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DaVita (DVA)

Participants
Jim Gustafson DaVita, Inc.
Kent J. Thiry DaVita, Inc.
Javier J. Rodriguez DaVita, Inc.
Joel Ackerman DaVita, Inc.
Kevin Mark Fischbeck Bank of America Merrill Lynch
Justin Lake Wolfe Research LLC
Gary P. Taylor JPMorgan Securities LLC
Lisa Clive Sanford C. Bernstein Ltd.
Call transcript
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Operator

Good evening. My name is Marie, and I will be your conference facilitator for today. At this time, I would like to welcome everyone to DaVita's First Quarter 2018 Earnings Call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a 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 first our CEO; our everyone, call. you, I'm me We are Gustafson, the Marie, 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 these our recent filings, and risks most further including quarter SEC to filings. Report and details subsequent earnings XX-K earlier on of Form Annual please today uncertainties, refer and our first

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

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

Kent J. Thiry

this all call. Thank on you, to and Jim, welcome

overall terms after with some results XXXX. clinical XX% care after foremost, and year about XX% mix of five-star in first in and in kidney our things a improving caregiving increased as year. company. to of are, in centers community always, care will community CMS wonderful We says industry the from the fact, our It in of the I four-and-five-star recently year XXXX Therefore, results. for latest released April, start,

very hasten in rankings, mix forced add still remind and same when we for for for to for current respect these reduced health was to lead addition, care if position leadership we they're a improvements there In with increased curve and our and our of happy that And are long period with days that in hospitalizations. but the the XX% these XX% but as from the and yore people system improved taxpayer families, they of great well. also their to and to the not only patients good quality DaVita's

in three points a summary Now many quarter, pure JR this view. as the observed was but no the from strong already you U.S. of of onto one it for Kidney business doubt call more of will a talk Care. point detail, about have

DMG the towards progress of on thought Second, two, sale back significantly, a we repurchases. deployed amounts I'll cash process for to now over Kidney U.S. and but continues with Javier track. equally and Care. share or come significant to little later third And another finally your

Javier J. Rodriguez

and you, Thank Kent, afternoon. good

The the performance solid Care with first Kidney was quarter a business. operating year in good start to our

positive impact enrollment Aside and cost non-acquired of workforce in performance increase and the in G&A, Medicare and offset in from additional open straightforward had the revenue was shortly, of was calcimimetics, Normalized we $XX our revenues bad payroll in and good ACA seasonal debt stable, and were operational taxes. million, by plans commercial pretty which calcimimetics X.X%. quarter operationally. per it up slightly treatment Net will discuss growth I a was changes excluding the costs

processes spent D and of this reimbursement. of class a contracting Part teammates to XXXX, in class change. introduced XXXX operational in training and significant transition clinic, and We half this drug Now included drug some first cost-plus transition the is basis. developing Part detail changes systems was on The Medicare reimbursement for on January B calcimimetics, from This our our billing in of of second for starting our teams. a

the with encouraged am I early, date. transition is to it While

injectable As open there bundle. between are the transition introduced, several oral generics physicians prescribing you and the of patterns and to the the be calcimimetics in know, into timing particular product, matters, when still future of

experienced we reimbursement California we to need risks and flaws required a advisers. we into despite to to needed the initiatives negative Now, high us If impact do and on of and shareholders, and have have by due initiatives, is in resources facing. and broader regulatory attempt our union-backed teammates, costs let the advocate clinic. room believe or could dialysis the legal are already to the to actually patients, in will emergency were to already cap our and the be intervention of in and To initiatives. the committed are for a postpone the the on groups together state. these industry initiatives care ignoring utilization operate other have this educate population These represent They cancel voice hospitals and new what to access working me patient hired healthcare state. impact clinics transition an to led our vulnerable We're to capacity counter utilization in voters necessary and prevent initiatives on a these see pass,

that know us to fails, unfortunately, handicap not difficult if is the likely the union's looking for the is it you're end outcome, predict. will to campaign. this I juncture, I it ballot corporate note, but Finally, at to however, initiative

about policies in Act. that be to prospect to industry the the benefit patient dialysis patients, the Now excited PATIENTS we transforming continue of through on care moving

both of unusual support an have of amount co-sponsors. bipartisan with chambers in XXX Congress We

lift will shot. it transformative believe get we approved a a While real be to this have year, this significant legislation we

certain dialysis on progress could legislative authorize lead that open including to During for in provisions the quarter, to providers, community, issues new facilities states. us accreditation faster private made which the care other important kidney we

we including X, set XXXX. HHD also physicians We on visit, PD got of steps expect Medicare now two Special allowed to all for January telehealth facilitate in-person substitute been forward have also providers. and monthly patients Needs modality. patients physician lastly, and and good home Plans, which the reauthorization a Advantage to growth to visits the in expire And we These are C-SNPs, have three their which with

results. financial Now, on on to Joel for our details

Joel Ackerman

the Operating items continuing from first was are operations quarter for million. The income Javier. a $XXX that rate. you, Thank run outside few our contained quarter

First, is in the recognized recognition in million debt line quarter, relating we with what change to second in In another This Medicare million. standards. bad mentioned revenue quarter. $X the recoveries $XX recognize to to we we expect $X million last

from DaVita million prior Health Second, recoveries quarter. this I shared to mentioned and up bad approximately related came we to Adjusting recognized revenue was business. debt of $XX was the Medicare $XX for dialysis treatment do from calcimimetics Approximately QX. next is $X savings Solutions this not from per change We factors, revenue about before. $XX RPT our recur from QX. expect period these versus the $X up Net

our care addition Our result per the largely the from to of in the this calcimimetics in seasonally treatment XXX(k) was first quarter. dialysis Other the of as XXXX were costs we segment was wages, cost salaries patient treatment impact day XXXX the income full The year breakeven, dialysis for and the segment. Dialysis operating declines smaller on in in average. with up small fewer reimbursement treatment our approximately taxes, roughly and margin and quarter indirect with positive a higher initiatives income G&A by was cost were match cost calcimimetics line this for increases items overall the and the year, from in structure. operating of $XX Most per dialysis implemented one offset QX. headwind strategic and the both was lab of segment corporate change payroll and

roughly be to year's last expect treatment levels. line continue We dialysis G&A to in per segment with

Looking billion. on to at DMG in A Kidney few words billion to year, the sale. Care the operating $X.X the be of continuing expect range $X.X to full we're our income

be close XXXX. track We transaction the on to in continue to

to As In foreign working in and received the a million, FTC, disclosed diligently respond. in million in the excluding operating was and our are loss from Pacific the we venture. profit cash March, $X to Asia On joint exchange second from quarter, our $X request first Optum a international international. balance we

for achieve to exchange XXXX, by profitability any incorporated losses. foreign sustainable guidance QX or operations XXXX. This We to enterprise excluding continuing continue is in our expect gains for

from effective the quarter. income DaVita tax was taxes, operations XX% rate on in Regarding attributable to our continuing

expect rate XX.X% We XXXX operations to XX.X%. be continuing effective to and between in from continue our tax

quarter. flow. Operating quarter. quarter-over-quarter cash U.S. Now, was lower run and increase down was the note in our and $XXX lab will DSOs I were This dialysis flow in than in rate, expected day the cash full-year segment. XXXX for AR calcimimetics million accrued that seasonal from to compensation continuing operations an one decreases in our from primarily due

to to $X.X cash We from flow continue the $X.X to continuing operating be billion. billion year operations expect for

Now, CapEx. on to

capital CapEx. the which development X for add Included our in the full to that for of detail some release we wanted amount clinics back, as press ground-up, buildings then disclosure I with our JV lease we development are from partners. to develop our about that is as CapEx and spend the owned well sell CapEx Table in we First,

help details into a or I by cash generation from the called To to factors outlay to projects, of the we building real We of would contributions these cash of consideration new the X buyers to these of in capital and items, ensure portion these business. line either flow, view view have you a will take line statement. self-developed to the CapEx bridge the temporary both the evaluating cash an flow For of more covered accounting is our estate our you when eventually hope sale to Table added and partners. our interest of point JV non-controlling economic

line be CapEx be spend CapEx capital expect XXXX. non-recurring This for to $XXX some total continuing to in to $XXX still continue million. XXXX. approximately XXXX XXXX in more We expect We includes million for of operations spend with around

patient cost and we to stronger to stakeholders. utilization, of better capacity forward, lead all the are opportunities and these construction, center that payers, If for capital grow evaluating think we and works dialysis. increase lower intensity could physicians, of efforts a ecosystem lower with the our groups, are home successful, could that Looking working business regulators

have repurchased shares million short taken an as enhanced approximately expect early repurchase in this year-to-date, Term million of We the earnings May our million, Finally, higher agreement. on we sale. share nearly the following view Through of Loan and $XXX current on of incremental X% leverage an buybacks, DMG This last X.X place extension in the credit an these our call. deployment we for $XXX close have X, includes A term To since we our put shares the facilitate of repurchases. representing stock XXXX, outstanding. as have of liquidity

pending We financing to the new DMG expect to the arrangements subsequent close into enter transaction. of

to for over it turn I'll Now, Kent closing some remarks.

Kent J. Thiry

Joel. you, Thank

to generate regard. every move cash six to sale we continue Number to operator, two, please continue me important, operations to term international and large transition the continue to we Number quick once Q&A, like our repurchases. and to strong results. both Number seeing which good please And Number factors kidney allow dialysis towards significant we we And and most some on long one be U.S. strong to we have be improvement we're business nice restatements. discretion in deploy the provide well-positioned four, DMG things like swing are to growing do the integrated we Before with five, towards continues flows, with again that, Act integrated positive track. fence, corporate the three, Number shot the things number at in care population. share active PATIENTS care. Q&A? very negative disease the our on sides some American campaign perhaps union in six, finally, of can

Operator

Thank you.

begin now will the We question-and-answer session.

have As queue. of moment, questions the four on we

of of Let's Fischbeck America. start Bank Kevin with

now is line open. Your

Kevin Mark Fischbeck

Great. Thank you.

first, basis the the to bad think way of on quarter see out that Medicare questions guess think what clean a to as it? to is of million So, it's of I a from just number the Is number, $XX couple normalized the about would be. kind debt way the – clarification that take kind quarter

Kent J. Thiry

I think the point to item. as that's fair. And DHS a from non-recurring the million $XX I'd also

really you'd normalize, take wanted you both if those. So out to of

Kevin Mark Fischbeck

a more the back in guidance, just kind of It's back-out But that's were clean base guidance. number. of not to those both so a things contemplated versus Okay. out the already

Kent J. Thiry

fair. That's

Kevin Mark Fischbeck

less is is for guess, it's had plays a the And we number time of of (XX:XX) kind a that calcimimetics trying as that big decline should is the throughout the of relatively the answer to of But year figure to the earnings should and number kind going assuming just to be over Okay. I out better driver My stable drug, be less revenue year. managing kind be so no company of I guess QX? matter to to and the of that at assumption I'm how model how a the rest boost it. to moving that also not out. it utilization think generics about the gets cost of to

Joel Ackerman

Kevin, beginning, about is there is be way neutral economic you it, would started the in slight is think the which a come where out to right if be to I temporary it'll up and out. positive, – aggregate, generics think

think best So, to way about that's probably the it.

Kevin Mark Fischbeck

of Okay. But little we of revenue a year bit effectively kind comes cost a as think on? should the it goes down

Kent J. Thiry

of think, way is operational hard what it we've so right we're change to clinically, because yet, predict now, in to line we had that item. don't I changes But visibility best what of some think not it have goes of asking. any where the seeing you're and

Kevin Mark Fischbeck

don't like commentary first I certainly. if you against the for seemed the in It's guys spending question. it were home last hemo the maybe then, and – around the CapEx know time And ever Okay.

I think important always benefit. doing changed a your about years? haven't you planning But about – view over the it years from on that as maybe there over initiative more the seen really was the next almost in or home an viewed lot Has hemo it and you we few few the that last a of like for opportunity past. need sounded how it part you were it the you in versus about thought prospectively something the

Kent J. Thiry

this Kevin, know. don't KT. I is

not small, profit. have to been a profit the or last in leader or decade big the of HHD and growing for for PD relative community, We most for

novo been significant decade. cetera. part had it's and on last decisions, our so, et de It's an And a decisions impact CapEx of

continuing very decisions. are one we strategic so, of important as And to it regional consider the in variables making

far maintain change, for maybe it's years going been with where just but to decade, it's level intensity consistent today forward the we're we doing slight ago. going and a to same And compared as pretty as what so, actually a ten are darn to we've

Kevin Mark Fischbeck

around announcement Any push reaction home into the to hemo to CVS dialysis? on they're trying

Javier J. Rodriguez

reality Yeah. they're this the lot the asked I've to don't and Kevin, is out do by is not there's Javier. of that since there. question a what details exactly we gotten going many people, know

we past, competition the and we've As working do will to forward. intense know, compete you so are had in going and we effectively hard

Kevin Mark Fischbeck

All you. right. Thank

Kent J. Thiry

Thanks, Kevin.

Operator

Thank you. you. Thank

comes question Justin Research. Lake next Our from of Wolfe

is line Your open. now

Justin Lake

Thanks.

on and back make sure million. go the crystal to want I'm clear $XX just So

EBIT with income, jump-off XXXX? million year number operating $XX saying of I this as should the you you're So whatever number end out take rate up of that in terms or into right to go

Joel Ackerman

again? It's sorry, that annual Justin. Joel. the You're compare about run I'm which you I against asking Can rate XXXX? would apologize. say you

Justin Lake

what operating rate billion Yeah, to income, Joel. I to the $XX year. that going million not Care jump-off right, you asking right think is $XX because about here I'm $X.X recur in back in of Kidney out to if income, for XXXX, is next Basically, growth million do that need

Joel Ackerman

Yeah.

thinking these are about not... I think you're think I $XX $XX correctly It's it non-recurring, million plus million. But $XX million. it's that

Justin Lake

to million quarter. to next another there's million going Well, $X $X be

Joel Ackerman

I'm Yeah. sorry.

Yeah. fair. that's So

Justin Lake

Okay.

sure Just I'm wanted there. double to clear make

mix, us even an So terms the commercial give quarter? either or tell per on of from revenue the can on And mix update impact then any there changes in treatment, us you sequentially maybe year-over-year commercial change? in

Joel Ackerman

per are we sort as we feels don't quarters it we on you so right important environment, sense and of is mix. past normal our in know, tried in guide What can our the a treatment meant I state to that guidance. in we're in because Justin, quarterly a that give of you that's portfolio. a reflected period, our stable and and in little what now in And revenue

Justin Lake

Okay.

So commercial mix? stable

Joel Ackerman

embedded that? How's I'm that – you in give nothing would It's I that our guidance. additional There's detail.

Justin Lake

Okay.

So – okay.

another I Kent. So can it at way, come then maybe

fairly commercial I positively think pricing into coming you talked and about contracting XXXX.

$X about So to you just are how core there. up get know think like Medicare I a understand revenue want to, squares in treatment. I per $X to zip, almost this try I but it increase looks the rates

So if increase an stable? driving bit there commercial a why mix price is is of little more the

Kent J. Thiry

but take the puts quarter that five think baked stab unusual positive made quarter was out point I'm of or of the prior at stability six and last quarter I contracts have. an that and course, and there's primary Justin, although we we a takes, the lot of into going last it, to level long-term had of a we largest

it more prior think And so what was stability much a about we was That the distinction rates. at history. from are their reasonable year's of

Justin Lake

like those rates, about X% more X%. when inflationary-type always And I talk you rates? that reasonable to Is as kind seeing thought about what Okay. there, we're of have

Kent J. Thiry

which with of with changes, to payers. we're we I start contracts, and involved especially a again, at the about all was positive a answers we percentage the giving given on sorts that And we nature negotiations want sorts think lot reasonable was rates Yeah. always made, fair. point of think don't the of one longer-term all contracts, shareholders, are the big of for and specific

So were even hadn't the or maybe three. or able prior two words to those for year say been we

And But so talking for negotiations. never was to average commercial know have good gone of it increases, our year-by-year that. can the in weighted way or get about quarter-by-quarter really all you that because we then

Justin Lake

queue. Okay. I'll Thanks, in jump guys. the back

Kent J. Thiry

Justin. Thanks,

Operator

Thank you.

from Gary next Our Taylor comes JPMorgan. of question

Your line open. now is

Gary P. Taylor

go what could I in assume in million about remind don't I Hey. savings the that? the Maybe know participation technically I quarter. and that's the to driving little would want you Good $XX fourth just added quarter. that guess afternoon. bit, recur shared said, you us you the just it fourth Because to have quarter, in a

recur necessarily may not ever. didn't it say You

have why you just of So where us the year? don't program this the of quarter think scale surprise? earnings from And a participating you're kind might you remind equivalent next was that? But and

Joel Ackerman

repeat? Gary. you Could sorry, I'm

Gary P. Taylor

Yeah.

talking million $XX million about fourth that assume probably about. earnings quarter, the had On we the you and shouldn't savings, contribution, the In shared you suggested you're recur. $XX

you participation don't So why continue scale looks your in think you came better. going us of it these like and earnings kind of this the just would Could of forward? remind types

Joel Ackerman

Yeah. Those with were clients. our of non-recurring one settlements

we the sort reflect ongoing they phrase so flow. why profit used And of don't And that's any non-recurring.

So result. first success, project. a negotiated operating after phase some that a a regular of reflects business result more good it's was big the It not but

Gary P. Taylor

per in – thought to that overall Got you what it. treatment meant quick excluding about XXXX? were year. presume – Were would I speaking calcimimetics more be the or quarter segment is he you said impact the excluding last Joel this revenue talking Two ones. I line versus with dialysis XXXX

Joel Ackerman

So, said over Gary, the XXXX up That's backing would be it $X, is QX QX calcimimetics I Medicare recovery. bad XXXX. about as well which out debt as

Gary P. Taylor

Okay.

a full XXXX? understand Maybe correctly. about make of didn't You comment year just the didn't I that

Joel Ackerman

No, I didn't.

Gary P. Taylor

question. Last Okay.

you of per why thoughts know treatment guys your morning Any about calcimimetics. said this more do $XX. of number Fresenius market So is revenue than $XX called plenty theirs? on sizable intelligence. from I impact you

Javier J. Rodriguez

of obviously We for No. but were reason their a have the told we difference. good don't number,

Gary P. Taylor

Okay. Thank you.

Javier J. Rodriguez

Thank you.

Kent J. Thiry

Thanks, Gary.

Operator

from Our Bernstein. Clive next question comes Lisa at

Your line is open. now

Lisa Clive

Hi. A questions. few

on detail apparently not on stand may to Ohio. industry the on views question that to Fresenius budgeted thank it you Arizona the this. the a joining mentioned the like just at ballot dialysis be on that it on SEIU I great wasn't gets $XX hear Javier the And your where about believe that. and whether initiative moving California. Arizona situation, push heard things the sounds California on be fight million for in in We least First, from today earlier has just It just forward. would also

lastly, the helpful off? market sights parties, you'll the second, of other assume approach understand PATIENTS just Or will it And was would seemed FMC interested just to, to the that Care I you be here. an wondering particular and to just that get organic but kicks from acute quarter. care. was means of give sort Act U.S. just I XXXX be strong Dialysis your help financial mentioned So for could the enough any lot part Do you as update in growth in there's attention. a that specific fairly have Do I season in before have legislation more of a really likely campaigning anything contract in your on this Dialysis? election is vehicle And event? this? time think getting if and piece you a you on allude whether of us picked up think, losing acute a there then you've you

Javier J. Rodriguez

Lisa. Okay,

them order. take Let's in

what's The on going first and with initiatives. one on ballot the Arizona Ohio and

real we has Ohio. it and no confirmation in dropped rumors, hear there's whether out Arizona While

So to it investment, optimistic voice our we And and to it relates to represented. as of will make try and as patients' the continue be many takes that going shareholders' we're course, teammates' the do get people we sure is states. economically, both participate of to to what in voice, our and size

too early to So tell.

fluctuations As out. depending these on have can campaigns the they size you major know, in play of the how investment

don't the I so Did And on there? I ballot get the points know. all to

Lisa Clive

Actually, costs guidance. one is Correct? the in just follow-up, no these there included still for fighting major Yeah. initiatives real

Javier J. Rodriguez

correct. That's

Lisa Clive

Okay.

Javier J. Rodriguez

Okay.

the On talk last let Kent one, and think I'll point. policy the about I

just on acute. the take me Let

a us. we very but keep and continues hard sometimes give make the business to some for this discipline good high have into and a business win pricing flu stay good hard work that our We sure but is our lose we accounts, actually and business for it obviously us. had We center from season worked hospital, the in And takes profitable. acute to to contributor be we

Kent J. Thiry

hard what to passes it's certain things, available be Act, the to just before sometimes PATIENTS all they even certainly really to legislation might XXXX, vehicle. have on that avoid January to reasons seem be to as do. they to they doing what know have do some And a be guess going because X, you for able although There's

be competing to the in first we'll that's XXXX And for other of say difficult vehicles of pretty that probability, very total but half just with So or whether the second certainty whatever certainly high half I is exist. without handicap. people and XXXX

Lisa Clive

thanks. Okay,

Kent J. Thiry

you. Thank

Operator

Thank you.

Lake comes Our of next Justin from Wolfe question Research.

line Your is now open.

Justin Lake

the of Thanks. revenue in numbers treatment. One question per terms more

million, flow through through that ancillary? Just want That $XX shared to don't dollars treatment, right. the revenue per confirm flows savings that

Joel Ackerman

Correct.

Justin Lake

patient so I and we reengage a getting to SEIU SEIU then Javier, they're multiple here. their regarding assistance. ones. plans feedback said to on maybe other about their here talk the back letter a if know you avenues, on just the any of coming on Curious couple there's some The willingness and, CMS from could to joined And CMS to send thoughts Okay.

Javier J. Rodriguez

Justin. Thanks, Yeah.

relates the interest. letter the and Secretary, the have for to is of We, things lot their responded, and letter just that would a that the to the of to it debunked. and involved of had allegations to debunked try of to say has factual course, the I to the just As AKF because a special that it that get be story normal been some Secretary lot for community, of has people new responded because misleading by need respin-up things

general, that back but the the website in is them, Kidney know we very, clear. Fund we letter that have has from So on good not their counter-response and American heard very very

engaged. we're whether they're the heard have and so at we happy not response, And

cost to numbers consider that's thing for the is other important market. now the just attributable market that than is medical group to themselves. The ESRD individual speak The lower

distribution And that that so is of now plan. the risk favor means what in the is

for And so there's no the speak that there-there. numbers themselves

I'm the same conclusion. will they facts, so when look the at hoping that they And reach

Justin Lake

dialysis guess, it. looked to, any disclose like California, And some or in AKF, I assistance. I on community legislative to just Got then introduced side, charitable the force the was patients guess, that are the legislation getting there

correctly, whether that assume would not. your to that or the on what did, think I'd understanding the potential what you potential be it I'm that it passes should sure you if thoughts make hear we But to we want and consider? think should impact impact? just I love So

Javier J. Rodriguez

a Justin, payer thing talking the put think, about avoid lever XXXX, again the agenda payer a which union industry. the CPA a kind trying to the and and is on and and wanting we've dialysis of union some for of the where disclosed with coverage is SB trying sick, that to is Bill, to the restriction you're Senate I different sort typical

with And more dialysis, educate the is the them. work than to we're So this to what obviously, is trying AKF. bill legislation not do extensive just

sure other And constituents that so be with will educated. we are make working to legislators

Justin Lake

these question rate next reasonable $XX could about Okay. that And think run it's on year? following participation the or contribution for maybe we rate, savings, the think? as zero on Or we run assume just being shared run but plans or not we rate Gary's this $XX in up is your a should the And that there around a – that they're million. million should

Joel Ackerman

Yeah.

I think going is a zero safer assumption forward.

Justin Lake

And are given saying participating any you don't it be to see that that yourself don't savings in Or share? you're be you participating will zero? these, forward? would Why you there think going

Joel Ackerman

startup It's disproportionate base. operation, a with very to small Justin, relative expenses its business

And so going enterprise, there's tiny. be downs In and to going to broader of and context puts takes. really and the be ups the they're

are worthy point your makes neutral, think, to numbers it I wait of generate just, to it some at it attention. so call that sense And a and we'll then if starts and see

Justin Lake

it. Got Got it.

of, Joel, appreciated was, gave understanding CapEx true that. terms economic numbers what some and in your really helpful you In us I

evaluating mentioned opportunities CapEx. You to you're lower

to an capacity. another You another set increase and by I you centers? relative chairs cost going there, at talked knock a put existing in entire building Decreasing... to Meaning almost assume construction adding center about mean wall you're of down center? capacity

Joel Ackerman

about comment increasing Justin. utilization, about capacity was sorry, not I'm increasing My capacity.

actually would require So not marginal it any CapEx.

Justin Lake

Okay.

So a CapEx get how that could saw on the things, do of to make? think yourself in if dent I about what $XXX all run guess million that you of to if next was I just these relative is to you here there, being talked successful much trying you hit for as year, really you rate

Joel Ackerman

at too the for to successful be what early this I speculate question. appreciate is coming if I us and So It know exactly where from. on initiative will magnitude. you're just

Justin Lake

off I person Okay. to last question I because the ask apologize. think I'm a rambling here. I'm

the won't get jump back I to So queue. in

you. I for So more one got

as your looking In at good terms investment. stock to you're that an of – see attractive it's

of DMG expected ahead buying close. the You're it

before close, we see you limbo, and So, you cash timeline. full is one, this But stepping going the have sounds close in assume, see do might doing? the forward it when could something access potentially feel and like or not that despite ballot you you clarity have does the once everyone, it's regulatory yourself close on stock even is on while importantly, this that that initiative. material visibility you think more going Do close it to makes that as to confident I the to pretty doing yourself think that's something have this deal

Joel Ackerman

Yeah.

Justin, How about talked we're hard methodology predict. to out on past. we've share the not to in exactly play going is We're and committed buybacks to timing very and the process for the those buybacks. speculate as will

Justin Lake

Thanks, I'll it Okay. leave guys. there then.

Joel Ackerman

you. Thank

Operator

show Thank you. questions no further on queue. We

Kent J. Thiry

Okay. you Thank questions. time, our hard very in you. quarter. for attention work much for next Thank and your and we'll you now between And all

Operator

you. That you conference. for participation. Thank Thank your concludes today's

now may disconnect. You