Chemed Corp. Reports Mixed Q4 Results, Shares Decline on Earnings Miss
Chemed Corp. (NYSE:CHE), the parent company of VITAS Healthcare and Roto-Rooter, reported financial results for the fourth quarter ended December 31, 2025. The company posted revenue that was essentially flat compared to the prior year but fell short of Wall Street's expectations, while adjusted earnings also missed analyst targets. The market reaction was notably negative, with the stock declining significantly following the report.
Earnings and Revenue Versus Estimates
The company's performance in the fourth quarter did not meet the forecasts set by financial analysts. Chemed reported revenue of $639.3 million, which was nearly identical to the $640.0 million reported in the fourth quarter of 2024. However, this figure fell short of the analyst consensus estimate of approximately $665.7 million.
On the profitability front, the picture was similar. Chemed reported adjusted diluted earnings per share (EPS) of $6.42, a 6.0% decrease from the $6.83 reported in the prior-year period. This result was 8.7% below the analyst estimate of $7.14 per share. The GAAP diluted EPS came in at $5.48, a 9.0% year-over-year decline.
Market Reaction
The earnings and revenue miss was met with a clear negative reaction from investors. In the trading session following the earnings release, Chemed's stock price dropped approximately 14.7%. This sharp decline reflects investor disappointment with the quarterly results, particularly the shortfall in profitability against expectations, and suggests concerns about near-term operational performance.
Segment Performance Breakdown
The quarterly results highlighted diverging trends between Chemed's two main business segments:
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VITAS Healthcare: The hospice care segment saw modest growth but faced margin pressure.
- Net patient revenue increased 1.9% to $418.8 million.
- Average daily census grew 1.3%, and admissions rose 6.0%.
- Adjusted EBITDA, excluding Medicare Cap impacts, declined 1.7% to $91.6 million, with the corresponding margin contracting by 79 basis points to 21.7%.
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Roto-Rooter: The plumbing and drain cleaning services segment experienced a more challenging quarter.
- Revenue declined 3.7% to $220.6 million.
- Adjusted EBITDA fell sharply by 21.1% to $47.5 million.
- The Adjusted EBITDA margin contracted significantly by 477 basis points to 21.5%, driven by a decline in gross margin and a 10.5% increase in selling, general, and administrative expenses.
Financial Position and Capital Allocation
Chemed maintained a strong balance sheet. As of December 31, 2025, the company held $74.5 million in cash and cash equivalents with no debt. The company also continued its aggressive share repurchase program, buying back 400,000 shares during the quarter for $174.6 million. Approximately $127.3 million remains available under the current repurchase authorization.
2026 Outlook and Comparison to Analyst Estimates
Management provided guidance for the full year 2026, offering a forward-looking perspective that contrasts with the recent quarterly performance.
- VITAS is projected to achieve revenue growth (prior to Medicare Cap) of 5.5% to 6.5% and an EBITDA margin of 17.5% to 18.0%. The company expects Medicare Cap billing limitations to fall significantly to $9.5 million from $27.2 million in 2025.
- Roto-Rooter is forecast to grow revenue by 3.0% to 3.5% with an EBITDA margin between 22.5% and 23.0%.
- Consolidated Guidance: For the full year 2026, Chemed expects adjusted diluted EPS in the range of $23.25 to $24.25, compared to $21.55 in 2025.
This company-provided EPS guidance range has a midpoint of $23.75. This sits below the current analyst consensus estimate for full-year 2026 sales of approximately $2.73 billion and revenue of $25.66, suggesting management's outlook may be more conservative than the street's expectations. Chemed noted that earnings momentum is expected to build through the year, with approximately 55% of consolidated adjusted net income projected for the second half.
Conclusion
Chemed's fourth-quarter results presented a mixed bag, with the VITAS segment showing resilient patient growth amid margin compression and the Roto-Rooter segment facing clear headwinds on both the top and bottom lines. The significant miss on earnings estimates and the lower-than-expected revenue triggered a substantial sell-off in the stock. While the company's outlook for 2026 projects a return to growth and improved profitability, the provided guidance appears cautious relative to existing analyst models. Investors will likely focus on the company's ability to execute on its second-half weighted recovery plan and restore margins, particularly within the Roto-Rooter business.
For a detailed look at Chemed's historical earnings and future analyst estimates, you can review the data here.
Disclaimer: This article is for informational purposes only and does not constitute financial advice, investment recommendation, or an offer to buy or sell any securities. Investors should conduct their own research and consult with a qualified financial advisor before making any investment decisions.