Richard Felton: Thank you very much. So, two questions from me, please. The first one on Care Enablement margins. So, obviously, strong sequential improvement. But my question is how sustainable do you think that improvement is now? So, obviously, last year, you had a strong start in Q1 and then margins faded slightly through the year. Is there anything that you can call out in terms of sort of phasing for CE margins this year? Or can we expect further improvements from the solid base in Q1.That’s the first question. Then my second one is on the Q1 number for U.S. treatment volumes. Obviously, it were relatively subdued start to the year. Are you able to share any additional color or quantifications on the drivers of that between excess mortality, missed treatments and new starts? Thank you.
Helen Giza: Hi Richard, this is Helen. I’ll take those two. So, on Care Enablement margins, as you can probably tell from my tone here, we’re really excited to see the inflection point. We had said that we expected the Care Enablement margin to at least double from last year. And of course, what you see here is quite a decent step-up. We do expect there will be a little bit of phasing as we go through the quarters. And as we know, value — sorry, VBP, value-based pricing in procurement, excuse me, in China will come in at the back half of the year. But at the same time, we also expect to have further FME25 contributions and the impact from price. So, I think overall, that 6% might be an aggressive proxy for the year, but definitely trending toward that direction, but with some fluctuations probably through the quarters.
On your second question, yes, look, we all know. We are watching. I think the world is watching the U.S. treatment volume growth. And obviously, while Q1 came in line with our expectations, it is obviously still hovering around that flat piece. We did have a flu season that was a little bit stronger than we had thought. That did result in higher mortality and missed treatments in January. I think also for us, with our regional footprint, bad weather in the first six weeks of the year also impacted those missed treatments. The positive sign that we’re signaling here is referral trends are better Q4 to Q1. And then I think outside the external factors, if you will, about kind of the flu season and weather obviously, the operational double down here and pulling apart our end-to-end processes to improve our operational capabilities is well underway.
Of course, we know these things take some time, but confident in the overall plan here that we’ll get this within the range that we have obviously guided to.
Richard Felton: Great. Thank you, Helen.
Dominik Heger: So, the next question comes from Victoria from Berenberg. Victoria?
Victoria Lambert: Thanks for taking my question. Just the first one for me is, where was clinic utilization tracking in Q1. DaVita commented that they were tracking, I think it was 67% during the quarter. So it would just be good to see the comparison is between both of you. And then I saw that there was a divestiture from your Turkish clinics business. Could you give some color how big that divestment is and what other geographies you may be looking to exit this year? thank you.
Helen Giza: Hi Victoria. I’ll take the first question and maybe Martin and I, we will tag-team the second question. In terms of our utilization, I think we are seeing it very similar to DaVita. I think DaVita said 58% on their call. We are seeing it very similar in that high 50s, obviously not where we — where any of us wanted to be, but it is kind of a key focus area for us. And I think the work that we’re doing kind of on the operational turnaround, we’ll certainly help that as well. Obviously, that constrained clinic coming down by a third from quarter end last year is significant for us as well. Martin, do you want to take the numbers on the Turkey divestiture and I can speak to the overall Turkey — sorry, the rest of the divestiture few?
Martin Fischer: Yes. So, we have divested Turkey just only recently. I think there is — it’s a smaller sized business, and we think in April, exactly. And it is — sorry, yes. We closed it in April. It’s a smaller-sized business. I think it’s more in the low double-digit volume range that is relevant for us. And we are in the process or we just closed and have — in Q2, we expect the divestiture effects to materialize. And with that, I think — we also divested the remainder or signed that I meant the remainder of Latin America in April and in the first quarter as well. But for the first quarter, there is almost no effect that we have from divestitures. It will be shown in the quarter two.
Helen Giza: Sorry, on your broader question about what else is in scope, as you can see, we have — we’ve moved quite some pace from — Argentina and NCP quite the loans we list in Q1 with many of those also going into Q2 announcements and closing. We have signed roughly around $1 billion of revenues for those divestments. I think you can expect that the majority of what we had in scope is now out there. There’s a handful of things that we are still working through some other country footprint, but obviously, we can’t speak to that until it’s public and kind of maybe some other smaller assets in scope. I think we’ve been very consistent with our portfolio optimization plan here. And as you saw in our press release, we expect to get around €650 million of proceeds from what we had signed in 2024, which adds to roughly the €135 million that we got last year. I think all on track, proceeding well, a lot of activity these last few months.
Victoria Lambert: Thank you.
Dominik Heger: The next call comes from James from Jefferies. James, the line is yours.
James Vane-Tempest: Hi, thanks for taking my questions and two, if I can, please. If I can just come back to the same-store you mentioned, I think it was minus 0.7% or minus 0.3% adjusting to the acute clinics. There seems to be a different trajectory to DaVita, who I imagine also had to deal with weather and fluent things. So, I guess what are the key differences between them in your business? And did I hear correctly, you’re also reiterating the 0.5 to 2% volume rate target for 2024 if I didn’t see that in the slides. And then my second question is just on the intersegment business. I mean the margins were positive here. So, I was just kind of curious this contribute to the Care Enablement margins? And should we expect a positive margin for the eliminations in full year 2024? Thank you.
Helen Giza: Hi James, I’ll take that first question. Yes, look, there’s — clinic footprint does vary. I think there is definitely a distinction between our competitors’ performance on same-market treatment growth in ours. But the footprint does vary. We were hit pretty hard on East Coast. So, flu season should be roughly the same weather can vary. And clearly, we’ve got some operational work to do and that is well underway here, particularly on some of our processes as well as unconstraining clinics and still some labor challenging markets for us. So, we do reconfirm our growth wasn’t on the slide, I think I spoke to Ed, of 0.5% to 2%. But obviously, we know that, that is expected to step up over the course of the year. And I think what we’re looking at in terms of the patient funnel and referral trends, admissions, new patient starts, obviously, they’re all important metrics for the incoming funnel.
And then for us, operationally, we need to kind of make sure that we can get them into our clinics and service them, and that’s kind of the ongoing process work that we’re doing. In terms of the intersegment business, nothing has changed there in terms of the intercompany pricing or anything like that. So, I want to be very clear that, that’s not transfer pricing or intercompany games. This is really — the progress in Care Enablement is really underlying the operational FME25 transformation programs. But I’ve been telling you all it’s coming. We just — they take longer. We just got to be patient and now we’re starting to see that inflection, particularly on the manufacturing side, and that was evident in the first quarter as well as the continued pricing.
Martin Fischer: Also perhaps to add on the intersegment, it does not roll up into Care Enablement. It rolls up together on the corporate piece. So what you see in the Care Enablement numbers is a true Care Enablement operational performance improvement.
James Vane-Tempest: That’s very clear. Thanks very much.
Dominik Heger: Thank you, James. The next question comes from Veronika from Citi. Veronika, the line is yours.
Veronika Dubajova: Hello everyone and good afternoon and thank you for taking my questions. I will also stick to two — on two very predictable topics, I apologize. The first one is just circle back to the same market treatment growth and Helen, I don’t know if you can maybe articulate a little bit better your expectation of the cadence of growth as we move through Q2, Q3, and Q4. I guess would you already expect to be in the 0.5% to 2% range in the second quarter? Or do we need to wait for that until 3Q or Q4? And then apologies for being picky, but any impact from day number of days in Q1? And if you can just remind us if that’s included or excluded in the minus 0.7, apologies. I should have asked that of Dominik first thing this morning, but I forgot.
My second question is just a bigger question on your revenue per treatment expectations. I know you don’t comment on this, but obviously backing out the same market and it does look like revenue per treatment in Q1 was very healthy. Anything unusual here? And if you can give us an update on Medicare Advantage and how that’s trending and if that was a meaningful driver? Thank you guys.
Helen Giza: Hey Veronika, thank you. Same market treatment growth, not a surprise. Look, I think the cadence of growth, our expectation is that this is going to ramp up over the quarters, and we’re expecting it to be stronger in half two. I think the — obviously, I have a range out there and kind of — we’re obviously managing the guidance within that range. The work that we’re doing, some of that’s taking kind of week or months to take hold. So, I think that’s also why we’re kind of saying it will ramp up. I don’t think it will be the significant step-up like the numbers you threw out there, Veronika for Q2. But ramping up over the course of the year. The impact of dialysis days, there is actually one more day in the quarter, but we actually adjust for that in our same-market treatment growth calculation, our company anyway.
So, that has been adjusted out already. So, obviously, that kind of — it’s a negative adjustment. Moving to your RPT question. Look, this is something we — you see the revenue growth. And obviously, as you say, you back out the volume really, really pleased with the progress that we’re seeing on that line from reimbursement, from pricing and for mix. MA mix continues to grow. There was a time when I said, my gosh, if we can get this to 35%, that would be great. And now we’re north of 40% and kind of going towards that mid-40% number. So, I think the mix — commercial mix is strong, slight improvement there and then kind of obviously the contracting that comes with it. So, really pleased with the progression on the RPT.
Veronika Dubajova: Excellent. Thanks so much.
Dominik Heger: Thank you, Veronika. Next question comes from Graham from UBS. Graham, line is yours.
Graham Doyle: Hi guys. Thanks for taking my questions. Just first one on GLP-1, which hasn’t been asked it’s been a while, but we’re obviously still waiting to get more information from the flow data. But I was wondering in terms of what you have internally, do you have any data that indicates where you’re treating a patient who’s currently taking GLP-1 that it actually does translate into longer times on dialysis, i.e., lower mortality overall, therefore, benefit to you guys? So that would be question number one. And question two is, as you continue this great delivery and you’re seeing the balance sheet deleverage. What are your thoughts in terms of what you might do with that extra balance sheet room, maybe not the next sort of six to 12 months, but beyond that, particularly as you’ve obviously retrenched from some international markets that lease flex for things like, say, by one of your peers clearly does? Thank you very much.
