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Chemed Reports Third-Quarter 2023 Results – Increases Full Year Guidance

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.

 

Contacts

David P. Williams

(513) 762-6901

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