This is Zack Fuss. Today we are breaking down Chemed. Chemed represents the union of two seemingly distinct businesses: end-of-life healthcare and plumbing services. As our guest aptly puts it, old houses and old people. The two underlying businesses, VITAS and the widely recognized Roto-Rooter, both offer interesting stories in their own right.
The strength of this business has been its intentional and well-executed capital allocation strategy, which has resulted in a 21% EPS CAGR since 2003, a market cap of $8.5 billion, and a net cash balance sheet.
On the one hand, you have Vitas Healthcare, a leading provider of end-of-life hospice care in the US founded in 1978. And on the other hand, there's Rotor-Rooter, the iconic plumbing drain cleaning and water cleanup service provider whose roots go all the way back to 1935. So, how did an end-of-life healthcare company and an emergency plumbing business end up under the same corporate umbrella?
I'm joined today by Chadd Garcia, a portfolio manager at the Ave Maria Focused Fund. We'll discuss their unique business models, the growth drivers of the businesses, and why Chemed and its management team believe that this unique combination ultimately works for maximizing shareholder value.
Please enjoy this Breakdown on Chemed Corporation.
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Business Breakdowns is a property of Colossus, LLC. For more episodes of Business Breakdowns, visit joincolossus.com/episodes.
Editing and post-production work for this episode was provided by The Podcast Consultant (https://thepodcastconsultant.com).
Show Notes
(00:00:00) Welcome to Business Breakdowns
(00:00:12) ChemED's Business Philosophy
(00:01:45) History and Evolution of ChemED
(00:05:13) Roto-Rooter: Business Breakdown
(00:08:19) Vitas: Business Breakdown
(00:09:15) Vitas: Business Breakdown
(00:13:27) Roto-Rooter: Competitive Landscape
(00:20:17) Comparing Roto-Rooter and Vitas
(00:21:20) Vitas: Market Dynamics and Growth
(00:34:41) Capital Allocation and Future Prospects
(00:36:48) Lessons From Creaking Down Chemed
