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 first quarter ended March 31, 2020, versus the comparable prior-year period, as follows:

Consolidated operating results:

• Revenue increased 11.6% to $516 million
• GAAP Diluted Earnings-per-Share (EPS) of $3.38, an increase of 25.2%
• Adjusted Diluted EPS of $3.68, an increase of 26.0%

VITAS segment operating results:

• Net Patient Revenue of $338 million, an increase of 10.1%
• Average Daily Census (ADC) of 19,215, an increase of 4.7%
• Admissions of 18,603, an increase of 4.8%
• Net Income, excluding certain discrete items, of $42.5 million, an increase of 22.7%
• Adjusted EBITDA, excluding Medicare Cap, of $60.2 million, an increase of 21.2%
• Adjusted EBITDA margin, excluding Medicare Cap, of 17.7%, an increase of 167-basis points

Roto-Rooter segment operating results:

• Revenue of $178 million, an increase of 14.6%
• Net Income, excluding certain discrete items, of $26.7 million, an increase of 14.3%
• Adjusted EBITDA of $40.0 million, an increase of 19.5%
• Adjusted EBITDA margin of 22.5%, an increase of 92-basis points

VITAS

VITAS net revenue was $338 million in the first quarter of 2020, which is an increase of 10.1%, when compared to the prior-year period. This revenue increase is comprised primarily of a 5.9% increase in days-of-care, a geographically weighted average Medicare reimbursement rate increase of approximately 5.0%, and acuity mix shift which then reduced the Medicare rate increase approximately 90-basis points. The combination of a decline in Medicare Cap, increase in Medicaid net room and board pass through and other contra revenue activity had minimal impact on overall revenue growth in the quarter.

In the first quarter of 2020, VITAS accrued $2.5 million in Medicare Cap billing limitations. This compares to the prior-year Medicare Cap billing limitation of $3.4 million.

VITAS currently has 30 Medicare provider numbers. During the first six months of the fiscal 2020 Medicare Cap year, 23 of these 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 an estimated 2020 Medicare Cap billing limitation.

Average revenue per patient per day in the first quarter of 2020 was $198.99, which, including acuity mix shift, is 4.1% above the prior-year period. Reimbursement for routine home care and high acuity care averaged $164.14 and $990.72, respectively. During the quarter, high acuity days-of-care were 4.2% of total days of care, 21-basis points less than the prior-year quarter. This 21-basis point mix shift in high acuity days-of-care reduced the increase in average revenue per patient per day from 5.0% to 4.1% in the quarter.

The first quarter 2020 gross margin, excluding Medicare Cap, was 23.8%, which is a 108-basis point margin improvement when compared to the first quarter of 2019.

Selling, general and administrative expense was $22.3 million in the first quarter of 2020, which is an increase of 3.4% compared to the prior-year quarter. Adjusted EBITDA, excluding Medicare Cap, totaled $60.2 million in the quarter, an increase of 21.2%. Adjusted EBITDA margin, excluding Medicare Cap, was 17.7% in the quarter, which is a 167-basis point improvement when compared to the prior-year period.

Roto-Rooter

Roto-Rooter generated quarterly revenue of $178 million for the first quarter of 2020, an increase of $22.6 million, or 14.6%, 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 $158 million for the first quarter of 2020, an increase of 1.6%, over the prior-year quarter.

Including acquisitions, total commercial revenue increased 20.1%. This aggregate commercial revenue growth consisted of drain cleaning revenue expanding 25.0%, commercial plumbing and excavation increasing 20.1%, and commercial water restoration declining 4.4%.

Excluding acquisitions, commercial drain cleaning revenue were equal to the prior year, commercial plumbing and excavation declined 4.3%, and commercial water restoration declined 15.5%. Commercial water restoration represents approximately 10% of total water restoration service revenue. Overall, commercial revenue excluding acquisitions decreased 3.5%.

Including acquisitions, total residential revenue increased 11.7%. This aggregate residential revenue growth consisted of residential drain cleaning increasing 18.5%, plumbing and excavation expanding 14.4%, and residential water restoration increasing 1.0%.

Excluding acquisitions, residential drain cleaning increased 4.1%, plumbing and excavation increased 4.4%, and residential water restoration decreased 1.9%. Overall, residential sales excluding acquisitions increased 2.4%.

Roto-Rooter’s gross margin in the quarter was 48.1%, a 105-basis point increase when compared to the first quarter of 2019. Adjusted EBITDA in the first quarter of 2020 totaled $40.0 million, an increase of 19.5%. The Adjusted EBITDA margin in the quarter was 22.5% which is a 92-basis point increase when compared to the prior year.

Chemed Consolidated

As of March 31, 2020, Chemed had total cash and cash equivalents of $29.0 million and long-term debt of $160 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 March 31, 2020, the Company had approximately $252 million of undrawn borrowing capacity under this credit agreement.

During the quarter, the Company repurchased 225,000 shares of Chemed stock for $100.2 million which equates to a cost per share of $445.49. On March 13, 2020, Chemed’s Board of Directors authorized an additional $250 million for stock repurchase under Chemed’s existing share repurchase program. As of March 31, 2020, there was approximately $254 million of remaining share repurchase authorization under this plan.

Chemed restarted its share repurchase program in 2007. Since that time Chemed has repurchased approximately 14.4 million shares, aggregating approximately $1.3 billion at an average share cost of $91.56. Including dividends over this period, Chemed has returned approximately $1.5 billion to shareholders.

Guidance for 2020

Management anticipates providing updated 2020 earnings guidance in July 2020 as part of the June 30, 2020, earnings press release.

Conference Call

Chemed will host a conference call and webcast at 10 a.m., ET, on Wednesday, April 29, 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 2398574. 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 2398574. 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 March 31,

 

2020

 

 

 

2019

 

Service revenues and sales

$

515,798

 

 

$

462,034

 

Cost of services provided and goods sold

 

351,745

 

 

 

321,951

 

Selling, general and administrative expenses (aa)

 

70,583

 

 

 

74,029

 

Depreciation

 

11,388

 

 

 

9,710

 

Amortization

 

2,477

 

 

 

519

 

Other operating expenses

 

242

 

 

 

6,353

 

Total costs and expenses

 

436,435

 

 

 

412,562

 

Income from operations

 

79,363

 

 

 

49,472

 

Interest expense

 

(975

)

 

 

(1,124

)

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

 

(9,466

)

 

 

2,439

 

Income before income taxes

 

68,922

 

 

 

50,787

 

Income taxes

 

(13,031

)

 

 

(6,120

)

Net income

$

55,891

 

 

$

44,667

 

Earnings Per Share

 

 

 

Net income

$

3.50

 

 

$

2.80

 

Average number of shares outstanding

 

15,991

 

 

 

15,954

 

Diluted Earnings Per Share

 

 

 

Net income

$

3.38

 

 

$

2.70

 

Average number of shares outstanding

 

16,516

 

 

 

16,525

 

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

 

Three Months Ended March 31,

 

2020

 

 

 

2019

 

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

$

78,334

 

 

$

70,203

 

Market value adjustments related to deferred compensation trusts

 

(9,572

)

 

 

2,338

 

Long-term incentive compensation

 

1,821

 

 

 

1,488

 

Total SG&A expenses

$

70,583

 

 

$

74,029

 

 

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

Three Months Ended March 31,

 

2020

 

 

 

2019

 

Market value adjustments related to deferred compensation trusts

$

(9,572

)

$

2,338

 

Interest income

 

106

 

 

101

 

Total other (expense)/income--net

$

(9,466

)

$

2,439

 

 

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

March 31,

2020

2019

Assets Current assets Cash and cash equivalents

$

28,951

 

$

8,768

 

Accounts receivable less allowances

 

134,695

 

 

119,575

 

Inventories

 

7,313

 

 

6,315

 

Prepaid income taxes

 

5,917

 

 

5,349

 

Prepaid expenses

 

21,939

 

 

19,148

 

Total current assets

 

198,815

 

 

159,155

 

Investments of deferred compensation plans held in trust

 

72,296

 

 

70,632

 

Properties and equipment, at cost less accumulated depreciation

 

183,729

 

 

164,629

 

Lease right of use asset

 

112,302

 

 

87,811

 

Identifiable intangible assets less accumulated amortization

 

124,219

 

 

67,868

 

Goodwill

 

577,236

 

 

510,598

 

Other assets

 

8,962

 

 

9,138

 

Total Assets

$

1,277,559

 

$

1,069,831

 

Liabilities

 

 

Current liabilities

 

 

Accounts payable

$

37,838

 

$

39,737

 

Income taxes

 

6,133

 

 

3,922

 

Accrued insurance

 

56,480

 

 

48,477

 

Accrued compensation

 

63,622

 

 

52,526

 

Accrued legal

 

7,114

 

 

8,163

 

Short-term lease liability

 

36,252

 

 

30,699

 

Other current liabilities

 

39,298

 

 

33,576

 

Total current liabilities

 

246,737

 

 

217,100

 

Deferred income taxes

 

20,681

 

 

18,108

 

Long-term debt

 

160,000

 

 

100,000

 

Deferred compensation liabilities

 

70,363

 

 

70,934

 

Long-term lease liability

 

88,278

 

 

67,960

 

Other liabilities

 

7,899

 

 

7,719

 

Total Liabilities

 

593,958

 

 

481,821

 

Stockholders' Equity

 

 

Capital stock

 

35,912

 

 

35,521

 

Paid-in capital

 

878,550

 

 

803,701

 

Retained earnings

 

1,476,151

 

 

1,265,485

 

Treasury stock, at cost

 

(1,709,390

)

 

(1,519,077

)

Deferred compensation payable in Company stock

 

2,378

 

 

2,380

 

Total Stockholders' Equity

 

683,601

 

 

588,010

 

Total Liabilities and Stockholders' Equity

$

1,277,559

 

$

1,069,831

 

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

For the Three Months Ended March 31,

2020

2019

Cash Flows from Operating Activities Net income

$

55,891

 

$

44,667

 

Adjustments to reconcile net income to net cash provided by operating activities:

 

 

Depreciation and amortization

 

13,865

 

 

10,229

 

Stock option expense

 

5,045

 

 

4,089

 

Provision/(benefit) for deferred income taxes

 

2,290

 

 

(3,489

)

Noncash long-term incentive compensation

 

1,598

 

 

1,119

 

Provision for bad debts

 

594

 

 

-

 

Amortization of debt issuance costs

 

76

 

 

76

 

Litigation settlement

 

-

 

 

6,000

 

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

 

 

Decrease/(increase) in accounts receivable

 

6,269

 

 

(81

)

Decrease/(increase) in inventories

 

149

 

 

(610

)

Decrease in prepaid expenses

 

1,211

 

 

6

 

(Decrease)/increase in accounts payable and other current liabilities

 

(7,037

)

 

348

Change in current income taxes

 

10,159

 

 

9,219

 

Net change in lease assets and liabilities

 

(153

)

 

(328

)

Decrease/(increase) in other assets

 

5,048

 

 

(5,006

)

(Decrease)/increase in other liabilities

 

(6,067

)

 

6,459

 

Other sources

 

388

 

 

887

 

Net cash provided by operating activities

 

89,326

 

 

73,585

 

Cash Flows from Investing Activities

 

 

Capital expenditures

 

(19,897

)

 

(13,866

)

Business combinations

 

(1,452

)

 

-

 

Other uses

 

(144

)

 

(68

)

Net cash used by investing activities

 

(21,493

)

 

(13,934

)

Cash Flows from Financing Activities

 

 

Proceeds from revolving line of credit

 

174,100

 

 

125,100

 

Payments on revolving line of credit

 

(104,100

)

 

(114,300

)

Purchases of treasury stock

 

(100,235

)

 

(49,250

)

Change in cash overdrafts payable

 

(9,849

)

 

(13,303

)

Proceeds from exercise of stock options

 

9,241

 

 

11,827

 

Capital stock surrendered to pay taxes on stock-based compensation

 

(7,951

)

 

(11,170

)

Dividends paid

 

(5,130

)

 

(4,799

)

Other (uses)/sources

 

(1,116

)

 

181

 

Net cash used by financing activities

 

(45,040

)

 

(55,714

)

Increase in Cash and Cash Equivalents

 

22,793

 

 

3,937

 

Cash and cash equivalents at beginning of year

 

6,158

 

 

4,831

 

Cash and cash equivalents at end of year

$

28,951

 

$

8,768

 

    CHEMED CORPORATION AND SUBSIDIARY COMPANIES CONSOLIDATING STATEMENTS OF INCOME FOR THE THREE MONTHS ENDED MARCH 31, 2020 AND 2019 (in thousands)(unaudited) Chemed VITAS Roto-Rooter Corporate Consolidated 2020 (a) Service revenues and sales

$

337,916

 

$

177,882

 

$

-

 

$

515,798

 

Cost of services provided and goods sold

 

259,429

 

 

92,316

 

 

-

 

 

351,745

 

Selling, general and administrative expenses

 

22,269

 

 

46,282

 

 

2,032

 

 

70,583

 

Depreciation

 

5,474

 

 

5,878

 

 

36

 

 

11,388

 

Amortization

 

18

 

 

2,459

 

 

-

 

 

2,477

 

Other operating expense

 

114

 

 

128

 

 

-

 

 

242

 

Total costs and expenses

 

287,304

 

 

147,063

 

 

2,068

 

 

436,435

 

Income/(loss) from operations

 

50,612

 

 

30,819

 

 

(2,068

)

 

79,363

 

Interest expense

 

(45

)

 

(102

)

 

(828

)

 

(975

)

Intercompany interest income/(expense)

 

4,386

 

 

1,349

 

 

(5,735

)

 

-

 

Other (expense)/income—net

 

65

 

 

40

 

 

(9,571

)

 

(9,466

)

Income/(loss) before income taxes

 

55,018

 

 

32,106

 

 

(18,202

)

 

68,922

 

Income taxes

 

(13,739

)

 

(7,784

)

 

8,492

 

 

(13,031

)

Net income/(loss)

$

41,279

 

$

24,322

 

$

(9,710

)

$

55,891

 

 

 

 

 

2019 (b)

 

 

 

 

Service revenues and sales

$

306,781

 

$

155,253

 

$

-

 

$

462,034

 

Cost of services provided and goods sold

 

239,743

 

 

82,208

 

 

-

 

 

321,951

 

Selling, general and administrative expenses

 

21,536

 

 

39,601

 

 

12,892

 

 

74,029

 

Depreciation

 

4,708

 

 

4,963

 

 

39

 

 

9,710

 

Amortization

 

18

 

 

501

 

 

-

 

 

519

 

Other operating expense

 

6,354

 

 

(1

)

 

-

 

 

6,353

 

Total costs and expenses

 

272,359

 

 

127,272

 

 

12,931

 

 

412,562

 

Income/(loss) from operations

 

34,422

 

 

27,981

 

 

(12,931

)

 

49,472

 

Interest expense

 

(47

)

 

(95

)

 

(982

)

 

(1,124

)

Intercompany interest income/(expense)

 

4,394

 

 

2,195

 

 

(6,589

)

 

-

 

Other income—net

 

88

 

 

14

 

 

2,337

 

 

2,439

 

Income/(loss) before income taxes

 

38,857

 

 

30,095

 

 

(18,165

)

 

50,787

 

Income taxes

 

(9,569

)

 

(7,109

)

 

10,558

 

 

(6,120

)

Net income/(loss)

$

29,288

 

$

22,986

 

$

(7,607

)

$

44,667

 

    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 MARCH 31, 2020 AND 2019 (in thousands)(unaudited)   Chemed VITAS Roto-Rooter Corporate Consolidated

2020

Net income/(loss)

$

41,279

 

$

24,322

 

$

(9,710

)

$

55,891

 

Add/(deduct):

 

 

 

 

Interest expense

 

45

 

 

102

 

 

828

 

 

975

 

Income taxes

 

13,739

 

 

7,784

 

 

(8,492

)

 

13,031

 

Depreciation

 

5,474

 

 

5,878

 

 

36

 

 

11,388

 

Amortization

 

18

 

 

2,459

 

 

-

 

 

2,477

 

EBITDA

 

60,555

 

 

40,545

 

 

(17,338

)

 

83,762

 

Add/(deduct):

 

 

 

 

Intercompany interest expense/(income)

 

(4,386

)

 

(1,349

)

 

5,735

 

 

-

 

Interest income

 

(68

)

 

(40

)

 

-

 

 

(108

)

Stock option expense

 

-

 

 

-

 

 

5,045

 

 

5,045

 

Direct costs related to COVID-19

 

973

 

 

861

 

 

-

 

 

1,834

 

Long-term incentive compensation

 

-

 

 

-

 

 

1,821

 

 

1,821

 

Medicare cap sequestration adjustment

 

675

 

 

-

 

 

-

 

 

675

 

Adjusted EBITDA

$

57,749

 

$

40,017

 

$

(4,737

)

$

93,029

 

 

 

 

 

2019

 

 

 

 

Net income/(loss)

$

29,288

 

$

22,986

 

$

(7,607

)

$

44,667

 

Add/(deduct):

 

 

 

 

Interest expense

 

47

 

 

95

 

 

982

 

 

1,124

 

Income taxes

 

9,569

 

 

7,109

 

 

(10,558

)

 

6,120

 

Depreciation

 

4,708

 

 

4,963

 

 

39

 

 

9,710

 

Amortization

 

18

 

 

501

 

 

-

 

 

519

 

EBITDA

 

43,630

 

 

35,654

 

 

(17,144

)

 

62,140

 

Add/(deduct):

 

 

 

 

Intercompany interest expense/(income)

 

(4,394

)

 

(2,195

)

 

6,589

 

 

-

 

Interest income

 

(88

)

 

(14

)

 

-

 

 

(102

)

Litigation settlement

 

6,000

 

 

-

 

 

-

 

 

6,000

 

Non cash ASC 842 expenses/(benefit)

 

656

 

 

55

 

 

(163

)

 

548

 

Medicare cap sequestration adjustment

 

515

 

 

-

 

 

-

 

 

515

 

Acquisition expense

 

-

 

 

-

 

 

120

 

 

120

 

Stock option expense

 

-

 

 

-

 

 

4,089

 

 

4,089

 

Long-term incentive compensation

 

-

 

 

-

 

 

1,488

 

 

1,488

 

Adjusted EBITDA

$

46,319

 

$

33,500

 

$

(5,021

)

$

74,798

 

  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 March 31,

2020

2019

Net income as reported

$

55,891

 

$

44,667

 

Add/(deduct) pre-tax cost of:

 

 

Stock option expense

 

5,045

 

 

4,089

 

Amortization of reacquired franchise agreements

 

2,352

 

 

441

 

Direct costs related to COVID-19

 

1,834

 

 

-

 

Long-term incentive compensation

 

1,821

 

 

1,488

 

Medicare cap sequestration adjustments

 

675

 

 

515

 

Litigation settlement

 

-

 

 

6,000

 

Acquisition expense

 

-

 

 

120

 

Non cash ASC 842 expenses

 

-

 

 

548

 

Add/(deduct) tax impacts:

 

 

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

 

(2,350

)

 

(2,961

)

Excess tax benefits on stock compensation

 

(4,553

)

 

(6,732

)

Adjusted net income

$

60,715

 

$

48,175

 

 

 

Diluted Earnings Per Share As Reported

 

 

Net income

$

3.38

 

$

2.70

 

Average number of shares outstanding

 

16,516

 

 

16,525

 

 

 

Adjusted Diluted Earnings Per Share

 

 

Adjusted net income

$

3.68

 

$

2.92

 

Average number of shares outstanding

 

16,516

 

 

16,525

 

  (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 March 31,

OPERATING STATISTICS

2020

2019

Net revenue ($000) (c) Homecare

$

271,762

 

$

258,847

 

Inpatient

 

32,482

 

 

22,570

 

Continuous care

 

40,555

 

 

32,244

 

Other

 

3,147

 

 

2,010

 

Subtotal

$

347,946

 

$

315,671

 

Room and board, net

 

(3,381

)

 

(2,542

)

Contractual allowances

 

(4,149

)

 

(2,948

)

Medicare cap allowance

 

(2,500

)

 

(3,400

)

Net Revenue

$

337,916

 

$

306,781

 

Net revenue as a percent of total before Medicare cap allowance

 

 

Homecare

 

78.1

%

 

82.0

%

Inpatient

 

9.3

 

 

7.1

 

Continuous care

 

11.7

 

 

10.2

 

Other

 

0.9

 

 

0.7

 

Subtotal

 

100.0

 

 

100.0

 

Room and board, net

 

(1.0

)

 

(0.9

)

Contractual allowances

 

(1.2

)

 

(1.0

)

Medicare cap allowance

 

(0.7

)

 

(0.9

)

Net Revenue

 

97.1

%

 

97.2

%

Days of care

 

 

Homecare

 

1,364,746

 

 

1,281,899

 

Nursing home

 

303,374

 

 

289,769

 

Respite

 

6,692

 

 

6,301

 

Subtotal routine homecare and respite

 

1,674,812

 

 

1,577,969

 

Inpatient

 

32,348

 

 

29,150

 

Continuous care

 

41,373

 

 

43,923

 

Total

 

1,748,533

 

 

1,651,042

 

Number of days in relevant time period

 

91

 

 

90

 

Average daily census ("ADC") (days)

 

 

Homecare

 

14,997

 

 

14,243

 

Nursing home

 

3,334

 

 

3,220

 

Respite

 

74

 

 

70

 

Subtotal routine homecare and respite

 

18,405

 

 

17,533

 

Inpatient

 

355

 

 

324

 

Continuous care

 

455

 

 

488

 

Total

 

19,215

 

 

18,345

 

 

 

Total Admissions

 

18,603

 

 

17,758

 

Total Discharges

 

18,196

 

 

17,339

 

Average length of stay (days)

 

90.7

 

 

91.3

 

Median length of stay (days)

 

14.0

 

 

15.0

 

ADC by major diagnosis

 

 

Cerebro

 

35.9

%

 

35.6

%

Neurological

 

21.4

 

 

19.9

 

Cancer

 

12.7

 

 

13.1

 

Cardio

 

15.9

 

 

16.9

 

Respiratory

 

8.3

 

 

8.2

 

Other

 

5.8

 

 

6.3

 

Total

 

100.0

%

 

100.0

%

Admissions by major diagnosis

 

 

Cerebro

 

21.1

%

 

20.7

%

Neurological

 

12.5

 

 

12.8

 

Cancer

 

28.3

 

 

28.0

 

Cardio

 

15.1

 

 

16.3

 

Respiratory

 

12.2

 

 

12.0

 

Other

 

10.8

 

 

10.2

 

Total

 

100.0

%

 

100.0

%

 

 

Estimated uncollectible accounts as a percent of revenues

 

1.2

%

 

1.0

%

Accounts receivable --

 

 

Days of revenue outstanding- excluding unapplied Medicare payments

 

33.9

 

 

34.9

 

Days of revenue outstanding- including unapplied Medicare payments

 

26.1

 

 

23.3

 

  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 ENDED MARCH 31, 2020 AND 2019 (unaudited)   (a) Included in the results of operations for 2020 are the following significant credits/(charges) which may not be indicative of ongoing operations (in thousands): Three Months Ended March 31, 2020 VITAS Roto-Rooter Corporate Consolidated   Stock option expense

$

-

 

$

-

 

$

(5,045

)

$

(5,045

)

Amortization of reacquired franchise agreements

 

-

 

 

(2,352

)

 

-

 

 

(2,352

)

Direct costs related to COVID-19

 

(973

)

 

(861

)

 

-

 

 

(1,834

)

Long-term incentive compensation

 

-

 

 

-

 

 

(1,821

)

 

(1,821

)

Medicare cap sequestration adjustment

 

(675

)

 

-

 

 

-

 

 

(675

)

Pretax impact on earnings

 

(1,648

)

 

(3,213

)

 

(6,866

)

 

(11,727

)

Excess tax benefits on stock compensation

 

-

 

 

-

 

 

4,553

 

 

4,553

 

Income tax benefit on the above

 

419

 

 

851

 

 

1,080

 

 

2,350

 

After-tax impact on earnings

$

(1,229

)

$

(2,362

)

$

(1,233

)

$

(4,824

)

    (b) 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 March 31, 2019 VITAS Roto-Rooter Corporate Consolidated   Litigation settlement

$

(6,000

)

$

-

$

-

$

(6,000

)

Stock option expense

-

 

-

 

(4,089

)

(4,089

)

Long-term incentive compensation

 

-

 

 

-

 

 

(1,488

)

 

(1,488

)

Non cash ASC 842 (expenses)/benefit

 

(656

)

 

(55

)

 

163

 

 

(548

)

Medicare cap sequestration adjustment

 

(515

)

 

-

 

 

-

 

 

(515

)

Amortization of reacquired franchise agreements

 

-

 

 

(441

)

 

-

 

 

(441

)

Acquisition expense

 

-

 

 

-

 

 

(120

)

 

(120

)

Pretax impact on earnings

 

(7,171

)

 

(496

)

 

(5,534

)

 

(13,201

)

Excess tax benefits on stock compensation

 

-

 

 

-

 

 

6,732

 

 

6,732

 

Income tax benefit on the above

 

1,819

 

 

132

 

 

1,010

 

 

2,961

 

After-tax impact on earnings

$

(5,352

)

$

(364

)

$

2,208

 

$

(3,508

)

    (c) VITAS has 11 large (greater than 450 ADC), 22 medium (greater than 200 but less than 450 ADC) and 15 small (less than 200 ADC) hospice programs. Of Vitas' 30 Medicare provider numbers, for the first six months of the current cap year, 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 liability.  

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20200428005895/en/

David P. Williams (513) 762-6901