Chemed Corporation (CHE Quick QuoteCHE - Free Report) reported adjusted earnings per share (EPS) of $5.47 in the second quarter of 2024, up 34.1% year over year. However, the figure missed the Zacks Consensus Estimate by 1.3%.

The company’s GAAP EPS was $4.65, up 32.5% from last year’s reported figure.

Revenues in Detail

Revenues in the reported quarter improved 7.6% year over year to $595.9 million. The metric missed the Zacks Consensus Estimate by 1.2%.

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 second quarter, net revenues totaled $374.6 million, up 16.7% year over year.

The rise in revenues was primarily due to a 14.4% increase in days of care and a rise in the geographically weighted average Medicare reimbursement rate of nearly 2.5%.

VITAS also completed its acquisition of the hospice assets and an assisted living facility of Covenant Health and Community Services, Inc. (Covenant Health) in April 2024 for $85 million in cash.

Roto-Rooter

The segment reported sales of $221.3 million in the second quarter, down 5% year over year.

Total Roto-Rooter branch commercial revenues decreased 8.2% from the last year. This consisted of a 6.4% decline in drain cleaning revenues, a 10.4% fall in plumbing, an 11.1% drop in excavation and an 8.8% decrease in water restoration.

Total Roto-Rooter branch residential revenues registered a decrease of 1.6% over the prior-year period. This aggregate residential revenue decline consisted of drain cleaning decreasing 2.6%, plumbing decreasing 3.3%, excavation declining 1% and water restoration decreasing 4.6%.

Margins in Detail

The gross profit increased 14.8% year over year to $206.1 million in the second quarter of 2024. The gross margin expanded 216 basis points (bps) year over year to 34.6% despite a 4.2% increase in the cost of services provided and goods sold.  

The adjusted operating profit rose 22.7% from the year-ago period to $103.9 million. The adjusted operating margin expanded 215 bps to 17.4% despite an increase of 7.7% in adjusted operating expenses.

Liquidity & Capital Structure

Chemed exited the second quarter with cash and cash equivalents of $222.9 million compared with $313.4 million at the end of the first quarter. The company did not have any long-term debt at the quarter end.

The cumulative net cash provided by operating activities at the end of the second quarter of 2024 was $162.1 million compared with $192.8 million in the year-ago comparable period.

During the quarter, the company repurchased 100,000 shares of Chemed stock for $55.8 million, which equates to a cost of $557.68 per share. As of Jun 30, 2024, there was approximately $225.9 million of remaining share repurchase authorization under its plan.

Chemed has a consistent dividend-paying history, with the five-year annualized dividend growth being 5.51%.

2024 Guidance

Chemed provided an updated financial outlook for 2024.  

The company anticipates 2024 revenues from VITAS, prior to Medicare Cap, to increase in the range of 16.3%-17.3% from the prior year (previously 9%-9.8%). Meanwhile, Roto-Rooter revenues are expected to decline by 4%-5% (earlier revenue growth of 3.5% to 4%) in 2024 compared with the 2023 reported figure.

For 2024, the Zacks Consensus Estimate for total revenues is pegged at $2.44 billion, which indicates an 8% improvement.

For the full-year 2024, the adjusted EPS is estimated in the range of $23.55-$23.80 (earlier $23.30-$23.70). The Zacks Consensus Estimate for the metric is pegged at $23.20, which implies 14.3% growth over the 2023 adjusted figure.

Our Take

Chemed ended the second quarter of 2024 with lower-than-expected earnings and revenues. Meanwhile, the metrics showed year-over-year improvement. An increase in days of care and a geographically weighted average Medicare reimbursement rate drove VITAS’ revenue growth. The expansion of both the margins during the quarter is appreciating.

Barring Roto-Rooter, the revised upbeat outlook for the full year bodes well for the stock. Meanwhile, Roto-Rooter registered another decline in the quarter.

Zacks Rank and Key Picks

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

Some better-ranked stocks from the broader medical space are Intuitive Surgical (ISRG Quick QuoteISRG - Free Report) , Abbott Laboratories, Inc. (ABT Quick QuoteABT - Free Report) and Quest Diagnostics (DGX Quick QuoteDGX - Free Report) .

Intuitive Surgical reported a second-quarter 2024 adjusted EPS of $1.78, which beat the Zacks Consensus Estimate by 16.3%. Revenues of $2.01 billion topped the consensus estimate by 2%. ISRG currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Intuitive Surgical has an estimated long-term earnings growth rate of 16.1% in 2024 compared with the industry’s 14.1%. The company’s earnings surpassed estimates in each of the trailing four quarters, the average being 8.97%.

Abbott, carrying a Zacks Rank #2 (Buy), reported second-quarter 2024 earnings of $1.14, which surpassed the Zacks Consensus Estimate by 3.6%. Revenues of $10.38 billion topped the Zacks Consensus Estimate by 0.3%. 

ABT has an estimated earnings growth rate of 10.1% for 2025 compared    with the S&P 500’s 9.3%. The company surpassed earnings estimates in each of the trailing four quarters, the average being 2.34%.

Quest Diagnostics, carrying a Zacks Rank #2, reported a second-quarter adjusted EPS of $2.35, which surpassed the Zacks Consensus Estimate by 1.7%. Revenues of $2.40 billion exceeded the Zacks Consensus Estimate by 0.5%.

DGX’s historical five-year earnings growth rate of 7.4% compared favorably with the industry’s 4.2%. The company surpassed earnings estimates in each of the trailing four quarters, the average being 3.31%.