Ladies and gentlemen, thank you for standing by. I am Patrick Wright, your Chorus Call operator. Welcome and thank you for joining the Fresenius Medical Care Earnings Call on the First Quarter 2017. 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. I would now like to turn the conference over to Dominik Heger, Head of Investor Relations. Please go ahead, sir. Dominik Heger - Fresenius Medical Care AG & Co. KGaA: Thank you, Patrick. We would like to welcome all of you to the Fresenius Medical Care earnings call for the first quarter 2017. I'll start out the call by mentioning our cautionary language that is in our Safe Harbor statement as well as in our presentation and in all the materials that we have distributed earlier today. For further details concerning risks and uncertainties, please refer to these documents as well as to our SEC filings. With us today is Rice Powell, our CEO and Chairman of the Management Board. Rice will give you a general business update and go through some of the highlights of the quarter. Also with us is Mike Brosnan, our Chief Financial Officer, who will give you an update on the financials and the outlook. I'll now handover to Rice. The floor is yours. Rice Powell - Fresenius Medical Care AG & Co. KGaA: Thank you, Dominik. Good morning and good afternoon to everyone. We have had an eventful start to the year, notwithstanding a number of moving parts and challenges, particularly in the U.S. market year-to-date. I'm very happy that we were able to deliver such strong first quarter performance and that we can discuss that with you today. If you will, please do keep in mind that this is…

Thank you. Ladies and gentlemen, at this time we will begin the question-and-answer session. And our first question today comes from the line of Patrick Wood of Citi. Please go ahead.

Hi. Thank you very much. I have two, if I may, please. The first is on the BPCI side of things. I hear on the savings rates, I was wondering if you could get a sense for roughly what that actually contributed in terms of revenues and linked to that, what do you think the Care Coordination margin maybe in Q1 would have been had you not recorded those BPCI revenues? So that's the first question. And the second one is more around wages and on the Dialysis side. There's obviously the Dialysis Patient Safety Act in California, I was wondering and I'm aware that some other states already have mandatory ratios on staffing, but I was wondering if that was something that you expected to expand over time or if you expect any kind of an impact from that over the long-term? Thank you. Rice Powell - Fresenius Medical Care AG & Co. KGaA: Hey, Patrick, it's Rice. Mike, you want to take... Michael Brosnan - Fresenius Medical Care AG & Co. KGaA: Sure. Rice Powell - Fresenius Medical Care AG & Co. KGaA: the one-and-a-half? Because I think you have half question there. And I'll take California. Michael Brosnan - Fresenius Medical Care AG & Co. KGaA: Yeah. On BPCI, I provided kind of that detailed commentary because we were not planning on disclosing specific dollar numbers each quarter as we progress through this thing. We think we've reached a milestone in terms of getting comfortable with the information coming from the government in getting both the finance folks and the actuaries satisfied. Also, considered in our guidance for the year, so I don't think the particulars and a with or without for Care Coordination makes sense to us right now, because this program has been in the…

That's very helpful. Thanks, guys.

Our next question comes from the line of Tom Jones of Berenberg. Please go ahead. Tom M. Jones - Joh. Berenberg, Gossler & Co. KG (United Kingdom): Hi, good morning. Good afternoon, Rice. And thanks for taking my questions. I hate to hop on it, but I wanted to ask a bit more about the Care Coordination business. There's obviously a lot of moving parts to the margins, and you've got the ESCO revenues this quarter, the pressure around your vascular access business, the bad debt. I know you don't want to give specific numbers, but maybe it would help us to at least understand where you think the margins or which directions the margins in that business are going to travel over the next three quarters? And then perhaps, maybe on a three-year view, you could speculate in the way you think this business' margin should be able to get to. And I guess it's just one of those things we might have to get used to, a little bit more volatility in the margin in that business than we're used to in the rest of the business. And then on a more positive note, I wondered if you can make some – at least qualitative comments about your improvements in the revenue for treatment. I guess, Medicare rates are basically flat year-on-year. So how much of the jump that you saw was related to payor mix and how much of it was price increases? And on the subject of price increases, it's widely known you had two fairly large commercial contracts, are reaching out for renewal or in the process of renewal. Just anything you can add on those would be helpful. Rice Powell - Fresenius Medical Care AG & Co. KGaA: I'm going to let Mike answer…

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

Good morning. Thanks for taking my question. I guess – will any of the policy changes that the new administration has announced affect BPCI in any way that you can tell? Rice Powell - Fresenius Medical Care AG & Co. KGaA: Hey Gary, it's Rice. Not at this point. Now, let me say this. I've been in D.C. a lot over the course of the first quarter. And we've talked to a lot of people. I would say to you that as best we can tell, particularly, Secretary Price, he likes value-based care. I think there's some pieces of that that from a patient's standpoint he has some concerns. But in general, he thinks the program makes sense. So we have not gotten the feeling or an idea that something's going to impact this at this point in time. But obviously, in this particular political environment things change on the dime. If something comes up, we'll have to react to it and see what it means. But at least in the early meetings, because we've asked value-based questions or how is this going. It has not come out to us that that they're looking at any radical change that would affect BPCI, as best that I can tell.

Okay. That's helpful. And then I guess, just going back to one of the earlier questions that was asked about breaking out the impact. You broke out the VA because it was for multiple periods. I mean BPCI revenues that you recognized in here is also for multiple periods. So, wouldn't it be helpful to break it out just to have a better sense of kind of how it might evolve on more of a run-rate basis? Rice Powell - Fresenius Medical Care AG & Co. KGaA: Yeah, Mike? Michael Brosnan - Fresenius Medical Care AG & Co. KGaA: Yeah, the VA was an agreement we reached, so we booked it in a period that it was bookable based on having reached the agreement, and the BPCI is similar and that we've always been very transparent that we hadn't reached the criteria to be able to book anything under GAAP. And so we're booking in the first period where we've achieved that. That's essentially what I've tried to do in terms of giving you a sense as to the 5% to 6% of gross savings and the 2% to 3% of net. And I think we've indicated – without getting into a lot of granularity about which piece of this revenue relates to which period. It is a very long tail cost savings program. I mean, even at this point in time, we're basically three quarters back in terms of what we've recognized for revenues.

Okay. And then if I could sneak in one question on the Dialysis business. You mentioned the cost per treatment and how first quarter is typically a more expensive quarter. But just looking back, the sequential increase from fourth quarter to first quarter of 2017 was around 8% increase. And I look back at 2015 to 2016, it was under 3%. So is there anything else going on in there? Michael Brosnan - Fresenius Medical Care AG & Co. KGaA: Well, Gary, the biggest piece, you might have seen or thought about or not is there's two less dialysis days in Q1 and Q4, which is a big contributor to the bump. You're spreading your fixed cost over two fewer dialysis days, that's the biggest driver.

Okay. That's helpful. Thanks very much. Rice Powell - Fresenius Medical Care AG & Co. KGaA: You bet.

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

Hi, thanks. It's Ian Douglas-Pennant at UBS. Again, I wanted to go back to Care Coordination and apologies in advance. Just thinking about the profitability here and any conjunction with the revenue growth, at what point do you need to slow the – and I'm thinking about the organic revenue growth, at what point do you need to think about slowing the organic revenue growth? I don't know, whether you need to relook at some of the contracts that's been signed or whether you're being disciplined enough there and assess whether they are as profitable as you thought they were initially, or are you comfortable or it's just a lag effect and so we'll see that come through, because it does look like a multi-year trend now. Rice Powell - Fresenius Medical Care AG & Co. KGaA: So, Ian, help me here, are you referring to Sound, in particular, or the whole book of Care Coordination businesses? Can you be a little clearer?

I guess the question is more relevant to Sound. Rice Powell - Fresenius Medical Care AG & Co. KGaA: Okay. Thanks, that's helpful. I think, what we would say in the case of Sound and the contracts that we have. We do look at those, they are not long-term deals. They generally will roll in a year, Mike, if I believe I remember that correctly. So we had a chance to look at them and reevaluate. I think, at this point, we're not thinking about putting our foot on the brake in terms of revenue in that business. I think we're going to give it some more time to look and see how it develops. I think, we should be fine. So we have to look at that. Mike, any more color? Michael Brosnan - Fresenius Medical Care AG & Co. KGaA: Yeah. I guess I'd add two things. One, relative to Sound, and in particular, relative to BPCI, because I know I gave you some numbers particularly with regard to gains-only and moving into pluses and minuses. As we progress in the BPCI program, we always have the option of dropping episodes of care or dropping locations. So, in terms of your point about how do you manage in this environment, that's a lever we can pull as we – now, that we've gotten into revenue recognition, that's a lever we can pull to make sure that that drives to the kind of outcomes we were looking for. And relative more broadly to Care Coronation, we've said in the past, both Rice and I, that we look at each one of these businesses and we ask ourselves that question routinely since we did our acquisitions in 2014 and that will continue. And if we need to make adjustments, we…

Okay, fine. That makes a lot of sense. Thank you. And just going back to the earlier question on revenue for treatment given that the strong number this quarter. What are the – and you said there were a few moving parts within that. I mean, within the range that you gave there, what are the key moving parts or the key uncertainties that you think there are? What are you kind of most concerned about that might bring you above or below that revenue per treatment target that you've set for the full year? Michael Brosnan - Fresenius Medical Care AG & Co. KGaA: I'm smiling a little bit. I don't think I've ever gotten this many questions about a quarter that has a positive revenue per treatment development. But I should welcome the good news, I guess. Well, I think, it's the things that we always talk about. It's where do you stand with regard to your commercial contracting, where do you stand with regard to your patient mix as two key drivers. And to what extent do you get even a modest bump in terms of the CMS reimbursement rate, which also happened in the first quarter of this year. Those are principally what drives the revenue recognition.

Okay. Fine. Great. Thanks very much.

Our next question comes from the line of Lisa Clive of Sanford Bernstein. Please go ahead.

Hi. Few questions. First, you commented on improved payor mix. Can you just confirm the stability of your ACA patient base both on exchange, which I think you were pretty clearly about at Q4 that you had already seen the enrollment figures, but also off exchange or maybe a slightly different timeline? Your close competitor was hinting at a loss of patients outside the Medicaid-eligible population. And I know Medicaid-eligible is not a big chunk of patients for you guys. So that wasn't really an issue for you to begin with. But because of all the question marks around premium support that there were some losses of patients. So I'm just trying to square the circle here, if indeed your patient count is very stable. Second question, DaVita also announced an integrated care deal with Humana. But, interestingly, it also included not just the ESRD patients but CKD patients. Could you comment on any initiatives you may have in place here and how we should think about that opportunity longer term? And then, third, on Care Coordination, I fully understand that you don't want to provide too much granularity on the business that has a lot of moving parts. And in each specific business line, there is a lot of uncertainty on the exact pathway of revenues and profits. But it would just be very helpful if we could just think about the different buckets and the sizing of different buckets of these businesses. Perhaps, just split between Sound, other non-dialysis, broadly sort of dialysis-related ancillary services and then, finally, integrated care. And I'm sure you won't give me what level of detail I would like, but I can at least plead. Rice Powell - Fresenius Medical Care AG & Co. KGaA: Okay, Lisa. It's Rice. So let's see how we do this. Status of patients, yes, we've got that. So if we go and we look at our patient base from the end of September through the end of March, we've gone up 5 patients. So it's very stable. If you remember, we told you September through January 31, we were down around 20 patients and now adding these two extra months, we've seen just a little bit of tick up. So it's extremely stable for us and...

And actually just a follow-up on that. You do have that level of granularity where you know, obviously, who is paying your bills into the various clinics. So you know exactly, which insurance company is covering them and then you have a sense of whether that's an EGHP plan or an ACA plan, et cetera. Rice Powell - Fresenius Medical Care AG & Co. KGaA: It is not easy to get the information and I've been accused of torturing people to get it, which is probably true. But now that we have it, I'm just telling you, it's a stable book of business, Lisa. It's looking okay for us. And I know – I was an Indian giver, I told you I'd give you the medicated eligibles and then I didn't. I'm not going to give them to you today but I will also tell you that's a pretty stable number. I'm looking at it and it hasn't moved much. So we are business as usual at this point in time. And then on your question on the Humana deal, you're right. I did look at their transcript. I think they are doing CKD and dialysis. Our position on that or our deal with Humana is just dialysis only. We're not swimming upstream into CKD in that particular case. And then as far as your question on, can we give you anything a little more granular on the Care Coordination businesses, let me do this. Come to Frankfurt, June 8, CMD, we'll try to give you some clarity on some of this. We may not give you as much as you want but we'll try to give you some sense of how we see this playing out and obviously, we'll talk about midterm or what we're doing there. We're not just ready to go chapter and verse on all this yet. There is just still some things that we are not exactly sure how they're going to play out. But we'll see if we can give you a little bit better sense of where we're going on this, okay?

Okay. Appreciate it. And one last question. You used to – in your 20-Fs report that the proportion of patients that were Medicare and Medicaid, which I think in 2014 was 77%. I haven't seen – I don't think you actually disclosed those numbers for 2015 and 2016. But it would just be really helpful to get an idea of what proportion are Medicare, Medicaid, what proportion are Medicare Advantage, and then what proportion are pure private. DaVita just yesterday said that they are pure private, so obviously, that's EGHP and any ACA plans and COBRA, et cetera, was about 11%. I'm just wondering whether you're in that same ballpark. Rice Powell - Fresenius Medical Care AG & Co. KGaA: Yeah. I cannot tell you if we still put it or we stopped putting it in the 20-F, but let me do this just so you don't go home empty handed. The number that DaVita gave you for pure private is a number that we could understand and get a sense of that. How about we leave it like that. That's not a foreign number to us. Michael Brosnan - Fresenius Medical Care AG & Co. KGaA: Yeah. The – just for clarity on the 20-F, the Medicare, Medicaid split revenue sourcing was a U.S. GAAP requirement and not an IFRS requirement. So that's why it's not in the queue. It was historically reported in all the prior periods, but it's just changed because it's not required under this accounting standard to describe the character of revenues in that way. We have other disclosures that we think provide some transparency, just not the same way. Just so you know. Rice Powell - Fresenius Medical Care AG & Co. KGaA: Hopefully that helps, Lisa.

Yeah. Thank you. Michael Brosnan - Fresenius Medical Care AG & Co. KGaA: We weren't withholding information. (49:39)

And our next question comes from the line of Michael Jüngling of Morgan Stanley. Please go ahead. Michael K. Jüngling - Morgan Stanley & Co. International Plc: Hi, good afternoon. And I have three questions. Firstly, on North America, on the Dialysis margin do you think you can maintain a year-over-year EBIT margin increase over cost inflation and less cost savings to drive an inflection point later on this year? Question number two, on BPCI. For the revenues that you've recorded, have you received the cash? And if not, how does the cash recognition work for BPCI? And question number three is on (50:21) for quite some time. I was hoping to get some indication on what your experience is. And also, when we can get some news with Vifor Pharma on a potential deal that you can use in your own clinics? Thank you. Rice Powell - Fresenius Medical Care AG & Co. KGaA: Hey, Michael. Mike, if you want to take Michael's one and two and I'll come back on the (50:46), okay? Michael Brosnan - Fresenius Medical Care AG & Co. KGaA: Yeah. I mean on margins, we provide guidance on global margins, which is probably where I'd stay. We indicated globally that we'd be able to maintain our margins in 2017 versus 2016. I think, Q1 we're at stable margins on the Dialysis Services business in the U.S, we're pretty happy with that. On the cash, the short answer is, yes, we are receiving cash as well from the government with regard to the savings. The revenues are on the accrual basis, but we did receive a substantial check relative to the revenues in comparison to the revenues that we booked. Rice Powell - Fresenius Medical Care AG & Co. KGaA: Michael, very quick, yes, we…

Our next question comes from the line of Ines Silva of Bank of America Merrill Lynch. Please go ahead.

Hi, thank you for taking my questions. I just have two quick ones left. The first one is could you, excluding all the additional dialysis days and excluding all the efficiencies coming from Mircera (54:29) et cetera, could you just comment what is the underlying cost inflation that you are seeing in dialysis in North America? Or you should prefer what is the normalized inflation that you expect for the full year? And then my second question is just on EMEA – on the EMEA EBIT margin. The differential that we see year-on-year this quarter, is this indicative of what, how we should think about the margin versus the rest of the year? Or are there other moving parts in the next three quarters that we should be thinking about? Rice Powell - Fresenius Medical Care AG & Co. KGaA: Thank you, Ines. Mike? Michael Brosnan - Fresenius Medical Care AG & Co. KGaA: Yes. I'm afraid I might disappoint you, Ines. I would love if I could run the business with a normalized inflation rate and not have to deal with any of the outliers, but we do. So the best I can do is the guidance I provided on cost per treatment, which was approximately 1% for the year, and that's the favorable and the unfavorable things, considering all the actions we take to make sure that we're managing the total cost effectively. And I think that's the best guidance I can give you, and it prevents you from having to resort. Because your next question would be, okay, well then what are the effects of all the things that you're doing. So I'll stick with what I've said in the past. On EMEA, if I – you're asking for – if I heard you correctly, a prognostication…

Thank you. Let me just – sorry, just follow-up on the first question real quick. What I was asking is more what kind of inflation you think you should see in this business? I think, in the past, you've talked about 2%, 3% cost inflation. So let's not focus on 2017 but just, in general, what do you think is a suitable cost inflation for the dialysis treatment in North America? Rice Powell - Fresenius Medical Care AG & Co. KGaA: What I would say, Ines, is that that range we've given you of 2% to 3%, I think it's fair. What we generally do is budget at 1% and then we hope to bring it in a little lower than that if we can. But obviously, people expect raises and we need to do that. So I think, that's probably the best way to answer it, it's kind of in that range.

Perfect. Thank you.

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

Good afternoon gentlemen and thank you for squeezing me in towards the end. I have a couple of questions, please. The first one is just on the cost development in Care Coordination. Mike, if I look obviously, last year we started the year with a quarterly cost running around €500 million (58:30). Q1, the cost in the quarter was almost €700 million (58:35) for the Care Coordination business. Now I appreciate there are some one offs in there. But is this the appropriate run rate you think for the business looking at the rest of the year? And I guess if you can just give us some detail on what has driven the significant growth in the cost base in Care Coordination over the past five quarters specifically, that would be really helpful I think for us as we wrestle with where the margin might or might not go? So that's my first question. And then my second question is just to confirm that in spite of cost per treatment being up 3% this quarter you're still sticking with the plus 1% for the full year. And I guess if you can maybe just give us a sense on what may alleviate the growth as we move throughout the rest of the year? Thank you. Michael Brosnan - Fresenius Medical Care AG & Co. KGaA: Hi Veronika. With regard to the cost base, it's a complicated question because you've got pretty extraordinary revenue growth and we're obviously investing in the business to achieve that, which includes both organic as well as acquisition growth in the five quarters. So I would say where we have had things happening, Care Coordination, that we view as one offs or episodic or something that would be outside the national run rate, we pointed that…

But to confirm, you are sticking with the 1% for the full year that you had guided to before? Michael Brosnan - Fresenius Medical Care AG & Co. KGaA: Sorry. I thought I said that in my prepared remarks. Yes.

And apologies if I missed that. Okay. And can I just follow-up on Care Coordination, I wasn't really trying to ask. I think what's very difficult for us to understand is even the individual buckets that you have within Care Coordination. So, we don't have a huge amount of visibility into how each of them has grown individually both from a profit and a revenue perspective. So maybe, just taking a step back, the question really is, and I think this would be really helpful for everyone on the call, is just to get an understanding of the growth that you've seen organically in the business, what's been the most significant driver of that? And as you think about the margin compression that we witnessed in Care Coordination, even excluding the one-offs, which part of the business is most responsible for that? Just because for all of us right now, it's bit of a random number generator. Rice Powell - Fresenius Medical Care AG & Co. KGaA: Go ahead, Mike. Michael Brosnan - Fresenius Medical Care AG & Co. KGaA: Yeah. Just thinking about how to answer your question because you're talking about one quarter and when you talk about margin progression in Care Coordination, you're talking about three years where we've had a variety of different growth rates. I mean, Rice pointed out we had a bump in health plan – Fresenius Health Services when we did the first 8 ESCOs and now again when we do the next 24. We've had ramps in our pharmacy business over the course of the last several years. Obviously, the largest part of Care Coordination, as everyone knows is Sound Physicians, which has had substantial organic growth. We've continued to invest in that business with other acquisitions. So acquisition generated growth. And…

Okay. Understood. Thanks guys. Rice Powell - Fresenius Medical Care AG & Co. KGaA: Yes.

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

Afternoon, guys. Most of my questions have been asked. Not necessarily answered, but they have been asked. Just in terms of two follow-ups really, one is just the one less dialysis day is the U.S. and would I be right in assuming that's probably about a €30 million impact on your profitability? And second, just on recognition of BPCI revenues, are you going to be recognizing revenues now every quarter, or will it just continue to be lumpy quarter-to-quarter? Thanks. Michael Brosnan - Fresenius Medical Care AG & Co. KGaA: We expect to recognize BPCI revenues every quarter now. So that's become a routine part of the P&L. Rice Powell - Fresenius Medical Care AG & Co. KGaA: Yeah. As it is with the ESCOs, and those plans – the health plan, we would think that would be routine, David. And just give us a moment, we're checking on your first question. Somebody reach for a calculator that tells you something there. Top or bottom line on the one less dialysis day?

I'd say both, please. (01:07:49) Michael Brosnan - Fresenius Medical Care AG & Co. KGaA: And we wanted clarification because the best you were going to get is top line. Yeah, we're stumbling around a little bit here. But my rule of thumb has always been on top line about $15 million per day, has been my rule of thumb. Rice Powell - Fresenius Medical Care AG & Co. KGaA: So you are close.

All right. Thanks, guys. Michael Brosnan - Fresenius Medical Care AG & Co. KGaA: That's dollars, by the way. Not euros. But that would be about €30 million. Rice Powell - Fresenius Medical Care AG & Co. KGaA: Thank you, David.

There are no further questions at this time. I would like to hand it back to Mr. Dominik to please close the call. Dominik Heger - Fresenius Medical Care AG & Co. KGaA: So thank you very much, everybody, for the questions, and the lively participation today. Also, we discussed it already, nevertheless, I would like to take the opportunity to highlight that we will have our Capital Markets Day, I think everyone got the message, it's worth coming now and to get some more information. We hope that you all join the event and have registered already or will register soon. And then we are looking forward to seeing and talking to you soon. Thank you. Rice Powell - Fresenius Medical Care AG & Co. KGaA: Thanks, folks. Michael Brosnan - Fresenius Medical Care AG & Co. KGaA: Thank you. Rice Powell - Fresenius Medical Care AG & Co. KGaA: Appreciate the interest. Bye-bye, now.

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