EX-99 2 a5466892ex99.txt EXHIBIT 99 EXHIBIT 99 ================================================================================ CHEMED CORPORATION AND SUBSIDIARY COMPANIES Index Page No. -------- PART I. FINANCIAL INFORMATION: Item 1. Financial Statements Unaudited Consolidated Balance Sheet - March 31, 2007 and December 31, 2006 2 Unaudited Consolidated Statement of Income - Three months ended March 31, 2007 and 2006 3 Unaudited Consolidated Statement of Cash Flows - Three months ended March 31, 2007 and 2006 4 Notes to Unaudited Financial Statements 5 1 Exhibit 99

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) March 31, December 31, 2007 2006 ------------- ------------- ASSETS Current assets Cash and cash equivalents $ 30,137 $ 29,274 Accounts receivable less allowances of $10,392 (2006 - $10,180) 85,211 93,086 Inventories 6,752 6,578 Current deferred income taxes 21,595 17,789 Current assets of discontinued operations - 5,418 Prepaid expenses and other current assets 9,110 9,968 ------------- ------------- Total current assets 152,805 162,113 Investments of deferred compensation plans held in trust 27,736 25,713 Note receivable 14,701 14,701 Properties and equipment, at cost, less accumulated depreciation of $80,233 (2006 - $77,107) 69,295 70,140 Identifiable intangible assets less accumulated amortization of $14,211 (2006 - $13,201) 68,205 69,215 Goodwill 435,040 435,050 Noncurrent assets of discontinued operations - 287 Other assets 16,194 16,068 ------------- ------------- Total Assets $ 783,976 $ 793,287 ============= ============= LIABILITIES Current liabilities Accounts payable $ 55,272 $ 49,744 Current portion of long-term debt 164 209 Income taxes 9,410 6,765 Accrued insurance 39,889 38,457 Accrued compensation 29,110 35,990 Current liabilities of discontinued operations - 12,215 Other current liabilities 26,653 22,684 ------------- ------------- Total current liabilities 160,498 166,064 Deferred income taxes 24,970 26,301 Long-term debt 150,235 150,331 Deferred compensation liabilities 27,157 25,514 Other liabilities 5,382 3,716 ------------- ------------- Total liabilities 368,242 371,926 ------------- ------------- STOCKHOLDERS' EQUITY Capital stock - authorized 80,000,000 shares $1 par; issued 29,035,918 shares (2006 - 28,849,918 shares) 29,036 28,850 Paid-in capital 260,641 252,639 Retained earnings 234,914 215,517 Treasury stock - 3,735,608 shares (2006 - 3,023,635 shares), at cost (111,293) (78,064) Deferred compensation payable in Company stock 2,436 2,419 ------------- ------------- Total Stockholders' Equity 415,734 421,361 ------------- ------------- Total Liabilities and Stockholders' Equity $ 783,976 $ 793,287 ============= =============

See accompanying notes to unaudited financial statements. 2 Exhibit 99

CHEMED CORPORATION AND SUBSIDIARY COMPANIES UNAUDITED CONSOLIDATED STATEMENT OF INCOME (in thousands, except per share data) Three Months Ended March 31, ----------------------------- 2007 2006 ------------- ------------- Continuing operations Service revenues and sales $ 270,439 $ 243,921 ------------- ------------- Cost of services provided and goods sold (excluding depreciation) 188,247 176,035 Selling, general and administrative expenses 48,070 38,454 Depreciation 4,715 4,132 Amortization 1,315 1,296 Other operating income (1,138) - ------------- ------------- Total costs and expenses 241,209 219,917 ------------- ------------- Income from operations 29,230 24,004 Interest expense (3,742) (5,345) Loss on extinguishment of debt - (430) Other income--net 869 1,495 ------------- ------------- Income before income taxes 26,357 19,724 Income taxes (10,136) (7,686) ------------- ------------- Income from continuing operations 16,221 12,038 Discontinued operations, net of income taxes - 177 ------------- ------------- Net income $ 16,221 $ 12,215 ============= ============= Earnings Per Share Income from continuing operations $ 0.63 $ 0.46 ============= ============= Net income $ 0.63 $ 0.47 ============= ============= Average number of shares outstanding 25,716 26,044 ============= ============= Diluted Earnings Per Share Income from continuing operations $ 0.62 $ 0.45 ============= ============= Net income $ 0.62 $ 0.46 ============= ============= Average number of shares outstanding 26,162 26,723 ============= ============= Cash Dividends Per Share $ 0.06 $ 0.06 ============= =============

See accompanying notes to unaudited financial statements. 3 Exhibit 99

CHEMED CORPORATION AND SUBSIDIARY COMPANIES UNAUDITED CONSOLIDATED STATEMENT OF CASH FLOWS (in thousands) Three Months Ended March 31, ------------------------------ 2007 2006 ------------- ------------- Cash Flows from Operating Activities Net income $ 16,221 $ 12,215 Adjustments to reconcile net income to net cash provided/ (used) by operating activities: Depreciation and amortization 6,030 5,428 Noncash long-term incentive compensation 4,719 - Provision for uncollectible accounts receivable 2,084 2,012 Amortization of debt issuance costs 455 444 Provision for deferred income taxes (345) (1,292) Write off of unamortized debt issuance costs - 430 Discontinued operations - (177) Changes in operating assets and liabilities, excluding amounts acquired in business combinations Decrease in accounts receivable 5,275 19,638 Increase in inventories (174) (225) Decrease in prepaid expenses and other current assets 858 901 Decrease in accounts payable and other current liabilities (9,091) (13,460) Increase in income taxes 9,538 8,704 Increase in other assets (2,102) (1,917) Increase in other liabilities 2,218 1,051 Excess tax benefit on share-based compensation (611) (3,289) Other uses (375) (49) ------------- ------------- Net cash provided by continuing operations 34,700 30,414 Net cash provided by discontinued operations - 2,326 ------------- ------------- Net cash provided by operating activities 34,700 32,740 ------------- ------------- Cash Flows from Investing Activities Capital expenditures (5,764) (3,852) Net uses from the sale of discontinued operations (3,876) (1,684) Proceeds from sales of property and equipment 2,975 65 Business combinations, net of cash acquired (62) (384) Other uses (299) (305) ------------- ------------- Net cash used by investing activities (7,026) (6,160) ------------- ------------- Cash Flows from Financing Activities Purchases of treasury stock (24,199) (2,318) Increase in cash overdrafts payable (1,608) 786 Dividends paid (1,555) (1,572) Excess tax benefit on share-based compensation 611 3,289 Repayment of long-term debt (141) (84,497) Issuance of capital stock, net of costs 130 2,360 Net increase in revolving line of credit - 44,000 Debt issuance costs - (150) Other sources/(uses) (49) 57 ------------- ------------- Net cash used by financing activities (26,811) (38,045) ------------- ------------- Increase/(Decrease) in Cash and Cash Equivalents 863 (11,465) Cash and cash equivalents at beginning of year 29,274 57,133 ------------- ------------- Cash and cash equivalents at end of period $ 30,137 $ 45,668 ============= =============

See accompanying notes to unaudited financial statements. 4 Exhibit 99 CHEMED CORPORATION AND SUBSIDIARY COMPANIES Notes to Unaudited 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 for complete financial statements. However, in our opinion, the financial statements presented herein contain all adjustments, consisting only of normal recurring adjustments, necessary to present 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 Consolidated Financial Statements and related notes included in our Annual Report on Form 10-K for the year ended December 31, 2006. Certain 2006 amounts have been reclassified to conform with current period presentation in the balance sheet and statement of income primarily related to the presentation of the discontinued operations of our Phoenix hospice program. 2. Capital Stock Transactions In July 2006, we announced a $50 million on-going stock repurchase program. Our previous stock repurchase program, approved in February 2000, had remaining authorization of $8 million. For the three months ended March 31, 2007 we repurchased 626,079 shares at a weighted average cost of $46.76 per share. There were no shares repurchased during the three months ended March 31, 2006. On May 15, 2006, our shareholders approved an amendment to our Certificate of Incorporation increasing the number of authorized shares of capital stock from 40 million shares to 80 million shares. 3. Revenue Recognition Both the VITAS segment and 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 caps, as described further 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. The Medicare cap measurement period is from September 29 through September 28 of the following year for admissions and from November 1 through October 31 of the following year for revenue. As of the date of this filing for the 2007 measurement period, no programs have a required Medicare billing reduction. Our current estimates for the projected full year 2007 measurement period anticipate no programs with a Medicare cap billing limitation. Therefore, no revenue reduction for Medicare cap has been recorded for the quarter ended March 31, 2007. Additionally, we recorded approximately $472,000 in November and December 2006 related to estimated billing limitations for the 2007 measurement period. That amount was reversed during the first quarter of 2007. 5 Exhibit 99 4. Segments Service revenues and sales and aftertax earnings by business segment are as follows (in thousands): Three months ended March 31, ------------------------------ 2007 2006 -------------- -------------- Service Revenues and Sales -------------------------- VITAS $ 184,049 $ 166,057 Roto-Rooter 86,390 77,864 -------------- -------------- Total $ 270,439 $ 243,921 ============== ============== Aftertax Earnings ----------------- VITAS $ 14,987 $ 10,680 Roto-Rooter 9,486 7,201 -------------- -------------- Total 24,473 17,881 Corporate (8,252) (5,843) Discontinued operations - 177 -------------- -------------- Net income $ 16,221 $ 12,215 ============== ============== 5. Patient Care Notes Receivable We have notes receivable of $14.7 million from Patient Care, Inc. related to our sale of this subsidiary in 2002. In February 2007, the parties amended the terms of the promissory notes receivable. The amended notes are due October 2009. The interest on the notes receivable is the higher of Patient Care's current floating rate plus 2% or 11.5% per year. Interest payments are due quarterly. As of March 31, 2007, Patient Care is current on all interest payments related to these notes. 6. Earnings per Share Earnings per share are computed using the weighted average number of shares of capital stock outstanding. Earnings and diluted earnings per share for 2007 and 2006 are computed as follows (in thousands, except per share data):

Income from Continuing Operations Net Income -------------------------------------- -------------------------------------- For the Three Months Ended Earnings Earnings March 31, Income Shares per Share Income Shares per Share ------------------------------- ------------ ------------ ------------ ------------ ------------ ------------ 2007 Earnings $ 16,221 25,716 $ 0.63 $ 16,221 25,716 $ 0.63 ============ ============ Dilutive stock options - 386 - 386 Nonvested stock awards - 60 - 60 ------------ ------------ ------------ ------------ Diluted earnings $ 16,221 26,162 $ 0.62 $ 16,221 26,162 $ 0.62 ============ ============ ============ ============ ============ ============ 2006 Earnings $ 12,038 26,044 $ 0.46 $ 12,215 26,044 $ 0.47 ============ ============ Dilutive stock options - 590 - 590 Nonvested stock awards - 89 - 89 ------------ ------------ ------------ ------------ Diluted earnings $ 12,038 26,723 $ 0.45 $ 12,215 26,723 $ 0.46 ============ ============ ============ ============ ============ ============

7. Other Operating Income During the first quarter of 2007, we completed the sale of Roto-Rooter's call center in Florida. The proceeds from the sale were approximately $3.0 million, which resulted in a pretax gain of $1.1 million. The gain was recorded in other income from operations in the accompanying consolidated statement of income. 6 Exhibit 99 8. Other Income -- Net Other income -- net comprises the following (in thousands): Three months ended March 31, ------------------------------ 2007 2006 -------------- -------------- Interest income $ 767 $ 973 (Loss)/gain on trading investments of employee benefit trust 212 493 Other - net (110) 29 -------------- -------------- Total other income $ 869 $ 1,495 ============== ============== 9. Other Current Liabilities Other current liabilities as of March 31, 2007 and December 31, 2006 consist of the following (in thousands): 2007 2006 -------------- -------------- Accrued legal settlements $ 1,859 $ 1,889 Accrued divestiture expenses 2,618 2,612 Accrued Medicare cap estimate 9,503 3,373 Other 12,673 14,810 -------------- -------------- Total other current liabilities $ 26,653 $ 22,684 ============== ============== Accrued Medicare cap as of March 31, 2007 includes $6.6 million related to our Phoenix program that was sold in November 2006. This amount was recorded in current liabilities from discontinued operations as of December 31, 2006. 10. 2002 Executive Long-Term Incentive Plan In February 2007, we met the cumulative earnings target specified in the 2002 Long-Term Incentive Plan (LTIP) and on March 9, 2007, the Compensation/Incentive Committee of the Board of Directors approved a stock grant of 100,000 shares and the related allocation to participants. The pre-tax cost of the stock grant was $5.4 million and is included in selling, general and administrative expenses in the accompanying consolidated statement of income. No market price components of the LTIP were reached during the three months ended March 31, 2007 or 2006. 11. Long-term Debt and Extinguishment of Debt On March 31, 2006, we repaid in full our $84.4 million term loan with JPMorgan Chase Bank. The term loan was paid with $40.4 million of cash on hand and the remainder with a draw on our revolving credit facility. At that time, we also amended the $175 million revolving credit facility with JPMorgan Chase Bank to reduce the commitment and annual fees and to reduce the floating interest rate by approximately 50 basis points. The interest rate of the amended revolving credit agreement is LIBOR plus 1.25%. The amended revolving credit facility also includes an "accordion" feature that allows us the opportunity to expand the facility by $50 million. In connection with the repayment of the term loan, we recorded a write-off of unamortized debt issuance costs of $430,000. We are in compliance with all debt covenants as of March 31, 2007. We have issued $33.3 million in standby letters of credit as of March 31, 2007 mainly for insurance purposes. Issued letters of credit reduce our available credit under the revolving credit agreement. As of March 31, 2007, the Company has approximately $141.7 million of unused lines of credit available and eligible to be drawn down under its revolving credit facility, excluding the accordion feature. See Note 19 for discussion of significant changes to our capitalization structure subsequent to March 31, 2007. 12. Loans Receivable from Independent Contractors The Roto-Rooter segment sublicenses with approximately sixty-one independent contractors to operate certain plumbing repair and drain cleaning businesses in lesser-populated areas of the United States and Canada. As of March 31, 2007, we had notes receivable from its independent contractors totaling $1.8 million (December 31, 2006-$1.9 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 5% to 8% per annum and the remaining terms of the loans range from two months to 5.4 years at March 31, 2007. During the quarter ended March 31, 2007, we recorded revenues of $5.4 million (2006-$5.0 million) and pretax profits of $2.5 million (2006-$2.0 million) from our independent contractors. 7 Exhibit 99 We have adopted the provisions of Financial Accounting Standards Board ("FASB") Interpretation No. 46R "Consolidation of Variable Interest Entities--an interpretation of Accounting Research Bulletin No. 51 (revised)" ("FIN 46R") relative to our contractual relationships with the independent contractors. FIN 46R requires the primary beneficiary of a Variable Interest Entity ("VIE") to consolidate the accounts of the VIE. We have evaluated our relationships with our independent contractors based upon guidance provided in FIN 46R and have concluded that some of the contractors who have loans payable to us may be VIE's. We believe consolidation, if required, of the accounts of any VIE's for which we might be the primary beneficiary would not materially impact our financial position, results of operations or cash flows. 13. Pension and Retirement Plans All of the Company's plans that provide retirement and similar benefits are defined contribution plans. Expenses for the Company's pension and profit-sharing plans, ESOP's, excess benefit plans and other similar plans were $3.6 million and $2.4 million for the three months ended March 31, 2007 and 2006, respectively. 14. Litigation Like other large California employers, our VITAS subsidiary faces allegations of purported class-wide wage and hour violations. It was party to a class action lawsuit filed in the Superior Court of California, Los Angeles County, in April of 2004 by Ann Marie Costa, Ana Jimenez, Mariea Ruteaya and Gracetta Wilson ("Costa"). This case alleged failure to pay overtime wages for hours worked "off the clock" on administrative tasks, including voicemail retrieval, time entry, travel to and from work, and pager response. This case also alleged VITAS failed to provide meal and break periods to a purported class of California nurses, home health aides and licensed clinical social workers. The case also sought payment of penalties, interest, and Plaintiffs' attorney fees. VITAS contested these allegations. During 2006, we reached a tentative settlement and on June 26, 2006, the court granted final approval of the settlement ($19.9 million). VITAS is party to a class action lawsuit filed in the Superior Court of California, Los Angeles County, in September 2006 by Bernadette Santos, Keith Knoche and Joyce White ("Santos"). This case, filed by the Costa case Plaintiffs' counsel, makes similar allegations of failure to pay overtime and failure to provide meal and rest periods to a purported class of California admissions nurses, chaplains and sales representatives. The case likewise seeks payment of penalties, interest and Plaintiffs' attorney fees. VITAS contests these allegations. The lawsuit is in its early stage and we are unable to estimate our potential liability, if any, with respect to these allegations. Regardless of outcome, defense of litigation adversely affects us through defense costs, diversion of our time and related publicity. In the normal course of business, we are a party to various claims and legal proceedings. We record a reserve for these matters when an adverse outcome is probable and the amount of the potential liability is reasonably estimable. 15. OIG Investigation On April 7, 2005, we announced the Office of Inspector General ("OIG") for the Department of Health and Human Services served VITAS with civil subpoenas relating to VITAS' alleged failure to appropriately bill Medicare and Medicaid for hospice services. As part of this investigation, the OIG selected medical records for 320 past and current patients from VITAS' three largest programs for review. It also sought policies and procedures dating back to 1998 covering admissions, certifications, recertifications and discharges. During the third quarter of 2005 and again in May 2006, the OIG requested additional information from us. A qui tam complaint has been filed in U.S. District Court for the Southern District of Florida. We are conferring with the U.S. Attorney regarding our defenses to the complaint allegations. The U.S. Attorney has not decided whether to intervene in the qui tam action. We have incurred pretax expense related to complying with OIG requests and defending the litigation of $66,000 and $132,000 for the three months ended March 31, 2007 and 2006, respectively. The government continues to investigate the complaint's allegations, against which VITAS is presently defending. We are unable to predict the outcome of this matter or the impact, if any, that the investigation may have on the business, results of operations, liquidity or capital resources. Regardless of outcome, responding to the subpoenas and defending the litigation can adversely affect us through defense costs, diversion of our time and related publicity. 8 Exhibit 99 16. Related Party Agreement In October 2004, VITAS entered into a pharmacy services agreement ("Agreement") with Omnicare, Inc. ("OCR") whereby OCR will provide specified pharmacy services for VITAS and its hospice patients in geographical areas served by both VITAS and OCR. The Agreement has an initial term of three years that renews automatically thereafter for one-year terms. Either party may cancel the Agreement at the end of any term by giving written notice at least 90 days prior to the end of said term. In June 2004, VITAS entered into a pharmacy services agreement with excelleRx. The agreement has a one-year term and automatically renews unless either party provides a 90-day written termination notice. Subsequent to June 2004, OCR acquired excelleRx. Under both agreements, VITAS made purchases of $8.2 million and $6.7 for three months ended March 31, 2007 and 2006, respectively and has accounts payable of $3.6 million at March 31, 2007. Mr. E. L. Hutton is non-executive Chairman of the Board and a director of the Company and OCR. Mr. Joel F. Gemunder, President and Chief Executive Officer of OCR, Mr. Charles H. Erhart, Jr. and Ms. Sandra Laney are directors of both OCR and the Company. Mr. Kevin J. McNamara, President, Chief Executive Officer and a director of the Company, is a director emeritus of OCR. We believe that the terms of these agreements are no less favorable to VITAS than we could negotiate with an unrelated party. 17. Cash Overdrafts Payable Included in accounts payable at March 31, 2007 are cash overdrafts payable of $9.0 million (December 31, 2006 - $10.6 million). 18. Uncertain Tax Positions On January 1, 2007, we adopted FASB Interpretation No. 48 (FIN 48), "Accounting for Uncertainty in Income Taxes - an Interpretation of FASB Statement 109", which prescribes a comprehensive model for how to recognize, measure, present and disclose in financial statements uncertain tax positions taken or expected to be taken on a tax return. Upon adoption of FIN 48, the financial statements reflect expected future tax consequences of such uncertain positions assuming the taxing authorities' full knowledge of the position and all relevant facts. FIN 48 also revises disclosure requirements and introduces an annual, tabular roll-forward of the unrecognized tax benefits. The cumulative effect upon adoption of FIN 48 was to reduce our accrual for uncertain tax positions by approximately $4.7 million, which has been recorded in retained earnings as of January 1, 2007 in the accompanying consolidated balance sheet. After adoption, we had approximately $1.2 million in unrecognized tax benefits. The majority of this amount would affect our effective tax rate, if recognized in a future period. The years ended December 31, 2003 and forward remain open for review for Federal income tax purposes at Chemed and Roto-Rooter. For VITAS, fiscal years beginning after February 24, 2004 (the date of acquisition) remain open for review for Federal income tax purposes. The earliest open year relating to any of our material state jurisdictions is the fiscal year ended December 31, 2002. During the next twelve months, we anticipate that the amount of unrecognized tax benefits will decrease by approximately $150,000 to $200,000 in total due to normal quarterly provisions and releases upon expiration of certain statutes of limitation. As permitted by FIN 48, we reclassified interest related to our accrual for uncertain tax positions to separate interest accounts. We believe this change in accounting method is preferable as it more accurately classifies the impact of interest in our consolidated balance sheet and consolidated statement of income. As of March 31, 2007, we have approximately $166,000 accrued in interest related to uncertain tax positions. These accruals are included in other current liabilities in the accompanying consolidated balance sheet. For the three months ended March 31, 2007, we have recorded approximately $14,000 for interest related to uncertain tax positions in interest expense in the accompanying consolidated statement of income. 19. Subsequent Events On April 4, 2007, we issued a contingent bond redemption notice regarding the $150 million, 8 3/4% senior notes due in 2011. The redemption is being made pursuant to the terms of the indenture dated February 24, 2004 at a redemption price of 104.375% of the principal amount plus accrued but unpaid interest. This redemption notice was contingent upon the completion of the new credit facility discussed in the next paragraph. The senior notes are redeemable on or after May 4, 2007. We expect to write-off approximately $4.8 million in deferred debt costs related to the senior notes. We will also incur a $6.5 million charge related to the 4.375% premium to be paid upon redemption. These amounts will be recorded in the second quarter of 2007. On May 2, 2007, we entered into a new senior secured credit facility with JPMorgan Chase Bank (the "2007 Facility") to replace our existing credit facility. The 2007 Facility includes a $100 million term loan, a $175 million revolving credit facility and a $100 million expansion feature. The facility has a 5-year maturity with principal payments on the term loan due quarterly and on the revolving credit facility due at maturity. Interest is payable quarterly at a floating rate equal to our choice of various indexes plus a specified margin based on our leverage ratio. The interest rate at the inception of the agreement is LIBOR plus 0.875%. In connection with replacing our existing credit facility, we will write-off approximately $2.3 million in the second quarter of 2007 related to deferred debt costs. 9 Exhibit 99 On April 26, 2007, our Board of Directors authorized a $150 million stock repurchase program. Our $50 million stock repurchase program, authorized in July 2006, has approximately $13.6 million remaining as of March 31, 2007. 20. Recent Accounting Statements In February 2007, the FASB issued Statement No. 159, "The Fair Value Option for Financial Assets and Financial Liabilities" ("SFAS 159"), which permits an entity to measure certain financial assets and financial liabilities at fair value. Entities that elect the fair value option will report unrealized gains and losses in earnings at each reporting date. The fair value option may be elected on an instrument-by-instrument basis, with a few exceptions, as long as it is applied to the entire instrument. The fair value election is irrevocable unless a new election date occurs. SFAS 159 is effective as of the beginning of the first fiscal year that begins after November 15, 2007. We are currently evaluating the impact SFAS 159 will have on our financial condition and results of operations, if any. In September 2006, the FASB issued Statement No. 157, "Fair Value Measurements" ("SFAS 157"), which addresses how companies should measure fair value when they are required to use a fair value measure for recognition or disclosure purposes under generally accepted accounting principles (GAAP). It sets a common definition of fair value to be used throughout GAAP. The new standard is designed to make the measurement of fair value more consistent and comparable and improve disclosures about those measures. This statement is effective for financial statements issued for fiscal years beginning after November 15, 2007. We are currently evaluating the impact SFAS 157 will have on our financial condition and results of operations. 10 Exhibit 99 21. Guarantor Subsidiaries -Subsequent Event Our 1.875% Senior Convertible Notes issued on May 14, 2007, as described in our Form 10-Q filing for the quarter ended June 30, 2007, are fully and unconditionally guaranteed on an unsecured, joint and severally liable basis by certain of our 100% owned subsidiaries. The equity method has been used with respect to the parent company's (Chemed) investment in subsidiaries. No consolidating adjustments column is presented for the condensed consolidating statement of cash flow since there were no significant consolidating adjustments for the periods presented. The following unaudited, condensed, consolidating financial data presents the composition of the parent company, the guarantor subsidiaries and the non-guarantor subsidiaries as of March 31, 2007 and December 31, 2006 and for the periods ended March 31, 2007 and 2006 (in thousands):

Condensed Consolidating Balance Sheet ------------------------------------- Non- March 31, 2007 Guarantor Guarantor Consolidating -------------- Parent Subsidiaries Subsidiaries Adjustments Consolidated ------------- ------------- ------------- ------------- ------------- ASSETS Cash and cash equivalents $ 25,767 $ (1,543) $ 5,913 $ - $ 30,137 Accounts receivable, less allowances 1,891 82,744 576 - 85,211 Intercompany receivables 59,884 - - (59,884) - Inventories - 6,174 578 - 6,752 Current deferred income taxes 1,504 19,905 186 - 21,595 Prepaid expenses and other current assets 798 8,227 85 - 9,110 ------------- ------------- ------------- ------------- ------------- Total current assets 89,844 115,507 7,338 (59,884) 152,805 ------------- ------------- ------------- ------------- ------------- Investments of deferred compensation plans held in trust 12,918 14,818 - - 27,736 Note receivable 14,701 - - - 14,701 Properties and equipment, at cost, less accumulated depreciation 4,548 62,961 1,786 - 69,295 Identifiable intangible assets less accumulated amortization - 68,204 1 - 68,205 Goodwill - 430,681 4,359 - 435,040 Other assets 12,833 2,654 707 - 16,194 Investments in subsidiaries 454,592 9,415 - (464,007) - ------------- ------------- ------------- ------------- ------------- Total assets $ 589,436 $ 704,240 $ 14,191 $ (523,891) $ 783,976 ============= ============= ============= ============= ============= LIABILITIES AND STOCKHOLDERS' EQUITY Accounts payable $ 6,244 $ 48,531 $ 497 $ - $ 55,272 Intercompany payables - 57,829 2,055 (59,884) - Current portion of long-term debt - 164 - - 164 Income taxes (1,884) 10,426 868 - 9,410 Accrued insurance 2,824 37,065 - - 39,889 Accrued salaries and wages 1,222 27,336 552 - 29,110 Other current liabilities 6,351 20,074 228 - 26,653 Deferred income taxes (7,381) 31,945 406 - 24,970 Long-term debt 150,000 235 - - 150,235 Deferred compensation liabilities 13,048 14,109 - - 27,157 Other liabilities 3,278 1,934 170 - 5,382 Stockholders' equity 415,734 454,592 9,415 (464,007) 415,734 ------------- ------------- ------------- ------------- ------------- Total liabilities and stockholders' equity $ 589,436 $ 704,240 $ 14,191 $ (523,891) $ 783,976 ============= ============= ============= ============= =============

11 Exhibit 99

Non- December 31, 2006 Guarantor Guarantor Consolidating ----------------- Parent Subsidiaries Subsidiaries Adjustments Consolidated ------------- ------------- ------------- ------------- ------------- ASSETS Cash and cash equivalents $ 25,258 $ (1,314) $ 5,330 $ - $ 29,274 Accounts receivable, less allowances 1,547 91,065 474 - 93,086 Intercompany receivables 84,784 - - (84,784) - Inventories - 6,169 409 - 6,578 Current deferred income taxes (117) 17,591 315 - 17,789 Current assets of discontinued operations - 5,418 - - 5,418 Prepaid expenses and other current assets 809 9,087 72 - 9,968 ------------- ------------- ------------- ------------- ------------- Total current assets 112,281 128,016 6,600 (84,784) 162,113 ------------- ------------- ------------- ------------- ------------- Investments of deferred compensation plans held in trust 12,214 13,499 - - 25,713 Note receivable 14,701 - - - 14,701 Properties and equipment, at cost, less accumulated depreciation 6,412 62,023 1,705 - 70,140 Identifiable intangible assets less accumulated amortization - 69,213 2 - 69,215 Goodwill - 430,671 4,379 - 435,050 Noncurrent assets of discontinued operations - 287 - - 287 Other assets 12,845 2,514 709 - 16,068 Investments in subsidiaries 430,399 8,628 - (439,027) - ------------- ------------- ------------- ------------- ------------- Total assets $ 588,852 $ 714,851 $ 13,395 $ (523,811) $ 793,287 ============= ============= ============= ============= ============= LIABILITIES AND STOCKHOLDERS' EQUITY Accounts payable $ (189) $ 49,502 $ 431 $ - $ 49,744 Intercompany payables - 84,036 748 (84,784) - Current portion of long-term debt - 209 - - 209 Income taxes (5,906) 11,680 991 - 6,765 Accrued insurance 2,938 35,519 - - 38,457 Accrued salaries and wages 2,530 32,731 729 - 35,990 Current liabilities of discontinued operations - 12,215 - - 12,215 Other current liabilities 9,568 11,715 1,401 - 22,684 Deferred income taxes (6,946) 32,780 467 - 26,301 Long-term debt 150,000 331 - - 150,331 Deferred compensation liabilities 12,247 13,267 - - 25,514 Other liabilities 3,249 467 - - 3,716 Stockholders' equity 421,361 430,399 8,628 (439,027) 421,361 ------------- ------------- ------------- ------------- ------------- Total liabilities and stockholders' equity $ 588,852 $ 714,851 $ 13,395 $ (523,811) $ 793,287 ============= ============= ============= ============= =============

12 Exhibit 99

Non- For the period ended March 31, 2007 Guarantor Guarantor Consolidating ----------------------------------- Parent Subsidiaries Subsidiaries Adjustments Consolidated ------------- ------------- ------------- ------------- ------------- Net sales and service revenues $ - $ 264,295 $ 6,144 $ - $ 270,439 ------------- ------------- ------------- ------------- ------------- Cost of services provided and goods sold - 185,105 3,142 - 188,247 Selling, general and administrative expenses 5,645 41,204 1,221 - 48,070 Depreciation 122 4,448 145 - 4,715 Amortization 305 1,010 - - 1,315 Other income - net (1,138) - - - (1,138) ------------- ------------- ------------- ------------- ------------- Total costs and expenses 4,934 231,767 4,508 - 241,209 ------------- ------------- ------------- ------------- ------------- Income/(loss) from operations (4,934) 32,528 1,636 - 29,230 Interest expense (3,623) (119) - - (3,742) Other income/(expense) - net 5,106 (4,284) 47 - 869 ------------- ------------- ------------- ------------- ------------- Income/(loss) before income taxes (3,451) 28,125 1,683 - 26,357 Income tax (provision)/ benefit 1,351 (10,789) (698) - (10,136) Equity in net income of subsidiaries 18,321 985 - (19,306) - ------------- ------------- ------------- ------------- ------------- Net income $ 16,221 $ 18,321 $ 985 $ (19,306) $ 16,221 ============= ============= ============= ============= =============

Non- For the period ended March 31, 2006 Guarantor Guarantor Consolidating ----------------------------------- Parent Subsidiaries Subsidiaries Adjustments Consolidated ------------- ------------- ------------- ------------- ------------- Continuing Operations Net sales and service revenues $ - $ 239,142 $ 4,779 $ - $ 243,921 ------------- ------------- ------------- ------------- ------------- Cost of services provided and goods sold - 173,581 2,454 - 176,035 Selling, general and administrative expenses 2,549 34,820 1,085 - 38,454 Depreciation 136 3,855 141 - 4,132 Amortization 292 1,003 1 - 1,296 ------------- ------------- ------------- ------------- ------------- Total costs and expenses 2,977 213,259 3,681 - 219,917 ------------- ------------- ------------- ------------- ------------- Income/(loss) from operations (2,977) 25,883 1,098 - 24,004 Interest expense (5,141) (184) (20) - (5,345) Loss on extinguishment of debt (430) - - - (430) Other income/(expense) - net 5,702 (4,222) 15 - 1,495 ------------- ------------- ------------- ------------- ------------- Income/(loss) before income taxes (2,846) 21,477 1,093 - 19,724 Income tax (provision)/ benefit 1,051 (8,260) (477) - (7,686) Equity in net income of subsidiaries 14,010 616 - (14,626) - ------------- ------------- ------------- ------------- ------------- Income from continuing operations 12,215 13,833 616 (14,626) 12,038 Discontinued Operations - 177 - - 177 ------------- ------------- ------------- ------------- ------------- Net income $ 12,215 $ 14,010 $ 616 $ (14,626) $ 12,215 ============= ============= ============= ============= =============

13 Exhibit 99

For the period ended March 31, 2007 ----------------------------------- Guarantor Non-Guarantor Parent Subsidiaries Subsidiaries Consolidated ------------- ------------- ------------- ------------- Cash Flow from Operating Activities: ------------------------------------- Net cash provided/(used) by operating activities $ (2,304) $ 37,437 $ (433) $ 34,700 ------------- ------------- ------------- ------------- Cash Flow from Investing Activities: ------------------------------------- Capital expenditures (68) (5,459) (237) (5,764) Business combinations, net of cash acquired - (62) - (62) Net payments from sale of discontinued operations (137) (3,739) - (3,876) Proceeds from sale of property and equipment 2,962 10 3 2,975 Other uses - net (232) (67) - (299) ------------- ------------- ------------- ------------- Net cash provided/ (used) by investing activities 2,525 (9,317) (234) (7,026) ------------- ------------- ------------- ------------- Cash Flow from Financing Activities: ------------------------------------- Increase/(decrease) in cash overdrafts payable 394 (2,002) - (1,608) Change in intercompany accounts 24,899 (26,206) 1,307 - Dividends paid to shareholders (1,555) - - (1,555) Purchases of treasury stock (24,199) - - (24,199) Proceeds from exercise of stock options 130 - - 130 Realized excess tax benefit on share based compensation 611 - - 611 Repayment of long-term debt - (141) - (141) Other sources and uses - net 8 - (57) (49) ------------- ------------- ------------- ------------- Net cash provided/ (used) by financing activities 288 (28,349) 1,250 (26,811) ------------- ------------- ------------- ------------- Net increase/(decrease) in cash and cash equivalents 509 (229) 583 863 Cash and cash equivalents at beginning of year 25,258 (1,314) 5,330 29,274 ------------- ------------- ------------- ------------- Cash and cash equivalents at end of period $ 25,767 $ (1,543) $ 5,913 $ 30,137 ============= ============= ============= =============

14 Exhibit 99

For the period ended March 31, 2006 ----------------------------------- Guarantor Non-Guarantor Parent Subsidiaries Subsidiaries Consolidated ------------- ------------- ------------- ------------- Cash Flow from Operating Activities: ------------------------------------- Net cash provided/(used) by operating activities $ (20,447) $ 52,636 $ 551 $ 32,740 ------------- ------------- ------------- ------------- Cash Flow from Investing Activities: ------------------------------------- Capital expenditures (51) (3,635) (166) (3,852) Business combinations, net of cash acquired - (384) - (384) Net payments from sale of discontinued operations (1,684) - - (1,684) Proceeds from sale of property and equipment 31 34 - 65 Other uses - net (157) (148) - (305) ------------- ------------- ------------- ------------- Net cash used by investing activities (1,861) (4,133) (166) (6,160) ------------- ------------- ------------- ------------- Cash Flow from Financing Activities: ------------------------------------- Increase/(decrease) in cash overdrafts payable (226) 1,012 - 786 Change in intercompany accounts 48,633 (48,680) 47 - Dividends paid to shareholders (1,572) - - (1,572) Purchases of treasury stock (2,318) - - (2,318) Proceeds from exercise of stock options 2,360 - - 2,360 Realized excess tax benefit on share based compensation 3,289 - - 3,289 Net increase in revolving credit facility 44,000 - - 44,000 Debt issuance costs (150) - - (150) Repayment of long-term debt (84,363) (134) - (84,497) Other sources - net 26 31 - 57 ------------- ------------- ------------- ------------- Net cash provided/ (used) by financing activities 9,679 (47,771) 47 (38,045) ------------- ------------- ------------- ------------- Net increase/(decrease) in cash and cash equivalents (12,629) 732 432 (11,465) Cash and cash equivalents at beginning of year 54,871 (1,419) 3,681 57,133 ------------- ------------- ------------- ------------- Cash and cash equivalents at end of period $ 42,242 $ (687) $ 4,113 $ 45,668 ============= ============= ============= =============

15 Exhibit 99 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: May 2, 2007 By: Kevin J. McNamara --------------------- --------------------------------------- Kevin J. McNamara (President and Chief Executive Officer) Dated: May 2, 2007 By: David P. Williams --------------------- --------------------------------------- David P. Williams (Vice President and Chief Financial Officer) Dated: May 2, 2007 By: Arthur V. Tucker, Jr. --------------------- --------------------------------------- Arthur V. Tucker, Jr. (Vice President and Controller) 16