I want to thank everyone for joining us here as we wrap up day one of the conference. It's my pleasure to be introducing DaVita. DaVita is one of the largest providers of dialysis services in the world. Presenting today, we have Joel Ackerman, who's the CFO. We also have Logan Dunn and Nic Eliason in the audience. So why don't we just jump right in unless there's anything you want to start with? No. All right. Perfect. Go ahead. So I guess one of the things that at least we've been focused on, I think the market has been broadly too, is just about volume growth, right? Because I think that the growth algorithm that you guys have outlined is a lot easier to understand when you're growing volumes 2%. So when we think about where you've been during COVID, entering COVID, for the first, I don't know, was it 12 or 13 years that I covered DaVita, the volume growth was consistently 4%. And then it kind of moved down to 2%, right, heading into COVID. And then it's been negative during COVID. It's starting to come back up. Where do you think the right growth rate is for DaVita? And when do you think we'll actually kind of get back to that normalized number? Sure. So you're absolutely right. Heading into COVID, the number was kind of 2-ish. And we think we can get back to that number. It had come down from the 4% number, which benefited from many years of the industry delivering better mortality, but mortality flattened out. And this had nothing to do with COVID. This was just pre-COVID. And then, as you said, mortality was high during COVID. And that led to all the dynamics you mentioned. We guided for the year to 1%-2%, which is a lot better than the -2% we were seeing during COVID and better than the 0% from last year. The dynamic we're seeing now has been similar for a number of quarters now, which is our new-to-treatment dialysis growth is back to pre-COVID levels. And we feel good about that. We've seen it over a number of quarters. We feel good about that trend. Mortality has improved significantly from the peak of COVID. But it is not back yet to the range we saw pre-COVID. And I think it's important for everyone to appreciate the fact that mortality pre-COVID varied from year to year due to flu and other fluctuations. But we're not back to that range yet. And we think until the mortality normalizes, it'll be hard to get back to that 2%-ish growth rate. I guess, is there a reason why you would think that mortality would still be elevated this far kind of post-removed COVID? Is it something specific within your population? Or is it something more broad that you're seeing? I think the data we see shows it being broader than just the dialysis impact. I don't think we have great analytics to really explain what's going on. For that reason, it's harder to forecast it and harder to give a timeline for when we think it can get back to normal. So when you say that the new-to-dialysis treatments are kind of back to pre-COVID levels, are you saying that on an absolute basis? Because I guess, in theory, you would have thought that over five years, there should be a higher absolute number in 2024 than there would be in 2019. Is it back to 2019 levels? Or is it back to where the 2019 trend line would have kind of pointed to by now? I mean, the year-over-year growth is back to pre-COVID levels. I'm trying to remember the graphs that I've had put in front of me so many times to answer that question. I'm not confident enough in the answer to give you an answer on that one. Well, I'd be happy if you presented those graphs to me at some point in the coming weeks. That'd be good to see. Yeah. So I guess, so you're confident that because the beginning of the funnel is there, mortality just has to normalize at some point. And therefore, that's the issue. Because I guess, I think that. Well, I wouldn't say mortality has to normalize, right? You hear people talk about COVID becoming endemic, right? It feels day to day like COVID is gone. But it's not gone. And if COVID becomes endemic, you'd effectively be in a scenario where the flu season would be worse than normal. It would remain variable. But it would be really the flu plus the COVID season. And that could persist for some period of time. And so I don't think we know enough to really know exactly how that's going to play out. Nor are we saying we have enough visibility to know exactly what's going to happen to mortality. Is there anything about the age of your population? Has that changed at all? Where you'd say, actually, pre-COVID, the average age was 66. And then that would say, oh. We don't think there's any impact. If anything, COVID would have gone the other direction. The older patients would have died a little quicker. And you'd have a younger population. But we don't see that dynamic either. So look, we've spent a lot of time looking at it. There are a lot of people out there speculating, whether it's fentanyl overdoses or people driving systematically faster than they used to. It seems to be societal rather than something that has to do with dialysis. And we can't explain it. Yeah. Because obviously, the market concern, at least for a short period of time, was that GLP-1s were kind of the issue here. And that might have pushed up the average age if people were slowing in and then coming in. Because I think that slowdown in volumes, although it seems like you've got better data than I think we often do from the outside about new starts versus mortality, certainly on a real-time basis. But the slowdown in volume from 4%-2% kind of coincided with the rise of GLP-1s and SGLT2s. And so it's hard from the outside looking in. But there's nothing that you can see right now that says that that would be really having any kind of impact on volumes. No. Look, we laid out our analysis on GLP-1s in a lot of detail. I think we've got a lot of confidence that they are not playing into our volume number now. Nor do we expect them to play into them in the short term or the medium term or the long term, for that matter. So we don't think it's that. I mean, there were all sorts of theories. It was that. It was changes in how kidney patients were being managed. We don't see any of that either. And the fact that the top of the funnel remains robust gives us a lot of confidence that it's really not that. And mortality is something that's relatively easy to measure. We can't necessarily measure it in real time. But with a few-month lag, we can measure it. And so we can see that that remains elevated. OK. And then so I guess kind of moving to the other part of the revenue buildup rates. So what's the commercial environment like now again? Another concern that was out there for a while, but seems to have kind of died down, was Marietta and commercial rates. Is there any updates on that? You know. I think rate increases continue to benefit from the inflationary environment. So they are better than they were a few years ago. There's really nothing new to say about Marietta. We continue to watch to see if there's any growth in discriminatory plan design. And we're just not seeing it. So Marietta is not impacting our rates. I think the real news on our rates over the last year or so is really what we've been able to accomplish in terms of our revenue operations. And the revenue per treatment growth last year, north of 3%, and this year we're guiding to about 3%, is really the biggest change there is what we've been able to do in improving our revenue operations, improving our collections, bringing down our bad debt, and driving revenue per treatment there without needing higher prices or higher mix. I think it's a great example of DaVita's operational excellence. We are very much an operator-driven culture. Many people were concerned that that was all about price cutting. And I think our ability to deliver quality care with lower prices is certainly something that we do well. This has shown there are other ways to drive margin and drive profit growth without just cost cutting. Can you talk a little bit about that revenue cycle management pickup? It sounds like it's 100 basis points or so. Should we be thinking about that as all margin? Is that a big part of your OI growth this year, is that extra 100 basis points kind of? It is an important piece of it. I mean, there's a little bit of increased SG&A that goes against that. But it's basically all margin, yeah. Yeah. OK. But I guess one of the things I kind of struggle with with you guys is that you guys have laid out a long-term growth trajectory where it's like, OK, 2% volume. And then rate updates should be a little bit less than your cost growth. And then it's kind of up to you to figure out how to make that all work. That is a fair characterization of our business situation. Yeah. But you guys always seem to find something to make it work. And so this is just one more example, I guess, of that. Is there anything else on the revenue side that where you kind of say because a lot of the things that have happened in the past have been on the cost side? Anything else on the revenue side going forward? No. I think this is really the big one. And we'll always be looking for more opportunities in the revenue cycle side. But we're not out of ideas. I think there continues to be a good list of opportunities to go after to continue to bridge that gap for many years to come. I guess from the MA perspective, that's been a nice tailwind over the last few years as penetration has gone up. I mean, are we at a normalization there? Or is there an opportunity for that to kind of keep going and adding to the rates? I think we're at a normalization in terms of the growth rate. We saw accelerated growth through 2021 and 2022, really a little bit in 2023. I think the MA penetration will continue to grow at the market rate. But I don't think it's going to grow at the accelerated rate we saw over the last few years. OK. And I guess there's been a lot of pressure within the MA side of things on the health plan side. Is there any flow-through or read-through into you and the kind of rates that you would be receiving from them? Or how they might try to negotiate with you? Or are you worried that when they see cross-pressure, they just go after providers to offset it? We haven't seen any yet. I'd say the negotiations with MA plans and the commercial plans has always been, as their former CEO used to say, a full-contact sport. So it wasn't easy before. And we're worried it's going to get hard. It was hard before. On the MA patients, there's been a lot of rate improvements for the ESRD patients in MA over the last few years. So if you turn the clock back a few years, you would have heard payers complaining that these were loss-making patients. They ran with MLRs in the 110%-120% range. That period is over. I think these are profitable patients for them that have a very different dynamic than the rest of their MA book. The coding is different. The rate increases are different. And the cost trends are different. What we're seeing now is that they're treated a little bit differently. We're not feeling that push-through of rate pressure that the MA plans are feeling on their non-ESRD book. OK. And so I guess, since it sounds like some of the better rate capture outside the RCM improvements is because the inflation backdrop is also higher, how do you solve that delta between where the rate growth is and where your cost growth is, which seems to be coming in a little bit higher? So no shortage of ideas. But what are some of those ideas to kind of. So capacity utilization is certainly high on the list. We've closed a lot of clinics as a result of the mortality from COVID. We'll continue that this year. Then we see a path to growing capacity utilization by growing volume without opening net new clinics or opening net new clinics fewer than the volume. There's a lot of flow-through to margin of adding patients without adding clinics. About two-thirds of our clinic cost is variable. Roughly one-third is fixed. If you're not adding that 1/3, you get a lot of margin flow-through. That would be one. We see opportunities on productivity, in particular around training. During COVID, our turnover went up among our teammates. It has remained elevated. That leads to significantly higher training costs. Because as you're turning teammates, you need to train more teammates. We see an opportunity to bring that down as the labor market improves. So that would be another one. IKC will be another area of OI growth. International is growing faster. We just did an acquisition there that should accelerate that as well. And then there are all sorts of others. We still see opportunity in pharma. We've invested a lot in IT. We see that as an opportunity to continue to drive some of our other costs down. So no shortage of ideas. OK. Maybe we go back to some of these things. The capacity utilization side of it, where is capacity utilization today? Where can that be? Sure. So today, it's at about 58%. It peaked at roughly 65%. And we measure capacity assuming a six-shift per clinic. And it's hard to get too high because then you have patients dialyzing on unfavorable shifts. And the likely answer in those scenarios is someone will build a new clinic to accommodate that. So the question is, can we get back to 65%? I think it'll remain to be seen what volume growth is, what happens with competition, and then closing clinics or building clinics. Home penetration plays into that number a bit as well. So I think we can certainly get back into the 60s. I think it will take a little bit of time. But as we talked before, there's a lot of margin flow-through from each point of that. OK. And then when you talk about that, is there also a home health dynamic of that improvement? Or are you just really talking about the physical plant capacity? Because I guess capacity could be almost infinite if you do home health, right? Right. Yeah. Home dialysis would help that. Look, home patients still end up going to a clinic. So you still need clinics for home patients. They're cheaper clinics to build. You don't need a water room and a lot of the CapEx that goes into them. But you still build clinics for home patients. OK. That's capacity utilization. The second one was the labor market kind of normalizing. Where are we in that process? So there's obviously a huge macroeconomic question that the Fed and others are spending a lot of time looking at that I'm not qualified to opine on. That said, I think we are at a point where we're largely driven by the overall labor environment rather than anything unique to DaVita or anything particularly necessarily health care related. So as that environment cools, we'd see wage pressure coming down and turnover come down. And that would help the productivity side. And then on the IKC business, you guys have kind of previously outlined a trajectory for improvement and leverage on that. Where are we on that trajectory? We're making good progress. Our guidance for the year is to lose $50 million for 2024. We've committed to break even by 2026. We still feel good about that trajectory. What are the big levers there? One would be scale to continue to grow the number of patients and dollars under management. The second would be driving our savings, the amount we're actually reducing costs by for these patients because we share in those savings, or we get all of them depending on the nature of the contract. And then third would be bringing down our unit costs for delivering this. So our operating model and our G&A, most of that will come as a result of scale. OK. And then the last one, the international business, is there a cost I guess, where does the savings come from there? Is it just adding density to the existing? It's adding density. Our international markets are higher organic growth markets in general than our U.S. market. We also do M&A there. We're pretty constrained on M&A in the U.S. given our market density. But we don't have those constraints in general internationally. For example, the acquisition in Latin America that we announced this quarter. And so when we put that all together, I guess, where are our margins now? Where can they go if everything kind of comes together? Yeah. We haven't really guided on that. I'd say, in general, if you look at our long-term 3%-7% margin guide, at the middle of that range, margins are relatively flat. The high end of that range, we're seeing margin expansion. At the low end of the range, we're seeing a little bit of margin contraction. OK. That makes sense. And then I guess when we think about the IKC business, is there an opportunity? There's been rapid growth in that. But I guess it feels to me like there shouldn't be a reason to expect continued growth at the more recent growth rates, right? Or is there still a huge opportunity for penetration? I think there's a big opportunity. You should not expect growth rates to continue at the rates we've seen recently. I mean, there's been massive expansion both through signing new contracts, largely with MA plans, and in particular the government program, the CKCC program. That's grown a lot. I wouldn't expect that to continue to grow at the pace it's been growing. OK. So it's more about MA penetration from here to grow that? Yes. What's the gating factor to that today? Why isn't it higher already to where it could be? We've been pretty disciplined about pricing there. We wanted to get to scale in that business so we could build our capabilities and be a real player. But we were unwilling to do deals that just were bad contracts, where we were upside down on the risk. So we were pretty disciplined on that. I think it remains to be seen what happens in that market. Will some of the players who we think were a little bit less disciplined need to come closer to where we are in order to drive profitability? I think there were companies in this market that were raising capital in a growth-at-all-costs kind of mentality. And obviously, the capital markets on that have changed. Yeah. All right. So do you think that those rates that you've signed would be attractive to MA plans, broadly speaking? So someone else took it. Is Is it a matter of you have a market clearing rate, but someone else decided to undercut you? So you're going to lose that? That's a broad oversimplification, but not a bad one. So yeah. Yeah. So your rates will work for both you and the managed care company? I think they should. Yeah. I mean, again, as I referenced before, there was a time when ESRD patients, because of the MA ESRD rate, these were patients running at MLRs well north of 100%. Those rates didn't work for anyone. And we can't sign deals at 85% of premium when the MLR is 115%. Those MLRs have naturally come down. So I think we can now offer percentage of premium rates that should be attractive to the MA plan relative to them having no contract at all. If someone's willing to buy the business at a rate well below ours, we're not going to chase that. Yeah. And so how long do you think it will take for that market to normalize? Hard to tell. I think there's a lot we don't know about how long this can last, what contracts these companies have signed, how they're doing, how much capital they have. So it's really hard to predict. OK. And then from a leverage perspective, you guys paused share repurchase a while. But now you've been improving margins nicely. The EBITDA has come up. The leverage has come down. How do you think about capital deployment from here? Yeah. So I think it's important to recognize, since we came out with our capital-efficient growth concept in 2019 and our capital deployment model, really nothing has changed. It's just if you've got a paradigm, you have to adjust to the moment in time. And we've always said leverage ratio and liquidity were something we watched carefully. And obviously, starting the middle of 2022, that got away from us. So we shut down the buybacks in order to get back into range. We're back in range now. It ticked up a little in Q1 because of the Change Healthcare stuff. But as we said on the call, we see that resolving itself quickly. So I think our capital allocation strategy hasn't changed. We've normalized the leverage ratio. So I think it should feel now the way it did to investors for the few years before mid-2022. OK. And then maybe just going back for a minute to the volume question, your guidance is 1%-2%. Based on where Q1 was, it'd be kind of hard to hit the midpoint of that range. Is it safe to say the lower end of that range is where to go? Because you'd almost have to be 2% Q2, Q3, Q4 to do that. Or is there the potential that you could exit the year above 2%? Yeah. We haven't gotten specific on where in the range we expect. We expect it to grow over the course of the year. As we said on the call, we weren't surprised by the growth rate in Q1, even though it came in below the low point in the range. So I think there's still things that we need to see, in particular around mortality, to see where in that range we wind up for the year. I don't know if there's any update since the quarter around how volumes are going. Is everything still kind of knocked out at 1%-2%? It hasn't been very long, obviously. But so no update. OK. And then I guess the other kind of theme that we've talked a little bit about, but home dialysis, it felt like there was a lot of momentum and a lot of excitement around it. And then COVID kind of maybe put a little bit of a pause on that. And we kind of stuck around 15%. Should we expect, now that things have kind of normalized, for that 15% to go up? Or is there a gating factor to that continuing to grow? Yeah. I think you characterized it right. I would expect it to continue to grow. It's growing now relative to last year. Look, we put a lot of energy into home dialysis. We like it as a modality. It's great for many of our patients. And as the CFO, it's good economics for us. So we don't need more incentives to try and grow home. There are a lot of challenges for many patients, for some physicians, quite honestly. But I would expect it to continue to grow from here, yes. I guess the other thing that the government was trying to do a few years ago was trying to increase kidney transplant. You guys highlighted that at your most recent call, just kind of the progress you guys have made on that. Is there any risk to that volume growth story from kidney transplants? You can make a lot of progress, but there's just still not going to impact things. Look, it's an industry that suffers from supply. Until the government or science figures out the supply challenge, it's hard to imagine it growing to a point where it changes the volume story radically. Okay. All right. I think that's all we have time for. So thank you for coming. Thank you, Kevin. Thanks for having us.