Core Viewpoint - Chemed Corporation reported better-than-expected earnings and revenues for the fourth quarter of 2024, driven by strong performance in its VITAS segment and an acquisition that bolstered its metrics [14]. Financial Performance - The adjusted earnings per share (EPS) for the fourth quarter was $6.83, a 3.5% increase year over year, surpassing the Zacks Consensus Estimate by 0.5% [1] - The GAAP EPS was $6.02, reflecting a 2% increase from the previous year [2] - Full-year adjusted EPS reached $23.13, marking a 13.9% increase from the prior year [2] - Revenues for the fourth quarter improved by 9.2% year over year to $640 million, exceeding the Zacks Consensus Estimate by 1.7% [3] - Total revenues for the full year were $2.43 billion, up 7.4% from the previous year [3] Segment Performance - VITAS segment reported net patient revenues of $411 million in the fourth quarter, a 17.4% increase year over year, driven by a 14.6% rise in days of care and a nearly 3.5% increase in Medicare reimbursement rates [5] - Roto-Rooter segment reported sales of $229 million, down 2.9% year over year, with mixed performance across its services [7][8] Margin Analysis - Gross profit for the fourth quarter increased by 2.9% year over year to $234.1 million, but gross margin contracted by 226 basis points to 36.6% due to rising service costs [9] - SG&A expenses rose by 3.8% year over year to $104 million, while adjusted operating profit increased by 2.1% to $129.8 million, with adjusted operating margin contracting by 141 basis points to 20.3% [9] Liquidity and Capital Structure - At the end of the fourth quarter, the company had cash and cash equivalents of $178.4 million, down from $264 million at the end of 2023, with no current or long-term debt [11] - The cumulative net cash provided by operating activities was $417.5 million compared to $330.3 million in the previous year [11] - The company repurchased 388,235 shares for $57.8 million, with approximately $255.3 million remaining under its share repurchase authorization [12] Future Guidance - For 2025, Chemed expects VITAS revenues to increase by 10.5% to 11.3% from 2024 levels, with total revenue estimates pegged at $2.57 billion, indicating a 5.8% year-over-year improvement [13] - The adjusted EPS for full-year 2024 is expected to be in the range of $24.95-$25.45, implying an 8.5% growth over the 2024 adjusted figure [13]

Business Segments - Chemed operates in two segments: VITAS, providing hospice and palliative care, and Roto-Rooter, offering plumbing and related services[11]. - VITAS is one of the largest hospice service providers in the U.S., competing with numerous small, community-based hospices[25]. - Roto-Rooter's revenue and operating results are significantly impacted by weather patterns across the United States, affecting service demand[19]. Revenue Sources - Over 90% of VITAS' revenue comes from the Medicare program, indicating a significant reliance on government funding[21]. - Over 95% of VITAS' revenue comes from Medicare and Medicaid payments, primarily on a "per diem" basis, making cost management critical for profitability[54]. - Medicaid reimbursement accounted for approximately 4% of VITAS' revenues in 2024, with state programs required to pay at least the same rates as Medicare[70]. Compliance and Regulatory Challenges - The company emphasizes the importance of compliance with Medicare's Conditions of Participation to avoid sanctions and maintain operational integrity[33]. - VITAS must comply with various state licensure requirements, and non-compliance could adversely affect operations and participation in Medicare and Medicaid[53]. - The company faces regulatory challenges in expanding into states with Certificate of Need laws, which may require state agency approval for new programs[48]. - The Medicare program has implemented a 2% reimbursement cut, which was temporarily reduced to 1% during the COVID-19 pandemic, affecting future revenue[73]. - The company is subject to various federal and state health regulatory laws covering professional services and the dispensing of drugs[101]. Financial Performance and Risks - VITAS' profitability is at risk due to potential increases in operating costs without corresponding increases in Medicare and Medicaid rates[134]. - Liability claims and inadequate insurance coverage pose risks to VITAS' financial condition and operational results[152]. - The company is subject to financial covenants that restrict its ability to incur additional debt and could lead to default if not met[160][161]. - The company has historically incurred debt to finance operations, and its ability to service this debt depends on future operating performance[168][169]. Competition - Roto-Rooter faces competition from local and regional firms, with competition primarily based on service quality, pricing, and brand recognition[23]. - The hospice industry is highly competitive, with VITAS facing pressure from various healthcare organizations and potential new entrants[149]. - The company recognizes the intense competition in the service industry, particularly in plumbing, which could impact its growth strategy[127]. Acquisitions and Growth Strategy - The company has engaged in twelve significant acquisitions or divestitures since its inception, focusing on maximizing shareholder value[10]. - VITAS acquired hospice operations and an assisted living facility from Covenant for an aggregated purchase price of $85.0 million in cash[121]. - Roto-Rooter completed several acquisitions in 2024, including a franchise in New Jersey for $5.8 million, Texas for $1.5 million, and Kentucky for $5.1 million, totaling $12.4 million[121]. - VITAS' growth strategy includes expansion into new markets, but success is not guaranteed, which could adversely affect overall business performance[145]. Employee and Workforce Management - The Company employed a total of 15,695 employees as of December 31, 2024, emphasizing the importance of talent attraction and retention[109]. - VITAS's "Difference Maker Program" paid over $39.2 million in bonuses to retain healthcare workers during the pandemic[119]. - The company values diversity and inclusion in its workforce to better serve its diverse customer base[120]. Cybersecurity and Data Protection - The company has developed a response plan for potential cybersecurity breaches and maintains safeguards against cyber-attacks[132]. - The company has implemented cybersecurity measures, including regular updates and independent testing, to combat increasing cyber threats[176][178]. - The company has not experienced any known material system/data breaches that compromised customer or proprietary data[155]. Environmental Compliance - As of December 31, 2024, the Company has an estimated liability for potential environmental cleanup costs amounting to $1.7 million, with a maximum contingent liability of $14.9 million[105]. - The Company is currently in compliance with environmental laws and regulations, with capital expenditures for compliance being immaterial in 2023 and 2024[106]. Shareholder Returns and Financial Position - The Company repurchased a total of 388,235 shares in the fourth quarter of 2024 at a weighted average price of $548.13 per share, with a remaining dollar amount of $351,929,650 under the repurchase program[193]. - The Company's cumulative total stockholder return from December 31, 2019, to December 31, 2024, was 22.37%, compared to 97.02% for the S&P 500 and 103.37% for the Dow Jones Industrial Diversified Index[199]. - The Company has no long-term debt as of December 31, 2024, and its interest rate risk exposure is primarily through a variable interest credit facility[203]. Legal and Litigation Risks - The company is involved in ongoing litigation, which could result in substantial damages and affect its financial condition[167]. - The company acknowledges that the effects of another pandemic could negatively impact its operations and service delivery[171][172].

Financial Data and Key Metrics Changes - VITAS net revenue was $411 million in Q4 2024, an increase of 17.4% compared to the prior year period [21] - Roto-Rooter generated quarterly revenue of $229 million, a decrease of 2.9% year-over-year [13] - Adjusted EBITDA for VITAS was $93.2 million, an increase of 11.8% [23] - Adjusted EBITDA margin for VITAS was 22.5%, down 112 basis points from the prior year [23] Business Line Data and Key Metrics Changes - VITAS admissions totaled 16,427, a 3.5% increase from Q4 2023 [8] - Average daily census (ADC) for VITAS expanded to 22,179 patients, a 14.6% increase year-over-year [37] - Roto-Rooter residential revenue decreased by 2%, while commercial revenue increased by 0.4% [13] - Roto-Rooter adjusted EBITDA totaled $60.3 million, a decrease of 7.2% compared to the prior year [26] Market Data and Key Metrics Changes - VITAS experienced a geographically weighted average Medicare reimbursement rate increase of approximately 3.5% [21] - The average revenue per patient day for VITAS was $206.23, which is 244 basis points above the prior year [22] - Roto-Rooter's call volume was down 8% compared to the prior year quarter [14] Company Strategy and Development Direction - VITAS is focusing on hospital-based admissions to manage Medicare cap exposure and ensure sustainable growth [42][45] - Roto-Rooter is optimistic about its commercial business growth and aims to stop further deterioration in the residential sector [30] - The company plans to continue its strategy of acquiring new locations and integrating other providers to enhance patient care [45] Management's Comments on Operating Environment and Future Outlook - Management expressed cautious optimism regarding Roto-Rooter's turnaround despite challenging operating conditions [18] - VITAS management is confident in maintaining above-average historical growth through organic growth and acquisitions [45] - The company anticipates a slight moderation in growth rates due to Medicare cap management strategies [28] Other Important Information - The Covenant Health acquisition contributed $11 million to $12 million in revenue during Q4 2024 [25] - The company is not incorporating share repurchases into its guidance for 2025 [67] Q&A Session Summary Question: What gives confidence in Roto-Rooter's turnaround? - Management noted strong support for growth in Roto-Rooter, with December and January typically being strong months [51][52] Question: How does VITAS plan to capture market share? - VITAS is focusing on differentiated offerings and attracting high-quality clinicians to capture market share [61] Question: What is the outlook for share repurchases? - No share repurchases are built into the guidance, but the company intends to do some level of programmatic share repurchases [69] Question: What is causing margin pressure for VITAS? - The margin pressure is attributed to a shift towards hospital-based admissions and managing Medicare cap limitations [75] Question: Will the Medicare cap be a headwind beyond 2025? - Management indicated that the Medicare cap is part of normal operations and does not anticipate substantial changes [82]

Core Viewpoint - Chemed reported quarterly earnings of $6.83 per share, exceeding the Zacks Consensus Estimate of $6.79 per share, and showing an increase from $6.60 per share a year ago [1][2] Financial Performance - The company achieved revenues of $639.99 million for the quarter ended December 2024, surpassing the Zacks Consensus Estimate by 1.78% and up from $585.91 million year-over-year [3] - Chemed has surpassed consensus revenue estimates two times over the last four quarters [3] Stock Performance - Chemed shares have increased approximately 3.9% since the beginning of the year, compared to a 1.3% gain in the S&P 500 [4] - The stock currently holds a Zacks Rank 3 (Hold), indicating expected performance in line with the market in the near future [7] Earnings Outlook - The current consensus EPS estimate for the upcoming quarter is $5.55 on revenues of $623.53 million, and for the current fiscal year, it is $25.10 on revenues of $2.57 billion [8] - The estimate revisions trend for Chemed is mixed, which may change following the recent earnings report [7] Industry Context - Chemed operates within the Medical - Outpatient and Home Healthcare industry, which is currently ranked in the top 24% of over 250 Zacks industries [9] - The industry has shown a strong correlation between near-term stock movements and trends in earnings estimate revisions [6]

Revenue Growth - VITAS segment revenue increased by 9.2% to $640.0 million in Q4 2024, with net patient revenue rising 17.4% to $411.0 million[6]. - Service revenues for Q4 2024 reached $639,993, an increase of 9.2% from $585,912 in Q4 2023[46]. - Consolidated service revenues and sales for 2024 reached $2,431,287, an increase from $2,264,417 in 2023, representing a growth of approximately 7.4%[54]. - VITAS segment net revenue for 2024 was $1.530978 billion, up from $1.315065 billion in 2023, indicating a growth of 16.4%[63]. - Homecare revenue in the VITAS segment increased to $1.326488 billion in 2024, compared to $1.136437 billion in 2023, marking a rise of 16.7%[63]. Earnings and Profitability - GAAP diluted EPS for Q4 2024 was $6.02, a 2.0% increase, while adjusted diluted EPS rose 3.5% to $6.83[6]. - Net income for the year 2024 was $301,999, up 10.9% from $272,509 in 2023[50]. - Earnings per share (EPS) for 2024 was $20.10, compared to $18.11 in 2023, reflecting a growth of 10.9%[46]. - Adjusted net income for 2024 was $351.188 million, up from $308.515 million in 2023, which is an increase of 13.8%[60]. - The company reported a net income margin of approximately 12.4% for 2024, compared to 12.0% in 2023[54]. Expenses and Costs - Total costs and expenses for 2024 amounted to $2,064,794, up from $1,923,848 in 2023, indicating a rise of approximately 7.3%[54]. - Selling, general and administrative expenses for 2024 totaled $424,360, an increase from $395,120 in 2023, which is a rise of about 7.4%[54]. - The cost of services provided and goods sold in 2024 was $1,576,939, compared to $1,465,602 in 2023, reflecting an increase of approximately 7.6%[54]. Cash Flow and Financial Position - As of December 31, 2024, Chemed had total cash and cash equivalents of $178.4 million and no debt[26]. - The company reported a net cash provided by operating activities of $417,497 for 2024, an increase from $330,299 in 2023[50]. - Cash and cash equivalents decreased to $178,350 in 2024 from $263,958 in 2023, a decline of 32.3%[48]. - Total liabilities decreased to $549,582 in 2024 from $560,219 in 2023, a reduction of 1.1%[48]. Shareholder Returns - The company repurchased 388,235 shares for $212.8 million in Q4 2024, with approximately $255.3 million remaining under its share repurchase authorization[28]. - The company purchased $361,389 in treasury stock in 2024, significantly higher than $67,697 in 2023[50]. Operational Metrics - Average Daily Census (ADC) for VITAS was 22,179, reflecting a 14.6% increase compared to the prior year[6]. - Average daily census (ADC) for homecare increased to 17,153 days in 2024 from 14,953 days in 2023, a growth of 14.7%[63]. - Total admissions for the VITAS segment rose to 67,447 in 2024, compared to 63,431 in 2023, representing a growth of 6.4%[63]. - The total number of days of care provided in 2024 was 7,748,471, compared to 6,793,832 in 2023, indicating a growth of 14.1%[63]. Challenges and Strategic Initiatives - For the three months ended December 31, 2024, the consolidated after-tax impact on earnings was a loss of $12,134,000, primarily due to significant charges[65]. - The pretax impact on earnings for the year ended December 31, 2024, was a loss of $62,726,000, highlighting the financial challenges faced during the period[65]. - The company reported an acquisition expense of $206,000 for the three months ended December 31, 2024, indicating ongoing strategic growth initiatives[65]. - The long-term incentive compensation for the year ended December 31, 2024, was $14,815,000, which is a significant component of employee compensation[65]. Medicare and Tax Benefits - The Medicare cap cushion for 25 provider numbers was greater than 10%, indicating a strong position in the Medicare reimbursement landscape[65]. - The income tax benefit related to excess tax benefits on stock compensation for the year ended December 31, 2024, was $4,442,000, providing some financial relief[65].

Core Viewpoint - Chemed Corporation (CHE) is positioned for growth due to strong operational performance in its VITAS segment and resilience in Roto-Rooter, despite facing macroeconomic challenges and competitive pressures [1][4]. Group 1: Financial Performance - Chemed has a market capitalization of $8.46 billion and an earnings yield of 4.46%, which is higher than the industry's 4.08% yield [2]. - The company has a historical average earnings growth rate of 14.1%, significantly outpacing the industry's 3.7% and the S&P 500's 8.1% growth [2]. - As of the end of Q3 2024, Chemed reported cash and cash equivalents of $238.5 million with no debt, and it repurchased 100,000 shares for $57.8 million [6]. Group 2: VITAS Segment Growth - The VITAS segment has shown a year-over-year growth of 17.3% in Q3 2024, aided by the acquisition of Covenant Health, which improved admissions by 6.3% and Average Daily Census (ADC) by 15.5% [3]. - Management is optimistic about VITAS's ability to continue hiring and retaining licensed healthcare professionals, leading to sustained growth in admissions and patient census [3]. Group 3: Roto-Rooter Resilience - Roto-Rooter has maintained its competitive edge despite challenges in consumer sentiment and spending, supported by strong brand awareness and customer service capabilities [4]. - The management has introduced initiatives such as adding commercial sales staff and enhancing customer relationship management to drive revenue growth [5]. Group 4: Macroeconomic and Competitive Challenges - Chemed faces macroeconomic headwinds, including rising labor and supply chain costs, with service costs increasing by 9.3% year-over-year in Q3 [9]. - The competitive landscape for Roto-Rooter and VITAS is challenging, with both segments needing to innovate to maintain market share in fragmented industries [10]. Group 5: Earnings Estimates - The Zacks Consensus Estimate for Chemed's 2024 earnings per share (EPS) is $23.09, with revenue estimates at $2.42 billion, indicating a 6.87% increase from the previous year [11].

Core Viewpoint - Chemed (CHE) is facing challenges due to macroeconomic impacts, seasonality, and competition, particularly affecting its Roto-Rooter business, leading to a Zacks Rank 4 (Sell) [1] Group 1: Challenges Facing Chemed - The Roto-Rooter business is struggling with headwinds in consumer sentiment and spending, prompting management to seek a new marketing agency for its paid search program [2] - The transition to a new SEM provider has contributed to a decline in residential revenues during the third quarter, although management remains optimistic about future improvements [3] - Global economic conditions, including labor shortages, supply chain issues, and inflation, are increasing operational costs, with service costs rising 9.3% year over year and SG&A expenses up 2.4% [4] Group 2: Competitive Landscape - Chemed's Roto-Rooter operates in a fragmented and competitive market for plumbing and drain services, facing competition from local and regional firms [5] - The hospice care segment, particularly VITAS, also faces competition from numerous organizations, necessitating a focus on quality and responsive services to maintain market position [5] Group 3: Positive Developments - The VITAS segment is showing strong growth, with a 17.3% year-over-year increase in the third quarter, bolstered by the $85 million acquisition of Covenant Health [8] - The acquisition has led to a 6.3% increase in admissions and a 15.5% rise in Average Daily Census (ADC), indicating a return to normalized operating conditions [8] - The aging population is expected to drive growth in the hospice market, increasing demand for end-of-life care and supportive services [9] - The global hospice market is projected to grow at a CAGR of 9.1% from 2023 to 2028, indicating favorable long-term trends for the industry [10]

Revenue and Sales Performance - For the three months ended September 30, 2024, consolidated service revenues and sales increased by 7.4% to $606,181,000 compared to $564,532,000 in the same period of 2023[103]. - VITAS experienced a 17.3% increase in service revenues, primarily driven by a 15.5% increase in days-of-care and a 2.6% increase in Medicare reimbursement rates[104]. - Roto-Rooter saw a 6.9% decrease in service revenues, attributed to declines across all service lines[104]. - Total revenues for the first nine months of 2024 increased by 6.7% to $1,791,294,000 compared to $1,678,505,000 in the same period of 2023[134]. - VITAS' routine homecare revenue for the first nine months of 2024 was $967,981,000, a 16.3% increase from $832,554,000 in 2023[135]. - Total net revenue for Q3 2024 was $399,148,000, compared to $340,801,000 in Q3 2023, indicating a growth of 17.1%[165]. - Homecare revenue for Q3 2024 reached $338,344,000, a significant increase from $287,389,000 in Q3 2023, marking a growth of 17.7%[165]. Income and Earnings - Adjusted net income for the three months ended September 30, 2024, was $85,485,000, up from $80,866,000 in 2023, representing a 8.0% increase[103]. - Net income for VITAS in Q3 2024 was $53,486,000, an increase from $44,331,000 in Q3 2023, reflecting improved revenue performance[130]. - Roto-Rooter's net income decreased to $37,955,000 in Q3 2024 from $50,327,000 in Q3 2023, impacted by declining revenue and increased SG&A expenses[131]. - Net income for the three months ended September 30, 2024, was $75,776 thousand, an increase from $74,958 thousand in the same period last year[159][160]. - Net income for the nine months ended September 30, 2024, was $211,680 thousand, up from $182,456 thousand in the same period last year, representing a year-over-year increase of 16.0%[162]. - Adjusted net income for the nine months ended September 30, 2024, was $248,735,000, up from $207,701,000 in the same period of 2023, representing an increase of 19.7%[164]. Expenses and Costs - Total SG&A expenses rose to $101,981,000 in Q3 2024, up 2.4% from $99,602,000 in Q3 2023, primarily due to salary increases and higher marketing expenses[124]. - Total SG&A expenses rose by 8.6% to $320.1 million in the first nine months of 2024 from $294.7 million in 2023, primarily due to normal salary increases and higher marketing expenses[138]. - The total costs and expenses for the consolidated entity were $514.0 million for the three months ended September 30, 2024[148]. - The company incurred a total of $11,700,000 in pretax costs related to stock options and long-term incentives in Q3 2023[152]. Margins and Profitability - Consolidated gross margin decreased to 34.6% in Q3 2024 from 35.8% in Q3 2023, while VITAS' gross margin improved to 24.6% from 24.0%[123]. - The consolidated gross margin increased to 34.6% in the first nine months of 2024 from 34.0% in the same period of 2023[137]. - VITAS' gross margin improved to 23.9% in the first nine months of 2024 compared to 20.2% in 2023, attributed to increased revenues and the expiration of the Retention Bonus Program[137]. - After-tax earnings as a percentage of revenue at VITAS increased to 13.1% in the first nine months of 2024 from 9.9% in 2023[144]. - Roto-Rooter's after-tax earnings as a percentage of revenue decreased to 17.8% in the first nine months of 2024 from 20.0% in 2023, primarily due to declining revenue and higher SG&A expenses[145]. Tax and Adjustments - The effective tax rate for Q3 2024 was 25.0%, up from 19.6% in Q3 2023, influenced by changes in state and local tax structures[127]. - The effective tax rate for the first nine months of 2024 was 24.2%, compared to 22.3% in 2023, influenced by a tax benefit from realigning the state and local corporate tax structure[141]. - The company recognized a total after-tax adjustment of $(9,709,000) in Q3 2024, compared to $(5,908,000) in Q3 2023, reflecting various impacts on earnings[129]. Cash Flow and Financial Position - Net cash provided by operating activities increased by $30.8 million from September 30, 2023, to September 30, 2024, primarily due to a $29.2 million increase in earnings[111]. - As of September 30, 2024, the company has approximately $404.8 million of unused lines of credit available under its revolving credit facility[115]. - The company had no variable rate debt outstanding as of September 30, 2024, mitigating interest rate risk exposure[168]. - For each $10 million borrowed under the credit facility, a 100 basis points change in interest rates would affect annual interest expense by $100,000[168]. - Interest expense for the nine months ended September 30, 2024, totaled $1,281 thousand, compared to $2,766 thousand in the same period last year[162]. Acquisitions and Investments - The acquisition of hospice operations and an assisted living facility from Covenant Health for $85 million was completed on April 17, 2024[106]. - The company reported a $81.8 million increase in goodwill primarily due to the Covenant acquisition[110]. - A $20.5 million increase in investments of deferred compensation plans was noted, mainly due to market valuation gains[110]. Future Outlook - Future outlook includes continued focus on service revenue growth and operational efficiency improvements across both VITAS and Roto-Rooter segments[151].

Financial Data and Key Metrics Changes - VITAS net revenue was $391.4 million in Q3 2024, an increase of 17.3% compared to the prior year period, driven by a 15.5% increase in days of care and a 2.6% increase in Medicare reimbursement rates [19][22] - Adjusted EBITDA for VITAS, excluding Medicare Cap, totaled $73.1 million, reflecting a 33.1% increase, with an adjusted EBITDA margin of 18.6%, up 212 basis points from the prior year [22] - Roto-Rooter generated quarterly revenue of $214.8 million, a decrease of 6.9% year-over-year, with residential revenue down 6.3% and commercial revenue down 5.9% [12][24][26] - Adjusted EBITDA at Roto-Rooter totaled $56.4 million, a decrease of 15.8% compared to the prior year, with an adjusted EBITDA margin of 26.3%, down 275 basis points [28] Business Line Data and Key Metrics Changes - VITAS admissions totaled 16,775, a 6.3% improvement from the same period in 2023, with average daily census (ADC) expanding to 21,785, an increase of 15.5% [8][33] - Roto-Rooter's call volume was down 11.7% year-over-year, impacting overall revenue performance [12][55] - Roto-Rooter experienced a sequential improvement in commercial revenue, which increased by 5% over Q2 2024 [16][26] Market Data and Key Metrics Changes - The acquisition of Covenant Health contributed $10 million to $11 million in revenue for VITAS in Q3 2024, translating to net income of approximately $1.8 million to $2 million [23] - The impact of Hurricane Helene on admissions was estimated to be a reduction of 60 to 100 patients, with expectations of a more significant impact in Q4 due to additional hurricanes [10][11] Company Strategy and Development Direction - VITAS is focused on sustainable expansion of its workforce and patient capacity, marking nine consecutive quarters of growth in clinical workforce capacity [31][40] - Roto-Rooter is implementing a new marketing strategy to improve residential and commercial revenue, with a focus on increasing call volume as a key metric for success [49][55] - The company remains optimistic about VITAS's growth potential, expecting above-average historical growth rates in the coming years [41][74] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in VITAS's ability to maintain strong admission and census growth, despite challenges faced by Roto-Rooter [17][80] - The company anticipates continued pressure on Roto-Rooter's residential side, with hopes for improvement in commercial revenue [72][74] - For 2025, VITAS expects high single to low double-digit growth in days of care, while Roto-Rooter is projected to have flattish revenue with no significant margin expansion [74][76] Other Important Information - The company has reduced its full-year 2024 earnings per diluted share guidance for Roto-Rooter, estimating a range of $23 to $23.15, reflecting a 13.3% to 14% increase from 2023 [29][30] - The integration of Covenant Health was completed smoothly, both operationally and culturally, enhancing VITAS's service capabilities [36] Q&A Session Summary Question: Long-term growth expectations for census and regional considerations - Management indicated strong occupancy levels and demand across markets, with expectations for growth above pre-pandemic levels [44][48] Question: Hurdle rates or benchmarks for the new marketing strategy at Roto-Rooter - Management emphasized that call count will be the primary metric for success, with current call volume down significantly [55] Question: Details on the new vendor managing online searches for Roto-Rooter - The new agency is expected to bring fresh ideas and strategies to improve online visibility and call volume [58][60] Question: Guidance for Roto-Rooter in Q4 and overall revenue expectations - Management expects similar revenue numbers for Roto-Rooter in Q4 compared to Q3, with no significant improvement anticipated [64] Question: High-level comments on growth for Roto-Rooter and VITAS in 2025 - Management is cautious about Roto-Rooter's residential side but optimistic about VITAS's growth potential, expecting above-average growth rates [72][74]

Core Insights - Chemed Corporation reported third-quarter 2024 adjusted earnings per share (EPS) of $5.64, a 6% increase year over year, but missed the Zacks Consensus Estimate by 2.1% [1] - The company's GAAP EPS was $5.00, reflecting a 1.4% increase from the previous year [1] - Revenues for the quarter improved by 7.4% year over year to $606.2 million, but also missed the Zacks Consensus Estimate by 1.1% [2] Revenue Breakdown - VITAS segment net revenues reached $391.4 million, up 17.3% year over year, driven by a 15.5% increase in days of care and a nearly 2.6% rise in the Medicare reimbursement rate [4] - Roto-Rooter segment reported sales of $214.8 million, down 6.9% year over year, with declines in various service categories [4][5] Margin Analysis - Gross profit increased by 3.9% year over year to $210 million, but gross margin contracted by 117 basis points to 34.6% due to a 9.3% rise in service costs [6] - SG&A expenses rose by 2.4% year over year to $102 million, while adjusted operating profit increased by 22.7% to $108 million, with adjusted operating margin contracting by 35 basis points to 17.8% [6] Liquidity and Capital Structure - Chemed ended the quarter with cash and cash equivalents of $238.5 million, up from $222.9 million at the end of the previous quarter, and had no current or long-term debt [7] - Cumulative net cash from operating activities was $252.6 million, compared to $221.7 million in the prior year [7] Share Repurchase and Dividends - The company repurchased 100,000 shares for $57.8 million, averaging $578.2 per share, with approximately $168.1 million remaining under its share repurchase authorization [8] - Chemed has a consistent dividend-paying history, with a five-year annualized dividend growth of 5.51% [8] Guidance and Outlook - Chemed maintained its 2024 revenue guidance for VITAS, expecting a revenue increase of 16.3-17.3% compared to the previous year [9] - The updated adjusted EPS outlook for 2024 is now in the range of $23.00-$23.15, down from the previous estimate of $23.55-$23.80, with the Zacks Consensus Estimate at $23.58, indicating a 16.2% growth over 2023 [10]