CHEMED CORP - Quarter Report: 2015 September (Form 10-Q)

a51207804.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

	x	Quarterly Report Under Section 13 or 15 (d) of the Securities Exchange Act of 1934 For the Quarterly Period Ended September 30, 2015

	o	Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Commission File Number: 1-8351

CHEMED CORPORATION

(Exact name of registrant as specified in its charter)

Delaware	31-0791746
(State or other jurisdiction of incorporation or organization)	(IRS Employer Identification No.)

255 E. Fifth Street, Suite 2600, Cincinnati, Ohio	45202
(Address of principal executive offices)	(Zip code)

(513) 762-6690

(Registrant’s telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter periods that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

Yes

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer or a non-accelerated filer (as defined in Rule 12b-2 of the Exchange Act).

	Large accelerated		Accelerated		Non-accelerated		Smaller reporting
	filer	x	filer	o	filer	o	company	o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes

Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date.

Class	Amount	Date

Capital Stock $1 Par Value	16,879,147 Shares	September 30, 2015

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CHEMED CORPORATION AND

SUBSIDIARY COMPANIES

Index

	Page No.
PART I. FINANCIAL INFORMATION:
Item 1. Financial Statements
Unaudited Consolidated Balance Sheet -
September 30, 2015 and December 31, 2014	3

Unaudited Consolidated Statement of Income -
Three and nine months ended September 30, 2015 and 2014	4

Unaudited Consolidated Statement of Cash Flows -
Nine months ended September 30, 2015 and 2014	5

Notes to Unaudited Consolidated Financial Statements	6

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations	14

Item 3. Quantitative and Qualitative Disclosures about Market Risk	30

Item 4. Controls and Procedures	30

PART II. OTHER INFORMATION
Item 1. Legal Proceedings	30

Item 1A. Risk Factors	30

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	31

Item 3. Defaults Upon Senior Securities	31

Item 4. Mine Safety Disclosures	31

Item 5. Other Information	31

Item 6. Exhibits	32
EX – 31.1
EX – 31.2
EX – 31.3
EX – 32.1
EX – 32.2
EX – 32.3
EX – 101.INS
EX – 101.SCH
EX – 101.CAL
EX – 101.DEF
EX – 101.LAB
EX – 101.PRE

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PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
CHEMED CORPORATION AND SUBSIDIARY COMPANIES
UNAUDITED CONSOLIDATED BALANCE SHEET
(in thousands, except share and per share data)

	September 30, 2015			December 31, 2014
ASSETS
Current assets
Cash and cash equivalents	$	38,450		$	14,132
Accounts receivable less allowances of $16,548 (2014 - $14,728)		123,665			124,607
Inventories		6,545			6,168
Current deferred income taxes		17,323			15,414
Prepaid income taxes		3,299			2,787
Prepaid expenses		11,493			11,456
Total current assets		200,775			174,564
Investments of deferred compensation plans		49,951			49,147
Properties and equipment, at cost, less accumulated depreciation of $195,446 (2014 - $185,735)		111,221			105,336
Identifiable intangible assets less accumulated amortization of $33,174 (2014 - $32,772)		55,834			56,027
Goodwill		472,407			466,722
Other assets		7,450			8,136
Total Assets	$	897,638		$	859,932

LIABILITIES
Current liabilities
Accounts payable	$	52,468		$	46,849
Current portion of long-term debt		7,500			6,250
Income taxes		736			5,818
Accrued insurance		42,356			40,814
Accrued compensation		59,533			50,718
Accrued legal		1,698			753
Other current liabilities		22,472			24,352
Total current liabilities		186,763			175,554
Deferred income taxes		29,370			29,945
Long-term debt		130,625			141,250
Deferred compensation liabilities		49,282			48,684
Other liabilities		13,022			13,143
Total Liabilities		409,062			408,576
Commitments and contingencies
STOCKHOLDERS' EQUITY
Capital stock - authorized 80,000,000 shares $1 par; issued 33,816,088 shares (2014 - 33,337,297 shares)		33,816			33,337
Paid-in capital		581,342			538,845
Retained earnings		839,979			771,176
Treasury stock - 17,037,021 shares (2014 - 16,446,572)		(968,946	)		(894,285	)
Deferred compensation payable in Company stock		2,385			2,283
Total Stockholders' Equity		488,576			451,356
Total Liabilities and Stockholders' Equity	$	897,638		$	859,932


See accompanying notes to unaudited consolidated financial statements.

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CHEMED CORPORATION AND SUBSIDIARY COMPANIES
UNAUDITED CONSOLIDATED STATEMENT OF INCOME
(in thousands, except per share data)

	Three Months Ended September 30,						Nine Months Ended September 30,
	2015			2014			2015			2014
Service revenues and sales	$	386,226		$	358,389		$	1,144,799		$	1,076,871
Cost of services provided and goods sold (excluding depreciation)		272,089			256,445			811,637			771,271
Selling, general and administrative expenses		55,197			53,566			171,779			162,886
Depreciation		8,075			7,450			24,189			21,871
Amortization		737			717			1,895			2,461
Total costs and expenses		336,098			318,178			1,009,500			958,489
Income from operations		50,128			40,211			135,299			118,382
Interest expense		(908	)		(980	)		(2,846	)		(7,224	)
Other income/(expense) - net		(2,355	)		705			(1,256	)		2,277
Income before income taxes		46,865			39,936			131,197			113,435
Income taxes		(18,032	)		(15,351	)		(50,852	)		(43,913	)
Net income	$	28,833		$	24,585		$	80,345		$	69,522

Earnings Per Share
Net income	$	1.71		$	1.44		$	4.76		$	4.03
Average number of shares outstanding		16,865			17,039			16,887			17,263

Diluted Earnings Per Share
Net income	$	1.65		$	1.39		$	4.61		$	3.87
Average number of shares outstanding		17,422			17,627			17,430			17,968

Cash Dividends Per Share	$	0.24		$	0.22		$	0.68		$	0.62

See accompanying notes to unaudited consolidated financial statements.

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CHEMED CORPORATION AND SUBSIDIARY COMPANIES
UNAUDITED CONSOLIDATED STATEMENT OF CASH FLOWS
(in thousands)

	Nine Months Ended September 30,
	2015			2014
Cash Flows from Operating Activities
Net income	$	80,345		$	69,522
Adjustments to reconcile net income to net cash provided
by operating activities:
Depreciation and amortization		26,084			24,332
Deferred income taxes		(2,694	)		5,630
Provision for uncollectible accounts receivable		11,100			9,573
Amortization of discount on convertible notes		-			3,392
Stock option expense		3,600			3,430
Amortization of debt issuance costs		392			697
Noncash long-term incentive compensation		3,755			1,988
Changes in operating assets and liabilities, excluding
amounts acquired in business combinations:
Increase in accounts receivable		(10,110	)		(50,027	)
Decrease/(increase) in inventories		(373	)		318
Decrease in prepaid expenses		68			4,398
Increase/(decrease) in accounts payable and other current liabilities		5,956			(29,680	)
Increase in income taxes		3,049			8,186
Increase in other assets		(605	)		(3,138	)
Increase in other liabilities		524			5,370
Excess tax benefit on share-based compensation		(8,474	)		(3,737	)
Other sources		467			755
Net cash provided by operating activities		113,084			51,009
Cash Flows from Investing Activities
Capital expenditures		(30,194	)		(31,745	)
Business combinations, net of cash acquired		(6,614	)		(250	)
Other sources		396			189
Net cash used by investing activities		(36,412	)		(31,806	)
Cash Flows from Financing Activities
Proceeds from revolving line of credit		103,200			308,600
Payments on revolving line of credit		(108,200	)		(233,800	)
Payments on other long-term debt		(4,375	)		(188,206	)
Proceeds from other long-term debt		-			100,000
Purchases of treasury stock		(36,682	)		(99,103	)
Proceeds from exercise of stock options		11,193			22,123
Dividends paid		(11,542	)		(10,558	)
Capital stock surrendered to pay taxes on stock-based compensation		(11,226	)		(6,121	)
Retirement of warrants		-			(2,645	)
Excess tax benefit on share-based compensation		8,474			3,737
Debt issuance costs		-			(939	)
Increase/(decrease) in cash overdrafts payable		(1,745	)		22,233
Other uses		(1,451	)		(380	)
Net cash used by financing activities		(52,354	)		(85,059	)
Increase/(Decrease) in Cash and Cash Equivalents		24,318			(65,856	)
Cash and cash equivalents at beginning of year		14,132			84,418
Cash and cash equivalents at end of period	$	38,450		$	18,562

See accompanying notes to unaudited consolidated financial statements.

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CHEMED CORPORATION AND SUBSIDIARY COMPANIES

Notes to Unaudited Consolidated Financial Statements

1. Basis of Presentation

As used herein, the terms "We," "Company" and "Chemed" refer to Chemed Corporation or Chemed Corporation and its consolidated subsidiaries.

We have prepared the accompanying unaudited consolidated financial statements of Chemed in accordance with Rule 10-01 of SEC Regulation S-X. Consequently, we have omitted certain disclosures required under generally accepted accounting principles in the United States (“GAAP”) for complete financial statements. The December 31, 2014 balance sheet data were derived from audited financial statements but do not include all disclosures required by GAAP. However, in our opinion, the financial statements presented herein contain all adjustments, consisting only of normal recurring adjustments, necessary to state fairly our financial position, results of operations and cash flows. These financial statements are prepared on the same basis as and should be read in conjunction with the audited Consolidated Financial Statements and related notes included in our Annual Report on Form 10-K for the year ended December 31, 2014.

2. Revenue Recognition

Both the VITAS segment and the Roto-Rooter segment recognize service revenues and sales when the earnings process has been completed. Generally, this occurs when services are provided or products are delivered. VITAS recognizes revenue at the estimated realizable amount due from third-party payers. Medicare payments are subject to certain limitations, as described below.

We actively monitor each of our hospice programs, by provider number, as to their specific admission, discharge rate and median length of stay data in an attempt to determine whether they are likely to exceed the annual per-beneficiary Medicare cap (“Medicare cap”). Should we determine that revenues for a program are likely to exceed the Medicare cap based on projected trends, we attempt to institute corrective action to influence the patient mix or to increase patient admissions. However, should we project our corrective action will not prevent that program from exceeding its Medicare cap, we estimate the amount of revenue recognized during the period that will require repayment to the Federal government under the Medicare cap and record the amount as a reduction to patient revenue.

During the third quarter of 2015, no Medicare cap was recorded.

During the first nine months ended September 30, 2015, we recorded a $165,000 Medicare cap reversal of amounts recorded in the fourth quarter of 2014 for one program’s projected 2015 measurement period liability. The fourth quarter of 2014 was part of the 2015 Medicare cap year.

Shown below is the Medicare cap liability activity for the fiscal periods ended (in thousands):

	September 30,
	2015			2014
Beginning balance January 1,	$	6,112		$	8,260
2015 measurement period		(165	)		-
2014 measurement period		-			1,796
Payments		(4,782	)		(3,439	)
Ending balance September 30,	$	1,165		$	6,617

Vitas provides charity care, in certain circumstances, to patients without charge when management of the hospice program determines, at the time services are performed, that the patient does not have the financial wherewithal to make payment. There is no revenue or associated accounts receivable in the accompanying consolidated financial statements related to charity care. The cost of charity care is calculated by taking the ratio of charity care days to total days of care and multiplying by total cost of care. The cost of charity care is as follows (in thousands):

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	Three months ended September 30,			Nine months ended September 30,
	2015	2014		2015		2014
$	1,929	$	1,827	$	5,788	$	5,518

3. Segments

Service revenues and sales and after-tax earnings by business segment are as follows (in thousands):

	Three months ended September 30,						Nine months ended September 30,
	2015			2014			2015			2014
Service Revenues and Sales
VITAS	$	285,008		$	265,384		$	831,081		$	789,822
Roto-Rooter		101,218			93,005			313,718			287,049
Total	$	386,226		$	358,389		$	1,144,799		$	1,076,871

After-tax Earnings
VITAS	$	25,723		$	21,593		$	66,839		$	60,645
Roto-Rooter		10,961			9,848			35,122			30,599
Total		36,684			31,441			101,961			91,244
Corporate		(7,851	)		(6,856	)		(21,616	)		(21,722	)
Net income	$	28,833		$	24,585		$	80,345		$	69,522

We report corporate administrative expenses and unallocated investing and financing income and expense not directly related to either segment as “Corporate”.

4. Earnings per Share

Earnings per share (“EPS”) are computed using the weighted average number of shares of capital stock outstanding. Earnings and diluted earnings per share are computed as follows (in thousands, except per share data):

		Net Income
For the Three Months Ended September 30,	Income		Shares	Earnings per Share
2015
Earnings	$	28,833	16,865	$	1.71
Dilutive stock options		-	399
Nonvested stock awards		-	158
Diluted earnings	$	28,833	17,422	$	1.65

2014
Earnings	$	24,585	17,039	$	1.44
Dilutive stock options		-	416
Nonvested stock awards		-	151
Conversion of notes		-	21
Diluted earnings	$	24,585	17,627	$	1.39

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		Net Income
For the Nine Months Ended September 30,	Income		Shares	Earnings per Share
2015
Earnings	$	80,345	16,887	$	4.76
Dilutive stock options		-	391
Nonvested stock awards		-	152
Diluted earnings	$	80,345	17,430	$	4.61

2014
Earnings	$	69,522	17,263	$	4.03
Dilutive stock options		-	402
Nonvested stock awards		-	147
Conversion of Notes		-	156
Diluted earnings	$	69,522	17,968	$	3.87

For the three and nine-month period ended September 30, 2015 and 2014, no stock options were excluded from the computation of diluted earnings per share because they would have been anti-dilutive.

For the three and nine-months ended September 30, 2014 diluted earnings per share was impacted by the issuance of 249,000 shares of capital stock under the conversion feature of our 1.875% Senior Convertible Notes (the “Notes”) on the May 15, 2014 maturity date. Assuming these shares were issued April 1, 2014 increases average diluted shares outstanding for the first nine months of 2014 by 135,000 shares.

5. Long-Term Debt

On June 30, 2014, we replaced our existing credit agreement with the Third Amended and Restated Credit Agreement (“2014 Credit Agreement”). Terms of the 2014 Credit Agreement consist of a five-year, $350 million revolving credit facility and a $100 million term loan. The 2014 Credit Agreement has a floating interest rate that is currently LIBOR plus 113 basis points.

The debt outstanding as of September 30, 2015 consists of the following:

Revolver	$	45,000
Term loan		93,125
Total		138,125
Current portion of term loan		(7,500	)
Long-term debt	$	130,625

Scheduled principal payments of the term loan are as follows:

2015	$	1,875
2016		7,500
2017		8,750
2018		10,000
2019		65,000
	$	93,125

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The 2014 Credit Agreement contains the following quarterly financial covenants:

Description		Requirement

Leverage Ratio (Consolidated Indebtedness/Consolidated Adj. EBITDA)		< 3.50 to 1.00

Fixed Charge Coverage Ratio (Consolidated Free Cash Flow/Consolidated Fixed Charges)		> 1.50 to 1.00

Annual Operating Lease Commitment		< $50.0 million

We are in compliance with all debt covenants as of September 30, 2015. We have issued $36.6 million in standby letters of credit as of September 30, 2015 for insurance purposes. Issued letters of credit reduce our available credit under the 2014 Credit Agreement. As of September 30, 2015, we have approximately $268.4 million of unused lines of credit available and eligible to be drawn down under our revolving credit facility.

6. Other Income/(Expense) – Net

Other income/(expense) -- net comprises the following (in thousands):

	Three months ended September 30,							Nine months ended September 30,
	2015				2014			2015			2014
Market value gains/(losses) on assets held in
deferred compensation trust		$	(2,328	)	$	896		$	(880	)	$	2,708
Loss on disposal of property and equipment			(116	)		(167	)		(131	)		(493	)
Interest income - net			77			(13	)		207			(5	)
Other - net			12			(11	)		(452	)		67
Total other income/(expense) - net		$	(2,355	)	$	705		$	(1,256	)	$	2,277

7. Stock-Based Compensation Plans

On May 18, 2015, the Compensation/Incentive Committee of the Board of Directors (“CIC”) approved a grant of 32,550 shares of restricted stock to certain key employees. The restricted shares vest ratably over three years from the date of issuance. The cumulative compensation expense related to the restricted stock award is $4.0 million and will be recognized over the three-year vesting period. We assumed no forfeitures in determining the cumulative compensation expense of the grant.

On February 20, 2015, the (“CIC”) granted 10,761 Performance Stock Units (“PSUs”) contingent upon the achievement of certain total shareholders return (“TSR”) targets as compared to the TSR of a group of peer companies for the three-year period ending December 31, 2017, the date at which such awards vest. The cumulative compensation cost of the TSR-based PSU award to be recorded over the three year service period is $1.5 million.

On February 20, 2015, the CIC also granted 10,761 PSUs contingent upon the achievement of certain earnings per share (“EPS”) targets for the three-year period ending December 31, 2017. At the end of each reporting period, the Company estimates the number of shares that it believes will ultimately be earned and records that expense over the service period of the award. We currently estimate the cumulative compensation cost of the EPS-based PSUs to be recorded over the three year service period is $1.9 million.

8. Independent Contractor Operations

The Roto-Rooter segment sublicenses with 69 independent contractors to operate certain plumbing repair and drain cleaning businesses in lesser-populated areas of the United States and Canada. We had notes receivable from our independent contractors as of September 30, 2015 totaling $1.9 million (December 31, 2014 - $1.6 million). In most cases these loans are fully or partially secured by equipment owned by the contractor. The interest rates on the loans range from 0% to 7% per annum and the remaining terms of the loans range from 2 months to 5 years at September 30, 2015. We recorded the following from our independent contractors (in thousands):

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	Three months ended September 30,						Nine months ended September 30,
	2015			2014			2015		2014
Revenues		$	9,119		$	8,751	$	28,110		$	26,964
Pretax profits			5,435			4,946		16,653			15,341

9. Retirement Plans

All of the Company’s plans that provide retirement and similar benefits are defined contribution plans. These expenses include the impact of market gains and losses on assets held in deferred compensation plans. Expenses for the Company’s pension and profit-sharing plans, excess benefit plans and other similar plans are as follows (in thousands):

	Three months ended September 30,			Nine months ended September 30,
	2015	2014		2015		2014
$	458	$	3,635	$	7,636	$	10,856

10. Legal and Regulatory Matters

The VITAS segment of the Company’s business operates in a heavily-regulated industry. As a result, the Company is subjected to inquiries and investigations by various government agencies, as well as to lawsuits, including qui tam actions. The following sections describe the various ongoing material lawsuits and investigations of which the Company is currently aware. It is not possible at this time for us to estimate either the timing or outcome of any of those matters, or whether any potential loss, or range of potential losses, is probable or estimable.

Regulatory Matters and Litigation

On May 2, 2013, the government filed a False Claims Act complaint against the Company and certain of its hospice-related subsidiaries in the U.S. District Court for the Western District of Missouri, United States v. VITAS Hospice Services, LLC, et al., No. 4:13-cv-00449-BCW (the “2013 Action”). Prior to that date, the Company received various qui tam lawsuits and subpoenas from the U.S. Department of Justice and OIG that have been previously disclosed. The 2013 Action alleges that, since at least 2002, VITAS, and since 2004, the Company, submitted or caused the submission of false claims to the Medicare program by (a) billing Medicare for continuous home care services when the patients were not eligible, the services were not provided, or the medical care was inappropriate, and (b) billing Medicare for patients who were not eligible for the Medicare hospice benefit because they did not have a life expectancy of six months or less if their illnesses ran their normal course. This complaint seeks treble damages, statutory penalties, and the costs of the action, plus interest. The defendants filed a motion to dismiss on September 24, 2013. On September 30, 2014, the Court denied the motion, except to the extent that claims were filed before July 24, 2002. On November 13, 2014, the government filed a Second Amended Complaint. The Second Amended Complaint changed and supplemented some of the allegations, but did not otherwise expand the causes of action or the nature of the relief sought against VITAS. VITAS filed its Answer to the Second Amended Complaint on August 11, 2015. The Company is not able to reasonably estimate the probability of loss or range of loss at this time.

For additional procedural history of this litigation, please refer to our prior quarterly and annual filings. The costs incurred related to U.S. v. Vitas and related regulatory matters were $1.2 million and $450,000 for the quarters ended September 30, 2015 and 2014, respectively. For the nine months ended September 30, 2015 and 2014, the net costs were $3.8 million and $1.6 million respectively.

In November 2013, two shareholder derivative lawsuits were filed against the Company’s current and former directors, as well as certain of its officers, both of which are covered by the Company’s commercial insurance. On November 6, 2013, KBC Asset Management NV filed suit in the United States District Court for the District of Delaware, KBC Asset Management NV, derivatively on behalf of Chemed Corp. v. McNamara, et al., No. 13 Civ. 1854 (LPS) (D. Del.). It sued Kevin McNamara, Joel Gemunder, Patrick Grace, Thomas Hutton, Walter Krebs, Andrea Lindell, Thomas Rice, Donald Saunders, Arthur Tucker, Jr., George Walsh III, Frank Wood, Timothy O’Toole, David Williams and Ernest Mrozek, together with the Company as nominal defendant. Plaintiff alleges that since at least 2004, Chemed, through VITAS, has submitted or caused the submission of false claims to Medicare. The suit alleges a claim for breach of fiduciary duty against the individual defendants, and seeks (a) a declaration that the individual defendants breached their fiduciary duties to the Company; (b) an order requiring those defendants to pay compensatory damages, restitution and exemplary damages, in unspecified amounts, to the Company; (c) an order directing the Company to implement new policies and procedures; and (d) costs and disbursements incurred in bringing the action, including attorneys’ fees.

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to submit improper and ineligible claims to Medicare and Medicaid; and (b) allegedly misrepresenting the state of Chemed’s internal controls. The suit alleges claims for breach of fiduciary duty, abuse of control and gross mismanagement against the individual defendants. The complaint also alleges unjust enrichment and insider trading against Messrs. McNamara, Williams and O’Toole. Plaintiff seeks (a) a declaration that the individual defendants breached their fiduciary duties to the Company; (b) an order requiring those defendants to pay compensatory damages, restitution and exemplary damages, in unspecified amounts, to the Company; (c) an order directing the Company to implement new policies and procedures; and (d) costs and disbursements incurred in bringing the action, including attorneys’ fees.

On January 29, 2014 defendants in North filed a motion to transfer that case to Delaware under 28 U.S.C § 1404(a). On February 12, 2014, defendants in KBC filed a motion to dismiss that case pursuant to Federal Rules of Civil Procedure 23.1 and 12(b)(6). On September 19, 2014, the Ohio court granted defendants’ motion to transfer North to Delaware. Following that decision and in light of that transfer, on September 29, 2014, the Delaware court denied without prejudice defendants’ motion to dismiss KBC, and referred both cases to Magistrate Judge Burke.

On October 15, 2014, Plaintiff KBC filed a motion to consolidate KBC with North. On February 2, 2015 the court granted the motion for consolidation in full, appointing Plaintiff KBC the sole lead plaintiff and its counsel, the sole lead and liaison counsel. The court ordered that both cases will proceed under the caption In re Chemed Corp. Shareholder and Derivative Litigation, No. 13 Civ. 1854 (LPS) (CJB) (D. Del.). Plaintiff KBC has designated its pending complaint as the operative complaint in the consolidated proceedings. Defendants have renewed their motion to dismiss the claims and allegations.

The Company intends to defend vigorously against the allegations in each of the above lawsuits. Regardless of the outcome of any of the preceding matters, responding to the subpoenas and dealing with the various regulatory agencies and opposing parties can adversely affect us through defense costs, potential payments, diversion of management time, and related publicity. Although the Company intends to defend them vigorously, there can be no assurance that those suits will not have a material adverse effect on the Company.

11. Concentration of Risk

VITAS has pharmacy services agreements ("Agreements") with Enclara Pharmacia (previously Hospice Pharmacia) and its subsidiaries whereby Enclara provides specified pharmacy services for VITAS and its hospice patients in geographical areas served by both VITAS and Enclara. VITAS made purchases from Enclara of $9.5 million and $8.8 million for the three months ended September 30, 2015 and 2014, respectively. VITAS made purchases from Enclara of $28.3 million and $26.5 million for the nine months ended September 30, 2015 and 2014, respectively. For the three and nine month periods ending September 30, 2015 and 2014, respectively, purchases from this vendor exceed 90% of all pharmacy services used by VITAS.

12. Cash Overdrafts and Cash Equivalents

Included in accounts payable at September 30, 2015 is cash overdrafts payable of $8.8 million (December 31, 2014 - $10.5 million).

From time to time throughout the year, we invest excess cash in money market funds with major commercial banks. We closely monitor the creditworthiness of the institutions with which we invest our overnight funds. We had $52,000 in cash equivalents as of September 30, 2015. There was $80,000 in cash equivalents as of December 31, 2014. The weighted average rate of return for our cash equivalents was 0.10% at September 30, 2015 and 0.06% at December 31, 2014.

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13. Financial Instruments

FASB’s authoritative guidance on fair value measurements defines a hierarchy which prioritizes the inputs in fair value measurements. Level 1 measurements are measurements using quoted prices in active markets for identical assets or liabilities. Level 2 measurements use significant other observable inputs. Level 3 measurements are measurements using significant unobservable inputs which require a company to develop its own assumptions. In recording the fair value of assets and liabilities, companies must use the most reliable measurement available. For cash and cash equivalents, accounts receivable and accounts payable, the carrying amount is a reasonable estimate of fair value because of the liquidity and short-term nature of these instruments.

The following shows the carrying value, fair value and the hierarchy for our financial instruments as of September 30, 2015 (in thousands):

			Fair Value Measure

	Carrying Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Mutual fund investments of deferred
compensation plans held in trust	$	49,951	$	49,951	$	-	$	-
Long-term debt		138,125		-		138,125		-

For the mutual fund investments carrying value is fair value. All outstanding long-term debt is at a floating interest rate tied to LIBOR. Therefore, the carrying amount is a reasonable estimation of fair value.

The following shows the carrying value, fair value and the hierarchy for our financial instruments as of December 31, 2014 (in thousands):

			Fair Value Measure

	Carrying Value		Quoted Prices in Active Markets for Identical Assets (Level 1)		Significant Other Observable Inputs (Level 2)		Significant Unobservable Inputs (Level 3)
Mutual fund investments of deferred
compensation plans held in trust	$	49,147	$	49,147	$	-	$	-
Long-term debt		147,500		-		147,500		-

14. Capital Stock Repurchase Plan Transactions

We repurchased the following capital stock for the three and nine months ended September 30, 2015 and 2014:

	Three months ended September 30,				Nine months ended September 30,
	2015		2014		2015		2014

Total cost of repurchased shares	$	18,230	$	40,610	$	47,992	$	99,103
Shares repurchased		135,765		400,000		385,765		1,082,934
Weighted average price per share	$	134.28	$	101.53	$	124.41	$	91.51

In March 2015, the Board of Directors authorized an additional $100 million for stock repurchase under Chemed’s existing share repurchase program. We currently have $63.8 million of authorization remaining under this share repurchase plan.

Of the $18.2 million and $48.0 million in repurchases made during the three and nine months ended September 30, 2015 respectively, $11.3 million was paid for in October 2015. Amounts repurchased but settled subsequent to the end of the periods are considered non-cash financing activities and excluded from the Consolidated Statement of Cash Flows.

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15. Recent Accounting Statements

In May 2014, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update “ASU No. 2014-09 – Revenue from Contracts with Customers” which provides additional guidance to clarify the principles for recognizing revenue. The standard will also be used to develop a common revenue standard for removing inconsistencies and weaknesses, improve comparability, provide more useful information to users through improved disclosure requirements, and simplify the preparation of financial statements. The guidance is effective for fiscal years beginning after December 15, 2017. We are currently evaluating the impact of this ASU on our existing revenue recognition policies and disclosures.

In August 2014, the FASB issued Accounting Standards Update No. 2014-15, “ASU No. 2014-15 - Presentation of Financial Statements-Going Concern”. ASU 2014-15 is intended to define management's responsibility to evaluate whether there is substantial doubt about an organization's ability to continue as a going concern and to provide related footnote disclosures. This guidance is effective for us for the annual period ending December 31, 2016 and interim periods thereafter. We do not expect the adoption of this standard to have a material impact on our consolidated financial position, results of operations or cash flows.

In April 2015, the FASB issued Accounting Standards Update No. 2015-03, “ASU No. 2015-03 – Interest – Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs”. ASU 2015-03 is intended to simplify the presentation of debt issuance costs. Under the new guidance, debt issuance costs will be presented as a direct deduction from the carrying value of the associated debt, consistent with the existing presentation of a debt discount. This guidance is effective for us for the annual period beginning after December 15, 2015. We do not expect the adoption of this standard to have a material impact on our consolidated financial position, results of operations or cash flows.

In August 2015, the FASB issued Accounting Standards Update No. 2015-15, “ASU No. 2015-15- Interest – Imputation of Interest (Subtopic 835-30): Presentation and Subsequent Measurement of Debt Issuance Costs Associated with Line of Credit Arrangements”. This Accounting Standards Update adds SEC paragraphs pursuant to the SEC Staff Accouncement at the June 18, 2015 Emerging Issues Task Force (EITF) meeting. Given the absence of authoritative guidance within Update 2015-03 for debt issuance costs related to line-of-credit arrangements, the SEC staff would not object to an entity deferring and presenting debt issuance costs as an asset and subsequently amortizing the deferred debt issuance ratably over the term of the line-of-credit arrangement, regardless of whether there are any outstanding borrowings on the line-of-credit arrangement. We do not expect this interpretation to have a material impact on our consolidated financial position, results of operations or cash flows.

16. Business Combinations

In the first nine months of 2015, we completed two business combinations within our Roto-Rooter segment for $6.6 million in cash to increase our market penetration in Omaha, Nebraska and Scranton, Pennsylvania. A substantial portion of this aggregate purchase price was allocated to goodwill. The operating results of these business combinations have been included in our results of operations since the acquisition date and are not material for the three and nine-month periods ended September 30, 2015 nor for the comparable prior year periods.

Shown below is movement in Goodwill (in thousands):

	Vitas			Roto-Rooter			Total
Balance at January 1, 2014	$	328,450		$	138,421		$	466,871
Business combinations		-			198			198
Foreign currency adjustments		-			(198	)		(198	)
Program closing		(149	)		-			(149	)
Balance at December 31, 2014	$	328,301		$	138,421		$	466,722
Business combinations		-			5,944			5,944
Foreign currency adjustments		-			(259	)		(259	)
Balance at September 30, 2015	$	328,301		$	144,106		$	472,407

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

Executive Summary

We operate through our two wholly-owned subsidiaries, VITAS Healthcare Corporation and Roto-Rooter Group, Inc. VITAS focuses on hospice care that helps make terminally ill patients’ final days as comfortable as possible. Through its teams of doctors, nurses, home health aides, social workers, clergy and volunteers, VITAS provides direct medical services to patients, as well as spiritual and emotional counseling to both patients and their families. Roto-Rooter’s services are focused on providing plumbing, drain cleaning, water restoration and other related services to both residential and commercial customers. Through its network of company-owned branches, independent contractors and franchisees, Roto-Rooter offers plumbing and drain cleaning service to over 90% of the U.S. population.

The following is a summary of the key operating results (in thousands except per share amounts):

	Three months ended September 30,						Nine months ended September 30,
	2015			2014			2015			2014
Service revenues and sales	$	386,226		$	358,389		$	1,144,799		$	1,076,871
Net income	$	28,833		$	24,585		$	80,345		$	69,522
Diluted EPS	$	1.65		$	1.39		$	4.61		$	3.87
Adjusted net income	$	30,934		$	26,058		$	87,481		$	76,351
Adjusted diluted EPS	$	1.78		$	1.48		$	5.02		$	4.28
Adjusted EBITDA	$	59,410		$	50,946		$	169,948		$	150,831
Adjusted EBITDA as a % of revenue		15.4	%		14.2	%		14.8	%		14.0	%

Adjusted net income, adjusted diluted EPS, earnings before interest, taxes and depreciation and amortization (“EBITDA”) and Adjusted EBITDA are not measures derived in accordance with GAAP. We provide non-GAAP measures to help readers evaluate our operating results, compare our operating performance with that of similar companies that have different capital structures and help evaluate our ability to meet future debt service, capital expenditure and working capital requirements. Our non-GAAP measures should not be considered in isolation or as a substitute for comparable measures presented in accordance with GAAP. A reconciliation of our non-GAAP measures are presented on pages 26-28.

For the three months ended September 30, 2015, the increase in consolidated service revenues and sales was driven by an 8.8% increase at Roto-Rooter and a 7.4% increase at VITAS. The increase in service revenues at Roto-Rooter was driven by an increase in all major service lines. The increase in service revenues at VITAS was a result of Medicare reimbursement rates increasing 1.4%, a 7.4% increase in days of care, offset by geographical and level of care mix shift. Consolidated net income increased 17.3% due to higher revenues at both VITAS and Roto-Rooter combined with leveraging our current infrastructure resulting in operating costs growing at a slower rate than revenue. Diluted EPS increased 18.7% as a result of the increase in net income as well as a lower number of shares outstanding. Adjusted EBITDA as a percent of revenue increased 1.2%. See page 29 for additional VITAS operating metrics.

For the nine months ended September 30, 2015, the increase in consolidated service revenues and sales was driven by a 9.3% increase at Roto-Rooter and a 5.2% increase at VITAS. The increase in service revenues at Roto-Rooter was driven primarily by an increase in the water restoration business line as well as an increase in plumbing revenue. The increase in service revenues at VITAS was a result of Medicare reimbursement rates increasing 1.4%, a 5.4% increase in days of care offset by level of care and geographical mix shift. Consolidated net income increased 15.6% due to higher revenues at both VITAS and Roto-Rooter combined with leveraging our current infrastructure resulting in operating costs growing at a slower rate than revenue. Diluted EPS increased 19.1% as a result of the increase in net income as well as a lower number of shares outstanding. Adjusted EBITDA as a percent of revenue increased 0.8%. See page 29 for additional VITAS operating metrics.

VITAS expects its full-year 2015 revenue growth, prior to Medicare cap, to be in the range of 4.0% to 5.0%. Admissions in 2015 are estimated to increase 4.0% to 5.0%. Adjusted EBITDA margin, prior to Medicare cap, is estimated to be 14.0% to 15.0%. Medicare cap billing limitations are estimated to be $1.0 million in 2015. Roto-Rooter expects full-year 2015 revenue growth of 6.0% to 7.0%. The revenue estimate is a result of continued expansion in water restoration services and increased job pricing of approximately 1.0%. Adjusted EBITDA margin for 2015 is estimated in the range of 19.5% to 20.0%. We anticipate that our operating income and cash flows will be sufficient to operate our businesses and meet any commitments for the foreseeable future.

-14-

Financial Condition

Liquidity and Capital Resources

Material changes in the balance sheet accounts from December 31, 2014 to September 30, 2015 include the following:

	●	A $24.3 million increase in cash due to cash generated by operations and an increase in borrowings on our revolving line of credit partially offset by treasury stock purchases, capital expenditures and cash dividends.
	●	A $5.9 million increase in properties and equipment due mainly to expenditures related to the water restoration business line at Roto-Rooter.
	●	A $5.7 million increase in goodwill due to two acquisitions at Roto-Rooter.
	●	A $5.6 million increase in accounts payable due to timing of payments.
	●	A $5.1 million decrease in income taxes due to timing of payments.
	●	An $8.8 million increase in accrued compensation due primarily to timing of payroll payments.
	●	A $10.6 million decrease in long-term debt due primarily to payments made.

Net cash provided by operating activities increased $62.1 million primarily as a result of higher net income, payment of litigation settlements in 2014 that did not recur in 2015 and the timing of other disbursements. Management continually evaluates cash utilization alternatives, including share repurchase, debt repurchase, acquisitions and increased dividends to determine the most beneficial use of available capital resources.

We have issued $36.6 million in standby letters of credit as of September 30, 2015, for insurance purposes. Issued letters of credit reduce our available credit under the revolving credit agreement. As of September 30, 2015, we have approximately $268.4 million of unused lines of credit available and eligible to be drawn down under our revolving credit facility. Management believes its liquidity and sources of capital are satisfactory for the Company’s needs in the foreseeable future.

Significant changes in our accounts receivable balances are driven mainly by the timing of payments received from the Federal government at our VITAS subsidiary. We typically receive a payment in excess of $35.0 million from the Federal government from hospice services every other Friday. The timing of period end will have a significant impact on the accounts receivable at VITAS. These changes generally normalize over a two year period, as cash flow variations in one year are offset in the following year.

Commitments and Contingencies

Collectively, the terms of our credit agreements require us to meet various financial covenants, to be tested quarterly. We are in compliance with all financial and other debt covenants as of September 30, 2015 and anticipate remaining in compliance throughout the foreseeable future.

On May 2, 2013, the government filed a False Claims Act complaint against the Company and certain of its hospice-related subsidiaries in the U.S. District Court for the Western District of Missouri, United States v. VITAS Hospice Services, LLC, et al., No. 4:13-cv-00449-BCW (the “2013 Action”). Prior to that date, the Company received various subpoenas from the U.S. Department of Justice and OIG that have been previously disclosed. The 2013 Action alleges that, since at least 2002, VITAS, and since 2004, the Company, submitted or caused the submission of false claims to the Medicare program by (a) billing Medicare for continuous home care services when the patients were not eligible, the services were not provided, or the medical care was inappropriate, and (b) billing Medicare for patients who were not eligible for the Medicare hospice benefit because they did not have a life expectancy of six months or less if their illnesses ran their normal course. This complaint seeks treble damages, statutory penalties, and the costs of the action, plus interest. The defendants filed a motion to dismiss on September 24, 2013. On September 30, 2014, the Court denied the motion, except to the extent that claims were filed before July 24, 2002. On November 13, 2014, the government filed a Second Amended Complaint. The Second Amended Complaint changed and supplemented some of the allegations, but did not otherwise expand the causes of action or the nature of the relief sought against VITAS. The Court granted the motion to file the Second Amended Complaint on July 24, 2015. VITAS filed its Answer to the Second Amended Complaint on August 11, 2015. The Company is not able to reasonably estimate the probability of loss or range of loss at this time.

-15-

On November 14, 2013, Mildred A. North filed suit in the United States District Court for the Southern District of Ohio, North, derivatively on behalf of Chemed Corp. v. Kevin McNamara, el al., No. 13 Civ. 833 (MDB) (S.D. Ohio). She sued Kevin McNamara, David Williams, Timothy O’Toole, Joel Gemunder, Patrick Grace, Walter Krebs, Andrea Lindell, Thomas Rice, Donald Saunders, George Walsh III, Frank Wood and Thomas Hutton, together with the Company as nominal defendant. Plaintiff alleges that, between February 2010 and the present, the individual defendants breached their fiduciary duties as officers and directors of Chemed by, among other things, (a) allegedly causing VITAS to submit improper and ineligible claims to Medicare and Medicaid; and (b) allegedly misrepresenting the state of Chemed’s internal controls. The suit alleges claims for breach of fiduciary duty, abuse of control and gross mismanagement against the individual defendants. The complaint also alleges unjust enrichment and insider trading against Messrs. McNamara, Williams and O’Toole. Plaintiff seeks (a) a declaration that the individual defendants breached their fiduciary duties to the Company; (b) an order requiring those defendants to pay compensatory damages, restitution and exemplary damages, in unspecified amounts, to the Company; (c) an order directing the Company to implement new policies and procedures; and (d) costs and disbursements incurred in bringing the action, including attorneys’ fees.

-16-

Results of Operations

Three months ended September 30, 2015 versus 2014 - Consolidated Results

Our service revenues and sales for the third quarter of 2015 increased 7.8% versus services and sales revenues for the third quarter of 2014. Of this increase, $19.6 million was attributable to VITAS and $8.2 million was attributable to Roto-Rooter. The following chart shows the components of those changes (in thousands):

	Increase/(Decrease)
	Amount			Percent
VITAS
Routine homecare	$	17,987			8.8
Continuous care		(122	)		(0.3	)
General inpatient		(741	)		(3.0	)
Medicare cap		2,500			100.0
Roto-Rooter
Plumbing		3,869			9.4
Drain cleaning		1,167			3.6
Water restoration		2,843			53.5
Contractor operations		368			4.2
Other		(34	)		(0.7	)
Total	$	27,837			7.8

The increase in VITAS’ revenues for the third quarter of 2015 versus the third quarter of 2014 was a combination of Medicare reimbursement rates increasing approximately 1.4% and a 7.4% increase in days of care offset by level of care and geographical mix shift.

Days of care during the quarter ended September 30 were as follows:

	Days of Care				Increase/(Decrease)
	2015		2014		Percent

Routine homecare		1,357,688		1,256,844		8.0
Continuous care		51,652		51,642		-
General inpatient		37,121		38,347		(3.2	)
Total days of care		1,446,461		1,346,833		7.4

Over 90% of VITAS’ service revenues for the period were from Medicare and Medicaid.

The increase in plumbing revenues for the third quarter of 2015 versus 2014 is attributable to a 7.3% increase in job count and a 2.1% increase in a combination of price and service mix shift. Drain cleaning revenues for the third quarter of 2015 versus 2014 reflect a 1.3% increase in the number of jobs performed combined with a price and service mix shift of 2.3%. Water restoration increased 53.5% as a result of continued expansion of this service offering into other Roto-Rooter locations. Water restoration is the remediation or removal of water and humidity after a flood. Contractor operations increased 4.2% and Other Roto-Rooter revenue decreased 0.7%.

The consolidated gross margin was 29.6% in the third quarter of 2015 as compared with 28.4% in the third quarter of 2014. On a segment basis, VITAS’ gross margin was 23.3% in the third quarter of 2015 as compared with 22.0%, in the third quarter of 2014. This increase was the mainly the result of a $2.5 million charge in Medicare cap in 2014 versus none in 2015 and favorable health insurance claims experience. The Roto-Rooter segment’s gross margin was 47.1% for the third quarter of 2015, essentially flat when compared to the third quarter of 2014.

-17-

Selling, general and administrative expenses (“SG&A”) comprise (in thousands):

	Three months ended September 30,
	2015			2014
SG&A expenses before the impact of market gains/(losses) of deferred compensation
plans, long-term incentive compensation, and OIG investigation expenses	$	55,010		$	51,218
Long-term incentive compensation		1,364			1,002
Expenses related to OIG investigation		1,151			450
Impact of market value gains/(losses) related to assets held in deferred
compensation trusts		(2,328	)		896
Total SG&A expenses	$	55,197		$	53,566

SG&A expenses before long-term incentive compensation, expenses related to OIG investigation and the impact of market gains/(losses) of deferred compensation plans for the third quarter of 2015 were up 7.4% when compared to the third quarter of 2014. The increase was mainly a result of the increase in variable expenses caused by increased revenue as well as normal salary increases, higher incentive compensation costs and higher bad debt expense in 2015.

Other income/(expense) - net comprise (in thousands):

	Three months ended September 30,
	2015			2014
Market value gains/(losses) on assets held in
deferred compensation trusts	$	(2,328	)	$	896
Loss on disposal of property and equipment		(116	)		(167	)
Interest income - net		77			(13	)
Other		12			(11	)
Total other income/(expense) - net	$	(2,355	)	$	705

Our effective income tax rate was 38.5% in the third quarter of 2015 essentially equal to the third quarter of 2014.

Net income for both periods included the following after-tax items/adjustments that reduced or increased after-tax earnings (in thousands):

	Three months ended September 30,
	2015			2014
VITAS
Expenses related to OIG investigation	$	(711	)	$	(279	)
Roto-Rooter
Acquisition expenses		(18	)		-
Recoveries related to litigation settlements		-			143
Corporate
Stock option expense		(509	)		(615	)
Long-term incentive compensation		(863	)		(634	)
Expenses related to securities litigation		-			(88	)
Total	$	(2,101	)	$	(1,473	)

-18-

Three months ended September 30, 2015 versus 2014 - Segment Results

The change in after-tax earnings for the third quarter of 2015 versus the third quarter of 2014 is due to (in thousands):

	Increase/(Decrease)
	Amount				Percent
VITAS		$	4,130			19.1
Roto-Rooter			1,113			11.3
Corporate			(995	)		(14.5	)
		$	4,248			17.3

VITAS’ after-tax earnings were positively impacted in 2015 compared to 2014 by a $19.6 million increase in revenue. After-tax earnings as a percent of revenue in the third quarter of 2015 were 9.0%, an increase of 0.9% over the third quarter of 2014.

Roto-Rooter’s after-tax earnings were positively impacted in 2015 compared to 2014 primarily by a $2.8 million revenue increase in Roto-Rooter’s water restoration line of business, a $3.9 million increase in plumbing revenue and a $1.2 million increase in sewer and drain cleaning revenue. After-tax earnings as a percent of revenue at Roto-Rooter in 2015 were 10.8% as compared to 10.6% in 2014.

Results of Operations

Nine months ended September 30, 2015 versus 2014 - Consolidated Results

Our service revenues and sales for the first nine months of 2015 increased 6.3% versus services and sales revenues for the first nine months of 2014. Of this increase, $41.3 million was attributable to VITAS and $26.7 million was attributable to Roto-Rooter. The following chart shows the components of those changes (in thousands):

	Increase/(Decrease)
	Amount			Percent
VITAS
Routine homecare	$	40,087			6.7
Continuous care		(237	)		(0.2	)
General inpatient		(552	)		(0.7	)
Medicare cap		1,961			109.2
Roto-Rooter
Plumbing		8,395			6.5
Drain cleaning		(137	)		(0.1	)
Water restoration		17,539			171.4
Contractor operations		1,146			4.3
Other		(274	)		(1.7	)
Total	$	67,928			6.3

The increase in VITAS’ revenues for the first nine months of 2015 versus the first nine months of 2014 was a combination of Medicare reimbursement rates increasing approximately 1.4% and a 5.4% increase in days of care offset by level of care and geographical mix shift. In the first nine months of 2015, VITAS recorded a positive revenue adjustment of $165,000 related to one program’s Medicare cap liability recorded in the fourth quarter of 2014. This compares to a negative revenue adjustment of $1.8 million recorded in the first nine months of 2014.

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Days of care for the nine months ended September 30 were as follows:

	Days of Care				Increase/(Decrease)
	2015		2014		Percent

Routine homecare		3,899,900		3,685,923		5.8
Continuous care		155,742		155,119		0.4
General inpatient		115,700		117,105		(1.2	)
Total days of care		4,171,342		3,958,147		5.4

Over 90% of VITAS’ service revenues for the period were from Medicare and Medicaid.

The increase in plumbing revenues for the first nine months of 2015 versus 2014 is attributable to a combination of a 1.3% increase in job count, and a 5.2% increase in price and service mix shift. Drain cleaning revenues for the first nine months of 2015 versus 2014 reflect a 3.3% decrease in the number of jobs performed, offset by a 3.2% increase in a combination of price and service mix shift. Water restoration increased 171.4% as a result of continued expansion of this service offering into other Roto-Rooter locations. Water restoration is the remediation or removal of water and humidity after a flood. Contractor operations increased 4.3% and Other Roto-Rooter revenue decreased 1.7%.

The consolidated gross margin was 29.1% in the first nine months of 2015 as compared with 28.3% in the first nine months of 2014. On a segment basis, VITAS’ gross margin was 22.2% in the first nine months of 2015 as compared with 21.7% in the first nine months of 2014. This increase is mainly the result of favorable health insurance claims experience. The Roto-Rooter segment’s gross margin was 47.5% for the first nine months of 2015 as compared with 46.7% for the first nine months of 2014. The gross margin increase was mainly the result of favorable health and casualty insurance experience during the first nine months of 2015.

Selling, general and administrative expenses (“SG&A”) comprise (in thousands):

	Nine months ended September 30,
	2015			2014
SG&A expenses before the impact of market gains/(losses) of deferred compensation
plans, long-term incentive compensation, and OIG investigation expenses	$	165,067		$	156,582
Long-term incentive compensation		3,755			1,988
Expenses related to OIG investigation		3,837			1,608
Impact of market value gains/(losses) related to assets held in deferred
compensation trusts		(880	)		2,708
Total SG&A expenses	$	171,779		$	162,886

SG&A expenses before long-term incentive compensation, expenses related to OIG investigation and the impact of market gains/(losses) of deferred compensation plans for the first nine months of 2015 were up 5.4% when compared to the first nine months of 2014. The increase was mainly a result of the increase in variable expenses caused by increased revenue as well as normal salary increases and higher bad debt expenses in 2015.

Other income/(expense) - net comprise (in thousands):

	Nine months ended September 30,
	2015			2014
Market value gains/(losses) on assets held in
deferred compensation trusts	$	(880	)	$	2,708
Loss on disposal of property and equipment		(131	)		(493	)
Interest income - net		207			(5	)
Other		(452	)		67
Total other income/(expense) - net	$	(1,256	)	$	2,277

Our effective income tax rate was 38.8% in the first nine months of 2015, essentially equal to the first nine months of 2014.

-20-

Net income for both periods included the following after-tax items/adjustments to after-tax earnings (in thousands):

	Nine Months Ended September 30,
	2015			2014
VITAS
Legal expenses of OIG investigation	$	(2,369	)	$	(997	)
Expenses related to litigation settlements		-			(70	)
Acquisition expenses		-			(1	)
Roto-Rooter
Net expenses/(recoveries) related to litigation settlements		(3	)		6
Acquisition expenses		(98	)		-
Corporate
Stock option expense		(2,268	)		(2,159	)
Noncash impact of change in accounting for convertible debt		-			(2,143	)
Long-term incentive compensation		(2,375	)		(1,258	)
Expenses of securities litigation		(23	)		(207	)
Total	$	(7,136	)	$	(6,829	)

Nine months ended September 30, 2015 versus 2014 - Segment Results

The change in after-tax earnings for the first nine months of 2015 versus the first nine months of 2014 is due to (in thousands):

	Increase/(Decrease)
	Amount			Percent
VITAS		$	6,194		10.2
Roto-Rooter			4,523		14.8
Corporate			106		0.5
		$	10,823		15.6

VITAS’ after-tax earnings were positively impacted in 2015 compared to 2014 by a $41.3 million increase in revenue. After-tax earnings as a percent of revenue in 2015 were 8.0% as compared to 7.7% in 2014.

Roto-Rooter’s after-tax earnings were positively impacted in 2015 compared to 2014 primarily by a $17.5 million revenue increase in Roto-Rooter’s water restoration line of business and an $8.4 million increase in plumbing revenue. After-tax earnings as a percent of revenue at Roto-Rooter in 2015 were 11.2% as compared to 10.7% in 2014. This increase is largely the result of higher sales and gross profit in 2015, partially offset by higher SG&A expenses. Favorable casualty and health insurance experience during 2015 contributed to the higher gross profit.

-21-

CHEMED CORPORATION AND SUBSIDIARY COMPANIES

CONSOLIDATING STATEMENT OF INCOME

FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2015

(in thousands)(unaudited)


	VITAS			Roto-Rooter			Corporate			Chemed Consolidated
2015 (a)
Service revenues and sales	$	285,008		$	101,218		$	-		$	386,226
Cost of services provided and goods sold		218,528			53,561			-			272,089
Selling, general and administrative expenses		22,241			27,437			5,519			55,197
Depreciation		4,631			3,300			144			8,075
Amortization		186			172			379			737
Total costs and expenses		245,586			84,470			6,042			336,098
Income/(loss) from operations		39,422			16,748			(6,042	)		50,128
Interest expense		(54	)		(80	)		(774	)		(908	)
Intercompany interest income/(expense)		1,979			858			(2,837	)		-
Other income/(expense)—net		(11	)		(15	)		(2,329	)		(2,355	)
Income/(expense) before income taxes		41,336			17,511			(11,982	)		46,865
Income taxes		(15,613	)		(6,550	)		4,131			(18,032	)
Net income/(loss)	$	25,723		$	10,961		$	(7,851	)	$	28,833

(a) The following amounts are included in net income (in thousands):

		VITAS			Roto-Rooter			Corporate			Chemed Consolidated
Pretax benefit/(cost):
Stock option expense	$	-		$	-		$	(813	)	$	(813	)
Long-term incentive compensation		-			-			(1,364	)		(1,364	)
Acquisition expenses		-			(30	)		-			(30	)
Expenses related to OIG investigation		(1,151	)		-			-			(1,151	)
Total	$	(1,151	)	$	(30	)	$	(2,177	)	$	(3,358	)

		VITAS			Roto-Rooter			Corporate			Chemed Consolidated
After-tax benefit/(cost):
Stock option expense	$	-		$	-		$	(509	)	$	(509	)
Long-term incentive compensation		-			-			(863	)		(863	)
Acquisition expenses		-			(18	)		-			(18	)
Expenses related to OIG investigation		(711	)		-			-			(711	)
Total	$	(711	)	$	(18	)	$	(1,372	)	$	(2,101	)

-22-

CHEMED CORPORATION AND SUBSIDIARY COMPANIES
CONSOLIDATING STATEMENT OF INCOME
FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2014
(in thousands)(unaudited)


	VITAS			Roto-Rooter			Corporate			Chemed Consolidated
2014 (a)
Service revenues and sales	$	265,384		$	93,005		$	-		$	358,389
Cost of services provided and goods sold		207,105			49,340			-			256,445
Selling, general and administrative expenses		20,224			25,682			7,660			53,566
Depreciation		4,530			2,772			148			7,450
Amortization		205			114			398			717
Total costs and expenses		232,064			77,908			8,206			318,178
Income/(loss) from operations		33,320			15,097			(8,206	)		40,211
Interest expense		(55	)		(87	)		(838	)		(980	)
Intercompany interest income/(expense)		1,660			760			(2,420	)		-
Other income/(expense)—net		(189	)		(2	)		896			705
Income/(expense) before income taxes		34,736			15,768			(10,568	)		39,936
Income taxes		(13,143	)		(5,920	)		3,712			(15,351	)
Net income/(loss)	$	21,593		$	9,848		$	(6,856	)	$	24,585

(a) The following amounts are included in net income (in thousands):

		VITAS			Roto-Rooter			Corporate			Chemed Consolidated
Pretax benefit/(cost):
Stock option expense	$	-		$	-		$	(977	)	$	(977	)
Long-term incentive compensation		-			-			(1,002	)		(1,002	)
Net recoveries related to litigation settlements		-			234			-			234
Expenses related to securities litigation		-			-			(138	)		(138	)
Expenses related to OIG investigation		(450	)		-			-			(450	)
Total	$	(450	)	$	234		$	(2,117	)	$	(2,333	)

		VITAS			Roto-Rooter			Corporate			Chemed Consolidated
After-tax benefit/(cost):
Stock option expense	$	-		$	-		$	(615	)	$	(615	)
Long-term incentive compensation		-			-			(634	)		(634	)
Net recoveries related to litigation settlements		-			143			-			143
Expenses related to securities litigation		-			-			(88	)		(88	)
Expenses related to OIG investigation		(279	)		-			-			(279	)
Total	$	(279	)	$	143		$	(1,337	)	$	(1,473	)

-23-

CHEMED CORPORATION AND SUBSIDIARY COMPANIES

CONSOLIDATING STATEMENT OF INCOME

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2015

(in thousands)(unaudited)


	VITAS			Roto-Rooter			Corporate			Chemed Consolidated
2015 (a)
Service revenues and sales	$	831,081		$	313,718		$	-		$	1,144,799
Cost of services provided and goods sold		646,801			164,836			-			811,637
Selling, general and administrative expenses		66,449			84,439			20,891			171,779
Depreciation		14,141			9,598			450			24,189
Amortization		523			408			964			1,895
Total costs and expenses		727,914			259,281			22,305			1,009,500
Income/(loss) from operations		103,167			54,437			(22,305	)		135,299
Interest expense		(164	)		(274	)		(2,408	)		(2,846	)
Intercompany interest income/(expense)		5,461			2,501			(7,962	)		-
Other income/(expense)—net		(395	)		19			(880	)		(1,256	)
Income/(expense) before income taxes		108,069			56,683			(33,555	)		131,197
Income taxes		(41,230	)		(21,561	)		11,939			(50,852	)
Net income/(loss)	$	66,839		$	35,122		$	(21,616	)	$	80,345

(a) The following amounts are included in net income (in thousands):

		VITAS			Roto-Rooter			Corporate			Chemed Consolidated
Pretax benefit/(cost):
Stock option expense	$	-		$	-		$	(3,600	)	$	(3,600	)
Long-term incentive compensation		-			-			(3,755	)		(3,755	)
Expenses related to litigation settlements		-			(5	)		-			(5	)
Expenses related to securities litigation		-			-			(37	)		(37	)
Acquisition expenses		-			(161	)		-			(161	)
Expenses related to OIG investigation		(3,837	)		-			-			(3,837	)
Total	$	(3,837	)	$	(166	)	$	(7,392	)	$	(11,395	)

		VITAS			Roto-Rooter			Corporate			Chemed Consolidated
After-tax benefit/(cost):
Stock option expense	$	-		$	-		$	(2,268	)	$	(2,268	)
Long-term incentive compensation		-			-			(2,375	)		(2,375	)
Expenses related to litigation settlements		-			(3	)		-			(3	)
Expenses related to securities litigation		-			-			(23	)		(23	)
Acquisition expenses		-			(98	)		-			(98	)
Expenses related to OIG investigation		(2,369	)		-			-			(2,369	)
Total	$	(2,369	)	$	(101	)	$	(4,666	)	$	(7,136	)

-24-

CHEMED CORPORATION AND SUBSIDIARY COMPANIES

CONSOLIDATING STATEMENT OF INCOME

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2014

(in thousands)(unaudited)


	VITAS			Roto-Rooter			Corporate			Chemed Consolidated
2014 (a)
Service revenues and sales	$	789,822		$	287,049		$	-		$	1,076,871
Cost of services provided and goods sold		618,315			152,956			-			771,271
Selling, general and administrative expenses		62,939			78,569			21,378			162,886
Depreciation		13,709			7,732			430			21,871
Amortization		829			397			1,235			2,461
Total costs and expenses		695,792			239,654			23,043			958,489
Income/(loss) from operations		94,030			47,395			(23,043	)		118,382
Interest expense		(167	)		(295	)		(6,762	)		(7,224	)
Intercompany interest income/(expense)		4,520			2,090			(6,610	)		-
Other income/(expense)—net		(577	)		137			2,717			2,277
Income/(expense) before income taxes		97,806			49,327			(33,698	)		113,435
Income taxes		(37,161	)		(18,728	)		11,976			(43,913	)
Net income/(loss)	$	60,645		$	30,599		$	(21,722	)	$	69,522

(a) The following amounts are included in net income (in thousands):

		VITAS			Roto-Rooter			Corporate			Chemed Consolidated
Pretax benefit/(cost):
Stock option expense	$	-		$	-		$	(3,430	)	$	(3,430	)
Noncash impact of accounting for convertible debt		-			-			(3,389	)		(3,389	)
Long-term incentive compensation		-			-			(1,988	)		(1,988	)
Net recoveries/(expenses) related to litigation settlements		(113	)		9			-			(104	)
Expenses related to securities litigation		-			-			(327	)		(327	)
Acquisition expenses		(1	)		-			-			(1	)
Expenses related to OIG investigation		(1,608	)		-			-			(1,608	)
Total	$	(1,722	)	$	9		$	(9,134	)	$	(10,847	)

		VITAS			Roto-Rooter			Corporate			Chemed Consolidated
After-tax benefit/(cost):
Stock option expense	$	-		$	-		$	(2,159	)	$	(2,159	)
Noncash impact of accounting for convertible debt		-			-			(2,143	)		(2,143	)
Long-term incentive compensation		-			-			(1,258	)		(1,258	)
Net recoveries/(expenses) related to litigation settlements		(70	)		6			-			(64	)
Expenses related to securities litigation		-			-			(207	)		(207	)
Acquisition expenses		(1	)		-			-			(1	)
Expenses related to OIG investigation		(997	)		-			-			(997	)
Total	$	(1,068	)	$	6		$	(5,767	)	$	(6,829	)

-25-

Unaudited Consolidating Summary and Reconciliation of Adjusted EBITDA

Chemed Corporation and Subsidiary Companies
(in thousands)													Chemed
For the three months ended September 30, 2015	VITAS				Roto-Rooter				Corporate				Consolidated

Net income/(loss)		$	25,723			$	10,961			$	(7,851	)		$	28,833
Add/(deduct):
Interest expense			54				80				774				908
Income taxes			15,613				6,550				(4,131	)			18,032
Depreciation			4,631				3,300				144				8,075
Amortization			186				172				379				737
EBITDA			46,207				21,063				(10,685	)			56,585
Add/(deduct):
Intercompany interest expense/(income)			(1,979	)			(858	)			2,837				-
Interest income			(68	)			(9	)			-				(77	)
Expenses related to OIG investigation			1,151				-				-				1,151
Acquisition expenses			-				30				-				30
Advertising cost adjustment			-				(456	)			-				(456	)
Stock option expense			-				-				813				813
Long-term incentive compensation			-				-				1,364				1,364
Adjusted EBITDA		$	45,311			$	19,770			$	(5,671	)		$	59,410

													Chemed
For the three months ended September 30, 2014	VITAS				Roto-Rooter				Corporate				Consolidated

Net income/(loss)		$	21,593			$	9,848			$	(6,856	)		$	24,585
Add/(deduct):
Interest expense			55				87				838				980
Income taxes			13,143				5,920				(3,712	)			15,351
Depreciation			4,530				2,772				148				7,450
Amortization			205				114				398				717
EBITDA			39,526				18,741				(9,184	)			49,083
Add/(deduct):
Intercompany interest expense/(income)			(1,660	)			(760	)			2,420				-
Interest income			23				(9	)			(1	)			13
Expenses related to OIG investigation			450				-				-				450
Advertising cost adjustment			-				(483	)			-				(483	)
Expenses related to litigation settlements			-				(234	)			-				(234	)
Long-term incentive compensation			-				-				1,002				1,002
Stock option expense			-				-				977				977
Expenses related to securities litigation			-				-				138				138
Adjusted EBITDA		$	38,339			$	17,255			$	(4,648	)		$	50,946

-26-

Unaudited Consolidating Summary and Reconciliation of Adjusted EBITDA

Chemed Corporation and Subsidiary Companies
(in thousands)													Chemed
For the nine months ended September 30, 2015	VITAS				Roto-Rooter				Corporate				Consolidated

Net income/(loss)		$	66,839			$	35,122			$	(21,616	)		$	80,345
Add/(deduct):
Interest expense			164				274				2,408				2,846
Income taxes			41,230				21,561				(11,939	)			50,852
Depreciation			14,141				9,598				450				24,189
Amortization			523				408				964				1,895
EBITDA			122,897				66,963				(29,733	)			160,127
Add/(deduct):
Intercompany interest expense/(income)			(5,461	)			(2,501	)			7,962				-
Interest income			(179	)			(27	)			(1	)			(207	)
Expenses related to OIG investigation			3,837				-				-				3,837
Acquisition expenses			-				161				-				161
Expenses related to litigation settlements			-				5				-				5
Advertising cost adjustment			-				(1,367	)			-				(1,367	)
Stock option expense			-				-				3,600				3,600
Long-term incentive compensation			-				-				3,755				3,755
Expenses related to securities litigation			-				-				37				37
Adjusted EBITDA		$	121,094			$	63,234			$	(14,380	)		$	169,948

													Chemed
For the nine months ended September 30, 2014	VITAS				Roto-Rooter				Corporate				Consolidated

Net income/(loss)		$	60,645			$	30,599			$	(21,722	)		$	69,522
Add/(deduct):
Interest expense			167				295				6,762				7,224
Income taxes			37,161				18,728				(11,976	)			43,913
Depreciation			13,709				7,732				430				21,871
Amortization			829				397				1,235				2,461
EBITDA			112,511				57,751				(25,271	)			144,991
Add/(deduct):
Intercompany interest expense/(income)			(4,520	)			(2,090	)			6,610				-
Interest income			43				(28	)			(10	)			5
Expenses related to OIG investigation			1,608				-				-				1,608
Acquisition expenses			1				-				-				1
Advertising cost adjustment			-				(1,623	)			-				(1,623	)
Expenses related to litigation settlements			113				(9	)			-				104
Long-term incentive compensation			-				-				1,988				1,988
Stock option expense			-				-				3,430				3,430
Expenses related to securities litigation			-				-				327				327
Adjusted EBITDA		$	109,756			$	54,001			$	(12,926	)		$	150,831

-27-

CHEMED CORPORATION AND SUBSIDIARY COMPANIES
RECONCILIATION OF ADJUSTED NET INCOME
(in thousands, except per share data)(unaudited)

	Three Months Ended September 30,					Nine Months Ended September 30,
	2015		2014			2015		2014
Net income as reported	$	28,833	$	24,585		$	80,345	$	69,522

Add/(deduct) after-tax cost of:
Stock option expense		509		615			2,268		2,159
Expenses of OIG investigation		711		279			2,369		997
Long-term incentive compensation		863		634			2,375		1,258
Litigation settlements		-		-			23		-
Net expense/(recoveries) related to litigation settlements		-		(143	)		3		64
Expenses related to securities settlements		-		88			-		207
Additional interest expense resulting from the change in accounting
for the conversion feature of the convertible notes		-		-			-		2,143
Acquisition expenses		18		-			98		1
Adjusted net income	$	30,934	$	26,058		$	87,481	$	76,351

Diluted Earnings Per Share As Reported
Net income	$	1.65	$	1.39		$	4.61	$	3.87
Average number of shares outstanding		17,422		17,627			17,430		17,968

Adjusted Diluted Earnings Per Share
Adjusted net income	$	1.78	$	1.48		$	5.02	$	4.28
Adjusted average number of shares outstanding*		17,422		17,627			17,430		17,833


* Adjusted diluted average shares outstanding excludes the estimated dilutive impact of the Convertible Notes prior to conversion of these Notes on May 15, 2014 (121,000 shares for the three months ended June 30, 2014 and 202,000 shares for the six months ended June 30, 2014) as this impact was entirely offset upon the exercise of the note hedges on May 15, 2014.

-28-

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

	Three Months Ended September 30,						Nine Months Ended September 30,
OPERATING STATISTICS	2015			2014			2015			2014
Net revenue ($000)
Homecare	$	222,952		$	204,965		$	640,867		$	600,780
Inpatient		24,271			25,012			76,485			77,037
Continuous care		37,785			37,907			113,564			113,801
Total before Medicare cap allowance	$	285,008		$	267,884		$	830,916		$	791,618
Medicare cap allowance		-			(2,500	)		165			(1,796	)
Total	$	285,008		$	265,384		$	831,081		$	789,822
Net revenue as a percent of total before Medicare cap allowances
Homecare		78.2	%		76.5	%		77.1	%		75.9	%
Inpatient		8.5			9.3			9.2			9.7
Continuous care		13.3			14.2			13.7			14.4
Total before Medicare cap allowance		100.0			100.0			100.0			100.0
Medicare cap allowance		-			(0.9	)		-			(0.2	)
Total		100.0	%		99.1	%		100.0	%		99.8	%
Average daily census (days)
Homecare		11,607			10,662			11,259			10,562
Nursing home		3,150			2,999			3,026			2,940
Routine homecare		14,757			13,661			14,285			13,502
Inpatient		404			417			424			429
Continuous care		561			561			571			568
Total		15,722			14,639			15,280			14,499
Total Admissions		16,131			15,653			50,082			47,777
Total Discharges		15,949			15,460			48,979			47,139
Average length of stay (days)		78.6			83.7			78.9			82.4
Median length of stay (days)		16.0			15.0			15.0			15.0
ADC by major diagnosis
Cerebro		28.8	%		18.5	%		28.6	%		15.1	%
Neurological		22.9			32.7			23.3			35.0
Cancer		16.6			17.3			16.7			17.4
Cardio		17.4			17.6			17.5			16.6
Respiratory		7.9			8.0			7.9			7.9
Other		6.4			5.9			6.0			8.0
Total		100.0	%		100.0	%		100.0	%		100.0	%
Admissions by major diagnosis
Cerebro		18.7			13.5	%		18.8	%		9.3	%
Neurological		12.5			18.2			12.3			20.6
Cancer		33.3			34.0			32.1			33.3
Cardio		14.5			15.2			15.3			14.8
Respiratory		9.2			9.1			10.0			9.5
Other		11.8			10.0			11.5			12.5
Total		100.0	%		100.0	%		100.0	%		100.0	%
Direct patient care margins
Routine homecare		53.7	%		53.8	%		52.9	%		53.4	%
Inpatient		3.8			4.9			6.1			5.4
Continuous care		15.7			17.4			16.1			17.2
Homecare margin drivers (dollars per patient day)
Labor costs	$	54.92		$	53.65		$	56.14		$	54.31
Drug costs		6.64			6.64			6.70			7.04
Home medical equipment		6.66			6.68			6.55			6.69
Medical supplies		2.81			3.22			2.93			3.20
Inpatient margin drivers (dollars per patient day)
Labor costs	$	355.30		$	345.18		$	347.52		$	344.05
Continuous care margin drivers (dollars per patient day)
Labor costs	$	596.39		$	584.99		$	591.26		$	586.60
Bad debt expense as a percent of revenues		1.0	%		1.0	%		2.0	%		1.0	%
Accounts receivable -- Days of revenue outstanding- excluding unapplied Medicare payments		38.1			38.1		n.a			n.a
Accounts receivable -- Days of revenue outstanding- including unapplied Medicare payments		32.3			36.3		n.a			n.a

-29-

Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995 Regarding Forward-Looking Information

Certain statements contained in this report 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. These forward-looking statements are based on current expectations and assumptions and involve various known and unknown risks, uncertainties, contingencies and other factors, which could cause Chemed’s actual results to differ from those expressed in such forward-looking statements. Variances in any or all of the risks, uncertainties, contingencies, and other factors from our assumptions could cause actual results to differ materially from these forward-looking statements and trends. In addition, our ability to deal with the unknown outcomes of these events, many of which are beyond our control, may affect the reliability of projections and other financial matters. Investors are cautioned that such forward-looking statements are subject to inherent risk and there are no assurances that the matters contained in such statements will be achieved. Chemed does not undertake and specifically disclaims any obligation to publicly update or revise any forward-looking statements, whether as a result of a new information, future events or otherwise.

Item 3. Quantitative and Qualitative Disclosures about Market Risk

The Company’s primary market risk exposure relates to interest rate risk exposure through its variable interest line of credit. At September 30, 2015, the Company had $138.1 million of variable rate debt outstanding. For each $10 million dollars borrowed under the credit facility, an increase or decrease of 100 basis points (1% point), increases or decreases the Company’s annual interest expense by $100,000.

The Company continually evaluates this interest rate exposure and periodically weighs the cost versus the benefit of fixing the variable interest rates through a variety of hedging techniques.

Item 4. Controls and Procedures

We carried out an evaluation, under the supervision of our President and Chief Executive Officer and with the participation of the Executive Vice President and Chief Financial Officer and the Vice President and Controller, of the effectiveness of the design and operation of our disclosure controls and procedures as of the end of the period covered by this report. Based on that evaluation, the President and Chief Executive Officer, Executive Vice President and Chief Financial Officer and Vice President and Controller have concluded that our disclosure controls and procedures were effective as of the end of the period covered by this report. There has been no change in our internal control over financial reporting that occurred during the quarter covered by this report that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting.

PART II. OTHER INFORMATION

Item 1. Legal Proceedings

For information regarding the Company’s legal proceedings, see note 10, Legal and Regulatory Matters, under Part I, Item I of this Quarterly Report on Form 10-Q.

Item 1A. Risk Factors

There have been no material changes from the risk factors previously disclosed in the Company’s most recent Annual Report on Form 10-K.

-30-

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

Item 2(c). Purchases of Equity Securities by Issuer and Affiliated Purchasers

The following table shows the activity related to our share repurchase program for the first nine months of 2015:

	Total Number		Weighted Average		Cumulative Shares		Dollar Amount
	of Shares		Price Paid Per		Repurchased Under		Remaining Under
	Repurchased		Share		the Program		The Program

February 2011 Program
January 1 through January 31, 2015		-	$	-		6,074,819	$	11,808,785
February 1 through February 28, 2015		-		-		6,074,819		11,808,785
March 1 through March 31, 2015		-		-		6,074,819	$	111,808,785

First Quarter Total		-	$	-

April 1 through April 30, 2015		31,239	$	116.66		6,106,058	$	108,163,534
May 31 through May 31, 2015		218,761		119.38		6,324,819		82,047,193
June 1 through June 30, 2015		-		-		6,324,819	$	82,047,193

Second Quarter Total		250,000	$	119.05

July 1 through July 31, 2015		-	$	-		6,324,819	$	82,047,193
August 1 through August 31, 2015		50,000		138.40		6,374,819		75,127,293
September 1 through September 30, 2015		85,765		131.87		6,460,584	$	63,817,207

Third Quarter Total		135,765	$	134.28

On March 13, 2015 our Board of Directors authorized an additional $100 million under the February 2011 Repurchase Program.

Item 3. Defaults Upon Senior Securities

None

Item 4. Mine Safety Disclosures

None

Item 5. Other Information

None

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Item 6. Exhibits

Exhibit No.		Description

31.1		Certification by Kevin J. McNamara pursuant to Rule 13a-14(a)/15d-14(a) of the Exchange Act of 1934.

31.2		Certification by David P. Williams pursuant to Rule 13a-14(a)/15d-14(a) of the Exchange Act of 1934.

31.3		Certification by Arthur V. Tucker, Jr. pursuant to Rule 13a-14(a)/15d-14(a) of the Exchange Act of 1934.

32.1		Certification by Kevin J. McNamara pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

32.2		Certification by David P. Williams pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

32.3		Certification by Arthur V. Tucker, Jr. pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

101.INS		XBRL Instance Document

101.SCH		XBRL Taxonomy Extension Schema

101.CAL		XBRL Taxonomy Extension Calculation Linkbase
101.DEF		XBRL Taxonomy Extension Definition Linkbase
101.LAB		XBRL Taxonomy Extension Label Linkbase

101.PRE		XBRL Taxonomy Extension Presentation Linkbase

SIGNATURES

Pursuant to the requirements of the Securities and Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

			Chemed Corporation
			(Registrant)


Dated:	October 30, 2015	By:	/s/ Kevin J. McNamara
			Kevin J. McNamara
			(President and Chief Executive Officer)


Dated:	October 30, 2015	By:	/s/ David P. Williams
			David P. Williams
			(Executive Vice President and Chief Financial Officer)


Dated:	October 30, 2015	By:	/s/ Arthur V. Tucker, Jr.
			Arthur V. Tucker, Jr.
			(Vice President and Controller)

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