10-Q 1 che-20210930x10q.htm 10-Q che-20210930x10q
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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 September 30, 2021

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

15,395,049 Shares

September 30, 2021

 


-1-


CHEMED CORPORATION AND

SUBSIDIARY COMPANIES

Index

Page No.

PART I. FINANCIAL INFORMATION:

Item 1. Financial Statements

Unaudited Consolidated Balance Sheets -

September 30, 2021 and December 31, 2020

3

Unaudited Consolidated Statements of Income -

Three and nine months ended September 30, 2021 and 2020

4

Unaudited Consolidated Statements of Cash Flows -

Nine months ended September 30, 2021 and 2020

5

Unaudited Consolidated Statements of Changes in Stockholders’ Equity-

Three and nine months ended September 30, 2021 and 2020

6

Notes to Unaudited Consolidated Financial Statements

8

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

23

Item 3. Quantitative and Qualitative Disclosures about Market Risk

40

Item 4. Controls and Procedures

40

PART II. OTHER INFORMATION

Item 1. Legal Proceedings

40

Item 1A. Risk Factors

40

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

41

Item 3. Defaults Upon Senior Securities

41

Item 4. Mine Safety Disclosures

41

Item 5. Other Information

41

Item 6. Exhibits

42

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)

September 30, 2021

December 31, 2020

ASSETS

Current assets

Cash and cash equivalents

$

28,743

$

162,675 

Accounts receivable

118,193

126,853 

Inventories

8,394

7,095 

Prepaid income taxes

12,940

6,603 

Prepaid expenses

32,294

26,177 

Total current assets

200,564

329,403 

Investments of deferred compensation plans

102,045

88,811 

Properties and equipment, at cost, less accumulated depreciation of $310,972 (2020 - $293,380)

190,781

187,820 

Lease right of use asset

127,077

123,448 

Identifiable intangible assets less accumulated amortization of $55,138 (2020 - $47,607)

110,606

118,085 

Goodwill

578,610

578,585 

Other assets

8,450

8,759 

Total Assets

$

1,318,133

$

1,434,911 

LIABILITIES

Current liabilities

Accounts payable

$

60,042

$

54,234 

Income taxes

180

9,464 

Accrued insurance

52,645

54,703 

Accrued compensation

97,256

91,282 

Accrued legal

1,497

10,632 

Short-term lease liability

35,148

36,200 

Other current liabilities

39,318

42,593 

Total current liabilities

286,086

299,108 

Deferred income taxes

20,100

20,664 

Deferred compensation liabilities

100,409

88,456 

Long-term lease liability

104,198

99,210 

Other liabilities

27,621

26,273 

Total Liabilities

538,414

533,711 

Commitments and contingencies (Note 10)

 

 

STOCKHOLDERS' EQUITY

Capital stock - authorized 80,000,000 shares $1 par; issued 36,402,025 shares (2020 - 36,258,638 shares)

36,402

36,259 

Paid-in capital

1,007,506

961,404 

Retained earnings

1,901,245

1,723,777 

Treasury stock - 21,073,917 shares (2020 - 20,351,562 shares)

(2,167,640)

(1,822,579)

Deferred compensation payable in Company stock

2,206

2,339 

Total Stockholders' Equity

779,719

901,200 

Total Liabilities and Stockholders' Equity

$

1,318,133

$

1,434,911 

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 September 30,

Nine Months Ended September 30,

2021

2020

2021

2020

Service revenues and sales

$

538,667 

$

528,297 

$

1,598,283 

$

1,546,294 

Cost of services provided and goods sold (excluding depreciation)

342,164 

339,240 

1,033,130 

1,043,148 

Selling, general and administrative expenses

89,217 

88,317 

274,654 

243,413 

Depreciation

11,844 

11,714 

37,171 

34,761 

Amortization

2,510 

2,511 

7,530 

7,476 

Other operating expenses/(income)

63 

12,207 

789 

(28,935)

Total costs and expenses

445,798 

453,989 

1,353,274 

1,299,863 

Income from operations

92,869 

74,308 

245,009 

246,431 

Interest expense

(583)

(379)

(1,343)

(2,005)

Other income - net

3,134 

7,675 

10,521 

5,723 

Income before income taxes

95,420 

81,604 

254,187 

250,149 

Income taxes

(23,417)

(13,882)

(60,262)

(44,435)

Net income

$

72,003 

$

67,722 

$

193,925 

$

205,714 

Earnings Per Share:

Net income

$

4.62 

$

4.25 

$

12.27 

$

12.90 

Average number of shares outstanding

15,587 

15,940 

15,808 

15,948 

Diluted Earnings Per Share:

Net income

$

4.55 

$

4.14 

$

12.06 

$

12.53 

Average number of shares outstanding

15,842 

16,373 

16,083 

16,419 

Cash Dividends Per Share

$

0.36 

$

0.34 

$

1.04 

$

0.98 

See accompanying Notes to Unaudited Consolidated Financial Statements.

 


-4-


 

CHEMED CORPORATION AND SUBSIDIARY COMPANIES

UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

Nine Months Ended September 30,

2021

2020

Cash Flows from Operating Activities

Net income

$

193,925 

$

205,714 

Adjustments to reconcile net income to net cash provided

by operating activities:

Depreciation and amortization

44,701 

42,237 

Stock option expense

16,342 

13,296 

Litigation settlements

(9,440)

2,684 

Noncash long-term incentive compensation

5,344 

5,301 

Noncash directors' compensation

1,173 

1,171 

(Benefit)/provision for deferred income taxes

(561)

831 

Amortization of debt issuance costs

229 

229 

Unutilized CARES Act grant

-

48,041 

Deferred payroll taxes

-

22,941 

Changes in operating assets and liabilities:

Decrease in accounts receivable

9,247 

27,993 

Increase in inventories

(1,299)

(84)

Increase in prepaid expenses

(6,117)

(2,072)

Increase in accounts payable and other current liabilities

6,330 

34,526 

Change in current income taxes

(15,749)

(4,366)

Net change in lease assets and liabilities

15 

1,583 

Increase in other assets

(13,561)

(9,646)

Increase in other liabilities

13,474 

10,735 

Other sources

974 

1,298 

Net cash provided by operating activities

245,027 

402,412 

Cash Flows from Investing Activities

Capital expenditures

(44,472)

(42,670)

Business combinations

-

(3,600)

Other sources

760 

672 

Net cash used by investing activities

(43,712)

(45,598)

Cash Flows from Financing Activities

Purchases of treasury stock

(330,380)

(147,123)

Proceeds from exercise of stock options

17,918 

31,498 

Dividends paid

(16,457)

(15,639)

Capital stock surrendered to pay taxes on stock-based compensation

(9,445)

(18,707)

Change in cash overdrafts payable

3,054 

(9,849)

Payments on revolving line of credit

(1,500)

(264,900)

Proceeds from revolving line of credit

1,500 

174,900 

Other sources/(uses)

63 

(387)

Net cash used by financing activities

(335,247)

(250,207)

(Decrease)/Increase in Cash and Cash Equivalents

(133,932)

106,607 

Cash and cash equivalents at beginning of year

162,675 

6,158 

Cash and cash equivalents at end of period

$

28,743 

$

112,765 

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 September 30, 2021 and 2020:

Deferred

Compensation

Treasury

Payable in

Capital

Paid-in

Retained

Stock-

Company

Stock

Capital

Earnings

at Cost

Stock</