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Chemed Corp.

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Chemed reported better-than-expected results in the first quarter of 2017, with both earnings and revenues beating the Zacks Consensus Estimate. Although VITAS healthcare saw a sluggish quarter, the improvement in average net Medicare reimbursement rate and increase in average daily census are impressive. We are optimistic about the outlook for the Roto-Rooter segment. This has been reflected through the company’s share price trend too. The company is currently trading above the broader Medical – Outpatient & Home Healthcare industry over the last three months. The solid bottom-line expectations indicate that this bullish trend is going to continue in the days ahead. However, headwinds like reimbursement related issues, seasonality in business, a competitive landscape and dependence on government mandate pose challenges for Chemed. Issues related to declining units for admission raise concern.

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