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, 2013, versus the comparable prior-year period, as follows:
Consolidated operating results:
- Revenue decreased 5.4% to $349 million
- GAAP Diluted EPS, including litigation, decreased 8.6% to $1.28
- Adjusted Diluted EPS decreased 7.6% to $1.45
VITAS segment operating results:
- Net Patient Revenue of $256 million, a decrease of 6.1%
- Average Daily Census (ADC) of 14,185, a decrease of 1.9%
- Admissions of 15,445, a decrease of 3.5%
- Net Income, including litigation costs, of $20.9 million, a decrease of 14.9%
- Adjusted EBITDA of $38.6 million, a decrease of 12.2%
- Adjusted EBITDA margin of 15.1%, a decrease of 105 basis points
Roto-Rooter segment operating results:
- Revenue of $92.4 million, a decrease of 3.4%
- Unit-for-unit job count of 153,357, a decrease of 4.8%
- Net Income, including litigation, of $10.0 million, an increase of 9.1%
- Adjusted EBITDA of $18.4 million, an increase of 7.8%
- Adjusted EBITDA margin of 20.0%, an increase of 206 basis points
VITAS
Net revenue for VITAS was $256 million in the fourth quarter of 2013, which is a decline of 6.1% when compared to the prior-year period. This revenue decline is a combination of several factors. Medicare reimbursement rates, including sequestration, decreased approximately 0.6%, ADC declined 1.9%, a mix shift away from high acuity care reduced revenue 2.3% and a $3.0 million increase in Medicare Cap billing adjustment which equated to 1.1% of additional revenue decline.
In the fourth quarter of 2013, VITAS recorded a Medicare Cap billing adjustment of $3.8 million related to two provider numbers.
Of VITAS’ 37 unique Medicare provider numbers, 33 provider numbers have a Medicare Cap cushion of 10% or greater during the most recent twelve month period; one provider number has a Medicare Cap cushion between 5% to 10%; and two provider numbers have a cap cushion between 0% and 5%. VITAS generated an aggregate cap cushion of $267 million during the trailing twelve-month period.
Average revenue per patient per day in the quarter, excluding the impact of Medicare Cap, was $199.28, which is 3.2% below the prior-year period. The average revenue includes the 2.0% reduction in Medicare hospice reimbursement effective April 1, 2013. Routine home care reimbursement and high acuity care averaged $163.13 and $691.91, respectively, per patient per day in the fourth quarter of 2013. During the quarter, high acuity days of care were 6.8% of total days of care, 81 basis points below the prior-year quarter.
The fourth quarter of 2013 gross margin, excluding the impact of Medicare Cap, was 24.1%, which is a 60 basis point improvement when compared to the fourth quarter of 2012.
Selling, general and administrative expense was $20.9 million in the fourth quarter of 2013, which is an increase of 4.1% when compared to the prior-year quarter. Adjusted EBITDA, excluding Medicare Cap, totaled $42.4 million in the quarter, a decrease of 5.4% over the prior-year period. Adjusted EBITDA margin, excluding the impact from Medicare Cap, 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 $92.4 million for the fourth quarter of 2013, a decrease of 3.4% over the prior-year quarter.
Total unit-for-unit job count decreased 4.8% in the fourth quarter of 2013 when compared to the prior-year period. This consisted of residential drain cleaning job count decreasing 10.4% and residential plumbing job count declining 0.7%, when compared to the fourth quarter of 2012. Residential jobs represented 68% of total job count in the quarter. Commercial drain cleaning decreased 1.4% and commercial plumbing/excavation job count increased 7.8% when compared to the prior-year quarter.
Roto-Rooter’s gross margin in the quarter was 47.3%, a 223 basis point increase when compared to the fourth quarter of 2012. Adjusted EBITDA in the fourth quarter of 2013 totaled $18.4 million, an increase of 7.8%, and the Adjusted EBITDA margin was 20.0% in the quarter, an increase of 206 basis points. The increase in margin is primarily the result of reductions in healthcare claims, supervisory wages and overtime premium.
Chemed Consolidated
As of December 31, 2013, Chemed had total cash and cash equivalents of $84 million and debt of $184 million. 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.
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 facility has a floating rate that is currently LIBOR plus 125 basis points. At December 31, 2013, the Company had approximately $315 million of undrawn borrowing capacity under this credit agreement after deducting $35 million for letters of credit issued to secure the Company’s workers’ compensation insurance.
Capital expenditures through December 31, 2013, aggregated $29.3 million and compares to depreciation and amortization during the same period of $32.4 million.
During the quarter, the Company repurchased $3.3 million of Chemed stock. This equates to 42,889 of Chemed shares repurchased at an average cost of $76.95. Chemed currently has $21.8 million of authorization remaining under this share repurchase plan.
Guidance for 2014
Effective October 1, 2012, Medicare increased the average hospice reimbursement rates by approximately 0.9%. Effective April 1, 2013, Medicare reduced hospice reimbursement rates 2.0%. As a result, effective April 1, 2013, this 0.9% increase was reduced to a 1.1% decline in Medicare rates when compared to the prior year. Effective October 1, 2013, Medicare increased the average hospice rate approximately 1.4%.
VITAS estimates its full-year 2014 revenue growth will continue to be constrained in the first half of 2014. This is a result of the first quarter of 2013 having Medicare rates 2% higher than the subsequent quarters. In addition, VITAS anticipates continued mix shift from high acuity care to routine home care will impact revenue comparisons for the first half of 2014.
Full-year 2014 revenue growth for VITAS, prior to Medicare Cap, is estimated to be in the range of 1% to 3%. Admissions in 2014 are estimated to increase 3% to 4% and full-year Adjusted EBITDA margin, prior to Medicare Cap, is estimated to be 14.5% to 15.0%. Medicare Cap is estimated to be $5.6 million in 2014. Revenue, Adjusted EBITDA and admissions growth is anticipated to begin in the second quarter of 2014, with the majority of this growth weighted to the second half of 2014.
Roto-Rooter is forecasted to achieve full-year 2014 revenue growth of 3% to 4%. This revenue estimate is based upon increased job pricing of approximately 2.0% and job count essentially equal to the prior year. Adjusted EBITDA margin for 2014 is estimated in the range of 19.0% to 20.0%.
Management estimates that full-year 2014 earnings per diluted share, excluding non-cash expense for stock options, the non-cash interest expense related to the accounting for convertible debt, litigation and other discrete items, will be in the range of $5.90 to $6.10. This compares to Chemed’s 2013 reported adjusted earnings per diluted share of $5.62.
Conference Call
Chemed will host a conference call and webcast at 10 a.m., ET, on Tuesday, February 18, 2014, to discuss the Company's quarterly results and to provide an update on its business. The dial-in number for the conference call is (866) 318-8617 for U.S. and Canadian participants and (617) 399-5136 for international participants. The participant passcode is 78679009. 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 19056885. 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 Ended | For the Years Ended | |||||||||||||||||||||||
| December 31, | December 31, | |||||||||||||||||||||||
| 2013 | 2012 | 2013 | 2012 | |||||||||||||||||||||
| Service revenues and sales | $ | 348,604 | $ | 368,577 | $ | 1,413,329 | $ | 1,430,043 | ||||||||||||||||
| Cost of services provided and goods sold | 245,958 | 261,898 | 1,008,808 | 1,033,321 | ||||||||||||||||||||
| Selling, general and administrative expenses (aa) | 54,981 | 52,764 | 212,518 | 208,656 | ||||||||||||||||||||
| Depreciation | 7,033 | 6,831 | 27,698 | 26,009 | ||||||||||||||||||||
| Amortization | 1,192 | 1,137 | 4,690 | 4,512 | ||||||||||||||||||||
| Other operating expenses (bb) | - | - | 26,221 | 1,126 | ||||||||||||||||||||
| Total costs and expenses | 309,164 | 322,630 | 1,279,935 | 1,273,624 | ||||||||||||||||||||
| Income from operations | 39,440 | 45,947 | 133,394 | 156,419 | ||||||||||||||||||||
| Interest expense | (3,744 | ) | (3,691 | ) | (15,035 | ) | (14,723 | ) | ||||||||||||||||
| Other income--net (cc) | 2,158 | 1,158 | 5,470 | 4,123 | ||||||||||||||||||||
| Income before income taxes | 37,854 | 43,414 | 123,829 | 145,819 | ||||||||||||||||||||
| Income taxes | (14,945 | ) | (16,674 | ) | (46,602 | ) | (56,515 | ) | ||||||||||||||||
| Net income | $ | 22,909 | $ | 26,740 | $ | 77,227 | $ | 89,304 | ||||||||||||||||
| Earnings Per Share | ||||||||||||||||||||||||
| Net income | $ | 1.31 | $ | 1.44 | $ | 4.24 | $ | 4.72 | ||||||||||||||||
| Average number of shares outstanding | 17,492 | 18,628 | 18,199 | 18,924 | ||||||||||||||||||||
| Diluted Earnings Per Share | ||||||||||||||||||||||||
| Net income | $ | 1.28 | $ | 1.40 | $ | 4.16 | $ | 4.62 | ||||||||||||||||
| Average number of shares outstanding | 17,899 | 19,053 | 18,585 | 19,339 | ||||||||||||||||||||
| (aa) | Selling, general and administrative ("SG&A") expenses comprise (in thousands): | |||||||||||||||||||||||||
| For the Three Months Ended | For the Years Ended | |||||||||||||||||||||||||
| December 31, | December 31, | |||||||||||||||||||||||||
| 2013 | 2012 | 2013 | 2012 | |||||||||||||||||||||||
|
SG&A expenses before long-term incentive |
$ | 52,205 | $ | 51,666 | $ | 206,235 | $ | 204,797 | ||||||||||||||||||
|
Market value gains related to deferred compensation trusts |
2,636 | 738 | 4,982 | 3,499 | ||||||||||||||||||||||
| Long-term incentive compensation | 140 | 360 | 1,301 | 360 | ||||||||||||||||||||||
| Total SG&A expenses | $ | 54,981 | $ | 52,764 | $ | 212,518 | $ | 208,656 | ||||||||||||||||||
| (bb) | Other operating expenses comprise: | |||||||||||||||||||||||||
| For the Years Ended December 31, | ||||||||||||||||||||||||||
| 2013 | 2012 | |||||||||||||||||||||||||
| Litigations settlements of Roto-Rooter segment | $ | 15,721 | $ | - | ||||||||||||||||||||||
| Litigation settlement of VITAS segment | 10,500 | - | ||||||||||||||||||||||||
| Severance and other operating expenses related to closing Roto-Rooter's HVAC business | - | 1,126 | ||||||||||||||||||||||||
| Total other operating expenses | $ | 26,221 | $ | 1,126 | ||||||||||||||||||||||
| (cc | ) | Other income--net comprises (in thousands): | ||||||||||||||||||||||||
| For the Three Months Ended | For the Years Ended | |||||||||||||||||||||||||
| December 31, | December 31, | |||||||||||||||||||||||||
| 2013 | 2012 | 2013 | 2012 | |||||||||||||||||||||||
|
Market value gains related to deferred compensation trusts |
$ | 2,636 | $ | 738 | $ | 4,982 | $ | 3,499 | ||||||||||||||||||
| Interest income | (318 | ) | 408 | 847 | 809 | |||||||||||||||||||||
| Loss on disposal of property and equipment | (140 | ) | (119 | ) | (320 | ) | (347 | ) | ||||||||||||||||||
| Other | (20 | ) | 131 | (39 | ) | 162 | ||||||||||||||||||||
| Total other income--net | $ | 2,158 | $ | 1,158 | $ | 5,470 | $ | 4,123 | ||||||||||||||||||
| CHEMED CORPORATION AND SUBSIDIARY COMPANIES | |||||||||||||||||||
| CONSOLIDATED BALANCE SHEET | |||||||||||||||||||
| (in thousands, except per share data)(unaudited) | |||||||||||||||||||
| December 31, | |||||||||||||||||||
| 2013 | 2012 | ||||||||||||||||||
| Assets | |||||||||||||||||||
| Current assets | |||||||||||||||||||
| Cash and cash equivalents | $ | 84,418 | $ | 69,531 | |||||||||||||||
| Accounts receivable less allowances | 91,770 | 93,333 | |||||||||||||||||
| Inventories | 6,703 | 7,058 | |||||||||||||||||
| Current deferred income taxes | 20,257 | 13,659 | |||||||||||||||||
| Prepaid income taxes | 3,690 | 2,643 | |||||||||||||||||
| Prepaid expenses | 17,818 | 11,447 | |||||||||||||||||
| Total current assets | 224,656 | 197,671 | |||||||||||||||||
| Investments of deferred compensation plans held in trust | 42,465 | 36,089 | |||||||||||||||||
| Properties and equipment, at cost less accumulated depreciation | 92,955 | 91,934 | |||||||||||||||||
| Identifiable intangible assets less accumulated amortization | 56,556 | 57,177 | |||||||||||||||||
| Goodwill | 466,871 | 465,832 | |||||||||||||||||
| Other assets | 10,198 | 10,923 | |||||||||||||||||
| Total Assets | $ | 893,701 | $ | 859,626 | |||||||||||||||
| Liabilities | |||||||||||||||||||
| Current liabilities | |||||||||||||||||||
| Accounts payable | $ | 41,758 | $ | 48,472 | |||||||||||||||
| Current portion of long-term debt | 183,564 | - | |||||||||||||||||
| Income taxes | 111 | 4,938 | |||||||||||||||||
| Accrued insurance | 41,859 | 40,654 | |||||||||||||||||
| Accrued compensation | 48,323 | 45,457 | |||||||||||||||||
| Accrued legal | 23,210 | 1,161 | |||||||||||||||||
| Other current liabilities | 25,161 | 16,140 | |||||||||||||||||
| Total current liabilities | 363,986 | 156,822 | |||||||||||||||||
| Deferred income taxes | 27,301 | 27,662 | |||||||||||||||||
| Long-term debt | - | 174,890 | |||||||||||||||||
| Deferred compensation liabilities | 42,348 | 35,599 | |||||||||||||||||
| Other liabilities | 11,176 | 11,362 | |||||||||||||||||
| Total Liabilities | 444,811 | 406,335 | |||||||||||||||||
| Stockholders' Equity | |||||||||||||||||||
| Capital stock | 32,245 | 31,589 | |||||||||||||||||
| Paid-in capital | 481,011 | 437,364 | |||||||||||||||||
| Retained earnings | 686,114 | 623,035 | |||||||||||||||||
| Treasury stock, at cost | (752,634 | ) | (640,732 | ) | |||||||||||||||
| Deferred compensation payable in Company stock | 2,154 | 2,035 | |||||||||||||||||
| Total Stockholders' Equity | 448,890 | 453,291 | |||||||||||||||||
| Total Liabilities and Stockholders' Equity | $ | 893,701 | $ | 859,626 | |||||||||||||||
| CHEMED CORPORATION AND SUBSIDIARY COMPANIES | |||||||||||||||||
| CONSOLIDATED STATEMENT OF CASH FLOWS | |||||||||||||||||
| (in thousands)(unaudited) | |||||||||||||||||
| For the Years Ended December 31, | |||||||||||||||||
| 2013 | 2012 | ||||||||||||||||
| Cash Flows from Operating Activities | |||||||||||||||||
| Net income | $ | 77,227 | $ | 89,304 | |||||||||||||
|
Adjustments to reconcile net income to net cash provided by operating activities: |
|||||||||||||||||
| Depreciation and amortization | 32,388 | 30,521 | |||||||||||||||
| Provision for uncollectible accounts receivable | 10,907 | 9,111 | |||||||||||||||
| Amortization of discount on convertible notes | 8,674 | 8,106 | |||||||||||||||
| Provision for deferred income taxes | (6,988 | ) | (3,151 | ) | |||||||||||||
| Stock option expense | 6,042 | 8,130 | |||||||||||||||
| Amortization of debt issuance costs | 1,751 | 1,265 | |||||||||||||||
| Noncash long-term incentive compensation | 1,301 | 360 | |||||||||||||||
|
Changes in operating assets and liabilities, excluding amounts acquired in business combinations: |
|||||||||||||||||
| Increase in accounts receivable | (9,009 | ) | (24,421 | ) | |||||||||||||
| Decrease in inventories | 355 | 1,610 | |||||||||||||||
| Increase in prepaid expenses | (6,317 | ) | (38 | ) | |||||||||||||
| Increase in accounts payable and other current liabilities | 40,340 | 4,954 | |||||||||||||||
| Increase/(decrease) in income taxes | (2,461 | ) | 6,020 | ||||||||||||||
| Increase in other assets | (6,507 | ) | (5,203 | ) | |||||||||||||
| Increase in other liabilities | 6,713 | 8,329 | |||||||||||||||
| Excess tax benefit on stock-based compensation | (3,982 | ) | (3,435 | ) | |||||||||||||
| Other sources | 413 | 306 | |||||||||||||||
| Net cash provided by operating activities | 150,847 | 131,768 | |||||||||||||||
| Cash Flows from Investing Activities | |||||||||||||||||
| Capital expenditures | (29,324 | ) | (35,252 | ) | |||||||||||||
| Business combinations, net of cash acquired | (2,257 | ) | (5,900 | ) | |||||||||||||
| Other uses | 235 | 468 | |||||||||||||||
| Net cash used by investing activities | (31,346 | ) | (40,684 | ) | |||||||||||||
| Cash Flows from Financing Activities | |||||||||||||||||
| Purchases of treasury stock | (92,911 | ) | (60,624 | ) | |||||||||||||
| Proceeds from exercise of stock options | 17,122 | 12,310 | |||||||||||||||
| Dividends paid | (14,148 | ) | (13,026 | ) | |||||||||||||
| Increase/(decrease) in cash overdrafts payable | (11,415 | ) | 1,924 | ||||||||||||||
| Capital stock surrendered to pay taxes on stock-based compensation | (5,348 | ) | (4,098 | ) | |||||||||||||
| Excess tax benefit on stock-based compensation | 3,982 | 3,435 | |||||||||||||||
| Debt issuances costs | (1,108 | ) | - | ||||||||||||||
| Other sources/(uses) | (788 | ) | 445 | ||||||||||||||
| Net cash used by financing activities | (104,614 | ) | (59,634 | ) | |||||||||||||
| Increase in Cash and Cash Equivalents | 14,887 | 31,450 | |||||||||||||||
| Cash and cash equivalents at beginning of year | 69,531 | 38,081 | |||||||||||||||
| Cash and cash equivalents at end of period | $ | 84,418 | $ | 69,531 | |||||||||||||
| CHEMED CORPORATION AND SUBSIDIARY COMPANIES | ||||||||||||||||||||
| CONSOLIDATING STATEMENT OF INCOME | ||||||||||||||||||||
| FOR THE THREE MONTHS ENDED DECEMBER 31, 2013 AND 2012 | ||||||||||||||||||||
| (in thousands)(unaudited) | ||||||||||||||||||||
| Chemed | ||||||||||||||||||||
| VITAS | Roto-Rooter | Corporate | Consolidated | |||||||||||||||||
|
2013 |
||||||||||||||||||||
| Service revenues and sales | $ | 256,218 | $ | 92,386 | $ | - | $ | 348,604 | ||||||||||||
| Cost of services provided and goods sold | 197,265 | 48,693 | - | 245,958 | ||||||||||||||||
| Selling, general and administrative expenses (a) | 20,948 | 25,691 | 8,342 | 54,981 | ||||||||||||||||
| Depreciation | 4,569 | 2,329 | 135 | 7,033 | ||||||||||||||||
| Amortization | 538 | 153 | 501 | 1,192 | ||||||||||||||||
| Total costs and expenses | 223,320 | 76,866 | 8,978 | 309,164 | ||||||||||||||||
| Income/(loss) from operations | 32,898 | 15,520 | (8,978 | ) | 39,440 | |||||||||||||||
| Interest expense (a) | (37 | ) | (83 | ) | (3,624 | ) | (3,744 | ) | ||||||||||||
| Intercompany interest income/(expense) | 1,347 | 613 | (1,960 | ) | - | |||||||||||||||
| Other income/(expense)—net | (441 | ) | (45 | ) | 2,644 | 2,158 | ||||||||||||||
| Income/(loss) before income taxes | 33,767 | 16,005 | (11,918 | ) | 37,854 | |||||||||||||||
| Income taxes (a) | (12,859 | ) | (5,980 | ) | 3,894 | (14,945 | ) | |||||||||||||
| Net income/(loss) | $ | 20,908 | $ | 10,025 | $ | (8,024 | ) | $ | 22,909 | |||||||||||
|
2012 |
||||||||||||||||||||
| Service revenues and sales | $ | 272,987 | $ | 95,590 | $ | - | $ | 368,577 | ||||||||||||
| Cost of services provided and goods sold | 209,388 | 52,510 | - | 261,898 | ||||||||||||||||
| Selling, general and administrative expenses (a) | 20,127 | 26,491 | 6,146 | 52,764 | ||||||||||||||||
| Depreciation | 4,567 | 2,132 | 132 | 6,831 | ||||||||||||||||
| Amortization | 489 | 161 | 487 | 1,137 | ||||||||||||||||
| Total costs and expenses | 234,571 | 81,294 | 6,765 | 322,630 | ||||||||||||||||
| Income/(loss) from operations | 38,416 | 14,296 | (6,765 | ) | 45,947 | |||||||||||||||
| Interest expense (a) | (46 | ) | (69 | ) | (3,576 | ) | (3,691 | ) | ||||||||||||
| Intercompany interest income/(expense) | 819 | 395 | (1,214 | ) | - | |||||||||||||||
| Other income/(expense)—net | 399 | (3 | ) | 762 | 1,158 | |||||||||||||||
| Income/(loss) before income taxes | 39,588 | 14,619 | (10,793 | ) | 43,414 | |||||||||||||||
| Income taxes (a) | (15,011 | ) | (5,429 | ) | 3,766 | (16,674 | ) | |||||||||||||
| Net income/(loss) | $ | 24,577 | $ | 9,190 | $ | (7,027 | ) | $ | 26,740 | |||||||||||
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, 2013 AND 2012 | ||||||||||||||||||||
| (in thousands)(unaudited) | ||||||||||||||||||||
| Chemed | ||||||||||||||||||||
| VITAS | Roto-Rooter | Corporate | Consolidated | |||||||||||||||||
|
2013 |
||||||||||||||||||||
| Service revenues and sales | $ | 1,045,113 | $ | 368,216 | $ | - | $ | 1,413,329 | ||||||||||||
| Cost of services provided and goods sold | 813,600 | 195,208 | - | 1,008,808 | ||||||||||||||||
| Selling, general and administrative expenses (a) | 82,252 | 102,592 | 27,674 | 212,518 | ||||||||||||||||
| Depreciation | 18,149 | 9,014 | 535 | 27,698 | ||||||||||||||||
| Amortization | 2,102 | 607 | 1,981 | 4,690 | ||||||||||||||||
| Other operating expenses (a) | 10,500 | 15,721 | - | 26,221 | ||||||||||||||||
| Total costs and expenses | 926,603 | 323,142 | 30,190 | 1,279,935 | ||||||||||||||||
| Income/(loss) from operations | 118,510 | 45,074 | (30,190 | ) | 133,394 | |||||||||||||||
| Interest expense (a) | (182 | ) | (322 | ) | (14,531 | ) | (15,035 | ) | ||||||||||||
| Intercompany interest income/(expense) | 4,288 | 2,055 | (6,343 | ) | - | |||||||||||||||
| Other income/(expense)—net | 438 | (4 | ) | 5,036 | 5,470 | |||||||||||||||
| Income/(loss) before income taxes | 123,054 | 46,803 | (46,028 | ) | 123,829 | |||||||||||||||
| Income taxes (a) | (46,910 | ) | (17,560 | ) | 17,868 | (46,602 | ) | |||||||||||||
| Net income/(loss) | $ | 76,144 | $ | 29,243 | $ | (28,160 | ) | $ | 77,227 | |||||||||||
|
2012 |
||||||||||||||||||||
| Service revenues and sales | $ | 1,067,037 | $ | 363,006 | $ | - | $ | 1,430,043 | ||||||||||||
| Cost of services provided and goods sold | 831,321 | 202,000 | - | 1,033,321 | ||||||||||||||||
| Selling, general and administrative expenses (a) | 80,494 | 102,366 | 25,796 | 208,656 | ||||||||||||||||
| Depreciation | 17,087 | 8,397 | 525 | 26,009 | ||||||||||||||||
| Amortization | 1,956 | 632 | 1,924 | 4,512 | ||||||||||||||||
| Other operating expenses (a) | - | 1,126 | - | 1,126 | ||||||||||||||||
| Total costs and expenses | 930,858 | 314,521 | 28,245 | 1,273,624 | ||||||||||||||||
| Income/(loss) from operations | 136,179 | 48,485 | (28,245 | ) | 156,419 | |||||||||||||||
| Interest expense (a) | (233 | ) | (433 | ) | (14,057 | ) | (14,723 | ) | ||||||||||||
| Intercompany interest income/(expense) | 3,180 | 1,617 | (4,797 | ) | - | |||||||||||||||
| Other income—net | 543 | 6 | 3,574 | 4,123 | ||||||||||||||||
| Income/(loss) before income taxes | 139,669 | 49,675 | (43,525 | ) | 145,819 | |||||||||||||||
| Income taxes (a) | (53,092 | ) | (18,770 | ) | 15,347 | (56,515 | ) | |||||||||||||
| Net income/(loss) | $ | 86,577 | $ | 30,905 | $ | (28,178 | ) | $ | 89,304 | |||||||||||
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, 2013 AND 2012 | ||||||||||||||||||||||
| (in thousands)(unaudited) | ||||||||||||||||||||||
| Chemed | ||||||||||||||||||||||
| VITAS | Roto-Rooter | Corporate | Consolidated | |||||||||||||||||||
|
2013 |
||||||||||||||||||||||
| Net income/(loss) | $ | 20,908 | $ | 10,025 | $ | (8,024 | ) | $ | 22,909 | |||||||||||||
| Add/(deduct): | ||||||||||||||||||||||
| Interest expense | 37 | 83 | 3,624 | 3,744 | ||||||||||||||||||
| Income taxes | 12,859 | 5,980 | (3,894 | ) | 14,945 | |||||||||||||||||
| Depreciation | 4,569 | 2,329 | 135 | 7,033 | ||||||||||||||||||
| Amortization | 538 | 153 | 501 | 1,192 | ||||||||||||||||||
| EBITDA | 38,911 | 18,570 | (7,658 | ) | 49,823 | |||||||||||||||||
| Add/(deduct): | ||||||||||||||||||||||
| Intercompany interest expense/(income) | (1,347 | ) | (613 | ) | 1,960 | - | ||||||||||||||||
| Interest income | 300 | 26 | (8 | ) | 318 | |||||||||||||||||
| Expenses related to OIG investigation | 705 | - | - | 705 | ||||||||||||||||||
| Acquisition expenses | 20 | - | - | 20 | ||||||||||||||||||
| Expenses related to litigation settlements | - | 274 | - | 274 | ||||||||||||||||||
| Advertising cost adjustment (c) | - | 177 | - | 177 | ||||||||||||||||||
| Stock option expense | - | - | 1,310 | 1,310 | ||||||||||||||||||
| Long-term incentive compensation | - | - | 140 | 140 | ||||||||||||||||||
| Expenses related to securities litigation | - | - | 105 | 105 | ||||||||||||||||||
| Adjusted EBITDA | $ | 38,589 | $ | 18,434 | $ | (4,151 | ) | $ | 52,872 | |||||||||||||
|
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 expense/(income) | (819 | ) | (395 | ) | 1,214 | - | ||||||||||||||||
| Interest income | (375 | ) | (9 | ) | (24 | ) | (408 | ) | ||||||||||||||
| Expenses related to OIG investigation | 463 | - | - | 463 | ||||||||||||||||||
| Acquisition expenses | 13 | 53 | - | 66 | ||||||||||||||||||
| Expenses related to litigation settlements | - | 173 | - | 173 | ||||||||||||||||||
| Advertising cost adjustment (c) | - | 297 | - | 297 | ||||||||||||||||||
| Stock option expense | - | - | 1,421 | 1,421 | ||||||||||||||||||
| Long-term incentive compensation | - | - | 360 | 360 | ||||||||||||||||||
| Expenses related to securities litigation | - | - | 477 | 477 | ||||||||||||||||||
| Adjusted EBITDA | $ | 43,972 | $ | 17,100 | $ | (3,150 | ) | $ | 57,922 | |||||||||||||
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, 2013 AND 2012 | ||||||||||||||||||||||
| (in thousands)(unaudited) | ||||||||||||||||||||||
| Chemed | ||||||||||||||||||||||
| VITAS | Roto-Rooter | Corporate | Consolidated | |||||||||||||||||||
|
2013 |
||||||||||||||||||||||
| Net income/(loss) | $ | 76,144 | $ | 29,243 | $ | (28,160 | ) | $ | 77,227 | |||||||||||||
| Add/(deduct): | ||||||||||||||||||||||
| Interest expense | 182 | 322 | 14,531 | 15,035 | ||||||||||||||||||
| Income taxes | 46,910 | 17,560 | (17,868 | ) | 46,602 | |||||||||||||||||
| Depreciation | 18,149 | 9,014 | 535 | 27,698 | ||||||||||||||||||
| Amortization | 2,102 | 607 | 1,981 | 4,690 | ||||||||||||||||||
| EBITDA | 143,487 | 56,746 | (28,981 | ) | 171,252 | |||||||||||||||||
| Add/(deduct): | ||||||||||||||||||||||
| Intercompany interest expense/(income) | (4,288 | ) | (2,055 | ) | 6,343 | - | ||||||||||||||||
| Interest income | (750 | ) | (41 | ) | (56 | ) | (847 | ) | ||||||||||||||
| Expenses related to OIG investigation | 2,149 | - | - | 2,149 | ||||||||||||||||||
| Litigation settlements | 10,500 | 15,721 | - | 26,221 | ||||||||||||||||||
| Expenses related to litigation settlements | - | 1,425 | - | 1,425 | ||||||||||||||||||
| Acquisition expenses | 58 | 4 | - | 62 | ||||||||||||||||||
| Advertising cost adjustment (c) | - | (1,166 | ) | - | (1,166 | ) | ||||||||||||||||
| Expenses of severance arrangement | - | 302 | - | 302 | ||||||||||||||||||
| Stock option expense | - | - | 6,042 | 6,042 | ||||||||||||||||||
| Long-term incentive compensation | - | - | 1,301 | 1,301 | ||||||||||||||||||
| Expenses related to securities litigation | - | - | 109 | 109 | ||||||||||||||||||
| Adjusted EBITDA | $ | 151,156 | $ | 70,936 | $ | (15,242 | ) | $ | 206,850 | |||||||||||||
|
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 expense/(income) | (3,180 | ) | (1,617 | ) | 4,797 | - | ||||||||||||||||
| Interest income | (703 | ) | (30 | ) | (76 | ) | (809 | ) | ||||||||||||||
| Expenses related to OIG investigation | 1,212 | - | - | 1,212 | ||||||||||||||||||
| Expenses related to litigation settlements | - | 1,016 | - | 1,016 | ||||||||||||||||||
| Acquisition expenses | 15 | 173 | - | 188 | ||||||||||||||||||
| Advertising cost adjustment (c) | - | (1,573 | ) | - | (1,573 | ) | ||||||||||||||||
| Expenses to shut down HVAC operations | - | 1,126 | - | 1,126 | ||||||||||||||||||
| Stock option expense | - | - | 8,130 | 8,130 | ||||||||||||||||||
| Long-term incentive compensation | - | - | 360 | 360 | ||||||||||||||||||
| Expenses related to securities litigation | - | - | 742 | 742 | ||||||||||||||||||
| Adjusted EBITDA | $ | 156,289 | $ | 58,232 | $ | (13,066 | ) | $ | 201,455 | |||||||||||||
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, | ||||||||||||||||||
| 2013 | 2012 | 2013 | 2012 | ||||||||||||||||
| Net income as reported | $ | 22,909 | $ | 26,740 | $ | 77,227 | $ | 89,304 | |||||||||||
| Add/(deduct) the after-tax: | |||||||||||||||||||
| Non-cash expense of change in accounting for convertible debt | 1,402 | 1,297 | 5,448 | 5,041 | |||||||||||||||
| Stock option expense | 820 | 900 | 3,813 | 5,143 | |||||||||||||||
| Expenses related to OIG investigation | 438 | 287 | 1,333 | 752 | |||||||||||||||
| Expenses related to litigation settlements | 166 | 105 | 865 | 617 | |||||||||||||||
| Long-term incentive compensation | 88 | 228 | 822 | 228 | |||||||||||||||
| Expenses related to securities litigation | 66 | 301 | 69 | 469 | |||||||||||||||
| Acquisition expenses | 13 | 40 | 38 | 114 | |||||||||||||||
| Litigation settlements | - | - | 16,061 | - | |||||||||||||||
| Uncertain tax position adjustments | - | - | (1,782 | ) | - | ||||||||||||||
| Loss on extinguishment of debt | - | - | 294 | - | |||||||||||||||
| Expenses of severance arrangements | - | - | 184 | - | |||||||||||||||
| Expenses to shut down HVAC operations | - | - | - | 649 | |||||||||||||||
| Adjusted net income | $ | 25,902 | $ | 29,898 | $ | 104,372 | $ | 102,317 | |||||||||||
| Earnings Per Share As Reported | |||||||||||||||||||
| Net income | $ | 1.31 | $ | 1.44 | $ | 4.24 | $ | 4.72 | |||||||||||
| Average number of shares outstanding | 17,492 | 18,628 | 18,199 | 18,924 | |||||||||||||||
| Diluted Earnings Per Share As Reported | |||||||||||||||||||
| Net income | $ | 1.28 | $ | 1.40 | $ | 4.16 | $ | 4.62 | |||||||||||
| Average number of shares outstanding | 17,899 | 19,053 | 18,585 | 19,339 | |||||||||||||||
| Adjusted Earnings Per Share | |||||||||||||||||||
| Net income | $ | 1.48 | $ | 1.61 | $ | 5.74 | $ | 5.41 | |||||||||||
| Average number of shares outstanding | 17,492 | 18,628 | 18,199 | 18,924 | |||||||||||||||
| Adjusted Diluted Earnings Per Share | |||||||||||||||||||
| Net income | $ | 1.45 | $ | 1.57 | $ | 5.62 | $ | 5.29 | |||||||||||
| Average number of shares outstanding | 17,899 | 19,053 | 18,585 | 19,339 | |||||||||||||||
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 | 2013 | 2012 | 2013 | 2012 | ||||||||||||||||||||
| Net revenue ($000) (d) | ||||||||||||||||||||||||
| Homecare | $ | 198,325 | $ | 201,266 | $ | 791,735 | $ | 778,776 | ||||||||||||||||
| Inpatient | 25,788 | 28,013 | 104,968 | 114,494 | ||||||||||||||||||||
| Continuous care | 35,943 | 44,581 | 155,409 | 172,063 | ||||||||||||||||||||
| Total before Medicare cap allowance | $ | 260,056 | $ | 273,860 | $ | 1,052,112 | $ | 1,065,333 | ||||||||||||||||
| Medicare cap allowance | (3,838 | ) | (873 | ) | (6,999 | ) | 1,704 | |||||||||||||||||
| Total | $ | 256,218 | $ | 272,987 | $ | 1,045,113 | $ | 1,067,037 | ||||||||||||||||
| Net revenue as a percent of total before Medicare cap allowance | ||||||||||||||||||||||||
| Homecare | 76.3 | % | 73.5 | % |
75.2 |
% | 73.1 | % | ||||||||||||||||
| Inpatient | 9.9 | 10.2 | 10.0 | 10.7 | ||||||||||||||||||||
| Continuous care | 13.8 | 16.3 |
14.8 |
16.2 | ||||||||||||||||||||
| Total before Medicare cap allowance | 100.0 | 100.0 |
100.0 |
100.0 | ||||||||||||||||||||
| Medicare cap allowance | (1.5 | ) | (0.3 | ) | (0.7 | ) | 0.2 | |||||||||||||||||
| Total | 98.5 | % | 99.7 | % |
99.3 |
% | 100.2 | % | ||||||||||||||||
| Average daily census ("ADC") (days) | ||||||||||||||||||||||||
| Homecare | 10,353 | 10,352 | 10,449 | 10,016 | ||||||||||||||||||||
| Nursing home | 2,862 | 3,007 | 2,911 | 3,025 | ||||||||||||||||||||
| Routine homecare | 13,215 | 13,359 | 13,360 | 13,041 | ||||||||||||||||||||
| Inpatient | 433 | 451 | 438 | 462 | ||||||||||||||||||||
| Continuous care | 537 | 655 | 585 | 637 | ||||||||||||||||||||
| Total | 14,185 | 14,465 | 14,383 | 14,140 | ||||||||||||||||||||
| Total Admissions | 15,445 | 16,004 | 62,858 | 63,777 | ||||||||||||||||||||
| Total Discharges | 15,396 | 16,120 | 62,999 | 63,196 | ||||||||||||||||||||
| Average length of stay (days) | 82.6 | 80.3 | 81.6 | 78.8 | ||||||||||||||||||||
| Median length of stay (days) | 15.0 | 15.0 | 15.0 | 15.0 | ||||||||||||||||||||
| ADC by major diagnosis | ||||||||||||||||||||||||
| Neurological | 38.9 | % | 33.9 | % | 37.7 | % | 34.2 | % | ||||||||||||||||
| Cancer | 17.2 | 17.2 | 17.1 | 17.5 | ||||||||||||||||||||
| Cardio | 14.3 | 11.1 | 13.2 | 11.3 | ||||||||||||||||||||
| Respiratory | 7.8 | 6.5 | 7.6 | 6.6 | ||||||||||||||||||||
| Other | 21.8 | 31.3 | 24.4 | 30.4 | ||||||||||||||||||||
| Total | 100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | ||||||||||||||||
| Admissions by major diagnosis | ||||||||||||||||||||||||
| Neurological | 21.3 | % | 18.5 | % | 20.7 | % | 19.1 | % | ||||||||||||||||
| Cancer | 33.8 | 33.3 | 33.2 | 33.3 | ||||||||||||||||||||
| Cardio | 13.4 | 11.3 | 13.1 | 11.1 | ||||||||||||||||||||
| Respiratory | 8.7 | 8.3 | 9.2 | 8.2 | ||||||||||||||||||||
| Other | 22.8 | 28.6 | 23.8 | 28.3 | ||||||||||||||||||||
| Total | 100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | ||||||||||||||||
| Direct patient care margins (e) | ||||||||||||||||||||||||
| Routine homecare | 53.8 | % | 54.4 | % | 52.6 | % | 52.5 | % | ||||||||||||||||
| Inpatient | 5.0 | 10.5 | 5.5 | 11.6 | ||||||||||||||||||||
| Continuous care | 16.1 | 18.3 | 15.9 | 19.2 | ||||||||||||||||||||
| Homecare margin drivers (dollars per patient day) | ||||||||||||||||||||||||
| Labor costs | $ | 53.85 | $ | 53.28 | $ | 55.17 | $ | 55.03 | ||||||||||||||||
| Drug costs | 7.54 | 7.61 | 7.54 | 8.09 | ||||||||||||||||||||
| Home medical equipment | 6.38 | 6.68 | 6.61 | 6.83 | ||||||||||||||||||||
| Medical supplies | 2.99 | 2.78 | 2.97 | 2.77 | ||||||||||||||||||||
| Inpatient margin drivers (dollars per patient day) | ||||||||||||||||||||||||
| Labor costs | $ | 334.50 | $ | 330.20 | $ | 338.51 | $ | 323.09 | ||||||||||||||||
| Continuous care margin drivers (dollars per patient day) | ||||||||||||||||||||||||
| Labor costs | $ | 589.51 | $ | 583.46 | $ | 591.54 | $ | 574.64 | ||||||||||||||||
| Bad debt expense as a percent of revenues | 0.9 | % | 0.6 | % | 0.9 | % | 0.8 | % | ||||||||||||||||
| Accounts receivable -- | ||||||||||||||||||||||||
| Days of revenue outstanding- excluding unapplied Medicare payments | 36.5 | 35.9 | n.a. | n.a. | ||||||||||||||||||||
| Days of revenue outstanding- including unapplied Medicare payments | 25.9 | 25.2 | 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, 2013 AND 2012 | ||||||||||||||||||||||||||
| (unaudited) | ||||||||||||||||||||||||||
| (a) |
Included in the results of operations 2013 are the following significant credits/(charges) which may not be indicative of ongoing operations (in thousands): |
|||||||||||||||||||||||||
|
|
||||||||||||||||||||||||||
| For the Three Months Ended December 31, 2013 | ||||||||||||||||||||||||||
| VITAS | Roto-Rooter | Corporate | Consolidated | |||||||||||||||||||||||
| Selling, general and administrative expenses: | ||||||||||||||||||||||||||
| Expenses related to OIG investigation | $ | (705 | ) | $ | - | $ | - | $ | (705 | ) | ||||||||||||||||
| Acquisition expenses | (20 | ) | - | - | (20 | ) | ||||||||||||||||||||
| Expenses related to litigation settlements | - | (274 | ) | - | (274 | ) | ||||||||||||||||||||
| Stock option expense | - | - | (1,310 | ) | (1,310 | ) | ||||||||||||||||||||
| Long-term incentive compensation | - | - | (140 | ) | (140 | ) | ||||||||||||||||||||
| Expenses related to securities litigation | - | - | (105 | ) | (105 | ) | ||||||||||||||||||||
| Interest expense: | ||||||||||||||||||||||||||
| Non-cash expense of change in accounting for convertible debt | - | - | (2,216 | ) | (2,216 | ) | ||||||||||||||||||||
| Pretax impact on earnings | (725 | ) | (274 | ) | (3,771 | ) | (4,770 | ) | ||||||||||||||||||
| Income tax benefit on the above | 274 | 108 | 1,395 | 1,777 | ||||||||||||||||||||||
| After-tax impact on earnings | $ | (451 | ) | $ | (166 | ) | $ | (2,376 | ) | $ | (2,993 | ) | ||||||||||||||
| For the Year Ended December 31, 2013 | ||||||||||||||||||||||||||
| VITAS | Roto-Rooter | Corporate | Consolidated | |||||||||||||||||||||||
| Selling, general and administrative expenses: | ||||||||||||||||||||||||||
| Expenses related to OIG investigation | $ | (2,149 | ) | $ | - | $ | - | $ | (2,149 | ) | ||||||||||||||||
| Acquisition expenses | (58 | ) | (4 | ) | - | (62 | ) | |||||||||||||||||||
| Expenses related to litigation settlements | - | (1,425 | ) | - | (1,425 | ) | ||||||||||||||||||||
| Expense of severance arrangement | - | (302 | ) | - | (302 | ) | ||||||||||||||||||||
| Stock option expense | - | - | (6,042 | ) | (6,042 | ) | ||||||||||||||||||||
| Long-term incentive compensation | - | - | (1,301 | ) | (1,301 | ) | ||||||||||||||||||||
| Expenses related to securities litigation | - | - | (109 | ) | (109 | ) | ||||||||||||||||||||
| Other operating expenses | (10,500 | ) | (15,721 | ) | - | (26,221 | ) | |||||||||||||||||||
| Interest expense: | ||||||||||||||||||||||||||
| Non-cash expense of change in accounting for convertible debt | - | - | (8,613 | ) | (8,613 | ) | ||||||||||||||||||||
| Loss on extinguishment of debt | - | - | (465 | ) | (465 | ) | ||||||||||||||||||||
| Pretax impact on earnings | (12,707 | ) | (17,452 | ) | (16,530 | ) | (46,689 | ) | ||||||||||||||||||
| Income tax benefit on the above | 4,828 | 6,850 | 7,866 | 19,544 | ||||||||||||||||||||||
| After-tax impact on earnings | $ | (7,879 | ) | $ | (10,602 | ) | $ | (8,664 | ) | $ | (27,145 | ) | ||||||||||||||
| (b) |
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: | |||||||||||||||||||||||||
| Expenses related to OIG investigation | $ | (463 | ) | $ | - | $ | - | $ | (463 | ) | |||||||||||||||
| Acquisition expenses | (13 | ) | (53 | ) | - | (66 | ) | ||||||||||||||||||
| Expenses related to litigation settlements | - | (173 | ) | - | (173 | ) | |||||||||||||||||||
| Stock option expense | - | - | (1,421 | ) | (1,421 | ) | |||||||||||||||||||
| Expenses related to securities litigation | - | - | (477 | ) | (477 | ) | |||||||||||||||||||
| Long-term incentive compensation | - | - | (360 | ) | (360 | ) | |||||||||||||||||||
| Interest expense: | |||||||||||||||||||||||||
| Non-cash expense of change in accounting for convertible debt | - | - | (2,052 | ) | (2,052 | ) | |||||||||||||||||||
| Pretax impact on earnings | (476 | ) | (226 | ) | (4,310 | ) | (5,012 | ) | |||||||||||||||||
| Income tax benefit on the above | 181 | 89 | 1,584 | 1,854 | |||||||||||||||||||||
| After-tax impact on earnings | $ | (295 | ) | $ | (137 | ) | $ | (2,726 | ) | $ | (3,158 | ) | |||||||||||||
| For the Year Ended December 31, 2012 | |||||||||||||||||||||||||
| VITAS | Roto-Rooter | Corporate | Consolidated | ||||||||||||||||||||||
| Selling, general and administrative expenses: | |||||||||||||||||||||||||
| Expenses related to OIG investigation | $ | (1,212 | ) | $ | - | $ | - | $ | (1,212 | ) | |||||||||||||||
| Acquisition expenses | (15 | ) | (173 | ) | - | (188 | ) | ||||||||||||||||||
| Expenses related to litigation settlements | - | (1,016 | ) | - | (1,016 | ) | |||||||||||||||||||
| Stock option expense | - | - | (8,130 | ) | (8,130 | ) | |||||||||||||||||||
| Expenses related to securities litigation | - | - | (742 | ) | (742 | ) | |||||||||||||||||||
| Long-term incentive compensation | - | - | (360 | ) | (360 | ) | |||||||||||||||||||
| Other operating expenses | - | (1,126 | ) | - | (1,126 | ) | |||||||||||||||||||
| Interest expense: | |||||||||||||||||||||||||
| Non-cash expense of change in accounting for convertible debt | - | - | (7,971 | ) | (7,971 | ) | |||||||||||||||||||
| Pretax impact on earnings | (1,227 | ) | (2,315 | ) | (17,203 | ) | (20,745 | ) | |||||||||||||||||
| Income tax benefit on the above | 466 | 944 | 6,322 | 7,732 | |||||||||||||||||||||
| After-tax impact on earnings | $ | (761 | ) | $ | (1,371 | ) | $ | (10,881 | ) | $ | (13,013 | ) | |||||||||||||
| (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 2013 and 2012, GAAP advertising expense for Roto-Rooter totaled $6,518,000 and $6,857,000, respectively. If the expense of the telephone directories were spread over the periods they are in circulation, advertising expense for the fourth quarters of 2013 and 2012 would total $6,341,000 and $6,560,000, respectively. |
|
|
Similarly, for the years ended December 31, 2013 and 2012, GAAP advertising expense for Roto-Rooter totaled $24,092,000 and $23,535,000, 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, 2013 and 2012 would total $25,258,000 and $25,108,000, respectively. |
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| (d) |
VITAS has 9 large (greater than 450 ADC), 15 medium (greater than 200 but less than 450 ADC) and 27 small (less than 200 ADC) hospice programs. For the current Medicare cap year there are two programs with a cap liability and two 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. |
