Lennox Q1 2026 Demand Outlook and Backlog Expectations Analysis

Chemed: guidance change for Q1 2026 and what it implies for VITAS revenue growth + EBITDA margins

1) What exactly changed in guidance (announced on the Q1 2026 call)

Chemed said it updated (normally it doesn’t do quarterly guidance updates) guidance for fiscal 2026 because VITAS performance in Q1 materially exceeded expectations, and also because of the level of share repurchases in Q1 2026.¹

Updated full-year 2026 revenue growth outlook (net of Medicare Cap impact)

Chemed revised its 2026 outlook for anticipated revenue growth excluding the impact of the Medicare Cap to improve to 6.5%–7.5%, compared with the original guidance of 5.5%–6.5%.¹

This is the guidance change most directly tied to VITAS’ ability to outperform on revenue (Chemed attributes the Q1 overperformance to improved admissions execution during a tough year-over-year comparison and continued Medicare Cap “cushion” build in Florida).²

Updated full-year 2026 EBITDA margin outlook (net of Medicare Cap impact)

Chemed also revised its 2026 outlook for revised EBITDA margin excluding the impact of the Medicare Cap to 18.0%–18.5%, compared with original guidance of 17.5%–18.5%.¹

So, the margin band was raised at the low end (from 17.5% to 18.0%) while keeping the high end at 18.5%.¹

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2) How Chemed described the Q1 drivers behind the VITAS guidance upgrade

Chemed explicitly linked Q1 performance to higher-than-expected revenue growth and EBITDA margins, while still continuing to add “Cushion” to the Medicare Cap position in Florida.²

Key operational factors Chemed cited:

• VITAS performance exceeded expectations during Q1 despite expecting a tough comparison as it transitions patient mix between short-stay and long-stay patients.²
• VITAS added ADC through accelerated admissions from nonhospital preadmission locations while maintaining a high level of hospital-based emissions.²
• This occurred while keeping hospice labor costs lower than budgeted.²
• Those factors together enabled higher-than-expected revenue growth and EBITDA margins.²
• Chemed reported VITAS admissions totaled 19,394 in Q1 2026, a 6.9% improvement vs. Q1 2025.²

Chemed further quantified a “Cushion” metric:

• Chemed said VITAS added over $32.5 million to cap cushion in the Florida combined program in Q1 2026.²

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3) What VITAS reported in Q1 2026 (context for the guidance change)

To connect the guidance revisions to realized Q1 performance:

• VITAS net revenue in Q1 2026 was $420 million, up 3.1% vs. the prior year period.³
• Chemed attributed this revenue increase to:
  • 2.2% increase in days of care and
  • ~2.6% improvement in geographically weighted average Medicare reimbursement rate, while noting offsetting factors such as acuity mix shift (-120 bps) and Medicare Cap/contra revenue impacts (-47 bps).³
• Adjusted EBITDA (excluding Medicare Cap) was $70.8 million, up 0.6% YoY.³
• Adjusted EBITDA margin (excluding Medicare Cap) was 16.8% for Q1 2026.³

Chemed’s margin question from a participant was also addressed in a way that supports why Q1 margins looked strong:

• Chemed said it averaged roughly 100 FTEs below budget and was able to efficiently serve increased ADC, but they indicated this staffing level is not sustainable for the rest of the year and planned to raise staffing to closer to 60 FTEs per month for the remainder of the year.⁴

That matters because Chemed is still guiding EBITDA margin (excluding Medicare Cap) for the full year despite the expectation of higher labor/capacity build.¹⁴

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4) Important nuance: marketing costs rising constrained full-year margins for the consolidated company

While the question asks specifically about VITAS EBITDA margins, Chemed’s guidance discussion includes a specific margin pressure driver:

• Chemed said adjusted EBITDA margin decline was mainly caused by increased internet marketing costs.¹
• For the full-year outlook, Chemed said estimated adjusted EBITDA margin (the company-level metric discussed alongside Roto-Rooter performance) was lowered slightly to 21.5%–22.5% from original 22.5%–23%, and that this was primarily due to elevated marketing costs expected to persist above original guidance for the remainder of the year.¹
• Management quantified the marketing cost run-rate driver: they expected to add $1 million per quarter of marketing costs for the next three quarters, reflecting about $2 million higher marketing spend in Q1 vs budget, with about $1 million of that tied to weather-related operational inability to serve calls.⁵

This is relevant because it shows that not all of the margin movement in the guidance story is “VITAS margin strength”—some margin is being impacted by marketing intensity (noted by management as driven by costs expected to persist).¹⁵

However, the VITAS-specific EBITDA margin guidance adjustment (excluding Medicare Cap) is still improved/raised at the low end to 18.0%–18.5%.¹

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Bottom line (direct answer)

For Q1 2026, Chemed’s guidance change for fiscal 2026—stemming from VITAS materially better-than-expected performance—was:

• VITAS-related revenue growth guidance (excluding Medicare Cap impact): revised upward to 6.5%–7.5%, from 5.5%–6.5%.¹
• VITAS-related EBITDA margin guidance (excluding Medicare Cap impact): revised to 18.0%–18.5%, from 17.5%–18.5% (raised low end).¹
• Chemed attributed the Q1 outperformance (which underpins the raised outlook) to stronger admissions execution (including ADC from nonhospital preadmission locations), maintaining hospital emissions, and keeping hospice labor costs below budget, enabling higher-than-expected revenue growth and EBITDA margins, while also adding $32.5M+ to Medicare Cap cushion in Florida.²