UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities
Exchange Act of 1934
Date of
Report (Date of earliest event reported):
February
21, 2008
CHEMED
CORPORATION
(Exact
name of registrant as specified in its charter)
|
Delaware |
1-8351 |
31-0791746 |
|
(State or other jurisdiction of incorporation) |
(Commission File Number) |
(I.R.S. Employer Identification No.) |
|
2600 Chemed Center, 255 East 5th Street, Cincinnati, OH 45202 |
|
(Address of Principal Executive Offices) (Zip Code) |
Registrant’s
telephone number, including area code:
(513) 762-6900
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
⃞ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
⃞ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
⃞ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
⃞ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Item 2.02 Results of Operations and Financial Condition
On February 21, 2008 Chemed Corporation issued a press release announcing its financial results for the quarter ended December 31, 2007. A copy of the release is furnished herewith as Exhibit 99.
Item 9.01 Financial Statements and Exhibits
| d) | Exhibit | |
| (99) Registrant’s press release dated February 21, 2008 |
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
|
CHEMED CORPORATION |
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| Date: | February 21, 2008 | By: |
/s/ Arthur V. Tucker, Jr. |
|
| Name: |
Arthur V. Tucker, Jr. |
|||
| Title: |
Vice President and Controller |
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Exhibit 99
Chemed Reports Fourth-Quarter 2007 Results
CINCINNATI--(BUSINESS WIRE)--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 fourth quarter ended December 31, 2007, versus the comparable prior-year period, as follows:
Consolidated operating results from Continuing Operations:
- Revenue increased 5.1% to $286 million
- Diluted EPS from Continuing Operations of $.83
- Diluted EPS from Continuing Operations, excluding special items, of $.92
- Full-year diluted EPS from Continuing Operations, excluding special items, of $3.16
VITAS segment operating results from Continuing Operations:
- Net Patient Revenue of $197 million, up 5.9%
- Average Daily Census (ADC) of 11,660, up 4.3%
- Admissions of 13,594, an increase of 2.3%
- Average Length of Stay in the quarter of 75.7 days
- Net income of $16.8 million
- Adjusted EBITDA of $28.4 million
Roto-Rooter segment operating results:
- Revenue of $89 million, an increase of 3.3%
- Job count of 204,875
- Net Income of $9.7 million
- Adjusted EBITDA of $19.0 million
VITAS
VITAS generated 13,594 admissions in the quarter, which represents an increase of 2.3% over the prior year. Discharges totaled 13,700, an increase of 3.8%, and ADC in the quarter increased 4.3%, to 11,660. VITAS’ Average Length of Stay (ALOS) for patients discharged in the quarter was 75.7 days. This compares to an ALOS of 76.7 days in the third quarter of 2007 and is equal to the ALOS in the fourth quarter of 2006. Median Length of Stay (MLOS) was 14 days.
Net revenue for VITAS was $197 million in the fourth quarter of 2007, which is an increase of 5.9% over the prior-year period. This revenue growth was the result of increased ADC of 4.3%, a Medicare price increase of approximately 3%, partially offset by the continued shift in revenue mix from high acuity care to routine home care.
In the fourth quarter of 2006, high acuity days-of-care was 8.68% of total days-of-care. High acuity days-of-care averaged 8.39% in the first quarter of 2007, 8.04% in the second quarter, 8.01% in the third quarter and 7.97% in the fourth quarter of 2007.
This mix shift from high acuity care to routine home care negatively impacted revenue growth by $3.8 million in the quarter. Routine home care reimbursement and high acuity care averaged $144.97 and $632.49, respectively, per patient per day in the fourth quarter of 2007. Any shift in revenue mix will have a noticeable impact on overall revenue given the significant disparity in reimbursement. However, given the relatively low profitability margin on high acuity care, this mix shift had minimal impact on gross profit and net income.
VITAS did not have any billing restrictions related to Medicare Cap for its fourth-quarter 2007 operating activity. As of December 31, 2007, VITAS has not accrued any Medicare billing restrictions for the 2008 or 2007 Cap years.
VITAS measures its Medicare Cap cushion, or Medicare Cap liability, on a program-by-program basis. Of VITAS' 37 unique Medicare provider numbers, 29 provider numbers, or 78%, have a Cap cushion greater than 20% on a trailing twelve-month basis, four provider numbers are between 15% and 20%, one is between 10% and 15%, and three provider numbers have Cap cushion ranging between 4% and 9%. VITAS had aggregate Cap cushion in excess of $219 million on a trailing twelve-month basis.
Gross margin in the fourth quarter of 2007 was 23.2%. This is a 70 basis point improvement over the prior-year quarter. Selling, general and administrative expense was $17.3 million in the fourth quarter of 2007, which is an increase of 5.2% over the prior year. Adjusted EBITDA totaled $28.4 million, an increase of 11% over the prior year and equates to an adjusted EBITDA margin of 14.4%, an increase of 63 basis points over the fourth quarter of 2006.
Roto-Rooter
Roto-Rooter’s plumbing and drain cleaning business generated sales of $89 million for the fourth quarter of 2007, 3.3% higher than the $86 million reported in the comparable prior-year quarter. Net income for the quarter was $9.7 million. The fourth quarter net income includes a $1.9 million pretax and $1.2 million aftertax charge for a tentative settlement of a class action lawsuit that alleged wage and hour violations in California. This suit claimed Roto-Rooter failed to provide meal and break time as well as credit for work time beginning from the first call to dispatch rather than arrival at the day’s first assignment. Excluding this tentative settlement, net income in the fourth quarter of 2007 increased 12%. Adjusted EBITDA in the fourth quarter of 2007 totaled $19.0 million, an increase of 10.5% over the fourth quarter of 2006 and equated to an adjusted EBITDA margin of 21.5%, an increase of 140 basis points over the prior-year period.
Job count in the fourth quarter of 2007 declined 2.8% when compared to the prior-year period, and increased 3.3% sequentially. Total residential jobs declined 0.8% and consisted of residential plumbing jobs increasing 4.5% and residential drain cleaning jobs declining 3.1%, when compared to the fourth quarter of 2006. Residential jobs represent approximately 70% of total job count.
Total commercial jobs declined 7.3% with commercial plumbing job count declining 1.6% and commercial drain cleaning decreasing 10.0%, over the prior-year quarter. A significant portion of the commercial job count decline is attributed to the elimination of low revenue, low margin commercial business. This mix shift has favorably impacted the average revenue per commercial job, which increased 8.0% in the fourth quarter of 2007 and has increased 10.6% on a year-to-date basis.
Guidance for 2008
VITAS is estimated to generate full-year revenue growth from continuing operations, prior to Medicare Cap, of 7.0% to 8.0%. Admissions are estimated to increase 4.0% to 5.0% and adjusted EBITDA margin, prior to Medicare Cap, of 14.2% to 15.0%. This guidance assumes the hospice industry receives a full Medicare basket price increase of 3.0% in the fourth quarter of 2008. Full calendar year 2008 Medicare contractual billing limitations are estimated at $5.0 million.
Roto-Rooter is estimated to generate a 6.0% to 8.0% increase in revenue in 2008, job count growth from flat to 1.0% and adjusted EBITDA margin in the range of 19.5% to 20.5%.
Based upon these factors, an effective tax rate of 38.5% and an average diluted share count for 2008 of 24.55 million shares, our estimate is that full-year 2008 earnings per diluted share from continuing operations, excluding noncash expenses for stock options and charges or credits not indicative of ongoing operations, will be in the range of $3.60 to $3.70.
Conference Call
Chemed will host a conference call and webcast at 10 a.m., ET, on Friday, February 22, 2008, to discuss the company's quarterly results and provide an update on its business. The dial-in number for the conference call is (800) 265-0241 for U.S. and Canadian participants and (617) 847-8704 for international participants. The participant passcode is 41680742. 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 32730528. 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 11,500 patients with severe, life-limiting illnesses. This type of care is focused on making the terminally ill patient's final days as comfortable and pain-free as possible.
Chemed operates in the residential and commercial plumbing and drain cleaning industry under the brand name Roto-Rooter. Roto-Rooter provides plumbing and drain service through company-owned branches, independent contractors and franchisees in the United States and Canada. Roto-Rooter also has licensed master franchisees in 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) | |||||||||||||||||||||||
|
For the Three Months |
For the Years |
||||||||||||||||||||||
| December 31, | December 31, | ||||||||||||||||||||||
| 2007 | 2006 | 2007 | 2006 | ||||||||||||||||||||
| Continuing Operations | |||||||||||||||||||||||
| Service revenues and sales | $ | 285,729 | $ |
271,903 |
$ | 1,100,058 | $ | 1,018,587 | |||||||||||||||
| Cost of services provided and goods sold | 197,221 | 189,586 | 767,066 | 730,123 | |||||||||||||||||||
| Selling, general and administrative expenses (aa) | 47,374 | 44,969 | 184,060 | 161,183 | |||||||||||||||||||
| Depreciation | 5,221 | 4,390 | 20,118 | 16,775 | |||||||||||||||||||
| Amortization | 1,369 | 1,287 | 5,270 | 5,255 | |||||||||||||||||||
| Other operating expenses--net (aa) | 1,927 | - | 789 | 272 | |||||||||||||||||||
|
Total costs and expenses |
253,112 | 240,232 | 977,303 | 913,608 | |||||||||||||||||||
| Income from operations | 32,617 | 31,671 | 122,755 | 104,979 | |||||||||||||||||||
| Interest expense | (1,587 | ) | (3,742 | ) | (11,244 | ) | (17,468 | ) | |||||||||||||||
| Loss on extinguishment of debt (aa) | - | - | (13,798 | ) | (430 | ) | |||||||||||||||||
| Loss from impairment of investment (aa) | - | - | - | (1,445 | ) | ||||||||||||||||||
| Other income--net | 1,057 | 1,914 | 4,125 | 4,648 | |||||||||||||||||||
| Income before income taxes | 32,087 | 29,843 | 101,838 | 90,284 | |||||||||||||||||||
| Income taxes (aa) | (11,882 | ) | (10,584 | ) | (39,063 | ) | (32,562 | ) | |||||||||||||||
| Income from continuing operations | 20,205 | 19,259 | 62,775 | 57,722 | |||||||||||||||||||
| Discontinued Operations (bb) | - | (1,626 | ) | 1,201 | (7,071 | ) | |||||||||||||||||
| Net Income | $ | 20,205 | $ | 17,633 | $ | 63,976 | $ | 50,651 | |||||||||||||||
| Earnings Per Share | |||||||||||||||||||||||
| Income from continuing operations | $ | 0.84 | $ | 0.74 | $ | 2.56 | $ | 2.21 | |||||||||||||||
| Net Income | $ | 0.84 | $ | 0.68 | $ | 2.61 | $ | 1.94 | |||||||||||||||
| Average number of shares outstanding | 23,959 | 26,030 | 24,520 | 26,118 | |||||||||||||||||||
| Diluted Earnings Per Share | |||||||||||||||||||||||
| Income from continuing operations | $ | 0.83 | $ | 0.73 | $ | 2.50 | $ | 2.16 | |||||||||||||||
| Net Income | $ | 0.83 | $ | 0.67 | $ | 2.55 | $ | 1.90 | |||||||||||||||
| Average number of shares outstanding | 24,460 | 26,411 | 25,077 | 26,669 | |||||||||||||||||||
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| (aa) |
Included in the consolidated statement of income are the following significant credits/(charges) which may not be indicative of ongoing operations (in thousands): |
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For the Three Months |
For the Years |
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| December 31, | December 31, | ||||||||||||||||||||||
| 2007 | 2006 | 2007 | 2006 | ||||||||||||||||||||
| Continuing Operations | |||||||||||||||||||||||
| Selling, general and administrative expenses | |||||||||||||||||||||||
| Stock option expense | $ | (1,591 | ) | $ | (596 | ) | $ | (4,665 | ) | $ | (1,211 | ) | |||||||||||
| Costs associated with OIG investigation | (39 | ) | (250 | ) | (227 | ) | (1,068 | ) | |||||||||||||||
| Long-term incentive compensation | - | - | (7,067 | ) | - | ||||||||||||||||||
| Other | - | 467 | 467 | 467 | |||||||||||||||||||
| Other operating expenses -- net | |||||||||||||||||||||||
| Costs related to litigation settlements | (1,927 | ) | - | (1,927 | ) | (272 | ) | ||||||||||||||||
| Gain on sale of property | - | - | 1,138 |
- |
|||||||||||||||||||
| Loss from impairment of investment | - | - | - | (1,445 | ) | ||||||||||||||||||
| Loss on extinguishment of debt | - | - | (13,798 | ) | (430 | ) | |||||||||||||||||
| Pretax impact on earnings | (3,557 | ) | (379 | ) | (26,079 | ) | (3,959 | ) | |||||||||||||||
| Income tax benefit on the above | 1,355 | 142 | 9,623 | 1,464 | |||||||||||||||||||
| Income tax benefit from finalizing prior years' returns | - | 324 | - | 2,115 | |||||||||||||||||||
| Aftertax impact on continuing operations | $ | (2,202 | ) | $ | 87 | $ | (16,456 | ) | $ | (380 | ) | ||||||||||||
| (bb) | Discontinued operations include (in thousands): | ||||||||||||||||||||||
|
For the Three Months |
For the Years |
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| December 31, | December 31, | ||||||||||||||||||||||
| 2007 | 2006 | 2007 | 2006 | ||||||||||||||||||||
| VITAS' Phoenix operation, discontinued in 2006 | $ | - | $ | (1,653 | ) | $ | 1,201 | $ | (4,872 | ) | |||||||||||||
| Patient Care, discontinued in 2002 | - | 53 | - | (1,426 | ) | ||||||||||||||||||
| Service America, discontinued in 2004 | - | (25 | ) | - | (32 | ) | |||||||||||||||||
| Adjustments related to other discontinued operations | - | (1 | ) | - | (741 | ) | |||||||||||||||||
| Total discontinued operations | $ | - | $ | (1,626 | ) | $ | 1,201 | $ | (7,071 | ) | |||||||||||||
| CHEMED CORPORATION AND SUBSIDIARY COMPANIES | |||||||||||||||||||
| CONSOLIDATED BALANCE SHEET | |||||||||||||||||||
| (in thousands, except per share data)(unaudited) | |||||||||||||||||||
| December 31, | |||||||||||||||||||
| 2007 | 2006 | ||||||||||||||||||
| Assets | |||||||||||||||||||
| Current assets | |||||||||||||||||||
| Cash and cash equivalents | $ | 4,988 | $ | 29,274 | |||||||||||||||
| Accounts receivable less allowances | 103,113 | 93,086 | |||||||||||||||||
| Inventories | 6,596 | 6,578 | |||||||||||||||||
| Current deferred income taxes | 14,212 | 17,789 | |||||||||||||||||
| Current assets of discontinued operations | - | 5,418 | |||||||||||||||||
| Prepaid expenses and other current assets | 10,496 | 9,968 | |||||||||||||||||
| Total current assets | 139,405 | 162,113 | |||||||||||||||||
| Investments of deferred compensation plans held in trust | 29,417 | 25,713 | |||||||||||||||||
| Notes receivable | 9,701 | 14,701 | |||||||||||||||||
| Properties and equipment, at cost less accumulated depreciation | 74,513 | 70,140 | |||||||||||||||||
| Identifiable intangible assets less accumulated amortization | 65,177 | 69,215 | |||||||||||||||||
| Goodwill |
438,689 |
435,050 | |||||||||||||||||
| Noncurrent assets of discontinued operations | - | 287 | |||||||||||||||||
| Other assets | 15,411 | 16,068 | |||||||||||||||||
| Total Assets | $ |
772,313 |
$ | 793,287 | |||||||||||||||
| Liabilities | |||||||||||||||||||
| Current liabilities | |||||||||||||||||||
| Accounts payable | $ |
48,111 |
$ | 49,744 | |||||||||||||||
| Current portion of long-term debt | 10,162 | 209 | |||||||||||||||||
| Income taxes | 4,221 | 6,765 | |||||||||||||||||
| Accrued insurance | 36,337 | 38,457 | |||||||||||||||||
| Accrued compensation | 40,072 | 35,990 | |||||||||||||||||
| Current liabilities of discontinued operations | - | 12,215 | |||||||||||||||||
| Other current liabilities | 13,929 | 22,684 | |||||||||||||||||
| Total current liabilities |
152,832 |
166,064 | |||||||||||||||||
| Deferred income taxes | 5,802 | 26,301 | |||||||||||||||||
| Long-term debt | 214,669 | 150,331 | |||||||||||||||||
| Deferred compensation liabilities | 29,149 | 25,514 | |||||||||||||||||
| Other liabilities | 5,512 | 3,716 | |||||||||||||||||
| Total Liabilities |
407,964 |
371,926 | |||||||||||||||||
| Stockholders' Equity | |||||||||||||||||||
| Capital stock | 29,261 | 28,850 | |||||||||||||||||
| Paid-in capital | 267,312 | 252,639 | |||||||||||||||||
| Retained earnings | 278,336 | 215,517 | |||||||||||||||||
| Treasury stock, at cost | (213,041 | ) | (78,064 | ) | |||||||||||||||
| Deferred compensation payable in Company stock | 2,481 | 2,419 | |||||||||||||||||
| Total Stockholders' Equity | 364,349 | 421,361 | |||||||||||||||||
| Total Liabilities and Stockholders' Equity | $ |
772,313 |
$ | 793,287 | |||||||||||||||
| Book Value Per Share | $ | 15.21 | $ | 16.32 | |||||||||||||||
| CHEMED CORPORATION AND SUBSIDIARY COMPANIES | |||||||||||||||
| CONSOLIDATED STATEMENT OF CASH FLOWS | |||||||||||||||
| (in thousands)(unaudited) | |||||||||||||||
| For the Years Ended | |||||||||||||||
| December 31, | |||||||||||||||
| 2007 | 2006 | ||||||||||||||
| Cash Flows from Operating Activities | |||||||||||||||
| Net income | $ | 63,976 | $ | 50,651 | |||||||||||
|
Adjustments to reconcile net income to net cash provided by operating activities: |
|||||||||||||||
| Depreciation and amortization | 25,388 | 22,030 | |||||||||||||
| Provision for uncollectible accounts receivable | 8,373 | 8,169 | |||||||||||||
| Provision for deferred income taxes | 8,113 | 7,408 | |||||||||||||
| Write off unamortized debt issuance costs | 7,235 | 430 | |||||||||||||
| Noncash portion of long-term incentive compensation | 6,154 | - | |||||||||||||
| Discontinued operations | (1,201 | ) | 7,071 | ||||||||||||
| Amortization of debt issuance costs | 1,186 | 1,774 | |||||||||||||
| Loss on impairment of investment | - | 1,445 | |||||||||||||
| Noncash long-term incentive compensation | - | - | |||||||||||||
|
Changes in operating assets and liabilities, excluding amounts acquired in business combinations: |
|||||||||||||||
| Increase in accounts receivable | (18,416 | ) | (12,527 | ) | |||||||||||
| Decrease/(increase) in inventories | (18 | ) | (78 | ) | |||||||||||
|
Decrease/(increase) in prepaid expenses and other current assets |
|||||||||||||||
| (549 | ) | (2,188 | ) | ||||||||||||
| Increase/(decrease) in accounts payable and other current liabilities | |||||||||||||||
| (8,299 | ) | (13,017 | ) | ||||||||||||
| Increase in income taxes | 6,321 | 18,726 | |||||||||||||
| Increase in other assets | (3,655 | ) | (722 | ) | |||||||||||
| Increase/(decrease) in other liabilities | 4,426 | 3,788 | |||||||||||||
| Excess tax benefit on share-based compensation | (3,091 | ) | (5,600 | ) | |||||||||||
| Noncash expense of internally financed ESOPs | - | - | |||||||||||||
| Other sources/(uses) | 3,641 | 2,109 | |||||||||||||
| Net cash provided by continuing operations | 99,584 | 89,469 | |||||||||||||
| Net cash provided/(used) by discontinued operations | - | 9,120 | |||||||||||||
| Net cash provided by operating activities | 99,584 | 98,589 | |||||||||||||
| Cash Flows from Investing Activities | |||||||||||||||
| Capital expenditures | (26,640 | ) | (21,987 | ) | |||||||||||
| Net uses from disposals of discontinued operations | (5,402 | ) | (922 | ) | |||||||||||
| Proceeds from sales of property and equipment | 3,104 | 347 | |||||||||||||
| Business combinations, net of cash acquired | (1,079 | ) | (4,145 | ) | |||||||||||
| Other uses | (1,701 | ) | (1,025 | ) | |||||||||||
| Net cash used by investing activities | (31,718 | ) | (27,732 | ) | |||||||||||
| Cash Flows from Financing Activities | |||||||||||||||
| Proceeds from issuance of long-term debt | 300,000 | - | |||||||||||||
| Repayment of long-term debt | (225,709 | ) | (84,563 | ) | |||||||||||
| Purchases of treasury stock | (131,704 | ) | (19,885 | ) | |||||||||||
| Purchase of note hedges | (55,100 | ) | - | ||||||||||||
| Proceeds from issuance of warrants | 27,614 | - | |||||||||||||
| Excess tax benefit on share-based compensation | 3,091 | 5,600 | |||||||||||||
| Debt issuance costs | (6,949 | ) | (154 | ) | |||||||||||
| Dividends paid | (5,888 | ) | (6,322 | ) | |||||||||||
| Proceeds from exercise of stock options | 2,467 | 3,861 | |||||||||||||
| Increase in cash overdraft payable | (919 | ) | 2,571 | ||||||||||||
| Other sources | 945 | 176 | |||||||||||||
| Net cash used by financing activities | (92,152 | ) | (98,716 | ) | |||||||||||
| Decrease in Cash and Cash Equivalents | (24,286 | ) | (27,859 | ) | |||||||||||
| Cash and cash equivalents at beginning of year | 29,274 | 57,133 | |||||||||||||
| Cash and cash equivalents at end of year | $ | 4,988 | $ | 29,274 | |||||||||||
| CHEMED CORPORATION AND SUBSIDIARY COMPANIES | ||||||||||||||||||||
| CONSOLIDATING STATEMENT OF INCOME | ||||||||||||||||||||
| FOR THE THREE MONTHS ENDED DECEMBER 31, 2007 AND 2006 | ||||||||||||||||||||
| (in thousands)(unaudited) | ||||||||||||||||||||
| Chemed | ||||||||||||||||||||
| VITAS | Roto-Rooter | Corporate | Consolidated | |||||||||||||||||
| 2007 | ||||||||||||||||||||
| Service revenues and sales | $ | 197,202 | $ | 88,527 | $ | - | $ | 285,729 | ||||||||||||
| Cost of services provided and goods sold | 151,476 | 45,745 | - | 197,221 | ||||||||||||||||
| Selling, general and administrative expenses (a) | 17,288 | 25,484 | 4,602 | 47,374 | ||||||||||||||||
| Depreciation | 3,069 | 2,075 | 77 | 5,221 | ||||||||||||||||
| Amortization | 996 | 13 | 360 | 1,369 | ||||||||||||||||
| Other operating expense (a) | - | 1,927 | - | 1,927 | ||||||||||||||||
| Total costs and expenses | 172,829 | 75,244 | 5,039 | 253,112 | ||||||||||||||||
| Income/(loss) from operations | 24,373 | 13,283 | (5,039 | ) | 32,617 | |||||||||||||||
| Interest expense | (43 | ) | 1 | (1,545 | ) | (1,587 | ) | |||||||||||||
| Intercompany interest income/(expense) | 1,902 | 1,317 | (3,219 | ) | - | |||||||||||||||
| Other income—net | 23 | 194 | 840 | 1,057 | ||||||||||||||||
| Income/(loss) before income taxes | 26,255 | 14,795 | (8,963 | ) | 32,087 | |||||||||||||||
| Income taxes (a) | (9,484 | ) | (5,067 | ) | 2,669 | (11,882 | ) | |||||||||||||
| Net income/(loss) | $ | 16,771 | $ | 9,728 | $ | (6,294 | ) | $ | 20,205 | |||||||||||
| 2006 | ||||||||||||||||||||
| Service revenues and sales | $ | 186,219 | $ | 85,684 | $ | - | $ | 271,903 | ||||||||||||
| Cost of services provided and goods sold | 144,347 | 45,239 | - | 189,586 | ||||||||||||||||
| Selling, general and administrative expenses (b) | 16,426 | 25,345 | 3,198 | 44,969 | ||||||||||||||||
| Depreciation | 2,421 | 1,882 | 87 | 4,390 | ||||||||||||||||
| Amortization | 964 | 16 | 307 | 1,287 | ||||||||||||||||
| Total costs and expenses | 164,158 | 72,482 | 3,592 | 240,232 | ||||||||||||||||
| Income/(loss) from operations | 22,061 | 13,202 | (3,592 | ) | 31,671 | |||||||||||||||
| Interest expense | (35 | ) | (87 | ) | (3,620 | ) | (3,742 | ) | ||||||||||||
| Intercompany interest income/(expense) | 1,583 | 1,108 | (2,691 | ) | - | |||||||||||||||
| Other income—net | (7 | ) | 721 | 1,200 | 1,914 | |||||||||||||||
| Income/(loss) before income taxes | 23,602 | 14,944 | (8,703 | ) | 29,843 | |||||||||||||||
| Income taxes (b) | (8,457 | ) | (5,203 | ) | 3,076 | (10,584 | ) | |||||||||||||
| Income/(loss) from continuing operations | 15,145 | 9,741 | (5,627 | ) | 19,259 | |||||||||||||||
| Discontinued operations | (1,653 | ) | - | 27 | (1,626 | ) | ||||||||||||||
| Net income/(loss) | $ | 13,492 | $ | 9,741 | $ | (5,600 | ) | $ | 17,633 | |||||||||||
| The "Footnotes to Financial Statements" are integral parts of this financial information. | ||||||||||||||||||||
| CHEMED CORPORATION AND SUBSIDIARY COMPANIES | ||||||||||||||||||||
| CONSOLIDATING STATEMENT OF INCOME | ||||||||||||||||||||
| FOR THE YEARS ENDED DECEMBER 31, 2007 AND 2006 | ||||||||||||||||||||
| (in thousands)(unaudited) | ||||||||||||||||||||
| Chemed | ||||||||||||||||||||
| VITAS | Roto-Rooter | Corporate | Consolidated | |||||||||||||||||
| 2007 | ||||||||||||||||||||
| Service revenues and sales | $ | 755,426 | $ | 344,632 | $ | - | $ | 1,100,058 | ||||||||||||
| Cost of services provided and goods sold | 586,435 | 180,631 | - | 767,066 | ||||||||||||||||
| Selling, general and administrative expenses (a) | 65,103 | 96,266 | 22,691 | 184,060 | ||||||||||||||||
| Depreciation | 11,446 | 8,365 | 307 | 20,118 | ||||||||||||||||
| Amortization | 3,984 | 54 | 1,232 | 5,270 | ||||||||||||||||
| Other operating expense/(income) (a) | - | 1,927 | (1,138 | ) | 789 | |||||||||||||||
| Total costs and expenses | 666,968 | 287,243 | 23,092 | 977,303 | ||||||||||||||||
| Income/(loss) from operations | 88,458 | 57,389 | (23,092 | ) | 122,755 | |||||||||||||||
| Interest expense | (146 | ) | (495 | ) | (10,603 | ) | (11,244 | ) | ||||||||||||
| Intercompany interest income/(expense) | 7,254 | 4,993 | (12,247 | ) | - | |||||||||||||||
| Loss on extinguishment of debt (a) | - | - | (13,798 | ) | (13,798 | ) | ||||||||||||||
| Other income—net | (11 | ) | 820 | 3,316 | 4,125 | |||||||||||||||
| Income/(loss) before income taxes | 95,555 | 62,707 | (56,424 | ) | 101,838 | |||||||||||||||
| Income taxes (a) | (35,722 | ) | (23,856 | ) | 20,515 | (39,063 | ) | |||||||||||||
| Income/(loss) from continuing operations | 59,833 | 38,851 | (35,909 | ) | 62,775 | |||||||||||||||
| Discontinued operations | 1,201 | - | - | 1,201 | ||||||||||||||||
| Net income/(loss) | $ | 61,034 | $ | 38,851 | $ | (35,909 | ) | $ | 63,976 | |||||||||||
| 2006 | ||||||||||||||||||||
| Service revenues and sales | $ | 699,092 | $ | 319,495 | $ | - | $ | 1,018,587 | ||||||||||||
| Cost of services provided and goods sold | 557,260 | 172,863 | - | 730,123 | ||||||||||||||||
| Selling, general and administrative expenses (b) | 56,961 | 92,495 | 11,727 | 161,183 | ||||||||||||||||
| Depreciation | 8,753 | 7,665 | 357 | 16,775 | ||||||||||||||||
| Amortization | 3,916 | 72 | 1,267 | 5,255 | ||||||||||||||||
| Other operating expense (b) | 272 | - | - | 272 | ||||||||||||||||
| Total costs and expenses | 627,162 | 273,095 | 13,351 | 913,608 | ||||||||||||||||
| Income/(loss) from operations | 71,930 | 46,400 | (13,351 | ) | 104,979 | |||||||||||||||
| Interest expense | (191 | ) | (368 | ) | (16,909 | ) | (17,468 | ) | ||||||||||||
| Intercompany interest income/(expense) | 5,329 | 3,997 | (9,326 | ) | - | |||||||||||||||
| Loss on extinguishment of debt (b) | - | - | (430 | ) | (430 | ) | ||||||||||||||
| Loss from impairment of investment (b) | - | - | (1,445 | ) | (1,445 | ) | ||||||||||||||
| Other income—net | 55 | 1,173 | 3,420 | 4,648 | ||||||||||||||||
| Income/(loss) before income taxes | 77,123 | 51,202 | (38,041 | ) | 90,284 | |||||||||||||||
| Income taxes (b) | (28,705 | ) | (18,748 | ) | 14,891 | (32,562 | ) | |||||||||||||
| Income/(loss) from continuing operations | 48,418 | 32,454 | (23,150 | ) | 57,722 | |||||||||||||||
| Discontinued operations | (4,872 | ) | - | (2,199 | ) | (7,071 | ) | |||||||||||||
| Net income/(loss) | $ | 43,546 | $ | 32,454 | $ | (25,349 | ) | $ | 50,651 | |||||||||||
| 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 DECEMBER 31, 2007 AND 2006 | ||||||||||||||||||||||
| (in thousands)(unaudited) | ||||||||||||||||||||||
| Chemed | ||||||||||||||||||||||
| VITAS | Roto-Rooter | Corporate | Consolidated | |||||||||||||||||||
| 2007 | ||||||||||||||||||||||
| Net income/(loss) | $ | 16,771 | $ | 9,728 | $ | (6,294 | ) | $ | 20,205 | |||||||||||||
| Add/(deduct): | ||||||||||||||||||||||
| Interest expense | 43 | (1 | ) | 1,545 | 1,587 | |||||||||||||||||
| Income taxes | 9,484 | 5,067 | (2,669 | ) | 11,882 | |||||||||||||||||
| Depreciation | 3,069 | 2,075 | 77 | 5,221 | ||||||||||||||||||
| Amortization | 996 | 13 | 360 | 1,369 | ||||||||||||||||||
| EBITDA | 30,363 | 16,882 | (6,981 | ) | 40,264 | |||||||||||||||||
| Add/(deduct): | ||||||||||||||||||||||
| Lawsuit settlement | - | 1,927 | - | 1,927 | ||||||||||||||||||
| Stock option expense | - | - | 1,591 | 1,591 | ||||||||||||||||||
| Legal expenses of OIG investigation | 39 | - | - | 39 | ||||||||||||||||||
| Advertising cost adjustment (c) | - | 1,532 | - | 1,532 | ||||||||||||||||||
| Interest income | (61 | ) | (19 | ) | (616 | ) | (696 | ) | ||||||||||||||
| Intercompany interest (income)/expense | (1,902 | ) | (1,317 | ) | 3,219 | - | ||||||||||||||||
| Adjusted EBITDA | $ | 28,439 | $ | 19,005 | $ | (2,787 | ) | $ | 44,657 | |||||||||||||
| 2006 | ||||||||||||||||||||||
| Net income/(loss) | $ | 13,492 | $ | 9,741 | $ | (5,600 | ) | $ | 17,633 | |||||||||||||
| Add/(deduct): | ||||||||||||||||||||||
| Discontinued operations | 1,653 | - | (27 | ) | 1,626 | |||||||||||||||||
| Interest expense | 35 | 87 | 3,620 | 3,742 | ||||||||||||||||||
| Income taxes | 8,457 | 5,203 | (3,076 | ) | 10,584 | |||||||||||||||||
| Depreciation | 2,421 | 1,882 | 87 | 4,390 | ||||||||||||||||||
| Amortization | 964 | 16 | 307 | 1,287 | ||||||||||||||||||
| EBITDA | 27,022 | 16,929 | (4,689 | ) | 39,262 | |||||||||||||||||
| Add/(deduct): | ||||||||||||||||||||||
| Stock option expense | - | - | 596 | 596 | ||||||||||||||||||
| Legal expenses of OIG investigation | 250 | - | - | 250 | ||||||||||||||||||
| Other | - | - | (467 | ) | (467 | ) | ||||||||||||||||
| Advertising cost adjustment (c) | - | 1,395 | - | 1,395 | ||||||||||||||||||
| Interest income | (14 | ) | (16 | ) | (684 | ) | (714 | ) | ||||||||||||||
| Intercompany interest (income)/expense | (1,583 | ) | (1,108 | ) | 2,691 | - | ||||||||||||||||
| Adjusted EBITDA | $ | 25,675 | $ | 17,200 | $ | (2,553 | ) | $ | 40,322 | |||||||||||||
| The "Footnotes to Financial Statements" are integral parts of this financial information. | ||||||||||||||||||||||
| CHEMED CORPORATION AND SUBSIDIARY COMPANIES | ||||||||||||||||||||||
| CONSOLIDATING SUMMARY OF EBITDA | ||||||||||||||||||||||
| FOR THE YEARS ENDED DECEMBER 31, 2007 AND 2006 | ||||||||||||||||||||||
| (in thousands)(unaudited) | ||||||||||||||||||||||
| Chemed | ||||||||||||||||||||||
| VITAS | Roto-Rooter | Corporate | Consolidated | |||||||||||||||||||
| 2007 | ||||||||||||||||||||||
| Net income/(loss) | $ | 61,034 | $ | 38,851 | $ | (35,909 | ) | $ | 63,976 | |||||||||||||
| Add/(deduct): | ||||||||||||||||||||||
| Discontinued operations | (1,201 | ) | - | - | (1,201 | ) | ||||||||||||||||
| Interest expense | 146 | 495 | 10,603 | 11,244 | ||||||||||||||||||
| Income taxes | 35,722 | 23,856 | (20,515 | ) | 39,063 | |||||||||||||||||
| Depreciation | 11,446 | 8,365 | 307 | 20,118 | ||||||||||||||||||
| Amortization | 3,984 | 54 | 1,232 | 5,270 | ||||||||||||||||||
| EBITDA | 111,131 | 71,621 | (44,282 | ) | 138,470 | |||||||||||||||||
| Add/(deduct): | ||||||||||||||||||||||
| Long-term incentive compensation | - | - | 7,067 | 7,067 | ||||||||||||||||||
| Lawsuit settlement | - | 1,927 | - | 1,927 | ||||||||||||||||||
| Stock option expense | - | - | 4,665 | 4,665 | ||||||||||||||||||
| Legal expenses of OIG investigation | 227 | - | - | 227 | ||||||||||||||||||
| Gain on sale of property | - | - | (1,138 | ) | (1,138 | ) | ||||||||||||||||
| Other | - | - | (467 | ) | (467 | ) | ||||||||||||||||
| Loss on extinguishment of debt | - | - | 13,798 | 13,798 | ||||||||||||||||||
| Advertising cost adjustment (c) | - | 601 | - | 601 | ||||||||||||||||||
| Interest income | (151 | ) | (377 | ) | (2,776 | ) | (3,304 | ) | ||||||||||||||
| Intercompany interest (income)/expense | (7,254 | ) | (4,993 | ) | 12,247 | - | ||||||||||||||||
| Adjusted EBITDA | $ | 103,953 | $ | 68,779 | $ | (10,886 | ) | $ | 161,846 | |||||||||||||
| 2006 | ||||||||||||||||||||||
| Net income/(loss) | $ | 43,546 | $ | 32,454 | $ | (25,349 | ) | $ | 50,651 | |||||||||||||
| Add/(deduct): | ||||||||||||||||||||||
| Discontinued operations | 4,872 | - | 2,199 | 7,071 | ||||||||||||||||||
| Interest expense | 191 | 368 | 16,909 | 17,468 | ||||||||||||||||||
| Income taxes | 28,705 | 18,748 | (14,891 | ) | 32,562 | |||||||||||||||||
| Depreciation | 8,753 | 7,665 | 357 | 16,775 | ||||||||||||||||||
| Amortization | 3,916 | 72 | 1,267 | 5,255 | ||||||||||||||||||
| EBITDA | 89,983 | 59,307 | (19,508 | ) | 129,782 | |||||||||||||||||
| Add/(deduct): | ||||||||||||||||||||||
| Loss from impairment of investment | - | - | 1,445 | 1,445 | ||||||||||||||||||
| Lawsuit settlement | 272 | - | - | 272 | ||||||||||||||||||
| Stock option expense | - | - | 1,211 | 1,211 | ||||||||||||||||||
| Legal expenses of OIG investigation | 1,068 | - | - | 1,068 | ||||||||||||||||||
| Other | - | - | (467 | ) | (467 | ) | ||||||||||||||||
| Loss on extinguishment of debt | - | - | 430 | 430 | ||||||||||||||||||
| Advertising cost adjustment (c) | - | 323 | - | 323 | ||||||||||||||||||
| Interest income | (114 | ) | (85 | ) | (2,492 | ) | (2,691 | ) | ||||||||||||||
| Intercompany interest (income)/expense | (5,329 | ) | (3,997 | ) | 9,326 | - | ||||||||||||||||
| Adjusted EBITDA | $ | 85,880 | $ | 55,548 | $ | (10,055 | ) | $ | 131,373 | |||||||||||||
| The "Footnotes to Financial Statements" are integral parts of this financial information. | ||||||||||||||||||||||
| CHEMED CORPORATION AND SUBSIDIARY COMPANIES | |||||||||||||||||||||
| RECONCILIATION OF ADJUSTED NET INCOME | |||||||||||||||||||||
| FOR THE YEARS ENDED DECEMBER 31, 2007 AND 2006 | |||||||||||||||||||||
| (in thousands, except per share data)(unaudited) | |||||||||||||||||||||
| Three Months Ended | Year Ended | ||||||||||||||||||||
| December 31, | December 31, | ||||||||||||||||||||
| 2007 | 2006 | 2007 | 2006 | ||||||||||||||||||
| Net income as reported | $ | 20,205 | $ | 17,633 | $ | 63,976 | $ | 50,651 | |||||||||||||
| Add/(deduct): | |||||||||||||||||||||
| Discontinued operations | - | 1,626 | (1,201 | ) | 7,071 | ||||||||||||||||
| Aftertax loss on impairment of investment | - | - | - | 918 | |||||||||||||||||
| Aftertax costs related to litigation settlements | 1,168 | - | 1,168 | 169 | |||||||||||||||||
| Prior-period tax adjustments | - | (324 | ) | - | (2,115 | ) | |||||||||||||||
| Aftertax cost of long-term incentive compensation | - | - | 4,427 | - | |||||||||||||||||
| Aftertax stock option expense | 1,010 | 378 | 2,962 | 769 | |||||||||||||||||
| Aftertax cost of legal expenses of OIG investigation | 24 | 155 | 141 | 662 | |||||||||||||||||
| Aftertax other | - | (296 | ) | (296 | ) | (296 | ) | ||||||||||||||
| Aftertax gain on sale of property | . | - | - | (724 | ) | ||||||||||||||||
| Aftertax cost of loss on extinguishment of debt | - | - | 8,778 | 273 | |||||||||||||||||
| Adjusted income from continuing operations | $ | 22,407 | $ | 19,172 | $ | 79,231 | $ | 58,102 | |||||||||||||
| Earnings Per Share As Reported | |||||||||||||||||||||
| Net income | $ | 0.84 | $ | 0.68 | $ | 2.61 | $ | 1.94 | |||||||||||||
| Average number of shares outstanding | 23,959 | 26,030 | 24,520 | 26,118 | |||||||||||||||||
| Diluted Earnings Per Share As Reported | |||||||||||||||||||||
| Net income | $ | 0.83 | $ | 0.67 | $ | 2.55 | $ | 1.90 | |||||||||||||
| Average number of shares outstanding | 24,460 | 26,411 | 25,077 | 26,669 | |||||||||||||||||
| Adjusted Earnings Per Share | |||||||||||||||||||||
| Income from continuing operations | $ | 0.94 | $ | 0.74 | $ | 3.23 | $ | 2.22 | |||||||||||||
| Average number of shares outstanding | 23,959 | 26,030 | 24,520 | 26,118 | |||||||||||||||||
| Adjusted Diluted Earnings Per Share | |||||||||||||||||||||
| Income from continuing operations | $ | 0.92 | $ | 0.73 | $ | 3.16 | $ | 2.18 | |||||||||||||
| Average number of shares outstanding | 24,460 | 26,411 | 25,077 | 26,669 | |||||||||||||||||
| The "Footnotes to Financial Statements" are integral parts of this financial information. | |||||||||||||||||||||
| CHEMED CORPORATION AND SUBSIDIARY COMPANIES | |||||||||||||||||||||
| OPERATING STATISTICS FOR VITAS SEGMENT | |||||||||||||||||||||
|
FOR THE YEARS ENDED DECEMBER 31, 2007 AND 2006 |
|||||||||||||||||||||
| (unaudited) | |||||||||||||||||||||
|
Three Months Ended |
Years Ended |
||||||||||||||||||||
| 2007 | 2006 | 2007 | 2006 | ||||||||||||||||||
| OPERATING STATISTICS | |||||||||||||||||||||
| Net revenue ($000) (d) | |||||||||||||||||||||
| Homecare | $ | 143,125 | $ | 132,082 | $ | 546,872 | $ | 492,012 | |||||||||||||
| Inpatient | 23,927 | 23,316 | 92,995 | 89,882 | |||||||||||||||||
| Continuous care | 30,150 | 31,509 | 115,801 | 121,096 | |||||||||||||||||
| Total before Medicare cap allowance | $ | 197,202 | $ | 186,907 | $ | 755,668 | $ | 702,990 | |||||||||||||
| Medicare cap allowance | - | (688 | ) | (242 | ) | (3,898 | ) | ||||||||||||||
| Total | $ | 197,202 | $ | 186,219 | $ | 755,426 | $ | 699,092 | |||||||||||||
| Net revenue as a percent of total before Medicare cap allowance | |||||||||||||||||||||
| Homecare | 72.6 | % | 70.6 | % | 72.4 | % | 70.0 | % | |||||||||||||
| Inpatient | 12.1 | 12.5 | 12.3 | 12.8 | |||||||||||||||||
| Continuous care | 15.3 | 16.9 | 15.3 | 17.2 | |||||||||||||||||
| Total before Medicare cap allowance | 100.0 | 100.0 | 100.0 | 100.0 | |||||||||||||||||
| Medicare cap allowance | - | (0.4 | ) | - | (0.6 | ) | |||||||||||||||
| Total | 100.0 | % | 99.6 | % | 100.0 | % | 99.4 | % | |||||||||||||
| Average daily census ("ADC") (days) | |||||||||||||||||||||
| Homecare | 7,121 | 6,636 | 6,966 | 6,333 | |||||||||||||||||
| Nursing home | 3,610 | 3,567 | 3,581 | 3,501 | |||||||||||||||||
| Routine homecare | 10,731 | 10,203 | 10,547 | 9,834 | |||||||||||||||||
| Inpatient | 417 | 411 | 417 | 411 | |||||||||||||||||
| Continuous care | 512 | 560 | 513 | 555 | |||||||||||||||||
| Total | 11,660 | 11,174 | 11,477 | 10,800 | |||||||||||||||||
| Total Admissions | 13,594 | 13,291 | 54,798 | 52,736 | |||||||||||||||||
| Total Discharges | 13,700 | 13,199 | 54,530 | 51,552 | |||||||||||||||||
| Average length of stay (days) | 75.7 | 75.7 | 76.5 | 71.9 | |||||||||||||||||
| Median length of stay (days) | 14.0 | 14.0 | 13.0 | 13.0 | |||||||||||||||||
| ADC by major diagnosis | |||||||||||||||||||||
| Neurological | 32.8 | % | 33.7 | % | 33.1 | % | 33.4 | % | |||||||||||||
| Cancer | 20.4 | 19.7 | 20.1 | 20.2 | |||||||||||||||||
| Cardio | 13.5 | 14.7 | 14.1 | 14.8 | |||||||||||||||||
| Respiratory | 6.8 | 7.0 | 6.8 | 7.1 | |||||||||||||||||
| Other | 26.5 | 24.9 | 25.9 | 24.5 | |||||||||||||||||
| Total | 100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | |||||||||||||
| Admissions by major diagnosis | |||||||||||||||||||||
| Neurological | 18.5 | % | 19.8 | % | 18.5 | % | 19.8 | % | |||||||||||||
| Cancer | 36.6 | 35.3 | 36.1 | 35.5 | |||||||||||||||||
| Cardio | 11.9 | 12.7 | 12.6 | 13.1 | |||||||||||||||||
| Respiratory | 7.3 | 7.2 | 7.5 | 7.3 | |||||||||||||||||
| Other | 25.7 | 25.0 | 25.3 | 24.3 | |||||||||||||||||
| Total | 100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | |||||||||||||
| Direct patient care margins (e) | |||||||||||||||||||||
| Routine homecare | 51.6 | % | 49.7 | % | 51.1 | % | 49.0 | % | |||||||||||||
| Inpatient | 18.8 | 19.4 | 18.4 | 20.0 | |||||||||||||||||
| Continuous care | 17.6 | 17.0 | 18.0 | 18.2 | |||||||||||||||||
| Homecare margin drivers | |||||||||||||||||||||
| (dollars per patient day) | |||||||||||||||||||||
| Labor costs | $ | 49.59 | $ | 49.72 | $ | 49.14 | $ | 49.38 | |||||||||||||
| Drug costs | 7.73 | 8.17 | 7.90 | 8.12 | |||||||||||||||||
| Home medical equipment | 5.91 | 5.81 | 5.78 | 5.63 | |||||||||||||||||
| Medical supplies | 2.49 | 2.28 | 2.25 | 2.17 | |||||||||||||||||
| Inpatient margin drivers | |||||||||||||||||||||
| (dollars per patient day) | |||||||||||||||||||||
| Labor costs | $ | 272.46 | $ | 261.55 | $ | 265.47 | $ | 259.25 | |||||||||||||
| Continuous care margin drivers | |||||||||||||||||||||
| (dollars per patient day) | |||||||||||||||||||||
| Labor costs | $ | 506.72 | $ | 486.46 | $ | 486.90 | $ | 468.13 | |||||||||||||
| Bad debt expense as a percent of revenues | 1.0 | % | 1.0 | % | 0.9 |
% |
0.9 | % | |||||||||||||
| Accounts receivable -- | |||||||||||||||||||||
| days of revenue outstanding | 43.4 | 38.7 | N.A. | N.A. | |||||||||||||||||
| The "Footnotes to Financial Statements" are integral parts of this financial information. | |||||||||||||||||||||
|
CHEMED CORPORATION AND SUBSIDIARY COMPANIES FOOTNOTES TO FINANCIAL STATEMENTS FOR THE THREE MONTHS AND YEARS ENDED DECEMBER 31, 2007 AND 2006 |
||||||||||||||||||||||||
| (unaudited) | ||||||||||||||||||||||||
| (a) |
Included in the results of operations for the three months and years ended December 31, 2007 are the following significant credits/(charges) which may not be indicative of ongoing operations (in thousands): |
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| Three Months Ended December 31, 2007 | ||||||||||||||||||||||||
| VITAS | Roto-Rooter | Corporate | Consolidated | |||||||||||||||||||||
| Selling, general and administrative expenses | ||||||||||||||||||||||||
| Costs associated with OIG investigation | $ | (39 | ) | $ | - | $ | - | $ | (39 | ) | ||||||||||||||
| Stock option expense | - | - | (1,591 | ) | (1,591 | ) | ||||||||||||||||||
| Other operating expense - net | ||||||||||||||||||||||||
| Costs related to litigation settlement |
- |
(1,927 | ) | - | (1,927 | ) | ||||||||||||||||||
| Pretax impact on earnings | (39 | ) | (1,927 | ) | (1,591 | ) | (3,557 | ) | ||||||||||||||||
| Income tax benefit/(charge) on the above | 15 | 759 | 581 | 1,355 | ||||||||||||||||||||
| Aftertax impact on earnings | $ | (24 | ) | $ | (1,168 | ) | $ | (1,010 | ) | $ | (2,202 | ) | ||||||||||||
| Year Ended December 31, 2007 | ||||||||||||||||||||||||
| VITAS | Roto-Rooter | Corporate | Consolidated | |||||||||||||||||||||
| Selling, general and administrative expenses | ||||||||||||||||||||||||
| Long-term incentive compensation | $ | - | $ | - | $ | (7,067 | ) | $ | (7,067 | ) | ||||||||||||||
| Costs associated with OIG investigation | (227 | ) | - | - | (227 | ) | ||||||||||||||||||
| Stock option expense | - | - | (4,665 | ) | (4,665 | ) | ||||||||||||||||||
| Other | - | - | 467 | 467 | ||||||||||||||||||||
| Other operating expense/(income) | ||||||||||||||||||||||||
| Costs related to litigation settlement |
- |
(1,927 | ) |
- |
(1,927 | ) | ||||||||||||||||||
| Gain on sale of property | - | - | 1,138 | 1,138 | ||||||||||||||||||||
| Loss on extinguishment of debt | - | - | (13,798 | ) | (13,798 | ) | ||||||||||||||||||
| Pretax impact on earnings | (227 | ) | (1,927 | ) | (23,925 | ) | (26,079 | ) | ||||||||||||||||
| Income tax benefit/(charge) on the above | 86 | 759 | 8,778 | 9,623 | ||||||||||||||||||||
| Aftertax impact on earnings | $ | (141 | ) | $ | (1,168 | ) | $ | (15,147 | ) | $ | (16,456 | ) | ||||||||||||
| (b) |
Included in the results of operations for the three months and years ended December 31, 2006 are the following significant credits/(charges) which may not be indicative of ongoing operations (in thousands): |
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| Three Months Ended December 31, 2006 | ||||||||||||||||||||||||
| VITAS | Roto-Rooter | Corporate | Consolidated | |||||||||||||||||||||
| Selling, general and administrative expenses | ||||||||||||||||||||||||
| Costs associated with OIG investigation | $ | (250 | ) | $ | - | $ | - | $ | (250 | ) | ||||||||||||||
| Stock option expense | - | - | (596 | ) | (596 | ) | ||||||||||||||||||
| Other | - | - | 467 | 467 | ||||||||||||||||||||
| Pretax impact on earnings | (250 | ) | - | (129 | ) | (379 | ) | |||||||||||||||||
| Income tax benefit on the above | 95 |
- |
47 | 142 | ||||||||||||||||||||
| Income tax benefit from finalizing prior years' returns | - | 324 | - | 324 | ||||||||||||||||||||
| Aftertax impact on earnings | $ | (155 | ) | $ | 324 | $ | (82 | ) | $ | 87 | ||||||||||||||
| Year Ended December 31, 2006 | ||||||||||||||||||||||||
| VITAS | Roto-Rooter | Corporate | Consolidated | |||||||||||||||||||||
| Selling, general and administrative expenses | ||||||||||||||||||||||||
| Costs associated with OIG investigation | $ | (1,068 | ) | $ | - | $ | - | $ | (1,068 | ) | ||||||||||||||
| Stock option expense | - | - | (1,211 | ) | (1,211 | ) | ||||||||||||||||||
| Other | - | - | 467 | 467 | ||||||||||||||||||||
| Other operating expense | ||||||||||||||||||||||||
| Costs related to litigation settlement | (272 | ) | - | - | (272 | ) | ||||||||||||||||||
| Loss from impairment of investment | - | - | (1,445 | ) | (1,445 | ) | ||||||||||||||||||
| Loss on extinguishment of debt | - | - | (430 | ) | (430 | ) | ||||||||||||||||||
| Pretax impact on earnings | (1,340 | ) | - | (2,619 | ) | (3,959 | ) | |||||||||||||||||
| Income tax benefit on the above | 509 | - | 955 | 1,464 | ||||||||||||||||||||
| Income tax benefit from finalizing prior years' returns | - | 1,251 | 864 | 2,115 | ||||||||||||||||||||
| Aftertax impact on earnings | $ | (831 | ) | $ | 1,251 | $ | (800 | ) | $ | (380 | ) | |||||||||||||
| (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 fourth quarters of 2007 and 2006, GAAP advertising expense for Roto-Rooter totaled $7,330,000 and $6,579,000, respectively. If the expense of the telephone directories were spread over the periods they are in circulation, advertising expense for the fourth quarters of 2007 and 2006 would total $5,798,000 and $5,184,000, respectively. For the years ended December 31, 2007 and 2006, GAAP advertising expense for Roto-Rooter totaled $22,980,000 and $20,563,000, respectively. If the expense of the telephone directories were spread over the periods they are in circulation, advertising expense for the years ended December 31, 2007 and 2006 would total 22,379,000 and $20,240,000, respectively. |
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| (d) |
VITAS has 6 large (greater than 450 ADC), 15 medium (greater than 200 but less than 450 ADC) and 22 small (less than 200 ADC) hospice programs. There are two programs continuing at December 31, 2007 with Medicare cap cushion of less than 10% for the 2007 measurement period. |
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| (e) | Amounts exclude indirect patient care and administrative costs, as well as Medicare Cap billing limitation. | |||||||||||||||||||||||
CONTACT:
Chemed Corporation
David P. Williams, 513-762-6901