CHEMED CORPORATION (CHE): what the price assumes

In the published model solve dated 2026-Q2, anchored at $523.38, CHEMED CORPORATION (CHE) is priced for +5.9% growth. boothcheck publishes no house fair value, target price, or buy/sell rating; individual model outputs and user-controlled scenarios are analytical inputs, not Boothcheck targets. Narrative composed 2026-07-25.

Generated: 2026-08-31 · Source: https://boothcheck.com/report/CHE

Headline

What The Price Assumes (Inversion)

The assumption today's price embeds, recovered by inverting the valuation.

The operating-margin figure is value-band context at year 12: derived from the framework's value band, a separate calculation — not part of the priced-in solve.

Solve inputs: computed at a 7.7% cost of capital with 4% terminal growth over a 5-year stage.

How unusual the bet is: within-range (limited comparison data)

Valuation X-Ray

Every valuation family lands below the price. The price therefore sits beyond what those standard frames encode.

How the valuation models price the stock relative to the market price. Price/FV above 1.0 means the market pays more than that lens defends (expensive); at or below 1.0 the lens can defend the price.

Families that call it expensive: Asset, Earnings, Relative

The models below discount at their own flat-beta convention rates (cost of equity 9.3%, WACC 8.9%); the inversion above states its own rate.

Per-Model Detail (n=14)

Economic-Unit Decomposition (Sum Of The Parts)

One or more material disclosed units has unresolved economics. Unknown/general is not evidence of homogeneity: segment SOTP is primary but incomplete, consolidated cash flow may remain only a secondary cross-check when every unit shares an enterprise basis, and one sector multiple or target margin is withheld.

No total common-equity value is stated. One or more material units lack a supported unit value. The displayed values are an indicative subtotal; consolidated debt and cash cannot be applied to a fraction of the company.

Solvency

Bullet Takeaways

• One operating statistic decides this company: hospice census, and it is still climbing, with the first-quarter 2026 filing showing total average daily census of 22,723 against 22,244 a year earlier and admissions of 19,394 against 18,139.
• Nearly all of that revenue comes from a single payer whose rates are set by regulation and capped per admission, and the 10-K warns that rising labor, pharmaceutical and supply costs without a compensating increase in Medicare and Medicaid rates, could have a material adverse effect on VITAS' business.
• Second-quarter results land on July 28, 2026, and the line to watch is plumbing, where the March-quarter filing reported that the revenue decline was driven by a 1.9% decrease in commercial revenue and a 1.5% decrease in residential revenue.

Bull Case

Everything here turns on one number, and it is not a financial one. Hospice is a per-day business: the payer sends a fixed amount for every day a patient is on service, so revenue is census multiplied by rate, and cost control does the rest. In the first quarter of 2026 VITAS carried total average daily census of 22,723 against 22,244 in the same quarter of 2025, with admissions of 19,394 against 18,139. Admissions rising faster than census is exactly the shape you want, because admissions are the input and census is the stock they feed. If that relationship reverses, the entire investment thesis reverses with it. It has not reversed.

The reason it keeps working is structural, and slightly uncomfortable to state plainly. Demand for end-of-life care is demographic rather than economic. It does not respond to interest rates, consumer confidence, or a soft quarter for retail. The 10-K notes that 15% to 20% of VITAS' days of care are provided to patients residing in nursing homes, which is a distribution channel more than a market: the referral relationship is with the facility, and facilities do not change hospice partners casually. What limits growth is not demand. It is the supply of nurses, which the filing identifies directly, warning that attracting and training staff who can care effectively for terminally ill patients and their families can be difficult and lengthy.

Bolted to that is a plumbing company, and the combination is stranger than it is inefficient. Roto-Rooter reaches, per the 10-K, over 90% of the U.S. population through company-owned branches, independent contractors and franchisees. Its value is a phone number people already know when water is coming through a ceiling at midnight, which is close to the definition of pricing power in a fragmented trade. The company keeps buying back its own franchise territories, completing purchases of one Texas franchise for $17.36 million and one California franchise for $3.25 million on March 31, 2026. Converting a royalty stream into an owned operation is a modest, repeatable use of cash with a visible return.

The financial result of running both is a profitability profile the peer group does not match. Trailing operating margin of 12.6% sits above every comparable in the hospice and home-based care set: AVAH files 10.9%, ADUS 9.8%, ENSG 8.5%, NHC 8.5% and OPCH 5.8%. Chemed converts that into $322.2M of trailing operating income and $259.8M of trailing net income, and interest is close to a rounding error against it, with operating income covering the interest bill on the order of 185 times.

Guidance history supports the read. Management has raised guidance on 5 separate occasions since 2006 against a single cut, and raised its full-year 2026 outlook at the first-quarter report. The bull case does not require the plumbing business to recover. It requires census to keep growing and costs per patient day to stay behind the reimbursement rate. Both are currently true.

Bear Case

Two thirds of this company sells to one customer, and that customer writes the price list itself. Hospice revenue arrives as a per-diem rate set by Medicare, and the 10-K is explicit that the arrangement has a ceiling built into it: reimbursement is subject to certain limitations or "caps" based on the number of inpatient days of care and overall average capitation per admission, with the cap per admission increased each year against a national index. Profitability is therefore largely dependent upon VITAS' ability to manage the costs of providing hospice services to patients, because the revenue side is not a negotiation. Labor, pharmaceutical and supply costs rise with inflation and, as the filing puts it, doing so without a compensating increase in Medicare and Medicaid rates, could have a material adverse effect on VITAS' business. That is a margin structure levered to the gap between two rates, only one of which the company influences.

The cycle in the other business has already turned. Roto-Rooter's service revenue fell in the March 2026 quarter, and the filing attributes it to a 1.9% decrease in commercial revenue and a 1.5% decrease in residential revenue. Both categories moving down together is not a mix problem. It is demand. Plumbing and drain work is deferrable in a way hospice care is not, and a homeowner who postpones a repair is doing exactly what the household budget tells them to do. Against that, the peer set is still growing: FTDR filed revenue growth of 12.0% and ROL 11.0%, while ROL also earns an operating margin of 19.0%. Roto-Rooter is not the growth engine right now, and the acquisitions of franchise territories are a way of buying revenue the branches are not generating organically.

Layer the price on top and the arithmetic tightens. At about 21.7 times company-wide operating income, the market is asking for operating profit to compound at roughly 8.5% a year for five years. That is well above the pace the forward models draw from the company's own recent revenue history, which they take as roughly two percent a year. Closing that distance requires three things at once: better cost leverage in hospice, continued census growth, and a plumbing recovery. One of the three is currently going backwards and another is capped by regulation.

The regulatory exposure is not only about rates. The 10-K describes increased scrutiny of claims, including through the targeted probe and educate program, which may cause additional delays or denials in receiving reimbursement, and notes the company cannot predict whether future billing reviews will result in material delays, suspensions, denials or reductions in revenue. Certificate-of-need laws in some states, including Florida, restrict where new capacity can be added. For a business whose growth requires opening or expanding programs, that is a permission structure sitting between the company and its addressable market.

Every family of valuation method already lands below the price. The price sits about 39% above the peer-multiple family, about 51% above the forward-growth family, and more than two and a half times the earnings-power family. The balance sheet is not the risk here: borrowings are trivial relative to earnings and interest is barely visible. The risk is that a business earning a regulated per-diem on one side and a cyclical service fee on the other has been valued as though both halves compound.

Valuation

A hospice provider and a plumbing company share one share price, which makes the usual valuation shortcuts unreliable from the start. VITAS supplies 64% of revenue and Roto-Rooter 36%, and the two have almost nothing in common: one earns a regulated per-diem from a single payer, the other charges market rates for emergency work. Whatever the enterprise is worth, it is the sum of two unrelated things, and no single sector multiple describes it.

What the price asks for is straightforward enough. At $510.52 the enterprise carries about 21.7 times company-wide operating income, and that inverts to operating profit compounding at roughly 8.5% a year over a five-year stage. Measured against Chemed's own record, that pace is inside what the business has recently produced, and the multiple sits in the upper half of the peer range rather than at the top of it. The demand is not extreme. The question is where it comes from when one of the two businesses is currently shrinking.

None of the four families of method reaches the price, which for a services business with modest capital intensity is worth interpreting carefully rather than treating as a verdict. The price sits about 39% above the peer-multiple family, about 51% above the forward-growth family, and more than two and a half times the earnings-power family. The two forward approaches are instructive about why. Both draw their growth input from the company's own recent revenue history, which they take as roughly 2% a year, and one of them then holds today's cash-earnings multiple flat to its exit year. Feed a 2% grower into a discounted cash flow and it will land well under a price that assumes 8.5%. The earnings-power figure is lower still because it capitalizes a five-year average of operating income with no growth credited at all, and that average sits below the current run rate.

So the gap between the methods and the price is a disagreement about the growth input, not about the arithmetic. Trailing operating margin of 12.6% converts $2.54B of revenue into $322.2M of operating income, and the company earns that margin in a hospice cohort where nobody else clears 11%: AVAH at 10.9%, ADUS at 9.8%, ENSG and NHC at 8.5% each. A buyer at today's price is paying for that spread to persist and widen, not for a re-rating.

The balance sheet takes almost nothing off the table and adds almost nothing to the risk. Borrowings run to about 74.3 million dollars net on a funded-debt basis, or roughly 220 million once lease obligations are included, against trailing operating income that covers the interest bill on the order of 185 times. Free cash flow of $355.8M exceeds trailing net income of $259.8M, which is the ordinary shape of a business that collects promptly and owns few hard assets. What that cash has been financing is visible in the filings, which record that On March 31, 2026, Roto-Rooter completed two acquisitions, for one franchise in Texas for $17.36 million in cash and one franchise in California for $3.25 million in cash. Small, repeatable, and entirely dependent on the hospice side continuing to fund it.

Catalysts

Second-quarter results are scheduled for July 28, 2026, with the conference call the following morning. Two lines carry the print. The first is hospice census, which grew in the March quarter with total average daily census at 22,723 against 22,244 a year earlier. The second is Roto-Rooter, where both commercial and residential service revenue declined in that same quarter. A second consecutive quarter of falling plumbing revenue would make the March figures a trend rather than a soft patch, and it is the trend, not the level, that would change how the market reads the segment.

Management gave itself room in April. At the first-quarter report on April 24, 2026 the company raised its full-year 2026 earnings outlook, having reported revenue of $657.5 million against a consensus estimate of $649.82 million. A raise this early in the year from a management team that has moved guidance up on 5 separate occasions since 2006 and down once is a reasonable signal about how the hospice side is tracking.

Capital deployment continues on the plumbing side regardless of the demand backdrop. Beyond the two franchise purchases completed on March 31, 2026, Roto-Rooter acquired franchise territories covering Corpus Christi, the Rio Grande Valley and Beaumont in Texas. Each of these converts a royalty into an owned branch. On the sell side, BofA lifted its price target to $510 from $450 while keeping a Neutral rating, citing accelerating search interest in plumbing services. A target that lands essentially on the traded price with a neutral rating attached is analyst-speak for a business the street respects and a valuation it does not want to argue with in either direction.

Peer Cohorts (Per Segment, With Filing Citations)

VITAS (reported)

• ADUS (Addus HomeCare Corp)
• FY2025 10-K: …srt:MaximumMember 2025-01-01 2025-12-31 0001468328 us-gaap:RestrictedStockMember adus:AmendedAndRestated2017OmnibusIncentivePlanMember 2025-01-01 2025-12-31 0001468328 adus:AmendedAndRestated2017OmnibusIncentivePlanMember srt:MinimumMember 2025-01-01 2025-12-31 0001468328…
• FY2025 10-K: Aging. Once a consumer has been evaluated and determined to be eligible for a program, an assigned care coordinator refers the consumer to a list of authorized providers, from which the consumer selects the provider. We provide our services in accordance with a care plan developed by the care coordinator and under…
• AVAH (Aveanna Healthcare Holdings Inc.)
• FY2025 10-K: …and support our future growth. We have invested significantly in our infrastructure and technology. Our frontline caregivers leverage our technology-enabled solutions, such as our remote care management tools that we deploy into patient homes to enhance data collection and the efficiency and quality of the caregiver…
• FY2025 10-K: …management a normalized view of our core, ongoing operations after integrating our acquired companies, which is an important measure in assessing our performance. Given our determination of adjustments in arriving at our computations of EBITDA and Adjusted EBITDA, these non-GAAP measures have limitations as…
• OPCH (OPTION CARE HEALTH, INC.)
• FY2025 10-K: …in coordination with, and under the direction of, the patient's physician. Our multidisciplinary team of clinicians, including pharmacists, nurses, and dietitians, work with the physician to develop a plan of care suited to each patient's specific needs. We provide home infusion services consisting of…
• FY2025 10-K: …works with medical specialists across the country to offer access to all approved factor products, a full range of therapies, and dedicated support services. • Naven Health. The Company offers a nationwide home infusion nursing network and clinical platform. Naven Health focuses on delivering highly specialized…
• ENSG (ENSIGN GROUP, INC)
• FY2025 10-K: …to maintain readiness and resiliency while regularly reviewing policies in the interest of protecting data security. External companies or agencies may be called upon to provide consulting, guidance, assistance, or some other form of support in response to a cybersecurity incident. The regular training of employees,…
• FY2025 10-K: …to attract and retain qualified professional clinical staff stems from our ability to offer attractive wage and benefits packages, a high level of employee training, an empowered culture that provides incentives for individual efforts and a quality work environment. Unity - Our commitment to inclusion is deeply…
• NHC (NATIONAL HEALTHCARE CORP)
• FY2025 10-K: …living facilities, independent living facilities, homecare and hospice agencies, and behavioral health hospitals. Our business activities include providing sub-acute and post-acute skilled nursing care, intermediate nursing care, rehabilitative care, memory and Alzheimer's care, senior living services, home health…
• FY2025 10-K: …for the active and ambulatory elderly and provide various ancillary services for our residents, including restaurants, activity rooms and social areas. Charges for services are paid from private sources without assistance from governmental programs. Independent living facilities may be licensed and regulated in some…
• AHCO (AdaptHealth Corp.)
• FY2025 10-K: …Health segment provides oxygen and home mechanical ventilation equipment and supplies and related chronic therapy services to individuals for the treatment of respiratory diseases, such as chronic obstructive pulmonary disease and chronic respiratory failure. Diabetes Health The Diabetes Health segment provides…
• FY2025 10-K: …By: /s/ Bradley Coppens Director Bradley Coppens By: /s/ Theodore S. Lundberg Director Theodore S. Lundberg By: /s/ Diana Nole Director Diana Nole By: /s/ Dr. Susan Weaver Director Dr. Susan Weaver By: /s/ David S. Williams III Director David S. Williams III 130

Roto-Rooter (reported)

• FTDR (Frontdoor, Inc.)
• FY2025 10-K: …We realize significant economies of scale as a result of our volume of home warranty service requests. We leverage our enhanced customer- and contractor-centric technology platform, robust independent contractor network, existing customer base, purchasing volume for parts, appliances and home systems, and extensive…
• FY2025 10-K: …and growth. Diverse, Recurring and Stable Revenue Channels. We acquire new customers for our home warranty business through two channels, real estate and DTC, which are offered in the continental U.S. We believe our ability to acquire customers through the DTC channel helps to mitigate the effect of potential…
• ROL (ROLLINS INC)
• FY2025 10-K: …0000084839 2025 FY false http://rollins.com/20251231#CustomerServicesMember http://rollins.com/20251231#CustomerServicesMember http://rollins.com/20251231#CustomerServicesMember P3Y 100 50 P1Y 186 iso4217:USD xbrli:shares iso4217:USD xbrli:shares rol:segment rol:reportingUnit rol:deliverable rol:store xbrli:pure…
• FY2025 10-K: …experience, (iii) a diverse portfolio of brands of varying sizes of which to innovate, test, learn, and grow or expand, particularly when it comes to emerging technology, (iv) route density to manage variable costs, and (v) financial flexibility to generate organic growth and pursue acquisitions. Robust Operating…
• ABM (ABM INDUSTRIES INCORPORATED)
• FY2025 10-K: , Plant and Equipment We record property, plant and equipment at cost. Repairs and maintenance expenditures are expensed as incurred. In contrast, we capitalize major renewals or replacements that substantially extend the useful life of an asset. We determine depreciation for financial reporting purposes using the…
• FY2025 10-K: …is a lease at inception and begin recording lease activity at the commencement date. ROU assets and lease liabilities are 51 recognized based on the present value of lease payments over the lease term with lease expense recognized on a straight-line basis. The present value of future lease payments is determined…
• CLH (CLEAN HARBORS, INC)
• FY2025 10-K: …2025. Using our nationwide fleet of trucks, tankers, rail-cars and barges, our teams collect used waste oil from thousands of customers. These used waste oils then serve as feedstock for our oil re-refineries in order to produce sustainable recycled lubricants. In 2025, we collected 243 million gallons of used oil.…
• FY2025 10-K: …2024, is not expected to reach full utilization until the end of 2026. Our incinerators offer a wide range of technological capabilities to customers through this network. In the United States, we provide incineration through one fluidized bed thermal oxidation unit and four solids and liquids-capable incinerator…

Methodology Note

• Priced-in inversion: the valuation is inverted on the current price to recover the operating-income growth, duration, and steady-state margin the price embeds (ROE for financials, FFO growth for REITs).
• Valuation x-ray: the valuation models, grouped into four families (asset, earnings, relative, growth). Each model is expressed as a price/FV ratio (distance from price), not a point fair-value estimate. The spread across families is the disagreement.
• Economic-unit decomposition (SOTP): each disclosed business unit is assigned its native valuation basis before any multiple is applied. Operating units are valued on enterprise value; funded financial units are valued on their own common equity, because their borrowings fund earning assets rather than levering the parent. A company total is stated only once every material unit carries a supported value and the parent capital bridge reconciles.
• Solvency: net cash/debt, net-debt-to-NOPAT, interest coverage, and share-count CAGR from EDGAR financials (net debt / FFO and fixed-charge coverage for REITs; regulatory-capital framing for financials).
• Peer cohorts: per-segment comparables with deep-linkable SEC filing citations.

Fundamentals sourced from SEC EDGAR filings. Current price from Databento. The priced-in inversion and valuation x-ray are computed by the boothcheck engine; narrative composed by AI from the structured data.