- VITAS Admissions Growth 17,419 admissions (+6%) Q4 2025 vs. Q4 2024, but revenue growth muted due to skewed hospital admissions.
- 2026 Revenue and Margin Guidance VITAS projects 5.5–6.5% revenue growth and 17.5–18% EBITDA margin; Roto-Rooter forecasts 3–3.5% revenue growth with 22.5–23% EBITDA margin.
- Roto-Rooter Q4 Performance Revenue declined 3.7% YoY, but commercial revenue rose 1.6%, signaling growth potential in non-residential markets.
- 2026 Earnings Weighting 55% of consolidated adjusted net income and EBITDA expected in H2 2026, driven by improved lead volume and collections.
- Medicare Cap Liability VITAS anticipates $9.5M cap limit in 2026, primarily impacted by California, with strategies to mitigate billing limitations in other states.
Segment Performance
VITAS has been granted a certificate of need to operate in Manatee County, Florida, representing a significant growth opportunity. The company expects to rebalance its patient mix in 2026, driving revenue growth and EBITDA margin expansion. Roto-Rooter management believes that the commercial business continues to represent a significant opportunity for growth, with branch commercial revenue increasing 1.6% in the fourth quarter. As Kevin McNamara noted, "We've moved from a business model where leads were predominantly free to one where we pay for them. The leads are still profitable, but the change in business model affects the comparison."
Guidance and Outlook
Chemed Corporation's 2026 guidance includes revenue growth of 5.5% to 6.5% for VITAS and 3% to 3.5% for Roto-Rooter. The company expects its EBITDA margin prior to Medicare Cap to be 17.5% to 18% and Roto-Rooter's adjusted EBITDA margin to be 22.5% to 23%. The earnings trajectory is weighted towards the second half of 2026, with 55% of consolidated adjusted net income and consolidated adjusted EBITDA prior to Medicare Cap projected to be generated in the second half.
Valuation
Chemed Corporation's current valuation metrics indicate a P/E Ratio of 20.93, EV/EBITDA of 14.54, and ROE of 23.92%. With analysts estimating revenue growth of 4.7% for next year, the stock appears to be fairly valued. The company's strong cash flow generation, as evidenced by its Free Cash Flow Yield of 5.63%, is a positive. However, the recent miss on EPS and the challenges faced by Roto-Rooter may impact the stock's near-term performance.