NYSE:CHE
CHEMED CORP
A dominant provider of clinical environmental services to North American healthcare facilities with robust cash flow generation and steady revenue expansion.
Key Metrics
Investment Thesis
Bull Case
Chemed offers an attractive dividend yield and consistent buyback program supported by robust free cash flow conversion rates exceeding 70%. The essential nature of its infection control services provides defensive characteristics during economic downturns while benefiting from long-term healthcare demand growth. Valuation metrics appear reasonable given the company's stable earnings history and dominant market position in North America.
Bear Case
The recent decline in net income to $265.2M raises concerns about margin compression or one-time charges that could impact future profitability trends. High levels of goodwill at $667.0M present a risk if integration of past acquisitions fails to deliver expected synergies or returns. Investors may also worry about potential headwinds in the healthcare sector that could slow the company's historical revenue growth rate.
About CHEMED CORP
Chemed Corp provides clinical environmental services to healthcare facilities across North America, specializing in infection control and patient care solutions. The company serves hospitals, ambulatory surgery centers, and home health agencies with its diverse portfolio of service offerings including cleaning, laundry, and medical waste management. With a strong cash generation profile and consistent revenue growth, CHEMED CORP stands as a leading player in the essential healthcare support sector.
Analysis
Management Discussion
Chemed demonstrated resilient financial performance with revenue growing to $2.53B in 2025 from $2.13B in 2022, reflecting a consistent expansion trajectory. While net income saw a slight dip to $265.2M in the latest year compared to $302.0M in 2024, the company maintains strong operational cash flow of $388.3M and a healthy balance sheet with $74.5M in cash equivalents. The management team continues to execute on share repurchases totaling $431.5M, signaling confidence in intrinsic value despite the recent decline in net profit.
Industry Overview
The clinical environmental services industry is essential for maintaining hygiene standards and preventing hospital-acquired infections across North America. This sector typically exhibits defensive characteristics with steady demand driven by population aging and increased healthcare complexity. Competition remains moderate but favors large, established players who can offer comprehensive service packages to major health systems.
Financial Statements
Income Statement
Balance Sheet
Cash Flow
| Metric | 2022 | 2023 | 2024 | 2025 |
|---|---|---|---|---|
| Revenue | $2.13B | $2.26B | $2.43B | $2.53B |
| Cost of Revenue | $1.37B | $1.47B | $1.58B | $1.71B |
| Gross Profit | $765.1M | $798.8M | $854.3M | $823.2M |
| Operating Expenses | $421.6M | $458.2M | $2.06B | $2.19B |
| Operating Income | $343.5M | $340.6M | $366.5M | $338.2M |
| G&A | $358.7M | $395.1M | $424.4M | $417.2M |
| Stock-Based Comp | $33.6M | $40.8M | $52.1M | $38.7M |
| D&A | $59.2M | $60.9M | $63.0M | $64.8M |
| Depreciation | $49.1M | $50.8M | $52.9M | $54.6M |
| Amortization | $10.1M | $10.1M | $10.2M | $10.3M |
| Other OpEx | $62.9M | $63.1M | $1.64B | $1.77B |
| Non-Operating Income | $-13.8M | $9.8M | $33.0M | $17.5M |
| Interest Expense | $4.6M | $3.1M | $1.8M | $1.8M |
| Pre-Tax Income | $329.7M | $350.4M | $399.5M | $355.8M |
| Income Tax | $80.1M | $77.9M | $97.5M | $90.5M |
| Continuing Ops | $249.6M | $272.5M | $302.0M | $265.2M |
| Discontinued Ops | $0 | $0 | $0 | $0 |
| Net Income | $249.6M | $272.5M | $302.0M | $265.2M |
| Minority Interest | $0 | $0 | $0 | $0 |
| Net to Common | $249.6M | $272.5M | $302.0M | $265.2M |
| Metric | 2022 | 2023 | 2024 | 2025 |
|---|---|---|---|---|
| Current Assets | $272.6M | $500.8M | $394.7M | $302.6M |
| Cash & Equivalents | $74.1M | $264.0M | $178.3M | $74.5M |
| Accounts Receivable | $139.4M | $181.5M | $171.2M | $182.6M |
| Inventory | $10.3M | $12.0M | $8.2M | $7.5M |
| Other Current Assets | $48.8M | $43.4M | $37.0M | $38.0M |
| Long-Term Assets | $1.17B | $1.17B | $1.27B | $1.24B |
| PP&E (Net) | $199.7M | $203.8M | $200.8M | $205.7M |
| Intangibles | $99.7M | $90.3M | $92.2M | $82.8M |
| Goodwill | $581.3M | $585.0M | $666.7M | $667.0M |
| Operating Leases | $135.7M | $126.4M | $127.3M | $131.2M |
| Other LT Assets | $153.0M | $161.7M | $186.7M | $149.0M |
| Total Assets | $1.44B | $1.67B | $1.67B | $1.54B |
| Current Liabilities | $297.2M | $312.1M | $285.7M | $287.1M |
| Accounts Payable | $41.9M | $64.0M | $44.1M | $64.5M |
| Current Debt | $5.0M | — | — | — |
| Current Leases | $39.0M | $38.6M | $42.3M | $40.9M |
| Taxes Payable | — | $6.9M | $7.6M | $2.5M |
| Other Current Liab | $211.3M | $202.5M | $191.7M | $179.3M |
| Long-Term Liabilities | $346.1M | $248.2M | $263.9M | $271.7M |
| Long-Term Debt | $92.5M | — | — | — |
| LT Operating Leases | $110.5M | $100.8M | $98.5M | $102.9M |
| Other LT Liab | $143.1M | $147.4M | $165.3M | $168.8M |
| Total Liabilities | $643.3M | $560.2M | $549.6M | $558.8M |
| Shareholders' Equity | $798.7M | $1.11B | $1.12B | $979.4M |
| Retained Earnings | $2.20B | $2.45B | $2.72B | $2.96B |
| Treasury Stock | $2.59B | $2.72B | $3.13B | $3.61B |
| Total L&E | $1.44B | $1.67B | $1.67B | $1.54B |
| Metric | 2022 | 2023 | 2024 | 2025 |
|---|---|---|---|---|
| Net Income (CFO) | $249.6M | $272.5M | $302.0M | $265.2M |
| Non-Cash Adjustments | $15.2M | $-26.2M | $108.8M | $138.1M |
| Working Capital Changes | $45.1M | $84.0M | $6.7M | $-15.1M |
| Cash from Operations | $309.9M | $330.3M | $417.5M | $388.3M |
| Capital Expenditures | $57.3M | $56.9M | $49.5M | $62.8M |
| Cash from Investing | $-59.4M | $-60.6M | $-143.9M | $-59.3M |
| Share Buybacks | $114.5M | $67.7M | $361.4M | $431.5M |
| Dividends Paid | $22.0M | $23.5M | $27.1M | $31.7M |
| Cash from Financing | $-209.3M | $-79.8M | $-359.2M | $-432.8M |
| FX Effect | $0 | $0 | $0 | $0 |
| Net Change in Cash | $41.2M | $189.8M | $-85.6M | $-103.8M |
| Beginning Cash | $32.9M | $74.1M | $264.0M | $178.3M |
| Ending Cash | $74.1M | $264.0M | $178.3M | $74.5M |
Frequently Asked Questions
How does CHEMED CORP make money?
The company's revenue streams are diversified across infection control services, patient care solutions such as linen and laundry management, medical waste disposal, and specialized construction services tailored for healthcare environments. These segments collectively support the critical need for maintaining sterile and safe hospital conditions.
What are the main risks for CHE?
Investors should monitor potential regulatory changes in environmental health standards that could increase compliance costs or operational constraints. Fluctuations in healthcare utilization rates and reimbursement models may impact the demand for Chemed's essential services. Additionally, inflationary pressures on labor and supply chain inputs could compress operating margins despite high revenue.
What is CHE's competitive advantage?
Chemed benefits from significant economies of scale and deep customer relationships built over decades within the highly regulated healthcare sector. Its vertically integrated model allows for better cost control and margin stability compared to competitors who rely on fragmented service providers. The company's specialized expertise in infection prevention creates a high barrier to entry that protects its market share.
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Not financial advice. All content is for informational purposes only. Data may contain errors. Consult a qualified financial advisor before making investment decisions.