Good day ladies and gentlemen, and welcome to the Chemed Corporation Q1 2017 Earnings Conference Call. At this time, all participants are in a listen-only mode. Following managements prepared remarks, we will host a question-and-answer session and our instructions will follow at that time. [Operator Instructions] As a reminder, this conference is being recorded for replay purposes. It is now my pleasure to hand the conference over to Ms. Sherri Warner, Investor Relations. Ma'am, please proceed.

Good morning. Our conference call this morning will review the financial results for the first quarter of 2017 ended March 31, 2017. 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 26 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 26 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 Nick Westfall, 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 2017 conference call. I will begin with highlights for the quarter, and David and Nick will follow-up with some additional operating detail. I will then open up the call for questions. In the quarter, Chemed generated $406 million of revenue, an increase of 4%. Consolidated net income in the quarter excluding certain discreet items generated adjusted earnings per diluted share of $1.82, an increase of 12.3%. Both VITAS performed well in the quarter exceeding the high-end of our internal projections. VITAS after lapping the disruption triggered by the 2016 rebasing generated admissions growth in the quarter of 4.1%, an average daily census growth of 3.6%. Roto-Rooter's continue to show excellent results in our core plumbing and drain cleaning service segments, as well as strong growth in water restoration. This resulted in Roto-Rooter having record revenue, adjusted EBITDA and adjusted EBITDA margin in the quarter. During the quarter we purchased 300,000 shares of Chemed stock at an average cost of $180.87. Since we restated our share repurchase program in 2007, Chemed has repurchased 13.1 million shares, aggregating $923 million at an average share cost of $70.41, including dividends paid during this period, Chemed has returned over $1 billion to our shareholders. With that, I would like to turn this teleconference over to David Williams, our Chief Financial Officer.

Thanks, Kevin. Net revenue for VITAS was $282 million in the first quarter of 2017, which is an increase of 1.7% when compared to the prior year period. This revenue increase comprised of a net Medicare reimbursement rate increase of approximately 1.6%, a 3.6% increase in average daily census offset by acuity mix shift which negatively impacted revenue $6.6 million or 2.4%. We also had one less day in the quarter when compared to the prior year period which negatively impacted our growth and additional 1.1%. VITAS did not have any adjustments to revenue related to the Medicare Cap billing limitation in the current or prior-year quarter. VITAS has 31 unique Medicare provider numbers, 30 of these provider numbers have a Medicare cap cushion of 10% or greater for 2017 and one provider number has a cap cushion between 5% and 10% on a trailing 12-month period. Average revenue per patient per day in the quarter was $193.37, which is 8/10 of 1% below the prior-year period. Routine home care reimbursement and high acuity care averaged $163.37 and $715.10, respectively. During the quarter, high acuity days of care were 5.4% of total days of care, 83 basis points less than the prior-year quarter. The first quarter 2017 gross margin for VITAS was 21.5%, which is a 49 basis point improvement when compared to the first quarter of 2016. Our routine homecare direct gross margin was 51.3% in the quarter, a decrease of 80 basis points compared to the prior year quarter. Direct inpatient margins in the quarter were 5.9% and compares to 5.7% in the prior year period. Occupancy of our 32 dedicated inpatient units averaged 71.4% in the quarter and compares to 78.3% occupancy in the first quarter of 2016. As a reminder, approximately 76% of our inpatient days…

Thanks, David. VITAS had a solid quarter, both financially and operationally. Our average daily census for the first quarter of 2017 was 16,222 patients, an increase of 3.6% over the prior year. Total admissions in the quarter were 17,563, an increase of 4.1%. If you're factoring the impact of the 2016 leap year, admissions increased 5.2%. This improving trend is the result of our continued focus on enhancing all aspects of our admissions infrastructure regarding people, processes and accountability. This approach combined with our continued and healthy referral trends will help to sustain admission growth and ensure we are admitting appropriate patients in a timely and efficient manner. During the quarter, admissions generated from hospital referrals which typically represents over 50% of our admissions increased 3%, home-based referrals increased 3.7%, nursing home admissions improved 3.3% and assisted living facility admissions increased 5.4% in the quarter. Our per patient per day ancillary costs which includes durable medical equipment, supplies and pharmaceutical costs averaged $15.14 and are 2.1% favorable when compared to the $15.46 the cost that these items had in the prior year quarter. We continue to be focused on improving margins in our high acuity care, specifically our inpatient facilities. This focus is showing positive results and we generated inpatient margins of 5.9% in the quarter. This is a 20 basis points improvement over the prior year and a 470 basis points improvement sequentially. Our inpatient care currently consists of 32 dedicated units as well as contract beds. On a market by market basis we continuously evaluate capacity so that our inpatient facilities are appropriately positioned to meet the needs of our patients in every community we serve. This process involves reviewing all of our existing and potential future inpatient contractual arrangements and when necessary working with our partners to renew, restructure or exit to best service the community. Margins continue to strengthen and we anticipate continued improvement in margins throughout 2017. Within continuous care, we've also enhanced our focus on the labor management of continuous care related to appropriate nursing to aid staffing assignments and the appropriate utilization of outside nursing agencies based upon the patient's locations and the individual needs. These efforts improved our continuous care margins 50 basis points when compared to the first quarter of 2016. VITAS' average length of stay in the quarter was 88.7 days which compares to 83.7 days in the prior year quarter. Medium length of stay was 15 days in the quarter and is equal to the prior year quarter. Median length of stay is the key indicator into our penetration and the high acuity sector of the market. With that, I'd like to turn this call back over to Kevin.

Thank you, Nick. I will now open to concerning any questions that come for the meeting.

Thank you. [Operator Instructions] And I'm showing no questions over the phone line. So now, I would like to hand the call back over to Mr. Kevin McNamara, President & Chief Executive Officer for closing comments and remarks. Sir?

Okay, don't have any significant closing comments…

Pardon me, sir, we actually just got a question.

Okay.

The question will come from the line of Eugene Fox with Cardinal Capital Management. Please proceed.

Just a couple of questions. Your Roto-Rooter results were very strong on the topline that you maintained guidance. Can you -- are we simply being conservative in light of the issues relative to water restoration or is there something else?

Well, I'd say we don't -- we try and give annual guidance and we're almost as a rule unless it was a remarkable development, we would not change guidance after one quarter. I mean it is something that we do sit down after two quarters and make a more in-depth analysis of it and to the extent that the trends in Roto-Rooter continue -- I wouldn't think that we likely see a change there. But generally speaking I guess we try -- we try and avoid quarterly guidance. We like to give it -- we feel like an annual guidance would just little shaping. It's forced almost by rationality but your comment is well taken.

Kevin as it relates to the host [ph] business, any developments on the litigation front?

Not really. I think that -- the bottom-line is not really. I mean we're in the mediation stage which just means it's still in the pre-trial stage, the discovery section is largely closed. You know, this is a time when both sides sit down and analyze it but I mean again, I think that from my perspective as I've said generally, I don't see any adverse developments with regard to that, whole case, but at the same time when the Department of Justice has a case against it, it's not a good thing. I mean there are one -- the U.S. government is our one significant customer, we like to be a good -- I have good relationship with them and pretty much every healthcare company one way or another has that same situation and have to deal with these whistleblower type cases and the only true -- the only real defense to them is just make sure you do all your blocking and tackling on a day to day basis to stay on that right side of the angels. But really, no significant change.

Last question for me. You bought in $50 million worth of stock in the first quarter but yet your share account actually went up quarter over quarter. And is that simply the timing of when you made the purchases so we would likely see that be more reflected in the balance of the year.

The short answer is yes, you do a weighted average in the quarter, the other issue is given our guide and analysis the stock prices climbed and that certainly under the GAAP accounting [indiscernible] deluded shares, that lost that a portion but certainly now remotely all of the share repurchasing.

And congratulations, nice job guys.

Thank you.

Thank you. Our next question will come from Bill Sutherland, The Benchmark Company. Please proceed.

Hi, good morning, thanks for taken the question. I am interested in any color that you guys might be able to provide on the VITAS kind of growth plan, I know you've been focused on your current markets in terms of improving the referral flow, but I am just curious any thoughts on New-market growth or any other kinds of expansion.

Well, I will turn it over to Nick in a minute. But let me say generally speaking it's tough, there's some state that like give you example New York, where full profit company, it is very difficult for full profit company gets even be involved in healthcare, their number statement don't have the right -- the graphics [ph] to support up. And vibrant full service hospital company like VITAS. Let me just say that yes, we are -- we've -- over the last 10 years we think we've opened a numbers branches in cities, we closed a few, I mean it is a little bit hit or miss when you -- our goal -- opening a grassroots start-up. We learned some lessons, we continue to focus on growing with expansion to our call our three major states which are Florida, California, and Texas. We have gotten in the last year and half to COMs in Florida which we're very excited about. But generally it's not a high growth business and we're not likely to be become very aggressive on the acquisition front. But Nick, anyone else you want to add to that.

No, just couple comments that Bill, as you pointed out most of -- all of our growth almost excluded has been organically over the past few years, we do have a few new starts in the [indiscernible] have just recently opened up or in the pipeline here in 2017. You know, between the combination of the new starts and or the potential for acquisitions we are always evaluating that markets were not in today what the right entrance strategy would be, if we want to be in those markets and from an acquisition perspective, as we stated I think over the past few years, the past few quarters, will be opportunistic related to any of those opportunities that very frequently come across, but have to be the right situation, have the right valuation associated with it and have some business and strategic value or us long-term. So that our game plan will remain consistent with -- with how it has been in the past and the combination of those sort of free sellers should allow for the growth that we're projecting and forecast in our guidance.

Let me just expand a little bit more as well. So Chem [ph] has expanding existence just a little under 50 year. Kevin has been here for 37 of those years, I was from 27. And acquisitions always played a critical part of our growth in returning value to shareholders. But with that said, acquisitions have to have a return on capital that is adequate for the risk. And I can confidently say over the last 10 to 12 years, the valuations have been so high there is massive risk in mediocrity almost potentially negative returns. Said differently, we think the amount of sheep borrowing that has flooded the market has largely put us to the sideline on acquisitions in most cases, probably absent of [indiscernible] franchisees. So we'll continue to evaluate acquisition. Including things outside of our core businesses of healthcare and pluming services. But quite frankly, until sanity returns on fair return for capital risk, we probably will just stay organic on our growth.

And then just one follow-up on this line of thinking. Strategically do you think of VITAS being exclusively focused on hospice going forward or would there be other post-acute types of care that you would want to co-locate with your hospice.

Bill, I think that is an excellent question. Today our mostly comprised exclusively from hospice perspective, there's also palette [ph] of care which in some people see inter-changeable, while others it's a uniquely different a little bit from a component the hospice benefit. But similarly from an acquisition perspective additional complementary service lines are one of those things that we would always continue to evaluate and have a lot of additional factors regarding reimbursement streams being complimentary to the end of light business, but I think it's one in which for both the short term and long term any of those considerations would be exclusively in post-acute, and exclusively really in the home care component of it, given our expertise right in managing a decentralized workforce in caring for patients and families out in the market, outside of the four walls of facility.

And we have tried, as suggested we've -- we've tried a number of expansions with limited success, so again there is still question, we don't want to take our focus away from our core business, which would again Texas still has that -- a nice but certainly do not explosive upside but a nice solid predictable upside the is really been the basis of our -- a good part of it, part of the growth the last 13, 14 years.

And any of the pieces would need to be complimentary in nature.

Okay, thanks for the color, appreciate it.

Now I would like to turn the call back to Mr. Kevin McNamara, President and Chief Executive officer for closing comments and remarks.

Okay, I don't really have too many significant closing comments, other than thank everyone for listening and we are pleased with the quarter, and will be back in about three months and hope to report another good quarter. Thank you.

Ladies and gentlemen, thank you for your participation on today's conference, this does include the program. You may all disconnect, everybody have a wonderful day.