Chemed Reports Second-Quarter 2007 Results.

* Full year 2007 guidance increased

CINCINNATI -- 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, today reported financial results for its second quarter ended June 30, 2007, versus the comparable prior-year period, as follows:

Consolidated operating results from Continuing Operations:

* Revenue increased 9.0% to $271 million

* Diluted EPS from Continuing Operations of $.38

* Adjusted diluted EPS from Continuing Operations, which excludes early extinguishments of debt and certain other items, of $.79

VITAS segment operating results from Continuing Operations:

* Net Patient Revenue of $186 million, up 8.3%

* Average Daily Census (ADC) of 11,406, up 6.6%

* Admissions of 13,658, an increase of 5.2%

* Average Length of Stay in the quarter of 76.6 days

* Net income of $14.2 million

* Adjusted EBITDA of $24.9 million

Roto-Rooter segment operating results:

* Revenue of $86 million, an increase of 10.5%

* Job count of 201,939 up 1.6%

* Net Income of $10.7 million

* Adjusted EBITDA of $18.1 million

VITAS

VITAS generated 13,658 admissions in the quarter, which represents an increase of 5.2% over the prior year. Discharges totaled 13,359, an increase of 6.6%, and ADC in the quarter increased 6.6% to 11,406. VITAS' Average Length of Stay (ALOS) for patients discharged in the quarter was 76.6 days and Median Length of Stay (MLOS) was 13 days. This compares to an ALOS of 76.9 days in the first quarter of 2007 and 68.0 days in the second quarter of 2006.

VITAS recorded net revenue of $186 million in the second quarter of 2007, which was an increase of 8.3% over the prior-year period. The revenue growth generated from the increase in ADC combined with the Medicare price increase was partially offset by the continued shift in revenue mix to routine home care. Routine homecare revenue increased 11.6% in the quarter. This revenue growth was partially offset by a modest decline in the higher acuity inpatient and continuous care revenue of 0.9% in the quarter. Net income from continuing operations for the second quarter was $14.2 million, an increase of 16.9%.

VITAS did not record any billing restrictions related to Medicare Cap in the second quarter of 2007. As of June 30, 2007, VITAS has not accrued any Medicare billing restrictions for the 2007 cap year. The ability for VITAS to bill Medicare for 100% of the care provided to terminally ill patients is a result of improved admissions metrics, relatively low MLOS and the continued combination of various hospice provider numbers.

All of VITAS' hospice programs currently have a cap cushion greater than 10% on a trailing twelve-month basis, with the exception of two programs. These two programs have a cap cushion of 5% and 8%, respectively. The same analysis through the first eight months of the 2007 cap year results in all of VITAS' Medicare provider numbers having a cap cushion greater than 10% with the exception of two programs. These programs have cap cushion of 7% and 8%, respectively.

Gross margin in the quarter was 22.1%, which is a 180 basis point improvement over the prior year quarter. Approximately 90 basis points of this improvement is a result of VITAS managing labor costs to more historical levels. The remaining 90 basis points of this improvement is the result of $1.6 million of expenses that had been historically charged to cost of services and are now expensed into central support. Effective October 1, 2006, management realigned certain processes and expenses related to hospice program support. These processes and related expenses were centralized effective the beginning of the fourth quarter of 2006 and are now incurred and controlled at VITAS corporate and classified as selling, general and administrative expense. In the second quarter of 2006, approximately $1.6 million of this type of expense was classified as cost of services. These expenses were charged to central support in the second quarter of 2007.

Central support costs for VITAS, which are classified as selling, general and administrative expenses in the Consolidating Statement of Income, totaled $16.3 million, which is an increase of 18.7% over the prior year. Adjusting for the reclassification of expenses noted above, second-quarter 2007 central support costs increased 6.3% over the prior year.

Roto-Rooter

Roto-Rooter's plumbing and drain cleaning business generated sales of $86 million for the second quarter of 2007, 10.5% higher than the $78 million reported in the comparable prior-year quarter. Net income for the quarter was $10.7 million, an increase of 53% over the prior year. Adjusted EBITDA in the second quarter of 2007 totaled $18.1 million, an increase of 42% over the second quarter of 2006 and equated to an adjusted EBITDA margin of 21.1%, an increase of 469 basis points over the prior-year period.

Job count in the second quarter of 2007 increased 1.6% over the prior-year period. Residential jobs increased 6.0% and commercial jobs decreased 7.4%. Residential plumbing jobs increased 14.7% and residential drain cleaning jobs expanded 2.2% when compared to the second quarter of 2006. Residential jobs represent approximately 70% of total job count. Commercial plumbing job count decreased 3.8% and commercial drain cleaning decreased 8.7% over the prior-year quarter.

Guidance for 2007

VITAS is estimated to generate full-year revenue growth from continuing operations, prior to Medicare Cap, of 9% to 11%. This range is a 100 basis point decrease from the previous guidance to reflect the revenue mix shift to routine home care noted earlier. Admissions are estimated to increase 4% to 6%, increased ADC of 8% to 10% and adjusted EBITDA margins, prior to Medicare Cap, of 13.5% to 14.5%. This guidance assumes the hospice industry receives a full Medicare basket price increase of 3.3% in the fourth quarter of 2007. Full-year 2007 Medicare contractual billing limitations are estimated at $2.5 million.

Roto-Rooter is estimated to generate an 8.5% to 9.5% increase in revenue in 2007, job count growth between 0.5% and 1.5% and adjusted EBITDA margin in the range of 19.0% to 20.0%.

Based upon these factors, an effective tax rate of 38.5% and an average diluted share count for the second half of 2007 of 24.5 million, our estimate is that full-year 2007 earnings per diluted share from continuing operations, excluding early extinguishment of debt, expense for stock options and other long-term incentive compensation, gain on sale of building, or any other charges or credits not indicative of ongoing operations, will be in the range of $3.10 to $3.20.

Conference Call

Chemed will host a conference call and webcast at 10 a.m., ET, on Thursday, August 2, 2007, to discuss the company's quarterly results and 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 participant passcode is 85108295. 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 two hours after the call's conclusion. It can be accessed by dialing 888-286-8010 for U.S. and Canadian callers and 617-801-6888 for international callers and will be available for one week following the live call. The replay passcode is 41816435. An archived webcast will also be available at www.chemed.com and will remain available for 14 days following the live call.

Chemed Corporation operates in the healthcare field through its VITAS Healthcare Corporation subsidiary. VITAS provides daily hospice services to over 11,000 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 and drain service through company-owned branches, independent contractors and franchisees in the United States and Canada. Roto-Rooter also has licensed master franchisees in Indonesia, Singapore, Japan, and the Philippines.

This press release contains information about Chemed's EBITDA and Adjusted EBITDA, which are not measures derived in accordance with generally accepted accounting principles and which exclude components that are important to understanding Chemed's financial performance. Chemed provides EBITDA and Adjusted EBITDA to help investors and others evaluate its 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 EBITDA and Adjusted EBITDA should not be considered in isolation or as a substitute for comparable measures calculated and presented in accordance with GAAP. A reconciliation of Chemed's net income to its Adjusted EBITDA 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.

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