Chemed Reports Third-Quarter 2009 Results

Chemed Corporation (Chemed) (NYSE:CHE), which operates VITAS Healthcare Corporation (VITAS), the nation’s largest provider of end-of-life care, and Roto-Rooter, the nation’s largest commercial and residential plumbing and drain cleaning services provider, reported financial results for its third quarter ended September 30, 2009, versus the comparable prior-year period, as follows:

Consolidated operating results:

• Revenue increased 2.9% to $296.8 million
• Diluted EPS increased 13.5% to $0.84
• Adjusted Diluted EPS increased 6.7% to $0.96

VITAS segment operating results:

• Net Patient Revenue of $217.1 million, an increase of 5.9%
• Average Daily Census (ADC) of 12,117, an increase of 0.7%
• Admissions of 13,735, an increase of 3.1%
• Net Income of $18.3 million, an increase of 4.0%
• Adjusted EBITDA of $32.9 million, an increase of 5.8%

Roto-Rooter segment operating results:

• Revenue of $79.7 million, a decline of 4.4%
• Job count of 160,923, a decline of 8.3%
• Net Income of $8.0 million, an increase of 0.4%
• Adjusted EBITDA of $13.8 million, an increase of 1.2%
• Adjusted EBITDA margin of 17.3%, an increase of 95 basis points

VITAS

Net revenue for VITAS was $217.1 million in the third quarter of 2009, which is an increase of 5.9% over the prior-year period. This revenue growth was the result of increased admissions of 3.1%, a Medicare price increase of approximately 3.5%, partially offset by an increase in discharged patients of 1.2%. The remaining difference is attributed to the timing within the quarter of admissions and discharges as well as revenue and patient geographic mix.

Average revenue per patient per day in the quarter was $194.76, which is 5.2% above the prior-year period. Routine home care reimbursement and high acuity care averaged $153.11 and $675.70, respectively, per patient per day in the third quarter of 2009. During the quarter, high acuity days-of-care were 8.0% of total days-of-care.

Of VITAS’ 34 unique Medicare provider numbers, 31 provider numbers, or 91%, have a Medicare Cap cushion greater than 10% for the 2009 Medicare Cap period with two provider numbers having cushion of less than 5%. VITAS generated an aggregate cap cushion of $174 million or 25% during the 2009 Medicare Cap period. In the third quarter of 2009, we received notification from our fiscal intermediary of a $43,000 Medicare Cap billing limitation for one program related to the 2006 cap period.

The third quarter of 2009 gross margin was 23.4%, which is essentially flat with the third quarter of 2008.

Selling, general and administrative expense was $18.2 million in the third quarter of 2009, which is an increase of 6.6% when compared to the prior year. Adjusted EBITDA totaled $32.9 million, an increase of 5.8% over the comparable prior-year period. Adjusted EBITDA margin was 15.1% in the quarter, which is essentially equal to the third quarter of 2008.

Roto-Rooter

Roto-Rooter’s plumbing and drain cleaning business generated sales of $79.7 million for the third quarter of 2009, a decline of 4.4%. Despite the decline in revenues, Roto-Rooter’s gross margin expanded 133 basis points to 46.4%, as compared to the third quarter of 2008. This is attributable primarily to favorable technician turnover rate, lower fuel costs and lower health insurance expense. Favorable technician turnover rates improve margins by reducing hiring expenses and training costs. Adjusted EBITDA in the third quarter of 2009 totaled $13.8 million, an increase of 1.2% from the third quarter of 2008, and equated to an Adjusted EBITDA margin of 17.3%.

Job count in the third quarter of 2009 declined 8.3% when compared to the prior-year period. Total residential jobs declined 6.1%, as residential plumbing jobs decreased 6.8% and residential drain cleaning jobs declined 5.6%, when compared to the third quarter of 2008. Residential jobs represented 71% of total job count in the quarter. Total commercial jobs declined 13.3% with commercial plumbing job count declining 17.1% and commercial drain cleaning decreasing 13.1%, when compared to the prior-year quarter. These declines were partially offset by a 21.3% increase in jobs in the "Other” category.

This job count decline was significantly mitigated relative to total revenue through a combination of increased pricing and favorable job mix shift to more expensive jobs such as excavation.

Management continues to have discussions with existing franchisees to acquire Roto-Rooter franchise territories. This activity is attributed to the current state of the capital markets, the potential increase in tax rates and the recessionary difficulties our franchisees are experiencing. Management will continue to be highly disciplined in terms of valuation, risk assessment and overall return on investment of any potential acquisition. However, the timing or actual completion of any acquisition cannot be predicted.

Chemed Consolidated Debt and Cash Flows

Effective January 1, 2009, the Company retrospectively adopted a new accounting standard to account for its convertible debt instrument. This accounting standard required the Company to separately account for the debt and equity portions of its 1.875% Senior Convertible Notes (Notes). This accounting method assumed the Company could have borrowed under a conventional seven-year fixed rate interest-only note at 6.875%. The difference between the actual 1.875% coupon rate of the Notes and this estimated borrowing rate created a discount on the Notes that is recorded in equity at the inception of the debt. The Notes, net of this discount, will be accreted to their face value over the life of the Notes using the effective interest method. The impact of this accounting change for the year ended December 31, 2009, is projected to be a non-cash increase in pretax interest expense of approximately $6.3 million ($4.0 million after-tax).

Chemed had total debt of $150.5 million at September 30, 2009. This debt is net of the discount taken as a result of the new accounting standard. Excluding this discount, aggregate debt is $187.0 million and is due in May 2014. During the third quarter of 2009, the Company prepaid the remaining $5.0 million bank term loan utilizing cash on hand. Chemed’s total debt equates to less than one times trailing Adjusted EBITDA.

Chemed’s $175.0 million revolving credit facility expires in May 2012. At September 30, 2009, this credit facility had approximately $147.1 million of undrawn borrowing capacity after deducting $27.9 million for letters of credit issued under this facility to secure the Company’s workers’ compensation insurance.

Total cash and cash equivalents as of September 30, 2009, was $42.0 million, which represents 23.1% of total current assets. Net cash provided from operations in the first nine months of 2009 aggregated $80.5 million. Capital expenditures for the first nine months of 2009 aggregated $14.5 million and compares favorably to depreciation and amortization in the first nine months of 2009 of $20.8 million.

In the third quarter of 2009, the Company increased its quarterly dividend per share from $0.06 per share to $0.12 per share. Management continually evaluates alternatives, including share or debt repurchase, acquisitions and increased dividends, to determine the most beneficial use of available capital resources.

Guidance for 2009

VITAS expects to achieve full-year 2009 revenue growth, prior to Medicare Cap, of 5.7% to 6.2%. Admissions in 2009 are estimated to be in the range of 98% to 100% of total 2008 admissions and full-year Adjusted EBITDA margin, prior to Medicare Cap, is estimated to be 15.2% to 15.5%. Effective October 1, 2009, Medicare increased average hospice reimbursement rates by approximately 1.4%. This guidance includes $1.25 million of estimated Medicare contractual billing limitations in the fourth quarter of 2009.

Roto-Rooter expects to achieve full-year 2009 revenue to range from 98% to 101% of 2008 full-year sales. The revenue estimate is a result of increased pricing of 5.0%, a favorable mix shift to higher revenue jobs, offset by a job count decline estimated at 7.0% to 8.0%. Adjusted EBITDA margin for 2009 is estimated in the range of 17.9% to 18.2%.

Chemed’s effective tax rate for full-year 2009 is estimated at 39.0%.

Based upon these factors and a full-year average diluted share count of 22.7 million shares, management estimates 2009 earnings per diluted share from continuing operations, excluding non-cash expenses for stock options, the non-cash increase in interest expense related to the accounting change for convertible debt interest expense and other items not indicative of ongoing operations will be in the range of $3.85 to $3.95.

Conference Call

Chemed will host a conference call and webcast at 10 a.m., EDT, on Wednesday, October 28, 2009, to discuss the Company's quarterly results and to provide an update on its business. The dial-in number for the conference call is (866) 804-6924 for U.S. and Canadian participants and (857) 350-1670 for international participants. The participant passcode is 36347073. 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 (888) 286-8010 for U.S. and Canadian callers and (617) 801-6888 for international callers and will be available for one week following the live call. The replay passcode is 89632552. An archived webcast will also be available at www.chemed.com.

Chemed Corporation operates in the healthcare field through its VITAS Healthcare Corporation subsidiary. VITAS provides daily hospice services to approximately 12,000 patients with severe, life-limiting illnesses. This type of care is focused on making the terminally ill patient's final days as comfortable and pain-free as possible.

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

This press release contains information about Chemed’s EBITDA, 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								Nine Months Ended
									September 30,								September 30,
									2009				2008 (aa)				2009				2008 (aa)
Service revenues and sales									$	296,794			$	288,312			$	886,987			$	856,736
Cost of services provided and goods sold										208,888				202,446				623,238				609,397
Selling, general and administrative expenses (bb)										48,148				44,022				143,521				133,070
Depreciation										5,361				5,441				16,024				16,249
Amortization										1,611				1,494				4,765				4,433
Other operating expense (cc)										-				-				3,989				-
	Total costs and expenses									264,008				253,403				791,537				763,149
	Income from operations									32,786				34,909				95,450				93,587
Interest expense										(2,853	)			(3,140	)			(8,839	)			(9,213	)
Other income/(expense)--net (dd)										1,733				(1,908	)			4,815				(2,211	)
	Income before income taxes									31,666				29,861				91,426				82,163
Income taxes										(12,456	)			(12,910	)			(35,627	)			(33,081	)
Net Income									$	19,210			$	16,951			$	55,799			$	49,082
Earnings Per Share
	Net income								$	0.86			$	0.75			$	2.49			$	2.11
	Average number of shares outstanding									22,461				22,503				22,425				23,285
Diluted Earnings Per Share
	Net income								$	0.84			$	0.74			$	2.46			$	2.08
	Average number of shares outstanding									22,744				22,818				22,679				23,620

(aa)	Effective January 1, 2009, we retrospectively adopted the provisions of the FASB's guidance, issued in May 2008, for accounting for certain convertible debt instruments.
(bb)	Selling, general and administrative ("SG&A") expenses comprise (in thousands):

				Three Months Ended September 30,								Nine Months Ended September 30,
				2009				2008				2009				2008
		SG&A expenses before the impact of market gains and losses of deferred compensation plans		$	46,359			$	45,966			$	140,147			$	135,695
		Impact of market gains and losses			1,789				(1,944	)			3,374				(2,625	)
		Total SG&A expenses		$	48,148			$	44,022			$	143,521			$	133,070

(cc)	Amount represents expenses associated with contested proxy situation
(dd)	Other income/(expense)--net comprises (in thousands):

									Three Months Ended September 30,								Nine Months Ended September 30,
									2009				2008				2009				2008
		Market value gains/(losses) on assets held in deferred compensation trust							$	1,789			$	(1,944	)		$	3,374			$	(2,625	)
		Gain/ (loss) on disposal of property and equipment								(159	)			(147	)			(213	)			(260	)
		Interest income								86				159				375				602
		Gain on settlement of company-owned life insurance								-				-				1,211				-
		Other								17				24				68				72
			Total other income--net						$	1,733			$	(1,908	)		$	4,815			$	(2,211	)

	CHEMED CORPORATION AND SUBSIDIARY COMPANIES
	CONSOLIDATED BALANCE SHEET
	(in thousands, except per share data)(unaudited)
													September 30,
													2009				2008 (aa)
Assets
		Current assets
			Cash and cash equivalents										$	42,047			$	6,804
			Accounts receivable less allowances											106,667				88,206
			Inventories											8,071				7,494
			Current deferred income taxes											16,648				15,500
			Prepaid expenses and other current assets											8,579				7,702
				Total current assets										182,012				125,706
		Investments of deferred compensation plans held in trust												22,441				28,897
		Properties and equipment, at cost less accumulated depreciation												73,918				70,970
		Identifiable intangible assets less accumulated amortization												58,853				62,152
		Goodwill												450,130				439,909
		Other assets												14,049				14,913
					Total Assets								$	801,403			$	742,547
Liabilities
		Current liabilities
			Accounts payable										$	47,788			$	46,187
			Current portion of long-term debt											70				10,166
			Income taxes											8,022				2,736
			Accrued insurance											34,955				34,567
			Accrued compensation											41,383				38,385
			Other current liabilities											12,992				13,412
				Total current liabilities										145,210				145,453
		Deferred income taxes												22,389				21,239
		Long-term debt												150,431				161,036
		Deferred compensation liabilities												21,962				29,133
		Other liabilities												4,435				6,123
					Total Liabilities									344,427				362,984
Stockholders' Equity
		Capital stock												29,763				29,446
		Paid-in capital												327,918				311,388
		Retained earnings												388,109				320,731
		Treasury stock, at cost												(290,748	)			(284,436	)
		Deferred compensation payable in Company stock												1,934				2,434
					Total Stockholders' Equity									456,976				379,563
					Total Liabilities and Stockholders' Equity								$	801,403			$	742,547
		(aa)	Effective January 1, 2009, we retrospectively adopted the provisions of the FASB's guidance, issued in May 2008, for accounting for certain convertible debt instruments.

CHEMED CORPORATION AND SUBSIDIARY COMPANIES
CONSOLIDATED STATEMENT OF CASH FLOWS
(in thousands)(unaudited)
												Nine Months Ended September 30,
												2009				2008 (aa)
Cash Flows from Operating Activities
	Net income											$	55,799			$	49,082
	Adjustments to reconcile net income to net cash provided by operating activities:
			Depreciation and amortization										20,789				20,682
			Provision for uncollectible accounts receivable										8,297				7,101
			Stock option expense										6,699				5,084
			Amortization of discount on convertible notes										4,921				4,920
			Provision for deferred income taxes										(1,336	)			(3,945	)
			Amortization of debt issuance costs										480				464
			Changes in operating assets and liabilities, excluding amounts acquired in business combinations:
					Decrease/(increase) in accounts receivable								(16,936	)			5,846
					Increase in inventories								(499	)			(851	)
					Decrease in prepaid expenses and other current assets
													1,406				2,804
					Decrease in accounts payable and other current liabilities								(4,584	)			(875	)
					Increase/(decrease) in income taxes								8,657				(329	)
					Increase in other assets								(103	)			(547	)
					Increase/(decrease) in other liabilities								(1,632	)			674
			Excess tax benefit on share-based compensation										(1,519	)			(1,234	)
			Other sources										108				654
				Net cash provided by operating activities									80,547				89,530
Cash Flows from Investing Activities
	Capital expenditures												(14,471	)			(13,103	)
	Business combinations, net of cash acquired												(1,859	)			(1,578	)
	Proceeds from sales of property and equipment												1,519				200
	Net proceeds/(uses) from the sale of discontinued operations												(558	)			8,980
	Other uses												(392	)			(421	)
				Net cash used by investing activities									(15,761	)			(5,922	)
Cash Flows from Financing Activities
	Repayment of long-term debt												(14,599	)			(7,595	)
	Net decrease in revolving line of credit												(8,200	)			-
	Dividends paid												(5,429	)			(4,352	)
	Purchases of treasury stock												(1,684	)			(69,136	)
	Excess tax benefit on share-based compensation												1,519				1,234
	Increase/(decrease) in cash overdrafts payable												943				(1,913	)
	Other sources/(uses)												1,083				(30	)
				Net cash used by financing activities									(26,367	)			(81,792	)
Increase in Cash and Cash Equivalents													38,419				1,816
Cash and cash equivalents at beginning of year													3,628				4,988
Cash and cash equivalents at end of period												$	42,047			$	6,804
(aa)		Effective January 1, 2009, we retrospectively adopted the provisions of the FASB's guidance, issued in May 2008, for accounting for certain convertible debt instruments.

CHEMED CORPORATION AND SUBSIDIARY COMPANIES
CONSOLIDATING STATEMENT OF INCOME
FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2009 AND 2008
(in thousands)(unaudited)
																			Chemed
							VITAS				Roto-Rooter				Corporate				Consolidated
2009
Service revenues and sales							$	217,067			$	79,727			$	-			$	296,794
Cost of services provided and goods sold								166,182				42,706				-				208,888
Selling, general and administrative expenses (a)								18,227				22,739				7,182				48,148
Depreciation								3,292				2,005				64				5,361
Amortization								990				33				588				1,611
	Total costs and expenses							188,691				67,483				7,834				264,008
	Income/(loss) from operations							28,376				12,244				(7,834	)			32,786
Interest expense (a)								(51	)			(43	)			(2,759	)			(2,853	)
Intercompany interest income/(expense)								1,178				684				(1,862	)			-
Other income/(expense)—net								(86	)			15				1,804				1,733
	Income/(loss) before income taxes							29,417				12,900				(10,651	)			31,666
Income taxes (a)								(11,150	)			(4,912	)			3,606				(12,456	)
	Net income/(loss)						$	18,267			$	7,988			$	(7,045	)		$	19,210
2008 (f)
Service revenues and sales							$	204,956			$	83,356			$	-			$	288,312
Cost of services provided and goods sold								156,685				45,761				-				202,446
Selling, general and administrative expenses (b)								17,100				23,576				3,346				44,022
Depreciation								3,256				2,102				83				5,441
Amortization								996				11				487				1,494
	Total costs and expenses							178,037				71,450				3,916				253,403
	Income/(loss) from operations							26,919				11,906				(3,916	)			34,909
Interest expense (b)								(35	)			(56	)			(3,049	)			(3,140	)
Intercompany interest income/(expense)								1,435				1,026				(2,461	)			-
Other income/(expense)—net								(59	)			45				(1,894	)			(1,908	)
	Income/(loss) before income taxes							28,260				12,921				(11,320	)			29,861
Income taxes (b)								(10,699	)			(4,964	)			2,753				(12,910	)
	Net income/(loss)						$	17,561			$	7,957			$	(8,567	)		$	16,951
The "Footnotes to Financial Statements" are integral parts of this financial information.
CHEMED CORPORATION AND SUBSIDIARY COMPANIES
CONSOLIDATING STATEMENT OF INCOME
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2009 AND 2008
(in thousands)(unaudited)
																			Chemed
							VITAS				Roto-Rooter				Corporate				Consolidated
2009
Service revenues and sales							$	636,787			$	250,200			$	-			$	886,987
Cost of services provided and goods sold								487,989				135,249				-				623,238
Selling, general and administrative expenses (a)								53,650				69,958				19,913				143,521
Depreciation								9,767				6,094				163				16,024
Amortization								2,969				81				1,715				4,765
Other operating expense (a)								-				-				3,989				3,989
	Total costs and expenses							554,375				211,382				25,780				791,537
	Income/(loss) from operations							82,412				38,818				(25,780	)			95,450
Interest expense (a)								(416	)			(137	)			(8,286	)			(8,839	)
Intercompany interest income/(expense)								3,091				1,801				(4,892	)			-
Other income/(expense)—net								34				137				4,644				4,815
	Income/(loss) before income taxes							85,121				40,619				(34,314	)			91,426
Income taxes (a)								(32,327	)			(15,504	)			12,204				(35,627	)
	Net income/(loss)						$	52,794			$	25,115			$	(22,110	)		$	55,799
2008 (f)
Service revenues and sales							$	602,589			$	254,147			$	-			$	856,736
Cost of services provided and goods sold (b)								471,018				138,379				-				609,397
Selling, general and administrative expenses (b)								50,520				70,710				11,840				133,070
Depreciation								9,769				6,249				231				16,249
Amortization								2,988				36				1,409				4,433
	Total costs and expenses							534,295				215,374				13,480				763,149
	Income/(loss) from operations							68,294				38,773				(13,480	)			93,587
Interest expense (b)								(118	)			(216	)			(8,879	)			(9,213	)
Intercompany interest income/(expense)								3,862				2,832				(6,694	)			-
Other income/(expense)—net								(48	)			58				(2,221	)			(2,211	)
	Income/(loss) before income taxes							71,990				41,447				(31,274	)			82,163
Income taxes (b)								(26,810	)			(16,002	)			9,731				(33,081	)
	Net income/(loss)						$	45,180			$	25,445			$	(21,543	)		$	49,082
The "Footnotes to Financial Statements" are integral parts of this financial information.

CHEMED CORPORATION AND SUBSIDIARY COMPANIES
CONSOLIDATING SUMMARY OF EBITDA
FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2009 AND 2008
(in thousands)(unaudited)
																					Chemed
									VITAS				Roto-Rooter				Corporate				Consolidated
2009
Net income/(loss)									$	18,267			$	7,988			$	(7,045	)		$	19,210
Add/(deduct):
		Interest expense								51				43				2,759				2,853
		Income taxes								11,150				4,912				(3,606	)			12,456
		Depreciation								3,292				2,005				64				5,361
		Amortization								990				33				588				1,611
			EBITDA							33,750				14,981				(7,240	)			41,491
Add/(deduct):
		Legal expenses of OIG investigation								343				-				-				343
		Stock option expense								-				-				2,214				2,214
		Advertising cost adjustment (c)								-				(466	)			-				(466	)
		Interest income								(54	)			(9	)			(23	)			(86	)
		Intercompany interest income/(expense)								(1,178	)			(684	)			1,862				-
			Adjusted EBITDA						$	32,861			$	13,822			$	(3,187	)		$	43,496
2008 (f)
Net income/(loss)									$	17,561			$	7,957			$	(8,567	)		$	16,951
Add/(deduct):
		Interest expense								35				56				3,049				3,140
		Income taxes								10,699				4,964				(2,753	)			12,910
		Depreciation								3,256				2,102				83				5,441
		Amortization								996				11				487				1,494
			EBITDA							32,547				15,090				(7,701	)			39,936
Add/(deduct):
		Legal expenses of OIG investigation								2				-				-				2
		Stock option expense								-				-				2,102				2,102
		Advertising cost adjustment (c)								-				(351	)			-				(351	)
		Interest income								(58	)			(51	)			(50	)			(159	)
		Intercompany interest income/(expense)								(1,435	)			(1,026	)			2,461				-
			Adjusted EBITDA						$	31,056			$	13,662			$	(3,188	)		$	41,530
The "Footnotes to Financial Statements" are integral parts of this financial information.

CHEMED CORPORATION AND SUBSIDIARY COMPANIES
CONSOLIDATING SUMMARY OF EBITDA
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2009 AND 2008
(in thousands)(unaudited)
																					Chemed
									VITAS				Roto-Rooter				Corporate				Consolidated
2009
Net income/(loss)									$	52,794			$	25,115			$	(22,110	)		$	55,799
Add/(deduct):
		Interest expense								416				137				8,286				8,839
		Income taxes								32,327				15,504				(12,204	)			35,627
		Depreciation								9,767				6,094				163				16,024
		Amortization								2,969				81				1,715				4,765
			EBITDA							98,273				46,931				(24,150	)			121,054
Add/(deduct):
		Non-taxable income from certain investments held in deferred compensation trusts								-				-				(1,211	)			(1,211	)
		Expenses associated with contested proxy solicitation.								-				-				3,989				3,989
		Legal expenses of OIG investigation								442				-				-				442
		Stock option expense								-				-				6,699				6,699
		Advertising cost adjustment (c)								-				(1,228	)			-				(1,228	)
		Interest income								(250	)			(44	)			(81	)			(375	)
		Intercompany interest income/(expense)								(3,091	)			(1,801	)			4,892				-
			Adjusted EBITDA						$	95,374			$	43,858			$	(9,862	)		$	129,370
2008 (f)
Net income/(loss)									$	45,180			$	25,445			$	(21,543	)		$	49,082
Add/(deduct):
		Interest expense								118				216				8,879				9,213
		Income taxes								26,810				16,002				(9,731	)			33,081
		Depreciation								9,769				6,249				231				16,249
		Amortization								2,988				36				1,409				4,433
			EBITDA							84,865				47,948				(20,755	)			112,058
Add/(deduct):
		Unreserved insurance claim								-				597				-				597
		Legal expenses of OIG investigation								44				-				-				44
		Stock option expense								-				-				5,084				5,084
		Advertising cost adjustment (c)								-				(1,176	)			-				(1,176	)
		Interest income								(109	)			(91	)			(402	)			(602	)
		Intercompany interest income/(expense)								(3,862	)			(2,832	)			6,694				-
			Adjusted EBITDA						$	80,938			$	44,446			$	(9,379	)		$	116,005
The "Footnotes to Financial Statements" are integral parts of this financial information.

CHEMED CORPORATION AND SUBSIDIARY COMPANIES
RECONCILIATION OF ADJUSTED NET INCOME
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2009 AND 2008
(in thousands, except per share data)(unaudited)
							Three Months Ended						Nine Months Ended
							September 30,						September 30,
							2009			2008 (f)			2009				2008 (f)
Net income as reported							$	19,210		$	16,951		$	55,799			$	49,082
Add/(deduct):
		After-tax stock option expense						1,401			1,334			4,237				3,228
		After-tax additional interest expense resulting from the change in accounting for the conversion feature of the convertible notes						1,006			997			2,961				2,936
		After-tax cost of legal expenses of OIG investigation						213			1			274				27
		After-tax impact of non-deductible losses and non-taxable gains on investments held in deferred compensation trusts						-			1,237			(756	)			1,237
		After-tax expenses associated with contested proxy solicitation						-			-			2,525				-
		After-tax unreserved insurance cost						-			-			-				358
		Income tax credit related to prior years						-			-			-				(322	)
Adjusted net income							$	21,830		$	20,520		$	65,040			$	56,546
Earnings Per Share As Reported
		Net income					$	0.86		$	0.75		$	2.49			$	2.11
		Average number of shares outstanding						22,461			22,503			22,425				23,285
Diluted Earnings Per Share As Reported
		Net income					$	0.84		$	0.74		$	2.46			$	2.08
		Average number of shares outstanding						22,744			22,818			22,679				23,620
Adjusted Earnings Per Share
		Net income					$	0.97		$	0.91		$	2.90			$	2.43
		Average number of shares outstanding						22,461			22,503			22,425				23,285
Adjusted Diluted Earnings Per Share
		Net income					$	0.96		$	0.90		$	2.87			$	2.39
		Average number of shares outstanding						22,744			22,818			22,679				23,620
The "Footnotes to Financial Statements" are integral parts of this financial information.

CHEMED CORPORATION AND SUBSIDIARY COMPANIES
OPERATING STATISTICS FOR VITAS SEGMENT
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2009 AND 2008
(unaudited)
							Three Months Ended September 30,						Nine Months Ended September 30,
OPERATING STATISTICS							2009			2008			2009			2008
	Net revenue ($000) (d)
		Homecare					$	157,079		$	149,732		$	456,160		$	436,075
		Inpatient						24,057			24,155			72,806			74,497
		Continuous care						35,974			31,069			105,679			92,017
			Total before Medicare cap allowance and 2008 BNAF*				$	217,110		$	204,956		$	634,645		$	602,589
		Estimated BNAF* Accrual Q4 2008						-			-			1,950			-
		Medicare cap allowance						(43	)		-			192			-
			Total				$	217,067		$	204,956		$	636,787		$	602,589
	Net revenue as a percent of total before Medicare cap allowance
		Homecare						72.3	%		73.0	%		71.8	%		72.4	%
		Inpatient						11.1			11.8			11.5			12.3
		Continuous care						16.6			15.2			16.7			15.3
			Total before Medicare cap allowance and 2008 BNAF*					100.0			100.0			100.0			100.0
		Estimated BNAF* Accrual Q4 2008						-			-			0.3			-
		Medicare cap allowance						-			-			-			-
			Total					100.0	%		100.0	%		100.3	%		100.0	%
	Average daily census ("ADC") (days)
		Homecare						7,835			7,534			7,661			7,346
		Nursing home						3,316			3,570			3,291			3,562
			Routine homecare					11,151			11,104			10,952			10,908
		Inpatient						404			410			406			429
		Continuous care						562			519			565			521
			Total					12,117			12,033			11,923			11,858
	Total Admissions							13,735			13,317			41,743			42,485
	Total Discharges							13,441			13,279			41,064			41,992
	Average length of stay (days)							78.0			74.1			75.0			72.9
	Median length of stay (days)							14.0			15.0			14.0			14.0
	ADC by major diagnosis
		Neurological						33.1	%		32.5	%		33.0	%		32.5	%
		Cancer						19.1			19.9			19.2			19.9
		Cardio						12.2			12.8			12.2			12.9
		Respiratory						6.2			6.5			6.5			6.7
		Other						29.4			28.3			29.1			28.0
			Total					100.0	%		100.0	%		100.0	%		100.0	%
	Admissions by major diagnosis
		Neurological						17.9	%		18.2	%		17.9	%		18.4	%
		Cancer						36.8			37.6			35.6			35.6
		Cardio						11.1			11.3			11.8			11.8
		Respiratory						6.8			7.0			7.5			7.8
		Other						27.4			25.9			27.2			26.4
			Total					100.0	%		100.0	%		100.0	%		100.0	%
	Direct patient care margins (e)
		Routine homecare						51.7	%		52.4	%		51.8	%		51.2	%
		Inpatient						12.8			16.6			15.7			17.9
		Continuous care						20.6			18.0			20.3			17.4
	Homecare margin drivers (dollars per patient day)
		Labor costs					$	52.56		$	48.59		$	52.40		$	50.16
		Drug costs						7.59			7.85			7.65			7.70
		Home medical equipment						7.03			6.28			6.85			6.22
		Medical supplies						2.48			2.17			2.37			2.35
	Inpatient margin drivers (dollars per patient day)
		Labor costs					$	294.24		$	262.98		$	282.74		$	263.71
	Continuous care margin drivers (dollars per patient day)
		Labor costs					$	530.88		$	512.04		$	524.84		$	511.81
	Bad debt expense as a percent of revenues							1.1	%		1.0	%		1.1	%		1.0	%
	Accounts receivable --
	days of revenue outstanding excluding unapplied Medicare payments							52.8			46.9			N.A.			N.A.
	days of revenue outstanding including unapplied Medicare payments							37.0			30.4			N.A.			N.A.

		* Budget Neutrality Adjustment Factor.
		The "Footnotes to Financial Statements" are integral parts of this financial information.

CHEMED CORPORATION AND SUBSIDIARY COMPANIES
FOOTNOTES TO FINANCIAL STATEMENTS
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2009 AND 2008
(unaudited)
(a)	Included in the results of operations for the three and nine months ended September 30, 2009, are the following significant credits/(charges) which may not be indicative of ongoing operations (in thousands):
									Three Months Ended September 30, 2009
									VITAS				Corporate				Consolidated
	Selling, general and administrative expenses
		Stock option expense							$	-			$	(2,214	)		$	(2,214	)
		Legal expenses of OIG investigation								(343	)			-				(343	)
	Interest expense
		Additional interest expense resulting from the change in accounting for the conversion feature of the convertible notes								-				(1,591	)			(1,591	)
			Pretax impact on earnings							(343	)			(3,805	)			(4,148	)
	Income tax benefit on the above									130				1,398				1,528
			After-tax impact on earnings						$	(213	)		$	(2,407	)		$	(2,620	)
									Nine Months Ended September 30, 2009
									VITAS				Corporate				Consolidated
	Selling, general and administrative expenses
		Stock option expense							$	-			$	(6,699	)		$	(6,699	)
		Legal expenses of OIG investigation								(442	)			-				(442	)
	Other operating expense
		Expenses associated with contested proxy solicitation								-				(3,989	)			(3,989	)
	Interest expense
		Additional interest expense resulting from the change in accounting for the conversion feature of the convertible notes								-				(4,682	)			(4,682	)
	Other income-net
		Non-taxable income from certain investments held in deferred compensation trusts								-				1,211				1,211
			Pretax impact on earnings							(442	)			(14,159	)			(14,601	)
	Income tax benefit on the above									168				5,192				5,360
			After-tax impact on earnings						$	(274	)		$	(8,967	)		$	(9,241	)
(b)	Included in the results of operations for the three and nine months ended September 30, 2008, are the following significant credits/(charges) which may not be indicative of ongoing operations (in thousands):
									Three Months Ended September 30, 2008
									VITAS				Corporate (f)				Consolidated
	Selling, general and administrative expenses
		Stock option expense							$	-			$	(2,102	)		$	(2,102	)
		Legal expenses of OIG investigation								(2	)			-				(2	)
	Interest expense
		Additional interest expense resulting from the change in accounting for the conversion feature of the convertible notes								-				(1,570	)			(1,570	)
			Pretax impact on earnings							(2	)			(3,672	)			(3,674	)
	Income tax benefit on the above									1				1,341				1,342
	Income tax impact of non-deductible net market losses on investments held in deferred compensation trusts									-				(1,237	)			(1,237	)
			After-tax impact on earnings						$	(1	)		$	(3,568	)		$	(3,569	)

										Nine Months Ended September 30, 2008
										VITAS				Roto-Rooter					Corporate (f)					Consolidated
	Cost of services provided and goods sold
		Unreserved prior-year's insurance claim								$	-			$	(597	)			$	-				$	(597	)
	Selling, general and administrative expenses
		Stock option expense									-				-					(5,084	)				(5,084	)
		Legal expenses of OIG investigation									(44	)			-					-					(44	)
	Interest expense
		Additional interest expense resulting from the change in accounting for the conversion feature of the convertible notes									-				-					(4,624	)				(4,624	)
			Pretax impact on earnings								(44	)			(597	)				(9,708	)				(10,349	)
	Income tax benefit on the above										17				239					3,544					3,800
	Income tax impact of non-deductible net market losses on investments held in deferred compensation trusts										-				-					(1,237	)				(1,237	)
	Income tax credit related to prior years										322				-					-					322
			After-tax impact on earnings							$	295			$	(358	)			$	(7,401	)			$	(7,464	)

(c)		Under Generally Accepted Accounting Principles ("GAAP"), the Roto-Rooter segment expenses all advertising, including the cost of telephone directories, immediately upon the initial release of the advertising. Telephone directories are generally in circulation 12 months. If a directory is in circulation for a time period greater or less than 12 months, the publisher adjusts the directory billing for the change in billing period. The timing of when a telephone directory is published can and does fluctuate significantly on a quarterly basis. This "direct expensing" results in significant fluctuations in quarterly advertising expense. In the third quarters of 2009 and 2008, GAAP advertising expense for Roto-Rooter totaled $5,674,000 and $5,498,000, respectively. If the expense of the telephone directories were spread over the periods they are in circulation, advertising expense for the third quarters of 2009 and 2008 would total $6,140,000 and $5,849,000, respectively. For the nine months ended September 30, 2009 and 2008, GAAP advertising expense for Roto-Rooter totaled $17,202,000 and $16,656,000, respectively. If the expense of the telephone directories were spread over the periods they are in circulation, advertising expense for the nine months ended September 30, 2009 and 2008, would total $18,430,000 and $17,832,000, respectively.
(d)		VITAS has 4 large (greater than 450 ADC), 19 medium (greater than 200 but less than 450 ADC) and 21 small (less than 200 ADC) hospice programs. There are three programs continuing at September 30, 2009, with Medicare cap cushion of less than 10% for the 2009 Medicare cap period.
(e)		Amounts exclude indirect patient care and administrative costs, as well as Medicare cap billing limitation.
(f)		Effective January 1, 2009, we retrospectively adopted the provisions of the FASB's guidance, issued in May 2008, for accounting for certain convertible debt instruments.