Chemed Reports Second-Quarter 2024 Results

Rhea-AI Summary

Chemed (NYSE: CHE) reported strong Q2 2024 financial results. Consolidated revenue rose 7.6% to $595.9 million, while GAAP diluted EPS increased 32.5% to $4.65. Adjusted diluted EPS jumped 34.1% to $5.47. VITAS segment revenue grew 16.7% to $374.6 million, driven by a 14.4% increase in average daily census and 11.0% rise in admissions. Conversely, Roto-Rooter posted a 5.0% decline in revenue to $221.3 million alongside a 9.2% drop in adjusted EBITDA. Chemed ended the quarter with $222.9 million in cash and no debt. Additionally, the company repurchased 100,000 shares worth $55.8 million. Guidance for 2024 has been revised upward, anticipating VITAS revenue to grow by 16.3%-17.3% and Roto-Rooter revenue to decline by 4.0%-5.0%. Full-year EPS is projected to range between $23.55 and $23.80.

Positive

• Revenue increased by 7.6% to $595.9 million.
• GAAP diluted EPS rose 32.5% to $4.65.
• Adjusted diluted EPS increased 34.1% to $5.47.
• VITAS segment revenue grew 16.7% to $374.6 million.
• VITAS' acquisition of Covenant Health contributed $8.2-$8.7 million in revenue.
• Chemed repurchased $55.8 million worth of shares.
• Upward revision to 2024 guidance, projecting VITAS revenue growth of 16.3%-17.3%.

Negative

• Roto-Rooter segment revenue decreased by 5.0% to $221.3 million.
• Roto-Rooter adjusted EBITDA fell by 9.2%.
• Roto-Rooter adjusted EBITDA margin declined by 126-basis points.

Insights

Financial Analyst

Chemed 's Q2 2024 results show a strong performance, particularly in its VITAS Healthcare segment. Revenue increased by 7.6% to $595.9 million, with GAAP Diluted EPS rising 32.5% to $4.65 and Adjusted Diluted EPS up 34.1% to $5.47.

The VITAS segment, which provides end-of-life care, demonstrated remarkable growth. Net Patient Revenue increased by 16.7% to $374.6 million, driven by a 14.4% increase in Average Daily Census and a 2.5% rise in Medicare reimbursement rates. The segment's Adjusted EBITDA, excluding Medicare Cap, grew by an impressive 77% to $67 million, with margins expanding by 613 basis points to 17.8%.

However, the Roto-Rooter segment faced challenges, with revenue declining by 5% to $221.3 million. This was primarily due to decreases in both commercial and residential services. Despite this, the segment maintained a solid Adjusted EBITDA margin of 27%.

Chemed's financial position remains strong, with $222.9 million in cash and no debt. The company's share repurchase program continues, with 100,000 shares bought back for $55.8 million during the quarter.

Based on these results, Chemed has revised its 2024 guidance upward, now expecting full-year adjusted diluted EPS between $23.55 and $23.80, up from the previous range of $23.30 to $23.70. This positive outlook is primarily driven by the strong performance of the VITAS segment.

Healthcare Industry Analyst

The Q2 2024 results for Chemed highlight significant growth in its hospice care division, VITAS Healthcare. The 16.7% increase in Net Patient Revenue and 14.4% rise in Average Daily Census indicate robust demand for end-of-life care services. This growth may be attributed to an aging population and increased awareness of hospice care benefits.

The acquisition of Covenant Health's hospice assets in April 2024 has contributed positively to VITAS' performance, adding between $8.2 million and $8.7 million in revenue for the quarter. This strategic move has expanded VITAS' presence in Florida and is expected to contribute $30 million to $32 million in full-year revenue.

The improvement in VITAS' Adjusted EBITDA margin, excluding Medicare Cap, from 11.67% to 17.8% year-over-year is noteworthy. This significant margin expansion suggests effective cost management and operational efficiencies, even as the company grows its patient base.

However, it's important to note the ongoing impact of Medicare Cap billing limitations. While the accrual has decreased from $2.8 million in Q2 2023 to $1.4 million in Q2 2024, one provider number still faces a substantial $7.5 million trailing 12-month Medicare Cap billing limitation. This highlights the ongoing challenge of managing reimbursement caps in the hospice industry.

The award of a Certificate of Need for Pasco County, Florida, represents a new growth opportunity for VITAS, potentially leading to further market expansion in the future.

Market Strategist

Chemed 's Q2 2024 results present a mixed picture, with strong performance in its VITAS Healthcare segment offsetting challenges in the Roto-Rooter business. This dichotomy reflects broader economic trends and sector-specific dynamics.

The hospice care sector, represented by VITAS, is showing robust growth, likely driven by demographic trends and increased acceptance of end-of-life care services. The 16.7% revenue growth and 14.4% increase in Average Daily Census suggest a expanding market opportunity. The strategic acquisition of Covenant Health's assets further strengthens VITAS' market position and contributes to its growth trajectory.

Conversely, the Roto-Rooter segment's 5% revenue decline may be indicative of broader economic pressures affecting discretionary spending on home services. The decrease in both commercial (8.2%) and residential (1.6%) revenues suggests a softening demand across customer segments.

Despite these challenges, Chemed's overall financial health remains strong, with no debt and a substantial cash position of $222.9 million. The company's continued share repurchase program, buying back 100,000 shares for $55.8 million, demonstrates confidence in its long-term prospects and commitment to shareholder value.

The upward revision of full-year guidance, with adjusted diluted EPS now expected between $23.55 and $23.80, reflects management's optimism about the company's overall performance, particularly driven by the VITAS segment. This positive outlook, despite challenges in the Roto-Rooter business, suggests that Chemed's diversified business model is providing resilience in a complex economic environment.

CINCINNATI--(BUSINESS WIRE)-- Chemed Corporation (Chemed) (NYSE: CHE), which operates VITAS Healthcare Corporation (VITAS), one of the nation’s largest providers of end-of-life care, and Roto-Rooter, the nation’s largest commercial and residential plumbing and drain cleaning services provider, reported financial results for its second quarter ended June 30, 2024, versus the comparable prior-year period.

Changes to Non-GAAP Metrics

Chemed uses certain non-GAAP metrics such as EBITDA, adjusted EBITDA, adjusted net income and adjusted diluted earnings per share, to provide additional context and perspective to reported operational results.

Chemed’s previously reported non-GAAP metrics during the four sequential quarters from September 30, 2022 through June 30, 2023 excluded the 12-month pandemic-related licensed healthcare professional retention bonus (Retention Program). Starting with the quarter-ended September 30, 2023, the Company no longer excludes the cost of the Retention Program when presenting non-GAAP operating metrics in current or prior periods.

For the quarter-ended June 30, 2023, the pretax and after-tax Retention Program expense was $12.8 million and $9.7 million, respectively. For the six-months ended June 30, 2023, the pretax and after-tax Retention Program expense was $23.7 million and $18.0 million, respectively. There was no material impact on financial results for the quarter or six months-ended June 30, 2024 as a result of the Retention Program.

Results for Quarter Ended June 30, 2024

Consolidated operating results:

• Revenue increased 7.6% to $595.9 million
• GAAP Diluted Earnings-per-Share (EPS) of $4.65, an increase of 32.5%
• Adjusted Diluted EPS of $5.47, an increase of 34.1%

VITAS segment operating results:

• Net Patient Revenue of $374.6 million, an increase of 16.7%
• Average Daily Census (ADC) of 21,036, an increase of 14.4%
• Admissions of 17,334, an increase of 11.0%
• Net Income, excluding certain discrete items, of $49.9 million, an increase of 91.1%
• Adjusted EBITDA, excluding Medicare Cap, of $67.0 million, an increase of 77.0%
• Adjusted EBITDA margin, excluding Medicare Cap, of 17.8%, an increase of 613-basis points

Roto-Rooter segment operating results:

• Revenue of $221.3 million, a decrease of 5.0%
• Net Income, excluding certain discrete items, of $42.4 million, a decrease of 8.1%
• Adjusted EBITDA of $59.8 million, a decline of 9.2%
• Adjusted EBITDA margin of 27.0%, a decline of 126-basis points

VITAS

As previously announced, VITAS completed its acquisition of the hospice assets and an assisted living facility of Covenant Health and Community Services, Inc. (Covenant Health) on April 17, 2024 for $85.0 million in cash. Before presenting VITAS’ overall results, it is important to disclose the methodology used in determining the impact of Covenant Health’s acquisition on VITAS’ overall results. VITAS had significant operations in 2 of the 3 Florida locations we acquired from Covenant Health. Those locations require that we estimate the Covenant Health impact, as once the operations are integrated, there are not separate results. For instance, there are no VITAS-specific referral sources versus Covenant Health-specific referral sources in these locations. It is very likely that referral sources in the area have historically referred to both VITAS and Covenant Health. We have used historical operating trends in these locations to determine what is “legacy” VITAS activity. All activity above those historical operating trends have been attributed as the Covenant Health impact. We have included the specifically determined impact as it relates to new operating territories acquired. Based on the above, we discuss the range of impact that Covenant had on the overall VITAS operating metrics.

Covenant Health contributed $8.2 million to $8.7 million of revenue in the second quarter of 2024. This revenue translated to net income of approximately $1.6 million to $1.8 million. Adjusted EBITDA in the quarter attributed to Covenant Health is between $2.2 million and $2.4 million.

VITAS net revenue was $374.6 million in the second quarter of 2024, which is an increase of 16.7% when compared to the prior-year period. This revenue increase is comprised primarily of a 14.4% increase in days-of-care and a geographically weighted average Medicare reimbursement rate increase of approximately 2.5%. Acuity mix shift negatively impacted revenue growth 112-basis points in the quarter when compared to the prior-year period’s revenue and level-of-care mix. The combination of Medicare Cap and other contra revenue changes increased revenue growth by approximately 92-basis points.

In the second quarter of 2024, VITAS accrued $1.4 million in Medicare Cap billing limitations which includes a $1.0 million reversal of prior period accruals. This compares to a $2.8 million Medicare Cap billing limitation in the second quarter of 2023.

Of VITAS’ 32 Medicare provider numbers, 28 provider numbers have a trailing 12-month Medicare Cap cushion of 10% or greater, three provider numbers have a cushion between 0% and 10%, and one provider number has a trailing 12-month Medicare Cap billing limitation totaling $7.5 million.

Average revenue per patient per day in the second quarter of 2024 was $200.03 which is 153-basis points above the prior-year period. Reimbursement for routine home care and high acuity care averaged $176.73 and $1,071.65, respectively. During the quarter, high acuity days-of-care were 2.6% of total days of care, a decline of 21-basis points when compared to the prior-year quarter.

The second quarter 2024 gross margin, excluding Medicare Cap, was 24.1%. This compares to the prior year quarter’s gross margin of 18.7%, excluding Medicare Cap. Approximately 397-basis points of this difference is attributable to the expense associated with the Retention Program. Selling, general and administrative expenses were $24.3 million in the second quarter of 2024 compared to $22.7 million in the prior-year quarter.

Adjusted EBITDA, excluding Medicare Cap, totaled $67.0 million in the quarter, an increase of 77.0%. Adjusted EBITDA margin in the quarter, excluding Medicare Cap, was 17.8%, which is 613-basis points above the prior-year period. Approximately 397-basis points of this difference is attributable to the expense associated with the Retention Program in 2023.

In the second quarter of 2024, VITAS was awarded a Certificate of Need to begin hospice operations in Pasco County, Florida. This represents a new operating territory for VITAS.

Roto-Rooter

Roto-Rooter generated quarterly revenue of $221.3 million in the second quarter of 2024, a decrease of 5.0%, when compared to the prior-year quarter.

Roto-Rooter branch commercial revenue in the quarter totaled $50.9 million, a decrease of 8.2% from the prior-year period. This aggregate commercial revenue decline consisted of drain cleaning revenue declining 6.4%, plumbing declining 10.4%, excavation declining 11.1%, and water restoration declining 8.8%.

Roto-Rooter branch residential revenue in the quarter totaled $155.0 million, a decrease of 1.6%, over the prior-year period. This aggregate residential revenue decline consisted of drain cleaning decreasing 2.6%, plumbing decreasing 3.3%, excavation declining 1.0%, and water restoration decreasing 4.6%.

Roto-Rooter’s gross margin in the quarter was 52.9%, a 60-basis point improvement when compared to the second quarter of 2023. Adjusted EBITDA in the second quarter of 2024 totaled $59.8 million, a decrease of 9.2%. The Adjusted EBITDA margin in the quarter was 27.0%. The second quarter Adjusted EBITDA margin represents a 120-basis point sequential improvement from the first quarter of 2024 based mainly on lower internet marketing costs.

Chemed Consolidated

As of June 30, 2024, Chemed had total cash and cash equivalents of $222.9 million and no current or long-term debt.

In June 2022, Chemed entered into a five-year $550 million Amended and Restated Credit Agreement (Credit Agreement). This Credit Agreement consisted of a $100 million amortizable term loan and a $450 million revolving credit facility. The interest rate on this Credit Agreement has a floating rate that is currently SOFR plus 100-basis points. There is approximately $404.8 million of undrawn borrowing capacity under the Credit Agreement after excluding $45.2 million for Letters of Credit.

During the quarter, the Company repurchased 100,000 shares of Chemed stock for $55.8 million which equates to a cost per share of $557.68. As of June 30, 2024, there was approximately $225.9 million of remaining share repurchase authorization under its plan.

Upward Revision to Guidance for 2024

VITAS 2024 revenue, prior to Medicare Cap, is estimated to increase 16.3% to 17.3% when compared to 2023. ADC is estimated to increase 13.3% to 14.4%. Full year adjusted EBITDA margin, prior to Medicare Cap, is estimated to be 19.3% to 19.7%. We are currently estimating $8.5 million in Medicare Cap billing limitations in calendar 2024. The cost of the retention program negatively impacted VITAS’ 2023 full year adjusted EBITDA by 159 basis points.

Covenant Health is estimated to contribute approximately $30 million to $32 million of revenue to VITAS’ full year revenue. There is no estimated Medicare Cap billing limitation expected related to Covenant Health. This translates into adjusted net income attributable to Covenant Health of $5.5 million to $6.0 million and adjusted EBITDA of $8.0 million to $8.5 million.

Roto-Rooter is forecasted to have a 4.0% to 5.0% revenue decline in 2024 compared to 2023. Roto-Rooter’s adjusted EBITDA margin for 2024 is expected to be 26.5% to 27.0%.

Based on the above, full-year 2024 earnings per diluted share, excluding non-cash expense for stock options, tax benefits from stock option exercises, costs related to litigation and other discrete items, is estimated to be in the range of $23.55 to $23.80. This guidance assumes an effective corporate tax rate on adjusted earnings of 24.3% and a diluted share count of 15.25 million shares. Chemed’s previously issued 2024 guidance range was $23.30 to $23.70. Chemed’s 2023 reported adjusted earnings per diluted share was $20.30.

Conference Call

As previously disclosed, Chemed will host a conference call and webcast at 10 a.m., ET, on Thursday July 25, 2024, to discuss the company's quarterly results and to provide an update on its business. Participants may access a live webcast of the conference call through the investor relations section of Chemed’s website, Investor Relations Home | Chemed Corporation or the hosting website https://edge.media-server.com/mmc/p/unbdyk8k.

Participants may also register via teleconference at: https://register.vevent.com/register/BI1a861ca332ea4e9bbf8c4d66fe30ff51.

Once registration is completed, participants will be provided with a dial-in number containing a personalized conference code to access the call. All participants are instructed to dial-in 15 minutes prior to the start time.

A taped replay of the conference call will be available beginning approximately two hours after the call's conclusion. You may access the replay via webcast through the investor relations section of Chemed’s website.

Chemed Corporation operates in the healthcare field through its VITAS Healthcare Corporation subsidiary. VITAS provides daily hospice services to patients with severe, life-limiting illnesses. This type of care is focused on making the terminally ill patient's final days as comfortable and pain-free as possible.

Chemed operates in the residential and commercial plumbing and drain cleaning industry under the brand name Roto-Rooter. Roto-Rooter provides plumbing, drain cleaning, and water cleanup services through company-owned branches, independent contractors and franchisees in the United States and Canada. Roto-Rooter also has licensed master franchisees in the republics of Indonesia and Singapore, and the Philippines.

This press release contains information about Chemed’s EBITDA, Adjusted EBITDA and Adjusted Diluted EPS, which are not measures derived in accordance with GAAP and which exclude components that are important to understanding Chemed’s financial performance. In reporting its operating results, Chemed provides EBITDA, Adjusted EBITDA and Adjusted Diluted EPS measures to help investors and others evaluate the Company’s operating results, compare its operating performance with that of similar companies that have different capital structures and evaluate its ability to meet its future debt service, capital expenditures and working capital requirements. Chemed’s management similarly uses EBITDA, Adjusted EBITDA and Adjusted Diluted EPS to assist it in evaluating the performance of the Company across fiscal periods and in assessing how its performance compares to its peer companies. These measures also help Chemed’s management to estimate the resources required to meet Chemed’s future financial obligations and expenditures. Chemed’s EBITDA, Adjusted EBITDA and Adjusted Diluted EPS should not be considered in isolation or as a substitute for comparable measures calculated and presented in accordance with GAAP. We calculated Adjusted EBITDA Margin by dividing Adjusted EBITDA by service revenue and sales. A reconciliation of Chemed’s net income to its EBITDA, Adjusted EBITDA and Adjusted Diluted EPS is presented in the tables following the text of this press release.

Forward-Looking Statements

Certain statements contained in this press release and the accompanying tables are "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. The words "believe," "expect," "hope," "anticipate," "plan" and similar expressions identify forward-looking statements, which speak only as of the date the statement was made. Chemed does not undertake and specifically disclaims any obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. These statements are based on current expectations and assumptions and involve various risks and uncertainties, which could cause Chemed's actual results to differ from those expressed in such forward-looking statements.

These risks and uncertainties arise from, among other things, possible changes in regulations governing the hospice care or plumbing and drain cleaning industries; periodic changes in reimbursement levels and procedures under Medicare and Medicaid programs; difficulties predicting patient length of stay and estimating potential Medicare reimbursement obligations; challenges inherent in Chemed's growth strategy; the current shortage of qualified nurses, other healthcare professionals and licensed plumbing and drain cleaning technicians; Chemed’s dependence on patient referral sources; and other factors detailed under the caption "Description of Business by Segment" or "Risk Factors" in Chemed’s most recent report on form 10-Q or 10-K and its other filings with the Securities and Exchange Commission. You are cautioned not to place undue reliance on such forward-looking statements and there are no assurances that the matters contained in such statements will be achieved.

CHEMED CORPORATION AND SUBSIDIARY COMPANIES
CONSOLIDATED STATEMENTS OF INCOME
(in thousands, except per share data)(unaudited)
		Three Months Ended June 30,								Six Months Ended June 30,
		2024				2023				2024				2023
Service revenues and sales		$	595,880			$	553,816			$	1,185,113			$	1,113,973
Cost of services provided and goods sold			389,750				374,193				774,877				744,898
Selling, general and administrative expenses (aa)			102,255				94,987				218,128				195,082
Depreciation			13,167				12,634				26,454				24,920
Amortization			2,546				2,514				5,067				5,027
Other operating expense/(income)			37				(18	)			129				1,721
Total costs and expenses			507,755				484,310				1,024,655				971,648
Income from operations			88,125				69,506				160,458				142,325
Interest expense			(429	)			(771	)			(854	)			(2,322	)
Other income--net (bb)			6,132				1,609				18,709				1,506
Income before income taxes			93,828				70,344				178,313				141,509
Income taxes			(22,941	)			(16,967	)			(42,409	)			(34,011	)
Net income		$	70,887			$	53,377			$	135,904			$	107,498
Earnings Per Share
Net income		$	4.70			$	3.54			$	8.99			$	7.16
Average number of shares outstanding			15,097				15,058				15,109				15,013
Diluted Earnings Per Share
Net income		$	4.65			$	3.51			$	8.89			$	7.09
Average number of shares outstanding			15,251				15,219				15,295				15,167
(aa) Selling, general and administrative ("SG&A") expenses comprise (in thousands):
		Three Months Ended June 30,								Six Months Ended June 30,
		2024				2023				2024				2023
SG&A expenses before long-term incentive compensation
and the impact of market value adjustments related to
deferred compensation plans		$	96,025			$	91,733			$	194,443			$	189,634
Long-term incentive compensation			3,593				1,750				12,714				4,264
Market value adjustments related to deferred
compensation trusts			2,637				1,504				10,971				1,184
Total SG&A expenses		$	102,255			$	94,987			$	218,128			$	195,082
(bb) Other income--net comprises (in thousands):
		Three Months Ended June 30,								Six Months Ended June 30,
		2024				2023				2024				2023
Market value adjustments related to deferred
compensation trusts		$	2,637			$	1,504			$	10,971			$	1,184
Interest income			3,495				113				7,737				263
Other			-				(8	)			1				59
Total other income--net		$	6,132			$	1,609			$	18,709			$	1,506

CHEMED CORPORATION AND SUBSIDIARY COMPANIES
CONSOLIDATED BALANCE SHEETS
(in thousands, except per share data)(unaudited)
		June 30,
		2024				2023
Assets
Current assets
Cash and cash equivalents		$	222,903			$	159,924
Accounts receivable less allowances			184,961				120,314
Inventories			10,735				11,684
Prepaid income taxes			17,084				16,666
Prepaid expenses			28,929				28,572
Total current assets			464,612				337,160
Investments of deferred compensation plans held in trust			120,784				99,522
Properties and equipment, at cost less accumulated depreciation			202,249				208,101
Lease right of use asset			132,262				127,215
Identifiable intangible assets less accumulated amortization			97,035				94,932
Goodwill			662,124				581,542
Other assets			55,918				56,708
Total Assets		$	1,734,984			$	1,505,180
Liabilities
Current liabilities
Accounts payable		$	43,001			$	41,058
Accrued insurance			59,899				57,461
Accrued compensation			78,374				74,384
Short-term lease liability			41,169				38,779
Other current liabilities			39,310				90,805
Total current liabilities			261,753				302,487
Deferred income taxes			27,901				36,681
Deferred compensation liabilities			119,780				98,941
Long-term lease liability			105,233				102,112
Other liabilities			13,020				12,880
Total Liabilities			527,687				553,101
Stockholders' Equity
Capital stock			37,313				36,996
Paid-in capital			1,416,166				1,240,415
Retained earnings			2,570,722				2,294,004
Treasury stock, at cost			(2,819,053	)			(2,621,657	)
Deferred compensation payable in Company stock			2,149				2,321
Total Stockholders' Equity			1,207,297				952,079
Total Liabilities and Stockholders' Equity		$	1,734,984			$	1,505,180

CHEMED CORPORATION AND SUBSIDIARY COMPANIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)(unaudited)
		Six Months Ended June 30,
		2024				2023
Cash Flows from Operating Activities
Net income		$	135,904			$	107,498
Adjustments to reconcile net income to net cash provided
by operating activities:
Depreciation and amortization			31,521				29,947
Stock option expense			17,895				16,882
Noncash long-term incentive compensation			12,699				3,493
Litigation settlements			(5,750	)			1,750
Benefit for deferred income taxes			(2,420	)			(1,932	)
Noncash directors' compensation			1,282				1,444
Amortization of debt issuance costs			160				420
Changes in operating assets and liabilities, excluding
amounts acquired in business combinations:
(Increase)/decrease in accounts receivable			(2,422	)			20,100
Decrease/(increase) in inventories			1,289				(1,412	)
Decrease in prepaid expenses			1,275				1,719
(Decrease)/increase in accounts payable and
other current liabilities			(19,499	)			8,561
Change in current income taxes			(10,776	)			1,865
Net change in lease assets and liabilities			(109	)			(1,046	)
Increase in other assets			(15,365	)			(3,810	)
Increase in other liabilities			15,730				7,344
Other sources/(uses)			652				(14	)
Net cash provided by operating activities			162,066				192,809
Cash Flows from Investing Activities
Business combinations, net of cash acquired			(92,300	)			(305	)
Capital expenditures			(23,225	)			(33,420	)
Proceeds from sale of fixed assets			2,916				360
Other uses			(265	)			(169	)
Net cash used by investing activities			(112,874	)			(33,534	)
Cash Flows from Financing Activities
Purchases of treasury stock			(94,228	)			(13,425	)
Proceeds from exercise of stock options			38,594				53,675
Dividends paid			(12,107	)			(11,412	)
Change in cash overdrafts payable			(15,749	)			-
Capital stock surrendered to pay taxes on stock-based compensation			(5,960	)			(5,313	)
Payments on long-term debt			-				(97,500	)
Other (uses)/sources			(797	)			498
Net cash used by financing activities			(90,247	)			(73,477	)
(Decrease)/increase in Cash and Cash Equivalents			(41,055	)			85,798
Cash and cash equivalents at beginning of year			263,958				74,126
Cash and cash equivalents at end of year		$	222,903			$	159,924

CHEMED CORPORATION AND SUBSIDIARY COMPANIES
CONSOLIDATING STATEMENTS OF INCOME
FOR THE THREE MONTHS ENDED JUNE 30, 2024 AND 2023
(in thousands)(unaudited)
														Chemed
		VITAS				Roto-Rooter				Corporate				Consolidated
2024 (a)
Service revenues and sales		$	374,558			$	221,322			$	-			$	595,880
Cost of services provided and goods sold			285,517				104,233				-				389,750
Selling, general and administrative expenses			24,293				57,351				20,611				102,255
Depreciation			5,058				8,096				13				13,167
Amortization			26				2,520				-				2,546
Other operating expense/(income)			56				(19	)			-				37
Total costs and expenses			314,950				172,181				20,624				507,755
Income/(loss) from operations			59,608				49,141				(20,624	)			88,125
Interest expense			(46	)			(118	)			(265	)			(429	)
Intercompany interest income/(expense)			4,982				3,540				(8,522	)			-
Other income—net			46				24				6,062				6,132
Income/(loss) before income taxes			64,590				52,587				(23,349	)			93,828
Income taxes			(15,338	)			(12,070	)			4,467				(22,941	)
Net income/(loss)		$	49,252			$	40,517			$	(18,882	)		$	70,887
2023 (b)
Service revenues and sales		$	320,861			$	232,955			$	-			$	553,816
Cost of services provided and goods sold			263,085				111,108				-				374,193
Selling, general and administrative expenses			22,656				56,012				16,319				94,987
Depreciation			4,940				7,681				13				12,634
Amortization			26				2,488				-				2,514
Other operating expense/(income)			26				(44	)			-				(18	)
Total costs and expenses			290,733				177,245				16,332				484,310
Income/(loss) from operations			30,128				55,710				(16,332	)			69,506
Interest expense			(51	)			(124	)			(596	)			(771	)
Intercompany interest income/(expense)			4,810				2,869				(7,679	)			-
Other income—net			70				35				1,504				1,609
Income/(loss) before income taxes			34,957				58,490				(23,103	)			70,344
Income taxes			(8,829	)			(14,116	)			5,978				(16,967	)
Net income/(loss)		$	26,128			$	44,374			$	(17,125	)		$	53,377
The "Footnotes to Financial Statements" are integral parts of this financial information.

CHEMED CORPORATION AND SUBSIDIARY COMPANIES
CONSOLIDATING STATEMENTS OF INCOME
FOR THE SIX MONTHS ENDED JUNE 30, 2024 AND 2023
(in thousands)(unaudited)
														Chemed
		VITAS				Roto-Rooter				Corporate				Consolidated
2024 (a)
Service revenues and sales		$	728,564			$	456,549			$	-			$	1,185,113
Cost of services provided and goods sold			557,411				217,466				-				774,877
Selling, general and administrative expenses			48,085				118,611				51,432				218,128
Depreciation			10,225				16,204				25				26,454
Amortization			52				5,015				-				5,067
Other operating expense			63				66				-				129
Total costs and expenses			615,836				357,362				51,457				1,024,655
Income/(loss) from operations			112,728				99,187				(51,457	)			160,458
Interest expense			(92	)			(235	)			(527	)			(854	)
Intercompany interest income/(expense)			10,176				6,982				(17,158	)			-
Other income—net			75				47				18,587				18,709
Income/(loss) before income taxes			122,887				105,981				(50,555	)			178,313
Income taxes			(29,666	)			(24,610	)			11,867				(42,409	)
Net income/(loss)		$	93,221			$	81,371			$	(38,688	)		$	135,904
2023 (b)
Service revenues and sales		$	631,339			$	482,634			$	-			$	1,113,973
Cost of services provided and goods sold			516,739				228,159				-				744,898
Selling, general and administrative expenses			45,992				116,825				32,265				195,082
Depreciation			9,898				14,994				28				24,920
Amortization			52				4,975				-				5,027
Other operating expense			38				1,683				-				1,721
Total costs and expenses			572,719				366,636				32,293				971,648
Income/(loss) from operations			58,620				115,998				(32,293	)			142,325
Interest expense			(102	)			(257	)			(1,963	)			(2,322	)
Intercompany interest income/(expense)			9,458				5,612				(15,070	)			-
Other income—net			259				64				1,183				1,506
Income/(loss) before income taxes			68,235				121,417				(48,143	)			141,509
Income taxes			(17,343	)			(29,390	)			12,722				(34,011	)
Net income/(loss)		$	50,892			$	92,027			$	(35,421	)		$	107,498
The "Footnotes to Financial Statements" are integral parts of this financial information.

CHEMED CORPORATION AND SUBSIDIARY COMPANIES
CONSOLIDATING SUMMARIES OF EBITDA
FOR THE THREE MONTHS ENDED JUNE 30, 2024 AND 2023
(in thousands)(unaudited)
														Chemed
		VITAS				Roto-Rooter				Corporate				Consolidated
2024
Net income/(loss)		$	49,252			$	40,517			$	(18,882	)		$	70,887
Add/(deduct):
Interest expense			46				118				265				429
Income taxes			15,338				12,070				(4,467	)			22,941
Depreciation			5,058				8,096				13				13,167
Amortization			26				2,520				-				2,546
EBITDA			69,720				63,321				(23,071	)			109,970
Add/(deduct):
Intercompany interest expense/(income)			(4,982	)			(3,540	)			8,522				-
Interest income			(45	)			(25	)			(3,425	)			(3,495	)
Stock option expense			-				-				8,870				8,870
Long-term incentive compensation			-				-				3,593				3,593
Acquisition expense			907				45				-				952
Adjusted EBITDA		$	65,600			$	59,801			$	(5,511	)		$	119,890
2023
Net income/(loss)		$	26,128			$	44,374			$	(17,125	)		$	53,377
Add/(deduct):
Interest expense			51				124				596				771
Income taxes			8,829				14,116				(5,978	)			16,967
Depreciation			4,940				7,681				13				12,634
Amortization			26				2,488				-				2,514
EBITDA			39,974				68,783				(22,494	)			86,263
Add/(deduct):
Intercompany interest expense/(income)			(4,810	)			(2,869	)			7,679				-
Interest income			(79	)			(34	)			-				(113	)
Stock option expense			-				-				8,400				8,400
Long-term incentive compensation			-				-				1,750				1,750
Adjusted EBITDA		$	35,085			$	65,880			$	(4,665	)		$	96,300
The "Footnotes to Financial Statements" are integral parts of this financial information.

CHEMED CORPORATION AND SUBSIDIARY COMPANIES
CONSOLIDATING SUMMARIES OF EBITDA
FOR THE SIX MONTHS ENDED JUNE 30, 2024 AND 2023
(in thousands)(unaudited)
														Chemed
		VITAS				Roto-Rooter				Corporate				Consolidated
2024
Net income/(loss)		$	93,221			$	81,371			$	(38,688	)		$	135,904
Add/(deduct):
Interest expense			92				235				527				854
Income taxes			29,666				24,610				(11,867	)			42,409
Depreciation			10,225				16,204				25				26,454
Amortization			52				5,015				-				5,067
EBITDA			133,256				127,435				(50,003	)			210,688
Add/(deduct):
Intercompany interest expense/(income)			(10,176	)			(6,982	)			17,158				-
Interest income			(75	)			(47	)			(7,615	)			(7,737	)
Stock option expense			-				-				17,895				17,895
Long-term incentive compensation			-				-				7,377				7,377
Severance arrangement			-				-				5,337				5,337
Acquisition expense			907				45				-				952
Adjusted EBITDA		$	123,912			$	120,451			$	(9,851	)		$	234,512
2023
Net income/(loss)		$	50,892			$	92,027			$	(35,421	)		$	107,498
Add/(deduct):
Interest expense			102				257				1,963				2,322
Income taxes			17,343				29,390				(12,722	)			34,011
Depreciation			9,898				14,994				28				24,920
Amortization			52				4,975				-				5,027
EBITDA			78,287				141,643				(46,152	)			173,778
Add/(deduct):
Intercompany interest expense/(income)			(9,458	)			(5,612	)			15,070				-
Interest income			(199	)			(64	)			-				(263	)
Stock option expense			-				-				16,882				16,882
Long-term incentive compensation			-				-				4,264				4,264
Litigation settlements			-				1,756				-				1,756
Adjusted EBITDA		$	68,630			$	137,723			$	(9,936	)		$	196,417
The "Footnotes to Financial Statements" are integral parts of this financial information.

CHEMED CORPORATION AND SUBSIDIARY COMPANIES
RECONCILIATION OF ADJUSTED NET INCOME
(in thousands, except per share data)(unaudited)
		Three Months Ended June 30,								Six Months Ended June 30,
		2024				2023				2024				2023
Net income as reported		$	70,887			$	53,377			$	135,904			$	107,498
Add/(deduct) pre-tax cost of:
Stock option expense			8,870				8,400				17,895				16,882
Long-term incentive compensation			3,593				1,750				7,377				4,264
Severance arrangement			-				-				5,337				-
Amortization of reacquired franchise agreements			2,352				2,352				4,704				4,704
Acquisition expense			952				-				952				-
Litigation settlement			-				-				-				1,756
Add/(deduct) tax impacts:
Tax impact of the above pre-tax adjustments (1)			(2,613	)			(2,266	)			(5,000	)			(5,118	)
Excess tax benefits on stock compensation			(622	)			(1,501	)			(3,919	)			(3,150	)
Adjusted net income		$	83,419			$	62,112			$	163,250			$	126,836
Diluted Earnings Per Share As Reported
Net income		$	4.65			$	3.51			$	8.89			$	7.09
Average number of shares outstanding			15,251				15,219				15,295				15,167
Adjusted Diluted Earnings Per Share
Adjusted net income		$	5.47			$	4.08			$	10.67			$	8.36
Average number of shares outstanding			15,251				15,219				15,295				15,167
(1) The tax impact of pre-tax adjustments was calculated using the effective tax rate of the operating unit for which each adjustment is associated.
The "Footnotes to Financial Statements" are integral parts of this financial information.

CHEMED CORPORATION AND SUBSIDIARY COMPANIES
OPERATING STATISTICS FOR VITAS SEGMENT
(unaudited)
	Three Months Ended June 30,									Six Months Ended June 30,
OPERATING STATISTICS	2024				2023					2024				2023
Net revenue ($000) (c)
Homecare	$	324,778			$	278,116				$	629,637			$	545,166
Inpatient		29,071				27,401					59,374				56,494
Continuous care		24,327				21,081					48,497				41,022
Other		4,733				3,154					8,817				6,175
Subtotal	$	382,909			$	329,752				$	746,325			$	648,857
Room and board, net		(3,156	)			(2,904	)				(6,101	)			(5,672	)
Contractual allowances		(3,820	)			(3,237	)				(7,910	)			(6,346	)
Medicare cap allowance		(1,375	)			(2,750	)				(3,750	)			(5,500	)
Net Revenue	$	374,558			$	320,861				$	728,564			$	631,339
Net revenue as a percent of total before Medicare cap allowance
Homecare		84.8		%		84.3		%			84.4		%		84.0		%
Inpatient		7.6				8.3					8.0				8.7
Continuous care		6.4				6.4					6.5				6.3
Other		1.2				1.0					1.1				1.0
Subtotal		100.0				100.0					100.0				100.0
Room and board, net		(0.8	)			(0.8	)				(0.8	)			(0.9	)
Contractual allowances		(1.0	)			(1.0	)				(1.1	)			(1.0	)
Medicare cap allowance		(0.4	)			(0.8	)				(0.5	)			(0.8	)
Net Revenue		97.8		%		97.4		%			97.6		%		97.3		%
Days of care
Homecare		1,551,163				1,340,655					2,999,075				2,627,092
Nursing home		304,191				279,898					587,349				545,327
Respite		9,102				6,159					16,854				11,919
Subtotal routine homecare and respite		1,864,456				1,626,712					3,603,278				3,184,338
Inpatient		25,895				25,125					52,540				51,494
Continuous care		23,933				21,873					47,970				42,559
Total		1,914,284				1,673,710					3,703,788				3,278,391
Number of days in relevant time period		91				91					182				181
Average daily census ("ADC") (days)
Homecare		17,046				14,732					16,478				14,514
Nursing home		3,343				3,076					3,227				3,013
Respite		100				68					93				66
Subtotal routine homecare and respite		20,489				17,876					19,798				17,593
Inpatient		284				276					288				286
Continuous care		263				240					264				235
Total		21,036				18,392					20,350				18,114
Total Admissions		17,334				15,611					34,245				31,790
Total Discharges		15,898				15,104					32,068				30,509
Average length of stay (days)		100.6				99.5					102.2				99.7
Median length of stay (days)		18.0				16.0					17.0				15.0
ADC by major diagnosis
Cerebro		42.5		%		41.9		%			43.4		%		42.0		%
Neurological		13.3				18.8					13.4				19.0
Cancer		10.0				10.8					10.0				10.6
Cardio		16.2				16.1					16.2				16.0
Respiratory		7.3				7.1					7.3				7.2
Other		10.7				5.3					9.7				5.2
Total		100.0		%		100.0		%			100.0		%		100.0		%
Admissions by major diagnosis
Cerebro		27.1		%		25.9		%			27.4		%		26.2		%
Neurological		8.3				10.1					7.9				10.4
Cancer		25.0				27.1					24.8				25.9
Cardio		16.1				16.3					15.9				16.3
Respiratory		9.6				9.8					10.1				10.4
Other		13.9				10.8					13.9				10.8
Total		100.0		%		100.0		%			100.0		%		100.0		%
Estimated uncollectible accounts as a percent of revenues		1.0		%		1.0		%			1.1		%		1.0		%
Accounts receivable --
Days of revenue outstanding-excluding unapplied Medicare payments		38.8				35.2				n.a.				n.a.
Days of revenue outstanding-including unapplied Medicare payments		34.7				22.6				n.a.				n.a.
The "Footnotes to Financial Statements" are integral parts of this financial information.

CHEMED CORPORATION AND SUBSIDIARY COMPANIES
FOOTNOTES TO FINANCIAL STATEMENTS
FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2024 AND 2023
(unaudited)
(a)	Included in the results of operations for 2024 are the following significant credits/(charges) which may not be indicative of ongoing operations
	(in thousands):
			Three Months Ended June 30, 2024
			VITAS				Roto-Rooter				Corporate				Consolidated
	Stock option expense		$	-			$	-			$	(8,870	)		$	(8,870	)
	Long-term incentive compensation			-				-				(3,593	)			(3,593	)
	Amortization of reacquired franchise agreements			-				(2,352	)			-				(2,352	)
	Acquisition expense			(907	)			(45	)			-				(952	)
	Pretax impact on earnings			(907	)			(2,397	)			(12,463	)			(15,767	)
	Excess tax benefits on stock compensation			-				-				622				622
	Income tax benefit on the above			220				559				1,834				2,613
	After-tax impact on earnings		$	(687	)		$	(1,838	)		$	(10,007	)		$	(12,532	)
			Six Months Ended June 30, 2024
			VITAS				Roto-Rooter				Corporate				Consolidated
	Stock option expense		$	-			$	-			$	(17,895	)		$	(17,895	)
	Long-term incentive compensation			-				-				(7,377	)			(7,377	)
	Severance arrangement			-				-				(5,337	)			(5,337	)
	Amortization of reacquired franchise agreements			-				(4,704	)			-				(4,704	)
	Acquisition expense			(907	)			(45	)			-				(952	)
	Pretax impact on earnings			(907	)			(4,749	)			(30,609	)			(36,265	)
	Excess tax benefits on stock compensation			-				-				3,919				3,919
	Income tax benefit on the above			220				1,107				3,673				5,000
	After-tax impact on earnings		$	(687	)		$	(3,642	)		$	(23,017	)		$	(27,346	)
(b)	Included in the results of operations for 2023 are the following significant credits/(charges) which may not be indicative of ongoing operations
	(in thousands):
			Three Months Ended June 30, 2023
			VITAS				Roto-Rooter				Corporate				Consolidated
	Stock option expense		$	-			$	-			$	(8,400	)		$	(8,400	)
	Amortization of reacquired franchise agreements			-				(2,352	)			-				(2,352	)
	Long-term incentive compensation			-				-				(1,750	)			(1,750	)
	Pretax impact on earnings			-				(2,352	)			(10,150	)			(12,502	)
	Excess tax benefits on stock compensation			-				-				1,501				1,501
	Income tax benefit on the above			-				623				1,643				2,266
	After-tax impact on earnings		$	-			$	(1,729	)		$	(7,006	)		$	(8,735	)
			Six Months Ended June 30, 2023
			VITAS				Roto-Rooter				Corporate				Consolidated
	Stock option expense		$	-			$	-			$	(16,882	)		$	(16,882	)
	Amortization of reacquired franchise agreements			-				(4,704	)			-				(4,704	)
	Long-term incentive compensation			-				-				(4,264	)			(4,264	)
	Litigation settlements			-				(1,756	)			-				(1,756	)
	Pretax impact on earnings			-				(6,460	)			(21,146	)			(27,606	)
	Excess tax benefits on stock compensation			-				-				3,150				3,150
	Income tax benefit on the above			-				1,712				3,406				5,118
	After-tax impact on earnings		$	-			$	(4,748	)		$	(14,590	)		$	(19,338	)
(c)	VITAS has 10 large (greater than 450 ADC), 22 medium (greater than 200 but less than 450 ADC) and 21 small (less than 200 ADC) hospice programs. Of Vitas' 32 Medicare provider numbers, for the trailing 12 months, 28 provider numbers have a Medicare cap cushion of greater than 10%, one provider number has a Medicare cap cushion between 5% and 10%, two provider numbers has a Medicare cap cushion between 0% and 5%, and one provider number has a Medicare cap liability.

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20240724583414/en/

Michael D. Witzeman

(513) 762-6714

Source: Chemed Corporation

FAQ

What were Chemed's Q2 2024 earnings results?

Chemed's Q2 2024 revenue rose 7.6% to $595.9 million. GAAP diluted EPS increased 32.5% to $4.65, and adjusted diluted EPS grew 34.1% to $5.47.

How did VITAS perform in Q2 2024?

VITAS revenue grew 16.7% to $374.6 million, with a 14.4% increase in average daily census and 11.0% rise in admissions.

What was the impact of Covenant Health on Chemed's Q2 2024 results?

Covenant Health contributed $8.2-$8.7 million in revenue and $1.6-$1.8 million in net income to VITAS in Q2 2024.

How did Roto-Rooter perform in Q2 2024?

Roto-Rooter revenue decreased by 5.0% to $221.3 million, and its adjusted EBITDA fell by 9.2%.

What is Chemed's 2024 earnings guidance?

Chemed revised its 2024 EPS guidance to a range of $23.55 to $23.80, up from the previous range of $23.30 to $23.70.