Chemed Corporation (Chemed) (NYSE: CHE), which operates VITAS
Healthcare Corporation (VITAS), one of the nation’s largest
providers of end-of-life care, and Roto-Rooter, the nation’s
largest commercial and residential plumbing and drain cleaning
services provider, reported financial results for its third quarter
ended September 30, 2019, versus the comparable prior-year period,
as follows:
Consolidated operating results:
- Revenue increased 8.2% to $481 million
- GAAP Diluted Earnings-per-Share (EPS) of $3.56, an increase of
16.3%
- Adjusted Diluted EPS of $3.46, an increase of 12.7%
VITAS segment operating results:
- Net Patient Revenue of $322 million, an increase of 6.6%
- Average Daily Census (ADC) of 19,086, an increase of 6.3%
- Admissions of 17,131, an increase of 4.4%
- Net Income, excluding certain discrete items, of $40.4 million,
an increase of 10.9%
- Adjusted EBITDA, excluding Medicare Cap, of $54.3 million, an
increase of 6.7%
Roto-Rooter segment operating results:
- Revenue of $159 million, an increase of 11.6%
- Net Income, excluding certain discrete items, of $28.8 million,
an increase of 16.6%
- Adjusted EBITDA of $39.8 million, an increase of 17.0%
- Adjusted EBITDA margin of 25.0%, an increase of 116-basis
points
VITAS
VITAS net revenue was $322 million in the third quarter of 2019,
which is an increase of 6.6%, when compared to the prior-year
period. This revenue increase is comprised primarily of a
geographically weighted average Medicare reimbursement rate
increase of approximately 0.5%, a 6.3% increase in days-of-care and
a reduction in the Medicare Cap billing limitation that increased
revenue 0.2%. This growth was partially offset by acuity mix shift,
fluctuations in net room and board and contractual adjustments, the
combination of which negatively impacted revenue growth
approximately 0.4%, when compared to the prior-year period.
In the third quarter of 2019, VITAS accrued $1.3 million in
Medicare Cap billing limitations. This compares favorably to the
prior-year Medicare Cap billing limitation of $2.0 million. At
September 30, 2019, VITAS had 30 Medicare provider numbers, three
of which have an estimated fiscal 2019 Medicare Cap billing
limitation liability of approximately $9.6 million.
Of VITAS’ 30 Medicare provider numbers, 23 provider numbers have
a Medicare Cap cushion of 10% or greater, one provider number has a
cap cushion between 5% and 10%, three provider numbers have a cap
cushion between 0% and 5%, and three provider numbers have a fiscal
2019 Medicare Cap billing limitation.
Average revenue per patient per day in the quarter was $188.02,
which is 0.4% above the prior-year period. Reimbursement for
routine home care and high acuity care averaged $164.39 and
$755.38, respectively. During the quarter, high acuity days-of-care
were 4.0% of total days of care, 7-basis points less than the
prior-year quarter.
The third quarter of 2019 gross margin, excluding Medicare Cap,
was 23.4%, which is a 9-basis point margin improvement when
compared to the third quarter of 2018.
Selling, general and administrative expense was $22.0 million in
the third quarter of 2019, which is an increase of 7.7% compared to
the prior-year quarter. Adjusted EBITDA, excluding Medicare Cap,
totaled $54.3 million in the quarter, an increase of 6.7%. Adjusted
EBITDA margin, excluding Medicare Cap, was 16.8% in the quarter,
which is a 5-basis point margin improvement when compared to the
prior-year period.
Roto-Rooter
Roto-Rooter generated quarterly revenue of $159 million for the
third quarter of 2019, an increase of $16.5 million, or 11.6%, over
the prior-year quarter. Revenue from the water restoration service
segment totaled $25.7 million, an increase of 3.0%, when compared
to the prior-year quarter. Approximately 90% of the water
restoration revenue is generated from residential customers and the
remaining 10% is generated from commercial accounts.
Commercial drain cleaning revenue increased 16.5%, commercial
plumbing and excavation increased 24.9%, and commercial water
restoration increased 3.1%. Overall, commercial revenue increased
19.3%.
Residential drain cleaning increased 9.8%, plumbing and
excavation increased 7.0%, and residential water restoration
increased 2.9%. Aggregate residential sales increased 6.5%.
Roto-Rooter’s gross margin in the quarter was 49.2%, a slight
increase when compared to the third quarter of 2018. Adjusted
EBITDA in the third quarter of 2019 totaled $39.8 million, an
increase of 17.0%. The Adjusted EBITDA margin in the quarter was
25.0% which is a 116-basis point margin expansion over the prior
year.
Chemed
Consolidated
As of September 30, 2019, Chemed had total cash and cash
equivalents of $9 million and debt of $130 million.
In June 2018, Chemed entered into a five-year Amended and
Restated Credit Agreement that consists of a $450 million revolving
credit facility. The interest rate on this facility has a floating
rate that is currently LIBOR plus 100-basis points. At September
30, 2019, the Company had approximately $282 million of undrawn
borrowing capacity under this credit agreement.
The Company did not purchase any shares during the third quarter
of 2019. As of September 30, 2019, there was approximately $125
million of remaining share repurchase authorization under this
share repurchase program.
Chemed restarted its share repurchase program in 2007. Since
that time Chemed has repurchased over 14 million shares,
aggregating approximately $1.2 billion at an average share cost of
$84.76. Including dividends over this period, Chemed has returned
approximately $1.4 billion to shareholders.
Conference Call
Chemed will host a conference call and webcast at 10 a.m., ET,
on Wednesday, October 30, 2019, to discuss the Company's quarterly
results and to provide an update on its business. The dial-in
number for the conference call is (844) 743-2500 for U.S. and
Canadian participants and +1 (661) 378-9533 for international
participants. The Conference ID is 5229315. A live webcast of the
call can be accessed on Chemed's website at www.chemed.com by
clicking on Investor Relations Home.
A taped replay of the conference call will be available
beginning approximately 24 hours after the call's conclusion. It
can be accessed by dialing (855) 859-2056 for U.S. and Canadian
callers and +1 (404) 537-3406 for international callers and will be
available for one week following the live call. The replay
Conference ID is 5229315. An archived webcast will also be
available at www.chemed.com.
Chemed Corporation operates in the healthcare field through its
VITAS Healthcare Corporation subsidiary. VITAS provides daily
hospice services to approximately 19,000 patients with severe,
life-limiting illnesses. This type of care is focused on making the
terminally ill patient's final days as comfortable and pain-free as
possible.
Chemed operates in the residential and commercial plumbing and
drain cleaning industry under the brand name Roto-Rooter.
Roto-Rooter provides plumbing, drain cleaning, and water cleanup
services through company-owned branches, independent contractors
and franchisees in the United States and Canada. Roto-Rooter also
has licensed master franchisees in the republics of Indonesia and
Singapore, and the Philippines.
This press release contains information about Chemed’s EBITDA,
Adjusted EBITDA and Adjusted Diluted EPS, which are not measures
derived in accordance with GAAP and which exclude components that
are important to understanding Chemed’s financial performance. In
reporting its operating results, Chemed provides EBITDA, Adjusted
EBITDA and Adjusted Diluted EPS measures to help investors and
others evaluate the Company’s operating results, compare its
operating performance with that of similar companies that have
different capital structures and evaluate its ability to meet its
future debt service, capital expenditures and working capital
requirements. Chemed’s management similarly uses EBITDA, Adjusted
EBITDA and Adjusted Diluted EPS to assist it in evaluating the
performance of the Company across fiscal periods and in assessing
how its performance compares to its peer companies. These measures
also help Chemed’s management to estimate the resources required to
meet Chemed’s future financial obligations and expenditures.
Chemed’s EBITDA, Adjusted EBITDA and Adjusted Diluted EPS should
not be considered in isolation or as a substitute for comparable
measures calculated and presented in accordance with GAAP. We
calculated Adjusted EBITDA Margin by dividing Adjusted EBITDA by
service revenue and sales. A reconciliation of Chemed’s net income
to its EBITDA, Adjusted EBITDA and Adjusted Diluted EPS is
presented in the tables following the text of this press
release.
Forward-Looking Statements
Certain statements contained in this press release and the
accompanying tables are "forward-looking statements" within the
meaning of the Private Securities Litigation Reform Act of 1995.
The words "believe," "expect," "hope," "anticipate," "plan" and
similar expressions identify forward-looking statements, which
speak only as of the date the statement was made. Chemed does not
undertake and specifically disclaims any obligation to publicly
update or revise any forward-looking statements, whether as a
result of new information, future events or otherwise. These
statements are based on current expectations and assumptions and
involve various risks and uncertainties, which could cause Chemed's
actual results to differ from those expressed in such
forward-looking statements.
These risks and uncertainties arise from, among other things,
possible changes in regulations governing the hospice care or
plumbing and drain cleaning industries; periodic changes in
reimbursement levels and procedures under Medicare and Medicaid
programs; difficulties predicting patient length of stay and
estimating potential Medicare reimbursement obligations; challenges
inherent in Chemed's growth strategy; the current shortage of
qualified nurses, other healthcare professionals and licensed
plumbing and drain cleaning technicians; Chemed’s dependence on
patient referral sources; and other factors detailed under the
caption "Description of Business by Segment" or "Risk Factors" in
Chemed’s most recent report on form 10-Q or 10-K and its other
filings with the Securities and Exchange Commission. You are
cautioned not to place undue reliance on such forward-looking
statements and there are no assurances that the matters contained
in such statements will be achieved.
CHEMED CORPORATION AND SUBSIDIARY COMPANIES CONSOLIDATED
STATEMENTS OF INCOME (in thousands, except per share
data)(unaudited)
Three Months Ended September
30,
Nine Months Ended September
30,
2019
2018
2019
2018
Service revenues and sales
$
480,613
$
444,151
$
1,416,231
$
1,325,140
Cost of services provided and goods sold
328,183
305,312
973,771
915,589
Selling, general and administrative expenses (aa)
76,836
67,177
222,421
204,474
Depreciation
10,147
9,657
29,744
28,642
Amortization
441
35
1,366
96
Other operating expenses
78
257
9,001
88
Total costs and expenses
415,685
382,438
1,236,303
1,148,889
Income from operations
64,928
61,713
179,928
176,251
Interest expense
(1,041
)
(1,082
)
(3,402
)
(3,813
)
Other income--net (bb)
3,036
2,300
5,488
4,356
Income before income taxes
66,923
62,931
182,014
176,794
Income taxes
(7,976
)
(11,682
)
(27,671
)
(25,578
)
Net income
$
58,947
$
51,249
$
154,343
$
151,216
Earnings Per Share Net income
$
3.69
$
3.19
$
9.68
$
9.41
Average number of shares outstanding
15,970
16,074
15,952
16,070
Diluted Earnings Per Share Net income
$
3.56
$
3.06
$
9.35
$
8.98
Average number of shares outstanding
16,555
16,772
16,514
16,830
(aa) Selling, general and administrative ("SG&A")
expenses comprise (in thousands):
Three Months Ended September
30,
Nine Months Ended September
30,
2019
2018
2019
2018
SG&A expenses before long-term incentive compensation
and the impact of market value adjustments related to deferred
compensation plans
$
72,273
$
63,754
$
212,775
$
196,271
Market value adjustments related to deferred compensation trusts
2,886
2,189
5,094
3,827
Long-term incentive compensation
1,677
1,234
4,552
4,376
Total SG&A expenses
$
76,836
$
67,177
$
222,421
$
204,474
(bb) Other income--net comprises (in thousands):
Three Months Ended September
30,
Nine Months Ended September
30,
2019
2018
2019
2018
Market value adjustments related to deferred compensation
trusts
$
2,886
$
2,189
$
5,094
$
3,827
Interest income
173
111
387
529
Other
(23
)
-
7
-
Total other income--net
$
3,036
$
2,300
$
5,488
$
4,356
CHEMED CORPORATION AND SUBSIDIARY COMPANIES CONSOLIDATED
BALANCE SHEETS (in thousands, except per share data)(unaudited)
September 30,
2019
2018
Assets Current assets Cash and cash equivalents
$
9,066
$
67,459
Accounts receivable less allowances
114,480
108,999
Inventories
7,354
5,763
Prepaid income taxes
10,745
6,039
Prepaid expenses
26,150
17,610
Total current assets
167,795
205,870
Investments of deferred compensation plans held in trust
73,714
70,237
Properties and equipment, at cost less accumulated depreciation
172,932
154,434
Lease right of use asset
103,286
-
Identifiable intangible assets less accumulated amortization
129,276
56,649
Goodwill
576,600
483,281
Other assets
8,982
8,653
Total Assets
$
1,232,585
$
979,124
Liabilities Current liabilities Accounts payable
$
44,027
$
36,977
Accrued insurance
47,726
43,503
Accrued compensation
75,208
70,687
Accrued legal
7,283
1,423
Short-term lease liability
33,761
-
Other current liabilities
43,496
27,608
Total current liabilities
251,501
180,198
Deferred income taxes
15,512
15,293
Long-term debt
130,000
130,000
Deferred compensation liabilities
73,335
68,492
Long-term lease liability
82,012
-
Other liabilities
7,845
16,988
Total Liabilities.
560,205
410,971
Stockholders' Equity Capital stock
35,738
35,211
Paid-in capital
841,837
755,263
Retained earnings
1,365,303
1,175,949
Treasury stock, at cost
(1,572,844
)
(1,400,577
)
Deferred compensation payable in Company stock
2,346
2,307
Total Stockholders' Equity
672,380
568,153
Total Liabilities and Stockholders' Equity
$
1,232,585
$
979,124
CHEMED CORPORATION AND SUBSIDIARY COMPANIES CONSOLIDATED
STATEMENTS OF CASH FLOWS (in thousands)(unaudited)
Nine Months Ended September
30,
2019
2018
Cash Flows from Operating Activities Net income
$
154,343
$
151,216
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation and amortization
31,110
28,738
Stock option expense
10,729
9,360
Benefit for deferred income taxes
(6,085
)
(1,344
)
Litigation settlement
6,000
-
Noncash long-term incentive compensation
4,184
4,176
Asset impairment loss
2,266
-
Noncash directors' compensation
767
766
Amortization of debt issuance costs
229
361
Amortization of restricted stock awards
-
446
Changes in operating assets and liabilities, excluding amounts
acquired in business combinations: Decrease in accounts receivable
10,558
4,637
Increase in inventories
(1,649
)
(429
)
Increase in prepaid expenses
(6,836
)
(1,518
)
Increase in accounts payable and other current liabilities
28,622
12,182
Change in current income taxes
(81
)
23,858
Net change in lease assets and liabilities
1,311
-
Increase in other assets
(8,145
)
(9,441
)
Increase in other liabilities
9,045
7,190
Other sources
1,277
410
Net cash provided by operating activities
237,645
230,608
Cash Flows from Investing Activities Business combinations,
net of cash acquired
(138,010
)
(12,875
)
Capital expenditures
(39,753
)
(36,554
)
Other sources
101
480
Net cash used by investing activities
(177,662
)
(48,949
)
Cash Flows from Financing Activities Proceeds from revolving
line of credit
400,700
428,150
Payments on revolving line of credit
(359,900
)
(324,350
)
Purchases of treasury stock
(71,926
)
(121,976
)
Capital stock surrendered to pay taxes on stock-based compensation
(26,108
)
(24,763
)
Proceeds from exercise of stock options
23,383
23,079
Dividends paid
(14,657
)
(13,850
)
Change in cash overdrafts payable
(7,535
)
(15,307
)
Payments on other long-term debt
-
(75,000
)
Debt issuance costs
-
(985
)
Other sources/(uses)
295
(319
)
Net cash used by financing activities
(55,748
)
(125,321
)
Increase in Cash and Cash Equivalents
4,235
56,338
Cash and cash equivalents at beginning of year
4,831
11,121
Cash and cash equivalents at end of year
$
9,066
$
67,459
CHEMED CORPORATION AND SUBSIDIARY COMPANIES CONSOLIDATING
STATEMENTS OF INCOME FOR THE THREE MONTHS ENDED SEPTEMBER
30, 2019 AND 2018 (in thousands)(unaudited)
Chemed
VITAS
Roto-Rooter
Corporate
Consolidated
2019
Service revenues and sales (a)
$
321,748
$
158,865
$
-
$
480,613
Cost of services provided and goods sold
247,551
80,632
-
328,183
Selling, general and administrative expenses (a)
21,965
41,758
13,113
76,836
Depreciation
5,105
5,003
39
10,147
Amortization
18
423
-
441
Other operating expense/(income)
97
(19
)
-
78
Total costs and expenses
274,736
127,797
13,152
415,685
Income/(loss) from operations
47,012
31,068
(13,152
)
64,928
Interest expense.
(48
)
(80
)
(913
)
(1,041
)
Intercompany interest income/(expense)
4,618
2,234
(6,852
)
-
Other income—net
121
31
2,884
3,036
Income/(loss) before income taxes
51,703
33,253
(18,033
)
66,923
Income taxes (a)
(11,930
)
(7,113
)
11,067
(7,976
)
Net income/(loss)
$
39,773
$
26,140
$
(6,966
)
$
58,947
2018
Service revenues and sales (b)
$
301,764
$
142,387
$
-
$
444,151
Cost of services provided and goods sold
233,006
72,306
-
305,312
Selling, general and administrative expenses (b)
20,394
36,112
10,671
67,177
Depreciation
4,905
4,712
40
9,657
Amortization
-
35
-
35
Other operating expense
100
157
-
257
Total costs and expenses
258,405
113,322
10,711
382,438
Income/(loss) from operations
43,359
29,065
(10,711
)
61,713
Interest expense
(49
)
(71
)
(962
)
(1,082
)
Intercompany interest income/(expense)
3,306
1,814
(5,120
)
-
Other income—net
89
22
2,189
2,300
Income/(loss) before income taxes
46,705
30,830
(14,604
)
62,931
Income taxes (b)
(10,784
)
(6,267
)
5,369
(11,682
)
Net income/(loss)
$
35,921
$
24,563
$
(9,235
)
$
51,249
The "Footnotes to Financial Statements" are integral parts of this
financial information.
CHEMED CORPORATION AND SUBSIDIARY
COMPANIES CONSOLIDATING STATEMENTS OF INCOME FOR THE
NINE MONTHS ENDED SEPTEMBER 30, 2019 AND 2018 (in
thousands)(unaudited)
Chemed
VITAS
Roto-Rooter
Corporate
Consolidated
2019
Service revenues and sales (a)
$
941,279
$
474,952
$
-
$
1,416,231
Cost of services provided and goods sold
728,397
245,374
-
973,771
Selling, general and administrative expenses (a)
65,182
120,736
36,503
222,421
Depreciation
14,644
14,983
117
29,744
Amortization
53
1,313
-
1,366
Other operating expense (a)
6,521
214
2,266
9,001
Total costs and expenses
814,797
382,620
38,886
1,236,303
Income/(loss) from operations
126,482
92,332
(38,886
)
179,928
Interest expense
(150
)
(273
)
(2,979
)
(3,402
)
Intercompany interest income/(expense)
13,395
6,609
(20,004
)
-
Other income—net
309
86
5,093
5,488
Income/(loss) before income taxes
140,036
98,754
(56,776
)
182,014
Income taxes (a)
(33,636
)
(22,452
)
28,417
(27,671
)
Net income/(loss)
$
106,400
$
76,302
$
(28,359
)
$
154,343
2018
Service revenues and sales (b)
$
890,577
$
434,563
$
-
$
1,325,140
Cost of services provided and goods sold
693,335
222,254
-
915,589
Selling, general and administrative expenses (b)
61,606
108,120
34,748
204,474
Depreciation
14,753
13,782
107
28,642
Amortization
-
96
-
96
Other operating expense (b)
16
72
-
88
Total costs and expenses
769,710
344,324
34,855
1,148,889
Income/(loss) from operations
120,867
90,239
(34,855
)
176,251
Interest expense
(153
)
(255
)
(3,405
)
(3,813
)
Intercompany interest income/(expense)
9,524
5,231
(14,755
)
-
Other income—net
469
60
3,827
4,356
Income/(loss) before income taxes
130,707
95,275
(49,188
)
176,794
Income taxes (b)
(30,987
)
(22,476
)
27,885
(25,578
)
Net income/(loss)
$
99,720
$
72,799
$
(21,303
)
$
151,216
The "Footnotes to Financial Statements" are integral parts of this
financial information.
CHEMED CORPORATION AND SUBSIDIARY
COMPANIES CONSOLIDATING SUMMARIES OF EBITDA FOR THE
THREE MONTHS ENDED SEPTEMBER 30, 2019 AND 2018 (in
thousands)(unaudited)
Chemed
VITAS
Roto-Rooter
Corporate
Consolidated
2019
Net income/(loss)
$
39,773
$
26,140
$
(6,966
)
$
58,947
Add/(deduct): Interest expense
48
80
913
1,041
Income taxes
11,930
7,113
(11,067
)
7,976
Depreciation
5,105
5,003
39
10,147
Amortization
18
423
-
441
EBITDA
56,874
38,759
(17,081
)
78,552
Add/(deduct): Intercompany interest expense/(income)
(4,618
)
(2,234
)
6,852
-
Interest income
(139
)
(34
)
-
(173
)
Acquisition expense
-
3,281
-
3,281
Stock option expense
-
-
2,711
2,711
Long-term incentive compensation
-
-
1,677
1,677
Medicare cap sequestration adjustment
859
-
-
859
Adjusted EBITDA
$
52,976
$
39,772
$
(5,841
)
$
86,907
2018
Net income/(loss)
$
35,921
$
24,563
$
(9,235
)
$
51,249
Add/(deduct): Interest expense
49
71
962
1,082
Income taxes
10,784
6,267
(5,369
)
11,682
Depreciation
4,905
4,712
40
9,657
Amortization
-
35
-
35
EBITDA
51,659
35,648
(13,602
)
73,705
Add/(deduct): Intercompany interest expense/(income)
(3,306
)
(1,814
)
5,120
-
Interest income..
(88
)
(23
)
-
(111
)
Medicare cap sequestration adjustment..
503
-
-
503
Acquisition expense
177
177
-
354
Stock option expense
-
-
2,055
2,055
Long-term incentive compensation
-
-
1,234
1,234
Adjusted EBITDA
$
48,945
$
33,988
$
(5,193
)
$
77,740
The "Footnotes to Financial Statements" are integral parts of this
financial information.
CHEMED CORPORATION AND SUBSIDIARY
COMPANIES CONSOLIDATING SUMMARIES OF EBITDA FOR THE
NINE MONTHS ENDED SEPTEMBER 30, 2019 AND 2018 (in
thousands)(unaudited)
Chemed
VITAS
Roto-Rooter
Corporate
Consolidated
2019
Net income/(loss)
$
106,400
$
76,302
$
(28,359
)
$
154,343
Add/(deduct): Interest expense
150
273
2,979
3,402
Income taxes
33,636
22,452
(28,417
)
27,671
Depreciation
14,644
14,983
117
29,744
Amortization
53
1,313
-
1,366
EBITDA
154,883
115,323
(53,680
)
216,526
Add/(deduct): Intercompany interest expense/(income)
(13,395
)
(6,609
)
20,004
-
Interest income
(296
)
(91
)
-
(387
)
Stock option expense
-
-
10,729
10,729
Litigation settlement
6,000
-
-
6,000
Long-term incentive compensation
-
-
4,552
4,552
Acquisition Expense
-
3,377
120
3,497
Medicare cap sequestration adjustment
3,063
-
-
3,063
Impairment loss on transportation equipment
-
-
2,266
2,266
Non cash ASC 842 expenses/(benefit)
656
55
(163
)
548
Adjusted EBITDA
$
150,911
$
112,055
$
(16,172
)
$
246,794
2018
Net income/(loss)
$
99,720
$
72,799
$
(21,303
)
$
151,216
Add/(deduct): Interest expense
153
255
3,405
3,813
Income taxes..
30,987
22,476
(27,885
)
25,578
Depreciation
14,753
13,782
107
28,642
Amortization
-
96
-
96
EBITDA
145,613
109,408
(45,676
)
209,345
Add/(deduct): Intercompany interest expense/(income)
(9,524
)
(5,231
)
14,755
-
Interest income
(468
)
(60
)
-
(528
)
Stock option expense
-
-
9,360
9,360
Long-term incentive compensation
-
-
4,376
4,376
Medicare cap sequestration adjustment
1,040
-
-
1,040
Amortization of stock awards
107
100
239
446
Acquisition expense
177
177
-
354
Litigation settlement
(204
)
-
-
(204
)
Adjusted EBITDA
$
136,741
$
104,394
$
(16,946
)
$
224,189
The "Footnotes to Financial Statements" are integral parts of this
financial information.
CHEMED CORPORATION AND SUBSIDIARY
COMPANIES RECONCILIATION OF ADJUSTED NET INCOME (in
thousands, except per share data)(unaudited)
Three Months Ended September
30,
Nine Months Ended September
30,
2019
2018
2019
2018
Net income as reported
$
58,947
$
51,249
$
154,343
$
151,216
Add/(deduct) pre-tax cost of: Stock option expense
2,711
2,055
10,729
9,360
Litigation settlement
-
-
6,000
(204
)
Long-term incentive compensation
1,677
1,234
4,552
4,376
Acquisition expense
3,281
354
3,497
354
Medicare cap sequestration adjustments
859
503
3,063
1,040
Impairment loss on transportation equipment
-
-
2,266
-
Amortization of acquired and cancelled franchise agreements
331
-
1,103
-
Non cash ASC 842 expenses
-
-
548
-
Add/(deduct) tax impacts: Tax impact of the above pre-tax
adjustments (1)
(1,801
)
(821
)
(6,761
)
(3,059
)
Excess tax benefits on stock compensation
(8,792
)
(3,118
)
(18,737
)
(18,618
)
Adjusted net income
$
57,213
$
51,456
$
160,603
$
144,465
Diluted Earnings Per Share As Reported Net income
$
3.56
$
3.06
$
9.35
$
8.98
Average number of shares outstanding
16,555
16,772
16,514
16,830
Adjusted Diluted Earnings Per Share Adjusted net
income
$
3.46
$
3.07
$
9.73
$
8.58
Average number of shares outstanding
16,555
16,772
16,514
16,830
(1)
The tax impact of pre-tax adjustments was
calculated using the effective tax rate of the operating unit for
which each adjustment is associated.
The "Footnotes to Financial Statements" are integral parts
of this financial information.
CHEMED CORPORATION AND SUBSIDIARY
COMPANIES OPERATING STATISTICS FOR VITAS SEGMENT
(unaudited)
Three Months Ended September
30,
Nine Months Ended September
30,
OPERATING STATISTICS
2019
2018
2019
2018
Net revenue ($000) (c) Homecare
$
274,746
$
257,134
$
800,059
$
748,546
Inpatient
23,599
19,617
69,063
61,803
Continuous care
29,446
30,385
92,476
91,664
Other
2,356
2,104
6,598
5,844
Subtotal
$
330,147
$
309,240
$
968,196
$
907,857
Room and board, net
(2,846
)
(2,569
)
(8,098
)
(7,863
)
Contractual allowances
(4,236
)
(2,957
)
(10,904
)
(8,749
)
Medicare cap allowance
(1,317
)
(1,950
)
(7,915
)
(668
)
Net Revenue
$
321,748
$
301,764
$
941,279
$
890,577
Net revenue as a percent of total before Medicare cap allowance
Homecare
83.2
%
83.2
%
82.6
%
82.5
%
Inpatient
7.1
6.3
7.1
6.8
Continuous care
8.9
9.8
9.6
10.1
Other
0.8
0.7
0.7
0.6
Subtotal
100.0
100.0
100.0
100.0
Room and board, net
(0.9
)
(0.8
)
(0.8
)
(0.9
)
Contractual allowances
(1.3
)
(1.0
)
(1.2
)
(1.0
)
Medicare cap allowance
(0.4
)
(0.6
)
(0.8
)
(0.1
)
Net Revenue
97.4
%
97.6
%
97.2
%
98.0
%
Average daily census ("ADC") (days) Homecare
14,799
13,791
14,510
13,515
Nursing home
3,483
3,402
3,374
3,298
Routine homecare
18,282
17,193
17,884
16,813
Inpatient
373
313
363
328
Continuous care
431
451
460
466
Total
19,086
17,957
18,707
17,607
Total Admissions
17,131
16,403
52,380
51,540
Total Discharges
16,915
16,171
51,274
50,234
Average length of stay (days)
92.6
90.0
91.6
89.0
Median length of stay (days)
17.0
18.0
16.0
16.0
ADC by major diagnosis Cerebro
35.7
%
36.2
%
35.9
%
36.5
%
Neurological
20.7
18.8
20.4
18.7
Cancer
12.9
13.8
12.9
13.8
Cardio
16.6
16.4
16.7
16.4
Respiratory
8.1
8.1
8.1
8.1
Other
6.0
6.7
6.0
6.5
Total
100.0
%
100.0
%
100.0
%
100.0
%
Admissions by major diagnosis Cerebro
21.1
%
21.1
%
20.8
%
21.9
%
Neurological
12.7
11.6
12.6
11.3
Cancer
30.5
31.5
29.2
30.0
Cardio
14.8
14.7
15.7
15.3
Respiratory
10.2
10.3
11.3
11.0
Other
10.7
10.8
10.4
10.5
Total
100.0
%
100.0
%
100.0
%
100.0
%
Estimated uncollectible accounts as a percent of revenues
1.3
%
1.0
%
1.1
%
1.0
%
Accounts receivable -- Days of revenue outstanding- excluding
unapplied Medicare payments
32.7
36.0
n.a.
n.a.
Days of revenue outstanding- including unapplied Medicare payments
21.0
22.8
n.a.
n.a.
The "Footnotes to Financial Statements"
are integral parts of this financial information.
CHEMED CORPORATION AND SUBSIDIARY COMPANIES FOOTNOTES TO
FINANCIAL STATEMENTS FOR THE THREE AND NINE MONTHS ENDED
SEPTEMBER 30, 2019 AND 2018 (unaudited)
(a)
Included in the results of operations for 2019 are the following
significant credits/(charges) which may not be indicative of
ongoing operations (in thousands):
Three Months Ended September
30, 2019
VITAS
Roto-Rooter
Corporate
Consolidated
Service revenues and sales: Medicare cap sequestration adjustment
$
(859
)
$
-
$
-
$
(859
)
Selling, general and administrative expenses: Acquisition expense
-
(3,281
)
-
(3,281
)
Stock option expense
-
-
(2,711
)
(2,711
)
Long-term incentive compensation
-
-
(1,677
)
(1,677
)
Amortization of acquired and cancelled franchise agreements
-
(331
)
-
(331
)
Pretax impact on earnings
(859
)
(3,612
)
(4,388
)
(8,859
)
Excess tax benefits on stock compensation
-
-
8,792
8,792
Income tax benefit on the above
220
957
624
1,801
After-tax impact on earnings
$
(639
)
$
(2,655
)
$
5,028
$
1,734
Nine Months Ended September
30, 2019
VITAS
Roto-Rooter
Corporate
Consolidated
Service revenues and sales: Medicare cap sequestration adjustment
$
(3,063
)
$
-
$
-
$
(3,063
)
Selling, general and administrative expenses: Stock option expense
-
-
(10,729
)
(10,729
)
Long-term incentive compensation
-
-
(4,552
)
(4,552
)
Acquisition expense
-
(3,377
)
(120
)
(3,497
)
Amortization of acquired and cancelled franchise agreements
-
(1,103
)
-
(1,103
)
Non cash ASC 842 (expenses)/benefit
(656
)
(55
)
163
(548
)
Other operating expenses: Litigation settlement
(6,000
)
-
-
(6,000
)
Impairment loss on transportation equipment
-
-
(2,266
)
(2,266
)
Pretax impact on earnings
(9,719
)
(4,535
)
(17,504
)
(31,758
)
Excess tax benefits on stock compensation
-
-
18,737
18,737
Income tax benefit on the above
2,474
1,202
3,085
6,761
After-tax impact on earnings
$
(7,245
)
$
(3,333
)
$
4,318
$
(6,260
)
(b)
Included in the results of operations for 2018 are the following
significant credits/(charges) which may not be indicative of
ongoing operations (in thousands):
Three Months Ended September
30, 2018
VITAS
Roto-Rooter
Corporate
Consolidated
Service revenues and sales: Medicare cap sequestration adjustment
$
(503
)
$
-
$
-
$
(503
)
Selling, general and administrative expenses: Stock option expense
-
-
(2,055
)
(2,055
)
Long-term incentive compensation
-
-
(1,234
)
(1,234
)
Acquisition expense
(177
)
(177
)
-
(354
)
Pretax impact on earnings
(680
)
(177
)
(3,289
)
(4,146
)
Excess tax benefits on stock compensation
-
-
3,118
3,118
Income tax benefit on the above
172
47
602
821
After-tax impact on earnings
$
(508
)
$
(130
)
$
431
$
(207
)
Nine Months Ended September
30, 2018
VITAS
Roto-Rooter
Corporate
Consolidated
Service revenues and sales: Medicare cap sequestration adjustment
$
(1,040
)
$
-
$
-
$
(1,040
)
Selling, general and administrative expenses: Stock option expense
-
-
(9,360
)
(9,360
)
Long-term incentive compensation
-
-
(4,376
)
(4,376
)
Acquisition expense
(177
)
(177
)
-
(354
)
Other operating expenses: Litigation settlement
204
-
-
204
Pretax impact on earnings
(1,013
)
(177
)
(13,736
)
(14,926
)
Excess tax benefits on stock compensation
-
-
18,618
18,618
Income tax benefit on the above
256
47
2,756
3,059
After-tax impact on earnings
$
(757
)
$
(130
)
$
7,638
$
6,751
(c) VITAS has 12 large (greater than 450 ADC), 19 medium (greater
than 200 but less than 450 ADC) and 17 small (less than 200 ADC)
hospice programs. Of VITAS' 30 Medicare provider numbers, 24
provider numbers have a Medicare cap cushion of 5% or greater
during the current cap year, three provider numbers have a cap
cushion between 0% and 5%, and three provider numbers have a
Medicare cap liability.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20191029005950/en/
David P. Williams (513) 762-6901
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