Australia markets open in 5 hours 30 minutes
  • ALL ORDS

    7,042.70
    +102.10 (+1.47%)
     
  • AUD/USD

    0.7780
    +0.0069 (+0.89%)
     
  • ASX 200

    6,789.60
    +116.30 (+1.74%)
     
  • OIL

    61.40
    -0.10 (-0.16%)
     
  • GOLD

    1,728.20
    -0.60 (-0.03%)
     
  • BTC-AUD

    62,903.11
    +6,628.73 (+11.78%)
     
  • CMC Crypto 200

    978.39
    +50.16 (+5.40%)
     

Chemed Reports Fourth-Quarter 2020 Results

·17-min read

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, 2020, versus the comparable prior-year period, as follows:

Consolidated operating results:

  • Revenue increased 2.1% to $533 million

  • GAAP Diluted Earnings-per-Share (EPS) of $6.96, an increase of 75.8%

  • Adjusted Diluted EPS of $5.13, an increase of 21.6%

VITAS segment operating results:

  • Net Patient Revenue of $332 million, a decline of 2.3%

  • Average Daily Census (ADC) of 18,718, a decline of 2.8%

  • Admissions of 17,960 an increase of 2.8%

  • Net Income, excluding certain discrete items, of $58.1 million, an increase of 16.0%

  • Adjusted EBITDA, excluding Medicare Cap, of $78.7 million, an increase of 11.7%

  • Adjusted EBITDA margin, excluding Medicare Cap, of 23.5%, an increase of 306-basis points

Roto-Rooter segment operating results:

  • Revenue of $201 million, an increase of 10.2%

  • Net Income, excluding certain discrete items, of $37.9 million, an increase of 24.6%

  • Adjusted EBITDA of $54.5 million, an increase of 24.7%

  • Adjusted EBITDA margin of 27.1%, an increase of 313-basis points

VITAS

VITAS net revenue was $332 million in the fourth quarter of 2020, which is a decline of 2.3%, when compared to the prior-year period. This revenue decline is comprised primarily of a 2.8% decline in days-of-care, a geographically weighted average Medicare reimbursement rate increase (including the suspension of sequestration on May 1, 2020) of approximately 2.4%, and acuity mix shift which then reduced the blended average Medicare rate increase approximately 255-basis points. The combination of lower Medicare Cap and a decrease in Medicaid net room and board pass-through, increased revenue growth an additional 64-basis points in the quarter.

In the fourth quarter of 2020, VITAS accrued $2.5 million in Medicare Cap billing limitations. This compares to a $4.5 million Medicare Cap billing limitation in the fourth quarter of 2019.

Of VITAS’ 30 Medicare provider numbers, 23 provider numbers currently have a Medicare Cap cushion of 10% or greater, four provider numbers have a cap cushion between 5% and 10%, 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 fourth quarter of 2020 was $198.33, which, including acuity mix shift, is 7-basis points below the prior-year period. Reimbursement for routine home care and high acuity care averaged $169.83 and $997.37, respectively. During the quarter, high acuity days-of-care were 3.4% of total days of care, 62-basis points less than the prior-year quarter.

The fourth quarter 2020 gross margin, excluding Medicare Cap, increased costs for personal protection equipment (PPE), disinfecting facilities and other costs related to operating during the pandemic, was 29.9%. This is a 357-basis point margin improvement when compared to the fourth quarter of 2019. This increase in gross margin is attributed to a level-of-care mix shift to higher margin routine home care and the temporary suspension of sequestration which increased reimbursement 200-basis points.

Selling, general and administrative expense was $20.3 million in the fourth quarter of 2020, which is a favorable decrease of 4.0% compared to the prior-year quarter. Adjusted EBITDA, excluding Medicare Cap, totaled $78.7 million in the quarter, an increase of 11.7%. Adjusted EBITDA margin, excluding Medicare Cap, was 23.5% in the quarter, which is a 306-basis point improvement when compared to the prior-year period.

Roto-Rooter

Roto-Rooter generated quarterly revenue of $201 million in the fourth quarter of 2020, an increase of $18.7 million, or 10.2%, over the prior-year quarter. On a unit-for-unit basis, which excludes the Oakland and HSW acquisitions completed in July 2019 and September 2019, respectively, Roto-Rooter generated quarterly revenue of $183 million for the fourth quarter of 2020, an increase of 12.8% over the prior-year quarter.

Total commercial revenue in the quarter, excluding acquisitions, decreased 9.8%. This aggregate commercial revenue decline consisted of drain cleaning revenue declining 11.6%, commercial plumbing and excavation declining 8.9%, and commercial water restoration increasing 1.0%.

Total residential revenue, excluding acquisitions, increased 20.8%. This aggregate residential revenue growth consisted of residential drain cleaning increasing 17.1%, plumbing and excavation expanding 25.5%, and residential water restoration increasing 16.8%.

Roto-Rooter’s gross margin in the quarter was 51.6%, a 301-basis point increase when compared to the fourth quarter of 2019. Adjusted EBITDA in the fourth quarter of 2020 totaled $54.5 million, an increase of 24.7%. The Adjusted EBITDA margin in the quarter was 27.1% which is a 313-basis point increase when compared to the prior year.

Chemed Consolidated

As of December 31, 2020, Chemed had total cash and cash equivalents of $163 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 December 31, 2020, the Company had approximately $412 million of undrawn borrowing capacity under this credit agreement.

During the quarter, the Company repurchased 59,252 shares of Chemed stock for $28.5 million which equates to a cost per share of $480.52. As of December 31, 2020, there was approximately $178 million of remaining share repurchase authorization under this plan.

Chemed restarted its share repurchase program in 2007. Since that time, Chemed has repurchased approximately 14.5 million shares, aggregating approximately $1.4 billion at an average share cost of $95.75. Including dividends over this period, Chemed has returned approximately $1.6 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. Once we complete this phase of our projected operating results, we would then modify the projections for the timing of price increases, changes in commission structure, wages, marketing programs and a variety of continuous improvement initiatives that our business segments plan on executing over the coming year. 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. Federal, state and local government authorities are forced to make swift decisions within our healthcare system, labor pools and general economy. These governmental decisions have the potential for an immediate and material impact on VITAS and Roto-Rooter operating results.

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 materially disrupt all aspects of our healthcare system and general economy to such an extent that future rules, regulations and government mandates could materially impact our 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, which reached another record low in the third quarter of 2020. This reduced occupancy in senior housing has had a corresponding reduction in VITAS nursing home admissions. Nursing home patients represented 14.7% of the VITAS fourth quarter 2020 patient census, a 310-basis point reduction when compared the fourth quarter of 2019.

VITAS anticipates continued weak occupancy and corresponding weak referrals from senior housing for the first half of 2021. 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 4.0% 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 19.4%. We are currently estimating $10 million for Medicare Cap billing limitations in calendar year 2021.

Roto-Rooter is forecasted to achieve full-year 2021 revenue growth of 5% to 6%. Roto-Rooter’s Adjusted EBITDA margin for 2021 is estimated to be 26.0%.

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 $17.00 to $17.50. This 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, February 24, 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 7865216. 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 7865216. 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 19,000 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 December 31,

For the Years Ended December 31,

2020

2019

2020

2019

Service revenues and sales

$

533,289

$

522,324

2,079,583

$

1,938,555

Cost of services provided and goods sold

335,049

347,355

1,378,197

1,321,126

Selling, general and administrative expenses (aa)

86,805

83,291

330,218

305,712

Depreciation

11,835

11,126

46,596

40,870

Amortization

2,511

2,969

9,987

4,335

Other operating (income)/expenses

(46,160

)

131

(75,095

)

9,132

Total costs and expenses

390,040

444,872

1,689,903

1,681,175

Income from operations

143,249

77,452

389,680

257,380

Interest expense

(350

)

(1,133

)

(2,355

)

(4,535

)

Other income--net (bb)

2,942

3,276

8,665

8,764

Income before income taxes

145,841

79,595

395,990

261,609

Income taxes

(32,089

)

(14,015

)

(76,524

)

(41,686

)

Net income

$

113,752

$

65,580

$

319,466

$

219,923

Earnings Per Share

Net income

$

7.12

$

4.09

$

20.02

$

13.77

Average number of shares outstanding

15,973

16,022

15,955

15,969

Diluted Earnings Per Share

Net income

$

6.96

$

3.96

$

19.48

$

13.31

Average number of shares outstanding

16,348

16,565

16,398

16,527

(aa) Selling, general and administrative ("SG&A") expenses comprise (in thousands):

Three Months Ended December 31,

For the Years Ended December 31,

2020

2019

2020

2019

SG&A expenses before long-term incentive compensation and the impact of market value adjustments related to deferred compensation plans

$

80,551

$

77,053

$

313,348

$

289,828

Long-term incentive compensation

3,414

3,078

8,937

7,630

Market value adjustments related to deferred compensation trusts

2,840

3,160

7,933

8,254

Total SG&A expenses

$

86,805

$

83,291

$

330,218

$

305,712

(bb) Other income--net comprises (in thousands):

Three Months Ended December 31,

For the Years Ended December 31,

2020

2019

2020

2019

Market value adjustments related to deferred compensation trusts

$

2,840

$

3,160

$

7,933

$

8,254

Interest income

109

126

757

513

Other

(7

)

(10

)

(25

)

(3

)

Total other income--net

$

2,942

$

3,276

$

8,665

$

8,764

CHEMED CORPORATION AND SUBSIDIARY COMPANIES

CONSOLIDATED BALANCE SHEETS

(in thousands, except per share data)(unaudited)

December 31,

2020

2019

Assets

Current assets

Cash and cash equivalents

$

162,675

$

6,158

Accounts receivable less allowances

126,853

143,827

Inventories

7,095

7,462

Prepaid income taxes

6,603

10,074

Prepaid expenses

26,177

23,150

Total current assets

329,403

190,671

Investments of deferred compensation plans held in trust

88,811

77,446

Properties and equipment, at cost less accumulated depreciation

187,820

175,763

Lease right of use asset

123,448

111,652

Identifiable intangible assets less accumulated amortization

118,085

126,370

Goodwill

578,585

577,367

Other assets

8,759

9,048

Total Assets

$

1,434,911

$

1,268,317

Liabilities

Current liabilities

Accounts payable

$

54,234

$

51,101

Income taxes

9,464

131

Accrued insurance

54,703

50,328

Accrued compensation

91,282

70,814

Accrued legal

10,632

6,941

Short-term lease liability

36,200

39,280

Other current liabilities

42,593

43,625

Total current liabilities

299,108

262,220

Deferred income taxes

20,664

18,504

Long-term debt

-

90,000

Deferred compensation liabilities

88,456

76,446

Long-term lease liability

99,210

86,656

Other liabilities

26,273

7,883

Total Liabilities

533,711

541,709

Stockholders' Equity

Capital stock

36,259

35,811

Paid-in capital

961,404

860,671

Retained earnings

1,723,777

1,425,752

Treasury stock, at cost

(1,822,579

)

(1,597,940

)

Deferred compensation payable in Company stock

2,339

2,314

Total Stockholders' Equity

901,200

726,608

Total Liabilities and Stockholders' Equity

$

1,434,911

$

1,268,317

CHEMED CORPORATION AND SUBSIDIARY COMPANIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)(unaudited)

For the Years Ended December 31,

2020

2019

Cash Flows from Operating Activities

Net income

$

319,466

$

219,923

Adjustments to reconcile net income to net cash provided by operating activities:

Depreciation and amortization

56,583

45,205

Stock option expense

18,422

14,831

Deferred payroll taxes

36,350

-

Noncash long-term incentive compensation

7,208

5,740

Litigation settlement

2,684

6,000

Deferred tax provision/(benefit)

1,433

(2,770

)

Noncash directors' compensation

1,171

767

Amortization of debt issuance costs

306

306

Asset impairment loss

-

2,266

Changes in operating assets and liabilities, excluding amounts acquired in business combinations:

Decrease/(increase) in accounts receivable

12,773

(19,247

)

Decrease/(increase) in inventories

367

(1,757

)

Increase in prepaid expenses

(3,027

)

(3,491

)

Increase in accounts payable and other current liabilities

19,096

28,417

Change in current income taxes

13,525

161

Net change in lease assets and liabilities

1,206

3,108

Increase in other assets

(11,834

)

(11,963

)

Increase in other liabilities

12,323

12,354

Other sources

1,237

1,399

Net cash provided by operating activities

489,289

301,249

Cash Flows from Investing Activities

Capital expenditures

(58,831

)

(53,022

)

Business combinations

(3,600

)

(138,010

)

Other sources

871

272

Net cash used by investing activities

(61,560

)

(190,760

)

Cash Flows from Financing Activities

Payments on revolving line of credit

(264,900

)

(482,100

)

Proceeds from revolving line of credit

174,900

482,900

Purchases of treasury stock

(175,594

)

(92,631

)

Proceeds from exercise of stock options

50,382

34,380

Capital stock surrendered to pay taxes on stock-based compensation

(25,328

)

(28,474

)

Dividends paid

(21,079

)

(19,788

)

Change in cash overdrafts payable

(9,849

)

(3,927

)

Other sources

256

478

Net cash used by financing activities

(271,212

)

(109,162

)

Increase in Cash and Cash Equivalents

156,517

1,327

Cash and cash equivalents at beginning of year

6,158

4,831

Cash and cash equivalents at end of year

$

162,675

$

6,158

CHEMED CORPORATION AND SUBSIDIARY COMPANIES

CONSOLIDATING STATEMENTS OF INCOME

FOR THE THREE MONTHS ENDED DECEMBER 31, 2020 AND 2019

(in thousands)(unaudited)

Chemed

VITAS

Roto-Rooter

Corporate

Consolidated

2020 (a)

Service revenues and sales

$

332,190

$

201,099

$

-

$

533,289

Cost of services provided and goods sold

237,812

97,237

-

335,049

Selling, general and administrative expenses

20,305

49,679

16,821

86,805

...

Depreciation

5,546

6,257

32

11,835

Amortization

18

2,493

-

2,511

Other operating expense/(income)

(46,929

)

769

-

(46,160

)

Total costs and expenses

216,752

156,435

16,853

390,040

Income/(loss) from operations

115,438

44,664

(16,853

)

143,249

Interest expense

(29

)

(68

)

(253

)

(350

)

Intercompany interest income/(expense)

5,434

1,834

(7,268

)

-

Other income—net

95

7

2,840

2,942

Income/(loss) before income taxes

120,938

46,437

(21,534

)

145,841

Income taxes

(29,419

)

(11,007

)

8,337

(32,089

)

Net income/(loss)

$

91,519

$

35,430

$

(13,197

)

$

113,752

2019 (b)

Service revenues and sales

$

339,905

$

182,419

$

-

$

522,324

Cost of services provided and goods sold

253,659

93,696

-

347,355

Selling, general and administrative expenses

21,162

46,198

15,931

83,291

Depreciation

5,341

5,747

38

11,126

Amortization

18

2,951

-

2,969

Other operating expense

25

106

-

131

Total costs and expenses

280,205

148,698

15,969

444,872

Income/(loss) from operations

59,700

33,721

(15,969

)

77,452

Interest expense

(19

)

(72

)

(1,042

)

(1,133

)

Intercompany interest income/(expense)

4,740

1,543

(6,283

)

-

Other income—net

76

40

3,160

3,276

Income/(loss) before income taxes

64,497

35,232

(20,134

)

79,595

Income taxes

(15,075

)

(7,823

)

8,883

(14,015

)

Net income/(loss)

$

49,422

$

27,409

$

(11,251

)

$

65,580

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, 2020 AND 2019

(in thousands)(unaudited)

Chemed

VITAS

Roto-Rooter

Corporate

Consolidated

2020 (a)

Service revenues and sales

$

1,334,667

$

744,916

$

-

$

2,079,583

Cost of services provided and goods sold

1,010,693

367,504

-

1,378,197

Selling, general and administrative expenses

85,445

188,268

56,505

330,218

Depreciation

22,168

24,292

136

46,596

Amortization

71

9,916

-

9,987

Other operating (income)/expense

(78,590

)

3,495

-

(75,095

)

Total costs and expenses

1,039,787

593,475

56,641

1,689,903

Income/(loss) from operations

294,880

151,441

(56,641

)

389,680

Interest expense

(166

)

(340

)

(1,849

)

(2,355

)

Intercompany interest income/(expense)

19,897

6,256

(26,153

)

-

Other income—net

644

75

7,946

8,665

Income/(loss) before income taxes

315,255

157,432

(76,697

)

395,990

Income taxes

(76,473

)

(37,038

)

36,987

(76,524

)

Net income/(loss)

$

238,782

$

120,394

$

(39,710

)

$

319,466

2019 (b)

Service revenues and sales

$

1,281,184

$

657,371

$

-

$

1,938,555

Cost of services provided and goods sold

982,056

339,070

-

1,321,126

Selling, general and administrative expenses

86,345

166,934

52,433

305,712

Depreciation

19,984

20,730

156

40,870

Amortization

71

4,264

-

4,335

Other operating expense

6,546

320

2,266

9,132

Total costs and expenses

1,095,002

531,318

54,855

1,681,175

Income/(loss) from operations

186,182

126,053

(54,855

)

257,380

Interest expense

(169

)

(345

)

(4,021

)

(4,535

)

Intercompany interest income/(expense)

18,135

8,152

(26,287

)

-

Other income—net

385

126

8,253

8,764

Income/(loss) before income taxes

204,533

133,986

(76,910

)

261,609

Income taxes

(48,711

)

(30,276

)

37,301

(41,686

)

Net income/(loss)

$

155,822

$

103,710

$

(39,609

)

$

219,923

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, 2020 AND 2019

(in thousands)(unaudited)

Chemed

VITAS

Roto-Rooter

Corporate

Consolidated

2020

Net income/(loss)

$

91,519

$

35,430

$

(13,197

)

$

113,752

Add/(deduct):

Interest expense

29

68

253

350

Income taxes

29,419

11,007

(8,337

)

32,089

Depreciation

5,546

6,257

32

11,835

Amortization

18

2,493

-

2,511

EBITDA

126,531

55,255

(21,249

)

160,537

Add/(deduct):

Intercompany interest expense/(income)

(5,434

)

(1,834

)

7,268

-

Interest income

(102

)

(7

)

-

(109

)

CARES Act grant

(48,041

)

-

-

(48,041

)

Direct costs related to COVID-19

3,257

520

-

3,777

Stock option expense

-

-

5,127

5,127

Long-term incentive compensation

-

-

3,413

3,413

Litigation settlement

-

544

-

544

Adjusted EBITDA

$

76,211

$

54,478

$

(5,441

)

$

125,248

2019

Net income/(loss)

$

49,422

$

27,409

$

(11,251

)

$

65,580

Add/(deduct):

Interest expense

19

72

1,042

1,133

Income taxes

15,075

7,823

(8,883

)

14,015

Depreciation

5,341

5,747

38

11,126

Amortization

18

2,951

-

2,969

EBITDA

69,875

44,002

(19,054

)

94,823

Add/(deduct):

Intercompany interest expense/(income)

(4,740

)

(1,543

)

6,283

-

Interest income

(84

)

(42

)

-

(126

)

Stock option expense

-

-

4,102

4,102

Long-term incentive compensation

-

-

3,079

3,079

Acquisition expense

-

1,286

50

1,336

Medicare cap sequestration adjustment

919

-

-

919

Adjusted EBITDA

$

65,970

$

43,703

$

(5,540

)

$

104,133

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, 2020 AND 2019

(in thousands)(unaudited)

Chemed

VITAS

Roto-Rooter

Corporate

Consolidated

2020

Net income/(loss)

$

238,782

$

120,394

$

(39,710

)

$

319,466

Add/(deduct):

Interest expense

166

340

1,849

2,355

Income taxes

76,473

37,038

(36,987

)

76,524

Depreciation

22,168

24,292

136

46,596

Amortization

71

9,916

-

9,987

EBITDA

337,660

191,980

(74,712

)

454,928

Add/(deduct):

Intercompany interest expense/(income)

(19,897

)

(6,256

)

26,153

-

Interest income

(668

)

(76

)

(13

)

(757

)

CARES Act grant

(80,225

)

-

-

(80,225

)

Direct costs related to COVID-19

35,441

3,819

-

39,260

Stock option expense

-

-

18,422

18,422

Long-term incentive compensation

-

-

8,937

8,937

Litigation settlement costs

-

3,639

-

3,639

Medicare cap sequestration adjustment

619

-

-

619

Adjusted EBITDA

$

272,930

$

193,106

$

(21,213

)

$

444,823

2019

Net income/(loss)

$

155,822

$

103,710

$

(39,609

)

$

219,923

Add/(deduct):

Interest expense

169

345

4,021

4,535

Income taxes

48,711

30,276

(37,301

)

41,686

Depreciation

19,984

20,730

156

40,870

Amortization

71

4,264

-

4,335

EBITDA

224,757

159,325

(72,733

)

311,349

Add/(deduct):

Intercompany interest expense/(income)

(18,135

)

(8,152

)

26,287

-

Interest (income)/expense

(380

)

(133

)

-

(513

)

Stock option expense

-

-

14,831

14,831

Long-term incentive compensation

-

-

7,630

7,630

Litigation settlement costs

6,000

-

-

6,000

Acquisition expense

-

4,664

170

4,834

Medicare cap sequestration adjustment

3,982

-

-

3,982

Impairment loss on transportation equipment

-

-

2,266

2,266

Non cash ASC 842 expenses/(benefit)

656

55

(163

)

548

Adjusted EBITDA

$

216,880

$

155,759

$

(21,712

)

$

350,927

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

For the Years Ended

December 31,

December 31,

2020

2019

2020

2019

Net income as reported

$

113,752

$

65,580

$

319,466

$

219,923

Add/(deduct) pre-tax cost of:

CARES Act grant

(48,041

)

-

(80,225

)

-

Direct costs related to COVID-19

3,777

-

39,260

-

Stock option expense

5,127

4,102

18,422

14,831

Amortization of reacquired franchise agreements

2,352

2,861

9,408

3,964

Long-term incentive compensation

3,413

3,079

8,937

7,630

Litigation settlement

544

-

3,639

6,000

Medicare cap sequestration adjustments

-

919

619

3,982

Impairment loss on transportation equipment

-

-

-

2,266

Acquisition expense

-

1,336

-

4,834

Non cash ASC 842 expenses

-

-

-

548

Add/(deduct) tax impacts:

Tax impact of the above pre-tax adjustments (1)

9,141

(2,567

)

2,976

(9,328

)

Excess tax benefits on stock compensation

(6,146

)

(5,440

)

(26,089

)

(24,177

)

Adjusted net income

$

83,919

$

69,870

$

296,413

$

230,473

Diluted Earnings Per Share As Reported

Net income

$

6.96

$

3.96

$

19.48

$

13.31

Average number of shares outstanding

16,348

16,565

16,398

16,527

Adjusted Diluted Earnings Per Share

Adjusted net income

$

5.13

$

4.22

$

18.08

$

13.95

Average number of shares outstanding

16,348

16,565

16,398

16,527

(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

2020

2019

2020

2019

Net revenue ($000) (c)

Homecare

279,410

$

275,976

$

1,106,358

$

1,076,025

Inpatient

28,973

30,857

114,956

99,920

Continuous care

30,175

40,997

136,011

133,473

Other

2,984

3,825

11,164

10,433

Subtotal

341,542

$

351,655

$

1,368,489

$

1,319,851

Room and board, net

(2,858

)

(3,260

)

(12,174

)

(11,359

)

Contractual allowances

(3,994

)

(3,990

)

(14,970

)

(14,893

)

Medicare cap allowance

(2,500

)

(4,500

)

(6,678

)

(12,415

)

Net Revenue

332,190

$

339,905

$

1,334,667

$

1,281,184

Net revenue as a percent of total before Medicare cap allowance

Homecare

81.8

%

78.5

%

80.8

%

81.5

%

Inpatient

8.5

8.8

8.4

7.6

Continuous care

8.8

11.7

9.9

10.1

Other

0.9

1.0

0.9

0.8

Subtotal

100.0

100.0

100.0

100.0

Room and board, net

(0.8

)

(0.9

)

(0.9

)

(0.9

)

Contractual allowances

(1.2

)

(1.1

)

(1.1

)

(1.1

)

Medicare cap allowance

(0.7

)

(1.3

)

(0.5

)

(0.9

)

Net Revenue

97.3

%

96.7

%

97.5

%

97.1

%

Days of care

Homecare

1,404,532

1,377,403

5,597,213

5,338,664

Nursing home

253,261

314,946

1,097,493

1,224,264

Respite

4,971

7,305

20,387

28,857

Subtotal routine homecare and respite

1,662,764

1,699,654

6,715,093

6,591,785

Inpatient

27,811

30,697

112,718

120,063

Continuous care

31,493

41,386

141,693

166,783

Total

1,722,068

1,771,737

6,969,504

6,878,631

Number of days in relevant time period

92

92

366

365

Average daily census ("ADC") (days)

Homecare

15,267

14,972

15,293

14,626

Nursing home

2,753

3,423

2,999

3,354

Respite

54

79

55

79

Subtotal routine homecare and respite

18,074

18,474

18,347

18,059

Inpatient

302

334

308

329

Continuous care

342

450

387

458

Total

18,718

19,258

19,042

18,846

Total Admissions

17,960

17,479

71,328

69,859

Total Discharges

18,570

17,575

72,009

68,857

Average length of stay (days)

97.2

95.2

94.0

92.6

Median length of stay (days)

14.0

16.0

14.0

16.0

ADC by major diagnosis

Cerebro

35.5

%

35.8

%

35.8

%

36.0

%

Neurological

22.4

21.1

21.9

20.6

Cancer

12.3

12.8

12.5

12.9

Cardio

15.9

16.2

15.8

16.5

Respiratory

7.9

8.1

8.1

8.1

Other

6.0

6.0

5.9

5.9

Total

100.0

%

100.0

%

100.0

%

100.0

%

Admissions by major diagnosis

Cerebro

20.9

%

21.9

%

21.1

%

21.1

%

Neurological

12.6

12.9

12.9

12.6

Cancer

26.7

29.2

27.6

29.2

Cardio

13.8

14.7

14.3

15.5

Respiratory

10.4

10.5

10.6

11.0

Other

15.6

10.8

13.5

10.6

Total

100.0

%

100.0

%

100.0

%

100.0

%

Estimated uncollectible accounts as a percent of revenues

1.2

%

1.2

%

1.1

%

1.2

%

Accounts receivable --

Days of revenue outstanding-excluding unapplied Medicare payments

36.0

35.4

n.a.

n.a.

Days of revenue outstanding-including unapplied Medicare payments

25.6

27.2

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, 2020 AND 2019

(unaudited)

(a)

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 December 31, 2020

VITAS

Roto-Rooter

Corporate

Consolidated

CARES Act grant

$

48,041

$

-

$

-

$

48,041

Direct costs related to COVID-19

(3,257

)

(520

)

-

(3,777

)

Stock option expense

-

-

(5,127

)

(5,127

)

Long-term incentive compensation

-

-

(3,413

)

(3,413

)

Amortization of reacquired franchise agreements

-

(2,352

)

-

(2,352

)

Litigation settlement

-

(544

)

-

(544

)

Pretax impact on earnings

44,784

(3,416

)

(8,540

)

32,828

Excess tax benefits on stock compensation

-

-

6,146

6,146

Income tax benefit on the above

(11,367

)

906

1,320

(9,141

)

After-tax impact on earnings

$

33,417

$

(2,510

)

$

(1,074

)

$

29,833

For the Year Ended December 31, 2020

VITAS

Roto-Rooter

Corporate

Consolidated

CARES Act grant

$

80,225

$

-

$

-

$

80,225

Direct costs related to COVID-19

(35,441

)

(3,819

)

-

(39,260

)

Stock option expense

-

-

(18,422

)

(18,422

)

Amortization of acquired and cancelled franchise agreements

-

(9,408

)

-

(9,408

)

Long-term incentive compensation

-

-

(8,937

)

(8,937

)

Litigation settlement

-

(3,639

)

-

(3,639

)

Medicare cap sequestration adjustment

(619

)

-

-

(619

)

Pretax impact on earnings

44,165

(16,866

)

(27,359

)

(60

)

Excess tax benefits on stock compensation

-

-

26,089

26,089

Income tax benefit on the above

(11,209

)

4,469

3,764

(2,976

)

After-tax impact on earnings

$

32,956

$

(12,397

)

$

2,494

$

23,053

(b)

Included in the results of operations for 2019 are the following significant credits/(charges) which may not be indicative of ongoing operations

(in thousands):

Three Months Ended December 31, 2019

VITAS

Roto-Rooter

Corporate

Consolidated

Stock option expense

$

-

$

-

$

(4,102

)

$

(4,102

)

Long-term incentive compensation

-

-

(3,079

)

(3,079

)

Amortization of reacquired franchise agreements

-

(2,861

)

-

(2,861

)

Acquisition expense

-

(1,286

)

(50

)

(1,336

)

Medicare cap sequestration adjustment

(919

)

-

-

(919

)

Pretax impact on earnings

(919

)

(4,147

)

(7,231

)

(12,297

)

Excess tax benefits on stock compensation

-

-

5,441

5,441

Income tax benefit on the above

233

1,100

1,233

2,566

After-tax impact on earnings

$

(686

)

$

(3,047

)

$

(557

)

$

(4,290

)

For the Year Ended December 31, 2019

VITAS

Roto-Rooter

Corporate

Consolidated

Stock option expense

$

-

$

-

$

(14,831

)

$

(14,831

)

Long-term incentive compensation

-

-

(7,630

)

(7,630

)

Litigation settlement

(6,000

)

-

-

(6,000

)

Acquisition expense

-

(4,664

)

(170

)

(4,834

)

Medicare cap sequestration adjustment

(3,982

)

-

-

(3,982

)

Amortization of reacquired franchise agreements

-

(3,964

)

-

(3,964

)

Impairment loss on transportation equipment

-

-

(2,266

)

(2,266

)

Non cash ASC 842 (expenses)/benefit

(656

)

(55

)

163

(548

)

Pretax impact on earnings

(10,638

)

(8,683

)

(24,734

)

(44,055

)

Excess tax benefits on stock compensation

-

-

24,177

24,177

Income tax benefit on the above

2,707

2,301

4,320

9,328

After-tax impact on earnings

$

(7,931

)

$

(6,382

)

$

3,763

$

(10,550

)

(c)

VITAS has 10 large (greater than 450 ADC), 21 medium (greater than 200 but less than 450 ADC) and 18 small (less than 200 ADC) hospice programs. Of Vitas' 30 Medicare provider numbers, for the current cap year, 22 provider numbers have a Medicare cap cushion of 10% or greater, four provider numbers have a cap cushion between 5% and 10%, two provider numbers have 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/20210223006037/en/

Contacts

David P. Williams
(513) 762-6901