Chemed (CHE) Q3 2024 earnings summary

Executive summary

• Service revenues and sales rose 7.4% year-over-year to $606.2M in Q3 2024, driven by a 17.3% increase at VITAS and offset by a 6.9% decrease at Roto-Rooter.

• Net income for Q3 2024 was $75.8M, up from $75.0M in Q3 2023; adjusted diluted EPS was $5.64, up 6.0% year-over-year.

• VITAS growth was fueled by a 15.5% increase in days-of-care and a 2.6% Medicare reimbursement rate increase, with the Covenant Health acquisition contributing $10–11M in revenue and $1.8–2.0M in net income.

• Roto-Rooter experienced broad-based declines across all service lines, attributed to industry-wide demand softness and increased marketing costs.

• Hurricanes in Florida caused a temporary slowdown in VITAS admissions, with further impact expected in Q4.

Financial highlights

• Q3 2024 consolidated gross margin was 34.6%; VITAS gross margin rose to 24.6%, Roto-Rooter held steady at 52.9%.

• Adjusted EBITDA for Q3 2024 was $123.0M (20.3% margin); nine months: $357.5M (20.0% margin).

• VITAS adjusted EBITDA (excluding Medicare cap) was $73.1M, up 33.1%, with a margin of 18.6%, 212 basis points higher than last year.

• Roto-Rooter Q3 revenue was $214.8M, down 6.9% year-over-year; adjusted EBITDA was $56.4M, down 15.8%, with a margin of 26.3%.

• Cash and cash equivalents stood at $238.5M as of September 30, 2024, with no current or long-term debt.

Outlook and guidance

• Full-year 2024 adjusted diluted EPS is projected at $23.00–$23.15, a 13.3–14.0% increase over 2023.

• Guidance assumes a 24.3% effective tax rate and 15.22M diluted shares.

• VITAS is expected to maintain above-average historical growth in 2025, with a 3.9% Medicare rate increase providing additional upside.

• Roto-Rooter Q4 revenue is expected to be similar to Q3 year-over-year, with margins returning to Q2 levels.

• Roto-Rooter guidance was revised downward due to softer Q3 results.