Chemed Reports Fourth-Quarter 2020 Results

Rhea-AI Summary

Chemed Corporation reported its fourth-quarter 2020 financial results, indicating a 2.1% revenue increase to $533 million. GAAP diluted EPS rose to $6.96, a 75.8% increase. The VITAS segment faced a 2.3% decline in net patient revenue, totaling $332 million, with admissions increasing by 2.8%. In contrast, Roto-Rooter reported a 10.2% revenue rise to $201 million. The company anticipates VITAS revenue to drop by 4.0% in 2021, while Roto-Rooter expects 5%-6% growth. Chemed had $163 million in cash and no long-term debt.

Positive

• GAAP diluted EPS of $6.96, a 75.8% increase.
• Revenue for Roto-Rooter increased by 10.2% to $201 million.
• Adjusted EBITDA for Roto-Rooter increased 24.7%.

Negative

• VITAS segment net patient revenue declined 2.3% to $332 million.
• Average Daily Census in VITAS declined by 2.8%.
• VITAS anticipates a 4.0% revenue decline in 2021.

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, 2020, versus the comparable prior-year period, as follows:

Consolidated operating results:

• Revenue increased 2.1% to $533 million
• GAAP Diluted Earnings-per-Share (EPS) of $6.96, an increase of 75.8%
• Adjusted Diluted EPS of $5.13, an increase of 21.6%

VITAS segment operating results:

• Net Patient Revenue of $332 million, a decline of 2.3%
• Average Daily Census (ADC) of 18,718, a decline of 2.8%
• Admissions of 17,960 an increase of 2.8%
• Net Income, excluding certain discrete items, of $58.1 million, an increase of 16.0%
• Adjusted EBITDA, excluding Medicare Cap, of $78.7 million, an increase of 11.7%
• Adjusted EBITDA margin, excluding Medicare Cap, of 23.5%, an increase of 306-basis points

Roto-Rooter segment operating results:

• Revenue of $201 million, an increase of 10.2%
• Net Income, excluding certain discrete items, of $37.9 million, an increase of 24.6%
• Adjusted EBITDA of $54.5 million, an increase of 24.7%
• Adjusted EBITDA margin of 27.1%, an increase of 313-basis points

VITAS

VITAS net revenue was $332 million in the fourth quarter of 2020, which is a decline of 2.3%, when compared to the prior-year period. This revenue decline is comprised primarily of a 2.8% decline in days-of-care, a geographically weighted average Medicare reimbursement rate increase (including the suspension of sequestration on May 1, 2020) of approximately 2.4%, and acuity mix shift which then reduced the blended average Medicare rate increase approximately 255-basis points. The combination of lower Medicare Cap and a decrease in Medicaid net room and board pass-through, increased revenue growth an additional 64-basis points in the quarter.

In the fourth quarter of 2020, VITAS accrued $2.5 million in Medicare Cap billing limitations. This compares to a $4.5 million Medicare Cap billing limitation in the fourth quarter of 2019.

Of VITAS’ 30 Medicare provider numbers, 23 provider numbers currently have a Medicare Cap cushion of 10% or greater, four provider numbers have a cap cushion between 5% and 10%, one provider number has a cap cushion between 0% and 5% and two provider numbers currently have a fiscal 2021 Medicare Cap billing limitation liability.

Average revenue per patient per day in the fourth quarter of 2020 was $198.33, which, including acuity mix shift, is 7-basis points below the prior-year period. Reimbursement for routine home care and high acuity care averaged $169.83 and $997.37, respectively. During the quarter, high acuity days-of-care were 3.4% of total days of care, 62-basis points less than the prior-year quarter.

The fourth quarter 2020 gross margin, excluding Medicare Cap, increased costs for personal protection equipment (PPE), disinfecting facilities and other costs related to operating during the pandemic, was 29.9%. This is a 357-basis point margin improvement when compared to the fourth quarter of 2019. This increase in gross margin is attributed to a level-of-care mix shift to higher margin routine home care and the temporary suspension of sequestration which increased reimbursement 200-basis points.

Selling, general and administrative expense was $20.3 million in the fourth quarter of 2020, which is a favorable decrease of 4.0% compared to the prior-year quarter. Adjusted EBITDA, excluding Medicare Cap, totaled $78.7 million in the quarter, an increase of 11.7%. Adjusted EBITDA margin, excluding Medicare Cap, was 23.5% in the quarter, which is a 306-basis point improvement when compared to the prior-year period.

Roto-Rooter

Roto-Rooter generated quarterly revenue of $201 million in the fourth quarter of 2020, an increase of $18.7 million, or 10.2%, over the prior-year quarter. On a unit-for-unit basis, which excludes the Oakland and HSW acquisitions completed in July 2019 and September 2019, respectively, Roto-Rooter generated quarterly revenue of $183 million for the fourth quarter of 2020, an increase of 12.8% over the prior-year quarter.

Total commercial revenue in the quarter, excluding acquisitions, decreased 9.8%. This aggregate commercial revenue decline consisted of drain cleaning revenue declining 11.6%, commercial plumbing and excavation declining 8.9%, and commercial water restoration increasing 1.0%.

Total residential revenue, excluding acquisitions, increased 20.8%. This aggregate residential revenue growth consisted of residential drain cleaning increasing 17.1%, plumbing and excavation expanding 25.5%, and residential water restoration increasing 16.8%.

Roto-Rooter’s gross margin in the quarter was 51.6%, a 301-basis point increase when compared to the fourth quarter of 2019. Adjusted EBITDA in the fourth quarter of 2020 totaled $54.5 million, an increase of 24.7%. The Adjusted EBITDA margin in the quarter was 27.1% which is a 313-basis point increase when compared to the prior year.

Chemed Consolidated

As of December 31, 2020, Chemed had total cash and cash equivalents of $163 million and no long-term debt.

In June 2018, Chemed entered into a five-year Amended and Restated Credit Agreement that consists of a $450 million revolving credit facility. The interest rate on this facility has a floating rate that is currently LIBOR plus 100-basis points. At December 31, 2020, the Company had approximately $412 million of undrawn borrowing capacity under this credit agreement.

During the quarter, the Company repurchased 59,252 shares of Chemed stock for $28.5 million which equates to a cost per share of $480.52. As of December 31, 2020, there was approximately $178 million of remaining share repurchase authorization under this plan.

Chemed restarted its share repurchase program in 2007. Since that time, Chemed has repurchased approximately 14.5 million shares, aggregating approximately $1.4 billion at an average share cost of $95.75. Including dividends over this period, Chemed has returned approximately $1.6 billion to shareholders.

Guidance for 2021

Historically, Chemed earnings guidance has been developed using previous years’ key operating metrics which are then modeled and projected out for the calendar year. Critical within these projections is the understanding of traditional patterned correlations among key operating metrics. Once we complete this phase of our projected operating results, we would then modify the projections for the timing of price increases, changes in commission structure, wages, marketing programs and a variety of continuous improvement initiatives that our business segments plan on executing over the coming year. This modeling exercise also takes into consideration anticipated industry and macro-economic issues outside of management’s control but are somewhat predictable in terms of timing and impact on our business segments’ operating results.

The COVID-19 pandemic has made accurate modeling and providing meaningful earnings guidance exceptionally challenging. Federal, state and local government authorities are forced to make swift decisions within our healthcare system, labor pools and general economy. These governmental decisions have the potential for an immediate and material impact on VITAS and Roto-Rooter operating results.

Since the start of the pandemic, Chemed has been able to successfully navigate within this rapidly changing environment and produce operating results that we believe provide us with the ability to issue earnings guidance for the 2021 calendar year. However, this guidance should be taken with the recognition the pandemic will continue to materially disrupt all aspects of our healthcare system and general economy to such an extent that future rules, regulations and government mandates could materially impact our ability to achieve this guidance.

Statistically, patients residing in senior housing are identified as hospice appropriate earlier into their terminal prognosis and have a much greater probability of having a length of stay in excess of 90 days. Hospice patients referred from hospitals, oncology practices and similar referral sources are generally more acute and have a significantly lower probability of lengths-of-stay exceeding 90 days. According to data released by the National Investment Center for Seniors Housing & Care, COVID-19 continues to adversely affect senior housing occupancy, which reached another record low in the third quarter of 2020. This reduced occupancy in senior housing has had a corresponding reduction in VITAS nursing home admissions. Nursing home patients represented 14.7% of the VITAS fourth quarter 2020 patient census, a 310-basis point reduction when compared the fourth quarter of 2019.

VITAS anticipates continued weak occupancy and corresponding weak referrals from senior housing for the first half of 2021. This guidance anticipates senior housing occupancy will begin to normalize to pre-pandemic occupancy starting in the second half of calendar year 2021.

Based upon the above discussion, VITAS 2021 revenue, prior to Medicare Cap, is estimated to decline approximately 4.0% when compared to the prior year. Average Daily Census in 2021 is estimated to decline approximately 5.0%. Full-year Adjusted EBITDA margin, prior to Medicare Cap, is estimated to be 19.4%. We are currently estimating $10 million for Medicare Cap billing limitations in calendar year 2021.

Roto-Rooter is forecasted to achieve full-year 2021 revenue growth of 5% to 6%. Roto-Rooter’s Adjusted EBITDA margin for 2021 is estimated to be 26.0%.

Based upon the above, full-year 2021 adjusted 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 $17.00 to $17.50. This 2021 guidance assumes an effective corporate tax rate on adjusted earnings of 24.7%. Chemed’s 2020 reported adjusted earnings per diluted share was $18.08.

Conference Call

Chemed will host a conference call and webcast at 10 a.m., ET, on Wednesday, February 24, 2021, to discuss the Company's quarterly results and to provide an update on its business. The dial-in number for the conference call is (844) 743-2500 for U.S. and Canadian participants and +1 (661) 378-9533 for international participants. The Conference ID is 7865216. 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 (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 7865216. 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 approximately 19,000 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, 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,
		2020				2019				2020				2019
Service revenues and sales		$	533,289			$	522,324				2,079,583			$	1,938,555
Cost of services provided and goods sold			335,049				347,355				1,378,197				1,321,126
Selling, general and administrative expenses (aa)			86,805				83,291				330,218				305,712
Depreciation			11,835				11,126				46,596				40,870
Amortization			2,511				2,969				9,987				4,335
Other operating (income)/expenses			(46,160	)			131				(75,095	)			9,132
Total costs and expenses			390,040				444,872				1,689,903				1,681,175
Income from operations			143,249				77,452				389,680				257,380
Interest expense			(350	)			(1,133	)			(2,355	)			(4,535	)
Other income--net (bb)			2,942				3,276				8,665				8,764
Income before income taxes			145,841				79,595				395,990				261,609
Income taxes			(32,089	)			(14,015	)			(76,524	)			(41,686	)
Net income		$	113,752			$	65,580			$	319,466			$	219,923
Earnings Per Share
Net income		$	7.12			$	4.09			$	20.02			$	13.77
Average number of shares outstanding			15,973				16,022				15,955				15,969
Diluted Earnings Per Share
Net income		$	6.96			$	3.96			$	19.48			$	13.31
Average number of shares outstanding			16,348				16,565				16,398				16,527
(aa) Selling, general and administrative ("SG&A") expenses comprise (in thousands):
		Three Months Ended December 31,								For the Years Ended December 31,
		2020				2019				2020				2019
SG&A expenses before long-term incentive compensation and the impact of market value adjustments related to deferred compensation plans		$	80,551			$	77,053			$	313,348			$	289,828
Long-term incentive compensation			3,414				3,078				8,937				7,630
Market value adjustments related to deferred compensation trusts			2,840				3,160				7,933				8,254
Total SG&A expenses		$	86,805			$	83,291			$	330,218			$	305,712
(bb) Other income--net comprises (in thousands):
		Three Months Ended December 31,								For the Years Ended December 31,
		2020				2019				2020				2019
Market value adjustments related to deferred compensation trusts		$	2,840			$	3,160			$	7,933			$	8,254
Interest income			109				126				757				513
Other			(7	)			(10	)			(25	)			(3	)
Total other income--net		$	2,942			$	3,276			$	8,665			$	8,764

CHEMED CORPORATION AND SUBSIDIARY COMPANIES
CONSOLIDATED BALANCE SHEETS
(in thousands, except per share data)(unaudited)
		December 31,
		2020				2019
Assets
Current assets
Cash and cash equivalents		$	162,675			$	6,158
Accounts receivable less allowances			126,853				143,827
Inventories			7,095				7,462
Prepaid income taxes			6,603				10,074
Prepaid expenses			26,177				23,150
Total current assets			329,403				190,671
Investments of deferred compensation plans held in trust			88,811				77,446
Properties and equipment, at cost less accumulated depreciation			187,820				175,763
Lease right of use asset			123,448				111,652
Identifiable intangible assets less accumulated amortization			118,085				126,370
Goodwill			578,585				577,367
Other assets			8,759				9,048
Total Assets		$	1,434,911			$	1,268,317
Liabilities
Current liabilities
Accounts payable		$	54,234			$	51,101
Income taxes			9,464				131
Accrued insurance			54,703				50,328
Accrued compensation			91,282				70,814
Accrued legal			10,632				6,941
Short-term lease liability			36,200				39,280
Other current liabilities			42,593				43,625
Total current liabilities			299,108				262,220
Deferred income taxes			20,664				18,504
Long-term debt			-				90,000
Deferred compensation liabilities			88,456				76,446
Long-term lease liability			99,210				86,656
Other liabilities			26,273				7,883
Total Liabilities			533,711				541,709
Stockholders' Equity
Capital stock			36,259				35,811
Paid-in capital			961,404				860,671
Retained earnings			1,723,777				1,425,752
Treasury stock, at cost			(1,822,579	)			(1,597,940	)
Deferred compensation payable in Company stock			2,339				2,314
Total Stockholders' Equity			901,200				726,608
Total Liabilities and Stockholders' Equity		$	1,434,911			$	1,268,317

CHEMED CORPORATION AND SUBSIDIARY COMPANIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)(unaudited)
		For the Years Ended December 31,
		2020				2019
Cash Flows from Operating Activities
Net income		$	319,466			$	219,923
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization			56,583				45,205
Stock option expense			18,422				14,831
Deferred payroll taxes			36,350				-
Noncash long-term incentive compensation			7,208				5,740
Litigation settlement			2,684				6,000
Deferred tax provision/(benefit)			1,433				(2,770	)
Noncash directors' compensation			1,171				767
Amortization of debt issuance costs			306				306
Asset impairment loss			-				2,266
Changes in operating assets and liabilities, excluding amounts acquired in business combinations:
Decrease/(increase) in accounts receivable			12,773				(19,247	)
Decrease/(increase) in inventories			367				(1,757	)
Increase in prepaid expenses			(3,027	)			(3,491	)
Increase in accounts payable and other current liabilities			19,096				28,417
Change in current income taxes			13,525				161
Net change in lease assets and liabilities			1,206				3,108
Increase in other assets			(11,834	)			(11,963	)
Increase in other liabilities			12,323				12,354
Other sources			1,237				1,399
Net cash provided by operating activities			489,289				301,249
Cash Flows from Investing Activities
Capital expenditures			(58,831	)			(53,022	)
Business combinations			(3,600	)			(138,010	)
Other sources			871				272
Net cash used by investing activities			(61,560	)			(190,760	)
Cash Flows from Financing Activities
Payments on revolving line of credit			(264,900	)			(482,100	)
Proceeds from revolving line of credit			174,900				482,900
Purchases of treasury stock			(175,594	)			(92,631	)
Proceeds from exercise of stock options			50,382				34,380
Capital stock surrendered to pay taxes on stock-based compensation			(25,328	)			(28,474	)
Dividends paid			(21,079	)			(19,788	)
Change in cash overdrafts payable			(9,849	)			(3,927	)
Other sources			256				478
Net cash used by financing activities			(271,212	)			(109,162	)
Increase in Cash and Cash Equivalents			156,517				1,327
Cash and cash equivalents at beginning of year			6,158				4,831
Cash and cash equivalents at end of year		$	162,675			$	6,158

CHEMED CORPORATION AND SUBSIDIARY COMPANIES
CONSOLIDATING STATEMENTS OF INCOME
FOR THE THREE MONTHS ENDED DECEMBER 31, 2020 AND 2019
(in thousands)(unaudited)
														Chemed
		VITAS				Roto-Rooter				Corporate				Consolidated
2020 (a)
Service revenues and sales		$	332,190			$	201,099			$	-			$	533,289
Cost of services provided and goods sold			237,812				97,237				-				335,049
Selling, general and administrative expenses			20,305				49,679				16,821				86,805
Depreciation			5,546				6,257				32				11,835
Amortization			18				2,493				-				2,511
Other operating expense/(income)			(46,929	)			769				-				(46,160	)
Total costs and expenses			216,752				156,435				16,853				390,040
Income/(loss) from operations			115,438				44,664				(16,853	)			143,249
Interest expense			(29	)			(68	)			(253	)			(350	)
Intercompany interest income/(expense)			5,434				1,834				(7,268	)			-
Other income—net			95				7				2,840				2,942
Income/(loss) before income taxes			120,938				46,437				(21,534	)			145,841
Income taxes			(29,419	)			(11,007	)			8,337				(32,089	)
Net income/(loss)		$	91,519			$	35,430			$	(13,197	)		$	113,752
2019 (b)
Service revenues and sales		$	339,905			$	182,419			$	-			$	522,324
Cost of services provided and goods sold			253,659				93,696				-				347,355
Selling, general and administrative expenses			21,162				46,198				15,931				83,291
Depreciation			5,341				5,747				38				11,126
Amortization			18				2,951				-				2,969
Other operating expense			25				106				-				131
Total costs and expenses			280,205				148,698				15,969				444,872
Income/(loss) from operations			59,700				33,721				(15,969	)			77,452
Interest expense			(19	)			(72	)			(1,042	)			(1,133	)
Intercompany interest income/(expense)			4,740				1,543				(6,283	)			-
Other income—net			76				40				3,160				3,276
Income/(loss) before income taxes			64,497				35,232				(20,134	)			79,595
Income taxes			(15,075	)			(7,823	)			8,883				(14,015	)
Net income/(loss)		$	49,422			$	27,409			$	(11,251	)		$	65,580

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, 2020 AND 2019
(in thousands)(unaudited)
														Chemed
		VITAS				Roto-Rooter				Corporate				Consolidated
2020 (a)
Service revenues and sales		$	1,334,667			$	744,916			$	-			$	2,079,583
Cost of services provided and goods sold			1,010,693				367,504				-				1,378,197
Selling, general and administrative expenses			85,445				188,268				56,505				330,218
Depreciation			22,168				24,292				136				46,596
Amortization			71				9,916				-				9,987
Other operating (income)/expense			(78,590	)			3,495				-				(75,095	)
Total costs and expenses			1,039,787				593,475				56,641				1,689,903
Income/(loss) from operations			294,880				151,441				(56,641	)			389,680
Interest expense			(166	)			(340	)			(1,849	)			(2,355	)
Intercompany interest income/(expense)			19,897				6,256				(26,153	)			-
Other income—net			644				75				7,946				8,665
Income/(loss) before income taxes			315,255				157,432				(76,697	)			395,990
Income taxes			(76,473	)			(37,038	)			36,987				(76,524	)
Net income/(loss)		$	238,782			$	120,394			$	(39,710	)		$	319,466
2019 (b)
Service revenues and sales		$	1,281,184			$	657,371			$	-			$	1,938,555
Cost of services provided and goods sold			982,056				339,070				-				1,321,126
Selling, general and administrative expenses			86,345				166,934				52,433				305,712
Depreciation			19,984				20,730				156				40,870
Amortization			71				4,264				-				4,335
Other operating expense			6,546				320				2,266				9,132
Total costs and expenses			1,095,002				531,318				54,855				1,681,175
Income/(loss) from operations			186,182				126,053				(54,855	)			257,380
Interest expense			(169	)			(345	)			(4,021	)			(4,535	)
Intercompany interest income/(expense)			18,135				8,152				(26,287	)			-
Other income—net			385				126				8,253				8,764
Income/(loss) before income taxes			204,533				133,986				(76,910	)			261,609
Income taxes			(48,711	)			(30,276	)			37,301				(41,686	)
Net income/(loss)		$	155,822			$	103,710			$	(39,609	)		$	219,923

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, 2020 AND 2019
(in thousands)(unaudited)
														Chemed
		VITAS				Roto-Rooter				Corporate				Consolidated
2020
Net income/(loss)		$	91,519			$	35,430			$	(13,197	)		$	113,752
Add/(deduct):
Interest expense			29				68				253				350
Income taxes			29,419				11,007				(8,337	)			32,089
Depreciation			5,546				6,257				32				11,835
Amortization			18				2,493				-				2,511
EBITDA			126,531				55,255				(21,249	)			160,537
Add/(deduct):
Intercompany interest expense/(income)			(5,434	)			(1,834	)			7,268				-
Interest income			(102	)			(7	)			-				(109	)
CARES Act grant			(48,041	)			-				-				(48,041	)
Direct costs related to COVID-19			3,257				520				-				3,777
Stock option expense			-				-				5,127				5,127
Long-term incentive compensation			-				-				3,413				3,413
Litigation settlement			-				544				-				544
Adjusted EBITDA		$	76,211			$	54,478			$	(5,441	)		$	125,248
2019
Net income/(loss)		$	49,422			$	27,409			$	(11,251	)		$	65,580
Add/(deduct):
Interest expense			19				72				1,042				1,133
Income taxes			15,075				7,823				(8,883	)			14,015
Depreciation			5,341				5,747				38				11,126
Amortization			18				2,951				-				2,969
EBITDA			69,875				44,002				(19,054	)			94,823
Add/(deduct):
Intercompany interest expense/(income)			(4,740	)			(1,543	)			6,283				-
Interest income			(84	)			(42	)			-				(126	)
Stock option expense			-				-				4,102				4,102
Long-term incentive compensation			-				-				3,079				3,079
Acquisition expense			-				1,286				50				1,336
Medicare cap sequestration adjustment			919				-				-				919
Adjusted EBITDA		$	65,970			$	43,703			$	(5,540	)		$	104,133

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, 2020 AND 2019
(in thousands)(unaudited)
														Chemed
		VITAS				Roto-Rooter				Corporate				Consolidated
2020
Net income/(loss)		$	238,782			$	120,394			$	(39,710	)		$	319,466
Add/(deduct):
Interest expense			166				340				1,849				2,355
Income taxes			76,473				37,038				(36,987	)			76,524
Depreciation			22,168				24,292				136				46,596
Amortization			71				9,916				-				9,987
EBITDA			337,660				191,980				(74,712	)			454,928
Add/(deduct):
Intercompany interest expense/(income)			(19,897	)			(6,256	)			26,153				-
Interest income			(668	)			(76	)			(13	)			(757	)
CARES Act grant			(80,225	)			-				-				(80,225	)
Direct costs related to COVID-19			35,441				3,819				-				39,260
Stock option expense			-				-				18,422				18,422
Long-term incentive compensation			-				-				8,937				8,937
Litigation settlement costs			-				3,639				-				3,639
Medicare cap sequestration adjustment			619				-				-				619
Adjusted EBITDA		$	272,930			$	193,106			$	(21,213	)		$	444,823
2019
Net income/(loss)		$	155,822			$	103,710			$	(39,609	)		$	219,923
Add/(deduct):
Interest expense			169				345				4,021				4,535
Income taxes			48,711				30,276				(37,301	)			41,686
Depreciation			19,984				20,730				156				40,870
Amortization			71				4,264				-				4,335
EBITDA			224,757				159,325				(72,733	)			311,349
Add/(deduct):
Intercompany interest expense/(income)			(18,135	)			(8,152	)			26,287				-
Interest (income)/expense			(380	)			(133	)			-				(513	)
Stock option expense			-				-				14,831				14,831
Long-term incentive compensation			-				-				7,630				7,630
Litigation settlement costs			6,000				-				-				6,000
Acquisition expense			-				4,664				170				4,834
Medicare cap sequestration adjustment			3,982				-				-				3,982
Impairment loss on transportation equipment			-				-				2,266				2,266
Non cash ASC 842 expenses/(benefit)			656				55				(163	)			548
Adjusted EBITDA		$	216,880			$	155,759			$	(21,712	)		$	350,927

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								For the Years Ended
		December 31,								December 31,
		2020				2019				2020				2019
Net income as reported		$	113,752			$	65,580			$	319,466			$	219,923
Add/(deduct) pre-tax cost of:
CARES Act grant			(48,041	)			-				(80,225	)			-
Direct costs related to COVID-19			3,777				-				39,260				-
Stock option expense			5,127				4,102				18,422				14,831
Amortization of reacquired franchise agreements			2,352				2,861				9,408				3,964
Long-term incentive compensation			3,413				3,079				8,937				7,630
Litigation settlement			544				-				3,639				6,000
Medicare cap sequestration adjustments			-				919				619				3,982
Impairment loss on transportation equipment			-				-				-				2,266
Acquisition expense			-				1,336				-				4,834
Non cash ASC 842 expenses			-				-				-				548
Add/(deduct) tax impacts:
Tax impact of the above pre-tax adjustments (1)			9,141				(2,567	)			2,976				(9,328	)
Excess tax benefits on stock compensation			(6,146	)			(5,440	)			(26,089	)			(24,177	)
Adjusted net income		$	83,919			$	69,870			$	296,413			$	230,473
Diluted Earnings Per Share As Reported
Net income		$	6.96			$	3.96			$	19.48			$	13.31
Average number of shares outstanding			16,348				16,565				16,398				16,527
Adjusted Diluted Earnings Per Share
Adjusted net income		$	5.13			$	4.22			$	18.08			$	13.95
Average number of shares outstanding			16,348				16,565				16,398				16,527

(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		2020			2019				2020				2019
Net revenue ($000) (c)
Homecare		279,410			$	275,976			$	1,106,358			$	1,076,025
Inpatient		28,973				30,857				114,956				99,920
Continuous care		30,175				40,997				136,011				133,473
Other		2,984				3,825				11,164				10,433
Subtotal		341,542			$	351,655			$	1,368,489			$	1,319,851
Room and board, net		(2,858	)			(3,260	)			(12,174	)			(11,359	)
Contractual allowances		(3,994	)			(3,990	)			(14,970	)			(14,893	)
Medicare cap allowance		(2,500	)			(4,500	)			(6,678	)			(12,415	)
Net Revenue		332,190			$	339,905			$	1,334,667			$	1,281,184
Net revenue as a percent of total before Medicare cap allowance
Homecare		81.8	%			78.5	%			80.8	%			81.5	%
Inpatient		8.5				8.8				8.4				7.6
Continuous care		8.8				11.7				9.9				10.1
Other		0.9				1.0				0.9				0.8
Subtotal		100.0				100.0				100.0				100.0
Room and board, net		(0.8	)			(0.9	)			(0.9	)			(0.9	)
Contractual allowances		(1.2	)			(1.1	)			(1.1	)			(1.1	)
Medicare cap allowance		(0.7	)			(1.3	)			(0.5	)			(0.9	)
Net Revenue		97.3	%			96.7	%			97.5	%			97.1	%
Days of care
Homecare		1,404,532				1,377,403				5,597,213				5,338,664
Nursing home		253,261				314,946				1,097,493				1,224,264
Respite		4,971				7,305				20,387				28,857
Subtotal routine homecare and respite		1,662,764				1,699,654				6,715,093				6,591,785
Inpatient		27,811				30,697				112,718				120,063
Continuous care		31,493				41,386				141,693				166,783
Total		1,722,068				1,771,737				6,969,504				6,878,631
Number of days in relevant time period		92				92				366				365
Average daily census ("ADC") (days)
Homecare		15,267				14,972				15,293				14,626
Nursing home		2,753				3,423				2,999				3,354
Respite		54				79				55				79
Subtotal routine homecare and respite		18,074				18,474				18,347				18,059
Inpatient		302				334				308				329
Continuous care		342				450				387				458
Total		18,718				19,258				19,042				18,846
Total Admissions		17,960				17,479				71,328				69,859
Total Discharges		18,570				17,575				72,009				68,857
Average length of stay (days)		97.2				95.2				94.0				92.6
Median length of stay (days)		14.0				16.0				14.0				16.0
ADC by major diagnosis
Cerebro		35.5	%			35.8	%			35.8	%			36.0	%
Neurological		22.4				21.1				21.9				20.6
Cancer		12.3				12.8				12.5				12.9
Cardio		15.9				16.2				15.8				16.5
Respiratory		7.9				8.1				8.1				8.1
Other		6.0				6.0				5.9				5.9
Total		100.0	%			100.0	%			100.0	%			100.0	%
Admissions by major diagnosis
Cerebro		20.9	%			21.9	%			21.1	%			21.1	%
Neurological		12.6				12.9				12.9				12.6
Cancer		26.7				29.2				27.6				29.2
Cardio		13.8				14.7				14.3				15.5
Respiratory		10.4				10.5				10.6				11.0
Other		15.6				10.8				13.5				10.6
Total		100.0	%			100.0	%			100.0	%			100.0	%
Estimated uncollectible accounts as a percent of revenues		1.2	%			1.2	%			1.1	%			1.2	%
Accounts receivable --
Days of revenue outstanding-excluding unapplied Medicare payments		36.0				35.4				n.a.				n.a.
Days of revenue outstanding-including unapplied Medicare payments		25.6				27.2				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, 2020 AND 2019
(unaudited)
(a)	Included in the results of operations for 2020 are the following significant credits/(charges) which may not be indicative of ongoing operations
	(in thousands):
			Three Months Ended December 31, 2020
			VITAS				Roto-Rooter				Corporate				Consolidated
	CARES Act grant		$	48,041			$	-			$	-			$	48,041
	Direct costs related to COVID-19			(3,257	)			(520	)			-				(3,777	)
	Stock option expense			-				-				(5,127	)			(5,127	)
	Long-term incentive compensation			-				-				(3,413	)			(3,413	)
	Amortization of reacquired franchise agreements			-				(2,352	)			-				(2,352	)
	Litigation settlement			-				(544	)			-				(544	)
	Pretax impact on earnings			44,784				(3,416	)			(8,540	)			32,828
	Excess tax benefits on stock compensation			-				-				6,146				6,146
	Income tax benefit on the above			(11,367	)			906				1,320				(9,141	)
	After-tax impact on earnings		$	33,417			$	(2,510	)		$	(1,074	)		$	29,833
			For the Year Ended December 31, 2020
			VITAS				Roto-Rooter				Corporate				Consolidated
	CARES Act grant		$	80,225			$	-			$	-			$	80,225
	Direct costs related to COVID-19			(35,441	)			(3,819	)			-				(39,260	)
	Stock option expense			-				-				(18,422	)			(18,422	)
	Amortization of acquired and cancelled franchise agreements			-				(9,408	)			-				(9,408	)
	Long-term incentive compensation			-				-				(8,937	)			(8,937	)
	Litigation settlement			-				(3,639	)			-				(3,639	)
	Medicare cap sequestration adjustment			(619	)			-				-				(619	)
	Pretax impact on earnings			44,165				(16,866	)			(27,359	)			(60	)
	Excess tax benefits on stock compensation			-				-				26,089				26,089
	Income tax benefit on the above			(11,209	)			4,469				3,764				(2,976	)
	After-tax impact on earnings		$	32,956			$	(12,397	)		$	2,494			$	23,053
(b)	Included in the results of operations for 2019 are the following significant credits/(charges) which may not be indicative of ongoing operations
	(in thousands):
			Three Months Ended December 31, 2019
			VITAS				Roto-Rooter				Corporate				Consolidated
	Stock option expense		$	-			$	-			$	(4,102	)		$	(4,102	)
	Long-term incentive compensation			-				-				(3,079	)			(3,079	)
	Amortization of reacquired franchise agreements			-				(2,861	)			-				(2,861	)
	Acquisition expense			-				(1,286	)			(50	)			(1,336	)
	Medicare cap sequestration adjustment			(919	)			-				-				(919	)
	Pretax impact on earnings			(919	)			(4,147	)			(7,231	)			(12,297	)
	Excess tax benefits on stock compensation			-				-				5,441				5,441
	Income tax benefit on the above			233				1,100				1,233				2,566
	After-tax impact on earnings		$	(686	)		$	(3,047	)		$	(557	)		$	(4,290	)
			For the Year Ended December 31, 2019
			VITAS				Roto-Rooter				Corporate				Consolidated
	Stock option expense		$	-			$	-			$	(14,831	)		$	(14,831	)
	Long-term incentive compensation			-				-				(7,630	)			(7,630	)
	Litigation settlement			(6,000	)			-				-				(6,000	)
	Acquisition expense			-				(4,664	)			(170	)			(4,834	)
	Medicare cap sequestration adjustment			(3,982	)			-				-				(3,982	)
	Amortization of reacquired franchise agreements			-				(3,964	)			-				(3,964	)
	Impairment loss on transportation equipment			-				-				(2,266	)			(2,266	)
	Non cash ASC 842 (expenses)/benefit			(656	)			(55	)			163				(548	)
	Pretax impact on earnings			(10,638	)			(8,683	)			(24,734	)			(44,055	)
	Excess tax benefits on stock compensation			-				-				24,177				24,177
	Income tax benefit on the above			2,707				2,301				4,320				9,328
	After-tax impact on earnings		$	(7,931	)		$	(6,382	)		$	3,763			$	(10,550	)

(c)

VITAS has 10 large (greater than 450 ADC), 21 medium (greater than 200 but less than 450 ADC) and 18 small (less than 200 ADC) hospice programs. Of Vitas' 30 Medicare provider numbers, for the current cap year, 22 provider numbers have a Medicare cap cushion of 10% or greater, four provider numbers have a cap cushion between 5% and 10%, two provider numbers have a cap cushion between 0% and 5%, and two provider numbers have a Medicare cap liability.

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20210223006037/en/

FAQ

What were Chemed's fourth-quarter 2020 earnings per share?

Chemed reported a GAAP diluted earnings per share of $6.96 in the fourth quarter of 2020.

How did VITAS perform financially in the fourth quarter of 2020?

VITAS reported a net patient revenue of $332 million, a decline of 2.3% compared to the prior year.

What is the revenue growth forecast for Roto-Rooter in 2021?

Roto-Rooter is expected to achieve revenue growth of 5% to 6% in 2021.

What challenges does Chemed anticipate for VITAS in 2021?

Chemed anticipates VITAS revenue to decline by approximately 4.0% in 2021 due to ongoing effects from the COVID-19 pandemic.

What is the current financial position of Chemed Corporation?

As of December 31, 2020, Chemed had total cash and cash equivalents of $163 million and no long-term debt.