Chemed (CHE) Stock Forecast & Price Target

Chemed is supported by VITAS’s strong 3Q26 performance, where revenue rose 12.2% to $457.4 million and adjusted EBITDA ex-Medicare cap increased to $92.5 million on 9.4% ADC growth and a 20.2% margin, reinforcing confidence in durable hospice demand and disciplined cost control. The segment’s favorable Medicare cap position, with more than $34 million of cushion and no anticipated FY27 liability, plus manageable staffing and improving electronic labor tools, suggests continued margin expansion and earnings strength. Roto-Rooter remains a cash-generative offset, with revenue up 7.5% and same-store sales up 5.5%, and while higher paid-lead marketing and fuel costs pressured margins, improving commercial execution and water-restoration trends provide a path toward normalization.

Chemed is viewed cautiously because over 90% of Vitas revenue comes from Medicare and Medicaid, leaving earnings highly vulnerable to reimbursement pressure, Medicare cap exposure, and government investigations in a heavily regulated hospice market. The downside case assumes macroeconomic headwinds continue in 2027, with softer consumer demand hurting both Roto-Rooter and Vitas census momentum, while FY27 EPS falls 10% below the target and the valuation multiple contracts to about 16x. On top of that, Roto-Rooter faces weaker discretionary plumbing demand, a higher mix of paid leads that can compress margins, and more payer denials from AI tools, all of which can further erode profitability.