Chemed(CHE) - 2025 Q2 - Quarterly Results

Executive Summary Chemed Corporation's Q2 2025 results show increased consolidated revenue but a decline in GAAP and Adjusted Diluted EPS, with mixed performance across its VITAS and Roto-Rooter segments Consolidated Operating Results Chemed Corporation reported a 3.8% increase in consolidated revenue to $618.8 million for Q2 2025, while GAAP Diluted EPS decreased by 23.2% to $3.57 and Adjusted Diluted EPS decreased by 21.9% to $4.27 Consolidated Operating Results (Q2 2025 vs. Q2 2024) | Metric | Q2 2025 Value | Change YoY | | :----------------------- | :------------ | :--------- | | Revenue | $618.8 million | +3.8% | | GAAP Diluted EPS | $3.57 | -23.2% | | Adjusted Diluted EPS | $4.27 | -21.9% | VITAS Segment Operating Results VITAS Healthcare segment saw a 5.8% increase in Net Patient Revenue to $396.2 million, driven by a 6.1% increase in Average Daily Census (ADC), but Net Income and Adjusted EBITDA margin declined VITAS Segment Key Metrics (Q2 2025 vs. Q2 2024) | Metric | Q2 2025 Value | Change YoY | | :---------------------------------- | :------------ | :--------- | | Net Patient Revenue | $396.2 million | +5.8% | | Average Daily Census (ADC) | 22,318 | +6.1% | | Admissions | 17,545 | +1.2% | | Net Income (excl. discrete items) | $38.2 million | -23.5% | | Adjusted EBITDA (excl. Medicare Cap) | $66.8 million | Essentially flat | | Adjusted EBITDA margin (excl. Medicare Cap) | 16.2% | -163 bps | Roto-Rooter Segment Operating Results Roto-Rooter segment revenue increased slightly by 0.6% to $222.6 million, but Net Income and Adjusted EBITDA declined significantly, leading to a 517-basis point drop in Adjusted EBITDA margin Roto-Rooter Segment Key Metrics (Q2 2025 vs. Q2 2024) | Metric | Q2 2025 Value | Change YoY | | :---------------------------------- | :------------ | :--------- | | Revenue | $222.6 million | +0.6% | | Net Income (excl. discrete items) | $33.7 million | -20.4% | | Adjusted EBITDA | $48.6 million | -18.7% | | Adjusted EBITDA margin | 21.8% | -517 bps | Segment Performance This section details the individual financial and operational performance of the VITAS Healthcare and Roto-Rooter segments, highlighting revenue drivers, profitability, and specific challenges VITAS Healthcare Corporation VITAS's Q2 2025 net revenue grew by 5.8% to $396.2 million, driven by increased days-of-care and Medicare reimbursement rates, but faced significant negative impacts from acuity mix shift and increased Medicare Cap billing limitations VITAS Net Revenue and Growth Drivers (Q2 2025) | Metric | Value | Impact on Revenue Growth | | :------------------------------------ | :------------ | :----------------------- | | Net Revenue | $396.2 million | +5.8% YoY | | Days-of-care increase | 6.1% | Primary driver | | Medicare reimbursement rate increase | ~4.2% | Primary driver | | Acuity mix shift | N/A | -71 bps | | Medicare Cap & contra revenue changes | N/A | -379 bps | - Total VITAS admissions increased 4.9% in Q2 2025, excluding one-time admissions from the Covenant Health acquisition in Q2 2024[6] VITAS Medicare Cap Billing Limitation Accrual | Period | Accrued Amount | | :-------------------------------- | :------------- | | Q2 2025 | $16.4 million | | Q2 2024 | $1.4 million | - The $16.4 million Medicare Cap billing limitation in Q2 2025 includes a $9.5 million catch-up for the first six months of the 2025 Medicare Cap year in Florida, $4.8 million for the current quarter in Florida, and $2.1 million for other VITAS programs[9] VITAS Financial Performance (Q2 2025 vs. Q2 2024) | Metric | Q2 2025 | Q2 2024 | Change (bps) | | :---------------------------------- | :------ | :------ | :----------- | | Average revenue per patient per day | $207.03 | N/A | +350 bps | | Gross margin (excl. Medicare Cap) | 22.3% | 24.07% | -177 bps | | Adjusted EBITDA (excl. Medicare Cap) | $66.8 million | $65.6 million | Essentially flat | | Adjusted EBITDA margin (excl. Medicare Cap) | 16.2% | 17.83% | -163 bps | Roto-Rooter Roto-Rooter's Q2 2025 revenue increased marginally by 0.6% to $222.6 million, driven by commercial excavation and water restoration, but profitability significantly declined with gross margin falling to 49.0% and Adjusted EBITDA decreasing by 18.7% Roto-Rooter Revenue Breakdown (Q2 2025 vs. Q2 2024) | Revenue Type | Q2 2025 Value | Change YoY | | :-------------------------- | :------------ | :--------- | | Total Quarterly Revenue | $222.6 million | +0.6% | | Branch Commercial Revenue | $53.2 million | +4.4% | | - Plumbing | N/A | -2.9% | | - Excavation | N/A | +24.4% | | - Water Restoration | N/A | +11.7% | | - Drain Cleaning | N/A | -1.1% | | Branch Residential Revenue | $156.4 million | +0.9% | | - Drain Cleaning | N/A | -5.8% | | - Plumbing | N/A | -1.1% | | - Excavation | N/A | -4.3% | | - Water Restoration | N/A | +16.9% | | Independent Contractors | $17.4 million | -4.4% | Roto-Rooter Financial Performance (Q2 2025 vs. Q2 2024) | Metric | Q2 2025 | Q2 2024 | Change (bps) | | :-------------------- | :------ | :------ | :----------- | | Gross margin | 49.0% | 52.9% | -390 bps | | SG&A expenses | $60.5 million | $57.35 million | +5.6% | | Adjusted EBITDA | $48.6 million | $59.8 million | -18.7% | | Adjusted EBITDA margin | 21.8% | 26.97% | -517 bps | Consolidated Financial Position This section outlines Chemed's liquidity, capital resources, and share repurchase activities, reflecting its financial health and capital allocation strategies Liquidity and Capital Resources As of June 30, 2025, Chemed maintained a strong liquidity position with $249.9 million in cash and cash equivalents and no outstanding debt, complemented by significant undrawn borrowing capacity Chemed Liquidity (as of June 30, 2025) | Metric | Value | | :-------------------------- | :------------ | | Cash and cash equivalents | $249.9 million | | Current or long-term debt | $0 | | Undrawn borrowing capacity | ~$404.5 million | Share Repurchase Program During Q2 2025, Chemed repurchased 75,000 shares of its stock for $42.9 million at an average cost of $572.61 per share, with approximately $182.6 million remaining under authorization Share Repurchase Activity (Q2 2025) | Metric | Value | | :-------------------------------- | :------------ | | Shares repurchased | 75,000 | | Total cost of repurchases | $42.9 million | | Cost per share | $572.61 | | Remaining authorization (June 30, 2025) | ~$182.6 million | Full Year 2025 Guidance This section provides Chemed's updated financial outlook for the full year 2025, including revenue and Adjusted EBITDA margin projections for VITAS and Roto-Rooter, and revised consolidated EPS guidance VITAS Guidance VITAS projects full-year 2025 revenue (prior to Medicare Cap) to increase by 7.5% to 8.5% compared to 2024, with an Adjusted EBITDA margin (prior to Medicare Cap) of 18.2% to 18.7%, and estimates $28.2 million in Medicare Cap billing limitations VITAS Full Year 2025 Guidance | Metric | Guidance | | :------------------------------------ | :---------------- | | Revenue increase (prior to Medicare Cap) | 7.5% to 8.5% YoY | | Adjusted EBITDA margin (prior to Medicare Cap) | 18.2% to 18.7% | | Estimated Medicare Cap billing limitations | $28.2 million | - Management does not expect a significant level of Medicare Cap billing limitation in the Florida combined program for the 2026 Cap Year, assuming the 2025 rate differential does not recur and supported by successful Florida CON VITAS applications and expansion activities[24] Roto-Rooter Guidance Roto-Rooter forecasts a 1.25% to 1.75% revenue increase in 2025 compared to 2024, with an expected Adjusted EBITDA margin of 23.5% to 24.5% Roto-Rooter Full Year 2025 Guidance | Metric | Guidance | | :-------------------------- | :---------------- | | Revenue increase | 1.25% to 1.75% YoY | | Adjusted EBITDA margin | 23.5% to 24.5% | Consolidated EPS Guidance Chemed revised its full-year 2025 Adjusted Diluted EPS guidance to a range of $22.00 to $22.30, down from the previously issued range of $24.95 to $25.45, assuming a 25.3% effective tax rate and 14.7 million diluted shares Consolidated Full Year 2025 Adjusted Diluted EPS Guidance | Metric | 2025 Guidance | Previous 2025 Guidance | 2024 Reported | | :-------------------------------- | :-------------- | :--------------------- | :------------ | | Adjusted Diluted EPS | $22.00 to $22.30 | $24.95 to $25.45 | $23.13 | | Assumed Effective Tax Rate | 25.3% | N/A | N/A | | Assumed Diluted Share Count | 14.7 million | N/A | N/A | Executive Management Changes This section announces key leadership transitions within Chemed Corporation, specifically the departure of VITAS's Chairman and CEO and the appointment of his successor Leadership Transition at VITAS Nicholas M. Westfall, Executive Vice President of Chemed and Chairman and CEO of VITAS, is departing the company on December 1, 2025, after 16 years of service, with Joel L. Wherley succeeding him as CEO of VITAS - Nicholas M. Westfall, Executive Vice President of Chemed and Chairman and CEO of VITAS, will depart the company on December 1, 2025, after 16 years[28] - Joel L. Wherley, current VITAS President and Chief Operating Officer, will succeed Mr. Westfall as Chief Executive Officer of VITAS[29][30] Corporate Information This section provides details on Chemed's upcoming conference call, an overview of its business segments, explanations of non-GAAP financial measures, and a safe harbor statement regarding forward-looking information Conference Call Details Chemed will host a conference call and webcast on Wednesday, July 30, 2025, at 10 a.m. ET to discuss quarterly results and provide a business update, with a taped replay available afterward - Chemed will host a conference call and webcast on Wednesday, July 30, 2025, at 10 a.m. ET to discuss quarterly results and provide a business update[32] - Participants can access the live webcast via Chemed's investor relations website or a dedicated hosting website, with teleconference registration also available[32][33] Company Business Overview Chemed Corporation operates two distinct businesses: VITAS Healthcare Corporation, a major provider of end-of-life hospice care, and Roto-Rooter, the largest commercial and residential plumbing and drain cleaning services provider in the nation - VITAS Healthcare Corporation provides daily hospice services to patients with severe, life-limiting illnesses, focusing on comfort and pain relief[35] - Roto-Rooter offers plumbing, drain cleaning, and water cleanup services through company-owned branches, independent contractors, and franchisees in the US, Canada, Indonesia, Singapore, and the Philippines[36] Non-GAAP Financial Measures Chemed uses non-GAAP measures like EBITDA, Adjusted EBITDA, and Adjusted Diluted EPS to help investors evaluate operating results, compare performance, and assess future financial obligations, which should not be considered substitutes for GAAP-compliant figures - Chemed uses non-GAAP measures (EBITDA, Adjusted EBITDA, Adjusted Diluted EPS) to provide insights into operating results, compare performance, and assess future financial requirements[37] - These non-GAAP measures exclude components not derived in accordance with GAAP and should not be considered in isolation or as a substitute for GAAP measures[37] Forward-Looking Statements The press release contains forward-looking statements subject to inherent uncertainties, risks, and changes in circumstances, including those related to Medicare Cap, reimbursement rates, patient mix, and demand for services, with actual results potentially differing materially - Forward-looking statements are based on assumptions and are subject to known and unknown risks, uncertainties, and contingencies, including impacts of laws, Medicare Cap, reimbursement rates, patient mix, and demand for services[38] - Actual results and financial conditions may differ materially from forward-looking statements due to inherent uncertainties and risks described in SEC filings[39] Financial Statements This section presents Chemed Corporation's detailed financial statements, including consolidated statements of income, balance sheets, cash flows, and segment-level performance data, providing a comprehensive view of the company's financial health and operational results Consolidated Statements of Income The consolidated statements of income show a 3.8% increase in service revenues and sales for the three months ended June 30, 2025, compared to the prior year, but net income decreased by 26.0% to $52.5 million, and diluted EPS decreased by 23.2% to $3.57 Consolidated Statements of Income (Three Months Ended June 30) | Metric | 2025 (in thousands) | 2024 (in thousands) | Change (%) | | :-------------------------------- | :------------------ | :------------------ | :--------- | | Service revenues and sales | $618,798 | $595,880 | +3.8% | | Income from operations | $68,084 | $88,125 | -22.7% | | Net income | $52,493 | $70,887 | -26.0% | | Diluted Earnings Per Share | $3.57 | $4.65 | -23.2% | Consolidated Balance Sheets As of June 30, 2025, Chemed's total assets were $1.718 billion, a slight decrease from $1.735 billion in 2024, with cash and cash equivalents increasing while total liabilities and stockholders' equity saw minor reductions Consolidated Balance Sheets (as of June 30) | Metric | 2025 (in thousands) | 2024 (in thousands) | Change (%) | | :------------------------------------ | :------------------ | :------------------ | :--------- | | Cash and cash equivalents | $249,904 | $222,903 | +12.1% | | Total current assets | $491,377 | $464,612 | +5.8% | | Total Assets | $1,717,847 | $1,734,984 | -1.0% | | Total current liabilities | $263,886 | $261,753 | +0.8% | | Total Liabilities | $519,362 | $527,687 | -1.6% | | Total Stockholders' Equity | $1,198,485 | $1,207,297 | -0.7% | Consolidated Statements of Cash Flows For the six months ended June 30, 2025, net cash provided by operating activities increased to $171.4 million from $162.1 million in the prior year, with significant reductions in cash used by investing and financing activities, leading to a positive increase in cash and cash equivalents Consolidated Statements of Cash Flows (Six Months Ended June 30) | Metric | 2025 (in thousands) | 2024 (in thousands) | Change (%) | | :-------------------------------- | :------------------ | :------------------ | :--------- | | Net cash provided by operating activities | $171,350 | $162,066 | +5.7% | | Net cash used by investing activities | $(29,155) | $(112,874) | -74.1% | | Net cash used by financing activities | $(70,641) | $(90,247) | -21.7% | | Increase/(Decrease) in Cash and Cash Equivalents | $71,554 | $(41,055) | N/A | | Cash and cash equivalents at end of period | $249,904 | $222,903 | +12.1% | Consolidating Statements of Income (Segment-level) Segment-level income statements for Q2 and H1 2025 show VITAS revenue growth but a decline in net income for both VITAS and Roto-Rooter compared to the prior year, with the Corporate segment consistently reporting a net loss Consolidating Statements of Income (Three Months Ended June 30, 2025) | Segment | Service Revenues and Sales (in thousands) | Net Income/(Loss) (in thousands) | | :-------------- | :-------------------------------------- | :------------------------------- | | VITAS | $396,201 | $38,219 | | Roto-Rooter | $222,597 | $31,914 | | Corporate | $- | $(17,640) | | Consolidated | $618,798 | $52,493 | Consolidating Statements of Income (Six Months Ended June 30, 2025) | Segment | Service Revenues and Sales (in thousands) | Net Income/(Loss) (in thousands) | | :-------------- | :-------------------------------------- | :------------------------------- | | VITAS | $803,600 | $88,249 | | Roto-Rooter | $462,141 | $71,858 | | Corporate | $- | $(35,857) | | Consolidated | $1,265,741 | $124,250 | Consolidating Summaries of EBITDA (Segment-level) Segment-level EBITDA reconciliations show that VITAS's Adjusted EBITDA was essentially flat in Q2 2025, while Roto-Rooter's Adjusted EBITDA declined significantly, with both segments experiencing a decrease in Adjusted EBITDA for the six months compared to the prior year Consolidating Summaries of Adjusted EBITDA (Three Months Ended June 30) | Segment | 2025 (in thousands) | 2024 (in thousands) | Change (%) | | :-------------- | :------------------ | :------------------ | :--------- | | VITAS | $50,417 | $65,600 | -23.1% | | Roto-Rooter | $48,629 | $59,801 | -18.7% | | Corporate | $(3,715) | $(5,511) | +32.7% | | Consolidated | $95,331 | $119,890 | -20.5% | Consolidating Summaries of Adjusted EBITDA (Six Months Ended June 30) | Segment | 2025 (in thousands) | 2024 (in thousands) | Change (%) | | :-------------- | :------------------ | :------------------ | :--------- | | VITAS | $118,406 | $123,912 | -4.4% | | Roto-Rooter | $107,814 | $120,451 | -10.5% | | Corporate | $(9,197) | $(9,851) | +6.7% | | Consolidated | $217,023 | $234,512 | -7.4% | Reconciliation of Adjusted Net Income The reconciliation shows that Adjusted Net Income for Q2 2025 was $62.7 million, down from $83.4 million in Q2 2024, with Adjusted Diluted EPS also decreasing to $4.27 from $5.47, reflecting adjustments for non-cash expenses Reconciliation of Adjusted Net Income (Three Months Ended June 30) | Metric | 2025 (in thousands) | 2024 (in thousands) | Change (%) | | :-------------------------- | :------------------ | :------------------ | :--------- | | Net income as reported | $52,493 | $70,887 | -26.0% | | Adjusted net income | $62,721 | $83,419 | -24.8% | | Diluted Earnings Per Share As Reported | $3.57 | $4.65 | -23.2% | | Adjusted Diluted Earnings Per Share | $4.27 | $5.47 | -22.0% | Operating Statistics for VITAS Segment VITAS operating statistics for Q2 2025 show an increase in total days of care by 6.1% and Average Daily Census (ADC) by 6.1%, with admissions up 1.2% and a significant increase in average length of stay to 137.1 days VITAS Operating Statistics (Three Months Ended June 30) | Metric | 2025 | 2024 | Change (%) | | :------------------------------------ | :--------- | :--------- | :--------- | | Net Revenue ($000) | $396,201 | $374,558 | +5.8% | | Total Days of care | 2,030,913 | 1,914,284 | +6.1% | | Average Daily Census ("ADC") | 22,318 | 21,036 | +6.1% | | Total Admissions | 17,545 | 17,334 | +1.2% | | Total Discharges | 17,845 | 15,898 | +12.2% | | Average length of stay (days) | 137.1 | 100.6 | +36.3% | | Median length of stay (days) | 20.0 | 18.0 | +11.1% | VITAS Net Revenue as a Percent of Total Before Medicare Cap Allowance (Q2 2025) | Category | Percentage | | :-------------------------- | :--------- | | Homecare | 85.2% | | Inpatient | 7.9% | | Continuous care | 5.6% | | Other | 1.3% | Footnotes to Financial Statements The footnotes detail significant credits and charges included in the results of operations for 2025 and 2024, such as stock option expense, amortization of reacquired franchise agreements, long-term incentive compensation, and acquisition expenses, which are crucial for understanding non-GAAP financial measures Significant Credits/(Charges) in Q2 2025 (in thousands) | Item | VITAS | Roto-Rooter | Corporate | Consolidated | | :------------------------------------ | :---- | :---------- | :-------- | :----------- | | Stock option expense | $- | $- | $(9,216) | $(9,216) | | Amortization of reacquired franchise agreements | $- | $(2,352) | $- | $(2,352) | | Long-term incentive compensation | $- | $- | $(853) | $(853) | | Pretax impact on earnings | $- | $(2,352) | $(10,069) | $(12,421) | | After-tax impact on earnings | $- | $(1,806) | $(8,422) | $(10,228) | - VITAS has 35 Medicare provider numbers; for the current cap year, 28 have a Medicare cap cushion greater than 10%, three have a cushion between 0% and 10%, and four have a Medicare cap liability[60]