Chemed Reports First-Quarter 2016 Results CINCINNATI--(BUSINESS WIRE)

Reports First-Quarter 2016 Results

CINCINNATI--(BUSINESS WIRE)--April 28, 2016--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, 2016, versus the comparable prior-year period, as

Consolidated operating results:

Revenue increased 3.6% to $390 million

GAAP Diluted EPS increased 3.6% to $1.45

Adjusted Diluted EPS increased 5.2% to $1.62

VITAS segment operating results:

Net Patient Revenue of $278 million, an increase of 2.9%

Average Daily Census (ADC) of 15,653, an increase of 5.6%

Admissions of 16,868, a decrease of 2.3%

Unit for Unit admissions decreased 0.7%

Net Income, including litigation costs, of $19.1 million, a decrease

Adjusted EBITDA, excluding cap, of $35.9 million, an increase of 0.3%

Adjusted EBITDA margin, excluding cap, of 12.9%, a decrease of 34

Roto-Rooter segment operating results:

Revenue of $113 million, an increase of 5.4%

Net Income of $13.0 million, an increase of 8.4%

Adjusted EBITDA of $23.4 million, an increase of 9.1%

Adjusted EBITDA margin of 20.7%, an increase of 69 basis points

Net revenue for VITAS was $278 million in the first quarter of 2016,

which is an increase of 2.9%, when compared to the prior-year period.

This revenue increase is comprised primarily of an average Medicare

reimbursement rate increase of approximately 0.6%, a 5.6% increase in

average daily census, offset by acuity mix shift which negatively

impacted revenue 1.8% and changes in Medicare hospice reimbursement

which negatively impacted revenue 2.1%.

On January 1, 2016, CMS implemented a refinement to the Medicare hospice

reimbursement per diem. This refinement eliminated the single-tier per

diem for routine home care (RHC) and replaced it with a two-tiered rate,

with a higher per diem rate for the first 60 days of a hospice patient's

care, and a lower rate for day 61 and after. In addition, CMS provided

for a Service Intensity Add-on (SIA) payment which provides for

reimbursement of care provided by a registered nurse or social worker

for RHC patients within seven days prior to death. The reimbursement for

continuous care, inpatient care and respite care are not impacted by

The current two-tiered national per diem rate for RHC is $186.84 for the

first 60 days and $146.83 for RHC provided to patients in hospice beyond

60 days. An individual hospice's actual per diem rate is adjusted for

differences in geographic cost of living.

Rebasing in 2016 would be revenue neutral to a hospice if it has 37.6%

of total RHC days-of-care being provided to patients in their first 60

days of admission and 62.4% of total RHC days-of-care provided to

patients after the 60 days. (RHC Days-of-Care ratio).

In the first quarter of 2016, VITAS had a 25/75 RHC Days-of-Care ratio

and generated approximately $1.0 million in SIA payments. This resulted

in 2.1% less revenue than under the previous Medicare reimbursement

VITAS did not have any adjustments to revenue related to the Medicare

Cap billing limitation in the quarter. This compares to $0.2 million of

Medicare Cap billing limitations reversed in the first quarter of 2015.

At March 31, 2016, VITAS had 31 Medicare provider numbers, none of which

has an estimated 2016 Medicare Cap billing limitation.

Of VITAS' 31 unique Medicare provider numbers, 28 provider numbers have

a Medicare Cap cushion of 10% or greater for the 2016 Medicare Cap

period, two provider numbers have a cap cushion between 5% and 10%, and

one provider number has a cap cushion between 0% and 5%. VITAS generated

an aggregate cap cushion of $264 million during the trailing

twelve-month period.

Average revenue per patient per day in the quarter, excluding the impact

of Medicare Cap, was $194.84, which is 3.5% below the prior-year period.

Routine home care reimbursement and high acuity care averaged $160.92

and $702.52, respectively. During the quarter, high acuity days of care

were 6.3% of total days of care, 66 basis points less than the

The first quarter of 2016 gross margin, excluding the impact of Medicare

Cap, was 21.0%, which is a 14 basis point decline when compared to the

first quarter of 2015.

Selling, general and administrative expense, excluding litigation costs,

was $22.4 million in the first quarter of 2016, which is an increase of

7.9% when compared to the prior-year quarter. Adjusted EBITDA, excluding

Medicare Cap, totaled $35.9 million in the quarter, an increase of 0.3%

over the prior-year period. Adjusted EBITDA margin, excluding the impact

from Medicare Cap, was 12.9% in the quarter which is 34 basis points

below the prior-year period.

Roto-Rooter's plumbing and drain cleaning business generated sales of

$113 million for the first quarter of 2016, an increase of $5.8 million,

or 5.4%, over the prior-year quarter. Revenue from water restoration

totaled $12.5 million, an increase of 19.2% over the prior year.

Roto-Rooter's gross margin in the quarter was 47.6%, a 26 basis point

improvement when compared to the first quarter of 2015. Adjusted EBITDA

in the first quarter of 2016 totaled $23.4 million, an increase of 9.1%,

and the Adjusted EBITDA margin was 20.7% in the quarter, 69 basis points

higher than the prior year.

As of March 31, 2016, Chemed had total cash and cash equivalents of $15

million and debt of $145 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, 2016, the Company had approximately $257 million of

undrawn borrowing capacity under this credit agreement.

Capital expenditures through March 31, 2016, aggregated $11.5 million

and compares to depreciation and amortization during the same period of

During the quarter, the Company repurchased 400,000 shares of Chemed

stock for $52.5 million which equates to a cost per share of $131.15. On

March 11, 2016, Chemed's Board of Directors authorized an additional

$100 million for stock repurchase under Chemed's existing share