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.


	March 31,		‎December 31,
	2025		2024
Assets
Operating lease assets	$	131,150	$	127,323

Liabilities
Current operating leases		42,976		42,306
Noncurrent operating leases		102,082		98,538
Total operating lease liabilities	$	145,058	$	140,844

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


	Three months ended March 31,
	2025		2024
Lease Expense (a)
Operating lease expense	$	16,875	$	15,582
Sublease income		(36)		(23)
Net lease expense	$	16,839	$	15,559

(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.


	Three months ended March 31,
	2025		2024
Cash paid for amounts included in the measurement of lease liabilities
Operating cash flows from leases	$	13,571	$	12,453

Leased assets obtained in exchange for new operating lease liabilities	$	15,988	$	16,559


Maturity of Operating Lease Liabilities (in thousands)

2025	$	38,146
2026		40,178
2027		26,945
2028		20,385
2029		14,967
Thereafter		19,139
Total lease payments	$	159,760
Less: interest		(14,702)
Total liability recognized on the balance sheet	$	145,058

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 $3.1 million related to extended lease terms that are reasonably certain of being exercised and exclude $1.3 million of lease payments for leases signed but not yet commenced.