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Chemed Reports First-Quarter 2021 Results

Chemed Corporation (Chemed) (NYSE: CHE), which operates VITAS Healthcare Corporation (VITAS), one of the nation’s largest providers of end-of-life care, and Roto-Rooter, the nation’s largest commercial and residential plumbing and drain cleaning services provider, reported financial results for its first quarter ended March 31, 2021, versus the comparable prior-year period, as follows:

Consolidated operating results:

  • Revenue increased 2.2% to $527 million
  • GAAP Diluted Earnings-per-Share (EPS) of $4.01, an increase of 18.6%
  • Adjusted Diluted EPS of $4.44, an increase of 20.7%

VITAS segment operating results:

  • Net Patient Revenue of $316 million, a decline of 6.5%
  • Average Daily Census (ADC) of 18,050, a decline of 6.1%
  • Admissions of 18,135 a decline of 2.5%
  • Net Income, excluding certain discrete items, of $42.1 million, a decline of 1.0%
  • Adjusted EBITDA, excluding Medicare Cap, of $58.3 million, a decline of 3.3%
  • Adjusted EBITDA margin, excluding Medicare Cap, of 18.4%, an increase of 66-basis points

Roto-Rooter segment operating results:

  • Revenue of $212 million, an increase of 18.9%
  • Net Income, excluding certain discrete items, of $39.3 million, an increase of 47.3%
  • Adjusted EBITDA of $56.9 million, an increase of 42.1%
  • Adjusted EBITDA margin of 26.9%, an increase of 439-basis points

VITAS

VITAS net revenue was $316 million in the first quarter of 2021, which is a decline of 6.5%, when compared to the prior-year period. This revenue decline is comprised primarily of a 7.1% decline in days-of-care offset by a geographically weighted average Medicare reimbursement rate increase (including the suspension of sequestration on May 1, 2020) of approximately 2.8%. Acuity mix shift had a net impact of reducing revenue approximately $9.1 million, or 2.7%, in the quarter when compared to the prior year revenue and level-of-care mix. The combination of a lower Medicare Cap and other contra revenue changes offset a portion of the revenue decline by approximately 50-basis points.

In the first quarter of 2021, VITAS accrued $1.5 million in Medicare Cap billing limitations. This compares to a $2.5 million Medicare Cap billing limitation in the first quarter of 2020.

Of VITAS’ 30 Medicare provider numbers, 27 provider numbers currently have a Medicare Cap cushion of 10% or greater, one provider number has a cap cushion between 5% and 10%, one provider number has a cap cushion between 0% and 5% and one provider number currently has a fiscal 2021 Medicare Cap billing limitation liability. This is based on actual Medicare revenue and admissions in the first six months of the Medicare Cap fiscal year.

Average revenue per patient per day in the first quarter of 2021 was $198.95, which, including acuity mix shift, is 2-basis points below the prior-year period. Reimbursement for routine home care and high acuity care averaged $170.14 and $991.77, respectively. During the quarter, high acuity days-of-care were 3.5% of total days of care, 71-basis points less than the prior-year quarter.

The first quarter 2021 gross margin, excluding Medicare Cap, increased costs for personal protection equipment (PPE), disinfecting facilities and other costs related to operating during the pandemic, was 25.3%. This is a 123-basis point margin improvement when compared to the first quarter of 2020.

Selling, general and administrative expense was $22.1 million in the first quarter of 2021 and compares favorably to the $22.3 million incurred in the prior-year quarter. Adjusted EBITDA, excluding Medicare Cap, totaled $58.3 million in the quarter, a decrease of 3.3%. Adjusted EBITDA margin in the quarter, excluding Medicare Cap, was 18.4%, which is a 66-basis point improvement when compared to the prior-year period.

Roto-Rooter

Roto-Rooter generated quarterly revenue of $212 million in the first quarter of 2021, an increase of $33.7 million, or 18.9%, over the prior-year quarter.

Total Roto-Rooter branch commercial revenue in the quarter totaled $46.9 million, a decrease of 8.4% over the prior year. This aggregate commercial revenue decline consisted of drain cleaning revenue declining 5.8%, plumbing declining 5.0% and excavation declining 19.5%. Water restoration increased 8.8%.

Total Roto-Rooter branch residential revenue in the quarter totaled $144 million, an increase of 32.0% over the prior year period. This aggregate residential revenue growth consisted of drain cleaning increasing 29.5%, plumbing expanding 34.9%, excavation increasing 35.8%, and water restoration increasing 28.7%.

Roto-Rooter’s gross margin in the quarter was 51.9%, a 378-basis point increase when compared to the first quarter of 2020. Adjusted EBITDA in the first quarter of 2021 totaled $56.9 million, an increase of 42.1%. The Adjusted EBITDA margin in the quarter was 26.9% which is a 439-basis point increase when compared to the prior year.

Chemed Consolidated

As of March 31, 2021, Chemed had total cash and cash equivalents of $210 million and no long-term debt.

In June 2018, Chemed entered into a five-year Amended and Restated Credit Agreement that consists of a $450 million revolving credit facility. The interest rate on this facility has a floating rate that is currently LIBOR plus 100-basis points. At March 31, 2021, the Company had approximately $412 million of undrawn borrowing capacity under this credit agreement.

During the quarter, the Company repurchased 100,000 shares of Chemed stock for $44.8 million which equates to a cost per share of $447.67. As of March 31, 2021, there was approximately $134 million of remaining share repurchase authorization under this plan.

Chemed restarted its share repurchase program in 2007. Since that time, Chemed has repurchased approximately 14.6 million shares, aggregating approximately $1.4 billion at an average share cost of $98.15. Including dividends over this period, Chemed has returned approximately $1.6 billion to shareholders.

Guidance for 2021

Management anticipates providing updated 2021 earnings guidance in July 2021 as part of the June 30, 2021, earnings press release.

Conference Call

Chemed will host a conference call and webcast at 10 a.m., ET, on Wednesday, April 28, 2021, to discuss the Company's quarterly results and to provide an update on its business. The dial-in number for the conference call is (844) 743-2500 for U.S. and Canadian participants and +1 (661) 378-9533 for international participants. The Conference ID is 9096486. 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 24 hours after the call's conclusion. It can be accessed by dialing (855) 859-2056 for U.S. and Canadian callers and +1 (404) 537-3406 for international callers and will be available for one week following the live call. The replay Conference ID is 9096486. An archived webcast will also be available at www.chemed.com.

Chemed Corporation operates in the healthcare field through its VITAS Healthcare Corporation subsidiary. VITAS provides daily hospice services to approximately 18,000 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, drain cleaning, and water cleanup services through company-owned branches, independent contractors and franchisees in the United States and Canada. Roto-Rooter also has licensed master franchisees in the republics of Indonesia and Singapore, and the Philippines.

This press release contains information about Chemed’s EBITDA, Adjusted EBITDA and Adjusted Diluted EPS, which are not measures derived in accordance with GAAP and which exclude components that are important to understanding Chemed’s financial performance. In reporting its operating results, Chemed provides EBITDA, Adjusted EBITDA and Adjusted Diluted EPS measures to help investors and others evaluate the Company’s 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 management similarly uses EBITDA, Adjusted EBITDA and Adjusted Diluted EPS to assist it in evaluating the performance of the Company across fiscal periods and in assessing how its performance compares to its peer companies. These measures also help Chemed’s management to estimate the resources required to meet Chemed’s future financial obligations and expenditures. Chemed’s EBITDA, Adjusted EBITDA and Adjusted Diluted EPS should not be considered in isolation or as a substitute for comparable measures calculated and presented in accordance with GAAP. We calculated Adjusted EBITDA Margin by dividing Adjusted EBITDA by service revenue and sales. A reconciliation of Chemed’s net income to its EBITDA, Adjusted EBITDA and Adjusted Diluted EPS 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 STATEMENTS OF INCOME
(in thousands, except per share data)(unaudited)
 

Three Months Ended March 31,

2021

2020

Service revenues and sales$

527,360

$

515,798

Cost of services provided and goods sold

340,473

351,745

Selling, general and administrative expenses (aa)

91,599

70,583

Depreciation

11,715

11,388

Amortization

2,510

2,477

Other operating expense

622

242

Total costs and expenses

446,919

436,435

Income from operations

80,441

79,363

Interest expense

(381

)

(975

)

Other income/(expense)--net (bb)

3,602

(9,466

)

Income before income taxes

83,662

68,922

Income taxes

(18,262

)

(13,031

)

Net income$

65,400

$

55,891

Earnings Per Share
Net income$

4.08

$

3.50

Average number of shares outstanding

16,010

15,991

Diluted Earnings Per Share
Net income$

4.01

$

3.38

Average number of shares outstanding

16,310

16,516

 
(aa) Selling, general and administrative ("SG&A") expenses comprise (in thousands):
 

Three Months Ended March 31,

2021

2020

SG&A expenses before long-term incentive compensation and the impact of market value adjustments related to deferred compensation plans$

86,668

$

78,334

Market value adjustments related to deferred compensation trusts

3,038

(9,572

)

Long-term incentive compensation

1,893

1,821

Total SG&A expenses$

91,599

$

70,583

 
(bb) Other income/(expense)--net comprises (in thousands):

Three Months Ended March 31,

2021

2020

Market value adjustments related to deferred compensation trusts$

3,038

$

(9,572

)

Interest income

92

109

Other

472

(3

)

Total other income/(expense)--net$

3,602

$

(9,466

)

CHEMED CORPORATION AND SUBSIDIARY COMPANIES
CONSOLIDATED BALANCE SHEETS
(in thousands, except per share data)(unaudited)
 

March 31,

2021

2020

Assets
Current assets
Cash and cash equivalents$

210,156

$

28,951

Accounts receivable less allowances

104,748

134,695

Inventories

6,777

7,313

Prepaid income taxes

3,518

5,917

Prepaid expenses

21,775

21,939

Total current assets

346,974

198,815

Investments of deferred compensation plans held in trust

93,705

72,296

Properties and equipment, at cost less accumulated depreciation

190,154

183,729

Lease right of use asset

124,104

112,302

Identifiable intangible assets less accumulated amortization

115,517

124,219

Goodwill

578,618

577,236

Other assets

9,061

8,962

Total Assets$

1,458,133

$

1,277,559

Liabilities
Current liabilities
Accounts payable$

55,447

$

37,838

Income taxes

24,774

6,133

Accrued insurance

57,533

56,480

Accrued compensation

73,907

63,622

Accrued legal

2,102

7,114

Short-term lease liability

37,897

36,252

Other current liabilities

38,555

39,298

Total current liabilities

290,215

246,737

Deferred income taxes

19,733

20,681

Long-term debt

-

160,000

Deferred compensation liabilities

93,755

70,363

Long-term lease liability

98,813

88,278

Other liabilities

26,733

7,899

Total Liabilities

529,249

593,958

Stockholders' Equity
Capital stock

36,345

35,912

Paid-in capital

982,739

878,550

Retained earnings

1,783,740

1,476,151

Treasury stock, at cost

(1,876,315

)

(1,709,390

)

Deferred compensation payable in Company stock

2,375

2,378

Total Stockholders' Equity

928,884

683,601

Total Liabilities and Stockholders' Equity$

1,458,133

$

1,277,559

CHEMED CORPORATION AND SUBSIDIARY COMPANIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)(unaudited)
 

For the Three Months Ended March 31,

2021

2020

Cash Flows from Operating Activities
Net income$

65,400

$

55,891

Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization

14,225

13,865

Payments on previously accrued litigation settlements

(8,490

)

-

Stock option expense

6,106

5,045

Noncash long-term incentive compensation

1,642

1,598

Deferred payroll taxes

(930

)

2,290

Amortization of debt issuance costs

76

76

Provision for bad debts

-

594

Changes in operating assets and liabilities, excluding amounts acquired in business combinations:
Decrease in accounts receivable

22,773

6,269

Decrease in inventories

318

149

Decrease in prepaid expenses

4,402

1,211

Decrease in accounts payable and other current liabilities

(18,369

)

(7,037

)

Change in current income taxes

18,395

10,159

Net change in lease assets and liabilities

(24

)

(153

)

Decrease/(increase) in other assets

(5,274

)

5,048

Increase/(decrease) in other liabilities

5,759

(6,067

)

Other sources

710

388

Net cash provided by operating activities

106,719

89,326

Cash Flows from Investing Activities
Capital expenditures

(17,697

)

(19,897

)

Business combinations

-

(1,452

)

Other sources/(uses)

274

(144

)

Net cash used by investing activities

(17,423

)

(21,493

)

Cash Flows from Financing Activities
Purchases of treasury stock

(41,107

)

(100,235

)

Proceeds from exercise of stock options

11,026

9,241

Capital stock surrendered to pay taxes on stock-based compensation

(6,613

)

(7,951

)

Dividends paid

(5,437

)

(5,130

)

Payments on revolving line of credit

-

(104,100

)

Proceeds from revolving line of credit

-

174,100

Change in cash overdrafts payable

-

(9,849

)

Other sources/(uses)

316

(1,116

)

Net cash used by financing activities

(41,815

)

(45,040

)

Increase in Cash and Cash Equivalents

47,481

22,793

Cash and cash equivalents at beginning of year

162,675

6,158

Cash and cash equivalents at end of year$

210,156

$

28,951

CHEMED CORPORATION AND SUBSIDIARY COMPANIES
CONSOLIDATING STATEMENTS OF INCOME
FOR THE THREE MONTHS ENDED MARCH 31, 2021 AND 2020
(in thousands)(unaudited)
Chemed
VITASRoto-RooterCorporateConsolidated
2021 (a)
Service revenues and sales$

315,788

$

211,572

$

-

$

527,360

Cost of services provided and goods sold

238,667

101,806

-

340,473

Selling, general and administrative expenses

22,090

53,322

16,187

91,599

Depreciation

5,338

6,353

24

11,715

Amortization

18

2,492

-

2,510

Other operating expense

502

120

-

622

Total costs and expenses

266,615

164,093

16,211

446,919

Income/(loss) from operations

49,173

47,479

(16,211

)

80,441

Interest expense

(42

)

(89

)

(250

)

(381

)

Intercompany interest income/(expense)

4,525

1,620

(6,145

)

-

Other income—net

533

31

3,038

3,602

Income/(loss) before income taxes

54,189

49,041

(19,568

)

83,662

Income taxes

(13,419

)

(11,864

)

7,021

(18,262

)

Net income/(loss)$

40,770

$

37,177

$

(12,547

)

$

65,400

 
2020 (b)
Service revenues and sales$

337,916

$

177,882

$

-

$

515,798

Cost of services provided and goods sold

259,429

92,316

-

351,745

Selling, general and administrative expenses

22,269

46,282

2,032

70,583

Depreciation

5,474

5,878

36

11,388

Amortization

18

2,459

-

2,477

Other operating expense

114

128

-

242

Total costs and expenses

287,304

147,063

2,068

436,435

Income/(loss) from operations

50,612

30,819

(2,068

)

79,363

Interest expense

(45

)

(102

)

(828

)

(975

)

Intercompany interest income/(expense)

4,386

1,349

(5,735

)

-

Other income/(expense)—net

65

40

(9,571

)

(9,466

)

Income/(loss) before income taxes

55,018

32,106

(18,202

)

68,922

Income taxes

(13,739

)

(7,784

)

8,492

(13,031

)

Net income/(loss)$

41,279

$

24,322

$

(9,710

)

$

55,891

The "Footnotes to Financial Statements" are integral parts of this financial information.
CHEMED CORPORATION AND SUBSIDIARY COMPANIES
CONSOLIDATING SUMMARIES OF EBITDA
FOR THE THREE MONTHS ENDED MARCH 31, 2021 AND 2020
(in thousands)(unaudited)

Chemed

VITAS

Roto-Rooter

Corporate

Consolidated

2021

Net income/(loss)$

40,770

$

37,177

$

(12,547

)

$

65,400

Add/(deduct):
Interest expense

42

89

250

381

Income taxes

13,419

11,864

(7,021

)

18,262

Depreciation

5,338

6,353

24

11,715

Amortization

18

2,492

-

2,510

EBITDA

59,587

57,975

(19,294

)

98,268

Add/(deduct):
Intercompany interest expense/(income)

(4,525

)

(1,620

)

6,145

-

Interest income

(61

)

(31

)

-

(92

)

Stock option expense

-

-

6,106

6,106

Direct costs related to COVID-19

1,753

553

38

2,344

Long-term incentive compensation

-

-

1,893

1,893

Adjusted EBITDA$

56,754

$

56,877

$

(5,112

)

$

108,519

 

2020

Net income/(loss)$

41,279

$

24,322

$

(9,710

)

$

55,891

Add/(deduct):
Interest expense

45

102

828

975

Income taxes

13,739

7,784

(8,492

)

13,031

Depreciation

5,474

5,878

36

11,388

Amortization

18

2,459

-

2,477

EBITDA

60,555

40,545

(17,338

)

83,762

Add/(deduct):
Intercompany interest expense/(income)

(4,386

)

(1,349

)

5,735

-

Interest income

(68

)

(40

)

-

(108

)

Stock option expense

-

-

5,045

5,045

Direct costs related to COVID-19

973

861

-

1,834

Long-term incentive compensation

-

-

1,821

1,821

Medicare cap sequestration adjustment

675

-

-

675

Adjusted EBITDA$

57,749

$

40,017

$

(4,737

)

$

93,029

The "Footnotes to Financial Statements" are integral parts of this financial information.
CHEMED CORPORATION AND SUBSIDIARY COMPANIES
RECONCILIATION OF ADJUSTED NET INCOME
(in thousands, except per share data)(unaudited)
 
 

Three Months Ended March 31,

2021

2020

Net income as reported$

65,400

$

55,891

Add/(deduct) pre-tax cost of:
Stock option expense

6,106

5,045

Amortization of reacquired franchise agreements

2,352

2,352

Direct costs related to COVID-19

2,344

1,834

Long-term incentive compensation

1,893

1,821

Medicare cap sequestration adjustments

-

675

Add/(deduct) tax impacts:
Tax impact of the above pre-tax adjustments (1)

(2,487

)

(2,350

)

Excess tax benefits on stock compensation

(3,238

)

(4,553

)

Adjusted net income$

72,370

$

60,715

 
Diluted Earnings Per Share As Reported
Net income$

4.01

$

3.38

Average number of shares outstanding

16,310

16,516

 
Adjusted Diluted Earnings Per Share
Adjusted net income$

4.44

$

3.68

Average number of shares outstanding

16,310

16,516

(1) The tax impact of pre-tax adjustments was calculated using the effective tax rate of the operating unit for which each adjustment is associated.
 
The "Footnotes to Financial Statements" are integral parts of this financial information.
OPERATING STATISTICS FOR VITAS SEGMENT
(unaudited)
 

Three Months Ended March 31,

OPERATING STATISTICS

2021

2020

Net revenue ($000) (c)
Homecare$

263,754

$

271,762

Inpatient

29,156

32,482

Continuous care

27,349

40,555

Other

2,938

3,147

Subtotal$

323,197

$

347,946

Room and board, net

(2,665

)

(3,381

)

Contractual allowances

(3,244

)

(4,149

)

Medicare cap allowance

(1,500

)

(2,500

)

Net Revenue$

315,788

$

337,916

Net revenue as a percent of total before Medicare cap allowance
Homecare

81.6

%

78.1

%

Inpatient

9.0

9.3

Continuous care

8.5

11.7

Other

0.9

0.9

Subtotal

100.0

100.0

Room and board, net

(0.8

)

(1.0

)

Contractual allowances

(1.0

)

(1.2

)

Medicare cap allowance

(0.5

)

(0.7

)

Net Revenue

97.7

%

97.1

%

Days of care
Homecare

1,329,892

1,364,746

Nursing home

232,783

303,374

Respite

4,840

6,692

Subtotal routine homecare and respite

1,567,515

1,674,812

Inpatient

27,674

32,348

Continuous care

29,300

41,373

Total

1,624,489

1,748,533

 
Number of days in relevant time period

90

91

Average daily census ("ADC") (days)
Homecare

14,777

14,997

Nursing home

2,586

3,334

Respite

54

74

Subtotal routine homecare and respite

17,417

18,405

Inpatient

307

355

Continuous care

326

455

Total

18,050

19,215

Total Admissions

18,135

18,603

Total Discharges

18,516

18,196

Average length of stay (days)

94.4

90.7

Median length of stay (days)

12.0

14.0

ADC by major diagnosis
Cerebro

35.9

%

35.9

%

Neurological

22.1

21.4

Cancer

12.2

12.7

Cardio

15.8

15.9

Respiratory

7.8

8.3

Other

6.2

5.8

Total

100.0

%

100.0

%

Admissions by major diagnosis
Cerebro

21.4

%

21.1

%

Neurological

12.3

12.5

Cancer

25.0

28.3

Cardio

14.2

15.1

Respiratory

11.0

12.2

Other

16.1

10.8

Total

100.0

%

100.0

%

 
Estimated uncollectible accounts as a percent of revenues

1.0

%

1.2

%

 
Accounts receivable --
Days of revenue outstanding-excluding unapplied Medicare payments

37.8

33.9

Days of revenue outstanding-including unapplied Medicare payments

26.9

26.1

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 MARCH 31, 2021 AND 2020
(unaudited)
 
(a)Included in the results of operations for 2021 are the following significant credits/(charges) which may not be indicative of ongoing operations
(in thousands):
Three Months Ended March 31, 2021
VITASRoto-RooterCorporateConsolidated
 
Stock option expense$

-

$

-

$

(6,106

)

$

(6,106

)

Amortization of reacquired franchise agreements

-

(2,352

)

-

(2,352

)

Direct costs related to COVID-19

(1,753

)

(553

)

(38

)

(2,344

)

Long-term incentive compensation

-

-

(1,893

)

(1,893

)

Pretax impact on earnings

(1,753

)

(2,905

)

(8,037

)

(12,695

)

Excess tax benefits on stock compensation

-

-

3,238

3,238

Income tax benefit on the above

445

769

1,273

2,487

After-tax impact on earnings$

(1,308

)

$

(2,136

)

$

(3,526

)

$

(6,970

)

 
 
(b)Included in the results of operations for 2020 are the following significant credits/(charges) which may not be indicative of ongoing operations
(in thousands):
Three Months Ended March 31, 2020
VITASRoto-RooterCorporateConsolidated
 
Stock option expense$

-

$

-

$

(5,045

)

$

(5,045

)

Amortization of reacquired franchise agreements

-

(2,352

)

-

(2,352

)

Direct costs related to COVID-19

(973

)

(861

)

-

(1,834

)

Long-term incentive compensation

-

-

(1,821

)

(1,821

)

Medicare cap sequestration adjustment

(675

)

-

-

(675

)

Pretax impact on earnings

(1,648

)

(3,213

)

(6,866

)

(11,727

)

Excess tax benefits on stock compensation

-

-

4,553

4,553

Income tax benefit on the above

419

851

1,080

2,350

After-tax impact on earnings$

(1,229

)

$

(2,362

)

$

(1,233

)

$

(4,824

)

(c)VITAS has 10 large (greater than 450 ADC), 19 medium (greater than 200 but less than 450 ADC) and 20 small (less than 200 ADC) hospice programs. Of Vitas' 30 Medicare provider numbers, for the current cap year, 27 provider numbers have a Medicare cap cushion of 10% or greater, one provider number has a cap cushion between 5% and 10%, one provider number has a cap cushion between 0% and 5%, and one provider number have a Medicare cap liability.

Contacts:

David P. Williams
(513) 762-6901

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