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 second quarter 2025 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 then the number one on your telephone keypad. If you would like to withdraw your question, please press star then the number two. Thank you, Mr. Eliason. You may begin your conference.

Thank you, and welcome to our second quarter conference call. We appreciate your continued interest in our company. I'm Nick Eliason, Group 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 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 second quarter earnings press release and our SEC filings, including our most recent annual report on Form 10-K, all subsequent quarterly reports on Form 10-Q, and other subsequent filings that we may make with the SEC. Our forward-looking statements are based on 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, furnished to the SEC, and available on our website. I will now turn the call over to Javier Rodriguez.

Thank you, Nick, and thank you for joining the call today. We are pleased to report another solid quarter where our focus on providing exceptional care for our patients and fostering a positive experience for our caregivers continue to drive results. We delivered on our financial commitments, supported by strong clinical performance and disciplined execution across our businesses. Today, I will share the highlights of our second quarter results, offer insights on key policy developments, discuss the evolving landscape of device innovation, and finish by sharing our outlook for the rest of the year. But first, as always, let's begin with a clinical highlight. While I usually focus on a specific clinical achievement, today I want to take a step back and reflect on the exciting opportunities ahead for DaVita in the kidney care community. To offer some historical perspective, In the two decades leading up to COVID-19 pandemic, the kidney care community made remarkable clinical strides. Advances in technology and pharmaceuticals, combined with the adoption of more standardized care, led to improved outcomes and significant reductions in mortality rates. Then came COVID, a disruption that impacted not only operations, but also the health acuity of our patients. Yet, from where we stand today, I am optimistic about what's ahead, and I believe we're entering a new wave of clinical innovation that holds exciting potential for the patients we serve. Breakthrough technologies from advanced IT systems to the transformative power of artificial intelligence are positioned to help us personalize care in unprecedented ways. Greater adoption of new drug classes like GLP-1s and SGLT-2s, along with the next-generation devices that improve the clearance of middle-sized molecules, offer the potential to extend life and ease recovery from dialysis. Prior with these tools, the kidney care community is positioned to once again improve clinical outcomes. We have the opportunity to lower mortality, enhance the quality of life of our patients, and deliver better care. Of course, this evolution will take time and investment, but we're moving forward with conviction, grounded in our vision of an unwavering pursuit of a healthier tomorrow. Let me transition now to our second quarter performance. Adjusted operating income and adjusted earnings per share came in slightly ahead of our expectation. These results are indicative of two important themes that we highlighted last quarter, and which continue to resonate strongly today. The first theme is our ability to deliver on our commitment of three to seven percent adjusted OI growth despite not yet achieving our volume growth objectives. This was evident during the second quarter where the strong performance in patient care costs more than offset cyber related weakness in revenue per treatment and volume. That said, Improving volume remains a primary focus, and we continue to believe we will return a 2% annual treatment growth over time. While the rebound takes shape, we're executing against other opportunities to achieve our long-term operating income and EPS targets. Our proven track record of managing costs across our operations, coupled with our significant investment in systems and IT in recent years, give us the confidence that we can achieve cost savings that offset current volume weakness. The second theme I want to highlight is the resilience of our business to navigate environmental and unexpected challenges. We're now roughly three months out from our onset of the cyber incident we discussed last quarter, so let me provide more detail on our recovery and associated financial impact. Operationally, we continue to provide uninterrupted patient care The financial impact incurred can be split into two high-level categories. The first is discrete costs associated with the incident, such as outside consultants, technology costs, legal costs, et cetera. In the second quarter, those costs were approximately $13 million and are excluded from second quarter adjusted operating income as non-GAAP expenses. The second and more significant category is the impact on treatment volume and revenue per treatment due to lower patient admissions, increased mistreatments, and lower expected yield on claims for treatment this quarter, among other things. Aside from the continued impact of the lower census from lost admit opportunities, we believe the impact of the cyber event is largely behind this, and there will be limited ongoing effect to adjusted results. Joe will provide more color on these dynamics. I'll now transition to providing a few policy updates. Last quarter, we provided an update on various policy changes, including tariffs, Medicaid cuts, and qualified health plans. Although Congress has passed further legislation and each of these topics remains fluid, our estimates of the impact of these items on DaVita remains unchanged from last quarter. Additionally, In late June, CMS published the 2026 ESRD proposed rule. The approximate 2% increase from dialysis rate was in line with our expectations. Yet, much like recent years, continues to fall short of actual inflation experienced by dialysis providers. As a reminder, the Medicare rate is subject to an incremental update in the final rule later this year. One final topic before I move on to guidance. There's a lot of discussion and energy in the industry regarding new technology to the United States to improve clinical outcomes through better clearance of middle-sized molecules during dialysis. High-volume hemodial filtration, or HDF, is one example of this technology. We actively champion clinical innovation that can improve patient outcomes and quality of life, and these technologies offer promising potential. In terms of where we stand today, we are active with a number of work streams. This includes monitoring existing and future clinical studies to assess the efficacy of various solutions, including not only HCF machines, but advanced dialyzers, which may provide similar clinical outcomes. As more clinical evidence comes to light, we will listen to physicians' preferences. we're assessing the operational implications of each innovation with consideration of clinical outcomes and health economics. So there's a lot to be excited about, but still a lot to learn. We remain committed to staying at the forefront of clinical innovation and we're energized by the opportunity to deliver even better care for the patients we serve. Looking ahead to the remainder of the year, We're reaffirming our guidance range for adjusted operating income of $2.01 billion to $2.16 billion and our adjusted earnings per share range of $10.20 to $11.30, despite the negative impact of the cyber incident. Furthermore, we continue to have confidence in our ability to deliver adjusted operating income and adjusted EPS growth consistent with our long-term guidance. I will now turn it over to Joel to discuss our financial performance and outlook in more detail.