On April 23, 2025, Chemed Corp (CHE, Financial) released its 8-K filing detailing the financial performance for the first quarter ended March 31, 2025. Chemed Corp, known for its subsidiaries VITAS Healthcare Corporation and Roto-Rooter, reported a revenue increase of 9.8% to $646.9 million, surpassing the analyst estimate of $641.78 million. However, the GAAP diluted earnings per share (EPS) of $4.86 fell short of the estimated EPS of $5.14. The adjusted diluted EPS of $5.63 exceeded expectations.
Company Overview
Chemed Corp (CHE, Financial) operates through its subsidiaries, VITAS Healthcare Corporation and Roto-Rooter. VITAS is a leading provider of hospice and palliative care services, generating the majority of the company's revenue. Roto-Rooter offers plumbing, drain cleaning, and water restoration services to both residential and commercial clients.
Performance and Challenges
The company's performance in the first quarter of 2025 highlights significant growth in revenue, driven by both the VITAS and Roto-Rooter segments. VITAS reported a net patient revenue increase of 15.1% to $407.4 million, supported by a 13.1% rise in the average daily census and a 7.3% increase in admissions. Roto-Rooter saw a modest revenue increase of 1.8% to $239.5 million, with notable growth in excavation and water restoration services.
Despite these achievements, Chemed faces challenges such as the decline in Roto-Rooter's gross margin from 51.9% to 50.9% and a decrease in adjusted EBITDA by 2.4% compared to the previous year. These challenges could impact the company's profitability and operational efficiency.
Financial Achievements
Chemed's financial achievements are crucial in the healthcare providers and services industry, where maintaining strong revenue growth and operational efficiency is vital. The company's ability to surpass revenue estimates demonstrates its resilience and adaptability in a competitive market. The adjusted EBITDA margin for VITAS, excluding Medicare Cap, increased to 17.2%, reflecting improved operational performance.
Key Financial Metrics
Chemed's consolidated financial position remains strong, with total cash and cash equivalents of $173.9 million and no current or long-term debt as of March 31, 2025. The company also repurchased 50,000 shares for $29.8 million, indicating a commitment to returning value to shareholders.
| Metric | Q1 2025 | Q1 2024 |
|---|---|---|
| Revenue | $646.9 million | Not provided |
| GAAP EPS | $4.86 | Not provided |
| Adjusted EPS | $5.63 | Not provided |
| VITAS Revenue | $407.4 million | Not provided |
| Roto-Rooter Revenue | $239.5 million | Not provided |
Analysis and Conclusion
Chemed Corp's first-quarter 2025 results reflect a robust revenue performance, particularly in the VITAS segment, which continues to drive the company's growth. However, the decline in Roto-Rooter's gross margin and adjusted EBITDA highlights areas for improvement. The company's strong cash position and lack of debt provide a solid foundation for future growth and strategic investments.
Overall, Chemed's ability to exceed revenue expectations while managing operational challenges positions it well in the healthcare providers and services industry. Investors and stakeholders will be keen to see how the company addresses its challenges and leverages its strengths in the coming quarters.
Explore the complete 8-K earnings release (here) from Chemed Corp for further details.
