Full Press Release Details
Reports Third-Quarter 2013 Results
CINCINNATI--(BUSINESS WIRE)--October 28, 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
third quarter ended September 30, 2013, versus the comparable prior-year
Consolidated operating results:
Revenue decreased 3.8% to $341 million
GAAP Diluted EPS, including litigation, decreased 12.1% to $0.94
Adjusted Diluted EPS increased 6.3% to $1.36
VITAS segment operating results:
Net Patient Revenue of $254 million, a decrease of 5.2%
Average Daily Census (ADC) of 14,241, a decrease of 0.3%
Admissions of 14,555, a decrease of 6.3%
Net Income, including litigation costs, of $14.6 million, a decrease
Adjusted EBITDA of $37.3 million, a decrease of 6.2%
Adjusted EBITDA margin of 14.7%, a decrease of 15 basis points
Roto-Rooter segment operating results:
Revenue of $86.9 million, an increase of 0.6%
Unit-for-unit job count of 150,080, a decrease of 4.9%
Net Income, including litigation, of $8.2 million, an increase of 33.1%
Adjusted EBITDA of $16.2 million, an increase of 27.6%
Adjusted EBITDA margin of 18.6%, an increase of 393 basis points
Net revenue for VITAS was $254 million in the third quarter of 2013,
which is a decline of 5.2% when compared to the prior-year period. This
revenue decline is a combination of Medicare reimbursement rates
decreasing approximately 1.1%, ADC that was essentially equal to the
prior year, a Medicare billing adjustment of $3.2 million and level of
care mix shift. This shift in level of care negatively impacted revenue
approximately $6 million in the quarter.
In the third quarter of 2013, VITAS recorded a Medicare Cap billing
adjustment of $3.2 million related to one provider number.
Of VITAS' 37 unique Medicare provider numbers, 32 provider numbers have
a Medicare Cap cushion of 10% or greater during the 2013 Medicare Cap
year; three 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 $259 million during the trailing
twelve-month period.
Average revenue per patient per day in the quarter, excluding the impact
of Medicare Cap, was $196.30, which is 3.8% 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 $160.76 and $689.76, respectively, per
patient per day in the third quarter of 2013. During the quarter, high
acuity days of care were 6.7% of total days of care, 85 basis points
below the prior-year quarter.
The third quarter of 2013 gross margin, excluding the impact of Medicare
Cap, was 23.2%, which is a 104 basis point improvement when compared to
the third quarter of 2012.
Selling, general and administrative expense was $18.6 million in the
third quarter of 2013, which is a decrease of 7.5% when compared to the
prior-year quarter. This decline is attributable primarily to insurance
reimbursement of legal costs related to litigation in the prior year.
Adjusted EBITDA, excluding Medicare Cap, totaled $40.5 million in the
quarter, an increase of 1.8% over the prior-year period. Adjusted EBITDA
margin, excluding the impact from Medicare Cap, was 15.7% in the quarter
which is 90 basis points above the prior-year quarter.
In October 2013, VITAS reached a tentative settlement, subject to court
approval, with a class of California employees related to wage and hour
litigation. As a result of this tentative settlement, VITAS recorded an
after-tax expense in the quarter of $6.5 million.
Roto-Rooter's plumbing and drain cleaning business generated sales of
$86.9 million for the third quarter of 2013, an increase of 0.6%, over
the prior-year quarter.
Total unit-for-unit job count decreased 4.9% in the third quarter of
2013 when compared to the prior-year period. This consisted of a
residential drain cleaning job count decrease of 6.3% and residential
plumbing job count decline of 7.6%, when compared to the third quarter
of 2012. Residential jobs represented 67% of total job count in the
quarter. Commercial drain cleaning decreased 0.7% and commercial
plumbing/excavation job count increased 1.8% when compared to the
Roto-Rooter's gross margin in the quarter was 47.3%, a 303 basis point
increase when compared to the third quarter of 2012. Gross margins were
favorably impacted 182 basis points as a result of favorable experience
in Roto-Rooter's health care insurance plans. Adjusted EBITDA in the
third quarter of 2013 totaled $16.2 million, an increase of 27.6%, and
the Adjusted EBITDA margin was 18.6% in the quarter, an increase of 393
As of September 30, 2013, Chemed had total cash and cash equivalents of
$83 million, and debt of $181 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 September 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 September 30, 2013, aggregated $18.9
million and compares to depreciation and amortization during the same
period of $24.2 million.
During the quarter, the Company repurchased $71.2 million of Chemed
stock. This equates to 1,032,754 of Chemed shares repurchased at an
average cost of $68.91. Chemed currently has $25.1 million of
authorization remaining under the 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%