Exhibit 99
Chemed Reports Second-Quarter 2012 Results
CINCINNATI--(BUSINESS WIRE)--July 25, 2012--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 second quarter ended June 30, 2012, versus the comparable prior-year period, as follows:
Consolidated operating results:
- Revenue increased 6.2% to $354 million
- GAAP Diluted EPS increased 17.0% to $1.10
- Adjusted Diluted EPS increased 15.6% to $1.26
VITAS segment operating results:
- Net Patient Revenue of $265 million, an increase of 9.1%
- Average Daily Census (ADC) of 14,111, an increase of 6.0%
- Admissions of 15,912, an increase of 4.0%
- Net Income of $20.4 million, an increase of 9.9%
- Adjusted EBITDA of $37.1 million, an increase of 9.4%
- Adjusted EBITDA margin of 14.0%, an increase of 4 basis points
Roto-Rooter segment operating results:
- Revenue of $89.0 million, a decrease of 1.4%
- Unit-for-unit job count of 160,746, a decrease of 3.1%
- Net Income of $8.1 million, a decrease of 11.2%
- Adjusted EBITDA of $14.4 million, a decrease of 8.7%
- Adjusted EBITDA margin of 16.2%, a decrease of 128 basis points
VITAS
Net revenue for VITAS was $265 million in the second quarter of 2012, which is an increase of 9.1% over the prior-year period. This revenue growth was the result of increased ADC of 6.0%, driven by an increase in admissions of 4.0%, increased discharges of 4.4% and Medicare price increases of approximately 2.5%. Revenue growth was further enhanced by geographic mix shift within the patient base and a favorable comparison of Medicare cap.
Average revenue per patient per day in the quarter, excluding the impact of Medicare Cap, was $206.54, which is 2.8% above the prior-year period. Routine home care reimbursement and high acuity care averaged $163.18 and $717.63, respectively, per patient per day in the second quarter of 2012. During the quarter, high acuity days of care were 7.8% of total days of care, 6 basis points lower than the prior-year quarter.
Of VITAS’ 35 unique Medicare provider numbers, 30 provider numbers have a Medicare Cap cushion of 10% or greater during the first eight months of the 2012 Medicare Cap year; two provider numbers have a Medicare Cap cushion between 5% and 10%; and three provider numbers have a cap cushion between 0% and 5%. VITAS generated an aggregate cap cushion of $203 million during the most recent twelve-month period.
The second quarter of 2012 gross margin, excluding the impact of Medicare Cap, was 21.6%, which is a decline of 35 basis points from the second quarter of 2011.
Selling, general and administrative expense was $20.5 million in the second quarter of 2012, which is an increase of 3.7% when compared to the prior-year quarter. Adjusted EBITDA totaled $37.1 million in the quarter, an increase of 9.4% over the prior-year period. Adjusted EBITDA margin, excluding the impact from Medicare Cap, was 14.0% in the quarter which was 9 basis points below the prior-year.
Roto-Rooter
Roto-Rooter’s plumbing and drain cleaning business generated sales of $89.0 million for the second quarter of 2012, a decrease of 1.4% over the prior-year quarter.
Unit-for-unit job count in the second quarter of 2012 declined 3.1% when compared to the prior-year period. During the second quarter of 2012, total residential jobs decreased 6.0%, as residential plumbing jobs declined 2.1% and residential drain cleaning jobs decreased 7.9%, when compared to the second quarter of 2011. Residential jobs represented 69% of total job count in the quarter. Total commercial jobs increased 4.0%, with commercial plumbing/excavation job count increasing 9.2% and commercial drain cleaning increasing 2.1% when compared to the prior-year quarter. The “All Other” residential and commercial job category, which represents 1.6% of aggregate job count, decreased 9.2%.
Job count performances in both the first and second quarters of 2012 have noted a strong correlation to geographic location. Roto-Rooter branches located in temperate climates, primarily the South and West, have generated commercial and residential year-to-date job count growth of 7.5% and 0.6%, respectively. Branches located primarily in the East and Midwest experienced year-to-date commercial job count growth of 1.7% and residential job count decline of 11.2%. Branches located in the South and West represent approximately 41% of total job count.
Roto-Rooter’s gross margin was 44.3% in the quarter, a 66 basis point decline when compared to the second quarter of 2011. Adjusted EBITDA in the second quarter of 2012 totaled $14.4 million, a decline of 8.7%, and the Adjusted EBITDA margin was 16.2% in the quarter, a decline of 128 basis points, when compared to the prior-year quarter.
Chemed Consolidated
Chemed had total debt of $171 million at June 30, 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 March 2011 Chemed entered into a five-year Credit Agreement that consists of a $350 million revolving credit facility. The interest rate on this Credit Agreement has a floating rate that is currently LIBOR plus 175 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 June 30, 2012, this facility 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 through June 2012 aggregated $18.5 million and compares to depreciation and amortization during the same period of $14.9 million.
During the quarter, the company purchased 199,900 shares of Chemed stock at an aggregate cost of $11.1 million. The company has $64.1 million remaining under Chemed’s previously announced share repurchase program.
Guidance for 2012
VITAS expects to achieve full-year 2012 revenue growth, prior to Medicare Cap, of 7.5% to 9.0%. Admissions in 2012 are estimated to increase approximately 3.5% to 4.0% and full-year Adjusted EBITDA margin, prior to Medicare Cap, is estimated to be 14.5% to 15.0%. Effective October 1, 2011, Medicare increased the average hospice reimbursement rates by approximately 2.5%. Guidance assumes VITAS will incur $2.5 million of estimated Medicare contractual billing limitations for the remainder of calendar year 2012.
Roto-Rooter expects to achieve full-year 2012 revenue equal to the prior year. The revenue estimate is a result of increased pricing of approximately 2%, a favorable mix shift to higher revenue jobs, with job count estimated to decrease 2% to 4%. Adjusted EBITDA margin for 2012 is estimated in the range of 16.0% to 17.0%.
Based upon the above, management reiterates the prior-quarter guidance for 2012 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 $5.35 to $5.50. This compares to Chemed’s 2011 reported adjusted earnings per diluted share of $4.78.
Conference Call
Chemed will host a conference call and webcast at 10 a.m., ET, on Thursday, July 26, 2012, 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) 901-5248 for U.S. and Canadian participants and (617) 786-4512 for international participants. The participant passcode is 96013847. 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 84138726. An archived webcast will also be available at www.chemed.com.
Chemed Corporation operates in the healthcare field through its VITAS Healthcare Corporation subsidiary. VITAS provides daily hospice services to approximately 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) | |||||||||||||||||
| Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||
| 2012 | 2011 | 2012 | 2011 | ||||||||||||||
| Service revenues and sales | $ | 354,170 | $ | 333,360 | $ | 707,113 | $ | 664,278 | |||||||||
| Cost of services provided and goods sold | 257,368 | 239,597 | 514,813 | 477,055 | |||||||||||||
| Selling, general and administrative expenses (aa) | 49,770 | 50,424 | 102,937 | 106,078 | |||||||||||||
| Depreciation | 6,380 | 6,358 | 12,621 | 12,646 | |||||||||||||
| Amortization | 1,127 | 1,139 | 2,240 | 2,109 | |||||||||||||
| Total costs and expenses | 314,645 | 297,518 | 632,611 | 597,888 | |||||||||||||
| Income from operations | 39,525 | 35,842 | 74,502 | 66,390 | |||||||||||||
| Interest expense | (3,672 | ) | (3,461 | ) | (7,289 | ) | (6,705 | ) | |||||||||
Other income/(expense)--net (bb) | (970 | ) | 714 | 1,125 | 2,816 | ||||||||||||
| Income before income taxes | 34,883 | 33,095 | 68,338 | 62,501 | |||||||||||||
| Income taxes | (13,609 | ) | (12,809 | ) | (26,619 | ) | (24,114 | ) | |||||||||
| Net income | $ | 21,274 | $ | 20,286 | $ | 41,719 | $ | 38,387 | |||||||||
| Earnings Per Share | |||||||||||||||||
| Net income | $ | 1.12 | $ | 0.96 | $ | 2.20 | $ | 1.82 | |||||||||
| Average number of shares outstanding | 18,998 | 21,115 | 18,976 | 21,067 | |||||||||||||
| Diluted Earnings Per Share | |||||||||||||||||
| Net income | $ | 1.10 | $ | 0.94 | $ | 2.16 | $ | 1.78 | |||||||||
| Average number of shares outstanding | 19,369 | 21,637 | 19,357 | 21,586 | |||||||||||||
| (aa) | Selling, general and administrative ("SG&A") expenses comprise (in thousands): | ||||||||||||||||
| Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||
| 2012 | 2011 | 2012 | 2011 | ||||||||||||||
SG&A expenses before long-term incentive compensation and the impact of market gains and losses of deferred compensation plans | $ | 50,718 | $ | 49,681 | $ | 101,752 | $ | 100,259 | |||||||||
Market value gains/(losses) on assets held in deferred compensation trusts (cc) | (948 | ) | 743 | 1,185 | 2,807 | ||||||||||||
| Long-term incentive compensation | - | - | - | 3,012 | |||||||||||||
| Total SG&A expenses | $ | 49,770 | $ | 50,424 | $ | 102,937 | $ | 106,078 | |||||||||
| (bb) | Other income/(expense)--net comprises (in thousands): | ||||||||||||||||
| Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||
| 2012 | 2011 | 2012 | 2011 | ||||||||||||||
Market value gains/(losses) on assets held in deferred compensation trusts | $ | (948 | ) | $ | 743 | $ | 1,185 | $ | 2,807 | ||||||||
| Gain/(loss) on disposal of property and equipment | (67 | ) | 32 | (148 | ) | 11 | |||||||||||
| Interest income | 59 | 62 | 110 | 123 | |||||||||||||
| Other | (14 | ) | (123 | ) | (22 | ) | (125 | ) | |||||||||
| Total other income--net | $ | (970 | ) | $ | 714 | $ | 1,125 | $ | 2,816 | ||||||||
| CHEMED CORPORATION AND SUBSIDIARY COMPANIES | |||||||||||||||
| CONSOLIDATED BALANCE SHEET | |||||||||||||||
| (in thousands, except per share data)(unaudited) | |||||||||||||||
| June 30, | |||||||||||||||
| 2012 | 2011 | ||||||||||||||
| Assets | |||||||||||||||
| Current assets | |||||||||||||||
| Cash and cash equivalents | $ | 59,966 | $ | 50,941 | |||||||||||
| Accounts receivable less allowances | 81,811 | 118,281 | |||||||||||||
| Inventories | 8,146 | 8,682 | |||||||||||||
| Current deferred income taxes | 13,226 | 14,052 | |||||||||||||
| Prepaid income taxes | 4,187 | 1,300 | |||||||||||||
| Prepaid expenses | 10,737 | 10,344 | |||||||||||||
| Total current assets | 178,073 | 203,600 | |||||||||||||
| Investments of deferred compensation plans held in trust | 33,215 | 33,066 | |||||||||||||
| Properties and equipment, at cost less accumulated depreciation | 88,571 | 81,471 | |||||||||||||
| Identifiable intangible assets less accumulated amortization | 57,635 | 59,015 | |||||||||||||
| Goodwill | 461,965 | 460,793 | |||||||||||||
| Other assets | 11,669 | 12,668 | |||||||||||||
| Total Assets | $ | 831,128 | $ | 850,613 | |||||||||||
| Liabilities | |||||||||||||||
| Current liabilities | |||||||||||||||
| Accounts payable | $ | 51,002 | $ | 39,459 | |||||||||||
| Income taxes | 167 | 2,096 | |||||||||||||
| Accrued insurance | 36,786 | 35,143 | |||||||||||||
| Accrued compensation | 39,729 | 43,633 | |||||||||||||
| Other current liabilities | 14,906 | 14,972 | |||||||||||||
| Total current liabilities | 142,590 | 135,303 | |||||||||||||
| Deferred income taxes | 25,257 | 24,053 | |||||||||||||
| Long-term debt | 170,769 | 162,932 | |||||||||||||
| Deferred compensation liabilities | 33,149 | 32,255 | |||||||||||||
| Other liabilities | 11,918 | 6,736 | |||||||||||||
| Total Liabilities | 383,683 | 361,279 | |||||||||||||
| Stockholders' Equity | |||||||||||||||
| Capital stock | 31,142 | 30,907 | |||||||||||||
| Paid-in capital | 410,957 | 391,507 | |||||||||||||
| Retained earnings | 582,316 | 505,736 | |||||||||||||
| Treasury stock, at cost | (579,013 | ) | (440,809 | ) | |||||||||||
| Deferred compensation payable in Company stock | 2,043 | 1,993 | |||||||||||||
| Total Stockholders' Equity | 447,445 | 489,334 | |||||||||||||
| Total Liabilities and Stockholders' Equity | $ | 831,128 | $ | 850,613 | |||||||||||
| CHEMED CORPORATION AND SUBSIDIARY COMPANIES | |||||||||
| CONSOLIDATED STATEMENT OF CASH FLOWS | |||||||||
| (in thousands)(unaudited) | |||||||||
| Six Months Ended June 30, | |||||||||
| 2012 | 2011 | ||||||||
| Cash Flows from Operating Activities | |||||||||
| Net income | $ | 41,719 | $ | 38,387 | |||||
Adjustments to reconcile net income to net cash provided by operating activities: | |||||||||
| Depreciation and amortization | 14,861 | 14,755 | |||||||
| Provision for deferred income taxes | (4,895 | ) | (18 | ) | |||||
| Provision for uncollectible accounts receivable | 4,730 | 4,365 | |||||||
| Stock option expense | 4,312 | 4,495 | |||||||
| Amortization of discount on convertible notes | 3,985 | 3,724 | |||||||
| Noncash long-term incentive compensation | - | 2,595 | |||||||
Changes in operating assets and liabilities, excluding amounts acquired in business combinations: | |||||||||
| Increase in accounts receivable | (8,543 | ) | (9,271 | ) | |||||
| Decrease/(increase) in inventories | 522 | (954 | ) | ||||||
| Decrease/(increase) in prepaid expenses | 672 | (59 | ) | ||||||
Decrease in accounts payable and other current liabilities | (3,593 | ) | (6,603 | ) | |||||
| Increase/(decrease) in income taxes | (1,029 | ) | 3,738 | ||||||
| Increase in other assets | (2,283 | ) | (5,652 | ) | |||||
| Increase in other liabilities | 4,493 | 4,514 | |||||||
| Excess tax benefit on share-based compensation | (1,069 | ) | (3,339 | ) | |||||
| Other sources | 773 | 450 | |||||||
| Net cash provided by operating activities | 54,655 | 51,127 | |||||||
| Cash Flows from Investing Activities | |||||||||
| Capital expenditures | (18,474 | ) | (14,960 | ) | |||||
| Business combinations, net of cash acquired | (1,500 | ) | (3,689 | ) | |||||
| Other sources/(uses) | 357 | (869 | ) | ||||||
| Net cash used by investing activities | (19,617 | ) | (19,518 | ) | |||||
| Cash Flows from Financing Activities | |||||||||
| Purchases of treasury stock | (12,841 | ) | (25,482 | ) | |||||
| Dividends paid | (6,160 | ) | (5,967 | ) | |||||
| Proceeds from issuance of capital stock | 3,670 | 7,698 | |||||||
| Excess tax benefit on share-based compensation | 1,069 | 3,339 | |||||||
| Decrease in cash overdrafts payable | 985 | (7,814 | ) | ||||||
| Debt issuances costs | - | (2,723 | ) | ||||||
| Other sources | 124 | 364 | |||||||
| Net cash used by financing activities | (13,153 | ) | (30,585 | ) | |||||
| Increase in Cash and Cash Equivalents | 21,885 | 1,024 | |||||||
| Cash and cash equivalents at beginning of year | 38,081 | 49,917 | |||||||
| Cash and cash equivalents at end of period | $ | 59,966 | $ | 50,941 | |||||
| CHEMED CORPORATION AND SUBSIDIARY COMPANIES | ||||||||||||||||
| CONSOLIDATING STATEMENT OF INCOME | ||||||||||||||||
| FOR THE THREE MONTHS ENDED JUNE 30, 2012 AND 2011 | ||||||||||||||||
| (in thousands)(unaudited) | ||||||||||||||||
| Chemed | ||||||||||||||||
| VITAS | Roto-Rooter | Corporate | Consolidated | |||||||||||||
| 2012 | ||||||||||||||||
| Service revenues and sales | $ | 265,213 | $ | 88,957 | $ | - | $ | 354,170 | ||||||||
| Cost of services provided and goods sold | 207,839 | 49,529 | - | 257,368 | ||||||||||||
| Selling, general and administrative expenses (a) | 20,471 | 24,372 | 4,927 | 49,770 | ||||||||||||
| Depreciation | 4,164 | 2,085 | 131 | 6,380 | ||||||||||||
| Amortization | 488 | 157 | 482 | 1,127 | ||||||||||||
| Total costs and expenses | 232,962 | 76,143 | 5,540 | 314,645 | ||||||||||||
| Income/(loss) from operations | 32,251 | 12,814 | (5,540 | ) | 39,525 | |||||||||||
| Interest expense (a) | (63 | ) | (107 | ) | (3,502 | ) | (3,672 | ) | ||||||||
| Intercompany interest income/(expense) | 812 | 430 | (1,242 | ) | - | |||||||||||
| Other income/(expense)—net | (1 | ) | (33 | ) | (936 | ) | (970 | ) | ||||||||
| Income/(loss) before income taxes | 32,999 | 13,104 | (11,220 | ) | 34,883 | |||||||||||
| Income taxes (a) | (12,566 | ) | (5,030 | ) | 3,987 | (13,609 | ) | |||||||||
| Net income/(loss) | $ | 20,433 | $ | 8,074 | $ | (7,233 | ) | $ | 21,274 | |||||||
| 2011 | ||||||||||||||||
| Service revenues and sales | $ | 243,095 | $ | 90,265 | $ | - | $ | 333,360 | ||||||||
| Cost of services provided and goods sold | 189,940 | 49,657 | - | 239,597 | ||||||||||||
| Selling, general and administrative expenses (b) | 19,735 | 24,384 | 6,305 | 50,424 | ||||||||||||
| Depreciation | 4,199 | 2,025 | 134 | 6,358 | ||||||||||||
| Amortization | 520 | 155 | 464 | 1,139 | ||||||||||||
| Total costs and expenses | 214,394 | 76,221 | 6,903 | 297,518 | ||||||||||||
| Income/(loss) from operations | 28,701 | 14,044 | (6,903 | ) | 35,842 | |||||||||||
| Interest expense (b) | (62 | ) | (77 | ) | (3,322 | ) | (3,461 | ) | ||||||||
| Intercompany interest income/(expense) | 1,215 | 652 | (1,867 | ) | - | |||||||||||
| Other income/(expense)—net | (90 | ) | 15 | 789 | 714 | |||||||||||
| Income/(loss) before income taxes | 29,764 | 14,634 | (11,303 | ) | 33,095 | |||||||||||
| Income taxes (b) | (11,175 | ) | (5,542 | ) | 3,908 | (12,809 | ) | |||||||||
| Net income/(loss) | $ | 18,589 | $ | 9,092 | $ | (7,395 | ) | $ | 20,286 | |||||||
| The "Footnotes to Financial Statements" are integral parts of this financial information. | ||||||||||||||||
| CHEMED CORPORATION AND SUBSIDIARY COMPANIES | ||||||||||||||||
| CONSOLIDATING STATEMENT OF INCOME | ||||||||||||||||
| FOR THE SIX MONTHS ENDED JUNE 30, 2012 AND 2011 | ||||||||||||||||
| (in thousands)(unaudited) | ||||||||||||||||
| Chemed | ||||||||||||||||
| VITAS | Roto-Rooter | Corporate | Consolidated | |||||||||||||
| 2012 | ||||||||||||||||
| Service revenues and sales | $ | 526,060 | $ | 181,053 | $ | - | $ | 707,113 | ||||||||
| Cost of services provided and goods sold | 413,459 | 101,354 | - | 514,813 | ||||||||||||
| Selling, general and administrative expenses (a) | 40,219 | 50,525 | 12,193 | 102,937 | ||||||||||||
| Depreciation | 8,188 | 4,171 | 262 | 12,621 | ||||||||||||
| Amortization | 978 | 311 | 951 | 2,240 | ||||||||||||
| Total costs and expenses | 462,844 | 156,361 | 13,406 | 632,611 | ||||||||||||
| Income/(loss) from operations | 63,216 | 24,692 | (13,406 | ) | 74,502 | |||||||||||
| Interest expense (a) | (126 | ) | (214 | ) | (6,949 | ) | (7,289 | ) | ||||||||
| Intercompany interest income/(expense) | 1,566 | 825 | (2,391 | ) | - | |||||||||||
| Other income/(expense)—net | (32 | ) | (54 | ) | 1,211 | 1,125 | ||||||||||
| Income/(loss) before income taxes | 64,624 | 25,249 | (21,535 | ) | 68,338 | |||||||||||
| Income taxes (a) | (24,564 | ) | (9,680 | ) | 7,625 | (26,619 | ) | |||||||||
| Net income/(loss) | $ | 40,060 | $ | 15,569 | $ | (13,910 | ) | $ | 41,719 | |||||||
| 2011 | ||||||||||||||||
| Service revenues and sales | $ | 478,768 | $ | 185,510 | $ | - | $ | 664,278 | ||||||||
| Cost of services provided and goods sold | 374,241 | 102,814 | - | 477,055 | ||||||||||||
| Selling, general and administrative expenses (b) | 38,446 | 51,124 | 16,508 | 106,078 | ||||||||||||
| Depreciation | 8,366 | 4,009 | 271 | 12,646 | ||||||||||||
| Amortization | 1,003 | 287 | 819 | 2,109 | ||||||||||||
| Total costs and expenses | 422,056 | 158,234 | 17,598 | 597,888 | ||||||||||||
| Income/(loss) from operations | 56,712 | 27,276 | (17,598 | ) | 66,390 | |||||||||||
| Interest expense (b) | (110 | ) | (142 | ) | (6,453 | ) | (6,705 | ) | ||||||||
| Intercompany interest income/(expense) | 2,428 | 1,291 | (3,719 | ) | - | |||||||||||
| Other income/(expense)—net | (59 | ) | 5 | 2,870 | 2,816 | |||||||||||
| Income/(loss) before income taxes | 58,971 | 28,430 | (24,900 | ) | 62,501 | |||||||||||
| Income taxes (b) | (22,257 | ) | (10,828 | ) | 8,971 | (24,114 | ) | |||||||||
| Net income/(loss) | $ | 36,714 | $ | 17,602 | $ | (15,929 | ) | $ | 38,387 | |||||||
| 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 JUNE 30, 2012 AND 2011 | |||||||||||||||||
| (in thousands)(unaudited) | |||||||||||||||||
| Chemed | |||||||||||||||||
| VITAS | Roto-Rooter | Corporate | Consolidated | ||||||||||||||
| 2012 | |||||||||||||||||
| Net income/(loss) | $ | 20,433 | $ | 8,074 | $ | (7,233 | ) | $ | 21,274 | ||||||||
| Add/(deduct): | |||||||||||||||||
| Interest expense | 63 | 107 | 3,502 | 3,672 | |||||||||||||
| Income taxes | 12,566 | 5,030 | (3,987 | ) | 13,609 | ||||||||||||
| Depreciation | 4,164 | 2,085 | 131 | 6,380 | |||||||||||||
| Amortization | 488 | 157 | 482 | 1,127 | |||||||||||||
EBITDA | 37,714 | 15,453 | (7,105 | ) | 46,062 | ||||||||||||
| Add/(deduct): | |||||||||||||||||
| Intercompany interest expense/(income) | (812 | ) | (430 | ) | 1,242 | - | |||||||||||
| Interest income | (42 | ) | (2 | ) | (15 | ) | (59 | ) | |||||||||
| Legal expenses of OIG investigation | 195 | - | - | 195 | |||||||||||||
| Acquisition expenses | - | 20 | - | 20 | |||||||||||||
| Expenses of class action litigation | - | 80 | - | 80 | |||||||||||||
| Advertising cost adjustment (c) | - | (696 | ) | - | (696 | ) | |||||||||||
Stock option expense | - | - | 2,374 | 2,374 | |||||||||||||
| Legal expenses of securities litigation | - | - | 197 | 197 | |||||||||||||
| Adjusted EBITDA | $ | 37,055 | $ | 14,425 | $ | (3,307 | ) | $ | 48,173 | ||||||||
| 2011 | |||||||||||||||||
| Net income/(loss) | $ | 18,589 | $ | 9,092 | $ | (7,395 | ) | $ | 20,286 | ||||||||
| Add/(deduct): | |||||||||||||||||
| Interest expense | 62 | 77 | 3,322 | 3,461 | |||||||||||||
| Income taxes | 11,175 | 5,542 | (3,908 | ) | 12,809 | ||||||||||||
| Depreciation | 4,199 | 2,025 | 134 | 6,358 | |||||||||||||
| Amortization | 520 | 155 | 464 | 1,139 | |||||||||||||
| EBITDA | 34,545 | 16,891 | (7,383 | ) | 44,053 | ||||||||||||
| Add/(deduct): | |||||||||||||||||
| Intercompany interest expense/(income) | (1,215 | ) | (652 | ) | 1,867 | - | |||||||||||
| Interest income | (7 | ) | (9 | ) | (46 | ) | (62 | ) | |||||||||
| Legal expenses of OIG investigation | 486 | - | - | 486 | |||||||||||||
| Acquisition expenses | 51 | (12 | ) | - | 39 | ||||||||||||
| Expenses of class action litigation | - | 186 | - | 186 | |||||||||||||
| Advertising cost adjustment (c) | - | (607 | ) | - | (607 | ) | |||||||||||
| Stock option expense | - | - | 2,562 | 2,562 | |||||||||||||
| Adjusted EBITDA | $ | 33,860 | $ | 15,797 | $ | (3,000 | ) | $ | 46,657 | ||||||||
| The "Footnotes to Financial Statements" are integral parts of this financial information. | |||||||||||||||||
| CHEMED CORPORATION AND SUBSIDIARY COMPANIES | ||||||||||||||||
| CONSOLIDATING SUMMARY OF EBITDA | ||||||||||||||||
| FOR THE SIX MONTHS ENDED JUNE 30, 2012 AND 2011 | ||||||||||||||||
| (in thousands)(unaudited) | ||||||||||||||||
| Chemed | ||||||||||||||||
| VITAS | Roto-Rooter | Corporate | Consolidated | |||||||||||||
| 2012 | ||||||||||||||||
| Net income/(loss) | $ | 40,060 | $ | 15,569 | $ | (13,910 | ) | $ | 41,719 | |||||||
| Add/(deduct): | ||||||||||||||||
| Interest expense | 126 | 214 | 6,949 | 7,289 | ||||||||||||
| Income taxes | 24,564 | 9,680 | (7,625 | ) | 26,619 | |||||||||||
| Depreciation | 8,188 | 4,171 | 262 | 12,621 | ||||||||||||
| Amortization | 978 | 311 | 951 | 2,240 | ||||||||||||
EBITDA | 73,916 | 29,945 | (13,373 | ) | 90,488 | |||||||||||
| Add/(deduct): | ||||||||||||||||
| Intercompany interest expense/(income) | (1,566 | ) | (825 | ) | 2,391 | - | ||||||||||
| Interest income | (72 | ) | (10 | ) | (28 | ) | (110 | ) | ||||||||
| Legal expenses of OIG investigation | 266 | - | - | 266 | ||||||||||||
| Acquisition expenses | - | 35 | - | 35 | ||||||||||||
| Expenses of class action litigation | - | 727 | - | 727 | ||||||||||||
| Advertising cost adjustment (c) | - | (1,402 | ) | - | (1,402 | ) | ||||||||||
| Stock option expense | - | - | 4,312 | 4,312 | ||||||||||||
| Legal expenses of securities litigation | - | - | 197 | 197 | ||||||||||||
| Adjusted EBITDA | $ | 72,544 | $ | 28,470 | $ | (6,501 | ) | $ | 94,513 | |||||||
| 2011 | ||||||||||||||||
| Net income/(loss) | $ | 36,714 | $ | 17,602 | $ | (15,929 | ) | $ | 38,387 | |||||||
| Add/(deduct): | ||||||||||||||||
| Interest expense | 110 | 142 | 6,453 | 6,705 | ||||||||||||
| Income taxes | 22,257 | 10,828 | (8,971 | ) | 24,114 | |||||||||||
| Depreciation | 8,366 | 4,009 | 271 | 12,646 | ||||||||||||
| Amortization | 1,003 | 287 | 819 | 2,109 | ||||||||||||
| EBITDA | 68,450 | 32,868 | (17,357 | ) | 83,961 | |||||||||||
| Add/(deduct): | ||||||||||||||||
| Intercompany interest expense/(income) | (2,428 | ) | (1,291 | ) | 3,719 | - | ||||||||||
| Interest income | (44 | ) | (16 | ) | (63 | ) | (123 | ) | ||||||||
| Legal expenses of OIG investigation | 997 | - | - | 997 | ||||||||||||
| Acquisition expenses | 115 | (6 | ) | - | 109 | |||||||||||
| Expenses of class action litigation | - | 681 | - | 681 | ||||||||||||
| Advertising cost adjustment (c) | - | (857 | ) | - | (857 | ) | ||||||||||
| Stock option expense | - | - | 4,495 | 4,495 | ||||||||||||
| Long-term incentive compensation | - | - | 3,012 | 3,012 | ||||||||||||
| Adjusted EBITDA | $ | 67,090 | $ | 31,379 | $ | (6,194 | ) | $ | 92,275 | |||||||
| The "Footnotes to Financial Statements" are integral parts of this financial information. | ||||||||||||||||
| CHEMED CORPORATION AND SUBSIDIARY COMPANIES | ||||||||||||||
| RECONCILIATION OF ADJUSTED NET INCOME | ||||||||||||||
| (in thousands, except per share data)(unaudited) | ||||||||||||||
| Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||
| 2012 | 2011 | 2012 | 2011 | |||||||||||
| Net income as reported | $ | 21,274 | $ | 20,286 | $ | 41,719 | $ | 38,387 | ||||||
| Add/(deduct) impact of: | ||||||||||||||
| After-tax stock option expense | 1,502 | 1,620 | 2,727 | 2,843 | ||||||||||
After-tax additional interest expense resulting from the change in accounting for the conversion feature of the convertible notes | 1,248 | 1,155 | 2,472 | 2,287 | ||||||||||
| After-tax cost of expenses of securities litigation | 124 | - | 124 | - | ||||||||||
| After-tax cost of legal expenses of OIG investigation | 121 | 301 | 165 | 618 | ||||||||||
| After-tax cost of expenses of class action litigation | 49 | 113 | 442 | 414 | ||||||||||
| After-tax cost of acquisition expenses | 12 | 23 | 21 | 67 | ||||||||||
| After-tax long-term incentive compensation | - | - | - | 1,880 | ||||||||||
| Adjusted net income | $ | 24,330 | $ | 23,498 | $ | 47,670 | $ | 46,496 | ||||||
| Earnings Per Share As Reported | ||||||||||||||
| Net income | $ | 1.12 | $ | 0.96 | $ | 2.20 | $ | 1.82 | ||||||
| Average number of shares outstanding | 18,998 | 21,115 | 18,976 | 21,067 | ||||||||||
| Diluted Earnings Per Share As Reported | ||||||||||||||
| Net income | $ | 1.10 | $ | 0.94 | $ | 2.16 | $ | 1.78 | ||||||
| Average number of shares outstanding | 19,369 | 21,637 | 19,357 | 21,586 | ||||||||||
| Adjusted Earnings Per Share | ||||||||||||||
| Net income | $ | 1.28 | $ | 1.11 | $ | 2.51 | $ | 2.21 | ||||||
| Average number of shares outstanding | 18,998 | 21,115 | 18,976 | 21,067 | ||||||||||
| Adjusted Diluted Earnings Per Share | ||||||||||||||
| Net income | $ | 1.26 | $ | 1.09 | $ | 2.46 | $ | 2.15 | ||||||
| Average number of shares outstanding | 19,369 | 21,637 | 19,357 | 21,586 | ||||||||||
| The "Footnotes to Financial Statements" are integral parts of this financial information. | ||||||||||||||
| CHEMED CORPORATION AND SUBSIDIARY COMPANIES | ||||||||||||||||||
| OPERATING STATISTICS FOR VITAS SEGMENT | ||||||||||||||||||
| FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2012 AND 2011 | ||||||||||||||||||
| (unaudited) | ||||||||||||||||||
| Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||||
| OPERATING STATISTICS | 2012 | 2011 | 2012 | 2011 | ||||||||||||||
| Net revenue ($000) (d) | ||||||||||||||||||
| Homecare | $ | 193,150 | $ | 177,067 | $ | 379,747 | $ | 345,719 | ||||||||||
| Inpatient | 29,247 | 27,183 | 58,399 | 54,569 | ||||||||||||||
| Continuous care | 42,816 | 39,213 | 85,337 | 77,838 | ||||||||||||||
| Total before Medicare cap allowance | $ | 265,213 | $ | 243,463 | $ | 523,483 | $ | 478,126 | ||||||||||
| Medicare cap allowance | - | (368 | ) | 2,577 | 642 | |||||||||||||
| Total | $ | 265,213 | $ | 243,095 | $ | 526,060 | $ | 478,768 | ||||||||||
| Net revenue as a percent of total before Medicare cap allowance | ||||||||||||||||||
| Homecare | 72.9 | % | 72.7 | % | 72.5 | % | 72.2 | % | ||||||||||
| Inpatient | 11.0 | 11.2 | 11.2 | 11.4 | ||||||||||||||
| Continuous care | 16.1 | 16.1 | 16.3 | 16.4 | ||||||||||||||
| Total before Medicare cap allowance | 100.0 | 100.0 | 100.0 | 100.0 | ||||||||||||||
| Medicare cap allowance | - | (0.2 | ) | 0.5 | 0.1 | |||||||||||||
| Total | 100.0 | % | 99.8 | % | 100.5 | % | 100.1 | % | ||||||||||
| Average daily census ("ADC") (days) | ||||||||||||||||||
| Homecare | 9,971 | 9,229 | 9,792 | 9,031 | ||||||||||||||
| Nursing home | 3,036 | 3,034 | 3,011 | 3,034 | ||||||||||||||
| Routine homecare | 13,007 | 12,263 | 12,803 | 12,065 | ||||||||||||||
| Inpatient | 466 | 447 | 469 | 449 | ||||||||||||||
| Continuous care | 638 | 601 | 635 | 602 | ||||||||||||||
| Total | 14,111 | 13,311 | 13,907 | 13,116 | ||||||||||||||
| Total Admissions | 15,912 | 15,294 | 32,234 | 31,092 | ||||||||||||||
| Total Discharges | 15,508 | 14,855 | 31,707 | 30,419 | ||||||||||||||
| Average length of stay (days) | 74.0 | 77.1 | 78.3 | 78.0 | ||||||||||||||
| Median length of stay (days) | 14.0 | 14.0 | 14.0 | 14.0 | ||||||||||||||
| ADC by major diagnosis | ||||||||||||||||||
| Neurological | 33.6 | % | 34.2 | % | 34.0 | % | 34.2 | % | ||||||||||
| Cancer | 17.7 | 17.7 | 17.8 | 17.8 | ||||||||||||||
| Cardio | 11.6 | 11.5 | 11.5 | 11.7 | ||||||||||||||
| Respiratory | 6.7 | 6.9 | 6.7 | 6.8 | ||||||||||||||
| Other | 30.4 | 29.7 | 30.0 | 29.5 | ||||||||||||||
| Total | 100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | ||||||||||
| Admissions by major diagnosis | ||||||||||||||||||
| Neurological | 18.9 | % | 19.4 | % | 19.2 | % | 19.5 | % | ||||||||||
| Cancer | 33.5 | 32.8 | 32.9 | 32.2 | ||||||||||||||
| Cardio | 10.8 | 10.8 | 11.3 | 11.0 | ||||||||||||||
| Respiratory | 8.1 | 8.5 | 8.5 | 8.8 | ||||||||||||||
| Other | 28.7 | 28.5 | 28.1 | 28.5 | ||||||||||||||
Total | 100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | ||||||||||
| Direct patient care margins (e) | ||||||||||||||||||
| Routine homecare | 52.4 | % | 52.4 | % | 51.4 | % | 51.7 | % | ||||||||||
| Inpatient | 12.7 | 13.3 | 13.4 | 13.1 | ||||||||||||||
| Continuous care | 19.7 | 20.2 | 19.8 | 20.4 | ||||||||||||||
| Homecare margin drivers (dollars per patient day) | ||||||||||||||||||
| Labor costs | $ | 54.56 | $ | 53.23 | $ | 56.13 | $ | 54.28 | ||||||||||
| Drug costs | 8.31 | 8.21 | 8.32 | 8.08 | ||||||||||||||
| Home medical equipment | 6.79 | 6.66 | 6.80 | 6.66 | ||||||||||||||
| Medical supplies | 2.79 | 2.83 | 2.77 | 2.79 | ||||||||||||||
| Inpatient margin drivers (dollars per patient day) | ||||||||||||||||||
| Labor costs | $ | 321.16 | $ | 311.26 | $ | 317.73 | $ | 308.97 | ||||||||||
| Continuous care margin drivers (dollars per patient day) | ||||||||||||||||||
| Labor costs | $ | 569.98 | $ | 550.40 | $ | 569.76 | $ | 547.29 | ||||||||||
| Bad debt expense as a percent of revenues | 0.8 | % | 0.8 | % | 0.8 | % | 0.7 | % | ||||||||||
| Accounts receivable -- | ||||||||||||||||||
| Days of revenue outstanding- excluding unapplied Medicare payments | 35.0 | 37.2 | n.a. | n.a. | ||||||||||||||
| Days of revenue outstanding- including unapplied Medicare payments | 30.6 | 36.8 | 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 AND SIX MONTHS ENDED JUNE 30, 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): | ||||||||||||||||||||||||
| Three Months Ended June 30, 2012 | ||||||||||||||||||||||||
| VITAS | Roto-Rooter | Corporate | Consolidated | |||||||||||||||||||||
| Selling, general and administrative expenses: | ||||||||||||||||||||||||
| Legal expenses of OIG investigation | $ | (195 | ) | $ | - | $ | - | $ | (195 | ) | ||||||||||||||
| Acquisition expenses | - | (20 | ) | - | (20 | ) | ||||||||||||||||||
| Expenses of class action litigation | - | (80 | ) | - | (80 | ) | ||||||||||||||||||
| Stock option expense | - | - | (2,374 | ) | (2,374 | ) | ||||||||||||||||||
| Expenses of securities litigation | - | - | (197 | ) | (197 | ) | ||||||||||||||||||
| Interest expense: | ||||||||||||||||||||||||
Additional interest expense resulting from the change in accounting for the conversion feature of the convertible notes | - | - | (1,973 | ) | (1,973 | ) | ||||||||||||||||||
| Pretax impact on earnings | (195 | ) | (100 | ) | (4,544 | ) | (4,839 | ) | ||||||||||||||||
| Income tax benefit on the above | 74 | 39 | 1,670 | 1,783 | ||||||||||||||||||||
| After-tax impact on earnings | $ | (121 | ) | $ | (61 | ) | $ | (2,874 | ) | $ | (3,056 | ) | ||||||||||||
| Six Months Ended June 30, 2012 | ||||||||||||||||||||||||
| VITAS | Roto-Rooter | Corporate | Consolidated | |||||||||||||||||||||
| Selling, general and administrative expenses: | ||||||||||||||||||||||||
| Legal expenses of OIG investigation | $ | (266 | ) | $ | - | $ | - | $ | (266 | ) | ||||||||||||||
| Acquisition expenses | - | (35 | ) | - | (35 | ) | ||||||||||||||||||
| Expenses of class action litigation | - | (727 | ) | - | (727 | ) | ||||||||||||||||||
| Stock option expense | - | - | (4,312 | ) | (4,312 | ) | ||||||||||||||||||
| Expenses of securities litigation | - | - | (197 | ) | (197 | ) | ||||||||||||||||||
| Interest expense: | ||||||||||||||||||||||||
Additional interest expense resulting from the change in accounting for the conversion feature of the convertible notes | - | - | (3,908 | ) | (3,908 | ) | ||||||||||||||||||
| Pretax impact on earnings | (266 | ) | (762 | ) | (8,417 | ) | (9,445 | ) | ||||||||||||||||
| Income tax benefit on the above | 101 | 299 | 3,094 | 3,494 | ||||||||||||||||||||
| After-tax impact on earnings | $ | (165 | ) | $ | (463 | ) | $ | (5,323 | ) | $ | (5,951 | ) | ||||||||||||
| (b) | Included in the results of operations 2011 are the following significant credits/(charges) which may not be indicative of ongoing operations | |||||||||||||||||||||||
| (in thousands): | ||||||||||||||||||||||||
| Three Months Ended June 30, 2011 | ||||||||||||||||||||||||
| VITAS | Roto-Rooter | Corporate | Consolidated | |||||||||||||||||||||
| Selling, general and administrative expenses: | ||||||||||||||||||||||||
| Legal expenses of OIG investigation | $ | (486 | ) | $ | - | $ | - | $ | (486 | ) | ||||||||||||||
| Acquisition expenses | (51 | ) | 12 | - | (39 | ) | ||||||||||||||||||
| Expenses of class action litigation | - | (186 | ) | - | (186 | ) | ||||||||||||||||||
| Stock option expense | - | - | (2,562 | ) | (2,562 | ) | ||||||||||||||||||
| Interest expense: | ||||||||||||||||||||||||
Additional interest expense resulting from the change in accounting for the conversion feature of the convertible notes | - | - | (1,825 | ) | (1,825 | ) | ||||||||||||||||||
| Pretax impact on earnings | (537 | ) | (174 | ) | (4,387 | ) | (5,098 | ) | ||||||||||||||||
| Income tax benefit on the above | 205 | 69 | 1,612 | 1,886 | ||||||||||||||||||||
| After-tax impact on earnings | $ | (332 | ) | $ | (105 | ) | $ | (2,775 | ) | $ | (3,212 | ) | ||||||||||||
| Six Months Ended June 30, 2011 | ||||||||||||||||||||||||
| VITAS | Roto-Rooter | Corporate | Consolidated | |||||||||||||||||||||
| Selling, general and administrative expenses: | ||||||||||||||||||||||||
| Legal expenses of OIG investigation | $ | (997 | ) | $ | - | $ | - | $ | (997 | ) | ||||||||||||||
| Acquisition expenses | (115 | ) | 6 | - | (109 | ) | ||||||||||||||||||
| Expenses of class action litigation | - | (681 | ) | - | (681 | ) | ||||||||||||||||||
| Stock option expense | - | - | (4,495 | ) | (4,495 | ) | ||||||||||||||||||
| Long-term incentive compensation | - | - | (3,012 | ) | (3,012 | ) | ||||||||||||||||||
| Interest expense: | ||||||||||||||||||||||||
Additional interest expense resulting from the change in accounting for the conversion feature of the convertible notes | - | - | (3,615 | ) | (3,615 | ) | ||||||||||||||||||
| Pretax impact on earnings | (1,112 | ) | (675 | ) | (11,122 | ) | (12,909 | ) | ||||||||||||||||
| Income tax benefit on the above | 423 | 265 | 4,112 | 4,800 | ||||||||||||||||||||
| After-tax impact on earnings | $ | (689 | ) | $ | (410 | ) | $ | (7,010 | ) | $ | (8,109 | ) | ||||||||||||
| ||||||||||||||||||||||||
| (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 second quarters of 2012 and 2011, GAAP advertising expense for Roto-Rooter totaled $5,270,000 and $5,304,000, respectively. If the expense of the telephone directories were spread over the periods they are in circulation, advertising expense for the second quarters of 2012 and 2011 would total $5,966,000 and $5,911,000, respectively. | |||||||||||||||||||||||
Similarly, for the first six months of 2012 and 2011, GAAP advertising expense for Roto-Rooter totaled $10,894,000 and $11,222,000, respectively. If the expense of the telephone directories were spread over the periods they are in circulation, advertising expense for the first six months of 2012 and 2011 would total $12,296,000 and $12,079,000, respectively. | ||||||||||||||||||||||||
| (d) | VITAS has 28 large (greater than 450 ADC), 16 medium (greater than 200 but less than 450 ADC) and 8 small (less than 200 ADC) hospice programs. There are 6 programs as of June 30, 2012, with Medicare cap cushion of less than 10% for the most recent 12-month period. | |||||||||||||||||||||||
| (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