CHE Chemed Corporation

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 fourth quarter ended December 31, 2019, versus the comparable prior-year period, as follows:

Consolidated operating results:

• Revenue increased 14.2% to $522 million
• GAAP Diluted Earnings-per-Share (EPS) of $3.96, an increase of 21.5%
• Adjusted Diluted EPS of $4.22, an increase of 26.0%

VITAS segment operating results:

• Net Patient Revenue of $340 million, an increase of 10.7%
• Average Daily Census (ADC) of 19,258, an increase of 6.1%
• Admissions of 17,479, an increase of 5.4%
• Net Income, excluding certain discrete items, of $50.1 million, an increase of 24.5%
• Adjusted EBITDA, excluding Medicare Cap, of $70.5 million, an increase of 27.0%

Roto-Rooter segment operating results:

• Revenue of $182 million, an increase of 21.2%
• Net Income, excluding certain discrete items, of $30.5 million, an increase of 16.3%
• Adjusted EBITDA of $43.7 million, an increase of 20.9%
• Adjusted EBITDA margin of 24.0%, equal to the prior year

VITAS

VITAS net revenue was $340 million in the fourth quarter of 2019, which is an increase of 10.7%, when compared to the prior-year period. This revenue increase is comprised primarily of a geographically weighted average Medicare reimbursement rate increase of approximately 5.5%, a 6.1% increase in days-of-care and an increase in the Medicare Cap billing limitation that decreased revenue 0.3%. 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 0.7%, when compared to the prior-year period.

In the fourth quarter of 2019, VITAS accrued $4.5 million in Medicare Cap billing limitations. This compares to the prior-year Medicare Cap billing limitation of $3.5 million.

VITAS currently has 30 Medicare provider numbers. On a 12-month trailing basis, 23 of these provider numbers have a Medicare Cap cushion of 10% or greater, three provider numbers have a cap cushion between 0% and 5%, and four provider numbers have a Medicare Cap billing limitation.

Average revenue per patient per day in the fourth quarter of 2019 was $198.48, which is 5.0% above the prior-year period. Reimbursement for routine home care and high acuity care averaged $164.62 and $996.82, respectively. During the quarter, high acuity days-of-care were 4.1% of total days of care, 11-basis points less than the prior-year quarter. This 11-basis point mix shift in high acuity days-of-care reduced the increase in average revenue per patient per day from 5.5% to 5.0% in the quarter.

The fourth quarter 2019 gross margin, excluding Medicare Cap, was 26.3%, which is a 204-basis point margin improvement when compared to the fourth quarter of 2018.

Selling, general and administrative expense was $21.2 million in the fourth quarter of 2019, which is an increase of 3.9% compared to the prior-year quarter. Adjusted EBITDA, excluding Medicare Cap, totaled $70.5 million in the quarter, an increase of 27.0%. Adjusted EBITDA margin, excluding Medicare Cap, was 20.5% in the quarter, which is a 259-basis point margin improvement when compared to the prior-year period.

Roto-Rooter

Roto-Rooter generated quarterly revenue of $182 million for the fourth quarter of 2019, an increase of $31.9 million, or 21.2%, over the prior-year quarter. On a unit for unit basis, which excludes the Oakland and HSW acquisitions completed in July and September 2019, respectively, Roto-Rooter generated quarterly revenue of $162 million for the fourth quarter of 2019, an increase of 7.9%, over the prior-year quarter.

Including acquisitions, total commercial revenue increased 26.4%. This aggregate commercial revenue growth consisted of drain cleaning revenue expanding 34.9%, commercial plumbing and excavation increasing 25.2%, and commercial water restoration declining 8.8%.

Excluding acquisitions, commercial drain cleaning revenue increased 7.1%, commercial plumbing and excavation declined 0.1%, and commercial water restoration declined 17.4%. Commercial water restoration represents approximately 10% of total water restoration service revenue. Overall, commercial revenue excluding acquisitions increased 1.2%.

Including acquisitions, total residential revenue increased 19.4%. This aggregate residential revenue growth consisted of residential drain cleaning increasing 25.5%, plumbing and excavation expanding 18.1%, and residential water restoration increasing 16.3%.

Excluding acquisitions, residential drain cleaning increased 10.1%, plumbing and excavation increased 7.4%, and residential water restoration increased 14.6%. Overall, residential sales excluding acquisitions increased 9.5%.

Roto-Rooter’s gross margin in the quarter was 48.6%, a 15-basis point decline when compared to the fourth quarter of 2018. Adjusted EBITDA in the fourth quarter of 2019 totaled $43.7 million, an increase of 20.9%. The Adjusted EBITDA margin in the quarter was 24.0% which is equivalent to the prior year.

Chemed Consolidated

As of December 31, 2019, Chemed had total cash and cash equivalents of $6.2 million and long-term debt of $90 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 December 31, 2019, the Company had approximately $322 million of undrawn borrowing capacity under this credit agreement.

During the quarter, the Company repurchased 50,000 shares of Chemed stock for $20.7 million which equates to a cost per share of $414.11. As of December 31, 2019, there was approximately $104 million of remaining share repurchase authorization under this plan.

Chemed restarted its share repurchase program in 2007. Since that time Chemed has repurchased over 14.1 million shares, aggregating approximately $1.2 billion at an average share cost of $85.93. Including dividends over this period, Chemed has returned approximately $1.4 billion to shareholders.

Guidance for 2020

Revenue growth for VITAS in 2020, prior to Medicare Cap, is estimated to be in the range of 8.5% to 9.5%. Admissions and Average Daily Census in 2020 are estimated to expand approximately 3.5% to 4.5%. High acuity days-of-care are estimated at 4.1% of total 2020 days-of-care. Full-year Adjusted EBITDA margin, prior to Medicare Cap, is estimated to be 18.7% to 19.0%. We are currently estimating $18 million for Medicare Cap billing limitations for calendar year 2020.

Roto-Rooter is forecasted to achieve full-year 2020 revenue growth of 13.0% to 14.0%. This revenue estimate is based upon unit for unit revenue growth of 4.0% to 5.0% in core plumbing and drain cleaning services, continued but slowing revenue growth from water restoration services, combined with 12-months of revenue in the Oakland and HSW acquisitions. Roto-Rooter’s Adjusted EBITDA margin for 2020 is estimated to be in the range of 23.0% to 23.5%.

Based upon the above, full-year 2020 adjusted earnings per diluted share, excluding non-cash expense for stock options, tax benefits from stock options, costs related to litigation, intangible amortization of reacquired franchise rights and other discrete items, is estimated to be in the range of $16.20 to $16.50. This 2020 guidance assumes an effective corporate tax rate of 25.2%. Chemed’s 2019 reported adjusted earnings per diluted share was $13.96.

Conference Call

Chemed will host a conference call and webcast at 10 a.m., ET, on Wednesday, February 19, 2020, 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 4939797. 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 4939797. 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 December 31,

 

For the Years Ended December 31,

2019

 

2018

 

2019

 

2018

Service revenues and sales

522,324

 

$

457,507

 

$

1,938,555

 

$

1,782,648

 

Cost of services provided and goods sold

347,355

 

312,054

 

1,321,126

 

1,227,644

 

Selling, general and administrative expenses (aa)

83,291

 

66,735

 

305,712

 

271,209

 

Depreciation

11,126

 

9,822

 

40,870

 

38,464

 

Amortization

2,969

 

303

 

4,335

 

399

 

Other operating expenses

131

 

1,212

 

9,132

 

1,300

 

Total costs and expenses

444,872

 

390,126

 

1,681,175

 

1,539,016

 

Income from operations

77,452

 

67,381

 

257,380

 

243,632

 

Interest expense

(1,133

)

(1,177

)

(4,535

)

(4,990

)

Other income--net (bb)

3,276

 

(3,398

)

8,764

 

958

 

Income before income taxes

79,595

 

62,806

 

261,609

 

239,600

 

Income taxes

(14,015

)

(8,478

)

(41,686

)

(34,056

)

Net income

$

 

65,580

 

$

54,328

 

$

219,923

 

$

205,544

 

Earnings Per Share Net income

$

 

4.09

 

$

3.39

 

$

13.77

 

$

12.80

 

Average number of shares outstanding

16,022

 

16,026

 

15,969

 

16,059

 

Diluted Earnings Per Share Net income

$

 

3.96

 

$

3.26

 

$

13.31

 

$

12.23

 

Average number of shares outstanding

16,565

 

16,670

 

16,527

 

16,803

 

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

Three Months Ended December 31,

 

For the Years Ended December 31,

2019

 

2018

 

2019

 

2018

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

$

 

77,053

 

$

68,034

 

$

289,828

 

$

264,304

 

Market value adjustments related to deferred compensation trusts

3,160

 

(3,541

)

8,254

 

287

 

Long-term incentive compensation

3,078

 

2,242

 

7,630

 

6,618

 

Total SG&A expenses

$

 

83,291

 

$

66,735

 

$

305,712

 

$

271,209

 

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

Three Months Ended December 31,

 

For the Years Ended December 31,

2019

 

2018

 

2019

 

2018

Market value adjustments related to deferred compensation trusts

$

 

3,160

 

$

(3,541

)

$

8,254

 

$

287

 

Interest income

126

 

143

 

513

 

671

 

Other

(10

)

-

 

(3

)

-

 

Total other income--net

$

 

3,276

 

$

(3,398

)

$

8,764

 

$

958

 

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

December 31,

2019

 

2018

Assets Current assets Cash and cash equivalents

$

 

6,158

 

$

 

4,831

 

Accounts receivable less allowances

143,827

 

119,504

 

Inventories

7,462

 

5,705

 

Prepaid income taxes

10,074

 

10,646

 

Prepaid expenses

23,150

 

19,154

 

Total current assets

190,671

 

159,840

 

Investments of deferred compensation plans held in trust

77,446

 

65,624

 

Properties and equipment, at cost less accumulated depreciation

175,763

 

162,033

 

Lease right of use asset

111,652

 

-

 

Identifiable intangible assets less accumulated amortization

126,370

 

68,253

 

Goodwill

577,367

 

510,570

 

Other assets

9,048

 

9,209

 

Total Assets

$

 

1,268,317

 

$

 

975,529

 

Liabilities Current liabilities Accounts payable

$

 

51,101

 

$

 

50,150

 

Accrued insurance

50,328

 

46,095

 

Accrued compensation

70,814

 

63,329

 

Accrued legal

6,941

 

1,857

 

Short-term lease liability

39,280

 

-

 

Other current liabilities

43,756

 

30,239

 

Total current liabilities

262,220

 

191,670

 

Deferred income taxes

18,504

 

21,598

 

Long-term debt

90,000

 

89,200

 

Deferred compensation liabilities

76,446

 

64,616

 

Long-term lease liability

86,656

 

-

 

Other liabilities

7,883

 

17,111

 

Total Liabilities

541,709

 

384,195

 

Stockholders' Equity Capital stock

35,811

 

35,311

 

Paid-in capital

860,671

 

774,358

 

Retained earnings

1,425,752

 

1,225,617

 

Treasury stock, at cost

(1,597,940

)

(1,446,296

)

Deferred compensation payable in Company stock

2,314

 

2,344

 

Total Stockholders' Equity

726,608

 

591,334

 

Total Liabilities and Stockholders' Equity

$

 

1,268,317

 

$

 

975,529

 

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

For the Years Ended December 31,

2019

 

2018

Cash Flows from Operating Activities Net income

$

219,923

 

$

205,544

 

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

45,205

 

38,863

 

Stock option expense

14,831

 

12,611

 

Litigation settlement

6,000

 

-

 

Noncash long-term incentive compensation

5,740

 

5,405

 

(Benefit)/provision for deferred income taxes

(2,770

)

5,187

 

Loss on sale of transportation equipment

2,266

 

-

 

Noncash directors' compensation

767

 

766

 

Amortization of debt issuance costs

306

 

441

 

Amortization of restricted stock awards

-

 

446

 

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

(19,247

)

(5,570

)

Increase in inventories

(1,757

)

(351

)

Increase in prepaid expenses

(3,491

)

(2,665

)

Increase in accounts payable and other current liabilities

28,417

 

8,935

 

Change in current income taxes

161

 

18,898

 

Net change in lease assets and liabilities

3,108

 

-

 

Increase in other assets

(11,963

)

(5,544

)

Increase in other liabilities

12,354

 

3,451

 

Other sources

1,399

 

721

 

Net cash provided by operating activities

301,249

 

287,138

 

Cash Flows from Investing Activities Business combinations, net of cash acquired

(138,010

)

(53,177

)

Capital expenditures

(53,022

)

(52,872

)

Other sources

272

 

824

 

Net cash used by investing activities

(190,760

)

(105,225

)

Cash Flows from Financing Activities Proceeds from revolving line of credit

482,900

 

469,550

 

Payments on revolving line of credit

(482,100

)

(406,550

)

Purchases of treasury stock

(92,631

)

(158,884

)

Proceeds from exercise of stock options

34,380

 

32,412

 

Capital stock surrendered to pay taxes on stock-based compensation

(28,474

)

(27,548

)

Dividends paid

(19,788

)

(18,662

)

Change in cash overdrafts payable

(3,927

)

(1,531

)

Payments on other long-term debt

-

 

(75,000

)

Debt issuance costs

-

 

(1,052

)

Other sources/(uses)

478

 

(938

)

Net cash used by financing activities

(109,162

)

(188,203

)

Increase/(decrease) in Cash and Cash Equivalents

1,327

 

(6,290

)

Cash and cash equivalents at beginning of year

4,831

 

11,121

 

Cash and cash equivalents at end of year

$

6,158

 

$

4,831

 

  CHEMED CORPORATION AND SUBSIDIARY COMPANIES CONSOLIDATING STATEMENTS OF INCOME FOR THE THREE MONTHS ENDED DECEMBER 31, 2019 AND 2018 (in thousands)(unaudited)

 

 

 

 

 

 

Chemed

VITAS

 

Roto-Rooter

 

Corporate

 

Consolidated

2019

Service revenues and sales (a)

$

339,905

 

$

182,419

 

$

-

 

$

522,324

 

Cost of services provided and goods sold

253,659

 

93,696

 

-

 

347,355

 

Selling, general and administrative expenses (a)

21,162

 

46,198

 

15,931

 

83,291

 

Depreciation

5,341

 

5,747

 

38

 

11,126

 

Amortization

18

 

2,951

 

-

 

2,969

 

Other operating expense

25

 

106

 

-

 

131

 

Total costs and expenses

280,205

 

148,698

 

15,969

 

444,872

 

Income/(loss) from operations

59,700

 

33,721

 

(15,969

)

77,452

 

Interest expense

(19

)

(72

)

(1,042

)

(1,133

)

Intercompany interest income/(expense)

4,740

 

1,543

 

(6,283

)

-

 

Other income—net

76

 

40

 

3,160

 

3,276

 

Income/(loss) before income taxes

64,497

 

35,232

 

(20,134

)

79,595

 

Income taxes (a)

(15,075

)

(7,823

)

8,883

 

(14,015

)

Net income/(loss)

$

49,422

 

$

27,409

 

$

(11,251

)

$

65,580

 

 

2018

Service revenues and sales (b)

$

306,985

 

$

150,522

 

$

-

 

$

457,507

 

Cost of services provided and goods sold

234,971

 

77,083

 

-

 

312,054

 

Selling, general and administrative expenses (b)

20,363

 

37,563

 

8,809

 

66,735

 

Depreciation

4,935

 

4,847

 

40

 

9,822

 

Amortization

12

 

291

 

-

 

303

 

Other operating expense

1,114

 

98

 

-

 

1,212

 

Total costs and expenses

261,395

 

119,882

 

8,849

 

390,126

 

Income/(loss) from operations

45,590

 

30,640

 

(8,849

)

67,381

 

Interest expense

(22

)

(64

)

(1,091

)

(1,177

)

Intercompany interest income/(expense)

3,308

 

1,678

 

(4,986

)

-

 

Other income—net

110

 

32

 

(3,540

)

(3,398

)

Income/(loss) before income taxes

48,986

 

32,286

 

(18,466

)

62,806

 

Income taxes (b)

(9,860

)

(6,375

)

7,757

 

(8,478

)

Net income/(loss)

$

39,126

 

$

25,911

 

$

(10,709

)

$

54,328

 

  The "Footnotes to Financial Statements" are integral parts of this financial information. CHEMED CORPORATION AND SUBSIDIARY COMPANIES CONSOLIDATING STATEMENTS OF INCOME FOR THE YEARS ENDED DECEMBER 31, 2019 AND 2018 (in thousands)(unaudited)  

 

 

 

 

 

 

Chemed

VITAS

 

Roto-Rooter

 

Corporate

 

Consolidated

2019

Service revenues and sales (a)

$

1,281,184

 

$

657,371

 

$

-

 

$

1,938,555

 

Cost of services provided and goods sold

982,056

 

339,070

 

-

 

1,321,126

 

Selling, general and administrative expenses (a)

86,345

 

166,934

 

52,433

 

305,712

 

Depreciation

19,984

 

20,730

 

156

 

40,870

 

Amortization

71

 

4,264

 

-

 

4,335

 

Other operating expense (a)

6,546

 

320

 

2,266

 

9,132

 

Total costs and expenses

1,095,002

 

531,318

 

54,855

 

1,681,175

 

Income/(loss) from operations

186,182

 

126,053

 

(54,855

)

257,380

 

Interest expense

(169

)

(345

)

(4,021

)

(4,535

)

Intercompany interest income/(expense)

18,135

 

8,152

 

(26,287

)

-

 

Other income—net

385

 

126

 

8,253

 

8,764

 

Income/(loss) before income taxes

204,533

 

133,986

 

(76,910

)

261,609

 

Income taxes (a)

(48,711

)

(30,276

)

37,301

 

(41,686

)

Net income/(loss)

$

155,822

 

$

103,710

 

$

(39,609

)

$

219,923

 

 

2018

Service revenues and sales (b)

$

1,197,562

 

$

585,086

 

$

-

 

$

1,782,648

 

Cost of services provided and goods sold

928,306

 

299,338

 

-

 

1,227,644

 

Selling, general and administrative expenses (b)

81,969

 

145,683

 

43,557

 

271,209

 

Depreciation

19,688

 

18,629

 

147

 

38,464

 

Amortization

12

 

387

 

-

 

399

 

Other operating expense (b)

1,130

 

170

 

-

 

1,300

 

Total costs and expenses

1,031,105

 

464,207

 

43,704

 

1,539,016

 

Income/(loss) from operations

166,457

 

120,879

 

(43,704

)

243,632

 

Interest expense

(175

)

(319

)

(4,496

)

(4,990

)

Intercompany interest income/(expense)

12,832

 

6,908

 

(19,740

)

-

 

Other income—net

579

 

93

 

286

 

958

 

Income/(loss) before income taxes

179,693

 

127,561

 

(67,654

)

239,600

 

Income taxes (b)

(40,847

)

(28,850

)

35,641

 

(34,056

)

Net income/(loss)

$

138,846

 

$

98,711

 

$

(32,013

)

$

205,544

 

  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 DECEMBER 31, 2019 AND 2018 (in thousands)(unaudited)  

 

 

 

 

 

 

Chemed

VITAS

 

Roto-Rooter

 

Corporate

 

Consolidated

2019

Net income/(loss)

$

 

49,422

 

$

27,409

 

$

(11,251

)

$

65,580

 

Add/(deduct): Interest expense

19

 

72

 

1,042

 

1,133

 

Income taxes

15,075

 

7,823

 

(8,883

)

14,015

 

Depreciation

5,341

 

5,747

 

38

 

11,126

 

Amortization

18

 

2,951

 

-

 

2,969

 

EBITDA

69,875

 

44,002

 

(19,054

)

94,823

 

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

(4,740

)

(1,543

)

6,283

 

-

 

Interest income

(84

)

(42

)

-

 

(126

)

Stock option expense

-

 

-

 

4,102

 

4,102

 

Long-term incentive compensation

-

 

-

 

3,079

 

3,079

 

Acquisition expense

-

 

1,286

 

50

 

1,336

 

Medicare cap sequestration adjustment

919

 

-

 

-

 

919

 

Adjusted EBITDA

$

 

65,970

 

$

43,703

 

$

(5,540

)

$

104,133

 

 

2018

Net income/(loss)

$

 

39,126

 

$

25,911

 

$

(10,709

)

$

54,328

 

Add/(deduct): Interest expense

22

 

64

 

1,091

 

1,177

 

Income taxes

9,860

 

6,375

 

(7,757

)

8,478

 

Depreciation

4,935

 

4,847

 

40

 

9,822

 

Amortization

12

 

291

 

-

 

303

 

EBITDA

53,955

 

37,488

 

(17,335

)

74,108

 

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

(3,308

)

(1,678

)

4,986

 

-

 

Interest income

(111

)

(32

)

-

 

(143

)

Stock option expense

-

 

-

 

3,251

 

3,251

 

Long-term incentive compensation

-

 

-

 

2,242

 

2,242

 

Litigation settlement costs

1,000

 

-

 

-

 

1,000

 

Medicare cap sequestration adjustment

456

 

-

 

-

 

456

 

Acquisition expense

32

 

371

 

-

 

403

 

Adjusted EBITDA

$

 

52,024

 

$

36,149

 

$

(6,856

)

$

81,317

 

The "Footnotes to Financial Statements" are integral parts of this financial information. CHEMED CORPORATION AND SUBSIDIARY COMPANIES CONSOLIDATING SUMMARIES OF EBITDA FOR THE YEARS ENDED DECEMBER 31, 2019 AND 2018 (in thousands)(unaudited)

 

 

 

 

 

 

 

 

Chemed

VITAS

 

Roto-Rooter

 

Corporate

 

Consolidated

2019

Net income/(loss)

$

 

155,822

 

$

103,710

 

$

(39,609

)

$

219,923

 

Add/(deduct): Interest expense

169

 

345

 

4,021

 

4,535

 

Income taxes

48,711

 

30,276

 

(37,301

)

41,686

 

Depreciation

19,984

 

20,730

 

156

 

40,870

 

Amortization

71

 

4,264

 

-

 

4,335

 

EBITDA

224,757

 

159,325

 

(72,733

)

311,349

 

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

(18,135

)

(8,152

)

26,287

 

-

 

Interest income

(380

)

(133

)

-

 

(513

)

Stock option expense

-

 

-

 

14,831

 

14,831

 

Long-term incentive compensation

-

 

-

 

7,630

 

7,630

 

Litigation settlement

6,000

 

-

 

-

 

6,000

 

Acquisition Expense

-

 

4,664

 

170

 

4,834

 

Medicare cap sequestration adjustment

3,982

 

-

 

-

 

3,982

 

Loss on sale of transportation equipment

-

 

-

 

2,266

 

2,266

 

Non cash ASC 842 expenses/(benefit)

656

 

55

 

(163

)

548

 

Adjusted EBITDA

$

 

216,880

 

$

155,759

 

$

(21,712

)

$

350,927

 

2018

Net income/(loss)

$

 

138,846

 

$

98,711

 

$

(32,013

)

$

205,544

 

Add/(deduct): Interest expense

175

 

319

 

4,496

 

4,990

 

Income taxes

40,847

 

28,850

 

(35,641

)

34,056

 

Depreciation

19,688

 

18,629

 

147

 

38,464

 

Amortization

12

 

387

 

-

 

399

 

EBITDA

199,568

 

146,896

 

(63,011

)

283,453

 

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

(12,832

)

(6,908

)

19,740

 

-

 

Interest (income)/expense

(580

)

(92

)

1

 

(671

)

Stock option expense

-

 

-

 

12,611

 

12,611

 

Long-term incentive compensation

-

 

-

 

6,618

 

6,618

 

Medicare cap sequestration adjustment

1,496

 

-

 

-

 

1,496

 

Litigation settlement costs

796

 

-

 

-

 

796

 

Acquisition expense

209

 

548

 

-

 

757

 

Amortization of stock awards

107

 

100

 

239

 

446

 

Adjusted EBITDA

$

 

188,764

 

$

140,544

 

$

(23,802

)

$

305,506

 

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 December 31,

 

For the Years Ended December 31,

2019

 

2018

 

2019

 

2018

Net income as reported

$

65,580

 

$

54,328

 

$

219,923

 

$

205,544

 

Add/(deduct) pre-tax cost of: Stock option expense

4,102

 

3,251

 

14,831

 

12,611

 

Long-term incentive compensation

3,079

 

2,242

 

7,630

 

6,618

 

Litigation settlement

-

 

1,000

 

6,000

 

796

 

Acquisition expense

1,336

 

403

 

4,834

 

757

 

Medicare cap sequestration adjustments

919

 

456

 

3,982

 

1,496

 

  Amortization of acquired and cancelled franchise agreements

2,861

 

-

 

3,964

 

-

 

Loss on sale of transportation equipment

-

 

-

 

2,266

 

-

 

Non cash ASC 842 expenses

-

 

-

 

548

 

-

 

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

(2,567

)

(1,527

)

(9,328

)

(4,586

)

Excess tax benefits on stock compensation

(5,440

)

(4,244

)

(24,177

)

(22,862

)

Adjusted net income

$

69,870

 

$

55,909

 

$

230,473

 

$

200,374

 

  Diluted Earnings Per Share As Reported Net income

$

3.96

 

$

3.26

 

$

13.31

 

$

12.23

 

Average number of shares outstanding

16,565

 

16,670

 

16,527

 

16,803

 

  Adjusted Diluted Earnings Per Share Adjusted net income

$

4.22

 

$

3.35

 

$

13.95

 

$

11.93

 

Average number of shares outstanding

16,565

 

16,670

 

16,527

 

16,803

 

  (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 December 31,

 

For the Years Ended December 31,

OPERATING STATISTICS

2019

 

2018

 

2019

 

2018

Net revenue ($000) (c) Homecare

$

275,976

 

$

261,972

 

$

1,076,025

 

$

1,010,518

 

Inpatient

30,857

 

20,874

 

99,920

 

82,677

 

Continuous care

40,997

 

30,834

 

133,473

 

122,498

 

Other

3,825

 

1,986

 

10,433

 

7,831

 

Subtotal

$

351,655

 

$

315,666

 

$

1,319,851

 

$

1,223,524

 

Room and board, net

(3,260

)

(2,191

)

(11,359

)

(10,054

)

Contractual allowances

(3,990

)

(3,036

)

(14,893

)

(11,785

)

Medicare cap allowance

(4,500

)

(3,454

)

(12,415

)

(4,123

)

Net Revenue

$

339,905

 

$

306,985

 

$

1,281,184

 

$

1,197,562

 

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

78.5

%

83.0

%

81.5

%

82.6

%

Inpatient

8.8

 

6.6

 

7.6

 

6.8

 

Continuous care

11.7

 

9.8

 

10.1

 

10.0

 

Other

1.0

 

0.6

 

0.8

 

0.6

 

Subtotal

100.0

 

100.0

 

100.0

 

100.0

 

Room and board, net

(0.9

)

(0.7

)

(0.9

)

(0.8

)

Contractual allowances

(1.1

)

(1.0

)

(1.1

)

(1.1

)

Medicare cap allowance

(1.3

)

(1.1

)

(0.9

)

(0.2

)

Net Revenue

96.7

%

97.2

%

97.1

%

97.9

%

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

14,972

 

14,062

 

14,626

 

13,652

 

Nursing home

3,461

 

3,297

 

3,396

 

3,298

 

Routine homecare

18,433

 

17,359

 

18,022

 

16,950

 

Inpatient

375

 

326

 

366

 

327

 

Continuous care

450

 

464

 

458

 

465

 

Total

19,258

 

18,149

 

18,846

 

17,742

 

  Total Admissions

17,479

 

16,579

 

69,859

 

68,119

 

Total Discharges

17,575

 

16,623

 

68,857

 

66,868

 

Average length of stay (days)

95.2

 

92.6

 

92.6

 

89.9

 

Median length of stay (days)

16.0

 

17.0

 

16.0

 

17.0

 

ADC by major diagnosis Cerebro

35.8

%

35.8

%

36.0

%

36.3

%

Neurological

21.1

 

18.6

 

20.6

 

19.0

 

Cancer

12.8

 

13.7

 

12.9

 

13.7

 

Cardio

16.2

 

16.3

 

16.5

 

16.4

 

Respiratory

8.1

 

8.0

 

8.1

 

8.2

 

Other

6.0

 

7.6

 

5.9

 

6.4

 

Total

100.0

%

100.0

%

100.0

%

100.0

%

Admissions by major diagnosis Cerebro

21.9

%

20.9

%

21.1

%

21.8

%

Neurological

12.9

 

11.5

 

12.6

 

11.4

 

Cancer

29.2

 

31.1

 

29.2

 

30.2

 

Cardio

14.7

 

14.6

 

15.5

 

15.4

 

Respiratory

10.5

 

10.1

 

11.0

 

10.9

 

Other

10.8

 

11.8

 

10.6

 

10.3

 

Total

100.0

%

100.0

%

100.0

%

100.0

%

  Estimated uncollectible accounts as a percent of revenues

1.2

%

1.0

%

1.2

%

1.0

%

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

35.4

 

35.0

 

n.a.

n.a.

Days of revenue outstanding- including unapplied Medicare payments

27.2

 

24.6

 

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 MONTHS AND YEARS ENDED DECEMBER 31, 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 December 31, 2019

VITAS

 

Roto-Rooter

 

Corporate

 

Consolidated

Service revenues and sales: Medicare cap sequestration adjustment

$

(919

)

$

-

 

$

-

 

$

(919

)

Selling, general and administrative expenses: Stock option expense

-

 

-

 

(4,102

)

(4,102

)

Long-term incentive compensation

-

 

-

 

(3,079

)

(3,079

)

Amortization of acquired and cancelled franchise agreements

-

 

(2,861

)

-

 

(2,861

)

Acquisition expense

-

 

(1,286

)

(50

)

(1,336

)

Pretax impact on earnings

(919

)

(4,147

)

(7,231

)

(12,297

)

Excess tax benefits on stock compensation

-

 

-

 

5,440

 

5,440

 

Income tax benefit on the above

233

 

1,101

 

1,233

 

2,567

 

After-tax impact on earnings

$

(686

)

$

(3,046

)

$

(558

)

$

(4,290

)

 

For the Year Ended December 31, 2019

VITAS

 

Roto-Rooter

 

Corporate

 

Consolidated

Service revenues and sales: Medicare cap sequestration adjustment

$

(3,982

)

$

-

 

$

-

 

$

(3,982

)

Selling, general and administrative expenses: Stock option expense

-

 

-

 

(14,831

)

(14,831

)

Long-term incentive compensation

-

 

-

 

(7,630

)

(7,630

)

Acquisition expense

-

 

(4,664

)

(170

)

(4,834

)

Amortization of acquired and cancelled franchise agreements

-

 

(3,964

)

-

 

(3,964

)

Non cash ASC 842 (expenses)/benefit

(656

)

(55

)

163

 

(548

)

Other operating expenses: Litigation settlement

(6,000

)

-

 

-

 

(6,000

)

Loss on sale of transportation equipment

-

 

-

 

(2,266

)

(2,266

)

Pretax impact on earnings

(10,638

)

(8,683

)

(24,734

)

(44,055

)

Excess tax benefits on stock compensation

-

 

-

 

24,177

 

24,177

 

Income tax benefit on the above

2,708

 

2,301

 

4,319

 

9,328

 

After-tax impact on earnings

$

(7,930

)

$

(6,382

)

$

3,762

 

$

(10,550

)

(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 December 31, 2018

VITAS

 

Roto-Rooter

 

Corporate

 

Consolidated

Service revenues and sales: Medicare cap sequestration adjustment

$

(456

)

$

-

 

$

-

 

$

(456

)

Selling, general and administrative expenses: Stock option expense

-

 

-

 

(3,251

)

(3,251

)

Long-term incentive compensation

-

 

-

 

(2,242

)

(2,242

)

Acquisition expense

(32

)

(371

)

-

 

(403

)

Other operating expenses: Litigation settlement

(1,000

)

-

 

-

 

(1,000

)

Pretax impact on earnings

(1,488

)

(371

)

(5,493

)

(7,352

)

Excess tax benefits on stock compensation

-

 

-

 

4,244

 

4,244

 

Income tax benefit on the above

381

 

98

 

1,048

 

1,527

 

After-tax impact on earnings

$

(1,107

)

$

(273

)

$

(201

)

$

(1,581

)

 

For the Year Ended December 31, 2018

VITAS

 

Roto-Rooter

 

Corporate

 

Consolidated

Service revenues and sales: Medicare cap sequestration adjustment

$

(1,496

)

$

-

 

$

-

 

$

(1,496

)

Selling, general and administrative expenses: Stock option expense

-

 

-

 

(12,611

)

(12,611

)

Long-term incentive compensation

-

 

-

 

(6,618

)

(6,618

)

Acquisition expense

(209

)

(548

)

-

 

(757

)

Other operating expenses: Litigation settlement

(796

)

-

 

-

 

(796

)

Pretax impact on earnings

(2,501

)

(548

)

(19,229

)

(22,278

)

Excess tax benefits on stock compensation

-

 

-

 

22,862

 

22,862

 

Income tax benefit on the above

637

 

145

 

3,804

 

4,586

 

After-tax impact on earnings

$

(1,864

)

$

(403

)

$

7,437

 

$

5,170

 

  (c) VITAS has 12 large (greater than 450 ADC), 20 medium (greater than 200 but less than 450 ADC) and 16 small (less than 200 ADC) hospice programs. Of Vitas' 30 Medicare provider numbers, on a 12-month trailing basis, 23 provider numbers have a Medicare cap cushion of 10% or greater, three provider numbers have 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/20200218006005/en/

David P. Williams (513) 762-6901