Good day, ladies and gentlemen, and welcome to the Q1 2014 Chemed Corporation Earnings Conference Call. My name is Mark and I’ll be your operator for today's call. At this time, all participants are in a listen-only mode, and we will conduct a question-and-answer session towards the end of the conference. (Operator Instructions) As a reminder, this call is being recorded for replay purposes. I would now like to hand the call over to Sherri Warner with Chemed Investor Relations. Please proceed.

Good morning. Our conference call this morning will review the financial results for the first quarter of 2014 ended March 31, 2014. 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 29 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 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 29, 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 2014 conference call. I will begin with some highlights for the quarter and David and Tim will follow with additional operating detail. I will then open the call up for questions. On a comparative basis, our hospice revenue declined $11 million or 4% in the quarter. This decline is primarily the result of sequestration, as well as the slight mix shift away from high acuity care. As most of you are aware, Medicare reduced our per-diem reimbursements 2% in the start of the second quarter of 2013. This negatively impacted our revenue comparison in the first quarter of 2014 by roughly $5 million. Our high acuity care, which consists of continuous and inpatient care, represented 7.1% of our total days of care, a decline of 89 basis points when compared to the first quarter of 2013. This equated to a further reduction in revenue in the quarter of approximately $6.4 million. This modest shift of less than 1% in the level of care mix had an outsized impact on our revenue, given the fact that routine homecare has a per-dime rate of $163 and high acuity care has a per-dime that averages $704. However, the costs to provide high acuity care are significant, resulting in high acuity having a relatively low contribution margin. In many of our programs, the profit contribution from a day of high acuity care is less than the profit contribution from a day of routine homecare. The key takeaway on the level of care mix for all of our stakeholders is that the overall hospice business model is not dependent on level of care. The aggregate dollar profitability differences generated from routine homecare versus high acuity care are relatively insignificant. However, having the capability and…

Thanks, Kevin. As Kevin noted, during the quarter, our hospice revenue was significantly constrained by sequestration as well as the slight mix shift away from continuous and inpatient care. Comparisons in subsequent quarters should improve as we begin to lap these issues that impacted the first half of 2013. In the fourth quarter of 2013, VITAS recorded a Medicare Cap billing adjustment of $3.8 million related to two provider numbers. In the first quarter of 2014, through improved admissions, we’re able to reverse all of the Cap liability related to one program, as well as a portion of the Cap liability for the other program. Currently, of VITAS’ 38 unique Medicare provider numbers, 32 provider numbers have a Medicare Cap cushion of 10% or greater for the 2014 Medicare Cap period. Three provider numbers have a Medicare Cap cushion of 5% to 10% and two provider numbers have a Cap cushion between 0% and 5%. VITAS generated an aggregate Cap cushion of $261 million during the trailing 12-month period. The first quarter of 2014 gross margin, excluding the impact of Medicare Cap, was 20.9%, which is a 31 basis point decline when compared to the first quarter of 2013. Excluding the impact of sequestration, gross margins would have improved approximately 118 basis points. Our homecare direct gross margin was 52.8% in the quarter, an increase of 90 basis points when compared to the first quarter of 2013. Direct inpatient margins in the quarter were 4.2%, which compares to 10.9% in the prior-year quarter and 5.0% in the fourth quarter of 2013. Occupancy of our 37 inpatient units averaged 71.5% in the quarter and compares to 74.7% occupancy in the first quarter of 2013. Continuous care had a direct gross margin of 16.6%, a decline of 110 basis points when compared…

Thank you, David. Admissions continued to be difficult during the quarter, aggregating 16,353, which are 4.6% below the prior year. As most of you are aware, CMS is discouraging the use of failure to thrive and debility unspecified disease classifications when determining the primary medical condition that results in a terminal prognosis. The final rule issued in August of 2013 eliminates failure to thrive and debility unspecified as the primary coding for a terminal prognosis effective October 1, 2014. CMS encourages the documentation coding of failure to thrive and debility unspecified as additional medical support in reaching a terminal prognosis, specifically when the primary disease is outside traditional LCD guidelines for a doctor to reach a terminal prognosis. In prior years, approximately 15% of our patients were admitted with failure to thrive or debility unspecified as the primary reason for a patient to have a terminal prognosis. Since CMS made this announcement, admissions with the primary condition classified as failure to thrive or debility unspecified have declined to approximately 7%. Total admissions in the first quarter of 2014 under failure to thrive or debility unspecified equaled 6.7% of total admissions. Excluding these two conditions, admissions increased 5.1% in the quarter. Although difficult to measure, it does appear that some of the patients who would have been admitted under failure to thrive or debility unspecified are slowly being admitted under other disease categories. As of March 31, 2014, VITAS employs approximately 1,172 admissions personnel and is equivalent to the staffing in the prior-year quarter. During the first quarter of 2014, admissions from hospital referrals decreased 8.2%, nursing home admissions decreased 5.2%, assisted living facilities decreased 7.2% and home-based referrals decreased 0.7%. Our per-patient per-day pharmaceutical cost averaged $7.24 in the quarter, which is 4.4% favorable to the prior year. Our medical equipment per-patient per-day cost in the quarter totaled $6.61, which is 3.5% below the prior-year period. VITAS' average length of stay in the quarter was 81.1 days, which compares to 77.4 days in the prior-year quarter and 82.6 days in the fourth quarter of 2013. Average length of stay is calculated using total discharges during the period. Median length of stay was 14 days in the quarter. Median length of stay is a key indicator of our penetration into the high acuity sector of the market. Our days of care totaled 1,288,496 days in the quarter, a decline of 0.8%. Non-nursing home routine homecare days increased 1.2% in the quarter and nursing home routine homecare declined 3.4%. At March 31, 2014, we had two programs classified as start-ups. Both of these start-ups are state licensed, CHAP accredited and certified by Medicare. Operating losses for these two start-ups totaled $310,000 in the quarter and compares to losses of $331,000 for locations classified as start-ups in the prior-year period. With that, I’d like to turn this back over to Kevin.

Very well, Tim. Thank you. Well, as I've just been informed that there are no questioners in the queue, which is the first time development for us, which just goes to the -- a statement as to the transparency and clarity of Dave’s presentation. So, we’ll leave it with that. I'll just leave with a final comment I was going to try to work into some answer to one of the questions and that is that the first quarter went pretty much according to our expectations. We were pleased with many aspects of it. And we're always a little concerned when we give guidance for the year and say it's back loaded, but in this case, the normal seasonality coupled with the effects of sequestration, and as Tim talked about, lapping the issues on debility and failure to thrive, the metrics just turn out that way. So overall, happy with the quarter, and we'll reconvene this group about three months from today. Thank you.

Ladies and gentlemen thank you for your participation in today’s conference. This concludes the presentation and you may now disconnect.