Chemed’s shares rose 3.3% following a quarter where VITAS healthcare notably outperformed expectations on revenue growth and margin expansion, driving overall upside despite ongoing challenges in Roto-Rooter’s lead generation and marketing costs.
- VITAS revenue increased 11.9% YoY to $443.3 million, aided by a 6.1% rise in days of care and favorable Medicare reimbursement adjustments.
- VITAS admissions grew 9% YoY, with hospital admissions at a balanced 42.9% of the total for its Florida program, stabilizing the Medicare cap position and adding $8.9 million to the cap cushion.
- Roto-Rooter commercial revenue increased 6.8%, with branches having dedicated commercial managers posting a 13% revenue gain compared to a 1% decline elsewhere.
- Marketing spend for Roto-Rooter rose by $3.1 million due to a higher proportion of paid leads, while total lead volume fell 1.6%, impacting customer acquisition efficiency.
- The company invested $33.5 million to buy out four franchises in H1 2026, including a $12 million acquisition in south Texas expected to contribute more materially in 2027.
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