Chemed Reports Third-Quarter 2019 Results
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Chemed Reports Third-Quarter 2019 Results

CINCINNATI--(BUSINESS WIRE)--Oct. 29, 2019-- Chemed Corporation (Chemed) (NYSE: CHE), which operates VITAS Healthcare Corporation (VITAS), one of the nation’s largest providers of end-of-life care, and Roto-Rooter, the nation’s largest commercial and residential plumbing and drain cleaning services provider, reported financial results for its third quarter ended September 30, 2019, versus the comparable prior-year period, as follows:

Consolidated operating results:

  • Revenue increased 8.2% to $481 million
  • GAAP Diluted Earnings-per-Share (EPS) of $3.56, an increase of 16.3%
  • Adjusted Diluted EPS of $3.46, an increase of 12.7%

VITAS segment operating results:

  • Net Patient Revenue of $322 million, an increase of 6.6%
  • Average Daily Census (ADC) of 19,086, an increase of 6.3%
  • Admissions of 17,131, an increase of 4.4%
  • Net Income, excluding certain discrete items, of $40.4 million, an increase of 10.9%
  • Adjusted EBITDA, excluding Medicare Cap, of $54.3 million, an increase of 6.7%

Roto-Rooter segment operating results:

  • Revenue of $159 million, an increase of 11.6%
  • Net Income, excluding certain discrete items, of $28.8 million, an increase of 16.6%
  • Adjusted EBITDA of $39.8 million, an increase of 17.0%
  • Adjusted EBITDA margin of 25.0%, an increase of 116-basis points

VITAS

VITAS net revenue was $322 million in the third quarter of 2019, which is an increase of 6.6%, when compared to the prior-year period. This revenue increase is comprised primarily of a geographically weighted average Medicare reimbursement rate increase of approximately 0.5%, a 6.3% increase in days-of-care and a reduction in the Medicare Cap billing limitation that increased revenue 0.2%. This growth was partially offset by acuity mix shift, fluctuations in net room and board and contractual adjustments, the combination of which negatively impacted revenue growth approximately 0.4%, when compared to the prior-year period.

In the third quarter of 2019, VITAS accrued $1.3 million in Medicare Cap billing limitations. This compares favorably to the prior-year Medicare Cap billing limitation of $2.0 million. At September 30, 2019, VITAS had 30 Medicare provider numbers, three of which have an estimated fiscal 2019 Medicare Cap billing limitation liability of approximately $9.6 million.

Of VITAS’ 30 Medicare provider numbers, 23 provider numbers have a Medicare Cap cushion of 10% or greater, one provider number has a cap cushion between 5% and 10%, three provider numbers have a cap cushion between 0% and 5%, and three provider numbers have a fiscal 2019 Medicare Cap billing limitation.

Average revenue per patient per day in the quarter was $188.02, which is 0.4% above the prior-year period. Reimbursement for routine home care and high acuity care averaged $164.39 and $755.38, respectively. During the quarter, high acuity days-of-care were 4.0% of total days of care, 7-basis points less than the prior-year quarter.

The third quarter of 2019 gross margin, excluding Medicare Cap, was 23.4%, which is a 9-basis point margin improvement when compared to the third quarter of 2018.

Selling, general and administrative expense was $22.0 million in the third quarter of 2019, which is an increase of 7.7% compared to the prior-year quarter. Adjusted EBITDA, excluding Medicare Cap, totaled $54.3 million in the quarter, an increase of 6.7%. Adjusted EBITDA margin, excluding Medicare Cap, was 16.8% in the quarter, which is a 5-basis point margin improvement when compared to the prior-year period.

Roto-Rooter

Roto-Rooter generated quarterly revenue of $159 million for the third quarter of 2019, an increase of $16.5 million, or 11.6%, over the prior-year quarter. Revenue from the water restoration service segment totaled $25.7 million, an increase of 3.0%, when compared to the prior-year quarter. Approximately 90% of the water restoration revenue is generated from residential customers and the remaining 10% is generated from commercial accounts.

Commercial drain cleaning revenue increased 16.5%, commercial plumbing and excavation increased 24.9%, and commercial water restoration increased 3.1%. Overall, commercial revenue increased 19.3%.

Residential drain cleaning increased 9.8%, plumbing and excavation increased 7.0%, and residential water restoration increased 2.9%. Aggregate residential sales increased 6.5%.

Roto-Rooter’s gross margin in the quarter was 49.2%, a slight increase when compared to the third quarter of 2018. Adjusted EBITDA in the third quarter of 2019 totaled $39.8 million, an increase of 17.0%. The Adjusted EBITDA margin in the quarter was 25.0% which is a 116-basis point margin expansion over the prior year.

Chemed Consolidated

As of September 30, 2019, Chemed had total cash and cash equivalents of $9 million and debt of $130 million.

In June 2018, Chemed entered into a five-year Amended and Restated Credit Agreement that consists of a $450 million revolving credit facility. The interest rate on this facility has a floating rate that is currently LIBOR plus 100-basis points. At September 30, 2019, the Company had approximately $282 million of undrawn borrowing capacity under this credit agreement.

The Company did not purchase any shares during the third quarter of 2019. As of September 30, 2019, there was approximately $125 million of remaining share repurchase authorization under this share repurchase program.

Chemed restarted its share repurchase program in 2007. Since that time Chemed has repurchased over 14 million shares, aggregating approximately $1.2 billion at an average share cost of $84.76. Including dividends over this period, Chemed has returned approximately $1.4 billion to shareholders.

Conference Call

Chemed will host a conference call and webcast at 10 a.m., ET, on Wednesday, October 30, 2019, to discuss the Company's quarterly results and to provide an update on its business. The dial-in number for the conference call is (844) 743-2500 for U.S. and Canadian participants and +1 (661) 378-9533 for international participants. The Conference ID is 5229315. A live webcast of the call can be accessed on Chemed's website at www.chemed.com by clicking on Investor Relations Home.

A taped replay of the conference call will be available beginning approximately 24 hours after the call's conclusion. It can be accessed by dialing (855) 859-2056 for U.S. and Canadian callers and +1 (404) 537-3406 for international callers and will be available for one week following the live call. The replay Conference ID is 5229315. An archived webcast will also be available at www.chemed.com.

Chemed Corporation operates in the healthcare field through its VITAS Healthcare Corporation subsidiary. VITAS provides daily hospice services to approximately 19,000 patients with severe, life-limiting illnesses. This type of care is focused on making the terminally ill patient's final days as comfortable and pain-free as possible.

Chemed operates in the residential and commercial plumbing and drain cleaning industry under the brand name Roto-Rooter. Roto-Rooter provides plumbing, drain cleaning, and water cleanup services through company-owned branches, independent contractors and franchisees in the United States and Canada. Roto-Rooter also has licensed master franchisees in the republics of Indonesia and Singapore, and the Philippines.

This press release contains information about Chemed’s EBITDA, Adjusted EBITDA and Adjusted Diluted EPS, which are not measures derived in accordance with GAAP and which exclude components that are important to understanding Chemed’s financial performance. In reporting its operating results, Chemed provides EBITDA, Adjusted EBITDA and Adjusted Diluted EPS measures to help investors and others evaluate the Company’s operating results, compare its operating performance with that of similar companies that have different capital structures and evaluate its ability to meet its future debt service, capital expenditures and working capital requirements. Chemed’s management similarly uses EBITDA, Adjusted EBITDA and Adjusted Diluted EPS to assist it in evaluating the performance of the Company across fiscal periods and in assessing how its performance compares to its peer companies. These measures also help Chemed’s management to estimate the resources required to meet Chemed’s future financial obligations and expenditures. Chemed’s EBITDA, Adjusted EBITDA and Adjusted Diluted EPS should not be considered in isolation or as a substitute for comparable measures calculated and presented in accordance with GAAP. We calculated Adjusted EBITDA Margin by dividing Adjusted EBITDA by service revenue and sales. A reconciliation of Chemed’s net income to its EBITDA, Adjusted EBITDA and Adjusted Diluted EPS is presented in the tables following the text of this press release.

Forward-Looking Statements

Certain statements contained in this press release and the accompanying tables are "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. The words "believe," "expect," "hope," "anticipate," "plan" and similar expressions identify forward-looking statements, which speak only as of the date the statement was made. Chemed does not undertake and specifically disclaims any obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. These statements are based on current expectations and assumptions and involve various risks and uncertainties, which could cause Chemed's actual results to differ from those expressed in such forward-looking statements.

These risks and uncertainties arise from, among other things, possible changes in regulations governing the hospice care or plumbing and drain cleaning industries; periodic changes in reimbursement levels and procedures under Medicare and Medicaid programs; difficulties predicting patient length of stay and estimating potential Medicare reimbursement obligations; challenges inherent in Chemed's growth strategy; the current shortage of qualified nurses, other healthcare professionals and licensed plumbing and drain cleaning technicians; Chemed’s dependence on patient referral sources; and other factors detailed under the caption "Description of Business by Segment" or "Risk Factors" in Chemed’s most recent report on form 10-Q or 10-K and its other filings with the Securities and Exchange Commission. You are cautioned not to place undue reliance on such forward-looking statements and there are no assurances that the matters contained in such statements will be achieved.

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

Three Months Ended September 30,

 

Nine Months Ended September 30,

2019

 

2018

 

2019

 

2018

Service revenues and sales

$

480,613

 

$

444,151

 

$

1,416,231

 

$

1,325,140

 

Cost of services provided and goods sold

328,183

 

305,312

 

973,771

 

915,589

 

Selling, general and administrative expenses (aa)

76,836

 

67,177

 

222,421

 

204,474

 

Depreciation

10,147

 

9,657

 

29,744

 

28,642

 

Amortization

441

 

35

 

1,366

 

96

 

Other operating expenses

78

 

257

 

9,001

 

88

 

Total costs and expenses

415,685

 

382,438

 

1,236,303

 

1,148,889

 

Income from operations

64,928

 

61,713

 

179,928

 

176,251

 

Interest expense

(1,041

)

(1,082

)

(3,402

)

(3,813

)

Other income--net (bb)

3,036

 

2,300

 

5,488

 

4,356

 

Income before income taxes

66,923

 

62,931

 

182,014

 

176,794

 

Income taxes

(7,976

)

(11,682

)

(27,671

)

(25,578

)

Net income

$

58,947

 

$

51,249

 

$

154,343

 

$

151,216

 

 
 
Earnings Per Share
Net income

$

3.69

 

$

3.19

 

$

9.68

 

$

9.41

 

Average number of shares outstanding

15,970

 

16,074

 

15,952

 

16,070

 

 
Diluted Earnings Per Share
Net income

$

3.56

 

$

3.06

 

$

9.35

 

$

8.98

 

Average number of shares outstanding

16,555

 

16,772

 

16,514

 

16,830

 

 
 
(aa) Selling, general and administrative ("SG&A") expenses comprise (in thousands):
 

Three Months Ended September 30,

 

Nine Months Ended September 30,

2019

 

2018

 

2019

 

2018

 
SG&A expenses before long-term incentive compensation and the impact of market value adjustments related to deferred compensation plans

$

72,273

 

$

63,754

 

$

212,775

 

$

196,271

 

Market value adjustments related to deferred compensation trusts

2,886

 

2,189

 

5,094

 

3,827

 

Long-term incentive compensation

1,677

 

1,234

 

4,552

 

4,376

 

Total SG&A expenses

$

76,836

 

$

67,177

 

$

222,421

 

$

204,474

 

 
(bb) Other income--net comprises (in thousands):

Three Months Ended September 30,

 

Nine Months Ended September 30,

2019

 

2018

 

2019

 

2018

 
Market value adjustments related to deferred compensation trusts

$

2,886

 

$

2,189

 

$

5,094

 

$

3,827

 

Interest income

173

 

111

 

387

 

529

 

Other

(23

)

-

 

7

 

-

 

Total other income--net

$

3,036

 

$

2,300

 

$

5,488

 

$

4,356

 

CHEMED CORPORATION AND SUBSIDIARY COMPANIES
CONSOLIDATED BALANCE SHEETS
(in thousands, except per share data)(unaudited)
 

September 30,

2019

 

2018

Assets
Current assets
Cash and cash equivalents

$

9,066

 

$

67,459

 

Accounts receivable less allowances

114,480

 

108,999

 

Inventories

7,354

 

5,763

 

Prepaid income taxes

10,745

 

6,039

 

Prepaid expenses

26,150

 

17,610

 

Total current assets

167,795

 

205,870

 

Investments of deferred compensation plans held in trust

73,714

 

70,237

 

Properties and equipment, at cost less accumulated depreciation

172,932

 

154,434

 

Lease right of use asset

103,286

 

-

 

Identifiable intangible assets less accumulated amortization

129,276

 

56,649

 

Goodwill

576,600

 

483,281

 

Other assets

8,982

 

8,653

 

Total Assets

$

1,232,585

 

$

979,124

 

 
Liabilities
Current liabilities
Accounts payable

$

44,027

 

$

36,977

 

Accrued insurance

47,726

 

43,503

 

Accrued compensation

75,208

 

70,687

 

Accrued legal

7,283

 

1,423

 

Short-term lease liability

33,761

 

-

 

Other current liabilities

43,496

 

27,608

 

Total current liabilities

251,501

 

180,198

 

Deferred income taxes

15,512

 

15,293

 

Long-term debt

130,000

 

130,000

 

Deferred compensation liabilities

73,335

 

68,492

 

Long-term lease liability

82,012

 

-

 

Other liabilities

7,845

 

16,988

 

Total Liabilities.

560,205

 

410,971

 

 
Stockholders' Equity
Capital stock

35,738

 

35,211

 

Paid-in capital

841,837

 

755,263

 

Retained earnings

1,365,303

 

1,175,949

 

Treasury stock, at cost

(1,572,844

)

(1,400,577

)

Deferred compensation payable in Company stock

2,346

 

2,307

 

Total Stockholders' Equity

672,380

 

568,153

 

Total Liabilities and Stockholders' Equity

$

1,232,585

 

$

979,124

 

CHEMED CORPORATION AND SUBSIDIARY COMPANIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)(unaudited)
 

Nine Months Ended September 30,

2019

 

2018

Cash Flows from Operating Activities
Net income

$

154,343

 

$

151,216

 

Adjustments to reconcile net income to net cash provided by operating activities:

 

Depreciation and amortization

31,110

 

28,738

 

Stock option expense

10,729

 

9,360

 

Benefit for deferred income taxes

(6,085

)

(1,344

)

Litigation settlement

6,000

 

-

 

Noncash long-term incentive compensation

4,184

 

4,176

 

Asset impairment loss

2,266

 

-

 

Noncash directors' compensation

767

 

766

 

Amortization of debt issuance costs

229

 

361

 

Amortization of restricted stock awards

-

 

446

 

Changes in operating assets and liabilities, excluding amounts acquired in business combinations:
Decrease in accounts receivable

10,558

 

4,637

 

Increase in inventories

(1,649

)

(429

)

Increase in prepaid expenses

(6,836

)

(1,518

)

 

Increase in accounts payable and other current liabilities

28,622

 

12,182

 

Change in current income taxes

(81

)

23,858

 

Net change in lease assets and liabilities

1,311

 

-

 

Increase in other assets

(8,145

)

(9,441

)

Increase in other liabilities

9,045

 

7,190

 

Other sources

1,277

 

410

 

Net cash provided by operating activities

237,645

 

230,608

 

Cash Flows from Investing Activities
Business combinations, net of cash acquired

(138,010

)

(12,875

)

Capital expenditures

(39,753

)

(36,554

)

Other sources

101

 

480

 

Net cash used by investing activities

(177,662

)

(48,949

)

Cash Flows from Financing Activities
Proceeds from revolving line of credit

400,700

 

428,150

 

Payments on revolving line of credit

(359,900

)

(324,350

)

Purchases of treasury stock

(71,926

)

(121,976

)

Capital stock surrendered to pay taxes on stock-based compensation

(26,108

)

(24,763

)

Proceeds from exercise of stock options

23,383

 

23,079

 

Dividends paid

(14,657

)

(13,850

)

Change in cash overdrafts payable

(7,535

)

(15,307

)

Payments on other long-term debt

-

 

(75,000

)

Debt issuance costs

-

 

(985

)

Other sources/(uses)

295

 

(319

)

Net cash used by financing activities

(55,748

)

(125,321

)

Increase in Cash and Cash Equivalents

4,235

 

56,338

 

Cash and cash equivalents at beginning of year

4,831

 

11,121

 

Cash and cash equivalents at end of year

$

9,066

 

$

67,459

 

CHEMED CORPORATION AND SUBSIDIARY COMPANIES
CONSOLIDATING STATEMENTS OF INCOME
FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2019 AND 2018
(in thousands)(unaudited)
 

 

 

 

 

 

 

Chemed

VITAS

 

Roto-Rooter

 

Corporate

 

Consolidated

2019

Service revenues and sales (a)

$

321,748

 

$

158,865

 

$

-

 

$

480,613

 

Cost of services provided and goods sold

247,551

 

80,632

 

-

 

328,183

 

Selling, general and administrative expenses (a)

21,965

 

41,758

 

13,113

 

76,836

 

Depreciation

5,105

 

5,003

 

39

 

10,147

 

Amortization

18

 

423

 

-

 

441

 

Other operating expense/(income)

97

 

(19

)

-

 

78

 

Total costs and expenses

274,736

 

127,797

 

13,152

 

415,685

 

Income/(loss) from operations

47,012

 

31,068

 

(13,152

)

64,928

 

Interest expense.

(48

)

(80

)

(913

)

(1,041

)

Intercompany interest income/(expense)

4,618

 

2,234

 

(6,852

)

-

 

Other income—net

121

 

31

 

2,884

 

3,036

 

Income/(loss) before income taxes

51,703

 

33,253

 

(18,033

)

66,923

 

Income taxes (a)

(11,930

)

(7,113

)

11,067

 

(7,976

)

Net income/(loss)

$

39,773

 

$

26,140

 

$

(6,966

)

$

58,947

 

 

2018

Service revenues and sales (b)

$

301,764

 

$

142,387

 

$

-

 

$

444,151

 

Cost of services provided and goods sold

233,006

 

72,306

 

-

 

305,312

 

Selling, general and administrative expenses (b)

20,394

 

36,112

 

10,671

 

67,177

 

Depreciation

4,905

 

4,712

 

40

 

9,657

 

Amortization

-

 

35

 

-

 

35

 

Other operating expense

100

 

157

 

-

 

257

 

Total costs and expenses

258,405

 

113,322

 

10,711

 

382,438

 

Income/(loss) from operations

43,359

 

29,065

 

(10,711

)

61,713

 

Interest expense

(49

)

(71

)

(962

)

(1,082

)

Intercompany interest income/(expense)

3,306

 

1,814

 

(5,120

)

-

 

Other income—net

89

 

22

 

2,189

 

2,300

 

Income/(loss) before income taxes

46,705

 

30,830

 

(14,604

)

62,931

 

Income taxes (b)

(10,784

)

(6,267

)

5,369

 

(11,682

)

Net income/(loss)

$

35,921

 

$

24,563

 

$

(9,235

)

$

51,249

 

The "Footnotes to Financial Statements" are integral parts of this financial information.
CHEMED CORPORATION AND SUBSIDIARY COMPANIES
CONSOLIDATING STATEMENTS OF INCOME
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2019 AND 2018
(in thousands)(unaudited)
 

 

 

 

 

 

 

Chemed

VITAS

 

Roto-Rooter

 

Corporate

 

Consolidated

2019

Service revenues and sales (a)

$

941,279

 

$

474,952

 

$

-

 

$

1,416,231

 

Cost of services provided and goods sold

728,397

 

245,374

 

-

 

973,771

 

Selling, general and administrative expenses (a)

65,182

 

120,736

 

36,503

 

222,421

 

Depreciation

14,644

 

14,983

 

117

 

29,744

 

Amortization

53

 

1,313

 

-

 

1,366

 

Other operating expense (a)

6,521

 

214

 

2,266

 

9,001

 

Total costs and expenses

814,797

 

382,620

 

38,886

 

1,236,303

 

Income/(loss) from operations

126,482

 

92,332

 

(38,886

)

179,928

 

Interest expense

(150

)

(273

)

(2,979

)

(3,402

)

Intercompany interest income/(expense)

13,395

 

6,609

 

(20,004

)

-

 

Other income—net

309

 

86

 

5,093

 

5,488

 

Income/(loss) before income taxes

140,036

 

98,754

 

(56,776

)

182,014

 

Income taxes (a)

(33,636

)

(22,452

)

28,417

 

(27,671

)

Net income/(loss)

$

106,400

 

$

76,302

 

$

(28,359

)

$

154,343

 

 

2018

Service revenues and sales (b)

$

890,577

 

$

434,563

 

$

-

 

$

1,325,140

 

Cost of services provided and goods sold

693,335

 

222,254

 

-

 

915,589

 

Selling, general and administrative expenses (b)

61,606

 

108,120

 

34,748

 

204,474

 

Depreciation

14,753

 

13,782

 

107

 

28,642

 

Amortization

-

 

96

 

-

 

96

 

Other operating expense (b)

16

 

72

 

-

 

88

 

Total costs and expenses

769,710

 

344,324

 

34,855

 

1,148,889

 

Income/(loss) from operations

120,867

 

90,239

 

(34,855

)

176,251

 

Interest expense

(153

)

(255

)

(3,405

)

(3,813

)

Intercompany interest income/(expense)

9,524

 

5,231

 

(14,755

)

-

 

Other income—net

469

 

60

 

3,827

 

4,356

 

Income/(loss) before income taxes

130,707

 

95,275

 

(49,188

)

176,794

 

Income taxes (b)

(30,987

)

(22,476

)

27,885

 

(25,578

)

Net income/(loss)

$

99,720

 

$

72,799

 

$

(21,303

)

$

151,216

 

The "Footnotes to Financial Statements" are integral parts of this financial information.
CHEMED CORPORATION AND SUBSIDIARY COMPANIES
CONSOLIDATING SUMMARIES OF EBITDA
FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2019 AND 2018
(in thousands)(unaudited)
 

 

 

 

 

 

 

Chemed

VITAS

 

Roto-Rooter

 

Corporate

 

Consolidated

2019

Net income/(loss)

$

39,773

 

$

26,140

 

$

(6,966

)

$

58,947

 

Add/(deduct):
Interest expense

48

 

80

 

913

 

1,041

 

Income taxes

11,930

 

7,113

 

(11,067

)

7,976

 

Depreciation

5,105

 

5,003

 

39

 

10,147

 

Amortization

18

 

423

 

-

 

441

 

EBITDA

56,874

 

38,759

 

(17,081

)

78,552

 

Add/(deduct):
Intercompany interest expense/(income)

(4,618

)

(2,234

)

6,852

 

-

 

Interest income

(139

)

(34

)

-

 

(173

)

Acquisition expense

-

 

3,281

 

-

 

3,281

 

Stock option expense

-

 

-

 

2,711

 

2,711

 

Long-term incentive compensation

-

 

-

 

1,677

 

1,677

 

Medicare cap sequestration adjustment

859

 

-

 

-

 

859

 

Adjusted EBITDA

$

52,976

 

$

39,772

 

$

(5,841

)

$

86,907

 

 

2018

Net income/(loss)

$

35,921

 

$

24,563

 

$

(9,235

)

$

51,249

 

Add/(deduct):
Interest expense

49

 

71

 

962

 

1,082

 

Income taxes

10,784

 

6,267

 

(5,369

)

11,682

 

Depreciation

4,905

 

4,712

 

40

 

9,657

 

Amortization

-

 

35

 

-

 

35

 

EBITDA

51,659

 

35,648

 

(13,602

)

73,705

 

Add/(deduct):
Intercompany interest expense/(income)

(3,306

)

(1,814

)

5,120

 

-

 

Interest income..

(88

)

(23

)

-

 

(111

)

Medicare cap sequestration adjustment..

503

 

-

 

-

 

503

 

Acquisition expense

177

 

177

 

-

 

354

 

Stock option expense

-

 

-

 

2,055

 

2,055

 

Long-term incentive compensation

-

 

-

 

1,234

 

1,234

 

Adjusted EBITDA

$

48,945

 

$

33,988

 

$

(5,193

)

$

77,740

 

The "Footnotes to Financial Statements" are integral parts of this financial information.
CHEMED CORPORATION AND SUBSIDIARY COMPANIES
CONSOLIDATING SUMMARIES OF EBITDA
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2019 AND 2018
(in thousands)(unaudited)
 

 

 

 

 

 

 

Chemed

VITAS

 

Roto-Rooter

 

Corporate

 

Consolidated

2019

Net income/(loss)

$

106,400

 

$

76,302

 

$

(28,359

)

$

154,343

 

Add/(deduct):
Interest expense

150

 

273

 

2,979

 

3,402

 

Income taxes

33,636

 

22,452

 

(28,417

)

27,671

 

Depreciation

14,644

 

14,983

 

117

 

29,744

 

Amortization

53

 

1,313

 

-

 

1,366

 

EBITDA

154,883

 

115,323

 

(53,680

)

216,526

 

Add/(deduct):
Intercompany interest expense/(income)

(13,395

)

(6,609

)

20,004

 

-

 

Interest income

(296

)

(91

)

-

 

(387

)

Stock option expense

-

 

-

 

10,729

 

10,729

 

Litigation settlement

6,000

 

-

 

-

 

6,000

 

Long-term incentive compensation

-

 

-

 

4,552

 

4,552

 

Acquisition Expense

-

 

3,377

 

120

 

3,497

 

Medicare cap sequestration adjustment

3,063

 

-

 

-

 

3,063

 

Impairment loss on transportation equipment

-

 

-

 

2,266

 

2,266

 

Non cash ASC 842 expenses/(benefit)

656

 

55

 

(163

)

548

 

Adjusted EBITDA

$

150,911

 

$

112,055

 

$

(16,172

)

$

246,794

 

 

2018

Net income/(loss)

$

99,720

 

$

72,799

 

$

(21,303

)

$

151,216

 

Add/(deduct):
Interest expense

153

 

255

 

3,405

 

3,813

 

Income taxes..

30,987

 

22,476

 

(27,885

)

25,578

 

Depreciation

14,753

 

13,782

 

107

 

28,642

 

Amortization

-

 

96

 

-

 

96

 

EBITDA

145,613

 

109,408

 

(45,676

)

209,345

 

Add/(deduct):
Intercompany interest expense/(income)

(9,524

)

(5,231

)

14,755

 

-

 

Interest income

(468

)

(60

)

-

 

(528

)

Stock option expense

-

 

-

 

9,360

 

9,360

 

Long-term incentive compensation

-

 

-

 

4,376

 

4,376

 

Medicare cap sequestration adjustment

1,040

 

-

 

-

 

1,040

 

Amortization of stock awards

107

 

100

 

239

 

446

 

Acquisition expense

177

 

177

 

-

 

354

 

Litigation settlement

(204

)

-

 

-

 

(204

)

Adjusted EBITDA

$

136,741

 

$

104,394

 

$

(16,946

)

$

224,189

 

The "Footnotes to Financial Statements" are integral parts of this financial information.
CHEMED CORPORATION AND SUBSIDIARY COMPANIES
RECONCILIATION OF ADJUSTED NET INCOME
(in thousands, except per share data)(unaudited)
 

Three Months Ended September 30,

 

Nine Months Ended September 30,

2019

 

2018

 

2019

 

2018

Net income as reported

$

58,947

 

$

51,249

 

$

154,343

 

$

151,216

 

 
Add/(deduct) pre-tax cost of:
 
Stock option expense

2,711

 

2,055

 

10,729

 

9,360

 

Litigation settlement

-

 

-

 

6,000

 

(204

)

Long-term incentive compensation

1,677

 

1,234

 

4,552

 

4,376

 

Acquisition expense

3,281

 

354

 

3,497

 

354

 

Medicare cap sequestration adjustments

859

 

503

 

3,063

 

1,040

 

Impairment loss on transportation equipment

-

 

-

 

2,266

 

-

 

Amortization of acquired and cancelled franchise agreements

331

 

-

 

1,103

 

-

 

Non cash ASC 842 expenses

-

 

-

 

548

 

-

 

Add/(deduct) tax impacts:
Tax impact of the above pre-tax adjustments (1)

(1,801

)

(821

)

(6,761

)

(3,059

)

Excess tax benefits on stock compensation

(8,792

)

(3,118

)

(18,737

)

(18,618

)

Adjusted net income

$

57,213

 

$

51,456

 

$

160,603

 

$

144,465

 

 
 
Diluted Earnings Per Share As Reported
Net income

$

3.56

 

$

3.06

 

$

9.35

 

$

8.98

 

Average number of shares outstanding

16,555

 

16,772

 

16,514

 

16,830

 

 
 
Adjusted Diluted Earnings Per Share
Adjusted net income

$

3.46

 

$

3.07

 

$

9.73

 

$

8.58

 

Average number of shares outstanding

16,555

 

16,772

 

16,514

 

16,830

(1)

The tax impact of pre-tax adjustments was calculated using the effective tax rate of the operating unit for which each adjustment is associated.

 
The "Footnotes to Financial Statements" are integral parts of this financial information.
CHEMED CORPORATION AND SUBSIDIARY COMPANIES
OPERATING STATISTICS FOR VITAS SEGMENT
(unaudited)
 

Three Months Ended September 30,

 

Nine Months Ended September 30,

OPERATING STATISTICS

2019

 

2018

 

2019

 

2018

Net revenue ($000) (c)
Homecare

$

274,746

 

$

257,134

 

$

800,059

 

$

748,546

 

Inpatient

23,599

 

19,617

 

69,063

 

61,803

 

Continuous care

29,446

 

30,385

 

92,476

 

91,664

 

Other

2,356

 

2,104

 

6,598

 

5,844

 

Subtotal

$

330,147

 

$

309,240

 

$

968,196

 

$

907,857

 

Room and board, net

(2,846

)

(2,569

)

(8,098

)

(7,863

)

Contractual allowances

(4,236

)

(2,957

)

(10,904

)

(8,749

)

Medicare cap allowance

(1,317

)

(1,950

)

(7,915

)

(668

)

Net Revenue

$

321,748

 

$

301,764

 

$

941,279

 

$

890,577

 

Net revenue as a percent of total before Medicare cap allowance
Homecare

83.2

%

83.2

%

82.6

%

82.5

%

Inpatient

7.1

 

6.3

 

7.1

 

6.8

 

Continuous care

8.9

 

9.8

 

9.6

 

10.1

 

Other

0.8

 

0.7

 

0.7

 

0.6

 

Subtotal

100.0

 

100.0

 

100.0

 

100.0

 

Room and board, net

(0.9

)

(0.8

)

(0.8

)

(0.9

)

Contractual allowances

(1.3

)

(1.0

)

(1.2

)

(1.0

)

Medicare cap allowance

(0.4

)

(0.6

)

(0.8

)

(0.1

)

Net Revenue

97.4

%

97.6

%

97.2

%

98.0

%

Average daily census ("ADC") (days)
Homecare

14,799

 

13,791

 

14,510

 

13,515

 

Nursing home

3,483

 

3,402

 

3,374

 

3,298

 

Routine homecare

18,282

 

17,193

 

17,884

 

16,813

 

Inpatient

373

 

313

 

363

 

328

 

Continuous care

431

 

451

 

460

 

466

 

Total

19,086

 

17,957

 

18,707

 

17,607

 

 
Total Admissions

17,131

 

16,403

 

52,380

 

51,540

 

Total Discharges

16,915

 

16,171

 

51,274

 

50,234

 

Average length of stay (days)

92.6

 

90.0

 

91.6

 

89.0

 

Median length of stay (days)

17.0

 

18.0

 

16.0

 

16.0

 

ADC by major diagnosis
Cerebro

35.7

%

36.2

%

35.9

%

36.5

%

Neurological

20.7

 

18.8

 

20.4

 

18.7

 

Cancer

12.9

 

13.8

 

12.9

 

13.8

 

Cardio

16.6

 

16.4

 

16.7

 

16.4

 

Respiratory

8.1

 

8.1

 

8.1

 

8.1

 

Other

6.0

 

6.7

 

6.0

 

6.5

 

Total

100.0

%

100.0

%

100.0

%

100.0

%

Admissions by major diagnosis
Cerebro

21.1

%

21.1

%

20.8

%

21.9

%

Neurological

12.7

 

11.6

 

12.6

 

11.3

 

Cancer

30.5

 

31.5

 

29.2

 

30.0

 

Cardio

14.8

 

14.7

 

15.7

 

15.3

 

Respiratory

10.2

 

10.3

 

11.3

 

11.0

 

Other

10.7

 

10.8

 

10.4

 

10.5

 

Total

100.0

%

100.0

%

100.0

%

100.0

%

 
Estimated uncollectible accounts as a percent of revenues

1.3

%

1.0

%

1.1

%

1.0

%

Accounts receivable --
Days of revenue outstanding- excluding unapplied Medicare payments

32.7

 

36.0

 

n.a.

n.a.

Days of revenue outstanding- including unapplied Medicare payments

21.0

 

22.8

 

n.a.

n.a.

The "Footnotes to Financial Statements" are integral parts of this financial information.

CHEMED CORPORATION AND SUBSIDIARY COMPANIES
FOOTNOTES TO FINANCIAL STATEMENTS
FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2019 AND 2018
(unaudited)
 

(a)

Included in the results of operations for 2019 are the following significant credits/(charges) which may not be indicative of ongoing operations
(in thousands):

Three Months Ended September 30, 2019

VITAS

 

Roto-Rooter

 

Corporate

 

Consolidated

Service revenues and sales:
Medicare cap sequestration adjustment

$

(859

)

$

-

 

$

-

 

$

(859

)

Selling, general and administrative expenses:
Acquisition expense

-

 

(3,281

)

-

 

(3,281

)

Stock option expense

-

 

-

 

(2,711

)

(2,711

)

Long-term incentive compensation

-

 

-

 

(1,677

)

(1,677

)

Amortization of acquired and cancelled franchise agreements

-

 

(331

)

-

 

(331

)

Pretax impact on earnings

(859

)

(3,612

)

(4,388

)

(8,859

)

Excess tax benefits on stock compensation

-

 

-

 

8,792

 

8,792

 

Income tax benefit on the above

220

 

957

 

624

 

1,801

 

After-tax impact on earnings

$

(639

)

$

(2,655

)

$

5,028

 

$

1,734

 

 

Nine Months Ended September 30, 2019

VITAS

 

Roto-Rooter

 

Corporate

 

Consolidated

Service revenues and sales:
Medicare cap sequestration adjustment

$

(3,063

)

$

-

 

$

-

 

$

(3,063

)

Selling, general and administrative expenses:
Stock option expense

-

 

-

 

(10,729

)

(10,729

)

Long-term incentive compensation

-

 

-

 

(4,552

)

(4,552

)

Acquisition expense

-

 

(3,377

)

(120

)

(3,497

)

Amortization of acquired and cancelled franchise agreements

-

 

(1,103

)

-

 

(1,103

)

Non cash ASC 842 (expenses)/benefit

(656

)

(55

)

163

 

(548

)

Other operating expenses:
Litigation settlement

(6,000

)

-

 

-

 

(6,000

)

Impairment loss on transportation equipment

-

 

-

 

(2,266

)

(2,266

)

Pretax impact on earnings

(9,719

)

(4,535

)

(17,504

)

(31,758

)

Excess tax benefits on stock compensation

-

 

-

 

18,737

 

18,737

 

Income tax benefit on the above

2,474

 

1,202

 

3,085

 

6,761

 

After-tax impact on earnings

$

(7,245

)

$

(3,333

)

$

4,318

 

$

(6,260

)

 

(b)

Included in the results of operations for 2018 are the following significant credits/(charges) which may not be indicative of ongoing operations
(in thousands):

Three Months Ended September 30, 2018

VITAS

 

Roto-Rooter

 

Corporate

 

Consolidated

Service revenues and sales:
Medicare cap sequestration adjustment

$

(503

)

$

-

 

$

-

 

$

(503

)

Selling, general and administrative expenses:
Stock option expense

-

 

-

 

(2,055

)

(2,055

)

Long-term incentive compensation

-

 

-

 

(1,234

)

(1,234

)

Acquisition expense

(177

)

(177

)

-

 

(354

)

Pretax impact on earnings

(680

)

(177

)

(3,289

)

(4,146

)

Excess tax benefits on stock compensation

-

 

-

 

3,118

 

3,118

 

Income tax benefit on the above

172

 

47

 

602

 

821

 

After-tax impact on earnings

$

(508

)

$

(130

)

$

431

 

$

(207

)

 

Nine Months Ended September 30, 2018

VITAS

 

Roto-Rooter

 

Corporate

 

Consolidated

Service revenues and sales:
Medicare cap sequestration adjustment

$

(1,040

)

$

-

 

$

-

 

$

(1,040

)

Selling, general and administrative expenses:
Stock option expense

-

 

-

 

(9,360

)

(9,360

)

Long-term incentive compensation

-

 

-

 

(4,376

)

(4,376

)

Acquisition expense

(177

)

(177

)

-

 

(354

)

Other operating expenses:
Litigation settlement

204

 

-

 

-

 

204

 

Pretax impact on earnings

(1,013

)

(177

)

(13,736

)

(14,926

)

Excess tax benefits on stock compensation

-

 

-

 

18,618

 

18,618

 

Income tax benefit on the above

256

 

47

 

2,756

 

3,059

 

After-tax impact on earnings

$

(757

)

$

(130

)

$

7,638

 

$

6,751

 

(c) VITAS has 12 large (greater than 450 ADC), 19 medium (greater than 200 but less than 450 ADC) and 17 small (less than 200 ADC) hospice programs. Of VITAS' 30 Medicare provider numbers, 24 provider numbers have a Medicare cap cushion of 5% or greater during the current cap year, three provider numbers have a cap cushion between 0% and 5%, and three provider numbers have a Medicare cap liability.

 

Source: Chemed Corporation

David P. Williams
(513) 762-6901

All information current at time of original publication. Read complete disclaimer for details.
Copyright © 2017, Chemed Corporation. All rights reserved.
Page last modified: 04/18/05