Chemed (CHE) Stock Forecast & Price Target

Chemed is favored because VITAS is delivering strong, broad-based operating momentum, with revenue up 12.2% to $457.4MM, adjusted EBITDA of $92.5MM, and a 20.2% margin, while ADC rose 9.4% and admissions increased 7.2%. Its Medicare cap risk also looks well contained, as Florida ended the 2026 cap year with more than a $34MM cushion and no anticipated cap liability for FY27, alongside evidence of manageable staffing and cost discipline. Roto-Rooter faced marketing pressure, but revenue still grew 7.5% and water restoration improved, suggesting the company has multiple levers for earnings growth and supports the raised FY26 and FY27 EPS outlook.

Chemed is exposed to several fundamental pressures that support a negative outlook, led by VITAS’s heavy reliance on Medicare and Medicaid, which account for over 90% of revenue and create meaningful Medicare cap risk. The hospice business also faces regulatory and reimbursement uncertainty, while labor costs and government investigations can quickly pressure earnings in a highly regulated industry. On the Roto-Rooter side, softer consumer demand in 2027, weaker discretionary plumbing activity, a higher mix of paid leads, and increased payer denials from AI tools could compress margins, while franchise reacquisitions such as California may take 12–18 months to ramp to mature profitability.