Chemed Reports Second-Quarter 2022 Results

Rhea-AI Summary

Chemed Corporation (NYSE: CHE) reported its financial results for Q2 2022, revealing a 0.2% decline in revenue to $531 million. GAAP diluted EPS increased 25.4% to $4.40. The VITAS segment faced challenges, with net patient revenue down 4.5% to $298 million and a 10.4% decrease in net income. In contrast, Roto-Rooter demonstrated growth with revenue up 6.0% to $233 million and an 8.8% rise in net income. Chemed's cash position stood at $9.6 million with $117 million in debt, while share repurchases remain a priority as approximately $125 million is left for buybacks.

Positive

• GAAP diluted EPS increased 25.4% to $4.40.
• Roto-Rooter revenue grew 6.0% to $233 million.
• Roto-Rooter net income increased 8.8%.

Negative

• Total revenue declined 0.2% to $531 million.
• VITAS segment net patient revenue fell 4.5% to $298 million.
• VITAS admissions decreased 12.5%.

CINCINNATI--(BUSINESS WIRE)-- 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, 2022, versus the comparable prior-year period, as follows:

Consolidated operating results:

• Revenue declined 0.2% to $531 million
• GAAP Diluted Earnings-per-Share (EPS) of $4.40, an increase of 25.4%
• Adjusted Diluted EPS of $4.84, an increase of 5.2%

VITAS segment operating results:

• Net Patient Revenue of $298 million, a decline of 4.5%
• Average Daily Census (ADC) of 17,315, a decline of 3.8%
• Admissions of 14,735, a decline of 12.5%
• Net Income, excluding certain discrete items, of $35.3 million, a decline of 10.4%
• Adjusted EBITDA, excluding Medicare Cap, of $50.0 million, a decline of 8.8%
• Adjusted EBITDA margin, excluding Medicare Cap, of 16.7%, a decrease of 78-basis points

Roto-Rooter segment operating results:

• Revenue of $233 million, an increase of 6.0%
• Net Income, excluding certain discrete items, of $48.8 million, an increase of 8.8%
• Adjusted EBITDA of $69.0 million, an increase of 7.4%
• Adjusted EBITDA margin of 29.6%, an increase of 39-basis points

VITAS

VITAS net revenue was $298 million in the second quarter of 2022, which is a decline of 4.5%, when compared to the prior-year period. This revenue decline is comprised primarily of a 3.8% decline in days-of-care partially offset by a geographically weighted average Medicare reimbursement rate increase of approximately 0.8%. Acuity mix shift had a net impact of reducing revenue approximately $5.2 million, or 1.6%, in the quarter when compared to the prior-year revenue and level-of-care mix. The combination of Medicare Cap and other contra revenue changes reduced the revenue decline by approximately 10-basis points.

In the second quarter of 2022, VITAS accrued $2.0 million in Medicare Cap billing limitations. This is equal to the Medicare Cap billing limitation in the second quarter of 2021.

Of VITAS’ 30 Medicare provider numbers, 27 provider numbers have a Medicare Cap cushion of 10% or greater, one provider number has a cushion between 5% and 10%, and two provider numbers have an estimated fiscal 2022 Medicare Cap billing limitation liability.

Average revenue per patient per day in the second quarter of 2022 was $193.57 which, including acuity mix shift, is 84-basis points below the prior-year period. Reimbursement for routine home care and high acuity care averaged $170.29 and $1,004.55, respectively. During the quarter, high acuity days-of-care were 2.8% of total days of care, 40-basis points less than the prior-year quarter.

The second quarter 2022 gross margin, excluding Medicare Cap and increased costs directly related to operating during the pandemic, was 24.1%. This is a 61-basis point margin decline when compared to the second quarter of 2021.

Selling, general and administrative expense was $23.1 million in the second quarter of 2022 and compares to $22.6 million incurred in the prior-year quarter. Adjusted EBITDA, excluding Medicare Cap, totaled $50.0 million in the quarter, a decrease of 8.8%. Adjusted EBITDA margin in the quarter, excluding Medicare Cap, was 16.7%, which is 78-basis points below the prior-year period.

Roto-Rooter

Roto-Rooter generated quarterly revenue of $233 million in the second quarter of 2022, an increase of $13.2 million, or 6.0%, when compared to the prior-year quarter.

Roto-Rooter branch commercial revenue in the quarter totaled $54.8 million, an increase of $3.8 million, or 7.5%, over the prior year. This aggregate commercial revenue growth consisted of drain cleaning revenue increasing 8.4%, plumbing increasing 10.4%, water restoration increasing 4.1%, and excavation increasing 4.2%.

Roto-Rooter branch residential revenue in the quarter totaled $159 million, an increase of $7.6 million, or 5.0%, over the prior-year period. This aggregate residential revenue growth consisted of drain cleaning remaining essentially equal to the prior year quarter, plumbing expanding 9.3%, excavation declining 0.1%, and water restoration increasing 14.0%.

Roto-Rooter’s gross margin in the quarter was 53.2%, a 6-basis point decline when compared to the second quarter of 2021. Adjusted EBITDA in the second quarter of 2022 totaled $69.0 million, an increase of 7.4%. The Adjusted EBITDA margin in the quarter was 29.6%, which is a 39-basis point improvement when compared to the prior year.

Chemed Consolidated

As of June 30, 2022, Chemed had total cash and cash equivalents of $9.6 million and $117 million of current and long-term debt.

In June 2022, Chemed entered into a five-year $550 million Amended and Restated Credit Agreement (Credit Agreement). This Credit Agreement consists 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. On June 30, 2022, the Company had approximately $387 million of undrawn borrowing capacity under this credit agreement.

During the quarter, the Company repurchased 100,000 shares of Chemed stock for $49.9 million which equates to a cost per share of $498.61. As of June 30, 2022, there was approximately $125 million of remaining share repurchase authorization under this plan.

Chemed restarted its share repurchase program in 2007. Since that time, Chemed has repurchased approximately 15.9 million shares, aggregating approximately $2.0 billion at an average share cost of $128.76. Including dividends over this period, Chemed has returned approximately $2.3 billion to shareholders.

Guidance for 2022

Historically, Chemed earnings guidance has been developed using previous periods’ key operating metrics which are then modeled and projected out for future periods. 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, uncertainty regarding forward looking inflation, and a potential economic recession, 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 remainder of the 2022 calendar year. However, this guidance should be taken with the recognition the above macro issues could materially impact the company’s ability to achieve this guidance.

Based upon the above discussion, VITAS 2022 revenue, prior to Medicare Cap, is estimated to decline 4.5% to 5.0% when compared to 2021. A portion of the estimated revenue reduction, approximately $15 million, is the result of the phase out of sequestration relief over the first half of 2022 compared to a full year of sequestration relief in 2021. ADC is estimated to decline 3.5%. Full year adjusted EBITDA margin, prior to Medicare Cap, is estimated to be 17.0% to 17.2%. We are currently estimating $10 million for Medicare Cap billing limitations in calendar year 2022.

Roto-Rooter is forecasted to achieve full-year 2022 revenue growth of 5.5% to 5.7%. Roto-Rooter’s adjusted EBITDA margin for 2022 is expected to be 29.2% to 29.5%.

Based upon the above, full-year 2022 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 $19.30 to $19.50. This compares to our previous 2022 adjusted earnings per share guidance of $19.10 to $19.50. Current 2022 guidance assumes an effective corporate tax rate on adjusted earnings of 25.1% and a diluted share count of 15.12 million shares. Chemed’s 2021 reported adjusted earnings per diluted share was $19.33.

Conference Call

Chemed will host a conference call and webcast at 10 a.m., ET, on Thursday, July 28, 2022, 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/z8752xj3.

Participants may also register via teleconference at: https://register.vevent.com/register/BIb15c9a69666f4f3f8c4010ce89314068. 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 investors 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 17,300 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,
		2022				2021				2022				2021
Service revenues and sales		$	531,288			$	532,256				1,061,837			$	1,059,616
Cost of services provided and goods sold			336,821				350,493				673,373				690,966
Selling, general and administrative expenses (aa)			87,853				93,838				177,807				185,437
Depreciation			12,714				13,612				24,852				25,327
Amortization			2,520				2,510				5,038				5,020
Other operating (income)/expense			(558	)			104				(545	)			726
Total costs and expenses			439,350				460,557				880,525				907,476
Income from operations			91,938				71,699				181,312				152,140
Interest expense			(902	)			(379	)			(1,712	)			(760	)
Other (expense)/income--net (bb)			(4,930	)			3,785				(8,792	)			7,387
Income before income taxes			86,106				75,105				170,808				158,767
Income taxes			(19,650	)			(18,583	)			(40,183	)			(36,845	)
Net income		$	66,456			$	56,522			$	130,625			$	121,922
Earnings Per Share
Net income		$	4.45			$	3.57			$	8.73			$	7.66
Average number of shares outstanding			14,932				15,829				14,959				15,919
Diluted Earnings Per Share
Net income		$	4.40			$	3.51			$	8.62			$	7.52
Average number of shares outstanding			15,111				16,101				15,152				16,205
(aa) Selling, general and administrative ("SG&A") expenses comprise (in thousands):
		Three Months Ended June 30,								Six Months Ended June 30,
		2022				2021				2022				2021
SG&A expenses before long-term incentive compensation
and the impact of market value adjustments related to
deferred compensation plans		$	91,422			$	88,510			$	184,000			$	175,178
Market value adjustments related to deferred
compensation trusts			(5,086	)			3,655				(9,020	)			6,693
Long-term incentive compensation			1,517				1,673				2,827				3,566
Total SG&A expenses		$	87,853			$	93,838			$	177,807			$	185,437
(bb) Other (expense)/income--net comprises (in thousands):
		Three Months Ended June 30,								Six Months Ended June 30,
		2022				2021				2022				2021
Market value adjustments related to deferred
compensation trusts		$	(5,086	)		$	3,655			$	(9,020	)		$	6,693
Interest income			154				138				226				230
Other			2				(8	)			2				464
Total other (expense)/income--net		$	(4,930	)		$	3,785			$	(8,792	)		$	7,387

CHEMED CORPORATION AND SUBSIDIARY COMPANIES
CONSOLIDATED BALANCE SHEETS
(in thousands, except per share data)(unaudited)
		June 30,
		2022				2021
Assets
Current assets
Cash and cash equivalents		$	9,640			$	92,120
Accounts receivable less allowances			136,555				123,329
Inventories			10,696				7,411
Prepaid income taxes			17,256				23,386
Prepaid expenses			28,999				22,840
Total current assets			203,146				269,086
Investments of deferred compensation plans held in trust			96,061				98,256
Properties and equipment, at cost less accumulated depreciation			192,005				192,653
Lease right of use asset			128,290				123,207
Identifiable intangible assets less accumulated amortization			103,837				113,137
Goodwill			579,653				578,650
Other assets			9,972				8,807
Total Assets		$	1,312,964			$	1,383,796
Liabilities
Current liabilities
Accounts payable		$	73,975			$	55,975
Current portion of long-term debt			5,000				-
Income taxes			-				5
Accrued insurance			54,828				51,963
Accrued compensation			68,290				83,608
Accrued legal			808				1,391
Short-term lease liability			39,062				36,440
Other current liabilities			43,105				38,020
Total current liabilities			285,068				267,402
Deferred income taxes			21,054				21,713
Long-term debt			111,800				-
Deferred compensation liabilities			95,624				97,374
Long-term lease liability			103,389				99,093
Other liabilities			11,069				27,440
Total Liabilities			628,004				513,022
Stockholders' Equity
Capital stock			36,651				36,385
Paid-in capital			1,089,129				999,697
Retained earnings			2,090,214				1,834,835
Treasury stock, at cost			(2,533,306	)			(2,002,326	)
Deferred compensation payable in Company stock			2,272				2,183
Total Stockholders' Equity			684,960				870,774
Total Liabilities and Stockholders' Equity		$	1,312,964			$	1,383,796

CHEMED CORPORATION AND SUBSIDIARY COMPANIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)(unaudited)
		For the Six Months Ended June 30,
		2022				2021
Cash Flows from Operating Activities
Net income		$	130,625			$	121,922
Adjustments to reconcile net income to net cash provided
by operating activities:
Depreciation and amortization			29,890				30,347
Stock option expense			14,667				12,345
(Benefit)/provision for deferred income taxes			(2,129	)			1,051
Noncash long-term incentive compensation			2,497				3,402
Noncash directors' compensation			1,170				1,173
Amortization of debt issuance costs			153				153
Provision for bad debts			-				40
Payments on previously accrued litigation settlements			-				(9,440	)
Changes in operating assets and liabilities, excluding
amounts acquired in business combinations:
Decrease in accounts receivable			887				4,722
Increase in inventories			(587	)			(316	)
Decrease in prepaid expenses			3,689				3,337
Decrease in accounts payable and
other current liabilities			(24,001	)			(10,815	)
Change in current income taxes			27				(26,242	)
Net change in lease assets and liabilities			705				(436	)
Decrease/(increase) in other assets			2,071				(10,088	)
(Decrease)/increase in other liabilities			(1,491	)			10,088
Other (uses)/sources			(503	)			796
Net cash provided by operating activities			157,670				132,039
Cash Flows from Investing Activities
Capital expenditures			(25,610	)			(33,604	)
Proceeds from sale of fixed assets			1,757				522
Business combinations, net of cash acquired			(1,650	)			-
Other uses			(132	)			(220	)
Net cash used by investing activities			(25,635	)			(33,302	)
Cash Flows from Financing Activities
Payments on revolving line of credit			(263,300	)			-
Proceeds from revolving line of credit			95,100				-
Proceeds from other long-term debt			100,000				-
Purchases of treasury stock			(77,214	)			(166,649	)
Proceeds from exercise of stock options			12,869				16,186
Capital stock surrendered to pay taxes on stock-based compensation			(12,115	)			(8,598	)
Dividends paid			(10,722	)			(10,864	)
Change in cash overdrafts payable			1,716				-
Debt issuance costs			(1,510	)			-
Other (uses)/sources			(114	)			633
Net cash used by financing activities			(155,290	)			(169,292	)
Decrease in Cash and Cash Equivalents			(23,255	)			(70,555	)
Cash and cash equivalents at beginning of year			32,895				162,675
Cash and cash equivalents at end of year		$	9,640			$	92,120

CHEMED CORPORATION AND SUBSIDIARY COMPANIES
CONSOLIDATING STATEMENTS OF INCOME
FOR THE THREE MONTHS ENDED JUNE 30, 2022 AND 2021
(in thousands)(unaudited)
														Chemed
		VITAS				Roto-Rooter				Corporate				Consolidated
2022 (a)
Service revenues and sales		$	297,781			$	233,507			$	-			$	531,288
Cost of services provided and goods sold			227,533				109,288				-				336,821
Selling, general and administrative expenses			23,148				54,982				9,723				87,853
Depreciation			6,062				6,634				18				12,714
Amortization			26				2,494				-				2,520
Other operating (income)/expense			(807	)			249				-				(558	)
Total costs and expenses			255,962				173,647				9,741				439,350
Income/(loss) from operations			41,819				59,860				(9,741	)			91,938
Interest expense			(44	)			(115	)			(743	)			(902	)
Intercompany interest income/(expense)			4,683				2,205				(6,888	)			-
Other income/(expense)—net			119				37				(5,086	)			(4,930	)
Income/(loss) before income taxes			46,577				61,987				(22,458	)			86,106
Income taxes			(11,365	)			(14,915	)			6,630				(19,650	)
Net income/(loss)		$	35,212			$	47,072			$	(15,828	)		$	66,456
2021 (b)
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
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, 2022 AND 2021
(in thousands)(unaudited)
														Chemed
		VITAS				Roto-Rooter				Corporate				Consolidated
2022 (a)
Service revenues and sales		$	596,970			$	464,867			$	-			$	1,061,837
Cost of services provided and goods sold			454,773				218,600				-				673,373
Selling, general and administrative expenses			45,600				111,937				20,270				177,807
Depreciation			11,613				13,203				36				24,852
Amortization			49				4,989				-				5,038
Other operating (income)/expense			(955	)			410				-				(545	)
Total costs and expenses			511,080				349,139				20,306				880,525
Income/(loss) from operations			85,890				115,728				(20,306	)			181,312
Interest expense			(96	)			(229	)			(1,387	)			(1,712	)
Intercompany interest income/(expense)			9,339				4,381				(13,720	)			-
Other income/(expense)—net			156				72				(9,020	)			(8,792	)
Income/(loss) before income taxes			95,289				119,952				(44,433	)			170,808
Income taxes			(23,595	)			(28,943	)			12,355				(40,183	)
Net income/(loss)		$	71,694			$	91,009			$	(32,078	)		$	130,625
2021 (b)
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
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, 2022 AND 2021
(in thousands)(unaudited)
														Chemed
		VITAS				Roto-Rooter				Corporate				Consolidated
2022
Net income/(loss)		$	35,212			$	47,072			$	(15,828	)		$	66,456
Add/(deduct):
Interest expense			44				115				743				902
Income taxes			11,365				14,915				(6,630	)			19,650
Depreciation			6,062				6,634				18				12,714
Amortization			26				2,494				-				2,520
EBITDA			52,709				71,230				(21,697	)			102,242
Add/(deduct):
Intercompany interest expense/(income)			(4,683	)			(2,205	)			6,888				-
Interest income			(118	)			(37	)			1				(154	)
Stock option expense			-				-				7,216				7,216
Long-term incentive compensation			-				-				1,517				1,517
Medicare cap sequestration adjustment			138				-				-				138
Direct costs related to COVID-19			(80	)			-				-				(80	)
Other			-				28				-				28
Adjusted EBITDA		$	47,966			$	69,016			$	(6,075	)		$	110,907
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
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, 2022 AND 2021
(in thousands)(unaudited)
														Chemed
		VITAS				Roto-Rooter				Corporate				Consolidated
2022
Net income/(loss)		$	71,694			$	91,009			$	(32,078	)		$	130,625
Add/(deduct):
Interest expense			96				229				1,387				1,712
Income taxes			23,595				28,943				(12,355	)			40,183
Depreciation			11,613				13,203				36				24,852
Amortization			49				4,989				-				5,038
EBITDA			107,047				138,373				(43,010	)			202,410
Add/(deduct):
Intercompany interest expense/(income)			(9,339	)			(4,381	)			13,720				-
Interest income			(155	)			(71	)			-				(226	)
Stock option expense			-				-				14,667				14,667
Long-term incentive compensation			-				-				2,827				2,827
Direct costs related to COVID-19			310				960				-				1,270
Medicare cap sequestration adjustment			138				-				-				138
Other			-				28				-				28
Adjusted EBITDA		$	98,001			$	134,909			$	(11,796	)		$	221,114
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
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,
		2022				2021				2022				2021
Net income as reported		$	66,456			$	56,522			$	130,625			$	121,922
Add/(deduct) pre-tax cost of:
Stock option expense			7,216				6,239				14,667				12,345
Amortization of reacquired franchise agreements			2,352				2,352				4,704				4,704
Long-term incentive compensation			1,517				1,673				2,827				3,566
Direct costs related to COVID-19			(80	)			11,666				1,270				14,010
Medicare cap sequestration adjustment			138				-				138				-
Other			28				-				28				-
Facility relocation expenses			-				1,855				-				1,855
Litigation settlements			-				(98	)			-				(98	)
Add/(deduct) tax impacts:
Tax impact of the above pre-tax adjustments (1)			(2,038	)			(5,241	)			(4,449	)			(7,728	)
Excess tax benefits on stock compensation			(2,499	)			(868	)			(3,940	)			(4,106	)
Adjusted net income		$	73,090			$	74,100			$	145,870			$	146,470
Diluted Earnings Per Share As Reported
Net income		$	4.40			$	3.51			$	8.62			$	7.52
Average number of shares outstanding			15,111				16,101				15,152				16,205
Adjusted Diluted Earnings Per Share
Adjusted net income		$	4.84			$	4.60			$	9.63			$	9.04
Average number of shares outstanding			15,111				16,101				15,152				16,205
(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	2022				2021				2022				2021
Net revenue ($000) (c)
Homecare	$	257,631			$	264,926			$	515,267			$	528,680
Inpatient		24,619				27,371				51,189				56,527
Continuous care		19,538				24,282				39,116				51,631
Other		3,213				3,078				6,220				6,016
Subtotal	$	305,001			$	319,657			$	611,792			$	642,854
Room and board, net		(2,166	)			(2,657	)			(4,283	)			(5,322	)
Contractual allowances		(3,054	)			(3,065	)			(6,039	)			(6,309	)
Medicare cap allowance		(2,000	)			(2,000	)			(4,500	)			(3,500	)
Net Revenue	$	297,781			$	311,935			$	596,970			$	627,723
Net revenue as a percent of total before Medicare cap allowance
Homecare		84.5	%			82.9	%			84.2	%			82.2	%
Inpatient		8.1				8.6				8.4				8.8
Continuous care		6.4				7.6				6.4				8.0
Other		1.0				0.9				1.0				1.0
Subtotal		100.0				100.0				100.0				100.0
Room and board, net		(0.7	)			(0.8	)			(0.7	)			(0.8	)
Contractual allowances		(1.0	)			(1.0	)			(1.0	)			(1.0	)
Medicare cap allowance		(0.7	)			(0.6	)			(0.7	)			(0.6	)
Net Revenue		97.6	%			97.6	%			97.6	%			97.6	%
Days of care
Homecare		1,266,604				1,335,482				2,525,276				2,665,374
Nursing home		259,046				244,423				507,514				477,206
Respite		6,095				5,338				11,463				10,178
Subtotal routine homecare and respite		1,531,745				1,585,243				3,044,253				3,152,758
Inpatient		23,155				26,493				47,742				54,167
Continuous care		20,802				25,786				41,884				55,086
Total		1,575,702				1,637,522				3,133,879				3,262,011
Number of days in relevant time period		91				91				181				181
Average daily census ("ADC") (days)
Homecare		13,918				14,676				13,952				14,726
Nursing home		2,847				2,686				2,804				2,636
Respite		67				59				63				57
Subtotal routine homecare and respite		16,832				17,421				16,819				17,419
Inpatient		254				291				264				299
Continuous care		229				283				231				304
Total		17,315				17,995				17,314				18,022
Total Admissions		14,735				16,840				31,265				34,975
Total Discharges		14,603				16,525				31,465				35,054
Average length of stay (days)		103.7				94.5				104.3				94.4
Median length of stay (days)		17.0				14.0				16.0				13.0
ADC by major diagnosis
Cerebro		37.6	%			36.8	%			37.5	%			36.5	%
Neurological		22.7				22.4				22.8				22.3
Cancer		11.2				12.1				11.2				12.2
Cardio		15.8				15.6				15.8				15.6
Respiratory		7.2				7.3				7.3				7.5
Other		5.5				5.8				5.4				5.9
Total		100.0	%			100.0	%			100.0	%			100.0	%
Admissions by major diagnosis
Cerebro		23.8	%			21.4	%			23.4	%			21.5	%
Neurological		13.0				12.3				12.9				12.3
Cancer		27.3				28.9				26.0				26.9
Cardio		15.4				14.8				14.7				14.5
Respiratory		9.9				10.5				10.6				10.7
Other		10.6				12.1				12.4				14.1
Total		100.0	%			100.0	%			100.0	%			100.0	%
Estimated uncollectible accounts as a percent of revenues		1.0	%			1.0	%			1.0	%			1.0	%
Accounts receivable --
Days of revenue outstanding-excluding unapplied Medicare payments		33.7				36.3				n.a.				n.a.
Days of revenue outstanding-including unapplied Medicare payments		28.2				21.0				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, 2022 AND 2021
(unaudited)
(a)	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 June 30, 2022
			VITAS				Roto-Rooter				Corporate				Consolidated
	Stock option expense		$	-			$	-			$	(7,216	)		$	(7,216	)
	Amortization of reacquired franchise agreements			-				(2,352	)			-				(2,352	)
	Long-term incentive compensation			-				-				(1,517	)			(1,517	)
	Medicare cap sequestration adjustment			(138	)			-				-				(138	)
	Direct costs related to COVID-19			80				-				-				80
	Other			-				(28	)			-				(28	)
	Pretax impact on earnings			(58	)			(2,380	)			(8,733	)			(11,171	)
	Excess tax benefits on stock compensation			-				-				2,499				2,499
	Income tax benefit on the above			15				631				1,392				2,038
	After-tax impact on earnings		$	(43	)		$	(1,749	)		$	(4,842	)		$	(6,634	)
			Six Months Ended June 30, 2022
			VITAS				Roto-Rooter				Corporate				Consolidated
	Stock option expense		$	-			$	-			$	(14,667	)		$	(14,667	)
	Amortization of reacquired franchise agreements			-				(4,704	)			-				(4,704	)
	Long-term incentive compensation			-				-				(2,827	)			(2,827	)
	Direct costs related to COVID-19			(310	)			(960	)			-				(1,270	)
	Medicare cap sequestration adjustment			(138	)			-				-				(138	)
	Other			-				(28	)			-				(28	)
	Pretax impact on earnings			(448	)			(5,692	)			(17,494	)			(23,634	)
	Excess tax benefits on stock compensation			-				-				3,940				3,940
	Income tax benefit on the above			114				1,508				2,827				4,449
	After-tax impact on earnings		$	(334	)		$	(4,184	)		$	(10,727	)		$	(15,245	)
(b)	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
	Pretax impact on earnings			(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	)
(c)	VITAS has 8 large (greater than 450 ADC), 21 medium (greater than 200 but less than 450 ADC) and 23 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 greater than 10%, one provider number has 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/20220727005011/en/

Chemed Corporation

David P. Williams

(513) 762-6901

Source: Chemed Corporation

FAQ

What were Chemed's Q2 2022 revenue figures?

Chemed reported Q2 2022 revenue of $531 million, a decline of 0.2% from the previous year.

How did Chemed's GAAP diluted EPS change in Q2 2022?

Chemed's GAAP diluted EPS increased by 25.4%, reaching $4.40 in Q2 2022.

What challenges did the VITAS segment face in Q2 2022?

The VITAS segment saw a net patient revenue decline of 4.5%, primarily due to a 12.5% drop in admissions.

How did Roto-Rooter perform in Q2 2022?

Roto-Rooter reported a 6.0% increase in revenue, totaling $233 million, along with an 8.8% rise in net income.

What is Chemed's current cash and debt situation?

As of June 30, 2022, Chemed had $9.6 million in cash and $117 million in total debt.