Chemed Reports Second-Quarter 2024 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 second quarter ended June 30, 2024, versus the comparable prior-year period.

Changes to Non-GAAP Metrics

Chemed uses certain non-GAAP metrics such as EBITDA, adjusted EBITDA, adjusted net income and adjusted diluted earnings per share, to provide additional context and perspective to reported operational results.

Chemed’s previously reported non-GAAP metrics during the four sequential quarters from September 30, 2022 through June 30, 2023 excluded the 12-month pandemic-related licensed healthcare professional retention bonus (Retention Program). Starting with the quarter-ended September 30, 2023, the Company no longer excludes the cost of the Retention Program when presenting non-GAAP operating metrics in current or prior periods.

For the quarter-ended June 30, 2023, the pretax and after-tax Retention Program expense was $12.8 million and $9.7 million, respectively. For the six-months ended June 30, 2023, the pretax and after-tax Retention Program expense was $23.7 million and $18.0 million, respectively. There was no material impact on financial results for the quarter or six months-ended June 30, 2024 as a result of the Retention Program.

Results for Quarter Ended June 30, 2024

Consolidated operating results:

  • Revenue increased 7.6% to $595.9 million
  • GAAP Diluted Earnings-per-Share (EPS) of $4.65, an increase of 32.5%
  • Adjusted Diluted EPS of $5.47, an increase of 34.1%

VITAS segment operating results:

  • Net Patient Revenue of $374.6 million, an increase of 16.7%
  • Average Daily Census (ADC) of 21,036, an increase of 14.4%
  • Admissions of 17,334, an increase of 11.0%
  • Net Income, excluding certain discrete items, of $49.9 million, an increase of 91.1%
  • Adjusted EBITDA, excluding Medicare Cap, of $67.0 million, an increase of 77.0%
  • Adjusted EBITDA margin, excluding Medicare Cap, of 17.8%, an increase of 613-basis points

Roto-Rooter segment operating results:

  • Revenue of $221.3 million, a decrease of 5.0%
  • Net Income, excluding certain discrete items, of $42.4 million, a decrease of 8.1%
  • Adjusted EBITDA of $59.8 million, a decline of 9.2%
  • Adjusted EBITDA margin of 27.0%, a decline of 126-basis points

VITAS

As previously announced, VITAS completed its acquisition of the hospice assets and an assisted living facility of Covenant Health and Community Services, Inc. (Covenant Health) on April 17, 2024 for $85.0 million in cash. Before presenting VITAS’ overall results, it is important to disclose the methodology used in determining the impact of Covenant Health’s acquisition on VITAS’ overall results. VITAS had significant operations in 2 of the 3 Florida locations we acquired from Covenant Health. Those locations require that we estimate the Covenant Health impact, as once the operations are integrated, there are not separate results. For instance, there are no VITAS-specific referral sources versus Covenant Health-specific referral sources in these locations. It is very likely that referral sources in the area have historically referred to both VITAS and Covenant Health. We have used historical operating trends in these locations to determine what is “legacy” VITAS activity. All activity above those historical operating trends have been attributed as the Covenant Health impact. We have included the specifically determined impact as it relates to new operating territories acquired. Based on the above, we discuss the range of impact that Covenant had on the overall VITAS operating metrics.

Covenant Health contributed $8.2 million to $8.7 million of revenue in the second quarter of 2024. This revenue translated to net income of approximately $1.6 million to $1.8 million. Adjusted EBITDA in the quarter attributed to Covenant Health is between $2.2 million and $2.4 million.

VITAS net revenue was $374.6 million in the second quarter of 2024, which is an increase of 16.7% when compared to the prior-year period. This revenue increase is comprised primarily of a 14.4% increase in days-of-care and a geographically weighted average Medicare reimbursement rate increase of approximately 2.5%. Acuity mix shift negatively impacted revenue growth 112-basis points in the quarter when compared to the prior-year period’s revenue and level-of-care mix. The combination of Medicare Cap and other contra revenue changes increased revenue growth by approximately 92-basis points.

In the second quarter of 2024, VITAS accrued $1.4 million in Medicare Cap billing limitations which includes a $1.0 million reversal of prior period accruals. This compares to a $2.8 million Medicare Cap billing limitation in the second quarter of 2023.

Of VITAS’ 32 Medicare provider numbers, 28 provider numbers have a trailing 12-month Medicare Cap cushion of 10% or greater, three provider numbers have a cushion between 0% and 10%, and one provider number has a trailing 12-month Medicare Cap billing limitation totaling $7.5 million.

Average revenue per patient per day in the second quarter of 2024 was $200.03 which is 153-basis points above the prior-year period. Reimbursement for routine home care and high acuity care averaged $176.73 and $1,071.65, respectively. During the quarter, high acuity days-of-care were 2.6% of total days of care, a decline of 21-basis points when compared to the prior-year quarter.

The second quarter 2024 gross margin, excluding Medicare Cap, was 24.1%. This compares to the prior year quarter’s gross margin of 18.7%, excluding Medicare Cap. Approximately 397-basis points of this difference is attributable to the expense associated with the Retention Program. Selling, general and administrative expenses were $24.3 million in the second quarter of 2024 compared to $22.7 million in the prior-year quarter.

Adjusted EBITDA, excluding Medicare Cap, totaled $67.0 million in the quarter, an increase of 77.0%. Adjusted EBITDA margin in the quarter, excluding Medicare Cap, was 17.8%, which is 613-basis points above the prior-year period. Approximately 397-basis points of this difference is attributable to the expense associated with the Retention Program in 2023.

In the second quarter of 2024, VITAS was awarded a Certificate of Need to begin hospice operations in Pasco County, Florida. This represents a new operating territory for VITAS.

Roto-Rooter

Roto-Rooter generated quarterly revenue of $221.3 million in the second quarter of 2024, a decrease of 5.0%, when compared to the prior-year quarter.

Roto-Rooter branch commercial revenue in the quarter totaled $50.9 million, a decrease of 8.2% from the prior-year period. This aggregate commercial revenue decline consisted of drain cleaning revenue declining 6.4%, plumbing declining 10.4%, excavation declining 11.1%, and water restoration declining 8.8%.

Roto-Rooter branch residential revenue in the quarter totaled $155.0 million, a decrease of 1.6%, over the prior-year period. This aggregate residential revenue decline consisted of drain cleaning decreasing 2.6%, plumbing decreasing 3.3%, excavation declining 1.0%, and water restoration decreasing 4.6%.

Roto-Rooter’s gross margin in the quarter was 52.9%, a 60-basis point improvement when compared to the second quarter of 2023. Adjusted EBITDA in the second quarter of 2024 totaled $59.8 million, a decrease of 9.2%. The Adjusted EBITDA margin in the quarter was 27.0%. The second quarter Adjusted EBITDA margin represents a 120-basis point sequential improvement from the first quarter of 2024 based mainly on lower internet marketing costs.

Chemed Consolidated

As of June 30, 2024, Chemed had total cash and cash equivalents of $222.9 million and no current or long-term debt.

In June 2022, Chemed entered into a five-year $550 million Amended and Restated Credit Agreement (Credit Agreement). This Credit Agreement consisted 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. There is approximately $404.8 million of undrawn borrowing capacity under the Credit Agreement after excluding $45.2 million for Letters of Credit.

During the quarter, the Company repurchased 100,000 shares of Chemed stock for $55.8 million which equates to a cost per share of $557.68. As of June 30, 2024, there was approximately $225.9 million of remaining share repurchase authorization under its plan.

Upward Revision to Guidance for 2024

VITAS 2024 revenue, prior to Medicare Cap, is estimated to increase 16.3% to 17.3% when compared to 2023. ADC is estimated to increase 13.3% to 14.4%. Full year adjusted EBITDA margin, prior to Medicare Cap, is estimated to be 19.3% to 19.7%. We are currently estimating $8.5 million in Medicare Cap billing limitations in calendar 2024. The cost of the retention program negatively impacted VITAS’ 2023 full year adjusted EBITDA by 159 basis points.

Covenant Health is estimated to contribute approximately $30 million to $32 million of revenue to VITAS’ full year revenue. There is no estimated Medicare Cap billing limitation expected related to Covenant Health. This translates into adjusted net income attributable to Covenant Health of $5.5 million to $6.0 million and adjusted EBITDA of $8.0 million to $8.5 million.

Roto-Rooter is forecasted to have a 4.0% to 5.0% revenue decline in 2024 compared to 2023. Roto-Rooter’s adjusted EBITDA margin for 2024 is expected to be 26.5% to 27.0%.

Based on the above, full-year 2024 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 $23.55 to $23.80. This guidance assumes an effective corporate tax rate on adjusted earnings of 24.3% and a diluted share count of 15.25 million shares. Chemed’s previously issued 2024 guidance range was $23.30 to $23.70. Chemed’s 2023 reported adjusted earnings per diluted share was $20.30.

Conference Call

As previously disclosed, Chemed will host a conference call and webcast at 10 a.m., ET, on Thursday July 25, 2024, 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/unbdyk8k.

Participants may also register via teleconference at: https://register.vevent.com/register/BI1a861ca332ea4e9bbf8c4d66fe30ff51.

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 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,

2024

2023

2024

2023

Service revenues and sales $

595,880

 

$

553,816

 

$

1,185,113

 

$

1,113,973

 

Cost of services provided and goods sold

389,750

 

374,193

 

774,877

 

744,898

 

Selling, general and administrative expenses (aa)

102,255

 

94,987

 

218,128

 

195,082

 

Depreciation

13,167

 

12,634

 

26,454

 

24,920

 

Amortization

2,546

 

2,514

 

5,067

 

5,027

 

Other operating expense/(income)

37

 

(18

)

129

 

1,721

 

Total costs and expenses

507,755

 

484,310

 

1,024,655

 

971,648

 

Income from operations

88,125

 

69,506

 

160,458

 

142,325

 

Interest expense

(429

)

(771

)

(854

)

(2,322

)

Other income--net (bb)

6,132

 

1,609

 

18,709

 

1,506

 

Income before income taxes

93,828

 

70,344

 

178,313

 

141,509

 

Income taxes

(22,941

)

(16,967

)

(42,409

)

(34,011

)

Net income $

70,887

 

$

53,377

 

$

135,904

 

$

107,498

 

Earnings Per Share
Net income $

4.70

 

$

3.54

 

$

8.99

 

$

7.16

 

Average number of shares outstanding

15,097

 

15,058

 

15,109

 

15,013

 

Diluted Earnings Per Share
Net income $

4.65

 

$

3.51

 

$

8.89

 

$

7.09

 

Average number of shares outstanding

15,251

 

15,219

 

15,295

 

15,167

 

 
(aa) Selling, general and administrative ("SG&A") expenses comprise (in thousands):
 
Three Months Ended June 30, Six Months Ended June 30,

2024

2023

2024

2023

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

96,025

 

$

91,733

 

$

194,443

 

$

189,634

 

Long-term incentive compensation

3,593

 

1,750

 

12,714

 

4,264

 

Market value adjustments related to deferred
compensation trusts

2,637

 

1,504

 

10,971

 

1,184

 

Total SG&A expenses $

102,255

 

$

94,987

 

$

218,128

 

$

195,082

 

 
(bb) Other income--net comprises (in thousands):
Three Months Ended June 30, Six Months Ended June 30,

2024

2023

2024

2023

Market value adjustments related to deferred
compensation trusts $

2,637

 

$

1,504

 

$

10,971

 

$

1,184

 

Interest income

3,495

 

113

 

7,737

 

263

 

Other

-

 

(8

)

1

 

59

 

Total other income--net $

6,132

 

$

1,609

 

$

18,709

 

$

1,506

 

 
CHEMED CORPORATION AND SUBSIDIARY COMPANIES
CONSOLIDATED BALANCE SHEETS
(in thousands, except per share data)(unaudited)
 
June 30,

2024

2023

Assets
Current assets
Cash and cash equivalents $

222,903

 

$

159,924

 

Accounts receivable less allowances

184,961

 

120,314

 

Inventories

10,735

 

11,684

 

Prepaid income taxes

17,084

 

16,666

 

Prepaid expenses

28,929

 

28,572

 

Total current assets

464,612

 

337,160

 

Investments of deferred compensation plans held in trust

120,784

 

99,522

 

Properties and equipment, at cost less accumulated depreciation

202,249

 

208,101

 

Lease right of use asset

132,262

 

127,215

 

Identifiable intangible assets less accumulated amortization

97,035

 

94,932

 

Goodwill

662,124

 

581,542

 

Other assets

55,918

 

56,708

 

Total Assets $

1,734,984

 

$

1,505,180

 

Liabilities
Current liabilities
Accounts payable $

43,001

 

$

41,058

 

Accrued insurance

59,899

 

57,461

 

Accrued compensation

78,374

 

74,384

 

Short-term lease liability

41,169

 

38,779

 

Other current liabilities

39,310

 

90,805

 

Total current liabilities

261,753

 

302,487

 

Deferred income taxes

27,901

 

36,681

 

Deferred compensation liabilities

119,780

 

98,941

 

Long-term lease liability

105,233

 

102,112

 

Other liabilities

13,020

 

12,880

 

Total Liabilities

527,687

 

553,101

 

Stockholders' Equity
Capital stock

37,313

 

36,996

 

Paid-in capital

1,416,166

 

1,240,415

 

Retained earnings

2,570,722

 

2,294,004

 

Treasury stock, at cost

(2,819,053

)

(2,621,657

)

Deferred compensation payable in Company stock

2,149

 

2,321

 

Total Stockholders' Equity

1,207,297

 

952,079

 

Total Liabilities and Stockholders' Equity $

1,734,984

 

$

1,505,180

 

 
CHEMED CORPORATION AND SUBSIDIARY COMPANIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)(unaudited)
 
Six Months Ended June 30,

2024

2023

Cash Flows from Operating Activities
Net income $

135,904

 

$

107,498

 

Adjustments to reconcile net income to net cash provided
by operating activities:
Depreciation and amortization

31,521

 

29,947

 

Stock option expense

17,895

 

16,882

 

Noncash long-term incentive compensation

12,699

 

3,493

 

Litigation settlements

(5,750

)

1,750

 

Benefit for deferred income taxes

(2,420

)

(1,932

)

Noncash directors' compensation

1,282

 

1,444

 

Amortization of debt issuance costs

160

 

420

 

Changes in operating assets and liabilities, excluding
amounts acquired in business combinations:
(Increase)/decrease in accounts receivable

(2,422

)

20,100

 

Decrease/(increase) in inventories

1,289

 

(1,412

)

Decrease in prepaid expenses

1,275

 

1,719

 

(Decrease)/increase in accounts payable and
other current liabilities

(19,499

)

8,561

 

Change in current income taxes

(10,776

)

1,865

 

Net change in lease assets and liabilities

(109

)

(1,046

)

Increase in other assets

(15,365

)

(3,810

)

Increase in other liabilities

15,730

 

7,344

 

Other sources/(uses)

652

 

(14

)

Net cash provided by operating activities

162,066

 

192,809

 

Cash Flows from Investing Activities
Business combinations, net of cash acquired

(92,300

)

(305

)

Capital expenditures

(23,225

)

(33,420

)

Proceeds from sale of fixed assets

2,916

 

360

 

Other uses

(265

)

(169

)

Net cash used by investing activities

(112,874

)

(33,534

)

Cash Flows from Financing Activities
Purchases of treasury stock

(94,228

)

(13,425

)

Proceeds from exercise of stock options

38,594

 

53,675

 

Dividends paid

(12,107

)

(11,412

)

Change in cash overdrafts payable

(15,749

)

-

 

Capital stock surrendered to pay taxes on stock-based compensation

(5,960

)

(5,313

)

Payments on long-term debt

-

 

(97,500

)

Other (uses)/sources

(797

)

498

 

Net cash used by financing activities

(90,247

)

(73,477

)

(Decrease)/increase in Cash and Cash Equivalents

(41,055

)

85,798

 

Cash and cash equivalents at beginning of year

263,958

 

74,126

 

Cash and cash equivalents at end of year $

222,903

 

$

159,924

 

 
CHEMED CORPORATION AND SUBSIDIARY COMPANIES
CONSOLIDATING STATEMENTS OF INCOME
FOR THE THREE MONTHS ENDED JUNE 30, 2024 AND 2023
(in thousands)(unaudited)
Chemed
VITAS Roto-Rooter Corporate Consolidated
2024 (a)
Service revenues and sales $

374,558

 

$

221,322

 

$

-

 

$

595,880

 

Cost of services provided and goods sold

285,517

 

104,233

 

-

 

389,750

 

Selling, general and administrative expenses

24,293

 

57,351

 

20,611

 

102,255

 

Depreciation

5,058

 

8,096

 

13

 

13,167

 

Amortization

26

 

2,520

 

-

 

2,546

 

Other operating expense/(income)

56

 

(19

)

-

 

37

 

Total costs and expenses

314,950

 

172,181

 

20,624

 

507,755

 

Income/(loss) from operations

59,608

 

49,141

 

(20,624

)

88,125

 

Interest expense

(46

)

(118

)

(265

)

(429

)

Intercompany interest income/(expense)

4,982

 

3,540

 

(8,522

)

-

 

Other income—net

46

 

24

 

6,062

 

6,132

 

Income/(loss) before income taxes

64,590

 

52,587

 

(23,349

)

93,828

 

Income taxes

(15,338

)

(12,070

)

4,467

 

(22,941

)

Net income/(loss) $

49,252

 

$

40,517

 

$

(18,882

)

$

70,887

 

 
2023 (b)
Service revenues and sales $

320,861

 

$

232,955

 

$

-

 

$

553,816

 

Cost of services provided and goods sold

263,085

 

111,108

 

-

 

374,193

 

Selling, general and administrative expenses

22,656

 

56,012

 

16,319

 

94,987

 

Depreciation

4,940

 

7,681

 

13

 

12,634

 

Amortization

26

 

2,488

 

-

 

2,514

 

Other operating expense/(income)

26

 

(44

)

-

 

(18

)

Total costs and expenses

290,733

 

177,245

 

16,332

 

484,310

 

Income/(loss) from operations

30,128

 

55,710

 

(16,332

)

69,506

 

Interest expense

(51

)

(124

)

(596

)

(771

)

Intercompany interest income/(expense)

4,810

 

2,869

 

(7,679

)

-

 

Other income—net

70

 

35

 

1,504

 

1,609

 

Income/(loss) before income taxes

34,957

 

58,490

 

(23,103

)

70,344

 

Income taxes

(8,829

)

(14,116

)

5,978

 

(16,967

)

Net income/(loss) $

26,128

 

$

44,374

 

$

(17,125

)

$

53,377

 

 
 
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, 2024 AND 2023
(in thousands)(unaudited)
 
Chemed
VITAS Roto-Rooter Corporate Consolidated
2024 (a)
Service revenues and sales $

728,564

 

$

456,549

 

$

-

 

$

1,185,113

 

Cost of services provided and goods sold

557,411

 

217,466

 

-

 

774,877

 

Selling, general and administrative expenses

48,085

 

118,611

 

51,432

 

218,128

 

Depreciation

10,225

 

16,204

 

25

 

26,454

 

Amortization

52

 

5,015

 

-

 

5,067

 

Other operating expense

63

 

66

 

-

 

129

 

Total costs and expenses

615,836

 

357,362

 

51,457

 

1,024,655

 

Income/(loss) from operations

112,728

 

99,187

 

(51,457

)

160,458

 

Interest expense

(92

)

(235

)

(527

)

(854

)

Intercompany interest income/(expense)

10,176

 

6,982

 

(17,158

)

-

 

Other income—net

75

 

47

 

18,587

 

18,709

 

Income/(loss) before income taxes

122,887

 

105,981

 

(50,555

)

178,313

 

Income taxes

(29,666

)

(24,610

)

11,867

 

(42,409

)

Net income/(loss) $

93,221

 

$

81,371

 

$

(38,688

)

$

135,904

 

 
2023 (b)
Service revenues and sales $

631,339

 

$

482,634

 

$

-

 

$

1,113,973

 

Cost of services provided and goods sold

516,739

 

228,159

 

-

 

744,898

 

Selling, general and administrative expenses

45,992

 

116,825

 

32,265

 

195,082

 

Depreciation

9,898

 

14,994

 

28

 

24,920

 

Amortization

52

 

4,975

 

-

 

5,027

 

Other operating expense

38

 

1,683

 

-

 

1,721

 

Total costs and expenses

572,719

 

366,636

 

32,293

 

971,648

 

Income/(loss) from operations

58,620

 

115,998

 

(32,293

)

142,325

 

Interest expense

(102

)

(257

)

(1,963

)

(2,322

)

Intercompany interest income/(expense)

9,458

 

5,612

 

(15,070

)

-

 

Other income—net

259

 

64

 

1,183

 

1,506

 

Income/(loss) before income taxes

68,235

 

121,417

 

(48,143

)

141,509

 

Income taxes

(17,343

)

(29,390

)

12,722

 

(34,011

)

Net income/(loss) $

50,892

 

$

92,027

 

$

(35,421

)

$

107,498

 

 
 
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, 2024 AND 2023
(in thousands)(unaudited)
Chemed
VITAS Roto-Rooter Corporate Consolidated

2024

Net income/(loss) $

49,252

 

$

40,517

 

$

(18,882

)

$

70,887

 

Add/(deduct):
Interest expense

46

 

118

 

265

 

429

 

Income taxes

15,338

 

12,070

 

(4,467

)

22,941

 

Depreciation

5,058

 

8,096

 

13

 

13,167

 

Amortization

26

 

2,520

 

-

 

2,546

 

EBITDA

69,720

 

63,321

 

(23,071

)

109,970

 

Add/(deduct):
Intercompany interest expense/(income)

(4,982

)

(3,540

)

8,522

 

-

 

Interest income

(45

)

(25

)

(3,425

)

(3,495

)

Stock option expense

-

 

-

 

8,870

 

8,870

 

Long-term incentive compensation

-

 

-

 

3,593

 

3,593

 

Acquisition expense

907

 

45

 

-

 

952

 

Adjusted EBITDA $

65,600

 

$

59,801

 

$

(5,511

)

$

119,890

 

 

2023

Net income/(loss) $

26,128

 

$

44,374

 

$

(17,125

)

$

53,377

 

Add/(deduct):
Interest expense

51

 

124

 

596

 

771

 

Income taxes

8,829

 

14,116

 

(5,978

)

16,967

 

Depreciation

4,940

 

7,681

 

13

 

12,634

 

Amortization

26

 

2,488

 

-

 

2,514

 

EBITDA

39,974

 

68,783

 

(22,494

)

86,263

 

Add/(deduct):
Intercompany interest expense/(income)

(4,810

)

(2,869

)

7,679

 

-

 

Interest income

(79

)

(34

)

-

 

(113

)

Stock option expense

-

 

-

 

8,400

 

8,400

 

Long-term incentive compensation

-

 

-

 

1,750

 

1,750

 

Adjusted EBITDA $

35,085

 

$

65,880

 

$

(4,665

)

$

96,300

 

 
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, 2024 AND 2023
(in thousands)(unaudited)
Chemed
VITAS Roto-Rooter Corporate Consolidated

2024

Net income/(loss) $

93,221

 

$

81,371

 

$

(38,688

)

$

135,904

 

Add/(deduct):
Interest expense

92

 

235

 

527

 

854

 

Income taxes

29,666

 

24,610

 

(11,867

)

42,409

 

Depreciation

10,225

 

16,204

 

25

 

26,454

 

Amortization

52

 

5,015

 

-

 

5,067

 

EBITDA

133,256

 

127,435

 

(50,003

)

210,688

 

Add/(deduct):
Intercompany interest expense/(income)

(10,176

)

(6,982

)

17,158

 

-

 

Interest income

(75

)

(47

)

(7,615

)

(7,737

)

Stock option expense

-

 

-

 

17,895

 

17,895

 

Long-term incentive compensation

-

 

-

 

7,377

 

7,377

 

Severance arrangement

-

 

-

 

5,337

 

5,337

 

Acquisition expense

907

 

45

 

-

 

952

 

Adjusted EBITDA $

123,912

 

$

120,451

 

$

(9,851

)

$

234,512

 

2023

Net income/(loss) $

50,892

 

$

92,027

 

$

(35,421

)

$

107,498

 

Add/(deduct):
Interest expense

102

 

257

 

1,963

 

2,322

 

Income taxes

17,343

 

29,390

 

(12,722

)

34,011

 

Depreciation

9,898

 

14,994

 

28

 

24,920

 

Amortization

52

 

4,975

 

-

 

5,027

 

EBITDA

78,287

 

141,643

 

(46,152

)

173,778

 

Add/(deduct):
Intercompany interest expense/(income)

(9,458

)

(5,612

)

15,070

 

-

 

Interest income

(199

)

(64

)

-

 

(263

)

Stock option expense

-

 

-

 

16,882

 

16,882

 

Long-term incentive compensation

-

 

-

 

4,264

 

4,264

 

Litigation settlements

-

 

1,756

 

-

 

1,756

 

Adjusted EBITDA $

68,630

 

$

137,723

 

$

(9,936

)

$

196,417

 

 
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,

2024

2023

2024

2023

Net income as reported $

70,887

 

$

53,377

 

$

135,904

 

$

107,498

 

Add/(deduct) pre-tax cost of:
Stock option expense

8,870

 

8,400

 

17,895

 

16,882

 

Long-term incentive compensation

3,593

 

1,750

 

7,377

 

4,264

 

Severance arrangement

-

 

-

 

5,337

 

-

 

Amortization of reacquired franchise agreements

2,352

 

2,352

 

4,704

 

4,704

 

Acquisition expense

952

 

-

 

952

 

-

 

Litigation settlement

-

 

-

 

-

 

1,756

 

Add/(deduct) tax impacts:
Tax impact of the above pre-tax adjustments (1)

(2,613

)

(2,266

)

(5,000

)

(5,118

)

Excess tax benefits on stock compensation

(622

)

(1,501

)

(3,919

)

(3,150

)

Adjusted net income $

83,419

 

$

62,112

 

$

163,250

 

$

126,836

 

 
Diluted Earnings Per Share As Reported
Net income $

4.65

 

$

3.51

 

$

8.89

 

$

7.09

 

Average number of shares outstanding

15,251

 

15,219

 

15,295

 

15,167

 

 
Adjusted Diluted Earnings Per Share
Adjusted net income $

5.47

 

$

4.08

 

$

10.67

 

$

8.36

 

Average number of shares outstanding

15,251

 

15,219

 

15,295

 

15,167

 

 
(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

2024

2023

2024

2023

Net revenue ($000) (c)
Homecare

$

324,778

 

$

278,116

 

$

629,637

 

$

545,166

 

Inpatient

 

29,071

 

 

27,401

 

 

59,374

 

 

56,494

 

Continuous care

 

24,327

 

 

21,081

 

 

48,497

 

 

41,022

 

Other

 

4,733

 

 

3,154

 

 

8,817

 

 

6,175

 

Subtotal

$

382,909

 

$

329,752

 

$

746,325

 

$

648,857

 

Room and board, net

 

(3,156

)

 

(2,904

)

 

(6,101

)

 

(5,672

)

Contractual allowances

 

(3,820

)

 

(3,237

)

 

(7,910

)

 

(6,346

)

Medicare cap allowance

 

(1,375

)

 

(2,750

)

 

(3,750

)

 

(5,500

)

Net Revenue

$

374,558

 

$

320,861

 

$

728,564

 

$

631,339

 

Net revenue as a percent of total before Medicare cap allowance

 

 

 

 

Homecare

 

84.8

 

%

 

84.3

 

%

 

84.4

 

%

 

84.0

 

%

Inpatient

 

7.6

 

 

8.3

 

 

8.0

 

 

8.7

 

Continuous care

 

6.4

 

 

6.4

 

 

6.5

 

 

6.3

 

Other

 

1.2

 

 

1.0

 

 

1.1

 

 

1.0

 

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

)

 

(1.0

)

 

(1.1

)

 

(1.0

)

Medicare cap allowance

 

(0.4

)

 

(0.8

)

 

(0.5

)

 

(0.8

)

Net Revenue

 

97.8

 

%

 

97.4

 

%

 

97.6

 

%

 

97.3

 

%

Days of care

 

 

 

 

Homecare

 

1,551,163

 

 

1,340,655

 

 

2,999,075

 

 

2,627,092

 

Nursing home

 

304,191

 

 

279,898

 

 

587,349

 

 

545,327

 

Respite

 

9,102

 

 

6,159

 

 

16,854

 

 

11,919

 

Subtotal routine homecare and respite

 

1,864,456

 

 

1,626,712

 

 

3,603,278

 

 

3,184,338

 

Inpatient

 

25,895

 

 

25,125

 

 

52,540

 

 

51,494

 

Continuous care

 

23,933

 

 

21,873

 

 

47,970

 

 

42,559

 

Total

 

1,914,284

 

 

1,673,710

 

 

3,703,788

 

 

3,278,391

 

 

 

 

 

Number of days in relevant time period

 

91

 

 

91

 

 

182

 

 

181

 

Average daily census ("ADC") (days)

 

 

 

 

Homecare

 

17,046

 

 

14,732

 

 

16,478

 

 

14,514

 

Nursing home

 

3,343

 

 

3,076

 

 

3,227

 

 

3,013

 

Respite

 

100

 

 

68

 

 

93

 

 

66

 

Subtotal routine homecare and respite

 

20,489

 

 

17,876

 

 

19,798

 

 

17,593

 

Inpatient

 

284

 

 

276

 

 

288

 

 

286

 

Continuous care

 

263

 

 

240

 

 

264

 

 

235

 

Total

 

21,036

 

 

18,392

 

 

20,350

 

 

18,114

 

 

 

 

 

Total Admissions

 

17,334

 

 

15,611

 

 

34,245

 

 

31,790

 

Total Discharges

 

15,898

 

 

15,104

 

 

32,068

 

 

30,509

 

Average length of stay (days)

 

100.6

 

 

99.5

 

 

102.2

 

 

99.7

 

Median length of stay (days)

 

18.0

 

 

16.0

 

 

17.0

 

 

15.0

 

 

 

 

 

ADC by major diagnosis

 

 

 

 

Cerebro

 

42.5

 

%

 

41.9

 

%

 

43.4

 

%

 

42.0

 

%

Neurological

 

13.3

 

 

18.8

 

 

13.4

 

 

19.0

 

Cancer

 

10.0

 

 

10.8

 

 

10.0

 

 

10.6

 

Cardio

 

16.2

 

 

16.1

 

 

16.2

 

 

16.0

 

Respiratory

 

7.3

 

 

7.1

 

 

7.3

 

 

7.2

 

Other

 

10.7

 

 

5.3

 

 

9.7

 

 

5.2

 

Total

 

100.0

 

%

 

100.0

 

%

 

100.0

 

%

 

100.0

 

%

Admissions by major diagnosis

 

 

 

 

Cerebro

 

27.1

 

%

 

25.9

 

%

 

27.4

 

%

 

26.2

 

%

Neurological

 

8.3

 

 

10.1

 

 

7.9

 

 

10.4

 

Cancer

 

25.0

 

 

27.1

 

 

24.8

 

 

25.9

 

Cardio

 

16.1

 

 

16.3

 

 

15.9

 

 

16.3

 

Respiratory

 

9.6

 

 

9.8

 

 

10.1

 

 

10.4

 

Other

 

13.9

 

 

10.8

 

 

13.9

 

 

10.8

 

Total

 

100.0

 

%

 

100.0

 

%

 

100.0

 

%

 

100.0

 

%

 

 

 

 

Estimated uncollectible accounts as a percent of revenues

 

1.0

 

%

 

1.0

 

%

 

1.1

 

%

 

1.0

 

%

 

 

 

 

Accounts receivable --

 

 

 

 

Days of revenue outstanding-excluding unapplied Medicare payments

 

38.8

 

 

35.2

 

n.a.

n.a.

Days of revenue outstanding-including unapplied Medicare payments

 

34.7

 

 

22.6

 

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, 2024 AND 2023
(unaudited)
 
(a) Included in the results of operations for 2024 are the following significant credits/(charges) which may not be indicative of ongoing operations
(in thousands):
Three Months Ended June 30, 2024
VITAS Roto-Rooter Corporate Consolidated
 
Stock option expense $

-

 

$

-

 

$

(8,870

)

$

(8,870

)

Long-term incentive compensation

-

 

-

 

(3,593

)

(3,593

)

Amortization of reacquired franchise agreements

-

 

(2,352

)

-

 

(2,352

)

Acquisition expense

(907

)

(45

)

-

 

(952

)

Pretax impact on earnings

(907

)

(2,397

)

(12,463

)

(15,767

)

Excess tax benefits on stock compensation

-

 

-

 

622

 

622

 

Income tax benefit on the above

220

 

559

 

1,834

 

2,613

 

After-tax impact on earnings $

(687

)

$

(1,838

)

$

(10,007

)

$

(12,532

)

 
Six Months Ended June 30, 2024
VITAS Roto-Rooter Corporate Consolidated
 
Stock option expense $

-

 

$

-

 

$

(17,895

)

$

(17,895

)

Long-term incentive compensation

-

 

-

 

(7,377

)

(7,377

)

Severance arrangement

-

 

-

 

(5,337

)

(5,337

)

Amortization of reacquired franchise agreements

-

 

(4,704

)

-

 

(4,704

)

Acquisition expense

(907

)

(45

)

-

 

(952

)

Pretax impact on earnings

(907

)

(4,749

)

(30,609

)

(36,265

)

Excess tax benefits on stock compensation

-

 

-

 

3,919

 

3,919

 

Income tax benefit on the above

220

 

1,107

 

3,673

 

5,000

 

After-tax impact on earnings $

(687

)

$

(3,642

)

$

(23,017

)

$

(27,346

)

 
(b) Included in the results of operations for 2023 are the following significant credits/(charges) which may not be indicative of ongoing operations
(in thousands):
Three Months Ended June 30, 2023
VITAS Roto-Rooter Corporate Consolidated
 
Stock option expense $

-

 

$

-

 

$

(8,400

)

$

(8,400

)

Amortization of reacquired franchise agreements

-

 

(2,352

)

-

 

(2,352

)

Long-term incentive compensation

-

 

-

 

(1,750

)

(1,750

)

Pretax impact on earnings

-

 

(2,352

)

(10,150

)

(12,502

)

Excess tax benefits on stock compensation

-

 

-

 

1,501

 

1,501

 

Income tax benefit on the above

-

 

623

 

1,643

 

2,266

 

After-tax impact on earnings $

-

 

$

(1,729

)

$

(7,006

)

$

(8,735

)

 
Six Months Ended June 30, 2023
VITAS Roto-Rooter Corporate Consolidated
 
Stock option expense $

-

 

$

-

 

$

(16,882

)

$

(16,882

)

Amortization of reacquired franchise agreements

-

 

(4,704

)

-

 

(4,704

)

Long-term incentive compensation

-

 

-

 

(4,264

)

(4,264

)

Litigation settlements

-

 

(1,756

)

-

 

(1,756

)

Pretax impact on earnings

-

 

(6,460

)

(21,146

)

(27,606

)

Excess tax benefits on stock compensation

-

 

-

 

3,150

 

3,150

 

Income tax benefit on the above

-

 

1,712

 

3,406

 

5,118

 

After-tax impact on earnings $

-

 

$

(4,748

)

$

(14,590

)

$

(19,338

)

 
 
(c) VITAS has 10 large (greater than 450 ADC), 22 medium (greater than 200 but less than 450 ADC) and 21 small (less than 200 ADC) hospice programs. Of Vitas' 32 Medicare provider numbers, for the trailing 12 months, 28 provider numbers have a Medicare cap cushion of greater than 10%, one provider number has a Medicare cap cushion between 5% and 10%, two provider numbers has a Medicare cap cushion between 0% and 5%, and one provider number has a Medicare cap liability.

 

Contacts

Michael D. Witzeman

(513) 762-6714

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