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che-20230331x10q

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, 2023

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	15,019,778 Shares	March 31, 2023

‎

-1-

CHEMED CORPORATION AND

SUBSIDIARY COMPANIES

Index



	Page No.
PART I. FINANCIAL INFORMATION:

Item 1. Financial Statements
Unaudited Consolidated Balance Sheets -
March 31, 2023 and December 31, 2022	3

Unaudited Consolidated Statements of Income -
Three months ended March 31, 2023 and 2022	4

Unaudited Consolidated Statements of Cash Flows -
Three months ended March 31, 2023 and 2022	5

Unaudited Consolidated Statements of Changes in Stockholders’ Equity-
Three months ended March 31, 2023 and 2022	6

Notes to Unaudited Consolidated Financial Statements	7

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations	20

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

SIGNATURES	33

‎

-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, 2023		December 31, 2022
ASSETS
Current assets
Cash and cash equivalents	$	58,054	$	74,126
Accounts receivable		153,816		139,408
Inventories		10,663		10,272
Prepaid income taxes		10,633		18,515
Prepaid expenses		29,055		30,291
Total current assets		262,221		272,612
Investments of deferred compensation plans		97,436		93,196
Properties and equipment, at cost, less accumulated depreciation of $338,416 (2022- $335,920)		204,164		199,714
Lease right of use asset		131,219		135,662
Identifiable intangible assets less accumulated amortization of $70,229 (2022 - $67,716)		97,348		99,726
Goodwill		581,286		581,295
Other assets		57,511		59,807
Total Assets	$	1,431,185	$	1,442,012

LIABILITIES
Current liabilities
Accounts payable	$	40,279	$	41,884
Current portion of long-term debt		5,000		5,000
Income taxes		11,223		-
Accrued insurance		63,150		58,515
Accrued compensation		50,152		87,350
Accrued legal		6,061		4,456
Short-term lease liability		38,291		38,996
Other current liabilities		69,304		61,004
Total current liabilities		283,460		297,205
Deferred income taxes		35,418		38,613
Long-term debt		16,250		92,500
Deferred compensation liabilities		97,285		92,330
Long-term lease liability		106,212		110,513
Other liabilities		12,507		12,136
Total Liabilities		551,132		643,297
Commitments and contingencies (Note 10)
STOCKHOLDERS' EQUITY
Capital stock - authorized 80,000,000 shares $1 par; issued 36,884,382 shares (2022 - 36,795,792 shares)		36,884		36,796
Paid-in capital		1,186,119		1,149,899
Retained earnings		2,246,354		2,197,918
Treasury stock - 21,927,705 shares (2022 - 21,920,993 shares)		(2,591,588)		(2,588,145)
Deferred compensation payable in Company stock		2,284		2,247
Total Stockholders' Equity		880,053		798,715
Total Liabilities and Stockholders' Equity	$	1,431,185	$	1,442,012

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,
	2023		2022
Service revenues and sales	$	560,157	$	530,549
Cost of services provided and goods sold (excluding depreciation)		370,705		336,552
Selling, general and administrative expenses		100,095		89,954
Depreciation		12,286		12,138
Amortization		2,513		2,518
Other operating expense		1,739		13
Total costs and expenses		487,338		441,175
Income from operations		72,819		89,374
Interest expense		(1,551)		(810)
Other expense - net		(103)		(3,862)
Income before income taxes		71,165		84,702
Income taxes		(17,044)		(20,533)
Net income	$	54,121	$	64,169

Earnings Per Share:
Net income	$	3.62	$	4.28
Average number of shares outstanding		14,966		14,986

Diluted Earnings Per Share:
Net income	$	3.58	$	4.22
Average number of shares outstanding		15,110		15,192

Cash Dividends Per Share	$	0.38	$	0.36

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,
	2023		2022
Cash Flows from Operating Activities
Net income	$	54,121	$	64,169
Adjustments to reconcile net income to net cash provided
by operating activities:
Depreciation and amortization		14,799		14,656
Stock option expense		8,482		7,451
Benefit for deferred income taxes		(3,195)		(4,047)
Noncash long-term incentive compensation		2,024		1,185
Amortization of debt issuance costs		95		76
Changes in operating assets and liabilities:
(Increase)/decrease in accounts receivable		(14,318)		19,610
Increase in inventories		(391)		(431)
Decrease in prepaid expenses		1,236		3,099
Decrease in accounts payable and other current liabilities		(24,109)		(30,332)
Change in current income taxes		19,118		23,530
Net change in lease assets and liabilities		(632)		743
Increase in other assets		(2,173)		(1,562)
Increase in other liabilities		5,313		2,958
Other sources/(uses)		122		(15)
Net cash provided by operating activities		60,492		101,090
Cash Flows from Investing Activities
Capital expenditures		(17,020)		(12,649)
Proceeds from sale of fixed assets		146		485
Business combinations, net of cash acquired		-		(1,650)
Other uses		(139)		(134)
Net cash used by investing activities		(17,013)		(13,948)
Cash Flows from Financing Activities
Payments on long-term debt		(76,250)		-
Proceeds from exercise of stock options		25,680		7,692
Dividends paid		(5,685)		(5,322)
Capital stock surrendered to pay taxes on stock-based compensation		(3,166)		(4,893)
Payments on revolving line of credit		-		(86,500)
Purchases of treasury stock		-		(27,794)
Proceeds from revolving line of credit		-		21,500
Change in cash overdrafts payable		-		(7,051)
Other (uses)/sources		(130)		491
Net cash used by financing activities		(59,551)		(101,877)
Decrease in Cash and Cash Equivalents		(16,072)		(14,735)
Cash and cash equivalents at beginning of period		74,126		32,895
Cash and cash equivalents at end of period	$	58,054	$	18,160

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, 2023 and 2022:										Deferred
										Compensation
								Treasury		Payable in
		Capital		Paid-in		Retained		Stock-		Company
		Stock		Capital		Earnings		at Cost		Stock		Total
Balance at December 31, 2022		36,796		1,149,899		2,197,918		(2,588,145)		2,247	$	798,715
Net income		-		-		54,121		-		-		54,121
Dividends paid ($0.38 per share)		-		-		(5,685)		-		-		(5,685)
Stock awards and exercise of stock options		88		36,338		-		(3,406)		-		33,020
Purchases of treasury stock		-		-		-		-		-		-
Other		-		(118)		-		(37)		37		(118)
Balance at March 31, 2023	$	36,884	$	1,186,119	$	2,246,354	$	(2,591,588)	$	2,284	$	880,053
										Deferred
										Compensation
						`		Treasury		Payable in
		Capital		Paid-in		Retained		Stock-		Company
		Stock		Capital		Earnings		at Cost