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Chemed Reports Third-Quarter 2008 Results
Increases 2008 Earnings Guidance

CINCINNATI--(BUSINESS WIRE)-- 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, reported financial results for its third quarter ended September 30, 2008, versus the comparable prior-year period, as follows:

Consolidated operating results:

  • Revenue increased 5.8% to $288 million


  • Diluted EPS of $.79


  • Diluted EPS, excluding stock options and certain tax items, of $.90

VITAS segment operating results:

  • Net Patient Revenue of $205 million, up 8.7%


  • Average Daily Census (ADC) of 12,033, up 4.4%


  • Admissions of 13,317, a decline of 0.9%


  • Average Length of Stay in the quarter of 74.1 days


  • Adjusted EBITDA of $31.1 million, an increase of 26.1%


  • Adjusted EBITDA margin of 15.2%

Roto-Rooter segment operating results:

  • Revenue of $83.4 million, a decline of 0.8%


  • Job count of 175,433, a decline of 11.6%


  • Adjusted EBITDA of $13.7 million, a decline of 12.1%


  • Adjusted EBITDA margin of 16.4%

VITAS

Net revenue for VITAS was $205 million in the third quarter of 2008, which is an increase of 8.7% over the prior-year period. This revenue growth was the result of increased ADC of 4.4% and a Medicare price increase of approximately 3.2%. The remaining difference is attributed to revenue mix and the impact of a modest Medicare Cap limitation in the prior year.

Average revenue per patient per day in the quarter was $185.13, which is 3.8% above the prior-year period. Routine home care reimbursement and high acuity care averaged $146.57 and $645.75, respectively, per patient per day in the third quarter of 2008. During the quarter, high acuity days-of-care was 7.7% of total days-of-care. Quarterly high acuity days-of-care averaged between 8.0% and 8.4% in 2007.

VITAS did not have any billing restrictions related to Medicare Cap for its third-quarter 2008 operating activity. As of September 30, 2008, VITAS has not accrued any Medicare billing restrictions for the 2008 or 2007 Cap years. Of VITAS' 36 unique Medicare provider numbers, 30 provider numbers, or 83%, have a Cap cushion greater than 20% for the 2008 Cap year, three provider numbers are between 10% and 20%, and three provider numbers have Cap cushion of less than 10%.

Gross margin in the third quarter of 2008 was 23.6%. This is 190 basis points above the third quarter of 2007, after eliminating the modest impact of Medicare Cap in 2007. This margin increase is a result of improved management in scheduled labor. 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.

Selling, general and administrative expense was $17.1 million in the third quarter of 2008, which is an increase of 9.3% over the prior-year quarter and a 5.7% increase on a year-to-date basis. Adjusted EBITDA totaled $31.1 million, an increase of 26.1% over the prior year and equates to an adjusted EBITDA margin of 15.2%.

Roto-Rooter

Roto-Rooter's plumbing and drain cleaning business generated sales of $83 million for the third quarter of 2008, 0.8% lower than the $84 million reported in the comparable prior-year quarter. Adjusted EBITDA in the third quarter of 2008 totaled $13.7 million, a decrease of 12.1% over the third quarter of 2007, and equated to an adjusted EBITDA margin of 16.4%.

Job count in the third quarter of 2008 declined 11.6% when compared to the prior-year period. Total residential jobs declined 12.0% and consisted of residential plumbing jobs decreasing 10.3% and residential drain cleaning jobs declining 12.9%, when compared to the third quarter of 2007. Residential jobs represent approximately 70% of total job count. Total commercial jobs declined 10.6% with commercial plumbing job count declining 9.6% and commercial drain cleaning decreasing 10.8%, over the prior-year quarter.

The third quarter of 2008 continues to indicate recessionary pressure impacting demand for certain discretionary plumbing and drain cleaning services. This is evidenced by a 13% 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 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 16.9% year-to-date decline in commercial jobs while the Northeast Region had a modest 1.8% decline in commercial volume. Residential demand is also following a similar pattern in the South, with job count declining 12.0% while the remaining regions have experienced a job count decline ranging between 5% and 10%.

Management is in preliminary discussions, as well as final negotiations, to acquire a number of Roto-Rooter franchise territories. This significant increase in activity is attributed to the current state of the capital markets, the potential increase in tax rates and the recessionary difficulties our franchisees are experiencing. The timing or actual completion of these acquisitions cannot be predicted, however, management intends to be highly disciplined in terms of valuation and risk to ensure these acquisitions will be accretive to shareholders.

Chemed Consolidated Debt and Cash Flows

Chemed's long-term debt aggregated $217 million at September 30, 2008, $200 million of which carries an interest rate of 1.875% and is due in May 2014. The remaining debt consists of a bank term loan with a current interest rate of approximately 4.7%. Chemed's total debt divided by the trailing four quarters of Adjusted EBITDA reflects a debt leverage ratio of 1.35.

Chemed has a $175 million revolving credit facility that expires in May 2012. At September 30, 2008, this credit facility had approximately $148 million of undrawn borrowing capacity after deducting for $27 million of letters of credit issued under this facility to secure the Company's workers' compensation insurance. The credit facility carries a varying interest rate at prime or at LIBOR plus a borrowing spread which is currently 100 basis points. Letters of credit issued against the credit facility are charged the LIBOR borrowing spread.

Year-to-date net cash provided from operations aggregated $90 million. Capital expenditures for the first nine month of 2008 aggregated $13.1 million and compares favorably to Chemed's $20.7 million of depreciation and amortization.

Guidance for 2008

VITAS is estimated to generate full-year revenue growth, prior to Medicare Cap, of 8.0% to 8.5%. Admissions are estimated to increase 4% and full-year adjusted EBITDA margin, prior to Medicare Cap, is estimated to be 14.1% to 14.3%. This guidance assumes VITAS will receive a Medicare basket price increase of 2.6% effective October 1, 2008. Full calendar year 2008 Medicare contractual billing limitations are estimated at $1.25 million.

Roto-Rooter is estimated to generate full-year 2008 revenue totaling $340 million to $344 million. Adjusted EBITDA margin for 2008 is estimated in the range of 17.7% to 18.0%. This guidance does not include any Roto-Rooter franchise acquisitions that may be completed in the fourth quarter of 2008.

Chemed's effective tax rate has increased to 42.9% in the third quarter and is estimated at approximately 40.1% for the full-year 2008. This unusually high tax rate is a direct result of the interplay of severe volatility in the stock market as it relates to certain deferred compensation investments and required GAAP tax accounting. This stock market volatility does not have any material impact on Chemed's reported pretax earnings. Excluding the impact of taxes associated with this deferred compensation issue, Chemed's effective tax rate in the third quarter and for the full-year 2008, is estimated at 39%.

Based upon these factors and a full-year average diluted share count of 23.4 million shares, management estimates 2008 earnings per diluted share from continuing operations, excluding noncash expenses for stock options, the tax rate impact from deferred compensation investments and charges or credits not indicative of ongoing operations, will be in the range of $3.35 to $3.40.

Conference Call

Chemed will host a conference call and webcast at 10 a.m., ET, on Wednesday, October 22, 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) 831-6243 for U.S. and Canadian participants and (617) 213-8855 for international participants. The participant passcode is 89856449. 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 56673754. 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   Nine Months Ended
                                 September 30,        September 30,
                               ------------------- -------------------
                                 2008      2007      2008      2007
                               --------- --------- --------- ---------
Continuing Operations
      Service revenues and
       sales                   $288,312  $272,503  $856,736  $814,329
                               --------- --------- --------- ---------
      Cost of services
       provided and goods sold
       (aa)                     202,446   192,882   609,397   569,845
      Selling, general and
       administrative expenses
       (aa)                      44,022    42,526   133,070   136,686
      Depreciation                5,441     5,220    16,249    14,897
      Amortization                1,494     1,292     4,433     3,901
      Other operating
       expense/(income) (aa)          -         -         -    (1,138)
                               --------- --------- --------- ---------
           Total costs and
            expenses            253,403   241,920   763,149   724,191
                               --------- --------- --------- ---------
           Income from
            operations           34,909    30,583    93,587    90,138
      Interest expense           (1,570)   (2,515)   (4,589)   (9,657)
      Loss on extinguishment
       of debt (aa)                   -       (83)        -   (13,798)
      Other income--net          (1,908)       11    (2,211)    3,068
                               --------- --------- --------- ---------
           Income before
            income taxes         31,431    27,996    86,787    69,751
      Income taxes (aa)         (13,483)  (11,080)  (34,769)  (27,181)
                               --------- --------- --------- ---------
           Income from
            continuing
            operations           17,948    16,916    52,018    42,570
Discontinued Operations (bb)          -     1,201         -     1,201
                               --------- --------- --------- ---------
Net Income                     $ 17,948  $ 18,117  $ 52,018  $ 43,771
                               ========= ========= ========= =========

Earnings Per Share
      Income from continuing
       operations              $   0.80  $   0.71  $   2.23  $   1.72
                               ========= ========= ========= =========
      Net income               $   0.80  $   0.76  $   2.23  $   1.77
                               ========= ========= ========= =========
      Average number of shares
       outstanding               22,503    23,933    23,285    24,711
                               ========= ========= ========= =========
Diluted Earnings Per Share
      Income from continuing
       operations              $   0.79  $   0.69  $   2.20  $   1.69
                               ========= ========= ========= =========
      Net income               $   0.79  $   0.74  $   2.20  $   1.73
                               ========= ========= ========= =========
      Average number of shares
       outstanding               22,818    24,466    23,620    25,249
                               ========= ========= ========= =========

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

                               Three Months Ended   Nine Months Ended
                                  September 30,       September 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   (2,102)   (1,592)   (5,084)   (3,074)
          Costs associated
           with OIG
           investigation             (2)      (48)      (44)     (188)
          Long-term incentive
           compensation               -         -         -    (7,067)
          Other                       -         -         -       467
     Other operating
      expense/(income):
          Gain on sale of
           property                   -         -         -     1,138
     Loss on extinguishment
      of debt                         -       (83)        -   (13,798)
                               --------- --------- --------- ---------
              Pretax impact on
               earnings          (2,104)   (1,723)   (5,725)  (22,522)
     Income tax
      benefit/(charge) on the
      above                         769       630     2,112     8,268
     Income tax impact of non-
      deductible market losses
      on investments of
      deferred compensation
      trusts                     (1,237)     (123)   (1,237)     (123)
      Income tax credit
       related to prior years         -         -       322         -
                               --------- --------- --------- ---------
              After-tax
               impact on
               earnings        $ (2,572) $ (1,216) $ (4,528) $(14,377)
                               ========= ========= ========= =========

(bb)Discontinued operations represents accrual adjustments related to
     VITAS' Phoenix operations, discontinued in 2006.

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

                                                     September 30,
                                                 ---------------------
                                                    2008    2007 (cc)
                                                 ---------- ----------
Assets
     Current assets
        Cash and cash equivalents                $   6,804  $  16,730
        Accounts receivable less allowances         88,206     79,915
        Inventories                                  7,494      6,824
        Current deferred income taxes               15,500     20,344
        Prepaid expenses and other current
         assets                                      7,702      6,983
                                                 ---------- ----------
            Total current assets                   125,706    130,796
     Investments of deferred compensation plans
      held in trust                                 28,897     28,824
     Notes receivable                                    -     14,701
     Properties and equipment, at cost less
      accumulated depreciation                      70,970     73,285
     Identifiable intangible assets less
      accumulated amortization                      62,152     66,186
     Goodwill                                      439,909    436,262
     Other assets                                   16,042     16,382
                                                 ---------- ----------
                 Total Assets                    $ 743,676  $ 766,436
                                                 ========== ==========


Liabilities
     Current liabilities
        Accounts payable                         $  46,187  $  44,586
        Current portion of long-term debt           10,166     10,161
        Income taxes                                 2,736      9,854
        Accrued insurance                           34,567     37,725
        Accrued compensation                        38,385     37,147
        Other current liabilities                   13,412     20,972
                                                 ---------- ----------
            Total current liabilities              145,453    160,445
     Deferred income taxes                           4,849      3,370
     Long-term debt                                207,070    224,735
     Deferred compensation liabilities              29,133     28,407
     Other liabilities                               6,123      5,818
                                                 ---------- ----------
                 Total Liabilities                 392,628    422,775
                                                 ---------- ----------

Stockholders' Equity
     Capital stock                                  29,446     29,206
     Paid-in capital                               277,602    264,374
     Retained earnings                             326,002    259,578
     Treasury stock, at cost                      (284,436)  (211,959)
     Deferred compensation payable in Company
      stock                                          2,434      2,462
                                                 ---------- ----------
                 Total Stockholders' Equity        351,048    343,661
                                                 ---------- ----------
                 Total Liabilities and
                  Stockholders' Equity           $ 743,676  $ 766,436
                                                 ========== ==========

Book Value Per Share                             $   15.69  $   14.36
                                                 ========== ==========

------------------------------------------------
(cc) Reclassified to conform to 2007 presentation.

             CHEMED CORPORATION AND SUBSIDIARY COMPANIES
            UNAUDITED CONSOLIDATED STATEMENT OF CASH FLOWS
                            (in thousands)

                                                   Nine Months Ended
                                                     September 30,
                                                  --------------------
                                                    2008    2007 (cc)
                                                  --------- ----------
 Cash Flows from Operating Activities
  Net income                                      $ 52,018  $  43,771
  Adjustments to reconcile net income to net
   cash provided by operating activities:
    Depreciation and amortization                   20,682     18,798
    Provision for uncollectible accounts
     receivable                                      7,101      6,025
    Stock option expense                             5,084      3,074
    Provision for deferred income taxes             (2,257)    (1,388)
    Amortization of debt issuance costs                760        970
    Discontinued operations                              -     (1,201)
    Write off unamortized debt issuance costs            -      7,235
    Noncash long-term incentive compensation             -      6,154
    Changes in operating assets and liabilities,
     excluding amounts acquired in business
     combinations:
      Decrease in accounts receivable                5,846      4,796
      Increase in inventories                         (851)      (246)
      Decrease in prepaid expenses and other
       current assets                                2,804      2,964
      Decrease in accounts payable and other
       current liabilities                            (875)    (9,873)
      Increase/(decrease) in income taxes             (329)    11,825
      Increase in other assets                        (547)    (3,109)
      Increase in other liabilities                    674      3,908
    Excess tax benefit on share-based
     compensation                                   (1,234)    (2,506)
    Other sources/(uses)                               654     (1,054)
                                                  --------- ----------
     Net cash provided by operating activities      89,530     90,143
                                                  --------- ----------
 Cash Flows from Investing Activities
  Capital expenditures                             (13,103)   (20,145)
  Net uses from disposals of discontinued
   operations                                        8,980     (6,121)
  Business combinations, net of cash acquired       (1,578)    (1,079)
  Proceeds from sales of property and equipment        200      3,072
  Other uses                                          (421)    (1,415)
                                                  --------- ----------
    Net cash used by investing activities           (5,922)   (25,688)
                                                  --------- ----------
 Cash Flows from Financing Activities
  Purchases of treasury stock                      (69,136)  (130,873)
  Repayment of long-term debt                       (7,595)  (215,644)
  Dividends paid                                    (4,352)    (4,441)
  Increase in cash overdraft payable                (1,913)     2,554
  Excess tax benefit on share-based compensation     1,234      2,506
  Issuance of capital stock                            290      2,429
  Proceeds from issuance of long-term debt               -    300,000
  Purchases of note hedges                               -    (55,093)
  Proceeds from issuance of warrants                     -     27,614
  Debt issuance costs                                    -     (6,887)
  Other sources                                       (320)       836
                                                  --------- ----------
    Net cash used by financing activities          (81,792)   (76,999)
                                                  --------- ----------
 Increase/(Decrease) in Cash and Cash
  Equivalents                                        1,816    (12,544)
 Cash and cash equivalents at beginning of year      4,988     29,274
                                                  --------- ----------
 Cash and cash equivalents at end of period       $  6,804  $  16,730
                                                  ========= ==========

--------------------------------------------------
(cc) Reclassified to conform to 2008 presentation.

             CHEMED CORPORATION AND SUBSIDIARY COMPANIES
                  CONSOLIDATING STATEMENT OF INCOME
        FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2008 AND 2007
                      (in thousands)(unaudited)

                                                             Chemed
                          VITAS    Roto-Rooter  Corporate Consolidated
                      ------------ -----------  --------- ------------
2008
---------------------
 Service revenues and
  sales                $  204,956  $  83,356    $      -  $   288,312
                       ----------- -----------  --------- ------------
 Cost of services
  provided and goods
  sold                    156,685     45,761           -      202,446
 Selling, general and
  administrative
  expenses (a)             17,100     23,576       3,346       44,022
 Depreciation               3,256      2,102          83        5,441
 Amortization                 996         11         487        1,494
                       ----------- -----------  --------- ------------
        Total costs
         and expenses     178,037     71,450       3,916      253,403
                       ----------- -----------  --------- ------------
        Income/(loss)
         from
         operations        26,919     11,906      (3,916)      34,909
 Interest expense             (35)       (56)     (1,479)      (1,570)
 Intercompany interest
  income/(expense)          1,435      1,026      (2,461)           -
 Other income--net            (59)        45      (1,894)      (1,908)
                       ----------- -----------  --------- ------------
        Income/(loss)
         before income
         taxes             28,260     12,921      (9,750)      31,431
 Income taxes (a)         (10,699)    (4,964)      2,180      (13,483)
                       ----------- -----------  --------- ------------
        Net
         income/(loss) $   17,561  $   7,957    $ (7,570) $    17,948
                       =========== ===========  ========= ============

2007 (f)
---------------------
 Service revenues and
  sales                $  188,474  $  84,029    $      -  $   272,503
                       ----------- -----------  --------- ------------
 Cost of services
  provided and goods
  sold                    148,225     44,657           -      192,882
 Selling, general and
  administrative
  expenses (b)             15,651     23,272       3,603       42,526
 Depreciation               3,063      2,080          77        5,220
 Amortization                 996         13         283        1,292
                       ----------- -----------  --------- ------------
        Total costs
         and expenses     167,935     70,022       3,963      241,920
                       ----------- -----------  --------- ------------
        Income/(loss)
         from
         operations        20,539     14,007      (3,963)      30,583
 Interest expense             (36)      (317)     (2,162)      (2,515)
 Intercompany interest
  income/(expense)          1,909      1,337      (3,246)           -
 Loss on
  extinguishment of
  debt (b)                      -          -         (83)         (83)
 Other income--net             (3)       226        (212)          11
                       ----------- -----------  --------- ------------
        Income/(loss)
         before income
         taxes             22,409     15,253      (9,666)      27,996
 Income taxes (b)          (8,488)    (6,017)      3,425      (11,080)
                       ----------- -----------  --------- ------------
        Income/(loss)
         from
         continuing
         operations        13,921      9,236      (6,241)      16,916
 Discontinued
  operations, net of
  income taxes              1,201          -           -        1,201
                       ----------- -----------  --------- ------------
        Net
         income/(loss) $   15,122  $   9,236    $ (6,241) $    18,117
                       =========== ===========  ========= ============

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



             CHEMED CORPORATION AND SUBSIDIARY COMPANIES
                  CONSOLIDATING STATEMENT OF INCOME
        FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2008 AND 2007
                      (in thousands)(unaudited)

                                                             Chemed
                          VITAS    Roto-Rooter  Corporate Consolidated
                      ------------ -----------  --------- ------------
2008
---------------------
 Service revenues and
  sales                $  602,589  $ 254,147    $      -  $   856,736
                       ----------- -----------  --------- ------------
 Cost of services
  provided and goods
  sold                    471,018    138,379           -      609,397
 Selling, general and
  administrative
  expenses (a)             50,520     70,710      11,840      133,070
 Depreciation               9,769      6,249         231       16,249
 Amortization               2,988         36       1,409        4,433
                       ----------- -----------  --------- ------------
        Total costs
         and expenses     534,295    215,374      13,480      763,149
                       ----------- -----------  --------- ------------
        Income/(loss)
         from
         operations        68,294     38,773     (13,480)      93,587
 Interest expense            (118)      (216)     (4,255)      (4,589)
 Intercompany interest
  income/(expense)          3,862      2,832      (6,694)           -
 Other income--net            (48)        58      (2,221)      (2,211)
                       ----------- -----------  --------- ------------
        Income/(loss)
         before income
         taxes             71,990     41,447     (26,650)      86,787
 Income taxes (a)         (26,810)   (16,002)      8,043      (34,769)
                       ----------- -----------  --------- ------------
        Net
         income/(loss) $   45,180  $  25,445    $(18,607) $    52,018
                       =========== ===========  ========= ============

2007 (f)
---------------------
 Service revenues and
  sales                $  558,224  $ 256,105    $      -  $   814,329
                       ----------- -----------  --------- ------------
 Cost of services
  provided and goods
  sold                    434,959    134,886           -      569,845
 Selling, general and
  administrative
  expenses (b)             47,815     70,195      18,676      136,686
 Depreciation               8,377      6,290         230       14,897
 Amortization               2,988         41         872        3,901
 Other operating
  expense/(income) (b)          -          -      (1,138)      (1,138)
                       ----------- -----------  --------- ------------
        Total costs
         and expenses     494,139    211,412      18,640      724,191
                       ----------- -----------  --------- ------------
        Income/(loss)
         from
         operations        64,085     44,693     (18,640)      90,138
 Interest expense            (103)      (496)     (9,058)      (9,657)
 Intercompany interest
  income/(expense)          5,352      3,676      (9,028)           -
 Loss on
  extinguishment of
  debt (b)                      -          -     (13,798)     (13,798)
 Other income--net            (34)       344       2,758        3,068
                       ----------- -----------  --------- ------------
        Income/(loss)
         before income
         taxes             69,300     48,217     (47,766)      69,751
 Income taxes (b)         (26,238)   (18,984)     18,041      (27,181)
                       ----------- -----------  --------- ------------
        Income/(loss)
         from
         continuing
         operations        43,062     29,233     (29,725)      42,570
 Discontinued
  operations, net of
  income taxes              1,201          -           -        1,201
                       ----------- -----------  --------- ------------
        Net
         income/(loss) $   44,263  $  29,233    $(29,725) $    43,771
                       =========== ===========  ========= ============

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 SEPTEMBER 30, 2008 AND 2007
                      (in thousands)(unaudited)


                                                             Chemed
                            VITAS   Roto-Rooter Corporate Consolidated
                           -------- ----------- --------- ------------
2008
--------------------------
 Net income/(loss)         $17,561  $    7,957  $ (7,570) $    17,948
 Add/(deduct):
   Interest expense             35          56     1,479        1,570
   Income taxes             10,699       4,964    (2,180)      13,483
   Depreciation              3,256       2,102        83        5,441
   Amortization                996          11       487        1,494
                           -------- ----------- --------- ------------
                  EBITDA    32,547      15,090    (7,701)      39,936
 Add/(deduct):
   Legal expenses of OIG
    investigation                2           -         -            2
   Stock option expense          -           -     2,102        2,102
   Advertising cost
    adjustment (c)               -        (351)        -         (351)
   Interest income             (58)        (51)      (50)        (159)
   Intercompany interest
    income/(expense)        (1,435)     (1,026)    2,461            -
                           -------- ----------- --------- ------------
                  Adjusted
                   EBITDA  $31,056  $   13,662  $ (3,188) $    41,530
                           ======== =========== ========= ============

2007 (f)
--------------------------
 Net income/(loss)         $15,122  $    9,236  $ (6,241) $    18,117
 Add/(deduct):
   Discontinued
    operations, net of
    income taxes            (1,201)          -         -       (1,201)
   Interest expense             36         317     2,162        2,515
   Income taxes              8,488       6,017    (3,425)      11,080
   Depreciation              3,063       2,080        77        5,220
   Amortization                996          13       283        1,292
                           -------- ----------- --------- ------------
                  EBITDA    26,504      17,663    (7,144)      37,023
 Add/(deduct):
   Legal expenses of OIG
    Investigation               48           -         -           48
   Stock option expense          -           -     1,592        1,592
   Loss on extinguishment
    of debt                      -           -        83           83
   Advertising cost
    adjustment (c)               -        (535)        -         (535)
   Interest income             (11)       (247)     (639)        (897)
   Intercompany interest
    income/(expense)        (1,909)     (1,337)    3,246            -
                           -------- ----------- --------- ------------
                  Adjusted
                   EBITDA  $24,632  $   15,544  $ (2,862) $    37,314
                           ======== =========== ========= ============

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



             CHEMED CORPORATION AND SUBSIDIARY COMPANIES
                   CONSOLIDATING SUMMARY OF EBITDA
        FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2008 AND 2007
                      (in thousands)(unaudited)


                                                             Chemed
                            VITAS   Roto-Rooter Corporate Consolidated
                           -------- ----------- --------- ------------
2008
--------------------------
 Net income/(loss)         $45,180  $   25,445  $(18,607) $    52,018
 Add/(deduct):
   Interest expense            118         216     4,255        4,589
   Income taxes             26,810      16,002    (8,043)      34,769
   Depreciation              9,769       6,249       231       16,249
   Amortization              2,988          36     1,409        4,433
                           -------- ----------- --------- ------------
                  EBITDA    84,865      47,948   (20,755)     112,058
 Add/(deduct):
   Unreserved insurance
    claim                        -         597         -          597
   Legal expenses of OIG
    investigation               44           -         -           44
   Stock option expense          -           -     5,084        5,084
   Advertising cost
    adjustment (c)               -      (1,176)        -       (1,176)
   Interest income            (109)        (91)     (402)        (602)
   Intercompany interest
    income/(expense)        (3,862)     (2,832)    6,694            -
                           -------- ----------- --------- ------------
                  Adjusted
                   EBITDA  $80,938  $   44,446  $ (9,379) $   116,005
                           ======== =========== ========= ============

2007 (f)
--------------------------
 Net income/(loss)         $44,263  $   29,233  $(29,725) $    43,771
 Add/(deduct):
   Discontinued
    operations, net of
    income taxes            (1,201)          -         -       (1,201)
   Interest expense            103         496     9,058        9,657
   Income taxes             26,238      18,984   (18,041)      27,181
   Depreciation              8,377       6,290       230       14,897
   Amortization              2,988          41       872        3,901
                           -------- ----------- --------- ------------
                  EBITDA    80,768      55,044   (37,606)      98,206
 Add/(deduct):
   Long-term incentive
    compensation                 -           -     7,067        7,067
   Gain on sale of
    property                     -           -    (1,138)      (1,138)
   Legal expenses of OIG
    investigation              188           -         -          188
   Stock option expense          -           -     3,074        3,074
   Loss on extinguishment
    of debt                      -           -    13,798       13,798
   Advertising cost
    adjustment (c)               -        (931)        -         (931)
   Interest income             (90)       (358)   (2,160)      (2,608)
   Intercompany interest
    income/(expense)        (5,352)     (3,676)    9,028            -
   Other                         -           -      (467)        (467)
                           -------- ----------- --------- ------------
                  Adjusted
                   EBITDA  $75,514  $   50,079  $ (8,404) $   117,189
                           ======== =========== ========= ============

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 NINE MONTHS ENDED SEPTEMBER 30, 2008 AND 2007
           (in thousands, except per share data)(unaudited)


                                  Three Months Ended Nine Months Ended
                                    September 30,      September 30,
                                  ------------------ -----------------
                                    2008      2007     2008     2007
                                  --------- -------- -------- --------
 Net income as reported           $  17,948 $18,117  $52,018  $43,771

 Add/(deduct):
   Discontinued operations                -  (1,201)       -   (1,201)
   After-tax cost of long-term
    incentive compensation                -       -        -    4,427
   After-tax cost of legal
    expenses of OIG investigation         1      30       27      117
   After-tax stock option expense     1,334   1,011    3,228    1,952
   After-tax gain on sale of
    property                              -       -        -     (724)
   After-tax other                        -       -        -     (296)
   After-tax loss on
    extinguishment of debt                -      52        -    8,778
   Income tax impact of non-
    deductible market losses on
    investments of deferred
    compensation trusts               1,237     123    1,237      123
   Income tax credit related to
    prior years                           -       -     (322)       -
   After-tax unreserved insurance
    cost                                  -       -      358        -
                                  --------- -------- -------- --------

 Adjusted net income              $  20,520 $18,132  $56,546  $56,947
                                  ========= ======== ======== ========


 Earnings Per Share As Reported
   Net income                     $    0.80 $  0.76  $  2.23  $  1.77
                                  ========= ======== ======== ========
   Average number of shares
    outstanding                      22,503  23,933   23,285   24,711
                                  ========= ======== ======== ========
 Diluted Earnings Per Share As
  Reported
   Net income                     $    0.79 $  0.74  $  2.20  $  1.73
                                  ========= ======== ======== ========
   Average number of shares
    outstanding                      22,818  24,466   23,620   25,249
                                  ========= ======== ======== ========


 Adjusted Earnings Per Share
   Net income                     $    0.91 $  0.76  $  2.43  $  2.30
                                  ========= ======== ======== ========
   Average number of shares
    outstanding                      22,503  23,933   23,285   24,711
                                  ========= ======== ======== ========
 Adjusted Diluted Earnings Per
  Share
   Net income                     $    0.90 $  0.74  $  2.39  $  2.26
                                  ========= ======== ======== ========
   Average number of shares
    outstanding                      22,818  24,466   23,620   25,249
                                  ========= ======== ======== ========

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 NINE MONTHS ENDED SEPTEMBER 30, 2008 AND 2007
                             (unaudited)

                              Three Months Ended   Nine Months Ended
                                 September 30,       September 30,
                              ------------------- -------------------
OPERATING STATISTICS            2008      2007      2008      2007
                              --------  --------- --------  ---------
Net revenue ($000) (d)
 Homecare                     $149,732  $137,406  $436,075  $403,748
 Inpatient                      24,155    22,861    74,497    69,068
 Continuous care                31,069    28,921    92,017    85,650
                              --------  --------- --------  ---------
  Total before Medicare cap
   allowance                   204,956   189,188   602,589   558,466
 Medicare cap allowance              -      (714)        -      (242)
                              --------  --------- --------  ---------
  Total                       $204,956  $188,474  $602,589  $558,224
                              ========  ========= ========  =========
Net revenue as a percent of
 total before Medicare cap
 allowance
 Homecare                         73.0 %    72.6 %    72.4 %    72.3 %
 Inpatient                        11.8      12.1      12.3      12.4
 Continuous care                  15.2      15.3      15.3      15.3
                              --------  --------- --------  ---------
  Total before Medicare cap
   allowance                     100.0     100.0     100.0     100.0
 Medicare cap allowance              -      (0.4)        -         -
                              --------  --------- --------  ---------
  Total                          100.0 %    99.6 %   100.0 %   100.0 %
                              ========  ========= ========  =========
Average daily census ("ADC")
 (days)
 Homecare                        7,534     7,039     7,346     6,914
 Nursing home                    3,570     3,567     3,562     3,572
                              --------  --------- --------  ---------
  Routine homecare              11,104    10,606    10,908    10,486
 Inpatient                         410       412       429       417
 Continuous care                   519       511       521       512
                              --------  --------- --------  ---------
  Total                         12,033    11,529    11,858    11,415
                              ========  ========= ========  =========

Total Admissions                13,317    13,436    42,485    41,204
Total Discharges                13,279    13,403    41,992    40,823
Average length of stay (days)     74.1      76.7      72.9      76.7
Median length of stay (days)      15.0      14.0      14.0      13.0
ADC by major diagnosis
 Neurological                     32.5 %    32.8 %    32.5 %    33.1 %
 Cancer                           19.9      20.3      19.9      19.9
 Cardio                           12.8      14.2      12.9      14.5
 Respiratory                       6.5       6.8       6.7       6.9
 Other                            28.3      25.9      28.0      25.6
                              --------  --------- --------  ---------
  Total                          100.0 %   100.0 %   100.0 %   100.0 %
                              ========  ========= ========  =========
Admissions by major diagnosis
 Neurological                     18.2 %    18.2 %    18.4 %    18.5 %
 Cancer                           37.6      37.5      35.6      35.9
 Cardio                           11.3      12.1      11.8      12.8
 Respiratory                       7.0       7.1       7.8       7.6
 Other                            25.9      25.1      26.4      25.2
                              --------  --------- --------  ---------
  Total                          100.0 %   100.0 %   100.0 %   100.0 %
                              ========  ========= ========  =========
Direct patient care margins
 (e)
 Routine homecare                 52.4 %    51.0 %    51.2 %    50.9 %
 Inpatient                        16.6      15.9      17.9      18.3
 Continuous care                  18.0      16.9      17.4      18.2
Homecare margin drivers
 (dollars per patient day)
 Labor costs                  $  48.59  $  48.86  $  50.16  $  48.98
 Drug costs                       7.85      7.88      7.70      7.95
 Home medical equipment           6.28      5.65      6.22      5.73
 Medical supplies                 2.17      2.22      2.35      2.16
Inpatient margin drivers
 (dollars per patient day)
 Labor costs                  $ 262.98  $ 274.64  $ 263.71  $ 263.11
Continuous care margin
 drivers (dollars per patient
 day)
 Labor costs                  $ 512.04  $ 490.94  $ 511.81  $ 479.83
Bad debt expense as a percent
 of revenues                       1.0 %     0.9 %     1.0 %     0.9 %
 Accounts receivable -- days
  of revenue outstanding          46.9      39.6      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, 2008 AND 2007
                             (unaudited)

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


                                Three Months Ended
                                 September 30, 2008
                         ---------------------------------
                         VITAS   Corporate    Consolidated
                         ------ -----------  -------------
   Selling, general and
    administrative
    expenses
      Stock option
       expense           $   -  $   (2,102)  $    (2,102)
      Legal expenses of
       OIG investigation    (2)          -            (2)
                         ------ -----------  ------------
         Pretax impact
          on earnings       (2)     (2,102)       (2,104)
   Income tax
    benefit/(charge) on
    the above                1         768           769
   Income tax impact of
    non-deductible
    market losses on
    investments of
    deferred
    compensation trusts      -      (1,237)       (1,237)
                         ------ -----------  ------------
         After-tax
          impact on
          earnings       $  (1) $   (2,571)  $    (2,572)
                         ====== ===========  ============

                                       Nine Months Ended
                                       September 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               -           -        (5,084)      (5,084)
      Legal expenses of
       OIG investigation   (44)          -             -          (44)
                         ------ -----------  ------------ ------------
         Pretax impact
          on earnings      (44)       (597)       (5,084)      (5,725)
   Income tax
    benefit/(charge) on
    the above               17         239         1,856        2,112
   Income tax impact of
    non-deductible
    market losses on
    investments of
    deferred
    compensation trusts      -           -        (1,237)      (1,237)
   Income tax credit
    related to prior
    years                  322           -             -          322
                         ------ -----------  ------------ ------------
         After-tax
          impact on
          earnings       $ 295  $     (358)  $    (4,465) $    (4,528)
                         ====== ===========  ============ ============

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


                                Three Months Ended
                                 September 30, 2007
                         ---------------------------------
                         VITAS   Corporate    Consolidated
                         ------ -----------  -------------
   Selling, general and
    administrative
    expenses
      Legal expenses of
       OIG investigation $ (48) $        -   $       (48)
      Stock option
       expense               -      (1,592)       (1,592)
   Loss on
    extinguishment of
    debt                     -         (83)          (83)
                         ------ -----------  ------------
         Pretax impact
          on earnings      (48)     (1,675)       (1,723)
   Income tax
    benefit/(charge) on
    the above               18         612           630

   Income tax impact of
    non-deductible
    market losses on
    investments of
    deferred
    compensation trusts      -        (123)         (123)
                         ------ -----------  ------------
         After-tax
          impact on
          earnings       $ (30) $   (1,186)  $    (1,216)
                         ====== ===========  ============

                                Nine Months Ended
                                September 30, 2007
                         --------------------------------
                         VITAS   Corporate    Consolidated
                         ------ -----------  -------------
   Selling, general and
    administrative
    expenses
      Long-term
       incentive
       compensation      $   -  $   (7,067)  $    (7,067)
      Legal expenses of
       OIG investigation  (188)          -          (188)
      Stock option
       expense               -      (3,074)       (3,074)
      Other                  -         467           467
   Other operating
    expenses/(income)
      Gain on sale of
       property              -       1,138         1,138
   Loss on
    extinguishment of
    debt                     -     (13,798)      (13,798)
                         ------ -----------  ------------
         Pretax impact
          on earnings     (188)    (22,334)      (22,522)
   Income tax
    benefit/(charge) on
    the above               71       8,197         8,268

   Income tax impact of
    non-deductible
    market losses on
    investments of
    deferred
    compensation trusts      -        (123)         (123)
                         ------ -----------  ------------
         After-tax
          impact on
          earnings       $(117) $  (14,260)  $   (14,377)
                         ====== ===========  ============

(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 third quarters of 2008 and 2007, GAAP advertising
    expense for Roto-Rooter totaled $5,498,000 and $5,008,000,
    respectively. If the expense of the telephone directories were
    spread over the periods they are in circulation, advertising
    expense for the third quarters of 2008 and 2007 would total
    $5,849,000 and $5,543,000, respectively. For the nine months ended
    September 30, 2008 and 2007, GAAP advertising expense for Roto-
    Rooter totaled $16,656,000 and $15,650,000, respectively. If the
    expense of the telephone directories were spread over the periods
    they are in circulation, advertising expense for the nine months
    ended September 30, 2008 and 2007, would total $17,832,000 and
    $16,581,000, respectively.

(d)VITAS has 6 large (greater than 450 ADC), 17 medium (greater than
    200 but less than 450 ADC) and 23 small (less than 200 ADC)
    hospice programs. There are three programs as of September 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.

Source: Chemed Corporation