Ryan Langston

Javier said U.S. dialysis M&A opportunities are limited given consolidation, with future domestic growth coming more from de novo centers; international remains a focus.

Javier said buyback strategy is unchanged, with front-loaded purchases this year leaving DaVita well positioned year-to-date within its leverage target.

CFO confirmed this is normal, free cash flow has higher variability and a wider range than OI, so small OI increases don't automatically translate to FCF guide changes. Same dynamic as prior year.

CEO noted dialysis is relatively insulated: non-controversial diagnosis, bundle payment structure with single DRG simplifies compliance. DaVita takes compliance seriously internally.

CEO noted ESKD MA population receives a separate 6% rate increase in 2027 reflecting CMS recognition of prior underfunding. CFO added that V28 coding intensity rebasing issues are a much smaller factor for ESRD MA rates than for the broader MA population.

CEO clarified current vaccination rates are at 80%, strong nationally but below historical 90%+ highs. The remark was aspirational. CFO added that flu vaccines do contribute to Q4 RPT and cost seasonality.

CFO reported commercial mix at ~11%, down 15bps sequentially, and does not expect it to be a significant Q4 RPT driver.

CFO framed revenue cycle as a continuous multi-year process rather than a finite project. Won't feel like 2023-2024's outsized gains, but even 10-20bps annual improvement is meaningful given the $120M OI per 1% ROPS collections. AI and automation are key levers going forward.

CEO attributed cost improvement to better employee retention (teammates staying longer) and lower training costs from more effective onboarding processes.

CFO laid out the guidance bridge: two headwinds (volume decline + cyber costs) offset by two tailwinds (Q1 operating strength + higher binder contribution) netting to no change.

CFO provided detailed seasonality framework: Q1 OI at ~20% of full year due to RPT headwinds, IKC back-half loaded, Q4 expenses higher. EPS even more back-loaded due to buyback accumulation.

CEO confirmed IKC breakeven target for 2026 remains unchanged, noting the business has tracked right on top of the model since guidance was given in 2021.

Filton framed it as a long-standing structural pattern of ER use as primary care rather than a new quarter-specific development.

No intra-quarter disclosure and no specific plan given, but Filton committed to meeting or exceeding the original $800-900 million intent.

Filton said no material increase in denials despite industry reports of more aggressive payer behavior. Technology and process investments in acute revenue cycle allowing UHS to keep pace. Plans similar behavioral revenue cycle investments over next 12-18 months.

Filton said staffing challenges vary by market across nurses, therapists, and mental health technicians. Many markets are fully staffed. 2025 was a deliberate ramp-up year for hiring in constrained markets. Having filled many vacancies, gives greater confidence in 2-3% volume target for 2026.

Filton said leverage not expected to decline further. Intentionally kept low amid policy uncertainty. May lever up for buybacks as regulatory certainty improves. Will invest where compelling returns exist but won't spend just to increase leverage.

Filton acknowledged some economic softness in Las Vegas market affecting volumes, but overall Nevada performance remains very solid with West Henderson contributing positively.

Filton said incremental free cash flow from guidance raise will fund elevated buybacks, potentially even more aggressive given current share price attractiveness.

Filton estimated $7-8M incremental profit from excess flu cases but noted possible offsetting crowd-out of procedural cases. Nevada had a light flu season despite national intensity.

Filton said physician fees tracking at the expected ~5% inflationary increase rate. Some pressure from physician fee requests but being managed within expectations.

Filton attributed strong behavioral labor performance to improving supply-demand dynamics, reduced premium pay, moderated wage inflation, and better productivity.

Filton said buybacks are typically programmatic and ratable rather than market-timed, though they remain confident in the business and committed to active repurchasing.

Hazen declined the monthly cadence outright, citing business day alignment distortions; Marks did answer the proposed rule portion favorably.

Mike clarified surgical volumes were largely recovered by quarter-end, but ER visits and emergency admissions were not recapturable.

Sam noted outpatient M&A pipeline greater than past years. Hospital/tax-exempt opportunities not yet materializing. ~$7B in approved capital pipeline for 2026-28. CapEx raised to $5-5.5B. Hospitals at 73-74% occupancy.

Mike clarified CMI up only 30bps, consistent across payer lines. AI focus on denial management and ambient documentation tools for physicians. Coding practices verified by multiple audit layers.

Sam gave contracting: largely done for 2025, 80% for 2026, one-third for 2027. Company at 73-74% occupancy with $5.5B capital in pipeline. Don't see rapid CapEx acceleration but will pursue opportunities.

Sam acknowledged not having forward scheduling data at corporate level. Reaffirmed demand assumptions hold and surgical volumes expected to recover on per business day basis.

Sam confirmed broad-based inpatient surgical growth. Outpatient decline driven by Medicaid volumes down 10%, while commercial and exchange volumes up over 1%.

Mark said Medicaid outpatient surgery is utilization-driven and local group is unit-cost/mix-driven, with moderately lower surgery trends in Medicare and ACA; not a universal driver.

Gail framed CMS matter as historical payment dispute, outlined constructive engagement with agency and compliance deadline of July 31. Did not detail specific methodology behind the $935M estimate.

Felicia confirmed states actively exploring all levers including changes to optional medical services. Enhanced FMAP no longer available forcing states to find affordability solutions. Timing generally aligns with contract year in January or July.

Mark confirmed Medicaid trend moderated less than expected. Elevated utilization in LTSS, behavioral health, inpatient medical surgery. Cost split shifted to 1/3 acuity, 2/3 utilization from 2024's 60/40.

Mark quantified flu impact at 15-20bps on BER. Severity was in line with assumptions despite modestly higher incidence than pre-COVID norms. No outsized Q2 impact expected.

Gail declined to comment on Louisiana specifically but Pete outlined strategic M&A focus on specialty trend areas, pharmacy, and technology-enabled whole health solutions.

Answered the trend split briefly but refused to discuss bid positioning by segment, citing competitors listening to the call.

George said they look back several years for bounce-back members; more recent departures are a bigger percentage of the ~30% bounce-back cohort. Celeste confirmed V28 impact at 160bps, unchanged.

James cited portfolio balance, member stability for retention, and Stars outlook. George added 91% group renewal rate with margin recovery. New business including major airline, Kentucky, Alabama.

George explained group MA margin pressure from legacy multi-year rate guarantee contracts in a maturing market. Expects margin improvement in 2026 as contracts renew, but more pressure in 2025 built into guidance.

Sarah noted states have budget savings from redetermination membership losses, and legally need actuarially sound rates. Budget pressure historically drives managed care expansion.