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 DeVita third 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 would like to ask a question during this time, simply press star and then number one on your telephone keypad. If you would like to withdraw your question, please press star, 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 meaning of federal securities laws. All of these statements are subject to known and unknown risks and uncertainties forward-looking statements. For further details concerning these risks and uncertainties, please refer to our third quarter earnings press release and our SEC filing, including our most recent annual report on Form 10-K and subsequent quarterly reports on Form 10-Q and any subsequent filings that we may make with the SEC. 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, furnished to the SEC, and available on our website. I will now turn the call over to Javier Rodriguez.

Thank you, Jim, and good afternoon. Q3 was another strong quarter for DaVita in the face of a challenging operating environment. Despite another rise in COVID case counts across the United States and an increasingly challenging labor market, we continue to provide quality care to our patients and execute on our strategic objectives. I want to begin my remarks by highlighting an exciting milestone. We surpassed 15% of our patients dialyzing at home. This means that approximately 30,000 of our patients receive the clinical and lifestyle benefits of home dialysis. As we've explained before, to be a sustainable provider of home dialysis, it requires a comprehensive infrastructure, including convenient and easy access to a home center for training sessions and recurring visits with our care teams. Our current network of centers provides that easy access, such that 80% of our dialysis patients live within 10 miles of a DaVita home center. In addition, we continue to innovate on our platform to help make home dialysis an easier choice for patients and their physicians, and to extend the duration on home dialysis once patients have made that choice. A few highlights of note. First, We recently rolled out an enhanced education program along with supporting technology for our new patients to ensure that they receive timely and comprehensive modality education, which is tailored to each patient's individual needs. We also continue to work on additional enhancements and customizations to our education process for different communities, such as black and Hispanic patients, to improve their chance of selecting this modality and therefore improve health equity. Second, we develop a patient portal and telemedicine platform that supports remote monitoring and communications between DaVita caregivers, our nephrologist partners, and our home patients. Third, we develop a team of industry-leading home physicians to create an expert network which works closely with practicing physicians and practice leaders to help them understand the benefits of home modalities, troubleshooting complex clinical issues, and elevate their home clinical skills. Last, we're testing out our AI and other technologies to optimize PD prescriptions, alerting physicians in real time when an update prescription might be needed. We will discuss the strategic advantage of our platform in greater detail on November 16th on our Virtual Capital Markets Day. On to our Q3 results. Our business model continues to prove resilient in face of operating challenges. Q3 operating income grew approximately 9% year over year, and adjusted earnings per share grew by more than 31% over the same period. However, the ongoing COVID pandemic continues to take its toll on too many human lives in the world at large and amongst our patients. Across the broad U.S. population, the current surge driven by the Delta variant appears to have peaked in early September with new case counts reaching approximately two-thirds of the peak during the past winter. Fortunately, within our dialysis patient population, the new case counts peaked approximately one-third of the winter peak and mortality rates were relatively lower likely due to the vaccination rates amongst our patients. Incremental mortality increased from fewer than 500 in Q2 to approximately 2,000 in Q3. After quarter end, COVID infections continue to decline with our new case count during the week ending October 16th down by approximately 60% relative to the recent Delta peak. Switching to vaccines. Approximately 73% of our patients have now been vaccinated. In addition, we've started to roll out vaccine boosters for eligible patients in accordance with CDC guidelines. We're hopeful that any future COVID surges and breakthrough infections will be more limited relative to what we saw in the peak of last winter. Shifting to cost. Cost management continues to be strong in the quarter. although we are facing the same competitive dynamics in the market for healthcare workers as other companies have mentioned. Despite these challenges, I'm pleased with how our frontline leadership team has been responding. It has long been a key part of our mission to be the employer of choice. How we live this aspect of our mission has been evident throughout the pandemic, as our team has retained relentless focus on the safety and care of our patients, as well as one another. As we have discussed in past calls, we continue to offer a safe and fulfilling work environment and have provided incremental pay and benefits to help our frontline caregivers during this challenging time. These efforts are ongoing. Given the current environment, we expect to provide our teammates with higher annual compensation increases than in typical years. This will put additional pressures on our cost structure, but we believe This will help us attract and retain the talent needed to achieve our long-term objectives. Just as critical, it aligns with our mission and builds on our history of investing in our people. Finally, I would like to say a few words about Integrated Kidney Care, or IKC. Last quarter, we shared details on our planned investment in IKC and long-term opportunity this creates for patients, payers, and our shareholders. At the end of Q3, we now have over 22,000 patients in some form of integrated care arrangements representing $1.7 billion of value-based care contracts. Next year, we expect to approximately double the size of our IKC business, driven primarily by our participation in the federal government's new CKCC program. While it is still early and contingent on successful execution, We believe that the investing in IKC represents a new and potentially meaningful earnings opportunity for us in the coming years. This is another area we plan to discuss in detail at our upcoming virtual capital markets day. With that, I will turn it over to Joel for more details on the quarter.