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29.04.17
ROUNDUP 2: EU vor Brexit-​Verhandlungen ungewöhnlich einig

Chemed Reports Fourth-Quarter 2016 Results

Mittwoch, 15.02.2017 22:15



CINCINNATI --(BUSINESS WIRE)--

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, 2016, versus the comparable prior-year period, as follows:

Consolidated operating results:

  • Revenue increased 1.2% to $403 million
  • GAAP Diluted EPS increased 12.8% to $1.94
  • Adjusted Diluted EPS increased 6.6% to $2.10

VITAS segment operating results:

  • Net Patient Revenue of $284 million, a decrease of 0.1%
  • Average Daily Census (ADC) of 16,160, an increase of 2.9%
  • Unit for Unit admissions of 15,889, an increase of 0.7%
  • Net Income, including discrete items, of $26.4 million, a decrease of 0.3%
  • Adjusted EBITDA of $46.2 million, a decrease of 0.4%

Roto-Rooter segment operating results:

  • Revenue of $119 million, an increase of 4.5%
  • Net Income of $13.7 million, an increase of 1.7%
  • Adjusted EBITDA of $25.0 million, an increase of 2.7%
  • Adjusted EBITDA margin of 21.0%, a decrease of 38 basis points

VITAS

Net revenue for VITAS was $284 million in the fourth quarter of 2016, which is a decrease of 0.1%, when compared to the prior-year period. This revenue decrease is comprised primarily of an average Medicare reimbursement rate increase of approximately 2.1%, a 2.9% increase in average daily census, offset by acuity mix shift which negatively impacted revenue 1.9% and changes in Medicare hospice reimbursement methodology which negatively impacted revenue 2.3%.

On January 1, 2016, CMS implemented a refinement to the Medicare hospice reimbursement per diem. This refinement eliminated the single-tier per diem for routine home care (RHC) and replaced it with a two-tiered rate, with a higher per diem rate for the first 60 days of a hospice patient’s care, and a lower rate for days 61 and after. In addition, CMS provided for a Service Intensity Add-on (SIA) payment which provides for reimbursement of care provided by a registered nurse or social worker for RHC patients within seven days prior to death. The reimbursement for continuous care, inpatient care and respite care are not impacted by this rebasing.

The current two-tiered national per diem rate for RHC is $190.41 for the first 60 days and $149.68 for RHC provided to patients in hospice beyond 60 days. An individual hospice’s actual per diem rate is adjusted for differences in geographic cost of living.

Rebasing in 2016 would be revenue neutral to a hospice if 37.6% of total RHC days-of-care being provided to patients in their first 60 days of admission and 62.4% of total RHC days-of-care provided to patients after the 60 days. (RHC Days-of-Care ratio).

In the fourth quarter of 2016, VITAS had a 24.2/75.8 RHC Days-of-Care ratio and generated approximately $1.2 million in SIA payments. This resulted in $6.5 million less revenue than under the previous Medicare reimbursement methodology.

VITAS did not have any adjustments to revenue related to the Medicare Cap billing limitation in the current or prior-year quarter.

At December 31, 2016, VITAS had 31 Medicare provider numbers, none of which has an estimated 2017 Medicare Cap billing limitation.

All of VITAS’ 31 unique Medicare provider numbers have a Medicare Cap cushion of 10% or greater for the trailing twelve month period.

Average revenue per patient per day in the quarter was $191.15, which is 3.0% below the prior-year period. Routine home care reimbursement and high acuity care averaged $162.23 and $709.64, respectively. During the quarter, high acuity days of care were 5.3% of total days of care, 63 basis points less than the prior-year quarter.

The fourth quarter of 2016 gross margin was 24.1%, which is essentially equal to the fourth quarter of 2015.

Selling, general and administrative expense was $23.4 million in the fourth quarter of 2016, which is an increase of 1.2% when compared to the prior-year quarter. Adjusted EBITDA totaled $46.2 million in the quarter, a decrease of 0.4% over the prior-year period. Adjusted EBITDA margin was 16.3% in the quarter which is essentially equal to the prior-year quarter.

Roto-Rooter

Roto-Rooter’s plumbing and drain cleaning business generated sales of $119 million for the fourth quarter of 2016, an increase of $5.2 million, or 4.5%, over the prior-year quarter. Revenue from water restoration totaled $13.7 million, an increase of 31.7% over the prior year.

Roto-Rooter’s gross margin in the quarter was 46.9%, a 38 basis point decline when compared to the fourth quarter of 2015. Adjusted EBITDA in the fourth quarter of 2016 totaled $25.0 million, an increase of 2.7%, and the Adjusted EBITDA margin was 21.0% in the quarter, 38 basis points below the prior year.

Chemed Consolidated

As of December 31, 2016, Chemed had total cash and cash equivalents of $15 million and debt of $109 million.

In June 2014 Chemed entered into a five-year Amended and Restated Credit Agreement that consisted of a $100 million amortizable term loan and a $350 million revolving credit facility. The interest rate on this facility has a floating rate that is currently LIBOR plus 112.5 basis points. At December 31, 2016, the Company had approximately $287 million of undrawn borrowing capacity under this credit agreement.

Capital expenditures through December 31, 2016, aggregated $39.8 million and compares to depreciation and amortization during the same period of $34.6 million.

On March 11, 2016, Chemed’s Board of Directors authorized an additional $100 million for stock repurchase under Chemed’s existing share repurchase program. On a year-to-date basis, the company has purchased 780,134 shares of Chemed stock at an aggregate cost of $102.3 million. The company did not purchase any shares of Chemed stock in the fourth quarter of 2016. As of December 31, 2016, there is $50.2 million of share repurchase authorization under this plan.

Guidance for 2017

Revenue growth for VITAS in 2017, prior to Medicare Cap, is estimated to be in the range of 4% to 5%. Admissions and Average Daily Census in 2017 are estimated to expand approximately 3% to 4% and full-year Adjusted EBITDA margin, prior to Medicare Cap, is estimated to be 14.5% to 15.0%. We are currently estimating $5.0 million for Medicare Cap billing limitations in 2017.

Roto-Rooter is forecasted to achieve full-year 2017 revenue growth of 3% to 4%. This revenue estimate is based upon increased job pricing of approximately 2% and continued growth in water restoration services. Adjusted EBITDA margin for 2017 is estimated in the range of 21.5% to 22.0%.

Based upon the above, full-year 2017 adjusted earnings per diluted share, excluding non-cash expense for stock options, costs related to litigation, and other discrete items, is estimated to be in the range of $7.80 to $8.00. This compares to Chemed’s 2016 reported adjusted earnings per diluted share of $7.24.

Conference Call

Chemed will host a conference call and webcast at 10 a.m., ET, on Thursday, February 16, 2017, to discuss the Company's quarterly results and to provide an update on its business. The dial-in number for the conference call is (855) 715-1324 for U.S. and Canadian participants and +1 (503) 343-6664 for international participants. The participant passcode/Conference ID is 57003963. 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 57003963. 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 16,000 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 restoration 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 STATEMENT OF INCOME
(in thousands, except per share data)(unaudited)
               
 
For the Three Months Ended For the Years Ended
December 31, December 31,
2016 2015 2016 2015
Service revenues and sales $ 403,476   $ 398,589   $ 1,576,881   $ 1,543,388  
Cost of services provided and goods sold 279,083 275,973 1,115,431 1,087,610
Selling, general and administrative expenses (aa) 62,526 64,554 243,572 237,821
Depreciation 8,660 8,180 34,279 32,369
Amortization 85 723 359 1,130
Other operating expenses   -     -     4,491     -  
Total costs and expenses   350,354     349,430     1,398,132     1,358,930  
Income from operations 53,122 49,159 178,749 184,458
Interest expense (884 ) (799 ) (3,715 ) (3,645 )
Other income--net (bb)   87     569     2,020     (687 )
Income before income taxes 52,325 48,929 177,054 180,126
Income taxes   (20,136 )   (19,000 )   (68,311 )   (69,852 )
Net income $ 32,189   $ 29,929   $ 108,743   $ 110,274  
 
 
Earnings Per Share
Net income $ 1.99   $ 1.78   $ 6.64   $ 6.54  
Average number of shares outstanding   16,206     16,819     16,383     16,870  
 
Diluted Earnings Per Share
Net income $ 1.94   $ 1.72   $ 6.48   $ 6.33  
Average number of shares outstanding   16,598     17,365     16,789     17,422  
 
                               
(aa) Selling, general and administrative ("SG&A") expenses comprise (in thousands):
For the Three Months Ended For the Years Ended
December 31, December 31,
2016 2015 2016 2015

SG&A expenses before long-term incentive compensation, O.I.G. expenses and the impact of market value gains related to deferred compensation plans

$ 60,137 $ 58,625 $ 234,321 $ 225,180
Long-term incentive compensation 1,029 3,764 1,930 7,519
O.I.G. expenses 1,155 1,137 5,260 4,974

Market value gains related to deferred compensation trusts

  205     1,028     2,061     148  
Total SG&A expenses $ 62,526   $ 64,554   $ 243,572   $ 237,821  
 
(bb) Other income--net comprises (in thousands):
For the Three Months Ended For the Years Ended
December 31, December 31,
2016 2015 2016 2015

Market value gains related to deferred compensation trusts

$ 205 $ 1,028 $ 2,061 $ 148
Loss on disposal of property and equipment (200 ) (567 ) (424 ) (698 )
Interest income 82 74 383 281
Other   -     34     -     (418 )
Total other income--net $ 87   $ 569   $ 2,020   $ (687 )
     
CHEMED CORPORATION AND SUBSIDIARY COMPANIES
CONSOLIDATED BALANCE SHEET
(in thousands, except per share data)(unaudited)
             
 
December 31,
2016 2015
Assets
Current assets
Cash and cash equivalents $ 15,310 $ 14,727
Accounts receivable less allowances 132,021 106,262
Inventories 5,755 6,314
Prepaid income taxes 3,709 10,653
Prepaid expenses   13,105     12,852  
Total current assets 169,900 150,808
Investments of deferred compensation plans held in trust 54,389 49,481
Properties and equipment, at cost less accumulated depreciation 121,302 117,370
Identifiable intangible assets less accumulated amortization 55,065 55,111
Goodwill 472,366 472,322
Other assets   7,037     7,233  
Total Assets $ 880,059   $ 852,325  
 
Liabilities
Current liabilities
Accounts payable $ 39,586 $ 43,695
Current portion of long-term debt 8,750 7,500
Accrued insurance 47,960 43,972
Accrued compensation 53,979 52,817
Accrued legal 1,805 1,233
Other current liabilities  

19,752

    22,119  
Total current liabilities 171,832 171,336
Deferred income taxes 14,291 21,041
Long-term debt 100,000 83,750
Deferred compensation liabilities 54,288 49,467
Other liabilities   15,549     13,478  
Total Liabilities   355,960     339,072  
 
Stockholders' Equity
Capital stock 34,270 33,985
Paid-in capital 639,703 603,006
Retained earnings 958,149 865,845
Treasury stock, at cost (1,110,536 ) (991,978 )
Deferred compensation payable in Company stock   2,513     2,395  
Total Stockholders' Equity   524,099     513,253  
Total Liabilities and Stockholders' Equity $ 880,059   $ 852,325  
     
CHEMED CORPORATION AND SUBSIDIARY COMPANIES
CONSOLIDATED STATEMENT OF CASH FLOWS
(in thousands)(unaudited)
                 

 

For the Years Ended December 31,
2016 2015
Cash Flows from Operating Activities
Net income $ 108,743 $ 110,274

Adjustments to reconcile net income to net cash provided by operating activities:

Depreciation and amortization 34,638 33,499
Provision for uncollectible accounts receivable 16,319 14,247
Stock option expense 8,330 5,445
Provision/(benefit) for deferred income taxes (6,707 ) 6,325
Amortization of restricted stock awards 1,855 2,107
Noncash early retirement expense 1,747 -
Noncash long-term incentive compensation 1,301 6,644
Noncash directors' compensation 541 540
Amortization of debt issuance costs 519 523

Changes in operating assets and liabilities, excluding amounts acquired in business combinations:

Decrease/(increase) in accounts receivable (42,142 ) 4,132
Decrease/(increase) in inventories 559 (142 )
Decrease/(increase) in prepaid expenses (253 ) (1,290 )
Increase/(decrease) in accounts payable and other current liabilities 891 476
Increase in income taxes 13,886 344
Increase in other assets (5,224 ) (47 )
Increase in other liabilities 7,105 1,320
Excess tax benefit on stock-based compensation (7,195 ) (14,042 )
Other sources   480     1,145  
Net cash provided by operating activities   135,393     171,500  
Cash Flows from Investing Activities
Capital expenditures (39,772 ) (44,135 )
Business combinations, net of cash acquired - (6,614 )
Other sources   (90 )   432  
Net cash used by investing activities   (39,862 )   (50,317 )
Cash Flows from Financing Activities
Proceeds from revolving line of credit 184,550 103,200
Payments on revolving line of credit (159,550 ) (153,200 )
Purchases of treasury stock (102,313 ) (59,323 )
Dividends paid (16,439 ) (15,605 )
Capital stock surrendered to pay taxes on stock-based compensation (8,772 ) (15,734 )
Proceeds from exercise of stock options 8,421 15,424
Payments on other long-term debt (7,500 ) (6,250 )
Excess tax benefit on stock-based compensation 7,195 14,042
Increase/(decrease) in cash overdrafts payable (736 ) (1,177 )
Other uses   196     (1,965 )
Net cash used by financing activities   (94,948 )   (120,588 )
Increase/(Decrease) in Cash and Cash Equivalents 583 595
Cash and cash equivalents at beginning of year   14,727     14,132  
Cash and cash equivalents at end of period $ 15,310   $ 14,727  
   
CHEMED CORPORATION AND SUBSIDIARY COMPANIES
CONSOLIDATING STATEMENT OF INCOME
FOR THE THREE MONTHS ENDED DECEMBER 31, 2016 AND 2015
(in thousands)(unaudited)
           
Chemed
VITAS Roto-Rooter Corporate Consolidated
2016        
Service revenues and sales $ 284,186   $ 119,290   $ -   $ 403,476  
Cost of services provided and goods sold 215,722 63,361 - 279,083
Selling, general and administrative expenses (a) 23,354 30,922 8,250 62,526
Depreciation 4,690 3,838 132 8,660
Amortization   14     71     -     85  
Total costs and expenses   243,780     98,192     8,382     350,354  
Income/(loss) from operations 40,406 21,098 (8,382 ) 53,122
Interest expense (a) (35 ) (68 ) (781 ) (884 )
Intercompany interest income/(expense) 2,130 981 (3,111 ) -
Other income/(expense)—net   (57 )   (60 )   204     87  
Income/(loss) before income taxes 42,444 21,951 (12,070 ) 52,325
Income taxes (a)   (16,023 )   (8,272 )   4,159     (20,136 )
Net income/(loss) $ 26,421   $ 13,679   $ (7,911 ) $ 32,189  
 
2015        
Service revenues and sales $ 284,470   $ 114,119   $ -   $ 398,589  
Cost of services provided and goods sold 215,786 60,187 - 275,973
Selling, general and administrative expenses (b) 23,086 29,649 11,819 64,554
Depreciation 4,647 3,390 143 8,180
Amortization   578     145     -     723  
Total costs and expenses   244,097     93,371     11,962     349,430  
Income/(loss) from operations 40,373 20,748 (11,962 ) 49,159
Interest expense (b) (36 ) (74 ) (689 ) (799 )
Intercompany interest income/(expense) 2,039 884 (2,923 ) -
Other income/(expense)—net   (422 )   (38 )   1,029     569  
Income/(loss) before income taxes 41,954 21,520 (14,545 ) 48,929
Income taxes (b)   (15,446 )   (8,069 )   4,515     (19,000 )
Net income/(loss) $ 26,508   $ 13,451   $ (10,030 ) $ 29,929  
 
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, 2016 AND 2015
(in thousands)(unaudited)
 
Chemed
VITAS Roto-Rooter Corporate Consolidated
2016        
Service revenues and sales $ 1,123,317   $ 453,564   $ -   $ 1,576,881  
Cost of services provided and goods sold 878,092 237,339 - 1,115,431
Selling, general and administrative expenses (a) 92,550 118,812 32,210 243,572
Depreciation 19,035 14,698 546 34,279
Amortization 55 304 - 359
Other operating expenses   4,491     -     -     4,491  
Total costs and expenses   994,223     371,153     32,756     1,398,132  
Income/(loss) from operations 129,094 82,411 (32,756 ) 178,749
Interest expense (a) (211 ) (332 ) (3,172 ) (3,715 )
Intercompany interest income/(expense) 7,969 3,595 (11,564 ) -
Other income/(expense)—net   19     (62 )   2,063     2,020  
Income/(loss) before income taxes 136,871 85,612 (45,429 ) 177,054
Income taxes (a)   (51,910 )   (32,719 )   16,318     (68,311 )
Net income/(loss) $ 84,961   $ 52,893   $ (29,111 ) $ 108,743  
 
2015        
Service revenues and sales $ 1,115,551   $ 427,837   $ -   $ 1,543,388  
Cost of services provided and goods sold 862,587 225,023 - 1,087,610
Selling, general and administrative expenses (b) 89,879 114,269 33,673 237,821
Depreciation 18,789 12,988 592 32,369
Amortization   758     372     -     1,130  
Total costs and expenses   972,013     352,652     34,265     1,358,930  
Income/(loss) from operations 143,538 75,185 (34,265 ) 184,458
Interest expense (b) (200 ) (348 ) (3,097 ) (3,645 )
Intercompany interest income/(expense) 7,499 3,385 (10,884 ) -
Other income—net   (816 )   (19 )   148     (687 )
Income/(loss) before income taxes 150,021 78,203 (48,098 ) 180,126
Income taxes (b)   (56,675 )   (29,630 )   16,453     (69,852 )
Net income/(loss) $ 93,346   $ 48,573   $ (31,645 ) $ 110,274  
 
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, 2016 AND 2015
(in thousands)(unaudited)
         
 
Chemed
VITAS Roto-Rooter Corporate Consolidated
2016            
Net income/(loss) $ 26,421 $ 13,679 $ (7,911 ) $ 32,189
Add/(deduct):
Interest expense 35 68 781 884
Income taxes 16,023 8,272 (4,159 ) 20,136
Depreciation 4,690 3,838 132 8,660
Amortization 14     71     -     85  
EBITDA 47,183 25,928 (11,157 ) 61,954
Add/(deduct):
Intercompany interest expense/(income) (2,130 ) (981 ) 3,111 -
Interest income (69 ) (13 ) - (82 )
Expenses related to OIG investigation 1,155 - - 1,155
Amortization of stock awards 86 76 279 441
Advertising cost adjustment (c) - 20 - 20
Litigation settlement costs - 1 - 1
Stock option expense - - 2,071 2,071
Long-term incentive compensation   -     -     1,029     1,029  
Adjusted EBITDA $ 46,225   $ 25,031   $ (4,667 ) $ 66,589  
 
2015            
Net income/(loss) $ 26,508 $ 13,451 $ (10,030 ) $ 29,929
Add/(deduct):
Interest expense 36 74 689 799
Income taxes 15,446 8,069 (4,515 ) 19,000
Depreciation 4,647 3,390 143 8,180
Amortization   578     145     -     723  
EBITDA 47,215 25,129 (13,713 ) 58,631
Add/(deduct):
Intercompany interest expense/(income) (2,039 ) (884 ) 2,923 -
Interest income (61 ) (13 ) - (74 )
Expenses related to OIG investigation 1,137 - - 1,137
Amortization of stock awards 152 87 380 619
Acquisition expenses - 11 - 11
Advertising cost adjustment (c) - 50 - 50
Stock option expense - - 1,845 1,845
Long-term incentive compensation   -     -     3,764     3,764  
Adjusted EBITDA $ 46,404   $ 24,380   $ (4,801 ) $ 65,983  
 
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, 2016 AND 2015
(in thousands)(unaudited)
 
 
Chemed
VITAS Roto-Rooter Corporate Consolidated
2016      
Net income/(loss) $ 84,961 $ 52,893 $ (29,111 ) $ 108,743
Add/(deduct):
Interest expense 211 332 3,172 3,715
Income taxes 51,910 32,719 (16,318 ) 68,311
Depreciation 19,035 14,698 546 34,279
Amortization   55     304     -     359  
EBITDA 156,172 100,946 (41,711 ) 215,407
Add/(deduct):
Intercompany interest expense/(income) (7,969 ) (3,595 ) 11,564 -
Interest income (325 ) (58 ) - (383 )
Expenses related to OIG investigation 5,260 - - 5,260
Early retirement expenses 4,491 - - 4,491
Medicare cap sequestration adjustment 228 - - 228
Amortization of stock awards 387 307 1,161 1,855
Net expenses related to litigation settlements 1,149 45 - 1,194
Advertising cost adjustment (c) - (1,333 ) - (1,333 )
Stock option expense - - 8,330 8,330
Long-term incentive compensation   -     -     1,930     1,930  
Adjusted EBITDA $ 159,393   $ 96,312   $ (18,726 ) $ 236,979  
 
2015      
Net income/(loss) $ 93,346 $ 48,573 $ (31,645 ) $ 110,274
Add/(deduct):
Interest expense 200 348 3,097 3,645
Income taxes 56,675 29,630 (16,453 ) 69,852
Depreciation 18,789 12,988 592 32,369
Amortization   758     372     -     1,130  
EBITDA 169,768 91,911 (44,409 ) 217,270
Add/(deduct):
Intercompany interest expense/(income) (7,499 ) (3,385 ) 10,884 -
Interest income (241 ) (40 ) - (281 )
Expenses related to OIG investigation 4,974 - - 4,974
Amortization of stock awards 496 268 1,343 2,107
Net expenses related to litigation settlements - 5 - 5
Acquisition expenses - 172 - 172
Advertising cost adjustment (c) - (1,317 ) - (1,317 )
Stock option expense - - 5,445 5,445
Long-term incentive compensation - - 7,519 7,519
Expenses related to securities litigation   -     -     37     37  
Adjusted EBITDA $ 167,498   $ 87,614   $ (19,181 ) $ 235,931  
 

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 Ended For the Years Ended

December 31,

December 31,
2016 2015 2016 2015
Net income as reported $ 32,189 $ 29,929 $ 108,743 $ 110,274
 
Add/(deduct) the after-tax:
Long-term incentive compensation 651 2,377 1,221 4,752
Stock option expense 1,308 1,171 5,266 3,439
Early retirement expenses - - 2,840 -
Expenses related to OIG investigation 713 703 3,248 3,072
Acquisition expenses - 6 - 104
Medicare cap sequestration adjustment - - 141 -
Net expenses related to litigation settlements 1 - 28 3
Expenses related to securities litigation   -   -   -   23
Adjusted net income $ 34,862 $ 34,186 $ 121,487 $ 121,667
 
 
Diluted Earnings Per Share As Reported
Net income $ 1.94 $ 1.72 $ 6.48 $ 6.33
Average number of shares outstanding   16,598   17,365   16,789   17,422
 
 
Adjusted Diluted Earnings Per Share
Net income $ 2.10 $ 1.97 $ 7.24 $ 6.98
Adjusted average number of shares outstanding (d)   16,598   17,365   16,789   17,422
 

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 2016 2015 2016 2015
Net revenue ($000) (e)
Homecare $ 228,463 $ 224,278 $ 887,940 $ 865,145
Inpatient 23,724 22,954 97,580 99,439
Continuous care   31,999   37,238   138,025   150,802
Total before Medicare cap allowance $ 284,186 $ 284,470 $ 1,123,545 $ 1,115,386
Medicare cap allowance   -   -   (228 )   165
Total $ 284,186 $ 284,470 $ 1,123,317 $ 1,115,551
Net revenue as a percent of total before Medicare cap allowance
Homecare 80.4 % 78.8 % 78.9

%

 

77.6 %
Inpatient 8.3 8.1 8.7 8.9
Continuous care   11.3   13.1   12.4   13.5
Total before Medicare cap allowance 100.0 100.0 100.0 100.0
Medicare cap allowance   -   -   -   -
Total   100.0 %   100.0 %   100.0

%

 

100.0 %
Average daily census ("ADC") (days)
Homecare 12,241 11,707 12,040 11,372
Nursing home   3,065   3,062   3,037   3,035
Routine homecare 15,306 14,769 15,077 14,407
Inpatient 383 377 400 412
Continuous care   471   551   515   566
Total   16,160   15,697   15,992   15,385
 
Total Admissions 15,889 15,790 65,094 65,872
Total Discharges 16,282 15,915 64,689 64,900
Average length of stay (days) 91.4 89.8 86.7 81.6
Median length of stay (days) 16.0 17.0 16.0 15.0
ADC by major diagnosis
Neurological 20.3 % 22.8 %

21.1

%

 

23.2 %
Cancer 15.4 15.6 15.3 16.4
Cardio 16.9 17.4 17.1 17.4
Cerebro 33.4 29.9 32.7 29.1
Respiratory 7.8 7.7 7.8 7.8
Other   6.2   6.6   6.0   6.1

Total

  100.0 %   100.0 %   100.0

%

 

100.0 %
Admissions by major diagnosis
Neurological 11.3 % 12.1 % 11.0

%

 

12.3 %
Cancer 32.2 31.5 31.8 32.0
Cardio 16.0 15.2 15.4 15.3
Cerebro 21.6 19.7 21.0 19.0
Respiratory 10.8 9.5 10.2 9.9
Other   8.1   12.0   10.6   11.5
Total   100.0 %   100.0 %   100.0

%

 

100.0 %
Direct patient care margins (f)
Routine homecare 53.1 % 54.7 % 52.1

%

 

53.4 %
Inpatient 1.2 1.3 2.3 5.0
Continuous care 15.8 16.1 14.2 16.1
Homecare margin drivers (dollars per patient day)
Labor costs $ 56.11 $ 53.96 $ 56.41 $ 55.58

Combined drug, home medical equipment and medical supplies cost

14.99 16.08 15.66 16.15
Inpatient margin drivers (dollars per patient day)
Labor costs $ 363.06 $ 358.52 $ 350.56 $ 350.06
Continuous care margin drivers (dollars per patient day)
Labor costs $ 602.30 $ 596.21 $ 607.52 $ 592.48
Bad debt expense as a percent of revenues 1.2 % 1.0 % 1.2

%

 

1.0 %
Accounts receivable --
Days of revenue outstanding- excluding unapplied Medicare payments 36.5 37.5 n.a. n.a.
Days of revenue outstanding- including unapplied Medicare payments 32.6 26.7 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, 2016 AND 2015
(unaudited)
             
 
(a) Included in the results of operations 2016 are the following significant credits/(charges) which may not be indicative of ongoing operations
(in thousands):
For the Three Months Ended December 31, 2016
VITAS Roto-Rooter Corporate Consolidated
Selling, general and administrative expenses:
Expenses related to OIG investigation $ (1,155 ) $ - $ - $ (1,155 )
Litigation settlement expenses - (1 ) - (1 )
Long-term incentive compensation - - (1,029 ) (1,029 )
Stock option expense   -     -     (2,071 )   (2,071 )
Pretax impact on earnings (1,155 ) (1 ) (3,100 ) (4,256 )
Income tax benefit on the above   442     -     1,141     1,583  
After-tax impact on earnings $ (713 ) $ (1 ) $ (1,959 ) $ (2,673 )
 
For the Year Ended December 31, 2016
VITAS Roto-Rooter Corporate Consolidated
Services revenues and sales
Medicare cap sequestration adjustment $ (228 ) $ - $ - $ (228 )
Selling, general and administrative expenses:
Expenses related to OIG investigation (5,260 ) - - (5,260 )
Litigation settlement expenses - (45 ) - (45 )
Early retirement expenses (4,491 ) - - (4,491 )
Long-term incentive compensation - - (1,930 ) (1,930 )
Stock option expense   -     -     (8,330 )   (8,330 )
Pretax impact on earnings (9,979 ) (45 ) (10,260 ) (20,284 )
Income tax benefit on the above   3,750     17     3,773     7,540  
After-tax impact on earnings $ (6,229 ) $ (28 ) $ (6,487 ) $ (12,744 )
 
(b) Included in the results of operations 2015 are the following significant credits/(charges) which may not be indicative of ongoing operations
(in thousands):
For the Three Months Ended December 31, 2015
VITAS Roto-Rooter Corporate Consolidated
Selling, general and administrative expenses:
Expenses related to OIG investigation $ (1,137 ) $ - $ - $ (1,137 )
Acquisition expenses - (11 ) - (11 )
Stock option expense - - (3,764 ) (3,764 )
Long-term incentive compensation   -     -     (1,845 )   (1,845 )
Pretax impact on earnings (1,137 ) (11 ) (5,609 ) (6,757 )
Income tax benefit on the above   434     5     2,061     2,500  
After-tax impact on earnings $ (703 ) $ (6 ) $ (3,548 ) $ (4,257 )
 
For the Year Ended December 31, 2015
VITAS Roto-Rooter Corporate Consolidated
Selling, general and administrative expenses:
Expenses related to OIG investigation $ (4,974 ) $ - $ - $ (4,974 )
Net expenses related to litigation settlements - (5 ) - (5 )
Acquisition expenses - (172 ) - (172 )
Long-term incentive compensation - - (7,519 ) (7,519 )
Stock option expense - - (5,445 ) (5,445 )
Expenses related to securities litigation   -     -     (37 )   (37 )
Pretax impact on earnings (4,974 ) (177 ) (13,001 ) (18,152 )
Income tax benefit on the above   1,902     70     4,787     6,759  
After-tax impact on earnings $ (3,072 ) $ (107 ) $ (8,214 ) $ (11,393 )
 
(c)

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 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 2016 and 2015, GAAP advertising expense for Roto-Rooter totaled $7,323,000 and $6,952,000, respectively. If the expense of the telephone directories were spread over the periods they are in circulation, advertising expense for the fourth quarters of 2016 and 2015 would total $7,303,000 and $6,902,000, respectively.

 

Similarly, for the years ended December 31, 2016 and 2015, GAAP advertising expense for Roto-Rooter totaled $26,717,000 and $25,438,000, 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, 2016 and 2015 would total $28,050,000 and $26,755,000, respectively.

 

(d)

VITAS has 9 large (greater than 450 ADC), 18 medium (greater than 200 but less than 450 ADC) and 17 small (less than 200 ADC) hospice programs. For the current Medicare cap year there are no programs with a cap liability.

 
(e) Amounts exclude indirect patient care and administrative costs, as well as Medicare Cap billing limitation.

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