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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, 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

14,870,305 Shares

September 30, 2022

 


-1-


CHEMED CORPORATION AND

SUBSIDIARY COMPANIES

Index

Page No.

PART I. FINANCIAL INFORMATION:

Item 1. Financial Statements

Unaudited Consolidated Balance Sheets -

September 30, 2022 and December 31, 2021

3

Unaudited Consolidated Statements of Income -

Three and nine months ended September 30, 2022 and 2021

4

Unaudited Consolidated Statements of Cash Flows -

Nine months ended September 30, 2022 and 2021

5

Unaudited Consolidated Statements of Changes in Stockholders’ Equity-

Three and nine months ended September 30, 2022 and 2021

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, 2022

December 31, 2021

ASSETS

Current assets

Cash and cash equivalents

$

7,781

$

32,895 

Accounts receivable

121,662

137,217 

Inventories

10,469

10,109 

Prepaid income taxes

27,526

17,377 

Prepaid expenses

31,431

32,688 

Total current assets

198,869

230,286 

Investments of deferred compensation plans

90,097

98,884 

Properties and equipment, at cost, less accumulated depreciation of $337,528 (2021- $317,911)

193,705

193,680 

Lease right of use asset

131,430

125,048 

Identifiable intangible assets less accumulated amortization of $65,203 (2021 - $57,648)

102,103

108,096 

Goodwill

579,887

578,591 

Other assets

60,104

8,138 

Total Assets

$

1,356,195

$

1,342,723 

LIABILITIES

Current liabilities

Accounts payable

$

77,170

$

73,024 

Current portion of long-term debt

5,000

-

Income taxes

-

41 

Accrued insurance

56,732

55,918 

Accrued compensation

67,230

95,598 

Accrued legal

653

872 

Short-term lease liability

39,813

37,913 

Other current liabilities

51,552

39,033 

Total current liabilities

298,150

302,399 

Deferred income taxes

33,590

23,183 

Long-term debt

95,850

185,000 

Deferred compensation liabilities

89,873

98,597 

Long-term lease liability

105,594

100,629 

Other liabilities

11,722

9,642 

Total Liabilities

634,779

719,450 

Commitments and contingencies (Note 10)

 

 

STOCKHOLDERS' EQUITY

Capital stock - authorized 80,000,000 shares $1 par; issued 36,670,460 shares (2021 - 36,513,857 shares)

36,670

36,514 

Paid-in capital

1,100,161

1,044,341 

Retained earnings

2,141,418

1,970,311 

Treasury stock - 21,866,038 shares (2021 - 21,601,325 shares)

(2,559,141)

(2,430,094)

Deferred compensation payable in Company stock

2,308

2,201 

Total Stockholders' Equity

721,416

623,273 

Total Liabilities and Stockholders' Equity

$

1,356,195

$

1,342,723 

See Accompanying Notes to Unaudited Consolidated Financial Statements.

 


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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,

2022

2021

2022

2021

Service revenues and sales

$

526,472 

$

538,667 

$

1,588,309 

$

1,598,283 

Cost of services provided and goods sold (excluding depreciation)

346,934 

342,164 

1,020,307 

1,033,130 

Selling, general and administrative expenses

83,992 

89,217 

261,799 

274,654 

Depreciation

12,154 

11,844 

37,006 

37,171 

Amortization

2,520 

2,510 

7,558 

7,530 

Other operating expense/(income)

15 

63 

(530)

789 

Total costs and expenses

445,615 

445,798 

1,326,140 

1,353,274 

Income from operations

80,857 

92,869 

262,169 

245,009 

Interest expense

(1,271)

(583)

(2,983)

(1,343)

Other (expense)/income - net

(3,115)

3,134 

(11,907)

10,521 

Income before income taxes

76,471 

95,420 

247,279 

254,187 

Income taxes

(19,598)

(23,417)

(59,781)

(60,262)

Net income

$

56,873 

$

72,003 

$

187,498 

$

193,925 

Earnings Per Share:

Net income

$

3.82 

$

4.62 

$

12.55 

$

12.27 

Average number of shares outstanding

14,888 

15,587 

14,935 

15,808 

Diluted Earnings Per Share:

Net income

$

3.78 

$

4.55 

$

12.41 

$

12.06 

Average number of shares outstanding

15,042 

15,842 

15,114 

16,083 

Cash Dividends Per Share

$

0.38 

$

0.36 

$

1.10 

$

1.04 

See Accompanying Notes to Unaudited Consolidated Financial Statements.

 


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CHEMED CORPORATION AND SUBSIDIARY COMPANIES

UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

Nine Months Ended September 30,

2022

2021

Cash Flows from Operating Activities

Net income

$

187,498 

$

193,925 

Adjustments to reconcile net income to net cash provided

by operating activities:

Depreciation and amortization

44,564 

44,701 

Stock option expense

19,343 

16,342 

Provision/(benefit) for deferred income taxes

10,408 

(561)

Noncash long-term incentive compensation

4,343 

5,344 

Noncash directors' compensation

1,170 

1,173 

Amortization of debt issuance costs

247 

229 

Litigation settlements paid previously accrued

-

(9,440)

Changes in operating assets and liabilities:

Decrease in accounts receivable

16,166 

9,247 

Increase in inventories

(360)

(1,299)

Decrease/(increase) in prepaid expenses

1,257 

(6,117)

Increase/(decrease) in accounts payable and other current liabilities

(15,765)

6,330 

Change in current income taxes

(10,277)

(15,749)

Net change in lease assets and liabilities

313 

15 

Increase in other assets

(42,424)

(13,561)

(Decrease)/increase in other liabilities

(6,555)

13,474 

Other (uses)/sources

(241)

974 

Net cash provided by operating activities

209,687 

245,027 

Cash Flows from Investing Activities

Capital expenditures

(39,066)

(44,472)

Proceeds from sale of fixed assets

2,037 

-

Business combinations, net of cash acquired

(2,044)

-

Other (uses)/sources

(841)

760 

Net cash used by investing activities

(39,914)

(43,712)

Cash Flows from Financing Activities

Payments on revolving line of credit

(299,400)

(1,500)

Proceeds from revolving line of credit

116,500 

1,500 

Proceeds from other long-term debt

100,000 

-

Payments on other long-term debt

(1,250)

-

Purchases of treasury stock

(101,539)

(330,380)

Proceeds from exercise of stock options

17,128 

17,918 

Dividends paid

(16,391)

(16,457)

Capital stock surrendered to pay taxes on stock-based compensation

(12,497)

(9,445)

Change in cash overdrafts payable

5,535 

3,054 

Debt issuance costs

(1,584)

-

Other (uses)/sources

(1,389)

63 

Net cash used by financing activities

(194,887)

(335,247)

Decrease in Cash and Cash Equivalents

(25,114)

(133,932)

Cash and cash equivalents at beginning of year

32,895 

162,675 

Cash and cash equivalents at end of period

$

7,781 

$

28,743 

See Accompanying Notes to Unaudited Consolidated Financial Statements.

 


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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, 2022 and 2021:

Deferred

Compensation

Treasury

Payable in