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Acquisitions | 12 Months Ended
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Dec. 31, 2021
Acquisitions [Abstract] |
Acquisitions | 7. Acquisitions No acquisitions were completed during the year ended December 31, 2021.On June 1, 2020, we completed the acquisition of a Roto-Rooter franchise and the related assets in Bloomington, IN for $2.2 million in cash.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 $18.0 million in cash. The acquisitions were made as a continuation of Roto-Rooter’s strategy to re-acquire franchises in large markets in the United States. The allocation for the two acquisitions completed in 2019 is as follows (in thousands): HSW Oakland TotalGoodwill$ 56,191 $ 10,535 $ 66,726Reacquired franchise rights 52,980 6,190 59,170Property, plant, and equipment 5,998 675 6,673Working capital 3,760 22 3,782Customer relationships 2,220 500 2,720Non-compete agreements 140 100 240Other 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 in 2020. 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 for the period we owned them in 2019 are as follows (in thousands): HSW Oakland TotalService revenues and sales $ 20,141 $ 5,150 $ 25,291Net income/(loss) (2,777) 231 (2,546) Included in 2019 net income for the two acquisitions is $3.4 million of one-time acquisition expense. The franchise fee revenue, the valuation of reacquired franchise rights and amortization for the acquired franchises are as follows: Annualized Valuation Amortization of 2018 Franchise of Reacquired Reacquired Revenue Franchise Rights Franchise RightsHSW$ 1,782 $ 52,980 $ 7,258Oakland 95 6,190 825Subtotal 1,877 $ 59,170 $ 8,083All 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. 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.

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- Definition The entire disclosure for a business combination (or series of individually immaterial business combinations) completed during the period, including background, timing, and recognized assets and liabilities. The disclosure may include leverage buyout transactions (as applicable). + References Reference 1: http://fasb.org/us-gaap/role/ref/legacyRef -Publisher FASB -Name Accounting Standards Codification -Topic 805 -URI http://asc.fasb.org/topic&trid=2303972 + Details
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