Chemed Corporation (CHE) Q2 2026 earnings show adjusted EPS rising 41.9% to $25.00, driven by strong VITAS growth and revised revenue guidance. (158)
Chemed Corporation reported Q2 2026 adjusted earnings per share of $25.00, up 41.9% year-over-year and surpassing the consensus estimate of $24.00 by $1.00. The company's robust performance was driven by VITAS's strong revenue growth and significant operational improvements, which are expected to continue into the latter half of the year.
Key Takeaways
- Adjusted EPS reached $25.00, up 41.9% YoY, exceeding the consensus by $1.00.
- VITAS net revenue rose 11.9% YoY to $443.3 million, aided by a 6.1% increase in days of care.
- Roto Rooter commercial revenue increased by 6.8% YoY, totaling $56.8 million, while residential revenue rose 1.7% to $159.1 million.
- Revised full-year guidance for VITAS anticipates revenue growth of 8.25% to 9.25%, up from 6.5% to 7.5%.
- Average daily census for VITAS increased by 6.1% to 23,687 patients, exceeding 24,000 for the first time in company history.
Strong Growth in VITAS Revenue
VITAS generated net revenue of $443.3 million in Q2 2026, representing an 11.9% increase compared to the previous year. This growth resulted from a 6.1% rise in days of care and a 2.4% increase in the Medicare reimbursement rate. The combination of a favorable acuity mix and operational improvements contributed to this revenue surge, despite a 115 basis point negative impact from acuity mix shift.
| Metric | Q2 2026 | YoY | QoQ |
|---|---|---|---|
| VITAS Net Revenue | $443.3M | +11.9% | N/A |
| Average Revenue per Patient Day | $209.98 | +1.4% | N/A |
| Adjusted EBITDA (excluding Medicare cap) | $80.6M | +20.6% | N/A |
The average revenue per patient day improved to $209.98, reflecting a 143 basis point increase year-over-year. Moreover, VITAS managed to accrue only $500,000 in Medicare cap billing limitations, significantly below prior estimates, mainly due to improved admission performance in California.
Roto Rooter Sees Mixed Results Amid Stiff Competition
Roto Rooter's commercial revenue increased by 6.8% YoY to $56.8 million, while residential revenue saw a more modest rise of 1.7% to $159.1 million. However, the branch's adjusted EBITDA remained flat compared to the same quarter last year, totaling $48.5 million, primarily due to increased internet marketing costs. The adjusted EBITDA margin for Roto Rooter was 21.1%, a decline from the previous year's 21.8%.
Management noted that while water restoration services experienced a 6.7% decline in revenue, the overall demand for these services remains strong. The transition to a centralized billing system has introduced some operational challenges, but the company expects improvements as staff gain proficiency in this new model.
Revised Guidance Reflects Stronger Outlook
In light of VITAS's performance, Chemed has updated its full-year guidance. For 2026, VITAS's anticipated average daily census growth is now projected between 5.75% and 6.25%, up from 4.5% to 5.5%. Revenue growth expectations were revised from 6.5%-7.5% to 8.25%-9.25%, while the EBITDA margin is expected to improve to 19%-19.5% versus the previous estimate of 18%-18.5%. The anticipated Medicare cap billing limitation for the year has also been reduced from $9.5 million to $7 million.
Analyst Q&A Highlights Concerns and Confidence
During the Q&A session, analysts inquired about the sustainability of VITAS's growth and Roto Rooter's operational challenges. Joel McCulloch, CEO, reassured that VITAS has returned to normal growth rates and anticipates double-digit growth in the medium term. However, he acknowledged ongoing difficulties within Roto Rooter, particularly with rising marketing costs affecting margins, but emphasized the stability of the overall business model.
Kevin McNamara, Chairman and CEO, elaborated on the company's strategic focus, indicating that Chemed is poised to capitalize on franchise acquisition opportunities, particularly for Roto Rooter, while maintaining strong cash flow from operations.
Frequently Asked Questions
Did Chemed Corporation beat earnings estimates in Q2 2026?
Yes, Chemed Corporation reported adjusted EPS of $25.00, exceeding the consensus estimate of $24.00 by $1.00.
What was the revenue growth for VITAS in Q2 2026?
VITAS generated net revenue of $443.3 million in Q2 2026, reflecting an 11.9% increase year-over-year.
How did Roto Rooter's performance compare to last year?
Roto Rooter's commercial revenue grew by 6.8% year-over-year, while residential revenue increased by 1.7%. However, adjusted EBITDA remained flat compared to Q2 2025.
What is the updated guidance for VITAS for 2026?
The updated guidance for VITAS anticipates revenue growth of 8.25% to 9.25%, with average daily census growth projected between 5.75% and 6.25%.
Closing Thoughts
Chemed Corporation's strong Q2 results, highlighted by significant growth in VITAS and revised guidance, signal a robust outlook for the remainder of 2026. However, the challenges faced by Roto Rooter, particularly related to marketing costs, will require ongoing management focus as the company navigates a competitive landscape.
This analysis is based on public earnings call materials and is not investment advice.
