Chemed shares fall as Medicare cap concerns overshadow earnings beat

CINCINNATI - Chemed Corporation (NYSE:CHE) reported fourth-quarter earnings that beat analyst expectations, but shares tumbled 4.4% as investors focused on concerns about Medicare cap billing limitations for its VITAS hospice business.

The healthcare and plumbing services company posted adjusted earnings per share of $6.83, surpassing the analyst consensus of $6.78. Revenue rose 9.2% YoY to $640 million, also topping estimates of $636.1 million.

Chemed’s VITAS hospice segment saw strong growth, with revenue increasing 17.4% to $411 million. However, the company flagged that four of its 34 Medicare provider numbers have a trailing 12-month Medicare cap billing limitation totaling $9.6 million.

"The 60-basis point average differential between the reimbursement rate increase and the Medicare Cap increase has reduced cushion in our programs for both the trailing 12-months and our projected fiscal year 2025," Chemed stated in its earnings release.

For 2025, Chemed forecasts adjusted earnings per share of $24.95 to $25.45, compared to analyst expectations of $24.89. The company estimates Medicare cap billing limitations of $9.5 million for calendar year 2025.

The Roto-Rooter plumbing segment saw revenue decline 2.9% to $229 million in Q4, with adjusted EBITDA falling 7.2% to $60.3 million.

"We expect Roto-Rooter’s revenue and associated income to accelerate during the year, as management’s business improvement initiatives continue to build momentum," said Kevin McNamara, Chemed’s CEO.

Chemed ended the quarter with $178.4 million in cash and no debt. The company repurchased 388,235 shares for $212.8 million during Q4 at an average cost of $548.13 per share.

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