Chemed Reports Third-Quarter 2019 Results

CINCINNATI--(BUSINESS WIRE)--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 [phone] for U.S. and Canadian participants and [phone] 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 [phone] for U.S. and Canadian callers and [phone] 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 during the current cap year, three provider numbers have a cap cushion between 0% and 5%, and three provider numbers have a Medicare cap liability.