Chemed Corporation reported fourth‑quarter 2025 financial results, posting consolidated revenue of $639.3 million, a 1.9 % year‑over‑year increase, and adjusted diluted earnings per share of $6.42, which fell short of analyst expectations of $7.02–$7.14.
The revenue growth was driven by VITAS Healthcare’s $418.8 million in net revenue, up 1.9 % from $411.5 million in the prior year, and by a 3.7 % decline in Roto‑Rooter revenue to $220.6 million. VITAS benefited from a 1.3 % rise in days‑of‑care and a 2.2 % increase in Medicare reimbursement rates, while Roto‑Rooter’s decline reflected a 3.7 % drop in service volume.
Adjusted EBITDA excluding Medicare cap was $91.6 million, a 1.7 % decline from $93.2 million a year earlier, and the adjusted EBITDA margin contracted to 21.7 % from 22.4 %. Gross margin fell to 49.8 % from 51.3 %, largely due to higher paid‑lead costs and a 10.5 % rise in SG&A expenses. VITAS’s gross margin also slipped, reflecting an acuity mix shift and a level‑of‑care mix that reduced pricing power.
The EPS miss was driven by a combination of higher operating costs, the impact of Medicare cap billing limitations of $2.4 million, and a less favorable mix in both segments. While VITAS’s revenue grew modestly, the margin compression and the Medicare cap hit weighed on profitability, pushing the adjusted EPS below consensus estimates.
Management guided for 2026 revenue growth of 5.5 %–6.5 % for VITAS before Medicare cap and 3.0 %–3.5 % for Roto‑Rooter, with adjusted EBITDA margins of 17.5 %–18.0 % and 22.5 %–23.0 % respectively. Medicare cap billing limitations are projected to fall to $9.5 million from $27.2 million in 2025, supporting a higher adjusted EPS guidance of $23.25–$24.25, although the midpoint still falls short of analyst expectations by 6.5 %.
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