Chemed Corporation (CHE) Q4 2025 Earnings Call Summary

1Key Financial Results and Metrics

VITAS Healthcare:

Net revenue: $418.8 million, up 1.9% year-over-year.

Adjusted EBITDA: $91.6 million, down 1.7% year-over-year; EBITDA margin: 21.7%, down 79 basis points.

Average revenue per patient day: $208.01, up 86 basis points.

Admissions: 17,419, a 6% increase from Q4 2024.

Roto-Rooter:

Revenue: $155.6 million, down 3.1% year-over-year.

Adjusted EBITDA: $47.5 million, down 21.1%; EBITDA margin: 21.5%, down 477 basis points.

Branch commercial revenue increased by 1.6%, while residential revenue declined by 3.1%.

2Strategic Updates and Business Highlights

VITAS is focusing on balancing hospital admissions with other pre-admission locations to improve revenue growth and EBITDA margins.

The company received a certificate of need to operate in Manatee County, Florida, presenting new growth opportunities.

Roto-Rooter is expanding its commercial business by adding commercial business managers, which have shown positive revenue impacts.

A new third-party search engine optimization provider was contracted to improve natural lead generation.

3Forward Guidance and Outlook

VITAS:

Revenue growth expected between 5.5% and 6.5% in 2026, with average daily census growth of 3.5% to 4%.

EBITDA margin forecasted at 17.5% to 18%.

Anticipated Medicare Cap billing limitations of $9.5 million in 2026, significantly reduced from $27.2 million in 2025.

Roto-Rooter:

Revenue growth projected at 3% to 3.5% for 2026, with an adjusted EBITDA margin of 22.5% to 23%.

Expected improvements in billing and collections, particularly in water restoration, could provide a $4 million to $6 million tailwind.

4Bad News, Challenges, or Points of Concern

Both subsidiaries fell short of expectations in Q4 2025, leading to a $0.70 earnings per share miss.

VITAS faced challenges with a higher percentage of short-stay patient admissions, negatively impacting revenue growth and margins.

Roto-Rooter experienced a decline in residential revenue and increased write-offs related to water restoration, with implicit price concessions rising by 57%.

The transition from free to paid leads has impacted Roto-Rooter's revenue predictability, with natural leads declining significantly.

5Notable Q&A Insights

Management expressed confidence in achieving 2026 guidance despite the tough Q4 results, attributing the miss to temporary issues rather than fundamental weaknesses.

The transition to a paid lead model for Roto-Rooter is seen as a necessary adjustment, with management optimistic about stabilizing and improving lead generation.

Concerns about structural changes in the plumbing industry were addressed, with management indicating that competitive pressures from private equity are diminishing.

The Q&A highlighted the importance of balancing short-stay and long-stay admissions for VITAS to improve financial performance moving forward. Overall, while Chemed faced challenges in Q4 2025, management is optimistic about strategic initiatives and growth opportunities in 2026.