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 Fourth-Quarter 2023 Results By: Chemed Corporation via Business Wire February 27, 2024 at 16:15 PM EST Chemed Corporation (Chemed) (NYSE: CHE), which operates VITAS Healthcare Corporation (VITAS), one of the nation’s largest providers of end-of-life care, and Roto-Rooter, the nation’s largest commercial and residential plumbing and drain cleaning services provider, reported financial results for its fourth quarter ended December 31, 2023, versus the comparable prior-year period. Changes to Non-GAAP Metrics Chemed uses certain non-GAAP metrics such as EBITDA, adjusted EBITDA, adjusted net income and adjusted diluted earnings per share, to provide additional context and perspective to reported operational results. Chemed’s previously reported non-GAAP metrics during the four sequential quarters from September 30, 2022 through June 30, 2023 excluded the 12-month pandemic-related licensed healthcare professional retention bonus (Retention Program). Starting with the quarter-ended September 30, 2023, the Company no longer excludes the cost of the Retention Program when presenting non-GAAP operating metrics in current or prior periods. For the quarter-ended December 31, 2023, there is a pre-tax and after-tax expense reversal related to the Retention Program of $2.9 million and $2.2 million, respectively. For the quarter-ended December 31, 2022, the pretax and after-tax Retention Program expense was $10.1 million and $7.5 million, respectively. For the year ended December 31, 2023 pretax and after-tax expense for the Retention Program is $20.8 million and $15.8 million, respectively. For the year ended December 31, 2022 pretax and after-tax expense for the Retention Program was $19.6 million and $14.6 million, respectively. Results for Quarter Ended December 31, 2023 Consolidated operating results: Revenue increased 7.2% to $585.9 million GAAP Diluted Earnings-per-Share (EPS) of $5.90, an increase of 42.9% Adjusted Diluted EPS of $6.60, an increase of 35.0% VITAS segment operating results: Net Patient Revenue of $350.0 million, an increase of 13.6% Average Daily Census (ADC) of 19,352, an increase of 11.0% Admissions of 15,867, an increase of 7.0% Net Income, excluding certain discrete items, of $63.3 million, an increase of 72.6% Adjusted EBITDA, excluding Medicare Cap, of $83.3 million, an increase of 61.6% Adjusted EBITDA margin, excluding Medicare Cap, of 23.7%, an increase of 705-basis points Roto-Rooter segment operating results: Revenue of $235.9 million, a decrease of 1.1% Net Income, excluding certain discrete items, of $47.7 million, a decrease of 3.2% Adjusted EBITDA of $64.9 million, a decline of 6.4% Adjusted EBITDA margin of 27.5%, a decline of 154-basis points VITAS VITAS net revenue was $350.0 million in the fourth quarter of 2023, which is an increase of 13.6% when compared to the prior-year period. This revenue increase is comprised primarily of an 11.0% increase in days-of-care and a geographically weighted average Medicare reimbursement rate increase of approximately 2.3%. Acuity mix shift negatively impacted revenue growth 38-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 61-basis points. In the fourth quarter of 2023, VITAS accrued $2.4 million in Medicare Cap billing limitations. This compares to a $2.8 million Medicare Cap billing limitation in the fourth quarter of 2022. Of VITAS’ 30 Medicare provider numbers, 26 provider numbers have a trailing 12-month Medicare Cap cushion of 10% or greater, two provider numbers have a cushion between 5% and 10%, no provider number has a cushion between 0% and 5%, and two provider numbers have a trailing 12-month Medicare Cap billing limitation totaling $7.8 million. Average revenue per patient per day in the fourth quarter of 2023 was $201.33 which is 200-basis points above the prior-year period. Reimbursement for routine home care and high acuity care averaged $177.62 and $1,058.60, respectively. During the quarter, high acuity days-of-care were 2.7% of total days of care, a decline of 6-basis points when compared to the prior-year quarter. The fourth quarter 2023 gross margin, excluding Medicare Cap, was 29.9%. This compares to the prior year gross margin of 23.6%, excluding Medicare Cap. Approximately 406-basis points of this difference is attributable to the expense associated with the Retention Program. Selling, general and administrative expenses were $22.0 million in the fourth quarter of 2023 and compares to $22.0 million in the prior-year quarter. Adjusted EBITDA, excluding Medicare Cap, totaled $83.3 million in the quarter, an increase of 61.6%. Adjusted EBITDA margin in the quarter, excluding Medicare Cap, was 23.7%, which is 705-basis points above the prior-year period. Approximately 406-basis points of this difference is attributable to the expense associated with the Retention Program. Roto-Rooter Roto-Rooter generated quarterly revenue of $235.9 million in the fourth quarter of 2023, a decrease of 1.1%, when compared to the prior-year quarter. Roto-Rooter branch commercial revenue in the quarter totaled $54.0 million, a decrease of 7.9% from the prior-year. This aggregate commercial revenue decline consisted of drain cleaning revenue declining 8.6%, plumbing declining 6.3%, excavation declining 5.9%, and water restoration declining 16.1%. Roto-Rooter branch residential revenue in the quarter totaled $162.5 million, an increase of 2.0%, over the prior-year period. This aggregate residential revenue growth consisted of drain cleaning decreasing 5.6%, plumbing increasing 1.4%, excavation expanding 4.0%, and water restoration increasing 8.6%. Roto-Rooter’s gross margin in the quarter was 52.9%, a 9-basis point decline when compared to the fourth quarter of 2022. Adjusted EBITDA in the fourth quarter of 2023 totaled $64.9 million, a decrease of 6.4%. The Adjusted EBITDA margin in the quarter was 27.5%, which is 154-basis points below the prior-year period. Chemed Consolidated As of December 31, 2023, Chemed had total cash and cash equivalents of $264.0 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. The Company paid off the remaining portion of the term loan in the second quarter of 2023. 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 79,512 shares of Chemed stock for $46.0 million which equates to a cost per share of $579.09. As of December 31, 2023, there was approximately $314.1 million of remaining share repurchase authorization under its plan. Guidance for 2024 VITAS 2024 revenue, prior to Medicare Cap, is estimated to increase 9.0% to 9.8% when compared to 2023. ADC is estimated to increase 6.5% to 7.0%. Full year adjusted EBITDA margin, prior to Medicare Cap, is estimated to be 17.8% to 18.3%. Medicare Cap billing limitations are estimated to be $9.5 million in calendar year 2024. Roto-Rooter is forecasted to achieve full-year 2024 revenue growth of 3.5% to 4.0%. Roto-Rooter’s adjusted EBITDA margin for 2024 is expected to be 28.7% to 29.1%. Based upon the above, full-year 2024 earnings per diluted share, excluding: non-cash expense for stock options, tax benefits from stock option exercises, costs related to litigation, and other discrete items, is estimated to be in the range of $23.30 to $23.70. The 2024 guidance assumes an effective corporate tax rate on adjusted earnings of 24.2% and a diluted share count of 15.2 million shares. Chemed’s 2023 adjusted earnings per diluted share was $20.30, including $1.04 per share for costs associated with the 2023 portion of the Retention Program. Conference Call As previously disclosed, Chemed will host a conference call and webcast at 10 a.m., ET, on Wednesday, February 28, 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/586r6wmh. Participants may also register via teleconference at: https://register.vevent.com/register/BIefc8b6001c2b43b09e16a655471d87c4. Once registration is completed, participants will be provided with a dial-in number containing a personalized conference code to access the call. All participants are instructed to dial-in 15 minutes prior to the start time. A taped replay of the conference call will be available beginning approximately two hours after the call's conclusion. You may access the replay via webcast through the investor relations section of Chemed’s website. Chemed Corporation operates in the healthcare field through its VITAS Healthcare Corporation subsidiary. VITAS provides daily hospice services to approximately 18,600 patients with severe, life-limiting illnesses. This type of care is focused on making the terminally ill patient's final days as comfortable and pain-free as possible. Chemed operates in the residential and commercial plumbing and drain cleaning industry under the brand name Roto-Rooter. Roto-Rooter provides plumbing, drain cleaning, and water cleanup services through company-owned branches, independent contractors and franchisees in the United States and Canada. Roto-Rooter also has licensed master franchisees in the republics of Indonesia and Singapore, and the Philippines. This press release contains information about Chemed’s EBITDA, Adjusted EBITDA and Adjusted Diluted EPS, which are not measures derived in accordance with GAAP and which exclude components that are important to understanding Chemed’s financial performance. In reporting its operating results, Chemed provides EBITDA, Adjusted EBITDA and Adjusted Diluted EPS measures to help investors and others evaluate the Company’s operating results, compare its operating performance with that of similar companies that have different capital structures and evaluate its ability to meet its future debt service, capital expenditures and working capital requirements. Chemed’s management similarly uses EBITDA, Adjusted EBITDA and Adjusted Diluted EPS to assist it in evaluating the performance of the Company across fiscal periods and in assessing how its performance compares to its peer companies. These measures also help Chemed’s management to estimate the resources required to meet Chemed’s future financial obligations and expenditures. Chemed’s EBITDA, Adjusted EBITDA and Adjusted Diluted EPS should not be considered in isolation or as a substitute for comparable measures calculated and presented in accordance with GAAP. We calculated Adjusted EBITDA Margin by dividing Adjusted EBITDA by service revenue and sales. A reconciliation of Chemed’s net income to its EBITDA, Adjusted EBITDA and Adjusted Diluted EPS is presented in the tables following the text of this press release. Forward-Looking Statements Certain statements contained in this press release and the accompanying tables are "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. The words "believe," "expect," "hope," "anticipate," "plan" and similar expressions identify forward-looking statements, which speak only as of the date the statement was made. Chemed does not undertake and specifically disclaims any obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. These statements are based on current expectations and assumptions and involve various risks and uncertainties, which could cause Chemed's actual results to differ from those expressed in such forward-looking statements. These risks and uncertainties arise from, among other things, possible changes in regulations governing the hospice care or plumbing and drain cleaning industries; periodic changes in reimbursement levels and procedures under Medicare and Medicaid programs; difficulties predicting patient length of stay and estimating potential Medicare reimbursement obligations; challenges inherent in Chemed's growth strategy; the current shortage of qualified nurses, other healthcare professionals and licensed plumbing and drain cleaning technicians; Chemed’s dependence on patient referral sources; and other factors detailed under the caption "Description of Business by Segment" or "Risk Factors" in Chemed’s most recent report on form 10-Q or 10-K and its other filings with the Securities and Exchange Commission. You are cautioned not to place undue reliance on such forward-looking statements and there are no assurances that the matters contained in such statements will be achieved. CHEMED CORPORATION AND SUBSIDIARY COMPANIES CONSOLIDATED STATEMENTS OF INCOME (in thousands, except per share data)(unaudited) Three Months Ended December 31, For the Years Ended December 31, 2023 2022 2023 2022 Service revenues and sales $ 585,912 $ 546,654 $ 2,264,417 $ 2,134,963 Cost of services provided and goods sold 358,346 349,570 1,465,602 1,369,877 Selling, general and administrative expenses (aa) 100,436 96,928 395,120 358,727 Depreciation 13,024 12,096 50,802 49,102 Amortization 2,515 2,512 10,063 10,070 Other operating expense 197 4,221 2,261 3,691 Total costs and expenses 474,518 465,327 1,923,848 1,791,467 Income from operations 111,394 81,327 340,569 343,496 Interest expense (342 ) (1,601 ) (3,108 ) (4,584 ) Other income/(expense)--net (bb) 4,541 2,674 12,906 (9,233 ) Income before income taxes 115,593 82,400 350,367 329,679 Income taxes (25,540 ) (20,274 ) (77,858 ) (80,055 ) Net income $ 90,053 $ 62,126 $ 272,509 $ 249,624 Earnings Per Share Net income $ 5.96 $ 4.17 $ 18.11 $ 16.72 Average number of shares outstanding 15,099 14,913 15,050 14,929 Diluted Earnings Per Share Net income $ 5.90 $ 4.13 $ 17.93 $ 16.53 Average number of shares outstanding 15,270 15,052 15,200 15,099 (aa) Selling, general and administrative ("SG&A") expenses comprise (in thousands): Three Months Ended December 31, For the Years Ended December 31, 2023 2022 2023 2022 SG&A expenses before long-term incentive compensation and the impact of market value adjustments related to deferred compensation plans $ 95,601 $ 91,779 $ 377,027 $ 360,896 Long-term incentive compensation 3,872 2,923 11,689 7,801 Market value adjustments related to deferred compensation trusts 963 2,226 6,404 (9,970 ) Total SG&A expenses $ 100,436 $ 96,928 $ 395,120 $ 358,727 (bb) Other income/(expense)--net comprises (in thousands): Three Months Ended December 31, For the Years Ended December 31, 2023 2022 2023 2022 Market value adjustments related to deferred compensation trusts $ 963 $ 2,226 $ 6,404 $ (9,970 ) Interest income 3,408 65 6,270 355 Other 170 383 232 382 Total other income/(expense)--net $ 4,541 $ 2,674 $ 12,906 $ (9,233 ) CHEMED CORPORATION AND SUBSIDIARY COMPANIES CONSOLIDATED BALANCE SHEETS (in thousands, except per share data)(unaudited) December 31, 2023 2022 Assets Current assets Cash and cash equivalents $ 263,958 $ 74,126 Accounts receivable less allowances 181,511 139,408 Inventories 12,004 10,272 Prepaid income taxes 13,166 18,515 Prepaid expenses 30,204 30,291 Total current assets 500,843 272,612 Investments of deferred compensation plans held in trust 106,126 93,196 Properties and equipment, at cost less accumulated depreciation 203,840 199,714 Lease right of use asset 126,387 135,662 Identifiable intangible assets less accumulated amortization 90,264 99,726 Goodwill 585,017 581,295 Other assets 55,618 59,807 Total Assets $ 1,668,095 $ 1,442,012 Liabilities Current liabilities Accounts payable $ 64,034 $ 41,884 Current portion of long-term debt - 5,000 Income taxes 6,858 - Accrued insurance 58,568 58,515 Accrued compensation 88,381 87,350 Accrued legal 6,386 4,456 Short-term lease liability 38,635 38,996 Other current liabilities 49,188 61,004 Total current liabilities 312,050 297,205 Deferred income taxes 30,321 38,613 Long-term debt - 92,500 Deferred compensation liabilities 104,069 92,330 Long-term lease liability 100,776 110,513 Other liabilities 13,003 12,136 Total Liabilities 560,219 643,297 Stockholders' Equity Capital stock 37,184 36,796 Paid-in capital 1,341,273 1,149,899 Retained earnings 2,446,925 2,197,918 Treasury stock, at cost (2,719,588 ) (2,588,145 ) Deferred compensation payable in Company stock 2,082 2,247 Total Stockholders' Equity 1,107,876 798,715 Total Liabilities and Stockholders' Equity $ 1,668,095 $ 1,442,012 CHEMED CORPORATION AND SUBSIDIARY COMPANIES CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands)(unaudited) For the Years Ended December 31, 2023 2022 Cash Flows from Operating Activities Net income $ 272,509 $ 249,624 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 60,865 59,172 Stock option expense 30,082 26,254 Deferred payroll taxes - (18,175 ) Noncash long-term incentive compensation 9,267 6,188 (Benefit)/provision for deferred income taxes (8,027 ) 14,827 Litigation settlements 2,050 4,000 Noncash directors' compensation 1,444 1,170 Amortization of debt issuance costs 580 342 Changes in operating assets and liabilities, excluding amounts acquired in business combinations: Increase in accounts receivable (41,488 ) (2,414 ) Increase in inventories (1,732 ) (162 ) Decrease in prepaid expenses 87 2,397 (Decrease)/increase in accounts payable and other current liabilities (9,348 ) 15,343 Change in current income taxes 11,748 (996 ) Net change in lease assets and liabilities (1,424 ) 1,471 Increase in other assets (9,952 ) (45,779 ) Increase/(decrease) in other liabilities 12,802 (3,350 ) Other sources/(uses) 836 (26 ) Net cash provided by operating activities 330,299 309,886 Cash Flows from Investing Activities Capital expenditures (56,854 ) (57,325 ) Business combinations, net of cash acquired (3,994 ) (3,529 ) Proceeds from sale of fixed assets 640 2,330 Other uses (434 ) (878 ) Net cash used by investing activities (60,642 ) (59,402 ) Cash Flows from Financing Activities Proceeds from exercise of stock options 102,192 44,968 Payments on other long-term debt (97,500 ) (2,500 ) Proceeds from other long-term debt - 100,000 Purchases of treasury stock (67,697 ) (114,515 ) Dividends paid (23,502 ) (22,017 ) Change in cash overdrafts payable 15,749 (11,884 ) Capital stock surrendered to pay taxes on stock-based compensation (9,557 ) (15,611 ) Debt issuance costs - (1,586 ) Payments on revolving line of credit - (306,800 ) Proceeds from revolving line of credit - 121,800 Other sources/(uses) 490 (1,108 ) Net cash used by financing activities (79,825 ) (209,253 ) Increase/(decrease) in Cash and Cash Equivalents 189,832 41,231 Cash and cash equivalents at beginning of year 74,126 32,895 Cash and cash equivalents at end of year $ 263,958 $ 74,126 CHEMED CORPORATION AND SUBSIDIARY COMPANIES CONSOLIDATING STATEMENTS OF INCOME FOR THE THREE MONTHS ENDED DECEMBER 31, 2023 AND 2022 (in thousands)(unaudited) Chemed VITAS Roto-Rooter Corporate Consolidated 2023 (a) Service revenues and sales $ 349,998 $ 235,914 $ - $ 585,912 Cost of services provided and goods sold 247,151 111,195 - 358,346 Selling, general and administrative expenses 22,048 59,621 18,767 100,436 Depreciation 5,052 7,959 13 13,024 Amortization 26 2,489 - 2,515 Other operating (income)/expense 4 193 - 197 Total costs and expenses 274,281 181,457 18,780 474,518 Income/(loss) from operations 75,717 54,457 (18,780 ) 111,394 Interest expense (26 ) (55 ) (261 ) (342 ) Intercompany interest income/(expense) 5,008 3,265 (8,273 ) - Other income—net 201 29 4,311 4,541 Income/(loss) before income taxes 80,900 57,696 (23,003 ) 115,593 Income taxes (17,613 ) (11,809 ) 3,882 (25,540 ) Net income/(loss) $ 63,287 $ 45,887 $ (19,121 ) $ 90,053 2022 (b) Service revenues and sales $ 308,059 $ 238,595 $ - $ 546,654 Cost of services provided and goods sold 237,333 112,237 - 349,570 Selling, general and administrative expenses 22,005 57,096 17,827 96,928 Depreciation 5,061 7,017 18 12,096 Amortization 26 2,486 - 2,512 Other operating expense/(income) 4,266 (45 ) - 4,221 Total costs and expenses 268,691 178,791 17,845 465,327 Income/(loss) from operations 39,368 59,804 (17,845 ) 81,327 Interest expense (31 ) (76 ) (1,494 ) (1,601 ) Intercompany interest income/(expense) 4,720 2,594 (7,314 ) - Other income/(expense)—net 417 31 2,226 2,674 Income/(loss) before income taxes 44,474 62,353 (24,427 ) 82,400 Income taxes (10,800 ) (14,829 ) 5,355 (20,274 ) Net income/(loss) $ 33,674 $ 47,524 $ (19,072 ) $ 62,126 The "Footnotes to Financial Statements" are integral parts of this financial information. CONSOLIDATING STATEMENTS OF INCOME FOR THE YEARS ENDED DECEMBER 31, 2023 AND 2022 (in thousands)(unaudited) Chemed VITAS Roto-Rooter Corporate Consolidated 2023 (a) Service revenues and sales $ 1,315,065 $ 949,352 $ - $ 2,264,417 Cost of services provided and goods sold 1,017,623 447,979 - 1,465,602 Selling, general and administrative expenses 93,296 231,587 70,237 395,120 Depreciation 19,959 30,790 53 50,802 Amortization 104 9,959 - 10,063 Other operating (income)/expense (12 ) 2,273 - 2,261 Total costs and expenses 1,130,970 722,588 70,290 1,923,848 Income/(loss) from operations 184,095 226,764 (70,290 ) 340,569 Interest expense (180 ) (442 ) (2,486 ) (3,108 ) Intercompany interest income/(expense) 19,400 11,918 (31,318 ) - Other income—net 1,309 126 11,471 12,906 Income/(loss) before income taxes 204,624 238,366 (92,623 ) 350,367 Income taxes (46,115 ) (50,125 ) 18,382 (77,858 ) Net income/(loss) $ 158,509 $ 188,241 $ (74,241 ) $ 272,509 2022 (b) Service revenues and sales $ 1,201,564 $ 933,399 $ - $ 2,134,963 Cost of services provided and goods sold 931,861 438,016 - 1,369,877 Selling, general and administrative expenses 89,187 222,257 47,283 358,727 Depreciation 21,955 27,075 72 49,102 Amortization 101 9,969 - 10,070 Other operating (income)/expense 3,337 354 - 3,691 Total costs and expenses 1,046,441 697,671 47,355 1,791,467 Income/(loss) from operations 155,123 235,728 (47,355 ) 343,496 Interest expense (172 ) (396 ) (4,016 ) (4,584 ) Intercompany interest income/(expense) 18,901 9,345 (28,246 ) - Other income/(expense)—net 600 138 (9,971 ) (9,233 ) Income/(loss) before income taxes 174,452 244,815 (89,588 ) 329,679 Income taxes (43,000 ) (58,695 ) 21,640 (80,055 ) Net income/(loss) $ 131,452 $ 186,120 $ (67,948 ) $ 249,624 The "Footnotes to Financial Statements" are integral parts of this financial information. CHEMED CORPORATION AND SUBSIDIARY COMPANIES CONSOLIDATING SUMMARIES OF EBITDA FOR THE THREE MONTHS ENDED DECEMBER 31, 2023 AND 2022 (in thousands)(unaudited) Chemed VITAS Roto-Rooter Corporate Consolidated 2023 Net income/(loss) $ 63,287 $ 45,887 $ (19,121 ) $ 90,053 Add/(deduct): Interest expense 26 55 261 342 Income taxes 17,613 11,809 (3,882 ) 25,540 Depreciation 5,052 7,959 13 13,024 Amortization 26 2,489 - 2,515 EBITDA 86,004 68,199 (22,729 ) 131,474 Add/(deduct): Intercompany interest expense/(income) (5,008 ) (3,265 ) 8,273 - Interest income (31 ) (29 ) (3,348 ) (3,408 ) Stock option expense - - 7,706 7,706 Long-term incentive compensation - - 3,872 3,872 Adjusted EBITDA $ 80,965 $ 64,905 $ (6,226 ) $ 139,644 2022 Net income/(loss) $ 33,674 $ 47,524 $ (19,072 ) $ 62,126 Add/(deduct): Interest expense 31 76 1,494 1,601 Income taxes 10,800 14,829 (5,355 ) 20,274 Depreciation 5,061 7,017 18 12,096 Amortization 26 2,486 - 2,512 EBITDA 49,592 71,932 (22,915 ) 98,609 Add/(deduct): Intercompany interest expense/(income) (4,720 ) (2,594 ) 7,314 - Interest income (36 ) (30 ) 1 (65 ) Stock option expense - - 6,911 6,911 Litigation settlement 4,000 - - 4,000 Long-term incentive compensation - - 2,923 2,923 Adjusted EBITDA $ 48,836 $ 69,308 $ (5,766 ) $ 112,378 The "Footnotes to Financial Statements" are integral parts of this financial information. CHEMED CORPORATION AND SUBSIDIARY COMPANIES CONSOLIDATING SUMMARIES OF EBITDA FOR THE YEARS ENDED DECEMBER 31, 2023 AND 2022 (in thousands)(unaudited) Chemed VITAS Roto-Rooter Corporate Consolidated 2023 Net income/(loss) $ 158,509 $ 188,241 $ (74,241 ) $ 272,509 Add/(deduct): Interest expense 180 442 2,486 3,108 Income taxes 46,115 50,125 (18,382 ) 77,858 Depreciation 19,959 30,790 53 50,802 Amortization 104 9,959 - 10,063 EBITDA 224,867 279,557 (90,084 ) 414,340 Add/(deduct): Intercompany interest expense/(income) (19,400 ) (11,918 ) 31,318 - Interest income (1,078 ) (125 ) (5,067 ) (6,270 ) Stock option expense - - 30,082 30,082 Long-term incentive compensation - - 11,689 11,689 Litigation settlements - 2,056 - 2,056 Adjusted EBITDA $ 204,389 $ 269,570 $ (22,062 ) $ 451,897 2022 Net income/(loss) $ 131,452 $ 186,120 $ (67,948 ) $ 249,624 Add/(deduct): Interest expense 172 396 4,016 4,584 Income taxes 43,000 58,695 (21,640 ) 80,055 Depreciation 21,955 27,075 72 49,102 Amortization 101 9,969 - 10,070 EBITDA 196,680 282,255 (85,500 ) 393,435 Add/(deduct): Intercompany interest expense/(income) (18,901 ) (9,345 ) 28,246 - Interest income (218 ) (138 ) 1 (355 ) Stock option expense - - 26,254 26,254 Long-term incentive compensation - - 7,801 7,801 Litigation settlements 4,000 - - 4,000 Direct costs related to COVID-19 310 988 89 1,387 Medicare cap sequestration adjustment 138 - - 138 Adjusted EBITDA $ 182,009 $ 273,760 $ (23,109 ) $ 432,660 The "Footnotes to Financial Statements" are integral parts of this financial information. CHEMED CORPORATION AND SUBSIDIARY COMPANIES RECONCILIATION OF ADJUSTED NET INCOME (in thousands, except per share data)(unaudited) Three Months Ended December 31, For the Years Ended December 31, 2023 2022 2023 2022 Net income as reported $ 90,053 $ 62,126 $ 272,509 $ 249,624 Add/(deduct) pre-tax cost of: Stock option expense 7,706 6,911 30,082 26,254 Long-term incentive compensation 3,872 2,923 11,689 7,801 Amortization of reacquired franchise agreements 2,352 2,352 9,408 9,408 Litigation settlements - 4,000 2,056 4,000 Medicare cap sequestration adjustment - - - 138 Direct costs related to COVID-19 - - - 1,387 Add/(deduct) tax impacts: Tax impact of the above pre-tax adjustments (1) (2,216 ) (3,151 ) (8,658 ) (9,075 ) Tax impact of deferred tax rate change - - (4,241 ) - Excess tax benefits on stock compensation (954 ) (1,538 ) (4,330 ) (5,928 ) Adjusted net income $ 100,813 $ 73,623 $ 308,515 $ 283,609 Diluted Earnings Per Share As Reported Net income $ 5.90 $ 4.13 $ 17.93 $ 16.53 Average number of shares outstanding 15,270 15,052 15,200 15,099 Adjusted Diluted Earnings Per Share Adjusted net income $ 6.60 $ 4.89 $ 20.30 $ 18.78 Average number of shares outstanding 15,270 15,052 15,200 15,099 (1) The tax impact of pre-tax adjustments was calculated using the effective tax rate of the operating unit for which each adjustment is associated. The "Footnotes to Financial Statements" are integral parts of this financial information. CHEMED CORPORATION AND SUBSIDIARY COMPANIES OPERATING STATISTICS FOR VITAS SEGMENT (unaudited) Three Months Ended December 31, For the Years Ended December 31, OPERATING STATISTICS 2023 2022 2023 2022 Net revenue ($000) (c) Homecare $ 303,883 $ 267,691 $ 1,136,437 $ 1,039,211 Inpatient 28,107 26,647 112,419 102,361 Continuous care 22,620 19,284 85,674 77,000 Other 3,844 2,977 13,582 12,438 Subtotal $ 358,454 $ 316,599 $ 1,348,112 $ 1,231,010 Room and board, net (2,535 ) (2,778 ) (10,851 ) (9,574 ) Contractual allowances (3,546 ) (3,012 ) (14,196 ) (12,004 ) Medicare cap allowance (2,375 ) (2,750 ) (8,000 ) (7,868 ) Net Revenue $ 349,998 $ 308,059 $ 1,315,065 $ 1,201,564 Net revenue as a percent of total before Medicare cap allowance Homecare 84.8 % 84.6 % 84.3 % 84.4 % Inpatient 7.8 8.4 8.3 8.3 Continuous care 6.3 6.1 6.4 6.3 Other 1.1 0.9 1.0 1.0 Subtotal 100.0 100.0 100.0 100.0 Room and board, net (0.7 ) (0.9 ) (0.8 ) (0.8 ) Contractual allowances (1.0 ) (0.9 ) (1.1 ) (1.0 ) Medicare cap allowance (0.7 ) (0.9 ) (0.6 ) (0.6 ) Net Revenue 97.6 % 97.3 % 97.5 % 97.6 % Days of care Homecare 1,439,494 1,289,067 5,457,963 5,086,021 Nursing home 285,616 264,895 1,118,728 1,036,816 Respite 7,394 5,807 26,605 23,905 Subtotal routine homecare and respite 1,732,504 1,559,769 6,603,296 6,146,742 Inpatient 24,918 24,254 101,905 95,431 Continuous care 23,001 19,909 88,631 81,890 Total 1,780,423 1,603,932 6,793,832 6,324,063 Number of days in relevant time period 92 92 365 365 Average daily census ("ADC") (days) Homecare 15,646 14,012 14,953 13,934 Nursing home 3,105 2,879 3,065 2,841 Respite 80 63 73 65 Subtotal routine homecare and respite 18,831 16,954 18,091 16,840 Inpatient 271 264 279 261 Continuous care 250 216 243 224 Total 19,352 17,434 18,613 17,325 Total Admissions 15,867 14,829 63,431 60,774 Total Discharges 15,705 14,862 61,242 60,930 Average length of stay (days) 105.9 103.9 102.2 104.6 Median length of stay (days) 17.0 16.0 16.0 16.0 ADC by major diagnosis Cerebro 42.8 % 41.0 % 42.5 % 39.8 % Neurological 13.7 20.3 15.3 21.2 Cancer 10.3 10.7 10.5 10.9 Cardio 16.2 15.7 16.1 15.7 Respiratory 7.0 7.2 7.1 7.3 Other 10.0 5.1 8.5 5.1 Total 100.0 % 100.0 % 100.0 % 100.0 % Admissions by major diagnosis Cerebro 26.5 % 25.6 % 26.4 % 24.6 % Neurological 8.3 11.0 9.4 12.3 Cancer 25.9 26.7 26.0 26.3 Cardio 15.4 15.3 16.0 14.9 Respiratory 10.1 10.5 10.1 10.3 Other 13.8 10.9 12.1 11.6 Total 100.0 % 100.0 % 100.0 % 100.0 % Estimated uncollectible accounts as a percent of revenues 1.0 % 1.0 % 1.1 % 1.0 % Accounts receivable -- Days of revenue outstanding-excluding unapplied Medicare payments 37.8 38.1 n.a. n.a. Days of revenue outstanding-including unapplied Medicare payments 36.0 28.0 n.a. n.a. The "Footnotes to Financial Statements" are integral parts of this financial information. FOOTNOTES TO FINANCIAL STATEMENTS FOR THE THREE MONTHS AND YEARS ENDED DECEMBER 31, 2023 AND 2022 (unaudited) (a) 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 December 31, 2023 VITAS Roto-Rooter Corporate Consolidated Stock option expense $ - $ - $ (7,706 ) $ (7,706 ) Long-term incentive compensation - - (3,872 ) (3,872 ) Amortization of reacquired franchise agreements - (2,352 ) - (2,352 ) Pretax impact on earnings - (2,352 ) (11,578 ) (13,930 ) Excess tax benefits on stock compensation - - 954 954 Income tax benefit on the above - 548 1,668 2,216 After-tax impact on earnings $ - $ (1,804 ) $ (8,956 ) $ (10,760 ) For the Years Ended December 31, 2023 VITAS Roto-Rooter Corporate Consolidated Stock option expense $ - $ - $ (30,082 ) $ (30,082 ) Long-term incentive compensation - - (11,689 ) (11,689 ) Amortization of reacquired franchise agreements - (9,408 ) - (9,408 ) Litigation settlements - (2,056 ) - (2,056 ) Pretax impact on earnings - (11,464 ) (41,771 ) (53,235 ) Excess tax benefits on stock compensation - - 4,330 4,330 Tax impact of deferred tax rate change 1,772 3,559 (1,090 ) 4,241 Income tax benefit on the above - 2,671 5,987 8,658 After-tax impact on earnings $ 1,772 $ (5,234 ) $ (32,544 ) $ (36,006 ) (b) Included in the results of operations for 2022 are the following significant credits/(charges) which may not be indicative of ongoing operations (in thousands): Three Months Ended December 31, 2022 VITAS Roto-Rooter Corporate Consolidated Stock option expense $ - $ - $ (6,911 ) $ (6,911 ) Litigation settlements (4,000 ) - - (4,000 ) Long-term incentive compensation - - (2,923 ) (2,923 ) Amortization of reacquired franchise agreements - (2,352 ) - (2,352 ) Pretax impact on earnings (4,000 ) (2,352 ) (9,834 ) (16,186 ) Excess tax benefits on stock compensation - - 1,538 1,538 Income tax benefit on the above 1,016 623 1,512 3,151 After-tax impact on earnings $ (2,984 ) $ (1,729 ) $ (6,784 ) $ (11,497 ) For the Years Ended December 31, 2022 VITAS Roto-Rooter Corporate Consolidated Stock option expense $ - $ - $ (26,254 ) $ (26,254 ) Amortization of reacquired franchise agreements - (9,408 ) - (9,408 ) Long-term incentive compensation - - (7,801 ) (7,801 ) Litigation settlements (4,000 ) - - (4,000 ) Direct costs related to COVID-19 (310 ) (988 ) (89 ) (1,387 ) Medicare cap sequestration adjustment (138 ) - - (138 ) Pretax impact on earnings (4,448 ) (10,396 ) (34,144 ) (48,988 ) Excess tax benefits on stock compensation - - 5,928 5,928 Income tax benefit on the above 1,130 2,755 5,190 9,075 After-tax impact on earnings $ (3,318 ) $ (7,641 ) $ (23,026 ) $ (33,985 ) (c) VITAS has 11 large (greater than 450 ADC), 17 medium (greater than 200 but less than 450 ADC) and 22 small (less than 200 ADC) hospice programs. Of Vitas' 30 Medicare provider numbers, for the trailing 12 months, 26 provider numbers have a Medicare cap cushion of greater than 10%, two provider numbers have a Medicare cap cushion between 5% and 10%, and two provider numbers have a Medicare cap liability. View source version on businesswire.com: https://www.businesswire.com/news/home/20240227400148/en/Contacts Michael D. Witzeman (513) 762-6714 Data & News supplied by www.cloudquote.io Stock quotes supplied by Barchart Quotes delayed at least 20 minutes. By accessing this page, you agree to the following Privacy Policy and Terms and Conditions.
Chemed Reports Fourth-Quarter 2023 Results By: Chemed Corporation via Business Wire February 27, 2024 at 16:15 PM EST Chemed Corporation (Chemed) (NYSE: CHE), which operates VITAS Healthcare Corporation (VITAS), one of the nation’s largest providers of end-of-life care, and Roto-Rooter, the nation’s largest commercial and residential plumbing and drain cleaning services provider, reported financial results for its fourth quarter ended December 31, 2023, versus the comparable prior-year period. Changes to Non-GAAP Metrics Chemed uses certain non-GAAP metrics such as EBITDA, adjusted EBITDA, adjusted net income and adjusted diluted earnings per share, to provide additional context and perspective to reported operational results. Chemed’s previously reported non-GAAP metrics during the four sequential quarters from September 30, 2022 through June 30, 2023 excluded the 12-month pandemic-related licensed healthcare professional retention bonus (Retention Program). Starting with the quarter-ended September 30, 2023, the Company no longer excludes the cost of the Retention Program when presenting non-GAAP operating metrics in current or prior periods. For the quarter-ended December 31, 2023, there is a pre-tax and after-tax expense reversal related to the Retention Program of $2.9 million and $2.2 million, respectively. For the quarter-ended December 31, 2022, the pretax and after-tax Retention Program expense was $10.1 million and $7.5 million, respectively. For the year ended December 31, 2023 pretax and after-tax expense for the Retention Program is $20.8 million and $15.8 million, respectively. For the year ended December 31, 2022 pretax and after-tax expense for the Retention Program was $19.6 million and $14.6 million, respectively. Results for Quarter Ended December 31, 2023 Consolidated operating results: Revenue increased 7.2% to $585.9 million GAAP Diluted Earnings-per-Share (EPS) of $5.90, an increase of 42.9% Adjusted Diluted EPS of $6.60, an increase of 35.0% VITAS segment operating results: Net Patient Revenue of $350.0 million, an increase of 13.6% Average Daily Census (ADC) of 19,352, an increase of 11.0% Admissions of 15,867, an increase of 7.0% Net Income, excluding certain discrete items, of $63.3 million, an increase of 72.6% Adjusted EBITDA, excluding Medicare Cap, of $83.3 million, an increase of 61.6% Adjusted EBITDA margin, excluding Medicare Cap, of 23.7%, an increase of 705-basis points Roto-Rooter segment operating results: Revenue of $235.9 million, a decrease of 1.1% Net Income, excluding certain discrete items, of $47.7 million, a decrease of 3.2% Adjusted EBITDA of $64.9 million, a decline of 6.4% Adjusted EBITDA margin of 27.5%, a decline of 154-basis points VITAS VITAS net revenue was $350.0 million in the fourth quarter of 2023, which is an increase of 13.6% when compared to the prior-year period. This revenue increase is comprised primarily of an 11.0% increase in days-of-care and a geographically weighted average Medicare reimbursement rate increase of approximately 2.3%. Acuity mix shift negatively impacted revenue growth 38-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 61-basis points. In the fourth quarter of 2023, VITAS accrued $2.4 million in Medicare Cap billing limitations. This compares to a $2.8 million Medicare Cap billing limitation in the fourth quarter of 2022. Of VITAS’ 30 Medicare provider numbers, 26 provider numbers have a trailing 12-month Medicare Cap cushion of 10% or greater, two provider numbers have a cushion between 5% and 10%, no provider number has a cushion between 0% and 5%, and two provider numbers have a trailing 12-month Medicare Cap billing limitation totaling $7.8 million. Average revenue per patient per day in the fourth quarter of 2023 was $201.33 which is 200-basis points above the prior-year period. Reimbursement for routine home care and high acuity care averaged $177.62 and $1,058.60, respectively. During the quarter, high acuity days-of-care were 2.7% of total days of care, a decline of 6-basis points when compared to the prior-year quarter. The fourth quarter 2023 gross margin, excluding Medicare Cap, was 29.9%. This compares to the prior year gross margin of 23.6%, excluding Medicare Cap. Approximately 406-basis points of this difference is attributable to the expense associated with the Retention Program. Selling, general and administrative expenses were $22.0 million in the fourth quarter of 2023 and compares to $22.0 million in the prior-year quarter. Adjusted EBITDA, excluding Medicare Cap, totaled $83.3 million in the quarter, an increase of 61.6%. Adjusted EBITDA margin in the quarter, excluding Medicare Cap, was 23.7%, which is 705-basis points above the prior-year period. Approximately 406-basis points of this difference is attributable to the expense associated with the Retention Program. Roto-Rooter Roto-Rooter generated quarterly revenue of $235.9 million in the fourth quarter of 2023, a decrease of 1.1%, when compared to the prior-year quarter. Roto-Rooter branch commercial revenue in the quarter totaled $54.0 million, a decrease of 7.9% from the prior-year. This aggregate commercial revenue decline consisted of drain cleaning revenue declining 8.6%, plumbing declining 6.3%, excavation declining 5.9%, and water restoration declining 16.1%. Roto-Rooter branch residential revenue in the quarter totaled $162.5 million, an increase of 2.0%, over the prior-year period. This aggregate residential revenue growth consisted of drain cleaning decreasing 5.6%, plumbing increasing 1.4%, excavation expanding 4.0%, and water restoration increasing 8.6%. Roto-Rooter’s gross margin in the quarter was 52.9%, a 9-basis point decline when compared to the fourth quarter of 2022. Adjusted EBITDA in the fourth quarter of 2023 totaled $64.9 million, a decrease of 6.4%. The Adjusted EBITDA margin in the quarter was 27.5%, which is 154-basis points below the prior-year period. Chemed Consolidated As of December 31, 2023, Chemed had total cash and cash equivalents of $264.0 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. The Company paid off the remaining portion of the term loan in the second quarter of 2023. 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 79,512 shares of Chemed stock for $46.0 million which equates to a cost per share of $579.09. As of December 31, 2023, there was approximately $314.1 million of remaining share repurchase authorization under its plan. Guidance for 2024 VITAS 2024 revenue, prior to Medicare Cap, is estimated to increase 9.0% to 9.8% when compared to 2023. ADC is estimated to increase 6.5% to 7.0%. Full year adjusted EBITDA margin, prior to Medicare Cap, is estimated to be 17.8% to 18.3%. Medicare Cap billing limitations are estimated to be $9.5 million in calendar year 2024. Roto-Rooter is forecasted to achieve full-year 2024 revenue growth of 3.5% to 4.0%. Roto-Rooter’s adjusted EBITDA margin for 2024 is expected to be 28.7% to 29.1%. Based upon the above, full-year 2024 earnings per diluted share, excluding: non-cash expense for stock options, tax benefits from stock option exercises, costs related to litigation, and other discrete items, is estimated to be in the range of $23.30 to $23.70. The 2024 guidance assumes an effective corporate tax rate on adjusted earnings of 24.2% and a diluted share count of 15.2 million shares. Chemed’s 2023 adjusted earnings per diluted share was $20.30, including $1.04 per share for costs associated with the 2023 portion of the Retention Program. Conference Call As previously disclosed, Chemed will host a conference call and webcast at 10 a.m., ET, on Wednesday, February 28, 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/586r6wmh. Participants may also register via teleconference at: https://register.vevent.com/register/BIefc8b6001c2b43b09e16a655471d87c4. Once registration is completed, participants will be provided with a dial-in number containing a personalized conference code to access the call. All participants are instructed to dial-in 15 minutes prior to the start time. A taped replay of the conference call will be available beginning approximately two hours after the call's conclusion. You may access the replay via webcast through the investor relations section of Chemed’s website. Chemed Corporation operates in the healthcare field through its VITAS Healthcare Corporation subsidiary. VITAS provides daily hospice services to approximately 18,600 patients with severe, life-limiting illnesses. This type of care is focused on making the terminally ill patient's final days as comfortable and pain-free as possible. Chemed operates in the residential and commercial plumbing and drain cleaning industry under the brand name Roto-Rooter. Roto-Rooter provides plumbing, drain cleaning, and water cleanup services through company-owned branches, independent contractors and franchisees in the United States and Canada. Roto-Rooter also has licensed master franchisees in the republics of Indonesia and Singapore, and the Philippines. This press release contains information about Chemed’s EBITDA, Adjusted EBITDA and Adjusted Diluted EPS, which are not measures derived in accordance with GAAP and which exclude components that are important to understanding Chemed’s financial performance. In reporting its operating results, Chemed provides EBITDA, Adjusted EBITDA and Adjusted Diluted EPS measures to help investors and others evaluate the Company’s operating results, compare its operating performance with that of similar companies that have different capital structures and evaluate its ability to meet its future debt service, capital expenditures and working capital requirements. Chemed’s management similarly uses EBITDA, Adjusted EBITDA and Adjusted Diluted EPS to assist it in evaluating the performance of the Company across fiscal periods and in assessing how its performance compares to its peer companies. These measures also help Chemed’s management to estimate the resources required to meet Chemed’s future financial obligations and expenditures. Chemed’s EBITDA, Adjusted EBITDA and Adjusted Diluted EPS should not be considered in isolation or as a substitute for comparable measures calculated and presented in accordance with GAAP. We calculated Adjusted EBITDA Margin by dividing Adjusted EBITDA by service revenue and sales. A reconciliation of Chemed’s net income to its EBITDA, Adjusted EBITDA and Adjusted Diluted EPS is presented in the tables following the text of this press release. Forward-Looking Statements Certain statements contained in this press release and the accompanying tables are "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. The words "believe," "expect," "hope," "anticipate," "plan" and similar expressions identify forward-looking statements, which speak only as of the date the statement was made. Chemed does not undertake and specifically disclaims any obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. These statements are based on current expectations and assumptions and involve various risks and uncertainties, which could cause Chemed's actual results to differ from those expressed in such forward-looking statements. These risks and uncertainties arise from, among other things, possible changes in regulations governing the hospice care or plumbing and drain cleaning industries; periodic changes in reimbursement levels and procedures under Medicare and Medicaid programs; difficulties predicting patient length of stay and estimating potential Medicare reimbursement obligations; challenges inherent in Chemed's growth strategy; the current shortage of qualified nurses, other healthcare professionals and licensed plumbing and drain cleaning technicians; Chemed’s dependence on patient referral sources; and other factors detailed under the caption "Description of Business by Segment" or "Risk Factors" in Chemed’s most recent report on form 10-Q or 10-K and its other filings with the Securities and Exchange Commission. You are cautioned not to place undue reliance on such forward-looking statements and there are no assurances that the matters contained in such statements will be achieved. CHEMED CORPORATION AND SUBSIDIARY COMPANIES CONSOLIDATED STATEMENTS OF INCOME (in thousands, except per share data)(unaudited) Three Months Ended December 31, For the Years Ended December 31, 2023 2022 2023 2022 Service revenues and sales $ 585,912 $ 546,654 $ 2,264,417 $ 2,134,963 Cost of services provided and goods sold 358,346 349,570 1,465,602 1,369,877 Selling, general and administrative expenses (aa) 100,436 96,928 395,120 358,727 Depreciation 13,024 12,096 50,802 49,102 Amortization 2,515 2,512 10,063 10,070 Other operating expense 197 4,221 2,261 3,691 Total costs and expenses 474,518 465,327 1,923,848 1,791,467 Income from operations 111,394 81,327 340,569 343,496 Interest expense (342 ) (1,601 ) (3,108 ) (4,584 ) Other income/(expense)--net (bb) 4,541 2,674 12,906 (9,233 ) Income before income taxes 115,593 82,400 350,367 329,679 Income taxes (25,540 ) (20,274 ) (77,858 ) (80,055 ) Net income $ 90,053 $ 62,126 $ 272,509 $ 249,624 Earnings Per Share Net income $ 5.96 $ 4.17 $ 18.11 $ 16.72 Average number of shares outstanding 15,099 14,913 15,050 14,929 Diluted Earnings Per Share Net income $ 5.90 $ 4.13 $ 17.93 $ 16.53 Average number of shares outstanding 15,270 15,052 15,200 15,099 (aa) Selling, general and administrative ("SG&A") expenses comprise (in thousands): Three Months Ended December 31, For the Years Ended December 31, 2023 2022 2023 2022 SG&A expenses before long-term incentive compensation and the impact of market value adjustments related to deferred compensation plans $ 95,601 $ 91,779 $ 377,027 $ 360,896 Long-term incentive compensation 3,872 2,923 11,689 7,801 Market value adjustments related to deferred compensation trusts 963 2,226 6,404 (9,970 ) Total SG&A expenses $ 100,436 $ 96,928 $ 395,120 $ 358,727 (bb) Other income/(expense)--net comprises (in thousands): Three Months Ended December 31, For the Years Ended December 31, 2023 2022 2023 2022 Market value adjustments related to deferred compensation trusts $ 963 $ 2,226 $ 6,404 $ (9,970 ) Interest income 3,408 65 6,270 355 Other 170 383 232 382 Total other income/(expense)--net $ 4,541 $ 2,674 $ 12,906 $ (9,233 ) CHEMED CORPORATION AND SUBSIDIARY COMPANIES CONSOLIDATED BALANCE SHEETS (in thousands, except per share data)(unaudited) December 31, 2023 2022 Assets Current assets Cash and cash equivalents $ 263,958 $ 74,126 Accounts receivable less allowances 181,511 139,408 Inventories 12,004 10,272 Prepaid income taxes 13,166 18,515 Prepaid expenses 30,204 30,291 Total current assets 500,843 272,612 Investments of deferred compensation plans held in trust 106,126 93,196 Properties and equipment, at cost less accumulated depreciation 203,840 199,714 Lease right of use asset 126,387 135,662 Identifiable intangible assets less accumulated amortization 90,264 99,726 Goodwill 585,017 581,295 Other assets 55,618 59,807 Total Assets $ 1,668,095 $ 1,442,012 Liabilities Current liabilities Accounts payable $ 64,034 $ 41,884 Current portion of long-term debt - 5,000 Income taxes 6,858 - Accrued insurance 58,568 58,515 Accrued compensation 88,381 87,350 Accrued legal 6,386 4,456 Short-term lease liability 38,635 38,996 Other current liabilities 49,188 61,004 Total current liabilities 312,050 297,205 Deferred income taxes 30,321 38,613 Long-term debt - 92,500 Deferred compensation liabilities 104,069 92,330 Long-term lease liability 100,776 110,513 Other liabilities 13,003 12,136 Total Liabilities 560,219 643,297 Stockholders' Equity Capital stock 37,184 36,796 Paid-in capital 1,341,273 1,149,899 Retained earnings 2,446,925 2,197,918 Treasury stock, at cost (2,719,588 ) (2,588,145 ) Deferred compensation payable in Company stock 2,082 2,247 Total Stockholders' Equity 1,107,876 798,715 Total Liabilities and Stockholders' Equity $ 1,668,095 $ 1,442,012 CHEMED CORPORATION AND SUBSIDIARY COMPANIES CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands)(unaudited) For the Years Ended December 31, 2023 2022 Cash Flows from Operating Activities Net income $ 272,509 $ 249,624 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 60,865 59,172 Stock option expense 30,082 26,254 Deferred payroll taxes - (18,175 ) Noncash long-term incentive compensation 9,267 6,188 (Benefit)/provision for deferred income taxes (8,027 ) 14,827 Litigation settlements 2,050 4,000 Noncash directors' compensation 1,444 1,170 Amortization of debt issuance costs 580 342 Changes in operating assets and liabilities, excluding amounts acquired in business combinations: Increase in accounts receivable (41,488 ) (2,414 ) Increase in inventories (1,732 ) (162 ) Decrease in prepaid expenses 87 2,397 (Decrease)/increase in accounts payable and other current liabilities (9,348 ) 15,343 Change in current income taxes 11,748 (996 ) Net change in lease assets and liabilities (1,424 ) 1,471 Increase in other assets (9,952 ) (45,779 ) Increase/(decrease) in other liabilities 12,802 (3,350 ) Other sources/(uses) 836 (26 ) Net cash provided by operating activities 330,299 309,886 Cash Flows from Investing Activities Capital expenditures (56,854 ) (57,325 ) Business combinations, net of cash acquired (3,994 ) (3,529 ) Proceeds from sale of fixed assets 640 2,330 Other uses (434 ) (878 ) Net cash used by investing activities (60,642 ) (59,402 ) Cash Flows from Financing Activities Proceeds from exercise of stock options 102,192 44,968 Payments on other long-term debt (97,500 ) (2,500 ) Proceeds from other long-term debt - 100,000 Purchases of treasury stock (67,697 ) (114,515 ) Dividends paid (23,502 ) (22,017 ) Change in cash overdrafts payable 15,749 (11,884 ) Capital stock surrendered to pay taxes on stock-based compensation (9,557 ) (15,611 ) Debt issuance costs - (1,586 ) Payments on revolving line of credit - (306,800 ) Proceeds from revolving line of credit - 121,800 Other sources/(uses) 490 (1,108 ) Net cash used by financing activities (79,825 ) (209,253 ) Increase/(decrease) in Cash and Cash Equivalents 189,832 41,231 Cash and cash equivalents at beginning of year 74,126 32,895 Cash and cash equivalents at end of year $ 263,958 $ 74,126 CHEMED CORPORATION AND SUBSIDIARY COMPANIES CONSOLIDATING STATEMENTS OF INCOME FOR THE THREE MONTHS ENDED DECEMBER 31, 2023 AND 2022 (in thousands)(unaudited) Chemed VITAS Roto-Rooter Corporate Consolidated 2023 (a) Service revenues and sales $ 349,998 $ 235,914 $ - $ 585,912 Cost of services provided and goods sold 247,151 111,195 - 358,346 Selling, general and administrative expenses 22,048 59,621 18,767 100,436 Depreciation 5,052 7,959 13 13,024 Amortization 26 2,489 - 2,515 Other operating (income)/expense 4 193 - 197 Total costs and expenses 274,281 181,457 18,780 474,518 Income/(loss) from operations 75,717 54,457 (18,780 ) 111,394 Interest expense (26 ) (55 ) (261 ) (342 ) Intercompany interest income/(expense) 5,008 3,265 (8,273 ) - Other income—net 201 29 4,311 4,541 Income/(loss) before income taxes 80,900 57,696 (23,003 ) 115,593 Income taxes (17,613 ) (11,809 ) 3,882 (25,540 ) Net income/(loss) $ 63,287 $ 45,887 $ (19,121 ) $ 90,053 2022 (b) Service revenues and sales $ 308,059 $ 238,595 $ - $ 546,654 Cost of services provided and goods sold 237,333 112,237 - 349,570 Selling, general and administrative expenses 22,005 57,096 17,827 96,928 Depreciation 5,061 7,017 18 12,096 Amortization 26 2,486 - 2,512 Other operating expense/(income) 4,266 (45 ) - 4,221 Total costs and expenses 268,691 178,791 17,845 465,327 Income/(loss) from operations 39,368 59,804 (17,845 ) 81,327 Interest expense (31 ) (76 ) (1,494 ) (1,601 ) Intercompany interest income/(expense) 4,720 2,594 (7,314 ) - Other income/(expense)—net 417 31 2,226 2,674 Income/(loss) before income taxes 44,474 62,353 (24,427 ) 82,400 Income taxes (10,800 ) (14,829 ) 5,355 (20,274 ) Net income/(loss) $ 33,674 $ 47,524 $ (19,072 ) $ 62,126 The "Footnotes to Financial Statements" are integral parts of this financial information. CONSOLIDATING STATEMENTS OF INCOME FOR THE YEARS ENDED DECEMBER 31, 2023 AND 2022 (in thousands)(unaudited) Chemed VITAS Roto-Rooter Corporate Consolidated 2023 (a) Service revenues and sales $ 1,315,065 $ 949,352 $ - $ 2,264,417 Cost of services provided and goods sold 1,017,623 447,979 - 1,465,602 Selling, general and administrative expenses 93,296 231,587 70,237 395,120 Depreciation 19,959 30,790 53 50,802 Amortization 104 9,959 - 10,063 Other operating (income)/expense (12 ) 2,273 - 2,261 Total costs and expenses 1,130,970 722,588 70,290 1,923,848 Income/(loss) from operations 184,095 226,764 (70,290 ) 340,569 Interest expense (180 ) (442 ) (2,486 ) (3,108 ) Intercompany interest income/(expense) 19,400 11,918 (31,318 ) - Other income—net 1,309 126 11,471 12,906 Income/(loss) before income taxes 204,624 238,366 (92,623 ) 350,367 Income taxes (46,115 ) (50,125 ) 18,382 (77,858 ) Net income/(loss) $ 158,509 $ 188,241 $ (74,241 ) $ 272,509 2022 (b) Service revenues and sales $ 1,201,564 $ 933,399 $ - $ 2,134,963 Cost of services provided and goods sold 931,861 438,016 - 1,369,877 Selling, general and administrative expenses 89,187 222,257 47,283 358,727 Depreciation 21,955 27,075 72 49,102 Amortization 101 9,969 - 10,070 Other operating (income)/expense 3,337 354 - 3,691 Total costs and expenses 1,046,441 697,671 47,355 1,791,467 Income/(loss) from operations 155,123 235,728 (47,355 ) 343,496 Interest expense (172 ) (396 ) (4,016 ) (4,584 ) Intercompany interest income/(expense) 18,901 9,345 (28,246 ) - Other income/(expense)—net 600 138 (9,971 ) (9,233 ) Income/(loss) before income taxes 174,452 244,815 (89,588 ) 329,679 Income taxes (43,000 ) (58,695 ) 21,640 (80,055 ) Net income/(loss) $ 131,452 $ 186,120 $ (67,948 ) $ 249,624 The "Footnotes to Financial Statements" are integral parts of this financial information. CHEMED CORPORATION AND SUBSIDIARY COMPANIES CONSOLIDATING SUMMARIES OF EBITDA FOR THE THREE MONTHS ENDED DECEMBER 31, 2023 AND 2022 (in thousands)(unaudited) Chemed VITAS Roto-Rooter Corporate Consolidated 2023 Net income/(loss) $ 63,287 $ 45,887 $ (19,121 ) $ 90,053 Add/(deduct): Interest expense 26 55 261 342 Income taxes 17,613 11,809 (3,882 ) 25,540 Depreciation 5,052 7,959 13 13,024 Amortization 26 2,489 - 2,515 EBITDA 86,004 68,199 (22,729 ) 131,474 Add/(deduct): Intercompany interest expense/(income) (5,008 ) (3,265 ) 8,273 - Interest income (31 ) (29 ) (3,348 ) (3,408 ) Stock option expense - - 7,706 7,706 Long-term incentive compensation - - 3,872 3,872 Adjusted EBITDA $ 80,965 $ 64,905 $ (6,226 ) $ 139,644 2022 Net income/(loss) $ 33,674 $ 47,524 $ (19,072 ) $ 62,126 Add/(deduct): Interest expense 31 76 1,494 1,601 Income taxes 10,800 14,829 (5,355 ) 20,274 Depreciation 5,061 7,017 18 12,096 Amortization 26 2,486 - 2,512 EBITDA 49,592 71,932 (22,915 ) 98,609 Add/(deduct): Intercompany interest expense/(income) (4,720 ) (2,594 ) 7,314 - Interest income (36 ) (30 ) 1 (65 ) Stock option expense - - 6,911 6,911 Litigation settlement 4,000 - - 4,000 Long-term incentive compensation - - 2,923 2,923 Adjusted EBITDA $ 48,836 $ 69,308 $ (5,766 ) $ 112,378 The "Footnotes to Financial Statements" are integral parts of this financial information. CHEMED CORPORATION AND SUBSIDIARY COMPANIES CONSOLIDATING SUMMARIES OF EBITDA FOR THE YEARS ENDED DECEMBER 31, 2023 AND 2022 (in thousands)(unaudited) Chemed VITAS Roto-Rooter Corporate Consolidated 2023 Net income/(loss) $ 158,509 $ 188,241 $ (74,241 ) $ 272,509 Add/(deduct): Interest expense 180 442 2,486 3,108 Income taxes 46,115 50,125 (18,382 ) 77,858 Depreciation 19,959 30,790 53 50,802 Amortization 104 9,959 - 10,063 EBITDA 224,867 279,557 (90,084 ) 414,340 Add/(deduct): Intercompany interest expense/(income) (19,400 ) (11,918 ) 31,318 - Interest income (1,078 ) (125 ) (5,067 ) (6,270 ) Stock option expense - - 30,082 30,082 Long-term incentive compensation - - 11,689 11,689 Litigation settlements - 2,056 - 2,056 Adjusted EBITDA $ 204,389 $ 269,570 $ (22,062 ) $ 451,897 2022 Net income/(loss) $ 131,452 $ 186,120 $ (67,948 ) $ 249,624 Add/(deduct): Interest expense 172 396 4,016 4,584 Income taxes 43,000 58,695 (21,640 ) 80,055 Depreciation 21,955 27,075 72 49,102 Amortization 101 9,969 - 10,070 EBITDA 196,680 282,255 (85,500 ) 393,435 Add/(deduct): Intercompany interest expense/(income) (18,901 ) (9,345 ) 28,246 - Interest income (218 ) (138 ) 1 (355 ) Stock option expense - - 26,254 26,254 Long-term incentive compensation - - 7,801 7,801 Litigation settlements 4,000 - - 4,000 Direct costs related to COVID-19 310 988 89 1,387 Medicare cap sequestration adjustment 138 - - 138 Adjusted EBITDA $ 182,009 $ 273,760 $ (23,109 ) $ 432,660 The "Footnotes to Financial Statements" are integral parts of this financial information. CHEMED CORPORATION AND SUBSIDIARY COMPANIES RECONCILIATION OF ADJUSTED NET INCOME (in thousands, except per share data)(unaudited) Three Months Ended December 31, For the Years Ended December 31, 2023 2022 2023 2022 Net income as reported $ 90,053 $ 62,126 $ 272,509 $ 249,624 Add/(deduct) pre-tax cost of: Stock option expense 7,706 6,911 30,082 26,254 Long-term incentive compensation 3,872 2,923 11,689 7,801 Amortization of reacquired franchise agreements 2,352 2,352 9,408 9,408 Litigation settlements - 4,000 2,056 4,000 Medicare cap sequestration adjustment - - - 138 Direct costs related to COVID-19 - - - 1,387 Add/(deduct) tax impacts: Tax impact of the above pre-tax adjustments (1) (2,216 ) (3,151 ) (8,658 ) (9,075 ) Tax impact of deferred tax rate change - - (4,241 ) - Excess tax benefits on stock compensation (954 ) (1,538 ) (4,330 ) (5,928 ) Adjusted net income $ 100,813 $ 73,623 $ 308,515 $ 283,609 Diluted Earnings Per Share As Reported Net income $ 5.90 $ 4.13 $ 17.93 $ 16.53 Average number of shares outstanding 15,270 15,052 15,200 15,099 Adjusted Diluted Earnings Per Share Adjusted net income $ 6.60 $ 4.89 $ 20.30 $ 18.78 Average number of shares outstanding 15,270 15,052 15,200 15,099 (1) The tax impact of pre-tax adjustments was calculated using the effective tax rate of the operating unit for which each adjustment is associated. The "Footnotes to Financial Statements" are integral parts of this financial information. CHEMED CORPORATION AND SUBSIDIARY COMPANIES OPERATING STATISTICS FOR VITAS SEGMENT (unaudited) Three Months Ended December 31, For the Years Ended December 31, OPERATING STATISTICS 2023 2022 2023 2022 Net revenue ($000) (c) Homecare $ 303,883 $ 267,691 $ 1,136,437 $ 1,039,211 Inpatient 28,107 26,647 112,419 102,361 Continuous care 22,620 19,284 85,674 77,000 Other 3,844 2,977 13,582 12,438 Subtotal $ 358,454 $ 316,599 $ 1,348,112 $ 1,231,010 Room and board, net (2,535 ) (2,778 ) (10,851 ) (9,574 ) Contractual allowances (3,546 ) (3,012 ) (14,196 ) (12,004 ) Medicare cap allowance (2,375 ) (2,750 ) (8,000 ) (7,868 ) Net Revenue $ 349,998 $ 308,059 $ 1,315,065 $ 1,201,564 Net revenue as a percent of total before Medicare cap allowance Homecare 84.8 % 84.6 % 84.3 % 84.4 % Inpatient 7.8 8.4 8.3 8.3 Continuous care 6.3 6.1 6.4 6.3 Other 1.1 0.9 1.0 1.0 Subtotal 100.0 100.0 100.0 100.0 Room and board, net (0.7 ) (0.9 ) (0.8 ) (0.8 ) Contractual allowances (1.0 ) (0.9 ) (1.1 ) (1.0 ) Medicare cap allowance (0.7 ) (0.9 ) (0.6 ) (0.6 ) Net Revenue 97.6 % 97.3 % 97.5 % 97.6 % Days of care Homecare 1,439,494 1,289,067 5,457,963 5,086,021 Nursing home 285,616 264,895 1,118,728 1,036,816 Respite 7,394 5,807 26,605 23,905 Subtotal routine homecare and respite 1,732,504 1,559,769 6,603,296 6,146,742 Inpatient 24,918 24,254 101,905 95,431 Continuous care 23,001 19,909 88,631 81,890 Total 1,780,423 1,603,932 6,793,832 6,324,063 Number of days in relevant time period 92 92 365 365 Average daily census ("ADC") (days) Homecare 15,646 14,012 14,953 13,934 Nursing home 3,105 2,879 3,065 2,841 Respite 80 63 73 65 Subtotal routine homecare and respite 18,831 16,954 18,091 16,840 Inpatient 271 264 279 261 Continuous care 250 216 243 224 Total 19,352 17,434 18,613 17,325 Total Admissions 15,867 14,829 63,431 60,774 Total Discharges 15,705 14,862 61,242 60,930 Average length of stay (days) 105.9 103.9 102.2 104.6 Median length of stay (days) 17.0 16.0 16.0 16.0 ADC by major diagnosis Cerebro 42.8 % 41.0 % 42.5 % 39.8 % Neurological 13.7 20.3 15.3 21.2 Cancer 10.3 10.7 10.5 10.9 Cardio 16.2 15.7 16.1 15.7 Respiratory 7.0 7.2 7.1 7.3 Other 10.0 5.1 8.5 5.1 Total 100.0 % 100.0 % 100.0 % 100.0 % Admissions by major diagnosis Cerebro 26.5 % 25.6 % 26.4 % 24.6 % Neurological 8.3 11.0 9.4 12.3 Cancer 25.9 26.7 26.0 26.3 Cardio 15.4 15.3 16.0 14.9 Respiratory 10.1 10.5 10.1 10.3 Other 13.8 10.9 12.1 11.6 Total 100.0 % 100.0 % 100.0 % 100.0 % Estimated uncollectible accounts as a percent of revenues 1.0 % 1.0 % 1.1 % 1.0 % Accounts receivable -- Days of revenue outstanding-excluding unapplied Medicare payments 37.8 38.1 n.a. n.a. Days of revenue outstanding-including unapplied Medicare payments 36.0 28.0 n.a. n.a. The "Footnotes to Financial Statements" are integral parts of this financial information. FOOTNOTES TO FINANCIAL STATEMENTS FOR THE THREE MONTHS AND YEARS ENDED DECEMBER 31, 2023 AND 2022 (unaudited) (a) 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 December 31, 2023 VITAS Roto-Rooter Corporate Consolidated Stock option expense $ - $ - $ (7,706 ) $ (7,706 ) Long-term incentive compensation - - (3,872 ) (3,872 ) Amortization of reacquired franchise agreements - (2,352 ) - (2,352 ) Pretax impact on earnings - (2,352 ) (11,578 ) (13,930 ) Excess tax benefits on stock compensation - - 954 954 Income tax benefit on the above - 548 1,668 2,216 After-tax impact on earnings $ - $ (1,804 ) $ (8,956 ) $ (10,760 ) For the Years Ended December 31, 2023 VITAS Roto-Rooter Corporate Consolidated Stock option expense $ - $ - $ (30,082 ) $ (30,082 ) Long-term incentive compensation - - (11,689 ) (11,689 ) Amortization of reacquired franchise agreements - (9,408 ) - (9,408 ) Litigation settlements - (2,056 ) - (2,056 ) Pretax impact on earnings - (11,464 ) (41,771 ) (53,235 ) Excess tax benefits on stock compensation - - 4,330 4,330 Tax impact of deferred tax rate change 1,772 3,559 (1,090 ) 4,241 Income tax benefit on the above - 2,671 5,987 8,658 After-tax impact on earnings $ 1,772 $ (5,234 ) $ (32,544 ) $ (36,006 ) (b) Included in the results of operations for 2022 are the following significant credits/(charges) which may not be indicative of ongoing operations (in thousands): Three Months Ended December 31, 2022 VITAS Roto-Rooter Corporate Consolidated Stock option expense $ - $ - $ (6,911 ) $ (6,911 ) Litigation settlements (4,000 ) - - (4,000 ) Long-term incentive compensation - - (2,923 ) (2,923 ) Amortization of reacquired franchise agreements - (2,352 ) - (2,352 ) Pretax impact on earnings (4,000 ) (2,352 ) (9,834 ) (16,186 ) Excess tax benefits on stock compensation - - 1,538 1,538 Income tax benefit on the above 1,016 623 1,512 3,151 After-tax impact on earnings $ (2,984 ) $ (1,729 ) $ (6,784 ) $ (11,497 ) For the Years Ended December 31, 2022 VITAS Roto-Rooter Corporate Consolidated Stock option expense $ - $ - $ (26,254 ) $ (26,254 ) Amortization of reacquired franchise agreements - (9,408 ) - (9,408 ) Long-term incentive compensation - - (7,801 ) (7,801 ) Litigation settlements (4,000 ) - - (4,000 ) Direct costs related to COVID-19 (310 ) (988 ) (89 ) (1,387 ) Medicare cap sequestration adjustment (138 ) - - (138 ) Pretax impact on earnings (4,448 ) (10,396 ) (34,144 ) (48,988 ) Excess tax benefits on stock compensation - - 5,928 5,928 Income tax benefit on the above 1,130 2,755 5,190 9,075 After-tax impact on earnings $ (3,318 ) $ (7,641 ) $ (23,026 ) $ (33,985 ) (c) VITAS has 11 large (greater than 450 ADC), 17 medium (greater than 200 but less than 450 ADC) and 22 small (less than 200 ADC) hospice programs. Of Vitas' 30 Medicare provider numbers, for the trailing 12 months, 26 provider numbers have a Medicare cap cushion of greater than 10%, two provider numbers have a Medicare cap cushion between 5% and 10%, and two provider numbers have a Medicare cap liability. View source version on businesswire.com: https://www.businesswire.com/news/home/20240227400148/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 fourth quarter ended December 31, 2023, versus the comparable prior-year period. Changes to Non-GAAP Metrics Chemed uses certain non-GAAP metrics such as EBITDA, adjusted EBITDA, adjusted net income and adjusted diluted earnings per share, to provide additional context and perspective to reported operational results. Chemed’s previously reported non-GAAP metrics during the four sequential quarters from September 30, 2022 through June 30, 2023 excluded the 12-month pandemic-related licensed healthcare professional retention bonus (Retention Program). Starting with the quarter-ended September 30, 2023, the Company no longer excludes the cost of the Retention Program when presenting non-GAAP operating metrics in current or prior periods. For the quarter-ended December 31, 2023, there is a pre-tax and after-tax expense reversal related to the Retention Program of $2.9 million and $2.2 million, respectively. For the quarter-ended December 31, 2022, the pretax and after-tax Retention Program expense was $10.1 million and $7.5 million, respectively. For the year ended December 31, 2023 pretax and after-tax expense for the Retention Program is $20.8 million and $15.8 million, respectively. For the year ended December 31, 2022 pretax and after-tax expense for the Retention Program was $19.6 million and $14.6 million, respectively. Results for Quarter Ended December 31, 2023 Consolidated operating results: Revenue increased 7.2% to $585.9 million GAAP Diluted Earnings-per-Share (EPS) of $5.90, an increase of 42.9% Adjusted Diluted EPS of $6.60, an increase of 35.0% VITAS segment operating results: Net Patient Revenue of $350.0 million, an increase of 13.6% Average Daily Census (ADC) of 19,352, an increase of 11.0% Admissions of 15,867, an increase of 7.0% Net Income, excluding certain discrete items, of $63.3 million, an increase of 72.6% Adjusted EBITDA, excluding Medicare Cap, of $83.3 million, an increase of 61.6% Adjusted EBITDA margin, excluding Medicare Cap, of 23.7%, an increase of 705-basis points Roto-Rooter segment operating results: Revenue of $235.9 million, a decrease of 1.1% Net Income, excluding certain discrete items, of $47.7 million, a decrease of 3.2% Adjusted EBITDA of $64.9 million, a decline of 6.4% Adjusted EBITDA margin of 27.5%, a decline of 154-basis points VITAS VITAS net revenue was $350.0 million in the fourth quarter of 2023, which is an increase of 13.6% when compared to the prior-year period. This revenue increase is comprised primarily of an 11.0% increase in days-of-care and a geographically weighted average Medicare reimbursement rate increase of approximately 2.3%. Acuity mix shift negatively impacted revenue growth 38-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 61-basis points. In the fourth quarter of 2023, VITAS accrued $2.4 million in Medicare Cap billing limitations. This compares to a $2.8 million Medicare Cap billing limitation in the fourth quarter of 2022. Of VITAS’ 30 Medicare provider numbers, 26 provider numbers have a trailing 12-month Medicare Cap cushion of 10% or greater, two provider numbers have a cushion between 5% and 10%, no provider number has a cushion between 0% and 5%, and two provider numbers have a trailing 12-month Medicare Cap billing limitation totaling $7.8 million. Average revenue per patient per day in the fourth quarter of 2023 was $201.33 which is 200-basis points above the prior-year period. Reimbursement for routine home care and high acuity care averaged $177.62 and $1,058.60, respectively. During the quarter, high acuity days-of-care were 2.7% of total days of care, a decline of 6-basis points when compared to the prior-year quarter. The fourth quarter 2023 gross margin, excluding Medicare Cap, was 29.9%. This compares to the prior year gross margin of 23.6%, excluding Medicare Cap. Approximately 406-basis points of this difference is attributable to the expense associated with the Retention Program. Selling, general and administrative expenses were $22.0 million in the fourth quarter of 2023 and compares to $22.0 million in the prior-year quarter. Adjusted EBITDA, excluding Medicare Cap, totaled $83.3 million in the quarter, an increase of 61.6%. Adjusted EBITDA margin in the quarter, excluding Medicare Cap, was 23.7%, which is 705-basis points above the prior-year period. Approximately 406-basis points of this difference is attributable to the expense associated with the Retention Program. Roto-Rooter Roto-Rooter generated quarterly revenue of $235.9 million in the fourth quarter of 2023, a decrease of 1.1%, when compared to the prior-year quarter. Roto-Rooter branch commercial revenue in the quarter totaled $54.0 million, a decrease of 7.9% from the prior-year. This aggregate commercial revenue decline consisted of drain cleaning revenue declining 8.6%, plumbing declining 6.3%, excavation declining 5.9%, and water restoration declining 16.1%. Roto-Rooter branch residential revenue in the quarter totaled $162.5 million, an increase of 2.0%, over the prior-year period. This aggregate residential revenue growth consisted of drain cleaning decreasing 5.6%, plumbing increasing 1.4%, excavation expanding 4.0%, and water restoration increasing 8.6%. Roto-Rooter’s gross margin in the quarter was 52.9%, a 9-basis point decline when compared to the fourth quarter of 2022. Adjusted EBITDA in the fourth quarter of 2023 totaled $64.9 million, a decrease of 6.4%. The Adjusted EBITDA margin in the quarter was 27.5%, which is 154-basis points below the prior-year period. Chemed Consolidated As of December 31, 2023, Chemed had total cash and cash equivalents of $264.0 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. The Company paid off the remaining portion of the term loan in the second quarter of 2023. 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 79,512 shares of Chemed stock for $46.0 million which equates to a cost per share of $579.09. As of December 31, 2023, there was approximately $314.1 million of remaining share repurchase authorization under its plan. Guidance for 2024 VITAS 2024 revenue, prior to Medicare Cap, is estimated to increase 9.0% to 9.8% when compared to 2023. ADC is estimated to increase 6.5% to 7.0%. Full year adjusted EBITDA margin, prior to Medicare Cap, is estimated to be 17.8% to 18.3%. Medicare Cap billing limitations are estimated to be $9.5 million in calendar year 2024. Roto-Rooter is forecasted to achieve full-year 2024 revenue growth of 3.5% to 4.0%. Roto-Rooter’s adjusted EBITDA margin for 2024 is expected to be 28.7% to 29.1%. Based upon the above, full-year 2024 earnings per diluted share, excluding: non-cash expense for stock options, tax benefits from stock option exercises, costs related to litigation, and other discrete items, is estimated to be in the range of $23.30 to $23.70. The 2024 guidance assumes an effective corporate tax rate on adjusted earnings of 24.2% and a diluted share count of 15.2 million shares. Chemed’s 2023 adjusted earnings per diluted share was $20.30, including $1.04 per share for costs associated with the 2023 portion of the Retention Program. Conference Call As previously disclosed, Chemed will host a conference call and webcast at 10 a.m., ET, on Wednesday, February 28, 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/586r6wmh. Participants may also register via teleconference at: https://register.vevent.com/register/BIefc8b6001c2b43b09e16a655471d87c4. Once registration is completed, participants will be provided with a dial-in number containing a personalized conference code to access the call. All participants are instructed to dial-in 15 minutes prior to the start time. A taped replay of the conference call will be available beginning approximately two hours after the call's conclusion. You may access the replay via webcast through the investor relations section of Chemed’s website. Chemed Corporation operates in the healthcare field through its VITAS Healthcare Corporation subsidiary. VITAS provides daily hospice services to approximately 18,600 patients with severe, life-limiting illnesses. This type of care is focused on making the terminally ill patient's final days as comfortable and pain-free as possible. Chemed operates in the residential and commercial plumbing and drain cleaning industry under the brand name Roto-Rooter. Roto-Rooter provides plumbing, drain cleaning, and water cleanup services through company-owned branches, independent contractors and franchisees in the United States and Canada. Roto-Rooter also has licensed master franchisees in the republics of Indonesia and Singapore, and the Philippines. This press release contains information about Chemed’s EBITDA, Adjusted EBITDA and Adjusted Diluted EPS, which are not measures derived in accordance with GAAP and which exclude components that are important to understanding Chemed’s financial performance. In reporting its operating results, Chemed provides EBITDA, Adjusted EBITDA and Adjusted Diluted EPS measures to help investors and others evaluate the Company’s operating results, compare its operating performance with that of similar companies that have different capital structures and evaluate its ability to meet its future debt service, capital expenditures and working capital requirements. Chemed’s management similarly uses EBITDA, Adjusted EBITDA and Adjusted Diluted EPS to assist it in evaluating the performance of the Company across fiscal periods and in assessing how its performance compares to its peer companies. These measures also help Chemed’s management to estimate the resources required to meet Chemed’s future financial obligations and expenditures. Chemed’s EBITDA, Adjusted EBITDA and Adjusted Diluted EPS should not be considered in isolation or as a substitute for comparable measures calculated and presented in accordance with GAAP. We calculated Adjusted EBITDA Margin by dividing Adjusted EBITDA by service revenue and sales. A reconciliation of Chemed’s net income to its EBITDA, Adjusted EBITDA and Adjusted Diluted EPS is presented in the tables following the text of this press release. Forward-Looking Statements Certain statements contained in this press release and the accompanying tables are "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995. The words "believe," "expect," "hope," "anticipate," "plan" and similar expressions identify forward-looking statements, which speak only as of the date the statement was made. Chemed does not undertake and specifically disclaims any obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. These statements are based on current expectations and assumptions and involve various risks and uncertainties, which could cause Chemed's actual results to differ from those expressed in such forward-looking statements. These risks and uncertainties arise from, among other things, possible changes in regulations governing the hospice care or plumbing and drain cleaning industries; periodic changes in reimbursement levels and procedures under Medicare and Medicaid programs; difficulties predicting patient length of stay and estimating potential Medicare reimbursement obligations; challenges inherent in Chemed's growth strategy; the current shortage of qualified nurses, other healthcare professionals and licensed plumbing and drain cleaning technicians; Chemed’s dependence on patient referral sources; and other factors detailed under the caption "Description of Business by Segment" or "Risk Factors" in Chemed’s most recent report on form 10-Q or 10-K and its other filings with the Securities and Exchange Commission. You are cautioned not to place undue reliance on such forward-looking statements and there are no assurances that the matters contained in such statements will be achieved. CHEMED CORPORATION AND SUBSIDIARY COMPANIES CONSOLIDATED STATEMENTS OF INCOME (in thousands, except per share data)(unaudited) Three Months Ended December 31, For the Years Ended December 31, 2023 2022 2023 2022 Service revenues and sales $ 585,912 $ 546,654 $ 2,264,417 $ 2,134,963 Cost of services provided and goods sold 358,346 349,570 1,465,602 1,369,877 Selling, general and administrative expenses (aa) 100,436 96,928 395,120 358,727 Depreciation 13,024 12,096 50,802 49,102 Amortization 2,515 2,512 10,063 10,070 Other operating expense 197 4,221 2,261 3,691 Total costs and expenses 474,518 465,327 1,923,848 1,791,467 Income from operations 111,394 81,327 340,569 343,496 Interest expense (342 ) (1,601 ) (3,108 ) (4,584 ) Other income/(expense)--net (bb) 4,541 2,674 12,906 (9,233 ) Income before income taxes 115,593 82,400 350,367 329,679 Income taxes (25,540 ) (20,274 ) (77,858 ) (80,055 ) Net income $ 90,053 $ 62,126 $ 272,509 $ 249,624 Earnings Per Share Net income $ 5.96 $ 4.17 $ 18.11 $ 16.72 Average number of shares outstanding 15,099 14,913 15,050 14,929 Diluted Earnings Per Share Net income $ 5.90 $ 4.13 $ 17.93 $ 16.53 Average number of shares outstanding 15,270 15,052 15,200 15,099 (aa) Selling, general and administrative ("SG&A") expenses comprise (in thousands): Three Months Ended December 31, For the Years Ended December 31, 2023 2022 2023 2022 SG&A expenses before long-term incentive compensation and the impact of market value adjustments related to deferred compensation plans $ 95,601 $ 91,779 $ 377,027 $ 360,896 Long-term incentive compensation 3,872 2,923 11,689 7,801 Market value adjustments related to deferred compensation trusts 963 2,226 6,404 (9,970 ) Total SG&A expenses $ 100,436 $ 96,928 $ 395,120 $ 358,727 (bb) Other income/(expense)--net comprises (in thousands): Three Months Ended December 31, For the Years Ended December 31, 2023 2022 2023 2022 Market value adjustments related to deferred compensation trusts $ 963 $ 2,226 $ 6,404 $ (9,970 ) Interest income 3,408 65 6,270 355 Other 170 383 232 382 Total other income/(expense)--net $ 4,541 $ 2,674 $ 12,906 $ (9,233 ) CHEMED CORPORATION AND SUBSIDIARY COMPANIES CONSOLIDATED BALANCE SHEETS (in thousands, except per share data)(unaudited) December 31, 2023 2022 Assets Current assets Cash and cash equivalents $ 263,958 $ 74,126 Accounts receivable less allowances 181,511 139,408 Inventories 12,004 10,272 Prepaid income taxes 13,166 18,515 Prepaid expenses 30,204 30,291 Total current assets 500,843 272,612 Investments of deferred compensation plans held in trust 106,126 93,196 Properties and equipment, at cost less accumulated depreciation 203,840 199,714 Lease right of use asset 126,387 135,662 Identifiable intangible assets less accumulated amortization 90,264 99,726 Goodwill 585,017 581,295 Other assets 55,618 59,807 Total Assets $ 1,668,095 $ 1,442,012 Liabilities Current liabilities Accounts payable $ 64,034 $ 41,884 Current portion of long-term debt - 5,000 Income taxes 6,858 - Accrued insurance 58,568 58,515 Accrued compensation 88,381 87,350 Accrued legal 6,386 4,456 Short-term lease liability 38,635 38,996 Other current liabilities 49,188 61,004 Total current liabilities 312,050 297,205 Deferred income taxes 30,321 38,613 Long-term debt - 92,500 Deferred compensation liabilities 104,069 92,330 Long-term lease liability 100,776 110,513 Other liabilities 13,003 12,136 Total Liabilities 560,219 643,297 Stockholders' Equity Capital stock 37,184 36,796 Paid-in capital 1,341,273 1,149,899 Retained earnings 2,446,925 2,197,918 Treasury stock, at cost (2,719,588 ) (2,588,145 ) Deferred compensation payable in Company stock 2,082 2,247 Total Stockholders' Equity 1,107,876 798,715 Total Liabilities and Stockholders' Equity $ 1,668,095 $ 1,442,012 CHEMED CORPORATION AND SUBSIDIARY COMPANIES CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands)(unaudited) For the Years Ended December 31, 2023 2022 Cash Flows from Operating Activities Net income $ 272,509 $ 249,624 Adjustments to reconcile net income to net cash provided by operating activities: Depreciation and amortization 60,865 59,172 Stock option expense 30,082 26,254 Deferred payroll taxes - (18,175 ) Noncash long-term incentive compensation 9,267 6,188 (Benefit)/provision for deferred income taxes (8,027 ) 14,827 Litigation settlements 2,050 4,000 Noncash directors' compensation 1,444 1,170 Amortization of debt issuance costs 580 342 Changes in operating assets and liabilities, excluding amounts acquired in business combinations: Increase in accounts receivable (41,488 ) (2,414 ) Increase in inventories (1,732 ) (162 ) Decrease in prepaid expenses 87 2,397 (Decrease)/increase in accounts payable and other current liabilities (9,348 ) 15,343 Change in current income taxes 11,748 (996 ) Net change in lease assets and liabilities (1,424 ) 1,471 Increase in other assets (9,952 ) (45,779 ) Increase/(decrease) in other liabilities 12,802 (3,350 ) Other sources/(uses) 836 (26 ) Net cash provided by operating activities 330,299 309,886 Cash Flows from Investing Activities Capital expenditures (56,854 ) (57,325 ) Business combinations, net of cash acquired (3,994 ) (3,529 ) Proceeds from sale of fixed assets 640 2,330 Other uses (434 ) (878 ) Net cash used by investing activities (60,642 ) (59,402 ) Cash Flows from Financing Activities Proceeds from exercise of stock options 102,192 44,968 Payments on other long-term debt (97,500 ) (2,500 ) Proceeds from other long-term debt - 100,000 Purchases of treasury stock (67,697 ) (114,515 ) Dividends paid (23,502 ) (22,017 ) Change in cash overdrafts payable 15,749 (11,884 ) Capital stock surrendered to pay taxes on stock-based compensation (9,557 ) (15,611 ) Debt issuance costs - (1,586 ) Payments on revolving line of credit - (306,800 ) Proceeds from revolving line of credit - 121,800 Other sources/(uses) 490 (1,108 ) Net cash used by financing activities (79,825 ) (209,253 ) Increase/(decrease) in Cash and Cash Equivalents 189,832 41,231 Cash and cash equivalents at beginning of year 74,126 32,895 Cash and cash equivalents at end of year $ 263,958 $ 74,126 CHEMED CORPORATION AND SUBSIDIARY COMPANIES CONSOLIDATING STATEMENTS OF INCOME FOR THE THREE MONTHS ENDED DECEMBER 31, 2023 AND 2022 (in thousands)(unaudited) Chemed VITAS Roto-Rooter Corporate Consolidated 2023 (a) Service revenues and sales $ 349,998 $ 235,914 $ - $ 585,912 Cost of services provided and goods sold 247,151 111,195 - 358,346 Selling, general and administrative expenses 22,048 59,621 18,767 100,436 Depreciation 5,052 7,959 13 13,024 Amortization 26 2,489 - 2,515 Other operating (income)/expense 4 193 - 197 Total costs and expenses 274,281 181,457 18,780 474,518 Income/(loss) from operations 75,717 54,457 (18,780 ) 111,394 Interest expense (26 ) (55 ) (261 ) (342 ) Intercompany interest income/(expense) 5,008 3,265 (8,273 ) - Other income—net 201 29 4,311 4,541 Income/(loss) before income taxes 80,900 57,696 (23,003 ) 115,593 Income taxes (17,613 ) (11,809 ) 3,882 (25,540 ) Net income/(loss) $ 63,287 $ 45,887 $ (19,121 ) $ 90,053 2022 (b) Service revenues and sales $ 308,059 $ 238,595 $ - $ 546,654 Cost of services provided and goods sold 237,333 112,237 - 349,570 Selling, general and administrative expenses 22,005 57,096 17,827 96,928 Depreciation 5,061 7,017 18 12,096 Amortization 26 2,486 - 2,512 Other operating expense/(income) 4,266 (45 ) - 4,221 Total costs and expenses 268,691 178,791 17,845 465,327 Income/(loss) from operations 39,368 59,804 (17,845 ) 81,327 Interest expense (31 ) (76 ) (1,494 ) (1,601 ) Intercompany interest income/(expense) 4,720 2,594 (7,314 ) - Other income/(expense)—net 417 31 2,226 2,674 Income/(loss) before income taxes 44,474 62,353 (24,427 ) 82,400 Income taxes (10,800 ) (14,829 ) 5,355 (20,274 ) Net income/(loss) $ 33,674 $ 47,524 $ (19,072 ) $ 62,126 The "Footnotes to Financial Statements" are integral parts of this financial information. CONSOLIDATING STATEMENTS OF INCOME FOR THE YEARS ENDED DECEMBER 31, 2023 AND 2022 (in thousands)(unaudited) Chemed VITAS Roto-Rooter Corporate Consolidated 2023 (a) Service revenues and sales $ 1,315,065 $ 949,352 $ - $ 2,264,417 Cost of services provided and goods sold 1,017,623 447,979 - 1,465,602 Selling, general and administrative expenses 93,296 231,587 70,237 395,120 Depreciation 19,959 30,790 53 50,802 Amortization 104 9,959 - 10,063 Other operating (income)/expense (12 ) 2,273 - 2,261 Total costs and expenses 1,130,970 722,588 70,290 1,923,848 Income/(loss) from operations 184,095 226,764 (70,290 ) 340,569 Interest expense (180 ) (442 ) (2,486 ) (3,108 ) Intercompany interest income/(expense) 19,400 11,918 (31,318 ) - Other income—net 1,309 126 11,471 12,906 Income/(loss) before income taxes 204,624 238,366 (92,623 ) 350,367 Income taxes (46,115 ) (50,125 ) 18,382 (77,858 ) Net income/(loss) $ 158,509 $ 188,241 $ (74,241 ) $ 272,509 2022 (b) Service revenues and sales $ 1,201,564 $ 933,399 $ - $ 2,134,963 Cost of services provided and goods sold 931,861 438,016 - 1,369,877 Selling, general and administrative expenses 89,187 222,257 47,283 358,727 Depreciation 21,955 27,075 72 49,102 Amortization 101 9,969 - 10,070 Other operating (income)/expense 3,337 354 - 3,691 Total costs and expenses 1,046,441 697,671 47,355 1,791,467 Income/(loss) from operations 155,123 235,728 (47,355 ) 343,496 Interest expense (172 ) (396 ) (4,016 ) (4,584 ) Intercompany interest income/(expense) 18,901 9,345 (28,246 ) - Other income/(expense)—net 600 138 (9,971 ) (9,233 ) Income/(loss) before income taxes 174,452 244,815 (89,588 ) 329,679 Income taxes (43,000 ) (58,695 ) 21,640 (80,055 ) Net income/(loss) $ 131,452 $ 186,120 $ (67,948 ) $ 249,624 The "Footnotes to Financial Statements" are integral parts of this financial information. CHEMED CORPORATION AND SUBSIDIARY COMPANIES CONSOLIDATING SUMMARIES OF EBITDA FOR THE THREE MONTHS ENDED DECEMBER 31, 2023 AND 2022 (in thousands)(unaudited) Chemed VITAS Roto-Rooter Corporate Consolidated 2023 Net income/(loss) $ 63,287 $ 45,887 $ (19,121 ) $ 90,053 Add/(deduct): Interest expense 26 55 261 342 Income taxes 17,613 11,809 (3,882 ) 25,540 Depreciation 5,052 7,959 13 13,024 Amortization 26 2,489 - 2,515 EBITDA 86,004 68,199 (22,729 ) 131,474 Add/(deduct): Intercompany interest expense/(income) (5,008 ) (3,265 ) 8,273 - Interest income (31 ) (29 ) (3,348 ) (3,408 ) Stock option expense - - 7,706 7,706 Long-term incentive compensation - - 3,872 3,872 Adjusted EBITDA $ 80,965 $ 64,905 $ (6,226 ) $ 139,644 2022 Net income/(loss) $ 33,674 $ 47,524 $ (19,072 ) $ 62,126 Add/(deduct): Interest expense 31 76 1,494 1,601 Income taxes 10,800 14,829 (5,355 ) 20,274 Depreciation 5,061 7,017 18 12,096 Amortization 26 2,486 - 2,512 EBITDA 49,592 71,932 (22,915 ) 98,609 Add/(deduct): Intercompany interest expense/(income) (4,720 ) (2,594 ) 7,314 - Interest income (36 ) (30 ) 1 (65 ) Stock option expense - - 6,911 6,911 Litigation settlement 4,000 - - 4,000 Long-term incentive compensation - - 2,923 2,923 Adjusted EBITDA $ 48,836 $ 69,308 $ (5,766 ) $ 112,378 The "Footnotes to Financial Statements" are integral parts of this financial information. CHEMED CORPORATION AND SUBSIDIARY COMPANIES CONSOLIDATING SUMMARIES OF EBITDA FOR THE YEARS ENDED DECEMBER 31, 2023 AND 2022 (in thousands)(unaudited) Chemed VITAS Roto-Rooter Corporate Consolidated 2023 Net income/(loss) $ 158,509 $ 188,241 $ (74,241 ) $ 272,509 Add/(deduct): Interest expense 180 442 2,486 3,108 Income taxes 46,115 50,125 (18,382 ) 77,858 Depreciation 19,959 30,790 53 50,802 Amortization 104 9,959 - 10,063 EBITDA 224,867 279,557 (90,084 ) 414,340 Add/(deduct): Intercompany interest expense/(income) (19,400 ) (11,918 ) 31,318 - Interest income (1,078 ) (125 ) (5,067 ) (6,270 ) Stock option expense - - 30,082 30,082 Long-term incentive compensation - - 11,689 11,689 Litigation settlements - 2,056 - 2,056 Adjusted EBITDA $ 204,389 $ 269,570 $ (22,062 ) $ 451,897 2022 Net income/(loss) $ 131,452 $ 186,120 $ (67,948 ) $ 249,624 Add/(deduct): Interest expense 172 396 4,016 4,584 Income taxes 43,000 58,695 (21,640 ) 80,055 Depreciation 21,955 27,075 72 49,102 Amortization 101 9,969 - 10,070 EBITDA 196,680 282,255 (85,500 ) 393,435 Add/(deduct): Intercompany interest expense/(income) (18,901 ) (9,345 ) 28,246 - Interest income (218 ) (138 ) 1 (355 ) Stock option expense - - 26,254 26,254 Long-term incentive compensation - - 7,801 7,801 Litigation settlements 4,000 - - 4,000 Direct costs related to COVID-19 310 988 89 1,387 Medicare cap sequestration adjustment 138 - - 138 Adjusted EBITDA $ 182,009 $ 273,760 $ (23,109 ) $ 432,660 The "Footnotes to Financial Statements" are integral parts of this financial information. CHEMED CORPORATION AND SUBSIDIARY COMPANIES RECONCILIATION OF ADJUSTED NET INCOME (in thousands, except per share data)(unaudited) Three Months Ended December 31, For the Years Ended December 31, 2023 2022 2023 2022 Net income as reported $ 90,053 $ 62,126 $ 272,509 $ 249,624 Add/(deduct) pre-tax cost of: Stock option expense 7,706 6,911 30,082 26,254 Long-term incentive compensation 3,872 2,923 11,689 7,801 Amortization of reacquired franchise agreements 2,352 2,352 9,408 9,408 Litigation settlements - 4,000 2,056 4,000 Medicare cap sequestration adjustment - - - 138 Direct costs related to COVID-19 - - - 1,387 Add/(deduct) tax impacts: Tax impact of the above pre-tax adjustments (1) (2,216 ) (3,151 ) (8,658 ) (9,075 ) Tax impact of deferred tax rate change - - (4,241 ) - Excess tax benefits on stock compensation (954 ) (1,538 ) (4,330 ) (5,928 ) Adjusted net income $ 100,813 $ 73,623 $ 308,515 $ 283,609 Diluted Earnings Per Share As Reported Net income $ 5.90 $ 4.13 $ 17.93 $ 16.53 Average number of shares outstanding 15,270 15,052 15,200 15,099 Adjusted Diluted Earnings Per Share Adjusted net income $ 6.60 $ 4.89 $ 20.30 $ 18.78 Average number of shares outstanding 15,270 15,052 15,200 15,099 (1) The tax impact of pre-tax adjustments was calculated using the effective tax rate of the operating unit for which each adjustment is associated. The "Footnotes to Financial Statements" are integral parts of this financial information. CHEMED CORPORATION AND SUBSIDIARY COMPANIES OPERATING STATISTICS FOR VITAS SEGMENT (unaudited) Three Months Ended December 31, For the Years Ended December 31, OPERATING STATISTICS 2023 2022 2023 2022 Net revenue ($000) (c) Homecare $ 303,883 $ 267,691 $ 1,136,437 $ 1,039,211 Inpatient 28,107 26,647 112,419 102,361 Continuous care 22,620 19,284 85,674 77,000 Other 3,844 2,977 13,582 12,438 Subtotal $ 358,454 $ 316,599 $ 1,348,112 $ 1,231,010 Room and board, net (2,535 ) (2,778 ) (10,851 ) (9,574 ) Contractual allowances (3,546 ) (3,012 ) (14,196 ) (12,004 ) Medicare cap allowance (2,375 ) (2,750 ) (8,000 ) (7,868 ) Net Revenue $ 349,998 $ 308,059 $ 1,315,065 $ 1,201,564 Net revenue as a percent of total before Medicare cap allowance Homecare 84.8 % 84.6 % 84.3 % 84.4 % Inpatient 7.8 8.4 8.3 8.3 Continuous care 6.3 6.1 6.4 6.3 Other 1.1 0.9 1.0 1.0 Subtotal 100.0 100.0 100.0 100.0 Room and board, net (0.7 ) (0.9 ) (0.8 ) (0.8 ) Contractual allowances (1.0 ) (0.9 ) (1.1 ) (1.0 ) Medicare cap allowance (0.7 ) (0.9 ) (0.6 ) (0.6 ) Net Revenue 97.6 % 97.3 % 97.5 % 97.6 % Days of care Homecare 1,439,494 1,289,067 5,457,963 5,086,021 Nursing home 285,616 264,895 1,118,728 1,036,816 Respite 7,394 5,807 26,605 23,905 Subtotal routine homecare and respite 1,732,504 1,559,769 6,603,296 6,146,742 Inpatient 24,918 24,254 101,905 95,431 Continuous care 23,001 19,909 88,631 81,890 Total 1,780,423 1,603,932 6,793,832 6,324,063 Number of days in relevant time period 92 92 365 365 Average daily census ("ADC") (days) Homecare 15,646 14,012 14,953 13,934 Nursing home 3,105 2,879 3,065 2,841 Respite 80 63 73 65 Subtotal routine homecare and respite 18,831 16,954 18,091 16,840 Inpatient 271 264 279 261 Continuous care 250 216 243 224 Total 19,352 17,434 18,613 17,325 Total Admissions 15,867 14,829 63,431 60,774 Total Discharges 15,705 14,862 61,242 60,930 Average length of stay (days) 105.9 103.9 102.2 104.6 Median length of stay (days) 17.0 16.0 16.0 16.0 ADC by major diagnosis Cerebro 42.8 % 41.0 % 42.5 % 39.8 % Neurological 13.7 20.3 15.3 21.2 Cancer 10.3 10.7 10.5 10.9 Cardio 16.2 15.7 16.1 15.7 Respiratory 7.0 7.2 7.1 7.3 Other 10.0 5.1 8.5 5.1 Total 100.0 % 100.0 % 100.0 % 100.0 % Admissions by major diagnosis Cerebro 26.5 % 25.6 % 26.4 % 24.6 % Neurological 8.3 11.0 9.4 12.3 Cancer 25.9 26.7 26.0 26.3 Cardio 15.4 15.3 16.0 14.9 Respiratory 10.1 10.5 10.1 10.3 Other 13.8 10.9 12.1 11.6 Total 100.0 % 100.0 % 100.0 % 100.0 % Estimated uncollectible accounts as a percent of revenues 1.0 % 1.0 % 1.1 % 1.0 % Accounts receivable -- Days of revenue outstanding-excluding unapplied Medicare payments 37.8 38.1 n.a. n.a. Days of revenue outstanding-including unapplied Medicare payments 36.0 28.0 n.a. n.a. The "Footnotes to Financial Statements" are integral parts of this financial information. FOOTNOTES TO FINANCIAL STATEMENTS FOR THE THREE MONTHS AND YEARS ENDED DECEMBER 31, 2023 AND 2022 (unaudited) (a) 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 December 31, 2023 VITAS Roto-Rooter Corporate Consolidated Stock option expense $ - $ - $ (7,706 ) $ (7,706 ) Long-term incentive compensation - - (3,872 ) (3,872 ) Amortization of reacquired franchise agreements - (2,352 ) - (2,352 ) Pretax impact on earnings - (2,352 ) (11,578 ) (13,930 ) Excess tax benefits on stock compensation - - 954 954 Income tax benefit on the above - 548 1,668 2,216 After-tax impact on earnings $ - $ (1,804 ) $ (8,956 ) $ (10,760 ) For the Years Ended December 31, 2023 VITAS Roto-Rooter Corporate Consolidated Stock option expense $ - $ - $ (30,082 ) $ (30,082 ) Long-term incentive compensation - - (11,689 ) (11,689 ) Amortization of reacquired franchise agreements - (9,408 ) - (9,408 ) Litigation settlements - (2,056 ) - (2,056 ) Pretax impact on earnings - (11,464 ) (41,771 ) (53,235 ) Excess tax benefits on stock compensation - - 4,330 4,330 Tax impact of deferred tax rate change 1,772 3,559 (1,090 ) 4,241 Income tax benefit on the above - 2,671 5,987 8,658 After-tax impact on earnings $ 1,772 $ (5,234 ) $ (32,544 ) $ (36,006 ) (b) Included in the results of operations for 2022 are the following significant credits/(charges) which may not be indicative of ongoing operations (in thousands): Three Months Ended December 31, 2022 VITAS Roto-Rooter Corporate Consolidated Stock option expense $ - $ - $ (6,911 ) $ (6,911 ) Litigation settlements (4,000 ) - - (4,000 ) Long-term incentive compensation - - (2,923 ) (2,923 ) Amortization of reacquired franchise agreements - (2,352 ) - (2,352 ) Pretax impact on earnings (4,000 ) (2,352 ) (9,834 ) (16,186 ) Excess tax benefits on stock compensation - - 1,538 1,538 Income tax benefit on the above 1,016 623 1,512 3,151 After-tax impact on earnings $ (2,984 ) $ (1,729 ) $ (6,784 ) $ (11,497 ) For the Years Ended December 31, 2022 VITAS Roto-Rooter Corporate Consolidated Stock option expense $ - $ - $ (26,254 ) $ (26,254 ) Amortization of reacquired franchise agreements - (9,408 ) - (9,408 ) Long-term incentive compensation - - (7,801 ) (7,801 ) Litigation settlements (4,000 ) - - (4,000 ) Direct costs related to COVID-19 (310 ) (988 ) (89 ) (1,387 ) Medicare cap sequestration adjustment (138 ) - - (138 ) Pretax impact on earnings (4,448 ) (10,396 ) (34,144 ) (48,988 ) Excess tax benefits on stock compensation - - 5,928 5,928 Income tax benefit on the above 1,130 2,755 5,190 9,075 After-tax impact on earnings $ (3,318 ) $ (7,641 ) $ (23,026 ) $ (33,985 ) (c) VITAS has 11 large (greater than 450 ADC), 17 medium (greater than 200 but less than 450 ADC) and 22 small (less than 200 ADC) hospice programs. Of Vitas' 30 Medicare provider numbers, for the trailing 12 months, 26 provider numbers have a Medicare cap cushion of greater than 10%, two provider numbers have a Medicare cap cushion between 5% and 10%, and two provider numbers have a Medicare cap liability. View source version on businesswire.com: https://www.businesswire.com/news/home/20240227400148/en/
