Chemed Reports Third-Quarter 2021 Results - Full-Year 2021 Earnings Guidance Increased
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Chemed Reports Third-Quarter 2021 Results - Full-Year 2021 Earnings Guidance Increased

CINCINNATI--(BUSINESS WIRE)--Oct. 28, 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 third quarter ended September 30, 2021, versus the comparable prior-year period, as follows:

Consolidated operating results:

  • Revenue increased 2.0% to $539 million
  • GAAP Diluted Earnings-per-Share (EPS) of $4.55, an increase of 9.9%
  • Adjusted Diluted EPS of $5.06, an increase of 4.1%

VITAS segment operating results:

  • Net Patient Revenue of $317 million, a decline of 5.8%
  • Average Daily Census (ADC) of 18,034, a decline of 5.3%
  • Admissions of 17,598, a decline of 1.9%
  • Net Income, excluding certain discrete items, of $44.8 million, a decline of 18.7%
  • Adjusted EBITDA, excluding Medicare Cap, of $60.4 million, a decline of 11.5%
  • Adjusted EBITDA margin, excluding Medicare Cap, of 19.0%, a decrease of 146-basis points

Roto-Rooter segment operating results:

  • Revenue of $221 million, an increase of 15.7%
  • Net Income, excluding certain discrete items, of $46.6 million, an increase of 28.9%
  • Adjusted EBITDA of $65.8 million, an increase of 27.1%
  • Adjusted EBITDA margin of 29.7%, an increase of 266-basis points

VITAS

VITAS net revenue was $317 million in the third quarter of 2021, which is a decline of 5.8%, when compared to the prior-year period. This revenue decline is comprised primarily of a 5.3% decline in days-of-care partially offset by a geographically weighted average Medicare reimbursement rate increase (including the suspension of sequestration) of approximately 1.2%. Acuity mix shift had a net impact of reducing revenue approximately $3.0 million, or 0.9%, in the quarter when compared to the prior-year revenue and level-of-care mix. The combination of Medicare Cap and other contra revenue changes negatively impacted revenue growth an additional 80-basis points.

In the third quarter of 2021, VITAS accrued $0.1 million in Medicare Cap billing limitations. This compares to a $4.1 million reversal of Medicare Cap billing limitation in the third 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 have a fiscal 2021 Medicare Cap billing limitation liability.

Average revenue per patient per day in the third quarter of 2021 was $194.53, which, including acuity mix shift, is 22-basis points above the prior-year period. Reimbursement for routine home care and high acuity care averaged $168.88 and $983.43, respectively. During the quarter, high acuity days-of-care were 3.1% of total days of care, 28-basis points less than the prior-year quarter.

The third 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 25.8%. This is a 158-basis point margin decline when compared to the third quarter of 2020.

Selling, general and administrative expense was $21.4 million in the third quarter of 2021 and compares to $21.8 million incurred in the prior-year quarter. Adjusted EBITDA, excluding Medicare Cap, totaled $60.4 million in the quarter, a decrease of 11.5%. Adjusted EBITDA margin in the quarter, excluding Medicare Cap, was 19.0%, which is 146-basis points less than the prior-year period.

Roto-Rooter

Roto-Rooter generated quarterly revenue of $221 million in the third quarter of 2021, an increase of $30.1 million, or 15.7%, when compared to the prior-year quarter.

Roto-Rooter branch commercial revenue in the quarter totaled $52.3 million, an increase of $4.7 million, or 10.0%, over the prior year. This aggregate commercial revenue growth consisted of drain cleaning revenue increasing 17.6%, plumbing increasing 9.3% and excavation declining 1.3%. Water restoration increased 9.4%.

Roto-Rooter branch residential revenue in the quarter totaled $151 million, an increase of $22.2 million, or 17.2%, over the prior-year period. This aggregate residential revenue growth consisted of drain cleaning increasing 11.7%, plumbing expanding 17.4%, excavation increasing 14.1%, and water restoration increasing 28.0%.

Roto-Rooter’s gross margin in the quarter, excluding the impact from COVID, was 53.2%, a 95-basis point increase when compared to the third quarter of 2020. Adjusted EBITDA in the third quarter of 2021 totaled $65.8 million, an increase of 27.1%. The Adjusted EBITDA margin in the quarter was 29.7%, which is a 266-basis point improvement when compared to the prior year.

Chemed Consolidated

As of September 30, 2021, Chemed had total cash and cash equivalents of $29 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 September 30, 2021, the Company had approximately $404 million of undrawn borrowing capacity under this credit agreement.

During the quarter, the Company repurchased 350,000 shares of Chemed stock for $164 million which equates to a cost per share of $467.80. As of September 30, 2021, there was approximately $148 million of remaining share repurchase authorization under this plan.

Chemed restarted its share repurchase program in 2007. Since that time, Chemed has repurchased approximately 15.2 million shares, aggregating approximately $1.7 billion at an average share cost of $113.04. Including dividends over this period, Chemed has returned approximately $1.9 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 15.6% of VITAS’ third-quarter 2021 patient census. This compares to nursing home patients averaging 18.2% of total census just prior to the pandemic.

Based upon the above discussion, VITAS 2021 revenue, prior to Medicare Cap, is estimated to decline approximately 5% when compared to the prior year. Average Daily Census in 2021 is estimated to decline approximately 5.5%. Full-year Adjusted EBITDA margin, prior to Medicare Cap, is estimated to be 18.8%. We are currently estimating $6.6 million for Medicare Cap billing limitations in calendar year 2021.

Roto-Rooter is forecasted to achieve full-year 2021 revenue growth of 17.3%. Roto-Rooter’s Adjusted EBITDA margin for 2021 is estimated to be between 28.5% to 29.0%.

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 $19.00 to $19.20. 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 25.1%. 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 Friday, October 29, 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 6082999. 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 6082999. 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 September 30,

 

Nine Months Ended September 30,

2021

 

2020

 

2021

 

2020

Service revenues and sales

$

538,667

 

 

$

528,297

 

 

 

1,598,283

 

 

$

1,546,294

 

Cost of services provided and goods sold

 

342,164

 

 

 

339,240

 

 

 

1,033,130

 

 

 

1,043,148

 

Selling, general and administrative expenses (aa)

 

89,217

 

 

 

88,317

 

 

 

274,654

 

 

 

243,413

 

Depreciation

 

11,844

 

 

 

11,714

 

 

 

37,171

 

 

 

34,761

 

Amortization

 

2,510

 

 

 

2,511

 

 

 

7,530

 

 

 

7,476

 

Other operating expense/(income)

 

63

 

 

 

12,207

 

 

 

789

 

 

 

(28,935

)

Total costs and expenses

 

445,798

 

 

 

453,989

 

 

 

1,353,274

 

 

 

1,299,863

 

Income from operations

 

92,869

 

 

 

74,308

 

 

 

245,009

 

 

 

246,431

 

Interest expense

 

(583

)

 

 

(379

)

 

 

(1,343

)

 

 

(2,005

)

Other income--net (bb)

 

3,134

 

 

 

7,675

 

 

 

10,521

 

 

 

5,723

 

Income before income taxes

 

95,420

 

 

 

81,604

 

 

 

254,187

 

 

 

250,149

 

Income taxes

 

(23,417

)

 

 

(13,882

)

 

 

(60,262

)

 

 

(44,435

)

Net income

$

72,003

 

 

$

67,722

 

 

$

193,925

 

 

$

205,714

 

Earnings Per Share

 

 

 

 

 

 

 

Net income

$

4.62

 

 

$

4.25

 

 

$

12.27

 

 

$

12.90

 

Average number of shares outstanding

 

15,587

 

 

 

15,940

 

 

 

15,808

 

 

 

15,948

 

Diluted Earnings Per Share

 

 

 

 

 

 

 

Net income

$

4.55

 

 

$

4.14

 

 

$

12.06

 

 

$

12.53

 

Average number of shares outstanding

 

15,842

 

 

 

16,373

 

 

 

16,083

 

 

 

16,419

 

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

Three Months Ended September 30,

 

Nine Months Ended September 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

$

84,197

 

 

$

79,287

 

 

$

259,376

 

 

$

232,797

 

Market value adjustments related to deferred

 

 

 

 

 

 

 

compensation trusts

 

3,078

 

 

 

7,256

 

 

 

9,770

 

 

 

5,093

 

Long-term incentive compensation

 

1,942

 

 

 

1,774

 

 

 

5,508

 

 

 

5,523

 

Total SG&A expenses

$

89,217

 

 

$

88,317

 

 

$

274,654

 

 

$

243,413

 

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

Three Months Ended September 30,

 

Nine Months Ended September 30,

2021

 

2020

 

2021

 

2020

Market value adjustments related to deferred
compensation trusts

$

3,078

 

 

$

7,256

 

 

$

9,770

 

 

$

5,093

 

Interest income

 

57

 

 

 

423

 

 

 

288

 

 

 

647

 

Other

 

(1

)

 

 

(4

)

 

 

463

 

 

 

(17

)

Total other income--net

$

3,134

 

 

$

7,675

 

 

$

10,521

 

 

$

5,723

 

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

September 30,

2021

 

2020

Assets
Current assets
Cash and cash equivalents

$

28,743

 

$

112,765

 

Accounts receivable less allowances

 

118,193

 

 

110,839

 

Inventories

 

8,394

 

 

7,546

 

Prepaid income taxes

 

12,940

 

 

14,224

 

Prepaid expenses

 

32,294

 

 

25,222

 

Total current assets

 

200,564

 

 

270,596

 

Investments of deferred compensation plans held in trust

 

102,045

 

 

86,865

 

Properties and equipment, at cost less accumulated depreciation

 

190,781

 

 

181,386

 

Lease right of use asset

 

127,077

 

 

120,382

 

Identifiable intangible assets less accumulated amortization

 

110,606

 

 

120,401

 

Goodwill

 

578,610

 

 

578,519

 

Other assets

 

8,450

 

 

8,805

 

Total Assets

$

1,318,133

 

$

1,366,954

 

Liabilities

 

 

Current liabilities

 

 

Accounts payable

$

60,042

 

$

39,268

 

Income taxes

 

180

 

 

-

 

Accrued insurance

 

52,645

 

 

50,727

 

Accrued compensation

 

97,256

 

 

101,868

 

Accrued legal

 

1,497

 

 

9,561

 

Short-term lease liability

 

35,148

 

 

33,311

 

Unutilized CARES Act Grant

 

-

 

 

48,041

 

Other current liabilities

 

39,318

 

 

46,387

 

Total current liabilities

 

286,086

 

 

329,163

 

Deferred income taxes

 

20,100

 

 

19,222

 

Deferred compensation liabilities

 

100,409

 

 

86,875

 

Long-term lease liability

 

104,198

 

 

99,241

 

Other liabilities

 

27,621

 

 

31,045

 

Total Liabilities

 

538,414

 

 

565,546

 

Stockholders' Equity

 

 

Capital stock

 

36,402

 

 

36,137

 

Paid-in capital

 

1,007,506

 

 

925,271

 

Retained earnings

 

1,901,245

 

 

1,615,465

 

Treasury stock, at cost

 

(2,167,640

)

 

(1,777,809

)

Deferred compensation payable in Company stock

 

2,206

 

 

2,344

 

Total Stockholders' Equity

 

779,719

 

 

801,408

 

Total Liabilities and Stockholders' Equity

$

1,318,133

 

$

1,366,954

 

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

For the Nine Months Ended September 30,

2021

 

2020

Cash Flows from Operating Activities
Net income

$

193,925

 

$

205,714

 

Adjustments to reconcile net income to net cash provided

 

 

by operating activities:

 

 

Depreciation and amortization

 

44,701

 

 

42,237

 

Stock option expense

 

16,342

 

 

13,296

 

Litigation settlements

 

(9,440

)

 

2,684

 

Noncash long-term incentive compensation

 

5,344

 

 

5,301

 

Noncash directors' compensation

 

1,173

 

 

1,171

 

(Benefit)/provision for deferred income taxes

 

(561

)

 

831

 

Amortization of debt issuance costs

 

229

 

 

229

 

Unutilized CARES Act grant

 

-

 

 

48,041

 

Deferred payroll taxes

 

-

 

 

22,941

 

Changes in operating assets and liabilities, excluding

 

 

amounts acquired in business combinations:

 

 

Decrease in accounts receivable

 

9,247

 

 

27,993

 

Increase in inventories

 

(1,299

)

 

(84

)

Increase in prepaid expenses

 

(6,117

)

 

(2,072

)

Increase in accounts payable and

 

 

other current liabilities

 

6,330

 

 

34,526

 

Change in current income taxes

 

(15,749

)

 

(4,366

)

Net change in lease assets and liabilities

 

15

 

 

1,583

 

Increase in other assets

 

(13,561

)

 

(9,646

)

Increase in other liabilities

 

13,474

 

 

10,735

 

Other sources

 

974

 

 

1,298

 

Net cash provided by operating activities

 

245,027

 

 

402,412

 

Cash Flows from Investing Activities

 

 

Capital expenditures

 

(44,472

)

 

(42,670

)

Business combinations

 

-

 

 

(3,600

)

Other sources

 

760

 

 

672

 

Net cash used by investing activities

 

(43,712

)

 

(45,598

)

Cash Flows from Financing Activities

 

 

Purchases of treasury stock

 

(330,380

)

 

(147,123

)

Proceeds from exercise of stock options

 

17,918

 

 

31,498

 

Dividends paid

 

(16,457

)

 

(15,639

)

Capital stock surrendered to pay taxes on stock-based compensation

 

(9,445

)

 

(18,707

)

Change in cash overdrafts payable

 

3,054

 

 

(9,849

)

Payments on revolving line of credit

 

(1,500

)

 

(264,900

)

Proceeds from revolving line of credit

 

1,500

 

 

174,900

 

Other sources/(uses)

 

63

 

 

(387

)

Net cash used by financing activities

 

(335,247

)

 

(250,207

)

(Decrease)/Increase in Cash and Cash Equivalents

 

(133,932

)

 

106,607

 

Cash and cash equivalents at beginning of year

 

162,675

 

 

6,158

 

Cash and cash equivalents at end of year

$

28,743

 

$

112,765

 

CHEMED CORPORATION AND SUBSIDIARY COMPANIES
CONSOLIDATING STATEMENTS OF INCOME
FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2021 AND 2020
(in thousands)(unaudited)
 

 

 

 

 

 

 

Chemed

VITAS

 

Roto-Rooter

 

Corporate

 

Consolidated

2021 (a)

 

 

 

 

 

 

 

Service revenues and sales

$

317,411

 

$

221,256

 

$

-

 

$

538,667

 

Cost of services provided and goods sold

 

238,212

 

 

103,952

 

 

-

 

 

342,164

 

Selling, general and administrative expenses

 

21,372

 

 

51,914

 

 

15,931

 

 

89,217

 

Depreciation

 

5,286

 

 

6,539

 

 

19

 

 

11,844

 

Amortization

 

18

 

 

2,492

 

 

-

 

 

2,510

 

Other operating expense/(income)

 

65

 

 

(3

)

 

1

 

 

63

 

Total costs and expenses

 

264,953

 

 

164,894

 

 

15,951

 

 

445,798

 

Income/(loss) from operations

 

52,458

 

 

56,362

 

 

(15,951

)

 

92,869

 

Interest expense

 

(43

)

 

(285

)

 

(255

)

 

(583

)

Intercompany interest income/(expense)

 

4,513

 

 

1,847

 

 

(6,360

)

 

-

 

Other income—net

 

22

 

 

34

 

 

3,078

 

 

3,134

 

Income/(loss) before income taxes

 

56,950

 

 

57,958

 

 

(19,488

)

 

95,420

 

Income taxes

 

(14,000

)

 

(13,404

)

 

3,987

 

 

(23,417

)

Net income/(loss)

$

42,950

 

$

44,554

 

$

(15,501

)

$

72,003

 

 

 

 

 

2020 (b)

 

 

 

 

Service revenues and sales

$

337,097

 

$

191,200

 

$

-

 

$

528,297

 

Cost of services provided and goods sold

 

246,636

 

 

92,604

 

 

-

 

 

339,240

 

Selling, general and administrative expenses

 

21,799

 

 

48,074

 

 

18,444

 

 

88,317

 

Depreciation

 

5,592

 

 

6,089

 

 

33

 

 

11,714

 

Amortization

 

18

 

 

2,493

 

 

-

 

 

2,511

 

Other operating expense

 

9,052

 

 

3,155

 

 

-

 

 

12,207

 

Total costs and expenses

 

283,097

 

 

152,415

 

 

18,477

 

 

453,989

 

Income/(loss) from operations

 

54,000

 

 

38,785

 

 

(18,477

)

 

74,308

 

Interest expense

 

(47

)

 

(80

)

 

(252

)

 

(379

)

Intercompany interest income/(expense)

 

5,337

 

 

1,651

 

 

(6,988

)

 

-

 

Other income—net

 

381

 

 

38

 

 

7,256

 

 

7,675

 

Income/(loss) before income taxes

 

59,671

 

 

40,394

 

 

(18,461

)

 

81,604

 

Income taxes

 

(13,934

)

 

(9,218

)

 

9,270

 

 

(13,882

)

Net income/(loss)

$

45,737

 

$

31,176

 

$

(9,191

)

$

67,722

 

 
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, 2021 AND 2020
(in thousands)(unaudited)
 
Chemed
VITAS

Roto-Rooter

Corporate Consolidated
2021 (a)
Service revenues and sales

$

945,135

 

$

653,148

 

$

-

 

$

1,598,283

 

Cost of services provided and goods sold

 

724,398

 

 

308,732

 

 

-

 

 

1,033,130

 

Selling, general and administrative expenses

 

66,094

 

 

158,791

 

 

49,769

 

 

274,654

 

Depreciation

 

17,749

 

 

19,359

 

 

63

 

 

37,171

 

Amortization

 

53

 

 

7,477

 

 

-

 

 

7,530

 

Other operating expense

 

655

 

 

133

 

 

1

 

 

789

 

Total costs and expenses

 

808,949

 

 

494,492

 

 

49,833

 

 

1,353,274

 

Income/(loss) from operations

 

136,186

 

 

158,656

 

 

(49,833

)

 

245,009

 

Interest expense

 

(129

)

 

(464

)

 

(750

)

 

(1,343

)

Intercompany interest income/(expense)

 

13,524

 

 

5,116

 

 

(18,640

)

 

-

 

Other income—net

 

654

 

 

97

 

 

9,770

 

 

10,521

 

Income/(loss) before income taxes

 

150,235

 

 

163,405

 

 

(59,453

)

 

254,187

 

Income taxes

 

(36,805

)

 

(38,901

)

 

15,444

 

 

(60,262

)

Net income/(loss)

$

113,430

 

$

124,504

 

$

(44,009

)

$

193,925

 

 

 

 

 

2020 (b)

 

 

 

 

Service revenues and sales

$

1,002,477

 

$

543,817

 

$

-

 

$

1,546,294

 

Cost of services provided and goods sold

 

772,880

 

 

270,268

 

 

-

 

 

1,043,148

 

Selling, general and administrative expenses

 

65,141

 

 

138,587

 

 

39,685

 

 

243,413

 

Depreciation

 

16,622

 

 

18,035

 

 

104

 

 

34,761

 

Amortization

 

53

 

 

7,423

 

 

-

 

 

7,476

 

Other operating (income)/expense

 

(31,661

)

 

2,725

 

 

1

 

 

(28,935

)

Total costs and expenses

 

823,035

 

 

437,038

 

 

39,790

 

 

1,299,863

 

Income/(loss) from operations

 

179,442

 

 

106,779

 

 

(39,790

)

 

246,431

 

Interest expense

 

(137

)

 

(272

)

 

(1,596

)

 

(2,005

)

Intercompany interest income/(expense)

 

14,463

 

 

4,422

 

 

(18,885

)

 

-

 

Other income—net

 

549

 

 

68

 

 

5,106

 

 

5,723

 

Income/(loss) before income taxes

 

194,317

 

 

110,997

 

 

(55,165

)

 

250,149

 

Income taxes

 

(47,055

)

 

(26,031

)

 

28,651

 

 

(44,435

)

Net income/(loss)

$

147,262

 

$

84,966

 

$

(26,514

)

$

205,714

 

 
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, 2021 AND 2020
(in thousands)(unaudited)
 
Chemed
VITAS

Roto-Rooter

Corporate Consolidated

2021

Net income/(loss)

$

42,950

 

 

$

44,554

 

 

$

(15,501

)

 

$

72,003

 

Add/(deduct):

 

 

 

 

 

 

 

Interest expense

 

43

 

 

 

285

 

 

 

255

 

 

 

583

 

Income taxes

 

14,000

 

 

 

13,404

 

 

 

(3,987

)

 

 

23,417

 

Depreciation

 

5,286

 

 

 

6,539

 

 

 

19

 

 

 

11,844

 

Amortization

 

18

 

 

 

2,492

 

 

 

-

 

 

 

2,510

 

EBITDA

 

62,297

 

 

 

67,274

 

 

 

(19,214

)

 

 

110,357

 

Add/(deduct):

 

 

 

 

 

 

 

Intercompany interest expense/(income)

 

(4,513

)

 

 

(1,847

)

 

 

6,360

 

 

 

-

 

Interest income

 

(24

)

 

 

(34

)

 

 

-

 

 

 

(58

)

Stock option expense

 

-

 

 

 

-

 

 

 

3,998

 

 

 

3,998

 

Direct costs related to COVID-19

 

2,501

 

 

 

415

 

 

 

-

 

 

 

2,916

 

Long-term incentive compensation

 

-

 

 

 

-

 

 

 

1,942

 

 

 

1,942

 

Other

 

-

 

 

 

-

 

 

 

218

 

 

 

218

 

Adjusted EBITDA

$

60,261

 

 

$

65,808

 

 

$

(6,696

)

 

$

119,373

 

 

 

 

 

 

 

 

2020

 

 

 

 

 

 

 

Net income/(loss)

$

45,737

 

 

$

31,176

 

 

$

(9,191

)

 

$

67,722

 

Add/(deduct):

 

 

 

 

 

 

 

Interest expense

 

47

 

 

 

80

 

 

 

252

 

 

 

379

 

Income taxes

 

13,934

 

 

 

9,218

 

 

 

(9,270

)

 

 

13,882

 

Depreciation

 

5,592

 

 

 

6,089

 

 

 

33

 

 

 

11,714

 

Amortization

 

18

 

 

 

2,493

 

 

 

-

 

 

 

2,511

 

EBITDA

 

65,328

 

 

 

49,056

 

 

 

(18,176

)

 

 

96,208

 

Add/(deduct):

 

 

 

 

 

 

 

Intercompany interest expense/(income)

 

(5,337

)

 

 

(1,651

)

 

 

6,988

 

 

 

-

 

Interest income

 

(385

)

 

 

(38

)

 

 

-

 

 

 

(423

)

CARES Act grant

 

8,805

 

 

 

-

 

 

 

-

 

 

 

8,805

 

Direct costs related to COVID-19

 

6,945

 

 

 

1,321

 

 

 

-

 

 

 

8,266

 

Stock option expense

 

-

 

 

 

-

 

 

 

3,182

 

 

 

3,182

 

Litigation settlement

 

-

 

 

 

3,095

 

 

 

-

 

 

 

3,095

 

COVID-19 related Medicare cap

 

(2,250

)

 

 

-

 

 

 

-

 

 

 

(2,250

)

Long-term incentive compensation

 

-

 

 

 

-

 

 

 

1,774

 

 

 

1,774

 

Medicare cap sequestration adjustment

 

(852

)

 

 

-

 

 

 

-

 

 

 

(852

)

Adjusted EBITDA

$

72,254

 

 

$

51,783

 

 

$

(6,232

)

 

$

117,805

 

 
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, 2021 AND 2020
(in thousands)(unaudited)
 

 

 

 

 

 

 

Chemed

VITAS

 

Roto-Rooter

 

Corporate

 

Consolidated

2021

Net income/(loss)

$

113,430

 

$

124,504

 

$

(44,009

)

$

193,925

 

Add/(deduct):

 

 

 

 

Interest expense

 

129

 

 

464

 

 

750

 

 

1,343

 

Income taxes

 

36,805

 

 

38,901

 

 

(15,444

)

 

60,262

 

Depreciation

 

17,749

 

 

19,359

 

 

63

 

 

37,171

 

Amortization

 

53

 

 

7,477

 

 

-

 

 

7,530

 

EBITDA

 

168,166

 

 

190,705

 

 

(58,640

)

 

300,231

 

Add/(deduct):

 

 

 

 

Intercompany interest expense/(income)

 

(13,524

)

 

(5,116

)

 

18,640

 

 

-

 

Interest income

 

(191

)

 

(97

)

 

-

 

 

(288

)

Direct costs related to COVID-19

 

15,338

 

 

1,551

 

 

38

 

 

16,927

 

Stock option expense

 

-

 

 

-

 

 

16,342

 

 

16,342

 

Long-term incentive compensation

 

-

 

 

-

 

 

5,508

 

 

5,508

 

Litigation settlements

 

-

 

 

(98

)

 

-

 

 

(98

)

Other

 

-

 

 

-

 

 

218

 

 

218

 

Adjusted EBITDA

$

169,789

 

$

186,945

 

$

(17,894

)

$

338,840

 

 

2020

 

 

 

 

Net income/(loss)

$

147,262

 

$

84,966

 

$

(26,514

)

$

205,714

 

Add/(deduct):

 

 

 

 

Interest expense

 

137

 

 

272

 

 

1,596

 

 

2,005

 

Income taxes

 

47,055

 

 

26,031

 

 

(28,651

)

 

44,435

 

Depreciation

 

16,622

 

 

18,035

 

 

104

 

 

34,761

 

Amortization

 

53

 

 

7,423

 

 

-

 

 

7,476

 

EBITDA

 

211,129

 

 

136,727

 

 

(53,465

)

 

294,391

 

Add/(deduct):

 

 

 

 

Intercompany interest expense/(income)

 

(14,463

)

 

(4,422

)

 

18,885

 

 

-

 

Interest income

 

(566

)

 

(68

)

 

(13

)

 

(647

)

Direct costs related to COVID-19

 

32,184

 

 

3,299

 

 

-

 

 

35,483

 

CARES Act grant

 

(32,184

)

 

-

 

 

-

 

 

(32,184

)

Stock option expense

 

-

 

 

-

 

 

13,296

 

 

13,296

 

Long-term incentive compensation

 

-

 

 

-

 

 

5,523

 

 

5,523

 

Litigation settlements

 

-

 

 

3,095

 

 

-

 

 

3,095

 

Medicare cap sequestration adjustment

 

619

 

 

-

 

 

-

 

 

619

 

Adjusted EBITDA

$

196,719

 

$

138,631

 

$

(15,774

)

$

319,576

 

 
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,

2021

 

2020

 

2021

 

2020

Net income as reported

$

72,003

 

$

67,722

 

$

193,925

 

$

205,714

 

Add/(deduct) pre-tax cost of:

 

 

 

 

Direct costs related to COVID-19

 

2,916

 

 

8,266

 

 

16,927

 

 

35,483

 

Stock option expense

 

3,998

 

 

3,182

 

 

16,342

 

 

13,296

 

Amortization of reacquired franchise agreements

 

2,352

 

 

2,352

 

 

7,056

 

 

7,056

 

Long-term incentive compensation

 

1,942

 

 

1,774

 

 

5,508

 

 

5,523

 

Facility relocation expenses

 

-

 

 

-

 

 

1,855

 

 

-

 

Litigation settlements

 

-

 

 

3,095

 

 

(98

)

 

3,095

 

Other

 

218

 

 

-

 

 

218

 

 

-

 

CARES Act grant

 

-

 

 

8,805

 

 

-

 

 

(32,184

)

COVID-19 Medicare cap

 

-

 

 

(2,250

)

 

-

 

 

-

 

Medicare cap sequestration adjustments

 

-

 

 

(852

)

 

-

 

 

619

 

Add/(deduct) tax impacts:

 

 

 

 

Tax impact of the above pre-tax adjustments (1)

 

(2,146

)

 

(5,351

)

 

(9,874

)

 

(6,165

)

Excess tax benefits on stock compensation

 

(1,199

)

 

(7,187

)

 

(5,305

)

 

(19,943

)

Adjusted net income

$

80,084

 

$

79,556

 

$

226,554

 

$

212,494

 

 

 

 

 

Diluted Earnings Per Share As Reported

 

 

 

 

Net income

$

4.55

 

$

4.14

 

$

12.06

 

$

12.53

 

Average number of shares outstanding

 

15,842

 

 

16,373

 

 

16,083

 

 

16,419

 

 

 

 

 

Adjusted Diluted Earnings Per Share

 

 

 

 

Adjusted net income

$

5.06

 

$

4.86

 

$

14.09

 

$

12.94

 

Average number of shares outstanding

 

15,842

 

 

16,373

 

 

16,083

 

 

16,419

 

 
(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

2021

 

2020

 

2021

 

2020

Net revenue ($000) (c)
Homecare

$

268,137

 

$

278,856

 

$

796,817

 

$

826,954

 

Inpatient

 

29,368

 

 

27,633

 

 

85,895

 

 

85,983

 

Continuous care

 

22,027

 

 

30,699

 

 

73,658

 

 

105,836

 

Other

 

3,225

 

 

2,910

 

 

9,241

 

 

8,175

 

Subtotal

$

322,757

 

$

340,098

 

$

965,611

 

$

1,026,948

 

Room and board, net

 

(2,130

)

 

(3,289

)

 

(7,451

)

 

(9,317

)

Contractual allowances

 

(3,119

)

 

(3,784

)

 

(9,428

)

 

(10,976

)

Medicare cap allowance

 

(97

)

 

4,072

 

 

(3,597

)

 

(4,178

)

Net Revenue

$

317,411

 

$

337,097

 

$

945,135

 

$

1,002,477

 

Net revenue as a percent of total before Medicare cap allowance

 

 

 

 

Homecare

 

83.1

%

 

82.0

%

 

82.5

%

 

80.5

%

Inpatient

 

9.1

 

 

8.1

 

 

8.9

 

 

8.4

 

Continuous care

 

6.8

 

 

9.0

 

 

7.6

 

 

10.3

 

Other

 

1.0

 

 

0.9

 

 

1.0

 

 

0.8

 

Subtotal

 

100.0

 

 

100.0

 

 

100.0

 

 

100.0

 

Room and board, net

 

(0.7

)

 

(1.0

)

 

(0.8

)

 

(0.9

)

Contractual allowances

 

(1.0

)

 

(1.1

)

 

(1.0

)

 

(1.1

)

Medicare cap allowance

 

-

 

 

1.2

 

 

(0.3

)

 

(0.4

)

Net Revenue

 

98.3

%

 

99.1

%

 

97.9

%

 

97.6

%

Days of care

 

 

 

 

Homecare

 

1,342,841

 

 

1,426,191

 

 

4,008,215

 

 

4,192,681

 

Nursing home

 

258,700

 

 

261,396

 

 

735,906

 

 

844,232

 

Respite

 

5,331

 

 

4,566

 

 

15,509

 

 

15,416

 

Subtotal routine homecare and respite

 

1,606,872

 

 

1,692,153

 

 

4,759,630

 

 

5,052,329

 

Inpatient

 

27,962

 

 

27,017

 

 

82,129

 

 

84,907

 

Continuous care

 

24,299

 

 

33,013

 

 

79,385

 

 

110,200

 

Total

 

1,659,133

 

 

1,752,183

 

 

4,921,144

 

 

5,247,436

 

 

 

 

 

Number of days in relevant time period

 

92

 

 

92

 

 

273

 

 

274

 

Average daily census ("ADC") (days)

 

 

 

 

Homecare

 

14,596

 

 

15,502

 

 

14,682

 

 

15,302

 

Nursing home

 

2,812

 

 

2,841

 

 

2,696

 

 

3,081

 

Respite

 

58

 

 

50

 

 

57

 

 

56

 

Subtotal routine homecare and respite

 

17,466

 

 

18,393

 

 

17,435

 

 

18,439

 

Inpatient

 

304

 

 

294

 

 

301

 

 

310

 

Continuous care

 

264

 

 

358

 

 

291

 

 

402

 

Total

 

18,034

 

 

19,045

 

 

18,027

 

 

19,151

 

Total Admissions

 

17,598

 

 

17,943

 

 

52,573

 

 

53,368

 

Total Discharges

 

17,686

 

 

18,205

 

 

52,747

 

 

51,281

 

Average length of stay (days)

 

96.0

 

 

97.1

 

 

95.0

 

 

92.9

 

Median length of stay (days)

 

13.0

 

 

14.0

 

 

13.0

 

 

14.0

 

ADC by major diagnosis

 

 

 

 

Cerebro

 

36.4

%

 

35.1

%

 

36.7

%

 

35.7

%

Neurological

 

22.7

 

 

22.1

 

 

22.5

 

 

21.7

 

Cancer

 

12.0

 

 

12.5

 

 

12.1

 

 

12.6

 

Cardio

 

15.5

 

 

16.1

 

 

15.5

 

 

15.9

 

Respiratory

 

7.5

 

 

8.0

 

 

7.5

 

 

8.2

 

Other

 

5.9

 

 

6.2

 

 

5.7

 

 

5.9

 

Total

 

100.0

%

 

100.0

%

 

100.0

%

 

100.0

%

Admissions by major diagnosis

 

 

 

 

Cerebro

 

20.3

%

 

21.4

%

 

21.1

%

 

21.2

%

Neurological

 

12.1

 

 

13.2

 

 

12.2

 

 

13.0

 

Cancer

 

27.0

 

 

27.4

 

 

26.9

 

 

27.8

 

Cardio

 

14.1

 

 

13.6

 

 

14.4

 

 

14.5

 

Respiratory

 

11.3

 

 

9.9

 

 

10.9

 

 

10.6

 

Other

 

15.2

 

 

14.5

 

 

14.5

 

 

12.9

 

Total

 

100.0

%

 

100.0

%

 

100.0

%

 

100.0

%

 

 

 

 

Estimated uncollectible accounts as a percent of revenues

 

1.0

%

 

1.1

%

 

1.0

%

 

1.1

%

 

 

 

 

Accounts receivable --

 

 

 

 

Days of revenue outstanding-excluding unapplied Medicare payments

 

33.7

 

 

33.4

 

n.a.

n.a.

Days of revenue outstanding-including unapplied Medicare payments

 

23.4

 

 

22.1

 

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, 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 September 30, 2021
VITAS Roto-Rooter Corporate Consolidated
 
Stock option expense

$

-

 

$

-

 

$

(3,998

)

$

(3,998

)

Direct costs related to COVID-19

 

(2,501

)

 

(415

)

 

-

 

 

(2,916

)

Amortization of reacquired franchise agreements

 

-

 

 

(2,352

)

 

-

 

 

(2,352

)

Long-term incentive compensation

 

-

 

 

-

 

 

(1,942

)

 

(1,942

)

Other

 

-

 

 

-

 

 

(218

)

 

(218

)

Pretax impact on earnings

 

(2,501

)

 

(2,767

)

 

(6,158

)

 

(11,426

)

Excess tax benefits on stock compensation

 

-

 

 

-

 

 

1,199

 

 

1,199

 

Income tax benefit on the above

 

635

 

 

733

 

 

778

 

 

2,146

 

After-tax impact on earnings

$

(1,866

)

$

(2,034

)

$

(4,181

)

$

(8,081

)

 
Nine Months Ended September 30, 2021
VITAS Roto-Rooter Corporate Consolidated
 
Direct costs related to COVID-19

$

(15,338

)

$

(1,551

)

$

(38

)

$

(16,927

)

Stock option expense

 

-

 

 

-

 

 

(16,342

)

 

(16,342

)

Amortization of reacquired franchise agreements

 

-

 

 

(7,056

)

 

-

 

 

(7,056

)

Long-term incentive compensation

 

-

 

 

-

 

 

(5,508

)

 

(5,508

)

Facility relocation expenses

 

(1,855

)

 

-

 

 

-

 

 

(1,855

)

Litigation settlements

 

-

 

 

98

 

 

-

 

 

98

 

Other

 

-

 

 

-

 

 

(218

)

 

(218

)

Pretax impact on earnings

 

(17,193

)

 

(8,509

)

 

(22,106

)

 

(47,808

)

Excess tax benefits on stock compensation

 

-

 

 

-

 

 

5,305

 

 

5,305

 

Income tax benefit on the above

 

4,367

 

 

2,255

 

 

3,252

 

 

9,874

 

After-tax impact on earnings

$

(12,826

)

$

(6,254

)

$

(13,549

)

$

(32,629

)

 
(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 September 30, 2020
VITAS Roto-Rooter Corporate Consolidated
 
CARES Act grant

$

(8,805

)

$

-

 

$

-

 

$

(8,805

)

Direct costs related to COVID-19

 

(6,945

)

 

(1,321

)

 

-

 

 

(8,266

)

Stock option expense

 

-

 

 

-

 

 

(3,182

)

 

(3,182

)

Litigation settlement

 

-

 

 

(3,095

)

 

-

 

 

(3,095

)

Amortization of reacquired franchise agreements

 

-

 

 

(2,352

)

 

-

 

 

(2,352

)

COVID-19 Medicare cap

 

2,250

 

 

-

 

 

-

 

 

2,250

 

Long-term incentive compensation

 

-

 

 

-

 

 

(1,774

)

 

(1,774

)

Medicare cap sequestration adjustment

 

852

 

 

-

 

 

-

 

 

852

 

Pretax impact on earnings

 

(12,648

)

 

(6,768

)

 

(4,956

)

 

(24,372

)

Excess tax benefits on stock compensation

 

-

 

 

-

 

 

7,187

 

 

7,187

 

Income tax benefit on the above

 

3,253

 

 

1,794

 

 

304

 

 

5,351

 

After-tax impact on earnings

$

(9,395

)

$

(4,974

)

$

2,535

 

$

(11,834

)

 
Nine Months Ended September 30, 2020
VITAS Roto-Rooter Corporate Consolidated
 
Direct costs related to COVID-19

$

(32,184

)

$

(3,299

)

$

-

 

$

(35,483

)

CARES Act grant

 

32,184

 

 

-

 

 

-

 

 

32,184

 

Stock option expense

 

-

 

 

-

 

 

(13,296

)

 

(13,296

)

Amortization of reacquired franchise agreements

 

-

 

 

(7,056

)

 

-

 

 

(7,056

)

Long-term incentive compensation

 

-

 

 

-

 

 

(5,523

)

 

(5,523

)

Litigation settlement

 

-

 

 

(3,095

)

 

-

 

 

(3,095

)

Medicare cap sequestration adjustment

 

(619

)

 

-

 

 

-

 

 

(619

)

Pretax impact on earnings

 

(619

)

 

(13,450

)

 

(18,819

)

 

(32,888

)

Excess tax benefits on stock compensation

 

-

 

 

-

 

 

19,943

 

 

19,943

 

Income tax benefit on the above

 

157

 

 

3,564

 

 

2,444

 

 

6,165

 

After-tax impact on earnings

$

(462

)

$

(9,886

)

$

3,568

 

$

(6,780

)

 
(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.
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Page last modified: 04/18/05