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CHE Misses on Q3 Earnings, Lowers '24 EPS View, Stock Up
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Chemed Corporation (CHE - Free Report) reported third-quarter 2024 adjusted earnings per share (EPS) of $5.64, which rose 6% year over year. However, the figure missed the Zacks Consensus Estimate by 2.1%.
The company’s GAAP EPS was $5.00, up 1.4% from last year’s reported figure.
Find the latest EPS estimates and surprises on Zacks Earnings Calendar.
Following the earnings announcement, CHE stock rose marginally 0.2% yesterday.
CHE’s Revenues in Detail
Revenues in the reported quarter improved 7.4% year over year to $606.2 million. The metric missed the Zacks Consensus Estimate by 1.1%.
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 third quarter, net revenues totaled $391.4 million, up 17.3% year over year.
The rise in revenues was primarily due to a 15.5% increase in days of care and a rise in the geographically weighted average Medicare reimbursement rate of nearly 2.6%.
Covenant Health reported revenues of approximately $10-$11 million for the quarter.
Roto-Rooter
The segment reported sales of $214.8 million, down 6.9% year over year.
Total Roto-Rooter branch commercial revenues decreased 5.9% year over year. This consisted of a 4.4% decline in drain cleaning revenues, a 12.1% fall in plumbing, a 2.3% drop in excavation and a 3.3% decrease in water restoration.
Total Roto-Rooter branch residential revenues registered a decrease of 6.3% over the prior-year period. This included a decline of 5.9%, 11.2%, 6.1% and 6.9% in drain cleaning, plumbing, excavation and water restoration, respectively.
Margins in Detail
The gross profit increased 3.9% year over year to $210 million in the third quarter. The gross margin contracted 117 basis points (bps) year over year to 34.6% due to a 9.3% increase in the cost of services provided and goods sold.
SG&A expenses rose 2.4% year over year to $102 million. The adjusted operating profit rose 22.7% from the year-ago period to $108 million. The adjusted operating margin contracted 35 bps to 17.8% during the quarter.
CHE’s Liquidity & Capital Structure
Chemed exited the third quarter with cash and cash equivalents of $238.5 million compared with $222.9 million at the end of the second quarter. 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 $252.6 million compared with $221.7 million in the year-ago period.
The company repurchased 100,000 shares of Chemed stock for $57.8 million, which equates to a cost of $578.2 per share. As of June 30, 2024, there was approximately $168.1 million of remaining share repurchase authorization under its plan.
Chemed has a consistent dividend-paying history, with five-year annualized dividend growth of 5.51%.
Chemed Corporation Price, Consensus and EPS Surprise
The company maintained its 2024 revenue guidance for VITAS. It still anticipates revenues from VITAS, prior to Medicare Cap, to increase in the range of 16.3-17.3% compared with the previous year.
The Zacks Consensus Estimate for total revenues is pegged at $2.44 billion, which indicates a 7.8% improvement year over year.
For full-year 2024, the company now expects the adjusted EPS to be in the range of $23.00-$23.15 (earlier $23.55-$23.80). The Zacks Consensus Estimate for the metric is pegged at $23.58, which implies 16.2% growth over the 2023 adjusted figure.
Our Take
Chemed ended the third 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. However, the contraction of both margins during the quarter is commendable.
The lowered EPS outlook for the full year doesn’t bode well for the stock. Meanwhile, Roto-Rooter registered another decline in the quarter.
Phibro Animal Health reported fourth-quarter fiscal 2024 adjusted earnings of 41 cents per share, which topped the Zacks Consensus Estimate by 20.6%. Revenues of $273.2 million beat the Zacks Consensus Estimate by 4.1%. PAHC sports a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
PAHC’s fiscal 2025 earnings are expected to surge 31.9% compared with the industry’s 11.6% growth. The company’s earnings surpassed estimates in three of the trailing four quarters and missed in one, the average surprise being 4.1%.
Veracyte, sporting a Zacks Rank #1 at present, posted second-quarter 2024 earnings of 30 cents per share, which beat the Zacks Consensus Estimate of a loss of 3 cents. Revenues of $114.4 million surpassed the Zacks Consensus Estimate by 14%.
VCYT has an estimated earnings growth rate of 115.7% for 2024 compared with the industry’s 13.7%. The company’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 328.4%.
HealthEquity, carrying a Zacks Rank #2 (Buy) at present, reported a second-quarter fiscal 2025 adjusted earnings of 86 cents per share, which surpassed the Zacks Consensus Estimate by 22.9%. Revenues of $299.9 million topped the Zacks Consensus Estimate by 5.4%.
HQY has an estimated long-term earnings growth rate of 28.2% compared with the industry’s 13.4%. The company’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 19.8%.
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CHE Misses on Q3 Earnings, Lowers '24 EPS View, Stock Up
Chemed Corporation (CHE - Free Report) reported third-quarter 2024 adjusted earnings per share (EPS) of $5.64, which rose 6% year over year. However, the figure missed the Zacks Consensus Estimate by 2.1%.
The company’s GAAP EPS was $5.00, up 1.4% from last year’s reported figure.
Find the latest EPS estimates and surprises on Zacks Earnings Calendar.
Following the earnings announcement, CHE stock rose marginally 0.2% yesterday.
CHE’s Revenues in Detail
Revenues in the reported quarter improved 7.4% year over year to $606.2 million. The metric missed the Zacks Consensus Estimate by 1.1%.
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 third quarter, net revenues totaled $391.4 million, up 17.3% year over year.
The rise in revenues was primarily due to a 15.5% increase in days of care and a rise in the geographically weighted average Medicare reimbursement rate of nearly 2.6%.
Covenant Health reported revenues of approximately $10-$11 million for the quarter.
Roto-Rooter
The segment reported sales of $214.8 million, down 6.9% year over year.
Total Roto-Rooter branch commercial revenues decreased 5.9% year over year. This consisted of a 4.4% decline in drain cleaning revenues, a 12.1% fall in plumbing, a 2.3% drop in excavation and a 3.3% decrease in water restoration.
Total Roto-Rooter branch residential revenues registered a decrease of 6.3% over the prior-year period. This included a decline of 5.9%, 11.2%, 6.1% and 6.9% in drain cleaning, plumbing, excavation and water restoration, respectively.
Margins in Detail
The gross profit increased 3.9% year over year to $210 million in the third quarter. The gross margin contracted 117 basis points (bps) year over year to 34.6% due to a 9.3% increase in the cost of services provided and goods sold.
SG&A expenses rose 2.4% year over year to $102 million. The adjusted operating profit rose 22.7% from the year-ago period to $108 million. The adjusted operating margin contracted 35 bps to 17.8% during the quarter.
CHE’s Liquidity & Capital Structure
Chemed exited the third quarter with cash and cash equivalents of $238.5 million compared with $222.9 million at the end of the second quarter. 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 $252.6 million compared with $221.7 million in the year-ago period.
The company repurchased 100,000 shares of Chemed stock for $57.8 million, which equates to a cost of $578.2 per share. As of June 30, 2024, there was approximately $168.1 million of remaining share repurchase authorization under its plan.
Chemed has a consistent dividend-paying history, with five-year annualized dividend growth of 5.51%.
Chemed Corporation Price, Consensus and EPS Surprise
Chemed Corporation price-consensus-eps-surprise-chart | Chemed Corporation Quote
Chemed’s 2024 Guidance
Chemed provided an updated EPS outlook for 2024.
The company maintained its 2024 revenue guidance for VITAS. It still anticipates revenues from VITAS, prior to Medicare Cap, to increase in the range of 16.3-17.3% compared with the previous year.
The Zacks Consensus Estimate for total revenues is pegged at $2.44 billion, which indicates a 7.8% improvement year over year.
For full-year 2024, the company now expects the adjusted EPS to be in the range of $23.00-$23.15 (earlier $23.55-$23.80). The Zacks Consensus Estimate for the metric is pegged at $23.58, which implies 16.2% growth over the 2023 adjusted figure.
Our Take
Chemed ended the third 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. However, the contraction of both margins during the quarter is commendable.
The lowered EPS outlook for the full year doesn’t bode well for the stock. Meanwhile, Roto-Rooter registered another decline in the quarter.
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 Phibro Animal Health (PAHC - Free Report) , Veracyte (VCYT - Free Report) and HealthEquity (HQY - Free Report) .
Phibro Animal Health reported fourth-quarter fiscal 2024 adjusted earnings of 41 cents per share, which topped the Zacks Consensus Estimate by 20.6%. Revenues of $273.2 million beat the Zacks Consensus Estimate by 4.1%. PAHC sports a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
PAHC’s fiscal 2025 earnings are expected to surge 31.9% compared with the industry’s 11.6% growth. The company’s earnings surpassed estimates in three of the trailing four quarters and missed in one, the average surprise being 4.1%.
Veracyte, sporting a Zacks Rank #1 at present, posted second-quarter 2024 earnings of 30 cents per share, which beat the Zacks Consensus Estimate of a loss of 3 cents. Revenues of $114.4 million surpassed the Zacks Consensus Estimate by 14%.
VCYT has an estimated earnings growth rate of 115.7% for 2024 compared with the industry’s 13.7%. The company’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 328.4%.
HealthEquity, carrying a Zacks Rank #2 (Buy) at present, reported a second-quarter fiscal 2025 adjusted earnings of 86 cents per share, which surpassed the Zacks Consensus Estimate by 22.9%. Revenues of $299.9 million topped the Zacks Consensus Estimate by 5.4%.
HQY has an estimated long-term earnings growth rate of 28.2% compared with the industry’s 13.4%. The company’s earnings surpassed estimates in each of the trailing four quarters, the average surprise being 19.8%.