A clean revenue beat hides a 320-basis-point margin squeeze

The quarter cleared expectations on revenue. Q2 revenue reached $670.5 million, up 13.7% year over year, versus published expectations of roughly $638.6 million—about a 5% beat. Growth was broad: Home Health & Hospice rose 14.8%, Private Duty Services 14.0%, and Medical Solutions 9.4% (Consolidated Results; Segment Results).

The profit conversion was less impressive than the top line. Adjusted EBITDA grew 8.0%, well below revenue growth, while gross margin fell 320 basis points to 32.6%. That is close to management’s 32.2% full-year gross-margin assumption, but it shows that the revenue acceleration is not yet translating proportionally into earnings (Consolidated Results; 2026 Guidance; Segment Financial Highlights).

Management materially raised the full-year earnings framework. The presentation now calls for revenue above $2.68 billion and adjusted EBITDA above $365 million, compared with the previously communicated $2.63–$2.65 billion revenue range and $338–$342 million EBITDA range. The acquisition-related direction was already known after the Family First transaction, so the surprise is primarily the size of the updated EBITDA outlook rather than the existence of a raise (2026 Guidance).

Net read: a beat, but not a clean margin beat. The revenue upside and higher EBITDA outlook outweigh the margin compression, especially alongside $75.4 million of free cash flow. Still, the company carries $1.48 billion of variable-rate debt against $432.7 million of stated liquidity, so execution and cash conversion remain important qualifiers to the raised outlook (Capital Structure; Cash Flow).