Slide 1: Chemed Corporation
CHEMED CHEMED CORPORATION ROTO- Innovative ROOTE Hospice Care" S omens VITAS
Slide 2: Safe Harbor and Regulation G Statement
Safe Harbor and Regulation G Statement This presentation contains information about Chemed’s EBITDA, Adjusted EBITDA, EBIT, Adjusted EBIT, Adjusted Net Income and Adjusted Diluted EPS, which are not measures derived in accordance with GAAP and which exclude components that are important to understan
Slide 3: Important Information
Important Information Chemed filed with the SEC, on April 29, 2009, a definitive proxy statement in connection with its 2009 annual meeting, and is mailing the definitive proxy statement to its stockholders. Investors and security holders are urged to read the definitive proxy statement relating to
Slide 4: EPS and Stock Price History
EPS and Stock Price History (1) (1) Adjusted Diluted EPS; see Appendix at the back of this presentation for reconciliation from GAAP reported results to adjusted (non-GAAP) results (2) Adjusted for stock splits (2) Chemed has delivered strong and consistent EPS to stockholders since 2003, 53% 5-year
Slide 5: Chemed – Consolidated Summary of Operations
Chemed – Consolidated Summary of Operations For the years ended December 31, 2003 through 2008 (in thousands, except per share data) Adj. Diluted EPS is calculated by dividing Adj. Net Income by Diluted Average Shares Outstanding, and Diluted EPS is calculated by dividing Net Income by Diluted Avera
Slide 6: Consolidated Balance Sheet
Consolidated Balance Sheet Since Acquisition of VITAS in February 2004 Significantly reduced debt and leverage ratio February 2004 Debt of $335.9 million Debt/LTM Adjusted EBITDA = 4.5 March 2009 Debt of $159.2 million Debt/LTM Adjusted EBITDA = 0.95 Purchased $210.6 million of Chemed stock Annualiz
Slide 7: Chemed Operating Segments
Chemed Operating Segments
Slide 8: Chemed Corporation Revenue and Adjusted EBITDA
2008 2007 Chemed Corporation Revenue Chemed Adjusted EBITDA 14.1% Chemed Central Support 1.2% Roto-Rooter Central Support 8.3% Roto-Rooter COS 16.1% 5.9% VITAS Central Support 54.4% VITAS COS Roto-Rooter VITAS Chemed Adjusted EBITDA 14.7% Chemed Central Support 1.1% Roto-Rooter Central Support 8.6%
Slide 9: Roto-Rooter
ROTO- ( ROOTER.
Slide 10: Roto-Rooter
Roto-Rooter Acquired Roto-Rooter from founder’s heirs in 1980: Minimal company-owned territories Viewed as an under-leveraged brand Poor economic rent for brand value Methodical roll-up of franchise territories: Today, 50% of the United States population resides in company- owned territories Develop
Slide 11: Roto-Rooter Company Overview
Adjusted EBITDA (2008) Revenues (2008) (a) Roto-Rooter Company Overview Largest provider of plumbing and drain cleaning services in North America Provides plumbing services to approximately 90% of the United States and 40% of the Canadian population Provides plumbing and drain cleaning services in m
Slide 12: Chemed Growth Strategy – Roto-Rooter
Chemed Growth Strategy – Roto-Rooter Continue to increase efficiency Acquire franchisee territories at reasonable valuations $175 - $200 million in franchise street sales Purchase at 4-5 times EBITDA Minimal capital expenditure Focus on earnings and cash flow Company-owned Territories
Slide 13: Roto-Rooter – Summary of Operations
Roto-Rooter – Summary of Operations For The Years Ended December 31, 2003 through 2008 (in thousands, except percentages) (a) Continuing Operations (b) See Appendix at the back of this presentation for reconciliation from GAAP reported results to adjusted (non-GAAP) results
Slide 14: Roto-Rooter Versus the Competition
Roto-Rooter Versus the Competition Net Income from Continuing Operations (in millions) * *ServiceMaster went private in
Slide 15: Future of Roto-Rooter
Future of Roto-Rooter Continue to Consolidate Franchises Purchase at reasonable multiples Avoid over-paying for current acquisitions Inflates expectations/demands of remaining franchisees Utilize Cash Flow for: Purchase of franchises Acquisition of hospices Debt pay-down, share buy-back, increased d
Slide 16: VITAS Innovative Hospice Care
Innovative Hospice Care’ VITAS
Slide 17: VITAS Acquisition
VITAS Acquisition Chemed Invested in VITAS Preferred Stock in 1991 Active in VITAS’ Corporate Governance Since 1991 Board Position Audit Committee Compensation Committee Obtained Several Warrant Tranches 1991-2002 Converted Warrants to 37% Common Stock Ownership in 2003 Purchased 100% of VITAS in Fe
Slide 18: VITAS Healthcare Company Overview
Adjusted EBITDA 2008 Revenues 2008 (Before Cap) (a) VITAS Healthcare Company Overview General Inpatient Care Continuous Home Care Routine Home Care Hospice Program – Indirect 19.6% Hospice Program – Direct 57.7% EBITDA 14.3% Central Support 8.4% Medicare Cap 0.03% 72% 12% 16% (a) See Appendix at the
Slide 19: VITAS – Locations & ADC
Washington, DC VITAS – Locations & ADC (as of March 31, 2009) Inland Empire (San Bernardino/ Palm Springs) Orange County Dallas Fort Worth San Antonio Houston Central Florida Brevard Palm Beach Dade Broward Cincinnati Philadelphia New Jersey North New Jersey West New Jersey Shore Delaware Milwaukee
Slide 20: VITAS – Summary of Operations
VITAS – Summary of Operations For The Years Ended December 31, 2003 through 2008 (a) (a) Assumes VITAS was purchased on January 1, 2003 (b) See Appendix at the back of this presentation for reconciliation from GAAP reported results to adjusted (non-GAAP) results (in thousands, except percentages)
Slide 21: VITAS Versus the Competition
* Vistacare results for 2004 are annualized from the reported nine-month period ended September 30, 2004; Vistacare was purchased by Odyssey during their fiscal 2008 VITAS Versus the Competition* Net Income from Continuing Operations (in millions)
Slide 22: Future of VITAS
22 Future of VITAS Short-term Continue organic growth Acquisitions > Fragmented industry > Dominated by “Mom & Pop” not-for-profits > Average operating margin in hospice is 4%* » 50% of hospices have negative margin” » Economies of scale Access to reasonably priced capital critical to expansion Long
Slide 23: Chemed Corporate Overhead
Chemed Corporate Overhead
Slide 24: Corporate Overhead
Corporate Overhead Majority of Chemed’s corporate overhead costs are unavoidable as a public company Functions as Strategic Planning and Execution Business Model Developments Acquisitions and Divestitures Growth Strategies Manages Public Reporting Issues Accounting Tax Treasury Investor Relations Le
Slide 25: 2008 Corporate Overhead
2008 Corporate Overhead (a) Cash expenses. See Appendix at the back of this presentation for a reconciliation of cash and non-cash expenses to reported Chemed Corporate SG&A expenses. (a)
Slide 26: Corporate Overhead (Continued)
Corporate Overhead (Continued) Significant increase / duplication in costs if Roto-Rooter and VITAS were separate public companies: CEO / CFO Audit / SOX Accounting / Public Reporting Legal Directors Fees Investor Relations Treasury Tax
Slide 27: Chemed Valuation
Chemed Valuation Chemed Valuation Sum of the parts JP Morgan / Lazard evaluation Chemed Divestitures Status of tax-free spin-offs History of divestures
Slide 28: Comparable Company Trading
Comparable Company Trading No discernible discount due to Chemed’s corporate structure Significant transparency in segment operating metrics VITAS: EV /2009E EBITDA Avg. 5.7X eo 70% oo _ Bae 0g ate 40 20 oo Chamed oagsey Abmost Fanaly Gentiva ROTO-ROOTER: EV/2009E EBITDA Avg. 7.5x Punnarite ey, Tae
Slide 29: Sum-of-the-Parts Analysis – Market
Sum-of-the-Parts Analysis – Market Implied Roto-Rooter (in millions, except per share data) Note: Chemed financial based on broker research (a) Allocation based on percentage of sales (b) See Appendix at the back of this presentation for reconciliation of EBITDA and Adjusted EBITDA to Net Income (b)
Slide 30: JP Morgan / Lazard Evaluation
JP Morgan / Lazard Evaluation In the current market environment there has been a flight to security Smaller cap companies should continue to experience significant volatility Healthcare services sector has experienced significant volatility given uncertainty regarding government policy on reimbursem
Slide 31: Tax-Free Spin-Off
Tax-Free Spin-Off Chemed acquired control of VITAS on February 24, 2004, in a taxable purchase of stock Tax-free spin-offs are governed by IRC §355 The earliest a tax-free spin-off of Roto-Rooter or VITAS could be completed under IRC §355 was February 25, 2009 Now is not the right time for a separat
Slide 32: Chemed Has a History of Divestitures
Chemed Has a History of Divestitures Chemed’s Board of Directors has approved: 14 significant divestiture / transactions Generating $711,000,000 in proceeds Resulting in $284,000,000 in pre-tax gains Four divestitures in the last 12 years Divested Patient Care in 2002, a significant business segment
Slide 33: Summary of Significant Divestitures and Spin-Offs
Summary of Significant Divestitures and Spin-Offs
Slide 34: 2009 Annual Meeting of Stockholders
2009 Annual Meeting of Stockholders
Slide 35: Executive Summary
Executive Summary MMI Investments, L.P. (MMI), a dissident hedge fund, has nominated its own slate of five director candidates to stand for election to Chemed’s Board at our upcoming Annual Meeting Chemed believes MMI’s true motivation is to pursue an ill-timed, irresponsible separation of the Compa
Slide 36: Corporate Governance
Corporate Governance Governance rating score better than: 94.8% of S&P 600 companies 94.8% of Health Care Equipment & Services companies No poison pill Election of entire Board conducted annually Nine of 11 nominees independent All key committees comprised solely of independent directors Separate Ch
Slide 37: Chemed Director Independence
Chemed Director Independence Chemed’s Board is in full compliance with both the spirit and letter of the director- independence requirements of the NYSE and SEC None of the independent directors has been an employee or director of any Chemed affiliate for a minimum of nearly 10 years The “significan
Slide 38: Chemed – Board of Directors
Chemed – Board of Directors Composition Chemed has a long history of independent directors
Slide 39: Nominating Two New Independent Directors in 2009
Nominating Two New Independent Directors in 2009 Six Potential Nominees Considered Three were proposed by one of Chemed’s largest stockholders One proposed by an advisor One proposed by the Chief Executive Officer One proposed by the Chairman of the Board Board’s Nominating Committee reviewed the ba
Slide 40: MMI Investments
MMI Investments MMI’s Approach No substantive discussions prior to public letter No nominations submitted to the Nominating Committee Misleads investors that they have been a long-term stockholder MMI’s Credibility Mischaracterizations regarding a potential spin-off Misleading information regarding
Slide 41: MMI Investments (Continued)
MMI Investments (Continued) Qualifications of MMI’s Five Nominees 2 have no public company board experience 1 is a professional activist hedge fund manager 2 serve as limited partners of the same activist hedge fund Only 1 has any professional experience in healthcare Only 1 has any professional exp
Slide 42: Chemed Response to MMI
Chemed Response to MMI Criticizes Chemed’s Board of Directors Has not raised any claims of operational under performance Has not offered evidence to the claim that Chemed lags its peers on operating metrics Criticizes Chemed overhead in vague and general terms Has not provided evidence that Chemed d
Slide 43: Chemed's Nominees are the Right Choice
Chemed’s Nominees are the Right Choice Chemed’s Nominees are the Right Choice Superior long-term value creation and financial performance Track record of successful divestitures and other strategic transactions Highly qualified Board is committed to delivering value for stockholders through the exec
Slide 44: Appendix
Appendix
Slide 45: Chemed – Consolidated Summary of Operations
Q @ @ @ co) © @ ® el Chemed — Consolidated Summary of Operations For the years ended December 31, 2003 through 2008 Includes VITAS results as if VITAS were purchased on January 1, 2003 (in thousands, except per share data) Q @ @ ® io) © ig) Average Anmal, 2003 (6) __2004(6) 2005. 2006 2007 2008 Ine.
Slide 46: Chemed - Results from Continuing Operations
Chemed - Results from Continuing Operations ) 2) 8) ay 6) (6) a7 8) 0) Service Revenues and Sales EBITDA (a) Adj. EBITDA (a) Adj. EBITDA Margin (a) Net Income Adj. Net Income (a) Diluted EPS (b) Adj. Diluted EPS (a) (b) Di ited Average Shares Outstan (10) Capital Expenditures @ ro) (in thousands, ex
Slide 47: Cumulative Results Since the VITAS Acquisition
Ee Cumulative Results Since the VITAS Acquisition Forthe years ended December 31, 2003 through 2008 @ (2) @ GR ‘One Three Five Year Year _ Year Chemed* a Service revenues and sales 44% 7.84 10.4% @ Income from continuing operations 14.9% = 25.8% 41.8% @ Diluted EPS from continning operations B% 30%
Slide 48: Chemed – Total Stockholder Returns
a Chemed -— Total Stockholder Returns @ Q) 1) @) CAGR as of 12/31/08 YTD 4/30/09 Yr 3-Yr 3-Yr (1) Chemed 65 % (28.4) % 6.7) % 122 % (2) Russell 3000 (4) (38.7) (10.4) 3.8) @) Peer Group” (0.7) 23.3) 9) 71 (a) GICS Code 3610 "Health Care Equipment and Services" a Chemed Corporation
Slide 49: Chemed – Corporate Overhead Summary
Chemed — Corporate Overhead Summary Cash Overhead Expenses (1) Corporate Overhead Expenses (2) Management Fees Charged to Segments (3) Total Chemed Corporate Overhead, Net of Segment Non-cash Expenses (4) Stock Option Expense (6) Stock Award Amortization (6) Total Comorate Overhead Corporate O/H as
Slide 50: Chemed – Annual Incentive Compensation
—E Chemed — Annual Incentive Compensation 10) @ @ @ 6) Percent Variance Average Annual 2006 vs 2007 vs 2008 vs Percent Variance 2005 2006 2007, 2005-2007 2006-2008 (1). Reported Diluted EPS (2) 56.5% 157 % 232 % 34.6% 194 % (2) Adjusted Diluted EPS (@) cer 60.5 53 28.6 30.0 (@) Annual Incentive Comp
Slide 51: Chemed – Executive Long-Term Incentive Plan
Ete Chemed —- Executive Long-Term Incentive Plan Specific Performance Targets Current (Third) Plan Period Share Pool Time-Based Restricted Shares (3-year vesting; 16 participants) 40,000 shares Share Price Targets (20 aut of 60 Trading Days) $62.00 per common share 20,000 shares $68.00 per common sh
Slide 52: Roto-Rooter – Historical Financial Performance
ES Roto-Rooter — Historical Financial Performance ($000) (1) (2) (3) (4) 6) (6) Full Year Results Three Months Ended March 34, Favi(Unfav) Favi(Unfav) 2007 2008 _% Growth 2008 2009 _% Growth (1) Service Revenues and Sales $344,632 $340,496 (1.2%) —-$ 86,683 $ 86,521 (0.2%) (2) Net Income 38,971 33,5
Slide 53: VITAS – Results from Continuing Operations
VITAS — Results from Continuing Operations ($000) ) 2) 8) (4) 6) (6) Full Year Results Three Months Ended March 31, Favi(Unfav) Fav(Unfav) 2007 2008 __% Growth 2008 2009 __% Growth (1) Service Revenues Before Medicare Cap $ 755,668 $ 808,680 7.0% $198,585 $ 208,687 2) Medicare Cap (242) (235) 29% :
Slide 54: VITAS – Operating Metrics
m VITAS — Ope’ rating Metrics ($000) fy ‘51 ay m 8 1 a 2008 2007 2008 2009 Operating Marios at fa fa a at fa we aa at fa we a | rage ay sozst 10704 t4p20 tara] 14908 tans tt se3 tte] asst Haas tame tes | 4708 ‘dsm 43773 12987 aze8s taza] tattot3gse ae tased] 15212 gas 8.7 testa] 44488. Cerne 1329s t
Slide 55: VITAS - Growth Strategy
VITAS - Growth Strategy @ VITAS will expand its market preeminence by: > Organic growth in established programs > New Start programs and Satellite expansions > Niche acquisitions Organic growth will continue to be generated through sales and marketing: » » » » » Quality patient care services Focus o
Slide 56: Medicare Hospice Spending
Ete Medicare Hospice Spending (in billions) $10.0 $9.0 $8.0 $7.0 $6.0 $5.0 $4.0 $3.0 $2.0 $1.0 $0.0 $10.0 $8.9 <m 1999 2000 2001 2002 2003 2004 2005 2006 2007 m 20% Compounded annual growth rate from 1999 to 2007 Bei2 Source: MedPAC Report - 03/06/2008
Slide 57: VITAS - Sum-of-the-Parts Analysis – MMI Method
AAS VITAS - Sum-of-the-Parts Analysis — MMI Method” (in millions, except per share data) Based on VITAS comparable company peer group 5.3x to 6.3x 200% Comporate, Ad. 2009E-EV/09R EBITDA Segment EBITDA Expenses" EBITDA __Mulsiple Range Implied Value viras $128 12) gut $657 Roto-Rootit $58 6) $53 12.
Slide 58: Selected Comparable Company Analysis
Selected Comparable Company Analysis A-14, (in millions, except per share data) Enterprise Value as a Multiple of EBITDA NetDebs/ SwckPrice %of52 Equity Entorprite ewes EBITDA P/E Margin EBITDA Company WDPMS WeekHigh Vahe Vaho S009E 2010 2009E 2010E 2N9R OUR 2009E —-2009E Chemed $02.08 90% $960 SALE
Slide 59: Reconciliation of Adjusted EBITDA and Adjusted Net Income
A-tda o CHEMED CORPORATION RECONCILIATION OF ADJUSTED EBITDA and ADJUSTED NET INCOME FOR THE Y! Reconciliation of Adjusted EBITDA Net inccrne((lose) Discontinued operations Interest expense Ireame taxes Deyreciation Amortization, EBITDA Adii(deduct) (Gains}/losses on investments Gain on sale of prop
Slide 60: Reconciliation of Adjusted EBITDA and Adjusted Net Income (continued)
A-15b CHEMED CORPORATION RECONCILIATION OF ADJUSTED EBITDA and ADJUSTED NET INCOME FOR THE YEARS ENDED DECEMBER 31, 2003 THROUGH 2008 (INTHOUSANDS) continued) ® @ @ ® ° @ 2003 2004 2005 2006 2007 2008 Reconciliation of Adjusied Net Income (28) Netinccme(los) $ GG) $ M512 $ 3817 $ SHE § G16 $ 67,281
Slide 61: Reconciliation of Pro Forma Adjusted EBITDA and Net Income
2 CHEMED CORPORATION RECONCILIATION OF PROFORMA ADIUSTED EBITDA and PRO FORMA ADJUSTED NET INCOME FOR THE YEARSENDED DECEMBER 31, 2003 THROUGH 2008 (qu THOUSANDS) w Q @ ® 6) O) 2003(@) 004%) 2005 2006 2007 2008 Reconciliationof Adjusted EBITDA (1) Net itcomei(os) $ 204s) $ 32615 $ 35817 $ SOE $ sie
Slide 62: Reconciliation of Pro Forma Adjusted EBITDA and Net Income (continued)
AA6b RECONCILIATION OF PROFORMA ADJUSTED EBITDA and PRO FORMA ADJUSTED NET INCOME FOR THE YEARSENDED DECEMBER 31, 2003 THROUGH 2008 CHEMED CORPORATION qu THOUSANDS) continued) w @ @ ® 6) O) 2003) 2004(@) 2005 2006 2007 2008 Reconciliationof Adjusted Net Income (24) Net income loss) $ Qa § 3615 § 358
Slide 63: Roto-Rooter Group Reconciliation
SS ROTO-ROOTER GROUP RECONCILIATION OF ADJUSTED EBITDA and ADJUSTED NET INCOME FOR THE YEARS ENDED DECEMBER 31, 2003 THROUGH 2008 ANTHOUSANDS) w @ @ @ ° © 2003 mos__—-2005 2006 20072008 Recomeifation of Adjusted EBITDA (1) Net income $ 13176 $1805 $27,626 $ DaS4 $3Rg1 $33,592 (2) Interest expense 1m
Slide 64: VITAS Healthcare Group Reconciliation
VITAS HEALTHCARE GROUP RECONCILIATION OF ADJUSTED EBITDA and ADJUSTED NET INCOME FOR THE YEARS ENDED DECEMBER 31, 2003 THROUGH 2008 (a) Reconciliation of Adjusted EBITDA a Q e) @ o © a @ O) an) an 2) Netincone Dicontimed operations Interest expense Income taxes Depreciation Amortization EBITDA Adi(d
Slide 65: Chemed Reconciliation First Quarter 2008 and 2009
AAD CHEMED CORPORATION RECONCILIATION OF ADJUSTED EBITDA and ADJUSTED NET INCOME FOR THE FIRST QUARTER OF 2008 AND 2009 Reconciliation of Adjusied EBITDA Q @ (e) @ o) o @ ® @ ao ap @ a a9 Netineome Interest expense Teor tas Depecistion ‘Anortzation EBITDA Adai(deduct) (Guine)losses oninvestrents Exp
Slide 66: Roto-Rooter Group Reconciliation of Adjusted EBIT and EBITDA
2S ROTO-ROOTER GROUP RECONCILIATION OF ADJUSTED EBIT and ADJUSTED EBITDA FOR THE FIRST QUARTER OF 2008 AND 2009 ie) @ 2009 2008 Reconciliation of Adjusted EBIT and EBITDA (1) Net income $ 8,276 $ 9,095 (2) Interest expense 35 83 @) Income taxes 5,036 5,700 @ EBIT 13,347 14,878 Add/(deduct) () Advert
Slide 67: VITAS Healthcare Group Reconciliation of Adjusted EBITDA
eee VITAS HEALTHCARE GROUP RECONCILIATION OF ADJUSTED EBITDA FOR THE FIRST QUARTER OF 2008 AND 2009 Reconciliation of Adjusted EBITDA ic} Q) Q) o) (3) (6) 1) (8) (9) (10) Net income Interest expense Income taxes Depreciation Amortization EBITDA Addi(deduet) Legal expenses of OIG investigation Intere
Slide 68: Chemed Corporation
CHEMED CHEMED CORPORATION ROTO- Innovative ROOTE Hospice Care’ S comes VITAS