Chemed Corporation (Chemed) (NYSE: CHE), which operates VITAS
Healthcare Corporation (VITAS), one of the nation’s largest
providers of end-of-life care, and Roto-Rooter, the nation’s
largest commercial and residential plumbing and drain cleaning
services provider, reported financial results for its third quarter
ended September 30, 2023, versus the comparable prior-year
period.
Changes to Non-GAAP
Metrics
Chemed uses certain non-GAAP metrics such as EBITDA, Adjusted
EBITDA, Adjusted net income and Adjusted Diluted Earnings per
Share, to provide additional context and perspective to reported
operational results.
Chemed’s previously reported non-GAAP metrics during the four
sequential quarters from September 30, 2022 through June 30, 2023
excluded the 12-month pandemic-related licensed healthcare
professional retention bonus (Retention Program).
Starting with the September 30, 2023 quarter, Chemed is no
longer excluding the cost of the Retention Program when presenting
non-GAAP operating metrics in current or prior periods.
In the September 30, 2023 quarter, there is zero expense related
to the Retention Program. In the September 30, 2022 quarter, the
pretax and after-tax Retention Program expense was $9.6 million and
$7.1 million, respectively.
For the nine months ended September 30, 2023 pretax and
after-tax expense for the retention program is $23.8 million and
$18.0 million, respectively. For the nine months ended September
30, 2022 pretax and after-tax expense for the Retention Program was
$9.6 million and $7.1 million, respectively.
Results for Quarter Ended
September 30, 2023
- Revenue increased 7.2% to $565 million
- GAAP Diluted Earnings-per-Share (EPS) of $4.93, an increase of
30.4%
- Adjusted Diluted EPS of $5.32, an increase of 24.9%
VITAS segment operating results:
- Net Patient Revenue of $334 million, an increase of 12.5%
- Average Daily Census (ADC) of 18,859, an increase of 9.4%
- Admissions of 15,774, an increase of 7.5%
- Net Income, excluding certain discrete items, of $42.6 million,
an increase of 63.1%
- Adjusted EBITDA, excluding Medicare Cap, of $54.9 million, an
increase of 53.4%
- Adjusted EBITDA margin, excluding Medicare Cap, of 16.5%, an
increase of 441-basis points
Roto-Rooter segment operating results:
- Revenue of $231 million, an increase of 0.4%
- Net Income, excluding certain discrete items, of $49.0 million,
a decrease of 0.6%
- Adjusted EBITDA of $66.9 million, a decline of 3.7%
- Adjusted EBITDA margin of 29.0%, a decline of 124-basis
points
VITAS
VITAS net revenue was $334 million in the third quarter of 2023,
which is an increase of 12.5% when compared to the prior year
period. This revenue increase is comprised primarily of a 9.4%
increase in days-of-care and a geographically weighted average
Medicare reimbursement rate increase of approximately 2.7%. Acuity
mix shift positively impacted revenue growth 24-basis points 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 increased revenue growth by approximately 20-basis
points.
In the third quarter of 2023, VITAS accrued $0.13 million in
Medicare Cap billing limitations. This compares to a $0.6 million
Medicare Cap billing limitation in the third quarter of 2022.
Of VITAS’ 30 Medicare provider numbers, 25 provider numbers have
a trailing 12-month Medicare Cap cushion of 10% or greater, two
provider numbers have a cushion between 5% and 10%, one provider
number has a cushion between 0% and 5%, and two provider numbers
have a trailing 12-month Medicare Cap billing limitation totaling
$8.5 million.
Average revenue per patient per day in the third quarter of 2023
was $196.43 which is 296-basis points above the prior-year period.
Reimbursement for routine home care and high acuity care averaged
$172.52 and $1,026.48, respectively. During the quarter, high
acuity days-of-care were 2.8% of total days of care, an increase of
5-basis points when compared to the prior-year quarter.
The third quarter 2023 gross margin, excluding Medicare Cap, was
24.0%. This compares to the prior year gross margin of 19.3%,
excluding Medicare Cap.
Selling, general and administrative expenses were $25.3 million
in the third quarter of 2023 and compares to $21.6 million in the
prior-year quarter. Adjusted EBITDA, excluding Medicare Cap,
totaled $54.9 million in the quarter, an increase of 53.4%.
Adjusted EBITDA margin in the quarter, excluding Medicare Cap, was
16.5%, which is 441-basis points above the prior-year period.
Roto-Rooter
Roto-Rooter generated quarterly revenue of $231 million in the
third quarter of 2023, an increase of 0.4%, when compared to the
prior-year quarter.
Roto-Rooter branch commercial revenue in the quarter totaled
$56.8 million, an increase of 1.5%, over the prior year. This
aggregate commercial revenue growth consisted of drain cleaning
revenue declining 4.2%, plumbing increasing 1.8%, excavation
increasing 11.9%, and water restoration increasing 2.0%.
Roto-Rooter branch residential revenue in the quarter totaled
$155 million, an increase of 0.3%, over the prior-year period. This
aggregate residential revenue growth consisted of drain cleaning
decreasing 6.7%, plumbing increasing 0.3%, excavation expanding
3.2%, and water restoration increasing 4.3%.
Roto-Rooter’s gross margin in the quarter was 52.9%, a 45-basis
point decline when compared to the third quarter of 2022. Adjusted
EBITDA in the third quarter of 2023 totaled $66.9 million, a
decrease of 3.7%. The Adjusted EBITDA margin in the quarter was
29.0%, which is 124-basis points below the prior year period.
Chemed
Consolidated
As of September 30, 2023, Chemed had total cash and cash
equivalents of $173 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. The Company paid off the remaining portion
of the term loan in the second quarter of 2023. There is
approximately $405 million of undrawn borrowing capacity under the
Credit Agreement after excluding $45 million for Letters of
Credit.
During the quarter, the Company repurchased 28,457 shares of
Chemed stock for $14.3 million which equates to a cost per share of
$504.07. As of September 30, 2023, there was approximately $60
million of remaining share repurchase authorization under its
plan.
Guidance for
2023
VITAS 2023 revenue, prior to Medicare Cap, is estimated to
increase 9.3% 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 7.3% to
7.5%. Full year adjusted EBITDA margin, prior to Medicare Cap, is
estimated to be 15.4% to 15.7%. The total pretax cost of the
Retention Program in 2023 is estimated at $23.8 million, reducing
adjusted EBITDA margin by 180-basis points. We are currently
estimating $8 million for Medicare Cap billing limitations in
calendar year 2023.
Roto-Rooter is forecasted to achieve full-year 2023 revenue
growth of 1.6% to 2.0%. Roto-Rooter’s adjusted EBITDA margin for
2023 is expected to be 28.4% to 28.6%.
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, and other
discrete items, is estimated to be in the range of $19.82 to
$20.02. This guidance includes $1.18 per share of after-tax costs
related to the 2023 portion of the Retention Program.
This revised 2023 guidance compares to previous guidance, as
recast to no longer exclude costs associated with the Retention
Program, of $18.72 to $18.92, including. Current 2023 guidance
assumes an effective corporate tax rate on adjusted earnings of
23.6% and a diluted share count of 15.2 million shares. Chemed’s
2022 adjusted earnings per diluted share was $18.78, including
$0.97 per share for costs associated with the 2022 portion of the
Retention Program.
Conference
Call
As previously disclosed, Chemed will host a conference call and
webcast at 10 a.m., ET, on Thursday October 26, 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/9eyhbp68.
Participants may also register via teleconference at:
https://register.vevent.com/register/BIf6283da8a767485ab88786d7ddfffa28.
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 September 30, Nine
Months Ended September 30,
2023
2022
2023
2022
Service revenues and sales
$
564,532
$
526,472
1,678,505
$
1,588,309
Cost of services provided and goods sold
362,358
346,934
1,107,256
1,020,307
Selling, general and administrative expenses (aa)
99,602
83,992
294,684
261,799
Depreciation
12,858
12,154
37,778
37,006
Amortization
2,521
2,520
7,548
7,558
Other operating expense/(income)
343
15
2,064
(530
)
Total costs and expenses
477,682
445,615
1,449,330
1,326,140
Income from operations
86,850
80,857
229,175
262,169
Interest expense
(444
)
(1,271
)
(2,766
)
(2,983
)
Other income/(expense)--net (bb)
6,859
(3,115
)
8,365
(11,907
)
Income before income taxes
93,265
76,471
234,774
247,279
Income taxes
(18,307
)
(19,598
)
(52,318
)
(59,781
)
Net income
$
74,958
$
56,873
$
182,456
$
187,498
Earnings Per Share Net income
$
4.97
$
3.82
$
12.14
$
12.55
Average number of shares outstanding
15,075
14,888
15,034
14,935
Diluted Earnings Per Share Net income
$
4.93
$
3.78
$
12.02
$
12.41
Average number of shares outstanding
15,200
15,042
15,178
15,114
(aa) Selling, general and administrative ("SG&A")
expenses comprise (in thousands): Three Months Ended
September 30, Nine Months Ended September 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
$
91,792
$
85,118
$
281,426
$
269,118
Long-term incentive compensation
3,553
2,050
7,817
4,877
Market value adjustments related to deferred compensation trusts
4,257
(3,176
)
5,441
(12,196
)
Total SG&A expenses
$
99,602
$
83,992
$
294,684
$
261,799
(bb) Other income/(expense)--net comprises (in thousands):
Three Months Ended September 30, Nine Months Ended September 30,
2023
2022
2023
2022
Market value adjustments related to deferred compensation trusts
$
4,257
$
(3,176
)
$
5,441
$
(12,196
)
Interest income
2,600
62
2,863
288
Other
2
(1
)
61
1
Total other income/(expense)--net
$
6,859
$
(3,115
)
$
8,365
$
(11,907
)
CHEMED CORPORATION AND SUBSIDIARY COMPANIES CONSOLIDATED
BALANCE SHEETS (in thousands, except per share data)(unaudited)
September 30,
2023
2022
Assets Current assets Cash and cash equivalents
$
173,150
$
7,781
Accounts receivable less allowances
168,031
121,662
Inventories
12,511
10,469
Prepaid income taxes
11,337
27,526
Prepaid expenses
29,510
31,431
Total current assets
394,539
198,869
Investments of deferred compensation plans held in trust
104,410
90,097
Properties and equipment, at cost less accumulated depreciation
205,462
193,705
Lease right of use asset
123,353
131,430
Identifiable intangible assets less accumulated amortization
92,768
102,103
Goodwill
584,977
579,887
Other assets
56,570
60,104
Total Assets
$
1,562,079
$
1,356,195
Liabilities Current liabilities Accounts payable
$
56,508
$
77,170
Current portion of long-term debt
-
5,000
Income taxes
5,135
-
Accrued insurance
61,122
56,732
Accrued compensation
74,865
67,230
Accrued legal
6,626
653
Short-term lease liability
37,615
39,813
Other current liabilities
55,348
51,552
Total current liabilities
297,219
298,150
Deferred income taxes
30,381
33,590
Long-term debt
-
95,850
Deferred compensation liabilities
102,815
89,873
Long-term lease liability
99,346
105,594
Other liabilities
13,075
11,722
Total Liabilities
542,836
634,779
Stockholders' Equity Capital stock
37,013
36,670
Paid-in capital
1,254,356
1,100,161
Retained earnings
2,362,928
2,141,418
Treasury stock, at cost
(2,637,102
)
(2,559,141
)
Deferred compensation payable in Company stock
2,048
2,308
Total Stockholders' Equity
1,019,243
721,416
Total Liabilities and Stockholders' Equity
$
1,562,079
$
1,356,195
CHEMED CORPORATION AND SUBSIDIARY COMPANIES CONSOLIDATED
STATEMENTS OF CASH FLOWS (in thousands)(unaudited) For
the Nine Months Ended September 30,
2023
2022
Cash Flows from Operating Activities Net income
$
182,456
$
187,498
Adjustments to reconcile net income to net cash provided by
operating activities: Depreciation and amortization
45,326
44,564
Stock option expense
22,376
19,343
(Benefit)/provision for deferred income taxes
(8,232
)
10,408
Noncash long-term incentive compensation
6,637
4,343
Litigation settlements
2,050
-
Noncash directors' compensation
1,444
1,170
Amortization of debt issuance costs
500
247
Changes in operating assets and liabilities, excluding amounts
acquired in business combinations: (Increase)/decrease in accounts
receivable
(27,843
)
16,166
Increase in inventories
(2,239
)
(360
)
Decrease in prepaid expenses
781
1,257
Decrease in accounts payable and other current liabilities
(15,815
)
(15,765
)
Change in current income taxes
12,314
(10,277
)
Net change in lease assets and liabilities
(892
)
313
Increase in other assets
(8,622
)
(42,424
)
Increase/(decrease) in other liabilities
11,426
(6,555
)
Other sources/(uses)
69
(241
)
Net cash provided by operating activities
221,736
209,687
Cash Flows from Investing Activities Capital expenditures
(45,075
)
(39,066
)
Proceeds from sale of fixed assets
506
2,037
Business combinations, net of cash acquired
(3,994
)
(2,044
)
Other uses
(409
)
(841
)
Net cash used by investing activities
(48,972
)
(39,914
)
Cash Flows from Financing Activities Payments on other
long-term debt
(97,500
)
(1,250
)
Proceeds from other long-term debt
-
100,000
Proceeds from exercise of stock options
58,277
17,128
Purchases of treasury stock
(27,769
)
(101,539
)
Dividends paid
(17,446
)
(16,391
)
Change in cash overdrafts payable
16,182
5,535
Capital stock surrendered to pay taxes on stock-based compensation
(5,446
)
(12,497
)
Debt issuance costs
-
(1,584
)
Payments on revolving line of credit
-
(299,400
)
Proceeds from revolving line of credit
-
116,500
Other uses
(38
)
(1,389
)
Net cash used by financing activities
(73,740
)
(194,887
)
Increase/(decrease) in Cash and Cash Equivalents
99,024
(25,114
)
Cash and cash equivalents at beginning of year
74,126
32,895
Cash and cash equivalents at end of year
$
173,150
$
7,781
CHEMED CORPORATION AND SUBSIDIARY COMPANIES CONSOLIDATING
STATEMENTS OF INCOME FOR THE THREE MONTHS ENDED SEPTEMBER
30, 2023 AND 2022 (in thousands)(unaudited)
Chemed
VITAS Roto-Rooter Corporate
Consolidated 2023 (a) Service revenues and sales $
333,728
$
230,804
$
-
$
564,532
Cost of services provided and goods sold
253,731
108,627
-
362,358
Selling, general and administrative expenses
25,256
55,141
19,205
99,602
Depreciation
5,009
7,836
13
12,858
Amortization
26
2,495
-
2,521
Other operating (income)/expense
(53
)
396
-
343
Total costs and expenses
283,969
174,495
19,218
477,682
Income/(loss) from operations
49,759
56,309
(19,218
)
86,850
Interest expense
(52
)
(131
)
(261
)
(444
)
Intercompany interest income/(expense)
4,935
3,040
(7,975
)
-
Other income—net
849
34
5,976
6,859
Income/(loss) before income taxes
55,491
59,252
(21,478
)
93,265
Income taxes
(11,160
)
(8,925
)
1,778
(18,307
)
Net income/(loss) $
44,331
$
50,327
$
(19,700
)
$
74,958
2022 (b) Service revenues and sales $
296,536
$
229,936
$
-
$
526,472
Cost of services provided and goods sold
239,755
107,179
-
346,934
Selling, general and administrative expenses
21,581
53,225
9,186
83,992
Depreciation
5,281
6,855
18
12,154
Amortization
26
2,494
-
2,520
Other operating expense/(income)
26
(11
)
-
15
Total costs and expenses
266,669
169,742
9,204
445,615
Income/(loss) from operations
29,867
60,194
(9,204
)
80,857
Interest expense
(44
)
(91
)
(1,136
)
(1,271
)
Intercompany interest income/(expense)
4,842
2,371
(7,213
)
-
Other income/(expense)—net
26
36
(3,177
)
(3,115
)
Income/(loss) before income taxes
34,691
62,510
(20,730
)
76,471
Income taxes
(8,605
)
(14,924
)
3,931
(19,598
)
Net income/(loss) $
26,086
$
47,586
$
(16,799
)
$
56,873
The "Footnotes to Financial Statements" are integral
parts of this financial information.
CHEMED CORPORATION
AND SUBSIDIARY COMPANIES CONSOLIDATING STATEMENTS OF
INCOME FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2023 AND
2022 (in thousands)(unaudited)
Chemed
VITAS Roto-Rooter Corporate
Consolidated 2023 (a) Service revenues and sales $
965,066
$
713,439
$
-
$
1,678,505
Cost of services provided and goods sold
770,470
336,786
-
1,107,256
Selling, general and administrative expenses
71,248
171,966
51,470
294,684
Depreciation
14,907
22,830
41
37,778
Amortization
78
7,470
-
7,548
Other operating (income)/expense
(15
)
2,079
-
2,064
Total costs and expenses
856,688
541,131
51,511
1,449,330
Income/(loss) from operations
108,378
172,308
(51,511
)
229,175
Interest expense
(154
)
(387
)
(2,225
)
(2,766
)
Intercompany interest income/(expense)
14,393
8,652
(23,045
)
-
Other income—net
1,109
96
7,160
8,365
Income/(loss) before income taxes
123,726
180,669
(69,621
)
234,774
Income taxes
(28,503
)
(38,315
)
14,500
(52,318
)
Net income/(loss) $
95,223
$
142,354
$
(55,121
)
$
182,456
2022 (b) Service revenues and sales $
893,506
$
694,803
$
-
$
1,588,309
Cost of services provided and goods sold
694,528
325,779
-
1,020,307
Selling, general and administrative expenses
67,181
165,162
29,456
261,799
Depreciation
16,894
20,058
54
37,006
Amortization
76
7,482
-
7,558
Other operating (income)/expense
(929
)
399
-
(530
)
Total costs and expenses
777,750
518,880
29,510
1,326,140
Income/(loss) from operations
115,756
175,923
(29,510
)
262,169
Interest expense
(142
)
(319
)
(2,522
)
(2,983
)
Intercompany interest income/(expense)
14,181
6,751
(20,932
)
-
Other income/(expense)—net
183
107
(12,197
)
(11,907
)
Income/(loss) before income taxes
129,978
182,462
(65,161
)
247,279
Income taxes
(32,199
)
(43,867
)
16,285
(59,781
)
Net income/(loss) $
97,779
$
138,595
$
(48,876
)
$
187,498
The "Footnotes to Financial Statements" are integral
parts of this financial information.
CHEMED CORPORATION AND
SUBSIDIARY COMPANIES CONSOLIDATING SUMMARIES OF EBITDA
FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2023 AND 2022 (in
thousands)(unaudited)
Chemed VITAS Roto-Rooter
Corporate Consolidated
2023
Net income/(loss) $
44,331
$
50,327
$
(19,700
)
$
74,958
Add/(deduct): Interest expense
52
131
261
444
Income taxes
11,160
8,925
(1,778
)
18,307
Depreciation
5,009
7,836
13
12,858
Amortization
26
2,495
-
2,521
EBITDA
60,578
69,714
(21,204
)
109,088
Add/(deduct): Intercompany interest expense/(income)
(4,935
)
(3,040
)
7,975
-
Interest income
(847
)
(34
)
(1,719
)
(2,600
)
Stock option expense
-
-
5,495
5,495
Long-term incentive compensation
-
-
3,553
3,553
Litigation settlement
-
300
-
300
Adjusted EBITDA $
54,796
$
66,940
$
(5,900
)
$
115,836
2022
Net income/(loss) $
26,086
$
47,586
$
(16,799
)
$
56,873
Add/(deduct): Interest expense
44
91
1,136
1,271
Income taxes
8,605
14,924
(3,931
)
19,598
Depreciation
5,281
6,855
18
12,154
Amortization
26
2,494
-
2,520
EBITDA
40,042
71,950
(19,576
)
92,416
Add/(deduct): Intercompany interest expense/(income)
(4,842
)
(2,371
)
7,213
-
Interest income
(27
)
(35
)
-
(62
)
Stock option expense
-
-
4,676
4,676
Long-term incentive compensation
-
-
2,050
2,050
Direct costs related to COVID-19
-
-
89
89
Adjusted EBITDA $
35,173
$
69,544
$
(5,548
)
$
99,169
The "Footnotes to Financial Statements" are integral parts
of this financial information.
CHEMED CORPORATION AND SUBSIDIARY
COMPANIES CONSOLIDATING SUMMARIES OF EBITDA FOR THE
NINE MONTHS ENDED SEPTEMBER 30, 2023 AND 2022 (in
thousands)(unaudited)
Chemed VITAS Roto-Rooter
Corporate Consolidated
2023
Net income/(loss) $
95,223
$
142,354
$
(55,121
)
$
182,456
Add/(deduct): Interest expense
154
387
2,225
2,766
Income taxes
28,503
38,315
(14,500
)
52,318
Depreciation
14,907
22,830
41
37,778
Amortization
78
7,470
-
7,548
EBITDA
138,865
211,356
(67,355
)
282,866
Add/(deduct): Intercompany interest expense/(income)
(14,393
)
(8,652
)
23,045
-
Interest income
(1,046
)
(96
)
(1,720
)
(2,862
)
Stock option expense
-
-
22,376
22,376
Long-term incentive compensation
-
-
7,817
7,817
Litigation settlements
-
2,056
-
2,056
Adjusted EBITDA $
123,426
$
204,664
$
(15,837
)
$
312,253
2022
Net income/(loss) $
97,779
$
138,595
$
(48,876
)
$
187,498
Add/(deduct): Interest expense
142
319
2,522
2,983
Income taxes
32,199
43,867
(16,285
)
59,781
Depreciation
16,894
20,058
54
37,006
Amortization
76
7,482
-
7,558
EBITDA
147,090
210,321
(62,585
)
294,826
Add/(deduct): Intercompany interest expense/(income)
(14,181
)
(6,751
)
20,932
-
Interest income
(181
)
(107
)
-
(288
)
Stock option expense
-
-
19,343
19,343
Long-term incentive compensation
-
-
4,877
4,877
Direct costs related to COVID-19
310
988
89
1,387
Medicare cap sequestration adjustment
138
-
-
138
Adjusted EBITDA $
133,176
$
204,451
$
(17,344
)
$
320,283
The "Footnotes to Financial Statements" are integral parts
of this financial information.
CHEMED CORPORATION AND SUBSIDIARY
COMPANIES RECONCILIATION OF ADJUSTED NET INCOME (in
thousands, except per share data)(unaudited) Three Months
Ended September 30, Nine Months Ended September 30,
2023
2022
2023
2022
Net income as reported
$
74,958
$
56,873
$
182,456
$
187,498
Add/(deduct) pre-tax cost of: Stock option expense
5,495
4,676
22,376
19,343
Long-term incentive compensation
3,553
2,050
7,817
4,877
Amortization of reacquired franchise agreements
2,352
2,352
7,056
7,056
Litigation settlements
300
-
2,056
-
Medicare cap sequestration adjustment
-
-
-
138
Direct costs related to COVID-19
-
89
-
1,387
Add/(deduct) tax impacts: Tax impact of the above pre-tax
adjustments (1)
(1,326
)
(1,474
)
(6,443
)
(5,923
)
Tax impact of deferred tax rate change
(4,241
)
-
(4,241
)
-
Excess tax benefits on stock compensation
(225
)
(450
)
(3,376
)
(4,390
)
Adjusted net income
$
80,866
$
64,116
$
207,701
$
209,986
Diluted Earnings Per Share As Reported Net income
$
4.93
$
3.78
$
12.02
$
12.41
Average number of shares outstanding
15,200
15,042
15,178
15,114
Adjusted Diluted Earnings Per Share Adjusted net income
$
5.32
$
4.26
$
13.68
$
13.89
Average number of shares outstanding
15,200
15,042
15,178
15,114
(1) The tax impact of pre-tax adjustments was calculated
using the effective tax rate of the operating unit for which each
adjustment is associated. The "Footnotes to Financial
Statements" are integral parts of this financial information.
CHEMED CORPORATION AND SUBSIDIARY COMPANIES OPERATING
STATISTICS FOR VITAS SEGMENT (unaudited) Three Months
Ended September 30, Nine Months Ended September 30, OPERATING
STATISTICS
2023
2022
2023
2022
Net revenue ($000) (c) Homecare
$
287,389
$
256,253
$
832,554
$
771,520
Inpatient
27,818
24,526
84,312
75,714
Continuous care
22,032
18,600
63,054
57,717
Other
3,562
3,240
9,738
9,461
Subtotal
$
340,801
$
302,619
$
989,658
$
914,412
Room and board, net
(2,646
)
(2,513
)
(8,317
)
(6,796
)
Contractual allowances
(4,302
)
(2,952
)
(10,650
)
(8,992
)
Medicare cap allowance
(125
)
(618
)
(5,625
)
(5,118
)
Net Revenue
$
333,728
$
296,536
$
965,066
$
893,506
Net revenue as a percent of total before Medicare cap allowance
Homecare
84.3
%
84.7
%
84.1
%
84.4
%
Inpatient
8.2
8.1
8.5
8.3
Continuous care
6.5
6.1
6.4
6.3
Other
1.0
1.1
1.0
1.0
Subtotal
100.0
100.0
100.0
100.0
Room and board, net
(0.8
)
(0.8
)
(0.8
)
(0.7
)
Contractual allowances
(1.3
)
(1.0
)
(1.1
)
(1.0
)
Medicare cap allowance
-
(0.2
)
(0.6
)
(0.6
)
Net Revenue
97.9
%
98.0
%
97.5
%
97.7
%
Days of care Homecare
1,391,377
1,271,678
4,018,469
3,796,954
Nursing home
287,785
264,407
833,112
771,921
Respite
7,292
6,635
19,211
18,098
Subtotal routine homecare and respite
1,686,454
1,542,720
4,870,792
4,586,973
Inpatient
25,493
23,435
76,987
71,177
Continuous care
23,071
20,097
65,630
61,981
Total
1,735,018
1,586,252
5,013,409
4,720,131
Number of days in relevant time period
92
92
273
273
Average daily census ("ADC") (days) Homecare
15,124
13,823
14,720
13,908
Nursing home
3,128
2,874
3,052
2,828
Respite
79
72
70
66
Subtotal routine homecare and respite
18,331
16,769
17,842
16,802
Inpatient
277
255
282
261
Continuous care
251
218
240
227
Total
18,859
17,242
18,364
17,290
Total Admissions
15,774
14,680
47,564
45,945
Total Discharges
15,328
14,603
45,837
46,139
Average length of stay (days)
103.1
106.2
100.8
104.9
Median length of stay (days)
17.0
17.0
16.0
16.0
ADC by major diagnosis Cerebro
42.0
%
39.3
%
42.2
%
38.5
%
Neurological
14.7
22.0
15.9
22.3
Cancer
10.6
10.7
10.6
11.0
Cardio
16.4
15.4
16.1
15.6
Respiratory
7.2
7.2
7.1
7.3
Other
9.1
5.4
8.1
5.3
Total
100.0
%
100.0
%
100.0
%
100.0
%
Admissions by major diagnosis Cerebro
26.6
%
25.9
%
26.3
%
24.2
%
Neurological
8.8
12.4
9.9
12.7
Cancer
26.1
26.6
26.0
26.2
Cardio
16.0
14.9
16.2
14.8
Respiratory
9.7
9.5
10.1
10.3
Other
12.8
10.7
11.5
11.8
Total
100.0
%
100.0
%
100.0
%
100.0
%
Estimated uncollectible accounts as a percent of revenues
1.3
%
1.0
%
1.1
%
1.0
%
Accounts receivable -- Days of revenue outstanding-excluding
unapplied Medicare payments
36.4
33.8
n.a. n.a. Days of revenue outstanding-including unapplied
Medicare payments
33.8
24.9
n.a. n.a. The "Footnotes to Financial Statements" are
integral parts of this financial information.
CHEMED CORPORATION
AND SUBSIDIARY COMPANIES FOOTNOTES TO FINANCIAL
STATEMENTS FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30,
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 September 30, 2023 VITAS
Roto-Rooter Corporate Consolidated
Stock option expense $
-
$
-
$
(5,495
)
$
(5,495
)
Long-term incentive compensation
-
-
(3,553
)
(3,553
)
Amortization of reacquired franchise agreements
-
(2,352
)
-
(2,352
)
Litigation settlements
-
(300
)
-
(300
)
Pretax impact on earnings
-
(2,652
)
(9,048
)
(11,700
)
Excess tax benefits on stock compensation
-
-
225
225
Tax impact of deferred tax rate change
1,772
3,559
(1,090
)
4,241
Income tax benefit on the above
-
412
914
1,326
After-tax impact on earnings $
1,772
$
1,319
$
(8,999
)
$
(5,908
)
Nine Months Ended September 30, 2023 VITAS
Roto-Rooter Corporate Consolidated
Stock option expense $
-
$
-
$
(22,376
)
$
(22,376
)
Long-term incentive compensation
-
-
(7,817
)
(7,817
)
Amortization of reacquired franchise agreements
-
(7,056
)
-
(7,056
)
Litigation settlements
-
(2,056
)
-
(2,056
)
Pretax impact on earnings
-
(9,112
)
(30,193
)
(39,305
)
Excess tax benefits on stock compensation
-
-
3,376
3,376
Tax impact of deferred tax rate change
1,772
3,559
(1,090
)
4,241
Income tax benefit on the above
-
2,123
4,320
6,443
After-tax impact on earnings $
1,772
$
(3,430
)
$
(23,587
)
$
(25,245
)
(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
September 30, 2022 VITAS Roto-Rooter
Corporate Consolidated Stock option expense $
-
$
-
$
(4,676
)
$
(4,676
)
Amortization of reacquired franchise agreements
-
(2,352
)
-
(2,352
)
Long-term incentive compensation
-
-
(2,050
)
(2,050
)
Direct costs related to COVID-19
-
-
(89
)
(89
)
Pretax impact on earnings
-
(2,352
)
(6,815
)
(9,167
)
Excess tax benefits on stock compensation
-
-
450
450
Income tax benefit on the above
-
623
851
1,474
After-tax impact on earnings $
-
$
(1,729
)
$
(5,514
)
$
(7,243
)
Nine Months Ended September 30, 2022 VITAS
Roto-Rooter Corporate Consolidated
Stock option expense $
-
$
-
$
(19,343
)
$
(19,343
)
Amortization of reacquired franchise agreements
-
(7,056
)
-
(7,056
)
Long-term incentive compensation
-
-
(4,877
)
(4,877
)
Direct costs related to COVID-19
(310
)
(988
)
(89
)
(1,387
)
Medicare cap sequestration adjustment
(138
)
-
-
(138
)
Pretax impact on earnings
(448
)
(8,044
)
(24,309
)
(32,801
)
Excess tax benefits on stock compensation
-
-
4,390
4,390
Income tax benefit on the above
114
2,131
3,678
5,923
After-tax impact on earnings $
(334
)
$
(5,913
)
$
(16,241
)
$
(22,488
)
(c) VITAS has 11 large (greater than 450 ADC), 18 medium
(greater than 200 but less than 450 ADC) and 21 small (less than
200 ADC) hospice programs. Of Vitas' 30 Medicare provider numbers,
for the current cap year, 25 provider numbers have a Medicare cap
cushion of greater than 10%, two provider numbers have a Medicare
cap cushion between 5% and 10%, one provider number has a Medicare
cap cushion between 0% and 5% and two provider numbers have a
Medicare cap liability.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20231025895454/en/
David P. Williams (513) 762-6901
Chemed (NYSE:CHE)
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