Good evening. My name is Darren, and I will be your conference facilitator today. At this time, I would like to welcome everyone to DaVita's First Quarter 2019 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. Mr. Gustafson, you may begin.

Thank you. Darren and welcome everyone to our first quarter conference call. We appreciate your continued interest in our company. I'm Jim Gustafson, Vice President of Investor Relations, and with me today in the room are Kent Thiry, our CEO; Joel Ackerman, CFO; Javier Rodriguez, CEO of DaVita Kidney Care; and Jim Hilger, our Chief Accounting Officer. Please note that during this call we may make forward-looking statements within the meaning of the federal securities laws. All of these 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 these risks and uncertainties, please refer to our first quarter earnings press release and our SEC filings, including our most recent Annual Report on Form 10-K and Quarterly Report on Form 10-Q. Our forward-looking statements are based upon information currently available to us, and we do not intend and undertake no duty to update these statements. Additionally, we'd like to remind you that during this call we will discuss some non-GAAP financial measures. A reconciliation of these non-GAAP measures to the most comparable GAAP financial measures is included in our earnings press release submitted to the SEC and available on our website. I'll now turn the call over to Kent Thiry, our Chief Executive Officer.

Thank you and greetings to all of you. And thank you for your interest in DaVita. The first quarter results as many of you've already seen were slightly ahead of our expectations. Javier and Joel will elaborate on that but as we are first and foremost a care given company, I'll start as we always have with the clinical highlights. In this case, readmissions, hospital readmissions of course remain the top priority. The normal 30-day hospitalization readmit rate via 30 patients is about 35% that's more than double for the normal patient population in Medicare. Our Q1 readmit rate was 31.8% so significantly lower also continuing to improve versus the prior quarter and prior year. And our readmit rate is steadily trended down since we launched a number of transitions of care initiatives really but pretty much starting in 2017, which focused on delivering the right care to patients when they are discharged. If you do the math just to get a sense of the impact on the overall system and the savings and quality improvements associated there with, that improvement of the last two years equates alone to about 45,000 fewer patient days in the hospital. Good for patients; good for taxpayers, good for their families and we're all they going to get better. Moving on this is just shy my 20 year anniversary here at DaVita. I think it's my 102nd earnings call, when I combine that with my time at Vivra where some of you were with me/us there as well. It's nice to finish in a call we're going to reaffirm our annual guidance. And I was told the other day by one of the capital markets players that we have in fact hit our annual guidance and every one of the 20 years, Javier and…

Thank you Kent, and good afternoon, everyone. I am humbled and I am excited about the opportunity to serve as CEO of DaVita where I have been for 22 years. I look forward to giving you all detailed view on my plans for the company at our Capital Markets Day which we are in the process of finalizing and scheduling for August or September. That said; let me reassure you that I do not expect any major changes in our strategic direction. So let me reaffirm six elements of that. First, we're a caring company and our focus on clinical excellence will remain at the core of everything we do. Second, we will use our strong platform of over 2.900 clinics including 1,400 home programs and 900 hospitals of hospital relationships and a network of over 5,000 nephrologists to help provides continuity of care for the patient as they transition between the sites of care. Third, we will continue to pursue integrated care with the intensity that is deserved. Four, we will plan a robust set of patient data and innovative analytic tools that will help improve patient care, while lowering overall cost. Fifth, we will continue to build our unique DaVita culture. And finally, we will continue to be disciplined with our capital. Now let me transition to first quarter results. First, our adjusted operating income for the kidney care business is off to a good start for the year, generating $382 million for the first quarter. As you've seen our results, we're experiencing slower trends in unit growth than we expected a few months ago. There are many variables that contribute to the non acquired growth and they're difficult to individually quantify. That said; let me call out a couple of those factors. One, the growth of transplant…

Thank you Javier. First, I will walk you through some components of our US dialysis and lab segment. Non acquired growth for the quarter was 2.4%, absent a turnaround in future quarters in the underlying metrics Javier referenced; we expect to come in below our non acquired guidance range of 2.5% to 3.5%. Revenue per treatment for the quarter was in line with our guidance, and was up sequentially by $0.40. Before I move on to cost per treatment, I did want to address a question that came up last quarter about our Medicare Advantage mix. For context, the MA mix for all dialysis patients with Medicare as disclosed in the most recent US RDF data was 21% in 2016. In 2016, our percent of MA in Medicare was in line with the rest of the dialysis industry. As you would expect that number has grown for us and we assumed for the industry as well given the secular shift to MA in the broader marketplace. In Q1 of 2019, our MA mix stood at 24% of Medicare patients. We expect this number to continue to grow roughly in proportion to the MA market growth before the 21st century Cures Act in 2021. Patient costs were down a $1.52 per treatment quarter-over-quarter, driven by lower drug costs, partially offset by higher employee benefit costs and seasonally higher payroll taxes. Dialysis and lab segment G&A was down quarter-over-quarter $0.86 per treatment as a roughly $3.00 per treatment decrease in advocacy spend was largely offset by higher compensation and benefit expense. Now some details on calcimimetic. In Q1, 2019, we generated revenue about $17 per treatment with costs of about $11 per treatment from calcimimetic creating a temporary quarter-over-quarter tailwind of just over $20 million. For the rest of 2019, we continue…

Before we go to Q&A, I just like to share a few of my perspectives on the industry, on the community looking back over the 20 years in the hope that that might be useful, particularly to a number the people who are much newer shareholders to the space. Please allow me eight points. Number one, we never want to forget that we're providing an essential therapy. It's not disputable; it's not debatable; it's not controversial. Who needs dialysis or why the value it provides that is a good thing for people. It's a good thing for shareholders. Number two, the presence of an uncomfortable cost subsidy, perhaps one of the most extreme in American healthcare where the private sector has to subsidize the roughly 90% of our patients that our government pay. This is bad. It's a bad way to organize the healthcare system, but it's been this way now for thirty years and the good news about it is it's the same for every single player in the space. At number three, we've never been without intense productivity pressure. The derivative benefit of that is we are perhaps the most productive healthcare service segment in all of America, in all of the Medicare program. Number four; there's been a continuous stream over the 20 years of existential threats towards the business model. By that I mean existential threats that people said would either dramatically impair or destroy the economic viability of the business model, things like everybody is going to be able to do a wearable kidney things like diabetes incidence is going to plummet with a new drug, or stop advancing. I could list example after example through the course of the last 20 years. Of course, none of those existential threats have ever materialized, which is…

[Operator Instructions] Our first question comes from Kevin Fischbeck from Bank of America Merrill Lynch. Your line is now open.

Great. Thanks. Just wanted to see I guess, Kent, I think you said that the quarter came in slightly ahead of your expectations but then when Javier was talking about the revenue number, you talked about volumes coming in later. Can you just go into what was it that came in better than your expectations to get the operating income number I guess little bit better.

Sure. Hi, Kevin. It's Joel. I'll take that. Our internal number was a bit lower than the streets, largely driven I think by timing related to seasonality. So that's I think the genesis of that comment. I would say the single biggest thing that drove the number stronger was calcimimetic. And I mentioned in my script about a $20 million tailwind in calcimimetic in Q1 versus Q4.

And can you kind of remind us what you think the pace of that? You talked about ultimately that becoming a neutral or maybe even slightly negative thing. Is that slowly by yearend or is that a two-year? How to think about that process?

Yes. So I think you have to think about the margin in calcimimetic in two buckets. So start with what we had last year which we've called out as mid to high single digit which is kind of where we were as 2018, think of that as the baseline that will go away over time probably measured in years but not many years as the whole dynamic of generic entrance plays through, and that gives the temporary tailwind which is the $20 million that's the second piece. But then ultimately plays through to ASP. So the $20 million that extra tailwind that we saw in Q1, we don't know how that will play out over the rest of the year. There's certainly a possibility that we will be able to continue to buy at generic rates in Q2 before ASP falls, and there'll be a continued tailwind in Q2. We don't know what will happen in the second half of the year. There is a scenario where that completely reverses where generic availability in the market disappears, while ASP is falling and what was a tailwind in Q1 will turn into a headwind in the back of it, half of the year. So I think to try and sum this up, I think the mid to high single digit number that we called out in 2018, we think that will persist through 2019. How long it lasts after that is a question mark. This added $20 million tailwind could persist for a little bit while longer although it could flatten out, and it could potentially turn into a headwind in the back half of the year, all depending on what happens with generics supply and ultimately what happens with ASP.

Okay, that's helpful. And then I guess, as I said I'm not sure if you said I didn't catch it, but commercial mix in the quarter, any comment on how that trended?

Yes. The mix was slightly higher quarter-over-quarter and now this add since you asked, as we step back and look over what we said at JPMorgan, I wish the range was a little wider because that number sort of pops up and down. But in general, we were slightly up and there's nothing in the mix that would change or impact our guidance.

Can you talk about a little bit about some of the things that you mentioned as far as volume headwinds? Is there anything within the volume headwinds that would have a directional impact on mix? Are the things that are -- some of the things you mentioned as far as transplant facility, I think that might actually be more of a headwind to commercial mix than to Medicare mix for example. I don't know how you think about that but love to hear your comments on those pressures and how they apply to mix.

Sure. Let me take a stab and see if I'm answering your question. First, I just want to say, embarrass, we got it wrong at JPMorgan. And we gave and we missed the numbers so quickly after that. Two is that we have a track record about performing on non acquired growth. And we've had some episodic quarters where our competitors about performance. And three, is that there's a lot going into this number. There's an incident. There's mortality. There are transplants; there are competitors; there's peered dynamic and they're all moving in opposite direction. Sometimes so it's very hard to pinpoint the number, but at the end what we're trying to do is work really hard to make sure that we get the right trade-off between growth rate and capital deployment. And that's really what it's all about,

All right. Then maybe just my last question. Clearly, you're seeing a slowdown in volume because your competitors are ramping up de novo, is there any way to kind of quantify in your view, market share I guess losses maybe that are happening which you have said that real numbers should have been 2.5, 3.5, it was just a market share that pushed you down below that or how do you think about market share?

Yes. It's a good question. I mean if you look at market share and you look at what that 1% difference is over a year. This is only a quarter but over a year it'd be about 2,000 patients. So you got to look at in the base that we have roughly 200,000 and so does FMC. But we don't take it lightly of course compounding is very powerful, but again our track record that will outperform over time. But when you look at it sometimes you would rather have a lower growth. If it's got an impact on your deployment of capital. And so you can't isolate each one of these and micro but you got to look at the sort of overall portfolio. Because we could give you a higher nag number but it might be with lower returns on certain de novo and so we're being quite disciplined and scrutinizing that number.

Our next question comes from Justin Lake from Wolfe Research. Your line is now open.

Thanks. Good late afternoon I guess. First off, congrats, Kent on 20 years and retirement and Javier no surprise, but congrats on you taking the reign for exciting stuff. The first question I had, Javier, you kind of step in here, I feel like a big part of Kent's role as you take, as you've kind of been running the dialysis business for a while. And Kent's role has been in a very much kind of strategy and capital deployment and the move to international for instance, the DMG. So I'd love to hear your kind of thoughts on how you see the next kind of three to five years from a capital deployment perspective that might have been different than Kent's. And specifically given this deal looks like it's moving towards closed, your thoughts on how to deploy that capital especially given where the stock is?

Well, as Kent articulated, Justin, we worked together in partnership for 20 years. So I've gotten that question asked a fair amount and what I've said it's not like I've been shelving my idea is waiting for the time where I got to home and now I get to execute on them. We've been partners and we think a lot of like is it relate to the discipline on capital. And as I said in my opening remark, there's more that's going to look the same than anything that's going to look different. Things that would likely look different will be more around the evolution of time, technology and the needs of the business and a greater care policy and those things that we will be driving. As it relates to capital, we have and we will continue to have a very strong discipline around capital. And we are going to be sharing our three year plan and capital market in August or September. I don't want to provide any more detail at this point.

Got it. And then you talked about calcimimetic and the $20 million of benefit versus the fourth quarter. Can you give me that the total benefits in the quarter here?

I'm sorry. I'm not sure I understand the question, Justin. Are you saying the total calcimimetic profit in the quarter? So, it's roughly double $20 million. So it's a $20 million headwind combined with the number we had called out in the past which you recall it $80 million. So $38 million would be the total Q1 profit from calcimimetic.

Got it. And is your view that that calcimimetic potentially will not be a benefit next year, so we should think about that as a headwind year-over-year to numbers?

I think it's hard to call out the timing. We think ultimately most if not all of this will go away; don't know whether it's a 2020 event or 2021.

Got it. Is there anything you could share with us in terms of how, so if you're at a $40 million run rate, it sounded like the answer to Kevin's question was that you thought that could continue in the quarter, in the second quarter and then could moderate in the back half of the year. But what do you have baked in the guidance for the full year in terms of the calcimimetic benefit even if it's a range? It'd be helpful to kind of understand.

Yes, we -- there are a lot of scenarios that play through the ranges is in the forecast. So I don't think I'd be comfortable articulating just a single number that flows through. But I think it is safe to say what we've said in the past, which is some of this variability in the near term around calcimimetic is the single biggest swing factor in the $100 million of OI I range that we gave in our guidance.

Okay. And if I think I had obviously it's early for 2020 but is there anything that if this does start to moderate? Is there anything that you can think of that could kind of an offsetting benefit in 2020 some kind of tailwind like maybe the your EPO contract could potentially help offset that. Anything that you want to point us to before we think about-- as we think about 2020 headwinds and tailwinds?

Yes. So, I think there's a lot going on in pharma in general and that applies to unit price, it applies to unit volume. It applies across a number of the drugs we use. So I wouldn't point out a specific headwind or tailwind, but I don't think you can look at this as one isolated factor in the P&L and just handle it as its own issue.

Got it. If I could sneak in one more. I know last year and I apologize for not having run these numbers myself but just kind of thinking it through. Last year, I remember your first quarter had a benefit from a Medicare receivable true-up of some sort and this year obviously as a calcimimetic benefit. If I remember correctly last year did not have much of a benefit from calcimimetic. I think it’s sort of ramping slowly. Is that correct?

That is correct. I believe, yes.

Got it. So if I net the two right and if I kind of think about growth year-over-year in the first quarter excluding calcimimetic and the Medicare true-up. Can you do that math top of your head and give us an idea of what they year-over-year first quarter looked like?

So, if you went back to Q1 last year, you'd have to take out the Medicare bad debt. You also have to take out the DHS $70 million one-time pick up that we called out back then. If you looked at that number relative to where we came out this quarter, I believe it would be up a bit. But that would not be adjusting for calcimimetic.

I think that math would be somewhere at 371 to 382 and we had one less treatment day year-over-year.

So [Multiple Speakers] 382 and then I would back out $38 million for calcimimetic. Is that what you're saying?

I think that 38 would be high. I don't remember what we had in there. What we what exactly we called out but the 38 would be high. We can take it offline, Justin, and get you a better number. We've just got to look back at what we --what we disclosed.

Yes. I just offer a cautionary note on two levels here. One when we start this around too many variables on a live call. There's a lot of room for potential confusion on exactly how people are defining different numbers and then second, it sort of stating the obvious but worthwhile that in any given year we've got lots of variables that move $15 million - $20 million recurring, non-recurring up down and so it gets pretty tricky to start paying too much attention to one or two of them because there's a lot of them all the time.

Thank you. Next in queue we have Steve Tanal from Goldman Sachs. Your line is now open.

Good afternoon, guys. Congrats to Kent, Javier as well. I guess just the first question just in light of the updates on DMG and the commentary around the industry growth and more de novo from competitors. Could you kind of give us your latest thoughts on the potential deployment of DMG proceeds? Or what is your thought processes around that at this point?

Yes. So our thinking on that hasn't changed. The DMG proceeds will go to pay down debt after the deal closes. We're going to do a subsequent financing and we'll use those proceeds to bring us back to our historical leverage range 3x to 3.5x, and use that to buy back stock. So nothing really has changed around our thinking there,

Perfect, thank you. And a couple more sort of granular ones. I guess I'm just on calcimimetic discussion just to round that out the $11 cost per treatment, would you be able to give us that figure sort of for your last quarters? If you think about the houses of development.

Yes. It was --it was, hold on, bear with me one second. It was about $13.

Got it, okay. So it really does sort of seem like I guess the generic availability is maybe what changed here. Just thinking broader about patient care costs per treatment. It was considerably lower there. Are there any other drivers that you could talk about in that line that we should think about as potentially a more sustainable?

Are you talking about the calcimimetic question? I'm sorry.

No. I am sorry. Just inside of patient care costs sort of --like a per treatment basis came in quite a bit better, just trying to understand some of the other moving pieces as well.

Yes. So the other piece is EPO.

EPO is better.

Yes.

Got it. Okay, that's helpful. And then just one more maybe on the commercial side. Sounds like mixes up a little bit, maybe if you just comment on rate as well just as we think about RPTs in the quarter?

I think there's no headline on the rate side. Basically in line with where we expected it.

Got it, okay. And sort of a continuation I suppose is like what was laid out at the JPM day. Just I think there's a decline in that network rates and sort of the outlier stuff but an increase on the rest of the book like that's all still pretty much what's playing out.

Yes. Nothing to call out.

Great, okay, all right, thanks. Actually I guess just one last one. Just on the advocacy side is anything to note there just with AV290 or anything else on your minds. Are you still really comfortable with the $60 million step-down in the guide sort of sounds like it but just want to check in there?

Yes. The short answer is we continue to work with AV290 baby and we are comfortable with our advocacy spend and our progress in our relationships in Sacramento and another state capital.

Our next question comes from Whit Mayo from UBS. Your line is now open.

Hey, thanks. Congrats Kent and Javier, both well-deserved. Maybe just wanted to follow up on the competitive dynamics one more time. Just might be helpful to define competition a little bit more. Is this just new competitor that you're seeing or is this de novo activity from existing competition within your markets? And do you have any view on last year's AKI regulatory changes with sniff reimbursement and whether or not you're seeing any activity on that side?

Yes. On the first part, it is not the new entrants. We are not seeing any significant activity there. So it is with the existing competitors. On the AKI, for those people that are not familiar, it stands for acute kidney injury and basically that's before a doctor concludes that your kidneys are end-stage meaning they could come back. And so there was a change in philosophy there because they wanted to get the patients out of the hospital and into the most efficient side of care, which is our centers and so there are more diagnoses now AKI because it's system adjusted to that. I think that volume has gone through the system and I don't think it's relevant for nag factors.

Okay. And maybe one more on the calcimimetic. Is there any way to maybe frame up what percent in the quarter was generic versus branded since apart just in terms of dosing and did anything really surprise you positively or negatively since your last call on this one topic?

On the mix, the majority of the mix ended up being on the generic side. And as it relates to surprise, I would never call it a surprise. We just knew it was going to be a fluid and dynamic time. And so we're going through a bit of the waves, if you will. In this particular quarter, it was helpful and that we were able to purchase some at a discount and then of course Joel already explained that could be reversed at anytime depend how it plays out, ventures and how the pricing curve drops.

Got it. In any way to maybe frame-up what the inventory looks like going forward just to get a sense of how much visibility you have into additional generic opportunities?

No. It is very --it's been very hard to tell because of dynamics in the legal system as to what inventory is available on who's going to enter. And then of course that will drive the price to have any entrance and how much inventory. So we are just as interested as you are in those numbers, but they're very hard to find.

Yes, no, totally got it. Maybe just one last one and just curious Javier as you make the rounds and talk to your medical directors and nephrologist. Are you hearing anything new from clinical protocols therapies just anything aside from since, I am just trying to think from an upstream perspective if there's any change you're seeing within the nephrology practice setting? Thanks.

No. There's nothing to call out. The physicians are continuing to prescribe as they have in the past. Of course, they're always looking at the journals and the studies to see if there's anything in the science that indicates anything new, but there's nothing that I would call out right now.

Next in queue we have Gary Taylor from J. P. Morgan.

Hi, guys. Just a few quick ones. I think Joel mentioned in terms of patient expenses that our EPO cost, I was just wondering if that was price or utilization.

Price.

Thank you. And I wanted to ask, I've been on the call for long time, not 20 years, but a long time, haven't heard you talk about competitor de novo activity a lot. I understand you're saying it's existing competitors. But wanted to see if you had any comment on some of the new startups that are focused on CKD market like cricket and cricket is modest that is basically saying not enough resources have been expended. At CKD, we spend all our resources once the person hits ESRD and I think Azar comments were hinted at that or alluded to that a little bit as well. But how do you see that developing as positive, negative, hospital risk, the ESRD volumes, et cetera?

Sure. Thanks for the question. As it relates to competition, the first thing I'll say is competition makes us sharper. And we respect all competitors and so it's with that approach that we go paranoid at it because we want to make sure that our patients get the best. And we believe that we are best prepared to deliver that in a platform with all the types of care. That said, of course, when you are small and you're getting capitalized, you need to generate a story and so the provocative story is one that says that they're going to disrupt and innovate. And we believe that we've been self disrupting and innovating for quite some time when we do a lot of patient education more than anyone else. We send more patients to the proper modality than anyone else. We have amazing transplant education and so we know we have the entire suite, but of course they can't compete with that platform and so what they want to do is create a narrative that we are by definition of being big that we somehow or other not innovative which is of course not the entrepreneurial spirit of DaVita. So again we want to be sharp and we want to take them on and we respect it.

And Gary I would go ahead and add on a little bit here, giving us up a question that that number one, it's easy to say I found a thousand CKD patients, people with kidney disease, but the kidneys haven't failed yet. It is tough to say which ones of those are most likely to have kidney failure and when. And it is impossible to say what would have happened otherwise. So in order for anyone to pay you other anything other than a low unsatisfactory fee-for-service rate means you need to have sufficient data to be able to take a scaled population, know what they would have cost, so you can give someone a share the savings of what they did cost after you intervened. There is no one better positioned than we are to turn those unknowns into knowns and none of the new entrants have that capability currently, which is not to say they're smart and they, and if they get enough money, it's a very, it's a doable thing. It's not an easy thing. It's not a cheap thing. I appreciate the comments.

I appreciate the comments. One more quick one for Joel, if I could. You alluded to the fact that if not a core treatment growth stated this level, you be at risk of missing the treatment growth guidance for the year. Obviously, this quarter despite the weaker volume, you made it up on the OI side. So when you look at the year, you're contemplating the possibility could come at low end on of treatment, but you reiterated OI guidance. So is the messaging just from that. Are there are enough other puts and takes that even at the low end or slightly below and on volume you hit the OI range?

That's exactly right, Gary. We've got enough other things that week that were not worried about the OI range even if we come in below on that.

Our next question from John Ransom of Raymond James. Your line is now open.

Hi. Just wondering when you think you might get some color from CMMI on the reimbursement changes relative to home reimbursement versus clinic reimbursement.

This is KT here. It's difficult to predict these things and they have a couple of times predicted when they'll have stuffs done and they haven't been able to get it done. Not because they're not smart and hardworking, don't have good ideas. We applaud so much of what they're working on and so much what they're creating, but they have to go through a multi-agency approval process over which they do not have total control. So it's very difficult to know and sometimes they can't even know. If someone gets to it in the next two weeks, it's done in two weeks. If they don't get to in 10 weeks, it's not done for 10 weeks even though the elapsed time of the work might only be a week or two, things get pretty busy there. So unfortunately we can't give you a helpful response.

So those of us who get paid to speculate with zero information which would you wildly object to the notion of let's say today we have 100 treatments and 88 in the clinic and 12 at the home. I guess they're going to pull some money out of the total pie, but it would it be as perhaps the straightforward is saying, well, maybe we'll pay 5% less at the clinic and we'll pay 20% more for home and those dollars kind of roughly balance out. Or do you think it'll be a lot more dramatic and complicated and hard to figure out?

Yes. I don't think speculating is a good idea because that's literally what the accurate verb would be. And so it'll just have to wait. I'm very, very sorry but we can't predict.

Next in queue we have Pito Chickering from Deutsche Bank. Your line is now open.

Hey, good afternoon. It's Justin Bowers on for Pedo. And congratulations Kent for moving on and Javier for assuming the reign. Just in terms of some of the moving pieces with the receivables, what --can you provide us a little more detail on why the jump there and in terms of timing, how --should we expect that to go back to where you ended it 4Q towards the end of the year, in the middle of the year? A little better sense of [Technical Difficult] it would be helpful.

Sure. So Peter, there wasn't any individual thing. It was a bunch of things. Some of which are operational, some of which are seasonal, but all of which are temporary. We would expect in the next couple of quarters that this will all play through and we'll be back to the range where we were and kind of the back half of 2018 and to give you a flavor. I'll call out one thing we did a system change in one of our smaller businesses. A billing system change and that led to some operational complexity that led to some just temporary spike in the AR but we've worked that through. Now we're just catching up. That was the single biggest thing that was roughly 40% of the four days.

Okay, that's helpful, Joel. And was any of that related to not the 40% but let's say the other 60% related to any of your contracts made on the commercial side? And then in light of kind of the improvement and mix quarter-over-quarter is there any way that we can narrow the range there from the guidance you gave earlier in the year in terms of commercial RPT?

Yes. Justin, first I apologize for getting your name wrong. I don't see any linkage there; I don't think you can connect the two.

Okay. And then in terms of the commercial RPT for where we are, you guys still-- are you sticking to your guns there in terms of the guidance that you provided or?

Yes. No change on that.

Okay. And then just shifting gears a bit looking towards like 2020 and an MA and the opportunity there, any kind of color you can provide on some of the discussions that you're having with the payers, maybe in terms of some of the different programs you'd set up and maybe some of the programs that you can run with them, thinking of the comment you made on the hospital readmissions and overall like what's the rate environment there from MA?

Yes. Justin, as you can imagine there's interest because people are trying to run their models as to what's going to happen to that population. The reality is, it's got a lot of variables and at the end, and it ends up in being a patient choice as to what product they have. And so as it relates to the actual negotiation, we're continuing to have very constructive conversations with the payers as to how we can take risk on the MA business. And we're actually innovating quite a lot in that book of business. So it's a constructive productive conversation.

Next in queue we have [Indiscernible]. Your line is open.

Hi. Just a quick one for me. Looks like you had $400 million revolver draw sequentially. Just wondering what the use of proceeds was for that?

I think you should tie that to some of the comments we've made about DSOs and the move in AP, so it was just largely around working capital.

Okay. So, then that's expected to come down then in the interim quarters?

Yes. End of Q&A

Thank you. Speakers, we show no further questions in queue at this time.

All right. Thank you all very much for your kind attention. We'll talk to you again soon.

And that concludes today's conference. Thank you for your participation. You may now disconnect.