9

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10.  Pension and Retirement Plans

All of the Company’s plans that provide retirement and similar benefits are defined contribution plans.  Expenses for the Company’s pension and profit-sharing plans, excess benefit plans and other similar plans were $2.5 million and $1.5 million for the three months ended March 31, 2010 and 2009, respectively.

11.  Legal and Regulatory Matters

Litigation

VITAS is party to a class action lawsuit filed in the Superior Court of California, Los Angeles County, in September 2006 by Bernadette Santos, Keith Knoche and Joyce White.  This case alleges failure to pay overtime and failure to provide meal and rest periods to a purported class of California admissions nurses, chaplains and sales representatives.  The case seeks payment of penalties, interest and Plaintiffs’ attorney fees.  VITAS contests these allegations.  In December 2009, the trial court denied Plaintiffs’ motion for class certification. The lawsuit is in its early stages and we are unable to estimate our potential liability, if any, with respect to these allegations.

Regardless of outcome, defense of litigation adversely affects us through defense costs, diversion of our time and related publicity.  In the normal course of business, we are a party to various claims and legal proceedings.  We record a reserve for these matters when an adverse outcome is probable and the amount of the potential liability is reasonably estimable.

Regulatory Matters

In April 2005, the Office of Inspector General (“OIG”) for the Department of Health and Human Services served VITAS with civil subpoenas relating to VITAS’ alleged failure to appropriately bill Medicare and Medicaid for hospice services.  As part of this investigation, the OIG selected medical records for 320 past and current patients from VITAS’ three largest programs for review.  It also sought policies and procedures dating back to 1998 covering admissions, certifications, recertifications and discharges.  During the third quarter of 2005 and again in May 2006, the OIG requested additional information from us.  The Court dismissed a related qui tam complaint filed in U.S. District Court for the Southern District of F lorida with prejudice in July 2007.  The plaintiffs appealed this dismissal, which the Court of Appeals affirmed.  The government continues to investigate the complaint’s allegations.  In March 2009, we received a letter from the government reiterating the basis of their investigation.

In May 2009, VITAS received an administrative subpoena from the U.S. Department of Justice requesting VITAS deliver to the OIG documents, patient records, and policy and procedure manuals for headquarters and its Texas programs concerning hospice services provided for the period January 1, 2003 to the date of the letter.  In August 2009, the OIG selected medical records for 59 past and current patients from a Texas program for review.   In February 2010, VITAS received a companion civil investigative demand from the state of Texas Attorney General’s Office, seeking related documents. Based on the early stage of the investigation and the limited information we have at this time, we cannot predict the outcome of this investigation.  We believe that we are in material compliance with Medicare and Medicaid rules and regulations applicable to hospice providers.

The costs to comply with either of these investigations were not material for any period presented.  We are unable to predict the outcome of these matters or the impact, if any, that the investigation may have on our business, results of operations, liquidity or capital resources.  Regardless of outcome, responding to the subpoenas can adversely affect us through defense costs, diversion of our time and related publicity.

12.  Related Party Agreement

VITAS has two pharmacy services agreements ("Agreements") with Omnicare, Inc. and its subsidiaries (“OCR”) whereby OCR provides specified pharmacy services for VITAS and its hospice patients in geographical areas served by both VITAS and OCR.  The Agreements renew automatically for one-year terms.  Either party may cancel the Agreements at the end of any term by giving written notice at least 90 days prior to the end of said term.  VITAS made purchases from OCR of $8.6 million and $7.9 million for the three months ended March 31, 2010 and 2009, respectively.

 Mr. Joel F. Gemunder, President and Chief Executive Officer of OCR and Ms. Andrea Lindell are directors of both OCR and the Company. Mr. Kevin J. McNamara, President, Chief Executive Officer and a director of the Company, is a director emeritus of OCR.  We believe that the terms of these agreements are no less favorable to VITAS than we could negotiate with an unrelated party.

 

 

10

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13.  Cash Overdrafts Payable

Included in accounts payable at March 31, 2010 is cash overdrafts payable of $10.5 million (December 31, 2009 - $11.7 million).

14.  Financial Instruments

We adopted the provisions of the FASB’s authoritative guidance on fair value measurements.  This statement defines a hierarchy which prioritizes the inputs in fair value measurements.  Level 1 measurements are measurements using quoted prices in active markets for identical assets or liabilities.  Level 2 measurements use significant other observable inputs.  Level 3 measurements are measurements using significant unobservable inputs which require a company to develop its own assumptions.  In recording the fair value of assets and liabilities, companies must use the most reliable measurement available.  There was no impact on our financial position or results of operations upon adoption of this authoritative guidance.

The following shows the carrying value, fair value and the hierarchy for our financial instruments as of March 31, 2010 (in thousands):

 

						Fair Value Measure
		Carrying Value				Quoted Prices in Active Markets for Identical Assets (Level 1)				Significant Other Observable Inputs (Level 2)				Significant Unobservable Inputs (Level 3)
Mutual fund investments of deferred
compensation plans held in trust		$	25,925			$	25,925			$	-			$	-
Long-term debt			153,853				170,796				-				-

For cash and cash equivalents, accounts receivable and accounts payable, the carrying amount is a reasonable estimate of fair value because of the liquidity and short-term nature of these instruments.

 

 

15.  Capital Stock Transactions

On April 26, 2007, our Board of Directors authorized a $150 million stock repurchase program.  On May 19, 2008, our Board of Directors authorized an additional $56 million to the April 2007 stock repurchase program.  For the quarter ended March 31, 2010, we repurchased 31,375 shares at a weighted average cost per share of $47.17 under the April 2007 program.  For the quarter ended March 31, 2009 there was no stock repurchased.

16.  Subsequent Events

In April 2010, we met the stock-price target of the Company’s Long-term incentive plan.  The stock price hurdle of $54.00 was achieved during 30 trading days out of any 60 day trading day period. On April 16, 2010, the Compensation/Incentive Committee approved a stock grant of 27,900 shares and the related allocation to participants.  The pretax cost of the stock grant was $1.8 million.

 

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17.  Guarantor Subsidiaries

Our 1.875% Notes are fully and unconditionally guaranteed on an unsecured, jointly and severally liable basis by certain of our 100% owned subsidiaries.  The following unaudited, condensed, consolidating financial data presents the composition of the parent company (Chemed), the guarantor subsidiaries and the non-guarantor subsidiaries as of March 31, 2010 and December 31, 2009 for the balance sheet, the three months ended March 31, 2010 and March 31, 2009 for the income statement and the three months ended March 31, 2010  and  March 31, 2009 for the statement of cash flows (dollars in thousands):

 

March 31, 2010						Guarantor				Non-Guarantor				Consolidating
		Parent				Subsidiaries				Subsidiaries				Adjustments				Consolidated
ASSETS
Cash and cash equivalents		$	107,572			$	(274	)		$	4,821			$	-			$	112,119
Accounts receivable, less allowances			623				86,368				421				-				87,412
Intercompany receivables			-				158,970				-				(158,970	)			-
Inventories			-				6,940				669				-				7,609
Current deferred income taxes			(341	)			15,255				94				-				15,008
Prepaid expenses			460				9,359				67				-				9,886
Total current assets			108,314				276,618				6,072				(158,970	)			232,034
Investments of deferred compensation plans			-				-				25,925				-				25,925
Properties and equipment, at cost, less accumulated depreciation			10,175				62,797				2,217				-				75,189
Identifiable intangible assets less accumulated amortization			-				57,239				-				-				57,239
Goodwill			-				445,662				4,487				-				450,149
Other assets			11,008				2,345				339				-				13,692
Investments in subsidiaries			662,071				16,539				-				(678,610	)			-
Total assets		$	791,568			$	861,200			$	39,040			$	(837,580	)		$	854,228
LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts payable		$	(1,968	)		$	51,520			$	292			$	-			$	49,844
Intercompany payables			156,363				-				2,607				(158,970	)			-
Income taxes			(10,956	)			21,848				1,258				-				12,150
Accrued insurance			434				34,044				-				-				34,478
Accrued compensation			966				36,205				442				-				37,613
Other current liabilities			2,530				9,783				126				-				12,439
Total current liabilities			147,369				153,400				4,725				(158,970	)			146,524
Deferred income taxes			(10,985	)			43,400				(7,446	)			-				24,969
Long-term debt			153,853				-				-				-				153,853
Deferred compensation liabilities			-				-				25,522				-				25,522
Other liabilities			3,345				2,029				-				-				5,374
Stockholders' equity			497,986				662,371				16,239				(678,610	)			497,986
Total liabilities and stockholders' equity		$	791,568			$	861,200			$	39,040			$	(837,580	)		$	854,228

 

December 31, 2009						Guarantor				Non-Guarantor				Consolidating
		Parent				Subsidiaries				Subsidiaries				Adjustments				Consolidated
ASSETS
Cash and cash equivalents		$	109,331			$	(1,221	)		$	4,306			$	-			$	112,416
Accounts receivable, less allowances			618				52,303				540				-				53,461
Intercompany receivables			-				149,888				-				(149,888	)			-
Inventories			-				7,009				534				-				7,543
Current deferred income taxes			(378	)			14,048				31				-				13,701
Prepaid expenses			(2,457	)			13,706				(112	)			-				11,137
Total current assets			107,114				235,733				5,299				(149,888	)			198,258
Investments of deferred compensation plans			-				-				24,158				-				24,158
Properties and equipment, at cost, less accumulated depreciation			10,309				62,912				2,137				-				75,358
Identifiable intangible assets less accumulated amortization			-				57,920				-				-				57,920
Goodwill			-				445,662				4,380				-				450,042
Other assets			11,190				2,232				312				-				13,734
Investments in subsidiaries			643,572				15,523				-				(659,095	)			-
Total assets		$	772,185			$	819,982			$	36,286			$	(808,983	)		$	819,470
LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts payable		$	(2,411	)		$	54,084			$	398			$	-			$	52,071
Intercompany payables			147,744				-				2,144				(149,888	)			-
Income taxes			(2,145	)			2,159				49				-				63
Accrued insurance			1,231				33,930				-				-				35,161
Accrued compensation			4,235				30,020				407				-				34,662
Other current liabilities			1,643				11,367				1,117				-				14,127
Total current liabilities			150,297				131,560				4,115				(149,888	)			136,084
Deferred income taxes			(10,549	)			43,183				(6,710	)			-				25,924
Long-term debt			152,127				-				-				-				152,127
Deferred compensation liabilities			-				-				23,637				-				23,637
Other liabilities			3,148				1,388				-				-				4,536
Stockholders' equity			477,162				643,851				15,244				(659,095	)			477,162
Total liabilities and stockholders' equity		$	772,185			$	819,982			$	36,286			$	(808,983	)		$	819,470

 

 

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For the three months ended March 31, 2010						Guarantor				Non-Guarantor				Consolidating
		Parent				Subsidiaries				Subsidiaries				Adjustments				Consolidated
Continuing Operations
Service revenues and sales		$	-			$	303,002			$	5,811			$	-			$	308,813
Cost of services provided and goods sold			-				216,200				2,937				-				219,137
Selling, general and administrative expenses			5,698				41,317				1,523				-				48,538
Depreciation			136				5,133				200				-				5,469
Amortization			330				894				-				-				1,224
Total costs and expenses			6,164				263,544				4,660				-				274,368
Income/ (loss) from operations			(6,164	)			39,458				1,151				-				34,445
Interest expense			(2,851	)			(101	)			-				-				(2,952	)
Other (expense)/income - net			3,621				(3,637	)			202				-				186
Income/ (loss) before income taxes			(5,394	)			35,720				1,353				-				31,679
Income tax (provision)/ benefit			1,744				(13,539	)			(526	)			-				(12,321	)
Equity in net income of subsidiaries			23,008				826				-				(23,834	)			-
Net income		$	19,358			$	23,007			$	827			$	(23,834	)		$	19,358

 

 

For the three months ended March 31, 2009						Guarantor				Non-Guarantor				Consolidating
		Parent				Subsidiaries				Subsidiaries				Adjustments				Consolidated
Continuing Operations
Service revenues and sales		$	-			$	289,139			$	5,799			$	-			$	294,938
Cost of services provided and goods sold			-				204,029				2,984				-				207,013
Selling, general and administrative expenses			5,485				40,392				(84	)			-				45,793
Depreciation			151				5,007				167				-				5,325
Amortization			275				1,261				-				-				1,536
Other operating expenses			545				-				-				-				545
Total costs and expenses			6,456				250,689				3,067				-				260,212
Income/ (loss) from operations			(6,456	)			38,450				2,732				-				34,726
Interest (expense)/income			(2,770	)			(80	)			6				-				(2,844	)
Other (expense)/income - net			384				(277	)			(383	)			-				(276	)
Income/ (loss) before income taxes			(8,842	)			38,093				2,355				-				31,606
Income tax (provision)/ benefit			3,270				(14,450	)			(1,087	)			-				(12,267	)
Equity in net income of subsidiaries			24,911				1,605				-				(26,516	)			-
Net income		$	19,339			$	25,248			$	1,268			$	(26,516	)		$	19,339

 

 

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For the three months ended March 31, 2010						Guarantor				Non-Guarantor
		Parent				Subsidiaries				Subsidiaries				Consolidated
Cash Flow from Operating Activities:
Net cash provided by operating activities		$	(14,132	)		$	21,652			$	131			$	7,651
Cash Flow from Investing Activities:
Capital expenditures			(2	)			(5,176	)			(246	)			(5,424	)
Business combinations, net of cash acquired			-				-				-				-
Proceeds from sale of property and equipment			-				27				-				27
Other sources/(uses) - net			(50	)			(107	)			-				(157	)
Net cash provided/(used) by investing activities			(52	)			(5,256	)			(246	)			(5,554	)
Cash Flow from Financing Activities:
Change in cash overdrafts payable			473				(1,689	)			-				(1,216	)
Change in intercompany accounts			13,377				(13,840	)			463				-
Dividends paid to shareholders			(2,739	)			-				-				(2,739	)
Purchases of treasury stock			(2,516	)			-				-				(2,516	)
Proceeds from exercise of stock options			2,672				-				-				2,672
Realized excess tax benefit on share based compensation			1,135				-				-				1,135
Other sources/(uses) - net			23				80				167				270
Net cash provided/ (used) by financing activities			12,425				(15,449	)			630				(2,394	)
Net increase/(decrease) in cash and cash equivalents			(1,759	)			947				515				(297	)
Cash and cash equivalents at beginning of year			109,331				(1,221	)			4,306				112,416
Cash and cash equivalents at end of period		$	107,572			$	(274	)		$	4,821			$	112,119

 

 

For the three months ended March 31, 2009						Guarantor				Non-Guarantor
		Parent				Subsidiaries				Subsidiaries				Consolidated
Cash Flow from Operating Activities:
Net cash provided/(used) by operating activities		$	(5,656	)		$	28,627			$	2,130			$	25,101
Cash Flow from Investing Activities:
Capital expenditures			(7	)			(3,345	)			(24	)			(3,376	)
Business combinations, net of cash acquired			-				(1,944	)			-				(1,944	)
Proceeds from sale of property and equipment			1,256				104				-				1,360
Other sources/(uses) - net			(198	)			46				-				(152	)
Net cash provided/(used) by investing activities			1,051				(5,139	)			(24	)			(4,112	)
Cash Flow from Financing Activities:
Change in cash overdrafts payable			1,343				(1,685	)			-				(342	)
Change in intercompany accounts			22,357				(20,011	)			(2,346	)			-
Dividends paid to shareholders			(1,355	)			-				-				(1,355	)
Purchases of treasury stock			(231	)			-				-				(231	)
Proceeds from exercise of stock options			68				-				-				68
Realized excess tax benefit on share based compensation			145				-				-				145
Repayment of long-term debt			(10,700	)			(99	)			-				(10,799	)
Other sources/(uses) - net			20				71				(335	)			(244	)
Net cash provided/ (used) by financing activities			11,647				(21,724	)			(2,681	)			(12,758	)
Net increase/(decrease) in cash and cash equivalents			7,042				1,764				(575	)			8,231
Cash and cash equivalents at beginning of year			65				202				3,361				3,628
Cash and cash equivalents at end of period		$	7,107			$	1,966			$	2,786			$	11,859

 

 

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Item 2.  Management’s Discussion and Analysis of Financial Condition and Results of Operations

Executive Summary

We operate through our two wholly owned subsidiaries, VITAS Healthcare Corporation and Roto-Rooter Group, Inc.  VITAS focuses on hospice care that helps make terminally ill patients’ final days as comfortable as possible.  Through its team of doctors, nurses, home health aides, social workers, clergy and volunteers, VITAS provides direct medical services to patients, as well as spiritual and emotional counseling to both patients and their families.  Roto-Rooter’s services are focused on providing plumbing and drain cleaning services to both residential and commercial customers.  Through its network of company-owned branches, independent contractors and franchisees, Roto-Rooter offers plumbing and drain cleaning service to over 90% of the U.S. population.

The following is a summary of the key operating results for the three months ended March 31, 2010 and 2009 (in thousands except per share amounts):

		Three Months Ended March 31,
		2010				2009
Service revenues and sales		$	308,813			$	294,938
Net income		$	19,358			$	19,339
Diluted EPS		$	0.84			$	0.85
Adjusted EBITDA*		$	43,071			$	42,224
Adjusted EBITDA as a % of revenue			13.9	%			14.3	%

*See page 21 for reconciliation to GAAP measures

For the three months ended March 31, 2010, the increase in consolidated service revenues and sales was driven by a 7.0% increase at VITAS while Roto-Rooter revenues decreased by 0.7%.  The increase in service revenues at VITAS was a result of increased average daily census (“ADC”) of 5.1%, driven by an increase in admissions of 4.8%, combined with Medicare price increases of approximately 1.3%.  Roto-Rooter was driven by a 7.0% decrease in job count offset by an approximate 6.3% price and mix shift increase. The Roto-Rooter changes include the impact of acquisitions in 2009, offset by the conversion of one company-owned branch to an independent contractor in 2009.  The impact of these transactions is not material.  Consolidated net income is essentially flat over prior year.  Diluted EPS decreased as the result of the increased number of average shares outstanding. Adjusted earnings before interest, taxes, depreciation and amortization (“EBITDA”) increased 2.0% from the first quarter of 2009 to the first quarter of 2010.

EBITDA and Adjusted EBITDA are not measures derived in accordance with GAAP and exclude components that are important to understanding our financial performance.  We use Adjusted EBITDA as a measure of earnings for our LTIP awards.  We provide EBITDA and Adjusted EBITDA to help readers evaluate our operating results, compare our operating performance with that of similar companies that have different capital structures and help evaluate our ability to meet future debt service, capital expenditure and working capital requirements.  Our EBITDA and Adjusted EBITDA should not be considered in isolation or as a substitute for comparable measures presented in accordance with GAAP.  A reconciliation of our net income to our Adjusted EBITDA is presente d on page 21.

VITAS expects to achieve full-year 2010 revenue growth, prior to Medicare cap, of 5.0% to 6.0%.  Admissions are estimated to increase 2.0% to 4.0%.  Adjusted EBITDA margin, prior to Medicare cap is estimated to be 15.0% to 15.5%.  Roto-Rooter expects full-year 2010 revenue growth of 1.0% to 3.0%.  The revenue estimate is a result of increased pricing of 3.0%, a favorable mix shift to higher revenue jobs, offset by a job count decline estimated at 2.0% to 4.0%.  Adjusted EBITDA margin for 2010 is estimated to be in the range of 17.5% to 18.0%.  We anticipate that our operating income and cash flows will be sufficient to operate our businesses and meet any commitments for the foreseeable future.

Financial Condition

Liquidity and Capital Resources

Material changes in the balance sheet accounts from December 31, 2009 to March 31, 2010 include the following:

•	A $34.0 million increase in accounts receivable primarily at VITAS, related to timing of Medicare payments and refund of overpayments from prior years.

 

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 Net cash provided by operating activities decreased $17.5 million due primarily to the increase in accounts receivable, partially offset by a decrease in accounts payable and other current liabilities.  Management continually evaluates cash utilization alternatives, including share repurchase, debt repurchase, acquisitions and increased dividends to determine the most beneficial use of available capital resources.

We have issued $28.0 million in standby letters of credit as of March 31, 2010, for insurance purposes.  Issued letters of credit reduce our available credit under the revolving credit agreement.  As of March 31, 2010, we have approximately $147.0 million of unused lines of credit available and eligible to be drawn down under our revolving credit facility, excluding the expansion feature. Management believes its liquidity and sources of capital are satisfactory for the Company’s needs in the foreseeable future.

 

Commitments and Contingencies

Collectively, the terms of our credit agreements require us to meet various financial covenants, to be tested quarterly.  In connection therewith, we are in compliance with all financial and other debt covenants as of March 31, 2010 and anticipate remaining in compliance throughout 2010.

VITAS is party to a class action lawsuit filed in the Superior Court of California, Los Angeles County, in September 2006 by Bernadette Santos, Keith Knoche and Joyce White.  This case alleges failure to pay overtime and failure to provide meal and rest periods to a purported class of California admissions nurses, chaplains and sales representatives.  The case seeks payment of penalties, interest and Plaintiffs’ attorney fees.  VITAS contests these allegations.  In December 2009, the trial court denied Plantiffs’ motion for class certification. The lawsuit is in its early stages and we are unable to estimate our potential liability, if any, with respect to these allegations.

In April 2005, the Office of Inspector General (“OIG”) for the Department of Health and Human Services served VITAS with civil subpoenas relating to VITAS’ alleged failure to appropriately bill Medicare and Medicaid for hospice services.  As part of this investigation, the OIG selected medical records for 320 past and current patients from VITAS’ three largest programs for review.  It also sought policies and procedures dating back to 1998 covering admissions, certifications, recertifications and discharges.  During the third quarter of 2005 and again in May 2006, the OIG requested additional information from us.  The Court dismissed a related qui tam complaint filed in U.S. District Court for the Southern District of Fl orida with prejudice in July 2007.  The plaintiffs appealed this dismissal, which the Court of Appeals affirmed.  The government continues to investigate the complaint’s allegations.  In March 2009, we received a letter from the government reiterating the basis of their investigation.

In May 2009, VITAS received an administrative subpoena from the U.S. Department of Justice requesting VITAS deliver to the OIG documents, patient records, and policy and procedure manuals for headquarters and its Texas programs concerning hospice services provided for the period January 1, 2003 to the date of the letter.  In August 2009, the OIG selected medical records for 59 past and current patients from a Texas program for review. In February 2010, VITAS received a companion civil investigative demand from the state of Texas Attorney General’s office, seeking related documents. Based on the early stage of the investigation and the limited information we have at this time, we cannot predict the outcome of this investigation.  We believe that we are in mat erial compliance with Medicare and Medicaid rules and regulations applicable to hospice providers.

We are unable to predict the outcome of these matters or the impact, if any, that the investigation may have on our business, results of operations, liquidity or capital resources.  Regardless of outcome, responding to the subpoenas can adversely affect us through defense costs, diversion of our time and related publicity.

 

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Results of Operations

Three months ended March 31, 2010 versus  2009 - Consolidated Results

Our service revenues and sales for the first quarter of 2010 increased 4.7% versus services and sales revenues for the first quarter of 2009.  Of this increase, $14.5 million was attributable to VITAS offset by a $648,000 decrease at Roto-Rooter.  The following chart shows the components of those changes (dollar amounts in thousands):

		Increase/(Decrease)
		Amount				Percent
VITAS
Routine homecare			10,151				6.9	%
Continuous care			3,094				8.9	%
General inpatient			1,209				4.8	%
Medicare cap			2,019				747.8	%
BNAF adjustment			(1,950	)			-100.0	%
Roto-Rooter
Plumbing			1,128				3.0	%
Drain cleaning			(1,943	)			-5.3	%
Other			167				1.4	%
Total		$	13,875				4.7	%

The increase in VITAS’ revenues for the first quarter of 2010 versus the first quarter of 2009 was a result of increased ADC of 5.1% driven by an increase in admissions of 4.8%, combined with Medicare reimbursement rate increases of approximately 1.3%.  In excess of 90% of VITAS’ service revenues for the period were from Medicare and Medicaid.

The increase in plumbing revenues for the first quarter of 2010 versus 2009 is attributable to a 9.0% increase in the average price per job and a 5.2% decrease in the number of jobs performed.  The increase in the plumbing price per job was a combination of increased pricing and favorable job mix shift to more expensive jobs such as excavation.  Our excavation job count increased by 12.6% compared to 2009.  Drain cleaning revenues for the first quarter of 2010 versus 2009 reflect an 8.1% decline in the number of jobs, while the average price per job increased 2.9%.  The increase in other revenues is attributable primarily to an increase in our independent contractor operations offset by lower sales in our HVAC operation.

 

The consolidated gross margin was 29.0% in the first quarter of 2010 as compared with 29.8% in the first quarter of 2009.  On a segment basis, VITAS’ gross margin was 22.8% in the first quarter of 2010 and 23.4% in the first quarter of 2009.  The Roto-Rooter segment’s gross margin was 45.2% for the first quarter of 2010 essentially flat with the first quarter of 2009.  The decrease in VITAS’ gross margin is attributable to higher labor costs for admissions and Medicare compliance personnel, the opening of inpatient units which carry significant one time start-up costs as capacity begins to ramp-up and a slight mix shift towards higher acuity care which has a lower gross margin than routine homecare.

 

Selling, general and administrative expenses (“SG&A”) for the first quarter of 2010 were $48.5 million, an increase of $2.7 million (6.0%) versus the first quarter of 2009.  Included in SG&A is a $1.6 million increase related to the increase in our deferred compensation liability due to improved stock market performance.  The offset to the increased liability is recorded in other (non-operating) income and expense. Also in included in the SG&A increase is $147,000 related to OIG expenses.  The remaining change in SG&A is the result of typical cost of living increases for salaries and benefits plus increases in certain selling expenses which vary based on change in revenue.

 Other income increased $462,000 in the first quarter of 2010 to $186,000 due to a $1.8 million gain in the investments of deferred compensation plans which offsets the related expense in SG&A.  This was offset by a $1.2 million decrease related to the settlement of company-owned life insurance that occurred in 2009 but did not recur in 2010.

Our effective income tax rate of 38.9% in the first quarter of 2010 was essentially flat with the first quarter of 2009.

 

17

---

 

 

Net income for both periods included the following after-tax items/adjustments that increased/ (reduced) after-tax earnings (in thousands):

		Three Months Ended March 31,
		2010				2009
VITAS
Costs associated with the OIG investigation		$	(99	)		$	(8	)
Corporate
Costs related to contested proxy solicitation			-				(345	)
Stock option expense			(1,298	)			(1,292	)
Noncash interest expense related to accounting for
conversion feature of the convertible notes			(1,047	)			(968	)
Impact of non-deductible losses and non-taxable gains on
investments held in deferred compensation trusts			-				736
Total		$	(2,444	)		$	(1,877	)

 

Three months ended March 31, 2010 versus 2009 - Segment Results

The change in after-tax earnings for the first quarter of 2010 versus the first quarter of 2009 is due to (in thousands):

		Net Income
		Increase/(Decrease)
		Amount				Percent
VITAS		$	1,268				7.4	%
Roto-Rooter			(416	)			-5.1	%
Corporate			(833	)			-13.7	%
		$	19				0.1	%

 

 

18

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CHEMED CORPORATION AND SUBSIDIARY COMPANIES
CONSOLIDATING STATEMENT OF INCOME
FOR THE THREE MONTHS ENDED MARCH 31, 2010
(in thousands)(unaudited)
														Chemed
		VITAS				Roto-Rooter				Corporate				Consolidated
2010 (a)
Service revenues and sales		$	222,940			$	85,873			$	-			$	308,813
Cost of services provided and goods sold			172,093				47,044				-				219,137
Selling, general and administrative expenses			18,145				24,758				5,635				48,538
Depreciation			3,485				1,951				33				5,469
Amortization			771				123				330				1,224
Total costs and expenses			194,494				73,876				5,998				274,368
Income/(loss) from operations			28,446				11,997				(5,998	)			34,445
Interest expense			(32	)			(68	)			(2,852	)			(2,952	)
Intercompany interest income/(expense)			1,289				702				(1,991	)			-
Other income/(expense)—net			(39	)			10				215				186
Income/(loss) before income taxes			29,664				12,641				(10,626	)			31,679
Income taxes			(11,226	)			(4,828	)			3,733				(12,321	)
Net income/(loss)		$	18,438			$	7,813			$	(6,893	)		$	19,358

 

---

(a)   The following amounts are included in net income (in thousands):

 

														Chemed
		VITAS			Roto-Rooter					Corporate				Consolidated
Pretax benefit/(cost):
Stock option expense		$	-			$	-			$	(2,051	)		$	(2,051	)
Noncash impact of accounting for convertible debt			-				-				(1,655	)			(1,655	)
Expenses incurred in connection with the Office of Inspector
General investigation			(160	)			-				-				(160	)
Total		$	(160	)		$	-			$	(3,706	)		$	(3,866	)
		VITAS			Roto-Rooter					Corporate				Consolidated
After-tax benefit/(cost):
Stock option expense		$	-			$	-			$	(1,298	)		$	(1,298	)
Noncash impact of accounting for convertible debt			-				-				(1,047	)			(1,047	)
Expenses incurred in connection with the Office of Inspector
General investigation			(99	)			-				-				(99	)
Total		$	(99	)		$	-			$	(2,345	)		$	(2,444	)

 

 

19

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CHEMED CORPORATION AND SUBSIDIARY COMPANIES
CONSOLIDATING STATEMENT OF INCOME
FOR THE THREE MONTHS ENDED MARCH 31, 2009
(in thousands)(unaudited)
														Chemed
		VITAS				Roto-Rooter				Corporate				Consolidated
2009 (a)
Service revenues and sales		$	208,417			$	86,521			$	-			$	294,938
Cost of services provided and goods sold			159,631				47,382				-				207,013
Selling, general and administrative expenses			17,546				24,375				3,872				45,793
Depreciation			3,219				2,054				52				5,325
Amortization			1,172				89				275				1,536
Other operating expenses			-				-				545				545
Total costs and expenses			181,568				73,900				4,744				260,212
Income/(loss) from operations			26,849				12,621				(4,744	)			34,726
Interest expense			(39	)			(35	)			(2,770	)			(2,844	)
Intercompany interest income/(expense)			891				536				(1,427	)			-
Other income/(expense)—net			(3	)			116				(389	)			(276	)
Income/(loss) before income taxes			27,698				13,238				(9,330	)			31,606
Income taxes			(10,528	)			(5,009	)			3,270				(12,267	)
Net income/(loss)		$	17,170			$	8,229			$	(6,060	)		$	19,339

 

---

(a)   The following amounts are included in net income (in thousands):

 

														Chemed
		VITAS			Roto-Rooter					Corporate				Consolidated
Pretax benefit/(cost):
Stock option expense		$	-			$	-			$	(2,042	)		$	(2,042	)
Noncash impact of accounting for convertible debt			-				-				(1,530	)			(1,530	)
Non-taxable income on certain investments held in deferred
compensation trusts			-				-				1,211				1,211
Expenses associated with contested proxy solicitation			-				-				(545	)			(545	)
Expenses incurred in connection with the Office of Inspector
General investigation			(13	)			-				-				(13	)
Total		$	(13	)		$	-			$	(2,906	)		$	(2,919	)
		VITAS			Roto-Rooter					Corporate				Consolidated
After-tax benefit/(cost):
Stock option expense		$	-			$	-			$	(1,292	)		$	(1,292	)
Noncash impact of accounting for convertible debt			-				-				(968	)			(968	)
Non-taxable income on certain investments held in deferred
compensation trusts			-				-				1,211				1,211
Income tax impact of nondeductible losses on investments
held in deferred compensation trusts			-				-				(475	)			(475	)
Expenses associated with contested proxy solicitation			-				-				(345	)			(345	)
Expenses incurred in connection with the Office of Inspector
General investigation			(8	)			-				-				(8	)
Total		$	(8	)		$	-			$	(1,869	)		$	(1,877	)

 

 

20

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Consolidating Summary and Reconciliation of Adjusted EBITDA
Chemed Corporation and Subsidiary Companies
(in thousands)														Chemed
For the three months ended March 31, 2010	VITAS					Roto-Rooter				Corporate				Consolidated
Net income/(loss)		$	18,438			$	7,813			$	(6,893	)		$	19,358
Add/(deduct):
Interest expense			32				68				2,852				2,952
Income taxes			11,226				4,828				(3,733	)			12,321
Depreciation			3,485				1,951				33				5,469
Amortization			771				123				330				1,224
EBITDA			33,952				14,783				(7,411	)			41,324
Add/(deduct):
Legal expenses of OIG investigation			160				-				-				160
Stock option expense			-				-				2,051				2,051
Advertising cost adjustment			-				(389	)			-				(389	)
Interest income			(45	)			(2	)			(28	)			(75	)
Intercompany interest income/(expense)			(1,289	)			(702	)			1,991				-
Adjusted EBITDA		$	32,778			$	13,690			$	(3,397	)		$	43,071

 

 

														Chemed
For the three months ended March 31, 2009	VITAS					Roto-Rooter				Corporate				Consolidated
Net income/(loss)		$	17,170			$	8,229			$	(6,060	)		$	19,339
Add/(deduct):
Interest expense			39				35				2,770				2,844
Income taxes			10,528				5,009				(3,270	)			12,267
Depreciation			3,219				2,054				52				5,325
Amortization			1,172				89				275				1,536
EBITDA			32,128				15,416				(6,233	)			41,311
Add/(deduct):
Non-taxable income from certain investments held in
deferred compensation trusts			-				-				(1,211	)			(1,211	)
Expenses associated with contested proxy solicitation			-				-				545				545
Legal expenses of OIG investigation			13				-				-				13
Stock option expense			-				-				2,042				2,042
Advertising cost adjustment			-				(394	)			-				(394	)
Interest income			(48	)			(19	)			(15	)			(82	)
Intercompany interest income/(expense)			(891	)			(536	)			1,427				-
Adjusted EBITDA		$	31,202			$	14,467			$	(3,445	)		$	42,224

 

 

21

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CHEMED CORPORATION AND SUBSIDIARY COMPANIES
OPERATING STATISTICS FOR VITAS SEGMENT
FOR THE THREE MONTHS ENDED MARCH 31, 2010 AND 2009
(unaudited)
OPERATING STATISTICS		2010				2009
Net revenue ($000)
Homecare		$	157,226			$	147,075
Inpatient			26,291				25,082
Continuous care			37,674				34,580
Total before Medicare cap allowance and 2008 BNAF		$	221,191			$	206,737
Estimated BNAF			-				1,950
Medicare cap allowance			1,749				(270	)
Total		$	222,940			$	208,417
Net revenue as a percent of total
before Medicare cap allowance
Homecare			71.1	%			71.1	%
Inpatient			11.9				12.2
Continuous care			17.0				16.7
Total before Medicare cap allowance and 2008 BNAF			100.0				100.0
Estimated BNAF			-				0.9
Medicare cap allowance			0.8				(0.1	)
Total			100.8	%			100.8	%
Average daily census (days)
Homecare			8,112				7,477
Nursing home			3,162				3,263
Routine homecare			11,274				10,740
Inpatient			442				421
Continuous care			606				567
Total			12,322				11,728
Total Admissions			14,844				14,168
Total Discharges			14,461				13,865
Average length of stay (days)			75.8				76.6
Median length of stay (days)			13.0				13.0
ADC by major diagnosis
Neurological			32.6	%			32.5	%
Cancer			18.8				19.6
Cardio			11.9				12.3
Respiratory			6.6				6.7
Other			30.1				28.9
Total			100.0	%			100.0	%
Admissions by major diagnosis
Neurological			18.6	%			18.6	%
Cancer			33.5				35.9
Cardio			11.6				11.1
Respiratory			8.4				7.6
Other			27.9				26.8
Total			100.0	%			100.0	%
Direct patient care margins
Routine homecare			51.3	%			51.5	%
Inpatient			15.2				17.4
Continuous care			20.7				19.1
Homecare margin drivers (dollars per patient day)
Labor costs		$	53.93			$	52.82
Drug costs			7.77				7.65
Home medical equipment			6.94				6.68
Medical supplies			2.44				2.27
Inpatient margin drivers (dollars per patient day)
Labor costs		$	286.81			$	271.75
Continuous care margin drivers (dollars per patient day)
Labor costs		$	526.47			$	521.30
Bad debt expense as a percent of revenues			1.0	%			1.1	%
Accounts receivable --
Days of revenue outstanding- excluding unapplied Medicare payments			43.4				68.4
Days of revenue outstanding- including unapplied Medicare payments			29.2				37.5

 

 

22

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Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995 Regarding Forward-Looking Information

Certain statements contained in this report 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.  These forward-looking statements are based on current expectations and assumptions and involve various known and unknown risks, uncertainties, contingencies and other factors, which could cause Chemed’s actual results to differ from those expressed in such forward-looking statements.  Variances in any or all of the risks, uncertainties, contingencies, and o ther factors from our assumptions could cause actual results to differ materially from these forward-looking statements and trends.  In addition, our ability to deal with the unknown outcomes of these events, many of which are beyond our control, may affect the reliability of projections and other financial matters.  Investors are cautioned that such forward-looking statements are subject to inherent risk and there are no assurances that the matters contained in such statements will be achieved.  Chemed does not undertake and specifically disclaims any obligation to publicly update or revise any forward-looking statements, whether as a result of a new information, future events or otherwise.

Item 3.   Quantitative and Qualitative Disclosures about Market Risk

Our primary market risk exposure relates to interest rate risk exposure through variable interest rate borrowings.  At March 31, 2010, we had no variable rate debt outstanding.  At March 31, 2010, the fair value of the Notes approximates $170.8 million which have a face value of $187.0 million.

Item 4.   Controls and Procedures

We carried out an evaluation, under the supervision of our President and Chief Executive Officer and with the participation of the Executive Vice President and Chief Financial Officer and the Vice President and Controller, of the effectiveness of the design and operation of our disclosure controls and procedures as of the end of the period covered by this report.  Based on that evaluation, the President and Chief Executive Officer, Executive Vice President and Chief Financial Officer and Vice President and Controller have concluded that our disclosure controls and procedures were effective as of the end of the period covered by this report.  There has been no change in our internal control over financial reporting that occurred during the quarter covered by this report that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

 

PART II OTHER INFORMATION

Item 1.   Legal Proceedings

For information regarding the Company’s legal proceedings, see note 11, Legal and Regulatory Matters, under Part I, Item I of this Quarterly Report on Form 10-Q.

Item 1A. Risk Factors

There have been no material changes from the risk factors previously disclosed in the Company’s most recent Annual Report on Form 10-K,

 

23

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Item 2.   Unregistered Sales of Equity Securities and Use of Proceeds

 

Item 2(c). Purchases of Equity Securities by Issuer and Affiliated Purchasers

The following table shows the activity related to our share repurchase programs for the three months ended March 31, 2010:

						Weighted
		Total Number				Average				Cumulative Shares				Dollar Amount
		of Shares				Price Paid Per				Repurchased Under				Remaining Under
		Repurchased				Share				the Program				The Program
April 2007 Program
January 1 through January 31, 2010			31,375			$	47.17				1,736,972			$	51,718,696
February 1 through February 28, 2010			-			$	-				1,736,972			$	51,718,696
March 1 through March 31, 2010			-			$	-				1,736,972			$	51,718,696
First Quarter Total - April 2007 Program			31,375			$	47.17

 

On April 26, 2007, our Board of Directors authorized a $150 million share repurchase plan with no expiration date.

On May 20, 2008 our Board of Directors authorized an additional $56 million under the April 2007 Program.

Item 3.   Defaults Upon Senior Securities

None

Item 4.   Submission of Matters to a Vote of Security Holders

None

Item 5.   Other Information

None

Item 6.   Exhibits

Exhibit No.		Description
31.1		Certification by Kevin J. McNamara pursuant to Rule 13a-14(a)/15d-14(a) of the Exchange Act of 1934.
31.2		Certification by David P. Williams pursuant to Rule 13a-14(a)/15d-14(a) of the Exchange  Act of 1934.
31.3		Certification by Arthur V. Tucker, Jr. pursuant to Rule 13a-14(a)/15d-14(a) of the Exchange Act of 1934.
32.1		Certification by Kevin J. McNamara pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2		Certification by David P. Williams pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.3		Certification by Arthur V. Tucker, Jr. pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

 

 

24

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SIGNATURES

Pursuant to the requirements of the Securities and Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

 

					Chemed Corporation
					(Registrant)
	Dated:	April 30, 2010		By:	Kevin J. McNamara
					Kevin J. McNamara
					(President and Chief Executive Officer)
	Dated:	April 30, 2010		By:	David P. Williams
					David P. Williams
					(Executive Vice President and Chief Financial Officer)
	Dated:	April 30, 2010		By:	Arthur V. Tucker, Jr.
					Arthur V. Tucker, Jr.
					(Vice President and Controller)

 

 

25

EXHIBIT 31.1

CERTIFICATION PURSUANT TO RULES 13a-14(a)/15d-14(a) OF THE EXCHANGE ACT OF 1934

I, Kevin J. McNamara, certify that:

 

1.	I have reviewed this quarterly report on Form 10-Q of Chemed Corporation (“registrant”);

 

2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

 

3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations, and cash flows of the registrant as of, and for, the periods presented in this report;

 

4.

The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rule 13a-15(f) and 15d-15(f)) for the registrant and have:

 

a)  designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b)  designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c)  evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d)  disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter  (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5.	The registrant’s other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors or persons performing the equivalent function:

a)  all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b)  any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

 

 

Date:	April 30, 2010		/s/ Kevin J. McNamara
			Kevin J. McNamara
			(President and Chief
			Executive Officer)

 

 

 

E-1

 

EXHIBIT 31.2

CERTIFICATION PURSUANT TO RULES 13a-14(a)/15d-14(a) OF THE EXCHANGE ACT OF 1934

I, David P. Williams, certify that:

 

1.	I have reviewed this quarterly report on Form 10-Q of Chemed Corporation (“registrant”);

 

2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations, and cash flows of the registrant as of, and for, the periods presented in this report;

 

4.

The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rule 13a-15(f) and 15d-15(f)) for the registrant and have:

a)  designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b)  designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

c)  evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d)  disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

 

5.	The registrant’s other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors or persons performing the equivalent function:

 

a)  all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b)  any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date:	April 30, 2010		/s/ David P. Williams
			David P. Williams
			(Executive Vice President and
			Chief Financial Officer)

 

 

 

E-2

EXHIBIT 31.3

CERTIFICATION PURSUANT TO RULES 13a-14(a)/15d-14(a) OF THE EXCHANGE ACT OF 1934

I, Arthur V. Tucker, Jr., certify that:

 

1.	I have reviewed this quarterly report on Form 10-Q of Chemed Corporation (“registrant”);

 

2.	Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

 

3.	Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations, and cash flows of the registrant as of, and for, the periods presented in this report;

 

4.

The registrant’s other certifying officers and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rule 13a-15(f) and 15d-15(f)) for the registrant and have:

 

a)  designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

b)  designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles,

c)  evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

d)  disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

 

5.	The registrant’s other certifying officers and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors or persons performing the equivalent function:

a)  all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

b)  any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date:	April 30, 2010		/s/ Arthur V. Tucker, Jr.
			Arthur V. Tucker, Jr.
			(Vice President and
			Controller)

 

 

 

E-3

 

 

 

 

 

EXHIBIT 32.1

CERTIFICATION BY KEVIN J. MCNAMARA

PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002.

Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, the undersigned, as President and Chief Executive Officer of Chemed Corporation (“Company”), does hereby certify that:

1)

the Company’s Quarterly Report on Form 10-Q for the quarter ending March 31, 2010 (“Report”), fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2)

the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Dated:	April 30, 2010		/s/ Kevin J. McNamara
			Kevin J. McNamara
			(President and Chief
			Executive Officer)

 

 

 

E-4

EXHIBIT 32.2

CERTIFICATION BY DAVID P. WILLIAMS

PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002.

Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, the undersigned, as Executive Vice President and Chief Financial Officer of Chemed Corporation (“Company”), does hereby certify that:

1)

the Company’s Quarterly Report on Form 10-Q for the quarter ending March 31, 2010 (“Report”), fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2)

the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Dated:	April 30, 2010		/s/ David P. Williams
			David P. Williams
			(Executive Vice President and
			Chief Financial Officer)

 

 

 

E-5

EXHIBIT 32.3

CERTIFICATION BY ARTHUR V. TUCKER, JR.

PURSUANT TO SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002.

Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, the undersigned, as Vice President and Controller of Chemed Corporation (“Company”), does hereby certify that:

1)

the Company’s Quarterly Report on Form 10-Q for the quarter ending March 31, 2010 (“Report”), fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

2)

the information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Dated:	April 30, 2010		/s/ Arthur V. Tucker, Jr.
			Arthur V. Tucker, Jr.
			(Vice President and
			Controller)

 

 

 

E-6