Chemed Corporation (CHE) Earnings Call Transcript
November 10, 2020
Earnings Call Speaker Segments
This is Chemed. We're here.
Yes. Hi, everyone. It's A.J. Rice, the health care service analyst at Credit Suisse. We're very happy to have next up speaking is Chemed Corporation. We're joined today by Kevin McNamara, President and Chief Executive Officer; Dave Williams, Executive Vice President and Chief Financial Officer; and Nick Westfall, Chief Financial Officer of VITAS.
CEO.
Oh, CEO, I'm sorry, VITAS. Sorry about that. Let me maybe pass it on to David to make a few comments, introductory sort of level set people that may be new to the Chemed story. And then we'll have some Q&A.
Thanks, A.J. Yes, in terms of the questions we've actually received already this morning as well as over the past weeks since we released earnings, a lot of focus on the great results that we've had in -- for the first 9 months of 2020 as well as, obviously, we gave very robust guidance for the full year, which then all goes to -- the fourth quarter is going to be extremely robust for both VITAS as well as Roto-Rooter in terms of revenue, margins, overall profitability in our free cash flow and adjusted earnings per share. And that always then leads into, well, that's great, fantastic, record profitability, record margins, record year in a pandemic. What does 2021 look like? And that's where then the discussion gets a little problematic as we look at 2021, trying to see when normality returns in terms of traditional patterns for both of our segments and what will the year look like? On the Roto-Rooter side, we actually expect to have some nice growth at Roto-Rooter. We're still finalizing our 2021 business plan for Roto-Rooter. But we -- to open with a little bit of pressure, we think we're hard-pressed to see a continued momentum for all of 2021 on the residential side. But we see a lot of positives in terms of the market share we picked up in 2020. We expect to keep a chunk of that as well as we expect to a continuation of the demand for residential services in the home because we think working at home is going to still play a significant part of 2021. But residential growth has been great. So I'm not sure it's realistic to say, can we keep at that same rate?
And let me just give one clarification. We've been trying to study. I mean, the -- obviously, results at Roto-Rooter have been very strong. And one of the things that we've said is what's driving it? The one area that Dave is referring to is kind of the pent-up demand that we're in a position to service now. One of the issues that people have is if they have a repair plumbing situation that's not an emergency basis, they put it off. They say, look, I'm busy. I've got to reschedule. I'm at work. We won't get through that right away. I mean that's the kind of thing that, as I say, we see that as an aspect of pent-up demand. We don't -- we think we're cashing in on that now. It remains to be seen what effect that has on 2021. But that's the element of the residential side that we say could be pandemically related. The rest, no. I mean it's just -- we're taking new customers. We're taking a little market share. I mean we're doing a better job gulf -- in the gulf between our Google -- our approach on marketing at Google and our competitors is getting bigger. So I just wanted to break in there, Dave, continue. But I just want to say the Roto-Rooter -- there is an element that we have some questions that could be pandemic-related. But overall, it's -- we're looking as business as usual for next year.
Yes. I would agree. Like I said, residential is always going to be a key part of our offering. And the growth has been so good in '20 that you're hard to say, can you recreate that growth rate in 2021? And I think, well, possibly, but we're not counting on it.
We probably won't budget that.
What we are counting on is significant growth in the commercial side, which early on to the pandemic in 2020 was down as much as 30%. Now we're at a run rate that's down between -- somewhere around between 10% and 13%. Unit for unit commercial revenue was down from the prior year. We expect actually that pent-up demand to do very well in 2021, as well as the 2 large acquisitions we did. We bought the Oakland Group in July of 2019, and then we bought HSW in September of 2019. And frankly, those had a strong commercial presence. And because commercial was weak, we've actually accelerated the reengineering of those multisite, multistate acquisitions. And we actually expect those to be a very nice tailwind for our growth in 2021. But without a doubt, we're dealing with a mixed bag as we go into, call it, the tail end of the pandemic, God willing. But what I would say is we're going to have some weird percentage discussions in 2021 compared to 2020 for both Roto-Rooter and VITAS. But the reality is the profitability and cash flow and the growth in that cash flow is going to continue on at pre-pandemic levels once we get through '21. So we feel very good about that growth path. VITAS, quite frankly, the biggest headwind we have in '21 over 2020 is they relax sequestration for VITAS starting May 1, 2020. They gave us a 2% price increase starting from May of 2020. That's actually increased our EBITDA margins 200 basis points. That's scheduled to go away January 1, 2021. So our biggest headwind, frankly, is we lose that 2% price increase that we got from the federal government to help us work our way through the pandemic. That creates a bit of a headwind. Obviously, disruptions to our referral sources, our admissions pattern, where our patients are located, has been disrupted. That will ease in 2021. But that's also going to be -- create some weird comparisons. But what we have is absolute confidence is both VITAS and Roto-Rooter is going to emerge from the pandemic stronger than when we entered it. And we're well positioned to have the same sustainable growth rate for both segments as we get through '21 and go into 2022. But we are dealing with some weird comps in 2021 compared to 2020 that everyone should be aware of. But that doesn't impede our overall growth characteristics or frankly, the free cash flow we're going to generate in 2021.
Okay. No, that's helpful. That's helpful. So the strength you've seen in residential on the Roto-Rooter side, you're thinking, a lot of that's just driven by the fact that people are in lockdowns or working from home...
No. I think that some is. We're saying some is. And as closely as we've looked at it because we're entering our budget base, right? It's murky. It's murky. But we think that residential has been so strong, as Dave said, there has to be an explanation for it, and it can't all be explained by new customers and market share. So it's murky.
Are those the only variables in your mind, market share, new customers or stay at home? Are there any other thoughts about what might be driving...
Oh, there's a mix shift, too, that for a variety of reasons, we're doing a lot more water restoration and excavation. But I kind of think, I think those are related more to -- those are related -- it's emergency service. Those are related more to market share acquisition, I believe. So to answer your question, there's some factors that change the bottom line, that is mix shift. But I think the factors you just described when you add mix shift to it would be the explanation. Dave, anything -- any other thoughts off the top of your head?
No, that's exactly it. But again, we can't say it enough. Roto-Rooter is stronger now than it was pre-pandemic, and we're going to stay that way. We're just debating nuances of it. But I mean, basically, when we went through the Great Recession in 2008 and 2009, those 2 years for back then tied to the second best years ever. Now we have the pandemic, and we have actually the best margins and profits for Roto-Rooter we've ever seen. I think we've clearly established that emergency plumbing and drain cleaning services is both recession-resistant and pandemic resistant. And the fact is every time we have these crises, some of our competition goes away, and we just emerge a little bit stronger with our geographic presence as well as our 3 call centers that are 24/7, 365. That's an infrastructure that a mom-and-pop cannot compete against.
And Dave also give some credit to the Roto-Rooter, like you say, call centers. They were prepared to flip a switch in the heat of the pandemic, and all their dispatchers and call takers could function at 100% efficiency at home. So they were prepared for it. And part of their -- a good part of the success has been the -- both the preparation and the execution of, call it, disaster planning.
Yes, because we've been running a hybrid model in our call centers, where some are working from home and some are in the centers.
So when you think about the share shift that may be part of this, is that -- you think, just because they can get your team on the -- well, your people on the phone quicker because you've made those kind of changes versus maybe a local operator? Or is it more that, for some reason, they feel more comfort with you guys than they might with a local...
There's an element -- now keep in mind, one thing we emphasized from the start was, call it, the professional and safe level of Roto-Rooter when it comes to sanitation and the safe practices. We emphasized that from the start in all our Google marketing. That wasn't, you might say, we had an advantage because of our national presence in order to sell that argument, but I think that was effective. But to answer your question, I just really think that the -- there was a number of factors described or explain the good performance of Roto-Rooter. And I think that they learned something. They learned something. I think that when you talk about taking market share, there were small businesses that were close to retirement. Maybe the key clubbing provider was post retirement and gave up the ghost perhaps. You know what I mean? Yes. It probably was a catalyst for some of those changes. But again, it remains to be seen. When you talk about how big that market share grab was and how sustainable it is, that's the same question next year.
Okay. When you think about what's happening on the commercial side, I also don't want to jump to conclusions as to why that's trended the way it is. Is it a function of just these businesses have gone to remote? There's been some closures. Or what is driving that? And what is driving the rebound? Is this people back to work?
Well, our -- if you look at the commercial business, our 2 biggest cohorts that make up commercial business, the first one is actually what we would call retail. That would be the customer bathroom in the Hallmark store or in a bathroom in a Target. And then our second largest commercial cohort is restaurants. So some of that growth has been, as they -- as some of the restaurants have been allowed to return to normal or at least partial normal in terms of occupancy, we're getting business when they're running their production part of a restaurant, even if you're not seeding customers inside. So we don't get the restroom for the customers, but we still repair restrooms for the employees in the restaurant as well as managing grease traps and the other plumbing and drainage infrastructure...
Broken pipes.
Broken pipes. Even if you're just doing carryout. So that's kind of struggle, but return to 10% to 13% decline in commercial is in normalcy. But without a doubt, it's not as severe. And I think as the economy fully reopens, we'll return to, at a minimum, to levels we were at prior to the pandemic. I'm guessing slightly stronger because some of our competition won't come back. But that's a wait and see. I mean California is being impacted differently than the State of Ohio, frankly, in terms of the economic slowdown shutdowns. It's hard to say.
Right. Right. So if you're off 10% to 13%, if you look at different parts of the country, some are off more and some have come back to close to normal. Is that what you're describing?
Absolutely. And I will still say California seems to be struggling the most. Would you agree, Kevin?
No question about it. I mean, well aside from the fact that when you say New York, our New York, the Manhattan business...
Oh, yes, Manhattan. Yes.
Dried up and blown away.
Luckily, outside of Manhattan, they're not as crazy as the mayor, so.
We'll cut that from the transcript now. Is -- so you had the 2 deals last year. I'm sure it's hard to due diligence deals on either side of the business, but I'm more focused on the Roto-Rooter here for a second. But there may be a build in the pipeline. Any sense on that? What you're seeing out there and what the pipeline might look like?
There really is no pipeline for acquisitions. Now if you just look at the existing franchisee base, if you want to talk Roto-Rooter, and there's arguably -- and this might be a bit of a stretch, there's maybe, at best, $100 million in Street sales we'd want to get our paws on, maybe a little less. And only maybe $40 million, $35 million of that is large branch locations was like. The rest actually would be independent contractors.
That we've purchased and put it in our independent contractor. But I guess what I'm saying is you've got to remember [ road to ] acquisitions. They don't -- I'll tell you the factor that I always say that describes it, I think, best. There's a family that has a business, let's say. They've got a great service mark. They're pulling $1 million out of the business one way or the other, whether it's by employing several family members, by making retirement contributions, by providing all the perks for the daily life. To the set, you say, okay, we're interested in buying it. They'll say, well, you have to pay us enough so that once we get it, we'll have no basis in the business. It will all be taxable after tax, and we want to invest it in government bonds and then still pull out $1 million from that. You can see if you do the math on that, it's a 50x multiple. So it doesn't get done until there's a death -- a retirement in the family that forces a change. And when there is a change in the offing, Roto-Rooter is the most likely buyer in all but in the 40 years I've been associated with the business, there's only been a couple of instances when Roto-Rooter hasn't been the buyer.
And even those somehow made their way back to us, eventually.
Right. Right. Is -- I mean in this pandemic, has had everyone take another look at their cost structure. Is there anything on the Roto-Rooter side about the cost structure that you guys have looked at? And said, either temporary this year or permanent that's going to sustain on an ongoing basis that you've taken into account?
Not really, but only because there's, what, continuous engineering and realignment that happens on Roto-Rooter on a regular basis. So -- I mean, even if we have cultural pushback at Roto-Rooter, we can actually cut through that through direct confrontation or, call it, forced change. So no, I mean, Roto-Rooter, variable cost model, we changed that on a regular basis easy. Quite frankly, disruptions in the health care sector, though it does create opportunity to do some reengineering that you couldn't do otherwise without that disruption. So said differently, it's easy to go medieval on changing the behavior of plumbers and drain cleaners. It takes a much softer and intelligent touch to go change behavior of health care workers, nurses, home health aids and physicians. And I'll refer to Nick on that. But he's been working on reengineering in terms of quality of our employees' work life as well as being more efficient during the pandemic, some of which we should be able to hang on to those efficiencies, post-pandemic.
Okay. Well, that's a good segue way over to talking a little bit about VITAS and what you're seeing. I was going to talk about the high level, but maybe we'll jump right into on the cost side in terms of what Dave was just alluding to, what are you guys doing on the cost side there to take costs out, Nick?
Yes. So I mean, it's -- we don't necessarily look at it on a cost-only basis. I think that's the main item I really want to drawl out, right? We've really hung our hat on, and it's proven successful for at least the last 3 to 5 years at this point of -- if we're the highest quality provider, providing a full comprehensive suite that is encompassed around the hospice benefit, that makes us the most attractive option, not only for patients and families, but also for our health care partners and referral sources, meaning we're able to help support, provide education and bring patients on that are appropriate and have been independently determined to be appropriate and provide a comprehensive care offering. And while that's different and unique on a market-by-market basis, we're constantly managing and being cognizant of managing our mission and margin and allowing that to happen. So while there have been opportunities and things that were on our strategic road map, you talked about utilization that is a complement to care, not a replacement to care from a telehealth perspective, we were prepared, had the infrastructure and had that on our road map. And the pandemic, obviously, just accelerated the health care industry's adoption of telehealth in patients and families and health care partners' acceptance of telehealth being a good complementary option for what is a home care decentralized care model. And so we've learned a lot with it. As Dave alluded to, there's some great observations that we think we could build into our long-term model that will improve quality but also allow us to operate more efficiently. And then the other aspect to it, which is not directly attributable to cost, is we're always looking at ways in which we can continue to reinvest in our employee base and reduce turnover, but just increase overall morale. And so we've been able to do some really good things to support our employees, whether it's sufficient and ample access to PPE, all the educational protocols that come with it. We granted all of our clinicians an additional 2 weeks of PTO. We have not furloughed or laid anyone off. We've managed headcount through attrition as well as really honing in on our part-time and per diem our variable cost model with it. And really proud of the team for what we've been able to accomplish for the 7 months that the pandemic has been with us, and we feel good about continuing and capturing some of those efficiencies. But it's not always just the cost component. It should improve overall quality and improve the overall employee experience. And by doing those 3 things, combining with growth, I think it puts us in a great position going forward.
I don't want to sidetrack too far on this question, but when I hear people say, we're using more telehealth, lots of times, I can envision what that is with the hospice benefit, a lot of it's pain management and things like that. What specifically do you do with telehealth in the hospice area?
Yes. That's -- I'm really glad you brought that up. That's what I wanted to reinforce. It becomes an additional complement to the care delivery model. You cannot replace the physical interaction by a nurse, by a home health aid, et cetera, for the patient experience and the type of care we're providing. In the pandemic, obviously, when you would have facility access restrictions inside of a long-term care market, we were still able by being able to be -- and illustrate through testing symptomatic management, PPE utilization. We were still able to access and overcome many of those access restrictions. However, some of that unscheduled visit activity where the patient or family may need something or they would be reaching out, where we would have traditionally maybe just -- automatically, we would have had a telephone conversation, but automatically deployed someone if you go out to talk to them. We may be able to complement that care with a telehealth visit and avoid the deployment of that physical resource, and that does have a real cost savings over time to us.
Right. Okay. Interesting. When you think about the...
Real quick -- sorry, A.J., that's important. And it's almost -- it's self-serving a little bit, but it's self-serving because it really helps highlight the foresight, CMS, administrative [indiscernible] had with it. With the allowance telehealth-wise, when you're unable to do a physical interaction in some of the face-to-face recertification requirements, being able to be accomplished via telehealth also helped with a more efficient visit for what has been some purely administrative function that the government had not provided any additional reimbursement for, right, but had an elevated cost expectation with. So that's a real illustrative win. I apologize. I didn't mean to cut you off, but I didn't want to close that without mentioning it.
No, it's good. When you think about where your volumes are in the hospice side of the -- I mean, I think in the quarter, you said admissions were up 4.7%. Census is sort of flat, down 0.2%. But there's a lot of cross currents there. Some of your traditional referral sources like nursing homes, I don't know, it sounds like they're still fairly depressed where others have picked up. What's -- maybe where -- how would you relate where you're at today to where you were pre-pandemic? Are you seeing more volume from new referral sources? Or is that just coming to you a different way than it did historically the volume?
So I think that's the million-dollar question with it, right? Or the billion, more than a million. But we don't -- we have different measurement vehicles for that, but we can't definitively say how much of it truly is additional capturing of share because you don't always know what the patient interaction volume looks like from our health care partners, right, what that change in trend looks like. So to walk back to where you started, you're absolutely spot on. In the corner, admissions were up 4.7%. How that broke down was a -- in normal pre-pandemic times we would have seen a little variation amongst some of our -- the different referral streams. But in the pandemic, it's really reflective of what's going on in the marketplace. So third quarter, hospital admissions were up over 6%. Our physician office and home-based component was up over 18%, and that really becomes more indicative of how I think patients are choosing to access the health care industry right now. Nursing homes were down almost 23%, ALFs were down almost -- a little shy of 14%. But that's more -- mostly due to -- they may be imposing new resident restrictions currently underway that should alleviate over time. And so how many of those patients that would have potentially gone to long-term assisted living environment or a nursing home environment that are choosing to now stay at home and receive care directly through their primary care physician or some other specialty physician. We can't -- we don't necessarily know. We see some of that change in trend. And it turns out to be a little bit of a blessing of disguise because our strategy forever as an organization and really bore fruit during the pandemic was that to really try to service the collective needs of the local market in a diverse way, right? We don't have ownership. We weren't founded by a nursing home chain, et cetera. And so that diverse need and the ability to be out in the market, educating all health care partners has really allowed us to still look to grow and bring on more patients incrementally, sequentially, as well as year-over-year, because of that diverse referral source stream, where if we were owned or had exclusivity or a very large percentage of our business in one segment, that may not have been the case.
The one thing I'd take away from Nick's discussion is this, because referrals from long-term care market are down, occupancy in those areas -- I mean, those homes are down, access is restricted. It's -- those patients, which normally, is a very effective way to have those patients be aware of hospice and be transferred into hospice on a timely basis. The fact that, that avenue was restricted is its had its biggest effect on ADC. And you can see it in our median length of stay, which has gone down 2 days from 16 to 14, which means we're getting shorter-stay patients, fewer long-stay patients. And that's why it's hard to grow ADC in a -- during a time when you're -- you're not getting the long-stay patients. I mean, you've got to remember, half our patients are with us 14 days or shorter. And it just -- again, to the extent that, yes, we're making good advents. That's one of the reasons why our Medicare cap improved so dramatically in the second part of the cap year, resulted in reversals of expenses that we were projecting. We were getting the shorter-stay patients, but the longer-stay patients were not in a venue where we could effectively take them under care. So that's a long-winded way of saying, keep in mind that what's going on with the pandemic, in my mind, is just the effect on the long-stay patients. I think it's short term but it explains the -- our ADC number.
Just one other quick comment, if you don't mind, in the long-term care market that mentioned briefly on the earnings call, and time will tell is, as an organization for all those nursing homes and ALFs who don't have an ownership or direct affiliation with another hospice provider, we've been very successful with expanding our partnership with them and as well as their awareness around having high-quality hospice provider that can provide care safely, consistent with CMS regs. And not only access their facility, to provide care to the residents on service, but also protect everybody else. And the pandemic created an opportunity for us to continue to demonstrate that. So while admission flow is down on a comparative basis, we may be picking up some market share. And the hope is that as those facilities really open back up and come back to whatever the new normal is going to look like, that we would continue to have that share on a go-forward basis, to each...
Are COVID-related cases a significant portion of your hospice volume at this point?
They're not a significant portion. There's a -- we haven't released it publicly, but there, we have brought on a few thousand patients since the start of the pandemic that came to us confirmed COVID positive. But if you put the few thousand in perspective, say, it's 4,000-ish patients, that is roughly 10% of the overall admission flow we brought on since the start of the pandemic, right, roughly 40,000 patients. So it's not a material component. But with that being said, we thought it was very important being that -- well, we consider to be one of the leaders inside of the industry, no different than the HIV/AIDS pandemic, which was as some providers were stepping back, we were stepping forward and we're bringing patients on because we had -- as long as we were able to protect our employees, that was going to be the only piece that would have changed our philosophy on being able to bring positive patients on and care for them in a very safe manner, and ensuring our staff were protected and their families were protected.
Right. And when you think about what's happening in the nursing home environment right now and probably to some degree, even in like retirement communities and stuff, if they're on lockdown and your people can't get in there, is there a perception when that lockdown eases that there are people that are hospice-eligible that you're not able to talk to about the benefit? And therefore, all of a sudden, you might see a little mini surge when you -- when those access to those facilities reopened? I don't -- I know that's not going to persist for a long time, but could help you for a few quarters, I guess. Is that a possibility?
Yes. I mean, I think that...
It's a likelihood, I think. I mean our percentage will retreat to its norm.
Yes. That's right.
Percentage of hospice -- of long-term care of patients.
There definitely would be a pent-up demand. But the one guarantee, I think, we could all make is the patients that are out there with chronic conditions, that their disease trajectory is not changing, right? And their prognostication is not changing just because the pandemic's going on. We see people accessing certain aspects of the health care system later and therefore, coming to us maybe a day or 2 later than they would.
Yes. And that's -- we'll set aside the particularly vulnerable parts of that population that actually get the COVID vaccine.
That's exactly right. So I think there are absolutely patients out there who are hospice-appropriate that, as the pandemic continues to subside, will have a higher likelihood of being identified that weren't as -- during the course of the pandemic, but -- and a higher percentage of those in the long-term care side.
And the only question whether that constitutes a surge or just a gradual recapturing of a percentages.
And I hesitate -- all joking aside to describe anything in a surge because of how frequently that's used for -- to describe the pandemic in cases. So we made an uptick of admission flow.
At the risk of some people on the line saying A.J. is going off the rails here, but we cover the funeral home and cemetery providers. And one thing they're saying is the pandemic has made people more open, generally, about discussions about end of life and that type of thing. That's affecting them in what's called pre-need cemetery and funeral home sales, funeral service sales. Is there any dynamic like that in the hospice business that maybe people are more willing to consider hospice in light of the pandemic? Or is that -- you can't really see it?
I mean, it's too early to tell, but what you're describing -- I mean I can see that. I mean it plays out when in the super elderly. You say to some people, don't go out of the house. Don't see your grand -- don't see your grand kids. Don't do anything. And some people say that's right. I'm 89. I want to live at 93. And the other group says, look, I'm going through life. I'm not going to be a shut-in the rest of my life. And by its very nature, that mental process is -- goes to the issue of potential demise. And so that -- any type of focus like that is great for the hospice industry.
What we do see -- and it's pre-pandemic, but also throughout the pandemic. And CMS is extremely supportive of it, is I'll bucket into 2 different things. There's absolutely a need and an increased awareness for advanced care planning and goals of care conversations that occur with patients and their families, in many instances, pre-hospice eligibility. And what that really gets towards is patients and families really laying out what their wishes are, what they want as their life trajectory continues to evolve. And we participate in that offering. And frankly, as a country, we have to figure out how that's going to play out. There's a lot of benefits for it. And there's a lot of benefits for the Medicare system for that to be fully incorporated. And so I think that will be -- that's really a tailwind. It's just a question of how strong it's going to be and how long it takes to get to the inevitable conclusion where that's a standard practice for all Medicare beneficiaries.
And as we head into the home stretch here, I want to just ask you guys about the capital deployment strategy. I know you've had sort of a unique approach, and it's paid off for you well in terms of getting money back to shareholders. But also what you're seeing on the deal front, we didn't really talk about hospice, whether you're seeing opportunities there. But any comments on just general thinking about capital deployment?
Yes. And obviously, we've been talking about capital deployment for years, and we don't see the current utilization breakout changing. Or said differently, the best return of capital we have is actually fixed assets, hard assets that can actually have a return 30%, 40% in the year. But there's only so much fixed asset equipment we've put out there. Right now, on a sustainable basis, rounding up, we probably are doing about $50 million a year of CapEx. And that still leaves us about just a hair shy of under $300 million in free cash flow that's sustainable. So after CapEx, we love to do acquisitions. But frankly, we're waiting for the right order acquisitions to materialize. When they do, we jump on them. On the VITAS side, unless it's a unique program or provider number out there, the fact of the matter is, the multiples you pay are so obscene that it doesn't make economic sense. It's very risky. And if you're paying 20, 20-plus times adjusted EBITDA, and those adjustments to the EBITDA are somewhat questionable. Frankly, we look at all that and we conclude acquisitions don't make sense. We pay a dividend and we've been increasing that dividend every year, but it's still well under 1%. I mean, I think we're up to, what, $0.34 a share per quarter is our dividend. We pay that dividend even though it's very tax inefficient,because it expands our potential shareholder base. Some funds demand a dividend if they're to consider investing in Chemed. Others have more sophisticated algorithms that look at a growing dividend, how long you're paying it, the percentage of free cash flow to cover your dividend. So that's the reason we pay the dividend. And then, finally, share repurchasing, which has made up the bulk of our free cash flow utilization. And we -- as a general statement, both Kevin McNamara and I are not big fans of companies that do share repurchase programs because they're poorly thought out, they're mostly PR, they rarely execute them. We've been executing them for over -- it's been over 12 years since we've had an aggressive share repurchase program only utilizing the free cash flow we generate, and we do it with a combination of dollar averaging. Every quarter, we're just buying an up market as well as opportunistic purchasing when the stock has an abnormally correction...
That was our average -- during that period, Dave...
I think our average purchase price right now is around $90 -- a little over $90 a share. And we put to work about -- with the dividend over the past 12 years, $1.4 billion, $1.5 billion. But yes, we do dollar averaging and -- as well as opportunistic share repurchasing that we think is going to continue. We want to do acquisitions, but frankly, I think you'll see us in aggressive acquisition mode when it's a buyer's market, not a seller's market.
Right. Right. Well, that's great. I think that was a great rundown on the company. I appreciate you guys participating once again in the Credit Suisse Healthcare Conference. And so thanks for that, and thanks to all that have dialed in for the virtual meeting. So with that, we'll end this presentation and wish everyone well.
That's good. Thank you.
Thank you, A.J.
Take care.
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