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, 2019, versus the comparable prior-year
period, as follows:
Consolidated operating results:
- Revenue increased 7.2% to $474 million
- GAAP Diluted Earnings-per-Share (EPS) of $3.08
- Adjusted Diluted EPS of $3.36, an increase of 19.6%
VITAS segment operating results:
- Net Patient Revenue of $313 million, an increase of 5.4%
- Average Daily Census (ADC) of 18,681, an increase of 5.9%
- Admissions of 17,491, an increase of 3.8%
- Net Income, excluding certain discrete items, of $38.6 million,
an increase of 21.5%
- Adjusted EBITDA, excluding cap, of $54.8 million, an increase
of 25.6%
Roto-Rooter segment operating results:
- Revenue of $161 million, an increase of 10.9%
- Net Income, excluding certain discrete items, of $27.5 million,
an increase of 8.7%
- Adjusted EBITDA of $38.8 million, an increase of 6.2%
- Adjusted EBITDA margin of 24.1%, a decrease of 107-basis
points
VITAS
VITAS net revenue was $313 million in the second quarter of
2019, which is an increase of 5.4%, when compared to the prior-year
period. This revenue increase is comprised primarily of a
geographically weighted average Medicare reimbursement rate
increase of approximately 0.5% and a 5.9% increase in days-of-care.
This growth was partially offset by a Medicare Cap billing
limitation that reduced revenue growth by 0.9% as well as the
combination of acuity mix shift, fluctuations in net room and board
and contractual adjustments, the combination of which negatively
impacted revenue growth approximately 0.3%, when compared to the
prior-year period.
In the second quarter of 2019, VITAS accrued $3.2 million in
Medicare Cap billing limitations, of which $847,000 relates to
prior years Medicare Cap redeterminations. At June 30, 2019, VITAS
had 30 Medicare provider numbers, three of which have an estimated
2019 calendar year Medicare Cap billing limitation of approximately
$9 million.
Of VITAS’ 30 Medicare provider numbers, on a trailing 12-month
basis, 23 provider numbers have a Medicare Cap cushion of 10% or
greater, two provider numbers have a cap cushion between 5% and
10%, two provider numbers have a cap cushion between 0% and 5%, and
three provider numbers have a Medicare Cap billing limitation.
Average revenue per patient per day in the quarter was $189.64,
which is 0.5% above the prior-year period. Reimbursement for
routine home care and high acuity care averaged $165.00 and
$751.12, respectively. During the quarter, high acuity days-of-care
were 4.2% of total days of care, 7-basis points less than the
prior-year quarter.
The second quarter of 2019 gross margin, excluding Medicare Cap,
was 23.7%, which is a 208-basis point increase when compared to the
second quarter of 2018.
Selling, general and administrative expense was $21.7 million in
the second quarter of 2019, which is an increase of 4.7% compared
to the prior-year quarter. Adjusted EBITDA, excluding Medicare Cap,
totaled $54.8 million in the quarter, an increase of 25.6%.
Adjusted EBITDA margin, excluding Medicare Cap, was 17.3% in the
quarter, which is a 267-basis point increase when compared to the
prior-year period.
Roto-Rooter
Roto-Rooter generated quarterly revenue of $161 million for the
second quarter of 2019, an increase of $15.8 million, or 10.9%,
over the prior-year quarter. Revenue from the water restoration
service segment totaled $28.2 million, an increase of 14.0%, when
compared to the prior-year quarter. Approximately 90% of the water
restoration revenue is generated from residential customers and the
remaining 10% is generated from commercial accounts.
Commercial drain cleaning revenue increased 9.9%, commercial
plumbing and excavation increased 11.9% and commercial water
restoration increased 16.2%. Overall, commercial revenue increased
11.0%.
Residential drain cleaning increased 7.7%, plumbing and
excavation increased 9.6% and residential water restoration
increased 13.8%. Aggregate residential sales increased 9.9%.
Roto-Rooter’s gross margin in the quarter was 48.7%, a 121-basis
point decline when compared to the second quarter of 2018. Adjusted
EBITDA in the second quarter of 2019 totaled $38.8 million, an
increase of 6.2%. The Adjusted EBITDA margin in the quarter was
24.1% which is a 107-basis point decline over the prior year.
Chemed
Consolidated
As of June 30, 2019, Chemed had total cash and cash equivalents
of $3 million and debt of $85 million.
In June 2018, Chemed entered into a five-year Amended and
Restated Credit Agreement that consists of a $450 million revolving
credit facility. The interest rate on this facility has a floating
rate that is currently LIBOR plus 100-basis points. At June 30,
2019, the Company had approximately $327 million of undrawn
borrowing capacity under this credit agreement.
During the quarter, the Company repurchased 69,009 shares of
Chemed stock for $22.7 million, which equates to a cost per share
of $328.59. On February 22, 2019, Chemed’s Board of Directors
authorized an additional $150 million for stock repurchase under
Chemed’s existing share repurchase program. As of June 30, 2019,
there was approximately $125 million of remaining share repurchase
authorization under this plan.
Chemed restarted its share repurchase program in 2007. Since
that time Chemed has repurchased over 14 million shares,
aggregating approximately $1.2 billion at an average share cost of
$84.76. Including dividends over this period, Chemed has returned
approximately $1.4 billion to shareholders.
Updated Guidance for 2019
Chemed will issue updated guidance in August 2019 following the
Centers for Medicare and Medicaid Services (CMS) publishing the
final rule on the Fiscal Year 2020 Hospice Wage Index and Payment
Rate update.
Conference Call
Chemed will host a conference call and webcast at 10 a.m., ET,
on Friday, July 26, 2019, to discuss the Company's quarterly
results and to provide an update on its business. The dial-in
number for the conference call is (844) 743-2500 for U.S. and
Canadian participants and +1 (661) 378-9533 for international
participants. The Conference ID is 1109197. 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 1109197. 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 18,500 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, 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
STATEMENT OF INCOME (in thousands, except per share
data)(unaudited)
Three Months Ended June 30,
Six Months Ended June 30,
2019
2018
2019
2018
Service revenues and sales
$
473,584
$
441,813
$
935,618
$
880,989
Cost of services provided and goods sold
323,637
305,741
645,588
610,277
Selling, general and administrative expenses (aa)
71,556
68,297
145,585
137,297
Depreciation
9,887
9,718
19,597
18,985
Amortization
406
34
925
61
Other operating (income)/expenses
2,570
(118
)
8,923
(169
)
Total costs and expenses
408,056
383,672
820,618
766,451
Income from operations
65,528
58,141
115,000
114,538
Interest expense
(1,237
)
(1,524
)
(2,361
)
(2,731
)
Other income--net (bb)
13
1,038
2,452
2,056
Income before income taxes
64,304
57,655
115,091
113,863
Income taxes
(13,575
)
(2,684
)
(19,695
)
(13,896
)
Net income
$
50,729
$
54,971
$
95,396
$
99,967
Earnings Per Share Net income
$
3.18
$
3.43
$
5.98
$
6.22
Average number of shares outstanding
15,928
16,035
15,941
16,067
Diluted Earnings Per Share Net income
$
3.08
$
3.27
$
5.79
$
5.93
Average number of shares outstanding
16,449
16,811
16,489
16,854
(aa)
Selling, general and administrative ("SG&A") expenses comprise
(in thousands):
Three Months Ended June 30,
Six Months Ended June 30,
2019
2018
2019
2018
SG&A expenses before long-term incentive compensation and the
impact of market value adjustments related to deferred compensation
plans
$
70,300
$
66,296
$
140,504
$
132,517
Long-term incentive compensation
1,386
1,222
2,874
3,142
Market value gains/(losses) related to deferred compensation trusts
(130
)
779
2,207
1,638
Total SG&A expenses
$
71,556
$
68,297
$
145,585
$
137,297
(bb)
Other income--net comprises (in thousands):
Three Months Ended June 30,
Six Months Ended June 30,
2019
2018
2019
2018
Market value gains/(losses) related to deferred compensation
trusts
$
(130
)
$
779
$
2,207
$
1,638
Interest income
112
259
214
417
Other
31
-
31
1
Total other income--net
$
13
$
1,038
$
2,452
$
2,056
CHEMED CORPORATION AND SUBSIDIARY COMPANIES CONSOLIDATED
BALANCE SHEET (in thousands, except per share data)(unaudited)
June 30,
2019
2018
Assets Current assets Cash and cash equivalents
$
3,323
$
12,668
Accounts receivable less allowances
136,113
119,206
Inventories
6,336
5,696
Prepaid income taxes
12,951
19,666
Prepaid expenses
21,455
16,205
Total current assets
180,178
173,441
Investments of deferred compensation plans held in trust
70,460
67,573
Properties and equipment, at cost less accumulated depreciation
149,917
145,903
Assets held for sale
15,750
-
Lease right of use asset
90,755
-
Identifiable intangible assets less accumulated amortization
67,511
55,250
Goodwill
510,627
478,202
Other assets
8,874
7,845
Total Assets
$
1,094,072
$
928,214
Liabilities Current liabilities Accounts payable
$
51,143
$
48,236
Accrued insurance
46,912
42,826
Accrued compensation
50,123
49,372
Accrued legal
8,431
823
Short-term lease liability
31,614
-
Other current liabilities
35,446
25,159
Total current liabilities
223,669
166,416
Deferred income taxes
18,828
18,811
Long-term debt
85,000
103,400
Deferred compensation liabilities
70,273
66,154
Long-term lease liability
69,979
-
Other liabilities
7,754
17,042
Total Liabilities
475,503
371,823
Stockholders' Equity Capital stock
35,591
35,141
Paid-in capital
817,255
744,228
Retained earnings
1,311,446
1,129,289
Treasury stock, at cost
(1,548,138
)
(1,354,538
)
Deferred compensation payable in Company stock
2,415
2,271
Total Stockholders' Equity
618,569
556,391
Total Liabilities and Stockholders' Equity
$
1,094,072
$
928,214
CHEMED CORPORATION AND SUBSIDIARY COMPANIES CONSOLIDATED
STATEMENT OF CASH FLOWS (in thousands)(unaudited)
Six Months Ended June 30,
2019
2018
Cash Flows from Operating Activities Net income
$
95,396
$
99,967
Adjustments to reconcile net income to net cash provided by
operating activities: Depreciation and amortization
20,522
19,046
Stock option expense
8,018
7,305
Litigation settlement
6,000
-
(Benefit)/provision for deferred income taxes
(2,769
)
2,173
Noncash long-term incentive compensation
2,506
2,942
Asset impairment loss
2,266
-
Noncash directors' compensation
767
766
Amortization of debt issuance costs
153
288
Amortization of restricted stock awards
-
446
Changes in operating assets and liabilities, excluding amounts
acquired in business combinations: Increase in accounts receivable
(16,613
)
(6,057
)
Increase in inventories
(631
)
(362
)
Increase in prepaid expenses
(2,301
)
(113
)
Decrease in accounts payable and other current liabilities
(4,175
)
(14,909
)
Change in current income taxes
(2,249
)
10,136
Increase in other assets
(4,653
)
(5,667
)
Increase in other liabilities
5,833
4,889
Other sources
837
186
Net cash provided by operating activities
108,907
121,036
Cash Flows from Investing Activities Capital expenditures
(28,312
)
(23,872
)
Business combinations, net of cash acquired
-
(1,875
)
Other (uses)/sources
(137
)
533
Net cash used by investing activities
(28,449
)
(25,214
)
Cash Flows from Financing Activities Payments on revolving
line of credit
(227,000
)
(281,150
)
Proceeds from revolving line of credit
222,800
358,350
Purchases of treasury stock
(71,926
)
(84,304
)
Proceeds from exercise of stock options
16,517
20,209
Capital stock surrendered to pay taxes on stock-based compensation
(14,884
)
(21,022
)
Dividends paid
(9,567
)
(9,016
)
Change in cash overdrafts payable
1,710
(711
)
Payments on other long-term debt
-
(75,000
)
Debt issuance costs
-
(968
)
Other sources/(uses)
384
(663
)
Net cash used by financing activities
(81,966
)
(94,275
)
(Decrease)/increase in Cash and Cash Equivalents
(1,508
)
1,547
Cash and cash equivalents at beginning of year
4,831
11,121
Cash and cash equivalents at end of year
$
3,323
$
12,668
CHEMED CORPORATION AND SUBSIDIARY COMPANIES CONSOLIDATING
STATEMENT OF INCOME FOR THE THREE MONTHS ENDED JUNE 30, 2019
AND 2018 (in thousands)(unaudited)
Chemed
VITAS
Roto-Rooter
Corporate
Consolidated
2019
Service revenues and sales (a)
$
312,750
$
160,834
$
-
$
473,584
Cost of services provided and goods sold
241,104
82,533
-
323,637
Selling, general and administrative expenses (a)
21,682
39,377
10,497
71,556
Depreciation
4,831
5,017
39
9,887
Amortization
18
388
-
406
Other operating expense (a)
69
235
2,266
2,570
Total costs and expenses
267,704
127,550
12,802
408,056
Income/(loss) from operations
45,046
33,284
(12,802
)
65,528
Interest expense
(53
)
(100
)
(1,084
)
(1,237
)
Intercompany interest income/(expense)
4,382
2,180
(6,562
)
-
Other income/(expense)—net
101
42
(130
)
13
Income/(loss) before income taxes
49,476
35,406
(20,578
)
64,304
Income taxes (a)
(12,137
)
(8,231
)
6,793
(13,575
)
Net income/(loss)
$
37,339
$
27,175
$
(13,785
)
$
50,729
2018
Service revenues and sales (b)
$
296,799
$
145,014
$
-
$
441,813
Cost of services provided and goods sold
233,073
72,668
-
305,741
Selling, general and administrative expenses (b)
20,702
35,909
11,686
68,297
Depreciation
5,050
4,628
40
9,718
Amortization
-
34
-
34
Other operating income (b)
(67
)
(51
)
-
(118
)
Total costs and expenses
258,758
113,188
11,726
383,672
Income/(loss) from operations
38,041
31,826
(11,726
)
58,141
Interest expense
(53
)
(92
)
(1,379
)
(1,524
)
Intercompany interest income/(expense)
3,124
1,739
(4,863
)
-
Other income—net
238
21
779
1,038
Income/(loss) before income taxes
41,350
33,494
(17,189
)
57,655
Income taxes (b)
(9,565
)
(8,196
)
15,077
(2,684
)
Net income/(loss)
$
31,785
$
25,298
$
(2,112
)
$
54,971
The "Footnotes to Financial Statements" are integral parts of this
financial information.
CHEMED CORPORATION AND SUBSIDIARY
COMPANIES CONSOLIDATING STATEMENT OF INCOME FOR THE
SIX MONTHS ENDED JUNE 30, 2019 AND 2018 (in
thousands)(unaudited)
Chemed
VITAS
Roto-Rooter
Corporate
Consolidated
2019
Service revenues and sales (a)
$
619,531
$
316,087
$
-
$
935,618
Cost of services provided and goods sold
480,847
164,741
-
645,588
Selling, general and administrative expenses (a)
43,218
78,978
23,389
145,585
Depreciation
9,539
9,980
78
19,597
Amortization
35
890
-
925
Other operating expense (a)
6,423
234
2,266
8,923
Total costs and expenses
540,062
254,823
25,733
820,618
Income/(loss) from operations
79,469
61,264
(25,733
)
115,000
Interest expense
(101
)
(194
)
(2,066
)
(2,361
)
Intercompany interest income/(expense)
8,777
4,375
(13,152
)
-
Other income—net
188
56
2,208
2,452
Income/(loss) before income taxes
88,333
65,501
(38,743
)
115,091
Income taxes (a)
(21,707
)
(15,339
)
17,351
(19,695
)
Net income/(loss)
$
66,626
$
50,162
$
(21,392
)
$
95,396
2018
Service revenues and sales (b)
$
588,813
$
292,176
$
-
$
880,989
Cost of services provided and goods sold
460,329
149,948
-
610,277
Selling, general and administrative expenses (b)
41,213
72,006
24,078
137,297
Depreciation
9,846
9,072
67
18,985
Amortization
-
61
-
61
Other operating expense (b)
(84
)
(85
)
-
(169
)
Total costs and expenses
511,304
231,002
24,145
766,451
Income/(loss) from operations
77,509
61,174
(24,145
)
114,538
Interest expense
(104
)
(184
)
(2,443
)
(2,731
)
Intercompany interest income/(expense)
6,218
3,417
(9,635
)
-
Other income—net
380
37
1,639
2,056
Income/(loss) before income taxes
84,003
64,444
(34,584
)
113,863
Income taxes (b)
(20,203
)
(16,208
)
22,515
(13,896
)
Net income/(loss)
$
63,800
$
48,236
$
(12,069
)
$
99,967
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 JUNE 30, 2019 AND 2018 (in
thousands)(unaudited)
Chemed
VITAS
Roto-Rooter
Corporate
Consolidated
2019
Net income/(loss)
$
37,339
$
27,175
$
(13,785
)
$
50,729
Add/(deduct): Interest expense
53
100
1,084
1,237
Income taxes
12,137
8,231
(6,793
)
13,575
Depreciation
4,831
5,017
39
9,887
Amortization
18
388
-
406
EBITDA
54,378
40,911
(19,455
)
75,834
Add/(deduct): Intercompany interest expense/(income)
(4,382
)
(2,180
)
6,562
-
Interest income
(69
)
(43
)
-
(112
)
Stock option expense
-
-
3,929
3,929
Impairment loss on transportation equipment
-
-
2,266
2,266
Medicare cap sequestration adjustment
1,689
-
-
1,689
Long-term incentive compensation
-
-
1,386
1,386
Acquisition expense
-
97
-
97
Adjusted EBITDA
$
51,616
$
38,785
$
(5,312
)
$
85,089
2018
Net income/(loss)
$
31,785
$
25,298
$
(2,112
)
$
54,971
Add/(deduct): Interest expense
53
92
1,379
1,524
Income taxes
9,565
8,196
(15,077
)
2,684
Depreciation
5,050
4,628
40
9,718
Amortization
-
34
-
34
EBITDA
46,453
38,248
(15,770
)
68,931
Add/(deduct): Intercompany interest expense/(income)
(3,124
)
(1,739
)
4,863
-
Interest income
(237
)
(22
)
-
(259
)
Stock option expense
-
-
3,652
3,652
Long-term incentive compensation
-
-
1,222
1,222
Litigation settlement
(204
)
-
-
(204
)
Medicare cap sequestration adjustment
185
-
-
185
Amortization of stock awards
37
35
83
155
Adjusted EBITDA
$
43,110
$
36,522
$
(5,950
)
$
73,682
The "Footnotes to Financial Statements" are integral parts of this
financial information.
CHEMED CORPORATION AND SUBSIDIARY
COMPANIES CONSOLIDATING SUMMARY OF EBITDA FOR THE SIX
MONTHS ENDED 30, 2019 AND 2018 (in thousands)(unaudited)
Chemed
VITAS
Roto-Rooter
Corporate
Consolidated
2019
Net income/(loss)
$
66,626
$
50,162
$
(21,392
)
$
95,396
Add/(deduct): Interest expense
101
194
2,066
2,361
Income taxes
21,707
15,339
(17,351
)
19,695
Depreciation
9,539
9,980
78
19,597
Amortization
35
890
-
925
EBITDA
98,008
76,565
(36,599
)
137,974
Add/(deduct): Intercompany interest expense/(income)
(8,777
)
(4,375
)
13,152
-
Interest income
(157
)
(56
)
-
(213
)
Stock option expense
-
-
8,018
8,018
Litigation settlement
6,000
-
-
6,000
Long-term incentive compensation
-
-
2,874
2,874
Impairment loss on transportation equipment
-
-
2,266
2,266
Medicare cap sequestration adjustment
2,204
-
-
2,204
Non cash ASC 842 expenses/(benefit)
656
55
(163
)
548
Acquisition Expense
-
97
120
217
Adjusted EBITDA
$
97,934
$
72,286
$
(10,332
)
$
159,888
2018
Net income/(loss)
$
63,800
$
48,236
$
(12,069
)
$
99,967
Add/(deduct): Interest expense
104
184
2,443
2,731
Income taxes
20,203
16,208
(22,515
)
13,896
Depreciation
9,846
9,072
67
18,985
Amortization
-
61
-
61
EBITDA
93,953
73,761
(32,074
)
135,640
Add/(deduct): Intercompany interest expense/(income)
(6,218
)
(3,417
)
9,635
-
Interest income
(380
)
(37
)
-
(417
)
Stock option expense
-
-
7,305
7,305
Long-term incentive compensation
-
-
3,142
3,142
Medicare cap sequestration adjustment
537
-
-
537
Amortization of stock awards
107
100
239
446
Litigation settlement
(204
)
-
-
(204
)
Adjusted EBITDA
$
87,795
$
70,407
$
(11,753
)
$
146,449
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,
2019
2018
2019
2018
Net income as reported
$
50,729
$
54,971
$
95,396
$
99,967
Add/(deduct) pre-tax cost of: Stock option expense
3,929
3,652
8,018
7,305
Litigation settlement
-
(204
)
6,000
(204
)
Long-term incentive compensation
1,386
1,222
2,874
3,142
Impairment loss on transportation equipment
2,266
-
2,266
-
Medicare cap sequestration adjustments
1,689
185
2,204
537
Amortization of acquired and cancelled franchise agreements
331
-
772
-
Non cash ASC 842 expenses
-
-
548
-
Acquisition expenses
97
-
217
-
Add/(deduct) tax impacts: Tax impact of the above pre-tax
adjustments (1)
(2,000
)
(966
)
(4,961
)
(2,238
)
Excess tax benefits on stock compensation
(3,212
)
(11,702
)
(9,944
)
(15,500
)
Adjusted net income
$
55,215
$
47,158
$
103,390
$
93,009
Diluted Earnings Per Share As Reported Net income
$
3.08
$
3.27
$
5.79
$
5.93
Average number of shares outstanding
16,449
16,811
16,489
16,854
Adjusted Diluted Earnings Per Share Adjusted net
income
$
3.36
$
2.81
$
6.27
$
5.52
Average number of shares outstanding
16,449
16,811
16,489
16,854
(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
2019
2018
2019
2018
Net revenue ($000) (c) Homecare
$
266,461
$
250,381
$
525,312
$
491,412
Inpatient
22,894
20,077
45,464
42,186
Continuous care
30,786
30,513
63,030
61,279
Other
2,237
1,998
4,242
3,740
Subtotal
$
322,378
$
302,969
$
638,048
$
598,617
Room and board, net
(2,710
)
(2,675
)
(5,252
)
(5,294
)
Contractual allowances
(3,720
)
(2,959
)
(6,667
)
(5,792
)
Medicare cap allowance
(3,198
)
(536
)
(6,598
)
1,282
Net Revenue
$
312,750
$
296,799
$
619,531
$
588,813
Net revenue as a percent of total before Medicare cap allowance
Homecare
82.7
%
82.6
%
82.3
%
82.1
%
Inpatient
7.1
6.6
7.1
7.0
Continuous care
9.5
10.1
9.9
10.2
Other
0.7
0.7
0.7
0.7
Subtotal
100.0
100.0
100.0
100.0
Room and board, net
(0.8
)
(0.9
)
(0.8
)
(0.9
)
Contractual allowances
(1.2
)
(1.0
)
(1.0
)
(1.0
)
Medicare cap allowance
(1.0
)
(0.1
)
(1.0
)
0.3
Net Revenue
97.0
%
98.0
%
97.2
%
98.4
%
Average daily census ("ADC") (days) Homecare
14,482
13,583
14,364
13,375
Nursing home
3,382
3,275
3,318
3,245
Routine homecare
17,864
16,858
17,682
16,620
Inpatient
358
318
359
335
Continuous care
459
467
474
473
Total
18,681
17,643
18,515
17,428
Total Admissions
17,491
16,858
35,249
35,137
Total Discharges
17,008
16,474
34,350
34,054
Average length of stay (days)
91.1
89.0
91.2
88.4
Median length of stay (days)
16.0
17.0
15.0
16.0
ADC by major diagnosis Cerebro
35.7
%
36.2
%
35.8
%
36.4
%
Neurological
20.4
18.6
20.2
18.6
Cancer
12.7
13.9
12.7
13.9
Cardio
17.0
16.6
16.9
16.4
Respiratory
8.2
8.3
8.2
8.2
Other
6.0
6.4
6.2
6.5
Total
100.0
%
100.0
%
100.0
%
100.0
%
Admissions by major diagnosis Cerebro
20.6
%
21.7
%
20.7
%
22.2
%
Neurological
12.2
11.1
12.5
11.2
Cancer
29.2
30.5
28.6
29.2
Cardio
16.0
15.6
16.1
15.6
Respiratory
11.7
10.8
11.8
11.3
Other
10.3
10.3
10.3
10.5
Total
100.0
%
100.0
%
100.0
%
100.0
%
Estimated uncollectible accounts as a percent of revenues
1.2
%
1.0
%
1.1
%
1.0
%
Accounts receivable --
Days of revenue outstanding- excluding unapplied Medicare payments
32.7
31.9
n.a.
n.a.
Days of revenue outstanding- including unapplied Medicare payments
27.7
25.6
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, 2019 AND 2018 (unaudited)
(a)
Included in the results of operations for 2019 are the following
significant credits/(charges) which may not be indicative of
ongoing operations (in thousands):
Three Months Ended June 30,
2019
VITAS
Roto-Rooter
Corporate
Consolidated
Service revenues and sales: Medicare cap sequestration adjustment
$
(1,689
)
$
-
$
-
$
(1,689
)
Selling, general and administrative expenses: Stock option expense
-
-
(3,929
)
(3,929
)
Long-term incentive compensation
-
-
(1,386
)
(1,386
)
Amortization of acquired and cancelled franchise agreements
-
(331
)
-
(331
)
Acquisition expense
-
(97
)
-
(97
)
Other operating expenses: Impairment loss on transportation
equipment
-
-
(2,266
)
(2,266
)
Pretax impact on earnings
(1,689
)
(428
)
(7,581
)
(9,698
)
Excess tax benefits on stock compensation
-
-
3,212
3,212
Income tax benefit on the above
435
113
1,452
2,000
After-tax impact on earnings
$
(1,254
)
$
(315
)
$
(2,917
)
$
(4,486
)
Six Months Ended June 30,
2019
VITAS
Roto-Rooter
Corporate
Consolidated
Service revenues and sales: Medicare cap sequestration adjustment
$
(2,204
)
$
-
$
-
$
(2,204
)
Selling, general and administrative expenses: Stock option expense
-
-
(8,018
)
(8,018
)
Long-term incentive compensation
-
-
(2,874
)
(2,874
)
Amortization of acquired and cancelled franchise agreements
-
(772
)
-
(772
)
Non cash ASC 842 (expenses)/benefit
(656
)
(55
)
163
(548
)
Acquisition expense
-
(97
)
(120
)
(217
)
Other operating expenses: Litigation settlement
(6,000
)
-
-
(6,000
)
Impairment loss on transportation equipment
-
-
(2,266
)
(2,266
)
Pretax impact on earnings
(8,860
)
(924
)
(13,115
)
(22,899
)
Excess tax benefits on stock compensation
-
-
9,944
9,944
Income tax benefit on the above
2,254
245
2,462
4,961
After-tax impact on earnings
$
(6,606
)
$
(679
)
$
(709
)
$
(7,994
)
(b)
Included in the results of operations for 2018 are the following
significant credits/(charges) which may not be indicative of
ongoing operations (in thousands):
Three Months Ended June 30,
2018
VITAS
Roto-Rooter
Corporate
Consolidated
Service revenues and sales: Medicare cap sequestration adjustment
$
(185
)
$
-
$
-
$
(185
)
Selling, general and administrative expenses: Stock option expense
-
-
(3,652
)
(3,652
)
Long-term incentive compensation
-
-
(1,222
)
(1,222
)
Other operating expenses: Litigation settlements
204
-
-
204
Pretax impact on earnings
19
-
(4,874
)
(4,855
)
Excess tax benefits on stock compensation
-
-
11,702
11,702
Income tax benefit on the above
(5
)
-
971
966
After-tax impact on earnings
$
14
$
-
$
7,799
$
7,813
Six Months Ended June 30,
2018
VITAS
Roto-Rooter
Corporate
Consolidated
Service revenues and sales: Medicare cap sequestration adjustment
$
(537
)
$
-
$
-
$
(537
)
Selling, general and administrative expenses: Stock option expense
-
-
(7,305
)
(7,305
)
Long-term incentive compensation
-
-
(3,142
)
(3,142
)
Other operating expenses: Litigation settlement
204
-
-
204
Pretax impact on earnings
(333
)
-
(10,447
)
(10,780
)
Excess tax benefits on stock compensation
-
-
15,500
15,500
Income tax benefit on the above
84
-
2,154
2,238
After-tax impact on earnings
$
(249
)
$
-
$
7,207
$
6,958
(c)
VITAS has 11 large (greater than 450 ADC), 19 medium (greater than
200 but less than 450 ADC) and 18 small (less than 200 ADC) hospice
programs. Of VITAS' 30 Medicare provider numbers, 25 provider
numbers have a Medicare cap cushion of 5% or greater during the
current cap year, one provider number has a cap cushion between 0%
and 5%, and four provider numbers have a Medicare cap liability.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20190725005666/en/
David P. Williams (513) 762-6901
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