Chemed Corporation (CHE) Q1 2026 Earnings Call Summary

1Key Financial Results and Metrics

VITAS Healthcare:

Net revenue: $420 million, up 3.1% year-over-year.

Average revenue per day: $210.62, a 1.46% improvement from the prior year.

Adjusted EBITDA (excluding Medicare Cap): $70.8 million, a 0.6% increase; EBITDA margin: 16.8%.

Admissions totaled 19,394, a 6.9% increase from Q1 2025.

Roto-Rooter:

Residential revenue: $16.3 million, down 1.5% year-over-year.

Commercial revenue: $56.5 million, down 1.9%.

Adjusted EBITDA: $53.5 million, down 9.6%; EBITDA margin: 22.5%.

Increased marketing spend by nearly $3 million compared to Q1 2025.

2Strategic Updates and Business Highlights

VITAS successfully transitioned to a balanced patient mix, achieving higher-than-expected revenue growth and EBITDA margins while adding $32.5 million to the Medicare Cap cushion in Florida.

Roto-Rooter saw its first increase in residential plumbing and sewer revenue since Q4 2022, driven by a 3.3% increase in total leads.

The company repurchased franchises in San Francisco and Fort Worth for $20.6 million, expected to add $5 million to $5.5 million in revenue for the remainder of 2026.

3Forward Guidance and Outlook

VITAS:

Full-year average daily census (ADC) growth revised to 4.5% - 5.5% (up from 3.5% - 4%).

Revenue growth (excluding Medicare Cap) revised to 6.5% - 7.5% (up from 5.5% - 6.5%).

Adjusted EBITDA margin (excluding Medicare Cap) projected at 18% - 18.5%.

Roto-Rooter:

Revenue growth guidance remains at 3% - 3.5%.

Adjusted EBITDA margin slightly lowered to 21.5% - 22.5% due to elevated marketing costs.

4Bad News, Challenges, or Points of Concern

Roto-Rooter faced headwinds from weather disruptions that resulted in an estimated revenue loss of $3 million to $4 million.

Increased marketing costs due to reliance on paid leads, with a shift from organic to paid leads impacting profitability.

The company is navigating a challenging operating environment with ongoing competition and market pressures, particularly in the plumbing and restoration segments.

5Notable Q&A Insights

Management indicated that the margin improvement at VITAS was partly due to headcount reduction, but they plan to increase staffing to support growth.

Concerns about fraud enforcement in California were acknowledged, with management emphasizing the need for legitimate providers to maintain access to care.

Roto-Rooter’s marketing strategy is under scrutiny due to changes in Google’s algorithms affecting lead generation, with management committed to adapting to these challenges.

The company remains open to further acquisitions in the Roto-Rooter segment, citing favorable conditions in the current market. Overall, Chemed Corporation reported a solid quarter, particularly for VITAS, while Roto-Rooter showed signs of improvement despite facing operational challenges. The revised guidance reflects confidence in VITAS's growth trajectory, while Roto-Rooter continues to address its competitive landscape.