Roto-Rooter residential revenue dips; CEO points to Google, private equity

“People are going to say, ‘Is there something significantly wrong with Roto-Rooter?” said Kevin McNamara, CEO of Chemed Corporation — Roto-Rooter’s parent company — on an earnings call Thursday. 

Then, he answered his own question: “‘No, they’re going through a difficult period. They’re paying for leads that they used to get for free.’ If you want a one sentence capsule commentary.”

What’s happening: Roto-Rooter’s residential, company-owned branch revenue declined by 3.1 percent year-over-year in the fourth quarter of 2025, the company reported last week. 

• The change, CFO Michael Witzeman noted, consisted of plumbing growing by 6.3 percent, excavation essentially flat, water restoration falling 10.3 percent, and drain cleaning dipping 3.2 percent. 
• “Roto-Rooter’s fourth quarter 2025 gross margin was 49.8%,” a news release added. “This compares to the prior year quarter’s gross margin of 51.3%.”

The big picture: The company has experienced a volatile past seven quarters, with McNamara attributing the trend to private-equity consolidation and Google changes. 

What they’re saying: The “introduction of private equity money and practices into our sector had an immediate effect on us,” he said. “The biggest impact, aside from just existing and offering services at below cost on the plumbing side, [is that] they have disrupted the paid search model.”

• “They’re basically HVAC companies that said, ‘We’re very happy with paying $124 per lead,’ for a job that they’ll say they’ll clean any drain for $90,” he added. “And the reason they’re happy doing that is because… that becomes a long-term customer for their HVAC services.”
• Yes, but: “I consider the threat of private equity largely diminished at this point,” he noted, explaining that Roto-Rooter’s cost-per-lead has normalized over the past three quarters. 

Zoom in: “In October of 2024, Roto-Rooter was showing up on [Google Maps] nationwide 72 percent of the time,” McNamara said. “Within a few months, that fell to a low of 24 percent. Massive change in visibility… leads were falling, sales were falling. Tough time for Roto-Rooter.”

• Through AI-assisted SEO efforts, however, map visibility has recovered to about 35 percent.
• The company now pays roughly $90 per lead, and with 1.5 to 2 leads needed per paying job, he added, customer acquisition costs run between $150 and $180. About 60 to 65 percent of total leads are now paid. 

What we’re watching: “2026 is expected to be a transition year,” McNamara said, leading to modest growth, primarily during the second half of the year. 

• Witzeman specified that the company expects full-year revenue to grow between three and 3.5 percent year-over-year. 
• “We believe this forecast is achievable based on anticipated improved lead volume in 2026, improved billing and collections in our water restoration service line, and a lift in our commercial business through a commercial-focused sales force,” he explained.