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 first quarter
ended March 31, 2019, versus the comparable prior-year period, as
follows:
Consolidated operating results:
- Revenue increased 5.2% to $462
million
- GAAP Diluted Earnings-per-Share (EPS)
of $2.70
- Adjusted Diluted EPS of $2.92, an
increase of 7.4%
VITAS segment operating results:
- Net Patient Revenue of $307 million, an
increase of 5.1%
- Average Daily Census (ADC) of 18,345,
an increase of 6.6%
- Admissions of 17,758, a decline of
2.9%
- Net Income, excluding certain discrete
items, of $34.6 million, an increase of 7.3%
- Adjusted EBITDA, excluding cap, of
$49.7 million, an increase of 16.0%
Roto-Rooter segment operating results:
- Revenue of $155 million, an increase of
5.5%
- Net Income, excluding certain discrete
items, of $23.3 million, an increase of 1.8%
- Adjusted EBITDA of $33.5 million, a
slight decline of 1.1%
- Adjusted EBITDA margin of 21.6%, a
decrease of 145-basis points
VITAS
VITAS net revenue was $307 million in the first quarter of 2019,
which is an increase of 5.1%, when compared to the prior-year
period. This revenue increase is comprised primarily of a
geographically weighted average Medicare reimbursement rate
increase of approximately 0.6% and a 6.6% increase in days-of-care.
This growth was partially offset by a Medicare Cap billing
limitation that decreased revenue growth by 1.8% as well as the
combination of acuity mix shift, fluctuations in net room and board
and contractual adjustments, the combination of which negatively
impacted revenue growth 0.4%, when compared to the prior-year
period.
In the first quarter of 2019, VITAS accrued $3.4 million in
Medicare Cap billing limitations. At March 31, 2019, VITAS had 30
Medicare provider numbers, three of which have an estimated 2019
calendar year Medicare Cap billing limitation of approximately $10
million.
Of VITAS’ 30 Medicare provider numbers, on a trailing 12-month
basis, 25 provider numbers have a Medicare Cap cushion of 10% or
greater, one provider number has a cap cushion between 5% and 10%,
one provider number has a cap cushion between 0% and 5%, and three
provider numbers have a Medicare Cap billing limitation.
Average revenue per patient per day in the quarter was $191.20,
which is 0.2% above the prior-year period. Reimbursement for
routine home care and high acuity care averaged $165.31 and
$750.13, respectively. During the quarter, high acuity days-of-care
were 4.4% of total days of care, 22-basis points less than the
prior-year quarter.
The first quarter of 2019 gross margin, excluding Medicare Cap,
was 22.7%, which is a 102-basis point increase when compared to the
first quarter of 2018.
Selling, general and administrative expense was $21.5 million in
the first quarter of 2019, which is an increase of 5.0% compared to
the prior-year quarter. Adjusted EBITDA, excluding Medicare Cap,
totaled $49.7 million in the quarter, an increase of 16.0%.
Adjusted EBITDA margin, excluding Medicare Cap, was 16.0% in the
quarter, which is a 126-basis point increase when compared to the
prior-year period.
Roto-Rooter
Roto-Rooter generated quarterly revenue of $155 million for the
first quarter of 2019, an increase of $8.1 million, or 5.5%, over
the prior-year quarter. Revenue from the water restoration service
segment totaled $27.7 million, a decrease of 0.3%, when compared to
the prior-year quarter. Approximately 90% of the water restoration
revenue is generated from residential customers and the remaining
10% is generated from commercial accounts.
Commercial drain cleaning revenue increased 8.3%, commercial
plumbing and excavation increased 5.3% and commercial water
restoration declined 26.4%. Overall, commercial revenue increased
3.4%.
Residential drain cleaning increased 5.8%, plumbing and
excavation increased 7.5% and residential water restoration
increased 3.8%. Aggregate residential sales increased 5.9%.
Roto-Rooter’s gross margin in the quarter was 47.0%, a 44-basis
point decline when compared to the first quarter of 2018. Adjusted
EBITDA in the first quarter of 2019 totaled $33.5 million, a
decrease of 1.1%. The Adjusted EBITDA margin in the quarter was
21.6% which is a 145-basis point decline over the prior year.
Chemed
Consolidated
As of March 31, 2019, Chemed had total cash and cash equivalents
of $9 million and debt of $100 million.
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 March 31,
2019, the Company had approximately $314 million of undrawn
borrowing capacity under this credit agreement.
During the quarter, the Company repurchased 150,000 shares of
Chemed stock for $49.2 million, which equates to a cost per share
of $328.33. On February 22, 2019, Chemed’s Board of Directors
authorized an additional $150 million for stock repurchase under
Chemed’s existing share repurchase program. As of March 31, 2019,
there was approximately $147 million of remaining share repurchase
authorization under this plan.
Chemed restarted its share repurchase program in 2007. Since
that time Chemed has repurchased over 14 million shares,
aggregating approximately $1.2 billion at an average share cost of
$83.56. Including dividends over this period, Chemed has returned
approximately $1.3 billion to shareholders.
Guidance for
2019
Revenue growth for VITAS in 2019, prior to Medicare Cap, is
estimated to be in the range of 5.5% to 6.0%. Admissions are
estimated to expand approximately 3.0% to 4.0% and Average Daily
Census in 2019 is estimated to expand approximately 4.0% to 5.0%.
Full-year Adjusted EBITDA margin, prior to Medicare Cap, is
estimated to be 15.9%. We are currently estimating $10 million for
Medicare Cap billing limitations in calendar 2019.
Roto-Rooter is forecasted to achieve full-year 2019 revenue
growth of 9.0% to 10.0%. This revenue estimate is based upon
increased job pricing of approximately 2%, continued growth in core
plumbing and drain cleaning services as well as continued but
slowing revenue growth from water restoration services.
Roto-Rooter’s Adjusted EBITDA margin for 2019 is estimated at
23.7%.
Based upon the above, full-year 2019 adjusted earnings per
diluted share, excluding non-cash expense for stock options, tax
benefits from stock options, costs related to litigation, and other
discrete items, is estimated to be in the range of $12.65 to
$12.85. This 2019 guidance assumes an effective corporate tax rate
of 25.2%. Chemed’s 2018 reported adjusted earnings per diluted
share was $11.93.
Conference
Call
Chemed will host a conference call and webcast at 10 a.m., ET,
on Tuesday, April 30, 2019, 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 participant passcode/Conference ID is 5375966. 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 5375966. 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 18,500 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 March 31,
2019 2018 Service
revenues and sales
$ 462,034 $ 439,176
Cost of services provided and goods sold
321,951 304,536
Selling, general and administrative expenses (aa)
74,029
69,000 Depreciation
9,710 9,267 Amortization
519 27
Other operating (income)/expense
6,353
(51 ) Total costs and expenses
412,562
382,779 Income from operations
49,472 56,397 Interest
expense
(1,124 ) (1,207 ) Other income--net (bb)
2,439 1,018 Income before income
taxes
50,787 56,208 Income taxes
(6,120
) (11,212 ) Net income
$ 44,667
$ 44,996
Earnings Per Share Net income
$ 2.80 $ 2.79 Average number of shares
outstanding
15,954 16,100
Diluted Earnings Per Share Net income
$ 2.70
$ 2.66 Average number of shares outstanding
16,525 16,887
(aa) Selling, general and administrative ("SG&A")
expenses comprise (in thousands): Three Months Ended March 31,
2019 2018
SG&A expenses before long-term
incentive compensation and the impact of market value adjustments
related to deferred compensation trusts
$ 70,203 $ 66,220 Market value gains related to
deferred compensation trusts
2,338 860 Long-term incentive
compensation
1,488 1,920 Total
SG&A expenses
$ 74,029 $ 69,000
(bb) Other income--net comprises (in thousands): Three
Months Ended March 31,
2019 2018 Market value gains related
to deferred compensation trusts
$ 2,338 $ 860
Interest income
101 158 Total
other income--net
$ 2,439 $ 1,018
CHEMED CORPORATION AND SUBSIDIARY
COMPANIES
CONSOLIDATED BALANCE SHEETS
(in thousands, except per share
data)(unaudited)
March 31,
2019 2018
Assets Current
assets Cash and cash equivalents
$ 8,768 $ 13,686
Accounts receivable
119,575 111,332 Inventories
6,315
5,274 Prepaid income taxes
5,349 16,160 Prepaid expenses
19,148 15,047 Total current
assets
159,155 161,499 Investments of deferred compensation
plans held in trust
70,632 66,163 Properties and equipment,
at cost less accumulated depreciation
164,629 144,706 Lease
right of use assets
87,811 - Identifiable intangible assets
less accumulated amortization
67,868 55,163 Goodwill
510,598 477,964 Other assets
9,138
7,161 Total Assets
$ 1,069,831 $
912,656
Liabilities Current liabilities
Accounts payable
$ 39,737 $ 42,639 Current portion of
long-term debt
- 10,000 Income taxes
3,922 - Accrued
insurance
48,477 48,303 Accrued compensation
52,526
49,685 Accrued legal
8,163 1,643 Short-term lease liability
30,699 - Other current liabilities
33,576
25,027 Total current liabilities
217,100 177,297 Deferred income taxes
18,108 13,832
Long-term debt
100,000 132,500 Deferred compensation
liabilities
70,934 65,289 Long-term lease liability
67,960 - Other liabilities
7,719
16,779 Total Liabilities
481,821
405,697
Stockholders' Equity Capital stock
35,521 34,885 Paid-in capital
803,701 712,991
Retained earnings
1,265,485 1,078,690 Treasury stock, at
cost
(1,519,077 ) (1,321,843 ) Deferred compensation
payable in Company stock
2,380 2,236
Total Stockholders' Equity
588,010
506,959 Total Liabilities and Stockholders' Equity
$ 1,069,831 $ 912,656
CHEMED CORPORATION AND SUBSIDIARY
COMPANIES
CONSOLIDATED STATEMENTS OF CASH
FLOWS
(in thousands)(unaudited)
Three Months Ended
March 31,
2019
2018
Cash Flows from Operating Activities Net income
$ 44,667 $ 44,996
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation and amortization
10,229 9,294 Litigation
settlement
6,000 - Stock option expense
4,089 3,653
Benefit for deferred income taxes
(3,489 ) (2,807 )
Noncash long-term incentive compensation
1,119 1,721
Amortization of restricted stock awards
- 291 Amortization
of debt issuance costs
76 128 Changes in operating assets
and liabilities (Increase)/decrease in accounts receivable
(81 ) 1,591 (Increase)/decrease in inventories
(610 ) 60 Decrease in prepaid expenses
6 1,045
Increase/(decrease) in accounts payable and other current
liabilities
348 (7,911 ) Change in current income taxes
9,219 13,642 Increase in other assets
(5,006 )
(4,263 ) Increase in other liabilities
6,459 3,758 Other
sources/(uses)
559 (5 ) Net cash
provided by operating activities
73,585
65,193
Cash Flows from Investing Activities Capital
expenditures
(13,866 ) (12,648 ) Business
combinations
- (1,450 ) Other (uses)/sources
(68 ) 181 Net cash used by investing
activities
(13,934 ) (13,917 )
Cash
Flows from Financing Activities Proceeds from revolving line of
credit
125,100 134,300 Payments on revolving line of credit
(114,300 ) (90,500 ) Purchase of treasury stock
(49,250 ) (81,125 ) Change in cash overdrafts payable
(13,303 ) (6,671 ) Proceeds from exercise of stock
options
11,827 8,923 Capital stock surrendered to pay taxes
on stock-based compensation
(11,170 ) (6,377 )
Dividends paid
(4,799 ) (4,533 ) Payments on other
long-term debt
- (2,500 ) Other sources/(uses)
181 (228 ) Net cash used by financing
activities
(55,714 ) (48,711 )
Increase in Cash and Cash Equivalents 3,937 2,565
Cash and cash equivalents at beginning of year
4,831
11,121 Cash and cash equivalents at end of
period
$ 8,768 $ 13,686
CHEMED CORPORATION AND SUBSIDIARY
COMPANIES
CONSOLIDATING STATEMENTS OF
INCOME
FOR THE THREE MONTHS ENDED MARCH 31,
2019 AND 2018
(in thousands)(unaudited)
Chemed VITAS
Roto-Rooter Corporate Consolidated 2019
Service revenues and sales (a) $ 306,781 $ 155,253 $
- $ 462,034 Cost of services provided and goods sold
239,743 82,208 - 321,951 Selling, general and administrative
expenses (a) 21,536 39,601 12,892 74,029 Depreciation 4,708 4,963
39 9,710 Amortization 18 501 - 519 Other operating expenses (a)
6,354 (1 ) - 6,353
Total costs and expenses 272,359 127,272
12,931 412,562 Income/(loss)
from operations 34,422 27,981 (12,931 ) 49,472 Interest expense (47
) (95 ) (982 ) (1,124 ) Intercompany interest income/(expense)
4,394 2,195 (6,589 ) - Other income-net 88 14
2,337 2,439 Income/(loss) before income
taxes 38,857 30,095 (18,165 ) 50,787 Income taxes (a) (9,569
) (7,109 ) 10,558 (6,120 ) Net
income/(loss) $ 29,288 $ 22,986 $ (7,607 ) $ 44,667
2018 Service revenues and sales (b) $ 292,013
$ 147,163 $ - $ 439,176 Cost of services
provided and goods sold 227,256 77,280 - 304,536 Selling, general
and administrative expenses (b) 20,510 36,098 12,392 69,000
Depreciation 4,797 4,443 27 9,267 Amortization - 27 - 27 Other
operating expenses (18 ) (33 ) -
(51 ) Total costs and expenses 252,545 117,815
12,419 382,779 Income/(loss)
from operations 39,468 29,348 (12,419 ) 56,397 Interest expense (52
) (91 ) (1,064 ) (1,207 ) Intercompany interest income/(expense)
3,095 1,677 (4,772 ) - Other income-net 142 16
860 1,018 Income/(loss) before income
taxes 42,653 30,950 (17,395 ) 56,208 Income taxes (b)
(10,638 ) (8,012 ) 7,438 (11,212 ) Net
income/(loss) $ 32,015 $ 22,938 $ (9,957 ) $ 44,996
The "Footnotes to Financial Statements" are integral parts
of this financial information.
CHEMED CORPORATION AND SUBSIDIARY
COMPANIES
CONSOLIDATING SUMMARY OF EBITDA
FOR THE THREE MONTHS ENDED MARCH 31,
2019 AND 2018
(in thousands)(unaudited)
Chemed VITAS
Roto-Rooter Corporate Consolidated 2019
Net income/(loss) $ 29,288 $ 22,986 $ (7,607 ) $ 44,667
Add/(deduct): Interest expense 47 95 982 1,124 Income taxes 9,569
7,109 (10,558 ) 6,120 Depreciation 4,708 4,963 39 9,710
Amortization 18 501 -
519 EBITDA 43,630 35,654 (17,144 ) 62,140
Add/(deduct): Intercompany interest income/(expense) (4,394 )
(2,195 ) 6,589 - Interest income (88 ) (14 ) - (102 ) Litigation
settlement 6,000 - - 6,000 Non cash ASC 842 expenses/(benefit) 656
55 (163 ) 548 Medicare cap sequestration adjustment 515 - - 515
Acquisition expenses - - 120 120 Stock option expense - - 4,089
4,089 Long-term incentive compensation - -
1,488 1,488 Adjusted EBITDA $
46,319 $ 33,500 $ (5,021 ) $ 74,798
2018 Net income/(loss) $ 32,015 $ 22,938 $ (9,957 ) $ 44,996
Add/(deduct): Interest expense 52 91 1,064 1,207 Income taxes
10,638 8,012 (7,438 ) 11,212 Depreciation 4,797 4,443 27 9,267
Amortization - 27 -
27 EBITDA 47,502 35,511 (16,304 ) 66,709
Add/(deduct): Intercompany interest income/(expense) (3,095 )
(1,677 ) 4,772 - Interest income (142 ) (16 ) - (158 ) Amortization
of stock awards 70 65 156 291 Medicare cap sequestration adjustment
352 - - 352 Stock option expense - - 3,653 3,653 Long-term
incentive compensation - - 1,920
1,920 Adjusted EBITDA $ 44,687 $ 33,883
$ (5,803 ) $ 72,767 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 March 31,
2019 2018 Net income as reported
$
44,667 $ 44,996 Add/(deduct) pre-tax cost of:
Litigation settlement
6,000 - Stock option expense
4,089 3,653 Long-term incentive compensation
1,488
1,920 Non cash ASC 842 expenses
548 - Medicare cap
sequestration adjustment
515 352 Amortization of acquired
and cancelled franchise agreements
441 - Acquisition
expenses
120 - Add/(deduct) tax impacts: Tax impact of the
above pre-tax adjustments (1)
(2,961 ) (1,272 )
Excess tax benefits on stock compensation
(6,732
) (3,798 ) Adjusted net income
$ 48,175
$ 45,851 Diluted Earnings Per
Share As Reported Net income
$ 2.70 $ 2.66
Average number of shares outstanding
16,525
16,887 Adjusted Diluted Earnings Per
Share Adjusted net income
$ 2.92 $ 2.72
Average number of shares outstanding
16,525
16,887
(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 March 31, OPERATING
STATISTICS
2019 2018 Net revenue ($000) (c) Homecare
$ 258,847 $ 241,031 Inpatient
22,570 22,108
Continuous care
32,244 30,766 Other
2,010
1,741 Subtotal
$ 315,671 $
295,646 Room and board, net
(2,542 ) (2,618 )
Contractual allowances
(2,948 ) (2,833 ) Medicare cap
allowance
(3,400 ) 1,818 Net
Revenue
$ 306,781 $ 292,013
Net revenue as a percent of total before
Medicare cap allowance
Homecare
82.0 % 81.5 Inpatient
7.1 7.5
Continuous care
10.2 10.4 Other
0.7 0.6
Subtotal
100.0 100.0 Room and board, net
(0.9
) (0.9 ) Contractual allowances
(1.0 ) (0.9 )
Medicare cap allowance
(0.9 ) 0.6
Net Revenue
97.2 % 98.8 Average
daily census ("ADC") (days) Homecare
14,243 13,162 Nursing
home
3,254 3,215 Routine
homecare
17,497 16,377 Inpatient
360 352 Continuous
care
488 480 Total
18,345 17,209 Total Admissions
17,758 18,279 Total Discharges
17,339 17,558 Average
length of stay (days)
91.3 87.9 Median length of stay (days)
15.0 15.0 ADC by major diagnosis Neurological
19.9
% 18.5 Cerebro
35.6 36.2 Cancer
13.1 13.9
Cardio
16.9 16.4 Respiratory
8.2 8.2 Other
6.3 6.8 Total
100.0
% 100.0 Admissions by major diagnosis Neurological
12.8 % 11.4 Cerebro
20.7 22.6 Cancer
28.0 28.0 Cardio
16.3 15.5 Respiratory
12.0
11.7 Other
10.2 10.8 Total
100.0 % 100.0 Direct patient care
margins (d) Routine homecare
52.7 % 52.1 Inpatient
6.5 7.5 Continuous care
18.2 17.7 Homecare margin
drivers (dollars per patient day) Labor costs
$ 59.42
$ 58.63
Combined drug, home medical equipment and
medical supplies cost
13.08 14.47 Inpatient margin drivers (dollars per patient
day) Labor costs
$ 364.62 $ 362.75 Continuous care
margin drivers (dollars per patient day) Labor costs
$
582.54 $ 567.51
Estimated uncollectible accounts as a
percent of revenues
1.0 % 1.0 Accounts receivable -- Days of revenue
outstanding- excluding unapplied Medicare payments
34.9 32.6
Days of revenue outstanding- including unapplied Medicare payments
23.3 22.6 The "Footnotes to Financial Statements" are
integral parts of this financial information.
CHEMED CORPORATION AND SUBSIDIARY COMPANIES FOOTNOTES TO
FINANCIAL STATEMENTS FOR THE THREE MONTHS ENDED MARCH 31,
2019 AND 2018
(unaudited)
(a)
Included in the results of operations for
the three months ended March 31, 2019, are the following
significant credits/(charges) which may not be indicative of
ongoing operations (in thousands):
VITAS
Roto-Rooter Corporate
Total Service revenues and sales: Medicare cap
sequestration adjustment $ (515 ) $ - $ - $ (515 ) Selling, general
and administrative expenses: Non cash ASC 842 (expenses)/benefit
(656 ) (55 ) 163 (548 ) Amortization of acquired and cancelled
franchise agreements - (441 ) - (441 ) Acquisition expense - - (120
) (120 ) Stock option expense - - (4,089 ) (4,089 ) Long term
incentive compensation - - (1,488 ) (1,488 ) Other operating
expenses: Litigation settlement
(6,000
) - -
(6,000 ) Pretax impact on
earnings (7,171 ) (496 ) (5,534 ) (13,201 ) Excess tax benefits on
stock compensation - - 6,732 6,732 Income tax benefit on the above
1,819 132
1,010 2,961
After-tax impact on earnings
$ (5,352
) $ (364 )
$ 2,208 $
(3,508 ) (b)
Included in the results of operations for
the three months ended March 31, 2018, are the following
significant credits/(charges) which may not be indicative of
ongoing operations (in thousands):
VITAS Corporate
Total Service revenues and sales: Medicare cap
sequestration adjustment $ (352 ) $ - $ (352 ) Selling, general and
administrative expenses: Stock option expense - (3,653 ) (3,653 )
Long-term incentive compensation
-
(1,920 )
(1,920 ) Pretax impact on earnings (352 )
(5,573 ) (5,925 ) Excess tax benefits on stock compensation - 3,798
3,798 Income tax benefit on the above
89
1,183 1,272
After-tax impact on earnings
$ (263
) $ (592 )
$ (855 ) (c)
VITAS has 12 large (greater than 450 ADC),
18 medium (greater than 200 but less than 450 ADC) and 17 small
(less than 200 ADC) hospice programs. Of VITAS' 30 unique Medicare
provider numbers, 25 provider numbers have a Medicare cap cushion
of 5% or greater, two provider number has a cap cushion between 0%
and 5% and three provider numbers have a Medicare cap billing
limitation for the 2019 Medicare cap period.
(d) Amounts exclude indirect patient care and administrative costs,
as well as Medicare Cap billing limitation.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20190429005574/en/
David P. Williams(513) 762-6901
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