Chemed Reports Fourth-Quarter 2021 Results – Business Wire

CINCINNATI–()–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 fourth quarter ended December 31, 2021, versus the comparable prior-year period, as follows:

Consolidated operating results:

  • Revenue increased 1.4% to $541 million
  • GAAP Diluted Earnings-per-Share (EPS) of $4.81
  • Adjusted Diluted EPS of $5.25, an increase of 2.3%

VITAS segment operating results:

  • Net Patient Revenue of $316 million, a decline of 4.8%
  • Average Daily Census (ADC) of 17,935, a decline of 4.2%
  • Admissions of 16,250, a decline of 9.5%
  • Net Income, excluding certain discrete items, of $49.7 million, a decline of 14.4%
  • Adjusted EBITDA, excluding Medicare Cap, of $69.3 million, a decline of 11.9%
  • Adjusted EBITDA margin, excluding Medicare Cap, of 21.7%, a decrease of 179-basis points

Roto-Rooter segment operating results:

  • Revenue of $225 million, an increase of 11.8%
  • Net Income, excluding certain discrete items, of $44.2 million, an increase of 16.5%
  • Adjusted EBITDA of $62.2 million, an increase of 14.2%
  • Adjusted EBITDA margin of 27.7%, an increase of 58-basis points

VITAS

VITAS net revenue was $316 million in the fourth quarter of 2021, which is a decline of 4.8%, when compared to the prior-year period. This revenue decline is comprised primarily of a 4.2% decline in days-of-care partially offset by a geographically weighted average Medicare reimbursement rate increase of approximately 1.1%. Acuity mix shift had a net impact of reducing revenue approximately $7.1 million, or 2.1%, 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 offset a portion of this revenue decline by approximately 40-basis points.

In the fourth quarter of 2021, VITAS accrued $3.0 million in Medicare Cap billing limitations. This compares to $2.5 million in Medicare Cap billing limitation in the fourth quarter of 2020.

Of VITAS’ 30 Medicare provider numbers, 25 provider numbers have a Medicare Cap cushion of 10% or greater, two provider numbers have a cap cushion between 5% and 10%, one provider number has 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 fourth quarter of 2021 was $196.26, which, including acuity mix shift, is 105-basis points below the prior-year period. Reimbursement for routine home care and high acuity care averaged $172.16 and $1,005.47, respectively. During the quarter, high acuity days-of-care were 2.9% of total days of care, 55-basis points less than the prior-year quarter.

The fourth quarter 2021 gross margin, excluding Medicare Cap and increased costs directly related to operating during the pandemic, was 28.5%. This is a 109-basis point margin decline when compared to the fourth quarter of 2020.

Selling, general and administrative expense, excluding increased costs directly related to operating during the pandemic, was $21.5 million in the fourth quarter of 2021 and compares to $19.3 million incurred in the prior-year quarter. Adjusted EBITDA, excluding Medicare Cap, totaled $69.3 million in the quarter, a decrease of 11.9%. Adjusted EBITDA margin in the quarter, excluding Medicare Cap, was 21.7%, which is 179-basis points less than the prior-year period.

Roto-Rooter

Roto-Rooter generated quarterly revenue of $225 million in the fourth quarter of 2021, an increase of $23.8 million, or 11.8%, when compared to the prior-year quarter.

Roto-Rooter branch commercial revenue in the quarter totaled $53.9 million, an increase of $6.9 million, or 14.8%, over the prior year. This aggregate commercial revenue growth consisted of drain cleaning revenue increasing 17.0%, plumbing increasing 18.0% and excavation expanding 10.5%. Water restoration increased 4.5%.

Roto-Rooter branch residential revenue in the quarter totaled $152 million, an increase of $15.3 million, or 11.2%, over the prior-year period. This aggregate residential revenue growth consisted of drain cleaning increasing 10.6%, plumbing expanding 13.5%, excavation increasing 12.0%, and water restoration increasing 9.2%.

Roto-Rooter’s gross margin in the quarter, excluding the impact from COVID, was 52.7%, a 77-basis point increase when compared to the fourth quarter of 2020. Adjusted EBITDA in the fourth quarter of 2021 totaled $62.2 million, an increase of 14.2%. The Adjusted EBITDA margin in the quarter was 27.7%, which is a 58-basis point improvement when compared to the prior year. The fourth quarter of 2021 included approximately $1.9 million for increased casualty and health care insurance claims expense. In addition, there was approximately $1.2 million of increased eMarketing, repairs & maintenance and payroll fringes not anticipated to be incurred in future quarters. Combined, this spike in fourth quarter expenses negatively impacted fourth quarter 2021 adjusted EBITDA margin by approximately 138-basis points.

Chemed Consolidated

As of December 31, 2021, Chemed had total cash and cash equivalents of $33 million and $185 million of long-term debt.

In June 2018, Chemed entered into a five-year Amended and Restated Credit Agreement that consists of a $450 million revolving credit facility. The interest rate on this facility has a floating rate that is currently LIBOR plus 100-basis points. At December 31, 2021, the Company had approximately $219 million of undrawn borrowing capacity under this credit agreement.

During the quarter, the Company repurchased 495,529 shares of Chemed stock for $246 million which equates to a cost per share of $496.65. As of December 31, 2021, there was approximately $202 million of remaining share repurchase authorization under this plan.

Chemed restarted its share repurchase program in 2007. Since that time, Chemed has repurchased approximately 15.7 million shares, aggregating approximately $2.0 billion at an average share cost of $125.14. Including dividends over this period, Chemed has returned approximately $2.2 billion to shareholders.

Guidance for 2022

Historically, Chemed earnings guidance has been developed using previous years’ key operating metrics which are then modeled and projected out for the calendar year. Critical within these projections is the understanding of traditional patterned correlations among key operating metrics. This modeling exercise also takes into consideration anticipated industry and macro-economic issues outside of management’s control but are somewhat predictable in terms of timing and impact on our business segments’ operating results.

The COVID-19 pandemic has made accurate modeling and providing meaningful earnings guidance exceptionally challenging. Since the start of the pandemic, Chemed has been able to successfully navigate within this rapidly changing environment and produce operating results that we believe provide us with the ability to issue earnings guidance for the 2022 calendar year. However, this guidance should be taken with the recognition the pandemic will continue to disrupt our healthcare system and general economy to such an extent that future rules, regulations and government mandates could materially impact the company’s ability to achieve this guidance.

Statistically, patients residing in senior housing are identified as hospice appropriate earlier into their terminal prognosis and have a much greater probability of having a length of stay in excess of 90 days. Hospice patients referred from hospitals, oncology practices and similar referral sources are generally more acute and have a significantly lower probability of lengths-of-stay exceeding 90 days. According to data released by the National Investment Center for Seniors Housing & Care, COVID-19 continues to adversely affect senior housing occupancy. This reduced occupancy in senior housing has had a corresponding reduction in VITAS nursing home admissions. Nursing home patients represented 15.6% of VITAS’ fourth-quarter 2021 patient census. This compares to nursing home patients averaging 18.2% of total census just prior to the pandemic.

A November 2021 article in US News and World Report estimated that approximately 20% of all health care workers in the US have left the industry since the start of the pandemic. This shortage of licensed healthcare workers will generate short-term to medium-term pressure on VITAS’ labor costs and related margins.

Medicare hospice reimbursement rate increases are based on a government formula that utilizes the Bureau of Labor and Statistics’ measurement of healthcare wage inflation reflected in the hospital wage index basket. However, this formulaic methodology is based upon healthcare wage inflation and increased CPI measured from April 1 through March 31 to determine the following October 1 reimbursement rates. This methodology effectively delays actual wage inflation from impacting hospice reimbursement by 12 to 18 months.

VITAS anticipates that senior housing will continue to have weak occupancy rates at least through the first half of 2022. Accordingly, VITAS anticipates senior housing hospice referrals will not have meaningful growth until the second half of 2022. Labor cost increases and related margin pressure are anticipated to continue through all of 2022 with some moderation starting with the next reimbursement increase on October 1, 2022.

Based upon the above discussion, VITAS 2022 revenue, prior to Medicare Cap, is estimated to decline 1.5% to 2.5% when compared to 2021. A portion of the estimated revenue reduction, approximately $15 million, 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 1.0% to 1.5%. Full year adjusted EBITDA margin, prior to Medicare Cap, is estimated to be 15.5% to 16.0%. We are currently estimating $12 million for Medicare Cap billing limitations in calendar year 2022.

Roto-Rooter is forecasted to achieve full-year 2022 revenue growth of 8.0% to 9.5%. Roto-Rooter’s adjusted EBITDA margin for 2022 is expected to be 28.5% to 29.5%.

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 and other discrete items, is estimated to be in the range of $19.10 to $19.50. This 2022 guidance assumes an effective corporate tax rate on adjusted earnings of 25.1% and a diluted share count of 15.25 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 Friday, February 25, 2022, 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 3267032. 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 3267032. An archived webcast will also be available at www.chemed.com.

Chemed Corporation operates in the healthcare field through its VITAS Healthcare Corporation subsidiary. VITAS provides daily hospice services to approximately 18,000 patients with severe, life-limiting illnesses. This type of care is focused on making the terminally ill patient’s final days as comfortable and pain-free as possible.

Chemed operates in the residential and commercial plumbing and drain cleaning industry under the brand name Roto-Rooter. Roto-Rooter provides plumbing, drain cleaning, and water cleanup services through company-owned branches, independent contractors and franchisees in the United States and Canada. Roto-Rooter also has licensed master franchisees in the republics of Indonesia and Singapore, and the Philippines.

This press release contains information about Chemed’s EBITDA, Adjusted EBITDA and Adjusted Diluted EPS, which are not measures derived in accordance with GAAP and which exclude components that are important to understanding Chemed’s financial performance. In reporting its operating results, Chemed provides EBITDA, Adjusted EBITDA and Adjusted Diluted EPS measures to help investors and others evaluate the Company’s operating results, compare its operating performance with that of similar companies that have different capital structures and evaluate its ability to meet its future debt service, capital expenditures and working capital requirements. Chemed’s management similarly uses EBITDA, Adjusted EBITDA and Adjusted Diluted EPS to assist it in evaluating the performance of the Company across fiscal periods and in assessing how its performance compares to its peer companies. These measures also help Chemed’s management to estimate the resources required to meet Chemed’s future financial obligations and expenditures. Chemed’s EBITDA, Adjusted EBITDA and Adjusted Diluted EPS should not be considered in isolation or as a substitute for comparable measures calculated and presented in accordance with GAAP. We calculated Adjusted EBITDA Margin by dividing Adjusted EBITDA by service revenue and sales. A reconciliation of Chemed’s net income to its EBITDA, Adjusted EBITDA and Adjusted Diluted EPS is presented in the tables following the text of this press release.

Forward-Looking Statements

Certain statements contained in this press release and the accompanying tables are “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. The words “believe,” “expect,” “hope,” “anticipate,” “plan” and similar expressions identify forward-looking statements, which speak only as of the date the statement was made. Chemed does not undertake and specifically disclaims any obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. These statements are based on current expectations and assumptions and involve various risks and uncertainties, which could cause Chemed’s actual results to differ from those expressed in such forward-looking statements.

These risks and uncertainties arise from, among other things, possible changes in regulations governing the hospice care or plumbing and drain cleaning industries; periodic changes in reimbursement levels and procedures under Medicare and Medicaid programs; difficulties predicting patient length of stay and estimating potential Medicare reimbursement obligations; challenges inherent in Chemed’s growth strategy; the current shortage of qualified nurses, other healthcare professionals and licensed plumbing and drain cleaning technicians; Chemed’s dependence on patient referral sources; and other factors detailed under the caption “Description of Business by Segment” or “Risk Factors” in Chemed’s most recent report on form 10-Q or 10-K and its other filings with the Securities and Exchange Commission. You are cautioned not to place undue reliance on such forward-looking statements and there are no assurances that the matters contained in such statements will be achieved.

CHEMED CORPORATION AND SUBSIDIARY COMPANIES
CONSOLIDATED STATEMENTS OF INCOME
(in thousands, except per share data)(unaudited)
 

Three Months Ended December 31,

For the Years Ended December 31,

2021

2020

2021

2020

Service revenues and sales $

540,978

$

533,289

2,139,261

$

2,079,583

Cost of services provided and goods sold

336,328

335,049

1,369,458

1,378,197

Selling, general and administrative expenses (aa)

92,073

86,805

366,727

330,218

Depreciation

11,840

11,835

49,011

46,596

Amortization

2,510

2,511

10,040

9,987

Other operating expense/(income)

198

(46,160

)

987

(75,095

)

Total costs and expenses

442,949

390,040

1,796,223

1,689,903

Income from operations

98,029

143,249

343,038

389,680

Interest expense

(525

)

(350

)

(1,868

)

(2,355

)

Other (expense)/income–net (bb)

(1,377

)

2,942

9,144

8,665

Income before income taxes

96,127

145,841

350,314

395,990

Income taxes

(21,502

)

(32,089

)

(81,764

)

(76,524

)

Net income $

74,625

$

113,752

$

268,550

$

319,466

Earnings Per Share
Net income $

4.89

$

7.12

$

17.14

$

20.02

Average number of shares outstanding

15,266

15,973

15,671

15,955

Diluted Earnings Per Share
Net income $

4.81

$

6.96

$

16.85

$

19.48

Average number of shares outstanding

15,513

16,348

15,938

16,398

 
(aa) Selling, general and administrative (“SG&A”) expenses comprise (in thousands):
 

Three Months Ended December 31,

For the Years Ended December 31,

2021

2020

2021

2020

SG&A expenses before long-term incentive compensation
and the impact of market value adjustments related to
deferred compensation plans $

89,875

$

80,551

$

349,250

$

313,348

Long-term incentive compensation

3,658

3,414

9,167

8,937

Market value adjustments related to deferred
compensation trusts

(1,460

)

2,840

8,310

7,933

Total SG&A expenses $

92,073

$

86,805

$

366,727

$

330,218

 
(bb) Other (expense)/income–net comprises (in thousands):

Three Months Ended December 31,

For the Years Ended December 31,

2021

2020

2021

2020

Market value adjustments related to deferred
compensation trusts $

(1,460

)

$

2,840

$

8,310

$

7,933

Interest income

89

109

377

757

Other

(6

)

(7

)

457

(25

)

Total other (expense)/income–net $

(1,377

)

$

2,942

$

9,144

$

8,665

CHEMED CORPORATION AND SUBSIDIARY COMPANIES
CONSOLIDATED BALANCE SHEETS
(in thousands, except per share data)(unaudited)
 

December 31,

2021

2020

Assets
Current assets
Cash and cash equivalents $

32,895

$

162,675

Accounts receivable less allowances

137,217

126,853

Inventories

10,109

7,095

Prepaid income taxes

17,377

6,603

Prepaid expenses

32,688

26,177

Total current assets

230,286

329,403

Investments of deferred compensation plans held in trust

98,884

88,811

Properties and equipment, at cost less accumulated depreciation

193,680

187,820

Lease right of use asset

125,048

123,448

Identifiable intangible assets less accumulated amortization

108,096

118,085

Goodwill

578,591

578,585

Other assets

8,138

8,759

Total Assets $

1,342,723

$

1,434,911

Liabilities
Current liabilities
Accounts payable $

73,024

$

54,234

Income taxes

41

9,464

Accrued insurance

55,918

54,703

Accrued compensation

95,598

91,282

Accrued legal

872

10,632

Short-term lease liability

37,913

36,200

Other current liabilities

39,033

42,593

Total current liabilities

302,399

299,108

Deferred income taxes

23,183

20,664

Long-term debt

185,000

Deferred compensation liabilities

98,597

88,456

Long-term lease liability

100,629

99,210

Other liabilities

9,642

26,273

Total Liabilities

719,450

533,711

Stockholders’ Equity
Capital stock

36,514

36,259

Paid-in capital

1,044,341

961,404

Retained earnings

1,970,311

1,723,777

Treasury stock, at cost

(2,430,094

)

(1,822,579

)

Deferred compensation payable in Company stock

2,201

2,339

Total Stockholders’ Equity

623,273

901,200

Total Liabilities and Stockholders’ Equity $

1,342,723

$

1,434,911

CHEMED CORPORATION AND SUBSIDIARY COMPANIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)(unaudited)
 

For the Years Ended December 31,

2021

2020

Cash Flows from Operating Activities
Net income $

268,550

$

319,466

Adjustments to reconcile net income to net cash provided
by operating activities:
Depreciation and amortization

59,051

56,583

Stock option expense

22,502

18,422

Deferred payroll taxes

(18,175

)

36,350

Litigation settlements

(9,440

)

2,684

Noncash long-term incentive compensation

7,745

7,208

Provision for deferred income taxes

2,400

1,433

Noncash directors’ compensation

1,173

1,171

Amortization of debt issuance costs

306

306

Changes in operating assets and liabilities, excluding
amounts acquired in business combinations:
(Increase)/decrease in accounts receivable

(8,431

)

12,773

(Increase)/decrease in inventories

(3,014

)

367

Increase in prepaid expenses

(6,511

)

(3,027

)

Increase in accounts payable and
other current liabilities

9,832

19,096

Change in current income taxes

(20,401

)

13,525

Net change in lease assets and liabilities

(44

)

1,206

Increase in other assets

(10,305

)

(11,834

)

Increase in other liabilities

12,074

12,323

Other sources

1,285

1,237

Net cash provided by operating activities

308,597

489,289

Cash Flows from Investing Activities
Capital expenditures

(58,675

)

(58,831

)

Business combinations

(3,600

)

Other sources

918

871

Net cash used by investing activities

(57,757

)

(61,560

)

Cash Flows from Financing Activities
Purchases of treasury stock

(576,042

)

(175,594

)

Proceeds from revolving line of credit

210,300

174,900

Proceeds from exercise of stock options

35,848

50,382

Payments on revolving line of credit

(25,300

)

(264,900

)

Dividends paid

(22,016

)

(21,079

)

Capital stock surrendered to pay taxes on stock-based compensation

(15,129

)

(25,328

)

Change in cash overdrafts payable

11,884

(9,849

)

Other (uses)/sources

(165

)

256

Net cash used by financing activities

(380,620

)

(271,212

)

(Decrease)/Increase in Cash and Cash Equivalents

(129,780

)

156,517

Cash and cash equivalents at beginning of year

162,675

6,158

Cash and cash equivalents at end of year $

32,895

$

162,675

CHEMED CORPORATION AND SUBSIDIARY COMPANIES
CONSOLIDATING STATEMENTS OF INCOME
FOR THE THREE MONTHS ENDED DECEMBER 31, 2021 AND 2020
(in thousands)(unaudited)
Chemed
VITAS Roto-Rooter Corporate Consolidated
2021 (a)
Service revenues and sales $

316,112

$

224,866

$

$

540,978

Cost of services provided and goods sold

229,023

107,305

336,328

Selling, general and administrative expenses

21,491

56,246

14,336

92,073

Depreciation

5,365

6,456

19

11,840

Amortization

18

2,492

2,510

Other operating expense/(income)

221

(23

)

198

Total costs and expenses

256,118

172,476

14,355

442,949

Income/(loss) from operations

59,994

52,390

(14,355

)

98,029

Interest expense

(31

)

(132

)

(362

)

(525

)

Intercompany interest income/(expense)

4,601

2,064

(6,665

)

Other income—net

58

26

(1,461

)

(1,377

)

Income/(loss) before income taxes

64,622

54,348

(22,843

)

96,127

Income taxes

(15,621

)

(12,519

)

6,638

(21,502

)

Net income/(loss) $

49,001

$

41,829

$

(16,205

)

$

74,625

 
2020 (b)
Service revenues and sales $

332,190

$

201,099

$

$

533,289

Cost of services provided and goods sold

237,812

97,237

335,049

Selling, general and administrative expenses

20,305

49,679

16,821

86,805

Depreciation

5,546

6,257

32

11,835

Amortization

18

2,493

2,511

Other operating expense

(46,929

)

769

(46,160

)

Total costs and expenses

216,752

156,435

16,853

390,040

Income/(loss) from operations

115,438

44,664

(16,853

)

143,249

Interest expense

(29

)

(68

)

(253

)

(350

)

Intercompany interest income/(expense)

5,434

1,834

(7,268

)

Other income—net

95

7

2,840

2,942

Income/(loss) before income taxes

120,938

46,437

(21,534

)

145,841

Income taxes

(29,419

)

(11,007

)

8,337

(32,089

)

Net income/(loss) $

91,519

$

35,430

$

(13,197

)

$

113,752

 
 
The “Footnotes to Financial Statements” are integral parts of this financial information.
 
CHEMED CORPORATION AND SUBSIDIARY COMPANIES
CONSOLIDATING STATEMENTS OF INCOME
FOR THE YEARS ENDED DECEMBER 31, 2021 AND 2020
(in thousands)(unaudited)
 
Chemed
VITAS Roto-Rooter Corporate Consolidated
2021 (a)
Service revenues and sales $

1,261,246

$

878,015

$

$

2,139,261

Cost of services provided and goods sold

953,420

416,038

1,369,458

Selling, general and administrative expenses

87,585

215,036

64,106

366,727

Depreciation

23,114

25,816

81

49,011

Amortization

71

9,969

10,040

Other operating expense

876

111

987

Total costs and expenses

1,065,066

666,970

64,187

1,796,223

Income/(loss) from operations

196,180

211,045

(64,187

)

343,038

Interest expense

(160

)

(595

)

(1,113

)

(1,868

)

Intercompany interest income/(expense)

18,125

7,180

(25,305

)

Other income—net

712

123

8,309

9,144

Income/(loss) before income taxes

214,857

217,753

(82,296

)

350,314

Income taxes

(52,426

)

(51,420

)

22,082

(81,764

)

Net income/(loss) $

162,431

$

166,333

$

(60,214

)

$

268,550

 
2020 (b)
Service revenues and sales $

1,334,667

$

744,916

$

$

2,079,583

Cost of services provided and goods sold

1,010,693

367,504

1,378,197

Selling, general and administrative expenses

85,445

188,268

56,505

330,218

Depreciation

22,168

24,292

136

46,596

Amortization

71

9,916

9,987

Other operating (income)/expense

(78,590

)

3,495

(75,095

)

Total costs and expenses

1,039,787

593,475

56,641

1,689,903

Income/(loss) from operations

294,880

151,441

(56,641

)

389,680

Interest expense

(166

)

(340

)

(1,849

)

(2,355

)

Intercompany interest income/(expense)

19,897

6,256

(26,153

)

Other income—net

644

75

7,946

8,665

Income/(loss) before income taxes

315,255

157,432

(76,697

)

395,990

Income taxes

(76,473

)

(37,038

)

36,987

(76,524

)

Net income/(loss) $

238,782

$

120,394

$

(39,710

)

$

319,466

 
 

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 DECEMBER 31, 2021 AND 2020
(in thousands)(unaudited)
Chemed
VITAS Roto-Rooter Corporate Consolidated

2021

Net income/(loss) $

49,001

$

41,829

$

(16,205

)

$

74,625

Add/(deduct):
Interest expense

31

132

362

525

Income taxes

15,621

12,519

(6,638

)

21,502

Depreciation

5,365

6,456

19

11,840

Amortization

18

2,492

2,510

EBITDA

70,036

63,428

(22,462

)

111,002

Add/(deduct):
Intercompany interest expense/(income)

(4,601

)

(2,064

)

6,665

Interest income

(63

)

(26

)

(89

)

Stock option expense

6,159

6,159

Long-term incentive compensation

3,659

3,659

Direct costs related to COVID-19

959

884

1,843

Adjusted EBITDA $

66,331

$

62,222

$

(5,979

)

$

122,574

 

2020

Net income/(loss) $

91,519

$

35,430

$

(13,197

)

$

113,752

Add/(deduct):
Interest expense

29

68

253

350

Income taxes

29,419

11,007

(8,337

)

32,089

Depreciation

5,546

6,257

32

11,835

Amortization

18

2,493

2,511

EBITDA

126,531

55,255

(21,249

)

160,537

Add/(deduct):
Intercompany interest expense/(income)

(5,434

)

(1,834

)

7,268

Interest income

(102

)

(7

)

(109

)

CARES Act grant

(48,041

)

(48,041

)

Stock option expense

5,127

5,127

Direct costs related to COVID-19

3,257

520

3,777

Long-term incentive compensation

3,413

3,413

Litigation settlements

544

544

Adjusted EBITDA $

76,211

$

54,478

$

(5,441

)

$

125,248

 
The “Footnotes to Financial Statements” are integral parts of this financial information.

CHEMED CORPORATION AND SUBSIDIARY COMPANIES

CONSOLIDATING SUMMARIES OF EBITDA
FOR THE YEARS ENDED DECEMBER 31, 2021 AND 2020
(in thousands)(unaudited)
Chemed
VITAS

Roto-Rooter

Corporate Consolidated

2021

Net income/(loss) $

162,431

$

166,333

$

(60,214

)

$

268,550

Add/(deduct):
Interest expense

160

595

1,113

1,868

Income taxes

52,426

51,420

(22,082

)

81,764

Depreciation

23,114

25,816

81

49,011

Amortization

71

9,969

10,040

EBITDA

238,202

254,133

(81,102

)

411,233

Add/(deduct):
Intercompany interest expense/(income)

(18,125

)

(7,180

)

25,305

Interest income

(253

)

(124

)

(377

)

Stock option expense

22,502

22,502

Direct costs related to COVID-19

16,296

2,435

38

18,769

Long-term incentive compensation

9,167

9,167

Litigation settlements

(98

)

(98

)

Other

218

218

Adjusted EBITDA $

236,120

$

249,166

$

(23,872

)

$

461,414

2020

Net income/(loss) $

238,782

$

120,394

$

(39,710

)

$

319,466

Add/(deduct):
Interest expense

166

340

1,849

2,355

Income taxes

76,473

37,038

(36,987

)

76,524

Depreciation

22,168

24,292

136

46,596

Amortization

71

9,916

9,987

EBITDA

337,660

191,980

(74,712

)

454,928

Add/(deduct):
Intercompany interest expense/(income)

(19,897

)

(6,256

)

26,153

Interest income

(668

)

(76

)

(13

)

(757

)

CARES Act grant

(80,225

)

(80,225

)

Direct costs related to COVID-19

35,441

3,819

39,260

Stock option expense

18,422

18,422

Long-term incentive compensation

8,937

8,937

Litigation settlements

3,639

3,639

Medicare cap sequestration adjustment

619

619

Adjusted EBITDA $

272,930

$

193,106

$

(21,213

)

$

444,823

 
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 December 31,

For the Years Ended December 31,

2021

2020

2021

2020

Net income as reported $

74,625

$

113,752

$

268,550

$

319,466

Add/(deduct) pre-tax cost of:
Stock option expense

6,159

5,127

22,502

18,422

Direct costs related to COVID-19

1,843

3,777

18,769

39,260

Amortization of reacquired franchise agreements

2,352

2,352

9,408

9,408

Long-term incentive compensation

3,659

3,413

9,167

8,937

Facility relocation expenses

1,855

Litigation settlements

544

(98

)

3,639

Other

218

CARES Act grant

(48,041

)

(80,225

)

Medicare cap sequestration adjustments

619

Add/(deduct) tax impacts:
Tax impact of the above pre-tax adjustments (1)

(2,606

)

9,141

(12,480

)

2,976

Excess tax benefits on stock compensation

(4,579

)

(6,146

)

(9,884

)

(26,089

)

Adjusted net income $

81,453

$

83,919

$

308,007

$

296,413

 
Diluted Earnings Per Share As Reported
Net income $

4.81

$

6.96

$

16.85

$

19.48

Average number of shares outstanding

15,513

16,348

15,938

16,398

 
Adjusted Diluted Earnings Per Share
Adjusted net income $

5.25

$

5.13

$

19.33

$

18.08

Average number of shares outstanding

15,513

16,348

15,938

16,398

 
(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 December 31,

For the Years Ended December 31,

OPERATING STATISTICS

2021

2020

2021

2020

Net revenue ($000) (c)
Homecare $

272,949

$

279,410

$

1,069,766

$

1,106,358

Inpatient

27,291

28,973

113,187

114,956

Continuous care

20,680

30,175

94,338

136,011

Other

2,902

2,984

12,142

11,164

Subtotal $

323,822

$

341,542

$

1,289,433

$

1,368,489

Room and board, net

(2,609

)

(2,858

)

(10,060

)

(12,174

)

Contractual allowances

(2,101

)

(3,994

)

(11,530

)

(14,970

)

Medicare cap allowance

(3,000

)

(2,500

)

(6,597

)

(6,678

)

Net Revenue $

316,112

$

332,190

$

1,261,246

$

1,334,667

Net revenue as a percent of total before Medicare cap allowance
Homecare

84.3

%

81.8

%

83.0

%

80.8

%

Inpatient

8.4

8.5

8.8

8.4

Continuous care

6.4

8.8

7.3

9.9

Other

0.9

0.9

0.9

0.9

Subtotal

100.0

100.0

100.0

100.0

Room and board, net

(0.9

)

(0.8

)

(0.8

)

(0.9

)

Contractual allowances

(0.6

)

(1.2

)

(0.9

)

(1.1

)

Medicare cap allowance

(0.9

)

(0.7

)

(0.5

)

(0.5

)

Net Revenue

97.6

%

97.3

%

97.8

%

97.5

%

Days of care
Homecare

1,338,955

1,404,532

5,347,170

5,597,213

Nursing home

257,416

253,261

993,322

1,097,493

Respite

5,894

4,971

21,403

20,387

Subtotal routine homecare and respite

1,602,265

1,662,764

6,361,895

6,715,093

Inpatient

25,556

27,811

107,685

112,718

Continuous care

22,154

31,493

101,539

141,693

Total

1,649,975

1,722,068

6,571,119

6,969,504

 
Number of days in relevant time period

92

92

365

366

Average daily census (“ADC”) (days)
Homecare

14,554

15,267

14,649

15,293

Nursing home

2,798

2,753

2,721

2,999

Respite

64

54

59

55

Subtotal routine homecare and respite

17,416

18,074

17,429

18,347

Inpatient

278

302

295

308

Continuous care

241

342

279

387

Total

17,935

18,718

18,003

19,042

Total Admissions

16,250

17,960

68,823

71,328

Total Discharges

16,684

18,570

69,411

72,009

Average length of stay (days)

97.9

97.2

95.7

94.0

Median length of stay (days)

15.0

14.0

13.0

14.0

ADC by major diagnosis
Cerebro

36.5

%

35.5

%

36.7

%

35.8

%

Neurological

23.0

22.4

22.6

21.9

Cancer

11.5

12.3

11.9

12.5

Cardio

15.6

15.9

15.5

15.8

Respiratory

7.5

7.9

7.5

8.1

Other

5.9

6.0

5.8

5.9

Total

100.0

%

100.0

%

100.0

%

100.0

%

Admissions by major diagnosis
Cerebro

22.5

%

20.9

%

21.5

%

21.1

%

Neurological

12.7

12.6

12.3

12.9

Cancer

26.6

26.7

26.9

27.6

Cardio

14.8

13.8

14.5

14.3

Respiratory

11.0

10.4

10.9

10.6

Other

12.4

15.6

13.9

13.5

Total

100.0

%

100.0

%

100.0

%

100.0

%

 
Estimated uncollectible accounts as a percent of revenues

0.7

%

1.2

%

0.9

%

1.1

%

 
Accounts receivable —
Days of revenue outstanding-excluding unapplied Medicare payments

33.8

36.0

n.a.

n.a.

Days of revenue outstanding-including unapplied Medicare payments

28.1

25.6

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 MONTHS AND YEARS ENDED DECEMBER 31, 2021 AND 2020
(unaudited)
 
(a) Included in the results of operations for 2021 are the following significant credits/(charges) which may not be indicative of ongoing operations
(in thousands):
Three Months Ended December 31, 2021
VITAS Roto-Rooter Corporate Consolidated
 
Stock option expense $

$

$

(6,159

)

$

(6,159

)

Long-term incentive compensation

(3,659

)

(3,659

)

Amortization of reacquired franchise agreements

(2,352

)

(2,352

)

Direct costs related to COVID-19

(959

)

(884

)

(1,843

)

Pretax impact on earnings

(959

)

(3,236

)

(9,818

)

(14,013

)

Excess tax benefits on stock compensation

4,579

4,579

Income tax benefit on the above

243

859

1,504

2,606

After-tax impact on earnings $

(716

)

$

(2,377

)

$

(3,735

)

$

(6,828

)

 
For the Year Ended December 31, 2021
VITAS Roto-Rooter Corporate Consolidated
 
Stock option expense $

$

$

(22,502

)

$

(22,502

)

Direct costs related to COVID-19

(16,297

)

(2,434

)

(38

)

(18,769

)

Amortization of reacquired franchise agreements

(9,408

)

(9,408

)

Long-term incentive compensation

(9,167

)

(9,167

)

Facility relocation expenses

(1,855

)

(1,855

)

Litigation settlements

98

98

Other

(218

)

(218

)

Pretax impact on earnings

(18,152

)

(11,744

)

(31,925

)

(61,821

)

Excess tax benefits on stock compensation

9,884

9,884

Income tax benefit on the above

4,611

3,112

4,757

12,480

After-tax impact on earnings $

(13,541

)

$

(8,632

)

$

(17,284

)

$

(39,457

)

 
(b) Included in the results of operations for 2020 are the following significant credits/(charges) which may not be indicative of ongoing operations
(in thousands):
Three Months Ended December 31, 2020
VITAS Roto-Rooter Corporate Consolidated
 
CARES Act grant $

48,041

$

$

$

48,041

Stock option expense

(5,127

)

(5,127

)

Direct costs related to COVID-19

(3,257

)

(520

)

(3,777

)

Long-term incentive compensation

(3,413

)

(3,413

)

Amortization of reacquired franchise agreements

(2,352

)

(2,352

)

Litigation settlements

(544

)

(544

)

Pretax impact on earnings

44,784

(3,416

)

(8,540

)

32,828

Excess tax benefits on stock compensation

6,146

6,146

Income tax benefit on the above

(11,367

)

906

1,320

(9,141

)

After-tax impact on earnings $

33,417

$

(2,510

)

$

(1,074

)

$

29,833

 
For the Year Ended December 31, 2020
VITAS Roto-Rooter Corporate Consolidated
 
CARES Act grant $

80,225

$

$

$

80,225

Direct costs related to COVID-19

(35,441

)

(3,819

)

(39,260

)

Stock option expense

(18,422

)

(18,422

)

Amortization of reacquired franchise agreements

(9,408

)

(9,408

)

Long-term incentive compensation

(8,937

)

(8,937

)

Litigation settlements

(3,639

)

(3,639

)

Medicare cap sequestration adjustment

(619

)

(619

)

Pretax impact on earnings

44,165

(16,866

)

(27,359

)

(60

)

Excess tax benefits on stock compensation

26,089

26,089

Income tax benefit on the above

(11,209

)

4,469

3,764

(2,976

)

After-tax impact on earnings $

32,956

$

(12,397

)

$

2,494

$

23,053

 
(c) VITAS has 9 large (greater than 450 ADC), 18 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 providers have a cap cushion between 5% and 10%, one provider number has a cap cushion between 0% and 5%, and two provider numbers have a Medicare cap liability.