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Chemed Reports Second-Quarter 2023 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 second quarter ended June 30, 2023, versus the comparable prior-year period, as follows:

Consolidated operating results:

  • Revenue increased 4.2% to $554 million
  • GAAP Diluted Earnings-per-Share (EPS) of $3.51
  • Adjusted Diluted EPS of $4.71, a decrease of 2.7%

VITAS segment operating results:

  • Net Patient Revenue of $321 million, an increase of 7.8%
  • Average Daily Census (ADC) of 18,392, an increase of 6.2%
  • Admissions of 15,611, an increase of 5.9%
  • Net Income, excluding certain discrete items, of $35.7 million, an increase of 1.3%
  • Adjusted EBITDA, excluding Medicare Cap, of $50.7 million, an increase of 1.4%
  • Adjusted EBITDA margin, excluding Medicare Cap, of 15.7%, a decline of 101-basis points

Roto-Rooter segment operating results:

  • Revenue of $233 million, a decline of 0.2%
  • Net Income, excluding certain discrete items, of $46.1 million, an decrease of 5.6%
  • Adjusted EBITDA of $65.9 million, a decline of 4.5%
  • Adjusted EBITDA margin of 28.3%, a decline of 128-basis points

VITAS

VITAS net revenue was $321 million in the second quarter of 2023, which is an increase of 7.8% when compared to the prior year period. This revenue increase is comprised primarily of a 6.2% increase in days-of-care and a geographically weighted average Medicare reimbursement rate increase of approximately 2.7%, partially offset by 100-basis points as a result of CMS reimplementing sequestration that was suspended at the start of the pandemic. Acuity mix shift had minimal impact in the quarter when compared to the prior-year revenue and level-of-care mix. The combination of Medicare Cap and other contra revenue changes negatively impacted revenue growth by 10-basis points.

In the second quarter of 2023, VITAS accrued $2.75 million in Medicare Cap billing limitations. This compares to a $2.0 million Medicare Cap billing limitation in the second quarter of 2022.

Of VITAS’ 30 Medicare provider numbers, 24 provider numbers have a trailing nine-month Medicare Cap cushion of 10% or greater, three provider numbers have a cushion between 5% and 10%, and three provider numbers have a trailing nine-month billing limitation liability.

Average revenue per patient per day in the second quarter of 2023 was $197.02 which is 178-basis points above the prior-year period. Reimbursement for routine home care and high acuity care averaged $172.91 and $1,031.58, respectively. During the quarter, high acuity days-of-care were 2.8% of total days of care, essentially equal to the prior-year quarter.

The second quarter 2023 gross margin, excluding Medicare Cap and the hiring and retention bonus program, was 22.7%. This is a 143-basis point increase when compared to the second quarter of 2022. The margin increase is net of sequestration which reduced reimbursement 100-basis points when compared to the prior year. During the quarter, VITAS increased the licensed healthcare staff by 309 professionals. This results in total licensed staff increasing by 784 professionals since the inception of the retention program on July 1, 2022. The increase of 309 net professionals hired during the second quarter of 2023, basically underutilized capacity, is estimated to have negatively impacted margins in the quarter by approximately 80-basis points.

Selling, general and administrative expenses were $22.7 million in the second quarter of 2023 and compares to $23.1 million incurred in the prior-year quarter. Adjusted EBITDA, excluding Medicare Cap, totaled $50.7 million in the quarter, an increase of 1.4%. Adjusted EBITDA margin in the quarter, excluding Medicare Cap, was 15.7%, which is 101-basis points below the prior-year period. This Adjusted EBITDA margin was negatively impacted by 100-basis points for the reimplementation of sequestration and approximately 80-basis points due to the addition of 309 licensed professionals during the second quarter of 2023.

Roto-Rooter

Roto-Rooter generated quarterly revenue of $233 million in the second quarter of 2023, a decline of 0.2%, when compared to the prior-year quarter.

Roto-Rooter branch commercial revenue in the quarter totaled $55.5 million, an increase of 1.3%, over the prior year. This aggregate commercial revenue growth consisted of drain cleaning revenue declining 3.0%, plumbing increasing 5.4%, excavation increasing 2.9%, and water restoration increasing 9.7%.

Roto-Rooter branch residential revenue in the quarter totaled $158 million, a decline of 1.1%, over the prior-year period. This aggregate residential revenue growth consisted of drain cleaning decreasing 8.6%, plumbing declining 2.8%, excavation expanding 3.8%, and water restoration increasing 2.5%.

Roto-Rooter’s gross margin in the quarter was 52.3%, an 89-basis point decline when compared to the second quarter of 2022. Adjusted EBITDA in the second quarter of 2023 totaled $65.9 million, a decrease of 4.5%. The Adjusted EBITDA margin in the quarter was 28.3%, which is 128-basis points below the prior year period.

Chemed Consolidated

As of June 30, 2023, Chemed had total cash and cash equivalents of $160 million and no current or long-term debt.

In June 2022, Chemed entered into a five-year $550 million Amended and Restated Credit Agreement (Credit Agreement). This Credit Agreement consisted of a $100 million amortizable term loan and a $450 million revolving credit facility. The interest rate on this Credit Agreement has a floating rate that is currently SOFR plus 100-basis points. During the quarter, the Company paid off the remaining portion of the term loan. The Company has approximately $405 million of undrawn borrowing capacity under the Credit Agreement.

During the quarter, the Company repurchased 25,000 shares of Chemed stock for $13.4 million which equates to a cost per share of $536.98. As of June 30, 2023, there was approximately $74 million of remaining share repurchase authorization under its plan.

Guidance for 2023

VITAS 2023 revenue, prior to Medicare Cap, is estimated to increase 8.5% to 9.5% when compared to 2022. Forecasted revenue growth is negatively impacted by 75-basis points as a result of the sequestration relief in the first half of 2022 compared to a full year of sequestration in 2023. ADC is estimated to increase 6.5% to 7.5%. Full year adjusted EBITDA margin, prior to Medicare Cap and accrued retention bonuses related to the hiring initiatives, is estimated to be 16.5% to 17.0%. 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 1.0% to 2.0%. Roto-Rooter’s adjusted EBITDA margin for 2023 is expected to be 28.0% to 28.5%.

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 $19.90 to $20.10. Current 2023 guidance assumes an effective corporate tax rate on adjusted earnings of 24.7% and a diluted share count of 15.2 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 Thursday July 27, 2023, to discuss the company's quarterly results and to provide an update on its business. Participants may access a live webcast of the conference call through the investor relations section of Chemed’s website, Investor Relations Home | Chemed Corporation or the hosting website https://edge.media-server.com/mmc/p/ntafx2iw.

Participants may also register via teleconference at: https://register.vevent.com/register/BI8193ef2f50f34636bd3182c2d88daff9. Once registration is completed, participants will be provided with a dial-in number containing a personalized conference code to access the call. All participants are instructed to dial-in 15 minutes prior to the start time.

A taped replay of the conference call will be available beginning approximately two hours after the call's conclusion. You may access the replay via webcast through the investor relations section of Chemed’s website.

Chemed Corporation operates in the healthcare field through its VITAS Healthcare Corporation subsidiary. VITAS provides daily hospice services to approximately 18,400 patients with severe, life-limiting illnesses. This type of care is focused on making the terminally ill patient's final days as comfortable and pain-free as possible.

Chemed operates in the residential and commercial plumbing and drain cleaning industry under the brand name Roto-Rooter. Roto-Rooter provides plumbing, drain cleaning, and water cleanup services through company-owned branches, independent contractors and franchisees in the United States and Canada. Roto-Rooter also has licensed master franchisees in the republics of Indonesia and Singapore, and the Philippines.

This press release contains information about Chemed’s EBITDA, Adjusted EBITDA and Adjusted Diluted EPS, which are not measures derived in accordance with GAAP and which exclude components that are important to understanding Chemed’s financial performance. In reporting its operating results, Chemed provides EBITDA, Adjusted EBITDA and Adjusted Diluted EPS measures to help investors and others evaluate the Company’s operating results, compare its operating performance with that of similar companies that have different capital structures and evaluate its ability to meet its future debt service, capital expenditures and working capital requirements. Chemed’s management similarly uses EBITDA, Adjusted EBITDA and Adjusted Diluted EPS to assist it in evaluating the performance of the Company across fiscal periods and in assessing how its performance compares to its peer companies. These measures also help Chemed’s management to estimate the resources required to meet Chemed’s future financial obligations and expenditures. Chemed’s EBITDA, Adjusted EBITDA and Adjusted Diluted EPS should not be considered in isolation or as a substitute for comparable measures calculated and presented in accordance with GAAP. We calculated Adjusted EBITDA Margin by dividing Adjusted EBITDA by service revenue and sales. A reconciliation of Chemed’s net income to its EBITDA, Adjusted EBITDA and Adjusted Diluted EPS is presented in the tables following the text of this press release.

Forward-Looking Statements

Certain statements contained in this press release and the accompanying tables are "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. The words "believe," "expect," "hope," "anticipate," "plan" and similar expressions identify forward-looking statements, which speak only as of the date the statement was made. Chemed does not undertake and specifically disclaims any obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. These statements are based on current expectations and assumptions and involve various risks and uncertainties, which could cause Chemed's actual results to differ from those expressed in such forward-looking statements.

These risks and uncertainties arise from, among other things, possible changes in regulations governing the hospice care or plumbing and drain cleaning industries; periodic changes in reimbursement levels and procedures under Medicare and Medicaid programs; difficulties predicting patient length of stay and estimating potential Medicare reimbursement obligations; challenges inherent in Chemed's growth strategy; the current shortage of qualified nurses, other healthcare professionals and licensed plumbing and drain cleaning technicians; Chemed’s dependence on patient referral sources; and other factors detailed under the caption "Description of Business by Segment" or "Risk Factors" in Chemed’s most recent report on form 10-Q or 10-K and its other filings with the Securities and Exchange Commission. You are cautioned not to place undue reliance on such forward-looking statements and there are no assurances that the matters contained in such statements will be achieved.

CHEMED CORPORATION AND SUBSIDIARY COMPANIES
CONSOLIDATED STATEMENTS OF INCOME
(in thousands, except per share data)(unaudited)
 
Three Months Ended June 30, Six Months Ended June 30,

2023

 

2022

 

2023

 

2022

 

Service revenues and sales $

553,816

 

$

531,288

 

1,113,973

 

$

1,061,837

 

Cost of services provided and goods sold

374,193

 

336,821

 

744,898

 

673,373

 

Selling, general and administrative expenses (aa)

94,987

 

87,853

 

195,082

 

177,807

 

Depreciation

12,634

 

12,714

 

24,920

 

24,852

 

Amortization

2,514

 

2,520

 

5,027

 

5,038

 

Other operating (income)/expense

(18

)

(558

)

1,721

 

(545

)

Total costs and expenses

484,310

 

439,350

 

971,648

 

880,525

 

Income from operations

69,506

 

91,938

 

142,325

 

181,312

 

Interest expense

(771

)

(902

)

(2,322

)

(1,712

)

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

1,609

 

(4,930

)

1,506

 

(8,792

)

Income before income taxes

70,344

 

86,106

 

141,509

 

170,808

 

Income taxes

(16,967

)

(19,650

)

(34,011

)

(40,183

)

Net income $

53,377

 

$

66,456

 

$

107,498

 

$

130,625

 

Earnings Per Share
Net income $

3.54

 

$

4.45

 

$

7.16

 

$

8.73

 

Average number of shares outstanding

15,058

 

14,932

 

15,013

 

14,959

 

Diluted Earnings Per Share
Net income $

3.51

 

$

4.40

 

$

7.09

 

$

8.62

 

Average number of shares outstanding

15,219

 

15,111

 

15,167

 

15,152

 

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

2023

 

2022

 

2023

 

2022

 

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

91,733

 

$

91,422

 

$

189,634

 

$

184,000

 

Long-term incentive compensation

1,750

 

1,517

 

4,264

 

2,827

 

Market value adjustments related to deferred
compensation trusts

1,504

 

(5,086

)

1,184

 

(9,020

)

Total SG&A expenses $

94,987

 

$

87,853

 

$

195,082

 

$

177,807

 

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

2023

 

2022

 

2023

 

2022

 

Market value adjustments related to deferred
compensation trusts $

1,504

 

$

(5,086

)

$

1,184

 

$

(9,020

)

Interest income

113

 

154

 

263

 

226

 

Other

(8

)

2

 

59

 

2

 

Total other income/(expense)--net $

1,609

 

$

(4,930

)

$

1,506

 

$

(8,792

)

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

2023

 

2022

 

Assets
Current assets
Cash and cash equivalents $

159,924

 

$

9,640

 

Accounts receivable less allowances

120,314

 

136,555

 

Inventories

11,684

 

10,696

 

Prepaid income taxes

16,666

 

17,256

 

Prepaid expenses

28,572

 

28,999

 

Total current assets

337,160

 

203,146

 

Investments of deferred compensation plans held in trust

99,522

 

96,061

 

Properties and equipment, at cost less accumulated depreciation

208,101

 

192,005

 

Lease right of use asset

127,215

 

128,290

 

Identifiable intangible assets less accumulated amortization

94,932

 

103,837

 

Goodwill

581,542

 

579,653

 

Other assets

56,708

 

9,972

 

Total Assets $

1,505,180

 

$

1,312,964

 

Liabilities
Current liabilities
Accounts payable $

41,058

 

$

73,975

 

Current portion of long-term debt

-

 

5,000

 

Accrued insurance

57,461

 

54,828

 

Accrued compensation

74,384

 

68,290

 

Accrued legal

6,096

 

808

 

Short-term lease liability

38,779

 

39,062

 

Other current liabilities

84,709

 

43,105

 

Total current liabilities

302,487

 

285,068

 

Deferred income taxes

36,681

 

21,054

 

Long-term debt

-

 

111,800

 

Deferred compensation liabilities

98,941

 

95,624

 

Long-term lease liability

102,112

 

103,389

 

Other liabilities

12,880

 

11,069

 

Total Liabilities

553,101

 

628,004

 

Stockholders' Equity
Capital stock

36,996

 

36,651

 

Paid-in capital

1,240,415

 

1,089,129

 

Retained earnings

2,294,004

 

2,090,214

 

Treasury stock, at cost

(2,621,657

)

(2,533,306

)

Deferred compensation payable in Company stock

2,321

 

2,272

 

Total Stockholders' Equity

952,079

 

684,960

 

Total Liabilities and Stockholders' Equity $

1,505,180

 

$

1,312,964

 

CHEMED CORPORATION AND SUBSIDIARY COMPANIES

CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)(unaudited)
 
For the Six Months Ended June 30,

2023

 

2022

 

Cash Flows from Operating Activities
Net income $

107,498

 

$

130,625

 

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

29,947

 

29,890

 

Stock option expense

16,882

 

14,667

 

Noncash long-term incentive compensation

3,493

 

2,497

 

Benefit for deferred income taxes

(1,932

)

(2,129

)

Noncash directors' compensation

1,444

 

1,170

 

Amortization of debt issuance costs

420

 

153

 

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

20,100

 

887

 

Increase in inventories

(1,412

)

(587

)

Decrease in prepaid expenses

1,719

 

3,689

 

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

8,561

 

(24,001

)

Change in current income taxes

1,865

 

27

 

Net change in lease assets and liabilities

(1,046

)

705

 

(Increase)/decrease in other assets

(3,810

)

2,071

 

Increase/(decrease) in other liabilities

7,344

 

(1,491

)

Other sources/(uses)

1,736

 

(503

)

Net cash provided by operating activities

192,809

 

157,670

 

Cash Flows from Investing Activities
Capital expenditures

(33,420

)

(25,610

)

Proceeds from sale of fixed assets

360

 

1,757

 

Business combinations, net of cash acquired

(305

)

(1,650

)

Other uses

(169

)

(132

)

Net cash used by investing activities

(33,534

)

(25,635

)

Cash Flows from Financing Activities
Payments on other long-term debt

(97,500

)

-

 

Proceeds from other long-term debt

-

 

100,000

 

Proceeds from exercise of stock options

53,675

 

12,869

 

Purchases of treasury stock

(13,425

)

(77,214

)

Dividends paid

(11,412

)

(10,722

)

Capital stock surrendered to pay taxes on stock-based compensation

(5,313

)

(12,115

)

Debt issuance costs

-

 

(1,510

)

Payments on revolving line of credit

-

 

(263,300

)

Proceeds from revolving line of credit

-

 

95,100

 

Change in cash overdrafts payable

-

 

1,716

 

Other sources/(uses)

498

 

(114

)

Net cash used by financing activities

(73,477

)

(155,290

)

Increase/(decrease) in Cash and Cash Equivalents

85,798

 

(23,255

)

Cash and cash equivalents at beginning of year

74,126

 

32,895

 

Cash and cash equivalents at end of year $

159,924

 

$

9,640

 

 
CHEMED CORPORATION AND SUBSIDIARY COMPANIES
CONSOLIDATING STATEMENTS OF INCOME
FOR THE THREE MONTHS ENDED JUNE 30, 2023 AND 2022
(in thousands)(unaudited)
Chemed
VITAS Roto-Rooter Corporate Consolidated
2023 (a)
Service revenues and sales $

320,861

 

$

232,955

 

$

-

 

$

553,816

 

Cost of services provided and goods sold

263,085

 

111,108

 

-

 

374,193

 

Selling, general and administrative expenses

22,656

 

56,012

 

16,319

 

94,987

 

Depreciation

4,940

 

7,681

 

13

 

12,634

 

Amortization

26

 

2,488

 

-

 

2,514

 

Other operating expense/(income)

26

 

(44

)

-

 

(18

)

Total costs and expenses

290,733

 

177,245

 

16,332

 

484,310

 

Income/(loss) from operations

30,128

 

55,710

 

(16,332

)

69,506

 

Interest expense

(51

)

(124

)

(596

)

(771

)

Intercompany interest income/(expense)

4,810

 

2,869

 

(7,679

)

-

 

Other income—net

70

 

35

 

1,504

 

1,609

 

Income/(loss) before income taxes

34,957

 

58,490

 

(23,103

)

70,344

 

Income taxes

(8,829

)

(14,116

)

5,978

 

(16,967

)

Net income/(loss) $

26,128

 

$

44,374

 

$

(17,125

)

$

53,377

 

 
2022 (b)
Service revenues and sales $

297,781

 

$

233,507

 

$

-

 

$

531,288

 

Cost of services provided and goods sold

227,533

 

109,288

 

-

 

336,821

 

Selling, general and administrative expenses

23,148

 

54,982

 

9,723

 

87,853

 

Depreciation

6,062

 

6,634

 

18

 

12,714

 

Amortization

26

 

2,494

 

-

 

2,520

 

Other operating expense/(income)

(807

)

249

 

-

 

(558

)

Total costs and expenses

255,962

 

173,647

 

9,741

 

439,350

 

Income/(loss) from operations

41,819

 

59,860

 

(9,741

)

91,938

 

Interest expense

(44

)

(115

)

(743

)

(902

)

Intercompany interest income/(expense)

4,683

 

2,205

 

(6,888

)

-

 

Other income/(expense)—net

119

 

37

 

(5,086

)

(4,930

)

Income/(loss) before income taxes

46,577

 

61,987

 

(22,458

)

86,106

 

Income taxes

(11,365

)

(14,915

)

6,630

 

(19,650

)

Net income/(loss) $

35,212

 

$

47,072

 

$

(15,828

)

$

66,456

 

 
 
The "Footnotes to Financial Statements" are integral parts of this financial information.
 
 
CHEMED CORPORATION AND SUBSIDIARY COMPANIES
CONSOLIDATING STATEMENTS OF INCOME
FOR THE SIX MONTHS ENDED JUNE 30, 2023 AND 2022
(in thousands)(unaudited)
 
Chemed
VITAS Roto-Rooter Corporate Consolidated
2023 (a)
Service revenues and sales $

631,339

 

$

482,634

 

$

-

 

$

1,113,973

 

Cost of services provided and goods sold

516,739

 

228,159

 

-

 

744,898

 

Selling, general and administrative expenses

45,992

 

116,825

 

32,265

 

195,082

 

Depreciation

9,898

 

14,994

 

28

 

24,920

 

Amortization

52

 

4,975

 

-

 

5,027

 

Other operating expense

38

 

1,683

 

-

 

1,721

 

Total costs and expenses

572,719

 

366,636

 

32,293

 

971,648

 

Income/(loss) from operations

58,620

 

115,998

 

(32,293

)

142,325

 

Interest expense

(102

)

(257

)

(1,963

)

(2,322

)

Intercompany interest income/(expense)

9,458

 

5,612

 

(15,070

)

-

 

Other income—net

259

 

64

 

1,183

 

1,506

 

Income/(loss) before income taxes

68,235

 

121,417

 

(48,143

)

141,509

 

Income taxes

(17,343

)

(29,390

)

12,722

 

(34,011

)

Net income/(loss) $

50,892

 

$

92,027

 

$

(35,421

)

$

107,498

 

 
2022 (b)
Service revenues and sales $

596,970

 

$

464,867

 

$

-

 

$

1,061,837

 

Cost of services provided and goods sold

454,773

 

218,600

 

-

 

673,373

 

Selling, general and administrative expenses

45,600

 

111,937

 

20,270

 

177,807

 

Depreciation

11,613

 

13,203

 

36

 

24,852

 

Amortization

49

 

4,989

 

-

 

5,038

 

Other operating expense

(955

)

410

 

-

 

(545

)

Total costs and expenses

511,080

 

349,139

 

20,306

 

880,525

 

Income/(loss) from operations

85,890

 

115,728

 

(20,306

)

181,312

 

Interest expense

(96

)

(229

)

(1,387

)

(1,712

)

Intercompany interest income/(expense)

9,339

 

4,381

 

(13,720

)

-

 

Other income—net

156

 

72

 

(9,020

)

(8,792

)

Income/(loss) before income taxes

95,289

 

119,952

 

(44,433

)

170,808

 

Income taxes

(23,595

)

(28,943

)

12,355

 

(40,183

)

Net income/(loss) $

71,694

 

$

91,009

 

$

(32,078

)

$

130,625

 

 
 
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 JUNE 30, 2023 AND 2022
(in thousands)(unaudited)
Chemed
VITAS Roto-Rooter Corporate Consolidated

2023

Net income/(loss) $

26,128

 

$

44,374

 

$

(17,125

)

$

53,377

 

Add/(deduct):
Interest expense

51

 

124

 

596

 

771

 

Income taxes

8,829

 

14,116

 

(5,978

)

16,967

 

Depreciation

4,940

 

7,681

 

13

 

12,634

 

Amortization

26

 

2,488

 

-

 

2,514

 

EBITDA

39,974

 

68,783

 

(22,494

)

86,263

 

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

(4,810

)

(2,869

)

7,679

 

-

 

Interest income

(79

)

(34

)

-

 

(113

)

Licensed healthcare retention bonus

12,833

 

-

 

-

 

12,833

 

Stock option expense

-

 

-

 

8,400

 

8,400

 

Long-term incentive compensation

-

 

-

 

1,750

 

1,750

 

Adjusted EBITDA $

47,918

 

$

65,880

 

$

(4,665

)

$

109,133

 

 

2022

Net income/(loss) $

35,212

 

$

47,072

 

$

(15,828

)

$

66,456

 

Add/(deduct):
Interest expense

44

 

115

 

743

 

902

 

Income taxes

11,365

 

14,915

 

(6,630

)

19,650

 

Depreciation

6,062

 

6,634

 

18

 

12,714

 

Amortization

26

 

2,494

 

-

 

2,520

 

EBITDA

52,709

 

71,230

 

(21,697

)

102,242

 

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

(4,683

)

(2,205

)

6,888

 

-

 

Interest income

(118

)

(37

)

1

 

(154

)

Stock option expense

-

 

-

 

7,216

 

7,216

 

Long-term incentive compensation

-

 

-

 

1,517

 

1,517

 

Medicare cap sequestration adjustment

138

 

-

 

-

 

138

 

Direct costs related to COVID-19

(80

)

-

 

-

 

(80

)

Other

-

 

28

 

-

 

28

 

Adjusted EBITDA $

47,966

 

$

69,016

 

$

(6,075

)

$

110,907

 

 
The "Footnotes to Financial Statements" are integral parts of this financial information.
 
 
CHEMED CORPORATION AND SUBSIDIARY COMPANIES
CONSOLIDATING SUMMARIES OF EBITDA
FOR THE SIX MONTHS ENDED JUNE 30, 2023 AND 2022
(in thousands)(unaudited)
Chemed
VITAS Roto-Rooter Corporate Consolidated

2023

Net income/(loss) $

50,892

 

$

92,027

 

$

(35,421

)

$

107,498

 

Add/(deduct):
Interest expense

102

 

257

 

1,963

 

2,322

 

Income taxes

17,343

 

29,390

 

(12,722

)

34,011

 

Depreciation

9,898

 

14,994

 

28

 

24,920

 

Amortization

52

 

4,975

 

-

 

5,027

 

EBITDA

78,287

 

141,643

 

(46,152

)

173,778

 

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

(9,458

)

(5,612

)

15,070

 

-

 

Interest income

(199

)

(64

)

-

 

(263

)

Licensed healthcare retention bonus

23,750

 

-

 

-

 

23,750

 

Stock option expense

-

 

-

 

16,882

 

16,882

 

Long-term incentive compensation

-

 

-

 

4,264

 

4,264

 

Litigation settlements

-

 

1,756

 

-

 

1,756

 

Adjusted EBITDA $

92,380

 

$

137,723

 

$

(9,936

)

$

220,167

 

2022

Net income/(loss) $

71,694

 

$

91,009

 

$

(32,078

)

$

130,625

 

Add/(deduct):
Interest expense

96

 

229

 

1,387

 

1,712

 

Income taxes

23,595

 

28,943

 

(12,355

)

40,183

 

Depreciation

11,613

 

13,203

 

36

 

24,852

 

Amortization

49

 

4,989

 

-

 

5,038

 

EBITDA

107,047

 

138,373

 

(43,010

)

202,410

 

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

(9,339

)

(4,381

)

13,720

 

-

 

Interest income

(155

)

(71

)

-

 

(226

)

Stock option expense

-

 

-

 

14,667

 

14,667

 

Long-term incentive compensation

-

 

-

 

2,827

 

2,827

 

Direct costs related to COVID-19

310

 

960

 

-

 

1,270

 

Medicare cap sequestration adjustment

138

 

-

 

-

 

138

 

Other

-

 

28

 

-

 

28

 

Adjusted EBITDA $

98,001

 

$

134,909

 

$

(11,796

)

$

221,114

 

 
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 June 30, Six Months Ended June 30,

2023

 

2022

 

2023

 

2022

 

Net income as reported $

53,377

 

$

66,456

 

$

107,498

 

$

130,625

 

Add/(deduct) pre-tax cost of:
Licensed healthcare worker retention bonus

12,833

 

-

 

23,750

 

-

 

Stock option expense

8,400

 

7,216

 

16,882

 

14,667

 

Amortization of reacquired franchise agreements

2,352

 

2,352

 

4,704

 

4,704

 

Long-term incentive compensation

1,750

 

1,517

 

4,264

 

2,827

 

Litigation settlements

-

 

-

 

1,756

 

-

 

Medicare cap sequestration adjustment

-

 

138

 

-

 

138

 

Other

-

 

28

 

-

 

28

 

Direct costs related to COVID-19

-

 

(80

)

-

 

1,270

 

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

(5,525

)

(2,038

)

(11,151

)

(4,449

)

Excess tax benefits on stock compensation

(1,501

)

(2,499

)

(3,150

)

(3,940

)

Adjusted net income $

71,686

 

$

73,090

 

$

144,553

 

$

145,870

 

 
Diluted Earnings Per Share As Reported
Net income $

3.51

 

$

4.40

 

$

7.09

 

$

8.62

 

Average number of shares outstanding

15,219

 

15,111

 

15,167

 

15,152

 

 
Adjusted Diluted Earnings Per Share
Adjusted net income $

4.71

 

$

4.84

 

$

9.53

 

$

9.63

 

Average number of shares outstanding

15,219

 

15,111

 

15,167

 

15,152

 

 
(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 June 30, Six Months Ended June 30,
OPERATING STATISTICS

2023

 

2022

 

2023

 

2022

 

Net revenue ($000) (c)
Homecare $

278,116

 

$

257,631

 

$

545,166

 

$

515,267

 

Inpatient

27,401

 

24,619

 

56,494

 

51,189

 

Continuous care

21,081

 

19,538

 

41,022

 

39,116

 

Other

3,154

 

3,213

 

6,175

 

6,220

 

Subtotal $

329,752

 

$

305,001

 

$

648,857

 

$

611,792

 

Room and board, net

(2,904

)

(2,166

)

(5,672

)

(4,283

)

Contractual allowances

(3,237

)

(3,054

)

(6,346

)

(6,039

)

Medicare cap allowance

(2,750

)

(2,000

)

(5,500

)

(4,500

)

Net Revenue $

320,861

 

$

297,781

 

$

631,339

 

$

596,970

 

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

84.3

 

%

84.5

 

%

84.0

 

%

84.2

 

%

Inpatient

8.3

 

8.1

 

8.7

 

8.4

 

Continuous care

6.4

 

6.4

 

6.3

 

6.4

 

Other

1.0

 

1.0

 

1.0

 

1.0

 

Subtotal

100.0

 

100.0

 

100.0

 

100.0

 

Room and board, net

(0.8

)

(0.7

)

(0.9

)

(0.7

)

Contractual allowances

(1.0

)

(1.0

)

(1.0

)

(1.0

)

Medicare cap allowance

(0.8

)

(0.7

)

(0.8

)

(0.7

)

Net Revenue

97.4

 

%

97.6

 

%

97.3

 

%

97.6

 

%

Days of care
Homecare

1,340,655

 

1,266,604

 

2,627,092

 

2,525,276

 

Nursing home

279,898

 

259,046

 

545,327

 

507,514

 

Respite

6,159

 

6,095

 

11,919

 

11,463

 

Subtotal routine homecare and respite

1,626,712

 

1,531,745

 

3,184,338

 

3,044,253

 

Inpatient

25,125

 

23,155

 

51,494

 

47,742

 

Continuous care

21,873

 

20,802

 

42,559

 

41,884

 

Total

1,673,710

 

1,575,702

 

3,278,391

 

3,133,879

 

 
Number of days in relevant time period

91

 

91

 

181

 

181

 

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

14,732

 

13,918

 

14,514

 

13,952

 

Nursing home

3,076

 

2,847

 

3,013

 

2,804

 

Respite

68

 

67

 

66

 

63

 

Subtotal routine homecare and respite

17,876

 

16,832

 

17,593

 

16,819

 

Inpatient

276

 

254

 

286

 

264

 

Continuous care

240

 

229

 

235

 

231

 

Total

18,392

 

17,315

 

18,114

 

17,314

 

Total Admissions

15,611

 

14,735

 

31,790

 

31,265

 

Total Discharges

15,104

 

14,603

 

30,509

 

31,465

 

Average length of stay (days)

99.5

 

103.7

 

99.7

 

104.3

 

Median length of stay (days)

16.0

 

17.0

 

15.0

 

16.0

 

ADC by major diagnosis
Cerebro

41.9

 

%

37.6

 

%

42.0

 

%

37.5

 

%

Neurological

18.8

 

22.7

 

19.0

 

22.8

 

Cancer

10.8

 

11.2

 

10.6

 

11.2

 

Cardio

16.1

 

15.8

 

16.0

 

15.8

 

Respiratory

7.1

 

7.2

 

7.2

 

7.3

 

Other

5.3

 

5.5

 

5.2

 

5.4

 

Total

100.0

 

%

100.0

 

%

100.0

 

%

100.0

 

%

Admissions by major diagnosis
Cerebro

25.9

 

%

23.8

 

%

26.2

 

%

23.4

 

%

Neurological

10.1

 

13.0

 

10.4

 

12.9

 

Cancer

27.1

 

27.3

 

25.9

 

26.0

 

Cardio

16.3

 

15.4

 

16.3

 

14.7

 

Respiratory

9.8

 

9.9

 

10.4

 

10.6

 

Other

10.8

 

10.6

 

10.8

 

12.4

 

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

35.2

 

33.7

 

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

22.6

 

28.2

 

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 SIX MONTHS ENDED JUNE 30, 2023 AND 2022
(unaudited)
 
(a) Included in the results of operations for 2023 are the following significant credits/(charges) which may not be indicative of ongoing operations
(in thousands):
Three Months Ended June 30, 2023
VITAS Roto-Rooter Corporate Consolidated
 
Licensed healthcare worker retention bonus $

(12,833

)

$

-

 

$

-

 

$

(12,833

)

Stock option expense

-

 

-

 

(8,400

)

(8,400

)

Amortization of reacquired franchise agreements

-

 

(2,352

)

-

 

(2,352

)

Long-term incentive compensation

-

 

-

 

(1,750

)

(1,750

)

Pretax impact on earnings

(12,833

)

(2,352

)

(10,150

)

(25,335

)

Excess tax benefits on stock compensation

-

 

-

 

1,501

 

1,501

 

Income tax benefit on the above

3,259

 

623

 

1,643

 

5,525

 

After-tax impact on earnings $

(9,574

)

$

(1,729

)

$

(7,006

)

$

(18,309

)

 
Six Months Ended June 30, 2023
VITAS Roto-Rooter Corporate Consolidated
 
Licensed healthcare worker retention bonus $

(23,750

)

$

-

 

$

-

 

$

(23,750

)

Stock option expense

-

 

-

 

(16,882

)

(16,882

)

Amortization of reacquired franchise agreements

-

 

(4,704

)

-

 

(4,704

)

Long-term incentive compensation

-

 

-

 

(4,264

)

(4,264

)

Litigation settlements

-

 

(1,756

)

-

 

(1,756

)

Pretax impact on earnings

(23,750

)

(6,460

)

(21,146

)

(51,356

)

Excess tax benefits on stock compensation

-

 

-

 

3,150

 

3,150

 

Income tax benefit on the above

6,033

 

1,712

 

3,406

 

11,151

 

After-tax impact on earnings $

(17,717

)

$

(4,748

)

$

(14,590

)

$

(37,055

)

 
(b) Included in the results of operations for 2022 are the following significant credits/(charges) which may not be indicative of ongoing operations
(in thousands):
Three Months Ended June 30, 2022
VITAS Roto-Rooter Corporate Consolidated
 
Stock option expense $

-

 

$

-

 

$

(7,216

)

$

(7,216

)

Amortization of reacquired franchise agreements

-

 

(2,352

)

-

 

(2,352

)

Long-term incentive compensation

-

 

-

 

(1,517

)

(1,517

)

Medicare cap sequestration adjustment

(138

)

-

 

-

 

(138

)

Direct costs related to COVID-19

80

 

-

 

-

 

80

 

Other

-

 

(28

)

-

 

(28

)

Pretax impact on earnings

(58

)

(2,380

)

(8,733

)

(11,171

)

Excess tax benefits on stock compensation

-

 

-

 

2,499

 

2,499

 

Income tax benefit on the above

15

 

631

 

1,392

 

2,038

 

After-tax impact on earnings $

(43

)

$

(1,749

)

$

(4,842

)

$

(6,634

)

 
Six Months Ended June 30, 2022
VITAS Roto-Rooter Corporate Consolidated
 
Stock option expense $

-

 

$

-

 

$

(14,667

)

$

(14,667

)

Amortization of reacquired franchise agreements

-

 

(4,704

)

-

 

(4,704

)

Long-term incentive compensation

-

 

-

 

(2,827

)

(2,827

)

Direct costs related to COVID-19

(310

)

(960

)

-

 

(1,270

)

Medicare cap sequestration adjustment

(138

)

-

 

-

 

(138

)

Other

-

 

(28

)

-

 

(28

)

Pretax impact on earnings

(448

)

(5,692

)

(17,494

)

(23,634

)

Excess tax benefits on stock compensation

-

 

-

 

3,940

 

3,940

 

Income tax benefit on the above

114

 

1,508

 

2,827

 

4,449

 

After-tax impact on earnings $

(334

)

$

(4,184

)

$

(10,727

)

$

(15,245

)

 
(c) VITAS has 10 large (greater than 450 ADC), 18 medium (greater than 200 but less than 450 ADC) and 22 small (less than 200 ADC) hospice programs. Of Vitas' 30 Medicare provider numbers, for the current cap year, 24 provider numbers have a Medicare cap cushion of greater than 10%, three provider numbers have a Medicare cap cushion between 5% and 10% and three provider numbers have a Medicare cap liability.

 

Contacts

David P. Williams

(513) 762-6901

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