Thank you, Desmond. We would like to welcome all of you to the Fresenius Medical Care Earnings Call for the Third Quarter 2017. As always, I will 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 material 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. This call is limited to 60 minutes. It turns out to be a good approach in our recent calls to limit the number of questions to 2, please, without subquestions. We will answer the first 2 questions. This way we would like to ensure that all of you have a fair chance to ask at least 2 questions, we trust that you understand that. 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 will now hand over to Rice. The floor is yours.

Thank you, Dominik. Good morning, and good afternoon to everyone. Thank you for joining us. We have had an eventful third quarter, as you can imagine, with 3 hurricanes and an earthquake in North America. Beyond the regular business that we try to conduct over the course of the quarter, it's been quite interesting. If I may, I would like to start by saying a very large thank you to all our employees around the world for the great job that they've done. And in particular, I'd like to say thank you to the disaster response team in North America. Throughout the quarter, these people managed their priorities with great dedication and empathy for our patients and our employees that struggle during these natural disasters. Patients came first, employees came very closely second. And I hope, as stakeholders, you can be proud of the way the company has conducted itself, in the way that we have tried to do everything possible to improve the outcomes, while taking care of people during a very, very difficult time. So thank you, again, to all employees, in particular, to the disaster folks in North America. You've done an outstanding job, and you've made us all very proud. Moving to Slide 4. I will speak to third quarter highlights. Some things are new. And some things are a continuation of prior quarters, and we'll try to break it down for you in that context. I just spoke about the disasters. We'll more talk about the economic impact of that and our philosophy, for while we handle these things the way that we do. And Mike will speak to that later on in the call. We had good underlying growth in both products and services, including Care Coordination, obviously. The turnaround of the Care Coordination…

Thanks, Rice, and good morning, good afternoon to everyone. Continuing on with Chart 13. This is just a very high-level reference slide to guide you through the developments in the first 9 months of the business regarding, moving from left to right, what things look like in terms of our constant currency growth for the first 9 months, both in terms of revenues and net income. And you can see, consistent with our guidance, plus 9% in revenues, just over €1 billion. And plus 8% in net income, as Rice indicated, to get -- bring us to €843 million in earnings for the 9-month period. This is excluding the VA adjustment, which we indicated in the first quarter, and we're just applying consistently. And now also excludes the natural disaster costs, which I'll comment on just a bit -- a little bit later in my -- The foreign exchange translation adjustments were indicated. The impact of the VA agreement and the impact on an after-tax basis of the natural disaster costs bring you to the reported numbers, both in terms of revenues and earnings for the 9-month period. So turning to Chart 14, this is the same format that we used in the second quarter. Obviously, on the left are all the reported numbers. On the right are the numbers as we have adjusted them. And my comments will be largely focused on the right hand side of the page. So for the 9-month period, the revenues increased by 9%, also 9% constant currency. So there was a very little currency effect when you look at the full 9-month period year-over-year. Operating income increased €88 million to €1.767 billion or roughly 5%, also in terms of current and constant currency. On the left-hand side of the page, on a 9-month…

Thank you, Mike, Thank you, Rice, for the insights we already gained. I think we open the Q&A now to everyone in order to gain more.

And the first question comes from the line of Tom Jones of Berenberg.

I had two. One on ESCOs and one on third-party payment assistance. On the ESCO program, obviously, momentum is building within that program. I was wondering if you might be able to give us a little bit more in terms of concrete numbers in terms of what that contributed to the Care Coordination's EBIT during Q3? And what we should be expecting in Q4 and on into 2018 for that program? And then, I guess, the associated question is that the program is clearly trending very well, but across the industry. How much bigger and how much most successful does it need to become, do you think, before CMS, before Congress decides that's the way to go for the whole of the Medicare, and starts to seriously consider shifting everything over on for some kind of capitated payment or risk sharing model for dialysis? And the second question is on third-party premium assistance. I think the last time we spoke, there was some suggestion or thought that you had the vibes you were getting from CMS which suggested they may promulgate further rules around third-party premium assistance by year-end, but obviously, with the change in the top management at the Department of Health and Human Services, that might have changed somewhat. So just some kind of update there would be helpful?

Great, Tom. Mike, do you want hit ESCOs, and I'll come back around share at premium.

Yes, Tom, I'll do my best to at least to answer a part of your question. We had said at the beginning of '17 that '17 would be kind of a lumpy year with regard to our demonstration projects. We started recognizing BPCI in Q1, and it's progressed accordingly over the year. And I've stopped short of detailing out each quarter all the different pieces of both of those programs. But that having been said, we've made good progress on the ESCO program. I did indicate in Q2 that we would see an acceleration in the back half of the year, so you're seeing that now in the third quarter. I'm going to comment a little bit to give you some hints relative to how we see this going forward. CMS, as you may have seen, released some information about what they call plan year 1 of the program earlier this week. And we're very pleased with the results for FMC. They indicated substantial savings overall in their HDF programs. But for FMC, they've reported a little over $43 million in gross reported savings, which we think is in line with comments that we've made at our Capital Markets Day. Of that, there is $29 million or just under $30 million, which is net of CMS's participation. That would be shared with us and with the ESCO practice partners and with nephrologists. I think as we go forward, particularly as it relates to what we expect our experience will be net of all of the program costs and also net of the overheads that we incur in our Fresenius Health Plan business, we think the best way to think of this is on a per treatment basis. So in the first plan year, with regard to our perspective, net of all of our costs, we think this is going to be a net positive of $8 to $9 per treatment for the patients in the program. Now you asked about how we think of this going forward, and I just ask you to keep in mind that year 1 was focused on getting the program started and reporting data. Year 2, the program is going to add a financial consequence around quality. So it will be a penalty program structured in a similar to way we -- what we have today in our Medicare bundled rate. So that means if the quality measures are not achieved, there will be a penalty applied. So as you think about next year and the years beyond, if we're in the $8 to $9 per treatment range, we'll have to fold in whatever the quality effects of this are going to be going forward, and we also should have maybe a little bit of the benefit in terms of increased absorption of overheads. Too early to tell how that's going to play out in the detail, but I think $8 to $9 per treatment is a good benchmark.

So Tom, it's Rice. The follow-up on that, how successful does it have to be before it tips. It's a great question. I'd declare victory move on today, but I don't run CMS, so I don't get to do that. I would tell you that this plan, as it's laid out, it's going to run through '18. So we're going to have some discussions about what happens next, where do we go. I think it's little early to decide when do we hit a tipping point, can we hit a tipping point that would allow this become the norm. I think it's just too early to talk about that at the moment. And on charitable premium assistance, what I would say is steady as it goes. We had numbers of meetings, as I told you we had, we've talked to and given input to folks at CMS. I think with Price leaving and there is Acting Secretary Hargan there, I think, we may see a little bit of a lull before they could do rule making, they may want to wait and actually have some body appointed in that position, hard to say. But the good news is, at this point, all of the folks that we know and that we've worked with and given comments to are still there. Secretary Hargan has come in and taken the group, and they're working. So we'll never know for sure until he comes, but right now, it seems to be that there is a little bit of a lull until they can sort out what's going to happen here at the leadership.

The next question comes from the line of Lisa Clive of Bernstein.

Lisa Clive from Bernstein. Firstly, Mike, just to follow-up on your comment around the ESCO. I'm not quite clear in terms of your $8 to $9 per treatment. Are talking about just applying that across your 3-times dialysis treatments per week, over 52 weeks of the year. That would only get to you about $1,400. Is that an incremental EBIT figure, given the data you gave us at the Capital Markets Day, granted they were 2 best-performing ESCOs out of the 60 you've had up and running since 2015? But the per patient per month average savings that you gave to us that kind of implied that the numbers were more like $3,600 for the second best-performing, and actually over $5,000 per patient in the best-performing ESCO. So I'm just a little confused about really in terms of after Medicare has taken their cut and after you've paid out what you owe to the nephrology practice and other program expenses, really what the kind of EBIT per patient is that you are generating? And then second, on ESCO, you ramped it up to 30,000 patients over the course of this year and from the data that CMS has released, it appears that savings are well on track. Is there any potential to expand ESCO further? And have you had any discussions on that? And then just following up on Tom's question around, I know it is still early days, but if ESCO is on a sustainable basis saving the government money, what are the chances of getting that Patient CARE Act through Congress in the next 12 to 18 months?

So Lisa, obviously, I'm going to let Mike go right to answering your question. I'll come back on the Patient Act, if you will.

Yes, Lisa. The Capital Markets Day, those were the 2 best-performing, first of all. And that was more of a contribution-margin view, not including the Fresenius Health Plan overheads. So it was the direct costs associated with delivering care to the patients, the participating nephrology practices and then CMS's share. And the figure I gave you on a per treatment basis, it would be all in, covering everything. You are correct in terms of the calculations. You'd get to the $8 to $9 by taking 3 treatments a week, 52 weeks a year. There is a range there, because, as you know, there is a little bit of leakage with regard to treatments for an average patient over the course of the year with hospitalizations in this treatment. So I think you've heard us in the past use a benchmark of maybe somewhere around 144 treatments, you'd get to that $8 to $9 range whether you used 144 or 156 treatments a year.

I'm guessing you're writing, Lisa, so I don't want to interrupt you. Tell me when you're ready, I'll talk to you about the other thing.

Actually, just to follow-up with that. You're still looking at a net in that sort of net savings or net EBIT in incremental EBIT to FMC, is that the best way of thinking about that?

Yes. My intention in saying $8 to $9 a treatment is it's incremental EBIT. Yes.

Okay. And then that is based on the initial scale at 8,000 patients? I would assume that if you scale up to 30,000 and potentially beyond, that your cost per patient perhaps go down quite notably?

That is plan year 1, and that's why I made the comment with regard to as we look forward, we can certainly think about absorption of overheads. I agree with your point, but we also have to look at what our experience is going to be with regard to the quality measures.

Yes. There will be a QIP type of impact there. And we're not worried about our ability to deliver the quality, but even our history tells us that it could be a downer in some cases, Lisa. So we have to factor that in. And let me guide you a little bit. So we had said, you're absolutely right, we thought we would exit the year, we were hoping to be at 28,000 to 30,000 patients. We're at 26,000 and change. So I don't know that we'll -- I doubt we'll see 30,000 given we've got 2 months left in the year. Because remember, we can get up to 28,000 and then we can lose some patients. So it all depends on what's going on with patients in the programs. Relative to expanding next year, we would like to do that. Obviously, that's a conversation that we can only have with CMS, and they have to approve it. So we'll have to sit tight on that. We can probably give you some clarity on that in February. And then on the patient act, we obviously are big supporters of that. We'd like to see that happen. There is a house bill on the Patient Act that has been put together. We need the Senate to follow through, and we're hopeful that's going to happen. So we just stay focused, and we make the rounds that we need to make and talk about this program and the value it adds. And hopefully, we'll get the traction that we need, Lisa.

The next question comes from Oliver Metzger, Commerzbank.

My first question is on the PD product business in North America, which you really nailed with 20% growth. So potentially if you could just give some more background. Why the growth is currently so strong there? The second one relates to Care Coordination North America versus significant margin progress, which is nice. You already named that consolidation of ESCOs comes through. Nevertheless, I would still see Care Coordination in a growth mode. So from now, from the 6.5% that you've achieved in the current quarter, which margin level do you regards as sustainable, if you look on 1 or 2-year horizon, basically some more extension about growth opportunities, isn't it?

So all right, it's Rice. Let me speak to the PD business and then Mike will chat with you about the Care Coordination margin. So I think what we see happening on the PD side of the business in North America is simply -- it's about, #1 is Baxter, we are #2, we try harder. So we are looking and just pushing hard for more patient growth. We've got some new product offerings that are coming out. So I think, quite honestly, there is just still some pent-up demand. If you go back, some number of quarters ago, there were some issues with supply coming from Baxter. We were unable to fill all of that demand because we were sort of capacity constraints. So those things have sort of worked themselves out to where there is more flexibility in the supply. But I think it's just -- we're doing a good job of selling and the market is growing. And there is an opportunity there is the way I would characterize that.

Yes. And Oliver, great question in terms of the sustainable margin of Care Coordination. Because there are so many moving parts of the business, that's probably something I'll talk more about with year-end results in February. Also just as a reminder, I've said in Q2 in terms of back half accelerants that we see an acceleration in both the ESCOs and BPCI. So the ESCOs you're seeing in Q3, I'm still anticipating we'll see an acceleration in Q4 in BPCI. So I think we get through this year, obviously, with performance we trended in Q3, where we've at least met what I'd guided to at the beginning of the year in terms of margin performance. And in February, I'll talk a little bit more about what we think going forward. The pilots are a part of that. Keep in mind, at the beginning of the call, Rice was also talking about vascular, which is also in Care Coordination. So got to do a little more thinking about sustainability into '18 and '19 before we comment.

Okay. So we have no new questions, no new caller. So that was a short call. And I think there was too much reporting. Might be a record call today. Thank you very much, everyone.

Thank you very much for your interest. Take care. Bye, bye.