CHE · 10-Q · 2026Q1 · Full report

Gross Margin Drivers

CHEMED CORP · 2026-04-28 · Importance 25 · Surprise 32

Consolidated gross margin declined to 32.8% in Q1 2026 from 33.5% a year earlier, driven primarily by higher variable patient care expenses at VITAS. VITAS gross margin fell to 22.5% from 23.2% due to increased variable patient care costs, while Roto-Rooter maintained a 51.0% gross margin, essentially flat year-over-year. The margin weakness at VITAS reflects the combined effect of acuity mix shifts and increased patient-care related spending. Management identifies patient care expense trends as the primary driver of the consolidated margin movement.

Key facts

• Adjusted EBITDA as a percent of revenue for the three months ended March 31, 2026: 17.7% versus 18.8% for the three months ended March 31, 2025
• Roto-Rooter gross margin for the first quarter of 2026: 51.0%, essentially flat with first quarter of 2025
• Consolidated gross margin for the first quarter of 2026: 32.8% versus 33.5% in first quarter of 2025
• VITAS gross margin for the first quarter of 2026: 22.5% versus 23.2% in first quarter of 2025
• VITAS gross margin decline was related to an increase in variable patient care expenses in the first quarter of 2026 compared to the first quarter of 2025