The operator welcomes everyone to the DaVita First Quarter 2024 Earnings Call and introduces the speakers. The speakers remind listeners of the risks and uncertainties involved and discuss non-GAAP financial measures. Javier Rodriguez thanks everyone for joining the call.

In the first quarter, DaVita continued to build momentum and deliver clinical excellence. They achieved their highest monthly rate of patient referrals for transplant and are working to address systemic challenges in kidney transplants through initiatives such as promoting living donation and creating a health equity learning lab. In 2023, DaVita had the highest number of annual transplants in their history.

The main challenge in the field of organ transplantation is the limited supply of organs. However, there have been promising developments in using genetically engineered pig kidneys, although human trials are still in the early stages. In terms of financial performance, the company had a strong first quarter, with increased confidence in meeting full year expectations. The International business segment is also growing, with a focus on investing in countries with strong management teams and potential for growth. In March, the company signed an agreement to expand operations in Brazil, Colombia, Chile, and Ecuador through acquisitions.

DaVita has closed its acquisition in Chile and is awaiting regulatory approval for acquisitions in Ecuador, Colombia, and Brazil. They will continue to look for acquisition opportunities in the international market. Once these transactions are completed, DaVita will be the largest dialysis provider in Latin America. They expect international growth to contribute to their overall enterprise growth and have seen positive clinical outcomes in all international markets. The Change Healthcare outage posed challenges for DaVita in the first quarter, resulting in an increase in day sales outstanding and borrowing on their revolving credit facility.

In summary, the company has resumed billing and is collecting cash at higher levels due to catching up from a backlog of claims. The operational impact from the Change Healthcare disruptions has largely been resolved. In the first quarter, adjusted operating income was $463 million, adjusted earnings per share was $2.38, and free cash flow was negative $327 million. The quarter saw slightly lower U.S. dialysis treatments per day, but a fifth consecutive quarter of year-over-year new to dialysis admissions growth. Revenue per treatment was down due to typical seasonality, but non-GAAP patient care cost per treatment decreased. International adjusted operating income increased from the previous quarter.

In the first quarter, Q1 saw a boost in profits due to favorable foreign exchange rates and announced acquisitions in Latin America. However, there were also increases in U.S. dialysis day sales outstanding and a draw on the revolver due to the Change Healthcare outage. These metrics have since improved and the company expects to resume share repurchases. Adjusted operating income and EPS guidance have been updated for the full year 2024. The call is now open for Q&A.

In response to a question about treatment growth, Andrew Mok asks about the impact of weather and other seasonal factors on the quarter and the potential for reaching 1-2% treatment growth for the year. Javier Rodriguez explains that the year-over-year growth was impacted by an extra Tuesday and New Year's Day falling on a Monday, leading to a positive but lower than expected growth rate. He also mentions that clinic closures and seasonality may affect growth in the coming months, but overall, they still expect to reach 1-2% growth for the year.

The general trend for new dialysis patients is strong, but mortality rates remain elevated. Patient care costs were down due to lower contract costs and increased productivity. Revenue per treatment was higher due to seasonal factors and is expected to continue increasing throughout the year.

The speaker discusses the company's first quarter performance and states that there was nothing unusual to highlight. They also mention that the company's revenue per treatment is expected to be around 3% year-over-year. The analyst asks about the company's operating income and the speaker explains that seasonality can vary from year-to-year, but typically there is a pickup in revenue per treatment in the first quarter and increased expenses in the fourth quarter. They also mention that it is difficult to predict the seasonality for international dialysis.

The speaker discusses the company's performance in the first quarter and how it may not be the best indicator for the rest of the year. They mention that the numbers may be affected by seasonal weakness and the historical volume growth. They also mention that the guidance for the rest of the year does not assume the same level of outperformance as in the first quarter. The speaker explains that this is due to a difference in how they were initially modeling the year's performance.

In this paragraph, the speakers discuss the company's higher year-end numbers and how it is reaching them faster. They also address the question of cost trend in Medicare Advantage and how their utilization rates differ from the broader MA population. They explain that their trends are more stable and predictable due to their patient population and coding changes. They also discuss the recent acquisition of an international business and how they plan to add value to it.

The speaker discusses the efficiencies gained by economies of scale and how this led to one entity exiting and another seeing it as an attractive asset. They also mention their usual filters for assessing risk and return. The caller asks about wage inflation and mistreatment rates, to which the speaker responds that wage inflation is tracking as expected and mistreatment rates are slowly improving post-COVID. The expected number of center consolidations for the year is around 30.

The speaker, Javier Rodriguez, responds to a question about the company's operating margin growth and states that it is a full year number. He thanks the questioner for their compliments on the company's cost management and productivity, and mentions that there may be opportunities for continued margin growth in the future through revenue growth and other factors such as improved capacity utilization and cost management. However, the company's long-term operating margin growth guidance remains at 3% to 7%.

In the paragraph, analysts Gary Taylor and A.J. Rice are discussing the utilization of centers and the trajectory of IKC (International Kidney Cancer) in a conference call with DaVita's CEO Javier Rodriguez. They mention the consolidation of centers and the increase in patients per center, as well as the company's margins and home programs. They also clarify that the company's utilization has improved and that they can continue to absorb treatment growth without closing more centers. A.J. Rice then asks about the trajectory of IKC.

In the first quarter, the company is on track for their forecasted loss of $50 million in 2024. They are still aiming for share repurchases of $1 billion to $1.5 billion and the recent International acquisition was an opportunistic move to enter new markets. There are no indications that the pace of activity in the International market will increase.

Javier Rodriguez, CEO of DaVita, discusses the company's business strategy and plans for the future with A.J. Rice of UBS. He mentions that there is no rush, but they are following their plan with discipline. Lisa Clive of Bernstein asks a few questions about the company's utilization figures, the percentage of patients on Mercera, and their thoughts on online hemodiafiltration. Rodriguez clarifies that the utilization figures only include in-center patients, the majority of their patients are now on Mercera, and they are open to using new technology such as online hemodiafiltration in the future.

The speaker discusses the potential impact of hemodiafiltration in the United States and how it has varying levels of usage in different countries. They mention that while there are some studies that suggest it may be better for patients, there are still many unknown factors, such as reimbursement and patient and doctor preferences, that need to be considered. The speaker concludes by thanking the participants and emphasizing the company's commitment to providing excellent patient care.

This summary was generated with AI and may contain some inaccuracies.