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DaVita (DVA)

Participants
Jim Gustafson DaVita, Inc.
Kent J. Thiry DaVita, Inc.
Joel Ackerman DaVita, Inc.
Javier J. Rodriguez DaVita, Inc.
LeAnne M. Zumwalt DaVita, Inc.
Kevin Mark Fischbeck Bank of America Merrill Lynch
Tejus Ujjani Goldman Sachs & Co. LLC
Justin Lake Wolfe Research LLC
Whit Mayo Robert W. Baird & Co., Inc.
John W. Ransom Raymond James & Associates, Inc.
Patrick Wood Citigroup Global Markets Ltd.
Gary P. Taylor JPMorgan Securities LLC
Call transcript
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Operator

Good evening. My name is Jenny, and I'll be your conference facilitator today. At this time, I would like to welcome everyone to the DaVita Third Quarter 2017 Earnings Call. All lines have been placed on mute to prevent any background noise. After the speakers remark there will be question-and-answer period. you. Thank Mr. begin may conference. your you Gustafson,

Jim Gustafson

forward-looking President and Thank Kent quarter company. Thiry, to And Vice third our CEO; our everyone call. you, I'm me We are Gustafson, our Jenny, conference in appreciate our interest Relations. Ackerman, welcome your today Investor of Joel Jim with continued of meaning Kidney this Jim Zumwalt, Please the that during Hilger, Vice Javier laws. Group Chief Accounting CFO; President. the DaVita Rodriguez, our we statements may federal securities make call, CEO of LeAnne Care; within Officer; and note

are of these actual to All from forward-looking risks unknown and differ to that statements those the subject cause known in the statements. and could described materially uncertainties results

release concerning For our those our recent filings on and risks most further including quarter SEC XX-Q. to report Report and details quarterly earnings XX-K earlier on out Form Form Annual please today uncertainties, refer and our third

currently not to us statements are forward-looking to and upon duty no available undertake do information we update any and reason. Our based for statements these intend

like our with we'd available now GAAP discuss Officer. during reconciliation our this A measures. measures Chief you to release press the included these turn that and over will non-GAAP Executive financial non-GAAP is in measures the Thiry, of call most our some financial to the call, comparable I'll SEC Kent earnings filed we remind on Additionally, website. to

Kent J. Thiry

and for Thanks, joining everyone thanks call. Jim our

performance QX with get outlook, we our Before financial start and performance. as the our of always clinical specifics we'll we do into

and appropriately getting opioid of is publicity great Medical a amount the Group, within of DaVita epidemic, the First so. course,

risk and for in safety leadership stare Medical time the urine recently program trainings demonstrated. community screen back providers. cumulative We accomplishment in a to awarded an this that because we at amazingly scarring Association's Care, of it's good recognized integrated in of Washington for highest exemplary the And with by Kidney Our tools, and for work step the pain was Washington implemented supporting area Everett where DaVita we had assessment, robust category. their State patient were award the Clinic our Within care.

the seriously that for XX so, in XX% cetera. readmissions, recent our simply to with for on clinical all build economic, further but community look reaffirms outstanding, It for potential, name PATIENTS Act both years hospitalizations, our care. we've integrated rates integrated the C-SNIPs value, shareholders been few. a both accomplishment. of us XX% from others care just for reinforces those you only not are et well and as vehicles to outcomes XX% compared the reduction et because If average, at CBC the we'd the lower cetera, the to really fewer clinically scale ESCO data And is where or the relevant and it national involved arguments existing our and these supports

you the not last As options, more participation that noted, turn Medical to discuss does DaVita, Group. of support I'll it's But gives scalable, reintroduced of Senate come. on Joel bill DaVita the couple now to was bipartisan to substantive nephrologist weeks. proposal probably sustainable, over flexible the like it in providers high-quality just the House is penalize many This and in with in Ackerman and and quarters it

Joel Ackerman

Thank Kent. you, afternoon. Good

impairment items. which an non-cash excludes goodwill operating a and For non-GAAP adjusted other of $XXX DaVita million loss $X Group the quarter of had third Medical XXXX, million,

but are return the remain achieving the performance drivers we result our that growth. start business operational in capital as We recognize future. right have we that the the outcome, of discuss expectations changes is not recognize it saying financial let in will we I now contributing investors will result, making skepticism improved confident a to Before is nor that disappointing OI the me this by

for depreciation this reminder, related has our the million to high initiative a the acceleration EBITDA quarter, $X and load, outcome the drivers. quarter result roughly quarter's of of $XX $XX disproportionately quarter. business Therefore, branding million the this adjusted million of into $XX adjusted which amortization the The this quarter. of a for includes is million primarily translates operating of for As $X loss million two an

by XXXX First, prior higher diagnoses reflected of we in impact of driven in during largely savings costs, than our acuity patients expected million acuity year period reimbursement. than higher our past; We increased result. $XX which the in the the shared represents that seen This have utilization, approximately $XX in about impact. the these of by revenue result new things; XXXX of patient anticipate medical higher is true-ups costs and of result of seen increased as million the be will two will

Second, prior third year payments, of the we the was Medicare by CMS. historically Advantage finalization delayed in have which quarter, received

was on the this reference, to out underperformance, laid we of a $XX XXXX. Capital Day. operational make progress Markets your at drivers For four in Despite continue we our million improvement item this

However, yet DMG. announced during the non-clinical we particular the positions impact these financial operational have QX, show results. that in restructuring up changes Of note, in our of XXX to eliminated

resulting XXXX. be expect starting the savings year annualized approximately to $XX in We per million

to DMG million in be OI of give to Looking range now million. full forward, fourth adjusted $XX call. guidance quarter plan expect for our in operating year XXXX on we $XX We earnings DMG to February XXXX income the

While reasons. income operating we're this specific from not time, adjusted up that at XXXX giving will several DMG's operating for be we XXXX income XXXX expect guidance

First, in we expect savings year from next recent just restructuring, I million the as $XX mentioned.

increase, before. reflect Second, the mentioned acuity $XX I as revenue of that million increases patient

Third, are markets. that new or near four we have contracts our benefit in risk expect signing from to

Advantage in optimistic drive making per substantively markets we've XXXX. member agreed terms our signed legacy payers Medicare improvements business. have progress existing of approximately ability risk or Overall, in increased in our revenue in and with Finally, been we're re-contracting about payers with to XX% month on per covering

the Medicare offset more above We Advantage than rate previously have should we XXXX expect all headwinds of disclosed. the

see expectations for we through XXXX. reasonable XXXX million income Day greater at For income, deliver reduced the our operating Markets $XXX than Capital four that to scenarios May despite the discussed we levers operating continue

over to Now Javier Care. I turn will to discuss Kidney Rodriguez it

Javier J. Rodriguez

Thank you, and Joel, afternoon. good

I quarterly past want caregivers go recognize into the and the I hurricanes moment a floods to result, during to amazing responded the to Before quarter. take the

cross-country boat It of teammates. from was be heroic the leader with of and traveling rescuing in I to Care, the patients a team very From As local team's compassion to inspiring crisis. displaced working time real an so am the back-to-back in caring Kidney professionalism care to dialyzed, behavior stranded dedication, proud their multiple of families. so their period of they allow take can to truly shifts passion,

X% had onto Adjusted the Care primarily third $XXX quarter. results the Kidney We $X an solid Now quarter approximately was for by driven business. extra quarter, million for day. or the operating up treatment second versus million, income

Harvey The and at disruption we Our our missed and approximately of higher negatively for revenue growth process. estimate quarter $X approximately to billing Irma, treatment contribution $X non-acquired adjusted operating non-acquired approximately leaving for by impacted hurricane cost from the which XX financial uncollected negative growth our be million million income X.X%. Hurricane our and to points impact the from included quarter, basis the of lost of

dialysis for to to for per and was basis, an growth be lower essentially to the non-acquired and Revenue X.X% be the U.S. will lab likely quarter-over-quarter, annual essentially we of the XXXX. remain although within on expect per treatment flat quarter. end near flat to continue expect we treatment the business range We range X.X% of for revenue fourth

treatment that as patient per approximately quarter-over-quarter, treatment was was due up impact. hurricane which, approximately care $X mentioned, Our cost of $X.XX to the per

assistance, premium to topics: I'm contracting Now guidance. transition going to address charitable payer proactively and three

start me charitable Let premium assistance. with

As premium to an number number believe number insurance recently if patients, premium points. out, forced neediest to the patients for unlikely even a large unlikely assistance. would our two, number that four think risk facing released operating lot to provided reasons. assistance if our we a color through to income. take we most for number away for important existing complicated retain has annual Point million of I Point our Point is press been many navigate are assistance support one, information patients, $XXX the charitable downside to we releases, for you opportunity in I scenario critical estimate to coverage, three, go Q&A. plays million to this comment of $XXX extremely premium who know, likely will premium go concerning of charitable Point Because hardship. assistance approximately were exposure four, their additional despite significant financial charitable away leave we charitable this we to summarize want dialysis environment.

and the as last try questions For payer of the be some received we to additional to I environment, have also as can. helpful provide quarters, color around so I want couple

to anything see don't we unusual. XXXX, for out portfolio the review we As call as

the this of provide payers rates more we're of the years, two So detail? fifth five our currently bit in cadence and can What out renewals. I normal a does for to negotiating Four next largest three the little in have mean? locked

the regional guidance. will to up so down. and end some up For will continue some players, give-and-takes in have smaller to we normal On negotiations, end

operating for guidance $X.X $X.XX the in billion the impact of we're billion hurricane. new XXXX, For Care to range from billion. the range the The income tightening includes of our financial $X.XXX billion previous guidance to of $X.XXX adjusted negative Kidney be to

practices we want can helpful moving break here the as are Next, the business, recent on many and I quarter fourth of providing the guidance earnings there given from so pieces in to as be call.

a First, reminder.

the in of have in income we enrollment Number for XXXX. in for to range but match out $X.X worth be guidance, ACA transition XXXX which program. three our considered the the in Kidney expect open will of for handicap. billion plans. $XXX we recent accounting We it's year-over-year to harder elements, business Care to one, they're Nevertheless, a XXX(k) million $X.X forecast, billion headwind operating our calling In to have

volume We the have Point us it's forecast cost price, around advocacy and all the to lastly, clarity then patient individual uncertainty, two, of in for MEDICs. number hard yet. Given And California. cost don't regulatory decisions.

year. continue a to If to the our earlier labor state Capital the alter incur trajectory Longer initiative, term, know, economics to consistent in this advocacy which what with ballot have our significant at in unions efforts, onetime costs we they to California. decide in the we would support multiyear Day might proposed our XXXX to you the Markets not As proceed guidance that significantly stated have we expect initiative included we with have said be range. of

back I'll discuss international. to Now to give it Joel

Joel Ackerman

Javier. you, Thank

million. reduce our and the our of eliminating to global, is restructuring charges redundancy and of related million to international efficiency For G&A $X a improve across losses venture excludes structure to the reorganization country This by impairment charge regional higher $X operating level. and at which $X of and adjusted APAC joint $X exchange loss million, restructuring losses due operating were million goodwill quarter, this includes international foreign equity some

We starting million restructuring per to $X.X save expect international year this in approximately XXXX. cost in

For OI XXXX, last we we international reaffirm guidance full year provided quarter.

continue we internationally reach forward, to breakeven XXXX. during Looking expect to

achieve we breakeven for of largely function last quarter, be the As the for XXXX. rest full whether XXXX of of said will we our pace acquisition a year

we're for businesses. Capital a building solid Day, mentioned As Markets platform our in international in growth

day Finally, million temporary continues the of to be generation due approximately flow. and the reminder, in days following; $XX cash quarters to deployment. cash capital quarter one to DSO last some $XXX in increase year-to-date. of and translates on $X.XX strong operating of Operating was despite impact as million a over DSO flow two four a in the the comments billion adverse cash flow Cash

things. days four three were of the the So result

inherited receivables one from centers Renal delays normal about fluctuations, which Ventures another impacted which day. third, submitting and claims X.X in contributed X.X which contributed the the second, hurricanes, First, by days; days; contributed acquisition, in

the as we expect quarters of over three through year days of dialysis billing DSOs the billing We Separate well changes for to slight capital. to over in These frequency at past reduce made to next of we processes these changes to as as have lab processes. costs few also payers a days these in government changes requirements in the working have commercial four collection certain structural our increase for DSOs we anticipating DSO and expense include to collection a our increases, due changes from to seen regulatory items. decline short-term our three payers, increase approximately work

XXXX for billion flow the cash of range $X.XX billion. $X.XX operating expect to in continue be to to We

few Kent over closing Now, for comments. a to

Kent J. Thiry

a CPA; on buybacks. capital like two, number I'd to to three Number few Joel. offer one, deployment topics. thoughts respect DMG; number with share three, you, Thank

failure Kidney that already any DaVita Care, continuous words to believe extremely for results the and While meet we teams. to it and Medical our was still the the the solid assets a quarter this as in set. are of potential Nonetheless, to markets was disappointing an by it useful capital reality are Group, is noted. previously expectations is no you find difficult results. doubt, This these at value the given we It fact at have the exacerbated quarter point have the

focused We at and affecting the operating are May our like we Day. on on to DMG in enterprise, that said enterprise, your a performance the placing both Markets burden reiterate would intensely strategic what initiatives. Capital change in We is through

others strategic CPA. now for are to assets across I'd our to the in G&A alternatives underperforming therefore We parties across third to and Steps move reduction are involve difficult and our businesses that million premium like discussed pursuing $XX like control; many Joel markets. assistance, are charitable still time. on

CPA are unambiguously by and Charitable by patients. Act. most teammates our who assistance Care has First board above with the government, among the was been intentionally importantly, need. expanded explicitly in ESRD our accepted and the and long intentional, to our ethically acted for good endorsed explicit, patients and most Affordable respect it is charities

any other We XX ESRD as have notion by patients regulatory commercial to the limitation statute ridiculous. the a the cut Secondary insurers, that of are is regulatory any unfairly incremental system from entitlement under the responsibility, patients. There to ethical, of Medicare and XX-month commercial dramatically Medicare are two on the both way for namely subsidies aggregate comprehensively assistance insurers burdened outweigh that coverage. premium charitable And Payer educate and that ecosystem our burden or commercial

have against to amongst for. important, unable continue teammates keep way course, to discriminated best in and in Most quality of ability like the clinical they this patients that in Our this the Americans dialysis would coverage keep America. commercial only the patients to to provide care is all are our to pay of

to by will for patients system. be our of the continue We care advocate taken to

regarding Finally, stock buybacks.

them. do We to have continued

in deploying durable these which has recent of strategy, months. We amount repurchases in flow manifested of the considerable a have towards our our itself been allocation capital cash long-term form

Operator, In that fact, our approximately this approximately means X% authorization X% do is, nearly have November have purchased thing of outstanding would this shares approximately repurchased please with new your shares year-to-date remaining. XX.X our $X.X about million the billion shares outstanding line you since beginning a currently at we through or our we think last was or announced year. open the to call, of earnings We X, the million X stock right Q&A? and with the capital. up for Year-to-date, of

Operator

you. Thank

Kevin first Bank Our question from of Lynch. Fischbeck comes from Merrill the line of America

open. is line Your

Kevin Mark Fischbeck

Thanks. Great.

guess, in the number at assume of more I organically when year to about grow stock So business. actually basically looking talking like you're you the end change, one, amount, $XXX in amount. I than guess that range that And OI dialysis about it next growing X%, you're about volumes comp we high looks least ish the that the of XXXX and million that you're and throw for kind think we at

So in of mid-single-digit should with like the in why where growth wouldn't year? be there be kind line EBITDA top line next growth more

Javier J. Rodriguez

Appreciate the of A Kevin. things. question, couple

know, next million. year, and only going up is you for point roughly X.X is every As reimbursement percentage $XX Medicare

when you have line pressures not the and have up So just that up, have have there. you you moving and some going the that compression cost we structure labor

you is the So gave we consistent that. to that support range

Kevin Mark Fischbeck

you think a does consistently ahead? as owned you for surprising? influencing about than then that since it, the forecast and appreciate the mean, way two I business guys is and HCP being complexity complicated sustainability that the this the inability when business as pressure business, several guess obviously And earnings we it DMG owned it the quarter-to-quarter, rate in of or last have make the this from I relative something as DMG this far of business over business just new the over or it's we dialysis guess difficult factors there I really run to before is to you've think the the the the years. quarterly outlook, forecast is problem And guess in Or about the I Okay. I quarter visibility? but more general business

Kent J. Thiry

forecast, unit per reimbursement number member two month last neighborhood dramatic areas, Therefore, the responsive? increase. not of the it or business might or four impact on has per according I'll And their last amount number rate increase that changes would go the $XXX two, net exactly totaling to Kevin, acuity in five front, a stab you sufficient. going during right. of OI. it the average rate or your even annual exactly me ratio or in your of The Because period. million. and the case to the prior the and ahead increases reality. if let remaining or on the by years prior that of in course, be matched be stuff, patient those are, though weighted medical decreases five four instead five all miss your off or Advantage restructure I'm same a of four adjustment any years, the know of a takes at new fair magnitude the be to the medical same non-trivial dramatically big that, Medicare one, loss to of compared revenue years the in growth growth and it's unit get take while two HCP, is a rate meant there's a benchmark increase as you loss And been any the absolute then in but that Is ratio in could in bigger forecast what it group type

Kevin Mark Fischbeck

when to I to underlying the acuity the always there care to this you believe I extent there's going be between that to a year's same unusual the the more seeing and but acuity risk issue you'll acuity But scores basis, next year is you're able some me. to issues? guess this sense to be won't in inherent guess adjust going factor delay is that acuity to dynamic reason your where in And get or are Yeah. year's makes next boost, have the acuity year side you increases last way, acuity the

Kent J. Thiry

delta me increase let was year If fact, the acuity increase be it'd of a question, Excellent then step every in year-over-year clear be through not it wouldn't This there But acuity. and way. was very try acuity the or kind any same there that's year, there reasonable prior every case. year, a in because modest increase. very, year's the benefit would in from to differential

so acuity. in higher And incremental fact, tied did costs a we significant medical incur of that to number

from Just for high and happened, our great flu percentage population that the lot in unusual longer patient benefit wouldn't with who flu a would one derivative give care have why seen patients extra for otherwise developments unusually is of quarter. have of period other the first not an that dealing you to because issues The issues an in did all that of of you significantly time. had capture that acuity incidence actually a you reason you we job of cost within serious that

the just of sliver So larger analytical that's one picture.

another if the relative them. deficit deferred, because for year. in do to with it year the it we So work be on long average, to acuity. discontinuous view, cost keep suffer incremental truly expect To happens from revenue We time don't subsequent of you again this incurring increase would first we great happened our because happy a be and patients have point any in was be reason is a long-term and a honest, one a the there the while you're

acuity net is the present of And positive. value this actual of in type seriously so change

eating revenue. cost first However, happens, you're in the it of very the and the none year

Kevin Mark Fischbeck

to up maybe last business recontracting problem commercial out you're because Okay, signed is first. got second, on risk that about contracts Is are question, a XX% about, specing mentioned some year. you're really should that three are this you've recontracting and I for makes what just really what guess that? And contract you're for next I other or you've is side, talking unusual? normally XX% aspect of Is it sense. the that the you How think large looking that's you a you're talked announced years. guess about two there that rate this saying the XX% my improve it or profitability? forward this that then And happen you or MA doing? your we real Is

Joel Ackerman

Yes.

do So first, and we past. which it's year, normal this set in the done to course. is something It that we haven't not out intentionally accomplish

exactly payer relative percentage to the increasing of think In second way simplest keeps. think doing, the of of to I what terms of whom keeping it's we the percentage that we're about we're question premium the premium it that the are is contracting with

Kevin Mark Fischbeck

Okay.

to So that's the through line your it, bottom from just perspective? follow then it

Joel Ackerman

Exactly.

Kevin Mark Fischbeck

you. Okay. All right. Thank

Kent J. Thiry

add And Kevin, is are, you would all this year only the I results highly our thing know, there as public.

different and the simply in adjust paradigm on adjustments on government to cost added go we to the part high-value could in the with are next great changes spot in our go the we a have for so And point is And we the there their industry revenue and a that very payers one, fact network. Operator, to to reimbursement and of and be credibility side. this please? context significant the to now

Operator

Sure.

from question Tejus Ujjani next of Sachs. the comes Our line Goldman from

Your line is open.

Tejus Ujjani

Thanks Hi. Tejus the actually. for taking It's actually question. Ujjani

the workforce back reduction want to this DMG segment. Just to go in

of You mentioned a infrastructure, in kind to been underperforming some million if or operating quarters previously had impact reduction trying done why and savings, group wasn't time? operating overhead $XX sustainable annual is in this just it of or the if for prior understand

Joel Ackerman

Sure.

like we this some the enough changes where it been the we well performance. is established not without is operating you overall like a been we now change are the made quickly. performance about thinking make of There had for the had when takes run you business And of within now. the one The look, operating hurting business and puts a that into this thought quite we this. handle many the that to point have while could decision eliminate can So positions decisions

Tejus Ujjani

the Okay. DaVita switching to Thanks. topics of kind Rx. And just

think the I last as How of for million back had to million in if it just Javier actually up Day $XX the incremental Can far came EBITDA call And you that's of anything in Capital on update XXXX. $XX a guidance? mentioned this the Markets and any pharmacy occurred business well, for much on have share there's year? you how so incremental in actually rest much headwind the year? XXXX

Javier J. Rodriguez

Yes.

the We economics in it are so range we on up. high-end did that as to the same stay XXXX. hold relates but of did as And range, – number are they the XXXX, in we to expect the

Tejus Ujjani

I then very like to, of back are variable seems some leverage Okay. of all of growth, the it. costs kind I you're core I saying size in year the mean, pressures wage Care Thanks color I this the what's forward helpful. any on about the I Got of earlier really business, much. really it going the there's And mean, into line given I be any going the segment Kidney just pressures. and would that think, scale operating and in one at mean, not next Kidney mean, guess top segment. given that implied Care questions point?

Javier J. Rodriguez

into to have and because the XXXX XXXX in will doubt we about better, And be. we items look it not Medicare visibility some where is numbers are the that over reimbursement we better XXXX. XXXX, No that looking other want have

at I to here big juncture. have. number in three right shortly into as the we We to course, to with of visibility hard get said, there's do number that And that will, enrollment the variables the But we're of is this going and very open beat cost MEDICs. work

to our metrics. And those on so we do will perform best

Tejus Ujjani

back I'll in Great. Thanks questions. queue. for the the much very hop

Kent J. Thiry

Thank you.

Operator

Thank you.

Justin Lake Research. question next Wolfe comes from Our from

open. is line Your

Justin Lake

Thanks.

Wanted questions So right. the about color all back here. to first go premium given. your interaction appreciate this, Wanted CMS And with on to assistance. a few to talk you've

charitable came something all pulled at mention exchange with just came no back last of The recently, was assistance. the of outside they reg they on. out out later So year exchange there premium reg that

managed give curious to interaction topic? I'm right given on that, an So kind what now? some now most significant is given CMS of if quieted care making Just on your as update, Has with exchanges profits is of down, the it this you can? us

Kent J. Thiry

a developing the take stab this. Justin, Number And, would in approaching I'll how and least prior and is listening I nuances a one, on of that to thing. issue dramatic administration far this to complexities, both is the the administration, there's good much so deeper with understanding say and a difference which a say the versus a dialysis respect lot the generally at more at That's issue patients.

better also, for as that Put perhaps key some at item in very way has missing is predict. emerge up a word staffing behind and everyone it off they're spots. the to going Second, knows, all to but leadership agenda be not a – – together, while. dropped is nothing that the It's all, difficult impossible would

exchanges lines a in entire of than whole substantial the better same were that plans time that has and in pressure are also at the most complaining somewhat. of that about because exchanges noticing lot You more abated period, now people profits the this correct they are before doing that while of throughout other business, making very also are their

plans view, of on predict process to a repeat. is, least to of the But we both So It's more And what I And and want still when of we at expect. know news the to the far point measured just before. administration. from it's agenda, can't do don't they're than the good going something.

this preparatory kidney years. explicitly has the of existed as we continue will for in and and who, for to patients dialysis remarks, very our XX our mentioned care ecosystem We aspect advocate very intentionally

Justin Lake

some DMG, a in had recently conference, as Kent, X That's nice you said to DMG at Okay. September regards Then, helpful. momentum. a

the Your given that business, this? in that the talked How obviously business should the the think it, before the than So you're that this like others acquiring you've sale you alternatives discussion be given around interest on is about limited. about and consider? other other view educate forward main quarter, Are discussing? DMG, a or any of for in ourselves should we your I the the there must Or problems strategic strategic of something from we think in discussed business alternative strategic alternatives. visibility

Kent J. Thiry

Well, your you others confidence paragraph, the to is first question of the understand and other asked at this no at to rational for perspective front we that have forecasting, must when end and comes really as to our it someone a you point. very of dim there view have

there as single every are different question, the yes. well in answer to to market in strategic as question alternatives is everything? selling than aggregate. as There's other Second, The that other options

and our Of course, at recognize also you responsibilities to your the we fiduciary associates. same time,

Justin Lake

So anymore what those would color can alternatives you give like? other on us strategic look

Kent J. Thiry

Well, give so you example an them a partners be would and equity simultaneously contract get market the an become terms could in I'll an that and of vehicle separate local idea. us equity in It between players individual enhancing one – the create some have sell one serious market. just individual

business non-total some of one Just could business liberate economics example give to both change that sale the well well the as as as the of capital. a short-term derisk as

what for as the I'm and answering your alternative then shareholders? to that would to not on alternative strategic an is, be question, adding I'm question versus do top follow-up else. of advocating example what it So an simply well, anything would which that of everything for selling

Justin Lake

That's before I then back in. just And helpful. jump lastly,

October issues. in clear million color us brought that around DMG you some was X shares some You decision? that knowing despite give having Can

Joel Ackerman

quarter purchases not give about our this. color think a but or on little We're, about Joel. over general, comment to going you a Sure, month, me how we a let Justin. given in It's individual

day-to-day can't to is does locks both there is but certain challenge have in disadvantages. The issue, when purchases protracted The price buy decide purchases in and on flexibility on else. so can't than open gives other general, it The and window planned the as depending market to at and of close the we us the So like different obviously solves flexibility. XXbX-X us all factors. time a period not a purposes. as times, use purchases, based the over window we trade respond that on window closed, removes They market want or XXb-XX well whether stock or the we basis advantages open we to XXb-XX anything

use of XXbX-Xs, think to tend there do ensure we're That So likely can opportune plans plans. both. about complexities buying unintended happen, forward more When times. lean at XXbX-X be consequences of try we to and that said, the we to complex what's we our towards

Justin Lake

put it that say correctly, ended And maybe felt place is the you wanted you that interesting before began, price or quarter, the at to buy? that I hearing but so fair I'm the time stock quiet was if period you to in So on that should say? the like information have

Joel Ackerman

any where specifics. of in the guidance terms leave to into did going I'm I the getting general without it of

Justin Lake

you. Thank Okay.

Kent J. Thiry

Justin. Thanks,

Operator

Thank you.

W. comes of Our next from Baird] Baird (sic) Robert question the line (XX:XX). Mayo Whit [Robert from

is line Your open.

Whit Mayo

for be Hi, coverage topic, good A should not Medicare that with eligible payers and afternoon. On navigators plans language B that coverage marketplace those webinar some enrolling both this mentioned in effect. Part CMS a have to during exchange Friday or or Part

and payers have sort this guided of the I time my think And bit briefly. the on conference this little you implications thoughts we point. they've about this of this just patients? Do with I the that ESRD to the a any talked is, the think, second navigators at

Kent J. Thiry

the moment a looking because we and here damn a about feeling none got this of area pretty tricky equipped fairly around be for statement Friday it's because well us we're where you've Whit, to table didn't know precise. are

on either do we'll say not or get we have LeAnne shed any great do So thinking a to We're just said. job, do this, repeating light you have you. to or already stuff Jim, back to we of can we've ability

Whit Mayo

fine. That's

send email. back I'll changes. referencing? changes some and to process, anticipating I you're Jim, some specifically referenced And collection maybe regulatory of you the the the on comment Any on color think Okay. to what you Joel's

Javier J. Rodriguez

way through billing. do Basically, changed best we new a Javier. the and reviewed had billing system, some is we to went procedures. We and and This policies

So there's nothing from how a perspective we're at doing regulatory internally.

Whit Mayo

XXXX And Is sort at signaled think guide, I I you've the the guess, that Kidney should be generally breakeven. that ancillary Okay. international guide? or construct losses Care losses, looking that the the assumption used you the to of

Javier J. Rodriguez

writing something. Could was down the you I sorry, repeat question? I'm

Whit Mayo

Yeah.

Just ancillary XXXX, the for just business. guidance I'm the the Care curious were Kidney assumptions for what

what I range? and can I sort not that's of that it exactly the whether to stated believe think you you've was confirm looking within you've consistently or assumed breakeven, just

Javier J. Rodriguez

call people a this don't have have Why you is We immediate get answer. before don't take okay? back and to we some look an over,

Whit Mayo

maybe That's fine. And here. just one one last

utilization. think and Is past per mean, only citing year I I utilization. days or the the that go the on or higher this back higher matter comment are up? you're utilization to person in Just quarter acuity thousand DMG really for that really you seeing

Kent J. Thiry

business, or you scale have we we managed have heavily-weighted So we nature diversification in market. as are are localized. of are large don't about is talking And of larger of is some we six rather dominated have. the What you're players the are also so care result, payers, And us we we one a acuity. towards it don't about other the that while our remind given would the I markets, a

Whit Mayo

Thanks. sense. makes That Okay.

Kent J. Thiry

and But become And we've utilization average, months, average answer shows for cases, an below the thing decrement. have question? that's a earnings it actually if been the less an from up then other add, I we're on you XX separate in some in would we what below navigator as that, market, LeAnne, and us,

LeAnne M. Zumwalt

which if think has Medicare, is in correctly, if enroll patient saying a I a that QHP, training navigator you're I they instructing is Well, true. can't in heard navigators the enrolled you

be So I that, color. but training, clarification. take couldn't another But I and to look think any the I that beyond give you happy a unless training may the see respond at the

Whit Mayo

from direct Thanks. away not someone if for I'll A, a stating over, plan Medicare Part them it enrolled just is send should market-linked it is but you over (XX:XX), I'll and LeAnne. to No, eligible send and

LeAnne M. Zumwalt

problem. No Sure.

Joel Ackerman

follow-up our international. question on guide particular to in included on just in the range. you it's SIs line, broad then We in And asked the so I want don't

Whit Mayo

Thanks. Okay.

Operator

you. Thank

line Ransom question of from next Our Raymond comes the from James. John

is line Your open.

John W. Ransom

having from smart the who asked disadvantaged all I'm Justin had Hi. questions.

So I'll weigh in at with the end. weak my stuff

slides that little kind easy they maybe see pharmacy, may strategically, in to a these scale. it about that. if business a going like buy better of do because asset someone XXXX could reviewing to cheaper. of Why curious would the boil I'm it's else that's at onto levels? seem just kind are On of to for in assets to continue you one hanging if you an That put be your

Javier J. Rodriguez

for the question. Thanks Yes.

it story. clinical a pharmacy, the is On

our when the at you takes dialysis patient you average, so look of and look has prescriptions And the patients about take, and XX at that a prescriptions XX so research on quantity pills.

So capital. on course, didn't a bottoms-up, one of know, the patients lot deploy we help we so big then, could really did consolidate adherence. we business we that And as you advantages and of can is that the of

clinical And an on story been a actually acceptable so return that's it's been investment.

So about we that's think how it.

John W. Ransom

negative or I I plan, positive its mean, making it know it net positive EBITDA is EBITDA it missing EBITDA? point? at this is but is

Javier J. Rodriguez

It's got is it margins, making thin money. but

John W. Ransom

the for your Okay. how versus compare all does And XXXX is, care, takes guidance XXXX? in commercial XXXX, the of question in with my and managed sort then second preliminary pricing, puts pricing,

Javier J. Rodriguez

And I I our what small far fluctuations of I'm large think going state what to normal normal that's the far on being portfolio I gave go, a today. contracts as our which as I'd stable the a to account the is as account. is lot is call in want and go with as of

John W. Ransom

mean might see Medicare XXXX? XXXX XXXX? cryptic But you out? seeing I in we already are What's other comments in What's better play in XXXX. than you Javier made about than that better some

Javier J. Rodriguez

Yes, said cringed. it, I I gone When I probably shouldn't have there.

you unfortunately, word paying said. I attention every So were at

John W. Ransom

to that. rare That so a is That's moment, take credit moment. for going I'm actually a rare

Javier J. Rodriguez

but regret I'm it. and fair that well, to shouldn't I Yeah, it's go say to have going on not said further that,

John W. Ransom

would Medicare your less to you've a is treating cost, of got cost $XXX guess be two would is out and what clinic the with with XX my it simple know like right I about figure and than on I'm a patients, which cover base. seem patients Medicare I the mind if you total with doesn't Well, trying add marginal Medicare patient

sort the the seen in business So business spend? have leverage what And the of novo questioning than case, case. different maybe if rethinking (XX:XX)? that's Because if are gotten isn't economics the of you not I'm operating de that the we've maybe the

Javier J. Rodriguez

of we'll But utilization our back headwind. look the deployment. we Yes. this is, evaluating No, our capital And centers where is the a higher are for we to number wouldn't way? And capital to we operate one, compressing margin. at, deploy would would course, if down, would we XXXX and I at course, so so, we in do And number is returns obviously we going get what And normal what have of XXX(k) going is, have everyone a else. go if so you're Medicare do increases. and two, are, different

a will to back And on that. so be nice that normality tailwind,

John W. Ransom

Thank Okay. you.

Kent J. Thiry

their probably the question go last to comments call, we mistake And a CMS' and let be what If comments. would by a me this Friday backwards precisely second on were that about heard Medicare them been hand, comment And over it age the say. them. XX, on to if that they was only were other have a it pertained for may to making a eligibles mistake not

to covers program really staring think in should the needs them And follow-up them of any is that And forward just population also the is lean we'll this. to that not unusual that only all for look Medicare devil general, detail in if at Americans, It Medicare everything. period. So many philosophically to with we it. towards there clarity. And for the be on be

new. is implicit or sort to all bias so have some not And surprising of at

it to be and we'll into another For would as entirely, guidance thing procedural it explicitly and be look it, thanks up. bringing decided so for

Operator

Thank you.

from Patrick comes the question Citigroup. next of line Wood from Our

line is Your open.

Patrick Wood

the I whether in? expectation with were questions. would guys you total about CMS we million think you given it's confidence same the the And a a that in these going if see also, up where term little at write-down Thank fair maintaining long asset. DMG think should level. the that fact the you for How if ESCO of writing thinking on the I'm small put the just very And if the – that to do is, taking can these came I've this Or of and set expecting that's about to forward? one The think is difficulty came the long term, that early in come time better, value simplistically, bit overall got line that of the you're pool total that a appreciate in maybe industry the not -for asset. data in your days? EBIT over roughly is the I'm inflection have And two just second but just the my out savings. that as be first much on curious I please, proportion down outlook may. if a still question $XXX

to that be helpful? give some would around me Thanks, Just comfort guys.

Javier J. Rodriguez

don't are how precise First, the have And condition because transition, in let to it that that it for that because you makes that patients the that of supporters time. the healthcare know when quite reality curve. know just ESCO big access we that take when I that me the can of you quarterback someone done and is we question. is through some the care, numbers, were we a integrated all for have cost our sense comorbid bend the them XX hours, have you we've

So that progress we with the being said, happy we were made.

time. population, small number We so also that a that to have highlight fluctuate it's will over

down, small be to going it's because the and of so size. up And bumpy a

Kent J. Thiry

truly uncertain. And to the breathtaking would of reduce does drive the and is that me does makes dramatically this willing long-term returns let is us that detriment in And of to highly transformational – system architectural what are open-ended And investment fundamental rebounds everyone's like is everybody black win. is where flaws rebasing. in one amount make people and what just FMC the others that ESCO box improvements that the of add the to

is the you can from important question ESCOs this related Joel, question. the your And so to other the On to answer expect to of downstream. for what you,

Joel Ackerman

Sure.

many certainly So calculation. them, one are more goodwill the the some talked many in there go others, as that you nature. about of are there short in performance that impairment, And we while that about term is think factors into XXXX

about certainly they that XXXX. are other of So things are not lot thoughts there a disconnected, goodwill the calculation than into our while go

Patrick Wood

Thanks guys. color, it. for much the appreciate so Sure,

Kent J. Thiry

Patrick. you, Thank

Operator

you. Thank

question from Our from Taylor comes next JPMorgan. Gary

open. is line Your

Gary P. Taylor

Hi, good evening. Had a questions. couple

that $XXX one, comparable make to the think that fourth would have operating implied have I be is correct? just income $XXX million first want quarter this to The I Kidney the I sure midpoint quarter, million. The Do I right. this

Javier J. Rodriguez

be in the would midpoint Code. The that's but closer No. to $XXX ZIP million,

Gary P. Taylor

Okay.

so have would – including mainly incremental any hurricanes, the $XXX little so XXXX, I for you're driven would by what? implying And stepping be down been million and sequentially bit think a really

Javier J. Rodriguez

There main quarter. things fourth are two in the

teammates benefit deductibles. we We And have their explains a during period. escalation through run the have That the as of of that costs higher bulk the historically an G&A difference.

Gary P. Taylor

AKF. AKF your Kent. a that Okay. to for under What legal number a rescinded question from of have I we've obligation funds no that decided business they're do some heard potentially any feel you, as there the CPA plans risk they accept is plans' in if DaVita the of And of up pick they and are those they of of that my prepaid AKF and and have and seeing to and to Instead, patients ecosystem, an card, pay policies to a with transfers to to in coverage part And sustainable the those guess this debit accept wire the it checks necessary in given these patients is question those they're these center these patients and going is payments? acceptable helping dialysis circumventing premiums. being a origin cards are essentially the is not funding? refused now fact and administrative paying that complicit lot of for of dialysis care terms is, these to personnel hide I why conditions view

Kent J. Thiry

so we'll what with the familiar have Well, to first, not follow up. intimately I'm AKF does,

the XX it up. public majority It's that year to same know get or how funding in opine I criteria down. I'm assistance consistent care, a premium American there overwhelming number the to charitable are comes they of it, payers, a also approved it's the that government ago. overwhelming and how But the way I right, percentage, set Second, of pantheon anything did health two or majority how cannot with understates years. not be more the process but the more three claims of huge for AKF in going probably government on been than the entire and explicit provider operationally couldn't exactly it's continuing

subset with our the statements tiny made frame, with, whatever relevant. I'm just the so to But And highly familiar free other I've up highly, but not broader follow discussing, be of on reality feel you may are team.

Gary P. Taylor

Okay. back. Thanks. step I'll

Kent J. Thiry

Thank you.

Operator

Thank you.

Research. comes question Justin from Lake from Wolfe last Our

Your line's open.

Justin Lake

Thanks. back in Appreciate getting the here. queue

Just of run wanted numbers to question a here. through bunch

something that you And million, should apologize we think, $XX for hurricane And go we if the consider? it if impact impact I can hurricanes, exact in back from already. you OI assumed the of $XX any us into million give XQ? neighborhood First, I in XQ gave

Javier J. Rodriguez

hear you on part, but Was million there basis I couldn't on that end? last said else $XX that the there NAG. XX we back something was highlight plus the did

Justin Lake

is impact? yes, XQ a there So

Javier J. Rodriguez

am not I that. of sure

around. look me Let

here. I its quarter, flushed the think the of through but bulk I'll verify

Justin Lake

come it any to the think $XX Okay. back be of hurricane we is And whatever should the sustainable fourth XXXX is year, shouldn't there next any is there consider? that wherever impact back quarter shouldn't that coming million plus kind reason

Javier J. Rodriguez

Yeah.

numbers a they $X range are the not gave of quarter in We $X million assessing of fourth to now. should still is million, number a couple meaningful just centers, the be the but me for the Justin. the number that right And

So...

Justin Lake

benefits. Okay. That's question re-contracting helpful. Then getting the back around to

next from You this terms of scores pretty numbers any you the put revenue us think the through. what increases will year? be from go in Is can the number there as specific re-contracting savings give risk they that benefit restructuring, from you the around

Kent J. Thiry

from that. a on to specific going We're giving number away stay

year. out of over of still balance playing Some the that is the

give a not rather number. we'd So

Justin Lake

back guide Okay. you can is first? us give loss pretty this the entire know question in guys to employer you've of don't So, been year international? what international then go to but international expected you specific wanted to the And asked. I typically terms the Whit international business, on just I that

Kent J. Thiry

Sure.

quarter, we of XXs excluding and it, last said something low So OI, with the stuff. onetime in the sticking we're

Justin Lake

in And to about Is year? to next what's guidance get I breakeven talking think that breakeven should we year? cause that been you've getting expect to implied this

Kent J. Thiry

Sure.

believe of in we get point the the over in we XXXX, acquisition what's we'll some guidance there to year at year is and not on When but during we year year. will the depends we whether there get full during breakeven. XXXX, the in for So will pace really our implied be get the remainder the breakeven

Justin Lake

cost mentioned And That's advocacy could helpful. then, you impact year. California, Javier, Okay. next

of just to was into guidance. So some understand from into you perspective of there that make built built sure want guidance? that wasn't that I you say thought I a that did said

is answer at what's there? you And strip that business? you or normal so kind consider as a And kind something of that that of course is charge onetime something then the of would and that look out

Javier J. Rodriguez

as It that we so an called is think is I view accounting don't year could what you we as not So charge, but it correct. so in into would it you built number guidance, would the – out. carve out is we would a non-recurring, that? that tell from it how's wouldn't one-time perspective,

Justin Lake

about talked kick like you give us meaningful impactful. being thing And it? with impact up somewhat XXXX this on really as ballpark does of a you the would Can what

Javier J. Rodriguez

can all down. The up and numbers are over go the place, campaigns these and really

hard you give Justin. So number, to really it's a

Justin Lake

it. Appreciated numbers. on All right. the Thanks for color all the

Kent J. Thiry

to free Thanks, come All Feel again. back Justin. right.

Operator

questions moment. show no I at the

Kent J. Thiry

All right. Then thank your much you very continued for all interest.

We will you. best. Thank do our

Operator

for And that conference. your you Thank participation. concludes today's

disconnect. You may now