Jim Gustafson - DaVita, Inc. Kent J. Thiry - DaVita, Inc. Javier J. Rodriguez - DaVita, Inc. Vijay Kotte - DaVita, Inc. James K. Hilger - DaVita, Inc. LeAnne M. Zumwalt - DaVita, Inc..

Kevin Mark Fischbeck - Bank of America Merrill Lynch Tejus Ujjani - Goldman Sachs & Co. Justin Lake - Wolfe Research LLC Gary Lieberman - Wells Fargo Securities LLC Gary P. Taylor - JPMorgan Securities LLC Whit Mayo - Robert W. Baird & Co., Inc. Margaret M. Kaczor - William Blair & Co. LLC.

Welcome and thank you, for standing by. At this time, all participants will be on listen-only mode until the question-and-answer session of today's conference. I would like to turn the call over to your host, Mr. Jim Gustafson. You may begin..

Thank you, Daisy, and welcome, everyone, for our fourth quarter conference call. I appreciate your continued interest in our company. I'm Jim Gustafson, Vice President of Investor Relations.

With me today are Kent Thiry, our CEO; Javier Rodriguez, the CEO of DaVita Kidney Care; Vijay Kotte, Chief Financial Officer of DaVita Medical Group; Jim Hilger, our Chief Accounting Officer and Interim CFO; and LeAnne Zumwalt, Group Vice President. I'd like to start with our forward-looking disclosure statements.

During this call, we will make forward-looking statements within the meaning of the Federal Securities Laws. All of these statements are subject to known and unknown risks and uncertainties that could cause the actual results to differ materially from those described in the forward-looking statements.

For further details concerning these risks and uncertainties, please refer to our SEC filings included in our most recent Annual Report on Form 10-K and Quarterly Report on Form 10-Q.

Our forward-looking statements are based upon information currently available to us and we do not intend and undertake no duty to update these statements for any reason. Additionally, we'd like to remind you that during this call, we will discuss some non-GAAP financial measures.

Reconciliation of these non-GAAP measures to the most comparable GAAP financial measures is included in our Form 8-K submitted to the SEC and available on our website. I will now turn the call over to Kent Thiry, our Chief Executive Officer..

Okay. Thank you, Jim, and thanks, everyone for joining our call. We will start as we always do with our clinical performance. We are first and foremost a clinical enterprise. Within the DaVita Medical Group, we had great news on our star ratings most of you are familiar with that.

If you think about it, we have six main markets and there are nine key star measures, so a total of 54 cells in that grid, and 31 of those 54 cells, we have a five-star rating, that's 57%, and 47 of the 54 categories are either a four or a five, 87%.

Those are our best results ever and we doubt that any other multimarket set of medical groups can match them. So, very proud of that. Within Kidney Care, CMS recently released the results of the ESRD quality incentive program, which is called QIP, we significantly outperform the industry for the fourth year in a row.

Our penalty percentage was about 50% less than the rest of the industry, so a very large difference. And we, as always, remain big supporters of the transparency in both the quality incentive program and the five-star programs in both DaVita Kidney Care and DaVita Medical Group. Now, I will turn it over to Javier Rodriguez to discuss Kidney Care..

Thank you, Kent, and good afternoon. I'm going to jump right in, because I have a lot to cover. Our adjusted operating income was $423 million for the quarter on relatively flat U.S.

dialysis revenue and patient care costs per treatment, resulting in an adjusted operating income of $1.715 billion for 2016, which is near the midpoint of the adjusted guidance we provided last quarter of $1.695 billion to $1.725 billion.

Now, I'm going to shift to provide some details on our 2017 Kidney Care adjusted operating income guidance of $1.525 billion to $1.625 billion, which we first provided in January. I'm going to cover four headwinds and two tailwinds in depth. Let's start with the headwinds.

First, the early results from open enrollment indicate that the number of dialysis patients covered in ACA plans for 2017 will be down significantly year-over-year, consistent with what we have previously disclosed.

This decline appears to be driven by changes in plan design, loss of plan choices in certain markets and disruption generally in the market, including the impact of the interim final rule. As you know, the federal court issued an injunction, which prevented the rule from being enacted, concluding that the rule was arbitrary and capricious.

In fact, the judge found material fault with both the process and content with the IFR, indicating that significant harm would be done to thousands of patients if the rule had been implemented.

While this was a big victory for dialysis patients, in general, we still estimate that the earning impact from the overall loss of enrollment will be consistent with what we had previously disclosed at approximately $230 million.

On to the second headwind, like other healthcare providers, we've been experiencing wage inflation and turnover that is higher than our historical rates. Clinical teammates costs represent our largest expense. So even a small change in these costs are impactful.

Third as Kent mentioned earlier this year, our guidance range incorporates known and forecasted rate decreases. To try and be helpful. I'll ask and answer questions that I would have if I was in your roles. First, has something structurally changed in our core business? The answer is, no.

Are there more contracts than usual up for renewal this year? The answer is, no. Has leverage with payers changed? The answer is, no. They have always been formidable negotiators.

Well, then if all this is true, why are you experiencing rate reductions? The answer is that the political dynamics and the intensity of the conversation surrounding charitable premium assistance increased the scrutiny on ESRD rates.

And in a subset of our situations, we felt that it was appropriate to respond when the rates were unusually high in exchange for long-term sustainable agreements. The last question I'll ask myself on this topic is, how should we think about the future? Unfortunately, I can't provide much help here.

It's hard to speculate in timeframes beyond 2017, and, as has been the case for the past decade, we remain focused on negotiating agreements at long-term sustainable rates and attractive terms.

The last headwind I will discuss is that we expect significant decreases in operational income in our pharmacy business in 2017, as a result of several factors impacting rates, volume and cost. Now, let's shift on to the tailwinds. The first, as we disclosed in January, we signed a new supply agreement with Amgen.

We entered into a six-year deal that provides for substantial savings starting in 2017, however, the specific terms including pricing are confidential. Secondly, historically, we have had a profit share program in lieu of a traditional 401(k) match, and we're now switching to a 401(k) match effective in 2018.

The net effect of this change is a one-time expense pick-up in 2017 of approximately $100 million just due to the timing of the accruals. Please keep in mind that this will create an additional expense when comparing 2018 to 2017, because we will begin to accrue for a 401(k) match in 2018.

The aggregation of this is unfortunately – the net results of all these factors is that year-over-year we will have a decline of adjusted operating income of approximately $140 million at the midpoint of our guidance. This guidance includes the majority of probabilistic outcomes, but there are scenarios where we could be higher and lower.

Please note that we do not expect the operational income to be distributed evenly throughout the year due to several reasons, two of which are normal season factors, so for example, there are two fear treatment days in the first quarter compared to Q4, and one fear treatment day compared to Q1 of 2016.

And secondly, there are seasonally higher payroll taxes in Q1. As for the outlook, Kent will discuss this in his closing comments. So, now, I'll hand it over to Vijay Kotte to discuss DMG..

Number one, core infrastructure such as a new enterprise data warehouse.

Number two, innovative new capabilities as we continue to build a differentiated medical group, including the development of telemedicine capabilities, which will allow us to engage patients face-to-face outside the walls of our clinics or check-in between office visits as well as mobile shot technology that will provide our clinicians safe, remote, critical patient data regardless of where they are.

And then number three, expansion of existing population health capabilities into new markets, as we shift from fee-for-service to value. As you can see, staying flat in operating income masked some pretty strong operating performance improvement as we overcome these headwinds.

Finally, as we look towards our long-term operating income, our 2019 target remained $215 million. Now, to Jim Hilger for some financial details on the quarter..

Thanks, Vijay. I'll first address our international operations. Adjusted international operating income was $2 million in the quarter, and adjusted international operating losses were $27 million for the full-year. Q4 international equity earnings from our APAC JV benefited from a $7 million currency gain within the JV.

However, this gain was largely offset by a $6 million currency loss reported in other income, which is reported below operating income. These results are better than our guidance of approximately $40 million in adjusted international losses in 2016. We expect international operating losses to be approximately $20 million in 2017. Now, on to cash flow.

In 2016, we generated strong operating cash flow of $1.96 billion, positively impacted by the timing of certain working capital items that will likely reverse in 2017. Our operating cash flow guidance for 2017 is $1.75 billion to $1.95 billion.

2017 cash flow should be unusually high relative to adjusted operating income, primarily due to the net cash proceeds from the government payer settlement that we expect to receive in the first quarter. Next, during the fourth quarter, we repurchased 6.7 million shares of our stock for $416 million.

And for all of 2016, we deployed $1.1 billion to repurchase more than 16.6 million shares of our stock, which represents approximately 8% of our outstanding share count over the past year. Now, a few tax items of note. The lower effective tax rate in the quarter was due to lower realized day tax rates and related true-ups.

Our expected full-year tax rate attributable to DaVita in 2017 will be in the range of 39.5% to 40.5%, excluding any non-GAAP items. And please note that DaVita like many other U.S.-centric healthcare service providers pays among the highest tax rates in corporate America. Now, over to Kent for a few closing comments..

I'd like to finish with just a few words on each of our businesses. In Kidney Care, we are in a period of greater policy uncertainties, and is the norm, if you look back over the last 10 years or so, not unique, but more than the norm.

And so, while we expect a continuation of the positive operating performances we have had for several years, given the policy uncertainty, we could in fact do better or worse than the outlook that we've discussed today and earlier this year.

The big and obvious reasons are all the uncertainties surrounding what the new administration and the new Congress will do with respect to the Affordable Care Act.

In addition, we do know that despite the immensely favorable Federal Court ruling on the IFR, nonetheless the debate over what will happen with charitable premium assistance, not just in Kidney Care, but in all spheres of American healthcare.

In addition to the debates about benefit, design, and benefit implementation, we'll continue to play out over the next couple of years as much as all of us would love clarity to emerge sooner.

And it is worthwhile to note that there are also upsides embedded in this uncertainty with respect to issues like MSP, Medicare secondary provision, accelerating our patients' right to choose MA plans, the patient act enabling us to do global capitation in centers throughout the country et cetera.

And as we often point to the Kidney Care platform in the United States remains very strong.

The international business segment, we continue to grow at a good clip and progress towards reasonable scale and we continue to expect that we will breakeven in 2018 in international dialysis for our current footprint of countries, hopefully a platform emerging with a lot of downstream growth potential.

And then lastly, the DaVita Medical Group, DMG, which has proven to be a remarkably resilient platform with capabilities improving each and every quarter at this point. You probably noted that without the non-cash amortization there would have been a nice uptick in our thoughts around the operating income trajectory.

And in addition, there is growing MA support, Medicare Advantage support, in the administration and in Congress and we hope that translates into a better rate environment in the next few years than the very, very, very difficult one we've had the last few years.

And lastly, at the enterprise level, we'll make the typical obvious, but nonetheless worth noting point that our cash flows are strong, steady and hopefully we've demonstrated reasonable thoughtfulness in how we've deployed that wonderful shareholder asset and we'll continue to do so.

Operator, could we please open the line for Q&A?.

Thank you. We will now begin the question-and-answer session. One moment for our incoming questions. Our first question comes from Kevin Fischbeck [Bank of America Merrill Lynch]. Your line is open..

Okay. Great. Thanks. Just wanted to go back to the pricing headwind that you guys talked about.

Is this an issue of out of network being pushed in network?.

Short answer is, no..

Okay.

And then we think about then re-pricing some of your contracts that maybe were above average, is that something that you feel is now completely done or is the way that contract timing works, we might see additional pressure like this heading into 2018?.

Yeah, Kevin, what I would say is that we can't predict 2018.

What we do know is that the climate and the landscape has changed, that with the new administration, with so many patients leaving the exchange, and therefore, having less dialysis patients than the benchmark, when the injunction relief, that right now, the landscape is materially different for 2018, and so while that does not mean we will win, we're back to a very balanced situation.

Is that helpful?.

Yeah. No, I think that makes some sense.

And then, I guess if you could just – really wasn't clear to me exactly what's going on in the pharmacy business, what the headwinds are there? And when we think about the headwinds into 2017, is that something that is now in the numbers, or is that something that we should be expecting to pressure the business additionally in the future?.

I'll grab that one, Kevin. I'll probably be pretty redundant to what JR said, that there's a whole bunch of stuff going on there, unfortunately, largely negative. And so, without parsing it all out, it's a bunch of stuff that at the same time has hit rate, volume and cost, leading to the substantial decline that JR talked about.

And it's conceivable that through the course of the year, we might actually even move into a loss situation for the first time in a long time, and we'll of course keep you posted on that. So, it was important enough for us to point to, and we'll keep you posted as we move through the year..

Is that a business that you feel you need to be in strategically, or is that something that if it heads this direction, it becomes a loss that you could potentially get out of?.

From a strategic, and from a clinical, and from a mission perspective, we love the business. It does remarkable things for our patients' clinical outcomes, and the access and convenience, and support that they and their families so intensely need.

Having said that, if you said that the premise was ever we're going to lose money forever, then we'd have to take a good hard look, but that's not our expectation and that's not our intention..

I guess, there's a lot of things going on there, so it might be hard to explain in a short period of time. But I guess, just any color that you can provide around that, just so that we now have a sense of whether we think this will get better or worse going forward, I guess, it's kind of vague, and I'm not sure how to think about it..

Yeah. Maybe we'll go a little bit more in Capital Markets, because we never had to talk about it much and we had a couple very nice years there. And so, part of this is a drop from some really good things that happened that we didn't talk about because of the timing of the bad period we felt it important to cover that on this side.

So, why don't we share more at Capital Markets? And in general, a material movement in profits for Rx, that starts to look pretty immaterial when you think of it just as a part of our Kidney Care offering overall. And so, we don't want to place an emphasis on it that's out of proportion to the actual absolute numbers..

Okay. That will be helpful. All right. Thanks..

Our next question comes from Tejus Ujjani. Your line is open..

Hi. This is Tejus Ujjani. Thanks for taking the question. How should we think about U.S. center growth going into 2017? And then also, can you remind us of your JV strategy? And also kind of a modeling question, I noticed the NCI stepped down a bit sequentially, any color there would be helpful? Thanks..

Yeah. Let me take the first part. The first part on our non-acquired growth in Kidney Care, we're going to be consistent to the range that we've highlighted on the 3.5% to 4.5%.

And if you could repeat the second part of your question?.

Sure.

So, on your JV, you have joint ventures as well, so just curious kind of in 2017, will there be any change in kind of going after those opportunities as well? And then, kind of more remodeling question, I noticed that the non-controlling interest expense amount stepped down sequentially and year-over-year in this fourth quarter, I'm just curious kind of what drove that?.

Got it. As it relates to going after JVs, we remained consistent in our philosophy there, which is, we really like the clinical value that a joint venture partner offers. So, that has not changed and we don't expect that to change. As it relates to the number, Jim's got an answer..

Yeah, Tejus, the reason NCI dropped in the quarter was related to the goodwill impairment at one of our SIs, we took a $28 million impairment, there was $8 million related to that was impacted NCI. If you look in our non-GAAP reconciliation in the back of our earnings release, you can see the numbers..

Great. Thanks very much. Appreciate it..

Our next question comes from Justin Lake [Wolfe Research]. Your line is open..

Thanks.

[Technical Difficulty] (24:37-24:46)?.

Hey Justin. Justin you were all garbled there the first 10 words or so. We couldn't hear them could you start over..

Sorry about that, I just said, I'm in airport. So, current pricing (24:59) pressure, can you tell us how much more patients you have at these higher rates that could be subject to pressure going forward, I know you can't predict it.

But you did a similar amount that you still have these rates that you've already seen get re-priced or is it more or less?.

Well, it's less than before, given what happened. And I think it's – I don't think it's a good idea to sort of discuss the distribution curve.

I mean there is always going to be one, of course, but it can have a different shape and ours has been very steadily becoming a tighter distribution curve over the last eight years, consistent with the strategy that we've expressed to you. So, unfortunately, we can't sit here and say that there is no downside going forward.

Having said that, we just incurred a big chunk of it..

And now last on Medicare Advantage, you noted the final (26:04) and your stars are improving, can you tell us what you think your rates could be for 2018? And how that might affect your DaVita Medical Group business? Thanks..

Yeah. Justin, it's a little early for us at this point. As you know, there's a lot of variability between the advanced and the final notice. We've got some very high-level assumptions that have been put out, but the accounting level specifics are very important for us.

So, it's way too early to tell and when we get more information, we'll let you all know..

Got it..

Thanks, Justin..

Our next question comes from Gary Lieberman [Wells Fargo Securities]. Your line is open..

Thanks for taking my question. Maybe one housekeeping item.

Jim, what was the share count at the end of the year?.

It's in our earnings release. Hang on..

Sorry..

Fully diluted, at the end of the quarter, that will average for the quarter was 196,743,187..

Okay.

And what was at the absolute end of the year?.

We'll get back to you, though. We're....

Okay. Yeah, that was the number I was looking for. Javier, you mentioned that the landscape you think was more balanced going in to 2018, given some of the recent events.

Is there any chance that, that helps you at all in 2017 or is everything kind of locked and loaded for 2017 already?.

Well, it's not locked and loaded. The probabilistic gives and takes embedded in the number that we gave you..

Okay.

So, maybe it's not unreasonable, I think it might be a little bit better than initially thought?.

It could be a little better, it could be a little worse. In the name of the game, we try to be as constructive and productive as we can and give you as much as we can and that's what's embedded in our guidance..

Got it. And then if we think about the total, the $230 million hit, the two buckets you broke it out into, was the Medicaid and the non-Medicaid.

So, in future years given the court decision, is it possible that the non-Medicaid comes back? How should we think about the opportunity there?.

Yeah. On the non-Medicaid, I doubt that it would come back. I would just – I would say no to that, although you never say no to anything nowadays, because everything is being questioned.

And so, is that the bulk part of your question or is there something else in that?.

No, I think that's sort of the bulk of the question. And then maybe just to wrap up Kent, I think this is a question for you. You guys bought back a record amount of stock last year.

I mean going into this year with EBIT expectations to be down for the first time in a while, there is a little bit of a dichotomy there, obviously, it sounds like you guys are pretty bullish on the business with the stock repurchase.

So, can you maybe help reconcile that for us and what makes you so optimistic about the business going forward?.

Okay.

Gary, if you could clarify for me, where do you see the apparent contradiction?.

Well, just that you guys are obviously bullish about the business with the large stock repurchase, and the EBIT guidance for next year is down, which is not typically the case, so that sort of what I'm pointing out as maybe a little bit of a dichotomy?.

Yeah. Well, I don't know if I quite think about it the same way, so that makes me stumble around here for a second, and see if it can be useful.

As we accumulate cash, if we're not thinking that we've got the right business opportunities to invest in, there's a point at which we get someone uncomfortable, and usually a bunch of you do also with the amount.

And then we do stare at the price of the stock, and we are not in the camp that some people are in, where they just say buybacks are – buyback decisions should be made totally independent of what the stock price is.

We're not in that camp, nor do we think that we're excellent prognosticators of which way the stock moves as you can tell from a lot of the decisions we've made over time, whether it's stock buybacks, or option exercises, or whatever. So, we're appropriately humble in thinking about that, and there's always upside and downside.

So, clearly, putting all that stuff together, and the fact that it didn't feel at all appropriate to use your money to pay down debt, we thought it was right to put the cash to work by buying back stock, put it to work for you rather than having it sit for a longer and longer period of time on our balance sheet.

And of course, we didn't want to reduce our standards for making additional business investments. It is also the case that we think that while 2017 is going to be a very tough year compared to perhaps any year in memory that things are going to be better as we move forward out of 2017, it's not to say there isn't risk, but that's where we lean.

So, is any of that helpful to you in trying to resolve what you feel is sort of a contradiction?.

No, I think that is helpful, I mean maybe could you be more specific on some of the things that you think get better post-2017..

Well, it doesn't take much to get better. Taking a couple of hundred million dollars in hits between government actions and big payer hits. We've never had that happen in, I think, 17 years and so, just by not being another 2017, it already is a very nice step-up.

In addition, the fact is when we do eliminate some higher than usual rates that is another element of downside that's gone. In addition, we do have some policy upsides. In addition, we're hoping that DMG and international start to be incremental contributors.

So, I think those are some of the reasons beyond just the continued positive operating performance of our core U.S. Kidney Care platform, leads us to think we've got a very good chance of doing better..

Great. That's perfect. Thank you very much..

Hey Gary, while I've got you on the phone, both Jim and I have answers. This is Javier. I don't think I was clear in my answer. I might have even misspoken. The Medicaid is likely not to come back and the non-Medicaid is too early to tell. I think I might have confused my labels there..

Okay..

And Gary on the share count question, it's 194,554,000, and that's also disclosed on the face of the balance sheet..

Got it. Thanks very much..

All right. Thanks, Gary..

Our next question comes from Gary Taylor [JPMorgan Securities]. Your line is open..

Hi, good evening.

Couple of questions, one, since you mentioned it, is there a date for the Capital Markets Day yet for 2017?.

We're targeting a time in late May, Gary, and we're just finishing up that..

Okay. Thanks.

Another question around the Amgen contract, is the contract structured in such a way that the CMS ASP calculations are going to reflect your substantial savings? And if so, what's the risk that they look at rebasing the bundle again?.

Gary, the way our contract's structured has little to do with how CMS sees the data and the spend. And so you remember that CMS has to look at all of the inputs of cost to the facility and should do a rebasing, what you're referring to on a holistic basis.

So, they'll be looking at lots of things, including how much we're spending on Epogen and how much the industry is spending on total cost of care.

Then number two, I'm sorry, can you remind me the second part of the question?.

I think you kind of handled both, it was just, are they going to be able to see the savings? And if so, risk of potentially rebasing. So I think you hit both.

My last question would be, with the $100 million of headwind for 2018, which is about a 6% OI headwind, I know you're not giving 2018 guidance yet, but the Street's got 6% OI growth in 2018, which means, net of that headwind about 12% OI growth.

Are there some obvious tailwinds at this point comparable to that $100 million headwind to identify?.

I don't think we want to go any further in talking about time beyond 2017, right now. Capital Markets, hopefully, will give you some more insight and analysis to help you think about it, but I don't think we want to go any further now.

We have a shot at 2018 being a good year when you think about it in the context of the $100 million headwind created by the accounting change, but nothing that can be put in the bank yet..

Okay. Thank you..

Our next question comes from Whit Mayo [Robert W. Baird]. Your line is open..

Hey. Thanks. Good afternoon.

I'm just curious of the conversation around premium support on exchange lives is having any impact on the non-exchange business or maybe said in another way, do we believe that there is any spillover effect in your commercial book from the focus of premium support on the exchanges?.

There hasn't been any that I know of. The other parts of the business are very different from a regulatory and decision-making point of view. So, that's the current status..

Okay.

And maybe can you elaborate a little bit more on what some of the benefit design changes you're seeing health plans implement that's impeding the ability of the ESRD patients to enroll at this point?.

The real answer is that with open enrollment done, the substantial part of the equation played out. And so, it's not right now about the design issues, but rather that we missed the open window..

Got it. And maybe one last one here just looking in my notes, and I can't remember if Renal Ventures is closed or not, I know you re-priced the deal, just any color on the timing and any other relevant developments would be helpful..

Yeah. Unfortunately, there are no major developments to report on this. It's been a long transaction and we are anticipating in Q2 close, and that's all unfortunately we have to say..

And the original plan was first quarter?.

To be honest with you, the date has been a moving target, I can't remember the last one we gave you, because the buyer and the FTC and the process has been one that's kept going. And so, we've probably given you more dates, and the last one was, I believe, Q1, but I can't recall..

Okay. I'm going to sneak one more, and just you flagged higher labor cost trends and I presume a lot of this is field level, but any other color you can share around what headwinds you're seeing and maybe comment on merit pay increases? Thanks..

Yeah. I don't have anything insightful. The labor markets are getting tight, it's a competitive landscape, and just workers are demanding higher wages, of course, it's our job to create a special place to work where people are more fulfilled.

And so, therefore, on average, wages becomes, while of course, they are beginning to make a competitive wage, but people are less willing to consider moving to another place just for the wages. And so, that's what we're dealing with. I don't have anything else to add to that..

No. That's helpful. Thanks..

Thank you..

Our next question comes from Margaret Kaczor [William Blair]. Your line is open..

Hi, good afternoon. First question is a broader one for me.

Is there any legislation that you guys have seen that's percolating that might benefit you with the new administration and Congress, and if there was some kind of a tax reform I guess, what could you do with the additional earnings in cash flow?.

Well, if they achieved corporate tax reform, the kind of tax reform that they are talking about, we'll have a really nice party with you guys, because we're one of the highest taxpayers in America, and always have been. And the good news is that the new Congress is really serious about doing that. We're in D.C.

now and that subject has probably come up in four of the meetings that I've been in, in the last 24 hours. Having said that, that's a tall mountain to climb and so you've got tremendous resolve with Paul Ryan and others. And at the same time, you've got formidable challenges in pulling it off. So, we just love the fact that it's a real possibility.

And then, what will we do with it? Well, I think we'll wait until we're about to get it before we spend too much time on that. But I think we'll put it through the same decision-making filters that we put our current cash flow through.

And then I think your broader question about, is there any other legislation? The other piece of legislation which has a good shot is our patient demonstration legislation, wherein we would pick up the right to put thousands and thousands and thousands of our patients into a globally capitated environment, where we can provide integrated care, which would significantly improve clinical outcomes and over time save taxpayers money.

So that's a very, very big deal with a number of the bill sponsors here in the last 24 hours who remain very enthused and so that's percolating and has very attractive potential..

Okay. And then just given the changes in profitability. As we look out for you guys, this year what should we expect in terms of the number of centers that you're developing or acquiring in the Kidney Care business. And more broadly, I guess, again, is just smaller competitors that you have, the mom-and-pop shops to smaller regionals.

How do they handle the difficult profitability environment and could that impact your business in some way?.

Yeah, Margaret on the de novo certification, we see somewhere in the range of 90 to 110 for 2017. So pretty consistent to the range we had for, did I say 2016. So for 2017, we have that range. It's consistent to the range we had for 2016.

As it relates to the small players, we have seen a slight pickup in the marketplace, but the reality is that there is just not a lot out there and so it's on a very low base. And so, you shouldn't see a big spike or meaningful movement in the acquisition number..

So, you're not saying then necessarily shutting their doors or anything and the like yet at least?.

We haven't heard any, that doesn't mean that conversations aren't happening. But we have not heard of any..

Okay. And then just one more from me, in terms of Renal Ventures, is that included in guidance and roughly what's the impact? Thanks..

It is included in the guidance, and the number, I'll check in a sec here..

Thanks..

It's not material, is what I'm being told, but I'll get the number in a sec..

Thank you..

Thank you, Margaret. Margaret, just to wrap up, it's in the, approximately $10 million..

Oh!.

Thank you..

There are no questions in queue as of this moment..

Okay. Well, thanks everybody for your continued interest in our enterprise. We'll do our best to serve your capital well between now and our next call. Thanks..

Thank you. That concludes today's conference. Thank you for your participation. You may now disconnect..