Chemed (CHE -8.84%) -- home to hospice care provider Vitas Healthcare and Roto-Rooter -- saw its shares decline 9% as of 1 p.m. ET on Wednesday, according to data provided by S&P Global Market Intelligence.

Chemed reported second-quarter earnings that fell short of analysts' expectations, causing its share price to tumble.

While Chemed grew sales by 4% in Q2, adjusted earnings per share (EPS) declined by a staggering 22%. Meanwhile, management cut 2025 EPS guidance from $25.20 to $22.15, implying a 4% decline from last year's earnings.

Adding further uncertainty, the company announced Nick Westfall, CEO of Vitas Healthcare, was stepping down.

Chemed's challenging quarter

From a revenue perspective, Chemed's Q2 was relatively steady. However, each business segment faced profitability issues.

Vitas grew revenue by 4%, but faced Medicare cap billing limitations that caused earnings to drop by 24%. Even excluding these as theoretical one-time impacts (though it is more of a continuous cycle thanks to working in a highly regulated industry), Vitas's adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) was flat for the quarter.

Image source: Getty Images.

Meanwhile, Chemed's typically steady-Eddie Roto-Rooter business only eked out 1% sales growth alongside a hefty 20% decline in net income. Much of this decrease stems from increased pressure on its marketing costs.

Management referenced Alphabet-owned Google search during the earnings call, explaining:

They're saying if we can get money for making them pay for advertisers, we'll make sure they don't show up in the free areas. We deal with it. It's a bit of an adjustment for us.

Though Roto-Rooter remains the largest plumbing company in North America, this issue needs to be monitored by investors.

Ultimately, Chemed has a lot to sort out, but at just 20 times free cash flow, it could be a turnaround story.