Chemed (CHE) Q2 2024 earnings summary

Executive summary

• Service revenues and sales rose 7.6% year-over-year in Q2 2024, driven by a 16.7% increase at VITAS and offset by a 5% decline at Roto-Rooter.

• Net income increased to $70.9 million from $53.4 million in Q2 2023; diluted EPS was $4.65, up from $3.51.

• Adjusted EBITDA for Q2 2024 was $119.9 million (20.1% margin), up from $96.3 million (17.4%) in Q2 2023.

• VITAS completed the $85 million acquisition of Covenant Health, contributing $8.2–$8.7 million in revenue and $1.6–$1.8 million in net income in Q2.

• VITAS segment saw strong growth, while Roto-Rooter experienced revenue and profit declines.

Financial highlights

• Q2 2024 service revenues and sales: $595.9 million (Q2 2023: $553.8 million).

• Consolidated net income for Q2 2024 was $70.9 million, up from $53.4 million in Q2 2023.

• Adjusted net income for Q2 2024 was $83.4 million, up from $62.1 million in Q2 2023.

• Cash and cash equivalents stood at $222.9 million as of June 30, 2024, with no current or long-term debt.

• Operating cash flow for the first six months was $162.1 million; $94.2 million was used for share repurchases in the same period.

Outlook and guidance

• Full-year 2024 adjusted EPS guidance raised to $23.55–$23.80, up from prior $23.30–$23.70; 2023 adjusted EPS was $20.30.

• VITAS 2024 revenue (pre-Medicare Cap) expected to grow 16.3%–17.3% year-over-year; ADC to rise 13.3%–14.4%.

• Roto-Rooter 2024 revenue forecasted to decline 4%–5% year-over-year; adjusted EBITDA margin expected at 26.5%–27.0%.

• Covenant Health expected to contribute $30–$32 million in revenue and $5.5–$6 million in adjusted net income for 2024.

• Management remains optimistic about VITAS's growth prospects and is implementing initiatives to improve Roto-Rooter's commercial segment.