Javier J. Rodriguez
Director & Chief Executive Officer at DaVita
Thank you, Nick, and thank you for joining the call today. As we embark on 2025, we're celebrating the 25th anniversary of DaVita. During this time, we have focused our efforts on improving clinical outcomes, enhancing quality-of-life for our patients and care teams and being a force for positive change for the healthcare system. It is an honor to carry-on this legacy and we look-forward to pushing these boundaries in 2025 and the years ahead. Today, I will cover highlights of our 2024 performance, provide updates on several components of our growth trajectory and conclude with guidance for 2025. But first, I will begin as we always do with a clinical highlight. As I noted, we're celebrating our 25 years, a period encompassing remarkable clinical progress. Together with our physician partners, we have achieved so much for the people who have entrusted us with their care. Among the many highlights, we have worked to dramatically increase the access to care for patients, especially those living in more rural areas of the country. We moved beyond in-center care and supported the proliferation of home dialysis with more than four of every five patients living within 10 miles of a DaVita home program. Of the patients now treating at-home, more than 80% use connected cyclers, a technology that enables our care teams to remotely monitor and improve patient health outcomes. We have expanded for being a dialysis provider to a comprehensive kidney care company, addressing each step-in the kidney care journey. This includes our Kidney Smart program, where we have provided free education on managing chronic kidney disease to more than 300,000 people and Integrated Kidney Care or IKC where we have pioneered value-based care delivery, successfully partnering with health plans and CMS to provide holistic patient-care in addressing rising costs of the healthcare system. And finally, we have enhanced quality of care in 13 countries outside the United States, where we have consistently outperformed the clinical benchmarks in each market. I'm energized by the progress we have made to create better outcomes and improve millions of lives. And of course, we're far from done. Looking at the next chapter, our vision is to continue our unwavering pursuit of a healthier tomorrow. Transitioning to 2024 performance, we finished the year-on a strong note, producing full-year adjusted operating income and adjusted EPS in the top half of our guidance range with year-over-year growth of 21% and 26% respectively. In a year with several unique hurdles, including changed healthcare outage and hurricane disruption of our supply-chain, I am reminded of the resilience of our organization and inspired by the passion of our dedicated care teams. Within US dialysis, we continue to benefit from innovation in our revenue cycle operations. Enhanced collection performance and contracting propelled higher revenue per treatment growth, offsetting slower-than-expected rebound in treatment volume. Although volume growth was positive for the first year since the pandemic, growth for the full-year was below our expectations. Mortality and mistreatment rates remain elevated in the 4th-quarter and new patient starts were negatively impacted by supply constraints of our dialysis solutions. On the expense side, we continue our track-record of identifying efficiencies and executing on cost-saving initiatives. Beyond the US dialysis, we expanded our international presence and continue to grow IKC. We have now closed on three of the four acquisitions in Latin-America announced last year with Brazil expected to close mid-year 2025. With IKC, we continue making progress on our journey of delivering sustainable integrated care. For 2024, results for IKC were in-line with our expectations with an adjusted operating loss of $35 million. Our strategy remains focused on improving health outcomes and quality-of-life for our patients, minimizing avoidable medical expense, tightly managing our G&A costs and pursuing the right opportunities to achieve scale. As a reminder, last quarter, we highlighted the temporary closure of Baxter's North Cove facility due to Hurricane Hellen and the related impact on home dialysis. As a result of these challenges, we incurred approximately $6 million of operating income impact in the 4th-quarter due to higher-cost of saline, fewer patient starts due to the availability of PD solution and lower productivity from our home caregivers. The negative impact was lower than we originally expected due to the extraordinary effort of our supply and physician partners along with that of our procurement and operating teams. By year-end 2024, we had resumed admitting new-home patients at historical rates. However, our inability to start new patients on PD contributed to lower new admits in the 4th-quarter, which will negatively impact volume growth in 2025. This is included in our estimate of approximately $30 million of negative impact to adjusted operating income in 2025. Moving next to orals in the bundle, effective January 1 of this year, oral drugs transition from Medicare drug benefit over to the dialysis benefit. This policy is clearly positive for dialysis patients. We are excited to expand access for patients and expand options for prescribers. We estimate that up to 20% of patients did not have coverage and are now eligible to receive this therapy. Our patients will have support from dietitians and access to all major classes of phosphate-binders, including both branded and generic options. We expect the 2025 OI contribution to be $0 million to $50 million., for our 2025 guidance, we're back on a more normal adjusted OI growth trajectory. The midpoint of our 2025 guidance for adjusted OI growth is 5.2% and adjusted EPS growth is 11%. The detailed ranges of which can be found in our press release. This comes on the heels of a strong 2023 and 2024 years in which we exceeded the top-end of our original guidance ranges despite weak volume growth by driving strength in other components of our core and ancillary businesses. A priority for 2025 will, of course continue to be an intense focus on volume as we believe in an eventual return to a 2% growth trend, recognizing timing is difficult to predict. Despite this uncertainty, we continue to have confidence in delivering adjusted OI growth in our target range of 3% to 7% for the years ahead. We will continue to invest in differentiated capabilities to drive performance across our platform with excess capital returned to shareholders through share repurchases. We remain committed to our capital allocation strategy as a means to achieve double-digit growth in earnings per share. I will now turn it over to Joel to discuss our financial performance and outlook in more detail.
