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Acquisitions | 12 Months Ended
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Dec. 31, 2019
Acquisitions [Abstract] |
Acquisitions | 7. 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 $120.0 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
Included above is $1.4 million related to the HSW acquisition excess working capital. The amount was paid subsequent to year end. 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 2019 is 7.4 years. Revenue and net income for the two acquisitions completed in 2019 are as follows (in thousands):
| HSW |  | Oakland |  | Total
Service revenues and sales | $ | 20,141 |  | $ | 5,150 |  | $ | 25,291
Net income/(loss) |  | (2,777) |  |  | 231 |  |  | (2,546)
Included in net income for the two acquisitions is $3.4 million of one-time acquisition expense. 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 |  |  |  |  |  |
As a result of the acquisitions, 2018 is the last full-year of franchise revenue received from HSW and Oakland. Total franchise revenue in 2019 was $6.1 million. Amortization of reacquired franchise agreements is $4.0 million for 2019. 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 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. During 2018, we completed four business combinations of former franchisees within the Roto-Rooter segment for $42.2 million in cash to increase our market penetration. The VITAS segment completed one business combination in Florida for $11.0 million to increase our market penetration. The pro forma revenue and earnings of the Company, as if all acquisitions made in fiscal 2018 and 2019 were completed on January 1, 2018, are as follows (in thousands, except per share data):
| For the Years Ended
| December 31,
| 2019 |  | 2018
Service revenues and sales | $ | 1,995,688 |  | $ | 1,900,218
Net income | $ | 228,939 |  | $ | 224,851
Earnings per share | $ | 14.34 |  | $ | 14.00
Diluted earnings per share | $ | 13.85 |  | $ | 13.38

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