Education
About Us
Working with TipRanks
Follow Us
Chemed Corporation (CHE)
NYSE:CHE
Top Page
Chemed
(NYSE:CHE)
Select Model
Select Model
Rating:72Outperform
Price Target:
$518.00
▲(26.04% Upside)
Action:ReiteratedDate:02/27/26
The score is driven primarily by strong multi-year financial quality (profitability, low leverage, and reliable cash generation). Technicals are supportive with a positive trend and reasonable momentum. Offsetting factors are a moderate valuation and a mixed earnings-call outlook: improving 2026 guidance but recent operational/margin issues and an execution-dependent, back-half-weighted recovery.
Positive Factors
Conservative leverage & strong ROE
Chemed's materially improved leverage and low debt levels provide durable financial flexibility to fund organic growth, acquisitions, and shareholder returns. Persistently high ROE (mid‑20s to 40%+) reflects strong underlying profitability and efficient use of capital, supporting long-term resilience.
Consistent cash generation & conversion
Reliable operating cash flow and strong free cash flow conversion underpin Chemed's ability to reinvest, repair operations, and sustain buybacks or dividends through cycles. This quality of earnings reduces reliance on external financing and supports strategic fixes without materially weakening the balance sheet.
Reduced Medicare Cap risk in Florida
A major reduction in Florida Medicare Cap exposure materially lowers regulatory and reimbursement uncertainty for VITAS, improving revenue visibility and cash flow predictability. Combined with certificate-of-need wins and admissions growth, this improves durable capacity to expand market share in attractive markets.
Negative Factors
2025 revenue & earnings slowdown
A measurable pause in top‑line and net income in 2025 interrupts multi‑year growth momentum and raises execution demands for management. If sustained, the slowdown can compress margins and limit reinvestment capacity; recovery hinges on successful implementation of the H2‑weighted turnaround plan.
Roto-Rooter margin compression
Significant EBITDA decline and a near‑500bp margin squeeze at Roto‑Rooter reflect deeper operational and mix pressures (higher marketing, lower residential/water restoration revenue). Persistent margin weakness would erode cash flow contribution from a core segment and raise the bar for remediation to restore structural profitability.
Rising write-offs & broken organic lead mix
Loss of organic search visibility and higher write‑offs from insurer scrutiny increase customer acquisition costs and reduce realized revenue per lead. These are structural headwinds: platform traffic and insurer behaviors can remain impaired, forcing greater reliance on paid acquisition and tighter collections, pressuring long‑run margins and growth scalability.
Chemed (CHE) vs. SPDR S&P 500 ETF (SPY)
Market Cap
$5.84B
Dividend Yield0.51%
Average Volume (3M)208.98K
Price to Earnings (P/E)23.2
Beta (1Y)0.23
Revenue Growth6.45%
EPS Growth-4.77%
CountryUS
Employees15,695
SectorHealthcare
Sector Strength45
IndustryMedical - Care Facilities
Share Statistics
EPS (TTM)6.42
Shares Outstanding13,765,136
10 Day Avg. Volume289,676
30 Day Avg. Volume208,980
Financial Highlights & Ratios
PEG Ratio-2.78
Price to Book (P/B)6.29
Price to Sales (P/S)2.43
P/FCF Ratio18.93
Enterprise Value/Market Cap1.01
Enterprise Value/Revenue2.33
Enterprise Value/Gross Profit7.49
Enterprise Value/Ebitda13.91
Forecast
1Y Price Target
$443.00Price Target Upside7.79% Upside
Rating ConsensusHold
Number of Analyst Covering4
EPS Forecast (FY)25.41
Revenue Forecast (FY)$2.67B
Chemed Business Overview & Revenue Model
Company DescriptionChemed Corporation provides hospice and palliative care services to patients through a network of physicians, registered nurses, home health aides, social workers, clergy, and volunteers primarily in the United States. The company operates in two segments, VITAS and Roto-Rooter. It offers plumbing, drain cleaning, excavation, water restoration, and other related services to residential and commercial customers through company-owned branches, independent contractors, and franchisees. The company was incorporated in 1970 and is headquartered in Cincinnati, Ohio.
How the Company Makes MoneyChemed generates revenue primarily through its VITAS Healthcare subsidiary, which offers hospice care services. The company is reimbursed for these services by Medicare, Medicaid, and private insurance providers, with a significant portion of its revenue coming from Medicare reimbursements. Additionally, Chemed's Roto-Rooter subsidiary contributes to the company's revenue through plumbing and drain cleaning services, which are billed on a fee-for-service basis. Key partnerships with healthcare providers and insurance companies enhance Chemed's ability to attract patients and secure reimbursements, while also expanding its service offerings in both hospice care and plumbing services. Overall, the combination of these revenue streams, along with operational efficiencies and a growing demand for hospice services, contributes to Chemed's financial performance.
Chemed Earnings Call Summary
Earnings Call Date:Feb 25, 2026
(Q4-2025)
| % Change Since: |
Next Earnings Date:Apr 29, 2026
Earnings Call Sentiment Neutral
The call presented a mixed picture: tangible operational progress (notably the meaningful improvement in Florida Medicare Cap exposure, VITAS admissions growth, and clear 2026 guidance with EPS upside) and concrete remediation plans (billing centralization, new SEO, commercial hiring). However, the company reported a significant quarterly miss, material margin compression at Roto-Rooter (driven by higher marketing and sharply increased water restoration write-offs), a decline in residential revenue, and near-term transition costs that weigh on H1 2026 results. Management expressed confidence in the mid-to-long-term recovery and provided specific initiatives and numerical guidance, but execution risk and timing (H2-weighted recovery) leave the outlook contingent on successful implementation of these fixes.Q4-2025 Updates
Positive Updates
VITAS Admissions Growth
VITAS admissions totaled 17,419 in Q4 FY2025, a 6% increase year-over-year, with hospital-directed admissions and other channels contributing to improved intake.
Improved Florida Medicare Cap Position
Management reported a substantial improvement in the Florida Medicare Cap position (management referenced roughly a $25 million year-over-year improvement and later noted ~ $28 million+ improvement), with no Florida Medicare Cap billing limitation recorded at the end of January 2026 and a Q4 accrual of only $2.4 million for overall Medicare Cap billing limitations.
VITAS Revenue and Margins (Q4)
VITAS net revenue in Q4 was $418.8 million, up 1.9% year-over-year, driven by a 1.3% increase in days of care and an approximate 2.2% geographically weighted average Medicare reimbursement increase; average revenue per patient day was $208.01 (up 86 bps). Adjusted EBITDA (excluding Medicare Cap) was $91.6 million (down 1.7%) with an adjusted margin of 21.7% (down 79 bps).
2026 Guidance and Upside
Management provided full-year 2026 guidance showing anticipated improvement: VITAS revenue (pre-Cap) +5.5% to +6.5%, average daily census +3.5% to +4%, EBITDA margin (pre-Cap) 17.5%–18%, and consolidated adjusted EPS (ex certain items) of $23.25–$24.25 versus adjusted EPS of $21.55 in 2025. Medicare Cap billing limitations are forecast to fall to ~$9.5 million in calendar 2026 (vs $27.2 million in 2025).
New Florida Market Opportunity (Manatee County)
Chemed received a certificate of need to operate in Manatee County, Florida (December 2025). Management noted Manatee had ~3,000 Medicare hospice patients in government FY2024 and cited prior CON wins (Pinellas, Marion, Pasco) that have met or exceeded expectations as evidence of growth potential.
Roto-Rooter Commercial Progress & Paid-Lead Growth
Branch commercial revenue rose 1.6% in Q4, and branches with newly added commercial business managers have delivered approximately 10% higher revenue than branches without them. Paid lead generation increased ~9.4% in Q4 and ~10% in each of the last three quarters, demonstrating traction on paid acquisition initiatives.
Balance Sheet / Capital Return
The company repurchased 400,000 shares in the quarter at an average price of $436.39; since the buyback program began Chemed has returned over $2.9 billion to shareholders at an average cost of ~$167 per share.
Operational Remediations Announced
Management has initiated targeted actions: refocusing VITAS admission mix away from short-stay hospital admissions to improve long-term revenue/EBITDA, centralizing Roto-Rooter water restoration billing and collections, and engaging a new SEO provider to improve natural search visibility.
Negative Updates
Quarterly Results Missed Expectations
Management stated the fourth quarter fell short of expectations for both subsidiaries, leading to a roughly $0.70 per share earnings miss and prompting operational changes and caution on cadence for 2026 (weighted toward H2).
Roto-Rooter Revenue Decline (Q4)
Roto-Rooter revenue declined 3.7% in Q4 FY2025 vs prior year; branch residential revenue fell 3.1% (to $155.6 million) with water restoration down 10.3% and drain cleaning down 3.2% (plumbing +6.3%, excavation flat).
Roto-Rooter EBITDA and Margin Compression
Roto-Rooter adjusted EBITDA in Q4 was $47.5 million, down 21.1% year-over-year, and adjusted EBITDA margin compressed to 21.5%, a 477 basis point decline from Q4 2024 attributable to higher marketing costs and increased water restoration write-offs.
Sharp Increase in Water Restoration Write-offs
Implicit price concessions and credit memos (write-offs) rose materially: Q4 write-offs increased by $4 million (57%) year-over-year; total write-offs increased ~$11 million in fiscal 2025 vs 2024. Write-offs rose from slightly below 3% historically to over 4.5% in H2 2025, driven by increased insurance scrutiny (AI-driven) and inconsistent branch-level billing practices.
Muted VITAS Revenue Growth & Margin Impact from Admission Mix
The shift to higher hospital-based short-stay admissions lowered revenue growth and adjusted EBITDA margin (management noted a 143 basis point negative acuity mix shift and a ~20 bps negative impact from Medicare Cap and other contra revenue changes in the quarter), as short-stay patients depress average daily census and margin dynamics in the near term.
Lead Mix and Natural Search Visibility Issues
Total leads were flat in Q4 despite paid leads increasing ~9.4%, because natural leads declined. Management previously saw visibility on Google map results fall from ~72% to 24% (industry visibility disruption) and has only partially recovered visibility to ~35%, creating headwinds to organic lead generation.
Near-Term Transition Costs and Timing Risk
Management expects centralization of billing/collection and investments (technology, training, commercial hires) to cause upfront duplication costs and marginal headwinds in H1 2026, with the earnings trajectory weighted to H2 (55% of adjusted net income and EBITDA expected in second half), adding execution and timing risk.
Sector Disruption from Insurance Scrutiny and Competitors
Increased AI-driven insurer scrutiny and competitive dynamics (including private equity entrants and aggressive paid acquisition tactics from competitors) have materially pressured collections, write-offs and the lead cost structure, particularly affecting water restoration and residential services.
Company Guidance
Management guided 2026 with VITAS expected to grow revenue prior to Medicare Cap by 5.5%–6.5%, average daily census up 3.5%–4.0%, and full‑year EBITDA margin (pre‑Cap) of 17.5%–18.0%, with Medicare Cap billing limitations estimated at $9.5M in 2026 versus $27.2M in 2025 (including no Florida limitation) and the more balanced admission mix showing results mainly in H2; Roto‑Rooter is forecast to grow revenue 3.0%–3.5% with an adjusted EBITDA margin of 22.5%–23.0%, helped by improved paid leads/SEO, added commercial managers and a $4M–$6M tailwind from improved water restoration billing/collections; consolidated adjusted diluted EPS (excluding certain noncash and discrete items) is guided to $23.25–$24.25 (versus $21.55 in 2025), assuming a 24.5% adjusted tax rate and 13.9M diluted shares, and management expects about 55% of consolidated adjusted net income and adjusted EBITDA (pre‑Cap) to be generated in the second half of 2026.Chemed Financial Statement Overview
Summary
Overall fundamentals are strong: solid profitability over time, conservative and improving leverage, and consistently positive free cash flow with good cash conversion. Offsetting this is a clear 2025 slowdown (revenue and net income down vs. 2024) and some variability in free cash flow growth.Income Statement
Profitability remains solid, with net margins generally in the low-to-mid teens and healthy EBITDA margins across the period. Revenue grew consistently from 2020 through 2024, but the latest annual period (2025) shows a modest revenue decline (-2.6%) alongside lower net income versus 2024, suggesting a near-term growth and earnings pause. Margin data for 2025 is partially inconsistent (gross profit and EBIT margin shown as 0), which limits comparability, but the overall earnings profile remains strong based on EBITDA and net income.74
Positive
Balance Sheet
Leverage is conservative, with debt-to-equity improving materially from higher levels in 2021–2022 to low levels in 2023–2025, indicating stronger balance sheet flexibility. Returns on equity are consistently high (roughly mid‑20% to 40%+), reflecting strong profitability relative to capital. A key weakness is the decline in equity from 2024 to 2025, which bears monitoring even though overall debt remains low.82
Very Positive
Cash Flow
Cash generation is consistently strong: operating cash flow exceeds net income each year, indicating good earnings quality and conversion. Free cash flow is also consistently positive and substantial, with free cash flow running at roughly ~80%–88% of net income, supporting reinvestment and shareholder returns. The main drawback is volatility in free cash flow growth (notably negative in 2021 and again in 2025), pointing to some variability in cash spending or working capital dynamics.77
Positive
| Breakdown | Dec 2025 | Dec 2024 | Dec 2023 | Dec 2022 | Dec 2021 |
|---|---|---|---|---|---|
Income Statement | |||||
| Total Revenue | 2.53B | 2.43B | 2.26B | 2.13B | 2.14B |
| Gross Profit | 758.34M | 854.35M | 798.82M | 765.09M | 769.80M |
| EBITDA | 422.37M | 464.29M | 414.34M | 393.44M | 411.23M |
| Net Income | 265.24M | 302.00M | 272.51M | 249.62M | 268.55M |
Balance Sheet | |||||
| Total Assets | 1.64B | 1.67B | 1.67B | 1.44B | 1.34B |
| Cash, Cash Equivalents and Short-Term Investments | 74.52M | 178.35M | 263.96M | 74.13M | 32.90M |
| Total Debt | 154.76M | 140.84M | 155.11M | 247.01M | 323.54M |
| Total Liabilities | 660.61M | 549.58M | 560.22M | 643.30M | 719.45M |
| Stockholders Equity | 979.40M | 1.12B | 1.11B | 798.72M | 623.27M |
Cash Flow | |||||
| Free Cash Flow | 325.48M | 367.97M | 273.44M | 252.56M | 249.92M |
| Operating Cash Flow | 388.27M | 417.50M | 330.30M | 309.89M | 308.60M |
| Investing Cash Flow | -59.34M | -143.91M | -60.64M | -59.40M | -57.76M |
| Financing Cash Flow | -432.77M | -359.19M | -79.83M | -209.25M | -380.62M |
Chemed Technical Analysis
Negative
410.99
Price Trends
443.62
Negative
439.01
Negative
460.68
Negative
Market Momentum
-6.79
Positive
37.23
Neutral
35.39
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For CHE, the sentiment is Negative. The current price of 410.99 is below the 20-day moving average (MA) of 450.15, below the 50-day MA of 443.62, and below the 200-day MA of 460.68, indicating a bearish trend. The MACD of -6.79 indicates Positive momentum. The RSI at 37.23 is Neutral, neither overbought nor oversold. The STOCH value of 35.39 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for CHE.
Chemed Risk Analysis
Chemed disclosed 25 risk factors in its most recent earnings report. Chemed reported the most risks in the "Ability to Sell" category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks
Chemed Peers Comparison
UnderperformOutperform
Sector (51)
Name | Overall Rating | Market Cap | P/E Ratio | ROE | Dividend Yield | Revenue Growth | EPS Growth |
|---|---|---|---|---|---|---|---|
78 Outperform | $2.69B | 17.67 | 9.94% | 1.80% | 23.74% | -18.99% | |
75 Outperform | $1.91B | 20.66 | 8.58% | ― | 18.77% | 6.88% | |
74 Outperform | $12.39B | 29.02 | 16.91% | 0.14% | 18.61% | 35.76% | |
72 Outperform | $5.84B | 23.23 | 25.28% | 0.51% | 6.45% | -4.77% | |
71 Outperform | $4.88B | 24.29 | 15.20% | ― | 15.79% | 5.34% | |
63 Neutral | $10.34B | 10.44 | ― | ― | 5.14% | 4.37% | |
51 Neutral | $7.86B | -0.30 | -43.30% | 2.27% | 22.53% | -2.21% |
* Healthcare Sector Average
CHE
Chemed
412.16
-179.29
-30.31%
ADUS
Addus Homecare
104.62
9.33
9.79%
OPCH
Option Care Health
30.46
-3.80
-11.09%
DVA
DaVita
149.94
9.58
6.83%
NHC
National Healthcare
168.09
75.81
82.15%
ENSG
The Ensign Group
207.30
78.50
60.95%
Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
Disclaimer
This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.