Chain Heal is a 'smart' heal and always jumps to the eligible target with the largest hit points deficit in range. The bounce radius is 12.5 yards. Since the targets are linked into a chain, the third target must be in range of the second target but does not have to be within range of the first target. The chain cannot jump back to heal the same target more than once.
Chain Heal has a separate chance to crit on each target. The spell also has a separate chance to apply Earthliving on each target, and can potentially apply Earthliving to all four targets affected, greatly increasing the healing done by the spell. It has a reduced chance to trigger Earthliving compared to single target healing spells, however.
Now heals each chain target for 10% less than the previous target.
Patch 5.4.0(2013-09-10): Effectiveness will no longer decrease with each jump (up from a 30% reduction to healing with each jump).
Hotfix (2013-03-27):Chain Heal now heals for 20% more.
Patch 4.0.3a(2010-11-23): Mana cost increased from 17% to 20% of base mana.
Patch 3.2.0(2009-08-04): Jump distance increased by 25% to 12.5 yards. In addition, the amount of healing now decreases by 40% as it jumps to each new target, instead of 50%.
Patch 3.0.2(2008-10-14): Spell graphics changed to look more nature-like and less holy.
Patch 1.12.0(2006-08-22): After the initial target is healed, the healing effect will jump to the most damaged target (by absolute health) within range. In addition, if a raid member is the initial target it will look for valid raid targets to jump to rather than non-raid targets as a priority, making it consistent with group targeted Chain Heals.
Patch 1.6.0(2005-07-12): Chain spells cast on PvP targets by an unflagged Shaman will now properly bounce to other PvP targets.