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 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

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 the third quarter of 2019 is 7.4 years.

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

Amortization of reacquired franchise rights comprises the following (in thousands):


Three months ended September 30,				Nine months ended September 30,
2020		2019		2020		2019

$	2,352	$	331	$	7,056	$	1,103

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 the third quarter of 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.

The pro forma revenue and earnings of the Company for the three and nine months ended September 30, as if all acquisitions made in fiscal 2020 and 2019 were completed on January 1, 2019, are as follows: (in thousands, except per share data):


	Three months ended September 30,				Nine months ended September 30,
		2020		2019		2020		2019
Service revenues and sales	$	528,297	$	500,289	$	1,546,674	$	1,480,432
Net income	$	67,722	$	62,194	$	205,773	$	164,679
Earnings per share	$	4.25	$	3.89	$	12.90	$	10.32
Diluted earnings per share	$	4.14	$	3.76	$	12.53	$	9.97


	VITAS		Roto-Rooter		Total
Balance at December 31, 2019	$	333,331	$	244,036	$	577,367
Business combinations		-		1,193		1,193
Foreign currency adjustments		-		(41)		(41)
Balance at September 30, 2020	$	333,331	$	245,188	$	578,519