Chemed (CHE) Oppenheimer 35th Annual Health Care MedTech and Services Conference summary

Industry trends and regulatory environment

• Hospice volumes and operating metrics are tracking in line with 2025 guidance, with steady performance expected to continue.

• CMS has paused the special focus program for the year, with future rulemaking anticipated to benefit the industry.

• Demographic shifts, especially aging baby boomers, and increased awareness of hospice benefits are driving growth.

• Policy focus on earlier hospice access is expected to improve patient outcomes and generate Medicare Trust Fund savings.

• Industry advocacy and a consolidated trade association have strengthened the sector’s position for the next decade.

Volume growth, admissions, and Medicare cap

• Admissions trends are shifting toward more hospital-based patients, leading to shorter average stays and some compression in 2024 growth.

• Sustainable long-term volume growth is projected at 8.5-9%, above historical averages, with Medicare cap as a key limiting factor.

• Cap pressures in Florida are being managed by adjusting the mix of admissions and leveraging new CONs for growth.

• New market entries, especially in Florida, are ramping up faster due to proactive team building and brand awareness.

• New locations are expected to be accretive to Medicare cap cushion but not materially impact earnings until 2026.

Roto-Rooter business update

• Roto-Rooter faced a top-line sales challenge in 2023 due to increased competition and changes in Google ad dynamics.

• Management initiatives have improved sales and conversion rates, especially in commercial and water restoration segments.

• Commercial business is less seasonal and is expected to drive revenue growth in 2025.

• Competitive pricing pressures from private equity-backed firms are present, but the company’s brand and service model remain resilient.

• Margin improvement is a focus for 2025, with ongoing adjustments to pricing and operational strategies.