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Chemed’s Earnings Call: Challenges and Growth

Chemed’s Earnings Call: Challenges and Growth

Chemed ((CHE)) has held its Q2 earnings call. Read on for the main highlights of the call.

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Chemed Corporation’s recent earnings call highlighted a blend of challenges and growth opportunities. While concerns were raised about Medicare cap limitations and Roto-Rooter’s revenue performance, the company expressed confidence in its future growth, demonstrating resilience in hospital admissions and commercial revenue segments.

VITAS Revenue Increase

VITAS reported a net revenue of $396.2 million in Q2 2025, marking a 5.8% increase compared to the previous year. This growth was primarily driven by a 6.1% increase in days of care and a 4.2% rise in Medicare reimbursement rates, showcasing the company’s ability to capitalize on healthcare service demands.

Hospital Admissions Growth

Chemed’s strategic focus on shorter-stay patients resulted in a 9.1% increase in hospital-directed admissions in Q2 2025. This growth reflects the company’s efforts to optimize patient care and enhance service delivery within its healthcare operations.

Roto-Rooter Commercial Revenue Growth

Roto-Rooter’s branch commercial revenue grew by 4.4% in Q2 2025, driven by significant increases in excavation (24.4%) and water restoration (11.7%). This performance underscores the segment’s potential for expansion in specialized service areas.

Optimism for Future Growth

Despite facing several challenges, Chemed remains optimistic about the long-term growth prospects for both VITAS and Roto-Rooter. The company is focused on leveraging its strengths to navigate current obstacles and capitalize on future opportunities.

Medicare Cap Limitation

VITAS is contending with a $19 million Medicare cap billing limitation in Florida for the 2025 cap year, attributed to weaker admissions in April and May. This limitation poses a significant challenge for the company’s financial performance.

Roto-Rooter Revenue Challenges

Roto-Rooter’s revenue growth was modest at 0.6% in Q2 2025, falling short of expectations. The total leads were down 7.2% compared to Q2 2024, highlighting the need for strategic adjustments to boost performance.

Insurance and Compensation Costs

Higher casualty and workers’ compensation costs negatively impacted Roto-Rooter’s EBITDA margins by approximately 220 basis points, presenting an area of concern for the company’s profitability.

Reduced Earnings Guidance

Chemed revised its full-year 2025 earnings per diluted share guidance down to a range of $22 to $22.30 from the previous range of $24.95 to $25.45. This adjustment reflects the challenges faced during the second quarter, necessitating a more conservative outlook.

Forward-Looking Guidance

Looking ahead, Chemed’s management provided guidance for the remainder of 2025, projecting VITAS to achieve full-year revenue growth of 7.5% to 8.5%. The adjusted EBITDA margin, excluding Medicare Cap, is estimated between 18.2% and 18.7%. Roto-Rooter’s revenue is expected to increase by 1.25% to 1.75%, with an adjusted EBITDA margin between 23.5% and 24.5%. Overall, Chemed’s full-year earnings per diluted share are forecasted to range from $22 to $22.30, reflecting the ongoing challenges.

In conclusion, Chemed Corporation’s earnings call revealed a mixed sentiment, balancing challenges with growth opportunities. Key takeaways include the company’s resilience in hospital admissions, strategic focus on growth areas, and cautious optimism for future performance despite current hurdles.

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