Earnings Call: Q4 2020

Feb 23, 2021

Ladies and gentlemen, thank you for standing by. My name is Emma, your Chorus Call operator. Welcome, and thank you for joining the Fresenius Medical Corp. Earnings Call on the First Fourth Quarter and Full Year twenty twenty Results. Throughout today's recorded presentation, all participants are in a listen only mode. The presentation will be followed by a question and answer session. And I would now like to turn the conference over to Dominik, Head of Investor Relations. Please go ahead, sir. Thank you, Emma. As mentioned by Emma, we would like to welcome you to the Fresenis Medical Care earnings call for the fourth quarter and full year 2020. We appreciate you joining today to discuss more details following our early indications call at the beginning of the month. Now it is my pleasure as always to start out the call by mentioning our cautionary language that is in our Safe Harbor statement as well as in our presentation and in all the marketing material that we have distributed earlier today. For further details concerning risks and uncertainties, please refer to these documents as well as to our SEC filings. I do assume that there are numerous questions this time. Therefore, we have reserved ninety minutes for that call, but would like to limit the number of questions again to two in order to give everyone the chance to ask questions. Should there be further questions and time left, we can go a second round. It would be great if we could make this work again. With us today is, of course, Powell, our CEO and Chairman of the Management Board. Riesz will give you some more color around the strategy and business development. He will be joined by Frank Maddox, our Global Chief Medical Officer, who will provide a medical update with the focus on COVID-nineteen. And of course, also with us is Helen Gieser, our Chief Financial Officer, who will give you a detailed update on the financials as well as our targets for 2021 and 2025. I will now hand over to Rice. The floor is yours. Thank you, Dominic. Hello, everyone. Thank you for joining our presentation and for your continued interest in Fresenius Medical Care. I'll begin my remarks on Slide four. At Fresenius Medical Care, we have a common purpose, which is creating a future worth living for patients worldwide every day. And this purpose that unites our team was never more evident than throughout 2020. In the face of unprecedented COVID-nineteen pandemic, we delivered life sustaining dialysis treatments to nearly 347,000 patients and over 4,000 clinics worldwide. The number of treatments we provided increased by three percent to slightly over 53,000,000 treatments and we did all of this with uncompromising focus on our quality of care. Before we go any further, it's important for me to take a moment to once again say thank you to our employees around the world for their tireless efforts and relentless focus on patient care during these extraordinary times. This is a remarkable achievement. I would also like to acknowledge our patients that sadly passed away and acknowledge everyone that's grieving from the loss of a loved one during this terrible pandemic. Our thoughts are with you during this very painful time. Moving to Slide five. This pandemic has not changed the fact that the number of patients facing advanced kidney disease and requiring dialysis on a global basis is projected to grow after the effects of the pandemic has annualized out. There are several factors contributing to this. One, people around the world are simply living longer. By 02/1930, the number of people 65 is expected to increase significantly to around one billion people globally. Two, hypertension. Already one out of every four adults around the world suffers from high blood pressure. And lastly, diabetes. By 02/1930, the number of patients with diabetes is anticipated to grow to more than zero five billion. Considering these trends, we continue to project that over six million patients will need regular dialysis by 02/1930. We recognize our responsibility to this patient population and believe that we are well positioned to continue to address this growing need. This leads to our strategy on Slide six. At our Capital Markets Day last October, we introduced our 2025 strategy. Now more than ever, we feel that this is the appropriate strategy as it prioritizes patients' needs and quality of care, aligns with key drivers and developments for our industry and positions our business to deliver sustainable growth over the medium term and beyond. The first leg and core of our strategy focuses on the renal care continuum. We know that the patient population with advanced renal disease around the world continues to grow. We also know that these patients will encounter different phases of care and modalities for treatment. It is our goal to be able to provide holistic care for our patients throughout their complete treatment path or what we are calling the Renal Care Continuum. Building on our global vertically integrated business model, the Renal Care Continuum brings together both dialysis products and services and features four main components. New Renal Care Models where we will apply digital technologies such as artificial intelligence and the capability to analyze huge amounts of data. This also captures our push toward increasing home dialysis treatments. In value based care, we already lead the way in transitioning from the historic fee for service payment model to pay for performance models in order to provide superior care while ensuring it remains affordable. Our Humana contract is a perfect example of how we are already moving forward in this regard. With chronic kidney disease and transplantation, we are expanding beyond dialysis to the treatment of CKD and also looking to play an active role in the area of kidney transplantation. And with Renal Care Innovations, we aim to be at the forefront of any industry disruption by developing our own Renal Care Innovations as well as investing in startups and early stage companies in our space. Critical Care Solutions is the second leg of our strategy. Here, we seek to further extend our critical care portfolio to other extracorporeal intensive care therapy areas such as treatment of heart, lung and multi organ failure. Finally, complementary assets makes up the third and final leg of our strategy. Our goal here is to continue to expand our network of complementary assets through partnerships, investments and acquisitions. These assets will help us for example to coordinate patients efficiently and thereby add value in two dimensions in terms of creating medical value and in managing patient related costs. I want to reiterate that COVID-nineteen has not altered our strategic view, but we are committed to executing on this strategy and delivering on our 2025 targets. When we announced our strategic plan for 2025, we had not included COVID-nineteen as a negative effect. However, as the effects from the pandemic accelerated at the end of twenty twenty, its impact became significantly more pronounced. We strive to compensate for the anticipated negative COVID-nineteen effects on our 2025 targets by transforming our global operating model and reducing our cost base sustainably, while we execute on our 2025 strategy. We will touch on this more in the presentation. Turning to Slide seven, we are proud of the positive impact our life sustaining products and services have on the patients we treat. As a large global organization, we also recognize our responsibility for the broader impact we have on the environment and on society throughout the world. I am pleased to report that despite the challenging environment we faced in 2020, we have made real progress on our sustainability journey. Last year, we launched our global sustainability program to step up and drive the integration of sustainability into our business practices worldwide over the course of the next three years from 2020 to 2022. The program, which is under Mike's direct responsibility establishes common goals, responsibilities and key performance indicators. During 2020, we introduced ESG targets for management compensation that are directly linked to the progress of our global sustainability program, further underscoring the program's importance. In the last year, we defined global standards for how we measure our patients' feedback. We approved a new policy around human and labor rights and we rolled out a global code of conduct for our suppliers. We believe that we need good data to understand our impact and decide on global goals in the future. This is why we implemented several new global KPIs for sustainable development. Going forward, we will measure progress with performance indicators for topics such as quality of products and care as well as responsible business practices. The feedback we received from our stakeholders and their interest in our sustainability activities are also very important to us. We want to be transparent about what we strive to achieve and how we are progressing. This is why we will report on our progress and align with international standards such as those of the Sustainability Accounting Standards Board and the recommendations of task force on climate related financial disclosure. In our upcoming non financial report, we've included more than 100 KPIs that will speak to this commitment. With that, it's my pleasure to now hand over to Frank for his medical update. Thank you, Rice, and I appreciate the chance to speak today in somewhat more detail than I was able to at the early indications call we had on February 3. I wish to provide you with some perspective on the clinical burden we have experienced from COVID as well as the impact and outlook. I will comment on mitigating factors we are analyzing in the patients we treat both directly and indirectly around the world. As a reminder, the pandemic is the result of a highly contagious virus that causes severe respiratory distress syndrome and a substantive inflammatory response that can lead to multi organ failure and long term sequelae. This virus has changed over the course of 2020 and now in 2021, we see variations in the genetic makeup of the virus. It is these mutations of the virus that make the outlook for our patients one which will continue to be dynamic until our general population has developed immunity and we learn if immunity is conferred to these variants. Infectious disease experts note seventy percent to eighty five percent of the general population needs significant immunity to achieve notable reductions in the pandemic risk that causes disruptions to our health care systems and economies. Moving to Slide nine, we see the global accumulation of COVID infections over the course of 2020 and into 2021. These surges were at first isolated to specific countries and regions around the globe, but as the pandemic progressed through the year, we observed a remarkably broad based infection profile emerge. In late twenty twenty, the surge in cases was multinational and broad based throughout affected geographies with peak infections occurring in December in Europe and in mid January in The United States. The experience of the general population is mirrored in the exposure and cases documented in our own end stage kidney disease patients. We've seen the case rates for COVID at Fresenius Medical Care grow through the early weeks of 2021. COVID was correlated with local clinical realities that we had to adapt to. Each country managed the pandemic slightly differently. By example, throughout much of Europe when a dialysis patient became COVID positive, they were referred to a government healthcare location for isolation treatment, while patients free of disease were transferred into our facilities. This provided support of our prevalent patient count until the large late year European wave began and fewer patients were available to reenter the system. In other countries like in The United States, dialysis clinics had to set up and run a network of isolation clinics or shifts to treat COVID positive or suspected people. At its peak on January 17, we operated six twenty one isolation locations spread across the country. As these COVID surges have peaked, hospital and health care facilities began to limit non COVID care. This was a distinct strain on our population of patients who have a higher proportion of diabetes, cardiovascular disease and other conditions requiring ongoing clinical care. The progression of Fresenius Medical Care exposure to the virus and the depiction of the waves that were observed correlates with the curve seen in the general population, both globally and regionally. The latest wave has been during the winter months for the Northern Hemisphere countries and reached a peak in January. Despite the most recent weeks of decline in cases, there has been a concomitant increase in the number of locations that have outbreaks with the newer variant strains identified as The U. K. And South African variants. Moving on to Slide 10. Our reported key clinical indicators highlight the stability of clinical results in our patients receiving their routine treatments. You will note the slightly lower general hospitalization days seen in several regions that has been seen throughout the pandemic as routine care patterns were disrupted. We saw stable anemia as well as bone and mineral metabolism control, demonstrating that our patients are continuing to receive highly reliable dialysis care. Moving on to Slide 11. On this slide, I wish to address the phasing we noted during the early indications call in the excess death rate compared to our baseline. These data show the delta to the normative values as we analyze the full year against known seasonal variability. I will reiterate my comment from February 3 that capturing all deaths due to COVID trails by four to five weeks due to the nature of the illness and the fact that reporting became progressively delayed as identified cases were treated more intensively as the year progressed, but not within our own walls. I would note that as an acute COVID surge occurred in the general population, we observed a higher than normal incidence of acute kidney injury and increased need for critical kidney disease care. When observing this added care combined with the reduced treatments due to the COVID related excess deaths, we feel the dominant effect in the loss of patients that would have been expected to dialyze in the coming months is impacting the outlook. The impact we have seen in North America, moving on to Slide 12, and EMEA is that across all age groups, COVID has generated excess deaths and is not confined only to the elderly or diabetic populations. It is notable that excess deaths have not led to a change yet in these base level population demographics of our patients. Excess death due to COVID is not confined to Fresenius medical care, nor only to people with end stage kidney disease. It is now reported across the globe that the general population has seen an excess death rate that mirrors what we are seeing in the population of CKD and end stage kidney disease patients. These findings underpin our cautions around projections for the year, despite a rebound in referrals as health systems and doctors addressed the need for usual care to resume. Going on to my final Slide 13. We are reminded that immunity from vaccination is about not just vaccinating our population of patients and staff, but developing community immunity. Verzenios Medical Care is developing experience with almost all of the approved vaccines across the world and is attempting in a number of countries to have the dialysis facility become a point of distribution and delivery of these vaccines to patients and staff. Getting to herd immunity at the levels recommended in the communities we operate, where seventy percent to eighty five percent of people need antibodies to COVID will be challenging. We have active campaigns to address questions about the vaccine, understand the immunity vaccination confers on a dialysis patient and address the vaccine hesitancy that is slowing the ability to put the pandemic in the rearview mirror. Our expectation of the future is that some effects of the pandemic will be with us through a significant portion of 2021 and possibly beyond. We hope that vaccination, persistent attention to non pharmaceutical interventions, active surveillance for COVID cases and active treatment of new cases will begin to turn the tide on the excess deaths and return results to our expected norms in the second half of twenty twenty one. We do not see data to date that leads us to believe that the return will be below expected norms. This return to normalcy will afford the chance to begin to work on numerous active clinical initiatives to protect the cardiovascular system of our patients and begin to target the next level of achievement in patient outcomes. With that, I will turn it back to Rice. Thank you, Frank. I will continue my remarks beginning on Slide 15. Despite COVID-nineteen, we achieved our revenue target for 2020 and overachieved on net income for the year and thus setting ourselves a higher performance bar for 2021 than we had originally planned. As we indicated earlier this month, there are two significant developments impacting our developments in the fourth quarter of twenty twenty. Number one is the €195,000,000 goodwill impairment in our Latin American segment. The impairment was driven by macroeconomic downturn and increasing risk adjustment rates for certain countries in the Latin American region. Secondly, the impact in the fourth quarter relates to the excess mortality of dialysis patients that accelerated in The U. S. And in EMEA in November and December in particular and accumulated to approximately ten thousand patients over the pre pandemic baseline. This is an effect that will continue to impact our business in 2021. 2020 was a positive year for growth in home dialysis. We reached fourteen percent of treatments in The United States in a home setting. This implies a thirteen percent increase in the number of home treatments compared to 2019 with home hemodialysis growing around thirty seven percent and peritoneal dialysis contributing a solid seven percent growth in The U. S. We are well on track to achieving our twenty twenty two target of having fifteen percent plus of dialysis treatments in The United States in a home setting. On the basis of our strong business performance during 2020, we plan to propose a dividend increase at our Annual General Meeting in May. Turning to Slide 16, during the fourth quarter, we achieved revenue of $4,400,000,000 particularly in The United States, I am sorry, 4,400,000,000.0 reflecting 4% growth in constant currency. As mentioned earlier, the impact of accelerated excess mortality, particularly in The U. S. And EMEA had a negative impact on our growth. On an adjusted basis, excluding the €195,000,000 goodwill impairment in Latin America, our operating income grew 5% in constant currency and our net income grew 6% in constant currency for the fourth quarter. One of the larger contributors was a negative prior year revenue recognition adjustment related to accounts receivable. COVID-nineteen related costs such as elevated prices for personal protective equipment and higher compensation for our frontline workers, especially those in isolation clinics weighed heavily on the earnings for the quarter. Our business also faced substantial headwinds from foreign currency translation effects in all regions during the fourth quarter. Turning to Slide 17. Even with all the challenges of COVID-nineteen for the full year, we achieved 5% revenue growth at constant currency, in line with our stated target achievement stated targets for 2020. Our services business delivered 2% same store growth and had a very strong year boosted by products for acute care treatments and home dialysis products. Our full year net income growth exceeded our guidance range with 12% growth in constant currency. While we are proud of this outperformance in 2020 in net income growth, it consequently raised the bar by around 300 basis points against our plan for 2021. Additionally, the recent negative foreign exchange rate effects presents a significant headwind right from the beginning of the year, almost bringing net income growth to flat for 2021, excluding the negative impact from COVID. Turning to Slide 18. Given our earnings growth in 2020 and in line with our dividend policy, we plan to propose a 12% dividend increase to 1 point euros 3 at our Annual General Meeting in May. If approved, the proposal will result in our twenty fourth consecutive dividend increase and in an annual dividend growth CAGR of 10.9% over the last five years. We believe in the underlying strength of our business model despite the challenges that have presented themselves via COVID-nineteen. Looking to Slide 19, besides the high base we have created in 2020 and the mentioned sizable headwinds from exchange rates, we anticipate several important tailwinds for our business during 2021. These include the expansion of value based care programs as the industry transitions away from the fee for service payment model, improved reimbursement rates given the gradual shift of patients from Medicare to Medicare Advantage plans, the continued trend toward dialysis treatments at home and the positive effects from the completion of cost optimization measures that are coming to fruition. While these tailwinds do not offset the significant headwinds we are facing in the short term, the progress in these areas has positive implications for the strength of our business as we look out to the medium and longer term. For 2021, COVID-nineteen remains the dominant theme and we are expecting the headwinds to be significant. The excess mortality of dialysis patients due to COVID-nineteen has an ongoing effect on treatment volumes and will take until 2022 to annualize out. With lower treatment volumes, we also see lower clinic utilization, also other downstream assets. This also reduces our ability to absorb wage inflation and fixed cost inflation. This impact is also pronounced in EMEA where excess mortality has been high and the workforce is generally less flexible in terms of reallocating shifts. We anticipate the increased need and higher cost for personal protective equipment to remain with us as well as higher pay for employees working in our special isolation clinics. During 2020, we had significant SG and A savings, for example, from less travel and meetings and self insured health plans in The United States. While this contributed to positive net income performance in 2020, we do expect these trends to partially reverse in the second half of twenty twenty one, but with spending remaining below the 2019 levels. Beyond COVID-nineteen, we see negative headwinds from calcimimetics reimbursement and anticipate transactional exchange rate losses. While 2021 has the makings of a challenging year, we remain optimistic about our future and are focused on executing our 2025 strategy and achieving our corresponding financial targets. Therefore, in the year of our twenty fifth anniversary as a company, we plan to transform our global operating model to sustainably reduce our cost base and to put us in good standing for the next twenty five years. We are referring to this program as FME 25 and Helen will touch on it in more detail at the end of her remarks. And with that, it's my pleasure to turn the meeting over to Helen. Thank you, Rice. Hello, everyone. I will begin on Slide 21, which illustrates our target achievements during 2020. Echoing Wisser's earlier comments, I am very proud of the results we delivered in 2020, achieving revenue growth in line with our guidance and overachieving on our net income target, all while facing an unprecedented pandemic. On a constant currency basis, we achieved €18,400,000,000 in revenue, a 5% increase from 2019. This includes over €1,000,000,000 in business growth, tempered by a negative net COVID effect of €174,000,000 You will remember that for the first nine months of 2020, we reported a net neutral impact from COVID-nineteen. So it wasn't until the end of the fourth quarter that we really took a hit. Our reported revenue for the year includes a negative €536,000,000 impact from foreign exchange rates. On net income, again, on a constant currency basis, we achieved €1,400,000,000 representing a 12% increase from 2019. This includes a negative net COVID effect of €50,000,000 again, largely linked to developments in the fourth quarter. Reported net income for 2020 also reflects a negative translational exchange rate impact of €20,000,000 as well as €195,000,000 impairment in our Latin America business as a result of macroeconomic driven developments impacting goodwill and trade names in the region. As we are looking ahead to 2021, the strong achievement in net income before special items sets a roughly 300 basis points higher than planned baseline. Based on the current exchange rates, we see a significant headwind in 2021. Taking this and the unexpectedly higher base into account, net income growth for 2021 is close to flat, excluding the negative COVID-nineteen effect. I will now turn to Slide '22 to look at the fourth quarter in more detail. During the fourth quarter, we achieved organic growth of 1% despite sizable headwinds, thanks in large part to our global footprint. As highlighted earlier, excess mortality of dialysis patients significantly accelerated in The U. S. And in EMEA, especially in November and December. However, solid organic growth developments outside North America supported by the products business led to positive organic growth for our business overall. All regions experienced negative foreign currency developments during the quarter. Moving to Slide 23. Despite COVID-nineteen, we were able to continue our organic growth, especially in the area of home dialysis. On the positive side, performance for our services business was supported by a negative prior year revenue recognition adjustment related to accounts receivable. We also saw an improvement in reimbursement. Treatment growth was also a positive with overall same market treatment growth of 1% worldwide during the fourth quarter. The biggest negative driver for the quarter was the loss of treatment related to accelerated excess mortality of dialysis patients in North America and EMEA. This was very pronounced in particular in December. Therefore, the impact on 2020 was rather small, while consequently the annualization effect of lower treatments for 2021 has significantly grown. The services business also faced expected headwinds from lower reimbursement from calcimimetics as well as unfavorable foreign currency translation. I will move to the product performance on Slide 24. Our products business delivered strong growth in the fourth quarter with 8% organic growth. The remarkable 30% growth in non dialysis products, albeit representing just €26,000,000 in revenue was all driven by product sales for acute or critical care treatments. Growth in dialysis products was also boosted by sales of products that support treatment in an acute setting. The products business also benefited from higher sales of incentive disposables and the growth trend in home dialysis treatments with higher sales of both home HD and PD products. Performance for the products business was somewhat impacted by lower sales of in center machine for chronic treatment and again foreign exchange rates were a negative headwind here as well. Moving to Slide '25, our overall group margin decreased from 13.5 to 10.5% in 2020. The bar chart on the left shows the regional contributions and corresponding margins for the 2020 compared to the fourth quarter of twenty nineteen. North America, EMEA and Asia Pacific also improvements in their margin year over year, but not enough to make up for the margin deterioration in Latin America as a result of the €195,000,000 impairment. On the positive side, the biggest margin driver during the fourth quarter was the already mentioned negative prior year revenue recognition adjustment, but the margin also benefited from continued lower G and A spend such as travel and meetings. After the Latin America impairments, the negative effects from COVID-nineteen post the greatest headwind to margin development. COVID-nineteen related excess mortality negatively impacted in particular North America and EMEA in the fourth quarter. Continued costs required to operate safely through the pandemic, including PPE and higher compensation for frontline workers in isolation clinics also weighed on margin development. Finally, the fourth quarter margin was also negatively impacted by the anticipated lower reimbursement from calcimimetics. Turning to Slide 26. Here we look at the cash flow developments during the fourth quarter. In the last quarter, we generated EUR584 million of operating cash flow, resulting in a margin of 13.3%. Free cash flow for the fourth quarter totaled EUR283 million with a resultant margin of 6.4%. When you look at the leverage ratios on the bottom left of the page, including IFRS 16, our leverage ratio decreased to a 2.9 times net debt to EBITDA ratio during the fourth quarter, just below our target range of three to 3.5. If we were to include the positive effect of U. S. Federal relief funding and advanced payments under the CARES Act, which will reverse itself, the net debt to EBITDA ratio for the quarter would be at 2.7 times. The ratings presented in the bottom right box further confirm our solid financial position. Turning to Slide 27, this brings us to our outlook for 2021. On a constant currency basis, we are expecting revenue growth of low to mid single digits and a decline in net income in the high teens to mid-20s percentage range. I will explain how we get to these ranges in a moment, but I want to be clear on some key assumptions. We expect excess mortality to continue to accumulate through the first half of twenty twenty one. We are also assuming COVID-nineteen related costs in our dialysis service business, such as the provision of PPE and higher compensation for employees working in isolation clinics to remain on a high level. We are not assuming any further public relief funding beyond the already announced extension of Medicare sequestration through March 2021. And our 2021 targets exclude special items such as the costs related to FME25, which I will comment on a minute. Anticipating your modeling requirements for 2021, I would like to share some other relevant assumptions. We anticipate corporate costs in the range of $480,000,000 to €500,000,000 at constant rates. For our financial results, we expect a range of $340,000,000 to €360,000,000 at constant rates, and we assume a tax rate of 24% to 26%. I will now turn to Slide 28. Earlier we highlighted the tailwinds and headwinds we are expecting to face in 2021. While we don't know exactly how the different drivers will develop over the course of the year, we have attempted to at least visualize our assumptions and provide some perspective on the scale of the various revenue and net income drivers. I won't walk through every effect here, but not surprisingly, COVID-nineteen is the greatest headwind. Additionally to the increased cost level due to the pandemic, this includes the impact from accumulated excess mortality in North America and EMEA and the resulting consequences on the efficiency of the operations of our facilities, including downstream assets. There is a limited ability to flex the workforce in EMEA and in general, this also limits the ability to absorb wage and fixed cost inflation. The lower G and A spend relating to travel meetings and self insured health plans is likely to partially reverse in 2021. Turning to Slide '29. As Rice announced earlier, we plan to launch FME25 to transform our operating model to position our company for the next twenty five years, while we execute on our mid term strategy launched at our Capital Markets Day in October 2020. In order to support our 2025 targets, to further strengthen profitability and to compensate for the COVID-nineteen effect, we plan to invest up to €500,000,000 by 2025 in order to sustainably reduce our cost base and minimally improve operating income by the same amount. What we mean by this for example is if we invest €400,000,000 we would expect to improve our operating income by at least €400,000,000 SME25 is intended to look at all facets of our global operating model with the intent to simplify, streamline and to apply what we have learned from the COVID pandemic and the resulting new normal. We also see this as an opportunity to further accelerate our digitalization plan. We believe FM25 will be supportive of our midterm targets, which I will touch on the next slide, Slide 30. At the time of setting our 2025 targets in October 2020, the COVID impact in our business was roughly net neutral due to various measures and government relief. As it was unclear how the pandemic would evolve, we had excluded impact from COVID-nineteen on our 2025 targets. Unfortunately, the development of a pandemic proved this cautious approach to be right. We have to recognize how significantly the impact of COVID-nineteen on the achievement of our twenty twenty five targets has increased since then. Of course, we can only anticipate the impacts from the pandemic on these targets based on what we know today. And earlier, I outlined our assumptions with the explanation of our 2021 targets. We do stand by our 2025 targets. In order to achieve those, despite the anticipated COVID-nineteen impact, we will introduce SME25 as a countermeasure in the medium term, but also as a margin driver in the long term. To be very concrete, in respect to our 2025 targets, we assume that SME25 compensates for the anticipated impacts from COVID-nineteen. Of course, this will change the phasing of our target achievement from equally distributed over the five years to be more backend loaded. By the nature of the transformational change of our global operating model, which we are approaching, a positive net income from SME 25 is not expected early on. Therefore, we continue to expect revenue growth in the mid single digit percentage range and net income growth of high single digits through 2025 with a changed phasing. With that, I close my prepared remarks and turn it back to Dominic for, I'm sure, a lively Q and A. Thank you, Helen, Frank and Rice for the presentation. I'm happy to turn it over straight to Q and A. Emma, could you please open the lines? Yes, thank you. Ladies and gentlemen, at this time, we will begin the question and answer session. First question comes from the line of Veronika Dubajova with Goldman Sachs. Please go ahead. Thank you, guys, and good morning, Helen, Rice, good afternoon, Dominic. Lots of questions I'm going to try to stick to, but there might be a third that sneaks in, I apologize. The first one, I want to start with sort of the SME 25 program and that's up to $500,000,000 investment. Just kind of curious, SME has been restructuring for a long time. This is a pretty significant number. So I'd love to understand your degree of confidence in that $500,000,000 or up to $500,000,000 of cost savings, where precisely those might be coming from, if you can give us some examples. And I guess there is that up 500,000,000 So maybe at this point in time, what do you see as the most likely investment amount? Obviously, I appreciate this will change, if you can share some of that, that would be very helpful. And then my second question is on excess mortality. And we've spent a lot of time talking about it the context of your existing patient population. There is, of course, excess mortality also in the broader CKD patient population. And I'm curious how you're thinking about impact that might have in the growth rate in your business transition into 2022 and beyond? And if you've done some quantifications around that, that would be helpful. Thanks. Thank you, Veronica. I think Helen and I'll tag team number one and then Frank will talk about mortality both ESKD and CKD. So yes, we have been on cost optimization programs several times in my tenure and I would say what's different today or going forward with FME '25, those programs were already always very targeted. They were not large amounts of money. If you go back to the old GEP days, we were looking at purchasing synergy, we were looking at shared services and things of that nature that were very targeted. When we had the $100,000,000 cost optimization in 'nineteen, it was very focused on clinics and FKC, the clinic business if you will and some of the complementary assets in North America. Where we look at this up to €500,000,000 opportunity is really from an enterprise wide view of the world. We've grown tremendously. We as you know operate in 150 countries product, 50 service and we built and we are managing people in all those areas. And I think we are as a result of COVID asking ourselves, let's look globally, regionally and locally. What does it take to run our business effectively and efficiently having come off a year where we didn't travel hardly at all. We closed the books remotely if you will and we've had the opportunity to see these new normals of the way we can do business. So from my perspective, the difference is this is soup to nuts and it's not a targeted entree, if you will, if we're going to stick with the wheel analogy. But Helen, let me let you get your ore in the water here as well. Yes. I think I would just echo that this is different. This is a global review of our operating model. As we said, looking at where and how we do the work. I think also looking to see where we can leverage digitalization. As we think about this program, Veronica, we are thinking kind of a little bit longer in time, so not just a one or two year program, I think because of the holistic nature of this. But the investment phasing and the savings phasing, we have work to do and we would look to come back with more detail as the year goes on. I think it wouldn't be unreasonable to expect that we could start to see net savings by 2023 and accumulating past then. But we obviously will come back with more granularity on the specific areas. And obviously, there's the kind of the usual suspects, I guess, I would say in terms of as you think about an operating model and locations and things like that, but more to come as we go through the course of the year. Veronica, this is Frank. Thanks for your question about the mortality in CKD. So there are a number of things at play. We know that the CKD population in general is expanding with what Rice mentioned around diabetes, hypertension, other things. But we also know that the pandemic has had a distinct effect as it has in the general population on patients with CKD. In the midst of that, what we have seen are during the surges referral patterns change and also patterns in which patients are getting their routine and usual care that they would get. So it's been very difficult to quantify what these numbers are, but we know that there is an impact in this part of the population that we anticipate will recover as the pandemic begins to recede. And so we have found as the year progressed and people became more comfortable with treating the pandemic or treating patients in the pandemic, we saw more of our referral patterns recover and nephrologists seeing patients both virtually and at times of need. And so I think that this will begin to normalize as the pandemic falls back, But the actual number of CKD patients that are lost strictly to excess mortality, I would look towards the general population rates and create an analogy from that. There's no hard number yet published on this particular area. That's very helpful. If I can just get a very quick follow-up on the kind of COVID impact and the cost savings. Helen, any thoughts you have right now on the durability of some of the kind of PPE nursing wage costs? Is that something that you anticipate will continue beyond 2021? We hope not. We're definitely thinking that our PPE costs will be on a similar level in 'twenty one to what they were in 2020. As far as the additional labor costs for isolation clinics and so on, that had also been a significant we expect a significant reduction in 'twenty one to 2020, can't get my ears right, excuse me, because of just the nature and the pulsing of the outbreak. What we obviously trying to do on PPE in particular, we are using more and we are having to pay significantly accelerated inflated pricing. We would hope as we kind of turn the corner here in the back half of 2021 that we will be able to use less PPE and prices will return to somewhat normal. So we're not expecting that these additional PPE costs would continue into 2022 or if they do, it won't be as significant as a level of 2021. The next question comes from the line of Patrick Wood with Bank of America. The first one, please. Can you give us a little bit of color maybe more on the Medicare Advantage sign ups and how you've seen that going? And equally on that vein, the contribution in 'twenty one assumed from value based care from capitation agreements seems larger than I would have expected? Just commentary around that. So that's the first question. And then the second question, if you could maybe give us a little bit of a sense from the impact that you've had or expect to have next year for missed treatments, right? Because I'm guessing there's also a lot of patients who are electing to skip a treatment, maybe do two a week or some alternative rather than turning up or alternatively end up getting treated in the acute setting rather than in a clinic for different reasons. How because it's not quite the same effect as mortality, how should we be thinking about that impact? And does that roll back in, in 'twenty one through the year as we go through? Sure. You want to take one, I'll take two. Sure. Hi, Patrick. I'll take the Medicare Advantage. So as we had been sharing with you guys at the end of last year, we were seeing our Medicare Advantage business at the high teens at the end of twenty twenty. We were encouraged with the enrollment. It went very smoothly. And we the outcome was in line with our expectations and we are seeing the uptake in the mid-20s currently. Obviously, as the course of the year goes on, we're able to there's more opportunities for enrollment. And we remain encouraged on this book of business and still believe that it could be in the mid-30s in line with the general Medicare Advantage population. So yes, our expectations were met and we're very, very happy with how that came in. Bruce, you want to take value based care? Yes. So Patrick, when we look at value based care, a couple of things that will probably point you in the right direction. We are operating today in The U. S. With roughly twenty five percent of our patients in value based care arrangements. We've got around 43,000 that are in the ESCO program that will move into the new models as we get through Q1. And then in our Medicare Advantage value based care operations, are looking at around 10,000 patients. So this is significant for us. It's a quarter of our population and I think it's the strength of what we've been able to deliver in terms of better outcomes and good savings that are helping us drive this. We are quite active and as we've always said, this train has left the station for us. It is going to be the way we continue to see I think large growth opportunities as more people come into value based care. And then your second question on mistreatments, we don't see an increase there. We see mistreatments at kind of a level that we've always seen them. No doubt when we got into the first wave back in 2020 and there weren't any opportunities for people initially to get into treatment. They were worried about it. We found a way to make sure we could work with people. If you remember, we got a number of waivers. We could help people get transportation to get into their treatment. So I think from a mistreatment standpoint of people alive and well, but just deciding I'm not going in, I don't think we're expecting to see that become a thing if you will particularly in The U. S. And keep in mind and in some of the emerging markets two treatments per week is the norm. So in our very developed markets, we're still looking at the three times per week. So we don't really see that as something that would be a headwind for us in the course of this year 'twenty one. Super. Very clear. Thanks guys. The next question comes from the line of Lisa Kleyv with Bernstein. First question, DaVita had indicated that they saw increase in mortality of about seven thousand patients in their U. S. Business and this is about a $200,000,000 headwind, so around $28,000 per patient. Given that you said you had 10,000 patients and your U. S. Business is very similar to theirs, is it safe to assume that your split may be something like seven thousand in The U. S. And three thousand in Europe? And on the cost front, you did mention on call, thank you, that the labor costs are more fixed in that region. So is it safe to assume that the EMEA headwinds per patient is greater than the numbers that DaVita had implied? And then second of all, just looking at your international business, of ignoring last year because of the pandemic, but the services business does seem to just be getting less profitable over time. Can you tell us what is built into your normal contracts around inflation adjusters? You often do mention that you sort of have labor costs running up. I'm just trying to understand if this is just a sort of perpetual squeeze that you may see or whether you do end up getting compensated for that eventually. Okay, Lisa. Frank, why don't you jump in on the mortality, what she's asking about there relative to the split? Lisa, this is Frank. So our split overall was about 10,000 excess deaths across the globe. And when we look at The U. S, our U. S. Component of that was somewhat less than what was reported in the other earnings call and it is six thousand patient range. What we did see was a distinct difference in the early waves where there were far fewer excess deaths in EMEA, but this very last wave was quite substantial. And in the EMEA region, we have clearly seen this sort of winter wave being the more substantive COVID exposure that was seen in those particular areas. So our ultimate aggregate result is an aggregate from all four of the regions and that's kind of how the split works. So Lisa, on headwinds for EMEA, yes, I mean if you look at labor cost and the ability to manage that labor cost under a situation like this, it's a little bit tougher in EMEA for them to do that. It's not as it's a lot more complicated than the way we operate in The U. S. If you will. So I think there is some things there that we don't have as many degrees of freedom if you will depending on the market that you're in. And then on the services margin internationally, I would say particularly in Europe, remember that when you go back and you think about percent product business versus percent service business as that service component grows, you get margin pressure because of the labor component of that. And so that is just kind of as you all know, that's just kind of a progression that we go through. So we have to find other ways within the service sector to be able to try to combat that. I would also say one of the things that we have observed latter part of 2020 is that there are some markets, Hungary, Poland, The Czech Republic that as they have kind of taken a more nationalistic view politically, we have been sort of dictated to in terms of what pay is going to be, what the rates are going to be for nursing pay etcetera. They're trying to help uplift their economy and hang on to their nursing staff and not have them leave that country go someplace else. So all of those things have worked against us to some degree and have created a little bit less flexibility than perhaps we're used to in other markets. Okay. Can you just do you have inflation investors built into the contract or it seems like some of these are very sort of country specific and it's sort of out of your control? Yes. No, we don't really have that. It's not something that we're able to do which is put inflation adjusters in our negotiations with countries relative to what they are viewing healthcare pay to be if you will. That's not something that we really have an opportunity to do. Okay, sorry. And then last question on MA, you said you had about 10,000 patients capitated or rather in value based care. I was under the impression the Humana contract alone would be bigger than that given how big they are in MA. So are those numbers from 2020 and will the expanded Humana contract significantly change that number? Yes. So you're smart to peg it to a date. So that's kind of what I would say where we're exiting and stepping off into the New Year. So give us time as we work quarter to quarter and ask me again and I'll give you an update. But obviously the Humana contract is just getting kicked off. So we've got some things that will have to happen there as well. Perfect. Thanks. Sure. The next question comes from the line of Tom Jones with Berenberg. Please go ahead. Good afternoon. Thanks for taking my two questions. Apologies to Rice and Helen, but they're both for Frank. Frank, thank you very much for the data on that you shared on the sort of uniform mortality you're seeing from an age perspective. But I wondered if you can make any comments around mortality if you split your patient base into kind of comorbidity. And also, to that, maybe it's question more for recent Helen, is there are you seeing any significant differences in mortality when you cut the patients by payer type? The second question I had was just on vaccination in your patients. Could you give us an update on where you are vaccination wise? And also whether you have any at least early stage data on the efficacy of vaccinations amongst your patients. We're starting to see some early data coming out in real world use for broad populations for the efficacy of vaccines when it comes to reduced mortality and hospitalization. But I was just wondering if there was any early data you could share on the effect that vaccines appear to be having on mortality and hospitalization, specifically amongst dialysis patients. Great. Thanks, Tom. So let me start with the first one, looking more broadly at age and comorbidities. When we look at the way that we capture comorbidities around pulmonary disease, cardiac disease and other things, what we see over time is the same stability over the years that we've looked at where we look back the last three years. So we have very, very little change in what the end of year rate year over year is of this of the comorbidity profile of the patients that we have. We have not looked specifically in our medical office at payer type, so I can't answer that question directly. But what I would tell you is we have analyzed deeply that an individual patient's chances of infection and the prediction of whether they are more or less likely to get infected is most consistent with the ZIP code that they live in. And so it is very geographically oriented to the background rate of community infection that's seen in those zip codes. So if you have a person living in a very densely populated area in small locations, they are at a higher risk than somebody who is living in a very rural community as example or not around a lot of other people. And as that might track towards payer type, you might be able to infer something there, but we don't have that. We've not looked at that. From the vaccination status, I would tell you that around the world, the vaccination progress is highly variable and except in three locations that we have has been relatively insufficient to what the herd immunity needs are. What we have seen is some remarkable vaccination projects that have been completed in Portugal, in Israel and in Puerto Rico. And each of these took a different path towards vaccinating the population and our patients. There is active work being done to begin to analyze the ultimate impact on these patients. We are in active studies right now to look at the immunologic response to vaccination and dialysis patients, which if you look at hepatitis B vaccination and influenza vaccination, there is an attenuated immune response in our target population of patients. And so we will be looking at that with both the mRNA viruses and the adenovirus vector viruses that are out there. The second thing we could see is when we look at first doses in our two largest regions, EMEA and North America, we see sort of mid to high teen range of first doses having been given as of this week. And we have a small number of single digit percentage of patients that have had doses, second doses given. And then finally, have seen we're just beginning to unpack some of the vaccine hesitancy that we've seen and we see a slightly lower vaccine hesitancy rate in our patient population than our staff population. That's kind of what we where we are on the current status of vaccination. Tom, the only thing I would add is that each of the regions where possible is trying to engage with the local governments to allow us to be a focal nation because we do the flu vaccines every year, we do the hep B, etcetera. And specifically in The U. S. We started back in mid December at a very senior level here in North America and with our government affairs people talking to CDC and the government about allowing us to be a licensed vaccinator if you will giving us the impetus to be able to do this. We've also had some state to state discussions. It is slow. It's somewhat bureaucratic, but I think at the end of the day, we'll keep pestering people until they allow us to do this because we just think it makes the absolute most sense to not take somebody out of dialysis clinic and ship them over to a gymnasium across town to get them vaccinated. And I just think we have to keep working with The change of administration creates some uncertainty as well. But all of those things, we're just going to deal with them and keep pushing ahead, because we think we can play a vital role in this and do it in a way that's better for patients and staff. Why do you think there has been such resistance? Because I assume availability of vaccines is the only thing that's limiting your ability really limiting your ability to vaccinate patients. And if you're wanting to get a benefit, if you look across your patient base with the generally older, mostly diabetic, a lot of them are obese, they've all got high comorbidities, a lot of them are African American, and you've got doctors and nurses there and ready to do the injections and deal with any adverse events that may occur. So I'm amazed that any government around the world is not just giving you the vaccine straight away and letting you get on with it. Tom, this is Frank. We would agree with you on that statement. And I would say in the areas where we've seen quite effective vaccination programs in Israel, the healthcare system brought it directly to patients and our patients as opposed to patients having to go to it in Portugal. The distribution was directly to our clinics. And in Puerto Rico, was a National Guard effort. It was sort of a public local use of sort of the National Guard to try to make sure there was broad distribution to the population. So our the work that Bill Valle and the team have done and Cam Lynch in DC to try to get vaccine delivered directly to our clinics, both for our clinics and the rest of the renal community has been one of the central efforts that's been going on. And we're still hopeful that we will get there. But it has been plagued by a lot of logistical and I think political changes. Next question comes from the line of Oliver Metzger with Commerzbank. First one is on also in excess mortality. So you specified about ten thousand three hundred patients who passed away incrementally. Also, you provided some data points for mortality among the quarters. Could you give us an indication about the future within the fourth quarter? So with three thousand seven hundred excess deaths potentially starting from the November or potentially from the December until the end of the year, so a period when infection rates have started to peak? The second question is also in a similar direction. So the patients who unfortunately passed away appear to be more severe sick dialysis patients. Frank, you made already some comments on this. You collect a lot of data and do also a lot of analytics. Could you share with us your view on average life expectancy of the patients who passed away? My question targets towards the timeframe when you would reach normalized patients or that means pre corona patient structure again? Oliver, thanks. Do you want me to take that one? Yes, please go ahead. So on the phasing of sort of what we're seeing, the graph that I showed you in the fourth quarter is recognizing that there are seasonal trends that show increased deaths in a typical normal year due to influenza like illnesses that occur. So when we looked at the excess death rate, you have to look at when we saw the peak exposure in the two main regions. So EMEA had the largest peak in December. And so we began to see impact on the mortality rate from EMEA in these final weeks of the year that began to accumulate towards that three thousand or so that you saw in fourth quarter. In The U. S, that peak, if you look at it on a week by week basis, did not occur until around the January. And at that time, we are now capturing the data from that particular peak. And so although there were excess deaths obviously from the ongoing evolution of this third wave in The U. S. And this effectively second wave in EMEA, I think the proportion of those patients that were EMEA patients was probably higher in the fourth quarter than it had been in the prior quarters. And the impact that we are seeing from the third wave in The U. S. Is part of the early twenty twenty one impact that we expect to see. I think Oliver also it's Rice. I think one of the things that you kind of have to factor in as you work your way through this and you think about it, none of these mortality situations, none of these patients passed in our clinic. They are passing away in the ICU, in the hospital, perhaps in a nursing home. The nephrologist does not, I hate to say it this way, but they don't do the death certificate. It's coming from a different physician and we many times are not finding out about that passage for four or five weeks or something like that. So we're not even getting awareness of the passing until it's probably a month later. Other thing which we found is that in the initial stages of the pandemic back in March 2020 and April 2020, we saw deaths occurring very concurrent with the identification of disease. As health systems began to understand how to begin to organize and treat patients with the disease, we saw a wider array of patients with varying degrees of illness with COVID. And we saw that patients were living longer under more intensive care, intensive care units and hospital systems and so forth. So it took longer for those deaths to occur than what we saw originally and that was true in all three of the waves that we saw. On your second question with regard to the degree of illness that people have, what we've been looking at primarily is trying to recognize that the pandemic is a pandemic that broadly affects the vulnerable population of kidney patients. It not a single age group. It is not a single profiled comorbidity. It has occurred across all of these patients to a degree, some to larger or lesser degrees. But when we look at what the impact and what our population looks like today, the data doesn't tell us or doesn't show that in fact, we've had significant changes to date in the profile of the patients we treat. So whether it's comorbidities, whether it's age or other things, we have seen that the impact of the pandemic has actually spread through a pretty wide swath of the population of patients that we do treat. Now this may change as we get further information from the third wave. But to date, that's what the data shows us and we've been trying to be extremely objective about how we look at this. The other thing that has occurred is when we see the excess mortality surges that occur either just after a surge in cases, in between those surges, is a return towards normal, but we have yet to see any return all the way to normal. Between the first and second surges, there was a return back towards normal, but it didn't make it all the way back to our baseline and the same occurred between the second and third waves. So we still we'll see what that baseline normalcy looks like as we actually exit the pandemic. I hope that helps. Yes, it helps. But could you make a comment just on this topic of life expectancy? So how does life expectancy for patients who passed away compares to your average life expectancy of your normal dialysis population? So our normal dialysis population, the life expectancy of somebody that's symptomatic with COVID is quite a bit shorter, obviously. And otherwise we wouldn't have seen these excess deaths that are from COVID. And so I would say the degree to which that occurs is a little bit difficult to quantify. But I would tell you that it's substantially different than the baseline. The baseline has been many, many years. For a person that's COVID positive, we are now finding that there are patients that are asymptomatic dialysis patients with COVID and then there are obviously the many symptomatic patients. So I think it's a difficult question to actually answer directly, but simply to say that if you have COVID, you develop severe symptoms, your risk of death is much, much higher than it might normally be and that's maybe even an order of magnitude higher. The next question comes from the line of Michael Jungling with Morgan Stanley. I have two questions. Firstly, on mortality. In the presentation or so, you mentioned ten thousand excess deaths. Where do you think you'll be by the end of this year? Are we talking here about, sadly, twenty thousand people? Or is it slightly more or slightly less? And in the context of mortality, do you have a sense what percentage of your ESRD patients have already had COVID-nineteen? I suspect you do some antibody testing. And then finally, question two is on the CARES two program, for lack of a better word. How would you assess the lobbying of getting more government aid or support in Washington in 2021? Is there some sort of catalyst or event that you're focusing on that would make such a decision perhaps reality? Michael, thanks. This is Frank. I'll start with the first two. And predicting mortality is incredibly difficult in this disease. And I think that some might have predicted, but some might not have predicted that there would be a third wave. And I think not knowing the impact of these genetic variants, whether it's The UK variant, South African variant or new variants that will occur, I think we can predict that we will be living in a world with the pandemic. But the impact of additional surges is going to be based on a lot of things that we either don't control or don't have visibility on such as vaccination rates and getting to the point of herd immunity quickly, genetic variation and whether the vaccines will be sufficiently stimulus for an immune response against those particular variants, Weather, we will have economies opening up faster with reduction in non pharmaceutical interventions like social distancing and masking that will impact spots that flare up in surges. All of those are going to impact what our ultimate rate is and the degree of discipline that we see country by country is frankly quite different. And so all of those things are going to be the reason why I used the word dynamic in my prepared comments, because I don't think we know the answer to that question. I don't think there is really a good answer. We know that the third wave that there are excess deaths that extend into 2021 and as we stated, we anticipate that they will extend through a proportion of this year. Now the incidence rate, I can tell you that if we look at our global case rate of COVID, we've been able to through testing with PCR testing recognize that sixty thousand patients have had COVID that we have cared for around the world. And that was a number from a week or so ago, it was right at sixty thousand. And so we know that that's kind of the incidence rate that we're seeing on there. And then I'll turn it over to either Helen or Reese. Sure. Yes. So Michael, here's where we are. Had lots and lots of discussions with the incoming folks in the Biden administration and both sides of the aisle as well, Republicans and Democrats. It would appear at this point that the 1,900,000,000,000.0 bill that has been put together that has not been acted on, we're hearing that they want to act on that March. And what we're hearing there is at this point in time there is no relief included in that package for providers. So we are engaged and having discussions and trying to understand that, but that is a very clear answer that I have personally gotten. Secondly, in the provider relief fund that was appropriated under the Trump administration, there's around $30,000,000,000 of U. S. Dollar money available and the way you access those funds during the Trump administration as we have been told is going to be different under the Biden administration. We are asking and waiting to understand and get some guidance on what are the rules of the road going to be per se, but we have not gotten any feedback on that as of yet. So again, we believe our assumption of no relief is prudent at this point and we have to see what comes out of the mid March activity in the larger bill that at this point we are told there is no provider relief and then still waiting to get some sense and idea of what the process will be for the provider relief funding that was explicitly put together for providers be that hospitals or dialysis providers, we're waiting to see what's going to happen there. Okay, great. And briefly follow-up on those patients who have been diagnosed with COVID and have survived. Are they more difficult to treat as a result of the disease? Meaning as they get better, are they even if I can use the word iller or are they even unhealthier that the cost also of treating those recovered patients is higher? Or is the mortality or life expectancy lower once they've survived COVID in the first place? Do you have some sort of data which would suggest some sort of trend? Thank you. Sorry, for the follow-up. Thank you. Sure. So there's no evidence that they're any more difficult to treat. They obviously after COVID go through a period of recovery. And as you know, there are sequelae to COVID that require a fair amount of time to get over. But the treatment for their renal replacement therapy is no different and the type of work that our physicians and nurses are doing is essentially unchanged. We do try to protect these patients from getting reinfected. And so they are observed very, very closely during these times, but effectively no distinct treatment. Now those with COVID are being afforded the available treatments that are we've made available antibody treatments, we've made available other treatments that give them the opportunity to try to recover. But it's a but it effectively from the dialysis standpoint is not substantially different. The next question comes from the line of David Adlington with JPMorgan. Thanks, guys. Also for Frank, please. So just on the patient outcome side, I was intrigued to see that your patient hospital days have actually come down a little bit year on year, which seems odd given the excess deaths. And I expect some of these patients to end up in hospital beforehand. So it'd be good to get your thoughts on that first. And then just to sort of circle back on that, it was ten thousand deaths out of sixty thousand patients you've had at SLC, that was sort of one in six death rate. Is that fair? And I think that does sort of put you in mind with sort of order of magnitude higher than the general population in terms of mortality rates. Great. Thanks. So the hospital days coming down a couple of regions, I think is actually it's counterintuitive, but it makes sense when you realize that as surges occurred in communities, hospitals were overwhelmed with caring for COVID and that caring for COVID in the general population reduced a lot of routine care that was occurring in hospitals. And patients didn't want to go to ERs where there were a lot of COVID patients and they didn't want to go be placed into hospitals. And at the same time, the routine care was disrupted, especially earlier in the course of the pandemic. So we saw hospitalization rates typically fall in those areas where there were surges and there was overwhelming pressure on the healthcare system from COVID. And so that counter intuitively is one of the things. Now with the ten thousand deaths and the sixty thousand cases, remember the sixty thousand cases are the cases that we have diagnosed with positive PCR testing. Not all patients are diagnosed and not all of the excess deaths are in people that are known to be COVID positive. And so there is a probably and this is seen in the general population as well, the actual rate both on the mortality side from COVID and on the exposure side of being able to identify patients with code is probably quite a bit higher than what's actually documented. So I think the one sixth death rate is probably not accurate as an assessment of that because of those reasons. Next question comes from the line of James Tempest with Jefferies. James Van Tempest from Jefferies. Can you clarify the up to €500,000,000 investments and timing for those to be cost savings? I mean, I understand these are in the preliminary stages. So for example, you spend €50,000,000 this year. I appreciate it depends on what these are, but I'm just curious the timing, how you'd expect to see benefits over time. And then second question, if Rock City start gets approval and TDAPA funding, I'm just wondering how you view this opportunity for Fresenius in The U. S. And is any contribution from that included in your guidance? Quinn? Yes. Hi, James. I'm happy to take the FME25 question. So yes, you're right. The depending on what it is will depend on the rate of savings capture. I think if you look at real estate or facilities versus people, you get a quicker payback or things can take longer. I would say on average, we would expect payback within three years. And then that payback is going to be phased over the next few years as we tackle these different elements of our operating model. And that is obviously the more detailed work that we have ahead of us, and I think we'll be able to give more of an update on that, as I mentioned, when we come back at Q1. And obviously, parts of the world have different restrictions on how quickly you can do some things. But with the sizing of it, I think that was the other part of your question. We're not just looking at this for how do we counter the impact of COVID, but as part of our Capital Markets Day targets, we always had margin expansion in there. So we feel that the 500,000,000 is the right size to get us through this midterm target and set us up for sustainable profitability beyond. James, on roxadustat, no, at this point we've got no assumption that that will be approved and it will be running through our P and L in the 'twenty one plan at this point. Next question comes from the line of Sarkis Friedrich with Deutsche Bank. Please go ahead. Thank you. I would have two questions as well, please. Firstly, on Medicare Advantage. Could you share when you think you can reach the mid-30s threshold that you mentioned earlier in your prepared remarks? And then secondly, could you provide a bit of an outlook for your dialysis products business for the year? Do you expect some weakness here as part of this excess mortality situation? Or do you think the products business can still post solid growth again in 2021? All right. Helen, do you want to take Medicare Advantage? Yes. So what we've always said is we feel we can get to that mid-30s. The trajectory and the enrollment and the timeline to get there is somewhat out of our control. We feel we did this enrollment through a third party broker and it was incredibly successful. The North America team did a terrific job with this. Obviously, it's about patient education, discussion with the physician on the different benefits that the plan offers. I think we ask ourselves why in time wouldn't the patient take a Medicare Advantage plan and obviously it comes down to consumer choice. So I think within the next couple of years we could see that mid-30s, but I think we'll see what happens in the next round of open enrollment. I think by the end of twenty twenty one, we'll be more informed on how that uptake looks going into 2022. Falco, hi, it's Rice. Products growth, I think one of our advantages is having a complete full product line for all dialysis products is advantageous for us. We still are believing and planning on growth in products this year given the fact that we can see a need in the critical care space particularly if as we've said we believe COVID is going to be here at least through H1 that will create opportunity for us from an acute care standpoint. As you well know, the disposables become the blade if you will. So they are going to continue to be sold for in center patients as well. We do anticipate maybe some softness in our in center machine business, but we've seen that from time to time. But at this point we are looking at growth for the products business. We will have the opportunity to generate that kind of I would say mid single digit somewhere in that range growth. Okay, thank you. Sure. Next question comes from the line of Christoph Gretler with Credit Suisse. Please go ahead. Thank you, Rice, Helen, Frank. Still two questions left. The first is on your guidance, net income guidance. Mean, in a historic context, at least, it's a pretty wide range, high teens to mid-20s. It's almost more than €100,000,000 net income essentially. If I look at kind of your assumptions and kind of the key elements that could drive I mean, of them are well known. I mean, you knew how much money you got from government last year, kind of the pandemic related costs. We also now have a pretty good kind of sense about the level, etcetera. So I mean, could you maybe expand a bit on what is required to get to the low end? What is required to get to the high end? And what is probably the most kind of critical and most variable factor maybe behind this relatively wide guidance range? Chris, it's Helen. I'll take that. So yes, you're right. It is a range that is somewhat deliberate. Think the obviously, as you can see from our headwinds and tailwinds, we have a lot of moving parts in 2021. I'm very confident on our operational excellence that we will deliver, you know, what we're good at and the fundamentals of our business are strong and the operating model is strong. For me, I think the biggest variable quite honestly is the mortality and what we really see as the continued trajectory going into half one coming off the back of some pretty big numbers in December and January. So obviously, know, there's lot of questions for Frank today on mortality and vaccination. But I think those two things are going to be the game changer for us in 2021 and when we start to tip over on that curve. So I think the West, we know how to manage, but that one in particular is somewhat harder to call. So I would say that's the biggest variable. Okay. So then at least there is hope that maybe if we progress in the year that you're going to tighten it. Then the second question is just on care coordination. I noticed that after minorities, it basically turned to loss making. And I guess, with what you mentioned, it can be good for kind of that business as well. So what's kind of the midterm outlook here now kind of are we now adding restructuring candidate? Or basically, how would you kind of see it all the way back to I think in the past, you saw kind of double digit margin levels now as achievable. Is this still kind of not something that is realistic? Helna, we'll double team this, Chris. It's a great question. So couple of things just to get you thinking about it. As we continue to make the migration to value based care, we require these complementary assets. The pharmacy, the vascular access which is not only renal as well as cardiovascular and things of that nature. So I would say to you as we get through this mortality effect that Helen spoke about and we move beyond that, we would expect to see some improvement because we are going to be able to have patients coming in, are going to need vascular work etcetera, etcetera. Value based care, these complementary assets are so important because that's how we manage the clinical interventions and we keep patients out of the hospital and we drive higher clinical outcomes. So as we think about really looking at our business and what we're doing, we're not thinking that we would go in and take complementary assets and just kind of drop them out of the picture because then it makes it difficult for us to be able to manage effectively in value based care and we've learned this obviously over a number of years. Helen, Yes, do you want to perhaps Jeff would add, Chris, for us as we think about care coordination and as we take care of these patients patients and we are moving obviously way more into a value based care environment, we likely going to fold in the care coordination reporting into our services reporting moving forward. We think that makes more sense to have a more holistic view. And maybe the only other thing I would add is kind of maybe the Care Coordination segment in Asia Pacific also continues to grow. That's been a successful venture for particularly in Australia and our day clinics, for example. So we like the segment of care coordination. We feel it does enable us to offer greater wraparound surround, I call it, for our patients. But it's obviously becoming much more part of our services offering as we move forward. Ladies and gentlemen, unfortunately, we have no further questions at this time. I hand back to Dominic for closing comments. Okay. Thank you, Emma. So we have more questions, know, but we did run out of time, even the extended timeframe. So I apologize for that. We should have planned for even more. With that, I will nevertheless close the call. I can only say and that more than ever, stay safe and hope to hear you soon. Take care. Thank you, everyone. Be safe. Be well. Ladies and gentlemen, the conference has now concluded, and you may disconnect your telephone. Thank you for joining, and have a pleasant day. Goodbye.