Chemed Corporation (NYSE: CHE), known for its subsidiaries VITAS Healthcare and Roto-Rooter, has released its financial results for the fourth quarter that ended on December 31, 2024. The company, operating across the United States in hospice care and plumbing services, reported a quarter marked by significant revenue growth and strategic developments.
Chemed Corp Earnings
Chemed Corp demonstrated a solid fiscal performance in the fourth quarter of 2024, highlighted by a commendable increase in revenue. The company's ability to navigate through sector-specific challenges and capitalize on strategic acquisitions underpins its positive earnings outcome.
Chemed Corp Financial Results
| Metric | Q4 2024 ($) | YoY Change |
|---|---|---|
| Total Revenue | 640.0 million | 9.2% |
| GAAP Diluted EPS | 6.02 | 2.0% |
| Adjusted Diluted EPS | 6.83 | 3.5% |
Chemed reported a 9.2% year-over-year increase in revenue, reaching $640 million. The company also achieved a GAAP diluted earnings per share (EPS) of $6.02, rising by 2% compared to the previous year. The adjusted diluted EPS witnessed a slightly higher growth of 3.5%, reflecting the company's efficiency in managing operational costs and boosting profitability.
Revenue Breakdown
The performance of Chemed's primary segments, VITAS Healthcare and Roto-Rooter, was mixed, as illustrated in the table below:
| Segment | Q4 2024 Revenue ($) | YoY Change | Key Highlights |
|---|---|---|---|
| VITAS | 411.0 million | 17.4% | Supported by acquisition impact and Medicare reimbursement increases. |
| Roto-Rooter | 229.0 million | -2.9% | Decline due to decreased residential and plumbing revenues. |
VITAS Healthcare Performance
VITAS Healthcare exhibited outstanding performance, with a 17.4% increase in revenue, fueled by the strategic acquisition of Covenant Health, which contributed an estimated $11-12 million. The segment also benefited from a 3.5% increase in Medicare reimbursement rates and a growth in Average Daily Census (ADC) by 14.6%. However, the segment faced a slight negative impact from acuity mix shift, which affected revenue growth by 119 basis points.
Roto-Rooter Performance
Conversely, Roto-Rooter experienced a 2.9% decline in revenue due to weaker demand in residential services and declines in plumbing activities. While water restoration showed growth, the overall segment performance was hindered, impacting the adjusted EBITDA margin, which fell by 120 basis points.
Key Developments
Key developments during the quarter included strategic moves by VITAS, such as the acquisition of Covenant Health, which expands its operational footprint and strengthens its market presence in Florida. Moreover, Hurricanes Helene and Milton in late September and early October had a transient impact on patient admissions, although no significant damage was reported.
Dividends and Share Repurchases
Chemed maintains a strong cash position with cash equivalents of $178.4 million and no debt as of December 31, 2024. The company remains committed to returning value to shareholders, evidenced by the repurchase of 388,235 shares for $212.8 million during the quarter. There remains $255.3 million under the existing share repurchase authorization, showcasing Chemed's confidence in its financial resilience and future growth prospects.
Chemed Corp Stock Forecast
Analyzing the financial performance and strategic developments, Chemed Corp demonstrates solid financial health with growing revenue streams and effective cost management, particularly within its VITAS segment. However, the challenges faced by Roto-Rooter present an area of concern that could affect short-term performance.
The high projection for Chemed's stock price reflects continued revenue growth, especially from VITAS, and the ongoing benefit of strategic acquisitions. If operational improvements persist, the stock could potentially reach a high of $600. Conversely, if existing challenges in the Roto-Rooter segment exacerbate, there is a risk that the stock price could decline to a low of $520, considering external factors affecting consumer demand and potential cost pressures.
Chemed Corporation's fourth-quarter report underscores a focused strategy on growth and operational efficiency, positioning it for sustained long-term success in its healthcare and essential services sectors. As Chemed adapts to market dynamics and enhances its service offerings, it will remain a vital player in its industries with a robust outlook for future earnings.
