CHEMED CORP acquires HSW RR, Inc. (Roto-Rooter franchises) and Western Drain Supply

CHEMED CORP acquired HSW RR, Inc. (Roto-Rooter franchises) and Western Drain Supply for $120 million (plus a $1.4 million working-capital adjustment), a transaction completed in September 2019, structured as all cash (cash on-hand and borrowings under Chemed's $450 million revolving credit facility). The deal was a asset purchase.

HSW RR, Inc. (Roto-Rooter franchises) and Western Drain Supply operates in Roto-Rooter (plumbing and drain cleaning), is based in Western U.S. — California (LA, Inland Empire, San Fernando Valley, San Gabriel, Orange County, San Diego), Texas (Dallas, El Paso), Arizona (Phoenix, Tucson, Florence), Utah (Salt Lake City, Ogden, Park City, Provo), Oregon (Portland, Salem), had revenue of about HSW 2018 annualized franchise fee revenue of approximately $1.782 million (franchise-fee basis disclosed in 10-K). HSW RR, Inc. was Roto-Rooter's largest independent franchise operator. The transaction covered substantially all of HSW's assets plus certain related affiliate assets, including the assets of Western Drain Supply, Inc., a plumbing supply company. It added fourteen Roto-Rooter franchises in the western U.S. spanning Metro Los Angeles, San Diego, Dallas, El Paso, Phoenix, Tucson, Florence, Salt Lake City, Ogden, Park City, Provo, Portland and Salem; collectively these locations serve a population of approximately 32 million people.

"This purchase is part of Roto-Rooter's ongoing strategy of acquiring franchises to boost productivity, market share and profitability."

Largest independent Roto-Rooter franchise; converting it to company-owned operations captured 100% of territory economics across markets serving ~32 million people. Operational efficiencies from consolidating stand-alone franchises into Roto-Rooter's nationwide branch network. Folded into Roto-Rooter Services Company as company-owned branches