Chemed Reports Fourth-Quarter 2023 Results

February 27, 2024 at 4:15 PM EST

CINCINNATI--(BUSINESS WIRE)--Feb. 27, 2024-- 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/

Michael D. Witzeman
(513) 762-6714

Source: Chemed Corporation

Symbol:
Price:
Change: