Chemed Corporation (CHE) Business Profile

What it does

Chemed Corporation operates two businesses: VITAS, which provides hospice and palliative care, and Roto-Rooter, which provides plumbing and related services. Chemed was incorporated in 1970, is headquartered in Wilmington, and is led by President and Chief Executive Officer Kevin J. McNamara.

VITAS cares for patients with serious illnesses through a network that includes physicians, nurses, home health aides, social workers, clergy and volunteers. Hospice care focuses on comfort rather than curing a terminal illness. VITAS provides care in settings that include patients’ homes and inpatient facilities, depending on their needs. Most of its patients are Medicare recipients.

Roto-Rooter serves residential and commercial customers. Its services include plumbing repair, drain cleaning, excavation and water restoration. It operates through company-owned branches, independent contractors and franchise arrangements. Customers can seek help for an emergency as well as other plumbing and restoration needs.

The businesses are managed on a decentralized basis, with few shared functions such as sales, marketing or purchasing. Chemed’s corporate office is responsible for long-term planning, significant capital allocation decisions, investment activities, financial reporting, tax, legal matters and selecting key executives for the operating businesses.

How it makes money

VITAS earns revenue by providing hospice and palliative care. Medicare pays for hospice care mainly at an established rate for each day a patient receives services. The rate varies by location and by the level of care, which can include routine home care, continuous home care, inpatient care or respite care. Direct patient-care services delivered by hospice physicians are billed separately.

Daily payments continue while patients remain eligible and elect hospice care. VITAS must cover the cost of eligible services under the daily payment, so its profitability depends substantially on managing the cost of care. Medicare also applies limits to hospice payments, including a cap based on average payments per admission. Amounts above that cap must be refunded.

Roto-Rooter earns revenue from plumbing, drain cleaning, excavation, water restoration and related work for homes and businesses. Its operations include owned branches, independent contractors and franchises. Service availability, speed, guarantees and pricing are among the ways it competes for jobs. Chemed said over 50% of Roto-Rooter customers are repeat customers.

In FY2025, VITAS revenue was $1.7 billion, or 64.3% of Chemed’s revenue, while Roto-Rooter revenue was $937.9 million, or 35.7%. In Q3 2026, VITAS net revenue was $457.4 million. Roto-Rooter’s branch residential revenue was $158.8 million and branch commercial revenue was $59.9 million in the same quarter.

Chemed said Q3 2026 VITAS revenue growth was driven primarily by more days of care and a higher geographically weighted average Medicare reimbursement rate. Roto-Rooter’s total revenue also grew in the quarter, including revenue from recently acquired franchise territories.

Customers and how it sells

VITAS serves hospice and palliative care patients, including people admitted from hospitals, homes, assisted living facilities and nursing homes. Its patients’ care plans are based on their individual needs. Medicare patients can elect hospice care when they meet the program’s eligibility requirements, and they can later revoke that election.

Over 90% of VITAS revenue comes from the United States government through Medicare. Medicaid is another payer. A significant portion of VITAS’ business operates in Florida, where Medicare patients relocating during winter generally contribute to higher admissions and revenue in that season. Chemed has also described VITAS as a hospice provider in California.

Roto-Rooter serves a large and diverse base of residential and commercial customers. Its service operations include company-owned branches and independent contractors, while franchisees also use the Roto-Rooter marks. Customers find the business through channels including internet searches and direct contact with commercial business managers.

Chemed said approximately 60% of Roto-Rooter leads in Q3 2026 were paid, compared with 56% in the third quarter of 2025. It also said free internet-search leads declined 11.8% while paid leads increased 5% over that comparison period. Weather patterns across the United States can affect demand and operating results for Roto-Rooter.

Suppliers and costs

VITAS relies on care professionals and outside providers. Medicare generally requires substantially all hospice nursing, social work and counseling services to be provided directly by employees. VITAS can arrange non-core services, such as therapy, home health aide services, medical supplies or drugs, through outside entities, while retaining responsibility for managing those services.

VITAS also contracts with physicians, hospitals and nursing homes, as well as pharmacies, ambulance services and medical equipment companies. For eligible patients receiving nursing home care, it contracts with nursing homes for room and board. Labor, pharmaceuticals and supplies are operating costs, and increases without matching reimbursement increases could affect VITAS’ business.

Chemed said VITAS increased hiring in September 2026 to address growth in its average daily patient count. It also said nurse wage increases had exceeded reimbursement growth for more than five years.

At Roto-Rooter, customer acquisition and fuel are costs. Chemed said a shift in lead mix increased marketing spending by $4.3 million in Q3 2026 compared with the third quarter of 2025. It also said fuel costs increased approximately $1.4 million over that period. Acquired franchise territories initially operated at lower margins than owned branches.

Competitive position

VITAS competes in a fragmented hospice market against community-based hospices, national and regional providers, hospitals, nursing homes, home health agencies and other healthcare providers. Hospice care plans are not proprietary. VITAS differentiates its services through its ability to provide responsive care while meeting Medicare participation requirements. Some competitors have greater financial resources, and relatively few barriers to entry exist in many markets VITAS serves.

Some states require a Certificate of Need or similar approval before a hospice can open or expand. Chemed considers these certificates valuable assets, although obtaining approvals can also constrain VITAS’ expansion. Our reading: these requirements can provide a local barrier to entry, but their protection varies by state and can change.

Roto-Rooter competes with local and regional providers of plumbing, drain cleaning, excavation and water restoration. Advertising, service range, name recognition, emergency availability, speed, quality, guarantees and pricing are methods of competition. Chemed considers the Roto-Rooter marks valuable in marketing its services and franchises.

Our reading: the Roto-Rooter brand and repeat customers support its competitive position, but paid lead dependence limits the strength of that advantage. Chemed said over 50% of its Roto-Rooter customers are repeat customers, while a greater share of leads came through paid channels in Q3 2026 than a year earlier.

No competing companies are named in the supplied business evidence.

Growth opportunities

VITAS’ growth strategy includes expansion in new and existing markets. It may develop, acquire or expand hospice programs, including in states where a Certificate of Need or similar approval is required. Expansion can also require state licensing, Medicare and Medicaid certification, qualified staff and sufficient patient admissions.

Chemed said VITAS revenue increased 12.2% in Q3 2026 compared with the third quarter of 2025. It attributed the increase primarily to a 9.4% increase in days of care and an approximately 2.2% increase in the geographically weighted average Medicare reimbursement rate. VITAS increased hiring in September 2026 to address continued growth in its average daily patient count.

Roto-Rooter seeks growth from existing operations and acquisitions. Chemed said same-store revenue increased 5.5% in Q3 2026 compared with the third quarter of 2025, with growth across major service lines. Its commercial business manager program is intended to develop commercial business.

In Q3 2026, Roto-Rooter reacquired multiple California franchise territories for approximately $62.5 million. Chemed said some acquired locations would become part of owned branches, including new branches in Sacramento and San Diego, while the remaining locations would join its independent contractor model. Chemed said implementing the full Roto-Rooter operating model at acquired franchises is a 12 to 18 month process and expects their lower initial margins to reduce overall segment margins in the short term.

Structural risks

• Government reimbursement: VITAS depends on Medicare and Medicaid payments. Changes in rates, coverage or payment methods, as well as cost increases without matching rate increases, could affect revenue and profitability. Medicare payment caps can also require refunds.
• Regulation and audits: VITAS is subject to licensing, certification and healthcare rules. Claims reviews can delay or deny payments, while compliance failures can lead to sanctions or, in extreme circumstances, loss of Medicare or Medicaid participation.
• Expansion requirements: VITAS may need licenses, certificates and other approvals to enter or expand in markets. It also needs qualified management and sufficient admissions; failure to obtain approvals or staff locations could affect growth.
• Roto-Rooter competition and acquisition costs: Plumbing and related services face fragmented competition. Chemed said the shift toward paid leads increased Q3 2026 marketing spending by $4.3 million compared with the prior-year quarter, and it expects recently acquired territories’ lower initial margins to affect segment margins in the short term.
• People and information security: Roto-Rooter depends on senior management and skilled employees. Both businesses hold sensitive information in their systems, including customer information at Roto-Rooter and protected health information at VITAS.

Bottom line

Our reading

Our reading: Chemed combines a hospice business paid largely by government programs with a plumbing and restoration business that wins individual service jobs. Its exposure spans Medicare reimbursement and compliance at VITAS, alongside competition and customer acquisition costs at Roto-Rooter. Growth can come from more care days, existing service operations and acquired territories, though each has its own staffing, regulatory or integration demands.