A very good morning ladies and gentlemen, thank you all for joining. Welcome to the First Quarter 2013 Chemed Corporation’s Earnings Conference Call. My name is Lisa and I’ll be your coordinator for today. At this time all participants are in listen-only mode. Following this presentation, we will conduct a question-and-answer session and instructions will be provided that time for you to queue up for questions. (Operator Instructions) Also like to remind you, this conference is being recorded for replay purposes. I would now like to turn the conference over to Ms. Sherri Warner of Chemed Investor Relations. Please proceed. Thank you.

Good morning. Our conference call this morning will review the financial results for the first quarter of 2013 ended March 31, 2013. Before we begin, let me remind you that the Safe Harbor provisions of the Private Securities Litigation Reform Act of 1995 apply to this conference call. During the course of this call, the company will make various remarks concerning management’s expectations, predictions, plans and prospects that constitute forward-looking statements. Actual results may differ materially from those projected by these forward-looking statements as a result of a variety of factors, including those identified in the company’s news release of April 18 and in various other filings with the SEC. You are cautioned that any forward-looking statements reflect management’s current view only and that the company undertakes no obligation to revise or update such statements in the future. In addition, management may also discuss some non-GAAP operating performance results during today’s call, including earnings before interest, taxes, depreciation, and amortization or EBITDA and adjusted EBITDA. A reconciliation of these non-GAAP results is provided in the company’s press release dated April 18, which is available on the company’s website at chemed.com. I would now like to introduce our speakers for today Kevin McNamara, President and Chief Executive Officer of Chemed Corporation; Dave Williams, Executive Vice President and Chief Financial Officer of Chemed; and Tim O’Toole, Chief Executive Officer of Chemed’s VITAS Healthcare Corporation Subsidiary. I will now turn the call over to Kevin McNamara.

Thank you, Sherri. Good morning. Welcome to Chemed Corporation’s First Quarter 2013 Conference Call. I will begin with some of the highlights for the quarter and David and Tim will follow with additional operating detail. I will then open up the call for questions. As you are aware, sequestration mandated that CMS reduce our Medicare hospice reimbursement rates, 200 basis points effective April 1, 2013. Ordinarily, such a drastic reduction in reimbursement would have a negative impact on our forecasted earnings. However, I am very pleased to be able to maintain our full-year 2013 earnings guidance, in spite of these lowered reimbursement rates. This has been accomplished through excellent earnings growth in the first quarter of 2013, continued benefits from operational efficiencies within VITAS, reduced risk of Medicare Cap billing limitations and continued margin improvement in the Roto-Rooter segment. Now let’s turn to our operating results. In the first quarter of 2013, Chemed consolidated revenue totaled $367 million and that income was $22.3 million. If you adjust for certain non-cash items, an items that are not indicative of ongoing operations, adjusted net income for the quarter totaled $26.1 million and equated to adjusted earnings per diluted share of $1.38. This is an increase of 14% when compared with our adjusted earnings per diluted share in the first quarter of 2012. During the quarter, our hospice business segment generated revenue of $271 million, an increase of 4% over the comparable prior year period. Revenue growth aggregated 5.9%, excluding the impact of 2012 being a leap year and the impact of revenue recognition related to the reversal of prior years Medicare Cap accruals. We generated $37.6 million of adjusted EBITDA in the quarter, which equated to an adjusted EBITDA margin prior to Medicare Cap of 13.6%, an increase of 83 basis points.…

Thank you, Kevin. Net revenue for VITAS was $271 million in the first quarter of 2013, which is an increase of 4% over the prior year period. This revenue growth was accomplished from an increased ADC of 5.3%, driven by an increase in admissions of 5%, increased discharges of 4% and Medicare price increases of approximately 0.9%. As Kevin previously noted, if you exclude the impact of leap year and Medicare Cap reversals, our revenue expanded 5.9% in the quarter. Our average revenue per patient per day in the quarter, excluding the impact of Medicare Cap, was $208.23, which is 0.5% above the prior year period. Our routine home care reimbursement and high acuity care averaged a $164.51 and $713.65, respectively, per patient per day in the first quarter of 2013. During the quarter, our high acuity days of care were 8.0% of total days of care, 10 basis points below the prior year quarters. The first quarter 2013 gross margin, excluding the impact of Medicare Cap, was 21.2%, which is an 80 basis point improvement when compared to the first quarter of 2012. Our home care direct gross margin was 51.9% in the quarter, an increase of 150 basis points when compared to the first quarter of 2012. Direct inpatient margins in the quarter were 10.9%, which compared to 14.1% in the prior year. The occupancy of our inpatient units averaged 74.7% in the quarter and compared to 78.3% occupancy in the first quarter of 2012. Continuous care had a direct gross margin of 17.7%, a decline of 220 basis points when compared to the prior year quarter. Our average hours billed for a day of continuous care averaged 18.7 in the quarter, a 1.1% decline over the average hours billed in the first quarter of 2012. Roto-Rooter, the…

Thank you, Tim. I will now this teleconference to questions.

Certainly, thank you. So ladies and gentlemen, we will now conduct the question-and-answer session. (Operator Instructions) Okay, we have our first question from the line of Darren Lehrich of Deutsche Bank. Please go ahead. Darren Lehrich – Deutsche Bank: Thanks. Good morning everybody. Few things here I wanted to cover. Just first of all as it relates to guidance and first I’ll start with the Roto-Rooter side of things. Obviously, the margins are going to be very strong based on what you’re seeing. And as I look back over just the last three years or so, it works out to be about 200 basis points above where you’ve been. So just given how you know moderate the revenue growth is still, I’m wondering if you can just give us a little bit more confidence in how you plan to get there. And if beyond the health benefit large claims that you had last year. Is there anything else that we should be considering?

Hi, Darren, this is Dave. Yeah, there is a few things going on within Roto-Rooter and as it turns out all very, very positive. Of course, we talked about the first half of 2012, the first quarter of 2012 was a very warm winter, so we weren’t getting the business that were related to one-off and frozen pipes. And of course the second quarter was a very dry spring. We didn’t get as much rain which also is very good for our businesses. So we’re lapping out which is all very positive. And as you pointed out, we had a lot of claims primarily large health claims, throughout really 2012. So when we did our business plan going into 2013, some of the assumptions we initially started with is let’s just assume we have a continuation of difficult trends. And the Roto-Rooter operations basically took a hard look at every one of the branch programs and we had what we’ll call a mini reduction force, as well as streamlining of personnel, so expense reductions happened in really, primarily in December of 2012. So we were already reduced our indirect workforce headcount, as we went into January of 2013. So, we lowered our operating expenses and the increase in revenue happened, on the residential side which is a key part that 70% of our job counts. The healthcare claims aren’t coming. As a matter of fact, they’re coming in abnormally low and there is very short lead time, usually there is only about less than a 30 day incurred but not reported to almost on real billing time. So higher revenue, reduced operating expenses, reduced insurance claims, all kind of leads into a strong first quarter and we can already see the visibility in April, and that’s continuing. So all of that is actually pointing towards Roto-Rooter has a very good chance of this being the best year ever relative to EBITDA, one of the highest EBITDA margin we’ve had over the past, actually ever.

And to summarize Darren, you make a good point. I mean, yes, there is a number of factors contributing, but the real issue is preloading of reducing expenses in the field, but not at the technician level. So made a lot of tough calls in the fourth quarter, the Roto-Rooter business did, and they’re just everything else is going just good enough for them to kind of operate at peak levels of efficiency. Darren Lehrich – Deutsche Bank: Yeah. No, that certainly makes sense. The other question just around guidance. I know you don’t explicitly call it out, but just curious how buyback is contemplated in guidance. Just giving the pattern of capital deployment, we certainly have assumed some in our modeling, but I’m just not sure if that’s in your share count assumptions for guidance. Maybe just some color there.

Yeah, we did not put any share reduction beyond what’s currently happened. So there is no forward-looking share reduction in our guidance.

: Darren Lehrich – Deutsche Bank: Okay.

That’s one of the reasons because we bought none in the first quarter. Darren Lehrich – Deutsche Bank: Right. Okay and then just two other things here. One is just maybe for Tim, just length of stay in the first quarter I know that your discharge length of stay, but the median certainly dropped a lot. And I am just wondering if you think that’s sort of what the current mix of business looks like or not? Timothy S. O’Toole: Well, I don’t think there is anything meaningful. We bounced from 14 days to 15 or 13 on our median. It’s seems like and it just would probably indicate we’re doing a very good job of having access to the patients that need our services for only a short period of time, week ends, good relationships with hospitals, discharging into inpatient units, situations like that. So again, I don’t see any of it is unusual, but it’s favorable I think to not have an increasing longer length of stay and we basically make sure we’re on top of that. So all those trends look pretty good from where we sit. Darren Lehrich – Deutsche Bank: Yeah, just last thing here. MedPAC obviously laid out their U-shaped payment model in their last meeting cycle. Any reaction of that given your distribution of patient days and your patient mix? Just curious how we ought to be thinking about that for you guys?

Well, let me just say that. As we said all along, again, when you look at our median length of stay being seven to eight days shorter than the actual average under a U-shaped, curved situation on reimbursement. You would think we would be a big winner and as we do the math, I mean first of all a lot to be done between now and implementation. But, yeah, it would help us significantly. I mean, you can think of it but you know with this order of magnitude, 2% to 3% more revenue with the same cost. Darren Lehrich – Deutsche Bank: Yeah. And I think it’s probably too early to know for sure where CMS is going to land, but just in terms of the industry expectation do you think that there is enough here given what MedPAC has done for CMS to move on a rulemaking for next year, or do you think we’re still two to three years out?

I personally think we’re two to three years out, I wish it was next year.

Now, Darren, this is Dave. One of the issues we really have is it’s not so much as the, it’s actually a very thoughtful discussion in terms of heavy reimbursement, have a strong correlation to the cost of appropriate care. So we’re, obviously VITAS was completely in favor of that. But we’re really more concerned about the rules that get wrapped around this strategy and reimbursement. For example, what do you do about these hospices that have usually high live discharges? What do you do when you take those patients back in because the cost to develop a plan of care from someone else’s live discharge from earlier, maybe month earlier, we have to have those setup cost. So there is a lot of unknowns on the rules they wrap around the reimbursement that we think are critical to make sure you have an appropriate reimbursement program in place. So the National Hospice and Palliative Care Organization has been pushing hard for one CMS to develop that start process on reimbursement to actually then test it to a bit of a demonstration project to make sure they aren’t unintended consequences. So from that standpoint it’s a big unknown and when this will be put in place. Darren Lehrich – Deutsche Bank: Okay, that’s helpful. Thanks very much guys.

Thank you very much for your questions. Our next question is from the line of Frank Morgan of RBC Capital Markets. Please proceed with your question. Thank you. Frank Morgan – RBC Capital Markets: Good morning. You provided a lot of good detail about the sources of admission growth, which was quite impressive. But just taking that from a different tack, do you think recent de novos that have rolled in to your same-store count or also a strong driver there on the admission growth?

I don’t think so, Dave what do you?

I deferred to Tim on that. Timothy S. O’Toole: It’s not meaningful. The growth is consistent across our large operations as well with what we’ve been seen. So if there is improvement in our smaller locations, as they grow, they can usually grow faster because they have small market share and good opportunities, but it’s not been meaningful as far as anywhere in the margins.

Program almost has to be in existence three or four years before they start being a blip on the radar screen. Frank Morgan – RBC Capital Markets: I got you. So you attribute this growth. I mean, obviously, you’ve got a lot of sales, invested a lot in sales infrastructure, but this is just basically a lot of, you’re taking market share away from other competitors in the markets, is that fair?

Well, I don’t think it’s meaningful. I mean the growth rates that we’ve seen in the last quarter are not unusual for us. So we think we’re, as we’ve discussed, we think we’re better prepared than pretty much everyone out there our competition that move forward in a difficult environment and we’re seeing some advantage from that. It’s always very hard to tell. So, again, I would say this is our normal operations, should be ongoing. And as we’ve told you, yes, we have more resources. We’re moving forward in marketplaces with new products, new services, inpatient units, all the things that we’ve talked about and that seems to be a little different than most then I would suggest that’s benefiting us modestly but not dramatically.

And Frank, one way to look at it is, I mean the way we look at it is, we ask we’re, quote, maybe taking a little market share, but you can imagine that every hospices that was looking at sequestration cut of 2%, a lot of our biggest competitors are not for profits. What are they look at cutting sales and marketing, that’s – and what’s the impact of that and that’s kind of drift to some of the competitors that are maintaining and/or stepping up those sales and marketing efforts. And we think that a little bit of what we’re seeing. We hope that accelerates. Frank Morgan – RBC Capital Markets: I got you. How many additional de novos do you think you’ll be opening this year?

We’re going to minimize that for the balance of year. We have three years. We’ve discussed earlier. Right now, I would say we might do one more at some point in the year, but we’re going to slow those down and let them matures and there is less opportunities for the new starts. And one of the things we also are seeing with the many companies out there under pressure, frankly we’re probably seeing better acquisition opportunities. And we did a small one which we’ve announced early in April of about 65 70 census in Texas. And so we’ve always balanced the de novo startups to the acquisitions and it’s great that we’ve had the de novos that was very smart policy over the last five or six years to not buy and to build and we’ll see what the future brings, the good news is we’re prepared to go either way in the markets we’re at. Frank Morgan – RBC Capital Markets: Okay, one final question, I’ll ask this one for Dave. Just in terms of given the magnitude of the B in the first quarter and the way you’re laying out the rest of the year, any advice you want to give us in terms of sort of the sequential layout or directional layout over the balance of the year? When we get back to this annual guidance you’ve given us? Is there anything we should be aware of like in the second quarter as it relates to first quarter?

No, I just look at typical seasonality patterns for Roto-Rooter as well as for VITAS and that should get you to the full-year. Fourth quarter will be the strongest quarter for both of the operating segments. Frank Morgan – RBC Capital Markets: Okay, thanks.

Thank you for your question. Our next question is from the line of Jim Barrett of C.L. King Associates. Please proceed with your question. Thank you. Jim Barrett – C.L. King Associates, Inc.: Good morning everyone. The only question I have left is for Dave, and it relates to the convertible notes. Dave, they mature in 12, 13 months. What are your thoughts on how the company would finance retiring those notes assuming they’re not converted into stock? And I’m aware that you hedged your position back in May of 2007?

Yes, there is, the face value of their notes are $187 million and they come due in May of 2014. We structured our bank credit facility, which was renegotiated this January of 2013, five years, so it straddles that period very nicely. And all we’re really doing is looking at a lot of various options. First and foremost as you pointed out, it will not be dilutive unless our stock price goes over a $100 a share, I think around a $105. So from that standpoint, we’re not worried about dilution and we can get cash flow back if it’s in the money, when it comes to maturity. Right now, the convert market is actually not. On a comparable basis, the convert market is rather weak because interest rates are so low. I would argue the real rate of interest right now is zero or maybe even negative. So with probably at this point, we could do it with, depending on what our share repurchase with the combination of cash on hand and drawing on our credit facility and probably fixing that rate, which would be around 2.5% all in, maybe even better. So with that said, we have options of using cash on hand, drawing against our bank credit facility. But at this point I don’t even think it would be necessary to do another convert, but we have a lot of options available to us. Jim Barrett – C.L. King Associates, Inc.: Right. And I recognize your low leverage, but the fact you didn’t buy back any stock in the quarter, does that relate tactically to anticipating retiring that debt in May of 2014?

Absolutely not that doesn’t impact the decision at all. Jim Barrett – C.L. King Associates, Inc.: Okay.

Our share repurchase, one it’s very accretive to the shareholders. Jim Barrett – C.L. King Associates, Inc.: Sure.

And we also we want to be opportunistic. It seems inevitably some concerns out of Washington or some negative our article on hospice gets written that that takes our stock price to an unusually low level, and we’re opportunistic to take advantage of that. So that’s really why our share repurchase tends to come in chunky over any 12 month period.

And Jim just to the extent that there were just several periods where the Chemed stock price during the first quarter was going up very substantially just that’s not necessarily that the right time to be making significant stock repurchases for a couple of weeks. Jim Barrett – C.L. King Associates, Inc.: Yeah, okay. Okay, well thank you both.

We have more than adequate resources to do share repurchase and take out the debt next year. Jim Barrett – C.L. King Associates, Inc.: Perfect. Okay, thanks again.

Thank you for your question. There are no further questions for you. So ladies and gentlemen that concludes today’s question-and-answer session. I would now like to turn the conference back to Mr. McNamara for closing remarks.

As usual, I think we said it all, no closing remarks. So I just want to thank everyone for their attention and we look forward to having another similar call in about three months.