Chemed Corporation (CHE) | Investment Case

1. Company Snapshot

1.a. Company Description

Chemed 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.

Show Full description

1.b. Last Insights on CHE

Chemed Corporation's recent performance has been impacted by a Q3 earnings miss, with the company reporting $5.27 per share, below the Zacks Consensus Estimate of $5.39 per share. This compares to earnings of $5.64 per share a year ago. The miss was attributed to shrinking margins and weaker EPS, which overshadowed steady revenue gains from VITAS and Roto-Rooter. Additionally, Schwartz Investment Counsel sold 28,771 shares, valued at approximately $13.03 million. Despite this, the company will present at the UBS 2025 Global Healthcare Conference.

1.c. Company Highlights

Last Price	421.97
Change Percentage	-0.55%
Open	423.67
Previous Close	424.3
Market Cap ( Millions)	6167
Volume	130780
Year High	623.61
Year Low	408.42
M A 50	438.97
M A 200	504.92

FCF Yield	5.85%
Dividend Yield	0.52%
ROE	24.37%
Debt / Equity	13.14%
Net Debt / EBIDTA	2.69%
Price To Book	5.7
Price Earnings Ratio	22.0
Price To FCF	17.11
Price To sales	2.44
EV / EBITDA	14.15

2. Chemed Corporation's Q3 2025 Earnings: A Mixed Bag

Chemed Corporation reported mixed financial results for the third quarter of 2025. Revenue was $913.1 million, with VITAS generating $407.7 million, a 4.2% increase from the prior year, driven by a 2.5% increase in days-of-care and a 4.1% geographically weighted average Medicare reimbursement rate increase. Roto-Rooter revenue increased 1.1% to $505.4 million. Adjusted EBITDA excluding Medicare Cap totaled $70.4 million, a 3.8% decline from the prior year period at VITAS, while Roto-Rooter adjusted EBITDA declined 12.4% to $49.4 million. Earnings per share (EPS) was $5.27, missing estimates of $5.39.

Publication Date: Nov -01

                                    📋 Highlights
                                    VITAS Revenue Growth:
                                                Net revenue reached $407.7 million, a 4.2% increase YoY driven by 2.5% higher days-of-care and 4.1% Medicare rate hikes.
Adjusted EBITDA Decline:
                                                VITAS Adjusted EBITDA fell 3.8% YoY to $70.4 million, impacted by $6.1 million in Medicare Cap limitations.
Roto-Rooter Revenue:
                                                Revenue rose 1.1% YoY, with branch revenue up 3.4% and 2.8% (residential/commercial), but independent contractor revenue dropped 4.7%.
2026 Growth Target:
                                                Company projects 8% revenue growth and EBITDA margins of 17.5–18% for 2026, driven by Medicare rate hikes and operational efficiencies.
Medicare Cap Resolution:
                                                Management expects Florida Medicare Cap billing limits to be resolved in 2026, avoiding prior issues like the $18.9 million 2025 cap hit.

                                

Segment Performance

VITAS net revenue growth was driven by an increase in days-of-care and a higher Medicare reimbursement rate. However, the Medicare Cap billing limitation accrued in the third quarter of 2025 was $6.1 million. Roto-Rooter revenue growth was sluggish, with branch residential and commercial revenue increasing 3.4% and 2.8%, respectively, while revenue from independent contractors declined 4.7%. The decline in adjusted EBITDA at Roto-Rooter was largely due to increased costs.

Guidance and Outlook

The company reaffirmed its previously issued guidance of $22 to $22.30 per share, excluding non-cash expenses. Management expects some comparative improvements from the third quarter to the fourth quarter, driven by strategic initiatives and seasonal factors. For 2026, the company expects revenue growth in the 8% range and EBITDA margins between 17.5% and 18%. Analysts estimate revenue growth at 6.7% for next year.

Valuation

Chemed Corporation's current valuation metrics are: P/E Ratio of 22.48, P/B Ratio of 5.82, P/S Ratio of 2.48, EV/EBITDA of 14.42, and ROE of 24.37%. These metrics indicate that the company is trading at a premium, with the P/E Ratio slightly above the industry average. The company's strong ROE and ROIC (19.26%) suggest that it is generating strong returns on its investments.

Operational Highlights

VITAS is focusing on hospital admissions and managing length of stay to mitigate Medicare Cap liability in Florida. The company expects a rate increase of around 3% in 2026, which is manageable. Roto-Rooter is seeing improved competitive dynamics, with paid search leads up in double digits. The company is working to minimize SG&A costs while investing in paid search to drive revenue growth.

3. NewsRoom

Chemed Corporation to Present at the BofA Securities 2025 Virtual Home Care Conference

Dec -04

Source: globenewswire.com

Edgestream Partners L.P. Acquires 6,233 Shares of Chemed Corporation $CHE

Dec -04

Source: defenseworld.net

Creative Planning Decreases Position in Chemed Corporation $CHE

Nov -29

Source: defenseworld.net

Boston Partners Boosts Holdings in Chemed Corporation $CHE

Nov -29

Source: defenseworld.net

Chemtrade Logistics Income Fund (CHE.UN:CA) Q3 2025 Earnings Call Transcript

Nov -12

Source: seekingalpha.com

Chemed Corporation (CHE) Presents at UBS Global Healthcare Conference 2025 Transcript

Nov -11

Source: seekingalpha.com

Wall Street Analysts Predict a 32.69% Upside in Chemed (CHE): Here's What You Should Know

Nov -11

Source: zacks.com

Chemed Corporation Declares Quarterly Dividend of 60 Cents

Nov -07

Source: globenewswire.com

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (6.89%)

6. Segments

VITAS

Expected Growth: 8.37%

VITAS' 8.37% growth is driven by increasing demand for hospice care services, expansion into new markets, and strategic acquisitions. Additionally, the company's focus on providing high-quality patient care and improving operational efficiencies have contributed to its growth. Furthermore, the aging population and the shift towards value-based care have created a favorable environment for VITAS' services.

Roto-Rooter

Expected Growth: 4.83%

Roto-Rooter's 4.83% growth is driven by increasing demand for residential and commercial plumbing services, expansion into new markets, and strategic acquisitions. Additionally, the company's focus on water conservation and eco-friendly solutions resonates with environmentally conscious consumers, contributing to its growth momentum.

7. Detailed Products

VITAS Healthcare

VITAS Healthcare is a hospice care provider that offers end-of-life care to patients with terminal illnesses.

Roto-Rooter Plumbing and Water Cleanup

Roto-Rooter is a plumbing and water cleanup service provider that offers emergency plumbing, drain cleaning, and water damage restoration services.

8. Chemed Corporation's Porter Forces

Forces Ranking

Threat Of Substitutes

Chemed Corporation's threat of substitutes is moderate due to the presence of alternative healthcare services and products. However, the company's diversified business model and strong brand recognition mitigate this threat.

Bargaining Power Of Customers

Chemed Corporation's customers have limited bargaining power due to the company's strong market position and diversified customer base. This reduces the risk of customers negotiating lower prices or demanding better services.

Bargaining Power Of Suppliers

Chemed Corporation's suppliers have moderate bargaining power due to the company's dependence on a few key suppliers. However, the company's strong relationships with suppliers and its diversified supply chain mitigate this risk.

Threat Of New Entrants

The threat of new entrants in Chemed Corporation's industry is low due to the high barriers to entry, including regulatory hurdles and significant capital requirements. This reduces the risk of new competitors entering the market.

Intensity Of Rivalry

The intensity of rivalry in Chemed Corporation's industry is high due to the presence of established competitors and the need to maintain market share. The company must continue to innovate and differentiate its services to remain competitive.

9. SWOT Analysis

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

	Value
Debt Weight	12.28%
Debt Cost	3.95%
Equity Weight	87.72%
Equity Cost	6.23%
WACC	5.95%
Leverage	14.00%

11. Quality Control: Chemed Corporation passed 7 out of 9 key points

Strong Liquidity

Low Debt

Strong Interest Coverage

Healthy Cash Flow

Operating Efficiency

Strong Return On Equity

Consistent Revenue Growth

Consistent Operating Cash Flow Growth

Margin Improvement

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

Encompass Health

A-Score: 5.7/10

Value: 3.8

Growth: 5.1

Quality: 7.0

Yield: 1.0

Momentum: 8.5

Volatility: 8.7

1-Year Total Return ->

Ensign Group

A-Score: 5.0/10

Value: 2.0

Growth: 7.6

Quality: 4.4

Yield: 0.0

Momentum: 7.0

Volatility: 9.0

1-Year Total Return ->

DaVita

A-Score: 4.8/10

Value: 8.2

Growth: 7.0

Quality: 4.8

Yield: 0.0

Momentum: 2.0

Volatility: 7.0

1-Year Total Return ->

Option Care Health

A-Score: 4.4/10

Value: 4.5

Growth: 7.3

Quality: 5.2

Yield: 0.0

Momentum: 3.0

Volatility: 6.7

1-Year Total Return ->

Chemed

A-Score: 4.2/10

Value: 2.9

Growth: 6.1

Quality: 7.3

Yield: 0.0

Momentum: 1.0

Volatility: 7.7

1-Year Total Return ->

Select Medical

A-Score: 3.8/10

Value: 6.8

Growth: 4.3

Quality: 2.5

Yield: 3.0

Momentum: 1.0

Volatility: 5.3

1-Year Total Return ->

Peers Metrics

12.e Scoring ^Insights

12.f DCF ^BETA

Parameters

Short Term Growth

-2.71%

Short term Time

10.0

Long-Term Growth

2.00%

WACC

5.95%

Chemed Corporation - US16359R1032

1. Company Snapshot

1.a. Company Description

1.b. Last Insights on CHE

1.c. Company Highlights

Less Volatile

Better Quality

Expensive

Earnings Miss

Revenues Miss

Earnings Beats

2. Chemed Corporation's Q3 2025 Earnings: A Mixed Bag

Segment Performance

Guidance and Outlook

Valuation

Operational Highlights

3. NewsRoom

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (6.89%)

6. Segments

VITAS

Expected Growth: 8.37%

Roto-Rooter

Expected Growth: 4.83%

7. Detailed Products

VITAS Healthcare

Roto-Rooter Plumbing and Water Cleanup

8. Chemed Corporation's Porter Forces

Forces Ranking

Threat Of Substitutes

Bargaining Power Of Customers

Bargaining Power Of Suppliers

Threat Of New Entrants

Intensity Of Rivalry

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

11. Quality Control: Chemed Corporation passed 7 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

421.97$

Current Price

421.97$

Potential

-0.00%

Expected Cash-Flows

12.e Scoring ^Insights

12.f DCF ^BETA