Investor Relations

Corporate Governance

Dividends & Splits

Email Alerts

Financial Reports

Analyst Estimates

Fundamentals

Request Information

Company Events &
Presentations


Investor FAQ

Stock Information

News Releases

SEC Filings
Chemed > Investor Relations > News Releases > News Release
News Releases
Printer Friendly Version View printer-friendly version
<< Back
Chemed Reports Second-Quarter 2008 Results

Guides 2008 Earnings to Higher End of Range

CINCINNATI--(BUSINESS WIRE)--July 28, 2008--Chemed Corporation (Chemed) (NYSE:CHE), which operates VITAS Healthcare Corporation (VITAS), the nation's largest provider of end-of-life care, and Roto-Rooter, the nation's largest commercial and residential plumbing and drain cleaning services provider, today reported financial results for its second quarter ended June 30, 2008, versus the comparable prior-year period, as follows:

Consolidated operating results:

  • Revenue increased 4.3% to $283 million


  • Diluted EPS of $.73


  • Diluted EPS, excluding stock options and certain other items, of $.77

VITAS segment operating results:

  • Net Patient Revenue of $199 million, up 7.2%


  • Average Daily Census (ADC) of 11,846, up 3.9%


  • Admissions of 13,956, an increase of 2.2%


  • Average Length of Stay in the quarter of 73.2 days


  • Adjusted EBITDA of $26.3 million, an increase of 5.7%

Roto-Rooter segment operating results:

  • Revenue of $84.1 million, a decline of 1.8%


  • Job count of 182,083, a decline of 9.8%


  • Adjusted EBITDA of $14.8 million, a decline of 18.2%

VITAS

Net revenue for VITAS was $199 million in the second quarter of 2008, which is an increase of 7.2% over the prior-year period. This revenue growth was the result of increased ADC of 3.9% and a Medicare price increase of approximately 3.2%.

Average revenue per patient per day in the quarter was $184.64, which is 3.2 % above the prior-year period. Routine home care reimbursement and high acuity care averaged $145.68 and $642.30, respectively, per patient per day in the second quarter of 2008. During the quarter, high acuity days-of-care was 7.8% of total days-of-care. Quarterly high acuity days-of-care had averaged between 8.0% and 8.4% in 2007. Any shift in revenue mix will typically have a noticeable impact on overall revenue given the significant disparity in reimbursement. However, this marginal decline in high acuity days-of-care was more than offset by the geographic mix of high acuity patients residing in areas with above average per diem reimbursement.

VITAS did not have any billing restrictions related to Medicare Cap for its second-quarter 2008 operating activity. As of June 30, 2008, VITAS has not accrued any Medicare billing restrictions for the 2008 or 2007 Cap years. Of VITAS' 36 unique Medicare provider numbers, 31 provider numbers, or 86%, have a Cap cushion greater than 20% for the 2008 Cap year, three provider numbers are between 10% and 20%, and two provider numbers have Cap cushion of approximately 6%.

Gross margin in the second quarter of 2008 was 21.9%. This is 25 basis points below the second quarter of 2007. This margin decline is a result of increased expenses related to admissions substantially offset by increased direct care patient margins.

As part of its growth strategy, VITAS has expanded its investment in the admissions process. At the end of the second quarter of 2008, VITAS increased staffing of sales representatives, admissions coordinators and admissions nurses by 8.5%. This resulted in an additional $1.4 million of admission expense in the quarter when compared to the prior-year period.

VITAS continues to focus on more efficient scheduling of direct labor. This involves utilization of field-based labor management tools designed to meet and respond to hospice team staffing requirements. VITAS anticipates increased efficiency in its labor management during the second half of 2008.

Selling, general and administrative expense was $17.3 million in the second quarter of 2008, which is an increase of 6.2% over the prior-year quarter and 3.9% on a year-to-date basis. Adjusted EBITDA totaled $26.3 million, an increase of 5.7% over the prior year and equates to an adjusted EBITDA margin of 13.2%.

Roto-Rooter

Roto-Rooter's plumbing and drain cleaning business generated sales of $84 million for the second quarter of 2008, 1.8% lower than the $86 million reported in the comparable prior-year quarter. Adjusted EBITDA in the second quarter of 2008 totaled $14.8 million, a decrease of 18.2% over the second quarter of 2007, and equated to an adjusted EBITDA margin of 17.6%.

Job count in the second quarter of 2008 declined 9.8% when compared to the prior-year period. Total residential jobs declined 10.4% and consisted of residential plumbing jobs decreasing 8.0% and residential drain cleaning jobs declining 11.5%, when compared to the second quarter of 2007. Residential jobs represent approximately 70% of total job count. Total commercial jobs declined 8.5% with commercial plumbing job count declining 6.0% and commercial drain cleaning decreasing 9.2%, over the prior-year quarter.

The second quarter of 2008 continues to indicate recessionary pressure impacting demand for certain discretionary plumbing and drain cleaning services. This is evidenced by a 14% decline in call volume in Roto-Rooter's centralized call centers. This decline has been substantially offset by increased pricing, favorable job mix shift to higher revenue per job excavation work and increased conversion rates of calls to paid jobs.

There continues to be substantial disparity in demand for Roto-Rooter services within the United States. The South region has experienced a 15.9% year-to-date decline in commercial jobs while the Northeast Region had a modest 1.0% decline in commercial volume. Residential demand is also following a similar pattern in the South, with job count declining 11.2% while the remaining regions have experienced a job count decline ranging between 3.5% and 10.1%.

Guidance for 2008

VITAS is estimated to generate full-year revenue growth, prior to Medicare Cap, of 8% to 9%. Admissions are estimated to increase 5% to 7% and full-year adjusted EBITDA margin, prior to Medicare Cap, is estimated to be 13% to 14%. EBITDA margins are forecasted to improve sequentially throughout 2008, with an adjusted EBITDA margin averaging 13.8% to 14.3% in the second half of 2008. This guidance assumes the hospice industry receives a net Medicare basket price increase of 2.0% in the fourth quarter of 2008. Full calendar year 2008 Medicare contractual billing limitations are estimated at $2.5 million.

Roto-Rooter is estimated to generate full-year 2008 revenue totaling $341 million to $347 million. This guidance assumes revenue of approximately $82 to $84 million in the third quarter of 2008 and $88 million to $92 million in the fourth quarter of the year. Adjusted EBITDA margin for 2008 is estimated in the range of 18.0% to 19.0%.

Based upon these factors, an effective tax rate of 39% and a full-year average diluted share count of 23.5 million shares, management estimates 2008 earnings per diluted share from continuing operations, excluding noncash expenses for stock options and charges or credits not indicative of ongoing operations, will be in the range of $3.15 to $3.20.

Conference Call

Chemed will host a conference call and webcast at 10 a.m., ET, on Tuesday, July 29, 2008, to discuss the company's quarterly results and provide an update on its business. The dial-in number for the conference call is (866) 770-7125 for U.S. and Canadian participants and (617) 213-8066 for international participants. The participant passcode is 53476964. 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 two hours after the call's conclusion. It can be accessed by dialing 888-286-8010 for U.S. and Canadian callers and 617-801-6888 for international callers and will be available for one week following the live call. The replay passcode is 98763586. 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 12,000 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 and drain service through company-owned branches, independent contractors and franchisees in the United States and Canada. Roto-Rooter also has licensed master franchisees in Indonesia, Singapore, Japan, and the Philippines.

This press release contains information about Chemed's EBITDA and adjusted EBITDA, which are not measures derived in accordance with generally accepted accounting principles and which exclude components that are important to understanding Chemed's financial performance. Chemed provides EBITDA and adjusted EBITDA to help investors and others evaluate its 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 EBITDA and adjusted EBITDA should not be considered in isolation or as a substitute for comparable measures calculated and presented in accordance with GAAP. A reconciliation of Chemed's net income to its adjusted EBITDA 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 STATEMENT OF INCOME
           (in thousands, except per share data)(unaudited)


                               Three Months Ended   Six Months Ended
                                     June 30,            June 30,
                               ------------------- -------------------
                                 2008      2007      2008      2007
                               --------- --------- --------- ---------
  Service revenues and sales   $283,156  $271,387  $568,424  $541,826
                               --------- --------- --------- ---------
  Cost of services provided
   and goods sold (aa)          201,139   188,716   406,951   376,963
  Selling, general and
   administrative expenses
   (aa)                          46,321    46,090    89,048    94,160
  Depreciation                    5,370     4,962    10,808     9,677
  Amortization                    1,489     1,294     2,939     2,609
  Other operating
   expense/(income)(aa)               -         -         -    (1,138)
                               --------- --------- --------- ---------
     Total costs and expenses   254,319   241,062   509,746   482,271
                               --------- --------- --------- ---------
     Income from operations      28,837    30,325    58,678    59,555
  Interest expense               (1,422)   (3,400)   (3,019)   (7,142)
  Loss on extinguishment of
   debt (aa)                          -   (13,715)        -   (13,715)
  Other income--net                 886     2,188      (303)    3,057
                               --------- --------- --------- ---------
     Income before income
      taxes                      28,301    15,398    55,356    41,755
  Income taxes                  (11,051)   (5,965)  (21,286)  (16,101)
                               --------- --------- --------- ---------
  Net Income                   $ 17,250  $  9,433  $ 34,070  $ 25,654
                               ========= ========= ========= =========


 Earnings Per Share (aa)
   Net income                  $   0.73  $   0.38  $   1.44  $   1.02
                               ========= ========= ========= =========
   Average number of shares
    outstanding                  23,486    24,506    23,681    25,108
                               ========= ========= ========= =========

 Diluted Earnings Per Share
  (aa)
   Net income                  $   0.73  $   0.38  $   1.42  $   1.00
                               ========= ========= ========= =========
   Average number of shares
    outstanding                  23,759    25,080    24,026    25,684
                               ========= ========= ========= =========

 ------------------------------
  (aa)  Included in the results of operations are the following
         significant credits/(charges) which may not be indicative of
         ongoing operations (in thousands):

                               Three Months Ended   Six Months Ended
                                     June 30,            June 30,
                               ------------------- -------------------
                                 2008      2007      2008      2007
                               --------- --------- --------- ---------
        Cost of services
         provided and goods
         sold
           Unreserved prior-
            year's insurance
            claim              $      -  $      -  $   (597) $      -
        Selling, general and
         administrative
         expenses
           Stock option
            expense              (1,591)     (897)   (2,982)   (1,482)
           Legal costs
            associated with
            OIG investigation       (57)      (74)      (42)     (140)
           Long-term incentive
            compensation              -    (1,620)        -    (7,067)
           Other                      -         -         -       467
        Other operating
         expense/(income)
           Gain on sale of
            property                  -         -         -     1,138
        Loss on extinguishment
         of debt                      -   (13,715)        -   (13,715)
                               --------- --------- --------- ---------
               Pretax impact
                on earnings      (1,648)  (16,306)   (3,621)  (20,799)
        Income tax benefit on
         the above                  603     5,951     1,343     7,638
        Income tax credit
         related to prior
         years                        -         -       322         -
                               --------- --------- --------- ---------
               After-tax
                impact on
                earnings       $ (1,045) $(10,355) $ (1,956) $(13,161)
                               ========= ========= ========= =========
              CHEMED CORPORATION AND SUBSIDIARY COMPANIES
                      CONSOLIDATED BALANCE SHEET
           (in thousands, except per share data)(unaudited)

                                                       June 30,
                                                 ---------------------
                                                    2008    2007 (bb)
                                                 ---------- ----------
 Assets
   Current assets
       Cash and cash equivalents                 $   1,525  $   7,469
       Accounts receivable less allowances         101,403     98,085
       Inventories                                   7,588      6,752
       Current deferred income taxes                14,855     19,828
       Prepaid income taxes                          2,370      2,604
       Prepaid expenses and other current assets     9,323      8,570
                                                 ---------- ----------
              Total current assets                 137,064    143,308
   Investments of deferred compensation plans
    held in trust                                   30,630     29,360
   Notes receivable                                      -     14,701
   Properties and equipment, at cost less
    accumulated depreciation                        72,276     72,428
   Identifiable intangible assets less
    accumulated amortization                        63,160     67,195
   Goodwill                                        439,216    435,209
   Other assets                                     15,870     15,549
                                                 ---------- ----------
                  Total Assets                   $ 758,216  $ 777,750
                                                 ========== ==========

 Liabilities
   Current liabilities
       Accounts payable                          $  50,760  $  44,584
       Current portion of long-term debt            10,166     10,162
       Income taxes                                    863        837
       Accrued insurance                            34,501     37,084
       Accrued compensation                         34,492     33,046
       Other current liabilities                    13,230     20,638
                                                 ---------- ----------
              Total current liabilities            144,012    146,351
   Deferred income taxes                             4,762      3,846
   Long-term debt                                  217,870    268,035
   Deferred compensation liabilities                30,752     28,912
   Other liabilities                                 5,819      5,945
                                                 ---------- ----------
                  Total Liabilities                403,215    453,089
                                                 ---------- ----------

 Stockholders' Equity
   Capital stock                                    29,390     29,193
   Paid-in capital                                 273,812    261,951
   Retained earnings                               309,506    242,905
   Treasury stock, at cost                        (260,122)  (211,836)
   Deferred compensation payable in Company stock    2,415      2,448
                                                 ---------- ----------
                  Total Stockholders' Equity       355,001    324,661
                                                 ---------- ----------
                  Total Liabilities and
                   Stockholders' Equity          $ 758,216  $ 777,750
                                                 ========== ==========

  Book Value Per Share                           $   15.50  $   13.58
                                                 ========== ==========

 ------------------------------------------------
 (bb) Reclassified to conform to 2008 presentation.
             CHEMED CORPORATION AND SUBSIDIARY COMPANIES
                 CONSOLIDATED STATEMENT OF CASH FLOWS
                      (in thousands)(unaudited)

                                             Six Months Ended June 30,
                                             -------------------------
                                                 2008      2007 (bb)
                                             ------------ ------------
Cash Flows from Operating Activities
  Net income                                 $    34,070  $    25,654
  Adjustments to reconcile net income to net
   cash provided by operating activities:
     Depreciation and amortization                13,747       12,286
     Provision for uncollectible accounts
      receivable                                   4,351        4,009
     Stock option expense                          2,982        1,482
     Provision for deferred income taxes          (1,694)         376
     Amortization of debt issuance costs             507          751
     Write-off of unamortized debt issuance
      costs                                            -        7,153
     Noncash long-term incentive compensation          -        6,154
     Changes in operating assets and
      liabilities, excluding amounts acquired
      in business combinations:
         Increase in accounts receivable          (4,652)     (11,352)
         Increase in inventories                    (953)        (174)
         Decrease in prepaid expenses and
          other current assets                     1,179        1,377
         Decrease in accounts payable and
          other current liabilities               (2,248)     (14,794)
         Increase/(decrease) in income taxes      (4,903)          69
         Increase in other assets                 (1,906)      (3,932)
         Increase in other liabilities             1,910        4,540
     Excess tax benefit on share-based
      compensation                                  (825)      (2,370)
     Other sources                                   206       (1,005)
                                             ------------ ------------
         Net cash provided by operating
          activities                              41,771       30,224
                                             ------------ ------------
Cash Flows from Investing Activities
  Net proceeds/(uses) from the sale of
   discontinued operations                         9,439       (5,905)
  Capital expenditures                            (8,715)     (13,908)
  Business combinations, net of cash acquired       (577)         (62)
  Proceeds from sales of property and
   equipment                                          71        3,003
  Other uses                                        (306)        (564)
                                             ------------ ------------
         Net cash used by investing
          activities                                 (88)     (17,436)
                                             ------------ ------------
Cash Flows from Financing Activities
  Purchases of treasury stock                    (45,791)    (130,748)
  Net increase in revolving line of credit         8,300       13,300
  Repayment of long-term debt                     (5,095)    (185,643)
  Dividends paid                                  (2,900)      (2,997)
  Excess tax benefit on share-based
   compensation                                      825        2,370
  Increase/(decrease) in cash overdrafts
   payable                                          (655)         166
  Issuance of capital stock                          116        2,069
  Proceeds from issuance of long-term debt             -      300,000
  Purchase of note hedges                              -      (54,939)
  Proceeds from issuance of warrants                   -       27,614
  Debt issuance costs                                  -       (6,395)
  Other sources                                       54          610
                                             ------------ ------------
         Net cash used by financing
          activities                             (45,146)     (34,593)
                                             ------------ ------------
Decrease in Cash and Cash Equivalents             (3,463)     (21,805)
Cash and cash equivalents at beginning of
 year                                              4,988       29,274
                                             ------------ ------------
Cash and cash equivalents at end of period   $     1,525  $     7,469
                                             ============ ============

---------------------------------------------
(bb)Reclassified to conform with 2008 presentation.
             CHEMED CORPORATION AND SUBSIDIARY COMPANIES
                  CONSOLIDATING STATEMENT OF INCOME
          FOR THE THREE MONTHS ENDED JUNE 30, 2008 AND 2007
                      (in thousands)(unaudited)

                                                             Chemed
                            VITAS   Roto-Rooter Corporate Consolidated
                          --------- ----------- --------- ------------
  2008
 -------------------------
   Service revenues and
    sales                 $199,048  $   84,108  $      -  $   283,156
                          --------- ----------- --------- ------------
   Cost of services
    provided and goods
    sold                   155,530      45,609         -      201,139
   Selling, general and
    administrative
    expenses (a)            17,273      23,363     5,685       46,321
   Depreciation              3,233       2,065        72        5,370
   Amortization                996          12       481        1,489
                          --------- ----------- --------- ------------
     Total costs and
      expenses             177,032      71,049     6,238      254,319
                          --------- ----------- --------- ------------
     Income/(loss) from
      operations            22,016      13,059    (6,238)      28,837
   Interest expense            (32)        (77)   (1,313)      (1,422)
   Intercompany interest
    income/(expense)         1,062         764    (1,826)           -
   Other income--net           (12)        (15)      913          886
                          --------- ----------- --------- ------------
     Income/(loss) before
      income taxes          23,034      13,731    (8,464)      28,301
   Income taxes (a)         (8,713)     (5,338)    3,000      (11,051)
                          --------- ----------- --------- ------------
     Net income/(loss)    $ 14,321  $    8,393  $ (5,464) $    17,250
                          ========= =========== ========= ============

  2007 (f)
 -------------------------
   Service revenues and
    sales                 $185,701  $   85,686  $      -  $   271,387
                          --------- ----------- --------- ------------
   Cost of services
    provided and goods
    sold                   144,639      44,077         -      188,716
   Selling, general and
    administrative
    expenses (b)            16,260      23,381     6,449       46,090
   Depreciation              2,776       2,109        77        4,962
   Amortization                996          13       285        1,294
                          --------- ----------- --------- ------------
     Total costs and
      expenses             164,671      69,580     6,811      241,062
                          --------- ----------- --------- ------------
     Income/(loss) from
      operations            21,030      16,106    (6,811)      30,325
   Interest expense            (31)        (96)   (3,273)      (3,400)
   Intercompany interest
    income/(expense)         1,731       1,183    (2,914)           -
   Loss on extinguishment
    of debt (b)                  -           -   (13,715)     (13,715)
   Other income--net            57          68     2,063        2,188
                          --------- ----------- --------- ------------
     Income/(loss) before
      income taxes          22,787      17,261   (24,650)      15,398
   Income taxes (b)         (8,633)     (6,770)    9,438       (5,965)
                          --------- ----------- --------- ------------
     Net income/(loss)    $ 14,154  $   10,491  $(15,212) $     9,433
                          ========= =========== ========= ============

  The "Footnotes to Financial Statements" are integral parts of this
   financial information.
             CHEMED CORPORATION AND SUBSIDIARY COMPANIES
                  CONSOLIDATING STATEMENT OF INCOME
           FOR THE SIX MONTHS ENDED JUNE 30, 2008 AND 2007
                      (in thousands)(unaudited)

                                                             Chemed
                            VITAS   Roto-Rooter Corporate Consolidated
                          --------- ----------- --------- ------------
  2008
 ------------------------
   Service revenues and
    sales                 $397,633  $  170,791  $      -  $   568,424
                          --------- ----------- --------- ------------
   Cost of services
    provided and goods
    sold                   314,333      92,618         -      406,951
   Selling, general and
    administrative
    expenses (a)            33,420      47,134     8,494       89,048
   Depreciation              6,513       4,147       148       10,808
   Amortization              1,992          25       922        2,939
                          --------- ----------- --------- ------------
      Total costs and
       expenses            356,258     143,924     9,564      509,746
                          --------- ----------- --------- ------------
      Income/(loss) from
       operations           41,375      26,867    (9,564)      58,678
   Interest expense            (83)       (160)   (2,776)      (3,019)
   Intercompany interest
    income/(expense)         2,427       1,806    (4,233)           -
   Other income--net            11          13      (327)        (303)
                          --------- ----------- --------- ------------
      Income/(loss) before
       income taxes         43,730      28,526   (16,900)      55,356
   Income taxes (a)        (16,111)    (11,038)    5,863      (21,286)
                          --------- ----------- --------- ------------
      Net income/(loss)   $ 27,619  $   17,488  $(11,037) $    34,070
                          ========= =========== ========= ============

  2007 (f)
 ------------------------
   Service revenues and
    sales                 $369,750  $  172,076  $      -  $   541,826
                          --------- ----------- --------- ------------
   Cost of services
    provided and goods
    sold                   286,734      90,229         -      376,963
   Selling, general and
    administrative
    expenses (b)            32,164      46,923    15,073       94,160
   Depreciation              5,314       4,210       153        9,677
   Amortization              1,992          28       589        2,609
   Other operating
    expense/(income) (b)         -           -    (1,138)      (1,138)
                          --------- ----------- --------- ------------
      Total costs and
       expenses            326,204     141,390    14,677      482,271
                          --------- ----------- --------- ------------
      Income/(loss) from
       operations           43,546      30,686   (14,677)      59,555
   Interest expense            (67)       (179)   (6,896)      (7,142)
   Intercompany interest
    income/(expense)         3,443       2,339    (5,782)           -
   Loss on extinguishment
    of debt (b)                  -           -   (13,715)     (13,715)
   Other income--net           (31)        118     2,970        3,057
                          --------- ----------- --------- ------------
      Income/(loss) before
       income taxes         46,891      32,964   (38,100)      41,755
   Income taxes (b)        (17,750)    (12,967)   14,616      (16,101)
                          --------- ----------- --------- ------------
      Net income/(loss)   $ 29,141  $   19,997  $(23,484) $    25,654
                          ========= =========== ========= ============

  The "Footnotes to Financial Statements" are integral parts of this
   financial information.
              CHEMED CORPORATION AND SUBSIDIARY COMPANIES
                    CONSOLIDATING SUMMARY OF EBITDA
           FOR THE THREE MONTHS ENDED JUNE 30, 2008 AND 2007
                       (in thousands)(unaudited)

                                                             Chemed
                            VITAS   Roto-Rooter Corporate Consolidated
                           -------- ----------- --------- ------------
 2008
---------------------------
 Net income/(loss)         $14,321  $    8,393  $ (5,464) $    17,250
 Add/(deduct):
   Interest expense             32          77     1,313        1,422
   Income taxes              8,713       5,338    (3,000)      11,051
   Depreciation              3,233       2,065        72        5,370
   Amortization                996          12       481        1,489
                           -------- ----------- --------- ------------
      EBITDA                27,295      15,885    (6,598)      36,582
 Add/(deduct):
   Legal expenses of OIG
    investigation               57           -         -           57
   Stock option expense          -           -     1,591        1,591
   Advertising cost
    adjustment (c)               -        (255)        -         (255)
   Interest income             (13)        (22)      (71)        (106)
   Intercompany interest
    income/(expense)        (1,062)       (764)    1,826            -
                           -------- ----------- --------- ------------
      Adjusted EBITDA      $26,277  $   14,844  $ (3,252) $    37,869
                           ======== =========== ========= ============

 2007 (f)
---------------------------
 Net income/(loss)         $14,154  $   10,491  $(15,212) $     9,433
 Add/(deduct):
   Interest expense             31          96     3,273        3,400
   Income taxes              8,633       6,770    (9,438)       5,965
   Depreciation              2,776       2,109        77        4,962
   Amortization                996          13       285        1,294
                           -------- ----------- --------- ------------
      EBITDA                26,590      19,479   (21,015)      25,054
 Add/(deduct):
   Long-term incentive
    compensation                 -           -     1,620        1,620
   Legal expenses of OIG
    Investigation               74           -         -           74
   Stock option expense          -           -       897          897
   Loss on extinguishment
    of debt                      -           -    13,715       13,715
   Advertising cost
    adjustment (c)               -         (99)        -          (99)
   Interest income             (66)        (52)     (826)        (944)
   Intercompany interest
    income/(expense)        (1,731)     (1,183)    2,914            -
                           -------- ----------- --------- ------------
      Adjusted EBITDA      $24,867  $   18,145  $ (2,695) $    40,317
                           ======== =========== ========= ============

 The "Footnotes to Financial Statements" are integral parts of this
  financial information.
              CHEMED CORPORATION AND SUBSIDIARY COMPANIES
                    CONSOLIDATING SUMMARY OF EBITDA
            FOR THE SIX MONTHS ENDED JUNE 30, 2008 AND 2007
                       (in thousands)(unaudited)

                                                             Chemed
                            VITAS   Roto-Rooter Corporate Consolidated
                           -------- ----------- --------- ------------
 2008
---------------------------
  Net income/(loss)        $27,619  $   17,488  $(11,037) $    34,070
  Add/(deduct):
      Interest expense          83         160     2,776        3,019
      Income taxes          16,111      11,038    (5,863)      21,286
      Depreciation           6,513       4,147       148       10,808
      Amortization           1,992          25       922        2,939
                           -------- ----------- --------- ------------
        EBITDA              52,318      32,858   (13,054)      72,122
  Add/(deduct):
      Unreserved insurance
       claim                     -         597         -          597
      Legal expenses of
       OIG investigation        42           -         -           42
      Stock option expense       -           -     2,982        2,982
      Advertising cost
       adjustment (c)            -        (825)        -         (825)
      Interest income          (51)        (40)     (352)        (443)
      Intercompany
       interest
       income/(expense)     (2,427)     (1,806)    4,233            -
                           -------- ----------- --------- ------------
        Adjusted EBITDA    $49,882  $   30,784  $ (6,191) $    74,475
                           ======== =========== ========= ============

 2007 (f)
---------------------------
  Net income/(loss)        $29,141  $   19,997  $(23,484) $    25,654
  Add/(deduct):
       Interest expense         67         179     6,896        7,142
       Income taxes         17,750      12,967   (14,616)      16,101
       Depreciation          5,314       4,210       153        9,677
       Amortization          1,992          28       589        2,609
                           -------- ----------- --------- ------------
         EBITDA             54,264      37,381   (30,462)      61,183
  Add/(deduct):
      Long-term incentive
       compensation              -           -     7,067        7,067
      Gain on sale of
       property                  -           -    (1,138)      (1,138)
      Legal expenses of
       OIG investigation       140           -         -          140
      Stock option expense       -           -     1,482        1,482
      Loss on
       extinguishment of
       debt                      -           -    13,715       13,715
      Advertising cost
       adjustment (c)            -        (396)        -         (396)
      Interest income          (79)       (111)   (1,521)      (1,711)
      Intercompany
       interest
       income/(expense)     (3,443)     (2,339)    5,782            -
      Other                      -           -      (467)        (467)
                           -------- ----------- --------- ------------
        Adjusted EBITDA    $50,882  $   34,535  $ (5,542) $    79,875
                           ======== =========== ========= ============

 The "Footnotes to Financial Statements" are integral parts of this
  financial information.
              CHEMED CORPORATION AND SUBSIDIARY COMPANIES
                 RECONCILIATION OF ADJUSTED NET INCOME
       FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2008 AND 2007
           (in thousands, except per share data)(unaudited)


                                  Three Months Ended Six Months Ended
                                       June 30,          June 30,
                                  ------------------ -----------------
                                     2008     2007     2008     2007
                                  ---------- ------- -------- --------
 Net income as reported           $   17,250 $ 9,433 $34,070  $25,654

 Add/(deduct):
    After-tax cost of long-term
     incentive compensation                -   1,013       -    4,427
    After-tax cost of legal
     expenses of OIG investigation        35      46      26       87
    After-tax stock option expense     1,010     570   1,894      941
    After-tax gain on sale of
     property                              -       -       -     (724)
    After-tax other                        -       -       -     (296)
    After-tax cost of loss on
     extinguishment of debt                -   8,726       -    8,726
    Income tax credit related to
     prior years                           -       -    (322)       -
    After-tax unreserved insurance
     cost                                  -       -     358        -
                                  ---------- ------- -------- --------

 Adjusted net income              $   18,295 $19,788 $36,026  $38,815
                                  ========== ======= ======== ========


 Earnings Per Share As Reported
    Net income                    $     0.73 $  0.38 $  1.44  $  1.02
                                  ========== ======= ======== ========
    Average number of shares
     outstanding                      23,486  24,506  23,681   25,108
                                  ========== ======= ======== ========
 Diluted Earnings Per Share As
  Reported
    Net income                    $     0.73 $  0.38 $  1.42  $  1.00
                                  ========== ======= ======== ========
    Average number of shares
     outstanding                      23,759  25,080  24,026   25,684
                                  ========== ======= ======== ========


 Adjusted Earnings Per Share
    Net income                    $     0.78 $  0.81 $  1.52  $  1.55
                                  ========== ======= ======== ========
    Average number of shares
     outstanding                      23,486  24,506  23,681   25,108
                                  ========== ======= ======== ========
 Adjusted Diluted Earnings Per
  Share
    Net income                    $     0.77 $  0.79 $  1.50  $  1.51
                                  ========== ======= ======== ========
    Average number of shares
     outstanding                      23,759  25,080  24,026   25,684
                                  ========== ======= ======== ========

 The "Footnotes to Financial Statements" are integral parts of this
  financial information.
             CHEMED CORPORATION AND SUBSIDIARY COMPANIES
                OPERATING STATISTICS FOR VITAS SEGMENT
      FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2008 AND 2007
                             (unaudited)

                                 Three Months Ended  Six Months Ended
                                      June 30,           June 30,
                                 ------------------ ------------------
OPERATING STATISTICS               2008      2007     2008     2007
                                 --------  -------- ------------------
 Net revenue ($000) (d)
    Homecare                     $144,726  $134,794 $286,343 $266,341
    Inpatient                      24,371    22,745   50,342   46,207
    Continuous care                29,951    28,162   60,948   56,730
                                 --------  -------- -------- --------
      Total before Medicare cap
       allowance                  199,048   185,701  397,633  369,278
    Medicare cap allowance              -         -        -      472
                                 --------  -------- -------- --------
      Total                      $199,048  $185,701 $397,633 $369,750
                                 ========  ======== ======== ========
 Net revenue as a percent of
  total before Medicare cap
  allowance
    Homecare                         72.8%     72.6%    72.0%    72.0%
    Inpatient                        12.2      12.2     12.7     12.5
    Continuous care                  15.0      15.2     15.3     15.4
                                 --------  -------- -------- --------
      Total before Medicare cap
       allowance                    100.0     100.0    100.0     99.9
    Medicare cap allowance              -         -        -      0.1
                                 --------  -------- -------- --------
      Total                         100.0%    100.0%   100.0%   100.0%
                                 ========  ======== ======== ========
 Average daily census ("ADC")
  (days)
    Homecare                        7,347     6,915    7,251    6,851
    Nursing home                    3,570     3,574    3,559    3,574
                                 --------  -------- -------- --------
      Routine homecare             10,917    10,489   10,810   10,425
    Inpatient                         422       413      438      419
    Continuous care                   507       504      521      514
                                 --------  -------- -------- --------
      Total                        11,846    11,406   11,769   11,358
                                 ========  ======== ======== ========

 Total Admissions                  13,956    13,658   29,168   27,768
 Total Discharges                  13,707    13,359   28,704   27,416
 Average length of stay (days)       73.2      76.6     72.3     76.8
 Median length of stay (days)        13.0      13.0     13.0     13.0
 ADC by major diagnosis
    Neurological                     32.1%     33.0%    32.3%    33.2%
    Cancer                           20.0      19.7     20.0     19.7
    Cardio                           12.9      14.6     13.0     14.6
    Respiratory                       6.7       6.9      6.8      6.9
    Other                            28.3      25.8     27.9     25.6
                                 --------  -------- -------- --------
      Total                         100.0%    100.0%   100.0%   100.0%
                                 ========  ======== ======== ========
 Admissions by major diagnosis
    Neurological                     17.7%     18.0%    18.5%    18.6%
    Cancer                           35.7      35.9     34.6     35.0
    Cardio                           12.0      12.9     12.0     13.1
    Respiratory                       7.9       7.7      8.2      7.8
    Other                            26.7      25.5     26.7     25.5
                                 --------  -------- -------- --------
      Total                         100.0%    100.0%   100.0%   100.0%
                                 ========  ======== ======== ========
 Direct patient care margins (e)
    Routine homecare                 51.5%     51.1%    50.5%    50.9%
    Inpatient                        17.8      18.9     18.6     19.5
    Continuous care                  17.6      17.7     17.1     18.9
 Homecare margin drivers
  (dollars per patient day)
    Labor costs                  $  49.72  $  48.96 $  50.98 $  49.04
    Drug costs                       7.74      7.82     7.62     7.99
    Home medical equipment           6.20      5.78     6.19     5.77
    Medical supplies                 2.32      2.11     2.44     2.14
 Inpatient margin drivers
  (dollars per patient day)
    Labor costs                  $ 261.79  $ 262.37 $ 264.06 $ 257.35
 Continuous care margin drivers
  (dollars per patient day)
    Labor costs                  $ 513.89  $ 484.13 $ 511.70 $ 474.21
 Bad debt expense as a percent
  of revenues                         1.0%      0.9%     1.0%     0.9%
 Accounts receivable -- days of
  revenue outstanding                45.3      37.5     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 SIX MONTHS ENDED JUNE 30, 2008 AND 2007
                             (unaudited)

(a) Included in the results of operations for the three and six months
     ended June 30, 2008, are the following significant
     credits/(charges) which may not be indicative of ongoing
     operations (in thousands):

                         Three Months Ended June 30, 2008
                         --------------------------------
                          VITAS   Corporate  Consolidated
                         ------- ----------- ------------
    Selling, general and
     administrative
     expenses
       Stock option
        expense          $    -  $   (1,591) $    (1,591)
       Legal expenses of
        OIG investigation   (57)          -          (57)
                         ------- ----------- ------------
            Pretax impact
             on earnings    (57)     (1,591)      (1,648)
    Income tax benefit on
     the above               22         581          603
                         ------- ----------- ------------
            After-tax
             impact on
             earnings    $  (35) $   (1,010) $    (1,045)
                         ======= =========== ============

                                Six Months Ended June 30, 2008
                         ---------------------------------------------
                          VITAS  Roto-Rooter  Corporate   Consolidated
                         ------- ----------- ------------ ------------
    Cost of services
     provided and goods
     sold
       Unreserved prior-
        year's insurance
        claim            $    -  $     (597) $         -      $  (597)
    Selling, general and
     administrative
     expenses
       Stock option
        expense               -           -       (2,982)      (2,982)
       Legal expenses of
        OIG investigation   (42)          -            -          (42)
                         ------- ----------- ------------ ------------
            Pretax impact
             on earnings    (42)       (597)      (2,982)      (3,621)
    Income tax benefit on
     the above               16         239        1,088        1,343
    Income tax credit
     related to prior-
     years                  322           -            -          322
                         ------- ----------- ------------ ------------
            After-tax
             impact on
             earnings    $  296  $     (358) $    (1,894)     $(1,956)
                         ======= =========== ============ ============

(b) Included in the results of operations for the three and six months
     ended June 30, 2007, are the following significant
     credits/(charges) which may not be indicative of ongoing
     operations (in thousands):

                         Three Months Ended June 30, 2007
                         --------------------------------
                          VITAS   Corporate  Consolidated
                         ------- ----------- ------------
    Selling, general and
     administrative
     expenses
       Long-term
        incentive
        compensation     $    -  $   (1,620) $    (1,620)
       Legal expenses of
        OIG investigation   (74)          -          (74)
       Stock option
        expense               -        (897)        (897)
    Loss on
     extinguishment of
     debt                     -     (13,715)     (13,715)
                         ------- ----------- ------------
            Pretax impact
             on earnings    (74)    (16,232)     (16,306)
    Income tax benefit on
     the above               28       5,923        5,951
                         ------- ----------- ------------
            After-tax
             impact on
             earnings    $  (46) $  (10,309) $   (10,355)
                         ======= =========== ============

                          Six Months Ended June 30, 2007
                         --------------------------------
                          VITAS   Corporate  Consolidated
                         ------- ----------- ------------
    Selling, general and
     administrative
     expenses
       Long-term
        incentive
        compensation     $    -  $   (7,067) $    (7,067)
       Legal expenses of
        OIG investigation  (140)          -         (140)
       Stock option
        expense               -      (1,482)      (1,482)
       Other                  -         467          467
    Other operating
     expenses/(income)
       Gain on sale of
        property              -       1,138        1,138
    Loss on
     extinguishment of
     debt                     -     (13,715)     (13,715)
                         ------- ----------- ------------
            Pretax impact
             on earnings   (140)    (20,659)     (20,799)
    Income tax benefit on
     the above               53       7,585        7,638
                         ------- ----------- ------------
            After-tax
             impact on
             earnings    $  (87) $  (13,074) $   (13,161)
                         ======= =========== ============

(c) Under Generally Accepted Accounting Principles ("GAAP"), the Roto-
     Rooter segment expenses all advertising, including the cost of
     telephone directories, immediately upon the initial release of
     the advertising. Telephone directories are generally in
     circulation 12 months. If a directory is in circulation for a
     time period greater or less than 12 months, the publisher adjusts
     the directory billing for the change in billing period. The
     timing of when a telephone directory is published can and does
     fluctuate significantly on a quarterly basis. This "direct
     expensing" results in significant fluctuations in quarterly
     advertising expense. In the second quarters of 2008 and 2007,
     GAAP advertising expense for Roto-Rooter totaled $5,702,000 and
     $5,449,000, respectively. If the expense of the telephone
     directories were spread over the periods they are in circulation,
     advertising expense for the second quarters of 2008 and 2007
     would total $5,957,000 and $5,548,000, respectively. For the six
     months ended June 30, 2008 and 2007, GAAP advertising expense for
     Roto-Rooter totaled $11,158,000 and $10,642,000, respectively. If
     the expense of the telephone directories were spread over the
     periods they are in circulation, advertising expense for the six
     months ended June 30, 2008 and 2007, would total $11,983,000 and
     $11,038,000, respectively.

(d) VITAS has 5 large (greater than 450 ADC), 17 medium (greater than
     200 but less than 450 ADC) and 24 small (less than 200 ADC)
     hospice programs. There are two programs continuing at June 30,
     2008, with Medicare cap cushion of less than 10% for the 2008
     measurement period.

(e) Amounts exclude indirect patient care and administrative costs, as
     well as Medicare Cap billing limitation.

(f) Reclassified to conform to 2008 presentation.

CONTACT: Chemed Corporation
David P. Williams, 513-762-6901

SOURCE: Chemed Corporation

All information current at time of original publication. Read complete disclaimer for details.
Copyright © 2005, Chemed Corporation. All rights reserved.
Page last modified: 04/18/05