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Chemed provides update on 2025 performance in Q2 preannouncement

Chemed provides update on 2025 performance in Q2 preannouncement

Chemed (CHE) announced developments related to Q2 earnings and FY25 guidance. In prior public statements, management discussed the possibility that the VITAS subsidiary could have an aggregate Medicare Cap billing limitation related to its Florida consolidated program, excluding Tallahassee. However, as of the most recent quarterly earnings update, VITAS internal projections showed that the Florida consolidated program would end the 2025 government fiscal year ending on September 30, 2025 with a Medicare Cap cushion. Actual Medicare admissions in both April and May 2025 in Florida were weaker than anticipated and lower than VITAS' internal projections. As a result, VITAS now projects a Medicare Cap revenue limitation for the 2025 Cap Year of $18M-$25M related to the Florida consolidated program, excluding Tallahassee. The above projection includes actual results through May. Actual June results, which show better admissions than projected through the first half of the month, and actual results in Q3 could have a significant impact on this projection. Previous guidance for 2025 earnings did not include any Florida Medicare Cap. Based on the new start locations in Florida, primarily Marion County and Pinellas County, combined with operational changes currently being made in the Florida programs, management expects not to have any significant level of Medicare Cap revenue limitation in its Florida consolidated program for the 2026 fiscal year. This expectation assumes that the rate differential discussed above does not recur for the 2026 Cap Year. In the event that the rate differential does recur, VITAS will respond with further mitigation strategies at the outset of the 2026 Cap Year. While less financially significant than the VITAS Medicare Cap situation, during Q2, Roto-Rooter began to experience unexpected weakness in its residential business' demand compared to internal projections. This weakness represents a break from the trends experienced in Q1. Preliminary results for commercial demand in Q2 continue to reflect improved trends but not enough to offset the lower residential demand.
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