Chemed’s first quarter results saw a negative market response, despite revenue and non-GAAP earnings per share modestly exceeding Wall Street expectations. Management highlighted strong performance at its VITAS hospice subsidiary, driven by higher admissions and average daily census, partially supported by the Covington Health acquisition. CEO Kevin McNamara said, “VITAS continued its strong operating performance,” noting strategic efforts to navigate Medicare cap constraints. Meanwhile, Roto Rooter’s revenue grew, though management acknowledged a margin decline due to pricing adjustments in commercial excavation.
Is now the time to buy CHE? Find out in our full research report (it’s free).
Chemed (CHE) Q1 CY2025 Highlights:
- Revenue: $646.9 million vs analyst estimates of $641.8 million (9.8% year-on-year growth, 0.8% beat)
- Adjusted EPS: $5.63 vs analyst estimates of $5.55 (1.5% beat)
- Adjusted EBITDA: $121.7 million vs analyst estimates of $119.9 million (18.8% margin, 1.5% beat)
- Operating Margin: 14.6%, up from 12.3% in the same quarter last year
- : 1.63 million, up 184,657 year on year
- Market Capitalization: $7.96 billion
While we enjoy listening to the management's commentary, our favorite part of earnings calls are the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention.
Our Top 5 Analyst Questions Chemed’s Q1 Earnings Call
- Ben Hendrix (RBC Capital Markets) asked for more detail on the Medicare cap management strategy and whether cap pressure will persist. CEO Kevin McNamara and VITAS CEO Nick Westfall explained that cap management is a standard industry practice and current strategies should ensure sustainable growth without significant near-term impact.
- Ben Hendrix (RBC Capital Markets) inquired about cash flow and working capital, referencing a step-up in accounts receivable. CFO Mike Witzeman clarified that timing-related items, including a $48 million receivable tied to a prior audit and delayed Medicare payments, temporarily inflated receivables but were not indicative of collection issues.
- No further analyst questions on the call.
Catalysts in Upcoming Quarters
Looking ahead, our team will monitor (1) the pace of admissions growth and margin stability at VITAS as Medicare cap strategies evolve, (2) the early performance and integration of new Florida county programs, and (3) Roto Rooter’s ability to refine pricing in commercial segments while managing branch and contractor contributions. Updates on acquisition execution and further expansion efforts will also be key markers.
Chemed currently trades at $549.92, down from $586.94 just before the earnings. At this price, is it a buy or sell? Find out in our full research report (it’s free).
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