Full Press Release Details
Reports Fourth-Quarter 2016 Results
CINCINNATI--(BUSINESS WIRE)--February 15, 2017--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, 2016, versus the comparable prior-year
Consolidated operating results:
Revenue increased 1.2% to $403 million
GAAP Diluted EPS increased 12.8% to $1.94
Adjusted Diluted EPS increased 6.6% to $2.10
VITAS segment operating results:
Net Patient Revenue of $284 million, a decrease of 0.1%
Average Daily Census (ADC) of 16,160, an increase of 2.9%
Unit for Unit admissions of 15,889, an increase of 0.7%
Net Income, including discrete items, of $26.4 million, a decrease of
Adjusted EBITDA of $46.2 million, a decrease of 0.4%
Roto-Rooter segment operating results:
Revenue of $119 million, an increase of 4.5%
Net Income of $13.7 million, an increase of 1.7%
Adjusted EBITDA of $25.0 million, an increase of 2.7%
Adjusted EBITDA margin of 21.0%, a decrease of 38 basis points
Net revenue for VITAS was $284 million in the fourth quarter of 2016,
which is a decrease of 0.1%, when compared to the prior-year period.
This revenue decrease is comprised primarily of an average Medicare
reimbursement rate increase of approximately 2.1%, a 2.9% increase in
average daily census, offset by acuity mix shift which negatively
impacted revenue 1.9% and changes in Medicare hospice reimbursement
methodology which negatively impacted revenue 2.3%.
On January 1, 2016, CMS implemented a refinement to the Medicare hospice
reimbursement per diem. This refinement eliminated the single-tier per
diem for routine home care (RHC) and replaced it with a two-tiered rate,
with a higher per diem rate for the first 60 days of a hospice patient's
care, and a lower rate for days 61 and after. In addition, CMS provided
for a Service Intensity Add-on (SIA) payment which provides for
reimbursement of care provided by a registered nurse or social worker
for RHC patients within seven days prior to death. The reimbursement for
continuous care, inpatient care and respite care are not impacted by
The current two-tiered national per diem rate for RHC is $190.41 for the
first 60 days and $149.68 for RHC provided to patients in hospice beyond
60 days. An individual hospice's actual per diem rate is adjusted for
differences in geographic cost of living.
Rebasing in 2016 would be revenue neutral to a hospice if 37.6% of total
RHC days-of-care being provided to patients in their first 60 days of
admission and 62.4% of total RHC days-of-care provided to patients after
the 60 days. (RHC Days-of-Care ratio).
In the fourth quarter of 2016, VITAS had a 24.2/75.8 RHC Days-of-Care
ratio and generated approximately $1.2 million in SIA payments. This
resulted in $6.5 million less revenue than under the previous Medicare
reimbursement methodology.
VITAS did not have any adjustments to revenue related to the Medicare
Cap billing limitation in the current or prior-year quarter.
At December 31, 2016, VITAS had 31 Medicare provider numbers, none of
which has an estimated 2017 Medicare Cap billing limitation.
All of VITAS' 31 unique Medicare provider numbers have a Medicare Cap
cushion of 10% or greater for the trailing twelve month period.
Average revenue per patient per day in the quarter was $191.15, which is
3.0% below the prior-year period. Routine home care reimbursement and
high acuity care averaged $162.23 and $709.64, respectively. During the
quarter, high acuity days of care were 5.3% of total days of care, 63
basis points less than the prior-year quarter.
The fourth quarter of 2016 gross margin was 24.1%, which is essentially
equal to the fourth quarter of 2015.
Selling, general and administrative expense was $23.4 million in the
fourth quarter of 2016, which is an increase of 1.2% when compared to
the prior-year quarter. Adjusted EBITDA totaled $46.2 million in the
quarter, a decrease of 0.4% over the prior-year period. Adjusted EBITDA
margin was 16.3% in the quarter which is essentially equal to the
Roto-Rooter's plumbing and drain cleaning business generated sales of
$119 million for the fourth quarter of 2016, an increase of $5.2
million, or 4.5%, over the prior-year quarter. Revenue from water
restoration totaled $13.7 million, an increase of 31.7% over the prior
Roto-Rooter's gross margin in the quarter was 46.9%, a 38 basis point
decline when compared to the fourth quarter of 2015. Adjusted EBITDA in
the fourth quarter of 2016 totaled $25.0 million, an increase of 2.7%,
and the Adjusted EBITDA margin was 21.0% in the quarter, 38 basis points
below the prior year.
As of December 31, 2016, Chemed had total cash and cash equivalents of
$15 million and debt of $109 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 December 31, 2016, the Company had approximately $287 million
of undrawn borrowing capacity under this credit agreement.
Capital expenditures through December 31, 2016, aggregated $39.8 million
and compares to depreciation and amortization during the same period of
On March 11, 2016, Chemed's Board of Directors authorized an additional
$100 million for stock repurchase under Chemed's existing share
repurchase program. On a year-to-date basis, the company has purchased
780,134 shares of Chemed stock at an aggregate cost of $102.3 million.
The company did not purchase any shares of Chemed stock in the fourth
quarter of 2016. As of December 31, 2016, there is $50.2 million of
share repurchase authorization under this plan.
Revenue growth for VITAS in 2017, prior to Medicare Cap, is estimated to
be in the range of 4% to 5%. Admissions and Average Daily Census in 2017
are estimated to expand approximately 3% to 4% and full-year Adjusted
EBITDA margin, prior to Medicare Cap, is estimated to be 14.5% to 15.0%.
We are currently estimating $5.0 million for Medicare Cap billing
limitations in 2017.