DVA
#Thank you, <UNK>
For the second quarter of 2017, DaVita Medical Group had adjusted operating income of $34 million
As a reminder, this business has a disproportionally high amortization load, $44 million for the quarter, which includes roughly $7 million related to the acceleration of our branding initiative
Therefore, this quarter's adjusted operating income of $34 million translates into an adjusted EBITDA of $94 million for the quarter
Now, with respect to our value conversion
We're on track to our plan since our last update
We've signed a contract in Colorado, one of our newer geographies, and expect to add value contracts in New Mexico and Washington State by the end of the year
We had a fairly active quarter in closing tuck-in acquisitions of new groups in our existing geographies
We believe that these transactions are a capital-efficient and low risk way of acquiring new physicians and patients
Collectively, the groups we acquired in recent months consist of approximately 140 providers serving nearly 200,000 patients, of which about 20,000 are currently capitated
Regarding guidance for DMG, we're leaving our 2017 adjusted operating income guidance unchanged at $110 million to $150 million and we still believe it's more likely that we will be in the bottom half of this range
This operating income range includes an estimated $240 million in depreciation and amortization for 2017. Now, to International
International operating losses in the quarter were $13 million, which includes approximately $4 million of prior period adjustments and a $1 million foreign exchange loss
For the full year in the International business, we now expect adjusted operating income loss in the low $30 millions plus or minus a bp
This excludes the impact of currency and one-time expenses
We're disappointed in this change in guidance, which is the result of lower than anticipated clinic acquisitions and slower operating ramp of acquired clinics
These changes in outlook is incorporated in our adjusted operating income guidance for Kidney Care and the enterprise
Looking forward, we expect to reach breakeven internationally during 2018. Whether we achieve breakeven for the full year of 2018 will largely be a function of our acquisition pace for the rest of 2017 and early 2018. Finally, some comments on cash flow and capital deployment
Second quarter operating cash flow up of $146 million was adversely impacted by the timing of cash tax payments associated with our settlement with the VA that was announced in the first quarter and by an increase in accounts receivable DSO
Year-to-date, we generated operating cash flow of $1 billion and our operating cash flow guidance for 2017 remains $1.75 billion to $1.95 billion
As we discussed at our Capital Markets Day, we expect to be using some of this strong consistent cash flow as part of our long-term strategy to repurchase stock over the coming quarters
In the second quarter, we repurchased nearly 3.6 million shares or more than 1.8% of our shares outstanding for $232 million
Now, over to <UNK> for a few closing comments
So, we don't disclose the specific capital that we've allocated internationally
In terms of China specifically, it's a fascinating market
It's growing incredibly rapidly from a patient standpoint
That said, we have learned the challenges of entering China as a multinational corporation
We are looking at our strategy going forward thinking about partnerships as an opportunity for entering the market specifically
The other aspect of this question is the SI line
