CHE Stock Falls Post 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.

Following the earnings announcement on Feb. 25, the CHE stock dropped nearly 15%, finishing at $396.63 yesterday.

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.

Chemed Corporation Price, Consensus and EPS Surprise

 

Chemed Corporation price-consensus-eps-surprise-chart | Chemed Corporation Quote

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.

Our Take on CHE

Chemed exited the fourth quarter of 2025 with earnings and revenues missing estimates. VITAS revenues were negatively impacted by acuity mix shift, as well as the combination of Medicare Cap and other contra revenue changes. Within the Roto Rooter Branch residential business, the trend of increasing paid leads, offset by declining natural leads, extended into the quarter. Contraction of both margins is also discouraging.

On a promising note, management expects 2026 to be a transition year for both segments. VITAS is executing on the strategies required to fully mitigate potential Florida Medicare Cap billing limitations for the government's fiscal year 2026.

CHE’s Zacks Rank and Key Picks

Chemed currently carries a Zacks Rank #3 (Hold).

Some better-ranked stocks from the broader medical space are Intuitive Surgical ISRG, Cardinal Health CAH and Align Technology ALGN.

Intuitive Surgical, currently sporting a Zacks Rank #1 (Strong Buy), reported a fourth-quarter 2025

 adjusted EPS of $2.53, which surpassed the Zacks Consensus Estimate by 12.4%. Revenues of $2.87 billion beat the Zacks Consensus Estimate by 4.7%. You can see the complete list of today’s Zacks #1 Rank stocks here.

ISRG has an estimated long-term earnings growth rate of 15.7% compared with the industry’s 12.7% growth. The company beat earnings estimates in the trailing four quarters, the average surprise being 13.24%.

Cardinal Health, carrying a Zacks Rank #2 (Buy) at present, posted a second-quarter fiscal 2026 adjusted EPS of $2.63, exceeding the Zacks Consensus Estimate by 10%. Revenues of $65.6 billion topped the Zacks Consensus Estimate by 0.9%.

CAH has a long-term earnings growth rate of 15% compared with the industry’s 9.6% growth. The company’s earnings outpaced estimates in the trailing four quarters, the average surprise being 9.3%.

Align Technology, carrying a Zacks Rank #2 at present, posted a fourth-quarter 2025 adjusted EPS of $3.29, exceeding the Zacks Consensus Estimate by 10.1%. Revenues of $1.05 billion outperformed the Zacks Consensus Estimate by 5.3%.

ALGN has an estimated long-term earnings growth rate of 10.1% compared with the industry’s 9.5% growth. The company’s earnings outpaced estimates in three of the trailing four quarters and missed on one occasion, the average surprise being 6.16%.

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

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