Chemed Reports Third-Quarter 2021 Results - Full-Year 2021 Earnings Guidance Increased

Rhea-AI Summary

Chemed Corporation (NYSE: CHE) reported its Q3 2021 results with mixed performance. Overall revenue rose 2.0% to $539 million. The diluted EPS increased by 9.9% to $4.55, while adjusted diluted EPS rose 4.1% to $5.06. The VITAS segment faced challenges, with net patient revenue declining 5.8% to $317 million, while Roto-Rooter experienced a robust 15.7% revenue growth to $221 million. Adjusted EBITDA for VITAS fell 11.5% to $60.4 million, but Roto-Rooter’s adjusted EBITDA surged 27.1% to $65.8 million.

Positive

• Consolidated revenue up 2.0% to $539 million.
• Diluted EPS rose 9.9% to $4.55.
• Roto-Rooter revenue increased 15.7% to $221 million.
• Roto-Rooter adjusted EBITDA rose 27.1% to $65.8 million.
• Revised adjusted EPS guidance for 2021 increased to $19.00-$19.20.

Negative

• VITAS net patient revenue declined 5.8% to $317 million.
• Average Daily Census for VITAS decreased by 5.3%.
• Net income for VITAS segment fell 18.7% to $44.8 million.
• Adjusted EBITDA for VITAS down 11.5%, margin dropped to 19.0%.

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 third quarter ended September 30, 2021, versus the comparable prior-year period, as follows:

Consolidated operating results:

• Revenue increased 2.0% to $539 million
• GAAP Diluted Earnings-per-Share (EPS) of $4.55, an increase of 9.9%
• Adjusted Diluted EPS of $5.06, an increase of 4.1%

VITAS segment operating results:

• Net Patient Revenue of $317 million, a decline of 5.8%
• Average Daily Census (ADC) of 18,034, a decline of 5.3%
• Admissions of 17,598, a decline of 1.9%
• Net Income, excluding certain discrete items, of $44.8 million, a decline of 18.7%
• Adjusted EBITDA, excluding Medicare Cap, of $60.4 million, a decline of 11.5%
• Adjusted EBITDA margin, excluding Medicare Cap, of 19.0%, a decrease of 146-basis points

Roto-Rooter segment operating results:

• Revenue of $221 million, an increase of 15.7%
• Net Income, excluding certain discrete items, of $46.6 million, an increase of 28.9%
• Adjusted EBITDA of $65.8 million, an increase of 27.1%
• Adjusted EBITDA margin of 29.7%, an increase of 266-basis points

VITAS

VITAS net revenue was $317 million in the third quarter of 2021, which is a decline of 5.8%, when compared to the prior-year period. This revenue decline is comprised primarily of a 5.3% decline in days-of-care partially offset by a geographically weighted average Medicare reimbursement rate increase (including the suspension of sequestration) of approximately 1.2%. Acuity mix shift had a net impact of reducing revenue approximately $3.0 million, or 0.9%, 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 negatively impacted revenue growth an additional 80-basis points.

In the third quarter of 2021, VITAS accrued $0.1 million in Medicare Cap billing limitations. This compares to a $4.1 million reversal of Medicare Cap billing limitation in the third 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 have a fiscal 2021 Medicare Cap billing limitation liability.

Average revenue per patient per day in the third quarter of 2021 was $194.53, which, including acuity mix shift, is 22-basis points above the prior-year period. Reimbursement for routine home care and high acuity care averaged $168.88 and $983.43, respectively. During the quarter, high acuity days-of-care were 3.1% of total days of care, 28-basis points less than the prior-year quarter.

The third 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 25.8%. This is a 158-basis point margin decline when compared to the third quarter of 2020.

Selling, general and administrative expense was $21.4 million in the third quarter of 2021 and compares to $21.8 million incurred in the prior-year quarter. Adjusted EBITDA, excluding Medicare Cap, totaled $60.4 million in the quarter, a decrease of 11.5%. Adjusted EBITDA margin in the quarter, excluding Medicare Cap, was 19.0%, which is 146-basis points less than the prior-year period.

Roto-Rooter

Roto-Rooter generated quarterly revenue of $221 million in the third quarter of 2021, an increase of $30.1 million, or 15.7%, when compared to the prior-year quarter.

Roto-Rooter branch commercial revenue in the quarter totaled $52.3 million, an increase of $4.7 million, or 10.0%, over the prior year. This aggregate commercial revenue growth consisted of drain cleaning revenue increasing 17.6%, plumbing increasing 9.3% and excavation declining 1.3%. Water restoration increased 9.4%.

Roto-Rooter branch residential revenue in the quarter totaled $151 million, an increase of $22.2 million, or 17.2%, over the prior-year period. This aggregate residential revenue growth consisted of drain cleaning increasing 11.7%, plumbing expanding 17.4%, excavation increasing 14.1%, and water restoration increasing 28.0%.

Roto-Rooter’s gross margin in the quarter, excluding the impact from COVID, was 53.2%, a 95-basis point increase when compared to the third quarter of 2020. Adjusted EBITDA in the third quarter of 2021 totaled $65.8 million, an increase of 27.1%. The Adjusted EBITDA margin in the quarter was 29.7%, which is a 266-basis point improvement when compared to the prior year.

Chemed Consolidated

As of September 30, 2021, Chemed had total cash and cash equivalents of $29 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 September 30, 2021, the Company had approximately $404 million of undrawn borrowing capacity under this credit agreement.

During the quarter, the Company repurchased 350,000 shares of Chemed stock for $164 million which equates to a cost per share of $467.80. As of September 30, 2021, there was approximately $148 million of remaining share repurchase authorization under this plan.

Chemed restarted its share repurchase program in 2007. Since that time, Chemed has repurchased approximately 15.2 million shares, aggregating approximately $1.7 billion at an average share cost of $113.04. Including dividends over this period, Chemed has returned approximately $1.9 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 15.6% of VITAS’ third-quarter 2021 patient census. This compares to nursing home patients averaging 18.2% of total census just prior to the pandemic.

Based upon the above discussion, VITAS 2021 revenue, prior to Medicare Cap, is estimated to decline approximately 5% when compared to the prior year. Average Daily Census in 2021 is estimated to decline approximately 5.5%. Full-year Adjusted EBITDA margin, prior to Medicare Cap, is estimated to be 18.8%. We are currently estimating $6.6 million for Medicare Cap billing limitations in calendar year 2021.

Roto-Rooter is forecasted to achieve full-year 2021 revenue growth of 17.3%. Roto-Rooter’s Adjusted EBITDA margin for 2021 is estimated to be between 28.5% to 29.0%.

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 $19.00 to $19.20. 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 25.1%. 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 Friday, October 29, 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 6082999. 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 6082999. 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 September 30,								Nine Months Ended September 30,
		2021				2020				2021				2020
Service revenues and sales		$	538,667			$	528,297				1,598,283			$	1,546,294
Cost of services provided and goods sold			342,164				339,240				1,033,130				1,043,148
Selling, general and administrative expenses (aa)			89,217				88,317				274,654				243,413
Depreciation			11,844				11,714				37,171				34,761
Amortization			2,510				2,511				7,530				7,476
Other operating expense/(income)			63				12,207				789				(28,935	)
Total costs and expenses			445,798				453,989				1,353,274				1,299,863
Income from operations			92,869				74,308				245,009				246,431
Interest expense			(583	)			(379	)			(1,343	)			(2,005	)
Other income--net (bb)			3,134				7,675				10,521				5,723
Income before income taxes			95,420				81,604				254,187				250,149
Income taxes			(23,417	)			(13,882	)			(60,262	)			(44,435	)
Net income		$	72,003			$	67,722			$	193,925			$	205,714
Earnings Per Share
Net income		$	4.62			$	4.25			$	12.27			$	12.90
Average number of shares outstanding			15,587				15,940				15,808				15,948
Diluted Earnings Per Share
Net income		$	4.55			$	4.14			$	12.06			$	12.53
Average number of shares outstanding			15,842				16,373				16,083				16,419
(aa) Selling, general and administrative ("SG&A") expenses comprise (in thousands):
		Three Months Ended September 30,								Nine Months Ended September 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		$	84,197			$	79,287			$	259,376			$	232,797
Market value adjustments related to deferred
compensation trusts			3,078				7,256				9,770				5,093
Long-term incentive compensation			1,942				1,774				5,508				5,523
Total SG&A expenses		$	89,217			$	88,317			$	274,654			$	243,413
(bb) Other income--net comprises (in thousands):
		Three Months Ended September 30,								Nine Months Ended September 30,
		2021				2020				2021				2020
Market value adjustments related to deferred
compensation trusts		$	3,078			$	7,256			$	9,770			$	5,093
Interest income			57				423				288				647
Other			(1	)			(4	)			463				(17	)
Total other income--net		$	3,134			$	7,675			$	10,521			$	5,723

CHEMED CORPORATION AND SUBSIDIARY COMPANIES
CONSOLIDATED BALANCE SHEETS
(in thousands, except per share data)(unaudited)
		September 30,
		2021				2020
Assets
Current assets
Cash and cash equivalents		$	28,743			$	112,765
Accounts receivable less allowances			118,193				110,839
Inventories			8,394				7,546
Prepaid income taxes			12,940				14,224
Prepaid expenses			32,294				25,222
Total current assets			200,564				270,596
Investments of deferred compensation plans held in trust			102,045				86,865
Properties and equipment, at cost less accumulated depreciation			190,781				181,386
Lease right of use asset			127,077				120,382
Identifiable intangible assets less accumulated amortization			110,606				120,401
Goodwill			578,610				578,519
Other assets			8,450				8,805
Total Assets		$	1,318,133			$	1,366,954
Liabilities
Current liabilities
Accounts payable		$	60,042			$	39,268
Income taxes			180				-
Accrued insurance			52,645				50,727
Accrued compensation			97,256				101,868
Accrued legal			1,497				9,561
Short-term lease liability			35,148				33,311
Unutilized CARES Act Grant			-				48,041
Other current liabilities			39,318				46,387
Total current liabilities			286,086				329,163
Deferred income taxes			20,100				19,222
Deferred compensation liabilities			100,409				86,875
Long-term lease liability			104,198				99,241
Other liabilities			27,621				31,045
Total Liabilities			538,414				565,546
Stockholders' Equity
Capital stock			36,402				36,137
Paid-in capital			1,007,506				925,271
Retained earnings			1,901,245				1,615,465
Treasury stock, at cost			(2,167,640	)			(1,777,809	)
Deferred compensation payable in Company stock			2,206				2,344
Total Stockholders' Equity			779,719				801,408
Total Liabilities and Stockholders' Equity		$	1,318,133			$	1,366,954

CHEMED CORPORATION AND SUBSIDIARY COMPANIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)(unaudited)
		For the Nine Months Ended September 30,
		2021				2020
Cash Flows from Operating Activities
Net income		$	193,925			$	205,714
Adjustments to reconcile net income to net cash provided
by operating activities:
Depreciation and amortization			44,701				42,237
Stock option expense			16,342				13,296
Litigation settlements			(9,440	)			2,684
Noncash long-term incentive compensation			5,344				5,301
Noncash directors' compensation			1,173				1,171
(Benefit)/provision for deferred income taxes			(561	)			831
Amortization of debt issuance costs			229				229
Unutilized CARES Act grant			-				48,041
Deferred payroll taxes			-				22,941
Changes in operating assets and liabilities, excluding
amounts acquired in business combinations:
Decrease in accounts receivable			9,247				27,993
Increase in inventories			(1,299	)			(84	)
Increase in prepaid expenses			(6,117	)			(2,072	)
Increase in accounts payable and
other current liabilities			6,330				34,526
Change in current income taxes			(15,749	)			(4,366	)
Net change in lease assets and liabilities			15				1,583
Increase in other assets			(13,561	)			(9,646	)
Increase in other liabilities			13,474				10,735
Other sources			974				1,298
Net cash provided by operating activities			245,027				402,412
Cash Flows from Investing Activities
Capital expenditures			(44,472	)			(42,670	)
Business combinations			-				(3,600	)
Other sources			760				672
Net cash used by investing activities			(43,712	)			(45,598	)
Cash Flows from Financing Activities
Purchases of treasury stock			(330,380	)			(147,123	)
Proceeds from exercise of stock options			17,918				31,498
Dividends paid			(16,457	)			(15,639	)
Capital stock surrendered to pay taxes on stock-based compensation			(9,445	)			(18,707	)
Change in cash overdrafts payable			3,054				(9,849	)
Payments on revolving line of credit			(1,500	)			(264,900	)
Proceeds from revolving line of credit			1,500				174,900
Other sources/(uses)			63				(387	)
Net cash used by financing activities			(335,247	)			(250,207	)
(Decrease)/Increase in Cash and Cash Equivalents			(133,932	)			106,607
Cash and cash equivalents at beginning of year			162,675				6,158
Cash and cash equivalents at end of year		$	28,743			$	112,765

CHEMED CORPORATION AND SUBSIDIARY COMPANIES
CONSOLIDATING STATEMENTS OF INCOME
FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2021 AND 2020
(in thousands)(unaudited)
														Chemed
		VITAS				Roto-Rooter				Corporate				Consolidated
2021 (a)
Service revenues and sales		$	317,411			$	221,256			$	-			$	538,667
Cost of services provided and goods sold			238,212				103,952				-				342,164
Selling, general and administrative expenses			21,372				51,914				15,931				89,217
Depreciation			5,286				6,539				19				11,844
Amortization			18				2,492				-				2,510
Other operating expense/(income)			65				(3	)			1				63
Total costs and expenses			264,953				164,894				15,951				445,798
Income/(loss) from operations			52,458				56,362				(15,951	)			92,869
Interest expense			(43	)			(285	)			(255	)			(583	)
Intercompany interest income/(expense)			4,513				1,847				(6,360	)			-
Other income—net			22				34				3,078				3,134
Income/(loss) before income taxes			56,950				57,958				(19,488	)			95,420
Income taxes			(14,000	)			(13,404	)			3,987				(23,417	)
Net income/(loss)		$	42,950			$	44,554			$	(15,501	)		$	72,003
2020 (b)
Service revenues and sales		$	337,097			$	191,200			$	-			$	528,297
Cost of services provided and goods sold			246,636				92,604				-				339,240
Selling, general and administrative expenses			21,799				48,074				18,444				88,317
Depreciation			5,592				6,089				33				11,714
Amortization			18				2,493				-				2,511
Other operating expense			9,052				3,155				-				12,207
Total costs and expenses			283,097				152,415				18,477				453,989
Income/(loss) from operations			54,000				38,785				(18,477	)			74,308
Interest expense			(47	)			(80	)			(252	)			(379	)
Intercompany interest income/(expense)			5,337				1,651				(6,988	)			-
Other income—net			381				38				7,256				7,675
Income/(loss) before income taxes			59,671				40,394				(18,461	)			81,604
Income taxes			(13,934	)			(9,218	)			9,270				(13,882	)
Net income/(loss)		$	45,737			$	31,176			$	(9,191	)		$	67,722
The "Footnotes to Financial Statements" are integral parts of this financial information.

CHEMED CORPORATION AND SUBSIDIARY COMPANIES
CONSOLIDATING STATEMENTS OF INCOME
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2021 AND 2020
(in thousands)(unaudited)
														Chemed
		VITAS				Roto-Rooter				Corporate				Consolidated
2021 (a)
Service revenues and sales		$	945,135			$	653,148			$	-			$	1,598,283
Cost of services provided and goods sold			724,398				308,732				-				1,033,130
Selling, general and administrative expenses			66,094				158,791				49,769				274,654
Depreciation			17,749				19,359				63				37,171
Amortization			53				7,477				-				7,530
Other operating expense			655				133				1				789
Total costs and expenses			808,949				494,492				49,833				1,353,274
Income/(loss) from operations			136,186				158,656				(49,833	)			245,009
Interest expense			(129	)			(464	)			(750	)			(1,343	)
Intercompany interest income/(expense)			13,524				5,116				(18,640	)			-
Other income—net			654				97				9,770				10,521
Income/(loss) before income taxes			150,235				163,405				(59,453	)			254,187
Income taxes			(36,805	)			(38,901	)			15,444				(60,262	)
Net income/(loss)		$	113,430			$	124,504			$	(44,009	)		$	193,925
2020 (b)
Service revenues and sales		$	1,002,477			$	543,817			$	-			$	1,546,294
Cost of services provided and goods sold			772,880				270,268				-				1,043,148
Selling, general and administrative expenses			65,141				138,587				39,685				243,413
Depreciation			16,622				18,035				104				34,761
Amortization			53				7,423				-				7,476
Other operating (income)/expense			(31,661	)			2,725				1				(28,935	)
Total costs and expenses			823,035				437,038				39,790				1,299,863
Income/(loss) from operations			179,442				106,779				(39,790	)			246,431
Interest expense			(137	)			(272	)			(1,596	)			(2,005	)
Intercompany interest income/(expense)			14,463				4,422				(18,885	)			-
Other income—net			549				68				5,106				5,723
Income/(loss) before income taxes			194,317				110,997				(55,165	)			250,149
Income taxes			(47,055	)			(26,031	)			28,651				(44,435	)
Net income/(loss)		$	147,262			$	84,966			$	(26,514	)		$	205,714
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 SEPTEMBER 30, 2021 AND 2020
(in thousands)(unaudited)
														Chemed
		VITAS				Roto-Rooter				Corporate				Consolidated
2021
Net income/(loss)		$	42,950			$	44,554			$	(15,501	)		$	72,003
Add/(deduct):
Interest expense			43				285				255				583
Income taxes			14,000				13,404				(3,987	)			23,417
Depreciation			5,286				6,539				19				11,844
Amortization			18				2,492				-				2,510
EBITDA			62,297				67,274				(19,214	)			110,357
Add/(deduct):
Intercompany interest expense/(income)			(4,513	)			(1,847	)			6,360				-
Interest income			(24	)			(34	)			-				(58	)
Stock option expense			-				-				3,998				3,998
Direct costs related to COVID-19			2,501				415				-				2,916
Long-term incentive compensation			-				-				1,942				1,942
Other			-				-				218				218
Adjusted EBITDA		$	60,261			$	65,808			$	(6,696	)		$	119,373
2020
Net income/(loss)		$	45,737			$	31,176			$	(9,191	)		$	67,722
Add/(deduct):
Interest expense			47				80				252				379
Income taxes			13,934				9,218				(9,270	)			13,882
Depreciation			5,592				6,089				33				11,714
Amortization			18				2,493				-				2,511
EBITDA			65,328				49,056				(18,176	)			96,208
Add/(deduct):
Intercompany interest expense/(income)			(5,337	)			(1,651	)			6,988				-
Interest income			(385	)			(38	)			-				(423	)
CARES Act grant			8,805				-				-				8,805
Direct costs related to COVID-19			6,945				1,321				-				8,266
Stock option expense			-				-				3,182				3,182
Litigation settlement			-				3,095				-				3,095
COVID-19 related Medicare cap			(2,250	)			-				-				(2,250	)
Long-term incentive compensation			-				-				1,774				1,774
Medicare cap sequestration adjustment			(852	)			-				-				(852	)
Adjusted EBITDA		$	72,254			$	51,783			$	(6,232	)		$	117,805
The "Footnotes to Financial Statements" are integral parts of this financial information.
CHEMED CORPORATION AND SUBSIDIARY COMPANIES
CONSOLIDATING SUMMARIES OF EBITDA
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2021 AND 2020
(in thousands)(unaudited)
														Chemed
		VITAS				Roto-Rooter				Corporate				Consolidated
2021
Net income/(loss)		$	113,430			$	124,504			$	(44,009	)		$	193,925
Add/(deduct):
Interest expense			129				464				750				1,343
Income taxes			36,805				38,901				(15,444	)			60,262
Depreciation			17,749				19,359				63				37,171
Amortization			53				7,477				-				7,530
EBITDA			168,166				190,705				(58,640	)			300,231
Add/(deduct):
Intercompany interest expense/(income)			(13,524	)			(5,116	)			18,640				-
Interest income			(191	)			(97	)			-				(288	)
Direct costs related to COVID-19			15,338				1,551				38				16,927
Stock option expense			-				-				16,342				16,342
Long-term incentive compensation			-				-				5,508				5,508
Litigation settlements			-				(98	)			-				(98	)
Other			-				-				218				218
Adjusted EBITDA		$	169,789			$	186,945			$	(17,894	)		$	338,840
2020
Net income/(loss)		$	147,262			$	84,966			$	(26,514	)		$	205,714
Add/(deduct):
Interest expense			137				272				1,596				2,005
Income taxes			47,055				26,031				(28,651	)			44,435
Depreciation			16,622				18,035				104				34,761
Amortization			53				7,423				-				7,476
EBITDA			211,129				136,727				(53,465	)			294,391
Add/(deduct):
Intercompany interest expense/(income)			(14,463	)			(4,422	)			18,885				-
Interest income			(566	)			(68	)			(13	)			(647	)
Direct costs related to COVID-19			32,184				3,299				-				35,483
CARES Act grant			(32,184	)			-				-				(32,184	)
Stock option expense			-				-				13,296				13,296
Long-term incentive compensation			-				-				5,523				5,523
Litigation settlements			-				3,095				-				3,095
Medicare cap sequestration adjustment			619				-				-				619
Adjusted EBITDA		$	196,719			$	138,631			$	(15,774	)		$	319,576
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 September 30,								Nine Months Ended September 30,
		2021				2020				2021				2020
Net income as reported		$	72,003			$	67,722			$	193,925			$	205,714
Add/(deduct) pre-tax cost of:
Direct costs related to COVID-19			2,916				8,266				16,927				35,483
Stock option expense			3,998				3,182				16,342				13,296
Amortization of reacquired franchise agreements			2,352				2,352				7,056				7,056
Long-term incentive compensation			1,942				1,774				5,508				5,523
Facility relocation expenses			-				-				1,855				-
Litigation settlements			-				3,095				(98	)			3,095
Other			218				-				218				-
CARES Act grant			-				8,805				-				(32,184	)
COVID-19 Medicare cap			-				(2,250	)			-				-
Medicare cap sequestration adjustments			-				(852	)			-				619
Add/(deduct) tax impacts:
Tax impact of the above pre-tax adjustments (1)			(2,146	)			(5,351	)			(9,874	)			(6,165	)
Excess tax benefits on stock compensation			(1,199	)			(7,187	)			(5,305	)			(19,943	)
Adjusted net income		$	80,084			$	79,556			$	226,554			$	212,494
Diluted Earnings Per Share As Reported
Net income		$	4.55			$	4.14			$	12.06			$	12.53
Average number of shares outstanding			15,842				16,373				16,083				16,419
Adjusted Diluted Earnings Per Share
Adjusted net income		$	5.06			$	4.86			$	14.09			$	12.94
Average number of shares outstanding			15,842				16,373				16,083				16,419
(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 September 30,								Nine Months Ended September 30,
OPERATING STATISTICS		2021				2020				2021				2020
Net revenue ($000) (c)
Homecare		$	268,137			$	278,856			$	796,817			$	826,954
Inpatient			29,368				27,633				85,895				85,983
Continuous care			22,027				30,699				73,658				105,836
Other			3,225				2,910				9,241				8,175
Subtotal		$	322,757			$	340,098			$	965,611			$	1,026,948
Room and board, net			(2,130	)			(3,289	)			(7,451	)			(9,317	)
Contractual allowances			(3,119	)			(3,784	)			(9,428	)			(10,976	)
Medicare cap allowance			(97	)			4,072				(3,597	)			(4,178	)
Net Revenue		$	317,411			$	337,097			$	945,135			$	1,002,477
Net revenue as a percent of total before Medicare cap allowance
Homecare			83.1	%			82.0	%			82.5	%			80.5	%
Inpatient			9.1				8.1				8.9				8.4
Continuous care			6.8				9.0				7.6				10.3
Other			1.0				0.9				1.0				0.8
Subtotal			100.0				100.0				100.0				100.0
Room and board, net			(0.7	)			(1.0	)			(0.8	)			(0.9	)
Contractual allowances			(1.0	)			(1.1	)			(1.0	)			(1.1	)
Medicare cap allowance			-				1.2				(0.3	)			(0.4	)
Net Revenue			98.3	%			99.1	%			97.9	%			97.6	%
Days of care
Homecare			1,342,841				1,426,191				4,008,215				4,192,681
Nursing home			258,700				261,396				735,906				844,232
Respite			5,331				4,566				15,509				15,416
Subtotal routine homecare and respite			1,606,872				1,692,153				4,759,630				5,052,329
Inpatient			27,962				27,017				82,129				84,907
Continuous care			24,299				33,013				79,385				110,200
Total			1,659,133				1,752,183				4,921,144				5,247,436
Number of days in relevant time period			92				92				273				274
Average daily census ("ADC") (days)
Homecare			14,596				15,502				14,682				15,302
Nursing home			2,812				2,841				2,696				3,081
Respite			58				50				57				56
Subtotal routine homecare and respite			17,466				18,393				17,435				18,439
Inpatient			304				294				301				310
Continuous care			264				358				291				402
Total			18,034				19,045				18,027				19,151
Total Admissions			17,598				17,943				52,573				53,368
Total Discharges			17,686				18,205				52,747				51,281
Average length of stay (days)			96.0				97.1				95.0				92.9
Median length of stay (days)			13.0				14.0				13.0				14.0
ADC by major diagnosis
Cerebro			36.4	%			35.1	%			36.7	%			35.7	%
Neurological			22.7				22.1				22.5				21.7
Cancer			12.0				12.5				12.1				12.6
Cardio			15.5				16.1				15.5				15.9
Respiratory			7.5				8.0				7.5				8.2
Other			5.9				6.2				5.7				5.9
Total			100.0	%			100.0	%			100.0	%			100.0	%
Admissions by major diagnosis
Cerebro			20.3	%			21.4	%			21.1	%			21.2	%
Neurological			12.1				13.2				12.2				13.0
Cancer			27.0				27.4				26.9				27.8
Cardio			14.1				13.6				14.4				14.5
Respiratory			11.3				9.9				10.9				10.6
Other			15.2				14.5				14.5				12.9
Total			100.0	%			100.0	%			100.0	%			100.0	%
Estimated uncollectible accounts as a percent of revenues			1.0	%			1.1	%			1.0	%			1.1	%
Accounts receivable --
Days of revenue outstanding-excluding unapplied Medicare payments			33.7				33.4			n.a.				n.a.
Days of revenue outstanding-including unapplied Medicare payments			23.4				22.1			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 NINE MONTHS ENDED SEPTEMBER 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 September 30, 2021
			VITAS				Roto-Rooter				Corporate				Consolidated
	Stock option expense		$	-			$	-			$	(3,998	)		$	(3,998	)
	Direct costs related to COVID-19			(2,501	)			(415	)			-				(2,916	)
	Amortization of reacquired franchise agreements			-				(2,352	)			-				(2,352	)
	Long-term incentive compensation			-				-				(1,942	)			(1,942	)
	Other			-				-				(218	)			(218	)
	Pretax impact on earnings			(2,501	)			(2,767	)			(6,158	)			(11,426	)
	Excess tax benefits on stock compensation			-				-				1,199				1,199
	Income tax benefit on the above			635				733				778				2,146
	After-tax impact on earnings		$	(1,866	)		$	(2,034	)		$	(4,181	)		$	(8,081	)
			Nine Months Ended September 30, 2021
			VITAS				Roto-Rooter				Corporate				Consolidated
	Direct costs related to COVID-19		$	(15,338	)		$	(1,551	)		$	(38	)		$	(16,927	)
	Stock option expense			-				-				(16,342	)			(16,342	)
	Amortization of reacquired franchise agreements			-				(7,056	)			-				(7,056	)
	Long-term incentive compensation			-				-				(5,508	)			(5,508	)
	Facility relocation expenses			(1,855	)			-				-				(1,855	)
	Litigation settlements			-				98				-				98
	Other			-				-				(218	)			(218	)
	Pretax impact on earnings			(17,193	)			(8,509	)			(22,106	)			(47,808	)
	Excess tax benefits on stock compensation			-				-				5,305				5,305
	Income tax benefit on the above			4,367				2,255				3,252				9,874
	After-tax impact on earnings		$	(12,826	)		$	(6,254	)		$	(13,549	)		$	(32,629	)
(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 September 30, 2020
			VITAS				Roto-Rooter				Corporate				Consolidated
	CARES Act grant		$	(8,805	)		$	-			$	-			$	(8,805	)
	Direct costs related to COVID-19			(6,945	)			(1,321	)			-				(8,266	)
	Stock option expense			-				-				(3,182	)			(3,182	)
	Litigation settlement			-				(3,095	)			-				(3,095	)
	Amortization of reacquired franchise agreements			-				(2,352	)			-				(2,352	)
	COVID-19 Medicare cap			2,250				-				-				2,250
	Long-term incentive compensation			-				-				(1,774	)			(1,774	)
	Medicare cap sequestration adjustment			852				-				-				852
	Pretax impact on earnings			(12,648	)			(6,768	)			(4,956	)			(24,372	)
	Excess tax benefits on stock compensation			-				-				7,187				7,187
	Income tax benefit on the above			3,253				1,794				304				5,351
	After-tax impact on earnings		$	(9,395	)		$	(4,974	)		$	2,535			$	(11,834	)
			Nine Months Ended September 30, 2020
			VITAS				Roto-Rooter				Corporate				Consolidated
	Direct costs related to COVID-19		$	(32,184	)		$	(3,299	)		$	-			$	(35,483	)
	CARES Act grant			32,184				-				-				32,184
	Stock option expense			-				-				(13,296	)			(13,296	)
	Amortization of reacquired franchise agreements			-				(7,056	)			-				(7,056	)
	Long-term incentive compensation			-				-				(5,523	)			(5,523	)
	Litigation settlement			-				(3,095	)			-				(3,095	)
	Medicare cap sequestration adjustment			(619	)			-				-				(619	)
	Pretax impact on earnings			(619	)			(13,450	)			(18,819	)			(32,888	)
	Excess tax benefits on stock compensation			-				-				19,943				19,943
	Income tax benefit on the above			157				3,564				2,444				6,165
	After-tax impact on earnings		$	(462	)		$	(9,886	)		$	3,568			$	(6,780	)
(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/20211028006059/en/

David P. Williams

(513) 762-6901

Source: Chemed Corporation

FAQ

What were Chemed's Q3 2021 financial results?

Chemed reported Q3 2021 revenue of $539 million, up 2.0%, with diluted EPS of $4.55, up 9.9%.

How did VITAS perform in Q3 2021?

VITAS saw a decline in net patient revenue by 5.8% to $317 million and a drop in average daily census by 5.3%.

What is the guidance for Chemed's adjusted EPS for 2021?

Chemed revised its 2021 adjusted EPS guidance to a range of $19.00 to $19.20.

How did Roto-Rooter's revenue change in Q3 2021?

Roto-Rooter experienced a 15.7% increase in revenue, totaling $221 million.