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Chemed Corporation (CHE - Free Report) reported adjusted earnings per share (EPS) of $5.39 in the fourth quarter of 2022, up 2.7% year over year. The figure surpassed the Zacks Consensus Estimate by 1.7%.
The company’s GAAP EPS was $4.13, registering a 14.1% decline year over year.
For the full year, the adjusted EPS was $19.75, reflecting a 2.2% increase from the year-ago period. The figure also beat the Zacks Consensus Estimate by 0.4%.
Revenues in Detail
Revenues in the reported quarter improved 1% year over year to $546.6 million. The metric beat the Zacks Consensus Estimate by 0.6%.
Full-year revenues were $2.13 billion, down 0.2% from the last year’s revenues. 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).
Chemed Corporation Price, Consensus and EPS Surprise
In the fourth quarter, net revenues at VITAS totaled $308 million, down 2.5% year over year. The decline in revenues was primarily due to a 2.8% reduction in days of care and an increase in the geographically weighted average Medicare reimbursement rate of nearly 3.2%.
Roto-Rooter reported sales of $239 million in the fourth quarter, up 6.1% year over year.
Total Roto-Rooter branch commercial revenues improved 8.7% from the last year, on a 5.5% increase in drain cleaning revenues, a 13.8% rise in commercial plumbing, 5.1% growth in excavation revenues and a 27.3% hike in commercial water restoration revenues.
Total Roto-Rooter branch residential revenues registered 5% growth over the prior-year period on a 2.1% decrease in residential drain cleaning revenues, a 7% improvement in plumbing, a 4.9% increase in excavation and 13.2% growth in residential water restoration.
Margin in Detail
The gross profit declined 3.7% year over year to $197.1 million in the fourth quarter of 2022. The gross margin contracted 178 basis points (bps) year over year to 36.05%, as the cost of products and services rose 3.9% in the fourth quarter of 2022.
The adjusted operating profit decreased 11% from the year-ago period to $100.2 million. The adjusted operating margin contracted 249 bps to 18.3% on a 5.3% increase in adjusted operating expenses.
Liquidity & Capital Structure
Chemed exited 2022 with cash and cash equivalents of $74.1 million, which marked a significant increase from $32.9 million at the end of 2021. Meanwhile, long-term debt at the end of the year was $92.5 million compared with $185 million at the end of 2021.
The cumulative net cash provided by operating activities at the end of the fourth quarter of 2022 was $309.8 million compared with $308.6 million a year ago.
In the fourth quarter, Chemed’s management repurchased 25,000 stocks for $13 million. As of Dec 31, 2022, approximately $88 million remained under the existing share repurchase plan.
The company has a consistent dividend-paying history, with the five-year annualized dividend growth being 6.43%.
2023 Guidance
Chemed announced its financial guidance for 2023.
For 2023, revenues from VITAS, prior to Medicare Cap, are estimated to increase in the range of 6-7% from the prior year. Roto-Rooter is forecast to achieve 2023 revenue growth in the range of 5-5.5%. The Zacks Consensus Estimate for total revenues is pegged at $2.22 billion, suggesting 4% growth from the 2022 reported figure.
For the full-year 2023, the adjusted EPS is estimated in the range of $20.75-$21.10. The Zacks Consensus Estimate for the metric is pegged at $20.33, indicating 3.37% growth over the 2022 adjusted figure.
Our Take
Chemed ended the fourth quarter of 2022 with an earnings and revenue beat. The year-over-year growth in the adjusted EPS appears promising. The robust performance of the Roto-Rooter segment drove the top line. The company recorded substantial increases in drain cleaning, plumbing, excavation and water restoration revenues in the quarter under review.
On the flip side, the lower sales performance year over year of the VITAS segment is discouraging. Mounting costs and expenses weighed on the company’s margins.
Zacks Rank and Key Picks
Chemed currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the broader medical space that have announced quarterly results are Cardinal Health, Inc. (CAH - Free Report) , McKesson Corporation (MCK - Free Report) and Hologic, Inc. (HOLX - Free Report) .
Cardinal Health, carrying a Zacks Rank #2 (Buy), reported a second-quarter fiscal 2023 adjusted EPS of $1.32, beating the Zacks Consensus Estimate by 16.8%. Revenues of $51.47 billion outpaced the consensus mark by 2%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Cardinal Health has a long-term estimated growth rate of 11.6%. CAH’s earnings surpassed estimates in two of the trailing four quarters and missed the same in the other two, the average being 6.4%.
McKesson, having a Zacks Rank #2, reported a third-quarter fiscal 2023 adjusted EPS of $6.90, which beat the Zacks Consensus Estimate by 8.8%. Revenues of $70.49 billion outpaced the consensus mark by 0.02%.
McKesson has a long-term estimated growth rate of 10.4%. MCK’s earnings surpassed estimates in two of the trailing four quarters and missed the same in the other two, the average being 3.4%.
Hologic reported first-quarter fiscal 2023 adjusted earnings of $1.07 per share, beating the Zacks Consensus Estimate by 18.9%. Revenues of $1.07 billion surpassed the Zacks Consensus Estimate by 9.5%. It currently sports a Zacks Rank #1.
Hologic has a long-term estimated growth rate of 15.2%. HOLX’s earnings surpassed estimates in all the trailing four quarters, the average surprise being 30.6%.
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Chemed (CHE) Q4 Earnings Beat Estimates, Margins Contract
Chemed Corporation (CHE - Free Report) reported adjusted earnings per share (EPS) of $5.39 in the fourth quarter of 2022, up 2.7% year over year. The figure surpassed the Zacks Consensus Estimate by 1.7%.
The company’s GAAP EPS was $4.13, registering a 14.1% decline year over year.
For the full year, the adjusted EPS was $19.75, reflecting a 2.2% increase from the year-ago period. The figure also beat the Zacks Consensus Estimate by 0.4%.
Revenues in Detail
Revenues in the reported quarter improved 1% year over year to $546.6 million. The metric beat the Zacks Consensus Estimate by 0.6%.
Full-year revenues were $2.13 billion, down 0.2% from the last year’s revenues. 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).
Chemed Corporation Price, Consensus and EPS Surprise
Chemed Corporation price-consensus-eps-surprise-chart | Chemed Corporation Quote
In the fourth quarter, net revenues at VITAS totaled $308 million, down 2.5% year over year. The decline in revenues was primarily due to a 2.8% reduction in days of care and an increase in the geographically weighted average Medicare reimbursement rate of nearly 3.2%.
Roto-Rooter reported sales of $239 million in the fourth quarter, up 6.1% year over year.
Total Roto-Rooter branch commercial revenues improved 8.7% from the last year, on a 5.5% increase in drain cleaning revenues, a 13.8% rise in commercial plumbing, 5.1% growth in excavation revenues and a 27.3% hike in commercial water restoration revenues.
Total Roto-Rooter branch residential revenues registered 5% growth over the prior-year period on a 2.1% decrease in residential drain cleaning revenues, a 7% improvement in plumbing, a 4.9% increase in excavation and 13.2% growth in residential water restoration.
Margin in Detail
The gross profit declined 3.7% year over year to $197.1 million in the fourth quarter of 2022. The gross margin contracted 178 basis points (bps) year over year to 36.05%, as the cost of products and services rose 3.9% in the fourth quarter of 2022.
The adjusted operating profit decreased 11% from the year-ago period to $100.2 million. The adjusted operating margin contracted 249 bps to 18.3% on a 5.3% increase in adjusted operating expenses.
Liquidity & Capital Structure
Chemed exited 2022 with cash and cash equivalents of $74.1 million, which marked a significant increase from $32.9 million at the end of 2021. Meanwhile, long-term debt at the end of the year was $92.5 million compared with $185 million at the end of 2021.
The cumulative net cash provided by operating activities at the end of the fourth quarter of 2022 was $309.8 million compared with $308.6 million a year ago.
In the fourth quarter, Chemed’s management repurchased 25,000 stocks for $13 million. As of Dec 31, 2022, approximately $88 million remained under the existing share repurchase plan.
The company has a consistent dividend-paying history, with the five-year annualized dividend growth being 6.43%.
2023 Guidance
Chemed announced its financial guidance for 2023.
For 2023, revenues from VITAS, prior to Medicare Cap, are estimated to increase in the range of 6-7% from the prior year. Roto-Rooter is forecast to achieve 2023 revenue growth in the range of 5-5.5%. The Zacks Consensus Estimate for total revenues is pegged at $2.22 billion, suggesting 4% growth from the 2022 reported figure.
For the full-year 2023, the adjusted EPS is estimated in the range of $20.75-$21.10. The Zacks Consensus Estimate for the metric is pegged at $20.33, indicating 3.37% growth over the 2022 adjusted figure.
Our Take
Chemed ended the fourth quarter of 2022 with an earnings and revenue beat. The year-over-year growth in the adjusted EPS appears promising. The robust performance of the Roto-Rooter segment drove the top line. The company recorded substantial increases in drain cleaning, plumbing, excavation and water restoration revenues in the quarter under review.
On the flip side, the lower sales performance year over year of the VITAS segment is discouraging. Mounting costs and expenses weighed on the company’s margins.
Zacks Rank and Key Picks
Chemed currently carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the broader medical space that have announced quarterly results are Cardinal Health, Inc. (CAH - Free Report) , McKesson Corporation (MCK - Free Report) and Hologic, Inc. (HOLX - Free Report) .
Cardinal Health, carrying a Zacks Rank #2 (Buy), reported a second-quarter fiscal 2023 adjusted EPS of $1.32, beating the Zacks Consensus Estimate by 16.8%. Revenues of $51.47 billion outpaced the consensus mark by 2%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Cardinal Health has a long-term estimated growth rate of 11.6%. CAH’s earnings surpassed estimates in two of the trailing four quarters and missed the same in the other two, the average being 6.4%.
McKesson, having a Zacks Rank #2, reported a third-quarter fiscal 2023 adjusted EPS of $6.90, which beat the Zacks Consensus Estimate by 8.8%. Revenues of $70.49 billion outpaced the consensus mark by 0.02%.
McKesson has a long-term estimated growth rate of 10.4%. MCK’s earnings surpassed estimates in two of the trailing four quarters and missed the same in the other two, the average being 3.4%.
Hologic reported first-quarter fiscal 2023 adjusted earnings of $1.07 per share, beating the Zacks Consensus Estimate by 18.9%. Revenues of $1.07 billion surpassed the Zacks Consensus Estimate by 9.5%. It currently sports a Zacks Rank #1.
Hologic has a long-term estimated growth rate of 15.2%. HOLX’s earnings surpassed estimates in all the trailing four quarters, the average surprise being 30.6%.