Chemed Corp (CHE) Stock Analysis and Metrics

Chemed

NYSE: CHE

$510.42 ▲ +8.91 (+1.78%)

At close: Jul 17, 2026 · 3:59 PM UTC

Financial Ratios

Market Cap18.08 Bn

P/E51.68

P/S7.12

Div. Yield0.00

ROIC (Qtr)0.00

Total Debt (Qtr)91.20 Mn

Revenue Growth (1y) (Qtr)1.63

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About

Chemed Corporation purchases, operates and divests subsidiaries engaged in diverse business activities to maximize shareholder value. The company operates in two reportable segments: VITAS, which provides hospice and palliative care services, and Roto‑Rooter, which delivers plumbing, drain cleaning, excavation, water restoration and related services to residential and commercial customers.

Chemed generates revenue primarily from service fees in its two segments. VITAS earns revenue from hospice care reimbursed mainly by Medicare and Medicaid on a per diem basis, with over 95% of its revenue coming from those government programs. Roto‑Rooter derives revenue from plumbing and drain cleaning jobs, excavation, water restoration work, and from franchising its brand to independent operators, charging franchise fees and ongoing royalties.

The company operates through the following segments.

• VITAS: This segment provides hospice and palliative care services through a network of physicians, registered nurses, home health aides, social workers, clergy and volunteers, serving patients primarily under Medicare and Medicaid programs.

• Roto‑Rooter: This segment offers plumbing, drain cleaning, excavation, water restoration and related services to residential and commercial customers, and also franchises the Roto‑Rooter name to independent operators.

Within the hospice industry, VITAS is one of the nation’s largest providers, competing against numerous small community based hospices, regional and national hospice chains, hospitals, nursing homes and home health agencies. Its competitive advantages include scale, brand recognition, and a proven ability to meet complex Medicare conditions of participation. In the highly fragmented plumbing and drain cleaning market, Roto‑Rooter benefits from one of the most recognized trademarks in the United States, giving it an edge in name recognition, emergency service and service guarantees over many local and regional competitors.

VITAS serves Medicare and Medicaid beneficiaries, principally elderly patients receiving end of life care, while Roto‑Rooter serves a broad base of residential homeowners and commercial clients such as property managers, municipalities and businesses needing plumbing and drainage solutions.

Investment Thesis

▲ Bull case

VITAS demonstrated strong admission growth with a 6.9% increase year over year driven by both hospital and non hospital sources. Non hospital admissions rose 8.4% outpacing the overall trend and signaling successful diversification of referral sources. Hospital admissions as a% of total admissions in the Florida combined program remained at 43.8% staying within the targeted 42% to 45% range. The company added 32.5 million dollars to its Medicare cap cushion in the Florida combined program removing a near term risk of billing limitations. Management raised full year ADC growth guidance to 4.5% to 5.5% and revenue growth ex Medicare cap to 6.5% to 7.5% reflecting confidence in sustained momentum.
Adjusted EBITDA excluding Medicare cap rose 0.6% to 70.8 million dollars with a margin of 16.8% despite a shift toward higher acuity patients. Average revenue per day increased by 146 basis points to 210.62 dollars indicating better pricing or case mix. The company operated with roughly 100 full time equivalents below budget showing labor efficiency that can be scaled as hiring ramps up to 60 per month. Guidance for EBITDA margin ex Medicare cap was lifted to 18% to 18.5% suggesting room for further improvement as scale benefits accrue. Continued focus on workforce productivity could allow the margin to exceed the revised range if census growth outpaces labor cost inflation.
Roto Rooters saw paid leads jump 18.7% year over year and the proportion of paid leads rise to 53.4% from 46.5% showing effective capture of demand despite organic search headwinds. Core residential plumbing and sewer and drain revenue increased for the first time since 2022 signaling a turnaround in the company's foundational service lines. The centralized billing and collections effort improved write offs by 1.5 million dollars and is expected to lift revenue per water restoration job as staff gain experience. New franchise acquisitions in San Francisco and Fort Worth are projected to add between 5 billion and 5.5 billion dollars of revenue for the remainder of 2026 and are immediately accretive to earnings. The higher conversion efficiency of paid leads should improve marketing ROI and support sustained revenue growth even if organic channels remain pressured.
Thirteen branches with newly installed commercial business managers posted approximately 10% revenue growth indicating that the sales force upgrade is beginning to pay off. The company added eighteen new commercial business managers during the quarter whose productivity should accelerate commercial revenue as they complete training. Marketing spend increased by nearly three million dollars of which two million was above budget reflecting a proactive push to offset declining organic leads. The effective tax rate assumption of 24.5% combined with a diluted share count of 13.6 million shares supports the EPS guidance range of 24 to 24.75 dollars representing a 13% increase over 2025 levels. As the new commercial managers reach full productivity the segment could see incremental margin expansion beyond the current guidance range.
The shift toward a higher proportion of paid leads reflects a structural change in customer acquisition that could become a durable competitive advantage as the company refines bidding and targeting. VITAS expansion into Marion Pasco and Pinellas counties produced 526 admissions in the quarter exceeding internal forecasts and providing a platform for further geographic penetration. The Medicare cap cushion built in Florida reduces regulatory overhang and allows management to focus on growth rather than compliance. Continued investment in technology and process centralization is expected to drive incremental margin improvement across both segments over the next twelve to eighteen months. Together these factors position Chemed to capture market share gains while maintaining financial discipline through the economic cycle.

VITAS demonstrated strong admission growth with a 6.9% increase year over year driven by both hospital and non hospital sources. Non hospital admissions rose 8.4% outpacing the overall trend and signaling successful diversification of referral sources. Hospital admissions as a% of total admissions in the Florida combined program remained at 43.8% staying within the targeted 42% to 45% range. The company added 32.5 million dollars to its Medicare cap cushion in the Florida combined program removing a near term risk of billing limitations. Management raised full year ADC growth guidance to 4.5% to 5.5% and revenue growth ex Medicare cap to 6.5% to 7.5% reflecting confidence in sustained momentum.
Adjusted EBITDA excluding Medicare cap rose 0.6% to 70.8 million dollars with a margin of 16.8% despite a shift toward higher acuity patients. Average revenue per day increased by 146 basis points to 210.62 dollars indicating better pricing or case mix. The company operated with roughly 100 full time equivalents below budget showing labor efficiency that can be scaled as hiring ramps up to 60 per month. Guidance for EBITDA margin ex Medicare cap was lifted to 18% to 18.5% suggesting room for further improvement as scale benefits accrue. Continued focus on workforce productivity could allow the margin to exceed the revised range if census growth outpaces labor cost inflation.
Roto Rooters saw paid leads jump 18.7% year over year and the proportion of paid leads rise to 53.4% from 46.5% showing effective capture of demand despite organic search headwinds. Core residential plumbing and sewer and drain revenue increased for the first time since 2022 signaling a turnaround in the company's foundational service lines. The centralized billing and collections effort improved write offs by 1.5 million dollars and is expected to lift revenue per water restoration job as staff gain experience. New franchise acquisitions in San Francisco and Fort Worth are projected to add between 5 billion and 5.5 billion dollars of revenue for the remainder of 2026 and are immediately accretive to earnings. The higher conversion efficiency of paid leads should improve marketing ROI and support sustained revenue growth even if organic channels remain pressured.
Thirteen branches with newly installed commercial business managers posted approximately 10% revenue growth indicating that the sales force upgrade is beginning to pay off. The company added eighteen new commercial business managers during the quarter whose productivity should accelerate commercial revenue as they complete training. Marketing spend increased by nearly three million dollars of which two million was above budget reflecting a proactive push to offset declining organic leads. The effective tax rate assumption of 24.5% combined with a diluted share count of 13.6 million shares supports the EPS guidance range of 24 to 24.75 dollars representing a 13% increase over 2025 levels. As the new commercial managers reach full productivity the segment could see incremental margin expansion beyond the current guidance range.
The shift toward a higher proportion of paid leads reflects a structural change in customer acquisition that could become a durable competitive advantage as the company refines bidding and targeting. VITAS expansion into Marion Pasco and Pinellas counties produced 526 admissions in the quarter exceeding internal forecasts and providing a platform for further geographic penetration. The Medicare cap cushion built in Florida reduces regulatory overhang and allows management to focus on growth rather than compliance. Continued investment in technology and process centralization is expected to drive incremental margin improvement across both segments over the next twelve to eighteen months. Together these factors position Chemed to capture market share gains while maintaining financial discipline through the economic cycle.

▼ Bear case

The increase in paid leads to 53.4% of total volume came at the cost of a nearly three million dollar rise in marketing spend with two million dollars exceeding the original budget. Organic leads from the natural side of search declined approximately 16% due to Google algorithm changes a trend management expects to continue creating a persistent headwind. Higher marketing costs are cited as the main driver of the lowered EBITDA margin guidance for Roto Rooters now set at 21.5% to 22.5% down from the prior 22.5% to 23% range. If the paid lead environment becomes more expensive or conversion rates deteriorate the segment could face margin compression despite revenue growth. Continued reliance on paid channels may erode profitability if cost per lead rises faster than the ability to convert leads into profitable jobs.
Average revenue per water restoration job fell roughly 13% during the quarter as the transition to a centralized billing model created temporary inefficiencies. Management acknowledges that the issue will improve only as staff gain experience leaving near term uncertainty around pricing and profitability. Independent contractor revenue declined 3.3% year over year and the company warned that underperformance in this segment could persist. Both the water restoration and independent contractor businesses contribute meaningfully to overall revenue and any prolonged weakness would weigh on consolidated results. A failure to restore pricing power in water restoration or to reengage independent contractors could suppress earnings growth even if other lines improve.
Unusual ice and snowstorms disrupted service at twenty four Roto Rooters branches for five days resulting in an estimated lost revenue of between three million and four million dollars. While VITAS revenue is insulated by its per day reimbursement model prolonged adverse weather could affect admissions and length of stay trends. The company noted that about one million dollars of the additional marketing expense was tied to weather related unserved leads suggesting that weather volatility continues to inflate operating costs. Recurring severe weather patterns could erode the benefit of marketing investments and strain operational capacity. If weather related disruptions become more frequent they could undermine the expected contribution from recent franchise acquisitions and offset marketing gains.
VITAS operated with roughly one hundred full time equivalents below budget in the quarter a situation described as unsustainable for the remainder of the year. Management plans to increase hiring to about sixty full time equivalents per month to support the raised ADC growth guidance of 4.5% to 5.5%. The influx of new staff will likely increase labor expenses and could offset some of the margin improvement anticipated from higher census. If productivity gains do not keep pace with headcount growth the adjusted EBITDA margin may face downward pressure despite revenue expansion. Rising wage pressures from a tight labor market could further compress margins especially as the company scales its workforce to meet census targets.
Proposed federal wage rule changes and the new SSVI scoring system could increase compliance costs and potentially limit access for some patients if implementation inadvertently penalizes larger providers. Ongoing scrutiny of hospice fraud especially in California raises the risk of reputational damage or restrictive regulations that could affect VITAS growth prospects. Macro economic headwinds that reduced demand for discretionary home services last year are still present and could suppress residential plumbing and sewer and drain demand despite recent improvements. Any further deterioration in the economic environment would likely lead to lower lead volumes and higher acquisition costs for both segments. The combination of regulatory change and macro softness creates a scenario where growth investments may not translate into proportional earnings upside.

The increase in paid leads to 53.4% of total volume came at the cost of a nearly three million dollar rise in marketing spend with two million dollars exceeding the original budget. Organic leads from the natural side of search declined approximately 16% due to Google algorithm changes a trend management expects to continue creating a persistent headwind. Higher marketing costs are cited as the main driver of the lowered EBITDA margin guidance for Roto Rooters now set at 21.5% to 22.5% down from the prior 22.5% to 23% range. If the paid lead environment becomes more expensive or conversion rates deteriorate the segment could face margin compression despite revenue growth. Continued reliance on paid channels may erode profitability if cost per lead rises faster than the ability to convert leads into profitable jobs.
Average revenue per water restoration job fell roughly 13% during the quarter as the transition to a centralized billing model created temporary inefficiencies. Management acknowledges that the issue will improve only as staff gain experience leaving near term uncertainty around pricing and profitability. Independent contractor revenue declined 3.3% year over year and the company warned that underperformance in this segment could persist. Both the water restoration and independent contractor businesses contribute meaningfully to overall revenue and any prolonged weakness would weigh on consolidated results. A failure to restore pricing power in water restoration or to reengage independent contractors could suppress earnings growth even if other lines improve.
Unusual ice and snowstorms disrupted service at twenty four Roto Rooters branches for five days resulting in an estimated lost revenue of between three million and four million dollars. While VITAS revenue is insulated by its per day reimbursement model prolonged adverse weather could affect admissions and length of stay trends. The company noted that about one million dollars of the additional marketing expense was tied to weather related unserved leads suggesting that weather volatility continues to inflate operating costs. Recurring severe weather patterns could erode the benefit of marketing investments and strain operational capacity. If weather related disruptions become more frequent they could undermine the expected contribution from recent franchise acquisitions and offset marketing gains.
VITAS operated with roughly one hundred full time equivalents below budget in the quarter a situation described as unsustainable for the remainder of the year. Management plans to increase hiring to about sixty full time equivalents per month to support the raised ADC growth guidance of 4.5% to 5.5%. The influx of new staff will likely increase labor expenses and could offset some of the margin improvement anticipated from higher census. If productivity gains do not keep pace with headcount growth the adjusted EBITDA margin may face downward pressure despite revenue expansion. Rising wage pressures from a tight labor market could further compress margins especially as the company scales its workforce to meet census targets.
Proposed federal wage rule changes and the new SSVI scoring system could increase compliance costs and potentially limit access for some patients if implementation inadvertently penalizes larger providers. Ongoing scrutiny of hospice fraud especially in California raises the risk of reputational damage or restrictive regulations that could affect VITAS growth prospects. Macro economic headwinds that reduced demand for discretionary home services last year are still present and could suppress residential plumbing and sewer and drain demand despite recent improvements. Any further deterioration in the economic environment would likely lead to lower lead volumes and higher acquisition costs for both segments. The combination of regulatory change and macro softness creates a scenario where growth investments may not translate into proportional earnings upside.

Segment Reporting Information, by Segment Breakdown of Revenue (2025)

Peer Comparison

Companies in the Medical Care Facilities

S.No.	Ticker	Company	Market Cap	P/E	P/S	Total Debt (Qtr)
1	HCA	HCA Healthcare, Inc.	87.94 Bn	11.25	1.15	48.02 Bn
2	CHE	Chemed Corp	18.08 Bn	51.68	7.12	0.09 Bn
3	THC	Tenet Healthcare Corp	16.59 Bn	9.74	0.77	13.21 Bn
4	DVA	Davita Inc.	15.37 Bn	14.02	1.10	10.63 Bn
5	EHC	Encompass Health Corp	10.07 Bn	654.20	1.66	2.57 Bn
6	ENSG	Ensign Group, Inc	9.52 Bn	27.18	1.81	0.14 Bn
7	UHS	Universal Health Services Inc	9.19 Bn	6.05	0.52	4.71 Bn
8	PACS	PACS Group, Inc.	6.96 Bn	28.55	1.28	0.05 Bn

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Investment Thesis

Segment Reporting Information, by Segment Breakdown of Revenue (2025)

Segment Reporting Information, by Segment Breakdown of Revenue (2025)

Peer Comparison

Research Tools

Developers

About

Investment Thesis

Segment Reporting Information, by Segment Breakdown of Revenue (2025)

Segment Reporting Information, by Segment Breakdown of Revenue (2025)

Peer Comparison

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