DVA - Earnings call transcript Q2 2024

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Good evening. My name is Michelle, and I will be your conference facilitator today. At this time, I would like to welcome everyone to the DaVita Second Quarter 2024 Earnings Call. [Operator Instructions] Thank you. Mr. your begin may you conference. Eliason, .

Nic Eliason

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

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

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

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

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

now turn Rodriguez. will I the call Javier over to

Javier Rodriguez

our life-saving to for to the On opportunity behalf today. positive care quarter for I of for call Nic, teammates you, DaVita. joining you the who thank another Thank provide all and am report all the patients, grateful

cost outlook remaining structure. wrap XXXX the on will clinical up capabilities quarter the and while CMS We of our details with performance, continue operations second cover optimizing our I year. the our to and comment revenue the for Today, proposal of our enhance

we with dive do, before clinical me let always a highlight. begin, as But I in,

times serving as every left our the work caregiver, play our Nurses give teams, you of role interdisciplinary face, and to per pandemic. a XXX familiar within central year. of caregivers the thousands DaVita they sounding to Unfortunately, board tens of during our care As know, thousands over profession day, life patients. patient's see nurses

the implemented and care the nursing proud support critical a of next am we've programs initiatives of nurses. generation As system is health to the shortage. a result, facing I dialysis

I'll highlight examples. X

we're for financial on nephrology-specific prospective leading with First, collaborating to tailored barriers curriculum. nursing entry nursing students. also to universities nursing We're remove assistance providing

Second, a Centers. created students hands-on internship in we've clinical immersing DaVita program, with experience Dialysis

entrants individuals clinical this XXX have inception than program. since of We more participating the with X,XXX year

support practicing nurses Third, registered we've to to new built from Program student a nurses. Residency Nurse

in other and to goal help feel can alleviate barrier. of of of excited Our to practice, year confident a hundreds their things, ensure which, nurses workforce the of to pressures the is more nursing part patient better to among help safety. some We're to the not during do access our lead is program to to first care

costs lower per to the the Adjusted related census that storms along spring This operating ahead in driven patient was expectations quarter, was Transitioning was earnings This primarily by adjusted care our of outcome and share income per $XXX million second for $X.XX. favorability performance. quarter revenue this to miss to treatment in or strength lower-than-expected Offsetting was volume treatments growth continued elevated than and was RPT. gain. with favorability due primarily was expected.

these Our non-GAAP income In type costs. approximately call throughout We'll quarter operating expand today. periods, this point as costs center included prior second results closure adjusted adjusted the of million adjustments. from $XX also on of excluded we

highlight RPT, contribute it since primary There detail continues me strong give are X and to Let growth on in but many RPT to support our performance increase. drivers. additional our XXXX to some I'll guidance variables

component in multiyear a is effort. collection largest and our continuous improvement This first The is capabilities.

online few last navigating and and of revenue challenges bit new now me include let complexity collecting requirements. list the payer-specific involves a authorization, our of process exchanges health on numerous from plans portals separately this participating more data So billing due more are layers patients coverage over growing has of the a and one. requirements, growth updating Billing and health prior The Medicare These Advantage payer to These years. more elaborate their choices. and by exacerbated increased billable by plans operations frequently frequently items.

collect routine made capabilities. and technology investments and These a insurance top-in-class In investments in benefit automation response, rate we focus electronic retain more with greater frequent claims these rate and claims of verification, sales comfort and to us are other XXXX the sustainable believe continue submission enhancements. into capabilities series improvements these of modernize This days reducing outstanding. collection targeted quickly, tasks, teammates enabled With beyond. increasing we on on more and of among and past over overall our more improved experience will to has and year,

not years. still in Despite we Second, of increases increases, the these full higher rate inflationary resulted result the our health are higher modestly rate have plan over environment negotiations recouping impact high as inflation. of few past a

The this We growth and In mix, to track these top end growth RPT payer our XXXX the we for progress, expectations the increases to innovation range of along our our growth XXXX. bridge structure X.X% to continue of improvement quarter, communicated X%. RPT X.X% of X continued on we within for range gap. our of in first RPT land a combination cost our expectation in With to expect factors, of year. within now X% record discipline with continued the

increase X.X% released expected Staying line while the the expectations. with proposal become rule methodology the recently in with of on appreciate CMS' The its revenue. system to of the effort reflecting has inflation. broadly proposed CMS innovate to true the new ESRD And introduction [ ] we more short internal update topic was CMS complex wage payment falls of The prospective cost index. approximately XXXX. of rate for our industry

ahead. put on the further system. the We provide would to in this of improving proposed CMS to edit, rule years will Absent feedback final the the pressure rule in and hope in methodology continue

patients of is do patients. implement going the investing for Part have comply. proposed policy our ability with aid to stated of there CMS its the the given reconfirmed provide are calcimimetics, and within with concern this intention delay and since implementation drugs experience support coverage. beginning transition. this drugs D necessary include strongly prepared many DaVita bundle that to access and to with Congress scheduled these the to will resources as patients not for to our more changes our rule Additionally, CMS' operational this support in with and entities We providers well DaVita we with identified transition around position next year understand access oral-only believe to positive the patient are

Turning to full guidance. year

are change raising incorporating income We our of our closure expenses. guidance operating a XXXX center treatment adjusted while in

our income adjusted expected a metrics guidance in presentation. to the center and $X.XX now billion. This range $XX will highlighted revenue XXXX strong million a operating the the billion non-GAAP this from raising result income have $X.XXX by performance, full in adjusted range non-GAAP about offset our to range. expectation in the is of increase performance are This million operating closure back year. of million midpoint $X.XXX $XX prior reporting operating reflects billion to of of guidance a represents This more Joel We half increase provide $XX $X.XX billion in operating including at of including momentum excluded we of costs today new treatment the year per the the key change sustained for previously detail adjustment. progress as our a would that we approximately

performance our over now Joel turn it financial discuss I to and to detail. will in more outlook

Joel Ackerman

Thanks, Javier.

and $X.XX second income EPS cash $XXX Our was was adjusted quarter million, was million. operating free adjusted flow $XXX

I of that me some mentioned. into our for non-GAAP results in on Before Javier quarter, detail the presentation specifics add the our to change reporting dive the performance let

common our a the we As recent to G&A will center impact an no presentations. our non-GAAP care closure adjustment center costs SEC costs amortization letter treat lines. result These DaVita, a patient in and depreciation of costs, closure as and expense longer from

closure are QX roughly expected prior help a adjusted same Our under XXXX guidance to million approximately methodology. updated also represent with period million EPS prior in we $XX this and shared now for results full year. today year of . To for our quarter new these the now methodology. costs In and total periods, $XX includes aggregate, showing the per comparisons center costs OI follows adjusted XXXX

For comparison, center closure costs in XXXX approximately $XXX were million.

million cash million center $XX are These to have closure no of long-term XXXX, our manage For changes forecasting overall expectations. how on our business $XX we flow or presentation costs. we impact nor profitability,

second year, QX each treatments QX. QX XX improvement the increase period compared quarter the was of were up quarter down in our day and This of to dialysis the per starting in day components volume. and primarily seasonal me basis Sequentially, specifically with versus that, due in X.X% treatment were rate. U.S. performance, same last census to a With per treatments points. mistreatment up let gains break

as was headwind growth XX severe primary on below quarter. treatment result representing factors: First, points in X year-over-year treatment approximately weather of in year-over-year for basis higher resulted and May This miss June events growth expectations the our of rates, a

a disruption in seen Hurricane but with have July Beryl. similar We more the pronounced impact of

Second, U.S. than were expected. net weaker gains census

dialysis mortality admits grew to our was forecast. the sixth quarter, consecutive for Although new above

negatively We half of year. the to expect impact these the second both factors of

likely treatment X.X% full between the and now expect X%. For we volume be will growth year,

higher typical is Revenue sequentially. per from This treatment QX. increase was up patient and to approximately coinsurance in $X primarily deductibles due seasonality

higher year full anticipate per declines the [ growth for taxes to quarter-over-quarter. XXXX. increases revenue approximately cost seasonal higher like Typical of now X% QX other flat payroll offset per we treatment outlined, costs Javier items quarter. ] inflationary were Patient in treatment and As X.X% second care in benefit health from

million and D&A Depreciation result in million decline our year-over-year D&A approximately numbers, to a decline $XX now expect costs. million in these in a $XX Since closure in and a amortization Center approximately versus million. costs adjusted included closure $XX to XXXX. center XXXX we QX, in $XX million costs in adjusted as $XX are QX now of declined were partially of compared D&A

$X operating Care Kidney IKC, million our integrated declined care value-based sequentially. For business, or income

past, year the the of seen operating was as a first we expect have income quarter-over-quarter. result than half to half significantly the be recognition. in timing results we International in of the stronger second As revenue the of flat

We acquisitions close QX year-end. and in have to and our in Chile closed Brazil expect in in Colombia our acquisitions and by Ecuador

date, net due to million. QX, million and quarter, an was in Leverage reduction X.Xx months Moving now ago debt This the and additional from million repurchased repurchased structure. over $XXX to X.X trailing EBITDA. of have by EBITDA of X capital X.X QX we end a growth at in the second down to In was shares shares. we XX-month

of earlier event this to cyber As Healthcare's year. QX, UnitedHealth parent, approximately the of held related from funding Change million of we the $XXX end Group,

successful collections that and As impacted we balance of additional today, claims. to approximately with on at million $XXX currently align expect repayment sits

collect We unchanged quarter-over-quarter. impacted to continue claims health care

As leverage And maturing looking always, continue optimize this to assessing capital remaining ensure our are to to which our in balance of structure, our within to We capacity Loan To debt to opportunities increase leverage target are within XXXX. we opportunities includes the maintain address to assessing range X.Xx. this our we also of Xx sufficient end, to B Term range.

conclude, let XXXX. share for guidance about some adjusted income our detail To operating additional updated EPS me adjusted and

As this guidance our There number. OI is range moving within adjusted pieces billion Javier $X.XX are several $X.XX to said, new billion.

let and key the So you me takes. give puts

adjusted reiterate now adjusted cash of is additional financials of does flows. our in an were that expenses or change adjusted $XX operating the costs expenses and this range. our not are million center our not presentation To This comments, related approximate OI this previously impact results in a including GAAP earlier we closure in my to is guidance. First, OI

points represents expectations, growth relative RPT to basis million approximately our of the additional XX $XX an previous of at Second, to approximately midpoint. increase XXX

expectations for Third, our related full and which patient by year. reflects the is improvements the costs, to volume mostly improved range for expectations productivity care offset labor mostly revised

Altogether, approximate of million increase the represent adjusted at changes income these in the operating an midpoint $XX range. guidance our

remarks primarily $X.XX range in We the for That are prepared today. $XX.XX also concludes OI. due and increase updating of our to a guidance per to XXXX adjusted to share adjusted earnings my

call Q&A. for Operator, please open the

Operator

you sir. ahead, go [Operator with Instructions] Pito On Deutsche please. may Bank, moment, Chickering

Pito Chickering

just [indiscernible] you what give you to through saw the like first revised of the the July on high in you versus get at step-up the in which a guidance, on X.X%, NAG, is us some the quarter grow half end saw can big and of color I what what saw looking you year. your

sort to what give in guys want of you I seeing of So that. kind high of to the confidence just you . see end are

Joel Ackerman

Sure. Thanks, Pito.

expectations expected, had what and elevated dialysis pattern there So strong, elevated. the mortality quarter, seen pre-COVID is what was new and through miss to with admits really consistent to the was growth our we growth what and the we treatments remains remain below we census continued, there saw . were relative has

half which In terms last one thing to in treatment the back extra year, the is the half relative gives out day the second year of got of half we've I'd second that point of an the year. us confidence, of the year

So growth. half of and we of XX whole itself, a year. changes that, about for the of really in bps the additional haven't in lot is that, Other back than of modeled

We haven't built be we're and in census challenging. expecting to rate to treatment growth, much miss continue

the back year-over-year of than of growth, change in about half So, any underlying year, if you treatment any it's think days the really about assumptions. the really rather

Pito Chickering

bridge raised just guidance by some us art, guidance. components versus if $XX previous we And you $XX of raised of exclude Can of you sort closure the million. million the but Fair you costs how by million guidance $XX Okay. gave enough. you

Just to understand that . XXXX. wanted just [indiscernible] -- I

Joel Ackerman

Sure.

where what guide with start X%. moved revenue I'd So last per was now essentially we to quarter X%, treatment, the from

So at XX midpoint, bps is million. roughly $XX worth the

So revenue through operations, far we've year in bit the number and strength continued a that one. improvement. the mix from success little that's a then so And coming of combination on that's of seen contracting

So that's that X . Contributing well we're is labor seeing as I'd improvement in and worth things $XX the factor million. highlight there. some dominant costs. to

Those a over headwind combined year premium is out. better X the and about whether First, have bit And expected. $XX are pay, $XX some that in are we second, things or that OI of spot worth million, the down. bonuses lower come the volume million than productivity about of it's time offsetting seeing little we've called from

costs. account million to RPT, $XX get in volume, minus million into million $XX change million plus center you the before from taking increase $XX $XX from $XX So closure that from plus labor, million will

Operator

is . Our with Wolfe Lake Justin next Research. caller

Justin Lake

Let me just question Pito's up follow on there.

lower You volume? said $XX from million

Joel Ackerman

. Justin. right, That's

Justin Lake

XX what, And midpoint. down took . volume you the by, bps at

Joel Ackerman

I were would that at we'd say, modeling quarter thinking weren't as about as internally Yes. last we midpoint. we it, of be probably the

to $XX you'd that So -- million. volume lower a to bit of number get to have start you'd bridge probably little at lower . slightly a to a

Justin Lake

to So maybe relativity it's XX the about basis trying points. I'm here. just think .

Joel Ackerman

the you're Yes, pocket ]. right in [

Justin Lake

. OI So in an your $XX on points volume million basis of annual XX mind, of is about basis.

Joel Ackerman

have standalone, points would just worth, probably would -- I if $XX volume million I $XX you Yes. told I me -- basis ask what's would you to of probably XX million.

[indiscernible] more not number. lower So slightly

Justin Lake

[indiscernible] the same thing.

Joel Ackerman

is I'm million sorry. million. The team here is correcting $XX me. worth X% to $XX

ballpark there. So you're right in . the

Justin Lake

did $XX next say Okay. And then center on closures, $XX million you year? . or million for

Joel Ackerman

Yes.

For be in will XXXX, range. number that the think . I

Justin Lake

Okay.

Joel Ackerman

close that, not costs, be all important to closure costs you're just the a clinic. center clear right that it's modeling And about to when we realize come when

from [ lease example, close for them acceleration a when have like of the clinic. Some ] costs, delay can we

it, somewhere we're XX in that the year, next call out holdover level, seen but it what costs think some pre-COVID our them what from a -- a back a calling clinic be will be holdover of clinics the will closures by . we've clinic from I range. should in rate So to XXXX. actually was be closure year,

Justin Lake

it. what get to. was I Got to That's trying

So you think next to XXXX be back center year? like you'll closures .

Joel Ackerman

probably would XX . about end guess, like I I next year, more quarter, And for We're that. back probably a normal something at year, we XX getting closed we'll think for had out running light. have year, This year. of the pace to the called for only year and the Yes, last the

Justin Lake

you to per from question, pricing I And had quarter the revenue before mix One, mix versus What's . think QX? the second [indiscernible] treatment. the the in offsets you off, in said a some release, pressure? -- then I Okay. just on

Joel Ackerman

beginning in Mix was down right drop it's the a XX%. around where QX, It's the it but hanging right year. at was of

a the of any of at that of we QX, change mix delayed. bit some challenges end and claims was care, some movement as impact. think with commercial estimate I think between to commercial have I QX don't -- which would don't some little on were Our . because QX, the of mix health of lot disclosed there's But financial a harder the the changes real of been

Justin Lake

the on lastly, exchanges. then And

So the let's quarter at I the your to exchanges, you XX%, how pre-COVID. year, I the report. assume that let's were say, is say, today if end remember that XX.X% much But of that exchanges -- fourth from much from and how coming came of

Joel Ackerman

basis . Yes. The XXX number about points. is up

Operator

is A.J. UBS. with caller Our next Rice

Albert Rice

you the is guess, third business, you it's does in the the expectation? in the million. the On IKC as $XX did and is back $XX positive more I both I million. your know $XX the loss, if quarter? in And fourth the prepared suggest And million about that you'll year. for everybody, calculated think year target say year-to-date, see the positive you'll half remarks, . of be still I've

Javier Rodriguez

the for Thanks question, A.J.

right, numbers $XX year. year still the to at that meaning in for the to of and the a and change in necessarily million the million but year-to-date, negative got there's the back rather on recognition big not because revenue change it's up come end You've the expect we But $XX we're range. business,

a as And it So to annual basis and big more look on but the we've fluctuation that this range. still know, difference at on an asked bit that's quarter-to-quarter because the holds more you can you be dramatic, business, there.

Joel Ackerman

pull could forward much, and stronger be Then when QX of depending between on information would That get be us to on land. and QX can just to when a . it to QX again I to we Yes. QX, for will quarter quarterly quarter. revenue hard A.J., revenue loss-making the predict QX again, said, a spread the much the be in expect some QX.

Albert Rice

volume but treatments, on adjust to And your miss decision the What mortality. to of the are sounds was in or quarter-to-quarter. storm around a on mortality? And significant sort obviously, impact you normal you mention fluctuations it like just see the mostly Okay. did from not the . you see did comments contributor that that's

Joel Ackerman

Yes.

XXX pre-COVID, maybe the would second call for have sense about volume ourselves as mortality answer asking step are thinking we'd definitely volume year. like the relative we be be. bps back -- than And are to a on structurally been -- And higher it So just how to on it, of we we're to you back, is are short where we a we expected. give is we and is the where behind question helpful relative to growth, step for

And we are -- we quant spent a to trying of time lot that.

are by of the we data, try with data, That the information where numbers as it bps we $XXX pre-COVID, the quantify as here, relatively where or the a well have for both decent million year volume it of really limited X is inputs We recognizing relative we with amount between the variability. XXX volatility of and the have, things. bps, our playing said, we're that timeliness XXX is quality growth up the made small was it to right, gap think of

biggest related XXX not months is to year mortality. to that than Mortality of actually And structurally, bps XX basis the X to relative About it running was. was gap higher. up it think we're is we why this points of just ago. XXX that's where component higher It's

managing second our clinic took we thing capital-efficient relates we footprint. the to approach The believe to

that did, back teams years, utilization, over volume utilization was very our years. for to roughly clinics pulled in in capacity whole the before the And decline. investment healthy technology. was on going that We and or result industry XXX our clinical that could getting X the go to and our down in a de we back recognize were one capacity X quality information we few back and support on focused novos us You last closed others of we was and beginning

it And range the that, The on X.XX quantify, call all would basis years, have put last XX to somewhere was had we be it, with of It's probably to points. of over but that in lost believe result decline to a clinic we we it, if of a ] range hard our some XX volume. the share [ roughly. in few

the basis together, So we things basis put clinic mortality management, of impact XX XXX those think from and to you X combined our basis that to with XX XXX than points majority of point explains higher XX point the historical gap. footprint

new thing, the of admits not will our list I is to note one dialysis important gap. on

a remain before, pre-COVID dialysis healthy is The new said admits I've and saw As those the consistent in at we strong. growth with growth level. remains

question gave more at I beginning, picture. hope year bigger the the on bit your answered the color So you then and a I about

add? . Javier, anything to

Javier Rodriguez

add thing. one Yes. I'll

that a to basis walked dialysis . XXX up and there reflects clear a, of at ability no. basis normality It of is time And should and best the of we that we XXX are answer see the beginning Joel, But new rate. on conversation, all, ask change all make period on the to the bit to points just numbers, of at through rest back through of work about growth question First of elevated we of ourselves we've I change time. a to said lot day, think the structural come you're that appears come the the done, end that you the the where a is you mortality that overtly us with is point. million, our that it, going record sure to he patients is the call and in over the I the of volume these a while let's of to is, that $XXX the just trying the that talking was that are

Operator

Andrew is with next . Our caller Mok Barclays.

Andrew Mok

mortality elevated the would during intuitively I dynamic would the why Maybe on of in what's there of tailwind working think excess assumption point. suggest a is because mortality pandemic the early follow just mortality to years up be I guess the aftermath. that on the

here your on what's assumption it working kind remains of So why elevated? .

Javier Rodriguez

Yes.

say it is community understand with asking reality that come what is been we've and it you hypothesis, But people season, a is talking like to trying et lot, you see to can the that actually with something cetera. question that an Integrated going up the And and Care, managing should new improvement, driving impact our the a quantifiable could not SGLTX is one support equation, answer physician we we've confidence. starting the and people, and of a other GLP-X, cetera. the on Your have that to elevated Kidney one mortality bit higher flu if to upstream, say we're been real drugs, were on side et

And and we so are And as we share we head as our we scratching will will be working soon you. with on something with confidence, . it. get

Andrew Mok

Great.

in Okay. much mentioned last the how the I in seen And runway is the where we given gains effort. collections multiyear that remarks, is you then think beyond just . over this we've X strong prepared And in left the are improvement process? XXXX? quarters, And a

Joel Ackerman

half would to of XXXX year. I the certainly there's anticipating the back from improvements Yes. than in the more say in annualization of we're be going just nothing else the

RPT I are from time. say to safe mean think over that to benefits will by their what time. Looking this I combine to there, contribution decline any forward going from over it's growth that is And

so I much more it's to likely we're over it. there think period predict is time sustainable. and That what far everything to capture is how hard said, we've achieved

certainly years when ago expectations. this . the it think with exceeded of QX to I say when it a started has started it talking fair our to XXXX, we about few and Street we relative is in

Andrew Mok

point. on if more And follow just X I it. Got could up

a closures potential being drag to called volume well. I growth clinic the think out as as you

you leakage -- treatment, there? And time, of given your two big chains? to going their think the and at . not where clinics are of are there -- where dialysis large competitors I do you patients is one think if get your those think same do one the how competitor you much closing dialysis

Joel Ackerman

Yes.

over smaller than the years. of So we probably clinics. on fewer actually lot better some data that last a and is this. that. gained And of share. that And on and on up have share that volume more actually few we've the on -- have the is share operators clinic the ask data work enough, believe treatment built closed And interestingly good have They or clinic have we we midsized They done result better as And we that of have a dialysis the the clinics. that bad? result picking ourselves, is question is

it's start during In And to course, at general, the time share. you in as And de of it, this mortality pandemic. think we way we clinic that market will way is stopping looked of and escalated share. the one, course, in the that novos led tell of the

So DaVita capacity. rightsizing the led very build we And it stopped. see then aggressively was in if you the way

million And so if reduction. XXX you $XXX you going depending it's were say shorthand, $XXX to math, and on roughly just say we've centers, million to of closed do you roughly could would the fixed expense

And the loss of volume is roughly in that $XX million.

trade-off. that with you like we're math, right the say just making looks that would So it

the a of but have physicians money considerations there's we it. and access the dynamics of that lot all you of just to the relationship other I'm local giving into, patient side course, normal Of with go

Andrew Mok

Great. Thanks for the color.

Javier Rodriguez

Sure.

the question, point to exchanges. exchanges. that's come exchanges. from next basis I I XXX XXX back points I points to not increase about just that on the I Before we take increase want the came to Justin basis gave the of an wanted talked mix of answer revenue, clarify, from XXX just to basis

. that So I wanted clear. sure make was just to

Operator

Kevin is with America. call next of Bank Our Fischbeck .

Kevin Fischbeck

so Do year-to-date Great. follow-up that far? comes on from revenue point. the you . percentage Maybe just that just of have exchanges the like a

Joel Ackerman

give -- we're think we're I going to to not Kevin. going . sure I'm don't that number, Yes.

Kevin Fischbeck

in you just you looking were Okay. you a look guess, And about you to else? you be said would I made deploying up share that Or saying comment then capacity ensure And would lever were in . you to about range. the potentially more Are add something I capital, repurchase? remarks to leverage. think prepared that on debt this talking

Joel Ackerman

Yes.

above get that, I use was here up of goal to up. leverage that's characterize phrase So what range X.Xx. range as I what is wouldn't or because we're would to if leverage levering Xx our multiple our lever And the our the leverage really targeting maintaining

maintain EBITDA by need range end think right reality multiply X.Xx, leverage goes the up, now. debt as the of it need. is at to you more capacity. just recognizing that grows as number capacity X.XX%, that's and range X our We the the of of middle you in order the low EBITDA to I that And it's using we're

debt much grows. So we're as we stay can about that thinking make range sure need to EBITDA how we do in capacity .

Kevin Fischbeck

Is . capacity be theory, repurchase. that used share on In anything would or else there that Okay. -- is

Joel Ackerman

our used would capital mean using be allocation philosophy. I it

So and would of do that, be . would it capacity the love of level. top -- would the invest certainly list return how maintain at be first our hit to thing growth, we leverage be the Barring would use to to excess our the repurchases needs thresholds. recognizing it we growth capital-efficient share on to in

Kevin Fischbeck

less that? Or Okay. flow, And that free well, guess, I -- then be as free line but flow of we cash I collect the that back? you your United a to to use I guess point on credit, impact, guess cash going doesn't of that about [indiscernible]? change That's from how think would just do mean just be pay it I

Joel Ackerman

-- of pay form just change -- would a in debt. debt down revolver included we did for form $XXX it had used it's deal, million our as number one bond drew No, the exchanging we think we And debt the it it and I of debt, just extra we we -- and today or if net debt. on of it's -- if an to another

cash it free hit change wouldn't . it our leverage ratio. flow, wouldn't So

Kevin Fischbeck

it guess mean, you're would wouldn't when hard then issue why point hard there now? guess normalize. the thought fully And -- side I it to the it's to don't get understand But guess back couple other to quarters? And normal hard to . any I that? I is behind is next about to of of because reasons I you you're the such it. say looking things is just mortality Okay. kind And what It's the for going back it's why it know that on know over of to that an say

Javier Rodriguez

because again, think think we good it that revert not are that the think being from can we the to do improvements mortality. happen odds probably structural XXX%. of normality. that predicting don't you Well, a is don't back agree that And some But is reality the we highlighted with I've and it's I will it wrong of idea,

people is many et what well, happened. while why happens and can go a the assumption of is cetera, in dialysis. lot to that the exactly there's SNF, relocate, don't And And And can know a you say, et moving that reality people pieces more death cetera. that they're

to there's and have actually full And so in lag up follow time. you a story, you don't get the

systemic of And no work any there's so lot get piece seems you. and . that a think why and we'll to talked we've back But and hard a we're it nephrologists to having can we information, trend to that's that to together the be one identify.

Kevin Fischbeck

capturing a that what you to has similar is maybe XXXX? better about kind think It Okay. be maybe far you're to, bit better little little far so question. than tailwind And sounds of moves is as a mix going like going that just about for some into as be it then to big sounds you sustainable, to you can little still to that's guess, the contracting should we the everything raise, more How bit, happened commercial bit last a revenue commercial of like part seems Or reason? maybe normalize now? think seeing Is but like talk at least Since contracting? a that I was recent guidance it around a inflation. thought treatment going per

Javier Rodriguez

basically, RPT, have X to dynamics. think Well, on of you

you have revenue you negotiations have and mix, cycle. have You

about is of yourself so et asking -- negotiation, think is which you to put inflationary? about into future, the are have think the kind future, What the And And what for contracts the it cetera. to negotiations. up Is you're I environment? still

explained As are contracts the usually come And past, every comprehensively X big we've up to contracted. in we our years. X

So any in many given get [indiscernible]. you year, don't

And to partner our on means great to solutions that really payers. have focused we're at what What a the is great cost. best is be clinical to

XXXX. I what conversation, We margin, question, would about don't change said, margin the just in predict the to in that bring so remain I XXXX. the to foresee strength you kind that how feel of -- in looks do considerations if answer cost you i.e., to think Now anything what likely can't like. wanted That dramatically is the occurred

Kevin Fischbeck

just to Helpful. maybe bit guess little a ask differently. I

like all the rising it's either shift a of the higher giving appreciating stronger better reasons feel you you If Or and sell more, they at [ shift little you're provide contracting, power? getting just negotiations, in so are do need companies realize ]? is inflation bit more, for commercial and tide . they or there's a that's value managed negotiating care network you more you

Javier Rodriguez

just same, share Everybody and to the network But And containing the inflation. is changed all think are trying consideration account and have than course, best those we of and fair their we I dynamics meaning do an community No, the patient cost haven't to is those add to trying everybody value of have other inflation do things. take to the into . and expansive conversations for the in can. costs. type

Operator

caller TD is Cowen. next Langston with Our Ryan

Ryan Langston

Just a me. for couple

maybe it, is that growth, any performing are below census to pulling geographies maybe of a lower bit? isolated particular the I that On little maybe Or and average are geographies? missed but maybe the certain there down kind that

Joel Ackerman

board. seeing across No, We're much pretty that the Ryan.

Ryan Langston

opposed to year-on-year, And then just a and it. you're will the improvement, from assume to working to sounds of RPT some guiding X%, up end year annualize you're as maybe obviously, closer may it Got still Is to on this X.X% that it fair maybe just to that like, X.X% . 'XX. through clarify, to maybe the X%? that into

Joel Ackerman

RPT? about XXXX are sorry, asking I'm . you

Ryan Langston

some be growth it you're to X% into X% year, to the that closer maybe guiding prior, closer year, if to versus maybe . to might thought fair have this in to is rate X% but will XXXX. next X.X% or I'm X.X% to higher X.X% of Yes, it asking would annualize we

Joel Ackerman

for for would I to next early to X.X% go guidance, It's not year. but X% Yes.

that another perform for at year. I stretch this would level real think a to be

Operator

sir. you ahead, Deutsche may go Bank, Chickering with Pito

Pito Chickering

Just compared a first quick it your follow-up how here. center What percent . of with your quarter? treatments were home this premiums this the was quarter? quarter and equalization And what

Joel Ackerman

Yes. . utilization, XX.X% utilization were to between around the is XX%, capacity ] mid- high and XXs right still terms that. Home in of somewhere running in somewhere [

Pito Chickering

of the guess, that couple I X% evolves the business, over margin looks range. international think on to years? about the And you next Okay. . how be do

Joel Ackerman

I largely Latin it's think . couple years, in past, higher of international done next by growth the especially to for driven in in next the we've been acquisition year America. than likely that is be the

Pito Chickering

around for track . X%. OI margins, Sorry, the I

Joel Ackerman

margins. OI

Pito Chickering

. that for evolve international, time? margins how guess, does I over OI

Joel Ackerman

Yes.

I could margins, up think on to unlikely. will I but continue have say it . get to would don't tick a highly it ever U.S. view I the that's

Pito Chickering

for...... one All Last right.

Javier Rodriguez

of dynamics. in The of some and margins differently. payer, Number increase, increase. go a they as no government, such couple have There's in And you have And countries. internationally of then the international. XX XX is no have course, thing there's will they there one, these, where they X and a so will periods lump weigh to

And unusual . so the it's margin. to predict, dynamic got a little harder and more

Pito Chickering

use a than why the that margin doing rebuilt? So is, is flow cash I better of guess, guess, harder, I share

Javier Rodriguez

adjusted are But we which . a the seeing margin we're asking Well, question, confident return. on different you're is increases.

Pito Chickering

about this for X,XXX quarter the one per last you the quarter, is the spend as half about it then IKC, last in And average booked what on live life medical but last quarter. enough. Fair Okay. was

new type currently they who dynamics you're are have versus patient sort IKC, patients on can of in as So bringing of you what there? talk about you

Joel Ackerman

lives with medical of are only lot would don't flow medical costs you're be through. the not their P&L. Yes. -- medical the through talking I there, our costs flow life. ratio cost cautious actually SNP about per It's of the lives where that A

calculation. I wouldn't there go So probably with that

Operator

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

Javier Rodriguez

conclude, recent the from for Michelle, strong a capabilities. another questions. and enhance build was our years great to you, Thank Okay. and strong quarter investments in team, our for resulting it DaVita To thank you all systems

we your and As underperformance offer to partners margins well. future in while early With the the -- and to we interest benefit our we're guidance, for be about achieve excited ahead, continued we are Thank it's a patients, foundation, our sustainable. can this you look the teammates. that underpinnings little believe DaVita, . of

Operator

call. Thank you. conference This today's concludes

time. this and go at disconnect ahead may You

DaVita (DVA) 6 Aug 242024 Q2 Earnings call transcript