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

Consolidated operating results:

• Revenue increased 7.2% to $474 million
• GAAP Diluted Earnings-per-Share (EPS) of $3.08
• Adjusted Diluted EPS of $3.36, an increase of 19.6%

VITAS segment operating results:

• Net Patient Revenue of $313 million, an increase of 5.4%
• Average Daily Census (ADC) of 18,681, an increase of 5.9%
• Admissions of 17,491, an increase of 3.8%
• Net Income, excluding certain discrete items, of $38.6 million, an increase of 21.5%
• Adjusted EBITDA, excluding cap, of $54.8 million, an increase of 25.6%

Roto-Rooter segment operating results:

• Revenue of $161 million, an increase of 10.9%
• Net Income, excluding certain discrete items, of $27.5 million, an increase of 8.7%
• Adjusted EBITDA of $38.8 million, an increase of 6.2%
• Adjusted EBITDA margin of 24.1%, a decrease of 107-basis points

VITAS

VITAS net revenue was $313 million in the second quarter of 2019, which is an increase of 5.4%, when compared to the prior-year period. This revenue increase is comprised primarily of a geographically weighted average Medicare reimbursement rate increase of approximately 0.5% and a 5.9% increase in days-of-care. This growth was partially offset by a Medicare Cap billing limitation that reduced revenue growth by 0.9% as well as the combination of acuity mix shift, fluctuations in net room and board and contractual adjustments, the combination of which negatively impacted revenue growth approximately 0.3%, when compared to the prior-year period.

In the second quarter of 2019, VITAS accrued $3.2 million in Medicare Cap billing limitations, of which $847,000 relates to prior years Medicare Cap redeterminations. At June 30, 2019, VITAS had 30 Medicare provider numbers, three of which have an estimated 2019 calendar year Medicare Cap billing limitation of approximately $9 million.

Of VITAS’ 30 Medicare provider numbers, on a trailing 12-month basis, 23 provider numbers have a Medicare Cap cushion of 10% or greater, two provider numbers have a cap cushion between 5% and 10%, two provider numbers have a cap cushion between 0% and 5%, and three provider numbers have a Medicare Cap billing limitation.

Average revenue per patient per day in the quarter was $189.64, which is 0.5% above the prior-year period. Reimbursement for routine home care and high acuity care averaged $165.00 and $751.12, respectively. During the quarter, high acuity days-of-care were 4.2% of total days of care, 7-basis points less than the prior-year quarter.

The second quarter of 2019 gross margin, excluding Medicare Cap, was 23.7%, which is a 208-basis point increase when compared to the second quarter of 2018.

Selling, general and administrative expense was $21.7 million in the second quarter of 2019, which is an increase of 4.7% compared to the prior-year quarter. Adjusted EBITDA, excluding Medicare Cap, totaled $54.8 million in the quarter, an increase of 25.6%. Adjusted EBITDA margin, excluding Medicare Cap, was 17.3% in the quarter, which is a 267-basis point increase when compared to the prior-year period.

Roto-Rooter

Roto-Rooter generated quarterly revenue of $161 million for the second quarter of 2019, an increase of $15.8 million, or 10.9%, over the prior-year quarter. Revenue from the water restoration service segment totaled $28.2 million, an increase of 14.0%, when compared to the prior-year quarter. Approximately 90% of the water restoration revenue is generated from residential customers and the remaining 10% is generated from commercial accounts.

Commercial drain cleaning revenue increased 9.9%, commercial plumbing and excavation increased 11.9% and commercial water restoration increased 16.2%. Overall, commercial revenue increased 11.0%.

Residential drain cleaning increased 7.7%, plumbing and excavation increased 9.6% and residential water restoration increased 13.8%. Aggregate residential sales increased 9.9%.

Roto-Rooter’s gross margin in the quarter was 48.7%, a 121-basis point decline when compared to the second quarter of 2018. Adjusted EBITDA in the second quarter of 2019 totaled $38.8 million, an increase of 6.2%. The Adjusted EBITDA margin in the quarter was 24.1% which is a 107-basis point decline over the prior year.

Chemed Consolidated

As of June 30, 2019, Chemed had total cash and cash equivalents of $3 million and debt of $85 million.

In June 2018, Chemed entered into a five-year Amended and Restated Credit Agreement that consists of a $450 million revolving credit facility. The interest rate on this facility has a floating rate that is currently LIBOR plus 100-basis points. At June 30, 2019, the Company had approximately $327 million of undrawn borrowing capacity under this credit agreement.

During the quarter, the Company repurchased 69,009 shares of Chemed stock for $22.7 million, which equates to a cost per share of $328.59. On February 22, 2019, Chemed’s Board of Directors authorized an additional $150 million for stock repurchase under Chemed’s existing share repurchase program. As of June 30, 2019, there was approximately $125 million of remaining share repurchase authorization under this plan.

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

Updated Guidance for 2019

Chemed will issue updated guidance in August 2019 following the Centers for Medicare and Medicaid Services (CMS) publishing the final rule on the Fiscal Year 2020 Hospice Wage Index and Payment Rate update.

Conference Call

Chemed will host a conference call and webcast at 10 a.m., ET, on Friday, July 26, 2019, to discuss the Company's quarterly results and to provide an update on its business. The dial-in number for the conference call is (844) 743-2500 for U.S. and Canadian participants and +1 (661) 378-9533 for international participants. The Conference ID is 1109197. A live webcast of the call can be accessed on Chemed's website at www.chemed.com by clicking on Investor Relations Home.

A taped replay of the conference call will be available beginning approximately 24 hours after the call's conclusion. It can be accessed by dialing (855) 859-2056 for U.S. and Canadian callers and +1 (404) 537-3406 for international callers and will be available for one week following the live call. The replay Conference ID is 1109197. 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 18,500 patients with severe, life-limiting illnesses. This type of care is focused on making the terminally ill patient's final days as comfortable and pain-free as possible.

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

This press release contains information about Chemed’s EBITDA, Adjusted EBITDA and Adjusted Diluted EPS, which are not measures derived in accordance with GAAP and which exclude components that are important to understanding Chemed’s financial performance. In reporting its operating results, Chemed provides EBITDA, Adjusted EBITDA and Adjusted Diluted EPS measures to help investors and others evaluate the Company’s operating results, compare its operating performance with that of similar companies that have different capital structures and evaluate its ability to meet its future debt service, capital expenditures and working capital requirements. Chemed’s management similarly uses EBITDA, Adjusted EBITDA and Adjusted Diluted EPS to assist it in evaluating the performance of the Company across fiscal periods and in assessing how its performance compares to its peer companies. These measures also help Chemed’s management to estimate the resources required to meet Chemed’s future financial obligations and expenditures. Chemed’s EBITDA, Adjusted EBITDA and Adjusted Diluted EPS should not be considered in isolation or as a substitute for comparable measures calculated and presented in accordance with GAAP. We calculated Adjusted EBITDA Margin by dividing Adjusted EBITDA by service revenue and sales. A reconciliation of Chemed’s net income to its EBITDA, Adjusted EBITDA and Adjusted Diluted EPS is presented in the tables following the text of this press release.

Forward-Looking Statements

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

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

CHEMED CORPORATION AND SUBSIDIARY COMPANIES
CONSOLIDATED STATEMENT OF INCOME
(in thousands, except per share data)(unaudited)
										Three Months Ended June 30,										Six Months Ended June 30,
										2019					2018					2019					2018
Service revenues and sales										$		473,584			$		441,813			$		935,618			$		880,989
Cost of services provided and goods sold												323,637					305,741					645,588					610,277
Selling, general and administrative expenses (aa)												71,556					68,297					145,585					137,297
Depreciation												9,887					9,718					19,597					18,985
Amortization												406					34					925					61
Other operating (income)/expenses												2,570					(118	)				8,923					(169	)
	Total costs and expenses											408,056					383,672					820,618					766,451
	Income from operations											65,528					58,141					115,000					114,538
Interest expense												(1,237	)				(1,524	)				(2,361	)				(2,731	)
Other income--net (bb)												13					1,038					2,452					2,056
	Income before income taxes											64,304					57,655					115,091					113,863
Income taxes												(13,575	)				(2,684	)				(19,695	)				(13,896	)
Net income										$		50,729			$		54,971			$		95,396			$		99,967
Earnings Per Share
	Net income									$		3.18			$		3.43			$		5.98			$		6.22
	Average number of shares outstanding											15,928					16,035					15,941					16,067
Diluted Earnings Per Share
	Net income									$		3.08			$		3.27			$		5.79			$		5.93
	Average number of shares outstanding											16,449					16,811					16,489					16,854
(aa)	Selling, general and administrative ("SG&A") expenses comprise (in thousands):
										Three Months Ended June 30,										Six Months Ended June 30,
										2019					2018					2019					2018
			SG&A expenses before long-term incentive compensation and the impact of market value adjustments related to deferred compensation plans							$		70,300			$		66,296			$		140,504			$		132,517
			Long-term incentive compensation									1,386					1,222					2,874					3,142
			Market value gains/(losses) related to deferred compensation trusts									(130	)				779					2,207					1,638
				Total SG&A expenses						$		71,556			$		68,297			$		145,585			$		137,297
(bb)	Other income--net comprises (in thousands):
										Three Months Ended June 30,										Six Months Ended June 30,
										2019					2018					2019					2018
			Market value gains/(losses) related to deferred compensation trusts							$		(130	)		$		779			$		2,207			$		1,638
			Interest income									112					259					214					417
			Other									31					-					31					1
				Total other income--net						$		13			$		1,038			$		2,452			$		2,056

CHEMED CORPORATION AND SUBSIDIARY COMPANIES
CONSOLIDATED BALANCE SHEET
(in thousands, except per share data)(unaudited)
												June 30,
												2019					2018
Assets
	Current assets
		Cash and cash equivalents										$		3,323			$		12,668
		Accounts receivable less allowances												136,113					119,206
		Inventories												6,336					5,696
		Prepaid income taxes												12,951					19,666
		Prepaid expenses												21,455					16,205
			Total current assets											180,178					173,441
	Investments of deferred compensation plans held in trust													70,460					67,573
	Properties and equipment, at cost less accumulated depreciation													149,917					145,903
	Assets held for sale													15,750					-
	Lease right of use asset													90,755					-
	Identifiable intangible assets less accumulated amortization													67,511					55,250
	Goodwill													510,627					478,202
	Other assets													8,874					7,845
				Total Assets								$		1,094,072			$		928,214
Liabilities
	Current liabilities
		Accounts payable										$		51,143			$		48,236
		Accrued insurance												46,912					42,826
		Accrued compensation												50,123					49,372
		Accrued legal												8,431					823
		Short-term lease liability												31,614					-
		Other current liabilities												35,446					25,159
			Total current liabilities											223,669					166,416
	Deferred income taxes													18,828					18,811
	Long-term debt													85,000					103,400
	Deferred compensation liabilities													70,273					66,154
	Long-term lease liability													69,979					-
	Other liabilities													7,754					17,042
				Total Liabilities										475,503					371,823
Stockholders' Equity
	Capital stock													35,591					35,141
	Paid-in capital													817,255					744,228
	Retained earnings													1,311,446					1,129,289
	Treasury stock, at cost													(1,548,138	)				(1,354,538	)
	Deferred compensation payable in Company stock													2,415					2,271
				Total Stockholders' Equity										618,569					556,391
				Total Liabilities and Stockholders' Equity								$		1,094,072			$		928,214

CHEMED CORPORATION AND SUBSIDIARY COMPANIES
CONSOLIDATED STATEMENT OF CASH FLOWS
(in thousands)(unaudited)
												Six Months Ended June 30,
												2019					2018
Cash Flows from Operating Activities
	Net income											$		95,396			$		99,967
	Adjustments to reconcile net income to net cash provided by operating activities:
			Depreciation and amortization											20,522					19,046
			Stock option expense											8,018					7,305
			Litigation settlement											6,000					-
			(Benefit)/provision for deferred income taxes											(2,769	)				2,173
			Noncash long-term incentive compensation											2,506					2,942
			Asset impairment loss											2,266					-
			Noncash directors' compensation											767					766
			Amortization of debt issuance costs											153					288
			Amortization of restricted stock awards											-					446
			Changes in operating assets and liabilities, excluding amounts acquired in business combinations:
					Increase in accounts receivable									(16,613	)				(6,057	)
					Increase in inventories									(631	)				(362	)
					Increase in prepaid expenses									(2,301	)				(113	)
					Decrease in accounts payable and other current liabilities									(4,175	)				(14,909	)
					Change in current income taxes									(2,249	)				10,136
					Increase in other assets									(4,653	)				(5,667	)
					Increase in other liabilities									5,833					4,889
			Other sources											837					186
				Net cash provided by operating activities										108,907					121,036
Cash Flows from Investing Activities
	Capital expenditures													(28,312	)				(23,872	)
	Business combinations, net of cash acquired													-					(1,875	)
	Other (uses)/sources													(137	)				533
				Net cash used by investing activities										(28,449	)				(25,214	)
Cash Flows from Financing Activities
	Payments on revolving line of credit													(227,000	)				(281,150	)
	Proceeds from revolving line of credit													222,800					358,350
	Purchases of treasury stock													(71,926	)				(84,304	)
	Proceeds from exercise of stock options													16,517					20,209
	Capital stock surrendered to pay taxes on stock-based compensation													(14,884	)				(21,022	)
	Dividends paid													(9,567	)				(9,016	)
	Change in cash overdrafts payable													1,710					(711	)
	Payments on other long-term debt													-					(75,000	)
	Debt issuance costs													-					(968	)
	Other sources/(uses)													384					(663	)
				Net cash used by financing activities										(81,966	)				(94,275	)
(Decrease)/increase in Cash and Cash Equivalents														(1,508	)				1,547
Cash and cash equivalents at beginning of year														4,831					11,121
Cash and cash equivalents at end of year												$		3,323			$		12,668

CHEMED CORPORATION AND SUBSIDIARY COMPANIES
CONSOLIDATING STATEMENT OF INCOME
FOR THE THREE MONTHS ENDED JUNE 30, 2019 AND 2018
(in thousands)(unaudited)
																					Chemed
						VITAS					Roto-Rooter					Corporate					Consolidated
2019
Service revenues and sales (a)						$		312,750			$		160,834			$		-			$		473,584
Cost of services provided and goods sold								241,104					82,533					-					323,637
Selling, general and administrative expenses (a)								21,682					39,377					10,497					71,556
Depreciation								4,831					5,017					39					9,887
Amortization								18					388					-					406
Other operating expense (a)								69					235					2,266					2,570
	Total costs and expenses							267,704					127,550					12,802					408,056
	Income/(loss) from operations							45,046					33,284					(12,802	)				65,528
Interest expense								(53	)				(100	)				(1,084	)				(1,237	)
Intercompany interest income/(expense)								4,382					2,180					(6,562	)				-
Other income/(expense)—net								101					42					(130	)				13
	Income/(loss) before income taxes							49,476					35,406					(20,578	)				64,304
Income taxes (a)								(12,137	)				(8,231	)				6,793					(13,575	)
	Net income/(loss)					$		37,339			$		27,175			$		(13,785	)		$		50,729
2018
Service revenues and sales (b)						$		296,799			$		145,014			$		-			$		441,813
Cost of services provided and goods sold								233,073					72,668					-					305,741
Selling, general and administrative expenses (b)								20,702					35,909					11,686					68,297
Depreciation								5,050					4,628					40					9,718
Amortization								-					34					-					34
Other operating income (b)								(67	)				(51	)				-					(118	)
	Total costs and expenses							258,758					113,188					11,726					383,672
	Income/(loss) from operations							38,041					31,826					(11,726	)				58,141
Interest expense								(53	)				(92	)				(1,379	)				(1,524	)
Intercompany interest income/(expense)								3,124					1,739					(4,863	)				-
Other income—net								238					21					779					1,038
	Income/(loss) before income taxes							41,350					33,494					(17,189	)				57,655
Income taxes (b)								(9,565	)				(8,196	)				15,077					(2,684	)
	Net income/(loss)					$		31,785			$		25,298			$		(2,112	)		$		54,971

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, 2019 AND 2018
(in thousands)(unaudited)
																					Chemed
						VITAS					Roto-Rooter					Corporate					Consolidated
2019
Service revenues and sales (a)						$		619,531			$		316,087			$		-			$		935,618
Cost of services provided and goods sold								480,847					164,741					-					645,588
Selling, general and administrative expenses (a)								43,218					78,978					23,389					145,585
Depreciation								9,539					9,980					78					19,597
Amortization								35					890					-					925
Other operating expense (a)								6,423					234					2,266					8,923
	Total costs and expenses							540,062					254,823					25,733					820,618
	Income/(loss) from operations							79,469					61,264					(25,733	)				115,000
Interest expense								(101	)				(194	)				(2,066	)				(2,361	)
Intercompany interest income/(expense)								8,777					4,375					(13,152	)				-
Other income—net								188					56					2,208					2,452
	Income/(loss) before income taxes							88,333					65,501					(38,743	)				115,091
Income taxes (a)								(21,707	)				(15,339	)				17,351					(19,695	)
	Net income/(loss)					$		66,626			$		50,162			$		(21,392	)		$		95,396
2018
Service revenues and sales (b)						$		588,813			$		292,176			$		-			$		880,989
Cost of services provided and goods sold								460,329					149,948					-					610,277
Selling, general and administrative expenses (b)								41,213					72,006					24,078					137,297
Depreciation								9,846					9,072					67					18,985
Amortization								-					61					-					61
Other operating expense (b)								(84	)				(85	)				-					(169	)
	Total costs and expenses							511,304					231,002					24,145					766,451
	Income/(loss) from operations							77,509					61,174					(24,145	)				114,538
Interest expense								(104	)				(184	)				(2,443	)				(2,731	)
Intercompany interest income/(expense)								6,218					3,417					(9,635	)				-
Other income—net								380					37					1,639					2,056
	Income/(loss) before income taxes							84,003					64,444					(34,584	)				113,863
Income taxes (b)								(20,203	)				(16,208	)				22,515					(13,896	)
	Net income/(loss)					$		63,800			$		48,236			$		(12,069	)		$		99,967

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, 2019 AND 2018
(in thousands)(unaudited)
																							Chemed
								VITAS					Roto-Rooter					Corporate					Consolidated
2019
Net income/(loss)								$		37,339			$		27,175			$		(13,785	)		$		50,729
Add/(deduct):
		Interest expense								53					100					1,084					1,237
		Income taxes								12,137					8,231					(6,793	)				13,575
		Depreciation								4,831					5,017					39					9,887
		Amortization								18					388					-					406
			EBITDA							54,378					40,911					(19,455	)				75,834
Add/(deduct):
		Intercompany interest expense/(income)								(4,382	)				(2,180	)				6,562					-
		Interest income								(69	)				(43	)				-					(112	)
		Stock option expense								-					-					3,929					3,929
		Impairment loss on transportation equipment								-					-					2,266					2,266
		Medicare cap sequestration adjustment								1,689					-					-					1,689
		Long-term incentive compensation								-					-					1,386					1,386
		Acquisition expense								-					97					-					97
			Adjusted EBITDA					$		51,616			$		38,785			$		(5,312	)		$		85,089
2018
Net income/(loss)								$		31,785			$		25,298			$		(2,112	)		$		54,971
Add/(deduct):
		Interest expense								53					92					1,379					1,524
		Income taxes								9,565					8,196					(15,077	)				2,684
		Depreciation								5,050					4,628					40					9,718
		Amortization								-					34					-					34
			EBITDA							46,453					38,248					(15,770	)				68,931
Add/(deduct):
		Intercompany interest expense/(income)								(3,124	)				(1,739	)				4,863					-
		Interest income								(237	)				(22	)				-					(259	)
		Stock option expense								-					-					3,652					3,652
		Long-term incentive compensation								-					-					1,222					1,222
		Litigation settlement								(204	)				-					-					(204	)
		Medicare cap sequestration adjustment								185					-					-					185
		Amortization of stock awards								37					35					83					155
			Adjusted EBITDA					$		43,110			$		36,522			$		(5,950	)		$		73,682

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 30, 2019 AND 2018
(in thousands)(unaudited)
																							Chemed
								VITAS					Roto-Rooter					Corporate					Consolidated
2019
Net income/(loss)								$		66,626			$		50,162			$		(21,392	)		$		95,396
Add/(deduct):
		Interest expense								101					194					2,066					2,361
		Income taxes								21,707					15,339					(17,351	)				19,695
		Depreciation								9,539					9,980					78					19,597
		Amortization								35					890					-					925
			EBITDA							98,008					76,565					(36,599	)				137,974
Add/(deduct):
		Intercompany interest expense/(income)								(8,777	)				(4,375	)				13,152					-
		Interest income								(157	)				(56	)				-					(213	)
		Stock option expense								-					-					8,018					8,018
		Litigation settlement								6,000					-					-					6,000
		Long-term incentive compensation								-					-					2,874					2,874
		Impairment loss on transportation equipment								-					-					2,266					2,266
		Medicare cap sequestration adjustment								2,204					-					-					2,204
		Non cash ASC 842 expenses/(benefit)								656					55					(163	)				548
		Acquisition Expense								-					97					120					217
			Adjusted EBITDA					$		97,934			$		72,286			$		(10,332	)		$		159,888
2018
Net income/(loss)								$		63,800			$		48,236			$		(12,069	)		$		99,967
Add/(deduct):
		Interest expense								104					184					2,443					2,731
		Income taxes								20,203					16,208					(22,515	)				13,896
		Depreciation								9,846					9,072					67					18,985
		Amortization								-					61					-					61
			EBITDA							93,953					73,761					(32,074	)				135,640
Add/(deduct):
		Intercompany interest expense/(income)								(6,218	)				(3,417	)				9,635					-
		Interest income								(380	)				(37	)				-					(417	)
		Stock option expense								-					-					7,305					7,305
		Long-term incentive compensation								-					-					3,142					3,142
		Medicare cap sequestration adjustment								537					-					-					537
		Amortization of stock awards								107					100					239					446
		Litigation settlement								(204	)				-					-					(204	)
			Adjusted EBITDA					$		87,795			$		70,407			$		(11,753	)		$		146,449

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

CHEMED CORPORATION AND SUBSIDIARY COMPANIES
RECONCILIATION OF ADJUSTED NET INCOME
(in thousands, except per share data)(unaudited)
								Three Months Ended June 30,										Six Months Ended June 30,
								2019					2018					2019					2018
Net income as reported								$		50,729			$		54,971			$		95,396			$		99,967
Add/(deduct) pre-tax cost of:
		Stock option expense								3,929					3,652					8,018					7,305
		Litigation settlement								-					(204	)				6,000					(204	)
		Long-term incentive compensation								1,386					1,222					2,874					3,142
		Impairment loss on transportation equipment								2,266					-					2,266					-
		Medicare cap sequestration adjustments								1,689					185					2,204					537
		Amortization of acquired and cancelled franchise agreements								331					-					772					-
		Non cash ASC 842 expenses								-					-					548					-
		Acquisition expenses								97					-					217					-
Add/(deduct) tax impacts:
		Tax impact of the above pre-tax adjustments (1)								(2,000	)				(966	)				(4,961	)				(2,238	)
		Excess tax benefits on stock compensation								(3,212	)				(11,702	)				(9,944	)				(15,500	)
Adjusted net income								$		55,215			$		47,158			$		103,390			$		93,009
Diluted Earnings Per Share As Reported
		Net income						$		3.08			$		3.27			$		5.79			$		5.93
		Average number of shares outstanding								16,449					16,811					16,489					16,854
Adjusted Diluted Earnings Per Share
		Adjusted net income						$		3.36			$		2.81			$		6.27			$		5.52
		Average number of shares outstanding								16,449					16,811					16,489					16,854

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

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

CHEMED CORPORATION AND SUBSIDIARY COMPANIES
OPERATING STATISTICS FOR VITAS SEGMENT
(unaudited)
							Three Months Ended June 30,								Six Months Ended June 30,
OPERATING STATISTICS							2019				2018				2019				2018
	Net revenue ($000) (c)
		Homecare					$	266,461			$	250,381			$	525,312			$	491,412
		Inpatient						22,894				20,077				45,464				42,186
		Continuous care						30,786				30,513				63,030				61,279
		Other						2,237				1,998				4,242				3,740
			Subtotal				$	322,378			$	302,969			$	638,048			$	598,617
		Room and board, net						(2,710	)			(2,675	)			(5,252	)			(5,294	)
		Contractual allowances						(3,720	)			(2,959	)			(6,667	)			(5,792	)
		Medicare cap allowance						(3,198	)			(536	)			(6,598	)			1,282
			Net Revenue				$	312,750			$	296,799			$	619,531			$	588,813
	Net revenue as a percent of total before Medicare cap allowance
		Homecare						82.7	%			82.6	%			82.3	%			82.1	%
		Inpatient						7.1				6.6				7.1				7.0
		Continuous care						9.5				10.1				9.9				10.2
		Other						0.7				0.7				0.7				0.7
			Subtotal					100.0				100.0				100.0				100.0
		Room and board, net						(0.8	)			(0.9	)			(0.8	)			(0.9	)
		Contractual allowances						(1.2	)			(1.0	)			(1.0	)			(1.0	)
		Medicare cap allowance						(1.0	)			(0.1	)			(1.0	)			0.3
			Net Revenue					97.0	%			98.0	%			97.2	%			98.4	%
	Average daily census ("ADC") (days)
		Homecare						14,482				13,583				14,364				13,375
		Nursing home						3,382				3,275				3,318				3,245
			Routine homecare					17,864				16,858				17,682				16,620
		Inpatient						358				318				359				335
		Continuous care						459				467				474				473
			Total					18,681				17,643				18,515				17,428
	Total Admissions							17,491				16,858				35,249				35,137
	Total Discharges							17,008				16,474				34,350				34,054
	Average length of stay (days)							91.1				89.0				91.2				88.4
	Median length of stay (days)							16.0				17.0				15.0				16.0
	ADC by major diagnosis
		Cerebro						35.7	%			36.2	%			35.8	%			36.4	%
		Neurological						20.4				18.6				20.2				18.6
		Cancer						12.7				13.9				12.7				13.9
		Cardio						17.0				16.6				16.9				16.4
		Respiratory						8.2				8.3				8.2				8.2
		Other						6.0				6.4				6.2				6.5
			Total					100.0	%			100.0	%			100.0	%			100.0	%
	Admissions by major diagnosis
		Cerebro						20.6	%			21.7	%			20.7	%			22.2	%
		Neurological						12.2				11.1				12.5				11.2
		Cancer						29.2				30.5				28.6				29.2
		Cardio						16.0				15.6				16.1				15.6
		Respiratory						11.7				10.8				11.8				11.3
		Other						10.3				10.3				10.3				10.5
			Total					100.0	%			100.0	%			100.0	%			100.0	%
	Estimated uncollectible accounts as a percent of revenues							1.2	%			1.0	%			1.1	%			1.0	%
	Accounts receivable --
	Days of revenue outstanding- excluding unapplied Medicare payments							32.7				31.9				n.a.				n.a.
	Days of revenue outstanding- including unapplied Medicare payments							27.7				25.6				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 SIX MONTHS ENDED JUNE 30, 2019 AND 2018
(unaudited)
(a)	Included in the results of operations for 2019 are the following significant credits/(charges) which may not be indicative of ongoing operations
	(in thousands):
									Three Months Ended June 30, 2019
									VITAS					Roto-Rooter					Corporate					Consolidated
	Service revenues and sales:
		Medicare cap sequestration adjustment							$		(1,689	)		$		-			$		-			$		(1,689	)
	Selling, general and administrative expenses:
		Stock option expense									-					-					(3,929	)				(3,929	)
		Long-term incentive compensation									-					-					(1,386	)				(1,386	)
		Amortization of acquired and cancelled franchise agreements									-					(331	)				-					(331	)
		Acquisition expense									-					(97	)				-					(97	)
	Other operating expenses:
		Impairment loss on transportation equipment									-					-					(2,266	)				(2,266	)
			Pretax impact on earnings								(1,689	)				(428	)				(7,581	)				(9,698	)
	Excess tax benefits on stock compensation										-					-					3,212					3,212
	Income tax benefit on the above										435					113					1,452					2,000
			After-tax impact on earnings						$		(1,254	)		$		(315	)		$		(2,917	)		$		(4,486	)
									Six Months Ended June 30, 2019
									VITAS					Roto-Rooter					Corporate					Consolidated
	Service revenues and sales:
		Medicare cap sequestration adjustment							$		(2,204	)		$		-			$		-			$		(2,204	)
	Selling, general and administrative expenses:
		Stock option expense									-					-					(8,018	)				(8,018	)
		Long-term incentive compensation									-					-					(2,874	)				(2,874	)
		Amortization of acquired and cancelled franchise agreements									-					(772	)				-					(772	)
		Non cash ASC 842 (expenses)/benefit									(656	)				(55	)				163					(548	)
		Acquisition expense									-					(97	)				(120	)				(217	)
	Other operating expenses:
		Litigation settlement									(6,000	)				-					-					(6,000	)
		Impairment loss on transportation equipment									-					-					(2,266	)				(2,266	)
			Pretax impact on earnings								(8,860	)				(924	)				(13,115	)				(22,899	)
	Excess tax benefits on stock compensation										-					-					9,944					9,944
	Income tax benefit on the above										2,254					245					2,462					4,961
			After-tax impact on earnings						$		(6,606	)		$		(679	)		$		(709	)		$		(7,994	)
(b)	Included in the results of operations for 2018 are the following significant credits/(charges) which may not be indicative of ongoing operations
	(in thousands):
									Three Months Ended June 30, 2018
									VITAS					Roto-Rooter					Corporate					Consolidated
	Service revenues and sales:
		Medicare cap sequestration adjustment							$		(185	)		$		-			$		-			$		(185	)
	Selling, general and administrative expenses:
		Stock option expense									-					-					(3,652	)				(3,652	)
		Long-term incentive compensation									-					-					(1,222	)				(1,222	)
	Other operating expenses:
		Litigation settlements									204					-					-					204
			Pretax impact on earnings								19					-					(4,874	)				(4,855	)
	Excess tax benefits on stock compensation										-					-					11,702					11,702
	Income tax benefit on the above										(5	)				-					971					966
			After-tax impact on earnings						$		14			$		-			$		7,799			$		7,813
									Six Months Ended June 30, 2018
									VITAS					Roto-Rooter					Corporate					Consolidated
	Service revenues and sales:
		Medicare cap sequestration adjustment							$		(537	)		$		-			$		-			$		(537	)
	Selling, general and administrative expenses:
		Stock option expense									-					-					(7,305	)				(7,305	)
		Long-term incentive compensation									-					-					(3,142	)				(3,142	)
	Other operating expenses:
		Litigation settlement									204					-					-					204
			Pretax impact on earnings								(333	)				-					(10,447	)				(10,780	)
	Excess tax benefits on stock compensation										-					-					15,500					15,500
	Income tax benefit on the above										84					-					2,154					2,238
			After-tax impact on earnings						$		(249	)		$		-			$		7,207			$		6,958

(c)

VITAS has 11 large (greater than 450 ADC), 19 medium (greater than 200 but less than 450 ADC) and 18 small (less than 200 ADC) hospice programs. Of VITAS' 30 Medicare provider numbers, 25 provider numbers have a Medicare cap cushion of 5% or greater during the current cap year, one provider number has a cap cushion between 0% and 5%, and four provider numbers have a Medicare cap liability.

View source version on businesswire.com: https://www.businesswire.com/news/home/20190725005666/en/

David P. Williams

(513) 762-6901

Source: Chemed Corporation