Chemed (CHE) Down 5.2% Since Last Earnings Report: Can It Rebound?

A month has gone by since the last earnings report for Chemed (CHE). Shares have lost about 5.2% in that time frame, underperforming 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 latest earnings report in order to get a better handle on the recent drivers for Chemed Corporation before we dive into how investors and analysts have reacted as of late.

CHE Q3 Earnings and Revenues Miss, Margins Crash

Chemed Corporation (CHE) reported third-quarter 2025 adjusted earnings per share (EPS) of $5.27, which declined 6.6% year over year. The figure lagged the Zacks Consensus Estimate by 2.2%. 

The company’s GAAP EPS was $4.46, down 10.8% from last year’s reported figure.

CHE’s Q3 Revenues

Revenues in the reported quarter improved 3.1% year over year to $624.9 million. The metric missed the Zacks Consensus Estimate by 0.5%.

CHE stock slipped 2.7% in after-hours trading yesterday, likely reflecting investor concerns about the company’s declining earnings per share.

CHE’s 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 third quarter, net patient revenues totaled $407.7 million, up 4.2% year over year.

The rise in revenues was primarily due to a 2.5% increase in days-of-care and a nearly 4.1% rise in the geographically weighted average Medicare reimbursement rate.

Roto-Rooter

The segment reported sales of $217.2 million, up 1.1% year over year.

Total Roto-Rooter branch commercial revenues edged up 2.8% year over year. This aggregate commercial revenue change comprised a 10.2% increase in excavation, a 3.5% rise in water restoration, and a 1.2% increase in drain cleaning, partially offset by a 0.8% decline in plumbing.

Total Roto-Rooter branch residential revenues increased 3.4% year over year. The aggregate residential revenue change reflected increases of 8.2% in plumbing, 4.5% in excavation, and 6.8% in water restoration, partially offset by a 2.6% decline in drain cleaning.

CHE’s Margin Performance

The gross profit decreased 6.2% year over year to $196.9 million in the third quarter. The gross margin contracted 313 basis points (bps) year over year to 31.5% due to an 8% increase in the cost of services provided and goods sold. 

SG&A expenses rose 3.7% year over year to $105.8 million. The adjusted operating profit declined 15.6% from the year-ago period’s level to $91.1 million. The adjusted operating margin contracted 323 bps to 14.6% during the quarter.

CHE’s Liquidity & Capital Structure

Chemed exited the third quarter of 2025 with cash and cash equivalents of $129.8 million compared with $249.9 million at the end of the second quarter. The company did not have any current or long-term debt at the end of the reported quarter.

Cumulative net cash provided by operating activities was $254.7 million compared with $252.6 million in the year-ago period.

How Have Estimates Been Moving Since Then?

In the past month, investors have witnessed a upward trend in estimates revision.

VGM Scores

At this time, Chemed has a average Growth Score of C, though it is lagging a bit on the Momentum Score front with a D. However, the stock was allocated a grade of B on the value side, putting it in the second quintile for this investment strategy.

Overall, the stock has an aggregate VGM Score of C. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been trending upward for the stock, and the magnitude of this revision looks promising. It comes with little surprise Chemed has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.

Performance of an Industry Player

Chemed belongs to the Zacks Medical - Outpatient and Home Healthcare industry. Another stock from the same industry, Quest Diagnostics (DGX), has gained 8.5% over the past month. More than a month has passed since the company reported results for the quarter ended September 2025.

Quest Diagnostics reported revenues of $2.82 billion in the last reported quarter, representing a year-over-year change of +13.2%. EPS of $2.60 for the same period compares with $2.30 a year ago.

For the current quarter, Quest Diagnostics is expected to post earnings of $2.36 per share, indicating a change of +5.8% from the year-ago quarter. The Zacks Consensus Estimate has changed -0.3% over the last 30 days.

The overall direction and magnitude of estimate revisions translate into a Zacks Rank #3 (Hold) for Quest Diagnostics. Also, the stock has a VGM Score of A.

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This article originally published on Zacks Investment Research (zacks.com).

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