Chemed Reports Fourth-Quarter 2017 Results
Consolidated operating results:
-
Revenue increased 6.2% to
$428 million -
GAAP Diluted Earnings-per-Share of
$3.25 , an increase of 67.5% -
Adjusted Diluted EPS of
$2.32 , an increase of 10.5%
VITAS segment operating results:
-
Net Patient Revenue of
$292 million , an increase of 2.8% - Average Daily Census (ADC) of 16,920, an increase of 4.7%
- Admissions of 16,575, an increase of 4.3%
-
Net Income of
$42.8 million , an increase of 62.2% -
Adjusted EBITDA of
$47.5 million , an increase of 2.7%
Roto-Rooter segment operating results:
-
Revenue of
$136 million , an increase of 14.1% -
Net Income of
$25.6 million , an increase of 87.0% -
Adjusted EBITDA of
$31.1 million , an increase of 24.2% - Adjusted EBITDA margin of 22.8%, an increase of 185 basis points
VITAS
Net revenue for VITAS was
In the fourth quarter of 2017, VITAS had a 24.3/75.7 RHC Days-of-Care
ratio and generated approximately
VITAS recorded
At
Of VITAS’ 30 unique
Average revenue per patient per day in the quarter was
The fourth quarter of 2017 gross margin, excluding Medicare Cap, was 24.5%, which is a 41-basis point improvement when compared to the fourth quarter of 2016.
Selling, general and administrative expense was
Roto-Rooter
Roto-Rooter’s plumbing and drain cleaning business generated sales of
Roto-Rooter’s gross margin in the quarter was 49.3%, a 241 basis point
improvement when compared to the fourth quarter of 2016. Adjusted EBITDA
in the fourth quarter of 2017 totaled
Chemed Consolidated
As of
In
The Company did not repurchase any shares of
Guidance for 2018
Revenue growth for VITAS in 2018, prior to Medicare Cap, is estimated to
be in the range of 2.5% to 3.5%. Admissions and Average Daily Census in
2018 are estimated to expand approximately 3% to 4% and full-year
Adjusted EBITDA margin, prior to Medicare Cap, is estimated to be 15.4%.
We are currently estimating
Roto-Rooter is forecasted to achieve full-year 2018 revenue growth of 4.0% to 5.0%. This revenue estimate is based upon increased job pricing of approximately 2% and continued growth in water restoration services. Adjusted EBITDA margin for 2018 is estimated at 22.3%.
Based upon the above, full-year 2018 adjusted earnings per diluted
share, excluding non-cash expense for stock options, costs related to
litigation, and other discrete items, is estimated to be in the range of
Conference Call
A taped replay of the conference call will be available beginning approximately 24 hours after the call's conclusion. It can be accessed by dialing (855) 859-2056 for U.S. and Canadian callers and +1 (404) 537-3406 for international callers and will be available for one week following the live call. The replay Conference ID is 3768588. An archived webcast will also be available at www.chemed.com.
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,
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.
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
10-K and its other filings with the
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, | |||||||||||||||||||||||
2017 | 2016 | 2017 | 2016 | |||||||||||||||||||||
Service revenues and sales | $ | 428,357 | $ | 403,476 | $ | 1,666,724 | $ | 1,576,881 | ||||||||||||||||
Cost of services provided and goods sold | 291,493 | 279,083 | 1,150,532 | 1,115,431 | ||||||||||||||||||||
Selling, general and administrative expenses (aa) | 71,621 | 62,526 | 276,652 | 243,572 | ||||||||||||||||||||
Depreciation | 8,943 | 8,660 | 35,488 | 34,279 | ||||||||||||||||||||
Amortization | 26 | 85 | 137 | 359 | ||||||||||||||||||||
Other operating expenses | (258 | ) | - | 90,880 | 4,491 | |||||||||||||||||||
Total costs and expenses | 371,825 | 350,354 | 1,553,689 | 1,398,132 | ||||||||||||||||||||
Income from operations | 56,532 | 53,122 | 113,035 | 178,749 | ||||||||||||||||||||
Interest expense | (1,108 | ) | (884 | ) | (4,272 | ) | (3,715 | ) | ||||||||||||||||
Other income--net (bb) | 2,715 | 87 | 8,154 | 2,020 | ||||||||||||||||||||
Income before income taxes | 58,139 | 52,325 | 116,917 | 177,054 | ||||||||||||||||||||
Income taxes | (3,587 | ) | (20,136 | ) | (18,740 | ) | (68,311 | ) | ||||||||||||||||
Net income | $ | 54,552 | $ | 32,189 | $ | 98,177 | $ | 108,743 | ||||||||||||||||
Earnings Per Share | ||||||||||||||||||||||||
Net income | $ | 3.40 | $ | 1.99 | $ | 6.11 | $ | 6.64 | ||||||||||||||||
Average number of shares outstanding | 16,026 | 16,206 | 16,057 | 16,383 | ||||||||||||||||||||
Diluted Earnings Per Share | ||||||||||||||||||||||||
Net income | $ | 3.25 | $ | 1.94 | $ | 5.86 | $ | 6.48 | ||||||||||||||||
Average number of shares outstanding | 16,776 | 16,598 | 16,742 | 16,789 | ||||||||||||||||||||
(aa) | Selling, general and administrative ("SG&A") expenses comprise (in thousands): | |||||||||||||||||||||||
Three Months Ended December 31, | For the Years Ended December 31, | |||||||||||||||||||||||
2017 | 2016 | 2017 | 2016 | |||||||||||||||||||||
SG&A expenses before long-term incentive | ||||||||||||||||||||||||
compensation, expenses related to the O.I.G. | ||||||||||||||||||||||||
investigation and the impact of market value | ||||||||||||||||||||||||
adjustments related to deferred compensation | ||||||||||||||||||||||||
plans | $ | 66,821 | $ | 60,137 | $ | 258,034 | $ | 234,321 | ||||||||||||||||
Market value adjustments related to | ||||||||||||||||||||||||
deferred compensation plans | 2,811 | 205 | 8,430 | 2,061 | ||||||||||||||||||||
Long-term incentive compensation | 1,973 | 1,029 | 4,994 | 1,930 | ||||||||||||||||||||
Expenses related to the O.I.G. investigation | 16 | 1,155 | 5,194 | 5,260 | ||||||||||||||||||||
Total SG&A expenses | $ | 71,621 | $ | 62,526 | $ | 276,652 | $ | 243,572 | ||||||||||||||||
(bb) | Other income--net comprises (in thousands): | |||||||||||||||||||||||
Three Months Ended December 31, | For the Years Ended December 31, | |||||||||||||||||||||||
2017 | 2016 | 2017 | 2016 | |||||||||||||||||||||
Market value adjustments related to | ||||||||||||||||||||||||
deferred compensation plans | $ | 2,811 | $ | 205 | $ | 8,430 | $ | 2,061 | ||||||||||||||||
Loss on disposal of property and equipment | (226 | ) | (200 | ) | (707 | ) | (424 | ) | ||||||||||||||||
Interest income | 131 | 82 | 427 | 383 | ||||||||||||||||||||
Other | (1 | ) | - | 4 | - | |||||||||||||||||||
Total other income--net | $ | 2,715 | $ | 87 | $ | 8,154 | $ | 2,020 | ||||||||||||||||
CHEMED CORPORATION AND SUBSIDIARY COMPANIES | |||||||||||||||||||
CONSOLIDATED BALANCE SHEETS |
|||||||||||||||||||
(in thousands)(unaudited) |
|||||||||||||||||||
December 31, | |||||||||||||||||||
2017 | 2016 | ||||||||||||||||||
Assets | |||||||||||||||||||
Current assets | |||||||||||||||||||
Cash and cash equivalents | $ | 11,121 | $ | 15,310 | |||||||||||||||
Accounts receivable less allowances | 113,651 | 132,021 | |||||||||||||||||
Inventories | 5,334 | 5,755 | |||||||||||||||||
Prepaid income taxes | 29,848 | 3,709 | |||||||||||||||||
Prepaid expenses | 16,092 | 13,105 | |||||||||||||||||
Total current assets | 176,046 | 169,900 | |||||||||||||||||
Investments of deferred compensation plans held in trust | 62,067 | 54,389 | |||||||||||||||||
Properties and equipment, at cost less accumulated depreciation | 143,034 | 121,302 | |||||||||||||||||
Identifiable intangible assets less accumulated amortization | 54,865 | 55,065 | |||||||||||||||||
Goodwill | 476,887 | 472,366 | |||||||||||||||||
Other assets | 7,127 | 7,037 | |||||||||||||||||
Total Assets | $ | 920,026 | $ | 880,059 | |||||||||||||||
Liabilities | |||||||||||||||||||
Current liabilities | |||||||||||||||||||
Accounts payable | $ | 48,372 | $ | 39,586 | |||||||||||||||
Current portion of long-term debt | 10,000 | 8,750 | |||||||||||||||||
Accrued insurance | 46,968 | 47,960 | |||||||||||||||||
Accrued compensation | 62,933 | 53,979 | |||||||||||||||||
Accrued legal | 1,786 | 1,805 | |||||||||||||||||
Other current liabilities | 23,463 | 19,752 | |||||||||||||||||
Total current liabilities | 193,522 | 171,832 | |||||||||||||||||
Deferred income taxes | 16,640 | 14,291 | |||||||||||||||||
Long-term debt | 91,200 | 100,000 | |||||||||||||||||
Deferred compensation liabilities | 61,800 | 54,288 | |||||||||||||||||
Other liabilities | 16,510 | 15,549 | |||||||||||||||||
Total Liabilities | 379,672 | 355,960 | |||||||||||||||||
Stockholders' Equity | |||||||||||||||||||
Capital stock | 34,732 | 34,270 | |||||||||||||||||
Paid-in capital | 695,797 | 639,703 | |||||||||||||||||
Retained earnings | 1,038,955 | 958,149 | |||||||||||||||||
Treasury stock, at cost | (1,231,332 | ) | (1,110,536 | ) | |||||||||||||||
Deferred compensation payable in Company stock | 2,202 | 2,513 | |||||||||||||||||
Total Stockholders' Equity | 540,354 | 524,099 | |||||||||||||||||
Total Liabilities and Stockholders' Equity | $ | 920,026 | $ | 880,059 | |||||||||||||||
CHEMED CORPORATION AND SUBSIDIARY COMPANIES | |||||||||||||||||
CONSOLIDATED STATEMENTS OF CASH FLOWS |
|||||||||||||||||
(in thousands)(unaudited) | |||||||||||||||||
For the Years Ended December 31, | |||||||||||||||||
2017 | 2016 | ||||||||||||||||
Cash Flows from Operating Activities | |||||||||||||||||
Net income | $ | 98,177 | $ | 108,743 | |||||||||||||
Adjustments to reconcile net income to net cash provided | |||||||||||||||||
by operating activities: | |||||||||||||||||
Depreciation and amortization | 35,625 | 34,638 | |||||||||||||||
Provision for uncollectible accounts receivable | 17,306 | 16,319 | |||||||||||||||
Stock option expense | 10,485 | 8,330 | |||||||||||||||
Loss on sale of transportation equipment | 5,266 | - | |||||||||||||||
Noncash long-term incentive compensation | 3,774 | 1,301 | |||||||||||||||
Provision/(benefit) for deferred income taxes | 2,407 | (6,707 | ) | ||||||||||||||
Amortization of restricted stock awards | 1,231 | 1,855 | |||||||||||||||
Noncash directors' compensation | 766 | 541 | |||||||||||||||
Amortization of debt issuance costs | 516 | 519 | |||||||||||||||
Noncash early retirement expense | - | 1,747 | |||||||||||||||
Changes in operating assets and liabilities, excluding | |||||||||||||||||
amounts acquired in business combinations: | |||||||||||||||||
(Increase)/decrease in accounts receivable | 1,072 | (42,142 | ) | ||||||||||||||
Decrease in inventories | 421 | 559 | |||||||||||||||
Increase in prepaid expenses | (2,987 | ) | (253 | ) | |||||||||||||
Increase in accounts payable and | |||||||||||||||||
other current liabilities |
12,890 |
891 | |||||||||||||||
(Decrease)/increase in income taxes | (26,104 | ) | 13,886 | ||||||||||||||
Increase in other assets | (8,330 | ) | (5,224 | ) | |||||||||||||
Increase in other liabilities | 8,561 | 7,105 | |||||||||||||||
Excess tax benefit on share-based compensation |
- |
|
(7,195 | ) | |||||||||||||
Other sources |
1,419 |
480 | |||||||||||||||
Net cash provided by operating activities | 162,495 | 135,393 | |||||||||||||||
Cash Flows from Investing Activities | |||||||||||||||||
Capital expenditures | (64,300 | ) | (39,772 | ) | |||||||||||||
Business combinations, net of cash acquired | (4,725 | ) | - | ||||||||||||||
Other sources/(uses) | 1,417 | (90 | ) | ||||||||||||||
Net cash used by investing activities | (67,608 | ) | (39,862 | ) | |||||||||||||
Cash Flows from Financing Activities | |||||||||||||||||
Proceeds from revolving line of credit | 261,650 | 184,550 | |||||||||||||||
Payments on revolving line of credit | (260,450 | ) | (159,550 | ) | |||||||||||||
Purchases of treasury stock | (94,640 | ) | (102,313 | ) | |||||||||||||
Proceeds from exercise of stock options | 27,092 | 8,421 | |||||||||||||||
Dividends paid | (17,371 | ) | (16,439 | ) | |||||||||||||
Capital stock surrendered to pay taxes on stock-based compensation | (14,223 | ) | (8,772 | ) | |||||||||||||
Payments on other long-term debt | (8,750 | ) | (7,500 | ) | |||||||||||||
Decrease in cash overdrafts payable | 6,700 | (736 | ) | ||||||||||||||
Excess tax benefit on share-based compensation |
- |
7,195 | |||||||||||||||
Other sources |
916 |
196 | |||||||||||||||
Net cash used by financing activities | (99,076 | ) | (94,948 | ) | |||||||||||||
(Decrease)/Increase in Cash and Cash Equivalents | (4,189 | ) | 583 | ||||||||||||||
Cash and cash equivalents at beginning of year | 15,310 | 14,727 | |||||||||||||||
Cash and cash equivalents at end of period | $ | 11,121 | $ | 15,310 | |||||||||||||
CHEMED CORPORATION AND SUBSIDIARY COMPANIES | |||||||||||||||||||||
CONSOLIDATING STATEMENTS OF INCOME |
|||||||||||||||||||||
FOR THE THREE MONTHS ENDED DECEMBER 31, 2017 AND 2016 | |||||||||||||||||||||
(in thousands)(unaudited) | |||||||||||||||||||||
Chemed | |||||||||||||||||||||
VITAS | Roto-Rooter | Corporate | Consolidated | ||||||||||||||||||
2017 | |||||||||||||||||||||
Service revenues and sales (a) |
$ | 292,283 | $ | 136,074 | $ | - | $ | 428,357 | |||||||||||||
Cost of services provided and goods sold | 222,497 | 68,996 | - | 291,493 | |||||||||||||||||
Selling, general and administrative expenses (a) | 22,607 | 35,330 | 13,684 | 71,621 | |||||||||||||||||
Depreciation | 4,568 | 4,344 | 31 | 8,943 | |||||||||||||||||
Amortization | - | 26 | - | 26 | |||||||||||||||||
Other operating expenses (a) | (5,524 | ) | - | 5,266 | (258 | ) | |||||||||||||||
Total costs and expenses | 244,148 | 108,696 | 18,981 | 371,825 | |||||||||||||||||
Income/(loss) from operations | 48,135 | 27,378 | (18,981 | ) | 56,532 | ||||||||||||||||
Interest expense | (27 | ) | (65 | ) | (1,016 | ) | (1,108 | ) | |||||||||||||
Intercompany interest income/(expense) | 3,177 | 1,562 | (4,739 | ) | - | ||||||||||||||||
Other income/(expense)—net | (31 | ) | (64 | ) | 2,810 | 2,715 | |||||||||||||||
Income/(loss) before income taxes | 51,254 | 28,811 | (21,926 | ) | 58,139 | ||||||||||||||||
Income taxes (a) | (8,406 | ) | (3,228 | ) | 8,047 | (3,587 | ) | ||||||||||||||
Net income/(loss) | $ | 42,848 | $ | 25,583 | $ | (13,879 | ) | $ | 54,552 | ||||||||||||
2016 | |||||||||||||||||||||
Service revenues and sales (b) | $ | 284,186 | $ | 119,290 | $ | - | $ | 403,476 | |||||||||||||
Cost of services provided and goods sold | 215,722 | 63,361 | - | 279,083 | |||||||||||||||||
Selling, general and administrative expenses (b) | 23,354 | 30,922 | 8,250 | 62,526 | |||||||||||||||||
Depreciation | 4,690 | 3,838 | 132 | 8,660 | |||||||||||||||||
Amortization | 14 | 71 | - | 85 | |||||||||||||||||
Total costs and expenses | 243,780 | 98,192 | 8,382 | 350,354 | |||||||||||||||||
Income/(loss) from operations | 40,406 | 21,098 | (8,382 | ) | 53,122 | ||||||||||||||||
Interest expense | (35 | ) | (68 | ) | (781 | ) | (884 | ) | |||||||||||||
Intercompany interest income/(expense) | 2,130 | 981 | (3,111 | ) | - | ||||||||||||||||
Other income/(expense)—net | (57 | ) | (60 | ) | 204 | 87 | |||||||||||||||
Income/(loss) before income taxes | 42,444 | 21,951 | (12,070 | ) | 52,325 | ||||||||||||||||
Income taxes (b) | (16,023 | ) | (8,272 | ) | 4,159 | (20,136 | ) | ||||||||||||||
Net income/(loss) | $ | 26,421 | $ | 13,679 | $ | (7,911 | ) | $ | 32,189 |
The "Footnotes to Financial Statements" are integral parts of this financial information.
CHEMED CORPORATION AND SUBSIDIARY COMPANIES | |||||||||||||||||||||
CONSOLIDATING STATEMENTS OF INCOME |
|||||||||||||||||||||
FOR THE YEARS ENDED DECEMBER 31, 2017 AND 2016 | |||||||||||||||||||||
(in thousands)(unaudited) | |||||||||||||||||||||
Chemed | |||||||||||||||||||||
VITAS | Roto-Rooter | Corporate | Consolidated | ||||||||||||||||||
2017 | |||||||||||||||||||||
Service revenues and sales (a) | $ | 1,148,260 | $ | 518,464 | $ | - | $ | 1,666,724 | |||||||||||||
Cost of services provided and goods sold | 886,062 | 264,470 | - | 1,150,532 | |||||||||||||||||
Selling, general and administrative expenses (a) | 95,215 | 136,248 | 45,189 | 276,652 | |||||||||||||||||
Depreciation | 18,616 | 16,667 | 205 | 35,488 | |||||||||||||||||
Amortization | 14 | 123 | - | 137 | |||||||||||||||||
Other operating expenses (a) | 85,614 | - | 5,266 | 90,880 | |||||||||||||||||
Total costs and expenses | 1,085,521 | 417,508 | 50,660 | 1,553,689 | |||||||||||||||||
Income/(loss) from operations | 62,739 | 100,956 | (50,660 | ) | 113,035 | ||||||||||||||||
Interest expense | (188 | ) | (323 | ) | (3,761 | ) | (4,272 | ) | |||||||||||||
Intercompany interest income/(expense) | 11,656 | 5,596 | (17,252 | ) | - | ||||||||||||||||
Other income/(expense)—net | (126 | ) | (148 | ) | 8,428 | 8,154 | |||||||||||||||
Income/(loss) before income taxes | 74,081 | 106,081 | (63,245 | ) | 116,917 | ||||||||||||||||
Income taxes (a) | (16,436 | ) | (32,782 | ) | 30,478 | (18,740 | ) | ||||||||||||||
Net income/(loss) | $ | 57,645 | $ | 73,299 | $ | (32,767 | ) | $ | 98,177 | ||||||||||||
2016 | |||||||||||||||||||||
Service revenues and sales (b) | $ | 1,123,317 | $ | 453,564 | $ | - | $ | 1,576,881 | |||||||||||||
Cost of services provided and goods sold | 878,092 | 237,339 | - | 1,115,431 | |||||||||||||||||
Selling, general and administrative expenses (b) | 92,550 | 118,812 | 32,210 | 243,572 | |||||||||||||||||
Depreciation | 19,035 | 14,698 | 546 | 34,279 | |||||||||||||||||
Amortization | 55 | 304 | - | 359 | |||||||||||||||||
Other operating expenses (b) | 4,491 | - | - | 4,491 | |||||||||||||||||
Total costs and expenses | 994,223 | 371,153 | 32,756 | 1,398,132 | |||||||||||||||||
Income/(loss) from operations | 129,094 | 82,411 | (32,756 | ) | 178,749 | ||||||||||||||||
Interest expense | (211 | ) | (332 | ) | (3,172 | ) | (3,715 | ) | |||||||||||||
Intercompany interest income/(expense) | 7,969 | 3,595 | (11,564 | ) | - | ||||||||||||||||
Other income/(expense)—net | 19 | (62 | ) | 2,063 | 2,020 | ||||||||||||||||
Income/(loss) before income taxes | 136,871 | 85,612 | (45,429 | ) | 177,054 | ||||||||||||||||
Income taxes (b) | (51,910 | ) | (32,719 | ) | 16,318 | (68,311 | ) | ||||||||||||||
Net income/(loss) | $ | 84,961 | $ | 52,893 | $ | (29,111 | ) | $ | 108,743 |
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, 2017 AND 2016 | ||||||||||||||||||||||
(in thousands)(unaudited) | ||||||||||||||||||||||
Chemed | ||||||||||||||||||||||
VITAS | Roto-Rooter | Corporate | Consolidated | |||||||||||||||||||
2017 | ||||||||||||||||||||||
Net income/(loss) | $ | 42,848 | $ | 25,583 | $ | (13,879 | ) | $ | 54,552 | |||||||||||||
Add/(deduct): | ||||||||||||||||||||||
Interest expense | 27 | 65 | 1,016 | 1,108 | ||||||||||||||||||
Income taxes | 8,406 | 3,228 | (8,047 | ) | 3,587 | |||||||||||||||||
Depreciation | 4,568 | 4,344 | 31 | 8,943 | ||||||||||||||||||
Amortization | - | 26 | - | 26 | ||||||||||||||||||
EBITDA | 55,849 | 33,246 | (20,879 | ) | 68,216 | |||||||||||||||||
Add/(deduct): | ||||||||||||||||||||||
Intercompany interest expense/(income) | (3,177 | ) | (1,562 | ) | 4,739 | - | ||||||||||||||||
Interest income | (121 | ) | (10 | ) | - | (131 | ) | |||||||||||||||
Litigation settlement | (5,524 | ) | - | - | (5,524 | ) | ||||||||||||||||
Loss on sale of transportation equipment | - | - | 5,266 | 5,266 | ||||||||||||||||||
Medicare cap sequestration adjustment | 342 | - | - | 342 | ||||||||||||||||||
Expenses related to OIG investigation | 16 | - | - | 16 | ||||||||||||||||||
Amortization of stock awards | 71 | 66 | 160 | 297 | ||||||||||||||||||
Advertising cost adjustment (c) | - | (664 | ) | - | (664 | ) | ||||||||||||||||
Stock option expense |
- | - | 2,747 | 2,747 | ||||||||||||||||||
Long-term incentive compensation | - | - | 1,973 | 1,973 | ||||||||||||||||||
Adjusted EBITDA | $ | 47,456 | $ | 31,076 | $ | (5,994 | ) | $ | 72,538 | |||||||||||||
2016 | ||||||||||||||||||||||
Net income/(loss) | $ | 26,421 | $ | 13,679 | $ | (7,911 | ) | $ | 32,189 | |||||||||||||
Add/(deduct): | ||||||||||||||||||||||
Interest expense | 35 | 68 | 781 | 884 | ||||||||||||||||||
Income taxes | 16,023 | 8,272 | (4,159 | ) | 20,136 | |||||||||||||||||
Depreciation | 4,690 | 3,838 | 132 | 8,660 | ||||||||||||||||||
Amortization | 14 | 71 | - | 85 | ||||||||||||||||||
EBITDA | 47,183 | 25,928 | (11,157 | ) | 61,954 | |||||||||||||||||
Add/(deduct): | ||||||||||||||||||||||
Intercompany interest expense/(income) | (2,130 | ) | (981 | ) | 3,111 | - | ||||||||||||||||
Interest income | (69 | ) | (13 | ) | - | (82 | ) | |||||||||||||||
Expenses related to OIG investigation | 1,155 | - | - | 1,155 | ||||||||||||||||||
Amortization of stock awards | 86 | 76 | 279 | 441 | ||||||||||||||||||
Advertising cost adjustment (c) | - | 20 | - | 20 | ||||||||||||||||||
Litigation settlement costs | - | 1 | - | 1 | ||||||||||||||||||
Stock option expense |
- | - | 2,071 | 2,071 | ||||||||||||||||||
Long-term incentive compensation | - | - | 1,029 | 1,029 | ||||||||||||||||||
Adjusted EBITDA | $ | 46,225 | $ | 25,031 | $ | (4,667 | ) | $ | 66,589 |
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, 2017 AND 2016 | ||||||||||||||||||||||
(in thousands)(unaudited) | ||||||||||||||||||||||
Chemed | ||||||||||||||||||||||
VITAS | Roto-Rooter | Corporate | Consolidated | |||||||||||||||||||
2017 | ||||||||||||||||||||||
Net income/(loss) | $ | 57,645 | $ | 73,299 | $ | (32,767 | ) | $ | 98,177 | |||||||||||||
Add/(deduct): | ||||||||||||||||||||||
Interest expense | 188 | 323 | 3,761 | 4,272 | ||||||||||||||||||
Income taxes | 16,436 | 32,782 | (30,478 | ) | 18,740 | |||||||||||||||||
Depreciation | 18,616 | 16,667 | 205 | 35,488 | ||||||||||||||||||
Amortization | 14 | 123 | - | 137 | ||||||||||||||||||
EBITDA | 92,899 | 123,194 | (59,279 | ) | 156,814 | |||||||||||||||||
Add/(deduct): | ||||||||||||||||||||||
Intercompany interest expense/(income) | (11,656 | ) | (5,596 | ) | 17,252 | - | ||||||||||||||||
Interest income | (388 | ) | (39 | ) | - | (427 | ) | |||||||||||||||
Litigation settlement | 84,476 | 213 | - | 84,689 | ||||||||||||||||||
Medicare cap sequestration adjustment | 447 | - | - | 447 | ||||||||||||||||||
Loss on sale of transportation equipment | - | - | 5,266 | 5,266 | ||||||||||||||||||
Program closure expenses | 1,138 | - | - | 1,138 | ||||||||||||||||||
Expenses related to OIG investigation | 5,194 | - | - | 5,194 | ||||||||||||||||||
Amortization of stock awards | 291 | 269 | 670 | 1,230 | ||||||||||||||||||
Advertising cost adjustment (c) | - | (1,371 | ) | - | (1,371 | ) | ||||||||||||||||
Stock option expense | - | - | 10,485 | 10,485 | ||||||||||||||||||
Long-term incentive compensation | - | - | 4,994 | 4,994 | ||||||||||||||||||
Adjusted EBITDA | $ | 172,401 | $ | 116,670 | $ | (20,612 | ) | $ | 268,459 | |||||||||||||
2016 |
|
|||||||||||||||||||||
Net income/(loss) | $ | 84,961 | $ | 52,893 | $ | (29,111 | ) | $ | 108,743 | |||||||||||||
Add/(deduct): | ||||||||||||||||||||||
Interest expense | 211 | 332 | 3,172 | 3,715 | ||||||||||||||||||
Income taxes | 51,910 | 32,719 | (16,318 | ) | 68,311 | |||||||||||||||||
Depreciation | 19,035 | 14,698 | 546 | 34,279 | ||||||||||||||||||
Amortization | 55 | 304 | - | 359 | ||||||||||||||||||
EBITDA | 156,172 | 100,946 | (41,711 | ) | 215,407 | |||||||||||||||||
Add/(deduct): | ||||||||||||||||||||||
Intercompany interest expense/(income) | (7,969 | ) | (3,595 | ) | 11,564 | - | ||||||||||||||||
Interest income | (325 | ) | (58 | ) | - | (383 | ) | |||||||||||||||
Early retirement expenses | 4,491 | - | - | 4,491 | ||||||||||||||||||
Expenses related to OIG investigation | 5,260 | - | - | 5,260 | ||||||||||||||||||
Amortization of stock awards | 387 | 307 | 1,161 | 1,855 | ||||||||||||||||||
Medicare cap sequestration adjustment | 228 | - | - | 228 | ||||||||||||||||||
Advertising cost adjustment (c) | - | (1,333 | ) | - | (1,333 | ) | ||||||||||||||||
Net expenses related to litigation settlements | 1,149 | 45 | - | 1,194 | ||||||||||||||||||
Long-term incentive compensation | - | - | 1,930 | 1,930 | ||||||||||||||||||
Stock option expense | - | - | 8,330 | 8,330 | ||||||||||||||||||
Adjusted EBITDA | $ | 159,393 | $ | 96,312 | $ | (18,726 | ) | $ | 236,979 |
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, | |||||||||||||||||||
2017 | 2016 | 2017 | 2016 | |||||||||||||||||
Net income as reported | $ | 54,552 | $ | 32,189 | $ | 98,177 | $ | 108,743 | ||||||||||||
Add/(deduct) after-tax cost of: | ||||||||||||||||||||
Excess tax benefits on stock compensation | (10,811 | ) | - | (18,932 | ) | - | ||||||||||||||
Impact of tax reform | (8,302 | ) | - | (8,302 | ) | - | ||||||||||||||
Litigation settlement | (3,425 | ) | - | 52,504 | - | |||||||||||||||
Loss on sale of transportation equipment | 3,314 | - | 3,314 | - | ||||||||||||||||
Stock option expense | 2,000 | 1,308 | 6,892 | 5,266 | ||||||||||||||||
Long-term incentive compensation | 1,332 | 651 | 3,243 | 1,221 | ||||||||||||||||
Expenses of OIG investigation | 9 | 713 | 3,207 | 3,248 | ||||||||||||||||
Program closure expenses | - | - | 675 | - | ||||||||||||||||
Expenses related to litigation settlements | - | 1 | - | 28 | ||||||||||||||||
Medicare cap sequestration adjustments | 211 | - | 276 | 141 | ||||||||||||||||
Early retirement expenses | - | - | - | 2,840 | ||||||||||||||||
Adjusted net income | $ | 38,880 | $ | 34,862 | $ | 141,054 | $ | 121,487 | ||||||||||||
Diluted Earnings Per Share As Reported | ||||||||||||||||||||
Net income | $ | 3.25 | $ | 1.94 | $ | 5.86 | $ | 6.48 | ||||||||||||
Average number of shares outstanding | 16,776 | 16,598 | 16,742 | 16,789 | ||||||||||||||||
Adjusted Diluted Earnings Per Share | ||||||||||||||||||||
Adjusted net income | $ | 2.32 | $ | 2.10 | $ | 8.43 | $ | 7.24 | ||||||||||||
Average number of shares outstanding | 16,776 | 16,598 | 16,742 | 16,789 |
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 | 2017 | 2016 | 2017 | 2016 | |||||||||||||||||||||
Net revenue ($000) (d) | |||||||||||||||||||||||||
Homecare | $ | 242,554 | $ | 228,463 | $ | 935,913 | $ | 887,940 | |||||||||||||||||
Inpatient | 22,033 | 23,724 | 90,472 | 97,580 | |||||||||||||||||||||
Continuous care | 30,131 | 31,999 | 124,557 | 138,025 | |||||||||||||||||||||
Total before Medicare cap allowance | $ | 294,718 | $ | 284,186 | $ | 1,150,942 | $ | 1,123,545 | |||||||||||||||||
Medicare cap allowance | (2,435 | ) | - | (2,682 | ) | (228 | ) | ||||||||||||||||||
Total | $ | 292,283 | $ | 284,186 | $ | 1,148,260 | $ | 1,123,317 | |||||||||||||||||
Net revenue as a percent of total before Medicare cap allowance | |||||||||||||||||||||||||
Homecare | 82.3 | % | 80.4 | % | 81.2 | % | 78.9 | % | |||||||||||||||||
Inpatient | 7.5 | 8.3 | 7.9 | 8.7 | |||||||||||||||||||||
Continuous care | 10.2 | 11.3 | 10.9 | 12.4 | |||||||||||||||||||||
Total before Medicare cap allowance | 100.0 | 100.0 | 100.0 | 100.0 | |||||||||||||||||||||
Medicare cap allowance | (0.8 | ) | - | (0.2 | ) | - | |||||||||||||||||||
Total | 99.2 | % | 100.0 | % | 99.8 | % | 100.0 | % | |||||||||||||||||
Average daily census ("ADC") (days) | |||||||||||||||||||||||||
Homecare | 12,861 | 12,241 | 12,549 | 12,040 | |||||||||||||||||||||
Nursing home | 3,265 | 3,065 | 3,177 | 3,037 | |||||||||||||||||||||
Routine homecare | 16,126 | 15,306 | 15,726 | 15,077 | |||||||||||||||||||||
Inpatient | 342 | 383 | 354 | 400 | |||||||||||||||||||||
Continuous care | 452 | 471 | 470 | 515 | |||||||||||||||||||||
Total | 16,920 | 16,160 | 16,550 | 15,992 | |||||||||||||||||||||
Total Admissions | 16,575 | 15,889 | 66,449 | 65,094 | |||||||||||||||||||||
Total Discharges | 16,553 | 16,282 | 65,637 | 64,689 | |||||||||||||||||||||
Average length of stay (days) | 91.4 | 91.4 | 88.8 | 86.7 | |||||||||||||||||||||
Median length of stay (days) | 16.0 | 16.0 | 16.0 | 16.0 | |||||||||||||||||||||
ADC by major diagnosis | |||||||||||||||||||||||||
Cerebro | 36.1 | % | 33.4 | % | 35.5 | % | 32.7 | % | |||||||||||||||||
Neurological | 18.5 | 20.3 | 19.2 | 21.1 | |||||||||||||||||||||
Cardio | 16.4 | 16.9 | 16.5 | 17.1 | |||||||||||||||||||||
Cancer | 14.1 | 15.4 | 14.6 | 15.3 | |||||||||||||||||||||
Respiratory | 8.0 | 7.8 | 7.9 | 7.8 | |||||||||||||||||||||
Other | 6.9 | 6.2 | 6.3 | 6.0 | |||||||||||||||||||||
Total | 100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | |||||||||||||||||
Admissions by major diagnosis | |||||||||||||||||||||||||
Cerebro | 22.3 | % | 21.6 | % | 22.0 | % | 21.0 | % | |||||||||||||||||
Neurological | 10.7 | 11.3 | 10.6 | 11.0 | |||||||||||||||||||||
Cancer | 30.0 | 32.2 | 30.6 | 31.8 | |||||||||||||||||||||
Cardio | 14.9 | 16.0 | 15.0 | 15.4 | |||||||||||||||||||||
Respiratory | 10.7 | 10.8 | 10.8 | 10.2 | |||||||||||||||||||||
Other | 11.4 | 8.1 | 11.0 | 10.6 | |||||||||||||||||||||
Total | 100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | |||||||||||||||||
Direct patient care margins (e) | |||||||||||||||||||||||||
Routine homecare | 53.9 | % | 53.1 | % | 52.6 | % | 52.1 | % | |||||||||||||||||
Inpatient | 8.5 | 1.2 | 5.4 | 2.3 | |||||||||||||||||||||
Continuous care | 16.8 | 15.8 | 16.9 | 14.2 | |||||||||||||||||||||
Homecare margin drivers (dollars per patient day) | |||||||||||||||||||||||||
Labor costs | $ | 55.65 | $ | 56.11 | $ | 56.80 | $ | 56.41 | |||||||||||||||||
Combined drug, home medical equipment and | |||||||||||||||||||||||||
medical supplies cost | 14.30 | 14.99 | 14.65 | 15.66 | |||||||||||||||||||||
Inpatient margin drivers (dollars per patient day) | |||||||||||||||||||||||||
Labor costs | $ | 355.96 | $ | 363.06 | $ | 366.41 | $ | 350.56 | |||||||||||||||||
Continuous care margin drivers (dollars per patient day) | |||||||||||||||||||||||||
Labor costs | $ | 583.45 | $ | 602.30 | $ | 584.49 | $ | 607.52 | |||||||||||||||||
Bad debt expense as a percent of revenues | 1.1 | % | 1.2 | % | 1.1 | % | 1.2 | % | |||||||||||||||||
Accounts receivable -- | |||||||||||||||||||||||||
Days of revenue outstanding- excluding unapplied Medicare payments | 33.7 | 36.5 | n.a. | n.a. | |||||||||||||||||||||
Days of revenue outstanding- including unapplied Medicare payments | 25.0 | 32.6 | n.a. | n.a. |
The "Footnotes to Financial Statements" are integral parts of this financial information.
CHEMED CORPORATION AND SUBSIDIARY COMPANIES | |||||||||||||||||||||||||
FOOTNOTES TO FINANCIAL STATEMENTS | |||||||||||||||||||||||||
FOR THE THREE MONTHS AND YEARS ENDED DECEMBER 31, 2017 AND 2016 | |||||||||||||||||||||||||
(unaudited) | |||||||||||||||||||||||||
(a) | Included in the results of operations for 2017 are the following significant credits/(charges) which may not be indicative of ongoing operations | ||||||||||||||||||||||||
(in thousands): | |||||||||||||||||||||||||
For the Three Months Ended December 31, 2017 | |||||||||||||||||||||||||
VITAS | Roto-Rooter | Corporate | Consolidated | ||||||||||||||||||||||
Service revenues and sales: | |||||||||||||||||||||||||
Medicare cap sequestration adjustment | $ | (342 | ) | $ | - | $ | - | $ | (342 | ) | |||||||||||||||
Selling, general and administrative expenses: | |||||||||||||||||||||||||
Expenses related to OIG investigation | (16 | ) | - | - | (16 | ) | |||||||||||||||||||
Stock option expense | - | - | (2,747 | ) | (2,747 | ) | |||||||||||||||||||
Long-term incentive compensation | - | - | (1,973 | ) | (1,973 | ) | |||||||||||||||||||
Other operating expenses: | |||||||||||||||||||||||||
Litigation settlements | 5,524 | - | - | 5,524 | |||||||||||||||||||||
Loss on sale of transportation equipment | - | - | (5,266 | ) | (5,266 | ) | |||||||||||||||||||
Pretax impact on earnings | 5,166 | - | (9,986 | ) | (4,820 | ) | |||||||||||||||||||
Impact of tax reform | 11,057 | 7,761 | (10,516 | ) | 8,302 | ||||||||||||||||||||
Excess tax benefits on stock compensation | - | - | 10,811 | 10,811 | |||||||||||||||||||||
Income tax benefit on the above | (1,961 | ) | - | 3,340 | 1,379 | ||||||||||||||||||||
After-tax impact on earnings | $ | 14,262 | $ | 7,761 | $ | (6,351 | ) | $ | 15,672 | ||||||||||||||||
For the Year Ended December 31, 2017 | |||||||||||||||||||||||||
VITAS | Roto-Rooter | Corporate | Consolidated | ||||||||||||||||||||||
Service revenues and sales: | |||||||||||||||||||||||||
Medicare cap sequestration adjustment | $ | (447 | ) | $ | - | $ | - | $ | (447 | ) | |||||||||||||||
Selling, general and administrative expenses: | |||||||||||||||||||||||||
Expenses related to OIG investigation | (5,194 | ) | - | - | (5,194 | ) | |||||||||||||||||||
Stock option expense | - | - | (10,485 | ) | (10,485 | ) | |||||||||||||||||||
Long-term incentive compensation | - | - | (4,994 | ) | (4,994 | ) | |||||||||||||||||||
Other operating expenses: | |||||||||||||||||||||||||
Litigation settlements | (84,476 | ) | (213 | ) | - | (84,689 | ) | ||||||||||||||||||
Loss on sale of transportation equipment | - | - | (5,266 | ) | (5,266 | ) | |||||||||||||||||||
Program closure expenses | (1,138 | ) | - | - | (1,138 | ) | |||||||||||||||||||
Pretax impact on earnings | (91,255 | ) | (213 | ) | (20,745 | ) | (112,213 | ) | |||||||||||||||||
Impact of tax reform | 11,057 | 7,761 | (10,516 | ) | 8,302 | ||||||||||||||||||||
Excess tax benefits on stock compensation | - | - | 18,932 | 18,932 | |||||||||||||||||||||
Income tax benefit on the above | 34,722 | 84 | 7,296 | 42,102 | |||||||||||||||||||||
After-tax impact on earnings | $ | (45,476 | ) | $ | 7,632 | $ | (5,033 | ) | $ | (42,877 | ) | ||||||||||||||
(b) | Included in the results of operations for 2016 are the following significant credits/(charges) which may not be indicative of ongoing operations | ||||||||||||||||||||||||
(in thousands): | |||||||||||||||||||||||||
For the Three Months Ended December 31, 2016 | |||||||||||||||||||||||||
VITAS | Roto-Rooter | Corporate | Consolidated | ||||||||||||||||||||||
Selling, general and administrative expenses: | |||||||||||||||||||||||||
Expenses related to OIG investigation | $ | (1,155 | ) | $ | - | $ | - | $ | (1,155 | ) | |||||||||||||||
Expenses related to litigation settlements | - | (1 | ) | - | (1 | ) | |||||||||||||||||||
Stock option expense | - | - | (2,071 | ) | (2,071 | ) | |||||||||||||||||||
Long-term incentive compensation | - | - | (1,029 | ) | (1,029 | ) | |||||||||||||||||||
Pretax impact on earnings | (1,155 | ) | (1 | ) | (3,100 | ) | (4,256 | ) | |||||||||||||||||
Income tax benefit on the above | 442 | - | 1,141 | 1,583 | |||||||||||||||||||||
After-tax impact on earnings | $ | (713 | ) | $ | (1 | ) | $ | (1,959 | ) | $ | (2,673 | ) | |||||||||||||
For the Year Ended December 31, 2016 | |||||||||||||||||||||||||
VITAS | Roto-Rooter | Corporate | Consolidated | ||||||||||||||||||||||
Service revenues and sales: | |||||||||||||||||||||||||
Medicare cap sequestration adjustment | $ | (228 | ) | $ | - | $ | - | $ | (228 | ) | |||||||||||||||
Selling, general and administrative expenses: | |||||||||||||||||||||||||
Expenses related to OIG investigation | (5,260 | ) | - | - | (5,260 | ) | |||||||||||||||||||
Expenses related to litigation settlements | - | (45 | ) | - | (45 | ) | |||||||||||||||||||
Stock option expense | - | - | (8,330 | ) | (8,330 | ) | |||||||||||||||||||
Long-term incentive compensation | - | - | (1,930 | ) | (1,930 | ) | |||||||||||||||||||
Other operating expenses: | |||||||||||||||||||||||||
Early retirement expenses | (4,491 | ) | - | - | (4,491 | ) | |||||||||||||||||||
Pretax impact on earnings | (9,979 | ) | (45 | ) | (10,260 | ) | (20,284 | ) | |||||||||||||||||
Income tax benefit on the above | 3,750 | 17 | 3,773 | 7,540 | |||||||||||||||||||||
After-tax impact on earnings | $ | (6,229 | ) | $ | (28 | ) | $ | (6,487 | ) | $ | (12,744 | ) | |||||||||||||
(c) |
Under Generally Accepted Accounting Principles ("GAAP"), the Roto-Rooter segment expenses all advertising, including the cost of telephone directories, immediately upon the initial release of the advertising. Telephone directories are generally in circulation 12 months. If a directory is in circulation for a time period greater or less than 12 months, the publisher adjusts the directory billing for the change in billing period. The timing of when a telephone directory is published can and does fluctuate significantly on a quarterly basis. This "direct expensing" results in significant fluctuations in quarterly advertising expense. In the fourth quarters of 2017 and 2016, GAAP advertising expense for Roto-Rooter totaled $8,145,000 and $7,323,000, respectively. If the expense of the telephone directories were spread over the periods they are in circulation, advertising expense for the fourth quarters of 2017 and 2016 would total $8,809,000 and $7,303,000, respectively. |
|
Similarly, for the years ended December 31, 2017 and 2016, GAAP advertising expense for Roto-Rooter totaled $31,042,000 and $26,717,000, respectively. If the expense of the telephone directories were spread over the periods they are in circulation, advertising expense for the years ended December 31, 2017 and 2016 would total $32,413,000 and $28,050,000, respectively. |
||
(d) |
VITAS has 11 large (greater than 450 ADC), 16 medium (greater than 200 but less than 450 ADC) and 17 small (less than 200 ADC) hospice programs. Of VITAS' 30 unique Medicare provider numbers, 23 provider numbers have a Medicare cap cushion of 10%, five provider numbers have Medicare cap cushion between 3% and 5% and two provider numbers have a Medicare cap liability for the current cap year. |
|
(e) | Amounts exclude indirect patient care and administrative costs, as well as Medicare Cap billing limitation. |
View source version on businesswire.com: http://www.businesswire.com/news/home/20180214006100/en/
Source:
Chemed Corporation
David P. Williams, 513- 762-6901