Chemed (CHE) Stock Forecast & Price Target

Chemed Corp demonstrates strong financial performance, highlighted by a 33.1% year-over-year increase in adjusted EBITDA to $73.1 million, accompanied by a margin expansion of 220 basis points to 18.7%. The VITAS segment, which is the principal revenue generator, experienced a revenue growth of 17.3% to $391.4 million, supported by robust hiring and improved hospice demand, characterizing nine consecutive quarters of sequential census growth. Furthermore, initial guidance indicates an expected increase in average daily census (ADC) of 10.5-11.3%, reflecting strong underlying business momentum across both VITAS and Roto-Rooter segments.

Chemed Corporation faces a negative outlook primarily due to projected declines in revenue and EBITDA within its Roto-Rooter segment, with a forecasted 6.2% year-over-year decline in 2024 revenue driven by weak residential demand. This decline follows a 12.8% year-over-year fall in adjusted EBITDA and a contraction in margins, which have now been revised down by management, indicating an ongoing struggle to maintain profitability in the current economic environment. Additionally, macroeconomic headwinds are expected to exert downward pressure on consumer demand for both the Roto-Rooter and VITAS segments, leading to an anticipated EPS that is 10% below prior targets for fiscal year 2025.