XML 26 R14.htm IDEA: XBRL DOCUMENT

Leases

9 Months Ended

Sep. 30, 2023

7. 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 inpatient units (“IPUs”) and/or contract beds within hospitals. Roto-Rooter mainly 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.

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 capitalizes the equipment underlying these leases, depreciates the equipment and recognizes rental income.

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:


	September 30,		‎December 31,
	2023		2022
Assets
Operating lease assets	$	123,353	$	135,662

Liabilities
Current operating leases		37,615		38,996
Noncurrent operating leases		99,346		110,513
Total operating lease liabilities	$	136,961	$	149,509

‎

The components of lease expense for the third quarter are as follows (in thousands):


	Three months ended September 30,
	2023		2022
Lease Expense (a)
Operating lease expense	$	14,999	$	12,936
Sublease income		(23)		(45)
Net lease expense	$	14,976	$	12,891

The components of lease expense for the first nine months are as follows (in thousands):


	Nine months ended September 30,
	2023		2022
Lease Expense (a)
Operating lease expense	$	44,811	$	39,230
Sublease income		(70)		(136)
Net lease expense	$	44,741	$	39,094

(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:


	Nine months ended September 30,
	2023		2022
Cash paid for amounts included in the measurement of lease liabilities
Operating cash flows from leases	$	37,352	$	37,650

Leased assets obtained in exchange for new operating lease liabilities	$	21,630	$	41,855


Weighted Average Remaining Lease Term at September 30, 2023
Operating leases	4.39	years


Weighted Average Discount Rate at September 30, 2023
Operating leases	2.87	%


Maturity of Operating Lease Liabilities (in thousands)

2023	$	11,649
2024		41,093
2025		33,289
2026		26,016
2027		15,005
Thereafter		19,234
Total lease payments	$	146,286
Less: interest		(9,325)
Total liability recognized on the balance sheet	$	136,961

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 $2.7 million related to extended lease terms that are reasonably certain of being exercised and exclude $201,000 of lease payments for leases signed but not yet commenced.