Chemed’s Fall: A Skeptic’s Tale

In the vast, unyielding plains of the stock market, where fortunes rise like mirages and vanish just as swiftly, the tale of Chemed (CHE) unfolds. A company that tends to the fragile edges of life—through Vitas Healthcare’s hospice care—and wrestles with the stubborn plumbing of existence via Roto-Rooter, found itself sinking on a Wednesday afternoon. By 1 p.m. ET, its shares had plummeted by 9%, according to the cold arithmetic of S&P Global Market Intelligence.

It was not an act of God, nor some sudden calamity from beyond the stars, but something far more human: missed expectations. Chemed reported second-quarter earnings that fell short of what analysts had hoped for, sending its share price tumbling like dry leaves in an autumn wind.

The numbers themselves told a story both meager and cruel. Sales grew by a modest 4% in Q2, yet adjusted earnings per share collapsed by a staggering 22%. Like a farmer watching his crop wither under relentless sun, management cut their 2025 EPS guidance from $25.20 to $22.15—a grim forecast implying a 4% decline from last year’s yield. And then came news that Nick Westfall, CEO of Vitas Healthcare, would step down, leaving behind questions as heavy as stones.

Chemed’s quarter was one of quiet struggle, a battle fought in shadows. From afar, revenue seemed steady enough, but closer inspection revealed wounds festering beneath the surface. Each arm of this corporate body bore its own scars.

Vitas Healthcare, steward of those nearing the end of their journeys, managed to grow revenue by 4%. Yet it stumbled against the rigid walls of Medicare cap billing limitations, its earnings falling by 24%. Even if we were to cast these constraints aside as fleeting troubles—and they are anything but fleeting, given the iron grip of regulation—the segment’s adjusted EBITDA remained flat, like a weary traveler unable to take another step.

Meanwhile, Roto-Rooter, once the steadfast plow horse of Chemed’s fields, eked out only 1% sales growth while suffering a brutal 20% decline in net income. The culprit? Rising marketing costs, gnawing at profits like locusts upon wheat. During the earnings call, management spoke of Alphabet-owned Google search, explaining:

“If we can pay them to keep our ads visible, they ensure we don’t appear in the free areas.”

It is a strange new world where visibility itself must be bought, and even giants must bow to such demands. Though Roto-Rooter remains the largest plumbing company in North America, its struggles are a warning flare in the night sky for investors who dare look up.

the market is no friend to the hopeful, nor the desperate. It feeds equally on dreams and despair, leaving little trace of either when the dust settles.

Perhaps there will come a day when justice finds its way into these transactions, when dignity is restored to those who labor and invest alike. Until then, we watch and wait, knowing full well the winds may shift again without warning 🌬️.

2025-07-30 23:27

Read More