Good afternoon. My name is Josh and I'll be your conference operator today. At this time, I'd like to welcome everyone to the DaVita Q1 earnings call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer session. (Operator instructions) Thank you. Ms. Zumwalt, you may begin your conference.

Thank you, Josh, and welcome everyone to our first quarter conference call. We appreciate your continued interest in our company. I'm LeAnne Zumwalt, Vice President of Investor Relations and with me is Kent Thiry, our CEO and Rich Whitney, our CFO. I'll start with the forward-looking disclosure statement. During this call, we will make forward-looking statements which generally can be identified by the content of such statements or the use of forward-looking terminology, and includes statements that do not concern historical facts. All such forward-looking statements are subject to known and unknown risks and uncertainties that could cause the actual results to differ materially from those described in the forward-looking statements. For further details concerning the risks and uncertainties, please refer to our SEC filings including our most recent Annual Report on Form 10-K. Our forward-looking statements are based on information currently available to us and we undertake no obligation to update these statements, whether as a result of changes in underlying factors, new information, future events or other developments. Additionally, our press release and related disclosure include certain non-GAAP financial measures. These measures should be considered in addition to the results prepared in accordance with GAAP and should not be considered a substitute for GAAP results. Also included in the press release is a reconciliation of these non-GAAP measures to the most comparable GAAP financial measures. I'll now turn the call over to Kent Thiry.

Thank you, LeAnne. Q1 operating performance was solid and we are on plan for 2008. I'll provide a review of the following three items: Number one, clinical results; number two, government policy; and number three, the 2008 forecast and longer-term outlook. Number one: Clinical results: As is our custom, we will present these first. We are first and foremost a caregiving company serving over 107,000 patients. I'll report three outcome measures. First, adequacy, which is essentially how well we are doing at removing toxins from our patients' blood. This past quarter 95% of our patients had a Kt/V greater than 1.2. Second with respect to access, 58% of our patients have specialist [ph] place to receive dialysis. And third, in anemia management, 80% of our patients had a hemoglobin greater or equal to 11; taking the inverse, 20% had a hemoglobin less than 11. In each of these clinical measures, our outcomes compared quite favorable to national averages, and these numbers do relate to patients who have been with DaVita for 90 days. It is worth noting that nationally, the percent of patients with hemoglobin less than 11 has gone up approximately 25% since early '07 and the percent of patients with hemoglobin less than 10 has gone up approximately 20% from early '07. On to a Washington D.C. update or more broadly a public policy update. As many of you know, the House has their Medicare package from late last year. The Senate is literally working on Medicare as we speak, including on dialysis provisions. It is, at this point, impossible to handicap what the outcome will be with any confidence whatsoever beyond saying that if dialysis is included in the legislation, there is a reasonable probability that there will be a bundle in some form. Next, on to our outlook. Our '08 operating income guidance will remain the same 790 to 850. As to private rates, nothing significant was settled or occurred in the first quarter. We're still involved in a number of material negotiations. No clear window on when they will be resolved. And we may have to accept some patient losses in order to maintain private rates that are sufficient to offset our Medicare deficit. In case anyone has a question about '09, it's just too early for us to provide worthwhile guidance right now and no surprise, private rates and government reimbursement decisions remain the biggest swing factors. I'll now turn the call over to our CFO, Rich.

Thanks, Kent. I'd like to address a few key points about our quarter's results. First, the major drivers of our operating income results in the quarter. In Q1, we had the typical seasonal decline in treatment days. Q1 had two fewer treatment days than Q4 '07. Dialysis revenue per treatment increased $0.84 sequentially, benefitting from an increase in the Medicare drug add-on, some annual CPI rate increases and these two items were partially offset by declines in physician prescribed pharmaceuticals. Other revenue per treatment increased $0.89 and that was primarily due to the growth of our specialty pharmacy. Overall, operating expense per treatment increased $0.66 sequentially, driven by an increase in labor cost primarily because of the expected higher payroll taxes in the first quarter. Also, center-level operating expense per treatment was higher due to fewer treatment days in the quarter and these two items were offset by a decrease in General & Administrative expense of $3.20 per treatment. Q1 G&A was unusually low and as we have indicated previously, our G&A fluctuates from quarter to quarter, for example, due to the timing of consulting or professional fees, among other reasons. We expect G&A to be sequentially higher in the second quarter. And for the year, you should expect G&A to be in the range of 9% to 9.5% of revenue, but we will certainly see fluctuations from quarter to quarter. As for our cash flow, the rolling 12-month operating cash flow was $536 million. Q1 cash flow was on target and we are reiterating our operating cash flow expectations for 2008 of $480 million to $530 million. A few other comments. Non-acquired growth of 5% was unusually high, in part due to a high number of Monday, Wednesday, Friday days on the calendar in the first quarter of this year. You should continue to expect non-acquired growth to be in the 4% to 4.5% range for the year. Our effective tax rate for the quarter was 39% which is at the low end of our range of 39% to 40% due to a FIN 48 reserve reduction. We continue to expect the rate to be around 39.5% for the full year, but the rate of course may fluctuate quarter to quarter because of the effects of FIN 48 requirements. And then finally, since our last earnings call, we spent $136 million of our available cash repurchasing approximately 2.8 million shares. And operator, you can open it up for Q&A now, please?

(Operator instructions) Your first question comes from the line of John Ransom. John Ransom – Raymond James: Hi, I just had a quick one. What is the share count for the beginning of the second quarter? Thanks.

Hold on one second, John. We're checking. Since we'll throw out the answer once we have it in front of us. John Ransom – Raymond James: Okay, thanks.

Okay.

Next question, Operator?

Your next question comes from the line of Mark Arnold. Mark Arnold – Piper Jaffray & Co.: Good afternoon, great results. Just one question. Looking at the growth sequentially in your cost per treatment line, is it fair to say that the pharma utilization was pretty flat sequentially from Q4?

In the quarter, pharma utilization overall was down a bit and that's offset in the operating expenses by the other items that I mentioned. Mark Arnold – Piper Jaffray & Co.: Okay. Actually that's the only question I had, thank you.

Your next question comes from the line of Darren Lehrich. Darren Lehrich – Deutsche Bank: Thanks. Good afternoon. A few things, just a clinical question. What was the mean hemoglobin of your patient population in the first quarter?

Darren, this is Kent. I don't know off hand. I'll have somebody check. I think it was about 11.9, very close to that. I don't think it went down as low as 11.8. I know it went below 12 and I don't know that that would have changed in the opposite direction, so 11.9 is awfully close to the answer and we'll get back to you if it's anything materially different. Darren Lehrich – Deutsche Bank: Okay, so that number sounds stable with the last time I think you've discussed this on conference call, so where are we with EPO utilization and what's your view about EPO utilization declining from here?

Yes, let me take a stab at it and I have to start with that first phrase that's no fun, which is we're still not sure what is going to happen going forward because a lot of doctors are revisiting their practices and their protocols and the parts of the protocol that was developed by the DaVita Physician Council that they like and dislike, and so it's just still moves around a lot within individual physician groups. On average, however, what you saw was late in the first quarter or early in the second, the utilization started to move up a little bit. So the way some people interpreted that is that with the implementation around the new EMP, with the stop in reimbursement after a couple months and all of the focus on people above 13, that that lead many more doctors to hold, literally stop providing EPO as opposed to titrating down, in other words reducing the amount of EPO , so more doctors held leading to, A, a valley in terms of average EPO utilization use and, B, some increased volatility in our patients' hemoglobin scores as well as the increase in the sub-10 population, and then as I said late in the quarter or early in the new quarter, there was some movement back up a little bit. Therefore, some people look at that and say, "Gee, maybe we have reached the new sort of relative level of stability given it appears to have bottomed out." I'm not ready to say that, but that's all the data that we have and hopefully will help you draw your own conclusion. All of this of course could be subject to any new (inaudible) which would start changing people's point of view again. Is that responsive? Darren Lehrich – Deutsche Bank: Yes, that is helpful, Kent. As far as mortality, is there anything that you can share with us just about your mortality statistics? We haven't heard that number in some time.

Well, first let me say I just got handed the official number for the hemoglobin and it is 11.9. So we had that one right. And on mortality, there hasn't been any significant change. We remain a group with 107,000 patients, almost one out of every three patients in America and a gross mortality rate that looks very good compared to the national averages. I have not looked at this number a bit, but in for many, many months of 2007, we were in the 17s, meaning to say 7% to 17% range on gross mortality. There's been no dramatic difference that I know of, so I would guess we still look quite good there. Darren Lehrich – Deutsche Bank: Okay, and then I'll move on, I just have a couple more things and I'll jump back in the queue here. You did open quite a few de novo, so can you just comment please on what's happened? We've heard about in many other subsectors in healthcare lots of delays with regard to surveying, so did something open up for you in the quarter or are you doing something in an accelerated way that we should know about?

Short answer is no. The reason there were so many was more because we had a lot of delays in the last three months of '07 as opposed to '08 things happening faster. In addition, we are not doing as well as we have historically in terms of census at the new centers, although it's very, very early to be saying anything noteworthy there. But the number of de novos was higher than usual. It's not going to stay at that rate and it was because of last year's delays, not this year's acceleration. Darren Lehrich – Deutsche Bank: Okay. And then, Village Health, can you just bring us up to speed, do you have enrollment for Village Health? And as we look at the CMS data, Kent, there's been really negligible enrollment that they're reporting for the Village Health product that you're offering and I just want to get a sense for where you think you are relative to your plans there.

We had a lousy first quarter in enrollment, and the two primary drivers of that was, one, a lot of the executive talent focused on getting the operations infrastructure in place, which was quite a ramp up for them to pull off and second, a bunch of the other executives having to spend a lot of time in Washington D.C. working on the reauthorization of the SNP plans period. So, those are the two excuses, if you will, or explanations, neither of which of course is acceptable. We were supposed to get all that stuff done, plus hit our enrollment targets, and we didn't.

We should point out that the enrollment data on the web site is old. Darren Lehrich – Deutsche Bank: Okay. Last one from me. Bundled contract structures for managed care, are you doing anything more in this realm to, I guess, migrate any of your contracts or more of your contracts, I should say, to bundled structures, just some color there, please? Thanks.

We are non-denominational with respect to bundling versus unbundled, both in private and in the government. Having said that, the percent of our private business, which is bundled, has been growing steadily over the last 2.5 years and we predict that it will continue to. It tends to be more driven by the payers wanting to do it that way than us caring.

Thanks very much.

Thank you, Darren.

Your next question comes from the line of Clara King [ph].

Hi. Just a quick question. Just curious about the timing of the buybacks. Was there anything driving that or significant about that? It looks like there were kind of two periods where you're buying back stock?

No. I think we've broken them out in the press release in that fashion just so that we disclose the information of what was actually purchased during the quarter and then also to give you the most up-to-date information as to what we had purchased since the end of the quarter. That was the only reason why we broke them out into two periods.

Okay, thanks.

Your next question comes from the line of Bill Bonello. Bill Bonello – Wachovia Securities: Good afternoon. Just a couple of questions here. The first one is, Kent, you made some comments about you still have ongoing managed care negotiations and you may have to lose patients and what not. Can you give us any benchmark around that, any sense of the magnitude of exposure out there right now?

Let me see if I can come up with anything that's useful. We're talking to some large payers, but that doesn't necessarily mean there's going to be a large deal or a deal that involves large movement, up, down, or sideways. So, it's pretty difficult to calibrate. Why don't you come at me again, see if I can be useful at all. Bill Bonello – Wachovia Securities: Well, when you say you're talking to large payers, are you talking to large payers about rates on a national basis, rates on a multi-state basis, or rates on a zip code basis?

There's very little national conversation. They usually don't go too far on national single rate, so that's a part of it, and then you have more conversation about national multiple rates and almost inevitably, you end up having conversations about regional or state or some local rates because of the realities the payer faces in some markets or the realities we face in some markets. So it's kind of all of the above through the course of a conversation. Bill Bonello – Wachovia Securities: Okay, and maybe to just come at it one other way, I mean as you look at sort of the risk of commercial contracting today versus where you felt the risk was back at the time of the Analyst Day or sort of the time period immediately preceding that, does the risk appear to be as great?

I would say the risk is the same, Bill. I'm not willing to adjust that. Bill Bonello – Wachovia Securities: Okay. And then just a couple balance sheet questions. The allowance continues to grow north of 15% year-over-year, the balance sheet allowance, and it continues to increase as a percent of sort of gross receivables. Is that still just that you're working your way through a systems transition or –?

Yes, Bill, that's really just the timing of write-offs against the reserve and we have been consolidating and building platforms and moving things around among offices, etc., so that's really what I would point to. I think the overall, the net AR balance as reflected in DSO has been within a relatively stable and normal band and that's really what I would point you to. Bill Bonello – Wachovia Securities: Okay, and the two day uptick in DSO?

Really just a timing of cash collections, not an unusual movement from quarter to quarter. Bill Bonello – Wachovia Securities: Okay, and then just the final balance sheet question, the decrease in other receivables?

Other receivables are – there is a number of things in there, but a big part of it is rebates and so the movement is just based upon the timing of those payments. We of course accrue them throughout the course of the year and they get paid at different times. Bill Bonello – Wachovia Securities: Okay, thanks.

Sure.

Your next question comes from the line of Justin Lake. Justin Lake – UBS: Thanks. Couple questions here. I guess first, just in regards to the operating income guidance. Quarter was obviously pretty solid. It sounds like the big Risk Factors that you kind of highlighted being EPO and commercial rates, doesn't sound like there's a ton new to discuss there, but certainly not on the disastrous side some of us had feared. Is there any reason you could point us to as to why that range still needs to be so wide or why you think you're still going to be towards the bottom end of it, given what you know a third of the way through the year?

Let me take a stab at it Justin. I think everything I'm going to say it is going to sort of vanilla but let's see if it adds some value. To be honest, we probably didn't give a huge amount of thought to whether or not we should narrow the range. We just didn't and we'll certainly do that provoked by your question and it seems comfortable to keep the range the same, and it captures at this point a very substantial percentage of probabilities and we like having a range that does that. We hope that that does create real value for you guys, guys used in the non-gender laden sense, in trying to figure out how to value us, and we still think that the lower end is more likely than the upper end, so we didn't want to go out and reverse that statement, but it is true. The probabilities that were outside the range are lower than before. The probability that we fall under the bottom of the range is significantly lower than it was before. So, in that sense, your use of the word solid I think is right. A lot of things are more solid now than they were three to four months ago, if you look at the EPO stuff and the payer stuff and some of the operating variables. And perhaps my answer to Bill a moment ago was a little bit incomplete. When I was asked the question by Bill, would I characterize the risk differently today than before then, I think the risk is the same in terms of payer behavior and if anything, maybe tightened up a notch or heightened a notch just because of the pressures that some of the payers are having with their own earnings. On the other hand, as I've mentioned before, we are not operating at our best for a period last year and that's part of why what happened happened and I feel very good about having improved all aspects of our working and thinking around contracts and so in that sense that part of the risk, our own operating risk is lower than before. So do all those sentences help give you a sense that while on the one hand things are more solid, on the other hand there's nothing that's different enough to warrant changing the range? Justin Lake – UBS: Okay, any commentary around being towards the lower end of the range, maybe you could just tell us what would need to happen or what you're kind of embedding as far as EPO and commercial contracting that's going to put you there given again that solid performance so far?

No, there's nothing I can say there because, of course, our forecast is a product of every single factor. How in the heck these de novos in fact do and there's so many of them on our plate and they're little behind plan, we still don't know when some of this payer stuff is going to be resolved and exactly if we're going to be in big battles which are very expensive, even if you win, or if we're not, and so it's just not possible to sort of pick out three or four assumptions and say, "This is why we think the lower end," because it's inherently a composite of everything. Justin Lake – UBS: Okay. I'll switch topics. Just one other thing. On the minority interest side, looking at the reported number, it's down year-over-year and looks like it continues to decline and I'm just curious, has there been any bifurcation results between the facilities you've JVed with and those non-JVed facilities and maybe you could highlight some of the other factors that might be impacting that and our kind of your overall outlook towards joint venture facilities, are you seeing them increase as a percentage of the de novos or decrease?

Justin, this is Rich. The changes in minority interest are really just the timing of results and the variability of results of those joint venture operations. I don't think you can really draw any conclusion from that line item as to relative performance of joint venture facilities versus wholly owned facilities and in fact, we would predict that our minority interest line would likely trend up from here and the Q1 was low just because of the timing of how the results played out for the joint venture centers. So I wouldn't draw too much from it. It is down as you point out. It does move around a bunch and in fact, we would expect it to go back up and that's probably all you can really conclude from it. As far as our stance on joint ventures versus wholly owned, Kent, I don't know if you wanted to add anything specifically to that?

We still are very positive about owning 100% and we're still very positive about joint ventures. It's really a question or whether or not a physician wants to be a business partner and work with us to make a great center happen. We're happy to do it either way. Justin Lake – UBS: Okay, thank you very much.

Before we go to the next question, I think we almost forgot about you, John Ransom. You had the question about the share count and what we had exited Q1 at. And that number is 106.8 million shares outstanding at the end of the quarter. Next question, operator?

And your next question comes from the line of Gary Lieberman. Gary Liberman – Stanford Group Company: Thanks, good afternoon. Kent, you said in your prepared remarks that I guess some of the contracting with the large payers is still unresolved. Is that in line with your expectations or had you hoped to wrap up some of the contracting in the first quarter?

No. It is consistent with our expectations that it is unresolved and it would also be our expectation that no resolution is imminent. Gary Liberman – Stanford Group Company: Okay, and then last quarter, you said something to the effect of having battles in front of you, but you had a reasonable chance of winning a whole bunch of them. Are you still comfortable with that statement or would you change that at all?

If I said I was confident about winning a bunch, I misspoke, so I apologize for that. It's just that we could have them and if we have them, our results could be volatile because of that and I think we will win our share, but if I use word choice that was anymore – one sided in either direction, that was poor performance on my part. Gary Liberman – Stanford Group Company: I guess from the perspective of – it sounds like from your comments of having – getting by some of the operational issues you had on a contracting front and what not that you feel like you're at least in a good position to negotiate which puts you in a position to win those. Is that a fair statement?

I don't know how much further we can go in sort of refining adjectives and subjective assessments of probability that's going to add value. We think we bring a lot of value-added to the conversations with payers. Our geographic footprint, our differential outcomes, our differential ability to track outcomes, our ability to help produce hospitalizations, and then our good old willingness to battle hard, so you put all of that together, we think we can, we think it's a fair fight if a fight is what it ends up being, although of course that's not the hope. But I just don't know how much more adjective parsing we can do that's going to help refine what is in the end an unknown because we're negotiating with very serious talented thoughtful people on the other side that want a different outcome than we do and so to try to inject too much certainty into a forecast around that is just not prudent. Gary Liberman – Stanford Group Company: Okay and then maybe if I could ask some questions about some of the revenue per treatment details that you gave. You mentioned that Medicare revenue per treatment was up in the quarter. Could you just give a little bit more color in terms of what was driving that?

Yes. There was an increase in the Medicare drug add-on component of our Medicare reimbursement that was effective January 1. That would have affected the entire industry. Gary Liberman – Stanford Group Company: Okay, and then I think you also said that specialty pharma trends added $0.89 in revenue per treatment?

That's correct and that would show up in the other revenue line and that's due to the growth of that specialty pharmacy. So it's a growth rather than a pricing component. Gary Liberman – Stanford Group Company: Okay. And then I guess just in terms of thinking about the commercial component of revenue per treatment, would that have been flat or up or down in the quarter?

Overall, up a little bit. Of course, in any quarter we have some that are going up, some that are going down, and of course as we mentioned we're in discussions with a handful of larger payers but in this quarter it would have been up a little bit and in part due to annual CPI rate increases on certain portion of our portfolio. Gary Liberman – Stanford Group Company: Okay. And then I guess just one final question in terms of use of capital going forward, looks like you still have sizeable cash balance on the balance sheet. You bought back a number of shares in the quarter. How much do you still have outstanding on the current reauthorization – on the share repurchase authorization?

About $100 million outstanding under our existing Board authorization. Gary Liberman – Stanford Group Company: And then can you just maybe refresh us in terms of how the company thinks about best use of cash at this point? The stocks not trading dramatically different from where you bought back some of the shares in the quarter and is there anything potentially more interesting on the acquisition front?

Nothing has really changed in terms of the way we think about allocation of capital. Really, it's always been our policy for the last eight years or so not to talk prospectively about potential acquisitions or potential share repurchases, but instead to talk about capital allocation generally and we really haven't changed our point of view as it relates to that. To allocate our available free cash flow to grow through de novos and acquisitions and if you put on a multi-year hat and look at the structure of our industry, you probably will draw the conclusion that over an extended period of time that we're likely to generate more cash than there will be available growth opportunities and as a result, we're likely to return some capital to shareholders, particularly in absence of a change of our historic debt policy which is that business is a high free cash flow business. It's a stable free cash flow. It's not cyclical. And so we believe in that kind of business with stable cash flows not capital intensive to grow the business and sort of a low but steady growth. It's appropriate to have a reasonable amount of financial leverage on the business. Kind of put all of those things together and the conclusion is that we ought to have free cash flow to spend on acquisitions that have plenty of free cash flow to spend on de novos. We ought to have some free cash flow to return to shareholders, but again that's over an extended period of time and any one year or two, we could have plenty of growth opportunities to take our free cash flow. So, and if you go back and look at the history, that's 100% consistent with how we've allocated the capital over time. Gary Liberman – Stanford Group Company: And then just final question there, in terms of timing of the share repurchase it looks like you bought back most of the shares at the end of the quarter and even more so into the second quarter. Is there anything we should or could read into that from a timing perspective? Was there, because the stock was lower, at some point earlier in the first quarter and you didn't buy any back down sort of at the I guess what the bottom was for the first quarter? Was there something else you were waiting on to see if it was going to go or looking for better visibility into the business?

No, I don't think you should read that much into it. We bought some at lower prices. We bought some at higher prices. I don't think you should read into the specifics of the exact timing of repurchases. Gary Liberman – Stanford Group Company: Okay, thanks a lot.

Okay.

And your next question comes from the line of Darren Lehrich. Darren Lehrich – Deutsche Bank : Yes, I just have had follow-up, more housekeeping question. Can you just reconcile for me on the cash flow statement where the buyback is? I know you're saying 32 million but if I look at the cash flow statement, it's 7 million in purchases of treasury stock and maybe there's something netting against some of the items in the cash flow statement , but can you just point me in the direction of where I'd see that?

Yes. That's the right line item and the difference between that and what's disclosed in the press release is simply the settlement, so we purchased the higher amount that's quoted in the press release and the amount that we actually settled in cash is on the cash flow statement, so it takes a couple of days to settle so we just hadn't settled those extra repurchases. Darren Lehrich – Deutsche Bank : Perfect. Thanks very much.

Sure.

Your next question comes from the line of Mark Arnold. Mark Arnold – Piper Jaffray & Co.: Just a couple of follow-up questions, I'm going to take another stab on the capital side. Maybe without specifics and not asking you guys to talk about how you'd use capital but are you starting to see more potential deals that are attractive from a valuation perspective, given your access to capital in this market in either dialysis or non-dialysis businesses?

I think the answer to that is no. There really hasn't been any particular change and this is fairly highly consolidated business at this point in time, but you got to start with that and then with what's remaining, there are some mid-sized dialysis chains, and then from there, it drops off pretty quickly. But we're very active on the business development size as we always are every quarter, working on trying to find acquisitions at the right prices, but I wouldn't say there's been any shift in the availability of acquisitions that are imminent. Mark Arnold – Piper Jaffray & Co.: Okay. And outside of dialysis, in complementary businesses, such as what you guys acquired with the home infusion business last September, I mean, do you see anything in any complementary businesses that's starting to look more attractive than it has historically?

No. Mark Arnold – Piper Jaffray & Co.: Okay, and then just one last question. I think you've had some executive changes in the Village Health business in the last few months. Has that had any impact on that business and should we expect it to going forward?

We had one change, well, one departure and a couple of additions, Andrew Hayek who is running the business has gone to become the CEO of Surgical Care Affiliates, the TPG and former HealthSouth owned ASC business, and we wish him absolutely the best and we wish he was still here. But part of his charge was to build a team with a successor, and in fact prior to his decision to go there, we had already significantly changed his portfolio and added a couple of other things that were outside Village Health because we felt so good about the team he had put in place, and they've picked up the ball. Andrew in fact is still working with us. That transition is taking place right now, and so it certainly has had no impact on anything in the quarter just past or the month just past. It's not until the next month or two that there will be a difference in his working on the business. Mark Arnold – Piper Jaffray & Co.: Great. Thank you.

Thank you.

Your next question comes from the line of Gary Taylor. Gary Taylor – Banc of America Securities: Hi, good afternoon. I forgot about the earlier start time so I missed the first part of the call, so just direct me to the transcript if I repeat something. But Kent, did you talk about impact on the quarter from the new EPO monitoring policy and what your thoughts are over the next couple of quarters with that in place?

Yes, we did, so when you check out the transcript you'll be able to hear exactly what we said about EPO and the EMP. Gary Taylor – Banc of America Securities: I'll check that and then am I correct given your swap you have about a billion of floating rate debt outstanding?

Yes, that's very close to the number. Gary Taylor – Banc of America Securities: And what was the sequentially basis point move on that debt from the fourth quarter in terms of interest costs?

We're looking it up so we will let you know. Gary Taylor – Banc of America Securities: Okay. That's all I had, thank you.

Your next question comes from the line of Bill Bonello. Bill Bonello – Wachovia Securities: Just a couple of follow-up questions. You gave outlook for operating cash flow. Can you give outlook for free cash flow?

That's about $110 million less. Bill Bonello – Wachovia Securities: And that's less – and the $110 million, is that routine CapEx or what are you …

Correct. Maintenance CapEx. Bill Bonello – Wachovia Securities: Okay and what are your thoughts on development CapEx?

Acquisition and de novo, we've scheduled between $200 million to $220 million is what we've communicated. Bill Bonello – Wachovia Securities: Okay, and then just in the past, you had mentioned – when you originally gave guidance, you mentioned some expectations for what the sort of drag from your start up businesses would be. Any change there?

No. Bill Bonello – Wachovia Securities: Okay, thanks.

And your next question comes from the line of Andreas Dernago [ph].

Kent, back to the Washington issues for a second, you talked that if there is dialysis in there, there's likely to be bundling, a couple of questions on that. One is, are we generally having the conversation around 98% of the rate or are we still talking 96% of the rate and is there sort of an understanding in CMS and on Capitol Hill that if you go to bundling that it would probably include or hopefully include some form of annually mandated update?

Yes, the issue of the update is impossible to handicap, there is an awful lot of people in Congress who want to give us an update but money is tight and so how you balance those two facts, it's hard to put words around that. I think the exact words that I use is that there's a reasonable chance that a bundle would be included if dialysis was included in the legislation and there's certainly again a lot of people in Congress who would like to see us bundled but not necessarily unless there's an update to go with it so they end up being kind of linked in that sense. So, it's a great big guessing game right now and anybody who predicts an outcome with any confidence, you should immediately downgrade your assessment of their credibility.

Okay and I would then also no sort of update to your opinion last quarter that it's probably more unlikely that we'll see an MSP extension than likely, that's still the case?

Yes.

Okay. Given your comment on commercial contract negotiations, you said that the company may have to sort of lose some commercial patients in order to keep rates at acceptable rates. Are you talking about sort of loss of existing patients or are you talking about a loss of potential additional patients that recontracting could bring you?

Both.

So basically is there anything, if we look at the commercial contracting negotiations you're in, is there sort of just general pressure on pricing or is there sort of general pressure perhaps to bring those patients who are out of network in network?

Both.

Any one more than the other?

No. That would differ by payer.

Okay. When it comes to payer, based on the way that you contract, so not sort of taking the payer back to its national parent so to speak, but sort of grouping them, the way you contract with them and the way you negotiate with them, is there either you or Rich, is there any sort of comment you can make on your commercial payers in terms of concentrations, can you make the comment that there's no single payer that is more than 5% of revenues or 10% of revenue or whatever the number may be?

Well, Andreas, it really does depend upon how you cut that, as you say, and of course the payer side of the business is consolidated a bunch and so there are a handful of rather large payers if you look at it on a national basis.

Sure, but you also commented that you're not contracting on a national basis and are unlikely to contract on a national basis going forward so if you look at it on the way you are contracting, so whatever that local or regional entity might be.

Yes, I don't have those figures handy so I won't quote you an exact number, but suffice to say there are in our portfolio, there are a number of large payers depending upon whether, let's just say even if you cut it regionally versus nationally, a number of those payers want more of their patients in network. They want lower rates, and we lose money on Medicare, so we don't have much of an appetite for lower rates and so we'll have to see what happens. And I think Kent's comment is that in some cases if we don't agree on a rate, the payer may attempt to move some patients to other providers.

Sure, but is that sort of a number you just don't have handy and you can get to us or is that a number you are just not going to talk about?

Well, I just don't have it handy.

So you can get that to us?

Yes, it's a number I don't have handy, Andreas, and if you wanted to call us back to talk about it, we could talk about it a little bit more and kind of go from there, but it's not a number we've disclosed in the past, not a number I have handy, so I can't help you today.

Is the number you're talking about payer concentration in terms of percent of revenue, are you still talking about that revenue?

Yes.

Yes, it was true in the past and it's true today that there's no payer who generates more than 5% of our revenue.

Okay, great. And then just two other questions, one on Rich, I think it was your comments that part of the average revenue per treatment was hit by a decline in physician prescribed pharma this quarter. Was that comment based year-over-year or sequentially?

That was a sequential comment.

Andreas, there's one thing that you said that I think was incorrect. I did not say that I didn't think we would have any national contracts. I said that a single national rate sometimes gets discussed but usually falls apart. One could have a national contract with multiple rates embedded within it, so we right now don't make any prediction as to whether or not we'll have some national contracts but the prediction I did make is that there would be a single national rate.

Okay.

I just didn't the want you to be surprised.

No, absolutely. And basically I think for that EPO question where I'm getting at is we talked sort in the third quarter and fourth quarter that in the beginning of 2007, we saw about 2% or 3% reduction in utilization overall at the end of the more in the third and fourth quarter that had sort of accelerated to about a 5% reduction in utilization. I mean are we still basically around that same level in the first quarter?

I think it would be a bit more than that, Andreas, and I think what we had said is in the third quarter, it had been around that range and the fourth quarter we had said, look, it's bouncing around a bunch and we didn't think it would be useful to be specific about it. So Amgen disclosed they were down year-over-year a few days ago of 10% to 11% and we're not exactly at that, but it's not unreasonable to kind of use that as about the range of 10ish percent.

Sure, and then just one or two quick things. Rich, when you talked about your share repurchase authorization, I mean you basically used almost $100 million I think in just the past three or four weeks so that remaining $100 million could theoretically be used relatively quickly. Would you expect if you do use the rest of your authorization that you always do want to have some sort of authorization outstanding so you would go to the Board for an additional?

Yes. If we used it, I think we think it makes sense to have an authorization available so that we could move quickly if we thought it was a good time to allocate some capital to that.

Sure. And in the past, you pointed us towards your historic patterns. In the past, you have used sort of large let's call it $200 million, $300 million, $400 million authorizations in the form of Dutch tenders. Would that be an option at that point?

Not something we're considering right now. You got to remember that we're in a particular financing market, Andreas, so we don't have any appetite to (inaudible) that agreement for that right now.

Okay, great. Thank you.

As you know, historically, we've almost always had Board authorization for substantial share repurchases and the reason we do that is so that we never have formalities get in the way of our ability to nimble. Having said that, even when an authorization is in place, we always maintain a steady stream of communication with the Board so that we make sure we're never applying previously completed authorization in a way that they aren't totally comfortable with, so I would anticipate that we will go back and ask for additional authorization in the same way that we've always wanted that on the shelf before.

Absolutely, great. Thank you.

(Operator instructions) And there are no further questions at this time.

All right, thank you all very much for your consideration. Have a good day.

This concludes today's conference call. You may now disconnect.