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Chemed (CHE) Beats on Q2 Earnings & Revenues, View Raised
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Chemed Corporation’s (CHE - Free Report) second-quarter 2018 adjusted earnings per share (EPS) were $2.81, up 30.7% from a year ago. The figure also surpassed the Zacks Consensus Estimate of $2.68.
Quarter in Details
Revenues in the quarter increased 6.4% year over year to $441.8 million, beating the Zacks Consensus Estimate of $432.3 million.
Chemed operates through two wholly-owned subsidiaries, namely, VITAS Healthcare Corporation (a major provider of end-of-life care) and Roto-Rooter (a leading commercial and residential plumbing and drain cleaning service provider).
In the second quarter, net revenues at VITAS Healthcare totaled $297 million, reflecting an increase of 6.3% year over year. Revenues were driven by a 0.6% increase in the average net Medicare reimbursement rate and a 7.6% rise in average daily census. A Medicare Cap liability affected revenue growth by 0.1%. However, the revenue growth was partially offset by acuity mix shift which impacted revenues by 1.6%.
Chemed Corporation Price, Consensus and EPS Surprise
Roto-Rooter reported sales of $145 million in the second quarter, up 11.9% year over year. According to the company, revenues from water restoration increased 18.4% year over year to $24.8 million.
Gross margin contracted 30 basis points (bps) year over year to 30.8%. Adjusted operating margin expanded 70 bps to 15.3% in the quarter owing to a 0.5% contraction in selling, general and administrative expenses to $68.3 million.
Chemed exited the second quarter of 2018 with total cash and cash equivalents of $12.7 million, down from $13.7 million at the end of first quarter of 2018. The company had total debt of $103.4 million at the end of the second quarter, reflecting a sharp decrease from $132.5 million at the end of the first quarter. As of Jun 30, 2018, the company had approximately $310 million of undrawn borrowing capacity under its existing five-year credit agreement.
During the second quarter, the company repurchased shares worth $3.2 million. The board has authorized an additional $150 million for stock repurchase under Chemed’s existing plan. As of Jun 30, 2018, the company had $121 million of remaining share repurchase authorization under this plan.
2018 Outlook Raised
The company now projects VITAS Healthcare revenue growth for 2018 in the range of 4% to 5%, up from the previously provided band of 2.5% to 3.5%, prior to the Medicare Cap. Also, admissions are expected to increase 4.5% to 5% and Average Daily Census in 2018 is expected to rise 6.5%. Medicare Cap billing limitations are expected at around $2.5 million in the second half of 2018.
The Roto-Rooter business is now likely to grow 12% to 13% compared to 4% to 5% provided previously in the full year. The guidance was backed by a 2% increase in job pricing and water restoration services growth.
Full-year adjusted EPS is now expected to grow in the band of $11.35 to $11.55 compared to the previously provided range of $10.60 to $10.85. The Zacks Consensus Estimate of $11.12 falls below the guided range.
Our Take
Chemed exited the second quarter on a solid note. Also, the company witnessed year-over-year growth in earnings and revenues. Moreover, we are encouraged to note that the company’s subsidiaries saw year-over-year revenue growth in the quarter. The expansion in adjusted operating margin buoys optimism. Further, the raised guidance for 2018 hints at a brighter picture ahead.
However, reimbursement-related issues, seasonality in business, a competitive landscape and dependence on government mandates continue to pose challenges.
Zacks Rank & Key Picks
Chemed carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the broader medical space are Insulet Corporation (PODD - Free Report) , Amedisys, Inc. (AMED - Free Report) and Integer Holdings Corporation (ITGR - Free Report) .
Insulet is expected to release second-quarter fiscal 2018 results on Aug 2. The Zacks Consensus Estimate for the quarter's loss per share is pegged at 13 cents and for revenues at $132.9 million. The stock sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today's Zacks #1 Rank stocks here.
Integer Holdings is slated to release second-quarter 2018 results on Aug 2. The Zacks Consensus Estimate for EPS is pinned at 90 cents and for revenues at $381.8 million. The company is a Zacks #1 Ranked player.
Amedisys is expected to release second-quarter 2018 results on Jul 31. The Zacks Consensus Estimate for adjusted EPS is pinned at 78 cents and for revenues at $403.6 million. The stock carries a Zacks Rank of 1.
The Hottest Tech Mega-Trend of All
Last year, it generated $8 billion in global revenues. By 2020, it's predicted to blast through the roof to $47 billion. Famed investor Mark Cuban says it will produce "the world's first trillionaires," but that should still leave plenty of money for regular investors who make the right trades early.
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Chemed (CHE) Beats on Q2 Earnings & Revenues, View Raised
Chemed Corporation’s (CHE - Free Report) second-quarter 2018 adjusted earnings per share (EPS) were $2.81, up 30.7% from a year ago. The figure also surpassed the Zacks Consensus Estimate of $2.68.
Quarter in Details
Revenues in the quarter increased 6.4% year over year to $441.8 million, beating the Zacks Consensus Estimate of $432.3 million.
Chemed operates through two wholly-owned subsidiaries, namely, VITAS Healthcare Corporation (a major provider of end-of-life care) and Roto-Rooter (a leading commercial and residential plumbing and drain cleaning service provider).
In the second quarter, net revenues at VITAS Healthcare totaled $297 million, reflecting an increase of 6.3% year over year. Revenues were driven by a 0.6% increase in the average net Medicare reimbursement rate and a 7.6% rise in average daily census. A Medicare Cap liability affected revenue growth by 0.1%. However, the revenue growth was partially offset by acuity mix shift which impacted revenues by 1.6%.
Chemed Corporation Price, Consensus and EPS Surprise
Chemed Corporation Price, Consensus and EPS Surprise | Chemed Corporation Quote
Roto-Rooter reported sales of $145 million in the second quarter, up 11.9% year over year. According to the company, revenues from water restoration increased 18.4% year over year to $24.8 million.
Gross margin contracted 30 basis points (bps) year over year to 30.8%. Adjusted operating margin expanded 70 bps to 15.3% in the quarter owing to a 0.5% contraction in selling, general and administrative expenses to $68.3 million.
Chemed exited the second quarter of 2018 with total cash and cash equivalents of $12.7 million, down from $13.7 million at the end of first quarter of 2018. The company had total debt of $103.4 million at the end of the second quarter, reflecting a sharp decrease from $132.5 million at the end of the first quarter. As of Jun 30, 2018, the company had approximately $310 million of undrawn borrowing capacity under its existing five-year credit agreement.
During the second quarter, the company repurchased shares worth $3.2 million. The board has authorized an additional $150 million for stock repurchase under Chemed’s existing plan. As of Jun 30, 2018, the company had $121 million of remaining share repurchase authorization under this plan.
2018 Outlook Raised
The company now projects VITAS Healthcare revenue growth for 2018 in the range of 4% to 5%, up from the previously provided band of 2.5% to 3.5%, prior to the Medicare Cap. Also, admissions are expected to increase 4.5% to 5% and Average Daily Census in 2018 is expected to rise 6.5%. Medicare Cap billing limitations are expected at around $2.5 million in the second half of 2018.
The Roto-Rooter business is now likely to grow 12% to 13% compared to 4% to 5% provided previously in the full year. The guidance was backed by a 2% increase in job pricing and water restoration services growth.
Full-year adjusted EPS is now expected to grow in the band of $11.35 to $11.55 compared to the previously provided range of $10.60 to $10.85. The Zacks Consensus Estimate of $11.12 falls below the guided range.
Our Take
Chemed exited the second quarter on a solid note. Also, the company witnessed year-over-year growth in earnings and revenues. Moreover, we are encouraged to note that the company’s subsidiaries saw year-over-year revenue growth in the quarter. The expansion in adjusted operating margin buoys optimism. Further, the raised guidance for 2018 hints at a brighter picture ahead.
However, reimbursement-related issues, seasonality in business, a competitive landscape and dependence on government mandates continue to pose challenges.
Zacks Rank & Key Picks
Chemed carries a Zacks Rank #3 (Hold).
Some better-ranked stocks in the broader medical space are Insulet Corporation (PODD - Free Report) , Amedisys, Inc. (AMED - Free Report) and Integer Holdings Corporation (ITGR - Free Report) .
Insulet is expected to release second-quarter fiscal 2018 results on Aug 2. The Zacks Consensus Estimate for the quarter's loss per share is pegged at 13 cents and for revenues at $132.9 million. The stock sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today's Zacks #1 Rank stocks here.
Integer Holdings is slated to release second-quarter 2018 results on Aug 2. The Zacks Consensus Estimate for EPS is pinned at 90 cents and for revenues at $381.8 million. The company is a Zacks #1 Ranked player.
Amedisys is expected to release second-quarter 2018 results on Jul 31. The Zacks Consensus Estimate for adjusted EPS is pinned at 78 cents and for revenues at $403.6 million. The stock carries a Zacks Rank of 1.
The Hottest Tech Mega-Trend of All
Last year, it generated $8 billion in global revenues. By 2020, it's predicted to blast through the roof to $47 billion. Famed investor Mark Cuban says it will produce "the world's first trillionaires," but that should still leave plenty of money for regular investors who make the right trades early.
See Zacks' 3 Best Stocks to Play This Trend >>