Chemed Reports Third-Quarter 2022 Results - Increases 2022 Earnings Guidance

Rhea-AI Summary

Chemed Corporation (NYSE: CHE) reported a 2.3% decline in revenue to $526 million in Q3 2022, with GAAP EPS at $3.78. Adjusted diluted EPS decreased by 6.3% to $4.74. The VITAS segment saw a 6.6% drop in net patient revenue to $297 million, with significant declines in admissions (16.6%) and average daily census (4.4%). Conversely, Roto-Rooter revenue rose 3.9% to $230 million, while adjusted EBITDA increased 5.7% to $69.5 million. Cash and equivalents stood at $7.8 million, with $101 million in debt. Share repurchases totaled 50,000 shares for $23.9 million.

Positive

• Roto-Rooter segment revenue grew 3.9% to $230 million.
• Roto-Rooter net income increased 5.9% to $49.3 million.
• Adjusted EBITDA for Roto-Rooter rose 5.7% to $69.5 million.
• Roto-Rooter adjusted EBITDA margin improved by 50-basis points to 30.2%.

Negative

• Consolidated revenue declined by 2.3% year-on-year.
• Adjusted diluted EPS decreased 6.3% to $4.74.
• VITAS net patient revenue fell 6.6% to $297 million.
• Admissions decreased significantly by 16.6%.
• Average daily census declined by 4.4%.
• VITAS adjusted EBITDA decreased by 24.9% to $45.4 million.

 

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, 2022, versus the comparable prior-year period, as follows:

Consolidated operating results:

• Revenue declined 2.3% to $526 million
• GAAP Diluted Earnings-per-Share (EPS) of $3.78
• Adjusted Diluted EPS of $4.74, a decline of 6.3%

VITAS segment operating results:

• Net Patient Revenue of $297 million, a decline of 6.6%
• Average Daily Census (ADC) of 17,242, a decline of 4.4%
• Admissions of 14,680, a decline of 16.6%
• Net Income, excluding certain discrete items, of $33.2 million, a decline of 25.9%
• Adjusted EBITDA, excluding Medicare Cap, of $45.4 million, a decline of 24.9%
• Adjusted EBITDA margin, excluding Medicare Cap, of 15.3%, a decrease of 375-basis points

Roto-Rooter segment operating results:

• Revenue of $230 million, an increase of 3.9%
• Net Income, excluding certain discrete items, of $49.3 million, an increase of 5.9%
• Adjusted EBITDA of $69.5 million, an increase of 5.7%
• Adjusted EBITDA margin of 30.2%, an increase of 50-basis points

VITAS

VITAS net revenue was $297 million in the third quarter of 2022, which is a decline of 6.6%, when compared to the prior-year period. This revenue decline is comprised primarily of a 4.4% reduction in days-of-care and a geographically weighted average Medicare reimbursement rate decrease of approximately 0.2%. Reimbursement rates in the quarter were negatively impacted by 200-basis points as a result of CMS reimplementing the 2% sequestration cut that was suspended at the start of the pandemic. Acuity mix shift had a net impact of reducing revenue approximately $5.3 million, or 1.7%, 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 by 30-basis points.

In the third quarter of 2022, VITAS accrued $0.6 million in Medicare Cap billing limitations. This compares to a $0.1 million Medicare Cap billing limitation in the third quarter of 2021.

Of VITAS’ 30 Medicare provider numbers, 25 provider numbers have a Medicare Cap cushion of 10% or greater, two provider numbers have a cushion between 5% and 10%, one provider number has a cushion between 0% and 5%, and two provider numbers have an estimated fiscal 2022 Medicare Cap billing limitation liability.

Average revenue per patient per day in the third quarter of 2022 was $190.78 which, including acuity mix shift, is 193-basis points below the prior-year period. Reimbursement for routine home care and high acuity care averaged $168.20 and $990.67, respectively. During the quarter, high acuity days-of-care were 2.7% of total days of care, 41-basis points below the prior-year quarter.

The third quarter 2022 gross margin, excluding Medicare Cap, expenses related to VITAS’ 12-month hiring and retention program, and increased costs directly related to operating during the pandemic, was 22.5%. This is a 323-basis point margin decline when compared to the third quarter of 2021. Approximately 200-basis points of this decline is from Medicare reimplementing sequestration effective July 1, 2022. An additional 70-basis points of this margin decline is attributed to increased staffing and patient capacity from VITAS’ hiring and retention program.

Selling, general and administrative expense was $21.6 million in the third quarter of 2022 and compares to $21.4 million incurred in the prior-year quarter. Adjusted EBITDA, excluding Medicare Cap, totaled $45.4 million in the quarter, a decrease of 24.9%. Adjusted EBITDA margin in the quarter, excluding Medicare Cap, was 15.3%, which is 375-basis points below the prior-year period. This Adjusted EBITDA margin was also negatively impacted by 200-basis points for the reimplementation of sequestration and approximately 70-basis points due to increased staffing and patient capacity from VITAS’ hiring and retention program.

Roto-Rooter

Roto-Rooter generated quarterly revenue of $230 million in the third quarter of 2022, an increase of 3.9%, when compared to the prior-year quarter.

Roto-Rooter branch commercial revenue in the quarter totaled $55.9 million, an increase of 6.9%, over the prior year. This aggregate commercial revenue growth consisted of drain cleaning revenue increasing 2.9%, plumbing increasing 11.6%, excavation increasing 9.8%, and water restoration increasing 6.7%.

Roto-Rooter branch residential revenue in the quarter totaled $155 million, an increase of 2.5%, over the prior-year period. This aggregate residential revenue growth consisted of drain cleaning decreasing 2.9%, plumbing expanding 5.9%, excavation expanding 0.9%, and water restoration increasing 7.6%.

Roto-Rooter’s gross margin in the quarter was 53.4%, a 37-basis point increase when compared to the third quarter of 2021. Adjusted EBITDA in the third quarter of 2022 totaled $69.5 million, an increase of 5.7%. The Adjusted EBITDA margin in the quarter was 30.2%, which is a 50-basis point improvement when compared to the prior year.

Chemed Consolidated

As of September 30, 2022, Chemed had total cash and cash equivalents of $7.8 million and $101 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 September 30, 2022, the Company had approximately $401 million of undrawn borrowing capacity under this credit agreement.

During the quarter, the Company repurchased 50,000 shares of Chemed stock for $23.9 million which equates to a cost per share of $477.68. As of September 30, 2022, there was approximately $101 million of remaining share repurchase authorization under its plan.

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. This guidance should be taken with the recognition that 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 decline, approximately $15 million or 118-basis points, 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 3.4%. Full year adjusted EBITDA margin, prior to Medicare Cap, is estimated to be 17.1% to 17.2%. We are currently estimating $8.1 million for Medicare Cap billing limitations in calendar year 2022.

Roto-Rooter is forecasted to achieve full-year 2022 revenue growth of 6.2% to 6.5%. Roto-Rooter’s adjusted EBITDA margin for 2022 is expected to be 29.5% to 29.7%.

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, retention program for licensed healthcare employees, and other discrete items, is estimated to be in the range of $19.60 to $19.70. This compares to our previous 2022 adjusted earnings per share guidance of $19.30 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 Tuesday November 1, 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/8ovxyhbq.

Participants may also register via teleconference at:

https://register.vevent.com/register/BId400f56fad7a4877af359aca78465824. Once registration is completed, participants will be provided with a dial-in number containing a personalized conference code to access the call. All participants are instructed to dial-in 15 minutes prior to the start time.

A taped replay of the conference call will be available beginning approximately two hours after the call's conclusion. You may access the replay via webcast through the investor relations section of Chemed’s website.

Chemed Corporation operates in the healthcare field through its VITAS Healthcare Corporation subsidiary. VITAS provides daily hospice services to approximately 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 September 30,								Nine Months Ended September 30,
		2022				2021				2022				2021
Service revenues and sales		$	526,472			$	538,667				1,588,309			$	1,598,283
Cost of services provided and goods sold			346,934				342,164				1,020,307				1,033,130
Selling, general and administrative expenses (aa)			83,992				89,217				261,799				274,654
Depreciation			12,154				11,844				37,006				37,171
Amortization			2,520				2,510				7,558				7,530
Other operating expense/(income)			15				63				(530	)			789
Total costs and expenses			445,615				445,798				1,326,140				1,353,274
Income from operations			80,857				92,869				262,169				245,009
Interest expense			(1,271	)			(583	)			(2,983	)			(1,343	)
Other (expense)/income--net (bb)			(3,115	)			3,134				(11,907	)			10,521
Income before income taxes			76,471				95,420				247,279				254,187
Income taxes			(19,598	)			(23,417	)			(59,781	)			(60,262	)
Net income		$	56,873			$	72,003			$	187,498			$	193,925
Earnings Per Share
Net income		$	3.82			$	4.62			$	12.55			$	12.27
Average number of shares outstanding			14,888				15,587				14,935				15,808
Diluted Earnings Per Share
Net income		$	3.78			$	4.55			$	12.41			$	12.06
Average number of shares outstanding			15,042				15,842				15,114				16,083
(aa) Selling, general and administrative ("SG&A") expenses comprise (in thousands):
		Three Months Ended September 30,								Nine Months Ended September 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		$	85,118			$	84,197			$	269,118			$	259,376
Market value adjustments related to deferred
compensation trusts			(3,176	)			3,078				(12,196	)			9,770
Long-term incentive compensation			2,050				1,942				4,877				5,508
Total SG&A expenses		$	83,992			$	89,217			$	261,799			$	274,654
(bb) Other (expense)/income--net comprises (in thousands):
		Three Months Ended September 30,								Nine Months Ended September 30,
		2022				2021				2022				2021
Market value adjustments related to deferred
compensation trusts		$	(3,176	)		$	3,078			$	(12,196	)		$	9,770
Interest income			62				57				288				288
Other			(1	)			(1	)			1				463
Total other (expense)/income--net		$	(3,115	)		$	3,134			$	(11,907	)		$	10,521

CHEMED CORPORATION AND SUBSIDIARY COMPANIES
CONSOLIDATED BALANCE SHEETS
(in thousands, except per share data)(unaudited)
		September 30,
		2022				2021
Assets
Current assets
Cash and cash equivalents		$	7,781			$	28,743
Accounts receivable less allowances			121,662				118,193
Inventories			10,469				8,394
Prepaid income taxes			27,526				12,940
Prepaid expenses			31,431				32,294
Total current assets			198,869				200,564
Investments of deferred compensation plans held in trust			90,097				102,045
Properties and equipment, at cost less accumulated depreciation			193,705				190,781
Lease right of use asset			131,430				127,077
Identifiable intangible assets less accumulated amortization			102,103				110,606
Goodwill			579,887				578,610
Other assets			60,104				8,450
Total Assets		$	1,356,195			$	1,318,133
Liabilities
Current liabilities
Accounts payable		$	77,170			$	60,042
Current portion of long-term debt			5,000				-
Income taxes			-				180
Accrued insurance			56,732				52,645
Accrued compensation			67,230				97,256
Accrued legal			653				1,497
Short-term lease liability			39,813				35,148
Other current liabilities			51,552				39,318
Total current liabilities			298,150				286,086
Deferred income taxes			33,590				20,100
Long-term debt			95,850				-
Deferred compensation liabilities			89,873				100,409
Long-term lease liability			105,594				104,198
Other liabilities			11,722				27,621
Total Liabilities			634,779				538,414
Stockholders' Equity
Capital stock			36,670				36,402
Paid-in capital			1,100,161				1,007,506
Retained earnings			2,141,418				1,901,245
Treasury stock, at cost			(2,559,141	)			(2,167,640	)
Deferred compensation payable in Company stock			2,308				2,206
Total Stockholders' Equity			721,416				779,719
Total Liabilities and Stockholders' Equity		$	1,356,195			$	1,318,133

CHEMED CORPORATION AND SUBSIDIARY COMPANIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)(unaudited)
		For the Nine Months Ended September 30,
		2022				2021
Cash Flows from Operating Activities
Net income		$	187,498			$	193,925
Adjustments to reconcile net income to net cash provided
by operating activities:
Depreciation and amortization			44,564				44,701
Stock option expense			19,343				16,342
Provision/(benefit) for deferred income taxes			10,408				(561	)
Noncash long-term incentive compensation			4,343				5,344
Noncash directors' compensation			1,170				1,173
Amortization of debt issuance costs			247				229
Payments on previously accrued litigation settlements			-				(9,440	)
Changes in operating assets and liabilities, excluding
amounts acquired in business combinations:
Decrease in accounts receivable			16,166				9,247
Increase in inventories			(360	)			(1,299	)
Decrease/(increase) in prepaid expenses			1,257				(6,117	)
(Increase)/decrease in accounts payable and
other current liabilities			(15,765	)			6,330
Change in current income taxes			(10,277	)			(15,749	)
Net change in lease assets and liabilities			313				15
Increase in other assets			(42,424	)			(13,561	)
(Decrease)/increase in other liabilities			(6,555	)			13,474
Other (uses)/sources			(241	)			974
Net cash provided by operating activities			209,687				245,027
Cash Flows from Investing Activities
Capital expenditures			(39,066	)			(44,472	)
Proceeds from sale of fixed assets			2,037				710
Business combinations, net of cash acquired			(2,044	)			-
Other (uses)/sources			(841	)			50
Net cash used by investing activities			(39,914	)			(43,712	)
Cash Flows from Financing Activities
Payments on revolving line of credit			(299,400	)			(1,500	)
Proceeds from revolving line of credit			116,500				1,500
Proceeds from other long-term debt			100,000				-
Payments on other long-term debt			(1,250	)			-
Purchases of treasury stock			(101,539	)			(330,380	)
Proceeds from exercise of stock options			17,128				17,918
Dividends paid			(16,391	)			(16,457	)
Capital stock surrendered to pay taxes on stock-based compensation			(12,497	)			(9,445	)
Change in cash overdrafts payable			5,535				3,054
Debt issuance costs			(1,584	)			-
Other (uses)/sources			(1,389	)			63
Net cash used by financing activities			(194,887	)			(335,247	)
Decrease in Cash and Cash Equivalents			(25,114	)			(133,932	)
Cash and cash equivalents at beginning of year			32,895				162,675
Cash and cash equivalents at end of year		$	7,781			$	28,743

CHEMED CORPORATION AND SUBSIDIARY COMPANIES
CONSOLIDATING STATEMENTS OF INCOME
FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2022 AND 2021
(in thousands)(unaudited)
														Chemed
		VITAS				Roto-Rooter				Corporate				Consolidated
2022 (a)
Service revenues and sales		$	296,536			$	229,936			$	-			$	526,472
Cost of services provided and goods sold			239,755				107,179				-				346,934
Selling, general and administrative expenses			21,581				53,225				9,186				83,992
Depreciation			5,281				6,855				18				12,154
Amortization			26				2,494				-				2,520
Other operating expense/(income)			26				(11	)			-				15
Total costs and expenses			266,669				169,742				9,204				445,615
Income/(loss) from operations			29,867				60,194				(9,204	)			80,857
Interest expense			(44	)			(91	)			(1,136	)			(1,271	)
Intercompany interest income/(expense)			4,842				2,371				(7,213	)			-
Other income/(expense)—net			26				36				(3,177	)			(3,115	)
Income/(loss) before income taxes			34,691				62,510				(20,730	)			76,471
Income taxes			(8,605	)			(14,924	)			3,931				(19,598	)
Net income/(loss)		$	26,086			$	47,586			$	(16,799	)		$	56,873
2021 (b)
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
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, 2022 AND 2021
(in thousands)(unaudited)
														Chemed
		VITAS				Roto-Rooter				Corporate				Consolidated
2022 (a)
Service revenues and sales		$	893,506			$	694,803			$	-			$	1,588,309
Cost of services provided and goods sold			694,528				325,779				-				1,020,307
Selling, general and administrative expenses			67,181				165,162				29,456				261,799
Depreciation			16,894				20,058				54				37,006
Amortization			76				7,482				-				7,558
Other operating (income)/expense			(929	)			399				-				(530	)
Total costs and expenses			777,750				518,880				29,510				1,326,140
Income/(loss) from operations			115,756				175,923				(29,510	)			262,169
Interest expense			(142	)			(319	)			(2,522	)			(2,983	)
Intercompany interest income/(expense)			14,181				6,751				(20,932	)			-
Other income/(expense)—net			183				107				(12,197	)			(11,907	)
Income/(loss) before income taxes			129,978				182,462				(65,161	)			247,279
Income taxes			(32,199	)			(43,867	)			16,285				(59,781	)
Net income/(loss)		$	97,779			$	138,595			$	(48,876	)		$	187,498
2021 (b)
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
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, 2022 AND 2021
(in thousands)(unaudited)
														Chemed
		VITAS				Roto-Rooter				Corporate				Consolidated
2022
Net income/(loss)		$	26,086			$	47,586			$	(16,799	)		$	56,873
Add/(deduct):
Interest expense			44				91				1,136				1,271
Income taxes			8,605				14,924				(3,931	)			19,598
Depreciation			5,281				6,855				18				12,154
Amortization			26				2,494				-				2,520
EBITDA			40,042				71,950				(19,576	)			92,416
Add/(deduct):
Intercompany interest expense/(income)			(4,842	)			(2,371	)			7,213				-
Interest income			(27	)			(35	)			-				(62	)
Licensed healthcare retention bonus			9,559				-				-				9,559
Stock option expense			-				-				4,676				4,676
Long-term incentive compensation			-				-				2,050				2,050
Direct costs related to COVID-19			-				-				89				89
Adjusted EBITDA		$	44,732			$	69,544			$	(5,548	)		$	108,728
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
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, 2022 AND 2021
(in thousands)(unaudited)
														Chemed
		VITAS				Roto-Rooter				Corporate				Consolidated
2022
Net income/(loss)		$	97,779			$	138,595			$	(48,876	)		$	187,498
Add/(deduct):
Interest expense			142				319				2,522				2,983
Income taxes			32,199				43,867				(16,285	)			59,781
Depreciation			16,894				20,058				54				37,006
Amortization			76				7,482				-				7,558
EBITDA			147,090				210,321				(62,585	)			294,826
Add/(deduct):
Intercompany interest expense/(income)			(14,181	)			(6,751	)			20,932				-
Interest income			(181	)			(107	)			-				(288	)
Stock option expense			-				-				19,343				19,343
Licensed healthcare retention bonus			9,559				-				-				9,559
Long-term incentive compensation			-				-				4,877				4,877
Direct costs related to COVID-19			310				988				89				1,387
Medicare cap sequestration adjustment			138				-				-				138
Adjusted EBITDA		$	142,735			$	204,451			$	(17,344	)		$	329,842
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
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,
		2022				2021				2022				2021
Net income as reported		$	56,873			$	72,003			$	187,498			$	193,925
Add/(deduct) pre-tax cost of:
Stock option expense			4,676				3,998				19,343				16,342
Licensed healthcare worker retention bonus			9,559				-				9,559				-
Amortization of reacquired franchise agreements			2,352				2,352				7,056				7,056
Long-term incentive compensation			2,050				1,942				4,877				5,508
Direct costs related to COVID-19			89				2,916				1,387				16,927
Medicare cap sequestration adjustment			-				-				138				-
Facility relocation expenses			-				-				-				1,855
Litigation settlements			-				-				-				(98	)
Other			-				218				-				218
Add/(deduct) tax impacts:
Tax impact of the above pre-tax adjustments (1)			(3,902	)			(2,146	)			(8,351	)			(9,874	)
Excess tax benefits on stock compensation			(450	)			(1,199	)			(4,390	)			(5,305	)
Adjusted net income		$	71,247			$	80,084			$	217,117			$	226,554
Diluted Earnings Per Share As Reported
Net income		$	3.78			$	4.55			$	12.41			$	12.06
Average number of shares outstanding			15,042				15,842				15,114				16,083
Adjusted Diluted Earnings Per Share
Adjusted net income		$	4.74			$	5.06			$	14.37			$	14.09
Average number of shares outstanding			15,042				15,842				15,114				16,083
(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	2022				2021					2022				2021
Net revenue ($000) (c)
Homecare	$	256,253			$	268,137				$	771,520			$	796,817
Inpatient		24,526				29,368					75,714				85,895
Continuous care		18,600				22,027					57,717				73,658
Other		3,240				3,225					9,461				9,241
Subtotal	$	302,619			$	322,757				$	914,412			$	965,611
Room and board, net		(2,513	)			(2,130	)				(6,796	)			(7,451	)
Contractual allowances		(2,952	)			(3,119	)				(8,992	)			(9,428	)
Medicare cap allowance		(618	)			(97	)				(5,118	)			(3,597	)
Net Revenue	$	296,536			$	317,411				$	893,506			$	945,135
Net revenue as a percent of total before Medicare cap allowance
Homecare		84.7		%		83.1		%			84.4		%		82.5		%
Inpatient		8.1				9.1					8.3				8.9
Continuous care		6.1				6.8					6.3				7.6
Other		1.1				1.0					1.0				1.0
Subtotal		100.0				100.0					100.0				100.0
Room and board, net		(0.8	)			(0.7	)				(0.7	)			(0.8	)
Contractual allowances		(1.0	)			(1.0	)				(1.0	)			(1.0	)
Medicare cap allowance		(0.2	)			-					(0.6	)			(0.3	)
Net Revenue		98.0		%		98.3		%			97.7		%		97.9		%
Days of care
Homecare		1,271,678				1,342,841					3,796,954				4,008,215
Nursing home		264,407				258,700					771,921				735,906
Respite		6,635				5,331					18,098				15,509
Subtotal routine homecare and respite		1,542,720				1,606,872					4,586,973				4,759,630
Inpatient		23,435				27,962					71,177				82,129
Continuous care		20,097				24,299					61,981				79,385
Total		1,586,252				1,659,133					4,720,131				4,921,144
Number of days in relevant time period		92				92					273				273
Average daily census ("ADC") (days)
Homecare		13,823				14,596					13,908				14,682
Nursing home		2,874				2,812					2,828				2,696
Respite		72				58					66				57
Subtotal routine homecare and respite		16,769				17,466					16,802				17,435
Inpatient		255				304					261				301
Continuous care		218				264					227				291
Total		17,242				18,034					17,290				18,027
Total Admissions		14,680				17,598					45,945				52,573
Total Discharges		14,603				17,686					46,139				52,747
Average length of stay (days)		106.2				96.0					104.9				95.0
Median length of stay (days)		17.0				13.0					16.0				13.0
ADC by major diagnosis
Cerebro		39.3		%		36.4		%			38.5		%		36.7		%
Neurological		22.0				22.7					22.3				22.5
Cancer		10.7				12.0					11.0				12.1
Cardio		15.4				15.5					15.6				15.5
Respiratory		7.2				7.5					7.3				7.5
Other		5.4				5.9					5.3				5.7
Total		100.0		%		100.0		%			100.0		%		100.0		%
Admissions by major diagnosis
Cerebro		25.9		%		20.3		%			24.2		%		21.1		%
Neurological		12.4				12.1					12.7				12.2
Cancer		26.6				27.0					26.2				26.9
Cardio		14.9				14.1					14.8				14.4
Respiratory		9.5				11.3					10.3				10.9
Other		10.7				15.2					11.8				14.5
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		33.8				33.7					n.a.				n.a.
Days of revenue outstanding-including unapplied Medicare payments		24.9				23.4					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, 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 September 30, 2022
			VITAS				Roto-Rooter				Corporate				Consolidated
	Licensed healthcare worker retention bonus		$	(9,559	)		$	-			$	-			$	(9,559	)
	Stock option expense			-				-				(4,676	)			(4,676	)
	Amortization of reacquired franchise agreements			-				(2,352	)			-				(2,352	)
	Long-term incentive compensation			-				-				(2,050	)			(2,050	)
	Direct costs related to COVID-19			-				-				(89	)			(89	)
	Pretax impact on earnings			(9,559	)			(2,352	)			(6,815	)			(18,726	)
	Excess tax benefits on stock compensation			-				-				450				450
	Income tax benefit on the above			2,428				623				851				3,902
	After-tax impact on earnings		$	(7,131	)		$	(1,729	)		$	(5,514	)		$	(14,374	)
			Nine Months Ended September 30, 2022
			VITAS				Roto-Rooter				Corporate				Consolidated
	Stock option expense		$	-			$	-			$	(19,343	)		$	(19,343	)
	Licensed healthcare worker retention bonus			(9,559	)			-				-				(9,559	)
	Amortization of reacquired franchise agreements			-				(7,056	)			-				(7,056	)
	Long-term incentive compensation			-				-				(4,877	)			(4,877	)
	Direct costs related to COVID-19			(310	)			(988	)			(89	)			(1,387	)
	Medicare cap sequestration adjustment			(138	)			-				-				(138	)
	Pretax impact on earnings			(10,007	)			(8,044	)			(24,309	)			(42,360	)
	Excess tax benefits on stock compensation			-				-				4,390				4,390
	Income tax benefit on the above			2,542				2,131				3,678				8,351
	After-tax impact on earnings		$	(7,465	)		$	(5,913	)		$	(16,241	)		$	(29,619	)
(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 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	)
(c)	VITAS has 9 large (greater than 450 ADC), 16 medium (greater than 200 but less than 450 ADC) and 25 small (less than 200 ADC) hospice programs. Of Vitas' 30 Medicare provider numbers, for the current cap year, 25 provider numbers have a Medicare cap cushion of greater than 10%, two provider numbers have Medicare cap cushion between 5% and 10%, one provider number has a Medicare cap cushion between 1% and 5% and two provider numbers have a Medicare cap liability.

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20221031005015/en/

David P. Williams

(513) 762-6901

Source: Chemed Corporation

FAQ

What were Chemed's Q3 2022 earnings results?

Chemed reported Q3 2022 revenue of $526 million, GAAP EPS of $3.78, and adjusted diluted EPS of $4.74.

How did VITAS perform in Q3 2022?

VITAS experienced a 6.6% decline in net patient revenue to $297 million, with a significant drop in admissions by 16.6%.

What was the revenue growth for Roto-Rooter in Q3 2022?

Roto-Rooter revenue increased by 3.9% to $230 million in Q3 2022.

What is the outlook for Chemed following the Q3 2022 results?

Chemed's earnings guidance for 2022 reflects anticipated industry challenges and the impact of the COVID-19 pandemic.