Chemed Raises 2026 EPS Guidance to $24–24.75; Roto-Rooter Margin Drops to 22.5%
Chemed increased 2026 adjusted EPS guidance to $24.00–$24.75, up midpoint 13%, and now trades at 17.4X guidance versus a 24.4X five-year average. Roto-Rooter's Q1 adjusted EBITDA margin dropped to 22.5% from 27–29% due to paid digital leads, leading Chemed to set future margins at 21.5–22.5%.
1. Raised EPS Guidance and Current Valuation
Chemed raised its 2026 adjusted EPS guidance from $23.25–$24.25 to $24.00–$24.75, implying approximately 13% year-over-year growth. The shares now trade at 17.4 times the guidance midpoint versus a five-year average P/E of 24.4, reflecting market caution over segment headwinds.
2. Roto-Rooter Margin Pressures and Outlook
Roto-Rooter's Q1 adjusted EBITDA margin fell to 22.5% from a historical 27–29% range due to a structural shift toward paid digital leads and elevated write-offs in water restoration. Management now models the plumbing division at a 21.5–22.5% margin, signaling a conservative long-term outlook for profitability.
3. VITAS Hospice Growth and Medicare Cap Resolution
VITAS Healthcare mitigated a $27.2 million 2025 Medicare cap exposure by shifting admissions to shorter-stay hospital referrals, cutting Q1 2026 cap accrual to $2.4 million. Admissions grew 6.9%, average daily census reached 22,723, and full-year ADC growth guidance rose to 4.5–5.5% with revenue growth ex-cap at 6.5–7.5%.
4. Capital Return and Financial Position
Chemed has returned $400–$500 million annually through share buybacks and a $0.60 quarterly dividend, offering a 7–8% yield on its $5.7 billion market cap. The company maintains no long-term debt, supporting both capital returns and ongoing investment in VITAS and Roto-Rooter.