10-Q 1 che-20220331x10q.htm 10-Q che-20220331x10q
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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

x    Quarterly Report Under Section 13 or 15 (d) of the Securities Exchange Act of 1934 For the Quarterly Period Ended March 31, 2022

o    Transition Report Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Commission File Number: 1-8351

CHEMED CORPORATION

(Exact name of registrant as specified in its charter)

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)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter periods that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

Yes  

x

No  

o  

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files).

Yes  

x

No  

o  

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer or a non-accelerated filer (as defined in Rule 12b-2 of the Exchange Act).

Large Accelerated Filer

x

Accelerated Filer

o

Non-accelerated Filer

o

Smaller Reporting Company

o

Emerging growth company o

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended the extended transition period for complying with a new or revised financial accounting standards provided pursuant to Section 13 (a) of the Exchange Act o

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).

Yes  

 o 

No  

x  

Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date.

Securities registered pursuant to Section 12(b) of the Act:

Title of Each Class

Trading Symbol

Name of Each Exchange

on which Registered

Amount

Date

Capital Stock $1 Par Value

CHE

New York Stock Exchange

14,967,917 Shares

March 31, 2022

 


-1-


CHEMED CORPORATION AND

SUBSIDIARY COMPANIES

Index

Page No.

PART I. FINANCIAL INFORMATION:

Item 1. Financial Statements

Unaudited Consolidated Balance Sheets -

March 31, 2022 and December 31, 2021

3

Unaudited Consolidated Statements of Income -

Three months ended March 31, 2022 and 2021

4

Unaudited Consolidated Statements of Cash Flows -

Three months ended March 31, 2022 and 2021

5

Unaudited Consolidated Statements of Changes in Stockholders’ Equity-

Three months ended March 31, 2022 and 2021

6

Notes to Unaudited Consolidated Financial Statements

7

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations

19

Item 3. Quantitative and Qualitative Disclosures about Market Risk

30

Item 4. Controls and Procedures

30

PART II. OTHER INFORMATION

Item 1. Legal Proceedings

30

Item 1A. Risk Factors

30

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

31

Item 3. Defaults Upon Senior Securities

31

Item 4. Mine Safety Disclosures

31

Item 5. Other Information

31

Item 6. Exhibits

32

EX – 31.1

EX – 31.2

EX – 31.3

EX – 32.1

EX – 32.2

EX – 32.3

EX – 101

EX – 104


-2-


 

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

CHEMED CORPORATION AND SUBSIDIARY COMPANIES

UNAUDITED CONSOLIDATED BALANCE SHEETS

(in thousands, except share and per share data)

March 31, 2022

December 31, 2021

ASSETS

Current assets

Cash and cash equivalents

$

18,160

$

32,895 

Accounts receivable

117,319

137,217 

Inventories

10,540

10,109 

Prepaid income taxes

9,143

17,377 

Prepaid expenses

29,589

32,688 

Total current assets

184,751

230,286 

Investments of deferred compensation plans

100,139

98,884 

Properties and equipment, at cost, less accumulated depreciation of $326,154 (2021- $317,911)

192,405

193,680 

Lease right of use asset

134,169

125,048 

Identifiable intangible assets less accumulated amortization of $60,166 (2021 - $57,648)

106,367

108,096 

Goodwill

579,704

578,591 

Other assets

8,222

8,138 

Total Assets

$

1,305,757

$

1,342,723 

LIABILITIES

Current liabilities

Accounts payable

$

64,710

$

73,024 

Income taxes

15,390

41 

Accrued insurance

58,952

55,918 

Accrued compensation

62,205

95,598 

Accrued legal

871

872 

Short-term lease liability

38,856

37,913 

Other current liabilities

38,667

39,033 

Total current liabilities

279,651

302,399 

Deferred income taxes

19,136

23,183 

Long-term debt

120,000

185,000 

Deferred compensation liabilities

100,812

98,597 

Long-term lease liability

109,121

100,629 

Other liabilities

10,332

9,642 

Total Liabilities

639,052

719,450 

Commitments and contingencies (Note 10)

 

 

STOCKHOLDERS' EQUITY

Capital stock - authorized 80,000,000 shares $1 par; issued 36,578,650 shares (2021 - 36,513,857 shares)

36,579

36,514 

Paid-in capital

1,064,448

1,044,341 

Retained earnings

2,029,158

1,970,311 

Treasury stock - 21,676,467 shares (2021 - 21,601,325 shares)

(2,465,716)

(2,430,094)

Deferred compensation payable in Company stock

2,236

2,201 

Total Stockholders' Equity

666,705

623,273 

Total Liabilities and Stockholders' Equity

$

1,305,757

$

1,342,723 

See accompanying Notes to Unaudited Consolidated Financial Statements.

 


-3-


 

CHEMED CORPORATION AND SUBSIDIARY COMPANIES

UNAUDITED CONSOLIDATED STATEMENTS OF INCOME

(in thousands, except per share data)

Three Months Ended March 31,

2022

2021

Service revenues and sales

$

530,549 

$

527,360 

Cost of services provided and goods sold (excluding depreciation)

336,552 

340,473 

Selling, general and administrative expenses

89,954 

91,599 

Depreciation

12,138 

11,715 

Amortization

2,518 

2,510 

Other operating expenses

13 

622 

Total costs and expenses

441,175 

446,919 

Income from operations

89,374 

80,441 

Interest expense

(810)

(381)

Other (expense)/income - net

(3,862)

3,602 

Income before income taxes

84,702 

83,662 

Income taxes

(20,533)

(18,262)

Net income

$

64,169 

$

65,400 

Earnings Per Share:

Net income

$

4.28 

$

4.08 

Average number of shares outstanding

14,986 

16,010 

Diluted Earnings Per Share:

Net income

$

4.22 

$

4.01 

Average number of shares outstanding

15,192 

16,310 

Cash Dividends Per Share

$

0.36 

$

0.34 

See accompanying Notes to Unaudited Consolidated Financial Statements.

 


-4-


 

CHEMED CORPORATION AND SUBSIDIARY COMPANIES

UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

Three Months Ended March 31,

2022

2021

Cash Flows from Operating Activities

Net income

$

64,169 

$

65,400 

Adjustments to reconcile net income to net cash provided

by operating activities:

Depreciation and amortization

14,656 

14,225 

Stock option expense

7,451 

6,106 

Benefit for deferred income taxes

(4,047)

(930)

Noncash long-term incentive compensation

1,185 

1,642 

Amortization of debt issuance costs

76 

76 

Payments on previously accrued litigation settlements

-

(8,490)

Changes in operating assets and liabilities:

Decrease in accounts receivable

19,610 

22,773 

(Increase)/decrease in inventories

(431)

318 

Decrease in prepaid expenses

3,099 

4,402 

Decrease in accounts payable and other current liabilities

(30,332)

(18,369)

Change in current income taxes

23,530 

18,395 

Net change in lease assets and liabilities

743 

(24)

Increase in other assets

(1,562)

(5,274)

Increase in other liabilities

2,958 

5,759 

Other (uses)/sources

(15)

710 

Net cash provided by operating activities

101,090 

106,719 

Cash Flows from Investing Activities

Capital expenditures

(12,649)

(17,697)

Business combinations, net of cash acquired

(1,650)

-

Other sources

351 

274 

Net cash used by investing activities

(13,948)

(17,423)

Cash Flows from Financing Activities

Payments on revolving line of credit

(86,500)

-

Proceeds from revolving line of credit

21,500 

-

Purchases of treasury stock

(27,794)

(41,107)

Proceeds from exercise of stock options

7,692 

11,026 

Change in cash overdrafts payable

(7,051)

-

Dividends paid

(5,322)

(5,437)

Capital stock surrendered to pay taxes on stock-based compensation

(4,893)

(6,613)

Other sources

491 

316 

Net cash used by financing activities

(101,877)

(41,815)

(Decrease)/Increase in Cash and Cash Equivalents

(14,735)

47,481 

Cash and cash equivalents at beginning of year

32,895 

162,675 

Cash and cash equivalents at end of period

$

18,160 

$

210,156 

See accompanying Notes to Unaudited Consolidated Financial Statements.

 


-5-


 

CHEMED CORPORATION AND SUBSIDIARY COMPANIES

UNAUDITED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS' EQUITY

(in thousands, except per share data)

For the three months ended March 31, 2022 and 2021:

Deferred

Compensation

Treasury

Payable in

Capital

Paid-in

Retained

Stock-

Company

Stock

Capital

Earnings

at Cost

Stock

Total

Balance at December 31, 2021

36,514 

1,044,341 

1,970,311 

(2,430,094)

2,201 

623,273 

Net income

-

-

64,169 

-

-

64,169 

Dividends paid ($0.36 per share)

-

-

(5,322)

-

-

(5,322)

Stock awards and exercise of stock options

65 

19,603 

-

(8,233)

-

11,435 

Purchases of treasury stock

-

-

-

(27,353)

-

(27,353)

Other

-

504 

-

(36)

35 

503 

Balance at March 31, 2022

$

36,579 

$

1,064,448 

$

2,029,158 

$

(2,465,716)

$

2,236 

$

666,705 

Deferred

Compensation

`

Treasury

Payable in

Capital

Paid-in

Retained

Stock-

Company

Stock

Capital

Earnings

at Cost

Stock

Total

Balance at December 31, 2020

36,259 

961,404 

1,723,777 

(1,822,579)

2,339 

901,200 

Net income

-

-

65,400 

-

-

65,400 

Dividends paid ($0.34 per share)

-

-

(5,437)

-

-

(5,437)

Stock awards and exercise of stock options

86 

21,007