Chemed Corporation (Chemed) (NYSE: CHE), which operates VITAS
Healthcare Corporation (VITAS), one of the nation’s largest
providers of end-of-life care, and Roto-Rooter, the nation’s
largest commercial and residential plumbing and drain cleaning
services provider, reported financial results for its second
quarter ended June 30, 2023, versus the comparable prior-year
period, as follows:
Consolidated operating results:
- Revenue increased 4.2% to $554 million
- GAAP Diluted Earnings-per-Share (EPS) of $3.51
- Adjusted Diluted EPS of $4.71, a decrease of 2.7%
VITAS segment operating results:
- Net Patient Revenue of $321 million, an increase of 7.8%
- Average Daily Census (ADC) of 18,392, an increase of 6.2%
- Admissions of 15,611, an increase of 5.9%
- Net Income, excluding certain discrete items, of $35.7 million,
an increase of 1.3%
- Adjusted EBITDA, excluding Medicare Cap, of $50.7 million, an
increase of 1.4%
- Adjusted EBITDA margin, excluding Medicare Cap, of 15.7%, a
decline of 101-basis points
Roto-Rooter segment operating results:
- Revenue of $233 million, a decline of 0.2%
- Net Income, excluding certain discrete items, of $46.1 million,
an decrease of 5.6%
- Adjusted EBITDA of $65.9 million, a decline of 4.5%
- Adjusted EBITDA margin of 28.3%, a decline of 128-basis
points
VITAS
VITAS net revenue was $321 million in the second quarter of
2023, which is an increase of 7.8% when compared to the prior year
period. This revenue increase is comprised primarily of a 6.2%
increase in days-of-care and a geographically weighted average
Medicare reimbursement rate increase of approximately 2.7%,
partially offset by 100-basis points as a result of CMS
reimplementing sequestration that was suspended at the start of the
pandemic. Acuity mix shift had minimal impact in the quarter when
compared to the prior-year revenue and level-of-care mix. The
combination of Medicare Cap and other contra revenue changes
negatively impacted revenue growth by 10-basis points.
In the second quarter of 2023, VITAS accrued $2.75 million in
Medicare Cap billing limitations. This compares to a $2.0 million
Medicare Cap billing limitation in the second quarter of 2022.
Of VITAS’ 30 Medicare provider numbers, 24 provider numbers have
a trailing nine-month Medicare Cap cushion of 10% or greater, three
provider numbers have a cushion between 5% and 10%, and three
provider numbers have a trailing nine-month billing limitation
liability.
Average revenue per patient per day in the second quarter of
2023 was $197.02 which is 178-basis points above the prior-year
period. Reimbursement for routine home care and high acuity care
averaged $172.91 and $1,031.58, respectively. During the quarter,
high acuity days-of-care were 2.8% of total days of care,
essentially equal to the prior-year quarter.
The second quarter 2023 gross margin, excluding Medicare Cap and
the hiring and retention bonus program, was 22.7%. This is a
143-basis point increase when compared to the second quarter of
2022. The margin increase is net of sequestration which reduced
reimbursement 100-basis points when compared to the prior year.
During the quarter, VITAS increased the licensed healthcare staff
by 309 professionals. This results in total licensed staff
increasing by 784 professionals since the inception of the
retention program on July 1, 2022. The increase of 309 net
professionals hired during the second quarter of 2023, basically
underutilized capacity, is estimated to have negatively impacted
margins in the quarter by approximately 80-basis points.
Selling, general and administrative expenses were $22.7 million
in the second quarter of 2023 and compares to $23.1 million
incurred in the prior-year quarter. Adjusted EBITDA, excluding
Medicare Cap, totaled $50.7 million in the quarter, an increase of
1.4%. Adjusted EBITDA margin in the quarter, excluding Medicare
Cap, was 15.7%, which is 101-basis points below the prior-year
period. This Adjusted EBITDA margin was negatively impacted by
100-basis points for the reimplementation of sequestration and
approximately 80-basis points due to the addition of 309 licensed
professionals during the second quarter of 2023.
Roto-Rooter
Roto-Rooter generated quarterly revenue of $233 million in the
second quarter of 2023, a decline of 0.2%, when compared to the
prior-year quarter.
Roto-Rooter branch commercial revenue in the quarter totaled
$55.5 million, an increase of 1.3%, over the prior year. This
aggregate commercial revenue growth consisted of drain cleaning
revenue declining 3.0%, plumbing increasing 5.4%, excavation
increasing 2.9%, and water restoration increasing 9.7%.
Roto-Rooter branch residential revenue in the quarter totaled
$158 million, a decline of 1.1%, over the prior-year period. This
aggregate residential revenue growth consisted of drain cleaning
decreasing 8.6%, plumbing declining 2.8%, excavation expanding
3.8%, and water restoration increasing 2.5%.
Roto-Rooter’s gross margin in the quarter was 52.3%, an 89-basis
point decline when compared to the second quarter of 2022. Adjusted
EBITDA in the second quarter of 2023 totaled $65.9 million, a
decrease of 4.5%. The Adjusted EBITDA margin in the quarter was
28.3%, which is 128-basis points below the prior year period.
Chemed
Consolidated
As of June 30, 2023, Chemed had total cash and cash equivalents
of $160 million and no current or long-term debt.
In June 2022, Chemed entered into a five-year $550 million
Amended and Restated Credit Agreement (Credit Agreement). This
Credit Agreement consisted of a $100 million amortizable term loan
and a $450 million revolving credit facility. The interest rate on
this Credit Agreement has a floating rate that is currently SOFR
plus 100-basis points. During the quarter, the Company paid off the
remaining portion of the term loan. The Company has approximately
$405 million of undrawn borrowing capacity under the Credit
Agreement.
During the quarter, the Company repurchased 25,000 shares of
Chemed stock for $13.4 million which equates to a cost per share of
$536.98. As of June 30, 2023, there was approximately $74 million
of remaining share repurchase authorization under its plan.
Guidance for
2023
VITAS 2023 revenue, prior to Medicare Cap, is estimated to
increase 8.5% to 9.5% when compared to 2022. Forecasted revenue
growth is negatively impacted by 75-basis points as a result of the
sequestration relief in the first half of 2022 compared to a full
year of sequestration in 2023. ADC is estimated to increase 6.5% to
7.5%. Full year adjusted EBITDA margin, prior to Medicare Cap and
accrued retention bonuses related to the hiring initiatives, is
estimated to be 16.5% to 17.0%. We are currently estimating $11
million for Medicare Cap billing limitations in calendar year
2023.
Roto-Rooter is forecasted to achieve full-year 2023 revenue
growth of 1.0% to 2.0%. Roto-Rooter’s adjusted EBITDA margin for
2023 is expected to be 28.0% to 28.5%.
Based upon the above, full-year 2023 earnings per diluted share,
excluding: non-cash expense for stock options, tax benefits from
stock option exercises, costs related to litigation, retention
program for licensed healthcare employees, and other discrete
items, is estimated to be in the range of $19.90 to $20.10. Current
2023 guidance assumes an effective corporate tax rate on adjusted
earnings of 24.7% and a diluted share count of 15.2 million shares.
Chemed’s 2022 reported adjusted earnings per diluted share was
$19.75.
Conference
Call
Chemed will host a conference call and webcast at 10 a.m., ET,
on Thursday July 27, 2023, to discuss the company's quarterly
results and to provide an update on its business. Participants may
access a live webcast of the conference call through the investor
relations section of Chemed’s website, Investor Relations Home |
Chemed Corporation or the hosting website
https://edge.media-server.com/mmc/p/ntafx2iw.
Participants may also register via teleconference at:
https://register.vevent.com/register/BI8193ef2f50f34636bd3182c2d88daff9.
Once registration is completed, participants will be provided with
a dial-in number containing a personalized conference code to
access the call. All participants are instructed to dial-in 15
minutes prior to the start time.
A taped replay of the conference call will be available
beginning approximately two hours after the call's conclusion. You
may access the replay via webcast through the investor relations
section of Chemed’s website.
Chemed Corporation operates in the healthcare field through its
VITAS Healthcare Corporation subsidiary. VITAS provides daily
hospice services to approximately 18,400 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 June 30, Six Months
Ended June 30,
2023
2022
2023
2022
Service revenues and sales
$
553,816
$
531,288
1,113,973
$
1,061,837
Cost of services provided and goods sold
374,193
336,821
744,898
673,373
Selling, general and administrative expenses (aa)
94,987
87,853
195,082
177,807
Depreciation
12,634
12,714
24,920
24,852
Amortization
2,514
2,520
5,027
5,038
Other operating (income)/expense
(18
)
(558
)
1,721
(545
)
Total costs and expenses
484,310
439,350
971,648
880,525
Income from operations
69,506
91,938
142,325
181,312
Interest expense
(771
)
(902
)
(2,322
)
(1,712
)
Other income/(expense)--net (bb)
1,609
(4,930
)
1,506
(8,792
)
Income before income taxes
70,344
86,106
141,509
170,808
Income taxes
(16,967
)
(19,650
)
(34,011
)
(40,183
)
Net income
$
53,377
$
66,456
$
107,498
$
130,625
Earnings Per Share Net income
$
3.54
$
4.45
$
7.16
$
8.73
Average number of shares outstanding
15,058
14,932
15,013
14,959
Diluted Earnings Per Share Net income
$
3.51
$
4.40
$
7.09
$
8.62
Average number of shares outstanding
15,219
15,111
15,167
15,152
(aa) Selling, general and administrative ("SG&A")
expenses comprise (in thousands): Three Months Ended June
30, Six Months Ended June 30,
2023
2022
2023
2022
SG&A expenses before long-term incentive compensation and the
impact of market value adjustments related to deferred compensation
plans
$
91,733
$
91,422
$
189,634
$
184,000
Long-term incentive compensation
1,750
1,517
4,264
2,827
Market value adjustments related to deferred compensation trusts
1,504
(5,086
)
1,184
(9,020
)
Total SG&A expenses
$
94,987
$
87,853
$
195,082
$
177,807
(bb) Other income/(expense)--net comprises (in thousands):
Three Months Ended June 30, Six Months Ended June 30,
2023
2022
2023
2022
Market value adjustments related to deferred compensation trusts
$
1,504
$
(5,086
)
$
1,184
$
(9,020
)
Interest income
113
154
263
226
Other
(8
)
2
59
2
Total other income/(expense)--net
$
1,609
$
(4,930
)
$
1,506
$
(8,792
)
CHEMED CORPORATION AND SUBSIDIARY COMPANIES
CONSOLIDATED BALANCE SHEETS (in thousands, except per share
data)(unaudited) June 30,
2023
2022
Assets Current assets Cash and cash equivalents
$
159,924
$
9,640
Accounts receivable less allowances
120,314
136,555
Inventories
11,684
10,696
Prepaid income taxes
16,666
17,256
Prepaid expenses
28,572
28,999
Total current assets
337,160
203,146
Investments of deferred compensation plans held in trust
99,522
96,061
Properties and equipment, at cost less accumulated depreciation
208,101
192,005
Lease right of use asset
127,215
128,290
Identifiable intangible assets less accumulated amortization
94,932
103,837
Goodwill
581,542
579,653
Other assets
56,708
9,972
Total Assets
$
1,505,180
$
1,312,964
Liabilities Current liabilities Accounts payable
$
41,058
$
73,975
Current portion of long-term debt
-
5,000
Accrued insurance
57,461
54,828
Accrued compensation
74,384
68,290
Accrued legal
6,096
808
Short-term lease liability
38,779
39,062
Other current liabilities
84,709
43,105
Total current liabilities
302,487
285,068
Deferred income taxes
36,681
21,054
Long-term debt
-
111,800
Deferred compensation liabilities
98,941
95,624
Long-term lease liability
102,112
103,389
Other liabilities
12,880
11,069
Total Liabilities
553,101
628,004
Stockholders' Equity Capital stock
36,996
36,651
Paid-in capital
1,240,415
1,089,129
Retained earnings
2,294,004
2,090,214
Treasury stock, at cost
(2,621,657
)
(2,533,306
)
Deferred compensation payable in Company stock
2,321
2,272
Total Stockholders' Equity
952,079
684,960
Total Liabilities and Stockholders' Equity
$
1,505,180
$
1,312,964
CHEMED CORPORATION AND
SUBSIDIARY COMPANIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (in
thousands)(unaudited) For the Six Months Ended June 30,
2023
2022
Cash Flows from Operating Activities Net income
$
107,498
$
130,625
Adjustments to reconcile net income to net cash provided by
operating activities: Depreciation and amortization
29,947
29,890
Stock option expense
16,882
14,667
Noncash long-term incentive compensation
3,493
2,497
Benefit for deferred income taxes
(1,932
)
(2,129
)
Noncash directors' compensation
1,444
1,170
Amortization of debt issuance costs
420
153
Changes in operating assets and liabilities, excluding amounts
acquired in business combinations: Decrease in accounts receivable
20,100
887
Increase in inventories
(1,412
)
(587
)
Decrease in prepaid expenses
1,719
3,689
Increase/(decrease) in accounts payable and other current
liabilities
8,561
(24,001
)
Change in current income taxes
1,865
27
Net change in lease assets and liabilities
(1,046
)
705
(Increase)/decrease in other assets
(3,810
)
2,071
Increase/(decrease) in other liabilities
7,344
(1,491
)
Other sources/(uses)
1,736
(503
)
Net cash provided by operating activities
192,809
157,670
Cash Flows from Investing Activities Capital expenditures
(33,420
)
(25,610
)
Proceeds from sale of fixed assets
360
1,757
Business combinations, net of cash acquired
(305
)
(1,650
)
Other uses
(169
)
(132
)
Net cash used by investing activities
(33,534
)
(25,635
)
Cash Flows from Financing Activities Payments on other
long-term debt
(97,500
)
-
Proceeds from other long-term debt
-
100,000
Proceeds from exercise of stock options
53,675
12,869
Purchases of treasury stock
(13,425
)
(77,214
)
Dividends paid
(11,412
)
(10,722
)
Capital stock surrendered to pay taxes on stock-based compensation
(5,313
)
(12,115
)
Debt issuance costs
-
(1,510
)
Payments on revolving line of credit
-
(263,300
)
Proceeds from revolving line of credit
-
95,100
Change in cash overdrafts payable
-
1,716
Other sources/(uses)
498
(114
)
Net cash used by financing activities
(73,477
)
(155,290
)
Increase/(decrease) in Cash and Cash Equivalents
85,798
(23,255
)
Cash and cash equivalents at beginning of year
74,126
32,895
Cash and cash equivalents at end of year
$
159,924
$
9,640
CHEMED CORPORATION AND SUBSIDIARY COMPANIES
CONSOLIDATING STATEMENTS OF INCOME FOR THE THREE MONTHS
ENDED JUNE 30, 2023 AND 2022 (in thousands)(unaudited)
Chemed VITAS Roto-Rooter Corporate
Consolidated 2023 (a) Service revenues and sales $
320,861
$
232,955
$
-
$
553,816
Cost of services provided and goods sold
263,085
111,108
-
374,193
Selling, general and administrative expenses
22,656
56,012
16,319
94,987
Depreciation
4,940
7,681
13
12,634
Amortization
26
2,488
-
2,514
Other operating expense/(income)
26
(44
)
-
(18
)
Total costs and expenses
290,733
177,245
16,332
484,310
Income/(loss) from operations
30,128
55,710
(16,332
)
69,506
Interest expense
(51
)
(124
)
(596
)
(771
)
Intercompany interest income/(expense)
4,810
2,869
(7,679
)
-
Other income—net
70
35
1,504
1,609
Income/(loss) before income taxes
34,957
58,490
(23,103
)
70,344
Income taxes
(8,829
)
(14,116
)
5,978
(16,967
)
Net income/(loss) $
26,128
$
44,374
$
(17,125
)
$
53,377
2022 (b) Service revenues and sales $
297,781
$
233,507
$
-
$
531,288
Cost of services provided and goods sold
227,533
109,288
-
336,821
Selling, general and administrative expenses
23,148
54,982
9,723
87,853
Depreciation
6,062
6,634
18
12,714
Amortization
26
2,494
-
2,520
Other operating expense/(income)
(807
)
249
-
(558
)
Total costs and expenses
255,962
173,647
9,741
439,350
Income/(loss) from operations
41,819
59,860
(9,741
)
91,938
Interest expense
(44
)
(115
)
(743
)
(902
)
Intercompany interest income/(expense)
4,683
2,205
(6,888
)
-
Other income/(expense)—net
119
37
(5,086
)
(4,930
)
Income/(loss) before income taxes
46,577
61,987
(22,458
)
86,106
Income taxes
(11,365
)
(14,915
)
6,630
(19,650
)
Net income/(loss) $
35,212
$
47,072
$
(15,828
)
$
66,456
The "Footnotes to Financial Statements" are integral
parts of this financial information.
CHEMED
CORPORATION AND SUBSIDIARY COMPANIES CONSOLIDATING
STATEMENTS OF INCOME FOR THE SIX MONTHS ENDED JUNE 30, 2023
AND 2022 (in thousands)(unaudited)
Chemed
VITAS Roto-Rooter Corporate
Consolidated 2023 (a) Service revenues and sales $
631,339
$
482,634
$
-
$
1,113,973
Cost of services provided and goods sold
516,739
228,159
-
744,898
Selling, general and administrative expenses
45,992
116,825
32,265
195,082
Depreciation
9,898
14,994
28
24,920
Amortization
52
4,975
-
5,027
Other operating expense
38
1,683
-
1,721
Total costs and expenses
572,719
366,636
32,293
971,648
Income/(loss) from operations
58,620
115,998
(32,293
)
142,325
Interest expense
(102
)
(257
)
(1,963
)
(2,322
)
Intercompany interest income/(expense)
9,458
5,612
(15,070
)
-
Other income—net
259
64
1,183
1,506
Income/(loss) before income taxes
68,235
121,417
(48,143
)
141,509
Income taxes
(17,343
)
(29,390
)
12,722
(34,011
)
Net income/(loss) $
50,892
$
92,027
$
(35,421
)
$
107,498
2022 (b) Service revenues and sales $
596,970
$
464,867
$
-
$
1,061,837
Cost of services provided and goods sold
454,773
218,600
-
673,373
Selling, general and administrative expenses
45,600
111,937
20,270
177,807
Depreciation
11,613
13,203
36
24,852
Amortization
49
4,989
-
5,038
Other operating expense
(955
)
410
-
(545
)
Total costs and expenses
511,080
349,139
20,306
880,525
Income/(loss) from operations
85,890
115,728
(20,306
)
181,312
Interest expense
(96
)
(229
)
(1,387
)
(1,712
)
Intercompany interest income/(expense)
9,339
4,381
(13,720
)
-
Other income—net
156
72
(9,020
)
(8,792
)
Income/(loss) before income taxes
95,289
119,952
(44,433
)
170,808
Income taxes
(23,595
)
(28,943
)
12,355
(40,183
)
Net income/(loss) $
71,694
$
91,009
$
(32,078
)
$
130,625
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 JUNE 30, 2023 AND 2022 (in
thousands)(unaudited)
Chemed VITAS Roto-Rooter
Corporate Consolidated
2023
Net income/(loss) $
26,128
$
44,374
$
(17,125
)
$
53,377
Add/(deduct): Interest expense
51
124
596
771
Income taxes
8,829
14,116
(5,978
)
16,967
Depreciation
4,940
7,681
13
12,634
Amortization
26
2,488
-
2,514
EBITDA
39,974
68,783
(22,494
)
86,263
Add/(deduct): Intercompany interest expense/(income)
(4,810
)
(2,869
)
7,679
-
Interest income
(79
)
(34
)
-
(113
)
Licensed healthcare retention bonus
12,833
-
-
12,833
Stock option expense
-
-
8,400
8,400
Long-term incentive compensation
-
-
1,750
1,750
Adjusted EBITDA $
47,918
$
65,880
$
(4,665
)
$
109,133
2022
Net income/(loss) $
35,212
$
47,072
$
(15,828
)
$
66,456
Add/(deduct): Interest expense
44
115
743
902
Income taxes
11,365
14,915
(6,630
)
19,650
Depreciation
6,062
6,634
18
12,714
Amortization
26
2,494
-
2,520
EBITDA
52,709
71,230
(21,697
)
102,242
Add/(deduct): Intercompany interest expense/(income)
(4,683
)
(2,205
)
6,888
-
Interest income
(118
)
(37
)
1
(154
)
Stock option expense
-
-
7,216
7,216
Long-term incentive compensation
-
-
1,517
1,517
Medicare cap sequestration adjustment
138
-
-
138
Direct costs related to COVID-19
(80
)
-
-
(80
)
Other
-
28
-
28
Adjusted EBITDA $
47,966
$
69,016
$
(6,075
)
$
110,907
The "Footnotes to Financial Statements" are integral parts
of this financial information.
CHEMED CORPORATION
AND SUBSIDIARY COMPANIES CONSOLIDATING SUMMARIES OF
EBITDA FOR THE SIX MONTHS ENDED JUNE 30, 2023 AND 2022
(in thousands)(unaudited)
Chemed VITAS
Roto-Rooter Corporate Consolidated
2023
Net income/(loss) $
50,892
$
92,027
$
(35,421
)
$
107,498
Add/(deduct): Interest expense
102
257
1,963
2,322
Income taxes
17,343
29,390
(12,722
)
34,011
Depreciation
9,898
14,994
28
24,920
Amortization
52
4,975
-
5,027
EBITDA
78,287
141,643
(46,152
)
173,778
Add/(deduct): Intercompany interest expense/(income)
(9,458
)
(5,612
)
15,070
-
Interest income
(199
)
(64
)
-
(263
)
Licensed healthcare retention bonus
23,750
-
-
23,750
Stock option expense
-
-
16,882
16,882
Long-term incentive compensation
-
-
4,264
4,264
Litigation settlements
-
1,756
-
1,756
Adjusted EBITDA $
92,380
$
137,723
$
(9,936
)
$
220,167
2022
Net income/(loss) $
71,694
$
91,009
$
(32,078
)
$
130,625
Add/(deduct): Interest expense
96
229
1,387
1,712
Income taxes
23,595
28,943
(12,355
)
40,183
Depreciation
11,613
13,203
36
24,852
Amortization
49
4,989
-
5,038
EBITDA
107,047
138,373
(43,010
)
202,410
Add/(deduct): Intercompany interest expense/(income)
(9,339
)
(4,381
)
13,720
-
Interest income
(155
)
(71
)
-
(226
)
Stock option expense
-
-
14,667
14,667
Long-term incentive compensation
-
-
2,827
2,827
Direct costs related to COVID-19
310
960
-
1,270
Medicare cap sequestration adjustment
138
-
-
138
Other
-
28
-
28
Adjusted EBITDA $
98,001
$
134,909
$
(11,796
)
$
221,114
The "Footnotes to Financial Statements" are integral parts
of this financial information.
CHEMED CORPORATION AND SUBSIDIARY
COMPANIES RECONCILIATION OF ADJUSTED NET INCOME (in
thousands, except per share data)(unaudited) Three
Months Ended June 30, Six Months Ended June 30,
2023
2022
2023
2022
Net income as reported
$
53,377
$
66,456
$
107,498
$
130,625
Add/(deduct) pre-tax cost of: Licensed healthcare worker retention
bonus
12,833
-
23,750
-
Stock option expense
8,400
7,216
16,882
14,667
Amortization of reacquired franchise agreements
2,352
2,352
4,704
4,704
Long-term incentive compensation
1,750
1,517
4,264
2,827
Litigation settlements
-
-
1,756
-
Medicare cap sequestration adjustment
-
138
-
138
Other
-
28
-
28
Direct costs related to COVID-19
-
(80
)
-
1,270
Add/(deduct) tax impacts: Tax impact of the above pre-tax
adjustments (1)
(5,525
)
(2,038
)
(11,151
)
(4,449
)
Excess tax benefits on stock compensation
(1,501
)
(2,499
)
(3,150
)
(3,940
)
Adjusted net income
$
71,686
$
73,090
$
144,553
$
145,870
Diluted Earnings Per Share As Reported Net income
$
3.51
$
4.40
$
7.09
$
8.62
Average number of shares outstanding
15,219
15,111
15,167
15,152
Adjusted Diluted Earnings Per Share Adjusted net income
$
4.71
$
4.84
$
9.53
$
9.63
Average number of shares outstanding
15,219
15,111
15,167
15,152
(1) The tax impact of pre-tax adjustments was calculated
using the effective tax rate of the operating unit for which each
adjustment is associated. The "Footnotes to Financial
Statements" are integral parts of this financial information.
CHEMED CORPORATION AND SUBSIDIARY COMPANIES OPERATING
STATISTICS FOR VITAS SEGMENT (unaudited) Three Months
Ended June 30, Six Months Ended June 30, OPERATING STATISTICS
2023
2022
2023
2022
Net revenue ($000) (c) Homecare
$
278,116
$
257,631
$
545,166
$
515,267
Inpatient
27,401
24,619
56,494
51,189
Continuous care
21,081
19,538
41,022
39,116
Other
3,154
3,213
6,175
6,220
Subtotal
$
329,752
$
305,001
$
648,857
$
611,792
Room and board, net
(2,904
)
(2,166
)
(5,672
)
(4,283
)
Contractual allowances
(3,237
)
(3,054
)
(6,346
)
(6,039
)
Medicare cap allowance
(2,750
)
(2,000
)
(5,500
)
(4,500
)
Net Revenue
$
320,861
$
297,781
$
631,339
$
596,970
Net revenue as a percent of total before Medicare cap allowance
Homecare
84.3
%
84.5
%
84.0
%
84.2
%
Inpatient
8.3
8.1
8.7
8.4
Continuous care
6.4
6.4
6.3
6.4
Other
1.0
1.0
1.0
1.0
Subtotal
100.0
100.0
100.0
100.0
Room and board, net
(0.8
)
(0.7
)
(0.9
)
(0.7
)
Contractual allowances
(1.0
)
(1.0
)
(1.0
)
(1.0
)
Medicare cap allowance
(0.8
)
(0.7
)
(0.8
)
(0.7
)
Net Revenue
97.4
%
97.6
%
97.3
%
97.6
%
Days of care Homecare
1,340,655
1,266,604
2,627,092
2,525,276
Nursing home
279,898
259,046
545,327
507,514
Respite
6,159
6,095
11,919
11,463
Subtotal routine homecare and respite
1,626,712
1,531,745
3,184,338
3,044,253
Inpatient
25,125
23,155
51,494
47,742
Continuous care
21,873
20,802
42,559
41,884
Total
1,673,710
1,575,702
3,278,391
3,133,879
Number of days in relevant time period
91
91
181
181
Average daily census ("ADC") (days) Homecare
14,732
13,918
14,514
13,952
Nursing home
3,076
2,847
3,013
2,804
Respite
68
67
66
63
Subtotal routine homecare and respite
17,876
16,832
17,593
16,819
Inpatient
276
254
286
264
Continuous care
240
229
235
231
Total
18,392
17,315
18,114
17,314
Total Admissions
15,611
14,735
31,790
31,265
Total Discharges
15,104
14,603
30,509
31,465
Average length of stay (days)
99.5
103.7
99.7
104.3
Median length of stay (days)
16.0
17.0
15.0
16.0
ADC by major diagnosis Cerebro
41.9
%
37.6
%
42.0
%
37.5
%
Neurological
18.8
22.7
19.0
22.8
Cancer
10.8
11.2
10.6
11.2
Cardio
16.1
15.8
16.0
15.8
Respiratory
7.1
7.2
7.2
7.3
Other
5.3
5.5
5.2
5.4
Total
100.0
%
100.0
%
100.0
%
100.0
%
Admissions by major diagnosis Cerebro
25.9
%
23.8
%
26.2
%
23.4
%
Neurological
10.1
13.0
10.4
12.9
Cancer
27.1
27.3
25.9
26.0
Cardio
16.3
15.4
16.3
14.7
Respiratory
9.8
9.9
10.4
10.6
Other
10.8
10.6
10.8
12.4
Total
100.0
%
100.0
%
100.0
%
100.0
%
Estimated uncollectible accounts as a percent of revenues
1.0
%
1.0
%
1.0
%
1.0
%
Accounts receivable -- Days of revenue outstanding-excluding
unapplied Medicare payments
35.2
33.7
n.a. n.a. Days of revenue outstanding-including unapplied
Medicare payments
22.6
28.2
n.a. n.a. The "Footnotes to Financial Statements" are
integral parts of this financial information.
CHEMED CORPORATION
AND SUBSIDIARY COMPANIES FOOTNOTES TO FINANCIAL
STATEMENTS FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2023
AND 2022 (unaudited) (a) Included in the results of
operations for 2023 are the following significant credits/(charges)
which may not be indicative of ongoing operations (in thousands):
Three Months Ended June 30, 2023 VITAS
Roto-Rooter Corporate Consolidated
Licensed healthcare worker retention bonus $
(12,833
)
$
-
$
-
$
(12,833
)
Stock option expense
-
-
(8,400
)
(8,400
)
Amortization of reacquired franchise agreements
-
(2,352
)
-
(2,352
)
Long-term incentive compensation
-
-
(1,750
)
(1,750
)
Pretax impact on earnings
(12,833
)
(2,352
)
(10,150
)
(25,335
)
Excess tax benefits on stock compensation
-
-
1,501
1,501
Income tax benefit on the above
3,259
623
1,643
5,525
After-tax impact on earnings $
(9,574
)
$
(1,729
)
$
(7,006
)
$
(18,309
)
Six Months Ended June 30, 2023 VITAS
Roto-Rooter Corporate Consolidated
Licensed healthcare worker retention bonus $
(23,750
)
$
-
$
-
$
(23,750
)
Stock option expense
-
-
(16,882
)
(16,882
)
Amortization of reacquired franchise agreements
-
(4,704
)
-
(4,704
)
Long-term incentive compensation
-
-
(4,264
)
(4,264
)
Litigation settlements
-
(1,756
)
-
(1,756
)
Pretax impact on earnings
(23,750
)
(6,460
)
(21,146
)
(51,356
)
Excess tax benefits on stock compensation
-
-
3,150
3,150
Income tax benefit on the above
6,033
1,712
3,406
11,151
After-tax impact on earnings $
(17,717
)
$
(4,748
)
$
(14,590
)
$
(37,055
)
(b) Included in the results of operations for 2022 are the
following significant credits/(charges) which may not be indicative
of ongoing operations (in thousands):
Three Months Ended June
30, 2022 VITAS Roto-Rooter Corporate
Consolidated Stock option expense $
-
$
-
$
(7,216
)
$
(7,216
)
Amortization of reacquired franchise agreements
-
(2,352
)
-
(2,352
)
Long-term incentive compensation
-
-
(1,517
)
(1,517
)
Medicare cap sequestration adjustment
(138
)
-
-
(138
)
Direct costs related to COVID-19
80
-
-
80
Other
-
(28
)
-
(28
)
Pretax impact on earnings
(58
)
(2,380
)
(8,733
)
(11,171
)
Excess tax benefits on stock compensation
-
-
2,499
2,499
Income tax benefit on the above
15
631
1,392
2,038
After-tax impact on earnings $
(43
)
$
(1,749
)
$
(4,842
)
$
(6,634
)
Six Months Ended June 30, 2022 VITAS
Roto-Rooter Corporate Consolidated
Stock option expense $
-
$
-
$
(14,667
)
$
(14,667
)
Amortization of reacquired franchise agreements
-
(4,704
)
-
(4,704
)
Long-term incentive compensation
-
-
(2,827
)
(2,827
)
Direct costs related to COVID-19
(310
)
(960
)
-
(1,270
)
Medicare cap sequestration adjustment
(138
)
-
-
(138
)
Other
-
(28
)
-
(28
)
Pretax impact on earnings
(448
)
(5,692
)
(17,494
)
(23,634
)
Excess tax benefits on stock compensation
-
-
3,940
3,940
Income tax benefit on the above
114
1,508
2,827
4,449
After-tax impact on earnings $
(334
)
$
(4,184
)
$
(10,727
)
$
(15,245
)
(c) VITAS has 10 large (greater than 450 ADC), 18 medium
(greater than 200 but less than 450 ADC) and 22 small (less than
200 ADC) hospice programs. Of Vitas' 30 Medicare provider numbers,
for the current cap year, 24 provider numbers have a Medicare cap
cushion of greater than 10%, three provider numbers have a Medicare
cap cushion between 5% and 10% and three provider numbers have a
Medicare cap liability.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20230726455862/en/
David P. Williams (513) 762-6901
Chemed (NYSE:CHE)
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