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CHEMED CORP (CHE)·Q1 2025 Earnings Summary

Executive Summary

  • Q1 2025 delivered a clean, modest beat: revenue grew 9.8% to $646.9M and adjusted diluted EPS was $5.63 vs S&P Global consensus $5.55; strength at VITAS offset lighter Roto-Rooter margins as mix skewed to commercial jobs and targeted price cuts in excavation . EPS est. from S&P Global; see Estimates Context.
  • VITAS remained the growth engine (net revenue +15.1%, ADC +13.1%), while Medicare cap management tactics (higher hospital-based admissions) intentionally moderate margin expansion near term; management reiterated FY25 guidance commentary and will formally update with Q2 results .
  • Roto-Rooter revenue rose 1.8% with commercial +7.3% and residential +1.7%; excavation surged on selective price reductions, pressuring segment EBITDA margin to 24.7% (–108 bps YoY); management will refine pricing to balance growth and margin .
  • Liquidity/capital returns intact: $173.9M cash, no debt, ~$404.5M revolver capacity; repurchased 50K shares for $29.8M ($595/sh) in Q1; quarterly dividend of $0.50 declared in Feb .
  • Near-term stock catalysts: sustained ADC momentum with cap cushion management, Florida market expansion (Pasco live, Marion admissions starting mid-May), and evidence that Roto-Rooter pricing optimization stabilizes margins while sustaining revenue growth .

What Went Well and What Went Wrong

What Went Well

  • VITAS volume and revenue momentum: net patient revenue +15.1% to $407.4M; ADC +13.1% to 22,244; admissions +7.3% to 18,139; adjusted EBITDA ex cap +15.9% to $70.3M with 17.2% margin .
  • Strategic cap management underway with clear narrative: “Hospital referrals... result in shorter length of stay... moderating both revenue growth and margin growth, but also provide additional cap cushion,” and hospital-based admissions reached 49%, highest since pandemic .
  • Roto-Rooter revenue growth returned: total +1.8%, with commercial +7.3%; execution on commercial initiatives and faster response times for water restoration supported growth .

What Went Wrong

  • Roto-Rooter margin pressure from mix and pricing: adjusted EBITDA margin fell to 24.7% (–108 bps YoY) due to more commercial work and reduced pricing on large excavation jobs to drive volume; management plans further pricing refinement in Q2 .
  • Working capital timing masked cash generation intra-quarter: AR step-up tied to $48M OAS audit refund reclass to short-term and timing of a $57M PIP payment received early Q2; management emphasized timing, not collections issues .
  • VITAS cap dynamics continue to cap margin expansion near term: although revenue/day improved to $207.58, cap considerations and acuity mix temper margin expansion relative to elevated 2024 run-rate .

Financial Results

Consolidated Performance

MetricQ3 2024Q4 2024Q1 2025
Revenue ($M)$606.2 $640.0 $646.9
GAAP Diluted EPS ($)$5.00 $6.02 $4.86
Adjusted Diluted EPS ($)$5.64 $6.83 $5.63
Adjusted EBITDA ($M)$123.0 $145.5 $121.7

Vs S&P Global Consensus (Q1 2025)

MetricConsensusActualSurprise
Revenue ($M)$641.8*$646.9 +$5.2 (+0.8%)*
Primary EPS ($)$5.55*$5.63 +$0.08 (+1.5%)*

Values retrieved from S&P Global.*

Segment Performance

SegmentQ3 2024 Revenue ($M)Q4 2024 Revenue ($M)Q1 2025 Revenue ($M)
VITAS$391.4 $411.0 $407.4
Roto-Rooter$214.8 $229.0 $239.5
SegmentQ3 2024 Adj. EBITDA ($M)Q4 2024 Adj. EBITDA ($M)Q1 2025 Adj. EBITDA ($M)Adj. EBITDA Margin (%)
VITAS$70.9 $90.7 $70.3 (ex cap) 18.6% (Q3), 22.5% (Q4), 17.2% (Q1)
Roto-Rooter$56.4 $60.3 $59.2 26.3% (Q3), 26.3% (Q4), 24.7% (Q1)

KPIs (VITAS and Roto-Rooter)

KPIQ1 2024Q4 2024Q1 2025
VITAS Average Daily Census (patients)19,665 22,179 22,244
VITAS Admissions (patients)16,911 16,427 18,139
Avg Revenue per Patient per Day ($)—$206.23 $207.58
High Acuity Days (% of total)—2.5% 2.6%
Medicare Cap Accrual ($M)$2.38 $2.4 $2.3
Roto-Rooter Gross Margin (%)51.9 51.3 50.9
Roto-Rooter Branch Commercial Rev ($M)—$54.3 $57.7
Roto-Rooter Branch Residential Rev ($M)—$160.5 $167.2

Guidance Changes

MetricPeriodPrevious Guidance (2/26/25)Current (Q1 Update)Change
VITAS revenue growth (pre-cap)FY 2025+10.5% to +11.3% Management says results within guidance; formal update with Q2 release Maintained
VITAS ADC growthFY 2025+8.5% to +9.0% Maintained qualitative stance Maintained
VITAS adj. EBITDA margin (pre-cap)FY 202518.4% to 18.9% Maintained qualitative stance Maintained
Roto-Rooter revenue growthFY 2025+2.4% to +3.0% Maintained qualitative stance Maintained
Roto-Rooter adj. EBITDA marginFY 202525.7% to 26.3% Maintained qualitative stance Maintained
Adjusted EPS (diluted)FY 2025$24.95–$25.45 CEO: “We maintain that guidance.” Maintained
Tax rate assumptionFY 202524.0% Maintained qualitative stance Maintained
Diluted share countFY 202514.8M Maintained qualitative stance Maintained
DividendOngoing$0.50/qtr declared Feb 14, 2025 No change disclosedMaintained

Earnings Call Themes & Trends

TopicPrevious Mentions (Q3’24 and Q4’24)Current Period (Q1’25)Trend
Medicare Cap strategyCap allowances rising; guidance framed to temper margin; hurricanes temporarily slowed admissions Emphasis on hospital-based admissions (49% of admits) to build cap cushion; median LOS 16 days; slight moderation to margins Proactive cap management continues; margin moderated to sustain growth
Florida expansion (Pasco/Marion)Pasco first patient in Oct; Marion CON awarded Dec Growing admits in Pasco; first Marion admission expected mid-May Expanding footprint; incremental growth/cap cushion tailwind
Roto-Rooter commercial focusCommercial initiatives gaining momentum; improving conversion rates Commercial +7.3%; targeted excavation price cuts boosted volume but compressed margin; pricing model under refinement Revenue momentum building; margin optimization in progress
Labor and capacity (VITAS)Sequential ADC and clinician growth sustained 10 quarters of sequential ADC growth; 11 quarters of net clinician growth Capacity supports growth trajectory
Working capital/cashStrong FY24 cash generation; no debt AR elevated by $48M OAS refund reclass; PIP timing ($57M) hit quarter-end cash; timing not collections Neutral; timing resolved early Q2

Management Commentary

  • “VITAS continued its strong operating performance... ADC expanded to 22,244... Covenant Health acquisition is meeting all of our internal financial projections” — Kevin McNamara .
  • “Hospital referrals... result in shorter length of stay... limiting factor on revenue and EBITDA margin, but provide additional Medicare cap cushion” — Kevin McNamara .
  • “In the first quarter... hospital-based admissions represented 49% of our overall admissions... highest level since the pandemic” — Nick Westfall .
  • “Reduced the price structure for selected large commercial excavation jobs... key factor that led to the 38% increase in commercial excavation revenue... those jobs were done at a slightly lower margin” — Mike Witzeman .
  • “We anticipate providing updated earnings guidance as part of the June 30, 2025 earnings press release” — Mike Witzeman .
  • “We maintain that guidance” — Kevin McNamara .

Q&A Highlights

  • Medicare cap management and margin outlook: Management reiterated hospital-based admissions as primary lever; expect 2025 to be more sustainable vs outsized 2024 growth; cap is part of “normal business,” not a new headwind .
  • Cash flow/AR dynamics: AR higher due to $48M OAS refund reclass to short-term and PIP timing ($57M) into early Q2; cash received and no underlying collections issue .
  • Roto-Rooter trajectory: Confidence in revenue growth from commercial initiatives; excavation pricing trade-off was deliberate and will be tuned to balance margin .
  • VITAS margin vs growth: 2024 margins were record; 2025 range (18.4–18.9% pre-cap) reflects cap management (more hospital admissions) while sustaining above-historical growth .

Estimates Context

  • Q1 2025 beat Street modestly: revenue $646.9M vs $641.8M consensus; adjusted diluted EPS $5.63 vs $5.55 consensus; both based on 3 estimates. Coverage remains thin, so estimate volatility can be higher following prints. Values retrieved from S&P Global.*
  • Directionally, results were “within expectations” and FY guidance was maintained pending formal Q2 update; any estimate revisions likely focus on sustained VITAS ADC strength and Roto-Rooter volume/margin balance .

Key Takeaways for Investors

  • VITAS continues to compound volumes and revenue with disciplined cap management; near-term margin moderation is intentional to protect multi-year growth capacity .
  • Roto-Rooter has reaccelerated revenue, with management actively calibrating excavation pricing to optimize margin without sacrificing share; watch for margin stabilization by Q2/Q3 .
  • Balance sheet and capital returns remain supportive: $173.9M cash, no debt, ongoing buybacks and dividend provide downside support .
  • Florida expansion (Pasco live, Marion starting mid-May) offers incremental growth and cap cushion — a visible 2025–2026 tailwind .
  • The print was a small, high-quality beat with unchanged guidance commentary; narrative remains intact, reducing estimate risk and focusing the debate on mix/margin at Roto-Rooter. Values retrieved from S&P Global.*
  • Monitor: hospital-based admissions mix (cap cushion vs margin), Roto-Rooter excavation pricing and commercial pipeline, and Medicare policy developments impacting cap dynamics .

Additional Detail and Sources

  • Q1 2025 8‑K 2.02 press release and exhibits (financial statements, segment tables, KPIs) .
  • Q1 2025 earnings press release (narrative and segment detail) .
  • Q1 2025 earnings call transcript (prepared remarks and Q&A) .
  • Comparator quarters: Q4 2024 press release and call ; Q3 2024 press release .

Values retrieved from S&P Global.*