DaVita (DVA) 12 Feb 212020 Q4 Earnings call transcript

Company Profile

Participants

Jim Gustafson	Vice President of Investor Relations
Javier Rodriguez	Chief Executive Officer
Joel Ackerman	Chief Financial Officer
Justin Lake	Wolfe Research
Pito Chickering	Deutsche Bank
Andrew Mok	Barclays Bank
Kevin Fischbeck	Bank of America
Lisa Clive	Bernstein
Whit Mayo	UBS
John Ransom	Raymond James
Gary Taylor	JPMorgan
Matt Larew	William Blair
Lisa Clive	Bernstein
Justin Lake	Wolfe Research

Call transcript

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Operator

Good evening. My name is Sheila and I will be your conference facilitator today. At this time, I would like to welcome everyone to the DaVita Fourth Quarter 2020 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. Instructions] [Operator begin may Gustafson, your you conference.

Jim Gustafson

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

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

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

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

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

Javier Rodriguez

discuss our and afternoon Good the performance thank today you XXXX Jim. and to on joining Thanks XXXX. for thoughts call

financial and our three strength to I the on community. These challenges created our stand platforms For one and ago. year, have our to that operational, opportunities support never DaVita, for patients us harness and particularly we the imagined commitment of reflect to with kidney out. XXXX our When patients challenges led disease. COVID their showcased caregivers things and year our clinical, to could teams

what the on and by teams. impact elderly in health focus third, changing the to First, with organization of to on The talked underlying our in patients; each The difficult disproportionate higher dedication our empathy dialysis COVID XXXX, rates continues the has teams other We to and census unfortunately latest quarter, showed and of that about Despite of January. XXXX patients care estimate November innovation otherwise of the health for been our would remain. adopt our our mortality COVID. absent community. it the manifest the the patient to patient than challenges been creativity at love surge has continued accelerated in safety our was end issues particularly our The good and work the itself our team's landscape; patients. last and and through have of patients less to and we caregivers X,XXX second, and that COVID approximately

leading future, focus As vaccination we recent hope. as such the clinical indicators vaccine. and cases, our fewer This some the efforts us me look to new hospitalizations, leads COVID to on fewer give

caregivers and with CDC agencies, our to access vaccine. identify Over with patients the months, we've federal engaging past state ways been the and the gain to the to government, for few

administer health each vaccines monitor are in year, to our efficiently and expertise ability vaccine We positioned to infrastructure, delivering week. our uniquely clinics safely patients' clinical flu our our given and each

as California access vaccine and moment start set as distribution where getting Our Minnesota states get in XX%, to the several and ongoing are In have secure to able light. the and we system conversations rates up counties CDC we're ready are like direct across to large been with we government allocation, be the green federal both direct high from vaccination their logistics higher because direct to ultimate federal of other the vaccine Therefore, Across allocation and are the vaccine. rest sites the also remains patients. rates much for been acceptance many general our the when obtain but of see challenging are access the country, has separate the patients patients goal government. at signing have we up because receiving

Now, we benefits million costs our returning delivered continuing grew COVID, what COVID spend. of through range buyback. saw we of calcimimetics, an COVID would result free was accelerated COVID experienced of outperformed by our significantly the on $XX growth California. holiday for first and absent original negative shareholders G&A only impact bringing while roughly ballot $XX financial billion, operating and billion we anticipated we impact XX% our be $X.X the uncertainty significant the increased from below performance. we guidance year, QX which was of And QX, associated net a income was $X.X deliver of combined Through flow from than quarter. the continuing from fewer travel of knew Despite expected. than higher as season to specifically, three higher financial coming headwinds COVID with the offset cost, the out year with this revenue In a per earnings created it COVID impact were expenses. benefits, million as was decline reduced share to the earnings deliver initiative lower in adjusted offsets increased to our calcimimetic last we growth provided XXXX. of we ballot approximately higher the G&A of Despite our in challenges chance and In net mortality COVID COVID a financial that in quarters to hit, of the double-digits, cost our the almost The tough given guidance QX, we impact by and operations share impact. the in profit fighting the our growth generated We cash results. impact on adjusted uncertainty, operations net and When

middle COVID Excluding guidance our in range. the increased QX, in have would earnings been this impact our of

underlying demonstrates deliver incorporates on financial our of share believe solid of business. expected us As we and per $X.XX XXXX core year, to ahead guidance earnings in performance be the impact that will the growth which look our We long-term our creates a COVID coming foundation to in belief our $X.XX the goals. range for to our

Before our me Joel on to briefly let recent touch in to Advantage quarter cover I our hand and outlook enrollment. our over Medicare greater it detail,

MA year to limited plans which patients plan. MA reminder, the XXXX the Plans. patients coverage in existing dialysis kidney Advantage the of for preliminary XX%. MA Needs among a of Special in option is end MA in XXXX, is By enrolled first in failure mid-XXs enrolled the been we the Previously expect in the plans of And Medicare our data, to percentage in already patients approaching were have care our average. As patients to now Medicare patients still on ESRD enroll patients or certain our national Medicare had in MA was only who before to which the below enrollment percentage be XXXX, based

Medicare to of momentum out-of-pocket way we're the we help an was of been predominantly lead for MA investing. payer care overall cost nephrology which coverage, eager patients, to deliver ESRD opportunities previously will cap these in better expanded and that partners comprehensive to us new our lead trend and outcomes build expect, care. exciting with to is the benefit for care and we've believe would secondary you expenses. value-based creates clinical to MA enrollment the and The because growth additional on As our This lower will the patients patients the without benefit from population toward

Our XXXX to care our of our range our build cost reflects investments value-based guidance expected model and agreement. for

let hand me Now Joel. it over to

Joel Ackerman

focus on and then I'll additional on our color begin our with some results guidance. QX Javier. Thanks, XXXX

the Our remains XXXX expectations business exceeded of and strong. initial power full year core results earnings our the

However, $X.XX COVID from latest $XXX headwind the The and last adjusted below million. guidance Operating continuing range the guidance net the $XX QX our contemplated COVID earnings reflect earnings results was call. headwinds from share million of to approximately strong per our operations from the of middle from income our surge. EPS was

Javier actual referenced, was impact approximately the $XX as million. However,

care Excluding related effect financial which COVID, teammates higher have including throughout experienced second, costs I our treatment normal of various we and certain direct as the profit been in In fourth with Medicare then negative cost; monthly G&A Revenue guidance primarily of decreased the quarter to Other sequentially, range. of the mortality due factors stock. continuing a Relative benefits third QX; in net particularly to exchange to date due higher impacts due COVID our sequentially, and reduction the $X to frontline which business quarter, XXXX, notable help a COVID, the to the hardships COVID related international year; in primarily X.X saw COVID impact would for middle include costs. loss. ballot up additionally million quarter. shares. EPS and in of first, costs in to PPE during for mentioned; QX, have expense common continued approximately we And elimination quarter in has COVID our the non-acquired in had purchased helped healthcare X.X% of QX to worsening costs that the changes temper adjusted in offsets seasonality. teammates to was the foreign mortality we our and the reimbursement a previously compounding impact and we core Patient our of from operations than trend in of of by fluctuations million the shares million per offset a X.X the our quarter of in repurchased growth result to increased the

EPS our in models, consider X.X impact So count of today fourth in our of million. equity share the awards, of approximately quarter When XXX which share to you estimating was shares. the outstanding approximately count is diluted million dilutive need as your

forward Looking XXXX. to

earnings operating can and $X.XX guidance billion, $XXX $X.XX share As flow release, is adjusted to $X.XXX adjusted is is our cash $X.XXX million, press $X.XX see in billion. per income you to free billion the for

as the than incorporated have estimate the Our of driver the guidance of our treatment range result relative COVID on is XXXX. mortality approximately wider a growing an result XXXX primary At of net is of Declining million. results. year. the of our impact ranges associated volume we a the COVID range, to are impact wide of higher of with the $XXX of midpoint in This typical cost potential

of that for in the closer guidance second half of vaccine. levels year result use XXXX return to a as of higher the continue effective assumes Our pre-COVID mortality and the of will the widespread half first

level and result significantly forecast could in performing a outside are introduce this our range. higher does in COVID there that our of certain However, scenarios uncertainty

believe operating free COVID, Looking underlying in to through the continue invest our that and we impact another expect to year in of be strong XXXX we innovation. solid income with flow growth will of strategy and cash

cost approximately $XX spent our we XXXX tailwind ballot Let a should now defeat as be a few details initiative million provide me the on outlook. additional in significant California. in year-over-year Ballot to

we do to trend occur. although expect flat year, the election As the year-over-year, XXXX throughout in general is not this contribution XXXX be XXXX. relatively spread experienced not will a quarterly rather Calcimimetics declining should expense evenly be we than

component increasing Now offset Medicare enrollment of Other we longer few the more XXXX. quick with that by costs a call our Medicare has benefit swing value-based our costs the investments G&A and factors care from our run calcimimetics new will of financial start-up include include notes our become no enhancing on These permanent investment impact A forward. going associated program. with out Advantage model rate, associated in contracts.

our similar XXXX spend. to capital per reminder to $XX that run our million quarter. expect We rate expenditures million is interest expense our $XX A be to in XXXX current

of the XX% XX% year. treatment from absent payroll We for days With bad have fewer X.X QX fewer administration. expect treatment open and please will any QX And new in the than material higher as QX to the tax and last days taxes. changes rates because and debt two Year-over-year, usual, Q&A. leap between year operator, that has remain line

Operator

Instructions] [Operator Justin with Our Research. will you. come question Lake Thank Wolfe from first

is line open. Your

Justin Lake

follow-up wanted of first. Thanks. Good of XXXX sure make just kind and on there. the parts I the understand I moving Appreciate afternoon. details of to here some kind

on that year is my in Joel add would COVID costs remainder you savings together? million said, million and COVID $XXX when this sequestration mortality? So math $XXX of to -- comparable Is So $XX million the I that COVID. from be the

Joel Ackerman

remind COVID. a there's I'll and associated Yes everyone lot of that uncertainty with

our tried apples-to-apples range. we of be number from the middle XXXX. by yes, focusing is to helpful on $XX $XXX million million scenario So a a But roughly with in the

Justin Lake

Okay.

it in overall is remainder the is $XXX you Medicare Does would And are net costs mortality meaningful kind offset? how on is And mean still Medicare is Advantage were add Or wash? the that that the that so of there an Advantage saying Medicare the be of to any And some terms from color benefit can then you million. helpful. Advantage? of

Joel Ackerman

Yes.

percent So see I X%, a of And for contract typical Integrated we're result and is our that Cures the it MA had normally doing is first of we Act is access call range the X% business, think same in rate of the upside and IKC the way of couple up the some that or the a year related from would penetration the about what the the we the patients went think the what in as time. X% excess value-based XXXX that's Kidney in about call our to spending Care. we and growth fact

an positive Kidney in a Care two related investment the So Integrated same and and ballpark. things that are from extra to X% those roughly

growth. as those So XXXX think terms on OI impact in of a wash of

Justin Lake

Can long for the have or margins the kind like I've time one. I then Got you assume really could business revenue number question [ph] revise mortality there -- can to last confirm you're Medicare is we the I've try me? loss the patients, stock about membership focused on loss it's that how on think right, to of it. that in be us think understand about me. patients normalize secondly then $XXX membership covering And been going but things decremental treatments. mean, to a on more that margin losing can struggled million, much always probably helpful forward? understand you decremental side And so maybe and I And the and what as that help

Joel Ackerman

Sure.

million. $XXX -- So using you the me keep just clear first up let

associated spend. we're in with think of Let Think with how saw enhanced associated the three of me COVID teammates thinking our categories. COVID. them is we're up mimics $XXX increased benefits the impact COVID in ways what XXXX. many I hardship about million. would to we help PPE bucket direct and giving And the One costs clear to with into

what offsets, in from It wasn't bucket XXXX a self-insured to those passing result our quarter-to-quarter other full away swing were in as big are see of one. is each the the COVID. associated the if as this they two was those two big XXXX look employer. numbers that's But offset QX some the we sequestration QX. Medicare other. year, Bucket accumulating offset at you impact So the a why patients generally that's of T&E, result And the benefits with lower each loss and lower revenue, treatments but numbers, net true of you saw to some and

and will with So although, keep we year. to the more come scenario the T&E will QX, million you bit increased but think Obviously, can come $XX anticipating low, that as down. offsets, away. costs we're will mortality. think the we'll of remain the next $XX down we associated $XXX by And be again with little will that or high. offsets of That sequestration as XXXX, in out of will the the the the the the grows impact in elevated, in will offset down. costs PPE XXXX million laid associated go remain will the million be less anticipate benefits will We nature cost the but health cost a teammates come of some different. unit stays PPE And for

So, the again, from the and offsets is roughly impact mortality. blend direct and $XXX to zero costs million

on in passing patients impacts away And Two from likely patient. lower thinking period that on how more extends, model. a this let is result question. our commercial say our there -- and than costs it it long to cost are variable. get a Now about older our average the think care costs of average to structure, the to mix and me are are G&A, Yes, can terms have it takes the it's things. are patient they're safe depends who what relatively patients -- fundamental our Medicare your where COVID is patient these you it but as over how of of majority to our It tough as are fixed

Justin Lake

Thanks color. for the

Operator

you. Thank

will Chickering question Pito from with Bank. come next Deutsche Our

Your line is open.

Pito Chickering

that Justin's into the over operating half million the guys. year that of of your of the for guidance is take year XX% taking for should midpoint the year $XXX above million? the back so and XX Thanks it question. afternoon $XXX income Good of -- we operating back question typically my To the income for the if half be

Joel Ackerman

are saying No. Well, you excluding COVID?

Pito Chickering

the Correct. COVID Correct. Because first you year. like that said in half minimal year is half back the of of the impacting then the in and

of be? operating kind So about the back back within your year just the should think half income sort curious excluding of year kind of me how assumptions of COVID help even the of half or the actually

Joel Ackerman

Sure.

So of of the COVID year, -- we front year. in lost though were early we're that would increased And the of lost remain seeing associated result What clarify with as the passed through painting year. by half meant half patient our back away scenario be in the the remains we that the half the that mortality let saying is me the unfortunately what that are who population treatments we front highly will a there have unfortunately patients concentrated XXXX. those in of through the the

is back half treatments to you in in will increase and And So through the are time to hopefully bottoming you'd lost. the take year some but it treatments see half the see those the you'd the play the of system. starting what back for NAG out would of lost year,

be don't the year COVID, So say not the can certainly think by it of impacted half impacted COVID. will I will you be back by

Pito Chickering

modeling sort of the normalized help growth growth segue help from Can be returned guidance, you levels the where guidance. because will of modest you can treatment the seeing you be? revenue provide first didn't us to ranges quarter kidney treatment about some where the and ESRD a the that's lack for you're quarter then XXXX And us then to of you -- are Okay. Has just incidence think transplants? fourth of and tailwinds nice

Joel Ackerman

Yes.

think stuff terms you has all largely -- terms about of new the of that in returned if So admits to volume and NAG transplant that in other treatment to and impact factors volume normal. ESRD

So not that. we're anticipating of impact much

So question. largely XXXX story the mortality around the for NAG is

uncertainty increasing the is painted then scenario then and NAG But you bottom in that terms to it's this in And talk terms lot If that it trying in and about there's what QX you in recover as will see out. Again think here. one QX of there. continuing to we and start of will this or it decline QX, quarter might NAG a as And by anticipate where again QX. in X% of driven I'll of low know X% see to hard to negative for really mortality. even NAG, negative be the something from could we

we're the associated us seeing not would way year bit mortality system tailwind to in you -- through the play NAG this a you've a anticipate thing had once help quarterly it excess NAG. then lagging And through reasonable terms of about X%. If having worked about but it NAG not again, all you as a then and it's of thought XXXX I return to next is I as lower we've other to mortality of to of a on really think a don't in negative year XXXX, of -- mid-XXXX. full the of the should year with lead once have number, years wouldn't passed basis, you probably is see I'd for so negative until XXXX point return unfortunate NAG some full as you over then its effect see of out et COVID guiding away or the passed one result that COVID the somewhere safe result has a NAG a to you cetera. just seen negative think the normal the The otherwise X% few And a full in year-over-year NAG to who think mortality of remember think for model NAG, patients it's the would to we're a to mortality away -- certainly about NAG

patients XXXX, see a And But hangover NAG a certainly all going scenario, normal the half get that them, throwing vaccines numbers again apologize work on back NAG I'm of the seeing in this how in around and start on access for XXXX, XXXX. than be expect you'd headwind a back than is you'll real how confusing our can the bit and of of that So to in you'd XXXX. would this I many from half whereby, forward our a caveated from higher be.

wasn't if follow-up. So clear please anything

Pito Chickering

Thanks Great. much. so

Operator

from question will with Our Andrew Mok come next Barclays.

may You proceed.

Andrew Mok

Hi, good afternoon.

follow-up you construct to your both wanted speak MA and Can value-based strike the with were I in the base? partners of First, terms on that for to arrangements patient you discussion. some able of materiality to MA XXXX

Javier Rodriguez

me grab we is Andrew, different of that. lot that structures. The a let have reality

plans we just And if the added down. then are were So we came the with and those had at models. the you now new need winding then, look historically, of special up CMMI models CMMI course, models, which ESCO

that choices in executive have then the and So we has that the we CMMI order. four had

the a amount on of on base. that's fair there's the So innovation side government value

our course, On with side we, partners. doing more the are MA commercial now of

like a And full something looks from savings cap. a so we anything to shared little structured that more

see we're menu more is sure making. all thing to the we we're can to important that the the that And commitments to value-based moving you it and that make we're to bite deliver is sizes extensive. And out as on so taking committed of grab can

to why helpful whatever that can comes. So Andrew? that's deliver we're the sure that format we way investing make on Is

Andrew Mok

Yes. a of in arrangements in have today? mix terms terms value-based in you what's patient Do of number

Javier Rodriguez

CMMI government dramatically the We of all to products. do, but of number is that going fluctuate filing because these

that since enroll. not to are play how April, is process going they sure are going out and in start we patients to so whole And how many

the will So of and size it. be that largest bulk the

Andrew Mok

it. Got

an over more Thanks. playing strategy how and Okay. XX influencing the broadly? around clinic of acceleration next in XX see initiatives comment broadly on the patient That's months? you to you helpful. more And pandemic out your is dialysis and those home both optimization Do can mortality excess

Javier Rodriguez

is it. the most modality have I appreciate the no the right and of that for appropriate we is for think thing short the because The care. answer important physician, patient the that, is choice

And that and thing is first and is foremost first so, the considered. that

if is centers. area see what that's to course, those capacity of we looking in Secondly, an severely are that there impacted, is at

so, other close we're we patients have in there. difficult taking a long we money. And mortality, as responsible it. lightly we've one are a it's lost that needed centers our have if then very for and a at of not. because can take look that And as But imagine, or you to you the you time, these have be of center that communities most don't And know centers it's hundred decision something there's very whether several close carried very we still

Andrew Mok

you as just today? rates patient XX% that among Thanks. then lastly, population rate total And mentioned have your as vaccine in some for high vaccination it. geographies. your the Got patients you are Do a

Javier Rodriguez

time get we vaccine rate that teammate starting our in hope XX%. actually and we a because can vaccine working, to remarks example, diligently -- period. quick very are the the across And is rate as in use flu were with the we low the it And the get patient do is get close The into said direct the an very flu to government is very, entire to I the cohort. vaccine we allocation. XX% Yes. normal If as we

and of lot to a making a lot you there's of read, we're But in demand you've course, government. so of a different as case the groups. And know

break through And that so line. we're trying to

Andrew Mok

Got color. it. all for Thanks the

Operator

comes Kevin Our with next from Bank of America. question Fischbeck

open. Your line is

Kevin Fischbeck

in of these I benefit sounds it patients Or the that making will to this going a it's offset and wanted ones It XX% bit business get investments. thanks. you moving of you that ultimately that need to Great, business profitable another like kind are ask over more more from little that, of assuming an the book and Are be to in. year. about then become MA X% it kind investments investment will or time?

to margin of investment to in kind MA this should is over So MA that about of patients and a on. you're leverage more patients that kind make profit capitated the to arrangement? going an time to need think How a start of we actually come are in profile

Joel Ackerman

Yes.

So Kevin, few learn we're there's reasonable I the is about low but a to over going mid-single years digits that to a lot next think margin.

approach in about on it we take as some all don't of think full cap accounting the you revenue. a these, using of If kind

plays margin. But terms per at same So patient, wind in of that with dollar amount. the about you'd margin up the

Javier Rodriguez

maybe just Kevin, up pull of might before be based. it value not me let for making investments clear little because kind we're a

a One for individual those custom of that two categories contract that diabetes, of And so, then it. mental, of end software elements cost sort I like different in there's scale each health stuff, of. would models has to non-ESRD think life, kinds start-up things of is for G&A model care that of type And framework. a there's

health each to models are assessments that and care So things specific contract. other

helps. that hopefully So

Kevin Fischbeck

does. so the when just a I'm just No given little And clear about guess about I Yes. you're bit, talking that make about point sure, to your revenue.

of in about in talking at so revenue make? a you're least think I patient is premiums, adjustments typical about number something like XX% kind thinking are have you that about the revenue? Or that that to how are of I'd on dialysis the $XX,XXX there MA is other

Joel Ackerman

forward, to lot the going making if that I is say, would of dialysis. cost I about model margin of component uncertainty on think a would a the that and not again I were us trying

it manager, doesn't cost dialysis. that of The the a deliverer call care that is on a us $XX,XXX think So dialysis medical as value-based to go two-thirds of relatively fixed.

number. And to that apply margin so, number I'd XX,XXX the

Kevin Fischbeck

that COVID normalized, goes in guess And kind is that of of dynamics I saying been to a more X%? you and doing less about only guys you X% away come heading lead patient now treatments think that like treatment other the X,XXX where because from helpful. is growth. you or even are back business factors those have then, mortality. guess COVID. of I impacts kind that's That's the for Or will industry that, back sub-three have those Okay. to mean, things in X% growth -- mean COVID quarter. when but into that you post-COVID? I normalized like think Do the and you ultimately get Does

Joel Ackerman

Yes.

I appreciate do count Kevin, a been. piece tough an very NAG into do. the of to have number. of So It's the to trying analysis our math back treatment you're use quarter would was which end The to loss normal what X,XXX is

So when December towards It bit and little the that. you weighted more actually began. just multiply was a spike can't November

trouble it, lot can into we're you these think versus of of which other in back of mortality a passed away don't the because I really play So there having question backing COVID into and things. of number. is NAG patients Frankly, excess a

I'd avoid is. what to to trying interpolate So underlying NAG our

Kevin Fischbeck

And on? right. keeping you should thing? as and guidance Is that most? a mentioned other understand normal mortality eye lot Or I a watching thing last just we are just Is little wider our swing that COVID than major creates the should question. we really All The of bit be be factors uncertainty. there it is of kind this then

Joel Ackerman

could I of there Well, year. the impact swing that bunch a other are think factors

possibility play and potential Early the the play very the I obviously mortality how talked and variance list, were vaccine resiliency, the less we can't government that with in their a but with utilization you that patients pandemic it. volume remain terms were and or think PPE costs impact effectiveness price, is sight in that. a something line. will concerned I pleased that about additional certainly terms of the if something lose extending economic could shown of through very our So, of sequestration assistance more been dynamic the mix. private to that issue like a the halt we there's lot relatively about There's COVID of in that and coverage on the terms of are run have down We've and the pay in through maintaining

XXXX. a I'd dominating The So is on. certainly one keep to are few That the is things point mortality question those for eye our yes. said that out your modeling

Kevin Fischbeck

That’s helpful. Thanks.

Operator

come question Our Bernstein. with Clive next will from Lisa

Your open. line is

Lisa Clive

is that $XXX and $XXX guess -- headwind a from few one, of the the Number incremental. on just Hello, the COVID mortality questions. from million I incremental million

I'm of because pretty of lean where offset least savings to your that cost at from like of long guidance been your looks you this organization fully for it at is incremental OI time. sort Given midpoint a understand the trying confident that a you've can you're sort coming just pretty guidance.

think a makes trying of difference or early you to it sort where on into they keep levers greater potentially gone terms a especially just their are in second Are directly switch be employed, or Thanks. of expect year? and Medicare? just otherwise the you time the do to to do each shift in question longer-term the patients there, best I'm increased the would modality And to use HD. then just patient insurance, have you seen And patient. from we since specifically private their when either into what guess to home enough additional whether I potentially But for have COBRA it's mix for that you job So understand catching even a just impact they PD home home? Obviously, these understand of really whether the home, for trying period hit? just modalities. stay pandemic on dropped as of slightly about have down interest NAG what's

Joel Ackerman

Sure.

So second Lisa, think will the and Javier first I take me grab let one. the

to interpreted think headwind? is the here's And I from XXXX, it. about given the what's question bridge as way XXXX So your I the

back our COVID OI middle add If the million $XX the the ballot and adjusted that you XXXX non-GAAP million take back our you back to and or range initiatives then for in compare COVID. adding of add the for $XX then and

get about it's the and on mid so of our And doing to cost X%, MA The it's stable you'd like, -- think top RPT a year-over-year. this Good growth. me challenging, of And X% about low margins talked it. rate. by calcimimetic year XX.XX how solid, about the So very look the inflation. core growth is single-digit I offsetting year uncertain management. IKC would the X% revenue normal Stable below this driven to that's a I themselves. COVID again with how of what kind [ph] core very increases

So masked that's growth. -- a about steady It's just how I by year stable think X% the COVID. it's

Javier Rodriguez

home because modality. me have modality, of of enhances the which answer the is second we let home on of The is it on the that, excitement life. grab lot short Lisa a really part And quality

quite are our they home, And lot security they well. we if they're a confidence and are patients as that physicians responding in patients innovating our so when so our center. And in the were

grow so at does And a developing It to continue have work telehealth getting dialysis patients home. lot and The that way. that significant is answer to feel doing a so that impact patients mix. we're our relates what it of And as progress. and can short earlier other in does of remote tools like on in and security monitoring the things that's

without to continue physician with anyone they're educating early the modality enough the course, We then world-class that the as the your sure you have you spike to your hope mental dialysis. developed and issues in free transition practices of access big the so to know you And that, any so patients selection. without can make that training, that you or is that to acclimate selection that we've community our make depression work can or

Lisa Clive

signed Thanks. follow-up are EPO a I one And of renew? Amgen? a you for that know just where that Can avenue you is on lower does And cost with for Joel contract remind just them. you long-term with your the us potential Okay. contract When with structure. costs?

Joel Ackerman

Yes.

the Lisa, end XXXX. So ends contract the at of

agreements be terms little challenged ends, hips certainly we've can result times regarding It of say. you will dynamics. that contract always we confidentiality a in know, interesting As as what a some and of other been as

to remains then. it happen to seen be going So, what's

Lisa Clive

and time, Okay. for it’s your helpful. Thanks

Javier Rodriguez

Lisa. Thanks,

Operator

you. Thank

Whit hear Mayo UBS. Next we will with from

proceed. may You

Whit Mayo

in is this experienced XX,XXX your higher or the But imply got have hospitalized higher patients to fairly than would And off COVID it's on result your And Back and seen. data know death right mortality just of if Good dangerous, that based thinking Thanks. not, about I but don't afternoon. rate four know that I I the death. some the Or dynamic, of is this don't maybe was with to been we've of missed industry -- hear seeing mean hospitalizations maybe numbers but of hospitalization I it's drive broadly the visits. you could overall this cumulatively out around what appreciate was mortality. the factor? kind I another the just hard did you're to just of low. same wanted the and are time can this parse mortality? hospitalizations probably I'm that three

Joel Ackerman

Yes.

So, That is actually has patients early largely avoiding pandemic, suppose, the saw we would in missed a you benefit from the hospital. normalized. our treatments, which lower

the now. on part you of numbers would right I really isn't through So playing treatment remind platform. our

decent-sized a have acute We a result this. of some has and that seen business as benefits

-- but, So it's the not in overall year, on significant. terms the of impact

Whit Mayo

mortality. the stop I'll Right.

that share just the just but back I contract kind you network any to think had And Just But are you're an curious are That's behaving? that on I much more covers maybe network. update and anything about it. on other broadly was, maybe that payers with that out differently network modifications. were technically probably think, you with maybe topic. Humana question accurate how adequacy more of changes just guys statement, one the seeing I of pretty in never

Javier Rodriguez

Sure.

is that grab one. Javier. me Let This

and creating sure we is I and the were to The a be obviously lot we're of accomplished. ended be Humana of just because as outcome the multi-year were contract at this call very access In for the end lot happy That great cost. Both book, complexity it's a innovating we to Humana been was have with to and longer, at a you complicated, that up the a of goals -- sure to reduced you unfortunately have do that contract. what analytics that with general DaVita looking how sure patients mostly that more told a up more relationship we has last we're the the that that has of up make think value-based win-win and year, on ended size, outcomes set making more is and make contracted we wanted and time. Humana we we're it arrangement negotiation that our takes both to it but -- timing because the win-win. MA its happened had a to of forward lot time, delivers had quite better some

Whit Mayo

one guys the hate half? wrong last looking may are at guidance think you second things -- the for think internally don't of your But, one just have to any you first what here. percent us get think the earnings. I about in actually just to not half I'd all way want you And around to the how earnings cadence terribly versus quarters of give Okay. specific Joel, you with

Joel Ackerman

got the it mortality -- payroll in usually I not it different last say think down, fact issues taxes, across than COVID a unreasonable quarter. and calcimimetics is number But, the did of relatively last as is given the that that's will And QX to I really be pattern year. spike yes, debt, QX We've higher the but Look, thing spread But will other year being the think year wouldn't then will be Yes. fewer that don't sorry. don't mind. bad really are the come weak to one will think as are year. ballot Oh normal very that dramatic. different, in initiative. a raising relative be QX, I'd my I it we because skewed higher days slipping treatment things evenly there

Whit Mayo

Okay.

half think looking I saying back versus XXXX, a patterns half? second normal we reasonable about the at XXXX, We you your half, as apply So between the could as like and XXXX? look first second first at that are should break seasonal

Joel Ackerman

it's look the year, is uncertain look looking -- you're of could how reasonable enough going you patterns and if whole think I historical COVID core the how at for to over at in QX. hard play even spread across yes number. to But point a year quarter-by-quarter a uncertain very out We obviously the the like predict. starting saw reasonable is a course that seems relatively

Javier Rodriguez

assumption end to happened different Whit year the course in which if XXXX end front up is is in be big of there what the the of it The very play than the is then continues out of spike to in which happened year. ended the the mortality back

the are that work more quarter now. is the and that the premise vaccines than quarter course And -- we on analytically the and fourth are where third look that so and of normal

Whit Mayo

all for Thanks. Thanks the color.

Javier Rodriguez

you. Thank

Operator

you. Thank

from come Ransom will question John Raymond next James. Our with

is line open. Your

John Ransom

evening. Good

XXXX the that XXXX how we you've if I'm questions, answers said always -- about but does what to in for looking XXXX, was compare given is I what to So versus mix 'XX? know XXXX? complicated MA that simple think your

Joel Ackerman

is that think in around now at XX%, we non-dialysis. -- mid-XXs. sorry And the were is XXth roughly of And remember the the the we the rest we're said market getting to I what XX%. of the close the end 'XX meaning

John Ransom

because I it Yes, was said where mid-XXs? 'XX. but end -- it what you was but the remember know the is I average for

Joel Ackerman

you can if it but it's percentage you X year, around high the in do roughly the that math that, points assume moves Well XXs.

John Ransom

I XX% I minus can X% do All right. think.

Joel Ackerman

You are good to simplifying things.

John Ransom

Medicare crazy advantage? simple Yes. I on about around But know down advantage. to were $XX I you're that we going am a theme, to I the from something Medicare this some And treatment. then lift Is continuing of thinking simple. at think the spend fee-for-service rate

Joel Ackerman

avoided this Yes. commenting Whit -- number we've a John I'm on for sorry while.

is. You wanting from can average us them to just the an what MA exactly know the imagine plan. And not table sitting across rate

comment in over we going XXXX wanted be it. about how to We called to scale. to not helpful which model thinking out XXXX why comparable we're of as is on IKC terms the So investment in

a the largely wash they're And is MA relative full extra see wash of that the to growth, that you X%. X% So year-over-year. again not

out. that the between comment So get want year on is fee-for-service. get don't year we what the X% normal of Medicare and benefit in rate we the But we'll the -- differential MA to

John Ransom

your like And Sure. force. as just heroic an then I underexplored theme labor feel

a force So by the labor be if vaccinated think your of percent hazard the of you agree will year? were end to what guess to you

Javier Rodriguez

somewhere asking XXs. up been in great We've the end low XXs, question, we flu a on and John. high It's the

on is a this and very what's experience COVID. going obviously with they're so through they've going And unique seen

the labor slightly And normal right back you force convenient we the flu? know. in But the you vaccinated. once the momentum go now if of than make have vaccine answer data our been get becomes the lower it us and number roughly that now normal don't all the shows flu will is, Our the right to short then can you XX% field question has can and

John Ransom

I that for Do terms a So you? is still and of just do for will And just Or Sure. in you hump they're minute. burnout I if this Porsche. my But challenge have has neighbor year think and Porsche, go? think and labor a on the they a think -- don’t over are terms do temps the think unusual of you back exhaustion. Do actually? hump continues will you -- over need an in you or you there the I into mean that minute. year next you a

Javier Rodriguez

Well was John, end no, anyone us. more rest in than the this and year of the resilience the dedication to I commitment steeper first the anticipate. and spike and would they're of for inspiration and an things in acute thick team of all, your of actually this appreciate this empathy of been incredible because But really year their beginning just has just

And working, and to safe. been keep so trying everybody they've working, working

a our and have the heavy, that is and the an talked they real deal this So is emotional thing about to mortality to the that fatigue heavy drain we've seeing and attachment emotional with. patients

is I caregiving have to this going consequences years system for entire that so come. And think to for the

John Ransom

Yes, I do.

you do the you Medical think you think former we DaVita control rates? guys risk downstream Is Is control is and how Medicare when Or so it controlling directly? about contracts? risk and line make they eight can global it or that it had just think Lastly, we downstream shooting with your as years the encounter don't that you we're them having two-thirds Group, they the their -- than behavior to of front make we against? up system of will, them but control patient sort healthier the sort with can can set average health the healthier patient we we about

Javier Rodriguez

the the supplement the is… answer because go. where of day, Let grab understand then can I you to at But it. think, not me And I'm sure, you end want exactly I Joel,

John Ransom

I go. I ever wife where never to know my want Not does, either.

So I fine. never… that’s

Javier Rodriguez

with add And going a lot providers deal to then we're areas two-third have can to centers is so we're our with to a other to areas the our in going in I a where think lot be it's learned have a in ourselves lot -- going trust value. that lot we've we of it we we're and where My we address and some we and learning think a strength. of ESCOs in hybrid of

hours, can sure And for and actually for a one; of be so areas have have appropriate do challenge So, then as were intervening. a assessment something you thorough you therapy doing the you number to the you the and know systems the healthcare the can getting in twofer number is that quite and if make get intervene when to hold a four you you example, the do health center patient other to two, you there. of it about patient

And a that call strategic so Did it access we have advantage question? answer let's in do patient. the the your to

John Ransom

Well the Medicare insurance of, just mean, but the And I'm healthcare rates contracting company let's say, either… downstream assuming? you they the system? a local around go into how of rest I I that these to sort hospital, trying access mean are you're understand, to

Javier Rodriguez

Okay.

question. the Most the your contract... understand of time I think, in I

John Ransom

your the in You two-thirds. were saying other margins

margin trying So you with get spend? I'm of figure there that how just out to two-third

Javier Rodriguez

utilization the I utilization trying reduce payer's Yes. now. you to the after as got get price. and and so you're care basically opposed better you the that you're going of time network assumes to Most contract

John Ransom

you. Thank perfect. That’s you. got I

Javier Rodriguez

Thank you.

Operator

Thank you.

will Our with from JPMorgan. Gary question come next Taylor

Your line is open.

Gary Taylor

the magnitude movement you're with MA wanted talking I of your little this to population. a afternoon. understand Good Hi. towards risk-taking about better

looked a a a care of any MA or percent can isn't what that like that contracts? contract enrollment forward be your give MA is capitated Is historically? there something a gain will x material portion it the close points are just around in quality to that's of patients based capitated numbers So material on going contract you a of in in XXXX couple sharing and

Joel Ackerman

a right this We're we've healthcare. as we we being It's still a look side business win growing. We're our of to opportunity see small, think the talking right of ability -- but on relatively today in fundamentally big it's eye I'd terms say, to and got non-dialysis deliver very care of and still a relatively manage the quality keeping what It's on it. small. the was about because of side Javier careful

new viewing to me a still important the some rather that we business magnitude it than of as in is dialysis. finance But the it's think I new this point small. emphasize way terms of I today as to cost view

Gary Taylor

contracting year increases, about of you've theoretically obviously, global what got And in this got rollout cities limited a professional as geographic XX direct contracting. you've direct

Next year.

contracts So you're any now do going risk off doing health and anticipate direct to would fee-for-service takes you grows? if same now? population, have plans Or your risk-based have you the taking Medicare contracting for

Javier Rodriguez

interesting you an because it's example unlikely, of I the example takes the fee-for-service I open would risk if receiving at proposition. we It's but would in it, day, the direct upstream think, to someone out direct the we and be of laid contracting, mean, Medicare in end explore that contracting. be

much of would advantage strategic of spending partake can actually your So very interesting. so think literally unless patient, they the hey, you with with said, time we That be that us. because

the be at we look course, way Of to contracting is, entity. can other it direct the

that's they will at stands so, things looking be we how see play it all And and now. out. where these But

Gary Taylor

with just sounds MA. I want you consistently question. this little guys last thought stale. And it Medicare said understand just I My I'm to better. maybe, was had like of XX% a

can had So happen you pickup. to of it. payers I to very why obviously always would XXXX, it's saying, quite XX% it's more some going that like paid understood incremental, disclose I differential, fee-for-service. that's average want to be a MA know you're in that but and XX% if you're all estimates but well understand we or above don't

rate we you we to had of go terms if EBITDA. meant of to in So what that penetration MA to XX%, estimates incremental going were and see

offset So, I our investments small, in to of guess, eligible book? estimates that that capitation be compression the so price it to patients question enough your for with rate sound dialysis some movement is, like, would that historic making related MA the Because incremental MA, has that the all created pickup. doesn't has being

would that around color be helpful. any So,

Joel Ackerman

sure Gary, just rate. working make the we're penetration all with MA same Yes. let's

So couple more a X%, ago little the grew of of bit XX and a from is over years. maybe number year couple years each last the that

couple Cures XXXX. a coming get And add points at of end get maybe number So beginning X me the up right is Again little in years that's XXXX adding of in have -- this how which another on at sighted, you the XXXX in that gotten then that ballpark, beginning XX% probably my we the let XXXX. then Cures more percent, Javier a the X in of you been right, was the Act, again the anyway X% those but because being, a for year the of at Act. points growing would and points and has X another without X% to

use if So X% Act a as Cures coming XXXX trying I'd model of the you're upside in what's to number. the result online, that

Gary Taylor

certainly despite have sounds held up still more any there's you MA how the paying of Got about environment? risk-based bulk moving volume the rate like comment it more with that's impacted it. that And fact discussions, in the fee-for-service, engendered that direction? It but

Javier Rodriguez

have. it, general, of a have in attention to think, paid I lot they the but plans always

that conversation and we're we the of contracts because yet more has be into But really so base. seen. many of longer shift is have so gotten a And a can most answer we short the didn't the discussion term, at-bats, it's value that to do

Gary Taylor

Thanks. Okay.

Javier Rodriguez

you. Thank

Operator

you. Thank

Matt question will Larew from Our with Blair. come William next

open. is line Your

Matt Larew

Thanks.

you on Just some context have center NAG. nice new development, around

center about XXXX and us development, look help maybe might terms new In think I what XXXX guess, like. of

outside target in, a thinking but mortality home then But You back don't that the you're affected the curious, you're center sort had has non-home? higher have maybe the mid-XXXX we and about fading for the number looking context given versus a change And, ramping builds geographic sense that, seeing. on new on up. just mentioned XX-XX of any to into and obviously, way

Joel Ackerman

Yes.

real it certified. impact new time it development. about there's and our -- there's when a until you conceive thinking it build of will center lead So, get a long you a you from But center

have you'd more think new in centers a impact in look, than certified the see That XXXX. little numbers even or So in I XXXX. said, don't XX come down, XXXX much new we numbers the center

number think I be likely the And to again, more And down. actually certified in to next built actual look number mid-XXs. year, build next if the in way you then, see will the year the something we're probably forward going you'll come we XXs.

So that COVID. down number was coming before fast

Matt Larew

Yes. That's care sort of on just one helpful. more the And value-based maybe side. then,

include and CKD pretty presses payers have with about of started all to and conversations thought of any at moving population robust if upstream resources curious, your and dementia Smart? some Just like leveraging Kidney your

Javier Rodriguez

is working Yes, upstream. everybody is implications the at new And and make that plans the this are, meaning of through we're course, answer means what a there's and short going are then and what some day, of the to as all the patient that sure transition as trying manage possible we're regulatory with. end to soon that possible. But the of is restrictions as deal to at smooth as

Matt Larew

Okay. Thank you.

Javier Rodriguez

Thank you.

Operator

Clive from come question next with will Our Lisa Bernstein.

is Your line open.

Lisa Clive

adequacy all do the the decrease too over you be dynamics are rule? Or clinics over is at that out just are update us what -- few you in it the the lawsuit but right a go the Obviously, on years? on line on could now if Thanks. seem time on thinking away. MA a the to the your five doesn't Do impact network rule years? doesn't best change that overturned? you clinics Hi. down? far next guess number assuming think for rates treatment what give dialysis overturned, of then the not the problem are And follow-up. Thanks chances for And the Can an gets new think

Javier Rodriguez

is then patients longer an There been shift couple to a they dropped case network. objective let a technical dialysis it. more update of criteria And on plan have reason is people right network The have in up then active basically, a time now. an the demand you the on and and and made for in Lisa. saying it basically And no objective just and Thanks, there that, Yes. that is measure was and step subjective adequate there was case tracking me had haven't that MA feet a distance. adequacy

into look patients we we we harm. make next whether one, actually we and and pursue to waiting the As community that have are will sure

Right the we any of plan doesn't waiting have that's actually abide to And we status so a if that of hope and by we experienced spirit there's see, we're that, But of that adequacy. don't. making sure not now, the the update.

Lisa Clive

Okay.

So no challenge moving forward? is original longer the

Javier Rodriguez

Correct.

Lisa Clive

Thanks Okay. for the clarification.

Javier Rodriguez

Lisa. you, Thank

Operator

you. Thank

hear you Wolfe Research. Justin will Next with from Lake

You may proceed.

Justin Lake

it Is that quarter XQ follow-up. more entirely fourth out. Thanks was us about the for some go I color progressed there Or million you coming mortality? I in through -- million to to drag else watching XQ year? for there was $XX effectively $XX the terms wanted and mortality the being talked base? some with Can in back that from give how of you assume and it Joel, everything

Joel Ackerman

impact a There pattern patients, bit why It about year QX right? it the see way and and the you in you'll that in front loss of is that's number of QX away grew treatments of associated and the and passed in QX. Yes. QX accumulates that that accumulating it I see QX with in in who and half half two. XXXX. was continuing a our was Because think on three in And it's

Justin Lake

why that's asking. Yes, I'm exactly,

million, So give or million about to think it? the like it's $XX sounds million it $XX way take $XX million, about $XX is

Joel Ackerman

Yes.

Justin Lake

given was Is XQ it to by COVID spike XQ. end fourth similar And only or like net up I'm the the quarter a the actually surprised of there so, yes, year? XQ, in that the

Joel Ackerman

happened reason by four spike in The the is curve weeks. infection mortality spike for lags November and And that the or in remember, generally, the December. three

Justin Lake

Right.

So point. that's good a

we passed the patients us we think away that year-end for can of So number as just maybe if that kind annualized number see look about number what's of the year? if of maybe can about we're had you number? one talk -- XX/XX passes that would what to rest you the going Like, you a of give that quarterly number year-end can the at not or else maybe given annualized no kind if that at -- like can

Joel Ackerman

you think in some course passing as -- than in one out. Yes. ways. one $XXX we with Most happen to the emphasize about reasonable I year, it later in quarters. what again, But a in think think many played relatively out that it's is to it about if play I And more of million QX that math of million how of how QX. the over other want the I is But scenario, also me. scenario likely think flat. if again, different our can We just you think could middle you $XXX the don't away model this patients this burdened front about increase but have scenario. the in expenses to be will

math. So QX point. is a it's the a the not little mortality an unreasonable growing. complicated result of But, QX, Maybe is as starting flat across than higher year

Justin Lake

it. Got it. Got

up to I'm -- a increase go quarter. it's then in something million. call So that It to like up in forward. go from $XX a well, much. going you to that's And actually to going $XX it's or million be maybe it's to to pick going it, first from then million million million, like not said quarter, the quarter, and significantly going there $XX $XX how little you're a quarter wrong, And will like increase $XX be a

there had patient at any change on that's acquisition tried been kind I that. get going the an off focused UK, share of looks guys call to it maybe Okay. before know you that can there -- I you rightsizing we look count And number. way, to did like footprint Is you is the Javier, in I to the internationally. hop the And

to us, internationally. I'm be you acquisitions you why share a little that with was can surprised, see strategically doing to more Maybe important? So

Javier Rodriguez

a it it perspective, and that operate from capital very market, And team. we compliance on a couple where diligent a the which we markets, UK it. value, going interesting was outlined place we where to content predictable. safely is that we had is it a on, a we the clinical stayed management government-led had where to add we program has think could had to have A a capital very, right from thought, And we efficiency. where of things, we very been consistent The I private. Sure. we could would And basically we discipline where understand is be scale,

And tender. be And think that good. so we the, will won a returns we

Joel Ackerman

Yes.

great It's team pruning efficient a been platform. into And -- back just to I'd -- the growth. to of we new the add. get Justin, exciting a capital after for I it's get had think them maintaining acquisition country, international for and then, discipline the

it's From So impact materiality it's from a great. pretty standpoint, that terms in OI, on small. of standpoint,

Justin Lake

the give have mutual, patients you acquired do And or for take?

Joel Ackerman

we'll I don't you. the have If you, of to it call. We'll get for see not top off after the it we get can the my number, head. if

Justin Lake

Thanks lot. a

Javier Rodriguez

Justin. you, Thank

Operator

further Thank questions time. this no And you. at are showing we

Javier Rodriguez

Well. Okay. Thank you.

here. Let our patients and vulnerable to is that our one, team's me COVID. conditions, close comments off really sad them Number commitment and health make is some safety absolutely unfortunate unwavering. our significantly to the in of dedication age It patients comorbid more with and

with as had today I many shared We you helpful. our and company, it to possible. get on was to some as Number the soon going our are on patients we of vaccinated hope teams. two, has the pandemic dynamics that as diligently, work our on

with pandemic sentence, business shown our very the in say this will absent unpredictable our trajectory everything that of to course, the ranges discussed follow then capital which And markets. here the impact because that starts we pandemic. very lastly, at pandemic, hard outlook has with is Of the resiliency multiyear line and plan

So I our move And you interest safe. soon. talk in this past us we'll like can Thank this for with hopefully end hope I that that some stage. vaccine you optimism, Stay DaVita.

Operator

you That does for you. Thank today's conclude participating. conference. Thank

at disconnect time. may this You

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