Delaware
|
31-0791746
|
(State or other jurisdiction of incorporation or
organization) |
(IRS Employer Identification No.)
|
255 E. Fifth Street, Suite 2600, Cincinnati, Ohio
|
45202
|
(Address of principal executive offices)
|
(Zip code)
|
(513) 762-6690
(Registrant’s telephone number, including area code)
|
Yes
|
☒
|
No
|
☐
|
Yes
|
☒
|
No
|
☐
|
Large accelerated filer
|
☒
|
Accelerated filer
|
☐
|
Non-accelerated filer
|
☐
|
Smaller reporting company
|
☐
|
Yes
|
☐
|
No
|
☒
|
Class
|
Amount
|
Date
|
||
Capital Stock $1 Par Value
|
16,223,927 Shares
|
September 30, 2016
|
Page No.
|
|
PART I. FINANCIAL INFORMATION:
|
|
3
|
|
4
|
|
5
|
|
6
|
|
15
|
|
31
|
|
31
|
|
PART II. OTHER INFORMATION
|
|
31
|
|
31
|
|
32
|
|
32
|
|
32
|
|
32
|
|
33
|
|
EX – 31.1
|
|
EX – 31.2
|
|
EX – 31.3
|
|
EX – 32.1
|
|
EX – 32.2
|
|
EX – 32.3
|
|
EX – 101.INS
|
|
EX – 101.SCH
|
|
EX – 101.CAL
|
|
EX – 101.DEF
|
|
EX – 101.LAB
|
|
EX – 101.PRE
|
Item 1. Financial Statements
|
||||||||
CHEMED CORPORATION AND SUBSIDIARY COMPANIES
|
||||||||
UNAUDITED CONSOLIDATED BALANCE SHEET
|
||||||||
(in thousands, except share and per share data)
|
||||||||
September 30, 2016
|
December 31, 2015
|
|||||||
ASSETS
|
||||||||
Current assets
|
||||||||
Cash and cash equivalents
|
$
|
21,285
|
$
|
14,727
|
||||
Accounts receivable less allowances of $14,340 (2015 - $13,244)
|
86,006
|
106,262
|
||||||
Inventories
|
6,101
|
6,314
|
||||||
Prepaid income taxes
|
5,069
|
10,653
|
||||||
Prepaid expenses
|
14,498
|
12,852
|
||||||
Total current assets
|
132,959
|
150,808
|
||||||
Investments of deferred compensation plans
|
55,158
|
49,481
|
||||||
Properties and equipment, at cost, less accumulated depreciation of $208,674 (2015 - $201,094)
|
119,994
|
117,370
|
||||||
Identifiable intangible assets less accumulated amortization of $33,141 (2015 - $32,866)
|
55,067
|
55,111
|
||||||
Goodwill
|
472,418
|
472,322
|
||||||
Other assets
|
6,880
|
7,233
|
||||||
Total Assets
|
$
|
842,476
|
$
|
852,325
|
||||
LIABILITIES
|
||||||||
Current liabilities
|
||||||||
Accounts payable
|
$
|
42,844
|
$
|
43,695
|
||||
Current portion of long-term debt
|
8,125
|
7,500
|
||||||
Accrued insurance
|
46,233
|
43,972
|
||||||
Accrued compensation
|
48,391
|
52,817
|
||||||
Accrued legal
|
1,495
|
1,233
|
||||||
Other current liabilities
|
20,369
|
22,119
|
||||||
Total current liabilities
|
167,457
|
171,336
|
||||||
Deferred income taxes
|
15,586
|
21,041
|
||||||
Long-term debt
|
102,500
|
83,750
|
||||||
Deferred compensation liabilities
|
54,455
|
49,467
|
||||||
Other liabilities
|
15,276
|
13,478
|
||||||
Total Liabilities
|
355,274
|
339,072
|
||||||
Commitments and contingencies (Note 11)
|
||||||||
STOCKHOLDERS' EQUITY
|
||||||||
Capital stock - authorized 80,000,000 shares $1 par; issued 34,173,782 shares (2015 - 33,985,316 shares)
|
34,174
|
33,985
|
||||||
Paid-in capital
|
625,961
|
603,006
|
||||||
Retained earnings
|
930,184
|
865,845
|
||||||
Treasury stock - 18,049,933 shares (2015 - 17,187,540)
|
(1,105,620
|
)
|
(991,978
|
)
|
||||
Deferred compensation payable in Company stock
|
2,503
|
2,395
|
||||||
Total Stockholders' Equity
|
487,202
|
513,253
|
||||||
Total Liabilities and Stockholders' Equity
|
$
|
842,476
|
$
|
852,325
|
||||
See accompanying notes to unaudited consolidated financial statements.
|
UNAUDITED CONSOLIDATED STATEMENT OF INCOME
|
||||||||||||||||
(in thousands, except per share data)
|
||||||||||||||||
Three Months Ended September 30,
|
Nine Months Ended September 30,
|
|||||||||||||||
2016
|
2015
|
2016
|
2015
|
|||||||||||||
Service revenues and sales
|
$
|
392,607
|
$
|
386,226
|
$
|
1,173,405
|
$
|
1,144,799
|
||||||||
Cost of services provided and goods sold (excluding depreciation)
|
281,658
|
272,089
|
836,348
|
811,637
|
||||||||||||
Selling, general and administrative expenses
|
59,373
|
55,788
|
181,046
|
173,267
|
||||||||||||
Depreciation
|
8,614
|
8,075
|
25,619
|
24,189
|
||||||||||||
Amortization
|
91
|
146
|
274
|
407
|
||||||||||||
Other operating expenses
|
-
|
-
|
4,491
|
-
|
||||||||||||
Total costs and expenses
|
349,736
|
336,098
|
1,047,778
|
1,009,500
|
||||||||||||
Income from operations
|
42,871
|
50,128
|
125,627
|
135,299
|
||||||||||||
Interest expense
|
(1,018
|
)
|
(908
|
)
|
(2,831
|
)
|
(2,846
|
)
|
||||||||
Other income/(expense) - net
|
1,640
|
(2,355
|
)
|
1,933
|
(1,256
|
)
|
||||||||||
Income before income taxes
|
43,493
|
46,865
|
124,729
|
131,197
|
||||||||||||
Income taxes
|
(16,664
|
)
|
(18,032
|
)
|
(48,175
|
)
|
(50,852
|
)
|
||||||||
Net income
|
$
|
26,829
|
$
|
28,833
|
$
|
76,554
|
$
|
80,345
|
||||||||
Earnings Per Share
|
||||||||||||||||
Net income
|
$
|
1.66
|
$
|
1.71
|
$
|
4.66
|
$
|
4.76
|
||||||||
Average number of shares outstanding
|
16,166
|
16,865
|
16,443
|
16,887
|
||||||||||||
Diluted Earnings Per Share
|
||||||||||||||||
Net income
|
$
|
1.62
|
$
|
1.65
|
$
|
4.54
|
$
|
4.61
|
||||||||
Average number of shares outstanding
|
16,559
|
17,422
|
16,851
|
17,430
|
||||||||||||
Cash Dividends Per Share
|
$
|
0.26
|
$
|
0.24
|
$
|
0.74
|
$
|
0.68
|
||||||||
See accompanying notes to unaudited consolidated financial statements.
|
UNAUDITED CONSOLIDATED STATEMENT OF CASH FLOWS
|
||||||||
(in thousands)
|
||||||||
Nine Months Ended September 30,
|
||||||||
2016
|
2015
|
|||||||
Cash Flows from Operating Activities
|
||||||||
Net income
|
$
|
76,554
|
$
|
80,345
|
||||
Adjustments to reconcile net income to net cash provided
|
||||||||
by operating activities:
|
||||||||
Depreciation and amortization
|
25,893
|
24,596
|
||||||
Provision for uncollectible accounts receivable
|
12,132
|
11,100
|
||||||
Stock option expense
|
6,259
|
3,600
|
||||||
Benefit for deferred income taxes
|
(5,530
|
)
|
(2,694
|
)
|
||||
Noncash early retirement expense
|
1,747
|
-
|
||||||
Amortization of restricted stock awards
|
1,415
|
1,488
|
||||||
Noncash long-term incentive compensation
|
837
|
3,755
|
||||||
Noncash directors' compensation
|
541
|
540
|
||||||
Amortization of debt issuance costs
|
390
|
392
|
||||||
Changes in operating assets and liabilities:
|
||||||||
Decrease/(increase) in accounts receivable
|
8,061
|
(10,110
|
)
|
|||||
Decrease/(increase) in inventories
|
213
|
(373
|
)
|
|||||
Decrease/(increase) in prepaid expenses
|
(1,646
|
)
|
68
|
|||||
Increase/(decrease) in accounts payable and other current liabilities
|
(5,471
|
)
|
5,416
|
|||||
Increase in income taxes
|
8,587
|
3,049
|
||||||
Increase in other assets
|
(5,694
|
)
|
(605
|
)
|
||||
Increase in other liabilities
|
6,835
|
524
|
||||||
Excess tax benefit on share-based compensation
|
(2,974
|
)
|
(8,474
|
)
|
||||
Other sources
|
204
|
467
|
||||||
Net cash provided by operating activities
|
128,353
|
113,084
|
||||||
Cash Flows from Investing Activities
|
||||||||
Capital expenditures
|
(29,708
|
)
|
(30,194
|
)
|
||||
Business combinations, net of cash acquired
|
-
|
(6,614
|
)
|
|||||
Other sources/(uses)
|
(114
|
)
|
396
|
|||||
Net cash used by investing activities
|
(29,822
|
)
|
(36,412
|
)
|
||||
Cash Flows from Financing Activities
|
||||||||
Proceeds from revolving line of credit
|
110,200
|
103,200
|
||||||
Purchases of treasury stock
|
(102,313
|
)
|
(36,682
|
)
|
||||
Payments on revolving line of credit
|
(85,200
|
)
|
(108,200
|
)
|
||||
Dividends paid
|
(12,215
|
)
|
(11,542
|
)
|
||||
Capital stock surrendered to pay taxes on stock-based compensation
|
(7,051
|
)
|
(11,226
|
)
|
||||
Payments on other long-term debt
|
(5,625
|
)
|
(4,375
|
)
|
||||
Proceeds from exercise of stock options
|
4,625
|
11,193
|
||||||
Excess tax benefit on share-based compensation
|
2,974
|
8,474
|
||||||
Increase/(decrease) in cash overdrafts payable
|
2,092
|
(1,745
|
)
|
|||||
Other sources/(uses)
|
540
|
(1,451
|
)
|
|||||
Net cash used by financing activities
|
(91,973
|
)
|
(52,354
|
)
|
||||
Increase in Cash and Cash Equivalents
|
6,558
|
24,318
|
||||||
Cash and cash equivalents at beginning of year
|
14,727
|
14,132
|
||||||
Cash and cash equivalents at end of period
|
$
|
21,285
|
$
|
38,450
|
||||
See accompanying notes to unaudited consolidated financial statements.
|
September 30,
|
||||||||
2016
|
2015
|
|||||||
Beginning balance January 1,
|
$
|
1,165
|
$
|
6,112
|
||||
2015 measurement period
|
228
|
(165
|
)
|
|||||
Payments
|
(1,158
|
)
|
(4,782
|
)
|
||||
Ending balance September 30,
|
$
|
235
|
$
|
1,165
|
Three months ended September 30,
|
Nine months ended September 30,
|
||||||||||||
2016
|
2015
|
2016
|
2015
|
||||||||||
$ |
1,711
|
$
|
1,929
|
$
|
5,231
|
$
|
5,788
|
Three months ended September 30,
|
Nine months ended September 30,
|
|||||||||||||||
2016
|
2015
|
2016
|
2015
|
|||||||||||||
Service Revenues and Sales
|
||||||||||||||||
VITAS
|
$
|
282,865
|
$
|
285,008
|
$
|
839,131
|
$
|
831,081
|
||||||||
Roto-Rooter
|
109,742
|
101,218
|
334,274
|
313,718
|
||||||||||||
Total
|
$
|
392,607
|
$
|
386,226
|
$
|
1,173,405
|
$
|
1,144,799
|
||||||||
After-tax Earnings
|
||||||||||||||||
VITAS
|
$
|
20,903
|
$
|
25,723
|
$
|
58,538
|
$
|
66,839
|
||||||||
Roto-Rooter
|
12,855
|
10,961
|
39,216
|
35,122
|
||||||||||||
Total
|
33,758
|
36,684
|
97,754
|
101,961
|
||||||||||||
Corporate
|
(6,929
|
)
|
(7,851
|
)
|
(21,200
|
)
|
(21,616
|
)
|
||||||||
Net income
|
$
|
26,829
|
$
|
28,833
|
$
|
76,554
|
$
|
80,345
|
Net Income
|
||||||||||||
For the Three Months Ended September 30,
|
Income
|
Shares
|
Earnings
per Share |
|||||||||
2016
|
||||||||||||
Earnings
|
$
|
26,829
|
16,166
|
$
|
1.66
|
|||||||
Dilutive stock options
|
-
|
294
|
||||||||||
Nonvested stock awards
|
-
|
99
|
||||||||||
Diluted earnings
|
$
|
26,829
|
16,559
|
$
|
1.62
|
|||||||
2015
|
||||||||||||
Earnings
|
$
|
28,833
|
16,865
|
$
|
1.71
|
|||||||
Dilutive stock options
|
-
|
399
|
||||||||||
Nonvested stock awards
|
-
|
158
|
||||||||||
Diluted earnings
|
$
|
28,833
|
17,422
|
$
|
1.65
|
Net Income
|
||||||||||||
For the Nine Months Ended September 30,
|
Income
|
Shares
|
Earnings
per Share |
|||||||||
2016
|
||||||||||||
Earnings
|
$
|
76,554
|
16,443
|
$
|
4.66
|
|||||||
Dilutive stock options
|
-
|
296
|
||||||||||
Nonvested stock awards
|
-
|
112
|
||||||||||
Diluted earnings
|
$
|
76,554
|
16,851
|
$
|
4.54
|
|||||||
2015
|
||||||||||||
Earnings
|
$
|
80,345
|
16,887
|
$
|
4.76
|
|||||||
Dilutive stock options
|
-
|
391
|
||||||||||
Nonvested stock awards
|
-
|
152
|
||||||||||
Diluted earnings
|
$
|
80,345
|
17,430
|
$
|
4.61
|
Revolver
|
$
|
25,000
|
||
Term loan
|
85,625
|
|||
Total
|
110,625
|
|||
Current portion of long-term debt
|
(8,125
|
)
|
||
Long-term debt
|
$
|
102,500
|
2016
|
$
|
1,875
|
|||
2017
|
8,750
|
||||
2018
|
10,000
|
||||
2019
|
65,000
|
||||
$
|
85,625
|
Description
|
Requirement
|
|
Leverage Ratio (Consolidated Indebtedness/Consolidated Adj. EBITDA)
|
< 3.50 to 1.00
|
|
Fixed Charge Coverage Ratio (Consolidated Free Cash Flow/Consolidated Fixed Charges)
|
> 1.50 to 1.00
|
|
Annual Operating Lease Commitment
|
< $50.0 million
|
Three months ended September 30,
|
Nine months ended September 30,
|
|||||||||||||||
2016
|
2015
|
2016
|
2015
|
|||||||||||||
Market value adjustment on assets held in
|
||||||||||||||||
deferred compensation trust
|
$
|
1,656
|
$
|
(2,328
|
)
|
$
|
1,857
|
$
|
(880
|
)
|
||||||
Loss on disposal of property and equipment
|
(134
|
)
|
(116
|
)
|
(224
|
)
|
(131
|
)
|
||||||||
Interest income - net
|
119
|
77
|
301
|
207
|
||||||||||||
Other - net
|
(1
|
)
|
12
|
(1
|
)
|
(452
|
)
|
|||||||||
Total other income/(expense) - net
|
$
|
1,640
|
$
|
(2,355
|
)
|
$
|
1,933
|
$
|
(1,256
|
)
|
Three months ended September 30,
|
Nine months ended September 30,
|
|||||||||||||||
2016
|
2015
|
2016
|
2015
|
|||||||||||||
Revenues
|
$
|
9,823
|
$
|
9,119
|
$
|
29,451
|
$
|
28,110
|
||||||||
Pretax profits
|
5,835
|
5,435
|
18,015
|
16,653
|
Three months ended September 30,
|
Nine months ended September 30,
|
||||||||||||
2016
|
2015
|
2016
|
2015
|
||||||||||
$ | 4,423 | $ |
458
|
$ |
10,809
|
$ | 7,636 |
Fair Value Measure
|
||||||||||||||||
Carrying Value
|
Quoted Prices in
Active Markets for Identical Assets (Level 1) |
Significant Other Observable Inputs (Level 2)
|
Significant Unobservable
Inputs (Level 3) |
|||||||||||||
Mutual fund investments of deferred
|
||||||||||||||||
compensation plans held in trust
|
$
|
55,158
|
$
|
55,158
|
$
|
-
|
$
|
-
|
||||||||
Long-term debt
|
110,625
|
-
|
110,625
|
-
|
Fair Value Measure
|
||||||||||||||||
Carrying Value
|
Quoted Prices in
Active Markets for Identical Assets (Level 1) |
Significant Other Observable Inputs (Level 2)
|
Significant Unobservable
Inputs (Level 3) |
|||||||||||||
Mutual fund investments of deferred
|
||||||||||||||||
compensation plans held in trust
|
$
|
49,481
|
$
|
49,481
|
$
|
-
|
$
|
-
|
||||||||
Long-term debt
|
91,250
|
-
|
91,250
|
-
|
Three months ended
September 30, |
Nine months ended
September 30, |
|||||||||||||||
2016
|
2015
|
2016
|
2015
|
|||||||||||||
Total cost of repurchased shares (in thousands):
|
$
|
-
|
$
|
18,230
|
$
|
102,313
|
$
|
47,992
|
||||||||
Shares repurchased
|
-
|
135,765
|
780,134
|
385,765
|
||||||||||||
Weighted average price per share
|
$
|
-
|
$
|
134.28
|
$
|
131.15
|
$
|
124.41
|
Vitas
|
Roto-Rooter
|
Total
|
||||||||||
Balance at December 31, 2014
|
$
|
328,301
|
$
|
138,421
|
$
|
466,722
|
||||||
Business combinations
|
-
|
5,944
|
5,944
|
|||||||||
Foreign currency adjustments
|
-
|
(344
|
)
|
(344
|
)
|
|||||||
Balance at December 31, 2015
|
$
|
328,301
|
$
|
144,021
|
$
|
472,322
|
||||||
Foreign currency adjustments
|
-
|
96
|
96
|
|||||||||
Balance at September 30, 2016
|
$
|
328,301
|
$
|
144,117
|
$
|
472,418
|
Three months ended September 30,
|
Nine months ended September 30,
|
|||||||||||||||
2016
|
2015
|
2016
|
2015
|
|||||||||||||
Service revenues and sales
|
$
|
392,607
|
$
|
386,226
|
$
|
1,173,405
|
$
|
1,144,799
|
||||||||
Net income
|
$
|
26,829
|
$
|
28,833
|
$
|
76,554
|
$
|
80,345
|
||||||||
Diluted EPS
|
$
|
1.62
|
$
|
1.65
|
$
|
4.54
|
$
|
4.61
|
||||||||
Adjusted net income
|
$
|
28,643
|
$
|
30,934
|
$
|
86,625
|
$
|
87,481
|
||||||||
Adjusted diluted EPS
|
$
|
1.73
|
$
|
1.78
|
$
|
5.14
|
$
|
5.02
|
||||||||
Adjusted EBITDA
|
$
|
57,387
|
$
|
59,410
|
$
|
170,391
|
$
|
169,948
|
||||||||
Adjusted EBITDA as a % of revenue
|
14.6
|
%
|
15.4
|
%
|
14.5
|
%
|
14.8
|
%
|
●
|
A $20.3 million decrease in accounts receivable due mainly to timing of Medicare and Medicaid payments.
|
●
|
A $5.6 million decrease in prepaid income taxes due to timing of payments.
|
●
|
A $5.7 million increase in investments of deferred compensation plans related to participant contributions and market valuation gains.
|
●
|
A $2.3 million increase in accrued insurance due to timing of insurance payments.
|
●
|
A $4.4 million decrease in accrued compensation due to timing of payments of incentive compensation.
|
●
|
A $5.5 million decrease in deferred income taxes due to changes in various temporary differences including accrued expenses.
|
●
|
A $5.0 million increase in deferred compensation liabilities related to market valuation gains, participant contributions reduced by payouts to participants.
|
●
|
A $19.4 million increase in long-term debt due to borrowings on our revolving line of credit.
|
Increase/(Decrease)
|
||||||||
Amount
|
Percent
|
|||||||
VITAS
|
||||||||
Routine homecare
|
$
|
2,396
|
1.1
|
|||||
Continuous care
|
(3,890
|
)
|
(10.3
|
)
|
||||
General inpatient
|
(421
|
)
|
(1.7
|
)
|
||||
Medicare cap
|
(228
|
)
|
-
|
|||||
Roto-Rooter
|
||||||||
Plumbing
|
2,916
|
6.5
|
||||||
Drain cleaning
|
1,389
|
4.1
|
||||||
Water restoration
|
3,773
|
46.3
|
||||||
Contractor operations
|
704
|
7.7
|
||||||
Other
|
(258
|
)
|
(5.0
|
)
|
||||
Total
|
$
|
6,381
|
1.7
|
Days of Care
|
Increase/(Decrease)
|
|||||||||||
2016
|
2015
|
Percent
|
||||||||||
Routine homecare
|
1,407,623
|
1,357,688
|
3.7
|
|||||||||
Continuous care
|
46,582
|
51,652
|
(9.8
|
)
|
||||||||
General inpatient
|
36,241
|
37,121
|
(2.4
|
)
|
||||||||
Total days of care
|
1,490,446
|
1,446,461
|
3.0
|
Three months ended September 30,
|
||||||||
2016
|
2015
|
|||||||
SG&A expenses before market value adjustments of deferred compensation
|
||||||||
plans, long-term incentive compensation, and OIG investigation expenses
|
$
|
56,475
|
$
|
55,601
|
||||
Long-term incentive compensation
|
643
|
1,364
|
||||||
Expenses related to OIG investigation
|
599
|
1,151
|
||||||
Impact of market value adjustments related to assets held in deferred
|
||||||||
compensation trusts
|
1,656
|
(2,328
|
)
|
|||||
Total SG&A expenses
|
$
|
59,373
|
$
|
55,788
|
Three months ended September 30,
|
||||||||
2016
|
2015
|
|||||||
Market value adjustment on assets held in
|
||||||||
deferred compensation trusts
|
$
|
1,656
|
$
|
(2,328
|
)
|
|||
Loss on disposal of property and equipment
|
(134
|
)
|
(116
|
)
|
||||
Interest income - net
|
119
|
77
|
||||||
Other
|
(1
|
)
|
12
|
|||||
Total other income/(expense) - net
|
$
|
1,640
|
$
|
(2,355
|
)
|
Three months ended September 30,
|
||||||||
2016
|
2015
|
|||||||
VITAS
|
||||||||
Expenses related to OIG investigation
|
$
|
(370
|
)
|
$
|
(711
|
)
|
||
Medicare cap sequestration adjustment
|
(141
|
)
|
-
|
|||||
Roto-Rooter
|
||||||||
Acquisition expenses
|
-
|
(18
|
)
|
|||||
Corporate
|
||||||||
Stock option expense
|
(897
|
)
|
(509
|
)
|
||||
Long-term incentive compensation
|
(406
|
)
|
(863
|
)
|
||||
Total
|
$
|
(1,814
|
)
|
$
|
(2,101
|
)
|
Increase/(Decrease)
|
||||||||
Amount
|
Percent
|
|||||||
VITAS
|
$
|
(4,820
|
)
|
(18.7
|
)
|
|||
Roto-Rooter
|
1,894
|
17.3
|
||||||
Corporate
|
922
|
11.7
|
||||||
$
|
(2,004
|
)
|
(7.0
|
)
|
Increase/(Decrease)
|
||||||||
Amount
|
Percent
|
|||||||
VITAS
|
||||||||
Routine homecare
|
$
|
18,610
|
2.9
|
|||||
Continuous care
|
(7,538
|
)
|
(6.6
|
)
|
||||
General inpatient
|
(2,629
|
)
|
(3.4
|
)
|
||||
Medicare cap
|
(393
|
)
|
(238.2
|
)
|
||||
Roto-Rooter
|
||||||||
Plumbing
|
6,997
|
5.1
|
||||||
Drain cleaning
|
3,822
|
3.7
|
||||||
Water restoration
|
8,770
|
31.6
|
||||||
Contractor operations
|
1,342
|
4.8
|
||||||
Other
|
(375
|
)
|
(2.4
|
)
|
||||
Total
|
$
|
28,606
|
2.5
|
Days of Care
|
Increase/(Decrease)
|
|||||||||||
2016
|
2015
|
Percent
|
||||||||||
Routine homecare
|
4,109,775
|
3,899,900
|
5.4
|
|||||||||
Continuous care
|
145,327
|
155,742
|
(6.7
|
)
|
||||||||
General inpatient
|
111,323
|
115,700
|
(3.8
|
)
|
||||||||
Total days of care
|
4,366,425
|
4,171,342
|
4.7
|
Nine months ended September 30,
|
||||||||
2016
|
2015
|
|||||||
SG&A expenses before market value adjustments of deferred compensation
|
||||||||
plans, long-term incentive compensation, and OIG investigation expenses
|
$
|
174,183
|
$
|
166,555
|
||||
Long-term incentive compensation
|
901
|
3,755
|
||||||
Expenses related to OIG investigation
|
4,105
|
3,837
|
||||||
Impact of market value adjustments related to assets held in deferred
|
||||||||
compensation trusts
|
1,857
|
(880
|
)
|
|||||
Total SG&A expenses
|
$
|
181,046
|
$
|
173,267
|
Nine months ended September 30,
|
||||||||
2016
|
2015
|
|||||||
Market value adjustment on assets held in
|
||||||||
deferred compensation trusts
|
$
|
1,857
|
$
|
(880
|
)
|
|||
Loss on disposal of property and equipment
|
(224
|
)
|
(131
|
)
|
||||
Interest income - net
|
301
|
207
|
||||||
Other
|
(1
|
)
|
(452
|
)
|
||||
Total other income/(expense) - net
|
$
|
1,933
|
$
|
(1,256
|
)
|
Nine Months Ended September 30,
|
||||||||
2016
|
2015
|
|||||||
VITAS
|
||||||||
Legal expenses of OIG investigation
|
$
|
(2,535
|
)
|
$
|
(2,369
|
)
|
||
Early retirement expenses
|
(2,840
|
)
|
-
|
|||||
Medicare cap sequestration adjustment
|
(141
|
)
|
-
|
|||||
Roto-Rooter
|
||||||||
Expenses related to litigation settlements
|
(27
|
)
|
(3
|
)
|
||||
Acquisition expenses
|
-
|
(98
|
)
|
|||||
Corporate
|
||||||||
Stock option expense
|
(3,958
|
)
|
(2,268
|
)
|
||||
Long-term incentive compensation
|
(570
|
)
|
(2,375
|
)
|
||||
Expenses of securities litigation
|
-
|
(23
|
)
|
|||||
Total
|
$
|
(10,071
|
)
|
$
|
(7,136
|
)
|
Increase/(Decrease)
|
||||||||
Amount
|
Percent
|
|||||||
VITAS
|
$
|
(8,301
|
)
|
(12.4
|
)
|
|||
Roto-Rooter
|
4,094
|
11.7
|
||||||
Corporate
|
416
|
1.9
|
||||||
$
|
(3,791
|
)
|
(4.7
|
)
|
CHEMED CORPORATION AND SUBSIDIARY COMPANIES
|
||||||||||||||||
CONSOLIDATING STATEMENT OF INCOME
|
||||||||||||||||
FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2016
|
||||||||||||||||
(in thousands)(unaudited)
|
||||||||||||||||
|
||||||||||||||||
VITAS
|
Roto-Rooter
|
Corporate
|
Chemed
Consolidated |
|||||||||||||
2016 (a)
|
||||||||||||||||
Service revenues and sales
|
$
|
282,865
|
$
|
109,742
|
$
|
-
|
$
|
392,607
|
||||||||
Cost of services provided and goods sold
|
224,410
|
57,248
|
-
|
281,658
|
||||||||||||
Selling, general and administrative expenses
|
21,775
|
28,635
|
8,963
|
59,373
|
||||||||||||
Depreciation
|
4,751
|
3,731
|
132
|
8,614
|
||||||||||||
Amortization
|
14
|
77
|
-
|
91
|
||||||||||||
Total costs and expenses
|
250,950
|
89,691
|
9,095
|
349,736
|
||||||||||||
Income/(loss) from operations
|
31,915
|
20,051
|
(9,095
|
)
|
42,871
|
|||||||||||
Interest expense
|
(59
|
)
|
(78
|
)
|
(881
|
)
|
(1,018
|
)
|
||||||||
Intercompany interest income/(expense)
|
1,810
|
800
|
(2,610
|
)
|
-
|
|||||||||||
Other income/(expense)—net
|
(1
|
)
|
(14
|
)
|
1,655
|
1,640
|
||||||||||
Income/(expense) before income taxes
|
33,665
|
20,759
|
(10,931
|
)
|
43,493
|
|||||||||||
Income taxes
|
(12,762
|
)
|
(7,904
|
)
|
4,002
|
(16,664
|
)
|
|||||||||
Net income/(loss)
|
$
|
20,903
|
$
|
12,855
|
$
|
(6,929
|
)
|
$
|
26,829
|
|||||||
(a) The following amounts are included in net income (in thousands):
|
VITAS
|
Roto-Rooter
|
Corporate
|
Chemed
Consolidated
|
|||||||||||||
Pretax benefit/(cost):
|
||||||||||||||||
Stock option expense
|
$
|
-
|
$
|
-
|
$
|
(1,419
|
)
|
$
|
(1,419
|
)
|
||||||
Long-term incentive compensation
|
-
|
-
|
(643
|
)
|
(643
|
)
|
||||||||||
Medicare cap sequestration adjustment
|
(228
|
)
|
-
|
-
|
(228
|
)
|
||||||||||
Expenses related to OIG investigation
|
(599
|
)
|
-
|
-
|
(599
|
)
|
||||||||||
Total
|
$
|
(827
|
)
|
$
|
-
|
$
|
(2,062
|
)
|
$
|
(2,889
|
)
|
|||||
|
VITAS
|
Roto-Rooter
|
Corporate
|
Chemed
Consolidated
|
|||||||||||||
After-tax benefit/(cost):
|
||||||||||||||||
Stock option expense
|
$
|
-
|
$
|
-
|
$
|
(897
|
)
|
$
|
(897
|
)
|
||||||
Long-term incentive compensation
|
-
|
-
|
(406
|
)
|
(406
|
)
|
||||||||||
Medicare cap sequestration adjustment
|
(141
|
)
|
-
|
-
|
(141
|
)
|
||||||||||
Expenses related to OIG investigation
|
(370
|
)
|
-
|
-
|
(370
|
)
|
||||||||||
Total
|
$
|
(511
|
)
|
$
|
-
|
$
|
(1,303
|
)
|
$
|
(1,814
|
)
|
CHEMED CORPORATION AND SUBSIDIARY COMPANIES
|
||||||||||||||||
CONSOLIDATING STATEMENT OF INCOME
|
||||||||||||||||
FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2015
|
||||||||||||||||
(in thousands)(unaudited)
|
||||||||||||||||
Chemed
|
||||||||||||||||
VITAS
|
Roto-Rooter
|
Corporate
|
Consolidated
|
|||||||||||||
2015 (a)
|
||||||||||||||||
Service revenues and sales
|
$
|
285,008
|
$
|
101,218
|
$
|
-
|
$
|
386,226
|
||||||||
Cost of services provided and goods sold
|
218,528
|
53,561
|
-
|
272,089
|
||||||||||||
Selling, general and administrative expenses
|
22,367
|
27,523
|
5,898
|
55,788
|
||||||||||||
Depreciation
|
4,631
|
3,300
|
144
|
8,075
|
||||||||||||
Amortization
|
60
|
86
|
-
|
146
|
||||||||||||
Total costs and expenses
|
245,586
|
84,470
|
6,042
|
336,098
|
||||||||||||
Income/(loss) from operations
|
39,422
|
16,748
|
(6,042
|
)
|
50,128
|
|||||||||||
Interest expense
|
(54
|
)
|
(80
|
)
|
(774
|
)
|
(908
|
)
|
||||||||
Intercompany interest income/(expense)
|
1,979
|
858
|
(2,837
|
)
|
-
|
|||||||||||
Other income/(expense)—net
|
(11
|
)
|
(15
|
)
|
(2,329
|
)
|
(2,355
|
)
|
||||||||
Income/(expense) before income taxes
|
41,336
|
17,511
|
(11,982
|
)
|
46,865
|
|||||||||||
Income taxes
|
(15,613
|
)
|
(6,550
|
)
|
4,131
|
(18,032
|
)
|
|||||||||
Net income/(loss)
|
$
|
25,723
|
$
|
10,961
|
$
|
(7,851
|
)
|
$
|
28,833
|
|||||||
(a) The following amounts are included in net income (in thousands):
|
||||||||||||||||
|
VITAS
|
Roto-Rooter
|
Corporate
|
Chemed
Consolidated
|
|||||||||||||
Pretax benefit/(cost):
|
||||||||||||||||
Stock option expense
|
$
|
-
|
$
|
-
|
$
|
(813
|
)
|
$
|
(813
|
)
|
||||||
Long-term incentive compensation
|
-
|
-
|
(1,364
|
)
|
(1,364
|
)
|
||||||||||
Acquisition expenses
|
-
|
(30
|
)
|
-
|
(30
|
)
|
||||||||||
Expenses related to OIG investigation
|
(1,151
|
)
|
-
|
-
|
(1,151
|
)
|
||||||||||
Total
|
$
|
(1,151
|
)
|
$
|
(30
|
)
|
$
|
(2,177
|
)
|
$
|
(3,358
|
)
|
||||
|
VITAS
|
Roto-Rooter
|
Corporate
|
Chemed
Consolidated
|
|||||||||||||
After-tax benefit/(cost):
|
||||||||||||||||
Stock option expense
|
$
|
-
|
$
|
-
|
$
|
(509
|
)
|
$
|
(509
|
)
|
||||||
Long-term incentive compensation
|
-
|
-
|
(863
|
)
|
(863
|
)
|
||||||||||
Acquisition expenses
|
-
|
(18
|
)
|
-
|
(18
|
)
|
||||||||||
Expenses related to OIG investigation
|
(711
|
)
|
-
|
-
|
(711
|
)
|
||||||||||
Total
|
$
|
(711
|
)
|
$
|
(18
|
)
|
$
|
(1,372
|
)
|
$
|
(2,101
|
)
|
CHEMED CORPORATION AND SUBSIDIARY COMPANIES
|
||||||||||||||||
CONSOLIDATING STATEMENT OF INCOME
|
||||||||||||||||
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2016
|
||||||||||||||||
(in thousands)(unaudited)
|
||||||||||||||||
Chemed
|
||||||||||||||||
VITAS
|
Roto-Rooter
|
Corporate
|
Consolidated
|
|||||||||||||
2016 (a)
|
||||||||||||||||
Service revenues and sales
|
$
|
839,131
|
$
|
334,274
|
$
|
-
|
$
|
1,173,405
|
||||||||
Cost of services provided and goods sold
|
662,371
|
173,977
|
-
|
836,348
|
||||||||||||
Selling, general and administrative expenses
|
69,197
|
87,890
|
23,959
|
181,046
|
||||||||||||
Depreciation
|
14,346
|
10,860
|
413
|
25,619
|
||||||||||||
Amortization
|
41
|
233
|
-
|
274
|
||||||||||||
Other operating expenses
|
4,491
|
-
|
-
|
4,491
|
||||||||||||
Total costs and expenses
|
750,446
|
272,960
|
24,372
|
1,047,778
|
||||||||||||
Income/(loss) from operations
|
88,685
|
61,314
|
(24,372
|
)
|
125,627
|
|||||||||||
Interest expense
|
(176
|
)
|
(264
|
)
|
(2,391
|
)
|
(2,831
|
)
|
||||||||
Intercompany interest income/(expense)
|
5,840
|
2,614
|
(8,454
|
)
|
-
|
|||||||||||
Other income/(expense)—net
|
76
|
(2
|
)
|
1,859
|
1,933
|
|||||||||||
Income/(expense) before income taxes
|
94,425
|
63,662
|
(33,358
|
)
|
124,729
|
|||||||||||
Income taxes
|
(35,887
|
)
|
(24,446
|
)
|
12,158
|
(48,175
|
)
|
|||||||||
Net income/(loss)
|
$
|
58,538
|
$
|
39,216
|
$
|
(21,200
|
)
|
$
|
76,554
|
|||||||
(a) The following amounts are included in net income (in thousands):
|
Chemed
|
||||||||||||||||
VITAS
|
Roto-Rooter
|
Corporate
|
Consolidated
|
|||||||||||||
Pretax benefit/(cost):
|
||||||||||||||||
Stock option expense
|
$
|
-
|
$
|
-
|
$
|
(6,259
|
)
|
$
|
(6,259
|
)
|
||||||
Medicare cap sequestration adjustment
|
(228
|
)
|
-
|
-
|
(228
|
)
|
||||||||||
Long-term incentive compensation
|
-
|
-
|
(901
|
)
|
(901
|
)
|
||||||||||
Early retirement expenses
|
(4,491
|
)
|
-
|
-
|
(4,491
|
)
|
||||||||||
Expenses related to litigation settlements
|
-
|
(44
|
)
|
-
|
(44
|
)
|
||||||||||
Expenses related to OIG investigation
|
(4,105
|
)
|
-
|
-
|
(4,105
|
)
|
||||||||||
Total
|
$
|
(8,824
|
)
|
$
|
(44
|
)
|
$
|
(7,160
|
)
|
$
|
(16,028
|
)
|
||||
Chemed
|
||||||||||||||||
VITAS
|
Roto-Rooter
|
Corporate
|
Consolidated
|
|||||||||||||
After-tax benefit/(cost):
|
||||||||||||||||
Stock option expense
|
$
|
-
|
$
|
-
|
$
|
(3,958
|
)
|
$
|
(3,958
|
)
|
||||||
Medicare cap sequestration adjustment
|
(141
|
)
|
-
|
-
|
(141
|
)
|
||||||||||
Long-term incentive compensation
|
-
|
-
|
(570
|
)
|
(570
|
)
|
||||||||||
Early retirement expenses
|
(2,840
|
)
|
-
|
-
|
(2,840
|
)
|
||||||||||
Expenses related to litigation settlements
|
-
|
(27
|
)
|
-
|
(27
|
)
|
||||||||||
Expenses related to OIG investigation
|
(2,535
|
)
|
-
|
-
|
(2,535
|
)
|
||||||||||
Total
|
$
|
(5,516
|
)
|
$
|
(27
|
)
|
$
|
(4,528
|
)
|
$
|
(10,071
|
)
|
CHEMED CORPORATION AND SUBSIDIARY COMPANIES
|
||||||||||||||||
CONSOLIDATING STATEMENT OF INCOME
|
||||||||||||||||
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2015
|
||||||||||||||||
(in thousands)(unaudited)
|
||||||||||||||||
Chemed
|
||||||||||||||||
VITAS
|
Roto-Rooter
|
Corporate
|
Consolidated
|
|||||||||||||
2015 (a)
|
||||||||||||||||
Service revenues and sales
|
$
|
831,081
|
$
|
313,718
|
$
|
-
|
$
|
1,144,799
|
||||||||
Cost of services provided and goods sold
|
646,801
|
164,836
|
-
|
811,637
|
||||||||||||
Selling, general and administrative expenses
|
66,792
|
84,620
|
21,855
|
173,267
|
||||||||||||
Depreciation
|
14,141
|
9,598
|
450
|
24,189
|
||||||||||||
Amortization
|
180
|
227
|
-
|
407
|
||||||||||||
Total costs and expenses
|
727,914
|
259,281
|
22,305
|
1,009,500
|
||||||||||||
Income/(loss) from operations
|
103,167
|
54,437
|
(22,305
|
)
|
135,299
|
|||||||||||
Interest expense
|
(164
|
)
|
(274
|
)
|
(2,408
|
)
|
(2,846
|
)
|
||||||||
Intercompany interest income/(expense)
|
5,461
|
2,501
|
(7,962
|
)
|
-
|
|||||||||||
Other income/(expense)—net
|
(395
|
)
|
19
|
(880
|
)
|
(1,256
|
)
|
|||||||||
Income/(expense) before income taxes
|
108,069
|
56,683
|
(33,555
|
)
|
131,197
|
|||||||||||
Income taxes
|
(41,230
|
)
|
(21,561
|
)
|
11,939
|
(50,852
|
)
|
|||||||||
Net income/(loss)
|
$
|
66,839
|
$
|
35,122
|
$
|
(21,616
|
)
|
$
|
80,345
|
|||||||
(a) The following amounts are included in net income (in thousands):
|
Chemed
|
||||||||||||||||
VITAS
|
Roto-Rooter
|
Corporate
|
Consolidated
|
|||||||||||||
Pretax benefit/(cost):
|
||||||||||||||||
Stock option expense
|
$
|
-
|
$
|
-
|
$
|
(3,600
|
)
|
$
|
(3,600
|
)
|
||||||
Long-term incentive compensation
|
-
|
-
|
(3,755
|
)
|
(3,755
|
)
|
||||||||||
Expenses related to litigation settlements
|
-
|
(5
|
)
|
-
|
(5
|
)
|
||||||||||
Expenses related to securities litigation
|
-
|
-
|
(37
|
)
|
(37
|
)
|
||||||||||
Acquisition expenses
|
-
|
(161
|
)
|
-
|
(161
|
)
|
||||||||||
Expenses related to OIG investigation
|
(3,837
|
)
|
-
|
-
|
(3,837
|
)
|
||||||||||
Total
|
$
|
(3,837
|
)
|
$
|
(166
|
)
|
$
|
(7,392
|
)
|
$
|
(11,395
|
)
|
||||
Chemed
|
||||||||||||||||
VITAS
|
Roto-Rooter
|
Corporate
|
Consolidated
|
|||||||||||||
After-tax benefit/(cost):
|
||||||||||||||||
Stock option expense
|
$
|
-
|
$
|
-
|
$
|
(2,268
|
)
|
$
|
(2,268
|
)
|
||||||
Long-term incentive compensation
|
-
|
-
|
(2,375
|
)
|
(2,375
|
)
|
||||||||||
Expenses related to litigation settlements
|
-
|
(3
|
)
|
-
|
(3
|
)
|
||||||||||
Expenses related to securities litigation
|
-
|
-
|
(23
|
)
|
(23
|
)
|
||||||||||
Acquisition expenses
|
-
|
(98
|
)
|
-
|
(98
|
)
|
||||||||||
Expenses related to OIG investigation
|
(2,369
|
)
|
-
|
-
|
(2,369
|
)
|
||||||||||
Total
|
$
|
(2,369
|
)
|
$
|
(101
|
)
|
$
|
(4,666
|
)
|
$
|
(7,136
|
)
|
Unaudited Consolidating Summary and Reconciliation of Adjusted EBITDA
|
||||||||||||||||
Chemed Corporation and Subsidiary Companies
|
||||||||||||||||
(in thousands)
|
Chemed
|
|||||||||||||||
For the three months ended September 30, 2016
|
VITAS
|
Roto-Rooter
|
Corporate
|
Consolidated
|
||||||||||||
Net income/(loss)
|
$
|
20,903
|
$
|
12,855
|
$
|
(6,929
|
)
|
$
|
26,829
|
|||||||
Add/(deduct):
|
||||||||||||||||
Interest expense
|
59
|
78
|
881
|
1,018
|
||||||||||||
Income taxes
|
12,762
|
7,904
|
(4,002
|
)
|
16,664
|
|||||||||||
Depreciation
|
4,751
|
3,731
|
132
|
8,614
|
||||||||||||
Amortization
|
14
|
77
|
-
|
91
|
||||||||||||
EBITDA
|
38,489
|
24,645
|
(9,918
|
)
|
53,216
|
|||||||||||
Add/(deduct):
|
||||||||||||||||
Intercompany interest expense/(income)
|
(1,810
|
)
|
(800
|
)
|
2,610
|
-
|
||||||||||
Interest income
|
(108
|
)
|
(11
|
)
|
-
|
(119
|
)
|
|||||||||
Expenses related to litigation settlements
|
1,149
|
-
|
-
|
1,149
|
||||||||||||
Expenses related to OIG investigation
|
599
|
-
|
-
|
599
|
||||||||||||
Medicare cap sequestration adjustment
|
228
|
-
|
-
|
228
|
||||||||||||
Amortization of stock awards
|
85
|
76
|
279
|
440
|
||||||||||||
Advertising cost adjustment
|
-
|
(188
|
)
|
-
|
(188
|
)
|
||||||||||
Stock option expense
|
-
|
-
|
1,419
|
1,419
|
||||||||||||
Long-term incentive compensation
|
-
|
-
|
643
|
643
|
||||||||||||
Adjusted EBITDA
|
$
|
38,632
|
$
|
23,722
|
$
|
(4,967
|
)
|
$
|
57,387
|
|||||||
Chemed
|
||||||||||||||||
For the three months ended September 30, 2015
|
VITAS
|
Roto-Rooter
|
Corporate
|
Consolidated
|
||||||||||||
Net income/(loss)
|
$
|
25,723
|
$
|
10,961
|
$
|
(7,851
|
)
|
$
|
28,833
|
|||||||
Add/(deduct):
|
||||||||||||||||
Interest expense
|
54
|
80
|
774
|
908
|
||||||||||||
Income taxes
|
15,613
|
6,550
|
(4,131
|
)
|
18,032
|
|||||||||||
Depreciation
|
4,631
|
3,300
|
144
|
8,075
|
||||||||||||
Amortization
|
60
|
86
|
-
|
146
|
||||||||||||
EBITDA
|
46,081
|
20,977
|
(11,064
|
)
|
55,994
|
|||||||||||
Add/(deduct):
|
||||||||||||||||
Intercompany interest expense/(income)
|
(1,979
|
)
|
(858
|
)
|
2,837
|
-
|