Chemed Corporation Q3 FY2025 earnings call

• VITAS: Mitigated Florida Medicare Cap billing limitation for 2026. Admissions from hospitals were 44.5% in Q3 2025, above 42% target. New Pinellas County location on track to open early November. Marion County program ADC at 75 projecting to double to 150 by end 2026.
• Roto-Rooter: Residential plumbing revenue up 8.2% from targeted campaign. Paid leads up 8.6% y-o-y, natural leads down. SG&A costs increased $3.6 million due to shift from unpaid to paid leads. Operational initiatives having positive impacts, though margins still below long-term expectations.

VITAS Healthcare

• Net revenue in Q3 2025 was $407.7 million, a 4.2% increase from the prior year. This includes a 2.5% increase in days-of-care and a ~4.1% increase in geographically weighted average Medicare reimbursement rate. However, acuity mix shift and Medicare Cap/other contra revenue changes negatively impacted growth. Average revenue per patient day was $205.08, up 298 basis points y-o-y. Adjusted EBITDA excluding Medicare Cap was $70.4 million, down 3.8% y-o-y, with a margin of 17.0%, 157 basis points below the prior year.

Roto-Rooter

• Revenue increased 1.1% y-o-y. Branch residential revenue was up 3.4% (plumbing +8.2%, excavation +4.5%, water restoration +6.8%, drain cleaning -2.6%). Branch commercial revenue was up 2.8% (excavation +10.2%, water restoration +3.5%, drain cleaning +1.2%, plumbing -0.8%). Revenue from independent contractors declined 4.7%. Adjusted EBITDA was $49.4 million, down 12.4% y-o-y, with a margin of 22.7%, a 351 basis point decline from the prior year.

• Management reiterates guidance of $22 to $22.30 per share, excluding noncash expenses. Assumes no Medicare Cap related to Florida combined program for FY 2026 starting Oct 1, 2025. VITAS' fourth quarter typically best due to rate increase, Roto-Rooter stronger in fourth and first quarters due to weather.

• Potential Medicare Cap issues in Florida were a concern in 2025 but management believes 2026 will be clear. Competition affecting lead generation and margins at Roto-Rooter. Operational challenges with independent contractors at Roto-Rooter, affecting growth.

Q: Ben Hendrix asked about bridging to guidance, specifically demand, cost trends, and seasonality.

A: Michael Witzeman responded that there's seasonality, VITAS' fourth quarter is best due to rate increase, Roto-Rooter does better in fourth and first quarters due to weather. Kevin McNamara added specific elements expected to improve in Q4 compared to Q3.

Q: Brian Tanquilut asked about competitive dynamics in Roto-Rooter and G&A improvement.

A: Michael Witzeman said total paid search leads up, unpaid leads down, indicating less competitive pressure on paid leads. Kevin McNamara mentioned operational metrics at Roto-Rooter remain strong, poised to make more money if calls increase.

Q: Joanna Gajuk asked about VITAS margins, seasonality, and Roto-Rooter top-line growth.

A: Michael Witzeman said VITAS gets margin bump from rate increase, SG&A down y-o-y. For Roto-Rooter, budgeted growth in next year, early stages of budgeting but expecting better growth than 2025