DaVita (DVA) 13 Feb 242023 Q4 Earnings call transcript

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 Fourth Quarter 2023 Earnings Call. Today's conference is being recorded.

If you have any objections, you may disconnect at this time. Mr. Instructions] [Operator begin may Eliason, your you conference.

And and conference quarter you, Nick CEO; Group Investor and our Rodriguez, our are our fourth We appreciate Eliason, Relations. of President to Joel call. Vice me your our I'm today Javier Thank company. welcome joining CFO. continued Ackerman, in interest

meaning that securities laws. federal during may Please the call, note make forward-looking of we this statements within the

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

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

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

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

over I to will the now turn call Rodriguez. Javier

Nick, you, the thank joining and Thank you today. call for all

strengthening with characterize recent well ahead. uncertainties systems and that investment in on the a some investment with of capabilities, and made teammates, year, positioned we highlighted We great benefits past platform. we our business the the our few past of over the the that multiyear our reduction revealed and ultimately we're As continued and the the in stronger reflect for XXXX us . External momentum financial risk resilience years years. and years began XXXX performance our of challenges early our believe in

drugs. our guidance, our GLP-X annual Kidney integrated cover briefly Today, and continue and I results XXXX discussion provide Care will XXXX an our on on update

outstanding begin to the More This will do to I strived the and however, clinical to hours which XXX,XXX we highest give achieving XX a of communities, to committed step that XXXX, marks over a service means always year of also care only a our our back. cumulative second. XX,XXX be not their with first ever call, logged XXXX. First, have our teammates hours but as providing and than community we we're In highlights. years toward by company goal

tour, special kidney advance population communities symptoms wrapped which our program and And Today, of our teammates recently of time for often country. goal raising kidney until has our some XXXX severe. become personal a our health awareness We health the untreated their supporting mobile XX% goes undiagnosed U.S. screening of to kidney across disease. local and education disease, donated care

may tour help diabetes, health pressure was obesity, Our history that mobile factors identify and to designed high blood chronic risk including lead of kidney disease, disease. to for kidney family screening

our in teammates our X X bus power in service detection this XX,XXX hours of than more states. early dedication on to screenings tour, awareness To communities of volunteered prevention a effort road, the free communities. offer service across For kidney to months to miles and example XXX is of our raising for commitment XX their This disease. X,XXX wonderful local to ongoing combining with our traveled

came income, to EPS above adjusted the flow Transitioning free well beginning of year our guidance performance. Full operating in from all and our cash year. the XXXX adjusted

labor throughout year. XXXX challenges environment guidance the think would I XXXX. We reflect our that helpful to the uncertain over an volume on context, continue and shared progress our in began assumptions it's As back in and

initiatives on those facing. financial of headwinds we executing developing a simultaneously number on were some and focused of We're offsetting

on into points we These consistent to XX% a early the growth progressed, the impact As operating XX% target in range. a saw in in back improved income, combined year year-over-year strong operating ultimately adjusted trends, data positive our adjusted growth implemented, and return turned encouraging resulted positive performance of ratio the trends. the the leverage which the we initiatives in with EPS, and year,

share color. I'll additional X points for

First, on headwind been with surges these that in XXXX first landing growth X% then, was entered new volume. the annualization together, we year-over-year, able census the produce quarters same with started, due at lower growth were in of time, increased of Since and X successive since flat the consecutive from the prior COVID Adding magnitude top At guidance our a approximately volume saw XXXX factors excess patient with for mortality to year-over-year mortality. admits. We have to time year. patient COVID range. weaker

was Second, on We than in our reliance XXXX. than XXXX improved performance cut our labor more labor quickly staffing anticipated contract better centers. our and in

the teammate side with labor On of in turnover has the ledger, the care other markets. remained strong health elevated line

costs ahead. and retention for years training improvement improved the in an opportunity forward, represent Looking

these we treatment U.S. performance per initiatives notably, related spend year executed pharmaceutical from and Third, our drove strong in against facility through while revenue Most reducing our days full to for consolidated sustainable an more XX invested our day sales the Adding our platform to to achieve our capabilities. in improvements footprint. This differentiated outstanding. $X.XX additional revenue independent collections. and of our in than further this, operations operating trends, in we we resulted cost-saving

I cover moment. our we detail for Kidney a in which will in profitability annual more Finally, exceeded targets Care, Integrated

To we since and summarize, XXXX. with start in XXXX the had visibility more have of COVID we confidence entered that

operational has and us ahead. of the systems, years for Our challenges few well positioned ability to invest despite people, years, and in the last financial our the process

business, note, will or transition value-based let Kidney Integrated that Care IKC. which to call me we On care our

on quarterly than results. We have investors consistently urged assess our rather basis this business our to focusing on an annual

Now time reflect outlook performance is a and IKC. pause good our and of on to

more our or patients per programs, represents level, costs; based medical member our management. performance cost and a detail. through X our per At total on growth; month high IKC which G&A, of indicates medical reducing model in spend a each on three, bit IKC and assess total one, effectiveness two, and walk metrics: care which expense in we performance I'll primary clinical of

First, grew total to patients care for approximately growth patients of our reflecting a XX% represents XX% programs expense XX,XXX billion, from year-end, $X.X of as medical This IKC year-over-year. in increase XXXX.

programs, our disciplined, value-based continue prioritizing Then to growth. traditional be care we profitable

excess covered For XXXX, of for in and growth we expect medical total expense lives. XX%

healthier care proven collaboration driver expectations. partners to lives prevent rate is hospitalizations, of in care patients that model Largest acuity teams patients. physician readmission efforts of year-over-year reflecting has reducing This reduction and rates. of and our is our especially a and helping complex net on our in between Second, the in ahead most needs our costs, medical rising vulnerable slightly address and lead effective relies our savings our

finally, the result per per member per program In leverage. month And X%. cost our month and declined member to of improved cost fixed XXXX, per as cost continue down growth a trend our by

We to cost approximately expect XXXX. per decline in month further member per XX% by

of XXXX. we or we result XXXX by outperformed these that on breakeven efforts to performance operating better and The our is adjusted track deliver remain believe loss we forecast,

focused Medicare on business: patients. fee-for-service can on X special further Beyond based portfolio break CKCC Advantage primarily components IKC demonstration our Medicare and value-based performance care the patients, our of need primary metrics, for down our the our plans, core we project

care, consistent Special MA expect represents years further that year-over-year CKCC, We care we improvements optimize Within adjust Keep component, many model XXXX our our of value-based from and this CMS profitability. approximately of contracts savings, become Plans reached XX% in that have to and of census. and profitable in investment after the frame. in cost the our Need mind third portfolio, now changes time program

be our changed since Shortly we thinking I'll released. after our Before get a for call, were select quick clear, of none last clinical offer earnings has XXXX, on our GLP-X. results into trial the comment To call.

in benefits As XX% including confirms expected, cardiovascular mortality. in obesity and disease, trial reduction a the people with certain all-cause cardiovascular

Next on FLOW disease. endpoints, efficacy will multiple horizon the the will the progression near-term on slowing anticipate chronic which of including demonstrate kidney study, we be

into such Flex, is the As efficacy decade. dialysis growth our a a may FLOW study as to neutral up case, base net the GLP-X volume ramps in over reminder, demonstrated adoption impact already be incorporated next that

for growth of revenue our financial XXXX. to of results. from returns our guidance This reflecting midpoint progress range This incorporates We're continued predictable of adjusted in guidance EPS investment a of care resilience each delivering despite the income business cycle respective growth and Shifting X%, and IKC. while external guidance XX% environment, our and metric. our operating strong for our more operating provide high-quality further of adjusted demonstrates setting to the ability, challenges, expectations

on forecast. me drivers Let a touch our of few

to XXXX, of center Mircera including income benefit from First, to full will related improvement, development our savings cycle transition XXXX of operating consolidation. positive annualization revenue in the year adjusted and our impact the

earnings business demonstrating from Second, progress continue factors higher share breakeven rate. XXXX. effective and to finally, program, line, IKC as expect noted, interest adjusted repurchase tax including OI will by below our other per other share offset by we're higher losses, the expense benefit and our in And

opportunity the turn we drive page we care. have As that within differentiate operating further to XXXX, to great a advancements DaVita kidney

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

delivered adjusted of we per $XXX adjusted earnings QX, In Javier. of Thanks, $X.XX income million and share. operating

the end for year the QX Our updated performance top from our above the range puts of just us full strong quarter guidance call.

our expectations quarter needs primarily was improvements to the our in special business, period revenue our our Our in programs in plus growth management. outperformance per in related relative cycle IKC development revenue to continued from treatment prior

fourth third In treatments were the flat versus U.S. quarter. dialysis segment, per day the quarter

which mistreatment to week quarter. day reminder, rates As third an was mix improvement a seasonally by higher our months, the in the offset winter are in relative of

increase $X reimbursement our to treatment improvements fluctuations. normal higher flu quarter-over-quarter. cycle acute fourth and due per mix Revenue management related was revenue up and continued quarterly was of driven approximately in typical half equally quarter The vaccines. About this seasonality remaining to was for by

higher and $XX care patient driven line seasonality, with This primarily treatment sequential for but our benefits QX higher sequentially, up earnings was our call. in typical expense including was by in continued per expectations QX teammates. investment increase our on cost than described Adjusted

operating business, million IKC shared primarily primarily were our QX recognized from down XXXX. of due in adjusted revenue sequentially from $XX to timing services In results arrangements

revenue in the Advantage anticipated. for Additionally, care previously recognition otherwise XXXX. anticipated arrangements value-based million Medicare clearing savings hurdles revenue of had associated recognized we the recognizing we than and plan for $XX This result earlier revenue XXXX earlier is with several is shared of arrangements QX, of than year incremental

This been in revenue XXXX. otherwise recorded would have

that for our result, anticipate with they are a contracts beyond align generally Advantage in earned. which the and shared will now in savings revenue plan As year recognition we of Medicare XXXX our

continue final reconciliation. our until year beyond in likely there be updates estimates Although and will to planned each during

earnings incremental shared from recognized what been our This $XX operating change. been the as would revenue represents have million to absent excluded XXXX savings XXXX has it in adjusted income expected in

International sequential adjusted quarter-over-quarter. was down reserves. increase of in this component an change operating was debt income by million $XX The largest bad driven

capital to structure. Transitioning

of below the credit target shares free The facility our our strong the fourth was leverage XXXX of and X.XXx slightly repurchased end cash the X.X quarter DSOs, quarter, at quarter of X.X continued XXXX. an reduction since ratio dialysis of our last million our days U.S. with and below XX on X revolving range. of the we XXXX, consolidated from million days, days down balance result ended the at XX X flow level the partly During we which repurchased shares. ended the declined EBITDA, to midpoint We additional and leverage start

XXXX on Turning detail now to guidance.

Our in care as investments by cycle income to growth at adjusted long-term and footprint-related a $X.XXX result typical cost of higher driven in guidance costs operating growth is savings. the above our due X.X% annualization adjusted revenue year-over-year management representing of billion, our nonlabor This cost growth our to per patient $X.XXX the expectation savings income, to and X% treatment is our midpoint. X% in operating in for year of Mircera billion revenue

first more X give detail, me versus of drivers the To growth main let XXXX. you cover dialysis U.S.

partially of higher pre-COVID the offset par by slightly levels. continued volume result than is patient X% mortality This on treatment that pre-pandemic admissions X%. to remain is growth averages, expected of with we new First, growth to expect

The Second, remaining per revenue revenue growth management from of growth we expected the X%. of is annualization we in Approximately improvements X/X saw of rate the increases. cycle increase X.X% XXXX. due is anticipate of treatment X/X to this to primarily

cost treatment we X.X% X%. expect care per adjusted to patient to Third, increase

to and treatment Mercera We increase offset management continue XXXX, initiatives efforts. conversion and consolidation as wages levels. include volume of fixed above to to anemia Savings of leverage center our rates grows annualization to cost at expect pre-COVID savings including for costs this our in

your help to items other of with couple thinking a U.S. mention me Let dialysis.

result approximately our We our expect from historical $XX of amortization change many approximately the delayed consistent $XX marked decline to This $XX by and efficiency. is million over capital increases annually. a to adjusted years increase depreciation million effort million, to of

we to of it $XX past $XX do to to been typical measures As ballot million the million relates to policy expect election have related matters, that years. not spend would

an in covered Javier's our For our approximately and shared total assumes IKC, million. cost guidance fixed further as growth This of adjusted and loss improved operating within outlined our reflects performance continued lives savings expectation IKC of spend $XX programs, medical in income earlier comments. leverage,

the Medtronic line, in with business, kidney million, in in the Below million year-over-year. as growth income result continued adjusted in of of our incorporated losses we $XX largely expect of guidance our approximately In approximately products. co-investment our our international Mozarc, OI a operating share $XX of we losses

of to quarter per the and to $XXX due $XXX $XXX million increase year. million at half interest interest rate in our This of of We the second expiration caps year quarter midyear. million per of expect X% million the is first $XXX expense half the in to

We XX%. adjusted to expect effective of XX% tax rate an income

exist within today. XXX% expect my flow, through opportunities flow range deploy leverage long-term That when $XXX or billion, of the our for we to X strategy, Consistent capital growth $X.XX of shareholders our ending We such long-term concludes either anticipate with net target share cash we remarks income. capital-efficient cash return free free adjusted X.Xx. otherwise capital ratio to to majority of For expect million vast to towards prepared the repurchases. approximately our year

the open Q&A. for Operator, please call

[Operator Instructions] Wolfe Justin Lake with Research.

to seeing of needs on trend in Medicare have specifically [ QX? And revenue you've And then special terms is This many products? for XXXX. seen how you're could ] what in there then specifically year-to-date those on risk question products, members through Rosales Dean much speak do there how you of is My Justin. on Wondering terms exactly? costs And in is your you businesses. what and

Thanks, Dean.

is, important risk what than is I'd ESRD I think the Medicare population. broader to the MA on highlight Advantage the population So side of realize that different it's

you watch to which be very And apply certainly other seeing don't some of the trends population. with we carefully payers, our might necessarily

X highlight I'd things.

these given First, bear and needs a the medical acuity high the very costs these they than the of that population are of patients different patients.

one. that's So

population population separate that also that reimbursement I to would the differently, rate broader in rule. the preliminary and the not ESRD the runs population. third, both a Second, comes note apply this for and final reimbursement apply to MA that it's do the out And changes coding the

So with we're a our within where really That in, and value-based to view I on is. care. for pretty both the XXXX on on have us the -- feeling said, side savings early think that, what about good net population it's Advantage SNP came we're Medicare full our

it's million. somewhere the of revenue, of And just products. terms cleanup, our of of we north some X,XXX terms about SNP In members in in have $XXX

is with Deutsche. caller Chickering next Pito Our

of million the And what you revenues you PMPM. a XX% XX% noted those us think in IKC. shifted guidance, in IKC XXXX? in script, to then XXXX I that from it have loss was growth assuming refresh of about Looking loss in would metrics. reduction a of Can I at and XXXX a in $XX gain of you're talked

sort you if can help that. of bridge So

pretty a from guess, that, shifting cash shift comfort accounting point? guys. accrual accrual like you I accounting. then you're what's think this big makes an And seems at giving That I sense a that us to for

Yes.

lot in a Pito. So there,

this take and the try order. logical me in Let

the savings comfortable did MA Medicare both we first, that and What revenue was what revenue were we be. estimate program. share accounting. population, could on shared CKCC our population that we And would our for So true reasonably of until record historically, not the our fee-for-service --

get those your really product, things. why. method. words, we've always an we're when The about X the accounted about of SNP The asked comfortable you for in the we is It's talking use with I'll in, And accrual timing in estimates. change change

earlier we've changes language contractual attributed the that is made some gives clarity One lives. to on us

that's one. So

earlier. some helps actuarial the predict X can And of then ultimately the shared the had, together, better our which obviously do data turns third, those revenue experience year. in revenue we Second, we've we've calculations models. of our which with things just got the we're comfortable now reasonably we're getting us savings earlier, that And share putting into plan

on that's the the So change estimates. in

In you terms of asked about XXXX.

guiding to we're So for XXXX. $XX loss of million a

about year plan loss to result a the revenue product of million change it mentioned estimate is care XXXX from for thing is as number from that is realize line products The $XX million. includes the the for this 'XX, that revenue non-GAAP Our $XX well I the from which that value-based as of XXXX.

about be more the to to to maybe way question million, 'XX make make question? apples-to-apples $XX somewhere bit then think There other in around And bit I So would it apples-to-apples. million, was little there. PMPM with back what out more million to your XXXX was a it a think a $XX $XX

million you million So you're of to taking a after out the million. loss $XX $XX $XX back

you think sort of of script PMPM in IKC to XX% reduction on guided then of growth XX% in I a the and 'XX.

those in assume growth would would have loss. that, resulted a higher operating I -- and So operating conversion that in reductions

we of get how and those cost kind to metrics take growth still can reduction So million those loss? sort a metrics of $XX and

Yes.

So few a things.

that First, the we're still the business only the Advantage just as of estimating change comfortable new to CKCC the not I to enough is true is plan year. that Medicare in The referred clarify business. savings

hasn't So part changed. that

question. your terms of In

health call you'd So only the our G&A. not for us. care that related of a to is It's we're business. It's model the our cost MLR to what referring plan equivalent savings in not in

development some positive in a we're XXXX, business SNP particular are that not there forecasting amount in significant period -- was the recur. to there of in Second,

So year in to would this think the next another year bridge of I getting question be or why adjustment, 'XX. that we help which would profitability aren't

also, as on driver that growth the center, center to the at those new grew in fourth organic then the though in bps change even the third close another growth actually patients And looking key treatment mortality? as quarter at a quarter. center, bps, ops, the Is in is normalized one don't growth, when you XX a as new win your lower And patients XQ of you're discontinued old the numbers? XX you patients? it Is

Yes.

patient from show clinic any it one one. as another, the So no growth on of moves last our It's to sort patient. If doesn't up still anywhere.

terms flat. of were being I decline, which by uncommon In volume treatments would day. growth. the over effectively small And a not to combination treatment flat, point QX QX offset that's really QX is a better mix a day of in per census as

So Wednesday, more Tuesdays, Fridays, Monday, Fewer Thursdays.

So really, volume flat was call, QX a would I quarter-over-quarter.

America. Kevin Instructions] with of Fischbeck [Operator Bank

in filling and volume Gajuk 'XX your Joanna less discussion sequentially, for on than X% X%. growth. Kevin guidance but sounds question X% volume guess a assumes Actually, And today. I is up year-over-year, follow-up is the for to this it first flattish just like

you year? kind get build I that do could the confidence guess, end volume that, So to you What growth how for the of to of growth, that gives X%? especially to higher you

Thanks, Yes. Joanna.

the that is year. volume So the census. biggest I'd start impact remember fact on builds year-over-year of over that the course census the And with single

course 'XX fact was and the the at burdened flat, building only over declined which that 'XX. was of look the census by effectively that XXXX the started you in if So growth,

XXXX annualization of lot the a the So impacts XXXX. of of the negative is X of in

down into really we As break X it 'XX, about I'd components. think

build we you'd watched the but of bit First remembering result back And still is than to high it what we severity pre-COVID reason the down years, is number primarily mortality flu that its higher a the is the in and course pre-COVID end that, of running get that of the to a pre-COVID levels. it's a around be dialysis rate -- year, that typical admissions we've feel Where the comfortable back X% pre-COVID XXXX. range way higher call than COVID don't to or is would mortality new that of growth It as a to continues off pre-COVID. peak moved run season. did over

then to admit we negative So take if more and mortality X% to outlook the normal slightly X%. a to new outlook, get dialysis a that's how you

guess. And follow-up another I the on guidance,

about You for talked treatment. outlook your per revenue

about for guess build, rate the guess, commercial So much, mentioned I last specifically, up there's I renewal. is guess, the I increases? that? can you larger for some How talk there quarter, And you contracts

you're stand that, versus any on of terms you MA, in the And specifically then there? And mix. commercial increases rate color where government? MA So your inside also mix, these seeing

that, is by that Roughly grab A we annualization of payer out go me percent I couple we no, there's the to things reflect the operation rate. in the remaining. there are Joanna. X/X those the ahead receiving. remaining and in questions, pressures the XXXX improvements that the of mix. in trying and . To you a And Let chunk that direct question will inflationary and saw of made A part be -- let reimbursement make the of normal is unusual is and on rate what that increase usually good X/X -- we're course, what are because of underlying period. of sure something start we think dynamics, me rates of

is MA As trending on above you mix our slightly have market. seen, the

expect around So 'XX. a to end quarter the couple of at our MA number of and XX%, that be finished points higher the mix we

somewhere in XX% XX%, open the So on enrollment. range, depending

some larger up in for plans this on the update mentioned any you're guess that of you increases commercial renewal, rate I there plan seeing? And terms

on the to we're negotiations, not going specifics. go Commercial into --

We value insurance commercial commercial mix their continue our and patients that private is flattish. to see

RPT nothing that of embedded the guidance gave So on report we the And to . course, you. that's in that. of

UBS. with Rice A.J.

you without call GLP-X the can't asking through I question. one get let

anticipate FLOW efficacy for saying digression. the your in you're on study, including remarks, prepared slowing endpoints, multiple So that CKD for you

at. I market is where generally think the that's

like anything in the at gotten could really but wondered, makes range it optimistic most is the you've anything seems revisit? make community, -- less impact this I expect you high of in analysis study come you've It optimistic, wondering you that given is will out your what FLOW analysis, all the that to your more probability least that covered traction financial seems how there there of you I'm your in about would are something and have business? offered that

really question, know, as we of the you of surprise wanted a had out. on day, conversation. could improbable that's and on versed the well sort to the it. play At others we be make that lot in And want is last say are A.J. And we, highly, Thanks range, sure I to didn't an quarter, think there to our course, dissertation chances that what while gotten were that GLP-X end X, a shareholders never likely the that you unusual for of because of highly our capture

all and that a the decade. net the that neutral people is ] as over of -- to And don't a weighted bit. normal change And we would that how of our [ we dialysis expect adjustments lot And participate math volume discussed. at to impact end so on a probabilistic did want day, we position the in we many the next

said for in anticipate a I I you're wouldn't minimum banking wage have but for you could around annualizing on the when have you spending you're tailwind workers. care California wage should the going where low year. wages your from into about believe it that for contract there's least underlying you Maybe permanent labor, spending, election I I issue if be what of at workers. you and health and pivot know assumptions your an start still benefits for wonder there's know 'XX. for labor And ending you're then you whole what factoring to the to ask I impact. the

that. thanks A.J., for Yes,

labor and care other break So we half year, X% the treatment. down. that roughly for so of stuff. patient half out to That's X.X% growth labor for per called cost I'd

the the in labor and thinking side, X% that. into year baked that something On around California be would we're for

of rolling we once the out quicker We've called a a number it as for anticipated. to a something We XX. impact to around net $XX it's $XX bit of that ago, out rolled than million months XX out fully little million XX been in few

to that expect the range, So somewhere I into our number. and in be would XX XX probably that's number baked will

actions we're that Mircera of as patient annualization savings -- from Mircera being reason we've The is the X%, ship X% both only which it is cost to care growing half to the at X.X% with also well of got of those is comfortable the of the volume We've some given labor, got long-term a volume costs we clinic lot fixed took. cost without centers. grow contracts. and leverage And as that footprint with as we fixed under are are adding don't costs add other

feel we So like X%. get to X% that to can X.X% despite a wage we pressure,

is caller next Gary Cowen. Our Taylor with TD

for Linton Ryan [ is This Gary. ] on

year not sort have for impacting 'XX? saw Joel, partners? you your maybe for is Dean back of earlier, in but plan half the but can of us when you final just remind think back, we I And to sort on the 'XX, the reconciliation touched with go to guess, it trend only your how the I accruals, higher of guidance anticipate the Advantage Medicare

Yes.

It in development often and can the that will prior period take quarters, final ultimately It's business. plan. by -- the be will X or be X depend. plan into So IKC reconciliation baked

impact some us. the in But whether population than -- say terms we population In we the population. of to impact again, the too the on reiterate to broader it's different Again, our broader I us that QX. very that's think early for is think I'd of going of costs MA

eye a keeping XXXX, and out, to of how on see built we're plays it's into terms it In it careful our range.

Our ] with next is caller Klive Lisa Bernstein. [

stable. months we're one, pretty since mix Number me. ruling, the and pricing for seems your questions X XX Marietta Just commercial

any expecting has years meant just So over if and wanted what you're on to know changes. any ruling last whether have thoughts that the you few

ballot that up don't also just a on in to are going you then initiative clarification and obviously, need of your wages And a the fact terms California. spend in

for So it cycle? expect like obviously to this this initiatives. seems you it guys of continue? that SEIU. a reasonable nice really X-year with is dollar we be Is this the would fighting of Or just Or election cycle out to something truce should be

Lisa. All Thank you, right.

So let's start Marietta. with

seen terrible discussed choice. benefits, employers great. we would groups employer be said, at is have and sure taken work be out the in to end-stage for mindful we As community disease the make and kidney advantage disability we change we not That have of renal risk to have It which past, their is to a that employees of. of groups give absolutely want lot a of course, that sort it continue because has there dangerous not very not

a door I say hall in I it, no very lock want you it's someone on have is little. so And house, why in to your yes, analogy saying I or me asks like And broken -- well, said, you in you still when but have the say, fix passion town broken. one's the the so And much if

it.

it's be be to should so perspective, something the the champions Court it that clarified And needed from our It clarified. others believe and and Congress Supreme and said.

a example benefits didn't this. Now And network, when actually found we change have employer that has group they network process. their just that an we process reverted a I actually our out and an they and in admissions basically got to did had back discussed again to work apply their then benefit. employees that of verification we've the that think, helped also

ramifications think it worked I full ideas explore out case, the really So without well. sometimes, that people understanding in and

energy a put And of so will we lot that. continue on to

around question was second Your the ballot.

ballot we our of spending teammates were making process, about how to liked that on money a on we broader is think a lot our what about we the from suffer but takes it what didn't to it very dangerous money call and sure patients that. course, that state educate Of

the benefit the And extremely the of at that, the instead end happy of money day, on our of are get teammates that. that spending we so

it to that, cycle. is and relates it with election relationship talked and X time hopefully iron As about out revisit just good election this our labor. to a would We cycles be that

with our Wolfe is And caller Research. Justin next Lake

the fixed do the you've closings. on parse versus the savings on how center and is This And P&L And more is from there My touched speak for it you to efficiencies. out to I'm much Dean question if closing, or lower from again can costs revenue center on Justin. is but cost could you So here? impact already, right? sorry

Yes.

So I appreciate the question.

that are or closed centers, thinking either so net code And will of centers. roughly in the merged XX year other XX XX. into about have new roughly We ZIP thinking the centers,

the to your understood not try Could As I sure . you it it question. P&L, again? relates I'm

More just the moving parts impact to the P&L.

you how speak to one could Just guys you center closing. --

it good of But about inefficient. volume centers all these will you is strip little be that, A loss way on when tend have choice. to healthy patient you to think a

you then management you is fixed savings in so and rent do have director consolidate And leadership. And the fees. what medical expense some you particular, on the and

the at . expenses the end so eliminated. the inefficient come of And with center get that day, some fixed where savings that's from,

Deutsche. with Pito Chickering

If here. the mix And what you in seeing follow the -- question, quarter? was ups just are commercial you could Joanna's To what XXXX? for

for and stay mix the Commercial was XX.X%, expect flattish. quarter we to it

Or conversion? changing free conversion within cash in very that got, cash is flow 'XX in repeat 'XX Is which 'XX. simply days was DSOs what, And won't the 'XX. strong XX% in there you in then XX flow is this guidance anything about

Yes.

a just that's amortization. really would income net for comp. driving XXX% our share-based And persist, second X free to it, this expect net X stock-based flow is should persist of those decline why, really for by One the is DSOs. and lower CapEx that 'XX, free cash and things. is than some call remains 'XX And in impressive we're year, income, above it got comp, right. well we time. things in cash driven structurally flow depreciation that's our and was You've conversion

XXX? Like any AB on updates

a it. at summarize parties judge points. it is But some in both a hasn't that had but that color. is little activity won some to the on maybe end lost of gave basically And update. best final and the is ruling There the some the points both day, way some parties There color,

when the so appeal an is a quite there ruling. of And final are therefore, odds high

think to so likely more will if And be a be million that the And in range. the would to in question $XX a $XX are good probably had range. number the as AKF, impact lower, to million less on the the million guided were people I be like past, to is $X million next something you we is say $XX to financial what

the to you ask what guess, at of center I question, the do 'XX? was of center end of And I'm liquidation then in in last 'XX. fourth assume differently. closure And that quarter fourth question the -- going goes What quarter in

you did Pito, sorry, I'm utilization? say capacity

of that combination closing the thinking Yes. centers about and in the where get just back mean of 'XX? there's overall a I exit by to do you And and end patients 'XX? coming can you Where center legalization. think do year

Yes.

the exiting So little And about the year at we're up maybe point, expect would a more bit over of course a year. XX%. picking I the

And point going several range. so a percent is, the go range, opening as the how you if to people that be of range of so is all impact had, I'm pre-COVID, you reference. roughly Like back, the would want because we we've in this years difficult XXXX go in just or operating in XX% California then environment California the just conversation centers. because XX-or-so And aren't of to see back the

an these poor open very conduct all and there. to people impact propositions do and had So the have want not centers expensive

size curiosity, And to that G&A if XXX me, to XX% of out of, you multiyear here of can kind get then wonderful. over period and of bps this would for up worth a is just that back leverage like be if kind

Yes.

care So fixed care that's patient in the with the cost. clinic would in associated be see G&A cost patient a the leverage our it's in costs, not because there's you'd the

there. it see you'd So

variable, be is do fixed. treatment roughly I to X/X cost $XXX that help think per think with number, So math patient care right? X/X the XXXX. would about best I running you can to That our at

growing where imagine some many building utilization we exactly in you be. the if capacity and volume as be be not to build even without centers centers it would us because country just that is may to need clear, though capacity low, have you So the to

assumption will everything on math there, do treatment -- make it of need that the what X/X think what that to to I recognizing PCC do is on give you depending you per that you fixed, So could be worth.

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

interest you, and all you your Thank for in Okay. Michelle, thank DaVita.

now strong to close pre-pandemic path we in combined had back trajectory. and Just on we [ gunshot financial the are a to that, recuperate year XXXX, ] our our with summary, a

our work importantly, patients. a to great continue hard the deliver well. you provide call. for to joining for strong results, will . innovate We clinical most Thank all and Be care

concludes call. This today's you. conference Thank

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