Chemed Reports Fourth-Quarter 2022 Results
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 fourth quarter ended December 31, 2022, versus the comparable prior-year period, as follows:
Consolidated operating results:
Revenue increased 1.0% to $547 million GAAP Diluted Earnings-per-Share (EPS) of $4.13 Adjusted Diluted EPS of $5.39, an increase of 2.7%VITAS segment operating results:
Net Patient Revenue of $308 million, a decline of 2.5% Average Daily Census (ADC) of 17,434, a decline of 2.8% Admissions of 14,829, a decline of 8.7% Net Income, excluding certain discrete items, of $44.2 million, a decline of 11.1% Adjusted EBITDA, excluding Medicare Cap, of $61.7 million, a decline of 11.1% Adjusted EBITDA margin, excluding Medicare Cap, of 19.8%, a decrease of 189-basis pointsRoto-Rooter segment operating results:
Revenue of $239 million, an increase of 6.1% Net Income, excluding certain discrete items, of $49.3 million, an increase of 11.4% Adjusted EBITDA of $69.3 million, an increase of 11.4% Adjusted EBITDA margin of 29.0%, an increase of 138-basis pointsVITAS
VITAS net revenue was $308 million in the fourth quarter of 2022, which is a decline of 2.5%, when compared to the prior year period. This revenue decline is comprised primarily of a 2.8% reduction in days-of-care and a geographically weighted average Medicare reimbursement rate increase of approximately 3.2%, partially offset by 200-basis points as a result of CMS reimplementing the 2% sequestration cut that was suspended at the start of the pandemic in 2020. Acuity mix shift had a net impact of reducing revenue approximately $1.8 million, or 0.6%, in the quarter when compared to the prior-year revenue and level-of-care mix. The combination of Medicare Cap and other contra revenue changes negatively impacted revenue growth by 30-basis points.
In the fourth quarter of 2022, VITAS accrued $2.7 million in Medicare Cap billing limitations. This compares to a $3.0 million Medicare Cap billing limitation in the fourth quarter of 2021.
Of VITAS’ 30 Medicare provider numbers, 25 provider numbers have a Medicare Cap cushion of 10% or greater, one provider number has a cushion between 5% and 10%, and four provider numbers have a trailing 12-month billing limitation liability.
Average revenue per patient per day in the fourth quarter of 2022 was $197.39 which, including acuity mix shift, is 58-basis points above the prior-year period. Reimbursement for routine home care and high acuity care averaged $173.53 and $1,040.03, respectively. During the quarter, high acuity days-of-care were 2.7% of total days of care, 14-basis points below the prior-year quarter.
The fourth quarter 2022 gross margin, excluding Medicare Cap and the hiring and retention bonus program, was 26.9%. This is a 135-basis point margin decline when compared to the fourth quarter of 2021. VITAS has increased licensed healthcare staff by 275 since the inception of the retention program on July 1, 2022. This higher staffing increased aggregate cost of sales in the quarter by approximately $4.4 million. Excluding this capacity expansion, fourth quarter 2022 gross margins would have reflected a modest margin improvement when compared to the prior year quarter.
Selling, general and administrative expenses were $22.0 million in the fourth quarter of 2022 and compares to $21.5 million incurred in the prior-year quarter. Adjusted EBITDA, excluding Medicare Cap, totaled $61.7 million in the quarter, a decrease of 11.1%. Adjusted EBITDA margin in the quarter, excluding Medicare Cap, was 19.8%, which is 189-basis points below the prior-year period. This Adjusted EBITDA margin was also negatively impacted by 200-basis points for the reimplementation of sequestration and approximately 141-basis points due to increased staffing and patient capacity from VITAS’ hiring and retention program.
Roto-Rooter
Roto-Rooter generated quarterly revenue of $239 million in the fourth quarter of 2022, an increase of 6.1%, when compared to the prior-year quarter.
Roto-Rooter branch commercial revenue in the quarter totaled $58.6 million, an increase of 8.7%, over the prior year. This aggregate commercial revenue growth consisted of drain cleaning revenue increasing 5.5%, plumbing increasing 13.8%, excavation increasing 5.1%, and water restoration increasing 27.3%.
Roto-Rooter branch residential revenue in the quarter totaled $159 million, an increase of 5.0%, over the prior-year period. This aggregate residential revenue growth consisted of drain cleaning decreasing 2.1%, plumbing expanding 7.0%, excavation expanding 4.9%, and water restoration increasing 13.2%.
Roto-Rooter’s gross margin in the quarter was 53.0%, a 68-basis point increase when compared to the fourth quarter of 2021. Adjusted EBITDA in the fourth quarter of 2022 totaled $69.3 million, an increase of 11.4%. The Adjusted EBITDA margin in the quarter was 29.0%, which is a 138-basis point improvement when compared to the prior year.
Chemed Consolidated
As of December 31, 2022, Chemed had total cash and cash equivalents of $74.1 million and $97.5 million of current and long-term debt.
In June 2022, Chemed entered into a five-year $550 million Amended and Restated Credit Agreement (Credit Agreement). This Credit Agreement consists of a $100 million amortizable term loan and a $450 million revolving credit facility. The interest rate on this Credit Agreement has a floating rate that is currently SOFR plus 100-basis points. On December 31, 2022, the Company had approximately $405 million of undrawn borrowing capacity under this credit agreement.
During the quarter, the Company repurchased 25,000 shares of Chemed stock for $13.0 million which equates to a cost per share of $519.00. As of December 31, 2022, there was approximately $88 million of remaining share repurchase authorization under its plan.
Guidance for 2023
VITAS 2023 revenue, prior to Medicare Cap, is estimated to increase 6.0% to 7.0% when compared to 2022. Forecasted revenue growth is negatively impacted by 75-basis points as a result of the sequestration relief in the first half of 2022 compared to a full year of sequestration in 2023. ADC is estimated to increase 3.5% to 4.0%, with the majority of this census growth in the second half of 2023 as increased staffing and operational capacity generates increased census. Full year adjusted EBITDA margin, prior to Medicare Cap and accrued retention bonuses related to the hiring initiatives announced last year, is estimated to be 16.3% to 16.6%. We are currently estimating $11 million for Medicare Cap billing limitations in calendar year 2023.
Roto-Rooter is forecasted to achieve full-year 2023 revenue growth of 5.0% to 5.5%. Roto-Rooter’s adjusted EBITDA margin for 2023 is expected to be 29.3% to 29.5%.
Based upon the above, full-year 2023 earnings per diluted share, excluding non-cash expense for stock options, tax benefits from stock option exercises, costs related to litigation, retention program for licensed healthcare employees, and other discrete items, is estimated to be in the range of $20.75 to $21.10. Current 2023 guidance assumes an effective corporate tax rate on adjusted earnings of 25.1% and a diluted share count of 15.0 million shares. Chemed’s 2022 reported adjusted earnings per diluted share was $19.75.
Conference Call
Chemed will host a conference call and webcast at 10 a.m., ET, on Friday, February 24, 2023, to discuss the company's quarterly results and to provide an update on its business. Participants may access a live webcast of the conference call through the investor relations section of Chemed’s website, Investor Relations Home | Chemed Corporation or the hosting website https://edge.media-server.com/mmc/p/rvyepdf9.
Participants may also register via teleconference at:
https://register.vevent.com/register/BIa68c5dbaf8b34e36b34d624d6cd5cc4a. Once registration is completed, participants will be provided with a dial-in number containing a personalized conference code to access the call. All participants are instructed to dial-in 15 minutes prior to the start time.
A taped replay of the conference call will be available beginning approximately two hours after the call's conclusion. You may access the replay via webcast through the investor relations section of Chemed’s website.
Chemed Corporation operates in the healthcare field through its VITAS Healthcare Corporation subsidiary. VITAS provides daily hospice services to approximately 17,300 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 December 31, For the Years Ended December 31,2022
2021
2022
2021
Service revenues and sales
$546,654
$
540,978
2,134,963
$
2,139,261
Cost of services provided and goods sold
349,570
336,328
1,369,877
1,369,458
Selling, general and administrative expenses (aa)
96,928
92,073
358,727
366,727
Depreciation
12,096
11,840
49,102
49,011
Amortization
2,512
2,510
10,070
10,040
Other operating expense
4,221
198
3,691
987
Total costs and expenses
465,327
442,949
1,791,467
1,796,223
Income from operations
81,327
98,029
343,496
343,038
Interest expense
(1,601
)
(525
)
(4,584
)
(1,868
)
Other (expense)/income--net (bb)
2,674
(1,377
)
(9,233
)
9,144
Income before income taxes
82,400
96,127
329,679
350,314
Income taxes
(20,274
)
(21,502
)
(80,055
)
(81,764
)
Net income
$62,126
$
74,625
$
249,624
$
268,550
Earnings Per Share
Net income
$4.17
$
4.89
$
16.72
$
17.14
Average number of shares outstanding
14,913
15,266
14,929
15,671
Diluted Earnings Per Share
Net income
$4.13
$
4.81
$
16.53
$
16.85
Average number of shares outstanding
15,052
15,513
15,099
15,938
(aa) Selling, general and administrative ("SG&A") expenses comprise (in thousands): Three Months Ended December 31, For the Years Ended December 31,
2022
2021
2022
2021
SG&A expenses before long-term incentive compensation and the impact of market value adjustments related to deferred compensation plans $91,779
$
89,875
$
360,896
$
349,250
Market value adjustments related to deferred compensation trusts
2,226
(1,460
)
(9,970
)
8,310
Long-term incentive compensation
2,923
3,658
7,801
9,167
Total SG&A expenses $
96,928
$
92,073
$
358,727
$
366,727
(bb) Other (expense)/income--net comprises (in thousands):
Three Months Ended December 31,
For the Years Ended December 31,
2022
2021
2022
2021
Market value adjustments related to deferred compensation trusts $2,226
$
(1,460
)
$(9,970
)
$8,310
Interest income
65
89
355
377
Other
383
(6
)
382
457
Total other (expense)/income--net $
2,674
$
(1,377
)
$(9,233
)
$9,144
CHEMED CORPORATION AND SUBSIDIARY COMPANIES CONSOLIDATED BALANCE SHEETS (in thousands, except per share data)(unaudited) December 31,
2022
2021
Assets Current assets Cash and cash equivalents $74,126
$
32,895
Accounts receivable less allowances
139,408
137,217
Inventories
10,272
10,109
Prepaid income taxes
18,515
17,377
Prepaid expenses
30,291
32,688
Total current assets
272,612
230,286
Investments of deferred compensation plans held in trust
93,196
98,884
Properties and equipment, at cost less accumulated depreciation
199,714
193,680
Lease right of use asset
135,662
125,048
Identifiable intangible assets less accumulated amortization
99,726
108,096
Goodwill
581,295
578,591
Other assets
59,807
8,138
Total Assets $
1,442,012
$
1,342,723
Liabilities Current liabilities Accounts payable $
41,884
$
73,024
Current portion of long-term debt
5,000
-
Income taxes
-
41
Accrued insurance
58,515
55,918
Accrued compensation
87,350
95,598
Accrued legal
4,456
872
Short-term lease liability
38,996
37,913
Other current liabilities
61,004
39,033
Total current liabilities
297,205
302,399
Deferred income taxes
38,613
23,183
Long-term debt
92,500
185,000
Deferred compensation liabilities
92,330
98,597
Long-term lease liability
110,513
100,629
Other liabilities
12,136
9,642
Total Liabilities
643,297
719,450
Stockholders' Equity Capital stock
36,796
36,514
Paid-in capital
1,149,899
1,044,341
Retained earnings
2,197,918
1,970,311
Treasury stock, at cost
(2,588,145
)
(2,430,094
)
Deferred compensation payable in Company stock2,247
2,201
Total Stockholders' Equity
798,715
623,273
Total Liabilities and Stockholders' Equity $
1,442,012
$
1,342,723
CHEMED CORPORATION AND SUBSIDIARY COMPANIES CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands)(unaudited) For the Years Ended December 31,
2022
2021
Cash Flows from Operating Activities Net income $249,624
$
268,550
Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization
59,172
59,051
Stock option expense
26,254
22,502
Deferred payroll taxes
(18,175
)
(18,175
)
Provision for deferred income taxes14,827
2,400
Noncash long-term incentive compensation
6,188
7,745
Litigation settlements/(payments)
4,000
(9,440
)
Noncash directors' compensation1,170
1,173
Amortization of debt issuance costs
342
306
Changes in operating assets and liabilities, excluding amounts acquired in business combinations: Increase in accounts receivable
(2,414
)
(8,431
)
Increase in inventories(162
)
(3,014
)
Decrease/(increase) in prepaid expenses2,397
(6,511
)
Increase in accounts payable and other current liabilities15,343
9,832
Change in current income taxes
(996
)
(20,401
)
Net change in lease assets and liabilities1,471
(44
)
Increase in other assets(45,779
)
(10,305
)
(Decrease)/increase in other liabilities(3,350
)
12,074
Other (uses)/sources
(26
)
1,285
Net cash provided by operating activities
309,886
308,597
Cash Flows from Investing Activities Capital expenditures
(57,325
)
(58,675
)
Business combinations, net of cash acquired(3,529
)
-
Proceeds from sale of fixed assets
2,330
904
Other (uses)/sources
(878
)
14
Net cash used by investing activities
(59,402
)
(57,757
)
Cash Flows from Financing Activities Payments on revolving line of credit(306,800
)
(25,300
)
Proceeds from revolving line of credit121,800
210,300
Proceeds from other long-term debt
100,000
-
Payments on other long-term debt
(2,500
)
-
Purchases of treasury stock
(114,515
)
(576,042
)
Proceeds from exercise of stock options44,968
35,848
Dividends paid
(22,017
)
(22,016
)
Capital stock surrendered to pay taxes on stock-based compensation(15,611
)
(15,129
)
Change in cash overdrafts payable(11,884
)
11,884
Debt issuance costs
(1,586
)
-
Other uses
(1,108
)
(165
)
Net cash used by financing activities(209,253
)
(380,620
)
Increase/(decrease) in Cash and Cash Equivalents41,231
(129,780
)
Cash and cash equivalents at beginning of year32,895
162,675
Cash and cash equivalents at end of year $
74,126
$
32,895
CHEMED CORPORATION AND SUBSIDIARY COMPANIES CONSOLIDATING STATEMENTS OF INCOME FOR THE THREE MONTHS ENDED DECEMBER 31, 2022 AND 2021 (in thousands)(unaudited) Chemed VITAS Roto-Rooter Corporate Consolidated 2022 (a) Service revenues and sales $
308,059
$
238,595
$
-
$
546,654
Cost of services provided and goods sold
237,333
112,237
-
349,570
Selling, general and administrative expenses
22,005
57,096
17,827
96,928
Depreciation
5,061
7,017
18
12,096
Amortization
26
2,486
-
2,512
Other operating expense/(income)
4,266
(45
)
-
4,221
Total costs and expenses
268,691
178,791
17,845
465,327
Income/(loss) from operations
39,368
59,804
(17,845
)
81,327
Interest expense
(31
)
(76
)
(1,494
)
(1,601
)
Intercompany interest income/(expense)4,720
2,594
(7,314
)
-
Other income—net
417
31
2,226
2,674
Income/(loss) before income taxes
44,474
62,353
(24,427
)
82,400
Income taxes
(10,800
)
(14,829
)
5,355
(20,274
)
Net income/(loss) $33,674
$
47,524
$
(19,072
)
$62,126
2021 (b) Service revenues and sales $
316,112
$
224,866
$
-
$
540,978
Cost of services provided and goods sold
229,023
107,305
-
336,328
Selling, general and administrative expenses
21,491
56,246
14,336
92,073
Depreciation
5,365
6,456
19
11,840
Amortization
18
2,492
-
2,510
Other operating expense/(income)
221
(23
)
-
198
Total costs and expenses
256,118
172,476
14,355
442,949
Income/(loss) from operations
59,994
52,390
(14,355
)
98,029
Interest expense
(31
)
(132
)
(362
)
(525
)
Intercompany interest income/(expense)4,601
2,064
(6,665
)
-
Other income/(expense)—net
58
26
(1,461
)
(1,377
)
Income/(loss) before income taxes64,622
54,348
(22,843
)
96,127
Income taxes
(15,621
)
(12,519
)
6,638
(21,502
)
Net income/(loss) $49,001
$
41,829
$
(16,205
)
$74,625
The "Footnotes to Financial Statements" are integral parts of this financial information. CHEMED CORPORATION AND SUBSIDIARY COMPANIES CONSOLIDATING STATEMENTS OF INCOME FOR THE YEARS ENDED DECEMBER 31, 2022 AND 2021 (in thousands)(unaudited) Chemed VITAS Roto-Rooter Corporate Consolidated 2022 (a) Service revenues and sales $
1,201,564
$
933,399
$
-
$
2,134,963
Cost of services provided and goods sold
931,861
438,016
-
1,369,877
Selling, general and administrative expenses
89,187
222,257
47,283
358,727
Depreciation
21,955
27,075
72
49,102
Amortization
101
9,969
-
10,070
Other operating expense
3,337
354
-
3,691
Total costs and expenses
1,046,441
697,671
47,355
1,791,467
Income/(loss) from operations
155,123
235,728
(47,355
)
343,496
Interest expense
(172
)
(396
)
(4,016
)
(4,584
)
Intercompany interest income/(expense)18,901
9,345
(28,246
)
-
Other income/(expense)—net
600
138
(9,971
)
(9,233
)
Income/(loss) before income taxes174,452
244,815
(89,588
)
329,679
Income taxes
(43,000
)
(58,695
)
21,640
(80,055
)
Net income/(loss) $131,452
$
186,120
$
(67,948
)
$249,624
2021 (b) Service revenues and sales $
1,261,246
$
878,015
$
-
$
2,139,261
Cost of services provided and goods sold
953,420
416,038
-
1,369,458
Selling, general and administrative expenses
87,585
215,036
64,106
366,727
Depreciation
23,114
25,816
81
49,011
Amortization
71
9,969
-
10,040
Other operating expense
876
111
-
987
Total costs and expenses
1,065,066
666,970
64,187
1,796,223
Income/(loss) from operations
196,180
211,045
(64,187
)
343,038
Interest expense
(160
)
(595
)
(1,113
)
(1,868
)
Intercompany interest income/(expense)18,125
7,180
(25,305
)
-
Other income—net
712
123
8,309
9,144
Income/(loss) before income taxes
214,857
217,753
(82,296
)
350,314
Income taxes
(52,426
)
(51,420
)
22,082
(81,764
)
Net income/(loss) $162,431
$
166,333
$
(60,214
)
$268,550
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 DECEMBER 31, 2022 AND 2021 (in thousands)(unaudited) Chemed VITAS Roto-Rooter Corporate Consolidated
2022
Net income/(loss) $33,674
$
47,524
$
(19,072
)
$62,126
Add/(deduct): Interest expense
31
76
1,494
1,601
Income taxes
10,800
14,829
(5,355
)
20,274
Depreciation
5,061
7,017
18
12,096
Amortization
26
2,486
-
2,512
EBITDA
49,592
71,932
(22,915
)
98,609
Add/(deduct): Intercompany interest expense/(income)
(4,720
)
(2,594
)
7,314
-
Interest (income)/expense
(36
)
(30
)
1
(65
)
Licensed healthcare retention bonus10,075
-
-
10,075
Stock option expense
-
-
6,911
6,911
Litigation settlements
4,000
-
-
4,000
Long-term incentive compensation
-
-
2,923
2,923
Adjusted EBITDA $
58,911
$
69,308
$
(5,766
)
$122,453
2021
Net income/(loss) $49,001
$
41,829
$
(16,205
)
$74,625
Add/(deduct): Interest expense
31
132
362
525
Income taxes
15,621
12,519
(6,638
)
21,502
Depreciation
5,365
6,456
19
11,840
Amortization
18
2,492
-
2,510
EBITDA
70,036
63,428
(22,462
)
111,002
Add/(deduct): Intercompany interest expense/(income)
(4,601
)
(2,064
)
6,665
-
Interest income
(63
)
(26
)
-
(89
)
Stock option expense-
-
6,159
6,159
Long-term incentive compensation
-
-
3,659
3,659
Direct costs related to COVID-19
959
884
-
1,843
Adjusted EBITDA $
66,331
$
62,222
$
(5,979
)
$122,574
The "Footnotes to Financial Statements" are integral parts of this financial information. CHEMED CORPORATION AND SUBSIDIARY COMPANIES CONSOLIDATING SUMMARIES OF EBITDA FOR THE YEARS ENDED DECEMBER 31, 2022 AND 2021 (in thousands)(unaudited) Chemed VITAS Roto-Rooter Corporate Consolidated
2022
Net income/(loss) $131,452
$
186,120
$
(67,948
)
$249,624
Add/(deduct): Interest expense
172
396
4,016
4,584
Income taxes
43,000
58,695
(21,640
)
80,055
Depreciation
21,955
27,075
72
49,102
Amortization
101
9,969
-
10,070
EBITDA
196,680
282,255
(85,500
)
393,435
Add/(deduct): Intercompany interest expense/(income)
(18,901
)
(9,345
)
28,246
-
Interest (income)/expense
(218
)
(138
)
1
(355
)
Stock option expense-
-
26,254
26,254
Licensed healthcare retention bonus
19,634
-
-
19,634
Long-term incentive compensation
-
-
7,801
7,801
Litigation settlements
4,000
-
-
4,000
Direct costs related to COVID-19
310
988
89
1,387
Medicare cap sequestration adjustment
138
-
-
138
Adjusted EBITDA $
201,643
$
273,760
$
(23,109
)
$452,294
2021
Net income/(loss) $162,431
$
166,333
$
(60,214
)
$268,550
Add/(deduct): Interest expense
160
595
1,113
1,868
Income taxes
52,426
51,420
(22,082
)
81,764
Depreciation
23,114
25,816
81
49,011
Amortization
71
9,969
-
10,040
EBITDA
238,202
254,133
(81,102
)
411,233
Add/(deduct): Intercompany interest expense/(income)
(18,125
)
(7,180
)
25,305
-
Interest income
(253
)
(124
)
-
(377
)
Stock option expense-
-
22,502
22,502
Direct costs related to COVID-19
16,296
2,435
38
18,769
Long-term incentive compensation
-
-
9,167
9,167
Litigation settlements
-
(98
)
-
(98
)
Other-
-
218
218
Adjusted EBITDA $
236,120
$
249,166
$
(23,872
)
$461,414
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 December 31, For the Years Ended December 31,
2022
2021
2022
2021
Net income as reported $62,126
$
74,625
$
249,624
$
268,550
Add/(deduct) pre-tax cost of: Stock option expense
6,911
6,159
26,254
22,502
Licensed healthcare worker retention bonus
10,075
-
19,634
-
Amortization of reacquired franchise agreements
2,352
2,352
9,408
9,408
Long-term incentive compensation
2,923
3,659
7,801
9,167
Litigation settlements
4,000
-
4,000
(98
)
Direct costs related to COVID-19-
1,843
1,387
18,769
Medicare cap sequestration adjustment
-
-
138
-
Facility relocation expenses
-
-
-
1,855
Other
-
-
-
218
Add/(deduct) tax impacts: Tax impact of the above pre-tax adjustments (1)
(5,710
)
(2,606
)
(14,062
)
(12,480
)
Excess tax benefits on stock compensation(1,538
)
(4,579
)
(5,928
)
(9,884
)
Adjusted net income $81,139
$
81,453
$
298,256
$
308,007
Diluted Earnings Per Share As Reported Net income $
4.13
$
4.81
$
16.53
$
16.85
Average number of shares outstanding
15,052
15,513
15,099
15,938
Adjusted Diluted Earnings Per Share Adjusted net income $
5.39
$
5.25
$
19.75
$
19.33
Average number of shares outstanding
15,052
15,513
15,099
15,938
(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 December 31, For the Years Ended December 31, OPERATING STATISTICS
2022
2021
2022
2021
Net revenue ($000) (c) Homecare $
267,691
$
272,949
$
1,039,211
$
1,069,766
Inpatient
26,647
27,291
102,361
113,187
Continuous care
19,284
20,680
77,000
94,338
Other
2,977
2,902
12,438
12,142
Subtotal $
316,599
$
323,822
$
1,231,010
$
1,289,433
Room and board, net
(2,778
)
(2,609
)
(9,574
)
(10,060
)
Contractual allowances(3,012
)
(2,101
)
(12,004
)
(11,530
)
Medicare cap allowance(2,750
)
(3,000
)
(7,868
)
(6,597
)
Net Revenue $308,059
$
316,112
$
1,201,564
$
1,261,246
Net revenue as a percent of total before Medicare cap allowance Homecare
84.6
%
84.3
%
84.4
%
83.0
%
Inpatient8.4
8.4
8.3
8.8
Continuous care
6.1
6.4
6.3
7.3
Other
0.9
0.9
1.0
0.9
Subtotal
100.0
100.0
100.0
100.0
Room and board, net
(0.9
)
(0.9
)
(0.8
)
(0.8
)
Contractual allowances(0.9
)
(0.6
)
(1.0
)
(0.9
)
Medicare cap allowance(0.9
)
(0.9
)
(0.6
)
(0.5
)
Net Revenue97.3
%
97.6
%
97.6
%
97.8
%
Days of care Homecare1,289,067
1,338,955
5,086,021
5,347,170
Nursing home
264,895
257,416
1,036,816
993,322
Respite
5,807
5,894
23,905
21,403
Subtotal routine homecare and respite
1,559,769
1,602,265
6,146,742
6,361,895
Inpatient
24,254
25,556
95,431
107,685
Continuous care
19,909
22,154
81,890
101,539
Total
1,603,932
1,649,975
6,324,063
6,571,119
Number of days in relevant time period
92
92
365
365
Average daily census ("ADC") (days) Homecare
14,012
14,554
13,934
14,649
Nursing home
2,879
2,798
2,841
2,721
Respite
63
64
65
59
Subtotal routine homecare and respite
16,954
17,416
16,840
17,429
Inpatient
264
278
261
295
Continuous care
216
241
224
279
Total
17,434
17,935
17,325
18,003
Total Admissions
14,829
16,250
60,774
68,823
Total Discharges
14,862
16,684
60,930
69,411
Average length of stay (days)
103.9
97.9
104.6
95.7
Median length of stay (days)
16.0
15.0
16.0
13.0
ADC by major diagnosis Cerebro
41.0
%
36.5
%
39.8
%
36.7
%
Neurological20.3
23.0
21.2
22.6
Cancer
10.7
11.5
10.9
11.9
Cardio
15.7
15.6
15.7
15.5
Respiratory
7.2
7.5
7.3
7.5
Other
5.1
5.9
5.1
5.8
Total
100.0
%
100.0
%
100.0
%
100.0
%
Admissions by major diagnosis Cerebro25.6
%
22.5
%
24.6
%
21.5
%
Neurological11.0
12.7
12.3
12.3
Cancer
26.7
26.6
26.3
26.9
Cardio
15.3
14.8
14.9
14.5
Respiratory
10.5
11.0
10.3
10.9
Other
10.9
12.4
11.6
13.9
Total
100.0
%
100.0
%
100.0
%
100.0
%
Estimated uncollectible accounts as a percent of revenues1.0
%
0.7
%
1.0
%
0.9
%
Accounts receivable -- Days of revenue outstanding-excluding unapplied Medicare payments38.1
33.8
n.a. n.a. Days of revenue outstanding-including unapplied Medicare payments
28.0
28.1
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 MONTHS AND YEARS ENDED DECEMBER 31, 2022 AND 2021 (unaudited) (a) Included in the results of operations for 2022 are the following significant credits/(charges) which may not be indicative of ongoing operations (in thousands): Three Months Ended December 31, 2022 VITAS Roto-Rooter Corporate Consolidated Licensed healthcare worker retention bonus $
(10,075
)
$-
$
-
$
(10,075
)
Stock option expense-
-
(6,911
)
(6,911
)
Litigation settlements(4,000
)
-
-
(4,000
)
Long-term incentive compensation-
-
(2,923
)
(2,923
)
Amortization of reacquired franchise agreements-
(2,352
)
-
(2,352
)
Pretax impact on earnings(14,075
)
(2,352
)
(9,834
)
(26,261
)
Excess tax benefits on stock compensation-
-
1,538
1,538
Income tax benefit on the above
3,575
623
1,512
5,710
After-tax impact on earnings $
(10,500
)
$(1,729
)
$(6,784
)
$(19,013
)
For the Year Ended December 31, 2022 VITAS Roto-Rooter Corporate Consolidated Stock option expense $-
$
-
$
(26,254
)
$(26,254
)
Licensed healthcare worker retention bonus(19,634
)
-
-
(19,634
)
Amortization of reacquired franchise agreements-
(9,408
)
-
(9,408
)
Long-term incentive compensation-
-
(7,801
)
(7,801
)
Litigation settlements(4,000
)
-
-
(4,000
)
Direct costs related to COVID-19(310
)
(988
)
(89
)
(1,387
)
Medicare cap sequestration adjustment(138
)
-
-
(138
)
Pretax impact on earnings(24,082
)
(10,396
)
(34,144
)
(68,622
)
Excess tax benefits on stock compensation-
-
5,928
5,928
Income tax benefit on the above
6,117
2,755
5,190
14,062
After-tax impact on earnings $
(17,965
)
$(7,641
)
$(23,026
)
$(48,632
)
(b) 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 December 31, 2021 VITAS Roto-Rooter Corporate Consolidated Stock option expense $-
$
-
$
(6,159
)
$(6,159
)
Long-term incentive compensation-
-
(3,659
)
(3,659
)
Amortization of reacquired franchise agreements-
(2,352
)
-
(2,352
)
Direct costs related to COVID-19(959
)
(884
)
-
(1,843
)
Pretax impact on earnings(959
)
(3,236
)
(9,818
)
(14,013
)
Excess tax benefits on stock compensation-
-
4,579
4,579
Income tax benefit on the above
243
859
1,504
2,606
After-tax impact on earnings $
(716
)
$(2,377
)
$(3,735
)
$(6,828
)
For the Year Ended December 31, 2021 VITAS Roto-Rooter Corporate Consolidated Stock option expense $-
$
-
$
(22,502
)
$(22,502
)
Direct costs related to COVID-19(16,297
)
(2,434
)
(38
)
(18,769
)
Amortization of reacquired franchise agreements-
(9,408
)
-
(9,408
)
Long-term incentive compensation-
-
(9,167
)
(9,167
)
Facility relocation expenses(1,855
)
-
-
(1,855
)
Litigation settlements-
98
-
98
Other
-
-
(218
)
(218
)
Pretax impact on earnings(18,152
)
(11,744
)
(31,925
)
(61,821
)
Excess tax benefits on stock compensation-
-
9,884
9,884
Income tax benefit on the above
4,611
3,112
4,757
12,480
After-tax impact on earnings $
(13,541
)
$(8,632
)
$(17,284
)
$(39,457
)
(c) VITAS has 9 large (greater than 450 ADC), 14 medium (greater than 200 but less than 450 ADC) and 27 small (less than 200 ADC) hospice programs. Of Vitas' 30 Medicare provider numbers, for the current cap year, 23 provider numbers have a Medicare cap cushion of greater than 10%, two provider numbers have a Medicare cap cushion between 5% and 10% and five provider numbers have a Medicare cap liability.
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