Chemed Reports Third-Quarter 2023 Results – Increases Full Year Guidance

Rhea-AI Summary

Chemed Corporation (NYSE: CHE) reported financial results for Q3 2023. Revenue increased by 7.2% to $565 million. GAAP Diluted EPS increased by 30.4% to $4.93. VITAS segment operating results showed a net patient revenue increase of 12.5%. Roto-Rooter segment operating results showed a revenue increase of 0.4%. Chemed had total cash and cash equivalents of $173 million and no debt as of September 30, 2023.

Positive

• Chemed Corporation reported a revenue increase of 7.2% to $565 million in Q3 2023.
• GAAP Diluted EPS increased by 30.4% to $4.93 in Q3 2023.
• VITAS segment operating results showed a net patient revenue increase of 12.5% in Q3 2023.
• Roto-Rooter segment operating results showed a revenue increase of 0.4% in Q3 2023.
• Chemed had total cash and cash equivalents of $173 million and no debt as of September 30, 2023.

Negative

• None.

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, 2023, versus the comparable prior-year period.

Changes to Non-GAAP Metrics

Chemed uses certain non-GAAP metrics such as EBITDA, Adjusted EBITDA, Adjusted net income and Adjusted Diluted Earnings per Share, to provide additional context and perspective to reported operational results.

Chemed’s previously reported non-GAAP metrics during the four sequential quarters from September 30, 2022 through June 30, 2023 excluded the 12-month pandemic-related licensed healthcare professional retention bonus (Retention Program).

Starting with the September 30, 2023 quarter, Chemed is no longer excluding the cost of the Retention Program when presenting non-GAAP operating metrics in current or prior periods.

In the September 30, 2023 quarter, there is zero expense related to the Retention Program. In the September 30, 2022 quarter, the pretax and after-tax Retention Program expense was $9.6 million and $7.1 million, respectively.

For the nine months ended September 30, 2023 pretax and after-tax expense for the retention program is $23.8 million and $18.0 million, respectively. For the nine months ended September 30, 2022 pretax and after-tax expense for the Retention Program was $9.6 million and $7.1 million, respectively.

Results for Quarter Ended September 30, 2023

• Revenue increased 7.2% to $565 million
• GAAP Diluted Earnings-per-Share (EPS) of $4.93, an increase of 30.4%
• Adjusted Diluted EPS of $5.32, an increase of 24.9%

VITAS segment operating results:

• Net Patient Revenue of $334 million, an increase of 12.5%
• Average Daily Census (ADC) of 18,859, an increase of 9.4%
• Admissions of 15,774, an increase of 7.5%
• Net Income, excluding certain discrete items, of $42.6 million, an increase of 63.1%
• Adjusted EBITDA, excluding Medicare Cap, of $54.9 million, an increase of 53.4%
• Adjusted EBITDA margin, excluding Medicare Cap, of 16.5%, an increase of 441-basis points

Roto-Rooter segment operating results:

• Revenue of $231 million, an increase of 0.4%
• Net Income, excluding certain discrete items, of $49.0 million, a decrease of 0.6%
• Adjusted EBITDA of $66.9 million, a decline of 3.7%
• Adjusted EBITDA margin of 29.0%, a decline of 124-basis points

VITAS

VITAS net revenue was $334 million in the third quarter of 2023, which is an increase of 12.5% when compared to the prior year period. This revenue increase is comprised primarily of a 9.4% increase in days-of-care and a geographically weighted average Medicare reimbursement rate increase of approximately 2.7%. Acuity mix shift positively impacted revenue growth 24-basis points 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 increased revenue growth by approximately 20-basis points.

In the third quarter of 2023, VITAS accrued $0.13 million in Medicare Cap billing limitations. This compares to a $0.6 million Medicare Cap billing limitation in the third quarter of 2022.

Of VITAS’ 30 Medicare provider numbers, 25 provider numbers have a trailing 12-month 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 a trailing 12-month Medicare Cap billing limitation totaling $8.5 million.

Average revenue per patient per day in the third quarter of 2023 was $196.43 which is 296-basis points above the prior-year period. Reimbursement for routine home care and high acuity care averaged $172.52 and $1,026.48, respectively. During the quarter, high acuity days-of-care were 2.8% of total days of care, an increase of 5-basis points when compared to the prior-year quarter.

The third quarter 2023 gross margin, excluding Medicare Cap, was 24.0%. This compares to the prior year gross margin of 19.3%, excluding Medicare Cap.

Selling, general and administrative expenses were $25.3 million in the third quarter of 2023 and compares to $21.6 million in the prior-year quarter. Adjusted EBITDA, excluding Medicare Cap, totaled $54.9 million in the quarter, an increase of 53.4%. Adjusted EBITDA margin in the quarter, excluding Medicare Cap, was 16.5%, which is 441-basis points above the prior-year period.

Roto-Rooter

Roto-Rooter generated quarterly revenue of $231 million in the third quarter of 2023, an increase of 0.4%, when compared to the prior-year quarter.

Roto-Rooter branch commercial revenue in the quarter totaled $56.8 million, an increase of 1.5%, over the prior year. This aggregate commercial revenue growth consisted of drain cleaning revenue declining 4.2%, plumbing increasing 1.8%, excavation increasing 11.9%, and water restoration increasing 2.0%.

Roto-Rooter branch residential revenue in the quarter totaled $155 million, an increase of 0.3%, over the prior-year period. This aggregate residential revenue growth consisted of drain cleaning decreasing 6.7%, plumbing increasing 0.3%, excavation expanding 3.2%, and water restoration increasing 4.3%.

Roto-Rooter’s gross margin in the quarter was 52.9%, a 45-basis point decline when compared to the third quarter of 2022. Adjusted EBITDA in the third quarter of 2023 totaled $66.9 million, a decrease of 3.7%. The Adjusted EBITDA margin in the quarter was 29.0%, which is 124-basis points below the prior year period.

Chemed Consolidated

As of September 30, 2023, Chemed had total cash and cash equivalents of $173 million and no current or long-term debt.

In June 2022, Chemed entered into a five-year $550 million Amended and Restated Credit Agreement (Credit Agreement). This Credit Agreement consisted 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. The Company paid off the remaining portion of the term loan in the second quarter of 2023. There is approximately $405 million of undrawn borrowing capacity under the Credit Agreement after excluding $45 million for Letters of Credit.

During the quarter, the Company repurchased 28,457 shares of Chemed stock for $14.3 million which equates to a cost per share of $504.07. As of September 30, 2023, there was approximately $60 million of remaining share repurchase authorization under its plan.

Guidance for 2023

VITAS 2023 revenue, prior to Medicare Cap, is estimated to increase 9.3% to 9.5% when compared to 2022. Forecasted revenue growth is negatively impacted by 75-basis points as a result of the sequestration relief in the first half of 2022 compared to a full year of sequestration in 2023. ADC is estimated to increase 7.3% to 7.5%. Full year adjusted EBITDA margin, prior to Medicare Cap, is estimated to be 15.4% to 15.7%. The total pretax cost of the Retention Program in 2023 is estimated at $23.8 million, reducing adjusted EBITDA margin by 180-basis points. We are currently estimating $8 million for Medicare Cap billing limitations in calendar year 2023.

Roto-Rooter is forecasted to achieve full-year 2023 revenue growth of 1.6% to 2.0%. Roto-Rooter’s adjusted EBITDA margin for 2023 is expected to be 28.4% to 28.6%.

Based upon the above, full-year 2023 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 $19.82 to $20.02. This guidance includes $1.18 per share of after-tax costs related to the 2023 portion of the Retention Program.

This revised 2023 guidance compares to previous guidance, as recast to no longer exclude costs associated with the Retention Program, of $18.72 to $18.92, including. Current 2023 guidance assumes an effective corporate tax rate on adjusted earnings of 23.6% and a diluted share count of 15.2 million shares. Chemed’s 2022 adjusted earnings per diluted share was $18.78, including $0.97 per share for costs associated with the 2022 portion of the Retention Program.

Conference Call

As previously disclosed, Chemed will host a conference call and webcast at 10 a.m., ET, on Thursday October 26, 2023, 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/9eyhbp68.

Participants may also register via teleconference at: https://register.vevent.com/register/BIf6283da8a767485ab88786d7ddfffa28.

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 18,400 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,
		2023				2022				2023				2022
Service revenues and sales		$	564,532			$	526,472				1,678,505			$	1,588,309
Cost of services provided and goods sold			362,358				346,934				1,107,256				1,020,307
Selling, general and administrative expenses (aa)			99,602				83,992				294,684				261,799
Depreciation			12,858				12,154				37,778				37,006
Amortization			2,521				2,520				7,548				7,558
Other operating expense/(income)			343				15				2,064				(530	)
Total costs and expenses			477,682				445,615				1,449,330				1,326,140
Income from operations			86,850				80,857				229,175				262,169
Interest expense			(444	)			(1,271	)			(2,766	)			(2,983	)
Other income/(expense)--net (bb)			6,859				(3,115	)			8,365				(11,907	)
Income before income taxes			93,265				76,471				234,774				247,279
Income taxes			(18,307	)			(19,598	)			(52,318	)			(59,781	)
Net income		$	74,958			$	56,873			$	182,456			$	187,498
Earnings Per Share
Net income		$	4.97			$	3.82			$	12.14			$	12.55
Average number of shares outstanding			15,075				14,888				15,034				14,935
Diluted Earnings Per Share
Net income		$	4.93			$	3.78			$	12.02			$	12.41
Average number of shares outstanding			15,200				15,042				15,178				15,114
(aa) Selling, general and administrative ("SG&A") expenses comprise (in thousands):
		Three Months Ended September 30,								Nine Months Ended September 30,
		2023				2022				2023				2022
SG&A expenses before long-term incentive compensation
and the impact of market value adjustments related to
deferred compensation plans		$	91,792			$	85,118			$	281,426			$	269,118
Long-term incentive compensation			3,553				2,050				7,817				4,877
Market value adjustments related to deferred
compensation trusts			4,257				(3,176	)			5,441				(12,196	)
Total SG&A expenses		$	99,602			$	83,992			$	294,684			$	261,799
(bb) Other income/(expense)--net comprises (in thousands):
		Three Months Ended September 30,								Nine Months Ended September 30,
		2023				2022				2023				2022
Market value adjustments related to deferred
compensation trusts		$	4,257			$	(3,176	)		$	5,441			$	(12,196	)
Interest income			2,600				62				2,863				288
Other			2				(1	)			61				1
Total other income/(expense)--net		$	6,859			$	(3,115	)		$	8,365			$	(11,907	)

CHEMED CORPORATION AND SUBSIDIARY COMPANIES
CONSOLIDATED BALANCE SHEETS
(in thousands, except per share data)(unaudited)
		September 30,
		2023				2022
Assets
Current assets
Cash and cash equivalents		$	173,150			$	7,781
Accounts receivable less allowances			168,031				121,662
Inventories			12,511				10,469
Prepaid income taxes			11,337				27,526
Prepaid expenses			29,510				31,431
Total current assets			394,539				198,869
Investments of deferred compensation plans held in trust			104,410				90,097
Properties and equipment, at cost less accumulated depreciation			205,462				193,705
Lease right of use asset			123,353				131,430
Identifiable intangible assets less accumulated amortization			92,768				102,103
Goodwill			584,977				579,887
Other assets			56,570				60,104
Total Assets		$	1,562,079			$	1,356,195
Liabilities
Current liabilities
Accounts payable		$	56,508			$	77,170
Current portion of long-term debt			-				5,000
Income taxes			5,135				-
Accrued insurance			61,122				56,732
Accrued compensation			74,865				67,230
Accrued legal			6,626				653
Short-term lease liability			37,615				39,813
Other current liabilities			55,348				51,552
Total current liabilities			297,219				298,150
Deferred income taxes			30,381				33,590
Long-term debt			-				95,850
Deferred compensation liabilities			102,815				89,873
Long-term lease liability			99,346				105,594
Other liabilities			13,075				11,722
Total Liabilities			542,836				634,779
Stockholders' Equity
Capital stock			37,013				36,670
Paid-in capital			1,254,356				1,100,161
Retained earnings			2,362,928				2,141,418
Treasury stock, at cost			(2,637,102	)			(2,559,141	)
Deferred compensation payable in Company stock			2,048				2,308
Total Stockholders' Equity			1,019,243				721,416
Total Liabilities and Stockholders' Equity		$	1,562,079			$	1,356,195

CHEMED CORPORATION AND SUBSIDIARY COMPANIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)(unaudited)
		For the Nine Months Ended September 30,
		2023				2022
Cash Flows from Operating Activities
Net income		$	182,456			$	187,498
Adjustments to reconcile net income to net cash provided
by operating activities:
Depreciation and amortization			45,326				44,564
Stock option expense			22,376				19,343
(Benefit)/provision for deferred income taxes			(8,232	)			10,408
Noncash long-term incentive compensation			6,637				4,343
Litigation settlements			2,050				-
Noncash directors' compensation			1,444				1,170
Amortization of debt issuance costs			500				247
Changes in operating assets and liabilities, excluding
amounts acquired in business combinations:
(Increase)/decrease in accounts receivable			(27,843	)			16,166
Increase in inventories			(2,239	)			(360	)
Decrease in prepaid expenses			781				1,257
Decrease in accounts payable and
other current liabilities			(15,815	)			(15,765	)
Change in current income taxes			12,314				(10,277	)
Net change in lease assets and liabilities			(892	)			313
Increase in other assets			(8,622	)			(42,424	)
Increase/(decrease) in other liabilities			11,426				(6,555	)
Other sources/(uses)			69				(241	)
Net cash provided by operating activities			221,736				209,687
Cash Flows from Investing Activities
Capital expenditures			(45,075	)			(39,066	)
Proceeds from sale of fixed assets			506				2,037
Business combinations, net of cash acquired			(3,994	)			(2,044	)
Other uses			(409	)			(841	)
Net cash used by investing activities			(48,972	)			(39,914	)
Cash Flows from Financing Activities
Payments on other long-term debt			(97,500	)			(1,250	)
Proceeds from other long-term debt			-				100,000
Proceeds from exercise of stock options			58,277				17,128
Purchases of treasury stock			(27,769	)			(101,539	)
Dividends paid			(17,446	)			(16,391	)
Change in cash overdrafts payable			16,182				5,535
Capital stock surrendered to pay taxes on stock-based compensation			(5,446	)			(12,497	)
Debt issuance costs			-				(1,584	)
Payments on revolving line of credit			-				(299,400	)
Proceeds from revolving line of credit			-				116,500
Other uses			(38	)			(1,389	)
Net cash used by financing activities			(73,740	)			(194,887	)
Increase/(decrease) in Cash and Cash Equivalents			99,024				(25,114	)
Cash and cash equivalents at beginning of year			74,126				32,895
Cash and cash equivalents at end of year		$	173,150			$	7,781

CHEMED CORPORATION AND SUBSIDIARY COMPANIES
CONSOLIDATING STATEMENTS OF INCOME
FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2023 AND 2022
(in thousands)(unaudited)
														Chemed
		VITAS				Roto-Rooter				Corporate				Consolidated
2023 (a)
Service revenues and sales		$	333,728			$	230,804			$	-			$	564,532
Cost of services provided and goods sold			253,731				108,627				-				362,358
Selling, general and administrative expenses			25,256				55,141				19,205				99,602
Depreciation			5,009				7,836				13				12,858
Amortization			26				2,495				-				2,521
Other operating (income)/expense			(53	)			396				-				343
Total costs and expenses			283,969				174,495				19,218				477,682
Income/(loss) from operations			49,759				56,309				(19,218	)			86,850
Interest expense			(52	)			(131	)			(261	)			(444	)
Intercompany interest income/(expense)			4,935				3,040				(7,975	)			-
Other income—net			849				34				5,976				6,859
Income/(loss) before income taxes			55,491				59,252				(21,478	)			93,265
Income taxes			(11,160	)			(8,925	)			1,778				(18,307	)
Net income/(loss)		$	44,331			$	50,327			$	(19,700	)		$	74,958
2022 (b)
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
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, 2023 AND 2022
(in thousands)(unaudited)
														Chemed
		VITAS				Roto-Rooter				Corporate				Consolidated
2023 (a)
Service revenues and sales		$	965,066			$	713,439			$	-			$	1,678,505
Cost of services provided and goods sold			770,470				336,786				-				1,107,256
Selling, general and administrative expenses			71,248				171,966				51,470				294,684
Depreciation			14,907				22,830				41				37,778
Amortization			78				7,470				-				7,548
Other operating (income)/expense			(15	)			2,079				-				2,064
Total costs and expenses			856,688				541,131				51,511				1,449,330
Income/(loss) from operations			108,378				172,308				(51,511	)			229,175
Interest expense			(154	)			(387	)			(2,225	)			(2,766	)
Intercompany interest income/(expense)			14,393				8,652				(23,045	)			-
Other income—net			1,109				96				7,160				8,365
Income/(loss) before income taxes			123,726				180,669				(69,621	)			234,774
Income taxes			(28,503	)			(38,315	)			14,500				(52,318	)
Net income/(loss)		$	95,223			$	142,354			$	(55,121	)		$	182,456
2022 (b)
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
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, 2023 AND 2022
(in thousands)(unaudited)
														Chemed
		VITAS				Roto-Rooter				Corporate				Consolidated
2023
Net income/(loss)		$	44,331			$	50,327			$	(19,700	)		$	74,958
Add/(deduct):
Interest expense			52				131				261				444
Income taxes			11,160				8,925				(1,778	)			18,307
Depreciation			5,009				7,836				13				12,858
Amortization			26				2,495				-				2,521
EBITDA			60,578				69,714				(21,204	)			109,088
Add/(deduct):
Intercompany interest expense/(income)			(4,935	)			(3,040	)			7,975				-
Interest income			(847	)			(34	)			(1,719	)			(2,600	)
Stock option expense			-				-				5,495				5,495
Long-term incentive compensation			-				-				3,553				3,553
Litigation settlement			-				300				-				300
Adjusted EBITDA		$	54,796			$	66,940			$	(5,900	)		$	115,836
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	)
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		$	35,173			$	69,544			$	(5,548	)		$	99,169
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, 2023 AND 2022
(in thousands)(unaudited)
														Chemed
		VITAS				Roto-Rooter				Corporate				Consolidated
2023
Net income/(loss)		$	95,223			$	142,354			$	(55,121	)		$	182,456
Add/(deduct):
Interest expense			154				387				2,225				2,766
Income taxes			28,503				38,315				(14,500	)			52,318
Depreciation			14,907				22,830				41				37,778
Amortization			78				7,470				-				7,548
EBITDA			138,865				211,356				(67,355	)			282,866
Add/(deduct):
Intercompany interest expense/(income)			(14,393	)			(8,652	)			23,045				-
Interest income			(1,046	)			(96	)			(1,720	)			(2,862	)
Stock option expense			-				-				22,376				22,376
Long-term incentive compensation			-				-				7,817				7,817
Litigation settlements			-				2,056				-				2,056
Adjusted EBITDA		$	123,426			$	204,664			$	(15,837	)		$	312,253
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
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		$	133,176			$	204,451			$	(17,344	)		$	320,283
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,
		2023				2022				2023				2022
Net income as reported		$	74,958			$	56,873			$	182,456			$	187,498
Add/(deduct) pre-tax cost of:
Stock option expense			5,495				4,676				22,376				19,343
Long-term incentive compensation			3,553				2,050				7,817				4,877
Amortization of reacquired franchise agreements			2,352				2,352				7,056				7,056
Litigation settlements			300				-				2,056				-
Medicare cap sequestration adjustment			-				-				-				138
Direct costs related to COVID-19			-				89				-				1,387
Add/(deduct) tax impacts:
Tax impact of the above pre-tax adjustments (1)			(1,326	)			(1,474	)			(6,443	)			(5,923	)
Tax impact of deferred tax rate change			(4,241	)			-				(4,241	)			-
Excess tax benefits on stock compensation			(225	)			(450	)			(3,376	)			(4,390	)
Adjusted net income		$	80,866			$	64,116			$	207,701			$	209,986
Diluted Earnings Per Share As Reported
Net income		$	4.93			$	3.78			$	12.02			$	12.41
Average number of shares outstanding			15,200				15,042				15,178				15,114
Adjusted Diluted Earnings Per Share
Adjusted net income		$	5.32			$	4.26			$	13.68			$	13.89
Average number of shares outstanding			15,200				15,042				15,178				15,114
(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	2023				2022					2023				2022
Net revenue ($000) (c)
Homecare	$	287,389			$	256,253				$	832,554			$	771,520
Inpatient		27,818				24,526					84,312				75,714
Continuous care		22,032				18,600					63,054				57,717
Other		3,562				3,240					9,738				9,461
Subtotal	$	340,801			$	302,619				$	989,658			$	914,412
Room and board, net		(2,646	)			(2,513	)				(8,317	)			(6,796	)
Contractual allowances		(4,302	)			(2,952	)				(10,650	)			(8,992	)
Medicare cap allowance		(125	)			(618	)				(5,625	)			(5,118	)
Net Revenue	$	333,728			$	296,536				$	965,066			$	893,506
Net revenue as a percent of total before Medicare cap allowance
Homecare		84.3		%		84.7		%			84.1		%		84.4		%
Inpatient		8.2				8.1					8.5				8.3
Continuous care		6.5				6.1					6.4				6.3
Other		1.0				1.1					1.0				1.0
Subtotal		100.0				100.0					100.0				100.0
Room and board, net		(0.8	)			(0.8	)				(0.8	)			(0.7	)
Contractual allowances		(1.3	)			(1.0	)				(1.1	)			(1.0	)
Medicare cap allowance		-				(0.2	)				(0.6	)			(0.6	)
Net Revenue		97.9		%		98.0		%			97.5		%		97.7		%
Days of care
Homecare		1,391,377				1,271,678					4,018,469				3,796,954
Nursing home		287,785				264,407					833,112				771,921
Respite		7,292				6,635					19,211				18,098
Subtotal routine homecare and respite		1,686,454				1,542,720					4,870,792				4,586,973
Inpatient		25,493				23,435					76,987				71,177
Continuous care		23,071				20,097					65,630				61,981
Total		1,735,018				1,586,252					5,013,409				4,720,131
Number of days in relevant time period		92				92					273				273
Average daily census ("ADC") (days)
Homecare		15,124				13,823					14,720				13,908
Nursing home		3,128				2,874					3,052				2,828
Respite		79				72					70				66
Subtotal routine homecare and respite		18,331				16,769					17,842				16,802
Inpatient		277				255					282				261
Continuous care		251				218					240				227
Total		18,859				17,242					18,364				17,290
Total Admissions		15,774				14,680					47,564				45,945
Total Discharges		15,328				14,603					45,837				46,139
Average length of stay (days)		103.1				106.2					100.8				104.9
Median length of stay (days)		17.0				17.0					16.0				16.0
ADC by major diagnosis
Cerebro		42.0		%		39.3		%			42.2		%		38.5		%
Neurological		14.7				22.0					15.9				22.3
Cancer		10.6				10.7					10.6				11.0
Cardio		16.4				15.4					16.1				15.6
Respiratory		7.2				7.2					7.1				7.3
Other		9.1				5.4					8.1				5.3
Total		100.0		%		100.0		%			100.0		%		100.0		%
Admissions by major diagnosis
Cerebro		26.6		%		25.9		%			26.3		%		24.2		%
Neurological		8.8				12.4					9.9				12.7
Cancer		26.1				26.6					26.0				26.2
Cardio		16.0				14.9					16.2				14.8
Respiratory		9.7				9.5					10.1				10.3
Other		12.8				10.7					11.5				11.8
Total		100.0		%		100.0		%			100.0		%		100.0		%
Estimated uncollectible accounts as a percent of revenues		1.3		%		1.0		%			1.1		%		1.0		%
Accounts receivable --
Days of revenue outstanding-excluding unapplied Medicare payments		36.4				33.8					n.a.				n.a.
Days of revenue outstanding-including unapplied Medicare payments		33.8				24.9					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, 2023 AND 2022
(unaudited)
(a)	Included in the results of operations for 2023 are the following significant credits/(charges) which may not be indicative of ongoing operations
	(in thousands):
			Three Months Ended September 30, 2023
			VITAS				Roto-Rooter				Corporate				Consolidated
	Stock option expense		$	-			$	-			$	(5,495	)		$	(5,495	)
	Long-term incentive compensation			-				-				(3,553	)			(3,553	)
	Amortization of reacquired franchise agreements			-				(2,352	)			-				(2,352	)
	Litigation settlements			-				(300	)			-				(300	)
	Pretax impact on earnings			-				(2,652	)			(9,048	)			(11,700	)
	Excess tax benefits on stock compensation			-				-				225				225
	Tax impact of deferred tax rate change			1,772				3,559				(1,090	)			4,241
	Income tax benefit on the above			-				412				914				1,326
	After-tax impact on earnings		$	1,772			$	1,319			$	(8,999	)		$	(5,908	)
			Nine Months Ended September 30, 2023
			VITAS				Roto-Rooter				Corporate				Consolidated
	Stock option expense		$	-			$	-			$	(22,376	)		$	(22,376	)
	Long-term incentive compensation			-				-				(7,817	)			(7,817	)
	Amortization of reacquired franchise agreements			-				(7,056	)			-				(7,056	)
	Litigation settlements			-				(2,056	)			-				(2,056	)
	Pretax impact on earnings			-				(9,112	)			(30,193	)			(39,305	)
	Excess tax benefits on stock compensation			-				-				3,376				3,376
	Tax impact of deferred tax rate change			1,772				3,559				(1,090	)			4,241
	Income tax benefit on the above			-				2,123				4,320				6,443
	After-tax impact on earnings		$	1,772			$	(3,430	)		$	(23,587	)		$	(25,245	)
(b)	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
	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			-				(2,352	)			(6,815	)			(9,167	)
	Excess tax benefits on stock compensation			-				-				450				450
	Income tax benefit on the above			-				623				851				1,474
	After-tax impact on earnings		$	-			$	(1,729	)		$	(5,514	)		$	(7,243	)
			Nine Months Ended September 30, 2022
			VITAS				Roto-Rooter				Corporate				Consolidated
	Stock option expense		$	-			$	-			$	(19,343	)		$	(19,343	)
	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			(448	)			(8,044	)			(24,309	)			(32,801	)
	Excess tax benefits on stock compensation			-				-				4,390				4,390
	Income tax benefit on the above			114				2,131				3,678				5,923
	After-tax impact on earnings		$	(334	)		$	(5,913	)		$	(16,241	)		$	(22,488	)
(c)	VITAS has 11 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, 25 provider numbers have a Medicare cap cushion of greater than 10%, two provider numbers have a Medicare cap cushion between 5% and 10%, one provider number has a Medicare 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/20231025895454/en/

David P. Williams

(513) 762-6901

Source: Chemed Corporation

FAQ

What was Chemed Corporation's revenue in Q3 2023?

Chemed Corporation reported a revenue of $565 million in Q3 2023.

What was the increase in GAAP Diluted EPS for Chemed Corporation in Q3 2023?

The increase in GAAP Diluted EPS for Chemed Corporation in Q3 2023 was 30.4%.

What was the net patient revenue increase for VITAS segment in Q3 2023?

The net patient revenue for VITAS segment increased by 12.5% in Q3 2023.

What was the revenue increase for Roto-Rooter segment in Q3 2023?

The revenue for Roto-Rooter segment increased by 0.4% in Q3 2023.

What was the total cash and cash equivalents for Chemed Corporation as of September 30, 2023?

Chemed Corporation had total cash and cash equivalents of $173 million as of September 30, 2023.