Chemed Corporation Q3 2024 Financial Results

Chemed Corporation (NYSE: CHE), a provider of hospice care services through its VITAS Healthcare subsidiary and plumbing services via Roto-Rooter, announced its third-quarter financial results on October 25, 2024. The company reported significant revenue increase and patient admissions at VITAS, while Roto-Rooter faced challenges with decreased revenue and call volume. Chemed adjusted its full-year earnings per share guidance to $23-$23.15, reflecting optimism for VITAS and stabilization efforts for Roto-Rooter.

Key Takeaways

• VITAS Healthcare admissions rose by 6.3% year-over-year to 16,775.
• Average daily census for VITAS grew by 15.5%, with revenue climbing 17.3% to $391.4 million.
• Roto-Rooter experienced a 6.9% revenue decline to $214.8 million and an 11.7% drop in call volume.
• Hurricanes Helene and Milton impacted patient intake, expected to affect Q4 results.
• Chemed's full-year EPS guidance is set to $23-$23.15.

Company Outlook

• Chemed reaffirmed a 2024 guidance range of $23.55 to $23.80.
• Future VITAS performance is anticipated to exceed pre-pandemic growth levels.
• Roto-Rooter's Q4 revenue is projected to align with Q3, stabilizing margins post-marketing expense reduction.

Bearish Highlights

• Declines in Roto-Rooter residential revenue and call volume were noted.
• A shift to a new search engine marketing firm and increased competition affected demand.
• Hurricanes led to temporary slowdowns in referral volumes.

Bullish Highlights

• VITAS Healthcare has reported nine consecutive quarters of average daily census growth.
• Acquisition of Covenant Health and new Pasco County program positively influenced revenue.
• A projected 3.9% Medicare rate increase is expected to support VITAS revenue in 2025.

Misses

• Roto-Rooter's adjusted EBITDA fell by 15.8% to $56.4 million.
• Segment margin declined by 275 basis points to 26.3%.
• Ongoing struggles in the residential business prompted declining call counts.

Q&A Highlights

• Increased marketing personnel for Roto-Rooter aims to enhance online performance.
• VITAS anticipates above-average growth, with high single to low double-digit care growth.
• Chemed remains cautiously optimistic about commercial growth in 2025.

Conclusion

Chemed Corporation's Q3 earnings call depicted strong growth in its healthcare segment, contrasting with challenges in plumbing services. VITAS continues to expand its patient base, while Roto-Rooter grapples with competition and marketing obstacles. The company is committed to stabilizing Roto-Rooter’s performance while leveraging the growth of VITAS.

InvestingPro Insights

Chemed's recent financial results indicate mixed performance, with VITAS showing strength against Roto-Rooter's challenges. Data from InvestingPro highlights the company's overall fiscal health and market presence. Notably, Chemed reported a revenue of $2.38 billion over the last twelve months, with 6.83% growth, largely driven by VITAS.

Full Transcript Summary

The call began with Holley Schmidt, Assistant Controller, and included presentations from Kevin McNamara (CEO), Mike Witzeman (CFO), and Nick Westfall (CEO of VITAS). They discussed VITAS’ strong admissions and revenue, Roto-Rooter's struggles, and the overall financial outlook, with particular focus on growth strategies and marketing initiatives to address challenges.