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che-20220630x10q

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

Accelerated Filer

Non-accelerated Filer

Smaller Reporting Company

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

Stock

Capital

Earnings

at Cost