All right, good morning. My name is Justin Lake. I cover healthcare services here at Wolfe Research. Appreciate you all being here, especially DaVita. We've got Joel Ackerman, the company's CFO. Joel, thanks for being with us today. Thank you very much. Before I get into my list of questions here, I thought, Joel, I'd give you a minute to kind of give us your latest thoughts on the year for DaVita. What's gone right? What could have gone better? Maybe you can talk a little bit about your positioning for 2026. Sure. It has been an eventful year, 2025. A couple of notable challenges, which were a really tough flu season in Q1, combined with a cyber incident that was quite the challenge for us in Q2. I'm proud of the way DaVita handled those, especially the cyber incident. DaVita is, at its core, an operating company, and it was amazing to see how we managed through that. That said, they were real challenges. They were challenges primarily on volume, which, as most of you know, is probably the single biggest metric that we keep an eye on, investors keep an eye on. There are also other challenges on revenue per treatment as well. Despite those two challenges, I'm feeling proud that we have maintained our guidance and are working through those challenges and doing what we need to do to continue delivering operating results for the business. Looking forward to 2026, I would say the biggest eye is clearly on volume, as you would expect, both internally and externally. Mortality continues to be the primary headwind, and we've got a lot of activity in play to try and drive mortality. I think a lot of people don't understand that the history of the industry volume growth is really a mortality improvement story. If you look at the years 2000 to 2015, when industry volume grew 3%-4% higher than what we anticipate getting back to, it was not the result of admissions growth growing. It was the result of mortality coming down. That was through just better clinical practice across the industry. What we are looking to do going forward is get back on that mortality reduction trajectory through better clinical operations, longer time on therapy, better use of pharmaceuticals, potentially these new middle molecule technologies, whether that's HDF or better dialyzers, and really drive mortality down, which we think could be the solution to the volume challenges we're having. That's a great segue because volume is where I kind of wanted to start off. First of all, just to kind of give everybody a baseline, down 1%, give or take, this year. Correct. That includes some modest growth in the fourth quarter, and that's all really just kind of seasonality, right? 50-75 basis points of headwinds from stuff like flu and cyber that you think of as non-core. So maybe think of the core growth as 25-50 basis points negative. Correct. On a year-over-year basis is kind of your run rate. So you talked about mortality. I know you've talked about mistreatments. Can you give us a little color in terms of just update us on numbers? What kind of a headwind has mortality been this year? Or has it just been a neutral instead of a tailwind? It's been a headwind because of the flu. I think there are a lot of ways to calculate mortality. I know it sounds counterintuitive, but how you calculate mortality can be very complicated and can vary from one company to the next. Leaving that complexity aside, the mortality headwind this year relative to 2024 was about the flu. That said, it still remains elevated even without the flu relative to pre-COVID. That is the mortality story for the year. Mistreatment rate also remains elevated relative to pre-COVID levels. Our expectation going into the year was that hopefully this would be the year where we could start to see it coming down, and that is not what happened. Mistreatment rate was impacted by flu as well, as well as by the cyber incident. It was not the tailwind we were hoping for in the year. Just to put some numbers around it, what is typical? I know the way I always think about mortality is average lifespan on dialysis. What does that look like now versus history? It depends what data point you use for history. If you chose 2017, you'd get a very different answer than if you choose 2018 or if you choose 2019. There's a fair bit of those are all pre-COVID years, and there's a fair bit of variability from one year to the next, 50-plus basis points. We remain elevated more than a point of elevated mortality relative to pre-COVID. That's kind of how I'd start to quantify that. Got it. And then same thing on mistreatments. What are mistreatments typically, and where do you think you can get back to versus where they are today? Yeah, so mistreatments historically ran, let's call it roughly 6%. It's an easier number to quantify than mortality, and they're running about 100 basis points higher. We do see an opportunity to bring it down. The question that we and I think others are grappling with is, excuse me, which of the changes that happened during COVID were temporary and which are permanent? There appears to be just in the population some changes related to missing scheduled treatments in healthcare and not showing up for school that appears to be potentially permanent. The question is, can we overcome all of that going forward? Got it. And then new starts. How do we think about that kind of year-over-year change? What's kind of the tempo there? Yeah, so it's a pretty volatile number. For anyone who wants to understand that themselves, I'd recommend going to historical USRDS data and just looking from one year to the next. This is not for DaVita. This is for the full industry, how much volatility there can be from one year to the next. When you have small numbers that are very volatile, it's hard to figure out, to pick out the signal to noise. We appreciate investors' interest in this, particularly around the question of, is GLP-1, is the advent of GLP-1 having an impact on the upstream CKD population? We've tried to be as transparent as we can about this. I think that really we put a point on that on the February earnings call when we called out negative admit growth in Q4 of 2024. We debated how to communicate that. We don't want to whipsaw investors on the one hand, but we also don't want to get behind in our transparency. We called it out. We called it out as what we thought was noise, and we're now a few quarters later, and we now feel quite confident that that one negative data point was noise. In general, we're not seeing the impact of GLP-1s on admits. It continues to oscillate within the range we saw pre-COVID. In terms of the question of, is declining admits an important part of the story on volume, we continue to believe the answer is no. Got it. Got it. So it. So that's the number that's similar to pre-COVID. And that kind of leads me into my next question, which is kind of thinking about the breadcrumbs that we would all look for for return to growth. Sounds like it's more around mortality and mistreatments than it's going to be about new starts. I think. New starts have been pretty consistent. I think that is correct. I would put mortality as a much bigger issue than mistreatment rate. The reality is, mistreatment rate, say it is running about 7% now. If it stayed at 7% and never got any better, it is no longer a headwind on volume growth. It could be a tailwind if it comes down. The mortality improvement, if we bring mortality down by 100 basis points, that is a 100-basis-point improvement to growth year after year after year. Right. That makes sense. So when we think about the long-term growth of the company, kind of the LRP of, I think in dialysis, it's 3%, right? It's kind of your current target for growth. How do we think about that in terms of, I went back to your first investor day. I can't believe it's been eight years now. It's 2017. You started as CFO. I think there were 200 million shares outstanding. Now there's 75 million shares outstanding, right? You've done a great job deploying capital. Like you said, volume is the big swing factor, right? I remember at that investor day, you talked about typical 4%-5% volume growth total, right? Not the same story. You're acquiring some. But now, right now, we're kind of struggling to get back to zero. Within that 3%, if you had to think about volume, price, cost, how would you want us to kind of frame that? What would be a typical year? Yeah. So look, there aren't many typical years, which is why that question is so hard to answer. You look at last year where volume growth was about zero and RPT growth was about 3%. That would be one way to drive 3% top line. I wouldn't call that typical. Our expectation is we get back to a point where volume is a positive contributor to revenue growth, and we don't need 3% RPT growth to get to a 3% top line. I would say typical would probably look more like a balance between RPT and volume to get you to 3% top line growth and a steady margin. That gets you to 3% OI growth. Obviously, there's upside if we can improve margins. These things are not unconnected because volume growth also drives margin expansion. Obviously, higher RPT growth can drive margin expansion. I'm not talking a lot about the cost side. That's probably been the most consistent component of our story over the last couple of decades is DaVita's ability to manage the costs effectively. I don't see any reason that shouldn't continue. Right. That makes a lot of sense to me. I think people have covered the company for a long time. You sit down, and I know kind of rule of thumb, I think you've said 1% volume is typically like a $50 million-$60 million swing. Effectively, when volume has, let's just say, been flat to down, you've been starting with a, let's call it a 2%-3%-4% headwind every year. You've been able to overcome it, some of it with stuff like binders, but most of it with just improved core operations, right? Whether it's revenue collections, which were a big part of the 2023, 2024 story. I know you've done some interesting stuff on the cost side as well. If we were to look out and say, we think volumes are going to be flat for the next couple of years. We think price, right? We'll put the enhanced APTCs to the side for a second and say, volume's going to be flat. Pricing's going to be in that 1.5% range. Do you still feel like you have visibility towards being able to overcome that, let's say, $50 million-$60 million-$70 million headwind a year and get to 3% growth? Or do you feel like, I say, I think I've said, kind of what inning are you in terms of revenue collections, cost cutting, all that? Look, every year is different. And you're right. This year, binders was a big help. And there's a question, what's going to help next year? I don't love the innings analogy because it implies that the game ends at some point. The reality is there are always new opportunities coming about. I think you pointed out the right stuff in terms of what's helped us over the last few years. That said, it's also been a tough labor environment. If that turns around, that could go from a headwind to at least a neutral, maybe a tailwind in figuring out this equation. G&A has been a headwind as well in terms of growing faster than revenue and putting pressure on margins. That's something we're going to look at carefully. There continue to be opportunities to look at. I don't think we're sort of, we don't have a fixed list of opportunities and we're running out. There are always new opportunities coming on. Got it. Got it. Maybe the way to think about it is it sounded like, especially on the revenue side, for instance, this year, you've talked about in the third quarter, you're going to pick up some better collections. I think you said something in the neighborhood of a little more than half of the $50 million tailwind in RPT. Call it $30 million-$35 million there. Is that something that we should think about as a headwind to next year? Is that like, I guess, is that like a one-time benefit, or is that like a bigger-than-average benefit, or is that just like, hey, we're catching up from 2Q and 3Q, so it's all kind of intra-year? Do not think about that as a headwind next year. Yeah. Look, these types of resolutions we have every year. Some years are bigger, some years are smaller, some years are lumpier, some are spread out throughout the year. This year will be a little bit bigger than normal, but not crazy. This is not the only dispute we've had resolved this year. That said, we've had the headwind on RPT from the cyber outage. If you put those two things together, I think reported RPT for the year is a good baseline off of which to build RPT for next year. There's nothing to back out. That said, I think you mentioned the enhanced premium tax credits. You have to take that into the equation as you're thinking about RPT for next year. We've had a nice tailwind on mix over the last few years, which has certainly been one of the ways we've overcome volume and driven the RPT up. For next year, with the enhanced premium tax credits, assuming they go away, that will be a real headwind, which we've called out at about $40 million for next year. Right. Again, you've led me right into my next question, which is I want to go through this a little bit. You're one of the few companies to kind of give that kind of transparency and say, here's what we think will happen if the premium subsidies go away. Maybe we could just start with what percentage of patients, remind me, were on exchanges pre-COVID versus today? The number went from about 2% to about 3%. Our assumption is that the vast majority of that growth was the result of enhanced premium tax credits. Obviously, we have a lot of visibility on the insurance our patients have because we have to bill their insurers. We have less visibility on what sort of tax credits they're getting. We have even less visibility on some of their motivation and what's behind their financial decisions. A lot of the $40 million is based on our assumptions about patient behavior. Got it. So you've talked about $120 million as the total impact over three years. The way to think about that is exchanges/commercial mix go backwards 1%, go to Medicare. The delta in the revenue there from that 1% mix shift would be from exchanges to Medicare would be that $120 million. Is that the simplistic way to think about it? Yes, with one caveat. We're not assuming that the full 1% goes to Medicare. Our assumption is some of that 1% will retain commercial coverage. Either they'll stay on the exchanges and take advantage of just premium tax credits. They'll get other help with their commercial premiums. They'll go back to EGHP, something like that. Got it. So of that 1%, what do you think kind of sticks on exchanges or commercial versus goes to Medicare? Is it like one-third, two-thirds, or? It's in that range. Two-thirds retaining it. Guiding ranges on top of ranges is always complicated, but yeah, something like that. I'm sorry. Two-thirds. Two-thirds retaining. No, I'm sorry. Two-thirds losing, one-third retaining commercial coverage. That makes sense. The typical discount to the exchanges relative to employer, I think we usually use like a 20% ballpark for providers, like giving some not as good as commercial risk for a commercial employer, but certainly much better than Medicare. Is that 20% discount kind of in the right ballpark? We haven't disclosed the number, but I think if you think of commercial up here and Medicare down here, it's safe to say exchanges are here and MA is here. There remains a huge gap. The move from, in the context we're talking about, the move from commercial to exchanges or exchanges to traditional EGHP is not the story. The story is the move off of commercial to either Medicare or Medicare Advantage. Got it. You did mention Medicare Advantage as a potential swing factor on the third quarter call. Nobody knows better than the rest of healthcare investors that have been following managed care how much disruption there's been in the Medicare Advantage space, right? Yeah. Two people lost their plan last year, and they're the $2 million to lose it this year. Tell me how that affected you for 2025 and how you think we should look at this from a swing factor perspective in 2026. Yeah. I'll step back a second and look at the longer arc here and how we've dealt with the volume challenges. I mean, not just this year of negative 1% and last year of flat, but years where we were losing 3% a year. MA was a good part of that story. When the CARES Act came about, you think of 2021 and 2022, we really saw big growth, and that mix really mattered. We're now in a point where the growth in MA mix that we saw in 2025 is now leveling off. It's a small tailwind, but not significant. The concern for us is less around the churn of patients from one MA player to another. It's more, does somehow MA turn backwards and MA start shrinking? Then you're not talking about what's the size of the tailwind. You're talking about a tailwind becoming a headwind. That would be the concern. If you think MA will continue to grow, but at a much smaller rate going forward, then it's not a material issue for us. Got it. Even if it's flat year- over- year from an MA perspective, enrollment perspective, you don't see an issue there. Is there anything, like you guys, I know, do a great job of sitting down with your patients, going into each and every year and looking at all their insurance options and helping them. Some portion of losing their plan, just like everybody is, or at least some portion of the overall enrollment is. Is there anything that's jumping out to you that's idiosyncratic to dialysis patients, that, hey, I'm losing my plan, but I don't see another plan that looks interesting, and so I'm going back to fee for service? Do you think it's, I just have to, we as your investor base just have to track the overall MA baseline? Right. We should be good. Look, it's a very fair question, and I think it applies to the exchanges as well. Our patients are not the average American healthcare consumer. They cost on average $100,000 a year. They are very high utilizers. If high utilizers make different insurance decisions than the typical utilizer, our patients are likely to fall into that category. I think it's reasonable to think that our patients on average may behave differently than the average patient who's thinking about the change in their coverage, but it's hard to predict what that magnitude might be and which way it swings. Changing topics, IKC. You talked about the potential in the fourth quarter for a true-up on 2024. I think right now your guidance is to lose $20 million here, which implies a slight gain in the fourth quarter, maybe a slight loss. I can't remember which way it goes, but I think it's like $4 million either way. Right. Does that include the '24 true-up happening, or does that include? That assumes it would happen, yes. Okay. Okay. And. Remember, the '24 true-up is not a binary outcome. It happens or it does not, but then the question is, what is the magnitude as well? Got it. So you're assuming it happens. Is that a big, I guess, is that a big swing factor? Is that like a $20 million swing factor or a $5 million swing factor? Yeah. I would say, stepping back to our last capital markets day in 2021, I am pleasantly surprised with how IKC has played out relative to our expectations, meaning it's right on top of what we said we would do. I am surprised there's less annual variability relative to what we laid out. That said, there remains a lot of timing variability. We saw it when Q2 revenue came in a lot higher than expected, and that came out of Q3. That same dynamic could play out in Q4, and it could be a net positive. It could be a net negative. The good news for us is IKC is a distinct segment. We report it out every quarter. Every investor can see exactly what the performance is. I think we've been transparent about the dynamics. If something gets pulled in, if something gets pushed out, we'll call it out. I don't think it's an important dynamic for the economics of the business or for IKC, but IKC timing remains a swing factor. Just thinking about 2026 then, sounds like that '25- '26 bridge does not have that many moving parts outside of the enhanced premium tax subsidies. Yes. I think you've said break-even by in IKC, is that break-even by 2026? Yeah. If we are losing $20 million this year, that'll be a tailwind for next year. Which is in line with kind of the continual progress of $20 million-ish of improvement a year. Internationally, I know you've had some timing benefit. You've been making some pretty significant acquisitions through the year. Should that be kind of the same typical benefit? Yeah. I would not call out anything unusual at this point for IKC next year. I mean, it gets back to the model we have called out. 5% OI growth, 3% from U.S. dialysis, which we talked about before. Another point from IKC, another point from international. That is how you get to that 3%-7% OI growth. I will reiterate what I said before. There is no typical year. This was not a typical year. We got a lot more from international, a lot less from IKC. There is no typical, but if you needed a simple model to start with, that 3 plus 1 plus 1 equals 5 is a reasonable way to start. Got it. On the dialysis business outside of the $40 million headwind potential, if we do not see that extension, effectively it comes down to the swing factor being volume growth. If it does not show up again, are you able to pull enough levers to offset flattish growth, slight down, slight up? Exactly. That's what you'll let us know. Yeah. Yeah. Other enhanced premium tax credits, there's nothing distinctive to call out there. Got it. Maybe to wrap up, we'll talk a little bit about capital, right? Like I said, since you become CFO, I feel like both the capital dynamics of this company have changed dramatically to the positive. I know the level of, let's call it M&A that may or may not have contributed a lot in terms of returns on investment has gone down dramatically, right? You've kind of stuck to your knitting. CapEx number has gone down pretty dramatically, right? With no volume growth, you don't need to build as many facilities. And you've been buying back a ton of stock. Like I said, 190 million shares in 2017, down to 75 million. You've bought a billion dollars year to date. I think you've got another $500 million or so of free cash flow coming in the fourth quarter. That's still kind of ballpark? Look at Logan. I think so. I mean, our guidance hasn't changed. I think it's 6%. Versus the. I was looking at the third quarter number correctly. So leverage is at a little over three and a quarter, right? So that's right in the middle, slightly above, I think. Yeah. 337. Yeah. Right. 337. Should we just simply think about share repurchase equals free cash flow, give or take, unless you find some interesting M&A opportunities? In general, yes. Nothing has changed about our philosophy. The other thing that has driven buybacks, and people ask about this, is the comment of, "Oh, you're taking on debt to do buybacks." I would clarify that's not how we think about it. We talk about a target leverage range of three to three and a half times. As EBITDA grows, you need more debt to stay in that range. We raise debt to maintain that because we have a view about how to fund our business in a think about debt to equity ratio. You raise debt to stay in that three to three and a half times. You get cash, and then you have to decide what to do about that cash. As you pointed out, we're pretty disciplined about M&A. I would love to do more M&A. I would love to find great uses for that capital to grow, but we're not going to compromise our risk-adjusted return threshold for that. You have extra cash sitting around, so we buy back stock. Nothing there has changed. What it means is if EBITDA is growing, there's a leverage on that EBITDA growth for share buybacks because you don't buy back that EBITDA. You basically buy back three turns of that EBITDA to maintain the leverage. Yeah. Makes total sense. Joel, thanks for your time today. Appreciate you joining. Thank you. you. Thanks, everyone. Yep. Thank you, sir.