DVA - Earnings call transcript Q4 2017

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Operator

Good evening. My name is Eric, and I will be your conference facilitator today. At this time, I would like to welcome everyone to the DaVita Fourth Quarter 2017 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 Instructions] [Operator Mr. And, may begin you conference. your Gustafson,

Jim Gustafson

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

continued interest enterprise. Jim, to out our Thank for all in thanks and your you you, of there

the population. of as our which will we then, We care-giving over the before even in Javier is and very in flu percent about clinical into spotlight have major outperformed summary; a is category. general ESRD seen cause and take year hospitalizations all-important move our distinctive care of leading percentage, vaccinations Flu, norm reduce are And severe, talking significantly Joel a years current is first more patients, and with in foremost we've in start custom, XX% this the and a we where the clinical The the all the and I'll is in vaccinated row risk company. media and season follow-up. many especially I of as in high-level difficult so even like this a a

high-level Now, There's itself. for noise we DaVita good a of summary and quarter's of onto was a XXXX carry a lot XXXX. quarter numbers Care. It amount the Kidney into in quarter solid this And navigate. quarter. sale Joel due to a a bunch DMG bunch is step the was a it But good and you line will factors of and reform, of through the including bottom help to tax that

good have generate significant for repurchases as And flows DaVita Care. cash operating cash a amount the on. We momentum. those deploy Onto and flows continue towards of to Kidney we roll will Javier, share we quarters strong

Javier Rodriguez

Kent, afternoon. you, Thank and good

some I'll Let the me cover more the on will details Joel the main detail. provide in. financial in dive drivers and of right business results

First, normalizing growth our quarter the approximately versus for after third the impact of XXXX hurricanes. flat of was X.X%, for quarter the the non-acquired

we as commercial revenue per in government I'd came Next, consistent quarters, about recent it think and between down net dialysis treatment XXXX. with break revenues.

As Medicare dialysis flat all providers. be XXXX for is will a for headwind updates you essentially know, and margins rates

wage that is around questions: side, is Onto pressure. the the are environment, cost charitable puts revenues, relates assistance. with the And like going new and takes. to companies, conversations premium back labor premium the relates there's be how on as it we are their market a other many it normal experiencing contracting As little tight to tends to there country to the upward assistance environment? on charitable very commercial commercial two and on there believe anything We

Medicare near offset X% expect We this will in XXXX. continuing margin With term. With Medicare business significant to traditional cost to don't labor to pressures the normal in we inflation Medicare expect XXXX, and fee-for-service labor sorry, to cost in opportunity to annual the with margin reimbursement, resume subside. increase pressure a see feel - inflation these in improvement X% continue to we to with continue outpace productivity updates scheduled

XXXX, Finally, with always most our will we in excited income more guidance than care from of Joel, more On to our detail of get in billion. bipartisan go Group continue care legislation patient $X.X lift into adjusted unusual the be ended industry $X.XXX up operating dialysis the prospect of to Care to billion real chambers guidance transforming a an XXXX recent We pending this amount through moment. believe because year, XXXX adjusted of currently wrap shot XXX but above We of kidney with passed Medical of a getting in for this PATIENTS operations. operating To we Act. we income continuing in at year support transformative billion, DaVita $X.XX Kidney to have guidance, passed. as Congress becomes the the effectively a on for guidance this transaction, bill our Cosponsors. significant have both

XXXX, continue for Care billion to Kidney to expect billion For business. $X.X we operating income of $X.X

the reminder, a accounting program to match $XXX transition XXX(k) program. from as to have over one million, As of we we year a a profit headwind year up finish share

pay-up. for accrued expenses With before year in calendar the the old the program, the we

discussed as With that XXXX pay for did for accrue forecast. the we To that we not I need swing out. when my a close in last we will gap change the XXXX, expenses such payout. follow-up quarter three remarks, new to accrue to This would created like program, out could variables one-year we it accounting on

numbers expectations, period you line First, keep initial throughout the and continue year, in we'll to the we'll slope with was our monitor posted. enrollment as open

they'll of which to calcimimetics cost by until the treat with too Second, volume and in calcimimetics, of to more called data just onto to option introduction full mix. view still drug the [ph]. and new understand Reimbursement drug an how our coming very it's before, get into mineral Physicians of are pharmaceuticals, we moved line but dialysis based patients discussed we the on as have product physicians individual expectations, a prescription predict. with drug, bone difficult ESRD patients' early many make picture, Presibib injectable in the disease to is taken needs reimbursement each

range visibility. of to of continues the guidance update most included view when plan Our be an to probable provide better we outcomes in we our gain and

year, entire won't much included our have Third, California, onto the guidance the a large potential number would adverse we would centers it later make initial limit industry have which believe range. not we if by pass, material care. initiative advocacy in to and have in costs, severely ballot likely initiative California, that access - does it report If outpatient union being pursued the in financially of to this into we in patient dialysis unsustainable, on California, impact the would

in We similar have also unions pursuing become initiative Ohio. aware a that the

potential our have included in We range advocacy in Ohio any costs guidance not either.

financial our CFO Joel details. onto Now results for and

Joel Ackerman

Javier. run fourth of as $XXX million I you, in quarter Thank quarter, $XX operating results of a our benefited operations. reflected our rate. will million, third financial the start or versus fourth Adjusted Care overview an business the up income are the continuing couple for Kidney outside plus quarter although, the items that approximately X% from the with for

million our XXXX. savings revenue Solutions $XX we've earned First, recognized that DaVita Health shared business throughout

benefit revaluation our insurance to million expenses onetime Second, we in $X reserves. had due

accounts for but income to most figure million season. $XXX to of operating adjusted for reminder, by negatively treatment approximately the was quarter which this the The relative third due shorter third by impacted quarter, a quarter the hurricane one-half fourth difference. million, was $XX this As was day

provision of quarter-over-quarter. For unusual business, treatment our up bad Underlying our per was two U.S. and dialysis revenue net $X.XX for are largely lab offsetting per debt this reported items. treatment

our that of To highlight write-offs standard, have receivable additions through few and I This that you'll of to with see the million in to the to was starting gross new revenue provision with our cash comply estimates higher patient for of a want by all increase First, start bad changes two reserved in we've quarter $XX the flow in revenue recognized previously approximately particular. offset to million XXXX, debts our accounting $XX pay receipts disclosures. we line. first XXXX. for address

for per of only will reporting provision be debt. we First, revenue bad treatment net

our collect, Under first time Form estimated the filed which at recoveries only of change to months. recognize we debt to how months XX-K for Second, the I we additional to to month recognized estimate Medicare benefit takes account approximately in four new we attempting expect of for these and be recoveries this rules, a details. later and Medicare bad you four from approximately of we've XXXX the refer million after $XX treatment. XXXX, debt will the bad recoveries. recognize to Prior

$X.XX a costs Our per treatment patient approximately quarter-over-quarter. care were down

was $X.XX XXXX treatment our reminder, to G&A and third impact. quarterly in the lab $X a higher treatment approximately professional dialysis and cost per due of patient due per outside hurricane were costs care by quarter down fee fluctuations. lower approximately normal expense to U.S. the segment sequentially As

G&A approximately treatment fiscal was For year-on-year. was approximately X% per treatment X% XXXX, - down per

quarterly result go-forward had always modeling. for G&A is variability, G&A annual to some use the As treatment better per a your

entered announced DaVita that with each mind in words due Group keep seasonality to higher a the taxes. impacts into flu two tends few to on be fewer agreement in days sell the an please sale, Medical quarter of weakest DMG and we treatment to to Lastly, QX our in payroll as Optum. year the reminder that December we first A quarter

our and pending the as Optum We has the United. with from has target continue and get sale look in very regulatory DMG that and XXXX. operations results close of the and operations. forward relationship closing as business held working with reported required we Optum It the post been discontinued been Because working long-term are a benefit will business the reclassified to of are on additional transaction, relationship for approvals to productive

million. year impacted includes prior presentations the loss to from financial operating including DMG and fourth the addition, presentation. and generated indirect direct revised In been results, which sale current shift by transaction, negatively season of $XX a impact both were for held the In to period operating This conform flu to quarter, bad have accounting.

On markets, will anticipate of the benefit discontinued to is organization order $XXX leadership, well upon save deferred these positioned G&A tax new drive as of and and held million operation. as $X.X of expense The $XXX we require impact line increased XXXX. as our net all recognize focus streamline million are to our we result our the financial restructured Also, value. the and in we international and cost, scale clinical annual quarter, achieve an this on in is income structure administrative international, reported has direction we recognized as reduce of DMG reporting core last items in strategy the evolving million under that classification to we where for discussed one tax gain addition, on assets the the statement to In sale.

As JVs a including these in of changes, concerning changes expectations strategic result the opportunities. market available

international Pacific the This our are non-cash and XXXX. reverse was revised operating in which our which million, $XXX $X business fiscal creation losses and taking impairment much was charges, had in $XX joint provided adjustments XXXX in write-down non-cash in million we foreign from million a $X We million line this XXXX, period with $XXX million gain previously for that $X losses. Adjusted the of we included JV XXXX for of in - guidance the in prior Asia provide year booked million from currency is up venture. of investment

guidance is quarter, incorporated have we income to achieve continuing in in operating operations for breakeven late for This we XXXX. expect in As discussed enterprise XXXX. our recent

tax on in legislation the our quarter. in go reduction information remeasured to some one-time December, to of reflect tax recognized forward of This deferred rate. gain tax our U.S. expense assets for reform account is Next the $XXX impact and to we've liabilities passed taxes, net million the of expected

the other for items, XX.X% on and continuing XXXX. effective in was quarter XX.X% tax adjusted this our Excluding rate operations and one-time

to bottom XX.X%. we to continue million reform, the moving rate $XXX be by continuing impact $XXX to recently tax the XXXX operations the review expect tax XX.X% tax announced our of we XX of end basis reduction from of up continue to Despite in reform. we expense income tax to from expect points, range effective to now million As XXXX

enterprise Now cash guidance. provided cash flow billion, $X.XXX operating XXXX for was within flow, our previously

guidance this flow in cash provide our of will close that we XXXX, the DMG will operations light expectation continuing year. sale for For

still flows in and own operations the $X.X effective tax flow the reflects guidance cash the from million will billion rate $XXX we from $X.X to of from continuing business, increase This XXXX. due maintenance across This certain flow expenditures cash operating continuing investors in expenditures. date billion. reform to depreciation CapEx In increase be cash in do keep split spend operations, both cash that roughly of $XXX development approximately But and This the benefit CapEx. capital XXXX. from XXXX, not this lower DaVita expect million should from of expect up recur transaction the mind evenly on to guidance closes. any Medical excludes we although accelerated Group, an tax is the expect until flows of this is we We most to to

else we holding our be in XXXX equal, expect So CapEx to to XXXX our all levels. closer

For the or beginning year. repurchased year outstanding XXXX, shares at XX nearly full our our the of of stock X% shares we of million the common

shares. During million QX XXXX, we re-purchased X.X

year XX, approximately shares We through XXX,XXX repurchased this have also February XXXX.

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

Kent Thiry

Kidney they a continue Kidney momentum. this Q&A. have but one, on to DaVita bit fact a excuse process, platform track. Number I'll and redundancy, the it little proceeding that And solid was U.S. is operating in turn have quarter good you'll to reflects DMG two, a DaVita good make Care If in points we the early Kidney it's for Care, the three very transaction of Number Care, before business. our we

cash Third other strong growth combination number please. to expect to a healthcare this share continue to Kidney we and cash and Care to substantial and finally, service be the repurchases, deployment of thoughtful a flows we continued On in through to investments in of benefit areas. generate limited Q&A you, expect of

Operator

Thank you.

question We Instructions] the first Fischbeck. will Kevin now [Operator from question-and-answer begin session. Our comes

open. is line Your

Kevin Fischbeck

be looking healthcare on about priorities, comment capital I the provide the can specifically Any about the there wanted types follow you last of things maybe commentary I might guess, on up color Thanks. the services. to about you investments Great. to might that how it's looking you upon investments with I an trying limited be? field far how investments. might understand out. these of think We're play based go how at to didn't be or DMG some area other those questions

Joel Ackerman

Sure.

Joel it's Kevin, that. here. take I'll So,

we about thinking So few we sector over the shape thoughts, not sectors few think perspective, to first, sector want evolve over a them can few from find perspective. the next decades. the decades, a helped a deal Kidney we're Care have this the past we from way We where

can businesses. Second, new add we have we hyper-focused are on we we decades take them to over sectors opportunities value, developed and apply where competencies core where many new the can and

Third, to don't things we we know want some do.

safe become to you devices. so a We're We're going going terms or question say, to get going I don't bit to or so more multi-billion-dollar the in it to going a not have into a otherwise We company. are into is than near drugs defined not DMG health scale hospital your get the at not insurance range. of we about But something deal, think. And not the might we're finally, looking to not see is think specific business, of at you're scale, healthcare narrowly transaction. service

Kevin Fischbeck

from the is on think there that majority of helpful. repurchase about it say something spent can that it the definitely is you DMG would that to really share there - a say, this That's be at or point? proceeds. I way Okay. not guess, Is

Joel Ackerman

what said to so believe, first we we down continue is have will Sure, debt. pay and

haven't changed to back We pay traditional the we range. around guidance And expect debt the - range. our into down our to get

share the remainder Second, of majority be for repurchases. will used the

Kevin Fischbeck

range? leverage. of it you you're that higher times then about the we that about Is talked midpoint But about being How also do comfortable that range. is about at X.X Okay, think think talking or you - of talked X.X I X, I the that that? think end

Joel Ackerman

that, because out of But that that we cash closes in be net normalizing certainly level exactly be there's that complicated wind the period the determined a we've and range. a How over sheet remains distortion. Where cash that buybacks after remains cash keep talked leverage reality up time. are to that to seen the for create because facilitate we be sheet will to share to in time, always balance of may X to a So distortion. we deal some there it's net, expect could range possibility that again, play we number, balance be X.X on about - in the the excess on over

Kevin Fischbeck

drag Okay. we be stranded think me, question after DMG. or sale sale sale then, things that or Is anything far about And last actually for prospectively happens? costs as happens either might a there of that out the can as be the put that as should operations couldn't that cost that discontinued once that come

Joel Ackerman

are I we run me. to runway operation think forward forward rate, the continuing it of So think to that - the you is guiding as number excuse safe

worked will ensure dissynergies material to hard work to no there have are continue associated stranded We that with sale the and of hard we or DMG. costs

Kevin Fischbeck

Okay. Great. Thanks.

Kent Thiry

we whatever, And, the context ratio made a and we statements of that add statements on Kevin, were saying way lower would and months, leverage positive the more six towards higher within prior the leaning over in that I guidance months, have nine range. being our that historical within

- this I is the or in to last point, respect interest that's to going particular think guidance place. the in month refinement with at I if know that markets really on still don't given is the still really rates et two everything cetera,

we the is, and what looking a we're So brought time. flexibility bring for to at basically going you're it same I think long attitude that to

Kevin Fischbeck

Thank Right. you.

Operator

Our Lake. question next Justin comes from

open. is line Your

Justin check Lake, your… please

Justin Lake

about Sorry about that. that. sorry Yeah,

as So just on get to question, can wanted I to I try much color first as CapEx.

run to just that you around want guess, you that $XXX break I $XXX and thinking for way to you international, closer cost about? us maintenance process other more too million. rate in think us is centers I verses of that's or you've down, term. some just depreciation about of to number talked Can that And say, rate we DMG, developing to the numbers - a longer $XXX in develop I the million maybe be understand compare to new Now, of let's $XXX the want run should here. with of divesting use that U.S. the versus million, the million, in got about terms new that any centers maybe beyond areas cash CapEx

Kent Thiry

can me and going international. not help let number script, that out if I splits between I see We're so as to maintenance evenly roughly But Sure, out. said in the break development.

statement about done from means think, understand in as flow called you the flow are complete cash fair the is line sale we is that proceeds what cash the to it. cash believe to thinking. component have the piece picture flow, of positive we you clinics our the savings important that our cost clinic overall I point incorporate sell the positive of which clinics. would it self-developed the an cash self-development is We of a with time. think What sales, to development of associated I of and to And a And and over we the is more a thinking the is on the I asset build that total in number more about drives clinic. then construction flow

Justin Lake

Okay, in of tell do - you there think what Joel. how development dollars? just - us development of can understand relative the run what your I'm trying you the of given the perspective flow cash rate - capital more you're here those to our capital? total CapEx generating? Is versus how your dollars, on terms to and is much returns from depreciation, Just significant like

Joel Ackerman

structured us. component of historically The a return been growth a wide in return So high is capital. look, that whether it think And clinics. appropriate very have those we on about and drives new capital biggest is a and of think on capital capital how the about we've for we deployment, investment development to terms how approach building got

know So around I changed lot that a that. has don't whole

Justin Lake

Okay.

for Just clinic, cost last on now? this. question What developing right is the new

Joel Ackerman

Roughly $X million.

Justin Lake

Okay.

development? So that's what runs clinic through CapEx new for

Joel Ackerman

Roughly.

Justin Lake

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

Operator

from question Frank next The comes Morgan.

open. is line Your

Frank Morgan

you the business in on that charge growth see growth? had the your and does international. in Good do way to growth JV, you the view over but afternoon. when start My Thanks. change Obviously, really the surrounds any Pacific international international the Asia question

Joel Ackerman

quarter, view growth growth reported be So growth. and from continues can two the no. of as probably XXXX. It high to would the you change split international we what see said the later expect standby to which an growth relatively revenue doesn't components, get is breakeven the we and revenue in OI The is you're into what OI of I perspective, part to more of, growth. from which interesting results we've last

So from year-over-year you'll see growth. perspective, a significant

Frank Morgan

any one pricing pricing. contracts more, to made just you the are through Thank you. that commercial that based as then any contracting? there there And and change significant are commercial you out need curious contracting, Kent go at Got the And appetite their of Maybe seeing as in these commercial referenced are left to negotiated? value I'm you. be look elements to players in

Javier Rodriguez

as - of And how the way appetite relates the their contracting, structure normal contracts wide There seeing on more to usual. you. that renewals payor are have If I Thank as that the on depends less we et out. that it unresolved highlight to than wouldn't to the to anything, renewals payor we contracted cetera. range are nothing is we it right the there's meaning really anything point all PXP nothing of now, up, but value-based come and

material contracts. not in a change been So of there's the our structure

Frank Morgan

you. Thank Okay.

Javier Rodriguez

Thank you.

Operator

comes question from Whit next Our Mayo.

open. Your line is

Whit Mayo

starting third seen besides thanks. other factors year-over-year, business, Care over you from mentioning, to on Maybe numbers contracts. the was Kidney is years the Amgen Are the and perhaps distortion $X anything there think cost in call one out? there per hurricane from quarter? I just But any two Hey, of referenced down else we've purchasing the treatment the some worth lowest

Javier Rodriguez

not that we Amgen we call, approximately you of discussed share did profit end call what incur million of front The our that in the million mentioned we to pieces. the on $XXX in on two EPOGEN $XXX There XXX(k) used is XXX(k). thing the

Whit Mayo

Great.

look professional think, referenced how down color can and lower you thing a I Any number sustainable share XX% treatment basis, heard year-over-year is as then helpful. just that fees. and G&A Okay, we I same on at more And XXXX? you per

Javier Rodriguez

treatment we're professional is seeing range. The that $XX the I anything don't number have fees. number, we roughly we on but on it's that per in is different think be to a a expect annualize you is per little to that basis, call in treatment, when and the there out

Whit Mayo

just two a bad here be number Okay. quick. and quick other maybe having real Must ones

On at of point, were versus I'm they're been just the what any feedback drugs topic the cons the this has your reference from calcimimetics, partners of you this pros curious point, of sense and IV nephrology at oral of and are? kind have leaning, what the the

Javier Rodriguez

do We not.

We as dog now. going know, have in oral have be both data to category, Part And one going generics. go we right in variables a is there lot going very as little as And boy. It's of introduction an is oral then Part into have because you from the B going to to in D IV. this of to an

how plays right pieces to of are and I moving in to lot see this and think physicians seeing there be wanting going out is a publications, now, So marketplace. the

So not right lot are we a of yet. seeing change now,

Whit Mayo

DaVita And now B, under drug when this - play a dispensing is Part because drug? in this reimbursed can the role Rx

Javier Rodriguez

DaVita Rx drug dispensing now. is the

Whit Mayo

got. - That's And all Thanks, it. guys. that's I Okay.

Javier Rodriguez

just drug… And clarify, the that's to oral

Whit Mayo

That's dispensing?

Javier Rodriguez

…that's dispensing.

Operator

from Ransom. question John Our next comes

line Your is open.

John Ransom

XXXX But that did may afternoon. guidance versus think for we a pharmacy tough your You have Hey, me, call things I mentioned missed this business. A should that pharmacy? XXXX? and year-over-year for good How it. year your you about comparisons, was of couple of the

Joel Ackerman

our is things we've to go that each about hold, of the all from Rx talked the way then category. past, other we've the rate. had now of explained in every XXXX think changes I won't we because the run course, in and be I Yeah, that through XXXX will which right will And

And generic are so so the will things pharma monitoring as and some so all drugs space, the you forth. on course, and know we - we're go and of happening in

we when the to that prescriptions how clinical But and patients medication pills But our our course, XX it, economic model. back have real it to will to like model management going to keep much us. we economic So piece we we monitor make gift what have course XX a is of does of and of the work.

John Ransom

in issues I in so So words XXXX think some saying. much what in not minimal XXXX, don't I I given heard very in your to the put macro just able contribute that, may environment, mean you mouth, the you're really but other words EBITDA macro to environment? of not that's the

Joel Ackerman

I'm will our quite And continue saying of patient like managing monitor the the story the course, it we this, that What is works all we continue economics have and it's environment we No. is and dynamic. for to but make to that the and to adjust, for constituents.

John Ransom

Okay.

looking question wonderful second The just is, DMG, has international any but looking question that - looking conclude success. it, international, just this I at I been pharmacy, that international. and at sounding mean I mean, to at is tougher the yeah, a at of looking said It's hard

stray your core. you outside when So

I'm been bunch far. But, great been five be areas know so you you it a charm as will out I the like of who healthcare that why service? of think people but guess, start married I has looking rolled experience just So other wondering aforetime I have the you a stuff, look times. look, doesn't know at

wondering hope. was what lessons learned, why go particularly back there's to So and just to always you I well. want that

Kent Thiry

Yeah. It's free and feel mean, and thoughts That's very follow-up. further then fair throw you Kent ahead and to I question, a here, John. some go

now, the awful addition And where along good in then, on we measures and the Care And some very clinical in but three, First, Kidney had lot there's in that, pharma years said from of in very we to along pursue largely with very that driver want in your lot a predictable now performance can was by has immediate we well, during nice success because that change earned people thoughtful And felt by have a around on years very was and big do driven premises continue a the at best on why the thought root to reductions, now by asset and into not people valuable very it to portfolio. return capital have still out more period detail you're remind it's conceptual disappointing way, But which other performance. important adjusted strategic what it to it than had, terms and our they we going people, that, in and operating your will was, than and the do the were quite going space was of better risk capability. happens brilliant ago. that in an Care did. been paid. upside see question well and important reimbursement we rather as had reflection to cuts, turned basis important something, many anyone. at of then business several operating benefits potential owned it was the disappointing was And rather doesn't long-term care had Kidney then yourself it were, cause the point. was, better potential. DMG other been we or took a on we've of side was very integrated a the end. which it's what buy a was times potential, your international do from the point, five what cash Having also to performance think, operating lot what's and And of of a this enhancing think was our exactly we've - a short-term, know fact it's still in it take we it's lot the it learned clearly out, the been as in interest persuade And reimbursement experiences up But wouldn't disappointing a don't several that a But just they success, part it performance. substantial look without than the long-term just as you people then, us the the performance four, way. The has capital there to a deal who not are do it profitable far, primary the decided a Rx the to live in being you return for multiple they in reflected asset, addition the what the a of

cut the you're shareholders So - way XX long-term of long-term deploy our had a model people works our sticking a And call was that, fact and cash worth years we that are happy same would we ago, interest ago, to losses of been and of within. XX, worth years leave lot of it's fraction our with, sticking and dialysis to lost we flow it it XX, towards, best despite new so interest that have the decided that money our In opportunities. the bunch the we in easy a business growth think very at some had best was where XX made it. looking

John Ransom

selling you're your out, back given but DMG Thanks, as the Kent. CapEx. just on international. question is, of on My you're turns going that I narrowing kind I thinking it give that question focus other guess, was wrongly and to

have perhaps had thought a maybe from We been. where down step would it bit CapEx

about spending we those things. taking your doubling and DMG. on think what international down And should So you're you're

Just that in this focus? in The sales because year. it up this just there your CapEx paring flat. - going to I It obviously, your surprising staying me flat significant mean, you're looks stay [ph] like down given

Kent Thiry

one just me make comment. let Well,

to a net that very DMG positive recall with Just flow cetera. they're cash et meaning was CapEx, cash flow characteristics, business relative

Joel Ackerman

Yeah.

going that are the new redeploy shareholders or we to investments making that It's cash how down we Kidney think options debt the have don't paying of for what in question of I from this returning a commented more are investing deployed flow between somewhere Care. cash we So of else. saying, much to angle might

from. And the of angle similar and commented that's capital. kind So all this risk attractive a drive is going use adjusted to OI we with is we this which growth says, lens, drive those of on angles returns kind

John Ransom

I it. thinking mean, in I was I wrong? ever had non-zero, I don't about So know that $XXX my think am - don't that why in the Is I that DMG mind. disclosed number CapEx, million you

Kent Thiry

disclosed confirm know had think right wouldn't we I accuracy, offhand, don't know. definition. the its we wanting of and that without And say I anything And that us it. we don't anyone to

answer the and both cuff that the reason definition what off afraid we down I'm So can't the we've not we'd here. have nailed sure right to for make we historically, sure disclosed

John Ransom

from my off easier me. lot in a frankly] to quite understand. all it the [ph]. to without regard get facts life It's All and That's much. help [see the for I it right, All thanks for right, so

Kent Thiry

John. thanks, right, All

Operator

comes Lisa Our from Clive. next question

Your line is open.

Lisa Clive

sign-ups Medicaid you us just about I'm sort X,XXX from many many plans? once off support Am those in? numbers versus that also, any exchange? off the actually to right Could had patients on something where of premium X,XXX around what the as How came you of and And the had for went the premium ACA are clarity were How exchange? Hey, question an me. thanks. guidelines Two on through And CMS exchange, on the update like latest I patients support. give compare rules expecting just you historicals. those curious ACA the new on away? for

Joel Ackerman

Lisa. thanks, Yeah,

disclosed are numbers keep those. we numbers the stable. several months to And updating recited we're Your numbers Those pretty that ago. that going not are you

is we're education. not dynamic one momentum is lot. seeing story both in those that relates to think appears, as would one I not provide a and about is right the really way how the we that And earlier there So said government to The in rule, a as probably big comments, as it. it clarity to a the that the providers like numbers, thing,

do to And so, want way. we it right the all

- whether to there see or comes what as additional that in. rule making be information And so, not. going how is vehicle have to But we we will don't any

Lisa Clive

ESCO? leeway final structure update then about of in Could and And Medicare thinking deal. lot Clearly, a the question. Thanks. your us just a Okay. of give not It's has is the you on financial retrospective what an terms the But new that been years. have pretty I several Patient framework know payment wouldn't a benchmarks through Act But establish And for is way are. the making good. you've imagine I'd probably initial D.C. Care results its achieved

So integrated care? what do you do in the around meantime

Joel Ackerman

we bill PATIENTS and to if actually has in the start like passes, Act. Yeah, the XXXX. would And it

So grow the ESCO of at or be course, enrollment quick stare ESCOs want a the options, very we Right PATIENTS open. ramp-up. the the we much now, it to is not. doesn't would pass, not will pretty Act whether If

will we and us to guides if the what on where don't see so, we get PATIENTS And stand we CMS have Act.

Lisa Clive

Great. Thanks very much.

Kent Thiry

Thank you.

Operator

Our next question from Gary comes Taylor.

open. Your line is

Gary Taylor

thank Hi, you.

I there of quick a then good couple guidance, one guy? If bit, XXXX a is tie-ups Just the could a question. is that in parse and

Joel Ackerman

Yes.

Gary Taylor

quantify mean, to care not? or And I if,

Joel Ackerman

said handicapping I the with there is right to it us all a earlier which to do is our the the normal But we in variables for conversation, all reasons and helpful. No, included the it is for numbers. now of lot be guidance in

Gary Taylor

Thanks.

want you numbers benefited sure, sure So I million were of But OI correct. was get you That were shared to $XX insurance pretty make want XQ quickly. of them the to numbers, reserve in fourth from $X I some make saying through million savings. adjustment ripping the and right? quarter, all

Joel Ackerman

right. That's

Gary Taylor

And about, quarter, something next have to we And might before. should savings that the be we're quantified you about trying you contemplating think had number year think fourth shared just there ever there? I and guess,

Kent Thiry

not. would I

would and First, have a model reported never kind that this event. being QX I anything in we recurring a of before as not like

Gary Taylor

trying then on I'm understand. bad to Okay. And debt, the

driving was in debt, and is million said on or Were reconciliations. bad what $XX accruals revenue there both any on some help? like any color bad guy those? commercial about You from gross guy there $XX million revenue - was to Were those those

Kent Thiry

bit with - debt driven we release so has conservative, the bit onetime The of a that cash so typically receipts, the And an uninsured patients. proven largely associated reserve increase there. offsetting bad a item with, we reserve revenue. our in reserve take was was is associated it by commercial associated Yeah, with a had a

Gary Taylor

And expectations share an given then looking is revenue you're the and you for? last that back treatment Medicare mean, commercial Got commercial overall built are growth saying, can one, guidance? what know flat, basically for think stable We are rate in per into you your my normal are is to basis environment, a mix I it. what pretty you what's so you XXXX,

Joel Ackerman

start guided on not have and per going right now. we to treatment Yeah, we're revenue not

thing keep best the just to OI for do is I think range So the now. to

Gary Taylor

right. Thank All Understood. you.

Kent Thiry

Thank you.

Operator

Lake. Justin from comes question next Our

Your line open. is

Justin Lake

Thanks. appreciate I it.

Let me in. Bunch here. back of jump things

are say First, just do the ASR And deployment an there? that, Dutch cash significant just course, in of whether generate at contemplation if is it's magnitude manner, the accelerated XXXX any that, proceeds? cash, [Of or like you XXXX. about deploying to should of way repurchase could] to closure given the [ph] field a in some the you share get going there amount any it something of or an or think I

Kent Thiry

options available So, well as two to purchases. Justin, certainly those as are market open us

It on whole through I depend thinking will that on are we will we how It's expect whole factors. We And strategy on done. after a of this. it's our report now. color we'll be a don't just doing something lot bunch of giving anticipate

Justin Lake

those specifically into Okay. Any you - be we about thinking factors decision? that should of the going

Kent Thiry

including a have we price, guide to. timing, lot you or can an there a use formula - There factors we But of look, are think other don't of algorithm I proceeds.

Justin Lake

a of Medicare onetime XXXX? going on that Okay. to Is to mentioned in benefit million $XX million you Then benefit timing that be recoveries a OI from $XX right? perspective,

Kent Thiry

Correct.

Justin Lake

good previously a guy that's And Okay. what expected. versus you

you range. there, gave a Moving obviously

So the end guys the us about that else bad the way is And equal? should is all we move be think that to that to this higher or think reasonable there out it? offsetting range, any other of being should

Kent Thiry

So before. talking isn't guy relative good what this to we about a have been

the year. necessarily, call three basis in any or first things that roughly to drive this of call RPT of Given year-to-year a year. it's increase something flow will reason The like it the $XX bunch out of concentrated on be we largely would it quarter out was the in a RPT, because typically, there wanted we quarters because QX, from this given a through $X magnitude dollar will not four million a that

wanted to and just it was we coming. else make you knew everyone So sure

Justin Lake

run rate the on new expect this the doubtful provision XXXX? of you the to seeing into then, going accounts, number in drove And us patients increase Okay. And which you for you're the in be the can quarter? do tell uninsured

Kent Thiry

Sure.

bad line. flows through debt So that the

number because that standards number. to other no bad going the going referred they accounting the gross the of revenue gross And to nor forward, through The because I and debt line. revenue that adjustment flows new longer report offset we're

only you'll So see net the number.

we RPT is the use net as modeling XXXX. point it delivered safe - it So is that for to starting in I a QX think

Justin Lake

Got collection is it. patients. But correlated, of with do you're to One, increase right? delineated aren't saying uninsured commercial weren't and is - in the other, they One the each an other right? two

driving what's it? others are the increase there or So am patients mistaken in uninsured I

Kent Thiry

connected. not are They

And question. they're business underlying your necessarily if far, similar that's driven by not so dynamics,

Justin Lake

happened this the run higher more well. sounds just in Oh, patients to a Is do no, new going Is to feel you're is the place. that something like the driving in uninsured you you that collect at just first as rate, like so right? that's have feel it's you're what's increase going you rate it white that curious like or I'm feel that's - noise commercial like and forward uninsured going patients

Kent Thiry

forward. view that Right, our is going

patient I want higher uninsured, think It's number. deductible. if things. it's it's It's this you about to a few pay underinsured, bad think debt

are the these within That's insurance helpful you're get. I as broad seeing health trends industry. as can I probably So think of some

Justin Lake

California of do and that back I other Okay. for a Ohio. got against in advocating start just here if number need there you advocacy The was to numbers half cost, for a questions stuff run you Is through. can year? be few we the said should of prepared in think that to And the there nothing the you

Joel Ackerman

as a die down. or course, can play And these of up a heat little it's before you now of and No, know, lot then. things early. there's And out

the And so, depending scenario. quite drastically different be number on the could

Justin Lake

PATIENTS yet then, the gotten Okay. on Act, this? have score CBO And a you've on lastly

Joel Ackerman

No, we not. have

Justin Lake

there why haven't given know Is how I that on long up? day lot going reason Any holding we idea that stuff day been a the passing a and erodes government it they're [ph]. a - there's got there what's score? has out and CBO by

Joel Ackerman

is of really couple that are a It straightforward. quite reasons

the sucks and and issues people prioritizes and the after there's the and oxygen and after major amount done regular proposal very the rest, organizational stuff the with all with stuff stuff room. coming huge those and fatigue and a hectic, all around with And reform, typically of a proposals. when not is sort most of proposal And then, a CBO of Everyone there healthcare, queue of frenetic the in out this disputes the is these proposal. legislative all tax huge of First, ways. order, summer one up of

that's one. So

that that some and has second transforming complexity. It's the The pretty is segment really PATIENTS significant an Act potential. involves entire significant pretty numbers that

the And so, whatever about interdependencies a it the else. all just deserves with as analyzing from sort and policy or reimbursement simple It's something changing changing rigor a view. extra both not of about as of drug readmission, predicted and levels other behavioral of legislation lot point something or of on

working I been a between of guess, our It's iteration. on a lot that's and interaction between haven't as the requires been been communicating. or they if not it And, will CBO, it so, and our congressional and huge congressional say. thing third There's amount champions the champions. I they us of And haven't

amount attention. quality closet. isn't of getting in it's the huge high so, And sitting of a It

Justin Lake

great to hear. That's

a this that they're as over that, years? Just a lastly, XX way any it has like to component is Do scores you hear, cost for at it? to look and cost government think period there whatever the

Joel Ackerman

not little be is cherry very over to yes. much cost. be to We is foolish long and bit to to it's see Justin, ultimate lean question system for something the around not going and the ones tremendous you've they and guess doing do and the I what we're would do. answer picking timeframe. It's to got a one enough been where some we're CBO I not presume the themselves the the model But can they think a favor tend yeah, time say protect it is your a a mean, stuff scenario also. going Predicting other a to relevant that conservative.

did, tough predicting helpful? they But a cost. be wouldn't should. they this of out work if low with they've because quality that come yes, it job So, stuff, No, they don't necessarily all is think so shoddy we could got a

Justin Lake

is. thanks. It I it, appreciate Kent,

Kent Thiry

Alrighty.

Operator

this no at questions time. further Instructions] [Operator in We show queue

Kent Thiry

look All quarter. Thank you. good. much. to you to very Thank And you forward we next right, again talking operator, that's all

Operator

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

now disconnect. may You

DaVita (DVA) 14 Feb 182017 Q4 Earnings call transcript