues on consumer demand, involves part of that, and that is, yes, Yellow Pages is still dominant. However, 40% of our calls come in on numbers that only appear on the internet. And we've said that in the past. It's not going up as fast as it was, but I mean, again, it's still trending up. So 40%.

You have to remember, even though, I think, we have far and away the best strategy for internet placement, when you compare having the number-one listing on the internet, where you might be listed number one of five and have a point on a map, it still pales in the comparison to what you have when you have the first ad and a three-page ad in a section of the plumbing section of the Yellow Pages. So there's a lot of free riders right now on the Google searches. That is, it seems like there's a different mom-and-pop every month or so that appears as number two or number three. But their ads look pretty similar on the internet to ours. Let me put it that way. And so it's an issue we're dealing with. But make no mistake. When I say it's 40%, basically, 60% comes from the Yellow Pages.

And, Jim, there's another unusual phenomenon happening in terms of Yellow Pages. It's Yellow Pages and Yellow Book, where we actually see the inevitable -- the industry's already started going to paying for a per-call basis and longer calls. So it hasn't kicked in yet, but we actually see it phasing in, starting in about 12 months in various books, where it's going to become more to a durable cost model related to long phone calls, not short ones.

We're very happy about that. We're very happy about paying per call from the Yellow Pages. It's a little more difficult to pay for -- per click on the internet because anybody familiar with this subject knows that what the clicks mean is an open question. You can get a crazy number of clicks. That doesn't necessarily relate to jobs.

And the other thing relating to this is what's driving the phone calls. It's amazing. A new phone book will drop, and we'll put a different phone number in that book from the prior year. And a significant portion of the phone numbers we receive are coming from the prior year's book. So what's happened is people in a lot of cases -- the phone books aren't even making it into their homes. They make it to the trash can. If they are utilizing a book, it's an older book, and that's what's also driving this phenomenon of how telephone directories are going to keep up in the 21st century.

Okay. On a related note, can you tell me what percentage of your marketing or advertising budget is represented by Yellow Pages currently, since, presumably, you're spending something on the internet?

Yes. I tell you the internet number is dwarfed by the Yellow Pages; probably, 80% Yellow Pages. In internet spend, there's just a limit to what you can spend. I mean, to be honest with you, you can imagine that something growing that quickly -- we have kind of a -- I hope there's nobody from Roto-Rooter listening, but we have kind of an open budget on that, on internet spending, to make sure that we have the best strategy. And, frankly, because we're in a mom-and-pop industry, we don't have a lot of professional competition in this regard. We've had great success in getting and maintaining excellent internet positioning.

Good. Okay. And, then, again, you've touched upon it already, Kevin, but the -- in terms of Roto-Rooter, the last segment that I thought would decline during a difficult economy would be drain cleaning due to its nondiscretionary nature. I mean, are you getting anecdotal commentaries from your plumbers that people are simply, maybe, getting bids but are choosing not to clean their drains?

Jim, I'll tell you the anecdotal information -- first of all, it's not -- we always say it's recession resistant, not recession proof. And it's down. I think that, when you ask me, if you adjust for weather, it would have probably been down 4% instead of 10% as far as calls, order of magnitude. I mean, it's down. If you ask for the biggest, anecdotal response I can give you is -- when things get tough, do people clean their own drains? I was surprised when, a little more than two years ago, they said that, as far as rental places where you rent equipment, their busiest pieces of equipment were drain cleaning machines.

I see.

Yes. Is the do-it-yourself market an issue and continues to be an issue and even more so in tough times? The answer is yes. But, again, often times, the inside scuttlebutt at Roto-Rooter -- that just pay me now or pay me later type of thing. Other than clogs maybe, plumbing work done by nonprofessionals tends to be a short-term solution.

Jim, on a comparison basis from prior year to this year and, then, since we bifurcated locations in temperate climates versus ones that have more extreme freezing and then a lot of rain in the spring, clearly, it's substantially weather related. But related to in terms of not getting people conscious of taking out bids, our call volume was down 10%. So not quite something, if people called, they called the price, and the said no. The phone just didn't ring, which goes directly to residential demand. They didn't have a need for getting the drain cleaned because it was raining cats and dogs to allow the clogs to happen.

Keep in mind we are a premium-priced service, intentionally so. And, in tough economic times, that's not necessarily the most advantageous short-term strategy.

Right. Understood. Okay. Well, thank you both.

Frank Morgan, RBC Capital Markets.

Two questions. First, back on the VITAS side of the business, I was hopeful that you could provide some color on the admission growth trends. Were there any particular areas in the country where it's strong or weak -- or what you see is the opportunity there in terms of admission growth and census growth.

And then, secondly, on these administrative subpoenas, it sounds like this is -- did I understand you to say long-length-of-stay patients is where the issue has arisen? And, then, wasn't there sort of a big push in RAC audits several years ago about this whole issue of non-cancer-linked, long-length-of-stay patients? Do you think it's in any way related to that? Thanks.

Before I turn it over to Tim, I need to talk about admissions. Let me say that, ultimately, most of the controversy around hospice patients involves long-length-of-stay patients. In other words -- in our case, we get a patient who's declared terminal by his own doctor or her own doctor. We look at them. We admit them. When you start the recertification process, we know of a couple factors, which both is consistent in all our branches and the national averages as we see them. About 11% of the patients that we have and the national statistics live longer than six months. At that point, as we recertify them, we notice that half of those remaining patients are discharged every six months. When you do the math, you have long-stay patients. That's always -- it's a bit paradoxical, counterintuitive. But, to the extent that these are sick patients who are just statistical outliers, that is always, ultimately, kind of a spotlight of these investigations.

I would say, to answer your question, Frank, too early to tell, Although, ultimately, that's the issue, it's hard to prove. It's hard to prove because you don't have a doctor. The standard is in the doctor's professional opinion -- was the patient who's been very sick and determined to be terminal by their own doctor? Is that doctor opinion wrong? That's a tough standard.

And so, to the extent -- if you've read the Voyager settlement -- there's an effort sometimes to say, well, you had practices. You were incentivizing doctors to change their opinion. Or you made it difficult for doctors to render their opinion. That's why there's always an emphasis on the easy approach, which is -- do you have policies or procedures that are, again, not fair or gaming the system? And that's why -- but, to the extent that, as far as I know with regard to these administrative subpoenas, it's looking at that stuff. And it's the kind of stuff we've had looked at many times.

I can't say that every one has -- we have existing issues going and have since 2005. I'm not saying that we've been given a clean bill of health on any of this by anybody. What I'm saying is we've never settled. I think we've never paid a penny. Our policies and procedures were set up with the idea that they were going to be looked at and put under a microscope. But, with regard to anything, it's just kind of -- to the extent that you follow Chemed over the next several years, you'll hear about more of these. Again, I'm just confident that -- I have a degree of confidence that the amount of effort that has been put in these policies and procedures -- they're as good and solid as any hospice program in the country.

Now, with that, let's answer your question prior to that. No. As far as this point, they've asked for information dealing with policies and procedures, not any particular, long-stay patients. Okay? That's not surprising. It seems like that's the preliminary approach just to kind of get their toe in the water. But, with that --

Frank, you were questioning admissions and ADC growth. As we reported, admissions up 4% in the quarter and good, strong growth in Florida. As you know, Florida is one of our focal points because of the Medicare cap management, so we're very aggressive in Florida with our inpatient units, with expanding our palliative care initiatives, and all of our sales efforts there. So we're happy to see that those are working for us. At the same time, the census grew at about 5% or 6% in Florida as well.

California, up about 1% or 2% on admissions, and census a little stronger.

We're happy to see Illinois increased at about a 4% to 5% rate, our Illinois market, in the quarter. And that had been a market that a couple years ago was lagging. It stabilized. It seems to be moving ahead for us now.

And the Texas market is pretty soft. It's increasing, at 1% or 2%.

So that gives us an overall 4% admissions rate, and our ADC was up at 6%. Keep in mind that we're still getting a lot of short-stay patients with our median length of stay under 14 days, which helps both admissions and census growth. So our programs are working, and those trends have been about what we've seen all year. And they're healthy trends, so we feel good about it.

Thanks for the call. Very good.

One final one, and I'll hop. In those same markets, can you kind of give us a view over what you're seeing in terms of new entrants into the market? Is there any particular state or region where people are coming in more than in others? What's the -- ? What are you seeing on the -- ?

Not really. I think we're seeing pretty much a softening of new entrants in the marketplace. I think some of the -- the markets are all highly penetrated now. There's very few underserved markets. And, in the last several years, there's been an increased level of the regulatory scheme, which really raises the bar and presents some barrier to entry for new participants to come in. So we're not seeing a lot of new entrants. We are seeing the local competition in many cases very strong, very complete in the marketplace. So no big change. But we're not seeing a lot of new entrants.

Okay. Thanks.

Okay. I guess I see no more questions in the queue. So, at that point, we'll terminate the call. And I thank you for your interest.

This concludes today's conference. You may now disconnect. And have a great day.