Exhibit 99
Chemed Reports First-Quarter 2007 Results
-- Full-Year 2007 Guidance Increased
-- Board Authorizes an Additional $150 Million Share Buy-Back
Program
CINCINNATI--(BUSINESS WIRE)--April 30, 2007--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, 2007, versus the comparable
prior-year period, as follows:
Consolidated operating results from Continuing Operations:
-- Revenue increased 10.9% to $270 million
-- Diluted EPS from Continuing Operations of $.62
-- Adjusted diluted EPS from Continuing Operations of $.73
VITAS segment operating results from Continuing Operations:
-- Net Patient Revenue of $184 million, up 10.8%
-- Average Daily Census (ADC) of 11,309, up 9.9%
-- Admissions of 14,110, an increase of 2.4%
-- Average Length of Stay in the quarter of 76.9 days
-- Net income of $15.0 million
-- Adjusted EBITDA of $26.0 million
Roto-Rooter segment operating results:
-- Revenue of $86 million, an increase of 10.9%
-- Job count of 211,022, up 1.9%
-- Net Income of $9.5 million
-- Adjusted EBITDA of $16.3 million
VITAS
VITAS generated a record 14,110 in admissions in the quarter,
which represents an increase of 2.4% over the prior year and a 6.2%
increase sequentially. ADC in the quarter increased 9.9% to 11,309.
VITAS' Average Length of Stay (ALOS) for patients discharged in the
quarter was 76.9 days and median length of stay (MLOS) was 13 days.
This compares to an ALOS of 75.7 days in the fourth quarter of 2006
and 72.4 days in the first quarter of 2006.
VITAS generated net revenue of $184 million in the first quarter
of 2007, which was an increase of 10.8% over the prior-year period.
Net income from continuing operations for the first quarter was $15.0
million, an increase of 40%.
VITAS did not record any billing restrictions related to Medicare
Cap in the first quarter of 2007. In addition, approximately $472,000
of Medicare billing restrictions recorded in the fourth quarter of
2006 was reversed into revenue in the first quarter of 2007. As of
March 31, 2007, VITAS has not accrued any Medicare billing
restrictions for the 2007 cap year. The ability to eliminate these
Medicare billing restrictions is a result of improved admissions
metrics, improved MLOS and the continued combination of various
hospice programs that qualify to bill Medicare under a single provider
number.
Starting in 2006, VITAS merged several hospice programs and
eliminated the corresponding Medicare provider numbers in three
states. VITAS is in the process of eliminating one additional Medicare
provider number that is not currently in a cap situation. Once
completed, all of VITAS' hospice programs will have a cap cushion
greater than 10% on a trailing twelve-month basis, with the exception
of two programs. These two programs have a cap cushion between 5% and
10%. The same analysis through the first five months of the 2007 cap
year results in all of VITAS' Medicare provider numbers having a cap
cushion greater than 10% with the exception of one program. This
program has a cap cushion between 5% and 10%.
Gross margin in the quarter, excluding the reversal of $472,000 of
Medicare Cap, was 22.6%. This compares to 19.5% in the prior-year
quarter. The majority of this 310 basis point increase in margin is a
result of VITAS managing labor costs to more historical levels. In
addition, 80 basis points of this improvement is the result of certain
expenses that had been historically charged to cost of services and
are now expensed into central support.
Effective October 1, 2006, management realigned certain processes
and expenses related to hospice program support such as recruiting and
information technology. These processes and related expenses were
centralized effective the beginning of the fourth quarter of 2006 and
are now incurred and controlled at VITAS corporate and classified as
selling, general and administrative expenses. In the first quarter of
2006, approximately $1.3 million of this type of expense was
classified as cost of services. These expenses were charged to central
support in the first quarter of 2007.
Central support costs for VITAS, which are classified as selling,
general and administrative expenses in the Consolidating Statement of
Income, totaled $15.9 million, which is an increase of 20.3% over the
prior year and a decline of 3.2% sequentially. Adjusting for the
reclassification of expenses noted above, first-quarter 2007 central
support costs increased 9.4% over the prior year.
Roto-Rooter
Roto-Rooter's plumbing and drain cleaning business generated sales
of $86 million for the first quarter of 2007, 11% higher than the $78
million reported in the comparable prior-year quarter. Net income for
the quarter was $9.5 million, an increase of 32% over the prior year.
Adjusted EBITDA in the first quarter of 2007 totaled $16.3 million, an
increase of 28% over the first quarter of 2006 and equated to an
adjusted EBITDA margin of 18.9%, an increase of 251 basis points over
the prior-year period.
Job count in the first quarter of 2007 increased 1.9% over the
prior-year period. Commercial jobs decreased 3.6% and residential jobs
increased 4.5%. Commercial plumbing job count increased 0.2% and
commercial drain cleaning decreased 4.3% over the prior-year quarter.
Residential plumbing jobs increased 14.6% and residential drain
cleaning jobs expanded 0.7% when compared to the first quarter of
2006.
Roto-Rooter company-owned and operated territories are divided
into four regions. In 2006 all four regions struggled in various areas
of commercial business. As of the first quarter of 2007, only one
region is struggling commercially. This region accounts for over 100%
of the commercial job count decline and is the only region to post a
decline in residential job count during the quarter. Management is
focused on correcting the issues impacting this region and improving
both commercial and residential job count growth.
Guidance for 2007
VITAS is estimated to generate full-year revenue growth from
continuing operations, prior to Medicare Cap, of 10% to 12%, increased
admissions of 4% to 6%, increased ADC of 8% to 10% and adjusted EBITDA
margins, prior to Medicare Cap, of 13.0% to 14.5%. This guidance
assumes the hospice industry receives a full Medicare basket price
increase of 3.6% in the fourth quarter of 2007. Full-year 2007
Medicare contractual billing limitations are estimated at $3.8
million.
Roto-Rooter is estimated to generate an 8.5% to 9.5% increase in
revenue in 2007, job count growth between 0.5% and 1.5% and adjusted
EBITDA margin in the range of 18.5% to 19.5%.
On April 4, 2007, Chemed announced the conditional redemption of
its $150 million senior notes due February 2011. This redemption is
conditioned upon the completion of one or more financing transactions
prior to May 4, 2007. We anticipate completing a new Bank Credit
Facility to fund this redemption by May 3, 2007. Based upon
preliminary terms of this Bank Credit Facility, and assuming the
redemption noted above is completed, this refinancing is anticipated
to be accretive to 2007 earnings by $.08 per diluted share, or on an
annualized basis, $.12 per diluted share. This excludes any related
charge associated with the early extinguishment of debt.
The Company has purchased approximately $54 million of Chemed
stock since the announcement of its intention to repurchase stock was
made in 2006. At March 31, 2007, the remaining share repurchase
authorization totaled $13.6 million. Chemed's Board of Directors has
increased this stock repurchase authorization an additional $150
million, resulting in $163.6 million authorized for future Chemed
stock repurchase.
Based upon these factors, an effective tax rate of 38.5% and an
average full-year diluted share count of 25.9 million, our estimate is
that full-year 2007 earnings per diluted share from continuing
operations, excluding expense for stock options and other long-term
incentive compensation, gain on sale of building, early extinguishment
of debt or any other charges or credits not indicative of ongoing
operations, will be in the range of $2.85 to $3.05.
Conference Call
Chemed will host a conference call and webcast at 11 a.m., EST, on
Tuesday, May 1, 2007, to discuss the company's quarterly results and
provide an update on its business. The dial-in number for the
conference call is (800) 543-6405 for U.S. and Canadian participants
and
(617) 213-8897 for international participants. The participant
passcode is 49815399. 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 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 and will be available for one
week following the live call. The replay passcode is 38128620. An
archived webcast will also be available at www.chemed.com and will
remain available for 14 days following the live call.
Chemed Corporation operates in the healthcare field through its
VITAS Healthcare Corporation subsidiary. VITAS provides daily hospice
services to over 11,000 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 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 March 31,
-----------------------------
2007 2006 (bb)
-------------- --------------
Continuing Operations
Service revenues and sales (aa) $270,439 $243,921
-------------- --------------
Cost of services provided and goods
sold 188,247 176,035
Selling, general and administrative
expenses (aa) 48,070 38,454
Depreciation 4,715 4,132
Amortization 1,315 1,296
Other operating expense/(income) (1,138) -
-------------- --------------
Total costs and expenses 241,209 219,917
-------------- --------------
Income from operations 29,230 24,004
Interest expense (3,742) (5,345)
Loss on extinguishment of debt (aa) - (430)
Other income--net 869 1,495
-------------- --------------
Income before income taxes 26,357 19,724
Income taxes (10,136) (7,686)
-------------- --------------
Income from continuing operations 16,221 12,038
Discontinued Operations, Net of Income
Taxes - 177
-------------- --------------
Net Income $ 16,221 $ 12,215
============== ==============
Earnings Per Share (aa)
Income from continuing operations $ 0.63 $ 0.46
============== ==============
Net income $ 0.63 $ 0.47
============== ==============
Average number of shares outstanding 25,716 26,044
============== ==============
Diluted Earnings Per Share (aa)
Income from continuing operations $ 0.62 $ 0.45
============== ==============
Net income $ 0.62 $ 0.46
============== ==============
Average number of shares outstanding 26,162 26,723
============== ==============
- -----------------------------------------
(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,
-----------------------------
2007 2006
-------------- --------------
Selling, general and administrative
expenses
Long-term incentive compensation $ (5,447) $ -
Stock option expense (585) -
Expenses associated with OIG
investigation (66) (132)
Other 467 -
Other operating expenses/(income)
Gain on sale of property 1,138 -
Loss on extinguishment of debt - (430)
-------------- --------------
Pretax impact on earnings (4,493) (562)
Income tax benefit on the above 1,687 207
Discontinued operations - 177
-------------- --------------
Aftertax impact on earnings $ (2,806) $ (178)
============== ==============
(bb)Reclassified for operations discontinued in November 2006.
CHEMED CORPORATION AND SUBSIDIARY COMPANIES
CONSOLIDATED BALANCE SHEET
(in thousands, except per share data)(unaudited)
March 31,
--------------------
2007 2006(bb)
---------- ---------
Assets
Current assets
Cash and cash equivalents $ 30,137 $ 45,668
Accounts receivable less allowances 85,211 69,418
Inventories 6,752 6,724
Current deferred income taxes 21,595 27,775
Prepaid income taxes - 4,032
Current assets of discontinued operations - 3,557
Prepaid expenses and other current assets 9,110 8,867
---------- ---------
Total current assets 152,805 166,041
Investments of deferred compensation plans held
in trust 27,736 23,287
Other investments - 1,445
Note receivable 14,701 12,500
Properties and equipment, at cost less
accumulated depreciation 69,295 64,781
Identifiable intangible assets less accumulated
amortization 68,205 71,884
Goodwill 435,040 432,623
Noncurrent assets of discontinued operations - 7,571
Other assets 16,194 20,408
---------- ---------
Total Assets $ 783,976 $800,540
========== =========
Liabilities
Current liabilities
Accounts payable $ 55,272 $ 42,132
Current portion of long-term debt 164 207
Income taxes 9,410 5,224
Accrued insurance 39,889 38,639
Accrued compensation 29,110 25,175
Current liabilities of discontinued
operations - 3,578
Other current liabilities 26,653 39,991
---------- ---------
Total current liabilities 160,498 154,946
Deferred income taxes 24,970 26,053
Long-term debt 150,235 194,399
Deferred compensation liabilities 27,157 22,647
Noncurrent liabilities of discontinued
operations - 3
Other liabilities 5,382 3,986
---------- ---------
Total Liabilities 368,242 402,034
---------- ---------
Stockholders' Equity
Capital stock 29,036 28,667
Paid-in capital 260,641 244,101
Retained earnings 234,914 181,831
Treasury stock, at cost (111,293) (58,440)
Deferred compensation payable in Company stock 2,436 2,401
Notes receivable for shares sold - (54)
---------- ---------
Total Stockholders' Equity 415,734 398,506
---------- ---------
Total Liabilities and Stockholders'
Equity $ 783,976 $800,540
========== =========
Book Value Per Share $ 16.43 $ 15.23
========== =========
- --------------------------------------------------
(bb) Reclassified for operations discontinued in November 2006.
CHEMED CORPORATION AND SUBSIDIARY COMPANIES
CONSOLIDATED STATEMENT OF CASH FLOWS
(in thousands)(unaudited)
Three Months Ended
March 31,
-------------------
2007 2006 (bb)
--------- ---------
Cash Flows from Operating Activities
Net income $ 16,221 $ 12,215
Adjustments to reconcile net income to net cash
provided/(used) by operating activities:
Depreciation and amortization 6,030 5,428
Noncash long-term incentive compensation 4,719 -
Provision for uncollectible accounts
receivable 2,084 2,012
Amortization of debt issuance costs 455 444
Provision for deferred income taxes (345) (1,292)
Write-off of unamortized debt issuance costs - 430
Discontinued operations - (177)
Changes in operating assets and liabilities,
excluding amounts acquired in business
combinations:
Decrease in accounts receivable 5,275 19,638
Increase in inventories (174) (225)
Decrease in prepaid expenses and other
current assets 858 901
Decrease in accounts payable and other
current liabilities (9,091) (13,460)
Increase in income taxes 9,538 8,704
Increase in other assets (2,102) (1,917)
Increase in other liabilities 2,218 1,051
Excess tax benefit on share-based
compensation (611) (3,289)
Other uses (375) (49)
--------- ---------
Net cash provided by continuing operations 34,700 30,414
Net cash provided by discontinued
operations - 2,326
--------- ---------
Net cash provided by operating activities 34,700 32,740
--------- ---------
Cash Flows from Investing Activities
Capital expenditures (5,764) (3,852)
Net uses from the sale of discontinued operations (3,876) (1,684)
Proceeds from sales of property and equipment 2,975 65
Business combinations, net of cash acquired (62) (384)
Other uses (299) (305)
--------- ---------
Net cash used by investing activities (7,026) (6,160)
--------- ---------
Cash Flows from Financing Activities
Purchases of treasury stock (24,199) (2,318)
Increase in cash overdrafts payable (1,608) 786
Dividends paid (1,555) (1,572)
Excess tax benefit on share-based compensation 611 3,289
Repayment of long-term debt (141) (84,497)
Issuance of capital stock 130 2,360
Net increase in revolving line of credit - 44,000
Debt issuance costs - (150)
Other sources (49) 57
--------- ---------
Net cash used by financing activities (26,811) (38,045)
--------- ---------
Increase/(Decrease) in Cash and Cash Equivalents 863 (11,465)
Cash and cash equivalents at beginning of year 29,274 57,133
--------- ---------
Cash and cash equivalents at end of period 30,137 $ 45,668
========= =========
(bb) Reclassified for operations discontinued in November 2006.
CHEMED CORPORATION AND SUBSIDIARY COMPANIES
CONSOLIDATING STATEMENT OF INCOME
FOR THE THREE MONTHS ENDED MARCH 31, 2007 AND 2006
(in thousands)(unaudited)
Chemed
VITAS Roto-Rooter Corporate Consolidated
--------- ------------ ---------- -------------
2007
- -----------------------
Service revenues and
sales $184,049 $86,390 $ - $270,439
--------- ----------- ---------- -------------
Cost of services
provided and goods
sold 142,095 46,152 - 188,247
Selling, general and
administrative
expenses (a) 15,904 23,760 8,406 48,070
Depreciation 2,538 2,101 76 4,715
Amortization 996 15 304 1,315
Other operating
expense/(income) (a) - - (1,138) (1,138)
--------- ----------- ---------- -------------
Total costs and
expenses 161,533 72,028 7,648 241,209
--------- ----------- ---------- -------------
Income/(loss) from
operations 22,516 14,362 (7,648) 29,230
Interest expense (36) (83) (3,623) (3,742)
Intercompany interest
income/(expense) 1,712 1,156 (2,868) -
Other income--net (88) 172 785 869
--------- ----------- ---------- -------------
Income/(loss) before
income taxes 24,104 15,607 (13,354) 26,357
Income taxes (9,117) (6,121) 5,102 (10,136)
--------- ----------- ---------- -------------
Net income/(loss) $ 14,987 $ 9,486 $ (8,252) $ 16,221
========= =========== ========== =============
2006 (f)
- -----------------------
Service revenues and
sales $166,057 $77,864 $ - $243,921
--------- ----------- ---------- -------------
Cost of services
provided and goods
sold 133,596 42,439 - 176,035
Selling, general and
administrative
expenses 13,215 22,542 2,697 38,454
Depreciation 2,057 1,969 106 4,132
Amortization 984 20 292 1,296
--------- ----------- ---------- -------------
Total costs and
expenses 149,852 66,970 3,095 219,917
--------- ----------- ---------- -------------
Income/(loss) from
operations 16,205 10,894 (3,095) 24,004
Interest expense (31) (173) (5,141) (5,345)
Intercompany interest
income/(expense) 954 852 (1,806) -
Loss on extinguishment
of debt (b) - - (430) (430)
Other income--net 12 362 1,121 1,495
--------- ----------- ---------- -------------
Income/(loss) before
income taxes 17,140 11,935 (9,351) 19,724
Income taxes (6,460) (4,734) 3,508 (7,686)
--------- ----------- ---------- -------------
Income/(loss) from
continuing operations 10,680 7,201 (5,843) 12,038
Discontinued
operations, net of
income taxes 177 - - 177
--------- ----------- ---------- -------------
Net income/(loss) $ 10,857 $ 7,201 $ (5,843) $ 12,215
========= =========== ========== =============
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, 2007 AND 2006
(in thousands)(unaudited)
Chemed
VITAS Roto-Rooter Corporate Consolidated
-------- ------------ ---------- -------------
2007
- -----------------------
Net income/(loss) $14,987 $ 9,486 $(8,252) $16,221
Add/(deduct):
Interest expense 36 83 3,623 3,742
Income taxes 9,117 6,121 (5,102) 10,136
Depreciation 2,538 2,101 76 4,715
Amortization 996 15 304 1,315
--------- ----------- --------- -------------
EBITDA 27,674 17,806 (9,351) 36,129
Add/(deduct):
Long-term incentive
compensation - - 5,447 5,447
Gain on sale of
property - - (1,138) (1,138)
Legal expenses of OIG
investigation 66 - - 66
Stock option expense - - 585 585
Advertising cost
adjustment (c) - (297) - (297)
Interest income (13) (59) (695) (767)
Intercompany interest
income/(expense) (1,712) (1,156) 2,868 -
Other - - (467) (467)
--------- ----------- --------- -------------
Adjusted EBITDA $26,015 $16,294 $(2,751) $39,558
======== =========== ========= =============
2006 (f)
- -----------------------
Net income/(loss) $10,857 $ 7,201 $(5,843) $12,215
Add/(deduct):
Discontinued
operations, net of
income taxes (177) - - (177)
Interest expense 31 173 5,141 5,345
Income taxes 6,460 4,734 (3,508) 7,686
Depreciation 2,057 1,969 106 4,132
Amortization 984 20 292 1,296
--------- ----------- --------- -------------
EBITDA 20,212 14,097 (3,812) 30,497
Add/(deduct):
Legal expenses of OIG
Investigation 132 - - 132
Advertising cost
adjustment (c) - (494) - (494)
Interest income (41) (23) (908) (972)
Intercompany interest
income/(expense) (954) (852) 1,806 -
Loss on
extinguishment of
debt - - 430 430
--------- ----------- --------- -------------
Adjusted EBITDA $19,349 $12,728 $(2,484) $29,593
======== =========== ========= =============
The "Footnotes to Financial Statements" are integral parts of this
financial information.
CHEMED CORPORATION AND SUBSIDIARY COMPANIES
RECONCILIATION OF ADJUSTED NET INCOME
FOR THE THREE MONTHS ENDED MARCH 31, 2007 AND 2006
(in thousands, except per share data)(unaudited)
2007 2006 (f)
-------- --------
Net income/(loss) as reported $16,221 $12,215
Add/(deduct):
Discontinued operations, net of income taxes - (177)
Aftertax cost of long-term incentive compensation 3,414 -
Aftertax cost of legal expenses of OIG
investigation 41 82
Aftertax stock option expense 371 -
Aftertax gain on sale of property (724) -
Aftertax other (296) -
Aftertax cost of loss on extinguishment of debt - 273
-------- --------
Adjusted income from continuing operations $19,027 $12,393
======== ========
Earnings/(Loss) Per Share As Reported
Net income/(loss) $ 0.63 $ 0.47
======== ========
Average number of shares outstanding 25,716 26,044
======== ========
Diluted Earnings/(Loss) Per Share As Reported
Net income/(loss) $ 0.62 $ 0.46
======== ========
Average number of shares outstanding 26,162 26,723
======== ========
Adjusted Earnings Per Share
Income from continuing operations $ 0.74 $ 0.48
======== ========
Average number of shares outstanding 25,716 26,044
======== ========
Adjusted Diluted Earnings Per Share
Income from continuing operations $ 0.73 $ 0.46
======== ========
Average number of shares outstanding 26,162 26,723
======== ========
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 MONTHS ENDED MARCH 31, 2007 AND 2006
(unaudited)
2007 2006 (f)
--------- ---------
OPERATING STATISTICS
Net revenue ($000) (d)
Homecare $131,548 $113,232
Inpatient 23,462 23,016
Continuous care 28,567 29,809
--------- ---------
Total before Medicare cap allowance 183,577 $166,057
Medicare cap allowance 472 -
--------- ---------
Total $184,049 $166,057
========= =========
Net revenue as a percent of total before
Medicare cap allowance
Homecare 71.6 % 68.1 %
Inpatient 12.8 13.9
Continuous care 15.6 18.0
--------- ---------
Total before Medicare cap allowance 100.0 100.0
Medicare cap allowance 0.3 -
--------- ---------
Total 100.3 % 100.0 %
========= =========
Average daily census ("ADC") (days)
Homecare 6,786 5,931
Nursing home 3,574 3,359
--------- ---------
Routine homecare 10,360 9,290
Inpatient 426 430
Continuous care 523 571
--------- ---------
Total 11,309 10,291
========= =========
Total Admissions 14,110 13,773
Total Discharges 14,051 13,298
Average length of stay (days) 76.9 72.4
Median length of stay (days) 13.0 12.0
ADC by major diagnosis
Neurological 33.3 % 33.1 %
Cancer 19.7 20.5
Cardio 14.6 14.8
Respiratory 7.0 7.1
Other 25.4 24.5
--------- ---------
Total 100.0 % 100.0 %
========= =========
Admissions by major diagnosis
Neurological 18.9 % 20.5 %
Cancer 33.6 33.7
Cardio 13.3 13.8
Respiratory 7.8 7.9
Other 26.4 24.1
--------- ---------
Total 100.0 % 100.0 %
========= =========
Direct patient care margins (e)
Routine homecare 50.8 % 47.6 %
Inpatient 20.1 23.1
Continuous care 20.0 18.3
Homecare margin drivers (dollars per patient
day)
Labor costs $ 49.12 $ 51.32
Drug costs 8.18 7.38
Home medical equipment 5.75 5.54
Medical supplies 2.17 2.09
Inpatient margin drivers (dollars per patient
day)
Labor costs $ 252.42 $ 247.69
Continuous care margin drivers (dollars per
patient day)
Labor costs $ 464.54 $ 454.53
Bad debt expense as a percent of revenues 0.9 0.9 %
Accounts receivable -- days of revenue
outstanding 38.1 39.4
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, 2007 AND 2006
(unaudited)
(a)Included in the results of operations for the three months ended
March 31, 2007 are the following significant credits/(charges)
which may not be indicative of ongoing operations (in thousands):
VITAS Corporate Consolidated
------ ---------- -------------
Selling, general and administrative
expenses
Long-term incentive
compensation $ $(5,447) $(5,447)
Costs associated with OIG
investigation (66) - (66)
Stock option expense - (585) (585)
Other - 467 467
Other operating expenses/(income)
Gain on sale of property - 1,138 1,138
------ ---------- -------------
Pretax impact on earnings (66) (4,427) (4,493)
Income tax benefit/(charge) on the
above 25 1,662 1,687
------ ---------- -------------
Aftertax impact on
earnings $ (41) $(2,765) $(2,806)
====== ========== =============
(b)Included in the results of operations for the three months ended
March 31, 2006 are the following significant credits/(charges)
which may not be indicative of ongoing operations (in thousands):
VITAS Corporate Consolidated
------ ---------- -------------
Selling, general and administrative
expenses
Costs associated with OIG
investigation $(132) $ - $ (132)
Loss on extinguishment of debt - (430) (430)
------ ---------- -------------
Pretax impact on earnings (132) (430) (562)
Income tax benefit on the above 50 157 207
------ ---------- -------------
Aftertax impact on
earnings $ (82) $ (273) $ (355)
====== ========== =============
(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 first quarters of 2007 and 2006, GAAP
advertising expense for Roto-Rooter totaled $5,193,000 and
$4,424,000, respectively. If the expense of the telephone
directories were spread over the periods they are in circulation,
advertising expense for the first quarters of 2007 and 2006 would
total $5,490,000 and $4,918,000, respectively.
(d)VITAS has 6 large (greater than 450 ADC), 15 medium (greater than
200 but less than 450 ADC) and 21 small (less than 200 ADC)
hospice programs. As of March 31, 2007, there were no programs
with a Medicare Cap liability for the 2007 measurement period.
There were two programs with less than 10% cap cushion measured
for the twelve month period ending March 31, 2007.
(e)Amounts exclude indirect patient care and administrative costs, as
well as Medicare Cap billing limitation.
(f)Reclassified for operations discontinued in November 2006.
CONTACT: Chemed Corporation
David P. Williams, 513-762-6901