Chemed Reports Second-Quarter 2021 Results - Full-Year 2021 Guidance Increased
<< Back
Chemed Reports Second-Quarter 2021 Results - Full-Year 2021 Guidance Increased

 

CINCINNATI--(BUSINESS WIRE)--Jul. 27, 2021-- 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 second quarter ended June 30, 2021, versus the comparable prior-year period, as follows:

Consolidated operating results:

  • Revenue increased 6.0% to $532 million
  • GAAP Diluted Earnings-per-Share (EPS) of $3.51, a decrease of 29.9%
  • Adjusted Diluted EPS of $4.60, an increase of 4.3%

VITAS segment operating results:

  • Net Patient Revenue of $312 million, a decline of 4.7%
  • Average Daily Census (ADC) of 17,995, a decline of 6.3%
  • Admissions of 16,840, an increase of 0.1%
  • Net Income, excluding certain discrete items, of $39.4 million, a decline of 21.4%
  • Adjusted EBITDA, excluding Medicare Cap, of $54.8 million, a decline of 24.4%
  • Adjusted EBITDA margin, excluding Medicare Cap, of 17.4%, a decrease of 430-basis points

Roto-Rooter segment operating results:

  • Revenue of $220 million, an increase of 26.1%
  • Net Income, excluding certain discrete items, of $44.9 million, an increase of 40.1%
  • Adjusted EBITDA of $64.3 million, an increase of 37.2%
  • Adjusted EBITDA margin of 29.2%, an increase of 236-basis points

VITAS

VITAS net revenue was $312 million in the second quarter of 2021, which is a decline of 4.7%, when compared to the prior-year period. This revenue decline is comprised primarily of a 6.3% decline in days-of-care offset by a geographically weighted average Medicare reimbursement rate increase (including the suspension of sequestration on May 1, 2020) of approximately 1.8%. Acuity mix shift had a net impact of reducing revenue approximately $3.8 million, or 1.2%, in the quarter when compared to the prior-year revenue and level-of-care mix. The combination of a lower Medicare Cap and other contra revenue changes offset a portion of the revenue decline by approximately 90-basis points.

In the second quarter of 2021, VITAS accrued $2.0 million in Medicare Cap billing limitations. This compares to a $5.7 million Medicare Cap billing limitation in the second quarter of 2020.

Of VITAS’ 30 Medicare provider numbers, 27 provider numbers currently have a Medicare Cap cushion of 10% or greater, one provider number has a cap cushion between 0% and 5% and two provider numbers currently have a fiscal 2021 Medicare Cap billing limitation liability.

Average revenue per patient per day in the second quarter of 2021 was $195.21, which, including acuity mix shift, is 61-basis points above the prior-year period. Reimbursement for routine home care and high acuity care averaged $169.06 and $988.03, respectively. During the quarter, high acuity days-of-care were 3.2% of total days of care, 32-basis points less than the prior-year quarter.

The second quarter 2021 gross margin, excluding Medicare Cap, increased costs for personal protection equipment (PPE), disinfecting facilities and other costs related to operating during the pandemic, was 24.7%. This is a 252-basis point margin decline when compared to the second quarter of 2020.

Selling, general and administrative expense was $22.6 million in the second quarter of 2021 and compares to $21.1 million incurred in the prior-year quarter. Adjusted EBITDA, excluding Medicare Cap, totaled $54.8 million in the quarter, a decrease of 24.4%. Adjusted EBITDA margin in the quarter, excluding Medicare Cap, was 17.4%, which is 430-basis points less than the prior-year period.

Roto-Rooter

Roto-Rooter generated quarterly revenue of $220 million in the second quarter of 2021, an increase of $45.6 million, or 26.1%, over the prior-year quarter.

Total Roto-Rooter branch commercial revenue in the quarter totaled $50.3 million, an increase of 31.8% over the prior year. This aggregate commercial revenue growth consisted of drain cleaning revenue increasing 39.8%, plumbing increasing 32.4% and excavation expanding 25.8%. Water restoration increased 8.3%.

Total Roto-Rooter branch residential revenue in the quarter totaled $149 million, an increase of 23.7% over the prior-year period. This aggregate residential revenue growth consisted of drain cleaning increasing 20.6%, plumbing expanding 30.7%, excavation increasing 22.4%, and water restoration increasing 23.1%.

Roto-Rooter’s gross margin in the quarter was 53.3%, a 211-basis point increase when compared to the second quarter of 2020. Adjusted EBITDA in the second quarter of 2021 totaled $64.3 million, an increase of 37.2%. The Adjusted EBITDA margin in the quarter was 29.2%, which is a 236-basis point increase when compared to the prior year.

Chemed Consolidated

As of June 30, 2021, Chemed had total cash and cash equivalents of $92 million and no long-term debt.

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 June 30, 2021, the Company had approximately $404 million of undrawn borrowing capacity under this credit agreement.

During the quarter, the Company repurchased 250,000 shares of Chemed stock for $122 million which equates to a cost per share of $487.53. As of June 30, 2021, there was approximately $312 million of remaining share repurchase authorization under this plan.

Chemed restarted its share repurchase program in 2007. Since that time, Chemed has repurchased approximately 14.9 million shares, aggregating approximately $1.6 billion at an average share cost of $104.70. Including dividends over this period, Chemed has returned approximately $1.8 billion to shareholders.

Guidance for 2021

Historically, Chemed earnings guidance has been developed using previous years’ key operating metrics which are then modeled and projected out for the calendar year. Critical within these projections is the understanding of traditional patterned correlations among key operating metrics. This modeling exercise also takes into consideration anticipated industry and macro-economic issues outside of management’s control but are somewhat predictable in terms of timing and impact on our business segments’ operating results.

The COVID-19 pandemic has made accurate modeling and providing meaningful earnings guidance exceptionally challenging. Since the start of the pandemic, Chemed has been able to successfully navigate within this rapidly changing environment and produce operating results that we believe provide us with the ability to issue earnings guidance for the 2021 calendar year. However, this guidance should be taken with the recognition the pandemic will continue to disrupt our healthcare system and general economy to such an extent that future rules, regulations and government mandates could materially impact the company’s ability to achieve this guidance.

Statistically, patients residing in senior housing are identified as hospice appropriate earlier into their terminal prognosis and have a much greater probability of having a length of stay in excess of 90 days. Hospice patients referred from hospitals, oncology practices and similar referral sources are generally more acute and have a significantly lower probability of lengths-of-stay exceeding 90 days. According to data released by the National Investment Center for Seniors Housing & Care, COVID-19 continues to adversely affect senior housing occupancy. This reduced occupancy in senior housing has had a corresponding reduction in VITAS nursing home admissions. Nursing home patients represented 14.9% of VITAS’ second-quarter 2021 patient census. This compares to nursing home patients averaging 18.2% of total census just prior to the pandemic.

This guidance anticipates senior housing occupancy will begin to normalize to pre-pandemic occupancy starting in the second half of calendar year 2021.

Based upon the above discussion, VITAS 2021 revenue, prior to Medicare Cap, is estimated to decline approximately 4.5% when compared to the prior year. Average Daily Census in 2021 is estimated to decline approximately 5.0%. Full-year Adjusted EBITDA margin, prior to Medicare Cap, is estimated to be 18.3%. We are currently estimating $7.5 million for Medicare Cap billing limitations in calendar year 2021.

Roto-Rooter is forecasted to achieve full-year 2021 revenue growth of 15.0% to 15.5%. Roto-Rooter’s Adjusted EBITDA margin for 2021 is estimated to be between 28% to 29%.

Based upon the above, full-year 2021 adjusted earnings per diluted share, excluding non-cash expense for stock options, tax benefits from stock option exercises, costs related to litigation, and other discrete items, is estimated to be in the range of $18.20 to $18.50. This compares to initial 2021 adjusted earnings per diluted share guidance of $17.00 to $17.50. This revised 2021 guidance assumes an effective corporate tax rate on adjusted earnings of 24.7%. Chemed’s 2020 reported adjusted earnings per diluted share was $18.08.

Conference Call

Chemed will host a conference call and webcast at 10 a.m., ET, on Wednesday, July 28, 2021, 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 4172673. 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 4172673. 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 18,000 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 June 30,

 

Six Months Ended June 30,

 

 

2021

 

2020

 

2021

 

2020

Service revenues and sales $

532,256

 

$

502,199

 

1,059,616

 

$

1,017,997

 

Cost of services provided and goods sold

350,493

 

352,163

 

690,966

 

703,908

 

Selling, general and administrative expenses (aa)

93,838

 

84,513

 

185,437

 

155,096

 

Depreciation

13,612

 

11,659

 

25,327

 

23,047

 

Amortization

2,510

 

2,488

 

5,020

 

4,965

 

Other operating expense/(income)

104

 

(41,384

)

726

 

(41,142

)

Total costs and expenses

460,557

 

409,439

 

907,476

 

845,874

 

Income from operations

71,699

 

92,760

 

152,140

 

172,123

 

Interest expense

(379

)

(651

)

(760

)

(1,626

)

Other income/(expense)--net (bb)

3,785

 

7,514

 

7,387

 

(1,952

)

Income before income taxes

75,105

 

99,623

 

158,767

 

168,545

 

Income taxes

(18,583

)

(17,522

)

(36,845

)

(30,553

)

Net income $

56,522

 

$

82,101

 

$

121,922

 

$

137,992

 

Earnings Per Share
Net income $

3.57

 

$

5.16

 

$

7.66

 

$

8.65

 

Average number of shares outstanding

15,829

 

15,914

 

15,919

 

15,953

 

Diluted Earnings Per Share
Net income $

3.51

 

$

5.01

 

$

7.52

 

$

8.39

 

Average number of shares outstanding

16,101

 

16,373

 

16,205

 

16,445

 

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

Three Months Ended June 30,

 

Six Months Ended June 30,

2021

 

2020

 

2021

 

2020

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

88,510

 

$

75,176

 

$

175,178

 

$

153,511

 

Market value adjustments related to deferred compensation trusts

3,655

 

 

 

7,408

 

 

 

6,693

 

 

 

(2,164

)

Long-term incentive compensation

1,673

 

1,929

 

3,566

 

3,749

 

Total SG&A expenses $

93,838

 

$

84,513

 

$

185,437

 

$

155,096

 

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

Three Months Ended June 30,

 

Six Months Ended June 30,

2021

 

2020

 

2021

 

2020

Market value adjustments related to deferred compensation trusts $

3,655

 

$

7,408

 

$

6,693

 

$

(2,164

)

Interest income

138

 

116

 

230

 

225

 

Other

(8

)

(10

)

464

 

(13

)

Total other income/(expense)--net $

3,785

 

$

7,514

 

$

7,387

 

$

(1,952

)

 

CHEMED CORPORATION AND SUBSIDIARY COMPANIES

CONSOLIDATED BALANCE SHEETS

(in thousands, except per share data)(unaudited)

 

 

 

 

 

 

 

 

 

June 30,

 

 

2021

 

2020

Assets
Current assets
Cash and cash equivalents $

92,120

 

$

20,376

 

Accounts receivable less allowances

123,329

 

132,487

 

Inventories

7,411

 

7,467

 

Prepaid income taxes

23,386

 

5,794

 

Prepaid expenses

22,840

 

23,183

 

Total current assets

269,086

 

189,307

 

Investments of deferred compensation plans held in trust

98,256

 

80,113

 

Properties and equipment, at cost less accumulated depreciation

192,653

 

183,017

 

Lease right of use asset

123,207

 

128,418

 

Identifiable intangible assets less accumulated amortization

113,137

 

122,791

 

Goodwill

578,650

 

578,491

 

Other assets

8,807

 

9,055

 

Total Assets $

1,383,796

 

$

1,291,192

 

Liabilities
Current liabilities
Accounts payable $

55,975

 

$

36,704

 

Income taxes

5

 

19,576

 

Accrued insurance

51,963

 

50,847

 

Accrued compensation

83,608

 

80,552

 

Accrued legal

1,391

 

6,959

 

Short-term lease liability

36,440

 

36,093

 

Unutilized CARES Act Grant

-

 

39,236

 

Other current liabilities

38,020

 

48,549

 

Total current liabilities

267,402

 

318,516

 

Deferred income taxes

21,713

 

21,108

 

Deferred compensation liabilities

97,374

 

77,639

 

Long-term lease liability

99,093

 

104,444

 

Other liabilities

27,440

 

18,789

 

Total Liabilities

513,022

 

540,496

 

Stockholders' Equity
Capital stock

36,385

 

36,040

 

Paid-in capital

999,697

 

904,421

 

Retained earnings

1,834,835

 

1,553,144

 

Treasury stock, at cost

(2,002,326

)

(1,745,299

)

Deferred compensation payable in Company stock

2,183

 

2,390

 

Total Stockholders' Equity

870,774

 

750,696

 

Total Liabilities and Stockholders' Equity $

1,383,796

 

$

1,291,192

 

 

CHEMED CORPORATION AND SUBSIDIARY COMPANIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)(unaudited)

 

 

 

 

 

 

 

 

 

For the Six Months Ended June 30,

 

 

2021

 

2020

Cash Flows from Operating Activities
Net income $

121,922

 

$

137,992

 

Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization

30,347

 

28,012

 

Stock option expense

12,345

 

10,113

 

Litigation settlements paid

(9,440

)

-

 

Noncash long-term incentive compensation

3,402

 

3,527

 

Noncash directors' compensation

1,173

 

1,171

 

Provision for deferred income taxes

1,051

 

2,717

 

Amortization of debt issuance costs

153

 

153

 

Provision for bad debts

40

 

871

 

Unutilized CARES Act grant

-

 

39,236

 

Deferred payroll taxes

-

 

10,716

 

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

4,722

 

6,696

 

Increase in inventories

(316

)

(5

)

Decrease/(increase) in prepaid expenses

3,337

 

(33

)

(Decrease)/increase in accounts payable and other current liabilities (10,815 ) 13,303
Change in current income taxes

(26,242

)

23,725

 

Net change in lease assets and liabilities

(436

)

1,287

 

Increase in other assets

(10,088

)

(2,988

)

Increase in other liabilities

10,088

 

1,383

 

Other sources/(uses)

796

 

(54

)

Net cash provided by operating activities

132,039

 

277,822

 

Cash Flows from Investing Activities
Capital expenditures

(33,604

)

(32,251

)

Business combinations

-

 

(3,600

)

Other sources

302

 

473

 

Net cash used by investing activities

(33,302

)

(35,378

)

Cash Flows from Financing Activities
Purchases of treasury stock

(166,649

)

(122,148

)

Proceeds from exercise of stock options

16,186

 

19,440

 

Dividends paid

(10,864

)

(10,238

)

Capital stock surrendered to pay taxes on stock-based compensation

(8,598

)

(14,845

)

Payments on revolving line of credit

-

 

(264,900

)

Proceeds from revolving line of credit

-

 

174,900

 

Change in cash overdrafts payable

-

 

(9,849

)

Other sources/(uses)

633

 

(586

)

Net cash used by financing activities

(169,292

)

(228,226

)

(Decrease)/Increase in Cash and Cash Equivalents

(70,555

)

14,218

 

Cash and cash equivalents at beginning of year

162,675

 

6,158

 

Cash and cash equivalents at end of year $

92,120

 

$

20,376

 

 

CHEMED CORPORATION AND SUBSIDIARY COMPANIES

CONSOLIDATING STATEMENTS OF INCOME

FOR THE THREE MONTHS ENDED JUNE 30, 2021 AND 2020

(in thousands)(unaudited)

 

 

 

 

 

 

 

 

Chemed

 

 

VITAS

 

Roto-Rooter 

 

Corporate

 

Consolidated

2021 (a)
Service revenues and sales $

311,935

 

$

220,321

 

$

-

 

$

532,256

 

Cost of services provided and goods sold

247,519

 

102,974

 

-

 

350,493

 

Selling, general and administrative expenses

22,631

 

53,556

 

17,651

 

93,838

 

Depreciation

7,125

 

6,468

 

19

 

13,612

 

Amortization

18

 

2,492

 

-

 

2,510

 

Other operating expense

87

 

17

 

-

 

104

 

Total costs and expenses

277,380

 

165,507

 

17,670

 

460,557

 

Income/(loss) from operations

34,555

 

54,814

 

(17,670

)

71,699

 

Interest expense

(43

)

(89

)

(247

)

(379

)

Intercompany interest income/(expense)

4,486

 

1,649

 

(6,135

)

-

 

Other income—net

99

 

32

 

3,654

 

3,785

 

Income/(loss) before income taxes

39,097

 

56,406

 

(20,398

)

75,105

 

Income taxes

(9,385

)

(13,633

)

4,435

 

(18,583

)

Net income/(loss) $

29,712

 

$

42,773

 

$

(15,963

)

$

56,522

 

 
2020 (b)
Service revenues and sales $

327,465

 

$

174,734

 

$

-

 

$

502,199

 

Cost of services provided and goods sold

266,815

 

85,348

 

-

 

352,163

 

Selling, general and administrative expenses

21,072

 

44,231

 

19,210

 

84,513

 

Depreciation

5,556

 

6,069

 

34

 

11,659

 

Amortization

18

 

2,470

 

-

 

2,488

 

Other operating income

(40,826

)

(558

)

-

 

(41,384

)

Total costs and expenses

252,635

 

137,560

 

19,244

 

409,439

 

Income/(loss) from operations

74,830

 

37,174

 

(19,244

)

92,760

 

Interest expense

(45

)

(90

)

(516

)

(651

)

Intercompany interest income/(expense)

4,739

 

1,422

 

(6,161

)

-

 

Other income/(expense)—net

104

 

(10

)

7,420

 

7,514

 

Income/(loss) before income taxes

79,628

 

38,496

 

(18,501

)

99,623

 

Income taxes

(19,383

)

(9,028

)

10,889

 

(17,522

)

Net income/(loss) $

60,245

 

$

29,468

 

$

(7,612

)

$

82,101

 

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

CHEMED CORPORATION AND SUBSIDIARY COMPANIES

CONSOLIDATING STATEMENTS OF INCOME

FOR THE SIX MONTHS ENDED JUNE 30, 2021 AND 2020

(in thousands)(unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Chemed

 

 

VITAS

 

Roto-Rooter 

 

Corporate

 

Consolidated

2021 (a)
Service revenues and sales $

627,723

 

$

431,893

 

$

-

 

$

1,059,616

 

Cost of services provided and goods sold

486,186

 

204,780

 

-

 

690,966

 

Selling, general and administrative expenses

44,721

 

106,878

 

33,838

 

185,437

 

Depreciation

12,462

 

12,821

 

44

 

25,327

 

Amortization

36

 

4,984

 

-

 

5,020

 

Other operating expense

590

 

136

 

-

 

726

 

Total costs and expenses

543,995

 

329,599

 

33,882

 

907,476

 

Income/(loss) from operations

83,728

 

102,294

 

(33,882

)

152,140

 

Interest expense

(85

)

(179

)

(496

)

(760

)

Intercompany interest income/(expense)

9,011

 

3,269

 

(12,280

)

-

 

Other income—net

632

 

63

 

6,692

 

7,387

 

Income/(loss) before income taxes

93,286

 

105,447

 

(39,966

)

158,767

 

Income taxes

(22,805

)

(25,497

)

11,457

 

(36,845

)

Net income/(loss) $

70,481

 

$

79,950

 

$

(28,509

)

$

121,922

 

 
2020 (b)
Service revenues and sales $

665,380

 

$

352,617

 

$

-

 

$

1,017,997

 

Cost of services provided and goods sold

526,244

 

177,664

 

-

 

703,908

 

Selling, general and administrative expenses

43,341

 

90,513

 

21,242

 

155,096

 

Depreciation

11,030

 

11,947

 

70

 

23,047

 

Amortization

36

 

4,929

 

-

 

4,965

 

Other operating expense

(40,712

)

(430

)

-

 

(41,142

)

Total costs and expenses

539,939

 

284,623

 

21,312

 

845,874

 

Income/(loss) from operations

125,441

 

67,994

 

(21,312

)

172,123

 

Interest expense

(90

)

(192

)

(1,344

)

(1,626

)

Intercompany interest income/(expense)

9,125

 

2,771

 

(11,896

)

-

 

Other income/(expense)—net

169

 

30

 

(2,151

)

(1,952

)

Income/(loss) before income taxes

134,645

 

70,603

 

(36,703

)

168,545

 

Income taxes

(33,121

)

(16,813

)

19,381

 

(30,553

)

Net income/(loss) $

101,524

 

$

53,790

 

$

(17,322

)

$

137,992

 

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 JUNE 30, 2021 AND 2020

(in thousands)(unaudited)

 

 

 

 

 

 

 

 

Chemed

 

 

VITAS

 

Roto-Rooter 

 

Corporate

 

Consolidated

2021

Net income/(loss) $

29,712

 

$

42,773

 

$

(15,963

)

$

56,522

 

Add/(deduct):
Interest expense

43

 

89

 

247

 

379

 

Income taxes

9,385

 

13,633

 

(4,435

)

18,583

 

Depreciation

7,125

 

6,468

 

19

 

13,612

 

Amortization

18

 

2,492

 

-

 

2,510

 

EBITDA

46,283

 

65,455

 

(20,132

)

91,606

 

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

(4,486

)

(1,649

)

6,135

 

-

 

Interest income

(106

)

(32

)

-

 

(138

)

Direct costs related to COVID-19

11,084

 

582

 

-

 

11,666

 

Stock option expense

-

 

-

 

6,239

 

6,239

 

Long-term incentive compensation

-

 

-

 

1,673

 

1,673

 

Litigation settlements

-

 

(98

)

-

 

(98

)

Adjusted EBITDA $

52,775

 

$

64,258

 

$

(6,085

)

$

110,948

 

 

2020

Net income/(loss) $

60,245

 

$

29,468

 

$

(7,612

)

$

82,101

 

Add/(deduct):
Interest expense

45

 

90

 

516

 

651

 

Income taxes

19,383

 

9,028

 

(10,889

)

17,522

 

Depreciation

5,556

 

6,069

 

34

 

11,659

 

Amortization

18

 

2,470

 

-

 

2,488

 

EBITDA

85,247

 

47,125

 

(17,951

)

114,421

 

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

(4,739

)

(1,422

)

6,161

 

-

 

Interest (income)/expense

(113

)

10

 

(13

)

(116

)

CARES Act grant

(40,989

)

-

 

-

 

(40,989

)

Direct costs related to COVID-19

24,265

 

1,117

 

-

 

25,382

 

Stock option expense

-

 

-

 

5,068

 

5,068

 

COVID-19 related Medicare cap

2,250

 

-

 

-

 

2,250

 

Long-term incentive compensation

-

 

-

 

1,929

 

1,929

 

Medicare cap sequestration adjustment

796

 

-

 

-

 

796

 

Adjusted EBITDA $

66,717

 

$

46,830

 

$

(4,806

)

$

108,741

 

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

CHEMED CORPORATION AND SUBSIDIARY COMPANIES

CONSOLIDATING SUMMARIES OF EBITDA

FOR THE SIX MONTHS ENDED JUNE 30, 2021 AND 2020

(in thousands)(unaudited)

 

 

 

 

 

 

 

 

 

 

 

Chemed

 

 

VITAS

 

Roto-Rooter 

 

Corporate

 

Consolidated

2021

Net income/(loss) $

70,481

 

$

79,950

 

$

(28,509

)

$

121,922

 

Add/(deduct):
Interest expense

85

 

179

 

496

 

760

 

Income taxes

22,805

 

25,497

 

(11,457

)

36,845

 

Depreciation

12,462

 

12,821

 

44

 

25,327

 

Amortization

36

 

4,984

 

-

 

5,020

 

EBITDA

105,869

 

123,431

 

(39,426

)

189,874

 

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

(9,011

)

(3,269

)

12,280

 

-

 

Interest income

(167

)

(63

)

-

 

(230

)

Direct costs related to COVID-19

12,836

 

1,136

 

38

 

14,010

 

Stock option expense

-

 

-

 

12,345

 

12,345

 

Long-term incentive compensation

-

 

-

 

3,566

 

3,566

 

Litigation settlements

-

 

(98

)

-

 

(98

)

Adjusted EBITDA $

109,527

 

$

121,137

 

$

(11,197

)

$

219,467

 

2020

Net income/(loss) $

101,524

 

$

53,790

 

$

(17,322

)

$

137,992

 

Add/(deduct):
Interest expense

90

 

192

 

1,344

 

1,626

 

Income taxes

33,121

 

16,813

 

(19,381

)

30,553

 

Depreciation

11,030

 

11,947

 

70

 

23,047

 

Amortization

36

 

4,929

 

-

 

4,965

 

EBITDA

145,801

 

87,671

 

(35,289

)

198,183

 

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

(9,125

)

(2,771

)

11,896

 

-

 

Interest income

(181

)

(31

)

(13

)

(225

)

Direct costs related to COVID-19

25,238

 

1,978

 

-

 

27,216

 

CARES Act grant

(40,989

)

-

 

-

 

(40,989

)

Stock option expense

-

 

-

 

10,114

 

10,114

 

Long-term incentive compensation

-

 

-

 

3,749

 

3,749

 

COVID-19 Medicare cap

2,250

 

-

 

-

 

2,250

 

Medicare cap sequestration adjustment

1,472

 

-

 

-

 

1,472

 

Adjusted EBITDA $

124,466

 

$

86,847

 

$

(9,543

)

$

201,770

 

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 June 30,

 

Six Months Ended June 30,

 

 

2021

 

2020

 

2021

 

2020

Net income as reported $

56,522

 

$

82,101

 

$

121,922

 

$

137,992

 

Add/(deduct) pre-tax cost of:
Direct costs related to COVID-19

11,666

 

25,382

 

14,010

 

27,216

 

Stock option expense

6,239

 

5,068

 

12,345

 

10,114

 

Amortization of reacquired franchise agreements

2,352

 

2,352

 

4,704

 

4,704

 

Long-term incentive compensation

1,673

 

1,929

 

3,566

 

3,749

 

Facility relocation expenses

1,855

 

-

 

1,855

 

-

 

Litigation settlements

(98

)

-

 

(98

)

-

 

CARES Act grant

-

 

(40,989

)

-

 

(40,989

)

COVID-19 Medicare cap

-

 

2,250

 

-

 

2,250

 

Medicare cap sequestration adjustments

-

 

796

 

-

 

1,472

 

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

(5,241

)

1,537

 

(7,728

)

(814

)

Excess tax benefits on stock compensation

(868

)

(8,203

)

(4,106

)

(12,756

)

Adjusted net income $

74,100

 

$

72,223

 

$

146,470

 

$

132,938

 

 
Diluted Earnings Per Share As Reported
Net income $

3.51

 

$

5.01

 

$

7.52

 

$

8.39

 

Average number of shares outstanding

16,101

 

16,373

 

16,205

 

16,445

 

 
Adjusted Diluted Earnings Per Share
Adjusted net income $

4.60

 

$

4.41

 

$

9.04

 

$

8.08

 

Average number of shares outstanding

16,101

 

16,373

 

16,205

 

16,445

 

(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 June 30,

 

 

Six Months Ended June 30,

OPERATING STATISTICS

 

2021

 

2020

 

 

2021

 

2020

Net revenue ($000) (c)
Homecare $

264,926

 

$

276,345

 

$

528,680

 

$

548,098

 

Inpatient

27,371

 

25,868

 

56,527

 

58,350

 

Continuous care

24,282

 

34,582

 

51,631

 

75,137

 

Other

3,078

 

2,109

 

6,016

 

5,265

 

Subtotal $

319,657

 

$

338,904

 

$

642,854

 

$

686,850

 

Room and board, net

(2,657

)

(2,647

)

(5,322

)

(6,028

)

Contractual allowances

(3,065

)

(3,042

)

(6,309

)

(7,192

)

Medicare cap allowance

(2,000

)

(5,750

)

(3,500

)

(8,250

)

Net Revenue $

311,935

 

$

327,465

 

$

627,723

 

$

665,380

 

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

82.9

%

81.5

%

82.2

%

79.8

%

Inpatient

8.6

 

7.6

 

8.8

 

8.5

 

Continuous care

7.6

 

10.2

 

8.0

 

10.9

 

Other

0.9

 

0.7

 

1.0

 

0.8

 

Subtotal

100.0

 

100.0

 

100.0

 

100.0

 

Room and board, net

(0.8

)

(0.8

)

(0.8

)

(0.9

)

Contractual allowances

(1.0

)

(0.9

)

(1.0

)

(1.0

)

Medicare cap allowance

(0.6

)

(1.7

)

(0.6

)

(1.2

)

Net Revenue

97.6

%

96.6

%

97.6

%

96.9

%

Days of care
Homecare

1,335,482

 

1,401,744

 

2,665,374

 

2,766,490

 

Nursing home

244,423

 

279,462

 

477,206

 

582,836

 

Respite

5,338

 

4,158

 

10,178

 

10,850

 

Subtotal routine homecare and respite

1,585,243

 

1,685,364

 

3,152,758

 

3,360,176

 

Inpatient

26,493

 

25,542

 

54,167

 

57,890

 

Continuous care

25,786

 

35,814

 

55,086

 

77,187

 

Total

1,637,522

 

1,746,720

 

3,262,011

 

3,495,253

 

 
Number of days in relevant time period

91

 

91

 

181

 

182

 

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

14,676

 

15,404

 

14,726

 

15,201

 

Nursing home

2,686

 

3,071

 

2,636

 

3,202

 

Respite

59

 

45

 

57

 

60

 

Subtotal routine homecare and respite

17,421

 

18,520

 

17,419

 

18,463

 

Inpatient

291

 

281

 

299

 

318

 

Continuous care

283

 

394

 

304

 

424

 

Total

17,995

 

19,195

 

18,022

 

19,205

 

Total Admissions

16,840

 

16,822

 

34,975

 

35,425

 

Total Discharges

16,525

 

17,000

 

35,054

 

35,208

 

Average length of stay (days)

94.5

 

90.9

 

94.4

 

90.8

 

Median length of stay (days)

14.0

 

14.0

 

13.0

 

14.0

 

ADC by major diagnosis
Cerebro

36.8

%

35.2

%

36.5

%

35.7

%

Neurological

22.4

 

21.7

 

22.3

 

21.6

 

Cancer

12.1

 

12.8

 

12.2

 

12.7

 

Cardio

15.6

 

16.1

 

15.6

 

15.9

 

Respiratory

7.3

 

8.2

 

7.5

 

8.3

 

Other

5.8

 

6.0

 

5.9

 

5.8

 

Total

100.0

%

100.0

%

100.0

%

100.0

%

Admissions by major diagnosis
Cerebro

21.4

%

20.9

%

21.5

%

21.0

%

Neurological

12.3

 

13.4

 

12.3

 

12.9

 

Cancer

28.9

 

27.6

 

26.9

 

28.0

 

Cardio

14.8

 

14.6

 

14.5

 

14.9

 

Respiratory

10.5

 

9.8

 

10.7

 

10.9

 

Other

12.1

 

13.7

 

14.1

 

12.3

 

Total

100.0

%

100.0

%

100.0

%

100.0

%

 
Estimated uncollectible accounts as a percent of revenues

1.0

%

0.9

%

1.0

%

1.1

%

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

36.3

 

31.9

 

n.a. n.a.
Days of revenue outstanding-including unapplied Medicare payments

21.0

 

26.7

 

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 SIX MONTHS ENDED JUNE 30, 2021 AND 2020
(unaudited)
 
(a) Included in the results of operations for 2021 are the following significant credits/(charges) which may not be indicative of ongoing operations
(in thousands):

Three Months Ended June 30, 2021 

VITAS

 

Roto-Rooter 

 

Corporate

 

Consolidated

 
Direct costs related to COVID-19 $

(11,084

)

$

(582

)

$

-

 

$

(11,666

)

Stock option expense

-

 

-

 

(6,239

)

(6,239

)

Amortization of reacquired franchise agreements

-

 

(2,352

)

-

 

(2,352

)

Facility relocation expenses

(1,855

)

-

 

-

 

(1,855

)

Long-term incentive compensation

-

 

-

 

(1,673

)

(1,673

)

Litigation settlements

-

 

98

 

-

 

98

 

(12,939

)

(2,836

)

(7,912

)

(23,687

)

Excess tax benefits on stock compensation

-

 

-

 

868

 

868

 

Income tax benefit on the above

3,287

 

751

 

1,203

 

5,241

 

After-tax impact on earnings $

(9,652

)

$

(2,085

)

$

(5,841

)

$

(17,578

)

 

Six Months Ended June 30, 2021 

VITAS

 

Roto-Rooter 

 

Corporate

 

Consolidated

 
Direct costs related to COVID-19 $

(12,836

)

$

(1,136

)

$

(38

)

$

(14,010

)

Stock option expense

-

 

-

 

(12,345

)

(12,345

)

Amortization of reacquired franchise agreements

-

 

(4,704

)

-

 

(4,704

)

Long-term incentive compensation

-

 

-

 

(3,566

)

(3,566

)

Facility relocation expenses

(1,855

)

-

 

-

 

(1,855

)

Litigation settlements

-

 

98

 

-

 

98

 

Pretax impact on earnings

(14,691

)

(5,742

)

(15,949

)

(36,382

)

Excess tax benefits on stock compensation

-

 

-

 

4,106

 

4,106

 

Income tax benefit on the above

3,731

 

1,522

 

2,475

 

7,728

 

After-tax impact on earnings $

(10,960

)

$

(4,220

)

$

(9,368

)

$

(24,548

)

 
(b) Included in the results of operations for 2020 are the following significant credits/(charges) which may not be indicative of ongoing operations
(in thousands):

Three Months Ended June 30, 2020

VITAS

 

Roto-Rooter 

 

Corporate

 

Consolidated

 
CARES Act grant $

40,989

 

$

-

 

$

-

 

$

40,989

 

Direct costs related to COVID-19

(24,265

)

(1,117

)

-

 

(25,382

)

Stock option expense

-

 

-

 

(5,068

)

(5,068

)

Amortization of reacquired franchise agreements

-

 

(2,352

)

-

 

(2,352

)

COVID-19 Medicare cap

(2,250

)

-

 

-

 

(2,250

)

Long-term incentive compensation

-

 

-

 

(1,929

)

(1,929

)

Medicare cap sequestration adjustment

(796

)

-

 

-

 

(796

)

Pretax impact on earnings

13,678

 

(3,469

)

(6,997

)

3,212

 

Excess tax benefits on stock compensation

-

 

-

 

8,203

 

8,203

 

Income tax benefit on the above

(3,515

)

918

 

1,060

 

(1,537

)

After-tax impact on earnings $

10,163

 

$

(2,551

)

$

2,266

 

$

9,878

 

 

Six Months Ended June 30, 2020

VITAS

 

Roto-Rooter 

 

Corporate

 

Consolidated

 
CARES Act grant $

40,989

 

$

-

 

$

-

 

$

40,989

 

Direct costs related to COVID-19

(25,238

)

(1,978

)

-

 

(27,216

)

Stock option expense

-

 

-

 

(10,114

)

(10,114

)

Amortization of reacquired franchise agreements

-

 

(4,704

)

-

 

(4,704

)

Long-term incentive compensation

-

 

-

 

(3,749

)

(3,749

)

COVID-19 Medicare cap

(2,250

)

-

 

-

 

(2,250

)

Medicare cap sequestration adjustment

(1,472

)

-

 

-

 

(1,472

)

Pretax impact on earnings

12,029

 

(6,682

)

(13,863

)

(8,516

)

Excess tax benefits on stock compensation

-

 

-

 

12,756

 

12,756

 

Income tax benefit on the above

(3,096

)

1,770

 

2,140

 

814

 

After-tax impact on earnings $

8,933

 

$

(4,912

)

$

1,033

 

$

5,054

 

(c) VITAS has 10 large (greater than 450 ADC), 18 medium (greater than 200 but less than 450 ADC) and 21 small (less than 200 ADC) hospice programs. Of Vitas' 30 Medicare provider numbers, for the current cap year, 27 provider numbers have a Medicare cap cushion of 10% or greater, one provider number has a cap cushion between 0% and 5%, and two provider numbers have a Medicare cap liability.
 
 

 

David P. Williams
(513) 762-6901

Source: Chemed Corporation

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