News Release Details

CINCINNATI--(BUSINESS WIRE)--Oct. 22, 2015-- Chemed Corporation (Chemed) (NYSE:CHE), which operates VITAS Healthcare Corporation (VITAS), the nation’s largest provider of end-of-life care, and Roto-Rooter, the nation’s largest commercial and residential plumbing and drain cleaning services provider, reported financial results for its third quarter ended September 30, 2015, versus the comparable prior-year period, as follows:

Consolidated operating results:

• Revenue increased 7.8% to $386 million
• GAAP Diluted EPS increased 18.7% to $1.65
• Adjusted Diluted EPS increased 20.3% to $1.78

VITAS segment operating results:

• Net Patient Revenue of $285 million, an increase of 7.4%
• Average Daily Census (ADC) of 15,722, an increase of 7.4%
• Admissions of 16,131, an increase of 3.1%
• Net Income, including litigation costs, of $25.7 million, an increase of 19.1%
• Adjusted EBITDA of $45.3 million, an increase of 18.2%
• Adjusted EBITDA margin of 15.9%, an increase of 145 basis points

Roto-Rooter segment operating results:

• Revenue of $101 million, an increase of 8.8%
• Net Income of $11.0 million, an increase of 11.3%
• Adjusted EBITDA of $19.8 million, an increase of 14.6%
• Adjusted EBITDA margin of 19.5%, an increase of 98 basis points

VITAS

Net revenue for VITAS was $285 million in the third quarter of 2015, which is an increase of $19.6 million, or 7.4%, when compared to the prior-year period. This revenue increase is comprised of an average Medicare reimbursement rate increase of approximately 1.4%, a 7.4% increase in average daily census, offset by level of care and geographic mix shift, when compared to the prior year.

In the third quarter of 2015, VITAS did not record any adjustments in estimated Medicare Cap billing limitations. This compares to $2.5 million of Medicare Cap billing limitations recorded in the third quarter of 2014.

At September 30, 2015, VITAS had 34 Medicare provider numbers, none of which has an estimated 2015 Medicare Cap billing limitation.

Of VITAS’ 34 unique Medicare provider numbers, 32 provider numbers have a Medicare Cap cushion of 10% or greater for the 2015 Medicare Cap period, one provider number has a cap cushion between 5% and 10% and one provider number has a cap cushion between 0% and 5%. VITAS generated an aggregate cap cushion of $302 million during the trailing twelve-month period.

Average revenue per patient per day in the quarter, excluding the impact of Medicare Cap, was $197.04, which is 0.9% below the prior-year period. Routine home care reimbursement and high acuity care averaged $164.22 and $699.04, respectively. During the quarter, high acuity days of care were 6.1% of total days of care, 54 basis points less than the prior-year quarter.

The third quarter of 2015 gross margin, excluding the impact of Medicare Cap, was 23.3%, which is 64 basis points above the third quarter of 2014.

Selling, general and administrative expense was $22.2 million in the third quarter of 2015, which is an increase of 10.0% when compared to the prior-year quarter. Adjusted EBITDA, excluding Medicare Cap, totaled $45.3 million in the quarter, an increase of 11.0% over the prior-year period. Adjusted EBITDA margin, excluding the impact from Medicare Cap, was 15.9% in the quarter which is 65 basis points favorable to the prior-year period.

Roto-Rooter

Roto-Rooter generated sales of $101 million for the third quarter of 2015, an increase of $8.2 million, or 8.8%, over the prior-year quarter. Water restoration accounted for $2.8 million of this revenue growth, with water and flood remediation services aggregating $8.2 million in the quarter.

Roto-Rooter’s gross margin in the quarter was 47.1%, a 13 basis point improvement when compared to the third quarter of 2014. Adjusted EBITDA in the third quarter of 2015 totaled $19.8 million, an increase of 14.6%, and the Adjusted EBITDA margin was 19.5% in the quarter, 98 basis points higher than the prior year.

Chemed Consolidated

As of September 30, 2015, Chemed had total cash and cash equivalents of $38 million and debt of $138 million.

In June 2014Chemed entered into a five-year Amended and Restated Credit Agreement that consisted of a $100 million amortizable term loan and a $350 million revolving credit facility. The interest rate on this facility has a floating rate that is currently LIBOR plus 112.5 basis points. At September 30, 2015, the Company had approximately $268 million of undrawn borrowing capacity under this credit agreement.

Capital expenditures through September 30, 2015, aggregated $30.2 million and compares to depreciation and amortization during the same period of $26.1 million.

The Company repurchased $18.2 million of Chemed stock during the quarter. This equates to 135,765 shares of Chemed stock repurchased at an average cost of $134.28. Chemed currently has $63.8 million of authorization remaining under this share repurchase plan.

Guidance for 2015

Full-year 2015 revenue growth for VITAS, prior to Medicare Cap, is estimated to be in the range of 4% to 5%. Admissions in 2015 are estimated to increase 4% to 5% and full-year Adjusted EBITDA margin, prior to Medicare Cap, is estimated to be 14% to 15%. Medicare Cap billing limitations for calendar year 2015 are estimated to be $1.0 million.

Roto-Rooter is forecasted to achieve full-year 2015 revenue growth of 6% to 7%. This revenue estimate is based upon continued expansion in water restoration services coupled with increased job pricing of approximately 1%. Adjusted EBITDA margin for 2015 is forecasted to be in the range of 19.5% to 20.0%.

Management estimates that full-year 2015 adjusted earnings per diluted share, which excludes non-cash expense for stock options, costs related to litigation, and other discrete items, will be in the range of $6.75 to $6.80. This compares to Chemed’s 2014 reported adjusted earnings per diluted share of $6.07.

Conference Call

Chemed will host a conference call and webcast at 10 a.m., ET, on Friday, October 23, 2015, to discuss the Company's quarterly results and to provide an update on its business. The dial-in number for the conference call is (877) 703-6103 for U.S. and Canadian participants and (857) 244-7302 for international participants. The participant passcode is 66337784. A live webcast of the call can be accessed on Chemed's website at www.chemed.com by clicking on Investor Relations Home.

A taped replay of the conference call will be available beginning approximately 24 hours after the call's conclusion. It can be accessed by dialing (888) 286-8010 for U.S. and Canadian callers and (617) 801-6888 for international callers and will be available for one week following the live call. The replay pass code is 92492254. An archived webcast will also be available at www.chemed.com.

Chemed Corporation operates in the healthcare field through its VITAS Healthcare Corporation subsidiary. VITAS provides daily hospice services to over 15,000 patients with severe, life-limiting illnesses. This type of care is focused on making the terminally ill patient's final days as comfortable and pain-free as possible.

Chemed operates in the residential and commercial plumbing and drain cleaning industry under the brand name Roto-Rooter. Roto-Rooter provides plumbing and drain service 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.