Chemed Corporation

Chemed said total revenue increased 8.8% in the second quarter of 2026, and adjusted diluted EPS increased 41.9% versus the same period in 2025. VITAS net revenue was $443.3 million, up 11.9% year over year; average revenue per patient day was $209.98, up 1.43%; and adjusted EBITDA excluding Medicare cap was $80.6 million, up 20.6%, with an 18.2% margin. VITAS accrued $500,000 in Medicare cap billing limitation, versus a Florida Medicare cap billing limitation of $16.4 million in Q2 2025, and there was no Florida cap limitation recorded in Q2 2026. Roto-Rooter branch commercial revenue was $56.8 million, up 6.8%; branch residential revenue was $159 million, up 1.7%; gross margin was 50.4%, up 135 basis points year over year; and adjusted EBITDA was $48.5 million, essentially flat, with a 21.1% margin. For full-year 2026, VITAS ADC growth guidance was raised to 5.75% to 6.25%, revenue growth ex Medicare cap to 8.25% to 9.25%, EBITDA margin ex Medicare cap to 19.0% to 19.5%, and Medicare cap billing limitation reduced to $7 million from $9.5 million. Full-year Roto-Rooter guidance stayed at 3% to 3.5% revenue growth and 21.5% to 22.5% adjusted EBITDA margin. Full-year adjusted EPS was guided to $25.00 to $25.75, with a midpoint representing 7.8% growth versus 2025 adjusted EPS of $20.21.

Kevin McNamara struck a notably upbeat tone, saying VITAS exceeded even the high end of expectations and that the Florida cap issue of 2025 appears behind them. He emphasized that VITAS has returned to a normalized rate of growth and that the business is building cushion while maintaining a healthy hospital-based mix. On Roto-Rooter, he described improving operating momentum, said the company is well positioned to buy attractive franchises, and noted that cash flow and low leverage support both acquisitions and share repurchases.

Michael Witzeman pointed to the main financial drivers: VITAS revenue growth from 6.1% higher days of care and a roughly 2.4% weighted Medicare rate increase, partially offset by acuity mix, and Roto-Rooter gross margin of 50.4%, up 135 basis points. He said VITAS adjusted EBITDA ex Medicare cap rose to $80.6 million with an 18.2% margin, while Roto-Rooter adjusted EBITDA was $48.5 million and the margin pressure was mainly from increased internet marketing costs. He also highlighted strong cash generation, with consolidated cash flow from operations above $173 million in the quarter, and said the company’s minimal leverage gives it flexibility for accretive acquisitions and share repurchases.

Analysts focused on whether VITAS’s growth and margin profile are sustainable, and management said the current mix and KPI-based resource management make the growth rate sustainable and expected to continue into 2027. On Roto-Rooter, questions centered on paid versus free leads and whether higher marketing costs will persist; management said the mix shift away from free leads has largely stabilized, but they do not expect a major near-term improvement and are working to reduce reliance on Google. Analysts also pressed on franchise acquisitions, hospice acquisition opportunities, and Florida cap risk; management said more Roto-Rooter franchise purchases are likely this year, hospice acquisitions remain possible where barriers to entry exist, and Florida cap risk is not a near-term concern given the current admission mix and new starts.