I'm assuming the WoW Wiki is correct when it says:

http://www.wowwiki.com/Chain_Heal

The spell is cast on a friendly target. This target is healed for the advertised amount (plus 5/7 = 71.4% bonus from +heal gear).
The spell then jumps to the friendly target within 5 yards with the largest current health deficit, and heals it for 50% of the amount from the first one.
After that, the spell jumps a second time (but never back to the first target) to a third target, which is healed for 25% of the initial amount.
Personally, I have
  • 9 - they all CH my current friendly target or me if the current target is an enemy
  • Shift 9 - they all CH a hard-coded target (A->B, B->C, C->D, D->E, E->A), which I also use for making my Pentagram light display
I use Shift-9 mostly, as that will tend to bring everyone back up to max, and just 9 for those "oops, over-aggro" moments.