CHEMED CORP
For the period ended Mar 31, 2025. Filed Apr 28, 2025.
View on SEC.govAbout this filing
A company's report for each of its first three quarters. The financial statements are not audited. It shows how the business has moved since the last annual report, and what management says changed.
Mar 31, 2025 · Filed Apr 28, 2025
CHE$528.05-1.1%Stored close · as of Nov 6, 2026
What changed in Management’s Discussion and Analysis?
Read the current filingPrevious report: 10-Q
Period ended 2024-09-30; filed 2024-11-01.
0001562762-24-000248
Item 2. Management's Discussion and Analysis of Financial Condition and Results of OperationsCurrent report: 10-Q
Period ended 2025-03-31; filed 2025-04-28.
0001562762-25-000096
Item 2. Management's Discussion and Analysis of Financial Condition and Results of OperationsThe baseline is this issuer’s latest earlier reporting period of the same form that was filed before the current report. A previous 10-Q is a different quarter, not a year-over-year comparison. Amendments are excluded.
Compared 73 previous paragraphs and 48 current paragraphs.
24 unchanged; 19 reworded; 5 added; 19 removed; 11 previous and 0 current paragraphs rearranged.
Tables are not compared: 24 previous and 14 current tables excluded. Dates, whitespace, punctuation and numbering changes are ignored; changes to financial figures remain significant.
A changed paragraph is not evidence that risk increased or decreased. An unchanged paragraph does not establish that risk stayed the same.
Added paragraphs (5)
Current report
Revenue for the Covenant acquisition for the first three months of 2025 was approximately $11.5 million to $12.5 million and this translated to net income of approximately $1.8 million to $2.0 million. Adjusted EBITDA in the quarter attributed to Covenant is between $2.5 million and $2.7 million.
Current report
A $47.3 million decrease in other assets primarily related to the reclassification of the OAS deposit from a long-term receivable to accounts receivable.
Current report
The increase in service revenues at VITAS is comprised primarily of a 11.9% increase in days-of-care and a geographically weighted average Medicare reimbursement rate increase of approximately 3.2%. Acuity mix shift negatively impacted revenue growth by 112-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 112-basis.
Current report
Roto-Rooter’s after-tax earnings as a percent of revenue in thefirst quarter of 2025 was 16.7%, as compared to 17.4% in thefirst quarter of 2024.
Current report
After-tax Corporate expenses for thefirst quarter of 2025 decreased 8.0% when compared to thefirst quarter in 2024 due primarily to a $6.3 million decrease in stock-based compensation offset by a $2.2 million decrease in interest income and a $2.8 million decrease in excess tax benefits on stock compensation.
Removed paragraphs (19)
Previous report
For the nine months ended September 30, 2024, the increase in consolidated service revenues and sales was driven by a 16.1% increase at VITAS offset by a 5.9% decrease at Roto-Rooter. The increase in service revenues at VITAS is comprised primarily of a 13.9% increase in days-of-care and a geographically weighted average Medicare reimbursement rate increase of approximately 2.6%. Acuity mix shift negatively impacted revenue growth by 110-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 70-basis points. The decrease in service revenues at Roto-Rooter was driven by a decrease in all service lines.
Previous report
Hurricane Helene, which impacted the panhandle of Florida and other parts of the southeastern United States in late September, did not result in any significant property loss or damage to VITAS. However, as with other similar events, we did experience a slowdown in admission activity while health systems prepared for the hurricane and then dealt with the aftermath. We estimate that admissions were negatively impacted during the quarter by approximately 60-100 patients. We also believe that the Florida admission impact will be more significant in the fourth quarter with the combination of Hurricanes Helene and Milton.
Previous report
VITAS continues to perform as anticipated, and we reiterate the metrics for VITAS as presented in our second quarter 2024 press release. Roto-Rooter’s revenue and resulting adjusted EBITDA and adjusted net income was softer than anticipated during the third quarter of 2024. As a result of these factors, 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 $23.00 to $23.15. This range represents a 13.3% to 14.0% increase from Chemed’s reported adjusted earnings per diluted share of $20.30. This guidance assumes an effective corporate tax rate on adjusted earnings of 24.3% and a diluted share count of 15.22 million shares.
Previous report
A $20.5 million increase in investments of deferred compensation plans due mainly to market valuation gains. This resulted in a similar increase in the liability associated with deferred compensation plans.
Previous report
A $4.5 million increase in identifiable intangible assets due primarily to the Covenant acquisition at VITAS.
Previous report
A $81.8 million increase in goodwill due primarily to the Covenant acquisition at VITAS.
Previous report
A $15.1 million decrease in other current liabilities due to payments of legal settlements at VITAS and Roto-Rooter, payments of the Retention Bonus Program implemented at VITAS and a decrease in the Medicare Cap liability at VITAS.
Previous report
We made prepayments totaling $75.0 million in the first quarter of 2023, on the $100.0 million term loan. We paid the remaining balance of $21.3 million on April 28, 2023. There were no prepayment penalties associated with this repayment. This prepayment reduced the total borrowing capacity of the 2022 Credit Facilities from $550.0 million to $450.0 million.
Previous report
The increase in service revenues at VITAS is comprised primarily of a 15.5% increase in days-of-care and a geographically weighted average Medicare reimbursement rate increase of approximately 2.6%. Acuity mix shift negatively impacted revenue growth by 140-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 64-basis.
Previous report
During the third quarter of 2023, the Company recognized a tax benefit from realignment of its state and local corporate tax structure based on the location of operating resources and profitability by business segment. This benefit includes a reduction in current state and local tax expense and a one time benefit of $4.2 million in reduction of deferred tax liabilities reflecting the lower tax rates.
Previous report
Roto-Rooter’s net income was negatively impacted in thethird quarter of 2024 compared to thethird quarter of 2023 primarily due to declining revenue and higher SG&A related to enhanced marketing efforts. After-tax earnings as a percent of revenue at Roto-Rooter in thethird quarter of 2024 was 17.7%, as compared to 21.8% in thethird quarter of 2023.
Previous report
After-tax Corporate expenses for thethird quarter of 2024 decreased 20.5% when compared to thethird quarter in 2023 due primarily to the tax benefit from the realignment of state and local corporate tax structure change recognized in September 2023, and market gains and interest income from excess cash invested in money market funds.
Previous report
Results of Operations
Previous report
The increase in service revenues at VITAS is comprised primarily of a 13.9% increase in days-of-care and a geographically weighted average Medicare reimbursement rate increase of approximately 2.6%. Acuity mix shift negatively impacted revenue growth by 110-basis points 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 70-basis points.
Previous report
The consolidated gross margin was 34.6% in thefirst nine months of 2024 as compared with 34.0% in thefirst nine months of 2023. On a segment basis, VITAS’ gross margin was 23.9% in thefirst nine months of 2024 as compared with 20.2%, in thefirst nine months of 2023. The increase in gross margin at VITAS is mostly the result of increased revenues and the expiration of the licensed healthcare worker Retention Bonus Program in 2023. The expense recorded in the first nine months of 2023 related to the VITAS Retention Bonus Program was $23.8 million. The Roto-Rooter segment’s gross margin was 52.5% for thefirst nine months of 2024 as compared with 52.8% in thefirst nine months of 2023.
Previous report
During the third quarter of 2023, the Company recognized a tax benefit from realignment of its state and local corporate tax structure based on the location of operating resources and profitability by business segment. This benefit includes a reduction in current state and local tax expense and a one time benefit of $4.2 million in reduction of deferred tax liabilities reflecting the lower tax rates.
Previous report
After-tax earnings as a percent of revenue at VITAS in thefirst nine monthsof 2024 was 13.1% as compared to 9.9% in thefirst nine monthsof 2023. VITAS’ after-tax earnings increased primarily due to increased revenues and the expiration of the licensed healthcare worker Retention Bonus Program in 2023.
Previous report
Roto-Rooter’s net income was negatively impacted in thefirst nine monthsof 2024 compared to thefirst nine monthsof 2023 primarily due to declining revenue and higher SG&A related to enhanced marketing efforts. After-tax earnings as a percent of revenue at Roto-Rooter in thefirst nine months of 2024 was 17.8%, as compared to 20.0% in the first nine months of 2023.
Previous report
After-tax Corporate expenses for thefirst nine monthsof 2024 decreased by 1.4% compared to thefirst nine monthsin 2023 primarily due to the tax benefit from the realignment of state and local corporate tax structure change recognized in September 2023.
Reworded paragraphs (19)
Previous wording
The vast majority of the Company’s operations are located in the United States. As both operations are service companies, our employees are the most critical resource of the Company. We have very little exposure related to customers, vendors, or employees in other regions of the world.
Current wording
The vast majority of the Company’s operations are located in the United States. As both operations are service companies, our employees are the most critical resource of the Company. We have very little exposure related to customers, vendors, or employees in other regions of the world. We continue to monitor macroeconomic trends and uncertainties such as inflation, the effects of recently implemented tariffs, and the potential imposition of modified or additional tariffs, which may have adverse effects on net sales and profitability. Based on preliminary analysis of the potential effects of the announced tariffs and these other factors, we do not expect a material negative effect on our net sales or profitability for the remainder of fiscal year 2025. However, we are continuing to evaluate these factors and their potential effects as well as our ability to potentially offset all or a portion of cost increases through pricing actions and cost savings efforts for fiscal year 2026 planning. Economic pressures including the challenges of high inflation and the effects of increased tariffs may negatively affect our net sales and profitability in the future.
Previous wording
Adjusted net income, adjusted diluted EPS, earnings before interest, taxes and depreciation and amortization (“EBITDA”), Adjusted EBITDA and Adjusted EBITDA as a percent of revenue are not measures derived in accordance with US GAAP. We provide non-GAAP measures to help readers evaluate our operating results and to compare our operating performance with that of similar companies that have different capital structures. Our non-GAAP measures should not be considered in isolation or as a substitute for comparable measures presented in accordance with GAAP. A reconciliation of our non-GAAP measures is presented on pages 35-37.
Current wording
Adjusted net income, adjusted diluted EPS, earnings before interest, taxes and depreciation and amortization (“EBITDA”), Adjusted EBITDA and Adjusted EBITDA as a percent of revenue are not measures derived in accordance with US GAAP. We provide non-GAAP measures to help readers evaluate our operating results and to compare our operating performance with that of similar companies that have different capital structures. Our non-GAAP measures should not be considered in isolation or as a substitute for comparable measures presented in accordance with GAAP. A reconciliation of our non-GAAP measures is presented on pages 30-31.
Previous wording
For the three months ended September 30, 2024, the increase in consolidated service revenues and sales was driven by a 17.3% increase at VITAS offset by a 6.9% decrease at Roto-Rooter. The increase in service revenues at VITAS is comprised primarily of a 15.5% increase in days-of-care and a geographically weighted average Medicare reimbursement rate increase of approximately 2.6%. Acuity mix shift negatively impacted revenue growth by 140-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 64-basis points. The decrease in service revenues at Roto-Rooter was driven by a decrease in all service lines.
Current wording
For the three months ended March 31, 2025, the increase in consolidated service revenues and sales was driven by a 15.1% increase at VITAS and by a 1.8% increase at Roto-Rooter. The increase in service revenues at VITAS is comprised primarily of a 11.9% increase in days-of-care and a geographically weighted average Medicare reimbursement rate increase of approximately 3.2%. Acuity mix shift negatively impacted revenue growth by 112-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 112-basis points. The increase in service revenues at Roto-Rooter was driven by an increase in excavation and water restoration offset by a decrease in plumbing and drain cleaning.
Previous wording
The pro forma revenue and earnings for the Company for the three and nine months ended September 30, as if the Covenant acquisition made in 2024 was completed on January 1, 2023 are as follows (in thousands, except per share data):
Current wording
The pro forma revenue and earnings for the Company for the three months ended March 31, as if the Covenant acquisition made in 2024 was completed on January 1, 2024 are as follows (in thousands, except per share data):
Previous wording
Significant changes in our accounts receivable balances are typically driven by the timing of payments received from the Federal government at our VITAS subsidiary. We typically receive a payment in excess of $50.0 million from the Federal government for hospice services every other Friday. The timing of a period end will have a significant impact on the accounts receivable at VITAS. These changes generally normalize over a two-year period, as cash flow variations in one year are offset in the following year.
Current wording
A $114.7 million increase in accounts receivable due to the reclassification of the OAS deposit of $47.0 million. Other significant changes in our accounts receivable balances are typically driven by the timing of payments received from the Federal government at our VITAS subsidiary. We typically receive a payment in excess of $57.0 million from the Federal government for hospice services every other Friday. The timing of a period end will have a significant impact on the accounts receivable at VITAS. These changes generally normalize over a two-year period, as cash flow variations in one year are offset in the following year.
Previous wording
A $7.7 million increase in lease right of use asset due to lease renewals. This resulted in a similar increase in the lease liability accounts.
Current wording
A $3.8 million increase in lease right of use asset due to lease renewals. This resulted in a similar increase in the lease liability accounts.
Previous wording
A $19.1 million decrease in accounts payable due to timing of payments.
Current wording
A $3.5 million increase in accounts payable due to timing of payments.
Previous wording
A $3.5 million decrease in income taxes payable due to timing of payments.
Current wording
A $30.7 million decrease in income taxes payable due to timing of payments.
Previous wording
A $15.2 million decline in accrued compensation due primarily to the payment of 2023 bonuses in the first quarter of 2024.
Current wording
A $32.2 million decline in accrued compensation due primarily to the payment of 2024 bonuses in the first quarter of 2025.
Previous wording
Net cash provided by operating activities increased $30.8 million from September 30, 2023 to September 30, 2024. The main driver is an increase in earnings of $29.2 million.
Current wording
Net cash provided by operating activities decreased $51.8 million from March 31, 2024 to March 31, 2025. The main drivers are a increase of $72.8 million due to accounts receivable offset by a $20.4 million decline in accounts payable.
Previous wording
We have issued $45.2 million in standby letters of credit as of September 30, 2024, mainly for insurance purposes. Issued letters of credit reduce our available credit under the 2022 Credit Facilities. As of September 30, 2024, we have approximately $404.8 million of unused linesof credit available and are eligible to be drawn down under our revolving credit facility. Management believes its liquidity and sources of capital are satisfactory for the Company’s needs in the foreseeable future.
Current wording
We have issued $45.5 million in standby letters of credit as of March 31, 2025, mainly for insurance purposes. Issued letters of credit reduce our available credit under the 2022 Credit Facilities. As of March 31, 2025, we have approximately $404.5 million of unused linesof credit available and are eligible to be drawn down under our revolving credit facility. Management believes its liquidity and sources of capital are satisfactory for the Company’s needs in the foreseeable future.
Previous wording
Our service revenues and sales for the third quarter of 2024 increased 7.4% versus services and sales revenues for the third quarter of 2023. Of this increase, a $57.7 million increase was attributable to VITAS, offset by a $16.0 million decrease at Roto-Rooter. The following chart shows the components of revenue by operating segment (in thousands):
Current wording
Our service revenues and sales for the first quarter of 2025 increased 9.8% versus services and sales revenues for the first quarter of 2024. Of this increase, a $53.4 million increase was attributable to VITAS, and a $4.3 million increase at Roto-Rooter. The following chart shows the components of revenue by operating segment (in thousands):
Previous wording
The decrease in drain cleaning revenues for the first nine months of 2024 versus 2023 is attributable to a 2.6% increase in price and service mix offset by an 8.2% decrease in job count. The decrease in plumbing revenues for the first nine months of 2024 versus 2023 is attributable to a 1.2% decrease in price and service mix shift and by a 6.0% decrease in job count. Excavation and water restoration jobs are generally sold as a result of initial calls from customers regarding drain cleaning issues.
Current wording
The decrease in drain cleaning revenues for the first quarter of 2025 versus 2024 is attributable to a 3.2% increase in price and service mix offset by a 6.6% decrease in job count. The decrease in plumbing revenues for the first quarter of 2025 versus 2024 is attributable to a 3.3% decrease in price and service mix shift and a 0.9% decrease in job count. Excavation and water restoration jobs
Previous wording
-25- attributable to a 1.8% decrease in price and service mix shift and a 9.7% decrease in job count. Excavation and water restoration jobs are generally sold as a result of initial calls from customers regarding drain cleaning issues.
Current wording
-25- are generally sold as a result of initial calls from customers regarding drain cleaning issues. As a result, excavation revenues increased 9.6% and water restoration revenues increased 16.0%. Contractors operations decreased 6.4%.
Previous wording
The consolidated gross margin was 34.6% in the third quarter of 2024 as compared with 35.8% in the third quarter of 2023. On a segment basis, VITAS’ gross margin was 24.6% in the third quarter of 2024 as compared with 24.0%, in the third quarter of 2023. The increase in gross margin at VITAS is mostly the result of increased revenues. The Roto-Rooter segment’s gross margin was 52.9% for the third quarter of 2024 and the third quarter of 2023.
Current wording
The consolidated gross margin was 33.5% in the first quarter of 2025 as compared with 34.6% in the first quarter of 2024. On a segment basis, VITAS’ gross margin was 23.2% in the first quarter of 2025 essentially equal to first quarter of 2024. The Roto-Rooter segment’s gross margin was 50.9% for the first quarter of 2025 as compared with 51.9% in the first quarter of 2024.
Previous wording
SG&A expenses before long-term incentive compensation and the impact of market value adjustments related to deferred compensation trusts for thethird quarter of 2024 were up 1.6% when compared tothird quarter of 2023 due mainly to normal salary increases and an increase in variable selling expenses, primarily increased marketing expense at Roto-Rooter.
Current wording
SG&A expenses before long-term incentive compensation and the impact of market value adjustments related to deferred compensation trusts for thefirst quarter of 2025 were up 5.4% when compared tofirst quarter of 2024 due mainly to normal salary increases and an increase in variable selling expenses.
Previous wording
We invest excess cash in money market funds with major commercial banks. We closely monitor the creditworthiness of the institutions with which we invest our overnight funds. In 2023, Chemed began investing excess cash in money market funds holding US Treasuries. Deposits and withdrawals are made daily, based on the Company’s excess cash balance. There are no penalties associated with withdrawals. The accounts bear interest at a normal market rate.
Current wording
We invest excess cash in money market funds with major commercial banks. We closely monitor the creditworthiness of the institutions with which we invest our overnight funds. Chemed invests excess cash in money market funds holding US Treasuries. Deposits and withdrawals are made daily, based on the Company’s excess cash balance. There are no penalties associated with withdrawals. The accounts bear interest at a normal market rate.
Previous wording
Net income/(loss) for thethird quarter of 2024 versus thethird quarter of 2023 by segment (in thousands):
Current wording
Net income/(loss) for thefirst quarter of 2025 versus thefirst quarter of 2024 by segment (in thousands):
Previous wording
After-tax earnings as a percent of revenue at VITAS in thethird quarter of 2024 was 13.7% as compared to 13.3% in thethird quarter of 2023. VITAS’ after-tax earnings increased primarily due to increased revenues.
Current wording
After-tax earnings as a percent of revenue at VITAS in thefirst quarter of 2025 was 12.3% as compared to 12.4% in thefirst quarter of 2024.
Rearranged previous paragraphs (11)
Previous report — wording carried elsewhere
The decrease in drain cleaning revenues for the third quarter of 2024 versus 2023 is attributable to a 3.6% increase in price and service mix offset by an 8.9% decrease in job count. The decrease in plumbing revenues for the third quarter of 2024 versus 2023 is
Previous report — wording carried elsewhere
Nine months ended September 30, 2024 versus 2023 - Consolidated Results
Previous report — wording carried elsewhere
Our service revenues and sales for the first nine months of 2024 increased 6.7% versus services and sales revenues for the first nine months of 2023. Of this increase, a $154.9 million increase was attributable to VITAS, offset by a $42.1 million decrease at Roto-Rooter. The following chart shows the components of revenue by operating segment (in thousands):
Previous report — wording carried elsewhere
Days of care at VITAS during the nine months ended September 30 were as follows:
Previous report — wording carried elsewhere
Selling, general andadministrative expenses (“SG&A”) comprise (in thousands):
Previous report — wording carried elsewhere
SG&A expenses before long-term incentive compensation and the impact of market value adjustments related to deferred compensation trusts for thefirst nine monthsof 2024 were up 2.2% when compared to thefirst nine months of 2023 due mainly to normal salary increases and an increase in variable selling expenses, primarily increased marketing expense at Roto-Rooter.
Previous report — wording carried elsewhere
Other income – net comprise (in thousands):
Previous report — wording carried elsewhere
Our effective tax rate reconciliation is as follows (in thousands):
Previous report — wording carried elsewhere
Net income for both periods included the following after-tax items/adjustments that (reduced) or increased after-tax earnings (in thousands):
Previous report — wording carried elsewhere
Nine months ended September 30, 2024 versus 2023 - Segment Results
Previous report — wording carried elsewhere
Net income/(loss) for the first nine months of 2024 versus thefirst nine months of 2023 by segment (in thousands):