Chemed Reports Second-Quarter 2021 Results - Full-Year 2021 Guidance Increased

Rhea-AI Summary

Chemed Corporation (NYSE: CHE) reported Q2 2021 results with revenue up 6.0% to $532 million. GAAP EPS fell 29.9% to $3.51, while adjusted EPS rose 4.3% to $4.60. VITAS saw a 4.7% revenue decline to $312 million, despite a slight increase in admissions. Roto-Rooter’s revenue soared 26.1% to $220 million, with a 40.1% increase in net income. Adjusted EBITDA for VITAS dropped 24.4%, while Roto-Rooter's adjusted EBITDA surged 37.2%. Chemed has $92 million in cash, no long-term debt, and plans to continue share repurchases.

Positive

• Consolidated revenue increased 6.0% to $532 million.
• Adjusted EPS improved by 4.3% to $4.60.
• Roto-Rooter revenue grew 26.1% to $220 million.
• Net income for Roto-Rooter increased 40.1%.

Negative

• GAAP EPS decreased by 29.9% to $3.51.
• VITAS revenue fell 4.7% to $312 million.
• Average Daily Census for VITAS declined by 6.3%.

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 second quarter ended June 30, 2021, versus the comparable prior-year period, as follows:

Consolidated operating results:

• Revenue increased 6.0% to $532 million
• GAAP Diluted Earnings-per-Share (EPS) of $3.51, a decrease of 29.9%
• Adjusted Diluted EPS of $4.60, an increase of 4.3%

VITAS segment operating results:

• Net Patient Revenue of $312 million, a decline of 4.7%
• Average Daily Census (ADC) of 17,995, a decline of 6.3%
• Admissions of 16,840, an increase of 0.1%
• Net Income, excluding certain discrete items, of $39.4 million, a decline of 21.4%
• Adjusted EBITDA, excluding Medicare Cap, of $54.8 million, a decline of 24.4%
• Adjusted EBITDA margin, excluding Medicare Cap, of 17.4%, a decrease of 430-basis points

Roto-Rooter segment operating results:

• Revenue of $220 million, an increase of 26.1%
• Net Income, excluding certain discrete items, of $44.9 million, an increase of 40.1%
• Adjusted EBITDA of $64.3 million, an increase of 37.2%
• Adjusted EBITDA margin of 29.2%, an increase of 236-basis points

VITAS

VITAS net revenue was $312 million in the second quarter of 2021, which is a decline of 4.7%, when compared to the prior-year period. This revenue decline is comprised primarily of a 6.3% decline in days-of-care offset by a geographically weighted average Medicare reimbursement rate increase (including the suspension of sequestration on May 1, 2020) of approximately 1.8%. Acuity mix shift had a net impact of reducing revenue approximately $3.8 million, or 1.2%, in the quarter when compared to the prior-year revenue and level-of-care mix. The combination of a lower Medicare Cap and other contra revenue changes offset a portion of the revenue decline by approximately 90-basis points.

In the second quarter of 2021, VITAS accrued $2.0 million in Medicare Cap billing limitations. This compares to a $5.7 million Medicare Cap billing limitation in the second quarter of 2020.

Of VITAS’ 30 Medicare provider numbers, 27 provider numbers currently have a Medicare Cap cushion of 10% or greater, 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 second quarter of 2021 was $195.21, which, including acuity mix shift, is 61-basis points above the prior-year period. Reimbursement for routine home care and high acuity care averaged $169.06 and $988.03, respectively. During the quarter, high acuity days-of-care were 3.2% of total days of care, 32-basis points less than the prior-year quarter.

The second quarter 2021 gross margin, excluding Medicare Cap, increased costs for personal protection equipment (PPE), disinfecting facilities and other costs related to operating during the pandemic, was 24.7%. This is a 252-basis point margin decline when compared to the second quarter of 2020.

Selling, general and administrative expense was $22.6 million in the second quarter of 2021 and compares to $21.1 million incurred in the prior-year quarter. Adjusted EBITDA, excluding Medicare Cap, totaled $54.8 million in the quarter, a decrease of 24.4%. Adjusted EBITDA margin in the quarter, excluding Medicare Cap, was 17.4%, which is 430-basis points less than the prior-year period.

Roto-Rooter

Roto-Rooter generated quarterly revenue of $220 million in the second quarter of 2021, an increase of $45.6 million, or 26.1%, over the prior-year quarter.

Total Roto-Rooter branch commercial revenue in the quarter totaled $50.3 million, an increase of 31.8% over the prior year. This aggregate commercial revenue growth consisted of drain cleaning revenue increasing 39.8%, plumbing increasing 32.4% and excavation expanding 25.8%. Water restoration increased 8.3%.

Total Roto-Rooter branch residential revenue in the quarter totaled $149 million, an increase of 23.7% over the prior-year period. This aggregate residential revenue growth consisted of drain cleaning increasing 20.6%, plumbing expanding 30.7%, excavation increasing 22.4%, and water restoration increasing 23.1%.

Roto-Rooter’s gross margin in the quarter was 53.3%, a 211-basis point increase when compared to the second quarter of 2020. Adjusted EBITDA in the second quarter of 2021 totaled $64.3 million, an increase of 37.2%. The Adjusted EBITDA margin in the quarter was 29.2%, which is a 236-basis point increase when compared to the prior year.

Chemed Consolidated

As of June 30, 2021, Chemed had total cash and cash equivalents of $92 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 June 30, 2021, the Company had approximately $404 million of undrawn borrowing capacity under this credit agreement.

During the quarter, the Company repurchased 250,000 shares of Chemed stock for $122 million which equates to a cost per share of $487.53. As of June 30, 2021, there was approximately $312 million of remaining share repurchase authorization under this plan.

Chemed restarted its share repurchase program in 2007. Since that time, Chemed has repurchased approximately 14.9 million shares, aggregating approximately $1.6 billion at an average share cost of $104.70. Including dividends over this period, Chemed has returned approximately $1.8 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. 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. 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 disrupt our healthcare system and general economy to such an extent that future rules, regulations and government mandates could materially impact the company’s 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. This reduced occupancy in senior housing has had a corresponding reduction in VITAS nursing home admissions. Nursing home patients represented 14.9% of VITAS’ second-quarter 2021 patient census. This compares to nursing home patients averaging 18.2% of total census just prior to the pandemic.

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 4.5% 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 18.3%. We are currently estimating $7.5 million for Medicare Cap billing limitations in calendar year 2021.

Roto-Rooter is forecasted to achieve full-year 2021 revenue growth of 15.0% to 15.5%. Roto-Rooter’s Adjusted EBITDA margin for 2021 is estimated to be between 28% to 29%.

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 $18.20 to $18.50. This compares to initial 2021 adjusted earnings per diluted share guidance of $17.00 to $17.50. This revised 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, July 28, 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 4172673. 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 4172673. 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 18,000 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 June 30,								Six Months Ended June 30,
		2021				2020				2021				2020
Service revenues and sales		$	532,256			$	502,199				1,059,616			$	1,017,997
Cost of services provided and goods sold			350,493				352,163				690,966				703,908
Selling, general and administrative expenses (aa)			93,838				84,513				185,437				155,096
Depreciation			13,612				11,659				25,327				23,047
Amortization			2,510				2,488				5,020				4,965
Other operating expense/(income)			104				(41,384	)			726				(41,142	)
Total costs and expenses			460,557				409,439				907,476				845,874
Income from operations			71,699				92,760				152,140				172,123
Interest expense			(379	)			(651	)			(760	)			(1,626	)
Other income/(expense)--net (bb)			3,785				7,514				7,387				(1,952	)
Income before income taxes			75,105				99,623				158,767				168,545
Income taxes			(18,583	)			(17,522	)			(36,845	)			(30,553	)
Net income		$	56,522			$	82,101			$	121,922			$	137,992
Earnings Per Share
Net income		$	3.57			$	5.16			$	7.66			$	8.65
Average number of shares outstanding			15,829				15,914				15,919				15,953
Diluted Earnings Per Share
Net income		$	3.51			$	5.01			$	7.52			$	8.39
Average number of shares outstanding			16,101				16,373				16,205				16,445
(aa) Selling, general and administrative ("SG&A") expenses comprise (in thousands):
		Three Months Ended June 30,								Six Months Ended June 30,
		2021				2020				2021				2020
SG&A expenses before long-term incentive compensation and the impact of market value adjustments related to deferred compensation plans		$	88,510			$	75,176			$	175,178			$	153,511
Market value adjustments related to deferred compensation trusts			3,655				7,408				6,693				(2,164	)
Long-term incentive compensation			1,673				1,929				3,566				3,749
Total SG&A expenses		$	93,838			$	84,513			$	185,437			$	155,096
(bb) Other income/(expense)--net comprises (in thousands):
		Three Months Ended June 30,								Six Months Ended June 30,
		2021				2020				2021				2020
Market value adjustments related to deferred compensation trusts		$	3,655			$	7,408			$	6,693			$	(2,164	)
Interest income			138				116				230				225
Other			(8	)			(10	)			464				(13	)
Total other income/(expense)--net		$	3,785			$	7,514			$	7,387			$	(1,952	)

CHEMED CORPORATION AND SUBSIDIARY COMPANIES
CONSOLIDATED BALANCE SHEETS
(in thousands, except per share data)(unaudited)
		June 30,
		2021				2020
Assets
Current assets
Cash and cash equivalents		$	92,120			$	20,376
Accounts receivable less allowances			123,329				132,487
Inventories			7,411				7,467
Prepaid income taxes			23,386				5,794
Prepaid expenses			22,840				23,183
Total current assets			269,086				189,307
Investments of deferred compensation plans held in trust			98,256				80,113
Properties and equipment, at cost less accumulated depreciation			192,653				183,017
Lease right of use asset			123,207				128,418
Identifiable intangible assets less accumulated amortization			113,137				122,791
Goodwill			578,650				578,491
Other assets			8,807				9,055
Total Assets		$	1,383,796			$	1,291,192
Liabilities
Current liabilities
Accounts payable		$	55,975			$	36,704
Income taxes			5				19,576
Accrued insurance			51,963				50,847
Accrued compensation			83,608				80,552
Accrued legal			1,391				6,959
Short-term lease liability			36,440				36,093
Unutilized CARES Act Grant			-				39,236
Other current liabilities			38,020				48,549
Total current liabilities			267,402				318,516
Deferred income taxes			21,713				21,108
Deferred compensation liabilities			97,374				77,639
Long-term lease liability			99,093				104,444
Other liabilities			27,440				18,789
Total Liabilities			513,022				540,496
Stockholders' Equity
Capital stock			36,385				36,040
Paid-in capital			999,697				904,421
Retained earnings			1,834,835				1,553,144
Treasury stock, at cost			(2,002,326	)			(1,745,299	)
Deferred compensation payable in Company stock			2,183				2,390
Total Stockholders' Equity			870,774				750,696
Total Liabilities and Stockholders' Equity		$	1,383,796			$	1,291,192

CHEMED CORPORATION AND SUBSIDIARY COMPANIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)(unaudited)
		For the Six Months Ended June 30,
		2021				2020
Cash Flows from Operating Activities
Net income		$	121,922			$	137,992
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization			30,347				28,012
Stock option expense			12,345				10,113
Litigation settlements paid			(9,440	)			-
Noncash long-term incentive compensation			3,402				3,527
Noncash directors' compensation			1,173				1,171
Provision for deferred income taxes			1,051				2,717
Amortization of debt issuance costs			153				153
Provision for bad debts			40				871
Unutilized CARES Act grant			-				39,236
Deferred payroll taxes			-				10,716
Changes in operating assets and liabilities, excluding amounts acquired in business combinations:
Decrease in accounts receivable			4,722				6,696
Increase in inventories			(316	)			(5	)
Decrease/(increase) in prepaid expenses			3,337				(33	)
(Decrease)/increase in accounts payable and other current liabilities			(10,815	)			13,303
Change in current income taxes			(26,242	)			23,725
Net change in lease assets and liabilities			(436	)			1,287
Increase in other assets			(10,088	)			(2,988	)
Increase in other liabilities			10,088				1,383
Other sources/(uses)			796				(54	)
Net cash provided by operating activities			132,039				277,822
Cash Flows from Investing Activities
Capital expenditures			(33,604	)			(32,251	)
Business combinations			-				(3,600	)
Other sources			302				473
Net cash used by investing activities			(33,302	)			(35,378	)
Cash Flows from Financing Activities
Purchases of treasury stock			(166,649	)			(122,148	)
Proceeds from exercise of stock options			16,186				19,440
Dividends paid			(10,864	)			(10,238	)
Capital stock surrendered to pay taxes on stock-based compensation			(8,598	)			(14,845	)
Payments on revolving line of credit			-				(264,900	)
Proceeds from revolving line of credit			-				174,900
Change in cash overdrafts payable			-				(9,849	)
Other sources/(uses)			633				(586	)
Net cash used by financing activities			(169,292	)			(228,226	)
(Decrease)/Increase in Cash and Cash Equivalents			(70,555	)			14,218
Cash and cash equivalents at beginning of year			162,675				6,158
Cash and cash equivalents at end of year		$	92,120			$	20,376

CHEMED CORPORATION AND SUBSIDIARY COMPANIES
CONSOLIDATING STATEMENTS OF INCOME
FOR THE THREE MONTHS ENDED JUNE 30, 2021 AND 2020
(in thousands)(unaudited)
														Chemed
		VITAS				Roto-Rooter				Corporate				Consolidated
2021 (a)
Service revenues and sales		$	311,935			$	220,321			$	-			$	532,256
Cost of services provided and goods sold			247,519				102,974				-				350,493
Selling, general and administrative expenses			22,631				53,556				17,651				93,838
Depreciation			7,125				6,468				19				13,612
Amortization			18				2,492				-				2,510
Other operating expense			87				17				-				104
Total costs and expenses			277,380				165,507				17,670				460,557
Income/(loss) from operations			34,555				54,814				(17,670	)			71,699
Interest expense			(43	)			(89	)			(247	)			(379	)
Intercompany interest income/(expense)			4,486				1,649				(6,135	)			-
Other income—net			99				32				3,654				3,785
Income/(loss) before income taxes			39,097				56,406				(20,398	)			75,105
Income taxes			(9,385	)			(13,633	)			4,435				(18,583	)
Net income/(loss)		$	29,712			$	42,773			$	(15,963	)		$	56,522
2020 (b)
Service revenues and sales		$	327,465			$	174,734			$	-			$	502,199
Cost of services provided and goods sold			266,815				85,348				-				352,163
Selling, general and administrative expenses			21,072				44,231				19,210				84,513
Depreciation			5,556				6,069				34				11,659
Amortization			18				2,470				-				2,488
Other operating income			(40,826	)			(558	)			-				(41,384	)
Total costs and expenses			252,635				137,560				19,244				409,439
Income/(loss) from operations			74,830				37,174				(19,244	)			92,760
Interest expense			(45	)			(90	)			(516	)			(651	)
Intercompany interest income/(expense)			4,739				1,422				(6,161	)			-
Other income/(expense)—net			104				(10	)			7,420				7,514
Income/(loss) before income taxes			79,628				38,496				(18,501	)			99,623
Income taxes			(19,383	)			(9,028	)			10,889				(17,522	)
Net income/(loss)		$	60,245			$	29,468			$	(7,612	)		$	82,101

The "Footnotes to Financial Statements" are integral parts of this financial information.

CHEMED CORPORATION AND SUBSIDIARY COMPANIES
CONSOLIDATING STATEMENTS OF INCOME
FOR THE SIX MONTHS ENDED JUNE 30, 2021 AND 2020
(in thousands)(unaudited)
														Chemed
		VITAS				Roto-Rooter				Corporate				Consolidated
2021 (a)
Service revenues and sales		$	627,723			$	431,893			$	-			$	1,059,616
Cost of services provided and goods sold			486,186				204,780				-				690,966
Selling, general and administrative expenses			44,721				106,878				33,838				185,437
Depreciation			12,462				12,821				44				25,327
Amortization			36				4,984				-				5,020
Other operating expense			590				136				-				726
Total costs and expenses			543,995				329,599				33,882				907,476
Income/(loss) from operations			83,728				102,294				(33,882	)			152,140
Interest expense			(85	)			(179	)			(496	)			(760	)
Intercompany interest income/(expense)			9,011				3,269				(12,280	)			-
Other income—net			632				63				6,692				7,387
Income/(loss) before income taxes			93,286				105,447				(39,966	)			158,767
Income taxes			(22,805	)			(25,497	)			11,457				(36,845	)
Net income/(loss)		$	70,481			$	79,950			$	(28,509	)		$	121,922
2020 (b)
Service revenues and sales		$	665,380			$	352,617			$	-			$	1,017,997
Cost of services provided and goods sold			526,244				177,664				-				703,908
Selling, general and administrative expenses			43,341				90,513				21,242				155,096
Depreciation			11,030				11,947				70				23,047
Amortization			36				4,929				-				4,965
Other operating expense			(40,712	)			(430	)			-				(41,142	)
Total costs and expenses			539,939				284,623				21,312				845,874
Income/(loss) from operations			125,441				67,994				(21,312	)			172,123
Interest expense			(90	)			(192	)			(1,344	)			(1,626	)
Intercompany interest income/(expense)			9,125				2,771				(11,896	)			-
Other income/(expense)—net			169				30				(2,151	)			(1,952	)
Income/(loss) before income taxes			134,645				70,603				(36,703	)			168,545
Income taxes			(33,121	)			(16,813	)			19,381				(30,553	)
Net income/(loss)		$	101,524			$	53,790			$	(17,322	)		$	137,992

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 JUNE 30, 2021 AND 2020
(in thousands)(unaudited)
														Chemed
		VITAS				Roto-Rooter				Corporate				Consolidated
2021
Net income/(loss)		$	29,712			$	42,773			$	(15,963	)		$	56,522
Add/(deduct):
Interest expense			43				89				247				379
Income taxes			9,385				13,633				(4,435	)			18,583
Depreciation			7,125				6,468				19				13,612
Amortization			18				2,492				-				2,510
EBITDA			46,283				65,455				(20,132	)			91,606
Add/(deduct):
Intercompany interest expense/(income)			(4,486	)			(1,649	)			6,135				-
Interest income			(106	)			(32	)			-				(138	)
Direct costs related to COVID-19			11,084				582				-				11,666
Stock option expense			-				-				6,239				6,239
Long-term incentive compensation			-				-				1,673				1,673
Litigation settlements			-				(98	)			-				(98	)
Adjusted EBITDA		$	52,775			$	64,258			$	(6,085	)		$	110,948
2020
Net income/(loss)		$	60,245			$	29,468			$	(7,612	)		$	82,101
Add/(deduct):
Interest expense			45				90				516				651
Income taxes			19,383				9,028				(10,889	)			17,522
Depreciation			5,556				6,069				34				11,659
Amortization			18				2,470				-				2,488
EBITDA			85,247				47,125				(17,951	)			114,421
Add/(deduct):
Intercompany interest expense/(income)			(4,739	)			(1,422	)			6,161				-
Interest (income)/expense			(113	)			10				(13	)			(116	)
CARES Act grant			(40,989	)			-				-				(40,989	)
Direct costs related to COVID-19			24,265				1,117				-				25,382
Stock option expense			-				-				5,068				5,068
COVID-19 related Medicare cap			2,250				-				-				2,250
Long-term incentive compensation			-				-				1,929				1,929
Medicare cap sequestration adjustment			796				-				-				796
Adjusted EBITDA		$	66,717			$	46,830			$	(4,806	)		$	108,741

The "Footnotes to Financial Statements" are integral parts of this financial information.

CHEMED CORPORATION AND SUBSIDIARY COMPANIES
CONSOLIDATING SUMMARIES OF EBITDA
FOR THE SIX MONTHS ENDED JUNE 30, 2021 AND 2020
(in thousands)(unaudited)
														Chemed
		VITAS				Roto-Rooter				Corporate				Consolidated
2021
Net income/(loss)		$	70,481			$	79,950			$	(28,509	)		$	121,922
Add/(deduct):
Interest expense			85				179				496				760
Income taxes			22,805				25,497				(11,457	)			36,845
Depreciation			12,462				12,821				44				25,327
Amortization			36				4,984				-				5,020
EBITDA			105,869				123,431				(39,426	)			189,874
Add/(deduct):
Intercompany interest expense/(income)			(9,011	)			(3,269	)			12,280				-
Interest income			(167	)			(63	)			-				(230	)
Direct costs related to COVID-19			12,836				1,136				38				14,010
Stock option expense			-				-				12,345				12,345
Long-term incentive compensation			-				-				3,566				3,566
Litigation settlements			-				(98	)			-				(98	)
Adjusted EBITDA		$	109,527			$	121,137			$	(11,197	)		$	219,467
2020
Net income/(loss)		$	101,524			$	53,790			$	(17,322	)		$	137,992
Add/(deduct):
Interest expense			90				192				1,344				1,626
Income taxes			33,121				16,813				(19,381	)			30,553
Depreciation			11,030				11,947				70				23,047
Amortization			36				4,929				-				4,965
EBITDA			145,801				87,671				(35,289	)			198,183
Add/(deduct):
Intercompany interest expense/(income)			(9,125	)			(2,771	)			11,896				-
Interest income			(181	)			(31	)			(13	)			(225	)
Direct costs related to COVID-19			25,238				1,978				-				27,216
CARES Act grant			(40,989	)			-				-				(40,989	)
Stock option expense			-				-				10,114				10,114
Long-term incentive compensation			-				-				3,749				3,749
COVID-19 Medicare cap			2,250				-				-				2,250
Medicare cap sequestration adjustment			1,472				-				-				1,472
Adjusted EBITDA		$	124,466			$	86,847			$	(9,543	)		$	201,770

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 June 30,								Six Months Ended June 30,
		2021				2020				2021				2020
Net income as reported		$	56,522			$	82,101			$	121,922			$	137,992
Add/(deduct) pre-tax cost of:
Direct costs related to COVID-19			11,666				25,382				14,010				27,216
Stock option expense			6,239				5,068				12,345				10,114
Amortization of reacquired franchise agreements			2,352				2,352				4,704				4,704
Long-term incentive compensation			1,673				1,929				3,566				3,749
Facility relocation expenses			1,855				-				1,855				-
Litigation settlements			(98	)			-				(98	)			-
CARES Act grant			-				(40,989	)			-				(40,989	)
COVID-19 Medicare cap			-				2,250				-				2,250
Medicare cap sequestration adjustments			-				796				-				1,472
Add/(deduct) tax impacts:
Tax impact of the above pre-tax adjustments (1)			(5,241	)			1,537				(7,728	)			(814	)
Excess tax benefits on stock compensation			(868	)			(8,203	)			(4,106	)			(12,756	)
Adjusted net income		$	74,100			$	72,223			$	146,470			$	132,938
Diluted Earnings Per Share As Reported
Net income		$	3.51			$	5.01			$	7.52			$	8.39
Average number of shares outstanding			16,101				16,373				16,205				16,445
Adjusted Diluted Earnings Per Share
Adjusted net income		$	4.60			$	4.41			$	9.04			$	8.08
Average number of shares outstanding			16,101				16,373				16,205				16,445

(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 June 30,								Six Months Ended June 30,
OPERATING STATISTICS		2021			2020					2021				2020
Net revenue ($000) (c)
Homecare	$	264,926			$	276,345				$	528,680			$	548,098
Inpatient		27,371				25,868					56,527				58,350
Continuous care		24,282				34,582					51,631				75,137
Other		3,078				2,109					6,016				5,265
Subtotal	$	319,657			$	338,904				$	642,854			$	686,850
Room and board, net		(2,657	)			(2,647	)				(5,322	)			(6,028	)
Contractual allowances		(3,065	)			(3,042	)				(6,309	)			(7,192	)
Medicare cap allowance		(2,000	)			(5,750	)				(3,500	)			(8,250	)
Net Revenue	$	311,935			$	327,465				$	627,723			$	665,380
Net revenue as a percent of total before Medicare cap allowance
Homecare		82.9	%			81.5	%				82.2	%			79.8	%
Inpatient		8.6				7.6					8.8				8.5
Continuous care		7.6				10.2					8.0				10.9
Other		0.9				0.7					1.0				0.8
Subtotal		100.0				100.0					100.0				100.0
Room and board, net		(0.8	)			(0.8	)				(0.8	)			(0.9	)
Contractual allowances		(1.0	)			(0.9	)				(1.0	)			(1.0	)
Medicare cap allowance		(0.6	)			(1.7	)				(0.6	)			(1.2	)
Net Revenue		97.6	%			96.6	%				97.6	%			96.9	%
Days of care
Homecare		1,335,482				1,401,744					2,665,374				2,766,490
Nursing home		244,423				279,462					477,206				582,836
Respite		5,338				4,158					10,178				10,850
Subtotal routine homecare and respite		1,585,243				1,685,364					3,152,758				3,360,176
Inpatient		26,493				25,542					54,167				57,890
Continuous care		25,786				35,814					55,086				77,187
Total		1,637,522				1,746,720					3,262,011				3,495,253
Number of days in relevant time period		91				91					181				182
Average daily census ("ADC") (days)
Homecare		14,676				15,404					14,726				15,201
Nursing home		2,686				3,071					2,636				3,202
Respite		59				45					57				60
Subtotal routine homecare and respite		17,421				18,520					17,419				18,463
Inpatient		291				281					299				318
Continuous care		283				394					304				424
Total		17,995				19,195					18,022				19,205
Total Admissions		16,840				16,822					34,975				35,425
Total Discharges		16,525				17,000					35,054				35,208
Average length of stay (days)		94.5				90.9					94.4				90.8
Median length of stay (days)		14.0				14.0					13.0				14.0
ADC by major diagnosis
Cerebro		36.8	%			35.2	%				36.5	%			35.7	%
Neurological		22.4				21.7					22.3				21.6
Cancer		12.1				12.8					12.2				12.7
Cardio		15.6				16.1					15.6				15.9
Respiratory		7.3				8.2					7.5				8.3
Other		5.8				6.0					5.9				5.8
Total		100.0	%			100.0	%				100.0	%			100.0	%
Admissions by major diagnosis
Cerebro		21.4	%			20.9	%				21.5	%			21.0	%
Neurological		12.3				13.4					12.3				12.9
Cancer		28.9				27.6					26.9				28.0
Cardio		14.8				14.6					14.5				14.9
Respiratory		10.5				9.8					10.7				10.9
Other		12.1				13.7					14.1				12.3
Total		100.0	%			100.0	%				100.0	%			100.0	%
Estimated uncollectible accounts as a percent of revenues		1.0	%			0.9	%				1.0	%			1.1	%
Accounts receivable --
Days of revenue outstanding-excluding unapplied Medicare payments		36.3				31.9					n.a.				n.a.
Days of revenue outstanding-including unapplied Medicare payments		21.0				26.7					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 AND SIX MONTHS ENDED JUNE 30, 2021 AND 2020
(unaudited)
(a)	Included in the results of operations for 2021 are the following significant credits/(charges) which may not be indicative of ongoing operations
	(in thousands):
			Three Months Ended June 30, 2021
			VITAS				Roto-Rooter				Corporate				Consolidated
	Direct costs related to COVID-19		$	(11,084	)		$	(582	)		$	-			$	(11,666	)
	Stock option expense			-				-				(6,239	)			(6,239	)
	Amortization of reacquired franchise agreements			-				(2,352	)			-				(2,352	)
	Facility relocation expenses			(1,855	)			-				-				(1,855	)
	Long-term incentive compensation			-				-				(1,673	)			(1,673	)
	Litigation settlements			-				98				-				98
				(12,939	)			(2,836	)			(7,912	)			(23,687	)
	Excess tax benefits on stock compensation			-				-				868				868
	Income tax benefit on the above			3,287				751				1,203				5,241
	After-tax impact on earnings		$	(9,652	)		$	(2,085	)		$	(5,841	)		$	(17,578	)
			Six Months Ended June 30, 2021
			VITAS				Roto-Rooter				Corporate				Consolidated
	Direct costs related to COVID-19		$	(12,836	)		$	(1,136	)		$	(38	)		$	(14,010	)
	Stock option expense			-				-				(12,345	)			(12,345	)
	Amortization of reacquired franchise agreements			-				(4,704	)			-				(4,704	)
	Long-term incentive compensation			-				-				(3,566	)			(3,566	)
	Facility relocation expenses			(1,855	)			-				-				(1,855	)
	Litigation settlements			-				98				-				98
	Pretax impact on earnings			(14,691	)			(5,742	)			(15,949	)			(36,382	)
	Excess tax benefits on stock compensation			-				-				4,106				4,106
	Income tax benefit on the above			3,731				1,522				2,475				7,728
	After-tax impact on earnings		$	(10,960	)		$	(4,220	)		$	(9,368	)		$	(24,548	)
(b)	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 June 30, 2020
			VITAS				Roto-Rooter				Corporate				Consolidated
	CARES Act grant		$	40,989			$	-			$	-			$	40,989
	Direct costs related to COVID-19			(24,265	)			(1,117	)			-				(25,382	)
	Stock option expense			-				-				(5,068	)			(5,068	)
	Amortization of reacquired franchise agreements			-				(2,352	)			-				(2,352	)
	COVID-19 Medicare cap			(2,250	)			-				-				(2,250	)
	Long-term incentive compensation			-				-				(1,929	)			(1,929	)
	Medicare cap sequestration adjustment			(796	)			-				-				(796	)
	Pretax impact on earnings			13,678				(3,469	)			(6,997	)			3,212
	Excess tax benefits on stock compensation			-				-				8,203				8,203
	Income tax benefit on the above			(3,515	)			918				1,060				(1,537	)
	After-tax impact on earnings		$	10,163			$	(2,551	)		$	2,266			$	9,878
			Six Months Ended June 30, 2020
			VITAS				Roto-Rooter				Corporate				Consolidated
	CARES Act grant		$	40,989			$	-			$	-			$	40,989
	Direct costs related to COVID-19			(25,238	)			(1,978	)			-				(27,216	)
	Stock option expense			-				-				(10,114	)			(10,114	)
	Amortization of reacquired franchise agreements			-				(4,704	)			-				(4,704	)
	Long-term incentive compensation			-				-				(3,749	)			(3,749	)
	COVID-19 Medicare cap			(2,250	)			-				-				(2,250	)
	Medicare cap sequestration adjustment			(1,472	)			-				-				(1,472	)
	Pretax impact on earnings			12,029				(6,682	)			(13,863	)			(8,516	)
	Excess tax benefits on stock compensation			-				-				12,756				12,756
	Income tax benefit on the above			(3,096	)			1,770				2,140				814
	After-tax impact on earnings		$	8,933			$	(4,912	)		$	1,033			$	5,054

(c)	VITAS has 10 large (greater than 450 ADC), 18 medium (greater than 200 but less than 450 ADC) and 21 small (less than 200 ADC) hospice programs. Of Vitas' 30 Medicare provider numbers, for the current cap year, 27 provider numbers have a Medicare cap cushion of 10% or greater, one provider number has 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/20210727006033/en/

FAQ

What were Chemed's Q2 2021 earnings results for CHE?

Chemed reported a revenue increase of 6.0% to $532 million, with adjusted EPS rising 4.3% to $4.60.

How did the VITAS segment perform in Q2 2021 for CHE?

VITAS experienced a revenue decline of 4.7%, totaling $312 million, with a 6.3% drop in Average Daily Census.

What was the revenue growth for Roto-Rooter in Q2 2021?

Roto-Rooter's revenue increased by 26.1% to $220 million in Q2 2021.

What is Chemed's forecast for full-year 2021?

Chemed expects VITAS revenue to decline approximately 4.5% and Roto-Rooter to achieve revenue growth of 15.0% to 15.5%.