DaVita Inc.

Ladies and gentlemen, good evening. My name is Kath, and I will be your conference facilitator today. At this time, I would like to welcome everyone to the DeVita First Quarter 2020 Earnings Call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer period. If you would like to ask a question during this time, simply press star and then the number one on your telephone keypad. If you would like to withdraw your questions, Press star, then the number two. Thank you. Mr. Gustafson, you may now begin your conference.

Thank you, and welcome, everyone, to our first quarter conference call. We appreciate your continued interest in our company. I'm Jim Gustafson, Vice President of Investor Relations, and joining me remotely today are Javier Rodriguez, our CEO, Joel Ackerman, our CFO, and Leanne Zumwalt, Group Vice President. Please note that during this call, we will make forward-looking statements within the meaning of the Federal Security Clause. All of these statements are subject to known and unknown risks and uncertainties that could cause the actual results to differ materially from those described in the forward-looking statements. For further details concerning these risks and uncertainties, please refer to our first quarter earnings press release and our SEC filings, including our most recent annual report on Form 10-K and subsequent quarterly report for the first quarter of 2020 on Form 10-Q, which will be filed today. Our forward-looking statements are based upon information currently available to us, and we do not intend and undertake no duty to update these statements. Additionally, we'd like to remind you that during this call, we will discuss some non-GAAP financial measures. Reconciliation of these non-GAAP financial measures to comparable GAAP financial measures is included in our earnings press release, submitted to the SEC, and available on our website. I will now turn the call over to Javier Rodriguez.

Thank you, Jim, and good afternoon, everyone. I hope that you and your families are healthy. Let me begin by expressing my sincere appreciation for the 65,000 nurses, patient care technicians, social workers, dieticians, and other caregivers worldwide, including many non-clinical workers who are on the front lines of care with our physician partners. These people are living up to the meaning of DaVita, which is to get life during this global crisis. Their courage and dedication to helping others is a source of energy and inspiration. I want to extend that gratitude to all healthcare organizations and caregivers around the world. For today's call, I'll discuss three topics, our response to the crisis, the impact of COVID on our business, and our decisions relating to the CARES Act. At Capital Market, I talked about the strength of our platform and our ability to provide continuity of care of dialysis patients across all sites of care, from the hospitals to patients' homes and in our clinics. Our response to COVID highlights the resilience and the strength of our teammates and demonstrates the power of connecting the multi-site platform. Let me give you a few examples to bring it to life. First, we're leveraging our national scale with resources, teams, and our geographic footprint to open and operate dedicated clinics and assist the dialysis patients who are or are suspected to be COVID positive, which has helped to free up precious hospital resources. The dialysis industry, in partnership with the government, has joined together to help maintain continuity of care for dialysis patients by creating isolated cohort capacity that can be accessed by other providers. Next. Our physician is a national leader in home dialysis who served our patients well by supporting continued growth of home dialysis during this crisis and helping to provide continuity of care for all of our patients as they may have moved between dialyzing at home, in hospital, or in center due to the virus. In addition, we've been able to utilize our leading telehealth capabilities to allow us to expand the treatment of our patients in the safety of their home while maintaining access to their care provider teams. With the support of the government, we're now using that telehealth platform to provide further support for in-center patient care. Finally, in our over 900 hospitals where we deliver acute services, we've been able to allocate resources and shift caregivers to areas in most need to help support patients and our hospital partners. Next, let me address some of the trends we're seeing while covering the expectations for the short and long-term business impacts of COVID. On the spread of the virus, we're experiencing similar geographic waves of COVID impact as you've read about in the news. Initially, the CDC wanted all COVID-positive patients treated in the hospital. As the pandemic spread, however, the CDC quickly recognized this was not possible in terms of providers like DaVita who've been able to focus on infection control well before COVID to alleviate the burden from the hospitals and to treat stable patients in an outpatient setting. Today, nearly 70% of DaVita patients who are either COVID positive or suspected to be COVID positive are treated in one of our outpatient settings. The operational task of maintaining treatment three times a week for these COVID positive or suspected to be patients on cohort shifts and clinics has been nothing short of extraordinary, all while maintaining continuous care for over 230,000 patients who show no symptoms of the virus but are at risk with multiple other comorbidities. The near-term impact on our business is still dynamic and somewhat uncertain. However, we're able to affirm our guidance for 2020 at this time. This may be in contrast to what you've heard from other providers who may be facing volume or liquidity issues due to the significant drop-off on elective procedures. As you know, dialysis is not optional. It is life-sustaining treatment that our patients need multiple times each week. The long-term impact is where we have less visibility. We believe the economic impact of COVID on our business will lag the impact of the broader economy. The scope of the impact of COVID on our business will be based primarily on the duration of this devastating virus and its impact on unemployment generally. We expect that these factors would have a greatest impact on volume and mix. Volume, as the growth of dialysis population, is more uncertain due to the potential impact when the virus on the late-stage CKD population and on the health status of our existing ESRD patients, and on commercial mix because the insurance mix of our patients could be negatively impacted by a weakening of the broader economy. Next, I want to acknowledge the administration's swift response in this time of crisis. The administration collaborated with the dialysis industry by modifying certain policies and regulations to facilitate our ability to treat COVID-positive patients in cohortships or clinics where necessary. The administration also acted swiftly by distributing funds to healthcare providers in an effort to ensure that patients, uninsured and insured, have access to the care they need during this time of crisis. We believe that the spirit and the intent of the government's action with the relief fund was to prevent healthcare providers from closing their doors, not to help a company make their earnings targets. The VITA has been and will be able to continue to provide care for our patients, including the uninsured, without the need for this federal funding. As a result, although we have incurred costs that fall within the parameters of the relief fund under the CARES Act, the VITA has decided not to accept this government's financial support at this time. We believe that it's in the best interest of our company, shareholders, and our country to allow these dollars to be redistributed to other individuals, organizations, or healthcare providers that truly need it. ESG has been an increased focus over the last year, and doing the right thing matters. In our opinion, the current healthcare crisis is an opportunity for companies to lead and contribute for the greater good of society, and we are happy to do our part. Let me conclude with a comment on DeVita's culture. In this crisis, the fact that our frontline caregivers know that they're part of something bigger, the village, has been a key part of our resilience. They are true heroes, and they know that our entire company, or as we say, our village, is doing what we can to support them. We know we still have an unpredictable future with this virus, but we're thankful that we're village strong. Now, on to Joel to provide an update on our Q1 results and to discuss our financial outlook.