We came across a bullish thesis on Chemed Corporation on The Buyside Guy’s Substack by The Buyside Guy. In this article, we will summarize the bulls’ thesis on CHE. Chemed Corporation's share was trading at $464.00 as of September 2nd. CHE’s trailing and forward P/E were 23.88 and 18.48, respectively according to Yahoo Finance. 5 States with the Highest Cancer Rates Tyler Olson/Shutterstock.com Chemed Corp. (CHE), based in Ohio and publicly listed since 1971, operates two distinct businesses: VITAS, the ...

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]

Financial Data and Key Metrics Changes - VITAS net revenue was $396.2 million in Q2 2025, representing a 5.8% increase 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 [13][14] - 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 [16][17] - Roto Rooter revenue increased 6% in 2025 compared to the same period in 2024, falling short of internal expectations [8][9] Business Line Data and Key Metrics Changes - DITAS admissions totaled 17,545, a 1.2% improvement from the same period in 2024, with a 4.9% increase when excluding patient transfers to VITAS [5][6] - Roto Rooter branch residential revenue was $156.4 million, a 9% increase from the prior year, driven by a 16.9% increase in water restoration [20] - Roto Rooter adjusted EBITDA decreased by 18.7% to $48.6 million, with an adjusted EBITDA margin of 21.8%, reflecting inefficiencies in the labor force due to lower residential revenues [21][22] 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][10] - The consolidated Florida program is projected 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 Q2 2025 [5][11] - VITAS is adjusting its patient mix in Florida to mitigate Medicare cap issues, which may cause some disruption in operating metrics but positions the company for long-term growth [11][12] - Roto Rooter is focusing on improving its competitive advantages and is optimistic about returning to a steadier growth trajectory [11][12] Management's Comments on Operating Environment and Future Outlook - Management noted that the weak admissions in April and May were influenced by external factors affecting consumer confidence and spending [10][11] - The company is optimistic about the overall prospects for both businesses, with VITAS management actively reviewing expenses to offset lower EBITDA margins [17][21] - Management expects to update assumptions regarding rates and the overall outlook for the 2026 Medicare cap year in the third quarter earnings release [7][26] Other Important Information - The company estimates $28.2 million in Medicare cap billing limitations for calendar 2025, with no limitations expected in the fourth quarter related to the Florida combined program [26] - Roto Rooter is forecasted to have a revenue increase of 1.25% to 1.75% in 2025 compared to 2024, with an adjusted EBITDA margin expected to be 23.5% to 24.5% [27] Q&A Session Summary Question: What measures are being taken to avoid Medicare cap issues in 2026? - Management emphasized hospital admissions and the moderation of the patient mix bubble created by the Community Access Program as key levers to avoid cap issues [31][32] Question: What is the outlook for admissions and revenue growth? - Management indicated that while admissions were slightly below expectations, they are confident in achieving a higher mix of short-stay patients moving forward [70][72] Question: How are local management issues affecting Roto Rooter's recovery? - Management stated that past local management issues have been resolved, and the focus is now on improving conversion rates and addressing market challenges [51][56] Question: What is the impact of the recent tax rate changes? - The effective tax rate decline was attributed to accounting factors related to stock option exercises, which are not expected to persist [67][68] Question: Is there a change in the company's acquisition strategy? - The company remains open to acquisitions at the right valuation and location, with no change in overall strategy despite current challenges [100][102]

Summary of Enhabit (EHAB) FY Conference Call - June 10, 2025 Company Overview - **Company**: Enhabit (EHAB) - **Industry**: Home Health and Hospice Care Key Points Industry and Market Dynamics - The home health industry is experiencing mid-single-digit volume growth, with Medicare Advantage driving higher utilization compared to traditional Medicare, which is declining at approximately -4% [7][10] - The aging population is a significant factor fueling growth in home health services [7] - Enhabit has seen a decline in traditional Medicare volumes but is working to stabilize and improve this through strategic initiatives [10][35] Company Strategy and Performance - Enhabit has focused on payer innovation as a critical part of its strategy to be recognized as a full-service provider [3] - The company has made substantial investments in changing its case management clinical model for hospice, which has shown positive results in growth [4] - Enhabit aims to grow its payer innovation contracts, which have shown a year-over-year increase of approximately 15% [21] - The company has successfully renegotiated contracts with major national and regional payers, enhancing its full-service provider status [14] Financial Metrics and Projections - Enhabit reported a decline in fee-for-service volumes, improving from -13% to -7% year-over-year, with a target to further reduce this to -4% to -5% by the end of the year [35][38] - The company has a goal to maintain a Medicare revenue percentage in line with peers, currently at just under 57% [12] - The average daily census (ADC) for hospice is expected to continue growing due to improved case management and business development efforts [60] Cost Management and Efficiency - Home health cost per day increased by 1% in 2024, with a focus on managing costs through technology and optimizing visit utilization [68][70] - Hospice cost per day is projected to grow by 2% to 3%, reflecting market inflation and operational efficiencies [75] - General and administrative (G&A) costs have been effectively managed, running slightly below the target range of $27 million to $28 million per quarter [76] Regulatory and Reimbursement Environment - Enhabit is advocating for better reimbursement rates from CMS, emphasizing the need for all-payer margin analysis rather than just Medicare margins [49][50] - The company is preparing for potential clawbacks and is actively engaging with MedPAC to address reimbursement challenges [53][54] Future Outlook - Enhabit plans to continue expanding its hospice services, with a focus on early patient acceptance and education for referral sources [57][64] - The company is targeting approximately 10 new sites annually, with a focus on hospice, which is expected to contribute to overall revenue growth [61] - Enhabit aims to leverage best practices from successful markets to enhance performance across its portfolio [39] Additional Insights - The company is focused on maintaining high-quality care while managing costs effectively, ensuring a balanced approach to patient care and operational efficiency [73] - Enhabit is committed to strategic growth through organic means, de novo expansions, and potential M&A opportunities, particularly in the hospice sector [62] This summary encapsulates the key insights and strategic directions discussed during the Enhabit FY Conference Call, highlighting the company's performance, market dynamics, and future growth strategies.

Core Viewpoint - The Pennant Group, Inc. reported strong operating results for the first quarter of 2025, with significant increases in revenue, net income, and adjusted earnings per share, indicating positive momentum across its home health, hospice, and senior living segments [1][4][5]. Financial Performance - Total revenue for Q1 2025 was $209.8 million, a 33.7% increase from $156.9 million in Q1 2024 [4][19]. - Net income for Q1 2025 was $7.8 million, up 58.5% from $5.1 million in Q1 2024 [4][12]. - Adjusted net income for Q1 2025 was $9.6 million, reflecting a 61.4% increase from $5.9 million in Q1 2024 [4][30]. - GAAP diluted earnings per share were $0.22, compared to $0.16 in the prior year [1][12]. - Adjusted diluted earnings per share were $0.27, up from $0.20 in Q1 2024 [1][30]. Segment Performance - Home Health and Hospice Services segment revenue was $159.9 million, a 37.2% increase from $116.5 million in Q1 2024 [4][19]. - Senior Living Services segment revenue reached $50.0 million, a 23.6% increase from $40.4 million in Q1 2024 [4][24]. - Total home health admissions increased by 28.9% to 18,878, while Medicare home health admissions rose by 19.7% to 7,599 [4][22]. - Hospice average daily census increased by 28.1% to 3,794 [4][22]. - Senior Living average monthly revenue per occupied room increased by 11.3% to $5,193 [4][24]. Operational Highlights - Consolidated Adjusted EBITDAR for Q1 2025 was $28.0 million, a 31.0% increase from $21.4 million in Q1 2024 [4][35]. - Consolidated Adjusted EBITDA for Q1 2025 was $16.4 million, reflecting a 45.9% increase from $11.2 million in Q1 2024 [4][35]. - The company emphasized ongoing investments in leadership development as a key driver of operational success [4][5]. Future Outlook - The company plans to discuss its financial results in a live webcast scheduled for May 7, 2025, indicating a commitment to transparency and investor engagement [1][6].

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, a 15.1% increase 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 [12] - 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 [13] - Roto Rooter generated a total revenue increase of 1.8% in Q1 2025 compared to the prior year, with gross branch revenue increasing by 3.1% [8][15] Business Line Data and Key Metrics Changes - VITAS admissions totaled 18,139 in Q1 2025, a 7.3% increase from the same period in 2024, with average daily census (ADC) expanding to 22,244, a 13.1% increase [6][21] - 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 [15] - Roto Rooter branch commercial revenue increased by 7.3% to $57.7 million, supported by a 38% increase in excavation and a 14% increase in water restoration [15] Market Data and Key Metrics Changes - Hospital-based admissions represented 49% of overall admissions for VITAS in Q1 2025, the highest level since the pandemic, with a 12% increase compared to Q1 2024 [24] - The average length of stay for VITAS patients increased to 118.7 days in Q1 2025 from 103.9 days in Q1 2024, reflecting the impact of community access initiatives [22] Company Strategy and Development Direction - The company is focusing on increasing hospital-based admissions to manage Medicare cap exposure, which is expected to provide a cushion for revenue growth [7][24] - VITAS is expanding its operating scope in Florida, with new locations in Pasco and Marion Counties, which are anticipated to enhance growth potential [10][25] - Roto Rooter management is refining its excavation pricing model to balance revenue growth and EBITDA margin, particularly in the commercial sector [19] Management's 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 [26] - The company acknowledged that the growth path observed in 2023 and 2024 may not be sustainable in the mid to long term due to Medicare cap constraints [36] Other Important Information - The financial results for Q1 2025 were within expectations and guidance, with plans to provide updated earnings guidance in the upcoming earnings press release [20] - The company experienced a significant increase in accounts receivable due to the timing of cash flow related to a previous audit refund [39][40] Q&A Session Summary Question: Details on long-term cap management strategy - Management discussed the importance of managing Medicare cap exposure and the impact of regulatory changes on revenue growth [30][31] Question: Insights on cash flow dynamics and working capital - Management explained that cash flow dynamics were affected by the timing of receivables and a significant refund related to an audit, clarifying that these do not indicate collection problems [37][39]

Financial Data and Key Metrics Changes - Consolidated net revenue for Q4 was $258.2 million, reflecting a sequential increase of $4.6 million or 1.8% quarter over quarter, but a decrease of $2.4 million or 0.9% year over year [27] - Consolidated adjusted EBITDA for Q4 was $25.1 million, an increase of $0.6 million or 2.4% sequentially, remaining relatively flat year over year [28] - Home Health revenue decreased by $0.6 million or 0.3% sequentially, while hospice revenue increased by $5.2 million or 9.9% sequentially [31][36] Business Line Data and Key Metrics Changes - Home Health admissions grew by 1.8% year over year, with non-Medicare admissions up 10.7% [7] - Hospice average daily census (ADC) increased by 8.6% year over year, with same-store up 7% [17] - Home Health adjusted EBITDA totaled $35.5 million in Q4, reflecting a sequential decrease of $1.0 million or 2.7% [32] Market Data and Key Metrics Changes - 72% of Home Health census is now in episodic payers, indicating a shift towards a more favorable payer mix [30] - Hospice ADC of 3,729 is 3.9% higher than the previous post-spin segment peak in Q4 of 2022 [38] Company Strategy and Development Direction - The company is focused on executing growth strategies in both Home Health and Hospice segments, with a strong emphasis on census growth and payer innovation contracts [6][19] - A de novo strategy was implemented, successfully opening six new locations in 2024, with plans for fourteen more projects in process [20] - The company aims to optimize its cost structure by closing or consolidating branches, expecting to improve adjusted EBITDA by approximately $1 million [23] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the ability to maintain growth momentum into 2025, particularly in hospice operations [55] - The company anticipates a foundational year in 2024 to set the stage for consistent census growth and improved payer mix [46] - Management highlighted the importance of managing visits per episode to maintain high-quality outcomes while increasing clinical capacity [12] Other Important Information - The company generated approximately $54 million of adjusted free cash flow during 2024, with a conversion rate of approximately 54% [42] - 2025 guidance for net service revenue is projected between $1.05 billion to $1.08 billion, with adjusted EBITDA in the range of $101 million to $107 million [43] Q&A Session Summary Question: How does the momentum in Q4 carry over into 2025? - Management is confident in the case management model and the business development team's ability to convert referrals quickly, expecting continued sequential growth [60] Question: What visibility exists regarding payer innovation contracts? - Management noted ongoing discussions with regional plans on episodic contracts, indicating a renewed interest in moving towards episodic arrangements [64] Question: How do the new opportunities and historical agreements relate to guidance? - The guidance includes an expectation of $19 to $21 million in overall revenue improvement based on pricing, without assuming material incremental unit revenues from payer innovation [70] Question: Can you break down the components of hospice revenue per day? - The hospice cap accrual benefit was about $1.4 million, and normalizing for that shows consistency with expected Medicare rate increases [72]