Dominik Heger: Thank you.
Helen Giza: If I can over the mute button. Sorry, about that. hi Graham. Yes. GLP-1s, we do have good data on the patients — our patient population that is taking GLP-1s. Two things I would say. For those that are on it, they’re not on it long enough yet for us to have any experience to kind of see what that translates into in terms of extended time on dialysis. I think maybe we have about a year’s worth of experience there. I think the other comment I would add on GLPs in outpatient population is that we have a very, very high dropout thus far of those patients that are on a GLP-1 and then kind of dropping off it pretty quickly. So, I think that the — there is a study that will read out on GLP-1 drug on dialysis. And I think that’s not expected to read out until 2027.
So, we — obviously, we’re later this month, we will have the expected readout of the double-click, if you will, of the data from flow, but everything that we’re seeing so far continues to confirm our expectations. Let me have Martin speak to the current capital allocation and delever plan, and then I’ll speak to maybe how I’m thinking about the strategy for the broader capital allocation plan.
Martin Fischer: Yes. So, Graham, we have well-articulated 2025 plan. So, until then, it is all about execution. It is about making sure that we continue to execute on our divestment plans. And we will continue to deploy capital to deleverage also kind of to make sure that we do what we can do from our side to keep the investment. There is a 3.5% own implied on applied range that we have. And I think with the 3.2%, we are well-positioned there in and there’s still some room for us to optimize. Having said that, capital allocation follows strategy and with that, I think I hand the strategy part of the question to Helen.
Helen Giza: Yes. Thank you. Graham, I think we feel really good about the capital allocation plans we have in place. And obviously, the combination of the divestments, the improving cash flow, improved operating performance is getting us to a natural delever. We’ve been asked the question a lot, it’s 3 to 3.5 times where you’re going to stick or are you going to change it? I think that answer depends on kind of our outlook. Obviously, I’m working with the leadership team pretty hard now on the strategy beyond 2025 and what those capital needs are. Obviously, we have HDF launch, clearly, sitting in our strategy wheelhouse as well as continued home and value-based care. I think we’ll be continuing to work that internally. And when we can deliver the strategy, we’ll also deliver the capital allocation plan with that.
So, we’re probably thinking next year for a Capital Markets Day on most of this. But now the focus is on strong cash flow generation, improving the profitability, delevering with the cash that we have and building headroom, particularly in this kind of volatile financial market that we’re in. I think we all feel good about the current plan.
Graham Doyle: Awesome. That’s great. Thank you very much guys.
Helen Giza: You bet.
Dominik Heger: Thank you, Graham. The next question comes from Lisa from Bernstein.
Lisa Clive: Hi there. Can you just comment on the VBP in dialysis products in China? Is that going to be consumables and machines? And also, if you could just give us rough estimate of what your Care Enablement sales in China are and assuming that, that gets cut in half, perhaps what the profit impact would be as well? Thank you.
Helen Giza: Hi Lisa. Yes, the — it’s — for that business in China, it’s consumables. I don’t think we’ve disclosed our separate revenue on the China business per se. We have built in an expected impact for VBP into our guidance outlook and kind of with what we’re seeing on tenders and so on. Expect that to be a back half impact, which also, obviously, with the Care Enablement — with the Care Enablement margin in Q1, obviously, we have — that’s why I’m saying that might be a little phasing through the quarters. So, I think what we’ve seen and what we’ve been successful on in the work there on VBP in China seems to be holding its own. And yes, we’re on good track there, I feel.
Lisa Clive: And just a follow-up question. Could you give us a rough idea of what your market share is in China consumables? I mean I think globally, you’re like in the 40%, 50% range in most markets, if I’m correct on that. Just wondering if China is different?
Helen Giza: Lisa, I don’t have that market share number to hand. Why don’t I have Dominik follow back up with you there. I mean you’re right in terms of being the clear leader in the HD product, but let me see if we can snag that market share and get back to you.
Lisa Clive: Okay, perfect. Thanks.
Helen Giza: Thanks.
Dominik Heger: thank you, Lisa. Next question comes from Robert from Morgan Stanley.
Robert Davies: Morning guys. Thanks for taking my questions. I had a few. One was just — could you give us an update because I might have missed it earlier, just in terms of where you’re seeing sort of labor inflation trends so far this year? Are those still coming down in the way you’d originally expected coming into 2024? The second one was on just sort of outlook. I know you said a medium-term margin target. Just in terms of where you’re at normalized growth rates given the sort of trend of excess mortality and I guess, kind of exiting COVID comps, there’s a lot of moving parts. So, just be curious for a little bit more color on what your expectations of what the kind of midterm growth potential for this business is likely to be. And then the final one, perhaps you could just give us an update on how things are trending around home dialysis where that is a percentage of overall kind of activity at the moment? Thank you.
Helen Giza: Martin, do you want to take the one and I’ll take the next two?
Martin Fischer: Yes. As it comes to labor inflation, we are — Robert, we are well on track. So, we have certain assumptions built into our guidance. We assumed a 5% kind of inflation being offset by efficiencies and coming down to a net 3%. We do see that confirmed in our first quarter, so it is developing in line as expectations as we also outlined in the expected headwinds. So, we are confident that we see further easing as we assumed also throughout 2024.
Helen Giza: Robert, on your question on the outlook for growth, I think we’ve been pretty consistent that we feel that the underlying fundamentals in this business are on track. The growing population, the aging population, the increasing incidence of the disease states still no substitution dialysis and small numbers of transplantation. And I think with our neutral view on GLPs, we’re still, I think, feeling confident that the return to market growth of 2% to 3% back to a pre-COVID level by the end of 2025 is on track. So, we are still confirming that. Home — your question on home, I think we’ve all been a little frustrated with the kind of the stagnation in home, and we all know why — whether it kind of the training ability of kind of training capacity of our staff.
What I would say is we have a little bit of an increase. It was still in that low 16%. But I think the trends that we’re seeing there now is a little bit of an inflection point in the number of patients being trained. So, more patients coming in for training. And the expectation and hope is that, that will translate into net patient gains, which is the important number there so we’re making progress. I think we all wish it would be faster. We know we have an aspirational goal out there, but I think this is going in tandem with the kind of the operational turnaround kind of in the clinic efficiencies as well.
Robert Davies: Okay, great. Thank you.
Dominik Heger: Thank you. The next question comes from Hugo from BNPP. Your line yours Hugo.
Hugo Solvet: Thanks Dominik. Hi guys. Thanks for taking my questions. I have two. Maybe, Helen, first, you mentioned the strong trends in terms of referral strong, just curious what’s the lag here takes to same treatment market growth? And I didn’t catch your earlier answer on the answer of the Veronika’s question. Would you expect as soon as Q2 to be at or above 0.5% for same market treatment growth? Second, a follow-up on hemodialysis. Curious to get your thoughts and views on the improving access to on dialysis act, maybe the likelihood to go through and the feedback that you’re getting from your teams in Washington? Thank you.
Dominik Heger: Thank you. Hugo, we couldn’t probably hear your first question. I think you asked how long referrals take to reflect in same market treatment growth. Is that correct?
Hugo Solvet: That’s correct. Yes, thank you.
Helen Giza: Okay. Maybe — hi Hugo, maybe I’ll take these in reverse order as we pull some numbers here. On the last one about the Dialysis Act, I don’t think — obviously, that we’re supportive of what’s going on there. We’re not expecting that, though, to have any more of an impact to us than what we’ve already got in here. If I recall correctly, it was budget neutral from CMS. So that likely will kind of maybe reduce the likelihood of getting it — getting it through. But I don’t think that changes our plans or anything on home. In terms of the same market treatment growth, I mean, I’m not going to guess what the number is for Q2. I mean I know the work that’s underway. I can see the patient funnel. Obviously, we’re expecting it to increase, but I’m not going to guess at that number right now.
