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 fourth 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, press star then the number two. Thank you, Mr. Eliason. You may begin your conference.

Thank you, and welcome to our fourth quarter conference call. 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 fourth 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 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. Good afternoon, everyone, and thank you for joining the call today. As we evaluate 2025, the year represents the latest evidence of our differentiated capabilities, strategy, and platform. We executed it with discipline, met challenges head-on, and delivered on our commitments we set at the beginning of the year. At the same time, we continue to invest to enhance patient care and fuel growth in the years ahead. As a result, we're well positioned for 2026 and beyond, with opportunities to deliver clinical and financial results consistent with our longstanding track record and guidance. Today, I'll review our fourth quarter results, share insights on our clinical strategy, and wrap up with guidance for 2026. But first, as always, I will start with a clinical highlight. This quarter, I want to spotlight the clinical results achieved in our integrated kidney care, or IKC, programs. Patients managed under IKC models consistently achieve better outcomes than the broader dialysis population. Our IKC patients are 35% more likely to start dialysis with a permanent vascular access, resulting in a better patient experience and costs that are three times lower during the first 180 days of dialysis. IKC patients also experience fewer bloodstream infections, achieve higher vaccination rates, and are more likely to choose home dialysis. We also see more than 10% improvement in treatment adherence with fewer mistreatments. Most importantly, these outcomes lead to what matters most, a better quality of life with fewer hospitalizations. Transitioning to our fourth quarter performance, we delivered results in line with our expectations. As anticipated, revenue per treatment accelerated in the quarter alongside strength in IKC. This was partially offset by higher than expected health benefit costs. For the full year, we achieved adjusted operating income and adjusted earnings per share in the top half of our guidance range despite the impact of cyber incident on our U.S. dialysis business. Let me elaborate briefly on our IKC performance. As we've noted previously, We analyze IKC results on a full year basis, given quarterly volatility driven by timing of revenue recognition. As we look back to our capital markets day in 2021, we outlined a five-year path to IKC profitability by 2026. Our strategy centered on sustainable contract, physician partnership, and a scalable care model supported by technology. With full year 2025 results, we're reporting our first profitable year in IKC, which is slightly ahead of schedule. This milestone reinforces two key learnings. First, our hands-on clinical models work. As reflected in the outcomes I highlighted earlier, our dedicated IKC caregivers are delivering on the promise of value-based care by keeping patients healthier and out of the hospital. Second, we've proven there's a viable business model that is good for our patients, good for the healthcare system, and can generate value for DaVita and our partners. The business will continue to evolve over time alongside changes in government policy, competitive dynamics, and innovation. Building from this 2025 benchmark, we expect to deliver an incremental $20 million of IKC operating income growth in 2026. Looking more broadly at our business, we see significant opportunities ahead and believe DaVita is uniquely positioned to deliver on them. Before turning to those opportunities, let me provide some context on our journey to date. Over the past five years, we've navigated wide-range challenges, from macro events like global pandemic and inflation to supply chain disruption and cyber incident. And through it all, we delivered on our multi-year commitments. We provided high quality care for our patients, built a solid foundation for the future, and generated a compound annual growth in line with our long-term target for adjusted operating income and adjusted EPS. This performance reflects the determination of our teammates and the resilience of our operating model. This experience also gives us the confidence as we look at the opportunities and challenges ahead of us. We're managing two near-term financial headwinds. continued pressure on treatment growth driven by elevated mortality, and the revenue per treatment impact from the expiration of enhanced premium tax credits. Even with these headwinds and the reality of unknown challenges, we remain confident in our ability to sustain our track record of profit growth. That confidence starts with the most important driver of our long-term success, an unwavering focus on clinical excellence. We're executing a set of targeted initiatives designed to enhance patient care, reduce mortality and mistreatment rates, and ultimately support higher treatment volume growth. I will highlight four specific examples. First is vaccination. For many years, we achieved flu vaccination rates above 90% for our patients and clinical teammates. And we're working hard to return to that benchmark. Our patients who received a vaccination early in this flu season have shown a 9% lower risk of hospitalization and a 27% lower risk of mortality compared to their unvaccinated peers. Protecting our vulnerable patients from the flu, COVID, and pneumonia is a clinical imperative. Second is GLP-1 adoption and adherence. A growing body of evidence confirms that GLP-1s can reduce major adverse cardiac events and mortality for many dialysis patients. We're actively working with physicians to help our patients navigate the clinical, operational, and financial complexities of these drugs. Third is advancing dialysis technologies to remove middle molecules. Innovations such as medium cutoff dialyzers and hemodial filtration enable the clearance of a broader range of toxins from the body during the treatment. These technologies help the patients recover more quickly after dialysis and show promise of reducing mortality by as much as 20% or more. Finally, Today, we announced a strategic clinical partnership with Alara Caring, a leading home care provider, to establish an ESKD-focused offering. This model spans Alara's skilled home health, personal care, and hospice service lines and is designed to lower hospitalizations and mistreatment rates while improving the overall patient experience. Joel will provide more details about the investment we're making alongside this strategic partnership. Together, these clinical initiatives demonstrate how our patient-centered strategy directly supports our business objectives. By improving quality of life, reducing hospitalization, and advancing clinical outcomes, we continue to believe we're on a path back to at least 2% volume growth. In parallel, we maintain a diligent focus on cost and innovation to improve efficiency, continue sustainable U.S. dialysis margins, and deliver durable financial performance. With that backdrop, we remain confident in our ability to deliver adjusted operating income growth over the next three years that is consistent with our long-term growth target of 3% to 7%. On adjusted EPS, With our current capital allocation program and removing the headwinds from our investment in Mozart, we see an opportunity to exceed our long-term adjusted EPS guidance of 8% to 14%. Taken together, these priorities reinforce our ability to generate sustainable shareholder value and continued leadership in kidney care. I'll wrap up my comments with our guidance for 2026. We expect adjusted operating income within a range of $2.085 billion to $2.235 billion, which represents 3.2% growth at the midpoint. Our guidance for adjusted earnings per share is $13.60 to $15 even, reflecting a 33% growth at the midpoint. This guidance exceeds our long-term EPS targets, reflecting our expectation for another year of strong operating performance and the cumulative benefits of our capital allocation strategy. Finally, we expect to generate free cash flow between $1 billion and $1.25 billion. I will now turn it over to Joel to discuss our financial performance and outlook in more detail.