Summary of Chemed (NYSE:CHE) FY Conference Call - March 19, 2026 Company Overview - **Company**: Chemed Corporation - **Segments**: VITAS (hospice care) and Roto-Rooter (plumbing and water restoration services) Key Points on VITAS - **Guidance Confidence**: The company is comfortable with VITAS guidance, indicating potential conservatism in projections. They aim to balance the patient mix between short and long-stay patients, which could enhance growth in 2026 [2][3] - **Volume Trends**: Strong volume performance was noted coming out of Q4 2025, which is expected to guide overall growth potential for 2026 [6] - **Florida Market**: Florida's unique Certificate of Need (CON) environment allows for rapid growth. The company is optimistic about its growth trajectory in Florida compared to other regions, where growth rates are slower [7][8] - **Medicare ADC Growth**: The company has seen consistent growth in Average Daily Census (ADC) in Medicare, particularly in Florida, indicating a positive trend in patient admissions [10][11] - **Hospital Admissions**: The ideal hospital admission rate is targeted between 42%-45%. The company has successfully managed to reduce this percentage while increasing overall volumes [11][12] - **Long-term Outlook**: The company feels confident about its long-term position in Florida, citing sufficient hospital patient base availability to maintain a balanced patient mix [16][17] - **New Market Expansion**: New locations in Florida (Pasco, Marion, Pinellas) are expected to reach profitability within 12 months, contributing significantly to organic growth [21][22][23] - **Margin Management**: The company anticipates returning to pre-pandemic margin levels, targeting margins of 18%-18.5% in the long term, with gradual improvements expected [27][26] Key Points on Roto-Rooter - **Growth Projections**: Roto-Rooter is projecting a top-line growth of 3%-3.5% for 2026, with improvements expected from reduced water restoration write-offs and a slight increase in lead volume [28][29] - **Marketing Costs**: Elevated marketing costs are anticipated to remain stable, impacting EBITDA. The company is focused on managing these costs effectively [30][34] - **Water Restoration Challenges**: The company is centralizing billing and collections for water restoration to improve efficiency and collection rates, which have historically varied across branches [36][37] - **Technology Integration**: Roto-Rooter is testing new technology to improve documentation for insurance claims, which is expected to enhance collection rates [40] - **Seasonality Impact**: The first quarter is expected to be challenging due to tough comparisons with the previous year, but the company remains on track with its overall metrics [44][46] - **Franchise Acquisition Strategy**: The company is actively pursuing franchise acquisitions, offering higher multiples than before, which may reduce ROI but is expected to yield strategic benefits [48][49] - **Strategic Alternatives**: If Roto-Rooter does not show recovery in 2026, the company is open to considering strategic alternatives, including potential divestitures [50] Additional Insights - **Market Conditions**: The company is navigating challenges related to weather impacts on operations and the competitive landscape for lead generation [45][46] - **Long-term Viability**: There is a strong belief in the long-term viability of both segments, with a focus on improving operational efficiencies and patient care [50]

WowBari Weiss (@bariweiss):Incredible investigation today from @CBSNews. Our reporters visited "ground zero" for hospice fraud: Los Angeles, California. One building had 89 registered hospices . . .Read it here:https://t.co/cHuzIo4Xec ...

Core Insights - The Pennant Group reported a strong performance in 2025, driven by acquisitions, same-store improvements, and leadership development, with a focus on five key areas: leadership development, clinical excellence, employee experience, margin improvement, and growth [1][4][7] Financial Performance - For the full year 2025, Pennant achieved revenue of $947.7 million, an increase of $252.5 million or 36.3% compared to the previous year [2][7] - Adjusted EBITDA rose to $72.5 million, up $19.2 million or 36%, while adjusted EBITDA prior to noncontrolling interests increased to $76.7 million, an improvement of $21.6 million or 39.2% [2][7] - The adjusted earnings per share (EPS) for 2025 was $1.18, exceeding the midpoint of the company's updated guidance of $1.16 [3][7] Growth and Acquisitions - The company made significant expansions in 2025, including the acquisition of Signature Healthcare at Home and over 50 locations from UnitedHealth/Amedisys, marking its largest acquisition to date [6][9] - Management anticipates continued growth in 2026, with guidance for revenue between $1.13 billion and $1.17 billion, adjusted EBITDA of $88.5 million to $94.1 million, and adjusted EPS of $1.26 to $1.36 [5][18] Segment Performance - In the home health and hospice segment, fourth-quarter revenue reached $233.3 million, up 64.3% year over year, with adjusted EBITDA of $33.7 million, up 58.2% [11] - The hospice quality composite score was reported at 97.5%, contributing to an all-time high average daily census of 5,060, up 46.9% year over year [12] - Senior living segment revenue increased to $215 million for the full year, up 22.3%, with fourth-quarter revenue rising 19.6% to $56.1 million [12] Balance Sheet and Cash Flow - The company expanded its credit facility with a $100 million term loan, bringing the total to $350 million, and reported net debt to adjusted EBITDA of 1.7x [14] - Operating cash flow was $21 million in the fourth quarter and $48.3 million year to date, with expectations for 2026 operating cash flow of $45 million to $55 million [15] Strategic Outlook - Management views healthcare as a local business and aims to position itself as a premier independent provider, leveraging its locally driven operating model [17] - The Southeast footprint, supported by a new Nashville service center, is expected to become a strength, with a focus on integration and optimization in 2026 [20]

Chemed (NYSE:CHE) 2025 Conference Summary Company Overview - Chemed operates two distinct service businesses: VITAS (hospice provider) and Roto-Rooter (plumbing and drain care) [4][5] - The company has experienced consistent net income growth of 11% to 12% per annum over the past 20 years [5] - Chemed has utilized free cash flow to repurchase over $2 billion of its stock, reducing shares outstanding from approximately 27 million to just under 15 million [6] Financial Performance and Challenges - The second quarter of 2025 was challenging for both VITAS and Roto-Rooter, with VITAS facing Medicare cap issues in Florida [3][12] - VITAS had to return approximately $18.9 million to the government due to exceeding Medicare billing limitations [11][12] - Roto-Rooter faced increased competition, particularly from private equity-backed companies, affecting its market position and advertising costs [10][30] Growth Strategy - Chemed's growth strategy focuses on organic growth rather than acquisitions, leveraging strong cash flow from both businesses [5][11] - The company aims to return to pre-pandemic growth levels, targeting high single-digit growth rates for VITAS [69][78] - The hospice market is projected to grow 8-10% annually due to the aging baby boomer population [77][79] VITAS Performance - VITAS has seen a recovery in patient census, returning to pre-pandemic levels after workforce disruptions during the pandemic [7][64] - The company is strategically managing admissions to balance Medicare cap limitations, with expectations of improved performance in 2026 [15][66] - The average daily census (ADC) increased by 2.5%, with total admissions up 5.6% year-over-year [64][65] Roto-Rooter Performance - Roto-Rooter has experienced a decline in phone calls and leads due to increased competition and higher advertising costs [31][32] - The company is adapting its marketing strategy to focus more on commercial business, which has shown promising growth [89][90] - Roto-Rooter is expanding its commercial business manager program, which has resulted in a 20% revenue increase in branches where it has been implemented [92][94] Labor and Operational Insights - Chemed has successfully managed labor turnover, with rates now better than pre-pandemic levels [81][82] - Average wage increases have been around 3% to mid-threes, and the company has been recognized as a best workplace in healthcare for 2025 [85][88] - The company does not anticipate labor shortages impacting operations in 2026 [80] Market Outlook - Chemed expects to achieve a balanced growth trajectory for both VITAS and Roto-Rooter, with a focus on maintaining a healthy mix of short-stay and long-stay patients [79][80] - The company is optimistic about returning to historical growth rates and addressing competitive challenges effectively [50][51] Conclusion - Chemed is navigating through post-pandemic recovery with a focus on returning to consistent growth across its two business segments, while addressing competitive pressures and operational challenges [3][10][12]

Financial Data and Key Metrics Changes - The company reported revenues of $229 million for Q3 2025, an increase of $48.4 million, or 26.8% year-over-year [5] - Adjusted EBITDA was $17.3 million, up $2.2 million, or 14.5% compared to the prior year quarter [5] - Adjusted EPS increased to $0.30, reflecting a $0.04 increase, or 15.4% year-over-year [5] - Full-year revenue guidance was raised to between $911.4 million and $948.6 million, with adjusted EBITDA expected between $70.9 million and $73.8 million [10][25] Business Line Data and Key Metrics Changes - Home Health and Hospice segment revenue reached $173.6 million, a 27.9% increase, with adjusted EBITDA of $26.8 million, up 22.7% [12] - Senior Living segment revenue was $55.5 million, up 23.2% year-over-year, with adjusted EBITDA increasing 26.2% [15] - Same-store occupancy in senior living reached 81.8%, with all-store occupancy at 80.9% [15] Market Data and Key Metrics Changes - The average CMS reported star rating for home health was 4.1, compared to the industry average of three stars [12] - Potentially preventable hospitalizations decreased to 8.4%, below the national average of 9.9% [12] - Hospice quality composite score improved to 97%, exceeding the national average of 92% [12] Company Strategy and Development Direction - The company is focused on integrating the recently acquired UnitedHealth Amedisys operations and enhancing local leadership [5][33] - There is a strong emphasis on empowering local clinical leaders to drive operational success and improve clinical outcomes [9][12] - The company plans to continue pursuing acquisition opportunities in senior living and home health, maintaining a disciplined approach [23][60] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about the long-term value of home health services despite current regulatory uncertainties [19] - The company anticipates some lumpiness in results due to integration efforts but expects significant long-term potential from recent acquisitions [6][10] - Management highlighted the importance of local leadership and community engagement in driving operational success [9][48] Other Important Information - The company closed on a $100 million term loan to enhance balance sheet capacity [24] - The acquisition of UnitedHealth Amedisys included 54 locations with trailing 12-month revenues of $189.3 million [21] - The company is actively advocating against proposed regulatory changes that could negatively impact the industry [9][18] Q&A Session Summary Question: What are the top priorities for integration after the Amedisys transaction? - The focus is on identifying and elevating leaders, ensuring exceptional support for agencies, and developing a joint venture with the University of Tennessee [33][34] Question: How should we think about margins in senior living going forward? - As occupancy increases, there is an expectation for improved margins, with a focus on operational efficiency and revenue quality [38] Question: What dynamics are affecting margin guidance? - NCI growth and elevated G&A expenses are impacting EBITDA margins, with adjustments made for these factors [40][41] Question: What is driving the increase in hospice length of stay? - The increase reflects a return to pre-pandemic levels and improved identification of appropriate patients for hospice services [42][43] Question: How is the internal reception of the Amedisys assets? - Employees have shown excitement and commitment, with minimal turnover and strong performance during the transition [46][49] Question: What is the competitive landscape for senior living acquisitions? - There is increased activity in the senior living space, with a mix of opportunities within the company's target range [60][62]

Financial Data and Key Metrics Changes - Consolidated net revenue totaled $263.6 million, an increase of $10 million or 3.9% year over year [17] - Consolidated adjusted EBITDA was $27 million, reflecting a sequential increase of $0.1 million or 0.4% and a year-over-year increase of $2.5 million or 10.2% [18] - Net debt to adjusted EBITDA leverage ratio improved to 3.9 times, down from 5.4 times in Q4 2023 [15][26] Business Line Data and Key Metrics Changes - Home Health total admissions increased by 3.6% year over year, with a census increase of 3.7% [7] - Hospice segment revenue reached $63.1 million, reflecting a year-over-year growth of 20% [22] - Home health adjusted EBITDA totaled $33.9 million, a decrease of 7.1% year over year [20] Market Data and Key Metrics Changes - Fee-for-Service Medicare census stabilized with a decline of only 1.4% year over year, compared to a 14.1% decline in Q3 2024 [8] - Non-Medicare admissions increased by 10.4%, contributing to a 2.8% increase in non-Medicare revenue per visit year over year [8] Company Strategy and Development Direction - The company is focused on mitigating pricing headwinds from the CMS 2026 Home Health Final Rule through various strategies [29] - The de novo strategy is positively impacting total growth, with plans to open a total of 10 de novos in 2025 [11] - The company aims to improve operational efficiency and reduce costs to strategically invest in people and technology [12] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's positioning within the industry, citing experienced leaders and innovative technology [13] - The company anticipates continued growth momentum into Q4 and has updated full-year guidance for revenue and adjusted EBITDA [27][28] - Management highlighted the importance of maintaining staffing productivity to offset wage inflation [44] Other Important Information - The company has successfully reduced overall bank debt by $15.5 million during the quarter, with a total reduction of $100 million since Q4 2023 [26] - Home office expenses improved to 9.1% of revenues, down from 9.9% in the prior quarter, reflecting effective cost management initiatives [25] Q&A Session Summary Question: Can you provide some color on the rate increase from the new payer innovation contract in November? - Management indicated that they cannot disclose specific updates but mentioned that more regional agreements will be coming up for renewal in the next year [33] Question: Can you provide details on the G&A expense reduction? - Management noted that the reduction came from headcount adjustments and efficiencies gained by insourcing capabilities, estimating that $1 million-$1.5 million of the improvement is durable [34] Question: What seasonal factors drive hospice performance at the end of the year? - Management acknowledged that holiday times can be unpredictable, with patients often delaying decisions until after the holidays [38] Question: How long is the typical recontracting cycle for payer innovation contracts? - Management stated that most contracts are typically three years, with some being two years [40] Question: How is the company managing labor costs and wage inflation? - Management reported an uptick in the applicant pool for nursing and therapy, with wage inflation expected to normalize around 3% [44]

Core Points - The Pennant Group, Inc. has increased its credit facility by $100 million, bringing the total to $350 million, supported by a lending consortium led by Truist Securities [1][2] - The CEO emphasized that the expansion strengthens the balance sheet and provides capacity for future growth, while maintaining disciplined use of the credit facility [2] - The CFO confirmed that the proceeds from the new term loan will be used to refinance a portion of the outstanding revolving loans [2] Company Overview - The Pennant Group, Inc. operates through 141 home health and hospice agencies and 61 senior living communities across multiple states including Arizona, California, and Texas [3] - Each agency and community operates as an independent subsidiary with its own management and assets, indicating a decentralized operational structure [3]

Core Insights - The Pennant Group, Inc. has acquired certain operations from UnitedHealth Group for a total purchase price of $146.5 million, which includes 54 locations primarily in Tennessee, Georgia, and Alabama [1][2][3] Group 1: Acquisition Details - The acquisition involves divested home health, hospice, and personal care services as part of an antitrust settlement between UnitedHealth and Amedisys with the U.S. Justice Department [1][2] - Approximately two-thirds of the revenue from the acquired agencies is related to home health services, while one-third is associated with hospice services [3] Group 2: Strategic Importance - This acquisition is viewed as a strategic move for Pennant, marking a new chapter in its growth journey and expanding its presence in the Southeast region [4] - The company aims to leverage proven leadership and operational excellence to integrate the new agencies into its existing platform [4] Group 3: Transition and Future Plans - A transition services agreement is in place to ensure a smooth integration process for the acquired operations [3] - The company plans to continue pursuing growth opportunities in the home health, hospice, and senior living sectors, focusing on strategic and underperforming operations [4]

Summary of The Pennant Group Conference Call Company Overview - The Pennant Group operates in the home health, hospice, and senior living sectors, primarily on the West Coast and in some Midwest states, with operations across 14 states [8][10][12]. Recent Acquisition - The company is acquiring assets from Amedisys as part of the Optum transaction, specifically in Tennessee, Georgia, and Alabama, which will enhance its presence in the Southeast [10][11]. - The acquisition is expected to close in early Q4 2025, with a court order mandating closure within the first few weeks of October [11]. Business Model and Differentiation - The Pennant Group emphasizes a local leadership model, investing in local leaders to drive operations and decision-making [13][14]. - The company has programs like the CEO in Training program, which allows Executive Directors to become CEOs, fostering an entrepreneurial environment [13][14]. - The focus is on accountability and peer support among local leaders to drive results [14][15]. Growth Strategy - The company is disciplined in its acquisition strategy, prioritizing locations with strong leadership and operational support [15][16]. - It is agnostic regarding service lines, willing to invest in home health, hospice, or senior living opportunities based on leadership availability [17][18]. Operational Challenges and Strategies - The company is preparing for a potential 6.5% cut in reimbursement rates from CMS, emphasizing the need for efficiency and local accountability [33][34]. - Local teams are expected to adapt by reallocating resources and focusing on profitable service lines [34][37]. - The company is actively lobbying against the proposed cuts, emphasizing the importance of home health in the healthcare system [35][36]. Joint Ventures and Partnerships - The Pennant Group is exploring joint ventures as a strategy for market entry and growth, leveraging the reputation and resources of established healthcare systems [28][29][30]. - A joint venture with the University of Tennessee Medical Center will be part of the Tennessee operations [30]. Medicaid Exposure - Approximately 25% to 30% of revenue comes from Medicaid or waiver programs, with the company monitoring changes in Medicaid benefits closely [52][53]. Future Outlook - The company believes that opportunities for consolidation may arise due to potential distress in the industry from reimbursement cuts [39][41]. - The leadership is confident in their ability to maintain strong cash flows and continue investing in growth despite regulatory challenges [40][42]. Key Takeaways - The Pennant Group has a robust operational model focused on local leadership and accountability, which has proven effective in various market conditions [55][56]. - The company is well-positioned to adapt to regulatory changes and capitalize on potential acquisition opportunities in a challenging environment [37][41].

Financial Data and Key Metrics Changes - The company reported Q2 2025 revenue of $219.5 million, an increase of $50.8 million or 30.1% year-over-year, and adjusted EBITDA of $16.4 million, up $3.2 million or 24.5% from the prior year quarter [7][32][10] - GAAP diluted earnings per share for the quarter was $0.20, while adjusted diluted earnings per share was $0.27 [32] Business Line Data and Key Metrics Changes - In the Home Health and Hospice segment, revenue reached $166 million, an increase of $40.7 million or 32.5%, with adjusted EBITDA of $25.5 million, up $5.9 million or 29.9% year-over-year [15] - Hospice revenue was $73.8 million, an increase of $14.4 million or 24.3%, with hospice admissions up 14.7% and average daily census up 21.4% [16] - Home health revenue grew to $79.2 million, an increase of $17.6 million or 28.5%, with total home health admissions increasing 26.1% [19] - Senior Living segment revenue improved to $53.5 million, an increase of $10 million or 23.1%, with same store occupancy exceeding 80% [24][26] Market Data and Key Metrics Changes - The company anticipates full-year revenue in the range of $852.8 million to $887.6 million, with adjusted earnings per share expected between $1.09 and $1.15 [13][32] - The proposed 2026 Home Health Rule suggests a net reduction of 6.4% in aggregate payments to home health agencies, which could impact the company's revenue [21][22] Company Strategy and Development Direction - The company is focused on leadership development, clinical excellence, employee engagement, margin improvement, and growth as key focus areas for continuous improvement [7] - The acquisition of divested assets from Amedisys and UnitedHealth Group is seen as a significant opportunity to expand operations in attractive markets, particularly in Tennessee, Alabama, and Georgia [12][29] - The company is committed to adapting its operations to the changing regulatory environment and believes in the essential role of home health services in the healthcare continuum [23][24] Management's Comments on Operating Environment and Future Outlook - Management expressed concerns about the proposed home health rule, stating it could negatively affect access to care for vulnerable patients and increase overall healthcare spending [22][23] - Despite challenges, management remains optimistic about the company's growth trajectory, citing strong performance across various segments and a healthy balance sheet [10][13] Other Important Information - The company has a strong focus on operational efficiency and has implemented various initiatives to improve clinical quality and financial performance [20][24] - The company is actively preparing for the integration of newly acquired assets and has invested in leadership and operational training to ensure a smooth transition [58][70] Q&A Session Summary Question: Insights on the Tennessee market and payer landscape - Management highlighted the unique opportunities in the Tennessee market, emphasizing the potential for building a care continuum and the presence of quality providers [41][43] Question: Impact of proposed clawback on capitated relationships - Management acknowledged that adjustments from Medicare rate changes could affect both traditional and capitated contracts, but emphasized the company's diversified business model [46][48] Question: Sustainability of revenue per occupied bed in senior living - Management indicated that while they anticipate mid-single-digit growth in revenue per occupied bed, they are encouraged by recent occupancy growth [54][56] Question: Preparations for the Amedisys acquisition - Management detailed investments in leadership and resources to ensure a successful transition and operational efficiency post-acquisition [57][58] Question: Balancing M&A versus market share growth amid regulatory changes - Management expressed confidence that disruptions in the market could create opportunities for growth, emphasizing a strategic approach to acquisitions [59][62]