Full Press Release Details
Reports Second-Quarter 2016 Results
Full-Year Earnings Guidance-
CINCINNATI--(BUSINESS WIRE)--July 25, 2016--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, 2016, versus the comparable prior-year period, as follows:
Consolidated operating results:
Revenue increased 2.2% to $390 million
GAAP Diluted EPS decreased 4.5% to $1.48
Adjusted Diluted EPS increased 5.3% to $1.80
VITAS segment operating results:
Net Patient Revenue of $279 million, an increase of 0.8%
Average Daily Census (ADC) of 15,952, an increase of 4.4%
Unit for Unit admissions of 16,180, a decrease of 1.4%
Net Income, including discrete items, of $18.6 million, a decrease of
Adjusted EBITDA of $38.6 million, a decrease of 3.0%
Adjusted EBITDA margin of 13.9%, a decrease of 55 basis points
Roto-Rooter segment operating results:
Revenue of $112 million, an increase of 5.9%
Net Income of $13.3 million, an increase of 9.8%
Adjusted EBITDA of $24.2 million, an increase of 9.8%
Adjusted EBITDA margin of 21.7%, an increase of 77 basis points
Net revenue for VITAS was $279 million in the second quarter of 2016,
which is an increase of 0.8%, when compared to the prior-year period.
This revenue increase is comprised primarily of an average Medicare
reimbursement rate increase of approximately 0.6%, a 4.4% 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 2.0%.
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 $186.84 for the
first 60 days and $146.83 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 it has 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 second quarter of 2016, VITAS had a 25.5/74.5 RHC Days-of-Care
ratio and generated approximately $1.0 million in SIA payments. This
resulted in 2.0% 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 June 30, 2016, VITAS had 31 Medicare provider numbers, none of which
has an estimated 2016 Medicare Cap billing limitation.
Of VITAS' 31 unique Medicare provider numbers, 27 provider numbers have
a Medicare Cap cushion of 10% or greater for the 2016 Medicare Cap
period, three provider numbers have a cap cushion between 5% and 10%,
and one provider number has a cap cushion between 0% and 5%. VITAS
generated an aggregate cap cushion of $266 million during the trailing
twelve-month period.
Average revenue per patient per day in the quarter, excluding the impact
of Medicare Cap, was $192.02, which is 3.4% below the prior-year period.
Routine home care reimbursement and high acuity care averaged $160.41
and $702.58, respectively. During the quarter, high acuity days of care
were 5.8% of total days of care, 66 basis points less than the
The second quarter of 2016 gross margin was 21.5%, which is a 41 basis
point decline when compared to the second quarter of 2015.
Selling, general and administrative expense, excluding litigation costs,
was $21.5 million in the second quarter of 2016, which is an increase of
2.5% when compared to the prior-year quarter. Adjusted EBITDA, excluding
Medicare Cap, totaled $38.6 million in the quarter, a decrease of 3.0%
over the prior-year period. Adjusted EBITDA margin was 13.9% in the
quarter which is 55 basis points below the prior-year period.
Roto-Rooter's plumbing and drain cleaning business generated sales of
$112 million for the second quarter of 2016, an increase of $6.2
million, or 5.9%, over the prior-year quarter. Revenue from water
restoration totaled $12.1 million, an increase of 32.7% over the prior
Roto-Rooter's gross margin in the quarter was 48.5%, a 50 basis point
improvement when compared to the second quarter of 2015. Adjusted EBITDA
in the second quarter of 2016 totaled $24.2 million, an increase of
9.8%, and the Adjusted EBITDA margin was 21.7% in the quarter, 77 basis
points higher than the prior year.
As of June 30, 2016, Chemed had total cash and cash equivalents of $17
million and debt of $148 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 June 30, 2016, the Company had approximately $253 million of
undrawn borrowing capacity under this credit agreement.
Capital expenditures through June 30, 2016, aggregated $20 million and
compares to depreciation and amortization during the same period of $17
On March 11, 2016, Chemed's Board of Directors authorized an additional
$100 million for stock repurchase under Chemed's existing share
repurchase program. During the second quarter of 2016, the Company
repurchased 380,134 shares of Chemed stock for $49.9 million which
equates to a cost per share of $131.15. As of June 30, 2016, there is
$50.2 million of share repurchase authorization under this plan.