A month has gone by since the last earnings report for Chemed (CHE). Shares have lost about 6.2% in that time frame, outperforming the S&P 500.
Will the recent negative trend continue leading up to its next earnings release, or is Chemed due for a breakout? Well, first let's take a quick look at its most recent earnings report in order to get a better handle on the recent catalysts for Chemed Corporation before we dive into how investors and analysts have reacted as of late.
Chemed Q4 Earnings & Revenue Miss, Margins Crash
Chemed Corporation (CHE) reported fourth-quarter 2025 adjusted earnings per share (EPS) of $6.42, which fell 6% year over year. The figure missed the Zacks Consensus Estimate by 8.55%.
The company’s GAAP EPS was $6.02, up 2% from last year’s reported figure.
For the year, the adjusted EPS was $21.55, reflecting a 6.8% decrease from the year-ago period.
CHE’s Revenues
Revenues in the reported quarter came in at $639.3 million, almost in line with the year-ago quarter. The metric fell short of the Zacks Consensus Estimate by 2.55%.
Revenues for 2025 were $2.53 billion, up 4.1% from last year.
CHE’s Q4 Segmental Details
Chemed operates through two wholly owned subsidiaries — VITAS (a major provider of end-of-life care) and Roto-Rooter (a leading commercial and residential plumbing plus drain cleaning service provider).
VITAS
In the fourth quarter, net patient revenues totaled $418.8 million, up 1.9% on a year-over-year basis. The rise in revenues was primarily due to a 1.3% increase in days-of-care and a 2.2% rise in the geographically weighted average Medicare reimbursement rate.
Roto-Rooter
The segment reported sales of $220.6 million, down 3.7% year over year.
Total Roto-Rooter branch commercial revenues increased 1.6% year over year. This aggregate commercial revenue change consisted of excavation increasing 10.9%, drain cleaning increasing 2%, plumbing flat between years, offset by a decline in water restoration of 20%.
Total Roto-Rooter branch residential revenues registered a decrease of 3.1% over the prior-year period. This aggregate residential revenue change consisted of plumbing increasing 6.3%, excavation essentially flat between periods, offset by water restoration decreasing 10.3% and drain cleaning declining 3.2%.
CHE’s Q4 Margin Performance
The gross profit decreased 5% year over year to $222.3 million in the fourth quarter of 2025. The gross margin contracted 181 basis points (bps) year over year to 34.8% due to a 2.7% increase in the cost of services provided and goods sold.
SG&A expenses rose 1.2% year over year to $105.5 million. The adjusted operating profit fell 10.1% from the year-ago period to $116.8 million. The adjusted operating margin contracted 202 bps to 18.3% during the quarter.
CHE’s Liquidity & Capital Structure
Chemed exited the fourth quarter with cash and cash equivalents of $74.5 million compared with $178.4 million at the end of 2024. The company did not have any current or long-term debt at the end of the reported quarter.
The cumulative net cash provided by operating activities was $388.3 million compared with $417.5 million in the year-ago period.
The company repurchased 400,000 shares of Chemed stock for $174.6 million, which equates to costs of $436.39 per share. As of Dec. 31, 2025, there was $127.3 million of remaining share repurchase authorization under its plan.
Chemed has a consistent dividend-paying history, with five-year annualized dividend growth of 11.8%.
Chemed Issues 2026 Guidance
For 2026, the company expects revenues from VITAS, prior to Medicare Cap, to increase 5.5-16.5% from the 2025 reported level. The Zacks Consensus Estimate for total revenues is pegged at $2.67 billion, which indicates a 5.5% year-over-year improvement.
Adjusted EPS for the year is expected to be $23.25-$24.25. The Zacks Consensus Estimate for the metric is pegged at $25.23, which implies 17.1% growth from the 2025 adjusted figure.
How Have Estimates Been Moving Since Then?
It turns out, fresh estimates have trended downward during the past month.
The consensus estimate has shifted -7.08% due to these changes.
VGM Scores
At this time, Chemed has a great Growth Score of A, though it is lagging a lot on the Momentum Score front with a C. Charting a somewhat similar path, the stock has a grade of B on the value side, putting it in the top 40% for value investors.
Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been broadly trending downward for the stock, and the magnitude of this revision indicates a downward shift. It's no surprise Chemed has a Zacks Rank #4 (Sell). We expect a below average return from the stock in the next few months.
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This article originally published on Zacks Investment Research (zacks.com).
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
