DaVita Inc.

Good evening, my name is Michelle and I will be your conference facilitator today. At this time, I would like to welcome everyone to the DaVita third 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 question, press star and then the number two. Thank you. Mr. Gustafson, you may begin your conference.

Thank you, and welcome everyone to our third quarter conference call. We appreciate your continued interest in our company. I'm Jim Gustafson, Vice President of Investor Relations, and joining me today are Javier Rodriguez, our CEO, and Joel Ackerman, our CFO. Please note that during this call, we may make forward-looking statements within the meanings of federal securities laws. All of these statements are subject to known and unknown risks and uncertainties that could cause 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 third quarter earnings press release and our SEC filings, including our most recent annual report on Form 10-K and subsequent quarterly reports on Form 10-Q. 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 except as may be required by law. Additionally, we'd like to remind you that during this call, we will discuss some non-GAAP financial measures. The reconciliation of these non-GAAP measures to the most 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.

Thanks, Jim, and good afternoon, everyone. Thank you for joining us to review our third quarter financial results. We are now nine months into the pandemic, and one thing is clear. Our team of caregivers is committed to serving our patients. Because of our team, our business is performing well despite disruptions from the pandemic, wildfires, and hurricanes. I've said it before, and it's worth repeating. I am incredibly proud to be part of DaVita and to serve alongside our 65,000 teammates who work so hard to provide our patients with life-sustaining care. It is our people who make our business resilient in the face of so many challenging externalities. Through these challenging times, our focus remains on our patients and on building capabilities to enhance their care and their experience in the future. Today, there are still too many patients who are surprised by their start on dialysis, which impacts their ability to adjust their lifestyle and then to choose their optimal modality. Therefore, we work with patients with chronic kidney disease known as CKD to help them understand how to stay healthy, delay the progression of kidney disease, pursue transplantation, and evaluate different treatment options. Education is one important factor to avoid a surprise start. We are excited to have reached a milestone this quarter of educating 200,000 people through our Kidney Smart program, a no-cost CKD education program. During the pandemic, we have shifted all Kidney Smart classes to virtual format, and we continue to have high engagement with CKD patients. The program has healthy results as individuals who attend a kidney smart class are six times more likely to start dialysis at home, experience 38% fewer mistreatments in their first 90 days on dialysis, and have 30% fewer hospitalizations. Now on to quarterly results. Q3 was another strong quarter for our company. Total revenue came in largely as expected. While volume growth was weaker than historical levels due to the impact of COVID, total revenue held up due to the year-to-date improvement in revenue per treatment. Our cost came in significantly below our forecast as a result of lower COVID impact this quarter and continued strong cost management. Looking forward, I remain confident in the strength of our business model as well as our earnings and free cash flow growth. Due to our strong performance over the past year, we're ahead of plan that we discussed last year's capital markets day, both financially and strategically. Financially, we're ahead of the expected adjusted earnings per share guidance we shared both in 2020 and 2022. Today, we are again raising our 2020 adjusted earnings per share guidance range to 735 to 760. Over the past year, we've been able to achieve operating margin increases in share purchases faster than expected. In addition, we've also lowered our debt cost consistent to what we expressed at Capital Markets Day. Looking forward, we're confident in our ability to deliver continued capital efficient growth from 2020 levels over the next few years. To quantify this, we expect to be able to deliver annual adjusted EPS growth on average in the low double digits. I want to highlight that we are accomplishing this while continuing to invest in innovation, building new capabilities, and strengthening our platform. Strategically, we have made tangible progress in extending the breadth and depth of our clinical and operational capabilities, fueled by our digital transformation in several areas. We believe that these capabilities in our platform will create a competitive advantage with a focus on our patients, nephrologists, partners, and payer partners. We also see a path to using these capabilities to improve the quality and value of care for our patients across the healthcare delivery system. For example, we're personalizing the care for patients across the kidney care continuum using proprietary systems that we've been developing for years in partnership. We've been with industry leaders including Epic, Cerner, Salesforce, and Google. We have more to do to effectuate our strategy, but we're beginning to see the benefits from these tools in the form of AI-driven models that personalize dosing for certain therapeutics, anticipate patients' clinical status and help avoid hospitalizations, anticipate patients who may drop off home therapy, and identify CKD stage 4 patients who are likely to progress quickly to ESRD and help avoid unplanned dialysis starts. As we place these tools and information in the hands of nephrologists and our caregivers, we envision three significant benefits. One, enabling the best in class patient experience, delivering individualized care at scale. Two, enabling our physicians to deliver industry leading clinical outcomes. And three, lowering the total cost of care of kidney care populations through avoiding disruptions caused by preventable hospitalization stays and changes in modalities that are not clinically driven. We're also making strategic progress in our shift to value-based payment model. Over the last decade, we've built capabilities and real world experience managing the total cost of care for ESRD patients through our partnerships and the unique relationships and access we have to more than 200,000 dialysis patients. We've developed a model of care that is tailored to the specific needs of dialysis patients and have applied this to a variety of value-based payment models, including shared savings and full capitation. Our discussions with payers about using value-based arrangements to align incentives and drive better outcomes have accelerated in recent quarters. On the government side, we're carefully considering the models for value-based arrangements developed by CMS. On the commercial side, we continue to contract for pay-for-performance models for both ESRD and CKD patients. We're also using the expected growth of Medicare Advantage in the ESRD population to accelerate conversation with MA plans about new payment models. We're excited for the momentum toward value-based care, and we're prepared for opportunities to partner with government and commercial payers. We believe that our current capabilities, deep experience, and national scale give us a superior platform for delivering value to our partners, patients, and payers. Now I'll turn it over to Joel, who will discuss our financial results and outlook in more detail.