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Executives

Oliver Maier – IR

Ben Lipps – Chairman and CEO

Mike Brosnan – CFO

Rice Powell – CEO, North America and Deputy Chairman

Analysts

Chaitowitz – Redburn Partners

Ilan Chaitowitz – Redburn Partners

Edward Ridley – Merrill Lynch

Unidentified Company Representative

Lisa Clive – Sanford Bernstein

Martin Wales – UBS

Ryan Halsted – Wells Fargo

Jones Tom – Berenberg Bank

Holger Blum – Deutsche Bank

Kevin Ellich – Piper Jaffray

Fresenius Medical Care AG & Co. (FMS) Q1 2011 Earnings Call May 4, 2011 9:15 AM ET

Operator

Good afternoon and welcome to the conference call Fresenius Medical Care, which is now starting. May I hand you over to Oliver Maier, head of the Investor Relations.

Oliver Maier

Thank you. I would like to welcome all of you to Fresenius Medical Care First Quarter 2011 Conference Call. A warm welcome also to everybody up there on the web. We very much appreciate your continued interest in our company.

With us here today are Ben Lipps, our Chief Executive Officer and Chairman of the Management Board of Fresenius Medical Care; Mike Brosnan, our Chief Financial Officer and Rice Powell, our Deputy Chairman and CEO for Fresenius Medical Care, North America.

Let me start our presentation by mentioning our cautionary language mentioned in our Safe Harbor statement at the end of the presentation. For further details concerning risks and uncertainties, please refer to our filings including our SEC filings. Additionally, please be reminded that any non US-GAAP measures that we might use are being reconciled to the most comparable GAAP financial measure at the end of the presentation and in the material provided.

With that now it’s my sincere pleasure to turn it over to Ben. Ben, the floor is yours.

Ben Lipps

Thank you, Oliver. Ladies and gentlemen let me exchange you a warm welcome to you, our board, all of our employees, associates and people who have joined us on the internet. In terms of the agenda I’ll cover the business update, Mike will talk about the financials then Mike and I are ready to answer questions at the end of the presentation.

Turning now to chart 4, we are very pleased with our successful first quarter, we’ve seen strong operating performance despite implementation challenges posed to us with the Medicare perspective payment listed in the US. Our operating performance in North America has continued to develop favorably and we have continued to see a good treatment growth in our steps (ph) for growth. In international we continue to expand our credit network and we’ve seen significant expansion in certain countries, we also have seen excellent revenue growth in the international sector. Again, I would like to thank the dedicated staff worldwide with the management board for their continued dedication to provide the highest quality products and patient care in our center, our revenue was 3.36 billion, a 5% increase in both constant currency and actual currency. Net income also grew by 5%. With this we will be raising our guidance for 2011 and Mike will talk about that later on in the presentation.

Turning now to chart 5, we’ll look the – little closer look at the regions in terms of revenue growth, we saw a very solid revenue growth in Asia-Pacific at 30%, Latin America plus 12% constant currency and Europe at 9% growth in constant currency, North America had revenues of about $2 billion again growing at about 1% reflecting the changes in reimbursement. International had revenues of 1.55 billion, growing at 13% constant currency and today Europe, the Middle East and Africa represent about 22% of our business. Asia has continued to grow, it represents about 8% of our total revenue Latin America continues at about 5% of our total revenue.

Turning now to chart 6, you can see our dialysis services, we had strong global growth, it was driven by the 21% constant currency in international reflecting our acquisition program combined with excellent organic growth in international of 5%. We also continue to see good same market growth at 3.7% in the US or in North America and international 5.6% which gave us a very respectable and strong 4.3% growth on a global basis.

Looking at the clinics today we provide dialysis care to around 217,000 patients in 2,800 clinics, 1,850 of them are in the US accounting to manage clinics and about 950 are in international area with 500 being in Europe, 200 Latin America and Asia-Pacific has about 245 clinics at this point of time in Asia-Pacific. So, you can see that we continue to grow in the international area as well as North America in terms of the clinics and I will talk a little bit more about our De Novo later, but we continue to execute our plans in terms of expansion of our service network on a global basis.

Turning now to slide 7, as I have mentioned we’ve got a fair commitment to products, quality and service quality, I would like to go through this chart, has a lot of numbers it, but I think there are some very important contributions to quality as shown in our commitments to quality on this chart. We continue to provide, deliver treatments at the prescribed therapy in 96% to 97% of the time that we operate in our clinics and that’s really quite phenomenal, it increases each year by a certain basis points.

Now, looking at our AMEA management in the US as you know the bundle is focused on the 10 to 12 grams per deciliter, we’ve made significant improvements, we’re now about 73% of our patients fall in that range. I would like to point out that in international we still focus on between 10 and 13 and there we have about in the AMEA area we have about 77% of our patients in the 10 to 13. So, we’re going to end up overtime having a couple of different standards here that we’ll look at on a global basis. Again, in terms of nutrition you can see that we are making progress in both areas in terms – as measured by up human when we look at our subject, our progress in the bone mineral metabolism area in the prostate, you can see that we are making progress in the US at about 62% of patients are below 5.5 and in international and AMEA, we have 76%. I think what you will find overtime is that reflects our dedication to online with that filtration which has better serving capacity for prostate then normal hot box (ph).

Looking at the catheters, we’ve had a major program in the US in the catheters, reducing catheters you can see that the growth in North America have essentially continued to improve that we now have 76% of our patients from time zero that do not have catheters, again in Europe you can see that we have over 82% and if you look at after 90 days, you can see that we essentially are 80% and Europe is at 86%.

Hospitalization, we are pretty much the same in both regions, again less than 10, and I think we are pretty much at the benchmark. Now, in the future we will be talking about the Asia-pacific quality to, I thought I would give you just a couple pieces of information it will start to show up on our next quarter report. Interestingly, we are very close to hemoglobin with the international area and Asia-Pacific, very close in terms of nutrition. The one area that Asia-Pacific stands out in they have 94% of the patients without catheters and they have hospitalization days that are only about days per year, so I think it is an indication that clearly all of our effort on catheters around the world is saying a lot and now we have a new benchmarks to look at peers from the Asia-Pacific area. So, looking forward to presenting their solid metric mixed up, in next quarterly presentation.

Turning now to page 8, I want to talk a little bit about our clinic growth, we’ve seen about an 8% growth in clinics this year, 3% North America and 19% in international, again that reflects our programs to expand our base in international, we will do about a 100 De Novo this year pretty close to what we have done in 2010, and those would be pretty much good even between the regions. I would also like to point out that on right hand corner of slide 8, to chart 8, there is very interesting piece of data, we continue to see in the international area a growth in our revenue for treatment in fact we are seeing a 2% constant currency growth over the past year. Again, looking at the entire metric the international group operates, this is a major accomplishment if you consider all the pressure that has been applied on the budgets around the world and again my hats off to Emanuel (inaudible) who stay in that group for that excellent performance. So again, we are seeing that our service business around the world is performing very well.

Turning to chart 9, we’ll look a little bit at the revenue for treatment in the US. Again, everything is moving around and changing so this is only a partial description and I think that if we have more questions later Rice and Mike can clearly answer them. But if you look last year to this year, we’ve seen about a 2% decrease in reimbursement which we basically expected if the course of that is about 3.2% came from the bundle Medicare and we continue to see rate increases which added back about another 1.2%. So, we continue the group in North America is doing excellent job in terms of continuing to get the proper increases in rates for the services that we are offering, they’re doing excellent job coping with bundle and you can see that the effects of the bundle and if that doesn’t include the transition adjusters for first quarter. So, as we look to the rest of the year, we’re pretty comfortable that we’ll be in the range of around 2% difference, 2% less in terms of reimbursement for treatment in 2011 on the average versus 2010 on the average that reflects what we are doing the bundle of Rice can comment later, plus continue to increase and see commercial mix increase and also increases in the revenue for treatment of commercial side.

So, if you look at North America then we’re right on target doing excellent jobs with the bundle and we’ll continue to do an excellent job with essentially our negotiations with the commercial payers.

Turning now to slide 10, we’ll talk about products on a global basis, like to start out if you look at our total product sales we had 7% growth in revenue and in current currency, 6% in constant currency, out deal basically to the rest of the discussion in constant currency. External revenue growth was 5% on a global basis, international clearly led that with 6% growth in constant currency basis driven by very strong growth in peritoneal dialysis we saw a 22% increase again part of that was attributed to strong organic growth in the mid-single digit and also it reflects the positive effect of Gambro acquisition that we did last year. And so we’re quite pleased with the growth of our PD business and also dialysis continue to grow at 6 plus percent. So, we had a strong then in international and the products business. Asia continues to lead with a 19% constant currency growth and continues to set the pace in terms of the high level.

Turning now to North America, we see a 2% decline in revenue, let me poke a little bit behind that, what we see here is that we have maintained our market position for Venofer in light of competitive prices being put forward for branded products and we continue to manage with our customers in this bundled environment. And so, we have maintained our market share but we have actually had to give some pricing discount to our customers during this past fourth quarter and into 2010. So, if we are seeing that in a price 3.5%. So, we’re continuing to see in our products business as a trends basically transfers into 2011. We’re going to come back into a more normal range in the products business. However, we are also monitoring the actual use of Venofer, use of IV Iron anemia management (inaudible) across the U.S. And we are not quite sure where the actual volume increased versus the pricing decreases will end up for the year. But we’re very comfortable that we’ve maintain, we’ve got a good products, maintained our market position. And I think the guys have done a great job in maintaining our franchise in this area. So, net-net, we saw a 3% total product growth, excluding internal sales, and again we saw a very strong peritoneal dialysis growth of about 21%, as we focused on peritoneal dialysis both internally and externally.

So, in the products area, good performance, excellent performance in international and a very strong performance underneath, in the North America, which will show up as we go through the year in terms of the actual external growth.

Turning now to chart 11. I think everyone knows that we essentially– CMS announced a final transition adjustment for 2011. And I think the one like I’d like to mention is this region really does reflect on the constructive working relationship that the industry has developed with CMS and with Congress over the past multiple years. And again, I think credit goes to everyone. Everyone has operated at very effectively in this industry, and at the same time very proud of what was accomplished. I think all of us should be, and I think we’ve got good working relationship and I think all of us will continue to value that and keep that going into the future.

So, in summary on page 12, we’re off to a very good start. The North American group is handling the reimbursement change I think very, very well, excellently. We continue to maintain our quality. Now I have to tell you that there is certainly a change in the regulations around the world in terms of products, product regulations, and we clearly embrace those. We will work with the regulators. We will continue to do whatever is necessary to meet the standards that are put forth from the regulators in terms of our products and our services. So, again, we are total dedicated to that.

Looking at North America, I talked about their strong activity in the bundle area. I would like to mention that we have made a $300 million minority investment in Renal Advantage Partners. This is the parent company of Renal Advantage. We are entering into agreements to provide renal products, pharmaceutical services to other services to both Renal Advantage and Liberty Dialysis. And again, this is a step in our strategy to support the industry and patient care in an era, which we’re in, of major Medicare reimbursement changes. And again, we’re very proud to be associated with them. If there is more questions, later we can handle those. But, we’re very pleased with our ability to work with both groups.

International; I think you’ve seen, our expansion of our business continues. We are looking forward to closing the Euromedic like second quarter. And Asia Pacific continues to drive excellent results in product growth. So, net-net, we’re off to a very good start for 2011. It’s not easy. There’ve been a lot of activities that we have to cope with. And I think at this point, I’ll turn it over to Mike and he’ll give you the financials. Mike?

Mike Brosnan

All right. Thank you, Ben. And let me extend my welcome as well to today’s participants. I’ll review our company’s financial results with a little bit more detail behind our operating earnings and our income after taxes. In addition, at the end I’ll update you on our financial guidance for 2011.

As you can see on our top line growth $3 billion that Ben has already commented on, very good growth, 5% actual, 5% constant currency. That generated a similar performance in our operating margins growing 5% to $445 million.

Worldwide, our EBIT margin decreased from 14.8% last year to 14.7%, currently or a very modest decline of 10 basis points. And frankly, considering the environment we operated in for Q1 2011, our results are reflecting the substantial effort we’ve made to compensate for changes including the challenges that we faced under their perspective payment in the United States.

Continuing with North America, our margins increased 10 basis points benefiting from lower cost of pharmaceuticals, particularly EPO and vitamin D. And the equity income of our new joint venture with Vifor-Fresenius, Vifor-Renal Pharma JV. This was partly offset by the revenue effects associated with the bundle, increases in personnel expenses and increases in our distribution costs related diesel fuel.

Our revenue rate in the U.S. has been commented on was down $7 to $348 per treatment, or roughly 2%, and the comparable expense per treatment was down by more than 2% to compensate for that.

In international, the overall decrease in margin was about 20 basis points, driven by our international sales mix, some increased patent – and production costs and partially offset by reduced bad debt and other effects.

Our regional operating margin performance was offsetting. So the consequence from a performance perspective was constant margins around. And the world and 10 basis points that we have in terms of global margin reduction is really been driven for our continuing investment in new product technologies.

Before I move on to the rest of the P&L, I’d just like to clarify one point. It’s not in the charts that you’re looking at, but it is a detail in the investor news.

We’ve a new line called from equity method investees, and this line was added to reflect the development on our business model, which now includes our minority equity participations and the Vifor-Fresenius Pharma joint venture as well as going forward Renal Advantage Partners LLC.

We do show our prior-year figure representing the historical results for similar small investments that we have made for some time. These historical results have always been included in our operating income.

Continue to move through the P&L; our net interest expense increased by 6% from $67 million to $72 million. This actually represents a 12% increase in our underlying interest expense, $2 million up from $73, due to the capital market activities we had last year and the long-term senior notes we’ve loaded in the first quarter of this year to fund our acquisitions.

This increase in interest expense partly offset by an increase in interest-to-income, which includes earnings on the investment we made in Renal Advantage Partners Limited in the first quarter. The combined effect of this is an improvement in our income before taxes of roughly 4% or $373 million.

Moving to tax expense for the quarter, you can see reported effective tax rate is down about 200-plus basis points from Q1 of last year. This considers the effect of earnings in our new Pharma joint venture, the increase in non-controlling interest and the net effect of some nondeductible expenses that we had in 2010. We continue to expect our full-year tax rate to be within our guidance.

Regarding the change in our non-controlling interest as you can see growing from $90 million to $28 million, the values reflect to performance of our underlying joint ventures as well as new joint ventures entered into since Q1 of last year. I think for modeling purposes this value is a reasonable approximation of what we would expect for 2011. Overall, has been reported, our income has increased to $221 million or 5% in a very difficult new operating environment.

Moving to our cash flow discussion and starting on page 15, where we typically our days sales outstanding with regard to our receivables portfolio. You can see that our DSO increased worldwide by 4 days, ending the quarter at about 80 days in total. This includes an increase of 6 days in North America with the international part of our business staying flat and 116 days of the end of the first quarter.

In terms of North America, about one day of North America’s performance is the typical seasonal effect we see with pure treatment days in the first quarter of the fiscal year. Beyond that, North America’s performance is influenced by three additional elements.

First, there are some regulatory effects. As we reported in our year-end conference, we successfully transition to the new billing for Medicare patients. Initially our invoices, however, are running a few days later than our norms under the old reimbursement system. And we are finding that the intermediaries are a little slower paying [ph] and both the delay and billing and the intermediary payments take medicate systems. Additionally, we had a change in ownership in New York state which followed action the legislation took in 2009 and we reported last year that we have changed our ownership structure of our clinics in the state of New York that is, it lead to a very slight increase in our DSO as we worked through the administrative process of getting new provider numbers for both Medicare and Medicaid.

These developments address about a three day increase in the DSO in North America and we would anticipate to see a substantial improvement of that in the second quarter. The last element that influences North America is we are also converting to a new billing system for the services group in the US and this is cause an additionally increase of about 2 days.

We expected that to be with us through the end of the fiscal year. In terms of international we are very pleased with the performance from the rest of the world. We will continue to monitor the collection in the important markets to the company as the year progress. Okay, having said all that when you look at the, when you move to chart 16 and you now look at the cash flow statement for the first quarter, you can see that cash flow is about 6% of the revenue which is down compare to last year which was right about 12 percent.

In the quarter that performance reflects an improvement in earnings in Q1, 2001 as I previously recorded and that improvement is all set by the increase in DSO which accounts for about 4% of revenues and increase in our inventory levels which accounts for about 2% of revenues. Most of that increase in inventory is seasonal adjustment that we make with regard to anticipating some of the summer shutdowns we have in plants around the world and addition to that we did increase our overall inventory levels and ship more products particularly in Asia in to the local market to ensure that we didn’t have any supply interruptions with the difficulties that Japan has experienced in the last month or so.

Beyond that there was a onetime effect in 2011 of an apex hear, some of our inner companies’ borrowing which was offset by favorable changes in the other elements of our working capital. Capital expenditure at $113 million were about 4% of revenue that’s consistent with our results from last year. The split of CapEx was about 70% maintenance and 30% expansion for the quarter and services representation about 55% of that overall spent level. As a result free cash flow is up about, is about 2% of revenues showing as you see this $62 million in the first quarter.

Acquisition spending of $339 million reflect the guidance we provided for the year in terms of our overall spend of 1.2 billion and that’s consistent with the guidance and it include several additional investment in the U.S. market including our investment in Renal Advantage Partners Limited which is the parent company of Reno Advantage Inc., as well as smaller investment that we make in the international markets.

Turning to page 17 and looking at development of our debt, again at the end of the quarter is $6.4 billion this is up about 9% from your end, our EBITDA development was also strong therefore our net leveraging increased slightly as expected to 2.5 times.

We also have cash and short term investment at the end of the reported totally $620 million and this coupled with the availability, the available capacity under a credit facilities will be sufficient operating in investment need. If you are planning to return to the capital markets on the second half of 2011 to address the majority of our trust preferred securities.

Now, we move now to my last chart on page 18, you can see we have continued the strong guidance we provided few in February for fiscal 2011. At that time in addition we committed to improve our guidance should US government address the transition adjuster in 2011. Based on this commitment we are revising our top line guidance indicting that our revenues will be greater than $13 billion, this represents growth of about 8 % on reported as well as constant currency basis.

Leading to net income we are increasing our guidance share as well again due to the correction of the transition adjuster the remaining 9 month of this year. We currently insist their running will be in the range of 1 billion 70 million, to $1 billion 90 million.

To elaborate a little bit more on the change to our whole year development. World-wide revenues will come from about 3 to 4 % organic growth and consistent with what we told you in February about 5% growth will be the effect on 2011 of our acquisition program.

You may recall from North America revenues, we said considering the bundled and all the other smaller effects of its implementation but usually anticipate our organic revenue growth in US would be less than 1% for 2011. With the revision of the transition adjuster we would increase organic growth in North America to 1.5%, 2 % from fiscal 11.

Finally on the full year our international business continues to grow very nicely and we anticipate solid organic growth in these markets over 7%. In terms of seasonality of our guidance, in February we said that the first half this year would be challenging with the stronger finish in the second half.

We need to believe that is the appropriate way to look at 2011 in terms of seasonality. We have committed since Q3, we commented, excuse me, since Q3 and in February on our bundle mitigation plan in US which we have come to call the 40-40, 20 plan.

You may recall, this outlined our approach to the transition adjuster of 40 % plan regarding formally utilization as well as that acquisition cost and then finally the affect we antipasti for our plan to increase some penetration and manage our non pharma class effectively. We are executing against this plan and you can see the very good result that we had for the first quarter of this year.

Well, we are continuing with our plans to roll that changes in the organization and particular regarding finally utilization and penetration and non-pharma cost management. We are also in addition looking on the revenue side and will be looking to ensure that there is stability in the reimbursement and that we have anticipated all the affects this environment will present to us to that end we continue to believe the guidance we provided to you on seasonality continue to be appropriate.

Moving to the capital side we are confirming our guidance on capital spending acquisitions, capital spent will be around 5%, acquisition will be about $1.2 billion and we will continue to be opportunities in the market place and careful to manage our overall debt position to what we indicate at the capital markets day of two and half to no more than three times of EBITDA.

We got out our on track for closing the majority of our acquisition of IDC, which is the dialysis arm of Euro Medic, thank you, and closing for the non U.S. properties for the (inaudible) we did suspect that to happen straight away second quarter probably before the end of June.

Regarding our leverage, no change at 2.8 times the EBITDA for the focus full year. You can see that our revenues in earning guidance are providing shows that we anticipate our company will have a very strong financial performance in 2011.

In conclusion, our employees in U.S. and around the world have been doing and will continue to do extraordinary job addressing regulatory and reimbursement reforms and always insuring that we operate the business focus on our patients providing them a high quality care with the best park.

Thank you, I will turn the meeting back to Oliver.

Oliver Maier

Thank you Mike, thank you Ben for the comments on the presentation and, I think we can open up to call now for question and we, Ben and Mike will be available.

Question-and-Answer Session

Operator

(Operator Instructions) Mr. Ian Seloviks (ph) from Redburn Partners may we have your question.

Unidentified Analyst

Well, I am (inaudible) from Redburn Partners, I thanks for taking question I have two, three questions. Firstly, I was hoping you could talk about some cost for bid, we saw in terms of your disclosed FX treatment there was a $1 decline quarter on quarter in FX per treatment, I was wondering how you see that progressing over the rest of this and in particular, I was wondering. And also talk about sourcing and potentially labor salary, labor cost efficiencies as well, that’s the first point. Now the second point is on the international margin, I thought last year in Q1, the underlying margin was 18%, stripping out the effect of the Venezuelan Boulevard evaluation which would imply a strong decline in Q1 this year. Can you just explain what’s going on there and indeed, what we should expect in terms of international margin for 2011, if we should expect it to be the same as last year on an underlying basis or not? And then, with regard to the Liberty dialysis and Renal Advantage deals, can you go into a bit more details of what financial impact of that, there’s clearly more disclosure on the cost line a bit. Should we adjust now our net financial expectations for 2011 as well?

Mike Brosnan

Thank you Ilan for the questions.

Ben Lipps

Thank you Ilan, state question number one, Mike? Why don’t you go ahead and take that one in terms of the FX?

Mike Brosnan

Okay.

Ben Lipps

Okay.

Mike Brosnan

Okay. Yeah, Ilan, I think that we absolutely appreciate that the – our revenue and cost for treatment information historically is an important metric. And you might recall in February when we provided guidance for 2011, we did talk quite a bit about the fact that given the change that we’re facing in the U.S. environment, we think those are good detailed metrics when you have a stable historical base. But when you’re looking at all the changes that we’re facing with regard to both revenues and how we’re addressing that in our mitigation plan. We thought that it would not be appropriate to prognosticate that level of detail. So, we’ve looked at that in light of our Q1 results and talked about it. And I think, for the time being, we’re providing a fair amount of guidance in terms of our expected operating performance in 2011.

But we would rather not provide that level of granularity in terms of the remaining nine months in the U.S. Our view is that we have a number of operating activities underway in the U.S. that Rice will comment on shortly. But that are, in our view, very effectively addressing the change in the reimbursement ring. You can see, as I commented, that we had about 2% effect in terms of revenues and better than 2% effect in terms of FX procurement. And we’ll continue to report out those actual each quarter. So, generally I would say, we still remain committed to our mitigation plan. We still believe that we will effectively mitigate the impacts of the bundle in fiscal 2011. But we just don’t want to get into the space given the volatility of the environment where we’re commenting at that level of detail each quarter against our guidance.

A comment on the Rice Powell (inaudible).

Rice Powell

Thanks Mike. Hello, it’s Rice (ph). Thank you for your question. First, because I know I have a number of my senior managers listening on the phone. I must say to you that we’ll never be done looking for cost improvements and try and drive more value into the system. Whereas it relates specifically to people on Vitamin D, I would say that we’ve made much progress in Q1, very happy with that. But I do not think that we’re done. I think there’s still some more room there. We’re still looking and tweaking things as we go along. I would say, the majority of our work has been very successful. But we’ve got a little more I think we can do. And it will be a constant look for us as to how we improve this. And let me remind you from my comments back in February on last year’s performance. That we really looked at the bundle litigation and we said that they’re probably 8 to 9, 10 very high level programs we need to get very busy with up which obviously anemia management bone mineral metabolism or two of those 8 to 10. And so, we’re progressing on all those fronts. But we’re very comfortable on the drug side of this. But I think there’s a little more we can do.

Ben Lipps

Thank you, Rice. Ilan, I think let me give a little overview on liberty and then, Rice, maybe you can add some color there. I think we’ve talked over the past year or so that our intention to support the industry on patient care and also the major changes in Medicare reimbursement. And this is one of the ways of which we’ve elected to do that. Rice, do you want to comment a little bit. We’ve just announced that today we’re in the early stages of moving forward with it. Would you like to make a couple of comments on the transaction?

Rice Powell

Sure, Ilan, I think specifically I believe you’re asking whether we see that changing financial predictions if you will. Our forecasting, I would tell you, it’s too early for that now. I don’t think I can really comment. What I would like to say is that this is an opportunity that we took to continue to support the industry that we like the brand and the respect that people have for Renal Advantage and Liberty. And thought it was just a really great opportunity for us to work with people in the industry. I think I’ll leave my comments at that and not get into too much detail beyond that at this point.

Ben Lipps

Mike, maybe you could comment in terms of how this is in our guidance?

Mike Brosnan

Yeah, yeah, I will Ben. You know, with regard to the acquisitions that we announced and in this case, specifically the Euromedic Acquisition as well as the Renal Advantage part results, those are included in the guidance that I provided you for fiscal 2011. Ilan, I want to come back to your question, your last question I believe, which is the impact in the international margin associated with, in particular the exchange effect of Venezuela in Q1 of last year. And in short, what I would say, and I commented on this a little bit in my opening remarks, in terms of the development of our international business, in terms of revenue mix, that’s the open terms of the shift of our business from products to services which you saw over the first decade of the company in the U.S. And now, as we development a more robust international business by introducing more services, operations around the world, that tends to be very well performing with a lower margin business. In addition, in any given quarter, you see shifts and mix with regard to where we saw our products around the world.

Having said that, and that’s my comment with regard to international sales mix when I made my remarks on the international margins. What I probably could have said at that time was also, if you look just at FX, you’re correct in that, there’s about I would say 120 basis points effect associated with Venezuela in Q1 of last year. And when I looked at what’s happened with regard to FX year-over-year, I think there’s been about 80 basis point of unfavorable development. So the net impact of FX if you look at Venezuela in Q1 last year and what’s happened around the world in Q1 of this year is about 40 basis points. So arguably you could look at the 20 basis point decline in international attribute 40 basis points of FX to it.

Chaitowitz – Redburn Partners

Thank you. If I can just follow up and then push you on the last point. Do you see scope to improve your international margin in 2011 versus 2010?

Mike Brosnan

I think, I guess, generally we wouldn’t typically provide guidance at that level. I think when you look at our international margins over years the business has always performed very well. I think that we’ll have to see what develops this year with regard to that continuing development of exchange level of, but I wouldn’t expect any material change on the international side.

Ilan Chaitowitz – Redburn Partners

Thank you very much.

Ben Lipps

Thank you.

Operator

The next question is from Edward Ridley from Merrill Lynch. May we have your question?

Edward Ridley – Merrill Lynch

Thank you very much. First question, I had just with on the commercial mix. Benny, you say that clearly you had some, a good progress, good discussions with your commercial payers. You have an improving, those improving, yesterday were should we say fairy cautious on the commercial prior developments, sighting, economic factors and improved mortality effected for why DeVita was seeing a worsening mix. And if you could talk to that and how you believe you’re in a stronger position or have been able to do a better job, that’d be very useful. Just also to follow up in terms of the Michael, with the impact of the Renal Advantage Acquisition, just in terms of the interest expense. Could you actually quantify the actual impact on first quarter interest expense in the Renal Advantage Acquisition?

Ben Lipps

Okay, Ed, I’ll take the commercial mix and then Mike will take, will answer your question on the interest. I read the transcript and I think we’re really in an almost the same space. What contracting group, and the North America is doing a good a job, have I good job there, and I think they use a moderating or can’t talk about it so, have we got this really change, and it’s not what easy than it was two years ago. But it’s actually not verses and it was more, more bundle programs are put in place, and I think we’ve some sort of stability so (inaudible) same thing and it’s stabilizing or is a by (inaudible). Take on a relay date like you wants to give up.

Mike Brosnan

Sure yeah, I think I would answer your question a couple of different ways and the, if you look at the numbers that actually what looking at interest expense about $82 million and net interest expense about 72, so there is a about $10 million change in the quarter such are year-over-year associated with our interest income. But what I would say is our interest income includes our new investment renal advantage, but it also traditionally as we account for earnings on our short term investments interest income for trade accounts for where we collect and with regard to our hedging strategies around the world. So we can’t look at the year-over-year effect attributed all to the renal advantage investment, but that is where our organ trust was reported for the first quarter.

Operator

The next question is from (inaudible). May we have your question.

Unidentified Analyst

Yes, Good morning, maybe I’m just going to start to committee follow up on the renal advantage Mike I’m sorry, I’m a bit slow can you actually just describe the structure of the investment because I’m assuming given that it has an impact in interest income, there must be some sort of to veritable loan of portion

Mike Brosnan

Yeah, happy to do that in terms of the investment the investment was structured as a loan with the portion of the loan, of subject to an equity call. So in the first quarter it was a long and shortly have to be end of the first quarter we did exercise rights under the equity call, so when you look at this coming forward from the pure accounting perspective, what you continue to see in some interesting come associated with along, and you start to see from our result recorded in our equity in industry companies, which is the new one, we create that I talk about difference (inaudible).

Unidentified Analyst

And in terms of the equity, what percentage do you own at this point?

Mike Brosnan

Let me say it’s a minority positions, I think that’s probably is much color clarity as I can give you at this point we with, we’re a minority in minority position.

Unidentified Analyst

Okay, great and two quick follow up questions, one for those what are little further from renal advantage for speak, just, to conform renal advantage holdings is the holding company for the combined with that.

Mike Brosnan

Okay, yeah.

Unidentified Analyst

Renal advantage own.

Mike Brosnan

Yeah, now that’s renal advantage own yes, I don’t know that I can give you just is by getting in their legal into the structure maybe we can come back, and they are would probably burden you.

Unidentified Analyst

Okay, great and then just in terms of the product side, in the drug side, were they an existing customers, they are holding new customers this point.

Mike Brosnan

We’ve mix of relationship we did business with them, but it was sort of mix pad between our AI is to what those works, so we’ve really saw him last little five there, and maybe I would say picking up more footing across the fix of products and drugs.

Unidentified Analyst

Which last quarter, you some great color in terms of the processes like driving through to sort of drive the clinical operational changes in preparation from the bundle you made some comments about, I guess your believe personal believe that you get deeper utilization, I get down 10% to 15% versus your pervious estimated 5 to 10, maybe you can just talk a little bit, and provide as an update at how I progress to you with a quarter, did you start with all of your clinic on January 1st was it faced do you know, with a quarter, you know, any sort of color you can give there?

Mike Brosnan

Surely, I’m happy to do that, I would tell that the range I give you back in February a tender 15% (inaudible) specifically say they could maybe 16 or so, I get back continues to be from our view of the world we as I said or done with our problem calls, we know how were doing them, what we’re currently doing it not done is simply the what our call promotion push of the following call through all of our clinics, keep in mind that our approach to this types of change really has a very (inaudible) education component in that for I (inaudible) on our clinic managers. We have a lot’s of dialog with our physician, physicians is well so we are done this (inaudible) have made selections on how we’re going to manage a anemia but now we’re just pushing at through an education conversation process, if will address then we’ll finish up in the second quarter that the status of where we already did.

Unidentified Analyst

In terms of some of the other impact to the bundle, have you had any issues with sort of getting the documentation you need to get the proper billing for the come abilities.

Mike Brosnan

I think what I would say there is, we’re working hard on that, I think we’re accomplish what we need to clearly though in our view and the industries view. We believe that relative wait that were given this some of those (inaudible) abilities really are not reflective of what we and the industries see keep in mind and lot of a structure of that some more ability to (inaudible) was done through hospitals, and other physicians specially if you were not apology so we do, and I (inaudible) can’t commit on the (inaudible) so we ended yesterday. We believe there is something accuracies there, and there is work, we would like to go back to see a (inaudible) they have been respected or in that process, so I think we’ve done what we need to do in order to code, but I’m not happy that every exactly is we thought it should be so we’re going to work on that from an industry perspective.

Unidentified Analyst

Okay great, and final one, and then I’ll get back in the queue, (inaudible) can just give us any sort of color on discussions that are going on (inaudible) right now about any potential label change is to EPO, we’ve been hearing the cardiac may meet in June, they have been discussions that a could drop the range from 10 to 12, 9 to 11 or something like that, just color on, whatever hearing and in that was the case they would have drop it potential how that would impact you from a provider perspective.

Mike Brosnan

(Inaudible) we all read the same I was into the same reports it’s our believe that 10 to 12 is pretty well grounded in the area, and supported by physicians by all of the past date. So again we don’t see at this point that changing, but if it does then we’ll certainly response to it, but this point we feel that is the right, the right target for the (inaudible) patients what we feel most of the three providers and physicians believe the some so, I don’t believe at this point we got to see much change.

Unidentified Company Representative

(Inaudible) let me, I clear something on just to make sure, what we were talking about a rental advantage in (inaudible) don’t worry by we confused that we took an interest in (inaudible), we did not our interest in rental advantage, what (inaudible) that we work with both companies that, we’ve relationships from supplies (inaudible) on the point.

Operator

The next question comes from the Lisa Clive from Sanford Bernstein. May we have your question.

Lisa Clive – Sanford Bernstein

Few questions, first on home and your capital markets that you give us some figures around, I believe that portion of patients that getting to their home, how that a changed over the previous 12 months, could you give us an update on that and then could you give us to have some bit more detail on the potential financial and (inaudible) of that my understanding is because you have those nursing components those patients could be more profitable obviously not all patients are best severed by that modality but it will just helpful that think about that, see how you think you meet that, and also could comment on what you expect our tax rates. For the full year to be given, and there was bit lower than usual this quarter.

Mike Brosnan

Sure Lisa, I think the personal tax to recent effective tax. I think that there is pretty much a consensus that in the industry we’re going to see maximum 10% to 12% hold and you can speak to the division between PD and otherwise. And so, I think that’s where we see the top end of this. Let me turn it to Rice right now, cause we did talk about moving from a number to number, do you want to give a little bit of a color on that.

Rice Powell

Yeah, I guess from the census standpoint, Lisa, we used to run in the low to mid-single digits in the patient of patients. It were on PD and we really begun to see that move. I agree with Ben, that low double digit is where we could get I think. Mike and I chatted about that and where we are today, we continue to make progress. Our growth is up in the high mid to single digit growth. So, we had the opportunity to understand the various matters of treatment they select. And we’re progressing, I feel pretty good where we are in the fact that we move that needle the low mid-single digits to more of the high single digits, hoping to get to that double digit, yeah, maybe a couple of 100 basis points above where we were as I believe the conversation that Mike and I had in the London.

Mike Brosnan

I think, Rice financial impact and given the tax rate

Rice Powell

Yeah, I’m happy to do that. Well I think (inaudible), so I won’t go back to that that captures what we (inaudible) capital markets. In terms of the tax rates, we guided to 33.5 and 34 and we in terms of fiscal 2011 in February, and we’re a little bit below that now, I would say there’s always a couple of things you have to look at with regard to our tax rate. First obviously is the underlying tax rate based on where we are, our profits around the world. Second, we typically have a number of time effects, which when you take them together represents just the natural flow of tax matters for a company of our size and of our complexity in terms of the number tax (inaudible) we operate under around the world. The one time effects typically institute settlements, transfer price matters, nondeductible cost related to some changes that take place from time to time, changes and movement of our tax efficient financing. There’s two development changes in the underlying tax rate and the kind of happen flow of all the different one time effects that you have for business our size, our worst about two-thirds of the overall change and the effective rate.

And the last word is really, almost really optical it’s the fact now that the tax effects of the non-controlling interest are no longer improving in the tax line that was the change that it has been acquired a couple of years ago under 160. So, you’ve got about two-thirds of their effective tax change. I think it was 200 plus basis points. But two-thirds of that is really operational, one-third is just the FX, the non-controlling interest.

Lisa Clive – Sanford Bernstein

Okay, great. And then actually I have one follow up question. And the guidance provided you provided at Q4, I believe you had given some information about your EBIT margin, I think you said about 20 basis points of improvement over the year. Given that the transition adjustment has gone away, is it fair to say that can now be in, I don’t know, perhaps the 70 to 90 range or would you be able to give us a little bit of, a little bit of guidance there.

Rice Powell

I’ll let Mike to answer that one, go ahead Mike.

Mike Brosnan

We provided the guidance for the full year and I commented earlier about seasonality. So, I’m going to view in terms of providing, more capacity with regard to EBIT margin because I think we provided a lot of matters for you in terms of looking at based on the performance we expect in 2011. I would say with regard to EBIT margin is, we have had, we think operationally a very strong quarter in Q1. We think that the U.S. team is really doing an excellent job addressing what needs to be done under the bundle. But, if I gave you, two data points just to move you up margin a little bit, I would urge for this, I commented that the U.S. being up about 10 basis points that obviously include the effect of the new Vifor-Fresenius joint venture. If you try to make an adjustment for that, you’d see that net of that, we’re still driving to operational improvement under our bundle litigation plan for about 40 basis points in the U.S. And we’re going to continue to drive for them improvement over the course of the rest of the year.

And that’s why I’m looking to (inaudible) all these different element issue because the environment is so dynamic. So, the way I think of the margin is, yes, we got the transition adjuster, yes, it’s coming in for the remaining nine months of the year. But, we’re not done yet in terms of the mitigation plan, we have work to do, Rice has commented that the teams are continuing to work on pharma utilization on non pharma cost management and you’ll see a little bit of the evidence stronger in terms of our, in terms of the individual metrics like margin.

The other thing, I thought about commenting on, I think, I will because I realized, I see the (inaudible) comments earlier with regard to the typical operating expense detail that we provide and your comment with regard to margin. In terms of providing you some additional comfort, in particular with regard to North America, I would say, we typically don’t breakout this level of granularity. But, I reiterated my guidance in terms of first half versus second half for the reasons that I indicated to you just now. But, the comfort that I would give you is, despite the fact that the U.S. is managing all these changes and the environment. We told you that the first half would be challenging, but there would still be a positive development year-over-year in the first half and that the second half would be better. But, I would also add to that is, I looked at just North America in terms of their contribution to that positive development in Q1. It was a positive contributor to the 5% earnings growth we had on a worldwide basis. So, I realized that’s our margin, but hopefully that’s helpful in terms of giving you some comfort about what’s happening.

Lisa Clive – Sanford Bernstein

That’s great. Thanks.

Operator

The next question comes from Martin Wales from UBS. May we have your question?

Martin Wales – UBS

Good afternoon and good morning. Firstly, so do we get a quick update on what your thoughts are on what you’re seeing in terms of prospect or tangible (inaudible) some point in the future. And I guess secondly following up nearly questions on commercial mix, I’m still probably puzzled by your (inaudible) versus the I guess 2% duration in commercial mix what I have seen from the DeVita over the last two years, can help me out. Understand a little bit more about what actually you’re seeing in terms of your commercial payments?

Ben Lipps

Okay. Thanks, Martin. This is Ben. I think everybody is following the new regulations on the accountable care that they certainly didn’t read on a renal accountable care or (inaudible) were reading on the primary physicians. So, I believe the industry still believes that there is some value here to heavy renal accountable care program, but we are in the early stages of discussing with CMS. We believe it’s best for the patients, best for the pairs and also – right thing to do. So, you have to sort of stay tune to that, I think as the accountable care program takes the, and everybody responds by June 6. We’ll start to see where it’s – going to sort.

On the commercial mix, I shouldn’t get into any discussion of us and DeVita. I just want to complement that Rice’s team, we continue to see a stability or slight increase in our commercial mix and again we done that over the years, we’ve seen that over the last couple of years. I do believe that at this point in time, we’re at the stable environment in terms of the contracting and it’s nothing, it’s every easy, but we’re working on it every day, it’s good working on every day. So, I think that’s where is nothing changed over the last couple of years from our standpoint other than, (inaudible) any more clarity too.

Martin Wales – UBS

Okay. Can I just follow up with the separate issue? Just to be clear what is in this income from equity method (inaudible) in Q1 2011, it seemed to be only as I understand that they are (inaudible) JV, what was the net in 2010? And can you tell where this line is going in 2011, given that you’ll be adding in – something from renal advantage?

Ben Lipps

Martin, let me toss it back to Mike, Mike can you –

Mike Brosnan

Honestly I can’t detail through everything, in last year and this year. We put there because, we have announced the couple of deals that make that line out of relevant presenting as before and the renal advantage partners. As you can see we have had some underlying activity in that for many years, we’ve now just broken it out because we got a reason to do. So, I think the general direction of that line over the course of fiscal 2011 is up. But, we’re really not going to provide guidance on adjusted individual line –

Martin Wales – UBS

I apologize, I was slightly puzzled because obviously, the actual numbers you’re talking about to deliver time in 2010 it’s marginally bigger and actually turns in 2011. So far clearly you’re going to have us mitigate on impact from renal advantage. I was wondering why, what makes a material, I guess, the question, it will make a material (inaudible)?

Mike Brosnan

We anticipated a number of questions about those ventures. So, we just decided to break it out, so you’ll see it develop overtime.

Ben Lipps

Yeah, I think Martin, this is just our attempt to be more transparent and as Mike indicated recent indicator, we’re doing more and more of these minority positions. And so that line will grow and will explain what’s in it because we wanted you to see it, it’s just part of our growth strategy at this point in time.

Martin Wales – UBS

Okay, that’s great. Thank you very much.

Ben Lipps

(Inaudible) going forward, but it’s just a (inaudible) our part to be more transparent.

Martin Wales – UBS

And then I wanted to discuss that.

Operator

The next question comes from Gary Lieberman from Wells Fargo. May we have your question?

Ryan Halsted – Wells Fargo

This is Ryan Halsted for Gary. I was wondering if you could, if you would be willing to, I guess, discuss a little further the coding issues you are seeing and if you would be willing to maybe quantify, you know, what the lost opportunity might have been in the quarter on say per treatment basis?

Rice Powell

Yeah Ryan, I don’t know, if we could get in the – that level of detail, it’s not particularly enamoring number I would say. But, yeah, the coding is just simply the work that we had to go through reviewing patient records and loading in the couple of amenities that we knew, we’re on the record and getting them accounted for on a patient basis. But beyond that what I’m simply trying to say is just that we believe the relative percentage of each of those couple of amenities that CMS that they would see and in the weighing they put on those. We have different view, we think they missed that mix, but if you want to translate that in the impact, I would say, it’s somewhere in about $2 – less than $2 impact on a per treatment. So, it’s – if not I’ll give you some more clarity.

Ryan Halsted – Wells Fargo

Yeah, thanks. And then on the, I guess on the hemoglobin range, the improvement you are seeing on the 10 to 12, just an update on – it is most of that from the above 12 grams per deciliter patients or are you saying more I guess, improvement on the below 10?

Ben Lipps

This is Ben, I will take that one. Yes, the good news is that actually below 10 we’ve been pretty stable, I think recently to 7% to 8% range, so it’s 7%. So, that’s – most of the focus has been on the high end and whatever improvement you see is essentially moving down from the high end.

Ryan Halsted – Wells Fargo

Great. And then a last question I guess, any update on the Baby K machine and if you started shipping any of those machines?

Ben Lipps

Let me turn that to Rice.

Mike Brosnan

Yeah, I think he was talking about the K (inaudible).

Rice Powell

Yeah, Baby K is a good name. Right, in the outcome where we are at this point as you know we got our FDA clearance back in February. But part of the clearance there was they wanted a plan for going out into the field we had somewhere around 650 to 800 machines are in field and they wanted us to (inaudible) up those machines for some of the new software that was part of the Baby K approval, so and they asked that we would do that in first before we got out into the market in the way. So we put plan to get there, we are working through that. Well, I would say to you is Baby Ks will be in – on the market being so probably sometime in the month of July, we’ll have to spill over a little bit past that on (inaudible) the older ones but we’ll have to (inaudible) them done before we do the actual launch, I think FDA is comfortable with that. So, look forward in the summer time. We’re excited and we get quite a bit of interest from providers but figure in the summer time activity.

Ryan Halsted – Wells Fargo

Excellent, thank you.

Rice Powell

Thank you.

Operator

The next question comes from Jones Tom, Berenberg Bank. May we have your question please?

Jones Tom – Berenberg Bank

Good morning, it’s Tom Jones (inaudible). I had three questions, the first one was just on your North American sort of general and administrative expenses, they grew at 9% year-on-year, if I got the numbers out versus Q1 last year, given that your price is up 4%, little surprised to see SG&A up 9%, so I just want to know if there are any sort of one of like the cost to the transition to bundling include in that that we should expect still, just how we should think about that for the rest of the year going forward? The second question, I have just on the accounting for JP and (inaudible) now you’ve reporting that this is separate sort of EBIT line, is there any kind of revenue cost just to drop out the (inaudible) results that you just reported a net equity income line, you know, if you could cut (inaudible) the structure of your distribution – how it have been broaden (inaudible) it has some cost and it has some revenue, I just wondering how that two numbers kind of balanced often to get to that net equity income line? And then the final question was just on CMS’s proposals to make fleet (inaudible) mandatory for certain Medicare providers as I condition of participation. I just wonder where you are in terms of vaccinating your Medicare patients for flu and what that to bring any (inaudible) cost to you?

Ben Lipps

Thank you Tom, Mike would you take the SG&A and then review the counting and then go back to the flu.

Mike Brosnan

Yeah, Tom, following you map I would tell you that there is really no material one time effects in the SG&A in 2011 are related the bundle implementation. So, we’re managing the North America operations and we’ll always watch on cost there but our challenge the analysis and – are just indicate there is no one time effect. With regard to the accounting for the (inaudible) and I’m sure we’ll be talking about this over the year. We now have a minority interest in the joint venture relative to the being the factor the API also that carries with it and earnings flow that doesn’t change the fact that in many countries with the distributor of the finished product. So, we’re continuing to have revenues associated with that distribution and we’ll continue to have operating costs, related to that in terms of (inaudible) etcetera. So, we didn’t move any cost around our P&L at all. All we did was take out what we historically accounted for as equity in that numbers, single line item in EBIT and now added to so you get better transparency fiscal ‘11 going forward on the effects just our participation, our minority participation in those venture. Did that make sense to you?

Jones Tom – Berenberg Bank

Yeah, kind of it, you just said, where would that (inaudible) whole the number, but it just have to run about where when you reported your numbers before, which line that 1.7 of equity income buried and it was in that (inaudible) SG&A or costs or it was in revenue, someway the put in the (inaudible).

Mike Brosnan

It was net it off against SG&A.

Jones Tom – Berenberg Bank

Okay.

Rice Powell

CMS, the proposal here for imagination, the best I can say to you is simply the – we’ll certainly make it available to our patients, we’ve to look at the cost, I can’t really tell you what we think it would be, but we will do the right thing for the patient and if your cost as money will be over that, I’m just not as close that, probably that should be, so I have to do a little (inaudible) but, we’re happy to provide whatever we need to help our patients.

Mike Brosnan

Thank you Tom.

Operator

The question comes from Holger Blum, Deutsche Bank. May we have your question please?

Holger Blum – Deutsche Bank

Yeah, I’m Holger Blum from Deutsche Bank. One question on the from what you mentioned Ben, it’s the volume gross (inaudible) of this year, or that be a assumptions or would you –

Ben Lipps

That’s the going in assumption for the year. But remember as the anemia managed protocols are rolled out, there is a spike as most of move to a different comparing level. And what we are monitoring is, okay, where we’ll settle in when all these roll through and our intention was that we were interested in maintaining the market share and then trading off the price with volume, we’re just not – we are still monitoring it as Mike said, I think everybody won’t have to fix on that field, like second quarter. That’s all.

Holger Blum – Deutsche Bank

(inaudible) once you started the optimization of (inaudible) is that really – would that make sense for anybody when to switch to different elements, when you have to start one again in getting the fade off (inaudible).

Ben Lipps

Well, I think you have to ask the other providers, but our assumptions and I think it’s a cases that we will probably audit more frequently then we have in the past and so when you do that you are essentially providing more iron in the safety profile of the Venofer is everyone talk as they can do that and so I think that as we go to the year we would expect to have pretty good sticking us with our customers as they optimize around Venofer, in early in the year and we haven’t seen where it’s going to fall at loss. Rice, you wanted to comment.

Rice Powell

Yeah, Holger the other thing I think is part of the partial that it has do with the delivery of that actual dose of iron in the case of Venofer it’s a (inaudible) it’s fairly to easy administer other products in the (inaudible) you have to use a builder syringe so there are couple of things to go into this one maybe last question more general way to make sure you talked a little bit about it. But could you maybe give us kind of update on your product loan schedule that you foresee for the next one or two years when we might see maybe, agent product launches that could give your product line another boost?

Ben Lipps

Sure. Rice, why don’t you go ahead and take your note.

Rice Powell

I’m happy to do that over. What I can tell you is particularly in the area of pharmaceuticals, PhosLo product which is a liquid version of PhosLo which will be easier to take obviously much more convenient for the patients. We got FDA approval on that product back towards the latter part of April. We are currently finalizing the labeling and some of the manufacturing steps to that with FDA. But we expect to launch that in late June to early July, so that would be a new dosage format you will have a phosphate binder. We’ve mentioned before the other piece of pharmaceutical offering that we believe will drive value into the system for providers is the ability to take benefit for and administer it via a pump on presenting a steam or dialysis machines. We did get that 510-K approved back late last year or early this year, I don’t remember the exact date however. But we expect to have some limited release of that over the course of the summer in the hall. We’re doing some additional work. It’s quite important so this work flawlessly ended other providers.

We’re doing some what I call market trials, although it is improved, we’re doing some market work with some of our better benefit customers to get them some familiarity with this. And we expect to full scale the launch of this probably in the latter part of the year, more like fourth quarter, going into next year. But, we’re excited about those products because, we believer that will bring some value to the pharmaceutical sector for us. And I’ve spoken about Care at home, from the product standpoint that will be back in the summer times. I think I’ll hold at that for the moment.

Ben Lipps

Thank you. And I think as we mentioned in February 23 is that in the international we have the 4,008 classic being launched. And as you mentioned in the tea, we have some new dialoguers in terms of different scientist. But if you really step back and look at home whereas we’ve discussed in the past. Our target would be to continue to see the products growth in the mid to high single digit. I think that we’ve got the program to do that, once we work through the reimbursement changed in the U.S. So, but I don’t think you’ll see anything that will drive again, you keep writing that bank and that’s a reactor.

Holger Blum – Deutsche Bank

Okay, that’s great, thanks.

Ben Lipps

Thank you Holger.

Operator

The next question comes from Kevin Ellich from Piper Jaffray. May we have the question please?

Kevin Ellich – Piper Jaffray

Hey guys, I’m sorry if you talked about this already. But I joined down the call a little late. I’m just wondering if you provided comments about where equal utilization is now. I know, last quarter, Rice I think you said it was 10 and down about 10% or 15%. Are we still looking at about the same range or is it gone down even further?

Rice Powell

I’ll take that. Sure, no, Kevin, we are continuing to believe that the 10% to 15% range is accurate, I talked about that in February when we had our full year and fourth quarter of ‘10 released. We still see that today. Everything I’m looking at tells me that’s 10% to 15% accurate. I think in February I’ve seen okay, maybe it could be 16 and I think that’s still rational. But that’s the range that we’re in and we still feel pretty comfortable based on everything that we’re looking at today, that’s accurate and rational, Kevin.

Kevin Ellich – Piper Jaffray

Okay, that’s helpful. And then, just going back to the investment you guys made in Renal Advantage. I guess I’m a little confused and was hoping to get a little clarity. I thought last year, Liberty and Renal Advantage merged. So, basically if you made an investment in Renal Advantage, once that go across the board, the bulk companies?

Ben Lipps

Mike, will clarify.

Mike Brosnan

Yeah, I think, I think yeah. Basically the holding company was created in intermediate step in the legal structure which facilitated those folks that wanted to invest in the Renal Advantage franchise. So, that’s the level of which we’re partnering with Liberty on the investment.

Ben Lipps

Right.

Mike Brosnan

And that so the investment is in a holding company but only for Renal Advantage.

Ben Lipps

That’s correct.

Kevin Ellich – Piper Jaffray

Okay. So, you are able to separate the investment just for Renal Advantage and not for Liberty?

Mike Brosnan

Now, the business relationships that Rice talked about cover both Liberty and Renal Advantage. And so, those are a different type business proposition.

Ben Lipps

That’s correct.

Kevin Ellich – Piper Jaffray

Okay, I appreciate it. Thanks very much Ben. Thank you. And then just lastly, I wanted to get an update on the competitive landscape DeVita is now starting to make headways or they’re moving into the international markets. And they’re in the initial phases. But just wanted to see what you’re thinking about. And do you think they’ll be a formidable competitor in the international markets then?

Mike Brosnan

Well, again, I think Theorde (ph) is a formidable competitor and we have great respect for them. But what we’ve learned in the U.S. over the last five years is that we accomplished much more in working with them in the regulatory area in Washington. And quite frankly I think around the world there would be a good group to work with in terms of again a purchase to the government. And again from that standpoint, we welcome activities that their interest in international. But we also intend to work with them. And I think it’s a very confessional U.S. and we would expect it to be successful country by country as they decide where they’re going to come in.

Kevin Ellich – Piper Jaffray

Got it. Okay, thank you.

Ben Lipps

Thank you, Kevin. I think we have one more.

Operator

We have another question from Ilan Chaitowitz from Redburn Partners. May we have your question?

Ilan Chaitowitz – Redburn Partners

Thanks for the follow ups. Just two questions for Ben. The first one related to your commentary that you’re expecting the momentum to accelerate over the course of this year. And it seems that some investors that I talked to are concerned that making money, a healthcare company making money in the market is politically incorrect in this day and age. And I was just wondering about their concern, about that FMC may look to redeploy any efficiency savings elsewhere. And I was just hoping Ben, if you could give us some comfort that FMC as a group which has been historically very disciplined in terms of its capital allocation and investment will not deviate from that to hide any improvements in profitability. That’s the first question. And the second question is more specific to vitamin D. You’ve been very clear now in guiding us towards the upper end of the range of 10% to 15% for now, for the full year you said, maybe 16%. Did you give us an indication some sort of range that you expect for vitamin D to decline over 2011?

Ben Lipps

I guess, I got both of those, Ilan. As far as your question in terms of our momentum which we clearly are trying to drive forward because of the investments that we’ve made this year, we’re really pleased to see them come to closing. But will that have a problem in Washington. From my standpoint, we’re totally public we totally do everything we can with respect to patient care. And we’re working with the government, we opted into their programs 100% as an industry. We’re willing to help them in the countable clear area. So, I feel our relationship in Washington as an industry which includes all of us, is quite credible and quite good. So, I don’t worry about that. It’s really what the right thing for patient care is and we’ll all win. So, I’d put that away and don’t worry about that for a while. As far as vitamin D, I don’t think we’ve given any guidance. And it’s pretty difficult because, it’s therefore a different region in the management. And so, at this point in time, we’ve not really tried to influence anyone in the vitamin D algorithms or even set them up. So, I don’t believe what you think. Rice, do you have anything you want to add on.

Rice Powell

No, I don’t think we could guide you there. What I would tell you that we can do is we’ll look out and see where we are and maybe we can speak to that next time we have an update. But today, I don’t think I could give you any really good clarity on that. We’ve really not approached that as we have anemia management precise. So, let us go back and see what clarity we might be able to give you down the road on that.

Ilan Chaitowitz – Redburn Partners

Thank you very much.

Ben Lipps

Thank you, Ilan.

Operator

I would now like to hand over to Oliver Maier for final remarks.

Oliver Maier

Great. Thank you so much everybody for participating in today’s call. We really want to appreciate, actually you calling in and taking the time. And talk to you next time, actually in August I presume. Thank you.

Mike Brosnan

Thank you.

Ben Lipps

Thank you very much, bye.

Operator

We want to thank for Fresenius Medical Care and other participants for taking part on this conference call. Good bye.

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