CHEMED CORP - FORM 8-K - EX-99

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8-K - 8-K - CHEMED CORP	che-20200218x8k.htm

Exhibit 99.1

CONTACT: David P. Williams

(513) 762-6901

Chemed Reports Fourth-Quarter 2019 Results

CINCINNATI, February 18, 2020—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 fourth quarter ended December 31, 2019, versus the comparable prior-year period, as follows:

Consolidated operating results:

Revenue increased 14.2% to $522 million

GAAP Diluted Earnings-per-Share (EPS) of $3.96, an increase of 21.5%

Adjusted Diluted EPS of $4.22, an increase of 26.0%

VITAS segment operating results:

Net Patient Revenue of $340 million, an increase of 10.7%

Average Daily Census (ADC) of 19,258, an increase of 6.1%

Admissions of 17,479, an increase of 5.4%

Net Income, excluding certain discrete items, of $50.1 million, an increase of 24.5%

Adjusted EBITDA, excluding Medicare Cap, of $70.5 million, an increase of 27.0%

Roto-Rooter segment operating results:

Revenue of $182 million, an increase of 21.2%

Net Income, excluding certain discrete items, of $30.5 million, an increase of 16.3%

Adjusted EBITDA of $43.7 million, an increase of 20.9%

Adjusted EBITDA margin of 24.0%, equal to the prior year

VITAS

VITAS net revenue was $340 million in the fourth quarter of 2019, which is an increase of 10.7%, when compared to the prior-year period. This revenue increase is comprised primarily of a geographically weighted average Medicare reimbursement rate increase of approximately 5.5%, a 6.1% increase in days-of-care and an increase in the Medicare Cap billing limitation that decreased revenue 0.3%. This growth was partially offset by acuity mix shift, fluctuations in net room and board and contractual adjustments, the combination of which negatively impacted revenue growth approximately 0.7%, when compared to the prior-year period.

In the fourth quarter of 2019, VITAS accrued $4.5 million in Medicare Cap billing limitations. This compares to the prior-year Medicare Cap billing limitation of $3.5 million.

VITAS currently has 30 Medicare provider numbers. On a 12-month trailing basis, 23 of these provider numbers have a Medicare Cap cushion of 10% or greater, three provider numbers have a cap cushion between 0% and 5%, and four provider numbers are forecasted to have a Medicare Cap billing limitation.

Average revenue per patient per day in the fourth quarter of 2019 was $198.48, which is 5.0% above the prior-year period. Reimbursement for routine home care and high acuity care averaged $164.62 and $996.82, respectively. During the quarter, high acuity days-of-care were 4.1% of total days of care, 11-basis points less than the prior-year quarter. This 11-basis point mix shift in high acuity days-of-care reduced the increase in average revenue per patient per day from 5.5% to 5.0% in the quarter.

The fourth quarter 2019 gross margin, excluding Medicare Cap, was 26.3%, which is a 204-basis point margin improvement when compared to the fourth quarter of 2018.

Selling, general and administrative expense was $21.2 million in the fourth quarter of 2019, which is an increase of 3.9% compared to the prior-year quarter. Adjusted EBITDA, excluding Medicare Cap, totaled $70.5 million in the quarter, an increase of 27.0%. Adjusted EBITDA margin, excluding Medicare Cap, was 20.5% in the quarter, which is a 259-basis point margin improvement when compared to the prior-year period.

Roto-Rooter

Roto-Rooter generated quarterly revenue of $182 million for the fourth quarter of 2019, an increase of $31.9 million, or 21.2%, over the prior-year quarter. On a unit for unit basis, which excludes the Oakland and HSW acquisitions completed in July and September 2019, respectively, Roto-Rooter generated quarterly revenue of $162 million for the fourth quarter of 2019, an increase of 7.9%, over the prior-year quarter.

Including acquisitions, total commercial revenue increased 26.4%. This aggregate commercial revenue growth consisted of drain cleaning revenue expanding 34.9%, commercial plumbing and excavation increasing 25.2%, and commercial water restoration declining 8.8%.

Excluding acquisitions, commercial drain cleaning revenue increased 7.1%, commercial plumbing and excavation declined 0.1%, and commercial water restoration declined 17.4%. Commercial water restoration represents approximately 10% of total water restoration service revenue. Overall, commercial revenue excluding acquisitions increased 1.2%.

Including acquisitions, total residential revenue increased 19.4%. This aggregate residential revenue growth consisted of residential drain cleaning increasing 25.5%, plumbing and excavation expanding 18.1%, and residential water restoration increasing 16.3%.

Excluding acquisitions, residential drain cleaning increased 10.1%, plumbing and excavation increased 7.4%, and residential water restoration increased 14.6%. Overall, residential sales excluding acquisitions increased 9.5%.

Roto-Rooter’s gross margin in the quarter was 48.6%, a 15-basis point decline when compared to the fourth quarter of 2018. Adjusted EBITDA in the fourth quarter of 2019 totaled $43.7 million, an increase of 20.9%. The Adjusted EBITDA margin in the quarter was 24.0% which is equivalent to the prior year.

Chemed Consolidated

As of December 31, 2019, Chemed had total cash and cash equivalents of $6.2 million and long-term debt of $90 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 December 31, 2019, the Company had approximately $322 million of undrawn borrowing capacity under this credit agreement.

During the quarter, the Company repurchased 50,000 shares of Chemed stock for $20.7 million which equates to a cost per share of $414.11. As of December 31, 2019, there was approximately $104 million of remaining share repurchase authorization under this plan.

Chemed restarted its share repurchase program in 2007. Since that time Chemed has repurchased over 14.1 million shares, aggregating approximately $1.2 billion at an average share cost of $85.93. Including dividends over this period, Chemed has returned approximately $1.4 billion to shareholders.

Guidance for 2020

Revenue growth for VITAS in 2020, prior to Medicare Cap, is estimated to be in the range of 8.5% to 9.5%. Admissions and Average Daily Census in 2020 are estimated to expand approximately 3.5% to 4.5%. High acuity days-of-care are estimated at 4.1% of total 2020 days-of-care. Full-year Adjusted EBITDA margin, prior to Medicare Cap, is estimated to be 18.7% to 19.0%. We are currently estimating $18 million for Medicare Cap billing limitations for calendar year 2020.

Roto-Rooter is forecasted to achieve full-year 2020 revenue growth of 13.0% to 14.0%. This revenue estimate is based upon unit for unit revenue growth of 4.0% to 5.0% in core plumbing and drain cleaning services, continued but slowing revenue growth from water restoration services, combined with 12-months of revenue in the Oakland and HSW acquisitions. Roto-Rooter’s Adjusted EBITDA margin for 2020 is estimated to be in the range of 23.0% to 23.5%.

Based upon the above, full-year 2020 adjusted earnings per diluted share, excluding non-cash expense for stock options, tax benefits from stock options, costs related to litigation, intangible amortization of reacquired franchise rights and other discrete items, is estimated to be in the range of $16.20 to $16.50. This 2020 guidance assumes an effective corporate tax rate of 25.2%. Chemed’s 2019 reported adjusted earnings per diluted share was $13.96.

Conference Call

Chemed will host a conference call and webcast at 10 a.m., ET, on Wednesday, February 19, 2020, 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 4939797. 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 4939797. An archived webcast will also be available at www.chemed.com.

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

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

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

Forward-Looking Statements

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

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


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

	Three Months Ended December 31,				For the Years Ended December 31,
	2019		2018		2019		2018
Service revenues and sales		522,324	$	457,507	$	1,938,555	$	1,782,648
Cost of services provided and goods sold		347,355		312,054		1,321,126		1,227,644
Selling, general and administrative expenses (aa)		83,291		66,735		305,712		271,209
Depreciation		11,126		9,822		40,870		38,464
Amortization		2,969		303		4,335		399
Other operating expenses		131		1,212		9,132		1,300
Total costs and expenses		444,872		390,126		1,681,175		1,539,016
Income from operations		77,452		67,381		257,380		243,632
Interest expense		(1,133)		(1,177)		(4,535)		(4,990)
Other income--net (bb)		3,276		(3,398)		8,764		958
Income before income taxes		79,595		62,806		261,609		239,600
Income taxes		(14,015)		(8,478)		(41,686)		(34,056)
Net income	$	65,580	$	54,328	$	219,923	$	205,544
Earnings Per Share
Net income	$	4.09	$	3.39	$	13.77	$	12.80
Average number of shares outstanding		16,022		16,026		15,969		16,059
Diluted Earnings Per Share
Net income	$	3.96	$	3.26	$	13.31	$	12.23
Average number of shares outstanding		16,565		16,670		16,527		16,803

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

	Three Months Ended December 31,				For the Years Ended December 31,
	2019		2018		2019		2018
SG&A expenses before long-term incentive compensation
and the impact of market value adjustments related to
deferred compensation plans	$	77,053	$	68,034	$	289,828	$	264,304
Market value adjustments related to deferred
compensation trusts		3,160		(3,541)		8,254		287
Long-term incentive compensation		3,078		2,242		7,630		6,618
Total SG&A expenses	$	83,291	$	66,735	$	305,712	$	271,209

(bb) Other income--net comprises (in thousands):
	Three Months Ended December 31,				For the Years Ended December 31,
	2019		2018		2019		2018
Market value adjustments related to deferred
compensation trusts	$	3,160	$	(3,541)	$	8,254	$	287
Interest income		126		143		513		671
Other		(10)		-		(3)		-
Total other income--net	$	3,276	$	(3,398)	$	8,764	$	958


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

	December 31,
	2019		2018
Assets
Current assets
Cash and cash equivalents	$	6,158	$	4,831
Accounts receivable less allowances		143,827		119,504
Inventories		7,462		5,705
Prepaid income taxes		10,074		10,646
Prepaid expenses		23,150		19,154
Total current assets		190,671		159,840
Investments of deferred compensation plans held in trust		77,446		65,624
Properties and equipment, at cost less accumulated depreciation		175,763		162,033
Lease right of use asset		111,652		-
Identifiable intangible assets less accumulated amortization		126,370		68,253
Goodwill		577,367		510,570
Other assets		9,048		9,209
Total Assets	$	1,268,317	$	975,529
Liabilities
Current liabilities
Accounts payable	$	51,101	$	50,150
Accrued insurance		50,328		46,095
Accrued compensation		70,814		63,329
Accrued legal		6,941		1,857
Short-term lease liability		39,280		-
Other current liabilities		43,756		30,239
Total current liabilities		262,220		191,670
Deferred income taxes		18,504		21,598
Long-term debt		90,000		89,200
Deferred compensation liabilities		76,446		64,616
Long-term lease liability		86,656		-
Other liabilities		7,883		17,111
Total Liabilities		541,709		384,195
Stockholders' Equity
Capital stock		35,811		35,311
Paid-in capital		860,671		774,358
Retained earnings		1,425,752		1,225,617
Treasury stock, at cost		(1,597,940)		(1,446,296)
Deferred compensation payable in Company stock		2,314		2,344
Total Stockholders' Equity		726,608		591,334
Total Liabilities and Stockholders' Equity	$	1,268,317	$	975,529


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

	For the Years Ended December 31,
	2019		2018
Cash Flows from Operating Activities
Net income	$	219,923	$	205,544
Adjustments to reconcile net income to net cash provided
by operating activities:
Depreciation and amortization		45,205		38,863
Stock option expense		14,831		12,611
Litigation settlement		6,000		-
Noncash long-term incentive compensation		5,740		5,405
(Benefit)/provision for deferred income taxes		(2,770)		5,187
Loss on sale of transportation equipment		2,266		-
Noncash directors' compensation		767		766
Amortization of debt issuance costs		306		441
Amortization of restricted stock awards		-		446
Changes in operating assets and liabilities, excluding
amounts acquired in business combinations:
Increase in accounts receivable		(19,247)		(5,570)
Increase in inventories		(1,757)		(351)
Increase in prepaid expenses		(3,491)		(2,665)
Increase in accounts payable and
other current liabilities		28,417		8,935
Change in current income taxes		161		18,898
Net change in lease assets and liabilities		3,108		-
Increase in other assets		(11,963)		(5,544)
Increase in other liabilities		12,354		3,451
Other sources		1,399		721
Net cash provided by operating activities		301,249		287,138
Cash Flows from Investing Activities
Business combinations, net of cash acquired		(138,010)		(53,177)
Capital expenditures		(53,022)		(52,872)
Other sources		272		824
Net cash used by investing activities		(190,760)		(105,225)
Cash Flows from Financing Activities
Proceeds from revolving line of credit		482,900		469,550
Payments on revolving line of credit		(482,100)		(406,550)
Purchases of treasury stock		(92,631)		(158,884)
Proceeds from exercise of stock options		34,380		32,412
Capital stock surrendered to pay taxes on stock-based compensation		(28,474)		(27,548)
Dividends paid		(19,788)		(18,662)
Change in cash overdrafts payable		(3,927)		(1,531)
Payments on other long-term debt		-		(75,000)
Debt issuance costs		-		(1,052)
Other sources/(uses)		478		(938)
Net cash used by financing activities		(109,162)		(188,203)
Increase/(decrease) in Cash and Cash Equivalents		1,327		(6,290)
Cash and cash equivalents at beginning of year		4,831		11,121
Cash and cash equivalents at end of year	$	6,158	$	4,831


CHEMED CORPORATION AND SUBSIDIARY COMPANIES
CONSOLIDATING STATEMENTS OF INCOME
FOR THE THREE MONTHS ENDED DECEMBER 31, 2019 AND 2018
(in thousands)(unaudited)
			Roto-				Chemed
	VITAS		Rooter		Corporate		Consolidated
2019
Service revenues and sales (a)	$	339,905	$	182,419	$	-	$	522,324
Cost of services provided and goods sold		253,659		93,696		-		347,355
Selling, general and administrative expenses (a)		21,162		46,198		15,931		83,291
Depreciation		5,341		5,747		38		11,126
Amortization		18		2,951		-		2,969
Other operating expense		25		106		-		131
Total costs and expenses		280,205		148,698		15,969		444,872
Income/(loss) from operations		59,700		33,721		(15,969)		77,452
Interest expense		(19)		(72)		(1,042)		(1,133)
Intercompany interest income/(expense)		4,740		1,543		(6,283)		-
Other income—net		76		40		3,160		3,276
Income/(loss) before income taxes		64,497		35,232		(20,134)		79,595
Income taxes (a)		(15,075)		(7,823)		8,883		(14,015)
Net income/(loss)	$	49,422	$	27,409	$	(11,251)	$	65,580

2018
Service revenues and sales (b)	$	306,985	$	150,522	$	-	$	457,507
Cost of services provided and goods sold		234,971		77,083		-		312,054
Selling, general and administrative expenses (b)		20,363		37,563		8,809		66,735
Depreciation		4,935		4,847		40		9,822
Amortization		12		291		-		303
Other operating expense		1,114		98		-		1,212
Total costs and expenses		261,395		119,882		8,849		390,126
Income/(loss) from operations		45,590		30,640		(8,849)		67,381
Interest expense		(22)		(64)		(1,091)		(1,177)
Intercompany interest income/(expense)		3,308		1,678		(4,986)		-
Other income—net		110		32		(3,540)		(3,398)
Income/(loss) before income taxes		48,986		32,286		(18,466)		62,806
Income taxes (b)		(9,860)		(6,375)		7,757		(8,478)
Net income/(loss)	$	39,126	$	25,911	$	(10,709)	$	54,328


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


CHEMED CORPORATION AND SUBSIDIARY COMPANIES
CONSOLIDATING STATEMENTS OF INCOME
FOR THE YEARS ENDED DECEMBER 31, 2019 AND 2018
(in thousands)(unaudited)

			Roto-				Chemed
	VITAS		Rooter		Corporate		Consolidated
2019
Service revenues and sales (a)	$	1,281,184	$	657,371	$	-	$	1,938,555
Cost of services provided and goods sold		982,056		339,070		-		1,321,126
Selling, general and administrative expenses (a)		86,345		166,934		52,433		305,712
Depreciation		19,984		20,730		156		40,870
Amortization		71		4,264		-		4,335
Other operating expense (a)		6,546		320		2,266		9,132
Total costs and expenses		1,095,002		531,318		54,855		1,681,175
Income/(loss) from operations		186,182		126,053		(54,855)		257,380
Interest expense		(169)		(345)		(4,021)		(4,535)
Intercompany interest income/(expense)		18,135		8,152		(26,287)		-
Other income—net		385		126		8,253		8,764
Income/(loss) before income taxes		204,533		133,986		(76,910)		261,609
Income taxes (a)		(48,711)		(30,276)		37,301		(41,686)
Net income/(loss)	$	155,822	$	103,710	$	(39,609)	$	219,923

2018
Service revenues and sales (b)	$	1,197,562	$	585,086	$	-	$	1,782,648
Cost of services provided and goods sold		928,306		299,338		-		1,227,644
Selling, general and administrative expenses (b)		81,969		145,683		43,557		271,209
Depreciation		19,688		18,629		147		38,464
Amortization		12		387		-		399
Other operating expense (b)		1,130		170		-		1,300
Total costs and expenses		1,031,105		464,207		43,704		1,539,016
Income/(loss) from operations		166,457		120,879		(43,704)		243,632
Interest expense		(175)		(319)		(4,496)		(4,990)
Intercompany interest income/(expense)		12,832		6,908		(19,740)		-
Other income—net		579		93		286		958
Income/(loss) before income taxes		179,693		127,561		(67,654)		239,600
Income taxes (b)		(40,847)		(28,850)		35,641		(34,056)
Net income/(loss)	$	138,846	$	98,711	$	(32,013)	$	205,544



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


CHEMED CORPORATION AND SUBSIDIARY COMPANIES
CONSOLIDATING SUMMARIES OF EBITDA
FOR THE THREE MONTHS ENDED DECEMBER 31, 2019 AND 2018
(in thousands)(unaudited)

							Chemed
	VITAS		Roto-Rooter		Corporate		Consolidated
2019
Net income/(loss)	$	49,422	$	27,409	$	(11,251)	$	65,580
Add/(deduct):
Interest expense		19		72		1,042		1,133
Income taxes		15,075		7,823		(8,883)		14,015
Depreciation		5,341		5,747		38		11,126
Amortization		18		2,951		-		2,969
EBITDA		69,875		44,002		(19,054)		94,823
Add/(deduct):
Intercompany interest expense/(income)		(4,740)		(1,543)		6,283		-
Interest income		(84)		(42)		-		(126)
Stock option expense		-		-		4,102		4,102
Long-term incentive compensation		-		-		3,079		3,079
Acquisition expense		-		1,286		50		1,336
Medicare cap sequestration adjustment		919		-		-		919
Adjusted EBITDA	$	65,970	$	43,703	$	(5,540)	$	104,133

2018
Net income/(loss)	$	39,126	$	25,911	$	(10,709)	$	54,328
Add/(deduct):
Interest expense		22		64		1,091		1,177
Income taxes		9,860		6,375		(7,757)		8,478
Depreciation		4,935		4,847		40		9,822
Amortization		12		291		-		303
EBITDA		53,955		37,488		(17,335)		74,108
Add/(deduct):
Intercompany interest expense/(income)		(3,308)		(1,678)		4,986		-
Interest income		(111)		(32)		-		(143)
Stock option expense		-		-		3,251		3,251
Long-term incentive compensation		-		-		2,242		2,242
Litigation settlement costs		1,000		-		-		1,000
Medicare cap sequestration adjustment		456		-		-		456
Acquisition expense		32		371		-		403
Adjusted EBITDA	$	52,024	$	36,149	$	(6,856)	$	81,317

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



CHEMED CORPORATION AND SUBSIDIARY COMPANIES
CONSOLIDATING SUMMARIES OF EBITDA
FOR THE YEARS ENDED DECEMBER 31, 2019 AND 2018
(in thousands)(unaudited)
							Chemed
	VITAS		Roto-Rooter		Corporate		Consolidated
2019
Net income/(loss)	$	155,822	$	103,710	$	(39,609)	$	219,923
Add/(deduct):
Interest expense		169		345		4,021		4,535
Income taxes		48,711		30,276		(37,301)		41,686
Depreciation		19,984		20,730		156		40,870
Amortization		71		4,264		-		4,335
EBITDA		224,757		159,325		(72,733)		311,349
Add/(deduct):
Intercompany interest expense/(income)		(18,135)		(8,152)		26,287		-
Interest income		(380)		(133)		-		(513)
Stock option expense		-		-		14,831		14,831
Long-term incentive compensation		-		-		7,630		7,630
Litigation settlement		6,000		-		-		6,000
Acquisition Expense		-		4,664		170		4,834
Medicare cap sequestration adjustment		3,982		-		-		3,982
Loss on sale of transportation equipment		-		-		2,266		2,266
Non cash ASC 842 expenses/(benefit)		656		55		(163)		548
Adjusted EBITDA	$	216,880	$	155,759	$	(21,712)	$	350,927
2018
Net income/(loss)	$	138,846	$	98,711	$	(32,013)	$	205,544
Add/(deduct):
Interest expense		175		319		4,496		4,990
Income taxes		40,847		28,850		(35,641)		34,056
Depreciation		19,688		18,629		147		38,464
Amortization		12		387		-		399
EBITDA		199,568		146,896		(63,011)		283,453
Add/(deduct):
Intercompany interest expense/(income)		(12,832)		(6,908)		19,740		-
Interest (income)/expense		(580)		(92)		1		(671)
Stock option expense		-		-		12,611		12,611
Long-term incentive compensation		-		-		6,618		6,618
Medicare cap sequestration adjustment		1,496		-		-		1,496
Litigation settlement costs		796		-		-		796
Acquisition expense		209		548		-		757
Amortization of stock awards		107		100		239		446
Adjusted EBITDA	$	188,764	$	140,544	$	(23,802)	$	305,506

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 December 31,				For the Years Ended December 31,
	2019		2018		2019		2018
Net income as reported	$	65,580	$	54,328	$	219,923	$	205,544
Add/(deduct) pre-tax cost of:
Stock option expense		4,102		3,251		14,831		12,611
Long-term incentive compensation		3,079		2,242		7,630		6,618
Litigation settlement		-		1,000		6,000		796
Acquisition expense		1,336		403		4,834		757
Medicare cap sequestration adjustments		919		456		3,982		1,496
Amortization of acquired and cancelled franchise agreements		2,861		-		3,964		-
Loss on sale of transportation equipment		-		-		2,266		-
Non cash ASC 842 expenses		-		-		548		-
Add/(deduct) tax impacts:
Tax impact of the above pre-tax adjustments (1)		(2,567)		(1,527)		(9,328)		(4,586)
Excess tax benefits on stock compensation		(5,440)		(4,244)		(24,177)		(22,862)
Adjusted net income	$	69,870	$	55,909	$	230,473	$	200,374

Diluted Earnings Per Share As Reported
Net income	$	3.96	$	3.26	$	13.31	$	12.23
Average number of shares outstanding		16,565		16,670		16,527		16,803

Adjusted Diluted Earnings Per Share
Adjusted net income	$	4.22	$	3.35	$	13.95	$	11.93
Average number of shares outstanding		16,565		16,670		16,527		16,803

(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 December 31,						For the Years Ended December31,
OPERATING STATISTICS	2019			2018			2019			2018
Net revenue ($000) (c)
Homecare	$	275,976		$	261,972		$	1,076,025		$	1,010,518
Inpatient		30,857			20,874			99,920			82,677
Continuous care		40,997			30,834			133,473			122,498
Other		3,825			1,986			10,433			7,831
Subtotal	$	351,655		$	315,666		$	1,319,851		$	1,223,524
Room and board, net		(3,260)			(2,191)			(11,359)			(10,054)
Contractual allowances		(3,990)			(3,036)			(14,893)			(11,785)
Medicare cap allowance		(4,500)			(3,454)			(12,415)			(4,123)
Net Revenue	$	339,905		$	306,985		$	1,281,184		$	1,197,562
Net revenue as a percent of total before Medicare cap allowance
Homecare		78.5	%		83.0	%		81.5	%		82.6	%
Inpatient		8.8			6.6			7.6			6.8
Continuous care		11.7			9.8			10.1			10.0
Other		1.0			0.6			0.8			0.6
Subtotal		100.0			100.0			100.0			100.0
Room and board, net		(0.9)			(0.7)			(0.9)			(0.8)
Contractual allowances		(1.1)			(1.0)			(1.1)			(1.1)
Medicare cap allowance		(1.3)			(1.1)			(0.9)			(0.2)
Net Revenue		96.7	%		97.2	%		97.1	%		97.9	%
Average daily census ("ADC") (days)
Homecare		14,972			14,062			14,626			13,652
Nursing home		3,461			3,297			3,396			3,298
Routine homecare		18,433			17,359			18,022			16,950
Inpatient		375			326			366			327
Continuous care		450			464			458			465
Total		19,258			18,149			18,846			17,742

Total Admissions		17,479			16,579			69,859			68,119
Total Discharges		17,575			16,623			68,857			66,868
Average length of stay (days)		95.2			92.6			92.6			89.9
Median length of stay (days)		16.0			17.0			16.0			17.0
ADC by major diagnosis
Cerebro		35.8	%		35.8	%		36.0	%		36.3	%
Neurological		21.1			18.6			20.6			19.0
Cancer		12.8			13.7			12.9			13.7
Cardio		16.2			16.3			16.5			16.4
Respiratory		8.1			8.0			8.1			8.2
Other		6.0			7.6			5.9			6.4
Total		100.0	%		100.0	%		100.0	%		100.0	%
Admissions by major diagnosis
Cerebro		21.9	%		20.9	%		21.1	%		21.8	%
Neurological		12.9			11.5			12.6			11.4
Cancer		29.2			31.1			29.2			30.2
Cardio		14.7			14.6			15.5			15.4
Respiratory		10.5			10.1			11.0			10.9
Other		10.8			11.8			10.6			10.3
Total		100.0	%		100.0	%		100.0	%		100.0	%

Estimated uncollectible accounts as a percent of revenues		1.2	%		1.0	%		1.2	%		1.0	%
Accounts receivable --
Days of revenue outstanding- excluding unapplied Medicare payments		35.4			35.0			n.a.			n.a.
Days of revenue outstanding- including unapplied Medicare payments		27.2			24.6			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 MONTHS AND YEARS ENDED DECEMBER 31, 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 December 31, 2019
		VITAS		Roto-Rooter		Corporate		Consolidated
	Service revenues and sales:
	Medicare cap sequestration adjustment	$	(919)	$	-	$	-	$	(919)
	Selling, general and administrative expenses:
	Stock option expense		-		-		(4,102)		(4,102)
	Long-term incentive compensation		-		-		(3,079)		(3,079)
	Amortization of acquired and cancelled franchise agreements		-		(2,861)		-		(2,861)
	Acquisition expense		-		(1,286)		(50)		(1,336)
	Pretax impact on earnings		(919)		(4,147)		(7,231)		(12,297)
	Excess tax benefits on stock compensation		-		-		5,440		5,440
	Income tax benefit on the above		233		1,101		1,233		2,567
	After-tax impact on earnings	$	(686)	$	(3,046)	$	(558)	$	(4,290)

		For the Year Ended December 31, 2019
		VITAS		Roto-Rooter		Corporate		Consolidated
	Service revenues and sales:
	Medicare cap sequestration adjustment	$	(3,982)	$	-	$	-	$	(3,982)
	Selling, general and administrative expenses:
	Stock option expense		-		-		(14,831)		(14,831)
	Long-term incentive compensation		-		-		(7,630)		(7,630)
	Acquisition expense		-		(4,664)		(170)		(4,834)
	Amortization of acquired and cancelled franchise agreements		-		(3,964)		-		(3,964)
	Non cash ASC 842 (expenses)/benefit		(656)		(55)		163		(548)
	Other operating expenses:
	Litigation settlement		(6,000)		-		-		(6,000)
	Loss on sale of transportation equipment		-		-		(2,266)		(2,266)
	Pretax impact on earnings		(10,638)		(8,683)		(24,734)		(44,055)
	Excess tax benefits on stock compensation		-		-		24,177		24,177
	Income tax benefit on the above		2,708		2,301		4,319		9,328
	After-tax impact on earnings	$	(7,930)	$	(6,382)	$	3,762	$	(10,550)

(b)	Included in the results of operations for 2018 are the following significant credits/(charges) which may not be indicative of ongoing operations


	Three Months Ended December 31, 2018
	VITAS		Roto-Rooter		Corporate		Consolidated
Service revenues and sales:
Medicare cap sequestration adjustment	$	(456)	$	-	$	-	$	(456)
Selling, general and administrative expenses:
Stock option expense		-		-		(3,251)		(3,251)
Long-term incentive compensation		-		-		(2,242)		(2,242)
Acquisition expense		(32)		(371)		-		(403)
Other operating expenses:
Litigation settlement		(1,000)		-		-		(1,000)
Pretax impact on earnings		(1,488)		(371)		(5,493)		(7,352)
Excess tax benefits on stock compensation		-		-		4,244		4,244
Income tax benefit on the above		381		98		1,048		1,527
After-tax impact on earnings	$	(1,107)	$	(273)	$	(201)	$	(1,581)

	For the Year Ended December 31, 2018
	VITAS		Roto-Rooter		Corporate		Consolidated
Service revenues and sales:
Medicare cap sequestration adjustment	$	(1,496)	$	-	$	-	$	(1,496)
Selling, general and administrative expenses:
Stock option expense		-		-		(12,611)		(12,611)
Long-term incentive compensation		-		-		(6,618)		(6,618)
Acquisition expense		(209)		(548)		-		(757)
Other operating expenses:
Litigation settlement		(796)		-		-		(796)
Pretax impact on earnings		(2,501)		(548)		(19,229)		(22,278)
Excess tax benefits on stock compensation		-		-		22,862		22,862
Income tax benefit on the above		637		145		3,804		4,586
After-tax impact on earnings	$	(1,864)	$	(403)	$	7,437	$	5,170

VITAS has 12 large (greater than 450 ADC), 20 medium (greater than 200 but less than 450 ADC) and 16 small (less than 200 ADC) hospice programs. Of Vitas' 30 Medicare provider numbers,on a 12-month trailing basis, 23 provider numbers have a Medicare cap cushion of 10% or greater, three provider numbers have a cap cushion between 0% and 5%, and four provider numbers have a Medicare cap liability.

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