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Chemed Reports Fourth-Quarter 2012 Results



  Chemed Reports Fourth-Quarter 2012 Results

Business Wire

CINCINNATI -- February 18, 2013

Chemed Corporation (Chemed) (NYSE:CHE),  which operates VITAS Healthcare
Corporation (VITAS), the nation’s largest provider 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, 2012, versus the comparable prior-year period, as
follows:

Consolidated operating results:

  * Revenue increased 5.2% to $369 million
  * GAAP Diluted EPS increased 6.9% to $1.40
  * Adjusted Diluted EPS increased 8.3% to $1.57

VITAS segment operating results:

  * Net Patient Revenue of $273 million, an increase of 7.2%
  * Average Daily Census (ADC) of 14,465, an increase of 5.4%
  * Admissions of 16,004, an increase of 5.4%
  * Net Income of $24.6 million, an increase of 8.4%
  * Adjusted EBITDA of $44.0 million, an increase of 9.8%
  * Adjusted EBITDA margin of 16.1%, a increase of 38 basis points

Roto-Rooter segment operating results:

  * Revenue of $95.6 million, a decrease of 0.1%
  * Unit-for-unit job count of 168,144, a decrease of 2.1%
  * Net Income of $9.2 million, a decrease of 0.8%
  * Adjusted EBITDA of $17.1 million, a decrease of 4.2%
  * Adjusted EBITDA margin of 17.9%, a decrease of 76 basis points

                                    VITAS

Net revenue for VITAS was $273 million in the fourth quarter of 2012, which is
an increase of 7.2% over the prior-year period. This revenue growth was the
result of increased ADC of 5.4%, driven by an increase in admissions of 5.4%,
increased discharges of 5.4% and Medicare price increases of approximately
0.9%. Revenue growth in the quarter was also enhanced by lower Medicare Cap
billing limitations.

Average revenue per patient per day in the quarter, excluding the impact of
Medicare Cap, was $205.78, which is 1.0% above the prior-year period. Routine
home care reimbursement and high acuity care averaged $163.76 and $713.34,
respectively, per patient per day in the fourth quarter of 2012. During the
quarter, high acuity days of care were 7.7% of total days of care, essentially
equal to the prior-year quarter.

In the fourth quarter of 2012, VITAS recorded a Medicare Cap liability of $0.9
million. This compares to $2.6 million of Medicare Cap liability recorded in
the fourth quarter of 2011. The government’s Medicare Cap fiscal year begins
on September 29. The first quarter of a Medicare Cap year has the potential to
be volatile if a program experiences unusual or seasonal admission and
discharge patterns.

Of VITAS’ 36 unique Medicare provider numbers, 28 provider numbers have a
Medicare Cap cushion of 10% or greater during the trailing twelve-month
period; four provider numbers have a Medicare Cap cushion between 5% to 10%;
two provider numbers have a cap cushion between 0% and 5% and two provider
numbers have recorded a modest Medicare Cap liability. VITAS generated an
aggregate cap cushion of $213 million during the trailing twelve-month period.

The fourth quarter of 2012 gross margin, excluding the impact of Medicare Cap,
was 23.5%, which is 21 basis points below the gross margin in the fourth
quarter of 2011.

Selling, general and administrative expense was $20.1 million in the fourth
quarter of 2012, which is an increase of 10.0% when compared to the prior-year
quarter. On a year-to-date basis, selling, general and administrative expenses
increased 6.3%, 150 basis points below full-year revenue growth, excluding the
impact of Medicare Cap. Adjusted EBITDA totaled $44.0 million in the quarter,
an increase of 9.8% over the prior-year period. Adjusted EBITDA margin,
excluding the impact from Medicare Cap, was 16.4% in the quarter which is 21
basis points below the prior-year quarter.

                                 Roto-Rooter

Roto-Rooter’s plumbing and drain cleaning business generated sales of $95.6
million for the fourth quarter of 2012, a decrease of 0.1%, over the
prior-year quarter.

Unit-for-unit job count in the fourth quarter of 2012 declined 2.1% when
compared to the prior-year period. During the fourth quarter of 2012, total
residential jobs decreased 2.4%, as residential plumbing jobs declined 9.0%
and residential drain cleaning jobs increased 1.2%, when compared to the
fourth quarter of 2011. Residential jobs represented 70% of total job count in
the quarter. Total commercial jobs decreased 1.3%, with commercial
plumbing/excavation job count decreasing 3.4% and commercial drain cleaning
increasing 0.3% when compared to the prior-year quarter. The “All Other”
residential and commercial job category, which represents 1.5% of aggregate
job count, decreased 10.5%.

Roto-Rooter’s gross margin in the quarter was 45.1%, a 30 basis point decline
when compared to the fourth quarter of 2011. Adjusted EBITDA in the fourth
quarter of 2012 totaled $17.1 million, a decline of 4.2%, and the Adjusted
EBITDA margin was 17.9% in the quarter, a decline of 76 basis points.

                             Chemed Consolidated

Chemed had total debt of $175 million at December 31, 2012. This debt is net
of the discount taken as a result of convertible debt accounting requirements.
Excluding this discount, aggregate debt is $187 million and is due in May
2014. Chemed’s total debt equates to less than one times trailing twelve-month
adjusted EBITDA.

In January 2013 Chemed entered into a five-year Amended and Restated Credit
Agreement that consists of a $350 million revolving credit facility. The
interest rate on this Amended Credit Agreement has a floating rate that is
currently LIBOR plus 125 basis points. In addition, an expansion feature is
included in this Credit Agreement that provides Chemed the opportunity to
increase its revolver and/or enter into term loans for an additional $150
million. At December 31, 2012, the Company had approximately $321 million of
undrawn borrowing capacity after deducting $29 million for letters of credit
issued to secure the Company’s workers’ compensation insurance.

Capital expenditures for the full year of 2012 aggregated $35.3 million and
compares to depreciation and amortization during the same period of $30.5
million.

During the quarter, the Company purchased 723,472 shares of Chemed stock at an
aggregate cost of $48.8 million. The Company has $14.8 million remaining under
Chemed’s previously announced share repurchase program.

                              Guidance for 2013

VITAS expects to achieve full-year 2013 revenue growth, prior to Medicare Cap,
of 6.4% to 7.0%. Admissions in 2013 are estimated to increase approximately
4.5% to 6.0% and full-year Adjusted EBITDA margin, prior to Medicare Cap, is
estimated to be 14.4% to 14.8%. Effective October 1, 2012, Medicare increased
the average hospice reimbursement rates by approximately 0.9%. Revenue growth
assumes sequestration is deferred into calendar year 2014. Earnings per share
guidance also assumes VITAS will incur $5.0 million of estimated Medicare
contractual billing limitations for calendar year 2013.

Roto-Rooter expects to achieve full-year 2013 revenue growth of 2.0%. The
revenue estimate is a result of increased pricing of approximately 1.5%, a
favorable mix shift to higher revenue jobs, with job count estimated to equal
the prior year. Adjusted EBITDA margin for 2013 is estimated in the range of
17.1% to 17.5%.

Based upon the above, management estimates 2013 earnings per diluted share,
excluding non-cash expense for stock options, the non-cash interest expense
related to the accounting for convertible debt and other items not indicative
of ongoing operations, will be in the range of $5.65 to $5.80. This compares
to Chemed’s 2012 reported adjusted earnings per diluted share of $5.29.

                               Conference Call

Chemed will host a conference call and webcast at 10 a.m., ET, on Tuesday,
February 19, 2013, to discuss the Company's quarterly results and to provide
an update on its business. The dial-in number for the conference call is (800)
299-8538 for U.S. and Canadian participants and (617) 786-2902 for
international participants. The participant passcode is 59071392. 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 (888) 286-8010 for U.S. and Canadian callers and (617) 801-6888 for
international callers and will be available for one week following the live
call. The replay passcode is 22711120. 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
over 14,000 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 and
drain service through company-owned branches, independent contractors and
franchisees in the United States and Canada. Roto-Rooter also has licensed
master franchisees in Indonesia, Singapore, Japan, 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 STATEMENT OF INCOME
(in thousands, except per share data)(unaudited)
                                           
                                                                               
                              For the Three Months          For the Years Ended
                              Ended
                              December 31,                  December 31,
                              2012          2011            2012            2011
Service revenues and          $ 368,577     $ 350,253       $ 1,430,043     $ 1,355,970  
sales
Cost of services
provided and goods              261,898       248,366         1,033,321       970,484
sold
Selling, general and
administrative                  52,764        48,564          208,656         202,260
expenses (aa)
Depreciation                    6,831         6,288           26,009          25,247
Amortization                    1,137         1,009           4,512           4,252
Other operating                 -             -               1,126           -          
expenses (bb)
     Total costs and            322,630       304,227         1,273,624       1,202,243  
     expenses
     Income from                45,947        46,026          156,419         153,727
     operations
Interest expense                (3,691  )     (3,628  )       (14,723   )     (13,888   )
Other
income/(expense)--net           1,158         (164    )       4,123           717        
(cc)
     Income before              43,414        42,234          145,819         140,556
     income taxes
Income taxes                    (16,674 )     (16,529 )       (56,515   )     (54,577   )
Net income                    $ 26,740      $ 25,705        $ 89,304        $ 85,979     
                                                                               
                                                                               
Earnings Per Share
     Net income               $ 1.44        $ 1.34          $ 4.72          $ 4.19       
     Average number
     of shares                  18,628        19,237          18,924          20,523     
     outstanding
                                                                               
Diluted Earnings Per
Share
     Net income               $ 1.40        $ 1.31          $ 4.62          $ 4.10       
     Average number
     of shares                  19,053        19,556          19,339          20,945     
     outstanding
                                                                               
                                               
(aa)   Selling, general and administrative ("SG&A") expenses comprise (in thousands):
                              For the Three Months          For the Years Ended
                              Ended
                              December 31,                  December 31,
                              2012          2011            2012            2011
         SG&A
         expenses
         before
         long-term
         incentive
         compensation
         and the
         impact of
         market gains
         and losses
         of deferred          $ 51,666      $ 48,561        $ 204,797       $ 198,449
         compensation
         plans
         Market value
         gains of
         deferred               738           3               3,499           799
         compensation
         trusts
         Long-term
         incentive              360           -               360             3,012      
         compensation
         Total SG&A           $ 52,764      $ 48,564        $ 208,656       $ 202,260    
         expenses
                                                                               
(bb)   Other operating expenses comprise severance and other costs related to closing
       Roto-Rooter's HVAC business in the third quarter of 2012.
                                                                               
(cc)   Other income/(expense)--net comprises (in thousands):
                              For the Three Months          For the Years Ended
                              Ended
                              December 31,                  December 31,
                              2012          2011            2012            2011
         Market value
         gains of
         deferred             $ 738         $ 3             $ 3,499         $ 799
         compensation
         trusts
         Interest               408           229             809             426
         income
         Loss on
         disposal of            (119    )     (373    )       (347      )     (441      )
         property and
         equipment
         Other                  131           (23     )       162             (67       )
         Total other          $ 1,158       $ (164    )     $ 4,123         $ 717        
         income--net
                                                                                         

                                                                 
CHEMED CORPORATION AND SUBSIDIARY COMPANIES
CONSOLIDATED BALANCE SHEET
(in thousands, except per share data)(unaudited)
                       
                                                                     
                                                 December 31,
                                                 2012             2011
Assets
    Current assets
             Cash and cash equivalents           $ 69,531         $ 38,081
             Accounts receivable less              93,333           77,924
             allowances
             Inventories                           7,058            8,668
             Current deferred income               13,659           12,540
             taxes
             Prepaid income taxes                  2,643            2,131
             Prepaid expenses                      11,447           11,409    
                   Total current assets            197,671          150,753
    Investments of deferred compensation           36,089           31,629
    plans held in trust
    Properties and equipment, at cost              91,934           82,951
    less accumulated depreciation
    Identifiable intangible assets less            57,177           58,262
    accumulated amortization
    Goodwill                                       465,832          460,633
    Other assets                                   10,923           11,677    
                         Total Assets            $ 859,626        $ 795,905   
                                                                     
Liabilities
    Current liabilities
             Accounts payable                    $ 48,472         $ 48,225
             Income taxes                          4,938            90
             Accrued insurance                     40,654           37,147
             Accrued compensation                  45,457           41,087
             Other current liabilities             17,301           18,851    
                   Total current                   156,822          145,400
                   liabilities
    Deferred income taxes                          27,662           29,463
    Long-term debt                                 174,890          166,784
    Deferred compensation liabilities              35,599           30,693
    Other liabilities                              11,362           9,881     
                         Total                     406,335          382,221   
                         Liabilities
                                                                     
Stockholders' Equity
    Capital stock                                  31,589           30,937
    Paid-in capital                                437,364          398,094
    Retained earnings                              623,035          546,757
    Treasury stock, at cost                        (640,732 )       (564,091 )
    Deferred compensation payable in               2,035            1,987     
    Company stock
                         Total
                         Stockholders'             453,291          413,684   
                         Equity
                         Total
                         Liabilities and         $ 859,626        $ 795,905   
                         Stockholders'
                         Equity
                                                                              

                                                                 
CHEMED CORPORATION AND SUBSIDIARY COMPANIES
CONSOLIDATED STATEMENT OF CASH FLOWS
(in thousands)(unaudited)
                
                                                                     
                                              For the Years Ended December 31,
                                              2012                2011
Cash Flows from Operating Activities
    Net income                                $  89,304           $ 85,979
    Adjustments to reconcile net
    income to net cash provided
      by operating activities:
        Depreciation and amortization            30,521             29,499
        Provision for uncollectible              9,111              8,563
        accounts receivable
        Stock option expense                     8,130              8,376
        Amortization of discount on              8,106              7,576
        convertible notes
        Provision for deferred income            (3,151   )         7,242
        taxes
        Amortization of debt issuance            1,265              1,137
        costs
        Noncash long-term incentive              360                2,595
        compensation
        Changes in operating assets
        and liabilities, excluding
            amounts acquired in
            business combinations:
               Decrease/(increase) in            (24,421  )         26,896
               accounts receivable
               Decrease/(increase) in            1,610              (940     )
               inventories
               Increase in prepaid               (38      )         (1,124   )
               expenses
               Increase/(decrease) in
               accounts payable and
                     other current               4,954              (1,397   )
                     liabilities
               Increase in income                6,020              2,708
               taxes
               Increase in other                 (5,203   )         (4,009   )
               assets
               Increase in other                 8,329              4,548
               liabilities
        Excess tax benefit on                    (3,435   )         (3,854   )
        share-based compensation
        Other sources                            306                548       
            Net cash provided by                 131,768            174,343   
            operating activities
Cash Flows from Investing Activities
    Capital expenditures                         (35,252  )         (29,592  )
    Business combinations, net of                (5,900   )         (3,664   )
    cash acquired
    Other uses                                   468                (858     )
            Net cash used by                     (40,684  )         (34,114  )
            investing activities
Cash Flows from Financing Activities
    Purchases of treasury stock                  (64,722  )         (147,886 )
    Dividends paid                               (13,026  )         (12,538  )
    Proceeds from exercise of stock              12,310             8,036
    options
    Excess tax benefit on share-based            3,435              3,854
    compensation
    Increase/(decrease) in cash                  1,924              (826     )
    overdrafts payable
    Debt issuances costs                         -                  (2,657   )
    Other sources                                445                (48      )
            Net cash used by                     (59,634  )         (152,065 )
            financing activities
Increase/(Decrease) in Cash and Cash             31,450             (11,836  )
Equivalents
Cash and cash equivalents at                     38,081             49,917    
beginning of year
Cash and cash equivalents at end of           $  69,531           $ 38,081    
period
                                                                              

                                                                            
CHEMED CORPORATION AND SUBSIDIARY COMPANIES
CONSOLIDATING STATEMENT OF INCOME
FOR THE THREE MONTHS ENDED DECEMBER 31, 2012 AND 2011
(in thousands)(unaudited)
                                            
                                                                             Chemed
                             VITAS           Roto-Rooter     Corporate       Consolidated
2012
Service revenues and         $ 272,987       $  95,590       $ -             $  368,577  
sales
Cost of services
provided and goods             209,388          52,510         -                261,898
sold
Selling, general and
administrative                 20,127           26,491         6,146            52,764
expenses (a)
Depreciation                   4,567            2,132          132              6,831
Amortization                   489              161            487              1,137    
      Total costs              234,571          81,294         6,765            322,630  
      and expenses
      Income/(loss)
      from                     38,416           14,296         (6,765  )        45,947
      operations
Interest expense (a)           (46     )        (69    )       (3,576  )        (3,691  )
Intercompany
interest                       819              395            (1,214  )        -
income/(expense)
Other                          399              (3     )       762              1,158    
income/(expense)—net
      Income/(loss)
      before income            39,588           14,619         (10,793 )        43,414
      taxes
Income taxes (a)               (15,011 )        (5,429 )       3,766            (16,674 )
      Net                    $ 24,577        $  9,190        $ (7,027  )     $  26,740   
      income/(loss)
                                                                                 
2011
Service revenues and         $ 254,560       $  95,693       $ -             $  350,253  
sales
Cost of services
provided and goods             196,084          52,282         -                248,366
sold
Selling, general and
administrative                 18,306           26,347         3,911            48,564
expenses (b)
Depreciation                   4,094            2,063          131              6,288
Amortization                   384              156            469              1,009    
      Total costs              218,868          80,848         4,511            304,227  
      and expenses
      Income/(loss)
      from                     35,692           14,845         (4,511  )        46,026
      operations
Interest expense (b)           (57     )        (84    )       (3,487  )        (3,628  )
Intercompany
interest                       735              394            (1,129  )        -
income/(expense)
Other                          59               (233   )       10               (164    )
income/(expense)—net
      Income/(loss)
      before income            36,429           14,922         (9,117  )        42,234
      taxes
Income taxes (b)               (13,755 )        (5,661 )       2,887            (16,529 )
      Net                    $ 22,674        $  9,261        $ (6,230  )     $  25,705   
      income/(loss)
                                                                                 
The "Footnotes to Financial Statements" are integral parts of this financial information.
 

                                                                              
CHEMED CORPORATION AND SUBSIDIARY COMPANIES
CONSOLIDATING STATEMENT OF INCOME
FOR THE YEARS ENDED DECEMBER 31, 2012 AND 2011
(in thousands)(unaudited)
                                              
                                                                               Chemed
                             VITAS             Roto-Rooter     Corporate       Consolidated
2012
Service revenues and         $ 1,067,037       $ 363,006       $ -             $ 1,430,043  
sales
Cost of services
provided and goods             831,321           202,000         -               1,033,321
sold
Selling, general and
administrative                 80,494            102,366         25,796          208,656
expenses (a)
Depreciation                   17,087            8,397           525             26,009
Amortization                   1,956             632             1,924           4,512
Other operating                -                 1,126           -               1,126      
expenses (a)
      Total costs              930,858           314,521         28,245          1,273,624  
      and expenses
      Income/(loss)
      from                     136,179           48,485          (28,245 )       156,419
      operations
Interest expense (a)           (233      )       (433    )       (14,057 )       (14,723   )
Intercompany
interest                       3,180             1,617           (4,797  )       -
income/(expense)
Other                          543               6               3,574           4,123      
income/(expense)—net
      Income/(loss)
      before income            139,669           49,675          (43,525 )       145,819
      taxes
Income taxes (a)               (53,092   )       (18,770 )       15,347          (56,515   )
      Net                    $ 86,577          $ 30,905        $ (28,178 )     $ 89,304     
      income/(loss)
                                                                                  
2011
Service revenues and         $ 986,272         $ 369,698       $ -             $ 1,355,970  
sales
Cost of services
provided and goods             766,732           203,752         -               970,484
sold
Selling, general and
administrative                 75,698            102,528         24,034          202,260
expenses (b)
Depreciation                   16,583            8,130           534             25,247
Amortization                   1,897             599             1,756           4,252      
      Total costs              860,910           315,009         26,324          1,202,243  
      and expenses
      Income/(loss)
      from                     125,362           54,689          (26,324 )       153,727
      operations
Interest expense (b)           (229      )       (358    )       (13,301 )       (13,888   )
Intercompany
interest                       3,998             2,136           (6,134  )       -
income/(expense)
Other                          62                (235    )       890             717        
income/(expense)—net
      Income/(loss)
      before income            129,193           56,232          (44,869 )       140,556
      taxes
Income taxes (b)               (48,835   )       (21,353 )       15,611          (54,577   )
      Net                    $ 80,358          $ 34,879        $ (29,258 )     $ 85,979     
      income/(loss)
                                                                                  
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 DECEMBER 31, 2012 AND 2011
(in thousands)(unaudited)
         
                                                                               
                                                                           Chemed
                             VITAS          Roto-Rooter     Corporate      Consolidated
2012
Net income/(loss)            $ 24,577       $  9,190        $ (7,027 )     $  26,740
Add/(deduct):
    Interest expense           46              69             3,576           3,691
    Income taxes               15,011          5,429          (3,766 )        16,674
    Depreciation               4,567           2,132          132             6,831
    Amortization               489             161            487             1,137    
            EBITDA             44,690          16,981         (6,598 )        55,073
Add/(deduct):
    Intercompany
    interest                   (819   )        (395   )       1,214           -
    expense/(income)
    Interest income            (375   )        (9     )       (24    )        (408    )
    Costs related to
    OIG                        463             -              -               463
    investigation
    Acquisition                13              53             -               66
    expenses
    Advertising cost           -               297            -               297
    adjustment (c)
    Costs related to
    litigation                 -               173            -               173
    settlements
    Stock option               -               -              1,421           1,421
    expense
    Costs related to
    securities                 -               -              477             477
    litigation
    Long-term
    incentive                  -               -              360             360      
    compensation
            Adjusted         $ 43,972       $  17,100       $ (3,150 )     $  57,922   
            EBITDA
                                                                               
2011
Net income/(loss)            $ 22,674       $  9,261        $ (6,230 )     $  25,705
Add/(deduct):
    Interest expense           57              84             3,487           3,628
    Income taxes               13,755          5,661          (2,887 )        16,529
    Depreciation               4,094           2,063          131             6,288
    Amortization               384             156            469             1,009    
            EBITDA             40,964          17,225         (5,030 )        53,159
Add/(deduct):
    Intercompany
    interest                   (735   )        (394   )       1,129           -
    expense/(income)
    Interest income            (208   )        (12    )       (9     )        (229    )
    Costs related to
    OIG                        (21    )        -              -               (21     )
    investigation
    Acquisition                30              (20    )       -               10
    expenses
    Advertising cost           -               202            -               202
    adjustment (c)
    Costs related to
    litigation                 -               848            -               848
    settlements
    Stock option               -               -              1,473           1,473    
    expense
            Adjusted         $ 40,030       $  17,849       $ (2,437 )     $  55,442   
            EBITDA
                                                                               
The "Footnotes to Financial Statements" are integral parts of this financial
information.
 

                                                                            
CHEMED CORPORATION AND SUBSIDIARY COMPANIES
CONSOLIDATING SUMMARY OF EBITDA
FOR THE YEARS ENDED DECEMBER 31, 2012 AND 2011
(in thousands)(unaudited)
                            
                                                                                 
                                                                             Chemed
                             VITAS           Roto-Rooter     Corporate       Consolidated
2012
Net income/(loss)            $ 86,577        $  30,905       $ (28,178 )     $  89,304
Add/(deduct):
    Interest expense           233              433            14,057           14,723
    Income taxes               53,092           18,770         (15,347 )        56,515
    Depreciation               17,087           8,397          525              26,009
    Amortization               1,956            632            1,924            4,512    
            EBITDA             158,945          59,137         (27,019 )        191,063
Add/(deduct):
    Intercompany
    interest                   (3,180  )        (1,617 )       4,797            -
    expense/(income)
    Interest income            (703    )        (30    )       (76     )        (809    )
    Costs related to
    OIG                        1,212            -              -                1,212
    investigation
    Acquisition                15               173            -                188
    expenses
    Cost to shut
    down HVAC                  -                1,126          -                1,126
    operations
    Costs related to
    litigation                 -                1,016          -                1,016
    settlements
    Advertising cost           -                (1,573 )       -                (1,573  )
    adjustment (c)
    Stock option               -                -              8,130            8,130
    expense
    Costs related to
    securities                 -                -              742              742
    litigation
    Long-term
    incentive                  -                -              360              360      
    compensation
            Adjusted         $ 156,289       $  58,232       $ (13,066 )     $  201,455  
            EBITDA
                                                                                 
2011
Net income/(loss)            $ 80,358        $  34,879       $ (29,258 )     $  85,979
Add/(deduct):
    Interest expense           229              358            13,301           13,888
    Income taxes               48,835           21,353         (15,611 )        54,577
    Depreciation               16,583           8,130          534              25,247
    Amortization               1,897            599            1,756            4,252    
            EBITDA             147,902          65,319         (29,278 )        183,943
Add/(deduct):
    Intercompany
    interest                   (3,998  )        (2,136 )       6,134            -
    expense/(income)
    Interest income            (295    )        (40    )       (91     )        (426    )
    Costs related to           1,188            -              -                1,188
    investigation
    Acquisition                147              (26    )       -                121
    expenses
    Costs related to
    litigation                 -                2,299          -                2,299
    settlements
    Advertising cost           -                (1,240 )       -                (1,240  )
    adjustment (c)
    Stock option               -                -              8,376            8,376
    expense
    Long-term
    incentive                  -                -              3,012            3,012    
    compensation
            Adjusted         $ 144,944       $  64,176       $ (11,847 )     $  197,273  
            EBITDA
                                                                                 
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)
                          
                                                                        
                           For the Three Months          For the Years Ended
                           Ended
                           December 31,                  December 31,
                           2012          2011            2012        2011
Net income as              $  26,740     $  25,705       $ 89,304    $ 85,979
reported
                                                                        
Add/(deduct) the
after-tax:
    Non-cash cost
    of change in
    accounting for            1,297         1,200          5,041       4,664
    convertible
    debt
    Stock option              900           932            5,143       5,298
    expense
    Costs related
    to securities             301           -              469         -
    litigation
    Costs reated
    to OIG                    287           (12    )       752         737
    investigation
    Long-term
    incentive                 228           -              228         1,880
    compensation
    Costs related
    to litigation             105           516            617         1,397
    settlements
    Acquisition               40            6              114         75
    expenses
    Costs to shut
    down HVAC                 -             -              649         -
    operations
                                                                        
Adjusted net               $  29,898     $  28,347       $ 102,317   $ 100,030
income
                                                                        
                                                                        
Earnings Per Share
As Reported
    Net income             $  1.44       $  1.34         $ 4.72      $ 4.19
    Average number
    of shares                 18,628        19,237         18,924      20,523
    outstanding
Diluted Earnings
Per Share As
Reported
    Net income             $  1.40       $  1.31         $ 4.62      $ 4.10
    Average number
    of shares                 19,053        19,556         19,339      20,945
    outstanding
                                                                        
                                                                        
Adjusted Earnings
Per Share
    Net income             $  1.61       $  1.47         $ 5.41      $ 4.87
    Average number
    of shares                 18,628        19,237         18,924      20,523
    outstanding
Adjusted Diluted
Earnings Per Share
    Net income             $  1.57       $  1.45         $ 5.29      $ 4.78
    Average number
    of shares                 19,053        19,556         19,339      20,945
    outstanding
                                                                        
The "Footnotes to Financial Statements" are integral parts of this financial
information.
 

                                                                                 
CHEMED CORPORATION AND SUBSIDIARY COMPANIES
OPERATING STATISTICS FOR VITAS SEGMENT
(unaudited)
                                                                                   
                                                                                               
                              For the Three Months Ended        For the Years Ended
                              December 31,                      December 31,
OPERATING STATISTICS          2012            2011              2012              2011
    Net revenue
    ($000) (d)
        Homecare              $ 201,266       $ 188,782         $ 778,776         $ 718,658
        Inpatient               28,013          27,882            114,494           110,742
        Continuous              44,581          40,516            172,063           158,466  
        care
            Total
            before
            Medicare          $ 273,860       $ 257,180         $ 1,065,333       $ 987,866
            cap
            allowance
        Medicare cap            (873    )       (2,620  )         1,704             (1,594  )
        allowance
            Total             $ 272,987       $ 254,560         $ 1,067,037       $ 986,272  
    Net revenue as a
    percent of total
    before Medicare
    cap allowance
        Homecare                73.5      %     73.4      %       73.1        %     72.7      %
        Inpatient               10.2            10.8              10.7              11.2
        Continuous              16.3            15.8              16.2              16.1     
        care
            Total
            before
            Medicare            100.0           100.0             100.0             100.0
            cap
            allowance
        Medicare cap            (0.3    )       (1.0    )         0.2               (0.2    )
        allowance
            Total               99.7      %     99.0      %       100.2       %     99.8      %
    Average daily
    census ("ADC")
    (days)
        Homecare                10,352          9,582             10,016            9,285
        Nursing home            3,007           3,092             3,025             3,069    
            Routine             13,359          12,674            13,041            12,354
            homecare
        Inpatient               451             443               462               449
        Continuous              655             607               637               603      
        care
            Total               14,465          13,724            14,140            13,406   
                                                                                               
    Total Admissions            16,004          15,191            63,777            60,162
    Total Discharges            16,120          15,289            63,196            60,393
    Average length of           80.3            79.0              78.8              78.8
    stay (days)
    Median length of            15.0            14.0              15.0              14.0
    stay (days)
    ADC by major
    diagnosis
        Neurological            33.9      %     34.0      %       34.2        %     34.4      %
        Cancer                  17.2            17.8              17.5              17.7
        Cardio                  11.1            11.3              11.3              11.5
        Respiratory             6.5             6.4               6.6               6.7
        Other                   31.3            30.5              30.4              29.7     
            Total               100.0     %     100.0     %       100.0       %     100.0     %
    Admissions by
    major diagnosis
        Neurological            18.5      %     19.4      %       19.1        %     19.4      %
        Cancer                  33.3            34.4              33.3              33.5
        Cardio                  11.3            10.8              11.1              10.8
        Respiratory             8.3             7.6               8.2               8.3
        Other                   28.6            27.8              28.3              28.0     
            Total               100.0     %     100.0     %       100.0       %     100.0     %
    Direct patient
    care margins (e)
        Routine                 54.4      %     53.2      %       52.5        %     52.3      %
        homecare
        Inpatient               10.5            13.1              11.6              12.9
        Continuous              18.3            19.9              19.2              20.3
        care
    Homecare margin
    drivers (dollars
    per patient day)
        Labor costs           $ 53.28         $ 52.92           $ 55.03           $ 53.63
        Drug costs              7.61            8.31              8.09              8.19
        Home medical            6.68            6.78              6.83              6.69
        equipment
        Medical                 2.78            2.79              2.77              2.80
        supplies
    Inpatient margin
    drivers (dollars
    per patient day)
        Labor costs           $ 330.20        $ 320.43          $ 323.09          $ 312.78
    Continuous care
    margin drivers
    (dollars per
    patient day)
        Labor costs           $ 583.46        $ 559.11          $ 574.64          $ 552.38
    Bad debt expense
    as a percent of             0.6       %     0.6       %       0.8         %     0.7       %
    revenues
    Accounts
    receivable --
    Days of revenue
    outstanding-
    excluding                   35.9            36.7              n.a.              n.a.
    unapplied
    Medicare payments
    Days of revenue
    outstanding-
    including                   25.2            22.3              n.a.              n.a.
    unapplied
    Medicare payments
                                                                                               
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, 2012 AND 2011
(unaudited)
             
                                                                             
(a)   Included in the results of operations 2012 are the following significant
      credits/(charges) which may not be indicative of ongoing operations
      (in thousands):
                                For the Three Months Ended December 31, 2012
                                VITAS        Roto-Rooter   Corporate     Consolidated
      Selling, general
      and
      administrative
      expenses:
          Costs related
          to OIG                $ (463   )   $  -          $ -           $  (463    )
          investigation
          Acquisition             (13    )      (53    )     -              (66     )
          expenses
          Costs related
          to litigation           -             (173   )     -              (173    )
          settlements
          Stock option            -             -            (1,421  )      (1,421  )
          expense
          Costs related
          to securities           -             -            (477    )      (477    )
          litigation
          Long-term
          incentive               -             -            (360    )      (360    )
          compensation
      Interest expense:
          Non-cash cost
          of change in
          accounting              -             -            (2,052  )      (2,052  )
          for
          convertible
          debt
              Pretax
              impact on           (476   )      (226   )     (4,310  )      (5,012  )
              earnings
      Income tax
      benefit on the              181           89           1,584          1,854    
      above
              After-tax
              impact on         $ (295   )   $  (137   )   $ (2,726  )   $  (3,158  )
              earnings
                                                                             
                                For the Year Ended December 31, 2012
                                VITAS        Roto-Rooter   Corporate     Consolidated
      Selling, general
      and
      administrative
      expenses:
          Costs related
          to OIG                $ (1,212 )   $  -          $ -           $  (1,212  )
          investigation
          Acquisition             (15    )      (173   )     -              (188    )
          expenses
          Costs related
          to litigation           -             (1,016 )     -              (1,016  )
          settlements
          Stock option            -             -            (8,130  )      (8,130  )
          expense
          Costs related
          to securities           -             -            (742    )      (742    )
          litigation
          Long-term
          incentive               -             -            (360    )      (360    )
          compensation
      Other operating             -             (1,126 )     -              (1,126  )
      expenses
      Interest expense:
          Non-cash cost
          of change in
          accounting              -             -            (7,971  )      (7,971  )
          for
          convertible
          debt
              Pretax
              impact on           (1,227 )      (2,315 )     (17,203 )      (20,745 )
              earnings
      Income tax
      benefit on the              466           944          6,322          7,732    
      above
              After-tax
              impact on         $ (761   )   $  (1,371 )   $ (10,881 )   $  (13,013 )
              earnings
                                                                             
(b)   Included in the results of operations 2011 are the following significant
      credits/(charges) which may not be indicative of ongoing operations
      (in thousands):
                                For the Three Months Ended December 31, 2011
                                VITAS        Roto-Rooter   Corporate     Consolidated
      Selling, general
      and
      administrative
      expenses:
          Costs related
          to OIG                $ 21         $  -          $ -           $  21
          investigation
          Acquisition             (30    )      20           -              (10     )
          expenses
          Costs related
          to litigation           -             (848   )     -              (848    )
          settlements
          Stock option            -             -            (1,473  )      (1,473  )
          expense
      Interest expense:
          Non-cash cost
          of change in
          accounting              -             -            (1,898  )      (1,898  )
          for
          convertible
          debt
              Pretax
              impact on           (9     )      (828   )     (3,371  )      (4,208  )
              earnings
      Income tax
      benefit on the              3             324          1,239          1,566    
      above
              After-tax
              impact on         $ (6     )   $  (504   )   $ (2,132  )   $  (2,642  )
              earnings
                                                                             
                                For the Year Ended December 31, 2011
                                VITAS        Roto-Rooter   Corporate     Consolidated
      Selling, general
      and
      administrative
      expenses:
          Costs related
          to OIG                $ (1,188 )   $  -          $ -           $  (1,188  )
          investigation
          Acquisition             (147   )      26           -              (121    )
          expenses
          Costs related
          to litigation           -             (2,299 )     -              (2,299  )
          settlements
          Stock option            -             -            (8,376  )      (8,376  )
          expense
          Long-term
          incentive               -             -            (3,012  )      (3,012  )
          compensation
      Interest expense:
          Non-cash cost
          of change in
          accounting              -             -            (7,374  )      (7,374  )
          for
          convertible
          debt
              Pretax
              impact on           (1,335 )      (2,273 )     (18,762 )      (22,370 )
              earnings
      Income tax
      benefit on the              507           892          6,920          8,319    
      above
              After-tax
              impact on         $ (828   )   $  (1,381 )   $ (11,842 )   $  (14,051 )
              earnings
                                                                                     

      Under Generally Accepted Accounting Principles ("GAAP"), the Roto-Rooter
      segment expenses all advertising, including the cost of telephone
      directories, immediately upon the initial release of the
      advertising.  Telephone directories are generally in circulation 12
      months.  If a directory is in circulation for a time period greater or
      less than 12 months, the publisher adjusts the directory billing for the
      change in billing period.  The timing of when a telephone directory is
(c)   published can and does fluctuate significantly on a quarterly
      basis.  This "direct expensing" results in significant fluctuations in
      quarterly advertising expense.  In the fourth quarters of 2012 and 2011,
      GAAP advertising expense for Roto-Rooter totaled $6,857,000 and
      $6,073,000, respectively.  If the expense of the telephone directories
      were spread over the periods they are in circulation, advertising
      expense for the fourth quarters of 2012 and 2011 would total $6,560,000
      and $5,871,000, respectively.
       
      Similarly, for the years ended December 31, 2012 and 2011, GAAP
      advertising expense for Roto-Rooter totaled $23,535,000 and $22,534,000,
      respectively.  If the expense of the telephone directories were spread
      over the periods they are in circulation, advertising expense for the
      years ended December 31, 2012 and 2011, would total $25,108,000 and
      $23,774,000, respectively.
       
      VITAS has 9 large (greater than 450 ADC), 16 medium (greater than 200
      but less than 450 ADC) and 26 small (less than 200 ADC) hospice
(d)   programs. For the current Medicare cap year there are three programs
      with a cap liability and six programs with Medicare cap cushion of less
      than 10%.
       
(e)   Amounts exclude indirect patient care and administrative costs, as well
      as Medicare Cap billing limitation.
       

Contact:

Chemed Corporation
David P. Williams, 513-762-6901
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