Javier Rodriguez from DaVita Inc. announced during a call that in 2025 the company is celebrating its 25th anniversary. Over the years, DaVita has focused on improving clinical outcomes and enhancing quality of life for patients and care teams while promoting positive change in the healthcare system. In 2024, the company made significant progress, especially in extending patient access to care in rural areas and advancing home dialysis, with most patients living near a DaVita home program and utilizing technology for remote monitoring. DaVita has evolved from a dialysis provider to a comprehensive kidney care company, offering education through the Kidney Smart program to over 300,000 people and leading value-based care initiatives through integrated kidney care (IKC) partnerships with health plans and CMS to improve patient care and manage healthcare costs.

The company reported strong financial performance in 2024, achieving significant growth in adjusted operating income and EPS despite unique challenges such as healthcare outages and supply chain disruptions from hurricanes. While treatment volume growth was below expectations and new patient starts were affected by supply issues, high revenue per treatment helped offset this. The organization expanded internationally, made progress in its integrated care initiatives, and has closed three out of four planned acquisitions in Latin America, with the Brazilian acquisition expected to close in 2025. Despite a loss in its integrated care unit, results aligned with expectations.

The paragraph discusses the company's strategy to enhance patient health outcomes, manage costs, and seek growth opportunities. It mentions the temporary closure of Baxter's North Cove facility due to Hurricane Helene, which resulted in a $6 million operating income impact in the fourth quarter, although it was less than expected due to effective collaboration. The closure affected the start of new home dialysis patients, impacting 2025 volume growth and contributing to a projected $30 million negative impact on adjusted operating income. Additionally, a policy change effective January 1 allows oral drugs to transition from Medicare drug benefit to dialysis benefit, broadening patient access and potential treatment options. Up to 20% more patients now have coverage, with expected 2025 operating income contribution of $0 to $50 million. The company's guidance for 2025 anticipates a 5.2% growth in adjusted operating income and 11% in adjusted EPS.

The company exceeded guidance in 2023 and 2024 through strong performance in its core and ancillary businesses despite weak volume growth. For 2025, they aim to focus on volume growth, aiming for a 2% growth trend, and they expect adjusted operating income (OI) growth of 3% to 7%. The company plans to continue investing in capabilities and returning excess capital to shareholders through share repurchases to achieve double-digit earnings per share growth. Joel Ackerman then discusses the financial performance, noting that the fourth-quarter adjusted operating income was $491 million, and full-year 2024 adjusted EPS was $9.68. Free cash flow for the year reached $1.16 billion. However, the fourth-quarter US treatment volume was below expectations due to missed treatments from severe weather and lower-than-expected new dialysis admits, partly due to Hurricane Helene's impact on PV supply.

During the quarter, a supply constraint led to a loss of around 350 admissions. Yearly treatment growth was slightly lower than expected. Fourth quarter revenue per treatment grew modestly due to seasonality, with patient care costs rising primarily due to higher health benefits and field costs. General and administrative costs increased, but depreciation and amortization expenses dropped due to fewer center closure costs. International operations saw a decline mainly due to a reserve for aged accounts receivable in Brazil, though overall performance was as expected. The company expanded in Colombia and plans further expansion in Brazil pending government approval. Their value-based care business ended the year with a loss, though ahead of expectations. Debt expenses remained steady, and their leverage ratio was just over three times EBITDA.

In the fourth quarter, 2.3 million shares were repurchased. For 2025, the company expects adjusted operating income to range from $2.01 billion to $2.16 billion, representing a 5.2% growth at the midpoint. Treatment volume is expected to remain flat compared to 2024, with no significant changes anticipated in admissions, mortality, and mistreatment rates from previous years. A 4.5% to 5.5% increase in revenue per treatment is expected, primarily due to new oral phosphate binder reimbursements, rate increases, collections improvements, and changes in mix. Patient care costs per treatment are projected to grow by 6% to 7%, with oral phosphate binders being a significant factor. Other cost increases are expected from inflationary pressures on labor and other areas, partially offset by reduced center closure costs. US dialysis G&A costs are expected to rise by about 4% due to investments in personnel and systems, while depreciation and amortization costs are projected to decline by $25 million to $30 million due to fewer center closures and decreased capital expenditures in recent years.

In the discussed paragraph, Javier Rodriguez and Joel Ackerman highlight their financial expectations for their company. The IKC business is projected to have relatively flat operating income year-over-year compared to 2024. There is an acceleration of $10 to $15 million in value-based care revenue from 2025 to 2024. For their international segment, $50 million growth in adjusted operating income is anticipated, driven by Latin American acquisitions and account management in Brazil. The adjusted earnings per share (EPS) for 2025 is projected to be between $10.20 and $11.30, with an 11% growth over 2024. Interest and tax rates are expected to remain consistent with 2024, and free cash flow is estimated at $1 to $1.25 billion. The company plans to focus on capital-efficient growth and share repurchases. Joanna Gajuk from Bank of America poses a question regarding the volume outlook for 2025, asking if there is a range aligned with the operating income range.

In the conversation, Joel Ackerman discusses the variability in volume forecasts, influenced by factors such as admissions, mortality, and mistreatment rates. Joanna Gajuk inquires about the potential range of outcomes, and Ackerman explains their reluctance to provide a specific range due to past forecasting challenges. He notes that the treatment volume in 2024 increased by about 50 basis points, partly due to 2024 being a leap year, which provided additional growth. For 2025, they are predicting a flat midpoint, considering the absence of the leap year growth and the impact of a PD supply disruption caused by a hurricane, which affected new patient admissions in Q4.

The paragraph discusses the impact of losing approximately 350 patients to another provider who opted for peritoneal dialysis, which is expected to significantly affect DaVita Inc.'s patient volume and growth in 2025. The discussion then shifts to the inclusion of oral drugs, particularly phosphate binders, into a different Medicare category, describing the potential financial impact based on factors like drug type, volume, and patient adherence. The wide range of the financial impact is due to uncertainties in these factors, as adherence can be low due to the high pill burden required. The company is cautiously providing a broad estimate until they gain more experience with this change.

The paragraph involves a discussion between various speakers regarding anticipated growth in patient treatment costs. Joanna Gajuk and AJ Rice ask questions, and Javier Rodriguez and Joel Ackerman provide answers. Joel Ackerman explains that the expected midpoint growth in patient care costs is 6.5%, with 3.75% historically driven and 2.75% due to including orals in the cost. Both labor and other costs are projected to rise at about the same rate of 3.75%, with labor facing higher pressure than pre-COVID levels. AJ Rice also inquires about capital deployment and share repurchases, although a specific figure is not provided.

In the dialogue, Joel Ackerman discusses the company's approach to growth, indicating a focus on capital-efficient expansion either through internal investment or mergers and acquisitions (M&A). He mentions that their financial leverage is targeted in the range of three to three and a half and that any excess capital will be directed towards share repurchases, maintaining a strategy consistent with past practices. While they are considering some M&A opportunities, he does not foresee any actions that would significantly alter the share repurchase program. AJ Rice then brings up a question about the flat incidence of end-stage renal disease and its treatment volumes and inquires about the potential impact of SGLT2 inhibitors. Javier Rodriguez responds, suggesting that their physicians believe the impact of these medications on their patient population is minimal.

The paragraph discusses data on chronic kidney disease (CKD) and dialysis trends. It notes that advanced CKD prevalence is estimated to be in the low teens according to CMS data, with adherence rates in the mid-sixties, suggesting limited impact on outcomes. Mortality offsets, such as increased longevity, are not expected based on expert reviews. It highlights admission trends, stating that while admission growth was strong earlier in the year, it weakened in Q4, with flat new dialysis admissions, a shift from previous growth. Examining USRDS data over ten years (excluding COVID noise), it suggests no clear trend based on a single year of negative data, emphasizing historical variability in incident growth rates.

The discussion centers around the impact of COVID-19 on mortality in CKD stage four patients and its perceived effect on industry trends, contrasting it with the potential influence of new drugs like SGLT2 inhibitors and GLP-1s. It acknowledges a period of negative incident growth that isn't unprecedented or necessarily indicative of a broader trend, and emphasizes COVID as the more likely cause rather than the drugs. The conversation then shifts to the stabilization of PD supplies from Baxter, indicating a return to normalcy, although they're still recuperating from the loss of 350 patients in 2025. Despite returning to normal admission levels, those patients will not return, affecting the overall metrics, which are normalized to in-center equivalents.

The paragraph is a conversation between several speakers discussing volume counts and operational dynamics in a healthcare setting. Javier Rodriguez explains that patient counts do not change when patients switch between peritoneal dialysis (PD) and in-center treatments because the total treatments remain the same. AJ Rice questions why, despite the normalization of PD supplies from Baxter, the midpoint of patient trends remains flat instead of increasing, considering switching dynamics. Joel Ackerman notes similarities to previous year dynamics impacted by specific factors in 2025. Later, Justin Lake asks about an unexpected increase in noncontrolling interest (NCI) related to US dialysis operating income. Ackerman attributes this to quarterly collection shifts, highlighting no overall change in modeling NCI.

In the discussion, AJ Rice questions the stability of operating earnings, suggesting they may fluctuate between quarters but should align between 2024 and 2025. Joel Ackerman hesitates to provide specific share count expectations, indicating some financial variations, particularly in the corporate segment, due to equity compensation timing. While tax rates and interest expenses are disclosed, the earnings per share (EPS) appears lighter than anticipated, possibly due to share buyback timing and share price fluctuations. The conversation suggests taking the matter offline to clarify any discrepancies. AJ Rice also notes potential revenue improvements linked to collections and payer mix, areas previously thought to have limited remaining benefits.

The paragraph captures a conference call conversation where various participants discuss financial metrics and projections related to payer mix and revenue per treatment in the healthcare sector. Javier Rodriguez and Joel Ackerman mention that the company's commercial mix is at about 11% and exchange coverage at approximately 3% currently, compared to 2% pre-COVID. They attribute about $50 million in annualized collection improvements for 2024. Andrew Mok from Barclays queries about Medicare payment increases, specifically concerning phosphate binders, suggesting potential disparities between expected and actual revenue growth per treatment. Joel Ackerman clarifies that the increase per Medicare patient is $10 to $15, not the $25 estimated by Mok.

In this discussion, the speakers are addressing why their revenue per treatment (RPT) is lower than expected, at around $7.80 compared to the anticipated $10 to $15. This discrepancy is due to not all patients being eligible for or using the oral treatments included in a certain bundle, particularly among commercial, managed Medicaid, Medicare, and Medicare Advantage patients. They also discuss General and Administrative (G&A) costs, noting a 6% sequential and 11% year-over-year increase, attributed to both traditional cost bases and investments, such as IT improvements. Productivity gains offset inflationary costs. A settlement gain that slightly affected patient care cost was deemed minor and routine.

The paragraph involves a discussion on the seasonal trends in the financial performance of IKC, particularly focusing on operating income (OI) and earnings per share (EPS). Joel Ackerman explains that revenue per treatment is typically lower in Q1 due to bad debt from patient pay but increases throughout the year. The IKC shows back-loaded seasonality, with potential complications in the dynamics of Q3 and Q4. Expenses often rise in Q4, affecting patient care costs and general and administrative expenses. Consequently, Q1's operating income is around 20% of the full-year figure, increasing in Q2 and Q3, but potentially dropping slightly in Q4. As share buybacks accumulate, the share count decreases, facilitating EPS growth over the year, with Q1's EPS likely lower than the 20% of the annual projection. Lastly, AJ Rice and Javier Rodriguez briefly touch on the starting point for IKC in the new year.

In the paragraph, Javier Rodriguez discusses the financial outlook of a business, noting that they expect it to remain flat this year, with some revenue shifts into 2024. Despite this, the company is still on track to reach breakeven by 2026, as initially projected in 2021. Joel Ackerman adds that there won't be significant changes in financial performance between 2024 and 2025. Joanna Gajuk asks about free cash flow guidance, which Rodriguez attributes to working capital changes that result in fluctuations, hence the broad guidance range. Regarding clinic closures, Rodriguez mentions that the company has returned to a pre-pandemic normal, closing about 20 centers annually.

The paragraph is a discussion about patient numbers and accounting practices related to integrated care arrangements, specifically regarding risk-based integrated care and loss of patients. Pito Chickering asks about the reasons behind the loss of 2,200 patients and inquires about the possibility of shifting from cash-based to accrual accounting systems as experience grows. Joel Ackerman clarifies that the company does not use cash accounting and explains their cautious approach in revenue recognition. He notes the progress in estimating revenue earlier in their value-based care component but mentions a prudent approach for Medicare fee-for-service programs. He advises not to overinterpret patient count changes as significant. Looking forward to 2025, Ackerman emphasizes the focus on driving margins rather than significant alterations in patient numbers.

In the paragraph, there is a discussion about business strategy and financial matters. AJ Rice, Joel Ackerman, and Pito Chickering address concerns over choosing certain contracts for growth, emphasizing a predicted slower membership growth by 2025. They discuss a $19 million reserve in Brazil, impacting operating income (OI) due to aged accounts receivable, but assert it doesn't affect the business's core earning power in 2024. Additionally, they mention a $10 million benefit from pulling forward IKC revenue from 2025. After considering both the reserve and revenue adjustments, the adjusted operating income of $491 million reflects these financial impacts. The paragraph concludes with Javier Rodriguez expressing gratitude for participation and highlighting 25 years of clinical innovation.

The paragraph emphasizes DaVita Inc.'s commitment to enhancing patient and care team experiences, maintaining operational excellence, and driving innovation. Despite annual variations in their financial metrics like Operating Income (OI), Earnings Per Share (EPS), and EPS growth, the company is dedicated to disciplined management across its VIDUS platform, focusing on key dialysis metrics such as revenue, cost structure, and volume. They also prioritize returning excess capital to shareholders. The paragraph concludes with a thank-you and the end of the conference call.

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