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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 June 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

14,904,946 Shares

June 30, 2022

 


-1-


CHEMED CORPORATION AND

SUBSIDIARY COMPANIES

Index

Page No.

PART I. FINANCIAL INFORMATION:

Item 1. Financial Statements

Unaudited Consolidated Balance Sheets -

June 30, 2022 and December 31, 2021

3

Unaudited Consolidated Statements of Income -

Three and six months ended June 30, 2022 and 2021

4

Unaudited Consolidated Statements of Cash Flows -

Six months ended June 30, 2022 and 2021

5

Unaudited Consolidated Statements of Changes in Stockholders’ Equity-

Three and six months ended June 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

21

Item 3. Quantitative and Qualitative Disclosures about Market Risk

38

Item 4. Controls and Procedures

38

PART II. OTHER INFORMATION

Item 1. Legal Proceedings

38

Item 1A. Risk Factors

38

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

39

Item 3. Defaults Upon Senior Securities

39

Item 4. Mine Safety Disclosures

39

Item 5. Other Information

39

Item 6. Exhibits

40

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)

June 30, 2022

December 31, 2021

ASSETS

Current assets

Cash and cash equivalents

$

9,640

$

32,895 

Accounts receivable

136,555

137,217 

Inventories

10,696

10,109 

Prepaid income taxes

17,256

17,377 

Prepaid expenses

28,999

32,688 

Total current assets

203,146

230,286 

Investments of deferred compensation plans

96,061

98,884 

Properties and equipment, at cost, less accumulated depreciation of $329,967 (2021- $317,911)

192,005

193,680 

Lease right of use asset

128,290

125,048 

Identifiable intangible assets less accumulated amortization of $62,685 (2021 - $57,648)

103,837

108,096 

Goodwill

579,653

578,591 

Other assets

9,972

8,138 

Total Assets

$

1,312,964

$

1,342,723 

LIABILITIES

Current liabilities

Accounts payable

$

73,975

$

73,024 

Current portion of long-term debt

5,000 

-

Income taxes

-

41 

Accrued insurance

54,828

55,918 

Accrued compensation

68,290

95,598 

Accrued legal

808

872 

Short-term lease liability

39,062

37,913 

Other current liabilities

43,105

39,033 

Total current liabilities

285,068

302,399 

Deferred income taxes

21,054

23,183 

Long-term debt

111,800

185,000 

Deferred compensation liabilities

95,624

98,597 

Long-term lease liability

103,389

100,629 

Other liabilities

11,069

9,642 

Total Liabilities

628,004

719,450 

Commitments and contingencies (Note 10)

 

 

STOCKHOLDERS' EQUITY

Capital stock - authorized 80,000,000 shares $1 par; issued 36,651,151 shares (2021 - 36,513,857 shares)

36,651

36,514 

Paid-in capital

1,089,129

1,044,341 

Retained earnings

2,090,214

1,970,311 

Treasury stock - 21,812,013 shares (2021 - 21,601,325 shares)

(2,533,306)

(2,430,094)

Deferred compensation payable in Company stock

2,272

2,201 

Total Stockholders' Equity

684,960

623,273 

Total Liabilities and Stockholders' Equity

$

1,312,964

$

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 June 30,

Six Months Ended June 30,

2022

2021

2022

2021

Service revenues and sales

$

531,288 

$

532,256 

$

1,061,837 

$

1,059,616 

Cost of services provided and goods sold (excluding depreciation)

336,821 

350,493 

673,373 

690,966 

Selling, general and administrative expenses

87,853 

93,838 

177,807 

185,437 

Depreciation

12,714 

13,612 

24,852 

25,327 

Amortization

2,520 

2,510 

5,038 

5,020 

Other operating (income)/expense

(558)

104 

(545)

726 

Total costs and expenses

439,350 

460,557 

880,525 

907,476 

Income from operations

91,938 

71,699 

181,312 

152,140 

Interest expense

(902)

(379)

(1,712)

(760)

Other (expense)/income - net

(4,930)

3,785 

(8,792)

7,387 

Income before income taxes

86,106 

75,105 

170,808 

158,767 

Income taxes

(19,650)

(18,583)

(40,183)

(36,845)

Net income

$

66,456 

$

56,522 

$

130,625 

$

121,922 

Earnings Per Share:

Net income

$

4.45 

$

3.57 

$

8.73 

$

7.66 

Average number of shares outstanding

14,932 

15,829 

14,959 

15,919 

Diluted Earnings Per Share:

Net income

$

4.40 

$

3.51 

$

8.62 

$

7.52 

Average number of shares outstanding

15,111 

16,101 

15,152 

16,205 

Cash Dividends Per Share

$

0.36 

$

0.34 

$

0.72 

$

0.68 

See Accompanying Notes to Unaudited Consolidated Financial Statements.

 


-4-


 

CHEMED CORPORATION AND SUBSIDIARY COMPANIES

UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

Six Months Ended June 30,

2022

2021

Cash Flows from Operating Activities

Net income

$

130,625 

$

121,922 

Adjustments to reconcile net income to net cash provided

by operating activities:

Depreciation and amortization

29,890 

30,347 

Stock option expense

14,667 

12,345 

(Benefit)/provision for deferred income taxes

(2,129)

1,051 

Noncash long-term incentive compensation

2,497 

3,402 

Noncash directors' compensation

1,170 

1,173 

Amortization of debt issuance costs

153 

153 

Provision for bad debts

-

40 

Litigation settlements paid previously accrued

-

(9,440)

Changes in operating assets and liabilities:

Decrease in accounts receivable

887 

4,722 

Increase in inventories

(587)

(316)

Decrease in prepaid expenses

3,689 

3,337 

Decrease in accounts payable and other current liabilities

(24,001)

(10,815)

Change in current income taxes

27 

(26,242)

Net change in lease assets and liabilities

705 

(436)

Decrease/(increase) in other assets

2,071 

(10,088)

(Decrease)/increase in other liabilities

(1,491)

10,088 

Other (uses)/sources

(503)

796 

Net cash provided by operating activities

157,670 

132,039 

Cash Flows from Investing Activities

Capital expenditures

(25,610)

(33,604)

Proceeds from sale of fixed assets

1,757 

522 

Business combinations, net of cash acquired

(1,650)

-

Other sources

(132)

(220)

Net cash used by investing activities

(25,635)

(33,302)

Cash Flows from Financing Activities

Payments on revolving line of credit

(263,300)

-

Proceeds from revolving line of credit

95,100 

-

Proceeds from other long-term debt

100,000 

-

Purchases of treasury stock

(77,214)

(166,649)

Proceeds from exercise of stock options

12,869 

16,186 

Capital stock surrendered to pay taxes on stock-based compensation

(12,115)

(8,598)

Dividends paid

(10,722)

(10,864)

Change in cash overdrafts payable

1,716 

-

Debt issuance costs

(1,510)

-

Other (uses)/sources

(114)

633 

Net cash used by financing activities

(155,290)

(169,292)

Decrease in Cash and Cash Equivalents

(23,255)

(70,555)

Cash and cash equivalents at beginning of year

32,895 

162,675 

Cash and cash equivalents at end of period

$

9,640 

$

92,120 

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 June 30, 2022 and 2021:

Deferred

Compensation

Treasury

Payable in

Capital

Paid-in

Retained

Stock-

Company