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, 2020, versus the comparable prior-year period, as
follows:
Consolidated operating results:
- Revenue increased 11.6% to $516 million
- GAAP Diluted Earnings-per-Share (EPS) of $3.38, an increase of
25.2%
- Adjusted Diluted EPS of $3.68, an increase of 26.0%
VITAS segment operating results:
- Net Patient Revenue of $338 million, an increase of 10.1%
- Average Daily Census (ADC) of 19,215, an increase of 4.7%
- Admissions of 18,603, an increase of 4.8%
- Net Income, excluding certain discrete items, of $42.5 million,
an increase of 22.7%
- Adjusted EBITDA, excluding Medicare Cap, of $60.2 million, an
increase of 21.2%
- Adjusted EBITDA margin, excluding Medicare Cap, of 17.7%, an
increase of 167-basis points
Roto-Rooter segment operating results:
- Revenue of $178 million, an increase of 14.6%
- Net Income, excluding certain discrete items, of $26.7 million,
an increase of 14.3%
- Adjusted EBITDA of $40.0 million, an increase of 19.5%
- Adjusted EBITDA margin of 22.5%, an increase of 92-basis
points
VITAS
VITAS net revenue was $338 million in the first quarter of 2020,
which is an increase of 10.1%, when compared to the prior-year
period. This revenue increase is comprised primarily of a 5.9%
increase in days-of-care, a geographically weighted average
Medicare reimbursement rate increase of approximately 5.0%, and
acuity mix shift which then reduced the Medicare rate increase
approximately 90-basis points. The combination of a decline in
Medicare Cap, increase in Medicaid net room and board pass through
and other contra revenue activity had minimal impact on overall
revenue growth in the quarter.
In the first quarter of 2020, VITAS accrued $2.5 million in
Medicare Cap billing limitations. This compares to the prior-year
Medicare Cap billing limitation of $3.4 million.
VITAS currently has 30 Medicare provider numbers. During the
first six months of the fiscal 2020 Medicare Cap year, 23 of these
provider numbers have a Medicare Cap cushion of 10% or greater, two
provider numbers have a cap cushion between 5% and 10%, two
provider numbers have a cap cushion between 0% and 5%, and three
provider numbers have an estimated 2020 Medicare Cap billing
limitation.
Average revenue per patient per day in the first quarter of 2020
was $198.99, which, including acuity mix shift, is 4.1% above the
prior-year period. Reimbursement for routine home care and high
acuity care averaged $164.14 and $990.72, respectively. During the
quarter, high acuity days-of-care were 4.2% of total days of care,
21-basis points less than the prior-year quarter. This 21-basis
point mix shift in high acuity days-of-care reduced the increase in
average revenue per patient per day from 5.0% to 4.1% in the
quarter.
The first quarter 2020 gross margin, excluding Medicare Cap, was
23.8%, which is a 108-basis point margin improvement when compared
to the first quarter of 2019.
Selling, general and administrative expense was $22.3 million in
the first quarter of 2020, which is an increase of 3.4% compared to
the prior-year quarter. Adjusted EBITDA, excluding Medicare Cap,
totaled $60.2 million in the quarter, an increase of 21.2%.
Adjusted EBITDA margin, excluding Medicare Cap, was 17.7% in the
quarter, which is a 167-basis point improvement when compared to
the prior-year period.
Roto-Rooter
Roto-Rooter generated quarterly revenue of $178 million for the
first quarter of 2020, an increase of $22.6 million, or 14.6%, over
the prior-year quarter. On a unit for unit basis, which excludes
the Oakland and HSW acquisitions completed in July and September
2019, respectively, Roto-Rooter generated quarterly revenue of $158
million for the first quarter of 2020, an increase of 1.6%, over
the prior-year quarter.
Including acquisitions, total commercial revenue increased
20.1%. This aggregate commercial revenue growth consisted of drain
cleaning revenue expanding 25.0%, commercial plumbing and
excavation increasing 20.1%, and commercial water restoration
declining 4.4%.
Excluding acquisitions, commercial drain cleaning revenue were
equal to the prior year, commercial plumbing and excavation
declined 4.3%, and commercial water restoration declined 15.5%.
Commercial water restoration represents approximately 10% of total
water restoration service revenue. Overall, commercial revenue
excluding acquisitions decreased 3.5%.
Including acquisitions, total residential revenue increased
11.7%. This aggregate residential revenue growth consisted of
residential drain cleaning increasing 18.5%, plumbing and
excavation expanding 14.4%, and residential water restoration
increasing 1.0%.
Excluding acquisitions, residential drain cleaning increased
4.1%, plumbing and excavation increased 4.4%, and residential water
restoration decreased 1.9%. Overall, residential sales excluding
acquisitions increased 2.4%.
Roto-Rooter’s gross margin in the quarter was 48.1%, a 105-basis
point increase when compared to the first quarter of 2019. Adjusted
EBITDA in the first quarter of 2020 totaled $40.0 million, an
increase of 19.5%. The Adjusted EBITDA margin in the quarter was
22.5% which is a 92-basis point increase when compared to the prior
year.
Chemed
Consolidated
As of March 31, 2020, Chemed had total cash and cash equivalents
of $29.0 million and long-term debt of $160 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,
2020, the Company had approximately $252 million of undrawn
borrowing capacity under this credit agreement.
During the quarter, the Company repurchased 225,000 shares of
Chemed stock for $100.2 million which equates to a cost per share
of $445.49. On March 13, 2020, Chemed’s Board of Directors
authorized an additional $250 million for stock repurchase under
Chemed’s existing share repurchase program. As of March 31, 2020,
there was approximately $254 million of remaining share repurchase
authorization under this plan.
Chemed restarted its share repurchase program in 2007. Since
that time Chemed has repurchased approximately 14.4 million shares,
aggregating approximately $1.3 billion at an average share cost of
$91.56. Including dividends over this period, Chemed has returned
approximately $1.5 billion to shareholders.
Guidance for
2020
Management anticipates providing updated 2020 earnings guidance
in July 2020 as part of the June 30, 2020, earnings press
release.
Conference Call
Chemed will host a conference call and webcast at 10 a.m., ET,
on Wednesday, April 29, 2020, to discuss the Company's quarterly
results and to provide an update on its business. The dial-in
number for the conference call is (844) 743-2500 for U.S. and
Canadian participants and +1 (661) 378-9533 for international
participants. The Conference ID is 2398574. 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 2398574. 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 19,000 patients with severe,
life-limiting illnesses. This type of care is focused on making the
terminally ill patient's final days as comfortable and pain-free as
possible.
Chemed operates in the residential and commercial plumbing and
drain cleaning industry under the brand name Roto-Rooter.
Roto-Rooter provides plumbing, drain cleaning, and water cleanup
services through company-owned branches, independent contractors
and franchisees in the United States and Canada. Roto-Rooter also
has licensed master franchisees in the republics of Indonesia and
Singapore, and the Philippines.
This press release contains information about Chemed’s EBITDA,
Adjusted EBITDA and Adjusted Diluted EPS, which are not measures
derived in accordance with GAAP and which exclude components that
are important to understanding Chemed’s financial performance. In
reporting its operating results, Chemed provides EBITDA, Adjusted
EBITDA and Adjusted Diluted EPS measures to help investors and
others evaluate the Company’s operating results, compare its
operating performance with that of similar companies that have
different capital structures and evaluate its ability to meet its
future debt service, capital expenditures and working capital
requirements. Chemed’s management similarly uses EBITDA, Adjusted
EBITDA and Adjusted Diluted EPS to assist it in evaluating the
performance of the Company across fiscal periods and in assessing
how its performance compares to its peer companies. These measures
also help Chemed’s management to estimate the resources required to
meet Chemed’s future financial obligations and expenditures.
Chemed’s EBITDA, Adjusted EBITDA and Adjusted Diluted EPS should
not be considered in isolation or as a substitute for comparable
measures calculated and presented in accordance with GAAP. We
calculated Adjusted EBITDA Margin by dividing Adjusted EBITDA by
service revenue and sales. A reconciliation of Chemed’s net income
to its EBITDA, Adjusted EBITDA and Adjusted Diluted EPS is
presented in the tables following the text of this press
release.
Forward-Looking Statements
Certain statements contained in this press release and the
accompanying tables are "forward-looking statements" within the
meaning of the Private Securities Litigation Reform Act of 1995.
The words "believe," "expect," "hope," "anticipate," "plan" and
similar expressions identify forward-looking statements, which
speak only as of the date the statement was made. Chemed does not
undertake and specifically disclaims any obligation to publicly
update or revise any forward-looking statements, whether as a
result of new information, future events or otherwise. These
statements are based on current expectations and assumptions and
involve various risks and uncertainties, which could cause Chemed's
actual results to differ from those expressed in such
forward-looking statements.
These risks and uncertainties arise from, among other things,
possible changes in regulations governing the hospice care or
plumbing and drain cleaning industries; periodic changes in
reimbursement levels and procedures under Medicare and Medicaid
programs; difficulties predicting patient length of stay and
estimating potential Medicare reimbursement obligations; challenges
inherent in Chemed's growth strategy; the current shortage of
qualified nurses, other healthcare professionals and licensed
plumbing and drain cleaning technicians; Chemed’s dependence on
patient referral sources; and other factors detailed under the
caption "Description of Business by Segment" or "Risk Factors" in
Chemed’s most recent report on form 10-Q or 10-K and its other
filings with the Securities and Exchange Commission. You are
cautioned not to place undue reliance on such forward-looking
statements and there are no assurances that the matters contained
in such statements will be achieved.
CHEMED CORPORATION AND SUBSIDIARY COMPANIES
CONSOLIDATED STATEMENTS OF INCOME (in thousands, except per
share data)(unaudited)
Three Months Ended March 31,
2020
2019
Service revenues and sales
$
515,798
$
462,034
Cost of services provided and goods sold
351,745
321,951
Selling, general and administrative expenses (aa)
70,583
74,029
Depreciation
11,388
9,710
Amortization
2,477
519
Other operating expenses
242
6,353
Total costs and expenses
436,435
412,562
Income from operations
79,363
49,472
Interest expense
(975
)
(1,124
)
Other (expense)/income--net (bb)
(9,466
)
2,439
Income before income taxes
68,922
50,787
Income taxes
(13,031
)
(6,120
)
Net income
$
55,891
$
44,667
Earnings Per Share
Net income
$
3.50
$
2.80
Average number of shares outstanding
15,991
15,954
Diluted Earnings Per Share
Net income
$
3.38
$
2.70
Average number of shares outstanding
16,516
16,525
(aa) Selling, general and administrative ("SG&A") expenses
comprise (in thousands):
Three Months Ended March 31,
2020
2019
SG&A expenses before long-term incentive compensation and the
impact of market value adjustments related to deferred compensation
plans
$
78,334
$
70,203
Market value adjustments related to deferred compensation trusts
(9,572
)
2,338
Long-term incentive compensation
1,821
1,488
Total SG&A expenses
$
70,583
$
74,029
(bb) Other (expense)/income--net comprises (in thousands):
Three Months Ended March 31,
2020
2019
Market value adjustments related to deferred compensation trusts
$
(9,572
)
$
2,338
Interest income
106
101
Total other (expense)/income--net
$
(9,466
)
$
2,439
CHEMED CORPORATION AND SUBSIDIARY COMPANIES
CONSOLIDATED BALANCE SHEETS (in thousands, except per share
data)(unaudited)
March 31,
2020
2019
Assets Current assets Cash and cash equivalents
$
28,951
$
8,768
Accounts receivable less allowances
134,695
119,575
Inventories
7,313
6,315
Prepaid income taxes
5,917
5,349
Prepaid expenses
21,939
19,148
Total current assets
198,815
159,155
Investments of deferred compensation plans held in trust
72,296
70,632
Properties and equipment, at cost less accumulated depreciation
183,729
164,629
Lease right of use asset
112,302
87,811
Identifiable intangible assets less accumulated amortization
124,219
67,868
Goodwill
577,236
510,598
Other assets
8,962
9,138
Total Assets
$
1,277,559
$
1,069,831
Liabilities
Current liabilities
Accounts payable
$
37,838
$
39,737
Income taxes
6,133
3,922
Accrued insurance
56,480
48,477
Accrued compensation
63,622
52,526
Accrued legal
7,114
8,163
Short-term lease liability
36,252
30,699
Other current liabilities
39,298
33,576
Total current liabilities
246,737
217,100
Deferred income taxes
20,681
18,108
Long-term debt
160,000
100,000
Deferred compensation liabilities
70,363
70,934
Long-term lease liability
88,278
67,960
Other liabilities
7,899
7,719
Total Liabilities
593,958
481,821
Stockholders' Equity
Capital stock
35,912
35,521
Paid-in capital
878,550
803,701
Retained earnings
1,476,151
1,265,485
Treasury stock, at cost
(1,709,390
)
(1,519,077
)
Deferred compensation payable in Company stock
2,378
2,380
Total Stockholders' Equity
683,601
588,010
Total Liabilities and Stockholders' Equity
$
1,277,559
$
1,069,831
CHEMED CORPORATION AND SUBSIDIARY COMPANIES
CONSOLIDATED STATEMENTS OF CASH FLOWS (in
thousands)(unaudited)
For the Three Months Ended March
31,
2020
2019
Cash Flows from Operating Activities Net income
$
55,891
$
44,667
Adjustments to reconcile net income to net cash provided by
operating activities:
Depreciation and amortization
13,865
10,229
Stock option expense
5,045
4,089
Provision/(benefit) for deferred income taxes
2,290
(3,489
)
Noncash long-term incentive compensation
1,598
1,119
Provision for bad debts
594
-
Amortization of debt issuance costs
76
76
Litigation settlement
-
6,000
Changes in operating assets and liabilities, excluding amounts
acquired in business combinations:
Decrease/(increase) in accounts receivable
6,269
(81
)
Decrease/(increase) in inventories
149
(610
)
Decrease in prepaid expenses
1,211
6
(Decrease)/increase in accounts payable and other current
liabilities
(7,037
)
348
Change in current income taxes
10,159
9,219
Net change in lease assets and liabilities
(153
)
(328
)
Decrease/(increase) in other assets
5,048
(5,006
)
(Decrease)/increase in other liabilities
(6,067
)
6,459
Other sources
388
887
Net cash provided by operating activities
89,326
73,585
Cash Flows from Investing Activities
Capital expenditures
(19,897
)
(13,866
)
Business combinations
(1,452
)
-
Other uses
(144
)
(68
)
Net cash used by investing activities
(21,493
)
(13,934
)
Cash Flows from Financing Activities
Proceeds from revolving line of credit
174,100
125,100
Payments on revolving line of credit
(104,100
)
(114,300
)
Purchases of treasury stock
(100,235
)
(49,250
)
Change in cash overdrafts payable
(9,849
)
(13,303
)
Proceeds from exercise of stock options
9,241
11,827
Capital stock surrendered to pay taxes on stock-based compensation
(7,951
)
(11,170
)
Dividends paid
(5,130
)
(4,799
)
Other (uses)/sources
(1,116
)
181
Net cash used by financing activities
(45,040
)
(55,714
)
Increase in Cash and Cash Equivalents
22,793
3,937
Cash and cash equivalents at beginning of year
6,158
4,831
Cash and cash equivalents at end of year
$
28,951
$
8,768
CHEMED CORPORATION AND SUBSIDIARY COMPANIES
CONSOLIDATING STATEMENTS OF INCOME FOR THE THREE MONTHS
ENDED MARCH 31, 2020 AND 2019 (in thousands)(unaudited)
Chemed VITAS Roto-Rooter Corporate
Consolidated 2020 (a) Service revenues and sales
$
337,916
$
177,882
$
-
$
515,798
Cost of services provided and goods sold
259,429
92,316
-
351,745
Selling, general and administrative expenses
22,269
46,282
2,032
70,583
Depreciation
5,474
5,878
36
11,388
Amortization
18
2,459
-
2,477
Other operating expense
114
128
-
242
Total costs and expenses
287,304
147,063
2,068
436,435
Income/(loss) from operations
50,612
30,819
(2,068
)
79,363
Interest expense
(45
)
(102
)
(828
)
(975
)
Intercompany interest income/(expense)
4,386
1,349
(5,735
)
-
Other (expense)/income—net
65
40
(9,571
)
(9,466
)
Income/(loss) before income taxes
55,018
32,106
(18,202
)
68,922
Income taxes
(13,739
)
(7,784
)
8,492
(13,031
)
Net income/(loss)
$
41,279
$
24,322
$
(9,710
)
$
55,891
2019 (b)
Service revenues and sales
$
306,781
$
155,253
$
-
$
462,034
Cost of services provided and goods sold
239,743
82,208
-
321,951
Selling, general and administrative expenses
21,536
39,601
12,892
74,029
Depreciation
4,708
4,963
39
9,710
Amortization
18
501
-
519
Other operating expense
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
(9,569
)
(7,109
)
10,558
(6,120
)
Net income/(loss)
$
29,288
$
22,986
$
(7,607
)
$
44,667
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 MARCH 31, 2020 AND
2019 (in thousands)(unaudited)
Chemed
VITAS Roto-Rooter Corporate
Consolidated
2020
Net income/(loss)
$
41,279
$
24,322
$
(9,710
)
$
55,891
Add/(deduct):
Interest expense
45
102
828
975
Income taxes
13,739
7,784
(8,492
)
13,031
Depreciation
5,474
5,878
36
11,388
Amortization
18
2,459
-
2,477
EBITDA
60,555
40,545
(17,338
)
83,762
Add/(deduct):
Intercompany interest expense/(income)
(4,386
)
(1,349
)
5,735
-
Interest income
(68
)
(40
)
-
(108
)
Stock option expense
-
-
5,045
5,045
Direct costs related to COVID-19
973
861
-
1,834
Long-term incentive compensation
-
-
1,821
1,821
Medicare cap sequestration adjustment
675
-
-
675
Adjusted EBITDA
$
57,749
$
40,017
$
(4,737
)
$
93,029
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 expense/(income)
(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 expense
-
-
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
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,
2020
2019
Net income as reported
$
55,891
$
44,667
Add/(deduct) pre-tax cost of:
Stock option expense
5,045
4,089
Amortization of reacquired franchise agreements
2,352
441
Direct costs related to COVID-19
1,834
-
Long-term incentive compensation
1,821
1,488
Medicare cap sequestration adjustments
675
515
Litigation settlement
-
6,000
Acquisition expense
-
120
Non cash ASC 842 expenses
-
548
Add/(deduct) tax impacts:
Tax impact of the above pre-tax adjustments (1)
(2,350
)
(2,961
)
Excess tax benefits on stock compensation
(4,553
)
(6,732
)
Adjusted net income
$
60,715
$
48,175
Diluted Earnings Per Share As Reported
Net income
$
3.38
$
2.70
Average number of shares outstanding
16,516
16,525
Adjusted Diluted Earnings Per Share
Adjusted net income
$
3.68
$
2.92
Average number of shares outstanding
16,516
16,525
(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
2020
2019
Net revenue ($000) (c) Homecare
$
271,762
$
258,847
Inpatient
32,482
22,570
Continuous care
40,555
32,244
Other
3,147
2,010
Subtotal
$
347,946
$
315,671
Room and board, net
(3,381
)
(2,542
)
Contractual allowances
(4,149
)
(2,948
)
Medicare cap allowance
(2,500
)
(3,400
)
Net Revenue
$
337,916
$
306,781
Net revenue as a percent of total before Medicare cap allowance
Homecare
78.1
%
82.0
%
Inpatient
9.3
7.1
Continuous care
11.7
10.2
Other
0.9
0.7
Subtotal
100.0
100.0
Room and board, net
(1.0
)
(0.9
)
Contractual allowances
(1.2
)
(1.0
)
Medicare cap allowance
(0.7
)
(0.9
)
Net Revenue
97.1
%
97.2
%
Days of care
Homecare
1,364,746
1,281,899
Nursing home
303,374
289,769
Respite
6,692
6,301
Subtotal routine homecare and respite
1,674,812
1,577,969
Inpatient
32,348
29,150
Continuous care
41,373
43,923
Total
1,748,533
1,651,042
Number of days in relevant time period
91
90
Average daily census ("ADC") (days)
Homecare
14,997
14,243
Nursing home
3,334
3,220
Respite
74
70
Subtotal routine homecare and respite
18,405
17,533
Inpatient
355
324
Continuous care
455
488
Total
19,215
18,345
Total Admissions
18,603
17,758
Total Discharges
18,196
17,339
Average length of stay (days)
90.7
91.3
Median length of stay (days)
14.0
15.0
ADC by major diagnosis
Cerebro
35.9
%
35.6
%
Neurological
21.4
19.9
Cancer
12.7
13.1
Cardio
15.9
16.9
Respiratory
8.3
8.2
Other
5.8
6.3
Total
100.0
%
100.0
%
Admissions by major diagnosis
Cerebro
21.1
%
20.7
%
Neurological
12.5
12.8
Cancer
28.3
28.0
Cardio
15.1
16.3
Respiratory
12.2
12.0
Other
10.8
10.2
Total
100.0
%
100.0
%
Estimated uncollectible accounts as a percent of revenues
1.2
%
1.0
%
Accounts receivable --
Days of revenue outstanding- excluding unapplied Medicare payments
33.9
34.9
Days of revenue outstanding- including unapplied Medicare payments
26.1
23.3
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, 2020 AND 2019
(unaudited) (a) Included in the results of operations for
2020 are the following significant credits/(charges) which may not
be indicative of ongoing operations (in thousands):
Three Months
Ended March 31, 2020 VITAS Roto-Rooter
Corporate Consolidated Stock option expense
$
-
$
-
$
(5,045
)
$
(5,045
)
Amortization of reacquired franchise agreements
-
(2,352
)
-
(2,352
)
Direct costs related to COVID-19
(973
)
(861
)
-
(1,834
)
Long-term incentive compensation
-
-
(1,821
)
(1,821
)
Medicare cap sequestration adjustment
(675
)
-
-
(675
)
Pretax impact on earnings
(1,648
)
(3,213
)
(6,866
)
(11,727
)
Excess tax benefits on stock compensation
-
-
4,553
4,553
Income tax benefit on the above
419
851
1,080
2,350
After-tax impact on earnings
$
(1,229
)
$
(2,362
)
$
(1,233
)
$
(4,824
)
(b) Included in the results of operations for 2019
are the following significant credits/(charges) which may not be
indicative of ongoing operations (in thousands):
Three Months
Ended March 31, 2019 VITAS Roto-Rooter
Corporate Consolidated Litigation settlement
$
(6,000
)
$
-
$
-
$
(6,000
)
Stock option expense
-
-
(4,089
)
(4,089
)
Long-term incentive compensation
-
-
(1,488
)
(1,488
)
Non cash ASC 842 (expenses)/benefit
(656
)
(55
)
163
(548
)
Medicare cap sequestration adjustment
(515
)
-
-
(515
)
Amortization of reacquired franchise agreements
-
(441
)
-
(441
)
Acquisition expense
-
-
(120
)
(120
)
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
)
(c) VITAS has 11 large (greater than 450 ADC), 22
medium (greater than 200 but less than 450 ADC) and 15 small (less
than 200 ADC) hospice programs. Of Vitas' 30 Medicare provider
numbers, for the first six months of the current cap year, 23
provider numbers have a Medicare cap cushion of 10% or greater, two
provider numbers have a cap cushion between 5% and 10%, two
provider numbers have a cap cushion between 0% and 5%, and three
provider numbers have a Medicare cap liability.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20200428005895/en/
David P. Williams (513) 762-6901
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