Schwartz Offloads 28,000 Chemed (CHE) Shares Valued at $13 Million

Schwartz Investment Counsel significantly reduced its position in Chemed Corporation (CHE) during Q3 2025, divesting 28,771 shares valued at $13.03 million and lowering its stake to 1.67% of reportable assets. This move follows Chemed's substantial stock underperformance, down 27.91% year-over-year, and disappointing Q3 results characterized by adjusted EBITDA declines in both its VITAS hospice and Roto-Rooter plumbing segments due to contracting margins, despite some revenue growth. The fund's reduced exposure signals concerns over Chemed's recent profitability challenges.

Analysis

Schwartz Investment Counsel significantly reduced its position in Chemed Corporation (CHE) during Q3 2025, divesting 28,771 shares valued at $13.03 million. This action lowered the fund's stake from 2.24% to 1.67% of reportable assets, demoting Chemed from its 11th to 17th largest holding. This substantial reduction, the fifth-largest for the fund in Q3, signals a notable shift in conviction.

Chemed's stock has experienced significant underperformance, declining 27.91% over the past year and trailing the S&P 500 by 45.55 percentage points as of October 28, 2025. This downturn follows a 33.7% drop from its peak early last year, reflecting broader market dissatisfaction with its trajectory.

The company's disappointing Q3 results are a key driver for this sentiment, with both operating segments reporting contracting margins. The VITAS hospice segment saw adjusted EBITDA decline 3.8% to $70.4 million, despite a 2.98% year-over-year revenue per day increase, attributed to rising care costs. Similarly, the Roto-Rooter segment's adjusted EBITDA fell 12.4% year-over-year, even with a 1.1% revenue growth, indicating severe margin pressure.

This institutional divestment, coupled with Chemed's inability to translate revenue growth into proportional profitability, suggests fundamental challenges in its dual-segment business model. Investors should note the persistent margin compression across both essential service lines, which is impacting overall financial health.

Key Decisions for Investors

• Closely monitor Chemed's operating margins, particularly how management plans to address rising costs in hospice and contracting margins in plumbing.
• Consider the implications of Schwartz Investment Counsel's significant divestment as a potential signal of fundamental concerns regarding Chemed's profitability trajectory.
• Evaluate Chemed's pricing power and competitive landscape in both its VITAS and Roto-Rooter segments, given the inability to offset cost increases.