Full Press Release Details
CONTACT: David P. Williams
Chemed Reports Second-Quarter 2021 Results Full-Year 2021 Guidance Increased
CINCINNATI, July 27, 2021 Chemed Corporation (Chemed) (NYSE: CHE), which operates VITAS Healthcare Corporation (VITAS), one of the nation's largest providers 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, 2021, versus the comparable prior-year period, as follows:
Consolidated operating results:
VITAS segment operating results:
Roto-Rooter segment operating results:
VITAS net revenue was $312 million in the second quarter of 2021, which is a decline of 4.7%, when compared to the prior-year period. This revenue decline is comprised primarily of a 6.3% decline in days-of-care offset by a geographically weighted average Medicare reimbursement rate increase (including the suspension of sequestration on May 1, 2020) of approximately 1.8%.
Acuity mix shift had a net impact of reducing revenue approximately $3.8 million, or 1.2%, in the quarter when compared to the prior-year revenue and level-of-care mix. The combination of a lower Medicare Cap and other contra revenue changes offset a portion of the revenue decline by approximately 90-basis points.
In the second quarter of 2021, VITAS accrued $2.0 million in Medicare Cap billing limitations. This compares to a $5.7 million Medicare Cap billing limitation in the second quarter of 2020.
Of VITAS' 30 Medicare provider numbers, 27 provider numbers currently have a Medicare Cap cushion of 10% or greater, one provider number has a cap cushion between 0% and 5% and two provider numbers currently have a fiscal 2021 Medicare Cap billing limitation liability.
Average revenue per patient per day in the second quarter of 2021 was $195.21, which, including acuity mix shift, is 61-basis points above the prior-year period. Reimbursement for routine home care and high acuity care averaged $169.06 and $988.03, respectively. During the quarter, high acuity days-of-care were 3.2% of total days of care, 32-basis points less than the prior-year quarter.
The second quarter 2021 gross margin, excluding Medicare Cap, increased costs for personal protection equipment (PPE), disinfecting facilities and other costs related to operating during the pandemic, was 24.7%. This is a 252-basis point margin decline when compared to the second quarter of 2020.
Selling, general and administrative expense was $22.6 million in the second quarter of 2021 and compares to $21.1 million incurred in the prior-year quarter. Adjusted EBITDA, excluding Medicare Cap, totaled $54.8 million in the quarter, a decrease of 24.4%. Adjusted EBITDA margin in the quarter, excluding Medicare Cap, was 17.4%, which is 430-basis points less than the prior-year period.
Roto-Rooter generated quarterly revenue of $220 million in the second quarter of 2021, an increase of $45.6 million, or 26.1%, over the prior-year quarter.
Total Roto-Rooter branch commercial revenue in the quarter totaled $50.3 million, an increase of 31.8% over the prior year. This aggregate commercial revenue growth consisted of drain cleaning revenue increasing 39.8%, plumbing increasing 32.4% and excavation expanding 25.8%. Water restoration increased 8.3%.
Total Roto-Rooter branch residential revenue in the quarter totaled $149 million, an increase of 23.7% over the prior-year period. This aggregate residential revenue growth consisted of drain cleaning increasing 20.6%, plumbing expanding 30.7%, excavation increasing 22.4%, and water restoration increasing 23.1%.
Roto-Rooter's gross margin in the quarter was 53.3%, a 211-basis point increase when compared to the second quarter of 2020. Adjusted EBITDA in the second-quarter of 2021 totaled $64.3
million, an increase of 37.2%. The Adjusted EBITDA margin in the quarter was 29.2%, which is a 236-basis point increase when compared to the prior year.
As of June 30, 2021, Chemed had total cash and cash equivalents of $92 million and no long-term debt.
In June 2018, Chemed entered into a five-year Amended and Restated Credit Agreement that consists of a $450 million revolving credit facility. The interest rate on this facility has a floating rate that is currently LIBOR plus 100-basis points. At June 30, 2021, the Company had approximately $404 million of undrawn borrowing capacity under this credit agreement.
During the quarter, the Company repurchased 250,000 shares of Chemed stock for $122 million which equates to a cost per share of $487.53. As of June 30, 2021, there was approximately $312 million of remaining share repurchase authorization under this plan.
Chemed restarted its share repurchase program in 2007. Since that time, Chemed has repurchased approximately 14.9 million shares, aggregating approximately $1.6 billion at an average share cost of $104.70. Including dividends over this period, Chemed has returned approximately $1.8 billion to shareholders.
Historically, Chemed earnings guidance has been developed using previous years' key operating metrics which are then modeled and projected out for the calendar year. Critical within these projections is the understanding of traditional patterned correlations among key operating metrics. This modeling exercise also takes into consideration anticipated industry and macro-economic issues outside of management's control but are somewhat predictable in terms of timing and impact on our business segments' operating results.
The COVID-19 pandemic has made accurate modeling and providing meaningful earnings guidance exceptionally challenging. Since the start of the pandemic, Chemed has been able to successfully navigate within this rapidly changing environment and produce operating results that we believe provide us with the ability to issue earnings guidance for the 2021 calendar year. However, this guidance should be taken with the recognition the pandemic will continue to disrupt our healthcare system and general economy to such an extent that future rules, regulations and government mandates could materially impact the company's ability to achieve this guidance.
Statistically, patients residing in senior housing are identified as hospice appropriate earlier into their terminal prognosis and have a much greater probability of having a length of stay in excess of 90 days. Hospice patients referred from hospitals, oncology practices and similar referral sources are generally more acute and have a significantly lower probability of lengths-of-stay exceeding 90 days. According to data released by the National Investment Center for Seniors
Housing & Care, COVID-19 continues to adversely affect senior housing occupancy. This reduced occupancy in senior housing has had a corresponding reduction in VITAS nursing home admissions. Nursing home patients represented 14.9% of VITAS' second quarter 2021 patient census. This compares to nursing home patients averaging 18.2% of total census just prior to the pandemic.
This guidance anticipates senior housing occupancy will begin to normalize to pre-pandemic occupancy starting in the second half of calendar year 2021.
Based upon the above discussion, VITAS 2021 revenue, prior to Medicare Cap, is estimated to decline approximately 4.5% when compared to the prior year. Average Daily Census in 2021 is estimated to decline approximately 5.0%. Full-year Adjusted EBITDA margin, prior to Medicare Cap, is estimated to be 18.3%. We are currently estimating $7.5 million for Medicare Cap billing limitations in calendar year 2021.
Roto-Rooter is forecasted to achieve full-year 2021 revenue growth of 15.0% to 15.5%. Roto-Rooter's Adjusted EBITDA margin for 2021 is estimated to be between 28% to 29%.
Based upon the above, full-year 2021 adjusted earnings per diluted share, excluding non-cash expense for stock options, tax benefits from stock option exercises, costs related to litigation, and other discrete items, is estimated to be in the range of $18.20 to $18.50. This compares to initial 2021 adjusted earnings per diluted share guidance of $17.00 to $17.50. This revised 2021 guidance assumes an effective corporate tax rate on adjusted earnings of 24.7%. Chemed's 2020 reported adjusted earnings per diluted share was $18.08.
Chemed will host a conference call and webcast at 10 a.m., ET, on Wednesday, July 28, 2021, to discuss the Company's quarterly results and to provide an update on its business. The dial-in number for the conference call is (844) 743-2500 for U.S. and Canadian participants and +1 (661) 378-9533 for international participants. The Conference ID is 4172673. A live webcast of the call can be accessed on Chemed's website at www.chemed.com by clicking on Investor Relations Home.
A taped replay of the conference call will be available beginning approximately 24 hours after the call's conclusion. It can be accessed by dialing (855) 859-2056 for U.S. and Canadian callers and +1 (404) 537-3406 for international callers and will be available for one week following the live call. The replay Conference ID is 4172673. An archived webcast will also be available at www.chemed.com.
Chemed Corporation operates in the healthcare field through its VITAS Healthcare Corporation subsidiary. VITAS provides daily hospice services to approximately 18,000 patients with severe, life-limiting illnesses. This type of care is focused on making the terminally ill patient's final days as comfortable and pain-free as possible.
Chemed operates in the residential and commercial plumbing and drain cleaning industry under the brand name Roto-Rooter. Roto-Rooter provides plumbing, drain cleaning, and water cleanup services through company-owned branches, independent contractors and franchisees in the United States and Canada. Roto-Rooter also has licensed master franchisees in the republics of Indonesia and Singapore, and the Philippines.
This press release contains information about Chemed's EBITDA, Adjusted EBITDA and Adjusted Diluted EPS, which are not measures derived in accordance with GAAP and which exclude components that are important to understanding Chemed's financial performance. In reporting its operating results, Chemed provides EBITDA, Adjusted EBITDA and Adjusted Diluted EPS measures to help investors and others evaluate the Company's operating results, compare its operating performance with that of similar companies that have different capital structures and evaluate its ability to meet its future debt service, capital expenditures and working capital requirements. Chemed's management similarly uses EBITDA, Adjusted EBITDA and Adjusted Diluted EPS to assist it in evaluating the performance of the Company across fiscal periods and in assessing how its performance compares to its peer companies. These measures also help Chemed's management to estimate the resources required to meet Chemed's future financial obligations and expenditures. Chemed's EBITDA, Adjusted EBITDA and Adjusted Diluted EPS should not be considered in isolation or as a substitute for comparable measures calculated and presented in accordance with GAAP. We calculated Adjusted EBITDA Margin by dividing Adjusted EBITDA by service revenue and sales. A reconciliation of Chemed's net income to its EBITDA, Adjusted EBITDA and Adjusted Diluted EPS is presented in the tables following the text of this press release.
Forward-Looking Statements
Certain statements contained in this press release and the accompanying tables are "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. The words "believe," "expect," "hope," "anticipate," "plan" and similar expressions identify forward-looking statements, which speak only as of the date the statement was made. Chemed does not undertake and specifically disclaims any obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. These statements are based on current expectations and assumptions and involve various risks and uncertainties, which could cause Chemed's actual results to differ from those expressed in such forward-looking statements.
These risks and uncertainties arise from, among other things, possible changes in regulations governing the hospice care or plumbing and drain cleaning industries; periodic changes in reimbursement levels and procedures under Medicare and Medicaid programs; difficulties predicting patient length of stay and estimating potential Medicare reimbursement obligations; challenges inherent in Chemed's growth strategy; the current shortage of qualified nurses, other healthcare professionals and licensed plumbing and drain cleaning technicians; Chemed's dependence on patient referral sources; and other factors detailed under the caption "Description of Business by Segment" or "Risk Factors" in Chemed's most recent report on form 10-Q or 10-K and its other filings with the Securities and Exchange Commission. You are cautioned not to place
undue reliance on such forward-looking statements and there are no assurances that the matters contained in such statements will be achieved.
| CHEMED CORPORATION AND SUBSIDIARY COMPANIES | ||||||||||||
| CONSOLIDATED STATEMENTS OF INCOME | ||||||||||||
| (in thousands, except per share data)(unaudited) | ||||||||||||
| Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||
| 2021 | 2020 | 2021 | 2020 | |||||||||
| Service revenues and sales | $ | 532,256 | $ | 502,199 | 1,059,616 | $ | 1,017,997 | |||||
| Cost of services provided and goods sold | 350,493 | 352,163 | 690,966 | 703,908 | ||||||||
| Selling, general and administrative expenses (aa) | 93,838 | 84,513 | 185,437 | 155,096 | ||||||||
| Depreciation | 13,612 | 11,659 | 25,327 | 23,047 | ||||||||
| Amortization | 2,510 | 2,488 | 5,020 | 4,965 | ||||||||
| Other operating expense/(income) | 104 | (41,384) | 726 | (41,142) | ||||||||
| Total costs and expenses | 460,557 | 409,439 | 907,476 | 845,874 | ||||||||
| Income from operations | 71,699 | 92,760 | 152,140 | 172,123 | ||||||||
| Interest expense | (379) | (651) | (760) | (1,626) | ||||||||
| Other income/(expense)--net (bb) | 3,785 | 7,514 | 7,387 | (1,952) | ||||||||
| Income before income taxes | 75,105 | 99,623 | 158,767 | 168,545 | ||||||||
| Income taxes | (18,583) | (17,522) | (36,845) | (30,553) | ||||||||
| Net income | $ | 56,522 | $ | 82,101 | $ | 121,922 | $ | 137,992 | ||||
| Earnings Per Share | ||||||||||||
| Net income | $ | 3.57 | $ | 5.16 | $ | 7.66 | $ | 8.65 | ||||
| Average number of shares outstanding | 15,829 | 15,914 | 15,919 | 15,953 | ||||||||
| Diluted Earnings Per Share | ||||||||||||
| Net income | $ | 3.51 | $ | 5.01 | $ | 7.52 | $ | 8.39 | ||||
| Average number of shares outstanding | 16,101 | 16,373 | 16,205 | 16,445 | ||||||||
| (aa) Selling, general and administrative ("SG&A") expenses comprise (in thousands): | ||||||||||||
| Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||
| 2021 | 2020 | 2021 | 2020 | |||||||||
| SG&A expenses before long-term incentive compensation | ||||||||||||
| and the impact of market value adjustments related to | ||||||||||||
| deferred compensation plans | $ | 88,510 | $ | 75,176 | $ | 175,178 | $ | 153,511 | ||||
| Market value adjustments related to deferred | ||||||||||||
| compensation trusts | 3,655 | 7,408 | 6,693 | (2,164) | ||||||||
| Long-term incentive compensation | 1,673 | 1,929 | 3,566 | 3,749 | ||||||||
| Total SG&A expenses | $ | 93,838 | $ | 84,513 | $ | 185,437 | $ | 155,096 | ||||
| (bb) Other income/(expense)--net comprises (in thousands): | ||||||||||||
| Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||
| 2021 | 2020 | 2021 | 2020 | |||||||||
| Market value adjustments related to deferred | ||||||||||||
| compensation trusts | $ | 3,655 | $ | 7,408 | $ | 6,693 | $ | (2,164) | ||||
| Interest income | 138 | 116 | 230 | 225 | ||||||||
| Other | (8) | (10) | 464 | (13) | ||||||||
| Total other income/(expense)--net | $ | 3,785 | $ | 7,514 | $ | 7,387 | $ | (1,952) |
| CHEMED CORPORATION AND SUBSIDIARY COMPANIES | ||||||
| CONSOLIDATED BALANCE SHEETS | ||||||
| (in thousands, except per share data)(unaudited) | ||||||
| June 30, | ||||||
| 2021 | 2020 | |||||
| Assets | ||||||
| Current assets | ||||||
| Cash and cash equivalents | $ | 92,120 | $ | 20,376 | ||
| Accounts receivable less allowances | 123,329 | 132,487 | ||||
| Inventories | 7,411 | 7,467 | ||||
| Prepaid income taxes | 23,386 | 5,794 | ||||
| Prepaid expenses | 22,840 | 23,183 | ||||
| Total current assets | 269,086 | 189,307 | ||||
| Investments of deferred compensation plans held in trust | 98,256 | 80,113 | ||||
| Properties and equipment, at cost less accumulated depreciation | 192,653 | 183,017 | ||||
| Lease right of use asset | 123,207 | 128,418 | ||||
| Identifiable intangible assets less accumulated amortization | 113,137 | 122,791 | ||||
| Goodwill | 578,650 | 578,491 | ||||
| Other assets | 8,807 | 9,055 | ||||
| Total Assets | $ | 1,383,796 | $ | 1,291,192 | ||
| Liabilities | ||||||
| Current liabilities | ||||||
| Accounts payable | $ | 55,975 | $ | 36,704 | ||
| Income taxes | 5 | 19,576 | ||||
| Accrued insurance | 51,963 | 50,847 | ||||
| Accrued compensation | 83,608 | 80,552 | ||||
| Accrued legal | 1,391 | 6,959 | ||||
| Short-term lease liability | 36,440 | 36,093 | ||||
| Unutilized CARES Act Grant | - | 39,236 | ||||
| Other current liabilities | 38,020 | 48,549 | ||||
| Total current liabilities | 267,402 | 318,516 | ||||
| Deferred income taxes | 21,713 | 21,108 | ||||
| Deferred compensation liabilities | 97,374 | 77,639 | ||||
| Long-term lease liability | 99,093 | 104,444 | ||||
| Other liabilities | 27,440 | 18,789 | ||||
| Total Liabilities | 513,022 | 540,496 | ||||
| Stockholders' Equity | ||||||
| Capital stock | 36,385 | 36,040 | ||||
| Paid-in capital | 999,697 | 904,421 | ||||
| Retained earnings | 1,834,835 | 1,553,144 | ||||
| Treasury stock, at cost | (2,002,326) | (1,745,299) | ||||
| Deferred compensation payable in Company stock | 2,183 | 2,390 | ||||
| Total Stockholders' Equity | 870,774 | 750,696 | ||||
| Total Liabilities and Stockholders' Equity | $ | 1,383,796 | $ | 1,291,192 |
| CHEMED CORPORATION AND SUBSIDIARY COMPANIES | ||||||
| CONSOLIDATED STATEMENTS OF CASH FLOWS | ||||||
| (in thousands)(unaudited) | ||||||
| For the Six Months Ended June 30, | ||||||
| 2021 | 2020 | |||||
| Cash Flows from Operating Activities | ||||||
| Net income | $ | 121,922 | $ | 137,992 | ||
| Adjustments to reconcile net income to net cash provided | ||||||
| by operating activities: | ||||||
| Depreciation and amortization | 30,347 | 28,012 | ||||
| Stock option expense | 12,345 | 10,113 | ||||
| Litigation settlements paid | (9,440) | - | ||||
| Noncash long-term incentive compensation | 3,402 | 3,527 | ||||
| Noncash directors' compensation | 1,173 | 1,171 | ||||
| Provision for deferred income taxes | 1,051 | 2,717 | ||||
| Amortization of debt issuance costs | 153 | 153 | ||||
| Provision for bad debts | 40 | 871 | ||||
| Unutilized CARES Act grant | - | 39,236 | ||||
| Deferred payroll taxes | - | 10,716 | ||||
| Changes in operating assets and liabilities, excluding | ||||||
| amounts acquired in business combinations: | ||||||
| Decrease in accounts receivable | 4,722 | 6,696 | ||||
| Increase in inventories | (316) | (5) | ||||
| Decrease/(increase) in prepaid expenses | 3,337 | (33) | ||||
| (Decrease)/increase in accounts payable and | ||||||
| other current liabilities | (10,815) | 13,303 | ||||
| Change in current income taxes | (26,242) | 23,725 | ||||
| Net change in lease assets and liabilities | (436) | 1,287 | ||||
| Increase in other assets | (10,088) | (2,988) | ||||
| Increase in other liabilities | 10,088 | 1,383 | ||||
| Other sources/(uses) | 796 | (54) | ||||
| Net cash provided by operating activities | 132,039 | 277,822 | ||||
| Cash Flows from Investing Activities | ||||||
| Capital expenditures | (33,604) | (32,251) | ||||
| Business combinations | - | (3,600) | ||||
| Other sources | 302 | 473 | ||||
| Net cash used by investing activities | (33,302) | (35,378) | ||||
| Cash Flows from Financing Activities | ||||||
| Purchases of treasury stock | (166,649) | (122,148) | ||||
| Proceeds from exercise of stock options | 16,186 | 19,440 | ||||
| Dividends paid | (10,864) | (10,238) | ||||
| Capital stock surrendered to pay taxes on stock-based compensation | (8,598) | (14,845) | ||||
| Payments on revolving line of credit | - | (264,900) | ||||
| Proceeds from revolving line of credit | - | 174,900 | ||||
| Change in cash overdrafts payable | - | (9,849) | ||||
| Other sources/(uses) | 633 | (586) | ||||
| Net cash used by financing activities | (169,292) | (228,226) | ||||
| (Decrease)/Increase in Cash and Cash Equivalents | (70,555) | 14,218 | ||||
| Cash and cash equivalents at beginning of year | 162,675 | 6,158 | ||||
| Cash and cash equivalents at end of year | $ | 92,120 | $ | 20,376 |
| CHEMED CORPORATION AND SUBSIDIARY COMPANIES | ||||||||||||
| CONSOLIDATING STATEMENTS OF INCOME | ||||||||||||
| FOR THE THREE MONTHS ENDED JUNE 30, 2021 AND 2020 | ||||||||||||
| (in thousands)(unaudited) | ||||||||||||
| Roto- | Chemed | |||||||||||
| VITAS | Rooter | Corporate | Consolidated | |||||||||
| 2021 (a) | ||||||||||||
| Service revenues and sales | $ | 311,935 | $ | 220,321 | $ | - | $ | 532,256 | ||||
| Cost of services provided and goods sold | 247,519 | 102,974 | - | 350,493 | ||||||||
| Selling, general and administrative expenses | 22,631 | 53,556 | 17,651 | 93,838 | ||||||||
| Depreciation | 7,125 | 6,468 | 19 | 13,612 | ||||||||
| Amortization | 18 | 2,492 | - | 2,510 | ||||||||
| Other operating expense | 87 | 17 | - | 104 | ||||||||
| Total costs and expenses | 277,380 | 165,507 | 17,670 | 460,557 | ||||||||
| Income/(loss) from operations | 34,555 | 54,814 | (17,670) | 71,699 | ||||||||
| Interest expense | (43) | (89) | (247) | (379) | ||||||||
| Intercompany interest income/(expense) | 4,486 | 1,649 | (6,135) | - | ||||||||
| Other income net | 99 | 32 | 3,654 | 3,785 | ||||||||
| Income/(loss) before income taxes | 39,097 | 56,406 | (20,398) | 75,105 | ||||||||
| Income taxes | (9,385) | (13,633) | 4,435 | (18,583) | ||||||||
| Net income/(loss) | $ | 29,712 | $ | 42,773 | $ | (15,963) | $ | 56,522 | ||||
| 2020 (b) | ||||||||||||
| Service revenues and sales | $ | 327,465 | $ | 174,734 | $ | - | $ | 502,199 | ||||
| Cost of services provided and goods sold | 266,815 | 85,348 | - | 352,163 | ||||||||
| Selling, general and administrative expenses | 21,072 | 44,231 | 19,210 | 84,513 | ||||||||
| Depreciation | 5,556 | 6,069 | 34 | 11,659 | ||||||||
| Amortization | 18 | 2,470 | - | 2,488 | ||||||||
| Other operating income | (40,826) | (558) | - | (41,384) | ||||||||
| Total costs and expenses | 252,635 | 137,560 | 19,244 | 409,439 | ||||||||
| Income/(loss) from operations | 74,830 | 37,174 | (19,244) | 92,760 | ||||||||
| Interest expense | (45) | (90) | (516) | (651) | ||||||||
| Intercompany interest income/(expense) | 4,739 | 1,422 | (6,161) | - | ||||||||
| Other income/(expense) net | 104 | (10) | 7,420 | 7,514 | ||||||||
| Income/(loss) before income taxes | 79,628 | 38,496 | (18,501) | 99,623 | ||||||||
| Income taxes | (19,383) | (9,028) | 10,889 | (17,522) | ||||||||
| Net income/(loss) | $ | 60,245 | $ | 29,468 | $ | (7,612) | $ | 82,101 | ||||
| The "Footnotes to Financial Statements" are integral parts of this financial information. |
| CHEMED CORPORATION AND SUBSIDIARY COMPANIES | ||||||||||||
| CONSOLIDATING STATEMENTS OF INCOME | ||||||||||||
| FOR THE SIX MONTHS ENDED JUNE 30, 2021 AND 2020 | ||||||||||||
| (in thousands)(unaudited) | ||||||||||||
| Roto- | Chemed | |||||||||||
| VITAS | Rooter | Corporate | Consolidated | |||||||||
| 2021 (a) | ||||||||||||
| Service revenues and sales | $ | 627,723 | $ | 431,893 | $ | - | $ | 1,059,616 | ||||
| Cost of services provided and goods sold | 486,186 | 204,780 | - | 690,966 | ||||||||
| Selling, general and administrative expenses | 44,721 | 106,878 | 33,838 | 185,437 | ||||||||
| Depreciation | 12,462 | 12,821 | 44 | 25,327 | ||||||||
| Amortization | 36 | 4,984 | - | 5,020 | ||||||||
| Other operating expense | 590 | 136 | - | 726 | ||||||||
| Total costs and expenses | 543,995 | 329,599 | 33,882 | 907,476 | ||||||||
| Income/(loss) from operations | 83,728 | 102,294 | (33,882) | 152,140 | ||||||||
| Interest expense | (85) | (179) | (496) | (760) | ||||||||
| Intercompany interest income/(expense) | 9,011 | 3,269 | (12,280) | - | ||||||||
| Other income net | 632 | 63 | 6,692 | 7,387 | ||||||||
| Income/(loss) before income taxes | 93,286 | 105,447 | (39,966) | 158,767 | ||||||||
| Income taxes | (22,805) | (25,497) | 11,457 | (36,845) | ||||||||
| Net income/(loss) | $ | 70,481 | $ | 79,950 | $ | (28,509) | $ | 121,922 | ||||
| 2020 (b) | ||||||||||||
| Service revenues and sales | $ | 665,380 | $ | 352,617 | $ | - | $ | 1,017,997 | ||||
| Cost of services provided and goods sold | 526,244 | 177,664 | - | 703,908 | ||||||||
| Selling, general and administrative expenses | 43,341 | 90,513 | 21,242 | 155,096 | ||||||||
| Depreciation | 11,030 | 11,947 | 70 | 23,047 | ||||||||
| Amortization | 36 | 4,929 | - | 4,965 | ||||||||
| Other operating expense | (40,712) | (430) | - | (41,142) | ||||||||
| Total costs and expenses | 539,939 | 284,623 | 21,312 | 845,874 | ||||||||
| Income/(loss) from operations | 125,441 | 67,994 | (21,312) | 172,123 | ||||||||
| Interest expense | (90) | (192) | (1,344) | (1,626) | ||||||||
| Intercompany interest income/(expense) | 9,125 | 2,771 | (11,896) | - | ||||||||
| Other income/(expense) net | 169 | 30 | (2,151) | (1,952) | ||||||||
| Income/(loss) before income taxes | 134,645 | 70,603 | (36,703) | 168,545 | ||||||||
| Income taxes | (33,121) | (16,813) | 19,381 | (30,553) | ||||||||
| Net income/(loss) | $ | 101,524 | $ | 53,790 | $ | (17,322) | $ | 137,992 | ||||
| The "Footnotes to Financial Statements" are integral parts of this financial information. |
| CHEMED CORPORATION AND SUBSIDIARY COMPANIES | ||||||||||||
| CONSOLIDATING SUMMARIES OF EBITDA | ||||||||||||
| FOR THE THREE MONTHS ENDED JUNE 30, 2021 AND 2020 | ||||||||||||
| (in thousands)(unaudited) | ||||||||||||
| Chemed | ||||||||||||
| VITAS | Roto-Rooter | Corporate | Consolidated | |||||||||
| 2021 | ||||||||||||
| Net income/(loss) | $ | 29,712 | $ | 42,773 | $ | (15,963) | $ | 56,522 | ||||
| Add/(deduct): | ||||||||||||
| Interest expense | 43 | 89 | 247 | 379 | ||||||||
| Income taxes | 9,385 | 13,633 | (4,435) | 18,583 | ||||||||
| Depreciation | 7,125 | 6,468 | 19 | 13,612 | ||||||||
| Amortization | 18 | 2,492 | - | 2,510 | ||||||||
| EBITDA | 46,283 | 65,455 | (20,132) | 91,606 | ||||||||
| Add/(deduct): | ||||||||||||
| Intercompany interest expense/(income) | (4,486) | (1,649) | 6,135 | - | ||||||||
| Interest income | (106) | (32) | - | (138) | ||||||||
| Direct costs related to COVID-19 | 11,084 | 582 | - | 11,666 | ||||||||
| Stock option expense | - | - | 6,239 | 6,239 | ||||||||
| Long-term incentive compensation | - | - | 1,673 | 1,673 | ||||||||
| Litigation settlements | - | (98) | - | (98) | ||||||||
| Adjusted EBITDA | $ | 52,775 | $ | 64,258 | $ | (6,085) | $ | 110,948 | ||||
| 2020 | ||||||||||||
| Net income/(loss) | $ | 60,245 | $ | 29,468 | $ | (7,612) | $ | 82,101 | ||||
| Add/(deduct): | ||||||||||||
| Interest expense | 45 | 90 | 516 | 651 | ||||||||
| Income taxes | 19,383 | 9,028 | (10,889) | 17,522 | ||||||||
| Depreciation | 5,556 | 6,069 | 34 | 11,659 | ||||||||
| Amortization | 18 | 2,470 | - | 2,488 | ||||||||
| EBITDA | 85,247 | 47,125 | (17,951) | 114,421 | ||||||||
| Add/(deduct): | ||||||||||||
| Intercompany interest expense/(income) | (4,739) | (1,422) | 6,161 | - | ||||||||
| Interest (income)/expense | (113) | 10 | (13) | (116) | ||||||||
| CARES Act grant | (40,989) | - | - | (40,989) | ||||||||
| Direct costs related to COVID-19 | 24,265 | 1,117 | - | 25,382 | ||||||||
| Stock option expense | - | - | 5,068 | 5,068 | ||||||||
| COVID-19 related Medicare cap | 2,250 | - | - | 2,250 | ||||||||
| Long-term incentive compensation | - | - | 1,929 | 1,929 | ||||||||
| Medicare cap sequestration adjustment | 796 | - | - | 796 | ||||||||
| Adjusted EBITDA | $ | 66,717 | $ | 46,830 | $ | (4,806) | $ | 108,741 | ||||
| The "Footnotes to Financial Statements" are integral parts of this financial information. |
| CHEMED CORPORATION AND SUBSIDIARY COMPANIES | ||||||||||||
| CONSOLIDATING SUMMARIES OF EBITDA | ||||||||||||
| FOR THE SIX MONTHS ENDED JUNE 30, 2021 AND 2020 | ||||||||||||
| (in thousands)(unaudited) | ||||||||||||
| Chemed | ||||||||||||
| VITAS | Roto-Rooter | Corporate | Consolidated | |||||||||
| 2021 | ||||||||||||
| Net income/(loss) | $ | 70,481 | $ | 79,950 | $ | (28,509) | $ | 121,922 | ||||
| Add/(deduct): | ||||||||||||
| Interest expense | 85 | 179 | 496 | 760 | ||||||||
| Income taxes | 22,805 | 25,497 | (11,457) | 36,845 | ||||||||
| Depreciation | 12,462 | 12,821 | 44 | 25,327 | ||||||||
| Amortization | 36 | 4,984 | - | 5,020 | ||||||||
| EBITDA | 105,869 | 123,431 | (39,426) | 189,874 | ||||||||
| Add/(deduct): | ||||||||||||
| Intercompany interest expense/(income) | (9,011) | (3,269) | 12,280 | - | ||||||||
| Interest income | (167) | (63) | - | (230) | ||||||||
| Direct costs related to COVID-19 | 12,836 | 1,136 | 38 | 14,010 | ||||||||
| Stock option expense | - | - | 12,345 | 12,345 | ||||||||
| Long-term incentive compensation | - | - | 3,566 | 3,566 | ||||||||
| Litigation settlements | - | (98) | - | (98) | ||||||||
| Adjusted EBITDA | $ | 109,527 | $ | 121,137 | $ | (11,197) | $ | 219,467 | ||||
| 2020 | ||||||||||||
| Net income/(loss) | $ | 101,524 | $ | 53,790 | $ | (17,322) | $ | 137,992 | ||||
| Add/(deduct): | ||||||||||||
| Interest expense | 90 | 192 | 1,344 | 1,626 | ||||||||
| Income taxes | 33,121 | 16,813 | (19,381) | 30,553 | ||||||||
| Depreciation | 11,030 | 11,947 | 70 | 23,047 | ||||||||
| Amortization | 36 | 4,929 | - | 4,965 | ||||||||
| EBITDA | 145,801 | 87,671 | (35,289) | 198,183 | ||||||||
| Add/(deduct): | ||||||||||||
| Intercompany interest expense/(income) | (9,125) | (2,771) | 11,896 | - | ||||||||
| Interest income | (181) | (31) | (13) | (225) | ||||||||
| Direct costs related to COVID-19 | 25,238 | 1,978 | - | 27,216 | ||||||||
| CARES Act grant | (40,989) | - | - | (40,989) | ||||||||
| Stock option expense | - | - | 10,114 | 10,114 | ||||||||
| Long-term incentive compensation | - | - | 3,749 | 3,749 | ||||||||
| COVID-19 Medicare cap | 2,250 | - | - | 2,250 | ||||||||
| Medicare cap sequestration adjustment | 1,472 | - | - | 1,472 | ||||||||
| Adjusted EBITDA | $ | 124,466 | $ | 86,847 | $ | (9,543) | $ | 201,770 | ||||
| The "Footnotes to Financial Statements" are integral parts of this financial information. |
| CHEMED CORPORATION AND SUBSIDIARY COMPANIES | ||||||||||||
| RECONCILIATION OF ADJUSTED NET INCOME | ||||||||||||
| (in thousands, except per share data)(unaudited) | ||||||||||||
| Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||
| 2021 | 2020 | 2021 | 2020 | |||||||||
| Net income as reported | $ | 56,522 | $ | 82,101 | $ | 121,922 | $ | 137,992 | ||||
| Add/(deduct) pre-tax cost of: | ||||||||||||
| Direct costs related to COVID-19 | 11,666 | 25,382 | 14,010 | 27,216 | ||||||||
| Stock option expense | 6,239 | 5,068 | 12,345 | 10,114 | ||||||||
| Amortization of reacquired franchise agreements | 2,352 | 2,352 | 4,704 | 4,704 | ||||||||
| Long-term incentive compensation | 1,673 | 1,929 | 3,566 | 3,749 | ||||||||
| Facility relocation expenses | 1,855 | - | 1,855 | - | ||||||||
| Litigation settlements | (98) | - | (98) | - | ||||||||
| CARES Act grant | - | (40,989) | - | (40,989) | ||||||||
| COVID-19 Medicare cap | - | 2,250 | - | 2,250 | ||||||||
| Medicare cap sequestration adjustments | - | 796 | - | 1,472 | ||||||||
| Add/(deduct) tax impacts: | ||||||||||||
| Tax impact of the above pre-tax adjustments (1) | (5,241) | 1,537 | (7,728) | (814) | ||||||||
| Excess tax benefits on stock compensation | (868) | (8,203) | (4,106) | (12,756) | ||||||||
| Adjusted net income | $ | 74,100 | $ | 72,223 | $ | 146,470 | $ | 132,938 | ||||
| Diluted Earnings Per Share As Reported | ||||||||||||
| Net income | $ | 3.51 | $ | 5.01 | $ | 7.52 | $ | 8.39 | ||||
| Average number of shares outstanding | 16,101 | 16,373 | 16,205 | 16,445 | ||||||||
| Adjusted Diluted Earnings Per Share | ||||||||||||
| Adjusted net income | $ | 4.60 | $ | 4.41 | $ | 9.04 | $ | 8.08 | ||||
| Average number of shares outstanding | 16,101 | 16,373 | 16,205 | 16,445 | ||||||||
| (1) The tax impact of pre-tax adjustments was calculated using the effective tax rate of the operating unit for which each adjustment is associated. | ||||||||||||
| The "Footnotes to Financial Statements" are integral parts of this financial information. |
| CHEMED CORPORATION AND SUBSIDIARY COMPANIES | |||||||||||||
| OPERATING STATISTICS FOR VITAS SEGMENT | |||||||||||||
| (unaudited) | |||||||||||||
| Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||
| OPERATING STATISTICS | 2021 | 2020 | 2021 | 2020 | |||||||||
| Net revenue ($000) (c) | |||||||||||||
| Homecare | $ | 264,926 | $ | 276,345 | $ | 528,680 | $ | 548,098 | |||||
| Inpatient | 27,371 | 25,868 | 56,527 | 58,350 | |||||||||
| Continuous care | 24,282 | 34,582 | 51,631 | 75,137 | |||||||||
| Other | 3,078 | 2,109 | 6,016 | 5,265 | |||||||||
| Subtotal | $ | 319,657 | $ | 338,904 | $ | 642,854 | $ | 686,850 | |||||
| Room and board, net | (2,657) | (2,647) | (5,322) | (6,028) | |||||||||
| Contractual allowances | (3,065) | (3,042) | (6,309) | (7,192) | |||||||||
| Medicare cap allowance | (2,000) | (5,750) | (3,500) | (8,250) | |||||||||
| Net Revenue | $ | 311,935 | $ | 327,465 | $ | 627,723 | $ | 665,380 | |||||
| Net revenue as a percent of total before Medicare cap allowance | |||||||||||||
| Homecare | 82.9 | % | 81.5 | % | 82.2 | % | 79.8 | % | |||||
| Inpatient | 8.6 | 7.6 | 8.8 | 8.5 | |||||||||
| Continuous care | 7.6 | 10.2 | 8.0 | 10.9 | |||||||||
| Other | 0.9 | 0.7 | 1.0 | 0.8 | |||||||||
| Subtotal | 100.0 | 100.0 | 100.0 | 100.0 | |||||||||
| Room and board, net | (0.8) | (0.8) | (0.8) | (0.9) | |||||||||
| Contractual allowances | (1.0) | (0.9) | (1.0) | (1.0) | |||||||||
| Medicare cap allowance | (0.6) | (1.7) | (0.6) | (1.2) | |||||||||
| Net Revenue | 97.6 | % | 96.6 | % | 97.6 | % | 96.9 | % | |||||
| Days of care | |||||||||||||
| Homecare | 1,335,482 | 1,401,744 | 2,665,374 | 2,766,490 | |||||||||
| Nursing home | 244,423 | 279,462 | 477,206 | 582,836 | |||||||||
| Respite | 5,338 | 4,158 | 10,178 | 10,850 | |||||||||
| Subtotal routine homecare and respite | 1,585,243 | 1,685,364 | 3,152,758 | 3,360,176 | |||||||||
| Inpatient | 26,493 | 25,542 | 54,167 | 57,890 | |||||||||
| Continuous care | 25,786 | 35,814 | 55,086 | 77,187 | |||||||||
| Total | 1,637,522 | 1,746,720 | 3,262,011 | 3,495,253 | |||||||||
| Number of days in relevant time period | 91 | 91 | 181 | 182 | |||||||||
| Average daily census ("ADC") (days) | |||||||||||||
| Homecare | 14,676 | 15,404 | 14,726 | 15,201 | |||||||||
| Nursing home | 2,686 | 3,071 | 2,636 | 3,202 | |||||||||
| Respite | 59 | 45 | 57 | 60 | |||||||||
| Subtotal routine homecare and respite | 17,421 | 18,520 | 17,419 | 18,463 | |||||||||
| Inpatient ` | 291 | 281 | 299 | 318 | |||||||||
| Continuous care | 283 | 394 | 304 | 424 | |||||||||
| Total | 17,995 | 19,195 | 18,022 | 19,205 | |||||||||
| Total Admissions | 16,840 | 16,822 | 34,975 | 35,425 | |||||||||
| Total Discharges | 16,525 | 17,000 | 35,054 | 35,208 | |||||||||
| Average length of stay (days) | 94.5 | 90.9 | 94.4 | 90.8 | |||||||||
| Median length of stay (days) | 14.0 | 14.0 | 13.0 | 14.0 | |||||||||
| ADC by major diagnosis | |||||||||||||
| Cerebro | 36.8 | % | 35.2 | % | 36.5 | % | 35.7 | % | |||||
| Neurological | 22.4 | 21.7 | 22.3 | 21.6 | |||||||||
| Cancer | 12.1 | 12.8 | 12.2 | 12.7 | |||||||||
| Cardio | 15.6 | 16.1 | 15.6 | 15.9 | |||||||||
| Respiratory | 7.3 | 8.2 | 7.5 | 8.3 | |||||||||
| Other | 5.8 | 6.0 | 5.9 | 5.8 | |||||||||
| Total | 100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | |||||
| Admissions by major diagnosis | |||||||||||||
| Cerebro | 21.4 | % | 20.9 | % | 21.5 | % | 21.0 | % | |||||
| Neurological | 12.3 | 13.4 | 12.3 | 12.9 | |||||||||
| Cancer | 28.9 | 27.6 | 26.9 | 28.0 | |||||||||
| Cardio | 14.8 | 14.6 | 14.5 | 14.9 | |||||||||
| Respiratory | 10.5 | 9.8 | 10.7 | 10.9 | |||||||||
| Other | 12.1 | 13.7 | 14.1 | 12.3 | |||||||||
| Total | 100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | |||||
| Estimated uncollectible accounts as a percent of revenues | 1.0 | % | 0.9 | % | 1.0 | % | 1.1 | % | |||||
| Accounts receivable -- | |||||||||||||
| Days of revenue outstanding-excluding unapplied Medicare payments | 36.3 | 31.9 | n.a. | n.a. | |||||||||
| Days of revenue outstanding-including unapplied Medicare payments | 21.0 | 26.7 | n.a. | n.a. | |||||||||
| The "Footnotes to Financial Statements" are integral parts of this financial information. |
| CHEMED CORPORATION AND SUBSIDIARY COMPANIES | |||||||||||||
| FOOTNOTES TO FINANCIAL STATEMENTS | |||||||||||||
| FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2021 AND 2020 | |||||||||||||
| (unaudited) | |||||||||||||
| (a) | Included in the results of operations for 2021 are the following significant credits/(charges) which may not be indicative of ongoing operations | ||||||||||||
| (in thousands): | |||||||||||||
| Three Months Ended June 30, 2021 | |||||||||||||
| VITAS | Roto-Rooter | Corporate | Consolidated | ||||||||||
| Direct costs related to COVID-19 | $ | (11,084) | $ | (582) | $ | - | $ | (11,666) | |||||
| Stock option expense | - | - | (6,239) | (6,239) | |||||||||
| Amortization of reacquired franchise agreements | - | (2,352) | - | (2,352) | |||||||||
| Facility relocation expenses | (1,855) | - | - | (1,855) | |||||||||
| Long-term incentive compensation | - | - | (1,673) | (1,673) | |||||||||
| Litigation settlements | - | 98 | - | 98 | |||||||||
| (12,939) | (2,836) | (7,912) | (23,687) | ||||||||||
| Excess tax benefits on stock compensation | - | - | 868 | 868 | |||||||||
| Income tax benefit on the above | 3,287 | 751 | 1,203 | 5,241 | |||||||||
| After-tax impact on earnings | $ | (9,652) | $ | (2,085) | $ | (5,841) | $ | (17,578) | |||||
| Six Months Ended June 30, 2021 | |||||||||||||
| VITAS | Roto-Rooter | Corporate | Consolidated | ||||||||||
| Direct costs related to COVID-19 | $ | (12,836) | $ | (1,136) | $ | (38) | $ | (14,010) | |||||
| Stock option expense | - | - | (12,345) | (12,345) | |||||||||
| Amortization of reacquired franchise agreements | - | (4,704) | - | (4,704) | |||||||||
| Long-term incentive compensation | - | - | (3,566) | (3,566) | |||||||||
| Facility relocation expenses | (1,855) | - | - | (1,855) | |||||||||
| Litigation settlements | - | 98 | - | 98 | |||||||||
| Pretax impact on earnings | (14,691) | (5,742) | (15,949) | (36,382) | |||||||||
| Excess tax benefits on stock compensation | - | - | 4,106 | 4,106 | |||||||||
| Income tax benefit on the above | 3,731 | 1,522 | 2,475 | 7,728 | |||||||||
| After-tax impact on earnings | $ | (10,960) | $ | (4,220) | $ | (9,368) | $ | (24,548) |
| (b) | Included in the results of operations for 2020 are the following significant credits/(charges) which may not be indicative of ongoing operations | ||||||||||||
| (in thousands): | |||||||||||||
| Three Months Ended June 30, 2020 | |||||||||||||
| VITAS | Roto-Rooter | Corporate | Consolidated | ||||||||||
| CARES Act grant | $ | 40,989 | $ | - | $ | - | $ | 40,989 | |||||
| Direct costs related to COVID-19 | (24,265) | (1,117) | - | (25,382) | |||||||||
| Stock option expense | - | - | (5,068) | (5,068) | |||||||||
| Amortization of reacquired franchise agreements | - | (2,352) | - | (2,352) | |||||||||
| COVID-19 Medicare cap | (2,250) | - | - | (2,250) | |||||||||
| Long-term incentive compensation | - | - | (1,929) | (1,929) | |||||||||
| Medicare cap sequestration adjustment | (796) | - | - | (796) | |||||||||
| Pretax impact on earnings | 13,678 | (3,469) | (6,997) | 3,212 | |||||||||
| Excess tax benefits on stock compensation | - | - | 8,203 | 8,203 | |||||||||
| Income tax benefit on the above | (3,515) | 918 | 1,060 | (1,537) | |||||||||
| After-tax impact on earnings | $ | 10,163 | $ | (2,551) | $ | 2,266 | $ | 9,878 | |||||
| Six Months Ended June 30, 2020 | |||||||||||||
| VITAS | Roto-Rooter | Corporate | Consolidated | ||||||||||
| CARES Act grant | $ | 40,989 | $ | - | $ | - | $ | 40,989 | |||||
| Direct costs related to COVID-19 | (25,238) | (1,978) | - | (27,216) | |||||||||
| Stock option expense | - | - | (10,114) | (10,114) | |||||||||
| Amortization of reacquired franchise agreements | - | (4,704) | - | (4,704) | |||||||||
| Long-term incentive compensation | - | - | (3,749) | (3,749) | |||||||||
| COVID-19 Medicare cap | (2,250) | - | - | (2,250) | |||||||||
| Medicare cap sequestration adjustment | (1,472) | - | - | (1,472) | |||||||||
| Pretax impact on earnings | 12,029 | (6,682) | (13,863) | (8,516) | |||||||||
| Excess tax benefits on stock compensation | - | - | 12,756 | 12,756 | |||||||||
| Income tax benefit on the above | (3,096) | 1,770 | 2,140 | 814 | |||||||||
| After-tax impact on earnings | $ | 8,933 | $ | (4,912) | $ | 1,033 | $ | 5,054 | |||||
| (c) | VITAS has 10 large (greater than 450 ADC), 18 medium (greater than 200 but less than 450 ADC) and 21 small (less than 200 ADC) hospice programs. Of Vitas' 30 Medicare provider numbers, for the current cap year, 27 provider numbers have a Medicare cap cushion of 10% or greater, one provider number has a cap cushion between 0% and 5%, and two provider numbers have a Medicare cap liability. |