The case for & against
Bull & Bear analysis
Bullish
ChemEd Corporation (NASDAQ: CHEM) provides essential services primarily through its VITAS Healthcare subsidiary, which specializes in hospice care, and Roto-Rooter, offering plumbing and restoration services. Positioning itself in the healthcare and home services sectors, the company is navigating a competitive and regulatory landscape, particularly in managing Medicare reimbursements. The recent focus on VITAS indicates a strategic emphasis on hospice services to address aging demographics while improving operational efficiencies to meet evolving market demands.
Bull says
- ↑VITAS Q1 net revenue $420M (+3.1% YoY) driven by accelerated admissions
- ↑Patient admissions at VITAS rose 6.9% YoY to 19,394
- ↑2026 adjusted EPS guidance raised to $24.00–$24.75 from prior $23.25–$24.25
- ↑Roto-Rooter franchise acquisitions to add $5–$5.5M revenue in 2026, accretive
- ↑Strong liquidity and high earnings yield indicate sound financial health
- ↑VITAS revenue growth forecast upgraded to 4.5–5.5% for upcoming periods
Bear says
- ↓Roto-Rooter Q1 revenue fell to $56.5M (-1.9% YoY) on weather headwinds
- ↓Roto-Rooter adjusted EBITDA dropped 9.6% to $53.5M, margins at 22.5%
- ↓Marketing expenses rose by $3M, reducing Roto-Rooter profitability
- ↓VITAS adjusted EBITDA margin slipped to 16.8%, highlighting margin pressures
- ↓Intense private equity competition pressures pricing and lead generation
- ↓Weak profitability and declining dividend yield signal shareholder return risk
Investment themes with CHE
High Dividend Yield↑ +0.32%
Companies paying above-average dividends
AVGO · JPM · XOM
Buybacks↑ +0.48%
Companies repurchasing their own shares
C · JCI · WFC
Health Care Providers↓ -0.61%
UNH · CVS · HCA
Earnings Call · Q1 2026 · Mgmt. Guidance
Updated 04-24-2026neutral
Transcript signals
Bull points
- VITAS performance during the quarter exceeded even the high end of our expectations. We believed that the first quarter of 2026 would be a tough comparison as we continued to transition to balance our patient mix between short-stay and long-stay patients. VITAS management was able to add ADC through accelerated admissions from non-hospital pre-admission locations while also maintaining a high level of hospital-based admissions. This was achieved while also keeping hospice labor costs lower than budgeted. These factors combined to allow VITAS to achieve higher than expected revenue growth and EBITDA margins while continuing to add cushion to the Medicare cap position in our Florida combined position program.
- We feel very positive that the initiatives we have discussed over the last few quarters are beginning to take hold.
- VITAS net revenue was $420 million in the first quarter of 2026, which is an increase of 3.1% when compared to the prior year period. This revenue increase is the result of a 2.2% increase in days of care, and a geographically weighted average Medicare reimbursement rate increase of approximately 2.6%. Average revenue per day in the first quarter of 2026 was $210.62, which is a 146 basis point improvement from the prior year period.
Bear points
- the first quarter of 2026 also showed some signs of improvement across multiple fronts.
- Weather patterns in the first quarter of any given year are positive for Roto-Rooter. However, in the first quarter of 2026, unusual ice and snowstorms across large parts of the country led to significant service disruptions due to road conditions. 24 Roto-Rooter branches experienced some level of service disruption for a period of time across five days of the quarter. We estimate that these service disruptions resulted in a net loss revenue of between $3 and $4 million during the quarter.
- Marketing costs, you know, proxy for Google costs. And as we indicated, our leads were up 3%. However, to get that 3%, we had to battle with the fact that due to changes in the Google algorithm, our leads from the natural or free side of the search spectrum were down almost 16%.
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