Hello, and welcome again to the 43rd Annual J.P. Morgan Healthcare Conference. I'm Sean Perkins, an associate in the Healthcare Investment Banking Group, and I'm joined today by Chemed Corporation with Kevin McNamara, President and CEO, Mike Weitzman, Vice President and CFO, and Nick Westfall, Chairman and CEO of VITAS Healthcare, so with that, I'll turn it over to Kevin. Thank you.
Thank you. In presentations like this, I always like to take a couple of minutes to explain the rationale or why it is that we're a company with a plumbing and drain cleaning company and a hospice company. It really goes back to history, and that is that Chemed started off as a spinoff of W.R. Grace & Co. in 1971 with several businesses, largely specialty chemical businesses. Eventually, it developed a healthcare group, and in 1981, it spun off what became a nursing home pharmacy business, Omnicare, and it retained some healthcare businesses. Over the years, it bought and sold a number of companies, mostly in the chemical field. And in the early 1990s, it had the opportunity to make an investment in VITAS, which we did, and had a preferred stock situation there. And it was very good.
We held it for a long time. During the late 1990s, it sold our other businesses and had basically our VITAS position, cash from selling the businesses, and a company that we had bought in 1980, Roto-Rooter, had paid $18 million for them, and it's largely nation's largest franchisor of any service, and one of the early television advertisers, so it was very well known as far as a service mark, but a relatively small business, and so we actually changed the name of the company to Roto-Rooter at that point, but shortly thereafter, we were notified by the VITAS management saying that they had found a purchaser for the company, and we said, "Well, great.
What's the price?," and they told us, and we said, "Well, at that price, we'd rather be a purchaser than a seller," and so we actually borrowed more than our market cap at that point and purchased the two-thirds of VITAS that we didn't basically have the interest in up to that point. Now, that made an interesting situation, so that left us with the Roto-Rooter business, some debt, and VITAS, and again, we were familiar with the healthcare business. I mean, I actually was with Chemed's Healthcare Group, and then when Omnicare was formed, went with them as an employee as well, but we said, "Well, we want to be a healthcare company. We want the focus to be on VITAS. We want to go to healthcare conferences.
That's the shareholder base we want to attract." Of course, there were questions at the time whether owning Roto-Rooter would be a distraction. We had bought and sold a lot of companies. We said, "Look, if it creates value, we would look to separate the two companies. If not, we would just have a lot of transparency in the reported numbers, so it would be easy for investors to do the sum of the parts." And if it was creating value, we just said we're familiar with it, focused on the healthcare business. Roto-Rooter was an established business with us, very well run, good basic business. And we just said, "Well, until something better comes along, that's how we would maintain it." And this happened almost 25 years ago. I mean, 21 years ago, just about 20 years ago right now.
When we look at the results, we say, "Well, what have we had?" Over the 20-year period, we have two businesses that are similar in that they both have their service businesses. They are market leaders, and they both have very good cash flow.
One more, Kevin.
One more. Sorry. It's on my screen, but not yours. During this period, the 20-year period, the adjusted net income for VITAS over the 21-year period is up 10.8%. We have the period Roto-Rooter was up 14.4% per annum. Again, I mentioned good cash flow, the magic of leverage, reducing the share count of Chemed from 27 million to 15 million shares outstanding. That meant that our adjusted net income over the period for Chemed is up 21.7%. Again, when you risk-adjust those results, it's pretty good because they're largely not driven by acquisitions, mostly by same-store growth with some geographic expansion, both in VITAS and in Roto-Rooter, but pretty basic businesses. I would say that just going back to summarize, I mentioned the cash flow. At the current time, Chemed has no debt, $200 million on the balance sheet.
In dividends and share repurchases over this period, we've done $2.5 billion returned to shareholders. And not surprising, look at this next chart. You look at, it's our stock price and our adjusted earnings per share. You can see both show very consistent growth. As I said, 21% over a 21-year period is good. It's hard to think that it could continue at that rate, but there's some hiccups from here and there, including last year. We've been able to do that. But let me start going down to specifics, turning over to Mike to talk a little bit about Roto-Rooter and any other basic financial issues. Mike is our Chief Financial Officer.
Thanks, Kevin. As he says, I'll cover a couple slides on Roto-Rooter, but I'll be brief given that it's a healthcare conference, and then turn it over to Nick on the Vitas side where he'll do a lot of the heavy lifting of talking on what's happening at Vitas. As Kevin mentioned, Roto-Rooter, generally speaking, is a grind-it-out kind of required business in the country. Coming out of the pandemic, there had been so much business that because people were home, our business during the pandemic had really skyrocketed. There was some demand that had been pulled forward. As you can see from this chart, 2023 and 2024 have been a little weaker than we would like for Roto-Rooter. A little bit of revenue decline year- over- year, but ultimately, we're still very optimistic about the Roto-Rooter story for the long term.
We're very bullish on the fact that plumbing is a required service and that industry demand is going to sort of return to what we would expect our normal 4%-6% growth to be in the short term here. As Kevin mentioned, it's kind of odd to have two companies, a plumbing company and a hospice company, and so we always are evaluating what are we going to do with these two things over the long term, and essentially, from a Roto-Rooter perspective, we've spent time garnering the cash flow. It's a very, very solid cash flow business and supplementing either Vitas growth, things that Vitas wants to do, or, as Kevin mentioned, buying back shares, using the free cash flow with no leverage at all on our balance sheet.
So, I think our current best view is we're going to keep generating those cash flows from Roto-Rooter and using them for other things in the business to provide outsized growth. With that, I'll let Nick talk about VITAS.
Sounds good. Thanks, Mike. So, as we transition and talk about VITAS and healthcare in general, this picture really encapsulates the last few years for VITAS. So, let me walk the group through it here briefly. This outlines our quarter-by-quarter overall average daily census, which is our patient volume going back from the start of the pandemic through the third quarter of 2024, which is our most recently reported quarter affiliated with it. When we think about it, and I'll briefly spend a second on the pandemic, in March of 2020, our average daily census for that month was 19,378. And as everyone in this room is aware and every other provider through the course of this conference will highlight, pandemic hits and with an acceleration of burnout and turnover, we were not immune to that whatsoever.
The one thing that is unique to VITAS as well as to hospice overall is what we didn't see in the pandemic was any waning of demand for our services. The thing that changed was, with all the disruption to the healthcare system, patients were being referred to hospice providers later in their disease trajectory. So, that was impacting length of stay. And so, if you look at that decline from the first quarter of 2020 all the way through the springtime to summertime of 2022, it's one which was unfortunate, but also was predictable. And so we hope and we believe we got a lot of credit because we forecasted those things as best as we could, no different than any other healthcare provider through the course of the pandemic.
What we wanted to focus on in the vast majority of our story and the questions we've gotten over the last few years is an inflection point, which was in the springtime of 2022. What I did and what we challenged our entire VITAS organization about was looking ourselves in the mirror and acknowledging what our key core strength is. The number one strength we have organizationally is our culture. The VITAS culture is our strongest asset. Most companies say it. I think we've walked the walk related to it. And so we really looked ourselves in the mirror, and I challenged all of our leaders and said, "We need to elevate and refocus on our culture. It's what has made us great at that time for 42 years since the company was founded." And we became laser-focused on reducing retention.
The other component that we layered into that had an intentional focus on what we referred to as a community access initiative. What that means is, while demand never waned, we needed to become more intentional around balancing our business on a market-by-market basis of not only just responding to hospital-based referrals, but also all the other non-hospital segments, facilities, specialty physicians, etc. To give you an order of magnitude, that means going from 51% of our admissions being hospital-based to 46%. It's not a substantial shift, but it is an important component of this narrative.
And so, with the early success we saw for challenging our leaders and our local teams in terms of really improving retention, driving down turnover, we enacted a recruiting and retention program that we officially launched that started in the third quarter of 2022 and went for one year until it completed at the second quarter of 2023. That functioned as a catalyst for us, where we focused on five clinical disciplines at the bedside. And we added net bedside capacity during that window, which is more hires than folks that left, and it was really turnover improvement that drove that of 784 bedside clinicians in that 12-month period.
The more important part, and what we get most of the story about here is, while the program acted as a catalyst, leaning into and focusing on the cultural component and the sustainability of that cultural component and continuing to drive down retention, our performance since the expiration of that program has outpaced our performance during that program. So, while we added a net 784 bedside clinicians for those five disciplines in the window, any trailing 12-month window since the expiration of that program is well north of 1,000 clinicians. So, we have built a sustainable model to recruit and retain staff to meet that ongoing demand. And as you can see here in the graph running through the third quarter of 2022, what that has translated to is, in August of 2022, we hit our low point, 17,000. Let me look at my notes real quick. 17,180 C.
And as we exited the third quarter, we were caring for well north of 22,000 patients. And that growth trajectory I'll translate to from a financial performance here on the next slide, but the vast majority of all that growth was organic. There are a few de novos in there, and there was our largest acquisition, but it's not material to the volume number there at the beginning part of 2024, I'll talk about here in a second. So, as we look towards the next chart, I'll very briefly reference column three, which is 2023 performance. We grew top line at roughly 10%. We grew Adjusted EBITDA at a 12% clip or $22 million. Focusing in on the first nine months of 2024, and we'll release fourth quarter results and 2025 guidance here at the end of February.
But when you focus on it, you can see the patient volume translation coming into return to financial performance. So, we grew for the first nine months of 2024 at about 16% top line. 14% of that's volume, 2% of that's pricing. And as you can see from a bottom line, and I'll focus on the pre-tax component of it, we grew at 58% on a dollar basis for Adjusted EBITDA. There's a little bit of noise related to that for some expense components in the prior year. But just as importantly, you can see we saw margin expansion in that nine-month window, 460 basis points. And it's what's led us to reinforcing our guidance through the year of an Adjusted EBITDA margin of 19.3%-19.7%. What that means and what we get a lot of questions are is, "That's fantastic. And what will 2025 look like?
What does the outlook look like?" What I wanted to reinforce here is, as we think about the future of VITAS, and we'll reaffirm it when we come out with guidance, we have a sustainable path to a new normal growth rate with it. In the short term, we're going to continue to grow organically like we have. Historically, we would have said patient volume was maybe somewhere in the 4%-6% range. Over the last six months and most of these conferences we've referenced, we believe, and we'll finalize it with our 2025 guidance, our new volume expectation is probably somewhere between 8% and 10% from a volume standpoint. That's great in terms of repeatable grinded-out approach. When we think about the short term, what we also have the opportunity to do is to continue to leverage our balance sheet.
There are, at a minimum, 12 states we don't operate in that we think are very attractive to us, and we are out actively sourcing deals, and we expect some of that deal flow to continue to come through here in 2025 and beyond. There are a lot of factors contributing to that on a go-forward basis, and I wanted to come back to an important component that occurred in the springtime of 2024, which was an $85 million acquisition we did of a long-standing 43-year-old nonprofit hospice provider up in the panhandle of Florida and Alabama. Why that's so important is, in our industry, and we believe we're at the early part of an inflection point, historically, nonprofit and for-profit has been an inhibition around the ability of a thoughtful consolidation of long-standing mission-focused organizations. Their board and leadership saw the opportunity from an alignment standpoint.
We've executed on that. It's fully integrated. It's outperforming our internal expectations. But equally and more importantly, the community response, the cultural response, the integration components that are so key to hospice and palliative care have gone fantastic. And we think we're in the early roads of really an ongoing consolidation inside of the space from a short-term standpoint. Long-term, hospice and palliative care sits squarely in a value-based environment. I think anyone that's familiar with the space is aware of that. It drives down total cost of care. It elevates quality. And the pandemic just accelerated the country's recognition that high-quality care can be provided at home. So, we feel great about, from a Chemed standpoint and from a VITAS leadership standpoint, we're operating a high-quality provider. There's very few in the space that are scalable at size.
And so we'll continue to grow it selectively, like we've discussed, to expand our footprint across the country. From a long-term standpoint, whether it is ongoing provider consolidation, health system consolidation, the payer's appetite to own or partner in the space, we think VITAS is incredibly positioned to just accelerate growth, provide high-quality care out in the community in which we're talking about, and for this purpose, from an investor standpoint, just return predictable growing earnings to our shareholders that are accretive to EPS and Chemed's overall growth story. With that, that's all of our prepared remarks at this point. I wanted to have the opportunity to take some questions and answers. Thanks.
I know it's early in April, but can you talk a little bit about your experience with the Special Focus Program at this point? I believe a couple of your locations were selected for it.
Yeah. Here, sorry. Let me sit back down. To your point, it's very early innings. There really hasn't been any activity affiliated with it. Two of our locations were inside of the original 50, and as a reminder for the audience, not only the entire industry, but even bipartisan congressional support was behind this going into the year around how sort of deeply flawed the algorithm for the special focus program was to begin with, and so, while time will tell around what 2025 looks like for those selected providers, I think there's still a lot of activity.
And even with the transitional team with the new administration, there's an opportunity to discuss, "Hey, should the Special Focus Program continue as it is planned, or should it go back in and really think through what was sort of an agreed-upon, like I said, bipartisan acknowledgment that it was not ready for prime time?" But with all that being said, the hospice industry and all long-standing providers want an elevation of quality and expectations on a go-forward basis. And so, I'm hopeful that we'll be able to have a collaborative approach ongoing with the new administration to get this right. And we also have a consolidated trade association for all six industries inside of home care that came together last year that we have new leadership in place.
And so that's what gives me some optimism, industry-specific, but as it relates to us from a provider or anyone else that was on the original 50 that has been taken down, modified, and acknowledged the data was wrong, even in the last week and a half by CMS. There's been no actual experience from a survey activity standpoint.
And just to be clear, the two VITAS programs that were selected are not two of our larger programs. And so, while we do take it very, very seriously, at least from a financial standpoint, we don't believe there's a big issue for us specifically. But as Nick said, there's a lot larger industry issues at play here.
Yeah. Let me just give you one bit for people maybe who aren't as close to the situation as you are. This algorithm they use is a very substantial element. And correct me if I'm wrong, Nick, you're closer than I am, but it's substantiated complaints. That is where there's been a problem. And again, we have human beings going out and doing a lot of patient days at all these over, this is over a three-year lookback period, I believe. But in one of the branches that is on the list, it's basically because they had us for having over this period four substantiated patient complaints. That is, it could be something like, well, there's a patient who was in a nursing home and had a wound and it didn't heal. Maybe the nursing home is at fault.
Maybe your hospice provider should have noticed that they had a wound, that type of thing, unrelated to their cancer diagnosis, for instance. We accept that substantiated complaint, okay? The issue is, in this particular one, they have us for four, but two of them were unsubstantiated. The investigator, the state investigator went in and said, "Yeah, that's not a complaint against VITAS." And the issue is, well, the records don't properly reflect that. Now, what does the hospice provider do saying, "Well, you say we're on this list because we have four substantiated patient complaints in the three-year period, but we don't?" And they kind of said, "Well, okay, we'll look into it." I mean, when you talk about the industry's up in arms about this program, that's how specific it is.
And then when ultimately we get to the point where they're looking at, let's say, a program like Florida that might, over this period, have a million patient days, they'll be looking at the same substantiated complaints for a million patient days with other hospices that might have a thousand. I mean, it's kind of, again, we're concerned about it. It hasn't had an effect on the business. It's embarrassing. It's something that, yeah, no one wants substantiated complaints, but it's something we'll continue to work with the government. And Nick has been very active and through his associations to just address it from a public relations standpoint.
To drill down into a few of the comments just to help to further clarify it. So, over about a three-year window since the initial announcement was, the industry's tried to help collaborate with many of these things. And so, there is definitely data integrity concerns, not only that relates to us, but other providers that have played out since the list was announced on December 20th. And that's going to continue. I think there'll be even more activity coming out this week related to that.
One of the other key areas, and it goes back to how deeply flawed the algorithm is to begin with, that Kevin was alluding to when he was discussing overall size, is if there's no normalization inside, if you're going to use survey activity related to it, you could make an argument that it needs to be normalized for scale and how many patients are being cared for. So, to put it in perspective, just order of magnitude, and these are extremes at this point, but our consolidated Florida window over that three-year period provided 20 million days of care, okay? And it's going to be compared against the same provider that may have provided 20,000 days of care. And that's fine. And that's a standard. And that's a high-quality expectation that we all want to hold ourselves to.
But the opportunity for a potential complaint to occur, we would argue, and the industry has argued, is not the same just mathematically. However, the approach is, "Well, that's fine. We'll figure it out as we go." And so, it's a fluid circumstance. I think the one thing to remind everyone about, and it's what we don't want to be dismissive about it, but the approach for all of this is, "Hey, we're going to come in and we're going to survey." We get surveyed all the time. So do all the other long-standing providers. And we have great success with all of those things. So, there's no concern around we're not a poor-performing hospice. I think looking and knowing some of those providers on the list, they're not either.
And it's just something we'll navigate through as a collective industry and hopefully doesn't become too large of a distraction with the hopeful goal of continuing the positive narrative of all the things that hospice continues to provide and being a solution for the Medicare Trust Fund and wanting to continue to elevate quality, but not conflating it with other narratives of fraud, specifically isolated in four states, things like that. That's why the federal advocacy and the ongoing federal advocacy will be so important for the industry and for VITAS overall. And we'll continue our leadership role on that.
Clearly, you guys are the leaders in Florida. Are you concerned with now the change in the administration and the united situation with Amedisys, Humana, Bain, Kindred, Elevance getting closer to acquiring several different hospices? And my second question is, what are you thinking about in value-based arrangements, especially around that big market of yours? And clearly, you are the leaders. The reputation that you have in that market is second to none. You have an executive that I have to mention, her name. Betty Bel is the superstar of the superstars. But the market is changing, right?
It absolutely is, and I agree wholeheartedly. Betty's been with us for many, many decades, and in fact, we just had, we were exchanging notes last week, so she's great along with the rest of our Florida team as well, so to take it in two parts in the order in which the insurers and payers appetite to continue to either own or partner in the space is one we pay a lot of attention to, as well as have dialogue, right? Of course, Humana had taken an approach where they wanted to own and include the Gentiva component in the full CenterWell asset, and they divested and diluted some of that ownership because of brand perception, death panel risk, and other reasons maybe why they didn't want to have ownership anymore in the hospice and palliative care space, but they wanted to own the home health space, right?
And so, when they purchased that asset, that has its own dynamic. The Optum component, really specific around Amedisys because LHC, once again, is a home health asset for the most part. They have a little bit of hospice. We'll see it from an Amedisys standpoint. But the important thing to consider inside of Florida in particular, or else in the other 12 states I referenced and that are a Certificate of Need and Florida Certificate of Need, in the hospice industry, the thing that has a lot of uniform agreement now is whether you have low capital and barrier to entry components, unlike the hospital industry, Certificate of Need when done right functions very effectively to ensure access to care continues to happen, but you don't have a lot of unnecessary noise.
So, if I take a flip side of that, California, which is the primary area for fraud inside of the industry, has over half of the hospice providers in the country embedded inside of it, all of which have occurred in the last four years. The governor's solution was to enact a moratorium not to allow any more hospice providers, so a retroactive Certificate of Need to be reapplied in Florida or to be reapplied in California. So, Florida and some of those other states really are the prime example for where really high-quality hospice care continues to be provided. And that becomes important from a payer dynamic standpoint. So, we cover about 80% of the population in the state of Florida. We entered into a new market we announced publicly at the completion of the third quarter up in Tampa.
We were awarded another one up by The Villages here recently, so we're really excited about that story, but we're not naive to partnership, and that's what I mentioned from a long-term trajectory. As it relates to value-based care, because the two things go hand in hand, we know and feel great and have been able to prove our value proposition in value-based care. Total cost of care reduction, elevation of quality, which is the holy grail of everything. What has been unique on a partner-by-partner basis is referral source in health systems basis is whether they want to partner or whether they want to really explore business-to-business contracting, and it's still early innings, but our business-to-business contracting related to it, we're willing and want to take, we'll take full risk on everything because we know what that outcome is.
The dynamic is many of those risk-bearing entities in a value-based arrangement aren't used to someone taking, we'll take full risk. They just want to come in like an insurance company and take the lion's share of the profits and negotiate on rate discounting on the back end. We've been unwilling to do that and will continue, I think, as an industry also to be unwilling to do that. And so, it will play out over time, but it's why I can make the comment for 40 years or 40 plus years and all the research illustrates high-quality hospice providers and high-quality pre-hospice palliative care providers drive down cost, elevate outcomes.
And it's why I'd rather be operating in a space that is on the right side of the value-based equation and just being mindful and thoughtful about it from a business and scale standpoint versus being cut and trying to scrap for 60 cents on the dollar as compared to Medicare reimbursement, which is a long-winded way to say it's going to continue to play out for five to 10 years. And as we think about VITAS and the VITAS asset, we think it's really well positioned. We'll continue to scale it accordingly. And we think it's a preeminent partner no matter which way the ownership versus partnership equation transpires long-term. Great question.
Just want to better understand the consolidation opportunity. So, when you're looking at incremental transactions, what's your ROI hurdle? And then what are the limiters beyond reasonable price capital for how much you can deploy?
I'll let Mike and Kevin get into it. As you might imagine, we won't put parameters around some of those limitations. I can give you an example for Covenant Care, which we can see drawn out. We effectively paid five to seven times for that business depending on the outlook, so immediately accretive, but just as importantly, one that made all sorts of sense from a cultural and mission alignment standpoint. We have our own structured approach thinking about prudent capital deployment, but just as importantly, thinking about size, cultural, and integration components, which are so key and critical from a hospice acquisition standpoint. I don't want to be flipping around what are our limitations. There really aren't any limitations, but.
Not reasonable limitations.
Reasonable. And that's what I was trying to get at with it is Kevin and the entire Chemed team for decades now, prudent return of capital weighed against all the different options as he alluded to, buybacks, dividends, other alternatives. And so, we have a real thoughtful risk-adjusted basis for how do we want to deploy capital against every single opportunity that are out there. So, we're not swinging for the fences, not obligated to do it. If the right opportunity came across, there's not an embedded size limitation, but it gets weighed against all the other options from a capital deployment standpoint to ensure, first and foremost, it's the right and best thing for our shareholders long.
We're not going to buy something just to grow through M&A. We think, as Kevin said earlier, we internally do some of the parts between the two separate businesses. I think as prudent owners of those businesses, I think that's a thing that we need to do. And we would say we think VITAS is roughly in the 13-15 times valuation sort of within our stock price. And so, I think just purely from a financial standpoint, we would be looking at deals at that or maybe a little bit lower than that level. But as Nick said, there are a lot of other factors other than pure valuation that we would take into account. We wouldn't be as interested in acquiring hospices in non-CON states, for instance. The risk there, as well as what you're really buying, is still questionable in our minds.
We've always been very, very prudent and conservative in those things, and we don't need to buy something to buy something, and so we're going to evaluate every opportunity, but be very selective in the ones that we would be interested in pursuing.
Yeah. And I'd say when you talk about hurdles, when we look at some of these other hospices that come to market, they're very different, okay? Our average ADC for a program is over 400. The ones that I've seen, I don't think I've seen a specific program half of that in some of the ones that are for sale. They're different. I mean, our service offering is full-quality hospice. That is with all four levels of service, starting with continuous care, inpatient. And a lot of the hospices, you say they're too small. They say we're just not, it's logistically impossible to offer those options. We don't have full-time medical directors. We do. But we'd say, okay, it's hard to support on a bunch of small hospice programs, the VITAS model. Now, maybe eventually over time we will adopt it, but the first time we haven't.
With regard to the type of acquisition we're interested in, if it's of any size and it's in Florida and it's in a market where we don't have a CON, we're interested immediately at some level. Several of our, a couple of our acquisitions over the years, including our biggest one last year, fit that model exactly. There are still counties in Florida we're not in, we'd like to be in. We're constantly looking at that. But as far as limitations on that, the first limitation I'd say is operational. If it's a bunch of small programs, not interested. They're probably not in CON states, okay? But as far as the next, the way we look at really, we look at what are we getting on our overnight money, okay? It's gone from a third of a % to over 5%, okay?
That changes the economics for, for instance, from our stock repurchase program. All of our stock repurchases over the years have been accretive. As I say, we've repurchased over $2.7 billion of stock repurchases, basically, all of which have been accretive. Our average cost on that is about $130.
$150, yeah.
$150 per share. And as those, the next thing we look at, of course, is, okay, if we cash on deposit, we could borrow several hundred million dollars, again, without breaking a sweat. But then, of course, our allocation would be as far as any operational assets of the businesses, that is improved inpatient facilities at VITAS, more trucks at Roto-Rooter or that type of thing. Those are easy. But as far as capital needs, we face almost no reasonable limitations.
Free cash flow is about what, $300 million?
$300 million.
$300 million. So anything that's reasonable out there. As Mike alluded to, we're not looking, we don't need to and aren't looking to go buy hospice platforms. We believe we have one. What we're looking to do is build to that platform in markets in which we desire to operate. And it makes sense to acquire them as opposed to de novo them at the end of the day, right? We had three new de novos as we exited the third quarter we referenced. So, we'll continue that growth algorithm, but feel great about the potential opportunity over the next few years because we believe and are seeing it in certain markets. Specific providers have not recovered like we just alluded to.
And they're looking for opportunities and have come to the realization they might be better off integrating in with someone like VITAS that helps provide that high-quality mission-focused service in the community, but do so in an environment that requires scale. And that's what we see the next one, three, five, ten years looking like.
Yep. Hi. So, you mentioned that the volume growth would be roughly 8%-10% or so, sort of call it a reaccelerating kind of rate. I presume that's a lot faster than the industry, I think in general. So, how are you, who are you taking, is it sort of just white space? Are you taking share? Can you sort of walk us through how you're, and then how long is that? I'm assuming you say it's durable, so I'm just trying to understand how it works.
It's durable. Before we get into the share component real quick, the hospice industry, and you get back to any OMB scoring or anything else that comes along with it, is forecasted to be the second highest growing industry over the next 10 to 15 years. So, it's going to grow at a 9% CAGR by itself, okay? And that's due to baby boomers, aging components, and earlier access to the hospice benefit. So, without stealing share, that's what gives us confidence that is the new normal from just a volume-based standpoint, which is very market-specific. And you want to be in markets that older individuals, our average age is 82, are moving to, okay? So, south is the best way to put it. And so, that's what gives us confidence there.
We definitely know and believe we have been taking share over the segment and the time period in which we spoke about, and it is driven to having a high-quality independent provider, but more importantly, the ability to really attract clinicians that are either re-entering the workspace, want to be in hospice, and we're trying to say, why VITAS? Or word of mouth where they're working at a competitive hospice and realizing that the cultural components, being part of a team, have full access to provide the care that you think is necessary without constraints. All those things are our value proposition, and that's what's allowed us to steal share long-term.
I guess we're at the end of our time period here. And I want to thank everybody for their attention. And again, really after we release earnings in the latter part of February, Mike is going to be in.
We'll entertain all calls.
Thank you.
Thank you, everyone.
Thank you.