Financial Data and Key Metrics Changes - VITAS' net revenue for Q4 2025 was $418.8 million, a 1.9% increase compared to the prior year, driven by a 1.3% increase in days of care and a 2.2% increase in Medicare reimbursement rates [14] - Adjusted EBITDA for VITAS, excluding Medicare cap, was $91.6 million, a decline of 1.7% year-over-year, with an adjusted EBITDA margin of 21.7%, down 79 basis points from the previous year [15] - Roto-Rooter revenue declined by 3.7% in Q4 2025 compared to Q4 2024, with adjusted EBITDA at $47.5 million, a decrease of 21.1% year-over-year, and an adjusted EBITDA margin of 21.5%, down 477 basis points [9][21] Business Line Data and Key Metrics Changes - VITAS admissions totaled 17,419 in Q4 2025, a 6% improvement from Q4 2024, with hospital-based admissions making up 44.8% of total admissions, the highest post-pandemic [4][5] - Roto-Rooter branch residential revenue decreased by 3.1%, with plumbing revenue increasing by 6.3% while water restoration revenue declined by 10.3% [16] - Roto-Rooter branch commercial revenue increased by 1.6%, with excavation revenue up 10.9% and drain cleaning revenue up 2% [19] Market Data and Key Metrics Changes - The average daily census for VITAS was 22,462 patients, a 1.3% increase, with hospital-directed admissions up 9.9% and home-based admissions up 4.1% [26] - The average revenue per patient day for VITAS was $288.01, an increase of 86 basis points from the prior year [15] - Roto-Rooter experienced a significant increase in paid leads by 9.4% compared to Q4 2024, although total leads remained flat due to a decline in natural leads [9][10] Company Strategy and Development Direction - VITAS aims to balance its admission patterns to improve revenue growth and EBITDA margins, with a focus on long-stay patients to enhance financial performance [8][29] - Roto-Rooter is expanding its commercial business by hiring commercial business managers, which has shown promising results in branches where they were implemented [19] - The company is pursuing strategic acquisitions and new CON opportunities in Florida to drive growth for VITAS [29] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence that the Florida Medicare cap issue is resolved, allowing for a return to a more sustainable growth pattern for VITAS [11][29] - Roto-Rooter is expected to face a transition year in 2026, with anticipated modest growth driven by improved lead generation and billing practices [12][42] - The company believes that the difficult operating environment is temporary and that long-term growth prospects remain intact for both VITAS and Roto-Rooter [11][60] Other Important Information - The company repurchased 400,000 shares of Chemed stock at an average price of $436.39, funded by free cash flow from both subsidiaries [21] - For 2026, VITAS revenue is projected to grow by 5.5%-6.5%, while Roto-Rooter is expected to achieve revenue growth of 3%-3.5% [22][23] Q&A Session Summary Question: What gives confidence in Roto-Rooter revenue growth in 2026 after flat revenues in 2025? - Management highlighted improvements in paid leads and a transition from free leads to paid leads, which is expected to stabilize and grow revenue [32][35] Question: Are long-term margin targets still achievable for Roto-Rooter? - Management indicated that achieving 24%-25% margins is still possible if revenue growth normalizes, but the path is less clear due to increased marketing costs [44][46] Question: What is the outlook for VITAS revenue and EBITDA progression in 2026? - Management noted that a shift back to long-stay patients is necessary for revenue growth, with expectations for gradual improvement throughout the year [50][51] Question: Is there a structural change in the plumbing industry affecting Roto-Rooter? - Management acknowledged challenges from private equity and changes in lead generation but expressed confidence that these issues are being addressed and that Roto-Rooter can return to stable growth [54][60]