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Chemed (CHE) Q4 Earnings Surpass Estimates, Revenues Miss
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Chemed Corporation (CHE - Free Report) reported fourth-quarter 2021 adjusted earnings per share (EPS) of $5.25, up 2.3% year over year. The figure surpassed the Zacks Consensus Estimate by 3.8%.
The company’s GAAP EPS was $4.81, registering a 30.9% decline year over year.
Full-year adjusted EPS was $19.33, reflecting a 6.9% increase from the year-ago period. The figure too beat the Zacks Consensus Estimate by 0.9%.
Revenues in Detail
Revenues in the reported quarter improved 1.4% year over year to $540.8 million. However, the metric missed the Zacks Consensus Estimate by 0.6%.
Full-year revenues were $2.14 billion, reflecting a 2.9% increase from a year ago. However, the metric was in line with the Zacks Consensus Estimate.
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).
In the fourth quarter, net revenues at VITAS totaled $316.1 million, down 4.8% year over year. This revenue decline was primarily led by a 4.2% decline in days-of-care, partially offset by a geographically weighted average Medicare reimbursement rate increase of nearly 1.1%.
Chemed Corporation Price, Consensus and EPS Surprise
Roto-Rooter reported sales of $224.9 million in the fourth quarter, up 11.8% year over year.
Total Roto-Rooter branch commercial revenues improved 14.8 on a 17% increase in drain cleaning revenues, 18% rise in commercial plumbing, 10.5% growth in excavation revenues and a 4.5% hike in commercial water restoration revenues.
Total Roto-Rooter branch residential revenues registered growth of 11.2% on a 10.6% rise in residential drain cleaning revenues, 13.5% improvement in plumbing, 12% increase in excavation and 9.2% growth in residential water restoration.
Margin in Detail
Gross profit rose 3.2% year over year to $204.7 million in the fourth quarter of 2021. Gross margin expanded 66 basis points (bps) year over year to 37.8%, while the cost of products and services rose 0.4% in the fourth quarter of 2021.
Adjusted operating profit increased 1% from the year-ago period to $112.6 million. Adjusted operating margin contracted 9 bps to 20.8% on a 6.1% increase in adjusted operating expenses.
Liquidity & Capital Structure
Chemed exited 2021 with cash and cash equivalents of $32.9 million, marking a significant decline from $162.7 million at the end of 2020. Meanwhile, long-term debt at 2021-end was $185 million.
Cumulative net cash provided by operating activities at the end of the fourth quarter of 2021 was $308.6 million compared with $489.3 million a year ago.
In the fourth quarter, Chemed’s management repurchased stocks for $246 million. As of Dec 31, 2021, there was approximately $202 million of share repurchase remaining under the existing plan.
The company has a consistent dividend-paying history, with five-year annualized dividend growth being 6.86%.
2022 Guidance
Chemed has announced its financial guidance for 2022, considering the rapidly changing business environment created by the COVID-19 pandemic as well as the anticipated industry and macro-economic issues that may affect the company’s business segments.
For 2022, VITAS revenues prior to Medicare Cap are estimated to decline in the range of 1.5-2.5% from the prior year. Roto-Rooter is forecast to achieve 2022 revenue growth in the range of 8.0-9.5%. The Zacks Consensus Estimate for total revenues is pegged at $2.23 billion, suggesting 4.2% growth from the 2021 reported figure.
Full-year 2021 adjusted EPS is estimated in the range of $19.10 to $19.50. The Zacks Consensus Estimate for the metric is pegged at $19.61, indicating 1.5% growth over the year-ago figure.
Our Take
Chemed ended the fourth quarter of 2021 with better-than-expected earnings. The year-over-year growth in revenues and adjusted EPS appears promising. Robust performance by the Roto-Rooter segment drove the top line. Expansion of gross margins buoys optimism. The company’s outlook for 2022, reflecting strong growth projections over 2021, instills investors’ confidence.
On the flip side, a decline in VITAS revenues is discouraging. Escalating operating expenses raise apprehension. A decline in short-term cash level is another downside.
Henry Schein reported fourth-quarter 2021 adjusted earnings of $1.07 per share, which beat the Zacks Consensus Estimate by 18.9%. Revenues of $3.33 billion outpaced the consensus mark by 4.7%.
Henry Schein has an estimated long-term growth rate of 11.8%. HSIC has gained 35.7% versus the industry’s 7.6% growth in the past year.
GlaxoSmithKline reported fourth-quarter 2021 adjusted earnings of 69 cents per American depositary share (ADS), which beat the Zacks Consensus Estimate by 9.5%. Revenues of $13 billion outpaced the consensus mark by 3%.
GlaxoSmithKline has an estimated long-term growth rate of 6.8%. GSK has gained 19.8% compared with the industry’s 15.5% growth in the past year.
McKesson reported third-quarter fiscal 2022 adjusted EPS of $6.15, which beat the Zacks Consensus Estimate of $5.38 per share by 14.3%. Revenues of $68.61 billion surpassed the Zacks Consensus Estimate by 3.2%.
McKesson has a long-term earnings growth rate of 11.8%. MCK has gained 53.1% versus the industry’s 7.6% growth in the past year.
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Chemed (CHE) Q4 Earnings Surpass Estimates, Revenues Miss
Chemed Corporation (CHE - Free Report) reported fourth-quarter 2021 adjusted earnings per share (EPS) of $5.25, up 2.3% year over year. The figure surpassed the Zacks Consensus Estimate by 3.8%.
The company’s GAAP EPS was $4.81, registering a 30.9% decline year over year.
Full-year adjusted EPS was $19.33, reflecting a 6.9% increase from the year-ago period. The figure too beat the Zacks Consensus Estimate by 0.9%.
Revenues in Detail
Revenues in the reported quarter improved 1.4% year over year to $540.8 million. However, the metric missed the Zacks Consensus Estimate by 0.6%.
Full-year revenues were $2.14 billion, reflecting a 2.9% increase from a year ago. However, the metric was in line with the Zacks Consensus Estimate.
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).
In the fourth quarter, net revenues at VITAS totaled $316.1 million, down 4.8% year over year. This revenue decline was primarily led by a 4.2% decline in days-of-care, partially offset by a geographically weighted average Medicare reimbursement rate increase of nearly 1.1%.
Chemed Corporation Price, Consensus and EPS Surprise
Chemed Corporation price-consensus-eps-surprise-chart | Chemed Corporation Quote
Roto-Rooter reported sales of $224.9 million in the fourth quarter, up 11.8% year over year.
Total Roto-Rooter branch commercial revenues improved 14.8 on a 17% increase in drain cleaning revenues, 18% rise in commercial plumbing, 10.5% growth in excavation revenues and a 4.5% hike in commercial water restoration revenues.
Total Roto-Rooter branch residential revenues registered growth of 11.2% on a 10.6% rise in residential drain cleaning revenues, 13.5% improvement in plumbing, 12% increase in excavation and 9.2% growth in residential water restoration.
Margin in Detail
Gross profit rose 3.2% year over year to $204.7 million in the fourth quarter of 2021. Gross margin expanded 66 basis points (bps) year over year to 37.8%, while the cost of products and services rose 0.4% in the fourth quarter of 2021.
Adjusted operating profit increased 1% from the year-ago period to $112.6 million. Adjusted operating margin contracted 9 bps to 20.8% on a 6.1% increase in adjusted operating expenses.
Liquidity & Capital Structure
Chemed exited 2021 with cash and cash equivalents of $32.9 million, marking a significant decline from $162.7 million at the end of 2020. Meanwhile, long-term debt at 2021-end was $185 million.
Cumulative net cash provided by operating activities at the end of the fourth quarter of 2021 was $308.6 million compared with $489.3 million a year ago.
In the fourth quarter, Chemed’s management repurchased stocks for $246 million. As of Dec 31, 2021, there was approximately $202 million of share repurchase remaining under the existing plan.
The company has a consistent dividend-paying history, with five-year annualized dividend growth being 6.86%.
2022 Guidance
Chemed has announced its financial guidance for 2022, considering the rapidly changing business environment created by the COVID-19 pandemic as well as the anticipated industry and macro-economic issues that may affect the company’s business segments.
For 2022, VITAS revenues prior to Medicare Cap are estimated to decline in the range of 1.5-2.5% from the prior year. Roto-Rooter is forecast to achieve 2022 revenue growth in the range of 8.0-9.5%. The Zacks Consensus Estimate for total revenues is pegged at $2.23 billion, suggesting 4.2% growth from the 2021 reported figure.
Full-year 2021 adjusted EPS is estimated in the range of $19.10 to $19.50. The Zacks Consensus Estimate for the metric is pegged at $19.61, indicating 1.5% growth over the year-ago figure.
Our Take
Chemed ended the fourth quarter of 2021 with better-than-expected earnings. The year-over-year growth in revenues and adjusted EPS appears promising. Robust performance by the Roto-Rooter segment drove the top line. Expansion of gross margins buoys optimism. The company’s outlook for 2022, reflecting strong growth projections over 2021, instills investors’ confidence.
On the flip side, a decline in VITAS revenues is discouraging. Escalating operating expenses raise apprehension. A decline in short-term cash level is another downside.
Zacks Rank and Other Key Picks
Chemed currently carries a Zacks Rank #2 (Buy).
A few other top-ranked stocks in the broader medical space that have announced their quarterly results are Henry Schein, Inc. (HSIC - Free Report) , GlaxoSmithKline plc (GSK - Free Report) and McKesson Corporation (MCK - Free Report) , each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Henry Schein reported fourth-quarter 2021 adjusted earnings of $1.07 per share, which beat the Zacks Consensus Estimate by 18.9%. Revenues of $3.33 billion outpaced the consensus mark by 4.7%.
Henry Schein has an estimated long-term growth rate of 11.8%. HSIC has gained 35.7% versus the industry’s 7.6% growth in the past year.
GlaxoSmithKline reported fourth-quarter 2021 adjusted earnings of 69 cents per American depositary share (ADS), which beat the Zacks Consensus Estimate by 9.5%. Revenues of $13 billion outpaced the consensus mark by 3%.
GlaxoSmithKline has an estimated long-term growth rate of 6.8%. GSK has gained 19.8% compared with the industry’s 15.5% growth in the past year.
McKesson reported third-quarter fiscal 2022 adjusted EPS of $6.15, which beat the Zacks Consensus Estimate of $5.38 per share by 14.3%. Revenues of $68.61 billion surpassed the Zacks Consensus Estimate by 3.2%.
McKesson has a long-term earnings growth rate of 11.8%. MCK has gained 53.1% versus the industry’s 7.6% growth in the past year.