CHEMED CORP Management Analysis and Analysis of Financial Position and Results of Operations (Form 10-Q)

Abstract

We operate through our two wholly-owned subsidiaries, VITAS Healthcare
Corporation and Roto-Rooter Group, Inc. VITAS focuses on hospice care that helps
make terminally ill patients' final days as comfortable as possible. Through its
teams of doctors, nurses, home health aides, social workers, clergy and
volunteers, VITAS provides direct medical services to patients, as well as
spiritual and emotional counseling to both patients and their families.
Roto-Rooter's services are focused on providing plumbing, drain cleaning, water
restoration and other related services to both residential and commercial
customers. Through its network of company-owned branches, independent
contractors and franchisees, Roto-Rooter offers plumbing and drain cleaning
service to over 90% of the U.S. population.

The following is a summary of the main operating results (in thousands, except per share amounts):

                                  Three months ended September 30,      

Nine months ended September 30,

                                     2021              2020                2021                 2020
Service revenues and sales        $  538,667     $        528,297    $      1,598,283     $      1,546,294
Net income                        $   72,003     $         67,722    $        193,925     $        205,714
Diluted EPS                       $     4.55     $           4.14    $          12.06     $          12.53
Adjusted net income               $   80,084     $         79,556    $        226,554     $        212,494
Adjusted diluted EPS              $     5.06     $           4.86    $          14.09     $          12.94
Adjusted EBITDA                   $  119,373     $        117,805    $        338,840     $        319,576
Adjusted EBITDA as a % of revenue       22.2  %              22.3  %             21.2  %              20.7  %


Adjusted net income, adjusted diluted EPS, earnings before interest, taxes and
depreciation and amortization ("EBITDA"), Adjusted EBITDA and Adjusted EBITDA as
a percent of revenue are not measures derived in accordance with US GAAP. We
provide non-GAAP measures to help readers evaluate our operating results and to
compare our operating performance with that of similar companies that have
different capital structures. Our non-GAAP measures should not be considered in
isolation or as a substitute for comparable measures presented in accordance
with GAAP. A reconciliation of our non-GAAP measures is presented on pages
36-38.

For the three months ended September 30, 2021, the increase in consolidated
service revenues and sales was driven by a 15.7% increase at Roto-Rooter offset
by a 5.8% decrease at VITAS. The increase in service revenues at Roto-Rooter was
driven by an increase in all major service lines. Roto-Rooter's third quarter
2020 revenue was significantly impacted by shut-downs resulting from the COVID
pandemic. The decrease in service revenues at VITAS is comprised primarily of a
5.3% decrease in days-of-care offset by a geographically weighted average
Medicare reimbursement rate increase (including the suspension of sequestration
on May 1, 2020) of approximately 1.2%. Acuity mix shift had a net impact of
reducing revenue approximately $3.0 million, or 0.9% in the quarter when
compared to the prior year revenue and level-of-care mix. The combination of a
Medicare cap revenue reduction and other contra revenue changes negatively
impacted revenue growth by approximately 80 basis points. See page 39 for
additional VITAS operating metrics.

For the nine months ended September 30, 2021, the increase in consolidated
service revenues and sales was driven by a 20.1% increase at Roto-Rooter offset
by a 5.7% decrease at VITAS. The increase in service revenues at Roto-Rooter was
driven by an increase in all major service lines. Roto-Rooter's first nine
months 2020 revenue was significantly impacted by the COVID pandemic. The
decrease in service revenues at VITAS is comprised primarily of a 6.2% decrease
in days-of-care offset by a geographically weighted average Medicare
reimbursement rate increase (including the suspension of sequestration on May 1,
2020) of approximately 1.9%. Acuity mix shift had a net impact of reducing
revenue approximately $16.0 million, or 1.6% in the quarter when compared to the
prior year revenue and level-of-care mix. The combination of a lower Medicare
cap revenue reduction and other contra revenue changes offset a portion of the
revenue decline by approximately 20 basis points. See page 39 for additional
VITAS operating metrics.

The current COVID-19 pandemic did have a material impact on our business
operations, results of operations, cash flow and financial position as of and
for the three months and nine months ended September 30, 2021 and 2020,
respectively. 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.

                                      -23-

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Historically, Chemed earnings guidance has been developed using previous years'
key operating metrics which are then modeled and projected out for the calendar
year. Critical within these projections is the understanding of traditional
patterned correlations among key operating metrics. This modeling exercise also
takes into consideration anticipated industry and macro-economic issues outside
of management's control but are somewhat predictable in terms of timing and
impact on our business segments' operating results.

The COVID-19 pandemic has made accurate modeling and providing meaningful
earnings guidance exceptionally challenging. Since the start of the pandemic,
Chemed has been able to successfully navigate within this rapidly changing
environment and produce operating results that we believe provide us with the
ability to issue earnings guidance for the 2021 calendar year. However, this
guidance should be taken with the recognition the pandemic will continue to
disrupt our healthcare system and general economy to such an extent that future
rules, regulations and government mandates could materially impact the company's
ability to achieve this guidance.

Statistically, patients residing in senior housing are identified as hospice
appropriate earlier into their terminal prognosis and have a much greater
probability of having a length of stay in excess of 90 days. Hospice patients
referred from hospitals, oncology practices and similar referral sources are
generally more acute and have a significantly lower probability of
lengths-of-stay exceeding 90 days. According to data released by the National
Investment Center for Seniors Housing & Care, COVID-19 continues to adversely
affect senior housing occupancy. This reduced occupancy in senior housing has
had a corresponding reduction in VITAS nursing home admissions. Nursing home
patients represented 15.6% of VITAS' third-quarter 2021 patient census. This
compares to nursing home patients averaging 18.2% of total census just prior to
the pandemic.

Based upon the above discussion, VITAS 2021 revenue, prior to Medicare Cap, is
estimated to decline approximately 5% when compared to the prior year. Average
Daily Census in 2021 is estimated to decline approximately 5.5%. Full-year
Adjusted EBITDA margin, prior to Medicare Cap, is estimated to be 18.8%. We are
currently estimating $6.6 million for Medicare Cap billing limitations in
calendar year 2021.

Roto-Rooter is forecasted to achieve full-year 2021 revenue growth of 17.3%.
Roto-Rooter's Adjusted EBITDA margin for 2021 is estimated to be between 28.5%
to 29.0%.

Based upon the above, full-year 2021 adjusted earnings per diluted share,
excluding non-cash expense for stock options, tax benefits from stock option
exercises, costs related to litigation, and other discrete items, is estimated
to be in the range of $19.00 to $19.20. This compares to initial 2021 adjusted
earnings per diluted share guidance of $17.00 to $17.50. This revised 2021
guidance assumes an effective corporate tax rate on adjusted earnings of 25.1%.
Chemed's 2020 reported adjusted earnings per diluted share was $18.08.

We expect that our operating income and cash flow will be sufficient to operate our business and meet our commitments for the foreseeable future.

Financial condition

Liquidity and capital resources

Significant changes in the balance sheet accounts of December 31, 2020 To
September 30, 2021 include the following:

?A $ 8.7 million decrease in accounts receivable due to the timing of collections.

?A $ 6.3 million increase in prepaid taxes due to timing of payments.

?A $ 6.1 million increase in prepaid expenses mainly due to a $ 6.0 million
increase in prepaid software at VITAS.

?A $ 13.2 million increased investments in deferred compensation plans primarily due to contributions and market valuation gains. These gains are offset by an expense recognized in the deferred compensation liability.

?A $ 7.5 million decrease in identifiable intangible assets due to amortization.

?A $ 5.8 million increase in accounts payable due to timing of payments.

?A $ 6.0 million increase in accrued compensation due to the accumulation of additional paid leave for VITAS frontline workers and an increase in the accumulated bonus.

?A $ 9.1 million decrease in accrued legal charges mainly due to payments from two legal settlements.

?A $ 345.1 million increase in treasury shares mainly due to share buybacks.

Net cash provided by operating activities decreased $157.4 million from
September 30, 2020 to September 30, 2021. The main drivers of the decrease are a
decrease in net income of $11.8 million, the Unutilized CARES Act grant received
in 2020 of $48.0 million, the deferral of payroll taxes during the second
quarter of 2020 of $22.9 million and increases in cash outflows associated with
accounts

                                      -24-
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payable and current income taxes of $39.6 million. Significant changes in our
accounts receivable balances are typically driven by the timing of payments
received from the Federal government at our VITAS subsidiary. We typically
receive a payment in excess of $40.0 million from the Federal government for
hospice services every other Friday. The timing of a period end will have a
significant impact on the accounts receivable at VITAS. These changes generally
normalize over a two year period, as cash flow variations in one year are offset
in the following year.

Management continually evaluates cash utilization alternatives, including share
repurchase, debt repurchase, acquisitions and increased dividends to determine
the most beneficial use of available capital resources.

On June 20, 2018, we signed 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 revolving credit facility has a five year maturity with principal payments
due at maturity.  The interest rate at the inception of the agreement was 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. We have no debt outstanding under the 2018 Credit
Agreement as of September 30, 2021.

We have issued $46.2 million in standby letters of credit as of September 30,
2021, mainly for insurance purposes. Issued letters of credit reduce our
available credit under the revolving credit agreement. As of September 30, 2021,
we have approximately $403.8 million of unused lines of credit available and
eligible to be drawn down under our revolving credit facility. Management
believes its liquidity and sources of capital are satisfactory for the Company's
needs in the foreseeable future.

Commitments and contingencies

Collectively, the terms of our credit agreements require us to comply with various financial covenants, which must be tested quarterly. We comply with all financial covenants and other covenants dated September 30, 2021 and expect to remain in compliance for the foreseeable future.

We are subject to various lawsuits and claims in the normal course of our
business. In addition, we periodically receive communications from governmental
and regulatory agencies concerning compliance with Medicare and Medicaid billing
requirements at our VITAS subsidiary. We establish reserves for specific,
uninsured liabilities in connection with regulatory and legal action that we
deem to be probable and estimable. We disclose the existence of regulatory and
legal actions when we believe it is reasonably possible that a loss could occur
in connection with the specific action. In most instances, we are unable to make
a reasonable estimate of any reasonably possible liability due to the
uncertainty of the outcome and stage of litigation. We record legal fees
associated with legal and regulatory actions as the costs are incurred.

See Note 11 of the Notes to the Unaudited Consolidated Financial Statements in Item 1 above for a description of the material legal issues outstanding.

?

                                      -25-

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Results of operations

Three months ended September 30, 2021 versus 2020 – Consolidated results

Our service revenues and sales for the third quarter of 2021 increased by 2.0% compared to the service and sales revenues for the third quarter of 2020. Of this increase, a $ 30.1 million increase was due to Roto-Rooter compensated by a
$ 19.7 million decrease attributable to VITAS. The following graph shows the components of revenue by operating segment (in thousands):

                                        Three months ended September 30,
                                         2021                          2020
VITAS
Routine homecare                  $         268,137                 $ 278,856
Continuous care                              22,027                    30,699
General inpatient                            29,368                    27,633
Other                                         3,225                     2,910
Medicare cap adjustment                         (97)                    4,072
Room and board - net                         (2,130)                   (3,289)
Implicit price concessions                   (3,119)                   (3,784)
Roto-Rooter
Drain cleaning - short term core             63,072                    55,527
Plumbing - short term core                   45,124                    39,439
Subtotal                                    108,196                    94,966
Excavation - short term core                 52,607                    47,688
Water restoration                            39,786                    32,137
Contractor operations                        18,969                    16,274
Outside franchisee fees                       1,260                     1,235
Other - short term core                         254                       435
Other                                         3,773                     3,332
Implicit price concessions                   (3,589)                   (4,867)
Total                             $         538,667                 $ 528,297


Days of care at VITAS during the quarter ended September 30 were as follows:

                                           Days of Care       Increase/(Decrease)
                                         2021        2020           Percent

Routine homecare                      1,342,841   1,426,191                 (5.8)
Nursing home                            258,700     261,396                 (1.0)
Respite                                   5,331       4,566                 16.8
Subtotal routine homecare and respite 1,606,872   1,692,153                 (5.0)
Continuous care                          24,299      33,013                (26.4)
General inpatient                        27,962      27,017                  3.5
Total days of care                    1,659,133   1,752,183                 (5.3)


The decrease in service revenues at VITAS is comprised primarily of a 5.3%
decrease in days-of-care offset by a geographically weighted average Medicare
reimbursement rate increase (including the suspension of sequestration on May 1,
2020) of approximately 1.2%. Acuity mix shift had a net impact of reducing
revenue approximately $3.0 million, or 0.9% in the quarter when compared to the
prior year revenue and level-of-care mix. The combination of Medicare cap
revenue reduction and other contra revenue changes negatively impacted revenue
growth by approximately 80 basis points.

The increase in plumbing revenues for the third quarter of 2021 versus 2020 is
attributable to a 1.0% increase in job count and to a 13.4% increase in price
and service mix shift. The increase in excavation revenues for the third quarter
of 2021 versus 2020 is attributable to a 14.2% increase in price and service mix
shift and a 3.9% decrease in job count. Drain cleaning revenues for the third
quarter of 2021 versus 2020 reflect a 11.2% increase in price and service mix
shift and a 2.4% increase in job count. Water restoration revenue increased for
the third quarter of 2021 versus 2020 due to a 11.0% increase in job count and a
12.8% increase in price and service mix shift.

The consolidated gross margin was 36.5% in the third quarter of 2021 as compared
with 35.8% in the third quarter of 2020. On a segment basis, VITAS' gross margin
was 25.0% in the third quarter of 2021 as compared with 26.8%, in the third
quarter of 2020. The decrease is primarily due to the payout of discretionary
bonuses. The Roto-Rooter segment's gross margin was 53.0% for the third quarter
of 2021 as compared with 51.6% in the third quarter of 2020 primarily due to
increased revenue and improved labor costs.

                                      -26-

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Selling, general and administrative expenses ("SG&A") comprise (in thousands):

                                                       Three months ended September 30,
                                                             2021              2020

SG&A fees before long-term incentive compensation and the impact of market value adjustments related to deferred compensation trusts

                          $           84,197   

$ 79,287
Impact of market value adjustments related to assets held in deferred compensation trusts

                               3,078    

7,256

Long-term incentive compensation                                   1,942           1,774
Total SG&A expenses                                   $           89,217   $      88,317


SG&A expenses before long-term incentive compensation and the impact of market
value adjustments related to deferred compensation trusts for the third quarter
of 2021 were up 6.2% when compared to the third quarter of 2020. This increase
was mainly a result of the increase in variable selling and general
administrative expenses and increased bonus expense at Roto-Rooter caused by
increased income.

Depreciation for the third quarter of 2021 increased by 1.1% compared to the third quarter of 2020.

Amortization for the third quarter of 2021 was flat when compared to the third
quarter of 2020. Quarterly amortization of intangible assets is mainly driven by
two Roto-Rooter franchise acquisitions completed in 2019. The total purchase
price of these acquisitions was $138.0 million. As part of the purchase price
allocation, approximately $59.2 million was determined to be the value of
reacquired franchise rights which are being amortized over the remaining life of
each franchise agreement. The average remaining life on the reacquired franchise
agreements was approximately seven years. Quarterly amortization of reacquired
franchise rights for these two acquisitions is approximately $2.0 million ($8.1
million annualized through 2026). This contrasts to quarterly franchise fees
historically collected from these two franchisees of approximately $470,000
($1.9 million annualized).

Other operating expenses include:

                                      Three months ended September 30,
                                     2021                            2020
Loss on disposal of fixed assets $        63                       $    307
CARES Act grant                             -                         8,805
Litigation settlement                       -                         3,095
Total other operating expenses   $        63                       $ 12,207


Other income – net includes (in thousands):

                                                       Three months ended 

September 30,

                                                             2021           

2020

Market value adjustment on assets held in deferred
compensation trusts                                   $           3,078    $      7,256
Interest income                                                      57             423
Other                                                                (1)             (4)
Total other income - net                              $           3,134    $      7,675



?

                                      -27-

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Our reconciliation of the effective tax rate is as follows (in thousands):

                                                       Three months ended September 30,
                                                            2021                2020

Income tax provision calculated at the statutory
federal rate                                          $         20,038       $   17,137
Stock compensation tax benefits                                 (1,199)          (7,187)
State and local income taxes                                     3,153            3,028
Other--net                                                       1,425              904
Income tax provision                                  $         23,417       $   13,882
Effective tax rate                                                24.5  %          17.0  %

Net income for both periods included the following after-tax items / adjustments that (reduced) or increased after-tax profit (in thousands):

                                                      Three months ended September 30,
                                                            2021              2020
VITAS
Direct costs related to COVID-19                      $         (1,866)   $     (5,181)
CARES Act grant                                                       -         (6,528)
COVID-19 Medicare cap                                                 -           1,679
Medicare cap sequestration adjustment                                 -     

635

Roto-Rooter

Amortization of reacquired franchise agreements                 (1,729)     

(1,728)

Direct costs related to COVID-19                                  (305)           (971)
Litigation settlements                                                -         (2,275)
Corporate
Stock option expense                                            (3,462)         (2,970)
Long-term incentive compensation                                (1,752)     

(1,682)

Excess tax benefits on stock compensation                         1,199           7,187
Other                                                             (166)               -
Total                                                 $         (8,081)   $    (11,834)

Three months ended September 30, 2021 compared to 2020 – Segment results

Net income for the third quarter of 2021 compared to the third quarter of 2020 by segment (in thousands):

                  Three months ended September 30,
                   2021                           2020
VITAS                    42,950                 $  45,737
Roto-Rooter              44,554                    31,176
Corporate              (15,501)                   (9,191)
            $            72,003                 $  67,722


VITAS' after-tax earnings decreased primarily due to lower revenue in the third
quarter of 2021 when compared to the third quarter of 2020. After-tax earnings
as a percent of revenue at VITAS in the third quarter of 2021 was 13.5% as
compared to 13.6% in the third quarter of 2020.

Roto-Rooter the net result was impacted in 2021 compared to 2020 mainly by the increase in revenues and the improvement in labor costs. Profit after tax as a percentage of sales as of Roto-Rooter in the third quarter of 2021 was 20.1%, compared to 16.3% in the third quarter of 2020.

Social charges after tax for 2021 increased by 68.7% compared to 2020 mainly due to a $ 6.0 million reduction in excess tax advantages on share-based compensation.

?

                                      -28-

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Results of operations

Nine months ended September 30, 2021 versus 2020 – Consolidated results

Our service revenues and sales for the first nine months of 2021 increased 3.4%
versus services and sales revenues for the first nine months of 2020. Of this
increase, $109.3 million was attributable to Roto-Rooter offset by a $57.3
million decrease attributable to VITAS. The following chart shows the components
of revenue by operating segment (in thousands):

                                       Nine months ended September 30,
                                         2021                      2020
VITAS
Routine homecare                  $         796,817            $   826,954
Continuous care                              73,658                105,836
General inpatient                            85,895                 85,983
Other                                         9,241                  8,175
Medicare cap adjustment                      (3,597)                (4,178)
Room and board - net                         (7,451)                (9,317)
Implicit price concessions                   (9,428)               (10,976)
Roto-Rooter
Drain cleaning - short term core            187,477                159,003
Plumbing - short term core                  131,045                108,255
Subtotal                                    318,522                267,258
Excavation - short term core                159,714                135,425
Water restoration                           115,804                 92,810
Contractor operations                        56,754                 47,695
Outside franchisee fees                       3,842                  3,635
Other - short term core                         853                  1,371
Other                                        11,601                  9,836
Implicit price concessions                  (13,942)               (14,213)
Total                             $       1,598,283            $ 1,546,294


Days of care at VITAS during the nine months ended September 30 were as follows:

                                           Days of Care       Increase/(Decrease)
                                         2021        2020           Percent

Routine homecare                      4,008,215   4,192,681                 (4.4)
Nursing home                            735,906     844,232                (12.8)
Respite                                  15,509      15,416                  0.6
Subtotal routine homecare and respite 4,759,630   5,052,329                 (5.8)
Continuous care                          79,385     110,200                (28.0)
General inpatient                        82,129      84,907                 (3.3)
Total days of care                    4,921,144   5,247,436                 (6.2)


The decrease in service revenues at VITAS is comprised primarily of a 6.2%
decrease in days-of-care offset by a geographically weighted average Medicare
reimbursement rate increase (including the suspension of sequestration on May 1,
2020) of approximately 1.9%. Acuity mix shift had a net impact of reducing
revenue approximately $16.0 million, or 1.6% in the quarter when compared to the
prior year revenue and level-of-care mix. The combination of a lower Medicare
cap revenue reduction and other contra revenue changes offset a portion of the
revenue decline by approximately 20 basis points.

The increase in plumbing revenues for the first nine months of 2021 versus 2020
is attributable to a 12.3% increase in job count and to an 8.8% increase in
price and service mix shift. The increase in excavation revenues for the first
nine months of 2021 versus 2020 is attributable to a 9.2% increase in job count
and to an 8.7% increase in price and service mix shift. Drain cleaning revenues
for the first nine months of 2021 versus 2020 reflect a 9.1% increase in price
and service mix shift and an 8.8% increase in job count. Water restoration
revenue increased for the first nine months of 2021 versus 2020 due to a 10.2%
increase in job count and a 14.6% increase in price and service mix shift. The
increase in job count for all service lines was driven by both residential and
commercial customers.

The consolidated gross margin was 35.4% in the first nine months of 2021 as
compared with 32.5% in the first nine months of 2020. On a segment basis, VITAS'
gross margin was 23.4% in the first nine months of 2021 as compared with 22.9%,
in the first nine months of 2020. The increase is primarily due to improved
labor costs. The Roto-Rooter segment's gross margin was 52.7% for the first nine
months of 2021 as compared with 50.3% in the first nine months of 2020 primarily
due to increased revenue and improved labor costs.

                                      -29-

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Selling, general and administrative expenses ("SG&A") comprise (in thousands):

                                                       Nine months ended September 30,
                                                            2021              2020

SG&A fees before long-term incentive compensation and the impact of market value adjustments related to deferred compensation trusts

                          $        259,376    $ 

232,797

Impact of market value adjustments related to assets held in deferred compensation trusts

                             9,770      

5,093

Long-term incentive compensation                                 5,508           5,523
Total SG&A expenses                                   $        274,654    $    243,413


SG&A expenses before long-term incentive compensation and the impact of market
value adjustments related to deferred compensation trusts for the first nine
months of 2021 were up 11.4% when compared to the first nine months of 2020.
This increase was mainly a result of the increase in variable selling and
general administrative expenses and increased bonus expense at Roto-Rooter
caused by increased income.

Depreciation for the first nine months of 2021 increased by 6.9% compared to the first nine months of 2020.

Amortization for the first nine months of 2021 increased 0.7% when compared to
the first nine months of 2020. Quarterly amortization of intangible assets is
mainly driven by two Roto-Rooter franchise acquisitions completed in 2019. The
total purchase price of these acquisitions was $138.0 million. As part of the
purchase price allocation, approximately $59.2 million was determined to be the
value of reacquired franchise rights which are being amortized over the
remaining life of each franchise agreement. The average remaining life on the
reacquired franchise agreements was approximately seven years. Quarterly
amortization of reacquired franchise rights for these two acquisitions is
approximately $2.0 million ($8.1 million annualized through 2026). This
contrasts to quarterly franchise fees historically collected from these two
franchisees of approximately $470,000 ($1.9 million annualized).

Other (income) / operating expenses include the following:

                                             Nine months ended September 

30,

                                            2021                           

2020

Loss on disposal of fixed assets        $        789                    $     154
CARES Act grant                                     -                     (32,184)
Litigation settlement                               -                       3,095
Total other operating (income)/expenses $        789                    $ 

(28 935)

Other income – net includes (in thousands):

                                                        Nine months ended 

September 30,

                                                             2021           

2020

Market value adjustment on assets held in deferred
compensation trusts                                   $            9,770    $      5,093
Interest income                                                      288             647
Other                                                                463             (17)
Total other income - net                              $           10,521    $      5,723



?

                                      -30-

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Our reconciliation of the effective tax rate is as follows (in thousands):

                                                       Nine months ended September 30,
                                                            2021               2020

Income tax provision calculated at the statutory
federal rate                                          $        53,379       $   52,531
Stock compensation tax benefits                                (5,305)         (19,943)
State and local income taxes                                    9,332            9,118
Other--net                                                      2,856            2,729
Income tax provision                                  $        60,262       $   44,435
Effective tax rate                                               23.7  %          17.8  %

Net income for both periods included the following after-tax items / adjustments that (reduced) or increased after-tax profit (in thousands):

                                                       Nine months ended September 30,
                                                            2021              2020
VITAS
Direct costs related to COVID-19                      $        (11,442)   $    (24,009)
Facility relocation costs                                       (1,384)               -
CARES Act grant                                                       -          24,009
Medicare cap sequestration adjustment                                 -     

(462)

Roto-Rooter

Amortization of reacquired franchise agreements                 (5,186)     

(5,185)

Direct costs related to COVID-19                                (1,140)         (2,426)
Litigation settlements                                               72         (2,275)
Corporate
Stock option expense                                           (13,695)        (11,369)
Excess tax benefits on stock compensation                         5,305     

19 943

Long-term incentive compensation                                (4,964)     

(5.006)

Direct costs related to COVID-19                                   (29)               -
Other                                                             (166)               -
Total                                                 $        (32,629)   $     (6,780)

Nine months ended September 30, 2021 compared to 2020 – Segment results

Net income for the first nine months of 2021 compared to the first nine months of 2020 by segment (in thousands):

                 Nine months ended September 30,
                  2021                         2020
VITAS       $         113,430               $  147,262
Roto-Rooter           124,504                   84,966
Corporate            (44,009)                 (26,514)
            $         193,925               $  205,714


VITAS' after-tax earnings decreased primarily due to lower revenue. After-tax
earnings as a percent of revenue at VITAS in the first nine months of 2021 was
12.0% as compared to 14.7% in the first nine months of 2020.

Roto-Rooter the net result was impacted in 2021 compared to 2020 mainly by the increase in revenues and the improvement in labor costs. Profit after tax as a percentage of sales as of Roto-Rooter in the first nine months of 2021 was 19.1%, compared to 15.6% in the first nine months of 2020.

Social charges after tax for 2021 increased by 66.0% compared to 2020 mainly due to a $ 14.6 million reduction in excess tax advantages on share-based compensation.

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                                      -31-

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