Chemed Reports Second-Quarter 2021 Results - Full-Year 2021 Guidance Increased
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:
Revenue increased 6.0% to $532 million GAAP Diluted Earnings-per-Share (EPS) of $3.51, a decrease of 29.9% Adjusted Diluted EPS of $4.60, an increase of 4.3%VITAS segment operating results:
Net Patient Revenue of $312 million, a decline of 4.7% Average Daily Census (ADC) of 17,995, a decline of 6.3% Admissions of 16,840, an increase of 0.1% Net Income, excluding certain discrete items, of $39.4 million, a decline of 21.4% Adjusted EBITDA, excluding Medicare Cap, of $54.8 million, a decline of 24.4% Adjusted EBITDA margin, excluding Medicare Cap, of 17.4%, a decrease of 430-basis pointsRoto-Rooter segment operating results:
Revenue of $220 million, an increase of 26.1% Net Income, excluding certain discrete items, of $44.9 million, an increase of 40.1% Adjusted EBITDA of $64.3 million, an increase of 37.2% Adjusted EBITDA margin of 29.2%, an increase of 236-basis pointsVITAS
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
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.
Chemed Consolidated
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.
Guidance for 2021
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.
Conference Call
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 expenses460,557
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 taxes75,105
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 compensation1,673
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 income138
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 stock2,183
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 expenses3,337
(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 liabilities10,088
1,383
Other sources/(uses)
796
(54
)
Net cash provided by operating activities132,039
277,822
Cash Flows from Investing Activities Capital expenditures
(33,604
)
(32,251
)
Business combinations-
(3,600
)
Other sources302
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 options16,186
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)
Chemed
VITAS
Roto-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 expenses252,635
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)
Chemed
VITAS
Roto-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 expenses539,939
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 taxes134,645
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-1911,084
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-1924,265
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-1912,836
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-1925,238
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
%
Inpatient8.6
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 Revenue97.6
%
96.6
%
97.6
%
96.9
%
Days of care Homecare1,335,482
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
%
Neurological22.4
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 Cerebro21.4
%
20.9
%
21.5
%
21.0
%
Neurological12.3
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 revenues1.0
%
0.9
%
1.0
%
1.1
%
Accounts receivable -- Days of revenue outstanding-excluding unapplied Medicare payments36.3
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 earnings13,678
(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 earnings12,029
(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.
View source version on businesswire.com: https://www.businesswire.com/news/home/20210727006033/en/