Vitas Healthcare’s 2024 purchase of Covenant Health and Community Services is helping to drive the company’s growth.

VITAS acquired Covenant last year for $85 million. The transaction included Covenant’s hospice assets and marked an important milestone for VITAS, including its entry into the assisted living space and in the Alabama market while expanding its geographic footprint across Florida. VITAS is a subsidiary of Chemed Corp. (NYSE: CHE).

The Covenant deal has yielded growth in revenue, average daily census and admissions.

“These historically good metrics were positively impacted by the $85 million acquisition of Covenant Health, which was closed on April 17, 2024 through the end of the first quarter,” Chemed CEO Kevin McNamara said in an earnings call. “The Covenant Health acquisition is meeting all of our internal financial projections developed at the time of the acquisition.”

Covenant Health contributed approximately $11.5 million to $12.5 million of VITAS’ revenue in the first quarter of 2025. This revenue translated to net income of approximately $1.8 million to $2.0 million. Adjusted EBITDA in the quarter attributed to Covenant Health was between $2.5 million and $2.7 million.

Overall, VITAS brought in $407.4 million in net patient revenue, a 15.1% increase year over year. In addition to the Covenant transaction, VITAS attributes the revenue growth to an 11.9% increase in days-of-care and a geographically weighted average Medicare reimbursement rate increase of approximately 3.2%.

The company’s ADC rose 13.1% to 22,244, and admissions were up 7.3% to 18.139. VITAS has seen 10 consecutive quarters of ADC growth.

A major initiative currently at VITAS is an effort to reduce hospice cap liability, according to Chairman and CEO Nick Westfall. A key component of this effort is to increase referrals from hospitals as opposed to other settings. In Q1, hospitals accounted for 49% of VITAS’ admissions.

“The primary Medicare cap management strategy is to increase hospital-based admissions in select locations,” Westfall said in the earnings call. “Hospital referrals traditionally come later on a patient’s disease trajectory and therefore result in shorter lengths of stay. This has the overall effect of moderating both revenue growth and margin growth, but also provides additional cap cushion in those key locations.”