Chemed and each of its operating subsidiaries are service companies. As such, real estate leases comprise the largest lease obligation (and conversely, right of use asset) in our lease portfolio. VITAS has leased office space, as well as space for inpatient units (“IPUs”) and/or contract beds within hospitals. Roto-Rooter mainly has leased office space. Our leases have remaining terms of under 1 year to 12 years, some of which include options to extend the lease for up to 5 years, and some of which include options to terminate the lease within 1 year.

Roto-Rooter purchases equipment and leases it to certain of its independent contractors. We analyzed these leases in accordance with ASC 842 and determined they are operating leases. As a result, Roto-Rooter capitalizes the equipment underlying these leases, depreciates the equipment and recognizes rental income.

We do not currently have any finance leases, therefore all lease information disclosed is related to operating leases.


	June 30,		‎December 31,
	2026		2025
Assets
Operating lease assets	$	142,535	$	131,151

Liabilities
Current operating leases		41,277		40,892
Noncurrent operating leases		113,516		102,867
Total operating lease liabilities	$	154,793	$	143,759

The components of lease expense for the second quarter are as follows (in thousands):


	Three months ended June 30,
	2026		2025
Lease Expense (a)
Operating lease expense	$	17,419	$	17,110
Sublease income		(25)		(30)
Net lease expense	$	17,394	$	17,080

The components of lease expense for the first six months are as follows (in thousands):


	Six months ended June 30,
	2026		2025
Lease Expense (a)
Operating lease expense	$	34,634	$	33,971
Sublease income		(56)		(66)
Net lease expense	$	34,578	$	33,905

(a)Includes short-term leases and variable lease costs, which are immaterial. Included in both cost of services provided and goods sold and selling, general and administrative expenses.


	Six months ended June 30,
	2026		2025
Cash paid for amounts included in the measurement of lease liabilities
Operating cash flows from leases	$	28,383	$	27,472

Leased assets obtained in exchange for new operating lease liabilities	$	36,108	$	29,056


Maturity of Operating Lease Liabilities (in thousands)

2026	$	28,516
2027		41,269
2028		32,668
2029		26,332
2030		18,607
Thereafter		25,380
Total lease payments	$	172,772
Less: interest		(17,979)
Total liability recognized on the balance sheet	$	154,793

For leases commencing prior to April 2019, minimum rental payments exclude payments to landlords for real estate taxes and common area maintenance. Operating lease payments include $10.6 million related to extended lease terms that are reasonably certain of being exercised and exclude $485,000 of lease payments for leases signed but not yet commenced.