Core Viewpoint - Chemed Corporation reported strong first-quarter 2025 earnings and revenue growth, but faced stock price decline due to concerns over gross margin contraction and Roto-Rooter segment performance [1][2][14]. Financial Performance - Adjusted EPS for Q1 2025 was $5.63, an increase of 8.3% year over year, surpassing the Zacks Consensus Estimate by 0.5% [1] - GAAP EPS was $4.86, reflecting a 14.6% increase from the previous year [1] - Revenues for the quarter reached $646.9 million, up 9.8% year over year, exceeding the Zacks Consensus Estimate by 1.7% [2] Segment Performance - VITAS segment reported net patient revenues of $407.4 million, a 15.1% increase year over year, driven by an 11.9% rise in days-of-care and a 3.2% increase in Medicare reimbursement rates [4] - Roto-Rooter segment generated sales of $239.5 million, a 1.8% year-over-year increase, with commercial revenues up 7.3% [6] - Roto-Rooter residential revenues decreased by 1.7% year over year, with specific declines in drain cleaning and plumbing services [7] Margin and Expense Analysis - Gross profit increased by 6% year over year to $216.4 million, but gross margin contracted by 119 basis points to 33.5% due to rising service costs [8] - SG&A expenses decreased by 8.9% year over year to $105.6 million, while adjusted operating profit rose by 25.6% to $110.8 million [8] Liquidity and Capital Structure - As of the end of Q1 2025, the company had cash and cash equivalents of $173.9 million, down from $178.4 million at the end of Q4 2024, with no current or long-term debt [9][10] - Net cash provided by operating activities was $32.7 million, compared to $84.5 million in the same period last year [10] Shareholder Returns and Guidance - The company repurchased 50,000 shares for $29.8 million, with approximately $225.6 million remaining under its share repurchase authorization [11] - For 2025, Chemed expects VITAS revenues to grow by 10.5% to 11.3%, while Roto-Rooter is forecasted to grow by 2.4% to 3.0% [12] - Adjusted EPS guidance for 2025 is set between $24.95 and $25.45, indicating an 8.8% growth over 2024 [13]

Chemed Corporation (NYSE:CHE) Q1 2025 Earnings Conference Call April 24, 2025 10:00 AM ET Company Participants Holley Schmidt - Assistant Controller Kevin McNamara - President and CEO Mike Witzeman - CFO Nick Westfall - Chairman and CEO, Chemed VITAS Healthcare Corporation Conference Call Participants Ben Hendrix - RBC Capital Markets Operator Good day, and thank you for standing by. Welcome to the Chemed Corporation First Quarter 2025 Earnings Conference Call. At this time, all participants are in a listen ...

Financial Data and Key Metrics Changes - VITAS net revenue was $407.4 million in Q1 2025, an increase of 15.1% compared to the prior year period, driven by an 11.9% increase in days of care and a 3.2% increase in Medicare reimbursement rates [18][19] - Adjusted EBITDA for VITAS, excluding Medicare cap, totaled $70.3 million, reflecting a 15.9% increase, with an adjusted EBITDA margin of 17.2%, up 13 basis points from the prior year [20][28] - Roto Rooter generated total revenue growth of 1.8% in Q1 2025, with gross branch revenue increasing by 3.1% [13][21] Business Line Data and Key Metrics Changes - VITAS admissions totaled 18,139, a 7.3% improvement compared to Q1 2024, with an average daily census of 22,244, up 13.1% year-over-year [8][30] - Roto Rooter branch residential revenue increased by 1.7% to $167.2 million, while branch commercial revenue rose by 7.3% to $57.7 million [22][23] - Revenue from independent contractors declined by 6.4% in Q1 2025 compared to the same period in 2024 [24] Market Data and Key Metrics Changes - Hospital-based admissions represented 49% of overall admissions for VITAS, the highest level since the pandemic, with a 12% increase compared to Q1 2024 [36] - The average length of stay for VITAS patients increased to 118.7 days, compared to 103.9 days in Q1 2024 [32] Company Strategy and Development Direction - VITAS is focusing on increasing hospital-based admissions to manage Medicare cap exposure, which is expected to provide a cushion for revenue growth [10][34] - Roto Rooter is refining its excavation pricing model to balance revenue growth and EBITDA margin, responding to feedback from its commercial sales force [26][28] - The company is expanding its operating scope in Florida, with new locations in Pasco and Marion counties expected to drive future growth [16][37] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in VITAS's ability to maintain above-average growth through organic means and accretive acquisitions in 2025 and beyond [39] - The company acknowledged that the growth path seen in 2023 and 2024 may not be sustainable due to Medicare cap constraints, suggesting a more moderate growth trajectory moving forward [53] Other Important Information - The Covington Health acquisition positively impacted revenue, adjusted net income, and EBITDA by 3 to 4% [20] - Cash flow dynamics were affected by the timing of accounts receivable, particularly related to a $48 million refund and a $57 million PIP payment [56][58] Q&A Session Summary Question: Long-term cap management strategy - Management discussed the importance of managing Medicare cap cushion and the impact of hospital admissions on revenue and length of stay [42][44] Question: Cash flow dynamics and working capital - Management clarified that the increase in accounts receivable was due to timing issues rather than cash flow collection problems [54][60]

Chemed (CHE) Q1 2025 Earnings Call April 24, 2025 10:00 AM ET Company Participants Holley Schmidt - Assistant ControllerKevin McNamara - President and CEOMichael Witzeman - VP, CFO and ControllerNicholas Westfall - Executive Vice PresidentBen Hendrix - Vice President Operator Good day, and thank you for standing by. Welcome to the Chemed Corporation First Quarter twenty twenty five Earnings Conference Call. At this time, all participants are in a listen only mode. After the speakers' presentation, there wil ...

Revenue Growth - Revenue increased by 9.8% to $646.9 million in Q1 2025 compared to the prior year[3] - Net Patient Revenue for VITAS was $407.4 million, reflecting a 15.1% increase year-over-year[6] - Roto-Rooter generated revenue of $239.5 million, an increase of 1.8% compared to the previous year[11] - Service revenues and sales for Q1 2025 were $646,943,000, up from $589,233,000 in Q1 2024, reflecting a growth of 9.8%[38] - VITAS segment net revenue for Q1 2025 reached $407,400,000, up from $354,007,000 in Q1 2024, indicating a year-over-year increase of 15.1%[45] - Homecare revenue within the VITAS segment was $351,566,000 in Q1 2025, compared to $304,860,000 in Q1 2024, marking a growth of 15.3%[45] Earnings Performance - GAAP Diluted Earnings-per-Share (EPS) rose by 14.6% to $4.86, while Adjusted Diluted EPS increased by 8.3% to $5.63[3] - Net income for Q1 2025 was $71,757,000, an increase of 10.7% compared to $65,017,000 in Q1 2024[36] - Adjusted net income for Q1 2025 was $83,074,000, compared to $79,831,000 in Q1 2024, reflecting a growth of 4.5%[42] - The diluted earnings per share for Q1 2025 was $4.86, up from $4.24 in Q1 2024, representing an increase of 14.6%[42] Operational Metrics - Average Daily Census (ADC) grew by 13.1% to 22,244, with admissions increasing by 7.3% to 18,139[3] - Average daily census (ADC) for homecare increased to 18,140 days in Q1 2025 from 15,911 days in Q1 2024, a rise of 14.2%[45] - Total admissions for VITAS in Q1 2025 were 18,139, up from 16,911 in Q1 2024, representing an increase of 7.2%[45] - The average length of stay for patients increased to 118.7 days in Q1 2025 from 103.9 days in Q1 2024, suggesting a longer duration of care provided[45] Financial Position - As of March 31, 2025, Chemed had total cash and cash equivalents of $173.9 million and no debt[16] - Total current assets decreased to $502,385,000 in Q1 2025 from $539,617,000 in Q1 2024, a decline of 6.8%[34] - Total liabilities remained relatively stable at $544,753,000 in Q1 2025 compared to $544,138,000 in Q1 2024[34] - Cash and cash equivalents decreased to $173,882,000 in Q1 2025 from $313,350,000 in Q1 2024, a decrease of 44.7%[36] - Total stockholders' equity slightly decreased to $1,181,762,000 in Q1 2025 from $1,183,495,000 in Q1 2024[34] Cash Flow and Investments - Net cash provided by operating activities was $32,744,000 in Q1 2025, down from $84,549,000 in Q1 2024, a decline of 61.2%[36] - Capital expenditures for Q1 2025 were $13,280,000, compared to $12,163,000 in Q1 2024, an increase of 9.2%[36] - The company repurchased 50,000 shares for $29.8 million, with approximately $225.6 million remaining under its share repurchase authorization[18] - The company purchased $33,222,000 in treasury stock during Q1 2025, compared to $38,460,000 in Q1 2024[36] Efficiency and Collection - Adjusted EBITDA for VITAS was $70.3 million, up 15.9% from the prior year, with an adjusted EBITDA margin of 17.2%[9] - Adjusted EBITDA for Q1 2025 was $121,692,000, compared to $114,622,000 in Q1 2024, reflecting a growth of 6.1%[40] - The estimated uncollectible accounts as a percentage of revenues decreased to 0.6% in Q1 2025 from 1.1% in Q1 2024, indicating improved revenue collection efficiency[46] - The company reported a decrease in accounts receivable by $67,424,000 in Q1 2025, contrasting with an increase of $5,345,000 in Q1 2024[36]

Core Viewpoint - Chemed's shares have increased by approximately 4.5% since the last earnings report, outperforming the S&P 500, raising questions about the sustainability of this positive trend leading up to the next earnings release [1] Company Performance - Chemed has not seen any earnings estimate revisions from analysts in the past two months, indicating a period of stability in expectations [2] - The company holds a VGM Score of B, with a strong Growth Score of A, a Momentum Score of B, but a lower Value Score of D, placing it in the bottom 40% for value investment strategy [3] Outlook - Chemed has a Zacks Rank of 4 (Sell), suggesting expectations of below-average returns in the upcoming months [4] Industry Comparison - Chemed operates within the Zacks Medical - Outpatient and Home Healthcare industry, where DaVita HealthCare has seen a 3.9% increase in shares over the past month [5] - DaVita HealthCare reported revenues of $3.29 billion for the last quarter, reflecting a year-over-year increase of 4.7%, with EPS rising from $1.87 to $2.24 [5] - For the current quarter, DaVita HealthCare is projected to report earnings of $1.75 per share, indicating a decline of 26.5% from the previous year, with no changes in the Zacks Consensus Estimate over the last 30 days [6]

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]