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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C.  20549

FORM 8-K
CURRENT REPORT

Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934

Date of Report: (date of earliest event reported):
April 26, 2017

CHEMED CORPORATION
(Exact name of registrant as specified in its charter)



Delaware

1-8351

31-0791746

(State or other

 jurisdiction of

 incorporation)

(Commission File Number)

 

(I.R.S. Employer

Identification

Number)

Suite 2600, 255 East 5th Street, Cincinnati, OH 45202

(Address of principal executive offices)     (Zip Code)

Registrant’s telephone number, including area code:
(513) 762-6690

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2 below):

⃞ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

⃞ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

⃞ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

⃞ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Page 1 of 2

Item 2.02     Results of Operations and Financial Condition

On April 26, 2017, Chemed Corporation issued a press release announcing its financial results for the quarter ended March 31, 2017.  A copy of the release is furnished herewith as Exhibit 99.

Item 9.01     Financial Statements and Exhibits

d)        Exhibit
            (99) Registrant’s press release dated April 26, 2017                                    





SIGNATURES

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

 

 

CHEMED CORPORATION

 

 

Dated:

  April 26, 2017

By:

   /s/   Michael D. Witzeman

Michael D. Witzeman

Vice President and Controller

Page 2 of 2

Exhibit 99

Chemed Reports First-Quarter 2017 Results

CINCINNATI--(BUSINESS WIRE)--April 26, 2017--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 first quarter ended March 31, 2017, versus the comparable prior-year period, as follows:

Consolidated operating results:

  • Revenue increased 4.0% to $406 million
  • GAAP Diluted EPS increased 22.8% to $1.78
  • Adjusted Diluted EPS increased 12.3% to $1.82

VITAS segment operating results:

  • Net Patient Revenue of $282 million, an increase of 1.7%
  • Average Daily Census (ADC) of 16,222, an increase of 3.6%
  • Admissions of 17,563, an increase of 4.1%
  • Net Income, including discrete items, of $20.6 million, an increase of 7.9%
  • Adjusted EBITDA of $38.4 million, an increase of 7.0%

Roto-Rooter segment operating results:

  • Revenue of $124 million, an increase of 9.5%
  • Net Income of $14.6 million, an increase of 12.3%
  • Adjusted EBITDA of $26.3 million, an increase of 12.7%
  • Adjusted EBITDA margin of 21.3%, an increase of 61 basis points

VITAS

Net revenue for VITAS was $282 million in the first quarter of 2017, which is an increase of 1.7%, when compared to the prior-year period. This revenue increase is comprised of an average net Medicare reimbursement rate increase of approximately 1.6%, a 3.6% increase in average daily census, offset by acuity mix shift which negatively impacted revenue 2.4% as well as the 1.1% negative impact from having one less day in the quarter when compared to the prior-year period.

In the first quarter of 2017, VITAS had a 26.1/73.9 RHC Days-of-Care ratio and generated approximately $1.4 million in SIA revenue. This compares to a 2016 RHC Days-of-Care ratio of 25.0/75.0 and SIA revenue of $1.0 million.

VITAS did not have any adjustments to revenue related to the Medicare Cap billing limitation in the current or prior-year quarter.

At March 31, 2017, VITAS had 31 Medicare provider numbers, none of which has an estimated 2017 Medicare Cap billing limitation.

Of VITAS’ 31 unique Medicare provider numbers, 30 provider numbers have a Medicare Cap cushion of 10% or greater and one provider number has a cap cushion between 5% and 10% on a trailing twelve-month period.

Average revenue per patient per day in the quarter was $193.37, which is 0.8% below the prior-year period. Routine home care reimbursement and high acuity care averaged $163.37 and $715.10, respectively. During the quarter, high acuity days of care were 5.4% of total days of care, 83 basis points less than the prior-year quarter.

The first quarter of 2017 gross margin was 21.5%, which is a 49 basis point improvement when compared to the first quarter of 2016.

Selling, general and administrative expense was $24.3 million in the first quarter of 2017, which is a decrease of 2.0% compared to the prior-year quarter. Adjusted EBITDA totaled $38.4 million in the quarter, an increase of 7.0% over the prior-year period. Adjusted EBITDA margin was 13.6% in the quarter which is 67 basis points higher than the prior-year period.

Roto-Rooter

Roto-Rooter’s plumbing and drain cleaning business generated sales of $124 million for the first quarter of 2017, an increase of $10.7 million, or 9.5%, over the prior-year quarter. Revenue from water restoration totaled $18.1 million, an increase of $5.6 million or 45.1%, when compared to the prior-year quarter.

Roto-Rooter’s gross margin in the quarter was 48.6%, a 106 basis point improvement when compared to the first quarter of 2016. Adjusted EBITDA in the first quarter of 2017 totaled $26.3 million, an increase of 12.7%, and the Adjusted EBITDA margin was 21.3% in the quarter, 61 basis points higher than the prior year.

Chemed Consolidated

As of March 31, 2017, Chemed had total cash and cash equivalents of $47 million and debt of $147 million.

In June 2014, Chemed entered into a five-year Amended and Restated Credit Agreement that consisted of a $100 million amortizable term loan and a $350 million revolving credit facility. The interest rate on this facility has a floating rate that is currently LIBOR plus 112.5 basis points. At March 31, 2017, the Company had approximately $246 million of undrawn borrowing capacity under this credit agreement.

Capital expenditures through March 31, 2017, aggregated $9.0 million and compares to depreciation and amortization during the same period of $8.9 million.

During the quarter, the Company repurchased 300,000 shares of Chemed stock for $54.3 million which equates to a cost per share of $180.87. On March 10, 2017, Chemed’s Board of Directors authorized an additional $100 million for stock repurchase under Chemed’s existing share repurchase program. As of March 31, 2017, there was $95.9 million of remaining share repurchase authorization under this plan.

Chemed restarted its share repurchase program in 2007. Since that time, Chemed has repurchased 13.1 million shares, aggregating $923 million at an average share cost of $70.41. Including dividends over this period, Chemed has returned over $1.04 billion to our shareholders.

Guidance for 2017

Revenue growth for VITAS in 2017, prior to Medicare Cap, is estimated to be in the range of 4% to 5%. Admissions and Average Daily Census in 2017 are estimated to expand approximately 3% to 4% and full-year Adjusted EBITDA margin, prior to Medicare Cap, is estimated to be 14.5% to 15.0%. We are currently estimating $3.7 million for Medicare Cap billing limitations in the 2017 calendar year.

Roto-Rooter is forecasted to achieve full-year 2017 revenue growth of 3% to 4%. This revenue estimate is based upon increased job pricing of approximately 2% and continued growth in water restoration services. Adjusted EBITDA margin for 2017 is estimated in the range of 21.5% to 22.0%.

Based upon the above, full-year 2017 adjusted earnings per diluted share, excluding non-cash expense for stock options, costs related to litigation, and other discrete items, is estimated to be in the range of $7.80 to $8.00. This compares to Chemed’s 2016 reported adjusted earnings per diluted share of $7.24.

Conference Call

Chemed will host a conference call and webcast at 10 a.m., ET, on Thursday, April 27, 2017, to discuss the Company's quarterly results and to provide an update on its business. The dial-in number for the conference call is (844) 743-2500 for U.S. and Canadian participants and +1 (661) 378-9533 for international participants. The participant passcode/Conference ID is 98225002. A live webcast of the call can be accessed on Chemed's website at www.chemed.com by clicking on Investor Relations Home.

A taped replay of the conference call will be available beginning approximately 24 hours after the call's conclusion. It can be accessed by dialing (855) 859-2056 for U.S. and Canadian callers and +1 (404) 537-3406 for international callers and will be available for one week following the live call. The replay Conference ID is 98225002. 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 over 16,000 patients with severe, life-limiting illnesses. This type of care is focused on making the terminally ill patient's final days as comfortable and pain-free as possible.

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

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

Forward-Looking Statements

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

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

   
CHEMED CORPORATION AND SUBSIDIARY COMPANIES
CONSOLIDATED STATEMENT OF INCOME
(in thousands, except per share data)(unaudited)
   
Three Months Ended March 31,
2017 2016
Service revenues and sales $ 405,864   $ 390,389  
Cost of services provided and goods sold 285,140 278,435
Selling, general and administrative expenses (aa) 69,458 59,045
Depreciation 8,893 8,424
Amortization 46 92
Other operating expenses   873     -  
Total costs and expenses   364,410     345,996  
Income from operations 41,454 44,393
Interest expense (995 ) (842 )
Other income--net (bb)   2,463     (2,924 )
Income before income taxes 42,922 40,627
Income taxes   (13,078 )   (15,787 )
Net income $ 29,844   $ 24,840  
 
Earnings Per Share
Net income $ 1.84   $ 1.49  
Average number of shares outstanding   16,219     16,720  
 
Diluted Earnings Per Share
Net income $ 1.78   $ 1.45  
Average number of shares outstanding   16,801     17,170  
 
       
(aa) Selling, general and administrative ("SG&A") expenses comprise (in thousands):
Three Months Ended March 31,
2017 2016
SG&A expenses before long-term incentive compensation, expenses
related to the O.I.G. investigation and the impact of market value

adjustments related to deferred compensation trusts

$ 63,732 $ 59,937
Market value gains/(losses) related to deferred compensation trusts 2,615 (2,987 )
Expenses related to O.I.G. investigation 2,150 2,336
Long-term incentive compensation   961     (241 )
Total SG&A expenses $ 69,458   $ 59,045  
 
(bb) Other income--net comprises (in thousands):
Three Months Ended March 31,
2017 2016
Market value gains/(losses) related to deferred compensation trusts $

2,615

$ (2,987 )
Interest income

85

97
Loss on disposal of property and equipment (236

)

(33 )
Other  

(1

)

  (1 )
Total other income--net $ 2,463   $ (2,924 )
 
   
CHEMED CORPORATION AND SUBSIDIARY COMPANIES
CONSOLIDATED BALANCE SHEET
(in thousands, except per share data)(unaudited)
   
 
March 31,
2017 2016
Assets
Current assets
Cash and cash equivalents $ 47,049 $ 15,235
Accounts receivable less allowances 109,726 143,040
Inventories 5,433 6,102
Prepaid income taxes 1,663 3,258
Prepaid expenses   12,102     12,306  
Total current assets 175,973 179,941
Investments of deferred compensation plans held in trust 56,596 49,195
Properties and equipment, at cost less accumulated depreciation 119,394 119,331
Identifiable intangible assets less accumulated amortization 54,976 55,018
Goodwill 472,391 472,438
Other assets   6,901     6,996  
Total Assets $ 886,231   $ 882,919  
 
Liabilities
Current liabilities
Accounts payable $ 29,341 $ 50,721
Current portion of long-term debt 9,375 18,000
Income taxes 12,614 11,129
Accrued insurance 54,150 45,628
Accrued compensation 37,382 43,844
Accrued legal 2,471 2,819
Other current liabilities   19,050     19,416  
Total current liabilities 164,383 191,557
Deferred income taxes 11,875 16,861
Long-term debt 137,500 126,875
Deferred compensation liabilities 56,024 49,188
Other liabilities   15,805     13,617  
Total Liabilities   385,587     398,098  
Stockholders' Equity
Capital stock 34,404 34,076
Paid-in capital 651,269 610,219
Retained earnings 983,742 886,604
Treasury stock, at cost (1,170,933 ) (1,048,509 )
Deferred compensation payable in Company stock   2,162     2,431  
Total Stockholders' Equity   500,644     484,821  
Total Liabilities and Stockholders' Equity $ 886,231   $ 882,919  
 
   
CHEMED CORPORATION AND SUBSIDIARY COMPANIES
CONSOLIDATED STATEMENT OF CASH FLOWS
(in thousands)(unaudited)
                 
Three Months Ended
March 31,
2017 2016
Cash Flows from Operating Activities
Net income $ 29,844 $ 24,840
Adjustments to reconcile net income to net cash provided
by operating activities:
Depreciation and amortization 8,939 8,516
Provision for uncollectible accounts receivable 4,249 4,242
Stock option expense 3,001 2,563
Benefit for deferred income taxes (2,415 ) (4,202 )
Noncash long-term incentive compensation 827 (305 )
Amortization of restricted stock awards 336 539
Amortization of debt issuance costs 129 130
Changes in operating assets and liabilities
Decrease/(increase) in accounts receivable 17,972 (41,050 )
Decrease in inventories 322 212
Decrease in prepaid expenses 1,003 546
Decrease in accounts payable and other current liabilities (10,766 ) (7,567 )
Increase in income taxes 14,655 19,448
Increase/(decrease) in other assets (2,140 ) 410
Increase/(decrease) in other liabilities 1,992 (140 )
Excess tax benefit on share-based compensation - (900 )
Other sources/(uses)   838     (59 )
Net cash provided by operating activities   68,786     7,223  
Cash Flows from Investing Activities
Capital expenditures (9,020 ) (11,473 )
Other sources/(uses)   (70 )   153  
Net cash used by investing activities   (9,090 )   (11,320 )
Cash Flows from Financing Activities
Proceeds from revolving line of credit 116,000 59,000
Payments on revolving line of credit (76,000 ) (3,500 )
Purchase of treasury stock (54,262 ) (52,460 )
Change in cash overdrafts payable (8,607 ) 7,061
Proceeds from exercise of stock options 5,635 2,887
Dividends paid (4,251 ) (4,081 )
Capital stock surrendered to pay taxes on stock-based compensation (4,744 ) (4,020 )
Payments on other long-term debt (1,875 ) (1,875 )
Excess tax benefit on share-based compensation - 900
Other sources   147     693  
Net cash (used)/provided by financing activities   (27,957 )   4,605  
Increase in Cash and Cash Equivalents 31,739 508
Cash and cash equivalents at beginning of year   15,310     14,727  
Cash and cash equivalents at end of period $ 47,049   $ 15,235  
 
   
CHEMED CORPORATION AND SUBSIDIARY COMPANIES
CONSOLIDATING STATEMENT OF INCOME
FOR THE THREE MONTHS ENDED MARCH 31, 2017 AND 2016
(in thousands)(unaudited)
     
Chemed
VITAS Roto-Rooter   Corporate   Consolidated

2017

Service revenues and sales $ 282,316   $ 123,548   $ -   $ 405,864  
Cost of services provided and goods sold 221,678 63,462 - 285,140
Selling, general and administrative expenses (a) 24,294 33,460 11,704 69,458
Depreciation 4,778 3,984 131 8,893
Amortization 14 32 - 46
Other operating expenses   873     -     -     873  
Total costs and expenses   251,637     100,938     11,835     364,410  
Income/(loss) from operations 30,679 22,610 (11,835 ) 41,454
Interest expense (55 ) (99 ) (841 ) (995 )
Intercompany interest income/(expense) 2,702 1,310 (4,012 ) -
Other income/(expense)—net   (80 )   (72 )   2,615   2,463  
Income/(loss) before income taxes 33,246 23,749 (14,073 ) 42,922
Income taxes (a)   (12,649 )   (9,125 )   8,696     (13,078 )
Net income/(loss) $ 20,597   $ 14,624   $ (5,377 ) $ 29,844  
 

2016

Service revenues and sales $ 277,528   $ 112,861   $ -   $ 390,389  
Cost of services provided and goods sold 219,266 59,169 - 278,435
Selling, general and administrative expenses (b) 24,783 29,807 4,455 59,045
Depreciation 4,781 3,501 142 8,424
Amortization   14     78     -     92  
Total costs and expenses   248,844     92,555     4,597     345,996  
Income/(loss) from operations 28,684 20,306 (4,597 ) 44,393
Interest expense (59 ) (93 ) (690 ) (842 )
Intercompany interest income/(expense) 2,103 948 (3,051 ) -
Other income/(expense)-net   41     23     (2,988 ) (2,924 )
Income/(loss) before income taxes 30,769 21,184 (11,326 ) 40,627
Income taxes (b)   (11,682 )   (8,164 )   4,059     (15,787 )
Net income/(loss) $ 19,087   $ 13,020   $ (7,267 ) $ 24,840  

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 MARCH 31, 2017 AND 2016
(in thousands)(unaudited)
         
 
Chemed
VITAS Roto-Rooter Corporate Consolidated
2017
Net income/(loss) $ 20,597 $ 14,624 $ (5,377 ) $ 29,844
Add/(deduct):
Interest expense 55 99 841 995
Income taxes 12,649 9,125 (8,696 ) 13,078
Depreciation 4,778 3,984 131 8,893
Amortization   14     32     -     46  
EBITDA 38,093 27,864 (13,101 ) 52,856
Add/(deduct):
Intercompany interest income/(expense) (2,702 ) (1,310 ) 4,012 -
Interest income (70 ) (15 ) - (85 )
Expenses related to O.I.G. investigation 2,150 - - 2,150
Amortization of stock awards 78 70 188 336
Program closure expenses 873 - - 873
Advertising cost adjustment (c) - (274 ) - (274 )
Stock option expense - - 3,001 3,001
Long-term incentive compensation   -     -     961     961  
Adjusted EBITDA $ 38,422   $ 26,335   $ (4,939 ) $ 59,818  
 
2016
Net income/(loss) $ 19,087 $ 13,020 $ (7,267 ) $ 24,840
Add/(deduct):
Interest expense 59 93 690 842
Income taxes 11,682 8,164 (4,059 ) 15,787
Depreciation 4,781 3,501 142 8,424
Amortization   14     78     -     92  
EBITDA 35,623 24,856 (10,494 ) 49,985
Add/(deduct):
Intercompany interest income/(expense) (2,103 ) (948 ) 3,051 -
Interest income (79 ) (17 ) (1 ) (97 )
Expenses related to O.I.G. investigation 2,336 - - 2,336
Amortization of stock awards 131 81 327 539
Advertising cost adjustment (c) - (608 ) - (608 )
Stock option expense - - 2,563 2,563
Long-term incentive compensation - - (241 ) (241 )
Expenses related to securities litigation   -     -     3     3  
Adjusted EBITDA $ 35,908   $ 23,364   $ (4,792 ) $ 54,480  

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

   
CHEMED CORPORATION AND SUBSIDIARY COMPANIES
RECONCILIATION OF ADJUSTED NET INCOME
(in thousands, except per share data)(unaudited)
       
Three Months Ended March 31,
2017 2016
Net income as reported $ 29,844 $ 24,840
 
Add after-tax cost of:
Excess tax benefits on stock compensation (3,695 ) -
Stock option expense 1,897 1,621
Expenses related to O.I.G. investigation 1,328 1,443
Long-term incentive compensation 608 (152 )
Program closure expenses 513 -
Expenses related to securities litigation   -     2  
Adjusted net income $ 30,495   $ 27,754  
 
 
 
Diluted Earnings Per Share As Reported
Net income $ 1.78   $ 1.45  
Average number of shares outstanding   16,801     17,170  
 
Adjusted Diluted Earnings Per Share
Adjusted net income $ 1.82   $ 1.62  
Average number of shares outstanding   16,801     17,170  

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

 
CHEMED CORPORATION AND SUBSIDIARY COMPANIES
OPERATING STATISTICS FOR VITAS SEGMENT
(unaudited)
           
Three Months Ended March 31,
OPERATING STATISTICS 2017 2016
Net revenue ($000) (d)
Homecare $ 225,536 $ 214,850
Inpatient 23,923 25,517
Continuous care   32,857   37,161
Total $ 282,316 $ 277,528
Net revenue as a percent of total
before Medicare cap allowance
Homecare 79.9 % 77.4 %
Inpatient 8.5 9.2
Continuous care   11.6   13.4
Total   100.0 % 100.0 %
Average daily census ("ADC") (days)
Homecare 12,287 11,681
Nursing home   3,052   2,991
Routine homecare 15,339 14,672
Inpatient 378 421
Continuous care   505   560
Total   16,222   15,653
 
Total Admissions 17,563 16,868
Total Discharges 17,213 16,743
Average length of stay (days) 88.7 83.7
Median length of stay (days) 15.0 15.0
ADC by major diagnosis
Neurological 19.7 % 22.1 %
Cerebro 34.4 31.2
Cancer 15.1 15.3
Cardio 16.6 17.3
Respiratory 7.9 7.9

 

Other   6.3   6.2
Total   100.0 % 100.0 %
Admissions by major diagnosis
Neurological 10.9 % 11.3 %
Cerebro 22.1 20.9
Cancer 29.5 30.5
Cardio 15.1 15.5
Respiratory 11.7 10.9
Other   10.7   10.9
Total   100.0 % 100.0 %
Direct patient care margins (e)
Routine homecare 51.3 % 52.1 %
Inpatient 5.9 5.7
Continuous care 15.6 15.1
Homecare margin drivers (dollars per patient day)
Labor costs $ 58.64 $ 56.72
Combined drug, home medical equipment and
medical supplies cost 15.14 15.46
Inpatient margin drivers (dollars per patient day)
Labor costs $ 369.99 $ 338.73
Continuous care margin drivers (dollars per patient day)
Labor costs $ 590.73 $ 599.38
Bad debt expense as a percent of revenues 1.2 % 1.3 %
Accounts receivable --
Days of revenue outstanding- excluding unapplied Medicare payments 35.9 38.3
Days of revenue outstanding- including unapplied Medicare payments 24.9 36.8

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

     
CHEMED CORPORATION AND SUBSIDIARY COMPANIES
FOOTNOTES TO FINANCIAL STATEMENTS
FOR THE THREE MONTHS ENDED MARCH 31, 2017 AND 2016
(unaudited)
       
 
(a) Included in the results of operations for the three months ended March 31, 2017, are the following significant credits/(charges)
which may not be indicative of ongoing operations (in thousands):
 
VITAS Corporate Total
Selling, general and administrative expenses
Expenses related to O.I.G. investigation $ (2,150 ) $ - $ (2,150 )
Program closure expenses (873 ) - (873 )
Stock option expense - (3,001 ) (3,001 )
Long-term incentive compensation   -     (961 )   (961 )
Pretax impact on earnings (3,023 ) (3,962 ) (6,985 )
Excess tax benefits on stock compensation - 3,695 3,695
Income tax benefit/(charge) on the above   1,182     1,457     2,639  
After-tax impact on earnings $ (1,841 ) $ 1,190   $ (651 )
 
(b) Included in the results of operations for the three months ended March 31, 2016, are the following significant credits/(charges)
which may not be indicative of ongoing operations (in thousands):
 
VITAS Corporate Total
Selling, general and administrative expenses
Expenses related to O.I.G. investigation $ (2,336 ) $ - $ (2,336 )
Stock option expense - (2,563 ) (2,563 )
Long-term incentive compensation - 241 241
Expenses related to securities litigation   -     (3 )   (3 )
Pretax impact on earnings (2,336 ) (2,325 ) (4,661 )
Income tax benefit/(charge) on the above   893     854     1,747  
After-tax impact on earnings $ (1,443 ) $ (1,471 ) $ (2,914 )
(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 first quarters of 2017 and 2016,
GAAP advertising expense for Roto-Rooter totaled $6,906,000 and $6,283,000, respectively. If the expense of the telephone
directories were spread over the periods they are in circulation, advertising expense for the first quarters of 2017 and 2016 would
total $7,180,000 and $6,891,000, respectively.
 
(d) VITAS has eight large (greater than 450 ADC), 18 medium (greater than 200 but less than 450 ADC) and 19 small (less than 200 ADC) hospice
programs. Of VITAS' 31 unique Medicare provider numbers, 28 provider numbers have a Medicare cap cushion of 10% or greater during
the current Medicare cap year, two provider numbers have a Medicare cap cushion between 5% and 10% and one provider number has a
Medicare cap cushion between 0% and 5%
 
(e) Amounts exclude indirect patient care and administrative costs, as well as Medicare Cap billing limitation.

CONTACT:
Chemed Corporation
David P. Williams, 513-762-6901