DaVita Inc.

Good evening. My name is Missy and I'll be your conference facilitator today. At this time, I'd like to welcome everyone to the DeVita second quarter 2021 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'd like to ask a question during this time, simply press star and then the number one on your telephone keypad. If you'd like to withdraw your question, press star then the number two. Thank you, Mr. Gustafson. You may begin your conference.

Thank you. And welcome, everyone, to our second quarter conference call. We appreciate your continued interest in our company. I am 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 meaning of the 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 first 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 and any subsequent filings that we make with the SEC. Our forward-looking statements are based upon the 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. A 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.

Thank you, Jim, and good afternoon. We are excited to talk to you today about our strong Q2 performance, our 2021 financial outlook, and recent developments on our efforts to transform kidney care. First, let me start the conversation with a clinical highlight. A kidney transplant is the best treatment option for eligible patients with kidney failure. DaVita has worked hard over the years to help our patients gain access to transplants through education, and direct support for patients to get on and stay on the transplantation wait list. The cumulative impact is meaningful. Last December, we announced a milestone of 100,000 DaVita patients who have received a transplant since the year 2000. To further advance the cause of transplantation, DaVita and the National Kidney Foundation are collaborating on a year-long pilot aimed at improving health equity in kidney transplantation with a focus on living donors. Increasing living donor transplants expands access to transplantation by increasing the availability of organs, which has been the limiting factor in the number of transplants performed annually. This pilot provides high touch and customized information to patients and families seeking a kidney transplantation from a living donor. We look forward to learning more from this pilot, improving the health equity of kidney transplants, and continuing to be the leader in supporting our patients to receive kidney transplants. Shifting to the latest update on COVID. We have made incredible progress in our efforts to combat the COVID-19 pandemic over the past several months. New COVID infections among our patients continue to drop significantly through the last week of June, down more than 95% from the peak in early January. However, similar to the rest of the country, we have started to see an uptick over the last few weeks. As of last week, on a rolling seven-day average basis, new infections are still down more than 90% from the peak. Thus far, our mortality continues to remain low on an absolute basis as we believe that our vaccinated patients are more protected from severe cases of COVID. We continue to educate our patients about the benefits of vaccine to reduce vaccine hesitancy, and we remain confident in our policies and procedures designed to keep our patients and our teammates safe while they're in our care. Now let me turn to our financial performance in the second quarter. We delivered strong results in both operating income and earnings per share. Our margins expanded as we continued to manage costs while delivering quality care. As a result, we delivered 6% year-over-year growth in adjusted operating income and 35% year-over-year growth in our adjusted earnings per share. Our free cash flow was particularly strong this quarter, and we continue to return cash to our shareholders through our stock buybacks. With the first half of the year behind us, we are now increasing the midpoint of guidance for the full year. Let me transition to update our progress in our integrated kidney care efforts, otherwise known as IKC. Value-based care for our patients with kidney disease is gaining momentum and appears to have reached an inflection point. We have always believed that coordinating dialysis care with the broader healthcare needs of CKD and ESKD patients could simultaneously improve outcomes and reduce total healthcare costs. For years, we've been participating in a variety of small programs and pilots to build our integrated care capabilities and better understand the economics. We believe we are at that point now where we are ready to shift to the next stage of the evolution of integrated care. You might be wondering why now? The trend towards value-based care is not new either in kidney care or other segments of healthcare. So what's changed to make the developments of scale business viable today? There's a couple reasons. First, with the growth of Medicare Advantage, Payers are looking for innovative ways to manage the increasing number of ESKD patients choosing MA plans. These patients tend to be more complex than most MA patients and should benefit from tailored care management. Second, CMS recently initiated the payment models in kidney care. We're preparing to partner with nephrologists in up to 12 markets beginning in January of next year to participate in CKCC voluntary programs. Our participation in CKCC model will also provide us with operational scale and more geographies to enter into other value-based arrangements. Lastly, we've increased our confidence in our capabilities to deliver clinical and economic value at scale and have leaned in on our willingness to take risks. We believe we're well positioned to win in integrated care because of our strong partnership with nephrologists, our regular and consistent interactions with patients, a broad kidney care platform that spans various modalities and care settings, and a clinical data set and analytics that we use to create, develop clinical interventions to support our patients holistically. We have a demonstrated track record of improving patient outcomes, coordinating care, and lowering costs for patients in risk arrangements. For example, in our ESCOs, we were able to generate non-dialysis cost savings in the high single digits, which translated into more than double the average savings rates compared to the rest of the industry over the life of the program. With our special needs plan, we have been able to lower mortality by 23% relative to other patients within the same center and county. To give you a better sense of the scale of the business, as of today, approximately 10% of our U.S. dialysis patients are in value-based care arrangements in which DaVita is responsible for managing the total cost of care. This represents almost $2 billion of annual medical costs under management. In addition, We have various other forms of value-based care arrangements with payers in which we have economic incentives for improving quality and lowering costs. In 2022, we expect our integrated kidney care business to double in size, both the number of patients in risk arrangements and the dollars under management. We also expect to see a dramatic increase in the number of CKD lives we have under risk in 2022. To prepare for this growth, we are currently scaling up our clinical teams and furthering building out our support function. Because of the investment, as well as the delays in cost savings impacts of our model of care and revenue recognition, we expect to incur a net operating loss of $120 million in 2021 in our U.S. ancillary segment. This outcome is consistent with the OI headwinds from IKC growth we called out at the beginning of the year and is, of course, included in our full-year guidance. The doubling of the business next year could result in an incremental operating loss in our ancillary segment of $50 million in 2022. We expect significant improvements in our financial performance beginning in 2023, as we begin to recognize savings from the new contract that we entered in 2021 and 2022. Over the five-plus-year horizon, we believe that our IKC business could become a sustainable driver of significant operating income growth. Currently, we serve approximately 200,000 dialysis patients across the country who utilize over $12 billion in healthcare services outside of the dialysis facility, including the cost of hospitalization, outpatient procedures, and physician services. In addition, we see an opportunity to manage the care of upstream CKD patients who currently do not dialyze in our centers. that we are managing the total cost of care for more than half of our dialysis patients as well as other CKD patients at low to single digit margin, we believe that this could be meaningful financial opportunity. In summary, all of healthcare has been talking about value-based for years. We are excited for DaVita to lead the way. With that, I'll turn the call over to Joel.

Thanks, Javier. We had a strong quarter despite the continuing operational challenges presented by COVID, primarily as a result of strong RPT performance and continued discipline on cost. For the quarter, operating income was $490 million and earnings per share were $2.64. Our Q2 results include a net COVID headwind of approximately $35 million, similar to what we saw in Q1. primarily the impact of excess mortality on volume and elevated PPE costs, partially offset by sequestration relief and reduced travel and meeting expenses. Turning to volume, in Q2, treatments per day increased by 0.4% compared to Q1. Excess mortality declined significantly in Q2, from approximately 3,000 in Q1 to fewer than 500 in Q2. At this point, we are cautiously optimistic that the worst is behind us, but we're closely monitoring the potential impact of the Delta variant, especially within pockets of the country that have lower vaccination rates. Longer term, we continue to believe that we will return to pre-pandemic treatment growth levels with an additional tailwind from lower than normal mortality rates. Our U.S. dialysis revenue per treatment grew sequentially by almost $6 this quarter, primarily due to normal seasonal improvements from patients meeting their coinsurance and deductible obligations. We also saw favorable changes in government rate and mix, including the continued growth in the percentage of patients enrolled in Medicare Advantage. Patient care costs and G&A expense per treatment in total were relatively flat quarter over quarter. Our patient care costs decreased sequentially, primarily due to reductions in labor costs. Our G&A increased slightly, primarily due to charitable contributions and increases in personnel costs. As expected, our U.S. dialysis and lab DSOs decreased by approximately six days in Q2 versus Q1, primarily due to collections on the temporary billing holds related to the winter storms in the first quarter. The majority of the impact of the storms on DSO and cash flow were reversed in Q2, but we may see an ongoing smaller benefit through the balance of the year. During the second quarter, we generated a gain of approximately $9 million on one of our DaVita Venture Group investments, which hit the other income line on our P&L. We have a small investment in Neuromatrix Medical that recently went public. The value of this investment at quarter end was $23 million. Going forward, we will market to market every quarter. Now, Turning to some updates on the rest of this year and some initial thoughts on 2022. As Javier mentioned, we are raising our guidance ranges for 2021 as follows. Adjusted earnings per share of $8.80 to $9.40, adjusted operating income of $1.8 billion to $1.875 billion, and free cash flow of $1 billion to $1.2 billion. Also, we now expect our 2021 effective tax rate on income attributable to DaVita to be between 24% and 26%, lower than the 26% to 28% range that we had communicated at the beginning of the year. These new guidance ranges exclude the potential impact of a significant fourth COVID surge later this year. I'll call out two notable potential headwinds during the second half of the year. First is COVID. We continue to expect the impact of excess mortality will be higher in the back half of the year than in the first half of the year due to the compounding impact of mortality through 2021. We're also expecting an uptick on costs related to testing, vaccinations, and teammate support as a result of the Delta variant. As a result, we're increasing the middle of the range of COVID impact for the full year to $170 million from $150 million. That implies a $30 million headwind from COVID in the second half of the year compared to the first half of the year. As a reminder, this is the middle of what is a wide range of possible impacts, depending on the impact of the Delta or other variants and any additional COVID mandate. Second, we expect to experience losses in our U.S. ancillary segment of approximately $70 million in the second half of the year, compared to $50 million in the first half of the year. This incremental loss is due primarily to new value-based care arrangements and startup costs associated with the CKCC program that launches in 2022. Looking forward to 2022, we do not expect anything unusual among the primary drivers of the business, including RPT, cost per treatment, or capital expenditures. However, we expect pressure on OI growth from the increased spend on growing our IKC business, the possibility of union activity in 2022 that we did not face in 2021, and the first year of depreciation expense associated with our new clinical IT platform that we have been developing for the past several years. We will provide more specific 2022 guidance on a future earnings call. Operator, let's open the lines for questions.

Yes, sir. It is now time for the question and answer session of today's call. Again, if you would like to ask a question over the phone, please press star followed by one on your telephone keypad. If you wish to withdraw your question, you can press star two. Please make sure that your phone is unmuted and record your name when prompted. Our first question comes from Pito Chickering from Deutsche Bank. Sir, your line is open.

Hey, guys. Good afternoon, and thanks for taking my questions. Lead off here on the IKC that you're talking about, You disclosed in the script $2 billion of gross revenues and seen that double in 2022. Can you remind us how that flows through the P&L in both the dialysis segments and other ancillary services? When will you begin to disclose these revenues and costs on the P&L so you can model it? And then in five years, where do you think this can go? Is that a $12 billion number to be referenced in the script? And from a margin perspective after year one, Should we put a high school digit margin on the $2 billion for next year and then additional drag from the $2 billion in new capitated arrangements?

Thanks, Peter. I hope I got all that, but please jump in if I didn't catch it. So starting off, in terms of where it is on the P&L, we've got a segment, our strategic initiatives, which breaks down between U.S. and international initiatives. The U.S. component of strategic initiatives is an excellent proxy for our IKC P&L. We've simplified what exists in that segment over the last few years as we've exited some of the strategic initiatives. And other than a couple of small things, it's everything related to IKC through that line. So I think As you think about both revenue and operating income, using the U.S. component of SIs as a proxy for our IKC business is a really good way to look at it. So that's number one. In terms of where this can go over time, Look, there are a lot of questions around how many members we can enroll here, what our savings rate can be, how much of that we'll ultimately capture. I think a reasonably simple way to model it would be to start with something like a third of our ESKD population in this. Use a spend per patient, especially if you're looking at a few years, of $100,000 per patient And that'll give you a medical cost under management. And then the question is, what percent of medical cost under management do we think can turn into OI? And I would say a reasonable number would be something in the low single digits, something equivalent to what a typical MA plan would drive as margins. One, two, three, maybe 4%. In that range, as a percentage of medical cost under management, I think is the right way to think about what the potential for this is in the out years. Peter, I think you had a third question, which I didn't catch.

Yeah, so there's a few questions buried in there. I guess, will you guys begin disclosing what those gross revenues are as well as the patients under management? Just help us model this. going forward as well?

Yeah, so I don't think we're not going to disclose a number that we would call gross revenue. I think the number that we will disclose would be what the revenue would be if we used gross revenue accounting, which would be the medical cost under management. We've seen this before. Under DMG, there were components of the business that were gross accounting and some were net, and we would disclose a medical cost under management or something like that, and that's the $2 billion number that Javier talked about in the script.

Okay, and then a sort of quick follow-up here on just the treatment growth. Can you guys disclose the number of patients you had at the end of 1Q and 2Q? I'm trying to understand what treatment growth is in the back half a year as you access mortality. and COVID hopefully is behind us. And if we assume we remain at these current levels, is it fair to model treatment growth going positive in the fourth quarter?

Yeah, so look, I think the right number to look at is not patients, but treatments per day. And the good news, let me try and walk you through. First, the good news is treatments per day grew in Q2 over Q1. And I think a sequential view of it will get you a better model than a year-over-year view. So sequentially, treatments per day grew in Q2 over Q1, about 400 treatments per day. There's a bunch of things going on in there. And so let me try and break it down for you. First, the good news is the new to dialysis treatment starts remain strong. So the question that we've gotten in the past about what has happened within the CKD population as a result of COVID, we continue to see strong new to dialysis treatment admissions. So we don't feel any pressure there right now. In terms of Q2 over Q1, Q2 did benefit from the storms in Q1. So you'll remember the storms in from URI led to lower treatment volume in Q1, and so the comparison in Q2 was a positive there. That said, there are a few things weighing on the quarter. First, acute volumes are down as you would expect with the pandemic getting better in Q2 over Q1. Second, excess mortality remained above normal. It was well below what we saw in Q1. It came down from 3,000 approximately to less than 500, but it still remained above normal. And finally, the mix of treatment days in Q2 was unfavorable. We do fewer treatments on Tuesday, Thursday, Saturdays than we do on Monday, Wednesdays, and Fridays. and that was about a 50 basis point headwind in Q2 over Q1. So just to summarize, the good news is we're back to a situation where treatments are growing quarter over quarter. The new to dialysis admissions remain strong. That said, there continues to be a bit of noise in the numbers.

Great. Thanks so much. I'll just jump back in the queue.

Thank you. Our next question comes from Justin Link from Wolf Research. Your line is open, sir.

Thanks. I wanted to follow up on the value-based care. So the torpedoes question, you know, it would be great if you could give us those numbers. And is that going to be just for the government programs, or are you going to also put any kind of MAs? value-based contracting, commercial value-based contracting that you have in there that's above and beyond the dialysis side?

Yeah, that would include all of that, Justin. It would include MA. It would include traditional Medicare as well as anything on the commercial side.

Okay. So that number will be all profitability. I assume, does that include or exclude the spending on dialysis? When you talk about a margin... are you talking about the $60,000 that's X dialysis? Are you talking about the 90, 95 that includes dialysis when you gross up to the 2 billion? It includes the dialysis number. Okay.

So the patient number would be more like a hundred thousand or 90,000, depending on what time period.

Perfect. And in turn, you mentioned on the, uh, on the call on the, in the trend, the, uh, the press releases should say the, uh, that, that your payer mix changed a little bit to the positive. Can you talk a little bit about commercial volume versus, uh, versus government?

Um, Justin, the reality is, uh, there's not a lot to say. Um, this is a bit of a numerator denominator issue. Um, you had more mortality on the Medicare side and, and, uh, the commercial side held strong. as people really valued their income and their insurance. And so it was a lot more resilient than we anticipated. So that's the dynamic that we're discussing here. A couple other things, Justin, while you were asking about the value-based care and how do we calculate it with dialysis and non-dialysis, I think it's important to do the math you're doing. You subtract the dialysis, and then you have to put in there that the payer slash government have a participation in the savings The nephrologist then has a participation in the savings, and that's how you trickle down to the percentages, the one, two, or three percentage roughly that Joel talked about.

Okay. Thanks for that. Can you help me with the commercial treatment growth on the quarter?

I can tell you commercial mix was up about 20 bps in Q2 over Q1. Okay, great. As a reminder, you don't get as much from that in COVID when your Medicare patients are passing away as you would in a normal time.

Okay, and then just last question on, you mentioned 2022. I apologize if I missed this, but the tax rate change for this year, do you expect that to continue in 2022? Or is this a reasonable new tax rate to assume? Or should we go back to the original guidance and assume that's the tax rate for 2022?

There's still a lot we don't know about how it will play out. I think it is reasonable to assume some, if not all, of the benefit we're seeing this year will continue for another year, but not in perpetuity. So for 2022, yes. 2023, I'd say no.

Okay. Thanks for that. I'll jump back in. Thanks, Chris. Thank you.

Thank you. Next question comes from Kevin Fishback from Bank of America. Your line is open, sir.

All right. Great. Thanks. I wanted to dig into the investments that you're making around this value-based care. I just want to make sure I had the numbers right. I think you said $120,000 this year, and then it sounded like you said $50 million. Did you say $50 million incremental, so like $170,000, or did you mean the $120,000 goes to 50? Incremental. Incremental, okay. Is there, I guess, as we think about that number, is that a net number? If you start to make a 2% margin on the value-based care, is that an offset to that, or is that kind of inclusive of any potential profitability? It's a net number. Okay. And then it sounded like you were saying that the 120 included the CKCC as well. Is that true? And does that number, I guess, just starting to think about the 120 to 170 and the roll-up there, is that all included?

Yeah, so, Kevin, the CKCC doesn't start until the beginning of 2022. but we will start investing in the back half of the year in anticipation of that growth. So it's not, you know, it's, it's expense that we are building in anticipation of growth related to CKCC.

Yeah. Okay. Um, and then as far as the sequential, um, uh, enrollment or, uh, treatment growth, uh, I guess it does look like, uh, Although that's a better way to look at it. It's a lot of puts and takes into that number. I guess once you get back to normal, what should that number look like? I guess like 0.4, I'm thinking that means 1.6% annualized. What do you think when it's all normalized? What is the growth rate in volume? Is it a 2% number? Is it a 3% number? What would it ultimately annualize to?

I think at the end of the day, Kevin, one of the things is you heard from Joel, there's a lot of different dynamics and interplay for us. The positive is that we're seeing, let's call it the new admin stabilize pre COVID. And so the best data we have right now is that we'll revert to the pre COVID numbers. Um, and so I think that's, that's the best assumption and we keep, we'll keep you posted as that changes.

Okay. Um, and it sounds like, uh, you're not really seeing anything on the labor side. A number of companies are complaining about labor pressure. Um, I guess, Could you talk a little bit about what you're doing there? And then it sounded like you talked about union issues, but I think you meant kind of ballot initiatives, right? Not actually labor costs, but more ballot initiatives that might be a pressure next year.

Yeah, so let me grab a couple. We're not going to complain about the pressure, but it's absolutely there. It is a very dynamic and competitive marketplace. We continue to invest in a differentiated workplace and find that our teammates find great fulfillment in the purpose of the work that we do. That said, again, the marketplace is quite dynamic. As it relates to the second question, yes, we were talking about the union might come up with another ballot. And so we've now, unfortunately, every other year have had to deal with it. We hope that they're a little more empathetic to the fact that we're in a pandemic and that it is not a good use of, uh, the resources, but we just want to continue to talk about it. So no one's surprised.

Yeah. Okay. And then last question, um, you know, I guess as we think about, um, the, uh, kind of growth in the, in the value-based care, um, opportunity, Is what you're doing differentiated? Do you think that there's going to be share shifts as a result of this? Are other smaller players or mid-sized players going to struggle to do what you're doing and you're resonating with the payers and so you can actually see a volume lift from this? Or is this kind of where the industry is going and your push into this is largely kind of the same so that you wouldn't expect, it's just really more about the revenue and the margin than it is about gaining share?

It's an interesting play. From our perspective, we believe that we're really well positioned. And, of course, there's a lot of dynamics on volume and mix, you know, how a patient gets to us, all the way from a patient choice to a payer, you know, choice to physician. And so that dynamic has got a lot going on, can the whole chain there. really see the value that we create. I think that over time, the answer will be yes, because the clinical outcomes will show it. And there'll be transparency where people say, gosh, if I can live there longer, if I can get more transplants, if I can get my CKD and not be hospitalized, I want to go there. But as you know, that takes time. And so from my perspective right now, I'm not assuming a change in sort of a shift in decision making. until this plays out a bit more. All right. Great. Thanks. Thank you.

Thank you. And again, if you would like to ask a question, please press star followed by 1. Please make sure that your phone is unmuted. Thank you. Our next question comes from Lisa Clive from Bernstein. Your line is open, ma'am.

Hi. Thanks very much. Apologies if I missed it in the prepared remarks, but what did you say your vaccination vaccination rate was for your patients and also what is it for your teammates? And second question, have you been giving third doses for selected patients given that the immunocompromised seem to not respond as well to the vaccines in terms of the efficacy? And then lastly, Are you still testing patients and teammates before every session and just wondering how that is going to evolve in the coming quarters?

All right. Well, let me grab them and then if I miss any one of them, please come back at me. The patient vaccinated complete with two doses is around 72% or so. Teammates is in the 68%. We're starting to tracking those people that intend to get a vaccine. and we're tracking somewhere in the one or two percent that are either thinking of getting it or in their first cycle. To my knowledge, there's nothing of significance in the third dosage yet in our population, and so I know that the physician community is discussing it, but I don't have any major numbers on that. And then what was your last question?

Just in terms of facts.

On the testing, we didn't test all the patients. I think that was in the assumed question. What we do is we, of course, test anyone that has any symptoms. And then, of course, our patients get tested a lot more because they're using so much healthcare that when they go to other physician offices or hospitals or other things, they get tested. So they're disproportionately tested. but we just test when there's symptoms.

Okay, thanks very much.

Thank you, Lisa.

Thank you. Our next question comes from Pito Chickering from Deutsche Bank. Your line is open, sir.

Hey, guys. Thanks for taking some follow-ups here. Let me go back to the IKC piece. As investors are a bit confused on these disclosures, my understanding today is you collect $2 billion of sort of gross revenues About half of that is located in the dialysis costs, and the other half are in medical costs or other medical costs. So when you reference a 1% to 4% margin, that's on the full $2 billion. So should we think about it instead as a 2% to 8% margin on the $1 billion of non-dialysis costs?

Either way works. We've decided to standardize on the full cost, but either way is perfectly fine. find a way to do the math.

Okay, perfect. And then let me actually hit one on patient care costs. There obviously was a lot of investor concern around labor inflation during 2Q. Obviously, your cost of treatment were down sequentially, driven by a number of areas. But as I think about patient care costs over the next couple of years, can you give us additional color on what can drive further in the efficiencies here, specifically around center occupancy? increasing and shift in home balances. Thanks so much.

Well, let me grab it. As it relates to the inflation, of course, we've been very good over time. If you do our TAGR over the last five years or so, I believe we're right at 1% or so, slightly below. And so we've used the levers quite thoughtfully over time. In there, we're managing, in essence, pharmaceuticals. We're managing productivity and, of course, wage rate. And there's other things like supplies and other miscellaneous items, which we are very diligent on. So we don't think those dynamics will change much other than during COVID, of course, the PPE has gone up dramatically, and we hope that that stabilizes over time. As it relates to the wage inflation, we have nothing really particular to say about it. We are another player in this really dynamic marketplace, and it feels like it's shifting quite aggressively right now. Is that a short period, or does that sustain itself? So I don't think I can comment on the multi-year. It is fair to say that we are aggressively looking at all the pharmaceutical and all the options to make sure that our physicians have the choice of their pharmaceutical, but at the best price possible. I don't know if that got to all of your questions. I think the last part of it was around capacity utilization. Of course, we are watching it very aggressively. We went from a time where we were very aggressive on the de novo bill to, as you can see, we really tapered that back and we're building a lot more home centers, which are a lot more capital efficient We will keep that sort of balance in check because we know the patients need the interplay between the home and the center, and so there needs to be that capacity available. And as we lost here roughly 5% of our patients during COVID, we are aggressively taking a look at our portfolio to make sure that our patients have access and that we are not having centers that are not at the right capacity.

Okay, and then sort of last follow-up question for you on the IKC, at least for now. Is it fair to think about the operating income in the dialysis segment being unchanged as you increase your penetration with IKC patients?

Yeah, I think that's fair. We are trying to present this in a way that represents the fact that that the businesses, they're not independent insofar as they are intricately, they are linked, and that's why we think and we're excited about our opportunity to win in IKC, but trying to present them as separate income statements, if you will, so you can assess how's the core historical dialysis business doing and how's the new IKC business doing.

And then last one here, is it fair to think that kind of as you roll into sort of third quarter results that you'll be able to give us additional disclosures in the press release around this sort of new segment or division?

We're taking a careful look about what's the right level of disclosure as the IKC business grows and making sure the shareholders understand have a good understanding of the economics of the business, the progress, the investment, the spending, et cetera. So more to come on where we land on that.

Great. Thanks so much, guys.

Thank you.

Thank you. There are no further questions in queue at this time.

Okay. Well, thank you, Missy. Let me make a couple of closing comments. Number one, our core business is strong. Number two, We are entering an exciting and dynamic time with an opportunity to deliver a lot of value for our patients by connecting and coordinating their care with payers, nephrologists, and providers. Point three, the clinical and the economic prices are absolutely meaningful, and like most valuable prices, there is a lot to do to make the plan a reality. Point four, if for whatever reason we cannot accomplish the desired outcomes, the economic risk is limited structurally because there are termination rights and off-ramps. So in summary, there's a big price with limited downside. So hopefully that helps you think of how we're thinking about it. Sorry, that lets you understand a little of how we're thinking about it. We thank you for your support, and we enter this new chapter together. Be well, everyone.

That does conclude today's conference. You may disconnect at this time, and thank you for joining.