Welcome and thank you for standing by. At this time, all participants are in a listen only mode. Now I'll turn the meeting over to your host, Jim Gustafson. Please go ahead.
Hello. I'm Jim Gustafson, DaVita's Vice President of Investor Relations, and I'd like to welcome everyone to DaVita's 2019 Capital Markets Day. We appreciate your interest in the company. The presentation is available for download on our website at investors. DaVita dot com.
The audio is being webcast live at investors. Davita.com and will also be available for replay. Before we begin the presentation, I would like to remind you that during this presentation, 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 the appendix to the presentation available on the website. Additionally, I'd like to point out that during the presentation and Q and A, we will make forward looking statements within the meanings of the federal securities laws, including statements regarding our financial guidance.
All these statements are subject to known and unknown risks and uncertainties that could cause the actual results and other events to differ materially from those described in forward looking statements. For further details concerning these risks and uncertainties, please refer to our most recent quarterly report on Form 10 Q and subsequent filings with the SEC. Our forward looking statements are based upon information currently available to us and we do not undertake any duty to update these statements. We have a full morning planned with the presentation followed by Q and A from those in the room. During the Q and A, we will ask you to limit yourself to one question and if necessary, a follow-up and then go back into the queue to allow everybody who wants to
have a chance to ask
And so now to begin, I'd like to turn it over to our Chief Executive Officer, Javier Rodriguez.
Good morning. I've been thinking of this day for a very long time, very excited to be here. I thought when you'd say my name, there'd be applause, but maybe I'll wait for that. Hopefully, I'll earn it by the end of the session. I am very proud and very happy to talk about DaVita today and DaVita tomorrow.
So let's jump into it. This will be our roadmap for today. It's basically divided into 2 categories. The first is loading us up, so we have a common language. And then the second one is going through financials and some of the questions that you will have.
Before we begin, it is really important to remember that we care for life sustaining therapy here for patients. So our mission is clear, it revolves around people, it revolves around our patients, our caregivers and our physicians, and that will follow throughout our whole presentation. So please don't forget that as you go along.
With the approach of starting with and start with
the end in mind and give you the answer first, and then we'll build up for it. Was worried that when I start talking to you about our philosophy and our strategy that you would be really distracted because you want numbers, and I see that it's working because everybody's writing them down. And so a couple of things to keep in mind. Number 1, this is a different framework than what we've usually given you. We've usually given you revenue per treatment costs and a couple other things.
We call this a trilogy. We're now going to give you revenue, EPS and free cash flows. As it relates to revenue, it's 3% to 4% growth. On adjusted EPS, of course, it depends on your starting point, but we started in 'nineteen, 'twenty, took out the noise from the tender and calcimimetics, and it's roughly a 13% EPS growth. And on free cash flow, again, depending on when your starting point is, but it should be a double digit around the 10 or so growth on free cash flow.
So we're excited to connect all those numbers and see how you get there. So let's jump into our story. Probably the most important thing that we want to talk to you about today is that many of us think of us as a dialysis company. They think of us as a brick and mortar. And that's how a lot of these articles are written.
And it is far from what's the truth. We are a kidney care company. We take care of everything from beginning to end on a patient that suffers from ESRD and or anything to do with the kidney. And so when you stare at these boxes, we're going to go each 1 by 1. But the most important thing that we will go through today is that it's not the individual boxes that matter, but it's the addition of them that unveils the power that we have here at DaVita.
And please look at that orange bar at the bottom. As people talk about analytics, AI and the value of data, no one has, to our knowledge, 20,000 sorry, 20 years, which is 1,400,000 records of patients, so we could do some analytics and make sure that we have breakthroughs for our patients. When you talk about a caregiving organization, the first thing you should talk about is, are they good at their care? I'm going to pick 2 metrics. The first one is mortality.
People talk about innovation in the space, continuous improvement. This is continuous improvement. This is innovation. We continue to have more lives on earth because of our good service and our commitment of our caregivers to do better every single year. This is Bernice.
There's 10,000 Bernices that are walking on earth because we have focused on that. If you were a patient or your mom was a patient or your husband was a patient, what you'd want is to make sure that they're out of the hospital. And we continue to focus on getting people out of hospital actually because of our good work. And although 5% looks incremental when you do it over 200,000 patients that are hospitalized one point 6 times a year and they're hospitalized about 5 to 6 days a year, it really adds up. So 100,000 more days in the hospital.
This is Veronica and with her husband, Lawrence. And so you see that they are very happy not to be in the hospital. When you talk about kidney care, most people start to ask about all the modalities, in center, home, transplant or hospital. And if you're going to understand this, what we're going to have to do is zoom out a bit. So let's zoom out, and what will happen is that you have to start before the kidneys fail.
And that's called CKD, stands for chronic kidney disease. And so the reason why it's so important to focus before we ever have the patient is because of the 2 categories. Where you start really matters. If you start in the hospital, which about 60% of patients start, it's a very different start than you start in 1 of our centers. And I'm going to tell you why that is so important.
So as you go into CKD, the biggest and hardest factor to do is find these patients. There are 30,000,000 Americans with chronic kidney disease. Of those, only around 1,200,000 or so will advance into later stages of CKD. And out of those, only 10% will actually advance to ESRD. And so you can see that the degree of difficulty of finding this patient population that are with their PCPs all over the country, many of which don't actually go to the doctor.
And so what we're doing is we're investing a lot in our analytics to make sure that we can find these patients, intervene with these patients and actually make sure that they have a smooth transition. We believe that the asset base on the other side of the slide here equips us with that. And if you are a payer, think about the importance of having a one turn solution. You cannot go to every little nephrologist, every PCP and aggregate this population. So you actually need some of the capabilities that we illustrate there.
So we are very well prepared for this CKD population. Back to this, why is it so important? Hospital starts 60%. Think about that. This is a sort of a catastrophic outcome that could be avoided and it could be predicted in many, many cases.
The big difference between them is if you have anything in your life where you have a severe change in it and you're prepared for it, you go into it very differently. And even sometimes when you're prepared for it, let me just tell you, when I dropped off my kid at college, I knew it was coming for about 18 years. But when I dropped them off, it was still traumatic. When I went home and it was a little more quiet that day, it was traumatic. So imagine when your lifestyle changes from one day to the next in the diet that you have to do in 12 hours of going to clinical care and maybe not working, your relationship with your significant others, your transportation needs, your insurance needs, all these things become somewhat daunting and lead to depression.
And that hospital start usually leads to about $50,000 in elevated care. And so there's a big, big difference between us intervening and not intervening. And so what we're doing again is these analytics to find these patients, do something about it. And what really matters is that the results speak for themselves. They're proven results.
When we have them, it is a game changer, period. We can get you a nephrologist. We can get your education so you could actually decide whether you want to go up home or whether you want to do in center. And then of course, you start in the clinic psychologically better prepared and that leads to less hospitalization. So that's CKD.
That is important. It's how you enter the system. And if you enter healthy, it is from a mental and from a preparation, it is a different outcome. Now, if you go through the modalities, I'm going to go through again to make sure that we're all talking about the same thing. In center dialysis, this is, again, what a center looks like.
It has basically a chair where a patient comes in, it has entertainment, and then it has a machine with an artificial kidney. You end up in that kidney depending sorry, on that machine, depending on your weight for roughly 4 hours. And this is the care team that surrounds you. So you usually have about 5 nurses, 8 techs, a social worker, dietitian and a nephrologist that rounds. I want to point one more thing.
Most of our centers well, I shouldn't say most, a great majority of our centers have home therapy available in center. So what that means is that the patient can actually choose whether they have in center or at home. The reason why that is important is because some of these superficial comments that say, oh, you just want them in your center, it couldn't be further from the truth. We have both modalities. We're actually indifferent and we want the patient to pick what he or she thinks is best for them.
The great majority of patients are in the center. And the reason why that is, is because if you or I or others would be on dialysis, many of us think that we're capable enough to take care of ourselves. But when you see the actual burden that you have to do, many actually are scared about it and they enjoy having someone else take care of it. It's a little like homeschooling. Many people think that the school systems are really flawed.
But actually doing it yourself at home actually requires some expertise and to do it better. So it's sort of the same mentality here that many of us would rather have an expert do it even if it's imperfect. Now on to home dialysis, a lot of conversation, especially after the executive order about home dialysis. And what I want to tell you is we're the leader in it. We love the modality and we want as many patients in it as possible, period.
There are 2 sorts of 2 modalities of home. I won't get into the technical aspects, but there's PD and in center, okay? Let's start with PD. In PD, you will have a catheter coming out of your stomach. And basically, you have a clamp on and a clamp off system.
So the training is a lot easier, but it doesn't make it less risky in the sense that you could have infection as you have a tube going into your belly. The second one is dialysis at home, which most people say, why wouldn't I do that? And the short answer is, you are doing a real medical procedure at home by yourself or with a companion. Hopefully, I'm the 1st CEO in New York to have a sort of a show and tell, sort of a touch thing, but maybe I'm not. I want to pass this around because until you see this, this is the needle that you would put in yourself.
And it's not so long, but if you could look at the girth, the thickness of it, and you said one in and one out. And so you have to decide if you want to do that to yourself every other day. And so that's why the great majority of people stay on PD when they pick a home modality versus home. There are other complications, but at the end of the day, that is the one that drives the most. So let's focus on PD.
This is patient John, and you see why John looks so jovial. He could stay home and he can do his dialysis exchange at home. What is not seen here is that there is a big care team behind him and a lot of technology to make sure that he's comfortable. John will go into the center approximately twice in a month to make sure that their labs are drawn and that the care team spends time with them. And so this is a big, big thing with PD.
And then you might say, well, how are you doing in PD? And the short answer is we're the largest. And if you're saying, yes, but you're big and so is Fresenius, what's your mix? Our mix is the best at scale, and it's the 2nd best. If you put one of the little ones, which is satellite.
They have a bigger mix in the high teens. Ours is around 13% mix in PD. But I'll point to the right of that slide, which is probably the most important point. And that is that 50% of PD centers, PD patients come from in center. They start in the center and then they learn about PD, then they get the courage to do it and then they switch.
And then at the same rate on the other hand, because the modality constraints, 60% of the patients that are on PD end up in center. And so you see that it is highly, highly intertwined. And if you were a patient, you would want both to be connected. Many people are asking, and there's different reports out there as to how much the penetration of PD can be in the world and how much can we do in the United States. And there's some outlier countries that I took out and the reason why is they have some really unusual things.
Sometimes they don't offer in centers. So of course, PD will be higher because of the alternatives PD or no alternative, but to pass away, of course, you take PD. But these countries look a lot more like the U. S. And so if you were to be aggressive and if you were going to have the patients educated, you were going to have the physicians educated and you want to be on the outer bound, we think that pushing the system to 1 in 4 or doubling where we are now is a healthy way to look at the modality.
And people say, why not bigger? Why can't it be a thing? And sometimes people think that I want them in the chair, brick and mortar, etcetera. That's just not correct. The reality is that there are real constraints.
Number 1 is the patients on average last 2 years in the modality, so they're going to need the in center. Number 2, we've already discussed, they start in center because they're crashing into dialysis. Until we fix the crash into dialysis, they cannot start in PD because you need to go through the catheter and you need to go through the transition to get into PD. Then the sort of the thing that's least mentioned, but it's published actually by Academia is that the nephrologists are not trained in the United States in PD. And so you see the surveys here that they think that the fellowship, 87% of the nephrologists survey don't think that they have enough and adequate training.
And so at some point, people are not referring in center because it's just sort of an easy thing to do or because we think it's important. It's because what they're feeling comfortable with and because they like the surroundings of the care team. So when you do that, all those dynamics mathematically, one of the things that you have to think about is, this is our numbers from 2018. We start with 24,000 patients and we lose half of them. So think about that.
And so the growth rate is actually having to make up half every single year and then build from there. And so out of that half, there's some transplants, there's death, but the real reason why people stop in general is infection and they have fatigue. They thought they could do it and then all of a sudden they realize they'd rather have someone else do it. The second point that's important is that the 7,000 and or basically what makes the growth potential available is to actually talk to people that are in the center and say, hey, let me walk you over and show you what PD could look like. Let me show you what training looks like.
And then that's what makes those patients have the courage to move on to PD. So our goal and our target is to say, how do we get more patients and how do we get them to stay? And so we're working incredibly hard in technology and with our care teams to make sure that the patients feel more comfortable and more prepared to be home. And so how are we doing that? Telemedicine, we're having all kinds of things where the patient can actually have predictive modelings and things to say like, oh my gosh, wait, you got to come in, something spiked, you have a higher risk of hospitalization.
So let's not only do a telehealth, but please come in so we can avoid a hospitalization because if you're in the hospital, many hospitals are not prepared to take care of a PD patient. And that's where we lose a lot of patients because they take out the catheter or do something and then the patient can no longer go back on therapy. So all these things that we're working on are really, really important and the patient feel more secure when they're being monitored from home. Clickers got a little slow thing, so I apologize. Back to the hospital, remember, 60% of the patients start there, but not only that, unfortunately, our patients will end up in the hospital regardless of what happens.
No matter how good of a care we take, these people have a lot of chronic conditions. They will be there roughly 1 to 2 times a year, and they'll be readmitted. What's really important is what I mentioned on PD that if you're not in the hospital and you're not present, those patients will likely go back to in center. So we want to keep them in that modality. People underestimate how hard it is to get to be this big in the hospitals.
And the reason why is many hospitals have big time, big time sub scale. And so what ends up happening is you get a dialysis treatment that is very inconsistent, so they're very hard to staff, and you need expertise in the hospital. So to get this kind of footprint, is hard to do, number 1. And then number 2, if you're a dialysis patient, you have a lot going on with you. You want your dialysis orders, you want to know your hep B, you want to know all your records on dialysis.
And so when we have an acute transplant, you see the stats on transplants. They've gone up 4,000 over the last 8 years or so. And the big thing that you want to look at is that there's a huge supply issue. And so you can get someone on the list, but the reality is that the list is big. When you have 95,000 or so people on the list and 22 getting in Oregon, you can do the math.
It is a tough wait list. And so many people again say, are you prepared to do the transplant? And we say, well, first, you got to look at the process of the transplant, because it's just you have to literally stare at it. The 2 blue dots are really right now the only pieces where DaVita is involved. And so it's on the front end.
Educating a patient to be transplant ready and getting them into a referral is a physician and or a social worker that can get them into being evaluated. But then after that, if you could look at the top of this slide, you see that they get evaluated over a period of time and there's a very thorough evaluation to know if you're transplant ready. But then you wait for a very long time, and then you have the whole process that really kicks in. And there's a lot of entities on the sourcing, on the match. And then, of course, the patient gets a very, very tiny time to make the decision whether they want to transplant.
And sometimes you say, why wouldn't they want to transplant? Sometimes they say, it's not a great match or the organ is infected, it has hepatitis or it has it's from an opioid patient. And then you have to decide whether you want to take that organ or wait for the next one. But at the end of it, what I want you to know is we have very limited, very limited, impact on transplants right now. And so what we want to do is ask the question, are we getting our fair share?
And the short answer is, we're getting our fair share not because we're good or bad or indifferent, but just the way the system is, you basically just get your patients in and you should have fair representation. We're getting fair representation both on transplant. We're getting fair representation of the people that are on the transplant list. And then on the last part, we're doing quite well at educating our patients. And so this whole notion that people say, oh, are you transplant, you want to keep the patient because the ESRD is good for you, it's just a crazy thing that people that are not educated on how it works, and that's why we have some issues with the executive order.
So if you're going to summarize all that, and again, I'm just trying to load people who are not familiar with what kidney care is all about, the main thing that you ought to take is that you can enter from a hospital and you can enter from the clinic. But regardless of which way you enter, all of the modalities, whether you're able to get a transplant, all of them are intertwined. They have huge interplay. And if you were a patient or any loved one of yours was a patient, you would want to be with 1 provider that does them all because if not, you would be adding to the problem of healthcare, which is total fragmentation and discontinuity of care. We've talked about the system.
Now let's talk about the quarterbacks of this whole system, which is the nephrologist. This is Sharif. He was a physician. I say was because he retired a couple of years ago, but he had his whole career with an affiliation with DaVita. That warm smile is what patients often describe with him.
He started with us right when DaVita started and had his entire career. What I want to tell you about the 7,600 Sharifs out there is that they work harder than anyone I know. They're 20 fourseven. And the reason why they're 20 fourseven is they have to be in the office, in the hospital and rounding into the dialysis clinics, and these are 20 fourseven type jobs. And I'm not going to go through the middle, but what I want to tell you is because of all the inter connectivities between the modalities and the sites of care, these physicians need data and they need it at the right time and at the right place.
And all of these interactions do just that, give you the data at the right time, at the right place, regardless of your site of care because you don't care where they are. You want to be able to do what you do best, and that's use your clinical expertise. If we zoom out of dialysis, there's a lot of talk right now about social determinants of health. In our patient population, it is a big, big deal. And so I'll give you two examples to bring it to life.
We had a patient that stopped coming to dialysis consistently. We asked him lots of questions. The patient didn't want to tell us why he started missing his dialysis, so we sent someone to his house. What we found out is that he used to have a driver that would carry him down the steps because he's in a wheelchair and down the steps of his house, the driver changed and the new driver would not carry him. And so then when he could get someone to carry him, he would go to dialysis And when someone wouldn't carry him, he wouldn't go to dialysis.
Of course, we intervened. We actually called Lowe's and we had a fun project. We built the ramp. And Lowe's and DaVita was so excited to do this that we actually ended up painting a house with the community and it was a gathering thing, but it's just sort of one of these really cool cases where you just saw for something that's very solvable, but you need to know about it. The second case is very similar.
We had a patient that being inconsistent. When we asked him why he was inconsistent, he was embarrassed to say. But the reality is he has an oxygen tank, and he couldn't get down up and down the transportation in the system. And so we help them with that. But the bigger point here is that you got to zoom out.
These patients have a lot going on in their life. They are the most complex, the most fragile people in our health care system. When you and I that are relatively healthy, intertwine with the health interact with the health care system, it's a frustrating process. It's fragmented. The patient records don't go from one place to another.
They ask you to fill out the same form, etcetera, etcetera. And so imagine when you're older and you have all of these interactions, how frustrating it is. So our job is still to try to put that all together and help these patients navigate the system. And so what we're trying to do is first wrap them around with a care team and then wrap them around with all the tools in the blue. Now if you were in any other health care company, they would some slide would look just like this.
So you're saying what's unique about DaVita. What's unique about DaVita, it is that it is kidney specific. And so if you were to grab any other healthcare system, it's usually wide and thin. We are narrow and deep. It is full expertise on kidney tailored for kidneys.
And so, as you can see, we continue the care delivery, we're very excited about. Now we need some payment reform, and these are some of the things that we're working with. We've got large payers, we've got the government, and we're trying lots and lots of things, even though sometimes we know they're imperfect. What we need to do is to make sure that we continue to try because at the end, we know it's going to work. So going into the future, there are 3 things that we're pretty excited about.
The first is the PATINS Act. For those of you that haven't heard, we've been working for roughly a decade or so on trying to get legislation that actually makes us accountable for broader care of the patient. And right now, where does it stand? We want introduction in the fall. We have bipartisan, bicameral support.
About 169 of the members that supported last year are back. And then, of course, we will have to play in the back end to see if there's a vehicle that we can tag into it, but we're not going to give up. We're going to keep trying. PMMI, there's 2 models. There's what's called the volunteer model.
And the mandatory model. And so what we're going to talk about is there's not a lot to talk about the voluntary models right now because there's a lot of information to come out, but we're optimistic. And then the last category is Medicare Advantage. As many of you know, we have a growing population of Medicare Advantage, and the payers are wanting a solution that's specified for kidney. So this is a suite of offerings that we're working on to make sure that we can address, the future demands of the healthcare system.
Why do we have so much passion on this integrated care? Some of you are like, my goodness, you've been talking about it for so long, when do you give up? The answer is we're not going to give up because we know the trifecta of care. We know that the patients like it. We know that it's good for the outcomes and that it will save money.
This is data from our special need plan and the results speak for themselves. It is just unambiguously good for patients. So we're going to keep doing it. If we get patients back, it would be a huge game changer economically as well. That means it would be our P and L would look very differently.
If you just grab that there's roughly 300,000 Medicare patients and you grab roughly $60,000 of their non dialysis care, you get into a big revenue pool. Of course, the whole object of this is to take cost out of it. So it's not going to be a high margin business, but it's going to be really, really exciting for the patient, and it is very capital efficient, although at the beginning, you would have to do some, of course, some investments. So there's a loop. There it is, our platform.
I think I can use the words unmatched. Some people probably debate it. Many people are trying to enter the space and actually grab one of these boxes and say that they want to be the specialist. And I would literally say to them that they are going to be part of the problem of the health care system. They're just fragmenting another piece.
You need the suite, and you now understand why you need the suite. And if you're a mom or dad or loved one was on dialysis, you would want them to go to a place that had this kind of platform. Now, let me move on to a lot some of the questions that we get. We divide them into 5 categories. We get these very often.
I'm sure you'll give me another shot live, but I just want to talk to you about growth. 1st and foremost, the question is what will the prevalence be going forward? There are different numbers out there. We don't proclaim to say that our number is right. We're doing the same math that other people are doing and coming out with slightly different answers because of the assumptions.
But at the end, we think that the prevalence is going to come down to 1.5% to 2%. Then you say, the last couple of quarters, you've underperformed on your non acquired growth versus your largest competitor. And the answer is yes, and we are very embarrassed. We have a track record, a long track record of outperforming the industry, and we are working very hard to get back into that. And we're making the commitment that we will get back to winning, And it'll take about 3, 4 quarters to get all of our operational discipline and all the things that we're working on to kick in, so bear with us.
But we are committed to outperforming over the long run. If people say what are the 3 main drivers, in essence, we have the incidence is coming down. We were getting, in essence, growth because mortality was improving, so the patients were staying on therapy longer. And then we had the increase in transplants, which we already talked about, 4,000 or so 80 basis points due to transplant. So those are the interplays of the dynamics, and I look forward to hearing your thoughts on that.
On revenue, we probably get the most questions on revenue, and we try to be very helpful on this. And sometimes we've done well by you, and sometimes we've actually just confused you. So I'm going to give you I'm going to give it another try, see if we can help on revenue. A couple of things. Before you talk anything on revenue, you have to remember that the fundamental structure of dialysis is different than any other health care segment.
Regardless of your age, regardless of your age, you can be you can join the Medicare if you are ESRD, okay? And then there's a coordination period that if you're on commercial, in 30 months coordination, then you can go to Medicare. That gives you that stack bar that looks ninety-ten on the mix. I don't know of any other segment that looks like that. And then what ends up happening is we have to charge a premium to our commercial payers.
And so therefore, at the end, the right bar, which is a revenue bar, actually looks a lot more common to other health providers. But that's why sometimes when you're talking to your payers and they say, man, the dialysis providers have a premium to Medicare, The answer is yes, we have a premium in Medicare, but you're given a volume subsidy that is quite large and therefore you have to make it up in price with a small number of patients that you cover. And that's the ecosystem. And then people sometimes, of course, don't like it. And then at the end of the day, what you have to look at is, we are, in my mind, the single most efficient care delivery in healthcare.
When you look at our weighted average revenue per treatment of $3.50 per treatment for 4 hours of life sustaining therapy with a physician, with a facility, with all the team that I just explained about, with all the support, with all the technology, and you say that's $80 an hour. I don't know of any other health care system that delivers that. It just happens to have a really unusual structure on the commercial side. So you might hear about that often. If you're going to summarize the revenue dynamics, we try to take a look at what's getting better and what's staying the same.
And in general, I'm going to go into each one of these one by one. This is the executive summary. So let me take each one at a time. The first one is the most meaningful one economically, which is we went through a very big low from 2014 to 2018 where we didn't we barely got an increase. And if you were to adjust for that, we would have $330,000,000 ish more profits today than what we do.
So while those numbers might look small, when you do it over our population and you compound them over time, they really, really matter. And so we're back to get into our improvement on getting our revenue to treatment back into a normal mode. Number 2, many questions come. Is this going to be a regular year? Do you have more negotiations, less negotiations?
Are you out of network, in network? So let me try to take each one of those at a time. Number 1, there's 500 or so payers in our portfolio. It is a fact and circumstances arrangement, meaning if you were to grab our contracts, they look substantially different. Even though the payers might look the same to you, they might have different initiatives.
Some might like shared savings. Some might like more predictable just step into it. Some might want more risk. Some might like geographies to have different things or different products. So when you ask us, we literally cannot tell you how it's going to behave because the payers also change the way they want to contract.
And so we're not going to talk about year to year. We're just not. We don't see in the foreseeable future a big spike in the $500,000,000 being negotiated, but we could have larger accounts on any given year. And so if you say, wow, we might have had a larger account and it had a shift up or down. As it relates to the out of network question, we've never given you this number before.
And so the bottom line is we try to be contracted. We try to be very constructive with our partners, and we're successful most of the time. So most of our portfolio is contracted. We talked in January about this outlier concept. And so for those of you that weren't there, basically, we said, look, if you we're like any other service, you have a distribution curve of pricing, and there are some that are higher.
And why did we bring up this concept without just giving you the number is we want you to be aware that there is a segment and when rates are a little higher or more or stands out and you do it times 144 times that there is a risk out there. But what we wanted to tell you also is that that risk is diminishing and that risk is fragmented. And so at the end of the day, we don't see, while we could have some lumpiness in it, that at the end of the day, we are diminishing that risk gradually and it's still out there. So but sometimes when you say, gosh, when I do the math and I think that you should get extra Y on your commercial revenue, it's that we're trying to overcome right now is that the population is getting older. And when you get older, most people at 65 or older will just elect Medicare as opposed to some of the younger patients that would rather stay on commercial.
And so as aging of the population comes to a headwind, we think that this will be about a 15 or so bps that we got to make up in our commercial mix. And we're going to try and make it up by all the things that we've talked about, which is catching the patient first, trying to make sure that they stay productive, members of society working, and hopefully they will keep their insurance. But if not, we've got about a 15 bps headwind. The 5th dynamic was the ACA. We think that we've passed through the ACA.
There's a lot of dynamics. I'm not going to go into them. You're very familiar with them. We've all read about them. But one of the most interesting and fascinating things that happened with the ACA is we had about 3,000 patients pre ACA on individual plans.
And after all of this stuff that's happened here, we have about 3,000 patients in the exchanges and in the ACA. So a lot of ups and downs, a lot of roller coaster, a lot of energy talked about this, but at the end, it looks the same. Unfortunately, in that transition, while we have approximately the same census, the rates are lower in the ACA, and it's due to some of the dynamics on the products and some of the payers leaving the exchange and having a little more influence as to what the pricing was. But we did take a price reduction, but the volume stayed constant. And so again, what I'm trying to do is bridge to you what's happened and why has revenue only grown at roughly 0.3% and what do we expect going forward.
The last dynamic is a positive one and we know some things and we don't know some other things. Let me tell you what we do know. Our patients are going to benefit from having Medicare Advantage be one of their choice. They were the only segment that were excluded from picking Medicare Advantage once their kidneys failed. So why do we have approximately 25% of our patients on it is because if you selected Medicare Advantage before your kidney sales, you were able to keep it.
Now what's happened in 2021 is regardless of whether you're kidney sale or not, you can select Medicare Advantage. Why is that relevant? On an economic basis is because we do get a premium on Medicare Advantage. It's a negotiated rate. It is not it is closer to Medicare than our commercial rates, but it is a premium to Medicare.
And then people ask us, well, how many patients do you think? What do you think will mix will be? And the answer is, we don't know. It'll be a patient specific solution as to their co pays, their physicians and what they want to do in their life. But a reasonable assumption is that we would track with the MA market.
It could be a little higher, a little lower depending on the dynamics. So we know roughly where it's going to end up. We don't know how long it's going to take to get there because a lot of patients are confused with insurance. A lot of patients are fine with their Medicare, so on and so forth. So we think it'll be a bit more gradual than people think that it's going to be like this thing that in 2021 people are going to line up to do it.
We don't know that, but our experience with insurance is that people in general get pretty confused and it takes them a little time to really understand what they want to do. But this is, we think, an exciting part for our patients and could be an exciting part for our economics depending on how it plays out. So in general, as a summary, we've gone through. What I want to let you know is there's a lot more going on underneath the sort of the smooth line that you see on revenue per treatment. Hopefully, the dynamics that we gave you help you understand some of the bridging, although, it is not good for us to give disclosure on each individual because we have, of course, our negotiators out there every single day and we have the payers and we have all the constituents that are listening and looking at our transcript.
But as you look for 2020, which is as far as we're going to give the guidance on, we expect revenue to be in the 0% to 1%, excluding the calcimimetics, which we've called out. Okay. Charitable premium assistance. Let me first say, number 1, unambiguously good for patients. Period, period, period.
Unambiguously good for patients. Unambiguously good for us. We make no qualm about that. And number 3, we think it's good for the system because they're not entering the system, which is pretty burdened. It's been steady.
It was steady for a very long time, from 1997, unquestioned, very clear with its intent and how it would architect and how it would function. What actually stirred that up was the ACA. It wasn't clear whether payers had to take charitable premium assistance. So the conversation opened up. So let me tell you a couple of things that are going on.
Number 1, the exchanges have stabilized, as you know, and many payers are making a lot of money. Number 2 is our mix of patients on the exchanges is no higher than anything on the insurance companies. So it might be lower, actually slightly lower. So that's not an issue. So we're hearing a lot less from that segment.
On the other side, what we're and many of you might have heard yesterday that the Senate in California passed AB-two ninety, and there's a lot of confusion and we are trying to figure it out as well. What that does is basically, in California, this bill that was introduced by the unions and insurance companies, basically does some price setting that allows patients let me back into it. If you were able to get premium assistance, it would rate set to Medicare, okay? So we would not be able to get a premium. Now, that's got the assumption that the AKF and other charities could actually work in California.
And that's up for debate because the AKF is on record and other entities are on record, but the AKF is the big one, on record that they think that if they abide by AB-two ninety and what it asked to track patients and other things, that they would be violation in the OIG opinion. And so in all that complexity, the bill passed, it's got a lot of amendments and the short end of it is that we are reaffirming that the range if AB-two ninety passes and it is implemented, forget the timing because there's a couple of things going on in timing, then when it plays out, the number is at $25,000,000 to $40,000,000 range. We're also reaffirming and confirming what we told you a couple of years ago that in the very unlikely case that CPA goes away, that nationally, it would be around €100,000,000 to €250,000,000 And there's a I know it's a big range, there's a lot of decisions as to how patients would behave and how they would supplement their payment. So those are two numbers that I want to make sure we reaffirm because there's some confusion out there. As it relates to team and culture, this is probably more of an internal question than from you, but it's kind of a fun one for me, which is, hey, the secret sauce of DaVita is its people and its culture.
Are you going to do anything differently? And the short answer is, while there might be some stylistic differences between Ken and I, the reality is we're equally passionate about a differentiated workplace and about taking care of our team. And we love when we get recognized, but at the end of the day, what we love more is this. The patients are cared for by teammates that stay longer because they feel engaged. So those accolades on the front page are nice, but the reality is what we want and what you would want if you are a dialysis patient is you want continuity of care from your treatment.
On the executive order, second to last, and then we'll go to Joel. I made you wait for the numbers. I know you're like, okay, you're talking too much. I'm like, come on, let's get the story out. On the executive order, basically, it's 3 things.
They want more transplants. They want more patients to get educated at CKD. They want less patients to have ESRD. And the only way to get more transplants is basically to stimulate more organs. And so that's what the executive order is.
If you were to ask us how we feel about it, the short answer is we really like the aspiration. We're a big part of this we won't want to do it, but let me tell you a couple of details. We talked about the voluntary model, doesn't have a lot of the specifics, so we'll wait for that. And then there's the sorry, the voluntary model. And then when you get to the mandatory model, it basically says that 50% of the centers would enter, that it would have an emphasis on home and transplant, and that at the end of it, it wants it has a set target to extract money out of the system when it's all said and done.
So that's a motivational piece for those of you that are out there. You want to work a lot harder and at the end, we're going to take money out of the pool. And so our comments, of course, are we love it. We're very thankful that you're giving the spotlight because when the President speaks and HHS and CMS and others are listening and all the constituents, the health care systems listening, it's helpful to get the attention and we want the same things as you. The mechanics though, do matter.
To get a patient and a physician influence on what choice of modality, I think it's not sort of a policy decision. We want to encourage, but we don't want to interfere with what modality they pick because of a payment mechanism, but rather because it's right for that patient. We were not given any waivers. And so some of these things that I told you are so exciting on CKD, we can't actually do because it might look like we're providing something of value to a doctor. And so we need waivers do the analytics and all the exciting things that I told you about on CKD, so that we can actually catch the patient and intervene.
And then the last point there is the transplant. I mean, you saw we play a role in the system. We have to get them in there. And of course, we could impact the organ by getting more living donors. But as you all know, that is a tall order and one that we would like to work on.
But we want to make sure that the right incentives are put in so that all of those players are involved as well because it's pretty much unfair, which is a weak word, but it is unfair to just say, we're going to hold you accountable for the conduct of all these people, which you have pretty much no control over. On international, I've been 100 days on the job, and I've been very excited to meet with Robert, who's here, our International President, and to understand the clarity of the strategy of which he's come by. So we've got 10 countries, very disciplined on his approach to growth. And so he's got 4 filters. Number 1, can we matter clinically?
Can we improve the quality of care for our patients? Number 2, is there an economic model that's sustainable? Number 3, is there scale? And number 4, do we align with the management team? And is there the talent to make it all happen?
And he's maniacal at these filters. And that's why we left India, didn't meet some of these criteria, and we continue to look over the portfolio. If you were going to look at it, the most fun slide of international for me continues to be the improvement. I will say when you look at the slides carefully, it has only 4 or 5 countries on the bottom. It's not because we cherry picked them or anything like that.
It's just that there is different definitions and there's data system issues, etcetera. So these were the ones that we felt comfortable giving you with the high integrity of the number. But we did pick out countries out of there. But you can see that again, more people are living and staying out of the hospital, which is what we want to do, period, end of story. Our evolution, although in the context of life, hopefully, this is a young evolution, it has now been a decade.
So it's interesting to stare back at the decade internationally and say, how did it play out? And like any other business, the 1st 5 years, you're planting seeds and you're Jim's giving me the eye, it's not a decade. I'm like, well, it's going to be a decade by the time 2022 comes, Jim, come on. I'm living in 2022 in this presentation. We planted the seeds, then we really went into the discipline of saying where are we actually going to do those four things.
And now we're very excited about the potential to actually give you some return on your invested capital. And so on international, again, less familiar with it, excited on it, and there'll be more to come as I learn more. So that's my story. Now on to what you've been really wanting to hear, Mr. Joe Ackerman, please welcome CFO.
Thank you.
Okay. Good morning, everyone. Okay. Great. So before I dive in on the actual guidance numbers, I wanted to cover a few philosophical issues around our guidance and some changes we're making.
So first and probably the most important one, we're moving from OI as our key financial metric to earnings per share. Fundamentally, our financial philosophy going forward is one of capital efficient growth. And with that in mind, earnings per share is just a better metric. Operating income measures growth, has very little, relating to to capital in there. Earnings per share obviously will keep us accountable on capital allocation, capital deployment.
So fundamentally, EPS going forward. Moving forward, we're moving away from guiding on those things on RPE and Moving forward, we're moving away from guiding on those things on RPT, cost per treatment, etcetera. We're going to focus on margins. We believe margin is a more direct measure of our financial performance. Focusing on RPT and cost per treatment are helpful, but there's a lot about margins that are not included in RPT and cost per treatment.
That includes G and A, it includes depreciation, it includes our other businesses, including international. So we'll guide to margin going forward. We'll obviously give you all the information you need to calculate RPT cost per treatment on a in a real time quarterly basis. We'll comment on those, but we're no longer guiding to those. 3rd, we're going to take a new approach to defining free cash flow.
We've heard a lot from our investors about what they're looking for in free cash flow. I'm not going to talk about this now. I'll cover it on a subsequent slide, but we're looking for a free cash flow definition that relates more directly to what the discretionary cash we have available to invest in things outside the core business. And then finally, we are excluding the cost of valid initiatives from our guidance. Let me be clear about this and I'll use 2018 as an example.
In 2018, we reported almost $100,000,000 of costs associated with the ballot initiatives. $30,000,000 of that is what we would call ongoing advocacy costs, and we saw that roughly $30,000,000 in 2019 and we're baking that into our numbers going forward. We're not calling that out. It's effectively a cost of doing business the way we see it now. That extra $65,000,000 that we saw in 2018, which was related to specific ballot initiatives in specific states, that we are not including in our guidance, in our 2020 numbers or our 2022 numbers.
We debated long and hard. Should we give you one big number that includes everything? Or should we give you clarity on the core business, the financial and guide without that number. Okay. And then just a follow-up on the core and guide without that number.
It'll help.
There we go. Okay. So with that philosophy behind us, let me cover the 4 big themes associated with our capital efficient growth outlook. So first is on revenue. Revenue growth is slowing, but we've got a steady, predictable organic growth in the business.
2nd is margins. Margins has been the single biggest pressure on the business over the last few years. We see a much better trajectory going forward than what we've had over the last few years, and I'll talk more about that. 3rd is increasing cash flow. Whether you use the old definition or the new, our cash flow is growing both because earnings are growing going forward and because CapEx is coming down.
And then finally, earnings per share growth. You put all these three things together, you add to a disciplined capital allocation, and we think we've got a good earnings per share growth story going forward. Okay. So let me start with revenue. You can see here our guidance, dollars 11,500,000,000 to $12,500,000,000 in 2022.
Let me go through the bridges here. So first, there are one time adjustments for 2018. This includes really 2 things. 1 is subtracting out calcimimetics. The second is subtracting out DaVita Rx.
Calimimetics, we've tried to call out as a one time event. It's interesting. I often think of calcimimetics and the ballot initiatives of 2 sides of the same coin. We're trying to give clarity on the core economics and we'll call out things that are one time, that are non recurring, that aren't part of the core. Calcimimetics was a big positive that we took out of the numbers.
Ballad Rx is a big negative that we've pulled out of the numbers. And just to be clear, we've got a lot more ability to adjust our forward looking numbers than our backward looking numbers just in terms of the regulations we're under. So 2018 here includes calcimimetics. What we've backed out what we'd recommend backing out in terms of the way we think about the base line of revenue against which we should be judged is backing out the $922,000,000 that's backing out calcimimetic, backing out DaVita Rx, if you want to think about what's our growth rate going forward. What's driving the growth?
U. S. Dialysis and labs, obviously, the biggest component. Javier called out the organic growth from nag of 1.5% to 2.5%. What's left beyond that is really RPT.
And then international, international is a growing business and will continue to contribute to our growth rate going forward. So that's revenue. Now margin. So let's start with a historical look at margin. You go back 10 years and you can see our margins were growing nicely from 2,008 to 2013.
Driven by a whole bunch of things. This is a complicated business, so there are a lot of dynamics underlying these things. But I'd call out a few things. One, labor productivity improved over those 5 years. But the most important thing is that was when EPO was brought into the bundle, and it's also when the label changed on EPO.
So prescribing patterns changed and the utilization of EPO came down. And that drove a significant margin improvement from 2,008 to the peak in 2013. Now look at the next 5 years, 2013 2018. Again, 400 basis point of margin decline, clearly the biggest headwind, the biggest pressure we've seen on the financial of the business. And here you've got a 2018 number of 13.3%.
This is an adjusted number. And so what I want to call out is what it's going to look like going forward. And I'll talk about the different components in a moment. But basically, what we are guiding to is a relatively flat adjusted OI margin through 2022, 13% to 14%. So I'm going to talk about this.
I'm going to talk about it as an improvement, but I just want to make sure no one mishears me and thinks we're talking about margins improving going here. What's improving is the margin trajectory. Instead of coming down, it's flattening out. So we believe going forward, margins will flatten out and this headwind will no longer be a challenge going forward. So now let me go through the pieces of margin.
So first is revenue. Javier talked about this. It's such a big point. I thought I'd cover it again. For the 5 years from 2013 to 20 18, we got no effectively no rate increases on Medicare fee for service, the biggest component of our patient population.
It was about a $330,000,000 OI headwind. And of that 400 basis point of margin decline that I talked about, 250 basis points of that. So more than 60% of that headwind was from this one issue alone. This issue is done. The rebasing has played through.
We're now back to an environment of more typical Medicare rate increases. So this margin headwind is done. Now let me talk about costs. A lot of dynamics playing through in costs. I'm not going to call out all of them.
But if you look at the first three, the dynamic over the last 5 years and the next few years, we think are relatively similar. Wage rates are a pressure. We do not get revenue per treatment increases commensurate with our labor cost increases. So labor will always be a headwind relative to margin. The good news is we've generally been able to offset some, most or all of that through 2 components.
1 is anemia management driving down the cost of EPO and the second is G and A. We manage G and A very tightly to a relatively flat per treatment number. And those two components EPO and G and A have generally offset the wage pressure on margins. The bottom one is where we see some improvement. So depreciation started climbing roughly in around 2011 when our CapEx numbers started growing and it grew really as a result of 2 things, increased investments in information technology combined with a growing portfolio of de novo builds.
And we've seen that CapEx number continuing to grow through 2018. And as you can imagine, growing CapEx for that sustained period of time put a lot of pressure on depreciation. So depreciation over that period was growing significantly faster than revenue. And of that 400 basis points of margin pressure, about 100 points of that came from the growth depreciation. The good news is going forward, we see depreciation flattening out, not on a dollar basis, but on depreciation caused relative to margins we see going away.
That's really the result of declining CapEx, which I'll talk about more in a couple of slides. So the cost picture is a little bit better. Most of it is the same, but depreciation is improving. Finally, on International. So interestingly enough, over this period, this 2013 to 2018 period, the OI contribution of International didn't change.
It was 0 at the beginning because it was a nascent business and 0 now because we haven't yet achieved scale. That said, the revenue grew significantly to almost $500,000,000 And when you add $500,000,000 of revenue with no OI, that too puts a margin increase. The good news again, going forward with disciplined growth, with G and A leverage in economies of scale, we see international starting to contribute OI and no longer being a little bit of an anchor on our margins going forward. So that's the margin picture. Stable margins from here through 20 22, 13% to 14%.
They will bounce around a bit. It can be a bit of a noisy number. But relative to that 400 basis point decline from 2013 to 2018, we think this is really good progress. Now let me talk about capital. This is number 3 as we think less the earnings side of the equation and more about the cash flow side of the equation.
So our CapEx number, you see here in 20 18, we see it coming down. We've talked about this a fair bit. As our growth slows and the growth is disproportionately moving towards home, we see our ability to manage our CapEx down. And you can see here roughly $200,000,000 to $300,000,000 reduction in CapEx over the course of 4 years, driven largely de novos. Our maintenance CapEx number we think will be relatively stable, driven largely by Information Technology.
But the CapEx number coming down and being an important driver of the growing cash flow that I'll talk about in a minute. I will point out the orange line here is the depreciation and amortization line. You see that, as I said, it does continue to grow, but it's no longer a headwind to margins. I would note that you can see here structurally, depreciation and amortization will be higher than our CapEx number. This is CapEx without it includes growth CapEx, I'd note, but it excludes acquisition CapEx.
But that gap is a structural benefit to the business. Why going forward, there's a structural benefit to cash flow relative to earnings. So now let me talk about our free cash flow. So first about the definition. We are changing the definition of free cash flow.
I know investors are always
conscious when definitions change. So I just want
to make sure I was crystal clear to alleviate any suspicion at the start, I'd say I'd point out that to alleviate any suspicion at the start, I'd say I'd point out the fact that we are bringing our cash flow number down. We're bringing our reported number down. This is not about our forecast coming down or anything. This is just about defining a different number. Historically, we've given free cash flow effectively before the cost of de novos.
And what we've heard from investors is, we believe de novos are part of your core business. They're part of your core growth. You could call them part of the organic growth, part of nag. And as a result, we wanted to do the math for investors, give a number that we thought would be more helpful. So we're taking our old free cash flow definition, we're subtracting out development CapEx and then we're making 2 other adjustments.
There are 2 components of our historical cash flow number where we had the negative part of the ledger, but not the positive part of the ledger. So we wanted to do all the math. 1 is sale leasebacks. Most of our facilities we lease. There are some that we build from the bottom up, ground up.
We build the bricks and mortar and then we sell the bricks and mortar in a sale leaseback transaction. When we've done that historically, the cost of building the center was in our CapEx number, but the proceeds from selling the center was not in our free cash flow number. So in order to give balance to that number, we're going to add back the sale lease proceeds. This is something I've talked about for a few quarters now. And we just again, we want to make it simpler for investors.
We'll do the math. And then contributions from non controlling interest. So when we build a facility that's a joint venture facility, we absorb all of that cost in our CapEx number. The proceeds we get from our joint venture partners who have to pay their fair share of that facility, That flows through a different line. It's an offset to our CapEx number.
So for that reason, we thought we'd add it back here and get what we think is an economically rational view of what is the real free cash flow that the business is generating for us to invest outside the core to buy back shares to do whatever you want. So what I've done here is taken our 2018 definition and bridged it to the new definition. So this is all historical numbers just showing the math. Now looking forward. So this is again, this is using our new definition of free cash flow.
You can see 2018, dollars 480,000,000 a lot of growth going forward, guiding to a number of $750,000,000 to $1,000,000,000 a year. Big drivers here, one is earnings growth. As you would expect, top line growth, stable margin should lead to earnings growth. The CapEx number, I've already talked about that and a small offset largely driven by natural working capital growth in a normal business, leading to what we think is an exciting improvement in our free cash flow. So that's about cash flow generation.
Now let's talk about what we're going to do with this cash. So, part of our capital efficient growth plan is a disciplined approach to capital allocation. So on the right hand side of this slide, let me talk first about acquisitions. So what's built into these numbers is typical small tuck in acquisitions, both in the U. S.
As well as internationally. What's not in any of these any of this guidance is any large M and A. We think large M and A going forward is relatively less likely than it has been in the past. It's been a number of years since we've done a big deal. The Renal Ventures deal, I think, was announced in 2015.
And that's the last really deal of scale that we've done in the U. S. These deals are few and far between. We continue to look at them. They're getting harder and harder to do.
So there's none of that built into the business. And then in terms of adjacent verticals, this is what we've talked about before, looking for businesses outside kidney care in the U. S. I would say we continue to look here is a tough environment to get anything done. Our appetite is relatively small in terms of the size of something we would look at here measured in the 100 of 1,000,000 of dollars, certainly not in the 1,000,000,000 of dollars.
And I'd say the likelihood of us getting anything done here is it continues to be a big question mark. We haven't allocated anything forward. We haven't built anything for this in the numbers. So that's M and A. Now let me talk about the other part of disciplined capital allocation and that's the capital structure.
So in terms of leverage levels, nothing really new to announce here. We've historically guided to a range of 3 to 3.5 times and we're not updating that range. We're not changing that range. I will reiterate a willingness to go outside that range. As you can see here, there have certainly been times, including in the recent past, where we've been willing to go above that range, theoretically, I guess, as well below that range for certain circumstances.
But as a general rule of thumb, 3 to 3.5 times is the leverage range that we prefer to stay in. We're in that range right now on an adjusted basis of 3.4x, and that's adjusted for all the financing that we've done recently. So on that topic, let me update you on where we are. This is where we will land pro form a for the bank financing that has been completed. The only component of this that is not yet complete is the calling of the 5 and 7.8 bonds.
The notification is out. I believe Monday is when it all happens. There's a delayed draw on the Term Loan A to accommodate that. So I think it's fair to say this is an accurate snapshot of what we have going forward. A few things to point out.
We are we feel good about our maturity profile. We've got nothing significant coming due until 2024, probably got a little bit more due in 2024 than we'd like for a given year, but we've got plenty of time to adjust that. We've also got came away with a weighted average interest cost of about 4.5%, so a nice pickup there. It's an interesting interest rate environment. Historically, we have not taken a position on interest rates, but we have looked to either hedge or cap.
I will let you know we have refreshed our caps. So we have put in place caps through mid-twenty 24 on $3,500,000,000 of our floating rate debt at LIBOR at a LIBOR of 2%. So we're actually capped below current LIBOR. But with the anticipation of LIBOR coming down, we thought it was prudent to cap at a lower number. With that, on capital allocation, as you can see here on the left hand side, we've leaned in on share repurchases.
It's been the predominant use of capital over the last few years. Going forward, we don't see anything changing here philosophically. We will continue to optimize our capital structure. We will continue to invest in growth when we see the opportunities, and we will continue to return capital to shareholders through share buybacks. We are price sensitive.
We've talked about that before. We use intrinsic value as our guidepost, but we don't see anything different about this going forward than what we've seen in the past. Finally, you put this all together and you wind up with earnings per share. Let me start by saying, we are reaffirming our 2019 guidance around OI, nothing new to report there relative to what we commented on, on the Q2 call. We are providing guidance here on 20 20.
We've thought of guidance for this day as really about long term guidance. We're here to talk about the long term strategy. We did want to be helpful on certain 2020 items, although it's early in the year for us typically to guide on 2020 just to help everyone out. We did Javier did talk about RPT growth for 2020. I gave a CapEx number.
And here, we're giving an adjusted earnings per share initiative. Same on 2022, introducing our long term EPS guidance, also excludes earnings also excludes anything related to the ballot initiatives. I will point out one thing about our earnings per share. 2018 2019, there is a lot going on in those numbers in terms of buybacks, calcimimetics, DMG and everything else. So if you're thinking about what is an earnings per share growth number look like going forward, we think the 2020 and the 2022 numbers we presented here are apples to apples.
And you can use those as a basis for thinking about what EPS growth looks like going forward. So with that, let me hand it back to Javier to close and then Q and A.
Thank you, Joel. I want to get to your questions, but I always wonder if you go back to your partners back in your office and say, what do they say at Capital Markets, what's the executive summary? The executive summary is that all of our modalities are tightly, tightly linked and that the platform is well positioned to perform wherever the patients and the physicians and the payers need us. And that will render some capital efficiency and some earnings per share growth. And with that, I'm going to stop, and I'm going to open it up for Q and A.
And just before that, let me introduce a couple of people here. We will have Robert Lang, our President of International. We our Chief Operating Officer, Mike Sperry Leanne Zomalt, I have a policy and Kathleen Waters, our General Counsel. And I'll have Joel join me up on stage and take some questions. Yes, sir.
Value and how you calculate it?
Sure. So it's a tough number to calculate it and come at it in many ways, discounted cash flows, comparables, etcetera, etcetera. And we think of it generally as a range. It's something we update quarterly. And the way we think about intrinsic value is if we're buying stock back below intrinsic value, we're creating value for long term shareholders.
If we're in that range, we're neither creating value nor destroying value, but we are allocating capital efficiently above the range. It's a challenge. Buying back stock above your intrinsic value, net net hurts your long term shareholders.
Good morning. Peter Chipper in Glitch Bank. The commercial environment
has been pretty volatile over the
last couple of years due to a variety of factors. Embedded within your guidance, what are you guys assuming that the overall merchant book of business is inflating per year for TRUVAN?
I think the guidance we gave took into account all of those ups and downs and variables that we described with the private mix, etcetera, at 0% to 1%. And so that's not commercial, but that's the whole book. I think that's sort of the healthy way to think about it. I don't know if you want to add anything to that, Joe?
Yes. I'd just call out, we are trying to move away from guiding on some of these more narrow inputs and really thinking about what are the financial outcomes that matter to investors. And that's why we're leaning in on margins over any individual input. And just to go into in a little bit more detail, the inputs are often linked. So it's hard to guide to one without guiding to the other.
Commercial rates are tied to what our cost increases are, for example. 2nd, if you put a range on 1 and then you put a range on another and then you put a range on a third, As those ranges accumulate, you wind up with such a large range on the number that shareholders ultimately care about like margin that it's not helpful. So we thought, let's put that all together, guide to that ultimate outcome in a narrower range to give the investors what they need.
Anthony Magdhesi, JP Morgan. Just wanted one quick clarification on my question. The 2020 guidance, you talked about excluding the financial impact of the advocacy costs and ballot initiatives. Does that also exclude a potential impact of AB290, kind of like it was the quarter to clarify?
So no, that includes the impact of AB-two ninety. And let me cover this again because I know it can get confusing. And so let me define the language. We think of advocacy costs as this ongoing cost, this $30,000,000 that I called out or the $30,000,000 we called out in 2018, it's not necessarily $30,000,000 every year. But that's an ongoing cost.
It's built into the numbers and it's built into 2020 numbers and the 2022 numbers. So that's what we refer to as advocacy costs. That's in there. The ballot initiatives, that bolus of costs that creates the ups and downs, partly because those numbers can get bigger and larger, partly because they're every other year. If we included the ballot numbers in there, the odd years would look very different than the even years.
So AB-two ninety is in there. The ongoing advocacy cost is in there. The specific ballot initiative cost is
not. Great. And then on the 2020 guidance as well, can you guys sense of the MA penetration you're assuming in that guidance? Thanks.
Yes. So again, we're not going to guide to any of the typical any of the specific inputs there. That said, look, MA has been growing at a relatively steady rate. The inflection will come when Choices Act comes into effect in 2021. I don't think you should expect anything radically different in 2020 on the growth of MA penetration.
Another thing that I'd add on the ballot cost is when you go to do it, it's nearly impossible because it assumes
that the language what is the language? Is it clear or not? Are you fighting having to explain it or not? Is it a big state or a little state? The price of media, blah, blah, blah.
So then all of a sudden you end up with ranges that aren't useful. So that's why it was good to call it out.
Thanks. Question here on 2020. So you gave EPS number, which was really helpful. Just there's so many moving parts. I know your interest expense is coming that is changing, your share count is changing, calcimimetics.
So maybe you can answer some of this. Like calcimimetics, do you have zero contribution in there for calcimimetics since 2020?
Effectively, yes. And the reason I say effectively rather than unequivocally, yes, calcimimetic is going to bounce around a bit. It could become depending on where it comes in relative to ASP and what happens to the cost. It could be a little bit of a headwind. It could be a little bit of a tailwind.
But our expectation is relatively soon, we'll get through this big positive bolus of calcimimetics and then we're just going to sweep it into the numbers like anything else. It will no longer be material or worth calling out. And that's the way we're thinking about 2020 right now is it's going to be a small number, could be a little positive, could be a little negative, but that's built into our range.
Okay. And then ex all these moving parts, we're backing into numbers that look like even ex calcimimetics, operating income might be down year over year. Can you give us any color on what you expect OI to do ex calcimimetics year over year just so we can get kind of a starting point for next year?
So we had a poll going. How long it would take Justin to do the back of the envelope math with us? I don't know what the over under was, but we're not giving guidance on 2020. We want to be helpful with EPS. We don't want to get dragged into a conversation about OI.
It's too early in the year. So, there are a lot of ranges in there. There are a lot of assumptions in there. So, we're not giving guidance on 2020 OI.
All right. If I could just squeeze in one more. The it was really helpful that you gave the added network revenue number, you know, I guess, 6%, right, the opposite of, you know, 94%. But, you know, you keep talking about outlier rates rather than just out of network rates, so is there any way you can help us understand how big that outlier rate percentage is as a percentage of total commercial revenue?
We figured that you'd want that and of course it's an interesting number, but we also wonder if it's going to actually bring pressure on the number. So we decided that not to give the number. And if you stem it and you say, we just don't call it out of network, but we just call it sort of an outlier. And the reason that is, is because sometimes you can have a contract with the lease network or you can have an unusual situation. And so there's just higher rates, but it could be contracted or non contracted.
But we're not going to talk about
the number.
Matthew Gillmor with Baird. One clarification on the advocacy costs. I think last call you called out the headwinds for 2020 from calcimimetics and efficacy. I know on an adjusted basis,
it's $65,000,000 on efficacy
that you're not going
to
impressive? So we had $65,000,000 in 2018. 2019, that didn't exist. For 2020, that's the type of that's the bucket of costs that we're excluding correct. Whether $65,000,000 look, 2018 was a very unique circumstance.
It was one state. It was a big state. It was tough language. We spent $65,000,000 What that number will look like in 2020 is hard to predict. We don't know how many states it will be in.
We don't know the size of those states. We don't know what the language will look like. But that $65,000,000 is the right bucket. What the right number is, hard to tell.
Fair enough. I was hoping you could spend a couple of minutes talking about the economics for a home patient. And my sense was they kind of be sort of in terms of OI opportunity higher at the beginning and then it's going
to diminish over time. But
Sure. So for a home patient during their journey, it's actually the opposite. Home patients are lower OI upfront because they have a big bolus of training. So home patients over their lifetime have a lower labor cost than an in center patient, but that labor cost is highly concentrated upfront and it's focused with an RN rather than a PCT, so the wage rate is significantly higher. Over their life, a home PD patient is better margin than an in center patient because labor costs are lower, supply costs are higher, but the net net is it's a better margin.
We didn't call it out in the margin slide because while it does while it is margin accretive over time, home penetration is growing over a very long period of time. And in this 3 year window, it isn't of a magnitude of some of the other things I called out.
Steve Denal, Goldman Sachs. I guess, I just wanted to understand on the executive order, the proposal rule I was drafted, if that were to go through, can you give us a sort of sense of what you'd expect sort of the all in impact? Obviously, there's the performance payment adjustments and maybe at the lower and the upper end the band or any sort of clarity around that?
I think the math that they said is that over time, they on the they would take out $25,000,000 So if you just say you get your share of it, it's going to be roughly, whatever, dollars 10,000,000 headwind. I think at the beginning of the program, it's incremental
Yes, it would be positive 5 to 10% in the 1st year just because of the payment increase. The next year as the bands kick in, that would offset that. After year 2, we really don't have visibility in terms of how the rates how they adjust those bands going forward. So small, small tailwind in year 1, nothing in year 2 going forward, hard to tell. And again, that's all assuming it gets implemented as it is.
There's just a lot of commentary going on about the bill. So I'm not sure that's a fair assumption.
I appreciate that. And I guess where I was getting at those, is there incremental cost to execute that program? I mean, is there more things you would do? Or you would say that's de minimis and we should just at the total that CMS estimated?
We're doing a lot of the things that are on there. But if you start to see on transplants, would we need to invest in different technology and interconnection with the transplant centers, things like that? We have not built anything major into it until we see how it plays out. And we did not see anything that was apparent that you needed to change from your strategy perspective.
Got it. And then just thinking about 2021 and the changes on IMA, are you guys considering sort of moving to more capitated payments or even global cap, maybe more interesting in that regard? And how would you think about your experience with DMG relative to that opportunity? Are there sort of lessons that can be applied whether with respect to contract there or otherwise?
So a couple of things. We are already picking up a lot of different arrangements with our MA partners. And so we have a lot of experience in it. Yes, DMG did help us, but the reality is with our special need plans and some of the other vehicles that we've had, we have plenty of experience in this narrow population. What's a lot harder in DMGs, of course, they do every single disease state.
And so we do one thing and we know it pretty well.
This growth, about $100,000,000 to $300,000,000 between 2018 to 2022. So more understood comments, what do you think is the revenue the margin for the international revenue? Is that how does that compare with the 13%, 14% overall? And 2, I also see that you might file the entire China in blue. So I want to ask you what is the growth strategy in China and how do you think the different regulation system and different medical payment system work How can WIDA grow in China?
So the margin international is much lower. We're not yet at scale and we're carrying an overhead that isn't justified by the size of the business today. So as we grow, we think the margins will continue to improve, but today they are below the U. S. Margins.
In terms of China, we have a couple of joint ventures there. Looking forward, we're paying a very careful eye to China. The dialysis dynamic there today is largely one where dialysis is done in hospital. With an evolving dynamic. There are a number of forces in play that are trying to push it to a more of an outpatient business the way we have in the U.
S. How that plays out remains to be seen, and we're keeping a careful eye on it and thinking about what's the best way to approach that evolving dynamic.
Hi, thanks. It's Josh from Nephron Research. Question about 2021 and as we transition into the expansion on the Medicare Advantage side, I'm curious as you think about patient advocacy, how do you think about different scenarios for the patient? I'm thinking which patients would be better off theoretically in an MA plan versus staying in the traditional fever service? And are there arrangements that you're talking with for plans today that you think are going to make that sort of transition more attractive to individual patients?
So on this one, it is very patient specific. So it's not a place of advocacy, but rather a place of curiosity and education as to what's going on in your life. And so if you look at an MA, what can be attractive is that you could have some positive economics and it's got caps and out of pocket and other dynamics, but it also could be restrictive. And if you are a patient with all this care, you might not want to be restricted in your network. Number 2 is if you have your family, well, this is why you say commercial.
If you have your family, you'd want to stay on coverage. So we're not going to go at it with, let's call it, a campaign of any sort, but rather from a place of, hey, you've got this new choice, here are the pros and cons, understand it and make a selection that works for you. Yes.
Yes. It's Jeff Gates from Gates Capital. Two questions. First, I think your EPS guide between 20% 22 year implies 13% plus at the midpoint sort of EPS growth. And I think that you made a statement that that's what you thought would be the long term growth.
And so I just wanted to clarify that I'm thinking of that correctly. And it appears as if maybe half or so or more of it would be from share repurchase. That's the first question. Second question is, one of your competitors went private, I think it was last year, U. S.
Renal Care, with less scale and less commercial mix, yet the margins appear to be higher than yours. And I'm just wondering how that can happen. So let me grab
the second one. You grabbed the first one. As it relates to U. S. Renal, I don't know the specifics as to why their margins would be higher.
What I can tell you is that, that unmatched platform has resources that are built for the future. And so we've invested a lot in our IT and our analytics and other things that we don't know what their portfolio looks like. In addition, if you were to ask them their contracted versus non con, the sustainability of their rates, I don't know any of that. So in this business, what we've seen is that there's always been times where people think that this had a network or high rate strategy can work, but over time, it doesn't play out. So you could have a better margin.
And then the question is, is that what's right for that company? And can it grow? And can it have the type of resources slash platform that we have. And so I don't know enough of the specifics and I can look at it.
On your first question, your math is right on the EPS growth between 2020 percent is our guidance for 2022 and going forward, but we do feel like there's a healthy EPS growth in the business. 2nd, on the balance between OI and share buybacks as the driver OI growth and share buybacks as the driver of EPS. They're both in there. There are many different ways to get to the EPS growth in that range. There are many scenarios.
There are some offsetting components of it. More industry growth leads to more ROI growth leads to less cash lower or higher CapEx because of more de novos that could get you there in one path. You could get there in other very different paths. But absolutely, there's I think part of the message we wanted people to come away with is there is revenue growth and there is OI growth in the business. This is not a story of just capital deployment for share buybacks.
Just a quick follow-up on your revenue per treatment growth. You gave 0 to 1% for next year. But looking out to 2021, 2022, what's kind of built in to that revenue guidance that you've given us? How should we think about RPK?
So you should think about us wanting to getting away from guiding on RPT. That would be the first thing. And we gave 2020 to try and be helpful and to bridge what we know is a change in our way of guiding on it. In terms of without giving you a number, I think going forward, I would look at, 1, the change in Medicare fee for service relative to the last 5 years is a positive. Some of Javier's comments about the dynamics within the commercial space around outliers and ACA and others.
And then I'd add on MA to say we're not guiding to RPT, but it's probably safe to say relative to the last 5 years, it feels like the tailwinds are better than the headwinds had been.
So maybe another way to come at this is, is it possible for you to keep margins flat as you talked about in that guide if RPT stays at 0 to 1 or does it have to improve in those back couple of years just given what your costs are
going? Yes. So look, I think history is an interesting guide here. If you look at the last 10 years, our RPT number was in the 30 to 40 basis point range growth on an annual basis, and that's over a very long period of time. We got there in very different ways over the last 10 years.
Sometimes it was about mix, sometimes it was about commercial rate, other times it was about Medicare. So there are many different ways to get there. But we were able to do a very nice job with margins, with RPT in that 0% to 1% range historically.
Okay. And then just on your CapEx number declining materially, I think that's helpful and appreciated. Can you give us kind of your thoughts on how what that means for new centers in terms of today versus 3 years from now? And then can you talk about home penetration and where that number gets to within that CapEx guidance? Sure.
So in terms of
the number of centers, we've historically given a number that's basically our in center centers, the $2 plus 1,000,000 centers. Going forward, that number is going to drop dramatically. I would guess our number in 2022 would be somewhere in the 30% to 40% -ish range, maybe a little bit higher than that. What's added to that though is a lot of standalone home centers. And remember, as Javier said, home is not about a nurse going to a patient's home.
Home is about a patient get it doing self care in their home and then coming to a facility every other week or so to get labs drawn and see their medical provider. So to facilitate a robust and growing home plan, which we have, we're going to build more and more standalone home centers. And those aren't they're nowhere near the $2,000,000 They're less than half the cost of that, but there is still some CapEx associated with that.
How many of those should we expect you to have kind of by now?
Hard to tell. And it's hard to tell because you can build them as standalone. It's more efficient to build them associated with an existing clinic. You need to put them in the right spot. So, it's hard to know.
I'll tell you, our total clinic build won't get anywhere near to our 2018 clinic build, even if you include the home centers as well. So it'll be a lower number and a lower cost per clinic, which is what's getting you there.
Whit Mayo with UBS. You've disclosed that you have now about 4,000 lives at risk in various special need programs. I'm curious if you could elaborate a little bit more on the experience that you've had with these health plans, what the risk arrangements look like and where do you think that 4,000 will be in 2, 3, 4, 5 years?
Sure. Our experience has been excellent. Unfortunately, one of the hardest things to do is to scale it and to get patients to sign up. There's all kinds of restrictions on how to sign up the patient. And so we don't expect the number to grow.
So the vehicle has got some restrictions and it's got some limitations on growth. And that's the biggest challenge that we have. Because if you like it so much, why wouldn't we take it nationally? And the reality is we just can't. And so we continue to learn on the CARE model and on the reimbursement model, etcetera, so we could mimic some of those models with MA plans and other places.
But the actual SNPs itself, we actually compressed our special needs plans this year, and we closed a couple because of scale issue.
That's helpful. And back on just the CapEx priorities, are there any other areas that you're emphasizing or deemphasizing going forward as you think about your future guidance? And I guess what I'm specifically referencing is maybe some of the commitments on IT. I know there's been a big emphasis there historically and how you're rethinking those investments.
I mean, obviously, we need to innovate. We need to be cutting edge. We need to be connecting all those platforms that we discussed. And so that's reflected in that number. If there's some major change, we would come back to you.
But we spent a lot of time on the IT piece and hoping that we've got enough fuel to get our programs to lead the way.
Peter,
it's a great question.
So I get that you guys don't
want to guide to MA penetration and sort of think about that growth going forward. So instead, if I think about your current book of business with your MA patients, what percent of your current MA patients today churn the drop in to be for service? As your social workers talk patients that have MA today, what's the cost delta for those patients today from keeping MA, which is dropping into pay for service?
I don't know the answer to the first question, which is how many of our MA dropped to Medicare? Does anyone in here know that? So we'd have to get back on that. And what's the second part of your question, sorry?
So looking at the as your social workers work with those patients each year, look at which options are best for them. And as you compare MA today versus fee for service, what is the savings delta for those typical patients today maintaining their Medicare Advantage versus dropping into future service with Medigap?
The savings to the system, what was the numbers?
Are you asking the
cost to the patient is in MA? I don't
know that. Do you know? We don't know that. So we'll get back
to you. Okay. And then
dropping into the international business, looking at 2022 guidance, what margin profile are you guys assuming within the international business?
So we're not guiding to an individual number for international. It's built into the overall EPS number. I'm comfortable saying we see the margins continuing to grow. We see we're excited about the balance of both organic as well as acquisition growth. Margins are not going to get to double digits in this time frame, but they'll continue to grow from roughly 0 they're at now, so 0% to 10% margin.
Hi. Maggie Zhang again from Bank of China. Are there any alternative treatment to dialysis or gene therapy or other potential breakthrough in terms of the kidney disease that potentially can be an impact for the future revenue growth?
There's nothing in the foreseeable future to replace renal replacement therapy. The best thing is transplant, and that's why the administration is focused on it. Obviously, there's research and there's a lot of entities that have been trying it for a long time, but the kidney is quite sensitive. And so there's been nothing that has actually worked. From my understanding on the research and of course some of this is done confidentially is that there's nothing in the foreseeable future as 0 to 10 years that would replace the therapy.
And of course, things change quickly. Yes.
Keith Finau, Goldman just following up as well. So it was helpful to hear anemia management on EPOGEN sort of helped you guys deal with RPT where it was for some years there. I guess sort of pursuant to that, what would have to happen for EPOGEN pricing for you guys to come down more? Did you need more new entrants? Is it pretty stable where it is?
What are the sort of the triggers that you could tell us, obviously, within the confines of the contract?
Obviously, as you know, the history for a long time, there was no choice. Now there's choice. So that helped. Secondly, we entered a long term contract because we wanted to secure that. And then lastly, there's the advent of of HIF.
And so we don't know if they're going to be introduced to the market and if so, what they will do to the pricing. But in general, now the ESA market is competitive. And so when you have ability to negotiate and the power that we have and the size that we have, it's useful.
There's one biosimilar in the market, as we know, and there's maybe another 1 or 2 coming. Like would there have to be more basically to get another market check? Is that the right way to think about how this will work?
I don't think more, but it's you have to have obviously a renewal. And so that's the best way to think about it.
All right. That's helpful. And then I guess I was just surprised to sort of hear you guys say that you expect the risk lives to be flat in the outlook with MA lives. Is that not considering what you might do with MA plans? Or maybe said another way, are you seeing appetite from incumbents in Medicare Advantage to do global cap for ESRD patients?
Is that part of the narrative discussions right now?
Yes.
It is?
Yes. Okay. Absolutely. Okay. Great.
And maybe just last one for me. I just want to clarify because it sounds like one of the messages today is to sort of downplay the idea that you might acquire something post the sale of DMG and maybe reemphasize more opportunistic buybacks on a go forward basis kind of beyond the tender. Is that fair or is that not a fair way to characterize what I feel like I'm hearing?
Want to comment on that? Sure.
So, look, are you referring to things outside of kidney care in the U. S? Is that sort
of above, right? Like relative to the discussion through DMG, through the close, it sounded like there might have been some tuck in deals or maybe some bigger deals. And now it really doesn't sound like that's on the table.
So look, on the tuck in side in Kidney Care, we continue to do those. As our presence grows, they get harder and harder. There's just no doubt about that. In terms of stuff outside kidney care, I would say it is fair to say that our enthusiasm for that has waned a bit. And part of that is as we went out looking for things where we could add value, it was hard to find stuff where we felt like we legitimately had a right to win if we own that business.
And second, valuations are tough. It is a tough environment out there. You all know what Private Equity is paying for things, and we've committed to be disciplined it. And for that reason, our interest in the concept remains. Our ability to execute on it, I think, has come down a bit.
And if I were to expand on that, our lens has basically gone from here to this. When you do integrated care, so if you were to say what's the hub of everything we have is people that suffer from end stage renal disease, right? Then you said, no, let's change that and say people that have CKD. And then you say, well, they have a lot of things going on. And if you're going to be the hub, you could do a lot of different things.
So that does actually focus you and excite you about the platform that you have as opposed to saying I need to leave kidney and go do something else.
Thank you.
Yes. Hello. I am Luis Hernandez. Thanks for taking the question. First one is simple one.
Will you continue to provide the maintenance CapEx number? Yes. All right. Second one, Javier, you mentioned a little bit about it, but you could provide more color on it. How relevant is the integrated care growth opportunity in relation with the current size of the VIDA right now?
Well, right now in the numbers that you're given, basically, we did the normal organic deals that we're talking about. But in Integrated Care, we did not put the sort of big ones, the Patients Act, etcetera, because that would just change the P and L in such a way that it wouldn't be useful. It would mess with all the ranges. So we've excluded any big transformational change, and we left all the things that we're doing with the payers now.
Right. But you're saying it would be transformation?
Well, if the Patients Act goes through, basically, depending on the size of it, right, because they haven't decided the size if it goes through, it could be incredibly exciting. Again, I try to size it and you say 300,000 patients in Medicare and it gets big right away because there's $60,000 of non dialysis costs that we would have to be managing. And so it goes back to that sort of circle where they have all these things going on. And so yes, it would be transformational.
And the final one is just an assurance. If the price of the stock was to trade in the lower end of the intrinsic value, would you just let the cash accumulate? Or would you continue to repurchase even if obviously lower amount, but would you would rather let the cash accumulate if you're trading at that lower end?
Right. So we're always evaluating share buybacks versus the other potential uses of capital, whether it's acquisitions, other investments in growth, repaying debt. Philosophically, we're not averse to buying back stock at our intrinsic value. If that's the best use of capital, we will absolutely do that.
But if it was above, you just let it sit on the bank, right?
Flynn:] There are other options to letting it sit in the bank. You could pay down debt. I guess theoretically you could do a dividend, not something on our radar, but it's a theoretical possibility.
Just another question on 2020. Can you from this distance, can you give us any headwinds, tailwinds that we need to know about in terms of thinking about that $5 to $5.50 range?
Sure. So look, the big headwinds are calcimimetics and the ballot initiatives. And the ballot initiatives aren't in our guidance, but don't mistake that for thinking we think they're not going to happen. We think there's a reasonable shot that they will happen and they'll cost a lot of money. So those are the 2 clear headwinds.
In terms of everything else, you go down the list, we've talked about NAG, we've talked about RPT, everything else, there's nothing that I would point out on the cost side or any of the various metrics that I would highlight as a particular headwind or tailwind going into 2020 other than all those things.
Okay. Is there any thought to kind of reporting an adjusted EPS number ex the ballot initiatives? Or is that going to be kind of put into one single reported EPS number?
So what we'll commit to is doing what we did with calcimimetic is giving clarity on what's in there or what isn't. I think we actually learned some good lessons through 2018 and through 2019 on how to give as much clarity as we can. We are constrained in terms of how we report historical numbers. There are things we're allowed to adjust for and there are things we're not allowed to adjust for. So unfortunately, sometimes we have to give you the components and let you do the math.
But we'll try to be as helpful as we can with all the underlying components.
Okay. Well, thank you so much for your interest in our company. We continue to look forward to work hard for you and we will see you quarter after quarter. Be well.