Chemed’s first quarter results were well received by the market, reflecting stronger-than-expected performance at its VITAS hospice business and early signs of stabilization at Roto-Rooter. Management attributed the quarter’s outperformance to accelerated admissions at VITAS, achieved through a deliberate push to increase both hospital and non-hospital referrals while maintaining lower-than-budgeted labor costs. CEO Kevin McNamara noted, “VITAS management was able to add ADC through accelerated admissions from nonhospital preadmission locations while also maintaining a high level of hospital-based emissions.” Meanwhile, the Roto-Rooter segment saw core residential revenues grow for the first time since late 2022, despite weather-related disruptions and increased marketing spend to offset declining organic search leads.
Is now the time to buy CHE? Find out in our full research report (it’s free for active Edge members).
Chemed (CHE) Q1 CY2026 Highlights:
- Revenue: $657.5 million vs analyst estimates of $649.8 million (1.6% year-on-year growth, 1.2% beat)
- Adjusted EPS: $5.65 vs analyst estimates of $5.30 (6.6% beat)
- Adjusted EBITDA: $116.3 million vs analyst estimates of $111.4 million (17.7% margin, 4.4% beat)
- Operating Margin: 12.9%, down from 14.6% in the same quarter last year
- Sales Volumes rose 2.2% year on year (11.9% in the same quarter last year)
- Market Capitalization: $5.60 billion
While we enjoy listening to the management's commentary, our favorite part of earnings calls are the analyst questions. Those are unscripted and can often highlight topics that management teams would rather avoid or topics where the answer is complicated. Here is what has caught our attention.
Our Top 5 Analyst Questions From Chemed’s Q1 Earnings Call
- Megan Holt (Jefferies) asked how much margin improvement at VITAS was due to headcount reduction and whether increased hiring would affect profitability. CFO Mike Witzeman explained that lower staffing was not sustainable, and additional hiring is planned to support growth.
- Megan Holt (Jefferies) inquired about the persistence of higher Roto-Rooter marketing costs. CEO Kevin McNamara confirmed that elevated marketing spending is likely to continue due to changes in Google’s search algorithm and increased reliance on paid leads.
- Joanna Gajuk (BofA) asked how recent franchise acquisitions impact Roto-Rooter’s full-year outlook. McNamara clarified that new revenue from acquisitions is offset by ongoing headwinds in independent contractor and water restoration segments, keeping overall expectations in line.
- Joanna Gajuk (BofA) questioned whether Roto-Rooter’s improved collections would accelerate through the year. Management responded that progress depends on further centralization and staff experience, with expectations for gradual improvement.
- Michael Murray (RBC Capital Markets) sought clarity on balancing VITAS’s hospital versus community-based admissions in new Florida markets. President Joel Wherley stated that community-based initiatives are growing responsibly and the mix will stabilize as patient bases mature.
Catalysts in Upcoming Quarters
In the coming quarters, the StockStory team will be watching (1) whether VITAS can sustain its strong admissions growth and successfully scale operations in new Florida markets, (2) Roto-Rooter’s ability to manage elevated marketing costs while improving organic lead generation, and (3) the impact of regulatory developments in hospice, particularly any CMS rule changes or fraud enforcement actions. Execution on franchise integration and digital marketing strategies will be additional signposts for Chemed’s operational resilience.
Chemed currently trades at $416.06, up from $382.97 just before the earnings. Is the company at an inflection point that warrants a buy or sell? The answer lies in our full research report (it’s free).
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