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Chemed Posts 4th Quarter 2013 Results

February 20, 2014

Chemed Corp., which operates Vitas Healthcare Corp., a provider of end-of-life care, and Roto-Rooter, a commercial and residential plumbing and drain cleaning services provider, reported financial results for its fourth quarter ended December 31, 2013, versus the comparable prior-year period, as follows:

Consolidated operating results:

-Revenue decreased 5.4 percent to $349 million

-GAAP Diluted EPS, including litigation, decreased 8.6 percent to $1.28

-Adjusted Diluted EPS decreased 7.6 percent to $1.45

Vitas segment operating results:

-Net Patient Revenue of $256 million, a decrease of 6.1 percent

-Average Daily Census (ADC) of 14,185, a decrease of 1.9 percent

-Admissions of 15,445, a decrease of 3.5 percent

-Net Income, including litigation costs, of $20.9 million, a decrease of 14.9 percent

-Adjusted EBITDA of $38.6 million, a decrease of 12.2 percent

-Adjusted EBITDA margin of 15.1 percent, a decrease of 105 basis points

Roto-Rooter segment operating results:

-Revenue of $92.4 million, a decrease of 3.4 percent

-Unit-for-unit job count of 153,357, a decrease of 4.8 percent

-Net Income, including litigation, of $10.0 million, an increase of 9.1 percent

-Adjusted EBITDA of $18.4 million, an increase of 7.8 percent

-Adjusted EBITDA margin of 20.0 percent, an increase of 206 basis points

In a release on February 17, the Company noted that net revenue for Vitas was $256 million in the fourth quarter of 2013, which is a decline of 6.1 percent when compared to the prior-year period. This revenue decline is a combination of several factors. Medicare reimbursement rates, including sequestration, decreased approximately 0.6 percent, ADC declined 1.9 percent, a mix shift away from high acuity care reduced revenue 2.3 percent and a $3.0 million increase in Medicare Cap billing adjustment which equated to 1.1 percent of additional revenue decline.

In the fourth quarter of 2013, Vitas recorded a Medicare Cap billing adjustment of $3.8 million related to two provider numbers.

Of Vitas' 37 unique Medicare provider numbers, 33 provider numbers have a Medicare Cap cushion of 10 percent or greater during the most recent twelve month period; one provider number has a Medicare Cap cushion between 5 percent to 10 percent; and two provider numbers have a cap cushion between 0 percent and 5 percent. Vitas generated an aggregate cap cushion of $267 million during the trailing twelve-month period.

Average revenue per patient per day in the quarter, excluding the impact of Medicare Cap, was $199.28, which is 3.2 percent below the prior-year period. The average revenue includes the 2.0 percent reduction in Medicare hospice reimbursement effective April 1, 2013. Routine home care reimbursement and high acuity care averaged $163.13 and $691.91, respectively, per patient per day in the fourth quarter of 2013. During the quarter, high acuity days of care were 6.8 percent of total days of care, 81 basis points below the prior- year quarter.

The fourth quarter of 2013 gross margin, excluding the impact of Medicare Cap, was 24.1 percent, which is a 60 basis point improvement when compared to the fourth quarter of 2012.

Selling, general and administrative expense was $20.9 million in the fourth quarter of 2013, which is an increase of 4.1 percent when compared to the prior-year quarter. Adjusted EBITDA, excluding Medicare Cap, totaled $42.4 million in the quarter, a decrease of 5.4 percent over the prior-year period. Adjusted EBITDA margin, excluding the impact from Medicare Cap, was 16.3 percent in the quarter which is essentially equal to the prior-year quarter.

Chemed Corp. operates in the healthcare field through its Vitas Healthcare Corp. subsidiary.

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