On July 24, 2024, Chemed Corp (CHE, Financial) released its 8-K filing for the second quarter ended June 30, 2024. Chemed Corp operates subsidiaries in two main segments: VITAS and Roto-Rooter. The VITAS segment provides hospice and palliative care services, while the Roto-Rooter segment offers plumbing, drain cleaning, and related services. The company generates the majority of its revenue from business in the United States.
Quarterly Performance Overview
Chemed Corp reported consolidated service revenues and sales of $595.88 million for Q2 2024, a 7.6% increase from $553.82 million in the same period last year. The company's net income for the quarter was $70.89 million, translating to earnings per share (EPS) of $4.70, falling short of the analyst estimate of $5.06. The revenue also came close to the estimated $599.19 million.
VITAS Segment Performance
The VITAS segment reported net revenue of $374.6 million, a 16.7% increase compared to the prior-year period. This growth was driven by a 14.4% increase in days-of-care and a 2.5% increase in Medicare reimbursement rates. The acquisition of Covenant Health contributed $8.2 million to $8.7 million in revenue and approximately $1.6 million to $1.8 million in net income for the quarter.
Adjusted EBITDA for VITAS, excluding Medicare Cap, was $67.0 million, a 77.0% increase from the previous year. The adjusted EBITDA margin was 17.8%, up by 613 basis points, partly due to the absence of the Retention Program expenses that impacted the prior year's results.
Roto-Rooter Segment Performance
Roto-Rooter generated $221.3 million in revenue for Q2 2024, a 5.0% decline from the previous year. The segment faced a decrease in both commercial and residential revenues, with commercial revenue down by 8.2% and residential revenue down by 1.6%. Despite the revenue decline, the gross margin improved by 60 basis points to 52.9%, and adjusted EBITDA was $59.8 million, a 9.2% decrease from the prior year.
Financial Metrics and Achievements
Chemed Corp's consolidated income from operations was $88.13 million, up from $69.51 million in the previous year. The company reported a significant increase in other income, netting $6.13 million compared to $1.61 million last year. As of June 30, 2024, Chemed had total cash and cash equivalents of $222.9 million and no current or long-term debt.
| Metric | Q2 2024 | Q2 2023 |
|---|---|---|
| Service Revenues and Sales | $595.88 million | $553.82 million |
| Net Income | $70.89 million | $53.38 million |
| Earnings Per Share (EPS) | $4.70 | $3.54 |
| Adjusted EBITDA | $119.89 million | $96.30 million |
Analysis and Future Outlook
Chemed Corp's strong performance in the VITAS segment significantly contributed to the overall positive results, offsetting the decline in Roto-Rooter revenue. The company's ability to manage costs and improve margins, particularly in the VITAS segment, highlights its operational efficiency. The acquisition of Covenant Health has also started to show positive contributions to the company's revenue and net income.
Looking ahead, Chemed Corp has revised its full-year 2024 guidance upward, estimating earnings per diluted share to be in the range of $23.55 to $23.80, compared to the previous guidance of $23.30 to $23.70. This optimistic outlook is based on the expected continued growth in the VITAS segment and improved margins.
For more detailed insights and the complete financial statements, readers are encouraged to review the full 8-K filing.
Explore the complete 8-K earnings release (here) from Chemed Corp for further details.
