Chemed(US:CHE) ZACKS·2024-07-16 14:10Core Viewpoint - Chemed Corporation (CHE) is positioned for growth in the upcoming quarters, primarily due to the positive trends in the global hospice industry and the performance of its VITAS business, despite facing macroeconomic challenges and competitive pressures [1]. Upsides - The hospice segment is expected to grow, driven by an aging population and the increasing prevalence of chronic illnesses, which boosts demand for end-of-life care and supportive services [3]. - Chemed repurchased 50,000 shares for $32.3 million, with a remaining share repurchase authorization of approximately $281.7 million as of March 31, 2024. The company has a solid dividend payment history, with a five-year annualized dividend growth of 5.87% [4]. - The Zacks Consensus Estimate for Chemed's 2024 revenues is $2.44 billion, indicating a 7.95% increase from the previous year [6]. - Chemed's market capitalization stands at $8.14 billion, with an estimated earnings growth rate of 17.6% for Q2 2024, supported by an 8.9% revenue increase [9]. - VITAS has shown improved operating metrics due to a retention and hiring program, achieving a 10.3% year-over-year growth in Average Daily Census (ADC) in Q1 [10]. - Chemed reported cash and cash equivalents of $313.4 million with no debt, indicating a strong financial position [11]. - The hospice market is projected to grow at a CAGR of 9.1% from 2023 to 2028, driven by increasing long-term care services for chronic diseases [20]. Downsides - The seasonal dynamics of VITAS operations can lead to fluctuating financial performance, particularly in Florida, where admissions and revenues peak during winter months [5]. - Chemed faces macroeconomic challenges, including inflation, increased logistics costs, and higher employee-related expenses, which have negatively impacted margin performance. In Q1 2024, the cost of products and services rose by 3.9%, and selling, general, and administrative expenses increased by 15.8% compared to the previous year [12].