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DaVita (DVA)

Participants
Jim Gustafson Vice President of Investor Relations
Javier Rodriguez Chief Executive Officer
Joel Ackerman Chief Financial Officer
Justin Lake Wolfe Research
Kevin Fischbeck Bank of America
Pito Chickering Deutsche Bank
Sarah James Barclays
Lisa Clive Bernstein
Gary Taylor Cowen
Call transcript
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Operator

Good evening. My name is Michelle and I will be your conference facilitator today. At this time, I would like to welcome everyone to the DaVita Third Quarter 2021 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. Mr. you, Thank Instructions] [Operator Gustafson, you conference. begin your may

Jim Gustafson

Relations Thank conference call, may securities interest call. welcome, our the everyone CEO of in Javier within Ackerman, make today third note quarter to our of that Investor President laws. forward-looking We Vice CFO. company. and Jim statements you, joining Rodriguez, we federal I'm me are and our Gustafson, and our appreciate Please Joel your meaning continued this during

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

Report For further subsequent quarterly Form on our and to press with XX-K Form details refer report release subsequent any SEC. XX-Q make these Annual concerning our we SEC uncertainties, our filings on please quarter the including that earnings and and third filings, and risks recent most

currently not to us, statements law. are forward-looking to be required and upon duty no available undertake by do information we update as and may Our based except statements these intend

we'd is press the Rodriguez. that and the call, call GAAP some available measures our Javier will discuss will measures our in A during financial to these comparable to you measures. Additionally, we non-GAAP to reconciliation to I website. now financial this release of remind furnished earnings over included like non-GAAP the on SEC turn

Javier Rodriguez

in want an dialyzing milestone, of our on past of benefits we exciting by my and patients patients dialysis. the means execute continue remarks the care increasingly COVID a an Jim afternoon. in provide lifestyle begin United market, strong of good of our XX,XXX for QX to face patients our and labor we and you, our clinical DaVita operating another challenging approximately States the Thank receive across strategic to another home quality This environment. was challenging took counts case rise XX% objectives. home. that at I to and Despite quarter highlighting

to center As we've with comprehensive provider training home a sessions, including sustainable it explained care our easy and visits convenient requires home before, dialysis, for to be a access team. infrastructure, and recurring

easy a current XX% dialysis of center. of such access DaVita miles patients provides Our our home within live centers XX network of that that

on dialysis, continue easier innovate choice to few help physicians make duration addition, dialysis their In our once to A patients patients and that we made platform extend to an have on home highlights for and home choice. note. of the

enhanced which and new individual ensure education First, for we is with education, our to program supporting an to comprehensive patients modality each tailored recently timely receive they rolled technology patient's out along that needs.

We also such process health chance of black different equity. on work to communities, education selecting and customization as additional and therefore our to patients improve for Hispanic continue modality and improve their enhancements this to

monitoring and portal communications patients. caregivers, a patient between that supports Second, we remote our home nephrologist DaVita our developed and platform telemedicine partners, and

we're Third, team benefits of Last, be clinical and out elevate real needed. testing an technologies alerting clinical troubleshooting them network, to which industry-leading closely issues optimize when prescription, create an help AI might practicing a in prescription of skill. we with to to and time their understand and update complex home other physicians works PD physicians practice the modalities, our leaders developed home home physicians expert

results. Markets on our of XX QX November will detail Day. We platform greater to strategic our discuss advantage On the in Capital on our Virtual

new many toll by of the per have Across and case XX% peaked amongst grew accounts more variant surge current driven September, approximately the Delta the prove share at the lives world model broad to take face business by continues to of winner. with and past the However, pandemic period continues grew the population, peak over income on year-over-year, the in QX Our large, operating during adjusted the in resilient than reaching operating X% to our appears same human approximately patients. its in ongoing two-thirds US challenges. too early earnings COVID

our approximately of lower, and amongst Switching were vaccination peak likely winner patient from mortality peaked approximately case to increased QX than rates due XXX one-third within the fewer patients. rates mortality count new the dialysis Fortunately, the to relatively population, Incremental in count our quarter week XXXX the now by been relative the to approximately vaccinated. approximately our infections Delta XX%, to down patients in continue After with QX. of COVID XX% our October recent during XX end, decline, ending new peak. to have vaccines, case

with this our another. team of patients accordance throughout mission retained rollout vaccine pandemic, breakthrough employer hopeful more as for I well peak management We're our responding. of will workers, what that been guidelines. How CDC infections has key COVID and In live leadership focus boosters the although aspect pleased of any mentioned. as Shifting to has choice. other continued competitive future have as of mission challenges, our and of long saw as be be how these been in relentless strong quarter, patients, we limited in to facing addition, to Cost healthcare safety frontline the the has with cost. the the Despite our be of we started companies one has winter. evident last same in relative the eligible in our are we care to market dynamics team the a on we've surges been It am part for the

during our offer in time. have to and frontline and ongoing. discussed work a fulfilling are this These we continue environment As have safe challenging to pay we and provided incremental efforts caregivers calls, past benefits help

on annual achieve help years. this cost This increases talent expect higher provide put long-term the our will additional Given but with we environment, objective. than our the we pressures compensation in us teammates retain believe needed structure and our to typical to attract current will

with of Just people. as builds aligns our history mission our critical, it in our and on investing

over investment shared Integrated care Last words now or for contracts. in patients, and billion XX,XXX we creates At of Care Kidney have payers and IKS X.X end a some the this patients Finally, long-term few opportunity planned care I of of about in would arrangements, integrated form quarter, like our QX, representing shareholders. value-based to our on say IKC. we details

we the primarily to our approximately year, size government's our news cheap driven federal in double participation the program. by business of Next IKC expect KCC

another While details the our it to for over the is on in on that execution, we Day. that, we still believe discuss years. IKC turn new With successful investing a for quarter. in This it I'll earnings early detail opportunity potentially and plan Capital upcoming represents contingent meaningful more us in Virtual Markets is Joe at area coming to and

Joel Ackerman

the delivered was results. quarter earnings challenges $XXX we referenced, operating $X.XX. Despite of Javier. Javier was and Thanks, strong million another share Operating per income

COVID net $XX to quarterly approximately increase Our impact headwind QX the of the million, year. that we experienced results of relative half a an first in include the

the quarter higher resulted QX in mortality in fewer although mortality continues. the hope in in it than also QX, approximately XXX decrease As anticipating than COVID Javier a we've surge to the compared that we excess XXXX few last mentioned, weeks the of to be was in latest QX. We're in seen

expectations of by approximately from of COVID view worse for million our year is current to $XX last compared impact the quarter. the Our OI

compared $XXX mortalities Treatments increase impact total in of was of COVID surge. For to day as XXX The COVID estimated approximately excess were mistreatment and XXXX, per the now a headwind we net the qX. million. our expect in by or down higher a primary QX result X.X%

wages, current essentially year-over-year expect of the per up quarter higher treatment approximately flat primarily the benefit quarter will continue we quarter-over-quarter, to into the and believe In which expenses. XXX. cost of increase XXXX. that the care quarter-over-quarter, This the lowered a impact Thursdays was benefit light nag to in by which with we Tuesdays, delayed had addition, growth, per new patient of In Saturdays, was teammate an our and the approximately seasonality of result higher compounding additional in treatments Delta of return training is on treatment a associated per be ratio QX. to our $X timing and day mortalities costs healthcare expenses, hires now positive into compensation for and due higher surge, Revenue

operating period to due Kidney Integrated improvement special needs plan. loss business the an which Our prior our in primarily its in is in Care development positive saw quarter,

$X QX, the decline to million projected quarter to fluctuations our $XX and business dialysis value continue days markets, million, staffing quarter investment Miromatrix. mark up of expect loss a by lab in ramp to primarily costs our timing investment in of for Other due we especially in in our preparation billing three and as million. the was end US market approximately was CKCC to due We primarily increased of DSOs for The at the in in collections. increased XXXX. this X.X for quarter-over-quarter,

year the of rest the for updates beyond. some to turning Now and

a As COVID I that variant earnings outcomes fourth range depending impact call, the in from a mentioned was noted would a significant of excluded in surge but the how on any our develop. possible surge in we Delta on wider QX part revised guidance, of

our Now that impact for million. are of impact the increasing by surge, estimate we've Delta year we the $XX COVID seen the of

are billion are now billion. the our in this we to incorporating revised where Given year, $X.XX of COVID we guidance $X.XX OI adjusted impact into

end flow our billion chance free free although the range, of And share. is below timing narrowing are some depending to to the We flow $X the we billion, for to are fall guidance $X.X may DSO guidance our our of bottom EPS per of $X.XX recovery. adjusted also cash maintaining cash on there $X.XX our that

performance OI for guidance existing impact, explained and by This our salaries decline is COVID implies the frontline financial in relative teammates. incremental a QX expected mortality partially Our wages and higher by QX. revised to

benefit income anticipates million one-time seasonally certain expenses, training health by or compensation higher of guidance including approximately costs, impacted and elevated expenses, Our be G&A. QX $XX to high items, operating negatively

Looking ahead remain. on about QX to call talked XXXX, headwinds expected the earnings I the three

of And new begin a help range a related few portion in with added industry greatest our big initiative to As things California. business. platform, continue about anticipate our effort We we incremental counter depreciating investment COVID uncertainty. expect we of the million. we ballot $XX clinical be you IP in to expect our to to remains XXXX. which the the reminder, grow also year-over-year to thinking $XX ITC approximately a have A the as expense additional million will to we

$XX the anticipating year. sequestration the are suspension, headwind which million a of for full end would We the be temporary

PPE, global costs to spiked the of some supply that to the quickly return that challenges of expect chain. pre-COVID particular levels during in due not COVID, may also We as the

Finally, COVID large remains next a impact factor. year mortality swing on

impact timing positive negatively the would volume surge delay winter and NAG. Another could treatment of achieving

as However, be search, increase XXXX, a In result level. significant in we the typical years than a then COVID we treatment will costs could lower pressures. if than net which recent market expect mortality, last would pre-COVID than from of proves result expect the tailwind higher surge to in growth more typical labor

Our to current headwind $XX net million. million $XX a estimate of is

We MA expect expect a of to platform care to non-labor patient after and transition we significant offset amount growth. strong will to operating continuing to growth level, but an which penetration growth significant expect of costs. get we From perspective, income historical our strong headwinds with temporary incremental XXXX year with costs, these a some management be largely through, continue support above profit

could reasonable This While a could impact $XXX from from broad, depreciation. includes modest the scenarios the XXXX guidance. of the range decline million COVID of OI initiative, in the although the IKC increased potential COVID, from there worse. where also our a outcomes impact of significantly are expected result an headwind ballot includes XXXX This is be for scenario and scenario

the XXXX, updated reversal XXXX in plus single show multi-year growth, of incremental a forward these low-to-mid shared impact digit operating we that headwinds, be a income our such of XXXX have would midpoint XXXX income with expect the to net operating from historically. guidance, to which we the outlook of we CAGR line Looking anticipate

this the term Markets of couple core of Capital in expect say We'll situation, guidance an weeks. the recognition of IKC, the a in our about costs, and the be lack savings result We have continued at long growth business. of to improved initiative-related COVID of Day to ballot more

shares million shares. million October of Operator, we during additional third X.X stock to call for and Q&A. we in open repurchased an quarter, the our Finally, X.X the please repurchase date,

Operator

[Operator you. Justin sir. from Wolfe Instructions] Lake Research, may Thank you go ahead,

Justin Lake

the all for thanks and here. Thanks color

the start quarter. Let's fourth on

in costs You're - million sounds fourth like COVID of XX correct? the actually most incremental it is talking quarter, happening the that of are about

Javier Rodriguez

some in there well. but was yes, QX Most as

we would gave would I and is QX. what QX for think of be the full number you XX XX million as if about left COVID, million So the for take year, for

Justin Lake

we Okay. mortality? higher that And us you talked how there? even serves much then much - million can the that's you're that talked of side of cost, how XX you are coming a help from about And maybe on million XX about seeing mortality what the

Javier Rodriguez

is XXX what and continue has a in expected. we've mortality XXXX on bit. in doubt that QX we mortality. seen to so excess in to Delta below we surge Yeah, QX, bigger no into than pickup that were expect a And QX come Remember, about we there's

if the largely if bit and XXX per excess that mortality. Tuesday, quarter, headwind quarter trying what the QX Monday, in than Wednesday, Thursday, So treatment in you're day more result treatment look you that's that's for day at growth, there down is were per you the see as Also, Fridays, a the was well. growth of triangulate about Saturdays to - a over QX on

- that's numbers those it. the are the So behind

in is the it what you're COVID, hits of excess even QX. hits terms in harder In that from financial QX, the seeing mortality impact definitely

seeing we're anticipating with increased surges labor that. we've QX and stuff cohorting increase see some and you which in in and again, also also You're costs mistreatments, like in then prior seen some associated

So that's in how impact I'd lay QX. QX COVID on mortality of and other and out things the

Justin Lake

a of, one-time there bigger jump or kind of kind or one time, any and QX is XX million the a of like rate , that that - this is of Okay, kind implied or is million, Is that terms the in some is off you some it so of portion not then, jump OI. base? off XX of that sounds the is that costs there reasonable of that within run

Javier Rodriguez

of one-time we teammates so think The tends when is type that I some higher the are stuff then lead would or coming to training comp hire forms, one-time seasonal things, either I XX in call training pickups. number. out is new to two and up Yeah, a bonus

impact to then things we QX, reasonable fundamental There's those there also think of to items. one-time as tend good and a things year XXXX baseline the to in seasonal in are see this But COVID. number question G&A. get some a seasonal point, XX bit result years to are benefit increase the in year, and year, next is off a the and for a from which year. jumping off off I jump they're a So the a for in most are patterns seasonal resulting Those of full exaggerated for what's next your of

get the adjusted to If same spot. for you took QX and XX about the million, you'd

Justin Lake

have about you better in But in tailwind one more, Got million talked transitory and you of it. talked of can about 'XX could really talked squeeze talked kind the pieces to improved of this IKC, If costs. of IKC How XXXX about much there right, you then tailwind I you losses. talk lot in be XXXX, you out with incremental That'd could about a terms stuff so you does here. the two makes of there? sense And savings, in COVID, sizing? terms helpful. $XX

Javier Rodriguez

Sure.

that uncertainty. caveat we're a talking about is about the even cautious away 'XX, with and XXXX way start given I'll So a long

but wouldn't guidance this to things help I estimates of think some just So think reasonable through. you as

in the we're So $XX think a I about way on is million IKC, of 'XX a to headwind reversal think reasonable 'XX. seeing

assume next winding up to about you think in is we in about. basically, point if where at said, year. 'XX. So disappears That some really, COVID hard really that are 'XX, COVID

goes from increased what on forever, five, primarily million and on number mortality. basically years to that sequestration a number Think four, number time, associated away it, 'XX got T&E $XX so think that the what you've basis, tailwind, offset net long And million away That now about related the to dissipates, got COVID. 'XX that, of and with effectively number offsets is that million in think run is seven a from some is suspension. is right. there. with about we $XX we've to all of to that getting sequestration expenses six, with comparable way right million a the think I to headwind labor, I'm a We're zero. spend from over in somewhere 'XX becomes roughly bridging rate 'XX PPE, some about that stays a of headwind there's so got the a and We've in number is really net would for and is a mortality $XXX left as that today, go you're period what today expect and tailwind $XX

you that time. would into see coming back $XXX as So over dissipates, earnings then got headwind we've today million that

So that's story. COVID the

Justin Lake

all for that. thank Thanks Great, you.

Joel Ackerman

And then you're finishing I'll your thing, add bridge. just one as

million 'XX. ballot sorry, that forget that California - in won't don't yeah be Justin, 'XX 'XX a in going in that's to $XX there's be

So, bridge to. numbers there to is another couple

Justin Lake

you. Thank

Joel Ackerman

you. Thank

Okay, Michelle.

Operator

Fischbeck go Kevin you ahead, you. sir. may from Bank of Thank America,

Kevin Fischbeck

Great. on question. to talking getting until I that the up Thanks. might back, I period you're wouldn't to That One longer that maybe or than mortality three a of more two four like four a bit guess coming last I about why years years it little seven something of Anyway, follow seven? number, guess to that rather about be anyway. have number be back think might time thought than

Javier Rodriguez

Yeah.

first of a long you than quicker and likely that it, than out Kevin, be where very certainly reasonable four be tail know back scenario a And seven quicker, - I back there's quicker comes we tail So, potentially is to all, think might that how is most there and but years of to right. don't right comes bounce certainly years.

come and more I to in a gets whatever evenly think little towards there's period, back get on number say over So thin that the and reasonable tail choose probably early the logic doesn't you it you end.

getting three most of be of say years. you right I terms it in So could in

Kevin Fischbeck

that positive then I what how guess you by then year you now expect had said that NAG thought don't waiting forget is QX, one in maybe have later, maybe last now you next it year. And get to of to right back I three going we have about we to spike, don't that or think But I the COVID period think you not? you helpful. get and we'll to that because able mentioned I guess, positive by you get might the QX, - NAG spike remember your if and you should end it, the or in back that's until I quarters was end that happen to thought that Okay, the positive is

Joel Ackerman

that's, thinking start think for about that's good I it. a

of the of long positive size NAG, back impacts get the lower, us if spike growth this how Although spike takes to that period natural time. also a in is shorter a a the it of to overcome kind can because

As years, be like day much going calls, easier a about about a next over happen to to volatility. revenue per few think this clunky way said, so of on be bit little I've found a what's and where in NAG to the prior our can thinking number, think ultimately, patterns to when I I've treatment quarter-over-quarter much then volumes, there's times

Kevin Fischbeck

last portion doubling big Okay. out mentioned, about And versus view the with that size growth like program? you the a a MA question, it's not in way program, of break And to IKC. the new then is I guess, of kind a government there your

Javier Rodriguez

is are choosing population, seeing last I in insurance is to the XX% roughly broader reviewing Sure. what and we're of now number around more Well, getting right non-kidney patients MA MA number we're our are think is if XX%. I saw the their look you that, and at to so were patients close selecting now, that around

into coming contract. a that's MA to of and And those are risk to us grows, feeder plans course, so be the to as big because likely wanting

to of now plays the to final are been we'll it their therefore the roughly that the what attribute really here give both have and as patient and estimates are relates in going enroll you government, from it practices have our sizing but As doubling we stages out. we information

Kevin Fischbeck

from moving doubling so then Okay. IKC penetration. type with of again, service have already is but MA for a kind from to contracts has you just And structure? at plans The already that fee MA

Javier Rodriguez

Yeah. Yeah.

type structures, are So have to correct. wanting plans IKC more

Kevin Fischbeck

Is there quickly? coming contracts the penetrated a what next together will arrangement? Okay. anything stuff, could year? or would thing And feet, contract expect largely different, year that type of I we year within on about so see arrangement these that dragging this would have contracts last this to first the then all that lot you their are your be when plans this is percentage this of majority question see of opportunity companies And on be timing of then. expect MA So of them to the of vast type this MA

Javier Rodriguez

payer, by of payers their know, paid to where specific it's quite different risk, full anywhere the Yeah, service, as way the as different to basically I shared, it's shared fee for we and have to payer. risk put customized, Again, structures range they think strategies by focus. and performance, all is gain cadences all from from customized contracts

is to customized, so there's cadence timing, interesting the constant. go really So really we're and we're se. nothing and them It's and ready steady to per report talking to on

Kevin Fischbeck

like not increasing that it's about it's so and you year, Okay, constant think when it? members drop growth huge next a

Javier Rodriguez

We're any change. forecasting drastic not

Kevin Fischbeck

it. Thank Got you.

Javier Rodriguez

you. Thank

Operator

question comes next Deutsche from you may from Pito go Bank, ahead, Our sir. Chickering

Pito Chickering

guys. of me, on a It's up of sort taking numbers questions this Yeah. Justin's and afternoon, forgive lot call. there questions, a to are the follow Good

IKC like get the that to XXXX, X% X.XX billion on that CAGR midpoint of change of OI income. for you core IKC of low going digit guidance the dialysis take and CAGR put How you single If that, mid how XXXX forward? a from does comes operating and much versus to for

Joel Ackerman

in OI terms KC again reasonable 'XX That's, in to 'XX. from to from with - that's are. the how really of much of about again, caveats we 'XX change where and a IKC, the all everything see from uncertainty and I going OI else, so no in you're scenario Yeah, comes

zero to growth, if basically see 'XX total IKC. you that scenario OI about, you a OI growth So think 'XX, in from

Pito Chickering

Okay.

point. coming at growth - this for next from even OI years, as core CAGR sort And So hundreds X% is that of the of dialysis two

Joel Ackerman

out from and think Pito, coming called bunch net system it's largely from tailwind kind There, us you'll IKC right new our they're it each ones headwinds clinical have The way a the about and is, with IP dialysis. from core COVID. of we've to think, stays depreciation offset from so and the other, ballots tailwinds, zero. a I of

Pito Chickering

second. these Okay, work take $XXX again for this that's from the I a OI numbers but IKC. so million from let If me just losses year, embedding of

You're it saying still $XXX through on of the that the XXXX, run million by will IKC? losses P&L

Joel Ackerman

saying we're goes What in in XXX 'XX. next year, for to XXX headwinds XXXX, that's big Right. and effectively itself next is the that one reverses the of and year,

Pito Chickering

Okay.

the I just XX just XXX So a - the full reverses or reverses. mean,

Joel Ackerman

No, just the XX.

Pito Chickering

Okay, got it.

Joel Ackerman

Ultimately would all the happen 'XX. would it be our profitable, business itself become full expectation the wouldn't but would reverse XXX in and

Pito Chickering

Okay. thinking of inflation, And was this XQ? [indiscernible] as kind which labor your is our inflation and premium normal will Can much labor of what from and for about your continue side, in you transitory costs what wage think how remind XXXX? treatment, for about wage was us versus start XQ from to you

Joel Ackerman

QX net and numbers where like to is stuff and I environment I year and the the all What year next the is of the we and But XX labor XX in I going net of start that if from you're QX, and quickly that. number could went call to a or year was million next so, productivity a doubt, there is million. for Yeah, know the million headwind through next it to headwind, inflation, offsets would given wages, XX seeing be there script. be but right would training, of numbers at million that in benefits be call labor really lot some beginning a the challenging wage think potential XX

Pito Chickering

enough. fair Okay,

for and help costs revenues will patients we breakout point, at per that's IKC, can For so how some plan tracking? you out the a model

Joel Ackerman

to Yeah, on progress. package of they need visibility I around a that will into our give to disclosure we're continue path bit IKC the shareholders create a a think

Pito Chickering

sheets Okay. how sitting And cash this dialysis do balance much that so dollars grows much repo XXXX? about a guys question need the core me, cash going new on think this run for last now, the the to and And you at billion that now, to of Thanks there's back the we right how much. point? in then IKC

Joel Ackerman

so cash not the have about with number a will don't needing Yeah, think somewhere sheet regulated million entity. capital I we're balance to don't typically $XXX statutory would on the We business. change significantly requirements. us around run I think IKC, of just that

Pito Chickering

Okay, $XXX so million excess about, sooner than think to [indiscernible] that's cash rather fair later.

Javier Rodriguez

yes, of the cash. bought call. been earnings say since we the I'd than on clearly excess Look, million the more XXX We stock. last of usual, buyers

we'd not As price, in will on we're like past, agnostic we've the said to price. If we more. buy

Pito Chickering

thanks Great, so much.

Operator

Thank you, may Barclays, Sarah James you go from ahead.

Sarah James

give a roll And cadence more all I appreciate hoping will I'm little the as of a out. color you. Thank could about but you year 'XX that us whole the bit on the of how

of and just anticipating guidance side, if we've are then the the that's back costs your later labor as in And headwinds, about the those and talking of starting wasn't sure they you half of the some key beginning well. of on? heard labor the year, on what at some the were cost improving in So guys year,

Javier Rodriguez

Sure.

about how and economy timing, that's So macro a to we don't going labor market, the view have on the think I particular labor play in out.

it'll costs some likely of a see back although seeing be half anything you can COVID might talked over to have of in don't is The be the in plays loaded. complicated, goes of starting more about a pieces And certainly similar to year the to the some think I So start there. lot QX, a big depreciation in other add actually the away of there'll are how you'll the to starting that in it rollout, on IKC, so event, but year, you'll that sequestration, of end back number I hard QX, to see what in be X/X, it it's historically, is hit could in there January, seen that, of the be initiative largely happen is probably course I've the year. will out we've related quarters. ballot up QX, predict. the other assuming If but build beginning exactly

you'd net-net, when as you a figure. that big not Historically, comes improving year to see sure mortality accumulates. down, that the not mortality goes And with even although number. on, Although even help I'm the probably it still how

that Next to winter see overall think you'd I go of year, I year. if away, starting there and the to course COVID that wave no is to improve hope over expect the begins helps.

Sarah James

very pressure skill you're that it where class give FWD is a on us just material in labor it on to or employee of you're position then labor. helpful. seeing most type that's here of how overall level And certain Can more one Thank that that No, expenses? is you. any your seeing acutely? more you and color So

Joel Ackerman

Sarah, I in certain is is, of and widespread is across while one to could we acute point it geographies, wide our it wish clinical it most so very and the teammates, geographies. more is reality and but many

Sarah James

much. you Thank very it. Got

Joel Ackerman

Thank you.

Operator

[Operator Thank caller next Clive Our you. is from Lisa Instructions] Bernstein.

may go You ahead.

Lisa Clive

two for Hi, me. questions

major inflation, at How similar understand And and about program. care, $XXX wage up the private us Medicare where year look in the program I'm that contracts? question to the CKCC like? just once losses I rate thinking obviously to so in obviously suppose just on integrated your the up Could one XXXX. that give getting sort the is then you of trying adjusters on and rate do driver. come Just metrics a Medicare backdated? you does ramp is Is big really that million delayed in set still inevitably of are looking and somewhat what envisage information are on second through. it updates some how this scaling their they're

Javier Rodriguez

and part Joel first the grab then me can supplement. Let

then economic call firm that is what way it's the Rather, at they happening or and it's forecasts year the what's calculated First which either is inflation adjustment, a and a to there's a measure subtract looking an the cost they productivity basket useful, essence, that's retrospective not pure prospectively. and trying XX of dialysis to average in update has efficiency economy. in case Medicare

complexity. So can as you some imagine, got that's

As the is it negotiated way. business, usually a commercial done relates it's the way through to

be contract effective of the and single every so tends them timing negotiated And one is whenever signed. the individually, was to

was the signed most done February that way usually, the contract in year. next traditional doing a of of of the in think escalator February, you if annual so it. That's would And be

in that there ways pay course, other But can for be performance that's how or that other Of mechanisms. a general, have works.

the we relates on it don't question answer second short know. your is As CKCC, to

a it's for authorized and years. CMMI it's so now, two right For pilot

out I if patients Of we're intent is the vehicle effective Medicare think would a it to try get try that the world and system then it. to well where in MA the course, that somewhere then it's but to would way doing We in or hopefully, see. being patient assume we extend a or XX,XXX and one if and try to by of if it another CMMI through you see for works will and

Lisa Clive

Thanks for that.

Javier Rodriguez

Thank Lisa. you,

Operator

ahead, And our you from Bank, Chickering may next Deutsche caller go sir. is Pito

Pito Chickering

out When How right ESCO that the here. struggling Hey, program I we'll have gate. years guys, out is in much. thanks a you follow XXXX. we'll running, of you has in there. ESCO your so bit three I'm little so the profitable it savings million been guys when to see of still while on up go to say the sort in want one? assuming IKC $XXX a IKC are back Thanks of can was losses losses, terms

Javier Rodriguez

Well, G&A. then load level have not and the were scale. and have, just partners that numbers. you the then number have model model course, get let how you have operating savings of to share best actually the with good. And ESCO what is to non-dialysis to that's trickles you the they profitable, you also separate of Joel, But to and grab but think actually sort we The quite that the high can the of are have so then down with me the apply and to in we to now way

half them, was whether the the it non-dialysis other half a it number But low-single when in so thinking all that the do will somewhere fully you think way at X-ish make the those so thinking get iterations, to go the because ESCOs, OI reducing depending number, a you it's people rather, you're roughly we were money, And of is - load non-dialysis, percent non-dialysis that X.X dialysis effective of didn't so good entire it's grabbing once you through probably you're measuring and I and or if all if or other you would costs. of in and digit costs.

Joel Ackerman

the get paint front. Pito, up add end how is, thing you I all there, how there, Yeah, game do do the the you would the costs the thing of question I'd the kind there, and you come remind is

the but for grow we delayed. number in revenue the you're any revenue You're year building start grow. you're some, model the for of time one, G&A, effectiveness two, the paying the paying savings, deliver to over And is we'll will won't continues capabilities, as to to the savings the shared see see year care of

matching good and years. costs, in especially a in not of is there So the revenue

the it revenue. talked is that investment the Javier part delay So is in the in about, of of it part the scale

Pito Chickering

Okay, thanks.

Operator

go Gary sir. you. Thank may Cowen, Taylor ahead, from you

Gary Taylor

good Hey, afternoon.

don't ones, quarterly in did but quantified mentioned step times, ever Just three system? have it give the for current up you've that know Joel, quick depreciation a I you us the few that I

Joel Ackerman

is Gary it'll QX XX in most the sometime in see it's start QX, million annualized Yeah, you'll and but number, and QX. it of probably

Gary Taylor

Okay.

the making note. Just

there The is mortality favorable other calling a commercial worth there of happening a Is that's row? on out? - the - anything couple in cited besides you quarters that's changing mix Medicare happening commercial it, anything

Joel Ackerman

resilient been a there's it, I very keep pandemic been value it's constant. and think much an during want No, insurance the so and people to appreciation very their that they and

Gary Taylor

so - CAGR That's to single up take it. XXXX. we're XXXX, about to mid low Got one to then we million, getting if one 'XX. XXXX, and my down nine but is then we going XXX going from walk back last a and step million, digit towards for 'XX back change back to Joel, XXX to it lat And

would be direct an mid incremental some COVID it? digit Is portion So that coming low expenses the of and single and rest gross would mortality XX down. that of parts to this organic, the then spend, of XX be IKC, advocacy that reduction million million of whole some the big part

Joel Ackerman

it got right. You exactly

Gary Taylor

you. Okay, perfect. Thank

Operator

Thank you go may Clive ahead. Bernstein, you. Lisa from

Lisa Clive

there. Hi,

contracting. the Just wanted to up follow on private

clearly terms the the all are outset fully any just for experiencing is that's so now as the adjustments of ability there set or at increase and is a increase increases for contract? contract, there inflation fully a, the work, if you're over fixed or those to percentage the have In are rate rate if the structure they adjustments four four rate how higher year years as course say, of you of

Javier Rodriguez

them lease. are fixed of Most

performance, of so fluctuate can earn are depending of them, most them to way have your fixed. they year-over-year on them So some you but to

Lisa Clive

they but your based would vary cost not Okay, structure. on on performance, underlying

Javier Rodriguez

Correct.

have, defined general, linked it's an you Sometimes, to something could of or that's course, understood. and index but something that, like in

Lisa Clive

Thanks. clear. that's Okay,

Javier Rodriguez

Thank you.

Operator

at And further showing I'm this questions. no time,

Javier Rodriguez

Thank number our you in 'XX; to XX, really then Be detail well our so historical have discussing teams you, more to as three, let day, try We point care that OI talk lot, our hard then. look and November markets will Three in covered two, and we've cleanly on the dream. lot integrated as can. OI to during capital on one, working Michelle. number strategy correct takeaways; our of a to everyone innovation are is core decreases deliver a to Well, summarize XXXX just I back temporary me business will strong; forward on

Operator

call. today's And conference thank This concludes you.

You disconnect time. ahead may and go at this