Company Overview - Chemed Corporation operates two primary segments: VITAS, which provides hospice and palliative care services, and Roto-Rooter, offering plumbing, drain cleaning, and water restoration solutions [4][5] - The company generates revenue through direct service delivery to patients and customers via company-owned branches, independent contractors, and franchisees [4][5] - Chemed's primary customers include patients requiring end-of-life care and residential or commercial clients needing plumbing and related services across the United States [5] Financial Performance - For the trailing twelve months (TTM), Chemed reported revenue of $2.53 billion and net income of $278.81 million [3] - The company's dividend yield stands at 0.44% as of October 28, 2025 [3] - As of October 28, 2025, Chemed shares were priced at $438.94, reflecting a 27.91% decline over the past year and underperforming the S&P 500 by 45.55 percentage points [2] Recent Developments - Schwartz Investment Counsel reduced its position in Chemed by 28,771 shares, valued at approximately $13.03 million, bringing its stake down to 1.67% of reportable assets from 2.24% in the previous quarter [1][2] - Chemed's stock was demoted from the 11th-largest holding to the 17th place in Schwartz's portfolio by the end of September 2025 [6] - The hospice segment experienced a decline in adjusted EBITDA by 3.8% to $70.4 million, despite a 2.98% year-over-year increase in average revenue per day [8] - The Roto-Rooter segment's revenue grew by 1.1% year over year, but adjusted EBITDA declined by 12.4% [9]

Chemed (NYSE:CHE) Q3 2025 Earnings Call October 29, 2025 10:00 AM ET Company ParticipantsJoel Wherley - President and CEOKevin McNamara - President and CEOHolley Schmidt - Assistant ControllerMike Witzeman - CFOConference Call ParticipantsBrian Tanquilut - AnalystJoanna Gajuk - AnalystBen Hendrix - AnalystHolley SchmidtGood morning.OperatorGood morning. Thank you for standing by. Welcome to the Chemed Corporation Third Quarter 2025 Earnings Conference Call. At this time, all participants are in a listen-onl ...

Chemed (NYSE:CHE) Q3 2025 Earnings Call October 29, 2025 10:00 AM ET Company ParticipantsJoel Wherley - President and CEOKevin McNamara - President and CEOHolley Schmidt - Assistant ControllerMike Witzeman - CFOConference Call ParticipantsBrian Tanquilut - AnalystJoanna Gajuk - AnalystBen Hendrix - AnalystHolley SchmidtGood morning.OperatorGood morning. Thank you for standing by. Welcome to the Chemed Corporation Third Quarter 2025 Earnings Conference Call. At this time, all participants are in a listen-onl ...

CINCINNATI, Oct. 28, 2025 (GLOBE NEWSWIRE) -- Chemed Corporation (Chemed) (NYSE: CHE), which operates VITAS Healthcare Corporation (VITAS), the nation’s largest provider of end-of-life care, and Roto-Rooter, the nation’s largest commercial and residential plumbing and drain cleaning services provider, reported financial results for its third quarter ended September 30, 2025, versus the comparable prior-year period. Results for Quarter Ended September 30, 2025 Consolidated operating results: Revenue increase ...

Group 1 - LRT Capital Management's "LRT Global Opportunities Strategy" reported a net return of -8.00% in September 2025, with a year-to-date return of -0.17% [1] - The strategy faced challenges as market indexes surged, particularly driven by a few overvalued mega-cap stocks, while the broader market declined [1] - The fund's top five holdings were highlighted as key picks for 2025 [1] Group 2 - Chemed Corporation (NYSE:CHE) is noted for its unique structure, operating in two non-correlated sectors: hospice care through VITAS and plumbing services through Roto-Rooter [3] - Chemed Corporation's one-month return was 5.91%, but it experienced a significant decline of 25.88% over the past 52 weeks [2] - As of October 6, 2025, Chemed Corporation's stock closed at $435.38 per share, with a market capitalization of $6.344 billion [2]

Investment Strategy Overview - LRT Global Opportunities strategy returned -8.00% in September and -0.17% year-to-date as of October 1, 2025 [4][5] - The strategy focuses on long positions in high-quality companies and short positions in broad market indexes, viewing September's performance as a temporary setback [6] - Current market valuations are at extreme levels, with a trailing P/E ratio over 30x, P/B ratio over 5.6x, and cyclical P/E over 40x, indicating potential future return challenges [7] Company Highlights StoneX Group Inc. (SNEX) - StoneX operates as a diversified financial services network, providing execution, clearing, payment, and advisory services across various asset classes [12][13] - The company focuses on underserved client segments, leveraging deep institutional knowledge and a robust global infrastructure [13][14] - StoneX's growth strategy combines organic expansion with strategic acquisitions, enhancing capabilities and geographic reach [14][15] Simpson Manufacturing Co., Inc. (SSD) - Simpson is a leader in engineered structural connectors, with products specified in building codes, creating high switching costs for customers [16][17] - The company benefits from a strong distribution network and technical support, reinforcing its market position [18][19] - Demand for Simpson's products is driven by housing construction and stricter building codes due to extreme weather events [19][20] Asbury Automotive Group, Inc. (ABG) - Asbury operates a diverse portfolio of dealerships, focusing on high-margin parts and service operations for revenue stability [21][22] - The company has a proven track record in strategic acquisitions, enhancing its operational footprint and earnings power [23][24] - Asbury's digital retailing platform, Clicklane, integrates online and in-store experiences, providing a competitive advantage [24][25] Chemed Corp. (CHE) - Chemed operates VITAS Healthcare and Roto-Rooter, benefiting from strong demand in hospice care and plumbing services [26][27] - VITAS is positioned to capitalize on the aging U.S. population, while Roto-Rooter offers recession-resistant services [28][29] - The company has a disciplined capital allocation strategy, returning significant capital to shareholders [29] The Toronto-Dominion Bank (TD) - TD is a major player in North America's banking sector, with a focus on retail and commercial banking [30][31] - The bank's U.S. retail segment has been a primary growth engine, supported by strategic acquisitions [32] - TD's conservative risk culture and strong capital management contribute to its competitive advantage [34] RLI Corp. (RLI) - RLI is a specialty insurance company known for its underwriting discipline and focus on niche markets [35][36] - The company prioritizes profitability over growth, maintaining a strong alignment of interests through employee ownership [37][38] - RLI has a history of returning excess capital to shareholders, demonstrating a commitment to shareholder value [38] The Toro Company (TTC) - Toro is a leader in turf and landscape solutions, known for its quality and innovation [39][40] - The company has a strong distribution network and a disciplined growth strategy, including strategic acquisitions [41][42] - Toro consistently generates strong free cash flow, which is reinvested in product development and shareholder returns [42] Crown Castle International Corp. (CCI) - Crown Castle owns the largest portfolio of shared communications infrastructure in the U.S., primarily macro cell towers [43][44] - The company benefits from long-term lease agreements, providing predictable revenue streams [44][45] - Crown Castle is divesting non-core businesses to focus on its tower portfolio, enhancing shareholder value [46] Corporación América Airports S.A. (CAAP) - CAAP operates 53 airports across six countries, generating revenue from aeronautical and commercial activities [48][49] - The company invests in airport infrastructure to enhance operational efficiency and passenger experience [51] - CAAP is well-positioned to benefit from the recovery in global air travel [52] Colliers International Group Inc. (CIGI) - Colliers is a global leader in commercial real estate services, distinguished by its decentralized structure and entrepreneurial culture [53][54] - The company pursues a balanced growth strategy, focusing on high-margin business lines [56] - Colliers' ownership culture aligns interests with long-term shareholders, enhancing its competitive advantage [54] The Travelers Companies, Inc. (TRV) - Travelers is a leading provider of property and casualty insurance, organized into three primary segments [57][58] - The company benefits from a vast distribution network and strong relationships with independent agents [58][62] - Travelers leverages its scale and data advantages to maintain profitability and manage risks effectively [62] Petróleo Brasileiro S.A. - Petrobras (PBR-A) - Petrobras is a major integrated energy producer, controlling significant pre-salt oil reserves [63][64] - The company focuses on maximizing value from its most profitable exploration and production activities [65][66] - Petrobras' performance is closely tied to its operational execution in the pre-salt basins [66] Fabrinet (FN) - Fabrinet specializes in advanced optical packaging and precision manufacturing, serving leading OEMs [67][68] - The company's engineering expertise and focus on complex manufacturing create high switching costs [68][69] - Fabrinet benefits from secular tailwinds in the optical communications market, driven by data traffic growth [69][70] UnitedHealth Group Incorporated (UNH) - UnitedHealth is a leading healthcare enterprise, combining health benefits with diversified health services [71][72] - The company's scale provides cost advantages and superior negotiating power in the healthcare market [73][74] - UnitedHealth's integrated model enhances efficiency and patient outcomes, positioning it for continued growth [74] Charter Communications, Inc. (CHTR) - Charter is a major connectivity provider in the U.S., focusing on high-speed broadband services [76][77] - The company is upgrading its network to meet increasing bandwidth demands and expanding into underserved areas [79] - Charter's convergence of services, including mobile offerings, enhances customer loyalty and reduces churn [78][79] Group 1 Automotive, Inc. (GPI) - Group 1 operates a diversified automotive retail business, focusing on luxury and import brands [80][81] - The company's disciplined acquisition strategy enhances performance and profitability [82] - Group 1's digital retailing platform improves customer experience and operational efficiency [82][83] Exxon Mobil Corp (XOM) - Exxon Mobil is a leading integrated energy and chemical manufacturer with a vertically integrated business model [85]

Core Insights - The Pennant Group, Inc. has acquired certain operations from UnitedHealth Group for $146.5 million, which includes home health, hospice, and personal care services in Tennessee, Georgia, and Alabama [1][2]. Acquisition Details - The acquisition involves 54 locations with combined revenues of $189.3 million over the trailing twelve months [2]. - Approximately two-thirds of the revenue from the acquired agencies is related to home health services, while one-third is from hospice services [3]. Strategic Importance - This acquisition marks a strategic expansion for Pennant into the Southeast region, enhancing its operational footprint and growth potential [4]. - The company has established a transition services agreement with UnitedHealth to ensure a smooth integration process [3]. Leadership Perspective - Pennant's CEO, Brent Guerisoli, emphasized the strategic nature of this move and the company's commitment to operational excellence and leadership in the industry [4]. - COO John Gochnour highlighted the quality of the acquired teams and their local ties, which will contribute to the success of the integration [4]. Future Growth Plans - The company intends to continue pursuing growth opportunities in the home health, hospice, and senior living sectors, focusing on strategic and underperforming operations [4].

Core Thesis - Chemed Corporation (CHE) is viewed positively due to its strong market position in hospice care and plumbing services, with significant growth potential in the hospice market [1][2][5] Business Overview - Chemed operates two main businesses: VITAS, the largest hospice provider in the U.S., contributing 58% of revenue and growing around 9%, and Roto-Rooter, a plumbing service provider, contributing 42% of revenue and growing approximately 1.7% [2] - The U.S. hospice market is projected to grow from $29.9 billion to $39.1 billion by 2030, indicating a strong growth trajectory for VITAS [2] Financial Performance - Chemed generates annual free cash flow between $250 million and $367 million, has no debt beyond leases, and holds $249 million in cash, allowing for opportunistic share repurchases [4] - The stock is currently trading near multi-year lows on P/E and EV/EBITDA metrics, suggesting potential for re-rating as market focus shifts to 2026 earnings [4] Challenges and Mitigation Strategies - Recent stock price decline was attributed to a Medicare cap issue in Florida, which limited revenue recognition for VITAS due to higher state reimbursement rates [3] - Management has strategies in place to address these challenges, including increasing admissions and optimizing patient mix, which are expected to mitigate cap risks and create a $30 million cushion for 2026 [3][4] Market Outlook - The stock is seen as having a compelling risk/reward profile, with a potential upside of 26% as earnings improve, while downside risk is limited to approximately 12% [4] - The operational resilience and financial strength of Chemed support a bullish outlook despite recent short-term headwinds [5]

Core Insights - Chemed missed expectations on both revenue and earnings for Q2, leading to a 9% decline in share price [1] - The company reported a 4% increase in sales but a significant 22% drop in adjusted earnings per share (EPS) [2] - Management has lowered the 2025 EPS guidance from $25.20 to $22.15, indicating a 4% decline from the previous year [2] - CEO of Vitas Healthcare, Nick Westfall, announced his resignation, adding to the uncertainty surrounding the company [2] Revenue and Profitability - Chemed's Q2 revenue growth was steady at 4%, but profitability issues were evident across all business segments [3] - Vitas Healthcare experienced a 4% revenue growth but faced Medicare cap billing limitations, resulting in a 24% decline in earnings [4] - Excluding one-time impacts, Vitas's adjusted EBITDA remained flat for the quarter [4] Roto-Rooter Performance - Roto-Rooter, Chemed's plumbing business, achieved only 1% sales growth while net income fell by 20% due to increased marketing costs [6] - The company faces challenges from advertising pressures, particularly from Google, which affects visibility in free search areas [6] - Despite these challenges, Roto-Rooter remains the largest plumbing company in North America, warranting investor attention [7] Future Outlook - Chemed is currently navigating several challenges but is valued at 20 times free cash flow, suggesting potential for a turnaround [7]

Financial Data and Key Metrics Changes - VITAS net revenue was $396.2 million in 2025, an increase of 5.8% compared to the prior year period, driven by a 6.1% increase in days of care and a 4.2% increase in Medicare reimbursement rates [12] - Adjusted EBITDA excluding Medicare Cap totaled $66.8 million in the quarter, essentially flat with 2024, with an adjusted EBITDA margin of 16.2%, down 163 basis points from the prior year [15][16] - Roto Rooter revenue increased by 6% in 2025 compared to the same period in 2024, falling short of internal expectations [8] Business Line Data and Key Metrics Changes - Admissions at DITAS totaled 17,545, a 1.2% improvement from the same period in 2024, with a 4.9% increase when excluding patient transfers from VITAS [5] - Roto Rooter branch residential revenue totaled $156.4 million, a 9% increase from the prior year, driven by a 16.9% increase in water restoration [17] - Roto Rooter branch commercial revenue totaled $53.2 million, a 4.4% increase from the prior year, with a 24.4% increase in excavation revenue [17] Market Data and Key Metrics Changes - Hospital-directed admissions increased by 9.1%, while home-based patient admissions declined by 6.2%, nursing home admissions declined by 2.9%, and assisted living facilities admissions declined by 1.4% compared to the prior year [6] - The consolidated Florida program is estimated to end the 2025 Medicare cap year with a $19 million billing limitation, with management expecting no significant Medicare cap billing limitation for the 2026 cap year [6][7] Company Strategy and Development Direction - The company remains confident in the growth potential and strategic direction of both businesses despite underperformance in 2025 [5] - VITAS is adjusting its patient mix in Florida to mitigate Medicare cap issues, which may cause some disruption in operating metrics but is expected to lead to higher growth rates in the long term [10] - Roto Rooter is focusing on improving its competitive advantages to return to a steadier growth trajectory [11] Management's Comments on Operating Environment and Future Outlook - Management commented on the impact of the Liberation Day tariff announcement on consumer confidence and spending, which affected Roto Rooter's performance in April and May [9] - The company is optimistic about the overall prospects for both businesses, with VITAS working on initiatives to improve admissions and Roto Rooter focusing on enhancing its service offerings [10][11] Other Important Information - The company estimates $28.2 million in Medicare cap billing limitations for calendar 2025, with $19 million related to the Florida combined program [23] - Roto Rooter's adjusted EBITDA totaled $48.6 million, a decrease of 18.7% compared to the prior year quarter, with a margin of 21.8% [18] Q&A Session Summary Question: Impact of Medicare cap and future margins - Management discussed the levers being pulled to ensure no carryover impact from the Medicare cap after Q3, emphasizing hospital admissions and the moderation of the patient mix bubble created by the Community Access Program [28][29] Question: Factors driving underperformance in admissions - Management noted that the increase in admissions was intentionally moderated to avoid providing services without reimbursement, focusing on hospital admissions instead [38][40] Question: Roto Rooter management issues and recovery - Management indicated that local management issues have been resolved, and the recovery seen in June and July is attributed to improved operational performance rather than management changes [49][50] Question: Tax rate favorability in Q2 - The decline in the effective tax rate was attributed to accounting factors related to stock option exercises, with fewer exercises in the quarter leading to a larger tax deduction [65][66] Question: Confidence in short stay patient mix - Management expressed confidence in achieving a higher mix of short stay patients through improved operational emphasis and reputation [70][71] Question: Capital deployment and acquisition strategy - The company remains open to acquisitions at the right valuation and location, with no change in strategy despite current business challenges [98]