Chemed's Q2 2025 Earnings Call: Contradictions in Medicare Cap Management, Insurance Costs, and Roto-Rooter Performance

VITAS and Medicare Cap Challenges:
- VITAS admissions in Florida were weaker than anticipated in April and May, resulting in a $19 million billing limitation for the 2025 Medicare cap year.
- The decline was due to slower-than-expected admissions, particularly of short-stay patients, and a larger-than-expected increase in reimbursement rates.

Roto-Rooter Revenue Struggles:
- Roto-Rooter's revenue increased by only 0.6% in Q2 2025, with branch revenue growing less than 1%.
- This underperformance was attributed to a soft April and May, potentially influenced by the Liberation Day tariff announcement, and lower-than-expected lead generation.

Admissions and Revenue Trends in VITAS:
- VITAS admissions totaled 17,545, representing a 1.2% improvement from 2024, excluding a significant number of acquisitions.
- Despite the acquisition-related increase, hospital admissions grew by 9.1%, while nursing home and assisted living admissions decreased due to cap management strategies.

Impact of Insurance Costs on Roto-Rooter Margins:
- Roto-Rooter's adjusted EBITDA margin declined by 517 basis points, partly due to a $4.8 million increase in casualty and workers' compensation costs.
- The increase was due to actuarial estimates assuming higher claim settlement costs, which negatively impacted margins.