[Executive Summary](index=1&type=section&id=Executive%20Summary) Chemed Corporation's Q2 2025 results show increased consolidated revenue but a decline in GAAP and Adjusted Diluted EPS, with mixed performance across its VITAS and Roto-Rooter segments [Consolidated Operating Results](index=1&type=section&id=Consolidated%20operating%20results) Chemed Corporation reported a 3.8% increase in consolidated revenue to $618.8 million for Q2 2025, while GAAP Diluted EPS decreased by 23.2% to $3.57 and Adjusted Diluted EPS decreased by 21.9% to $4.27 Consolidated Operating Results (Q2 2025 vs. Q2 2024) | Metric | Q2 2025 Value | Change YoY | | :----------------------- | :------------ | :--------- | | Revenue | $618.8 million | +3.8% | | GAAP Diluted EPS | $3.57 | -23.2% | | Adjusted Diluted EPS | $4.27 | -21.9% | [VITAS Segment Operating Results](index=1&type=section&id=VITAS%20segment%20operating%20results) VITAS Healthcare segment saw a 5.8% increase in Net Patient Revenue to $396.2 million, driven by a 6.1% increase in Average Daily Census (ADC), but Net Income and Adjusted EBITDA margin declined VITAS Segment Key Metrics (Q2 2025 vs. Q2 2024) | Metric | Q2 2025 Value | Change YoY | | :---------------------------------- | :------------ | :--------- | | Net Patient Revenue | $396.2 million | +5.8% | | Average Daily Census (ADC) | 22,318 | +6.1% | | Admissions | 17,545 | +1.2% | | Net Income (excl. discrete items) | $38.2 million | -23.5% | | Adjusted EBITDA (excl. Medicare Cap) | $66.8 million | Essentially flat | | Adjusted EBITDA margin (excl. Medicare Cap) | 16.2% | -163 bps | [Roto-Rooter Segment Operating Results](index=1&type=section&id=Roto-Rooter%20segment%20operating%20results) Roto-Rooter segment revenue increased slightly by 0.6% to $222.6 million, but Net Income and Adjusted EBITDA declined significantly, leading to a 517-basis point drop in Adjusted EBITDA margin Roto-Rooter Segment Key Metrics (Q2 2025 vs. Q2 2024) | Metric | Q2 2025 Value | Change YoY | | :---------------------------------- | :------------ | :--------- | | Revenue | $222.6 million | +0.6% | | Net Income (excl. discrete items) | $33.7 million | -20.4% | | Adjusted EBITDA | $48.6 million | -18.7% | | Adjusted EBITDA margin | 21.8% | -517 bps | [Segment Performance](index=2&type=section&id=Segment%20Performance) This section details the individual financial and operational performance of the VITAS Healthcare and Roto-Rooter segments, highlighting revenue drivers, profitability, and specific challenges [VITAS Healthcare Corporation](index=2&type=section&id=VITAS) VITAS's Q2 2025 net revenue grew by 5.8% to $396.2 million, driven by increased days-of-care and Medicare reimbursement rates, but faced significant negative impacts from acuity mix shift and increased Medicare Cap billing limitations VITAS Net Revenue and Growth Drivers (Q2 2025) | Metric | Value | Impact on Revenue Growth | | :------------------------------------ | :------------ | :----------------------- | | Net Revenue | $396.2 million | +5.8% YoY | | Days-of-care increase | 6.1% | Primary driver | | Medicare reimbursement rate increase | ~4.2% | Primary driver | | Acuity mix shift | N/A | -71 bps | | Medicare Cap & contra revenue changes | N/A | -379 bps | - Total VITAS admissions increased **4.9%** in Q2 2025, excluding one-time admissions from the Covenant Health acquisition in Q2 2024[6](index=6&type=chunk) VITAS Medicare Cap Billing Limitation Accrual | Period | Accrued Amount | | :-------------------------------- | :------------- | | Q2 2025 | $16.4 million | | Q2 2024 | $1.4 million | - The **$16.4 million** Medicare Cap billing limitation in Q2 2025 includes a **$9.5 million** catch-up for the first six months of the 2025 Medicare Cap year in Florida, **$4.8 million** for the current quarter in Florida, and **$2.1 million** for other VITAS programs[9](index=9&type=chunk) VITAS Financial Performance (Q2 2025 vs. Q2 2024) | Metric | Q2 2025 | Q2 2024 | Change (bps) | | :---------------------------------- | :------ | :------ | :----------- | | Average revenue per patient per day | $207.03 | N/A | +350 bps | | Gross margin (excl. Medicare Cap) | 22.3% | 24.07% | -177 bps | | Adjusted EBITDA (excl. Medicare Cap) | $66.8 million | $65.6 million | Essentially flat | | Adjusted EBITDA margin (excl. Medicare Cap) | 16.2% | 17.83% | -163 bps | [Roto-Rooter](index=3&type=section&id=Roto-Rooter) Roto-Rooter's Q2 2025 revenue increased marginally by 0.6% to $222.6 million, driven by commercial excavation and water restoration, but profitability significantly declined with gross margin falling to 49.0% and Adjusted EBITDA decreasing by 18.7% Roto-Rooter Revenue Breakdown (Q2 2025 vs. Q2 2024) | Revenue Type | Q2 2025 Value | Change YoY | | :-------------------------- | :------------ | :--------- | | Total Quarterly Revenue | $222.6 million | +0.6% | | Branch Commercial Revenue | $53.2 million | +4.4% | | - Plumbing | N/A | -2.9% | | - Excavation | N/A | +24.4% | | - Water Restoration | N/A | +11.7% | | - Drain Cleaning | N/A | -1.1% | | Branch Residential Revenue | $156.4 million | +0.9% | | - Drain Cleaning | N/A | -5.8% | | - Plumbing | N/A | -1.1% | | - Excavation | N/A | -4.3% | | - Water Restoration | N/A | +16.9% | | Independent Contractors | $17.4 million | -4.4% | Roto-Rooter Financial Performance (Q2 2025 vs. Q2 2024) | Metric | Q2 2025 | Q2 2024 | Change (bps) | | :-------------------- | :------ | :------ | :----------- | | Gross margin | 49.0% | 52.9% | -390 bps | | SG&A expenses | $60.5 million | $57.35 million | +5.6% | | Adjusted EBITDA | $48.6 million | $59.8 million | -18.7% | | Adjusted EBITDA margin | 21.8% | 26.97% | -517 bps | [Consolidated Financial Position](index=3&type=section&id=Chemed%20Consolidated) This section outlines Chemed's liquidity, capital resources, and share repurchase activities, reflecting its financial health and capital allocation strategies [Liquidity and Capital Resources](index=3&type=section&id=Liquidity%20and%20Capital%20Resources) As of June 30, 2025, Chemed maintained a strong liquidity position with **$249.9 million** in cash and cash equivalents and no outstanding debt, complemented by significant undrawn borrowing capacity Chemed Liquidity (as of June 30, 2025) | Metric | Value | | :-------------------------- | :------------ | | Cash and cash equivalents | $249.9 million | | Current or long-term debt | $0 | | Undrawn borrowing capacity | ~$404.5 million | [Share Repurchase Program](index=3&type=section&id=Share%20Repurchase%20Program) During Q2 2025, Chemed repurchased **75,000 shares** of its stock for **$42.9 million** at an average cost of **$572.61 per share**, with approximately **$182.6 million** remaining under authorization Share Repurchase Activity (Q2 2025) | Metric | Value | | :-------------------------------- | :------------ | | Shares repurchased | 75,000 | | Total cost of repurchases | $42.9 million | | Cost per share | $572.61 | | Remaining authorization (June 30, 2025) | ~$182.6 million | [Full Year 2025 Guidance](index=4&type=section&id=Full%20Year%202025%20Guidance) This section provides Chemed's updated financial outlook for the full year 2025, including revenue and Adjusted EBITDA margin projections for VITAS and Roto-Rooter, and revised consolidated EPS guidance [VITAS Guidance](index=4&type=section&id=VITAS%20full%20year%202025%20revenue) VITAS projects full-year 2025 revenue (prior to Medicare Cap) to increase by **7.5% to 8.5%** compared to 2024, with an Adjusted EBITDA margin (prior to Medicare Cap) of **18.2% to 18.7%**, and estimates **$28.2 million** in Medicare Cap billing limitations VITAS Full Year 2025 Guidance | Metric | Guidance | | :------------------------------------ | :---------------- | | Revenue increase (prior to Medicare Cap) | 7.5% to 8.5% YoY | | Adjusted EBITDA margin (prior to Medicare Cap) | 18.2% to 18.7% | | Estimated Medicare Cap billing limitations | $28.2 million | - Management does not expect a significant level of Medicare Cap billing limitation in the Florida combined program for the 2026 Cap Year, assuming the 2025 rate differential does not recur and supported by successful Florida CON VITAS applications and expansion activities[24](index=24&type=chunk) [Roto-Rooter Guidance](index=4&type=section&id=Roto-Rooter%20is%20forecasted) Roto-Rooter forecasts a **1.25% to 1.75%** revenue increase in 2025 compared to 2024, with an expected Adjusted EBITDA margin of **23.5% to 24.5%** Roto-Rooter Full Year 2025 Guidance | Metric | Guidance | | :-------------------------- | :---------------- | | Revenue increase | 1.25% to 1.75% YoY | | Adjusted EBITDA margin | 23.5% to 24.5% | [Consolidated EPS Guidance](index=4&type=section&id=Based%20on%20the%20above,%20full%20year%202025%20earnings) Chemed revised its full-year 2025 Adjusted Diluted EPS guidance to a range of **$22.00 to $22.30**, down from the previously issued range of **$24.95 to $25.45**, assuming a **25.3%** effective tax rate and **14.7 million** diluted shares Consolidated Full Year 2025 Adjusted Diluted EPS Guidance | Metric | 2025 Guidance | Previous 2025 Guidance | 2024 Reported | | :-------------------------------- | :-------------- | :--------------------- | :------------ | | Adjusted Diluted EPS | $22.00 to $22.30 | $24.95 to $25.45 | $23.13 | | Assumed Effective Tax Rate | 25.3% | N/A | N/A | | Assumed Diluted Share Count | 14.7 million | N/A | N/A | [Executive Management Changes](index=4&type=section&id=Executive%20Management%20Departure) This section announces key leadership transitions within Chemed Corporation, specifically the departure of VITAS's Chairman and CEO and the appointment of his successor [Leadership Transition at VITAS](index=4&type=section&id=Executive%20Management%20Departure) Nicholas M. Westfall, Executive Vice President of Chemed and Chairman and CEO of VITAS, is departing the company on **December 1, 2025**, after **16 years** of service, with Joel L. Wherley succeeding him as CEO of VITAS - Nicholas M. Westfall, Executive Vice President of Chemed and Chairman and CEO of VITAS, will depart the company on **December 1, 2025**, after **16 years**[28](index=28&type=chunk) - Joel L. Wherley, current VITAS President and Chief Operating Officer, will succeed Mr. Westfall as Chief Executive Officer of VITAS[29](index=29&type=chunk)[30](index=30&type=chunk) [Corporate Information](index=5&type=section&id=Corporate%20Information) This section provides details on Chemed's upcoming conference call, an overview of its business segments, explanations of non-GAAP financial measures, and a safe harbor statement regarding forward-looking information [Conference Call Details](index=5&type=section&id=Conference%20Call) Chemed will host a conference call and webcast on **Wednesday, July 30, 2025, at 10 a.m. ET** to discuss quarterly results and provide a business update, with a taped replay available afterward - Chemed will host a conference call and webcast on **Wednesday, July 30, 2025, at 10 a.m. ET** to discuss quarterly results and provide a business update[32](index=32&type=chunk) - Participants can access the live webcast via Chemed's investor relations website or a dedicated hosting website, with teleconference registration also available[32](index=32&type=chunk)[33](index=33&type=chunk) [Company Business Overview](index=5&type=section&id=Company%20Business%20Overview) Chemed Corporation operates two distinct businesses: VITAS Healthcare Corporation, a major provider of end-of-life hospice care, and Roto-Rooter, the largest commercial and residential plumbing and drain cleaning services provider in the nation - VITAS Healthcare Corporation provides daily hospice services to patients with severe, life-limiting illnesses, focusing on comfort and pain relief[35](index=35&type=chunk) - Roto-Rooter offers plumbing, drain cleaning, and water cleanup services through company-owned branches, independent contractors, and franchisees in the US, Canada, Indonesia, Singapore, and the Philippines[36](index=36&type=chunk) [Non-GAAP Financial Measures](index=5&type=section&id=Non-GAAP%20Financial%20Measures) Chemed uses non-GAAP measures like EBITDA, Adjusted EBITDA, and Adjusted Diluted EPS to help investors evaluate operating results, compare performance, and assess future financial obligations, which should not be considered substitutes for GAAP-compliant figures - Chemed uses non-GAAP measures (EBITDA, Adjusted EBITDA, Adjusted Diluted EPS) to provide insights into operating results, compare performance, and assess future financial requirements[37](index=37&type=chunk) - These non-GAAP measures exclude components not derived in accordance with GAAP and should not be considered in isolation or as a substitute for GAAP measures[37](index=37&type=chunk) [Forward-Looking Statements](index=6&type=section&id=SAFE%20HARBOR%20STATEMENT%20UNDER%20THE%20PRIVATE%20SECURITIES%20LITIGATION%20REFORM%20ACT%20OF%201995%20REGARDING%20FORWARD-LOOKING%20INFORMATION) The press release contains forward-looking statements subject to inherent uncertainties, risks, and changes in circumstances, including those related to Medicare Cap, reimbursement rates, patient mix, and demand for services, with actual results potentially differing materially - Forward-looking statements are based on assumptions and are subject to known and unknown risks, uncertainties, and contingencies, including impacts of laws, Medicare Cap, reimbursement rates, patient mix, and demand for services[38](index=38&type=chunk) - Actual results and financial conditions may differ materially from forward-looking statements due to inherent uncertainties and risks described in SEC filings[39](index=39&type=chunk) [Financial Statements](index=7&type=section&id=Financial%20Statements) This section presents Chemed Corporation's detailed financial statements, including consolidated statements of income, balance sheets, cash flows, and segment-level performance data, providing a comprehensive view of the company's financial health and operational results [Consolidated Statements of Income](index=7&type=section&id=CHEMED%20CORPORATION%20AND%20SUBSIDIARY%20COMPANIES%20CONSOLIDATED%20STATEMENTS%20OF%20INCOME) The consolidated statements of income show a **3.8%** increase in service revenues and sales for the three months ended June 30, 2025, compared to the prior year, but net income decreased by **26.0%** to **$52.5 million**, and diluted EPS decreased by **23.2%** to **$3.57** Consolidated Statements of Income (Three Months Ended June 30) | Metric | 2025 (in thousands) | 2024 (in thousands) | Change (%) | | :-------------------------------- | :------------------ | :------------------ | :--------- | | Service revenues and sales | $618,798 | $595,880 | +3.8% | | Income from operations | $68,084 | $88,125 | -22.7% | | Net income | $52,493 | $70,887 | -26.0% | | Diluted Earnings Per Share | $3.57 | $4.65 | -23.2% | [Consolidated Balance Sheets](index=8&type=section&id=CHEMED%20CORPORATION%20AND%20SUBSIDIARY%20COMPANIES%20CONSOLIDATED%20BALANCE%20SHEETS) As of June 30, 2025, Chemed's total assets were **$1.718 billion**, a slight decrease from **$1.735 billion** in 2024, with cash and cash equivalents increasing while total liabilities and stockholders' equity saw minor reductions Consolidated Balance Sheets (as of June 30) | Metric | 2025 (in thousands) | 2024 (in thousands) | Change (%) | | :------------------------------------ | :------------------ | :------------------ | :--------- | | Cash and cash equivalents | $249,904 | $222,903 | +12.1% | | Total current assets | $491,377 | $464,612 | +5.8% | | Total Assets | $1,717,847 | $1,734,984 | -1.0% | | Total current liabilities | $263,886 | $261,753 | +0.8% | | Total Liabilities | $519,362 | $527,687 | -1.6% | | Total Stockholders' Equity | $1,198,485 | $1,207,297 | -0.7% | [Consolidated Statements of Cash Flows](index=9&type=section&id=CHEMED%20CORPORATION%20AND%20SUBSIDIARY%20COMPANIES%20CONSOLIDATED%20STATEMENTS%20OF%20CASH%20FLOWS) For the six months ended June 30, 2025, net cash provided by operating activities increased to **$171.4 million** from **$162.1 million** in the prior year, with significant reductions in cash used by investing and financing activities, leading to a positive increase in cash and cash equivalents Consolidated Statements of Cash Flows (Six Months Ended June 30) | Metric | 2025 (in thousands) | 2024 (in thousands) | Change (%) | | :-------------------------------- | :------------------ | :------------------ | :--------- | | Net cash provided by operating activities | $171,350 | $162,066 | +5.7% | | Net cash used by investing activities | $(29,155) | $(112,874) | -74.1% | | Net cash used by financing activities | $(70,641) | $(90,247) | -21.7% | | Increase/(Decrease) in Cash and Cash Equivalents | $71,554 | $(41,055) | N/A | | Cash and cash equivalents at end of period | $249,904 | $222,903 | +12.1% | [Consolidating Statements of Income (Segment-level)](index=10&type=section&id=CHEMED%20CORPORATION%20AND%20SUBSIDIARY%20COMPANIES%20CONSOLIDATING%20STATEMENTS%20OF%20INCOME) Segment-level income statements for Q2 and H1 2025 show VITAS revenue growth but a decline in net income for both VITAS and Roto-Rooter compared to the prior year, with the Corporate segment consistently reporting a net loss Consolidating Statements of Income (Three Months Ended June 30, 2025) | Segment | Service Revenues and Sales (in thousands) | Net Income/(Loss) (in thousands) | | :-------------- | :-------------------------------------- | :------------------------------- | | VITAS | $396,201 | $38,219 | | Roto-Rooter | $222,597 | $31,914 | | Corporate | $- | $(17,640) | | Consolidated | $618,798 | $52,493 | Consolidating Statements of Income (Six Months Ended June 30, 2025) | Segment | Service Revenues and Sales (in thousands) | Net Income/(Loss) (in thousands) | | :-------------- | :-------------------------------------- | :------------------------------- | | VITAS | $803,600 | $88,249 | | Roto-Rooter | $462,141 | $71,858 | | Corporate | $- | $(35,857) | | Consolidated | $1,265,741 | $124,250 | [Consolidating Summaries of EBITDA (Segment-level)](index=12&type=section&id=CHEMED%20CORPORATION%20AND%20SUBSIDIARY%20COMPANIES%20CONSOLIDATING%20SUMMARIES%20OF%20EBITDA) Segment-level EBITDA reconciliations show that VITAS's Adjusted EBITDA was essentially flat in Q2 2025, while Roto-Rooter's Adjusted EBITDA declined significantly, with both segments experiencing a decrease in Adjusted EBITDA for the six months compared to the prior year Consolidating Summaries of Adjusted EBITDA (Three Months Ended June 30) | Segment | 2025 (in thousands) | 2024 (in thousands) | Change (%) | | :-------------- | :------------------ | :------------------ | :--------- | | VITAS | $50,417 | $65,600 | -23.1% | | Roto-Rooter | $48,629 | $59,801 | -18.7% | | Corporate | $(3,715) | $(5,511) | +32.7% | | Consolidated | $95,331 | $119,890 | -20.5% | Consolidating Summaries of Adjusted EBITDA (Six Months Ended June 30) | Segment | 2025 (in thousands) | 2024 (in thousands) | Change (%) | | :-------------- | :------------------ | :------------------ | :--------- | | VITAS | $118,406 | $123,912 | -4.4% | | Roto-Rooter | $107,814 | $120,451 | -10.5% | | Corporate | $(9,197) | $(9,851) | +6.7% | | Consolidated | $217,023 | $234,512 | -7.4% | [Reconciliation of Adjusted Net Income](index=14&type=section&id=CHEMED%20CORPORATION%20AND%20SUBSIDIARY%20COMPANIES%20RECONCILIATION%20OF%20ADJUSTED%20NET%20INCOME) The reconciliation shows that Adjusted Net Income for Q2 2025 was **$62.7 million**, down from **$83.4 million** in Q2 2024, with Adjusted Diluted EPS also decreasing to **$4.27** from **$5.47**, reflecting adjustments for non-cash expenses Reconciliation of Adjusted Net Income (Three Months Ended June 30) | Metric | 2025 (in thousands) | 2024 (in thousands) | Change (%) | | :-------------------------- | :------------------ | :------------------ | :--------- | | Net income as reported | $52,493 | $70,887 | -26.0% | | Adjusted net income | $62,721 | $83,419 | -24.8% | | Diluted Earnings Per Share As Reported | $3.57 | $4.65 | -23.2% | | Adjusted Diluted Earnings Per Share | $4.27 | $5.47 | -22.0% | [Operating Statistics for VITAS Segment](index=15&type=section&id=CHEMED%20CORPORATION%20AND%20SUBSIDIARY%20COMPANIES%20OPERATING%20STATISTICS%20FOR%20VITAS%20SEGMENT) VITAS operating statistics for Q2 2025 show an increase in total days of care by **6.1%** and Average Daily Census (ADC) by **6.1%**, with admissions up **1.2%** and a significant increase in average length of stay to **137.1 days** VITAS Operating Statistics (Three Months Ended June 30) | Metric | 2025 | 2024 | Change (%) | | :------------------------------------ | :--------- | :--------- | :--------- | | Net Revenue ($000) | $396,201 | $374,558 | +5.8% | | Total Days of care | 2,030,913 | 1,914,284 | +6.1% | | Average Daily Census ("ADC") | 22,318 | 21,036 | +6.1% | | Total Admissions | 17,545 | 17,334 | +1.2% | | Total Discharges | 17,845 | 15,898 | +12.2% | | Average length of stay (days) | 137.1 | 100.6 | +36.3% | | Median length of stay (days) | 20.0 | 18.0 | +11.1% | VITAS Net Revenue as a Percent of Total Before Medicare Cap Allowance (Q2 2025) | Category | Percentage | | :-------------------------- | :--------- | | Homecare | 85.2% | | Inpatient | 7.9% | | Continuous care | 5.6% | | Other | 1.3% | [Footnotes to Financial Statements](index=17&type=section&id=CHEMED%20CORPORATION%20AND%20SUBSIDIARY%20COMPANIES%20FOOTNOTES%20TO%20FINANCIAL%20STATEMENTS) The footnotes detail significant credits and charges included in the results of operations for 2025 and 2024, such as stock option expense, amortization of reacquired franchise agreements, long-term incentive compensation, and acquisition expenses, which are crucial for understanding non-GAAP financial measures Significant Credits/(Charges) in Q2 2025 (in thousands) | Item | VITAS | Roto-Rooter | Corporate | Consolidated | | :------------------------------------ | :---- | :---------- | :-------- | :----------- | | Stock option expense | $- | $- | $(9,216) | $(9,216) | | Amortization of reacquired franchise agreements | $- | $(2,352) | $- | $(2,352) | | Long-term incentive compensation | $- | $- | $(853) | $(853) | | Pretax impact on earnings | $- | $(2,352) | $(10,069) | $(12,421) | | After-tax impact on earnings | $- | $(1,806) | $(8,422) | $(10,228) | - VITAS has **35 Medicare provider numbers**; for the current cap year, **28** have a Medicare cap cushion greater than **10%**, **three** have a cushion between **0% and 10%**, and **four** have a Medicare cap liability[60](index=60&type=chunk)

Core Viewpoint - Astrana Health, Inc. (ASTH) is currently positioned as a better value investment compared to Chemed (CHE) based on Zacks Rank and various valuation metrics [3][7]. Valuation Metrics - ASTH has a Zacks Rank of 1 (Strong Buy), indicating a positive earnings outlook, while CHE has a Zacks Rank of 4 (Sell) [3]. - The forward P/E ratio for ASTH is 14.68, significantly lower than CHE's forward P/E of 20.43, suggesting that ASTH is undervalued relative to CHE [5]. - ASTH's PEG ratio is 0.85, indicating better expected earnings growth compared to CHE's PEG ratio of 2.09, which suggests overvaluation [5]. - ASTH has a P/B ratio of 1.74, while CHE's P/B ratio is 5.83, further indicating that ASTH is more attractively priced [6]. Value Grades - ASTH has received a Value grade of A, reflecting its strong valuation metrics, whereas CHE has a Value grade of C, indicating it is less favorable for value investors [6].

Core Viewpoint - Wall Street anticipates a year-over-year decline in earnings for Chemed despite higher revenues, with a focus on how actual results compare to estimates impacting stock price [1][2]. Earnings Expectations - Chemed is expected to report quarterly earnings of $4.76 per share, reflecting a 13% decrease year-over-year, while revenues are projected to be $619.83 million, a 4% increase from the previous year [3]. Estimate Revisions - The consensus EPS estimate has been revised down by 9.39% over the last 30 days, indicating a reassessment by analysts [4]. Earnings Surprise Prediction - The Zacks Earnings ESP model indicates that the Most Accurate Estimate matches the Zacks Consensus Estimate, resulting in an Earnings ESP of 0%, suggesting no recent differing analyst views [12]. Historical Performance - Chemed has beaten consensus EPS estimates in two out of the last four quarters, with a recent surprise of +0.54% when it reported earnings of $5.63 per share against an expectation of $5.6 [13][14]. Zacks Rank - The stock currently holds a Zacks Rank of 4, indicating a less favorable outlook for an earnings beat [12]. Conclusion - Chemed does not appear to be a strong candidate for an earnings beat, and investors should consider other factors before making investment decisions [17].

Company Overview - Chemed Corporation (CHE) provides healthcare and maintenance services primarily in the United States, operating in the VITAS and Roto-Rooter sectors [1]. VITAS Sector - The VITAS sector focuses on palliative care, which is a specialized area aimed at improving the quality of life for patients with serious illnesses [1]. Roto-Rooter Sector - The Roto-Rooter sector provides plumbing and drain cleaning services, contributing to the company's overall service offerings [1]. Investment Analysis Approach - The company emphasizes a fundamental analysis approach, screening for undervalued companies based on balance sheets, income statements, and cash flow statements [1]. - Valuation ratios and industry trends are key components of the analysis process to identify potential investment opportunities [1].

Core Viewpoint - Chemed's shares have increased by approximately 2.7% since the last earnings report, underperforming the S&P 500, raising questions about the sustainability of this trend leading up to the next earnings release [1] Earnings Estimates - Analysts have not made any earnings estimate revisions in the past two months, indicating a period of quiet regarding expectations for the company's performance [2] VGM Scores - Chemed has a strong Growth Score of A, a Momentum Score of B, and a Value Score of D, placing it in the bottom 40% for value investment strategy. The overall aggregate VGM Score is B, which is relevant for investors not focused on a single strategy [3] Outlook - Chemed holds a Zacks Rank of 4 (Sell), suggesting expectations for below-average returns in the upcoming months [4]

Summary of Kemet's Conference Call Company Overview - Kemet is one of the largest hospice providers, with a significant focus on its VITAS business segment [2][41]. Key Industry Insights - The hospice industry is experiencing growth, but there are concerns regarding the Medicare cap, which has been in place since 1983. This cap is seen as a potential limitation on growth due to its impact on patient admissions and revenue [3][5][6]. - The company has been proactive in managing the Medicare cap, utilizing analytical capabilities to forecast and strategize around it [5][6][30]. Financial Performance and Projections - VITAS has experienced a 15% growth in average daily census (ADC) over the past two and a half years, but the company is now projecting a more sustainable growth rate of 8-10% for the foreseeable future [6][22]. - The average length of stay for patients has increased due to staffing challenges during the pandemic, but the company is working to return to its historical admission rates from hospitals [10][12][22]. Medicare Cap Discussion - The Medicare cap has been a topic of concern, with discussions around its implications for the business. The company has been transparent about its Medicare cap cushion, which is lower than initially anticipated [17][22]. - The company is engaged in ongoing discussions with MedPAC regarding potential changes to the Medicare cap policy, advocating for adjustments that would better reflect the current healthcare landscape [30][31]. Recent Developments - Kemet has made its first acquisition in years by acquiring Covenant, indicating a shift towards a more aggressive acquisition strategy, particularly in Florida [41][49]. - The company is actively pursuing additional acquisition opportunities and has been more proactive in reaching out to potential targets [51][52]. Operational Strategies - The company has emphasized the importance of maintaining a strong workforce and has been successful in growing its net clinical capacity over the past 11 quarters [39][40]. - Kemet is focusing on enhancing its market presence by applying for new licenses in various states, including North Carolina, and expanding its operations in Florida [47][48]. Challenges and Market Dynamics - The company faces challenges related to staffing and competition from healthcare systems that have their own hospice services, which can affect referral patterns [8][10][35]. - There is a recognition of the need to adapt to changing market conditions and to manage costs effectively, particularly in light of potential tariffs and supply chain issues [54][58]. Conclusion - Kemet is navigating a complex healthcare environment with a focus on sustainable growth, proactive management of regulatory challenges, and strategic acquisitions to enhance its market position [41][51].

Financial Performance & Growth - Chemed's service revenues and sales increased by 74% year-over-year[9] - Chemed's adjusted net income increased by 138% year-over-year[9] - Chemed's adjusted diluted EPS from continuing operations increased by 139% year-over-year[9] - VITAS's service revenues and sales increased by 164% year-over-year[9] - VITAS's adjusted net income increased by 389% year-over-year[9] Roto-Rooter Analysis - Roto-Rooter's service revenues and sales decreased by (52%) year-over-year[9] - Roto-Rooter's adjusted net income decreased by (135%) year-over-year[9] - Roto-Rooter residential customers represent 72% of revenues, while commercial customers represent 25% of revenues[26] VITAS Healthcare Overview - VITAS Healthcare operates in 16 states and the District of Columbia[47] - VITAS Healthcare revenues were $407 million in Q1 2025[47]

Financial Performance - Service revenues and sales for Q1 2025 increased by 9.8% to $646,943,000 compared to $589,233,000 in Q1 2024[118] - Net income for Q1 2025 was $71,757,000, up from $65,017,000 in Q1 2024, representing an increase of 11.8%[104] - Adjusted EBITDA for Q1 2025 was $121,692,000, with an adjusted EBITDA margin of 18.8%, down from 19.5% in Q1 2024[104] - Total service revenues and sales for Q1 2025 reached $646,943,000, an increase from $589,233,000 in Q1 2024, representing a growth of 9.8%[129] - Net income for Q1 2025 was $71,757,000, compared to $65,017,000 in Q1 2024, reflecting an increase of 10.7%[129] - Adjusted EBITDA for Q1 2025 was $121,692,000, compared to $114,622,000 in Q1 2024, reflecting a year-over-year increase of 6.5%[134] - Adjusted net income for Q1 2025 was $83,074,000, up from $79,831,000 in Q1 2024, which is an increase of 4.0%[134] Segment Performance - VITAS experienced a 15.1% increase in service revenues, driven by an 11.9% increase in days-of-care and a 3.2% increase in Medicare reimbursement rates[105] - VITAS segment net income for Q1 2025 was $50,030,000, up from $43,970,000 in Q1 2024, a growth of 13.4%[126] - Roto-Rooter saw a 1.8% increase in net revenue, with excavation and water restoration revenues increasing by 9.6% and 16.0%, respectively[118] - Roto-Rooter segment net income decreased to $39,944,000 in Q1 2025 from $40,853,000 in Q1 2024, a decline of 2.2%[126] - VITAS segment after-tax earnings as a percentage of revenue in Q1 2025 was 12.3%, slightly down from 12.4% in Q1 2024[126] - Roto-Rooter's after-tax earnings as a percentage of revenue decreased to 16.7% in Q1 2025 from 17.4% in Q1 2024[127] Expenses and Margins - The consolidated gross margin decreased to 33.5% in Q1 2025 from 34.6% in Q1 2024, with VITAS maintaining a gross margin of 23.2%[122] - SG&A expenses for Q1 2025 totaled $105,587,000, a decrease from $115,873,000 in Q1 2024, primarily due to lower long-term incentive compensation[122] - Total other income - net for Q1 2025 was $1,245,000, significantly lower than $12,577,000 in Q1 2024, a decrease of 90.1%[123] - Corporate after-tax expenses decreased by 8.0% in Q1 2025 compared to Q1 2024, primarily due to a $6.3 million decrease in stock-based compensation[127] Tax and Compliance - The effective tax rate for Q1 2025 was 25.0%, up from 23.0% in Q1 2024[124] - Income tax provision for Q1 2025 was $23,917,000, compared to $19,468,000 in Q1 2024, an increase of 22.5%[124] - The company is in compliance with all financial covenants as of March 31, 2025, and expects to remain compliant[113] Operational Metrics - The average daily census for homecare in Q1 2025 was 18,140, an increase from 15,911 in Q1 2024, showing a growth of 14.0%[136] - Total admissions in Q1 2025 reached 18,139, compared to 16,911 in Q1 2024, marking an increase of 7.2%[136] - The average length of stay in Q1 2025 was 118.7 days, compared to 103.9 days in Q1 2024, reflecting a significant increase of 14.6%[136] - Estimated uncollectible accounts as a percentage of revenues decreased to 0.6% in Q1 2025 from 1.1% in Q1 2024, indicating improved revenue collection efficiency[136] Debt and Interest Rate Risk - The company had no variable rate debt outstanding as of March 31, 2025, mitigating interest rate risk exposure[138] - For each $10 million borrowed under the credit facility, a 100 basis points change in interest rates would affect annual interest expense by $100,000[138] Acquisition Impact - The Covenant acquisition contributed approximately $11.5 million to $12.5 million in revenue and $1.8 million to $2.0 million in net income for Q1 2025[107]

Core Viewpoint - Chemed Corporation reported strong first-quarter 2025 earnings and revenue growth, but faced stock price decline due to concerns over gross margin contraction and Roto-Rooter segment performance [1][2][14]. Financial Performance - Adjusted EPS for Q1 2025 was $5.63, an increase of 8.3% year over year, surpassing the Zacks Consensus Estimate by 0.5% [1] - GAAP EPS was $4.86, reflecting a 14.6% increase from the previous year [1] - Revenues for the quarter reached $646.9 million, up 9.8% year over year, exceeding the Zacks Consensus Estimate by 1.7% [2] Segment Performance - VITAS segment reported net patient revenues of $407.4 million, a 15.1% increase year over year, driven by an 11.9% rise in days-of-care and a 3.2% increase in Medicare reimbursement rates [4] - Roto-Rooter segment generated sales of $239.5 million, a 1.8% year-over-year increase, with commercial revenues up 7.3% [6] - Roto-Rooter residential revenues decreased by 1.7% year over year, with specific declines in drain cleaning and plumbing services [7] Margin and Expense Analysis - Gross profit increased by 6% year over year to $216.4 million, but gross margin contracted by 119 basis points to 33.5% due to rising service costs [8] - SG&A expenses decreased by 8.9% year over year to $105.6 million, while adjusted operating profit rose by 25.6% to $110.8 million [8] Liquidity and Capital Structure - As of the end of Q1 2025, the company had cash and cash equivalents of $173.9 million, down from $178.4 million at the end of Q4 2024, with no current or long-term debt [9][10] - Net cash provided by operating activities was $32.7 million, compared to $84.5 million in the same period last year [10] Shareholder Returns and Guidance - The company repurchased 50,000 shares for $29.8 million, with approximately $225.6 million remaining under its share repurchase authorization [11] - For 2025, Chemed expects VITAS revenues to grow by 10.5% to 11.3%, while Roto-Rooter is forecasted to grow by 2.4% to 3.0% [12] - Adjusted EPS guidance for 2025 is set between $24.95 and $25.45, indicating an 8.8% growth over 2024 [13]

Financial Data and Key Metrics Changes - VITAS net revenue was $407.4 million in Q1 2025, an increase of 15.1% compared to the prior year period [18] - Adjusted EBITDA, excluding Medicare cap, totaled $70.3 million in Q1 2025, an increase of 15.9% [20] - Adjusted EBITDA margin in Q1 2025, excluding Medicare cap, was 17.2%, which is 13 basis points above the prior year period [20] - Roto Rooter generated total revenue increase of 1.8% in Q1 2025 compared to the prior year quarter [13] - Adjusted EBITDA at Roto Rooter in Q1 2025 totaled $59.2 million, a decrease of 2.4% compared to the prior year quarter [25] Business Line Data and Key Metrics Changes - VITAS admissions totaled 18,139 in Q1 2025, a 7.3% improvement compared to the same period of 2024 [8] - Average daily census (ADC) for VITAS expanded to 22,244, an increase of 13.1% compared to the prior year quarter [8] - Roto Rooter branch residential revenue increased by 1.7% to $167.2 million, driven by a 3% increase in excavation revenue and a 12.5% increase in water restoration [21][22] - Roto Rooter branch commercial revenue increased by 7.3% to $57.7 million, driven by a 38% increase in excavation and a 14% increase in water restoration [23] Market Data and Key Metrics Changes - Hospital-based admissions represented 49% of overall admissions for VITAS, the highest level since the pandemic [36] - Hospital-directed admissions increased by 12% compared to Q1 2024 [32] - The average revenue per patient day for VITAS in Q1 2025 was $207.58, which is 221 basis points above the prior year period [19] Company Strategy and Development Direction - VITAS management is focusing on increasing hospital-based admissions to navigate Medicare cap issues [11][34] - The company is expanding its operating scope within Florida and other states with certificate of need restrictions [16] - Roto Rooter management is refining its excavation pricing model to balance revenue growth and EBITDA margin [28] Management Comments on Operating Environment and Future Outlook - Management expressed confidence in VITAS's ability to maintain above-average growth both organically and through acquisitions in 2025 and beyond [39] - The company anticipates providing updated earnings guidance as part of the June 30, 2025 earnings press release [29] - Management acknowledged that the growth path seen in 2023 and 2024 was likely higher than what is sustainable due to the Medicare cap [53] Other Important Information - The Covington Health acquisition positively impacted revenue, adjusted net income, and EBITDA by 3 to 4% [21] - The company experienced a $48 million increase in receivables due to the return of funds from a previous audit [56][58] Q&A Session Summary Question: Details on long-term cap management strategy - Management discussed the importance of managing cap cushion and the impact of hospital admissions on average length of stay [44][45] - The focus is on ensuring long-term sustainable growth while navigating regulatory changes [50][51] Question: Cash flow dynamics and working capital - Management explained that cash flow was affected by the timing of receivables and a PIP payment [55][58] - They clarified that the increase in receivables was not indicative of cash flow collection problems [60]