8-K - CHE - Equibles

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):

June 30, 2023

CHEMED CORPORATION

(Exact name of registrant as specified in its charter)

Delaware	1-8351	31-0791746
(State or other<br>‎jurisdiction of<br>‎incorporation)	(Commission File Number)	(I.R.S. Employer<br>‎Identification<br>‎Number)

2600 First Financial Center, 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 Exchange Act (17 CFR 240-14d-2(b))

[_] Pre-commencement communications pursuant to Rule 13e-4 (c) under Exchange Act (17 CFR 240-13e-4(c))

Securities registered pursuant to 12(b) of the Act:

Title of each class	Trading symbol	Name of each exchange on which<br><br>registered
Capital stock $1 par value	CHE	NYSE

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 or Rule 12b-2 of the Securities Exchange Act of 1934. [_]

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. [_]

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Item 2.02 Results of Operations and Financial Condition

On July 26, 2023, Chemed Corporation issued a press release announcing its financial results for the quarter ended June 30, 2023. 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 July 26, 2023
	104 The cover page from this Current Report on Form 8-K formatted in Inline XBRL

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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: July 26, 2023	By:	/s/ Michael D. Witzeman
		Michael D. Witzeman
		Vice President and Controller

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		Exhibit 99

CONTACT: David P. Williams

(513) 762-6901

Chemed Reports Second-Quarter 2023 Results

CINCINNATI, July 26, 2023—Chemed Corporation (Chemed) (NYSE: CHE), which operates VITAS Healthcare Corporation (VITAS), one of the nation’s largest providers of end-of-life care, and Roto-Rooter, the nation’s largest commercial and residential plumbing and drain cleaning services provider, reported financial results for its second quarter ended June 30, 2023, versus the comparable prior-year period, as follows:

Consolidated operating results: | · | Revenue increased 4.2% to $554 million | | --- | --- | | · | GAAP Diluted Earnings-per-Share (EPS) of $3.51 | | --- | --- | | · | Adjusted Diluted EPS of $4.71, a decrease of 2.7% | | --- | --- |

VITAS segment operating results: | · | Net Patient Revenue of $321 million, an increase of 7.8% | | --- | --- | | · | Average Daily Census (ADC) of 18,392, an increase of 6.2% | | --- | --- | | · | Admissions of 15,611, an increase of 5.9% | | --- | --- | | · | Net Income, excluding certain discrete items, of $35.7 million, an increase of 1.3% | | --- | --- | | · | Adjusted EBITDA, excluding Medicare Cap, of $50.7 million, an increase of 1.4% | | --- | --- | | · | Adjusted EBITDA margin, excluding Medicare Cap, of 15.7%, a decline of 101-basis points | | --- | --- |

Roto-Rooter segment operating results: | · | Revenue of $233 million, a decline of 0.2% | | --- | --- | | · | Net Income, excluding certain discrete items, of $46.1 million, a decrease of 5.6% | | --- | --- | | · | Adjusted EBITDA of $65.9 million, a decline of 4.5% | | --- | --- | | · | Adjusted EBITDA margin of 28.3%, a decline of 128-basis points | | --- | --- |

VITAS

VITAS net revenue was $321 million in the second quarter of 2023, which is an increase of 7.8% when compared to the prior year period. This revenue increase is comprised primarily of a 6.2% increase in days-of-care and a geographically weighted average Medicare reimbursement rate increase of approximately 2.7%, partially offset by 100-basis points as a result of CMS reimplementing sequestration that was suspended at the start of the pandemic. Acuity mix shift had minimal impact in the quarter when compared to the prior-year revenue and level-of-care mix.

The combination of Medicare Cap and other contra revenue changes negatively impacted revenue growth by 10-basis points.

In the second quarter of 2023, VITAS accrued $2.75 million in Medicare Cap billing limitations. This compares to a $2.0 million Medicare Cap billing limitation in the second quarter of 2022.

Of VITAS’ 30 Medicare provider numbers, 24 provider numbers have a trailing nine-month Medicare Cap cushion of 10% or greater, three provider numbers have a cushion between 5% and 10%, and three provider numbers have a trailing nine-month billing limitation liability.

Average revenue per patient per day in the second quarter of 2023 was $197.02 which is 178-basis points above the prior-year period. Reimbursement for routine home care and high acuity care averaged $172.91 and $1,031.58, respectively. During the quarter, high acuity days-of-care were 2.8% of total days of care, essentially equal to the prior-year quarter.

The second quarter 2023 gross margin, excluding Medicare Cap and the hiring and retention bonus program, was 22.7%. This is a 143-basis point increase when compared to the second quarter of 2022. The margin increase is net of sequestration which reduced reimbursement 100-basis points when compared to the prior year. During the quarter, VITAS increased the licensed healthcare staff by 309 professionals. This results in total licensed staff increasing by 784 professionals since the inception of the retention program on July 1, 2022. The increase of 309 net professionals hired during the second quarter of 2023, basically underutilized capacity, is estimated to have negatively impacted margins in the quarter by approximately 80-basis points.

Selling, general and administrative expenses were $22.7 million in the second quarter of 2023 and compares to $23.1 million incurred in the prior-year quarter. Adjusted EBITDA, excluding Medicare Cap, totaled $50.7 million in the quarter, an increase of 1.4%. Adjusted EBITDA margin in the quarter, excluding Medicare Cap, was 15.7%, which is 101-basis points below the prior-year period. This Adjusted EBITDA margin was negatively impacted by 100-basis points for the reimplementation of sequestration and approximately 80-basis points due to the addition of 309 licensed professionals during the second quarter of 2023.

Roto-Rooter

Roto-Rooter generated quarterly revenue of $233 million in the second quarter of 2023, a decline of 0.2%, when compared to the prior-year quarter.

Roto-Rooter branch commercial revenue in the quarter totaled $55.5 million, an increase of 1.3%, over the prior year. This aggregate commercial revenue growth consisted of drain cleaning revenue declining 3.0%, plumbing increasing 5.4%, excavation increasing 2.9%, and water restoration increasing 9.7%.

Roto-Rooter branch residential revenue in the quarter totaled $158 million, a decline of 1.1%, over the prior-year period. This aggregate residential revenue growth consisted of drain cleaning decreasing 8.6%, plumbing declining 2.8%, excavation expanding 3.8%, and water restoration

increasing 2.5%.

Roto-Rooter’s gross margin in the quarter was 52.3%, an 89-basis point decline when compared to the second quarter of 2022. Adjusted EBITDA in the second quarter of 2023 totaled $65.9 million, a decrease of 4.5%. The Adjusted EBITDA margin in the quarter was 28.3%, which is 128-basis points below the prior year period.

Chemed Consolidated

As of June 30, 2023, Chemed had total cash and cash equivalents of $160 million and no current or long-term debt.

In June 2022, Chemed entered into a five-year $550 million Amended and Restated Credit Agreement (Credit Agreement). This Credit Agreement consisted of a $100 million amortizable term loan and a $450 million revolving credit facility. The interest rate on this Credit Agreement has a floating rate that is currently SOFR plus 100-basis points. During the quarter, the Company paid off the remaining portion of the term loan. The Company has approximately $405 million of undrawn borrowing capacity under the Credit Agreement.

During the quarter, the Company repurchased 25,000 shares of Chemed stock for $13.4 million which equates to a cost per share of $536.98. As of June 30, 2023, there was approximately $74 million of remaining share repurchase authorization under its plan.

Guidance for 2023

VITAS 2023 revenue, prior to Medicare Cap, is estimated to increase 8.5% to 9.5% when compared to 2022. Forecasted revenue growth is negatively impacted by 75-basis points as a result of the sequestration relief in the first half of 2022 compared to a full year of sequestration in 2023. ADC is estimated to increase 6.5% to 7.5%. Full year adjusted EBITDA margin, prior to Medicare Cap and accrued retention bonuses related to the hiring initiatives, is estimated to be 16.5% to 17.0%. We are currently estimating $11 million for Medicare Cap billing limitations in calendar year 2023.

Roto-Rooter is forecasted to achieve full-year 2023 revenue growth of 1.0% to 2.0%. Roto-Rooter’s adjusted EBITDA margin for 2023 is expected to be 28.0% to 28.5%.

Based upon the above, full-year 2023 earnings per diluted share, excluding: non-cash expense for stock options, tax benefits from stock option exercises, costs related to litigation, retention program for licensed healthcare employees, and other discrete items, is estimated to be in the range of $19.90 to $20.10. Current 2023 guidance assumes an effective corporate tax rate on adjusted earnings of 24.7% and a diluted share count of 15.2 million shares. Chemed’s 2022 reported adjusted earnings per diluted share was $19.75.

Conference Call

Chemed will host a conference call and webcast at 10 a.m., ET, on Thursday July 27, 2023, to discuss the company's quarterly results and to provide an update on its business. Participants may access a live webcast of the conference call through the investor relations section of Chemed’s website, Investor Relations Home | Chemed Corporation or the hosting website https://edge.media-server.com/mmc/p/ntafx2iw.

Participants may also register via teleconference at: https://register.vevent.com/register/BI8193ef2f50f34636bd3182c2d88daff9.

Once registration is completed, participants will be provided with a dial-in number containing a personalized conference code to access the call. All participants are instructed to dial-in 15 minutes prior to the start time.

A taped replay of the conference call will be available beginning approximately two hours after the call's conclusion. You may access the replay via webcast through the investor relations section of Chemed’s website.

Chemed Corporation operates in the healthcare field through its VITAS Healthcare Corporation subsidiary. VITAS provides daily hospice services to approximately 18,400 patients with severe, life-limiting illnesses. This type of care is focused on making the terminally ill patient's final days as comfortable and pain-free as possible.

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

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

Forward-Looking Statements

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

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

| | | | | | | | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | | CHEMED CORPORATION AND SUBSIDIARY COMPANIES | | | | | | | | | | CONSOLIDATED STATEMENTS OF INCOME | | | | | | | | | | (in thousands, except per share data)(unaudited) | | | | | | | | | | | | | | | | | | | | | Three Months Ended June 30, | | | | Six Months Ended June 30, | | | | | | 2023 | | 2022 | | 2023 | | 2022 | | | Service revenues and sales | $ | 553,816 | $ | 531,288 | | 1,113,973 | $ | 1,061,837 | | Cost of services provided and goods sold | | 374,193 | | 336,821 | | 744,898 | | 673,373 | | Selling, general and administrative expenses (aa) | | 94,987 | | 87,853 | | 195,082 | | 177,807 | | Depreciation | | 12,634 | | 12,714 | | 24,920 | | 24,852 | | Amortization | | 2,514 | | 2,520 | | 5,027 | | 5,038 | | Other operating (income)/expense | | (18) | | (558) | | 1,721 | | (545) | | Total costs and expenses | | 484,310 | | 439,350 | | 971,648 | | 880,525 | | Income from operations | | 69,506 | | 91,938 | | 142,325 | | 181,312 | | Interest expense | | (771) | | (902) | | (2,322) | | (1,712) | | Other income/(expense)--net (bb) | | 1,609 | | (4,930) | | 1,506 | | (8,792) | | Income before income taxes | | 70,344 | | 86,106 | | 141,509 | | 170,808 | | Income taxes | | (16,967) | | (19,650) | | (34,011) | | (40,183) | | Net income | $ | 53,377 | $ | 66,456 | $ | 107,498 | $ | 130,625 | | Earnings Per Share | | | | | | | | | | Net income | $ | 3.54 | $ | 4.45 | $ | 7.16 | $ | 8.73 | | Average number of shares outstanding | | 15,058 | | 14,932 | | 15,013 | | 14,959 | | Diluted Earnings Per Share | | | | | | | | | | Net income | $ | 3.51 | $ | 4.40 | $ | 7.09 | $ | 8.62 | | Average number of shares outstanding | | 15,219 | | 15,111 | | 15,167 | | 15,152 | | | | | | | | | | | | (aa) Selling, general and administrative ("SG&A") expenses comprise (in thousands): | | | | | | | | | | | | | | | | | | | | | Three Months Ended June 30, | | | | Six Months Ended June 30, | | | | | | 2023 | | 2022 | | 2023 | | 2022 | | | SG&A expenses before long-term incentive compensation | | | | | | | | | | and the impact of market value adjustments related to | | | | | | | | | | deferred compensation plans | $ | 91,733 | $ | 91,422 | $ | 189,634 | $ | 184,000 | | Long-term incentive compensation | | 1,750 | | 1,517 | | 4,264 | | 2,827 | | Market value adjustments related to deferred | | | | | | | | | | compensation trusts | | 1,504 | | (5,086) | | 1,184 | | (9,020) | | Total SG&A expenses | $ | 94,987 | $ | 87,853 | $ | 195,082 | $ | 177,807 | | | | | | | | | | | | (bb) Other income/(expense)--net comprises (in thousands): | | | | | | | | | | | Three Months Ended June 30, | | | | Six Months Ended June 30, | | | | | | 2023 | | 2022 | | 2023 | | 2022 | | | Market value adjustments related to deferred | | | | | | | | | | compensation trusts | $ | 1,504 | $ | (5,086) | $ | 1,184 | $ | (9,020) | | Interest income | | 113 | | 154 | | 263 | | 226 | | Other | | (8) | | 2 | | 59 | | 2 | | Total other income/(expense)--net | $ | 1,609 | $ | (4,930) | $ | 1,506 | $ | (8,792) |

| | | | | | | --- | --- | --- | --- | --- | | CHEMED CORPORATION AND SUBSIDIARY COMPANIES | | | | | | CONSOLIDATED BALANCE SHEETS | | | | | | (in thousands, except per share data)(unaudited) | | | | | | | | | | | | | June 30, | | | | | | 2023 | | 2022 | | | Assets | | | | | | Current assets | | | | | | Cash and cash equivalents | $ | 159,924 | $ | 9,640 | | Accounts receivable less allowances | | 120,314 | | 136,555 | | Inventories | | 11,684 | | 10,696 | | Prepaid income taxes | | 16,666 | | 17,256 | | Prepaid expenses | | 28,572 | | 28,999 | | Total current assets | | 337,160 | | 203,146 | | Investments of deferred compensation plans held in trust | | 99,522 | | 96,061 | | Properties and equipment, at cost less accumulated depreciation | | 208,101 | | 192,005 | | Lease right of use asset | | 127,215 | | 128,290 | | Identifiable intangible assets less accumulated amortization | | 94,932 | | 103,837 | | Goodwill | | 581,542 | | 579,653 | | Other assets | | 56,708 | | 9,972 | | Total Assets | $ | 1,505,180 | $ | 1,312,964 | | Liabilities | | | | | | Current liabilities | | | | | | Accounts payable | $ | 41,058 | $ | 73,975 | | Current portion of long-term debt | | - | | 5,000 | | Accrued insurance | | 57,461 | | 54,828 | | Accrued compensation | | 74,384 | | 68,290 | | Accrued legal | | 6,096 | | 808 | | Short-term lease liability | | 38,779 | | 39,062 | | Other current liabilities | | 84,709 | | 43,105 | | Total current liabilities | | 302,487 | | 285,068 | | Deferred income taxes | | 36,681 | | 21,054 | | Long-term debt | | - | | 111,800 | | Deferred compensation liabilities | | 98,941 | | 95,624 | | Long-term lease liability | | 102,112 | | 103,389 | | Other liabilities | | 12,880 | | 11,069 | | Total Liabilities | | 553,101 | | 628,004 | | Stockholders' Equity | | | | | | Capital stock | | 36,996 | | 36,651 | | Paid-in capital | | 1,240,415 | | 1,089,129 | | Retained earnings | | 2,294,004 | | 2,090,214 | | Treasury stock, at cost | | (2,621,657) | | (2,533,306) | | Deferred compensation payable in Company stock | | 2,321 | | 2,272 | | Total Stockholders' Equity | | 952,079 | | 684,960 | | Total Liabilities and Stockholders' Equity | $ | 1,505,180 | $ | 1,312,964 |

| | | | | | | --- | --- | --- | --- | --- | | CHEMED CORPORATION AND SUBSIDIARY COMPANIES | | | | | | CONSOLIDATED STATEMENTS OF CASH FLOWS | | | | | | (in thousands)(unaudited) | | | | | | | | | | | | | For the Six Months Ended June 30, | | | | | | 2023 | | 2022 | | | Cash Flows from Operating Activities | | | | | | Net income | $ | 107,498 | $ | 130,625 | | Adjustments to reconcile net income to net cash provided | | | | | | by operating activities: | | | | | | Depreciation and amortization | | 29,947 | | 29,890 | | Stock option expense | | 16,882 | | 14,667 | | Noncash long-term incentive compensation | | 3,493 | | 2,497 | | Benefit for deferred income taxes | | (1,932) | | (2,129) | | Noncash directors' compensation | | 1,444 | | 1,170 | | Amortization of debt issuance costs | | 420 | | 153 | | Changes in operating assets and liabilities, excluding | | | | | | amounts acquired in business combinations: | | | | | | Decrease in accounts receivable | | 20,100 | | 887 | | Increase in inventories | | (1,412) | | (587) | | Decrease in prepaid expenses | | 1,719 | | 3,689 | | Increase/(decrease) in accounts payable and | | | | | | other current liabilities | | 8,561 | | (24,001) | | Change in current income taxes | | 1,865 | | 27 | | Net change in lease assets and liabilities | | (1,046) | | 705 | | (Increase)/decrease in other assets | | (3,810) | | 2,071 | | Increase/(decrease) in other liabilities | | 7,344 | | (1,491) | | Other sources/(uses) | | 1,736 | | (503) | | Net cash provided by operating activities | | 192,809 | | 157,670 | | Cash Flows from Investing Activities | | | | | | Capital expenditures | | (33,420) | | (25,610) | | Proceeds from sale of fixed assets | | 360 | | 1,757 | | Business combinations, net of cash acquired | | (305) | | (1,650) | | Other uses | | (169) | | (132) | | Net cash used by investing activities | | (33,534) | | (25,635) | | Cash Flows from Financing Activities | | | | | | Payments on other long-term debt | | (97,500) | | - | | Proceeds from other long-term debt | | - | | 100,000 | | Proceeds from exercise of stock options | | 53,675 | | 12,869 | | Purchases of treasury stock | | (13,425) | | (77,214) | | Dividends paid | | (11,412) | | (10,722) | | Capital stock surrendered to pay taxes on stock-based compensation | | (5,313) | | (12,115) | | Debt issuance costs | | - | | (1,510) | | Payments on revolving line of credit | | - | | (263,300) | | Proceeds from revolving line of credit | | - | | 95,100 | | Change in cash overdrafts payable | | - | | 1,716 | | Other sources/(uses) | | 498 | | (114) | | Net cash used by financing activities | | (73,477) | | (155,290) | | Increase/(decrease) in Cash and Cash Equivalents | | 85,798 | | (23,255) | | Cash and cash equivalents at beginning of year | | 74,126 | | 32,895 | | Cash and cash equivalents at end of year | $ | 159,924 | $ | 9,640 |

| | | | | | | | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | | CHEMED CORPORATION AND SUBSIDIARY COMPANIES | | | | | | | | | | CONSOLIDATING STATEMENTS OF INCOME | | | | | | | | | | FOR THE THREE MONTHS ENDED JUNE 30, 2023 AND 2022 | | | | | | | | | | (in thousands)(unaudited) | | | | | | | | | | | | | | | | | Chemed | | | | VITAS | | Roto-Rooter | | Corporate | | Consolidated | | | 2023 (a) | | | | | | | | | | Service revenues and sales | $ | 320,861 | $ | 232,955 | $ | - | $ | 553,816 | | Cost of services provided and goods sold | | 263,085 | | 111,108 | | - | | 374,193 | | Selling, general and administrative expenses | | 22,656 | | 56,012 | | 16,319 | | 94,987 | | Depreciation | | 4,940 | | 7,681 | | 13 | | 12,634 | | Amortization | | 26 | | 2,488 | | - | | 2,514 | | Other operating expense/(income) | | 26 | | (44) | | - | | (18) | | Total costs and expenses | | 290,733 | | 177,245 | | 16,332 | | 484,310 | | Income/(loss) from operations | | 30,128 | | 55,710 | | (16,332) | | 69,506 | | Interest expense | | (51) | | (124) | | (596) | | (771) | | Intercompany interest income/(expense) | | 4,810 | | 2,869 | | (7,679) | | - | | Other income—net | | 70 | | 35 | | 1,504 | | 1,609 | | Income/(loss) before income taxes | | 34,957 | | 58,490 | | (23,103) | | 70,344 | | Income taxes | | (8,829) | | (14,116) | | 5,978 | | (16,967) | | Net income/(loss) | $ | 26,128 | $ | 44,374 | $ | (17,125) | $ | 53,377 | | | | | | | | | | | | 2022 (b) | | | | | | | | | | Service revenues and sales | $ | 297,781 | $ | 233,507 | $ | - | $ | 531,288 | | Cost of services provided and goods sold | | 227,533 | | 109,288 | | - | | 336,821 | | Selling, general and administrative expenses | | 23,148 | | 54,982 | | 9,723 | | 87,853 | | Depreciation | | 6,062 | | 6,634 | | 18 | | 12,714 | | Amortization | | 26 | | 2,494 | | - | | 2,520 | | Other operating expense/(income) | | (807) | | 249 | | - | | (558) | | Total costs and expenses | | 255,962 | | 173,647 | | 9,741 | | 439,350 | | Income/(loss) from operations | | 41,819 | | 59,860 | | (9,741) | | 91,938 | | Interest expense | | (44) | | (115) | | (743) | | (902) | | Intercompany interest income/(expense) | | 4,683 | | 2,205 | | (6,888) | | - | | Other income/(expense)—net | | 119 | | 37 | | (5,086) | | (4,930) | | Income/(loss) before income taxes | | 46,577 | | 61,987 | | (22,458) | | 86,106 | | Income taxes | | (11,365) | | (14,915) | | 6,630 | | (19,650) | | Net income/(loss) | $ | 35,212 | $ | 47,072 | $ | (15,828) | $ | 66,456 | | | | | | | | | | | | | | | | | | | | | | The "Footnotes to Financial Statements" are integral parts of this financial information. | | | | | | | | |


CHEMED CORPORATION AND SUBSIDIARY COMPANIES
CONSOLIDATING STATEMENTS OF INCOME
FOR THE SIX MONTHS ENDED JUNE 30, 2023 AND 2022
(in thousands)(unaudited)

							Chemed
	VITAS		Roto-Rooter		Corporate		Consolidated
2023 (a)
Service revenues and sales	$	631,339	$	482,634	$	-	$	1,113,973
Cost of services provided and goods sold		516,739		228,159		-		744,898
Selling, general and administrative expenses		45,992		116,825		32,265		195,082
Depreciation		9,898		14,994		28		24,920
Amortization		52		4,975		-		5,027
Other operating expense		38		1,683		-		1,721
Total costs and expenses		572,719		366,636		32,293		971,648
Income/(loss) from operations		58,620		115,998		(32,293)		142,325
Interest expense		(102)		(257)		(1,963)		(2,322)
Intercompany interest income/(expense)		9,458		5,612		(15,070)		-
Other income—net		259		64		1,183		1,506
Income/(loss) before income taxes		68,235		121,417		(48,143)		141,509
Income taxes		(17,343)		(29,390)		12,722		(34,011)
Net income/(loss)	$	50,892	$	92,027	$	(35,421)	$	107,498

2022 (b)
Service revenues and sales	$	596,970	$	464,867	$	-	$	1,061,837
Cost of services provided and goods sold		454,773		218,600		-		673,373
Selling, general and administrative expenses		45,600		111,937		20,270		177,807
Depreciation		11,613		13,203		36		24,852
Amortization		49		4,989		-		5,038
Other operating expense		(955)		410		-		(545)
Total costs and expenses		511,080		349,139		20,306		880,525
Income/(loss) from operations		85,890		115,728		(20,306)		181,312
Interest expense		(96)		(229)		(1,387)		(1,712)
Intercompany interest income/(expense)		9,339		4,381		(13,720)		-
Other income—net		156		72		(9,020)		(8,792)
Income/(loss) before income taxes		95,289		119,952		(44,433)		170,808
Income taxes		(23,595)		(28,943)		12,355		(40,183)
Net income/(loss)	$	71,694	$	91,009	$	(32,078)	$	130,625


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

| | | | | | | | | | | --- | --- | --- | --- | --- | --- | --- | --- | --- | | CHEMED CORPORATION AND SUBSIDIARY COMPANIES | | | | | | | | | | CONSOLIDATING SUMMARIES OF EBITDA | | | | | | | | | | FOR THE THREE MONTHS ENDED JUNE 30, 2023 AND 2022 | | | | | | | | | | (in thousands)(unaudited) | | | | | | | | | | | | | | | | | Chemed | | | | VITAS | | Roto-Rooter | | Corporate | | Consolidated | | | 2023 | | | | | | | | | | Net income/(loss) | $ | 26,128 | $ | 44,374 | $ | (17,125) | $ | 53,377 | | Add/(deduct): | | | | | | | | | | Interest expense | | 51 | | 124 | | 596 | | 771 | | Income taxes | | 8,829 | | 14,116 | | (5,978) | | 16,967 | | Depreciation | | 4,940 | | 7,681 | | 13 | | 12,634 | | Amortization | | 26 | | 2,488 | | - | | 2,514 | | EBITDA | | 39,974 | | 68,783 | | (22,494) | | 86,263 | | Add/(deduct): | | | | | | | | | | Intercompany interest expense/(income) | | (4,810) | | (2,869) | | 7,679 | | - | | Interest income | | (79) | | (34) | | - | | (113) | | Licensed healthcare retention bonus | | 12,833 | | - | | - | | 12,833 | | Stock option expense | | - | | - | | 8,400 | | 8,400 | | Long-term incentive compensation | | - | | - | | 1,750 | | 1,750 | | Adjusted EBITDA | $ | 47,918 | $ | 65,880 | $ | (4,665) | $ | 109,133 | | | | | | | | | | | | 2022 | | | | | | | | | | Net income/(loss) | $ | 35,212 | $ | 47,072 | $ | (15,828) | $ | 66,456 | | Add/(deduct): | | | | | | | | | | Interest expense | | 44 | | 115 | | 743 | | 902 | | Income taxes | | 11,365 | | 14,915 | | (6,630) | | 19,650 | | Depreciation | | 6,062 | | 6,634 | | 18 | | 12,714 | | Amortization | | 26 | | 2,494 | | - | | 2,520 | | EBITDA | | 52,709 | | 71,230 | | (21,697) | | 102,242 | | Add/(deduct): | | | | | | | | | | Intercompany interest expense/(income) | | (4,683) | | (2,205) | | 6,888 | | - | | Interest income | | (118) | | (37) | | 1 | | (154) | | Stock option expense | | - | | - | | 7,216 | | 7,216 | | Long-term incentive compensation | | - | | - | | 1,517 | | 1,517 | | Medicare cap sequestration adjustment | | 138 | | - | | - | | 138 | | Direct costs related to COVID-19 | | (80) | | - | | - | | (80) | | Other | | - | | 28 | | - | | 28 | | Adjusted EBITDA | $ | 47,966 | $ | 69,016 | $ | (6,075) | $ | 110,907 | | | | | | | | | | | | The "Footnotes to Financial Statements" are integral parts of this financial information. | | | | | | | | |


CHEMED CORPORATION AND SUBSIDIARY COMPANIES
CONSOLIDATING SUMMARIES OF EBITDA
FOR THE SIX MONTHS ENDED JUNE 30, 2023 AND 2022
(in thousands)(unaudited)
							Chemed
	VITAS		Roto-Rooter		Corporate		Consolidated
2023
Net income/(loss)	$	50,892	$	92,027	$	(35,421)	$	107,498
Add/(deduct):
Interest expense		102		257		1,963		2,322
Income taxes		17,343		29,390		(12,722)		34,011
Depreciation		9,898		14,994		28		24,920
Amortization		52		4,975		-		5,027
EBITDA		78,287		141,643		(46,152)		173,778
Add/(deduct):
Intercompany interest expense/(income)		(9,458)		(5,612)		15,070		-
Interest income		(199)		(64)		-		(263)
Licensed healthcare retention bonus		23,750		-		-		23,750
Stock option expense		-		-		16,882		16,882
Long-term incentive compensation		-		-		4,264		4,264
Litigation settlements		-		1,756		-		1,756
Adjusted EBITDA	$	92,380	$	137,723	$	(9,936)	$	220,167
2022
Net income/(loss)	$	71,694	$	91,009	$	(32,078)	$	130,625
Add/(deduct):
Interest expense		96		229		1,387		1,712
Income taxes		23,595		28,943		(12,355)		40,183
Depreciation		11,613		13,203		36		24,852
Amortization		49		4,989		-		5,038
EBITDA		107,047		138,373		(43,010)		202,410
Add/(deduct):
Intercompany interest expense/(income)		(9,339)		(4,381)		13,720		-
Interest income		(155)		(71)		-		(226)
Stock option expense		-		-		14,667		14,667
Long-term incentive compensation		-		-		2,827		2,827
Direct costs related to COVID-19		310		960		-		1,270
Medicare cap sequestration adjustment		138		-		-		138
Other		-		28		-		28
Adjusted EBITDA	$	98,001	$	134,909	$	(11,796)	$	221,114

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 June 30, | | | | Six Months Ended June 30, | | | | | | 2023 | | 2022 | | 2023 | | 2022 | | | Net income as reported | $ | 53,377 | $ | 66,456 | $ | 107,498 | $ | 130,625 | | Add/(deduct) pre-tax cost of: | | | | | | | | | | Licensed healthcare worker retention bonus | | 12,833 | | - | | 23,750 | | - | | Stock option expense | | 8,400 | | 7,216 | | 16,882 | | 14,667 | | Amortization of reacquired franchise agreements | | 2,352 | | 2,352 | | 4,704 | | 4,704 | | Long-term incentive compensation | | 1,750 | | 1,517 | | 4,264 | | 2,827 | | Litigation settlements | | - | | - | | 1,756 | | - | | Medicare cap sequestration adjustment | | - | | 138 | | - | | 138 | | Other | | - | | 28 | | - | | 28 | | Direct costs related to COVID-19 | | - | | (80) | | - | | 1,270 | | Add/(deduct) tax impacts: | | | | | | | | | | Tax impact of the above pre-tax adjustments (1) | | (5,525) | | (2,038) | | (11,151) | | (4,449) | | Excess tax benefits on stock compensation | | (1,501) | | (2,499) | | (3,150) | | (3,940) | | Adjusted net income | $ | 71,686 | $ | 73,090 | $ | 144,553 | $ | 145,870 | | | | | | | | | | | | Diluted Earnings Per Share As Reported | | | | | | | | | | Net income | $ | 3.51 | $ | 4.40 | $ | 7.09 | $ | 8.62 | | Average number of shares outstanding | | 15,219 | | 15,111 | | 15,167 | | 15,152 | | | | | | | | | | | | Adjusted Diluted Earnings Per Share | | | | | | | | | | Adjusted net income | $ | 4.71 | $ | 4.84 | $ | 9.53 | $ | 9.63 | | Average number of shares outstanding | | 15,219 | | 15,111 | | 15,167 | | 15,152 | | | | | | | | | | | | (1) The tax impact of pre-tax adjustments was calculated using the effective tax rate of the operating unit for which each adjustment is associated. | | | | | | | | | | | | | | | | | | | | The "Footnotes to Financial Statements" are integral parts of this financial information. | | | | | | | | |


CHEMED CORPORATION AND SUBSIDIARY COMPANIES
OPERATING STATISTICS FOR VITAS SEGMENT
(unaudited)

						Six Months Ended June 30,
OPERATING STATISTICS			2022			2023			2022
Net revenue (000) (c)
Homecare	278,116		$	257,631		$	545,166		$	515,267
Inpatient	27,401			24,619			56,494			51,189
Continuous care	21,081			19,538			41,022			39,116
Other	3,154			3,213			6,175			6,220
Subtotal	329,752		$	305,001		$	648,857		$	611,792
Room and board, net	(2,904)			(2,166)			(5,672)			(4,283)
Contractual allowances	(3,237)			(3,054)			(6,346)			(6,039)
Medicare cap allowance	(2,750)			(2,000)			(5,500)			(4,500)
Net Revenue	320,861		$	297,781		$	631,339		$	596,970
Net revenue as a percent of total before Medicare cap allowance
Homecare	84.3	%		84.5	%		84.0	%		84.2	%
Inpatient	8.3			8.1			8.7			8.4
Continuous care	6.4			6.4			6.3			6.4
Other	1.0			1.0			1.0			1.0
Subtotal	100.0			100.0			100.0			100.0
Room and board, net	(0.8)			(0.7)			(0.9)			(0.7)
Contractual allowances	(1.0)			(1.0)			(1.0)			(1.0)
Medicare cap allowance	(0.8)			(0.7)			(0.8)			(0.7)
Net Revenue	97.4	%		97.6	%		97.3	%		97.6	%
Days of care
Homecare	1,340,655			1,266,604			2,627,092			2,525,276
Nursing home	279,898			259,046			545,327			507,514
Respite	6,159			6,095			11,919			11,463
Subtotal routine homecare and respite	1,626,712			1,531,745			3,184,338			3,044,253
Inpatient	25,125			23,155			51,494			47,742
Continuous care	21,873			20,802			42,559			41,884
Total	1,673,710			1,575,702			3,278,391			3,133,879

Number of days in relevant time period	91			91			181			181
Average daily census ("ADC") (days)
Homecare	14,732			13,918			14,514			13,952
Nursing home	3,076			2,847			3,013			2,804
Respite	68			67			66			63
Subtotal routine homecare and respite	17,876			16,832			17,593			16,819
Inpatient	276			254			286			264
Continuous care	240			229			235			231
Total	18,392			17,315			18,114			17,314

Total Admissions	15,611			14,735			31,790			31,265
Total Discharges	15,104			14,603			30,509			31,465
Average length of stay (days)	99.5			103.7			99.7			104.3
Median length of stay (days)	16.0			17.0			15.0			16.0

ADC by major diagnosis
Cerebro	41.9	%		37.6	%		42.0	%		37.5	%
Neurological	18.8			22.7			19.0			22.8
Cancer	10.8			11.2			10.6			11.2
Cardio	16.1			15.8			16.0			15.8
Respiratory	7.1			7.2			7.2			7.3
Other	5.3			5.5			5.2			5.4
Total	100.0	%		100.0	%		100.0	%		100.0	%
Admissions by major diagnosis
Cerebro	25.9	%		23.8	%		26.2	%		23.4	%
Neurological	10.1			13.0			10.4			12.9
Cancer	27.1			27.3			25.9			26.0
Cardio	16.3			15.4			16.3			14.7
Respiratory	9.8			9.9			10.4			10.6
Other	10.8			10.6			10.8			12.4
Total	100.0	%		100.0	%		100.0	%		100.0	%

Estimated uncollectible accounts as a percent of revenues	1.0	%		1.0	%		1.0	%		1.0	%

Accounts receivable --
Days of revenue outstanding-excluding unapplied Medicare payments	35.2			33.7			n.a.			n.a.
Days of revenue outstanding-including unapplied Medicare payments	22.6			28.2			n.a.			n.a.

All values are in US Dollars.

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 SIX MONTHS ENDED JUNE 30, 2023 AND 2022
(unaudited)

(a)	Included in the results of operations for 2023 are the following significant credits/(charges) which may not be indicative of ongoing operations
	(in thousands):
		Three Months Ended June 30, 2023
		VITAS		Roto-Rooter		Corporate		Consolidated

	Licensed healthcare worker retention bonus	$	(12,833)	$	-	$	-	$	(12,833)
	Stock option expense		-		-		(8,400)		(8,400)
	Amortization of reacquired franchise agreements		-		(2,352)		-		(2,352)
	Long-term incentive compensation		-		-		(1,750)		(1,750)
	Pretax impact on earnings		(12,833)		(2,352)		(10,150)		(25,335)
	Excess tax benefits on stock compensation		-		-		1,501		1,501
	Income tax benefit on the above		3,259		623		1,643		5,525
	After-tax impact on earnings	$	(9,574)	$	(1,729)	$	(7,006)	$	(18,309)

		Six Months Ended June 30, 2023
		VITAS		Roto-Rooter		Corporate		Consolidated

	Licensed healthcare worker retention bonus	$	(23,750)	$	-	$	-	$	(23,750)
	Stock option expense		-		-		(16,882)		(16,882)
	Amortization of reacquired franchise agreements		-		(4,704)		-		(4,704)
	Long-term incentive compensation		-		-		(4,264)		(4,264)
	Litigation settlements		-		(1,756)		-		(1,756)
	Pretax impact on earnings		(23,750)		(6,460)		(21,146)		(51,356)
	Excess tax benefits on stock compensation		-		-		3,150		3,150
	Income tax benefit on the above		6,033		1,712		3,406		11,151
	After-tax impact on earnings	$	(17,717)	$	(4,748)	$	(14,590)	$	(37,055)

(b)	Included in the results of operations for 2022 are the following significant credits/(charges) which may not be indicative of ongoing operations
	(in thousands):
		Three Months Ended June 30, 2022
		VITAS		Roto-Rooter		Corporate		Consolidated

	Stock option expense	$	-	$	-	$	(7,216)	$	(7,216)
	Amortization of reacquired franchise agreements		-		(2,352)		-		(2,352)
	Long-term incentive compensation		-		-		(1,517)		(1,517)
	Medicare cap sequestration adjustment		(138)		-		-		(138)
	Direct costs related to COVID-19		80		-		-		80
	Other		-		(28)		-		(28)
	Pretax impact on earnings		(58)		(2,380)		(8,733)		(11,171)
	Excess tax benefits on stock compensation		-		-		2,499		2,499
	Income tax benefit on the above		15		631		1,392		2,038
	After-tax impact on earnings	$	(43)	$	(1,749)	$	(4,842)	$	(6,634)

		Six Months Ended June 30, 2022
		VITAS		Roto-Rooter		Corporate		Consolidated

	Stock option expense	$	-	$	-	$	(14,667)	$	(14,667)
	Amortization of reacquired franchise agreements		-		(4,704)		-		(4,704)
	Long-term incentive compensation		-		-		(2,827)		(2,827)
	Direct costs related to COVID-19		(310)		(960)		-		(1,270)
	Medicare cap sequestration adjustment		(138)		-		-		(138)
	Other		-		(28)		-		(28)
	Pretax impact on earnings		(448)		(5,692)		(17,494)		(23,634)
	Excess tax benefits on stock compensation		-		-		3,940		3,940
	Income tax benefit on the above		114		1,508		2,827		4,449
	After-tax impact on earnings	$	(334)	$	(4,184)	$	(10,727)	$	(15,245)

(c)

VITAS has 10 large (greater than 450 ADC), 18 medium (greater than 200 but less than 450 ADC) and 22 small (less than 200 ADC) hospice programs. Of Vitas' 30 Medicare provider numbers, for the current cap year, 24 provider numbers have a Medicare cap cushion of greater than 10%, three provider numbers have a Medicare cap cushion between 5% and 10% and three provider numbers have a Medicare cap liability.