What Happened?
Shares of healthcare services company Chemed Corporation (NYSE: CHE) jumped 8.5% in the afternoon session after investors looked past a third-quarter earnings miss and focused instead on the company's decision to maintain its full-year guidance. The healthcare services company reported adjusted earnings per share of $5.27, which was 1.8% below analyst estimates and down from the prior year. Profitability also took a hit, with the operating margin contracting to 12% from 15.2% in the same period last year. On a brighter note, revenue grew 3.1% year on year to $624.9 million, meeting Wall Street's expectations. The positive stock move suggests investors were encouraged that the company reaffirmed its full-year adjusted EPS guidance of $22.15 at the midpoint, signaling confidence in its long-term outlook despite the quarterly softness.
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What Is The Market Telling Us
Chemed’s shares are not very volatile and have only had 5 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful, although it might not be something that would fundamentally change its perception of the business.
The biggest move we wrote about over the last year was 4 months ago when the stock dropped 14.7% on the news that the company provided a negative update on its full-year 2025 guidance, citing issues with its VITAS hospice business. The company announced that it now anticipates a significant Medicare Cap revenue limitation for its VITAS subsidiary in Florida. Specifically, Chemed projects a shortfall of $18 million to $25 million for the 2025 fiscal year ending in September, a reversal from previous expectations of having a cushion. The company pointed to weaker-than-expected Medicare admissions in April and May as the primary cause. Adding to concerns, Chemed also noted unexpected weakness in the residential demand for its Roto-Rooter plumbing services during the second quarter.
Chemed is down 11.5% since the beginning of the year, and at $467.16 per share, it is trading 24.6% below its 52-week high of $619.21 from April 2025. Investors who bought $1,000 worth of Chemed’s shares 5 years ago would now be looking at an investment worth $986.54.
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