Full Press Release Details
Reports Fourth-Quarter 2013 Results
CINCINNATI--(BUSINESS WIRE)--February 17, 2014--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
fourth quarter ended December 31, 2013, versus the comparable prior-year
Consolidated operating results:
Revenue decreased 5.4% to $349 million
GAAP Diluted EPS, including litigation, decreased 8.6% to $1.28
Adjusted Diluted EPS decreased 7.6% to $1.45
VITAS segment operating results:
Net Patient Revenue of $256 million, a decrease of 6.1%
Average Daily Census (ADC) of 14,185, a decrease of 1.9%
Admissions of 15,445, a decrease of 3.5%
Net Income, including litigation costs, of $20.9 million, a decrease
Adjusted EBITDA of $38.6 million, a decrease of 12.2%
Adjusted EBITDA margin of 15.1%, a decrease of 105 basis points
Roto-Rooter segment operating results:
Revenue of $92.4 million, a decrease of 3.4%
Unit-for-unit job count of 153,357, a decrease of 4.8%
Net Income, including litigation, of $10.0 million, an increase of 9.1%
Adjusted EBITDA of $18.4 million, an increase of 7.8%
Adjusted EBITDA margin of 20.0%, an increase of 206 basis points
Net revenue for VITAS was $256 million in the fourth quarter of 2013,
which is a decline of 6.1% when compared to the prior-year period. This
revenue decline is a combination of several factors. Medicare
reimbursement rates, including sequestration, decreased approximately
0.6%, ADC declined 1.9%, a mix shift away from high acuity care reduced
revenue 2.3% and a $3.0 million increase in Medicare Cap billing
adjustment which equated to 1.1% of additional revenue decline.
In the fourth quarter of 2013, VITAS recorded a Medicare Cap billing
adjustment of $3.8 million related to two provider numbers.
Of VITAS' 37 unique Medicare provider numbers, 33 provider numbers have
a Medicare Cap cushion of 10% or greater during the most recent twelve
month period; one provider number has a Medicare Cap cushion between 5%
to 10%; and two provider numbers have a cap cushion between 0% and 5%.
VITAS generated an aggregate cap cushion of $267 million during the
trailing twelve-month period.
Average revenue per patient per day in the quarter, excluding the impact
of Medicare Cap, was $199.28, which is 3.2% below the prior-year period.
The average revenue includes the 2.0% reduction in Medicare hospice
reimbursement effective April 1, 2013. Routine home care reimbursement
and high acuity care averaged $163.13 and $691.91, respectively, per
patient per day in the fourth quarter of 2013. During the quarter, high
acuity days of care were 6.8% of total days of care, 81 basis points
below the prior-year quarter.
The fourth quarter of 2013 gross margin, excluding the impact of
Medicare Cap, was 24.1%, which is a 60 basis point improvement when
compared to the fourth quarter of 2012.
Selling, general and administrative expense was $20.9 million in the
fourth quarter of 2013, which is an increase of 4.1% when compared to
the prior-year quarter. Adjusted EBITDA, excluding Medicare Cap, totaled
$42.4 million in the quarter, a decrease of 5.4% over the prior-year
period. Adjusted EBITDA margin, excluding the impact from Medicare Cap,
was 16.3% in the quarter which is essentially equal to the prior-year
Roto-Rooter's plumbing and drain cleaning business generated sales of
$92.4 million for the fourth quarter of 2013, a decrease of 3.4% over
the prior-year quarter.
Total unit-for-unit job count decreased 4.8% in the fourth quarter of
2013 when compared to the prior-year period. This consisted of
residential drain cleaning job count decreasing 10.4% and residential
plumbing job count declining 0.7%, when compared to the fourth quarter
of 2012. Residential jobs represented 68% of total job count in the
quarter. Commercial drain cleaning decreased 1.4% and commercial
plumbing/excavation job count increased 7.8% when compared to the
Roto-Rooter's gross margin in the quarter was 47.3%, a 223 basis point
increase when compared to the fourth quarter of 2012. Adjusted EBITDA in
the fourth quarter of 2013 totaled $18.4 million, an increase of 7.8%,
and the Adjusted EBITDA margin was 20.0% in the quarter, an increase of
206 basis points. The increase in margin is primarily the result of
reductions in healthcare claims, supervisory wages and overtime premium.
As of December 31, 2013, Chemed had total cash and cash equivalents of
$84 million and debt of $184 million. This debt is net of the discount
taken as a result of convertible debt accounting requirements. Excluding
this discount, aggregate debt is $187 million and is due in May 2014.
In January 2013 Chemed entered into a five-year Amended and Restated
Credit Agreement that consists of a $350 million revolving credit
facility. The interest rate on this facility has a floating rate that is
currently LIBOR plus 125 basis points. At December 31, 2013, the Company
had approximately $315 million of undrawn borrowing capacity under this
credit agreement after deducting $35 million for letters of credit
issued to secure the Company's workers' compensation insurance.
Capital expenditures through December 31, 2013, aggregated $29.3 million
and compares to depreciation and amortization during the same period of
During the quarter, the Company repurchased $3.3 million of Chemed
stock. This equates to 42,889 of Chemed shares repurchased at an average
cost of $76.95. Chemed currently has $21.8 million of authorization
remaining under this share repurchase plan.
Effective October 1, 2012, Medicare increased the average hospice
reimbursement rates by approximately 0.9%. Effective April 1, 2013,
Medicare reduced hospice reimbursement rates 2.0%. As a result,
effective April 1, 2013, this 0.9% increase was reduced to a 1.1%
decline in Medicare rates when compared to the prior year. Effective
October 1, 2013, Medicare increased the average hospice rate
VITAS estimates its full-year 2014 revenue growth will continue to be
constrained in the first half of 2014. This is a result of the first
quarter of 2013 having Medicare rates 2% higher than the subsequent
quarters. In addition, VITAS anticipates continued mix shift from high
acuity care to routine home care will impact revenue comparisons for the