Chemed Corporation (Chemed) (NYSE: CHE), which operates VITAS Healthcare Corporation (VITAS), the nation’s largest provider of end-of-life care, and Roto-Rooter, the nation’s largest commercial and residential plumbing and drain cleaning services provider, reported financial results for its first quarter ended March 31, 2018, versus the comparable prior-year period, as follows:
Consolidated operating results:
- Revenue increased 8.2% to $439 million
- GAAP Diluted Earnings-per-Share of $2.66, an increase of 49.4%
- Adjusted Diluted EPS of $2.72, an increase of 49.5%
VITAS segment operating results:
- Net Patient Revenue of $292 million, an increase of 3.4%
- Average Daily Census (ADC) of 17,209, an increase of 6.1%
- Admissions of 18,279, an increase of 4.1%
- Net Income of $32.0 million, an increase of 55.4%
- Adjusted EBITDA of $44.7 million, an increase of 16.3%
Roto-Rooter segment operating results:
- Revenue of $147 million, an increase of 19.1%
- Net Income of $22.9 million, an increase of 56.9%
- Adjusted EBITDA of $33.9 million, an increase of 28.7%
- Adjusted EBITDA margin of 23.0%, an increase of 171 basis points
Effective January 1, 2018, the Financial Accounting Standards Board (FASB) mandated changes in revenue recognition under Generally Accepted Accounting Principles (GAAP). For Chemed the accounting standard mandated reclassification of certain costs within the 2018 income statement when compared to prior-year formats. These reclassifications do not impact EBITDA, pretax income or net income. This accounting standard has been adopted on a modified retrospective basis, meaning prior-year results are not reclassified and are reported using historical revenue recognition accounting standards.
This resulted in the reclassification of net room and board expenses associated with certain patients residing in nursing homes to be reclassified from cost of services to revenue, effectively reducing VITAS revenue and cost of sales by $2.6 million. In addition, uncollectable accounts receivable, commonly referred to as normal bad debt expense, historically included in selling, general and administrative expenses for VITAS and Roto-Rooter, are now netted against service revenue and sales.
The discussion of operating results below does recast net room and board and estimated uncollectable receivables in the first quarter of 2017 to facilitate analysis of operating results in a format consistent with the 2018 revenue recognition accounting standard.
VITAS
VITAS net revenue was $292 million in the first quarter of 2018, which is an increase of 5.5%, when compared to the prior-year period. This revenue increase is comprised primarily of a geographically weighted average Medicare reimbursement rate increase of approximately 0.7%, a 6.1% increase in average daily census, and a reduction in Medicare Cap that increased revenue 0.6%. This growth is partially offset by acuity mix shift that negatively impacted revenue growth 1.8% when compared to the prior-year period.
In the first quarter of 2018, VITAS reversed $1.8 million in Medicare Cap billing limitations recorded in the fourth quarter of 2017 related to the 2018 Medicare Cap billing period.
At March 31, 2018, VITAS had 30 Medicare provider numbers, two of which have a current estimated 2018 Medicare Cap billing limitation of approximately $616,000.
Of VITAS’ 30 unique Medicare provider numbers, 27 provider numbers have a Medicare Cap cushion of 10% or greater, one provider number has a cap cushion between 5% and 10% and two provider numbers have a Medicare Cap billing limitation for the 2018 Medicare Cap period.
Average revenue per patient per day in the quarter was $189.76, which is 1.2% below the prior-year period. Routine home care reimbursement and high acuity care averaged $163.53 and $706.24, respectively. During the quarter, high acuity days of care were 4.8% of total days of care, 60-basis points less than the prior-year quarter.
The first quarter of 2018 gross margin, excluding Medicare Cap, was 21.7%, which is a 97-basis point improvement when compared to the first quarter of 2017.
Selling, general and administrative expense was $20.5 million in the first quarter of 2018, which is a favorable decrease of 2.4% compared to the prior-year quarter. Adjusted EBITDA, excluding Medicare Cap, totaled $42.9 million in the quarter, an increase of 11.6%. Adjusted EBITDA margin, excluding Medicare Cap, was 14.8% in the quarter which is an 89-basis point improvement when compared to the prior-year period.
Roto-Rooter
Roto-Rooter’s plumbing and drain cleaning business generated sales of $147 million for the first quarter of 2018, an increase of $24.7 million, or 20.2%, over the prior-year quarter. Revenue from water restoration totaled $27.7 million, an increase of $9.6 million, or 53.3%, when compared to the prior-year quarter.
Roto-Rooter’s gross margin in the quarter was 47.5%, a 69-basis point decline when compared to the first quarter of 2017. Adjusted EBITDA in the first quarter of 2018 totaled $33.9 million, an increase of 28.7%. The Adjusted EBITDA margin in the quarter was 23.0% which is a 152-basis point improvement over the prior year.
Chemed Consolidated
As of March 31, 2018, Chemed had total cash and cash equivalents of $14 million and debt of $143 million.
In June 2014, Chemed entered into a five-year Amended and Restated Credit Agreement that consisted of a $100 million amortizable term loan and a $350 million revolving credit facility. The interest rate on this facility has a floating rate that is currently LIBOR plus 112.5 basis points. At March 31, 2018, the Company had approximately $244 million of undrawn borrowing capacity under this credit agreement.
During the quarter, the Company repurchased 300,000 shares of Chemed stock for $81.1 million which equates to a cost per share of $270.42. On March 6, 2018, Chemed’s Board of Directors authorized an additional $150 million for stock repurchase under Chemed’s existing share repurchase program. As of March 31, 2018, there was $124.4 million of remaining share repurchase authorization under this plan.
Chemed restarted its share repurchase program in 2007. Since that time Chemed has repurchased 13.6 million shares, aggregating over $1.0 billion at an average share cost of $76.75. Including dividends over this period, Chemed has returned over $1.2 billion to shareholders.
Guidance for 2018
The first-quarter 2018 operating results did exceed Chemed management’s expectations. The Company has reiterated the earnings guidance issued in February 2018 and anticipates providing updated guidance for the second half of 2018 when it reports second-quarter results.
Conference Call
Chemed will host a conference call and webcast at 10 a.m., ET, on Friday, April 20, 2018, to discuss the Company's quarterly results and to provide an update on its business. The dial-in number for the conference call is (844) 743-2500 for U.S. and Canadian participants and +1 (661) 378-9533 for international participants. The participant passcode/Conference ID is 9986979. A live webcast of the call can be accessed on Chemed's website at www.chemed.com by clicking on Investor Relations Home.
A taped replay of the conference call will be available beginning approximately 24 hours after the call's conclusion. It can be accessed by dialing (855) 859-2056 for U.S. and Canadian callers and +1 (404) 537-3406 for international callers and will be available for one week following the live call. The replay Conference ID is 9986979. An archived webcast will also be available at www.chemed.com.
Chemed Corporation operates in the healthcare field through its VITAS Healthcare Corporation subsidiary. VITAS provides daily hospice services to over 17,000 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 restoration services through company-owned branches, independent contractors and franchisees in the United States and Canada. Roto-Rooter also has licensed master franchisees in the republics of Indonesia and Singapore, and the Philippines.
This press release contains information about Chemed’s EBITDA, Adjusted EBITDA and Adjusted Diluted EPS, which are not measures derived in accordance with GAAP and which exclude components that are important to understanding Chemed’s financial performance. In reporting its operating results, Chemed provides EBITDA, Adjusted EBITDA and Adjusted Diluted EPS measures to help investors and others evaluate the Company’s operating results, compare its operating performance with that of similar companies that have different capital structures and evaluate its ability to meet its future debt service, capital expenditures and working capital requirements. Chemed’s management similarly uses EBITDA, Adjusted EBITDA and Adjusted Diluted EPS to assist it in evaluating the performance of the Company across fiscal periods and in assessing how its performance compares to its peer companies. These measures also help Chemed’s management to estimate the resources required to meet Chemed’s future financial obligations and expenditures. Chemed’s EBITDA, Adjusted EBITDA and Adjusted Diluted EPS should not be considered in isolation or as a substitute for comparable measures calculated and presented in accordance with GAAP. We calculated Adjusted EBITDA Margin by dividing Adjusted EBITDA by service revenue and sales. A reconciliation of Chemed’s net income to its EBITDA, Adjusted EBITDA and Adjusted Diluted EPS is presented in the tables following the text of this press release.
Forward-Looking Statements
Certain statements contained in this press release and the accompanying tables are "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. The words "believe," "expect," "hope," "anticipate," "plan" and similar expressions identify forward-looking statements, which speak only as of the date the statement was made. Chemed does not undertake and specifically disclaims any obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. These statements are based on current expectations and assumptions and involve various risks and uncertainties, which could cause Chemed's actual results to differ from those expressed in such forward-looking statements.
These risks and uncertainties arise from, among other things, possible changes in regulations governing the hospice care or plumbing and drain cleaning industries; periodic changes in reimbursement levels and procedures under Medicare and Medicaid programs; difficulties predicting patient length of stay and estimating potential Medicare reimbursement obligations; challenges inherent in Chemed's growth strategy; the current shortage of qualified nurses, other healthcare professionals and licensed plumbing and drain cleaning technicians; Chemed’s dependence on patient referral sources; and other factors detailed under the caption "Description of Business by Segment" or "Risk Factors" in Chemed’s most recent report on form 10-Q or
10-K and its other filings with the Securities and Exchange Commission. You are cautioned not to place undue reliance on such forward-looking statements and there are no assurances that the matters contained in such statements will be achieved.
| CHEMED CORPORATION AND SUBSIDIARY COMPANIES | ||||||||||||||||
| CONSOLIDATED STATEMENTS OF INCOME | ||||||||||||||||
| (in thousands, except per share data)(unaudited) | ||||||||||||||||
| Three Months Ended March 31, | ||||||||||||||||
| 2018 | 2017 | |||||||||||||||
| Service revenues and sales | $ | 439,176 | $ | 405,864 | ||||||||||||
| Cost of services provided and goods sold | 304,536 | 285,140 | ||||||||||||||
| Selling, general and administrative expenses (aa) | 69,000 | 69,458 | ||||||||||||||
| Depreciation | 9,267 | 8,893 | ||||||||||||||
| Amortization | 27 | 46 | ||||||||||||||
| Other operating (income)/expense | (51 | ) | 873 | |||||||||||||
| Total costs and expenses | 382,779 | 364,410 | ||||||||||||||
| Income from operations | 56,397 | 41,454 | ||||||||||||||
| Interest expense | (1,207 | ) | (995 | ) | ||||||||||||
| Other income--net (bb) | 1,018 | 2,463 | ||||||||||||||
| Income before income taxes | 56,208 | 42,922 | ||||||||||||||
| Income taxes | (11,212 | ) | (13,078 | ) | ||||||||||||
| Net income | $ | 44,996 | $ | 29,844 | ||||||||||||
| Earnings Per Share | ||||||||||||||||
| Net income | $ | 2.79 | $ | 1.84 | ||||||||||||
| Average number of shares outstanding | 16,100 | 16,219 | ||||||||||||||
| Diluted Earnings Per Share | ||||||||||||||||
| Net income | $ | 2.66 | $ | 1.78 | ||||||||||||
| Average number of shares outstanding | 16,887 | 16,801 | ||||||||||||||
| (aa) | Selling, general and administrative ("SG&A") expenses comprise (in thousands): | |||||||||||||||
| Three Months Ended March 31, | ||||||||||||||||
| 2018 | 2017 | |||||||||||||||
| SG&A expenses before long-term incentive compensation, expenses | ||||||||||||||||
| related to the O.I.G. investigation and the impact of market value | ||||||||||||||||
| adjustments related to deferred compensation trusts | $ | 66,220 | $ | 63,732 | ||||||||||||
| Long-term incentive compensation | 1,920 | 961 | ||||||||||||||
| Market value gains related to deferred compensation trusts | 860 | 2,615 | ||||||||||||||
| Expenses related to O.I.G. investigation | - | 2,150 | ||||||||||||||
| Total SG&A expenses | $ | 69,000 | $ | 69,458 | ||||||||||||
| (bb) | Other income--net comprises (in thousands): | |||||||||||||||
| Three Months Ended March 31, | ||||||||||||||||
| 2018 | 2017 | |||||||||||||||
| Market value gains related to deferred compensation trusts | $ | 860 | $ | 2,615 | ||||||||||||
| Interest income | 158 | 85 | ||||||||||||||
| Loss on disposal of property and equipment | - | (236 | ) | |||||||||||||
| Other | - | (1 | ) | |||||||||||||
| Total other income--net | $ | 1,018 | $ | 2,463 | ||||||||||||
| CHEMED CORPORATION AND SUBSIDIARY COMPANIES | |||||||||||||||||||
| CONSOLIDATED BALANCE SHEETS | |||||||||||||||||||
| (in thousands, except per share data)(unaudited) | |||||||||||||||||||
| March 31, | |||||||||||||||||||
| 2018 | 2017 | ||||||||||||||||||
| Assets | |||||||||||||||||||
| Current assets | |||||||||||||||||||
Cash and cash equivalents | $ | 13,686 | $ | 47,049 | |||||||||||||||
| Accounts receivable less allowances | 111,332 | 109,726 | |||||||||||||||||
| Inventories | 5,274 | 5,433 | |||||||||||||||||
| Prepaid income taxes | 16,160 | 1,663 | |||||||||||||||||
| Prepaid expenses | 15,047 | 12,102 | |||||||||||||||||
| Total current assets | 161,499 | 175,973 | |||||||||||||||||
| Investments of deferred compensation plans held in trust | 66,163 | 56,596 | |||||||||||||||||
| Properties and equipment, at cost less accumulated depreciation | 144,706 | 119,394 | |||||||||||||||||
| Identifiable intangible assets less accumulated amortization | 55,163 | 54,976 | |||||||||||||||||
| Goodwill | 477,964 | 472,391 | |||||||||||||||||
| Other assets | 7,161 | 6,901 | |||||||||||||||||
| Total Assets | $ | 912,656 | $ | 886,231 | |||||||||||||||
| Liabilities | |||||||||||||||||||
| Current liabilities | |||||||||||||||||||
| Accounts payable | $ | 42,639 | $ | 29,341 | |||||||||||||||
| Current portion of long-term debt | 10,000 | 9,375 | |||||||||||||||||
| Income taxes | - | 12,614 | |||||||||||||||||
| Accrued insurance | 48,303 | 54,150 | |||||||||||||||||
| Accrued compensation | 49,685 | 37,382 | |||||||||||||||||
| Accrued legal | 1,643 | 2,471 | |||||||||||||||||
| Other current liabilities | 25,027 | 19,050 | |||||||||||||||||
| Total current liabilities | 177,297 | 164,383 | |||||||||||||||||
| Deferred income taxes | 13,832 | 11,875 | |||||||||||||||||
| Long-term debt | 132,500 | 137,500 | |||||||||||||||||
| Deferred compensation liabilities | 65,289 | 56,024 | |||||||||||||||||
| Other liabilities | 16,779 | 15,805 | |||||||||||||||||
| Total Liabilities | 405,697 | 385,587 | |||||||||||||||||
| Stockholders' Equity | |||||||||||||||||||
| Capital stock | 34,885 | 34,404 | |||||||||||||||||
| Paid-in capital | 712,991 | 651,269 | |||||||||||||||||
| Retained earnings | 1,078,690 | 983,742 | |||||||||||||||||
| Treasury stock, at cost | (1,321,843 | ) | (1,170,933 | ) | |||||||||||||||
| Deferred compensation payable in Company stock | 2,236 | 2,162 | |||||||||||||||||
| Total Stockholders' Equity | 506,959 | 500,644 | |||||||||||||||||
| Total Liabilities and Stockholders' Equity | $ | 912,656 | $ | 886,231 | |||||||||||||||
| CHEMED CORPORATION AND SUBSIDIARY COMPANIES | |||||||||||||||||||
| CONSOLIDATED STATEMENTS OF CASH FLOWS | |||||||||||||||||||
| (in thousands)(unaudited) | |||||||||||||||||||
| Three Months Ended | |||||||||||||||||||
| March 31, | |||||||||||||||||||
| 2018 | 2017 | ||||||||||||||||||
| Cash Flows from Operating Activities | |||||||||||||||||||
| Net income | $ | 44,996 | $ | 29,844 | |||||||||||||||
| Adjustments to reconcile net income to net cash provided | |||||||||||||||||||
| by operating activities: | |||||||||||||||||||
| Depreciation and amortization | 9,294 | 8,939 | |||||||||||||||||
| Provision for uncollectible accounts receivable | - | 4,249 | |||||||||||||||||
| Stock option expense | 3,653 | 3,001 | |||||||||||||||||
| Benefit for deferred income taxes | (2,807 | ) | (2,415 | ) | |||||||||||||||
| Noncash long-term incentive compensation | 1,721 | 827 | |||||||||||||||||
| Amortization of restricted stock awards | 291 | 336 | |||||||||||||||||
| Amortization of debt issuance costs | 128 | 129 | |||||||||||||||||
| Changes in operating assets and liabilities | |||||||||||||||||||
Decrease in accounts receivable | 1,591 | 17,972 | |||||||||||||||||
| Decrease in inventories | 60 | 322 | |||||||||||||||||
| Decrease in prepaid expenses | 1,045 | 1,003 | |||||||||||||||||
| Decrease in accounts payable and other current liabilities | (7,911 | ) | (10,766 | ) | |||||||||||||||
| Increase in income taxes | 13,642 | 14,655 | |||||||||||||||||
Increase in other assets | (4,263 | ) | (2,140 | ) | |||||||||||||||
| Increase in other liabilities | 3,758 | 1,992 | |||||||||||||||||
| Other sources/(uses) | (5 | ) | 838 | ||||||||||||||||
| Net cash provided by operating activities | 65,193 | 68,786 | |||||||||||||||||
| Cash Flows from Investing Activities | |||||||||||||||||||
| Capital expenditures | (12,648 | ) | (9,020 | ) | |||||||||||||||
| Business combinations | (1,450 | ) | - | ||||||||||||||||
| Other sources/(uses) | 181 | (70 | ) | ||||||||||||||||
| Net cash used by investing activities | (13,917 | ) | (9,090 | ) | |||||||||||||||
| Cash Flows from Financing Activities | |||||||||||||||||||
| Proceeds from revolving line of credit | 134,300 | 116,000 | |||||||||||||||||
| Payments on revolving line of credit | (90,500 | ) | (76,000 | ) | |||||||||||||||
| Purchase of treasury stock | (81,125 | ) | (54,262 | ) | |||||||||||||||
| Proceeds from exercise of stock options | 8,923 | 5,635 | |||||||||||||||||
| Change in cash overdrafts payable | (6,671 | ) | (8,607 | ) | |||||||||||||||
| Capital stock surrendered to pay taxes on stock-based compensation | (6,377 | ) | (4,744 | ) | |||||||||||||||
| Dividends paid | (4,533 | ) | (4,251 | ) | |||||||||||||||
| Payments on other long-term debt | (2,500 | ) | (1,875 | ) | |||||||||||||||
| Other sources/(uses) | (228 | ) | 147 | ||||||||||||||||
| Net cash used by financing activities | (48,711 | ) | (27,957 | ) | |||||||||||||||
| Increase in Cash and Cash Equivalents | 2,565 | 31,739 | |||||||||||||||||
| Cash and cash equivalents at beginning of year | 11,121 | 15,310 | |||||||||||||||||
| Cash and cash equivalents at end of period | $ | 13,686 | $ | 47,049 | |||||||||||||||
CHEMED CORPORATION AND SUBSIDIARY COMPANIES | |||||||||||||||||||||
| CONSOLIDATING STATEMENTS OF INCOME | |||||||||||||||||||||
| FOR THE THREE MONTHS ENDED MARCH 31, 2018 AND 2017 | |||||||||||||||||||||
| (in thousands)(unaudited) | |||||||||||||||||||||
| Chemed | |||||||||||||||||||||
| VITAS | Roto-Rooter | Corporate | Consolidated | ||||||||||||||||||
| 2018 | |||||||||||||||||||||
| Service revenues and sales | $ | 292,013 | $ | 147,163 | $ | - | $ | 439,176 | |||||||||||||
| Cost of services provided and goods sold | 227,256 | 77,280 | - | 304,536 | |||||||||||||||||
| Selling, general and administrative expenses (a) | 20,510 | 36,098 | 12,392 | 69,000 | |||||||||||||||||
| Depreciation | 4,797 | 4,443 | 27 | 9,267 | |||||||||||||||||
| Amortization | - | 27 | - | 27 | |||||||||||||||||
| Other operating expenses | (18 | ) | (33 | ) | - | (51 | ) | ||||||||||||||
| Total costs and expenses | 252,545 | 117,815 | 12,419 | 382,779 | |||||||||||||||||
| Income/(loss) from operations | 39,468 | 29,348 | (12,419 | ) | 56,397 | ||||||||||||||||
| Interest expense | (52 | ) | (91 | ) | (1,064 | ) | (1,207 | ) | |||||||||||||
| Intercompany interest income/(expense) | 3,095 | 1,677 | (4,772 | ) | - | ||||||||||||||||
| Other income/(expense)—net | 142 | 16 | 860 | 1,018 | |||||||||||||||||
| Income/(loss) before income taxes | 42,653 | 30,950 | (17,395 | ) | 56,208 | ||||||||||||||||
| Income taxes (a) | (10,638 | ) | (8,012 | ) | 7,438 | (11,212 | ) | ||||||||||||||
| Net income/(loss) | $ | 32,015 | $ | 22,938 | $ | (9,957 | ) | $ | 44,996 | ||||||||||||
| 2017 | |||||||||||||||||||||
| Service revenues and sales | $ | 282,316 | $ | 123,548 | $ | - | $ | 405,864 | |||||||||||||
| Cost of services provided and goods sold | 221,678 | 63,462 | - | 285,140 | |||||||||||||||||
| Selling, general and administrative expenses (b) | 24,294 | 33,460 | 11,704 | 69,458 | |||||||||||||||||
| Depreciation | 4,778 | 3,984 | 131 | 8,893 | |||||||||||||||||
| Amortization | 14 | 32 | - | 46 | |||||||||||||||||
| Other operating expenses | 873 | - | - | 873 | |||||||||||||||||
| Total costs and expenses | 251,637 | 100,938 | 11,835 | 364,410 | |||||||||||||||||
| Income/(loss) from operations | 30,679 | 22,610 | (11,835 | ) | 41,454 | ||||||||||||||||
| Interest expense | (55 | ) | (99 | ) | (841 | ) | (995 | ) | |||||||||||||
| Intercompany interest income/(expense) | 2,702 | 1,310 | (4,012 | ) | - | ||||||||||||||||
| Other income/(expense)-net | (80 | ) | (72 | ) | 2,615 | 2,463 | |||||||||||||||
| Income/(loss) before income taxes | 33,246 | 23,749 | (14,073 | ) | 42,922 | ||||||||||||||||
| Income taxes (b) | (12,649 | ) | (9,125 | ) | 8,696 | (13,078 | ) | ||||||||||||||
| Net income/(loss) | $ | 20,597 | $ | 14,624 | $ | (5,377 | ) | $ | 29,844 | ||||||||||||
The "Footnotes to Financial Statements" are integral parts of this financial information.
| CHEMED CORPORATION AND SUBSIDIARY COMPANIES | ||||||||||||||||||||||
| CONSOLIDATING SUMMARY OF EBITDA | ||||||||||||||||||||||
| FOR THE THREE MONTHS ENDED MARCH 31, 2018 AND 2017 | ||||||||||||||||||||||
| (in thousands)(unaudited) | ||||||||||||||||||||||
| Chemed | ||||||||||||||||||||||
| VITAS | Roto-Rooter | Corporate | Consolidated | |||||||||||||||||||
| 2018 | ||||||||||||||||||||||
| Net income/(loss) | $ | 32,015 | $ | 22,938 | $ | (9,957 | ) | $ | 44,996 | |||||||||||||
| Add/(deduct): | ||||||||||||||||||||||
| Interest expense | 52 | 91 | 1,064 | 1,207 | ||||||||||||||||||
| Income taxes | 10,638 | 8,012 | (7,438 | ) | 11,212 | |||||||||||||||||
| Depreciation | 4,797 | 4,443 | 27 | 9,267 | ||||||||||||||||||
| Amortization | - | 27 | - | 27 | ||||||||||||||||||
| EBITDA | 47,502 | 35,511 | (16,304 | ) | 66,709 | |||||||||||||||||
| Add/(deduct): | ||||||||||||||||||||||
Intercompany interest income/(expense) | (3,095 | ) | (1,677 | ) | 4,772 | - | ||||||||||||||||
| Interest income | (142 | ) | (16 | ) | - | (158 | ) | |||||||||||||||
| Amortization of stock awards | 70 | 65 | 156 | 291 | ||||||||||||||||||
| Medicare cap sequestration adjustment | 352 | - | - | 352 | ||||||||||||||||||
| Stock option expense | - | - | 3,653 | 3,653 | ||||||||||||||||||
| Long-term incentive compensation | - | - | 1,920 | 1,920 | ||||||||||||||||||
| Adjusted EBITDA | $ | 44,687 | $ | 33,883 | $ | (5,803 | ) | $ | 72,767 | |||||||||||||
| 2017 | ||||||||||||||||||||||
| Net income/(loss) | $ | 20,597 | $ | 14,624 | $ | (5,377 | ) | $ | 29,844 | |||||||||||||
| Add/(deduct): | ||||||||||||||||||||||
| Interest expense | 55 | 99 | 841 | 995 | ||||||||||||||||||
| Income taxes | 12,649 | 9,125 | (8,696 | ) | 13,078 | |||||||||||||||||
| Depreciation | 4,778 | 3,984 | 131 | 8,893 | ||||||||||||||||||
| Amortization | 14 | 32 | - | 46 | ||||||||||||||||||
| EBITDA | 38,093 | 27,864 | (13,101 | ) | 52,856 | |||||||||||||||||
| Add/(deduct): | ||||||||||||||||||||||
| Intercompany interest income/(expense) | (2,702 | ) | (1,310 | ) | 4,012 | - | ||||||||||||||||
| Interest income | (70 | ) | (15 | ) | - | (85 | ) | |||||||||||||||
| Expenses related to O.I.G. investigation | 2,150 | - | - | 2,150 | ||||||||||||||||||
| Amortization of stock awards | 78 | 70 | 188 | 336 | ||||||||||||||||||
| Program closure expenses | 873 | - | - | 873 | ||||||||||||||||||
| Advertising cost adjustment | - | (274 | ) | - | (274 | ) | ||||||||||||||||
| Stock option expense | - | - | 3,001 | 3,001 | ||||||||||||||||||
| Long-term incentive compensation | - | - | 961 | 961 | ||||||||||||||||||
| Adjusted EBITDA | $ | 38,422 | $ | 26,335 | $ | (4,939 | ) | $ | 59,818 | |||||||||||||
The "Footnotes to Financial Statements" are integral parts of this financial information.
| CHEMED CORPORATION AND SUBSIDIARY COMPANIES | ||||||||||||||
| RECONCILIATION OF ADJUSTED NET INCOME | ||||||||||||||
| (in thousands, except per share data)(unaudited) | ||||||||||||||
| Three Months Ended March 31, | ||||||||||||||
| 2018 | 2017 | |||||||||||||
| Net income as reported | $ | 44,996 | $ | 29,844 | ||||||||||
| Add after-tax cost of: | ||||||||||||||
| Excess tax benefits on stock compensation | (3,798 | ) | (3,695 | ) | ||||||||||
| Stock option expense | 2,891 | 1,897 | ||||||||||||
| Long-term incentive compensation | 1,499 | 608 | ||||||||||||
| Medicare cap sequestration adjustment | 263 | - | ||||||||||||
| Expenses related to O.I.G. investigation | - | 1,328 | ||||||||||||
| Program closure expenses | - | 513 | ||||||||||||
| Adjusted net income | $ | 45,851 | $ | 30,495 | ||||||||||
| Diluted Earnings Per Share As Reported | ||||||||||||||
| Net income | $ | 2.66 | $ | 1.78 | ||||||||||
| Average number of shares outstanding | 16,887 | 16,801 | ||||||||||||
| Adjusted Diluted Earnings Per Share | ||||||||||||||
| Adjusted net income | $ | 2.72 | $ | 1.82 | ||||||||||
| Average number of shares outstanding | 16,887 | 16,801 | ||||||||||||
The "Footnotes to Financial Statements" are integral parts of this financial information.
| CHEMED CORPORATION AND SUBSIDIARY COMPANIES | ||||||||||||||
| OPERATING STATISTICS FOR VITAS SEGMENT | ||||||||||||||
| (unaudited) | ||||||||||||||
| Three Months Ended March 31, | ||||||||||||||
| OPERATING STATISTICS | 2018 | 2017 | ||||||||||||
Net revenue ($000) (c) | ||||||||||||||
| Homecare | $ | 241,031 | $ | 224,562 | ||||||||||
| Inpatient | 22,108 | 23,246 | ||||||||||||
| Continuous care | 30,766 | 32,857 | ||||||||||||
| Other | 1,741 | 1,651 | ||||||||||||
Subtotal | $ | 295,646 | $ | 282,316 | ||||||||||
| Room and board, net | (2,618 | ) | - | |||||||||||
| Contractual allowances | (2,833 | ) | - | |||||||||||
| Medicare cap allowance | 1,818 | - | ||||||||||||
| Net Revenue | $ | 292,013 | $ | 282,316 | ||||||||||
Net revenue as a percent of total before Medicare cap allowance | ||||||||||||||
| Homecare | 81.5 | % | 79.5 | % | ||||||||||
| Inpatient | 7.5 | 8.2 | ||||||||||||
| Continuous care | 10.4 | 11.6 | ||||||||||||
| Other | 0.6 | 0.7 | ||||||||||||
Subtotal | 100.0 | 100.0 | ||||||||||||
| Room and board, net | (0.9 | ) | - | |||||||||||
| Contractual allowances | (0.9 | ) | - | |||||||||||
| Medicare cap allowance | 0.6 | - | ||||||||||||
| Net Revenue | 98.8 | % | 100.0 | % | ||||||||||
| Average daily census ("ADC") (days) | ||||||||||||||
| Homecare | 13,162 | 12,287 | ||||||||||||
| Nursing home | 3,215 | 3,052 | ||||||||||||
| Routine homecare | 16,377 | 15,339 | ||||||||||||
| Inpatient | 352 | 378 | ||||||||||||
| Continuous care | 480 | 505 | ||||||||||||
| Total | 17,209 | 16,222 | ||||||||||||
| Total Admissions | 18,279 | 17,563 | ||||||||||||
| Total Discharges | 17,558 | 17,213 | ||||||||||||
| Average length of stay (days) | 87.9 | 88.7 | ||||||||||||
| Median length of stay (days) | 15.0 | 15.0 | ||||||||||||
| ADC by major diagnosis | ||||||||||||||
| Neurological | 18.5 | % | 19.7 | % | ||||||||||
| Cerebro | 36.2 | 34.4 | ||||||||||||
| Cancer | 13.9 | 15.1 | ||||||||||||
| Cardio | 16.4 | 16.6 | ||||||||||||
| Respiratory | 8.2 | 7.9 | ||||||||||||
| Other | 6.8 | 6.3 | ||||||||||||
| Total | 100.0 | % | 100.0 | % | ||||||||||
| Admissions by major diagnosis | ||||||||||||||
| Neurological | 11.4 | % | 10.9 | % | ||||||||||
| Cerebro | 22.6 | 22.1 | ||||||||||||
| Cancer | 28.0 | 29.5 | ||||||||||||
| Cardio | 15.5 | 15.1 | ||||||||||||
| Respiratory | 11.7 | 11.7 | ||||||||||||
| Other | 10.8 | 10.7 | ||||||||||||
| Total | 100.0 | % | 100.0 | % | ||||||||||
Direct patient care margins (d) | ||||||||||||||
| Routine homecare | 52.1 | % | 51.3 | % | ||||||||||
| Inpatient | 7.5 | 5.9 | ||||||||||||
| Continuous care | 17.7 | 15.6 | ||||||||||||
| Homecare margin drivers (dollars per patient day) | ||||||||||||||
| Labor costs | $ | 58.63 | $ | 58.64 | ||||||||||
Combined drug, home medical equipment and medical supplies cost | 14.47 | 15.14 | ||||||||||||
| Inpatient margin drivers (dollars per patient day) | ||||||||||||||
| Labor costs | $ | 362.75 | $ | 369.99 | ||||||||||
| Continuous care margin drivers (dollars per patient day) | ||||||||||||||
| Labor costs | $ | 567.51 | $ | 590.73 | ||||||||||
Estimated uncollectable accounts as a percent of revenues | 1.0 | % | 1.2 | % | ||||||||||
| Accounts receivable -- | ||||||||||||||
| Days of revenue outstanding- excluding unapplied Medicare payments | 32.6 | 35.9 | ||||||||||||
| Days of revenue outstanding- including unapplied Medicare payments | 31.4 | 24.9 | ||||||||||||
The "Footnotes to Financial Statements" are integral parts of this financial information.
| CHEMED CORPORATION AND SUBSIDIARY COMPANIES | |||||||||||||||||||
| FOOTNOTES TO FINANCIAL STATEMENTS | |||||||||||||||||||
| FOR THE THREE MONTHS ENDED MARCH 31, 2018 AND 2017 | |||||||||||||||||||
| (unaudited) | |||||||||||||||||||
| (a) |
Included in the results of operations for the three months ended
March 31, 2018, are the following significant credits/(charges) | ||||||||||||||||||
| VITAS | Corporate | Total | |||||||||||||||||
| Selling, general and administrative expenses | |||||||||||||||||||
| Medicare cap sequestration adjustment | $ | (352 | ) | $ | - | $ | (352 | ) | |||||||||||
| Stock option expense | - | (3,653 | ) | (3,653 | ) | ||||||||||||||
| Long-term incentive compensation | - | (1,920 | ) | (1,920 | ) | ||||||||||||||
| Pretax impact on earnings | (352 | ) | (5,573 | ) | (5,925 | ) | |||||||||||||
| Excess tax benefits on stock compensation | - | 3,798 | 3,798 | ||||||||||||||||
| Income tax benefit on the above | 89 | 1,183 | 1,272 | ||||||||||||||||
| After-tax impact on earnings | $ | (263 | ) | $ | (592 | ) | $ | (855 | ) | ||||||||||
| (b) |
Included in the results of operations for the three months ended
March 31, 2017, are the following significant credits/(charges) | ||||||||||||||||||
| VITAS | Corporate | Total | |||||||||||||||||
| Selling, general and administrative expenses | |||||||||||||||||||
| Expenses related to O.I.G. investigation | $ | (2,150 | ) | $ | - | $ | (2,150 | ) | |||||||||||
| Program closure expenses | (873 | ) | - | (873 | ) | ||||||||||||||
| Stock option expense | - | (3,001 | ) | (3,001 | ) | ||||||||||||||
| Long-term incentive compensation | - | (961 | ) | (961 | ) | ||||||||||||||
| Pretax impact on earnings | (3,023 | ) | (3,962 | ) | (6,985 | ) | |||||||||||||
| Excess tax benefits on stock compensation | - | 3,695 | 3,695 | ||||||||||||||||
| Income tax benefit on the above | 1,182 | 1,457 | 2,639 | ||||||||||||||||
| After-tax impact on earnings | $ | (1,841 | ) | $ | 1,190 | $ | (651 | ) | |||||||||||
(c) |
VITAS has 11 large (greater than 450 ADC), 18 medium (greater than
200 but less than 450 ADC) and 16 small (less than 200 ADC) hospice | ||||||||||||||||||
(d) | Amounts exclude indirect patient care and administrative costs, as well as Medicare Cap billing limitation. | ||||||||||||||||||
View source version on businesswire.com: https://www.businesswire.com/news/home/20180419006333/en/
Contacts:
David P. Williams, 513-762-6901
