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]

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, driven by an 11.9% increase in days of care and a 3.2% increase in Medicare reimbursement rates [18][19] - Adjusted EBITDA for VITAS, excluding Medicare cap, totaled $70.3 million, reflecting a 15.9% increase, with an adjusted EBITDA margin of 17.2%, up 13 basis points from the prior year [20][28] - Roto Rooter generated total revenue growth of 1.8% in Q1 2025, with gross branch revenue increasing by 3.1% [13][21] Business Line Data and Key Metrics Changes - VITAS admissions totaled 18,139, a 7.3% improvement compared to Q1 2024, with an average daily census of 22,244, up 13.1% year-over-year [8][30] - Roto Rooter branch residential revenue increased by 1.7% to $167.2 million, while branch commercial revenue rose by 7.3% to $57.7 million [22][23] - Revenue from independent contractors declined by 6.4% in Q1 2025 compared to the same period in 2024 [24] Market Data and Key Metrics Changes - Hospital-based admissions represented 49% of overall admissions for VITAS, the highest level since the pandemic, with a 12% increase compared to Q1 2024 [36] - The average length of stay for VITAS patients increased to 118.7 days, compared to 103.9 days in Q1 2024 [32] Company Strategy and Development Direction - VITAS is focusing on increasing hospital-based admissions to manage Medicare cap exposure, which is expected to provide a cushion for revenue growth [10][34] - Roto Rooter is refining its excavation pricing model to balance revenue growth and EBITDA margin, responding to feedback from its commercial sales force [26][28] - The company is expanding its operating scope in Florida, with new locations in Pasco and Marion counties expected to drive future growth [16][37] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in VITAS's ability to maintain above-average growth through organic means and accretive acquisitions in 2025 and beyond [39] - The company acknowledged that the growth path seen in 2023 and 2024 may not be sustainable due to Medicare cap constraints, suggesting a more moderate growth trajectory moving forward [53] Other Important Information - The Covington Health acquisition positively impacted revenue, adjusted net income, and EBITDA by 3 to 4% [20] - Cash flow dynamics were affected by the timing of accounts receivable, particularly related to a $48 million refund and a $57 million PIP payment [56][58] Q&A Session Summary Question: Long-term cap management strategy - Management discussed the importance of managing Medicare cap cushion and the impact of hospital admissions on revenue and length of stay [42][44] Question: Cash flow dynamics and working capital - Management clarified that the increase in accounts receivable was due to timing issues rather than cash flow collection problems [54][60]