Full Press Release Details
Reports Second-Quarter 2013 Results
CINCINNATI--(BUSINESS WIRE)--July 18, 2013--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 second quarter
ended June 30, 2013, versus the comparable prior-year period, as follows:
Consolidated operating results:
Revenue increased 0.9% to $357 million
GAAP Diluted EPS, including litigation settlement, decreased 30.0% to
Adjusted Diluted EPS increased 14.3% to $1.44
VITAS segment operating results:
Net Patient Revenue of $264 million, a decrease of 0.6%
Average Daily Census (ADC) of 14,679, an increase of 4.0%
Admissions of 15,721, a decrease of 1.2%
Net Income of $20.5 million, an increase of 0.3%
Adjusted EBITDA of $37.7 million, an increase of 1.7%
Adjusted EBITDA margin of 14.3%, an increase of 32 basis points
Roto-Rooter segment operating results:
Revenue of $93.6 million, an increase of 5.3%
Unit-for-unit job count of 162,432, an increase of 1.0%
Net Income, including litigation settlement, of $1.4 million
Adjusted EBITDA of $18.9 million, an increase of 31.1%
Adjusted EBITDA margin of 20.2%, an increase of 398 basis points
Net revenue for VITAS was $264 million in the second quarter of 2013,
which is a decline of 0.6% when compared to the prior-year period. This
revenue decline is a combination of Medicare reimbursement rates
decreasing approximately 1.1%, increased ADC of 4.0% and level of care
mix shifting as the proportion of high acuity days-of-care declined 89
In the second quarter of 2013, VITAS recorded a Medicare Cap billing
adjustment of $0.9 million related to one provider number.
Of VITAS' 36 unique Medicare provider numbers, 32 provider numbers have
a Medicare Cap cushion of 10% or greater during the first nine months of
the 2013 Medicare Cap year; two provider numbers have a Medicare Cap
cushion between 5% to 10%; and one provider number has a cap cushion
between 0% and 5%. VITAS generated an aggregate cap cushion of $233
million during the trailing twelve-month period.
Average revenue per patient per day in the quarter, excluding the impact
of Medicare Cap, was $197.95, which is 4.2% 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 $161.08 and $693.20, respectively, per
patient per day in the second quarter of 2013. During the quarter, high
acuity days of care were 6.9% of total days of care, 89 basis points
below the prior-year quarter.
The second quarter of 2013 gross margin, excluding the impact of
Medicare Cap, was 22.2%, which is a 54 basis point improvement when
compared to the second quarter of 2012.
Selling, general and administrative expense was $21.1 million in the
second quarter of 2013, which is an increase of 2.9% when compared to
the prior-year quarter. Adjusted EBITDA, excluding Medicare Cap, totaled
$38.5 million in the quarter, an increase of 4.0% over the prior-year
period. Adjusted EBITDA margin, excluding the impact from Medicare Cap,
was 14.6% in the quarter which is 60 basis points above the prior-year
Roto-Rooter's plumbing and drain cleaning business generated sales of
$93.6 million for the second quarter of 2013, an increase of 5.3%, over
the prior-year quarter.
Total unit-for-unit job count increased 1.0% in the second quarter of
2013 when compared to the prior-year period. This consisted of a
residential drain cleaning job count increase of 5.8% and residential
plumbing job count decline of 4.5%, when compared to the second quarter
of 2012. Residential jobs represented 69% of total job count in the
quarter. Commercial drain cleaning increased 0.8% and commercial
plumbing/excavation job count declined 2.2% when compared to the
Roto-Rooter's gross margin in the quarter was 47.1%, a 273 basis point
increase when compared to the second quarter of 2012. Adjusted EBITDA in
the second quarter of 2013 totaled $18.9 million, an increase of 31.1%,
and the Adjusted EBITDA margin was 20.2% in the quarter, an increase of
In June 2013 Roto-Rooter reached a tentative agreement, subject to Court
approval, to settle litigation claims for alleged violation of the Fair
Labor Standards Act ("FLSA") and alleged claims for violations of the
labor laws of multiple states. As a result of this tentative settlement,
Roto-Rooter recorded an after-tax expense in the quarter of $9.0 million.
As of June 30, 2013, Chemed had total cash and cash equivalents of $113
million, and debt of $179 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 June 30, 2013, the Company had
approximately $317 million of undrawn borrowing capacity under this
credit agreement after deducting $33 million for letters of credit
issued to secure the Company's workers' compensation insurance.
Capital expenditures through June 30, 2013, aggregated $12.2 million and
compares to depreciation and amortization during the same period of
During the quarter, the Company repurchased $18.4 million of Chemed
stock. This equates to 280,701 of Chemed shares repurchased at an
average cost of $65.72. Chemed currently has $96.3 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. The impact
from sequestration impacts approximately 91.2% of Vitas' revenue base
and is factored into the 2013 guidance detailed below.
VITAS estimates its full-year 2013 revenue growth will be constrained in
the second half of 2013 as a result of mix shift from high acuity care
to routine home care. This mix shift is anticipated to have a modest