Fresenius Medical Care AG (FMS) 2011 Q2 法說會逐字稿

Good afternoon, and welcome to the conference call of Fresenius Medical Care, which is now starting. May I hand you over to Oliver Maier, Head of Investor Relations.

Thank you, Andrew. I would like to welcome all of you to Fresenius Medical Care's second quarter and first half year 2011 conference call. A warm welcome, also, to everybody out there on the Web. We much appreciate your continued interest in our Company.

With us today here in the room are Ben Lipps, our Chief Executive Officer and Chairman of the Management Board of Fresenius Medical Care, and Mike Brosnan, our Chief Financial Officer.

I would like to start, as always, our presentation, also by mentioning our cautionary language mentioned in our Safe Harbor statement at the end of the presentation. For further details concerning risks and uncertainties, please also refer to our filings, including our SEC filings.

Additionally, please be reminded that any non-US GAAP measure that we might use is being reconciled to the latest comparable GAAP financial measure at the end of the presentation, and in the material provided.

And now, with that, it's my sincere pleasure to turn it over to Ben. Ben, the floor is yours.

Thank you, Oliver. Ladies and gentlemen, let me extend a warm welcome to you again, to our Board members, and all of our employees and associates around the world, and those who have joined us on the Internet. In terms of the agenda, I will discuss the business update, and Mike will cover the finances and the outlook. We will also go into a question and answer session afterwards.

Let me point out that Mr. Rice Powell, our CEO of North America and Deputy Chairman of the Management Board is also with us to answer any questions that you might have.

Turning now to chart 4, we are very pleased to report a successful second quarter and first half of 2011 with strong operating performance. We are particularly pleased with the success of our international region, given the persistent challenging business environment, with the current debt crisis around the world, and the successful expansion of our clinical network in Asia/Pacific and Europe. We would like to specifically extend our thanks to Emanuele Gatti and Roberto Fuste, Board members for this region, and to the Executive Vice Presidents leading the operations, and also to the subregions' managers in Europe, Latin America and Asia/Pacific.

Let me also thank Rice Powell and his executives in North America who have successfully coped with a major Medicare change, and who have shown very strong operating performance. Again, I'd like to thank our dedicated staff, physician associates, Management Board for their continued dedication to provide the highest quality products and patient care.

Turning now to the numbers. Second quarter, we turned in a revenue of $3.2 billion, 8% actual currency growth, 5% constant currency growth. Our net income increased by 5% to $261 million.

Turning now to chart 5, let's look a little closer at the revenue by region for Q2. North America is on target, turning in approximately $2 billion worth of revenue, and even with the major Medicare payment changes.

In International, which turned in $1.2 billion of revenue, we saw excellent overall revenue growth, with 15%, led by Asia/Pacific with 27%, Latin America 17% constant currency, and Europe with 11% constant currency. Excellent results in all regions in the International area, and also in North America, considering what we were up against this first half year.

Turning now to chart 6, let's look at Dialysis Services. We had strong global revenue growth. It was driven by a 20% constant currency growth in International, reflecting our aggressive acquisition program, combined with excellent organic growth of 8%. North America turned in $1.83 billion of revenue second quarter in this service area. International turned in about $0.53 billion or $0.5 billion of revenue in this service area.

Our same market growth continues in the same range that it has been in, North America approximately 3.2% same market growth, International 5.2%. Again, very acceptable and essentially right on target.

Now, today, we operate about 2,840 dialysis clinics -- 1,850 of them are in the US, the other 1,000 clinics are in International. We now have over 1,000 clinics in the International area. Globally, we provide dialysis service to about 226,000 patients.

Turning now to chart 7 and looking at the quality, we are very clearly and absolutely committed to improving the quality of the services and the products that we produce and provide. Our mortality continues around all regions to be in the 14% range. We have added the Asia/Pacific quality metrics. We now have over 20,000 patients in Asia/Pacific, and we have the metrics that are flowing in.

Again, I'd like to point out that over 96% of the treatments exceed the prescription that provided by the physicians in each of the regions. I'm particularly pleased with the progress we're making in North America. We have over 80% of our patients after 90 days with no catheters, and just for note, in Asia/Pacific, 95% of the patients have no catheters.

Again, North America is making great strides in terms of anemia management. We have over 75% of our patients within the 10 to 12 grams per deciliter. Again, North America is making good progress in nutritional control, and you can see that in phosphate control, Europe leads the way, and I believe this is a reflection of our online hemodiafiltration therapy.

With respect to hospitalization, North America continues to improve, less than 10 days. Asia/Pacific is in the same range. And you can see that -- I'm sorry, Europe is in the same range. Asia/Pacific is in a very low range, around 5%.

Now, it's just the beginning of the numbers. They may change a little bit, but they also could be related to the significant number of patients without catheters. In other words, we have 95% of the patients without catheters, and of course, it depends on the availability of hospitals in certain regions.

But by and large, that is still a very good performance for Asia/Pacific, and we'll track that with time.

Turning now to chart 8, looking at the revenue per treatment in both the US and International, after first quarter, we indicated that we would see on average a decline of 2% to 3% in the revenue per treatment in North America. We're clearly on that track. We are flat with respect to the first two quarters, and clearly, we will probably for the rest of the year stay in that same range because of various motions back and forth in terms of the EPO utilization and its effect on the commercial reimbursement.

Turning now to the International, pleased to note that we have a 2% increase in constant currency. That's driven by inflation updates, which we continue to receive because of our quality. And also, we have a country mix in there, but primarily, we're still very pleased, in this environment, to continue to get inflation updates and revenue increases.

Turning to chart 9, this is just an overview of our clinic network. As I mentioned, we have about 2,850 clinics. During this past year, the last 12 months, we have acquired about 213 clinics. About 200 of those are ARC and Euromedics. At the same time, we will build about 90 de novos this year, as we did last year, and so basically, we have increased our footprint, our clinic footprint in International by about 26% over the last 12 months with our expansion program, and we're in a very good space in each of the countries that's we're now providing service.

Turning to chart 10, looking at the Dialysis Products, clearly, we had a strong dialysis -- global dialysis growth with 7% constant currency, or 15% actual currency, driven primarily by the International region, which had a 23% actual currency increase, or 11% constant currency. Again, Asia/Pacific led the way, with 16% constant currency growth.

Now, of the 11% in the International external growth, about 8% of that was organic, and 3% reflected the acquisitions last year of the Korean Products business from Nikkiso, and the Gambro PD.

Turning to North America, we saw a negative impact of about 5% year over year. Again, that's driven primarily by the pharma pricing. We continue to maintain our Venofer market share of greater than 40%. That's a rebasing that we expected this year. And our actual revenue in our Dialysis Products is growing at market, or a little over -- around 3% to 3.5%.

Now, also, we have focused very heavily on the home business, the -- primarily, the PD home business in North America. They've done an excellent job. We've increased the growth of PD internally by 53% from last year, and our external PD business is up about 18%, as North America focuses on the home business with respect to the bundle, and FMC and Rice's group focuses on the internal peritoneal dialysis business, and actually, doing an excellent job.

So by and large, we're pretty much on track for our business. We've lost no market share. We've gained market share in Europe, and we've maintained our market share in our Venofer in North America.

Turning now to chart 11, US healthcare reform, I think it goes without saying that the community appreciates the government's hard work and their dedication. We were particularly pleased that the agency CMS included a 1%, 1.8% increase in dialysis reimbursement for 2012, according to basically the mandate of the Congressional Act, and also that there will be no transition adjuster for 2012. And so we're very pleased with those two moves by CMS.

We continue to support CMS' quality improvement program. There were a number of proposals that have been presented to us. We are clearly -- our Medical Advisory Board, the executives in North America, the industry is looking at those, and we'll make, basically, our responses to those in the allotted time.

I would like to open us a little discussion or give you some thoughts here. Obviously, you know that there has been an FDA label change for EPO. Our Medical Advisory Board is studying this. And clearly, I'd like to emphasize that the pharmaceutical prescriptions are individualized for better outcomes by the responsible physician. And if the Medical Advisory Board endorses a protocol, it is a recommendation to assist this position. And this is in the process. They're being studied, and I think Rice will -- may comment more, but we're studying the new FDA labeling, and how our Medical Advisory Board is looking at that, how should that basically affect their recommendations to the rest of the physicians.

Now, as a side note, a parenthesis, I'd like to point out that if you're trying to measure the risk and benefits in a hemoglobin range between 10 and 12, because of the variability, natural variability of hemoglobin, and the -- with the patients, it's very, very difficult to measure that. And so, that's why a lot of this discussion has moved around from 10 to 12, to 10 to 11, and we're -- clearly, everyone is looking at that.

However, I would like to point out, there have been a number of very well powered respective -- retrospective studies that show there is a clear minimization of mortality and hospitalization between 11 and 12 grams per deciliter, and such study is on our website, that we published in 2003.

Turning now to chart 12, and I'd like to look at the acquisitions that are being planned in North America. Clearly, we're very excited about the two acquisitions that we'll discuss today. The first one is the Liberty Dialysis Holdings. The transaction includes the purchase of 100% of Liberty Dialysis and the other remaining 51% that we do not own today of Renal Advantage. They treat about 19,000 patients. They have an excellent group of healthcare professionals, excellent quality. In fact, I believe they have the leading percentage of patients with no catheters, so we're not as good as Asia/Pacific, but clearly, I think as far as North America, they are definitely the leading area. Fast growing, good joint venture business model. And for FMC, it opens up an opportunity in 50 new metropolitan statistical areas that we're not present in today, and we believe that that is important that we have a -- the largest complete geographic network as we move into a shared savings or capitated contracts with the federal government or with the states in the future.

Now, I'd like to back off a little bit and say, if you look at our plan for '11 and '12, you can see for 2011, we were clearly focused on international expansion and coping with the bundle in the US. As we look into 2012, North America's focus will shift, since the bundle will have been digested very well. It will shift to revenue expansion. And this is just one of the steps on the way towards that 2012 objective.

Turning now to chart 13, and a little bit of an overview of the financial implications, we have -- we will have invested about $2 billion in this acquisition. We do expect that it will return about $1 billion of revenue [per share of] operation. Again, a very well run group. We do not expect any material cost synergies, but we do expect excellent growth opportunities and excellent -- basically, mingling and merging of the operations of the two companies.

We do expect that this will be accretive the first year, and we do plan to fund it from cash from operations and from debt. However, we do not expect to see our debt, on a pro forma basis in calendar year 2012, to exceed a leverage ratio of 3.0.

Turning now to chart 14, basically chart 14 just shows the locations of the Liberty Dialysis in green dots, and Renal Advantage in red dots, and there are about 260 clinics in the -- being operated by Liberty Dialysis Holdings, and these are pretty much the locations. And as I said, they complement FMC, because there are over 50 MSAs that they bring to us that we are not in today.

Now, turning to the next acquisition, on chart 15, we are in the process of acquiring American Access Care. They have 28 access centers. We have 13 access centers. We've been involved in this area for about 10 years. In fact, 10 years ago in 2001, Rice and his group introduced the access flow assessment capability on our machine, and that, for the first time, allowed us to routinely and economically measure the capability of the access and the flow characteristic access, and to predict a little better when it should have, basically, scheduled revisions.

And that clearly allows them, for the patient, they don't have long waits at the hospitals, they don't have to lose time out of their day for their dialysis clinics. Clearly, you can keep the schedules, you don't have to lose patients that come in with the access as clotted, and we find, over time, that's probably the right model as you look at integrated care, and as you look at, essentially, managing the total cost of dialysis patients.

Now, we had 12 units, or 13 units. With the 28 that we're acquiring, that clearly gives more critical mass and allows us, then, to essentially provide more capability in the area in terms of quality standards or reimbursement.

Again, I think everyone knows that ESRD, vascular access, is a significant complication for ESRD patients, and we're trying to do the best we can, as the industry has done, to provide the best care and the least intrusive vascular access revisions. This acquisition, which we hope to close fourth quarter, will add about $175 million worth of incremental revenue next year, and the purchase price is approximately $385 million. It clearly will be accretive the first year of operations.

Turning now to chart 16, that essentially just shows you where the access centers are, the AAC access centers. In those service areas, those access centers, we have about 21,000 patients being dialyzed in FMC clinics, which require about 35,000 procedures. So clearly, this is an opportunity for us to create opportunity to service the patients that are actually being dialyzed in our units. So this is very reassuring.

Turning now to my last chart, 17, really, 2011 is about two things -- cost management in the US, and expansion in the International network. And I think both of them are clearly on track. We have -- very pleased with the performance for the first six months of the year.

And I think at this point, I'll turn it over to Mike, if you can take us through some of the financials, Mike.

Thank you, Ben, and good afternoon, everyone. I'll walk you through the P&L and the cash flows, and then at the conclusion of the call, update our guidance, and then we'll have some time for questions.

On chart 19, you can see the second quarter P&L. Ben has already discussed revenue growth in detail. For the quarter, that was transformed into $510 million of operating income, growing at 9% over last year.

Operating margins grew to 16%, which is a 20 basis point improvement, and the improvement in operating margins came up, what Ben said earlier, was largely the result of an 80 basis point improvement in North America, coming from cost savings on pharmaceuticals, EPO and vitamin D, higher income from our equity method investees, and this was partly offset by the effects of the lower revenue rate coming from the bundle, higher personnel expenses and increased freight and distribution costs, both due to the increased cost of diesel fuel, as well as to an increase in our home deliveries.

In International, margins declined by 130 basis points, largely due to some foreign exchange transactions driven by the weaker US dollar and some other local currencies around the world. In addition, margins declined due to our aggressive growth of the lower margin service business relative to the Products business on a historical basis, and a small increase in one-time costs associated with acquisitions.

Interest expense is up on a net basis by 9.4%. Gross expense increased 18%, due to the increased borrowings we've had associated with our acquisitions. And this was offset, in part, by an increase in interest income, mostly related to the note receivable from Renal Advantage Partner Ltd., which was used to finance our minority interest in that venture earlier this year.

Tax expense, at $149 million, was an effective rate of 34.2%. That's consistent with our expectations for this year.

Ben has commented -- well, actually, we did have, which I discussed in last year's conference call, about a $10 million tax benefit associated with utilizing our net operating loss carry forwards. And I'm pointing that out again today, because if you were to look at our earnings after tax and adjust for that one time benefit we took in the second quarter of last year, you'd see about a 10% increase in earnings after tax, which is just clarifying the earnings momentum that we've been discussing in our guidance this year.

The 2011 tax rates, also influenced a little bit by the higher level of tax free joint venture earnings that we had in 2011.

Non-controlling interest is in line with our 2011 run rate, and earnings after tax, as I just commented, are about 5% year over year.

Turning to chart 20, which is just the half year results, just take a very quick look. As you can see, there is consistent performance in the top line at 5% constant currency. Operating earnings are up 7% to just under $1 billion, and the operating margins are flat, due to the influence we had in the first quarter associated with our activities around the world.

Interest expense is up on a net basis, 7.8%, and the underlying drivers to that are very consistent with our second quarter results.

Tax expense, $273 million, essentially almost a spot-on effective tax rate on a year over year basis of a little under 34%.

And finally, net income up 5%, consistent with our Q1 performance, and adjusted, it would be 10% quarter over quarter for last year's tax benefit.

Moving to chart 21 and just starting the discussion of cash flows, we've got a chart on days sales outstanding. You can see our DSO increased by 2 days sequentially to 82 days on a global basis. This includes an increase of 5 days in the International business to 121, and a 1 day decrease in North America.

As we expected in North America, we saw significant improvement in our DSO in the Dialysis Services business.

Regarding the rest of North America, we are seeing an increase in DSO attributable to the implementation of the bundle with some of our external products customers, and we are seeing an increase in Mexico, due to both the growth of the business, as well as some slow pay.

In the International markets, DSO has increased 5 days. We had a short break in the first quarter with flat DSOs to the fiscal year, but we're continuing to see a lengthening of the payment cycle. In particular, we're seeing this in Europe and in some countries in Asia. Having said that, government contacts at the local level are recognizing the importance of the services we're providing, and are representing to us that the amounts due will be paid.

We continue to monitor collections in the important local markets, and we continue to believe these increases do not represent an extraordinary collection risk for us. We anticipate a collection of these receivables over an extended period of time.

Moving to chart 22, and a look at second quarter cash flows, you can see our operating cash flows are back up to 10% of revenues, which is comparable to last year. And this shows a significant improvement over what you saw in the first quarter and the 10% of revenues is in line with our expectations for our full year guidance.

In the quarter, the performance reflected an improvement in earnings related cash flows of about 1%, moving from 13% to 14% of revenues. That was offset by DSOs and inventory, and a favorable change of about 1% in our other working capital elements.

Capital expenditures were about 4% of revenues, which is very consistent with our results from last year, and the split of the CapEx was about 55% maintenance, 45% expansion. As a result, free cash flow was 6% of revenues in both fiscal years, just under $200 million.

Acquisition spending, at $784 million in the quarter, was largely for the acquisition of shares of International Dialysis Centers, which is the dialysis operations of Euromedic, and a few small investments in the United States.

Turning to chart 23, and again, just a very quick look at the first half results, you can see that the operating cash flows were down just a bit. That's incorporating the slight downtick in Q1. But again, we've recovered back to what we expect in the second quarter. We expect to be at that level for the balance of the year.

Capital expenses are in line with our -- and -- are in line, and our acquisitions have been discussed at length, so I won't review that again on this chart.

Turning to chart 24, with a look at our overall leverage, in our guidance for this year, we indicated we'd be increasing our leverage from last year's level to something on the order of less than or equal to 2.8 times debt to EBITDA. On the chart in front of you, you can see that increased leverage, finishing June after the close of Euromedic at 2.77.

I will cover our updated guidance in full on the next chart, but let me speak to our plans for leverage just a bit here.

With the acquisitions of AAC and Liberty Dialysis in 2012, we'll be increasing our overall level of debt in the course of the next six months or so. At the moment, we anticipate going to the credit markets in early September, and then again, likely in the first quarter of 2012. We do believe we'll be able to place bonds in market at a very reasonable cost, as the markets both here in Europe as well in the United States offer attractive rates to companies with our rating level, and with our business profile.

Finally, we were very pleased this morning that Fitch Ratings Ltd. published their review of our Company, and upgraded the Company from BB to BB+. In their commentary, they pointed out that this upgraded rating considers the effect of the acquisitions that we just announced today.

Turning to chart 25, just to take a look at the guidance for fiscal 2011. As you can see, we are continuing our strong guidance for the year. Specifically, revenue and earnings remain unchanged from the update that we provided you in May. Please keep in mind that we are updating our guidance with regard to our acquisition plans as well. This increased acquisition activity will not contribute to 2011, due to the timing of the close, but will carry some additional one-time costs associated with legal work, regulatory reviews, and other due diligence.

We estimate that these incremental one-time costs will be in the range of $8 million to $12 million after tax for 2011. We have evaluated this incremental cost as it relates to our fiscal 2011 earnings guidance, and we've determined that we will not change the range of performance for this year, but it will make our guidance a little bit more of a challenge for us.

Moving on, on the capital side, we're confirming our guidance on capital spending at around 5% of revenues. We're running a little bit favorable to that at the moment, in half year results. And for acquisitions, we're bumping our guidance up to $1.9 billion, which we've already elaborated on earlier in the call today.

Finally, with regard to our leverage, our earnings growth and the additional borrowing we'll undertake to fund our acquisitions, leaves us to revise our guidance to less than 3 times debt to EBITDA by the end of fiscal 2011.

In conclusion, our employees around the world have been doing, and will continue to do, an extraordinary job addressing regulatory requirements, reimbursement reforms, and managing the day to day business needs of the Company, ensuring that we focus on our patients to provide them the highest quality care with the best products.

Thank you for your attention. I'll turn the call back to Oliver Maier.

Great. Thank you, Mike, thank you, Ben, for the presentation and the business update. Andrew, I think you can open up the lines for Q&A right now.

We are now starting the question and answer session. (Operator instructions) Mr. Tom Jones from Berenberg Bank, may we have your question?

Oh, good afternoon, and thank you for taking my questions. Ben, I guess you've got your laptop all loaded up with your MSP extension presentation, ready to drive off to Washington to see what you can do there. So, just in the context of the hubbub about Medicare cuts going forward, wondered what your thoughts and hopes might be for an MSP extension, and whether that's something that might come back onto the political radar fairly quickly, given what's going on over in Washington at the moment.

That was my first question. The second question was just on -- a more down to earth question, on the International Products business. The 8% underlying growth that you posted was quite impressive. I just wondered if you could give us a little bit more color as to what's driving that, and how long and how sustainable you think that kind of growth rate is in the International Products markets.

Thanks, Thomas. As far as the MSP, yes, I think the industry considers it an opportunity to save Medicare expenses, and again, it depends on, I think, this committee at the end of the year, they'll be looking for ways. So it may well turn out to be something that would get saluted this time.

Secondly, as far as the International growth, we've maintained our products growth, International, gaining market share for a number of years in the 5% to 10% range. So the 8% organic is not out of line. Now, that doesn't come easy, and there's a lot of work that everyone needs to do, but I think we'll stay in that 5% to 10% range pretty consistently going forward.

With the acquisitions that we've done in Service, we clearly have exceeded that, and also, remember, we brought the Gambro PD, and we extended our service -- our PD business in Korea.

So I think we'll be fine, and the leader in that area is clearly Asia/Pacific, and they're headed towards $1 billion in sales this year. So I believe we will continue that.

Okay. And just to follow up on the Products business, in the past, you've talked pricing being pretty challenging in the International markets, at least, like for like pricing being quite challenging. Just -- it would be helpful if you could give us an update on how those trends have developed. We've seen pricing in other areas of healthcare getting pretty difficult across the board.

Are you seeing that in the dialysis space, or are you largely maintaining like for like, or perhaps a bit of a tailwind for mixed benefit?

I think every year, we see, again, country by country, region by region, we see somewhere between 0.5% and 1% decrease in pricing, okay? But at the same time, there is also an extension of receivables, and their need to be someone to carry those.

So there is a balance here, and we're one of the groups that can actually continue to provide the products even at a difficult time as far as debt and reimbursement, so this is pretty -- trades off a little bit. But I'd say somewhere in 0.5% to 1% would be an off the cuff number that we've seen over the years.

Okay. And if I may, just one sort of CMS related follow up question. I was quite surprised to see the bottom hemoglobin limit, the 10 gram per liter, drop off the quality improvement program. I just wondered what your thoughts were on that, and how much more wiggle room that gives you with your [repay] use, whether you think that's something you'll largely ignore and still try and keep to your previous goals, or -- just some thoughts about why CMS might have removed that lower limit. It seems somewhat counterintuitive to me, and what opportunities it might throw up for FMC.

Well, let -- this is really my opinion on it, and it may or may not be indicative of the entire community, because I think they're in the process of studying this.

Basically, CMS is following the FDA guidelines, and the question is, okay, at what point do you avoid transfusions, which we all believe it's around 10. So I think you're seeing this studied. I personally believe that the lower limit of 10, we should avoid that, in terms of what it does for the patients or doesn't do for the patients.

So I believe the doctors will study it carefully, the Medical Advisory Board will study it. If indeed it disappears off of the QIP in some fashion, I believe they will still execute what they think is good medicine, and for the last 15, 20 years, we have looked at sub-10 as not being good medicine for the patient. So I believe the physician will make an individual choice, and it will still be there, whether it's in the regulations or not.

Okay.

I do believe from everything we see, because of the moving 12 down to 11, that you will see a continued decrease. I think Amgen indicated this could be another 10%. So I think there will be a migration to lower levels, but the key target for FMC, can you tighten the distribution in some way so that you don't have a large number of patients below 10. I think the answer is, it will still be there as a physician selected target.

So a little bit of a nothing done, really, from your perspective.

There will be a little bit. There will be movement down, there's no question about that. I think everybody sees that. But I do believe that the 10 will be sort of the area that most physicians will look at very carefully to make sure that a large number of patients don't fall below that.

Perfect. That's very helpful. Thanks.

Ms. Lisa Clive from Sanford Bernstein, may we have your question, please?

Good afternoon. A question on the private patients. I was a little surprised to see your revenues per patient in North America stay flat despite the removal of the transition adjustment. Now I understand that private patients who are not bundled that clearly, your EPO utilization continues to trend down. You'll actually end up losing revenues on those patients. Perhaps -- I've tried on numerous occasions to get the split of your private patients between those unbundled contracts and those on the old -- sort of, cost plus basis.

Perhaps a different tack. When do you think that that stops being a headwind for your revenue per patient?

And then second question is on integrated care opportunities. Now, the ACO draft that came out in April, I think, has really been widely criticized by the industry. It seems like there's not a hospital system that are eager to sign up.

Is this an opportunity for you, as an industry, seeing as the dialysis industry does seem like one of the few parts of the US healthcare system that is very eager, and when we got that final draft through, do you think there's a chance that the dialysis organizations could potentially be included?

Lisa, thanks for the question. The first question, in terms of the revenue per treatment, one of the reasons that we haven't basically discussed that is, yes, there will be an impact during the year as EPO drops, in terms of the effect of the utilization on the commercial revenue per treatment. And at this point in time, if you look at quarter to quarter, if you balance that ongoing increases in the dialysis, plus the Medicare, with the EPO effects and some other contracting effects, they basically balance. So that's why we said over the year, don't use 2011 and put much on the revenue per treatment, because it's really the profitability, and as things dropped during the year just in terms of pharma utilization, it will affect, and you'll see a flat revenue per treatment, and that's what we saw Q1 to Q2, even with the transition adjuster added.

As far as the integrated care, I think both CMS and members of Congress understand that the demonstration project that was basically managed by DaVita and FMC separately, but we both had demonstration projects, clearly saved and reduced mortality by 25%, reduced hospitalizations by 20%, and reduced costs by 5%. And so we are very confident that as this ASO -- ACO discussion continues, there will be an extension of this opportunity to extend this pilot program into some sort of broad scale. So we're still very optimistic that we will get to the table, and we will have some sort of integrated care program starting in 2013 or 2014.

Okay, then, just a follow up question around the revenue per treatment. If that isn't necessarily the best (inaudible) look (inaudible), we've seen 80 basis points of your (inaudible) margin improvement, now that the transition adjustment has gone away. Going into the second half of the year, will we see a continuation of that trend, I assume as EPO utilization continues to tick down, particularly given the recent change in the label?

I think that this point, we probably shouldn't speculate on that. Rice, would you like to make a comment on that?

Yes, Lisa, hi. It's Rice. I think what I'll try to give you a little bit of help with is, as you recall, we thought we'd see the EPO drop somewhere in the neighborhood of 15% to 16%, and we've been pretty darn close to that number. Now with this recent change, we are literally, as we speak, having our MAB members going back and looking at what's going on and where we may take our protocols, so there may be some incremental drop that's yet to come. I personally there will be. So we're working on that.

So we're not ready to probably give you much more guidance on that, other than, probably yes, there will be some drop, but we're (inaudible) positions to figure out exactly how we want to look at incorporating that.

I think, Lisa, let me ask Mike to comment on the margins a little bit. Mike, for the second half of the year, which includes North America, obviously?

Yes, I think, just commenting maybe a little bit higher level, that when you look at our guidance for the full year, and our performance for the first half, consistent with what we said at the beginning of the year, we're looking for the second half of the year to be stronger than the first half, so -- I think that's going to come from a number of different areas. It will come from improved operating performance, it will come from the acquisitions that we've closed, and it will come from managing our interest expenses associated with our debt levels. But I think overall, it will be a strong second half.

Great. Thanks for that.

Mr. Stephan Gasteyer from Jefferies, may we have your question?

Yes, hello, and thank you very much for taking my question. Just two of them, please, on the Liberty deal. If you could, first of all, give us some color on the Medicare, the private payer mix at Liberty. I have to assume it's about similar to the rest of your business. And secondly, I was wondering how important the customer on the Product side Liberty already is for you, and is there potential for them to switch over from one of your competitors? Thank you very much.

Rice, why don't you go ahead and take that?

Sure. Let me answer your second question first, if I may. Both Liberty and Renal Advantage were customers of ours prior to the investment we made in the first quarter. And Renal Advantage, and then with this deal that we've done and announced today, we are picking up more business, we are seeing incremental business there, so it's very beneficial for us, from that standpoint, both Products as well as Lab.

And keep in mind that Renal Advantage had a high percentage of reuse in their operation, and that will be converting to single use. Liberty has always been a single use provider, so we are seeing some increased or incremental business there as a result of our merging these operations.

Relative to Liberty and their mix of private payer to Medicare, that's really something that I can't give you a lot of detail on. That's just not the kind of numbers that we typically want to talk about, Steven - or Stephan. Sorry.

Great. Thank you very much.

Mr. Gary Lieberman from Wells Fargo, may we have your question, please?

Thanks for taking the question. Maybe just going back to the prior comments on the -- I guess the impact you're seeing from the commercial contracts and the reduction in EPO use. Is there anything that you've -- you're doing, or trying to incrementally do to get more of those contracts bundled, so that you won't see that negative impact?

Gary, this is Ben. No, we -- as I think we mentioned the first quarter, we're pretty much at a position at this point that we're satisfied with. And even though the revenue per treatment drops, obviously, the pharmaceutical utilization has a net overall positive effect. So that's why you'll want to start looking at revenue per treatment next year, probably not this year.

Okay. And then, as we try to put some numbers around the accretion for Liberty, is there any sense you can give us or any color you can give us about the margins that Liberty has, maybe compared to your average, or even the industry average?

Mike, why don't you give a little bit of flavor on that one?

Yes, I think generally, I would say that we expect the margin performance will be consistent with our business. And beyond that, I would say we do anticipate that it will be accretive to earnings after tax in year one.

And how long do you think it will take to get the margins sort of in line with the overall Company average?

Rice, I -- go ahead, Rice.

I think that -- yes, you know, I would think, Gary, we'll see that come to a point that we're happy with, probably -- give us until the middle of next year, something like that. Keep in mind that we'll be filing our Hart-Scott documents tomorrow. Obviously, we'll spend some time with the Federal Trade Commission.

So again, we don't anticipate closing until probably first months of January and February of 2012, so we'll need a little run-in time, because as you know, there's not a lot we can do actively, looking at merging the companies, until we've passed the FTC process.

Great. Thanks a lot.

Ed Ridley from Merrill Lynch, may we have your question, sir?

Yes, thank you. I had a question on the Products business, and if you could talk a little bit to the performance of Venofer and business in the period of the market data, just in that market, we've seen significant price pressure. Also, however, could you also talk about the underlying growth in your core Product business, i.e., excluding the drugs in the US. Could you give us some flavor about how well that business is tracking? Thank you.

Thanks, Ed. I need to, I think, clarify one of my points, and then I'll turn it over to Rice. Basically, we've maintained our 90% market share in the US, and I think I might have misspoke earlier. But we clearly maintained the market share, and as I mentioned last year, we've met the prices, the competition, and we felt that basically, that was the right thing to do with respect to our business.

Now I think, Rice, why don't you comment on the core business, if you would like.

Sure. Ed, Rice Powell here. I will tell you that we remain bullish on our core Products business. You've seen some growth here, tremendous growth in our home therapy lines, but in our in-center lines, we're getting back to market growth at around 3.2%. And we really anticipate, as we look out to the back half of the year, continuing to see improvement. Primarily, the key drivers there are new products. We're continuing to see a nice uptake of people purchasing our 2008T machine. We're happy with that.

We still see great momentum with our dialyzer business. We converted about 700 patients to single use in the second quarter, so we're seeing a lot of opportunity here.

So we absolutely expect that we'll continue to see our Products business improve.

I would tell you that I think we sort of had a rebasing, if you will, last year, but I believe it will -- we'll make this back into the kind of market performance you're used to seeing from North American Products here, as we go through the remainder of this year, Ed.

Ed, back on the (inaudible) pricing, because of the proven, basically, the quality of the Venofer, I think we've got an edge there, and even though there is a lot of discussions about pricing for new generics or other iron products, I believe that our quality history on this product will continue to give us a superior pricing opportunity as we go forward, and basically, as we stand here today.

Yes.

Thank you, Rice. If I could just quickly follow up on that. So would you see a -- on a -- in terms of the total North American Product business, do you believe you can return to growth for the total business by the end of the fourth quarter?

I think in our core Products, you'll absolutely see that. When I combine Venofer with that, it's going to be a strong (inaudible) once you have pricing wars, if you will, in the market, it's hard to overcome that. But what I will tell you, and it's a little murky at the moment, but our Venofer pump that we've talked about, we showed you that at Investor Day back in London last year. That has been launched, it is being very well received. Nurses are extremely happy with this product. And so I think that's going to help us in bringing more value to the Venofer franchise. But I don't want to guesstimate at this point what I think that will do to overall product growth, but I think you'll clearly see our core products, dialyzers, machines, blood lines, PD products, etc., continue on an improvement trend.

Okay, great. Thanks.

Ed, on the core products for this quarter, we actually grew over 3%, so we're clearly (multiple speakers) --

(multiple speakers) --

--- 3.2%. So we're growing at market with the core products.

No, that's very helpful. Thank you.

Mr. Martin Wales, from UBS AG, may we have your question, please?

Thank you. Firstly, now you've actually owned Euromedic -- well, outside of Portugal, for a month. Could you give us some initial thoughts on that business, and what you think it can do to your Eastern European dialysis clinics business?

And I guess secondly, I'd like to come back to Venofer. If I look back at your 2009 SEC filing, your 20-F filings, it seems to suggest you're paying a fixed dollar price away to the originators of the product in your distribution deal. Can you make some comment on whether this is a -- pricing pressure is or is not hurting your profitability?

Okay. As far as the Euromedics, I think when we discussed that last year, we said that in the seven countries that we'll be adding clinics, we have a significant presence today. So remember, we just closed this as of July 1, but we do expect that, as we mentioned last year, that it would be accretive to EAT earnings, and we also believe that the European team will be very successful integrating these clinics. And again, we're looking only at the clinic operation, not integrating the administrative parts.

We believe it will be very successful. It should be very helpful to the Service business in Europe.

Any positive or negative surprises, now you've actually owned it for a month?

No, it's -- at this point in time, no surprises, and -- but remember, we're just getting into it, but we've been working with them for almost seven months. So -- and remember, they've been a major customer of ours for a number of years, so there's a lot of knowledge between the two, and I think our team will do a very good job of integrating those clinics into our environment.

Okay, thank you.

Okay. As far as the 2009, if you read that closely, if there are major changes in reimbursement, we have an opportunity to renegotiate the price. And obviously, there have been major changes, so that's in the discussion stage.

As far as the -- essentially, profitability, remember, we're actually now a joint venture partner with Galenica, so we have access to profitability from the API. So the franchise is -- has got two parts. One of them is a distribution, and one of them is the actual partnership on the API.

So we're still very comfortable with our approach in this area, and we think we've got a very safe, effective product.

Okay, so you're getting a partial offset from your stake in the manufacturing.

Right.

And you're looking to renegotiate more advantageously?

That's correct.

Perfect. Thank you very much.

Ms. Veronika Dubajova from Goldman Sachs, may we have your question?

Yes, good afternoon. It's Veronika Dubajova here from Goldman Sachs. Thank you so much for taking my questions. I have three questions, if I can.

One, with the CMS discussion that ACO is ongoing, Ben, I was wondering if you might be able to comment maybe a little bit about what you think ACOs would look like, whether they come in 2013 or 2014, and what impact might it have on your business profitability and growth-wise.

Second, Mike, can you talk a little bit about the margin decline that you saw in the International business? What has specifically driven this? Is it particularly FX, and how should we be thinking about it for the rest of the year?

And my last question is on Vitamin D, and your contract with Abbott. Any update you can give us to that, where those negotiations are, and what kind of savings might you be able to realize as you enter the second half of the year in 2012? Thank you.

Thank you, Veronika. I'll take the first one. Mike's the second, as you said. As I mentioned, we have tremendous support at both CMS and at Congress, members of Congress, to extend the demonstrator projects, which is an ACO or an integrated care. Now, there's still discussion in terms of, should it be part of the CMS ACOs which it doesn't fit, or should it be done under a special -- the innovation department.

And so we believe, I personally believe, everyone understands the better patient care, the savings, and the value of having an integrated care approach to renal. So we still believe that we will be successful in setting up something as an industry, everyone's participating in this, even if the ACOs, as they are designated, are not received. We think we're on a separate path, or we could be on that path if they want to adopt us, and we'll find out as we go through the year.

Okay, Ben. Veronika, just to comment a little bit on the International margins. In the second quarter, I said that it was FX. It was also the fact, as you've seen over the last 18 months, we've been very aggressively acquiring Services business in the International market. And when you look at our historical margins, you tend to see that the services business margins are a very nice business for us, very profitable. Also, very good in terms of cash flows, but generally run at slightly lower margins than the Products business.

So, you know, I continue to see, just because the scale is changing a bit in the International business towards Services, that same effect as we move forward.

I wouldn't specifically comment on margin expectations for the balance of the year, because we pretty much limit our guidance to what we've covered, and we've provided earnings guidance in that regard. So that's what I would say about -- to your question.

Thank you.

We had a third question, or did you cover it? Oh.

Mr. Julien Dormois from Exane, may we have your question, please?

Hi, good afternoon, gentlemen. Thanks for taking my questions, which are basically housekeeping questions, but I was just wondering, first, in terms of guidance for the full year, in terms of organic growth, what are you guiding for? Are you still in the 3% to 4% area, and especially, I am interested in the splits between US and International, and also looking for the contribution from external growth at the Group level for full year '11.

And second one is, I actually missed the organic growth that you delivered in the International segment for both Care and Products, so if you could just remind me of them, that would be very helpful. Thank you.

Julien, this is Ben. We will try to handle your housekeeping questions. I think as far as organic growth this year, it's a little bit of a misnomer, because of all of the activities in Medicare reimbursement in the US, organic revenue growth. So that's why I focused on the same market treatment growth.

However, I believe we're still going to run the year in the 3% to 4%, if you average International and North America for our organic growth. Okay?

In terms of the organic -- in terms of the organic growth between -- and that includes both Products and Services combined. Mike, as far as the other housekeeping issues, can I refer those to you?

Yes, Julien, I'm sorry, there was -- I know you requested a lot of specifics with regard to growth rates. I think if I just go back to what I elaborated on in February and May, because of the fact that we were in a year of transition, I did comment, just as Ben has just done, kind of separating out the US market, and I had said that because of the change in the transition adjuster, we'd anticipate organic growth in the US to be about -- around 1.5%, and that we anticipated very robust organic growth in the International markets.

So, to the extent to which I've detailed that in the past, I would just confirm that we're thinking the US organic growth will be, you know, in the 1.5%, 2% range, for the fiscal year, because of the effect the bundle had on the top line revenue growth there.

Okay, thank you. And just in terms of organic growth for Care and Products, the International segment, what you reported in Q2?

In Q2, let's see -- bear with me here. Organic growth in International, you said?

Yes, I quoted him the organic growth in Products was 8% (multiple speakers) --

Yes.

And what was Service, Mike?

So, for Services, in the International markets, organic growth was a little over 8%.

Okay, thanks.

Okay.

Mr. Thomas Deitz from RBS, may we have your question, please?

Yes, hi, gentlemen. Thank you for taking my questions. I have three, if I may. First of all, I wanted to come back to Amgen. I know Rice has talked about it. Amgen said that the dosage utilization of Epogen could be down 10%, 20% to 25%. I was just wondering what you thought there on that.

Secondly, I'd like to discuss the $1.9 billion acquisition figure that you're guiding to for this year. We spent $1.1 billion in the first half. If we add AAC, we get to about $1.5 billion. Does that mean you plan to spend another $400 million through the end of the year?

And then the last question, if I may, your debt to EBITDA ratio that you've calculated, the $7.1 billion for 2011, I guess that doesn't include Liberty yet, given that the deal is closing only next year. Thank you.

Thank you. Rice, why don't you go ahead and discuss the EPO again?

Yes, Thomas, just to kind of reconfirm, we had said that we thought we would be somewhere in the 15%, 16% drop this year, and we are at about 15.4%, so I think prior to this label copy change, yes, Amgen, I believe what they talked about was 20% to 25% drop for all of calendar year '11.

Personal opinion, yes, I think it will drop some more. That's just me as a business guy speaking. We're going to have to have our MAB in position to go through and look at that. But I don't think in the first meeting that I was able to sit through with the MAB, I think we believe those are probably rational figures, but we just don't know yet. So I don't want to go too far out on a limb, but I would think it will certainly be lower than where we sit today, at 15% to 16%.

But I do want to highlight the point that Ben made. We may well decide that we want a lower limit. Our physicians may feel that's best for our patients, and we would not hesitate to go do that, just to make sure that our physicians across the entire enterprise are comfortable that we've put that lower limit in. We may not necessarily believe that not having it makes the most sense, if you will.

Okay. And Rice, maybe as we are on Amgen, can you give us an update on the contract renegotiation, when you expect that to come through, please?

Sure, Thomas. As you know, our contract is good through the end of this year, December 31. We have had some initial discussions with them, and then we both decided, both parties, as we knew they were going into significant label copy change, that we would take a break and allow them to do the things that they needed to do, and we are, now that this has taken place, back in our discussions with them.

So, we're a little later than normal, but in past years, we haven't had a big label copy change coming in the middle of our discussions. So I'm pretty comfortable with where we are, and that we'll have this done before the end of the year, Thomas.

Okay, great. Thank you.

Mike, why don't you handle the acquisitions?

Okay. Thomas, you're correct. The leverage ratio does not include the Liberty transaction, because that will be, we're anticipating, a 2012 transaction. And when I commented about going to the credit markets, I mentioned that we'd -- going into September, and then we'd follow that probably in the first quarter of next year, and that will be to finance the Liberty deal.

In terms of the acquisition activities, your math, we did -- can't argue with the [$1.1-2-3] billion year to date, so we are anticipating some additional activities in the back half of the year, associated with our acquisition program. AAC is one element, and what remains is probably $300 million to $400 million. Some of that will be new acquisitions, some of that will be fulfilling commitments on acquisitions we've closed previously with regard to milestone payments and things like that.

I would say, just to give you a little bit more color of the -- where the spend will be, it will be largely 70% in International and about 30% in the US.

Okay, thank you very much.

Mr. Oliver Kammerer from WestLB, may we have your question, please?

Oh, yes, thanks for taking my questions. I just have two or three of them. First of all, on the same store treatment growth in the US, just coming back to that, you were trending naturally about 4% last year. Now it's down to 3.2%. What has triggered the change again, and going forward, is it fair to assume that we are back to the rather, 3% to 3.5% levels?

And secondly, probably on the EPO sales share of North American, that is, the Service revenues, is it right to assume that you're not (inaudible) probably something like 15%, 16% from 20% last year?

And last but not least, is there anything, or how does the Phoslyra launch in the US go? Can we get an update on that? Thank you.

I'm sorry, Oliver. What was the last question?

The Phoslyra launch in the US. I think you got FDA approval sometime in April, April or May. Is that right?

That's right. Okay, I'll take the first one, and basically, you've got to be a little careful that the growth rate, same market growth rate in North America is around 3.5%. Sometimes we go a little bit above it. I think we're at around 4% last year. We're a little bit below it.

I wouldn't read anything into that number, but remember, right now, everybody's totally preoccupied for the first half of the year on the bundle. So I think you'll find that that will average out still around the 3.5% range.

Yes, Oliver, it's Rice. We certainly would want to see it north of the 3.2%, but we've had some things to focus on. But I think you should think that -- or, expect that that will come up.

Okay. As far as the second question was the International --

No, it was --

EPO.

No, just the share of EPO revenues in North America. I think in the past, it [figured] out to being roughly 20%, 21% of North American dilutive Care revenues. It's now closer to 15%, 16%. Is that right to assume?

This is Ben. I don't know that at this point in time, because it's all in the bundle, it's not -- we don't report it. I think what Rice said is, our actual utilization is down about 15%. So if you did the math, you'd probably end up getting something in that 15% to 18% range.

Okay, thank you.

Okay. As far as Phoslyra, I believe that we have approval, or very near approval on the Phoslyra, but obviously, the launching of it is not pinned down at this point in time.

Oliver, it's Rice. You're right, we got approval back in April. We are actually launching this week. Your timing is (inaudible). Just in the process. I looked at some of the last label copy the other day, so we should launch in that area in the next couple days.

Okay, thanks for the update.

Chris Gretler from Credit Suisse, may we have your question, please?

Yes, hi. Good afternoon. I have two questions, essentially. Now, one relates to the acquisition of Liberty. If I understand correctly, I know this is more complementary than in past transactions, relative to your existing business. So should we expect no less of an overlap and less of a divestiture (inaudible) here? And in particular, as you look at the -- you know, this revenue you provide, this $1 billion, if they declare actually a net or a gross figure. So essentially, no before or before divestitures, or no after a reasonable amount of divestiture you would expect from such a transaction?

And the second question relates to your guidance. You mentioned that your new guidance now incorporates $8 million to $12 million in one-off costs. Could you provide now a split of what of that -- you know, if (inaudible) first half, and what -- so already in your analysis, essentially. And what is about to come in the second half.

That would be all. Thanks.

Thank you. I'll -- this is Ben. I'll take the first one. Remember, Liberty Holdings is a composite of Liberty Dialysis and Renal Advantage, and Renal Advantage was a spinoff from DaVita, which we had very little overlap. And you'll notice on the map that in terms of Liberty, there's clearly a position where we have very little overlap. So we're optimistic that it will be in the same -- better than what we had with RCG, in terms of the actual antitrust.

And as far as the guidance, in terms of the revenue, this is essentially a guidance that we feel net/net will be available for the first year.

Let me close it -- let me pass it to Mike. Mike, you want to give us some more flavor on that, color on that one?

Sure, sure. The -- I guess, first, let me speak to the one-time costs. And what I quoted, the $8 million to $12 million after tax, that was with regard to the incremental guidance we've given on acquisitions. So at each point this year when we've looked at what our overall acquisition plan was, we've looked at what we anticipated those costs would be.

So the $8 million to $12 million would be associated with the incremental guidance from $1.2 billion to the $1.9 billion for this year, and also anticipates on the Liberty transaction that we'll be spending money this year in order to be ready to close in the first quarter, hopefully, of 2012.

So, the entire $8 million to $12 million is actually incremental.

Mike, you want to comment on the revenue? This is basically our estimate of where it would be with Rice.

Yes, sure, Ben. I would say that the $1 billion that you're looking at is on a gross basis. We're not -- you know, we have not tried to second guess what the government may do in its review. So that's the starting point, and then we'll see where we go from there.

Okay, and can I have one more follow up on this Liberty, actually? One thing I don't really fully get is this (inaudible) business model that Liberty has been executing. Could you compare that to your existing model, and whether you would actually now intend to now convert that to your existing model, or whether you want to keep that as an ongoing business model?

Why don't you take that one?

Sure. Thanks, Ben. Chris, what I would say is, we have our own joint ventures within Fresenius, and I don't think you'll find that the actual structure of a joint venture between the way Liberty does it or Fresenius is really any different. I think we approach those the same way.

What I really like about the Liberty model, though, is just the involvement of their physician partners, how they manage their business, their approach to the joint venture operation. So I think there is quite a bit that we can learn from them, and we're excited to have that opportunity. But don't think of this in legal terms or in structure terms, that they're fundamentally that different. I think there is a fair amount of guidance out there that we've all gotten from the government as it relates to how you structure joint ventures.

What I will point out is that all of the Liberty business is joint ventured. So they are 100% joint ventured with their physician partners. And if you look at that 260 clinics or so, around 110 of those, I believe, are joint ventures that Liberty had prior to their transaction with Renal Advantage, and then the remainder of those are Renal Advantage, which, for the most part, are 100% wholly owned.

Oh, okay. That's very helpful. Thanks a lot.

Your next question is from Lisa Clive from Sanford Bernstein. Please go ahead.

Just one follow on question on the QRP payments, and the potential reduction of the lower limit. I was just looking at the details of that, and basically, there are penalties if you have above a certain proportion of patients that are above 12. My understanding from reading the document was that the average was around 16% for the industry as a whole.

Could you just give us an update on what proportion of your patients are above 12, and particularly given that the lower limit now may go away, I imagine that makes it a lot easier to get a higher number of patients below 12.

Lisa, let me try to cover that, and Rice, you can add if you need to. Again, you can base it on your own clinic or 2007, they give you -- the change of the clinic or 2007. And obviously, with the changes in EPO, meeting the upper limit of 12 is going to be easier for most of the industry, because clearly, we've moved -- it's moved down with the new FDA regulations 18 months ago.

So, from that standpoint, I don't think we have quoted how many are above 12, but that should be a target that most of the industry will get.

Now, as we move down, we obviously, with what is going on (inaudible) wise, we probably -- the industry has more under 10, so that's going to be a tougher target to beat, based on the 2007, 2008. So there will be a tradeoff there.

Okay, and could you just give us an update on your discussions with Amgen around EPO and the potential to enter into a new long-term contract?

Okay. Rice, why don't you take that? I think we covered that a little bit. Go ahead.

Yes, Lisa, I don't know that I'm going to make you real happy there. There's not a whole lot I can tell you, other than we are talking with them. They've been a good partner. It's a great product, but I don't think I can really tell you much about where we are in our deal, other than to say that our contract is good through the end of the year. We've really sort of picked up more discussion with them, once we got through the label change. I don't think I can go much further than that, Lisa.

Okay, and then one last question on (inaudible) increase. I mean, it was interesting to see how much your PD, at least, product sales has increased recently.

Can you just talk us through the economics of PD in the clinics? I understand -- you know, a dialysis nurse would have to spend quite a bit of time with patients, teaching them about how to do the treatments and look after themselves. Is there a sort of breakeven point at which it makes sense to have a certain number of patients in any clinic? Is that something that you'd sort of bump up against, or is it just a situation where you want to try and encourage as many people home as possible?

Well, Lisa, it's Rice. A couple things. Number one, we've got to sort of take the business aspect out of this, because really, the decision to go home really comes from the patient talking with the physician and understanding as they come on the therapy what their options are. You know, am I a candidate to go home, or do I need to go into the clinic? So that's really where that discussion begins.

What I will tell you though, is, for a patient that is going to go on PD, as you recall, when the bundle came about, one of the things that helps PD was, it's a reimbursement for whether it was in-center or whether it was PD, came in at the same level. So there is an opportunity that you can consider that you don't have as much personnel, much headcount at home. Obviously, you do on an in-center basis, so there is some margin opportunity there for patients go to home on PD therapy.

But you're exactly right, in that there is training, there are other things that will go into that set of economics. But I really want to leave you, though, with the point that that's a physician decision with the patient, and once they've made that decision, then there's a whole cascade of events that goes in.

But we like the therapy, we're happy with it, we like our product offering there, and we're really sort of seeing the synergy of really good technology, and with a patient base that wants to be at home. It's just been a really good situation for us over the last couple of months to see that growth. And I think it will continue.

But keep in mind too, there's a fairly significant dropout rate in PD, meaning that patients will go home, they'll practice that therapy for a while, but then over time, perhaps, they can't stay, they lose kidney function, or maybe they've got spousal support, and people get tired of that. And then we do see some of them migrate back into the clinics.

So it's really kind of a mixed bag, if you will, as to what the long-term of that will be. But we're excited to provide that opportunity, both product-wise as well as care-wise.

Okay, thanks.

Now, I would like to turn the conference back over to Oliver Maier. Please go ahead.

Okay. Thank you so much, Andrew. Thanks for everybody actually -- for participating in the [intersection] of the Company, and we hope to talk to you soon. Thank you so much.

Thank you for joining us. Bye bye, now.

Yes, bye bye.

We want to thank Fresenius Medical Care and all the participants for taking part in this conference call. Goodbye.