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News Release Details

Chemed Reports Third-Quarter 2022 Results - Increases 2022 Earnings Guidance

October 31, 2022 at 4:15 PM EDT

 

CINCINNATI--(BUSINESS WIRE)--Oct. 31, 2022-- 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, 2022, versus the comparable prior-year period, as follows:

Consolidated operating results:

  • Revenue declined 2.3% to $526 million
  • GAAP Diluted Earnings-per-Share (EPS) of $3.78
  • Adjusted Diluted EPS of $4.74, a decline of 6.3%

VITAS segment operating results:

  • Net Patient Revenue of $297 million, a decline of 6.6%
  • Average Daily Census (ADC) of 17,242, a decline of 4.4%
  • Admissions of 14,680, a decline of 16.6%
  • Net Income, excluding certain discrete items, of $33.2 million, a decline of 25.9%
  • Adjusted EBITDA, excluding Medicare Cap, of $45.4 million, a decline of 24.9%
  • Adjusted EBITDA margin, excluding Medicare Cap, of 15.3%, a decrease of 375-basis points

Roto-Rooter segment operating results:

  • Revenue of $230 million, an increase of 3.9%
  • Net Income, excluding certain discrete items, of $49.3 million, an increase of 5.9%
  • Adjusted EBITDA of $69.5 million, an increase of 5.7%
  • Adjusted EBITDA margin of 30.2%, an increase of 50-basis points

VITAS

VITAS net revenue was $297 million in the third quarter of 2022, which is a decline of 6.6%, when compared to the prior-year period. This revenue decline is comprised primarily of a 4.4% reduction in days-of-care and a geographically weighted average Medicare reimbursement rate decrease of approximately 0.2%. Reimbursement rates in the quarter were negatively impacted by 200-basis points as a result of CMS reimplementing the 2% sequestration cut that was suspended at the start of the pandemic. Acuity mix shift had a net impact of reducing revenue approximately $5.3 million, or 1.7%, 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 third quarter of 2022, VITAS accrued $0.6 million in Medicare Cap billing limitations. This compares to a $0.1 million Medicare Cap billing limitation in the third quarter of 2021.

Of VITAS’ 30 Medicare provider numbers, 25 provider numbers have a 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 an estimated fiscal 2022 Medicare Cap billing limitation liability.

Average revenue per patient per day in the third quarter of 2022 was $190.78 which, including acuity mix shift, is 193-basis points below the prior-year period. Reimbursement for routine home care and high acuity care averaged $168.20 and $990.67, respectively. During the quarter, high acuity days-of-care were 2.7% of total days of care, 41-basis points below the prior-year quarter.

The third quarter 2022 gross margin, excluding Medicare Cap, expenses related to VITAS’ 12-month hiring and retention program, and increased costs directly related to operating during the pandemic, was 22.5%. This is a 323-basis point margin decline when compared to the third quarter of 2021. Approximately 200-basis points of this decline is from Medicare reimplementing sequestration effective July 1, 2022. An additional 70-basis points of this margin decline is attributed to increased staffing and patient capacity from VITAS’ hiring and retention program.

Selling, general and administrative expense was $21.6 million in the third quarter of 2022 and compares to $21.4 million incurred in the prior-year quarter. Adjusted EBITDA, excluding Medicare Cap, totaled $45.4 million in the quarter, a decrease of 24.9%. Adjusted EBITDA margin in the quarter, excluding Medicare Cap, was 15.3%, which is 375-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 70-basis points due to increased staffing and patient capacity from VITAS’ hiring and retention program.

Roto-Rooter

Roto-Rooter generated quarterly revenue of $230 million in the third quarter of 2022, an increase of 3.9%, when compared to the prior-year quarter.

Roto-Rooter branch commercial revenue in the quarter totaled $55.9 million, an increase of 6.9%, over the prior year. This aggregate commercial revenue growth consisted of drain cleaning revenue increasing 2.9%, plumbing increasing 11.6%, excavation increasing 9.8%, and water restoration increasing 6.7%.

Roto-Rooter branch residential revenue in the quarter totaled $155 million, an increase of 2.5%, over the prior-year period. This aggregate residential revenue growth consisted of drain cleaning decreasing 2.9%, plumbing expanding 5.9%, excavation expanding 0.9%, and water restoration increasing 7.6%.

Roto-Rooter’s gross margin in the quarter was 53.4%, a 37-basis point increase when compared to the third quarter of 2021. Adjusted EBITDA in the third quarter of 2022 totaled $69.5 million, an increase of 5.7%. The Adjusted EBITDA margin in the quarter was 30.2%, which is a 50-basis point improvement when compared to the prior year.

Chemed Consolidated

As of September 30, 2022, Chemed had total cash and cash equivalents of $7.8 million and $101 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 September 30, 2022, the Company had approximately $401 million of undrawn borrowing capacity under this credit agreement.

During the quarter, the Company repurchased 50,000 shares of Chemed stock for $23.9 million which equates to a cost per share of $477.68. As of September 30, 2022, there was approximately $101 million of remaining share repurchase authorization under its plan.

Guidance for 2022

Historically, Chemed earnings guidance has been developed using previous periods’ key operating metrics which are then modeled and projected out for future periods. Critical within these projections is the understanding of traditional patterned correlations among key operating metrics. This modeling exercise also takes into consideration anticipated industry and macro-economic issues outside of management’s control but are somewhat predictable in terms of timing and impact on our business segments’ operating results.

The COVID-19 pandemic, uncertainty regarding forward looking inflation, and a potential economic recession, has made accurate modeling and providing meaningful earnings guidance exceptionally challenging. Since the start of the pandemic, Chemed has been able to successfully navigate within this rapidly changing environment and produce operating results that we believe provide us with the ability to issue earnings guidance for the remainder of the 2022 calendar year. This guidance should be taken with the recognition that the above macro issues could materially impact the company’s ability to achieve this guidance.

Based upon the above discussion, VITAS 2022 revenue, prior to Medicare Cap, is estimated to decline 4.5% to 5.0% when compared to 2021. A portion of the estimated revenue decline, approximately $15 million or 118-basis points, is the result of the phase out of sequestration relief over the first half of 2022 compared to a full year of sequestration relief in 2021. ADC is estimated to decline 3.4%. Full year adjusted EBITDA margin, prior to Medicare Cap, is estimated to be 17.1% to 17.2%. We are currently estimating $8.1 million for Medicare Cap billing limitations in calendar year 2022.

Roto-Rooter is forecasted to achieve full-year 2022 revenue growth of 6.2% to 6.5%. Roto-Rooter’s adjusted EBITDA margin for 2022 is expected to be 29.5% to 29.7%.

Based upon the above, full-year 2022 earnings per diluted share, excluding non-cash expense for stock options, tax benefits from stock option exercises, costs related to litigation, retention program for licensed healthcare employees, and other discrete items, is estimated to be in the range of $19.60 to $19.70. This compares to our previous 2022 adjusted earnings per share guidance of $19.30 to $19.50. Current 2022 guidance assumes an effective corporate tax rate on adjusted earnings of 25.1% and a diluted share count of 15.12 million shares. Chemed’s 2021 reported adjusted earnings per diluted share was $19.33.

Conference Call

Chemed will host a conference call and webcast at 10 a.m., ET, on Tuesday November 1, 2022, 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/8ovxyhbq.

Participants may also register via teleconference at:

https://register.vevent.com/register/BId400f56fad7a4877af359aca78465824. 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 September 30, Nine Months Ended September 30,

2022

2021

2022

2021

Service revenues and sales $

526,472

 

$

538,667

 

1,588,309

 

$

1,598,283

 

Cost of services provided and goods sold

346,934

 

342,164

 

1,020,307

 

1,033,130

 

Selling, general and administrative expenses (aa)

83,992

 

89,217

 

261,799

 

274,654

 

Depreciation

12,154

 

11,844

 

37,006

 

37,171

 

Amortization

2,520

 

2,510

 

7,558

 

7,530

 

Other operating expense/(income)

15

 

63

 

(530

)

789

 

Total costs and expenses

445,615

 

445,798

 

1,326,140

 

1,353,274

 

Income from operations

80,857

 

92,869

 

262,169

 

245,009

 

Interest expense

(1,271

)

(583

)

(2,983

)

(1,343

)

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

(3,115

)

3,134

 

(11,907

)

10,521

 

Income before income taxes

76,471

 

95,420

 

247,279

 

254,187

 

Income taxes

(19,598

)

(23,417

)

(59,781

)

(60,262

)

Net income $

56,873

 

$

72,003

 

$

187,498

 

$

193,925

 

Earnings Per Share
Net income $

3.82

 

$

4.62

 

$

12.55

 

$

12.27

 

Average number of shares outstanding

14,888

 

15,587

 

14,935

 

15,808

 

Diluted Earnings Per Share
Net income $

3.78

 

$

4.55

 

$

12.41

 

$

12.06

 

Average number of shares outstanding

15,042

 

15,842

 

15,114

 

16,083

 

 
(aa) Selling, general and administrative ("SG&A") expenses comprise (in thousands):
 
Three Months Ended September 30, Nine Months Ended September 30,

2022

2021

2022

2021

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

85,118

 

$

84,197

 

$

269,118

 

$

259,376

 

Market value adjustments related to deferred
compensation trusts

(3,176

)

3,078

 

(12,196

)

9,770

 

Long-term incentive compensation

2,050

 

1,942

 

4,877

 

5,508

 

Total SG&A expenses $

83,992

 

$

89,217

 

$

261,799

 

$

274,654

 

 
(bb) Other (expense)/income--net comprises (in thousands):
Three Months Ended September 30, Nine Months Ended September 30,

2022

2021

2022

2021

Market value adjustments related to deferred
compensation trusts $

(3,176

)

$

3,078

 

$

(12,196

)

$

9,770

 

Interest income

62

 

57

 

288

 

288

 

Other

(1

)

(1

)

1

 

463

 

Total other (expense)/income--net $

(3,115

)

$

3,134

 

$

(11,907

)

$

10,521

 

CHEMED CORPORATION AND SUBSIDIARY COMPANIES
CONSOLIDATED BALANCE SHEETS
(in thousands, except per share data)(unaudited)
 
September 30,

2022

2021

Assets
Current assets
Cash and cash equivalents $

7,781

 

$

28,743

 

Accounts receivable less allowances

121,662

 

118,193

 

Inventories

10,469

 

8,394

 

Prepaid income taxes

27,526

 

12,940

 

Prepaid expenses

31,431

 

32,294

 

Total current assets

198,869

 

200,564

 

Investments of deferred compensation plans held in trust

90,097

 

102,045

 

Properties and equipment, at cost less accumulated depreciation

193,705

 

190,781

 

Lease right of use asset

131,430

 

127,077

 

Identifiable intangible assets less accumulated amortization

102,103

 

110,606

 

Goodwill

579,887

 

578,610

 

Other assets

60,104

 

8,450

 

Total Assets $

1,356,195

 

$

1,318,133

 

Liabilities
Current liabilities
Accounts payable $

77,170

 

$

60,042

 

Current portion of long-term debt

5,000

 

-

 

Income taxes

-

 

180

 

Accrued insurance

56,732

 

52,645

 

Accrued compensation

67,230

 

97,256

 

Accrued legal

653

 

1,497

 

Short-term lease liability

39,813

 

35,148

 

Other current liabilities

51,552

 

39,318

 

Total current liabilities

298,150

 

286,086

 

Deferred income taxes

33,590

 

20,100

 

Long-term debt

95,850

 

-

 

Deferred compensation liabilities

89,873

 

100,409

 

Long-term lease liability

105,594

 

104,198

 

Other liabilities

11,722

 

27,621

 

Total Liabilities

634,779

 

538,414

 

Stockholders' Equity
Capital stock

36,670

 

36,402

 

Paid-in capital

1,100,161

 

1,007,506

 

Retained earnings

2,141,418

 

1,901,245

 

Treasury stock, at cost

(2,559,141

)

(2,167,640

)

Deferred compensation payable in Company stock

2,308

 

2,206

 

Total Stockholders' Equity

721,416

 

779,719

 

Total Liabilities and Stockholders' Equity $

1,356,195

 

$

1,318,133

 

CHEMED CORPORATION AND SUBSIDIARY COMPANIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)(unaudited)
 
For the Nine Months Ended September 30,

2022

2021

Cash Flows from Operating Activities
Net income $

187,498

 

$

193,925

 

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

44,564

 

44,701

 

Stock option expense

19,343

 

16,342

 

Provision/(benefit) for deferred income taxes

10,408

 

(561

)

Noncash long-term incentive compensation

4,343

 

5,344

 

Noncash directors' compensation

1,170

 

1,173

 

Amortization of debt issuance costs

247

 

229

 

Payments on previously accrued litigation settlements

-

 

(9,440

)

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

16,166

 

9,247

 

Increase in inventories

(360

)

(1,299

)

Decrease/(increase) in prepaid expenses

1,257

 

(6,117

)

(Increase)/decrease in accounts payable and
other current liabilities

(15,765

)

6,330

 

Change in current income taxes

(10,277

)

(15,749

)

Net change in lease assets and liabilities

313

 

15

 

Increase in other assets

(42,424

)

(13,561

)

(Decrease)/increase in other liabilities

(6,555

)

13,474

 

Other (uses)/sources

(241

)

974

 

Net cash provided by operating activities

209,687

 

245,027

 

Cash Flows from Investing Activities
Capital expenditures

(39,066

)

(44,472

)

Proceeds from sale of fixed assets

2,037

 

710

 

Business combinations, net of cash acquired

(2,044

)

-

 

Other (uses)/sources

(841

)

50

 

Net cash used by investing activities

(39,914

)

(43,712

)

Cash Flows from Financing Activities
Payments on revolving line of credit

(299,400

)

(1,500

)

Proceeds from revolving line of credit

116,500

 

1,500

 

Proceeds from other long-term debt

100,000

 

-

 

Payments on other long-term debt

(1,250

)

-

 

Purchases of treasury stock

(101,539

)

(330,380

)

Proceeds from exercise of stock options

17,128

 

17,918

 

Dividends paid

(16,391

)

(16,457

)

Capital stock surrendered to pay taxes on stock-based compensation

(12,497

)

(9,445

)

Change in cash overdrafts payable

5,535

 

3,054

 

Debt issuance costs

(1,584

)

-

 

Other (uses)/sources

(1,389

)

63

 

Net cash used by financing activities

(194,887

)

(335,247

)

Decrease in Cash and Cash Equivalents

(25,114

)

(133,932

)

Cash and cash equivalents at beginning of year

32,895

 

162,675

 

Cash and cash equivalents at end of year $

7,781

 

$

28,743

 

CHEMED CORPORATION AND SUBSIDIARY COMPANIES
CONSOLIDATING STATEMENTS OF INCOME
FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2022 AND 2021
(in thousands)(unaudited)
Chemed
VITAS Roto-Rooter Corporate Consolidated
2022 (a)
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

 

 
2021 (b)
Service revenues and sales $

317,411

 

$

221,256

 

$

-

 

$

538,667

 

Cost of services provided and goods sold

238,212

 

103,952

 

-

 

342,164

 

Selling, general and administrative expenses

21,372

 

51,914

 

15,931

 

89,217

 

Depreciation

5,286

 

6,539

 

19

 

11,844

 

Amortization

18

 

2,492

 

2,510

 

Other operating expense/(income)

65

 

(3

)

1

 

63

 

Total costs and expenses

264,953

 

164,894

 

15,951

 

445,798

 

Income/(loss) from operations

52,458

 

56,362

 

(15,951

)

92,869

 

Interest expense

(43

)

(285

)

(255

)

(583

)

Intercompany interest income/(expense)

4,513

 

1,847

 

(6,360

)

-

 

Other income—net

22

 

34

 

3,078

 

3,134

 

Income/(loss) before income taxes

56,950

 

57,958

 

(19,488

)

95,420

 

Income taxes

(14,000

)

(13,404

)

3,987

 

(23,417

)

Net income/(loss) $

42,950

 

$

44,554

 

$

(15,501

)

$

72,003

 

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

 

 
2021 (b)
Service revenues and sales $

945,135

 

$

653,148

 

$

-

 

$

1,598,283

 

Cost of services provided and goods sold

724,398

 

308,732

 

-

 

1,033,130

 

Selling, general and administrative expenses

66,094

 

158,791

 

49,769

 

274,654

 

Depreciation

17,749

 

19,359

 

63

 

37,171

 

Amortization

53

 

7,477

 

-

 

7,530

 

Other operating expense

655

 

133

 

1

 

789

 

Total costs and expenses

808,949

 

494,492

 

49,833

 

1,353,274

 

Income/(loss) from operations

136,186

 

158,656

 

(49,833

)

245,009

 

Interest expense

(129

)

(464

)

(750

)

(1,343

)

Intercompany interest income/(expense)

13,524

 

5,116

 

(18,640

)

-

 

Other income—net

654

 

97

 

9,770

 

10,521

 

Income/(loss) before income taxes

150,235

 

163,405

 

(59,453

)

254,187

 

Income taxes

(36,805

)

(38,901

)

15,444

 

(60,262

)

Net income/(loss) $

113,430

 

$

124,504

 

$

(44,009

)

$

193,925

 

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

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

)

Licensed healthcare retention bonus

9,559

 

-

 

-

 

9,559

 

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 $

44,732

 

$

69,544

 

$

(5,548

)

$

108,728

 

 

2021

Net income/(loss) $

42,950

 

$

44,554

 

$

(15,501

)

$

72,003

 

Add/(deduct):
Interest expense

43

 

285

 

255

 

583

 

Income taxes

14,000

 

13,404

 

(3,987

)

23,417

 

Depreciation

5,286

 

6,539

 

19

 

11,844

 

Amortization

18

 

2,492

 

-

 

2,510

 

EBITDA

62,297

 

67,274

 

(19,214

)

110,357

 

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

(4,513

)

(1,847

)

6,360

 

-

 

Interest income

(24

)

(34

)

-

 

(58

)

Stock option expense

-

 

-

 

3,998

 

3,998

 

Direct costs related to COVID-19

2,501

 

415

 

-

 

2,916

 

Long-term incentive compensation

-

 

-

 

1,942

 

1,942

 

Other

-

 

-

 

218

 

218

 

Adjusted EBITDA $

60,261

 

$

65,808

 

$

(6,696

)

$

119,373

 

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

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

 

Licensed healthcare retention bonus

9,559

 

-

 

-

 

9,559

 

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 $

142,735

 

$

204,451

 

$

(17,344

)

$

329,842

 

2021

Net income/(loss) $

113,430

 

$

124,504

 

$

(44,009

)

$

193,925

 

Add/(deduct):
Interest expense

129

 

464

 

750

 

1,343

 

Income taxes

36,805

 

38,901

 

(15,444

)

60,262

 

Depreciation

17,749

 

19,359

 

63

 

37,171

 

Amortization

53

 

7,477

 

-

 

7,530

 

EBITDA

168,166

 

190,705

 

(58,640

)

300,231

 

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

(13,524

)

(5,116

)

18,640

 

-

 

Interest income

(191

)

(97

)

-

 

(288

)

Direct costs related to COVID-19

15,338

 

1,551

 

38

 

16,927

 

Stock option expense

-

 

-

 

16,342

 

16,342

 

Long-term incentive compensation

-

 

-

 

5,508

 

5,508

 

Litigation settlements

-

 

(98

)

-

 

(98

)

Other

-

 

-

 

218

 

218

 

Adjusted EBITDA $

169,789

 

$

186,945

 

$

(17,894

)

$

338,840

 

 
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,

2022

2021

2022

2021

Net income as reported $

56,873

 

$

72,003

 

$

187,498

 

$

193,925

 

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

4,676

 

3,998

 

19,343

 

16,342

 

Licensed healthcare worker retention bonus

9,559

 

-

 

9,559

 

-

 

Amortization of reacquired franchise agreements

2,352

 

2,352

 

7,056

 

7,056

 

Long-term incentive compensation

2,050

 

1,942

 

4,877

 

5,508

 

Direct costs related to COVID-19

89

 

2,916

 

1,387

 

16,927

 

Medicare cap sequestration adjustment

-

 

-

 

138

 

-

 

Facility relocation expenses

-

 

-

 

-

 

1,855

 

Litigation settlements

-

 

-

 

-

 

(98

)

Other

-

 

218

 

-

 

218

 

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

(3,902

)

(2,146

)

(8,351

)

(9,874

)

Excess tax benefits on stock compensation

(450

)

(1,199

)

(4,390

)

(5,305

)

Adjusted net income $

71,247

 

$

80,084

 

$

217,117

 

$

226,554

 

 
Diluted Earnings Per Share As Reported
Net income $

3.78

 

$

4.55

 

$

12.41

 

$

12.06

 

Average number of shares outstanding

15,042

 

15,842

 

15,114

 

16,083

 

 
Adjusted Diluted Earnings Per Share
Adjusted net income $

4.74

 

$

5.06

 

$

14.37

 

$

14.09

 

Average number of shares outstanding

15,042

 

15,842

 

15,114

 

16,083

 

 
(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

2022

2021

2022

2021

Net revenue ($000) (c)
Homecare $

256,253

 

$

268,137

 

$

771,520

 

$

796,817

 

Inpatient

24,526

 

29,368

 

75,714

 

85,895

 

Continuous care

18,600

 

22,027

 

57,717

 

73,658

 

Other

3,240

 

3,225

 

9,461

 

9,241

 

Subtotal $

302,619

 

$

322,757

 

$

914,412

 

$

965,611

 

Room and board, net

(2,513

)

(2,130

)

(6,796

)

(7,451

)

Contractual allowances

(2,952

)

(3,119

)

(8,992

)

(9,428

)

Medicare cap allowance

(618

)

(97

)

(5,118

)

(3,597

)

Net Revenue $

296,536

 

$

317,411

 

$

893,506

 

$

945,135

 

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

84.7

 

%

83.1

 

%

84.4

 

%

82.5

 

%

Inpatient

8.1

 

9.1

 

8.3

 

8.9

 

Continuous care

6.1

 

6.8

 

6.3

 

7.6

 

Other

1.1

 

1.0

 

1.0

 

1.0

 

Subtotal

100.0

 

100.0

 

100.0

 

100.0

 

Room and board, net

(0.8

)

(0.7

)

(0.7

)

(0.8

)

Contractual allowances

(1.0

)

(1.0

)

(1.0

)

(1.0

)

Medicare cap allowance

(0.2

)

-

 

(0.6

)

(0.3

)

Net Revenue

98.0

 

%

98.3

 

%

97.7

 

%

97.9

 

%

Days of care
Homecare

1,271,678

 

1,342,841

 

3,796,954

 

4,008,215

 

Nursing home

264,407

 

258,700

 

771,921

 

735,906

 

Respite

6,635

 

5,331

 

18,098

 

15,509

 

Subtotal routine homecare and respite

1,542,720

 

1,606,872

 

4,586,973

 

4,759,630

 

Inpatient

23,435

 

27,962

 

71,177

 

82,129

 

Continuous care

20,097

 

24,299

 

61,981

 

79,385

 

Total

1,586,252

 

1,659,133

 

4,720,131

 

4,921,144

 

 
Number of days in relevant time period

92

 

92

 

273

 

273

 

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

13,823

 

14,596

 

13,908

 

14,682

 

Nursing home

2,874

 

2,812

 

2,828

 

2,696

 

Respite

72

 

58

 

66

 

57

 

Subtotal routine homecare and respite

16,769

 

17,466

 

16,802

 

17,435

 

Inpatient

255

 

304

 

261

 

301

 

Continuous care

218

 

264

 

227

 

291

 

Total

17,242

 

18,034

 

17,290

 

18,027

 

Total Admissions

14,680

 

17,598

 

45,945

 

52,573

 

Total Discharges

14,603

 

17,686

 

46,139

 

52,747

 

Average length of stay (days)

106.2

 

96.0

 

104.9

 

95.0

 

Median length of stay (days)

17.0

 

13.0

 

16.0

 

13.0

 

ADC by major diagnosis
Cerebro

39.3

 

%

36.4

 

%

38.5

 

%

36.7

 

%

Neurological

22.0

 

22.7

 

22.3

 

22.5

 

Cancer

10.7

 

12.0

 

11.0

 

12.1

 

Cardio

15.4

 

15.5

 

15.6

 

15.5

 

Respiratory

7.2

 

7.5

 

7.3

 

7.5

 

Other

5.4

 

5.9

 

5.3

 

5.7

 

Total

100.0

 

%

100.0

 

%

100.0

 

%

100.0

 

%

Admissions by major diagnosis
Cerebro

25.9

 

%

20.3

 

%

24.2

 

%

21.1

 

%

Neurological

12.4

 

12.1

 

12.7

 

12.2

 

Cancer

26.6

 

27.0

 

26.2

 

26.9

 

Cardio

14.9

 

14.1

 

14.8

 

14.4

 

Respiratory

9.5

 

11.3

 

10.3

 

10.9

 

Other

10.7

 

15.2

 

11.8

 

14.5

 

Total

100.0

 

%

100.0

 

%

100.0

 

%

100.0

 

%

 
Estimated uncollectible accounts as a percent of revenues

1.0

 

%

1.0

 

%

1.0

 

%

1.0

 

%

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

33.8

 

33.7

 

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

24.9

 

23.4

 

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, 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 September 30, 2022
VITAS Roto-Rooter Corporate Consolidated
 
Licensed healthcare worker retention bonus $

(9,559

)

$

-

 

$

-

 

$

(9,559

)

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

(9,559

)

(2,352

)

(6,815

)

(18,726

)

Excess tax benefits on stock compensation

-

 

-

 

450

 

450

 

Income tax benefit on the above

2,428

 

623

 

851

 

3,902

 

After-tax impact on earnings $

(7,131

)

$

(1,729

)

$

(5,514

)

$

(14,374

)

 
Nine Months Ended September 30, 2022
VITAS Roto-Rooter Corporate Consolidated
 
Stock option expense $

-

 

$

-

 

$

(19,343

)

$

(19,343

)

Licensed healthcare worker retention bonus

(9,559

)

-

 

-

 

(9,559

)

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

(10,007

)

(8,044

)

(24,309

)

(42,360

)

Excess tax benefits on stock compensation

-

 

-

 

4,390

 

4,390

 

Income tax benefit on the above

2,542

 

2,131

 

3,678

 

8,351

 

After-tax impact on earnings $

(7,465

)

$

(5,913

)

$

(16,241

)

$

(29,619

)

 
(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 September 30, 2021
VITAS Roto-Rooter Corporate Consolidated
 
Stock option expense $

-

 

$

-

 

$

(3,998

)

$

(3,998

)

Direct costs related to COVID-19

(2,501

)

(415

)

-

 

(2,916

)

Amortization of reacquired franchise agreements

-

 

(2,352

)

-

 

(2,352

)

Long-term incentive compensation

-

 

-

 

(1,942

)

(1,942

)

Other

-

 

-

 

(218

)

(218

)

Pretax impact on earnings

(2,501

)

(2,767

)

(6,158

)

(11,426

)

Excess tax benefits on stock compensation

-

 

-

 

1,199

 

1,199

 

Income tax benefit on the above

635

 

733

 

778

 

2,146

 

After-tax impact on earnings $

(1,866

)

$

(2,034

)

$

(4,181

)

$

(8,081

)

 
Nine Months Ended September 30, 2021
VITAS Roto-Rooter Corporate Consolidated
 
Direct costs related to COVID-19 $

(15,338

)

$

(1,551

)

$

(38

)

$

(16,927

)

Stock option expense

-

 

-

 

(16,342

)

(16,342

)

Amortization of reacquired franchise agreements

-

 

(7,056

)

-

 

(7,056

)

Long-term incentive compensation

-

 

-

 

(5,508

)

(5,508

)

Facility relocation expenses

(1,855

)

-

 

-

 

(1,855

)

Litigation settlements

-

 

98

 

-

 

98

 

Other

-

 

-

 

(218

)

(218

)

Pretax impact on earnings

(17,193

)

(8,509

)

(22,106

)

(47,808

)

Excess tax benefits on stock compensation

-

 

-

 

5,305

 

5,305

 

Income tax benefit on the above

4,367

 

2,255

 

3,252

 

9,874

 

After-tax impact on earnings $

(12,826

)

$

(6,254

)

$

(13,549

)

$

(32,629

)

 
(c) VITAS has 9 large (greater than 450 ADC), 16 medium (greater than 200 but less than 450 ADC) and 25 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 Medicare cap cushion between 5% and 10%, one provider number has a Medicare cap cushion between 1% and 5% and two provider numbers have a Medicare cap liability.

 

David P. Williams
(513) 762-6901

Source: Chemed Corporation