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CHE Stock Falls on Q3 Earnings and Revenue Miss, Margins Crash
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Key Takeaways
Chemed's Q3 adjusted EPS fell 6.6% year over year, missing analyst expectations.
CHE's revenues grew 3.1% to $624.9M, with VITAS up 4.2% and Roto-Rooter rising 1.1%.
CHE's gross margin contracted 313 bps to 31.5% as service costs increased 8% year over year.
Chemed Corporation (CHE - Free Report) 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.
The company repurchased 407,500 shares of Chemed stock for $180.8 million, which equates to a cost of $443.62 per share. As of Sept. 30, 2025, there was approximately $301.8 million of remaining share repurchase authorization under its plan.
For 2025, the company expects revenues from VITAS, prior to Medicare Cap, to increase 10.5% to 11.3% from the 2024 levels. The Roto-Rooter segment is forecasted to achieve revenue growth of 2.4% to 3.0%.
The Zacks Consensus Estimate for total revenues is pegged at $2.55 billion, which indicates a 4.9% improvement year over year.
For full-year 2025, the company now expects the adjusted EPS to be in the range of $24.95-$25.45. The Zacks Consensus Estimate for the metric is pegged at $22.03, which implies a 4.8% decline over the 2024 adjusted figure.
Our Take on CHE
Chemed delivered lower-than-expected earnings and revenues for the third quarter of 2025. Despite Medicare Cap limitations in certain of Chemed’s programs, VITAS achieved strong operating performance.
Roto-Rooter experienced modest growth in gross branch revenues but faced challenges with a decline in adjusted EBITDA. The contraction of both margins in the quarter is discouraging.
Veracyte reported second-quarter 2025 adjusted EPS of 44 cents, which beat the Zacks Consensus Estimate by 41.9%. Revenues of $130.2 million topped the Zacks Consensus Estimate by 7.1%. VCYT currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
VCYT has an estimated earnings growth rate of 19.3% for 2025 compared with the industry’s 12.9%. The company beat on earnings in each of the trailing four quarters, the average surprise being 242.77%.
Insulet, currently sporting a Zacks Rank #1, reported a second-quarter 2025 adjusted EPS of $1.17, which outperformed the Zacks Consensus Estimate by 25.81%. Revenues of $649.1 million exceeded the Zacks Consensus Estimate by 5.46%.
PODD has an estimated earnings growth rate of 42.3% for 2025 compared with the industry’s 12.7%. The company beat on earnings in each of the trailing four quarters, the average surprise being 19.54%.
Phibro Animal Health, currently carrying a Zacks Rank #2 (Buy), reported a fourth-quarter fiscal 2025 EPS of 57 cents, which beat the Zacks Consensus Estimate by 9.62%. Net sales of $378.7 million topped the consensus estimate by 4.86%.
Phibro has an estimated earnings growth rate of 21.1% for fiscal 2026 compared with the industry’s 12.8%. The company’s earnings surpassed estimates in each of the trailing four quarters, the average being 27.88%.
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CHE Stock Falls on Q3 Earnings and Revenue Miss, Margins Crash
Key Takeaways
Chemed Corporation (CHE - Free Report) 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.
The company repurchased 407,500 shares of Chemed stock for $180.8 million, which equates to a cost of $443.62 per share. As of Sept. 30, 2025, there was approximately $301.8 million of remaining share repurchase authorization under its plan.
Chemed has a consistent dividend-paying history, with five-year annualized dividend growth of 10.47%.
Chemed Corporation Price, Consensus and EPS Surprise
Chemed Corporation price-consensus-eps-surprise-chart | Chemed Corporation Quote
Chemed Reiterates 2025 Guidance
For 2025, the company expects revenues from VITAS, prior to Medicare Cap, to increase 10.5% to 11.3% from the 2024 levels. The Roto-Rooter segment is forecasted to achieve revenue growth of 2.4% to 3.0%.
The Zacks Consensus Estimate for total revenues is pegged at $2.55 billion, which indicates a 4.9% improvement year over year.
For full-year 2025, the company now expects the adjusted EPS to be in the range of $24.95-$25.45. The Zacks Consensus Estimate for the metric is pegged at $22.03, which implies a 4.8% decline over the 2024 adjusted figure.
Our Take on CHE
Chemed delivered lower-than-expected earnings and revenues for the third quarter of 2025. Despite Medicare Cap limitations in certain of Chemed’s programs, VITAS achieved strong operating performance.
Roto-Rooter experienced modest growth in gross branch revenues but faced challenges with a decline in adjusted EBITDA. The contraction of both margins in the quarter is discouraging.
CHE’s Zacks Rank and Key Picks
Chemed currently carries a Zacks Rank #4 (Sold).
Some better-ranked stocks from the broader medical space are Veracyte (VCYT - Free Report) , Insulet (PODD - Free Report) and Phibro Animal Health (PAHC - Free Report) .
Veracyte reported second-quarter 2025 adjusted EPS of 44 cents, which beat the Zacks Consensus Estimate by 41.9%. Revenues of $130.2 million topped the Zacks Consensus Estimate by 7.1%. VCYT currently sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
VCYT has an estimated earnings growth rate of 19.3% for 2025 compared with the industry’s 12.9%. The company beat on earnings in each of the trailing four quarters, the average surprise being 242.77%.
Insulet, currently sporting a Zacks Rank #1, reported a second-quarter 2025 adjusted EPS of $1.17, which outperformed the Zacks Consensus Estimate by 25.81%. Revenues of $649.1 million exceeded the Zacks Consensus Estimate by 5.46%.
PODD has an estimated earnings growth rate of 42.3% for 2025 compared with the industry’s 12.7%. The company beat on earnings in each of the trailing four quarters, the average surprise being 19.54%.
Phibro Animal Health, currently carrying a Zacks Rank #2 (Buy), reported a fourth-quarter fiscal 2025 EPS of 57 cents, which beat the Zacks Consensus Estimate by 9.62%. Net sales of $378.7 million topped the consensus estimate by 4.86%.
Phibro has an estimated earnings growth rate of 21.1% for fiscal 2026 compared with the industry’s 12.8%. The company’s earnings surpassed estimates in each of the trailing four quarters, the average being 27.88%.