Exhibit 99
Chemed Reports Second-Quarter 2005
Results; EPS Guidance for 2005 Increased; VITAS and Roto-Rooter Report
Double-Digit Increase in Earnings
CINCINNATI--(BUSINESS WIRE)--Aug. 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 second quarter ended June 30, 2005, versus the comparable
prior-year period, as follows:
Consolidated Operating Results from Continuing Operations
-- Consolidated Revenue increased 14% to $226 million
-- Diluted EPS from Continuing Operations of $.42, including $.03
charge for LTIP and other items
-- Adjusted EBITDA of $29 million
VITAS generated record operating results
-- Quarterly Net Patient Revenue of $154 million, up 18%
-- Average Daily Census (ADC) of 9,913, up 16%
-- Admissions of 12,646, up 10%
-- Net income of $10.1 million, up 28%
-- Adjusted EBITDA of $19.5 million, an increase of 21%
Roto-Rooter segment reported increased Revenue, Net Income and
Adjusted EBITDA
-- Revenue of $73 million, an increase of 5%
-- Net income of $5.7 million, an increase of 10%
-- Adjusted EBITDA of $11.3 million, an increase of 10%
"VITAS generated excellent census and admissions growth, with
second-quarter ADC totaling 9,913, up 16%, and admissions in the
quarter of 12,646, an increase of 10% over the prior-year quarter. Net
income in the quarter was $10.1 million, an increase of 28% over the
prior period," stated Kevin McNamara, Chemed president and chief
executive officer.
"Roto-Rooter also reported solid financial operating results. For
the second quarter of 2005, Roto-Rooter had revenue of $73 million, an
increase of 5%. Adjusted EBITDA was $11.3 million at a margin of
15.5%, resulting in net income of $5.7 million, an increase of 10%
over the prior year."
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. To facilitate review of Chemed's
operating results, pro forma supplemental schedules are included in
the back of this press release that assume Chemed owned 100% of VITAS
as of January 1, 2003.
In the second quarter of 2005, VITAS had net patient revenue of
$154 million and net income of $10.1 million. Net income includes
aftertax costs of $0.4 million for LTIP and $0.2 million for legal
expenses related to the OIG civil investigation. Adjusted EBITDA was
$19.5 million at a margin of 12.7%.
"VITAS generated revenue growth of 18.0% over the prior-year
period and 5.3% sequentially," stated David Williams, Chemed chief
financial officer. "Gross margins were 21.4% in the second quarter of
2005, a 40 basis point decline when compared to the prior-year
quarter. This decline is primarily the result of our new start
development efforts. The second-quarter 2005 gross margin includes
$1.4 million in start-up losses, which is $0.8 million higher than the
$0.6 million in 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 $13.6 million, including $0.3 million
in OIG legal expenses. Excluding these OIG expenses, central support
costs increased 8.3% when compared to the prior-year quarter and
increased 1.6% sequentially."
VITAS' ADC in the second quarter of 2005 was 9,913. This compares
to an ADC of 8,581 in the comparable prior-year period, an increase of
15.5% and 4.1% sequential growth. Admissions totaled 12,646, an
increase of 10.2% over the second quarter of 2004. The Average Length
of Stay (ALOS) for patients discharged in the quarter was 66.8 days
and compares to 66.2 days in the first quarter of 2005 and 60.0 days
in the second quarter of 2004.
"VITAS continues to generate strong internal growth," said
Williams. "This growth, which excludes 2004 and 2005 acquisitions,
generated revenue, ADC and admissions increases of 14.3%, 10.9% and
7.2%, respectively, over the prior-year quarter.
"Our mix of revenue at VITAS was relatively stable," Williams
added. "Routine home care represented 69.4% of revenue, an increase of
110 basis points over the prior-year quarter and a 20 basis point
increase on a sequential basis. Our inpatient revenue aggregated 13.7%
and continuous care was 16.9% of total revenue in the second quarter
of 2005.
"All of our base and new start programs are forecasted to have
Medicare cap cushion for the 2005 measurement period which ends on
October 31, 2005," stated Williams. "As previously discussed, we have
been closely monitoring Medicare cap limitations at our Phoenix
acquisition. Admissions generated by VITAS for Phoenix in 2005 have
exceeded the 2004 level. However, discharges of patients admitted to
the Phoenix hospice program prior to VITAS' acquisition have been at a
slower rate than anticipated. Based on these factors, Phoenix is
forecasted to have a Medicare cap liability ranging from $1.0 million
to $1.5 million as of October 31, 2005. The potential of reaching cap
in the initial year of acquisition was identified during our due
diligence of Phoenix. Since this cap limitation relates to patients
admitted into the program prior to acquisition, the estimated cap
accrual has been accounted for as a contingent liability assumed at
acquisition and is not reflected in the Consolidated Statement of
Income. VITAS anticipates creating cap cushion in 2006 by increasing
access to shorter stay patients and broadening access to in-patient
and continuous care patients. This broad mix of patients is consistent
with the clinical model provided by VITAS in its other programs."
Roto-Rooter Segment
Roto-Rooter's plumbing and drain cleaning business generated sales
of $73 million for the second quarter of 2005, 5.3% higher than the
$69 million reported in the comparable prior-year quarter. Net income
for the quarter was $5.7 million, including $0.2 million of aftertax
costs related to the LTIP. Adjusted EBITDA in the second quarter of
2005 totaled $11.3 million, an increase of 10.0% over the second
quarter of 2004. Adjusted EBITDA margin in the second quarter of 2005
was 15.5%, a 60 basis point increase over the prior-year period.
"Job count in the second quarter of 2005 was essentially flat,"
stated Williams. "However, commercial plumbing and drain cleaning job
count increased 7.9% and 3.3%, respectively, over the prior-year
quarter. Residential plumbing jobs increased 1.5% but were offset by a
4.7% decline in residential drain cleaning jobs during the quarter. A
commercial job will typically average approximately 34% more revenue
than a residential job. Accordingly, this continued shift of job mix
has a positive impact on revenue."
Consolidated Financial Position
"Our balance sheet is in excellent condition," Williams stated.
"As of June 30, 2005, we had $18 million in cash and cash equivalents.
Net cash provided by continuing operations was $22 million and capital
expenditures totaled $5.3 million in the second quarter of 2005."
Guidance for 2005
"Looking ahead into the second half of 2005," Williams stated, "we
anticipate VITAS to increase revenue in the range of 16% to 18% in
2005, with margins continuing to increase 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 6% increase in revenue with margins that approximate those
generated in 2004. Our consolidated effective tax rate for the first
six months of 2005 was 39%. This rate should hold for the remainder of
2005.
"Based upon these factors and a current diluted share count of
26.2 million, our expectation is that full-year 2005 earnings per
diluted share from continuing operations, excluding the early
extinguishment of debt and charges or credits not indicative of
ongoing operations, will be in the range of $1.77 to $1.82."
Conference Call
Chemed will hold a conference call to discuss second quarter
results Thursday, August 4, 2005, at 11:00 a.m. ET. 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 58290110. 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
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
13221466. The telephone replay will be available for one week
following the live call. An archived webcast will also be available at
www.chemed.com and will remain available for 30 days following the
live call.
Chemed Corporation operates in the healthcare field through its
VITAS Healthcare Corporation subsidiary. VITAS provides daily hospice
services to approximately 10,000 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 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 exclude 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 INCOME
(in thousands, except per share data)(unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
------------------- --------------------
2005 2004 (bb) 2005 2004 (bb)
--------- --------- ---------- ---------
Continuing Operations
Service revenues and sales $226,309 $199,135 $444,946 $319,475
-------- -------- -------- --------
Cost of services provided
and goods sold (aa) 161,120 140,070 314,072 218,919
Selling, general and
administrative
expenses (aa) 36,802 34,476 73,397 62,688
Depreciation 3,928 4,097 7,848 7,158
Amortization 1,231 1,097 2,423 1,558
Other expenses (aa) 1,166 (1,368) 2,490 7,415
-------- -------- -------- --------
Total costs and expenses 204,247 178,372 400,230 297,738
-------- -------- -------- --------
Income from operations 22,062 20,763 44,716 21,737
Interest expense (5,039) (6,204) (10,874) (9,104)
Loss on extinguishment of
debt (aa) - - (3,971) (3,330)
Other income--net 600 149 1,327 1,628
-------- -------- -------- --------
Income before income
taxes 17,623 14,708 31,198 10,931
Income taxes (6,512) (6,381) (12,182) (5,755)
Equity in loss of
affiliate (aa) - - - (4,105)
-------- -------- -------- --------
Income from continuing
operations 11,111 8,327 19,016 1,071
Discontinued Operations (bb) (2,226) (9) (2,015) 137
-------- -------- -------- --------
Net Income $ 8,885 $ 8,318 $ 17,001 $ 1,208
======== ======== ======== ========
Earnings Per Share (aa)
Income from continuing
operations $ 0.44 $ 0.34 $ 0.75 $ 0.05
======== ======== ======== ========
Net income $ 0.35 $ 0.34 $ 0.67 $ 0.05
======== ======== ======== ========
Average number of shares
outstanding 25,489 24,650 25,319 23,238
======== ======== ======== ========
Diluted Earnings Per Share (aa)
Income from continuing
operations $ 0.42 $ 0.33 $ 0.73 $ 0.05
======== ======== ======== ========
Net income $ 0.34 $ 0.33 $ 0.65 $ 0.05
======== ======== ======== ========
Average number of shares
outstanding 26,214 25,354 26,059 23,696
======== ======== ======== ========
- --------------------------------
(aa) Included in the results of operations are the following
significant credits/(charges) which may not be indicative of
ongoing operations (in thousands):
Three Months Ended Six Months Ended
June 30, June 30,
------------------- ------------------
2005 2004 2005 2004
--------- --------- -------- ---------
Cost of services provided
and goods sold
Favorable adjustment to
casualty insurance
accruals related to
prior years' experience $ - $ - $ 1,663 $ -
Selling, general and
administrative expenses
Legal costs associated
with OIG investigation (254) - (254) -
Other expenses
Long-term incentive
compensation (1,837) - (2,946) (8,783)
Cost of accelerating
vesting of stock
options - - (215) -
Adjustments to
transaction-related
costs of the VITAS
acquisition 671 1,368 671 1,368
Loss on extinguishment of
debt - - (3,971) (3,330)
------- ------ ------- --------
Pretax impact on
earnings (1,420) 1,368 (5,052) (10,745)
Income tax benefit on the
above 779 (547) 2,070 3,679
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 $ (641) $ 821 $(2,982) $(11,171)
======= ====== ======= ========
(bb) Results of operations for 2004 have been restated for the results
of Service America, discontinued in December 2004. Included in
discontinued operations for 2005 is an aftertax loss of
$2,350,000 resulting from finalizing the disposal of Service
America in May 2005.
CHEMED CORPORATION AND SUBSIDIARY COMPANIES
CONSOLIDATED BALANCE SHEET
(in thousands, except per share data)(unaudited)
June 30,
-------------------
2005 2004 (cc)
--------- ---------
Assets
Current assets
Cash and cash equivalents $ 17,870 $ 52,019
Accounts receivable less allowances 84,973 59,200
Inventories 7,309 6,418
Current deferred income taxes 20,687 22,746
Prepaid income taxes 8,360 10,737
Current assets of discontinued operations 4,656 15,340
Prepaid expenses and other current assets 9,499 9,822
-------- --------
Total current assets 153,354 176,282
Investments of deferred compensation plans
held in trust 19,610 19,163
Other investments 1,445 1,445
Note receivable 12,500 12,500
Properties and equipment, at cost less
accumulated depreciation 59,432 53,909
Identifiable intangible assets less
accumulated amortization 74,896 24,392
Goodwill 437,738 450,988
Noncurrent assets of discontinued operations 681 10,309
Other assets 22,571 26,093
-------- --------
Total Assets $782,227 $775,081
======== ========
Liabilities
Current liabilities
Accounts payable $ 39,899 $ 42,315
Current portion of long-term debt 1,176 5,466
Income taxes 6,922 5,445
Accrued insurance 27,392 19,929
Accrued salaries and wages 24,000 20,107
Current liabilities of discontinued
operations 7,605 22,574
Other current liabilities 36,284 35,403
-------- --------
Total current liabilities 143,278 151,239
Deferred income taxes 17,630 1,791
Other long-term debt 234,541 289,607
Deferred compensation liabilities 19,555 19,161
Noncurrent liabilities of discontinued
operations 779 568
Other liabilities 7,456 8,129
-------- --------
Total Liabilities 423,239 470,495
-------- --------
Stockholders' Equity
Capital stock 27,897 13,406
Paid-in capital 222,160 207,917
Retained earnings 155,484 118,248
Treasury stock, at cost (44,572) (32,702)
Unearned compensation (3,772) (4,081)
Deferred compensation payable in Company
stock 2,333 2,337
Notes receivable for shares sold (542) (539)
-------- --------
Total Stockholders' Equity 358,988 304,586
-------- --------
Total Liabilities and
Stockholders' Equity $782,227 $775,081
======== ========
Book Value Per Share $ 13.99 $ 12.24 (dd)
======== ========
(cc) Reclassified for operations discontinued in 2004.
(dd) Adjusted for 2-for-1 stock split in May 2005.
CHEMED CORPORATION AND SUBSIDIARY COMPANIES
CONSOLIDATED STATEMENT OF CASH FLOWS
(in thousands)(unaudited)
Six Months Ended
June 30,
---------------------
2005 2004 (cc)
---------- ----------
Cash Flows from Operating Activities
Net income/(loss) $ 17,001 $ 1,208
Adjustments to reconcile net income/(loss) to
net cash provided/(used) by operating
activities:
Depreciation and amortization 10,271 8,716
Write-off of unamortized debt issuance costs 2,871 -
Provision for deferred income taxes (2,206) 50
Provision for uncollectible accounts
receivable 3,343 2,932
Noncash long-term incentive compensation 2,574 4,988
Amortization of debt issuance costs 962 782
Discontinued operations 2,015 (137)
Equity in loss of affiliate - 4,105
Changes in operating assets and liabilities,
excluding amounts acquired in business
combinations:
Decrease/(increase) in accounts
receivable (23,653) 27
Increase in inventories (290) (407)
Decrease in prepaid expenses and
other current assets 343 13,435
Decrease in accounts payable and other
current liabilities (2,673) (17,345)
Increase in income taxes 7,859 4,895
Decrease/(increase) in other assets (1,328) 4,495
Increase in other liabilities 390 631
Noncash expense of internally financed ESOPs 572 947
Other sources/(uses) 676 (512)
--------- ---------
Net cash provided by continuing operations 18,727 28,810
Net cash provided/(used) by discontinued
operations (1,559) 3,651
--------- ---------
Net cash provided by operating activities 17,168 32,461
--------- ---------
Cash Flows from Investing Activities
Capital expenditures (11,455) (7,512)
Business combinations, net of cash acquired (5,495) (327,427)
Net uses from discontinued operations (5,478) (1,082)
Proceeds from sales of property and equipment 96 300
Return of merger deposit - 10,000
Other uses (107) (92)
--------- ---------
Net cash used by investing activities (22,439) (325,813)
--------- ---------
Cash Flows from Financing Activities
Repayment of long-term debt (140,978) (93,434)
Proceeds from issuance of long-term debt 85,000 295,000
Increase in cash overdraft payable 7,347 9,541
Issuance of capital stock, net of costs 8,766 97,054
Debt issuance costs (1,755) (13,837)
Dividends paid (3,060) (2,707)
Purchases of treasury stock (3,574) (2,228)
Net increase in revolving line of credit - -
Repayment of stock subscription note receivable - 8,053
Redemption of convertible trust preferred
securities - (2,736)
Other uses (53) (23)
--------- ---------
Net cash provided/(used) by financing
activities (48,307) 294,683
--------- ---------
Increase/(decrease) in Cash and Cash Equivalents (53,578) 1,331
Cash and cash equivalents at beginning of year 71,448 50,688
--------- ---------
Cash and cash equivalents at end of period $ 17,870 $ 52,019
========= =========
(cc) Reclassified for operations discontinued in December 2004.
CHEMED CORPORATION AND SUBSIDIARY COMPANIES
CONSOLIDATING STATEMENT OF OPERATIONS
FOR THE THREE MONTHS ENDED JUNE 30, 2005 AND 2004
(in thousands)(unaudited)
Chemed
VITAS Roto-Rooter Corporate Consolidated
--------- ----------- --------- ------------
2005
- -------------------------
Service revenues and
sales $153,748 $ 72,561 $ - $226,309
-------- -------- -------- --------
Cost of services provided
and goods sold 120,854 40,266 - 161,120
Selling, general and
administrative
expenses (a) 13,590 21,043 2,169 36,802
Depreciation 1,770 2,086 72 3,928
Amortization 984 23 224 1,231
Other expenses (b) 588 304 274 1,166
-------- -------- -------- --------
Total costs and
expenses 137,786 63,722 2,739 204,247
-------- -------- -------- --------
Income/(loss) from
operations 15,962 8,839 (2,739) 22,062
Interest expense (33) (97) (4,909) (5,039)
Intercompany interest
income/(expense) 681 516 (1,197) -
Other income--net 14 146 440 600
-------- -------- -------- --------
Income/(loss) before
income taxes 16,624 9,404 (8,405) 17,623
Income taxes (6,475) (3,728) 3,691 (6,512)
-------- -------- -------- --------
Income/(loss) from
continuing operations 10,149 5,676 (4,714) 11,111
Discontinued operations - - (2,226) (2,226)
-------- -------- -------- --------
Net income/(loss) $ 10,149 $ 5,676 $ (6,940) $ 8,885
======== ======== ======== ========
2004
- -------------------------
Service revenues and
sales $130,240 $ 68,895 $ - $199,135
-------- -------- -------- --------
Cost of services provided
and goods sold 101,790 38,280 - 140,070
Selling, general and
administrative expenses 12,319 19,932 2,225 34,476
Depreciation 1,861 2,174 62 4,097
Amortization 1,010 66 21 1,097
Other expenses (b) - - (1,368) (1,368)
-------- -------- -------- --------
Total costs and
expenses 116,980 60,452 940 178,372
-------- -------- -------- --------
Income/(loss) from
operations 13,260 8,443 (940) 20,763
Interest expense (30) (33) (6,141) (6,204)
Intercompany interest
income/(expense) 131 189 (320) -
Other income--net 45 (132) 236 149
-------- -------- -------- --------
Income/(loss) before
income taxes 13,406 8,467 (7,165) 14,708
Income taxes (5,499) (3,317) 2,435 (6,381)
-------- -------- -------- --------
Income/(loss) from
continuing operations 7,907 5,150 (4,730) 8,327
Discontinued operations - - (9) (9)
-------- -------- -------- --------
Net income/(loss) $ 7,907 $ 5,150 $ (4,739) $ 8,318
======== ======== ======== ========
The "Footnotes to Financial Statements" are integral parts of this
financial information.
CHEMED CORPORATION AND SUBSIDIARY COMPANIES
CONSOLIDATING STATEMENT OF OPERATIONS
FOR THE SIX MONTHS ENDED JUNE 30, 2005 AND 2004
(in thousands)(unaudited)
Chemed
VITAS Roto-Rooter Corporate Consolidated
--------- ----------- --------- ------------
2005
- -------------------------
Service revenues and
sales $299,738 $145,208 $ - $444,946
-------- -------- -------- --------
Cost of services provided
and goods sold (c) 236,074 77,998 - 314,072
Selling, general and
administrative
expenses (a) 26,714 42,193 4,490 73,397
Depreciation 3,555 4,148 145 7,848
Amortization 1,979 49 395 2,423
Other expenses (b) 881 552 1,057 2,490
-------- -------- -------- --------
Total costs and
expenses 269,203 124,940 6,087 400,230
-------- -------- -------- --------
Income/(loss) from
operations 30,535 20,268 (6,087) 44,716
Interest expense (71) (279) (10,524) (10,874)
Intercompany interest
income/(expense) 1,190 940 (2,130) -
Loss on extinguishment of
debt (d) - - (3,971) (3,971)
Other income--net 122 442 763 1,327
-------- -------- -------- --------
Income/(loss) before
income taxes 31,776 21,371 (21,949) 31,198
Income taxes (12,258) (8,550) 8,626 (12,182)
-------- -------- -------- --------
Income/(loss) from
continuing operations 19,518 12,821 (13,323) 19,016
Discontinued operations - - (2,015) (2,015)
-------- -------- -------- --------
Net income/(loss) $ 19,518 $ 12,821 $(15,338) $ 17,001
======== ======== ======== ========
2004
- -------------------------
Service revenues and
sales $181,352 $138,123 $ - $319,475
-------- -------- -------- --------
Cost of services provided
and goods sold 142,276 76,643 - 218,919
Selling, general and
administrative expenses 17,308 40,879 4,501 62,688
Depreciation 2,609 4,420 129 7,158
Amortization 1,412 125 21 1,558
Other expenses (b) - 1,558 5,857 7,415
-------- -------- -------- --------
Total costs and
expenses 163,605 123,625 10,508 297,738
-------- -------- -------- --------
Income/(loss) from
operations 17,747 14,498 (10,508) 21,737
Interest expense (58) (59) (8,987) (9,104)
Intercompany interest
income/(expense) 131 373 (504) -
Loss on extinguishment of
debt (d) - - (3,330) (3,330)
Other income--net 76 686 866 1,628
-------- -------- -------- --------
Income/(loss) before
income taxes 17,896 15,498 (22,463) 10,931
Income taxes (7,392) (6,111) 7,748 (5,755)
Equity in loss of
VITAS (e) - - (4,105) (4,105)
-------- -------- -------- --------
Income/(loss) from
continuing operations 10,504 9,387 (18,820) 1,071
Discontinued operations - - 137 137
-------- -------- -------- --------
Net income/(loss) $ 10,504 $ 9,387 $(18,683) $ 1,208
======== ======== ======== ========
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, 2005 AND 2004
(in thousands)(unaudited)
Chemed
VITAS Roto-Rooter Corporate Consolidated
-------- ----------- --------- ------------
2005
- ---------------------------
Net income/(loss) $10,149 $ 5,676 $(6,940) $ 8,885
Add/(deduct):
Discontinued operations - - 2,226 2,226
Interest expense 33 97 4,909 5,039
Income taxes 6,475 3,728 (3,691) 6,512
Depreciation 1,770 2,086 72 3,928
Amortization 984 23 224 1,231
------- ------- ------- -------
EBITDA 19,411 11,610 (3,200) 27,821
Add/(deduct):
Long-term incentive
compensation 588 304 945 1,837
Legal expenses of OIG
investigation 254 - - 254
VITAS transaction
expense adjustment (f) - - (671) (671)
Advertising cost
adjustment (g) - (76) - (76)
Interest income (33) (47) (182) (262)
Intercompany interest
income/(expense) (681) (516) 1,197 -
------- ------- ------- -------
Adjusted EBITDA $19,539 $11,275 $(1,911) $28,903
======= ======= ======= =======
2004
- ---------------------------
Net income/(loss) $ 7,907 $ 5,150 $(4,739) $ 8,318
Add/(deduct):
Discontinued operations - - 9 9
Interest expense 30 33 6,141 6,204
Income taxes 5,499 3,317 (2,435) 6,381
Depreciation 1,861 2,174 62 4,097
Amortization 1,010 66 21 1,097
------- ------- ------- -------
EBITDA 16,307 10,740 (941) 26,106
Add/(deduct):
VITAS transaction
expense adjustment (f) - - (1,368) (1,368)
Advertising cost
adjustment (g) - (273) - (273)
Interest income (65) (26) (395) (486)
Intercompany interest
income/(expense) (131) (189) 320 -
------- ------- ------- -------
Adjusted EBITDA $16,111 $10,252 $(2,384) $23,979
======= ======= ======= =======
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, 2005 AND 2004
(in thousands)(unaudited)
Chemed
VITAS Roto-Rooter Corporate Consolidated
-------- ----------- --------- ------------
2005
- ---------------------------
Net income/(loss) $19,518 $12,821 $(15,338) $17,001
Add/(deduct):
Discontinued operations - - 2,015 2,015
Interest expense 71 279 10,524 10,874
Income taxes 12,258 8,550 (8,626) 12,182
Depreciation 3,555 4,148 145 7,848
Amortization 1,979 49 395 2,423
------- ------- -------- -------
EBITDA 37,381 25,847 (10,885) 52,343
Add/(deduct):
Long-term incentive
compensation (h) 881 552 1,728 3,161
Prior-period insurance
adjustment - (1,663) - (1,663)
Legal expenses of OIG
investigation 254 - - 254
VITAS transaction
expense adjustment (f) - - (671) (671)
Advertising cost
adjustment (g) - (629) - (629)
Interest income (159) (88) (665) (912)
Intercompany interest
income/(expense) (1,190) (940) 2,130 -
Loss on extinguishment
of debt - - 3,971 3,971
------- ------- -------- -------
Adjusted EBITDA $37,167 $23,079 $ (4,392) $55,854
======= ======= ======== =======
2004
- ---------------------------
Net income/(loss) $10,504 $ 9,387 $(18,683) $ 1,208
Add/(deduct):
Discontinued operations - - (137) (137)
Interest expense 58 59 8,987 9,104
Income taxes 7,392 6,111 (7,748) 5,755
Depreciation 2,609 4,420 129 7,158
Amortization 1,412 125 21 1,558
------- ------- -------- -------
EBITDA 21,975 20,102 (17,431) 24,646
Add/(deduct):
Long-term incentive
compensation - 1,558 7,225 8,783
VITAS transaction
expense adjustment (f) - - (1,368) (1,368)
Advertising cost
adjustment (g) - (466) - (466)
Interest income (96) (64) (834) (994)
Intercompany interest
income/(expense) (131) (373) 504 -
Equity in loss of VITAS - - 4,105 4,105
Loss on extinguishment
of debt - - 3,330 3,330
------- ------- -------- -------
Adjusted EBITDA $21,748 $20,757 $ (4,469) $38,036
======= ======= ======== =======
The "Footnotes to Financial Statements" are integral parts of this
financial information.
CHEMED CORPORATION AND SUBSIDIARY COMPANIES
RECONCILIATION OF NET INCOME TO ADJUSTED PRO FORMA INCOME FROM
CONTINUING OPERATIONS
FOR THE THREE AND SIX MONTHS ENDED JUNE 30, 2005 AND 2004
(in thousands, except per share data)(unaudited)
Three Months Ended Six Months Ended
June 30, June 30,
----------------- -----------------
2005 2004 2005 2004
-------- -------- -------- --------
Net income as reported $ 8,885 $ 8,318 $17,001 $ 1,208
Add/(deduct):
Pro forma VITAS net income
contribution for the period (i) - 221 - 3,306
Pro forma financing costs
related to acquisition of
VITAS (j) - - - (2,211)
Pro forma elimination of VITAS
transaction expense
adjustment (f) - (821) - (821)
Pro forma elimination of equity
in loss of VITAS (k) - - - 4,105
------- ------- ------- -------
Pro forma net income 8,885 7,718 17,001 5,587
Add/(deduct):
Discontinued operations 2,226 9 2,015 (137)
Aftertax prior-period insurance
adjustment - - (1,014) -
Aftertax cost of long-term
incentive compensation (h) 1,152 - 1,984 5,723
Aftertax cost of legal expenses
of OIG investigation 160 - 160 -
Aftertax VITAS transaction
expense adjustment (f) (671) - (671) -
Aftertax cost of loss on
extinguishment of debt - - 2,523 2,164
------- ------- ------- -------
Adjusted pro forma income from
continuing operations $11,752 $ 7,727 $21,998 $13,337
======= ======= ======= =======
Earnings Per Share As Reported
Net income $ 0.35 $ 0.34 $ 0.67 $ 0.05
======= ======= ======= =======
Average number of shares
outstanding 25,489 24,650 25,319 23,238
======= ======= ======= =======
Diluted Earnings Per Share As
Reported
Net income $ 0.34 $ 0.33 $ 0.65 $ 0.05
======= ======= ======= =======
Average number of shares
outstanding 26,214 25,354 26,059 23,696
======= ======= ======= =======
Adjusted Pro Forma Earnings Per Share
Income from continuing
operations $ 0.46 $ 0.31 $ 0.87 $ 0.55
======= ======= ======= =======
Average number of shares
outstanding 25,489 24,650 25,319 24,424
======= ======= ======= =======
Adjusted Pro Forma Diluted
Earnings Per Share
Income from continuing
operations $ 0.45 $ 0.30 $ 0.84 $ 0.54
======= ======= ======= =======
Average number of shares
outstanding 26,214 25,354 26,059 24,882
======= ======= ======= =======
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 JUNE 30, 2005 AND 2004
(in thousands, except per share data) (unaudited)
Chemed
VITAS Roto-Rooter Corporate Consolidated
--------- ----------- --------- ------------
2005
- --------------------------
Service revenues and
sales $153,748 $72,561 $ - $226,309
-------- ------- ------- --------
Cost of services provided
and goods sold 120,854 40,266 - 161,120
Selling, general and
administrative
expenses (a) 13,590 21,043 2,169 36,802
Depreciation 1,770 2,086 72 3,928
Amortization 984 23 224 1,231
Other expenses (b) 588 304 274 1,166
-------- ------- ------- --------
Total costs and
expenses 137,786 63,722 2,739 204,247
-------- ------- ------- --------
Income/(loss) from
operations 15,962 8,839 (2,739) 22,062
Interest expense (33) (97) (4,909) (5,039)
Intercompany interest
income/(expense) 681 516 (1,197) -
Other income--net 14 146 440 600
-------- ------- ------- --------
Income/(loss) before
income taxes 16,624 9,404 (8,405) 17,623
Income taxes (6,475) (3,728) 3,691 (6,512)
-------- ------- ------- --------
Income/(loss) from
continuing operations 10,149 5,676 (4,714) 11,111
Discontinued operations - - (2,226) (2,226)
-------- ------- ------- --------
Net income/(loss) $ 10,149 $ 5,676 $(6,940) $ 8,885
======== ======= ======= ========
Earnings Per Share
Continuing operations $ 0.44
========
Net income $ 0.35
========
Average number of
shares outstanding 25,489
========
Diluted Earnings Per Share
Continuing operations $ 0.42
========
Net income $ 0.34
========
Average number of
shares outstanding 26,214
========
2004 (l)
- --------------------------
Service revenues and
sales $130,240 $68,895 $ - $199,135
-------- ------- ------- --------
Cost of services provided
and goods sold 101,790 38,280 - 140,070
Selling, general and
administrative expenses 12,319 19,932 2,225 34,476
Depreciation 1,270 2,174 62 3,506
Amortization 1,232 66 21 1,319
-------- ------- ------- --------
Total costs and
expenses 116,611 60,452 2,308 179,371
-------- ------- ------- --------
Income/(loss) from
operations 13,629 8,443 (2,308) 19,764
Interest expense (30) (33) (6,141) (6,204)
Intercompany interest
income/(expense) 131 189 (320) -
Other income--net 45 (132) 236 149
-------- ------- ------- --------
Income/(loss) before
income taxes 13,775 8,467 (8,533) 13,709
Income taxes (5,647) (3,317) 2,982 (5,982)
-------- ------- ------- --------
Income/(loss) from
continuing operations 8,128 5,150 (5,551) 7,727
Discontinued operations - - (9) (9)
-------- ------- ------- --------
Net income/(loss) $ 8,128 $ 5,150 $(5,560) $ 7,718
======== ======= ======= ========
Earnings Per Share
Continuing operations $ 0.31
========
Net income $ 0.31
========
Average number of
shares outstanding 24,650
========
Diluted Earnings Per Share
Continuing operations $ 0.30
========
Net income $ 0.30
========
Average number of
shares outstanding 25,354
========
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 SIX MONTHS ENDED JUNE 30, 2005 AND 2004
(in thousands, except per share data) (unaudited)
Chemed
VITAS Roto-Rooter Corporate Consolidated
--------- ----------- --------- ------------
2005
- --------------------------
Service revenues and
sales $299,738 $145,208 $ - $444,946
-------- -------- -------- --------
Cost of services provided
and goods sold (c) 236,074 77,998 - 314,072
Selling, general and
administrative
expenses (a) 26,714 42,193 4,490 73,397
Depreciation 3,555 4,148 145 7,848
Amortization 1,979 49 395 2,423
Other expenses (b) 881 552 1,057 2,490
-------- -------- -------- --------
Total costs and
expenses 269,203 124,940 6,087 400,230
-------- -------- -------- --------
Income/(loss) from
operations 30,535 20,268 (6,087) 44,716
Interest expense (71) (279) (10,524) (10,874)
Intercompany interest
income/(expense) 1,190 940 (2,130) -
Loss on extinguishment of
debt (d) - - (3,971) (3,971)
Other income--net 122 442 763 1,327
-------- -------- -------- --------
Income/(loss) before
income taxes 31,776 21,371 (21,949) 31,198
Income taxes (12,258) (8,550) 8,626 (12,182)
-------- -------- -------- --------
Income/(loss) from
continuing operations 19,518 12,821 (13,323) 19,016
Discontinued operations - - (2,015) (2,015)
-------- -------- -------- --------
Net income/(loss) $ 19,518 $ 12,821 $(15,338) $ 17,001
======== ======== ======== ========
Earnings Per Share
Continuing operations $ 0.75
========
Net income $ 0.67
========
Average number of
shares outstanding 25,319
========
Diluted Earnings Per Share
Continuing operations $ 0.73
========
Net income $ 0.65
========
Average number of
shares outstanding 26,059
========
2004 (l)
- --------------------------
Service revenues and
sales $254,222 $138,123 $ - $392,345
-------- -------- -------- --------
Cost of services provided
and goods sold 201,124 76,643 - 277,767
Selling, general and
administrative expenses 25,633 40,879 4,362 70,874
Depreciation 2,252 4,420 129 6,801
Amortization 2,327 125 21 2,473
Other expenses (b) - 1,558 7,225 8,783
-------- -------- -------- --------
Total costs and
expenses 231,336 123,625 11,737 366,698
-------- -------- -------- --------
Income/(loss) from
operations 22,886 14,498 (11,737) 25,647
Interest expense (58) (59) (12,389) (12,506)
Intercompany interest
income/(expense) 131 373 (504) -
Loss on extinguishment of
debt (d) - - (3,330) (3,330)
Other income--net 117 686 866 1,669
-------- -------- -------- --------
Income/(loss) before
income taxes 23,076 15,498 (27,094) 11,480
Income taxes (9,348) (6,111) 9,429 (6,030)
-------- -------- -------- --------
Income/(loss) from
continuing operations 13,728 9,387 (17,665) 5,450
Discontinued operations - - 137 137
-------- -------- -------- --------
Net income/(loss) $ 13,728 $ 9,387 $(17,528) $ 5,587
======== ======== ======== ========
Earnings Per Share
Continuing operations $ 0.22
========
Net income $ 0.23
========
Average number of
shares outstanding 24,424
========
Diluted Earnings Per Share
Continuing operations $ 0.22
========
Net income $ 0.22
========
Average number of
shares outstanding 24,882
========
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 JUNE 30, 2005 AND 2004
(in thousands)(unaudited)
Roto- Chemed
VITAS Rooter Corporate Consolidated
-------- ---------- --------- ------------
2005
- ----------------------------
Net income/(loss) $10,149 $ 5,676 $(6,940) $ 8,885
Add/(deduct):
Discontinued operations - - 2,226 2,226
Interest expense 33 97 4,909 5,039
Income taxes 6,475 3,728 (3,691) 6,512
Depreciation 1,770 2,086 72 3,928
Amortization 984 23 224 1,231
------- ------- ------- -------
EBITDA 19,411 11,610 (3,200) 27,821
Add/(deduct):
Long-term incentive
compensation 588 304 945 1,837
Legal expenses of OIG
investigation 254 - - 254
VITAS transaction
expense adjustment (f) - - (671) (671)
Advertising cost
adjustment (g) - (76) - (76)
Interest income (33) (47) (182) (262)
Intercompany interest
income/(expense) (681) (516) 1,197 -
------- ------- ------- -------
Adjusted EBITDA $19,539 $11,275 $(1,911) $28,903
======= ======= ======= =======
2004 (l)
- ----------------------------
Pro forma net income/(loss)$ 8,128 $ 5,150 $ (5,560) $ 7,718
Add/(deduct):
Discontinued operations - - 9 9
Interest expense 30 33 6,141 6,204
Income taxes 5,647 3,317 (2,982) 5,982
Depreciation 1,270 2,174 62 3,506
Amortization 1,232 66 21 1,319
------- ------- ------- -------
Pro forma EBITDA 16,307 10,740 (2,309) 24,738
Add/(deduct):
Advertising cost
adjustment (g) - (273) - (273)
Interest income (65) (26) (395) (486)
Intercompany interest
income/(expense) (131) (189) 320 -
------- ------- ------- -------
Pro forma adjusted
EBITDA $16,111 $10,252 $(2,384) $23,979
======= ======= ======= =======
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 SIX MONTHS ENDED JUNE 30, 2005 AND 2004
(in thousands)(unaudited)
Roto- Chemed
VITAS Rooter Corporate Consolidated
-------- ---------- --------- ------------
2005
- ----------------------------
Net income/(loss) $19,518 $12,821 $(15,338) $17,001
Add/(deduct):
Discontinued operations - - 2,015 2,015
Interest expense 71 279 10,524 10,874
Income taxes 12,258 8,550 (8,626) 12,182
Depreciation 3,555 4,148 145 7,848
Amortization 1,979 49 395 2,423
------- ------- -------- -------
EBITDA 37,381 25,847 (10,885) 52,343
Add/(deduct):
Long-term incentive
compensation (h) 881 552 1,728 3,161
Prior-period insurance
adjustment - (1,663) - (1,663)
Legal expenses of OIG
investigation 254 - - 254
VITAS transaction
expense adjustment (f) - - (671) (671)
Advertising cost
adjustment (g) - (629) - (629)
Interest income (159) (88) (665) (912)
Intercompany interest
income/(expense) (1,190) (940) 2,130 -
Loss on extinguishment
of debt - - 3,971 3,971
------- ------- -------- -------
Adjusted EBITDA $37,167 $23,079 $ (4,392) $55,854
======= ======= ======== =======
2004 (l)
- ----------------------------
Pro forma net income/(loss)$13,728 $ 9,387 $(17,528) $ 5,587
Add/(deduct):
Discontinued operations - - (137) (137)
Interest expense 58 59 12,389 12,506
Income taxes 9,348 6,111 (9,429) 6,030
Depreciation 2,252 4,420 129 6,801
Amortization 2,327 125 21 2,473
------- ------- -------- -------
Pro forma EBITDA 27,713 20,102 (14,555) 33,260
Add/(deduct):
Long-term incentive
compensation - 1,558 7,225 8,783
Advertising cost
adjustment (g) - (466) - (466)
Interest income (137) (64) (834) (1,035)
Intercompany interest
income/(expense) (131) (373) 504 -
Loss on extinguishment
of debt - - 3,330 3,330
------- ------- -------- -------
Pro forma adjusted
EBITDA $27,445 $20,757 $ (4,330) $43,872
======= ======= ======== =======
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, 2005 AND 2004
(unaudited)
(a) For the second quarter and six months ended June 30, 2005,
amounts for VITAS include $254,000 ($160,000 aftertax) for legal
expenses incurred in connection with the Office of Inspector
General ("OIG") investigation.
(b) Other expenses include the following (in thousands):
Three Months Six Months
Ended June 30, Ended June 30,
---------------- ----------------
2005 2004 2005 2004
Pretax cost/(benefit): ------- -------- ------- --------
Long-term incentive plan
payout $1,837 $ - $2,946 $ 8,783
Adjustment of transaction-
related expenses of the
VITAS acquisition (671) (1,368) (671) (1,368)
Cost of accelerating vesting
of stock options - - 215 -
------ ------- ------ -------
Total other expenses $1,166 $(1,368) $2,490 $ 7,415
====== ======= ====== =======
Aftertax cost/(benefit):
Long-term incentive plan
payout $1,152 $ - $1,847 $ 5,723
Adjustment of transaction-
related expenses of the
VITAS acquisition (671) (821) (671) (821)
Cost of accelerating vesting
of stock options - - 137 -
------ ------- ------ -------
Total other expenses,
net of income taxes $ 481 $ (821) $1,313 $ 4,902
====== ======= ====== =======
(c) For the six months ended June 30, 2005, amount for Roto-Rooter
includes a favorable adjustment to casualty insurance related to
prior periods' experience of $1,663,000 ($1,014,000 aftertax).
(d) For the six months ended June 30, 2005, amounts include 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 six months
ended June 30, 2004, amount represents the prepayment penalty
incurred on the early extinguishment of the Company's debt
($2,164,000 aftertax).
(e) 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.
(f) Amounts represent favorable adjustments to transaction expenses
related to the acquisition of VITAS.
(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 second quarters of 2005 and 2004,
GAAP advertising expense for Roto-Rooter totaled $3,760,000 and
$3,442,000, respectively. If the expense of the telephone
directories were spread over the periods they are in
circulation, advertising expense for the second quarters of 2005
and 2004 would total $3,836,000 and $3,715,000, respectively.
For the six months ended June 30, 2005 and 2004, GAAP
advertising expense for Roto-Rooter totaled $7,011,000 and
$6,817,000, respectively. If the expense of the telephone
directories were spread over the periods they are in
circulation, advertising expense for the six months ended
June 30, 2005 and 2004, would total $7,640,000 and $7,283,000,
respectively.
(h) For the six months ended June 30, 2005, amounts include costs
related to accelerating the vesting of stock options in addition
to payouts under the Company's LTIP.
(i) Amounts represent the additional net income VITAS would
contribute assuming the acquisition were completed on January 1
of the respective years (excluding Chemed management fees).
(j) Amount represents the additional financing costs, including a
loss on early extinguishment of debt in 2004, that would have
been incurred assuming the financing were completed on
January 1, 2004.
(k) Amount represents the impact of eliminating the Company's prior
investments in VITAS, assuming the acquisition of VITAS were
completed on January 1, 2004.
(l) Pro forma amounts for 2004 for VITAS and Corporate assume 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.
CONTACT: Chemed Corporation, Cincinnati
David P. Williams, 513-762-6901