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Warren Buffett's Berkshire Hathaway is DaVita's largest shareholder, with a 33% stake in the company according to a recent filing. Buffett's faith in the company, a long-term holding, has been rewarded, as the company has delivered a 13% annual return to shareholders over the past decade. Patients from around the world come to DaVita's 2,500 treatment centers for kidney dialysis.

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Based in Denver, Colo., the health provider delivers dialysis treatment and other medical services to patients globally. Through DaVita Kidney Care, the company treats patients with kidney disease.

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DaVita, incorporated in 1994 and based in Denver, was known as DaVita HealthCare Partners Inc. until changing its name to DaVita Inc. in 2016. It provides kidney dialysis services in the U.S., operating dialysis centers and providing related lab services. In addition the company offers integrated care and disease management services, clinical research programs, physician services, and comprehensive kidney care.

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Q4 2024

DaVita (DVA): Company Profile, Stock Price, News, Rankings

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DaVita

davita

Thank you, and welcome to our fourth quarter conference call. I'm Nick Eliason, Group Vice President of Investor Relations. And joining me today are Javier Rodriguez, our CEO and Joel Ackerman, our CFO. Please note that during this call, we may 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 fourth quarter earnings press release and our SEC filings, including our most recent annual report on Form 10 K, all subsequent quarterly reports on Form 10 Q and other subsequent filings that we make with the SEC. Our forward looking statements are based on information currently available to us, and we do not intend and undertake no duty to update these statements, except as may be required by law. Additionally, we'd like to remind you that during this call, 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 our earnings press release furnished to the SEC and available on our website. I will now turn the call over to Javier Rodriguez.

Thank you, Nick, and thank you for joining the call today. As we embark on 2025, we're celebrating the twenty fifth anniversary of DaVita. During this time, we have focused our efforts on improving clinical outcomes, enhancing quality of life for our patients and care teams and being a force for positive change for the healthcare system. It is an honor to carry on this legacy and we look forward to pushing these boundaries in 2025 and the years ahead. Today, I will cover highlights of our 2024 performance, provide updates on several components of our growth trajectory and conclude with guidance for 2025.

But first, I will begin as we always do with a clinical highlight. As I noted, we're celebrating our twenty five years, a period encompassing remarkable clinical progress. Together with our physician partners, we have achieved so much for the people who have entrusted us with their care. Among the many highlights, we have worked to dramatically increase the access to care for patients, especially those living in more rural areas of the country. We moved beyond in center care and supported the proliferation of home dialysis with more than four of every five patients living within 10 miles of a DaVita home program.

Of the patients now treating at home, more than eighty percent use connected cyclers, a technology that enables our care teams to remotely monitor and improve patient health outcomes. We have expanded for being a dialysis provider to a comprehensive kidney care company, addressing each step in the kidney care journey. This includes our Kidney Smart program, where we have provided free education on managing chronic kidney disease to more than 300,000 people and integrated kidney care or IKC, where we have pioneered value based care delivery, successfully partnering with health plans and CMS to provide holistic patient care and addressing rising costs of the healthcare system. Finally, we have enhanced quality of care in 13 countries outside The United States, where we have consistently outperformed the clinical benchmarks in each market. I'm energized by the progress we have made to create better outcomes and improve millions of lives.

And of course, we're far from done. Looking at the next chapter, our vision is to continue our unwavering pursuit of a healthier tomorrow. Transitioning to 2024 performance, we finished the year on a strong note, producing full year adjusted operating income and adjusted EPS in the top half of our guidance range with year over year growth of 2126% respectively. In a year with several unique hurdles, including changed healthcare outage and hurricane disruption of our supply chain, I am reminded of the resilience of our organization and inspired by the passion of our dedicated care teams. Within U.

S. Dialysis, we continue to benefit from innovation in our revenue cycle operations. Enhanced collection performance and contracting propelled high revenue per treatment growth, offsetting slower than expected rebound in treatment volume. Although volume growth was positive for the first year since the pandemic, growth for the full year was below our expectations. Mortality and mistreatment rates remain elevated in the fourth quarter and new patient starts were negatively impacted by supply constraints of our peritoneal dialysis solutions.

On the expense side, we continue our track record of identifying efficiencies and executing on cost saving initiatives. Beyond The U. S. Dialysis, we expanded our international presence and continue to grow IKC. We have now closed on three of the four acquisitions in Latin America announced last year with Brazil expected to close mid year twenty twenty five.

With IKC, we continue making progress on our journey of delivering sustainable integrated care. For 2024, results for IKC were in line with our expectations with an adjusted operating loss of $35,000,000 Our strategy remains focused on improving health outcomes and quality of life for our patients, minimizing avoidable medical expense, tightly managing our G and A costs and pursuing the right opportunities to achieve scale. As a reminder, last quarter, we highlighted the temporary closure of Baxter's North Cove facility due to Hurricane Helene and the related impact on home dialysis. As a result of these challenges, we incurred approximately $6,000,000 of operating income impact in the fourth quarter due to higher cost of saline, fewer patient starts due to the availability of PD solution and lower productivity from our home caregivers. The negative impact was lower than we originally expected due to the extraordinary effort of our supply and physician partners along with that of our procurement and operating teams.

By year end 2024, we had resumed admitting new home patients at historical rates. However, our inability to start new patients on PD contributed to lower new admits in the fourth quarter, which will negatively impact volume growth in 2025. This is included in our estimate of approximately $30,000,000 of negative impact to adjusted operating income in 2025. Moving next to Orals in the Bundle. Effective January one of this year, oral drugs transition from Medicare drug benefit over to the dialysis benefit.

This policy is clearly positive for dialysis patients. We are excited to expand access for patients and expand options for prescribers. We estimate that up to twenty percent of patients did not have coverage and are now eligible to receive this therapy. Our patients will have support from dietitians and access to all major classes of phosphate binders, including both branded and generic options. We expect the 2025 OI contribution to be $0 to $50,000,000 For our 2025 guidance, we're back on a more normal adjusted OI growth trajectory.

The midpoint of our 2025 guidance for adjusted OI growth is 5.2% and adjusted EPS growth is 11%, the detail ranges of which can be found in our press release. This comes on the heels of a strong 2023 and twenty twenty four years in which we exceeded the top end of our original guidance ranges despite weak volume growth by driving strength in other components of our core and ancillary businesses. A priority for 2025 will, of course, continue to be an intense focus on volume as we believe in an eventual return to a 2% growth trend recognizing timing is difficult to predict. Despite this uncertainty, we continue to have confidence in delivering adjusted OI growth in our target range of 3% to 7% for the years ahead. We will continue to invest in differentiated capabilities to drive performance across our platform with excess capital returned to shareholders through share repurchases.

We remain committed to our capital allocation strategy as a means to achieve double digit growth in earnings per share.

I will now turn it over to Joel to discuss our financial performance and outlook in more detail.

Thank you, Javier. Fourth quarter adjusted operating income was $491,000,000 bringing full year 2024 adjusted OI to $1,980,000,000 Q4 adjusted EPS was $2.24 taking full year adjusted EPS to $9.68 Free cash flow was $281,000,000 in the fourth quarter and $1,160,000,000 for the full year. I'll start today with some detail on the fourth quarter followed by some details on our 2025 guidance. Fourth quarter U.

S. Treatment volume increased by 30 basis points over the fourth quarter of twenty twenty three, while treatments per day declined 80 basis points versus fourth quarter of twenty twenty three. Q4 treatment volume came in below our expectations for two reasons. First, missed treatments were higher than expected, primarily as a result of severe weather events driving a 40 basis point reduction on year over year growth in the quarter. And second, new to dialysis admits were below forecast, partially as a result of the impact of Hurricane Helene on PD supply.

We estimate the PD supply constraint resulted in the loss of approximately three fifty admissions during the quarter. For the full year, treatment growth was 47 basis points, just below the bottom of the range we gave last quarter. Fourth quarter revenue per treatment increased approximately $1 sequentially, primarily due to seasonality, bringing full year RPT growth to 3.7% versus 2023. Patient care costs per treatment were up $7 sequentially. This was primarily the result of seasonality, including health benefits and other field costs with additional impact from higher sequential center closure costs.

G and A costs increased by $15,000,000 quarter over quarter. This is in line with expectations as we typically see higher G and A spend in the fourth quarter. Depreciation and amortization declined by $14,000,000 compared to the third quarter. The largest driver of the reduction was lower center closure costs. Adjusted international OI declined by $17,000,000 versus the third quarter.

This was driven by a $19,000,000 reserve recorded against aged accounts receivable in Brazil. Underlying operations in our international business remain otherwise in line with expectations. During the quarter, we closed the third of our twenty twenty four Latin American acquisitions, expanding our presence in Colombia. Our expansion in Brazil remains under government review and we expect the deal to close mid year. Integrated Kidney Care, our value based care business ended 2024 with a full year adjusted operating loss of $35,000,000 We continue to execute against our long term plan and while the full year came in approximately $15,000,000 ahead of our 2024 expectations, this is largely due to timing of revenue from our value based care contracts and normal variability.

Below the OI line, fourth quarter debt expense was relatively flat compared to the third quarter. Our leverage ratio at the end of the year was just over three times EBITDA. In the fourth quarter, we repurchased 2,300,000.0 shares and since the start of 2025, we have repurchased approximately 800,000 additional shares. I'll turn now to our expectations for 2025. Our 2025 adjusted operating income guidance is $2,010,000,000 to $2,160,000,000 At the midpoint, this represents 5.2% year over year growth.

Now for some detail starting with treatment volume. The middle of our adjusted OI guidance range assumes treatment volume growth is flat in 2025 compared to 2024. For the key underlying drivers of treatment volume, namely admissions, mortality and mistreatment rate, our guidance assumes no significant changes to the trends we saw in 2023 and 2024. Embedded in this forecast is approximately 50 basis points of headwinds specific to 2025 associated with the number of treatment days and the headwind associated with the disruption in PD admissions in Q4. Moving now to revenue per treatment.

We anticipate 4.5% to 5.5% revenue per treatment growth year over year. Around 40% of this expected growth is the result of new oral phosphate binder reimbursement. The remaining 60% is driven by rate increases, collections improvements and changes in mix. On patient care cost per treatment, we anticipate growth of 6% to 7% year over year. Again, oral phosphate binders are a key driver accounting for approximately 40% of the expected growth year over year.

We anticipate the remaining 60 of the growth to be driven by inflationary increases in labor and other costs with some offset from declining center closure costs as compared to 2024. We expect U. S. Dialysis G and A to increase by approximately 4%, which is driven by investments in our teams, capabilities and processes offset by a decline in center closure costs versus 2024. We anticipate U.

S. Dialysis depreciation and amortization to decline by approximately $25,000,000 to $30,000,000 driven by declining center closure costs and lower levels of CapEx in recent years. In our IKC business, we expect relatively flat year over year adjusted operating income compared to 2024. This is consistent with our prior expectations, except for the acceleration of $10,000,000 to $15,000,000 of value based care revenue from 2025 to 2024. For international, we expect approximately $50,000,000 of year over year adjusted OI growth.

This is the combination of the impact of the Latin America acquisitions we signed in 2024, the reserve against aged accounts receivable in Brazil impacting twenty twenty four's results and continued growth in our existing markets. Shifting to EPS, our guidance for 2025 adjusted earnings per share is $10.2 to $11.3 The midpoint of this range represents 11% adjusted EPS growth versus 2024, primarily driven by adjusted operating income growth and share count reduction due to share repurchases, offset by the full run rate of higher debt expenses. We anticipate other losses below the operating income line of approximately $75,000,000 roughly flat to 2024. We expect interest expense of $525,000,000 to $555,000,000 which is a continuation of approximately $135,000,000 per quarter. We anticipate an adjusted effective income tax rate of 24% to 26% consistent with 2024.

Free cash flow guidance for 2025 is $1,000,000,000 to $1,250,000,000 Our capital allocation philosophy remains consistent with prior years. We will prioritize capital efficient growth opportunities, target leverage between three and three point five times EBITDA and otherwise return capital to shareholders in the form of share repurchases. That concludes my prepared remarks for today. Operator, please open the call for Q and A. Thank

you. Our first caller is Joanna Gajuk from Bank of America. You may go ahead.

Hi. Thanks so much for taking the question. So I guess first on the volume outlook for twenty five percent. So you said flat at the midpoint. Is there a range associated with your ROI range?

Hi, Joanna. It's Joel here. Thanks for the question. So yes, there's certainly a range associated with volume. There's a fair bit of natural variability in all three of the inputs of admissions, mortality and mistreatment rate.

And that would be one of the factors that would drive the range we gave for OI.

Giving us like a range like I guess, call it minus one to plus one or anything narrower like that or how should we think about that? Like what's the, I guess, the major outcomes here?

Yes, we decided not to quantify it this year and rather focus on the midpoint of the range. I don't know that the variability we would see would differ a whole lot than the variability we would have thought about going into last year, but we missed our going into the year forecast in 2024 by a bit. So we were a little hesitant to give a range here.

On the comparable metric, right, the volumes were roughly flat in 2024, right, just to make sure. So you're kind of assuming a similar dynamic for the full year in 2025?

So the comparable number for 2024 was plus roughly 50 basis points. I think it's 47 basis points exactly. And just to be clear for everyone, when we give a volume forecast here, we're forecasting treatment volumes. We give a number of volume metrics like NAG and others that you can calculate, but we're really forecasting total treatment volumes. So the '24 number was up 50 basis points.

The midpoint of the range for '25 is flat. There are really two things driving the decline. One is treatment days. Remember 2024 was a leap year and that's worth about 20 basis points of extra growth in 2024 that '24 that won't happen in 2025. And then, we mentioned the disruption of PD supply from the hurricane and the result of that was in Q4, we were unable to admit new peritoneal dialysis patients for some period of time.

Some of those patients wound up in center, but we believe we lost roughly three fifty patients who otherwise would have come to DaVita, who we think decided to pursue peritoneal dialysis with another provider. And because we lost those three fifty patients in Q4, it didn't have much of an impact on Q4 volume, we'll have a much bigger impact on 2025 volume. And that's worth somewhere on the order of 15 to 20 basis points of growth in 2025. So you take that and the days and that's really what accounts for the 50 basis point decline in terms of the core metrics of mistreatment rate, mortality and admissions, we're viewing those in our guide as being roughly similar to what we saw in 2024.

All right. Appreciate it. And if I may, on that number, when you quantified the benefit to OI from the inclusion of the oral drug into the bundle zero to 50, so I'm a little bit surprised that there is actually a zero. So can you give us a little bit more color like why there is such a wide range? And also under what scenario is it a zero versus a 50?

Hi, Joanna. This is Javier. Let me grab that one. And for the people that haven't been tracking the oral in the bundle, this is a class of drugs that the largest is phosphate binders, which is a medication to reduce the absorption of dietary phosphate. And it was in Part D and is moving to Part B as in boy.

And there are three variables to consider. One is mix, what kind of phosphate binder and there's some generic and there are some branded. Two is volume and then three is adherence. This has a heavy pill burden. You have to take it at meals and snacks, etcetera.

And so many people for different reasons have low adherence. And so this is very new to us. And so with those three variables, we're being, I think prudent in giving you a wide range. And once we get a bit of experience, we will see how that plays out. But the midpoint of the range feels the most likely spot with what we're seeing now.

And then I'll add one last point on the volume side, which is it's hard to see volume up to now because in many instances people pick up the prescriptions for ninety days. And since we're now only in February, if you picked up your prescription in December or November, you might not we don't have visibility to what kind of medication you're on. So that's why you have such a wide range right now.

All right. I appreciate it. I guess I'll go back to the queue.

Our next caller is A. J. Rice with UBS. You may go ahead.

Thanks. Hi, everybody. I think if I got if I heard you right, you said patient treatment costs would be up about 6% to 7% and that's largely due to the phosphate binder inclusion. Can you comment on putting that aside? Is there any change in significant change in the way you're looking at the growth in patient treatment costs versus what you saw in 2024?

Sure. So the way I think about it and there ranges around this, but I'll use the midpoints here. The midpoint of growth in the patient care costs would be 6.5%. That would be 3.75% from our historical costs and 2.75% from including the orals in the bundle. So if you're comparing it to what you've seen in prior years, that 3.75% would be the right number.

And as we break that down, we typically think of it as labor and everything else. And we see them both moving at about the same pace of growth for next year. Labor continuing to anticipate some higher pressure than we saw pre COVID and everything else growing at about that same 3.75% range as well.

Okay. Thanks for that. And maybe a follow-up question. On the comments around capital deployment, do you have a figure for what you think you'll do on share repurchase? Any comments on the deal pipeline either international or in the domestic market and what you're seeing out there?

So on share repurchases, I'll stick with what we've said in the past, which is our philosophy hasn't changed. We will look for capital efficient growth either investing in the business or through M and A and we'll keep our leverage or we'll target our leverage in the three to 3.5 range, which it's in right now and everything else will go back to share repurchases. So we're not going to give a number, but I wouldn't expect expect anything different than what we've seen in the past. In terms of M and A, we're looking at a few things and I could certainly see a scenario in which we invest hundreds of millions of dollars. But as I've said in the past, I don't think we're going to do anything I don't see anything on the horizon now that would be that would significantly change the share repurchase program.

Thank you. Our next caller is Pito Chickering with Deutsche Bank. You may go ahead, sir.

Hey, guys. Good afternoon. The U. S. Already data is showing sort of flat incidence for, you know, an increase in renal disease in '24 and your treatments have been pretty flat this year.

There's definitely a pretty big debate now about the impact of SGL2 inhibitors on treatment volumes. Can you help quantify us the new starts that you guys saw in 2024 versus 2023? Just to help sort of compare contrast what DaVita is seeing versus what USRD data is showing us?

Let me grab a bit of that question and then Joel can give you the specific answer you asked because we have gotten several people assuming that the medications are having an impact. And the reality is that our physicians have looked at this very carefully and the odds that this is impacting our patient population are quite low at this juncture and let me tell you why. Number one, the information that we have from CMS puts the prevalence of CKD patients, advanced CKD in the low teens, and the adherence in the mid-60s. And so the ability to have an impact is unlikely. If it were to have an impact, you would also see the offset in mortality.

So the math would hopefully be a positive, meaning it's stretching people's longevity. And so when we talk to our medical professionals and they're reviewing all this data, they are very confident that that is unlikely to be the impact. Now the second part of your question is a bit more specific, Joel? Yes. So in terms of the data, Pitot, our admission growth has been running ahead of what you see in The U.

It was stronger in the first part of the year and it actually weakened significantly for Q4. Our new to dialysis admit growth was flattish in Q4, which is the first time it hasn't been running positive since for I think eight quarters. So we've been looking hard at that. And I'd say two things about this. First, if you look at USRDS year over year, new to dialysis or incidence growth, and we looked carefully at the ten years leading into COVID.

There was a lot of noise in the data during COVID. But if you look at the ten years before COVID, it's noisy data. There were two out of the ten years where incidence growth was negative. Those years did not indicate any sort of secular trend. The data bounced back, it would move back and forth, it could move up to three percent year over year.

And I think there was a six percent total swing during those ten years. So we don't see negative data one year of negative data in U. S. RDS as the start of a trend necessarily and we're basing that based on history. So that's point one.

Second, picking up on what Javier said, if there is negative admit impact in the industry today, we think the much more likely result is from mortality in CKD4 patients as a result of COVID than it is related to SGLT2 inhibitors or GLP-1s for the reason Javier said. So again, two points. One, a negative year of incidence growth is not a new thing. We've seen it before. It hasn't necessarily been the start of a trend.

And second of all, if there really is a signal in that noise, we think it's much more likely the result of COVID than these new drugs.

Okay. And then going on the PD, I guess, when did your PD supplies stabilize from Baxter? And then can you sort of quantify how those new starts at this point return to normalized levels? I understand the leap year impact and I understand the quantification from sort of the drag from the fifteen, twenty basis points of losing those three fifty patients. But can you actually quantify how the new starts sort of return to normal levels now that PD supplies have normalized?

Yes. So we're back online, back to normal. And so you should see that number pick back up. Our mix pre hurricane was in the mid 15% s, right below that about 15.4%. So we are right around 14.9%.

So we should see that get back in line. It'll take a bit of time, maybe a year or so as the year plays out, but we're back

And just to clarify two things, Peto. We're back to normal, but those three fifty admits that we lost, they're lost for all of '25. They're not going to come back to us, hence the impact even though we're back to admitting at a normal level. And second, I'll remind everyone, even though PD patients treat every day, when we report our volumes, we normalize that to in center equivalents.

So we don't pick up volume or lose volume in our volume count if a patient goes from PD to in center or vice versa.

But then let me sort of ask it one more different way is, there was a sort of sixty day time period when Baxter couldn't supply sort of this PD supplies, I get your losses three fifty patients. But now that that's normalized, why is the midpoint of the range flat? Why is the midpoint of the range not sort of 50 or 100 basis points minus the 20 bps from BP or minus the 20 bps from PD kind of why is flat the new level if patient trends are normalized at this point?

Because those patients are in center, they're just going to switch modality, but the treatments are the same.

Yes, I would think of it as it's the same 50 basis point dynamic we had last year driven by mortality admissions and mistreatment rate.

subtract off for these two dynamics, which are

Thank you. Our next caller is Justin Lake with Wolfe Research. You may go ahead, sir.

Thanks. I appreciate the questions. First, the non controlling interest looked a little bigger than what I would have expected given the OI in the quarter. Am I missing something there? Is there like what drives that number and was that larger than you expected?

Yes. Thanks for the question, Justin. It was a little larger than expected. I think modeling NCI as a percent of U. S.

Dialysis operating income for the year is the right way to model it. And I don't think anything has changed there overall. There were some collection dynamics associated with change healthcare that move things from one quarter to the next. But overall, there's no underlying trend there that I'd call out.

So you're saying the percentage of operating earnings isn't increasing. It might be flipping between quarters, but overall the 25 should be in line with the 24?

Okay. And I was hoping you could I mean, you ran most of the below the line numbers and yet EPS looks a little bit light versus what I would have thought. The only thing I can think of is the share count. Do you want to run that? Do you want to give us an idea of what your share count expectation is?

I'd rather not. I think I'm trying to think what might not be in there. It depends on how you're modeling it. If you're modeling it by business segment, I think the corporate segment is probably going to be $25,000,000 worse in 2025 than in 2024. And that's just about the timing of some equity compensation.

Other than that, I think if you're we gave the other income, we gave the interest expense, we gave the tax rate. So I think share will be ultimately the question. And look, that'll depend on a bunch of things, how much capital we deploy to buyback shares, obviously, what the share price is. It is impacted by when we buy the shares during the year as well, because it's a weight average count over the course of the year. Maybe we'll take it offline, Justin, we can make sure there isn't some arithmetic difference.

I appreciate that. The other question I have was on revenue per treatment. A couple of things you said, One, the that there's still some kind of juice to squeeze from collections, which I had the impression listening to you last quarter that you thought that was petering out a bit. So I was curious how much of improving you expect there. You also mentioned payer mix.

Would be great to know kind of where you ended the year and what you're assuming next year. And while you're talking about payer mix, can you give us your maybe the percentage of treatments coming from the exchanges or members with exchange coverage? Thanks.

Sure. So starting on the collections question, what you're seeing in here I think is what we've called out over the course of 2024, which is the annualization of collections improvement that kind of hit midyear of twenty twenty four and that's probably worth on the order of $50,000,000 call it. On the mix, there's really nothing interesting to call out about MA mix. We'll move with the industry. There's really not a lot there.

On commercial mix, we're at about 11% now and we think we'll pick up a few tens of basis points on that. In terms of the exchanges, we're at about 3% of our population are on the exchanges today.

And where was that number pre COVID, Joel, by exchanges?

If you go back pre COVID, I'll give you the number from before the enhanced premium tax credits came in place and it was right around two percent.

Thank you. Our next caller is Andrew Mott with Barclays. You may go ahead, sir.

Hi, good afternoon. I appreciate the comment that 40% of rev per treatment growth is from phosphate binders. It looks like that's worth about 25 per treatment from Medicare patients. Do I have that math right? And if so, like that feels a little bit light versus what CMS quantified ASP to be in the final rates.

So just trying to understand the absolute dollars on the Medicare patients specifically.

So no, Andrew, the number is more in the $10 to $15 for a Medicare patient and just to get everyone the math. So if you use the middle of that range and recognizing not all of our patients are eligible for orals in through the bundle, right. If you're on commercial or managed Medicaid, there are payer classes that aren't getting this. And even for those who are those on Medicare and Medicare Advantage, not every patient takes it. So that's why the 40% of our number, which is somewhere around $7.8 in ARPT is lower than the 10% to 15% because it doesn't apply to all patients.

Got it. Okay. And then on G and A per treatment, I think that was up 6% sequentially and 11% year over year that looks like a big acceleration and maybe stronger than typical seasonality. Any additional color on what's driving that?

Yes. Thanks, Andrew. I think the best way to think of G and A is in two parts. One is the let's call it the traditional, which is just a sort of thinking of it as a cost basis. The second part is now an investment portfolio that we have in there.

And so the examples that come to mind is IT, where we're getting a lot of benefit on another cost line item or our revenue operations where you're picking up the benefit obviously on RPT. And so the better way to think about that is that about half and half of that split and so you're just getting the inflationary part of the cost item and we're getting good productivity on the other half.

Okay. And then on the patient care costs, I think that benefited from a gain on settlement in the quarter. Can you quantify that for us?

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