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Should Investors Hold Chemed Stock in Their Portfolio Now?
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Key Takeaways
Chemed is positioned for growth as VITAS improves and Roto-Rooter shows resilience in a tough environment.
CHE's VITAS segment benefited from higher admissions, days-of-care growth, and Medicare increases.
Chemed faces margin pressure from inflation, tariffs, and intense competition across both operating segments.
Chemed Corporation (CHE - Free Report) is well-poised to grow in the coming quarters due to strong operational growth in the VITAS arm. Roto-Rooter maintains its core competitive edge in a challenging operational environment, which is highly promising. Meanwhile, ongoing macroeconomic headwinds and competitive pressures pose risks for Chemed’s operations.
Over the past year, this Zacks Rank #3 (Hold) stock has dropped 17.4% against the industry’s 6.2% rise and the S&P 500 composite’s 17.9% growth.
The renowned hospice care provider has a market capitalization of $6.05 billion. Chemed has an earnings yield of 5.2% compared with the industry’s 5% yield. Further, it has an earnings growth rate of 13.9% for 2026, well ahead of the industry’s 11.8% growth.
Let’s delve deeper.
Upsides for CHE
VITAS Prospects Bright: The segment is consistently registering accelerated improvement, supported by increased growth in licensed healthcare professionals and strong admissions. In the third quarter of 2025, VITAS’ growth was primarily driven by a 2.5% increase in days-of-care and a geographically weighted average Medicare reimbursement rate increase of approximately 4.1%.
Furthermore, VITAS is implementing targeted strategies to address the Medicare cap, with a particular emphasis on increasing hospital-based admissions in select markets. The company is on track to implement initiatives that will fully mitigate any potential impact from the Florida Medicare cap billing limitation in fiscal 2026. The new program in Pasco County, FL, is a key factor in mitigating Medicare cap issues in 2025 and beyond, while offering a promising long-term expansion opportunity. In another win, VITAS will soon start providing services in Marion County as well.
Roto-Rooter Shows Resilience: The segment’s long-standing history of overcoming challenges reinforces management’s belief in its growth potential, even amid ongoing consumer sentiment and spending pressures. In the third quarter of 2025, Roto-Rooter revenues experienced modest growth of 1.1% year over year, with branch performance higher than anticipated.
For the first time in several quarters, the segment experienced strength in residential plumbing revenue service line, driven by a multipronged campaign to target selected high-revenue dollar plumbing services. During the quarter, Roto-Rooter’s branch commercial revenue growth was fueled by a 10.2% increase in excavation, a 3.5% rise in water restoration revenues and a 1.2% increase in drain cleaning revenues.
Concerns for CHE
Macroeconomic Headwinds: Chemed is actively monitoring the macroeconomic trends, such as inflation, the effects of recently implemented tariffs, and the possibility of modified or additional tariffs, which may have an adverse impact on its net sales and profitability. In the third quarter of 2025, the cost of services provided and goods sold went up 8% year over year, resulting in a 313-basis point (bps) contraction in the gross margin.
Image Source: Zacks Investment Research
Furthermore, significant tariffs on certain products, such as steel for Roto-Rooter’s cabling machines and pharmaceuticals utilized by VITAS, could materially increase the costs of Roto-Rooter and VITAS.
Tough Competitive Landscape: Roto-Rooter operates in the highly competitive market for sewer, drain, and pipe cleaning and plumbing repair businesses. Competition is fragmented in most markets with local and regional firms providing much of the competition.
Besides, Hospice care in the United States is competitive, as programs for hospice services are generally uniform. Both these segments could face challenges in their operations if they are unable to innovate and effectively respond to market trends.
CHE’s Estimate Trend
The Zacks Consensus Estimate for Chemed’s 2025 earnings per share (EPS) has remained constant at $22.16 in the past 30 days.
The Zacks Consensus Estimate for the company’s 2025 revenues is pegged at $2.55 billion, suggesting a 4.8% rise from the year-ago reported number.
BrightSpring Health Services has an estimated long-term earnings growth rate of 53.3% compared with the industry’s 15.5% growth. Its earnings beat the Zacks Consensus Estimate in each of the trailing four quarters, with the average surprise being 45.1%. BTSG shares have surged 93.9% against the industry’s 0.1% decline over the past year.
Illumina, currently sporting a Zacks Rank #1, has an earnings yield of 3.7% compared to the industry’s -7.9% yield. Shares of the company have lost 10.8% over the past year against the industry’s 9.9% growth. ILMN’s earnings outpaced estimates in three of the trailing four quarters and missed on one occasion, the average surprise being 6.7%.
Insulet, currently carrying a Zacks Rank #2 (Buy), has an earnings yield of 3.9% against the industry’s -0.9% yield. Shares of the company have lost 7.8% compared with the industry’s 2.6% decline. PODD’s earnings surpassed estimates in each of the trailing four quarters, with the average surprise being 17.8%.
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Should Investors Hold Chemed Stock in Their Portfolio Now?
Key Takeaways
Chemed Corporation (CHE - Free Report) is well-poised to grow in the coming quarters due to strong operational growth in the VITAS arm. Roto-Rooter maintains its core competitive edge in a challenging operational environment, which is highly promising. Meanwhile, ongoing macroeconomic headwinds and competitive pressures pose risks for Chemed’s operations.
Over the past year, this Zacks Rank #3 (Hold) stock has dropped 17.4% against the industry’s 6.2% rise and the S&P 500 composite’s 17.9% growth.
The renowned hospice care provider has a market capitalization of $6.05 billion. Chemed has an earnings yield of 5.2% compared with the industry’s 5% yield. Further, it has an earnings growth rate of 13.9% for 2026, well ahead of the industry’s 11.8% growth.
Let’s delve deeper.
Upsides for CHE
VITAS Prospects Bright: The segment is consistently registering accelerated improvement, supported by increased growth in licensed healthcare professionals and strong admissions. In the third quarter of 2025, VITAS’ growth was primarily driven by a 2.5% increase in days-of-care and a geographically weighted average Medicare reimbursement rate increase of approximately 4.1%.
Furthermore, VITAS is implementing targeted strategies to address the Medicare cap, with a particular emphasis on increasing hospital-based admissions in select markets. The company is on track to implement initiatives that will fully mitigate any potential impact from the Florida Medicare cap billing limitation in fiscal 2026. The new program in Pasco County, FL, is a key factor in mitigating Medicare cap issues in 2025 and beyond, while offering a promising long-term expansion opportunity. In another win, VITAS will soon start providing services in Marion County as well.
Roto-Rooter Shows Resilience: The segment’s long-standing history of overcoming challenges reinforces management’s belief in its growth potential, even amid ongoing consumer sentiment and spending pressures. In the third quarter of 2025, Roto-Rooter revenues experienced modest growth of 1.1% year over year, with branch performance higher than anticipated.
For the first time in several quarters, the segment experienced strength in residential plumbing revenue service line, driven by a multipronged campaign to target selected high-revenue dollar plumbing services. During the quarter, Roto-Rooter’s branch commercial revenue growth was fueled by a 10.2% increase in excavation, a 3.5% rise in water restoration revenues and a 1.2% increase in drain cleaning revenues.
Concerns for CHE
Macroeconomic Headwinds: Chemed is actively monitoring the macroeconomic trends, such as inflation, the effects of recently implemented tariffs, and the possibility of modified or additional tariffs, which may have an adverse impact on its net sales and profitability. In the third quarter of 2025, the cost of services provided and goods sold went up 8% year over year, resulting in a 313-basis point (bps) contraction in the gross margin.
Image Source: Zacks Investment Research
Furthermore, significant tariffs on certain products, such as steel for Roto-Rooter’s cabling machines and pharmaceuticals utilized by VITAS, could materially increase the costs of Roto-Rooter and VITAS.
Tough Competitive Landscape: Roto-Rooter operates in the highly competitive market for sewer, drain, and pipe cleaning and plumbing repair businesses. Competition is fragmented in most markets with local and regional firms providing much of the competition.
Besides, Hospice care in the United States is competitive, as programs for hospice services are generally uniform. Both these segments could face challenges in their operations if they are unable to innovate and effectively respond to market trends.
CHE’s Estimate Trend
The Zacks Consensus Estimate for Chemed’s 2025 earnings per share (EPS) has remained constant at $22.16 in the past 30 days.
The Zacks Consensus Estimate for the company’s 2025 revenues is pegged at $2.55 billion, suggesting a 4.8% rise from the year-ago reported number.
Key MedTech Stocks
Some better-ranked stocks in the broader medical space are BrightSpring Health Services (BTSG - Free Report) , lllumina (ILMN - Free Report) and Insulet (PODD - Free Report) .
BrightSpring Health Services has an estimated long-term earnings growth rate of 53.3% compared with the industry’s 15.5% growth. Its earnings beat the Zacks Consensus Estimate in each of the trailing four quarters, with the average surprise being 45.1%. BTSG shares have surged 93.9% against the industry’s 0.1% decline over the past year.
BTSG sports a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
Illumina, currently sporting a Zacks Rank #1, has an earnings yield of 3.7% compared to the industry’s -7.9% yield. Shares of the company have lost 10.8% over the past year against the industry’s 9.9% growth. ILMN’s earnings outpaced estimates in three of the trailing four quarters and missed on one occasion, the average surprise being 6.7%.
Insulet, currently carrying a Zacks Rank #2 (Buy), has an earnings yield of 3.9% against the industry’s -0.9% yield. Shares of the company have lost 7.8% compared with the industry’s 2.6% decline. PODD’s earnings surpassed estimates in each of the trailing four quarters, with the average surprise being 17.8%.