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Chemed Corporation (CHE) operates as a diversified company with two primary business segments. It provides hospice care services through its VITAS segment and plumbing and drain cleaning services through its Roto-Rooter segment. The company primarily generates its revenue from operations within the United States, catering to both healthcare and home service needs.
- VITAS - Offers hospice services, including homecare, inpatient care, continuous care, and other related services to patients with terminal illnesses.
- Roto-Rooter - Provides plumbing, drain cleaning, water restoration, and other related services to residential and commercial customers.
| Name | Position | External Roles | Short Bio | |
|---|---|---|---|---|
Kevin J. McNamara ExecutiveBoard | President and Chief Executive Officer | Kevin J. McNamara has served as President of Chemed Corporation since August 1994 and as Chief Executive Officer since May 2001. He has also held several executive roles such as Vice President, Executive Vice President, Secretary, General Counsel, and has been a Director since 1987. | View Report → | |
Brian C. Judkins Executive | Vice President, Chief Legal Officer, and Secretary | Brian C. Judkins is Chemed Corporation's Vice President, Chief Legal Officer, and Secretary since August 31, 2020. He previously served as Vice President and Counsel starting in January 2019. | ||
Michael D. Witzeman Executive | Vice President, Chief Financial Officer, and Controller | Michael D. Witzeman is the Vice President, Chief Financial Officer, and Controller at Chemed Corporation, having assumed the CFO role effective January 1, 2024. He previously served as Assistant Vice President and Assistant Controller from July 2005, and held a role as Senior Manager of Assurance at Deloitte & Touche LLP. | ||
Nicholas M. Westfall Executive | Executive Vice President of Chemed Corporation | Nicholas M. Westfall is Chemed's Executive Vice President, a role he has held since June 16, 2016. He is also the CEO of VITAS Healthcare, a wholly owned subsidiary of Chemed, having advanced through various operational roles within the organization. | ||
Spencer S. Lee Executive | Executive Vice President | Chairman and Chief Executive Officer of Roto-Rooter Services Company | Spencer S. Lee has served as Executive Vice President of CHE since May 15, 2000. He is also the Chairman and Chief Executive Officer of Roto-Rooter Services Company since January 1999, following his role as Senior Vice President from May 1997 to January 1999. |
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How does management plan to address the margin compression in Roto-Rooter given the 38% increase in commercial excavation revenue came at a lower margin, and what specific adjustments are intended for the excavation pricing model?
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With the recent $85 million Covenant Health acquisition meeting internal projections, what measures are in place to ensure that similar future acquisitions do not impair EBITDA margins amid rising integration costs?
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Given the impact of working capital timing issues such as the $48 million receivable adjustment and the deferred PIP payment, what steps are management taking to stabilize cash flow and predict future working capital fluctuations?
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Considering the current strategy to boost hospital-based admissions in response to Medicare cap pressures, how does management intend to balance growth with potential revenue and margin trade-offs arising from shorter lengths of stay?
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In light of the increasing admissions and the 221 basis point rise in average revenue per patient day, what is management doing to ensure that the acuity mix shift and other revenue drivers continue to support sustainable income amid ongoing Medicare cap challenges?
| Customer | Relationship | Segment | Details |
|---|---|---|---|
United States Government (Medicare) | Primary payor for hospice care services | VITAS Healthcare | Over 90% of VITAS revenue from Medicare and 64% of VITAS accounts receivable tied to Medicare. |
Notable M&A activity and strategic investments in the past 3 years.
| Company | Year | Details |
|---|---|---|
Roto-Rooter (Linden, NJ franchise and related assets) | 2022 | Completed on February 1, 2022, this acquisition involved buying the Linden, NJ franchise and related assets for $400,000 in cash to grow the franchise network. |
Broward Health Hospital System hospice assets (via VITAS) | 2022 | Completed on January 28, 2022, VITAS acquired hospice assets from Broward Health Hospital System for approximately $1.3 million in cash (with minor reported variations) to expand its hospice care portfolio. |
Roto-Rooter (South Carolina franchise) | 2023 | In the first nine months of 2023, Roto-Rooter completed the acquisition of a South Carolina franchise for $305,000 in cash as part of its ongoing franchise expansion efforts. |
VITAS Healthcare Corporation (Covenant Care assets) | 2024 | Completed on April 17, 2024, VITAS acquired substantially all hospice operations and an assisted living facility from Covenant Health and Community Services, Inc. via an asset purchase agreement for $85 million in cash, integrating operations across the Florida panhandle and Alabama to enhance its patient-centered care model. |
Roto-Rooter (Texas franchise) | 2024 | The Texas franchise was acquired on March 27, 2024 for $1.5 million in cash, reinforcing Roto-Rooter's regional market presence. |
Roto-Rooter (New Jersey franchise) | 2024 | Acquired on March 11, 2024 for $5.8 million in cash, this transaction supports Chemed’s growth strategy by securing a strategic franchise territory focused on operational efficiency and earnings. |
Roto-Rooter (Michigan franchise) | 2025 | On January 3, 2025, Roto-Rooter completed the acquisition of its Michigan franchise for $225,000 in cash, further expanding its franchise network. |
Recent press releases and 8-K filings for CHE.
- Chemed Corporation held its annual stockholders meeting on May 19, 2025, where detailed vote counts were provided for the election of the entire Board of Directors.
- The meeting approved key proposals including the 2025 Stock Incentive Plan, the ratification of PricewaterhouseCoopers LLP as independent accountants for 2024, and the non-binding executive compensation program.
- The proposal to reduce the stockholder threshold for calling a special meeting was not presented as no representative from the proponent attended.
- Medicare Cap challenges are being managed within the VITAS business through enhanced analytics and a moderated ADC growth forecast (targeting 8%-10% instead of previous 15%), demonstrating proactive oversight of long-standing industry issues.
- The company discussed its recent Covenant acquisition in Florida and outlined a proactive strategy to pursue further acquisitions in key markets.
- Updates on Roto-Rooter indicated minimal tariff exposure due to cost pass-through practices and highlighted progress in growing both its commercial and residential segments, including growth through an innovative app platform.
- VITAS delivered strong growth with 18,139 admissions (up 7.3%) and an average daily census of 22,244 (up 13.1%), contributing to a net revenue of $407.4 million (up 15.1%) and an adjusted EBITDA increase of 15.9%.
- Roto-Rooter showed modest revenue gains with branch residential revenue at $167.2 million and branch commercial revenue at $57.7 million, though its adjusted EBITDA declined by 2.4%, reflecting margin pressures from pricing adjustments.
- Management addressed cash flow dynamics, noting a $48 million receivable adjustment related to prior refunds and a $57 million PIP payment timing, emphasizing these as timing issues rather than collection problems.
- The update confirmed that strategic initiatives, including the $85 million Covenant Health acquisition, are on track to support sustainable growth and assist in managing Medicare cap challenges.
- Consolidated revenue increased 9.8% to $646.9 million with GAAP diluted EPS rising 14.6% to $4.86 in Q1 2025.
- The VITAS segment led with net patient revenue of $407.4 million (up 15.1%) and the Roto-Rooter segment posted revenue of $239.5 million (up 1.8%), highlighting steady growth across divisions.
- Chemed repurchased 50,000 shares for $29.8 million, and ended the quarter with $173.9 million in cash and no debt, with updated 2025 guidance expected in late June.
- The call emphasized steady volume performance and revenue growth, with volume expectations at 8.5% to 9% ADC and a blended revenue guidance of 10.5% to 11.3% for 2025, consistent with full-year forecasts.
- Executives discussed cap pressures in Florida and the strategic adjustment to restore hospital admission ratios from about 45-46% to a historical level near 50%, which is key to managing Medicare cap effects.
- The ramp-up in new markets was highlighted, with progress in CON and de novo locations in Florida (e.g., Pasco and Marion Counties) aimed at expanding capacity, although profitability from these initiatives is expected in 2026.
- Additional insights covered competitive pressures in the drain cleaning segment, where private equity firms are intensifying bids, and a disciplined approach to capital deployment and share buybacks was noted as part of their strategic plan.
- Chemed's Q4 2024 results showed a 7.4% increase in service revenues from $2,264,417K to $2,431,287K with robust non‐GAAP improvements: Adjusted EBITDA up 11.3% and Adjusted Net Income up 13.8% .
- VITAS delivered strong operational performance with 16,427 admissions (up 3.5% y/y) and a 14.6% increase in average daily census .
- VITAS net revenue reached $411 million (up 17.4% y/y), bolstered by the $85 million Covenant Health acquisition .
- Roto-Rooter recorded quarterly revenue of $229 million, with mix improvements and better-than-expected commercial performance despite a 2.9% decline y/y .
- Management provided updated 2025 guidance, citing moderated growth due to Medicare cap impacts and seasonal trends while expecting continued strong performance .
- Revenue increased by 9.2% to $640.0 million with GAAP diluted EPS of $6.02 and adjusted diluted EPS of $6.83 in Q4 2024.
- The VITAS segment recorded net patient revenue of $411.0 million (+17.4%), while Roto-Rooter reported revenue of $229.0 million (down 2.9%).
- Adjusted EBITDA was $93.2 million for VITAS (+11.8%) versus $60.3 million for Roto-Rooter (down 7.2%).