Chemed Reports Fourth-Quarter 2020 Results

CINCINNATI--(BUSINESS WIRE)--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 fourth quarter ended December 31, 2020, versus the comparable prior-year period, as follows:

Consolidated operating results:

• Revenue increased 2.1% to $533 million
• GAAP Diluted Earnings-per-Share (EPS) of $6.96, an increase of 75.8%
• Adjusted Diluted EPS of $5.13, an increase of 21.6%

VITAS segment operating results:

• Net Patient Revenue of $332 million, a decline of 2.3%
• Average Daily Census (ADC) of 18,718, a decline of 2.8%
• Admissions of 17,960 an increase of 2.8%
• Net Income, excluding certain discrete items, of $58.1 million, an increase of 16.0%
• Adjusted EBITDA, excluding Medicare Cap, of $78.7 million, an increase of 11.7%
• Adjusted EBITDA margin, excluding Medicare Cap, of 23.5%, an increase of 306-basis points

Roto-Rooter segment operating results:

• Revenue of $201 million, an increase of 10.2%
• Net Income, excluding certain discrete items, of $37.9 million, an increase of 24.6%
• Adjusted EBITDA of $54.5 million, an increase of 24.7%
• Adjusted EBITDA margin of 27.1%, an increase of 313-basis points

VITAS

VITAS net revenue was $332 million in the fourth quarter of 2020, which is a decline of 2.3%, when compared to the prior-year period. This revenue decline is comprised primarily of a 2.8% decline in days-of-care, a geographically weighted average Medicare reimbursement rate increase (including the suspension of sequestration on May 1, 2020) of approximately 2.4%, and acuity mix shift which then reduced the blended average Medicare rate increase approximately 255-basis points. The combination of lower Medicare Cap and a decrease in Medicaid net room and board pass-through, increased revenue growth an additional 64-basis points in the quarter.

In the fourth quarter of 2020, VITAS accrued $2.5 million in Medicare Cap billing limitations. This compares to a $4.5 million Medicare Cap billing limitation in the fourth quarter of 2019.

Of VITAS’ 30 Medicare provider numbers, 23 provider numbers currently have a Medicare Cap cushion of 10% or greater, four provider numbers have a cap cushion between 5% and 10%, one provider number has a cap cushion between 0% and 5% and two provider numbers currently have a fiscal 2021 Medicare Cap billing limitation liability.

Average revenue per patient per day in the fourth quarter of 2020 was $198.33, which, including acuity mix shift, is 7-basis points below the prior-year period. Reimbursement for routine home care and high acuity care averaged $169.83 and $997.37, respectively. During the quarter, high acuity days-of-care were 3.4% of total days of care, 62-basis points less than the prior-year quarter.

The fourth quarter 2020 gross margin, excluding Medicare Cap, increased costs for personal protection equipment (PPE), disinfecting facilities and other costs related to operating during the pandemic, was 29.9%. This is a 357-basis point margin improvement when compared to the fourth quarter of 2019. This increase in gross margin is attributed to a level-of-care mix shift to higher margin routine home care and the temporary suspension of sequestration which increased reimbursement 200-basis points.

Selling, general and administrative expense was $20.3 million in the fourth quarter of 2020, which is a favorable decrease of 4.0% compared to the prior-year quarter. Adjusted EBITDA, excluding Medicare Cap, totaled $78.7 million in the quarter, an increase of 11.7%. Adjusted EBITDA margin, excluding Medicare Cap, was 23.5% in the quarter, which is a 306-basis point improvement when compared to the prior-year period.

Roto-Rooter

Roto-Rooter generated quarterly revenue of $201 million in the fourth quarter of 2020, an increase of $18.7 million, or 10.2%, over the prior-year quarter. On a unit-for-unit basis, which excludes the Oakland and HSW acquisitions completed in July 2019 and September 2019, respectively, Roto-Rooter generated quarterly revenue of $183 million for the fourth quarter of 2020, an increase of 12.8% over the prior-year quarter.

Total commercial revenue in the quarter, excluding acquisitions, decreased 9.8%. This aggregate commercial revenue decline consisted of drain cleaning revenue declining 11.6%, commercial plumbing and excavation declining 8.9%, and commercial water restoration increasing 1.0%.

Total residential revenue, excluding acquisitions, increased 20.8%. This aggregate residential revenue growth consisted of residential drain cleaning increasing 17.1%, plumbing and excavation expanding 25.5%, and residential water restoration increasing 16.8%.

Roto-Rooter’s gross margin in the quarter was 51.6%, a 301-basis point increase when compared to the fourth quarter of 2019. Adjusted EBITDA in the fourth quarter of 2020 totaled $54.5 million, an increase of 24.7%. The Adjusted EBITDA margin in the quarter was 27.1% which is a 313-basis point increase when compared to the prior year.

Chemed Consolidated

As of December 31, 2020, Chemed had total cash and cash equivalents of $163 million and no long-term debt.

In June 2018, Chemed entered into a five-year Amended and Restated Credit Agreement that consists of a $450 million revolving credit facility. The interest rate on this facility has a floating rate that is currently LIBOR plus 100-basis points. At December 31, 2020, the Company had approximately $412 million of undrawn borrowing capacity under this credit agreement.

During the quarter, the Company repurchased 59,252 shares of Chemed stock for $28.5 million which equates to a cost per share of $480.52. As of December 31, 2020, there was approximately $178 million of remaining share repurchase authorization under this plan.

Chemed restarted its share repurchase program in 2007. Since that time, Chemed has repurchased approximately 14.5 million shares, aggregating approximately $1.4 billion at an average share cost of $95.75. Including dividends over this period, Chemed has returned approximately $1.6 billion to shareholders.

Guidance for 2021

Historically, Chemed earnings guidance has been developed using previous years’ key operating metrics which are then modeled and projected out for the calendar year. Critical within these projections is the understanding of traditional patterned correlations among key operating metrics. Once we complete this phase of our projected operating results, we would then modify the projections for the timing of price increases, changes in commission structure, wages, marketing programs and a variety of continuous improvement initiatives that our business segments plan on executing over the coming year. This modeling exercise also takes into consideration anticipated industry and macro-economic issues outside of management’s control but are somewhat predictable in terms of timing and impact on our business segments’ operating results.

The COVID-19 pandemic has made accurate modeling and providing meaningful earnings guidance exceptionally challenging. Federal, state and local government authorities are forced to make swift decisions within our healthcare system, labor pools and general economy. These governmental decisions have the potential for an immediate and material impact on VITAS and Roto-Rooter operating results.

Since the start of the pandemic, Chemed has been able to successfully navigate within this rapidly changing environment and produce operating results that we believe provide us with the ability to issue earnings guidance for the 2021 calendar year. However, this guidance should be taken with the recognition the pandemic will continue to materially disrupt all aspects of our healthcare system and general economy to such an extent that future rules, regulations and government mandates could materially impact our ability to achieve this guidance.

Statistically, patients residing in senior housing are identified as hospice appropriate earlier into their terminal prognosis and have a much greater probability of having a length of stay in excess of 90 days. Hospice patients referred from hospitals, oncology practices and similar referral sources are generally more acute and have a significantly lower probability of lengths-of-stay exceeding 90 days. According to data released by the National Investment Center for Seniors Housing & Care, COVID-19 continues to adversely affect senior housing occupancy, which reached another record low in the third quarter of 2020. This reduced occupancy in senior housing has had a corresponding reduction in VITAS nursing home admissions. Nursing home patients represented 14.7% of the VITAS fourth quarter 2020 patient census, a 310-basis point reduction when compared the fourth quarter of 2019.

VITAS anticipates continued weak occupancy and corresponding weak referrals from senior housing for the first half of 2021. This guidance anticipates senior housing occupancy will begin to normalize to pre-pandemic occupancy starting in the second half of calendar year 2021.

Based upon the above discussion, VITAS 2021 revenue, prior to Medicare Cap, is estimated to decline approximately 4.0% when compared to the prior year. Average Daily Census in 2021 is estimated to decline approximately 5.0%. Full-year Adjusted EBITDA margin, prior to Medicare Cap, is estimated to be 19.4%. We are currently estimating $10 million for Medicare Cap billing limitations in calendar year 2021.

Roto-Rooter is forecasted to achieve full-year 2021 revenue growth of 5% to 6%. Roto-Rooter’s Adjusted EBITDA margin for 2021 is estimated to be 26.0%.

Based upon the above, full-year 2021 adjusted earnings per diluted share, excluding non-cash expense for stock options, tax benefits from stock option exercises, costs related to litigation, and other discrete items, is estimated to be in the range of $17.00 to $17.50. This 2021 guidance assumes an effective corporate tax rate on adjusted earnings of 24.7%. Chemed’s 2020 reported adjusted earnings per diluted share was $18.08.

Conference Call

Chemed will host a conference call and webcast at 10 a.m., ET, on Wednesday, February 24, 2021, to discuss the Company's quarterly results and to provide an update on its business. The dial-in number for the conference call is [phone] for U.S. and Canadian participants and [phone] for international participants. The Conference ID is 7865216. 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 [phone] for U.S. and Canadian callers and [phone] for international callers and will be available for one week following the live call. The replay Conference ID is 7865216. An archived webcast will also be available at www.chemed.com.

Chemed Corporation operates in the healthcare field through its VITAS Healthcare Corporation subsidiary. VITAS provides daily hospice services to approximately 19,000 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 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 December 31,						For the Years Ended December 31,
	2020			2019			2020			2019
Service revenues and sales	$	533,289		$	522,324			2,079,583		$	1,938,555
Cost of services provided and goods sold		335,049			347,355			1,378,197			1,321,126
Selling, general and administrative expenses (aa)		86,805			83,291			330,218			305,712
Depreciation		11,835			11,126			46,596			40,870
Amortization		2,511			2,969			9,987			4,335
Other operating (income)/expenses		(46,160	)		131			(75,095	)		9,132
Total costs and expenses		390,040			444,872			1,689,903			1,681,175
Income from operations		143,249			77,452			389,680			257,380
Interest expense		(350	)		(1,133	)		(2,355	)		(4,535	)
Other income--net (bb)		2,942			3,276			8,665			8,764
Income before income taxes		145,841			79,595			395,990			261,609
Income taxes		(32,089	)		(14,015	)		(76,524	)		(41,686	)
Net income	$	113,752		$	65,580		$	319,466		$	219,923
Earnings Per Share
Net income	$	7.12		$	4.09		$	20.02		$	13.77
Average number of shares outstanding		15,973			16,022			15,955			15,969
Diluted Earnings Per Share
Net income	$	6.96		$	3.96		$	19.48		$	13.31
Average number of shares outstanding		16,348			16,565			16,398			16,527
(aa) Selling, general and administrative ("SG&A") expenses comprise (in thousands):
	Three Months Ended December 31,						For the Years Ended December 31,
	2020			2019			2020			2019
SG&A expenses before long-term incentive compensation and the impact of market value adjustments related to deferred compensation plans	$	80,551		$	77,053		$	313,348		$	289,828
Long-term incentive compensation		3,414			3,078			8,937			7,630
Market value adjustments related to deferred compensation trusts		2,840			3,160			7,933			8,254
Total SG&A expenses	$	86,805		$	83,291		$	330,218		$	305,712
(bb) Other income--net comprises (in thousands):
	Three Months Ended December 31,						For the Years Ended December 31,
	2020			2019			2020			2019
Market value adjustments related to deferred compensation trusts	$	2,840		$	3,160		$	7,933		$	8,254
Interest income		109			126			757			513
Other		(7	)		(10	)		(25	)		(3	)
Total other income--net	$	2,942		$	3,276		$	8,665		$	8,764

CHEMED CORPORATION AND SUBSIDIARY COMPANIES
CONSOLIDATED BALANCE SHEETS
(in thousands, except per share data)(unaudited)
	December 31,
	2020			2019
Assets
Current assets
Cash and cash equivalents	$	162,675		$	6,158
Accounts receivable less allowances		126,853			143,827
Inventories		7,095			7,462
Prepaid income taxes		6,603			10,074
Prepaid expenses		26,177			23,150
Total current assets		329,403			190,671
Investments of deferred compensation plans held in trust		88,811			77,446
Properties and equipment, at cost less accumulated depreciation		187,820			175,763
Lease right of use asset		123,448			111,652
Identifiable intangible assets less accumulated amortization		118,085			126,370
Goodwill		578,585			577,367
Other assets		8,759			9,048
Total Assets	$	1,434,911		$	1,268,317
Liabilities
Current liabilities
Accounts payable	$	54,234		$	51,101
Income taxes		9,464			131
Accrued insurance		54,703			50,328
Accrued compensation		91,282			70,814
Accrued legal		10,632			6,941
Short-term lease liability		36,200			39,280
Other current liabilities		42,593			43,625
Total current liabilities		299,108			262,220
Deferred income taxes		20,664			18,504
Long-term debt		-			90,000
Deferred compensation liabilities		88,456			76,446
Long-term lease liability		99,210			86,656
Other liabilities		26,273			7,883
Total Liabilities		533,711			541,709
Stockholders' Equity
Capital stock		36,259			35,811
Paid-in capital		961,404			860,671
Retained earnings		1,723,777			1,425,752
Treasury stock, at cost		(1,822,579	)		(1,597,940	)
Deferred compensation payable in Company stock		2,339			2,314
Total Stockholders' Equity		901,200			726,608
Total Liabilities and Stockholders' Equity	$	1,434,911		$	1,268,317

CHEMED CORPORATION AND SUBSIDIARY COMPANIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)(unaudited)
	For the Years Ended December 31,
	2020			2019
Cash Flows from Operating Activities
Net income	$	319,466		$	219,923
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization		56,583			45,205
Stock option expense		18,422			14,831
Deferred payroll taxes		36,350			-
Noncash long-term incentive compensation		7,208			5,740
Litigation settlement		2,684			6,000
Deferred tax provision/(benefit)		1,433			(2,770	)
Noncash directors' compensation		1,171			767
Amortization of debt issuance costs		306			306
Asset impairment loss		-			2,266
Changes in operating assets and liabilities, excluding amounts acquired in business combinations:
Decrease/(increase) in accounts receivable		12,773			(19,247	)
Decrease/(increase) in inventories		367			(1,757	)
Increase in prepaid expenses		(3,027	)		(3,491	)
Increase in accounts payable and other current liabilities		19,096			28,417
Change in current income taxes		13,525			161
Net change in lease assets and liabilities		1,206			3,108
Increase in other assets		(11,834	)		(11,963	)
Increase in other liabilities		12,323			12,354
Other sources		1,237			1,399
Net cash provided by operating activities		489,289			301,249
Cash Flows from Investing Activities
Capital expenditures		(58,831	)		(53,022	)
Business combinations		(3,600	)		(138,010	)
Other sources		871			272
Net cash used by investing activities		(61,560	)		(190,760	)
Cash Flows from Financing Activities
Payments on revolving line of credit		(264,900	)		(482,100	)
Proceeds from revolving line of credit		174,900			482,900
Purchases of treasury stock		(175,594	)		(92,631	)
Proceeds from exercise of stock options		50,382			34,380
Capital stock surrendered to pay taxes on stock-based compensation		(25,328	)		(28,474	)
Dividends paid		(21,079	)		(19,788	)
Change in cash overdrafts payable		(9,849	)		(3,927	)
Other sources		256			478
Net cash used by financing activities		(271,212	)		(109,162	)
Increase in Cash and Cash Equivalents		156,517			1,327
Cash and cash equivalents at beginning of year		6,158			4,831
Cash and cash equivalents at end of year	$	162,675		$	6,158

CHEMED CORPORATION AND SUBSIDIARY COMPANIES
CONSOLIDATING STATEMENTS OF INCOME
FOR THE THREE MONTHS ENDED DECEMBER 31, 2020 AND 2019
(in thousands)(unaudited)
										Chemed
	VITAS			Roto-Rooter			Corporate			Consolidated
2020 (a)
Service revenues and sales	$	332,190		$	201,099		$	-		$	533,289
Cost of services provided and goods sold		237,812			97,237			-			335,049
Selling, general and administrative expenses		20,305			49,679			16,821			86,805
Depreciation		5,546			6,257			32			11,835
Amortization		18			2,493			-			2,511
Other operating expense/(income)		(46,929	)		769			-			(46,160	)
Total costs and expenses		216,752			156,435			16,853			390,040
Income/(loss) from operations		115,438			44,664			(16,853	)		143,249
Interest expense		(29	)		(68	)		(253	)		(350	)
Intercompany interest income/(expense)		5,434			1,834			(7,268	)		-
Other income—net		95			7			2,840			2,942
Income/(loss) before income taxes		120,938			46,437			(21,534	)		145,841
Income taxes		(29,419	)		(11,007	)		8,337			(32,089	)
Net income/(loss)	$	91,519		$	35,430		$	(13,197	)	$	113,752
2019 (b)
Service revenues and sales	$	339,905		$	182,419		$	-		$	522,324
Cost of services provided and goods sold		253,659			93,696			-			347,355
Selling, general and administrative expenses		21,162			46,198			15,931			83,291
Depreciation		5,341			5,747			38			11,126
Amortization		18			2,951			-			2,969
Other operating expense		25			106			-			131
Total costs and expenses		280,205			148,698			15,969			444,872
Income/(loss) from operations		59,700			33,721			(15,969	)		77,452
Interest expense		(19	)		(72	)		(1,042	)		(1,133	)
Intercompany interest income/(expense)		4,740			1,543			(6,283	)		-
Other income—net		76			40			3,160			3,276
Income/(loss) before income taxes		64,497			35,232			(20,134	)		79,595
Income taxes		(15,075	)		(7,823	)		8,883			(14,015	)
Net income/(loss)	$	49,422		$	27,409		$	(11,251	)	$	65,580

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

CHEMED CORPORATION AND SUBSIDIARY COMPANIES
CONSOLIDATING STATEMENTS OF INCOME
FOR THE YEARS ENDED DECEMBER 31, 2020 AND 2019
(in thousands)(unaudited)
										Chemed
	VITAS			Roto-Rooter			Corporate			Consolidated
2020 (a)
Service revenues and sales	$	1,334,667		$	744,916		$	-		$	2,079,583
Cost of services provided and goods sold		1,010,693			367,504			-			1,378,197
Selling, general and administrative expenses		85,445			188,268			56,505			330,218
Depreciation		22,168			24,292			136			46,596
Amortization		71			9,916			-			9,987
Other operating (income)/expense		(78,590	)		3,495			-			(75,095	)
Total costs and expenses		1,039,787			593,475			56,641			1,689,903
Income/(loss) from operations		294,880			151,441			(56,641	)		389,680
Interest expense		(166	)		(340	)		(1,849	)		(2,355	)
Intercompany interest income/(expense)		19,897			6,256			(26,153	)		-
Other income—net		644			75			7,946			8,665
Income/(loss) before income taxes		315,255			157,432			(76,697	)		395,990
Income taxes		(76,473	)		(37,038	)		36,987			(76,524	)
Net income/(loss)	$	238,782		$	120,394		$	(39,710	)	$	319,466
2019 (b)
Service revenues and sales	$	1,281,184		$	657,371		$	-		$	1,938,555
Cost of services provided and goods sold		982,056			339,070			-			1,321,126
Selling, general and administrative expenses		86,345			166,934			52,433			305,712
Depreciation		19,984			20,730			156			40,870
Amortization		71			4,264			-			4,335
Other operating expense		6,546			320			2,266			9,132
Total costs and expenses		1,095,002			531,318			54,855			1,681,175
Income/(loss) from operations		186,182			126,053			(54,855	)		257,380
Interest expense		(169	)		(345	)		(4,021	)		(4,535	)
Intercompany interest income/(expense)		18,135			8,152			(26,287	)		-
Other income—net		385			126			8,253			8,764
Income/(loss) before income taxes		204,533			133,986			(76,910	)		261,609
Income taxes		(48,711	)		(30,276	)		37,301			(41,686	)
Net income/(loss)	$	155,822		$	103,710		$	(39,609	)	$	219,923

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 DECEMBER 31, 2020 AND 2019
(in thousands)(unaudited)
										Chemed
	VITAS			Roto-Rooter			Corporate			Consolidated
2020
Net income/(loss)	$	91,519		$	35,430		$	(13,197	)	$	113,752
Add/(deduct):
Interest expense		29			68			253			350
Income taxes		29,419			11,007			(8,337	)		32,089
Depreciation		5,546			6,257			32			11,835
Amortization		18			2,493			-			2,511
EBITDA		126,531			55,255			(21,249	)		160,537
Add/(deduct):
Intercompany interest expense/(income)		(5,434	)		(1,834	)		7,268			-
Interest income		(102	)		(7	)		-			(109	)
CARES Act grant		(48,041	)		-			-			(48,041	)
Direct costs related to COVID-19		3,257			520			-			3,777
Stock option expense		-			-			5,127			5,127
Long-term incentive compensation		-			-			3,413			3,413
Litigation settlement		-			544			-			544
Adjusted EBITDA	$	76,211		$	54,478		$	(5,441	)	$	125,248
2019
Net income/(loss)	$	49,422		$	27,409		$	(11,251	)	$	65,580
Add/(deduct):
Interest expense		19			72			1,042			1,133
Income taxes		15,075			7,823			(8,883	)		14,015
Depreciation		5,341			5,747			38			11,126
Amortization		18			2,951			-			2,969
EBITDA		69,875			44,002			(19,054	)		94,823
Add/(deduct):
Intercompany interest expense/(income)		(4,740	)		(1,543	)		6,283			-
Interest income		(84	)		(42	)		-			(126	)
Stock option expense		-			-			4,102			4,102
Long-term incentive compensation		-			-			3,079			3,079
Acquisition expense		-			1,286			50			1,336
Medicare cap sequestration adjustment		919			-			-			919
Adjusted EBITDA	$	65,970		$	43,703		$	(5,540	)	$	104,133

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

CHEMED CORPORATION AND SUBSIDIARY COMPANIES
CONSOLIDATING SUMMARIES OF EBITDA
FOR THE YEARS ENDED DECEMBER 31, 2020 AND 2019
(in thousands)(unaudited)
										Chemed
	VITAS			Roto-Rooter			Corporate			Consolidated
2020
Net income/(loss)	$	238,782		$	120,394		$	(39,710	)	$	319,466
Add/(deduct):
Interest expense		166			340			1,849			2,355
Income taxes		76,473			37,038			(36,987	)		76,524
Depreciation		22,168			24,292			136			46,596
Amortization		71			9,916			-			9,987
EBITDA		337,660			191,980			(74,712	)		454,928
Add/(deduct):
Intercompany interest expense/(income)		(19,897	)		(6,256	)		26,153			-
Interest income		(668	)		(76	)		(13	)		(757	)
CARES Act grant		(80,225	)		-			-			(80,225	)
Direct costs related to COVID-19		35,441			3,819			-			39,260
Stock option expense		-			-			18,422			18,422
Long-term incentive compensation		-			-			8,937			8,937
Litigation settlement costs		-			3,639			-			3,639
Medicare cap sequestration adjustment		619			-			-			619
Adjusted EBITDA	$	272,930		$	193,106		$	(21,213	)	$	444,823
2019
Net income/(loss)	$	155,822		$	103,710		$	(39,609	)	$	219,923
Add/(deduct):
Interest expense		169			345			4,021			4,535
Income taxes		48,711			30,276			(37,301	)		41,686
Depreciation		19,984			20,730			156			40,870
Amortization		71			4,264			-			4,335
EBITDA		224,757			159,325			(72,733	)		311,349
Add/(deduct):
Intercompany interest expense/(income)		(18,135	)		(8,152	)		26,287			-
Interest (income)/expense		(380	)		(133	)		-			(513	)
Stock option expense		-			-			14,831			14,831
Long-term incentive compensation		-			-			7,630			7,630
Litigation settlement costs		6,000			-			-			6,000
Acquisition expense		-			4,664			170			4,834
Medicare cap sequestration adjustment		3,982			-			-			3,982
Impairment loss on transportation equipment		-			-			2,266			2,266
Non cash ASC 842 expenses/(benefit)		656			55			(163	)		548
Adjusted EBITDA	$	216,880		$	155,759		$	(21,712	)	$	350,927

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						For the Years Ended
	December 31,						December 31,
	2020			2019			2020			2019
Net income as reported	$	113,752		$	65,580		$	319,466		$	219,923
Add/(deduct) pre-tax cost of:
CARES Act grant		(48,041	)		-			(80,225	)		-
Direct costs related to COVID-19		3,777			-			39,260			-
Stock option expense		5,127			4,102			18,422			14,831
Amortization of reacquired franchise agreements		2,352			2,861			9,408			3,964
Long-term incentive compensation		3,413			3,079			8,937			7,630
Litigation settlement		544			-			3,639			6,000
Medicare cap sequestration adjustments		-			919			619			3,982
Impairment loss on transportation equipment		-			-			-			2,266
Acquisition expense		-			1,336			-			4,834
Non cash ASC 842 expenses		-			-			-			548
Add/(deduct) tax impacts:
Tax impact of the above pre-tax adjustments (1)		9,141			(2,567	)		2,976			(9,328	)
Excess tax benefits on stock compensation		(6,146	)		(5,440	)		(26,089	)		(24,177	)
Adjusted net income	$	83,919		$	69,870		$	296,413		$	230,473
Diluted Earnings Per Share As Reported
Net income	$	6.96		$	3.96		$	19.48		$	13.31
Average number of shares outstanding		16,348			16,565			16,398			16,527
Adjusted Diluted Earnings Per Share
Adjusted net income	$	5.13		$	4.22		$	18.08		$	13.95
Average number of shares outstanding		16,348			16,565			16,398			16,527

(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)
	Three Months Ended December 31,					For the Years Ended December 31,
OPERATING STATISTICS	2020		2019			2020			2019
Net revenue ($000) (c)
Homecare	279,410		$	275,976		$	1,106,358		$	1,076,025
Inpatient	28,973			30,857			114,956			99,920
Continuous care	30,175			40,997			136,011			133,473
Other	2,984			3,825			11,164			10,433
Subtotal	341,542		$	351,655		$	1,368,489		$	1,319,851
Room and board, net	(2,858	)		(3,260	)		(12,174	)		(11,359	)
Contractual allowances	(3,994	)		(3,990	)		(14,970	)		(14,893	)
Medicare cap allowance	(2,500	)		(4,500	)		(6,678	)		(12,415	)
Net Revenue	332,190		$	339,905		$	1,334,667		$	1,281,184
Net revenue as a percent of total before Medicare cap allowance
Homecare	81.8	%		78.5	%		80.8	%		81.5	%
Inpatient	8.5			8.8			8.4			7.6
Continuous care	8.8			11.7			9.9			10.1
Other	0.9			1.0			0.9			0.8
Subtotal	100.0			100.0			100.0			100.0
Room and board, net	(0.8	)		(0.9	)		(0.9	)		(0.9	)
Contractual allowances	(1.2	)		(1.1	)		(1.1	)		(1.1	)
Medicare cap allowance	(0.7	)		(1.3	)		(0.5	)		(0.9	)
Net Revenue	97.3	%		96.7	%		97.5	%		97.1	%
Days of care
Homecare	1,404,532			1,377,403			5,597,213			5,338,664
Nursing home	253,261			314,946			1,097,493			1,224,264
Respite	4,971			7,305			20,387			28,857
Subtotal routine homecare and respite	1,662,764			1,699,654			6,715,093			6,591,785
Inpatient	27,811			30,697			112,718			120,063
Continuous care	31,493			41,386			141,693			166,783
Total	1,722,068			1,771,737			6,969,504			6,878,631
Number of days in relevant time period	92			92			366			365
Average daily census ("ADC") (days)
Homecare	15,267			14,972			15,293			14,626
Nursing home	2,753			3,423			2,999			3,354
Respite	54			79			55			79
Subtotal routine homecare and respite	18,074			18,474			18,347			18,059
Inpatient	302			334			308			329
Continuous care	342			450			387			458
Total	18,718			19,258			19,042			18,846
Total Admissions	17,960			17,479			71,328			69,859
Total Discharges	18,570			17,575			72,009			68,857
Average length of stay (days)	97.2			95.2			94.0			92.6
Median length of stay (days)	14.0			16.0			14.0			16.0
ADC by major diagnosis
Cerebro	35.5	%		35.8	%		35.8	%		36.0	%
Neurological	22.4			21.1			21.9			20.6
Cancer	12.3			12.8			12.5			12.9
Cardio	15.9			16.2			15.8			16.5
Respiratory	7.9			8.1			8.1			8.1
Other	6.0			6.0			5.9			5.9
Total	100.0	%		100.0	%		100.0	%		100.0	%
Admissions by major diagnosis
Cerebro	20.9	%		21.9	%		21.1	%		21.1	%
Neurological	12.6			12.9			12.9			12.6
Cancer	26.7			29.2			27.6			29.2
Cardio	13.8			14.7			14.3			15.5
Respiratory	10.4			10.5			10.6			11.0
Other	15.6			10.8			13.5			10.6
Total	100.0	%		100.0	%		100.0	%		100.0	%
Estimated uncollectible accounts as a percent of revenues	1.2	%		1.2	%		1.1	%		1.2	%
Accounts receivable --
Days of revenue outstanding-excluding unapplied Medicare payments	36.0			35.4			n.a.			n.a.
Days of revenue outstanding-including unapplied Medicare payments	25.6			27.2			n.a.			n.a.

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 AND YEARS ENDED DECEMBER 31, 2020 AND 2019
(unaudited)
(a)	Included in the results of operations for 2020 are the following significant credits/(charges) which may not be indicative of ongoing operations
	(in thousands):
		Three Months Ended December 31, 2020
		VITAS			Roto-Rooter			Corporate			Consolidated
	CARES Act grant	$	48,041		$	-		$	-		$	48,041
	Direct costs related to COVID-19		(3,257	)		(520	)		-			(3,777	)
	Stock option expense		-			-			(5,127	)		(5,127	)
	Long-term incentive compensation		-			-			(3,413	)		(3,413	)
	Amortization of reacquired franchise agreements		-			(2,352	)		-			(2,352	)
	Litigation settlement		-			(544	)		-			(544	)
	Pretax impact on earnings		44,784			(3,416	)		(8,540	)		32,828
	Excess tax benefits on stock compensation		-			-			6,146			6,146
	Income tax benefit on the above		(11,367	)		906			1,320			(9,141	)
	After-tax impact on earnings	$	33,417		$	(2,510	)	$	(1,074	)	$	29,833
		For the Year Ended December 31, 2020
		VITAS			Roto-Rooter			Corporate			Consolidated
	CARES Act grant	$	80,225		$	-		$	-		$	80,225
	Direct costs related to COVID-19		(35,441	)		(3,819	)		-			(39,260	)
	Stock option expense		-			-			(18,422	)		(18,422	)
	Amortization of acquired and cancelled franchise agreements		-			(9,408	)		-			(9,408	)
	Long-term incentive compensation		-			-			(8,937	)		(8,937	)
	Litigation settlement		-			(3,639	)		-			(3,639	)
	Medicare cap sequestration adjustment		(619	)		-			-			(619	)
	Pretax impact on earnings		44,165			(16,866	)		(27,359	)		(60	)
	Excess tax benefits on stock compensation		-			-			26,089			26,089
	Income tax benefit on the above		(11,209	)		4,469			3,764			(2,976	)
	After-tax impact on earnings	$	32,956		$	(12,397	)	$	2,494		$	23,053
(b)	Included in the results of operations for 2019 are the following significant credits/(charges) which may not be indicative of ongoing operations
	(in thousands):
		Three Months Ended December 31, 2019
		VITAS			Roto-Rooter			Corporate			Consolidated
	Stock option expense	$	-		$	-		$	(4,102	)	$	(4,102	)
	Long-term incentive compensation		-			-			(3,079	)		(3,079	)
	Amortization of reacquired franchise agreements		-			(2,861	)		-			(2,861	)
	Acquisition expense		-			(1,286	)		(50	)		(1,336	)
	Medicare cap sequestration adjustment		(919	)		-			-			(919	)
	Pretax impact on earnings		(919	)		(4,147	)		(7,231	)		(12,297	)
	Excess tax benefits on stock compensation		-			-			5,441			5,441
	Income tax benefit on the above		233			1,100			1,233			2,566
	After-tax impact on earnings	$	(686	)	$	(3,047	)	$	(557	)	$	(4,290	)
		For the Year Ended December 31, 2019
		VITAS			Roto-Rooter			Corporate			Consolidated
	Stock option expense	$	-		$	-		$	(14,831	)	$	(14,831	)
	Long-term incentive compensation		-			-			(7,630	)		(7,630	)
	Litigation settlement		(6,000	)		-			-			(6,000	)
	Acquisition expense		-			(4,664	)		(170	)		(4,834	)
	Medicare cap sequestration adjustment		(3,982	)		-			-			(3,982	)
	Amortization of reacquired franchise agreements		-			(3,964	)		-			(3,964	)
	Impairment loss on transportation equipment		-			-			(2,266	)		(2,266	)
	Non cash ASC 842 (expenses)/benefit		(656	)		(55	)		163			(548	)
	Pretax impact on earnings		(10,638	)		(8,683	)		(24,734	)		(44,055	)
	Excess tax benefits on stock compensation		-			-			24,177			24,177
	Income tax benefit on the above		2,707			2,301			4,320			9,328
	After-tax impact on earnings	$	(7,931	)	$	(6,382	)	$	3,763		$	(10,550	)

(c)

VITAS has 10 large (greater than 450 ADC), 21 medium (greater than 200 but less than 450 ADC) and 18 small (less than 200 ADC) hospice programs. Of Vitas' 30 Medicare provider numbers, for the current cap year, 22 provider numbers have a Medicare cap cushion of 10% or greater, four provider numbers have a cap cushion between 5% and 10%, two provider numbers have a cap cushion between 0% and 5%, and two provider numbers have a Medicare cap liability.