MMI Investments LP has nominated five director candidates for Chemed Corp.'s (CHE) board after Chemed turned down its proposal to split the company in two.

The election will be at Chemed's May 18 annual meeting.

Last month, the hedge fund urged the company to spin off one of its divisions: Vitas Healthcare Corp., a provider of end-of-life care, or Roto-Rooter, a commercial and residential plumbing and drain cleaning services provider, to maximize value for its stockholders.

In a letter to MMI dated Monday, Chemed Chief Executive Kevin McNamara said a spinoff in the current market environment could impair shareholder value, though "we are well-positioned to separate the businesses if and when the time is right."
MMI President Clay Lifflander said Thursday that McNamara had said long-term separation is inevitable when the company acquired Vitas five years ago. Since then, Chemed's management has opposed a spinoff until recently, when it said a separation could create substantial shareholder value, he said.

"Despite this record of conflicting statements and shifting positions on this issue, Chemed's owners are being asked simply to trust that this board, which clearly lacks independence, will revisit this transaction in earnest on their own."

Lifflander, who is one of the candidates, said MMI's candidates have operational experience in health care and residential services, past service on public company boards and "total uncompromised independence." Chemed's 11-member board includes three current employees, five former employees of Chemed or its affiliates, and two people whose employers have received significant recent funding from Chemed, Lifflander said.

MMI is the beneficial owner of 800,000 shares, or about 3.6%, of Chemed stock.

Last month, Chemed reported lower fourth-quarter earnings, though revenue was up on contributions from its Vitas unit. Revenue rose 2.3%, with Vitas net revenue up 4.4% and Roto-Rooter's sales down 2.5%.

Chemed's shares closed Wednesday at $37.38, down 0.9%. The stock has lost a quarter of its value in the past six months.