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Chemed Corporation (CHE - Free Report) reported adjusted earnings per share (EPS) of $4.82 in the first quarter of 2023, up 0.6% year over year. However, the figure missed the Zacks Consensus Estimate by 2%.
The company’s GAAP EPS was $3.58, registering a 15.2% decline year over year.
Revenues in Detail
Revenues in the reported quarter improved 1% year over year to $560.2 million. However, the metric missed the Zacks Consensus Estimate by 2.6%
Chemed Corporation Price, Consensus and EPS Surprise
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 first quarter, net revenues at VITAS totaled $310.5 million, up 3.8% year over year. The rise in revenues was primarily due to a 3% increase in days of care and an increase in the geographically weighted average Medicare reimbursement rate of nearly 2.9%.
Roto-Rooter reported sales of $250 million in the first quarter, up 7.9% year over year.
Total Roto-Rooter branch commercial revenues improved 10.1% from the last year on a 4.0% increase in drain cleaning revenues, a 10.7% rise in commercial plumbing, 26.2% growth in excavation revenues and a 7.4% hike in commercial water restoration revenues.
Total Roto-Rooter branch residential revenues registered 7.5% growth over the prior-year period on a 2.9% decrease in residential drain cleaning revenues, a 3.6% improvement in plumbing, a 3.9% increase in excavation and 27.4% growth in residential water restoration.
Margins in Detail
The gross profit declined 2.3% year over year to $189.5 million in the first quarter of 2023. The gross margin contracted 274 basis points (bps) year over year to 33.8% due to an increase in the cost of products and services by 10.1% in the first quarter of 2023.
The adjusted operating profit decreased 14% from the year-ago period to $189.4 million. The adjusted operating margin contracted 366 bps to 16% on an 11.3% increase in adjusted operating expenses.
Liquidity & Capital Structure
Chemed exited the first quarter of 2023 with cash and cash equivalents of $58.1 million, which marked a significant increase from $18.2 million at the end of 2022. Meanwhile, long-term debt at the end of the first quarter was $16.2 million compared with $120 million at the end of 2022.
The cumulative net cash provided by operating activities at the end of the first quarter of 2023 was $60.5 million compared with $101.1 million in the year-ago period.
During the quarter, the company paid off the majority of the $100 million amortizable term loan under its five-year $550 million Amended and Restated Credit Agreement (Credit Agreement). As of Mar 31, 2023, the remaining balance of the term loan stands at $21.3 million.
Chemed has a consistent dividend-paying history, with the five-year annualized dividend growth being 6.24%.
2023 Guidance
Chemed expects to provide updated 2023 earnings guidance as part of the Jun 30, 2023, earnings release.
On the fourth-quarter 2022 earnings call, CHE anticipated 2023 revenues from VITAS, prior to Medicare Cap, to increase in the range of 6-7% from the prior year (VITAS’ 2022 reported revenues totaled $1.20 billion, down 4.7% from the 2021 reported figure).
Roto-Rooter is expected to achieve 2023 revenue growth in the range of 5-5.5% (Roto-Rooter’s reported revenues totaled $933.4 million in 2022, up 6.4% from the 2021 reported figure).
The Zacks Consensus Estimate for 2023 total revenues is pegged at $2.23 billion, suggesting 4.7% growth from the 2022 reported figure.
For the full-year 2023, the adjusted EPS is estimated in the range of $20.7-$21.1 (adjusted EPS for 2022 came in at $16.72). The Zacks Consensus Estimate for the metric is pegged at $20.8, suggesting 5.6% growth over the 2022 adjusted figure.
Our Take
Chemed ended the first quarter of 2023 with both earnings and revenues missing estimates.
On a positive note, the strong performance across both VITAS and Roto-Rooter drove the top line. Within the Roto-Rooter branch, the aggregate commercial and residential revenue growth was supported by substantial increases in commercial drain cleaning, plumbing, excavation and water restoration revenues in the quarter under review.
Meanwhile, mounting costs and expenses weighed on the company’s margins. In the first quarter, 200 additional licensed healthcare staff were hired for the VITAS segment, which has negatively impacted margins by approximately 50 bps.
Zacks Rank and Other Key Picks
Chemed currently carries a Zacks Rank #2 (Buy).
Some other top-ranked stocks in the broader medical space that have announced quarterly results are Edwards Lifesciences Corporation (EW - Free Report) , Intuitive Surgical, Inc. (ISRG - Free Report) and Johnson & Johnson (JNJ - Free Report) .
Edwards Lifesciences, carrying a Zacks Rank #2, reported first-quarter 2023 adjusted EPS of 62 cents, beating the Zacks Consensus Estimate by 1.6%. Revenues of $1.46 billion outpaced the consensus mark by 4.7%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Edwards Lifesciences has a long-term estimated growth rate of 6.8%. EW’s earnings surpassed estimates in two of the trailing four quarters, missed the same in one and broke even in the other, the average being 1.2%.
Intuitive Surgical, having a Zacks Rank #2, reported a first-quarter 2023 adjusted EPS of $1.23, which beat the Zacks Consensus Estimate by 3.4%. Revenues of $1.70 billion outpaced the consensus mark by 6.9%.
Intuitive Surgical has a long-term estimated growth rate of 13%. ISRG’s earnings surpassed estimates in two of the trailing four quarters and missed the same in the other two, the average being 1.9%.
Johnson & Johnson reported first-quarter 2023 adjusted earnings of $2.68 per share, beating the Zacks Consensus Estimate by 6.8%. Revenues of $24.75 billion surpassed the Zacks Consensus Estimate by 5%. It currently carries a Zacks Rank #2.
Johnson & Johnson has a long-term estimated growth rate of 5.5%. JNJ’s earnings surpassed estimates in all the trailing four quarters, the average surprise being 3.9%.
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Chemed (CHE) Lags Q1 Earnings Estimates, Reaffirms Guidance
Chemed Corporation (CHE - Free Report) reported adjusted earnings per share (EPS) of $4.82 in the first quarter of 2023, up 0.6% year over year. However, the figure missed the Zacks Consensus Estimate by 2%.
The company’s GAAP EPS was $3.58, registering a 15.2% decline year over year.
Revenues in Detail
Revenues in the reported quarter improved 1% year over year to $560.2 million. However, the metric missed the Zacks Consensus Estimate by 2.6%
Chemed Corporation Price, Consensus and EPS Surprise
Chemed Corporation price-consensus-eps-surprise-chart | Chemed Corporation Quote
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 first quarter, net revenues at VITAS totaled $310.5 million, up 3.8% year over year. The rise in revenues was primarily due to a 3% increase in days of care and an increase in the geographically weighted average Medicare reimbursement rate of nearly 2.9%.
Roto-Rooter reported sales of $250 million in the first quarter, up 7.9% year over year.
Total Roto-Rooter branch commercial revenues improved 10.1% from the last year on a 4.0% increase in drain cleaning revenues, a 10.7% rise in commercial plumbing, 26.2% growth in excavation revenues and a 7.4% hike in commercial water restoration revenues.
Total Roto-Rooter branch residential revenues registered 7.5% growth over the prior-year period on a 2.9% decrease in residential drain cleaning revenues, a 3.6% improvement in plumbing, a 3.9% increase in excavation and 27.4% growth in residential water restoration.
Margins in Detail
The gross profit declined 2.3% year over year to $189.5 million in the first quarter of 2023. The gross margin contracted 274 basis points (bps) year over year to 33.8% due to an increase in the cost of products and services by 10.1% in the first quarter of 2023.
The adjusted operating profit decreased 14% from the year-ago period to $189.4 million. The adjusted operating margin contracted 366 bps to 16% on an 11.3% increase in adjusted operating expenses.
Liquidity & Capital Structure
Chemed exited the first quarter of 2023 with cash and cash equivalents of $58.1 million, which marked a significant increase from $18.2 million at the end of 2022. Meanwhile, long-term debt at the end of the first quarter was $16.2 million compared with $120 million at the end of 2022.
The cumulative net cash provided by operating activities at the end of the first quarter of 2023 was $60.5 million compared with $101.1 million in the year-ago period.
During the quarter, the company paid off the majority of the $100 million amortizable term loan under its five-year $550 million Amended and Restated Credit Agreement (Credit Agreement). As of Mar 31, 2023, the remaining balance of the term loan stands at $21.3 million.
Chemed has a consistent dividend-paying history, with the five-year annualized dividend growth being 6.24%.
2023 Guidance
Chemed expects to provide updated 2023 earnings guidance as part of the Jun 30, 2023, earnings release.
On the fourth-quarter 2022 earnings call, CHE anticipated 2023 revenues from VITAS, prior to Medicare Cap, to increase in the range of 6-7% from the prior year (VITAS’ 2022 reported revenues totaled $1.20 billion, down 4.7% from the 2021 reported figure).
Roto-Rooter is expected to achieve 2023 revenue growth in the range of 5-5.5% (Roto-Rooter’s reported revenues totaled $933.4 million in 2022, up 6.4% from the 2021 reported figure).
The Zacks Consensus Estimate for 2023 total revenues is pegged at $2.23 billion, suggesting 4.7% growth from the 2022 reported figure.
For the full-year 2023, the adjusted EPS is estimated in the range of $20.7-$21.1 (adjusted EPS for 2022 came in at $16.72). The Zacks Consensus Estimate for the metric is pegged at $20.8, suggesting 5.6% growth over the 2022 adjusted figure.
Our Take
Chemed ended the first quarter of 2023 with both earnings and revenues missing estimates.
On a positive note, the strong performance across both VITAS and Roto-Rooter drove the top line. Within the Roto-Rooter branch, the aggregate commercial and residential revenue growth was supported by substantial increases in commercial drain cleaning, plumbing, excavation and water restoration revenues in the quarter under review.
Meanwhile, mounting costs and expenses weighed on the company’s margins. In the first quarter, 200 additional licensed healthcare staff were hired for the VITAS segment, which has negatively impacted margins by approximately 50 bps.
Zacks Rank and Other Key Picks
Chemed currently carries a Zacks Rank #2 (Buy).
Some other top-ranked stocks in the broader medical space that have announced quarterly results are Edwards Lifesciences Corporation (EW - Free Report) , Intuitive Surgical, Inc. (ISRG - Free Report) and Johnson & Johnson (JNJ - Free Report) .
Edwards Lifesciences, carrying a Zacks Rank #2, reported first-quarter 2023 adjusted EPS of 62 cents, beating the Zacks Consensus Estimate by 1.6%. Revenues of $1.46 billion outpaced the consensus mark by 4.7%. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Edwards Lifesciences has a long-term estimated growth rate of 6.8%. EW’s earnings surpassed estimates in two of the trailing four quarters, missed the same in one and broke even in the other, the average being 1.2%.
Intuitive Surgical, having a Zacks Rank #2, reported a first-quarter 2023 adjusted EPS of $1.23, which beat the Zacks Consensus Estimate by 3.4%. Revenues of $1.70 billion outpaced the consensus mark by 6.9%.
Intuitive Surgical has a long-term estimated growth rate of 13%. ISRG’s earnings surpassed estimates in two of the trailing four quarters and missed the same in the other two, the average being 1.9%.
Johnson & Johnson reported first-quarter 2023 adjusted earnings of $2.68 per share, beating the Zacks Consensus Estimate by 6.8%. Revenues of $24.75 billion surpassed the Zacks Consensus Estimate by 5%. It currently carries a Zacks Rank #2.
Johnson & Johnson has a long-term estimated growth rate of 5.5%. JNJ’s earnings surpassed estimates in all the trailing four quarters, the average surprise being 3.9%.