Chemed Corporation's Shares Are Experiencing a Steep Decline Today
Chemed Corporation, a diversified holding company with operations in healthcare and plumbing services, recently reported a Q2 2025 earnings miss. The company's adjusted earnings per share (EPS) declined by 22%, falling short of analyst expectations of $6.02, despite a 3.8% revenue increase. The company also lowered its EPS guidance, reflecting some near-term challenges.
The Q2 earnings report and the departure of Nick Westfall, CEO of Vitas Healthcare, Chemed’s hospice care segment, added further uncertainty to Chemed’s future.
Roto-Rooter Struggles and Google Costs
Roto-Rooter, another subsidiary of Chemed, only eked out 1% sales growth, with a 20% decline in net income due to increased pressure on marketing costs. The company mentioned during the earnings call that Google is trying to make them pay for advertisers to not show up in free areas, contributing to these expenses.
Near-Term Concerns
In addition to the Q2 earnings miss and reduced EPS outlook, Chemed is currently dealing with CEO turnover at VITAS Healthcare. Roto-Rooter's profitability issues and rising advertising costs due to Google's ecosystem are further concerns for investors.
Despite these headwinds, Chemed maintains a solid market position with a market cap of $6.28 billion, a forward P/E ratio of 18, and a dividend yield of 0.46%. Analysts generally maintain a "Buy" rating on the stock with a 12-month price target around $580, implying a strong upside of approximately 34% from current levels.
Long-Term Prospects
The financial performance shows resilient revenue growth (+7.37% in 2024) and earnings improvement (+10.82%), hinting at underlying operational strengths despite recent setbacks. Excluding the Medicare cap billing limitations, Vitas's adjusted EBITDA was flat for the quarter.
Investors should watch how Chemed manages operational challenges, leadership transition at VITAS, and cost pressures in advertising, as these factors will be critical for future earnings and stock performance. The company’s healthcare segment and service diversification provide a foundation for longer-term growth despite short-term volatility.
The article suggests that Chemed could be a turnaround story, offering potential for growth in the long term. However, it is essential for investors to closely monitor the company's progress in addressing these near-term challenges.
[1] Yahoo Finance. (2025). Chemed Corporation (CHE). https://finance.yahoo.com/quote/CHE [2] MarketWatch. (2025). Chemed Corp. (CHE) Q2 2025 Earnings Call Transcript. https://www.marketwatch.com/story/chemed-corp-che-q2-2025-earnings-call-transcript-2025-07-27 [3] Zacks Investment Research. (2025). Chemed Corporation (CHE). https://www.zacks.com/stock/quote/CHE [4] Seeking Alpha. (2025). Chemed Corporation (CHE) Q2 2025 Earnings Call Transcript. https://seekingalpha.com/article/4504654-chemed-corporation-che-q2-2025-earnings-call-transcript
- The near-term concerns for investors include Chemed's Q2 earnings miss, reduced EPS outlook, CEO turnover at VITAS Healthcare, and Roto-Rooter's profitability issues along with rising advertising costs due to Google's ecosystem.
- Despite these headwinds, Chemed maintains a solid market position, with analysts maintaining a "Buy" rating on the stock and a 12-month price target around $580.
- For long-term prospects, investors should watch how Chemed manages operational challenges, leadership transition at VITAS, and cost pressures in advertising, as these factors will be critical for future earnings and stock performance.
