Chemed - Earnings Call - Q4 2024
February 27, 2025
Executive Summary
- Consolidated Q4 2024 revenue rose 9.2% to $640.0M; GAAP diluted EPS was $6.02 and adjusted diluted EPS was $6.83, both up year over year; VITAS drove outperformance while Roto-Rooter was softer.
- VITAS net patient revenue grew 17.4% to $411.0M on 14.6% days-of-care growth and a 3.5% weighted average Medicare rate increase; adjusted EBITDA was $93.2M with a 22.5% margin, down 112 bps due to a one-time 2023 vacation policy tailwind.
- Roto-Rooter revenue declined 2.9% to $229.0M; adjusted EBITDA margin was 26.3% (-120 bps YoY); management sees momentum in commercial and expects stabilization in 2025 with residential demand uncertain.
- 2025 guidance: adjusted EPS $24.95–$25.45, VITAS revenue growth 10.5–11.3% (pre-cap) and ADC +8.5–9.0%; Roto-Rooter revenue +2.4–3.0%; guidance is weighted to the second half.
- Capital allocation: $212.8M buybacks in Q4 (388,235 shares at $548.13), cash $178.4M, no debt; dividend maintained at $0.50/share.
What Went Well and What Went Wrong
- What Went Well
- VITAS delivered robust volume growth: ADC 22,179 (+14.6% YoY) and admissions 16,427 (+3.5% YoY) with Covenant acquisition contributing $11–$12M revenue and ~$2.1–$2.3M net income.
- Medicare pricing tailwind and mix: weighted average reimbursement +3.5%; average revenue per day rose to $206.23; continuous care reimbursement saw focus from CMS.
- Management confidence in Florida growth: “Florida is very important…VITAS has always been preeminent…we continue to get new CONs. We’re growing.” (Kevin McNamara).
- What Went Wrong
- VITAS margin compression: adjusted EBITDA margin 22.5% (-112 bps YoY), impacted by absence of 2023 vacation roll-over benefit and Medicare cap rate differential (3.5% reimbursement vs 2.9% cap).
- Roto-Rooter revenue weakness: total -2.9% YoY; residential -2.0% and plumbing -9.6%; call volumes down and paid search competition remained a headwind.
- Medicare Cap cushion pressure: company projects $9.5M cap billing limitation in 2025, and cap cushion reduced in several programs (including Florida), necessitating mix actions that moderate margins.
Transcript
Operator (participant)
Hello, and welcome to the Chemed Corporation Fourth Quarter 2024 earnings conference call. At this time, all participants are in a listen-only mode. After the speaker presentation, there will be a question-and-answer session. To ask a question during the session, you will need to press star one one on your telephone. You will then hear an automated message advising that your hand has been raised. To withdraw your question, please press star one one again. Please be advised that today's conference is being recorded. It is now my pleasure to introduce Assistant Controller Holley Schmidt.
Holley Schmidt (Assistant Controller)
Good morning. Our conference call this morning will review the financial results for the fourth quarter of 2024 ended December 31st, 2024. Before we begin, let me remind you that the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995 apply to this conference call. During the course of this call, the company will make various remarks concerning management's expectations, predictions, plans, and prospects that constitute forward-looking statements. Actual results may differ materially from those projected by these forward-looking statements as a result of a variety of factors, including those identified in the company's news release of February 26th and in various other filings with the SEC. You are cautioned that any forward-looking statements reflect management's current view only and that the company undertakes no obligation to revise or update such statements in the future.
In addition, management may also discuss non-GAAP operating performance results during today's call, including earnings before interest, taxes, depreciation, and amortization, or EBITDA and adjusted EBITDA. A reconciliation of these non-GAAP results is provided in the company's press release dated February 26th, which is available on Chemed's website at chemed.com. I would now like to introduce our speakers for today: Kevin McNamara, President and Chief Executive Officer of Chemed Corporation; Mike Witzeman, Chief Financial Officer of Chemed; and Nick Westfall, Chairman and Chief Executive Officer of Chemed's VITAS Healthcare Corporation subsidiary. I will now turn the call over to Kevin McNamara.
Kevin McNamara (President and CEO)
Thank you, Holley. Good morning. Welcome to Chemed Corporation's Fourth Quarter 2024 conference call. I will begin with highlights for the quarter, then Mike and Nick will follow up with additional details. I will then open the call for questions. VITAS continued its strong operating performance during the fourth quarter of 2024. Admissions during the quarter totaled 16,427, which equates to a 3.5% improvement from the same period of 2023. Our average daily census, or ADC, expanded 2,827, an increase of 14.6% when compared with the prior year quarter. These historically good metrics were positively impacted by the $85 million acquisition of Covenant Health, which was closed on April 17th, 2024. To the end of the fourth quarter, the Covenant Health acquisition is meeting all of our internal financial projections that were developed at the time of the acquisition.
Early in the fourth quarter of 2024, our new program in Pasco County, Florida, accepted its first patient. During the quarter, VITAS had slightly more than 40 admissions to the Pasco program. We believe this program offers an exciting growth path for VITAS in 2025 and beyond. We are also very pleased that in December, VITAS was awarded a Certificate of Need in Marion County, Florida. Marion County includes Ocala, as well as a significant part of The Villages' retirement community. VITAS is currently working on a timeframe for opening the new location, but we believe this is another significant opportunity for growth in the coming years. As Mike will discuss in more detail, our 2025 VITAS guidance assumes continued above-historical average growth by all measures. However, that growth will be slightly tempered by headwinds associated with working to mitigate potential Medicare cap limitations in certain of our programs.
Now let's turn to Roto-Rooter. Roto-Rooter generated quarterly revenue of $229 million in the fourth quarter of 2024, a decrease of 2.9% when compared with the prior year quarter. While we're never satisfied with the decline in revenue or adjusted net income, the fourth quarter performance did exceed Roto-Rooter's internal estimates for both metrics by between 4% and 5%. Residential revenue at Roto-Rooter declined 2%, while commercial revenue increased 0.4%. Overall, our call volume was down 8% when compared to the prior year quarter. Conversion rates from calls to paying jobs continue to be at or near Roto-Rooter's all-time highest levels. For our residential business, conversion rates continue to improve for our add-on services, particularly water restoration. During the fourth quarter, Roto-Rooter management identified eight branches that had lagging conversion rates at residential water restoration.
Improvement in conversion rates for those specific branches was a major cause for the 2.8% increase in water restoration revenue in the fourth quarter. The commercial business initiatives that we've discussed during the course of 2024 have begun to gain momentum in many of our branches. We are winning business from key accounts based on our renewed focus on the local sales process at each branch. Our initiative to review the root cause of sewer drain cleaning issues through the use of cameras has resulted in an increase in excavation work related to commercial customers. The commercial business ended 2024 with positive momentum. We are optimistic this gives Roto-Rooter business a nice springboard into 2025. Our 2025 guidance assumes that momentum accelerates within Roto-Rooter's commercial business. It also assumes that the deterioration seen in the 2024 residential business does not continue into 2025.
To summarize, the strong results at VITAS are continuing. VITAS management has consistently demonstrated the ability to hire and retain licensed healthcare professionals at an appropriate pace. This has translated over an extended period of time of strong growth. Two new locations in the state of Florida provide a nice growth opportunity for the next few years. We are cautiously optimistic that Roto-Rooter has turned the corner despite some continued difficult operating conditions. We are confident that Roto-Rooter maintains its core competitive advantages in terms of excellent brand awareness, customer response time, 24/7 call centers, and aggressive internet presence. With that, I would like to turn this teleconference over to Mike.
Mike Witzeman (CFO)
Thank you, Kevin. VITAS net revenue was $411 million in the fourth quarter of 2024, which is an increase of 17.4% when compared to the prior year period. This revenue increase is comprised primarily of a 14.6% increase in days of care and a geographically weighted average Medicare reimbursement rate increase of approximately 3.5%. The acuity mix shift negatively impacted revenue growth 119 basis points in the quarter when compared to the prior year revenue and level of care mix. The combination of Medicare cap and other contra-revenue changes increased revenue growth by approximately 44 basis points. Average revenue per patient day in the fourth quarter of 2024 was $206.23, which is 244 basis points above the prior year period. Reimbursement for routine home care and high acuity care averaged $182.94 and $1,125.61, respectively.
During the quarter, high acuity days of care were 2.5% of total days of care, a decline of 22 basis points when compared to the prior year quarter. Adjusted EBITDA excluding Medicare cap totaled $93.2 million in the quarter, an increase of 11.8%. Adjusted EBITDA margin in the quarter excluding Medicare cap was 22.5%, which is 112 basis points below the prior year period. The fourth quarter of 2023 EBITDA margin was positively impacted by a one-time change in VITAS vacation rollover policy. This change positively impacted the 2023 EBITDA margin by 135 basis points and did not recur in 2024. The financial results just discussed include the impact of the Covenant Health acquisition in April. Covenant Health contributed $11 million-$12 million of revenue in the fourth quarter of 2024. This revenue translated to net income of approximately $2.1 million-$2.3 million.
Adjusted EBITDA in the quarter attributed to Covenant Health is between $2.8 million and $3 million. Turning to Roto-Rooter, Roto-Rooter branch residential revenue in the quarter totaled $160.5 million, a decrease of 2% from the prior year period. Roto-Rooter branch commercial revenue in the quarter totaled $54.3 million, an increase of 0.4% from the prior year. Adjusted EBITDA at Roto-Rooter in the fourth quarter of 2024 totaled $60.3 million, a decrease of 7.2% compared to the prior year quarter. The adjusted EBITDA margin in the quarter was 26.3%. The fourth quarter adjusted EBITDA margin represents a 120 basis points decline from the fourth quarter of 2023. Now let's discuss the 2025 guidance. VITAS revenue prior to Medicare cap is estimated to increase 10.5% to 11.3% when compared to 2024. ADC is estimated to increase 8.5% to 9%.
Full year Adjusted EBITDA margin prior to Medicare cap is estimated to be 18.4%-18.9%. This compares to the 2024 Adjusted EBITDA margin prior to Medicare cap of 19.1%. We are currently estimating a Medicare cap billing limitation of $9.5 million in 2025. 2024 represented an all-time high watermark for VITAS in terms of ADC growth, revenue growth, EBITDA growth, and EBITDA margin. The 2025 guidance assumes a slight moderation to those levels of growth while still maintaining increases that are significantly above average historical growth. VITAS' weighted average Medicare reimbursement rate increase received on October 1st was 3.5%. The per-admission Medicare cap protection covering the same period increased 2.9%, which is the overall national average reimbursement rate increase.
This 60 basis point average differential between the reimbursement rate increase and the Medicare cap increase has reduced Medicare cap cushion in our programs for both the trailing 12 months and our projected fiscal year 2025. The actual basis point differential in certain of our programs, including the Florida program, exceeds the overall 60 basis point average. VITAS management has taken the necessary steps in 2025 to ensure a significant Medicare cap issue does not arise. These steps are expected to have the effect of slightly moderating the all-time high level of growth seen in 2024. Roto-Rooter is forecasted to achieve revenue growth of 2.4%-3%. As Kevin mentioned, Roto-Rooter management expects to achieve this revenue growth by continuing the momentum in the commercial business sector while stopping further deterioration in the residential sector.
Roto-Rooter's EBITDA margin for 2025 is expected to be in the range of 25.7%-26.3%. This compares to Roto-Rooter's EBITDA margin in 2024 of 26.3%. Based upon the above, full year 2025 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 $24.95-$25.45. This compares to full year 2024 adjusted earnings per diluted share of $23.13. The 2025 earnings trajectory is weighted towards the second half of the year. Roto-Rooter's revenue and associated income is expected to accelerate during the year as Roto-Rooter management's business improvement initiatives continue to accelerate. Additionally, the first quarter of 2024 was Roto-Rooter's strongest quarter, making for difficult comparisons at the beginning of the year.
VITAS' revenue growth and EBITDA margin prior to Medicare cap in the second and third quarters will be adversely impacted by the initiatives required to moderate the impact of the Medicare cap rate differential previously discussed. The impact on the first quarter for VITAS will be mostly offset by the results of the Covenant acquisition, which occurred in April of 2024. The 2025 guidance assumes an effective corporate tax rate on adjusted earnings of 24% and a diluted share count of 14.8 million shares. I will now turn this call over to Nick.
Nick Westfall (Chairman and CEO of VITAS Healthcare)
Thanks, Mike. I continue to be very pleased with our overall operating performance over the past few years. In the fourth quarter of 2024, our average daily census was 22,179 patients, an increase of 14.6% compared to the prior year period. VITAS has generated quarterly sequential ADC growth over the last nine quarters. In the fourth quarter of 2024, total VITAS admissions were 16,427. This is a 3.5% increase when compared to the fourth quarter of 2023. This overall performance was slightly below our internal expectations in the quarter. This was partially due to the disruptions caused by the hurricanes in the early part of the quarter. However, I was very encouraged with the sequential acceleration of admissions within the quarter across all regions. In the quarter, admissions increased in three of the top four pre-admit location types.
Our nursing home admissions increased 7.3%, hospital-directed admissions increased 9.8%, and our home-based patient admissions expanded 3.6% when compared to the prior year period. Admissions for assisted living facilities declined by 5%. Our average length of stay in the quarter was 105.5 days. This compares to 105.9 days in the fourth quarter of 2023. Our median length of stay was 18 days in the quarter and compares to 17 days in the fourth quarter of 2023. As Kevin mentioned, we are excited today to be providing services in Pasco County and soon in Marion County, Florida. We believe our entry into these two territories is a win for both the people we will serve and for the future growth potential of VITAS. Florida and our southeastern locations experienced two significant hurricanes in late September and early October with Helene and Milton.
While we experienced a temporary slowdown in referral volume, I'm very proud to say our collective team enacted our emergency response protocols and successfully supported one another while providing exceptional care to our patients and the impacted communities. As both Kevin and Mike mentioned, we have implemented strategies that we began preparing in 2024 to successfully manage any additional exposure to Medicare cap in 2025. Knowing the average reimbursement increase for our locations was going to be 60 basis points above the national average only helped to reinforce the proactive approach needed to manage this industry factor. The primary component of this strategy is to increase our emphasis on hospital-based admissions in select programs. Generally, hospital-based referrals come later in a patient's disease trajectory and therefore result in shorter lengths of stay.
This has the overall effect of moderating both revenue growth and margin growth, but also provides additional cap cushion in those key locations. With the current Medicare cap rules, this is the right thing to do for the company to ensure long-term sustainable growth. To quickly recap what our team has accomplished, we have now generated 10 quarters of sequential net growth in licensed healthcare workers and nine quarters of sequential growth in ADC. In 2024, we also demonstrated the ability to partner with and successfully integrate other providers through acquisitions to ensure communities continue to receive the best possible patient care. As a result of these efforts, VITAS achieved all-time highs in ADC growth, revenue growth, EBITDA growth, and EBITDA margin.
While we briefly celebrated these accomplishments, our team is focused on continuing our 47-plus year commitment to fulfilling our mission of positively impacting patients and families across the country while delivering solid financial performance. As you can see from our 2025 guidance, we are optimistic about the ability of VITAS to maintain above-average historical growth both organically and through accretive acquisitions over the next few years. With that, I'd like to turn this call back over to Kevin.
Kevin McNamara (President and CEO)
Thank you, Nick. I will now open this teleconference to questions.
Operator (participant)
Thank you. As a reminder, to ask a question, please press star one one on your telephone and wait for your name to be announced. To withdraw your question, please press star one one again. Our first question comes from the line of Ben Hendrix with RBC Capital Markets.
Michael Murray (Equity Research Associate)
Hi, this is Michael Murray for Ben. Thanks for taking my question. For Q, Roto-Rooter revenue came in better than our expectations. It still declined 2.9% year-over-year. You're guiding the revenue growth of 2.4%-3%. I just wanted to hear what gives you confidence in the Roto-Rooter turnaround and how much of this improvement do you attribute to switching to a new marketing agency?
Kevin McNamara (President and CEO)
First, let me say that obviously, when we give guidance, we take a look at kind of how we're getting started in the year, and that is, generally speaking, because obviously, we're in the midst of it, very strong support for the growth in Roto-Rooter. December and January are usually the strongest months for Roto-Rooter. That can mask some issues from time to time, but it seems like we're showing strong growth. It's just not necessarily when I say core business, not down to its sewer and drain cleaning, but with pretty much everything else, so I guess the first answer to your question is no, I don't think it's aggressive. I do not think Roto-Rooter's guidance is aggressive.
We initially expected to start a little behind the eight ball because the first quarter last year was the strongest, and we thought we'd fall a little behind the eight ball and make it up the rest of the year. Just generally speaking, it doesn't look like that's going to be necessary. Looks like we're pretty much hitting on most of the cylinders at this point, not all. Now, let me go to the second part of your question, which was, how much do I attribute to the new marketing firm? I'd say not a lot. It's early. I mean, the issues with Google are not going away. I mean, the pandemic period drew a lot of private equity money into the sector. It's still very competitive with Google.
I don't want to. I could talk for an hour on this call about the issues and initiatives with Google, and we're a very good partner of Google and whatnot, but it's still tough. But I can't say it's not as though we're maybe a little smarter in that regard. And I attribute that largely to the new firm. But there's a long way to go. Mike, anything else on that?
Mike Witzeman (CFO)
No, I think you covered the only thing maybe I would add is even during the fourth quarter, we saw some accelerating metrics, some improvements, even intra-quarter as the quarter went along. So say December was better than November, and November was better than October. So as Kevin mentioned, 2025 has got off to a good start. We also saw improvement sequentially intra-quarter. And so I think we feel pretty comfortable that the commercial business, which is a little more repeatable on a year-to-year basis than maybe the residential businesses, is really creating a strong foundation for 2025. And I think we feel very comfortable with this guidance.
Michael Murray (Equity Research Associate)
Thank you. Just switching to VITAS, you expect another strong year of census growth, even accounting for the Covenant acquisition year-to-year comps there. I wanted to hear your thoughts on the competitive environment. Do you believe you're capturing share? And does your guidance contemplate any census in Marion County?
Nick Westfall (Chairman and CEO of VITAS Healthcare)
Let me answer the last part of the question first. The guidance does not incorporate any census in Marion County for 2025. It's still being worked through in terms of the exact time in which we're going to be able to enter that market. As it relates to stealing share and how much of that is driving overall growth, I think it definitely is contributing to it. But at the end of the day, it's stealing share through two facets of continuing to have a differentiated offering in the marketplace, not only for patients and families, but for all of our healthcare partners out there.
Part of that differentiated offering is the ability to continue to attract and retain high-quality clinicians so that game plan that we've been executing on for a while, well north of two years now, continues to offer great opportunity for us in each of the markets in which we operate. We're able to identify new opportunities where other providers maybe haven't met expectations of long-standing partners in the community. Our team's off trying to capitalize and execute on each of those. It's very much a market-by-market, account-by-account battle, as you might imagine.
Kevin McNamara (President and CEO)
The only thing I would add is that to understand, at least from my perspective, what's going on is the state of Florida is very important to VITAS. Obviously, it's the best hospice state. It's great demographics. VITAS has always been preeminent in Florida. As you just can pick up over the last couple of years, we continue to get new CONs. We're growing. We're adding staff. I mean, it's a powerhouse in the best state. And the effect of that tends to be have good things on your reported results. And it's almost like we look at it as two businesses, Florida and everywhere else. But Florida is doing very well.
Nick Westfall (Chairman and CEO of VITAS Healthcare)
Right, and the good news to complement Kevin's comments is everywhere else is as well, so we see good, strong growth throughout almost every market in the country, and it's what gives us the optimism that we've been discussing and now have formally put into our guidance for 2025 and beyond.
Michael Murray (Equity Research Associate)
Okay. That's helpful. If I could just sneak one more in on just on capital allocation, how are you thinking about share repurchases moving forward? And are any share repurchases built into your guidance? Thanks.
Mike Witzeman (CFO)
No share repurchases are built into the guidance. We don't try to forecast that going forward. We don't build in things like acquisitions either. It's sort of we're not sure how 2025 is going to play out on those fronts, and so we don't build any of that. We never have. Right. We never have. The way we think about share purchase in general isn't going to change, I don't believe. We are intending on a quarterly basis to do some level of programmatic share repurchases. We think it's with our free cash flow.
I think that and the dividend we think is a good opportunity to return cash to shareholders while still maintaining zero leverage. And then, as you might have seen with our fourth quarter, when there's an opportunity with the stock price and maybe with the interest that we get on the cash on the balance sheet, we will take a bigger swing. But the overall philosophy has not changed. And I don't see it changing anytime in the near term.
Michael Murray (Equity Research Associate)
All right. Thanks so much.
Operator (participant)
Thank you. And our next question comes from the line of Joanna Gajuk with Bank of America.
Christian Porter (Equity Research Analyst)
Hi. This is Christian Porter on for Joanna. Thank you guys for taking our question. My first question was about VITAS' margins. So margins were solid, but they were below our model. And the 2025 guidance calls for margins to decline year-over-year. So I was just wondering what is causing the margin pressure when the top line is growing double digits?
Nick Westfall (Chairman and CEO of VITAS Healthcare)
Yeah. Christian, just as a reminder, and I think it's something we've talked about for the last few quarters and included in our prepared remarks, 2024 at 19.1% Adjusted EBITDA margin ex cap was an all-time record high for the history of the company. Our new range of 18.4%-18.9%, we had been discussing on a preliminary basis. Just as you're managing all the factors such as Medicare cap management in this year that force us to think about heavier emphasis on hospital-based admissions in select markets that tend to have shorter lengths of stay that provide pressure to both top-line growth as well as marginal growth.
But it doesn't change the overall effect of outsized performance compared to any historical norm, both from a top-line volume growth standpoint as well as from a predictable marginal range that led to our collective guidance. So it really is just the moderation as we move into the next Medicare year of looking at it on a market-by-market basis and ensuring we have a sustainable business on a go-forward basis.
Kevin McNamara (President and CEO)
Let me say, just this is summarizing and reiterating, but to the extent that we got even more of these admits or the Medicare cap limitation was changed, yeah, VITAS would have stronger growth and higher margin. We're just threading the needle on that and doing the best under the existing legal constraints. Our goal is, as Nick says, if we can get enough hospital-based admissions, we won't make as much money. Our margin will be, in the short term, negatively impacted, but by less of a percentile or less of 1%. From that, that really gives us our growth in Florida. It's a threading the needle exercise is the best way to do it. There's nothing in the business itself, the underlying business itself, that would constrain growth in VITAS.
Christian Porter (Equity Research Analyst)
Okay. Thank you, guys. I just wanted to follow up on the Medicare cap because it seems like that will be a significant headwind for the year that will force you guys to change your mix. So I was wondering if we should assume that this headwind would continue beyond 2025?
Nick Westfall (Chairman and CEO of VITAS Healthcare)
I think it'd be a fair assumption. I don't know if I'd categorize it as a headwind as it is just part of normal hospital business operations. So it's always on a market-by-market basis. The overall price increase compared to what it correlates on a market-by-market is a year-by-year phenomenon. And just as a reminder, the Medicare cap limitation in which we're forecasting in our guidance at $9.5 million is effectively the equivalent we came in with last year. So there is no anticipated substantial differential in 2025 as it relates to Medicare cap liability as compared to where 2024 ultimately came in.
Kevin McNamara (President and CEO)
In 2024, it was all California, all driven not by patient mix, but by the very high reimbursement rates.
Nick Westfall (Chairman and CEO of VITAS Healthcare)
That's right. That's right. I mean, Christian, at an overall level, and it's a philosophical level that comes along with it, but the Medicare cap formula was put into place in the early 1980s as a way to protect overall growth for what was an experiment at the time for the Medicare Trust Fund. If you just look at the current Medicare reimbursement rate and divide it by our average revenue per day, that means that you're able to recognize revenue for 167 days of a patient's stay. And when you combine that with something like the NORC study that illustrates any patient that outlives their original prognosis of greater than six months, irrespective of disease, saves on average 11% or greater total cost of care to the Medicare Trust Fund, it sort of becomes counterintuitive as to what we're trying to accomplish across the country, which is.
Kevin McNamara (President and CEO)
Not cost productive as well.
Nick Westfall (Chairman and CEO of VITAS Healthcare)
Not productive in terms of earlier access, early awareness, greater quality for patients and families, and a total cost of care reduction for the Medicare Trust Fund. But that's neither here nor there. These are the rules of the road. And us and every other hospice provider inside of the country will continue to manage accordingly unless there was ever a change in the future.
Mike Witzeman (CFO)
We've been managing the Medicare cap since we purchased VITAS in 2004, so this isn't new. I would tell you that maybe the 2024 growth rate is probably not a long-term sustainable growth rate. What we're projecting for 2025 is a little more sustainable for the long term, but Nick and his team looked at the Medicare cap cushion that we had two years ago, implemented the community access program to maximize our performance, but we knew that that wasn't something that could be done forever, and so this has been on our radar. It's just we now need to make sure we moderate 2024, where we took an opportunity to grow probably more quickly than is a long-term sustainable path.
Nick Westfall (Chairman and CEO of VITAS Healthcare)
So we wouldn't categorize it as a headwind. It's part of normal business that's incorporated in 2025.
Christian Porter (Equity Research Analyst)
Okay. Thank you, guys, for the.
Kevin McNamara (President and CEO)
I was just going to say it alleviated when you think about long-term and you're looking out beyond just the next year was what your question. Getting new CONs in populated, great demographic counties in Florida is.
Nick Westfall (Chairman and CEO of VITAS Healthcare)
Helpful.
Kevin McNamara (President and CEO)
It's wonderful.
Christian Porter (Equity Research Analyst)
If I could sneak one question about Roto in really quickly. Your guidance assumes 2%-3%, sorry, 2%-3% revenue growth, which is better than prior comments. So I was just wondering what gives you guys the confidence that revenues are going to grow to that level? And also, if you could remind us of the seasonality that you're assuming in 2025.
Kevin McNamara (President and CEO)
Right. Let me just start by saying what gives us confidence is what we saw in the second part of the fourth quarter and clearly as we start the first quarter of 2025. Our guidance, we're not willfully blind to what we see going on in the weekly sales numbers. So very confident of that. With regard to seasonality, what we project is what we see every time. I mean, there's some weather conditions that are better for a company like Roto-Rooter that is cold weather, hopefully with not so much snow that the whole city is not shut down. But that tends to lead to frozen pipes and a lot more emergency work than a normal plumbing issue, and so what we're projecting basically is first quarter will probably be a very strong quarter. At that point, we'll start comparing against what was in 2024, much weaker results.
We don't anticipate in the second quarter being maybe quite as busy as the first quarter, but no reason to think it won't be a nice improvement over the second quarter of 2023. Then you get to the fourth quarter. Again, you get the return of the colder weather. There's a seasonality factor also in the fourth quarter. I guess what you'd say is, even though with our good start, what we anticipate is still what we said in our comments, that is a building positive comparison as we go through the year. I guess what I'm going to say is we don't want our analysts just to take the fourth quarter multiply the first quarter multiply by four. We do see growing positive comparisons to the second, third, and fourth quarter for Roto-Rooter.
Mike Witzeman (CFO)
Yeah. Historically, always the second and third quarter revenue, just absolute dollars, are lower than the first and fourth quarter for the reasons Kevin talked about. So there is definitely some seasonality built in. But what we've projected is pretty normal seasonality. It's just the comparatives to 2024.
Kevin McNamara (President and CEO)
Easier comparisons. I'd say even the first quarter, based on what we're seeing, is that, again, it's not a negative comparison really as we're looking at it. So we see much easier comparisons as we go through the year.
Christian Porter (Equity Research Analyst)
All right. Thank you guys so much.
Operator (participant)
Thank you. And I'm showing no further questions at this time. So with that, I'll hand the call back over to CEO Kevin McNamara for any closing remarks.
Kevin McNamara (President and CEO)
Thank you. I have no substantive closing remarks other than to say we're pleased with the results of both companies. I mean, it's the last couple of years we've gone through the seesaw of Roto-Rooter doing great during the pandemic and VITAS for good reasons suffering, and then we saw the switch, and now we're getting back to what I think is a normalized operating situation for both companies. I think we'll go back to our historic growth rates, which have been very solid. I mean, over a 20-year period, Chemed income has grown over 20% per annum on a CAGR basis. I mean, it's good to return to a period of normalcy, but with that, we'll just say we'll reconvene in about three months. Thank you for your attention.