Document And Entity Information
Document And Entity Information | 3 Months Ended |
Mar. 31, 2020shares | |
Document And Entity Information [Abstract] | |
Document Type | 10-Q |
Document Quarterly Report | true |
Document Period End Date | Mar. 31, 2020 |
Document Transition Report | false |
Entity File Number | 1-8351 |
Entity Registrant Name | CHEMED CORPORATION |
Entity Incorporation, State or Country Code | DE |
Entity Tax Identification Number | 31-0791746 |
Entity Address, Address Line One | 255 E. Fifth Street |
Entity Address, Address Line Two | Suite 2600 |
Entity Address, City or Town | Cincinnati |
Entity Address, State or Province | OH |
Entity Address, Postal Zip Code | 45202 |
City Area Code | 513 |
Local Phone Number | 762-6690 |
Entity Current Reporting Status | Yes |
Entity Interactive Data Current | Yes |
Entity Filer Category | Large Accelerated Filer |
Entity Small Business | false |
Entity Emerging Growth Company | false |
Entity Shell Company | false |
Title of 12(b) Security | Capital Stock $1 Par Value |
Trading Symbol | CHE |
Security Exchange Name | NYSE |
Entity Common Stock, Shares Outstanding | 15,873,532 |
Amendment Flag | false |
Entity Central Index Key | 0000019584 |
Current Fiscal Year End Date | --12-31 |
Document Fiscal Period Focus | Q1 |
Document Fiscal Year Focus | 2020 |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) $ in Thousands | Mar. 31, 2020 | Dec. 31, 2019 |
Current assets | ||
Cash and cash equivalents | $ 28,951 | $ 6,158 |
Accounts receivable less allowances of $1,427 (2019 -$353) | 134,695 | 143,827 |
Inventories | 7,313 | 7,462 |
Prepaid income taxes | 5,917 | 10,074 |
Prepaid expenses | 21,939 | 23,150 |
Total current assets | 198,815 | 190,671 |
Investments of deferred compensation plans | 72,296 | 77,446 |
Properties and equipment, at cost, less accumulated depreciation of $278,768 (2019 - $270,140) | 183,729 | 175,763 |
Lease right of use asset | 112,302 | 111,652 |
Identifiable intangible assets less accumulated amortization of $40,094 (2019 - $37,620) | 124,219 | 126,370 |
Goodwill | 577,236 | 577,367 |
Other assets | 8,962 | 9,048 |
Total Assets | 1,277,559 | 1,268,317 |
Current liabilities | ||
Accounts payable | 37,838 | 51,101 |
Accrued insurance | 56,480 | 50,328 |
Accrued compensation | 63,622 | 70,814 |
Accrued legal | 7,114 | 6,941 |
Short-term lease liability | 36,252 | 39,280 |
Other current liabilities | 45,431 | 43,756 |
Total current liabilities | 246,737 | 262,220 |
Deferred income taxes | 20,681 | 18,504 |
Long-term debt | 160,000 | 90,000 |
Deferred compensation liabilities | 70,363 | 76,446 |
Long-term lease liability | 88,278 | 86,656 |
Other liabilities | 7,899 | 7,883 |
Total Liabilities | 593,958 | 541,709 |
Commitments and contingencies (Note 11) | ||
STOCKHOLDERS' EQUITY | ||
Capital stock - authorized 80,000,000 shares $1 par; issued 35,911,724 shares (2019 - 35,810,528 shares) | 35,912 | 35,811 |
Paid-in capital | 878,550 | 860,671 |
Retained earnings | 1,476,151 | 1,425,752 |
Treasury stock - 20,116,345 shares (2019 - 19,867,220 shares) | (1,709,390) | (1,597,940) |
Deferred compensation payable in Company stock | 2,378 | 2,314 |
Total Stockholders' Equity | 683,601 | 726,608 |
Total Liabilities and Stockholders' Equity | $ 1,277,559 | $ 1,268,317 |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - USD ($) $ in Thousands | Mar. 31, 2020 | Dec. 31, 2019 |
Consolidated Balance Sheets [Abstract] | ||
Accounts receivable, allowances | $ 1,427 | $ 353 |
Properties and equipment, accumulated depreciation | 278,768 | 270,140 |
Identifiable intangible assets, accumulated amortization | $ 40,094 | $ 37,620 |
Capital stock - authorized | 80,000,000 | 80,000,000 |
Capital stock - par value | $ 1 | $ 1 |
Capital stock - issued | 35,911,724 | 35,810,528 |
Treasury stock | 20,116,345 | 19,867,220 |
Consolidated Statements Of Inco
Consolidated Statements Of Income - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Consolidated Statements Of Income [Abstract] | ||
Service revenues and sales | $ 515,798 | $ 462,034 |
Cost of services provided and goods sold (excluding depreciation) | 351,745 | 321,951 |
Selling, general and administrative expenses | 70,583 | 74,029 |
Depreciation | 11,388 | 9,710 |
Amortization | 2,477 | 519 |
Other operating expenses | 242 | 6,353 |
Total costs and expenses | 436,435 | 412,562 |
Income from operations | 79,363 | 49,472 |
Interest expense | (975) | (1,124) |
Other (expense)/income - net | (9,466) | 2,439 |
Income before income taxes | 68,922 | 50,787 |
Income taxes | (13,031) | (6,120) |
Net income | $ 55,891 | $ 44,667 |
Earnings Per Share: | ||
Net income | $ 3.50 | $ 2.80 |
Average number of shares outstanding | 15,991 | 15,954 |
Diluted Earnings Per Share: | ||
Net income | $ 3.38 | $ 2.70 |
Average number of shares outstanding | 16,516 | 16,525 |
Cash Dividends Per Share | $ 0.32 | $ 0.30 |
Consolidated Statements Of Cash
Consolidated Statements Of Cash Flows - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Cash Flows from Operating Activities | ||
Net income | $ 55,891 | $ 44,667 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Depreciation and amortization | 13,865 | 10,229 |
Stock option expense | 5,045 | 4,089 |
Provision/(benefit) for deferred income taxes | 2,290 | (3,489) |
Noncash long-term incentive compensation | 1,598 | 1,119 |
Provision for bad debts | 594 | |
Amortization of debt issuance costs | 76 | 76 |
Litigation settlement | 6,000 | |
Changes in operating assets and liabilities: | ||
Decrease/(increase) in accounts receivable | 6,269 | (81) |
Decrease/(increase) in inventories | 149 | (610) |
Decrease in prepaid expenses | 1,211 | 6 |
(Decrease)/increase in accounts payable and other current liabilities | (7,037) | 348 |
Change in current income taxes | 10,159 | 9,219 |
Net change in lease assets and liabilities | (153) | (328) |
Decrease/(increase) in other assets | 5,048 | (5,006) |
(Decrease)/increase in other liabilities | (6,067) | 6,459 |
Other sources | 388 | 887 |
Net cash provided by operating activities | 89,326 | 73,585 |
Cash Flows from Investing Activities | ||
Capital expenditures | (19,897) | (13,866) |
Business combinations | (1,452) | |
Other uses | (144) | (68) |
Net cash used by investing activities | (21,493) | (13,934) |
Cash Flows from Financing Activities | ||
Proceeds from revolving line of credit | 174,100 | 125,100 |
Payments on revolving line of credit | (104,100) | (114,300) |
Purchases of treasury stock | (100,235) | (49,250) |
Change in cash overdrafts payable | (9,849) | (13,303) |
Proceeds from exercise of stock options | 9,241 | 11,827 |
Capital stock surrendered to pay taxes on stock-based compensation | (7,951) | (11,170) |
Dividends paid | (5,130) | (4,799) |
Other (uses)/sources | (1,116) | 181 |
Net cash used by financing activities | (45,040) | (55,714) |
Increase in Cash and Cash Equivalents | 22,793 | 3,937 |
Cash and cash equivalents at beginning of year | 6,158 | 4,831 |
Cash and cash equivalents at end of period | $ 28,951 | $ 8,768 |
Consolidated Statements Of Chan
Consolidated Statements Of Changes In Stockholders Equity - USD ($) $ in Thousands | Capital Stock [Member] | Paid-In Capital [Member] | Retained Earnings [Member] | Treasury Stock-At Cost [Member] | Deferred Compensation Payable In Company Stock [Member] | Total |
Balance at Dec. 31, 2018 | $ 35,311 | $ 774,358 | $ 1,225,617 | $ (1,446,296) | $ 2,344 | $ 591,334 |
Net income | 44,667 | 44,667 | ||||
Dividends paid | (4,799) | (4,799) | ||||
Stock awards and exercise of stock options | 210 | 29,152 | (23,495) | 5,867 | ||
Purchases of treasury stock | (49,250) | (49,250) | ||||
Other | 191 | (36) | 36 | 191 | ||
Balance at Mar. 31, 2019 | 35,521 | 803,701 | 1,265,485 | (1,519,077) | 2,380 | 588,010 |
Balance at Dec. 31, 2019 | 35,811 | 860,671 | 1,425,752 | (1,597,940) | 2,314 | 726,608 |
Net income | 55,891 | 55,891 | ||||
Dividends paid | (5,130) | (5,130) | ||||
Stock awards and exercise of stock options | 101 | 18,972 | (11,140) | 7,933 | ||
Purchases of treasury stock | (100,235) | (100,235) | ||||
Other | (1,093) | (362) | (75) | 64 | (1,466) | |
Balance at Mar. 31, 2020 | $ 35,912 | $ 878,550 | $ 1,476,151 | $ (1,709,390) | $ 2,378 | $ 683,601 |
Consolidated Statements Of Ch_2
Consolidated Statements Of Changes In Stockholders Equity (Parenthetical) - $ / shares | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Consolidated Statements Of Changes In Stockholders Equity [Abstract] | ||
Dividends paid per share | $ 0.32 | $ 0.30 |
Basis Of Presentation
Basis Of Presentation | 3 Months Ended |
Mar. 31, 2020 | |
Basis Of Presentation [Abstract] | |
Basis Of Presentation | 1. Basis of Presentation As used herein, the terms “We,” “Company” and “Chemed” refer to Chemed Corporation or Chemed Corporation and its consolidated subsidiaries. We have prepared the accompanying unaudited consolidated financial statements of Chemed in accordance with Rule 10-01 of SEC Regulation S-X. Consequently, we have omitted certain disclosures required under generally accepted accounting principles in the United States (“GAAP”) for complete financial statements. The December 31, 2019 balance sheet data were derived from audited financial statements but do not include all disclosures required by GAAP. However, in our opinion, the financial statements presented herein contain all adjustments, consisting only of normal recurring adjustments, necessary to state fairly our financial position, results of operations and cash flows. These financial statements are prepared on the same basis as and should be read in conjunction with the audited Consolidated Financial Statements and related notes included in our Annual Report on Form 10-K for the year ended December 31, 2019. Certain reclassifications have been made to prior year financial statements to conform to current presentation. CURRENT EXPECTED CREDIT LOSSES In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments, Credit Losses. The ASU introduces the current expected credit loss (“CECL”) methodology. The CECL methodology utilizes a lifetime “expected credit loss” measurement objective for the recognition of credit losses for financial assets at the time the asset is originated or acquired. This generally results in earlier recognition of credit losses and greater transparency about credit risk. The Company adopted the provisions of ASU No. 2016-13 on January 1, 2020 using the modified retrospective method. The provisions of ASU No. 2016-13 did not significantly impact the method or timing that the Company recognizes expected credit losses and the cumulative effect of adoption was immaterial. The Company’s only material financial asset subject to ASU No. 2016-13 is accounts receivable, trade and other. The Company recognizes an allowance for credit losses related to accounts receivable to present the net amount expected to be collected as of the balance sheet date. Accounts receivable are written-off when it is determined that the amount is deemed uncollectible. The following presents a detailed discussion of the operating subsidiaries’ accounts receivable and their evaluation of credit risk related to those accounts: Roto-Rooter’s trade accounts receivable are comprised mainly of amounts due from commercial entities and commercial insurance carriers. Roto-Rooter’s accounts receivable are generally outstanding for 90 days or less and there are no significant amounts outstanding greater than one year. Roto-Rooter historically has not experienced significant write-offs due to credit losses. For amounts due from commercial entities, Roto-Rooter utilizes a provision matrix based on historical credit losses by aging category. For amounts due from commercial insurance carriers, mainly from water restoration revenue, Roto-Rooter periodically reviews published default tables related to commercial insurance carriers and provides an allowance. As further discussed below, Roto-Rooter assesses on a quarterly basis whether the historical rates used are expected to be representative of credit risk over the life of the account taking into consideration existing economic conditions. In excess of 90% of VITAS’ accounts receivable are from the Federal or state governments under Medicare and Medicaid. VITAS believes that it is reasonable to expect that the risk of non-payment as a result of credit issues from these government entities is zero. As such, there is no allowance for credit losses established related to these accounts. The remainder of VITAS’ accounts are from commercial insurance carriers. VITAS’ accounts are generally outstanding for 90 days or less and there are no significant amounts outstanding greater than one year. VITAS historically has not experienced significant write-offs due to credit losses. VITAS periodically reviews published default tables related to commercial insurance carriers and provides an allowance. VITAS assesses on a quarterly basis whether these default rates are expected to be representative of credit risk over the life of the account taking into consideration existing economic conditions. As further discussed in footnote 5, Chemed has $ 37.9 million in standby letters of credit outstanding. These letters of credit are with large, highly rated financial institutions. The Company periodically reviews published default tables related to these institutions to assess the need for an allowance. Chemed believes that any expected credit loss related to outstanding letters of credit based on current economic conditions is not material. In conjunction with its first quarter of 2020 closing process, subsequent to the adoption of ASU No. 2016-13, Roto-Rooter re-assessed its expected credit losses as a result of COVID-19. In addition to the historical provision matrix described above, and in conjunction with the quarterly assessment of current economic conditions and published default rates to evaluate credit risk over the life of the account, Roto-Rooter analyzed the industries from which the accounts receivable originated. Using available information and judgement, additional expected credit losses were recorded for industries deemed higher risk during the economic shut down, such as restaurants, hotels and bars. The additional charge taken for the three-month period ended March 31, 2020 related to expected credit losses from COVID-19 issues was $ 524,000 . The full economic impact as a result of COVID-19 and the related business shut-downs will not be known for some period of time. The amount recorded in the first quarter of 2020 represents management’s current best estimate. ADDITIONS (CHARGED) CREDITED (CHARGED) BALANCE AT TO COSTS CREDITED BALANCE BEGINNING AND TO OTHER AT END DESCRIPTION OF PERIOD EXPENSES ACCOUNTS OTHER OF PERIOD March 31, 2020 $ ( 353 ) $ ( 594 ) $ ( 475 ) $ ( 5 ) $ ( 1,427 ) CORONAVIRUS AID, RELIEF AND ECONOMIC STIMULUS (CARES) ACT The recent COVID-19 pandemic did not have a material impact on our results of operations, cash flow and financial position as of and for the three months-ended March 31, 2020. We are closely monitoring the impact of the pandemic on all aspects of our business including impacts to employees, customers, patients, suppliers and vendors. The Company’s two operating subsidiaries have been categorized as critical infrastructure businesses and are not currently materially limited by federal, state or local regulations that restrict movement or operating ability. The length and severity of the pandemic, coupled with related governmental actions including relief acts and actions relating to our workforce at federal, state and local levels, and underlying economic disruption will determine the ultimate short-term and long-term impact to our business operations and financial results. We are unable to predict the myriad of possible issues that could arise or the ultimate effect to our businesses as a result of the unknown short, medium and long-term impacts that the pandemic will have on the United States economy and society as a whole. On March 27, 2020, the CARES Act was passed. It is intended to provide economic relief to individuals and businesses affected by the coronavirus pandemic. It also contains provisions related to healthcare providers’ operations and the issues caused by the coronavirus pandemic. The following significant economic impacts for Chemed and its subsidiaries as a result of specific provisions of the CARES Act: Chemed deferred its first quarter 2020 income tax payment of $ 8.8 million to the Federal government until July 15, 2020, as permitted by the CARES Act. In addition, Chemed and its subsidiaries deferred payment of certain employer payroll taxes and certain state tax payments, as permitted by the CARES Act. A portion of the CARES Act provides $ 100 billion from the Public Health and Social Services Emergency Fund (“Relief Fund)” to hospitals and other healthcare providers on the front lines of the coronavirus response. Of this $ 100 billion distribution from the Relief Fund, $ 30 billion was designated to be automatically distributed to facilities and healthcare providers based upon their 2019 Medicare fee-for-service revenue. On April 10, 2020 VITAS automatically received $ 80.2 million from the Relief Fund based upon VITAS’s 2019 Medicare fee-for-service Medicare revenue. While specific details of the program have not been finalized, recipients of this $ 30 billion in CARES Act relief are specified to use these funds to prevent, prepare for, and respond to coronavirus, and shall reimburse the recipient only for health care related expenses or lost revenues that are attributable to coronavirus. The ability of VITAS to retain and utilize the full $ 80.2 million from the Relief Fund will depend on the magnitude, timing and nature of the economic impact of COVID-19 within VITAS, as well as the guidelines and rules of the Relief Fund program. During the period from May 1, 2020 through December 31, 2020, the 2 % Medicare sequestration reimbursement cut is suspended. VITAS anticipates the impact to increase revenue approximately $ 15 million to $ 20 million, excluding the impact of the Medicare Cap. LEASE ACCOUNTING In February 2016, the FASB issued Accounting Standards Update “ASU No. 2016-02 Leases” which introduced a lessee model that brings most leases onto the balance sheets and updates lessor accounting to align with changes in the lessee model and the revenue recognition standard. This standard is also referred to as Accountings Standards Codification No.842 (“ASC 842”). We adopted ASC 842 effective January 1, 2019, using the optional transition method requiring leases existing at, or entered into after, January 1, 2019 to be recognized and measured. The transition method selected does not require adjustments to prior period amounts, which continue to be reflected in accordance with historical accounting. In addition, we elected the package of practical expedients permitted under the transition guidance within the new standard which among other things, allowed us to carry forward the historical lease classification. Chemed and each of its operating subsidiaries are service companies. As such, real estate leases comprise the largest lease obligation (and conversely, right of use asset) in our lease portfolio. VITAS has leased office space, as well as space for inpatient units (“IPUs”) and/or contract beds within hospitals. Roto-Rooter mainly has leased office space. Roto-Rooter purchases equipment and leases it to certain of its independent contractors. We analyzed these leases in accordance with ASC 842 and determined they are operating leases. As a result, Roto-Rooter will continue to capitalize the equipment underlying these leases, depreciate the equipment and recognize rental income. Adoption of the new standard resulted in right of use assets and lease liabilities of $ 93.1 million and $ 104.3 million, respectively, as of January 1, 2019. In determining the liability, we used our incremental borrowing rate based on the information available at the time of adoption, since the rate implicit in the leases cannot be readily determined. At January 1, 2019, the weighted average rate was 3.47 %. The standard did not materially impact our consolidated net income or cash flows. We did not book a cumulative effect adjustment upon adoption of the standard. CLOUD COMPUTING On January 1, 2019, we early adopted ASU No. 2018-15, “Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That is a Service Contract”. This ASU aligns the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal use software. We adopted the ASU on a prospective basis. As of March 31, 2020, we have two cloud computing arrangements that are service contracts. Roto-Rooter is implementing a system to assist in technician dispatch and VITAS implemented a new human resources system. We have capitalized approximately $ 6.0 million related to implementation of these projects which are included in prepaid assets in the accompanying balance sheets. The VITAS human resource system was placed into service in January 2020 and is being amortized over 5 years. Through March 31, 2020, $ 262,000 has been amortized. There has been no amortization expense associated with the Roto-Rooter project, as the software has not yet been placed in service. We anticipate amortizing this asset over the original term of the arrangement plus renewal options that are reasonably certain of being exercised. NON-EMPLOYEE STOCK COMPENSATION In June 2018, the FASB issued Accounting Standards Update “ASU No. 2018-07 – Compensation – Stock Compensation”. The ASU expands the scope of current guidance to include all share-based payment arrangements related to the acquisition of goods and services from both non-employees and employees. The guidance in the ASU is effective for the Company in all fiscal years beginning after December 15, 2018. Adoption of this standard had no material impact on our Consolidated Financial Statements. INCOME TAXES Our effective income tax rate was 18.9 % in the first quarter of 2020 compared to 12.1 % during the first quarter of 2019. Excess tax benefit on stock options reduced our income tax expenses by $ 4.6 million and $ 6.7 million, respectively for the quarters ended March 31, 2020 and 2019. NON-CASH TRANSACTIONS Included in the accompanying Consolidated Balance Sheets are $ 1.7 million and $ 1.8 million of capitalized property and equipment which were not paid for as of March 31, 2020 and December 31, 2019, respectively. These amounts have been excluded from capital expenditures in the accompanying Consolidated Statements of Cash Flow. There are no material non-cash amounts included in interest expense for any period presented. BUSINESS COMBINATIONS We account for acquired businesses using the acquisition method of accounting. All assets acquired and liabilities assumed are recorded at their respective fair values at the date of acquisition. The determination of fair value involves estimates and the use of valuation techniques when market value is not readily available. We use various techniques to determine fair value in accordance with accepted valuation models, primarily the income approach. The significant assumptions used in developing fair values include, but are not limited to, revenue growth rates, the amount and timing of future cash flows, discount rates, useful lives, royalty rates and future tax rates. The excess of purchase price over the fair value of assets and liabilities acquired is recorded as goodwill. See footnote 17 for discussion of recent acquisitions. |
Revenue Recognition
Revenue Recognition | 3 Months Ended |
Mar. 31, 2020 | |
Revenue Recognition [Abstract] | |
Revenue Recognition | 2. Revenue Recognition In May 2014, the FASB issued Accounting Standards Update “ASU No. 2014-09 – Revenue from Contracts with Customers.” The standard and subsequent amendments are theoretically intended to develop a common revenue standard for removing inconsistencies and weaknesses, improve comparability, provide for more useful information to users through improved disclosure requirements and simplify the preparation of financial statements. The standard is also referred to as Accounting Standards Codification No. 606 (“ASC 606”). We adopted ASC 606 effective January 1, 2018. The required disclosures of ASC 606 and impact of adoption are discussed below for each of our operating subsidiaries. VITAS Service revenue for VITAS is reported at the amount that reflects the ultimate consideration we expect to receive in exchange for providing patient care. These amounts are due from third-party payors, primarily commercial health insurers and government programs (Medicare and Medicaid), and include variable consideration for revenue adjustments due to settlements of audits and reviews, as well as certain hospice-specific revenue capitations. Amounts are generally billed monthly or subsequent to patient discharge. Subsequent changes in the transaction price initially recognized are not significant. Hospice services are provided on a daily basis and the type of service provided is determined based on a physician’s determination of each patient’s specific needs on that given day. Reimbursement rates for hospice services are on a per diem basis regardless of the type of service provided or the payor. Reimbursement rates from government programs are established by the appropriate governmental agency and are standard across all hospice providers. Reimbursement rates from health insurers are negotiated with each payor and generally structured to closely mirror the Medicare reimbursement model. The types of hospice services provided and associated reimbursement model for each are as follows: Routine Home Care occurs when a patient receives hospice care in their home, including a nursing home setting. The routine home care rate is paid for each day that a patient is in a hospice program and is not receiving one of the other categories of hospice care. For Medicare patients, the routine home care rate reflects a two-tiered rate, with a higher rate for the first 60 days of a hospice patient’s care and a lower rate for days 61 and after. In addition, there is a Service Intensity Add-on payment which covers direct home care visits conducted by a registered nurse or social worker in the last seven day s of a hospice patient’s life, reimbursed up to 4 hours per day in 15 minute increments at the continuous home care rate. General Inpatient Care occurs when a patient requires services in a controlled setting for a short period of time for pain control or symptom management which cannot be managed in other settings. General inpatient care services must be provided in a Medicare or Medicaid certified hospital or long-term care facility or at a freestanding inpatient hospice facility with the required registered nurse staffing. Continuous Home Care is provided to patients while at home, including a nursing home setting, during periods of crisis when intensive monitoring and care, primarily nursing care, is required in order to achieve palliation or management of acute medical symptoms. Continuous home care requires a minimum of 8 hours of care within a 24-hour day, which begins at midnight. The care must be predominantly nursing care provided by either a registered nurse or licensed nurse practitioner. While the published Medicare continuous home care rates are daily rates, Medicare pays for continuous home care in 15 minute increments. This 15 minute rate is calculated by dividing the daily rate by 96. Respite Care permits a hospice patient to receive services on an inpatient basis for a short period of time in order to provide relief for the patient’s family or other caregivers from the demands of caring for the patient. A hospice can receive payment for respite care for a given patient for up to five consecutive days at a time, after which respite care is reimbursed at the routine home care rate. Each level of care represents a separate promise under the contract of care and is provided independently for each patient contingent upon the patient’s specific medical needs as determined by a physician. However, the clinical criteria used to determine a patient’s level of care is consistent across all patients, given that, each patient is subject to the same payor rules and regulations. As a result, we have concluded that each level of care is capable of being distinct and is distinct in the context of the contract. Furthermore, we have determined that each level of care represents a stand ready service provided as a series of either days or hours of patient care. We believe that the performance obligations for each level of care meet criteria to be satisfied over time. VITAS recognizes revenue based on the service output. VITAS believes this to be the most faithful depiction of the transfer of control of services as the patient simultaneously receives and consumes the benefits provided by our performance. Revenue is recognized on a daily or hourly basis for each patient in accordance with the reimbursement model for each type of service. VITAS’ performance obligations relate to contracts with an expected duration of less than one year. Therefore, VITAS has elected to apply the optional exception provided in ASC 606 and is not required to disclose the aggregate amount of the transaction price allocated to performance obligations that are unsatisfied or partially unsatisfied at the end of the reporting period. The unsatisfied or partially satisfied performance obligations referred to above relate to bereavement services provided to patients’ families for at least 12 months after discharge. Care is provided to patients regardless of their ability to pay. Patients who meet our criteria for charity care are provided care without charge. There is no revenue or associated accounts receivable in the accompanying Consolidated Financial Statements related to charity care. The cost of providing charity care during the quarters ended March 31, 2020 and 2019 was $ 2.2 million and $ 2.1 million, respectively. The cost of charity care is included in cost of services provided and goods sold and is calculated by taking the ratio of charity care days to total days of care and multiplying by the total cost of care. Generally, patients who are covered by third-party payors are responsible for related deductibles and coinsurance which vary in amount. VITAS also provides service to patients without a reimbursement source and may offer those patients discounts from standard charges. VITAS estimates the transaction price for patients with deductibles and coinsurance, along with those uninsured patients, based on historical experience and current conditions. The estimate of any contractual adjustments, discounts or implicit price concessions reduces the amount of revenue initially recognized. Subsequent changes to the estimate of the transaction price are recorded as adjustments to patient service revenue in the period of change. Subsequent changes that are determined to be the result of an adverse change in the patients’ ability to pay (i.e. change in credit risk) are recorded as bad debt expense. VITAS has no material adjustments related to subsequent changes in the estimate of the transaction price or subsequent changes as the result of an adverse change in the patient’s ability to pay for any period reported. Laws and regulations concerning government programs, including Medicare and Medicaid, are complex and subject to varying interpretation. Medicare and Medicaid programs have broad authority to audit and review compliance with such laws and regulations, and impose payment suspensions when merited. Additionally, the contracts we have with commercial health insurance payors provide for retroactive audit and review of claims. Settlement with third party payors for retroactive adjustments due to audits, reviews or investigations are considered variable consideration and are included in the determination of the estimated transaction price for providing patient care. The variable consideration is estimated based on the terms of the payment agreement, existing correspondence from the payor and our historical settlement activity. These estimates are adjusted in future periods, as new information becomes available. We are subject to certain limitations on Medicare payments for services which are considered variable consideration, as follows: Inpatient Cap. If the number of inpatient care days any hospice program provides to Medicare beneficiaries exceeds 20 % of the total days of hospice care such program provided to all Medicare patients for an annual period beginning September 28, the days in excess of the 20 % figure may be reimbursed only at the routine homecare rate. None of VITAS’ hospice programs exceeded the payment limits on inpatient services during the three months ended March 31, 2020 and 2019. Medicare Cap. We are also subject to a Medicare annual per-beneficiary cap (“Medicare cap”). Compliance with the Medicare cap is measured in one of two ways based on a provider election. The “streamlined” method compares total Medicare payments received under a Medicare provider number with respect to services provided to all Medicare hospice care beneficiaries in the program or programs covered by that Medicare provider number with the product of the per-beneficiary cap amount and the number of Medicare beneficiaries electing hospice care for the first time from that hospice program or programs from September 28 through September 27 of the following year. At March 31, 2020, all our programs except one are using the “streamlined” method. The “proportional” method compares the total Medicare payments received under a Medicare provider number with respect to services provided to all Medicare hospice care beneficiaries in the program or programs covered by the Medicare provider number between September 28 and September 27 of the following year with the product of the per beneficiary cap amount and a pro-rated number of Medicare beneficiaries receiving hospice services from that program during the same period. The pro-rated number of Medicare beneficiaries is calculated based on the ratio of days the beneficiary received hospice services during the measurement period to the total number of days the beneficiary received hospice services. We actively monitor each of our hospice programs, by provider number, as to their specific admission, discharge rate and median length of stay data in an attempt to determine whether revenues are likely to exceed the annual per-beneficiary Medicare cap. Should we determine that revenues for a program are likely to exceed the Medicare cap based on projected trends, we attempt to institute corrective actions, which include changes to the patient mix and increased patient admissions. However, should we project our corrective action will not prevent that program from exceeding its Medicare cap, we estimate revenue recognized during the government fiscal year that will require repayment to the Federal government under the Medicare cap and record an adjustment to revenue of an amount equal to a ratable portion of our best estimate for the year. In 2013, the U.S. government implemented automatic budget reductions of 2.0 % for all government payees, including hospice benefits paid under the Medicare program. In 2015, CMS determined that the Medicare cap should be calculated “as if” sequestration did not occur. As a result of this decision, VITAS has received notification from our third-party intermediary that an additional $ 8.3 million is owed for Medicare cap in three programs arising during the 2013 through 2019 measurement periods. The amounts are automatically deducted from our semi-monthly PIP payments. We do not believe that CMS is authorized under the sequestration authority or the statutory methodology for establishing the Medicare cap to the amounts they have withheld and intend to withhold under their current “as if” methodology. We have appealed CMS’s methodology change. Pursuant to the recent legislation, the sequestration has been lifted for the period from May 1 through December 31, 2020. During the quarter ended March 31, 2020, we recorded $ 2.5 million in net Medicare cap revenue reduction related to five programs for the 2020 government fiscal year. During the quarter ended March 31, 2019, we recorded $ 3.4 million in net Medicare cap revenue reduction related to three programs for the 2019 government fiscal year. For VITAS’ patients in the nursing home setting in which Medicaid pays the nursing home room and board, VITAS serves as a pass-through between Medicaid and the nursing home. We are responsible for paying the nursing home for that patient’s room and board. Medicaid reimburses us for 95 % of the amount we have paid. This results in a 5 % net expense for VITAS related to nursing home room and board. This transaction creates a performance obligation in that VITAS is facilitating room and board being delivered to our patient. As a result, the 5% net expense is recognized as a contra-revenue account under ASC 606 in the accompanying financial statements. The composition of patient care service revenue by payor and level of care for the quarter ended March 31, 2020 is as follows (in thousands): Medicare Medicaid Commercial Total Routine home care $ 253,965 $ 12,133 5,664 $ 271,762 Continuous care 37,132 1,871 1,552 40,555 Inpatient care 28,148 2,559 1,775 32,482 $ 319,245 $ 16,563 $ 8,991 $ 344,799 All other revenue - self-pay, respite care, etc. 3,147 Subtotal $ 347,946 Medicare cap adjustment ( 2,500 ) Implicit price concessions ( 4,149 ) Room and board, net ( 3,381 ) Net revenue $ 337,916 The composition of patient care service revenue by payor and level of care for the quarter ended March 31, 2019 is as follows (in thousands): Medicare Medicaid Commercial Total Routine home care $ 241,700 $ 11,673 $ 5,474 $ 258,847 Continuous care 28,973 1,787 1,484 32,244 Inpatient care 18,989 2,148 1,433 22,570 $ 289,662 $ 15,608 $ 8,391 $ 313,661 All other revenue - self-pay, respite care, etc. 2,010 Subtotal $ 315,671 Medicare cap adjustment ( 3,400 ) Implicit price concessions ( 2,948 ) Room and board, net ( 2,542 ) Net revenue $ 306,781 Roto-Rooter Roto-Rooter provides plumbing, drain cleaning, water restoration and other related services to both residential and commercial customers primarily in the United States. Services are provided through a network of company-owned branches, independent contractors and franchisees. Service revenue for Roto-Rooter is reported at the amount that reflects the ultimate consideration we expect to receive in exchange for providing services. Roto-Rooter owns and operates branches focusing mainly on large population centers in the United States. Roto-Rooter’s primary lines of business in company-owned branches consist of plumbing, sewer and drain cleaning, excavation and water restoration. For purposes of ASC 606 analysis, plumbing, sewer and drain cleaning, and excavation have been combined into one portfolio and are referred to as “short-term core services”. Water restoration is analyzed as a separate portfolio. The following describes the key characteristics of these portfolios: Short-term Core Services are plumbing, drain and sewer cleaning and excavation services. These services are provided to both commercial and residential customers. The duration of services provided in this category range from a few hours to a few days. There are no significant warranty costs or on-going obligations to the customer once a service has been completed. For residential customers, payment is received at the time of job completion before the Roto-Rooter technician leaves the residence. Commercial customers may be granted credit subject to internally designated authority limits and credit check guidelines. If credit is granted, payment terms are generally 30 days or less. Each job in this category is a distinct service with a distinct performance obligation to the customer. Revenue is recognized at the completion of each job. Variable consideration consists of pre-invoice discounts and post-invoice discounts. Pre-invoice discounts are given in the form of coupons or price concessions. Post-invoice discounts consist of credit memos generally granted to resolve customer service issues. Variable consideration is estimated based on historical activity and recorded at the time service is completed. Water Restoration Services involve the remediation of water and humidity after a flood. These services are provided to both commercial and residential customers. The duration of services provided in this category generally ranges from 3 to 5 days. There are no significant warranties or on-going obligations to the customer once service has been completed. The majority of these services are paid by the customer’s insurance company. Variable consideration relates primarily to allowances taken by insurance companies upon payment. Variable consideration is estimated based on historical activity and recorded at the time service is completed. For both short-term core services and water restoration services, Roto-Rooter satisfies its performance obligation at a point in time. The services provided generally involve fixing plumbing, drainage or flood-related issues at the customer’s property. At the time service is complete, the customer acknowledges its obligation to pay for service and its satisfaction with the service performed. This provides evidence that the customer has accepted the service and Roto-Rooter is now entitled to payment. As such, Roto-Rooter recognizes revenue for these services upon completion of the job and receipt of customer acknowledgement. Roto-Rooter’s performance obligations for short-term core services and water restoration services relate to contracts with an expected duration of less than a year. Therefore, Roto-Rooter has elected to apply the optional exception provided in ASC 606 and is not required to disclose the aggregate amount of the transaction price allocated to performance obligations that are unsatisfied or partially unsatisfied at the end of the reporting period. Roto-Rooter does not have significant unsatisfied or partially unsatisfied performance obligations at the time of initial revenue recognition for short-term core or water restoration services. Roto-Rooter owns the rights to certain territories and contracts with independent third-parties to operate the territory under Roto-Rooter’s registered trademarks. Such contracts are for a specified term but cancellable by either party without penalty with 90 days’ advance notice. Under the terms of these arrangements, Roto-Rooter provides certain back office support and advertising along with a limited license to use Roto-Rooter’s registered trademarks. The independent contractor is responsible for all day-to-day management of the business including staffing decisions and pricing of services provided. All performance obligations of Roto-Rooter cease at the termination of the arrangement. Independent contractors pay Roto-Rooter a standard fee calculated as a percentage of their cash collection from weekly sales. The primary value for the independent contractors under these arrangements is the right to use Roto-Rooter’s registered trademarks. Roto-Rooter recognizes revenue from independent contractors over-time (weekly) as the independent contractor’s labor sales are completed and payment from customers are received. Payment from independent contractors is also received on a weekly basis. The use of Roto-Rooter’s registered trademarks and advertising provides immediate value to the independent contractor as a result of Roto-Rooter’s nationally recognized brand. Therefore, over-time recognition provides the most faithful depiction of the transfer of services as the customer simultaneously receives and consumes the benefits provided. There is no significant variable consideration related to these arrangements. Roto-Rooter has licensed the rights to operate under Roto-Rooter’s registered trademarks in other territories to franchisees. Each such contract is for a 10 year term but cancellable by Roto-Rooter for cause with 60 day advance notice without penalty. The franchisee may cancel the contract for any reason with 60 days advance notice without penalty. Under the terms of the contract, Roto-Rooter provides national advertising and consultation on various aspects of operating a Roto-Rooter business along with the right to use Roto-Rooter’s registered trademarks. The franchisee is responsible for all day- to-day management of the business including staffing decisions, pricing of services provided and local advertising spend and placement. All performance obligations of Roto-Rooter cease at the termination of the arrangement. Franchisees pay Roto-Rooter a standard monthly fee based on the population within the franchise territory. The standard fee is revised on a yearly basis based on changes in the Consumer Price Index for All Urban Consumers. The primary value for the franchisees under this arrangement is the right to use Roto-Rooter’s registered trademarks. Roto-Rooter recognizes revenue from franchisees over-time (monthly). Payment from franchisees is also received on a monthly basis. The use of Roto-Rooter’s registered trademarks and advertising provides immediate value to the franchisees as a result of Roto-Rooter’s nationally recognized brand. Therefore, over-time recognition provides the most faithful depiction of the transfer of services as the customer simultaneously receives and consumes the benefits provided. There is no significant variable consideration related to these arrangements. The composition of disaggregated revenue for the first quarter is as follows (in thousands): March 31, 2020 2019 Short-term core service jobs $ 134,424 $ 112,185 Water restoration 29,246 29,208 Contractor revenue 16,228 14,032 Franchise fees 1,190 1,621 All other 3,534 3,008 Subtotal $ 184,622 $ 160,054 Implicit price concessions and credit memos ( 6,740 ) ( 4,801 ) Net revenue $ 177,882 $ 155,253 |
Segments
Segments | 3 Months Ended |
Mar. 31, 2020 | |
Segments [Abstract] | |
Segments | 3. Segments Service revenues and sales by business segment are shown in Footnote 2. After-tax earnings by business segment are as follows (in thousands): Three months ended March 31, 2020 2019 After-tax Income/(Loss) VITAS $ 41,279 $ 29,288 Roto-Rooter 24,322 22,986 Total 65,601 52,274 Corporate ( 9,710 ) ( 7,607 ) Net income $ 55,891 $ 44,667 We report corporate administrative expenses and unallocated investing and financing income and expense not directly related to either segment as “Corporate”. |
Earnings Per Share
Earnings Per Share | 3 Months Ended |
Mar. 31, 2020 | |
Earnings Per Share[Abstract] | |
Earnings Per Share | 4. Earnings per Share Earnings per share (“EPS”) are computed using the weighted average number of shares of capital stock outstanding. Earnings and diluted earnings per share are computed as follows (in thousands, except per share data): Net Income For the Three Months Ended March 31, Income Shares Earnings per Share 2020 Earnings $ 55,891 15,991 $ 3.50 Dilutive stock options - 446 Nonvested stock awards - 79 Diluted earnings $ 55,891 16,516 $ 3.38 2019 Earnings $ 44,667 15,954 $ 2.80 Dilutive stock options - 494 Nonvested stock awards - 77 Diluted earnings $ 44,667 16,525 $ 2.70 For the three months ended March 31, 2020, there were 285,000 stock options excluded in the computation of dilutive earnings per share because they would have been anti-dilutive. For the three months ended March 31, 2019, there were 246,000 stock options excluded in the computation of dilutive earnings per share because they would have been anti-dilutive. |
Long-Term Debt And Lines Of Cre
Long-Term Debt And Lines Of Credit | 3 Months Ended |
Mar. 31, 2020 | |
Long-Term Debt And Lines Of Credit [Abstract] | |
Long-Term Debt And Lines Of Credit | 5. Long-Term Debt and Lines of Credit On June 20, 2018, we replaced our existing credit agreement with the Fourth Amended and Restated Credit Agreement (“2018 Credit Agreement”). Terms of the 2018 Credit Agreement consist of a five year , $ 450 million revolving credit facility and a $ 150 million expansion feature, which may consist of term loans or additional revolving commitments. The interest rate at the inception of the agreement is LIBOR plus 100 basis points. The 2018 Credit Agreement has a floating interest rate that is generally LIBOR plus a tiered additional rate which varies based on our current leverage ratio. The amount outstanding as of March 31, 2020 is $ 160.0 million. Debt issuance costs associated with the prior credit agreement were not written off as the lenders and their relative percentages participation in the facility did not change. With respect to the 2018 Credit Agreement, deferred financing costs were $ 1.0 million. The 2018 Credit Agreement contains the following quarterly financial covenants effective as of March 31, 2020: Description Requirement Leverage Ratio (Consolidated Indebtedness/Consolidated Adj. EBITDA) < 3.50 to 1.00 Fixed Charge Coverage Ratio (Consolidated Free Cash Flow/Consolidated Fixed Charges) > 1.50 to 1.00 We are in compliance with all debt covenants as of March 31, 2020. We have issued $ 37.9 million in standby letters of credit as of March 31, 2020, mainly for insurance purposes. Issued letters of credit reduce our available credit under the 2018 Credit Agreement. As of March 31, 2020, we have approximately $ 252.1 million of unused lines of credit available and eligible to be drawn down under our revolving credit facility. |
Other Operating Expenses_(Incom
Other Operating Expenses/(Income) | 3 Months Ended |
Mar. 31, 2020 | |
Other Operating Expenses/(Income) [Abstract] | |
Other Operating Expenses/(Income) | 6. Other Operating Expenses/(Income) Three months ended March 31, 2020 2019 Loss on disposal of fixed assets $ 242 $ 353 Litigation settlement - 6,000 Total other operating expenses $ 242 $ 6,353 During the three months ended March 31, 2019, the Company recorded $ 6.0 million for a potential legal settlement, which includes the settlement amount, estimated employment taxes and other litigation costs. See footnote 11 for further discussion. |
Other (Expense)_Income - Net
Other (Expense)/Income - Net | 3 Months Ended |
Mar. 31, 2020 | |
Other (Expense)/Income - Net [Abstract] | |
Other (Expense)/Income - Net | 7. Other (Expense)/Income – Net Other (expense)/income – net comprises the following (in thousands): Three months ended March 31, 2020 2019 Market value adjustment on assets held in deferred compensation trust $ ( 9,572 ) $ 2,338 Interest income 106 101 Total other (expense)/income - net $ ( 9,466 ) $ 2,439 |
Leases
Leases | 3 Months Ended |
Mar. 31, 2020 | |
Leases [Abstract] | |
Leases | 8. Leases Chemed and each of its operating subsidiaries are service companies. As such, real estate leases comprise the largest lease obligation (and conversely, right of use asset) in our lease portfolio. VITAS has leased office space, as well as space for IPUs and/or contract beds within hospitals. Roto-Rooter has leased office space. Our leases have remaining terms of under 1 year to 10 years, some of which include options to extend the lease for up to 5 years , and some of which include options to terminate the lease within 1 year . We do not currently have any finance leases, therefore all lease information disclosed is related to operating leases. The components of balance sheet information related to leases were as follows: March 31, December 31, 2020 2019 Assets Operating lease assets $ 112,302 $ 111,652 Liabilities Current operating leases 36,252 39,280 Noncurrent operating leases 88,278 86,656 Total operating lease liabilities $ 124,530 $ 125,936 The components of lease expense were as follows: Three months ended March 31, 2020 2019 Lease Expense (a) Operating lease expense $ 14,610 $ 11,537 Sublease income - ( 6 ) Net lease expense $ 14,610 $ 11,531 (a) Includes short-term leases and variable lease costs, which are immaterial. Included in both cost of services provided and goods sold and selling, general and administrative expenses. The components of cash flow information related to leases were as follows: Three months ended March 31, 2020 2019 Cash paid for amounts included in the measurement of lease liabilities Operating cash flows from leases $ 12,028 $ 9,987 Leased assets obtained in exchange for new operating lease liabilities $ 12,583 $ 3,213 Weighted Average Remaining Lease Term at March 31, 2020 Operating leases 4.5 years Weighted Average Discount Rate at March 31, 2020 Operating leases 3.24 % Maturity of Operating Lease Liabilities (in thousands) 2020 $ 32,855 2021 32,430 2022 24,360 2023 18,089 2024 12,948 Thereafter 13,387 Total lease payments $ 134,069 Less: interest ( 9,423 ) Less: future lease obligations not yet commenced ( 116 ) Total liability recognized on the balance sheet $ 124,530 For leases commencing prior to April 2019, minimum rental payments exclude payments to landlords for real estate taxes and common area maintenance. Operating lease payments include $ 2.3 million related to extended lease terms that are reasonably certain of being exercised and exclude $ 116,000 lease payments for leases signed but not yet commenced. |
Stock-Based Compensation Plans
Stock-Based Compensation Plans | 3 Months Ended |
Mar. 31, 2020 | |
Stock-Based Compensation Plans [Abstract] | |
Stock-Based Compensation Plans | 9. Stock-Based Compensation Plans On February 21, 2020, the Compensation/Incentive Committee of the Board of Directors (“CIC”) granted 5,156 Performance Stock Units (“PSUs”) contingent upon the achievement of certain total shareholder return (“TSR”) targets as compared to the TSR of a group of peer companies for the three year period ending December 31, 2022, the date at which such awards vest. The cumulative compensation cost of the TSR-based PSU award to be recorded over the three year service period is $ 3.3 million. On February 21, 2020, the CIC also granted 5,156 PSUs contingent upon the achievement of certain earnings per share (“EPS”) targets for the three year period ending December 31, 2022. At the end of each reporting period, the Company estimates the number of shares that it believes will ultimately be earned and records the corresponding expense over the service period of the award. We currently estimate the cumulative compensation cost of the EPS-based PSUs to be recorded over the three year service period is $ 5.0 million . |
Retirement Plans
Retirement Plans | 3 Months Ended |
Mar. 31, 2020 | |
Retirement Plans [Abstract] | |
Retirement Plans | 10. Retirement Plans All of the Company’s plans that provide retirement and similar benefits are defined contribution plans. These expenses include the impact of market gains and losses on assets held in deferred compensation plans and are recorded in selling, general and administrative expenses. Net (losses)/gains for the Company’s retirement and profit-sharing plans, excess benefit plans and other similar plans are as follows (in thousands): Three months ended March 31, 2020 2019 $ ( 4,414 ) $ 6,914 |
Legal And Regulatory Matters
Legal And Regulatory Matters | 3 Months Ended |
Mar. 31, 2020 | |
Legal And Regulatory Matters [Abstract] | |
Legal And Regulatory Matters | 11. Legal and Regulatory Matters The VITAS segment of the Company’s business operates in a heavily-regulated industry. As a result, the Company is subjected to inquiries and investigations by various government agencies, which can result in penalties including repayment obligations, funding withholding, or debarment, as well as to lawsuits, including qui tam actions. The following sections describe the various ongoing material lawsuits and investigations of which the Company is currently aware. Other than as described below, it is not possible at this time for us to estimate either the timing or outcome of any of those matters, or whether any potential loss, or range of potential losses, is probable or reasonably estimable. Regulatory Matters and Litigation On October 30, 2017, the Company entered into a settlement agreement (the “Settlement Agreement”) to resolve civil litigation under the False Claims Act brought by the United States Department of Justice (“DOJ”) on behalf of the OIG and various relators concerning VITAS, filed in the U.S. District Court of the Western District of Missouri. The Company denied any violation of law and agreed to settlement without admission of wrongdoing. In connection with the settlement VITAS and certain of its subsidiaries entered into a corporate integrity agreement (“CIA”) on October 30, 2017. The CIA formalizes various aspects of VITAS’ already existing Compliance Program and contains requirements designed to document compliance with federal healthcare program requirements. It has a term of five years during which it imposes monitoring, reporting, certification, oversight, screening and training obligations, certain of which had previously been implemented by VITAS. It also requires VITAS to engage an Independent Review Organization to perform audit and review functions and to prepare reports regarding compliance with federal healthcare programs. In the event of breach of the CIA, VITAS could become liable for payment of stipulated penalties or could be excluded from participation in federal healthcare programs. The Company entered into a settlement agreement in March 2019 that will resolve state-wide wage and hour class action claims raised in four separate cases: (1) Jordan A. Seper on behalf of herself and others similarly situated v. VITAS Healthcare Corporation of California, a Delaware corporation; VITAS Healthcare Corp of CA, a business entity unknown; and DOES 1 to 100, inclusive ; Los Angeles Superior Court Case Number BC 642857 (“ Seper ”); (2) Jiwan Chhina v. VITAS Health Services of California, Inc., a California corporation; VITAS Healthcare Corporation of California, a Delaware corporation; VITAS Healthcare Corporation of California, a Delaware corporation dba VITAS Healthcare Inc.; and DOES 1 to 100, inclusive ; San Diego Superior Court Case Number 37-2015-00033978-CU-OE-CTL (“ Chhina ”) (which was subsequently merged with Seper ); (3) Chere Phillips and Lady Moore v. VITAS Healthcare Corporation of California , Sacramento County Superior Court, Case No. 34-2017-0021-2755 (“Phillips and Moore”); and (4) Williams v. VITAS Healthcare Corporation of California , Alameda County Superior Court Case No. RG 17853886 (“ Williams ”). These actions were brought by both current and former employees including a registered nurse, a licensed vocational nurse (LVN), home health aides and a social worker. Each action stated multiple claims generally including (1) failure to pay minimum wage for all hours worked; (2) failure to provide overtime for all hours worked; (3) failure to pay wages for all hours at the regular rate; (4) failure to provide meal periods; (5) failure to provide rest breaks; (6) failure to provide complete and accurate wage statements; (7) failure to pay for all reimbursement expenses; (8) unfair business practices; and (9) violation of the California Private Attorneys General Act. The cases generally asserted claims on behalf of classes defined to include all current and former non-exempt employees employed with VITAS in California within the four years preceding the filing of each lawsuit. For additional procedural history of these cases, please refer to our prior quarterly and annual filings. The Seper and Chhina cases were consolidated in Los Angeles County Superior Court; Chhina was dismissed as a separate action and joined with Seper in the filing of amended complaint on August 28, 2018, in which both Chhina and Seper were identified as named plaintiffs. Discovery in the remaining cases was stayed as to class claims and each court was advised of the pendency of the consolidated Seper/Chhina action. The parties engaged in a mediation process beginning in October 2018 and concluded with an agreement in March 2019. The settlement amount of $ 5.75 million plus employment taxes was recorded in the first quarter of 2019. As of December 31, 2019, $ 6.0 million was accrued in the accompanying Consolidated Balance Sheet. The definition of the class to participate in the settlement is intended to cover claims raised in the consolidated Seper/Chhina matter, claims raised in Phillips and Moore , as well as any class claims in William s. On January 28, 2020, the court granted preliminary approval of the settlement. A notice of the proposed settlement has been sent to the members of the class by the class claims administrator. The court has set the date for the final approval of the settlement hearing for May 21, 2020. Alfred Lax (“Lax”), a current employee of Roto-Rooter Services Company (“RRSC”), was hired in RRSC’s Menlo Park branch in 2007. On November 30, 2018, Lax filed a class action lawsuit in Santa Clara County Superior Court alleging (1) failure to provide or compensate for required rest breaks; (2) failure to properly pay for all hours worked; (3) failure to provide accurate wage statements; (4) failure to reimburse for work-related expenses; and (5) unfair business practices. Lax stated these claims as a representative of a class defined as all service technicians employed by RRSC in California during the four year s preceding the filing of the complaint. He seeks a determination that the action may proceed and be maintained as a class action and for compensatory and statutory damages (premium payments for missed rest periods, uncompensated rest periods, wages for time allegedly not paid such as travel time, repair time, and vehicle maintenance time, and unreimbursed expenses), penalties and restitutions, pre- and post-judgement interest and attorneys’ fees and costs. The lawsuit is, Alfred Lax on behalf of himself and all others similarly situated v. Roto-Rooter Services Company, and Does 1 through 50 inclusive; Santa Clara County Superior Court Case Number 18CV338652. The Company is not able to reasonably estimate the probability of loss or range of loss for any of these lawsuits at this time, with the exception of Seper/Chhina, Phillips and Moore and the class claims in Williams. The Company intends to defend vigorously against the allegations in the Lax lawsuit. Regardless of the outcome of any of the preceding matters, dealing with the various regulatory agencies and opposing parties can adversely affect us through defense costs, potential payments, withholding of governmental funding, diversion of management time, and related publicity. Although the Company intends to defend them vigorously, there can be no assurance that those suits will not have a material adverse effect on the Company. |
Concentration Of Risk
Concentration Of Risk | 3 Months Ended |
Mar. 31, 2020 | |
Concentration Of Risk [Abstract] | |
Concentration Of Risk | 12. Concentration of Risk As of March 31, 2020 and December 31, 2019, approximately 70 % and 71 %, respectively, of VITAS’ total accounts receivable balance were from Medicare and 25 % and 24 %, respectively, of VITAS’ total accounts receivable balance were due from various state Medicaid or managed Medicaid programs. Combined accounts receivable from Medicare, Medicaid, and managed Medicaid represent approximately 75 % of the consolidated net accounts receivable in the accompanying consolidated balance sheets as of March 31, 2020. VITAS has a pharmacy services contract with one service provider for specified pharmacy services related to its hospice operations. A large majority of VITAS’ pharmaceutical purchases are from this vendor. The pharmaceuticals purchased by VITAS are available through many providers in the United States. However, a disruption from VITAS’ main service provider could adversely impact VITAS’ operations, including temporary logistical challenges and increased cost associated with getting medication to our patients. |
Cash Overdrafts And Cash Equiva
Cash Overdrafts And Cash Equivalents | 3 Months Ended |
Mar. 31, 2020 | |
Cash Overdrafts And Cash Equivalents [Abstract] | |
Cash Overdrafts And Cash Equivalents | 13. Cash Overdrafts and Cash Equivalents There are no cash overdrafts payable included in accounts payable at March 31, 2020 (December 31, 2019 - $ 9.8 million). From time to time throughout the year, we invest excess cash in money market funds with major commercial banks. We closely monitor the creditworthiness of the institutions with which we invest our overnight funds. The amount invested was not material for each balance sheet date presented. |
Financial Instruments
Financial Instruments | 3 Months Ended |
Mar. 31, 2020 | |
Financial Instruments [Abstract] | |
Financial Instruments | 14. Financial Instruments FASB’s authoritative guidance on fair value measurements defines a hierarchy which prioritizes the inputs in fair value measurements. Level 1 measurements are measurements using quoted prices in active markets for identical assets or liabilities. Level 2 measurements use significant other observable inputs. Level 3 measurements are measurements using significant unobservable inputs which require a company to develop its own assumptions. In recording the fair value of assets and liabilities, companies must use the most reliable measurement available. The following shows the carrying value, fair value and the hierarchy for our financial instruments as of March 31, 2020 (in thousands): Fair Value Measure Carrying Value Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Mutual fund investments of deferred compensation plans held in trust $ 72,296 $ 72,296 $ - $ - Total debt 160,000 - 160,000 - The following shows the carrying value, fair value and the hierarchy for our financial instruments as of December 31, 2019 (in thousands): Fair Value Measure Carrying Value Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Mutual fund investments of deferred compensation plans held in trust $ 77,446 $ 77,446 $ - $ - Total debt 90,000 - 90,000 - For cash and cash equivalents, accounts receivable and accounts payable, the carrying amount is a reasonable estimate of fair value because of the liquidity and short-term nature of these instruments. As further described in Footnote 5, our outstanding long-term debt and current portion of long-term debt have floating interest rates that are reset at short-term intervals, generally 30 or 60 days. The interest rate we pay also includes an additional amount based on our current leverage ratio. As such, we believe our borrowings reflect significant nonperformance risks, mainly credit risk. Based on these factors, we believe the fair value of our long-term debt and current portion of long-term debt approximate the carrying value. |
Capital Stock Repurchase Plan T
Capital Stock Repurchase Plan Transactions | 3 Months Ended |
Mar. 31, 2020 | |
Capital Stock Repurchase Plan Transactions [Abstract] | |
Capital Stock Repurchase Plan Transactions | 15. Capital Stock Repurchase Plan Transactions We repurchased the following capital stock: Three months ended March 31, 2020 2019 Total cost of repurchased shares (in thousands) $ 100,235 $ 49,250 Shares repurchased 225,000 150,000 Weighted average price per share $ 445.49 $ 328.33 In March 2020, the Board of Directors authorized an additional $ 250.0 million for stock repurchase under Chemed’s existing share repurchase program. We currently have $ 253.8 million of authorization remaining under this share repurchase plan. |
Recent Accounting Standards
Recent Accounting Standards | 3 Months Ended |
Mar. 31, 2020 | |
Recent Accounting Standards [Abstract] | |
Recent Accounting Standards | 16. Recent Accounting Standards In March 2020, the FASB issued Accounting Standards Update “ASU No. 2020-04 - Reference Rate Reform”. The update provides optional expedients and exceptions for applying GAAP to contract modifications and hedging relationships, subject to meeting certain criteria, that reference LIBOR or another rate expected to be discontinued. The update is effective for all entities as of March 12, 2020 and will apply through December 31, 2022. The interest rate charged on borrowings from our existing revolver is based on LIBOR. The credit agreement includes provisions for modifying the interest rate in the instance that LIBOR is discontinued. As a result, no contract modifications will be required when LIBOR is discontinued. In December 2019, the FASB issued Accounting Standards Update “ASU No. 2019-12 – Simplifying the Accounting for Income Taxes”. The ASU adds new guidance to simplify accounting for income taxes, changes the accounting for certain income tax transactions and makes minor improvements to the codifications. The ASU is effective for the Company on January 1, 2021. We are currently evaluating the impact of this standard on our consolidated financial statements. |
Acquisitions
Acquisitions | 3 Months Ended |
Mar. 31, 2020 | |
Acquisitions [Abstract] | |
Acquisitions | 17. Acquisitions On August 2, 2019, we entered into an Asset Purchase Agreement (the “Agreement”) to purchase substantially all of the assets of HSW RR, Inc., a Delaware corporation (“HSW”) and certain related assets of its affiliates, for $ 120 million, subject to a working capital adjustment that resulted in an additional $ 1.4 million payment to HSW. HSW owned and operated fourteen Roto-Rooter franchises mainly in the southwestern section of the United States, including Los Angeles, Dallas and Phoenix. Included in the assets purchased were the assets of Western Drain Supply, Inc., a plumbing supply company. The purchase was made using a combination of cash on-hand and borrowings under Chemed’s existing $ 450 million revolving credit facility. On September 16, 2019, we completed the acquisition. On July 1, 2019 , we completed the acquisition of a Roto-Rooter franchise and the related assets in Oakland, CA for $ 18.0 million in cash. The acquisitions were made as a continuation of Roto-Rooter’s strategy to re-acquire franchises in large markets in the United States. The allocation for the two acquisitions completed in 2019 is as follows (in thousands): HSW Oakland Total Goodwill $ 56,191 $ 10,535 $ 66,726 Reacquired franchise rights 52,980 6,190 59,170 Property, plant, and equipment 5,998 675 6,673 Working capital 3,760 22 3,782 Customer relationships 2,220 500 2,720 Non-compete agreements 140 100 240 Other assets and liabilities - net 128 23 151 $ 121,417 $ 18,045 $ 139,462 Reacquired franchise rights, included in identifiable intangibles on the Consolidated Balance Sheets, are amortized over the period remaining in each individual franchise agreement. The average amortization period for reacquired franchise rights for the acquisitions made in the third quarter of 2019 is 7.4 years. The franchise fee revenue, the valuation of reacquired franchise rights and amortization for the acquired franchises are as follows: Annualized Valuation Amortization of 2018 Franchise of Reacquired Reacquired Revenue Franchise Rights Franchise Rights HSW $ 1,782 $ 52,980 $ 7,258 Oakland 95 6,190 825 Subtotal 1,877 $ 59,170 $ 8,083 All other franchise territories 4,505 $ 6,382 Amortization of reacquired franchise rights comprises the following (in thousands): Three months ended March 31, 2020 2019 $ 2,352 $ 441 Customer relationships, included in identifiable intangibles on the Consolidated Balance Sheets, are amortized over an average amortization period of 20.4 years. Non-compete agreements are amortized over the period of the agreement. The average amortization period for non-compete agreements for the transactions made in the third quarter of 2019 is 4.0 years. Goodwill is assessed for impairment on a yearly basis as of October 1. The primary factor that contributed to the purchase price resulting in the recognition of goodwill is operational efficiencies expected as a result of consolidating stand- alone franchises and Roto-Rooter’s network of nationwide branches. All goodwill recognized is deductible for tax purposes. The pro forma revenue and earnings of the Company for March 31, 2019, as if all acquisitions made in fiscal 2019 were completed on January 1, 2019, are as follows: (in thousands, except per share data): Service revenues and sales $ 484,106 Net income $ 47,936 Earnings per share $ 3.00 Diluted earnings per share $ 2.90 Shown below is movement in Goodwill (in thousands): VITAS Roto-Rooter Total Balance at December 31, 2019 $ 333,331 $ 244,036 $ 577,367 Foreign currency adjustments - ( 131 ) ( 131 ) Balance at March 31, 2020 $ 333,331 $ 243,905 $ 577,236 |
Basis Of Presentation (Policy)
Basis Of Presentation (Policy) | 3 Months Ended |
Mar. 31, 2020 | |
Summary Of Significant Accounting Policies [Abstract] | |
Basis Of Presentation | As used herein, the terms “We,” “Company” and “Chemed” refer to Chemed Corporation or Chemed Corporation and its consolidated subsidiaries. We have prepared the accompanying unaudited consolidated financial statements of Chemed in accordance with Rule 10-01 of SEC Regulation S-X. Consequently, we have omitted certain disclosures required under generally accepted accounting principles in the United States (“GAAP”) for complete financial statements. The December 31, 2019 balance sheet data were derived from audited financial statements but do not include all disclosures required by GAAP. However, in our opinion, the financial statements presented herein contain all adjustments, consisting only of normal recurring adjustments, necessary to state fairly our financial position, results of operations and cash flows. These financial statements are prepared on the same basis as and should be read in conjunction with the audited Consolidated Financial Statements and related notes included in our Annual Report on Form 10-K for the year ended December 31, 2019. Certain reclassifications have been made to prior year financial statements to conform to current presentation. |
Current Expected Credit Losses | CURRENT EXPECTED CREDIT LOSSES In June 2016, the FASB issued ASU No. 2016-13, Financial Instruments, Credit Losses. The ASU introduces the current expected credit loss (“CECL”) methodology. The CECL methodology utilizes a lifetime “expected credit loss” measurement objective for the recognition of credit losses for financial assets at the time the asset is originated or acquired. This generally results in earlier recognition of credit losses and greater transparency about credit risk. The Company adopted the provisions of ASU No. 2016-13 on January 1, 2020 using the modified retrospective method. The provisions of ASU No. 2016-13 did not significantly impact the method or timing that the Company recognizes expected credit losses and the cumulative effect of adoption was immaterial. The Company’s only material financial asset subject to ASU No. 2016-13 is accounts receivable, trade and other. The Company recognizes an allowance for credit losses related to accounts receivable to present the net amount expected to be collected as of the balance sheet date. Accounts receivable are written-off when it is determined that the amount is deemed uncollectible. The following presents a detailed discussion of the operating subsidiaries’ accounts receivable and their evaluation of credit risk related to those accounts: Roto-Rooter’s trade accounts receivable are comprised mainly of amounts due from commercial entities and commercial insurance carriers. Roto-Rooter’s accounts receivable are generally outstanding for 90 days or less and there are no significant amounts outstanding greater than one year. Roto-Rooter historically has not experienced significant write-offs due to credit losses. For amounts due from commercial entities, Roto-Rooter utilizes a provision matrix based on historical credit losses by aging category. For amounts due from commercial insurance carriers, mainly from water restoration revenue, Roto-Rooter periodically reviews published default tables related to commercial insurance carriers and provides an allowance. As further discussed below, Roto-Rooter assesses on a quarterly basis whether the historical rates used are expected to be representative of credit risk over the life of the account taking into consideration existing economic conditions. In excess of 90% of VITAS’ accounts receivable are from the Federal or state governments under Medicare and Medicaid. VITAS believes that it is reasonable to expect that the risk of non-payment as a result of credit issues from these government entities is zero. As such, there is no allowance for credit losses established related to these accounts. The remainder of VITAS’ accounts are from commercial insurance carriers. VITAS’ accounts are generally outstanding for 90 days or less and there are no significant amounts outstanding greater than one year. VITAS historically has not experienced significant write-offs due to credit losses. VITAS periodically reviews published default tables related to commercial insurance carriers and provides an allowance. VITAS assesses on a quarterly basis whether these default rates are expected to be representative of credit risk over the life of the account taking into consideration existing economic conditions. As further discussed in footnote 5, Chemed has $ 37.9 million in standby letters of credit outstanding. These letters of credit are with large, highly rated financial institutions. The Company periodically reviews published default tables related to these institutions to assess the need for an allowance. Chemed believes that any expected credit loss related to outstanding letters of credit based on current economic conditions is not material. In conjunction with its first quarter of 2020 closing process, subsequent to the adoption of ASU No. 2016-13, Roto-Rooter re-assessed its expected credit losses as a result of COVID-19. In addition to the historical provision matrix described above, and in conjunction with the quarterly assessment of current economic conditions and published default rates to evaluate credit risk over the life of the account, Roto-Rooter analyzed the industries from which the accounts receivable originated. Using available information and judgement, additional expected credit losses were recorded for industries deemed higher risk during the economic shut down, such as restaurants, hotels and bars. The additional charge taken for the three-month period ended March 31, 2020 related to expected credit losses from COVID-19 issues was $ 524,000 . The full economic impact as a result of COVID-19 and the related business shut-downs will not be known for some period of time. The amount recorded in the first quarter of 2020 represents management’s current best estimate. ADDITIONS (CHARGED) CREDITED (CHARGED) BALANCE AT TO COSTS CREDITED BALANCE BEGINNING AND TO OTHER AT END DESCRIPTION OF PERIOD EXPENSES ACCOUNTS OTHER OF PERIOD March 31, 2020 $ ( 353 ) $ ( 594 ) $ ( 475 ) $ ( 5 ) $ ( 1,427 ) |
Coronavirus Aid, Relief And Economic Stimulus (CARES) Act | CORONAVIRUS AID, RELIEF AND ECONOMIC STIMULUS (CARES) ACT The recent COVID-19 pandemic did not have a material impact on our results of operations, cash flow and financial position as of and for the three months-ended March 31, 2020. We are closely monitoring the impact of the pandemic on all aspects of our business including impacts to employees, customers, patients, suppliers and vendors. The Company’s two operating subsidiaries have been categorized as critical infrastructure businesses and are not currently materially limited by federal, state or local regulations that restrict movement or operating ability. The length and severity of the pandemic, coupled with related governmental actions including relief acts and actions relating to our workforce at federal, state and local levels, and underlying economic disruption will determine the ultimate short-term and long-term impact to our business operations and financial results. We are unable to predict the myriad of possible issues that could arise or the ultimate effect to our businesses as a result of the unknown short, medium and long-term impacts that the pandemic will have on the United States economy and society as a whole. On March 27, 2020, the CARES Act was passed. It is intended to provide economic relief to individuals and businesses affected by the coronavirus pandemic. It also contains provisions related to healthcare providers’ operations and the issues caused by the coronavirus pandemic. The following significant economic impacts for Chemed and its subsidiaries as a result of specific provisions of the CARES Act: Chemed deferred its first quarter 2020 income tax payment of $ 8.8 million to the Federal government until July 15, 2020, as permitted by the CARES Act. In addition, Chemed and its subsidiaries deferred payment of certain employer payroll taxes and certain state tax payments, as permitted by the CARES Act. A portion of the CARES Act provides $ 100 billion from the Public Health and Social Services Emergency Fund (“Relief Fund)” to hospitals and other healthcare providers on the front lines of the coronavirus response. Of this $ 100 billion distribution from the Relief Fund, $ 30 billion was designated to be automatically distributed to facilities and healthcare providers based upon their 2019 Medicare fee-for-service revenue. On April 10, 2020 VITAS automatically received $ 80.2 million from the Relief Fund based upon VITAS’s 2019 Medicare fee-for-service Medicare revenue. While specific details of the program have not been finalized, recipients of this $ 30 billion in CARES Act relief are specified to use these funds to prevent, prepare for, and respond to coronavirus, and shall reimburse the recipient only for health care related expenses or lost revenues that are attributable to coronavirus. The ability of VITAS to retain and utilize the full $ 80.2 million from the Relief Fund will depend on the magnitude, timing and nature of the economic impact of COVID-19 within VITAS, as well as the guidelines and rules of the Relief Fund program. During the period from May 1, 2020 through December 31, 2020, the 2 % Medicare sequestration reimbursement cut is suspended. VITAS anticipates the impact to increase revenue approximately $ 15 million to $ 20 million, excluding the impact of the Medicare Cap. |
Lease Accounting | LEASE ACCOUNTING In February 2016, the FASB issued Accounting Standards Update “ASU No. 2016-02 Leases” which introduced a lessee model that brings most leases onto the balance sheets and updates lessor accounting to align with changes in the lessee model and the revenue recognition standard. This standard is also referred to as Accountings Standards Codification No.842 (“ASC 842”). We adopted ASC 842 effective January 1, 2019, using the optional transition method requiring leases existing at, or entered into after, January 1, 2019 to be recognized and measured. The transition method selected does not require adjustments to prior period amounts, which continue to be reflected in accordance with historical accounting. In addition, we elected the package of practical expedients permitted under the transition guidance within the new standard which among other things, allowed us to carry forward the historical lease classification. Chemed and each of its operating subsidiaries are service companies. As such, real estate leases comprise the largest lease obligation (and conversely, right of use asset) in our lease portfolio. VITAS has leased office space, as well as space for inpatient units (“IPUs”) and/or contract beds within hospitals. Roto-Rooter mainly has leased office space. Roto-Rooter purchases equipment and leases it to certain of its independent contractors. We analyzed these leases in accordance with ASC 842 and determined they are operating leases. As a result, Roto-Rooter will continue to capitalize the equipment underlying these leases, depreciate the equipment and recognize rental income. Adoption of the new standard resulted in right of use assets and lease liabilities of $ 93.1 million and $ 104.3 million, respectively, as of January 1, 2019. In determining the liability, we used our incremental borrowing rate based on the information available at the time of adoption, since the rate implicit in the leases cannot be readily determined. At January 1, 2019, the weighted average rate was 3.47 %. The standard did not materially impact our consolidated net income or cash flows. We did not book a cumulative effect adjustment upon adoption of the standard. |
Cloud Computing | CLOUD COMPUTING On January 1, 2019, we early adopted ASU No. 2018-15, “Customer’s Accounting for Implementation Costs Incurred in a Cloud Computing Arrangement That is a Service Contract”. This ASU aligns the requirements for capitalizing implementation costs incurred in a hosting arrangement that is a service contract with the requirements for capitalizing implementation costs incurred to develop or obtain internal use software. We adopted the ASU on a prospective basis. As of March 31, 2020, we have two cloud computing arrangements that are service contracts. Roto-Rooter is implementing a system to assist in technician dispatch and VITAS implemented a new human resources system. We have capitalized approximately $ 6.0 million related to implementation of these projects which are included in prepaid assets in the accompanying balance sheets. The VITAS human resource system was placed into service in January 2020 and is being amortized over 5 years. Through March 31, 2020, $ 262,000 has been amortized. There has been no amortization expense associated with the Roto-Rooter project, as the software has not yet been placed in service. We anticipate amortizing this asset over the original term of the arrangement plus renewal options that are reasonably certain of being exercised. |
Non-Employee Stock Compensation | NON-EMPLOYEE STOCK COMPENSATION In June 2018, the FASB issued Accounting Standards Update “ASU No. 2018-07 – Compensation – Stock Compensation”. The ASU expands the scope of current guidance to include all share-based payment arrangements related to the acquisition of goods and services from both non-employees and employees. The guidance in the ASU is effective for the Company in all fiscal years beginning after December 15, 2018. Adoption of this standard had no material impact on our Consolidated Financial Statements. |
Income Taxes | INCOME TAXES Our effective income tax rate was 18.9 % in the first quarter of 2020 compared to 12.1 % during the first quarter of 2019. Excess tax benefit on stock options reduced our income tax expenses by $ 4.6 million and $ 6.7 million, respectively for the quarters ended March 31, 2020 and 2019. |
Non-Cash Transactions | NON-CASH TRANSACTIONS Included in the accompanying Consolidated Balance Sheets are $ 1.7 million and $ 1.8 million of capitalized property and equipment which were not paid for as of March 31, 2020 and December 31, 2019, respectively. These amounts have been excluded from capital expenditures in the accompanying Consolidated Statements of Cash Flow. There are no material non-cash amounts included in interest expense for any period presented. |
Business Combinations | BUSINESS COMBINATIONS We account for acquired businesses using the acquisition method of accounting. All assets acquired and liabilities assumed are recorded at their respective fair values at the date of acquisition. The determination of fair value involves estimates and the use of valuation techniques when market value is not readily available. We use various techniques to determine fair value in accordance with accepted valuation models, primarily the income approach. The significant assumptions used in developing fair values include, but are not limited to, revenue growth rates, the amount and timing of future cash flows, discount rates, useful lives, royalty rates and future tax rates. The excess of purchase price over the fair value of assets and liabilities acquired is recorded as goodwill. See footnote 17 for discussion of recent acquisitions. |
Basis Of Presentation (Tables)
Basis Of Presentation (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Basis Of Presentation [Abstract] | |
Schedule Of Allowance For Doubtful Accounts | ADDITIONS (CHARGED) CREDITED (CHARGED) BALANCE AT TO COSTS CREDITED BALANCE BEGINNING AND TO OTHER AT END DESCRIPTION OF PERIOD EXPENSES ACCOUNTS OTHER OF PERIOD March 31, 2020 $ ( 353 ) $ ( 594 ) $ ( 475 ) $ ( 5 ) $ ( 1,427 ) |
Revenue Recognition (Tables)
Revenue Recognition (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Revenue Recognition [Abstract] | |
Schedule Of Patient Care Service Revenue | The composition of patient care service revenue by payor and level of care for the quarter ended March 31, 2020 is as follows (in thousands): Medicare Medicaid Commercial Total Routine home care $ 253,965 $ 12,133 5,664 $ 271,762 Continuous care 37,132 1,871 1,552 40,555 Inpatient care 28,148 2,559 1,775 32,482 $ 319,245 $ 16,563 $ 8,991 $ 344,799 All other revenue - self-pay, respite care, etc. 3,147 Subtotal $ 347,946 Medicare cap adjustment ( 2,500 ) Implicit price concessions ( 4,149 ) Room and board, net ( 3,381 ) Net revenue $ 337,916 The composition of patient care service revenue by payor and level of care for the quarter ended March 31, 2019 is as follows (in thousands): Medicare Medicaid Commercial Total Routine home care $ 241,700 $ 11,673 $ 5,474 $ 258,847 Continuous care 28,973 1,787 1,484 32,244 Inpatient care 18,989 2,148 1,433 22,570 $ 289,662 $ 15,608 $ 8,391 $ 313,661 All other revenue - self-pay, respite care, etc. 2,010 Subtotal $ 315,671 Medicare cap adjustment ( 3,400 ) Implicit price concessions ( 2,948 ) Room and board, net ( 2,542 ) Net revenue $ 306,781 |
Schedule Of Disaggregated Revenue | The composition of disaggregated revenue for the first quarter is as follows (in thousands): March 31, 2020 2019 Short-term core service jobs $ 134,424 $ 112,185 Water restoration 29,246 29,208 Contractor revenue 16,228 14,032 Franchise fees 1,190 1,621 All other 3,534 3,008 Subtotal $ 184,622 $ 160,054 Implicit price concessions and credit memos ( 6,740 ) ( 4,801 ) Net revenue $ 177,882 $ 155,253 |
Segments (Tables)
Segments (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Segments [Abstract] | |
Segment Data | Three months ended March 31, 2020 2019 After-tax Income/(Loss) VITAS $ 41,279 $ 29,288 Roto-Rooter 24,322 22,986 Total 65,601 52,274 Corporate ( 9,710 ) ( 7,607 ) Net income $ 55,891 $ 44,667 |
Earnings Per Share (Tables)
Earnings Per Share (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Earnings Per Share[Abstract] | |
Schedule Of Computation Of Earnings Per Share | Net Income For the Three Months Ended March 31, Income Shares Earnings per Share 2020 Earnings $ 55,891 15,991 $ 3.50 Dilutive stock options - 446 Nonvested stock awards - 79 Diluted earnings $ 55,891 16,516 $ 3.38 2019 Earnings $ 44,667 15,954 $ 2.80 Dilutive stock options - 494 Nonvested stock awards - 77 Diluted earnings $ 44,667 16,525 $ 2.70 |
Long-Term Debt And Lines of C_2
Long-Term Debt And Lines of Credit (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Long-Term Debt And Lines Of Credit [Abstract] | |
Financial Debt Covenants | Description Requirement Leverage Ratio (Consolidated Indebtedness/Consolidated Adj. EBITDA) < 3.50 to 1.00 Fixed Charge Coverage Ratio (Consolidated Free Cash Flow/Consolidated Fixed Charges) > 1.50 to 1.00 |
Other Operating Expenses_(Inc_2
Other Operating Expenses/(Income) (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Other Operating Expenses/(Income) [Abstract] | |
Schedule Of Other Operating Expenses | Three months ended March 31, 2020 2019 Loss on disposal of fixed assets $ 242 $ 353 Litigation settlement - 6,000 Total other operating expenses $ 242 $ 6,353 |
Other (Expense)_Income - Net (T
Other (Expense)/Income - Net (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Other (Expense)/Income - Net [Abstract] | |
Schedule Of Other (Expense)/Income - Net | Three months ended March 31, 2020 2019 Market value adjustment on assets held in deferred compensation trust $ ( 9,572 ) $ 2,338 Interest income 106 101 Total other (expense)/income - net $ ( 9,466 ) $ 2,439 |
Leases (Tables)
Leases (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Leases [Abstract] | |
Components Of Balance Sheet Information Related To Leases | March 31, December 31, 2020 2019 Assets Operating lease assets $ 112,302 $ 111,652 Liabilities Current operating leases 36,252 39,280 Noncurrent operating leases 88,278 86,656 Total operating lease liabilities $ 124,530 $ 125,936 |
Components Of Lease Expense | Three months ended March 31, 2020 2019 Lease Expense (a) Operating lease expense $ 14,610 $ 11,537 Sublease income - ( 6 ) Net lease expense $ 14,610 $ 11,531 (a) Includes short-term leases and variable lease costs, which are immaterial. Included in both cost of services provided and goods sold and selling, general and administrative expenses. |
Components Of Cash Flow Information Related To Leases | Three months ended March 31, 2020 2019 Cash paid for amounts included in the measurement of lease liabilities Operating cash flows from leases $ 12,028 $ 9,987 Leased assets obtained in exchange for new operating lease liabilities $ 12,583 $ 3,213 Weighted Average Remaining Lease Term at March 31, 2020 Operating leases 4.5 years Weighted Average Discount Rate at March 31, 2020 Operating leases 3.24 % |
Summary Of Maturity Of Operating Lease Liabilities | Maturity of Operating Lease Liabilities (in thousands) 2020 $ 32,855 2021 32,430 2022 24,360 2023 18,089 2024 12,948 Thereafter 13,387 Total lease payments $ 134,069 Less: interest ( 9,423 ) Less: future lease obligations not yet commenced ( 116 ) Total liability recognized on the balance sheet $ 124,530 |
Retirement Plans (Tables)
Retirement Plans (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Retirement Plans [Abstract] | |
Schedule Of Net (Losses)/Expenses For Retirement, Profit-Sharing Plans, Excess Benefit Plans And Other Similar Plans | Three months ended March 31, 2020 2019 $ ( 4,414 ) $ 6,914 |
Financial Instruments (Tables)
Financial Instruments (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Financial Instruments [Abstract] | |
Carrying Value, Fair Value And Hierarchy Of Financial Instruments | The following shows the carrying value, fair value and the hierarchy for our financial instruments as of March 31, 2020 (in thousands): Fair Value Measure Carrying Value Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Mutual fund investments of deferred compensation plans held in trust $ 72,296 $ 72,296 $ - $ - Total debt 160,000 - 160,000 - The following shows the carrying value, fair value and the hierarchy for our financial instruments as of December 31, 2019 (in thousands): Fair Value Measure Carrying Value Quoted Prices in Active Markets for Identical Assets (Level 1) Significant Other Observable Inputs (Level 2) Significant Unobservable Inputs (Level 3) Mutual fund investments of deferred compensation plans held in trust $ 77,446 $ 77,446 $ - $ - Total debt 90,000 - 90,000 - |
Capital Stock Repurchase Plan_2
Capital Stock Repurchase Plan Transactions (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Capital Stock Repurchase Plan Transactions [Abstract] | |
Schedule Of Repurchased Capital Stock | Three months ended March 31, 2020 2019 Total cost of repurchased shares (in thousands) $ 100,235 $ 49,250 Shares repurchased 225,000 150,000 Weighted average price per share $ 445.49 $ 328.33 |
Acquisitions (Tables)
Acquisitions (Tables) | 3 Months Ended |
Mar. 31, 2020 | |
Acquisitions [Abstract] | |
Schedule Of Business Acquisitions | HSW Oakland Total Goodwill $ 56,191 $ 10,535 $ 66,726 Reacquired franchise rights 52,980 6,190 59,170 Property, plant, and equipment 5,998 675 6,673 Working capital 3,760 22 3,782 Customer relationships 2,220 500 2,720 Non-compete agreements 140 100 240 Other assets and liabilities - net 128 23 151 $ 121,417 $ 18,045 $ 139,462 |
Schedule Of Franchise Revenue, Valuation And Amortization Of Reacquired Franchise Rights | Annualized Valuation Amortization of 2018 Franchise of Reacquired Reacquired Revenue Franchise Rights Franchise Rights HSW $ 1,782 $ 52,980 $ 7,258 Oakland 95 6,190 825 Subtotal 1,877 $ 59,170 $ 8,083 All other franchise territories 4,505 $ 6,382 |
Schedule Of Amortization Of Reacquired Franchise Agreements | Three months ended March 31, 2020 2019 $ 2,352 $ 441 |
Schedule Of Business Acquisitions Pro Forma Of Operations | Service revenues and sales $ 484,106 Net income $ 47,936 Earnings per share $ 3.00 Diluted earnings per share $ 2.90 |
Schedule Of Movement In Goodwill | VITAS Roto-Rooter Total Balance at December 31, 2019 $ 333,331 $ 244,036 $ 577,367 Foreign currency adjustments - ( 131 ) ( 131 ) Balance at March 31, 2020 $ 333,331 $ 243,905 $ 577,236 |
Basis Of Presentation (Narrativ
Basis Of Presentation (Narrative) (Details) | 3 Months Ended | 8 Months Ended | ||||
Mar. 31, 2020USD ($)item | Mar. 31, 2019USD ($) | Dec. 31, 2020USD ($) | Apr. 10, 2020USD ($) | Dec. 31, 2019USD ($) | Jan. 01, 2019USD ($) | |
Standby letters of credit | $ 37,900,000 | |||||
Expected credit losses from COVID-19 | 594,000 | |||||
Deferred income taxes | 2,290,000 | $ (3,489,000) | ||||
Revenue | 515,798,000 | $ 462,034,000 | ||||
Lease right of use assets | 112,302,000 | $ 111,652,000 | ||||
Lease liabilities | $ 124,530,000 | 125,936,000 | ||||
Weighted average rate | 3.24% | |||||
Number of cloud computing arrangements | item | 2 | |||||
Effective tax rate | 18.90% | 12.10% | ||||
Excess tax benefit on stock options reduced income tax expense | $ 4,600,000 | $ 6,700,000 | ||||
Capitalized property and equipment | 1,700,000 | $ 1,800,000 | ||||
CARES Act [Member] | ||||||
Deferred income taxes | 8,800,000 | |||||
Relief Fund | 100,000,000,000 | |||||
CARES Act - 2019 Medicare Fee-For-Service [Member] | ||||||
Relief Fund | 30,000,000,000 | |||||
ASU 2016-02 [Member] | ||||||
Lease right of use assets | $ 93,100,000 | |||||
Lease liabilities | $ 104,300,000 | |||||
Weighted average rate | 3.47% | |||||
Cloud Computing [Member] | ||||||
Capitalized contract cost | 6,000,000 | |||||
VITAS [Member] | CARES Act [Member] | Subsequent Event [Member] | ||||||
Relief Fund | $ 30,000,000,000 | |||||
VITAS [Member] | CARES Act - 2019 Medicare Fee-For-Service [Member] | Subsequent Event [Member] | ||||||
Relief Fund | $ 80,200,000 | |||||
VITAS [Member] | Forecast [Member] | ||||||
Percentage of Medicare sequestration reimbursement | 2.00% | |||||
VITAS [Member] | Forecast [Member] | Minimum [Member] | ||||||
Revenue | $ 15,000,000 | |||||
VITAS [Member] | Forecast [Member] | Maximum [Member] | ||||||
Revenue | $ 20,000,000 | |||||
VITAS [Member] | Cloud Computing [Member] | ||||||
Capitalized contract cost, amortization expense | $ 262,000 | |||||
Capitalized contract cost, amortization period | 5 years | |||||
Roto-Rooter [Member] | ||||||
Expected credit losses from COVID-19 | $ 524,000 | |||||
Roto-Rooter [Member] | Cloud Computing [Member] | ||||||
Capitalized contract cost, amortization expense | $ 0 |
Basis Of Presentation (Schedule
Basis Of Presentation (Schedule Of Allowance For Doubtful Accounts) (Details) $ in Thousands | 3 Months Ended |
Mar. 31, 2020USD ($) | |
BALANCE AT BEGINNING OF PERIOD | $ (353) |
(CHARGED) CREDITED TO COSTS AND EXPENSES | (594) |
(CHARGED) CREDITED TO OTHER ACCOUNTS | (475) |
OTHER | (5) |
BALANCE AT END OF PERIOD | (1,427) |
Roto-Rooter [Member] | |
(CHARGED) CREDITED TO COSTS AND EXPENSES | $ (524) |
Revenue Recognition (Narrative)
Revenue Recognition (Narrative) (Details) - USD ($) $ in Millions | 3 Months Ended | 12 Months Ended | ||
Mar. 31, 2020 | Mar. 31, 2019 | Dec. 31, 2015 | Dec. 31, 2013 | |
Three Program Projected Measurement Period Liability [Member] | ||||
Revenue Recognition [line items] | ||||
Additional Medicare cap adjustment related to prior cap liabilities | $ 8.3 | |||
Roto-Rooter [Member] | ||||
Revenue Recognition [line items] | ||||
Credit payment terms | 30 days | |||
Duration of advance notice of cancellation without penalty for both parties | 90 days | |||
Term of contract | 10 years | |||
Duration of advance notice of cancelation without penatly | 60 days | |||
Roto-Rooter [Member] | Maximum [Member] | ||||
Revenue Recognition [line items] | ||||
Duration of services provided | 5 days | |||
Roto-Rooter [Member] | Minimum [Member] | ||||
Revenue Recognition [line items] | ||||
Duration of services provided | 3 days | |||
VITAS [Member] | ||||
Revenue Recognition [line items] | ||||
Period of tier one care rate | 60 days | |||
Period of tier two care rate | 61 days | |||
Period of services provided after discharge | 12 months | |||
Period of service intensity add-on payment | 7 days | |||
Reimbursement period per day | 4 hours | |||
Reimbursement increments | 15 minutes | |||
Minimum amount of care per 24-hr period | 8 hours | |||
Charity care cost | $ 2.2 | $ 2.1 | ||
Percentage of automatic budget reductions | 2.00% | |||
Percentage of medicaid reimbursement | 95.00% | |||
Percentage of expenses | 5.00% | |||
VITAS [Member] | Maximum [Member] | ||||
Revenue Recognition [line items] | ||||
Inpatient cap percentage | 20.00% | |||
VITAS [Member] | Five Programs Projected Measurement Period Liability [Member] | ||||
Revenue Recognition [line items] | ||||
Medicare cap adjustment | $ 2.5 | |||
VITAS [Member] | Three Program Projected Measurement Period Liability [Member] | ||||
Revenue Recognition [line items] | ||||
Medicare cap adjustment | $ 3.4 |
Revenue Recognition (Schedule O
Revenue Recognition (Schedule Of Patient Care Service Revenue) (Details) - VITAS [Member] - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Revenue Recognition, Multiple-deliverable Arrangements [Line Items] | ||
Patient care service revenue | $ 347,946 | $ 315,671 |
Net revenue | 337,916 | 306,781 |
Routine Home Care [Member] | ||
Revenue Recognition, Multiple-deliverable Arrangements [Line Items] | ||
Patient care service revenue | 271,762 | 258,847 |
Continuous Care [Member] | ||
Revenue Recognition, Multiple-deliverable Arrangements [Line Items] | ||
Patient care service revenue | 40,555 | 32,244 |
Inpatient Care [Member] | ||
Revenue Recognition, Multiple-deliverable Arrangements [Line Items] | ||
Patient care service revenue | 32,482 | 22,570 |
Care Services Total [Member] | ||
Revenue Recognition, Multiple-deliverable Arrangements [Line Items] | ||
Patient care service revenue | 344,799 | 313,661 |
All Other Revenue- Self-pay, Respite Care, Etc. [Member] | ||
Revenue Recognition, Multiple-deliverable Arrangements [Line Items] | ||
Patient care service revenue | 3,147 | 2,010 |
Medicare Cap [Member] | ||
Revenue Recognition, Multiple-deliverable Arrangements [Line Items] | ||
Medicare cap adjustment | (2,500) | (3,400) |
Implicit Price Concessions [Member] | ||
Revenue Recognition, Multiple-deliverable Arrangements [Line Items] | ||
Implicit price concessions | (4,149) | (2,948) |
Room And Board [Member] | ||
Revenue Recognition, Multiple-deliverable Arrangements [Line Items] | ||
Room and board, net | (3,381) | (2,542) |
Medicare [Member] | Routine Home Care [Member] | ||
Revenue Recognition, Multiple-deliverable Arrangements [Line Items] | ||
Patient care service revenue | 253,965 | 241,700 |
Medicare [Member] | Continuous Care [Member] | ||
Revenue Recognition, Multiple-deliverable Arrangements [Line Items] | ||
Patient care service revenue | 37,132 | 28,973 |
Medicare [Member] | Inpatient Care [Member] | ||
Revenue Recognition, Multiple-deliverable Arrangements [Line Items] | ||
Patient care service revenue | 28,148 | 18,989 |
Medicare [Member] | Care Services Total [Member] | ||
Revenue Recognition, Multiple-deliverable Arrangements [Line Items] | ||
Patient care service revenue | 319,245 | 289,662 |
Medicaid [Member] | Routine Home Care [Member] | ||
Revenue Recognition, Multiple-deliverable Arrangements [Line Items] | ||
Patient care service revenue | 12,133 | 11,673 |
Medicaid [Member] | Continuous Care [Member] | ||
Revenue Recognition, Multiple-deliverable Arrangements [Line Items] | ||
Patient care service revenue | 1,871 | 1,787 |
Medicaid [Member] | Inpatient Care [Member] | ||
Revenue Recognition, Multiple-deliverable Arrangements [Line Items] | ||
Patient care service revenue | 2,559 | 2,148 |
Medicaid [Member] | Care Services Total [Member] | ||
Revenue Recognition, Multiple-deliverable Arrangements [Line Items] | ||
Patient care service revenue | 16,563 | 15,608 |
Commercial [Member] | Routine Home Care [Member] | ||
Revenue Recognition, Multiple-deliverable Arrangements [Line Items] | ||
Patient care service revenue | 5,664 | 5,474 |
Commercial [Member] | Continuous Care [Member] | ||
Revenue Recognition, Multiple-deliverable Arrangements [Line Items] | ||
Patient care service revenue | 1,552 | 1,484 |
Commercial [Member] | Inpatient Care [Member] | ||
Revenue Recognition, Multiple-deliverable Arrangements [Line Items] | ||
Patient care service revenue | 1,775 | 1,433 |
Commercial [Member] | Care Services Total [Member] | ||
Revenue Recognition, Multiple-deliverable Arrangements [Line Items] | ||
Patient care service revenue | $ 8,991 | $ 8,391 |
Revenue Recognition (Schedule_2
Revenue Recognition (Schedule Of Disaggregated Revenue) (Details) - Roto-Rooter [Member] - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Subtotal | $ 184,622 | $ 160,054 |
Implicit price concessions and credit memos | (6,740) | (4,801) |
Net revenue | 177,882 | 155,253 |
Short-Term Core Service Jobs [Member] | ||
Subtotal | 134,424 | 112,185 |
Water Restoration [Member] | ||
Subtotal | 29,246 | 29,208 |
Contractor Revenue [Member] | ||
Subtotal | 16,228 | 14,032 |
Franchise Fees [Member] | ||
Subtotal | 1,190 | 1,621 |
All Other [Member] | ||
Subtotal | $ 3,534 | $ 3,008 |
Segments (Segment Data) (Detail
Segments (Segment Data) (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Segment Reporting Information [Line Items] | ||
Net income | $ 55,891 | $ 44,667 |
Operating Segments [Member] | ||
Segment Reporting Information [Line Items] | ||
Net income | 65,601 | 52,274 |
VITAS [Member] | Operating Segments [Member] | ||
Segment Reporting Information [Line Items] | ||
Net income | 41,279 | 29,288 |
Roto-Rooter [Member] | Operating Segments [Member] | ||
Segment Reporting Information [Line Items] | ||
Net income | 24,322 | 22,986 |
Corporate [Member] | ||
Segment Reporting Information [Line Items] | ||
Net income | $ (9,710) | $ (7,607) |
Earnings Per Share (Narrative)
Earnings Per Share (Narrative) (Details) - shares | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Earnings Per Share[Abstract] | ||
Excluded stock options | 285,000 | 246,000 |
Earnings Per Share (Schedule Of
Earnings Per Share (Schedule Of Computation Of Earnings Per Share) (Details) - USD ($) $ / shares in Units, shares in Thousands, $ in Thousands | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Earnings Per Share[Abstract] | ||
Earnings | $ 55,891 | $ 44,667 |
Diluted earnings | $ 55,891 | $ 44,667 |
Earnings, Shares | 15,991 | 15,954 |
Dilutive stock options, Shares | 446 | 494 |
Nonvested stock awards, Shares | 79 | 77 |
Diluted earnings, Shares | 16,516 | 16,525 |
Earnings, Earnings per Share | $ 3.50 | $ 2.80 |
Diluted earnings, Earnings per Share | $ 3.38 | $ 2.70 |
Long-Term Debt And Lines of C_3
Long-Term Debt And Lines of Credit (Narrative) (Details) - USD ($) | 3 Months Ended | ||
Mar. 31, 2020 | Aug. 02, 2019 | Jun. 20, 2018 | |
Debt Instrument [Line Items] | |||
Standby letters of credit | $ 37,900,000 | ||
Revolving Credit Facility [Member] | |||
Debt Instrument [Line Items] | |||
Borrowing amount | $ 450,000,000 | ||
2018 Credit Agreement [Member] | Revolving Credit Facility [Member] | |||
Debt Instrument [Line Items] | |||
Revolving credit facility period, years | 5 years | ||
Borrowing amount | $ 450,000,000 | ||
Amount outstanding | $ 160,000,000 | ||
Deferred financing costs | 1,000,000 | ||
Unused lines of credit | $ 252,100,000 | ||
2018 Credit Agreement [Member] | Revolving Credit Facility [Member] | LIBOR [Member] | |||
Debt Instrument [Line Items] | |||
Basis spread on variable interest rate | 100.00% | ||
2018 Credit Agreement [Member] | Expansion Feature [Member] | |||
Debt Instrument [Line Items] | |||
Borrowing amount | $ 150,000,000 |
Long-Term Debt And Lines of C_4
Long-Term Debt And Lines of Credit (Financial Debt Covenants) (Details) | 3 Months Ended |
Mar. 31, 2020 | |
Minimum [Member] | |
Debt Instrument [Line Items] | |
Leverage Ratio (Consolidated Indebtedness/Consolidated Adj. EBITDA), Requirement | 1 |
Fixed Charge Coverage Ratio (Consolidated Free Cash Flow/Consolidated Fixed Charges), Requirement | 1 |
Maximum [Member] | |
Debt Instrument [Line Items] | |
Leverage Ratio (Consolidated Indebtedness/Consolidated Adj. EBITDA), Requirement | 3.50 |
Fixed Charge Coverage Ratio (Consolidated Free Cash Flow/Consolidated Fixed Charges), Requirement | 1.50 |
Other Operating Expenses_(Inc_3
Other Operating Expenses/(Income) (Narrative) (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Other Operating Expenses [Line Items] | ||
Total other operating expenses | $ 242 | $ 6,353 |
Litigation Settlement [Member] | ||
Other Operating Expenses [Line Items] | ||
Total other operating expenses | $ 6,000 |
Other Operating Expenses_(Inc_4
Other Operating Expenses/(Income) (Schedule Of Other Operating Expenses/(Income)) (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Total other operating expenses | $ 242 | $ 6,353 |
Loss On Disposal Of Fixed Assets [Member] | ||
Total other operating expenses | $ 242 | 353 |
Litigation Settlement [Member] | ||
Total other operating expenses | $ 6,000 |
Other (Expense)_Income - Net (S
Other (Expense)/Income - Net (Schedule Of Other (Expense)/Income - Net) (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Other (Expense)/Income - Net [Abstract] | ||
Market value adjustment on assets held in deferred compensation trust | $ (9,572) | $ 2,338 |
Interest income | 106 | 101 |
Total other (expense)/income - net | $ (9,466) | $ 2,439 |
Leases (Narrative) (Details)
Leases (Narrative) (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Operating Leased Assets [Line Items] | ||
Option to extend the lease, term | up to 5 years | |
Option to terminate the lease, term | within 1 year | |
Operating lease payments related to extended lease terms | $ 2,300 | |
Lease payments for leases signed, but not yet commenced | $ 116 | |
Minimum [Member] | ||
Operating Leased Assets [Line Items] | ||
Remaining terms of leases under operating lease | 1 year | |
Maximum [Member] | ||
Operating Leased Assets [Line Items] | ||
Remaining terms of leases under operating lease | 10 years |
Leases (Components Of Balance S
Leases (Components Of Balance Sheet Information Related To Leases) (Details) - USD ($) $ in Thousands | Mar. 31, 2020 | Dec. 31, 2019 |
Assets | ||
Operating lease assets | $ 112,302 | $ 111,652 |
Liabilities | ||
Current operating leases | 36,252 | 39,280 |
Noncurrent operating leases | 88,278 | 86,656 |
Total operating lease liabilities | $ 124,530 | $ 125,936 |
Leases (Components Of Lease Exp
Leases (Components Of Lease Expense) (Details) - USD ($) $ in Thousands | 3 Months Ended | ||
Mar. 31, 2020 | Mar. 31, 2019 | ||
Lease Expense | |||
Operating lease expense | [1] | $ 14,610 | $ 11,537 |
Sublease income | [1] | (6) | |
Net lease expense | [1] | $ 14,610 | $ 11,531 |
[1] | Includes short-term leases and variable lease costs, which are immaterial. Included in both cost of services provided and goods sold and selling, general and administrative expenses. |
Leases (Components Of Cash Flow
Leases (Components Of Cash Flow Information Related To Leases) (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Cash paid for amounts included in the measurement of lease liabilities | ||
Operating cash flows from leases | $ 12,028 | $ 9,987 |
Leased asset obtained in exchange for new operating lease liabilities | $ 12,583 | $ 3,213 |
Weighted Average Remaining Lease Term, Operating leases | 4 years 6 months | |
Weighted Average Discount Rate, Operating leases | 3.24% |
Leases (Summary Of Maturity Of
Leases (Summary Of Maturity Of Operating Lease Liabilities) (Details) - USD ($) $ in Thousands | Mar. 31, 2020 | Dec. 31, 2019 |
Leases [Abstract] | ||
2020 | $ 32,855 | |
2021 | 32,430 | |
2022 | 24,360 | |
2023 | 18,089 | |
2024 | 12,948 | |
Thereafter | 13,387 | |
Total lease payments | 134,069 | |
Less: interest | (9,423) | |
Less: future lease obligations not yet commenced | (116) | |
Total liability recognized on the balance sheet | $ 124,530 | $ 125,936 |
Stock-Based Compensation Plans
Stock-Based Compensation Plans (Narrative) (Details) - USD ($) $ in Millions | Feb. 21, 2020 | Mar. 31, 2020 |
Performance Based TSR [Member] | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Shares vesting period, years | 3 years | |
Cumulative compensation expense | $ 3.3 | |
Performance Based EPS [Member] | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Shares vesting period, years | 3 years | |
Cumulative compensation expense | $ 5 | |
Compensation/Incentive Committee [Member] | Perfromance Stock Units [Member] | ||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||
Shares of stock granted - target | 5,156 |
Retirement Plans (Schedule Of N
Retirement Plans (Schedule Of Net (Losses)/Expenses For Retirement, Profit-Sharing Plans, Excess Benefit Plans And Other Similar Plans) (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Retirement Plans [Abstract] | ||
Defined contribution plans (losses)/gains | $ (4,414) | $ 6,914 |
Legal And Regulatory Matters (N
Legal And Regulatory Matters (Narrative) (Details) - USD ($) $ in Thousands | 3 Months Ended | ||
Mar. 31, 2020 | Mar. 31, 2019 | Dec. 31, 2019 | |
Loss Contingencies [Line Items] | |||
Accrued legal | $ 7,114 | $ 6,941 | |
Seper/Chhina v. VITAS [Member] | |||
Loss Contingencies [Line Items] | |||
Settlement amount | $ 5,750 | ||
Accrued legal | $ 6,000 | ||
Lax v. Roto-Rooter [Member] | |||
Loss Contingencies [Line Items] | |||
Period of preceding the filing of the lawsuit | 4 years |
Concentration Of Risk (Narrativ
Concentration Of Risk (Narrative) (Details) $ in Thousands | 3 Months Ended | 12 Months Ended |
Mar. 31, 2020USD ($)item | Dec. 31, 2019USD ($) | |
Concentration Risk [Line Items] | ||
Accounts payable | $ | $ 37,838 | $ 51,101 |
VITAS [Member] | ||
Concentration Risk [Line Items] | ||
Number of service providers | item | 1 | |
Medicare [Member] | Accounts Receivable [Member] | VITAS [Member] | ||
Concentration Risk [Line Items] | ||
Concentration risk, percentage | 70.00% | 71.00% |
Medicaid [Member] | Accounts Receivable [Member] | VITAS [Member] | ||
Concentration Risk [Line Items] | ||
Concentration risk, percentage | 25.00% | 24.00% |
Medicare And Medicaid [Member] | Accounts Receivable [Member] | VITAS [Member] | ||
Concentration Risk [Line Items] | ||
Concentration risk, percentage | 75.00% |
Cash Overdrafts And Cash Equi_2
Cash Overdrafts And Cash Equivalents (Narrative) (Details) - USD ($) | Mar. 31, 2020 | Dec. 31, 2019 |
Cash Overdrafts And Cash Equivalents [Abstract] | ||
Cash overdrafts included in accounts payable | $ 0 | $ 9,800,000 |
Financial Instruments (Narrativ
Financial Instruments (Narrative) (Details) | 3 Months Ended |
Mar. 31, 2020 | |
Minimum [Member] | |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |
Period in which the interest rate will reset | 30 days |
Maximum [Member] | |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | |
Period in which the interest rate will reset | 60 days |
Financial Instruments (Carrying
Financial Instruments (Carrying Value, Fair Value And Hierarchy Of Financial Instruments) (Details) - USD ($) $ in Thousands | Mar. 31, 2020 | Dec. 31, 2019 |
Carrying Value [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Mutual fund investments of deferred compensation plans held in trust | $ 72,296 | $ 77,446 |
Total debt | 160,000 | 90,000 |
Quoted Prices In Active Markets For Identical Assets (Level 1) [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Mutual fund investments of deferred compensation plans held in trust | 72,296 | 77,446 |
Significant Other Observable Inputs (Level 2) [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Total debt | $ 160,000 | $ 90,000 |
Capital Stock Repurchase Plan_3
Capital Stock Repurchase Plan Transactions (Narrative) (Details) $ in Millions | Mar. 31, 2020USD ($) |
Capital Stock Repurchase Plan Transactions [Abstract] | |
Stock repurchase program, amount authorized | $ 250 |
Stock repurchase program, remaining authorized repurchase amount | $ 253.8 |
Capital Stock Repurchase Plan_4
Capital Stock Repurchase Plan Transactions (Schedule Of Repurchased Capital Stock) (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Capital Stock Repurchase Plan Transactions [Abstract] | ||
Total cost of repurchased shares | $ 100,235 | $ 49,250 |
Shares repurchased | 225,000 | 150,000 |
Weighted average price per share | $ 445.49 | $ 328.33 |
Acquisitions (Narrative) (Detai
Acquisitions (Narrative) (Details) - USD ($) $ in Millions | Aug. 02, 2019 | Jul. 01, 2019 | Mar. 31, 2020 | Sep. 30, 2019 |
Reacquired Franchise Rights [Member] | ||||
Goodwill [Line Items] | ||||
Average amortization period | 7 years 4 months 24 days | |||
Customer Relationships [Member] | ||||
Goodwill [Line Items] | ||||
Average amortization period | 20 years 4 months 24 days | |||
Non-Compete Agreements [Member] | ||||
Goodwill [Line Items] | ||||
Average amortization period | 4 years | |||
Roto-Rooter, Oakland [Member] | ||||
Goodwill [Line Items] | ||||
Acquisition date | Jul. 1, 2019 | |||
Business combination cost | $ 18 | |||
Roto-Rooter [Member] | HSW RR, Inc [Member] | ||||
Goodwill [Line Items] | ||||
Business combination cost | $ 120 | |||
Additional business combination cost | 1.4 | |||
Revolving Credit Facility [Member] | ||||
Goodwill [Line Items] | ||||
Borrowing amount | $ 450 |
Acquisitions (Schedule Of Busin
Acquisitions (Schedule Of Business Acquisitions) (Details) - USD ($) $ in Thousands | Mar. 31, 2020 | Dec. 31, 2019 |
Business Acquisition [Line Items] | ||
Goodwill | $ 577,236 | $ 577,367 |
HSW RR, Inc [Member] | ||
Business Acquisition [Line Items] | ||
Goodwill | 56,191 | |
Property, plant, and equipment | 5,998 | |
Working capital | 3,760 | |
Other assets and liabilities - net | 128 | |
Purchase price | 121,417 | |
Roto-Rooter, Oakland [Member] | ||
Business Acquisition [Line Items] | ||
Goodwill | 10,535 | |
Property, plant, and equipment | 675 | |
Working capital | 22 | |
Other assets and liabilities - net | 23 | |
Purchase price | 18,045 | |
HSW And Oakland [Member] | ||
Business Acquisition [Line Items] | ||
Goodwill | 66,726 | |
Property, plant, and equipment | 6,673 | |
Working capital | 3,782 | |
Other assets and liabilities - net | 151 | |
Purchase price | 139,462 | |
Reacquired Franchise Rights [Member] | HSW RR, Inc [Member] | ||
Business Acquisition [Line Items] | ||
Finite-lived intangibles | 52,980 | |
Reacquired Franchise Rights [Member] | Roto-Rooter, Oakland [Member] | ||
Business Acquisition [Line Items] | ||
Finite-lived intangibles | 6,190 | |
Reacquired Franchise Rights [Member] | HSW And Oakland [Member] | ||
Business Acquisition [Line Items] | ||
Finite-lived intangibles | 59,170 | |
Customer Relationships [Member] | HSW RR, Inc [Member] | ||
Business Acquisition [Line Items] | ||
Finite-lived intangibles | 2,220 | |
Customer Relationships [Member] | Roto-Rooter, Oakland [Member] | ||
Business Acquisition [Line Items] | ||
Finite-lived intangibles | 500 | |
Customer Relationships [Member] | HSW And Oakland [Member] | ||
Business Acquisition [Line Items] | ||
Finite-lived intangibles | 2,720 | |
Non-Compete Agreements [Member] | HSW RR, Inc [Member] | ||
Business Acquisition [Line Items] | ||
Finite-lived intangibles | 140 | |
Non-Compete Agreements [Member] | Roto-Rooter, Oakland [Member] | ||
Business Acquisition [Line Items] | ||
Finite-lived intangibles | 100 | |
Non-Compete Agreements [Member] | HSW And Oakland [Member] | ||
Business Acquisition [Line Items] | ||
Finite-lived intangibles | $ 240 |
Acquisitions (Schedule Of Franc
Acquisitions (Schedule Of Franchise Revenue, Valuation And Amortization Of Reacquired Franchise Rights) (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | Dec. 31, 2018 | |
Business Acquisition [Line Items] | |||
Revenue | $ 515,798 | $ 462,034 | |
Franchise [Member] | |||
Business Acquisition [Line Items] | |||
Revenue | $ 6,382 | ||
HSW RR, Inc [Member] | Franchise [Member] | |||
Business Acquisition [Line Items] | |||
Revenue | 1,782 | ||
Roto-Rooter, Oakland [Member] | Franchise [Member] | |||
Business Acquisition [Line Items] | |||
Revenue | 95 | ||
HSW And Oakland [Member] | Franchise [Member] | |||
Business Acquisition [Line Items] | |||
Revenue | 1,877 | ||
All Other Franchise Territories [Member] | Franchise [Member] | |||
Business Acquisition [Line Items] | |||
Revenue | 4,505 | ||
Reacquired Franchise Rights [Member] | |||
Business Acquisition [Line Items] | |||
Annualized Amortization of | $ 2,352 | $ 441 | |
Reacquired Franchise Rights [Member] | HSW RR, Inc [Member] | |||
Business Acquisition [Line Items] | |||
Valuation of | 52,980 | ||
Annualized Amortization of | 7,258 | ||
Reacquired Franchise Rights [Member] | Roto-Rooter, Oakland [Member] | |||
Business Acquisition [Line Items] | |||
Valuation of | 6,190 | ||
Annualized Amortization of | 825 | ||
Reacquired Franchise Rights [Member] | HSW And Oakland [Member] | |||
Business Acquisition [Line Items] | |||
Valuation of | 59,170 | ||
Annualized Amortization of | $ 8,083 |
Acquisitions (Schedule Of Amort
Acquisitions (Schedule Of Amortization Of Reacquired Franchise Agreements) (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2020 | Mar. 31, 2019 | |
Reacquired Franchise Rights [Member] | ||
Business Acquisition [Line Items] | ||
Amortization of reacquired franchise agreements | $ 2,352 | $ 441 |
Acquisitions (Schedule Of Bus_2
Acquisitions (Schedule Of Business Acquisitions Pro Forma Of Operations) (Details) $ / shares in Units, $ in Thousands | 3 Months Ended |
Mar. 31, 2019USD ($)$ / shares | |
Acquisitions [Abstract] | |
Service revenues and sales | $ | $ 484,106 |
Net income | $ | $ 47,936 |
Earnings per share | $ / shares | $ 3 |
Diluted earnings per share | $ / shares | $ 2.90 |
Acquisitions (Schedule Of Movem
Acquisitions (Schedule Of Movement In Goodwill) (Details) $ in Thousands | 3 Months Ended |
Mar. 31, 2020USD ($) | |
Goodwill [Line Items] | |
Beginning balance | $ 577,367 |
Foreign currency adjustments | (131) |
Ending balance | 577,236 |
VITAS [Member] | |
Goodwill [Line Items] | |
Beginning balance | 333,331 |
Foreign currency adjustments | |
Ending balance | 333,331 |
Roto-Rooter [Member] | |
Goodwill [Line Items] | |
Beginning balance | 244,036 |
Foreign currency adjustments | (131) |
Ending balance | $ 243,905 |