--- title: "Chemed’s VITAS Drives Upbeat Earnings Call" type: "News" locale: "en" url: "https://longbridge.com/en/news/294630507.md" description: "Chemed reported strong Q2 earnings, driven by its VITAS hospice unit. VITAS saw 11.9% revenue growth to $443.3 million and raised full-year guidance for EPS and margins due to expanding profitability and improved Medicare cap positions. Consolidated revenue grew 8.8%, with adjusted diluted EPS jumping 41.9%. While Roto-Rooter faced marketing cost pressures and weak water restoration results, operational improvements boosted gross margins. Management highlighted robust cash flow and confidence in volume trends." datetime: "2026-08-03T00:19:41.000Z" locales: - [zh-CN](https://longbridge.com/zh-CN/news/294630507.md) - [en](https://longbridge.com/en/news/294630507.md) - [zh-HK](https://longbridge.com/zh-HK/news/294630507.md) generator: "portal-rs" --- # Chemed’s VITAS Drives Upbeat Earnings Call Chemed ((CHE)) has held its Q2 earnings call. Read on for the main highlights of the call. ### Claim 55% Off TipRanks - Unlock powerful investing tools with TipRanks Premium to make smarter, more confident investment decisions - Subscribe to TipRanks Smart Investor Newsletter, and discover new investing opportunities with data-backed stock picks Chemed’s latest earnings call struck an upbeat tone as both its hospice arm, VITAS, and its plumbing and restoration unit, Roto-Rooter, delivered solid results. Management highlighted strong top-line growth, expanding margins at VITAS, robust cash generation, and a higher EPS outlook, while acknowledging marketing pressures and operational hiccups at Roto-Rooter as manageable near-term drags. ## VITAS Revenue and Admissions Growth VITAS posted net revenue of $443.3 million in the second quarter of 2026, up 11.9% from a year earlier as hospice demand remained strong. Admissions climbed 9% to 19,125, while days of care increased 6.1%, pushing average daily census to 23,687 and total patient census past 24,000 by quarter end. ## Improved VITAS Profitability and Margins Profitability at VITAS moved meaningfully higher, with adjusted EBITDA excluding Medicare cap reaching $80.6 million, a 20.6% year-over-year gain. The adjusted EBITDA margin rose to 18.2% for the quarter, and management raised full-year margin guidance ex-cap to a range of 19.0% to 19.5% from a prior 18.0% to 18.5%. ## Medicare Cap Cushion and Reduced Accruals Chemed underscored a healthier Medicare cap position at VITAS, adding $8.9 million to its cap cushion in Florida during the quarter. No cap billing limitation was recorded for the combined Florida program, versus $16.4 million a year ago, and the company trimmed full-year cap limitation guidance to $7 million from $9.5 million. ## Upgraded Full-Year Guidance and EPS Outlook Management lifted VITAS’ full-year average daily census growth outlook to 5.75% to 6.25%, up from 4.5% to 5.5%, signaling confidence in volume trends. Revenue growth excluding cap is now projected at 8.25% to 9.25%, and full-year adjusted diluted EPS guidance increased to $25.00 to $25.75, implying a roughly 7.8% gain over 2025 at the midpoint. ## Strong Consolidated Performance and Cash Generation At the consolidated level, Chemed reported revenue growth of 8.8% in the second quarter and a 41.9% jump in adjusted diluted EPS, reflecting leverage on higher volumes and improved mix. Operating cash flow topped $173 million, giving the company ample balance-sheet flexibility to pursue acquisitions and maintain an aggressive share repurchase program with minimal leverage. ## Roto-Rooter Commercial Momentum and Franchise Acquisitions Roto-Rooter continued to build its commercial business, with branch commercial revenue rising 6.8% to $56.8 million in the quarter. Branches that have dedicated commercial business managers, now at 30 productive managers, delivered about 13% commercial revenue growth, while the company also spent roughly $33.5 million year-to-date to repurchase four franchises. ## Operational Improvements at Roto-Rooter Centralizing water restoration billing and collections has begun to pay off, improving collections and cutting write-offs by $1.3 million compared with last year. The centralization effort also allowed Roto-Rooter to reduce its workforce by about 20 employees, helping lift gross margin to 50.4%, an improvement of 135 basis points. ## Roto-Rooter Lead Generation and Marketing Cost Pressure Despite growth in some channels, Roto-Rooter faced pressure in lead generation, with total leads down 1.6% year over year and free leads falling 13.1%. To offset this, the company leaned more on paid leads, which rose 7.3% and now account for 59% of total leads, driving an extra $3.1 million in marketing spend and higher customer acquisition costs. ## Roto-Rooter Margin Headwinds and Water Restoration Weakness Roto-Rooter’s adjusted EBITDA held essentially flat at $48.5 million, but its adjusted EBITDA margin slipped 77 basis points to 21.1%. The water restoration business remained a soft spot, with revenue down 6.7% and average revenue per job falling about 3.5% after a double-digit decline in the first quarter, partly due to disruption from centralization initiatives. ## Independent Contractor Segment Underperformance Chemed acknowledged weakness in Roto-Rooter’s independent contractor segment, where revenue declined 1.9% in the quarter. Management described these smaller, middle-market contractors as lagging the broader network and indicated they will require targeted remediation to return to a growth trajectory. ## VITAS Acuity Mix and Shorter Length-of-Stay Within VITAS, shifts in patient acuity weighed on revenue, trimming about 115 basis points from growth in the quarter. Average length-of-stay dropped sharply to 101.2 days from 137.1 days a year ago, while median length-of-stay declined by four days, impacting per-patient economics and interacting with Medicare cap dynamics. ## Regulatory and Program-Integrity Risks Management flagged ongoing regulatory and oversight risks for hospice, including industry scrutiny from government watchdogs and a certificate-of-need moratorium limiting near-term expansion. Potential tightening of program-integrity measures and quality metrics could elevate compliance costs over time, although no immediate material reimbursement changes are expected. ## Transition and One-Time Disruptions Chemed emphasized that some of Roto-Rooter’s challenges stem from temporary transition effects tied to centralization, particularly in water restoration billing. These changes reduced average job revenue and, together with higher marketing spend, caused the unit to miss its EBITDA target by roughly $1 million for the quarter. ## Forward-Looking Guidance and Outlook Looking ahead, Chemed’s updated guidance reflects confidence in sustained growth at VITAS and steady performance at Roto-Rooter, with consolidated adjusted diluted EPS projected between $25.00 and $25.75 for 2026. The company assumes a modest effective tax rate and stable share count, while reiterating Roto-Rooter’s revenue growth target of 3.0% to 3.5% and adjusted EBITDA margin of 21.5% to 22.5%. Chemed’s earnings call painted a picture of a company leaning on VITAS’ momentum to drive earnings while methodically fixing growing pains at Roto-Rooter. Investors heard a blend of robust guidance, stronger cash flows, and disciplined capital deployment, balanced by candid discussion of regulatory and marketing headwinds that management believes are under control. ### Related Stocks - [CHE.US](https://longbridge.com/en/quote/CHE.US.md) ## Related News & Research - [Chemed (NYSE:CHE) Posts Earnings Results](https://longbridge.com/en/news/294127496.md) - [Chemed declares quarterly dividend of 70 cents a share](https://longbridge.com/en/news/295126359.md) - [Chemed Corporation (NYSE:CHE) to Issue Dividend Increase - $0.70 Per Share](https://longbridge.com/en/news/295234954.md) - [Chemed Q2 revenue beats estimates, helped by VITAS segment growth](https://longbridge.com/en/news/294109919.md) - [Amundi Raises Stock Position in Chemed Corporation $CHE](https://longbridge.com/en/news/294923530.md) --- > **Disclaimer: This article is for reference only and does not constitute any investment advice.**