Business Context and Reporting Period
Company: CHEMED CORP (Chemed)
Filing Type: Form 10-Q (Quarterly Report)
Reporting Period: Quarter and six months ended June 30, 2026
Business Overview: Chemed operates through two primary segments: VITAS Healthcare (hospice care services) and Roto-Rooter Group (plumbing, drain cleaning, excavation, and water restoration). The company is a large accelerated filer incorporated in Delaware.
Key Financial Metrics
| Metric | Q2 2026 | Q2 2025 | YTD 2026 | YTD 2025 |
|---|---|---|---|---|
| Service Revenues & Sales | $673.3M | $618.8M | $1,330.8M | $1,265.7M |
| Net Income | $67.7M | $52.5M | $134.0M | $124.3M |
| Diluted EPS | $5.13 | $3.57 | $9.97 | $8.43 |
| Adjusted Net Income | $80.0M | $62.7M | $157.4M | $145.8M |
| Adjusted Diluted EPS | $6.06 | $4.27 | $11.71 | $9.90 |
| Adjusted EBITDA | $121.8M | $95.3M | $238.1M | $217.0M |
| Operating Cash Flow (YTD) | $173.0M | $171.4M | - | - |
| Cash & Equivalents (End of Period) | $40.2M | $249.9M | - | - |
| Long-Term Debt | $140.0M | $0 | - | - |
| Unused Credit Facility | $262.7M | - | - | - |
Material Changes vs. Prior Period
- Revenue Growth: Consolidated revenue increased 8.8% in Q2 2026 and 5.1% YTD 2026.
- VITAS: Revenue grew 11.9% in Q2, driven by a 6.1% increase in days-of-care and a 2.4% increase in Medicare reimbursement rates. A significant reduction in Medicare Cap liability ($15.9M decrease in Q2 vs. prior year) boosted margins.
- Roto-Rooter: Revenue grew 3.3% in Q2, driven by price increases in plumbing and excavation, offset by a decline in water restoration services.
- Profitability: Net income increased 29.0% in Q2 and 7.9% YTD. Adjusted EBITDA margin improved to 18.1% in Q2 2026 from 15.4% in Q2 2025.
- Balance Sheet:
- Debt: Long-term debt increased by $140.0M due to a new credit facility utilized for acquisitions and stock repurchases.
- Cash: Cash and cash equivalents decreased by $34.3M YTD, primarily due to $287.5M in share repurchases and $33.5M in acquisition costs.
- Goodwill: Increased by $32.4M due to four Roto-Rooter franchise acquisitions.
- Capital Allocation: The company repurchased 710,000 shares YTD 2026 at a weighted average price of $404.96. Dividends increased to $0.60 per share in Q2 2026 ($1.20 YTD) from $0.50 per share in Q2 2025 ($1.00 YTD).
Guidance, Outlook, and Risks
- Outlook: Management does not expect a material negative effect on net sales or profitability for the remainder of fiscal year 2026 regarding recently implemented tariffs or the war with Iran, though they are monitoring these factors for 2027 planning.
- Debt Covenants: The company is in compliance with all financial covenants under its new $450M revolving credit facility (Leverage Ratio < 3.50x; Interest Coverage > 3.00x).
- Legal & Regulatory:
- Medicare Audit: VITAS successfully appealed a $50.3M overpayment demand; the amount was reduced to a de minimis figure, and funds were refunded in April 2025.
- Cybersecurity: Class action lawsuits related to an October 2025 data breach have been settled for a non-material amount covered by insurance.
- Concentration Risk: Approximately 76% of consolidated net accounts receivable are from Medicare, Medicaid, and managed Medicaid programs. VITAS relies on single vendors for pharmacy services and the majority of medical supplies.
Investor Verification Checklist
- Medicare Cap Impact: Verify the sustainability of the reduced Medicare Cap liability, which significantly boosted VITAS margins in 2026 compared to 2025.
- Debt Utilization: Monitor the usage of the new $450M credit facility and the impact of interest rate fluctuations (SOFR + 100 bps) on future interest expense.
- Share Repurchase Pace: Assess the remaining $139.8M authorization under the repurchase program and its impact on liquidity given the current cash balance of $40.2M.
- Roto-Rooter Water Restoration: Investigate the continued decline in water restoration revenue (down 6.0% in Q2) and its effect on the segment's overall growth.
- Regulatory Exposure: Review ongoing government audits and compliance risks inherent to the VITAS hospice segment.