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Chemed Reports Fourth-Quarter 2022 Results

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 fourth quarter ended December 31, 2022, versus the comparable prior-year period, as follows:

Consolidated operating results:

  • Revenue increased 1.0% to $547 million
  • GAAP Diluted Earnings-per-Share (EPS) of $4.13
  • Adjusted Diluted EPS of $5.39, an increase of 2.7%

VITAS segment operating results:

  • Net Patient Revenue of $308 million, a decline of 2.5%
  • Average Daily Census (ADC) of 17,434, a decline of 2.8%
  • Admissions of 14,829, a decline of 8.7%
  • Net Income, excluding certain discrete items, of $44.2 million, a decline of 11.1%
  • Adjusted EBITDA, excluding Medicare Cap, of $61.7 million, a decline of 11.1%
  • Adjusted EBITDA margin, excluding Medicare Cap, of 19.8%, a decrease of 189-basis points

Roto-Rooter segment operating results:

  • Revenue of $239 million, an increase of 6.1%
  • Net Income, excluding certain discrete items, of $49.3 million, an increase of 11.4%
  • Adjusted EBITDA of $69.3 million, an increase of 11.4%
  • Adjusted EBITDA margin of 29.0%, an increase of 138-basis points

VITAS

VITAS net revenue was $308 million in the fourth quarter of 2022, which is a decline of 2.5%, when compared to the prior year period. This revenue decline is comprised primarily of a 2.8% reduction in days-of-care and a geographically weighted average Medicare reimbursement rate increase of approximately 3.2%, 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 a net impact of reducing revenue approximately $1.8 million, or 0.6%, 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 30-basis points.

In the fourth quarter of 2022, VITAS accrued $2.7 million in Medicare Cap billing limitations. This compares to a $3.0 million Medicare Cap billing limitation in the fourth quarter of 2021.

Of VITAS’ 30 Medicare provider numbers, 25 provider numbers have a Medicare Cap cushion of 10% or greater, one provider number has a cushion between 5% and 10%, and four provider numbers have a trailing 12-month billing limitation liability.

Average revenue per patient per day in the fourth quarter of 2022 was $197.39 which, including acuity mix shift, is 58-basis points above the prior-year period. Reimbursement for routine home care and high acuity care averaged $173.53 and $1,040.03, respectively. During the quarter, high acuity days-of-care were 2.7% of total days of care, 14-basis points below the prior-year quarter.

The fourth quarter 2022 gross margin, excluding Medicare Cap and the hiring and retention bonus program, was 26.9%. This is a 135-basis point margin decline when compared to the fourth quarter of 2021. VITAS has increased licensed healthcare staff by 275 since the inception of the retention program on July 1, 2022. This higher staffing increased aggregate cost of sales in the quarter by approximately $4.4 million. Excluding this capacity expansion, fourth quarter 2022 gross margins would have reflected a modest margin improvement when compared to the prior year quarter.

Selling, general and administrative expenses were $22.0 million in the fourth quarter of 2022 and compares to $21.5 million incurred in the prior-year quarter. Adjusted EBITDA, excluding Medicare Cap, totaled $61.7 million in the quarter, a decrease of 11.1%. Adjusted EBITDA margin in the quarter, excluding Medicare Cap, was 19.8%, which is 189-basis points below the prior-year period. This Adjusted EBITDA margin was also negatively impacted by 200-basis points for the reimplementation of sequestration and approximately 141-basis points due to increased staffing and patient capacity from VITAS’ hiring and retention program.

Roto-Rooter

Roto-Rooter generated quarterly revenue of $239 million in the fourth quarter of 2022, an increase of 6.1%, when compared to the prior-year quarter.

Roto-Rooter branch commercial revenue in the quarter totaled $58.6 million, an increase of 8.7%, over the prior year. This aggregate commercial revenue growth consisted of drain cleaning revenue increasing 5.5%, plumbing increasing 13.8%, excavation increasing 5.1%, and water restoration increasing 27.3%.

Roto-Rooter branch residential revenue in the quarter totaled $159 million, an increase of 5.0%, over the prior-year period. This aggregate residential revenue growth consisted of drain cleaning decreasing 2.1%, plumbing expanding 7.0%, excavation expanding 4.9%, and water restoration increasing 13.2%.

Roto-Rooter’s gross margin in the quarter was 53.0%, a 68-basis point increase when compared to the fourth quarter of 2021. Adjusted EBITDA in the fourth quarter of 2022 totaled $69.3 million, an increase of 11.4%. The Adjusted EBITDA margin in the quarter was 29.0%, which is a 138-basis point improvement when compared to the prior year.

Chemed Consolidated

As of December 31, 2022, Chemed had total cash and cash equivalents of $74.1 million and $97.5 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 consists 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. On December 31, 2022, the Company had approximately $405 million of undrawn borrowing capacity under this credit agreement.

During the quarter, the Company repurchased 25,000 shares of Chemed stock for $13.0 million which equates to a cost per share of $519.00. As of December 31, 2022, there was approximately $88 million of remaining share repurchase authorization under its plan.

Guidance for 2023

VITAS 2023 revenue, prior to Medicare Cap, is estimated to increase 6.0% to 7.0% 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 3.5% to 4.0%, with the majority of this census growth in the second half of 2023 as increased staffing and operational capacity generates increased census. Full year adjusted EBITDA margin, prior to Medicare Cap and accrued retention bonuses related to the hiring initiatives announced last year, is estimated to be 16.3% to 16.6%. We are currently estimating $11 million for Medicare Cap billing limitations in calendar year 2023.

Roto-Rooter is forecasted to achieve full-year 2023 revenue growth of 5.0% to 5.5%. Roto-Rooter’s adjusted EBITDA margin for 2023 is expected to be 29.3% to 29.5%.

Based upon the above, full-year 2023 earnings per diluted share, excluding non-cash expense for stock options, tax benefits from stock option exercises, costs related to litigation, retention program for licensed healthcare employees, and other discrete items, is estimated to be in the range of $20.75 to $21.10. Current 2023 guidance assumes an effective corporate tax rate on adjusted earnings of 25.1% and a diluted share count of 15.0 million shares. Chemed’s 2022 reported adjusted earnings per diluted share was $19.75.

Conference Call

Chemed will host a conference call and webcast at 10 a.m., ET, on Friday, February 24, 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/rvyepdf9.

Participants may also register via teleconference at:

https://register.vevent.com/register/BIa68c5dbaf8b34e36b34d624d6cd5cc4a. 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 17,300 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 December 31, For the Years Ended December 31,

2022

 

2021

 

2022

 

2021

Service revenues and sales

$

546,654

 

$

540,978

 

2,134,963

 

$

2,139,261

 

Cost of services provided and goods sold

349,570

 

336,328

 

1,369,877

 

1,369,458

 

Selling, general and administrative expenses (aa)

96,928

 

92,073

 

358,727

 

366,727

 

Depreciation

12,096

 

11,840

 

49,102

 

49,011

 

Amortization

2,512

 

2,510

 

10,070

 

10,040

 

Other operating expense

4,221

 

198

 

3,691

 

987

 

Total costs and expenses

465,327

 

442,949

 

1,791,467

 

1,796,223

 

Income from operations

81,327

 

98,029

 

343,496

 

343,038

 

Interest expense

(1,601

)

(525

)

(4,584

)

(1,868

)

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

2,674

 

(1,377

)

(9,233

)

9,144

Income before income taxes

82,400

 

96,127

 

329,679

 

350,314

 

Income taxes

(20,274

)

(21,502

)

(80,055

)

(81,764

)

Net income

$

62,126

 

$

74,625

 

$

249,624

 

$

268,550

 

Earnings Per Share

Net income

$

4.17

 

$

4.89

 

$

16.72

 

$

17.14

 

Average number of shares outstanding

14,913

 

15,266

 

14,929

 

15,671

 

Diluted Earnings Per Share

Net income

$

4.13

 

$

4.81

 

$

16.53

 

$

16.85

 

Average number of shares outstanding

15,052

 

15,513

 

15,099

 

15,938

 

 
(aa) Selling, general and administrative ("SG&A") expenses comprise (in thousands):
 
Three Months Ended December 31, For the Years Ended December 31,

2022

 

2021

 

2022

 

2021

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

91,779

 

$

89,875

 

$

360,896

 

$

349,250

 

Market value adjustments related to deferred
compensation trusts

2,226

 

(1,460

)

(9,970

)

8,310

 

Long-term incentive compensation

2,923

 

3,658

 

7,801

 

9,167

 

Total SG&A expenses $

96,928

 

$

92,073

 

$

358,727

 

$

366,727

 

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

Three Months Ended December 31,

 

For the Years Ended December 31,

2022

 

2021

 

2022

 

2021

Market value adjustments related to deferred
compensation trusts $

2,226

 

$

(1,460

)

$

(9,970

)

$

8,310

 

Interest income

65

 

89

 

355

 

377

 

Other

383

 

(6

)

382

 

457

 

Total other (expense)/income--net $

2,674

 

$

(1,377

)

$

(9,233

)

$

9,144

 

CHEMED CORPORATION AND SUBSIDIARY COMPANIES
CONSOLIDATED BALANCE SHEETS
(in thousands, except per share data)(unaudited)
 
December 31,

2022

2021

Assets
Current assets
Cash and cash equivalents $

74,126

 

$

32,895

 

Accounts receivable less allowances

139,408

 

137,217

 

Inventories

10,272

 

10,109

 

Prepaid income taxes

18,515

 

17,377

 

Prepaid expenses

30,291

 

32,688

 

Total current assets

272,612

 

230,286

 

Investments of deferred compensation plans held in trust

93,196

 

98,884

 

Properties and equipment, at cost less accumulated depreciation

199,714

 

193,680

 

Lease right of use asset

135,662

 

125,048

 

Identifiable intangible assets less accumulated amortization

99,726

 

108,096

 

Goodwill

581,295

 

578,591

 

Other assets

59,807

 

8,138

 

Total Assets $

1,442,012

 

$

1,342,723

 

Liabilities
Current liabilities
Accounts payable $

41,884

 

$

73,024

 

Current portion of long-term debt

5,000

 

-

 

Income taxes

-

 

41

 

Accrued insurance

58,515

 

55,918

 

Accrued compensation

87,350

 

95,598

 

Accrued legal

4,456

 

872

 

Short-term lease liability

38,996

 

37,913

 

Other current liabilities

61,004

 

39,033

 

Total current liabilities

297,205

 

302,399

 

Deferred income taxes

38,613

 

23,183

 

Long-term debt

92,500

 

185,000

 

Deferred compensation liabilities

92,330

 

98,597

 

Long-term lease liability

110,513

 

100,629

 

Other liabilities

12,136

 

9,642

 

Total Liabilities

643,297

 

719,450

 

Stockholders' Equity
Capital stock

36,796

 

36,514

 

Paid-in capital

1,149,899

 

1,044,341

 

Retained earnings

2,197,918

 

1,970,311

 

Treasury stock, at cost

(2,588,145

)

(2,430,094

)

Deferred compensation payable in Company stock

2,247

 

2,201

 

Total Stockholders' Equity

798,715

 

623,273

 

Total Liabilities and Stockholders' Equity $

1,442,012

 

$

1,342,723

 

CHEMED CORPORATION AND SUBSIDIARY COMPANIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)(unaudited)
 
For the Years Ended December 31,

2022

2021

Cash Flows from Operating Activities
Net income $

249,624

 

$

268,550

 

Adjustments to reconcile net income to net cash provided
by operating activities:
Depreciation and amortization

59,172

 

59,051

 

Stock option expense

26,254

 

22,502

 

Deferred payroll taxes

(18,175

)

(18,175

)

Provision for deferred income taxes

14,827

 

2,400

 

Noncash long-term incentive compensation

6,188

 

7,745

 

Litigation settlements/(payments)

4,000

 

(9,440

)

Noncash directors' compensation

1,170

 

1,173

 

Amortization of debt issuance costs

342

 

306

 

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

(2,414

)

(8,431

)

Increase in inventories

(162

)

(3,014

)

Decrease/(increase) in prepaid expenses

2,397

 

(6,511

)

Increase in accounts payable and
other current liabilities

15,343

 

9,832

 

Change in current income taxes

(996

)

(20,401

)

Net change in lease assets and liabilities

1,471

 

(44

)

Increase in other assets

(45,779

)

(10,305

)

(Decrease)/increase in other liabilities

(3,350

)

12,074

 

Other (uses)/sources

(26

)

1,285

 

Net cash provided by operating activities

309,886

 

308,597

 

Cash Flows from Investing Activities
Capital expenditures

(57,325

)

(58,675

)

Business combinations, net of cash acquired

(3,529

)

-

 

Proceeds from sale of fixed assets

2,330

 

904

 

Other (uses)/sources

(878

)

14

 

Net cash used by investing activities

(59,402

)

(57,757

)

Cash Flows from Financing Activities
Payments on revolving line of credit

(306,800

)

(25,300

)

Proceeds from revolving line of credit

121,800

 

210,300

 

Proceeds from other long-term debt

100,000

 

-

 

Payments on other long-term debt

(2,500

)

-

 

Purchases of treasury stock

(114,515

)

(576,042

)

Proceeds from exercise of stock options

44,968

 

35,848

 

Dividends paid

(22,017

)

(22,016

)

Capital stock surrendered to pay taxes on stock-based compensation

(15,611

)

(15,129

)

Change in cash overdrafts payable

(11,884

)

11,884

 

Debt issuance costs

(1,586

)

-

 

Other uses

(1,108

)

(165

)

Net cash used by financing activities

(209,253

)

(380,620

)

Increase/(decrease) in Cash and Cash Equivalents

41,231

 

(129,780

)

Cash and cash equivalents at beginning of year

32,895

 

162,675

 

Cash and cash equivalents at end of year $

74,126

 

$

32,895

 

CHEMED CORPORATION AND SUBSIDIARY COMPANIES
CONSOLIDATING STATEMENTS OF INCOME
FOR THE THREE MONTHS ENDED DECEMBER 31, 2022 AND 2021
(in thousands)(unaudited)
Chemed
VITAS Roto-Rooter Corporate Consolidated
2022 (a)
Service revenues and sales $

308,059

 

$

238,595

 

$

-

 

$

546,654

 

Cost of services provided and goods sold

237,333

 

112,237

 

-

 

349,570

 

Selling, general and administrative expenses

22,005

 

57,096

 

17,827

 

96,928

 

Depreciation

5,061

 

7,017

 

18

 

12,096

 

Amortization

26

 

2,486

 

-

 

2,512

 

Other operating expense/(income)

4,266

 

(45

)

-

 

4,221

 

Total costs and expenses

268,691

 

178,791

 

17,845

 

465,327

 

Income/(loss) from operations

39,368

 

59,804

 

(17,845

)

81,327

 

Interest expense

(31

)

(76

)

(1,494

)

(1,601

)

Intercompany interest income/(expense)

4,720

 

2,594

 

(7,314

)

-

 

Other income—net

417

 

31

 

2,226

 

2,674

 

Income/(loss) before income taxes

44,474

 

62,353

 

(24,427

)

82,400

 

Income taxes

(10,800

)

(14,829

)

5,355

 

(20,274

)

Net income/(loss) $

33,674

 

$

47,524

 

$

(19,072

)

$

62,126

 

 
2021 (b)
Service revenues and sales $

316,112

 

$

224,866

 

$

-

 

$

540,978

 

Cost of services provided and goods sold

229,023

 

107,305

 

-

 

336,328

 

Selling, general and administrative expenses

21,491

 

56,246

 

14,336

 

92,073

 

Depreciation

5,365

 

6,456

 

19

 

11,840

 

Amortization

18

 

2,492

 

-

 

2,510

 

Other operating expense/(income)

221

 

(23

)

-

 

198

 

Total costs and expenses

256,118

 

172,476

 

14,355

 

442,949

 

Income/(loss) from operations

59,994

 

52,390

 

(14,355

)

98,029

 

Interest expense

(31

)

(132

)

(362

)

(525

)

Intercompany interest income/(expense)

4,601

 

2,064

 

(6,665

)

-

 

Other income/(expense)—net

58

 

26

 

(1,461

)

(1,377

)

Income/(loss) before income taxes

64,622

 

54,348

 

(22,843

)

96,127

 

Income taxes

(15,621

)

(12,519

)

6,638

 

(21,502

)

Net income/(loss) $

49,001

 

$

41,829

 

$

(16,205

)

$

74,625

 

 
 
The "Footnotes to Financial Statements" are integral parts of this financial information.
CHEMED CORPORATION AND SUBSIDIARY COMPANIES
CONSOLIDATING STATEMENTS OF INCOME
FOR THE YEARS ENDED DECEMBER 31, 2022 AND 2021
(in thousands)(unaudited)
 
Chemed
VITAS Roto-Rooter Corporate Consolidated
2022 (a)
Service revenues and sales $

1,201,564

 

$

933,399

 

$

-

 

$

2,134,963

 

Cost of services provided and goods sold

931,861

 

438,016

 

-

 

1,369,877

 

Selling, general and administrative expenses

89,187

 

222,257

 

47,283

 

358,727

 

Depreciation

21,955

 

27,075

 

72

 

49,102

 

Amortization

101

 

9,969

 

-

 

10,070

 

Other operating expense

3,337

 

354

 

-

 

3,691

 

Total costs and expenses

1,046,441

 

697,671

 

47,355

 

1,791,467

 

Income/(loss) from operations

155,123

 

235,728

 

(47,355

)

343,496

 

Interest expense

(172

)

(396

)

(4,016

)

(4,584

)

Intercompany interest income/(expense)

18,901

 

9,345

 

(28,246

)

-

 

Other income/(expense)—net

600

 

138

 

(9,971

)

(9,233

)

Income/(loss) before income taxes

174,452

 

244,815

 

(89,588

)

329,679

 

Income taxes

(43,000

)

(58,695

)

21,640

 

(80,055

)

Net income/(loss) $

131,452

 

$

186,120

 

$

(67,948

)

$

249,624

 

 
2021 (b)
Service revenues and sales $

1,261,246

 

$

878,015

 

$

-

 

$

2,139,261

 

Cost of services provided and goods sold

953,420

 

416,038

 

-

 

1,369,458

 

Selling, general and administrative expenses

87,585

 

215,036

 

64,106

 

366,727

 

Depreciation

23,114

 

25,816

 

81

 

49,011

 

Amortization

71

 

9,969

 

-

 

10,040

 

Other operating expense

876

 

111

 

-

 

987

 

Total costs and expenses

1,065,066

 

666,970

 

64,187

 

1,796,223

 

Income/(loss) from operations

196,180

 

211,045

 

(64,187

)

343,038

 

Interest expense

(160

)

(595

)

(1,113

)

(1,868

)

Intercompany interest income/(expense)

18,125

 

7,180

 

(25,305

)

-

 

Other income—net

712

 

123

 

8,309

 

9,144

 

Income/(loss) before income taxes

214,857

 

217,753

 

(82,296

)

350,314

 

Income taxes

(52,426

)

(51,420

)

22,082

 

(81,764

)

Net income/(loss) $

162,431

 

$

166,333

 

$

(60,214

)

$

268,550

 

 
 
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 DECEMBER 31, 2022 AND 2021
(in thousands)(unaudited)
Chemed
VITAS Roto-Rooter Corporate Consolidated

2022

Net income/(loss) $

33,674

 

$

47,524

 

$

(19,072

)

$

62,126

 

Add/(deduct):
Interest expense

31

 

76

 

1,494

 

1,601

 

Income taxes

10,800

 

14,829

 

(5,355

)

20,274

 

Depreciation

5,061

 

7,017

 

18

 

12,096

 

Amortization

26

 

2,486

 

-

 

2,512

 

EBITDA

49,592

 

71,932

 

(22,915

)

98,609

 

Add/(deduct):
Intercompany interest expense/(income)

(4,720

)

(2,594

)

7,314

 

-

 

Interest (income)/expense

(36

)

(30

)

1

 

(65

)

Licensed healthcare retention bonus

10,075

 

-

 

-

 

10,075

 

Stock option expense

-

 

-

 

6,911

 

6,911

 

Litigation settlements

4,000

 

-

 

-

 

4,000

 

Long-term incentive compensation

-

 

-

 

2,923

 

2,923

 

Adjusted EBITDA $

58,911

 

$

69,308

 

$

(5,766

)

$

122,453

 

 

2021

Net income/(loss) $

49,001

 

$

41,829

 

$

(16,205

)

$

74,625

 

Add/(deduct):
Interest expense

31

 

132

 

362

 

525

 

Income taxes

15,621

 

12,519

 

(6,638

)

21,502

 

Depreciation

5,365

 

6,456

 

19

 

11,840

 

Amortization

18

 

2,492

 

-

 

2,510

 

EBITDA

70,036

 

63,428

 

(22,462

)

111,002

 

Add/(deduct):
Intercompany interest expense/(income)

(4,601

)

(2,064

)

6,665

 

-

 

Interest income

(63

)

(26

)

-

 

(89

)

Stock option expense

-

 

-

 

6,159

 

6,159

 

Long-term incentive compensation

-

 

-

 

3,659

 

3,659

 

Direct costs related to COVID-19

959

 

884

 

-

 

1,843

 

Adjusted EBITDA $

66,331

 

$

62,222

 

$

(5,979

)

$

122,574

 

 
The "Footnotes to Financial Statements" are integral parts of this financial information.
CHEMED CORPORATION AND SUBSIDIARY COMPANIES
CONSOLIDATING SUMMARIES OF EBITDA
FOR THE YEARS ENDED DECEMBER 31, 2022 AND 2021
(in thousands)(unaudited)
Chemed
VITAS Roto-Rooter Corporate Consolidated

2022

Net income/(loss) $

131,452

 

$

186,120

 

$

(67,948

)

$

249,624

 

Add/(deduct):
Interest expense

172

 

396

 

4,016

 

4,584

 

Income taxes

43,000

 

58,695

 

(21,640

)

80,055

 

Depreciation

21,955

 

27,075

 

72

 

49,102

 

Amortization

101

 

9,969

 

-

 

10,070

 

EBITDA

196,680

 

282,255

 

(85,500

)

393,435

 

Add/(deduct):
Intercompany interest expense/(income)

(18,901

)

(9,345

)

28,246

 

-

 

Interest (income)/expense

(218

)

(138

)

1

 

(355

)

Stock option expense

-

 

-

 

26,254

 

26,254

 

Licensed healthcare retention bonus

19,634

 

-

 

-

 

19,634

 

Long-term incentive compensation

-

 

-

 

7,801

 

7,801

 

Litigation settlements

4,000

 

-

 

-

 

4,000

 

Direct costs related to COVID-19

310

 

988

 

89

 

1,387

 

Medicare cap sequestration adjustment

138

 

-

 

-

 

138

 

Adjusted EBITDA $

201,643

 

$

273,760

 

$

(23,109

)

$

452,294

 

2021

Net income/(loss) $

162,431

 

$

166,333

 

$

(60,214

)

$

268,550

 

Add/(deduct):
Interest expense

160

 

595

 

1,113

 

1,868

 

Income taxes

52,426

 

51,420

 

(22,082

)

81,764

 

Depreciation

23,114

 

25,816

 

81

 

49,011

 

Amortization

71

 

9,969

 

-

 

10,040

 

EBITDA

238,202

 

254,133

 

(81,102

)

411,233

 

Add/(deduct):
Intercompany interest expense/(income)

(18,125

)

(7,180

)

25,305

 

-

 

Interest income

(253

)

(124

)

-

 

(377

)

Stock option expense

-

 

-

 

22,502

 

22,502

 

Direct costs related to COVID-19

16,296

 

2,435

 

38

 

18,769

 

Long-term incentive compensation

-

 

-

 

9,167

 

9,167

 

Litigation settlements

-

 

(98

)

-

 

(98

)

Other

-

 

-

 

218

 

218

 

Adjusted EBITDA $

236,120

 

$

249,166

 

$

(23,872

)

$

461,414

 

 
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 December 31, For the Years Ended December 31,

2022

 

2021

 

2022

 

2021

Net income as reported $

62,126

 

$

74,625

 

$

249,624

 

$

268,550

 

Add/(deduct) pre-tax cost of:
Stock option expense

6,911

 

6,159

 

26,254

 

22,502

 

Licensed healthcare worker retention bonus

10,075

 

-

 

19,634

 

-

 

Amortization of reacquired franchise agreements

2,352

 

2,352

 

9,408

 

9,408

 

Long-term incentive compensation

2,923

 

3,659

 

7,801

 

9,167

 

Litigation settlements

4,000

 

-

 

4,000

 

(98

)

Direct costs related to COVID-19

-

 

1,843

 

1,387

 

18,769

 

Medicare cap sequestration adjustment

-

 

-

 

138

 

-

 

Facility relocation expenses

-

 

-

 

-

 

1,855

 

Other

-

 

-

 

-

 

218

 

Add/(deduct) tax impacts:
Tax impact of the above pre-tax adjustments (1)

(5,710

)

(2,606

)

(14,062

)

(12,480

)

Excess tax benefits on stock compensation

(1,538

)

(4,579

)

(5,928

)

(9,884

)

Adjusted net income $

81,139

 

$

81,453

 

$

298,256

 

$

308,007

 

 
Diluted Earnings Per Share As Reported
Net income $

4.13

 

$

4.81

 

$

16.53

 

$

16.85

 

Average number of shares outstanding

15,052

 

15,513

 

15,099

 

15,938

 

 
Adjusted Diluted Earnings Per Share
Adjusted net income $

5.39

 

$

5.25

 

$

19.75

 

$

19.33

 

Average number of shares outstanding

15,052

 

15,513

 

15,099

 

15,938

 

 
(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 December 31, For the Years Ended December 31,
OPERATING STATISTICS

2022

2021

2022

2021

 

Net revenue ($000) (c)
Homecare $

267,691

 

$

272,949

 

$

1,039,211

 

$

1,069,766

 

Inpatient

26,647

 

27,291

 

102,361

 

113,187

 

Continuous care

19,284

 

20,680

 

77,000

 

94,338

 

Other

2,977

 

2,902

 

12,438

 

12,142

 

Subtotal $

316,599

 

$

323,822

 

$

1,231,010

 

$

1,289,433

 

Room and board, net

(2,778

)

(2,609

)

(9,574

)

(10,060

)

Contractual allowances

(3,012

)

(2,101

)

(12,004

)

(11,530

)

Medicare cap allowance

(2,750

)

(3,000

)

(7,868

)

(6,597

)

Net Revenue $

308,059

 

$

316,112

 

$

1,201,564

 

$

1,261,246

 

Net revenue as a percent of total before Medicare cap allowance
Homecare

84.6

 

%

84.3

 

%

84.4

 

%

83.0

 

%

Inpatient

8.4

 

8.4

 

8.3

 

8.8

 

Continuous care

6.1

 

6.4

 

6.3

 

7.3

 

Other

0.9

 

0.9

 

1.0

 

0.9

 

Subtotal

100.0

 

100.0

 

100.0

 

100.0

 

Room and board, net

(0.9

)

(0.9

)

(0.8

)

(0.8

)

Contractual allowances

(0.9

)

(0.6

)

(1.0

)

(0.9

)

Medicare cap allowance

(0.9

)

(0.9

)

(0.6

)

(0.5

)

Net Revenue

97.3

 

%

97.6

 

%

97.6

 

%

97.8

 

%

Days of care
Homecare

1,289,067

 

1,338,955

 

5,086,021

 

5,347,170

 

Nursing home

264,895

 

257,416

 

1,036,816

 

993,322

 

Respite

5,807

 

5,894

 

23,905

 

21,403

 

Subtotal routine homecare and respite

1,559,769

 

1,602,265

 

6,146,742

 

6,361,895

 

Inpatient

24,254

 

25,556

 

95,431

 

107,685

 

Continuous care

19,909

 

22,154

 

81,890

 

101,539

 

Total

1,603,932

 

1,649,975

 

6,324,063

 

6,571,119

 

 
Number of days in relevant time period

92

 

92

 

365

 

365

 

Average daily census ("ADC") (days)
Homecare

14,012

 

14,554

 

13,934

 

14,649

 

Nursing home

2,879

 

2,798

 

2,841

 

2,721

 

Respite

63

 

64

 

65

 

59

 

Subtotal routine homecare and respite

16,954

 

17,416

 

16,840

 

17,429

 

Inpatient

264

 

278

 

261

 

295

 

Continuous care

216

 

241

 

224

 

279

 

Total

17,434

 

17,935

 

17,325

 

18,003

 

Total Admissions

14,829

 

16,250

 

60,774

 

68,823

 

Total Discharges

14,862

 

16,684

 

60,930

 

69,411

 

Average length of stay (days)

103.9

 

97.9

 

104.6

 

95.7

 

Median length of stay (days)

16.0

 

15.0

 

16.0

 

13.0

 

ADC by major diagnosis
Cerebro

41.0

 

%

36.5

 

%

39.8

 

%

36.7

 

%

Neurological

20.3

 

23.0

 

21.2

 

22.6

 

Cancer

10.7

 

11.5

 

10.9

 

11.9

 

Cardio

15.7

 

15.6

 

15.7

 

15.5

 

Respiratory

7.2

 

7.5

 

7.3

 

7.5

 

Other

5.1

 

5.9

 

5.1

 

5.8

 

Total

100.0

 

%

100.0

 

%

100.0

 

%

100.0

 

%

Admissions by major diagnosis
Cerebro

25.6

 

%

22.5

 

%

24.6

 

%

21.5

 

%

Neurological

11.0

 

12.7

 

12.3

 

12.3

 

Cancer

26.7

 

26.6

 

26.3

 

26.9

 

Cardio

15.3

 

14.8

 

14.9

 

14.5

 

Respiratory

10.5

 

11.0

 

10.3

 

10.9

 

Other

10.9

 

12.4

 

11.6

 

13.9

 

Total

100.0

 

%

100.0

 

%

100.0

 

%

100.0

 

%

 
Estimated uncollectible accounts as a percent of revenues

1.0

 

%

0.7

 

%

1.0

 

%

0.9

 

%

 
Accounts receivable --
Days of revenue outstanding-excluding unapplied Medicare payments

38.1

 

33.8

 

n.a. n.a.
Days of revenue outstanding-including unapplied Medicare payments

28.0

 

28.1

 

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 MONTHS AND YEARS ENDED DECEMBER 31, 2022 AND 2021
(unaudited)
 
(a) 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 December 31, 2022
VITAS Roto-Rooter Corporate Consolidated
 
Licensed healthcare worker retention bonus $

(10,075

)

$

-

 

$

-

 

$

(10,075

)

Stock option expense

-

 

-

 

(6,911

)

(6,911

)

Litigation settlements

(4,000

)

-

 

-

 

(4,000

)

Long-term incentive compensation

-

 

-

 

(2,923

)

(2,923

)

Amortization of reacquired franchise agreements

-

 

(2,352

)

-

 

(2,352

)

Pretax impact on earnings

(14,075

)

(2,352

)

(9,834

)

(26,261

)

Excess tax benefits on stock compensation

-

 

-

 

1,538

 

1,538

 

Income tax benefit on the above

3,575

 

623

 

1,512

 

5,710

 

After-tax impact on earnings $

(10,500

)

$

(1,729

)

$

(6,784

)

$

(19,013

)

 
For the Year Ended December 31, 2022
VITAS Roto-Rooter Corporate Consolidated
 
Stock option expense $

-

 

$

-

 

$

(26,254

)

$

(26,254

)

Licensed healthcare worker retention bonus

(19,634

)

-

 

-

 

(19,634

)

Amortization of reacquired franchise agreements

-

 

(9,408

)

-

 

(9,408

)

Long-term incentive compensation

-

 

-

 

(7,801

)

(7,801

)

Litigation settlements

(4,000

)

-

 

-

 

(4,000

)

Direct costs related to COVID-19

(310

)

(988

)

(89

)

(1,387

)

Medicare cap sequestration adjustment

(138

)

-

 

-

 

(138

)

Pretax impact on earnings

(24,082

)

(10,396

)

(34,144

)

(68,622

)

Excess tax benefits on stock compensation

-

 

-

 

5,928

 

5,928

 

Income tax benefit on the above

6,117

 

2,755

 

5,190

 

14,062

 

After-tax impact on earnings $

(17,965

)

$

(7,641

)

$

(23,026

)

$

(48,632

)

 
(b) Included in the results of operations for 2021 are the following significant credits/(charges) which may not be indicative of ongoing operations
(in thousands):
Three Months Ended December 31, 2021
VITAS Roto-Rooter Corporate Consolidated
 
Stock option expense $

-

 

$

-

 

$

(6,159

)

$

(6,159

)

Long-term incentive compensation

-

 

-

 

(3,659

)

(3,659

)

Amortization of reacquired franchise agreements

-

 

(2,352

)

-

 

(2,352

)

Direct costs related to COVID-19

(959

)

(884

)

-

 

(1,843

)

Pretax impact on earnings

(959

)

(3,236

)

(9,818

)

(14,013

)

Excess tax benefits on stock compensation

-

 

-

 

4,579

 

4,579

 

Income tax benefit on the above

243

 

859

 

1,504

 

2,606

 

After-tax impact on earnings $

(716

)

$

(2,377

)

$

(3,735

)

$

(6,828

)

 
For the Year Ended December 31, 2021
VITAS Roto-Rooter Corporate Consolidated
 
Stock option expense $

-

 

$

-

 

$

(22,502

)

$

(22,502

)

Direct costs related to COVID-19

(16,297

)

(2,434

)

(38

)

(18,769

)

Amortization of reacquired franchise agreements

-

 

(9,408

)

-

 

(9,408

)

Long-term incentive compensation

-

 

-

 

(9,167

)

(9,167

)

Facility relocation expenses

(1,855

)

-

 

-

 

(1,855

)

Litigation settlements

-

 

98

 

-

 

98

 

Other

-

 

-

 

(218

)

(218

)

Pretax impact on earnings

(18,152

)

(11,744

)

(31,925

)

(61,821

)

Excess tax benefits on stock compensation

-

 

-

 

9,884

 

9,884

 

Income tax benefit on the above

4,611

 

3,112

 

4,757

 

12,480

 

After-tax impact on earnings $

(13,541

)

$

(8,632

)

$

(17,284

)

$

(39,457

)

 
(c) VITAS has 9 large (greater than 450 ADC), 14 medium (greater than 200 but less than 450 ADC) and 27 small (less than 200 ADC) hospice programs. Of Vitas' 30 Medicare provider numbers, for the current cap year, 23 provider numbers have a Medicare cap cushion of greater than 10%, two provider numbers have a Medicare cap cushion between 5% and 10% and five provider numbers have a Medicare cap liability.

 

Contacts

David P. Williams

(513) 762-6901

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