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Chemed Reports Fourth-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 fourth quarter ended December 31, 2023, versus the comparable prior-year period.

Changes to Non-GAAP Metrics

Chemed uses certain non-GAAP metrics such as EBITDA, adjusted EBITDA, adjusted net income and adjusted diluted earnings per share, to provide additional context and perspective to reported operational results.

Chemed’s previously reported non-GAAP metrics during the four sequential quarters from September 30, 2022 through June 30, 2023 excluded the 12-month pandemic-related licensed healthcare professional retention bonus (Retention Program).

Starting with the quarter-ended September 30, 2023, the Company no longer excludes the cost of the Retention Program when presenting non-GAAP operating metrics in current or prior periods.

For the quarter-ended December 31, 2023, there is a pre-tax and after-tax expense reversal related to the Retention Program of $2.9 million and $2.2 million, respectively. For the quarter-ended December 31, 2022, the pretax and after-tax Retention Program expense was $10.1 million and $7.5 million, respectively.

For the year ended December 31, 2023 pretax and after-tax expense for the Retention Program is $20.8 million and $15.8 million, respectively. For the year ended December 31, 2022 pretax and after-tax expense for the Retention Program was $19.6 million and $14.6 million, respectively.

Results for Quarter Ended December 31, 2023

Consolidated operating results:

  • Revenue increased 7.2% to $585.9 million
  • GAAP Diluted Earnings-per-Share (EPS) of $5.90, an increase of 42.9%
  • Adjusted Diluted EPS of $6.60, an increase of 35.0%

VITAS segment operating results:

  • Net Patient Revenue of $350.0 million, an increase of 13.6%
  • Average Daily Census (ADC) of 19,352, an increase of 11.0%
  • Admissions of 15,867, an increase of 7.0%
  • Net Income, excluding certain discrete items, of $63.3 million, an increase of 72.6%
  • Adjusted EBITDA, excluding Medicare Cap, of $83.3 million, an increase of 61.6%
  • Adjusted EBITDA margin, excluding Medicare Cap, of 23.7%, an increase of 705-basis points

Roto-Rooter segment operating results:

  • Revenue of $235.9 million, a decrease of 1.1%
  • Net Income, excluding certain discrete items, of $47.7 million, a decrease of 3.2%
  • Adjusted EBITDA of $64.9 million, a decline of 6.4%
  • Adjusted EBITDA margin of 27.5%, a decline of 154-basis points

VITAS

VITAS net revenue was $350.0 million in the fourth quarter of 2023, which is an increase of 13.6% when compared to the prior-year period. This revenue increase is comprised primarily of an 11.0% increase in days-of-care and a geographically weighted average Medicare reimbursement rate increase of approximately 2.3%. Acuity mix shift negatively impacted revenue growth 38-basis points in the quarter when compared to the prior-year period’s revenue and level-of-care mix. The combination of Medicare Cap and other contra revenue changes increased revenue growth by approximately 61-basis points.

In the fourth quarter of 2023, VITAS accrued $2.4 million in Medicare Cap billing limitations. This compares to a $2.8 million Medicare Cap billing limitation in the fourth quarter of 2022.

Of VITAS’ 30 Medicare provider numbers, 26 provider numbers have a trailing 12-month Medicare Cap cushion of 10% or greater, two provider numbers have a cushion between 5% and 10%, no provider number has a cushion between 0% and 5%, and two provider numbers have a trailing 12-month Medicare Cap billing limitation totaling $7.8 million.

Average revenue per patient per day in the fourth quarter of 2023 was $201.33 which is 200-basis points above the prior-year period. Reimbursement for routine home care and high acuity care averaged $177.62 and $1,058.60, respectively. During the quarter, high acuity days-of-care were 2.7% of total days of care, a decline of 6-basis points when compared to the prior-year quarter.

The fourth quarter 2023 gross margin, excluding Medicare Cap, was 29.9%. This compares to the prior year gross margin of 23.6%, excluding Medicare Cap. Approximately 406-basis points of this difference is attributable to the expense associated with the Retention Program. Selling, general and administrative expenses were $22.0 million in the fourth quarter of 2023 and compares to $22.0 million in the prior-year quarter.

Adjusted EBITDA, excluding Medicare Cap, totaled $83.3 million in the quarter, an increase of 61.6%. Adjusted EBITDA margin in the quarter, excluding Medicare Cap, was 23.7%, which is 705-basis points above the prior-year period. Approximately 406-basis points of this difference is attributable to the expense associated with the Retention Program.

Roto-Rooter

Roto-Rooter generated quarterly revenue of $235.9 million in the fourth quarter of 2023, a decrease of 1.1%, when compared to the prior-year quarter.

Roto-Rooter branch commercial revenue in the quarter totaled $54.0 million, a decrease of 7.9% from the prior-year. This aggregate commercial revenue decline consisted of drain cleaning revenue declining 8.6%, plumbing declining 6.3%, excavation declining 5.9%, and water restoration declining 16.1%.

Roto-Rooter branch residential revenue in the quarter totaled $162.5 million, an increase of 2.0%, over the prior-year period. This aggregate residential revenue growth consisted of drain cleaning decreasing 5.6%, plumbing increasing 1.4%, excavation expanding 4.0%, and water restoration increasing 8.6%.

Roto-Rooter’s gross margin in the quarter was 52.9%, a 9-basis point decline when compared to the fourth quarter of 2022. Adjusted EBITDA in the fourth quarter of 2023 totaled $64.9 million, a decrease of 6.4%. The Adjusted EBITDA margin in the quarter was 27.5%, which is 154-basis points below the prior-year period.

Chemed Consolidated

As of December 31, 2023, Chemed had total cash and cash equivalents of $264.0 million and no current or long-term debt.

In June 2022, Chemed entered into a five-year $550 million Amended and Restated Credit Agreement (Credit Agreement). This Credit Agreement consisted of a $100 million amortizable term loan and a $450 million revolving credit facility. The interest rate on this Credit Agreement has a floating rate that is currently SOFR plus 100-basis points. The Company paid off the remaining portion of the term loan in the second quarter of 2023. There is approximately $404.8 million of undrawn borrowing capacity under the Credit Agreement after excluding $45.2 million for Letters of Credit.

During the quarter, the Company repurchased 79,512 shares of Chemed stock for $46.0 million which equates to a cost per share of $579.09. As of December 31, 2023, there was approximately $314.1 million of remaining share repurchase authorization under its plan.

Guidance for 2024

VITAS 2024 revenue, prior to Medicare Cap, is estimated to increase 9.0% to 9.8% when compared to 2023. ADC is estimated to increase 6.5% to 7.0%. Full year adjusted EBITDA margin, prior to Medicare Cap, is estimated to be 17.8% to 18.3%. Medicare Cap billing limitations are estimated to be $9.5 million in calendar year 2024.

Roto-Rooter is forecasted to achieve full-year 2024 revenue growth of 3.5% to 4.0%. Roto-Rooter’s adjusted EBITDA margin for 2024 is expected to be 28.7% to 29.1%.

Based upon the above, full-year 2024 earnings per diluted share, excluding: non-cash expense for stock options, tax benefits from stock option exercises, costs related to litigation, and other discrete items, is estimated to be in the range of $23.30 to $23.70.

The 2024 guidance assumes an effective corporate tax rate on adjusted earnings of 24.2% and a diluted share count of 15.2 million shares. Chemed’s 2023 adjusted earnings per diluted share was $20.30, including $1.04 per share for costs associated with the 2023 portion of the Retention Program.

Conference Call

As previously disclosed, Chemed will host a conference call and webcast at 10 a.m., ET, on Wednesday, February 28, 2024, 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/586r6wmh.

Participants may also register via teleconference at: https://register.vevent.com/register/BIefc8b6001c2b43b09e16a655471d87c4.

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 18,600 patients with severe, life-limiting illnesses. This type of care is focused on making the terminally ill patient's final days as comfortable and pain-free as possible.

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

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

Forward-Looking Statements

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

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

 
CHEMED CORPORATION AND SUBSIDIARY COMPANIES
CONSOLIDATED STATEMENTS OF INCOME
(in thousands, except per share data)(unaudited)
 
Three Months Ended December 31, For the Years Ended December 31,

2023

2022

2023

 

2022

Service revenues and sales $

585,912

 

$

546,654

 

$

2,264,417

 

$

2,134,963

 

Cost of services provided and goods sold

358,346

 

349,570

 

1,465,602

 

1,369,877

 

Selling, general and administrative expenses (aa)

100,436

 

96,928

 

395,120

 

358,727

 

Depreciation

13,024

 

12,096

 

50,802

 

49,102

 

Amortization

2,515

 

2,512

 

10,063

 

10,070

 

Other operating expense

197

 

4,221

 

2,261

 

3,691

 

Total costs and expenses

474,518

 

465,327

 

1,923,848

 

1,791,467

 

Income from operations

111,394

 

81,327

 

340,569

 

343,496

 

Interest expense

(342

)

(1,601

)

(3,108

)

(4,584

)

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

4,541

 

2,674

 

12,906

 

(9,233

)

Income before income taxes

115,593

 

82,400

 

350,367

 

329,679

 

Income taxes

(25,540

)

(20,274

)

(77,858

)

(80,055

)

Net income $

90,053

 

$

62,126

 

$

272,509

 

$

249,624

 

Earnings Per Share
Net income $

5.96

 

$

4.17

 

$

18.11

 

$

16.72

 

Average number of shares outstanding

15,099

 

14,913

 

15,050

 

14,929

 

Diluted Earnings Per Share
Net income $

5.90

 

$

4.13

 

$

17.93

 

$

16.53

 

Average number of shares outstanding

15,270

 

15,052

 

15,200

 

15,099

 

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

2023

2022

2023

2022

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

95,601

 

$

91,779

 

$

377,027

 

$

360,896

 

Long-term incentive compensation

3,872

 

2,923

 

11,689

 

7,801

 

Market value adjustments related to deferred
compensation trusts

963

 

2,226

 

6,404

 

(9,970

)

Total SG&A expenses $

100,436

 

$

96,928

 

$

395,120

 

$

358,727

 

 
(bb) Other income/(expense)--net comprises (in thousands):
Three Months Ended December 31, For the Years Ended December 31,

2023

2022

2023

2022

Market value adjustments related to deferred
compensation trusts $

963

 

$

2,226

 

$

6,404

 

$

(9,970

)

Interest income

3,408

 

65

 

6,270

 

355

 

Other

170

 

383

 

232

 

382

 

Total other income/(expense)--net $

4,541

 

$

2,674

 

$

12,906

 

$

(9,233

)

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

2023

2022

Assets
Current assets
Cash and cash equivalents $

263,958

 

$

74,126

 

Accounts receivable less allowances

181,511

 

139,408

 

Inventories

12,004

 

10,272

 

Prepaid income taxes

13,166

 

18,515

 

Prepaid expenses

30,204

 

30,291

 

Total current assets

500,843

 

272,612

 

Investments of deferred compensation plans held in trust

106,126

 

93,196

 

Properties and equipment, at cost less accumulated depreciation

203,840

 

199,714

 

Lease right of use asset

126,387

 

135,662

 

Identifiable intangible assets less accumulated amortization

90,264

 

99,726

 

Goodwill

585,017

 

581,295

 

Other assets

55,618

 

59,807

 

Total Assets $

1,668,095

 

$

1,442,012

 

Liabilities
Current liabilities
Accounts payable $

64,034

 

$

41,884

 

Current portion of long-term debt

-

 

5,000

 

Income taxes

6,858

 

-

 

Accrued insurance

58,568

 

58,515

 

Accrued compensation

88,381

 

87,350

 

Accrued legal

6,386

 

4,456

 

Short-term lease liability

38,635

 

38,996

 

Other current liabilities

49,188

 

61,004

 

Total current liabilities

312,050

 

297,205

 

Deferred income taxes

30,321

 

38,613

 

Long-term debt

-

 

92,500

 

Deferred compensation liabilities

104,069

 

92,330

 

Long-term lease liability

100,776

 

110,513

 

Other liabilities

13,003

 

12,136

 

Total Liabilities

560,219

 

643,297

 

Stockholders' Equity
Capital stock

37,184

 

36,796

 

Paid-in capital

1,341,273

 

1,149,899

 

Retained earnings

2,446,925

 

2,197,918

 

Treasury stock, at cost

(2,719,588

)

(2,588,145

)

Deferred compensation payable in Company stock

2,082

 

2,247

 

Total Stockholders' Equity

1,107,876

 

798,715

 

Total Liabilities and Stockholders' Equity $

1,668,095

 

$

1,442,012

 

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

2023

2022

Cash Flows from Operating Activities
Net income $

272,509

 

$

249,624

 

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

60,865

 

59,172

 

Stock option expense

30,082

 

26,254

 

Deferred payroll taxes

-

 

(18,175

)

Noncash long-term incentive compensation

9,267

 

6,188

 

(Benefit)/provision for deferred income taxes

(8,027

)

14,827

 

Litigation settlements

2,050

 

4,000

 

Noncash directors' compensation

1,444

 

1,170

 

Amortization of debt issuance costs

580

 

342

 

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

(41,488

)

(2,414

)

Increase in inventories

(1,732

)

(162

)

Decrease in prepaid expenses

87

 

2,397

 

(Decrease)/increase in accounts payable and
other current liabilities

(9,348

)

15,343

 

Change in current income taxes

11,748

 

(996

)

Net change in lease assets and liabilities

(1,424

)

1,471

 

Increase in other assets

(9,952

)

(45,779

)

Increase/(decrease) in other liabilities

12,802

 

(3,350

)

Other sources/(uses)

836

 

(26

)

Net cash provided by operating activities

330,299

 

309,886

 

Cash Flows from Investing Activities
Capital expenditures

(56,854

)

(57,325

)

Business combinations, net of cash acquired

(3,994

)

(3,529

)

Proceeds from sale of fixed assets

640

 

2,330

 

Other uses

(434

)

(878

)

Net cash used by investing activities

(60,642

)

(59,402

)

Cash Flows from Financing Activities
Proceeds from exercise of stock options

102,192

 

44,968

 

Payments on other long-term debt

(97,500

)

(2,500

)

Proceeds from other long-term debt

-

 

100,000

 

Purchases of treasury stock

(67,697

)

(114,515

)

Dividends paid

(23,502

)

(22,017

)

Change in cash overdrafts payable

15,749

 

(11,884

)

Capital stock surrendered to pay taxes on stock-based compensation

(9,557

)

(15,611

)

Debt issuance costs

-

 

(1,586

)

Payments on revolving line of credit

-

 

(306,800

)

Proceeds from revolving line of credit

-

 

121,800

 

Other sources/(uses)

490

 

(1,108

)

Net cash used by financing activities

(79,825

)

(209,253

)

Increase/(decrease) in Cash and Cash Equivalents

189,832

 

41,231

 

Cash and cash equivalents at beginning of year

74,126

 

32,895

 

Cash and cash equivalents at end of year $

263,958

 

$

74,126

 

 
CHEMED CORPORATION AND SUBSIDIARY COMPANIES
CONSOLIDATING STATEMENTS OF INCOME
FOR THE THREE MONTHS ENDED DECEMBER 31, 2023 AND 2022
(in thousands)(unaudited)
Chemed
VITAS Roto-Rooter Corporate Consolidated
2023 (a)
Service revenues and sales $

349,998

 

$

235,914

 

$

-

 

$

585,912

 

Cost of services provided and goods sold

247,151

 

111,195

 

-

 

358,346

 

Selling, general and administrative expenses

22,048

 

59,621

 

18,767

 

100,436

 

Depreciation

5,052

 

7,959

 

13

 

13,024

 

Amortization

26

 

2,489

 

-

 

2,515

 

Other operating (income)/expense

4

 

193

 

-

 

197

 

Total costs and expenses

274,281

 

181,457

 

18,780

 

474,518

 

Income/(loss) from operations

75,717

 

54,457

 

(18,780

)

111,394

 

Interest expense

(26

)

(55

)

(261

)

(342

)

Intercompany interest income/(expense)

5,008

 

3,265

 

(8,273

)

-

 

Other income—net

201

 

29

 

4,311

 

4,541

 

Income/(loss) before income taxes

80,900

 

57,696

 

(23,003

)

115,593

 

Income taxes

(17,613

)

(11,809

)

3,882

 

(25,540

)

Net income/(loss) $

63,287

 

$

45,887

 

$

(19,121

)

$

90,053

 

 
2022 (b)
Service revenues and sales $

308,059

 

$

238,595

 

$

-

 

$

546,654

 

Cost of services provided and goods sold

237,333

 

112,237

 

-

 

349,570

 

Selling, general and administrative expenses

22,005

 

57,096

 

17,827

 

96,928

 

Depreciation

5,061

 

7,017

 

18

 

12,096

 

Amortization

26

 

2,486

 

-

 

2,512

 

Other operating expense/(income)

4,266

 

(45

)

-

 

4,221

 

Total costs and expenses

268,691

 

178,791

 

17,845

 

465,327

 

Income/(loss) from operations

39,368

 

59,804

 

(17,845

)

81,327

 

Interest expense

(31

)

(76

)

(1,494

)

(1,601

)

Intercompany interest income/(expense)

4,720

 

2,594

 

(7,314

)

-

 

Other income/(expense)—net

417

 

31

 

2,226

 

2,674

 

Income/(loss) before income taxes

44,474

 

62,353

 

(24,427

)

82,400

 

Income taxes

(10,800

)

(14,829

)

5,355

 

(20,274

)

Net income/(loss) $

33,674

 

$

47,524

 

$

(19,072

)

$

62,126

 

 
 
The "Footnotes to Financial Statements" are integral parts of this financial information.
 
CONSOLIDATING STATEMENTS OF INCOME
FOR THE YEARS ENDED DECEMBER 31, 2023 AND 2022
(in thousands)(unaudited)
 
Chemed
VITAS Roto-Rooter Corporate Consolidated
2023 (a)
Service revenues and sales $

1,315,065

 

$

949,352

 

$

-

 

$

2,264,417

 

Cost of services provided and goods sold

1,017,623

 

447,979

 

-

 

1,465,602

 

Selling, general and administrative expenses

93,296

 

231,587

 

70,237

 

395,120

 

Depreciation

19,959

 

30,790

 

53

 

50,802

 

Amortization

104

 

9,959

 

-

 

10,063

 

Other operating (income)/expense

(12

)

2,273

 

-

 

2,261

 

Total costs and expenses

1,130,970

 

722,588

 

70,290

 

1,923,848

 

Income/(loss) from operations

184,095

 

226,764

 

(70,290

)

340,569

 

Interest expense

(180

)

(442

)

(2,486

)

(3,108

)

Intercompany interest income/(expense)

19,400

 

11,918

 

(31,318

)

-

 

Other income—net

1,309

 

126

 

11,471

 

12,906

 

Income/(loss) before income taxes

204,624

 

238,366

 

(92,623

)

350,367

 

Income taxes

(46,115

)

(50,125

)

18,382

 

(77,858

)

Net income/(loss) $

158,509

 

$

188,241

 

$

(74,241

)

$

272,509

 

 
2022 (b)
Service revenues and sales $

1,201,564

 

$

933,399

 

$

-

 

$

2,134,963

 

Cost of services provided and goods sold

931,861

 

438,016

 

-

 

1,369,877

 

Selling, general and administrative expenses

89,187

 

222,257

 

47,283

 

358,727

 

Depreciation

21,955

 

27,075

 

72

 

49,102

 

Amortization

101

 

9,969

 

-

 

10,070

 

Other operating (income)/expense

3,337

 

354

 

-

 

3,691

 

Total costs and expenses

1,046,441

 

697,671

 

47,355

 

1,791,467

 

Income/(loss) from operations

155,123

 

235,728

 

(47,355

)

343,496

 

Interest expense

(172

)

(396

)

(4,016

)

(4,584

)

Intercompany interest income/(expense)

18,901

 

9,345

 

(28,246

)

-

 

Other income/(expense)—net

600

 

138

 

(9,971

)

(9,233

)

Income/(loss) before income taxes

174,452

 

244,815

 

(89,588

)

329,679

 

Income taxes

(43,000

)

(58,695

)

21,640

 

(80,055

)

Net income/(loss) $

131,452

 

$

186,120

 

$

(67,948

)

$

249,624

 

 
 
The "Footnotes to Financial Statements" are integral parts of this financial information.
 
CHEMED CORPORATION AND SUBSIDIARY COMPANIES
CONSOLIDATING SUMMARIES OF EBITDA
FOR THE THREE MONTHS ENDED DECEMBER 31, 2023 AND 2022
(in thousands)(unaudited)
Chemed
VITAS Roto-Rooter Corporate Consolidated

2023

Net income/(loss) $

63,287

 

$

45,887

 

$

(19,121

)

$

90,053

 

Add/(deduct):
Interest expense

26

 

55

 

261

 

342

 

Income taxes

17,613

 

11,809

 

(3,882

)

25,540

 

Depreciation

5,052

 

7,959

 

13

 

13,024

 

Amortization

26

 

2,489

 

-

 

2,515

 

EBITDA

86,004

 

68,199

 

(22,729

)

131,474

 

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

(5,008

)

(3,265

)

8,273

 

-

 

Interest income

(31

)

(29

)

(3,348

)

(3,408

)

Stock option expense

-

 

-

 

7,706

 

7,706

 

Long-term incentive compensation

-

 

-

 

3,872

 

3,872

 

Adjusted EBITDA $

80,965

 

$

64,905

 

$

(6,226

)

$

139,644

 

 

2022

Net income/(loss) $

33,674

 

$

47,524

 

$

(19,072

)

$

62,126

 

Add/(deduct):
Interest expense

31

 

76

 

1,494

 

1,601

 

Income taxes

10,800

 

14,829

 

(5,355

)

20,274

 

Depreciation

5,061

 

7,017

 

18

 

12,096

 

Amortization

26

 

2,486

 

-

 

2,512

 

EBITDA

49,592

 

71,932

 

(22,915

)

98,609

 

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

(4,720

)

(2,594

)

7,314

 

-

 

Interest income

(36

)

(30

)

1

 

(65

)

Stock option expense

-

 

-

 

6,911

 

6,911

 

Litigation settlement

4,000

 

-

 

-

 

4,000

 

Long-term incentive compensation

-

 

-

 

2,923

 

2,923

 

Adjusted EBITDA $

48,836

 

$

69,308

 

$

(5,766

)

$

112,378

 

 
The "Footnotes to Financial Statements" are integral parts of this financial information.
 
CHEMED CORPORATION AND SUBSIDIARY COMPANIES
CONSOLIDATING SUMMARIES OF EBITDA
FOR THE YEARS ENDED DECEMBER 31, 2023 AND 2022
(in thousands)(unaudited)
Chemed
VITAS Roto-Rooter Corporate Consolidated

2023

Net income/(loss) $

158,509

 

$

188,241

 

$

(74,241

)

$

272,509

 

Add/(deduct):
Interest expense

180

 

442

 

2,486

 

3,108

 

Income taxes

46,115

 

50,125

 

(18,382

)

77,858

 

Depreciation

19,959

 

30,790

 

53

 

50,802

 

Amortization

104

 

9,959

 

-

 

10,063

 

EBITDA

224,867

 

279,557

 

(90,084

)

414,340

 

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

(19,400

)

(11,918

)

31,318

 

-

 

Interest income

(1,078

)

(125

)

(5,067

)

(6,270

)

Stock option expense

-

 

-

 

30,082

 

30,082

 

Long-term incentive compensation

-

 

-

 

11,689

 

11,689

 

Litigation settlements

-

 

2,056

 

-

 

2,056

 

Adjusted EBITDA $

204,389

 

$

269,570

 

$

(22,062

)

$

451,897

 

2022

Net income/(loss) $

131,452

 

$

186,120

 

$

(67,948

)

$

249,624

 

Add/(deduct):
Interest expense

172

 

396

 

4,016

 

4,584

 

Income taxes

43,000

 

58,695

 

(21,640

)

80,055

 

Depreciation

21,955

 

27,075

 

72

 

49,102

 

Amortization

101

 

9,969

 

-

 

10,070

 

EBITDA

196,680

 

282,255

 

(85,500

)

393,435

 

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

(18,901

)

(9,345

)

28,246

 

-

 

Interest income

(218

)

(138

)

1

 

(355

)

Stock option expense

-

 

-

 

26,254

 

26,254

 

Long-term incentive compensation

-

 

-

 

7,801

 

7,801

 

Litigation settlements

4,000

 

-

 

-

 

4,000

 

Direct costs related to COVID-19

310

 

988

 

89

 

1,387

 

Medicare cap sequestration adjustment

138

 

-

 

-

 

138

 

Adjusted EBITDA $

182,009

 

$

273,760

 

$

(23,109

)

$

432,660

 

 
The "Footnotes to Financial Statements" are integral parts of this financial information.
 
CHEMED CORPORATION AND SUBSIDIARY COMPANIES
RECONCILIATION OF ADJUSTED NET INCOME
(in thousands, except per share data)(unaudited)
 
 
Three Months Ended December 31, For the Years Ended December 31,

2023

2022

2023

2022

Net income as reported $

90,053

 

$

62,126

 

$

272,509

 

$

249,624

 

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

7,706

 

6,911

 

30,082

 

26,254

 

Long-term incentive compensation

3,872

 

2,923

 

11,689

 

7,801

 

Amortization of reacquired franchise agreements

2,352

 

2,352

 

9,408

 

9,408

 

Litigation settlements

-

 

4,000

 

2,056

 

4,000

 

Medicare cap sequestration adjustment

-

 

-

 

-

 

138

 

Direct costs related to COVID-19

-

 

-

 

-

 

1,387

 

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

(2,216

)

(3,151

)

(8,658

)

(9,075

)

Tax impact of deferred tax rate change

-

 

-

 

(4,241

)

-

 

Excess tax benefits on stock compensation

(954

)

(1,538

)

(4,330

)

(5,928

)

Adjusted net income $

100,813

 

$

73,623

 

$

308,515

 

$

283,609

 

 
Diluted Earnings Per Share As Reported
Net income $

5.90

 

$

4.13

 

$

17.93

 

$

16.53

 

Average number of shares outstanding

15,270

 

15,052

 

15,200

 

15,099

 

 
Adjusted Diluted Earnings Per Share
Adjusted net income $

6.60

 

$

4.89

 

$

20.30

 

$

18.78

 

Average number of shares outstanding

15,270

 

15,052

 

15,200

 

15,099

 

 
(1) The tax impact of pre-tax adjustments was calculated using the effective tax rate of the operating unit for which each adjustment is associated.
 
The "Footnotes to Financial Statements" are integral parts of this financial information.
 
CHEMED CORPORATION AND SUBSIDIARY COMPANIES
OPERATING STATISTICS FOR VITAS SEGMENT
(unaudited)
 
Three Months Ended December 31, For the Years Ended December 31,
OPERATING STATISTICS

2023

2022

2023

2022

Net revenue ($000) (c)
Homecare $

303,883

 

$

267,691

 

$

1,136,437

 

$

1,039,211

 

Inpatient

28,107

 

26,647

 

112,419

 

102,361

 

Continuous care

22,620

 

19,284

 

85,674

 

77,000

 

Other

3,844

 

2,977

 

13,582

 

12,438

 

Subtotal $

358,454

 

$

316,599

 

$

1,348,112

 

$

1,231,010

 

Room and board, net

(2,535

)

(2,778

)

(10,851

)

(9,574

)

Contractual allowances

(3,546

)

(3,012

)

(14,196

)

(12,004

)

Medicare cap allowance

(2,375

)

(2,750

)

(8,000

)

(7,868

)

Net Revenue $

349,998

 

$

308,059

 

$

1,315,065

 

$

1,201,564

 

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

84.8

 

%

84.6

 

%

84.3

 

%

84.4

 

%

Inpatient

7.8

 

8.4

 

8.3

 

8.3

 

Continuous care

6.3

 

6.1

 

6.4

 

6.3

 

Other

1.1

 

0.9

 

1.0

 

1.0

 

Subtotal

100.0

 

100.0

 

100.0

 

100.0

 

Room and board, net

(0.7

)

(0.9

)

(0.8

)

(0.8

)

Contractual allowances

(1.0

)

(0.9

)

(1.1

)

(1.0

)

Medicare cap allowance

(0.7

)

(0.9

)

(0.6

)

(0.6

)

Net Revenue

97.6

 

%

97.3

 

%

97.5

 

%

97.6

 

%

Days of care
Homecare

1,439,494

 

1,289,067

 

5,457,963

 

5,086,021

 

Nursing home

285,616

 

264,895

 

1,118,728

 

1,036,816

 

Respite

7,394

 

5,807

 

26,605

 

23,905

 

Subtotal routine homecare and respite

1,732,504

 

1,559,769

 

6,603,296

 

6,146,742

 

Inpatient

24,918

 

24,254

 

101,905

 

95,431

 

Continuous care

23,001

 

19,909

 

88,631

 

81,890

 

Total

1,780,423

 

1,603,932

 

6,793,832

 

6,324,063

 

 
Number of days in relevant time period

92

 

92

 

365

 

365

 

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

15,646

 

14,012

 

14,953

 

13,934

 

Nursing home

3,105

 

2,879

 

3,065

 

2,841

 

Respite

80

 

63

 

73

 

65

 

Subtotal routine homecare and respite

18,831

 

16,954

 

18,091

 

16,840

 

Inpatient

271

 

264

 

279

 

261

 

Continuous care

250

 

216

 

243

 

224

 

Total

19,352

 

17,434

 

18,613

 

17,325

 

 
Total Admissions

15,867

 

14,829

 

63,431

 

60,774

 

Total Discharges

15,705

 

14,862

 

61,242

 

60,930

 

Average length of stay (days)

105.9

 

103.9

 

102.2

 

104.6

 

Median length of stay (days)

17.0

 

16.0

 

16.0

 

16.0

 

 
ADC by major diagnosis
Cerebro

42.8

 

%

41.0

 

%

42.5

 

%

39.8

 

%

Neurological

13.7

 

20.3

 

15.3

 

21.2

 

Cancer

10.3

 

10.7

 

10.5

 

10.9

 

Cardio

16.2

 

15.7

 

16.1

 

15.7

 

Respiratory

7.0

 

7.2

 

7.1

 

7.3

 

Other

10.0

 

5.1

 

8.5

 

5.1

 

Total

100.0

 

%

100.0

 

%

100.0

 

%

100.0

 

%

Admissions by major diagnosis
Cerebro

26.5

 

%

25.6

 

%

26.4

 

%

24.6

 

%

Neurological

8.3

 

11.0

 

9.4

 

12.3

 

Cancer

25.9

 

26.7

 

26.0

 

26.3

 

Cardio

15.4

 

15.3

 

16.0

 

14.9

 

Respiratory

10.1

 

10.5

 

10.1

 

10.3

 

Other

13.8

 

10.9

 

12.1

 

11.6

 

Total

100.0

 

%

100.0

 

%

100.0

 

%

100.0

 

%

 
Estimated uncollectible accounts as a percent of revenues

1.0

 

%

1.0

 

%

1.1

 

%

1.0

 

%

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

37.8

 

38.1

 

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

36.0

 

28.0

 

n.a. n.a.
 
The "Footnotes to Financial Statements" are integral parts of this financial information.
 
FOOTNOTES TO FINANCIAL STATEMENTS
FOR THE THREE MONTHS AND YEARS ENDED DECEMBER 31, 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 December 31, 2023
VITAS Roto-Rooter Corporate Consolidated
 
Stock option expense $

-

 

$

-

 

$

(7,706

)

$

(7,706

)

Long-term incentive compensation

-

 

-

 

(3,872

)

(3,872

)

Amortization of reacquired franchise agreements

-

 

(2,352

)

-

 

(2,352

)

Pretax impact on earnings

-

 

(2,352

)

(11,578

)

(13,930

)

Excess tax benefits on stock compensation

-

 

-

 

954

 

954

 

Income tax benefit on the above

-

 

548

 

1,668

 

2,216

 

After-tax impact on earnings $

-

 

$

(1,804

)

$

(8,956

)

$

(10,760

)

 
For the Years Ended December 31, 2023
VITAS Roto-Rooter Corporate Consolidated
 
Stock option expense $

-

 

$

-

 

$

(30,082

)

$

(30,082

)

Long-term incentive compensation

-

 

-

 

(11,689

)

(11,689

)

Amortization of reacquired franchise agreements

-

 

(9,408

)

-

 

(9,408

)

Litigation settlements

-

 

(2,056

)

-

 

(2,056

)

Pretax impact on earnings

-

 

(11,464

)

(41,771

)

(53,235

)

Excess tax benefits on stock compensation

-

 

-

 

4,330

 

4,330

 

Tax impact of deferred tax rate change

1,772

 

3,559

 

(1,090

)

4,241

 

Income tax benefit on the above

-

 

2,671

 

5,987

 

8,658

 

After-tax impact on earnings $

1,772

 

$

(5,234

)

$

(32,544

)

$

(36,006

)

 
(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 December 31, 2022
VITAS Roto-Rooter Corporate Consolidated
 
Stock option expense $

-

 

$

-

 

$

(6,911

)

$

(6,911

)

Litigation settlements

(4,000

)

-

 

-

 

(4,000

)

Long-term incentive compensation

-

 

-

 

(2,923

)

(2,923

)

Amortization of reacquired franchise agreements

-

 

(2,352

)

-

 

(2,352

)

Pretax impact on earnings

(4,000

)

(2,352

)

(9,834

)

(16,186

)

Excess tax benefits on stock compensation

-

 

-

 

1,538

 

1,538

 

Income tax benefit on the above

1,016

 

623

 

1,512

 

3,151

 

After-tax impact on earnings $

(2,984

)

$

(1,729

)

$

(6,784

)

$

(11,497

)

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

-

 

$

-

 

$

(26,254

)

$

(26,254

)

Amortization of reacquired franchise agreements

-

 

(9,408

)

-

 

(9,408

)

Long-term incentive compensation

-

 

-

 

(7,801

)

(7,801

)

Litigation settlements

(4,000

)

-

 

-

 

(4,000

)

Direct costs related to COVID-19

(310

)

(988

)

(89

)

(1,387

)

Medicare cap sequestration adjustment

(138

)

-

 

-

 

(138

)

Pretax impact on earnings

(4,448

)

(10,396

)

(34,144

)

(48,988

)

Excess tax benefits on stock compensation

-

 

-

 

5,928

 

5,928

 

Income tax benefit on the above

1,130

 

2,755

 

5,190

 

9,075

 

After-tax impact on earnings $

(3,318

)

$

(7,641

)

$

(23,026

)

$

(33,985

)

 
(c) VITAS has 11 large (greater than 450 ADC), 17 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 trailing 12 months, 26 provider numbers have a Medicare cap cushion of greater than 10%, two provider numbers have a Medicare cap cushion between 5% and 10%, and two provider numbers have a Medicare cap liability.

 

Contacts

Michael D. Witzeman

(513) 762-6714

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