Investor Relations

Corporate Governance

Dividends & Splits

Email Alerts

Financial Reports

Analyst Estimates

Fundamentals

Request Information

Company Events &
Presentations


Investor FAQ

Stock Information

News Releases

SEC Filings
Chemed > Investor Relations > News Releases > News Release
News Releases
Printer Friendly Version View printer-friendly version
<< Back
Chemed Reports Fourth-Quarter 2011 Results

CINCINNATI--(BUSINESS WIRE)--Feb. 14, 2012-- Chemed Corporation (Chemed) (NYSE:CHE), which operates VITAS Healthcare Corporation (VITAS), the nation’s largest provider 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 fourth quarter ended December 31, 2011, versus the comparable prior-year period, as follows:

Consolidated operating results:

  • Revenue increased 4.2% to $350 million
  • GAAP Diluted EPS increased 33.7% to $1.31
  • Adjusted Diluted EPS increased 19.8% to $1.45

VITAS segment operating results:

  • Net Patient Revenue of $255 million, an increase of 5.1%
  • Average Daily Census (ADC) of 13,724, an increase of 4.9%
  • Admissions of 15,191, an increase of 2.8%
  • Net Income of $22.7 million, a decrease of 2.6%
  • Adjusted EBITDA of $40.0 million, a decrease of 5.2%
  • Adjusted EBITDA margin of 15.7%, a decrease of 171 basis points

Roto-Rooter segment operating results:

  • Revenue of $95.7 million, an increase of 1.8%
  • Unit-for-unit job count of 165,841, a decrease of 0.2%
  • Net Income of $9.3 million, an increase of 27.6%
  • Adjusted EBITDA of $17.8 million, an increase of 12.0%
  • Adjusted EBITDA margin of 18.7%, an increase of 169 basis points

VITAS

Net revenue for VITAS was $255 million in the fourth quarter of 2011, which is an increase of 5.1% over the prior-year period. Excluding the impact of Medicare Cap, revenue increased 5.7%. This revenue growth was the result of increased ADC of 4.9%, driven by an increase in admissions of 2.8% and Medicare price increases of approximately 2.5%. This growth was partially offset by geographic and level of acuity mix shift of the patient base.

Average revenue per patient per day in the quarter, excluding the impact of Medicare Cap, was $203.68, which is 0.7% above the prior-year period. Routine home care reimbursement and high acuity care averaged $161.90 and $707.89, respectively, per patient per day in the fourth quarter of 2011. During the quarter, high acuity days of care were 7.6% of total days of care, 27 basis points lower than the prior-year quarter.

In the fourth quarter of 2011, VITAS recorded a Medicare Cap liability of $2.6 million. This compares to $1.1 million of Medicare Cap liability recorded in the fourth quarter of 2010. The government’s Medicare Cap fiscal year begins on September 29. The first quarter of a Medicare Cap year has the potential to be volatile if a program experiences unusual or seasonal admission and discharge patterns. Based upon actual January 2012 admissions, VITAS anticipates reversing a significant portion of this Medicare Cap liability in the first quarter of 2012.

Of VITAS’ 37 unique Medicare provider numbers, 32 provider numbers have a Medicare Cap cushion of 10% or greater during the trailing twelve-month period; two provider numbers have a Medicare Cap cushion between 5% to 10%; and three provider numbers have a cap cushion between 0% and 5%. VITAS generated an aggregate cap cushion of $218 million during the trailing twelve-month period.

The fourth quarter of 2011 gross margin, excluding the impact of Medicare Cap, was 23.8%, which is a decline of 155 basis points from the fourth quarter of 2010. This decline in margin is primarily the result of increased costs related to the 2011 mandated physician visit for recertification, expansion of our community liaison program, expansion of losses in start-up locations, as well as increased costs associated with expansion of inpatient units.

Selling, general and administrative expense was $18.3 million in the fourth quarter of 2011, which is a decrease of 2.8% when compared to the prior-year quarter. Adjusted EBITDA totaled $40.0 million in the quarter, a decrease of 5.2% over the prior-year period. Adjusted EBITDA margin, excluding the impact from Medicare Cap, was 16.6% in the quarter which was 122 basis points below the prior-year quarter.

Roto-Rooter

Roto-Rooter’s plumbing and drain cleaning business generated sales of $95.7 million for the fourth quarter of 2011, an increase of 1.8% over the prior-year quarter. This revenue growth was the result of a combination of selective price increases and favorable mix shift, partially offset by a slight decline in aggregate job count.

Unit-for-unit job count in the fourth quarter of 2011 declined 0.2% when compared to the prior-year period. During the fourth quarter of 2011, total residential jobs decreased 2.6%, as residential plumbing jobs increased 5.6% and residential drain cleaning jobs decreased 6.6%, when compared to the fourth quarter of 2010. Residential jobs represented 70% of total job count in the quarter. Total commercial jobs increased 5.7%, with commercial plumbing/excavation job count increasing 10.8% and commercial drain cleaning increasing 4.3% when compared to the prior-year quarter. The “All Other” residential and commercial job category, which represents less than 2% of aggregate job count, decreased 6.1%.

Roto-Rooter’s gross margin was 45.4% in the quarter, a 228 basis point increase when compared to the fourth quarter of 2010. Adjusted EBITDA in the fourth quarter of 2011 totaled $17.8 million, an increase of 12.0%, and the Adjusted EBITDA margin was 18.7% in the quarter, an increase of 169 basis points, when compared to the prior-year quarter.

Roto-Rooter continues to have periodic discussions with existing franchisees to acquire franchise territories. Management will be highly disciplined in terms of valuation, risk assessment and overall return on investment of any potential acquisition. The timing or actual completion of any acquisition cannot be predicted.

Chemed Consolidated Debt and Cash Flows

Chemed had total debt of $167 million at December 31, 2011. This debt is net of the discount taken as a result of convertible debt accounting requirements. Excluding this discount, aggregate debt is $187 million and is due in May 2014. Chemed’s total debt equates to less than one times trailing twelve-month adjusted EBITDA.

In March 2011 Chemed replaced its existing credit facility with a new Credit Agreement. Terms of this Credit Agreement consist of a five-year $350 million revolving credit facility. The interest rate on this Credit Agreement has a floating rate that is currently LIBOR plus 175 basis points. This Credit Agreement provides Chemed with increased flexibility in terms of acquisitions, share repurchases, dividends and other corporate needs. In addition, an expansion feature is included in this Credit Agreement that provides Chemed the opportunity to increase its revolver and/or enter into term loans for an additional $150 million. At December 31, 2011, this facility had approximately $321 million of undrawn borrowing capacity after deducting $29 million for letters of credit issued to secure the Company’s workers’ compensation insurance.

Capital expenditures in 2011 aggregated $29.6 million and compares to depreciation and amortization during the same period of $29.5 million.

The Company increased its quarterly dividend from $0.14 to $0.16 per share in the third quarter of 2011. In addition, the company has purchased $144 million, or 2,602,513 shares, of Chemed stock in 2011. As of December 31, 2011, $75.3 million is remaining under Chemed’s previously announced share repurchase program. Management will continually evaluate cash utilization alternatives, including share repurchase, debt repurchase, acquisitions and increased dividends to determine the most beneficial use of available capital resources.

Guidance for 2012

VITAS expects to achieve full-year 2012 revenue growth, prior to Medicare Cap, of 5.0% to 8.0%. Admissions in 2012 are estimated to increase approximately 2.5% to 4.0% and full-year Adjusted EBITDA margin, prior to Medicare Cap, is estimated to be 15.0% to 15.5%. Effective October 1, 2011, Medicare increased the average hospice reimbursement rates by approximately 2.5%. Our guidance assumes VITAS will incur $5.0 million of estimated Medicare contractual billing limitations for calendar year 2012.

Roto-Rooter expects to achieve full-year 2012 revenue growth of 4.0% to 5.0%. The revenue estimate is a result of increased pricing of approximately 2%, a favorable mix shift to higher revenue jobs, with job count growth estimated at 0% to 1.5%. Adjusted EBITDA margin for 2012 is estimated in the range of 17.0% to 18.0%.

Based upon the above, management estimates 2012 earnings per diluted share, excluding non-cash expense for stock options, the non-cash interest expense related to the accounting for convertible debt and other items not indicative of ongoing operations, will be in the range of $5.35 to $5.55. This compares to Chemed’s 2011 adjusted earnings per diluted share of $4.78.

Conference Call

Chemed will host a conference call and webcast at 10 a.m., ET, on Wednesday, February 15, 2012, to discuss the Company's quarterly results and to provide an update on its business. The dial-in number for the conference call is (866) 203-3436 for U.S. and Canadian participants and (617) 213-8849 for international participants. The participant passcode is 77396059. 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 (888) 286-8010 for U.S. and Canadian callers and (617) 801-6888 for international callers and will be available for one week following the live call. The replay passcode is 43136718. 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 13,500 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 and drain service through company-owned branches, independent contractors and franchisees in the United States and

Canada. Roto-Rooter also has licensed master franchisees in Indonesia, Singapore, Japan, 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 STATEMENT OF INCOME
(in thousands, except per share data)(unaudited)
         
 
For the Three Months Ended For the Years Ended
December 31, December 31,
2011 2010 2011 2010
Service revenues and sales $ 350,253   $ 336,286   $ 1,355,970   $ 1,280,545  
Cost of services provided and goods sold 248,366 235,262 970,484 906,016
Selling, general and administrative expenses (aa) 48,564 55,270 202,260 201,964
Depreciation 6,288 6,338 25,247 24,386
Amortization   1,009     950     4,252     4,657  
Total costs and expenses   304,227     297,820     1,202,243     1,137,023  
Income from operations 46,026 38,466 153,727 143,522
Interest expense (3,628 ) (3,013 ) (13,888 ) (11,959 )
Other income/(expense)--net (bb)   (164 )   1,850     717     2,268  
Income before income taxes 42,234 37,303 140,556 133,831
Income taxes   (16,529 )   (14,673 )   (54,577 )   (52,000 )
Net income $ 25,705   $ 22,630   $ 85,979   $ 81,831  
 
 
Earnings Per Share
Net income $ 1.34   $ 1.00   $ 4.19   $ 3.62  

Average number of shares outstanding

  19,237     22,534     20,523     22,587  
 
Diluted Earnings Per Share
Net income $ 1.31   $ 0.98   $ 4.10   $ 3.55  
Average number of shares outstanding   19,556     23,070     20,945     23,031  
 
                         
(aa)

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

For the Three Months Ended For the Years Ended
December 31, December 31,
2011 2010 2011 2010

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

$ 48,561 $ 50,473 $ 198,449 $ 195,020

Market value gains on assets held in deferred
compensation trusts

3 1,862 799 2,210
Long-term incentive compensation   -     2,935     3,012    

4,734

 

Total SG&A expenses

$

48,564

 

$

55,270

 

$

202,260

 

$

201,964

 

 

 

 

 

 

 

 

 

 

 
(bb) Other income/(expense)--net comprises (in thousands):
For the Three Months Ended For the Years Ended
December 31, December 31,
2011 2010 2011 2010
Loss on disposal of property and equipment $ (373 ) $ (132 ) $ (441 ) $ (425 )
Interest income 229 110 426 444

Market value gains on assets held in deferred
compensation trusts

3 1,862 799 2,210
Other   (23 )   10     (67 )   39  

Total other income/(expense)--net

$ (164 ) $ 1,850   $ 717   $ 2,268  
 

     

 

CHEMED CORPORATION AND SUBSIDIARY COMPANIES

CONSOLIDATED BALANCE SHEET
(in thousands, except per share data)(unaudited)
             
 
December 31,
2011 2010
Assets
Current assets
Cash and cash equivalents $ 38,081 $ 49,917
Accounts receivable less allowances 77,924 112,999
Inventories 8,668 7,728
Current deferred income taxes 12,540 15,098
Prepaid income taxes 2,131 770
Prepaid expenses   11,409     10,285  
Total current assets 150,753 196,797
Investments of deferred compensation plans held in trust 31,629 28,304
Properties and equipment, at cost less accumulated depreciation 82,951 79,292
Identifiable intangible assets less accumulated amortization 58,262 57,858
Goodwill 460,633 458,343
Other assets   11,677     9,567  
Total Assets $ 795,905   $ 830,161  
 
Liabilities
Current liabilities
Accounts payable $ 48,225 $ 55,829
Income taxes 90 1,161
Accrued insurance 37,147 36,492
Accrued compensation 41,087 39,719
Other current liabilities   18,851     16,141  
Total current liabilities 145,400 149,342
Deferred income taxes 29,463 25,085
Long-term debt 166,784 159,208
Deferred compensation liabilities 30,693 27,851
Other liabilities   9,881     6,626  
Total Liabilities   382,221     368,112  
 
Stockholders' Equity
Capital stock 30,937 30,382
Paid-in capital 398,094 365,007
Retained earnings 546,757 473,316
Treasury stock, at cost (564,091 ) (408,615 )
Deferred compensation payable in Company stock   1,987     1,959  
Total Stockholders' Equity   413,684     462,049  
Total Liabilities and Stockholders' Equity $ 795,905   $ 830,161  
 

       
 
CHEMED CORPORATION AND SUBSIDIARY COMPANIES
CONSOLIDATED STATEMENT OF CASH FLOWS
(in thousands)(unaudited)
             
 
For the Years Ended December 31,
2011 2010
Cash Flows from Operating Activities
Net income $ 85,979 $ 81,831
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation and amortization 29,499 29,043
Provision for uncollectible accounts receivable 8,563 9,078
Stock option expense 8,376 7,762
Amortization of discount on convertible notes 7,576 7,081
Provision for deferred income taxes 7,242 (2,409 )
Noncash long-term incentive compensation 2,595 4,161
Amortization of debt issuance costs 1,137 654
Changes in operating assets and liabilities, excluding
amounts acquired in business combinations:
Decrease/(increase) in accounts receivable 26,896 (68,656 )
Increase in inventories (940 ) (151 )
Decrease/(increase) in prepaid expenses (1,124 ) 332
Increase/(decrease) in accounts payable and other
current liabilities (1,397 ) 13,810
Increase in income taxes 2,708 4,825
Increase in other assets (4,009 ) (4,398 )
Increase in other liabilities 4,548 5,999
Excess tax benefit on share-based compensation (3,854 ) (3,357 )
Other sources   548     407  
Net cash provided by operating activities   174,343     86,012  
Cash Flows from Investing Activities
Capital expenditures (29,592 ) (25,639 )
Business combinations, net of cash acquired (3,664 ) (9,469 )
Other uses   (858 )   (592 )
Net cash used by investing activities   (34,114 )   (35,700 )
Cash Flows from Financing Activities
Purchases of treasury stock (147,886 ) (109,330 )
Dividends paid (12,538 ) (11,881 )
Proceeds from exercise of stock options 8,036 5,327
Excess tax benefit on share-based compensation 3,854 3,357
Debt issuance costs (2,657 ) -
Increase/(decrease) in cash overdraft payable (826 ) (581 )
Other sources   (48 )   297  
Net cash used by financing activities   (152,065 )   (112,811 )
Increase/(Decrease) in Cash and Cash Equivalents (11,836 ) (62,499 )
Cash and cash equivalents at beginning of year   49,917     112,416  
Cash and cash equivalents at end of year $ 38,081   $ 49,917  
 

   
 
CHEMED CORPORATION AND SUBSIDIARY COMPANIES
CONSOLIDATING STATEMENT OF INCOME
FOR THE THREE MONTHS ENDED DECEMBER 31, 2011 AND 2010
(in thousands)(unaudited)
 
       
Chemed
VITAS Roto-Rooter Corporate Consolidated

2011

Service revenues and sales

$ 254,560   $ 95,693   $ -   $ 350,253  
Cost of services provided and goods sold 196,084 52,282 - 248,366

Selling, general and administrative expenses (a)

18,306 26,347 3,911 48,564
Depreciation 4,094 2,063 131 6,288
Amortization   384     156     469     1,009  
Total costs and expenses   218,868     80,848     4,511     304,227  
Income/(loss) from operations 35,692 14,845 (4,511 ) 46,026
Interest expense (a) (57 ) (84 ) (3,487 ) (3,628 )
Intercompany interest income/(expense) 735 394 (1,129 ) -
Other income/(expense)—net   59     (233 )   10     (164 )
Income/(loss) before income taxes 36,429 14,922 (9,117 ) 42,234
Income taxes (a)   (13,755 )   (5,661 )   2,887     (16,529 )
Net income/(loss) $ 22,674   $ 9,261   $ (6,230 ) $ 25,705  
 

2010

Service revenues and sales

$ 242,268   $ 94,018   $ -   $ 336,286  
Cost of services provided and goods sold 181,747 53,515 - 235,262
Selling, general and administrative expenses (b) 18,836 27,208 9,226 55,270
Depreciation 4,252 1,949 137 6,338
Amortization   486     126     338     950  
Total costs and expenses   205,321     82,798     9,701     297,820  
Income/(loss) from operations 36,947 11,220 (9,701 ) 38,466
Interest expense (b) (4 ) (46 ) (2,963 ) (3,013 )
Intercompany interest income/(expense) 854 486 (1,340 ) -
Other income/(expense)—net   (80 )   18     1,912     1,850  
Income/(loss) before income taxes 37,717 11,678 (12,092 ) 37,303
Income taxes (b)   (14,445 )   (4,421 )   4,193     (14,673 )
Net income/(loss) $ 23,272   $ 7,257   $ (7,899 ) $ 22,630  
 
The "Footnotes to Financial Statements" are integral parts of this financial information.
 

           
 
CHEMED CORPORATION AND SUBSIDIARY COMPANIES
CONSOLIDATING STATEMENT OF INCOME
FOR THE YEARS ENDED DECEMBER 31, 2011 AND 2010
(in thousands)(unaudited)
 
 
Chemed
VITAS Roto-Rooter Corporate Consolidated

2011

Service revenues and sales $ 986,272   $ 369,698   $ -   $ 1,355,970  
Cost of services provided and goods sold 766,732 203,752 - 970,484
Selling, general and administrative expenses (a) 75,698 102,528 24,034 202,260
Depreciation 16,583 8,130 534 25,247
Amortization   1,897     599     1,756     4,252  
Total costs and expenses   860,910     315,009     26,324     1,202,243  
Income/(loss) from operations 125,362 54,689 (26,324 ) 153,727
Interest expense (a) (229 ) (358 ) (13,301 ) (13,888 )
Intercompany interest income/(expense) 3,998 2,136 (6,134 ) -
Other income/(expense)—net   62     (235 )   890     717  
Income/(loss) before income taxes 129,193 56,232 (44,869 ) 140,556
Income taxes (a)   (48,835 )   (21,353 )   15,611     (54,577 )
Net income/(loss) $ 80,358   $ 34,879   $ (29,258 ) $ 85,979  
 

2010

Service revenues and sales $ 925,810   $ 354,735   $ -   $ 1,280,545  
Cost of services provided and goods sold 709,094 196,922 - 906,016
Selling, general and administrative expenses (b) 73,755 100,731 27,478 201,964
Depreciation 16,161 7,775 450 24,386
Amortization   2,739     514     1,404     4,657  
Total costs and expenses   801,749     305,942     29,332     1,137,023  
Income/(loss) from operations 124,061 48,793 (29,332 ) 143,522
Interest expense (b) (131 ) (233 ) (11,595 ) (11,959 )
Intercompany interest income/(expense) 4,632 2,612 (7,244 ) -
Other income/(expense)—net   (165 )   53     2,380     2,268  
Income/(loss) before income taxes 128,397 51,225 (45,791 ) 133,831
Income taxes (b)   (48,601 )   (19,547 )   16,148     (52,000 )
Net income/(loss) $ 79,796   $ 31,678   $ (29,643 ) $ 81,831  
 
The "Footnotes to Financial Statements" are integral parts of this financial information.
 

 
 
CHEMED CORPORATION AND SUBSIDIARY COMPANIES
CONSOLIDATING SUMMARY OF EBITDA
FOR THE THREE MONTHS ENDED DECEMBER 31, 2011 AND 2010
(in thousands)(unaudited)
               
 
Chemed
VITAS Roto-Rooter Corporate Consolidated

2011

Net income/(loss)

$ 22,674 $ 9,261 $ (6,230 ) $ 25,705
Add/(deduct):
Interest expense 57 84 3,487 3,628
Income taxes 13,755 5,661 (2,887 ) 16,529
Depreciation 4,094 2,063 131 6,288
Amortization 384     156     469     1,009  
EBITDA 40,964 17,225 (5,030 ) 53,159
Add/(deduct):
Intercompany interest expense/(income) (735 ) (394 ) 1,129 -
Interest income (208 ) (12 ) (9 ) (229 )
Legal expenses of OIG investigation (21 ) - - (21 )
Acquisition expenses 30 (20 ) - 10
Costs related to litigation settlements - 848 - 848
Advertising cost adjustment (c) - 202 - 202
Stock option expense   -     -     1,473     1,473  
Adjusted EBITDA $ 40,030   $ 17,849   $ (2,437 ) $ 55,442  
 

2010

Net income/(loss) $ 23,272 $ 7,257 $ (7,899 ) $ 22,630
Add/(deduct):
Interest expense 4 46 2,963 3,013
Income taxes 14,445 4,421 (4,193 ) 14,673
Depreciation 4,252 1,949 137 6,338
Amortization   486     126     338     950  
EBITDA 42,459 13,799 (8,654 ) 47,604
Add/(deduct):
Intercompany interest expense/(income) (854 ) (486 ) 1,340 -
Interest income (48 ) (12 ) (50 ) (110 )
Legal expenses of OIG investigation 622 - - 622
Acquisition expenses 68 256 - 324
Costs related to litigation settlements - 1,426 - 1,426
Advertising cost adjustment (c) - 960 - 960
Long-term incentive compensation - - 2,935 2,935
Stock option expense   -     -     1,397     1,397  
Adjusted EBITDA $ 42,247   $ 15,943   $ (3,032 ) $ 55,158  
 
The "Footnotes to Financial Statements" are integral parts of this financial information.
 

     
 
CHEMED CORPORATION AND SUBSIDIARY COMPANIES
CONSOLIDATING SUMMARY OF EBITDA
FOR THE YEARS ENDED DECEMBER 31, 2011 AND 2010
(in thousands)(unaudited)
         
 
Chemed
VITAS Roto-Rooter Corporate Consolidated

2011

Net income/(loss) $ 80,358 $ 34,879 $ (29,258 ) $ 85,979
Add/(deduct):
Interest expense 229 358 13,301 13,888
Income taxes 48,835 21,353 (15,611 ) 54,577
Depreciation 16,583 8,130 534 25,247
Amortization   1,897     599     1,756     4,252  
EBITDA 147,902 65,319 (29,278 ) 183,943
Add/(deduct):
Intercompany interest expense/(income) (3,998 ) (2,136 ) 6,134 -
Interest income (295 ) (40 ) (91 ) (426 )
Legal expenses of OIG investigation 1,188 - - 1,188
Acquisition expenses 147 (26 ) - 121
Costs related to litigation settlements - 2,299 - 2,299
Advertising cost adjustment (c) - (1,240 ) - (1,240 )
Stock option expense - - 8,376 8,376
Long-term incentive compensation   -     -     3,012     3,012  
Adjusted EBITDA $ 144,944   $ 64,176   $ (11,847 ) $ 197,273  
 

2010

Net income/(loss) $ 79,796 $ 31,678 $ (29,643 ) $ 81,831
Add/(deduct):
Interest expense 131 233 11,595 11,959
Income taxes 48,601 19,547 (16,148 ) 52,000
Depreciation 16,161 7,775 450 24,386
Amortization   2,739     514     1,404     4,657  
EBITDA 147,428 59,747 (32,342 ) 174,833
Add/(deduct):
Intercompany interest expense/(income) (4,632 ) (2,612 ) 7,244 -
Interest income (220 ) (49 ) (175 ) (444 )
Legal expenses of OIG investigation 1,012 - - 1,012
Acquisition expenses 68 256 - 324
Costs related to litigation settlements - 1,853 - 1,853
Advertising cost adjustment (c) - (679 ) - (679 )
Stock option expense - - 7,762 7,762
Long-term incentive compensation   -     -     4,734     4,734  
Adjusted EBITDA $ 143,656   $ 58,516   $ (12,777 ) $ 189,395  
 
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)
     
 
For the Three Months Ended For the Years Ended
December 31, December 31,
2011 2010 2011 2010
Net income as reported $ 25,705 $ 22,630 $ 85,979 $ 81,831
 
Add/(deduct) impact of:
After-tax additional interest expense resulting from the change in
accounting for the conversion feature of the convertible notes 1,200 1,110 4,664 4,313
After-tax stock option expense 932 883 5,298 4,909
After-tax cost of costs related to litigation settlements 516 869 1,397 1,126
After-tax cost of legal expenses of OIG investigation (12 ) 385 737 627
After-tax cost of acquisition expenses 6 198 75 198
After-tax long-term incentive compensation -     1,833   1,880   2,957
 
Adjusted net income $ 28,347   $ 27,908 $ 100,030 $ 95,961
 
 
Earnings Per Share As Reported
Net income $ 1.34   $ 1.00 $ 4.19 $ 3.62
Average number of shares outstanding   19,237     22,534   20,523   22,587
Diluted Earnings Per Share As Reported
Net income $ 1.31   $ 0.98 $ 4.10 $ 3.55
Average number of shares outstanding   19,556     23,070   20,945   23,031
 
 
Adjusted Earnings Per Share
Net income $ 1.47   $ 1.24 $ 4.87 $ 4.25
Average number of shares outstanding   19,237     22,534   20,523   22,587
Adjusted Diluted Earnings Per Share
Net income $ 1.45   $ 1.21 $ 4.78 $ 4.17
Average number of shares outstanding   19,556     23,070   20,945   23,031
 
The "Footnotes to Financial Statements" are integral parts of this financial information.
 

             
 
CHEMED CORPORATION AND SUBSIDIARY COMPANIES
OPERATING STATISTICS FOR VITAS SEGMENT
(unaudited)
     
 
For the Three Months Ended For the Years Ended
December 31, December 31,
OPERATING STATISTICS 2011 2010 2011 2010
Net revenue ($000) (d)
Homecare $ 188,782 $ 176,517 $ 718,658 $ 666,562
Inpatient 27,882 27,344 110,742 105,588
Continuous care   40,516     39,463     158,466     153,050  
Total before Medicare cap allowance $ 257,180 $ 243,324 $ 987,866 $ 925,200
Medicare cap allowance   (2,620 )   (1,056 )   (1,594 )   610  
Total $ 254,560   $ 242,268   $ 986,272   $ 925,810  
Net revenue as a percent of total before Medicare cap allowance
Homecare 73.4 % 72.6 % 72.7 % 72.0 %
Inpatient 10.8 11.2 11.2 11.4
Continuous care   15.8     16.2     16.1     16.6  
Total before Medicare cap allowance 100.0 100.0 100.0 100.0
Medicare cap allowance   (1.0 )   (0.4 )   (0.2 )   (0.1 )
Total   99.0   % 99.6   %   99.8   % 99.9   %
Average daily census ("ADC") (days)
Homecare 9,582 8,851 9,285 8,476
Nursing home   3,092     3,193     3,069     3,207  
Routine homecare 12,674 12,044 12,354 11,683
Inpatient 443 436 449 434
Continuous care   607     600     603     596  
Total   13,724     13,080     13,406     12,713  
 
Total Admissions 15,191 14,776 60,162 58,526
Total Discharges 15,289 15,038 60,393 57,817
Average length of stay (days) 79.0 80.8 78.8 78.1
Median length of stay (days) 14.0 15.0 14.0 14.0
ADC by major diagnosis
Neurological 34.0 % 33.9 % 34.4 % 33.6 %
Cancer 17.8 18.3 17.7 18.4
Cardio 11.3 11.7 11.5 11.9
Respiratory 6.4 6.6 6.7 6.6
Other   30.5     29.5     29.7     29.5  
Total   100.0   % 100.0   %   100.0   % 100.0   %
Admissions by major diagnosis
Neurological 19.4 % 19.5 % 19.4 % 18.8 %
Cancer 34.4 34.4 33.5 34.5
Cardio 10.8 11.0 10.8 11.3
Respiratory 7.6 7.4 8.3 8.0
Other   27.8     27.7     28.0     27.4  
Total   100.0   % 100.0   %   100.0   % 100.0   %
Direct patient care margins (e)
Routine homecare 53.2 %

54.0

% 52.3 % 52.8 %
Inpatient 13.1 14.4 12.9 13.6
Continuous care 19.9 22.6 20.3 21.4
Homecare margin drivers (dollars per patient day)
Labor costs $ 52.92 $ 51.97 $ 53.63 $ 52.57
Drug costs 8.31 7.89 8.19 7.81
Home medical equipment 6.78 5.84 6.69 6.48
Medical supplies 2.79 2.67 2.80 2.56
Inpatient margin drivers (dollars per patient day)
Labor costs $ 320.43 $ 305.19 $ 312.78 $ 299.54
Continuous care margin drivers (dollars per patient day)
Labor costs $ 559.11 $ 533.32 $ 552.38 $ 531.69
Bad debt expense as a percent of revenues 0.6 % 0.7 % 0.7 % 0.9 %
Accounts receivable --
Days of revenue outstanding- excluding unapplied Medicare payments 36.7 38.2 n.a. n.a.
Days of revenue outstanding- including unapplied Medicare payments 22.3 36.5 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 MONTHS AND YEARS ENDED DECEMBER 31, 2011 AND 2010
(unaudited)
         
 

(a)

Included in the results of operations 2011 are the following significant credits/(charges) which may not be indicative of ongoing operations (in thousands):

For the Three Months Ended December 31, 2011
VITAS Roto-Rooter Corporate Consolidated
Selling, general and administrative expenses:
Legal expenses of OIG investigation $ 21 $ - $ - $ 21
Acquisition expenses (30 ) 20 - (10 )
Costs related to litigation settlements - (848 ) - (848 )
Stock option expense - - (1,473 ) (1,473 )
Interest expense:
Additional interest expense resulting from the change in accounting
for the conversion feature of the convertible notes   -     -     (1,898 )   (1,898 )
Pretax impact on earnings (9 ) (828 ) (3,371 ) (4,208 )
Income tax benefit on the above   3     324     1,239     1,566  
After-tax impact on earnings $ (6 ) $ (504 ) $ (2,132 ) $ (2,642 )
 
For the Years Ended December 31, 2011
VITAS Roto-Rooter Corporate Consolidated
Selling, general and administrative expenses:
Legal expenses of OIG investigation $ (1,188 ) $ - $ - $ (1,188 )
Acquisition expenses (147 ) 26 - (121 )
Costs related to litigation settlements - (2,299 ) - (2,299 )
Stock option expense - - (8,376 ) (8,376 )
Long-term incentive compensation - - (3,012 ) (3,012 )
Interest expense:
Additional interest expense resulting from the change in accounting
for the conversion feature of the convertible notes   -     -     (7,374 )   (7,374 )
Pretax impact on earnings (1,335 ) (2,273 ) (18,762 ) (22,370 )
Income tax benefit on the above   507     892     6,920     8,319  
After-tax impact on earnings $ (828 ) $ (1,381 ) $ (11,842 ) $ (14,051 )
 

(b)

Included in the results of operations 2010 are the following significant credits/(charges) which may not be indicative of ongoing operations (in thousands):

For the Three Months Ended December 31, 2010
VITAS Roto-Rooter Corporate Consolidated
Selling, general and administrative expenses:
Legal expenses of OIG investigation $ (622 ) $ - $ - $ (622 )
Acquisition expenses (68 ) (256 ) - (324 )
Costs related to litigation settlements - (1,426 ) - (1,426 )
Long-term incentive compensation - - (2,935 ) (2,935 )
Stock option expense - - (1,397 ) (1,397 )
Interest expense:
Additional interest expense resulting from the change in accounting
for the conversion feature of the convertible notes   -     -     (1,756 )   (1,756 )
Pretax impact on earnings (690 ) (1,682 ) (6,088 ) (8,460 )
Income tax benefit on the above   263     657     2,262     3,182  
After-tax impact on earnings $ (427 ) $ (1,025 ) $ (3,826 ) $ (5,278 )
 
For the Years Ended December 31, 2010
VITAS Roto-Rooter Corporate Consolidated
Selling, general and administrative expenses:
Legal expenses of OIG investigation $ (1,012 ) $ - $ - $ (1,012 )
Acquisition expenses (68 ) (256 ) - (324 )
Costs related to litigation settlements - (1,853 ) - (1,853 )
Stock option expense - - (7,762 ) (7,762 )
Long-term incentive compensation - - (4,734 ) (4,734 )
Interest expense:
Additional interest expense resulting from the change in accounting
for the conversion feature of the convertible notes   -     -     (6,820 )   (6,820 )
Pretax impact on earnings (1,080 ) (2,109 ) (19,316 ) (22,505 )
Income tax benefit on the above   411     827     7,137     8,375  
After-tax impact on earnings $ (669 ) $ (1,282 ) $ (12,179 ) $ (14,130 )
 

(c)  

Under Generally Accepted Accounting Principles ("GAAP"), the Roto-Rooter segment expenses all advertising, including the cost of telephone directories, immediately upon the initial release of the advertising. Telephone directories are generally in circulation 12 months. If a directory is in circulation for a time period greater or less than 12 months, the publisher adjusts the directory billing for the change in billing period. The timing of when a telephone directory is published can and does fluctuate significantly on a quarterly basis. This "direct expensing" results in significant fluctuations in quarterly advertising expense. In the fourth quarters of 2011 and 2010, GAAP advertising expense for Roto-Rooter totaled $6,073,000 and $7,034,000, respectively. If the expense of the telephone directories were spread over the periods they are in circulation, advertising expense for the fourth quarters of 2011 and 2010 would total $5,871,000 and $6,074,000, respectively.

 

Similarly, for the years ended December 31, 2011 and 2010, GAAP advertising expense for Roto-Rooter totaled $22,534,000 and $23,849,00, respectively. If the expense of the telephone directories were spread over the periods they are in circulation, advertising expense for years ended December 31, 2011 and 2010, would total $23,774,000 and $24,528,000, respectively.

 
(d)

VITAS has 8 large (greater than 450 ADC), 16 medium (greater than 200 but less than 450 ADC) and 28 small (less than 200 ADC) hospice programs. For the current cap year there are three programs with a cap liabilities and six programs with Medicare cap cushions of less than 10%.

 
(e) Amounts exclude indirect patient care and administrative costs, as well as Medicare Cap billing limitation.
 

Source: Chemed Corporation

Chemed Corporation
David P. Williams, 513-762-6901

All information current at time of original publication. Read complete disclaimer for details.
Copyright © 2005, Chemed Corporation. All rights reserved.
Page last modified: 04/18/05