Recent Quotes View Full List My Watchlist Create Watchlist Indicators DJI Nasdaq Composite SPX Gold Crude Oil EL&P Market Index Markets Stocks ETFs Tools Overview News Currencies International Treasuries Chemed Reports Third-Quarter 2024 Results By: Chemed Corporation via Business Wire October 29, 2024 at 16:15 PM EDT 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 third quarter ended September 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 nine-months ended September 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 nine months-ended September 30, 2024 as a result of the Retention Program. Results for Quarter Ended September 30, 2024 Consolidated operating results: Revenue increased 7.4% to $606.2 million GAAP Diluted Earnings-per-Share (EPS) of $5.00, an increase of 1.4% Adjusted Diluted EPS of $5.64, an increase of 6.0% VITAS segment operating results: Net Patient Revenue of $391.4 million, an increase of 17.3% Average Daily Census (ADC) of 21,785, an increase of 15.5% Admissions of 16,775, an increase of 6.3% Net Income, excluding certain discrete items, of $53.8 million, an increase of 26.4% Adjusted EBITDA, excluding Medicare Cap, of $73.1 million, an increase of 33.1% Adjusted EBITDA margin, excluding Medicare Cap, of 18.6%, an increase of 212-basis points Roto-Rooter segment operating results: Revenue of $214.8 million, a decrease of 6.9% Net Income, excluding certain discrete items, of $39.8 million, a decrease of 18.9% Adjusted EBITDA of $56.4 million, a decline of 15.8% Adjusted EBITDA margin of 26.3%, a decline of 275-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 two of the three 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 approximately $10 million to $11 million of revenue in the third quarter of 2024. This revenue translated to net income of approximately $1.8 million to $2.0 million. Adjusted EBITDA in the quarter attributed to Covenant Health is between $2.4 million and $2.6 million. VITAS net revenue was $391.4 million in the third quarter of 2024, which is an increase of 17.3% when compared to the prior-year period. This revenue increase is comprised primarily of a 15.5% increase in days-of-care and a geographically weighted average Medicare reimbursement rate increase of approximately 2.6%. Acuity mix shift negatively impacted revenue growth 144-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 64-basis points. In the third quarter of 2024, VITAS accrued $2.2 million in Medicare Cap billing limitations. This compares to a $125,000 Medicare Cap billing limitation in the third quarter of 2023. Of VITAS’ 32 Medicare provider numbers, 24 provider numbers have a trailing 12-month Medicare Cap cushion of 10% or greater, five provider numbers have a cushion between 0% and 10%, and three provider numbers have a trailing 12-month Medicare Cap billing limitation totaling $9.4 million. Average revenue per patient per day in the third quarter of 2024 was $199.16 which is 139-basis points above the prior-year period. Reimbursement for routine home care and high acuity care averaged $175.82 and $1,094.97, respectively. During the quarter, high acuity days-of-care were 2.5% of total days of care, a decline of 26-basis points when compared to the prior-year quarter. The third quarter 2024 gross margin, excluding Medicare Cap, was 25.1%. This compares to the prior year quarter’s gross margin of 24.0%, excluding Medicare Cap. Selling, general and administrative expenses were $25.9 million in the third quarter of 2024 compared to $25.3 million in the prior-year quarter. Adjusted EBITDA, excluding Medicare Cap, totaled $73.1 million in the quarter, an increase of 33.1% when compared to the prior year period. Adjusted EBITDA margin in the quarter, excluding Medicare Cap, was 18.6%, which is 212-basis points above the prior-year period. Hurricane Helene, which impacted the panhandle of Florida and other parts of the southeastern United States in late September, did not result in any significant property loss or damage to VITAS. However, as with other similar events, we did experience a slowdown in admission activity while health systems prepared for the hurricane and then dealt with the aftermath. We estimate that admissions were negatively impacted during the quarter by approximately 60-100 patients. We also believe that the Florida admission impact will be more significant in the fourth quarter with the combination of Hurricanes Helene and Milton. Roto-Rooter Roto-Rooter generated quarterly revenue of $214.8 million in the third quarter of 2024, a decrease of 6.9%, when compared to the prior-year quarter. Roto-Rooter branch commercial revenue in the quarter totaled $53.5 million, a decrease of 5.9% from the prior-year period. This aggregate commercial revenue change consisted of drain cleaning revenue declining 4.4%, plumbing declining 12.1%, excavation declining 2.3%, and water restoration declining 3.3%. Roto-Rooter branch residential revenue in the quarter totaled $146.0 million, a decrease of 6.3%, over the prior-year period. This aggregate residential revenue change consisted of drain cleaning declining 5.9%, plumbing declining 11.2%, excavation declining 6.1%, and water restoration declining 6.9%. Roto-Rooter’s gross margin in the quarter was 52.9%, essentially flat when compared to the third quarter of 2023. Roto-Rooter’s selling, general and administrative expenses were $57.1 million in the quarter, which is an increase of 3.5% compared to the third quarter of 2023. This increase was caused by continued enhanced marketing efforts designed to drive additional demand. Adjusted EBITDA in the third quarter of 2024 totaled $56.4 million, a decrease of 15.8% when compared to the third quarter of 2023. The Adjusted EBITDA margin in the quarter was 26.3% which represents a 275-basis point decline from the third quarter of 2023. Chemed Consolidated As of September 30, 2024, Chemed had total cash and cash equivalents of $238.5 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 $57.8 million which equates to a cost per share of $578.21. As of September 30, 2024, there was approximately $168.1 million of remaining share repurchase authorization under its plan. Revision to Guidance for 2024 VITAS continues to perform as anticipated, and we reiterate the metrics for VITAS as presented in our second quarter 2024 press release. Roto-Rooter’s revenue and resulting adjusted EBITDA and adjusted net income was softer than anticipated during the third quarter of 2024. As a result of these factors, full-year consolidated 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 $23.00 to $23.15. This range represents a 13.3% to 14.0% increase from Chemed’s 2023 reported adjusted earnings per diluted share of $20.30. This guidance assumes an effective corporate tax rate on adjusted earnings of 24.3% and a diluted share count of 15.22 million shares. Conference Call As previously disclosed, Chemed will host a conference call and webcast at 10 a.m., ET, on Wednesday October 30, 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/c93ntfig/. Participants may also register via teleconference at: https://register.vevent.com/register/BI0022c41ceecf4b83a582584604bc732b. 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 September 30, Nine Months Ended September 30, 2024 2023 2024 2023 Service revenues and sales $ 606,181 $ 564,532 $ 1,791,294 $ 1,678,505 Cost of services provided and goods sold 396,187 362,358 1,171,064 1,107,256 Selling, general and administrative expenses (aa) 101,981 99,602 320,109 294,684 Depreciation 13,147 12,858 39,601 37,778 Amortization 2,550 2,521 7,617 7,548 Other operating expense 159 343 288 2,064 Total costs and expenses 514,024 477,682 1,538,679 1,449,330 Income from operations 92,157 86,850 252,615 229,175 Interest expense (427 ) (444 ) (1,281 ) (2,766 ) Other income--net (bb) 9,299 6,859 28,008 8,365 Income before income taxes 101,029 93,265 279,342 234,774 Income taxes (25,253 ) (18,307 ) (67,662 ) (52,318 ) Net income $ 75,776 $ 74,958 $ 211,680 $ 182,456 Earnings Per Share Net income $ 5.04 $ 4.97 $ 14.04 $ 12.14 Average number of shares outstanding 15,025 15,075 15,082 15,034 Diluted Earnings Per Share Net income $ 5.00 $ 4.93 $ 13.88 $ 12.02 Average number of shares outstanding 15,168 15,200 15,253 15,178 (aa) Selling, general and administrative ("SG&A") expenses comprise (in thousands): Three Months Ended September 30, Nine Months Ended September 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 $ 93,269 $ 91,792 $ 287,712 $ 281,426 Market value adjustments related to deferred compensation trusts 5,629 4,257 16,600 5,441 Long-term incentive compensation 3,083 3,553 15,797 7,817 Total SG&A expenses $ 101,981 $ 99,602 $ 320,109 $ 294,684 (bb) Other income--net comprises (in thousands): Three Months Ended September 30, Nine Months Ended September 30, 2024 2023 2024 2023 Market value adjustments related to deferred compensation trusts $ 5,629 $ 4,257 $ 16,600 $ 5,441 Interest income 3,668 2,600 11,405 2,863 Other 2 2 3 61 Total other income--net $ 9,299 $ 6,859 $ 28,008 $ 8,365 CHEMED CORPORATION AND SUBSIDIARY COMPANIES CONSOLIDATED BALANCE SHEETS (in thousands, except per share data)(unaudited) September 30, 2024 2023 Assets Current assets Cash and cash equivalents $ 238,451 $ 173,150 Accounts receivable less allowances 196,481 168,031 Inventories 9,899 12,511 Prepaid income taxes 14,229 11,337 Prepaid expenses 31,377 29,510 Total current assets 490,437 394,539 Investments of deferred compensation plans held in trust 126,631 104,410 Properties and equipment, at cost less accumulated depreciation 200,939 205,462 Lease right of use asset 134,111 123,353 Identifiable intangible assets less accumulated amortization 94,753 92,768 Goodwill 666,860 584,977 Other assets 55,704 56,570 Total Assets $ 1,769,435 $ 1,562,079 Liabilities Current liabilities Accounts payable $ 44,938 $ 56,508 Accrued insurance 60,308 61,122 Accrued income taxes 3,385 5,135 Accrued compensation 73,141 74,865 Short-term lease liability 42,490 37,615 Other current liabilities 40,517 61,974 Total current liabilities 264,779 297,219 Deferred income taxes 28,076 30,381 Deferred compensation liabilities 122,240 102,815 Long-term lease liability 105,416 99,346 Other liabilities 13,169 13,075 Total Liabilities 533,680 542,836 Stockholders' Equity Capital stock 37,395 37,013 Paid-in capital 1,462,569 1,254,356 Retained earnings 2,639,011 2,362,928 Treasury stock, at cost (2,905,430 ) (2,637,102 ) Deferred compensation payable in Company stock 2,210 2,048 Total Stockholders' Equity 1,235,755 1,019,243 Total Liabilities and Stockholders' Equity $ 1,769,435 $ 1,562,079 CHEMED CORPORATION AND SUBSIDIARY COMPANIES CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands)(unaudited) Nine Months Ended September 30, 2024 2023 Cash Flows from Operating Activities Net income $ 211,680 $ 182,456 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 47,218 45,326 Stock option expense 23,933 22,376 Noncash long-term incentive compensation 15,783 6,637 Litigation settlements (5,750 ) 2,050 Benefit for deferred income taxes (2,245 ) (8,232 ) Noncash directors' compensation 1,282 1,444 Amortization of debt issuance costs 241 500 Changes in operating assets and liabilities, excluding amounts acquired in business combinations: Increase in accounts receivable (14,336 ) (27,843 ) Decrease/(increase) in inventories 2,125 (2,239 ) (Increase)/decrease in prepaid expenses (1,173 ) 781 Decrease in accounts payable and other current liabilities (19,641 ) (15,815 ) Change in current income taxes (4,545 ) 12,314 Net change in lease assets and liabilities (400 ) (892 ) Increase in other assets (21,101 ) (8,622 ) Increase in other liabilities 18,348 11,426 Other sources 1,165 69 Net cash provided by operating activities 252,584 221,736 Cash Flows from Investing Activities Business combinations, net of cash acquired (97,400 ) (3,994 ) Capital expenditures (36,770 ) (45,075 ) Proceeds from sale of fixed assets 3,060 506 Other uses (281 ) (409 ) Net cash used by investing activities (131,391 ) (48,972 ) Cash Flows from Financing Activities Purchases of treasury stock (152,049 ) (27,769 ) Proceeds from exercise of stock options 49,906 58,277 Dividends paid (19,594 ) (17,446 ) Change in cash overdrafts payable (15,749 ) 16,182 Capital stock surrendered to pay taxes on stock-based compensation (8,827 ) (5,446 ) Payments on long-term debt - (97,500 ) Other uses (387 ) (38 ) Net cash used by financing activities (146,700 ) (73,740 ) (Decrease)/increase in Cash and Cash Equivalents (25,507 ) 99,024 Cash and cash equivalents at beginning of year 263,958 74,126 Cash and cash equivalents at end of year $ 238,451 $ 173,150 CHEMED CORPORATION AND SUBSIDIARY COMPANIES CONSOLIDATING STATEMENTS OF INCOME FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2024 AND 2023 (in thousands)(unaudited) Chemed VITAS Roto-Rooter Corporate Consolidated 2024 (a) Service revenues and sales $ 391,406 $ 214,775 $ - $ 606,181 Cost of services provided and goods sold 294,936 101,251 - 396,187 Selling, general and administrative expenses 25,883 57,072 19,026 101,981 Depreciation 5,063 8,071 13 13,147 Amortization 26 2,524 - 2,550 Other operating expense 97 62 - 159 Total costs and expenses 326,005 168,980 19,039 514,024 Income/(loss) from operations 65,401 45,795 (19,039 ) 92,157 Interest expense (46 ) (114 ) (267 ) (427 ) Intercompany interest income/(expense) 4,920 3,656 (8,576 ) - Other income—net 62 18 9,219 9,299 Income/(loss) before income taxes 70,337 49,355 (18,663 ) 101,029 Income taxes (16,851 ) (11,400 ) 2,998 (25,253 ) Net income/(loss) $ 53,486 $ 37,955 $ (15,665 ) $ 75,776 2023 (b) Service revenues and sales $ 333,728 $ 230,804 $ - $ 564,532 Cost of services provided and goods sold 253,731 108,627 - 362,358 Selling, general and administrative expenses 25,256 55,141 19,205 99,602 Depreciation 5,009 7,836 13 12,858 Amortization 26 2,495 - 2,521 Other operating expense/(income) (53 ) 396 - 343 Total costs and expenses 283,969 174,495 19,218 477,682 Income/(loss) from operations 49,759 56,309 (19,218 ) 86,850 Interest expense (52 ) (131 ) (261 ) (444 ) Intercompany interest income/(expense) 4,935 3,040 (7,975 ) - Other income—net 849 34 5,976 6,859 Income/(loss) before income taxes 55,491 59,252 (21,478 ) 93,265 Income taxes (11,160 ) (8,925 ) 1,778 (18,307 ) Net income/(loss) $ 44,331 $ 50,327 $ (19,700 ) $ 74,958 The "Footnotes to Financial Statements" are integral parts of this financial information. CHEMED CORPORATION AND SUBSIDIARY COMPANIES CONSOLIDATING STATEMENTS OF INCOME FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2024 AND 2023 (in thousands)(unaudited) Chemed VITAS Roto-Rooter Corporate Consolidated 2024 (a) Service revenues and sales $ 1,119,970 $ 671,324 $ - $ 1,791,294 Cost of services provided and goods sold 852,347 318,717 - 1,171,064 Selling, general and administrative expenses 73,968 175,683 70,458 320,109 Depreciation 15,288 24,275 38 39,601 Amortization 79 7,538 - 7,617 Other operating expense 160 128 - 288 Total costs and expenses 941,842 526,341 70,496 1,538,679 Income/(loss) from operations 178,128 144,983 (70,496 ) 252,615 Interest expense (138 ) (349 ) (794 ) (1,281 ) Intercompany interest income/(expense) 15,096 10,638 (25,734 ) - Other income—net 138 64 27,806 28,008 Income/(loss) before income taxes 193,224 155,336 (69,218 ) 279,342 Income taxes (46,517 ) (36,010 ) 14,865 (67,662 ) Net income/(loss) $ 146,707 $ 119,326 $ (54,353 ) $ 211,680 2023 (b) Service revenues and sales $ 965,066 $ 713,439 $ - $ 1,678,505 Cost of services provided and goods sold 770,470 336,786 - 1,107,256 Selling, general and administrative expenses 71,248 171,966 51,470 294,684 Depreciation 14,907 22,830 41 37,778 Amortization 78 7,470 - 7,548 Other operating expense/(income) (15 ) 2,079 - 2,064 Total costs and expenses 856,688 541,131 51,511 1,449,330 Income/(loss) from operations 108,378 172,308 (51,511 ) 229,175 Interest expense (154 ) (387 ) (2,225 ) (2,766 ) Intercompany interest income/(expense) 14,393 8,652 (23,045 ) - Other income—net 1,109 96 7,160 8,365 Income/(loss) before income taxes 123,726 180,669 (69,621 ) 234,774 Income taxes (28,503 ) (38,315 ) 14,500 (52,318 ) Net income/(loss) $ 95,223 $ 142,354 $ (55,121 ) $ 182,456 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 SEPTEMBER 30, 2024 AND 2023 (in thousands)(unaudited) Chemed VITAS Roto-Rooter Corporate Consolidated 2024 Net income/(loss) $ 53,486 $ 37,955 $ (15,665 ) $ 75,776 Add/(deduct): Interest expense 46 114 267 427 Income taxes 16,851 11,400 (2,998 ) 25,253 Depreciation 5,063 8,071 13 13,147 Amortization 26 2,524 - 2,550 EBITDA 75,472 60,064 (18,383 ) 117,153 Add/(deduct): Intercompany interest expense/(income) (4,920 ) (3,656 ) 8,576 - Interest income (59 ) (18 ) (3,589 ) (3,666 ) Stock option expense - - 6,038 6,038 Long-term incentive compensation - - 3,083 3,083 Acquisition expense 394 (8 ) - 386 Adjusted EBITDA $ 70,887 $ 56,382 $ (4,275 ) $ 122,994 2023 Net income/(loss) $ 44,331 $ 50,327 $ (19,700 ) $ 74,958 Add/(deduct): Interest expense 52 131 261 444 Income taxes 11,160 8,925 (1,778 ) 18,307 Depreciation 5,009 7,836 13 12,858 Amortization 26 2,495 - 2,521 EBITDA 60,578 69,714 (21,204 ) 109,088 Add/(deduct): Intercompany interest expense/(income) (4,935 ) (3,040 ) 7,975 - Interest income (847 ) (34 ) (1,719 ) (2,600 ) Litigation settlement - 300 - 300 Stock option expense - - 5,495 5,495 Long-term incentive compensation - - 3,553 3,553 Adjusted EBITDA $ 54,796 $ 66,940 $ (5,900 ) $ 115,836 The "Footnotes to Financial Statements" are integral parts of this financial information. CHEMED CORPORATION AND SUBSIDIARY COMPANIES CONSOLIDATING SUMMARIES OF EBITDA FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2024 AND 2023 (in thousands)(unaudited) Chemed VITAS Roto-Rooter Corporate Consolidated 2024 Net income/(loss) $ 146,707 $ 119,326 $ (54,353 ) $ 211,680 Add/(deduct): Interest expense 138 349 794 1,281 Income taxes 46,517 36,010 (14,865 ) 67,662 Depreciation 15,288 24,275 38 39,601 Amortization 79 7,538 - 7,617 EBITDA 208,729 187,498 (68,386 ) 327,841 Add/(deduct): Intercompany interest expense/(income) (15,096 ) (10,638 ) 25,734 - Interest income (136 ) (64 ) (11,205 ) (11,405 ) Stock option expense - - 23,933 23,933 Long-term incentive compensation - - 10,460 10,460 Severance arrangement - - 5,337 5,337 Acquisition expense 1,302 37 - 1,339 Adjusted EBITDA $ 194,799 $ 176,833 $ (14,127 ) $ 357,505 2023 Net income/(loss) $ 95,223 $ 142,354 $ (55,121 ) $ 182,456 Add/(deduct): Interest expense 154 387 2,225 2,766 Income taxes 28,503 38,315 (14,500 ) 52,318 Depreciation 14,907 22,830 41 37,778 Amortization 78 7,470 - 7,548 EBITDA 138,865 211,356 (67,355 ) 282,866 Add/(deduct): Intercompany interest expense/(income) (14,393 ) (8,652 ) 23,045 - Interest income (1,046 ) (96 ) (1,720 ) (2,862 ) Stock option expense - - 22,376 22,376 Long-term incentive compensation - - 7,817 7,817 Litigation settlements - 2,056 - 2,056 Adjusted EBITDA $ 123,426 $ 204,664 $ (15,837 ) $ 312,253 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 September 30, Nine Months Ended September 30, 2024 2023 2024 2023 Net income as reported $ 75,776 $ 74,958 $ 211,680 $ 182,456 Add/(deduct) pre-tax cost of: Stock option expense 6,038 5,495 23,933 22,376 Long-term incentive compensation 3,083 3,553 10,460 7,817 Amortization of reacquired franchise rights 2,352 2,352 7,056 7,056 Severance arrangement - - 5,337 - Acquisition expense 386 - 1,339 - Litigation settlement - 300 - 2,056 Add/(deduct) tax impacts: Tax impact of the above pre-tax adjustments (1) (1,761 ) (1,326 ) (6,762 ) (6,443 ) Tax impact of deferred tax rate change - (4,241 ) - (4,241 ) Excess tax benefits on stock compensation (389 ) (225 ) (4,308 ) (3,376 ) Adjusted net income $ 85,485 $ 80,866 $ 248,735 $ 207,701 Diluted Earnings Per Share As Reported Net income $ 5.00 $ 4.93 $ 13.88 $ 12.02 Average number of shares outstanding 15,168 15,200 15,253 15,178 Adjusted Diluted Earnings Per Share Adjusted net income $ 5.64 $ 5.32 $ 16.31 $ 13.68 Average number of shares outstanding 15,168 15,200 15,253 15,178 (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 September 30, Nine Months Ended September 30, OPERATING STATISTICS 2024 2023 2024 2023 Net revenue ($000) (c) Homecare $ 338,344 $ 287,389 $ 967,981 $ 832,554 Inpatient 29,923 27,818 89,297 84,312 Continuous care 25,799 22,032 74,295 63,054 Other 5,082 3,562 13,900 9,738 Subtotal $ 399,148 $ 340,801 $ 1,145,473 $ 989,658 Room and board, net (3,336 ) (2,646 ) (9,437 ) (8,317 ) Contractual allowances (2,167 ) (4,302 ) (10,077 ) (10,650 ) Medicare cap allowance (2,239 ) (125 ) (5,989 ) (5,625 ) Net Revenue $ 391,406 $ 333,728 $ 1,119,970 $ 965,066 Net revenue as a percent of total before Medicare cap allowance Homecare 84.8 % 84.3 % 84.5 % 84.1 % Inpatient 7.5 8.2 7.8 8.5 Continuous care 6.5 6.5 6.5 6.4 Other 1.2 1.0 1.2 1.0 Subtotal 100.0 100.0 100.0 100.0 Room and board, net (0.8 ) (0.8 ) (0.8 ) (0.8 ) Contractual allowances (0.5 ) (1.3 ) (0.9 ) (1.1 ) Medicare cap allowance (0.6 ) - (0.5 ) (0.6 ) Net Revenue 98.1 % 97.9 % 97.8 % 97.5 % Days of care Homecare 1,622,680 1,391,377 4,621,755 4,018,469 Nursing home 320,664 287,785 908,013 833,112 Respite 9,952 7,292 26,806 19,211 Subtotal routine homecare and respite 1,953,296 1,686,454 5,556,574 4,870,792 Inpatient 26,524 25,493 79,064 76,987 Continuous care 24,365 23,071 72,335 65,630 Total 2,004,185 1,735,018 5,707,973 5,013,409 Number of days in relevant time period 92 92 274 273 Average daily census ("ADC") (days) Homecare 17,639 15,124 16,867 14,720 Nursing home 3,485 3,128 3,314 3,052 Respite 108 79 98 70 Subtotal routine homecare and respite 21,232 18,331 20,279 17,842 Inpatient 288 277 289 282 Continuous care 265 251 264 240 Total 21,785 18,859 20,832 18,364 Total Admissions 16,775 15,774 51,020 47,564 Total Discharges 16,217 15,328 48,285 45,837 Average length of stay (days) 102.0 103.1 102.2 100.8 Median length of stay (days) 18.0 17.0 17.0 16.0 ADC by major diagnosis Cerebro 43.6 % 42.0 % 43.7 % 42.2 % Neurological 13.3 14.7 13.3 15.9 Cancer 10.0 10.6 10.0 10.6 Cardio 16.3 16.4 16.2 16.1 Respiratory 7.1 7.2 7.2 7.1 Other 9.7 9.1 9.6 8.1 Total 100.0 % 100.0 % 100.0 % 100.0 % Admissions by major diagnosis Cerebro 28.4 % 26.6 % 27.7 % 26.3 % Neurological 7.7 8.8 7.9 9.9 Cancer 25.7 26.1 25.1 26.0 Cardio 15.1 16.0 15.7 16.2 Respiratory 9.5 9.7 9.9 10.1 Other 13.6 12.8 13.7 11.5 Total 100.0 % 100.0 % 100.0 % 100.0 % Estimated uncollectible accounts as a percent of revenues 0.6 % 1.3 % 0.9 % 1.1 % Accounts receivable -- Days of revenue outstanding-excluding unapplied Medicare payments 37.5 36.4 n.a. n.a. Days of revenue outstanding-including unapplied Medicare payments 35.5 33.8 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 NINE MONTHS ENDED SEPTEMBER 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 September 30, 2024 VITAS Roto-Rooter Corporate Consolidated Stock option expense $ - $ - $ (6,038 ) $ (6,038 ) Long-term incentive compensation - - (3,083 ) (3,083 ) Amortization of reacquired franchise agreements - (2,352 ) - (2,352 ) Acquisition expense (394 ) 8 - (386 ) Pretax impact on earnings (394 ) (2,344 ) (9,121 ) (11,859 ) Excess tax benefits on stock compensation - - 389 389 Income tax benefit on the above 96 546 1,119 1,761 After-tax impact on earnings $ (298 ) $ (1,798 ) $ (7,613 ) $ (9,709 ) Nine Months Ended September 30, 2024 VITAS Roto-Rooter Corporate Consolidated Stock option expense $ - $ - $ (23,933 ) $ (23,933 ) Long-term incentive compensation - - (10,460 ) (10,460 ) Amortization of reacquired franchise agreements - (7,056 ) - (7,056 ) Severance arrangement - - (5,337 ) (5,337 ) Acquisition expense (1,302 ) (37 ) - (1,339 ) Pretax impact on earnings (1,302 ) (7,093 ) (39,730 ) (48,125 ) Excess tax benefits on stock compensation - - 4,308 4,308 Income tax benefit on the above 317 1,652 4,793 6,762 After-tax impact on earnings $ (985 ) $ (5,441 ) $ (30,629 ) $ (37,055 ) (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 September 30, 2023 VITAS Roto-Rooter Corporate Consolidated Stock option expense $ - $ - $ (5,495 ) $ (5,495 ) Long-term incentive compensation - - (3,553 ) (3,553 ) Amortization of reacquired franchise agreements - (2,352 ) - (2,352 ) Litigation settlement - (300 ) - (300 ) Pretax impact on earnings - (2,652 ) (9,048 ) (11,700 ) Excess tax benefits on stock compensation - - 225 225 Tax impact of deferred tax rate change 1,772 3,559 (1,090 ) 4,241 Income tax benefit on the above - 412 914 1,326 After-tax impact on earnings $ 1,772 $ 1,319 $ (8,999 ) $ (5,908 ) Nine Months Ended September 30, 2023 VITAS Roto-Rooter Corporate Consolidated Stock option expense $ - $ - $ (22,376 ) $ (22,376 ) Long-term incentive compensation - - (7,817 ) (7,817 ) Amortization of reacquired franchise agreements - (7,056 ) - (7,056 ) Litigation settlements - (2,056 ) - (2,056 ) Pretax impact on earnings - (9,112 ) (30,193 ) (39,305 ) Excess tax benefits on stock compensation - - 3,376 3,376 Tax impact of deferred tax rate change 1,772 3,559 (1,090 ) 4,241 Income tax benefit on the above - 2,123 4,320 6,443 After-tax impact on earnings $ 1,772 $ (3,430 ) $ (23,587 ) $ (25,245 ) (c) VITAS has 10 large (greater than 450 ADC), 23 medium (greater than 200 but less than 450 ADC) and 22 small (less than 200 ADC) hospice programs. Of Vitas' 32 Medicare provider numbers, for the trailing 12 months, 24 provider numbers have a Medicare cap cushion of greater than 10%, one provider number has a Medicare cap cushion between 5% and 10%, four provider numbers have a Medicare cap cushion between 0% and 5%, and three provider numbers have a Medicare cap liability. View source version on businesswire.com: https://www.businesswire.com/news/home/20241029394976/en/Contacts Michael D. Witzeman (513) 762-6714 Stock Quote API & Stock News API supplied by www.cloudquote.io Quotes delayed at least 20 minutes. By accessing this page, you agree to the following Privacy Policy and Terms and Conditions.
Chemed Reports Third-Quarter 2024 Results By: Chemed Corporation via Business Wire October 29, 2024 at 16:15 PM EDT 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 third quarter ended September 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 nine-months ended September 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 nine months-ended September 30, 2024 as a result of the Retention Program. Results for Quarter Ended September 30, 2024 Consolidated operating results: Revenue increased 7.4% to $606.2 million GAAP Diluted Earnings-per-Share (EPS) of $5.00, an increase of 1.4% Adjusted Diluted EPS of $5.64, an increase of 6.0% VITAS segment operating results: Net Patient Revenue of $391.4 million, an increase of 17.3% Average Daily Census (ADC) of 21,785, an increase of 15.5% Admissions of 16,775, an increase of 6.3% Net Income, excluding certain discrete items, of $53.8 million, an increase of 26.4% Adjusted EBITDA, excluding Medicare Cap, of $73.1 million, an increase of 33.1% Adjusted EBITDA margin, excluding Medicare Cap, of 18.6%, an increase of 212-basis points Roto-Rooter segment operating results: Revenue of $214.8 million, a decrease of 6.9% Net Income, excluding certain discrete items, of $39.8 million, a decrease of 18.9% Adjusted EBITDA of $56.4 million, a decline of 15.8% Adjusted EBITDA margin of 26.3%, a decline of 275-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 two of the three 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 approximately $10 million to $11 million of revenue in the third quarter of 2024. This revenue translated to net income of approximately $1.8 million to $2.0 million. Adjusted EBITDA in the quarter attributed to Covenant Health is between $2.4 million and $2.6 million. VITAS net revenue was $391.4 million in the third quarter of 2024, which is an increase of 17.3% when compared to the prior-year period. This revenue increase is comprised primarily of a 15.5% increase in days-of-care and a geographically weighted average Medicare reimbursement rate increase of approximately 2.6%. Acuity mix shift negatively impacted revenue growth 144-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 64-basis points. In the third quarter of 2024, VITAS accrued $2.2 million in Medicare Cap billing limitations. This compares to a $125,000 Medicare Cap billing limitation in the third quarter of 2023. Of VITAS’ 32 Medicare provider numbers, 24 provider numbers have a trailing 12-month Medicare Cap cushion of 10% or greater, five provider numbers have a cushion between 0% and 10%, and three provider numbers have a trailing 12-month Medicare Cap billing limitation totaling $9.4 million. Average revenue per patient per day in the third quarter of 2024 was $199.16 which is 139-basis points above the prior-year period. Reimbursement for routine home care and high acuity care averaged $175.82 and $1,094.97, respectively. During the quarter, high acuity days-of-care were 2.5% of total days of care, a decline of 26-basis points when compared to the prior-year quarter. The third quarter 2024 gross margin, excluding Medicare Cap, was 25.1%. This compares to the prior year quarter’s gross margin of 24.0%, excluding Medicare Cap. Selling, general and administrative expenses were $25.9 million in the third quarter of 2024 compared to $25.3 million in the prior-year quarter. Adjusted EBITDA, excluding Medicare Cap, totaled $73.1 million in the quarter, an increase of 33.1% when compared to the prior year period. Adjusted EBITDA margin in the quarter, excluding Medicare Cap, was 18.6%, which is 212-basis points above the prior-year period. Hurricane Helene, which impacted the panhandle of Florida and other parts of the southeastern United States in late September, did not result in any significant property loss or damage to VITAS. However, as with other similar events, we did experience a slowdown in admission activity while health systems prepared for the hurricane and then dealt with the aftermath. We estimate that admissions were negatively impacted during the quarter by approximately 60-100 patients. We also believe that the Florida admission impact will be more significant in the fourth quarter with the combination of Hurricanes Helene and Milton. Roto-Rooter Roto-Rooter generated quarterly revenue of $214.8 million in the third quarter of 2024, a decrease of 6.9%, when compared to the prior-year quarter. Roto-Rooter branch commercial revenue in the quarter totaled $53.5 million, a decrease of 5.9% from the prior-year period. This aggregate commercial revenue change consisted of drain cleaning revenue declining 4.4%, plumbing declining 12.1%, excavation declining 2.3%, and water restoration declining 3.3%. Roto-Rooter branch residential revenue in the quarter totaled $146.0 million, a decrease of 6.3%, over the prior-year period. This aggregate residential revenue change consisted of drain cleaning declining 5.9%, plumbing declining 11.2%, excavation declining 6.1%, and water restoration declining 6.9%. Roto-Rooter’s gross margin in the quarter was 52.9%, essentially flat when compared to the third quarter of 2023. Roto-Rooter’s selling, general and administrative expenses were $57.1 million in the quarter, which is an increase of 3.5% compared to the third quarter of 2023. This increase was caused by continued enhanced marketing efforts designed to drive additional demand. Adjusted EBITDA in the third quarter of 2024 totaled $56.4 million, a decrease of 15.8% when compared to the third quarter of 2023. The Adjusted EBITDA margin in the quarter was 26.3% which represents a 275-basis point decline from the third quarter of 2023. Chemed Consolidated As of September 30, 2024, Chemed had total cash and cash equivalents of $238.5 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 $57.8 million which equates to a cost per share of $578.21. As of September 30, 2024, there was approximately $168.1 million of remaining share repurchase authorization under its plan. Revision to Guidance for 2024 VITAS continues to perform as anticipated, and we reiterate the metrics for VITAS as presented in our second quarter 2024 press release. Roto-Rooter’s revenue and resulting adjusted EBITDA and adjusted net income was softer than anticipated during the third quarter of 2024. As a result of these factors, full-year consolidated 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 $23.00 to $23.15. This range represents a 13.3% to 14.0% increase from Chemed’s 2023 reported adjusted earnings per diluted share of $20.30. This guidance assumes an effective corporate tax rate on adjusted earnings of 24.3% and a diluted share count of 15.22 million shares. Conference Call As previously disclosed, Chemed will host a conference call and webcast at 10 a.m., ET, on Wednesday October 30, 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/c93ntfig/. Participants may also register via teleconference at: https://register.vevent.com/register/BI0022c41ceecf4b83a582584604bc732b. 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 September 30, Nine Months Ended September 30, 2024 2023 2024 2023 Service revenues and sales $ 606,181 $ 564,532 $ 1,791,294 $ 1,678,505 Cost of services provided and goods sold 396,187 362,358 1,171,064 1,107,256 Selling, general and administrative expenses (aa) 101,981 99,602 320,109 294,684 Depreciation 13,147 12,858 39,601 37,778 Amortization 2,550 2,521 7,617 7,548 Other operating expense 159 343 288 2,064 Total costs and expenses 514,024 477,682 1,538,679 1,449,330 Income from operations 92,157 86,850 252,615 229,175 Interest expense (427 ) (444 ) (1,281 ) (2,766 ) Other income--net (bb) 9,299 6,859 28,008 8,365 Income before income taxes 101,029 93,265 279,342 234,774 Income taxes (25,253 ) (18,307 ) (67,662 ) (52,318 ) Net income $ 75,776 $ 74,958 $ 211,680 $ 182,456 Earnings Per Share Net income $ 5.04 $ 4.97 $ 14.04 $ 12.14 Average number of shares outstanding 15,025 15,075 15,082 15,034 Diluted Earnings Per Share Net income $ 5.00 $ 4.93 $ 13.88 $ 12.02 Average number of shares outstanding 15,168 15,200 15,253 15,178 (aa) Selling, general and administrative ("SG&A") expenses comprise (in thousands): Three Months Ended September 30, Nine Months Ended September 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 $ 93,269 $ 91,792 $ 287,712 $ 281,426 Market value adjustments related to deferred compensation trusts 5,629 4,257 16,600 5,441 Long-term incentive compensation 3,083 3,553 15,797 7,817 Total SG&A expenses $ 101,981 $ 99,602 $ 320,109 $ 294,684 (bb) Other income--net comprises (in thousands): Three Months Ended September 30, Nine Months Ended September 30, 2024 2023 2024 2023 Market value adjustments related to deferred compensation trusts $ 5,629 $ 4,257 $ 16,600 $ 5,441 Interest income 3,668 2,600 11,405 2,863 Other 2 2 3 61 Total other income--net $ 9,299 $ 6,859 $ 28,008 $ 8,365 CHEMED CORPORATION AND SUBSIDIARY COMPANIES CONSOLIDATED BALANCE SHEETS (in thousands, except per share data)(unaudited) September 30, 2024 2023 Assets Current assets Cash and cash equivalents $ 238,451 $ 173,150 Accounts receivable less allowances 196,481 168,031 Inventories 9,899 12,511 Prepaid income taxes 14,229 11,337 Prepaid expenses 31,377 29,510 Total current assets 490,437 394,539 Investments of deferred compensation plans held in trust 126,631 104,410 Properties and equipment, at cost less accumulated depreciation 200,939 205,462 Lease right of use asset 134,111 123,353 Identifiable intangible assets less accumulated amortization 94,753 92,768 Goodwill 666,860 584,977 Other assets 55,704 56,570 Total Assets $ 1,769,435 $ 1,562,079 Liabilities Current liabilities Accounts payable $ 44,938 $ 56,508 Accrued insurance 60,308 61,122 Accrued income taxes 3,385 5,135 Accrued compensation 73,141 74,865 Short-term lease liability 42,490 37,615 Other current liabilities 40,517 61,974 Total current liabilities 264,779 297,219 Deferred income taxes 28,076 30,381 Deferred compensation liabilities 122,240 102,815 Long-term lease liability 105,416 99,346 Other liabilities 13,169 13,075 Total Liabilities 533,680 542,836 Stockholders' Equity Capital stock 37,395 37,013 Paid-in capital 1,462,569 1,254,356 Retained earnings 2,639,011 2,362,928 Treasury stock, at cost (2,905,430 ) (2,637,102 ) Deferred compensation payable in Company stock 2,210 2,048 Total Stockholders' Equity 1,235,755 1,019,243 Total Liabilities and Stockholders' Equity $ 1,769,435 $ 1,562,079 CHEMED CORPORATION AND SUBSIDIARY COMPANIES CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands)(unaudited) Nine Months Ended September 30, 2024 2023 Cash Flows from Operating Activities Net income $ 211,680 $ 182,456 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 47,218 45,326 Stock option expense 23,933 22,376 Noncash long-term incentive compensation 15,783 6,637 Litigation settlements (5,750 ) 2,050 Benefit for deferred income taxes (2,245 ) (8,232 ) Noncash directors' compensation 1,282 1,444 Amortization of debt issuance costs 241 500 Changes in operating assets and liabilities, excluding amounts acquired in business combinations: Increase in accounts receivable (14,336 ) (27,843 ) Decrease/(increase) in inventories 2,125 (2,239 ) (Increase)/decrease in prepaid expenses (1,173 ) 781 Decrease in accounts payable and other current liabilities (19,641 ) (15,815 ) Change in current income taxes (4,545 ) 12,314 Net change in lease assets and liabilities (400 ) (892 ) Increase in other assets (21,101 ) (8,622 ) Increase in other liabilities 18,348 11,426 Other sources 1,165 69 Net cash provided by operating activities 252,584 221,736 Cash Flows from Investing Activities Business combinations, net of cash acquired (97,400 ) (3,994 ) Capital expenditures (36,770 ) (45,075 ) Proceeds from sale of fixed assets 3,060 506 Other uses (281 ) (409 ) Net cash used by investing activities (131,391 ) (48,972 ) Cash Flows from Financing Activities Purchases of treasury stock (152,049 ) (27,769 ) Proceeds from exercise of stock options 49,906 58,277 Dividends paid (19,594 ) (17,446 ) Change in cash overdrafts payable (15,749 ) 16,182 Capital stock surrendered to pay taxes on stock-based compensation (8,827 ) (5,446 ) Payments on long-term debt - (97,500 ) Other uses (387 ) (38 ) Net cash used by financing activities (146,700 ) (73,740 ) (Decrease)/increase in Cash and Cash Equivalents (25,507 ) 99,024 Cash and cash equivalents at beginning of year 263,958 74,126 Cash and cash equivalents at end of year $ 238,451 $ 173,150 CHEMED CORPORATION AND SUBSIDIARY COMPANIES CONSOLIDATING STATEMENTS OF INCOME FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2024 AND 2023 (in thousands)(unaudited) Chemed VITAS Roto-Rooter Corporate Consolidated 2024 (a) Service revenues and sales $ 391,406 $ 214,775 $ - $ 606,181 Cost of services provided and goods sold 294,936 101,251 - 396,187 Selling, general and administrative expenses 25,883 57,072 19,026 101,981 Depreciation 5,063 8,071 13 13,147 Amortization 26 2,524 - 2,550 Other operating expense 97 62 - 159 Total costs and expenses 326,005 168,980 19,039 514,024 Income/(loss) from operations 65,401 45,795 (19,039 ) 92,157 Interest expense (46 ) (114 ) (267 ) (427 ) Intercompany interest income/(expense) 4,920 3,656 (8,576 ) - Other income—net 62 18 9,219 9,299 Income/(loss) before income taxes 70,337 49,355 (18,663 ) 101,029 Income taxes (16,851 ) (11,400 ) 2,998 (25,253 ) Net income/(loss) $ 53,486 $ 37,955 $ (15,665 ) $ 75,776 2023 (b) Service revenues and sales $ 333,728 $ 230,804 $ - $ 564,532 Cost of services provided and goods sold 253,731 108,627 - 362,358 Selling, general and administrative expenses 25,256 55,141 19,205 99,602 Depreciation 5,009 7,836 13 12,858 Amortization 26 2,495 - 2,521 Other operating expense/(income) (53 ) 396 - 343 Total costs and expenses 283,969 174,495 19,218 477,682 Income/(loss) from operations 49,759 56,309 (19,218 ) 86,850 Interest expense (52 ) (131 ) (261 ) (444 ) Intercompany interest income/(expense) 4,935 3,040 (7,975 ) - Other income—net 849 34 5,976 6,859 Income/(loss) before income taxes 55,491 59,252 (21,478 ) 93,265 Income taxes (11,160 ) (8,925 ) 1,778 (18,307 ) Net income/(loss) $ 44,331 $ 50,327 $ (19,700 ) $ 74,958 The "Footnotes to Financial Statements" are integral parts of this financial information. CHEMED CORPORATION AND SUBSIDIARY COMPANIES CONSOLIDATING STATEMENTS OF INCOME FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2024 AND 2023 (in thousands)(unaudited) Chemed VITAS Roto-Rooter Corporate Consolidated 2024 (a) Service revenues and sales $ 1,119,970 $ 671,324 $ - $ 1,791,294 Cost of services provided and goods sold 852,347 318,717 - 1,171,064 Selling, general and administrative expenses 73,968 175,683 70,458 320,109 Depreciation 15,288 24,275 38 39,601 Amortization 79 7,538 - 7,617 Other operating expense 160 128 - 288 Total costs and expenses 941,842 526,341 70,496 1,538,679 Income/(loss) from operations 178,128 144,983 (70,496 ) 252,615 Interest expense (138 ) (349 ) (794 ) (1,281 ) Intercompany interest income/(expense) 15,096 10,638 (25,734 ) - Other income—net 138 64 27,806 28,008 Income/(loss) before income taxes 193,224 155,336 (69,218 ) 279,342 Income taxes (46,517 ) (36,010 ) 14,865 (67,662 ) Net income/(loss) $ 146,707 $ 119,326 $ (54,353 ) $ 211,680 2023 (b) Service revenues and sales $ 965,066 $ 713,439 $ - $ 1,678,505 Cost of services provided and goods sold 770,470 336,786 - 1,107,256 Selling, general and administrative expenses 71,248 171,966 51,470 294,684 Depreciation 14,907 22,830 41 37,778 Amortization 78 7,470 - 7,548 Other operating expense/(income) (15 ) 2,079 - 2,064 Total costs and expenses 856,688 541,131 51,511 1,449,330 Income/(loss) from operations 108,378 172,308 (51,511 ) 229,175 Interest expense (154 ) (387 ) (2,225 ) (2,766 ) Intercompany interest income/(expense) 14,393 8,652 (23,045 ) - Other income—net 1,109 96 7,160 8,365 Income/(loss) before income taxes 123,726 180,669 (69,621 ) 234,774 Income taxes (28,503 ) (38,315 ) 14,500 (52,318 ) Net income/(loss) $ 95,223 $ 142,354 $ (55,121 ) $ 182,456 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 SEPTEMBER 30, 2024 AND 2023 (in thousands)(unaudited) Chemed VITAS Roto-Rooter Corporate Consolidated 2024 Net income/(loss) $ 53,486 $ 37,955 $ (15,665 ) $ 75,776 Add/(deduct): Interest expense 46 114 267 427 Income taxes 16,851 11,400 (2,998 ) 25,253 Depreciation 5,063 8,071 13 13,147 Amortization 26 2,524 - 2,550 EBITDA 75,472 60,064 (18,383 ) 117,153 Add/(deduct): Intercompany interest expense/(income) (4,920 ) (3,656 ) 8,576 - Interest income (59 ) (18 ) (3,589 ) (3,666 ) Stock option expense - - 6,038 6,038 Long-term incentive compensation - - 3,083 3,083 Acquisition expense 394 (8 ) - 386 Adjusted EBITDA $ 70,887 $ 56,382 $ (4,275 ) $ 122,994 2023 Net income/(loss) $ 44,331 $ 50,327 $ (19,700 ) $ 74,958 Add/(deduct): Interest expense 52 131 261 444 Income taxes 11,160 8,925 (1,778 ) 18,307 Depreciation 5,009 7,836 13 12,858 Amortization 26 2,495 - 2,521 EBITDA 60,578 69,714 (21,204 ) 109,088 Add/(deduct): Intercompany interest expense/(income) (4,935 ) (3,040 ) 7,975 - Interest income (847 ) (34 ) (1,719 ) (2,600 ) Litigation settlement - 300 - 300 Stock option expense - - 5,495 5,495 Long-term incentive compensation - - 3,553 3,553 Adjusted EBITDA $ 54,796 $ 66,940 $ (5,900 ) $ 115,836 The "Footnotes to Financial Statements" are integral parts of this financial information. CHEMED CORPORATION AND SUBSIDIARY COMPANIES CONSOLIDATING SUMMARIES OF EBITDA FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2024 AND 2023 (in thousands)(unaudited) Chemed VITAS Roto-Rooter Corporate Consolidated 2024 Net income/(loss) $ 146,707 $ 119,326 $ (54,353 ) $ 211,680 Add/(deduct): Interest expense 138 349 794 1,281 Income taxes 46,517 36,010 (14,865 ) 67,662 Depreciation 15,288 24,275 38 39,601 Amortization 79 7,538 - 7,617 EBITDA 208,729 187,498 (68,386 ) 327,841 Add/(deduct): Intercompany interest expense/(income) (15,096 ) (10,638 ) 25,734 - Interest income (136 ) (64 ) (11,205 ) (11,405 ) Stock option expense - - 23,933 23,933 Long-term incentive compensation - - 10,460 10,460 Severance arrangement - - 5,337 5,337 Acquisition expense 1,302 37 - 1,339 Adjusted EBITDA $ 194,799 $ 176,833 $ (14,127 ) $ 357,505 2023 Net income/(loss) $ 95,223 $ 142,354 $ (55,121 ) $ 182,456 Add/(deduct): Interest expense 154 387 2,225 2,766 Income taxes 28,503 38,315 (14,500 ) 52,318 Depreciation 14,907 22,830 41 37,778 Amortization 78 7,470 - 7,548 EBITDA 138,865 211,356 (67,355 ) 282,866 Add/(deduct): Intercompany interest expense/(income) (14,393 ) (8,652 ) 23,045 - Interest income (1,046 ) (96 ) (1,720 ) (2,862 ) Stock option expense - - 22,376 22,376 Long-term incentive compensation - - 7,817 7,817 Litigation settlements - 2,056 - 2,056 Adjusted EBITDA $ 123,426 $ 204,664 $ (15,837 ) $ 312,253 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 September 30, Nine Months Ended September 30, 2024 2023 2024 2023 Net income as reported $ 75,776 $ 74,958 $ 211,680 $ 182,456 Add/(deduct) pre-tax cost of: Stock option expense 6,038 5,495 23,933 22,376 Long-term incentive compensation 3,083 3,553 10,460 7,817 Amortization of reacquired franchise rights 2,352 2,352 7,056 7,056 Severance arrangement - - 5,337 - Acquisition expense 386 - 1,339 - Litigation settlement - 300 - 2,056 Add/(deduct) tax impacts: Tax impact of the above pre-tax adjustments (1) (1,761 ) (1,326 ) (6,762 ) (6,443 ) Tax impact of deferred tax rate change - (4,241 ) - (4,241 ) Excess tax benefits on stock compensation (389 ) (225 ) (4,308 ) (3,376 ) Adjusted net income $ 85,485 $ 80,866 $ 248,735 $ 207,701 Diluted Earnings Per Share As Reported Net income $ 5.00 $ 4.93 $ 13.88 $ 12.02 Average number of shares outstanding 15,168 15,200 15,253 15,178 Adjusted Diluted Earnings Per Share Adjusted net income $ 5.64 $ 5.32 $ 16.31 $ 13.68 Average number of shares outstanding 15,168 15,200 15,253 15,178 (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 September 30, Nine Months Ended September 30, OPERATING STATISTICS 2024 2023 2024 2023 Net revenue ($000) (c) Homecare $ 338,344 $ 287,389 $ 967,981 $ 832,554 Inpatient 29,923 27,818 89,297 84,312 Continuous care 25,799 22,032 74,295 63,054 Other 5,082 3,562 13,900 9,738 Subtotal $ 399,148 $ 340,801 $ 1,145,473 $ 989,658 Room and board, net (3,336 ) (2,646 ) (9,437 ) (8,317 ) Contractual allowances (2,167 ) (4,302 ) (10,077 ) (10,650 ) Medicare cap allowance (2,239 ) (125 ) (5,989 ) (5,625 ) Net Revenue $ 391,406 $ 333,728 $ 1,119,970 $ 965,066 Net revenue as a percent of total before Medicare cap allowance Homecare 84.8 % 84.3 % 84.5 % 84.1 % Inpatient 7.5 8.2 7.8 8.5 Continuous care 6.5 6.5 6.5 6.4 Other 1.2 1.0 1.2 1.0 Subtotal 100.0 100.0 100.0 100.0 Room and board, net (0.8 ) (0.8 ) (0.8 ) (0.8 ) Contractual allowances (0.5 ) (1.3 ) (0.9 ) (1.1 ) Medicare cap allowance (0.6 ) - (0.5 ) (0.6 ) Net Revenue 98.1 % 97.9 % 97.8 % 97.5 % Days of care Homecare 1,622,680 1,391,377 4,621,755 4,018,469 Nursing home 320,664 287,785 908,013 833,112 Respite 9,952 7,292 26,806 19,211 Subtotal routine homecare and respite 1,953,296 1,686,454 5,556,574 4,870,792 Inpatient 26,524 25,493 79,064 76,987 Continuous care 24,365 23,071 72,335 65,630 Total 2,004,185 1,735,018 5,707,973 5,013,409 Number of days in relevant time period 92 92 274 273 Average daily census ("ADC") (days) Homecare 17,639 15,124 16,867 14,720 Nursing home 3,485 3,128 3,314 3,052 Respite 108 79 98 70 Subtotal routine homecare and respite 21,232 18,331 20,279 17,842 Inpatient 288 277 289 282 Continuous care 265 251 264 240 Total 21,785 18,859 20,832 18,364 Total Admissions 16,775 15,774 51,020 47,564 Total Discharges 16,217 15,328 48,285 45,837 Average length of stay (days) 102.0 103.1 102.2 100.8 Median length of stay (days) 18.0 17.0 17.0 16.0 ADC by major diagnosis Cerebro 43.6 % 42.0 % 43.7 % 42.2 % Neurological 13.3 14.7 13.3 15.9 Cancer 10.0 10.6 10.0 10.6 Cardio 16.3 16.4 16.2 16.1 Respiratory 7.1 7.2 7.2 7.1 Other 9.7 9.1 9.6 8.1 Total 100.0 % 100.0 % 100.0 % 100.0 % Admissions by major diagnosis Cerebro 28.4 % 26.6 % 27.7 % 26.3 % Neurological 7.7 8.8 7.9 9.9 Cancer 25.7 26.1 25.1 26.0 Cardio 15.1 16.0 15.7 16.2 Respiratory 9.5 9.7 9.9 10.1 Other 13.6 12.8 13.7 11.5 Total 100.0 % 100.0 % 100.0 % 100.0 % Estimated uncollectible accounts as a percent of revenues 0.6 % 1.3 % 0.9 % 1.1 % Accounts receivable -- Days of revenue outstanding-excluding unapplied Medicare payments 37.5 36.4 n.a. n.a. Days of revenue outstanding-including unapplied Medicare payments 35.5 33.8 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 NINE MONTHS ENDED SEPTEMBER 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 September 30, 2024 VITAS Roto-Rooter Corporate Consolidated Stock option expense $ - $ - $ (6,038 ) $ (6,038 ) Long-term incentive compensation - - (3,083 ) (3,083 ) Amortization of reacquired franchise agreements - (2,352 ) - (2,352 ) Acquisition expense (394 ) 8 - (386 ) Pretax impact on earnings (394 ) (2,344 ) (9,121 ) (11,859 ) Excess tax benefits on stock compensation - - 389 389 Income tax benefit on the above 96 546 1,119 1,761 After-tax impact on earnings $ (298 ) $ (1,798 ) $ (7,613 ) $ (9,709 ) Nine Months Ended September 30, 2024 VITAS Roto-Rooter Corporate Consolidated Stock option expense $ - $ - $ (23,933 ) $ (23,933 ) Long-term incentive compensation - - (10,460 ) (10,460 ) Amortization of reacquired franchise agreements - (7,056 ) - (7,056 ) Severance arrangement - - (5,337 ) (5,337 ) Acquisition expense (1,302 ) (37 ) - (1,339 ) Pretax impact on earnings (1,302 ) (7,093 ) (39,730 ) (48,125 ) Excess tax benefits on stock compensation - - 4,308 4,308 Income tax benefit on the above 317 1,652 4,793 6,762 After-tax impact on earnings $ (985 ) $ (5,441 ) $ (30,629 ) $ (37,055 ) (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 September 30, 2023 VITAS Roto-Rooter Corporate Consolidated Stock option expense $ - $ - $ (5,495 ) $ (5,495 ) Long-term incentive compensation - - (3,553 ) (3,553 ) Amortization of reacquired franchise agreements - (2,352 ) - (2,352 ) Litigation settlement - (300 ) - (300 ) Pretax impact on earnings - (2,652 ) (9,048 ) (11,700 ) Excess tax benefits on stock compensation - - 225 225 Tax impact of deferred tax rate change 1,772 3,559 (1,090 ) 4,241 Income tax benefit on the above - 412 914 1,326 After-tax impact on earnings $ 1,772 $ 1,319 $ (8,999 ) $ (5,908 ) Nine Months Ended September 30, 2023 VITAS Roto-Rooter Corporate Consolidated Stock option expense $ - $ - $ (22,376 ) $ (22,376 ) Long-term incentive compensation - - (7,817 ) (7,817 ) Amortization of reacquired franchise agreements - (7,056 ) - (7,056 ) Litigation settlements - (2,056 ) - (2,056 ) Pretax impact on earnings - (9,112 ) (30,193 ) (39,305 ) Excess tax benefits on stock compensation - - 3,376 3,376 Tax impact of deferred tax rate change 1,772 3,559 (1,090 ) 4,241 Income tax benefit on the above - 2,123 4,320 6,443 After-tax impact on earnings $ 1,772 $ (3,430 ) $ (23,587 ) $ (25,245 ) (c) VITAS has 10 large (greater than 450 ADC), 23 medium (greater than 200 but less than 450 ADC) and 22 small (less than 200 ADC) hospice programs. Of Vitas' 32 Medicare provider numbers, for the trailing 12 months, 24 provider numbers have a Medicare cap cushion of greater than 10%, one provider number has a Medicare cap cushion between 5% and 10%, four provider numbers have a Medicare cap cushion between 0% and 5%, and three provider numbers have a Medicare cap liability. View source version on businesswire.com: https://www.businesswire.com/news/home/20241029394976/en/Contacts Michael D. Witzeman (513) 762-6714
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 third quarter ended September 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 nine-months ended September 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 nine months-ended September 30, 2024 as a result of the Retention Program. Results for Quarter Ended September 30, 2024 Consolidated operating results: Revenue increased 7.4% to $606.2 million GAAP Diluted Earnings-per-Share (EPS) of $5.00, an increase of 1.4% Adjusted Diluted EPS of $5.64, an increase of 6.0% VITAS segment operating results: Net Patient Revenue of $391.4 million, an increase of 17.3% Average Daily Census (ADC) of 21,785, an increase of 15.5% Admissions of 16,775, an increase of 6.3% Net Income, excluding certain discrete items, of $53.8 million, an increase of 26.4% Adjusted EBITDA, excluding Medicare Cap, of $73.1 million, an increase of 33.1% Adjusted EBITDA margin, excluding Medicare Cap, of 18.6%, an increase of 212-basis points Roto-Rooter segment operating results: Revenue of $214.8 million, a decrease of 6.9% Net Income, excluding certain discrete items, of $39.8 million, a decrease of 18.9% Adjusted EBITDA of $56.4 million, a decline of 15.8% Adjusted EBITDA margin of 26.3%, a decline of 275-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 two of the three 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 approximately $10 million to $11 million of revenue in the third quarter of 2024. This revenue translated to net income of approximately $1.8 million to $2.0 million. Adjusted EBITDA in the quarter attributed to Covenant Health is between $2.4 million and $2.6 million. VITAS net revenue was $391.4 million in the third quarter of 2024, which is an increase of 17.3% when compared to the prior-year period. This revenue increase is comprised primarily of a 15.5% increase in days-of-care and a geographically weighted average Medicare reimbursement rate increase of approximately 2.6%. Acuity mix shift negatively impacted revenue growth 144-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 64-basis points. In the third quarter of 2024, VITAS accrued $2.2 million in Medicare Cap billing limitations. This compares to a $125,000 Medicare Cap billing limitation in the third quarter of 2023. Of VITAS’ 32 Medicare provider numbers, 24 provider numbers have a trailing 12-month Medicare Cap cushion of 10% or greater, five provider numbers have a cushion between 0% and 10%, and three provider numbers have a trailing 12-month Medicare Cap billing limitation totaling $9.4 million. Average revenue per patient per day in the third quarter of 2024 was $199.16 which is 139-basis points above the prior-year period. Reimbursement for routine home care and high acuity care averaged $175.82 and $1,094.97, respectively. During the quarter, high acuity days-of-care were 2.5% of total days of care, a decline of 26-basis points when compared to the prior-year quarter. The third quarter 2024 gross margin, excluding Medicare Cap, was 25.1%. This compares to the prior year quarter’s gross margin of 24.0%, excluding Medicare Cap. Selling, general and administrative expenses were $25.9 million in the third quarter of 2024 compared to $25.3 million in the prior-year quarter. Adjusted EBITDA, excluding Medicare Cap, totaled $73.1 million in the quarter, an increase of 33.1% when compared to the prior year period. Adjusted EBITDA margin in the quarter, excluding Medicare Cap, was 18.6%, which is 212-basis points above the prior-year period. Hurricane Helene, which impacted the panhandle of Florida and other parts of the southeastern United States in late September, did not result in any significant property loss or damage to VITAS. However, as with other similar events, we did experience a slowdown in admission activity while health systems prepared for the hurricane and then dealt with the aftermath. We estimate that admissions were negatively impacted during the quarter by approximately 60-100 patients. We also believe that the Florida admission impact will be more significant in the fourth quarter with the combination of Hurricanes Helene and Milton. Roto-Rooter Roto-Rooter generated quarterly revenue of $214.8 million in the third quarter of 2024, a decrease of 6.9%, when compared to the prior-year quarter. Roto-Rooter branch commercial revenue in the quarter totaled $53.5 million, a decrease of 5.9% from the prior-year period. This aggregate commercial revenue change consisted of drain cleaning revenue declining 4.4%, plumbing declining 12.1%, excavation declining 2.3%, and water restoration declining 3.3%. Roto-Rooter branch residential revenue in the quarter totaled $146.0 million, a decrease of 6.3%, over the prior-year period. This aggregate residential revenue change consisted of drain cleaning declining 5.9%, plumbing declining 11.2%, excavation declining 6.1%, and water restoration declining 6.9%. Roto-Rooter’s gross margin in the quarter was 52.9%, essentially flat when compared to the third quarter of 2023. Roto-Rooter’s selling, general and administrative expenses were $57.1 million in the quarter, which is an increase of 3.5% compared to the third quarter of 2023. This increase was caused by continued enhanced marketing efforts designed to drive additional demand. Adjusted EBITDA in the third quarter of 2024 totaled $56.4 million, a decrease of 15.8% when compared to the third quarter of 2023. The Adjusted EBITDA margin in the quarter was 26.3% which represents a 275-basis point decline from the third quarter of 2023. Chemed Consolidated As of September 30, 2024, Chemed had total cash and cash equivalents of $238.5 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 $57.8 million which equates to a cost per share of $578.21. As of September 30, 2024, there was approximately $168.1 million of remaining share repurchase authorization under its plan. Revision to Guidance for 2024 VITAS continues to perform as anticipated, and we reiterate the metrics for VITAS as presented in our second quarter 2024 press release. Roto-Rooter’s revenue and resulting adjusted EBITDA and adjusted net income was softer than anticipated during the third quarter of 2024. As a result of these factors, full-year consolidated 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 $23.00 to $23.15. This range represents a 13.3% to 14.0% increase from Chemed’s 2023 reported adjusted earnings per diluted share of $20.30. This guidance assumes an effective corporate tax rate on adjusted earnings of 24.3% and a diluted share count of 15.22 million shares. Conference Call As previously disclosed, Chemed will host a conference call and webcast at 10 a.m., ET, on Wednesday October 30, 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/c93ntfig/. Participants may also register via teleconference at: https://register.vevent.com/register/BI0022c41ceecf4b83a582584604bc732b. 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 September 30, Nine Months Ended September 30, 2024 2023 2024 2023 Service revenues and sales $ 606,181 $ 564,532 $ 1,791,294 $ 1,678,505 Cost of services provided and goods sold 396,187 362,358 1,171,064 1,107,256 Selling, general and administrative expenses (aa) 101,981 99,602 320,109 294,684 Depreciation 13,147 12,858 39,601 37,778 Amortization 2,550 2,521 7,617 7,548 Other operating expense 159 343 288 2,064 Total costs and expenses 514,024 477,682 1,538,679 1,449,330 Income from operations 92,157 86,850 252,615 229,175 Interest expense (427 ) (444 ) (1,281 ) (2,766 ) Other income--net (bb) 9,299 6,859 28,008 8,365 Income before income taxes 101,029 93,265 279,342 234,774 Income taxes (25,253 ) (18,307 ) (67,662 ) (52,318 ) Net income $ 75,776 $ 74,958 $ 211,680 $ 182,456 Earnings Per Share Net income $ 5.04 $ 4.97 $ 14.04 $ 12.14 Average number of shares outstanding 15,025 15,075 15,082 15,034 Diluted Earnings Per Share Net income $ 5.00 $ 4.93 $ 13.88 $ 12.02 Average number of shares outstanding 15,168 15,200 15,253 15,178 (aa) Selling, general and administrative ("SG&A") expenses comprise (in thousands): Three Months Ended September 30, Nine Months Ended September 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 $ 93,269 $ 91,792 $ 287,712 $ 281,426 Market value adjustments related to deferred compensation trusts 5,629 4,257 16,600 5,441 Long-term incentive compensation 3,083 3,553 15,797 7,817 Total SG&A expenses $ 101,981 $ 99,602 $ 320,109 $ 294,684 (bb) Other income--net comprises (in thousands): Three Months Ended September 30, Nine Months Ended September 30, 2024 2023 2024 2023 Market value adjustments related to deferred compensation trusts $ 5,629 $ 4,257 $ 16,600 $ 5,441 Interest income 3,668 2,600 11,405 2,863 Other 2 2 3 61 Total other income--net $ 9,299 $ 6,859 $ 28,008 $ 8,365 CHEMED CORPORATION AND SUBSIDIARY COMPANIES CONSOLIDATED BALANCE SHEETS (in thousands, except per share data)(unaudited) September 30, 2024 2023 Assets Current assets Cash and cash equivalents $ 238,451 $ 173,150 Accounts receivable less allowances 196,481 168,031 Inventories 9,899 12,511 Prepaid income taxes 14,229 11,337 Prepaid expenses 31,377 29,510 Total current assets 490,437 394,539 Investments of deferred compensation plans held in trust 126,631 104,410 Properties and equipment, at cost less accumulated depreciation 200,939 205,462 Lease right of use asset 134,111 123,353 Identifiable intangible assets less accumulated amortization 94,753 92,768 Goodwill 666,860 584,977 Other assets 55,704 56,570 Total Assets $ 1,769,435 $ 1,562,079 Liabilities Current liabilities Accounts payable $ 44,938 $ 56,508 Accrued insurance 60,308 61,122 Accrued income taxes 3,385 5,135 Accrued compensation 73,141 74,865 Short-term lease liability 42,490 37,615 Other current liabilities 40,517 61,974 Total current liabilities 264,779 297,219 Deferred income taxes 28,076 30,381 Deferred compensation liabilities 122,240 102,815 Long-term lease liability 105,416 99,346 Other liabilities 13,169 13,075 Total Liabilities 533,680 542,836 Stockholders' Equity Capital stock 37,395 37,013 Paid-in capital 1,462,569 1,254,356 Retained earnings 2,639,011 2,362,928 Treasury stock, at cost (2,905,430 ) (2,637,102 ) Deferred compensation payable in Company stock 2,210 2,048 Total Stockholders' Equity 1,235,755 1,019,243 Total Liabilities and Stockholders' Equity $ 1,769,435 $ 1,562,079 CHEMED CORPORATION AND SUBSIDIARY COMPANIES CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands)(unaudited) Nine Months Ended September 30, 2024 2023 Cash Flows from Operating Activities Net income $ 211,680 $ 182,456 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 47,218 45,326 Stock option expense 23,933 22,376 Noncash long-term incentive compensation 15,783 6,637 Litigation settlements (5,750 ) 2,050 Benefit for deferred income taxes (2,245 ) (8,232 ) Noncash directors' compensation 1,282 1,444 Amortization of debt issuance costs 241 500 Changes in operating assets and liabilities, excluding amounts acquired in business combinations: Increase in accounts receivable (14,336 ) (27,843 ) Decrease/(increase) in inventories 2,125 (2,239 ) (Increase)/decrease in prepaid expenses (1,173 ) 781 Decrease in accounts payable and other current liabilities (19,641 ) (15,815 ) Change in current income taxes (4,545 ) 12,314 Net change in lease assets and liabilities (400 ) (892 ) Increase in other assets (21,101 ) (8,622 ) Increase in other liabilities 18,348 11,426 Other sources 1,165 69 Net cash provided by operating activities 252,584 221,736 Cash Flows from Investing Activities Business combinations, net of cash acquired (97,400 ) (3,994 ) Capital expenditures (36,770 ) (45,075 ) Proceeds from sale of fixed assets 3,060 506 Other uses (281 ) (409 ) Net cash used by investing activities (131,391 ) (48,972 ) Cash Flows from Financing Activities Purchases of treasury stock (152,049 ) (27,769 ) Proceeds from exercise of stock options 49,906 58,277 Dividends paid (19,594 ) (17,446 ) Change in cash overdrafts payable (15,749 ) 16,182 Capital stock surrendered to pay taxes on stock-based compensation (8,827 ) (5,446 ) Payments on long-term debt - (97,500 ) Other uses (387 ) (38 ) Net cash used by financing activities (146,700 ) (73,740 ) (Decrease)/increase in Cash and Cash Equivalents (25,507 ) 99,024 Cash and cash equivalents at beginning of year 263,958 74,126 Cash and cash equivalents at end of year $ 238,451 $ 173,150 CHEMED CORPORATION AND SUBSIDIARY COMPANIES CONSOLIDATING STATEMENTS OF INCOME FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2024 AND 2023 (in thousands)(unaudited) Chemed VITAS Roto-Rooter Corporate Consolidated 2024 (a) Service revenues and sales $ 391,406 $ 214,775 $ - $ 606,181 Cost of services provided and goods sold 294,936 101,251 - 396,187 Selling, general and administrative expenses 25,883 57,072 19,026 101,981 Depreciation 5,063 8,071 13 13,147 Amortization 26 2,524 - 2,550 Other operating expense 97 62 - 159 Total costs and expenses 326,005 168,980 19,039 514,024 Income/(loss) from operations 65,401 45,795 (19,039 ) 92,157 Interest expense (46 ) (114 ) (267 ) (427 ) Intercompany interest income/(expense) 4,920 3,656 (8,576 ) - Other income—net 62 18 9,219 9,299 Income/(loss) before income taxes 70,337 49,355 (18,663 ) 101,029 Income taxes (16,851 ) (11,400 ) 2,998 (25,253 ) Net income/(loss) $ 53,486 $ 37,955 $ (15,665 ) $ 75,776 2023 (b) Service revenues and sales $ 333,728 $ 230,804 $ - $ 564,532 Cost of services provided and goods sold 253,731 108,627 - 362,358 Selling, general and administrative expenses 25,256 55,141 19,205 99,602 Depreciation 5,009 7,836 13 12,858 Amortization 26 2,495 - 2,521 Other operating expense/(income) (53 ) 396 - 343 Total costs and expenses 283,969 174,495 19,218 477,682 Income/(loss) from operations 49,759 56,309 (19,218 ) 86,850 Interest expense (52 ) (131 ) (261 ) (444 ) Intercompany interest income/(expense) 4,935 3,040 (7,975 ) - Other income—net 849 34 5,976 6,859 Income/(loss) before income taxes 55,491 59,252 (21,478 ) 93,265 Income taxes (11,160 ) (8,925 ) 1,778 (18,307 ) Net income/(loss) $ 44,331 $ 50,327 $ (19,700 ) $ 74,958 The "Footnotes to Financial Statements" are integral parts of this financial information. CHEMED CORPORATION AND SUBSIDIARY COMPANIES CONSOLIDATING STATEMENTS OF INCOME FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2024 AND 2023 (in thousands)(unaudited) Chemed VITAS Roto-Rooter Corporate Consolidated 2024 (a) Service revenues and sales $ 1,119,970 $ 671,324 $ - $ 1,791,294 Cost of services provided and goods sold 852,347 318,717 - 1,171,064 Selling, general and administrative expenses 73,968 175,683 70,458 320,109 Depreciation 15,288 24,275 38 39,601 Amortization 79 7,538 - 7,617 Other operating expense 160 128 - 288 Total costs and expenses 941,842 526,341 70,496 1,538,679 Income/(loss) from operations 178,128 144,983 (70,496 ) 252,615 Interest expense (138 ) (349 ) (794 ) (1,281 ) Intercompany interest income/(expense) 15,096 10,638 (25,734 ) - Other income—net 138 64 27,806 28,008 Income/(loss) before income taxes 193,224 155,336 (69,218 ) 279,342 Income taxes (46,517 ) (36,010 ) 14,865 (67,662 ) Net income/(loss) $ 146,707 $ 119,326 $ (54,353 ) $ 211,680 2023 (b) Service revenues and sales $ 965,066 $ 713,439 $ - $ 1,678,505 Cost of services provided and goods sold 770,470 336,786 - 1,107,256 Selling, general and administrative expenses 71,248 171,966 51,470 294,684 Depreciation 14,907 22,830 41 37,778 Amortization 78 7,470 - 7,548 Other operating expense/(income) (15 ) 2,079 - 2,064 Total costs and expenses 856,688 541,131 51,511 1,449,330 Income/(loss) from operations 108,378 172,308 (51,511 ) 229,175 Interest expense (154 ) (387 ) (2,225 ) (2,766 ) Intercompany interest income/(expense) 14,393 8,652 (23,045 ) - Other income—net 1,109 96 7,160 8,365 Income/(loss) before income taxes 123,726 180,669 (69,621 ) 234,774 Income taxes (28,503 ) (38,315 ) 14,500 (52,318 ) Net income/(loss) $ 95,223 $ 142,354 $ (55,121 ) $ 182,456 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 SEPTEMBER 30, 2024 AND 2023 (in thousands)(unaudited) Chemed VITAS Roto-Rooter Corporate Consolidated 2024 Net income/(loss) $ 53,486 $ 37,955 $ (15,665 ) $ 75,776 Add/(deduct): Interest expense 46 114 267 427 Income taxes 16,851 11,400 (2,998 ) 25,253 Depreciation 5,063 8,071 13 13,147 Amortization 26 2,524 - 2,550 EBITDA 75,472 60,064 (18,383 ) 117,153 Add/(deduct): Intercompany interest expense/(income) (4,920 ) (3,656 ) 8,576 - Interest income (59 ) (18 ) (3,589 ) (3,666 ) Stock option expense - - 6,038 6,038 Long-term incentive compensation - - 3,083 3,083 Acquisition expense 394 (8 ) - 386 Adjusted EBITDA $ 70,887 $ 56,382 $ (4,275 ) $ 122,994 2023 Net income/(loss) $ 44,331 $ 50,327 $ (19,700 ) $ 74,958 Add/(deduct): Interest expense 52 131 261 444 Income taxes 11,160 8,925 (1,778 ) 18,307 Depreciation 5,009 7,836 13 12,858 Amortization 26 2,495 - 2,521 EBITDA 60,578 69,714 (21,204 ) 109,088 Add/(deduct): Intercompany interest expense/(income) (4,935 ) (3,040 ) 7,975 - Interest income (847 ) (34 ) (1,719 ) (2,600 ) Litigation settlement - 300 - 300 Stock option expense - - 5,495 5,495 Long-term incentive compensation - - 3,553 3,553 Adjusted EBITDA $ 54,796 $ 66,940 $ (5,900 ) $ 115,836 The "Footnotes to Financial Statements" are integral parts of this financial information. CHEMED CORPORATION AND SUBSIDIARY COMPANIES CONSOLIDATING SUMMARIES OF EBITDA FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2024 AND 2023 (in thousands)(unaudited) Chemed VITAS Roto-Rooter Corporate Consolidated 2024 Net income/(loss) $ 146,707 $ 119,326 $ (54,353 ) $ 211,680 Add/(deduct): Interest expense 138 349 794 1,281 Income taxes 46,517 36,010 (14,865 ) 67,662 Depreciation 15,288 24,275 38 39,601 Amortization 79 7,538 - 7,617 EBITDA 208,729 187,498 (68,386 ) 327,841 Add/(deduct): Intercompany interest expense/(income) (15,096 ) (10,638 ) 25,734 - Interest income (136 ) (64 ) (11,205 ) (11,405 ) Stock option expense - - 23,933 23,933 Long-term incentive compensation - - 10,460 10,460 Severance arrangement - - 5,337 5,337 Acquisition expense 1,302 37 - 1,339 Adjusted EBITDA $ 194,799 $ 176,833 $ (14,127 ) $ 357,505 2023 Net income/(loss) $ 95,223 $ 142,354 $ (55,121 ) $ 182,456 Add/(deduct): Interest expense 154 387 2,225 2,766 Income taxes 28,503 38,315 (14,500 ) 52,318 Depreciation 14,907 22,830 41 37,778 Amortization 78 7,470 - 7,548 EBITDA 138,865 211,356 (67,355 ) 282,866 Add/(deduct): Intercompany interest expense/(income) (14,393 ) (8,652 ) 23,045 - Interest income (1,046 ) (96 ) (1,720 ) (2,862 ) Stock option expense - - 22,376 22,376 Long-term incentive compensation - - 7,817 7,817 Litigation settlements - 2,056 - 2,056 Adjusted EBITDA $ 123,426 $ 204,664 $ (15,837 ) $ 312,253 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 September 30, Nine Months Ended September 30, 2024 2023 2024 2023 Net income as reported $ 75,776 $ 74,958 $ 211,680 $ 182,456 Add/(deduct) pre-tax cost of: Stock option expense 6,038 5,495 23,933 22,376 Long-term incentive compensation 3,083 3,553 10,460 7,817 Amortization of reacquired franchise rights 2,352 2,352 7,056 7,056 Severance arrangement - - 5,337 - Acquisition expense 386 - 1,339 - Litigation settlement - 300 - 2,056 Add/(deduct) tax impacts: Tax impact of the above pre-tax adjustments (1) (1,761 ) (1,326 ) (6,762 ) (6,443 ) Tax impact of deferred tax rate change - (4,241 ) - (4,241 ) Excess tax benefits on stock compensation (389 ) (225 ) (4,308 ) (3,376 ) Adjusted net income $ 85,485 $ 80,866 $ 248,735 $ 207,701 Diluted Earnings Per Share As Reported Net income $ 5.00 $ 4.93 $ 13.88 $ 12.02 Average number of shares outstanding 15,168 15,200 15,253 15,178 Adjusted Diluted Earnings Per Share Adjusted net income $ 5.64 $ 5.32 $ 16.31 $ 13.68 Average number of shares outstanding 15,168 15,200 15,253 15,178 (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 September 30, Nine Months Ended September 30, OPERATING STATISTICS 2024 2023 2024 2023 Net revenue ($000) (c) Homecare $ 338,344 $ 287,389 $ 967,981 $ 832,554 Inpatient 29,923 27,818 89,297 84,312 Continuous care 25,799 22,032 74,295 63,054 Other 5,082 3,562 13,900 9,738 Subtotal $ 399,148 $ 340,801 $ 1,145,473 $ 989,658 Room and board, net (3,336 ) (2,646 ) (9,437 ) (8,317 ) Contractual allowances (2,167 ) (4,302 ) (10,077 ) (10,650 ) Medicare cap allowance (2,239 ) (125 ) (5,989 ) (5,625 ) Net Revenue $ 391,406 $ 333,728 $ 1,119,970 $ 965,066 Net revenue as a percent of total before Medicare cap allowance Homecare 84.8 % 84.3 % 84.5 % 84.1 % Inpatient 7.5 8.2 7.8 8.5 Continuous care 6.5 6.5 6.5 6.4 Other 1.2 1.0 1.2 1.0 Subtotal 100.0 100.0 100.0 100.0 Room and board, net (0.8 ) (0.8 ) (0.8 ) (0.8 ) Contractual allowances (0.5 ) (1.3 ) (0.9 ) (1.1 ) Medicare cap allowance (0.6 ) - (0.5 ) (0.6 ) Net Revenue 98.1 % 97.9 % 97.8 % 97.5 % Days of care Homecare 1,622,680 1,391,377 4,621,755 4,018,469 Nursing home 320,664 287,785 908,013 833,112 Respite 9,952 7,292 26,806 19,211 Subtotal routine homecare and respite 1,953,296 1,686,454 5,556,574 4,870,792 Inpatient 26,524 25,493 79,064 76,987 Continuous care 24,365 23,071 72,335 65,630 Total 2,004,185 1,735,018 5,707,973 5,013,409 Number of days in relevant time period 92 92 274 273 Average daily census ("ADC") (days) Homecare 17,639 15,124 16,867 14,720 Nursing home 3,485 3,128 3,314 3,052 Respite 108 79 98 70 Subtotal routine homecare and respite 21,232 18,331 20,279 17,842 Inpatient 288 277 289 282 Continuous care 265 251 264 240 Total 21,785 18,859 20,832 18,364 Total Admissions 16,775 15,774 51,020 47,564 Total Discharges 16,217 15,328 48,285 45,837 Average length of stay (days) 102.0 103.1 102.2 100.8 Median length of stay (days) 18.0 17.0 17.0 16.0 ADC by major diagnosis Cerebro 43.6 % 42.0 % 43.7 % 42.2 % Neurological 13.3 14.7 13.3 15.9 Cancer 10.0 10.6 10.0 10.6 Cardio 16.3 16.4 16.2 16.1 Respiratory 7.1 7.2 7.2 7.1 Other 9.7 9.1 9.6 8.1 Total 100.0 % 100.0 % 100.0 % 100.0 % Admissions by major diagnosis Cerebro 28.4 % 26.6 % 27.7 % 26.3 % Neurological 7.7 8.8 7.9 9.9 Cancer 25.7 26.1 25.1 26.0 Cardio 15.1 16.0 15.7 16.2 Respiratory 9.5 9.7 9.9 10.1 Other 13.6 12.8 13.7 11.5 Total 100.0 % 100.0 % 100.0 % 100.0 % Estimated uncollectible accounts as a percent of revenues 0.6 % 1.3 % 0.9 % 1.1 % Accounts receivable -- Days of revenue outstanding-excluding unapplied Medicare payments 37.5 36.4 n.a. n.a. Days of revenue outstanding-including unapplied Medicare payments 35.5 33.8 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 NINE MONTHS ENDED SEPTEMBER 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 September 30, 2024 VITAS Roto-Rooter Corporate Consolidated Stock option expense $ - $ - $ (6,038 ) $ (6,038 ) Long-term incentive compensation - - (3,083 ) (3,083 ) Amortization of reacquired franchise agreements - (2,352 ) - (2,352 ) Acquisition expense (394 ) 8 - (386 ) Pretax impact on earnings (394 ) (2,344 ) (9,121 ) (11,859 ) Excess tax benefits on stock compensation - - 389 389 Income tax benefit on the above 96 546 1,119 1,761 After-tax impact on earnings $ (298 ) $ (1,798 ) $ (7,613 ) $ (9,709 ) Nine Months Ended September 30, 2024 VITAS Roto-Rooter Corporate Consolidated Stock option expense $ - $ - $ (23,933 ) $ (23,933 ) Long-term incentive compensation - - (10,460 ) (10,460 ) Amortization of reacquired franchise agreements - (7,056 ) - (7,056 ) Severance arrangement - - (5,337 ) (5,337 ) Acquisition expense (1,302 ) (37 ) - (1,339 ) Pretax impact on earnings (1,302 ) (7,093 ) (39,730 ) (48,125 ) Excess tax benefits on stock compensation - - 4,308 4,308 Income tax benefit on the above 317 1,652 4,793 6,762 After-tax impact on earnings $ (985 ) $ (5,441 ) $ (30,629 ) $ (37,055 ) (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 September 30, 2023 VITAS Roto-Rooter Corporate Consolidated Stock option expense $ - $ - $ (5,495 ) $ (5,495 ) Long-term incentive compensation - - (3,553 ) (3,553 ) Amortization of reacquired franchise agreements - (2,352 ) - (2,352 ) Litigation settlement - (300 ) - (300 ) Pretax impact on earnings - (2,652 ) (9,048 ) (11,700 ) Excess tax benefits on stock compensation - - 225 225 Tax impact of deferred tax rate change 1,772 3,559 (1,090 ) 4,241 Income tax benefit on the above - 412 914 1,326 After-tax impact on earnings $ 1,772 $ 1,319 $ (8,999 ) $ (5,908 ) Nine Months Ended September 30, 2023 VITAS Roto-Rooter Corporate Consolidated Stock option expense $ - $ - $ (22,376 ) $ (22,376 ) Long-term incentive compensation - - (7,817 ) (7,817 ) Amortization of reacquired franchise agreements - (7,056 ) - (7,056 ) Litigation settlements - (2,056 ) - (2,056 ) Pretax impact on earnings - (9,112 ) (30,193 ) (39,305 ) Excess tax benefits on stock compensation - - 3,376 3,376 Tax impact of deferred tax rate change 1,772 3,559 (1,090 ) 4,241 Income tax benefit on the above - 2,123 4,320 6,443 After-tax impact on earnings $ 1,772 $ (3,430 ) $ (23,587 ) $ (25,245 ) (c) VITAS has 10 large (greater than 450 ADC), 23 medium (greater than 200 but less than 450 ADC) and 22 small (less than 200 ADC) hospice programs. Of Vitas' 32 Medicare provider numbers, for the trailing 12 months, 24 provider numbers have a Medicare cap cushion of greater than 10%, one provider number has a Medicare cap cushion between 5% and 10%, four provider numbers have a Medicare cap cushion between 0% and 5%, and three provider numbers have a Medicare cap liability. View source version on businesswire.com: https://www.businesswire.com/news/home/20241029394976/en/
