Fresenius Medical Care AG (FMS) 2011 Q3 法說會逐字稿

Thank you, Andrew. Good afternoon, and welcome to all of you, to Fresenius Medical Care's third quarter 2011 conference call. A warm welcome offered to everybody out there on the Web. We much appreciate your continued interest in our Company.

With us today here is Ben Lipps, our Chief Executive Officer and Chairman of the Management Board of Fresenius Medical Care, Rice Powell, the CEO of Fresenius Medical Care North America and Deputy Chairman of FMC, and of course, Mike Brosnan, our Chief Financial Officer.

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

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

One housekeeping item from my end actually, I have to ask for your understanding but we have to have a hard stop today at 4.50, 4.45, due to other internal commitments.

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

Thank you, Oliver. Ladies and gentlemen, let me again extend to you a warm welcome to our Board members, and all of our employees and associates around the world who are joining us on the Internet.

Our overall agenda today, I will discuss the business update, and Mike will cover the financials, and then we'll proceed into a question and answer.

Turning now to chart 4, we're particularly pleased with our successful third quarter and our first nine months of 2011. We saw the strong operating performance. We were particularly pleased with the success of our International region, given the persistent challenges in the business environment with the current debt crisis worldwide and the successful expansion of the clinic network, both Asia-Pacific (technical difficulty).

Okay, thank you very much. Again, our apologies for the technical difficulty. As I had mentioned, we are very pleased with the successful third quarter and the first nine months of 2011. We've seen strong operating performance. We're particularly pleased with the success of our International region, given the persistently challenging environment that they are seeing in the business environment and that they are operating in with the current debt crisis worldwide, and the successful expansion of our clinic network in Asia-Pacific and Europe.

We're equally pleased with the strong operating performance in North America, considering the major Medicare changes they have experienced in 2011. Again, I would like to thank the dedicated staff worldwide, our physician associates, management board for their continued dedication to providing the highest quality products and patient care in our clinics.

Turning now to the numbers on chart 4, we saw a 6% revenue increase in current currency 4% in constant currency, turning in about $3.2 billion in revenue. Net income to FMC increased by 13%, to $279 million. Mike will cover that a little more, but we also saw margin increases in the International of 150 basis points and in North America.

Turning now to chart 5, we'll take a closer look at the revenue by region. North America turned in approximately $2 billion dollars in revenue in Q3, which is flat to slightly lower, but this reflects major Medicare changes in 2011, and the EPO black box warnings as we saw them roll out in 2011. This cost us about 3% in overall revenue in 2011.

North America represents about 63% of the global revenue in the quarter. International turned in about $1.2 billion in revenue, and represents 37% of our global quarterly revenue, with a very impressive growth rate of 13% constant currency. Europe, the Middle East and Africa account for about 64% of our International revenue, and grew at 12% constant currency, also very good.

Asia-Pacific turned in $250 million in revenue. It represents about 21% of our International quarterly revenues, and grew at 10% constant currency. Latin America, $180 million in revenues, and the strongest constant currency growth of (technical difficulty) percent. So by and large, each of the International regions grew very well, and we understand in North America, basically, we're on target for the year, looking at the Medicare changes, and we'll have more information from Mike on that as we go through.

Turning now to chart 6, let's look at the Dialysis Services on a global basis. At the end of Q3, we had operated about 2,900 clinics worldwide, 1,900 of them in North America, and 1,000 in International. We provided dialysis services to about 228,000 patients. And our actual number of treatments this year increased by 9%.

North America turned in $1.85 billion in revenue, which is flat for the quarter, but their same market growth was 3%, and again, doing quite well in this environment.

International produced about $580 million in revenue, very strong growth rate of 26% in current currency, and if you correct for currency, still, a very impressive growth rate of 20%. And International had a very solid 6% same market growth. The organic revenue growth was also very impressive, at the high end of our target, at 8% for the year, led by Latin America, which had a 21% organic growth.

Turning now to chart 7, I think you certainly know from any of the past discussions with us, we have a very clear and absolute commitment to quality, both products and services. And the key quality metrics that we show each quarter for North America, Europe and Asia Pacific confirm this. And I'm very proud to say that around the world, we have excellent quality improvement programs that continue to improve our quality quarter by quarter, year by year.

Turning now and looking to chart 7, I'd like to point out that we did about 9 million treatments in the quarter, and 96% -- over 96% of those treatments we performed in Q3 exceeded the prescribed therapy. In all regions, over 80% of the patients have no catheters after 90 days on dialysis in our clinics.

North America continues to do an excellent job of typing the natural hemoglobin variation. We now have over 77% of our patients with hemoglobin between 12 --- 10 and 12 grams per deciliter.

With respect to nutrition, we now have achieved over 84% of the patients worldwide have albumins greater than 3.5, again, milligrams per deciliter.

With respect to mineral management, Europe and Asia-Pacific do a better job. We see a 76% of the patients meet less than 5.5 phosphate level in Europe, and 71% Asia-Pacific. And again, we see improvement, though, in North America, and with the various constraints that we're dealing with there, we expect that to continue to improve over time.

Hospitalization, very proud of that. North America and Europe are essentially in the same level, a little under 10 days per year. And Asia-Pacific has a significantly better outcome at 5 days per year. So all in all, around the world, we're quite pleased with the quality that we are providing the patients, and as you all know, we are never satisfied. We're always trying to improve that quality year by year, day by day.

Turning now to chart 8, let's talk about the Dialysis Services revenue per treatment. We saw a sequential $3.00 decline in revenue per treatment in the US. It was primarily accounted for by a black box warning, and it's -- includes on the physician pharmaceutical practices, especially as it affected our unbundled commercial contracts.

Our commercial mix remains stable. We expect to be in line with our projected 2% to 3% year over year average decline revenue per treatment in 2011, because of the various aspects of the bundle as we look at the year.

The good news is that our costs in North America declined by $4.00 per treatment, sequentially, again, from Q2 to Q3. The final ESRD prospective payment system and quality incentive program were released today, and by and large, they reflect the CMS recommendations. There are slight changes for productivity, but we're very pleased that essentially, these recommendations are pretty much all of the statutes, and we believe that the moving to the bundle and having an automatic update is still the right way to go, and everyone has upheld their part of the agreement.

In International, we saw a plus 2% increase in the average revenue per treatment year over year. That would be year to date for 2011, compared to the year to date 2010. This does reflect inflation updates, mix of clinics, and providing more services. The drop you see on the charts from Q2 to Q3 in revenue per treatment in dollars really reflects currency changes and mixes in clinic. So we're very pleased that the revenue per treatment growth in International, in constant currency, continues to be in the range of 1% to 2% per year, and considering the situations that we see in terms of the economic turbulence around the world, we're very pleased with what has been accomplished. We realize that will become even more and more difficult as we move into 2012 going forward. But we also have the -- the Group has, over the years, demonstrated an excellent ability to mitigate whatever cost issues, or reimbursement issues, that we see arise during the year.

Turning now to chart 9, and we'll look at the Dialysis Services clinic network status. In 2011, we have acquired 92 clinics, and we've added 54 de novos on a global basis, giving us a clinic growth rate of about 6% year over year. We do expect to add about 75 de novos in 2011, split pretty equally between North America and International. Of the 92 clinics we acquired so far in 2011, 85 of these clinics are international, with again, 85% of those clinics being in Europe. As we look ahead into 2012, we see that the acquisition activity will shift to North America with the acquisition of Liberty Dialysis, Inc.

Turning now to chart 11, I'll talk about the products' results for the third quarter. In the third quarter, we saw a 12% growth rate in actual currency (technical difficulty) for constant currency, 7% growth rate in the total product sales, and this is important that we keep our focus on the total product sales during this year, as our activities in the acquisition areas are so strong. And of course, you know, once they become an acquisition, and the clinics then become internal, those sales are not then reflected in the external sales.

North America, if you look at the total sales, actually had a sales growth of 3%, and International had a 9% constant currency growth. With respect to global external growth, we achieved 11% in actual currency and 5% in constant currency. International grew by 7%, and there, you see a decline in the external sales of about 2%. This does reflect a growth of approximately 5% in the Products, and then, a decline, or a decline in the pharma pricing for 2011, which we talked about and has allowed us, then, over 2011, to maintain our market share in all of our products, including our Venofer, which is over 90% market share at this time.

Turning now to International, we saw the international growth was driven by a strong growth in PD hemodialysis machines, dialyzers, and pharma. In North America, strong revenue growth was seen in PD hemodialysis machines and dialyzers. So during 2011 and 2012, we are now in the process of launching 8 new products on a global basis, and this, of course, takes a lot of energy, but they're excellent products, and we're finding them well received. Two new dialyzer families, one in Europe, one in the US, the T Machine in the US. We've also launched the Venofer Pump, which is part of our pharma tech programs with the IV iron. So basically, what we're doing is bringing another round of new products to the market within '11 and '12, and you'll see the impact of those as we move into 2012.

Also, I would like to comment that in the International area, we've been successful -- the Group, the management, and the managers have been successful in integrating the PD acquisition from Gambro, which closed earlier this year, and we've actually seen a growth in PD year to date of 27%, and we continue to gain market share in the PD business in the International area.

All of that activity was in International. None of the products were in the US, in the acquisition that we purchased.

So by and largely, Products business is actually, around the world, I think pretty much on track. I'm very proud of what they're accomplishing.

Turning now to chart 11, I'll give you a quick update on the status of our major acquisitions. Basically, as you note from last quarter, we closed the Euromedic Dialysis business acquisition, except for Portugal, where we're still awaiting an antitrust decision. The integration remains on track, and as you can see from the third quarter results, we're being quite successful in the integration of this part of this business.

American Access closed on October 1 in North America, and again, the team in North America is doing an excellent job. It's on track -- we believe the integration is on track, and we're looking forward to that contributing in fourth quarter.

Just recently, we have received the -- for Vifor joint venture, antitrust clearance with the key European countries. We closed the international portion of that business this week, and now, Fresenius Medical Care will be in a position to market both Ferinject and Venofer for Stage 3 and 4 and 5 ESRD outside the US. So we're looking forward to moving -- looking forward to the opportunity to continue to grow that business. Liberty Dialysis, the acquisition is on track. We expect a Q1 2012 closing.

So in summary, for the first quarter, under very difficult, I would say, global conditions, we have continued to successfully advance our strategy and our business objectives. And again, I would like to compliment and thank the dedicated 78,000 members of the Fresenius Medical Care family for a job well done for third quarter.

And at this point, I'd like to turn it over to Mike Brosnan, who will give us the financials, a clearer understanding of the financials, and we'll go into questions.

Thank you, Ben. Good afternoon, everyone. I'll guide you through the P&L and cash flows, and then comment on our guidance, then we'll have time for questions, as Ben indicated.

On chart 13, taking a look at our third quarter P&L, Ben discussed the revenue growth and its detail, so I won't spend more time on that. That was converted into $534 million of operating income, which is an 8% growth rate over last year.

Our operating margins improved by 40 basis points to 16.5% year over year. This was the result of improvements, as Ben had indicated, both in North America and in International, which was offset somewhat by increases in our corporate costs.

In North America, margins improved by 20 basis points. The improvements came from cost savings on pharmaceuticals due to changes in our anemia protocols and Vitamin D, income from equity method investees, and a reduction in our royalty for our IVR product. This was offset in part by the lower revenue rate associated with the implementation of the bundle, slightly higher personnel expenses, and increased freight and distribution costs largely related to the cost of diesel fuel and increased home deliveries.

In International, margins improved by 150 basis points, largely due to lower manufacturing costs, favorable FX, and growth in the business, in particular, in Asia.

Corporation costs were up year over year. This includes an increase in our global R&D efforts, which Ben mentioned, in terms of some of our new product introductions, some translations effects, and the costs associated with managing our global manufacturing organization. These costs include investments we're making in our plant quality systems, and the related information technology. These increases were partially offset by a reduction in our corporate legal costs in the quarter.

Moving to interest expense, interest expense, net interest expense is down slightly, by 3%. As you know, gross interest expense increased by 13%, largely associated with the increased borrowings associated with financing our acquisitions. And this was offset by an increase in interest income, mostly related to the note receivable from Renal Advantage Partners LLC, which was used to finance our minority investment in that venture in calendar year 2011.

Tax expense of $163 million was at an effective rate of 35%. This is consistent with our expectations for the year, and slightly better than last year.

Non-controlling interest at $24 million is in line with our run rate for 2011, and earnings after tax at $279 million is up 13%. This is consistent with our guidance, where we indicated that we would demonstrate earnings momentum during 2011, indicating the second half would be stronger than the first half of the year.

Turning to chart 14 and nine months' data, we'll take a quick look, and you can see very consistent performance in the top line, as Ben indicated, with 4% constant currency growth. Operating earnings at $1.5 billion is up 7%, and operating margins on a year to date basis are up 10 basis points worldwide.

The year to date margins do reflect the effects of the implementation of the bundle in the first quarter, and show the improvements that we've been demonstrating in North America's performance ever since then.

Interest expense is up on a net basis by 4%. The underlying drivers of that are very consistent with what I just mentioned for the third quarter. And tax expense of -- tax expense is at an effective rate of 34.2%, and that's consistent, slightly better than last year's results. Finally, earnings after tax, up 8% on a nine month basis to $761 million.

Moving to chart 15, our DSO improved by two days sequentially, to 80 days on a worldwide basis. And this does represent an improvement of three days in the International business, down from 121 to 118, and a four day decrease in North America, from 59 days to 55 days at the end of the third quarter.

On the International side of the business, we are managing the risks associated with the payment cycle, in particular, in Europe and in some Asian countries. Our government contacts at the local level recognize the importance of the services we are providing, and are continuing to indicate to us that the amounts due will be paid. So we expect to, again, as we've said earlier in the year, collect these funds perhaps over an extended period of time.

Moving to chart 16, and taking a look at the three month cash flows, third quarter operating cash flows are -- cash flows from operations, rather, are 14% of revenues, up from 13% last year. In the quarter, the performance reflects an improvement in earnings, related cash flows, the improvement in DSOs, partially offset by increases in other elements of our working capital.

Capital expenditures were at 4.6% of revenues, reasonably consistent with our results from last year. And the split of CapEx continues to be about 60% maintenance, 40% expansion on a worldwide basis, with slightly over half of that in our Services part of our business. As a result, free cash flows went up 10% in the quarter, which is a very strong performance.

Acquisition spending was very modest, at $49 million, representing some relatively small acquisitions that we've done on a global basis.

Turning to chart 17, which is the nine month view of cash flows, you can see that we're back to a level of performance of 10% of cash flow from operations, which is what we've guided to for the year. Capital costs are in line, and you're very familiar with the acquisitions that we've been discussing all year, which, on a year to date basis, we're just below $1.2 billion.

Turning to chart 18, and our debt to EBITDA, or our leverage ratios, we -- in our guidance for this year, we indicated that we would be increasing our leverage from 2010 levels of 2.38 to less than 3 times debt to EBITDA. On the chart in front of you, you can see a decline in our leverage of 22 basis points from the second quarter. This is due, obviously, to the improvement we've had in EBITDA, which is on a 12 month trailing basis, positive free cash flows, and favorable exchange rates.

With the investments we'll be making in the fourth quarter, American Access, which is one of the ones that Ben just mentioned, our full year guidance remains unchanged.

Looking at the capital markets, you know we completed a number of transactions in the European and US markets since our last conference call. We've raised just a little over $1 billion. And at the moment, we anticipate going back into the credit markets in the first quarter of 2012 in connection with our closing of the Liberty Dialysis transaction.

The credit markets have improved, and they continue to -- and they're offering attractive rates to companies with our ratings level and our business profile.

Turning to my last chart, relative to guidance, you can see that we're continuing on our guidance for the year. Specifically, revenue and earnings remain unchanged from the update we provided you in May and August.

Regarding the top line, we expect we will be closer to $13 billion. From what we see, market expectations are in line with our view.

In conclusion, I'd just like to thank you for your attention, and I will turn the call back to Oliver.

Great. Thank you, Ben, thank you, Mike, for the presentation. And I think, Andrew, we can now open up the lines for Q&A.

We are now starting the question and answer session. (Operator instructions) Mr. Lieberman from Wells Fargo Securities, may we have your question?

Thanks, good morning. Thanks for taking the question. As pharma use arguably continues to come down, maybe for the remainder of this year and into next year, would you expect to continue to see pressure on your revenue per treatment from the non-bundled contracts, or do you think you'll see an increased shift towards the bundled contracts on the commercial side, which will -- what would offset any pressure there?

I think that -- Gary, it's Ben. I think as we look at next year, we'll certainly keep you informed, but we still will probably start the year with some unbundled contracts, so we'll probably see some continued pressure. But again, let's -- we'll let you know when we talk about the guidance next year, where we're going to be.

Okay. And then maybe just on the full year guidance, remained unchanged in the quarter, maybe net income was just a tad lower than where consensus was. Was there a shift in timing of everything, or did you guys just sort of -- or, did the Street just sort of see things differently from what your internal plan had been?

Gary, this is Ben again. I've got to tell you, there's no shifting, and I guess what I looked at, the Street was about $280 million, and we came in $279 million. But maybe I'm looking at a different street EBIT, EAT, so for the year.

So I think we're pretty much, one, what we expected to deliver, and the market expects us deliver in EAT, okay? Is that fair?

Okay, that's helpful. Thanks.

Christoph Gretler from Credit Suisse, may we have your question?

Yes, hi, good afternoon. I have just one question on this revenue per treatment. So, and on the same market growth, actually, so in the US, I think it was 2.9%, and you know, a tad lower than in the quarter before. And if you're looking at what de novos pre-announced by DaVita, which was substantially higher, could you compare and contrast a bit in your performance here, and why we would see such a difference, given in all your similarities in your business?

Well, that's a tough one. Let's just compliment DaVita for their 4.6%, and again, we're pretty much where we expected to be, in the 3% level. But other than that, I can't -- the metrics aren't totally agreed between the companies, but let's congratulate them. That was a good growth on their part.

So you don't -- I mean, I can only speculate, but basically, if there are no impact, maybe, from a different view of now these joint ventures, for example, or in terms of regional mix, now that these guys now basically more exposed to California, also, and all that is beneficiary to that, is this now purely speculative, or --

Well, I think there's no way to really make the comparison, so at this point, we appreciate they did a good job, and we're pleased with our quarter. Rice, do you want to add anything to that?

Yes, I think, Chris, I would say, really, if you look briefly across the US, we have four divisions. Some will grow more than others in one particular quarter, and it moves around, so I don't think there's any pattern or any lack of coverage or growth in a particular geography. I think that we've been very focused on making the bundle work, and doing some acquisitions, and doing a lot of things, and trying to grow at the same time. But I think our 3% is fairly consistent, and we'll always want to do better. But we'll keep pushing it to do better.

Okay. Thank you.

Thank you.

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

Good afternoon. I have a few questions. Number one, in both Q2 and Q3, it looks like SG&A and R&D costs seemed to grow a bit more than usual. It looked like your SG&A margin this year is about 100 basis points higher than last year. What are the drivers of this? I think you had mentioned new product introductions. Was that part of it?

And I think more importantly, looking into Q4, should we expect cost growth to be more in line or potentially even pulled back, and is this what you were potentially referring to in the press release about earnings momentum into Q4?

Lisa, good questions. I think I mentioned that we certainly are in the process of launching a number of new products around the world, and that's pretty much the R&D part of it. Mike, maybe you can give a little more color on the rest of the SG&A issue.

Sure. Yes, Lisa, on the SG&A side, it -- you can see it largely in North America, and that's really the result of two things. One is the effect of the implementation of the bundle. Revenues come down, so the same costs in the subsequent period are going to register higher in terms of margin effect.

The second thing is, we've also commented on the fact that freight and distribution costs in North America are higher, and that's largely related to the cost of diesel fuel.

Okay, great. And then, on EPO utilization, how did those things change in Q3, and what is your cumulative decline now versus last year? And then looking forward, do you think we're finally at the bottom of EPO utilization? Could there be any incremental modest decline from here over time, potentially from (inaudible) such as the move away from catheters? I know there's issues there on hyporesponsiveness.

Lisa, again, a very good question. Rice, why don't you take that?

Sure, Lisa. Hi, it's Rice. Let's do a little quick walk across on history, and I'll answer your question. If you remember back in September of 2010, I had prognosticated maybe a 5% to 10% drop, and then as we closed out 2010, and we did the February earnings call, I was saying I thought somewhere around 15% to 16%, 17% drop.

Then last call we had, we just got the label changed with FDA, and we were thinking somewhere in the 15% to 20% range. Today, we're right at that range, right at that 20% or so. I will tell you, we'll have better visibility, and I'm happy to discuss that in the first quarter next year, and the reason for that, just as the first time through, we changed our algorithms. Once the label copy came out, we had to make some changes. We are pushing that out through our system. I expect it will take us into the early part of next year to get that done.

So, could we see another little bit of drop? I think it's possible. But I don't think I'm going to sit here and tell you it's down 30%. We're at 20% today. If we're at 21% or 22%, I think that's within the range of what we see. But I do need some more time, because literally, as we got the last change pushed through with the algorithm, the label copy changed, and we kind of had to go back and readdress that. So it's taken us a little time to get that through the system.

Okay, then, one last question. Clearly, EPO utilization has been the biggest driver of the decline in operation expenses per treatment this year, but what are some of the other cost buckets that maybe haven't been fully addressed? And here, I think I'm specifically thinking about the second most costly drug component, which is the Vitamin D analogs. Is there room to get better pricing? Is there anything around utilization that could potentially shift -- if you could just comment on that?

Well, we like the contract that we have on our Vitamin D. I guess, is there room that we could do a little better if we tweak our algorithms and look at what we're doing, that might be possible. But you're absolutely right, and it's more than just EPO. There are a host of things that go through there, and we are always trying to maximize the way we approach this with our physician partners in making sure that our quality is where we want it to be, and we'll continue to push on that. That's probably the best answer I can give you at this point in time.

Is it safe to say that most of your protocol tweaking has been focused on anemia this year, given how many moving parts there have been, or have you been sort of running your Vitamin D protocols simultaneously and exploring that? Or is that something that would be a new -- a next step?

No, I would say you're spot on. We've been very focused on anemia. We have looked at bone mineral metabolism. It's probably a little less complicated than the anemia. But we've predominantly been looking at anemia, and still trying to address bone mineral as well. We try to do this as best we can in parallel, but , there's a major difference in one algorithm versus the other with what you're trying to deal

Okay, and lastly -- I'm being very piggy, but any updating on your thinking about integrated care? I guess it was a little disappointing, although wholly expected, that the dialysis industry wasn't included in the ACO final framework. So what needs to happen from here for you guys, and do you expect -- do you have anything to say on the timeline?

Yes. Hi, Lisa, this is Ben again. Actually, we were -- that was pretty much on target, because all along, the ACOs have been for hospitals and primary care. So what they've done is actually, as you know, liberalized those. We're still very -- there's a tremendous interest in the part of the industry and everyone and patients and so on, physicians in a special integrated care project for ESRD, and we've gotten -- and we've been in constant contact, as an industry, with CMS and with Congress and various places like that.

So I think the fact that that one came out, and it was liberalized a little bit, that's actually a good step. But I believe whatever we do, as we've discussed in the past, will probably not flow right through the ACO model. It will float through some sort of special model for ESRD. And we believe that's still on track, okay?

Great. Thanks.

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

Yes, thank you. Good afternoon. Veronika Dubajova here from Goldman Sachs. A couple of questions, if I can.

First of all, Mike, maybe you can give us a little bit of a sensitivity. I think we're all a little surprised by how much revenue per treatment declined this quarter, and I appreciate there are some issues, in terms of sequential versus year on year, but if I were to assume that EPO usage across your patient population declined, let's say another 5%, what kind of impact would that have on your revenue per treatment? Can you help us understand that sensitivity maybe?

We haven't talked about that level of granularity in terms of the EPO protocol on revenue. And I would say the best way to look at the -- at this point, at the year over year effects of revenue is on a year to date basis, because you've got so much changing with the bundle environment in the US.

And when you look at it on a year to date basis, you've got about a $10.00 per treatment decline in revenue rate for the year, and that's matched up pretty well with about a $9.00 -- a little over $9.00 decline in expense per treatment.

So you are seeing the flowthrough effect of the change in the EPO protocols. We're just not differentiating between internal clinics and the impact on commercial rates.

That's very helpful. And is it fair to say that you are trying to bundle more contracts before we hit year-end, or do you think your proportion of bundled versus unbundled in the private patient group will remain the same as you enter 2012?

Mike, why don't you take that one?

Okay. I think Ben (technical difficulty) a little bit earlier in the call, but we said for a while now that we think that the majority of the contracts are bundled, and we're about where we want to be in terms of bundled versus unbundled.

Ben then did make the comment, looking at 2012, that we'll take a fresh look at that, and decide what we think we may want to do in the marketplace, but we're very comfortable with where we are right now.

Okay, that's very helpful. And my last question is more about your negotiations with Amgen as you look to renew the EPO contract going forward. Any update you can share with us there, Ben?

Let's turn that over to Rice. Rice, do you want to comment on that?

Sure, Veronika. We are in process, we're talking with Amgen, very active. And obviously, we want to get this done before the end of the year. But we are continuing to meet and work that process.

Okay, that's great. Thank you.

Mr. Ellich from Piper Jaffray, may we have your question?

Good morning. Thanks, guys. Just a couple questions. Ben, I was just wondering if you could give us a little color as to what the climate's like in Washington on the regulatory and reimbursement front.

Well, I think late last night, we saw that OMB and CMS put out their final prospective payment to a system for 2012 through 2015. And as I mentioned earlier, it's very close to what CMS had recommended. I think a little bit better in terms of the actual productivity calculation for '12 was dropped from [1.2 to 0.9], but there was also some changes in the labor issues in Puerto Rico. So net/net, I think we're still very much on track for the -- around 2% increase in reimbursement for '12, which is what CMS had recommended.

They did change some of the quality incentive programs, not for '12, but for '13. They basically moved them, got rid of the -- removed the less than 10, and kept URR, and they are also talking about vascular access types.

So by and large, I think what CMS has put forth as their plan six or eight months ago continues to be validated, and is out there.

Now, I think we still believe, as I mentioned earlier, that there's some real opportunity to improve patient care with integrated care, and we're having conversations with them. So at this point in time, I don't really have a whole lot. Everybody's focused on, obviously, the super committee and what they're going to do. I have no more knowledge of that, probably, than anybody that reads the newspaper every night. We're just hopeful that they can find a reasonable solution for the US, and it looks like they're working very hard to do that. So --

Got it. And then, is there any --

(multiple speakers)?

Oh, go ahead. Sorry.

So my standpoint, we're very pleased with the response to the bundle by CMS in terms of what they have done, and I think the industry has worked well with them. We try to be partners with them.

Understood. And then, what about, is there any chatter or discussion up on the Hill about MSP extension?

Not really. Most of the activity this year, as you can imagine, is looking for savings much larger than any MSP extension. And so, most of the activity is really focused in the, what's a couple hundred billion dollar savings that we can find, not $2 billion or $3 billion. So right now, I think it's off the radar screen for the year.

Okay, that's helpful. Thanks. And then, you know, just going back to the same market growth in North America of 2.9%, and that is low historically. I guess the way I've always looked at the US dialysis market, same market growth has typically been about 4%. Is there just any fundamental change that you guys are seeing, or is it -- 3% is fine, don't get me wrong, but I'm just curious why it's dipped.

Well, our assessment, and we can -- our assessment is, the market's probably growing around 3.5%. And so, we're a little bit below it. But as Rice said, we have many activities this year, and the patients -- you know, we have some major acquisitions that we're spending our time on. So I really don't want to read a whole lot into the difference between 2.9% or 3% or 3.5%. But I don't also want to take away any compliments to DaVita on their 4.6%.

So this is just basically, I think we're where we want to be. We've put the focus where we wanted to put it this year. It's turning out well. And I wouldn't try to read a whole lot into it.

Got it. And then, just two last quick questions here. The Galenica joint venture, just curious how that's performing. And do you see any other future partnership opportunities like that? And then a quick one for Mike. Bad debt kicked up a little bit higher this quarter. Just wondering what's going on with that, and what's driving the increase.

I can answer the first two. Let me take the second one, then I'll come back to the first one. At this point in time, we've now closed the international side of the joint venture, which means that we now have an opportunity to become active in Stage 3 and 4 internationally, so quite frankly, we've got, with all the acquisitions that we're doing next year and all the activities that may come around integrated care, we probably are in a position where we're not going to be looking for any other activities, joint ventures in the pharma area. We've got enough on our plate at this point. But that's -- so that's where we are.

As far as we roll into 2011, we'll be able to share with you a little more, but we're pleased to see that we still have over 90% market share in the US in the renal space, and in International, we see quite a strong acceptance of the IVR products for both 3 through 4 through 5.

So we've got our opportunities waiting for us next year. That's probably where we'll focus, is pretty much execution. Mike, do you want to --

Yes, I'll comment on the bad debt. We did see a little bit of an uptick in the US, North America actually, in particular. That's not a trend, I think, that with all the changes that we're going through, there's just a little bit of cleanup there relative to some of the historical receivables. But nothing indicating a trend.

Okay. Thanks, guys.

Mr. Jones from Berenberg Bank, may we have your question?

Oh, good. Good afternoon. I've got a couple, actually. The first, just sort of harking back to the volume growth in the US, would you speculate that DaVita's (inaudible) percentage of volume growth in the US is really just a factor of where the differences between how the two of you are deploying capital at the moment? You've kind of shut DaVita out of the international market, with what you've done.

So do you think that the faster growth in the US is just a factor of the fact that they're allocating a bit more capital into the area at the moment, and therefore, is not really a fundamental issue for you, it's just a choice that you had better opportunities elsewhere, and you left them with US growth?

That would be my first train of thought.

Okay, Tom, I don't think it's the difference is that significant. And I clearly don't believe that -- I don't know exactly where everybody is allocating their capital, other than what we're doing. So at this point in time, other than a metric, I don't think that it's -- it really is too fundamental to what we're trying to do, and I think you'll see over time it will come back into the 3.5% to 4% range.

But we've been very focused (inaudible) on what we're doing, and that's not a -- that's not something that I think, at this point -- Rice, unless you want to add something? I don't see that as significant between the two companies.

Yes, Tom, it's Rice. I would just suggest, if you were to go back and look over the last couple of years, we've probably operated within a hundred basis point range of 2.9%, and we were up at 3.7%, 3.8%, I think last year, at points.

It will come back. Exactly when and where -- but as I look at it, and where we are today, I think it will come back. I'm not overly concerned at this point. But we try to look at it for the long haul. One quarter won't make the whole game. So stay tuned, and we'll see where it comes in next quarter.

Okay, perfect. And the second thing, I know it's probably a little bit early to tell, given it only came out last night, but when the proposed rule came out, the general consensus was that in addition to the 1.8% increase to the ESRP rate that's now kind of falling out in the 2.1% range, there was probably another 30, 40, maybe even 50 basis points improvement from other changes proposed, in the proposed version, particularly relating to outlier payments.

Would you think that it's sensible to think that those -- the changes, how the final rule shook out on those issues, that 30, 40, 50 basis points is probably still there, or would you say that we should be thinking that that's not going to come now?

Well, Tom, I'll have Rice talk to it. But honestly, it's a little too early. We're still assessing it. Rice, do you want to add anything to that?

Yes, Tom, I'm familiar with kind of the numbers that you've got in your head there. Give us a little more time. We got this late last night as we were prepping for you guys today, so we need to do some more study. So I don't want to give you a wild guess that I really haven't been thoughtful on. But we can certainly come back and give you some more color on that when we've had a little more time to look at this.

Okay. But there wasn't anything in there that gave you a big scare, put it that way?

Oh, no, it's pretty consistent. The other thing you've got to realize, we still are seeing a reimbursement leakage under the case mix of $1.00 to $2.00. I don't think it did anything like it, Rice, last night, that would change that.

So net/net, really, you ought to look at it, it's not a whole lot has changed. I don't call it negative, but it hasn't. I don't know the (inaudible), is going to be that significant.

So they kept their word, and it came out pretty much the way they expected.

Okay, great. And the last, sort of (technical difficulty), just on the International business, I'm intrigued to see that the growth in the Asia-Pac business drove a proportion of the margin expansion. It would be interesting for us if you could give us some qualitative color, if not quantitative, on how that 150 basis point split between manufacturing improvements, what was going on in Asia-Pac and foreign exchange. Just really trying to get a handle on the sustainability of that margin expansion, and whether it might increase or decrease going forward.

Okay, I think, let's -- Mike and I will do that in a double sequence here. Asia-Pacific is growing, as I said, at 10% constant currency, and remember, they're still primarily Products. And so that's really one of our stronger margins areas, but that's also quite an accomplishment, to continue to grow the Products business in that competitive area at 10% constant currency.

So, and of course, there is a growth of patients in China. We actually grew over 30% in China. So, from that standpoint, it is a growth area. We're on track to do our $1 billion this year. As far as the actual margin contribution, Mike, let me turn that to you.

Okay, sure. No, I think the best way to describe it, and I'll pick you up on your qualitative rather than quantitative --

That's good.

Yes, absolutely. I think that as Ben said, we're growing the International side of the business quite substantially, when you look at the last couple of years, both organically, as well as through our acquisition program.

But in terms of the quarter, I would say that the bulk of what you're looking at there is actually improvements in the overall cost of production, second, with the contribution from Asia, and last, the tailwind of some favorable FX in the quarter.

Okay, cool. And last question, just on the international space. We've seen one or two countries trying to get a little bit more aggressive with price, and I'm sure you've had a robust response for them. But has it been sort of fairly isolated so far? I suppose I'm referring to Portugal, or have any other countries sort of sizing up to try anything similar?

Yes, let me -- this is Ben. I'll try to answer that. Number one, I think you can't miss a newspaper to realize that everybody is looking for ways to reduce their deficits around the world, including the US as well as Europe. And so, clearly, one of the areas that has been active has been Portugal, and there's sort of two aspects to that. One of them is that there is a decrease, but -- and that's been discussed. Again, Portugal is not, in the big scheme of things, a major part of our business. But at the same time, it's 2% to 3%. But at the same time, the management there is doing an excellent job. They're looking for ways to mitigate it, and they're also basically challenging some of the reports that have surfaced, indicating what the costs have done, and the reports probably have some flaws in them.

So we're very active. We feel that we provide good service. We'd like to make sure we get paid, so we can essentially continue to invest in those countries.

So this is going to happen, and that's one of my comments that we will be -- we will have quite a bit of that next year, but so far, the management and the -- and everyone is doing a good job of containing it, and we expect to see that.

So it's not material, but it clearly is something that the team is focusing on in a -- on a very daily basis.

Okay. And just the last sort of issue du jour internationally, on receivables management. I mean, you reiterated your confidence that you're going to get paid for what you do, and I suppose dialysis is probably one of the more protected areas of care. It's pretty hard to not have people treated for dialysis. But are you doing anything material with -- as far as receivables, in terms of trying to change payment terms, and kind of moving to a cash on delivery type basis, as we've seen some companies trying to do in certain markets?

Let me take part of it, and Mike will give you some good details. I was really, really proud of where the results for third quarter --- if you look at International, and you look at North America, International actually came down two or three days in a very difficult environment. And what that really speaks to me is that our customers, our payers, appreciate the quality of the products and what we're doing.

Now, that doesn't mean that they still won't drift up in time, but everybody is on top of that, and we feel we're providing a good service, and we're being paid fairly. But Mike, why don't you -- but I was very pleased to see it -- that it has improved last quarter.

No, absolutely, Ben, and folks are doing a great job in all the markets that we operate in around the world. You know, I would tell you that we haven't -- particularly as you specifically asked about, any kind of cash upfront payments. I mean, we have not changed, fundamentally, our policy, with regard to how we interact with our customers, either on the Products or the Services side of the business. But we do encourage folks to maintain close contact, both with their third party customers, as well as their government health ministries and the like. And I think you're seeing some of the results of that with the improvement we had in the third quarter.

Perfect, that's great. I'll jump back in line.

Thank you, Tom.

Mr. Wales from UBS, please go ahead with your question.

Thank you. Firstly, could you give us a lot more color on where you are, or where you're anticipating to see pressure internationally on the reimbursement side, outside of Portugal? Secondly, just for clarification, could you be clear about what you're expecting for the American Access acquisition in the fourth quarter? And I guess my third question relates to Venofer, and could you give us some sense of quite what this royalty adjustment was that improved profitability? Thank you.

Thank you, Martin. Let me turn that one to Mike, because there's probably more financial in there than --

Okay, let me see. That was three questions, very quickly. AAC, (multiple speakers), first one, yes, okay, thank you. Because I was thinking of my answers as you were speaking, which is always a mistake.

The -- in terms of the international business, what I would say is -- and I, frankly, think it's a strength of our franchise. You know, we operate on the Services side of our business in about mid 30s, in terms of the number of countries. And what that does afford us is a level of risk mitigation when it comes to reimbursement rate.

You know, our experience now for many quarters is that when you look at this on a global basis, you always have some countries that will come down or adjust for whatever reason, and you have other countries that will increase. And we've netted out to a positive in most quarters. Occasionally you'll have a quarter where you might have a little bit of a net negative, or you're at breakeven, but for the most part, when you look at our business, we find that these things balance each other, and we end up with a net positive.

So I think our expectations are that that will continue. Obviously, governments in particular are looking much more closely at what they want to accomplish in terms of their austerity plans, with regard to their public health systems. And as someone said earlier in the call, I think the fact that we operate a service business in-country around the world, and dialysis is so important to their citizens, that they take a very hard look at it before they decide they're going to make any cuts in reimbursement. So --

Even if, say, let's say Spain, Italy and France all decided to cut reimbursements in a relatively short period of time, by (inaudible) Portugal, do you think you could still see that overall positive trend?

I'll share back and forth with Mike. One of the things you don't want to lose track of, everything Mike says is absolutely true. But remember, the dialysis is only about 30% to 40% of the actual cost to treat those patients, and that's where we really believe, over time, our integrated care program around the world will actually allow the control of costs, but not necessarily by reducing dialysis rates.

So we've got a couple things where we have in (inaudible), in-country, most of the expenses we're providing of a necessary service, and we actually know a way to save the payers money by a more coordinated approach, which takes time for everyone to accept that. But again, that is a very important fact in this business.

Mike, I'd just add that back, if you --

No, absolutely, Ben. I wouldn't add anything to your comments.

Okay. With regard to AAC, I think we had provided some guidance in the second quarter, that we anticipated revenues would be about $175 million, and that it would be accretive to earnings in year one. So I think you can use that as a guide in terms of Q4.

That's clear enough. And Venofer?

Venofer, what I would tell you is, you know, we did have an opportunity under the original agreement that we signed in 2008 to amend the royalties under the contract after the implementation of the bundle in the US. So we did have discussions that started earlier this year, and finally did amend the agreement in the third quarter. And it will be a modest improvement in the economics going forward for the remaining term of the agreement.

So I think in general, that it's a positive impact. It was contemplated when we signed the deal in 2008. It had a modest effect on Q3, because we actually anticipated this benefit in the first half of the year.

Sorry. Can you explain that?

That just means, from an accounting point of view, we had a reasonably good sense as to what we'd accomplish under the amended agreement. And so, we accrued for some of that each quarter as the year progressed.

Okay, thank you very much.

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

Yes, good afternoon, gentlemen. Most of my questions have already been asked, but I have one left on the Product side, especially in the US. I was wondering whether you could give us a feel for what's the amount for product equipment is, and whether it has improved gradually throughout the year as you had expected previously? I think the number indicates that,but I just want to reconfirm that. Thank you.

Yes, thank you. Rice, would you take that one?

Sure. Thomas, we are seeing some improvement in our machine business, that's absolutely correct. I think that what we were concerned about earlier in the year was really in more of the independent side of the market, where were people going to go with their capital, what they were going to do with it. We've seen some loosening up of that, if you will, and people are spending again.

If you look externally, our machine base was up about low double digits, so a nice increase. I do think part of that is just the technology play, quite honestly. I think people are very happy with the new T Machine and the fact that it really gives them some advantage in their clinics.

So I'm bullish, and continue to be comfortable that I think we're going to be able to maintain growth there and be comfortable with where we are from past quarters.

Perfect, thank you.

Thanks, Thomas.

Mr. Morgan from RBC Capital Markets, may we have your question?

Yes, thank you. I wanted to jump back to the question on the outcome of the super committee. Ben, I'm just curious, do you have -- other than no cuts at all, is there a preference you have, sequestration over any other specific cut?

Well, my preference doesn't mean a whole lot, but the point is, I think the country would be better off and certainly the capital markets, if they accomplish at least a $1.2 billion -- trillion dollar savings, which is the floor, rather than going to sequestration. So I'm still confident that they can do that.

Now, again, define what is sequestration. Again, if I could pronounce it properly, I guess that would help. Not really sure that would have a whole lot of impact, either, on ESRD. But again, it's not good for something to happen unilaterally without thought.

So I'm still hopeful that they will meet the minimum of the $1.2 billion, and be able to declare success.

Okay, and then just a couple of other random questions. As I look at the bad debt expense, I'm just curious -- you may not have this as an exact number, but just more qualitatively, could you describe how that breakdown (technical difficulty) mixes between International versus the US side, in terms of, is one larger than the other?

Mike, that's definitely yours.

Yes, I think what I said before is, most of the activity was in North America, and I'd probably leave it at that, in terms of qualitatively. But again, nothing that indicates a long-term trend. It's really just cleaning things up as a result of the time we've had post-bundle implementation.

Okay, thank you. And then finally, obviously, very good growth internationally, particularly in Latin America. Are there any new markets that you're looking at beyond those you've already talked about in the past, that are new opportunities for the Company to grow?

Not -- this is Ben. Not really. As you look into the next -- 2012, we are in all of the countries we'd like to be in. We're increasing our clinical network there. We sell products in 150 to 200 countries. Probably our products touch 1.5 million patients.

So we really -- we are in a position where we want to just continue to execute on the acquisitions that we have made, and some of the new, exciting things that we're doing in terms of reimbursement around the world in the integrated care and various things we're doing in International.

So I think we're in an execution mode for the next 18 months.

Okay, one more, and I'll hop off. Just any updates you have on -- with the home dialysis market, whether what you're doing, or what you're seeing in the marketplace? Thanks.

Okay. Let me ask Rice to comment about his growth in the US, and then I can finish up (multiple speakers).

Sure. Frank, we're seeing good growth in PD. We are at, in the US now, probably around 8.5%, 9% of our patient base is on home therapy. The vast, vast majority of that, say, 96% or 97% of that, is on PD. We've seen good growth there.

I think there is -- when you (inaudible) in a home with a certain patient characteristic, if you will, and we're excited about continuing to bring new technology to the market, not only in PD, but also in-home hemo as well, we're back into the market with our home machine, the K-at-Home.

So I think home is still hot. I think it's growing. But the preponderance of that, I still see as PD at the moment.

I think, as I mentioned, International, we're growing double digits. Again, part of that is because of the acquisition of the PD systems of Gambro. But we've actually picked up market share, I think, around the world. And PD is growing as a home therapy on a global basis at this point.

Did that -- did I -- (inaudible). Frank, did we get -- we lost you. Do we have to get to the answers, or did you get your questions answered?

(inaudible), more questions.

Just one moment, please. I can open up that first line once again if you wish.

Okay.

I had gone to the next question. Just a moment. Perhaps in the interest of time, we should go to the next question.

Great.

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

Thanks. My question has been answered.

Thanks, Chris.

Thank you, Chris.

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

Hi. A follow up question on the home dialysis front. I think if I recall correctly, at your Capital Markets Day last year, you had indicated that, I guess, at the time, you were -- about 8% of your US patients were home therapy, and you thought that maybe over time, that could get to 12% or so. I was just wondering whether that seems reasonable, and over what sort of timeframe. And really, if we think about the growth of the home patients, what sort of annual growth rate over the next, say, five years, is feasible? And then ultimately, what kind of financial impact could that have? Obviously, there is some incremental costs around training and education, etc. But there are also, I assume, would be lower costs from -- around the fact that you don't have nurses who need to take care of these patients, etc.

Lisa, that's a very good, broad question for us. Let me toss that to Rice right now. He can follow up on what we said (multiple speakers).

Sure. Lisa, the goal of 12% is still my goal. I think it's doable. I'm sure if you talked to some of my folks, they'd tell you I'm probably pushing pretty hard on that.

I think it's rational. I think it will take a couple of years to get there. I don't think you can do it overnight. And let's keep in mind as well that with PD, as well as home hemo, you will have patients that will come into the therapy, and then there is dropout that will occur, because at some point, people may have an experience or something that they decide they want to go in-clinic.

But I do think 12% is not irrational, but I think it will take some time to get there. I'm probably going to pass on trying to give you a five year projection, because that would be a little too speculative.

From a financial standpoint, what I will tell you is, being vertically integrated really worked for us, when you look at a home program on a vertically integrated basis, meaning, here's what the Service business sees, here's what the Product business sees. It does work for us. It is something that is advantageous, so we're going to continue to grow and focus on that market.

But as Mike had said earlier, one of the things about home is, you build your technology, and then you've got to get it to the patient. And so it does come with a cost of delivery and maintaining a system, as you suggest. But again, if you look at it on a complete basis together, one business, it's well worth doing. And patients really can't thrive at home as well as in-center, and they really like it. So we are certainly committed to the program.

Okay, and then a question I really have, more on modeling. Your press release said you -- we should expect further earnings momentum into Q4, based on acquisitions and cost management. I think on the acquisition front, you've certainly given us enough information that we can all model that properly in terms of revenue contribution, timeline, etc. But on the cost management, where should we expect the improvements to come from, looking at your OpEx per treatment in the US, does that continue to go down a little bit more around the SG&A costs, again, as I asked earlier, does that tick down a little bit? Does the R&D sort of normalize at some point? Just a little bit of clarity there would be great.

Mike, it sounds like one for you.

Okay, thanks, Ben. I think a lot of what you said is true, but I'm not sure that will all happen in the fourth quarter. (laughter)

Come on. (laughter)

I think in terms of momentum, you know, in particular, I had contrasted first and second half. We're pretty happy with the 13% improvement we've had in EAT, and obviously, from our guidance, you can figure I'm looking for something similar in the fourth quarter.

So, you know, we haven't changed our program. We indicated that we were going after cost savings in three broad areas -- North America, with regard to the bundle implementation, that continues. Obviously, a lot of it is focused on pharma, both in terms of acquisition costs as well as some of the protocols. The increased penetration in home, which Rice just talked about. And then to a lesser extent, cost savings at the clinic level.

So, we're continuing to work towards that, and you know, I think I'm not going to say any more about Q4. I haven't confirmed our guidance at this point for the year.

Okay, and then last question, on the super committee again. Going back to that sequestration alternative, my understanding is that if the committee doesn't agree on anything, that there's potentially a 2% cut to providers from Medicare. If they agree to, say, $600 billion, so half of the target, then maybe -- I assume that would be -- mean a 1% cut to Medicare reimbursement rates.

Ben, you had mentioned that you didn't think ESRD was really going to be affected by this. If there is some straight cut to Medicare, given the economic sensitivity in the ESRD industry, particularly around a lot of small clinics that are pretty close to breakeven, do you think that there could be some sort of exemption for dialysis, or is that just a hit to reimbursement that you would just have to take, and that would be partially offset by any automatic inflation adjustments?

Yes, I think, Lisa, again, this is an opinion that our lobbyists and -- again, it can vary a little bit. But the thought is, the way this was described is that if there was a sequestration, then probably the automatic updates for 2013 would not be in effect, and that's on general, about 2%, around -- in most programs. So, I'm not looking at a, necessarily, a cut, but you may not get the update.

Now, we haven't -- until we got in a bundle, 2012 is our first automatic update, we've lived for 20 years with only three updates. So I think what we're looking at is that we don't expect it to go that way, but it would be more of a -- no increase, rather than a cut, is the way our people are interpreting what you would do to -- going to sequestration, okay? So that's what I think what we're looking at.

Now, we believe with integrated care, we could actually do even better than that in terms of savings, but again, that's really probably not on the table for the super committee.

You don't think integrated care would be thrown up as a long-term cost saving measure for Medicare?

I think what we're seeing is that they're looking for very large programs, and I think they're not going to be writing -- they're not looking at writing the legislation right away. So I think at this point, we believe that would happen more through some sort of special program with CMS, than be part of the super committee at this point.

Okay, that's really useful. Thanks.

Thanks, Lisa. And are there any more questions?

Not at this time, so I'd like to turn the call back over to Oliver Maier, Head of Investor Relations for closing comments.

Great, thank you so much. So I'd like to join everybody actually in the room and actually out there for joining us today, and hope to speak to you soon. If you have any remaining questions, please get in touch with us. Thank you.

Thank you very much for joining us. Thank you.

Goodbye, guys.

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