Chemed (CHE) BofA Securities 2025 Healthcare Conference summary

Medicare Cap Management and Industry Outlook

• Medicare cap has been a constant since 1983, with ongoing monitoring and forecasting at site level.

• Investments in analytics and go-to-market strategies enable proactive management of cap exposure.

• Recent growth rates have been intentionally moderated to maintain a sustainable Medicare cap cushion.

• Regional reimbursement differences, especially in California and Florida, are factored into planning.

• Transparent communication about cap cushion changes is prioritized, with no fundamental business model shifts.

Strategic Response to Regulatory and Market Changes

• Regular engagement with MedPAC and industry groups to advocate for cap policy updates.

• Policy realignment, rather than abolition, is seen as a practical improvement.

• Medicare cap is viewed as a deterrent to bad actors, but not a barrier to sustainable growth.

• Workforce retention and clinical capacity growth are key drivers, independent of cap policy.

• Mission-focused care and open formulary support talent attraction and partner relationships.

Acquisition and Expansion Strategy

• Recent acquisition of Covenant in Florida signals openness to strategic deals, especially in CON states.

• Expansion into new counties and states, including applications in North Carolina and other states.

• Positive integration of Covenant has enhanced reputation among nonprofit providers.

• Proactive outreach to potential acquisition targets has increased, leveraging strong balance sheet.

• Relationship-based approach and capital flexibility support further growth opportunities.