Dominik Heger - Head, IR & Corporate Communications Robert Powell - CEO Michael Brosnan - CFO.

Thomas Jones - Berenberg Elisabeth Clive - Sanford C. Bernstein & Co. Oliver Metzger - Commerzbank AG.

Thank you, Desmond. We would like to welcome all of you to the Fresenius Medical Care Earnings Call for the Third Quarter 2017. As always, I will start out the call by mentioning our cautionary language that is in our safe harbor statement as well as in our presentation and in all the material that we have distributed earlier today.

For further details concerning risks and uncertainties, please refer to these documents as well as to our SEC filings. This call is limited to 60 minutes. It turns out to be a good approach in our recent calls to limit the number of questions to 2, please, without subquestions. We will answer the first 2 questions.

This way we would like to ensure that all of you have a fair chance to ask at least 2 questions, we trust that you understand that. With us today is Rice Powell, our CEO and Chairman of the Management Board. Rice will give you a general business update and go through some of the highlights of the quarter.

Also with us is Mike Brosnan, our Chief Financial Officer, who will give you an update on the financials and the outlook. I will now hand over to Rice. The floor is yours..

Thank you, Dominik. Good morning, and good afternoon to everyone. Thank you for joining us. We have had an eventful third quarter, as you can imagine, with 3 hurricanes and an earthquake in North America. Beyond the regular business that we try to conduct over the course of the quarter, it's been quite interesting.

If I may, I would like to start by saying a very large thank you to all our employees around the world for the great job that they've done. And in particular, I'd like to say thank you to the disaster response team in North America.

Throughout the quarter, these people managed their priorities with great dedication and empathy for our patients and our employees that struggle during these natural disasters. Patients came first, employees came very closely second.

And I hope, as stakeholders, you can be proud of the way the company has conducted itself, in the way that we have tried to do everything possible to improve the outcomes, while taking care of people during a very, very difficult time. So thank you, again, to all employees, in particular, to the disaster folks in North America.

You've done an outstanding job, and you've made us all very proud. Moving to Slide 4. I will speak to third quarter highlights. Some things are new. And some things are a continuation of prior quarters, and we'll try to break it down for you in that context. I just spoke about the disasters.

We'll more talk about the economic impact of that and our philosophy, for while we handle these things the way that we do. And Mike will speak to that later on in the call. We had good underlying growth in both products and services, including Care Coordination, obviously.

The turnaround of the Care Coordination margin is impressive, moving from 1.2% operating margin in the second quarter to 6.6%. And if you back out some hurricane-related expenses that we had to deal with, we were up around 6.7%. Obviously, you'll have questions about that, and we're happy to answer them. The FX headwinds continue.

I think this is now about the third quarter that we've talked about this. So it is a continuation, and Mike will give you some more detail on that as appropriate. What's new in the quarter? Beyond having to deal with hurricanes of the proportion that we did.

Well, obviously, we tried to tip our handy during the Capital Markets Day by telling you that we were open and we were active and looking at the portfolio and how to optimize it. Well, we followed through on those comments, as you well know the NxStage acquisition was approved by their shareholder base on October 27.

94% of the participants there approved the deal. We had 3 antitrust activities that we needed to go through. Two of them are done, one in the U.K. and one here in Germany. We are still working with the FTC. No surprise to us and probably you, that we've gotten a second request.

But we are cooperating, answering questions, and this is going as we had thought it would go. And then lastly, we are divesting the Shiel Medical Laboratory, as you well know, that's going to Quest Diagnostics. We are also in the [indiscernible] phase of the FTC process in the U.S.

We do think that this deal should close in the fourth quarter of the year. And we believe it was the right decision for us at this point in time to optimize the portfolio in this way that we're going forward.

Now I'll may make no commentary on Slide 5 we have, again, for your reference, simply giving you the progression of clinics, patients, treatments and employees. I leave that to your own perusal. Now if we go to Slide 6, this will be the only 9-month year-to-date slide that I'm going to speak to.

I think Mike will give you a much more detailed view of a couple of other looks at the 9-month, but this will be my only one. All I want to cover here is simply to show you that we've laid this out as reported revenue in the KPIs of the P&L, within the adjusted look. I won't read these to you, you've been through them.

In the bottom right corner, we've tried to lay out for you, as plainly as we can, the things that we've excluded and give you some sense of the detail on that. So I'm going to leave that as it is. I think Mike will get into more detail on that, but just so we get you oriented to how we're looking at it. Now moving to Slide 7.

And the rest of my charts are going to be specific to the third quarter. Yes, we've had some headwinds, we've laid this out for you exactly the same way as we did the 9-month slide, with as reported and then, adjusted figures, and you have those figures. I would say this, obviously, we took a position on the natural disaster cause in the VA agreement.

We will talk about that in a couple of minutes and walk you through our thinking on that. No surprise, continuation, lower contributions from the vascular business, as we've discussed on the other 2 quarterly calls.

We took a 24% cut in the reimbursement rates, so that's obviously put pressure on us, and we're trying to work through that and pivot from physician office site 11 facilities to the ASCs, and we're happy to give you some more color on that if you liked.

We've talked about this now for several quarters, the PBMs, or the pharmacy benefit managers, in the U.S. are trying to put through to us increased costs or fees for direct and indirect situation. We are fighting those. We do not win them all the time. But it's something that we continue to try to work against.

But it is impacting the pharmacy to some degree. And then the lower income from equity method investees, that's code for before, we simply had a little bit higher spending in the Vifor JV. As you know, we've got several products that are coming to market internationally, and we've got some spending going on there.

And I will leave that alone, and Mike will speak to that when he is ready. So I would tell you net income, we feel good about what we are delivering here. But yes, it's not without some issues, as we move forward. Now, moving to Slide 8.

On the organic revenue for the quarter, I would just point out to you in the bottom right hand corner of this, we are seeing contributions from the region consistent with what we saw in the second quarter.

There had been a little bit of movement in first quarter, but just -- at this point Q2, Q3 are very consistent with the contributions around the regions. Again, we see good organic growth in North America at 6%, Asia, Latin America, little bit muted in EMEA.

But still we believe that we are holding our own in the organic growth around the world through the various regions. Now turning to Slide 9, and looking at our Health Care Services. Again, looking at the constant currency growth at 8%, we feel good with that, looking at North America at 8%.

And again, consistently, when you breakout Care Coordination, in North America, you see 26% constant currency growth. So we are continuing to see great growth there. Some of you will note, and you want to ask about, say, market growth in North America at 2%.

What I would tell you is we are walking away from some acute care contracts that just don't make sense to us. This is likely to carry on another quarter, that does impact the overall same market growth calculation, but we're happy to give you a little more color on that in a few moments, if you like.

And then I would also point out that you're looking at the second quarter of Care Coordination growth in Asia-Pacific. Remember when we started Q2, we had some there, and this is the continuation of that. And if you have questions on that, we're happy to try and answer those for you.

I will point out here, Mike will get into the detail, revenue per treatment of $352 per treatment in the quarter is up $2 over the third quarter of last year, year-over-year. And we're up $1 from sequential quarters.

So we continue to see some progress there, but within the range that we had guided you to over the second quarter call, we talked about where we thought that was going to go. I would say that we are now in Care Coordination. We are in the third consecutive quarter of booking BPCI.

So that is becoming a little more routine for us, and we can talk about that later. In the ESCOs, we're on the fifth consecutive quarter as well, and we're pleased with the way that's working well for us. In EMEA, patient growth and acquisitions are really what drove the growth. In Asia-Pacific, we had 5% organic growth.

Obviously, the Cura acquisition is contributing to the overall benefit in the region. And with that, I will now move to Slide 10. Slide 10 is our quality outcomes. And again, we see stability here. A little bit of movement, but nothing significant. I would just point out that you see very good stability in our dose of dialysis on the Kt/V.

Our hemoglobin management continues to be very stable. And then looking at our hospitalization days, we've had a little bit of movement or improvement, if you will, in some of the regions but again, I would characterize this as basically very, very stable. And obviously, we're pleased with that.

My last slide, which is Slide 11, Dialysis Products showing strong demand. We have had another very good quarter in our products business. We're looking at 7% constant currency growth on the dialysis book of business. Dropping down to Non-Dialysis Products.

As you know, that's the XENIOS, the critical care acquisition that we've made, those sales are sitting Europe. That is membrane oxygenation. It's -- we've talked about the technology. If you have questions, I'm happy to go over that with you and a little bit of apheresis in there.

Well, then looking at each of the regions, remembering that we look at product growth globally, usually running somewhere between 4% to 5% to 4% to 6% and so on an average basis, if you will, and you can see in each of these regions, we're either in that range or we're above that range. And so we believe that we're doing just fine there.

And I would also say that this is a fairly balanced portfolio that we're seeing on the global basis. If you look at North America, they continue to have very good PD growth. It was 20-something-plus percent in the quarter. As you know, we talked last quarter about machines, we're pretty flattish. They're up now, about 4% I believe it was.

So we are seeing nice balance around the regions, with what we're selling mix of disposables and hemo equipment or PD equipment in some cases, as well as the acute business. So with that, I'll stop here. I'll turn it over to Mike, and I will be back and touch with you when we get to the Q&A..

Thanks, Rice, and good morning, good afternoon to everyone. Continuing on with Chart 13.

This is just a very high-level reference slide to guide you through the developments in the first 9 months of the business regarding, moving from left to right, what things look like in terms of our constant currency growth for the first 9 months, both in terms of revenues and net income.

And you can see, consistent with our guidance, plus 9% in revenues, just over €1 billion. And plus 8% in net income, as Rice indicated, to get -- bring us to €843 million in earnings for the 9-month period. This is excluding the VA adjustment, which we indicated in the first quarter, and we're just applying consistently.

And now also excludes the natural disaster costs, which I'll comment on just a bit -- a little bit later in my -- The foreign exchange translation adjustments were indicated.

The impact of the VA agreement and the impact on an after-tax basis of the natural disaster costs bring you to the reported numbers, both in terms of revenues and earnings for the 9-month period. So turning to Chart 14, this is the same format that we used in the second quarter. Obviously, on the left are all the reported numbers.

On the right are the numbers as we have adjusted them. And my comments will be largely focused on the right hand side of the page. So for the 9-month period, the revenues increased by 9%, also 9% constant currency. So there was a very little currency effect when you look at the full 9-month period year-over-year.

Operating income increased €88 million to €1.767 billion or roughly 5%, also in terms of current and constant currency. On the left-hand side of the page, on a 9-month basis, you can see that's about a 50 basis point decline in margin from 13.8% to 13.3%. I'll come back and talk more about margin performance, particularly as it relates to Q3 shortly.

Net interest expense decreased by €2 million. This was driven by the retainment of our Senior Notes, which were at a higher interest rates in the back half of last year. And this has been partly offset by higher comparative average borrowing rates in fiscal 2017.

Taxes, excluding the VA settlement, net of the natural disaster cost, tax -- which are taxed at a higher rate than our average worldwide tax rate, the tax rate was flat at 30.4%.

Both 9-month periods benefited in their respective third quarters with regard to the outcome of tax audits in the case of 2016 and with regard to a change in the development of our deferred tax liabilities in the third quarter of fiscal '17. So you end up with, essentially, no effect on a year-to-date basis when you compare the two 9-month periods.

Our noncontrolling interest was €197 million, up in comparison to last year by €2 million due to higher noncontrolling interest in Care Coordination. And then lastly, net income, attributable to our shareholders. And our earnings per share was up €61 million, an increase of 8% constant currency, and in line with our guidance.

And our reported earnings per share has increased 13% or €0.33 year-to-date. Turning to Chart 15, and again, providing a high-level overview with regard to the Q3 results. See a similar performance, up 8% both in terms of revenues and earnings on a constant currency basis.

You see the effects in the 3-month period with regard to translation from currencies. A 5% effect on the top line, €223 million, and a 3% effect in net income or €11 million after-tax. The VA agreement, you see a little bit of noise in the quarter.

And essentially, all that is, is taking the agreement that we recorded in, principally, the first quarter. And as we translate to average exchange rates each subsequent quarter of the year, we always use the year-to-date average rates for the period.

And so you get a little bit of simply noise with regard to some of the things that have happened earlier in the periods. And then natural disaster cost, the same €8 million that I indicated a few months ago to get to the reported figures. So turning to Chart 16, and looking at the profit and loss for the third quarter.

Again, I'll focus my comments on the right hand side of the page. Revenue increased 3% in current currency and 8% constant, in line with our guidance. Operating income increased €13 million to €624 million or 6% constant currency. Comparing this to last year, you would see a 10 basis point decline in margins from 14.5% to 14.4%.

And the impact from foreign currency translation contributed 20% to the decline in margins. Net interest decreased by €4 million. This was, again, driven by foreign currency translation effects. Net interest expense on a constant currency basis in Q3 was stable year-over-year. And in taxes, you see the effective tax rate of 29.2%.

This is the consequence of what I just explained a few moments ago. We have, in both periods, favorable effects associated with the resolution of audit matters and change in some future tax liabilities that we anticipated.

Noncontrolling interest for the quarter was €62 million, €3 million below previous year, driven by translation, and also on a constant currency basis, down about -- increased about 1%, excuse me. Net income was up €15 million or 8% on a constant currency basis.

Turning to Chart 17, and starting to talk a little bit about the margin performance for the third quarter. And indicating in North America, I would focus on the light blue 16% margin for North America in Q3 2017, which excludes the natural disasters in VA.

And as I usually do, I'll just give you some sense before I get into the regions as to what the weighted contributions were for each of the regions in terms of our overall worldwide margins.

And in that case, from a global perspective, the decrease in margins came 10 basis points from North America, 30 basis points from EMEA, 10 basis points from Asia-Pacific and corporate and the mix effect we have contributed 20 basis points each.

So now looking at North America, our operating income was down €7 million to €483 million or about 1%, with the increase of 4% at constant currency. Excluding the natural disasters, the margins decreased 10 basis points from 16.1% to 16%.

More specifically, in our Dialysis business, operating margins were stable at 18.7%, excluding, again, natural disasters in VA.

What contributed to that was higher personnel expenses; higher bad debt expense, which actually relates to the prior period, it's simply a benefit that we saw in fiscal '16 that did not repeat itself in third quarter of this year.

We are seeing some higher rent expense and depreciation related to the clinics, and this was offset by lower costs associated with pharmaceuticals and the clinics. Care Coordination earnings were up €16 million or 53%.

Year-over-year margins increased to 150 basis points from 5.1% to 6.6%, driven by the -- in part by the initial recognition in calendar year 2017, of earnings from the BPCI initiative. Also increased earnings in our ESCO program in fiscal '17. And the impact from improved margins from our laboratory services business.

This was partly offset by higher bad debt expense in Care Coordination and impact from lower revenue for our vascular business, which we just commented on, and the higher cost in our pharmacy services business, which Rice also mentioned in his opening remarks. For EMEA, operating income was down €7 million or 5%.

Margins decreased 180 basis points from 18.6% to 16.8%, and this was principally driven the by investments that we've commented on in XENIOS, a company we acquired this year. Foreign currency transaction effects, which as Rice mentioned, continues to be an issue for us, particularly in our International businesses.

Lower income from our equity method investees, which is a consequence of the cost we're incurring to support the launch and the development of new projects, particularly in EMEA, and a little bit of pressure on reimbursements rates in some of the countries in this region.

This was partly offset from a very small legal settlement in the third quarter of '17 and lower bad debt expense. Turning to Chart 18, and looking at margin and earnings performance in Asia-Pacific. Asia-Pac was up €1 million or 1%, operating margins decreased 110 basis points from 19.9% to 18.8%.

The decrease in margin was due to some unfavorable mix affects related to acquisitions in our core business that were lower than our average margins in the region, impact from foreign currency transaction effects and again, lower income from equity method investees, partly offset by foreign currency translation effects.

As already outlined and Rice mentioned, in the second quarter, with the advent of Cura, as Care Coordination activity, we took the opportunity to include some legacy Care Coordination and started reporting this as a separate category.

As a consequence, Care Coordination generated €52 million in the revenues and €9 million of EBIT in the quarter or a margin of 17.7%, driven by strong margin performance at Cura on their hospital operations in Australia. And then lastly, Latin America remained unchanged at €18 million with margin slightly declining from 10.4% to 10.2%.

The 20 basis points decline was, again, due to the impact of foreign currency transaction effects. Also an unfavorable translation effect in the region, probably offset by reimbursement rate increases that mitigated inflationary cost increases in a number of countries in the region.

Corporate cost decreased by €11 million, from €86 million to €75 million, due to lower spending -- lower costs in research and development. Turning to Chart 19, and also talking a bit about our cash flow and our leverage.

You can see on the right hand side of the chart, in the first 9 months, operating cash flow was positively influenced by the agreement with VA. It was also influenced by the impact in 2016 of a discretionary contribution we made to our pension plan in the U.S.

of €91 million, which unfavorably impacted 2016's cash flows, and had a positive effect, obviously, this year. The resulting cash from operations of 12.5% of revenues for the 9-month period compares favorably to the 9.5% in fiscal '16.

Taking a look at the left hand side of the page for the third quarter operating results, you can see very good performance, €612 million operating cash flow, representing 14% of revenues compared to 9.3% in the comparable period. CapEx for the 9-month period decreased by approximately €4 million, still representing approximately 5% of revenues.

And our free cash flow for the 9-month period, very strong at just over €1 billion. Our net debt, which is our balance sheet debt net of cash, has decreased from €7.4 billion at the end of 2016, to €6.9 billion at the end of September, with a corresponding reduction in our leverage to 2x down from 2.3x at the end of the year. Turning to Slide 20.

We did have a solid first 9 months of performance, albeit impacted by our natural disasters in North America, we've excluded these effects. And we're confirming -- as indicated on the chart, we're confirming our outlook for 2017, both in terms of revenues between 8% and 10% constant currency, and then income growth of 7% to 9% constant currency.

Now Rice mentioned that I would just comment on the natural disasters. We did see some of the commentary coming in this morning. And folks generally wanting an understanding as to why we excluded that from guidance. And we excluded it, frankly, as a matter of policy.

It has -- we have never seen the likes of what we've seen in the last 6 to 8 weeks in terms of 4 hurricanes and wildfires in the United States and an earthquake in Mexico City. And our primary purpose is to take care of patients, it's a core value of the company.

We provide assistance all over the world when disasters strikes, but we'd never seen anything on the scale of what we saw in North America over the third quarter and into the fourth.

So as a consequence of that, as we thought about it, when disaster hits, we do not want our managers hesitating to do the right thing because they're troubled about how they're going to have to mitigate the extra cost associated with something that someone said months ago, in terms of providing financial guidance.

Therefore, we thought it was appropriate given what happened in '17 to exclude it. And I would say, going forward, if we come across similar circumstances from a policy perspective, we would probably exclude those costs as well to get everyone focused on making the right decision in the moment to take care of the patients.

You've seen the number of developments working as headwinds and tailwinds, and I'm sure you're going to ask me questions in the Q&A. That having been said, we're trending up from Q2, with EBIT growth of 6.2% constant currency versus 1.7% in the second quarter, and EAT growth of 8.4% constant currency versus 2.2% in the second quarter.

All of that having been said, I would say that as we look at wrapping up the year, we are in the range, but I would say that we're probably on the lower end of the range. So with that, I'll turn the call back to Dominik..

Thank you, Mike, Thank you, Rice, for the insights we already gained. I think we open the Q&A now to everyone in order to gain more..

And the first question comes from the line of Tom Jones of Berenberg..

I had two. One on ESCOs and one on third-party payment assistance. On the ESCO program, obviously, momentum is building within that program.

I was wondering if you might be able to give us a little bit more in terms of concrete numbers in terms of what that contributed to the Care Coordination's EBIT during Q3? And what we should be expecting in Q4 and on into 2018 for that program? And then, I guess, the associated question is that the program is clearly trending very well, but across the industry.

How much bigger and how much most successful does it need to become, do you think, before CMS, before Congress decides that's the way to go for the whole of the Medicare, and starts to seriously consider shifting everything over on for some kind of capitated payment or risk sharing model for dialysis? And the second question is on third-party premium assistance.

I think the last time we spoke, there was some suggestion or thought that you had the vibes you were getting from CMS which suggested they may promulgate further rules around third-party premium assistance by year-end, but obviously, with the change in the top management at the Department of Health and Human Services, that might have changed somewhat.

So just some kind of update there would be helpful?.

Great, Tom. Mike, do you want hit ESCOs, and I'll come back around share at premium..

Yes, Tom, I'll do my best to at least to answer a part of your question. We had said at the beginning of '17 that '17 would be kind of a lumpy year with regard to our demonstration projects. We started recognizing BPCI in Q1, and it's progressed accordingly over the year.

And I've stopped short of detailing out each quarter all the different pieces of both of those programs. But that having been said, we've made good progress on the ESCO program. I did indicate in Q2 that we would see an acceleration in the back half of the year, so you're seeing that now in the third quarter.

I'm going to comment a little bit to give you some hints relative to how we see this going forward. CMS, as you may have seen, released some information about what they call plan year 1 of the program earlier this week. And we're very pleased with the results for FMC. They indicated substantial savings overall in their HDF programs.

But for FMC, they've reported a little over $43 million in gross reported savings, which we think is in line with comments that we've made at our Capital Markets Day. Of that, there is $29 million or just under $30 million, which is net of CMS's participation. That would be shared with us and with the ESCO practice partners and with nephrologists.

I think as we go forward, particularly as it relates to what we expect our experience will be net of all of the program costs and also net of the overheads that we incur in our Fresenius Health Plan business, we think the best way to think of this is on a per treatment basis.

So in the first plan year, with regard to our perspective, net of all of our costs, we think this is going to be a net positive of $8 to $9 per treatment for the patients in the program. Now you asked about how we think of this going forward, and I just ask you to keep in mind that year 1 was focused on getting the program started and reporting data.

Year 2, the program is going to add a financial consequence around quality. So it will be a penalty program structured in a similar to way we -- what we have today in our Medicare bundled rate. So that means if the quality measures are not achieved, there will be a penalty applied.

So as you think about next year and the years beyond, if we're in the $8 to $9 per treatment range, we'll have to fold in whatever the quality effects of this are going to be going forward, and we also should have maybe a little bit of the benefit in terms of increased absorption of overheads.

Too early to tell how that's going to play out in the detail, but I think $8 to $9 per treatment is a good benchmark..

So Tom, it's Rice. The follow-up on that, how successful does it have to be before it tips. It's a great question. I'd declare victory move on today, but I don't run CMS, so I don't get to do that. I would tell you that this plan, as it's laid out, it's going to run through '18.

So we're going to have some discussions about what happens next, where do we go. I think it's little early to decide when do we hit a tipping point, can we hit a tipping point that would allow this become the norm. I think it's just too early to talk about that at the moment. And on charitable premium assistance, what I would say is steady as it goes.

We had numbers of meetings, as I told you we had, we've talked to and given input to folks at CMS. I think with Price leaving and there is Acting Secretary Hargan there, I think, we may see a little bit of a lull before they could do rule making, they may want to wait and actually have some body appointed in that position, hard to say.

But the good news is, at this point, all of the folks that we know and that we've worked with and given comments to are still there. Secretary Hargan has come in and taken the group, and they're working.

So we'll never know for sure until he comes, but right now, it seems to be that there is a little bit of a lull until they can sort out what's going to happen here at the leadership..

The next question comes from the line of Lisa Clive of Bernstein..

Lisa Clive from Bernstein. Firstly, Mike, just to follow-up on your comment around the ESCO. I'm not quite clear in terms of your $8 to $9 per treatment. Are talking about just applying that across your 3-times dialysis treatments per week, over 52 weeks of the year. That would only get to you about $1,400.

Is that an incremental EBIT figure, given the data you gave us at the Capital Markets Day, granted they were 2 best-performing ESCOs out of the 60 you've had up and running since 2015? But the per patient per month average savings that you gave to us that kind of implied that the numbers were more like $3,600 for the second best-performing, and actually over $5,000 per patient in the best-performing ESCO.

So I'm just a little confused about really in terms of after Medicare has taken their cut and after you've paid out what you owe to the nephrology practice and other program expenses, really what the kind of EBIT per patient is that you are generating? And then second, on ESCO, you ramped it up to 30,000 patients over the course of this year and from the data that CMS has released, it appears that savings are well on track.

Is there any potential to expand ESCO further? And have you had any discussions on that? And then just following up on Tom's question around, I know it is still early days, but if ESCO is on a sustainable basis saving the government money, what are the chances of getting that Patient CARE Act through Congress in the next 12 to 18 months?.

So Lisa, obviously, I'm going to let Mike go right to answering your question. I'll come back on the Patient Act, if you will..

Yes, Lisa. The Capital Markets Day, those were the 2 best-performing, first of all. And that was more of a contribution-margin view, not including the Fresenius Health Plan overheads. So it was the direct costs associated with delivering care to the patients, the participating nephrology practices and then CMS's share.

And the figure I gave you on a per treatment basis, it would be all in, covering everything. You are correct in terms of the calculations. You'd get to the $8 to $9 by taking 3 treatments a week, 52 weeks a year.

There is a range there, because, as you know, there is a little bit of leakage with regard to treatments for an average patient over the course of the year with hospitalizations in this treatment.

So I think you've heard us in the past use a benchmark of maybe somewhere around 144 treatments, you'd get to that $8 to $9 range whether you used 144 or 156 treatments a year..

I'm guessing you're writing, Lisa, so I don't want to interrupt you. Tell me when you're ready, I'll talk to you about the other thing..

Actually, just to follow-up with that.

You're still looking at a net in that sort of net savings or net EBIT in incremental EBIT to FMC, is that the best way of thinking about that?.

Yes. My intention in saying $8 to $9 a treatment is it's incremental EBIT. Yes..

Okay.

And then that is based on the initial scale at 8,000 patients? I would assume that if you scale up to 30,000 and potentially beyond, that your cost per patient perhaps go down quite notably?.

That is plan year 1, and that's why I made the comment with regard to as we look forward, we can certainly think about absorption of overheads. I agree with your point, but we also have to look at what our experience is going to be with regard to the quality measures..

Yes. There will be a QIP type of impact there. And we're not worried about our ability to deliver the quality, but even our history tells us that it could be a downer in some cases, Lisa. So we have to factor that in. And let me guide you a little bit.

So we had said, you're absolutely right, we thought we would exit the year, we were hoping to be at 28,000 to 30,000 patients. We're at 26,000 and change. So I don't know that we'll -- I doubt we'll see 30,000 given we've got 2 months left in the year. Because remember, we can get up to 28,000 and then we can lose some patients.

So it all depends on what's going on with patients in the programs. Relative to expanding next year, we would like to do that. Obviously, that's a conversation that we can only have with CMS, and they have to approve it. So we'll have to sit tight on that. We can probably give you some clarity on that in February.

And then on the patient act, we obviously are big supporters of that. We'd like to see that happen. There is a house bill on the Patient Act that has been put together. We need the Senate to follow through, and we're hopeful that's going to happen.

So we just stay focused, and we make the rounds that we need to make and talk about this program and the value it adds. And hopefully, we'll get the traction that we need, Lisa..

The next question comes from Oliver Metzger, Commerzbank..

My first question is on the PD product business in North America, which you really nailed with 20% growth. So potentially if you could just give some more background. Why the growth is currently so strong there? The second one relates to Care Coordination North America versus significant margin progress, which is nice.

You already named that consolidation of ESCOs comes through. Nevertheless, I would still see Care Coordination in a growth mode.

So from now, from the 6.5% that you've achieved in the current quarter, which margin level do you regards as sustainable, if you look on 1 or 2-year horizon, basically some more extension about growth opportunities, isn't it?.

So all right, it's Rice. Let me speak to the PD business and then Mike will chat with you about the Care Coordination margin. So I think what we see happening on the PD side of the business in North America is simply -- it's about, #1 is Baxter, we are #2, we try harder. So we are looking and just pushing hard for more patient growth.

We've got some new product offerings that are coming out. So I think, quite honestly, there is just still some pent-up demand. If you go back, some number of quarters ago, there were some issues with supply coming from Baxter. We were unable to fill all of that demand because we were sort of capacity constraints.

So those things have sort of worked themselves out to where there is more flexibility in the supply. But I think it's just -- we're doing a good job of selling and the market is growing. And there is an opportunity there is the way I would characterize that..

Yes. And Oliver, great question in terms of the sustainable margin of Care Coordination. Because there are so many moving parts of the business, that's probably something I'll talk more about with year-end results in February.

Also just as a reminder, I've said in Q2 in terms of back half accelerants that we see an acceleration in both the ESCOs and BPCI. So the ESCOs you're seeing in Q3, I'm still anticipating we'll see an acceleration in Q4 in BPCI.

So I think we get through this year, obviously, with performance we trended in Q3, where we've at least met what I'd guided to at the beginning of the year in terms of margin performance. And in February, I'll talk a little bit more about what we think going forward. The pilots are a part of that.

Keep in mind, at the beginning of the call, Rice was also talking about vascular, which is also in Care Coordination. So got to do a little more thinking about sustainability into '18 and '19 before we comment..

Okay. So we have no new questions, no new caller. So that was a short call. And I think there was too much reporting. Might be a record call today. Thank you very much, everyone..

Thank you very much for your interest. Take care. Bye, bye..