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, 2023, versus the comparable prior-year period, as follows:
Consolidated operating results:
- Revenue increased 5.6% to $560 million
- GAAP Diluted Earnings-per-Share (EPS) of $3.58
- Adjusted Diluted EPS of $4.82, an increase of 0.6%
VITAS segment operating results:
- Net Patient Revenue of $310 million, an increase of 3.8%
- Average Daily Census (ADC) of 17,830, an increase of 3.0%
- Admissions of 16,179, a decline of 2.1%
- Net Income, excluding certain discrete items, of $32.9 million, a decline of 10.5%
- Adjusted EBITDA, excluding Medicare Cap, of $47.2 million, a decline of 10.1%
- Adjusted EBITDA margin, excluding Medicare Cap, of 15.1%, a decrease of 234-basis points
Roto-Rooter segment operating results:
- Revenue of $250 million, an increase of 7.9%
- Net Income, excluding certain discrete items, of $50.7 million, an increase of 9.3%
- Adjusted EBITDA of $71.8 million, an increase of 9.0%
- Adjusted EBITDA margin of 28.8%, an increase of 29-basis points
VITAS
VITAS net revenue was $310 million in the first quarter of 2023, which is an increase of 3.8% when compared to the prior year period. This revenue increase is comprised primarily of a 3.0% increase in days-of-care and a geographically weighted average Medicare reimbursement rate increase of approximately 2.9%, partially offset by 200-basis points as a result of CMS reimplementing the 2% sequestration cut that was suspended at the start of the pandemic in 2020. 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 first quarter of 2023, VITAS accrued $2.75 million in Medicare Cap billing limitations. This compares to a $2.5 million Medicare Cap billing limitation in the first quarter of 2022.
Of VITAS’ 30 Medicare provider numbers, 25 provider numbers have a trailing six-month Medicare Cap cushion of 10% or greater, one provider number has a cushion between 5% and 10%, one provider number has a cushion between 0% and 5% and three provider numbers have a trailing six-month billing limitation liability.
Average revenue per patient per day in the first quarter of 2023 was $198.86 which is 100-basis points above the prior-year period. Reimbursement for routine home care and high acuity care averaged $173.39 and $1,042.06 respectively. During the quarter, high acuity days-of-care were 2.9% of total days of care, essentially equal to the prior-year quarter.
The first quarter 2023 gross margin, excluding Medicare Cap and the hiring and retention bonus program, was 22.5%. This is a 220-basis point margin decline when compared to the first quarter of 2022. The majority of this margin decline is the result of CMS reimplementing sequestration which reduced gross margins 200-basis points. During the quarter, VITAS increased the licensed healthcare staff by 200 professionals. This results in total licensed staff increasing by 475 professionals since the inception of the retention program on July 1, 2022. The increase of 200 professionals hired during the first quarter of 2023 is estimated to have negatively impacted margins in the quarter by approximately 50-basis points.
Selling, general and administrative expenses were $23.3 million in the first quarter of 2023 and compares to $22.5 million incurred in the prior-year quarter. Adjusted EBITDA, excluding Medicare Cap, totaled $47.2 million in the quarter, a decrease of 10.1%. Adjusted EBITDA margin in the quarter, excluding Medicare Cap, was 15.1%, which is 234-basis points below the prior-year period. This Adjusted EBITDA margin was negatively impacted by 200-basis points for the reimplementation of sequestration and approximately 50-basis points due to the addition of 200 licensed professionals during the first quarter of 2023.
Roto-Rooter
Roto-Rooter generated quarterly revenue of $250 million in the first quarter of 2023, an increase of 7.9%, when compared to the prior-year quarter.
Roto-Rooter branch commercial revenue in the quarter totaled $59.9 million, an increase of 10.1%, over the prior year. This aggregate commercial revenue growth consisted of drain cleaning revenue increasing 4.0%, plumbing increasing 10.7%, excavation increasing 26.2%, and water restoration increasing 7.4%.
Roto-Rooter branch residential revenue in the quarter totaled $169 million, an increase of 7.5%, over the prior-year period. This aggregate residential revenue growth consisted of drain cleaning decreasing 2.9%, plumbing expanding 3.6%, excavation expanding 3.9%, and water restoration increasing 27.4%.
Roto-Rooter’s gross margin in the quarter was 53.1%, a 37-basis point increase when compared to the first quarter of 2022. Adjusted EBITDA in the first quarter of 2023 totaled $71.8 million, an increase of 9.0%. The Adjusted EBITDA margin in the quarter was 28.8%, which is a 29-basis point improvement when compared to the prior year.
Chemed Consolidated
As of March 31, 2023, Chemed had total cash and cash equivalents of $58.1 million and $21.3 million of current and 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 majority of the term loan, with $21.3 million remaining as of March 31, 2023. The Company has approximately $405 million of undrawn borrowing capacity under the revolving portion of the credit agreement.
Guidance for 2023
Management anticipates providing updated 2023 earnings guidance as part of the June 30, 2023, earnings press release.
Conference Call
Chemed will host a conference call and webcast at 10 a.m., ET, on Thursday April 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/j92nc5np.
Participants may also register via teleconference at:
https://register.vevent.com/register/BI022164faf96b4f54a3fa9a29dc1a2511. 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 17,800 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, | |||||||||
| 2023 | 2022 | ||||||||
| Service revenues and sales | $ | 560,157 | $ | 530,549 | |||||
| Cost of services provided and goods sold | 370,705 | 336,552 | |||||||
| Selling, general and administrative expenses (aa) | 100,095 | 89,954 | |||||||
| Depreciation | 12,286 | 12,138 | |||||||
| Amortization | 2,513 | 2,518 | |||||||
| Other operating expense | 1,739 | 13 | |||||||
| Total costs and expenses | 487,338 | 441,175 | |||||||
| Income from operations | 72,819 | 89,374 | |||||||
| Interest expense | (1,551 | ) | (810 | ) | |||||
| Other expense–net (bb) | (103 | ) | (3,862 | ) | |||||
| Income before income taxes | 71,165 | 84,702 | |||||||
| Income taxes | (17,044 | ) | (20,533 | ) | |||||
| Net income | $ | 54,121 | $ | 64,169 | |||||
| Earnings Per Share | |||||||||
| Net income | $ | 3.62 | $ | 4.28 | |||||
| Average number of shares outstanding | 14,966 | 14,986 | |||||||
| Diluted Earnings Per Share | |||||||||
| Net income | $ | 3.58 | $ | 4.22 | |||||
| Average number of shares outstanding | 15,110 | 15,192 | |||||||
| (aa) Selling, general and administrative (“SG&A”) expenses comprise (in thousands): | |||||||||
| Three Months Ended March 31, | |||||||||
| 2023 | 2022 | ||||||||
| SG&A expenses before long-term incentive compensation | |||||||||
| and the impact of market value adjustments related to | |||||||||
| deferred compensation plans | $ | 97,902 | $ | 92,578 | |||||
| Long-term incentive compensation | 2,514 | 1,310 | |||||||
| Market value adjustments related to deferred | |||||||||
| compensation trusts | (321 | ) | (3,934 | ) | |||||
| Total SG&A expenses | $ | 100,095 | $ | 89,954 | |||||
| (bb) Other expense–net comprises (in thousands): | |||||||||
| Three Months Ended March 31, | |||||||||
| 2023 | 2022 | ||||||||
| Market value adjustments related to deferred | |||||||||
| compensation trusts | $ | (321 | ) | $ | (3,934 | ) | |||
| Interest income | 150 | 73 | |||||||
| Other | 68 | (1 | ) | ||||||
| Total other expense–net | $ | (103 | ) | $ | (3,862 | ) | |||
| CHEMED CORPORATION AND SUBSIDIARY COMPANIES | ||||||||
| CONSOLIDATED BALANCE SHEETS | ||||||||
| (in thousands, except per share data)(unaudited) | ||||||||
| March 31, | ||||||||
| 2023 | 2022 | |||||||
| Assets | ||||||||
| Current assets | ||||||||
| Cash and cash equivalents | $ | 58,054 | $ | 18,160 | ||||
| Accounts receivable less allowances | 153,816 | 117,319 | ||||||
| Inventories | 10,663 | 10,540 | ||||||
| Prepaid income taxes | 10,633 | 9,143 | ||||||
| Prepaid expenses | 29,055 | 29,589 | ||||||
| Total current assets | 262,221 | 184,751 | ||||||
| Investments of deferred compensation plans held in trust | 97,436 | 100,139 | ||||||
| Properties and equipment, at cost less accumulated depreciation | 204,164 | 192,405 | ||||||
| Lease right of use asset | 131,219 | 134,169 | ||||||
| Identifiable intangible assets less accumulated amortization | 97,348 | 106,367 | ||||||
| Goodwill | 581,286 | 579,704 | ||||||
| Other assets | 57,511 | 8,222 | ||||||
| Total Assets | $ | 1,431,185 | $ | 1,305,757 | ||||
| Liabilities | ||||||||
| Current liabilities | ||||||||
| Accounts payable | $ | 40,279 | $ | 64,710 | ||||
| Current portion of long-term debt | 5,000 | – | ||||||
| Income taxes | 11,223 | 15,390 | ||||||
| Accrued insurance | 63,150 | 58,952 | ||||||
| Accrued compensation | 50,152 | 62,205 | ||||||
| Accrued legal | 6,061 | 871 | ||||||
| Short-term lease liability | 38,291 | 38,856 | ||||||
| Other current liabilities | 69,304 | 38,667 | ||||||
| Total current liabilities | 283,460 | 279,651 | ||||||
| Deferred income taxes | 35,418 | 19,136 | ||||||
| Long-term debt | 16,250 | 120,000 | ||||||
| Deferred compensation liabilities | 97,285 | 100,812 | ||||||
| Long-term lease liability | 106,212 | 109,121 | ||||||
| Other liabilities | 12,507 | 10,332 | ||||||
| Total Liabilities | 551,132 | 639,052 | ||||||
| Stockholders’ Equity | ||||||||
| Capital stock | 36,884 | 36,579 | ||||||
| Paid-in capital | 1,186,119 | 1,064,448 | ||||||
| Retained earnings | 2,246,354 | 2,029,158 | ||||||
| Treasury stock, at cost | (2,591,588 | ) | (2,465,716 | ) | ||||
| Deferred compensation payable in Company stock | 2,284 | 2,236 | ||||||
| Total Stockholders’ Equity | 880,053 | 666,705 | ||||||
| Total Liabilities and Stockholders’ Equity | $ | 1,431,185 | $ | 1,305,757 | ||||
| CHEMED CORPORATION AND SUBSIDIARY COMPANIES | ||||||||
| CONSOLIDATED STATEMENTS OF CASH FLOWS | ||||||||
| (in thousands)(unaudited) | ||||||||
| Three Months Ended March 31, | ||||||||
| 2023 | 2022 | |||||||
| Cash Flows from Operating Activities | ||||||||
| Net income | $ | 54,121 | $ | 64,169 | ||||
| Adjustments to reconcile net income to net cash provided | ||||||||
| by operating activities: | ||||||||
| Depreciation and amortization | 14,799 | 14,656 | ||||||
| Stock option expense | 8,482 | 7,451 | ||||||
| Benefit for deferred income taxes | (3,195 | ) | (4,047 | ) | ||||
| Noncash long-term incentive compensation | 2,024 | 1,185 | ||||||
| Amortization of debt issuance costs | 95 | 76 | ||||||
| Changes in operating assets and liabilities, excluding | ||||||||
| amounts acquired in business combinations: | ||||||||
| (Increase)/decrease in accounts receivable | (14,318 | ) | 19,610 | |||||
| Increase in inventories | (391 | ) | (431 | ) | ||||
| Decrease in prepaid expenses | 1,236 | 3,099 | ||||||
| Decrease in accounts payable and | ||||||||
| other current liabilities | (24,109 | ) | (30,332 | ) | ||||
| Change in current income taxes | 19,118 | 23,530 | ||||||
| Net change in lease assets and liabilities | (632 | ) | 743 | |||||
| Increase in other assets | (2,173 | ) | (1,562 | ) | ||||
| Increase in other liabilities | 5,313 | 2,958 | ||||||
| Other sources/(uses) | 122 | (15 | ) | |||||
| Net cash provided by operating activities | 60,492 | 101,090 | ||||||
| Cash Flows from Investing Activities | ||||||||
| Capital expenditures | (17,020 | ) | (12,649 | ) | ||||
| Business combinations, net of cash acquired | – | (1,650 | ) | |||||
| Proceeds from sale of fixed assets | 146 | 485 | ||||||
| Other uses | (139 | ) | (134 | ) | ||||
| Net cash used by investing activities | (17,013 | ) | (13,948 | ) | ||||
| Cash Flows from Financing Activities | ||||||||
| Payments on long-term debt | (76,250 | ) | – | |||||
| Proceeds from exercise of stock options | 25,680 | 7,692 | ||||||
| Dividends paid | (5,685 | ) | (5,322 | ) | ||||
| Capital stock surrendered to pay taxes on stock-based compensation | (3,166 | ) | (4,893 | ) | ||||
| Payments on revolving line of credit | – | (86,500 | ) | |||||
| Proceeds from revolving line of credit | – | 21,500 | ||||||
| Purchases of treasury stock | – | (27,794 | ) | |||||
| Change in cash overdrafts payable | – | (7,051 | ) | |||||
| Other (uses)/sources | (130 | ) | 491 | |||||
| Net cash used by financing activities | (59,551 | ) | (101,877 | ) | ||||
| Decrease in Cash and Cash Equivalents | (16,072 | ) | (14,735 | ) | ||||
| Cash and cash equivalents at beginning of year | 74,126 | 32,895 | ||||||
| Cash and cash equivalents at end of year | $ | 58,054 | $ | 18,160 | ||||
| CHEMED CORPORATION AND SUBSIDIARY COMPANIES | ||||||||||||||||
| CONSOLIDATING STATEMENTS OF INCOME | ||||||||||||||||
| FOR THE THREE MONTHS ENDED MARCH 31, 2023 AND 2022 | ||||||||||||||||
| (in thousands)(unaudited) | ||||||||||||||||
| Chemed | ||||||||||||||||
| VITAS | Roto-Rooter | Corporate | Consolidated | |||||||||||||
| 2023 (a) | ||||||||||||||||
| Service revenues and sales | $ | 310,478 | $ | 249,679 | $ | – | $ | 560,157 | ||||||||
| Cost of services provided and goods sold | 253,654 | 117,051 | – | 370,705 | ||||||||||||
| Selling, general and administrative expenses | 23,336 | 60,813 | 15,946 | 100,095 | ||||||||||||
| Depreciation | 4,958 | 7,312 | 16 | 12,286 | ||||||||||||
| Amortization | 26 | 2,487 | – | 2,513 | ||||||||||||
| Other operating expense | 12 | 1,727 | – | 1,739 | ||||||||||||
| Total costs and expenses | 281,986 | 189,390 | 15,962 | 487,338 | ||||||||||||
| Income/(loss) from operations | 28,492 | 60,289 | (15,962 | ) | 72,819 | |||||||||||
| Interest expense | (50 | ) | (133 | ) | (1,368 | ) | (1,551 | ) | ||||||||
| Intercompany interest income/(expense) | 4,648 | 2,743 | (7,391 | ) | – | |||||||||||
| Other income/(expense)—net | 189 | 29 | (321 | ) | (103 | ) | ||||||||||
| Income/(loss) before income taxes | 33,279 | 62,928 | (25,042 | ) | 71,165 | |||||||||||
| Income taxes | (8,515 | ) | (15,275 | ) | 6,746 | (17,044 | ) | |||||||||
| Net income/(loss) | $ | 24,764 | $ | 47,653 | $ | (18,296 | ) | $ | 54,121 | |||||||
| 2022 (b) | ||||||||||||||||
| Service revenues and sales | $ | 299,189 | $ | 231,360 | $ | – | $ | 530,549 | ||||||||
| Cost of services provided and goods sold | 227,240 | 109,312 | – | 336,552 | ||||||||||||
| Selling, general and administrative expenses | 22,453 | 56,954 | 10,547 | 89,954 | ||||||||||||
| Depreciation | 5,551 | 6,569 | 18 | 12,138 | ||||||||||||
| Amortization | 24 | 2,494 | – | 2,518 | ||||||||||||
| Other operating expense/(income) | (148 | ) | 161 | – | 13 | |||||||||||
| Total costs and expenses | 255,120 | 175,490 | 10,565 | 441,175 | ||||||||||||
| Income/(loss) from operations | 44,069 | 55,870 | (10,565 | ) | 89,374 | |||||||||||
| Interest expense | (52 | ) | (115 | ) | (643 | ) | (810 | ) | ||||||||
| Intercompany interest income/(expense) | 4,656 | 2,176 | (6,832 | ) | – | |||||||||||
| Other income/(expense)—net | 37 | 35 | (3,934 | ) | (3,862 | ) | ||||||||||
| Income/(loss) before income taxes | 48,710 | 57,966 | (21,974 | ) | 84,702 | |||||||||||
| Income taxes | (12,229 | ) | (14,029 | ) | 5,725 | (20,533 | ) | |||||||||
| Net income/(loss) | $ | 36,481 | $ | 43,937 | $ | (16,249 | ) | $ | 64,169 | |||||||
| 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, 2023 AND 2022 | ||||||||||||||||
| (in thousands)(unaudited) | ||||||||||||||||
| Chemed | ||||||||||||||||
| VITAS | Roto-Rooter | Corporate | Consolidated | |||||||||||||
| 2023 | ||||||||||||||||
| Net income/(loss) | $ | 24,764 | $ | 47,653 | $ | (18,296 | ) | $ | 54,121 | |||||||
| Add/(deduct): | ||||||||||||||||
| Interest expense | 50 | 133 | 1,368 | 1,551 | ||||||||||||
| Income taxes | 8,515 | 15,275 | (6,746 | ) | 17,044 | |||||||||||
| Depreciation | 4,958 | 7,312 | 16 | 12,286 | ||||||||||||
| Amortization | 26 | 2,487 | – | 2,513 | ||||||||||||
| EBITDA | 38,313 | 72,860 | (23,658 | ) | 87,515 | |||||||||||
| Add/(deduct): | ||||||||||||||||
| Intercompany interest expense/(income) | (4,648 | ) | (2,743 | ) | 7,391 | – | ||||||||||
| Interest (income)/expense | (121 | ) | (29 | ) | – | (150 | ) | |||||||||
| Licensed healthcare retention bonus | 10,916 | – | – | 10,916 | ||||||||||||
| Stock option expense | – | – | 8,482 | 8,482 | ||||||||||||
| Long-term incentive compensation | – | – | 2,514 | 2,514 | ||||||||||||
| Litigation settlements | – | 1,756 | – | 1,756 | ||||||||||||
| Adjusted EBITDA | $ | 44,460 | $ | 71,844 | $ | (5,271 | ) | $ | 111,033 | |||||||
| 2022 | ||||||||||||||||
| Net income/(loss) | $ | 36,481 | $ | 43,937 | $ | (16,249 | ) | $ | 64,169 | |||||||
| Add/(deduct): | ||||||||||||||||
| Interest expense | 52 | 115 | 643 | 810 | ||||||||||||
| Income taxes | 12,229 | 14,029 | (5,725 | ) | 20,533 | |||||||||||
| Depreciation | 5,551 | 6,569 | 18 | 12,138 | ||||||||||||
| Amortization | 24 | 2,494 | – | 2,518 | ||||||||||||
| EBITDA | 54,337 | 67,144 | (21,313 | ) | 100,168 | |||||||||||
| Add/(deduct): | ||||||||||||||||
| Intercompany interest expense/(income) | (4,656 | ) | (2,176 | ) | 6,832 | – | ||||||||||
| Interest income | (37 | ) | (36 | ) | – | (73 | ) | |||||||||
| Stock option expense | – | – | 7,451 | 7,451 | ||||||||||||
| Direct costs related to COVID-19 | 391 | 961 | – | 1,352 | ||||||||||||
| Long-term incentive compensation | – | – | 1,310 | 1,310 | ||||||||||||
| Adjusted EBITDA | $ | 50,035 | $ | 65,893 | $ | (5,720 | ) | $ | 110,208 | |||||||
| 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, | ||||||||
| 2023 | 2022 | |||||||
| Net income as reported | $ | 54,121 | $ | 64,169 | ||||
| Add/(deduct) pre-tax cost of: | ||||||||
| Licensed healthcare worker retention bonus | 10,916 | – | ||||||
| Stock option expense | 8,482 | 7,451 | ||||||
| Long-term incentive compensation | 2,514 | 1,310 | ||||||
| Amortization of reacquired franchise agreements | 2,352 | 2,352 | ||||||
| Litigation settlements | 1,756 | – | ||||||
| Direct costs related to COVID-19 | – | 1,352 | ||||||
| Add/(deduct) tax impacts: | ||||||||
| Tax impact of the above pre-tax adjustments (1) | (5,624 | ) | (2,413 | ) | ||||
| Excess tax benefits on stock compensation | (1,650 | ) | (1,441 | ) | ||||
| Adjusted net income | $ | 72,867 | $ | 72,780 | ||||
| Diluted Earnings Per Share As Reported | ||||||||
| Net income | $ | 3.58 | $ | 4.22 | ||||
| Average number of shares outstanding | 15,110 | 15,192 | ||||||
| Adjusted Diluted Earnings Per Share | ||||||||
| Adjusted net income | $ | 4.82 | $ | 4.79 | ||||
| Average number of shares outstanding | 15,110 | 15,192 | ||||||
| (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 | 2023 | 2022 | ||||||
| Net revenue ($000) (c) | ||||||||
| Homecare | $ | 267,050 | $ | 257,636 | ||||
| Inpatient | 29,093 | 26,570 | ||||||
| Continuous care | 19,941 | 19,578 | ||||||
| Other | 3,021 | 3,007 | ||||||
| Subtotal | $ | 319,105 | $ | 306,791 | ||||
| Room and board, net | (2,769 | ) | (2,117 | ) | ||||
| Contractual allowances | (3,108 | ) | (2,985 | ) | ||||
| Medicare cap allowance | (2,750 | ) | (2,500 | ) | ||||
| Net Revenue | $ | 310,478 | $ | 299,189 | ||||
| Net revenue as a percent of total before Medicare cap allowance | ||||||||
| Homecare | 83.7 | % | 84.0 | % | ||||
| Inpatient | 9.1 | 8.7 | ||||||
| Continuous care | 6.2 | 6.4 | ||||||
| Other | 1.0 | 0.9 | ||||||
| Subtotal | 100.0 | 100.0 | ||||||
| Room and board, net | (0.8 | ) | (0.7 | ) | ||||
| Contractual allowances | (1.0 | ) | (1.0 | ) | ||||
| Medicare cap allowance | (0.9 | ) | (0.8 | ) | ||||
| Net Revenue | 97.3 | % | 97.5 | % | ||||
| Days of care | ||||||||
| Homecare | 1,286,437 | 1,258,672 | ||||||
| Nursing home | 265,429 | 248,468 | ||||||
| Respite | 5,760 | 5,368 | ||||||
| Subtotal routine homecare and respite | 1,557,626 | 1,512,508 | ||||||
| Inpatient | 26,369 | 24,587 | ||||||
| Continuous care | 20,686 | 21,082 | ||||||
| Total | 1,604,681 | 1,558,177 | ||||||
| Number of days in relevant time period | 90 | 90 | ||||||
| Average daily census (“ADC”) (days) | ||||||||
| Homecare | 14,294 | 13,985 | ||||||
| Nursing home | 2,949 | 2,761 | ||||||
| Respite | 64 | 60 | ||||||
| Subtotal routine homecare and respite | 17,307 | 16,806 | ||||||
| Inpatient | 293 | 273 | ||||||
| Continuous care | 230 | 234 | ||||||
| Total | 17,830 | 17,313 | ||||||
| Total Admissions | 16,179 | 16,530 | ||||||
| Total Discharges | 15,405 | 16,862 | ||||||
| Average length of stay (days) | 99.9 | 104.8 | ||||||
| Median length of stay (days) | 15.0 | 14.0 | ||||||
| ADC by major diagnosis | ||||||||
| Cerebro | 41.8 | % | 36.7 | % | ||||
| Neurological | 19.3 | 22.9 | ||||||
| Cancer | 10.5 | 11.1 | ||||||
| Cardio | 16.0 | 15.9 | ||||||
| Respiratory | 7.3 | 7.4 | ||||||
| Other | 5.1 | 6.0 | ||||||
| Total | 100.0 | % | 100.0 | % | ||||
| Admissions by major diagnosis | ||||||||
| Cerebro | 26.4 | % | 22.9 | % | ||||
| Neurological | 10.7 | 12.9 | ||||||
| Cancer | 24.7 | 24.9 | ||||||
| Cardio | 16.2 | 14.1 | ||||||
| Respiratory | 10.9 | 11.1 | ||||||
| Other | 11.1 | 14.1 | ||||||
| Total | 100.0 | % | 100.0 | % | ||||
| Estimated uncollectible accounts as a percent of revenues | 1.0 | % | 1.0 | % | ||||
| Accounts receivable — | ||||||||
| Days of revenue outstanding-excluding unapplied Medicare payments | 34.7 | 33.6 | ||||||
| Days of revenue outstanding-including unapplied Medicare payments | 29.2 | 23.9 | ||||||
| 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, 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 March 31, 2023 | |||||||||||||||||
| VITAS | Roto-Rooter | Corporate | Consolidated | ||||||||||||||
| Licensed healthcare worker retention bonus | $ | (10,916 | ) | $ | – | $ | – | $ | (10,916 | ) | |||||||
| Stock option expense | – | – | (8,482 | ) | (8,482 | ) | |||||||||||
| Long-term incentive compensation | – | – | (2,514 | ) | (2,514 | ) | |||||||||||
| Amortization of reacquired franchise agreements | – | (2,352 | ) | – | (2,352 | ) | |||||||||||
| Litigation settlements | – | (1,756 | ) | – | (1,756 | ) | |||||||||||
| Pretax impact on earnings | (10,916 | ) | (4,108 | ) | (10,996 | ) | (26,020 | ) | |||||||||
| Excess tax benefits on stock compensation | – | – | 1,650 | 1,650 | |||||||||||||
| Income tax benefit on the above | 2,772 | 1,089 | 1,763 | 5,624 | |||||||||||||
| After-tax impact on earnings | $ | (8,144 | ) | $ | (3,019 | ) | $ | (7,583 | ) | $ | (18,746 | ) | |||||
| (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 March 31, 2022 | |||||||||||||||||
| VITAS | Roto-Rooter | Corporate | Consolidated | ||||||||||||||
| Stock option expense | $ | – | $ | – | $ | (7,451 | ) | $ | (7,451 | ) | |||||||
| Long-term incentive compensation | – | – | (1,310 | ) | (1,310 | ) | |||||||||||
| Amortization of reacquired franchise agreements | – | (2,352 | ) | – | (2,352 | ) | |||||||||||
| Direct costs related to COVID-19 | (391 | ) | (961 | ) | – | (1,352 | ) | ||||||||||
| Pretax impact on earnings | (391 | ) | (3,313 | ) | (8,761 | ) | (12,465 | ) | |||||||||
| Excess tax benefits on stock compensation | – | – | 1,441 | 1,441 | |||||||||||||
| Income tax benefit on the above | 99 | 878 | 1,436 | 2,413 | |||||||||||||
| After-tax impact on earnings | $ | (292 | ) | $ | (2,435 | ) | $ | (5,884 | ) | $ | (8,611 | ) | |||||
| (c) | VITAS has 9 large (greater than 450 ADC), 17 medium (greater than 200 but less than 450 ADC) and 24 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 zero and 10% and three provider numbers have a Medicare cap liability. | ||||||||||||||||
(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, 2023, versus the comparable prior-year period, as follows:
Consolidated operating results:
Revenue increased 5.6% to $560 million
GAAP Diluted Earnings-per-Share (EPS) of $3.58
Adjusted Diluted EPS of $4.82, an increase of 0.6%
VITAS segment operating results:
Net Patient Revenue of $310 million, an increase of 3.8%
Average Daily Census (ADC) of 17,830, an increase of 3.0%
Admissions of 16,179, a decline of 2.1%
Net Income, excluding certain discrete items, of $32.9 million, a decline of 10.5%
Adjusted EBITDA, excluding Medicare Cap, of $47.2 million, a decline of 10.1%
Adjusted EBITDA margin, excluding Medicare Cap, of 15.1%, a decrease of 234-basis points
Roto-Rooter
segment operating results:
Revenue of $250 million, an increase of 7.9%
Net Income, excluding certain discrete items, of $50.7 million, an increase of 9.3%
Adjusted EBITDA of $71.8 million, an increase of 9.0%
Adjusted EBITDA margin of 28.8%, an increase of 29-basis points
VITAS
VITAS net revenue was $310 million
in the first quarter of 2023, which is an increase of 3.8% when compared to the prior year period. This revenue increase is comprised primarily of a 3.0% increase in days-of-care and a geographically weighted average Medicare reimbursement rate increase of approximately 2.9%, partially offset by 200-basis points as a result of CMS reimplementing the 2% sequestration cut that was suspended at the start of the pandemic in 2020. 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 first quarter of 2023, VITAS accrued $2.75 million
in Medicare Cap billing limitations. This compares to a $2.5 million
Medicare Cap billing limitation in the first quarter of 2022.
Of VITAS’ 30 Medicare provider numbers, 25 provider numbers have a trailing six-month Medicare Cap cushion of 10% or greater, one provider number has a cushion between 5% and 10%, one provider number has a cushion between 0% and 5% and three provider numbers have a trailing six-month billing limitation liability.
Average revenue per patient per day in the first quarter of 2023 was $198.86
which is 100-basis points above the prior-year period. Reimbursement for routine home care and high acuity care averaged $173.39
and $1,042.06
respectively. During the quarter, high acuity days-of-care were 2.9% of total days of care, essentially equal to the prior-year quarter.
The first quarter 2023 gross margin, excluding Medicare Cap and the hiring and retention bonus program, was 22.5%. This is a 220-basis point margin decline when compared to the first quarter of 2022. The majority of this margin decline is the result of CMS reimplementing sequestration which reduced gross margins 200-basis points. During the quarter, VITAS increased the licensed healthcare staff by 200 professionals. This results in total licensed staff increasing by 475 professionals since the inception of the retention program on July 1, 2022. The increase of 200 professionals hired during the first quarter of 2023 is estimated to have negatively impacted margins in the quarter by approximately 50-basis points.
Selling, general and administrative expenses were $23.3 million
in the first quarter of 2023 and compares to $22.5 million
incurred in the prior-year quarter. Adjusted EBITDA, excluding Medicare Cap, totaled $47.2 million
in the quarter, a decrease of 10.1%. Adjusted EBITDA margin in the quarter, excluding Medicare Cap, was 15.1%, which is 234-basis points below the prior-year period. This Adjusted EBITDA margin was negatively impacted by 200-basis points for the reimplementation of sequestration and approximately 50-basis points due to the addition of 200 licensed professionals during the first quarter of 2023.
Roto-Rooter
Roto-Rooter
generated quarterly revenue of $250 million
in the first quarter of 2023, an increase of 7.9%, when compared to the prior-year quarter.
Roto-Rooter
branch commercial revenue in the quarter totaled $59.9 million, an increase of 10.1%, over the prior year. This aggregate commercial revenue growth consisted of drain cleaning revenue increasing 4.0%, plumbing increasing 10.7%, excavation increasing 26.2%, and water restoration increasing 7.4%.
Roto-Rooter
branch residential revenue in the quarter totaled $169 million, an increase of 7.5%, over the prior-year period. This aggregate residential revenue growth consisted of drain cleaning decreasing 2.9%, plumbing expanding 3.6%, excavation expanding 3.9%, and water restoration increasing 27.4%.
Roto-Rooter’s gross margin in the quarter was 53.1%, a 37-basis point increase when compared to the first quarter of 2022. Adjusted EBITDA in the first quarter of 2023 totaled $71.8 million, an increase of 9.0%. The Adjusted EBITDA margin in the quarter was 28.8%, which is a 29-basis point improvement when compared to the prior year.
Chemed Consolidated
As of March 31, 2023
, Chemed had total cash and cash equivalents of $58.1 million
and $21.3 million
of current and 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 majority of the term loan, with $21.3 million
remaining as of March 31, 2023
. The Company has approximately $405 million
of undrawn borrowing capacity under the revolving portion of the credit agreement.
Guidance for 2023
Management anticipates providing updated 2023 earnings guidance as part of the June 30, 2023, earnings press release.
Conference Call
Chemed will host a conference call and webcast at 10 a.m., ET
, on Thursday April 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/j92nc5np.
Participants may also register via teleconference at:
https://register.vevent.com/register/BI022164faf96b4f54a3fa9a29dc1a2511. 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 17,800 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,
2023
2022
Service revenues and sales
$
560,157
$
530,549
Cost of services provided and goods sold
370,705
336,552
Selling, general and administrative expenses (aa)
100,095
89,954
Depreciation
12,286
12,138
Amortization
2,513
2,518
Other operating expense
1,739
13
Total costs and expenses
487,338
441,175
Income from operations
72,819
89,374
Interest expense
(1,551
)
(810
)
Other expense–net (bb)
(103
)
(3,862
)
Income before income taxes
71,165
84,702
Income taxes
(17,044
)
(20,533
)
Net income
$
54,121
$
64,169
Earnings Per Share
Net income
$
3.62
$
4.28
Average number of shares outstanding
14,966
14,986
Diluted Earnings Per Share
Net income
$
3.58
$
4.22
Average number of shares outstanding
15,110
15,192
(aa) Selling, general and administrative (“SG&A”) expenses comprise (in thousands):
Three Months Ended March 31,
2023
2022
SG&A expenses before long-term incentive compensation
and the impact of market value adjustments related to
deferred compensation plans
$
97,902
$
92,578
Long-term incentive compensation
2,514
1,310
Market value adjustments related to deferred
compensation trusts
(321
)
(3,934
)
Total SG&A expenses
$
100,095
$
89,954
(bb) Other expense–net comprises (in thousands):
Three Months Ended March 31,
2023
2022
Market value adjustments related to deferred
compensation trusts
$
(321
)
$
(3,934
)
Interest income
150
73
Other
68
(1
)
Total other expense–net
$
(103
)
$
(3,862
)
CHEMED CORPORATION AND SUBSIDIARY COMPANIES
CONSOLIDATED BALANCE SHEETS
(in thousands, except per share data)(unaudited)
March 31,
2023
2022
Assets
Current assets
Cash and cash equivalents
$
58,054
$
18,160
Accounts receivable less allowances
153,816
117,319
Inventories
10,663
10,540
Prepaid income taxes
10,633
9,143
Prepaid expenses
29,055
29,589
Total current assets
262,221
184,751
Investments of deferred compensation plans held in trust
97,436
100,139
Properties and equipment, at cost less accumulated depreciation
204,164
192,405
Lease right of use asset
131,219
134,169
Identifiable intangible assets less accumulated amortization
97,348
106,367
Goodwill
581,286
579,704
Other assets
57,511
8,222
Total Assets
$
1,431,185
$
1,305,757
Liabilities
Current liabilities
Accounts payable
$
40,279
$
64,710
Current portion of long-term debt
5,000
–
Income taxes
11,223
15,390
Accrued insurance
63,150
58,952
Accrued compensation
50,152
62,205
Accrued legal
6,061
871
Short-term lease liability
38,291
38,856
Other current liabilities
69,304
38,667
Total current liabilities
283,460
279,651
Deferred income taxes
35,418
19,136
Long-term debt
16,250
120,000
Deferred compensation liabilities
97,285
100,812
Long-term lease liability
106,212
109,121
Other liabilities
12,507
10,332
Total Liabilities
551,132
639,052
Stockholders’ Equity
Capital stock
36,884
36,579
Paid-in capital
1,186,119
1,064,448
Retained earnings
2,246,354
2,029,158
Treasury
stock, at cost
(2,591,588
)
(2,465,716
)
Deferred compensation payable in Company stock
2,284
2,236
Total Stockholders’ Equity
880,053
666,705
Total Liabilities and Stockholders’ Equity
$
1,431,185
$
1,305,757
CHEMED CORPORATION AND SUBSIDIARY COMPANIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)(unaudited)
Three Months Ended March 31,
2023
2022
Cash Flows from Operating Activities
Net income
$
54,121
$
64,169
Adjustments to reconcile net income to net cash provided
by operating activities:
Depreciation and amortization
14,799
14,656
Stock option expense
8,482
7,451
Benefit for deferred income taxes
(3,195
)
(4,047
)
Noncash long-term incentive compensation
2,024
1,185
Amortization of debt issuance costs
95
76
Changes in operating assets and liabilities, excluding
amounts acquired in business combinations:
(Increase)/decrease in accounts receivable
(14,318
)
19,610
Increase in inventories
(391
)
(431
)
Decrease in prepaid expenses
1,236
3,099
Decrease in accounts payable and
other current liabilities
(24,109
)
(30,332
)
Change in current income taxes
19,118
23,530
Net change in lease assets and liabilities
(632
)
743
Increase in other assets
(2,173
)
(1,562
)
Increase in other liabilities
5,313
2,958
Other sources/(uses)
122
(15
)
Net cash provided by operating activities
60,492
101,090
Cash Flows from Investing Activities
Capital expenditures
(17,020
)
(12,649
)
Business combinations, net of cash acquired
–
(1,650
)
Proceeds from sale of fixed assets
146
485
Other uses
(139
)
(134
)
Net cash used by investing activities
(17,013
)
(13,948
)
Cash Flows from Financing Activities
Payments on long-term debt
(76,250
)
–
Proceeds from exercise of stock options
25,680
7,692
Dividends paid
(5,685
)
(5,322
)
Capital stock surrendered to pay taxes on stock-based compensation
(3,166
)
(4,893
)
Payments on revolving line of credit
–
(86,500
)
Proceeds from revolving line of credit
–
21,500
Purchases of treasury stock
–
(27,794
)
Change in cash overdrafts payable
–
(7,051
)
Other (uses)/sources
(130
)
491
Net cash used by financing activities
(59,551
)
(101,877
)
Decrease in Cash and Cash Equivalents
(16,072
)
(14,735
)
Cash and cash equivalents at beginning of year
74,126
32,895
Cash and cash equivalents at end of year
$
58,054
$
18,160
CHEMED CORPORATION AND SUBSIDIARY COMPANIES
CONSOLIDATING STATEMENTS OF INCOME
FOR THE THREE MONTHS ENDED MARCH 31, 2023
AND 2022
(in thousands)(unaudited)
Chemed
VITAS
Roto-Rooter
Corporate
Consolidated
2023 (a)
Service revenues and sales
$
310,478
$
249,679
$
–
$
560,157
Cost of services provided and goods sold
253,654
117,051
–
370,705
Selling, general and administrative expenses
23,336
60,813
15,946
100,095
Depreciation
4,958
7,312
16
12,286
Amortization
26
2,487
–
2,513
Other operating expense
12
1,727
–
1,739
Total costs and expenses
281,986
189,390
15,962
487,338
Income/(loss) from operations
28,492
60,289
(15,962
)
72,819
Interest expense
(50
)
(133
)
(1,368
)
(1,551
)
Intercompany interest income/(expense)
4,648
2,743
(7,391
)
–
Other income/(expense)—net
189
29
(321
)
(103
)
Income/(loss) before income taxes
33,279
62,928
(25,042
)
71,165
Income taxes
(8,515
)
(15,275
)
6,746
(17,044
)
Net income/(loss)
$
24,764
$
47,653
$
(18,296
)
$
54,121
2022 (b)
Service revenues and sales
$
299,189
$
231,360
$
–
$
530,549
Cost of services provided and goods sold
227,240
109,312
–
336,552
Selling, general and administrative expenses
22,453
56,954
10,547
89,954
Depreciation
5,551
6,569
18
12,138
Amortization
24
2,494
–
2,518
Other operating expense/(income)
(148
)
161
–
13
Total costs and expenses
255,120
175,490
10,565
441,175
Income/(loss) from operations
44,069
55,870
(10,565
)
89,374
Interest expense
(52
)
(115
)
(643
)
(810
)
Intercompany interest income/(expense)
4,656
2,176
(6,832
)
–
Other income/(expense)—net
37
35
(3,934
)
(3,862
)
Income/(loss) before income taxes
48,710
57,966
(21,974
)
84,702
Income taxes
(12,229
)
(14,029
)
5,725
(20,533
)
Net income/(loss)
$
36,481
$
43,937
$
(16,249
)
$
64,169
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, 2023
AND 2022
(in thousands)(unaudited)
Chemed
VITAS
Roto-Rooter
Corporate
Consolidated
2023
Net income/(loss)
$
24,764
$
47,653
$
(18,296
)
$
54,121
Add/(deduct):
Interest expense
50
133
1,368
1,551
Income taxes
8,515
15,275
(6,746
)
17,044
Depreciation
4,958
7,312
16
12,286
Amortization
26
2,487
–
2,513
EBITDA
38,313
72,860
(23,658
)
87,515
Add/(deduct):
Intercompany interest expense/(income)
(4,648
)
(2,743
)
7,391
–
Interest (income)/expense
(121
)
(29
)
–
(150
)
Licensed healthcare retention bonus
10,916
–
–
10,916
Stock option expense
–
–
8,482
8,482
Long-term incentive compensation
–
–
2,514
2,514
Litigation settlements
–
1,756
–
1,756
Adjusted EBITDA
$
44,460
$
71,844
$
(5,271
)
$
111,033
2022
Net income/(loss)
$
36,481
$
43,937
$
(16,249
)
$
64,169
Add/(deduct):
Interest expense
52
115
643
810
Income taxes
12,229
14,029
(5,725
)
20,533
Depreciation
5,551
6,569
18
12,138
Amortization
24
2,494
–
2,518
EBITDA
54,337
67,144
(21,313
)
100,168
Add/(deduct):
Intercompany interest expense/(income)
(4,656
)
(2,176
)
6,832
–
Interest income
(37
)
(36
)
–
(73
)
Stock option expense
–
–
7,451
7,451
Direct costs related to COVID-19
391
961
–
1,352
Long-term incentive compensation
–
–
1,310
1,310
Adjusted EBITDA
$
50,035
$
65,893
$
(5,720
)
$
110,208
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,
2023
2022
Net income as reported
$
54,121
$
64,169
Add/(deduct) pre-tax cost of:
Licensed healthcare worker retention bonus
10,916
–
Stock option expense
8,482
7,451
Long-term incentive compensation
2,514
1,310
Amortization of reacquired franchise agreements
2,352
2,352
Litigation settlements
1,756
–
Direct costs related to COVID-19
–
1,352
Add/(deduct) tax impacts:
Tax impact of the above pre-tax adjustments (1)
(5,624
)
(2,413
)
Excess tax benefits on stock compensation
(1,650
)
(1,441
)
Adjusted net income
$
72,867
$
72,780
Diluted Earnings Per Share As Reported
Net income
$
3.58
$
4.22
Average number of shares outstanding
15,110
15,192
Adjusted Diluted Earnings Per Share
Adjusted net income
$
4.82
$
4.79
Average number of shares outstanding
15,110
15,192
(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
2023
2022
Net revenue ($000) (c)
Homecare
$
267,050
$
257,636
Inpatient
29,093
26,570
Continuous care
19,941
19,578
Other
3,021
3,007
Subtotal
$
319,105
$
306,791
Room and board, net
(2,769
)
(2,117
)
Contractual allowances
(3,108
)
(2,985
)
Medicare cap allowance
(2,750
)
(2,500
)
Net Revenue
$
310,478
$
299,189
Net revenue as a percent of total before Medicare cap allowance
Homecare
83.7
%
84.0
%
Inpatient
9.1
8.7
Continuous care
6.2
6.4
Other
1.0
0.9
Subtotal
100.0
100.0
Room and board, net
(0.8
)
(0.7
)
Contractual allowances
(1.0
)
(1.0
)
Medicare cap allowance
(0.9
)
(0.8
)
Net Revenue
97.3
%
97.5
%
Days of care
Homecare
1,286,437
1,258,672
Nursing home
265,429
248,468
Respite
5,760
5,368
Subtotal routine homecare and respite
1,557,626
1,512,508
Inpatient
26,369
24,587
Continuous care
20,686
21,082
Total
1,604,681
1,558,177
Number of days in relevant time period
90
90
Average daily census (“ADC”) (days)
Homecare
14,294
13,985
Nursing home
2,949
2,761
Respite
64
60
Subtotal routine homecare and respite
17,307
16,806
Inpatient
293
273
Continuous care
230
234
Total
17,830
17,313
Total Admissions
16,179
16,530
Total Discharges
15,405
16,862
Average length of stay (days)
99.9
104.8
Median length of stay (days)
15.0
14.0
ADC by major diagnosis
Cerebro
41.8
%
36.7
%
Neurological
19.3
22.9
Cancer
10.5
11.1
Cardio
16.0
15.9
Respiratory
7.3
7.4
Other
5.1
6.0
Total
100.0
%
100.0
%
Admissions by major diagnosis
Cerebro
26.4
%
22.9
%
Neurological
10.7
12.9
Cancer
24.7
24.9
Cardio
16.2
14.1
Respiratory
10.9
11.1
Other
11.1
14.1
Total
100.0
%
100.0
%
Estimated uncollectible accounts as a percent of revenues
1.0
%
1.0
%
Accounts receivable —
Days of revenue outstanding-excluding unapplied Medicare payments
34.7
33.6
Days of revenue outstanding-including unapplied Medicare payments
29.2
23.9
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, 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 March 31, 2023
VITAS
Roto-Rooter
Corporate
Consolidated
Licensed healthcare worker retention bonus
$
(10,916
)
$
–
$
–
$
(10,916
)
Stock option expense
–
–
(8,482
)
(8,482
)
Long-term incentive compensation
–
–
(2,514
)
(2,514
)
Amortization of reacquired franchise agreements
–
(2,352
)
–
(2,352
)
Litigation settlements
–
(1,756
)
–
(1,756
)
Pretax impact on earnings
(10,916
)
(4,108
)
(10,996
)
(26,020
)
Excess tax benefits on stock compensation
–
–
1,650
1,650
Income tax benefit on the above
2,772
1,089
1,763
5,624
After-tax impact on earnings
$
(8,144
)
$
(3,019
)
$
(7,583
)
$
(18,746
)
(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 March 31, 2022
VITAS
Roto-Rooter
Corporate
Consolidated
Stock option expense
$
–
$
–
$
(7,451
)
$
(7,451
)
Long-term incentive compensation
–
–
(1,310
)
(1,310
)
Amortization of reacquired franchise agreements
–
(2,352
)
–
(2,352
)
Direct costs related to COVID-19
(391
)
(961
)
–
(1,352
)
Pretax impact on earnings
(391
)
(3,313
)
(8,761
)
(12,465
)
Excess tax benefits on stock compensation
–
–
1,441
1,441
Income tax benefit on the above
99
878
1,436
2,413
After-tax impact on earnings
$
(292
)
$
(2,435
)
$
(5,884
)
$
(8,611
)
(c)
VITAS has 9 large (greater than 450 ADC), 17 medium (greater than 200 but less than 450 ADC) and 24 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 zero and 10% and three provider numbers have a Medicare cap liability.
Source: https://www.chemed.com/
