Business Wire | Jul 29, 2020 04:15PM EDT

Chemed Reports Second-Quarter 2020 Results

Jul. 29, 2020

CINCINNATI--(BUSINESS WIRE)--Jul. 29, 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 second quarter ended June 30, 2020, versus the comparable prior-year period, as follows:

Consolidated operating results:

* Revenue increased 6.0% to $502 million * GAAP Diluted Earnings-per-Share (EPS) of $5.01, an increase of 62.7% * Adjusted Diluted EPS of $4.41, an increase of 31.3%

VITAS segment operating results:

* Net Patient Revenue of $327 million, an increase of 4.7% * Average Daily Census (ADC) of 19,195, an increase of 2.8% * Admissions of 16,822 a decline of 3.8% * Net Income, excluding certain discrete items, of $50.1 million, an increase of 29.8% * Adjusted EBITDA, excluding Medicare Cap, of $72.5 million, an increase of 32.2% * Adjusted EBITDA margin, excluding Medicare Cap, of 21.7%, an increase of 440-basis points

Roto-Rooter segment operating results:

* Revenue of $175 million, an increase of 8.6% * Net Income, excluding certain discrete items, of $32.0 million, an increase of 16.5% * Adjusted EBITDA of $46.8 million, an increase of 20.7% * Adjusted EBITDA margin of 26.8%, an increase of 269-basis points

VITAS

VITAS net revenue was $327 million in the second quarter of 2020, which is an increase of 4.7%, when compared to the prior-year period. This revenue increase is comprised primarily of a 2.8% increase in days-of-care, a geographically weighted average Medicare reimbursement rate increase (including the suspension of sequestration on May 1, 2020) of approximately 5.4%, and acuity mix shift which then reduced the blended average Medicare rate increase approximately 310-basis points. The combination of increased Medicare Cap and a decrease in Medicaid net room and board pass-through, as well as reductions in other contra revenue activity, reduced revenue growth an additional 42-basis points in the quarter.

VITAS accrued $5.8 million in Medicare Cap billing limitations in the second quarter of 2020. This $5.8 million of Medicare Cap includes approximately $2.3 million of Cap liability attributed to the pandemic. The suspension of sequestration resulted in an additional 2% increase in reimbursement effective May 1, 2020. In Medicare provider numbers that were in a Medicare Cap liability situation, this 2% reimbursement increase was effectively eliminated by a corresponding increase in Medicare Cap liability in those markets. In addition, disruption in Medicare admissions in these markets resulted in a further increase in the projected 2020 Medicare Cap billing limitation.

VITAS currently has 30 Medicare provider numbers. During the first nine months of the fiscal 2020 Medicare Cap year, 22 of these provider numbers have a Medicare Cap cushion of 10% or greater, three 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 an estimated 2020 Medicare Cap billing limitation.

Average revenue per patient per day in the second quarter of 2020 was $194.02, which, including acuity mix shift, is 2.3% above the prior-year period. Reimbursement for routine home care and high acuity care averaged $165.22 and $985.23, respectively. During the quarter, high acuity days-of-care were 3.5% of total days of care, 69-basis points less than the prior-year quarter. This 69-basis point mix shift in high acuity days-of-care reduced the increase in average revenue per patient per day from 5.4% to 2.3% in the quarter.

The second quarter 2020 gross margin, excluding Medicare Cap, increased costs for personal protection equipment (PPE), disinfecting facilities and increased costs for additional paid time off (PTO) for our front-line employees, was 27.2%, which is a 352-basis point margin improvement when compared to the second quarter of 2019. This increase in gross margin is attributed to a level-of-care mix shift to higher margin, lower reimbursement routine home care; efficiencies from utilizing telehealth when appropriate; and lower wage costs from reduced admission intake, including reduced hospital referred admissions that typically result in short length-of-stays and negative gross margins.

Selling, general and administrative expense was $21.1 million in the second quarter of 2020, which is a favorable decrease of 2.8% compared to the prior-year quarter. Adjusted EBITDA, excluding Medicare Cap, totaled $72.5 million in the quarter, an increase of 32.2%. Adjusted EBITDA margin, excluding Medicare Cap, was 21.7% in the quarter, which is a 440-basis point improvement when compared to the prior-year period.

Roto-Rooter

Roto-Rooter generated quarterly revenue of $175 million in the second quarter of 2020, an increase of $13.9 million, or 8.6%, over the prior-year quarter. On a unit-for-unit basis, which excludes the Oakland and HSW acquisitions completed in July 2019 and September 2019, respectively, Roto-Rooter generated quarterly revenue of $158 million for the second quarter of 2020, a decline of 1.9% over the prior-year quarter.

Total commercial revenue, excluding acquisitions, decreased 29.1%. This aggregate commercial revenue decline consisted of drain cleaning revenue declining 31.2%, commercial plumbing and excavation declining 28.0%, and commercial water restoration declining 20.3%.

Total residential revenue, excluding acquisitions, increased 10.4%. This aggregate residential revenue growth consisted of residential drain cleaning increasing 10.2%, plumbing and excavation expanding 14.4%, and residential water restoration increasing 4.3%.

Roto-Rooter started the second quarter of 2020 with plummeting demand in our commercial business and very soft demand in our residential services when compared to the prior year. Fortunately, service demand began to improve in the later part of April and continued to strengthen throughout the remainder of the second quarter. This is reflected in our monthly performance with unit-for-unit commercial revenue declining 38.6%, 31.8% and 19.7% in April, May and June 2020, respectively. Unit-for-unit residential revenue sales declined 1.6% in April, increased 11.7% in May and increased 18.7% in June.

Roto-Rooter's gross margin in the quarter was 51.2%, a 247-basis point increase when compared to the second quarter of 2019. Adjusted EBITDA in the second quarter of 2020 totaled $46.8 million, an increase of 20.7%. The Adjusted EBITDA margin in the quarter was 26.8% which is a 269-basis point increase when compared to the prior year. The increase in Adjusted EBITDA margin is attributed to residential services having a higher margin than commercial services, as well as increased residential excavation and water restoration services which have a significantly higher direct contribution margin compared to commercial plumbing and drain cleaning services.

Chemed Consolidated

As of June 30, 2020, Chemed had total cash and cash equivalents of $20.4 million and no long-term debt.

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, 2020, the Company had approximately $412 million of undrawn borrowing capacity under this credit agreement.

During the quarter, the Company repurchased 50,000 shares of Chemed stock for $21.9 million which equates to a cost per share of $438.27. As of June 30, 2020, there was approximately $232 million of remaining share repurchase authorization under this plan.

Chemed restarted its share repurchase program in 2007. Since that time Chemed has repurchased approximately 14.4 million shares, aggregating approximately $1.3 billion at an average share cost of $92.76. Including dividends over this period, Chemed has returned approximately $1.5 billion to shareholders.

Guidance for 2020

Historically, Chemed earnings guidance has been developed using previous years' key operating metrics which are then modeled and projected out for the calendar year. Critical within these projections is the understanding of traditional patterned correlations among key operating metrics. Once we complete this phase of our projected operating results, we would then modify the projections for the timing of price increases, changes in commission structure, wages, marketing programs and a variety of continuous improvement initiatives that our business segments plan on executing over the coming year. This modeling exercise also takes into consideration anticipated industry and macro-economic issues outside of management's control but are somewhat predictable in terms of timing and impact on our business segments' operating results.

The 2020 pandemic has made accurate modeling and providing meaningful earnings guidance for Chemed exceptionally challenging. Federal, state and local government authorities are forced to make swift decisions within our healthcare system, labor pools and general economy. These governmental decisions have the potential for an immediate and material impact on VITAS and Roto-Rooter operating results.

Over the past four months, Chemed has been able to successfully navigate within this rapidly changing environment and produce operating results that we believe provide us with the ability to provide guidance for the remainder of the calendar year. However, this guidance should be taken with the recognition the pandemic will continue to materially disrupt all aspects of our healthcare system and general economy to such an extent that future rules, regulations and government mandates could materially impact our ability to achieve this guidance.

Revenue growth for VITAS in 2020, prior to Medicare Cap, is estimated to be in the range of 5% to 7%. Average Daily Census in 2020 is estimated to expand approximately 2% to 4%. Full-year Adjusted EBITDA margin, prior to Medicare Cap, is estimated to be 19% to 20%. We are currently estimating $17 million for Medicare Cap billing limitations for calendar year 2020. We also anticipate the $80.2 million of CARES Act funds formulaically calculated by the federal government based upon our 2019 Medicare fee-for-service revenue will be adequate to cover increased costs specifically related to operating our healthcare unit during the pandemic as well as any incremental Medicare Cap billing limitations triggered from declines in Medicare admissions. Chemed's full year adjusted earnings per share guidance eliminates any financial benefit from the CARES Act funds that relate to lost revenue. We anticipate returning any unused CARES Act funds to the federal government at the end of the pandemic measurement period.

Roto-Rooter is forecasted to achieve full-year 2020 revenue growth of 9% to 10%. Roto-Rooter's Adjusted EBITDA margin for 2020 is estimated to be in the range of 23% to 25%.

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, and other discrete items, is estimated to be in the range of $16.20 to $16.40. 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 Thursday, July 30, 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 2266476. 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 2266476. 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 COMPANIESCONSOLIDATED STATEMENTS OF INCOME(in thousands, except per share data)(unaudited) Three Months Ended June Six Months Ended June 30, 30,

2020 2019 2020 2019

Service revenues and $ 502,199 $ 473,584 $ 1,017,997 $ 935,618 salesCost of services 352,163 323,637 703,908 645,588 provided and goodssoldSelling, general and 84,513 71,556 155,096 145,585 administrativeexpenses (aa)Depreciation 11,659 9,887 23,047 19,597

Amortization 2,488 406 4,965 925

Other operating (41,384 ) 2,570 (41,142 ) 8,923 (income)/expensesTotal costs and 409,439 408,056 845,874 820,618 expensesIncome from operations 92,760 65,528 172,123 115,000

Interest expense (651 ) (1,237 ) (1,626 ) (2,361 )

Other (expense)/ 7,514 13 (1,952 ) 2,452 income--net (bb)Income before income 99,623 64,304 168,545 115,091 taxesIncome taxes (17,522 ) (13,575 ) (30,553 ) (19,695 )

Net income $ 82,101 $ 50,729 $ 137,992 $ 95,396

Earnings Per ShareNet income $ 5.16 $ 3.18 $ 8.65 $ 5.98

Average number of 15,914 15,928 15,953 15,941 shares outstandingDiluted Earnings PerShareNet income $ 5.01 $ 3.08 $ 8.39 $ 5.79

Average number of 16,373 16,449 16,445 16,489 shares outstanding (aa) Selling, general and administrative ("SG&A") expenses comprise (inthousands): Three Months Ended June Six Months Ended June 30, 30,

2020 2019 2020 2019

SG&A expenses beforelong-term incentivecompensation and the 75,176 70,300 153,511 140,504 impact of market value $ $ $ $adjustments related todeferred compensationplansMarket valueadjustments related to 7,408 (130 ) (2,164 ) 2,207 deferred compensationtrustsLong-term incentive 1,929 1,386 3,749 2,874 compensationTotal SG&A expenses $ 84,513 $ 71,556 $ 155,096 $ 145,585

(bb) Other (expense)/income--net comprises (inthousands): Three Months Ended June Six Months Ended June 30, 30,

2020 2019 2020 2019

Market valueadjustments related to $ 7,408 $ (130 ) $ (2,164 ) $ 2,207 deferred compensationtrustsInterest income 116 112 225 214

Other (10 ) 31 (13 ) 31

Total other (expense)/ $ 7,514 $ 13 $ (1,952 ) $ 2,452 income--net

CHEMED CORPORATION AND SUBSIDIARY COMPANIESCONSOLIDATED BALANCE SHEETS(in thousands, except per share data)(unaudited) June 30,

2020 2019

AssetsCurrent assetsCash and cash equivalents $ 20,376 $ 3,323

Accounts receivable less allowances 132,487 136,113

Inventories 7,467 6,336

Prepaid income taxes 5,794 12,951

Prepaid expenses 23,183 21,455

Total current assets 189,307 180,178

Investments of deferred compensation plans held 80,113 70,460 in trustProperties and equipment, at cost less 183,017 149,917 accumulated depreciationAssets held for sale - 15,750

Lease right of use asset 128,418 90,755

Identifiable intangible assets less accumulated 122,791 67,511 amortizationGoodwill 578,491 510,627

Other assets 9,055 8,874

Total Assets $ 1,291,192 $ 1,094,072

LiabilitiesCurrent liabilitiesAccounts payable $ 36,704 $ 51,143

Income taxes 19,576 56

Accrued insurance 50,847 46,912

Accrued compensation 80,552 50,123

Accrued legal 6,959 8,431

Short-term lease liability 36,093 31,614

Unutilized CARES Act grant 39,236 -

Other current liabilities 48,549 35,390

Total current liabilities 318,516 223,669

Deferred income taxes 21,108 18,828

Long-term debt - 85,000

Deferred compensation liabilities 77,639 70,273

Long-term lease liability 104,444 69,979

Other liabilities 18,789 7,754

Total Liabilities 540,496 475,503

Stockholders' EquityCapital stock 36,040 35,591

Paid-in capital 904,421 817,255

Retained earnings 1,553,144 1,311,446

Treasury stock, at cost (1,745,299 ) (1,548,138 )

Deferred compensation payable in Company stock 2,390 2,415

Total Stockholders' Equity 750,696 618,569

Total Liabilities and Stockholders' Equity $ 1,291,192 $ 1,094,072



CHEMED CORPORATION AND SUBSIDIARY COMPANIESCONSOLIDATED STATEMENTS OF CASH FLOWS(in thousands)(unaudited) For the Six Months Ended June 30,

2020 2019

Cash Flows from Operating ActivitiesNet income $ 137,992 $ 95,396

Adjustments to reconcile net income to net cashprovided by operating activities:Unutilized CARES Act grant 39,236 -

Depreciation and amortization 28,012 20,522

Deferred payroll taxes 10,716 -

Stock option expense 10,113 8,018

Noncash long-term incentive compensation 3,527 2,506

Provision/(benefit) for deferred income taxes 2,717 (2,769 )

Noncash directors' compensation 1,171 767

Provision for bad debts 871 -

Amortization of debt issuance costs 153 153

Litigation settlement - 6,000

Asset impairment loss - 2,266

Changes in operating assets and liabilities,excluding amounts acquired in businesscombinations:Decrease/(increase) in accounts receivable 6,696 (16,613 )

Increase in inventories (5 ) (631 )

Increase in prepaid expenses (33 ) (2,301 )

Increase/(decrease) in accounts payable and other 13,303 (4,175 )current liabilitiesChange in current income taxes 23,725 (2,249 )

Net change in lease assets and liabilities 1,287 (338 )

Increase in other assets (2,988 ) (4,653 )

Increase in other liabilities 1,383 5,833

Other (uses)/sources (54 ) 1,175

Net cash provided by operating activities 277,822 108,907

Cash Flows from Investing ActivitiesCapital expenditures (32,251 ) (28,312 )

Business combinations (3,600 ) -

Other sources/(uses) 473 (137 )

Net cash used by investing activities (35,378 ) (28,449 )

Cash Flows from Financing ActivitiesPayments on revolving line of credit (264,900 ) (227,000 )

Proceeds from revolving line of credit 174,900 222,800

Purchases of treasury stock (122,148 ) (71,926 )

Proceeds from exercise of stock options 19,440 16,517

Capital stock surrendered to pay taxes on (14,845 ) (14,884 )stock-based compensationDividends paid (10,238 ) (9,567 )

Change in cash overdrafts payable (9,849 ) 1,710

Other (uses)/sources (586 ) 384

Net cash used by financing activities (228,226 ) (81,966 )

Increase/(decrease) in Cash and Cash Equivalents 14,218 (1,508 )

Cash and cash equivalents at beginning of year 6,158 4,831

Cash and cash equivalents at end of year $ 20,376 $ 3,323



CHEMED CORPORATION AND SUBSIDIARY COMPANIESCONSOLIDATING STATEMENTS OF INCOMEFOR THE THREE MONTHS ENDED JUNE 30, 2020 AND 2019(in thousands)(unaudited) Chemed

VITAS Roto-Rooter Corporate Consolidated

2020 (a)Service revenues and $ 327,465 $ 174,734 $ - $ 502,199 salesCost of services 266,815 85,348 - 352,163 provided and goods soldSelling, general and 21,072 44,231 19,210 84,513 administrative expensesDepreciation 5,556 6,069 34 11,659

Amortization 18 2,470 - 2,488

Other operating income (40,826 ) (558 ) - (41,384 )

Total costs and 252,635 137,560 19,244 409,439 expensesIncome/(loss) from 74,830 37,174 (19,244 ) 92,760 operationsInterest expense (45 ) (90 ) (516 ) (651 )

Intercompany interest 4,739 1,422 (6,161 ) - income/(expense)Other (expense)/ 104 (10 ) 7,420 7,514 income-netIncome/(loss) before 79,628 38,496 (18,501 ) 99,623 income taxesIncome taxes (19,383 ) (9,028 ) 10,889 (17,522 )

Net income/(loss) $ 60,245 $ 29,468 $ (7,612 ) $ 82,101

2019 (b)Service revenues and $ 312,750 $ 160,834 $ - $ 473,584 salesCost of services 241,104 82,533 - 323,637 provided and goods soldSelling, general and 21,682 39,377 10,497 71,556 administrative expensesDepreciation 4,831 5,017 39 9,887

Amortization 18 388 - 406

Other operating expense 69 235 2,266 2,570

Total costs and 267,704 127,550 12,802 408,056 expensesIncome/(loss) from 45,046 33,284 (12,802 ) 65,528 operationsInterest expense (53 ) (100 ) (1,084 ) (1,237 )

Intercompany interest 4,382 2,180 (6,562 ) - income/(expense)Other (expense)/ 101 42 (130 ) 13 income-netIncome/(loss) before 49,476 35,406 (20,578 ) 64,304 income taxesIncome taxes (12,137 ) (8,231 ) 6,793 (13,575 )

Net income/(loss) $ 37,339 $ 27,175 $ (13,785 ) $ 50,729

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

CHEMED CORPORATION AND SUBSIDIARY COMPANIESCONSOLIDATING STATEMENTS OF INCOMEFOR THE SIX MONTHS ENDED JUNE 30, 2020 AND 2019(in thousands)(unaudited) Chemed

VITAS Roto-Rooter Corporate Consolidated

2020 (a)Service revenues and $ 665,380 $ 352,617 $ - $ 1,017,997 salesCost of services 526,244 177,664 - 703,908 provided and goodssoldSelling, general and 43,341 90,513 21,242 155,096 administrativeexpensesDepreciation 11,030 11,947 70 23,047

Amortization 36 4,929 - 4,965

Other operating income (40,712 ) (430 ) - (41,142 )

Total costs and 539,939 284,623 21,312 845,874 expensesIncome/(loss) from 125,441 67,994 (21,312 ) 172,123 operationsInterest expense (90 ) (192 ) (1,344 ) (1,626 )

Intercompany interest 9,125 2,771 (11,896 ) - income/(expense)Other (expense)/ 169 30 (2,151 ) (1,952 )income-netIncome/(loss) before 134,645 70,603 (36,703 ) 168,545 income taxesIncome taxes (33,121 ) (16,813 ) 19,381 (30,553 )

Net income/(loss) $ 101,524 $ 53,790 $ (17,322 ) $ 137,992

2019 (b)Service revenues and $ 619,531 $ 316,087 $ - $ 935,618 salesCost of services 480,847 164,741 - 645,588 provided and goodssoldSelling, general and 43,218 78,978 23,389 145,585 administrativeexpensesDepreciation 9,539 9,980 78 19,597

Amortization 35 890 - 925

Other operating 6,423 234 2,266 8,923 expenseTotal costs and 540,062 254,823 25,733 820,618 expensesIncome/(loss) from 79,469 61,264 (25,733 ) 115,000 operationsInterest expense (101 ) (194 ) (2,066 ) (2,361 )

Intercompany interest 8,777 4,375 (13,152 ) - income/(expense)Other income-net 188 56 2,208 2,452

Income/(loss) before 88,333 65,501 (38,743 ) 115,091 income taxesIncome taxes (21,707 ) (15,339 ) 17,351 (19,695 )

Net income/(loss) $ 66,626 $ 50,162 $ (21,392 ) $ 95,396

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

CHEMED CORPORATION AND SUBSIDIARY COMPANIESCONSOLIDATING SUMMARIES OF EBITDAFOR THE THREE MONTHS ENDED JUNE 30, 2020 AND 2019(in thousands)(unaudited) Chemed

VITAS Roto-Rooter Corporate Consolidated

2020

Net income/(loss) $ 60,245 $ 29,468 $ (7,612 ) $ 82,101

Add/(deduct):Interest expense 45 90 516 651

Income taxes 19,383 9,028 (10,889 ) 17,522

Depreciation 5,556 6,069 34 11,659

Amortization 18 2,470 - 2,488

EBITDA 85,247 47,125 (17,951 ) 114,421

Add/(deduct):Intercompany interest (4,739 ) (1,422 ) 6,161 - expense/(income)Interest income (113 ) 10 (13 ) (116 )

CARES Act grant (40,989 ) - - (40,989 )

Direct costs related to 24,265 1,117 - 25,382 COVID-19Stock option expense - - 5,068 5,068

COVID-19 related 2,250 - - 2,250 Medicare capLong-term incentive - - 1,929 1,929 compensationMedicare cap 796 - - 796 sequestrationadjustmentAdjusted EBITDA $ 66,717 $ 46,830 $ (4,806 ) $ 108,741

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 (4,382 ) (2,180 ) 6,562 - expense/(income)Interest income (69 ) (43 ) - (112 )

Stock option expense - - 3,929 3,929

Impairment loss on - - 2,266 2,266 transportationequipmentMedicare cap 1,689 - - 1,689 sequestrationadjustmentLong-term incentive - - 1,386 1,386 compensationAcquisition expense - 97 - 97

Adjusted EBITDA $ 51,616 $ 38,785 $ (5,312 ) $ 85,089

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

CHEMED CORPORATION AND SUBSIDIARY COMPANIESCONSOLIDATING SUMMARIES OF EBITDAFOR THE SIX MONTHS ENDED JUNE 30, 2020 AND 2019(in thousands)(unaudited) Chemed

VITAS Roto-Rooter Corporate Consolidated

2020

Net income/(loss) $ 101,524 $ 53,790 $ (17,322 ) $ 137,992

Add/(deduct):Interest expense 90 192 1,344 1,626

Income taxes 33,121 16,813 (19,381 ) 30,553

Depreciation 11,030 11,947 70 23,047

Amortization 36 4,929 - 4,965

EBITDA 145,801 87,671 (35,289 ) 198,183

Add/(deduct):Intercompany interest (9,125 ) (2,771 ) 11,896 - expense/(income)Interest income (181 ) (31 ) (13 ) (225 )

Direct costs related to 25,238 1,978 - 27,216 COVID-19CARES Act grant (40,989 ) - - (40,989 )

Stock option expense - - 10,114 10,114

Long-term incentive - - 3,749 3,749 compensationCOVID-19 Medicare cap 2,250 - - 2,250

Medicare cap 1,472 - - 1,472 sequestrationadjustmentAdjusted EBITDA $ 124,466 $ 86,847 $ (9,543 ) $ 201,770

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 (8,777 ) (4,375 ) 13,152 - expense/(income)Interest (income)/ (157 ) (56 ) - (213 )expenseStock option expense - - 8,018 8,018

Litigation settlement 6,000 - - 6,000 costsLong-term incentive - - 2,874 2,874 compensationImpairment loss on - - 2,266 2,266 transportationequipmentMedicare cap 2,204 - - 2,204 sequestrationadjustmentAcquisition expense - 97 120 217

Non cash ASC 842 656 55 (163 ) 548 expenses/(benefit)Adjusted EBITDA $ 97,934 $ 72,286 $ (10,332 ) $ 159,888

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

CHEMED CORPORATION AND SUBSIDIARY COMPANIESRECONCILIATION OF ADJUSTED NET INCOME(in thousands, except per share data)(unaudited) Three Months Ended June Six Months Ended June 30, 30,

2020 2019 2020 2019

Net income as reported $ 82,101 $ 50,729 $ 137,992 $ 95,396

Add/(deduct) pre-tax costof:CARES Act grant (40,989 ) - (40,989 ) -

Direct costs related to 25,382 - 27,216 - COVID-19Stock option expense 5,068 3,929 10,114 8,018

Amortization of 2,352 331 4,704 772 reacquired franchiseagreementsCOVID-19 Medicare cap 2,250 - 2,250 -

Long-term incentive 1,929 1,386 3,749 2,874 compensationMedicare cap 796 1,689 1,472 2,204 sequestration adjustmentsImpairment loss on - 2,266 - 2,266 transportation equipmentLitigation settlement - - - 6,000

Acquisition expense - 97 - 217

Non cash ASC 842 expenses - - - 548

Add/(deduct) tax impacts:Tax impact of the above 1,537 (2,000 ) (814 ) (4,961 )pre-tax adjustments (1)Excess tax benefits on (8,203 ) (3,212 ) (12,756 ) (9,944 )stock compensationAdjusted net income $ 72,223 $ 55,215 $ 132,938 $ 103,390

Diluted Earnings PerShare As ReportedNet income $ 5.01 $ 3.08 $ 8.39 $ 5.79

Average number of shares 16,373 16,449 16,445 16,489 outstanding Adjusted Diluted EarningsPer ShareAdjusted net income $ 4.41 $ 3.36 $ 8.08 $ 6.27

Average number of shares 16,373 16,449 16,445 16,489 outstanding (1) The tax impact of pre-tax adjustments was calculated using the effectivetax rate of the operating unit for which each adjustment is associated. The "Footnotes to Financial Statements" are integral parts of this financialinformation.

CHEMED CORPORATION AND SUBSIDIARY COMPANIESOPERATING STATISTICS FOR VITAS SEGMENT(unaudited) Three Months Ended June 30, Six Months Ended June 30,

OPERATING STATISTICS 2020 2019 2020 2019

Net revenue ($000)(c)Homecare $ 276,345 $ 266,461 $ 548,098 $ 525,312

Inpatient 25,868 22,894 58,350 45,464

Continuous care 34,582 30,786 75,137 63,030

Other 2,109 2,237 5,265 4,242

Subtotal $ 338,904 $ 322,378 $ 686,850 $ 638,048

Room and board, net (2,647 ) (2,710 ) (6,028 ) (5,252 )

Contractual (3,042 ) (3,720 ) (7,192 ) (6,667 )allowancesMedicare cap (5,750 ) (3,198 ) (8,250 ) (6,598 )allowanceNet Revenue $ 327,465 $ 312,750 $ 665,380 $ 619,531

Net revenue as apercent of totalbefore Medicare capallowanceHomecare 81.5 % 82.7 % 79.8 % 82.3 %

Inpatient 7.6 7.1 8.5 7.1

Continuous care 10.2 9.5 10.9 9.9

Other 0.7 0.7 0.8 0.7

Subtotal 100.0 100.0 100.0 100.0

Room and board, net (0.8 ) (0.8 ) (0.9 ) (0.8 )

Contractual (0.9 ) (1.2 ) (1.0 ) (1.0 )allowancesMedicare cap (1.7 ) (1.0 ) (1.2 ) (1.0 )allowanceNet Revenue 96.6 % 97.0 % 96.9 % 97.2 %

Days of careHomecare 1,401,744 1,317,854 2,766,490 2,599,753

Nursing home 279,462 303,983 582,836 593,752

Respite 4,158 6,669 10,850 12,970

Subtotal routine 1,685,364 1,628,506 3,360,176 3,206,475 homecare and respiteInpatient 25,542 29,663 57,890 58,813

Continuous care 35,814 41,804 77,187 85,727

Total 1,746,720 1,699,973 3,495,253 3,351,015

Number of days in 91 91 182 181 relevant time periodAverage daily census("ADC") (days)Homecare 15,404 14,482 15,201 14,364

Nursing home 3,071 3,340 3,202 3,280

Respite 45 73 60 72

Subtotal routine 18,520 17,895 18,463 17,716 homecare and respiteInpatient 281 327 318 325

Continuous care 394 459 424 474

Total 19,195 18,681 19,205 18,515

Total Admissions 16,822 17,491 35,425 35,249

Total Discharges 17,000 17,008 35,208 34,350

Average length of 90.9 91.1 90.8 91.2 stay (days)Median length of stay 14.0 16.0 14.0 15.0 (days)ADC by majordiagnosisCerebro 35.2 % 35.7 % 35.7 % 35.8 %

Neurological 21.7 20.4 21.6 20.2

Cancer 12.8 12.7 12.7 12.7

Cardio 16.1 17.0 15.9 16.9

Respiratory 8.2 8.2 8.3 8.2

Other 6.0 6.0 5.8 6.2

Total 100.0 % 100.0 % 100.0 % 100.0 %

Admissions by majordiagnosisCerebro 20.9 % 20.6 % 21.0 % 20.7 %

Neurological 13.4 12.2 12.9 12.5

Cancer 27.6 29.2 28.0 28.6

Cardio 14.6 16.0 14.9 16.1

Respiratory 9.8 11.7 10.9 11.8

Other 13.7 10.3 12.3 10.3

Total 100.0 % 100.0 % 100.0 % 100.0 %

Estimateduncollectible 0.9 % 1.2 % 1.1 % 1.1 %accounts as a percentof revenues Accounts receivable--Days of revenueoutstanding-excluding 31.9 32.7 n.a. n.a.unapplied MedicarepaymentsDays of revenueoutstanding-including 26.7 27.7 n.a. n.a.unapplied Medicarepayments The "Footnotes to Financial Statements" are integral parts of this financialinformation.

CHEMED CORPORATION AND SUBSIDIARY COMPANIESFOOTNOTES TO FINANCIAL STATEMENTSFOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2020 AND 2019(unaudited) (a) Included in the results of operations for 2020 are the following significant credits/(charges) which may not be indicative of ongoing operations

(in thousands):

Three Months Ended June 30, 2020

VITAS Roto-Rooter Corporate Consolidated

CARES Act grant $ 40,989 $ - $ - $ 40,989

Direct costs (24,265 ) (1,117 ) - (25,382 ) related to COVID-19 Stock option - - (5,068 ) (5,068 ) expense Amortization of reacquired - (2,352 ) - (2,352 ) franchise agreements COVID-19 Medicare (2,250 ) - - (2,250 ) cap Long-term - - (1,929 ) (1,929 ) incentive compensation Medicare cap (796 ) - - (796 ) sequestration adjustment Pretax impact on 13,678 (3,469 ) (6,997 ) 3,212 earnings Excess tax - - 8,203 8,203 benefits on stock compensation Income tax benefit (3,515 ) 918 1,060 (1,537 ) on the above After-tax impact $ 10,163 $ (2,551 ) $ 2,266 $ 9,878 on earnings Six Months Ended June 30, 2020

VITAS Roto-Rooter Corporate Consolidated

CARES Act grant $ 40,989 $ - $ - $ 40,989

Direct costs (25,238 ) (1,978 ) - (27,216 ) related to COVID-19 Stock option - - (10,114 ) (10,114 ) expense Amortization of acquired and - (4,704 ) - (4,704 ) cancelled franchise agreements Long-term - - (3,749 ) (3,749 ) incentive compensation COVID-19 Medicare (2,250 ) - - (2,250 ) cap Medicare cap (1,472 ) - - (1,472 ) sequestration adjustment Pretax impact on 12,029 (6,682 ) (13,863 ) (8,516 ) earnings Excess tax - - 12,756 12,756 benefits on stock compensation Income tax benefit (3,096 ) 1,770 2,140 814 on the above After-tax impact $ 8,933 $ (4,912 ) $ 1,033 $ 5,054 on earnings (b) 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

Stock option $ - $ - $ (3,929 ) $ (3,929 ) expense Impairment loss on - - (2,266 ) (2,266 ) transportation equipment Medicare cap (1,689 ) - - (1,689 ) sequestration adjustment Long-term - - (1,386 ) (1,386 ) incentive compensation Amortization of reacquired - (331 ) (331 ) franchise agreements Acquisition - (97 ) - (97 ) expense Pretax impact on (1,689 ) (428 ) (7,581 ) (9,698 ) earnings Excess tax - - 3,212 3,212 benefits on stock compensation Income tax benefit 435 113 1,452 2,000 on the above After-tax impact $ (1,254 ) $ (315 ) $ (2,917 ) $ (4,486 ) on earnings Six Months Ended June 30, 2019

VITAS Roto-Rooter Corporate Consolidated

Stock option $ - $ - $ (8,018 ) $ (8,018 ) expense Litigation (6,000 ) - - (6,000 ) settlement Long-term - - (2,874 ) (2,874 ) incentive compensation Impairment loss on - - (2,266 ) (2,266 ) transportation equipment Medicare cap (2,204 ) - - (2,204 ) sequestration adjustment Amortization of reacquired - (772 ) (772 ) franchise agreements Non cash ASC 842 (656 ) (55 ) 163 (548 ) (expenses)/benefit Acquisition - (97 ) (120 ) (217 ) expense Pretax impact on (8,860 ) (924 ) (13,115 ) (22,899 ) earnings Excess tax - - 9,944 9,944 benefits on stock compensation Income tax benefit 2,254 245 2,462 4,961 on the above After-tax impact $ (6,606 ) $ (679 ) $ (709 ) $ (7,994 ) on earnings VITAS has 11 large (greater than 450 ADC), 20 medium (greater than 200 but less than 450 ADC) and 18 small (less than 200 ADC) hospice programs. Of Vitas' 30 Medicare provider numbers, for the first nine months of the current(c) cap year, 22 provider numbers have a Medicare cap cushion of 10% or greater, three 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 liability.

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CONTACT: David P. Williams (513) 762-6901