Chemed Corporation Q4 FY2025 earnings call

• VITAS: Transitioned admission pattern to more hospital-directed admissions in Florida combined program, beginning to balance mix. Received CON to operate in Manatee County. Medicare cap billing limitation in Florida is behind us.
• Rotorooter: Continuing to add commercial business managers, contracted with new SEO provider, working on centralizing water restoration billing and collections to improve results.

VITAS: Fourth quarter 2025 net revenue was $418.8 million, up 1.9% y-o-y. Average daily census was 22,462, up 1.3%. Hospital-directed admissions increased 9.9%. Medicare cap billing limitation in fourth quarter was less than $2 million. Rotorooter: Fourth quarter revenue declined 3.7% y-o-y. Branch commercial revenue increased 1.6%, branch residential revenue declined 3.1%. Water restoration write-offs increased. Total leads were flat, with paid leads up 9.4% but natural leads down. Roto-Rooter Management contracted with new SEO provider.

VITAS: Revenue prior to Medicare cap estimated to increase 5.5%-6.5% y-o-y in 2026. Average daily census estimated to increase 3.5%-4%. Full-year EBITDA margin prior to Medicare cap 17.5%-18%. Medicare cap billing limitations estimated at $9.5 million in 2026. Rotorooter: Forecasted full-year 2026 revenue growth 3%-3.5%. Adjusted EBITDA margin 22.5%-23%. Full-year 2026 earnings per diluted share estimated $23.25-$24.25.

Private equity disruption in plumbing industry affecting paid search model. Google algorithm changes impacting natural search leads. Increased water restoration write-offs due to insurance scrutiny and inconsistent billing practices.

Q: What gives confidence in Roto-Rooter revenue growth in 2026?

A: Paid leads increasing, improved visibility through SEO, potential acquisition of other franchises.

Q: How to think about VITAS revenue progression?

A: Patient mix with short-stay patients building over year, refocusing admission pattern to normalize growth.

Q: Structural change in Roto-Rooter?

A: Going through transition with paid leads instead of free, but no long-term impairment, focusing on leads and ancillary services.