Full Press Release Details
Reports First-Quarter 2019 Results
CINCINNATI--(BUSINESS WIRE)--April 29, 2019--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
first quarter ended March 31, 2019, versus the comparable prior-year
Consolidated operating results:
Revenue increased 5.2% to $462 million
GAAP Diluted Earnings-per-Share (EPS) of $2.70
Adjusted Diluted EPS of $2.92, an increase of 7.4%
VITAS segment operating results:
Net Patient Revenue of $307 million, an increase of 5.1%
Average Daily Census (ADC) of 18,345, an increase of 6.6%
Admissions of 17,758, a decline of 2.9%
Net Income, excluding certain discrete items, of $34.6 million, an
Adjusted EBITDA, excluding cap, of $49.7 million, an increase of 16.0%
Roto-Rooter segment operating results:
Revenue of $155 million, an increase of 5.5%
Net Income, excluding certain discrete items, of $23.3 million, an
Adjusted EBITDA of $33.5 million, a slight decline of 1.1%
Adjusted EBITDA margin of 21.6%, a decrease of 145-basis points
VITAS net revenue was $307 million in the first quarter of 2019, which
is an increase of 5.1%, when compared to the prior-year period. This
revenue increase is comprised primarily of a geographically weighted
average Medicare reimbursement rate increase of approximately 0.6% and a
6.6% increase in days-of-care. This growth was partially offset by a
Medicare Cap billing limitation that decreased revenue growth by 1.8% as
well as the combination of acuity mix shift, fluctuations in net room
and board and contractual adjustments, the combination of which
negatively impacted revenue growth 0.4%, when compared to the prior-year
In the first quarter of 2019, VITAS accrued $3.4 million in Medicare Cap
billing limitations. At March 31, 2019, VITAS had 30 Medicare provider
numbers, three of which have an estimated 2019 calendar year Medicare
Cap billing limitation of approximately $10 million.
Of VITAS' 30 Medicare provider numbers, on a trailing 12-month basis, 25
provider numbers have a Medicare Cap cushion of 10% or greater, one
provider number has a cap cushion between 5% and 10%, one provider
number has a cap cushion between 0% and 5%, and three provider numbers
have a Medicare Cap billing limitation.
Average revenue per patient per day in the quarter was $191.20, which is
0.2% above the prior-year period. Reimbursement for routine home care
and high acuity care averaged $165.31 and $750.13, respectively. During
the quarter, high acuity days-of-care were 4.4% of total days of care,
22-basis points less than the prior-year quarter.
The first quarter of 2019 gross margin, excluding Medicare Cap, was
22.7%, which is a 102-basis point increase when compared to the first
Selling, general and administrative expense was $21.5 million in the
first quarter of 2019, which is an increase of 5.0% compared to the
prior-year quarter. Adjusted EBITDA, excluding Medicare Cap, totaled
$49.7 million in the quarter, an increase of 16.0%. Adjusted EBITDA
margin, excluding Medicare Cap, was 16.0% in the quarter, which is a
126-basis point increase when compared to the prior-year period.
Roto-Rooter generated quarterly revenue of $155 million for the first
quarter of 2019, an increase of $8.1 million, or 5.5%, over the
prior-year quarter. Revenue from the water restoration service segment
totaled $27.7 million, a decrease of 0.3%, when compared to the
prior-year quarter. Approximately 90% of the water restoration revenue
is generated from residential customers and the remaining 10% is
generated from commercial accounts.
Commercial drain cleaning revenue increased 8.3%, commercial plumbing
and excavation increased 5.3% and commercial water restoration declined
26.4%. Overall, commercial revenue increased 3.4%.
Residential drain cleaning increased 5.8%, plumbing and excavation
increased 7.5% and residential water restoration increased 3.8%.
Aggregate residential sales increased 5.9%.
Roto-Rooter's gross margin in the quarter was 47.0%, a 44-basis point
decline when compared to the first quarter of 2018. Adjusted EBITDA in
the first quarter of 2019 totaled $33.5 million, a decrease of 1.1%. The
Adjusted EBITDA margin in the quarter was 21.6% which is a 145-basis
point decline over the prior year.
As of March 31, 2019, Chemed had total cash and cash equivalents of $9
million and debt of $100 million.
In June 2018, Chemed entered into a five-year Amended and Restated
Credit Agreement that consists of a $450 million revolving credit
facility. The interest rate on this facility has a floating rate that is
currently LIBOR plus 100-basis points. At March 31, 2019, the Company
had approximately $314 million of undrawn borrowing capacity under this
During the quarter, the Company repurchased 150,000 shares of Chemed
stock for $49.2 million, which equates to a cost per share of $328.33.
On February 22, 2019, Chemed's Board of Directors authorized an
additional $150 million for stock repurchase under Chemed's existing
share repurchase program. As of March 31, 2019, there was approximately
$147 million of remaining share repurchase authorization under this plan.
Chemed restarted its share repurchase program in 2007. Since that time
Chemed has repurchased over 14 million shares, aggregating approximately
$1.2 billion at an average share cost of $83.56. Including dividends
over this period, Chemed has returned approximately $1.3 billion to
Revenue growth for VITAS in 2019, prior to Medicare Cap, is estimated to
be in the range of 5.5% to 6.0%. Admissions are estimated to expand
approximately 3.0% to 4.0% and Average Daily Census in 2019 is estimated
to expand approximately 4.0% to 5.0%. Full-year Adjusted EBITDA margin,
prior to Medicare Cap, is estimated to be 15.9%. We are currently
estimating $10 million for Medicare Cap billing limitations in calendar
Roto-Rooter is forecasted to achieve full-year 2019 revenue growth of
9.0% to 10.0%. This revenue estimate is based upon increased job pricing
of approximately 2%, continued growth in core plumbing and drain
cleaning services as well as continued but slowing revenue growth from
water restoration services. Roto-Rooter's Adjusted EBITDA margin for
2019 is estimated at 23.7%.