Chemed Corporation CHE reported fourth-quarter 2024 adjusted earnings per share (EPS) of $6.83, which rose 3.5% year over year. The figure surpassed the Zacks Consensus Estimate by 0.5%.

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The company’s GAAP EPS was $6.02, up 2% from last year’s reported figure.

For the full year, the adjusted EPS was $23.13, reflecting a 13.9% increase from the year-ago period.

CHE’s Revenues

Revenues in the reported quarter improved 9.2% year over year to $640 million. The metric topped the Zacks Consensus Estimate by 1.7%.

Full-year revenues were $2.43 billion, up 7.4% from last year’s revenues.

Since the earnings announcement on Feb. 26, CHE stock surged 7.3%, finishing at $586.12 yesterday.

CHE’s Segmental Details 

Chemed operates through two wholly owned subsidiaries — VITAS (a major provider of end-of-life care) and Roto-Rooter (a leading commercial and residential plumbing plus drain cleaning service provider).

VITAS

In the fourth quarter, net patient revenues totaled $411 million, up 17.4% year over year.

The rise in revenues was primarily due to a 14.6% increase in days of care and a nearly 3.5% rise in the geographically weighted average Medicare reimbursement rate.

Chemed Corporation Price, Consensus and EPS Surprise

Chemed Corporation price-consensus-eps-surprise-chart | Chemed Corporation Quote

On Apr. 17, 2024, VITAS completed its acquisition of the hospice assets and an assisted living facility of Covenant Health and Community Services, Inc. (Covenant Health). Covenant Health reported revenues of approximately $11-$12 million for the quarter.

Roto-Rooter

The segment reported sales of $229 million, down 2.9% year over year.

Total Roto-Rooter branch commercial revenues edged up 0.4% year over year. This consisted of a 0.2% rise in drain cleaning revenues, a 9.6% fall in plumbing, a 7.6% rise in excavation and a 19.8% increase in water restoration.

Total Roto-Rooter branch residential revenues registered a decrease of 2% over the prior-year period. This consisted of drain cleaning declining 2.8%, plumbing declining 9.6%, excavation declining 1.9%, and water restoration increasing 2.8%.

CHE’s Margin Performance

The gross profit increased 2.9% year over year to $234.1 million in the fourth quarter. The gross margin contracted 226 basis points (bps) year over year to 36.6% due to a 13.3% increase in the cost of services provided and goods sold. 

SG&A expenses rose 3.8% year over year to $104 million. The adjusted operating profit jumped 2.1% from the year-ago period to $129.8 million. The adjusted operating margin contracted 141 bps to 20.3% during the quarter.

CHE’s Liquidity & Capital Structure

Chemed exited the fourth quarter with cash and cash equivalents of $178.4 million compared with $264 million at the end of 2023. The company did not have any current or long-term debt at the end of the reported quarter.

The cumulative net cash provided by operating activities was $417.5 million compared with $330.3 million in the year-ago period.

The company repurchased 388,235 shares of Chemed stock for $57.8 million, which equates to a cost of $548.1 per share. As of Dec. 31, 2024, there was approximately $255.3 million of remaining share repurchase authorization under its plan.

Chemed has a consistent dividend-paying history, with five-year annualized dividend growth of 7.7%.

Chemed Issues 2025 Guidance

For 2025, the company expects revenues from VITAS, prior to Medicare Cap, to increase 10.5% to 11.3% from the 2024 levels.

The Zacks Consensus Estimate for total revenues is pegged at $2.57 billion, which indicates a 5.8% improvement year over year.

For full-year 2024, the company now expects the adjusted EPS to be in the range of $24.95-$25.45. The Zacks Consensus Estimate for the metric is pegged at $25.10, which implies 8.5% growth over the 2024 adjusted figure.

Our Take on CHE

Chemed delivered better-than-expected earnings and revenues in the fourth quarter of 2024. VITAS continued its strong operating performance, with the Covenant Health acquisition further boosting its historically good metrics. In Roto-Rooter, improving conversion rates at eight underperforming branches led to an increase in water restoration revenues. Meanwhile, the contraction of both margins in the quarter is discouraging. VITAS’ 2025 growth is expected to be slightly tempered by headwinds associated with working to mitigate potential Medicare Cap limitations in certain of Chemed’s programs.

CHE’s Zacks Rank and Key Picks

Chemed currently carries a Zacks Rank #3 (Hold).

Some better-ranked stocks from the broader medical space are ResMed RMD, Cardinal Health CAH and Insulet PODD.

ResMed reported a second-quarter fiscal 2025 adjusted EPS of $2.43, which topped the Zacks Consensus Estimate by 5.6%. Revenues of $1.28 billion exceeded the Zacks Consensus Estimate by 1.6%. RMD carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

RMD has an estimated fiscal 2025 earnings growth rate of 21.9% compared with the industry’s 13.2%. The company’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 6.9%.

Cardinal Health, carrying a Zacks Rank #2, posted a second-quarter fiscal 2025 adjusted EPS of $1.93, topping the Zacks Consensus Estimate by 10.3%. Revenues of $55.26 billion exceeded the Zacks Consensus Estimate by 0.7%.

CAH has an estimated five-year earnings growth rate of 10.7% compared with the industry’s 9.3%. The company’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 9.6%.

Insulet, carrying a Zacks Rank #2, posted a fourth-quarter 2024 adjusted EPS of $1.15, topping the Zacks Consensus Estimate by 9.5%. Revenues of $597.5 million exceeded the Zacks Consensus Estimate by 2.7%.

PODD has an estimated long-term earnings growth rate of 20.3% compared with the industry’s 15.5% growth. The company’s earnings surpassed estimates in three of the trailing four quarters and missed in one, the average surprise being 27.5%.

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