PART I. FINANCIAL INFORMATION Financial Statements This section provides Chemed Corporation's unaudited consolidated financial statements as of September 30, 2021, detailing financial position, performance, cash flows, and equity changes, along with comprehensive accounting notes Unaudited Consolidated Balance Sheets As of September 30, 2021, total assets decreased to $1.318 billion from $1.435 billion due to a significant reduction in cash, while stockholders' equity declined to $780 million from $901 million primarily due to share repurchases Consolidated Balance Sheet Summary (USD in thousands) | Item | September 30, 2021 | December 31, 2020 | | :--- | :--- | :--- | | Assets | | | | Cash and Cash Equivalents | 28,743 | 162,675 | | Accounts Receivable | 118,193 | 126,853 | | Total Current Assets | 200,564 | 329,403 | | Total Assets | 1,318,133 | 1,434,911 | | Liabilities and Stockholders' Equity | | | | Total Current Liabilities | 286,086 | 299,108 | | Total Liabilities | 538,414 | 533,711 | | Total Stockholders' Equity | 779,719 | 901,200 | | Total Liabilities and Stockholders' Equity | 1,318,133 | 1,434,911 | Unaudited Consolidated Statements of Income In Q3 2021, service revenues and sales grew 2.0% to $539 million, with net income increasing 6.3% to $72 million and diluted EPS reaching $4.55, while nine-month net income was $194 million Consolidated Statements of Income Summary (USD in thousands, except per share data) | Item | Q3 2021 | Q3 2020 | Nine Months Ended 2021 | Nine Months Ended 2020 | | :--- | :--- | :--- | :--- | :--- | | Service Revenues and Sales | 538,667 | 528,297 | 1,598,283 | 1,546,294 | | Operating Income | 92,869 | 74,308 | 245,009 | 246,431 | | Income Before Income Taxes | 95,420 | 81,604 | 254,187 | 250,149 | | Net Income | 72,003 | 67,722 | 193,925 | 205,714 | | Diluted Earnings Per Share | $4.55 | $4.14 | $12.06 | $12.53 | Unaudited Consolidated Statements of Cash Flows Net cash from operating activities for the nine months ended 2021 significantly decreased to $245 million from $402 million due to prior year CARES Act benefits, with $335 million in financing outflows primarily for share repurchases Consolidated Statements of Cash Flows Summary (Nine Months Ended September 30, USD in thousands) | Item | 2021 | 2020 | | :--- | :--- | :--- | | Net Cash Provided by Operating Activities | 245,027 | 402,412 | | Net Cash Used in Investing Activities | (43,712) | (45,598) | | Net Cash Used in Financing Activities | (335,247) | (250,207) | | Net (Decrease)/Increase in Cash and Cash Equivalents | (133,932) | 106,607 | | Cash and Cash Equivalents at Beginning of Period | 162,675 | 6,158 | | Cash and Cash Equivalents at End of Period | 28,743 | 112,765 | Unaudited Consolidated Statements of Changes in Stockholders' Equity As of September 30, 2021, total stockholders' equity was $780 million, primarily reduced by $330 million in share repurchases during the nine months, offsetting net income and dividend payments of $16.5 million - For the nine months ended 2021, the company repurchased $330 million of treasury stock, which was the primary factor contributing to the decrease in stockholders' equity20 - For the nine months ended 2021, the company paid dividends of $1.04 per share, totaling $16.46 million20 Notes to Unaudited Consolidated Financial Statements These notes detail key accounting policies, including the impact of the CARES Act, revenue recognition methods for VITAS and Roto-Rooter, lease liabilities, and ongoing legal matters such as DOJ civil investigations and OIG audits - Under the CARES Act, the company received $80.2 million in relief funds and deferred $36.4 million in payroll taxes in 2020, with the suspension of the 2% Medicare sequestration adding $17.9 million in revenue for the nine months ended 202127 - The company details revenue recognition policies for its VITAS (hospice) and Roto-Rooter (plumbing) segments, with VITAS revenue primarily from Medicare based on care levels, and Roto-Rooter revenue by service type4163 - The company faces multiple legal and regulatory matters, including a five-year Corporate Integrity Agreement (CIA) with the Department of Justice (DOJ) and a Civil Investigative Demand (CID) from the DOJ in October 2020 regarding its Florida operations100105 - In May 2021, the company increased its share repurchase authorization by $300 million, with $148 million remaining as of September 30, 2021, after repurchasing 700,000 shares for $330 million in the nine months ended 2021115 Key Financial Position Overview (September 30, 2021 vs December 31, 2020) | Balance Sheet Item | September 30, 2021 (USD in thousands) | December 31, 2020 (USD in thousands) | Change | | :--- | :--- | :--- | :--- | | Cash and Cash Equivalents | 28,743 | 162,675 | ▼ Decrease | | Total Assets | 1,318,133 | 1,434,911 | ▼ Decrease | | Total Liabilities | 538,414 | 533,711 | ▲ Increase | | Total Stockholders' Equity | 779,719 | 901,200 | ▼ Decrease | Operating Performance Overview (Three and Nine Months Ended September 30, 2021) | Income Statement Item | Q3 2021 (USD in thousands) | Q3 2020 (USD in thousands) | Nine Months Ended 2021 (USD in thousands) | Nine Months Ended 2020 (USD in thousands) | | :--- | :--- | :--- | :--- | :--- | | Service Revenues and Sales | 538,667 | 528,297 | 1,598,283 | 1,546,294 | | Net Income | 72,003 | 67,722 | 193,925 | 205,714 | | Diluted Earnings Per Share | $4.55 | $4.14 | $12.06 | $12.53 | Cash Flow Overview (Nine Months Ended September 30, 2021) | Cash Flow Item | 2021 (USD in thousands) | 2020 (USD in thousands) | Trend | | :--- | :--- | :--- | :--- | | Net Cash Provided by Operating Activities | 245,027 | 402,412 | ▼ Decrease | | Net Cash Used in Investing Activities | (43,712) | (45,598) | ▼ Decrease outflow | | Net Cash Used in Financing Activities | (335,247) | (250,207) | ▲ Increase outflow | Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A) Management discusses the company's financial condition and operating results, highlighting 15.7% growth in Roto-Rooter offsetting a 5.8% decline in VITAS due to COVID-19 impacts, leading to an upward revision of 2021 adjusted diluted EPS guidance to $19.00-$19.20 - The company raised its full-year 2021 Adjusted Diluted EPS guidance from $17.00-$17.50 to $19.00-$19.20132 - VITAS revenue is projected to decline approximately 5% in 2021 due to reduced admissions from lower nursing home occupancy rates impacted by the pandemic, while Roto-Rooter revenue is expected to grow 17.3%130131 Q3 2021 vs Q3 2020 Revenue Changes | Business Segment | Revenue Change | Primary Reason | | :--- | :--- | :--- | | Roto-Rooter | ▲ 15.7% | Growth across all major service lines | | VITAS | ▼ 5.8% | 5.3% decrease in days of care | Financial Condition As of September 30, 2021, the company maintains a strong financial position with no outstanding debt and $404 million in available credit, despite a decrease in operating cash flow due to prior year CARES Act benefits and increased treasury stock from repurchases - As of September 30, 2021, the company has no outstanding debt and approximately $403.8 million in available revolving credit facilities82140 - Operating cash flow for the nine months ended 2021 was $245 million, a $157 million decrease year-over-year, primarily due to $48 million in CARES Act grants and $22.9 million in deferred payroll taxes in the prior year136 Results of Operations This section analyzes Q3 and nine-month operating results, showing 2.0% consolidated revenue growth in Q3 driven by 15.7% Roto-Rooter expansion offsetting a 5.8% VITAS decline, with overall consolidated revenue up 3.4% for the nine months and improved gross margins Q3 2021 vs Q3 2020 Performance Comparison | Metric | Q3 2021 | Q3 2020 | Change | | :--- | :--- | :--- | :--- | | Consolidated Revenue (USD in millions) | 538.7 | 528.3 | ▲ 2.0% | | Roto-Rooter Revenue (USD in millions) | 221.3 | 191.2 | ▲ 15.7% | | VITAS Revenue (USD in millions) | 317.4 | 337.1 | ▼ 5.8% | | Consolidated Gross Margin | 36.5% | 35.8% | ▲ 0.7pp | YTD 2021 vs YTD 2020 Performance Comparison | Metric | YTD 2021 | YTD 2020 | Change | | :--- | :--- | :--- | :--- | | Consolidated Revenue (USD in millions) | 1,598.3 | 1,546.3 | ▲ 3.4% | | Roto-Rooter Revenue (USD in millions) | 653.1 | 543.8 | ▲ 20.1% | | VITAS Revenue (USD in millions) | 945.1 | 1,002.5 | ▼ 5.7% | | Consolidated Gross Margin | 35.4% | 32.5% | ▲ 2.9pp | - VITAS revenue declined primarily due to a 5.3% decrease in days of care in Q3 and 6.2% YTD, linked to the negative impact of the pandemic on nursing home occupancy and other senior care facilities145159 - Roto-Rooter's revenue growth across all major service lines (plumbing, drain, excavation, water restoration) was driven by improved pricing, service mix, and increased work volume146160 Quantitative and Qualitative Disclosures about Market Risk The company's primary market risk is interest rate risk from its variable-rate credit facility, though it had no outstanding variable-rate debt as of September 30, 2021, with a 100 basis point rate change impacting annual interest expense by $0.1 million per $10 million borrowed - The company's primary market risk is interest rate risk associated with its credit facilities192 - As of September 30, 2021, the company had no outstanding variable-rate debt, resulting in zero direct interest rate exposure192 - Sensitivity analysis indicates that a 1% change in interest rates would impact annual interest expense by $0.1 million for every $10 million borrowed192 Controls and Procedures Management, including the CEO, CFO, and Controller, assessed the effectiveness of disclosure controls and procedures as of the reporting period end, concluding they were effective with no material changes to internal control over financial reporting during the quarter - Company management assessed and confirmed the effectiveness of disclosure controls and procedures as of the end of the reporting period194 - No changes in internal control over financial reporting occurred during the quarter that materially affected or are reasonably likely to materially affect these controls194 PART II. OTHER INFORMATION Legal Proceedings Information regarding the company's legal proceedings refers directly to Note 11, 'Legal and Regulatory Matters,' in Part I of this report, providing no new disclosures - For detailed information on the company's legal proceedings, refer to Note 11, 'Legal and Regulatory Matters,' under Item 1 in Part I of this report195 Risk Factors The company states there have been no material changes to the risk factors previously disclosed in its most recent Annual Report on Form 10-K - No other material changes have occurred compared to the risk factors disclosed in the company's most recent Annual Report on Form 10-K196 Unregistered Sales of Equity Securities and Use of Proceeds This section details the company's share repurchase activities, including the repurchase of 350,000 shares for $163.7 million in Q3 2021 at an average price of $467.80, with $148 million remaining under the authorization as of September 30, 2021 Summary of 2021 Share Repurchase Activity | Period | Shares Repurchased | Average Price/Share (USD) | Total Cost (USD in millions) | | :--- | :--- | :--- | :--- | | Q1 2021 | 100,000 | 447.67 | 44.8 | | Q2 2021 | 250,000 | 487.52 | 121.9 | | Q3 2021 | 350,000 | 467.80 | 163.7 | | Total Nine Months Ended 2021 | 700,000 | 471.97 | 330.4 | - As of September 30, 2021, $148 million remained authorized under the company's share repurchase program115198 Defaults Upon Senior Securities The company reports no matters under this item Mine Safety Disclosures The company reports no matters under this item Other Information The company reports no matters under this item Exhibits This section lists exhibits filed with the 10-Q report, primarily including certifications by company executives (CEO, CFO, Controller) as required by the Exchange Act and Sarbanes-Oxley Act, and financial statement data in iXBRL format - Exhibits include certifications by the Chief Executive Officer, Chief Financial Officer, and Controller under Exchange Act Rule 13a-14(a)/15d-14(a) and Section 906 of the Sarbanes-Oxley Act204 - Exhibits 101 and 104 contain financial statements and notes formatted in iXBRL (Inline eXtensible Business Reporting Language)203
Chemed(CHE) - 2021 Q3 - Quarterly Report