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How CHE rewrote its risk factors

10-K ITEM 1A · FY2024 → FY2025

Text kept

82%

of sentences unchanged

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new sentences

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sentences removed

Length

+416

words, now 6,535

New in FY2025

Also, effective marketing and advertising may become more expensive and more difficult as search engines revise algorithms, customers use of artificial intelligence (“AI”) platforms become more prevalent and business models and customers change how they find our services.
Additionally, the increasing development and use of AI and other new and evolving technologies create additional system and other risks.
Roto-Rooter’s success is highly dependent on its brand reputation.
Roto-Rooter’s national reputation and brand image for performing necessary, high quality services in a timely manner is critical to Roto-Rooter’s continued success.
In the event that CMS re-institutes the SFP or a similar type of program and any VITAS program is identified as a “poor performer”, we do not know the extent to which such identification will affect industry referrals or referral patterns.
We cannot assure you that VITAS will be able to:  Identify markets that meet its selection criteria for new hospice locations;  Hire and retain qualified management teams to operate each of its new hospice locations;  Manage a large and geographically diverse group of hospice locations;  Become Medicare and Medicaid certified in new markets, particularly if a moratorium prohibits the granting of new licenses in certain markets;  Generate sufficient hospice admissions to operate profitably in these new markets;  Compete effectively with existing hospices in new markets; or  Obtain state licensure and/or a Certificate of Need from appropriate state agencies in new markets.
The recent nationwide shortage of qualified nurses impacts some of the markets in which VITAS provides hospice services.
In addition, VITAS’ insurance policies must be renewed annually and may be subject to increasing premiums, high deductibles, and cancellation during the policy period.
Despite significant safeguards, including active intrusion protection, firewalls and virus detection software, as discussed in greater detail on Item 1C below, in October of 2025, access to our systems was gained by a threat actor in a cybersecurity attack.
The threat actor was able to access a significant amount of Protected Health Information (“PHI”); however, despite repeated attempts, was not able to insert a tool often used by threat actors into our system.
Our response plan was effective in identifying, quarantining, and eliminating the third-party intrusion, but not before access to PHI was gained.
As a result of the cyberattack, we have reviewed our system and strengthened it further to better prevent future successful attacks.
We maintain commercial insurance related to cyberattacks.
However, these safeguards do not ensure that another significant cyberattack could not occur.
The current environment, particularly in healthcare and with the increase in use of AI and other new technologies, has significantly increased our usage of information technology systems and heightened the need for security of those systems with the increase in telehealth.
Although the cyberattack that led to the breach of PHI was the first to successfully gain access to our systems, it was not an isolated incident.
While we have been able to mitigate the damages from the prior successful attack, and did not experience any material operational or financial issues as a result of the attack, a subsequent successful attack on our information technology systems could have even greater consequences to the business including liability for compromised patient information and business interruption.
VITAS’ success is highly dependent on its brand reputation.
VITAS’ reputation for performing quality routine and high acuity patient hospice care within the regulations mandated by Medicare, Medicaid and commercial payors is critical to our success.
However, if CMS revises the program or implements a similar program and its implementation identifies any VITAS programs as “poor performers”, such designation could negatively affect VITAS’ brand reputation, and any additional governmental oversight could materially adversely affect the operations profitability of any affected programs.
VITAS’ headquarters and a significant portion of its operations are in Florida.
The occurrence of a natural disaster in any region that VITAS has significant operations could have a negative impact on the business.
Significant Tariffs Could Increase Costs, Decrease Margin, and Materially Adversely Affect the Business.
Both Roto-Rooter’s and VITAS’s primary businesses are the provision of services within the United States.
Accordingly, they are likely to be less affected by the impact of specific or wide-ranging tariffs than many other entities in the United States and Global economies.
However, significant tariffs on certain products, such as steel for Roto-Rooter’s cabling machines and pharmaceuticals utilized by VITAS, could materially increase the costs of Roto-Rooter and VITAS.
Additionally, because our service businesses heavily rely on delivering service to customers or patients in their residences, increases in the costs of vehicle acquisition, maintenance, repair, and reimbursement for employees’ use of personal vehicles, could have a significant increase on our expenses.
These additional costs, in the case of VITAS, cannot be passed along to our patients because of the structure of hospice reimbursement, and in the case of Roto-Rooter, may not be able to be fully passed along to our customers.
These additional costs could materially adversely affect our margins.
To the extent that tariffs cause any adverse impacts on global supply chains, it could further materially affect the ability of both businesses to timely source critical supplies, which may affect our delivery of services.
If, as a result of tariffs, the United States’ economy experiences a recession or other economic slowdown, the demand for Roto-Rooter’s non-emergency services may decline materially.

Gone since FY2024

Roto-Rooter’s success is highly dependent on its brand reputation Roto-Rooter’s national reputation and brand image for performing necessary, high quality services in a timely manner is critical to Roto-Rooter’s continued success.
In the event that CMS re-institutes the SFP and any VITAS program is identified as a “poor performer”, we do not know the extent to which such identification will affect industry referrals or referral patterns.
We cannot assure you that VITAS will be able to:  Identify markets that meet its selection criteria for new hospice locations;  Hire and retain qualified management teams to operate each of its new hospice locations;  Manage a large and geographically diverse group of hospice locations;  Become Medicare and Medicaid certified in new markets;  Generate sufficient hospice admissions to operate profitably in these new markets;  Compete effectively with existing hospices in new markets; or  Obtain state licensure and/or a Certificate of Need from appropriate state agencies in new markets.
The current nationwide shortage of qualified nurses impacts some of the markets in which VITAS provides hospice services.
In addition, VITAS’ insurance policies must be renewed annually and may be subject to cancellation during the policy period.
Recently healthcare organizations have been the focus of increased cybersecurity attacks.
We maintain our information technology systems with safeguard protection against cyber-attacks including active intrusion protection, firewalls and virus detection software.
As discussed previously, we are subject to and comply with HIPAA and HITECH regulations.
We have developed and tested a response plan in the event of a successful attack and we maintain commercial insurance related to a cyber-attack.
However, these safeguards do not ensure that a significant cyber-attack could not occur.
Increases in working from home and the provision of telehealth services due to the pandemic have significantly increased our usage of information technology systems and heightened the need for security of those systems.
Chemed’s Chief Legal Officer and Chief Financial Officer are alerted to any potential issues and evaluate those issues for cybersecurity materiality A successful attack on our information technology systems could have significant consequences to the business including liability for compromised patient information and business interruption.
VITAS’ success is highly dependent on its brand reputation VITAS’ reputation for performing quality routine and high acuity patient hospice care within the regulations mandated by Medicare, Medicaid and commercial payors is critical to our success.
However, if CMS revises the program and its reimplementation identifies any VITAS programs as “poor performers”, such designation could negatively affect VITAS’ brand reputation, and any additional governmental oversight could materially adversely affect the operations profitability of any affected programs.
VITAS’ headquarters and a significant portion of its operations are in Florida The occurrence of a natural disaster in any region that VITAS has significant operations could have a negative impact on the business.

Sentence-level comparison of Item 1A in the two most recent 10-Ks (FY2024 ↗, FY2025 ↗). A reworded sentence counts as one dropped and one added, so heavy edits read as low “kept”. Headings and page furniture are stripped; nothing is summarised by a model.

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