SEC Filing | Chemed Corporation

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che-20191029x8k

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (date of earliest event reported):

October 29, 2019

CHEMED CORPORATION

(Exact name of registrant as specified in its charter)


Delaware	1-8351	31-0791746
(State or other ‎jurisdiction of ‎incorporation)	(Commission File Number)	(I.R.S. Employer ‎Identification ‎Number)

2600 First Financial Center, 255 East 5th Street, Cincinnati, OH 45202

(Address of principal executive offices) (Zip Code)

Registrant's telephone number, including area code:

(513) 762-6690

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2 below):

[_] Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

[_] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240-14a-12)

[_] Pre-commencement communications pursuant to Rule 14d-2(b) under Exchange Act (17 CFR 240-14d-2(b))

[_] Pre-commencement communications pursuant to Rule 13e-4 (c) under Exchange Act (17 CFR 240-13e-4(c))

Securities registered pursuant to 12(b) of the Act:

Title of each class

Trading symbol

Name of each exchange on which

registered

Capital stock $1 par value

CHE

NYSE

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 or Rule 12b-2 of the Securities Exchange Act of 1934. [_]

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. [_]

Page 1 of 3

Item 2.02 Results of Operations and Financial Condition

On October 29, 2019 Chemed Corporation issued a press release announcing its financial results for the quarter ended September 30, 2019. A copy of the release is furnished herewith as Exhibit 99.

Item 9.01 Financial Statements and Exhibits


d)	Exhibit

	(99) Registrant’s press release dated October 29, 2019
	104 The cover page from this Current Report on Form 8-K formatted in Inline XBRL

Page 2 of 3

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has caused this report to be signed on its behalf by the undersigned hereunto duly authorized.


	CHEMED CORPORATION

Dated: October 29, 2019	By:	/s/ Michael D. Witzeman
		Michael D. Witzeman
		Vice President and Controller

Page 3 of 3

Exhibit 99

Exhibit 99.1

CONTACT: David P. Williams

(513) 762-6901

Chemed Reports Third-Quarter 2019 Results

CINCINNATI, October 29, 2019—Chemed Corporation (Chemed) (NYSE: CHE), which operates VITAS Healthcare Corporation (VITAS), one of the nation’s largest providers of end-of-life care, and Roto-Rooter, the nation’s largest commercial and residential plumbing and drain cleaning services provider, reported financial results for its third quarter ended September 30, 2019, versus the comparable prior-year period, as follows:

Consolidated operating results:

Revenue increased 8.2% to $481 million

GAAP Diluted Earnings-per-Share (EPS) of $3.56, an increase of 16.3%

Adjusted Diluted EPS of $3.46, an increase of 12.7%

VITAS segment operating results:

Net Patient Revenue of $322 million, an increase of 6.6%

Average Daily Census (ADC) of 19,086, an increase of 6.3%

Admissions of 17,131, an increase of 4.4%

Net Income, excluding certain discrete items, of $40.4 million, an increase of 10.9%

Adjusted EBITDA, excluding Medicare Cap, of $54.3 million, an increase of 6.7%

Roto-Rooter segment operating results:

Revenue of $159 million, an increase of 11.6%

Net Income, excluding certain discrete items, of $28.8 million, an increase of 16.6%

Adjusted EBITDA of $39.8 million, an increase of 17.0%

Adjusted EBITDA margin of 25.0%, an increase of 116-basis points

VITAS

VITAS net revenue was $322 million in the third quarter of 2019, which is an increase of 6.6%, when compared to the prior-year period. This revenue increase is comprised primarily of a geographically weighted average Medicare reimbursement rate increase of approximately 0.5%, a 6.3% increase in days-of-care and a reduction in the Medicare Cap billing limitation that increased revenue 0.2%. This growth was partially offset by acuity mix shift, fluctuations in net room and board and contractual adjustments, the combination of which negatively impacted revenue growth approximately 0.4%, when compared to the prior-year period.

In the third quarter of 2019, VITAS accrued $1.3 million in Medicare Cap billing limitations. This compares favorably to the prior-year Medicare Cap billing limitation of $2.0 million. At September 30, 2019, VITAS had 30 Medicare provider numbers, three of which have an estimated fiscal 2019 Medicare Cap billing limitation liability of approximately $9.6 million.

Of VITAS’ 30 Medicare provider numbers, 23 provider numbers have a Medicare Cap cushion of 10% or greater, one provider number has a cap cushion between 5% and 10%, three provider numbers have a cap cushion between 0% and 5%, and three provider numbers have a fiscal 2019 Medicare Cap billing limitation.

Average revenue per patient per day in the quarter was $188.02, which is 0.4% above the prior-year period. Reimbursement for routine home care and high acuity care averaged $164.39 and $755.38, respectively. During the quarter, high acuity days-of-care were 4.0% of total days of care, 7-basis points less than the prior-year quarter.

The third quarter of 2019 gross margin, excluding Medicare Cap, was 23.4%, which is a 9-basis point margin improvement when compared to the third quarter of 2018.

Selling, general and administrative expense was $22.0 million in the third quarter of 2019, which is an increase of 7.7% compared to the prior-year quarter. Adjusted EBITDA, excluding Medicare Cap, totaled $54.3 million in the quarter, an increase of 6.7%. Adjusted EBITDA margin, excluding Medicare Cap, was 16.8% in the quarter, which is a 5-basis point margin improvement when compared to the prior-year period.

Roto-Rooter

Roto-Rooter generated quarterly revenue of $159 million for the third quarter of 2019, an increase of $16.5 million, or 11.6%, over the prior-year quarter. Revenue from the water restoration service segment totaled $25.7 million, an increase of 3.0%, when compared to the prior-year quarter. Approximately 90% of the water restoration revenue is generated from residential customers and the remaining 10% is generated from commercial accounts.

Commercial drain cleaning revenue increased 16.5%, commercial plumbing and excavation increased 24.9%, and commercial water restoration increased 3.1%. Overall, commercial revenue increased 19.3%.

Residential drain cleaning increased 9.8%, plumbing and excavation increased 7.0%, and residential water restoration increased 2.9%. Aggregate residential sales increased 6.5%.

Roto-Rooter’s gross margin in the quarter was 49.2%, a slight increase when compared to the third quarter of 2018. Adjusted EBITDA in the third quarter of 2019 totaled $39.8 million, an increase of 17.0%. The Adjusted EBITDA margin in the quarter was 25.0% which is a 116-basis point margin expansion over the prior year.

Chemed Consolidated

As of September 30, 2019, Chemed had total cash and cash equivalents of $9 million and debt of $130 million.

In June 2018, Chemed entered into a five-year Amended and Restated Credit Agreement that consists of a $450 million revolving credit facility. The interest rate on this facility has a floating rate that is currently LIBOR plus 100-basis points. At September 30, 2019, the Company had approximately $282 million of undrawn borrowing capacity under this credit agreement.

The Company did not purchase any shares during the third quarter of 2019. As of September 30, 2019, there was approximately $125 million of remaining share repurchase authorization under this share repurchase program.

Chemed restarted its share repurchase program in 2007. Since that time Chemed has repurchased over 14 million shares, aggregating approximately $1.2 billion at an average share cost of $84.76. Including dividends over this period, Chemed has returned approximately $1.4 billion to shareholders.

Conference Call

Chemed will host a conference call and webcast at 10 a.m., ET, on Wednesday, October 30, 2019, to discuss the Company's quarterly results and to provide an update on its business. The dial-in number for the conference call is (844) 743-2500 for U.S. and Canadian participants and +1 (661) 378-9533 for international participants. The Conference ID is 5229315. A live webcast of the call can be accessed on Chemed's website at www.chemed.com by clicking on Investor Relations Home.

A taped replay of the conference call will be available beginning approximately 24 hours after the call's conclusion. It can be accessed by dialing (855) 859-2056 for U.S. and Canadian callers and +1 (404) 537-3406 for international callers and will be available for one week following the live call. The replay Conference ID is 5229315. An archived webcast will also be available at www.chemed.com.

Chemed Corporation operates in the healthcare field through its VITAS Healthcare Corporation subsidiary. VITAS provides daily hospice services to approximately 19,000 patients with severe, life-limiting illnesses. This type of care is focused on making the terminally ill patient's final days as comfortable and pain-free as possible.

Chemed operates in the residential and commercial plumbing and drain cleaning industry under the brand name Roto-Rooter. Roto-Rooter provides plumbing, drain cleaning, and water cleanup services through company-owned branches, independent contractors and franchisees in the United States and Canada. Roto-Rooter also has licensed master franchisees in the republics of Indonesia and Singapore, and the Philippines.

This press release contains information about Chemed’s EBITDA, Adjusted EBITDA and Adjusted Diluted EPS, which are not measures derived in accordance with GAAP and which exclude components that are important to understanding Chemed’s financial performance. In reporting its operating results, Chemed provides EBITDA, Adjusted EBITDA and Adjusted Diluted EPS measures to help investors and others evaluate the Company’s operating results, compare its operating performance with that of similar companies that have different capital structures and evaluate its ability to meet its future debt service, capital expenditures and working

capital requirements. Chemed’s management similarly uses EBITDA, Adjusted EBITDA and Adjusted Diluted EPS to assist it in evaluating the performance of the Company across fiscal periods and in assessing how its performance compares to its peer companies. These measures also help Chemed’s management to estimate the resources required to meet Chemed’s future financial obligations and expenditures. Chemed’s EBITDA, Adjusted EBITDA and Adjusted Diluted EPS should not be considered in isolation or as a substitute for comparable measures calculated and presented in accordance with GAAP. We calculated Adjusted EBITDA Margin by dividing Adjusted EBITDA by service revenue and sales. A reconciliation of Chemed’s net income to its EBITDA, Adjusted EBITDA and Adjusted Diluted EPS is presented in the tables following the text of this press release.

Forward-Looking Statements

Certain statements contained in this press release and the accompanying tables are "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. The words "believe," "expect," "hope," "anticipate," "plan" and similar expressions identify forward-looking statements, which speak only as of the date the statement was made. Chemed does not undertake and specifically disclaims any obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. These statements are based on current expectations and assumptions and involve various risks and uncertainties, which could cause Chemed's actual results to differ from those expressed in such forward-looking statements.

These risks and uncertainties arise from, among other things, possible changes in regulations governing the hospice care or plumbing and drain cleaning industries; periodic changes in reimbursement levels and procedures under Medicare and Medicaid programs; difficulties predicting patient length of stay and estimating potential Medicare reimbursement obligations; challenges inherent in Chemed's growth strategy; the current shortage of qualified nurses, other healthcare professionals and licensed plumbing and drain cleaning technicians; Chemed’s dependence on patient referral sources; and other factors detailed under the caption "Description of Business by Segment" or "Risk Factors" in Chemed’s most recent report on form 10-Q or 10-K and its other filings with the Securities and Exchange Commission. You are cautioned not to place undue reliance on such forward-looking statements and there are no assurances that the matters contained in such statements will be achieved.

###


CHEMED CORPORATION AND SUBSIDIARY COMPANIES
CONSOLIDATED STATEMENTS OF INCOME
(in thousands, except per share data)(unaudited)

	Three Months Ended September 30,				Nine Months Ended September 30,
	2019		2018		2019		2018
Service revenues and sales		480,613	$	444,151	$	1,416,231	$	1,325,140
Cost of services provided and goods sold		328,183		305,312		973,771		915,589
Selling, general and administrative expenses (aa)		76,836		67,177		222,421		204,474
Depreciation		10,147		9,657		29,744		28,642
Amortization		441		35		1,366		96
Other operating expenses		78		257		9,001		88
Total costs and expenses		415,685		382,438		1,236,303		1,148,889
Income from operations		64,928		61,713		179,928		176,251
Interest expense		(1,041)		(1,082)		(3,402)		(3,813)
Other income--net (bb)		3,036		2,300		5,488		4,356
Income before income taxes		66,923		62,931		182,014		176,794
Income taxes		(7,976)		(11,682)		(27,671)		(25,578)
Net income	$	58,947	$	51,249	$	154,343	$	151,216
Earnings Per Share
Net income	$	3.69	$	3.19	$	9.68	$	9.41
Average number of shares outstanding		15,970		16,074		15,952		16,070
Diluted Earnings Per Share
Net income	$	3.56	$	3.06	$	9.35	$	8.98
Average number of shares outstanding		16,555		16,772		16,514		16,830

(aa) Selling, general and administrative ("SG&A") expenses comprise (in thousands):

	Three Months Ended September 30,				Nine Months Ended September 30,
	2019		2018		2019		2018
SG&A expenses before long-term incentive compensation and the impact of market value adjustments related to deferred compensation plans	$	72,273	$	63,754	$	212,775	$	196,271
Market value adjustments related to deferred compensation trusts		2,886		2,189		5,094		3,827
Long-term incentive compensation		1,677		1,234		4,552		4,376
Total SG&A expenses	$	76,836	$	67,177	$	222,421	$	204,474

(bb) Other income--net comprises (in thousands):
	Three Months Ended September 30,				Nine Months Ended September 30,
	2019		2018		2019		2018
Market value adjustments related to deferred compensation trusts	$	2,886	$	2,189	$	5,094	$	3,827
Interest income		173		111		387		529
Other		(23)		-		7		-
Total other income--net	$	3,036	$	2,300	$	5,488	$	4,356

CHEMED CORPORATION AND SUBSIDIARY COMPANIES
CONSOLIDATED BALANCE SHEETS
(in thousands, except per share data)(unaudited)

	September 30,
	2019		2018
Assets
Current assets
Cash and cash equivalents	$	9,066	$	67,459
Accounts receivable less allowances		114,480		108,999
Inventories		7,354		5,763
Prepaid income taxes		10,745		6,039
Prepaid expenses		26,150		17,610
Total current assets		167,795		205,870
Investments of deferred compensation plans held in trust		73,714		70,237
Properties and equipment, at cost less accumulated depreciation		172,932		154,434
Lease right of use asset		103,286		-
Identifiable intangible assets less accumulated amortization		129,276		56,649
Goodwill		576,600		483,281
Other assets		8,982		8,653
Total Assets	$	1,232,585	$	979,124
Liabilities
Current liabilities
Accounts payable	$	44,027	$	36,977
Accrued insurance		47,726		43,503
Accrued compensation		75,208		70,687
Accrued legal		7,283		1,423
Short-term lease liability		33,761		-
Other current liabilities		43,496		27,608
Total current liabilities		251,501		180,198
Deferred income taxes		15,512		15,293
Long-term debt		130,000		130,000
Deferred compensation liabilities		73,335		68,492
Long-term lease liability		82,012		-
Other liabilities		7,845		16,988
Total Liabilities		560,205		410,971
Stockholders' Equity
Capital stock		35,738		35,211
Paid-in capital		841,837		755,263
Retained earnings		1,365,303		1,175,949
Treasury stock, at cost		(1,572,844)		(1,400,577)
Deferred compensation payable in Company stock		2,346		2,307
Total Stockholders' Equity		672,380		568,153
Total Liabilities and Stockholders' Equity	$	1,232,585	$	979,124


CHEMED CORPORATION AND SUBSIDIARY COMPANIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)(unaudited)

	Nine Months Ended September 30,
	2019		2018
Cash Flows from Operating Activities
Net income	$	154,343	$	151,216
Adjustments to reconcile net income to net cash provided
by operating activities:
Depreciation and amortization		31,110		28,738
Stock option expense		10,729		9,360
Benefit for deferred income taxes		(6,085)		(1,344)
Litigation settlement		6,000		-
Noncash long-term incentive compensation		4,184		4,176
Asset impairment loss		2,266		-
Noncash directors' compensation		767		766
Amortization of debt issuance costs		229		361
Amortization of restricted stock awards		-		446
Changes in operating assets and liabilities, excluding
amounts acquired in business combinations:
Decrease in accounts receivable		10,558		4,637
Increase in inventories		(1,649)		(429)
Increase in prepaid expenses		(6,836)		(1,518)
Increase in accounts payable and
other current liabilities		28,622		12,182
Change in current income taxes		(81)		23,858
Net change in lease assets and liabilities		1,311		-
Increase in other assets		(8,145)		(9,441)
Increase in other liabilities		9,045		7,190
Other sources		1,277		410
Net cash provided by operating activities		237,645		230,608
Cash Flows from Investing Activities
Business combinations, net of cash acquired		(138,010)		(12,875)
Capital expenditures		(39,753)		(36,554)
Other sources		101		480
Net cash used by investing activities		(177,662)		(48,949)
Cash Flows from Financing Activities
Proceeds from revolving line of credit		400,700		428,150
Payments on revolving line of credit		(359,900)		(324,350)
Purchases of treasury stock		(71,926)		(121,976)
Capital stock surrendered to pay taxes on stock-based compensation		(26,108)		(24,763)
Proceeds from exercise of stock options		23,383		23,079
Dividends paid		(14,657)		(13,850)
Change in cash overdrafts payable		(7,535)		(15,307)
Payments on other long-term debt		-		(75,000)
Debt issuance costs		-		(985)
Other sources/(uses)		295		(319)
Net cash used by financing activities		(55,748)		(125,321)
Increase in Cash and Cash Equivalents		4,235		56,338
Cash and cash equivalents at beginning of year		4,831		11,121
Cash and cash equivalents at end of year	$	9,066	$	67,459


CHEMED CORPORATION AND SUBSIDIARY COMPANIES
CONSOLIDATING STATEMENTS OF INCOME
FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2019 AND 2018
(in thousands)(unaudited)
							Chemed
	VITAS		Roto-Rooter		Corporate		Consolidated
2019
Service revenues and sales (a)	$	321,748	$	158,865	$	-	$	480,613
Cost of services provided and goods sold		247,551		80,632		-		328,183
Selling, general and administrative expenses (a)		21,965		41,758		13,113		76,836
Depreciation		5,105		5,003		39		10,147
Amortization		18		423		-		441
Other operating expense/(income)		97		(19)		-		78
Total costs and expenses		274,736		127,797		13,152		415,685
Income/(loss) from operations		47,012		31,068		(13,152)		64,928
Interest expense		(48)		(80)		(913)		(1,041)
Intercompany interest income/(expense)		4,618		2,234		(6,852)		-
Other income—net		121		31		2,884		3,036
Income/(loss) before income taxes		51,703		33,253		(18,033)		66,923
Income taxes (a)		(11,930)		(7,113)		11,067		(7,976)
Net income/(loss)	$	39,773	$	26,140	$	(6,966)	$	58,947

2018
Service revenues and sales (b)	$	301,764	$	142,387	$	-	$	444,151
Cost of services provided and goods sold		233,006		72,306		-		305,312
Selling, general and administrative expenses (b)		20,394		36,112		10,671		67,177
Depreciation		4,905		4,712		40		9,657
Amortization		-		35		-		35
Other operating expense		100		157		-		257
Total costs and expenses		258,405		113,322		10,711		382,438
Income/(loss) from operations		43,359		29,065		(10,711)		61,713
Interest expense		(49)		(71)		(962)		(1,082)
Intercompany interest income/(expense)		3,306		1,814		(5,120)		-
Other income—net		89		22		2,189		2,300
Income/(loss) before income taxes		46,705		30,830		(14,604)		62,931
Income taxes (b)		(10,784)		(6,267)		5,369		(11,682)
Net income/(loss)	$	35,921	$	24,563	$	(9,235)	$	51,249


The "Footnotes to Financial Statements" are integral parts of this financial information.


CHEMED CORPORATION AND SUBSIDIARY COMPANIES
CONSOLIDATING STATEMENTS OF INCOME
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2019 AND 2018
(in thousands)(unaudited)

							Chemed
	VITAS		Roto-Rooter		Corporate		Consolidated
2019
Service revenues and sales (a)	$	941,279	$	474,952	$	-	$	1,416,231
Cost of services provided and goods sold		728,397		245,374		-		973,771
Selling, general and administrative expenses (a)		65,182		120,736		36,503		222,421
Depreciation		14,644		14,983		117		29,744
Amortization		53		1,313		-		1,366
Other operating expense (a)		6,521		214		2,266		9,001
Total costs and expenses		814,797		382,620		38,886		1,236,303
Income/(loss) from operations		126,482		92,332		(38,886)		179,928
Interest expense		(150)		(273)		(2,979)		(3,402)
Intercompany interest income/(expense)		13,395		6,609		(20,004)		-
Other income—net		309		86		5,093		5,488
Income/(loss) before income taxes		140,036		98,754		(56,776)		182,014
Income taxes (a)		(33,636)		(22,452)		28,417		(27,671)
Net income/(loss)	$	106,400	$	76,302	$	(28,359)	$	154,343

2018
Service revenues and sales (b)	$	890,577	$	434,563	$	-	$	1,325,140
Cost of services provided and goods sold		693,335		222,254		-		915,589
Selling, general and administrative expenses (b)		61,606		108,120		34,748		204,474
Depreciation		14,753		13,782		107		28,642
Amortization		-		96		-		96
Other operating expense (b)		16		72		-		88
Total costs and expenses		769,710		344,324		34,855		1,148,889
Income/(loss) from operations		120,867		90,239		(34,855)		176,251
Interest expense		(153)		(255)		(3,405)		(3,813)
Intercompany interest income/(expense)		9,524		5,231		(14,755)		-
Other income—net		469		60		3,827		4,356
Income/(loss) before income taxes		130,707		95,275		(49,188)		176,794
Income taxes (b)		(30,987)		(22,476)		27,885		(25,578)
Net income/(loss)	$	99,720	$	72,799	$	(21,303)	$	151,216



The "Footnotes to Financial Statements" are integral parts of this financial information.


CHEMED CORPORATION AND SUBSIDIARY COMPANIES
CONSOLIDATING SUMMARIES OF EBITDA
FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2019 AND 2018
(in thousands)(unaudited)

							Chemed
	VITAS		Roto-Rooter		Corporate		Consolidated
2019
Net income/(loss)	$	39,773	$	26,140	$	(6,966)	$	58,947
Add/(deduct):
Interest expense		48		80		913		1,041
Income taxes		11,930		7,113		(11,067)		7,976
Depreciation		5,105		5,003		39		10,147
Amortization		18		423		-		441
EBITDA		56,874		38,759		(17,081)		78,552
Add/(deduct):
Intercompany interest expense/(income)		(4,618)		(2,234)		6,852		-
Interest income		(139)		(34)		-		(173)
Acquisition expense		-		3,281		-		3,281
Stock option expense		-		-		2,711		2,711
Long-term incentive compensation		-		-		1,677		1,677
Medicare cap sequestration adjustment		859		-		-		859
Adjusted EBITDA	$	52,976	$	39,772	$	(5,841)	$	86,907

2018
Net income/(loss)	$	35,921	$	24,563	$	(9,235)	$	51,249
Add/(deduct):
Interest expense		49		71		962		1,082
Income taxes		10,784		6,267		(5,369)		11,682
Depreciation		4,905		4,712		40		9,657
Amortization		-		35		-		35
EBITDA		51,659		35,648		(13,602)		73,705
Add/(deduct):
Intercompany interest expense/(income)		(3,306)		(1,814)		5,120		-
Interest income		(88)		(23)		-		(111)
Medicare cap sequestration adjustment		503		-		-		503
Acquisition expense		177		177		-		354
Stock option expense		-		-		2,055		2,055
Long-term incentive compensation		-		-		1,234		1,234
Adjusted EBITDA	$	48,945	$	33,988	$	(5,193)	$	77,740

The "Footnotes to Financial Statements" are integral parts of this financial information.


CHEMED CORPORATION AND SUBSIDIARY COMPANIES
CONSOLIDATING SUMMARIES OF EBITDA
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2019 AND 2018
(in thousands)(unaudited)

							Chemed
	VITAS		Roto-Rooter		Corporate		Consolidated
2019
Net income/(loss)	$	106,400	$	76,302	$	(28,359)	$	154,343
Add/(deduct):
Interest expense		150		273		2,979		3,402
Income taxes		33,636		22,452		(28,417)		27,671
Depreciation		14,644		14,983		117		29,744
Amortization		53		1,313		-		1,366
EBITDA		154,883		115,323		(53,680)		216,526
Add/(deduct):
Intercompany interest expense/(income)		(13,395)		(6,609)		20,004		-
Interest income		(296)		(91)		-		(387)
Stock option expense		-		-		10,729		10,729
Litigation settlement		6,000		-		-		6,000
Long-term incentive compensation		-		-		4,552		4,552
Acquisition Expense		-		3,377		120		3,497
Medicare cap sequestration adjustment		3,063		-		-		3,063
Impairment loss on transportation equipment		-		-		2,266		2,266
Non cash ASC 842 expenses/(benefit)		656		55		(163)		548
Adjusted EBITDA	$	150,911	$	112,055	$	(16,172)	$	246,794

2018
Net income/(loss)	$	99,720	$	72,799	$	(21,303)	$	151,216
Add/(deduct):
Interest expense		153		255		3,405		3,813
Income taxes		30,987		22,476		(27,885)		25,578
Depreciation		14,753		13,782		107		28,642
Amortization		-		96		-		96
EBITDA		145,613		109,408		(45,676)		209,345
Add/(deduct):
Intercompany interest expense/(income)		(9,524)		(5,231)		14,755		-
Interest income		(468)		(60)		-		(528)
Stock option expense		-		-		9,360		9,360
Long-term incentive compensation		-		-		4,376		4,376
Medicare cap sequestration adjustment		1,040		-		-		1,040
Amortization of stock awards		107		100		239		446
Acquisition expense		177		177		-		354
Litigation settlement		(204)		-		-		(204)
Adjusted EBITDA	$	136,741	$	104,394	$	(16,946)	$	224,189

The "Footnotes to Financial Statements" are integral parts of this financial information.


CHEMED CORPORATION AND SUBSIDIARY COMPANIES
RECONCILIATION OF ADJUSTED NET INCOME
(in thousands, except per share data)(unaudited)

	Three Months Ended September 30,				Nine Months Ended September 30,
	2019		2018		2019		2018
Net income as reported	$	58,947	$	51,249	$	154,343	$	151,216
Add/(deduct) pre-tax cost of:
Stock option expense		2,711		2,055		10,729		9,360
Litigation settlement		-		-		6,000		(204)
Long-term incentive compensation		1,677		1,234		4,552		4,376
Acquisition expense		3,281		354		3,497		354
Medicare cap sequestration adjustments		859		503		3,063		1,040
Impairment loss on transportation equipment		-		-		2,266		-
Amortization of acquired and cancelled franchise agreements		331		-		1,103		-
Non cash ASC 842 expenses		-		-		548		-
Add/(deduct) tax impacts:
Tax impact of the above pre-tax adjustments (1)		(1,801)		(821)		(6,761)		(3,059)
Excess tax benefits on stock compensation		(8,792)		(3,118)		(18,737)		(18,618)
Adjusted net income	$	57,213	$	51,456	$	160,603	$	144,465
Diluted Earnings Per Share As Reported
Net income	$	3.56	$	3.06	$	9.35	$	8.98
Average number of shares outstanding		16,555		16,772		16,514		16,830
Adjusted Diluted Earnings Per Share
Adjusted net income	$	3.46	$	3.07	$	9.73	$	8.58
Average number of shares outstanding		16,555		16,772		16,514		16,830

(1) The tax impact of pre-tax adjustments was calculated using the effective tax rate of the operating unit for which each adjustment is associated.

The "Footnotes to Financial Statements" are integral parts of this financial information.


CHEMED CORPORATION AND SUBSIDIARY COMPANIES
OPERATING STATISTICS FOR VITAS SEGMENT
(unaudited)

	Three Months Ended September 30,						Nine Months Ended September 30,
OPERATING STATISTICS	2019			2018			2019			2018
Net revenue ($000) (c)
Homecare	$	274,746		$	257,134		$	800,059		$	748,546
Inpatient		23,599			19,617			69,063			61,803
Continuous care		29,446			30,385			92,476			91,664
Other		2,356			2,104			6,598			5,844
Subtotal	$	330,147		$	309,240		$	968,196		$	907,857
Room and board, net		(2,846)			(2,569)			(8,098)			(7,863)
Contractual allowances		(4,236)			(2,957)			(10,904)			(8,749)
Medicare cap allowance		(1,317)			(1,950)			(7,915)			(668)
Net Revenue	$	321,748		$	301,764		$	941,279		$	890,577
Net revenue as a percent of total before Medicare cap allowance
Homecare		83.2	%		83.2	%		82.6	%		82.5	%
Inpatient		7.1			6.3			7.1			6.8
Continuous care		8.9			9.8			9.6			10.1
Other		0.8			0.7			0.7			0.6
Subtotal		100.0			100.0			100.0			100.0
Room and board, net		(0.9)			(0.8)			(0.8)			(0.9)
Contractual allowances		(1.3)			(1.0)			(1.2)			(1.0)
Medicare cap allowance		(0.4)			(0.6)			(0.8)			(0.1)
Net Revenue		97.4	%		97.6	%		97.2	%		98.0	%
Average daily census ("ADC") (days)
Homecare		14,799			13,791			14,510			13,515
Nursing home		3,483			3,402			3,374			3,298
Routine homecare		18,282			17,193			17,884			16,813
Inpatient		373			313			363			328
Continuous care		431			451			460			466
Total		19,086			17,957			18,707			17,607

Total Admissions		17,131			16,403			52,380			51,540
Total Discharges		16,915			16,171			51,274			50,234
Average length of stay (days)		92.6			90.0			91.6			89.0
Median length of stay (days)		17.0			18.0			16.0			16.0
ADC by major diagnosis
Cerebro		35.7	%		36.2	%		35.9	%		36.5	%
Neurological		20.7			18.8			20.4			18.7
Cancer		12.9			13.8			12.9			13.8
Cardio		16.6			16.4			16.7			16.4
Respiratory		8.1			8.1			8.1			8.1
Other		6.0			6.7			6.0			6.5
Total		100.0	%		100.0	%		100.0	%		100.0	%
Admissions by major diagnosis
Cerebro		21.1	%		21.1	%		20.8	%		21.9	%
Neurological		12.7			11.6			12.6			11.3
Cancer		30.5			31.5			29.2			30.0
Cardio		14.8			14.7			15.7			15.3
Respiratory		10.2			10.3			11.3			11.0
Other		10.7			10.8			10.4			10.5
Total		100.0	%		100.0	%		100.0	%		100.0	%

Estimated uncollectible accounts as a percent of revenues		1.3	%		1.0	%		1.1	%		1.0	%
Accounts receivable --
Days of revenue outstanding- excluding unapplied Medicare payments		32.7			36.0			n.a.			n.a.
Days of revenue outstanding- including unapplied Medicare payments		21.0			22.8			n.a.			n.a.

The "Footnotes to Financial Statements" are integral parts of this financial information.


CHEMED CORPORATION AND SUBSIDIARY COMPANIES
FOOTNOTES TO FINANCIAL STATEMENTS
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2019 AND 2018
(unaudited)

(a)	Included in the results of operations for 2019 are the following significant credits/(charges) which may not be indicative of ongoing operations
	(in thousands):
		Three Months Ended September 30, 2019
		VITAS		Roto-Rooter		Corporate		Consolidated
	Service revenues and sales:
	Medicare cap sequestration adjustment	$	(859)	$	-	$	-	$	(859)
	Selling, general and administrative expenses:
	Acquisition expense		-		(3,281)		-		(3,281)
	Stock option expense		-		-		(2,711)		(2,711)
	Long-term incentive compensation		-		-		(1,677)		(1,677)
	Amortization of acquired and cancelled franchise agreements		-		(331)		-		(331)
	Pretax impact on earnings		(859)		(3,612)		(4,388)		(8,859)
	Excess tax benefits on stock compensation		-		-		8,792		8,792
	Income tax benefit on the above		220		957		624		1,801
	After-tax impact on earnings	$	(639)	$	(2,655)	$	5,028	$	1,734

		Nine Months Ended September 30, 2019
		VITAS		Roto-Rooter		Corporate		Consolidated
	Service revenues and sales:
	Medicare cap sequestration adjustment	$	(3,063)	$	-	$	-	$	(3,063)
	Selling, general and administrative expenses:
	Stock option expense		-		-		(10,729)		(10,729)
	Long-term incentive compensation		-		-		(4,552)		(4,552)
	Acquisition expense		-		(3,377)		(120)		(3,497)
	Amortization of acquired and cancelled franchise agreements		-		(1,103)		-		(1,103)
	Non cash ASC 842 (expenses)/benefit		(656)		(55)		163		(548)
	Other operating expenses:
	Litigation settlement		(6,000)		-		-		(6,000)
	Impairment loss on transportation equipment		-		-		(2,266)		(2,266)
	Pretax impact on earnings		(9,719)		(4,535)		(17,504)		(31,758)
	Excess tax benefits on stock compensation		-		-		18,737		18,737
	Income tax benefit on the above		2,474		1,202		3,085		6,761
	After-tax impact on earnings	$	(7,245)	$	(3,333)	$	4,318	$	(6,260)

(b)	Included in the results of operations for 2018 are the following significant credits/(charges) which may not be indicative of ongoing operations
	(in thousands):
		Three Months Ended September 30, 2018
		VITAS		Roto-Rooter		Corporate		Consolidated
	Service revenues and sales:
	Medicare cap sequestration adjustment	$	(503)	$	-	$	-	$	(503)
	Selling, general and administrative expenses:
	Stock option expense		-		-		(2,055)		(2,055)
	Long-term incentive compensation		-		-		(1,234)		(1,234)
	Acquisition expense		(177)		(177)		-		(354)
	Pretax impact on earnings		(680)		(177)		(3,289)		(4,146)
	Excess tax benefits on stock compensation		-		-		3,118		3,118
	Income tax benefit on the above		172		47		602		821
	After-tax impact on earnings	$	(508)	$	(130)	$	431	$	(207)

		Nine Months Ended September 30, 2018
		VITAS		Roto-Rooter		Corporate		Consolidated
	Service revenues and sales:
	Medicare cap sequestration adjustment	$	(1,040)	$	-	$	-	$	(1,040)
	Selling, general and administrative expenses:
	Stock option expense		-		-		(9,360)		(9,360)
	Long-term incentive compensation		-		-		(4,376)		(4,376)
	Acquisition expense		(177)		(177)		-		(354)
	Other operating expenses:
	Litigation settlement		204		-		-		204
	Pretax impact on earnings		(1,013)		(177)		(13,736)		(14,926)
	Excess tax benefits on stock compensation		-		-		18,618		18,618
	Income tax benefit on the above		256		47		2,756		3,059
	After-tax impact on earnings	$	(757)	$	(130)	$	7,638	$	6,751

(c)	VITAS has 12 large (greater than 450 ADC), 19 medium (greater than 200 but less than 450 ADC) and 17 small (less than 200 ADC) hospice programs. Of Vitas' 30 Medicare provider numbers, 24 provider numbers have a Medicare cap cushion of 5% or greater for the most recent twelve months, three provider numbers have a cap cushion between 0% and 5%, and three provider numbers have a Medicare cap liability.