Exhibit 99
Chemed Corporation Reports 2005 First-Quarter Results From Continuing
Operations;
Consolidated Diluted EPS of $.61;
Adjusted Pro Forma Diluted EPS of $.79
CINCINNATI--(BUSINESS WIRE)--May 3, 2005--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, today reported financial results
for its first quarter ended March 31, 2005, versus the comparable
prior-year period, as follows:
-- Operating Results in Accordance with Generally Accepted
Accounting Principles (GAAP)
-- Consolidated Revenue increased 82% to $219 million
-- Diluted EPS from Continuing Operations of $.61
-- Pro Forma Adjusted Consolidated Operating Results (Non GAAP)
-- Adjusted Diluted EPS from Continuing Operations of $.79
-- Adjusted EBITDA from Continuing Operations of $27.0 million
-- VITAS generated record revenue and ADC levels
-- Quarterly Net Patient Revenue of $146 million, up 18%
-- Average Daily Census (ADC) of 9,523, up 18%
-- Net income of $9.4 million, up 67% over prior period
Pro Forma Net Income
-- Pro Forma Adjusted EBITDA (Non GAAP) of $17.6 million, an
increase of 56%
-- Roto-Rooter segment reported increased Revenue, Net Income and
Adjusted EBITDA
-- Revenue of $73 million, an increase of 5%
-- Net Income of $7.1 million
-- Adjusted EBITDA (Non GAAP) of $11.8 million, an increase of
12%
"The first quarter of 2005 operating results are consistent with
the momentum we developed in the prior year," stated Kevin McNamara,
Chemed president and chief executive officer. "VITAS generated
excellent census and admissions growth, with first quarter ADC
totaling 9,523, up 18%, and admissions in the quarter of 12,948, an
increase of 6% over the prior year quarter and 12% sequentially. Our
average length-of-stay for discharges (ALOS) was 66.2 days. During the
quarter, we completed the Pittsburgh acquisition and currently have
nine programs classified as new starts in various stages of
development.
"Roto-Rooter also had good financial operating results. For the
first quarter of 2005, Roto-Rooter had revenue of $73 million and net
income of $7.1 million. Adjusted EBITDA was $11.8 million at a margin
of 16.2%."
"The first quarter of 2005 includes several items that should be
taken into consideration when evaluating our operating results," said
David Williams, Chemed's chief financial officer. "These items include
expenses from the early extinguishment of Chemed's $110 million
floating rate notes, restructuring the Company's credit agreements, a
favorable adjustment to casualty insurance accruals related to prior
years' experience, long-term incentive payment (LTIP) compensation and
a noncash charge related to accelerating the vesting of stock
options."
For a detailed presentation of Chemed's operating results,
reconciling items and related definitions and components, please refer
to the attached schedules.
VITAS
The merger of VITAS was completed on February 24, 2004. Prior to
that date the Company accounted for its 37% ownership of VITAS under
the equity method of accounting. As a result, under GAAP, only a
portion of VITAS' operating results is fully consolidated into
Chemed's first quarter 2004 results.
In the first quarter of 2005, VITAS had net patient revenue of
$146 million and net income of $9.4 million. Adjusted EBITDA was $17.6
million at a margin of 12.1%.
VITAS generated revenue growth of 17.8% over the prior year period
and 2.6% sequentially. Gross margins were 21.1% in the first quarter
of 2005, an improvement of 120 basis points when compared to the prior
year quarter. The first quarter 2005 gross margin includes $1.2
million in start-up losses, which is essentially flat with the losses
from programs classified as new starts in the prior year period.
Central support costs for VITAS, which are classified as selling,
general and administrative expenses in the Statement of Operations,
totaled $13.1 million, which is a decline of 1.4% from the prior year
quarter and up 91 basis points sequentially.
VITAS' ADC in the first quarter of 2005 was 9,523. This compares
to an ADC of 8,097 in the comparable prior year period, an increase of
17.6% and 4.3% sequential growth. The month of March 2005 had an ADC
of 9,667. ALOS for patients discharged in the quarter was 66.2 days
and compares to 64.1 days in the fourth quarter of 2004 and 55.7 days
in the first quarter of 2004. ALOS is calculated from the patients
discharged in the period. Only one of our programs has an ALOS that
exceeds 100 days and this program maintains a current cap cushion of
approximately 12%.
"We continue to see strong ADC and admissions growth," said
Williams. "The ADC in our 24 base programs, which excludes
acquisitions and new starts, averaged 377 patients per program. ADC
growth in these established programs was 11.9% over the prior year
quarter and 1.2% sequentially. Admissions for the established programs
totaled 12,252, which was an increase of 0.5% over the prior year
quarter and 10.4% sequentially.
"Our mix of revenue at VITAS was relatively stable this quarter,"
Williams added. "Routine home care aggregated 69.1% of revenue, an
increase of 220 basis points over the prior year quarter and a 30
basis point decline on a sequential basis. Our inpatient revenue
aggregated 14.3% of total revenue and continuous care was 16.6% of
revenue in the first quarter of 2005."
Roto-Rooter Segment
Roto-Rooter's plumbing and drain cleaning business generated sales
of $73 million for the first quarter of 2005, 4.9% higher than the $69
million reported in the comparable prior-year quarter. Net income for
the quarter was $7.1 million, including $1.0 million of aftertax
benefit from favorable experience and adjustments in estimated
insurance accruals for claims incurred in prior periods. Adjusted
EBITDA in the first quarter of 2005 totaled $11.8 million, an increase
of 12.4% over the first quarter of 2004. Adjusted EBITDA margin in the
first quarter of 2005 was 16.2% and compares to Adjusted EBITDA margin
of 15.2% in the prior year period.
"Job count in aggregate declined a modest 1.0% from the prior-year
period," stated Williams. "However, commercial plumbing and drain
cleaning job count increased 7.4% and 2.3%, respectively, over the
prior year quarter. Residential plumbing jobs increased 3.1% but were
offset by a 5.2% decline in residential drain cleaning jobs in the
quarter. A commercial job will typically average approximately 34%
more revenue than a residential job. Accordingly, this type of demand
mix shift will have a positive impact on revenue."
Consolidated Financial Position
"Our balance sheet is in excellent condition," Williams stated.
"As of March 31, 2005, we had $8.6 million in cash and cash
equivalents. This cash balance is net of the approximately $55 million
used to redeem the floating rate notes. In addition, the first quarter
of 2005 ended on a Thursday, one day prior to receiving our scheduled
Medicare billing payment. This payment, received on April 1, 2005,
totaled $19.6 million. Net cash provided from continuing operations
was $5.0 million and capital expenditures totaled $6.2 million in the
first quarter of 2005."
Guidance for 2005
"Looking ahead into 2005," Williams stated, "we anticipate VITAS
to increase revenue in the range of 16% to 18% in 2005 with margins
increasing modestly from the 2004 levels. This operating margin
expansion will be generated from leveraging central support costs.
Roto-Rooter is estimated to generate a 5% to 7% increase in revenue
with margins that approximate those generated in 2004. Our
consolidated effective tax rate was unusually high in the first
quarter of 2005 due to the earnings mix and state and local tax impact
of the unusual items noted earlier. The 2005 consolidated full year
2005 income tax rate is estimated to be 39.5% to 40.0%.
"Based upon these factors, and a current diluted share count of
13.0 million, our expectation is that earnings per diluted share for
2005, excluding the early extinguishment of debt and other items noted
earlier, will be in the range of $3.40 to $3.50."
Conference Call
Chemed will hold a conference call to discuss first quarter
results Wednesday, May 4, 2005, at 11 a.m. EDT. The dial-in number for
the conference call is 800-510-9834 for U.S. and Canadian participants
and 617-614-3669 for international participants. The participant
passcode is 41187439. A live webcast of the call can be accessed on
Chemed's website at www.chemed.com by clicking on "Investor Relations
Home" and then on "Featured Event: Web Cast-Live Q1 2005 Chemed
Corporation Conference Call." An archived webcast will also be
available at www.chemed.com and will remain available for 14 days
following the live call.
A taped replay of the conference call will be available
approximately two 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. The replay passcode is
87752802. The telephone replay will be available for one week
following the live call.
Chemed Corporation operates in the healthcare field through its
VITAS Healthcare Corporation subsidiary. VITAS provides daily hospice
services to approximately 9,500 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 China/Hong
Kong, Indonesia, Singapore, Japan, Mexico, the Philippines and the
United Kingdom.
This press release contains information about Chemed's EBITDA and
Adjusted EBITDA, which are not measures derived in accordance with
generally accepted accounting principles, and which excludes
components that are important to understanding Chemed's financial
performance. Chemed provides EBITDA and Adjusted EBITDA to help
investors and others evaluate its 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 EBITDA and Adjusted EBITDA should not be
considered in isolation or as a substitute for comparable measures
calculated and presented in accordance with GAAP. A reconciliation of
Chemed's net income to its Adjusted EBITDA 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 OPERATIONS
(in thousands, except per share data)(unaudited)
Three Months Ended March 31,
-----------------------------
2005 2004 (bb)
------------- -------------
Continuing Operations
Service revenues and sales $ 218,637 $ 120,340
------------- -------------
Cost of services provided and
goods sold (aa) 152,952 78,849
Selling, general and
administrative expenses 36,595 28,212
Depreciation 3,920 3,061
Amortization 1,192 461
Other expenses (aa) 1,324 8,783
------------- -------------
Total costs and expenses 195,983 119,366
------------- -------------
Income from operations 22,654 974
Interest expense (5,835) (2,900)
Loss on extinguishment of
debt (aa) (3,971) (3,330)
Other income--net 727 1,479
------------- -------------
Income/(loss) before income
taxes 13,575 (3,777)
Income taxes (5,670) 626
Equity in loss of affiliate (aa) - (4,105)
------------- -------------
Income/(loss) from continuing
operations 7,905 (7,256)
Discontinued Operations (bb) 211 146
------------- -------------
Net Income/(Loss) $ 8,116 $ (7,110)
============= =============
Earnings/(Loss) Per Share (aa)
Income/(loss) from continuing
operations $ 0.63 $ (0.66)
============= =============
Net income/(loss) $ 0.65 $ (0.65)
============= =============
Average number of shares
outstanding 12,576 10,912
============= =============
Diluted Earnings/(Loss) Per Share
(aa)
Income/(loss) from continuing
operations $ 0.61 $ (0.66)
============= =============
Net income/(loss) $ 0.63 $ (0.65)
============= =============
Average number of shares
outstanding 12,955 10,912
============= =============
- ---------------------------------------
(aa) Included in the results of operations are the following
significant credits/(charges) which may not be indicative of
ongoing operations (in thousands, except per share data):
Three Months Ended March 31,
-----------------------------
2005 2004
------------- -------------
Cost of services provided and
goods sold
Favorable adjustment to
casualty insurance accruals
related to prior years'
experience $ 1,663 $ -
Other expenses
Long-term incentive
compensation (1,109) (8,783)
Cost of accelerating vesting
of stock options (215) -
Loss on extinguishment of debt (3,971) (3,330)
------------- -------------
Pretax impact on earnings (3,632) (12,113)
Income tax benefit on the above 1,291 4,226
Equity in loss of affiliate
attributable to transaction-
related expenses incurred by
VITAS prior to its acquisition
by Chemed - (4,105)
------------- -------------
Aftertax impact on earnings $ (2,341) $ (11,992)
============= =============
Impact on earnings per share $ (0.19) $ (1.10)
============= =============
Impact on diluted earnings per
share $ (0.18) $ (1.10)
============= =============
(bb) Results of operations for 2004 have been restated for
operations discontinued in December 2004. Discontinued
operations for both periods comprise solely the results of
operations of the Service America segment.
CHEMED CORPORATION AND SUBSIDIARY COMPANIES
CONSOLIDATED BALANCE SHEET
(in thousands, except per share data)(unaudited)
March 31,
-----------------------
2005 2004 (cc)
----------- -----------
Assets
Current assets
Cash and cash equivalents $ 8,557 $ 43,036
Accounts receivable less allowances 81,880 65,446
Inventories 7,012 6,031
Current deferred income taxes 33,559 26,103
Prepaid income taxes - 12,756
Current assets of discontinued operations 15,162 15,608
Prepaid expenses and other current assets 8,461 16,008
----------- -----------
Total current assets 154,631 184,988
Investments of deferred compensation plans
held in trust 19,415 18,904
Other investments 1,445 1,445
Note receivable 12,500 12,500
Properties and equipment, at cost less
accumulated depreciation 58,172 52,275
Identifiable intangible assets less
accumulated amortization 75,904 25,235
Goodwill 436,820 452,705
Noncurrent assets of discontinued operations 5,717 10,688
Other assets 22,519 31,217
----------- -----------
Total Assets $ 787,123 $ 789,957
=========== ===========
Liabilities
Current liabilities
Accounts payable $ 40,470 $ 38,317
Current portion of long-term debt 1,277 5,634
Income taxes 16,529 3,660
Accrued insurance 26,087 18,154
Accrued salaries and wages 22,656 18,344
Current liabilities of discontinued
operations 21,929 20,637
Other current liabilities 32,253 38,688
----------- -----------
Total current liabilities 161,201 143,434
Deferred income taxes 17,395 1,258
Convertible junior subordinated debentures - 14,001
Other long-term debt 234,738 315,800
Deferred compensation liabilities 19,357 19,121
Noncurrent liabilities of discontinued
operations 802 615
Other liabilities 8,062 9,069
----------- -----------
Total Liabilities 441,555 503,298
----------- -----------
Stockholders' Equity
Capital stock 13,662 13,056
Paid-in capital 222,062 195,609
Retained earnings 148,141 111,428
Treasury stock, at cost (36,241) (32,741)
Unearned compensation (3,836) (2,480)
Deferred compensation payable in Company
stock 2,318 2,324
Notes receivable for shares sold (538) (537)
----------- -----------
Total Stockholders' Equity 345,568 286,659
----------- -----------
Total Liabilities and Stockholders'
Equity $ 787,123 $ 789,957
=========== ===========
Book Value Per Share $ 27.32 $ 23.58
=========== ===========
(cc) Reclassified for operations discontinued in 2004.
CHEMED CORPORATION AND SUBSIDIARY COMPANIES
CONSOLIDATED STATEMENT OF CASH FLOWS
(in thousands)(unaudited)
Three Months Ended
March 31,
------------------------
2005 2004 (cc)
----------- -----------
Cash Flows from Operating Activities
Net income/(loss) $ 8,116 $ (7,110)
Adjustments to reconcile net income/(loss)
to net cash provided/(used) by operating
activities:
Depreciation and amortization 5,112 3,522
Write-off of unamortized debt issuance
costs 2,871 -
Provision for deferred income taxes (1,892) (1,341)
Provision for uncollectible accounts
receivable 1,530 883
Noncash long-term incentive
compensation 948 5,808
Amortization of debt issuance costs 522 -
Discontinued operations (211) (146)
Equity in loss of affiliate - 4,105
Changes in operating assets and
liabilities, excluding amounts
acquired in business combinations:
Increase in accounts receivable (18,747) (4,170)
Decrease/(increase) in inventories 7 (20)
Decrease in prepaid expenses and
other current assets 1,381 7,250
Decrease in accounts payable and
other current liabilities (1,785) (20,550)
Increase in income taxes 7,484 848
Decrease/(increase) in other assets (882) 358
Increase in other liabilities 635 1,317
Noncash expense of internally financed
ESOPs 286 474
Other uses (419) (991)
----------- -----------
Net cash provided/(used) by
continuing operations 4,956 (9,763)
Net cash provided/(used) by
discontinued operations (1,081) 1,330
----------- -----------
Net cash provided/(used) by operating
activities 3,875 (8,433)
----------- -----------
Cash Flows from Investing Activities
Capital expenditures (6,201) (1,653)
Business combinations, net of cash acquired (4,401) (324,075)
Net uses from discontinued operations (817) (448)
Proceeds from sales of property and
equipment 36 166
Return of merger deposit - 10,000
Other uses (136) (105)
----------- -----------
Net cash used by investing activities (11,519) (316,115)
----------- -----------
Cash Flows from Financing Activities
Repayment of long-term debt (140,680) (92,178)
Proceeds from issuance of long-term debt 85,000 295,000
Issuance of capital stock, net of costs 4,208 97,234
Debt issuance costs (1,555) (13,095)
Dividends paid (1,517) (1,209)
Purchases of treasury stock (833) (2,202)
Net increase in revolving line of credit - 25,000
Repayment of stock subscription note
receivable - 8,053
Other sources 130 293
----------- -----------
Net cash provided/(used) by financing
activities (55,247) 316,896
----------- -----------
Decrease in Cash and Cash Equivalents (62,891) (7,652)
Cash and cash equivalents at beginning of
year 71,448 50,688
----------- -----------
Cash and cash equivalents at end of period $ 8,557 $ 43,036
=========== ===========
(cc) Reclassified for operations discontinued in December 2004.
CHEMED CORPORATION AND SUBSIDIARY COMPANIES
CONSOLIDATING STATEMENT OF OPERATIONS
FOR THE THREE MONTHS ENDED MARCH 31, 2005 AND 2004
(in thousands)(unaudited)
Chemed
Roto- Consol-
VITAS Rooter Corporate idated
--------- --------- --------- ---------
2005
- ------------------------
Service revenues and
sales $145,990 $ 72,647 $ - $218,637
--------- --------- --------- ---------
Cost of services
provided and goods
sold 115,220 37,732 (a) - 152,952
Selling, general and
administrative
expenses 13,124 21,150 2,321 36,595
Depreciation 1,785 2,062 73 3,920
Amortization 995 26 171 1,192
Other expenses 293 (b) 248 (b) 783 (b) 1,324
--------- --------- --------- ---------
Total costs and
expenses 131,417 61,218 3,348 195,983
--------- --------- --------- ---------
Income/(loss) from
operations 14,573 11,429 (3,348) 22,654
Interest expense (38) (182) (5,615) (5,835)
Intercompany interest
income/(expense) 509 424 (933) -
Loss on extinguishment
of debt - - (3,971)(c) (3,971)
Other income--net 108 296 323 727
--------- --------- --------- ---------
Income/(loss) before
income taxes 15,152 11,967 (13,544) 13,575
Income taxes (5,783) (4,822) 4,935 (5,670)
--------- --------- --------- ---------
Income/(loss) from
continuing operations 9,369 7,145 (8,609) 7,905
Discontinued operations - - 211 211
--------- --------- --------- ---------
Net income/(loss) $ 9,369 $ 7,145 $ (8,398) $ 8,116
========= ========= ========= =========
2004
- ------------------------
Service revenues and
sales $ 51,112 $ 69,228 $ - $120,340
--------- --------- --------- ---------
Cost of services
provided and goods
sold 40,486 38,363 - 78,849
Selling, general and
administrative
expenses 4,989 20,947 2,276 28,212
Depreciation 748 2,246 67 3,061
Amortization 402 59 - 461
Other expenses - 1,558 (b) 7,225 (b) 8,783
--------- --------- --------- ---------
Total costs and
expenses 46,625 63,173 9,568 119,366
--------- --------- --------- ---------
Income/(loss) from
operations 4,487 6,055 (9,568) 974
Interest expense (28) (26) (2,846) (2,900)
Intercompany interest
income/(expense) - 184 (184) -
Loss on extinguishment
of debt - - (3,330)(c) (3,330)
Other income--net 31 818 630 1,479
--------- --------- --------- ---------
Income/(loss) before
income taxes 4,490 7,031 (15,298) (3,777)
Income taxes (1,893) (2,794) 5,313 626
Equity in loss of VITAS - - (4,105)(d) (4,105)
--------- --------- --------- ---------
Income/(loss) from
continuing operations 2,597 4,237 (14,090) (7,256)
Discontinued operations - - 146 146
--------- --------- --------- ---------
Net income/(loss) $ 2,597 $ 4,237 $(13,944) $ (7,110)
========= ========= ========= =========
The "Footnotes to Financial Statements" are integral parts of this
financial information.
CHEMED CORPORATION AND SUBSIDIARY COMPANIES
PRO FORMA CONSOLIDATING STATEMENT OF OPERATIONS
FOR THE THREE MONTHS ENDED MARCH 31, 2005 AND 2004
(in thousands, except per share data) (unaudited)
Chemed
Roto- Consol-
VITAS Rooter Corporate idated
--------- --------- --------- ---------
2005
- ------------------------
Service revenues and
sales $145,990 $ 72,647 $ - $218,637
--------- --------- --------- ---------
Cost of services
provided and goods
sold 115,220 37,732 (a) - 152,952
Selling, general and
administrative
expenses 13,124 21,150 2,321 36,595
Depreciation 1,785 2,062 73 3,920
Amortization 995 26 171 1,192
Other expenses 293 (b) 248 (b) 783 (b) 1,324
--------- --------- --------- ---------
Total costs and
expenses 131,417 61,218 3,348 195,983
--------- --------- --------- ---------
Income/(loss) from
operations 14,573 11,429 (3,348) 22,654
Interest expense (38) (182) (5,615) (5,835)
Intercompany interest
income/(expense) 509 424 (933) -
Loss on extinguishment
of debt - - (3,971)(c) (3,971)
Other income--net 108 296 323 727
--------- --------- --------- ---------
Income/(loss) before
income taxes 15,152 11,967 (13,544) 13,575
Income taxes (5,783) (4,822) 4,935 (5,670)
--------- --------- --------- ---------
Income/(loss) from
continuing operations 9,369 7,145 (8,609) 7,905
Discontinued operations - - 211 211
--------- --------- --------- ---------
Net income/(loss) $ 9,369 $ 7,145 $ (8,398) $ 8,116
========= ========= ========= =========
Earnings Per Share
Continuing operations $ 0.63
=========
Net income $ 0.65
=========
Average number of
shares outstanding 12,576
=========
Diluted Earnings Per
Share
Continuing operations $ 0.61
=========
Net income $ 0.63
=========
Average number of
shares outstanding 12,955
=========
2004 (e)
- ------------------------
Service revenues and
sales $123,982 $ 69,228 $ - $193,210
--------- --------- --------- ---------
Cost of services
provided and goods
sold 99,334 38,363 - 137,697
Selling, general and
administrative
expenses 13,314 20,947 2,137 36,398
Depreciation 982 2,246 67 3,295
Amortization 1,095 59 - 1,154
Other expenses - 1,558 (b) 7,225 (b) 8,783
--------- --------- --------- ---------
Total costs and
expenses 114,725 63,173 9,429 187,327
--------- --------- --------- ---------
Income/(loss) from
operations 9,257 6,055 (9,429) 5,883
Interest expense (28) (26) (6,248) (6,302)
Intercompany interest
income/(expense) - 184 (184) -
Loss on extinguishment
of debt - - (3,330)(c) (3,330)
Other income--net 72 818 630 1,520
--------- --------- --------- ---------
Income/(loss) before
income taxes 9,301 7,031 (18,561) (2,229)
Income taxes (3,701) (2,794) 6,447 (48)
--------- --------- --------- ---------
Income/(loss) from
continuing operations 5,600 4,237 (12,114) (2,277)
Discontinued operations - - 146 146
--------- --------- --------- ---------
Net income/(loss) $ 5,600 $ 4,237 $(11,968) $ (2,131)
========= ========= ========= =========
Earnings/(Loss) Per
Share
Continuing operations $ (0.19)
=========
Net income $ (0.18)
=========
Average number of
shares outstanding 12,099
=========
Diluted Earnings/(Loss)
Per Share
Continuing operations $ (0.19)
=========
Net income $ (0.18)
=========
Average number of
shares outstanding 12,099
=========
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 MARCH 31, 2005 AND 2004
(in thousands)(unaudited)
Chemed
Roto- Consol-
VITAS Rooter Corporate idated
----------- ----------- ----------- -----------
2005
- ----------------------
Net income/(loss) $ 9,369 $ 7,145 $ (8,398) $ 8,116
Add/(deduct):
Discontinued
operations - - (211) (211)
Interest expense 38 182 5,615 5,835
Income taxes 5,783 4,822 (4,935) 5,670
Depreciation 1,785 2,062 73 3,920
Amortization 995 26 171 1,192
------------ ----------- ----------- -----------
EBITDA 17,970 14,237 (7,685) 24,522
Add/(deduct):
Long-term
incentive
compensation (k) 293 248 783 1,324
Prior-period
insurance
adjustment - (1,663) - (1,663)
Advertising cost
adjustment (g) - (553) - (553)
Interest income (126) (41) (483) (650)
Intercompany
interest
income/(expense) (509) (424) 933 -
Loss on
extinguishment
of debt - - 3,971 3,971
------------ ----------- ----------- -----------
Adjusted EBITDA $ 17,628 $ 11,804 $ (2,481) $ 26,951
============ =========== =========== ===========
2004
- ----------------------
Net income/(loss) $ 2,597 $ 4,237 $ (13,944) $ (7,110)
Add/(deduct):
Discontinued
operations - - (146) (146)
Interest expense 28 26 2,846 2,900
Income taxes 1,893 2,794 (5,313) (626)
Depreciation 748 2,246 67 3,061
Amortization 402 59 - 461
------------ ----------- ----------- -----------
EBITDA 5,668 9,362 (16,490) (1,460)
Add/(deduct):
Long-term
incentive
compensation - 1,558 7,225 8,783
Advertising cost
adjustment (g) - (193) - (193)
Interest income (31) (38) (439) (508)
Intercompany
interest
income/(expense) - (184) 184 -
Equity in loss of
VITAS - - 4,105 4,105
Loss on
extinguishment
of debt - - 3,330 3,330
------------ ----------- ----------- -----------
Adjusted EBITDA $ 5,637 $ 10,505 $ (2,085) $ 14,057
============ =========== =========== ===========
The "Footnotes to Financial Statements" are integral parts of this
financial information.
CHEMED CORPORATION AND SUBSIDIARY COMPANIES
PRO FORMA CONSOLIDATING SUMMARY OF EBITDA
FOR THE THREE MONTHS ENDED MARCH 31, 2005 AND 2004
(in thousands)(unaudited)
Chemed
Roto- Corporate Consol-
VITAS (f) Rooter (f) idated
----------- ----------- ----------- -----------
2005
- ----------------------
Net income/(loss) $ 9,369 $ 7,145 $ (8,398) $ 8,116
Add/(deduct):
Discontinued
operations - - (211) (211)
Interest expense 38 182 5,615 5,835
Income taxes 5,783 4,822 (4,935) 5,670
Depreciation 1,785 2,062 73 3,920
Amortization 995 26 171 1,192
------------ ----------- ----------- -----------
EBITDA 17,970 14,237 (7,685) 24,522
Add/(deduct):
Long-term
incentive
compensation (k) 293 248 783 1,324
Prior-period
insurance
adjustment - (1,663) - (1,663)
Advertising cost
adjustment (g) - (553) - (553)
Interest income (126) (41) (483) (650)
Intercompany
interest
income/(expense) (509) (424) 933 -
Loss on
extinguishment
of debt - - 3,971 3,971
------------ ----------- ----------- -----------
Adjusted EBITDA $ 17,628 $ 11,804 $ (2,481) $ 26,951
============ =========== =========== ===========
2004
- ----------------------
Pro forma net
income/(loss) $ 5,600 $ 4,237 $ (11,968) $ (2,131)
Add/(deduct):
Discontinued
operations - - (146) (146)
Interest expense 28 26 6,248 6,302
Income taxes 3,701 2,794 (6,447) 48
Depreciation 982 2,246 67 3,295
Amortization 1,095 59 - 1,154
------------ ----------- ----------- -----------
Pro forma
EBITDA 11,406 9,362 (12,246) 8,522
Add/(deduct):
Long-term
incentive
compensation - 1,558 7,225 8,783
Advertising cost
adjustment (g) - (193) - (193)
Interest income (72) (38) (439) (549)
Intercompany
interest
income/(expense) - (184) 184 -
Loss on
extinguishment
of debt - - 3,330 3,330
------------ ----------- ----------- -----------
Pro forma
adjusted
EBITDA $ 11,334 $ 10,505 $ (1,946) $ 19,893
============ =========== =========== ===========
The "Footnotes to Financial Statements" are integral parts of this
financial information.
CHEMED CORPORATION AND SUBSIDIARY COMPANIES
RECONCILIATION OF PRO FORMA ADJUSTED NET INCOME
FOR THE THREE MONTHS ENDED MARCH 31, 2005 AND 2004
(in thousands, except per share data)(unaudited)
Three Months Ended
March 31,
------------------------
2005 2004
----------- -----------
Net income/(loss) as reported $ 8,116 $ (7,110)
Add/(deduct):
Pro forma VITAS net income contribution
for the period (h) - 3,085
Pro forma financing costs related to
acquisition of VITAS (i) - (2,211)
Pro forma elimination of equity in loss
of VITAS (j) - 4,105
----------- -----------
Pro forma net income/(loss) 8,116 (2,131)
Add/(deduct):
Discontinued operations (211) (146)
Aftertax prior-period insurance
adjustment (1,014) -
Aftertax cost of long-term incentive
compensation (k) 832 5,723
Aftertax cost of loss on extinguishment
of debt 2,523 2,164
----------- -----------
Adjusted pro forma income from continuing
operations $ 10,246 $ 5,610
=========== ===========
Earnings/(Loss) Per Share As Reported
Net income/(loss) $ 0.65 $ (0.65)
=========== ===========
Average number of shares outstanding 12,576 10,912
=========== ===========
Diluted Earnings/(Loss) Per Share As Reported
Net income/(loss) $ 0.63 $ (0.65)
=========== ===========
Average number of shares outstanding 12,955 10,912
=========== ===========
Adjusted Pro Forma Earnings Per Share
Income from continuing operations $ 0.81 $ 0.46
=========== ===========
Average number of shares outstanding 12,576 12,099
=========== ===========
Adjusted Pro Forma Diluted Earnings Per Share
Income from continuing operations $ 0.79 $ 0.46
=========== ===========
Average number of shares outstanding 12,955 12,099
=========== ===========
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 ENDED MARCH 31, 2005 AND 2004
(unaudited)
(a) Amount includes a favorable adjustment to casualty insurance
accruals related to prior quarters' experience of $1,663,000
($1,014,000 aftertax).
(b) For the first quarter of 2005, amounts include payouts under the
Company's Executive Long-Term Incentive Plan of $568,000 ($360,000
aftertax) for Corporate, $293,000 ($182,000 aftertax) for VITAS
and $248,000 ($153,000 aftertax) for Roto-Rooter. In addition, the
amount for Corporate includes $215,000 ($137,000 aftertax) related
to accelerating the vesting of stock options. For the first
quarter of 2004, amounts include payouts under the Company's
Executive Long-Term Incentive Plan of $7,225,000 ($4,455,000
aftertax) for Corporate and $1,558,000 ($982,000 aftertax) for
Roto-Rooter. For pro forma financial statements, all of the
foregoing apply.
(c) For the first quarter of 2005, amount represents the prepayment
penalty and write-off of debt issuance costs related to the early
extinguishment and refinancing of certain portions of the
Company's debt ($2,523,000 aftertax). For the first quarter of
2004, amount represents the prepayment penalty incurred on the
early extinguishment of the Company's debt ($2,164,000 aftertax).
(d) Amount includes the Company's aftertax share of VITAS' charges
related to the Company's acquisition of VITAS in the first quarter
of 2004 prior to the acquisition date. These charges comprise
transaction-related expenses that reduced the Company's equity in
the earnings/(loss) of VITAS by $4,621,000 during the first
quarter of 2004.
(e) The pro forma statement of operations for 2004 assumes the
Company's acquisition of VITAS and its financing (including the
retirement of existing debt) were completed as of January 1, 2004,
on the same terms and conditions as completed on February 24,
2004.
(f) Pro forma amounts for VITAS and Corporate assume the acquisition
of VITAS and the related financing were both completed on January
1, 2004.
(g) 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 first quarters of 2005 and 2004, GAAP advertising
expense for Roto-Rooter totaled $3,251,000 and $3,375,000,
respectively. If the expense of the telephone directories were
spread over the periods they are in circulation, advertising
expense for the first quarters of 2005 and 2004 would total
$3,804,000 and $3,568,000, respectively.
(h) Amount represents the additional net income VITAS would contribute
assuming the acquisition were completed on January 1 of the
respective years (excluding Chemed management fees).
(i) Amounts represent the additional financing costs, including a loss
on early extinguishment of debt in 2003, that would have been
incurred assuming the financing were completed on January 1 of the
respective years.
(j) Amounts represent the impact of eliminating the Company's prior
investments in VITAS, assuming the acquisition of VITAS were
completed on January 1 of the respective years.
(k) For the first quarter of 2005, amount includes costs related to
accelerating the vesting of stock options in addition to payouts
under the Company's Executive Long-Term Incentive Plan.
CONTACT: Chemed Corporation
David P. Williams, 513-762-6901