UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q ~~(Mark~~

(Mark One) Quarterly Report Under Section 13 or 15 (d) of the Securities Exchange Act of 1934 For the Quarterly Period Ended September X 30, 2007 -------- Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934 --------

	X		Quarterly Report Under Section 13 or 15 (d) of the Securities Exchange Act of 1934 For the Quarterly Period Ended March 31, 2008

			Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Commission File Number: 1-8351

CHEMED CORPORATION ~~(Exact~~

(Exact name of registrant as specified in its charter) Delaware 31-0791746 (State or other jurisdiction of (IRS Employer Identification No.) incorporation or organization) 2600 Chemed Center, 255 E. Fifth Street, 45202 Cincinnati, Ohio (Address of principal executive offices) (Zip code)

Delaware		31-0791746
(State or other jurisdiction of incorporation or organization)		(IRS Employer Identification No.)

2600 Chemed Center, 255 E. Fifth Street, Cincinnati, Ohio		45202
(Address of principal executive offices)		(Zip code)

(513) 762-6900 ~~(Registrant's~~

(Registrant’s telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter periods that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. ~~Yes X No ---- ----~~

Yes

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer or a non-accelerated filer (as defined in Rule 12b-2 of the Exchange Act). ~~Large Accelerated Non-accelerated accelerated filer X filer filer ---- ---- ----~~

Large accelerated filer

Accelerated filer

Non-accelerated filer

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). ~~Yes No X ---- ----~~

Yes

Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date. Class Amount Date Capital Stock 23,926,680 Shares September 30, 2007 $1 Par Value ================================================================================ 1

Class	Amount	Date

Capital Stock $1 Par Value	23,728,308 Shares	March 31, 2008

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CHEMED CORPORATION AND

SUBSIDIARY COMPANIES

Index

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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,
					2008			2007
ASSETS
Current assets
Cash and cash equivalents					$	29,704		$	4,988
Accounts receivable less allowances of $9,818
(2007 - $9,746)						87,004			101,170
Inventories						7,439			6,596
Current deferred income taxes						14,996			14,212
Prepaid expenses and other current assets						9,035			10,496
Total current assets						148,178			137,462
Investments of deferred compensation plans held in trust						29,524			29,417
Notes receivable						-			9,701
Properties and equipment, at cost, less accumulated
depreciation of		$	92,467	(2007 - $88,639)		72,910			74,513
Identifiable intangible assets less accumulated
amortization of		$	18,253	(2007 - $17,245)		64,168			65,177
Goodwill						438,656			438,689
Other assets						15,467			15,411
	Total Assets				$	768,903		$	770,370

LIABILITIES
Current liabilities
Accounts payable					$	46,450		$	46,168
Current portion of long-term debt						10,166			10,162
Income taxes						10,100			4,221
Accrued insurance						37,600			36,337
Accrued compensation						31,195			40,072
Other current liabilities						14,474			13,929
Total current liabilities						149,985			150,889
Deferred income taxes						5,465			5,802
Long-term debt						212,070			214,669
Deferred compensation liabilities						29,653			29,149
Other liabilities						5,540			5,512
	Total Liabilities					402,713			406,021

STOCKHOLDERS' EQUITY
Capital stock - authorized 80,000,000 shares $1 par; issued 29,379,006
shares (2007 - 29,260,791 shares)						29,379			29,261
Paid-in capital						271,296			267,312
Retained earnings						293,707			278,336
Treasury stock - 5,650,698 shares (2007 - 5,299,056 shares), at cost						(230,594	)		(213,041	)
Deferred compensation payable in Company stock						2,402			2,481
	Total Stockholders' Equity					366,190			364,349
	Total Liabilities and Stockholders' Equity				$	768,903		$	770,370


See accompanying notes to unaudited financial statements.

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CHEMED CORPORATION AND SUBSIDIARY COMPANIES
UNAUDITED CONSOLIDATED STATEMENT OF INCOME
(in thousands, except per share data)



	Three Months Ended March 31,
	2008			2007
Service revenues and sales	$	285,268		$	270,439
Cost of services provided and goods sold
(excluding depreciation)		205,812			188,247
Selling, general and administrative expenses		42,727			48,070
Depreciation		5,438			4,715
Amortization		1,450			1,315
Other operating income		-			(1,138	)
Total costs and expenses		255,427			241,209
Income from operations		29,841			29,230
Interest expense		(1,597	)		(3,742	)
Other (expense)/income--net		(1,189	)		869
Income before income taxes		27,055			26,357
Income taxes		(10,235	)		(10,136	)
Net income	$	16,820		$	16,221


Earnings Per Share
Net income	$	0.70		$	0.63
Average number of shares outstanding		23,873			25,716

Diluted Earnings Per Share
Net income	$	0.69		$	0.62
Average number of shares outstanding		24,285			26,162

Cash Dividends Per Share	$	0.06		$	0.06

See accompanying notes to unaudited financial statements.

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CHEMED CORPORATION AND SUBSIDIARY COMPANIES
UNAUDITED CONSOLIDATED STATEMENT OF CASH FLOWS
(in thousands)
	Three Months Ended
	March 31,
	2008				2007
Cash Flows from Operating Activities
Net income		$	16,820		$	16,221
Adjustments to reconcile net income to net cash provided
by operating activities:
Depreciation and amortization			6,888			6,030
Provision for uncollectible accounts receivable			2,002			2,084
Provision for deferred income taxes			(1,126	)		(345	)
Amortization of debt issuance costs			254			455
Noncash long-term incentive compensation			-			4,719
Changes in operating assets and liabilities, excluding
amounts acquired in business combinations
Decrease in accounts receivable			12,112			5,275
Increase in inventories			(843	)		(174	)
Decrease in prepaid expenses and
other current assets			1,488			858
Decrease in accounts payable and other current liabilities			(5,679	)		(9,091	)
Increase in income taxes			6,677			9,538
Increase in other assets			(293	)		(2,102	)
Increase in other liabilities			532			2,218
Excess tax benefit on share-based compensation			(825	)		(611	)
Other sources/(uses)			1,524			(375	)
Net cash provided by operating activities			39,531			34,700
Cash Flows from Investing Activities
Net sources/(uses) from the disposition of discontinued operations			9,556			(3,876	)
Capital expenditures			(3,891	)		(5,764	)
Proceeds from sales of property and equipment			19			2,975
Other uses			(122	)		(361	)
Net cash provided/(used) by investing activities			5,562			(7,026	)
Cash Flows from Financing Activities
Purchases of treasury stock			(16,263	)		(24,199	)
Repayment of long-term debt			(2,595	)		(141	)
Dividends paid			(1,449	)		(1,555	)
Decrease in cash overdrafts payable			(963	)		(1,608	)
Excess tax benefit on share-based compensation			825			611
Other sources			68			81
Net cash used by financing activities			(20,377	)		(26,811	)
Increase in Cash and Cash Equivalents			24,716			863
Cash and cash equivalents at beginning of year			4,988			29,274
Cash and cash equivalents at end of period		$	29,704		$	30,137


See accompanying notes to unaudited financial statements.

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CHEMED CORPORATION AND SUBSIDIARY COMPANIES Index Page No. PART I. FINANCIAL INFORMATION: Item 1. Financial Statements Unaudited Consolidated Balance Sheet - September 30, 2007 and December 31, 2006 3 Unaudited Consolidated Statement of Income - Three and nine months ended September 30, 2007 and 2006 4 Unaudited Consolidated Statement of Cash Flows - Nine months ended September 30, 2007 and 2006 5

Notes to Unaudited Financial Statements 6 Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations 20 Item 3. Quantitative and Qualitative Disclosures about Market Risk 29 Item 4. Controls and Procedures 29 PART II. OTHER INFORMATION Item 6. Exhibits 30 2

5 ~~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 (“GAAP”) for complete financial statements. The December 31, 2007 balance sheet data were derived from audited financial statements but does not include all disclosures required by GAAP. 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.~~2007. Certain ~~2006~~2007 amounts have been reclassified to conform with current period presentation inon the balance sheet ~~and statement of income primarily~~ related to the presentation of ~~the discontinued operations of~~Medicaid nursing home pass-through activity at our ~~former Phoenix hospice program.~~ VITAS subsidiary.

2. Refinancing Transactions 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 indices 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 wrote-off approximately $2.3 million in deferred debt costs. The write-off of deferred debt costs has been recorded as loss on extinguishment of debt in the accompanying statement of income. On May 4, 2007, we used the proceeds from the 2007 Facility to fund the redemption of our $150 million, 8.75% Senior Notes due 2011. The redemption was made pursuant to the terms of the indenture at a price of 104.375% plus accrued but unpaid interest. In connection with the redemption, we wrote-off approximately $4.8 million in deferred debt costs. The premium payment of $6.6 million and the write-off of deferred debt costs have been recorded as loss on extinguishment of debt in the accompanying statement of income. On May 8, 2007, we entered into a Purchase Agreement with J.P. Morgan Securities Inc. and Citigroup Global Markets Inc. (the "Initial Purchasers") for issuance and sale of $180 million in aggregate principal amount of our 1.875% Senior Convertible Notes due 2014 (the "Notes"). On May 9, 2007, the Initial Purchasers exercised an over-allotment option to purchase an additional $20 million in aggregate principal amount of Notes. On May 14, 2007 a total of $200 million in aggregate principal amount of the Notes were sold to the Initial Purchasers at a price of $1,000 per Note, less an underwriting fee of $27.50 per Note. The Notes are to be resold by the Initial Purchasers pursuant to Rule 144A of the Securities Act of 1933, as amended (the "Securities Act"). We received approximately $194 million in net proceeds from the sale of the Notes after paying underwriting fees, legal and other expenses. Proceeds from the offering were used to purchase treasury shares of our stock, as discussed further in Note 3 and to pay down a portion of the 2007 Facility. We will pay interest on the Notes on May 15 and November 15 of each year, beginning on November 15, 2007. The Notes will mature on May 15, 2014. The Notes are guaranteed on an unsecured senior basis by each of our subsidiaries that are a borrower or a guarantor under any senior credit facility, as defined in the Indenture. The Notes are convertible, under certain circumstances, into our Capital Stock at a conversion rate of 12.3874 shares per $1,000 principal amount of Notes. This conversion rate is equivalent to an initial conversion price of approximately $80.73 per share. Prior to March 1, 2014, holders may convert their Notes under certain circumstances. On and after March 1, 2014, the Notes will be convertible at any time prior to the close of business three days prior to the stated maturity date of the Notes. Upon conversion of a Note, if the conversion value is $1,000 or less, holders will receive cash equal to the lesser of $1,000 or the conversion value of the number of shares of our Capital Stock. If the conversion value exceeds $1,000, in addition to this, holders will receive shares of our Capital Stock for the excess amount. The Indenture contains customary terms and covenants that upon certain events of default, including without limitation, failure to pay when due any principal amount, a fundamental change or certain cross defaults in other agreements or instruments, occurring and continuing; either the trustee or the holders of 25% in aggregate principal amount of the Notes may declare the principal of the Notes and any accrued and unpaid interest through the date of such declaration immediately due and payable. In the case of certain events of bankruptcy or insolvency relating to any significant subsidiary or to us, the principal amount of the Notes and accrued interest automatically becomes due and payable. 6 Pursuant to the guidance in Emerging Issues Task Force ("EITF") 90-19, "Convertible Bonds with Issuer Option to Settle for Cash Upon Conversion", EITF 00-19 "Accounting for Derivative Instruments Indexed to, and Potentially Settled in a Company's Own Stock" and EITF 01-6 "The Meaning of Indexed to a Company's Own Stock", the Notes are accounted for as convertible debt in the accompanying consolidated balance sheet and the embedded options within the Notes have not been accounted for as separate derivatives. We, our subsidiary guarantors and the Initial Purchasers also entered into a Registration Rights Agreement (the "RRA") dated May 14, 2007. Pursuant to the RRA, we agreed to, no later than the 120th day after May 14, 2007, file a shelf registration statement covering resale of the Notes and the Capital Stock issuable upon conversion pursuant to Rule 415 under the Securities Act. On August 17, 2007, we filed a shelf registration statement, that became immediately effective, to register the Notes and Capital Stock issuable upon conversion. On May 8, 2007 we entered into a purchased call transaction and a warrant transaction (written call) with JPMorgan Chase, National Association and Citibank, N.A. (the "Counterparties"). The purchased call options cover approximately 2,477,000 shares of our Capital Stock, which under most circumstances represents the maximum number of shares of Capital Stock that underlie the Notes. Concurrently with entering into the purchased call options, we entered into warrant transactions with each of the Counterparties. Pursuant to the warrant transactions, we sold to the Counterparties warrants to purchase in the aggregate approximately 2,477,000 shares of Capital Stock. In most cases, the sold warrants may not be exercised prior to the maturity of the Notes. The purchased call options and sold warrants are separate contracts with the Counterparties, are not part of the terms of the Notes and do not affect the rights of holders under the Notes. A holder of the Notes will not have any rights with respect to the purchased call options or the sold warrants. The purchased call options are expected to reduce the potential dilution upon conversion of the Notes if the market value per share of the Capital Stock at the time of exercise is greater than approximately $80.73, which corresponds to the initial conversion price of the Notes. The sold warrants have an exercise price of $105.44 and are expected to result in some dilution should the price of our Capital Stock exceed this exercise price. See Note 7 for further detail with respect to the potential impact of these transactions on our Earnings Per Share. Our net cost for these transactions was approximately $27.3 million. Pursuant to EITF 00-19 and EITF 01-6, the purchased call option and the sold warrants are accounted for as equity transactions. Therefore, our net cost was recorded as a decrease in shareholders' equity in the accompanying consolidated balance sheet. Since May 2007, we have repaid $65.5 million of the $100 million term note under the 2007 Facility using cash on hand. Of the amount paid, $60.5 million represents a prepayment. The following is a schedule by year of required long-term debt repayments as of September 30, 2007 (in thousands): September 2008 $ 10,161 September 2009 10,059 September 2010 10,059 September 2011 4,559 September 2012 58 Thereafter 200,000 ------------------- Total debt 234,896 Less: Current portion (10,161) ------------------- Total long-term debt $ 224,735 =================== We are in compliance with all debt covenants as of September 30, 2007. We have issued $30.1 million in standby letters of credit as of September 30, 2007, mainly for insurance purposes. Issued letters of credit reduce our available credit under the revolving credit agreement. As of September 30, 2007, we have approximately $144.9 million of unused lines of credit available and eligible to be drawn down under our revolving credit facility, excluding the expansion feature. 7 3. Capital Stock Transactions On April 26, 2007, our Board of Directors authorized a $150 million stock repurchase program. For the nine months ended September 30, 2007 we repurchased 2.1 million shares at a weighted average cost of $59.82 per share. For the nine months ended September 30, 2006 we repurchased 111,380 shares at a weighted average cost of $37.30 per share. 4. 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 below.

As of March 31, 2008, VITAS has approximately $10.6 million in unbilled revenue (December 31, 2007 - $9.5 million). The unbilled revenue at VITAS relates to hospice programs currently undergoing focused medical reviews (FMR). During FMR, surveyors working on behalf of the U.S. Federal government review certain patient files for compliance with Medicare regulations. During the time the patient file is under review, we are unable to bill for care provided to those patients. During the past year, the pace of FMR activity has increased industry-wide, resulting in our significant unbilled revenue balances. We make appropriate provisions to reduce our accounts receivable balance for potential denials of patient service revenue due to FMR activity.

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"~~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 and 2008 measurement period, we estimate that no programs have a required Medicare billing reduction. Our current estimates for the projected full year 2007 and 2008 measurement period anticipate no programs with a Medicare cap billing limitation. Therefore, no revenue reduction for Medicare cap has been recorded for the ~~three or nine-month~~three-month period ended ~~September 30, 2007. In October~~March 31, 2008. During the three-month period ended March 31, 2007, we ~~received notification from the Federal government's fiscal intermediary regarding our Medicare cap liabilities~~reversed approximately $472,000 related to the 2006 measurement period. The notification revealed that we were over accrued by $1.2 million, consisting of an under accrual related to continuing operations of $714,000 and an over accrual related to our discontinued Phoenix operation of $1.9 million. Prior to this, we had $9.5 million accrued for the 2006 measurement period related to 3 programs, including our discontinued Phoenix program. The difference between our estimates and the amount calculated by the Federal government's fiscal intermediary was primarily the result of allocations made for patients transferring between our hospice programs and other providers. We continue to believe that our estimation methodology provides a reasonable basis to record potentialestimated Medicare cap liabilities. 5.The reversal of previously recorded amounts was based on improving admissions trends as well as consolidation of certain VITAS programs.

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3. Segments

Service revenues and sales and aftertax earnings by business segment are as follows (in thousands): Three months ended Nine months ended September 30, September 30, ------------------- ------------------- 2007 2006 2007 2006 --------- --------- --------- --------- Service Revenues and Sales - -------------------------- VITAS $188,474 $175,289 $558,224 $512,873

		Three months ended
		March 31,
		2008			2007
Service Revenues and Sales
VITAS		$	198,585		$	184,049
Roto-Rooter			86,683			86,390
	Total	$	285,268		$	270,439

Aftertax Earnings
VITAS		$	13,298		$	14,987
Roto-Rooter			9,095			9,506
	Total		22,393			24,493
Corporate			(5,573	)		(8,272	)
	Net income	$	16,820		$	16,221

Beginning on January 1, 2008, the income statement impact of our deferred compensation plans covering Roto-Rooter 84,029 78,406 256,105 233,811 --------- --------- --------- --------- Total $272,503 $253,695 $814,329 $746,684 ========= ========= ========= ========= Aftertax Earnings - ----------------- VITAS $ 13,921 $ 10,486 $ 43,062 $ 33,273employees has been classified as a Corporate activity. Historically, the income statement impact has been recorded as a Roto-Rooter 8,942 8,509 29,123 22,713 --------- --------- --------- --------- Total 22,863 18,995 72,185 55,986 Corporate (5,947) (6,120) (29,615) (17,523) Discontinued operations 1,201 (4,914) 1,201 (5,445) --------- --------- --------- --------- Net income $ 18,117 $ 7,961 $ 43,771 $ 33,018 ========= ========= ========= ========= 8 ~~6. Patient Care Notes Receivable We have notes receivable of $14.7 million from Patient Care, Inc. related~~activity. Due to the volatility in the capital markets, Roto-Rooter’s operational results were being distorted in our ~~sale of this subsidiary in 2002. In February 2007, the parties amended the terms~~management reporting as a result of the ~~promissory notes receivable.~~activity of the deferred compensation plans. Our Chief Operating Decision Maker, Kevin McNamara, determined that the income statement impact of Roto-Rooter’s deferred compensation plans is more appropriately classified as a Corporate activity. Our internal management reporting documents have been changed to reflect this determination. The ~~amended notes are due October 2009. The interest on~~comparable prior year period has been reclassified to conform to 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 September 30, 2007, Patient Care is current on all interest payments related to these notes. 7.~~year presentation.

4. 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~~2008 and ~~2006~~2007 are computed as follows (in thousands, except per share data):

	Net Income
For the Three Months Ended March 31,	Income		Shares		Earnings per Share
2008
Earnings	$	16,820		23,873	$	0.70
Dilutive stock options		-		377
Nonvested stock awards		-		35
Diluted earnings	$	16,820		24,285	$	0.69
2007
Earnings	$	16,221		25,716	$	0.63
Dilutive stock options		-		386
Nonvested stock awards		-		60
Diluted earnings	$	16,221		26,162	$	0.62

For the period ended March 31, 2008, 832,567 stock options were excluded from the computation of diluted earnings per share as their exercise prices were greater than the average market price for most of the quarter. No stock options were excluded for the comparable period in 2007.

Diluted earnings per share may be impacted in future periods as the result of the issuance of our $200 million Notes and related purchased call options and sold ~~warrants, as described in Note 2 above.~~warrants. Under EITF 04-8 ~~"The~~”The Effect of Contingently Convertible Instruments on Diluted Earnings per ~~Share"~~Share” and EITF 90-19, we will not include any shares related to the Notes in our calculation of diluted earnings per share until our average stock price for a quarter exceeds the conversion price of $80.73. We would then include in our diluted earnings per share calculation those shares issuable using the treasury stock method. The amount of shares issuable is based upon the amount by which the average stock price for the quarter exceeds the conversion price. The purchased call option does not impact the calculation of diluted earnings per share as it is always anti-dilutive. The sold warrants become dilutive when our average stock price for a quarter exceeds the strike price of the warrant. 9

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The following table provides examples of how changes in our stock price impact the number of shares that would be included in our diluted earnings per share calculation. It also shows the impact on the number of shares issuable upon conversion of the Notes and settlement of the purchased call options and sold warrants:

		Shares				Total Treasury		Shares Due			Incremental
		Underlying 1.875%				Method		to the Company			Shares Issued by
Share		Convertible		Warrant		Incremental		under Notes			the Company
Price		Notes		Shares		Shares (a)		Hedges			upon Conversion (b)
$	80.73		-		-		-		-			-
$	90.73		273,061		-		273,061		(273,061	)		-
$	100.73		491,905		-		491,905		(491,905	)		-
$	110.73		671,222		118,359		789,581		(671,222	)		118,359
$	120.73		820,833		313,764		1,134,597		(820,833	)		313,764
$	130.73		947,556		479,274		1,426,830		(947,556	)		479,274

~~Shares Total Treasury Shares Due Incremental Underlying 1.875% Method~~
(a) Represents the number of incremental shares that must be included in the calculation of fully diluted shares under U.S. GAAP.
(b) Represents the number of incremental shares to be issued by the Company ~~Shares Issued by Share~~upon conversion of the 1.875%
Convertible ~~Warrant Incremental under~~ Notes, assuming concurrent settlement of the Company Price Notes Shares Shares (a) Hedges upon Conversion (b) - ----------------- ------------------ ---------------- ---------------- ------------------- ---------------------- $ 80.73 - - - - - $ 90.73 273,061 - 273,061 (273,061) - $ 100.73 491,905 - 491,905 (491,905) - $ 110.73 671,222 118,359 789,581 (671,222) 118,359 $ 120.73 820,833 313,764 1,134,597 (820,833) 313,764 $ 130.73 947,556 479,274 1,426,830 (947,556) 479,274 note hedges and warrants.

~~(a) Represents~~

5. Patient Care Notes Receivable

In December 2007, the ~~number~~parties amended the terms of ~~incremental shares that must be included~~the long-term notes receivable from Patient Care. We agreed to waive the prepayment penalty provisions in the ~~calculation~~notes provided that Patient Care paid $5 million of ~~fully diluted shares~~principal on or before December 31, 2007, and the remaining outstanding principal on or before March 31, 2008. All principal outstanding on the notes receivable was collected as of March 31, 2008.

6. Long-Term Debt

We are in compliance with all debt covenants as of March 31, 2008. We have issued $27.5 million in standby letters of credit as of March 31, 2008, mainly for insurance purposes. Issued letters of credit reduce our available credit under ~~U.S. GAAP. (b) Represents~~ the ~~number~~revolving credit agreement. As of ~~incremental shares~~March 31, 2008, we have approximately $147.5 million of unused lines of credit available and eligible to be ~~issued by~~drawn down under our revolving credit facility, excluding the ~~Company upon conversion of the 1.875% Convertible Notes, assuming concurrent settlement of the note hedges and warrants. 8.~~expansion feature.

7. Other Operating Income

During the first quarter of 2007, we completed the sale of ~~Roto-Rooter's~~Roto-Rooter’s call center building 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. 9.

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8. Other Income -- Net

Other income -- net comprises the following (in thousands):

10 ~~10.~~

	Three Months Ended March 31,
	2008			2007
Interest income	$	337		$	767
(Loss)/gain on trading investments of employee benefit trust		(1,522	)		212
(Loss)/gain on disposal of property and equipment		(29	)		(136	)
Other - net		25			26
Total other income	$	(1,189	)	$	869

9. Other Current Liabilities

Other current liabilities as of ~~September 30, 2007~~March 31, 2008 and December 31, ~~2006~~2007 consist of the following (in thousands): 2007 2006 ----------- ------------ Accrued legal settlements $ 618 $ 1,889 Accrued divestiture expenses 842 2,612 Accrued Medicare Cap estimate 8,279 3,373 Other 11,233 14,810 ----------- ------------ Total other current liabilities $ 20,972 $ 22,684 =========== ============ Accrued Medicare cap as

	2008		2007
Accrued legal settlements	$	2,142	$	2,393
Accrued divestiture expenses		841		845
Accrued Medicare cap estimate		500		500
Other		10,991		10,191

Total other current liabilities	$	14,474	$	13,929

10. Stock-Based Compensation Awards

On February 13, 2008, the Compensation/Incentive Committee of ~~September 30, 2007 includes $4.7 million~~the Board of Directors (“CIC”) approved a grant of 40,315 shares of restricted stock to certain key employees. The restricted shares cliff vest four-years from the date of issuance. The cumulative compensation expense related to ~~our Phoenix program that we sold~~the restricted stock award is $2.1 million and will be recognized ratably over the four-year vesting period. We assumed no forfeitures in ~~November 2006. This amount was recorded in current liabilities from discontinued operations as~~determining the cumulative compensation expense of ~~December 31, 2006. 11. 2002 Executive Long-Term Incentive Plan~~ the grant.

In February 2007, we met the cumulative earnings target specified in the ~~LTIP~~Executive Long-Term Incentive Plan (LTIP) and on March 9, 2007 the ~~Compensation/Incentive Committee of the Board of Directors~~CIC 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. ~~In May 2007,~~No such LTIP grants were made during the ~~Compensation/Incentive Committee~~first quarter of the Board of Directors approved a pool of shares to be awarded based on new earnings before interest, depreciation and amortization (EBITDA) targets. The participants of the LTIP may be awarded 80,000 shares of our capital stock if we attain adjusted EBITDA of either $465 million for the three year period beginning January 1, 2007 or $604 million for the four year period beginning January 1, 2007. In June 2007, we met the $62.00 per share stock price hurdle specified in the 2002 Long-Term Incentive Plan (LTIP) and on June 27, 2007 the Compensation/Incentive Committee of the Board of Directors approved a stock grant of 22,200 shares and the related allocation to participants. The pre-tax cost of the stock grant was $1.6 million and is included in selling, general and administrative expenses in the accompanying statement of income. 12.2008.

11. 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 ~~September 30, 2007,~~March 31, 2008, we had notes receivable from our independent contractors totaling ~~$1.6~~$1.5 million (December 31, ~~2006-$1.9~~2007 - -$1.6 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%zero to 8% per annum and the remaining terms of the loans range from two months to 5 years at ~~September 30, 2007.~~March 31, 2008. During the ~~three and nine months~~three-months ended ~~September 30, 2007,~~March 31, 2008, we recorded revenues of ~~$5.3~~$5.6 million ~~and $16.2 respectively (2006-$4.5 million and $14.1 million, respectively)~~(2007 - $5.4 million) and pretax profits of ~~$2.3~~$2.7 million ~~and $7.1 million, respectively (2006-$1.7 million and $5.5 million, respectively)~~(2007 - $2.5 million) from our independent contractors.

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.~~VIE’s. We believe consolidation, if required, of the accounts of any ~~VIE's~~VIE’s for which we might be the primary beneficiary would not materially impact our financial position, results of operations or cash flows. ~~13.~~

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12. Pension and Retirement Plans

All of the ~~Company's~~Company’s plans that provide retirement and similar benefits are defined contribution plans. Expenses for the ~~Company's~~Company’s pension and profit-sharing plans, excess benefit plans and other similar plans were ~~$2.0~~$2.3 million and ~~$9.7~~$3.6 million for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2008 and 2007, respectively. Expenses for the Company's pension and profit-sharing plans, excess benefit plans and other similar plans were $2.6 million and $7.5 million for the three and nine months ended September 30, 2006, respectively. 11 ~~14.~~

13. 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"~~(“Santos”). This case ~~filed by the Costa case Plaintiffs' counsel, makes similar allegations of~~alleges 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'~~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.

In April 2007, our Roto-Rooter subsidiary was named in a class action lawsuit filed in San Mateo Superior Court by Stanley Ita (“Ita”) alleging class-wide wage and hour violations at one California branch. This suit alleges failure to provide meal and break periods, credit for work time beginning from the first call to dispatch rather than arrival at first assignment and improper calculations of work time and overtime. The case sought payment of penalties, interest and Plaintiffs’ attorney fees. After the suit was filed, we offered a settlement to certain members of the class and paid approximately $200,000. In January 2008, we agreed to a tentative settlement with the remaining members of the class for approximately $1.8 million. The tentative settlement is subject to court approval. The tentative settlement has been accrued in the accompanying financial statements as of and for the year ended December 31, 2007.

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.~~

14. OIG Investigation

In April 2005, the Office of Inspector General ~~("OIG"~~(“OIG”) for the Department of Health and Human Services served VITAS with civil subpoenas relating to ~~VITAS'~~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'~~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. The Court dismissed a related qui tam complaint filed in U.S. District Court for the Southern District of Florida with prejudice in July 2007. The plaintiffs are appealing this dismissal. Pretax expenses related to complying with OIG requests ~~have been~~were immaterial for the three ~~and nine-month periods ended September 30, 2007. We incurred pretax expense related to complying with OIG requests and defending the litigation of $344,000 and $818,000 for the three and nine~~ months ended ~~September 30, 2006, respectively.~~ March 31, 2008 and 2007.

The government ~~may continue~~continues to investigate the ~~complaint's~~complaint’s allegations. We are unable to predict the outcome of this matter or the impact, if any, that the investigation may have on our 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. ~~16.~~

15. Related Party Agreement

In October 2004, VITAS entered into a pharmacy services agreement ("Agreement") with Omnicare, Inc. ("OCR") whereby OCR provides 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 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 ~~$8.6~~$8.3 million and ~~$25.1~~$8.2 million for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2008 and 2007, respectively ~~(2006 - $8.0 million and $22.3 million, respectively)~~ and has accounts payable of ~~$912,000~~$695,000 at ~~September 30, 2007.~~ March 31, 2008.

Mr. E. L. Hutton is non-executive Chairman of the Board and a director of the ~~Company and OCR.~~Company. He was a director of OCR until his retirement in the first quarter of 2008 at which time he assumed the honorary post of Chairman Emeritus of OCR’s Board. 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. Ms. Andrea Lindell, a nominee for election to our Board of Directors, is also a director 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.~~

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16. Cash Overdrafts Payable

Included in accounts payable at ~~September 30, 2007~~March 31, 2008 is cash overdrafts payable of ~~$13.1~~$9.7 million (December 31, ~~2006~~2007 - ~~$10.6~~$9.5 million). 12

17. Capital Stock Transactions

On April 26, 2007, our Board of Directors authorized a $150 million stock repurchase program. For the three months ended March 31, 2008 we repurchased 300,000 shares at a weighted average cost of $49.19 per share. For the three months ended March 31, 2007 we repurchased 626,079 shares at a weighted average cost of $46.76 per share.

18. ~~Uncertain Tax Positions~~ Fair Value Measurements

On January 1, ~~2007,~~2008, we partially adopted ~~FASB Interpretation~~the provisions of Statement No. ~~48 (FIN 48), "Accounting~~157, “Fair Value Measurements” (“SFAS 157”). This statement defines a hierarchy which prioritizes the inputs in fair value measurements. Level 1 measurements are measurements using quoted prices in active markets for ~~Uncertainty in Income Taxes - an Interpretation~~identical assets or liabilities. Level 2 measurements use significant other observable inputs. Level 3 measurements are measurements using significant unobservable inputs which require a company to develop its own assumptions. In recording the fair value of ~~FASB Statement 109", which prescribes a comprehensive model for how to recognize, measure, present~~assets and ~~disclose in~~liabilities, companies must use the most reliable measurement available. There was no impact on our financial ~~statements uncertain tax positions taken~~position or ~~expected to be taken on a tax return. Upon adoption~~results 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 effectoperations upon adoption of ~~FIN 48 was~~SFAS 157. We have elected to ~~reduce our accrual for uncertain tax positions by approximately $4.7 million, which has been recorded in retained earnings as~~partially defer adoption of January 1, 2007 in the accompanying consolidated balance sheet. After adoption, we had approximately $1.3 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, 2004 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 net change in unrecognized tax benefits will be a decrease of approximately $200,000 to $250,000 due to normal quarterly provisions, releases upon expiration of certain statutes of limitation and the settlement of current audits. As permitted by FIN 48, we reclassified interestSFAS No. 157 related to our ~~accrual for uncertain tax positions to separate interest accounts. We believe this change~~goodwill and indefinite-lived intangible assets in ~~accounting method is preferable as it more accurately classifies the impact of interest in our consolidated balance sheet and consolidated statement of income.~~ accordance with FASB Staff Position 157-2.

As of ~~September 30, 2007,~~March 31, 2008, we ~~have approximately $137,000 accrued~~hold $29.5 million of investments in ~~interest~~mutual funds and company owned life insurance policies in a Rabbi Trust related to ~~uncertain tax positions.~~certain of our deferred compensation plans and $28.2 million in cash equivalents invested in overnight securities. These ~~accruals~~investments are ~~included~~valued using quoted prices in ~~other current liabilities in the accompanying consolidated balance sheet. For the three and nine months ended September 30, 2007, we have recorded approximately $1,000 and $28,000, respectively~~active markets for ~~net interest expense related to uncertain tax positions in interest expense in the accompanying consolidated statement of income.~~ identical investments (Level 1).

19. Recent Accounting Statements

In ~~February~~December 2007, the FASB issued Statement No. ~~159, "The Fair Value Option for Financial Assets and Financial Liabilities" ("~~141(R) “Business Combinations (revised 2007)” (“SFAS ~~159"~~141(R)”), which ~~permits~~changes certain aspects of the accounting for business combinations. This Statement retains the fundamental requirements in Statement No. 141 that the purchase method of accounting be used for all business combinations and for an ~~entity~~acquirer to ~~measure certain financial assets~~be identified for each business combination. SFAS 141(R) modifies existing accounting guidance in the areas of deal and ~~financial liabilities at fair value. Entities that elect~~restructuring costs, acquired contingencies, contingent consideration, in-process research and development, accounting for subsequent tax adjustments and assessing the ~~fair value option will report unrealized gains and losses in earnings at each reporting~~valuation date. ~~The fair value option may be elected~~This Statement applies prospectively to business combinations for which the acquisition date is 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 ofor after the beginning of the first ~~fiscal year~~annual reporting period beginning on or after December 15, 2008. An entity may not apply it before that ~~begins after November 15, 2007. We believe there~~date. There will be no impact on our financial ~~condition and results of operations~~statements as a result of the adoption of SFAS ~~159.~~ 141(R); however our accounting for all business combinations after adoption will comply with the new standard.

In ~~September 2006,~~December 2007, the FASB issued Statement No. ~~157, "Fair Value Measurements" ("~~160 “Non-controlling Interests in Consolidated Financial Statements – an amendment of ARB No. 51” (“SFAS ~~157"~~160”), 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 valuerequires ownership interests in subsidiaries held by others to be ~~used throughout GAAP. The new standard~~clearly identified, labeled and presented in the consolidated balance sheet within equity but separate from the parent company’s equity. SFAS 160 also affects the accounting requirements when the parent company either purchases a higher ownership interest or deconsolidates the equity investment. This Statement applies prospectively to business combinations for which the acquisition date is ~~designed to make~~on or after the ~~measurement~~beginning of ~~fair value more consistent and comparable and improve disclosures about those measures. This statement is effective for~~the first annual reporting period beginning on or after December 15, 2008. An entity may not apply it before that date. We currently do not have non-controlling interests in our consolidated 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, results of operations and footnote disclosures. 13 statements.

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20. Guarantor Subsidiaries

Our 1.875% Notes are fully and unconditionally guaranteed on an unsecured, joint and severally liable basis by certain of our 100% owned subsidiaries. The following unaudited, condensed, consolidating financial data presents the composition of the parent company (Chemed), the guarantor subsidiaries and the non-guarantor subsidiaries as of ~~September 30, 2007~~March 31, 2008 and December 31, ~~2006~~2007 for the balance sheet and the three ~~and nine~~ months ended ~~September 30,~~March 31, 2008 and 2007 ~~and 2006~~ for the income statement and ~~the nine months ended September 30, 2007 and 2006 for~~ the statement of cash flows (dollars in thousands):

Condensed Consolidating Balance Sheet

(As of March 31, 2008)				Guarantor			Non-Guarantor			Consolidating
	Parent			Subsidiaries			Subsidiaries			Adjustments			Consolidated
ASSETS
Cash and cash equivalents	$	28,524		$	(1,389	)	$	2,569		$	-		$	29,704
Accounts receivable, less allowances		1,133			85,425			446			-			87,004
Intercompany receivables		3,183			-			(3,849	)		666			-
Inventories		-			6,736			703			-			7,439
Current deferred income taxes		142			14,675			179			-			14,996
Prepaid expenses and other current assets		681			8,234			120			-			9,035
Total current assets		33,663			113,681			168			666			148,178
Investments of deferred compensation plans held in trust		-			-			29,524			-			29,524
Properties and equipment, at cost, less accumulated depreciation		4,216			66,811			1,883			-			72,910
Identifiable intangible assets less accumulated amortization		-			64,167			1			-			64,168
Goodwill		-			433,946			4,710			-			438,656
Other assets		12,772			2,406			289			-			15,467
Investments in subsidiaries		516,665			11,573			-			(528,238	)		-
Total assets	$	567,316		$	692,584		$	36,575		$	(527,572	)	$	768,903
LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts payable	$	(1,666	)	$	47,752		$	364		$	-		$	46,450
Intercompany payables		-			(3,239	)		2,573			666			-
Current portion of long-term debt		10,000			166			-			-			10,166
Income taxes		(4,439	)		12,800			1,739			-			10,100
Accrued insurance		359			37,241			-			-			37,600
Accrued salaries and wages		789			29,914			492			-			31,195
Other current liabilities		3,395			10,958			121			-			14,474
Deferred income taxes		(23,040	)		38,935			(10,430	)		-			5,465
Long-term debt		212,000			70			-			-			212,070
Deferred compensation liabilities		-			-			29,653			-			29,653
Other liabilities		3,728			1,793			19			-			5,540
Stockholders' equity		366,190			516,194			12,044			(528,238	)		366,190
Total liabilities and stockholders' equity	$	567,316		$	692,584		$	36,575		$	(527,572	)	$	768,903

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(as of December 31, 2007)				Guarantor			Non-Guarantor			Consolidating
	Parent			Subsidiaries			Subsidiaries			Adjustments			Consolidated
ASSETS
Cash and cash equivalents	$	3,877		$	(1,584	)	$	2,695		$	-		$	4,988
Accounts receivable, less allowances		706			99,900			564			-			101,170
Intercompany receivables		42,241			-			(3,925	)		(38,316	)		-
Inventories		-			6,116			480			-			6,596
Current deferred income taxes		130			13,964			118			-			14,212
Prepaid expenses and other current assets		884			9,521			91			-			10,496
Total current assets		47,838			127,917			23			(38,316	)		137,462
Investments of deferred compensation plans held in trust		-			-			29,417			-			29,417
Note receivable		9,701			-			-			-			9,701
Properties and equipment, at cost, less accumulated depreciation		4,306			68,303			1,904			-			74,513
Identifiable intangible assets less accumulated amortization		-			65,176			1			-			65,177
Goodwill		-			433,946			4,743			-			438,689
Other assets		12,658			2,450			303			-			15,411
Investments in subsidiaries		500,952			11,005			-			(511,957	)		-
Total assets	$	575,455		$	708,797		$	36,391		$	(550,273	)	$	770,370
LIABILITIES AND STOCKHOLDERS' EQUITY
Accounts payable	$	(1,236	)	$	47,035		$	369		$	-		$	46,168
Intercompany payables		-			34,992			3,324			(38,316	)		-
Current portion of long-term debt		10,000			162			-			-			10,162
Income taxes		1,137			3,034			50			-			4,221
Accrued insurance		255			36,082			-			-			36,337
Accrued salaries and wages		3,882			35,505			685			-			40,072
Other current liabilities		2,047			10,486			1,396			-			13,929
Deferred income taxes		(23,174	)		39,247			(10,271	)		-			5,802
Long-term debt		214,500			169			-			-			214,669
Deferred compensation liabilities		-			-			29,149			-			29,149
Other liabilities		3,695			1,797			20			-			5,512
Stockholders' equity		364,349			500,288			11,669			(511,957	)		364,349
Total liabilities and stockholders' equity	$	575,455		$	708,797		$	36,391		$	(550,273	)	$	770,370

Condensed Consolidating Income Statement

(For the three months ended March 31, 2008)				Guarantor			Non-Guarantor			Consolidating
	Parent			Subsidiaries			Subsidiaries			Adjustments			Consolidated
Continuing Operations
Net sales and service revenues	$	-		$	278,862		$	6,406		$	-		$	285,268
Cost of services provided and goods sold		-			202,704			3,108			-			205,812
Selling, general and administrative expenses		4,050			38,788			(111	)		-			42,727
Depreciation		124			5,149			165			-			5,438
Amortization		441			1,009			-			-			1,450
Total costs and expenses		4,615			247,650			3,162			-			255,427
Income/ (loss) from operations		(4,615	)		31,212			3,244			-			29,841
Interest expense		(1,463	)		(133	)		(1	)		-			(1,597	)
Other income - net		1,368			(1,056	)		(1,501	)		-			(1,189	)
Income/ (loss) before income taxes		(4,710	)		30,023			1,742			-			27,055
Income tax (provision)/ benefit		2,058			(10,979	)		(1,314	)		-			(10,235	)
Equity in net income of subsidiaries		19,472			699			-			(20,171	)		-
Net income	$	16,820		$	19,743		$	428		$	(20,171	)	$	16,820

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(For the three months ended March 31, 2007)				Guarantor			Non-Guarantor			Consolidating
	Parent			Subsidiaries			Subsidiaries			Adjustments			Consolidated
Continuing Operations
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		(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 - 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

Condensed Consolidating Statement of Cash Flows

(For the three months ended March 31, 2008)				Guarantor			Non-Guarantor
	Parent			Subsidiaries			Subsidiaries			Consolidated
Cash Flow from Operating Activities:
Net cash provided by operating activities	$	(7,889	)	$	46,513		$	907		$	39,531
Cash Flow from Investing Activities:
Capital expenditures		(42	)		(3,695	)		(154	)		(3,891	)
Net proceeds from sale of discontinued operations		9,556			-			-			9,556
Proceeds from sale of property and equipment		10			7			2			19
Other sources and uses - net		(155	)		33			-			(122	)
Net cash provided/ (used) by investing activities		9,369			(3,655	)		(152	)		5,562
Cash Flow from Financing Activities:
Decrease in cash overdrafts payable		(332	)		(631	)		-			(963	)
Change in intercompany accounts		42,838			(42,009	)		(829	)		-
Dividends paid to shareholders		(1,449	)		-			-			(1,449	)
Purchases of treasury stock		(16,263	)		-			-			(16,263	)
Proceeds from exercise of stock options		116			-			-			116
Realized excess tax benefit on share based compensation		825			-			-			825
Repayment of long-term debt		(2,500	)		(95	)		-			(2,595	)
Other sources and uses - net		(68	)		72			(52	)		(48	)
Net cash provided/ (used) by financing activities		23,167			(42,663	)		(881	)		(20,377	)
Net increase/(decrease) in cash and cash equivalents		24,647			195			(126	)		24,716
Cash and cash equivalents at beginning of year		3,877			(1,584	)		2,695			4,988
Cash and cash equivalents at end of period	$	28,524		$	(1,389	)	$	2,569		$	29,704

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(For the three months ended March 31, 2007)				Guarantor			Non-Guarantor
	Parent			Subsidiaries			Subsidiaries			Consolidated
Cash Flow from Operating Activities:
Net cash provided 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 sources and 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

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Item 2. ~~Management's~~Management’s Discussion and Analysis of Financial Condition and Results of Operations

Executive Summary ~~- -----------------~~

We operate through our two wholly owned subsidiaries, VITAS Healthcare Corporation and Roto-Rooter Group, Inc. VITAS focuses on hospice care that helps make terminally ill ~~patients'~~patients’ final days as comfortable as possible. Through its team of doctors, nurses, home health aides, social workers, clergy and volunteers, VITAS provides direct medical services to patients, as well as spiritual and emotional counseling to both patients and their families. ~~Roto-Rooter's~~Roto-Rooter’s services are focused on providing plumbing and drain cleaning services to both residential and commercial customers. Through its network of company-owned branches, independent contractors and franchisees, Roto-Rooter offers plumbing and drain cleaning service to over 90% of the U.S. population.

The following is a summary of the key operating results for the three ~~and nine~~ months ended ~~September 30,~~March 31, 2008 and 2007 ~~and 2006~~ (in thousands except per share amounts):

~~For the three months ended September 30, 2007 compared to 2006, the increase in consolidated service revenues and sales was driven by a 7.5% increase at VITAS and a 7.2% increase at Roto-Rooter.~~

	Three Months Ended March 31,
	2008		2007
Consolidated service revenues and sales	$	285,268	$	270,439

Consolidated net income	$	16,820	$	16,221

Diluted EPS	$	0.69	$	0.62

The increase at VITAS was primarily the result of a 4.6% increase in average daily census (ADC) from the third quarter of 2006 and the October 1, 2006 Medicare reimbursement rate increase. The increase at Roto-Rooter was driven primarily by increases due to price and job mix changes. Job count was essentially unchanged for the three months ended September 30, 2007 compared to 2006. For the nine months ended September 30, 2007 compared to 2006, the increase in consolidated service revenues and sales was driven by an ~~8.8%~~8% increase at VITAS ~~and a 9.5% increase at Roto-Rooter.~~while Roto-Rooter was essentially flat. The increase at VITAS was primarily the result of a ~~6.9%~~3.4% increase in average daily census (ADC) from the first ~~nine months~~quarter of ~~2006 and~~2007, the October 1, ~~2006~~2007 Medicare reimbursement rate ~~increase. The~~ increase atof approximately 3% and a slight mix shift to higher acuity days of care. Roto-Rooter was driven ~~primarily~~ by a ~~1.2% increase~~7% decrease in job count ~~combined~~offset with an approximate ~~8% increase due to~~7.8% price and ~~job~~ mix ~~changes. In October 2007, we received notification from~~shift increase. Consolidated net income increased at a slower rate than the ~~Federal government's fiscal intermediary regarding our Medicare cap liabilities related~~increase in revenues due mainly to ~~the 2006 measurement period. The notification revealed that we were over accrued by $1.2 million, consisting of an under accrual related to continuing operations of $714,000~~increased admissions and an over accrual related to our discontinued Phoenix operation of $1.9 million. Prior to this, we had $9.5 million accrued for the 2006 measurement period related to 3 programs, including our discontinued Phoenix program. The difference between our estimates and the amount calculated by the Federal government's fiscal intermediary was primarilydirect labor costs reducing overall gross margins at VITAS. Diluted EPS increased as the result of ~~allocations made for patients transferring between~~increased earnings and a reduction of diluted share count due to our ~~hospice programs and other providers. We continue to believe that our estimation methodology provides a reasonable basis to record potential Medicare cap liabilities.~~ stock repurchase program.

Financial Condition

Liquidity and Capital Resources

Significant changes in the balance sheet accounts from December 31, ~~2006~~2007 to ~~September 30, 2007~~March 31, 2008 include the following: o

The main cause of the $14.2 million decrease in accounts receivable ~~from $93.1 million at December 31, 2006 to $81.7 million at September 30, 2007 is due mainly~~relates to the timing of payments received from ~~Medicare. o~~ the US Government for VITAS. Offsetting the decrease due to timing of Medicare payments, our uncollected receivables and unbilled revenue from focused medical review (FMR) activity at VITAS increased approximately $3 million since year end. Roto-Rooter receivables are virtually unchanged reflecting the flat revenues from the fourth quarter of 2007.

The ~~increase~~notes receivable due from Patient Care were collected in ~~current portion~~full during the first quarter of long-term debt and long-term debt is the result of our refinancing transactions described in detail below. o The decrease in long-term deferred income taxes of $22.9 million relates mainly to the treatment of the premium payment made in conjunction with our purchased call options described below. o 2008.

The increase in treasury stock ~~of $133.9 million~~ relates ~~mainly~~ to ~~our share~~the repurchase ~~program. 20~~ 300,000 shares made under the 2007 Share Repurchase Program.

Net cash provided by continuing operations increased ~~$54.4~~$4.8 million ~~from a source of cash by continuing operations of $35.7 million for the first nine months of 2006, to a source of cash of $90.1 million for the first nine months of 2007,~~ due primarily to ~~higher net income and~~ the ~~timing of cash collections and payments~~decrease in accounts receivable and accounts payable. 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 indices 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 wrote-off approximately $2.3 million in deferred debt costs. The write-off of deferred debt costs has been recorded as loss on extinguishment of debt in the accompanying statement of income. On May 4, 2007, we used the proceeds from the 2007 Facility to fund the redemption of our $150 million, 8.75% Senior Notes due 2011. The redemption was made pursuant to the terms of the indenture at a price of 104.375% plus accrued but unpaid interest. In connection with the redemption, we wrote-off approximately $4.8 million in deferred debt costs. The premium payment of $6.6 million and the write-off of deferred debt costs have been recorded as loss on extinguishment of debt in the accompanying statement of income. On May 8, 2007, we entered into a Purchase Agreement with J.P. Morgan Securities Inc. and Citigroup Global Markets Inc. (the "Initial Purchasers") for issuance and sale of $180 million in aggregate principal amount of our 1.875% Senior Convertible Notes due 2014 (the "Notes"). On May 9, 2007, the Initial Purchasers exercised an over-allotment option to purchase an additional $20 million in aggregate principal amount of Notes. On May 14, 2007 a total of $200 million in aggregate principal amount of the Notes were sold to the Initial Purchasers at a price of $1,000 per Note, less an underwriting fee of $27.50 per Note. The Notes are to be resold by the Initial Purchasers pursuant to Rule 144A of the Securities Act of 1933, as amended (the "Securities Act"). We received approximately $194 million in net proceeds from the sale of the Notes after paying underwriting fees, legal and other expenses. Proceeds from the offering were used to purchase treasury shares of our stock and to pay down a portion of the 2007 Facility. We will pay interest on the Notes on May 15 and November 15 of each year, beginning on November 15, 2007. The Notes will mature on May 15, 2014. The Notes are guaranteed on an unsecured senior basis by each of our subsidiaries that are a borrower or a guarantor under any senior credit facility, as defined in the Indenture. The Notes are convertible, under certain circumstances, into our Capital Stock at a conversion rate of 12.3874 shares per $1,000 principal amount of Notes. This conversion rate is equivalent to an initial conversion price of approximately $80.73 per share. Prior to March 1, 2014, holders may convert their Notes under certain circumstances. On and after March 1, 2014, the Notes will be convertible at any time prior to the close of business three days prior to the stated maturity date of the Notes. Upon conversion of a Note, if the conversion value is $1,000 or less, holders will receive cash equal to the lesser of $1,000 or the conversion value of the number of shares of our Capital Stock. If the conversion value exceeds $1,000, in addition to this, holders will receive shares of our Capital Stock for the excess amount. The Indenture contains customary terms and covenants that upon certain events of default, including without limitation, failure to pay when due any principal amount, a fundamental change or certain cross defaults in other agreements or instruments, occurring and continuing; either the trustee or the holders of 25% in aggregate principal amount of the Notes may declare the principal of the Notes and any accrued and unpaid interest through the date of such declaration immediately due and payable. In the case of certain events of bankruptcy or insolvency relating to any significant subsidiary or to us, the principal amount of the Notes and accrued interest automatically becomes due and payable. Pursuant to the guidance in Emerging Issues Task Force ("EITF") 90-19, "Convertible Bonds with Issuer Option to Settle for Cash Upon Conversion", EITF 00-19 "Accounting for Derivative Instruments Indexed to, and Potentially Settled in a Company's Own Stock" and EITF 01-6 "The Meaning of Indexed to a Company's Own Stock", the Notes are accounted for as convertible debt in the accompanying consolidated balance sheet and the embedded options within the Notes have not been accounted for as separate derivatives. We, our subsidiary guarantors and the Initial Purchasers also entered into a Registration Rights Agreement (the "RRA") dated May 14, 2007. Pursuant to the RRA, we agreed to, no later than the 120th day after May 14, 2007, file a shelf registration statement covering resale of the Notes and the Capital Stock issuable upon conversion pursuant to Rule 415 under the Securities Act. On August 17, 2007, we filed a shelf registration statement, that became immediately effective, to register the Notes and Capital Stock issuable upon conversion. 21 On May 8, 2007 we entered into a purchased call transaction and a warrant transaction (written call) with JPMorgan Chase, National Association and Citibank, N.A. (the "Counterparties"). The purchased call options cover approximately 2,477,000 shares of our Capital Stock, which under most circumstances represents the maximum number of shares of Capital Stock that underlie the Notes. Concurrently with entering into the purchased call options, we entered into warrant transactions with each of the Counterparties. Pursuant to the warrant transactions, we sold to the Counterparties warrants to purchase in the aggregate approximately 2,477,000 shares of Capital Stock. In most cases, the sold warrants may not be exercised prior to the maturity of the Notes. The purchased call options and sold warrants are separate contracts with the Counterparties, are not part of the terms of the Notes and do not affect the rights of holders under the Notes. A holder of the Notes will not have any rights with respect to the purchased call options or the sold warrants. The purchased call options are expected to reduce the potential dilution upon conversion of the Notes if the market value per share of the Capital Stock at the time of exercise is greater than approximately $80.73, which corresponds to the initial conversion price of the Notes. The sold warrants have an exercise price of $105.44 and are expected to result in some dilution should the price of our Capital Stock exceed this exercise price. Our net cost for these transactions was approximately $27.3 million. Pursuant to EITF 00-19 and EITF 01-6, the purchased call option and the sold warrants are accounted for as equity transactions. Therefore, our net cost was recorded as a decrease in shareholders' equity in the accompanying consolidated balance sheet. Since May 2007, we have repaid $65.5 million of the $100 million term note under the 2007 Facility using cash on-hand. Of the amount paid, $60.5 million represents a prepayment. The following is a schedule by year of required long-term debt repayments as of September 30, 2007 (in thousands): September 2008 $ 10,161 September 2009 10,059 September 2010 10,059 September 2011 4,559 September 2012 58 Thereafter 200,000 -------------- Total debt 234,896 Less: Current portion (10,161) -------------- Total long-term debt $ 224,735 ============== We are in compliance with all debt covenants as of September 30, 2007. discussed above.

We have issued ~~$30.1~~$27.5 million in standby letters of credit as of ~~September 30, 2007~~March 31, 2008, mainly for insurance purposes. Issued letters of credit reduce our available credit under the revolving credit agreement. As of ~~September 30, 2007,~~March 31, 2008, we have approximately ~~$144.9~~$147.5 million of unused lines of credit available and eligible to be drawn down under our revolving credit facility, excluding the expansion feature. Management believes its liquidity and sources of capital are satisfactory for the Company’s needs in the foreseeable future.

Commitments and Contingencies ~~- -----------------------------~~

Collectively, the terms of our credit agreements ~~provide that we are required~~require us to meet various financial covenants, to be tested quarterly. WeIn connection therewith, we are in compliance with all financial and other debt covenants as of ~~September 30, 2007~~March 31, 2008 and anticipate remaining in compliance throughout 2007. 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). 2008.

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In April 2007, our Roto-Rooter subsidiary was named in a class action lawsuit filed in San Mateo Superior Court by Stanley Ita (“Ita”) alleging class-wide wage and hour violations at one California branch. This suit alleges failure to provide meal and break periods, credit for work time beginning from the first call to dispatch rather than arrival at first assignment and improper calculations of ~~outcome, defense of litigation adversely affects us through defense costs, diversion of our~~work time and ~~related publicity. In~~overtime. The case sought payment of penalties, interest and Plaintiffs’ attorney fees. After the ~~normal course of business,~~suit was filed, we ~~are~~offered a ~~party~~settlement to ~~various claims and legal proceedings. We record a reserve for these matters when an adverse outcome is probable and the amount~~certain members of the ~~potential liability~~class and paid approximately $200,000. In January 2008, we agreed to a tentative settlement with the remaining members of the class for approximately $1.8 million. The tentative settlement is ~~reasonably estimable.~~ subject to court approval. The tentative settlement has been accrued in the accompanying financial statements as of and for the year ended December 31, 2007.

In April 2005, the Office of Inspector General ~~("OIG"~~(“OIG”) for the Department of Health and Human Services served VITAS with civil subpoenas relating to ~~VITAS'~~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'~~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. The Court dismissed a related qui tam complaint filed in U.S. District Court for the Southern District of Florida with prejudice in July 2007. The plaintiffs are appealing this dismissal. Pretax expenses ~~incurred~~ related to complying with OIG requests ~~have been~~were immaterial for the three ~~and nine-month periods ended September 30, 2007. We incurred pretax expense related to complying with OIG requests and defending the litigation of $344,000 and $818,000 for the three and nine~~ months ended ~~September 30, 2006, respectively.~~ March 31, 2008 and 2007.

Results of Operations ~~Three -months ended September 30,~~

First Quarter 2008 versus First Quarter 2007 ~~versus 2006-Consolidated~~- Consolidated Results ~~- -----------------------------------------------------------------------~~

Our service revenues and sales for the ~~third~~first quarter of ~~2007~~2008 increased ~~7.4%~~5.5% versus revenues for the ~~third~~first quarter of ~~2006.~~2007. Of this increase, ~~$13.2~~$14.5 million was attributable to VITAS and ~~$5.6 million~~$293,000 was attributable to ~~Roto-Rooter, as follows (dollars~~Roto-Rooter. The following chart shows the components of those changes (dollar amounts in thousands): Increase/(Decrease) -------------------------- Amount Percent ---------------- --------- VITAS Routine homecare $ 11,476 9.1% Continuous care (1,219) -4.0% General inpatient 1,031 4.7% Medicare cap 1,897 72.7% Roto-Rooter Plumbing 2,636 8.1% Drain cleaning 1,324 3.8% Other 1,663 15.1% ---------------- Total $ 18,808 7.4% ================

	Increase/(Decrease)
	Amount			Percent
VITAS
Routine homecare	$	10,069			7.7	%
Continuous care		2,430			8.5	%
General inpatient		2,509			10.7	%
Medicare cap		(472	)		100.0	%
Roto-Rooter
Plumbing		370			1.1	%
Drain cleaning		(20	)		-0.1	%
Other		(57	)		-0.5	%

Total	$	14,829			5.5	%

The increase in ~~VITAS'~~VITAS’ revenues for the ~~third~~first quarter of ~~2007~~2008 versus the ~~third~~first quarter of ~~2006~~2007 is attributable to an increase in ADC of ~~5.4%~~3.3% for routine homecare, 2.5% for continuous care and ~~a 3.2% increase in~~6.3% for general ~~inpatient care offset by a 7.6% decline in continuous care.~~inpatient. ADC is a key measure we use to monitor volume growth in our hospice business. Changes in total program admissions and average length of stay for our patients are the main drivers of changes in ADC. The remainder of the revenue increase is due primarily to the annual increase in Medicare reimbursement rates in the fourth quarter of ~~2006.~~2007, as well as geographic mix shifts within patient care categories. In excess of 90% of ~~VITAS'~~VITAS’ revenues for the period were from Medicare and Medicaid. We recorded a $714,000 reduction in revenue in September 2007 related to Medicare cap billing limitations for the 2006 measurement period for 3 programs. The adjustment for the 2006 measurement period was due to the normal allocation of transferred patients performed by the Federal government's fiscal intermediary. We did not record any Medicare cap billing limitations related to the 2007 measurement period. We recorded a Medicare cap billing limitation for the three months ended September 30, 2006 of $2.6 million. 23

-17-

The increase in the plumbing revenues for the ~~third~~first quarter of ~~2007~~2008 versus ~~2006~~2007 comprises a ~~6.1% increase~~5% decrease in the number of jobs performed and a ~~2.0% increase caused by increased prices and job mix. The~~6% increase in ~~drain~~the average price per job. Drain cleaning revenues for the ~~third~~first quarter of 2008 versus 2007 ~~versus 2006~~ comprised ~~a 3.2%~~an 8% decline in the number of jobs offset by ~~a 7.0%~~an 8% increase ~~caused by increased prices and job mix.~~in the average price per job. The ~~increase~~decrease in other revenues is attributable primarily to lower sales of drain cleaning products offset by increased revenue from the independent contractor operations.

The consolidated gross margin was ~~29.2%~~27.9% in the ~~third~~first quarter of ~~2007~~2008 as compared with ~~26.9%~~30.4% in the ~~third~~first quarter of ~~2006.~~2007. On a segment basis, ~~VITAS'~~VITAS’ gross margin was ~~21.4%~~20.0% in the ~~third~~first quarter of ~~2007~~2008 and ~~18.6%~~22.8% in the ~~third~~first quarter of ~~2006. The increase~~2007. This margin decline is a combination of increased expenses related to admissions and increased costs for direct patient care labor. As part of its growth strategy, VITAS has expanded its investment in ~~VITAS'~~the admissions process. At the end of the first quarter of 2008, VITAS increased staffing of sales representatives, admissions coordinators and admissions nurses by 18%. This resulted in an additional $2.1 million of admission expense in the quarter and equates to 106 basis points of the decline in gross margin in ~~2007~~the quarter. The remaining margin decline is due to an increase in direct patient care labor. This additional labor is a combination of salary rate increases for existing employees as well as excess staffing relative to current patient census and individual plans of care. In the first quarter of 2008, total field salary increases averaged 4.2% over the prior-year period which is largely commensurate with local market salary requirements. This is above the 3.0% inflation per diem increase VITAS received from CMS in October 2007. Over the past several years the CMS calculated inflation factor has been below the actual inflation on direct patient care costs, primarily wages. Historically, VITAS has been able to offset this inflation adjustment shortfall through scale in management systems and infrastructure. Management anticipates VITAS margins returning to more historical levels in the second half of 2008.

The Roto-Rooter segment’s gross margin was 45.8% in the first quarter of 2008 and 46.6% in the first quarter of 2007. The slight decline in gross margin is attributable to a ~~reduction in the Medicare cap expense in 2007~~$0.4 million aftertax charge for a settlement of ~~$1.9 million,~~litigation relating to a reclassification of approximately $1.0 million of costs from cost of revenue to central support in 2007, as well as excess patient care capacity in the prior year period. We corrected our excess capacity during the later part of the second quarter and early part of the third quarter in 2006. The Roto-Rooter segment's gross margin2003 fire that, for unique technical reasons, was 46.8% in the third quarter of 2007 and 45.4% in the third quarter of 2006. The increase in Roto-Rooter's gross margin in 2007 is primarily attributable to price increases and better retention of service technicians, which enhances overall productivity of our workforce as well as reduces our workers' compensation costs. not covered by Roto-Rooter’s secondary insurance carrier.

Selling, general and administrative expenses ("(“SG~~&A"~~&A”) for the ~~third~~first quarter of ~~2007~~2008 were ~~$42.5~~$42.8 million, ~~an increase~~a decrease of ~~$3.4~~$5.3 million ~~(8.7%~~(11%) versus the third quarter of 2006. The increase is due to higher revenue, which increase our variable selling expenses as well as the reclassification of approximately $1.0 million of costs from cost of revenue to SG&A at our VITAS subsidiary. Income from operations increased $7.2 million from $23.4 million in the third quarter of 2006 to $30.6 million in the thirdfirst quarter of 2007. The ~~increase~~decrease is ~~primarily~~largely due to 2007 stock-based compensation expense of $5.4 million related to the ~~result~~LTIP. There was no such LTIP expense in the first quarter of ~~the increase in sales and gross margin.~~ 2008.

Interest expense, substantially all of which is incurred at Corporate, declined from ~~$4.1~~$3.7 million in the ~~third~~first quarter of ~~2006~~2007 to ~~$2.5~~$1.6 million in the ~~third~~first quarter of ~~2007. This decline is~~2008 due primarily to the debt refinancing transactions completed in ~~May 2007, discussed above.~~the second quarter of 2007. Other (expenses)/income-net decreased from ~~$715,000~~income of $869,000 in the ~~third~~first quarter of ~~2006~~2007 to ~~$11,000~~expenses of $1.2 million in the ~~third~~first quarter of ~~2007. The decrease is attributable~~2008 related to ~~market~~realized and unrealized losses ~~from~~in the investments of deferred compensation plans held in ~~our deferred compensation benefit trusts.~~ trust.

Our effective income tax rate ~~was 30.6%~~decreased from 38.5% in the third quarter of 2006 compared to 39.6% in the third quarter of 2007. The increase in the effective income tax rate is due to a $1.8 million reduction in our tax provision in 2006 related to the expiration of certain statutes of limitations. No significant adjustment was required in 2007. Income from continuing operations increased $4.0 million or 31.4% in the thirdfirst quarter of 2007 ~~as compared~~ to 37.8% in the ~~third~~first quarter of ~~2006 due mainly to~~2008 as the ~~sales and gross margin increases as discussed above. The $1.2 million gain from discontinued operations in the third quarter~~result of 2007 relates to VITAS' Phoenix, AZ program that we sold in November 2006. We received notification from the Federal government's fiscal intermediary that we were over accrued with respect to the Medicare capR&D credits available on certain of our information systems technology developed by ~~approximately $1.9 million on a pretax basis. The loss from discontinued operations in 2006 also results from the Phoenix, AZ program. Income from continuing operations and net~~VITAS.

Net income for both periods included the following aftertax special items/adjustments that ~~(increased)/reduced~~increased/ (reduced) aftertax earnings (in thousands): ~~Three Months Ended September 30, ---------------------------~~

	Three Months Ended March 31,
	2008			2007
Stock-option expense	$	(884	)	$	(371	)
Unreserved prior year insurance claim		(358	)		-
Gain on sale of Florida Call Center		-			724
R&D income tax credit related to prior years		322			-
Long-term incentive compensation award		-			(3,414	)
Legal expenses of OIG Investigation		9			(41	)
Other		-			296
	$	(911	)	$	(2,806	)

-18-

First quarter 2008 versus First quarter 2007 2006 ------------ -------------- Stock option expense $ 1,011 $ 379 Loss on extinguishment of debt 52 - Legal expenses of OIG investigation 30 213 Loss from impairment of investment - 918 Costs related to class action litigation - 169 Tax adjustments upon expiration of certain statutes - (1,791) ------------ -------------- $ 1,093 $ (112) ============ ============== 24 ~~Three-months ended September 30, 2007 versus 2006-Segment~~Segment Results - ----------------------------------------------------------------- The change in aftertax earnings for the third quarter of 2007 versus the third quarter of 2006 is due to (in thousands): Net Income Increase/(Decrease) ------------------------- Amount Percent --------------- --------- VITAS $ 3,435 32.8% Roto-Rooter 433 5.1% Corporate 173 2.8% Discontinued operations 6,115 124.4% --------------- $ 10,156 127.6% =============== Nine-months ended September 30, 2007 versus 2006-Consolidated Results - --------------------------------------------------------------------- Our service revenues and sales for the first nine months of 2007 increased 9.1% versus revenues for the first nine months of 2006. Of this increase, $45.3 million was attributable to VITAS and $22.3 million was attributable to Roto-Rooter, as follows (in thousands): Increase/(Decrease) -------------------------- Amount Percent ---------------- --------- VITAS Routine homecare $ 43,818 12.2% Continuous care (3,937) -4.4% General inpatient 2,502 3.8% Medicare cap 2,968 92.0% Roto-Rooter Plumbing 12,669 13.6% Drain cleaning 5,787 5.4% Other 3,838 11.3% ---------------- Total $ 67,645 9.1% ================ The increase in VITAS' revenues for the first nine months of 2007 versus the first nine months of 2006 is attributable to an increase in ADC of 8.0% for routine homecare and 1.5% for general inpatient care offset by a 7.2% decline in continuous care. ADC is a key measure we use to monitor volume growth in our hospice business. Changes in total program admissions and average length of stay for our patients are the main drivers of changes in ADC. The remainder of the revenue increase is due primarily to the annual increase in Medicare reimbursement rates in the fourth quarter of 2006. We recorded a $714,000 reduction in revenue in September 2007 related to Medicare cap billing limitations for the 2006 measurement period for 3 programs. The adjustment for the 2006 measurement period was due to the normal allocation of transferred patients performed by the Federal government's fiscal intermediary. We did not record any Medicare cap billing limitations related to the 2007 measurement period. We recorded a Medicare cap billing limitation for the nine months ended September 30, 2006 of $3.2 million. The increase in the plumbing revenues for the first nine months of 2007 versus 2006 comprises an 8.2% increase in the number of jobs performed and a 5.4% increase due to increased price and job mix. The increase in drain cleaning revenues for the first nine months of 2007 versus 2006 comprised a 1.6% decline in the number of jobs offset by a 7.0% increase due to increased price and job mix. The increase in other revenues is attributable primarily to increased revenue from the independent contractor operations. 25 The consolidated gross margin was 30.0% in the first nine months of 2007 as compared with 27.6% in the first nine months of 2006. On a segment basis, VITAS' gross margin was 22.1% in the first nine months of 2007 and 19.5% in the first nine months of 2006. The increase in VITAS' gross margin in 2007 is primarily attributable to $3.0 million less in Medicare cap billing reductions in 2007 as well as excess patient care capacity in the prior year period. We corrected our excess capacity during the later part of the second quarter and early part of the third quarter in 2006. The Roto-Rooter segment's gross margin was 47.3% in the first nine months of 2007 as compared to 45.4% in the first nine months of 2006. The increase in Roto-Rooter's gross margin in 2007 is primarily attributable to price increases and better retention of service technicians, which enhances overall productivity of our workforce as well as reduces our workers' compensation costs. SG&A for the first nine months of 2007 were $136.7 million, an increase of $20.5 million (17.6%) versus the first nine months of 2006. The increase is largely due to increased revenue which increases our variable selling expenses as well as 2007 expenses of $7.1 million related to the LTIP and $3.0 million related to stock option grants made in May 2007 and June 2006. LTIP and stock option expense recorded in the first nine months of 2006 was approximately $615,000. Income from operations increased $16.8 million from $73.3 million in the first nine months of 2006 to $90.1 million in the first nine months of 2007. The increase is primarily the result of the increase in sales and gross margin. Interest expense, substantially all of which is incurred at Corporate, declined from $13.7 million in the first nine months of 2006 to $9.7 million in the first nine months of 2007. This decline is due to the reduction in debt outstanding that occurred in February 2006 when we refinanced and repaid a significant portion of our debt as well as the refinancing transactions in May 2007, discussed above. The loss on extinguishment of debt is also the result of the May 2007 refinancing transactions. Our effective income tax rate was 39.0% for the first nine months of 2007 as compared to 36.4% for the same period of 2006. The increase in the effective income tax rate is due mainly to a $1.8 million reduction in our tax provision in 2006 related to the expiration of certain statutes of limitations. No significant adjustment was required in 2007. Income from continuing operations increased $4.1 million or 10.7% in the first nine months of 2007 as compared to the first nine months of 2006. Increased income from continuing operations was due to increases in sales and gross margin in 2007, which was offset by the $13.8 million loss on extinguishment of debt. The $1.2 million gain from discontinued operations in the third quarter of 2007 relates to VITAS' Phoenix, AZ program that we sold in November 2006. We received notification from the Federal government's fiscal intermediary that we were over accrued with respect to the Medicare cap by approximately $1.9 million on a pretax basis. The loss from discontinued operations in 2006 also results from the Phoenix, AZ program. Income from continuing operations and net income for both periods included the following aftertax special items/adjustments that (increased)/reduced aftertax earnings (in thousands): Nine Months Ended September 30, -------------------------- 2007 2006 ------------ ------------- Loss on extinguishment of debt $ 8,778 $ 273 Long-term incentive compensation award 4,427 - Stock option expense 1,952 391 Legal expenses of OIG investigation 117 507 Loss from impairment of investment - 918 Costs related to class action litigation - 169 Tax adjustments upon expiration of certain statutes - (1,791) Gain on sale of Florida call center (724) - Other (296) - ------------ ------------- $ 14,254 $ 467 ============ ============= 26 ~~Nine-months ended September 30, 2007 versus 2006-Segment Results - ----------------------------------------------------------------~~

The change in aftertax earnings for the first ~~nine months~~quarter of ~~2007~~2008 versus the first ~~nine months~~quarter of ~~2006~~2007 is due to (in thousands): Net Income Increase/(Decrease) --------------------------- Amount Percent --------------- ----------- VITAS $ 9,789 29.4% Roto-Rooter 6,410 28.2% Corporate (12,092) -69.0% Discontinued operations 6,646 122.1% --------------- $ 10,753 32.6% =============== 27

	Net Income
	Increase/(Decrease)
	Amount			Percent
VITAS	$	(1,689	)		-11.3	%
Roto-Rooter		(411	)		-4.3	%
Corporate		2,699			32.6	%

	$	599			3.7	%

The following chart updates historical unaudited financial and operating data of ~~VITAS:~~VITAS (dollars in thousands, except dollars per patient day)

28 :

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OPERATING STATISTICS FOR VITAS SEGMENT
FOR THE THREE MONTHS ENDED MARCH 31, 2008 AND 2007
(unaudited)

	2008			2007
OPERATING STATISTICS
Net revenue
Homecare	$	141,617		$	131,548
Inpatient		25,971			23,462
Continuous care		30,997			28,567
Total before Medicare cap allowance		198,585			183,577
Medicare cap allowance		-			472
Total	$	198,585		$	184,049
Net revenue as a percent of total
Homecare		71.3	%		71.6	%
Inpatient		13.1			12.8
Continuous care		15.6			15.6
Total before Medicare cap allowance		100.0			100.0
Medicare cap allowance		-			0.3
Total		100.0	%		100.3	%
Average daily census ("ADC") (days)
Homecare		7,154			6,786
Nursing home		3,548			3,574
Routine homecare		10,702			10,360
Inpatient		453			426
Continuous care		536			523
Total		11,691			11,309

Total admissions		15,212			14,110
Total discharges		14,992			14,051
Average length of stay (days)		71.5			76.9
Median length of stay (days		13.0			13.0
ADC by major diagnosis
Neurological		32.5	%		33.3	%
Cancer		20.0			19.7
Cardio		13.0			14.6
Respiratory		6.9			7.0
Other		27.6			25.4
Total		100.0	%		100.0	%
Admissions by major diagnosis
Neurological		19.0	%		18.9	%
Cancer		33.4			33.6
Cardio		11.9			13.3
Respiratory		8.5			7.8
Other		27.2			26.4
Total		100.0	%		100.0	%
Direct patient care margins
Routine homecare		49.5	%		50.8	%
Inpatient		19.3			20.1
Continuous care		16.5			20.0
Homecare margin drivers (dollars per patient day)
Labor costs	$	52.26		$	49.12
Drug costs		7.49			8.18
Home medical equipment		6.17			5.75
Medical supplies		2.57			2.17
Inpatient margin drivers (dollars per patient day)
Labor costs	$	266.18		$	252.42
Continuous care margin drivers (dollars per patient day)
Labor costs	$	509.62		$	464.54
Bad debt expense as a percent of revenues		0.9	%		0.9	%
Accounts receivable -- days of revenue outstanding		45.5			38.1


VITAS has 5 large (greater than 450 ADC), 17 medium (greater than 200 but less than 450 ADC) and 21 small (less than 200 ADC) hospice
programs. There is one program continuing at March 31, 2008 with Medicare cap cushion of less than 10% for the 2008 measurement
period.

Direct patient care margins exclude indirect patient care and administrative costs, as well as Medicare Cap billing limitation.

-20-

Recent Accounting Statements ~~- ----------------------------~~

Safe Harbor Statement under the Private Securities Litigation Reform Act of 1995 ~~- --------------------------------------------------------------------------------~~ Regarding Forward-Looking Information ~~- -------------------------------------~~

In addition to historical information, this report contains forward-looking statements and performance trends that are based upon assumptions subject to certain known and unknown risks, uncertainties, contingencies and other factors. Variances in any or all of the risks, uncertainties, contingencies, and other factors from our assumptions could cause actual results to differ materially from these forward-looking statements and trends. Our ability to deal with the unknown outcomes of these events, many of which are beyond our control, may affect the reliability of projections and other financial matters.

Item 3. Quantitative and Qualitative Disclosures about Market Risk

Our primary market risk exposure relates to interest rate risk exposure through variable interest rate borrowings. At ~~September 30, 2007,~~March 31, 2008, we had ~~$34.9~~$22.2 million of variable rate debt outstanding. A 1% change in the interest rate on our variable interest rate borrowings would have a ~~$349,000~~$222,000 full-year impact on our interest expense. At ~~September 30, 2007, we believe~~March 31, 2008, the fair value of our Senior Convertible Notes approximates ~~$196.7~~$165.5 million.

Item 4. Controls and Procedures

We carried out an evaluation, under the supervision of our President and Chief Executive Officer and with the participation of the Executive Vice President and Chief Financial Officer and the Vice President and Controller, of the effectiveness of the design and operation of our disclosure controls and procedures as of the end of the period covered by this report. Based on that evaluation, the President and Chief Executive Officer, Executive Vice President and Chief Financial Officer and Vice President and Controller have concluded that our disclosure controls and procedures were effective as of the end of the period covered by this report. There has been no change in our internal control over financial reporting that occurred during the quarter covered by this report that has materially affected, or is reasonably likely to materially affect, our internal control over financial reporting. 29

-21-

PART II OTHER INFORMATION

Item 2(c). Purchases of Equity Securities by the Issuer and Affiliated Purchasers

The following table shows the repurchase activity related to our share repurchase programs for the three months ended March 31, 2008:

	Total		Weighted Average		Cumulative Shares		Dollar Amount
	Number of Shares		Price Paid Per		Repurchased Under		Remaining Under
	Repurchased		Share		the Program		The Program

April 2007 Program
January 1 through January 31, 2008		-	$	-		1,293,250	$	65,004,906

February 1 through February 29, 2008		300,000	$	49.19		1,593,250	$	50,247,480

March 1 through March 31, 2008		-	$	-		1,593,250	$	50,247,480

First Quarter Total - April 2007 Program		300,000	$	49.19


On April 26, 2007, our Board of Directors authorized a $150 million share repurchase plan with no expiration date.

Item 6. Exhibits Exhibit No. Description ------------ --------------------------------------------- 31.1 Certification by Kevin J. McNamara pursuant to Rule 13a-14(a)/15d-14(a) of the Exchange Act of 1934. 31.2 Certification by David P. Williams pursuant to Rule 13a-14(a)/15d-14(a) of the Exchange Act of 1934. 31.3 Certification by Arthur V. Tucker, Jr. pursuant to Rule 13a-14(a)/15d-14(a) of the Exchange Act of 1934. 32.1 Certification by Kevin J. McNamara pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. 32.2 Certification by David P. Williams pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. 32.3 Certification by Arthur V. Tucker, Jr. pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. 30

Exhibit No.		Description

	31.1	Certification by Kevin J. McNamara pursuant to Rule 13a-14(a)/15d-14(a) of the Exchange Act of 1934.

	31.2	Certification by David P. Williams pursuant to Rule 13a-14(a)/15d-14(a) of the Exchange Act of 1934.

	31.3	Certification by Arthur V. Tucker, Jr. pursuant to Rule 13a-14(a)/15d-14(a) of the Exchange Act of 1934.

	32.1	Certification by Kevin J. McNamara pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

	32.2	Certification by David P. Williams pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

	32.3	Certification by Arthur V. Tucker, Jr. pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

-22-

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: November 1, 2007 By: Kevin J. McNamara ------------------- ---------------------------- Kevin J. McNamara (President and Chief Executive Officer) Dated: November 1, 2007 By: David P. Williams ------------------- ---------------------------- David P. Williams (Vice President and Chief Financial Officer) Dated: November 1, 2007 By: Arthur V. Tucker, Jr. ------------------- ---------------------------- Arthur V. Tucker, Jr. (Vice President and Controller) 31

				Page No.
PART I. FINANCIAL INFORMATION:
	Item 1.	Financial Statements
			Unaudited Consolidated Balance Sheet -
			March 31, 2008 and December 31, 2007	3

			Unaudited Consolidated Statement of Income -
			Three months ended March 31, 2008 and 2007	4

			Unaudited Consolidated Statement of Cash Flows -
			Three months ended March 31, 2008 and 2007	5

			Notes to Unaudited Financial Statements	6

	Item 2.	Management's Discussion and Analysis of Financial Condition and Results of Operations		16

	Item 3.	Quantitative and Qualitative Disclosures about Market Risk		21

	Item 4.	Controls and Procedures		21

PART II. OTHER INFORMATION
	Item 2(c).	Purchases of Equity Securities by Issuer and Affiliated Purchasers		22

	Item 6.	Exhibits		22

			Chemed Corporation
			(Registrant)


Dated:	April 30, 2008	By:	Kevin J. McNamara
			Kevin J. McNamara
			(President and Chief Executive Officer)


Dated:	April 30, 2008	By:	David P. Williams
			David P. Williams
			(Executive Vice President and Chief Financial Officer)


Dated:	April 30, 2008	By:	Arthur V. Tucker, Jr.
			Arthur V. Tucker, Jr.
			(Vice President and Controller)