Ladies and gentlemen, thank you for standing by. I’m Patrick Wright, your Chorus Call operator. Welcome and thank you for joining the Fresenius Medical Care Earnings Call of the Fourth Quarter and Full Year Results 2014. Throughout today’s recorded presentation, all participants will be in a listen-only mode. The presentation will be followed by a question-and-answer session. [Operator Instructions]. I would now like to turn the conference over to Oliver Maier, Head of Investor Relations. Please go ahead, sir.

Thank you very much, Patrick. We would like to welcome all of you to the Fresenius Medical Care earnings call for the fourth quarter and the fiscal year 2014. Also, a very warm welcome to the ones joining us on the web today. We very much appreciate your interest. As always, I would like to start out the call by mentioning our cautionary language that is in our Safe Harbor Statement of our presentation and of all the material that we have distributed today. For further details concerning risks and uncertainties, please refer to our filings, including our SEC filings. With us today are Rice Powell, our CEO and Chairman of the Fresenius Medical Care management board, and Rice will give you a general update and go through some of the strategic initiatives, give some highlights there. And we also have with us today, Mike Brosnan, our Chief Financial Officer, who will cover the financials and the outlook in more detail. So, with that Rice, the floor is all yours.

Thank you, Oliver. Welcome, everyone, happy to have you with us today. Before we get started with my prepared marks, as I always do, because I think it’s important, let me please thank the FMC senior management team for those of you that are on the phone or have joined us by the web. Thank you for a great fourth quarter and full year 2014. You worked very hard and you were very successful, and I appreciate it greatly the efforts that you made last year. Moving to my prepared remarks, on slide 5, I think the headline here is simply that our solid performance has continued as we look back at 2014. The right part of the slide gives you couple of key metrics graphically, revenue, EBIT, net income, I won’t walk you through those numbers I know you’ve seen them now for several hours. I think my comments would be the following. You will hear more detail later today about the recommendation, the proposal that we’re making for our 18th consecutive dividend increase at FMC. We have slightly better than expected performance in our global efficiency program. We had highlighted for you all year that we were looking at a pre-tax savings figure and net of implementation cost of about $60 million. And in fact, we came in around $65 million, about $40 million after tax. We’ve continued to make investments in quality and compliance systems, we are now operating in five additional countries. In the service business, we had 45 countries and obviously as we move into those systems and begin to engage with payers and regulators, we have to improve our infrastructure or increase our infrastructure. And obviously in the developed markets, we continue to have regulation changes that drive us to after-invest and adjust. And…

Thank you, thanks Rice. Hi everybody and I’ll just start on the P&L in one minute. Just I know you all took it the right way, but just to clarify one thing Rice said, he said that if we had followed our dividend policy there wouldn’t be a dividend. And what he meant to say was there would be a dividend increase.

They knew it on there.

I’m sure. But with all the folks we have on the phone, I don’t want us to be, people to misunderstand that item. So, thanks again. And I’ll just walk through it’s a really high level, the P&L both the quarter and the full year. Our operating earnings because Rice has covered revenues pretty thoroughly, our operating earnings were just slightly better $663 million [ph], margins obviously were down year-over-year about 170 basis points. Overall, when you look at that 170-basis point decline, North America’s margins were down and contributed to that decline to the tune of about 60 basis points. International margins were also off a bit contributing about 20 basis points. And we did see some increase in our corporate costs which had 100-basis point impact on the consolidated margins. And now I’ll just go through each of those elements. So, first, when you look at North America, operating income had an increase of 9%, $40 million in the quarter to just under $500 million of operating earnings. The margin decline for North America’s standalone was about 90 basis points. And it won’t come as a surprise to any of you that when you look at what happened with regard to Medicare reimbursement in 2014, we saw the impact of the Medicare rebasing. And even after you consider the market basket increase, essentially the Medicare reimbursement it does not cover the increased cost of care in North America. In addition, we did have some increases in the consulting and legal expenses, that, we’ve been talking about that’s the FDA remediation and the GranuFlo matter in the U.S. And those account for the more significant downsides. That was partly offset by good results with regard to our commercial-payer effects and slightly lower cost of pharmaceuticals from our cost and…

Great. Thank you, Rice, thank you, Mike, for the presentation, for the insight. I think Patrick, we can now open the call for Q&A.

[Operator Instructions]. And our first question today comes from the line of Tom Jones of Berenberg. Please go ahead.

Good afternoon, and thanks for taking my questions. I have a couple. The first question I want to toss you is just to get a bit more color on your 9% to 12% constant currency growth guidance for 2016. That’s, quite an acceleration on what one would expect you to better achieve from your core dialysis and products business. So my guess is, quite a bit of that’s going to come organically on the Care Coordination side, but I just wondered if you could try and explain that sort of acceleration and growth in a little more detail for us? The second question and I think the answer might be partly related to the first. I just wonder, with your expansion in Care Coordination, how much thought/consideration you’d given to perhaps more aggressively pursuing alternative structures within the Care Coordination? I was thinking perhaps you’ll move on to diverged partnership models or slightly different ownership structures to the ones that you’re currently involved in? I know with NCP that’s quite a heavy partnership model within that. But I just wondered, how we should be thinking about those kinds of things going forward? And then the third question was just on the Q4 interest expense. So, although the net number was basically what we expected in and if you take off the $8 million cost that you mentioned, it was very aligned with most of us are looking at, I think. Both the net, both the interest expense and the interest income were significantly higher than I was expecting. And I was just wondering, whether we should be thinking about the net number as the run rate, as a base for the run rate for the year ‘15? Or whether we should be thinking about the expense number as a run rate and how those dynamics might play out in ‘15?

I’ll take the first and the third, and Rice will give me a break, he’ll take the second question. So, on your first question in terms of the 9% to 12% growth in revenues for 2016, I would say ‘15 and ‘16 obviously we’re starting with some pretty robust growth in Care Coordination from $500 million to $1 billion to $1.7 billion. So, we do expect Care Coordination is going to continue to contribute generally to a faster growth rate than when you compare it to the legacy business. And then on the legacy business side, again, thinking in terms of both ‘15 and ‘16, I think it’s fair to say that if you think in terms of let’s say on the low-end 3% to maybe 5% for the legacy business, that’s - those are two benchmarks I’d give you in terms of looking at the, and those are global numbers for the legacy business to think in terms of the topline growth.

Sure.

On the third question Tom, I have to start with an apology for the accounting provision. We, as you know we did an equity neutral convertible bond in fiscal 2014 to take advantage of what was happening in the market and to get a very, very low cost of financing with 108 coupon on that. However, since it is equity neutral, you have to buy a call and then you have to deal with mark-to-market accounting on the call and the derivative in the bond. So, I would suggest but for the loan that we have in the U.S. to the middle-market provider, you’re better off looking at the net for ‘15 and ‘16 because you’re going to see depending on what happens with the mark-to-market provisions of the call and the derivative. You’re going to see a lot of volatility between interest income and interest expense. But on a net basis, essentially we’re providing for that convertible bond at roughly 2.5%.

Perfect.

Okay.

Tom, its Rice. When we think about Care Coordination and alternative structure, obviously we’ve come to a year where we didn’t partner much. We didn’t outright acquisitions I guess you could say. But I would tell you this we’re very open to partnering. I think we’re going to look at the opportunities as they present themselves. And as long as those potential partners or folks that we believe we can be on the same page with, and have the same goals and things we want to accomplish in terms of how we manage these patients and how we take care of them, we would certainly be open to that. I would sort of say to you that the pilot we’re running with that in some ways is the partnership trying to see how that’s going to go forward, how it might progress. But we’re open to both. I wouldn’t take the heavy acquisition activity of ‘14 and assume that’s the only way we view the world going forward, because we very much would be happy and we’ll partner. We will do some partnering with the right folks when the opportunity presents itself.

I mean, the reason I asked the question is, in the past FMC has been able to bring two things to part, really, relatively cheap capital and a lot of expertise but with the world kind of being flooded with cheap capital, that’s less of an advantage than it was in terms of adding value to a system. And then if I kind of reconcile with your kind of very heavy investments in all the goodwill side over the years, one of the less attractive features is, is FMC’s return profile. But I was just kind of thinking along the lines of potential waste to try and improve the return to profile over and above simply just growing earnings off a fixed asset base?

They’re fair perspective and I don’t disagree with that. And as we’ve talked about back there in the Capital Markets Day, we do expect to improve our return on investor capital over the period, midterm period of about 100 basis points. And obviously the approach that you’re suggesting is one way to help us to accomplish that.

That’s very, very helpful. Thanks very much.

Sure.

Thank you, Tom.

And our next question comes from the line of Alex Kleban of Barclays. Please go ahead.

Hi, thanks for taking the question. Just three, and mostly housekeeping. Number one, could you just clarify the amount of savings from the efficiency program in the guidance for this year? Number two, how much do we need to take into account for legal compliance cost? And number three, how much biosimilar EPO or Mircera related cost saving or cost reduction is in the 2016 EPS growth guidance talking purely cost reduction on ESA rather than any volume reduction?

Alex, hi, it’s Rice. We’re going to do this in reverse order. I’m going to take number three and then I’ll let Mike come back on one and two. In 2016, we have zero planned for biosimilar. It’s just two if you will to know, we’re well aware that Hospira’s NDA has been accepted by FDA but I just don’t think that we know enough or we’re comfortable enough to try to plan what contributions might come from there. And in the same sense with Mircera, being in the pilot having just started it in the latter part of ‘14, we have not loaded up if you will or made a lot of assumptions of what might come from that. We just aren’t comfortable doing that at this point. So what I would tell you is, there is not a bucket of money if you will that’s loaded in from those activities, we don’t think that would be prudent to try to project that into 2016 at this point in time.

Can I just follow-up quickly on that one, sorry.

Go ahead.

Yes, I was just going to say that, given you’re non-exclusive with Amgen, does that hurt you in ‘15 and ‘16, if you can’t launch either of those products?

Well, I would say it continues to be non-exclusive. So I think we’re kind of in the same position. I don’t perceive that we’re anywhere soft than we were before. So I don’t think we’re in a bad place there, I think it really isn’t coming on us to continue to work with Mircera and see how that pans out. And we’ll see where things end up on the approval process for Hospira.

Okay. So, net pricing basically, net of rebate has not worsened since the last contract period?

That’s correct. I mean, we’re well aware and you probably know as well that we see or we’ve been informed of another price increase coming in from Amgen. We had anticipated that, they’re fairly regular as to when they do that so we put that into our calculus for the planning for ‘15.

Thanks a lot.

Sure, Mike, go ahead.

Yes, Alex hi. With regards to your first question in terms of the amount of savings associated with the GEP program, we are on track with that program. So I had indicated at Capital Markets that we would get to a sustained run rate of about $200 million by the end of ‘15 and $300 million by the end of ‘16 into ‘17. So that’s what’s considered in the numbers. And then with regard to the legal and consulting costs associated with FDA compliance, the corporate spend for ‘14 was at about $258 million call it - $358 million call it $360 million. So, I would say, as you look at ‘15 and then to a certain extent ‘16, I commented in my narratives that we expect the cost to continue albeit at a lower level. But for ‘15, I would say, I don’t expect our corporate cost to increase beyond that figure. And I would expect that in 2015, it will be a bit less, and then a bit less again in 2016. And that’s probably the best way to benchmark size that for you.

Yes. I would say from a calendar standpoint, we are expecting FDA in probably middle of the year. And so if they come in and things go well there, obviously that will be some benefit to us. But it’s just hard for us to predict where that will go at this point. But they’re telling us that will be in probably early summer, so we’ll see where that goes out.

Okay, that’s very clear. Thanks.

Our next question comes from the line of Ed Ridley-Day of Bank of America. Please go ahead.

Thank you, yes. First of all just a follow-up on the corporate cost. Can you give us some update on the GranuFlo litigation in terms of the materiality within your overall corporate costs? And to what extent you feel comfortable with where you are and would it be worth, should we say handling these some of these cases upfront away from the court and then putting that behind you? That would be my first question. And then just to look at the Russian and the merger market exposure, can you give us some idea to what extent you have reduced your Russian expectations, your business there for this year and going forward? And on a run rate basis what percentage of your business it would be now?

Yes, hi, it’s Rice. So, as we talk about GranuFlo, what I would tell you is as Mike had commented that we did spend a little more on GranuFlo than we had anticipated. But let me give you some comfort on that. We basically, as you lay out a strategy for something like these types of matters, we had an estimate of the number of people we wanted to depose, the amount of work we wanted to do. And quite honestly we’ve done more than that than we had anticipated as we continue to develop our strategy of how we’re going to defend ourselves against this litigation. We’ve decided that that we wanted more debts if you will, we had other people involved. So it’s a little hard to predict exactly where it’s going to go. Now, what I would say to you relative to if you’re asking about a settlement strategy, I’m not ready to go there at the moment. We’ve got more work to do. What I would say to you is we still anticipate consistent with what I told you in the third quarter that this is probably a late 2015 activity particularly as you look at the multi-district litigation in Boston. But we’ll see where we go as we continue to develop our defense and our plans and our strategies we’ll see where it takes us. Do we look at some of these cases and perhaps try them early? That certainly can be an option. But we’re just not ready to make a comment on that at this point in time other than we recognize that’s obviously a path we might use to take depending upon how we feel over the next months as we progress. And I think…

Thank you. And just to be clear, in terms of your corporate cost guidance, the guidance you’ve given in terms of definitely no increase and potentially a slight decrease. That includes enough wriggle room for the GranuFlo litigation?

Yes. Let me just comment on the global cost and corporate include the compliance consulting activities and some of the FDA remediation. North America covers in terms of how we report the numbers, GranuFlo and then also in elements of the FDA remediation. So, from a benchmark perspective, I give the corporate figure because I think on a worldwide basis that would be the best way to track changes. And the actual details as we report the numbers, you’ll see GranuFlo show up in the U.S. So, I’ll calibrate to that as we progress through next year if that’s helpful.

Yes, thank you, yes.

Mike, you want to go ahead and take Russia.

Yes. We’re looking around a little bit here, just in terms of okay, that’s what I thought. So, maybe the best way to do this, because as we’ve said before when you have some volatility in some of the countries in which we operate in, because we’re a service business, we have bricks and mortars in country. Typically we’re a long-term investor in the countries in which we have those kinds of operations. So, we do see some volatility, we do see the impact on exchange rates. But we have no plans to materially change what we’re doing in Russia. It’s actually a very good market in terms of our business. So, order of magnitude, it’s a relatively small percentage of our global operations in terms of revenues, less than 2% of revenues. To give you some indication in terms of currency, if I look at 2015, I think I had said in my narratives that I saw Russia as having an impact on EAT of about 1% to 2% of our growth rate. So, you’re looking at the bottom line effect of these, this currency volatility in Russia having an impact of roughly on the order of $15 million to $20 million.

That’s very helpful, thanks. And just one final question. If we look at the guidance you’ve given in terms of additional investment. With international business, obviously some great progress last year. I presume we will see additional both on the medium sized clinic deals, is there any further color you can give us on that?

I would say Ed that we’re open to all of the above. We certainly are not going to start in that region given the growth and the performance they’ve had. But let me just leave it at that. But know that from a capital allocation standpoint, we’re going to be opportunistic there and make sure that we continue to invest in that area.

And Ed, you’ll also see in our regulatory filings I didn’t dwell on it today. You’ll see guidance for ‘15 of roughly $1 billion in CapEx and $400 in acquisitions. So there is fuel in the tank to progress as Rice indicated.

Great. Thanks.

Our next question comes from the line of Ian Douglas-Pennant of UBS. Please go ahead.

Hi, thank you for taking my questions. I’ve just got a couple. And firstly on the star rating system, and you mentioned that today and you’ve been very vocal otherwise of talking about this and the methodology of those ratings and how you disagree with that. What is the reason nevertheless that your below-average scores that you seem to have been given impair your ability to recruit patients whilst you manage to get this sorted out? And secondly, you also mentioned your 100,000 FTEs, with Sound and Cogent, has staff retention been an issue of your main competitor in this industry, and certainly talks about that quite a lot? And I just wanted to be sure of that merger you are going to get significant dis-synergies after that? Thanks very much.

Thank you Ian, its Rice. So let me take those. Yes, we’ve been pretty clear about how we feel about five-star rating system. But what I would say, I think it’s too early for me to tell you that we’ve seen no issue in our ability to attract new patients. I personally don’t think it will be. I think actually CMS has been overwhelmed with the degree of pushback not from Fresenius or DaVita, but really from the patient association. And physicians about how they do not like the system and putting people on a performance system which is based on bell curve, really just doesn’t seem to make sense to a number of us. So, we’ll see where that shakes out. But again part of why I gave you the sense of how we sit within the QIP process is because that’s the way that we believe we truly get judged by potential new patients coming in as well as just simply the simple fact of how do we treat them when they approach us about coming to the clinic, how easy do we make it for them to come into the clinic. So at this point we’ll take a wait and see attitude but I think not that it’s going to be a big impact. But it’s important and we’re happy to talk about that in future quarters as we go through time. Relatively to Sound, and I’m aware of the comments at IPC Major and their earnings call. What I’ll tell you is that it’s not been an issue for us in terms of Sound’s standalone. They’ve had incredible growth organically of well over around 50%. They seem to have no issues attracting and retaining people. And as we went into looking at Cogent and talking with Cogent and the physicians and the people there, we asked some pretty pointed questions about how they would feel about coming in with us, because obviously we wanted to make sure that we would not buy an asset and then have a mass exodus. And we haven’t seen that to date. We’re early on obviously since we just closed in the latter part of ‘14. But we do watch it, we’re measuring it, but I think at this point we feel good about where we are, we think the upfront work that we did getting to know Cogent and the management and talking with them, we feel good about it. But I’d still expect you’re going ask me this question in a couple of quarters and we’ll give you an answer when you do.

Okay, just a quick follow-up on that one. Have you, I mean, what’s cost inflation for this business, are you having to increase your average salary for field guys in response to what hospitalists and I guess what IPC are doing as well? Or are you finding other ways to retain those people?

It’s interesting. And if you look at a big piece of the growth at Sound, it really does come from less going into hospitals. And actually they have hospitalist, they haven’t been happy with their own program, they don’t really know how to manage it well. So, we step-in and take that over for them and we kind of acquire those physicians that come into Sound. We’ve not seen huge inflationary issues with that from salary standpoint. I think we bring the clinical expertise that many of these institutions are willing to accept without having to go in and as I’d like to say, get upside down if you will in what we’re, having to pay people.

That’s good news. Thanks very much.

Sure.

And our next question comes from the line of Lisa Clive of Bernstein. Please go ahead.

Few questions. First, at your CMD last year, you indicated that you expected to spend around $3 billion to build out Care Coordination including both M&A and De Novo. So, on that front, I have two questions. First, is it fair to assume that the split will be something like two-thirds M&A, one-third De Novo? And second, and depending on that ratio, last year it looks like you spent perhaps up to $1.3 billion on Care Coordination given that you’ve indicated not much in the way of M&A this year. Can we assume that the bulk of M&A for Care Coordination is really already been done? And then, further question on the global efficiency program, could you give us a rough estimate of the one-time cost from ‘14 and what should we expect from ‘15? I remember you had said there would be $100 million in total, but I just would like to get a better idea of the phasing between ‘14, ‘15 and ‘16?

It’s Rice, let me take number one and I’ll pass it over to Mike on the global efficiency program. It would be nice, I mean, yes, we said about $3 billion investment in Care Coordination. It would be nice if it worked out exactly two-thirds, one-third. I don’t think I would lead you down that path. It may appear that way as the way we rolled out through ‘14. But to be honest, we are not nearly as rigid in our thinking of where that’s going to go. I would say to you, we do have other acquisitions that we’re going to consider. Remember, I always remind you folks this is not a U.S. only program. It’s a global program. And we see opportunity out there that we’re going to consider. We obviously will invest De Novo, but what I would say for you, particularly there is no De Novo investment for Sound. And Cogent we’re obviously looking at National Cardiovascular partners and looking at the Urgent Care centers. We have a pretty good feel to what those costs to put together given the background we’ve got with building our own dialysis clinics. So, we don’t have a set-set formula yet, but let me leave you with a message that I don’t think M&A is completely done because we’re looking at this from a global standpoint. And we don’t want to pass on opportunities. Hopefully that gives you some color of what you were looking for, and Mike I’ll pass it over to you on the GEP.

Okay, thanks Lisa. And just to finish up, typically at the beginning of the year, with regard to what I call baseline acquisitions. So $400 million is what we tend to do year-in and year-out with regard to acquisitions. And then as opportunities present themselves, we adjust our guidance. Yes, with regard to GEP, I think Rice indicated the net figure of roughly $64 million to $65 million for fiscal 2014. I would say looking at that on a gross basis, it’s in the range of $90 million to $100 million, so that’s kind of what we’re coming into fiscal ‘15 with in the GEP program.

Okay, thanks. And then, one last question or actually sorry, I cut you off, could you give us an indication of the one-time cost in ‘16, I mean, in ‘15?

Actually, I guided separately to GEP at the beginning of last year. And it occupied a great deal of my time over the course of the year on Road Shows. So, we put it all in this year and decided not to give a lot of supplemental information because we’ve talked about it so much, we’re in year-two. And we’re indicating that we’re on track to the $200 million, so I’ll probably leave it at that.

Okay, fair enough. And then last question for Rice, could you just give us an update on the progress of the ASCO program, DaVita made some fairly positive comments on that looking like it may actually move forward in the near-term?

Yes, Lisa, I don’t know that I’ve got a lot of diversions from what Kent had said on his earnings call. We obviously put in, in a handful of locations. It looks to be that this is actually going to get kicked off here in the second quarter I believe it is. And so, we’re ready to participate, we’re going to see where it goes, there is work being done. We don’t change the commentary about the flaws we see in the system but it does look like we’re going to get engaged and get started here. So I would say that I have pretty much agreement with what Kent had indicated on his call.

Okay, thanks very much.

Sure.

Our next question comes from the line of Michael Jungling of Morgan Stanley. Please go ahead.

Great, thank you. I have two questions. Firstly on the 2016 guidance, and can you sort of breakdown at a high level how the earnings growth of 15% to 20% comes into existence. So for instance, does revenue growth account for 10 points expense control 3 points interest and tax? And question number two is, on U.S. Dialysis Care and the revenue per treatment growth continues to be less in the cost for treatment. And is 2015 the year where you sort of hit equilibrium meaning both cost and revenues go up at the same rate or do we still see a mismatch and inflation squeeze? Thank you.

Michael, hi, it’s Rice. Well, I’m going to let Mike have some fun with your first question on guidance. But what I would tell you on the Dialysis Care side in the U.S. where does that line cross. You remember we made some progress on that last year, I think it was actually in third quarter. But when you’re not getting an increase at all, and we are still going to have to pay some merit increases and things to our folks, it’s going to take some time. We do think those lines are going to cross. I’m not sure I can tell you exactly when. But as we’ve looked at our guidance, we’ve tried to map that out. We’re going to make progress on that, we’re going to see it next year. I’m not going to tell you exactly what quarter because I’m not sure I can do that reliably. But we’re going to see progress we have to see progress there in the course of ‘15 to deliver what we’re giving you for ‘16 and beyond. But I think I’ll leave it at there, and Mike I’ll let you speak to his question on guidance and earnings growth and mix.

Yes, Michael, I’m probably not going to get into a lot more detail on breaking down the pieces other than I think. But when you look at on a constant currency basis, growth of 10% to 12% in ‘15 and 9% to 12% again, on top in ‘16 that does provide a pretty good base to grow your earnings in concert with your revenue growth. GEP it should continue to add value on the spending side and as we indicated earlier we should get more traction in Care Coordination as a consequence to our investment. So you should see the general profitability of that business also increase in ‘16 or ‘15.

And we will see Michael, we’re planned to see a fractional increase in Medicare in ‘16, it could 0.75% to 1% but that’s a big deal for us given that ‘14 to ‘15 has been flat. So that’s going to play into that as well.

Yes. And on the revenue per treatment side, Michael, I would say and we were very open about this because as we transitioned from dialysis with the extensions, the extended services which was the concept we used in 2012-2013 into Care Coordination in 2014, we knew that the legacy calculation of revenue per treatment included some of the elements that are now in Care Coordination. But we said we weren’t going to revise those for ‘14. We’re looking at that for ‘15. So I would say, based on what we do in ‘15, if we’re looking purely at dialysis services, I think you will not see kind of that appropriate relationship until we hit back into the full market basket adjustment to Medicare. And as you know, they’re feathering that out over ‘15, ‘16, ‘17, you don’t get back to a full market basket adjustment until 2018. And that’s hopefully when you’d see a better relationship between revenue per treatment and cost per treatment in dialysis.

So, can I just quickly follow-up on?

Sure.

So, can I just quickly follow-up on, so for 2015 your guidance assumes at some point if I assumed correctly, a switchover where revenue suddenly move a little bit better than costs, is that a fair understanding of that you just said of cross over?

Actually we’ll come out with revised numbers of revenue and cost per treatment for ‘15 that will just have dialysis services and will not have the legacy elements of expanded services, the pharmacy and vascular access in that number. So you’ll have a better sense as to what that relationship is on just dialysis services. I didn’t make any prediction on the actual revenue per treatment for ‘15 but we’ll have a more appropriate base to look at in terms of what’s happening on a per treatment basis in the dialysis business. And then the second part in terms of what would I expect in terms of when you say a more normal relationship between revenue growth and expense growth, I think what - before you see a completely normalized relationship we’ll have to get back to a full inflationary adjusted Medicare rate which will happen in 2018.

Great. Thank you.

Our next question comes from the line of Gary Lieberman of Wells Fargo. Please go ahead.

Good morning, maybe just a follow-up on that last question. Do you actually have the number for excluding Care Coordination what the revenue per treatment and the cost per treatment growth was in the quarter?

No. Well, I had said in Q1 that we weren’t going to adjust that particular measure because we were talking a great deal about the pieces of the business and we felt in a transition year that was good enough because we were growing so much in Care Coordination. So, we’ll have it in Q1. And let me just correct myself, its 2019 when the Medicare rate is unadjusted market basket increase, sorry about that Michael.

And then, maybe just go back to some of the questions around Mircera, have you guys set a target for the percentage of patients you would like to have on Mircera at any given point in time?

Hi Gary, it’s Rice. No, we haven’t. We think it’s too early in for us to try to do that. But let me give you a little color on where we stand. We are today at 700 patients having had three doses of Mircera and that’s important because now we’ve got them at a place where we believe if there were going to be any issues, we’re going to see anything that caused this clinical concern it would begin perhaps to be evident at a three-dose experience. But it looks very good at this point, things continue to go well, the physicians are very pleased. In the overall scheme of things, I believe we were at 1,400 patients in Q3. And I think we’re up around somewhere around 2,400 maybe 2,500 I don’t know exactly. But it progresses well. It hasn’t moved quite as fast and I knew it wouldn’t start into late fourth quarter with the holidays in there, didn’t move quite as fast as I had hoped it would. But progressing, but I’m really pleased at 700 patients with three doses and no issues that, makes me feel very good. But we have not worked into a certain percentage and lot of that is going to depend on how this finishes up, how we feel about it, what’s a physician reaction of patient’s output or input is. So, we’ll see where that goes. But we may be able to talk about that later but at this point I don’t think I can.

Okay. And then, just update us on the relationship with Amgen, is there any changes or any updates to your contract or maybe even just remind us what the terms are and when that expires?

Yes. So, the actual contract that we’ve been working off expired on December 31 of ‘14. We have signed a new arrangement with Amgen, it’s essentially what I would call a product supply arrangement meaning that we have pricing, we have no volume commitments that we have to give. But obviously with the more we buy the better the price gets. It’s non-exclusive. So it really is just a supply arrangement for us as we work through these opportunities and see where we’re going to end up. And as I’ve always said, I expect we’ll always do some business with Amgen, so we’ll see how this progresses as we go through this pilot phase. But that’s probably the color I would leave you with.

So, it’s essentially an extension to the previous contract is there any dramatic changes to the terms?

Well, it’s multiyear. I believe it’s a four-year deal. I wouldn’t call it necessarily an extension there are some different aspects to that that I won’t go into. But it’s not a radical departure from what we’ve done.

Okay, great. Thanks very much.

Sure.

Our next question comes from the line of Veronika Dubajova of Goldman Sachs. Please go ahead.

Good afternoon, gentlemen, and thank you for taking my questions. I have a couple; the first one is just on the Care Coordination business. And I wonder Rice, I mean, if you look at all that you’ve acquired to date, how do you feel about the scale of what you have? And as you think about taking the business to the next level so, you’re seeing more capitated or risk shared programs with insurers. What else do you need to add into the pie? And how quickly can that next leg of business start materializing? And I’d love to get your thoughts on that now that you’ve done a lot of work around Care Coordination for 12 months. And then I have two housekeeping questions and apologies might if I have missed this in your remarks. But do you have any guidance for the tax rate for 2015 and also the net financial expenses if you can just clarify the comment you made at the very beginning of the Q&A, because I’m afraid I didn’t quite get it? That would be really helpful. Thank you.

Hi Veronika, it’s Rice. What I would say is, I think that where we sit today from a scale size in the investments we’ve made in Care Coordination, I feel good about it. I think there is more to do, and I don’t know that I can tell you exactly what those activities should be. And what I mean by that is I do think capitated contracts are going to come. Are they four years out, are they six years out? We’re not exactly sure. But I think the asset base that we’ve put together allows us to anticipate this and get ready for it, obviously we’re going to have lots of discussions with people that we would enter those kinds of arrangements with. So, we may have to do some tweaking to Care Coordination as we move through the outer years I would say as we’re looking towards, moving towards 2020. But right now we try to aggressively get to a critical mass that allows us to learn, understand and begin to try to anticipate as we think for that capitated rate opportunity might present itself. So, let me stop there and I see Mike’s working on some things for you relative to tax rate, and then I believe it was the financial expenses.

Yes, I was going to walk through the financial expense in a little bit different way. Yes, you didn’t miss it Veronika, so no worries. But I would say the tax rate if you use 33% to 34%, maybe you’re fine. With regards to the financial expense in Tom’s question, what I advised Tom in the end and all of you in the end was to look at the net figure. And I had mentioned, as you know it’s fully disclosed in our notes but we do have the note receivable from a middle market provider in the U.S. We also disclosed the fact that they’ve ended their draw-down period and there is a range to operate. So, if you just simply assume in ‘15 that there is roughly $20 million of income associated with that, you’ll be - there is other tos and fros with regard to the details but they’re all relatively small numbers. So I think if you look at our debt portfolio and look at the run rate of our net interest expense, that should be a pretty good guide knowing that the note receivables worth about $20 million.

Terrific, that’s very clear. And if I can at least just follow-up on your, on the Care Coordination business. I mean, in the absence of any further M&A, how should we be thinking about the organic growth rate in this business as we look over the next two to three years?

Yes, I would say particularly when you look at the organic growth rate from the hospitalist business, I think we’ve talked about that and about the - somewhere I think I’d say low double-digit to mid-double-digit growth rates. NCP I don’t think we’ve really given you a number on that, and I can’t, I’d be guessing if I try to give you one. So, let me do this Veronika, let me validate that when we come back to Q1, I need to do a little more work on NCP. I think my number is pretty good on the hospitalist business. But we’ll polish that out for you when we get to Q1. And we’re laying out metrics for you for Care Coordination we’ll be able to tie that together.

That would be great, thank you so much guys.

You bet.

And our next question comes from the line of David Adlington of JPMorgan. Please go ahead.

Hi guys, thanks for taking my questions. Just one bit of clarity around the P&Ls, structurally the P&L is changing somewhat. I just wondered, if you were willing to give us a kind of margin expectation for this year and next year? A bit of housekeeping around minority interest, again, I wondered, if you were able to give us a hard number for the guidance for this year? And then finally, just in terms of your FOREX assumptions, did you use rates right at the beginning of the year, because the dollar-Euro in particularly has depreciated quite a lot since then. So I just wondered, what actual rates did you use in terms of your FOREX assumptions? Thanks.

Sure. So, I heard margins, I heard, I’m not sure was your question on non-controlling interest.

I think its hard numbers and our guidance.

Hard numbers, yes, okay. Relative to margins, I think when you look at the top and bottom line it would be fair to say may be flat with a small positive potentially given the range of our earnings I provided because I’m saying zero to 5% on earnings after tax and 9% to 12% on the top line. So I think flat slightly positive is probably the right guidance on margin. Relative to non-controlling interest, I think I’m not ready to give a flat guidance number for that because the dynamics of the business - the business is too dynamic. I think as a starting point for the year, just keeping in mind how much things had moved, I’d look to Q4 but I’d advise you, I’ve indicated going forward we’ll talk kind of more transparently about both earnings and also earnings net of NCI. But I’d say as a starting point for ‘15, use Q4.

Okay, perfect.

FX.

And then, I’m sorry, I missed your last question, David.

David, you can actually ask, we didn’t get it all.

Okay, FX. Why don’t you repeat the question because I missed it?

Sure. Because you point towards using rates at the beginning of the year, but obviously there has been a material change since the beginning of the year particularly in the dollar-Euro. So I just wondered, if we used spot rates would we see some downsides to expectations?

Well, my traditional guidance is that whatever you see on the top line typically largely mitigates. So I would tell you, you wouldn’t be too far off using current. I mean, if you used an average rate for January, you’re probably pretty close. But if you wanted to use spot rates, I think on a bottom line you wouldn’t be that far off.

Okay, great. Thank you.

Okay.

Our next question comes from the line of Isabel Buccellati of Putnam. Please go ahead.

Yes, thank you very much for taking my question. I just can’t remember the cost saving target of $300 million, does that include or exclude to the benefit of the biosimilars? And I understand that you don’t put benefit in the guidance for 2015. But do you put in the ‘16 guidance benefit from the biosimilars?

Isabel, hi, it’s Rice. There is nothing in the $300 million for biosimilars. We just don’t believe we have enough comfort knowing that to be able to try to peg that. So it is not included in the numbers we’ve given you.

So, also not in the ‘16 guidance?

That’s correct.

Okay, thank you.

Sure.

And today’s last question comes from the line of Kevin Ellich of Piper Jaffray. Please go ahead.

Hi, good morning guys. Thanks for taking the questions, just a follow-up on the Care Coordination. Rice, you gave a lot of details in terms of your outlook. But I wanted to see if you could expand maybe upon Medicare’s bundled payment for care improvement initiative? And does the low-double-digit organic growth you said from hospitalist business, does that include any tuck-in deals or pricing increases, just wondering how you get to low double-digits?

Yes, Kevin hi. Well, couple of things. We probably know the same thing about BPIC, as Mike had said earlier, it was anticipated it would come in, in January and it’s been pushed out to April. So, there is going to be some impact there, we’ll have to see how that plays out. In the range that I gave you and part of what I was trying to arrange was, cover myself. I don’t think I want to get too much into the exact metrics of what we think is going to help us drive that and how we’re going to get there, are we going to be doing something with pricing, are there small deals in there. Let me withhold giving you that information today and maybe we can talk more about that in Q1, I think we’ll have a little more clarity. I’d like to see where we are on point with BPIC or BPCI. I’m not trying to be evasive but I don’t want to tell you something that we’re going to find out in three weeks is different, because we know a little bit more about when that’s going to come into being.

Sure. With BPCI, have you guys selected conveners and you know which models you guys plan to adhere to, is it model 2 and 3, like almost everyone else?

Yes, what I would say to you is yes and yes. We know the convener is going to be, we know what we’re going to do. But I think I’m just going to let it stay at that. As you can imagine, this is pretty competitive, there is a lot going on at this point. And the Sound guy told me they’d kill me if I told you. So I’m going to have to withdraw that or not offer it. But we do know what we’re trying to do and where we’re going to go. But I’m respecting the confidentiality that our management team at Sound wants to maintain at this point in time.

Okay, great. And then my last question is, with Shiel, the non-dialysis lab business, just wondering, strategically I guess how does that fit into the equation for you guys? Do you want to expand that to maybe try to compete with the Quest and Labcorp or is it really just more about providing ancillary services for the care coordination business?

Think of it in a different way. This is really a geographic opportunity that we seized. Given that opportunity our big lab is in Rockleigh New Jersey, right across the Hudson River. And we have the opportunity by this acquisition to learn about non-dialysis lab testing. We’re not looking to go out and compete with Quest and Labcorp although we will to some degree just in that geography. But it’s really a way for us, if you remember the plan we laid for you, the facility that Shiel has will be closing. It will be moving into the Rockleigh facility so we’re going to really leverage that asset in terms of lab folks and equipment. So that’s going to give us some opportunity there. And we’re going to learn a lot between New York, New Jersey and Philadelphia about how this business works and what opportunity it may present. Keeping in mind Kevin that the other big lab we have is in San Francisco. So we could look at perhaps a bicoastal thing. But we’re not looking at this point to really try to go out on a city to city basis and really compete with the larger guys. We’re taking advantage of geographic opportunities that we have in synergy.

Okay, great. That’s helpful. Thank you.

Sure.

Okay gentlemen, there are no further questions from the phone lines. So please continue with any other points you wish to raise.

Great. Thank you so much, Patrick. Thank you everybody actually for participating. We very much appreciate your interest. And talk to you soon. Thank you. Take care.

Bye-bye.

Ladies and gentlemen, the conference is now concluded. And you may disconnect your telephone. Thank you for joining and have a pleasant day. Goodbye.