DENVER, Aug. 1, 2019 /PRNewswire/ -- DaVita Inc. (NYSE:
DVA) today announced results for the quarter ended June 30,
2019.
Second quarter 2019 financial highlights:
- Completed the sale of our DMG division to Optum.
- Consolidated revenues of $2,843
million.
- Operating income of $462
million.
- Cash flows from continuing operations of $574 million.
|
Three months ended
June 30,
|
|
Six months ended
June 30,
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
Net income
attributable to DaVita Inc.:
|
(dollars in
millions, except per share data)
|
|
Net income from
continuing operations
|
$
|
194
|
|
|
$
|
200
|
|
|
$
|
314
|
|
|
$
|
391
|
|
|
Per share
|
$
|
1.16
|
|
|
$
|
1.15
|
|
|
$
|
1.89
|
|
|
$
|
2.19
|
|
|
Adjusted net income
from continuing operations(1)
|
$
|
203
|
|
|
$
|
183
|
|
|
$
|
356
|
|
|
$
|
374
|
|
|
Per share
adjusted(1)
|
$
|
1.22
|
|
|
$
|
1.05
|
|
|
$
|
2.13
|
|
|
$
|
2.10
|
|
|
Net income
|
$
|
274
|
|
|
$
|
267
|
|
|
$
|
423
|
|
|
$
|
446
|
|
|
Per share
|
$
|
1.64
|
|
|
$
|
1.53
|
|
|
$
|
2.54
|
|
|
$
|
2.51
|
|
|
|
|
|
|
|
|
|
|
Three months ended
June 30,
|
|
Six months ended
June 30,
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
Operating
income:
|
(dollars in
millions)
|
|
Operating
income
|
$
|
462
|
|
|
$
|
438
|
|
|
$
|
802
|
|
|
$
|
849
|
|
|
Adjusted operating
income(1)
|
$
|
462
|
|
|
$
|
419
|
|
|
$
|
843
|
|
|
$
|
829
|
|
|
|
|
|
|
|
|
|
(1)
|
For the definitions
of non-GAAP financial measures see the note titled "Note on
Non-GAAP Financial Measures" and related reconciliations beginning
at page 14.
|
DaVita Medical Group sale: As previously disclosed, on
June 19, 2019, we completed the sale of our DaVita Medical
Group (DMG) division to Collaborative Care Holdings, LLC (Optum), a
subsidiary of UnitedHealth Group Inc., for an aggregate purchase
price of $4.34 billion, prior to
certain adjustments specified in the related purchase agreement, as
amended. We recorded a preliminary pre-tax net loss of
approximately $23 million related to
this divestiture.
Upon the completion of the DMG sale we were required to make
mandatory prepayments on debt outstanding under our senior secured
credit facility, and we subsequently used the full $4.47 billion in preliminary net proceeds
received at closing to prepay term debt outstanding. As a result of
these prepayments we recognized a charge of $12 million to write off debt discount and
deferred financing costs.
Financial and operating metrics:
|
Three months ended
June 30,
|
|
Six months ended
June 30,
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
Cash
flow:
|
(dollars in
millions)
|
|
Operating cash
flow
|
$
|
610
|
|
|
$
|
562
|
|
|
$
|
751
|
|
|
$
|
925
|
|
|
Operating cash flow
from continuing operations
|
$
|
574
|
|
|
$
|
606
|
|
|
$
|
647
|
|
|
$
|
812
|
|
|
Free cash flow from
continuing operations(1)
|
$
|
461
|
|
|
$
|
470
|
|
|
$
|
410
|
|
|
$
|
532
|
|
|
|
|
|
|
|
|
|
(1)
|
For the definitions
of non-GAAP financial measures see the note titled "Note on
Non-GAAP Financial Measures" and related reconciliations beginning
at page 14.
|
Volume: Total U.S. dialysis treatments for the
second quarter of 2019 were 7,520,587, or an average of 96,418
treatments per day, representing a per day increase of 2.6% over
the second quarter of 2018. Normalized non-acquired treatment
growth in the second quarter of 2019 as compared to the second
quarter of 2018 was 2.1%.
Effective income tax rate: Our effective income tax
rate on income from continuing operations was 23.5% and 24.6% for
the three and six months ended June 30, 2019, respectively.
This effective income tax rate is impacted by the amount of third
party owners' income attributable to non-tax paying entities. The
effective income tax rate on income from continuing operations
attributable to DaVita Inc. was 28.0% and 29.6% for the three and
six months ended June 30, 2019, respectively.
Our effective income tax rate on income from continuing
operations attributable to DaVita Inc. for the three and six months
ended June 30, 2019 was further impacted by the write-off of
deferred financing costs and other debt costs and the six months
ended June 30, 2019 was also impacted by the goodwill
impairment charge recognized in the first quarter of 2019.
Excluding these items from the three and six months ended
June 30, 2019, our effective income tax rate on adjusted
income from continuing operations attributable to DaVita Inc. would
have been 27.9% and 28.9% for the three and six months ended
June 30, 2019, respectively.
Center activity: As of June 30, 2019, we
provided dialysis services to a total of approximately 231,700
patients at 2,971 outpatient dialysis centers, of which 2,723
centers were located in the United
States and 248 centers were located in nine countries
outside of the United States.
During the second quarter of 2019, we opened a total of 33 new
dialysis centers, acquired three dialysis centers and closed two
dialysis centers in the United
States. In addition, we acquired five dialysis centers
outside of the United States
during the second quarter of 2019.
Share repurchases: During the quarter ended
June 30, 2019, we repurchased a total of 2,059,976 shares of
our common stock for approximately $112
million at an average price of $54.46 per share. We have also repurchased
4,214,205 shares of our common stock for $238 million at an average price of $56.43 per share from July
1, 2019 through July 17, 2019.
On July 17, 2019, our Board of
Directors terminated all remaining prior share repurchase
authorizations available to the Company and approved a new share
repurchase authorization in the amount of $2.0 billion.
On July 22, 2019, we commenced a
modified "Dutch auction" tender offer for up to $1.2 billion of our common stock at a price per
share not less than $53.50 and not
more than $61.50. The tender offer
will expire at 12:00 midnight Eastern
time at the end of the day on August
16, 2019, unless extended or terminated. The tender offer is
contingent on successful execution of the bank financing described
below on terms reasonably acceptable to the Company.
Debt Transactions: As previously announced,
we plan to enter into a new bank financing consisting of a
$1.0 billion secured revolving loan
facility, a $1.75 billion secured
term loan A facility with a delayed draw feature and a $2.5 billion secured term loan B facility. We
expect to use the proceeds from the bank financing to pay off the
remaining balances outstanding under our Term Loan B and revolving
line of credit under our existing senior secured credit facility,
to call the Company's outstanding 5.75% Senior Notes due 2022
(Senior Notes), to fund the tender offer described above, and to
add cash to the balance sheet for potential future share
repurchases, acquisitions, and other general corporate purposes.
This press release does not constitute a call notice. The
Company expects the call notice for the Senior Notes to be issued
following completion of the bank financing.
As of July 31, 2019, $502 million and $650
million remained outstanding on our Term Loan B and
revolving line of credit, respectively, under our existing senior
secured credit facility.
Outlook:
As previously announced on July 22,
2019, the Company updated its adjusted operating income (a
non-GAAP financial measure) guidance for fiscal year 2019 to a
range of $1.64 billion to
$1.70 billion. The Company's prior
guidance at the time for adjusted operating income for fiscal year
2019 was $1.54 billion to
$1.64 billion.
The Company is now providing further fiscal year 2019 guidance
as follows:
|
Current 2019
guidance
|
|
Prior 2019
guidance
|
|
Low
|
|
High
|
|
Low
|
|
High
|
|
(dollars in
millions)
|
Operating cash flow
from continuing operations
|
$
|
1,450
|
|
|
$
|
1,625
|
|
|
$
|
1,375
|
|
|
$
|
1,575
|
|
Capital expenditures
from continuing operations
|
$
|
800
|
|
|
$
|
840
|
|
|
$
|
800
|
|
|
$
|
840
|
|
Effective income tax
rate on adjusted income from continuing operations attributable to DaVita
Inc.
|
28.5
|
%
|
|
29.5
|
%
|
|
28.5
|
%
|
|
29.5
|
%
|
These forward-looking measures and their underlying assumptions
involve significant risks and uncertainties, including those
described below, and actual results may vary significantly from
these current forward-looking measures. We do not provide guidance
for consolidated operating income or effective tax rate on income
from continuing operations on a GAAP basis nor a reconciliation of
forward-looking non-GAAP financial measures to the most directly
comparable GAAP financial measures on a forward-looking basis
because we are unable to predict certain items contained in the
GAAP measures without unreasonable efforts. These non-GAAP
financial measures do not include certain items, including goodwill
impairment charges and foreign currency fluctuations, any of which
may be significant. The guidance for effective income tax rate on
adjusted income from continuing operations attributable to DaVita
Inc. also excludes the amount of third party owners' income and
related taxes attributable to non-tax paying entities.
We will be holding a conference call to discuss our results for
the second quarter ended June 30, 2019, on August 1, 2019, at 5:00
p.m. Eastern Time. To join the conference call, please dial
(877) 918-6630 from the U.S. or (517) 308-9042 from outside the
U.S., and provide the operator the password 'Earnings'. A replay of
the conference call will be available on our website at
investors.davita.com for the following 30 days.
DaVita Inc. and its representatives may from time to time
make written and oral forward-looking statements within the meaning
of the Private Securities Litigation Reform Act of 1995 ("PSLRA"),
including statements in this release, filings with the Securities
and Exchange Commission ("SEC"), reports to stockholders and in
meetings with investors and analysts. All such statements in this
release, during the related presentation or other meetings, other
than statements of historical fact, are forward-looking statements
and as such are intended to be covered by the safe harbor for
"forward-looking statements" provided by the PSLRA. Without
limiting the foregoing, statements including the words "expect,"
"intend," "will," "plan," "anticipate," "believe," "we are
confident that," "forecast," "guidance," "outlook," "goals," and
similar expressions are intended to identify forward-looking
statements.
The forward-looking statements should be considered in light
of these risks and uncertainties. All forward-looking statements in
this release are based solely on information available to us on the
date of this release. We undertake no obligation to publicly update
or revise any of our guidance, the assessment of the underlying
assumptions or other forward-looking statements, whether as a
result of changed circumstances, new information, future events or
otherwise.
These forward-looking statements could include but are not
limited to statements related to our guidance and expectations for
our 2019 adjusted consolidated operating income, our 2019 operating
cash flow from continuing operations, our 2019 effective income tax
rate on adjusted income from continuing operations attributable to
DaVita Inc., our 2019 capital expenditures from continuing
operations, our expectations regarding the tender offer, the
proposed bank financing and the use of proceeds therefrom, and the
proposed redemption of our Senior Notes.
Our actual results and other events could differ materially
from any forward-looking statements due to numerous factors that
involve substantial known and unknown risks and uncertainties.
These risks and uncertainties include, among other things:
- the concentration of profits generated by higher-paying
commercial payor plans for which there is continued downward
pressure on average realized payment rates, and a reduction in the
number of patients under such plans, including as a result of
restrictions or prohibitions on the use and/or availability of
charitable premium assistance, which may result in the loss of
revenues or patients, or our making incorrect assumptions about how
our patients will respond to any change in financial assistance
from charitable organizations;
- the extent to which the ongoing implementation of healthcare
reform, or changes in or new legislation, regulations or guidance,
enforcement thereof or related litigation, and the extent to which
such developments result in a reduction in coverage or
reimbursement rates for our services, a reduction in the number of
patients enrolled in higher-paying commercial plans, or other
material impacts to our business;
- a reduction in government payment rates under the Medicare
End Stage Renal Disease program or other government-based programs
and the impact of the Medicare Advantage benchmark
structure;
- risks arising from potential and proposed federal and/or
state legislation, regulation, ballot, executive action or other
initiatives, including such initiatives related to healthcare
and/or labor matters;
- the impact of the changing political environment and related
developments on the current healthcare marketplace and on our
business, including with respect to the future of the Affordable
Care Act, the exchanges and many other core aspects of the current
health care marketplace;
- changes in pharmaceutical practice patterns, reimbursement
and payment policies and processes, or pharmaceutical pricing,
including with respect to calcimimetics;
- legal and compliance risks, such as our continued compliance
with complex government regulations and the provisions of our
current corporate integrity agreement;
- continued increased competition from dialysis providers and
others, and other potential marketplace changes;
- our ability to maintain contracts with physician medical
directors, changing affiliation models for physicians, and the
emergence of new models of care introduced by the government or
private sector that may erode our patient base and reimbursement
rates, such as accountable care organizations, independent practice
associations and integrated delivery systems;
- our ability to complete acquisitions, mergers or
dispositions that we might announce or be considering, on terms
favorable to us or at all, or to integrate and successfully operate
any business we may acquire or have acquired, or to successfully
expand our operations and services in markets outside the United States, or to businesses outside of
dialysis; and our ability to complete the tender offer, new bank
financing and redemption of our Senior Notes as described above on
the terms currently contemplated or at all;
- noncompliance by us or our business associates with any
privacy or security laws or any security breach by us or a third
party involving the misappropriation, loss or other unauthorized
use or disclosure of confidential information;
- the variability of our cash flows; the risk that we may not
be able to generate sufficient cash in the future to service our
indebtedness or to fund our other liquidity needs; and the risk
that we may not be able to refinance our indebtedness as it becomes
due, on terms favorable to us or at all;
- factors that may impact our ability to repurchase stock
under our stock repurchase program (including the tender offer
described above) and the timing of any such stock
repurchases;
- risks arising from the use of accounting estimates,
judgments and interpretations in our financial statements;
- impairment of our goodwill, investments or other
assets;
- uncertainties related to our use of the proceeds from the
DMG sale transaction and other available funds, including external
financing and cash flow from operations, which may be or have been
used in ways that we cannot assure will improve our results of
operations or enhance the value of our common stock; and
- uncertainties associated with the other risk factors set
forth in our most recent quarterly report on Form 10-Q, and the
other risks and uncertainties discussed in any subsequent reports
that we file or furnish to the SEC from time to time.
Contact:
|
Jim
Gustafson
|
|
Investor
Relations
|
|
DaVita
Inc.
|
|
(310)
536-2585
|
DAVITA
INC.
|
CONSOLIDATED
STATEMENTS OF INCOME
|
(unaudited)
|
(dollars in
thousands, except per share data)
|
|
|
Three
months ended June 30,
|
|
Six
months ended June 30,
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
Dialysis and related
lab patient service revenues
|
$
|
2,734,065
|
|
|
$
|
2,718,403
|
|
|
$
|
5,369,217
|
|
|
$
|
5,309,477
|
|
Provision for
uncollectible accounts
|
(10,249)
|
|
|
(49,406)
|
|
|
(15,712)
|
|
|
(23,861)
|
|
Net dialysis and
related lab patient service revenues
|
2,723,816
|
|
|
2,668,997
|
|
|
5,353,505
|
|
|
5,285,616
|
|
Other
revenues
|
118,889
|
|
|
217,956
|
|
|
232,312
|
|
|
450,781
|
|
Total
revenues
|
2,842,705
|
|
|
2,886,953
|
|
|
5,585,817
|
|
|
5,736,397
|
|
Operating expenses
and charges:
|
|
|
|
|
|
|
|
Patient care
costs
|
1,957,753
|
|
|
2,069,089
|
|
|
3,922,688
|
|
|
4,104,674
|
|
General and
administrative
|
275,338
|
|
|
264,094
|
|
|
526,151
|
|
|
530,623
|
|
Depreciation and
amortization
|
152,242
|
|
|
147,079
|
|
|
300,770
|
|
|
289,878
|
|
Provision for
uncollectible accounts
|
ā
|
|
|
(2,100)
|
|
|
ā
|
|
|
(8,100)
|
|
Equity investment
income
|
(4,514)
|
|
|
(9,795)
|
|
|
(7,222)
|
|
|
(9,950)
|
|
Impairment of other
assets
|
ā
|
|
|
11,245
|
|
|
ā
|
|
|
11,245
|
|
Goodwill impairment
charges
|
ā
|
|
|
3,106
|
|
|
41,037
|
|
|
3,106
|
|
Gain on changes in
ownership interest, net
|
ā
|
|
|
(33,957)
|
|
|
ā
|
|
|
(33,957)
|
|
Total operating
expenses and charges
|
2,380,819
|
|
|
2,448,761
|
|
|
4,783,424
|
|
|
4,887,519
|
|
Operating
income
|
461,886
|
|
|
438,192
|
|
|
802,393
|
|
|
848,878
|
|
Debt
expense
|
(131,666)
|
|
|
(119,692)
|
|
|
(263,185)
|
|
|
(233,208)
|
|
Debt prepayment
charges
|
(12,160)
|
|
|
ā
|
|
|
(12,160)
|
|
|
ā
|
|
Other income,
net
|
5,643
|
|
|
1,994
|
|
|
12,583
|
|
|
6,576
|
|
Income from
continuing operations before income taxes
|
323,703
|
|
|
320,494
|
|
|
539,631
|
|
|
622,246
|
|
Income tax
expense
|
75,938
|
|
|
83,868
|
|
|
132,684
|
|
|
154,605
|
|
Net income from
continuing operations
|
247,765
|
|
|
236,626
|
|
|
406,947
|
|
|
467,641
|
|
Net income from
discontinued operations, net of tax
|
79,392
|
|
|
69,696
|
|
|
109,697
|
|
|
63,910
|
|
Net income
|
327,157
|
|
|
306,322
|
|
|
516,644
|
|
|
531,551
|
|
Less: Net income
attributable to noncontrolling interests
|
(53,606)
|
|
|
(39,046)
|
|
|
(93,804)
|
|
|
(85,589)
|
|
Net income
attributable to DaVita Inc.
|
$
|
273,551
|
|
|
$
|
267,276
|
|
|
$
|
422,840
|
|
|
$
|
445,962
|
|
Earnings per share
attributable to DaVita Inc.:
|
|
|
|
|
|
|
|
Basic net income from
continuing operations per share
|
$
|
1.17
|
|
|
$
|
1.16
|
|
|
$
|
1.89
|
|
|
$
|
2.23
|
|
Basic net income per
share
|
$
|
1.64
|
|
|
$
|
1.56
|
|
|
$
|
2.54
|
|
|
$
|
2.54
|
|
Diluted net income
from continuing operations per share
|
$
|
1.16
|
|
|
$
|
1.15
|
|
|
$
|
1.89
|
|
|
$
|
2.19
|
|
Diluted net income
per share
|
$
|
1.64
|
|
|
$
|
1.53
|
|
|
$
|
2.54
|
|
|
$
|
2.51
|
|
Weighted average
shares for earnings per share:
|
|
|
|
|
|
|
|
Basic
|
166,346,041
|
|
|
171,617,238
|
|
|
166,366,886
|
|
|
175,267,270
|
|
Diluted
|
166,799,525
|
|
|
174,105,884
|
|
|
166,789,978
|
|
|
177,949,934
|
|
Amounts
attributable to DaVita Inc.:
|
|
|
|
|
|
|
|
Net income from
continuing operations
|
$
|
194,223
|
|
|
$
|
199,603
|
|
|
$
|
314,477
|
|
|
$
|
390,618
|
|
Net income from
discontinued operations
|
79,328
|
|
|
67,673
|
|
|
108,363
|
|
|
55,344
|
|
Net income
attributable to DaVita Inc.
|
$
|
273,551
|
|
|
$
|
267,276
|
|
|
$
|
422,840
|
|
|
$
|
445,962
|
|
DAVITA
INC.
|
CONSOLIDATED
STATEMENTS OF COMPREHENSIVE INCOME
|
(unaudited)
|
(dollars in
thousands)
|
|
|
Three
months ended June 30,
|
|
Six
months ended June 30,
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
Net income
|
$
|
327,157
|
|
|
$
|
306,322
|
|
|
$
|
516,644
|
|
|
$
|
531,551
|
|
Other comprehensive
income, net of tax:
|
|
|
|
|
|
|
|
Unrealized (losses)
gains on interest rate cap agreements:
|
|
|
|
|
|
|
|
Unrealized (losses)
gains
|
(31)
|
|
|
(268)
|
|
|
(611)
|
|
|
782
|
|
Reclassifications of
net realized losses into net income
|
1,606
|
|
|
1,537
|
|
|
3,212
|
|
|
3,074
|
|
Unrealized gains
(losses) on foreign currency translation:
|
|
|
|
|
|
|
|
Foreign currency
translation adjustments
|
12,365
|
|
|
(50,529)
|
|
|
(1,288)
|
|
|
(30,648)
|
|
Other comprehensive
income (loss)
|
13,940
|
|
|
(49,260)
|
|
|
1,313
|
|
|
(26,792)
|
|
Total comprehensive
income
|
341,097
|
|
|
257,062
|
|
|
517,957
|
|
|
504,759
|
|
Less: Comprehensive
income attributable to noncontrolling interests
|
(53,606)
|
|
|
(39,046)
|
|
|
(93,804)
|
|
|
(85,589)
|
|
Comprehensive income
attributable to DaVita Inc.
|
$
|
287,491
|
|
|
$
|
218,016
|
|
|
$
|
424,153
|
|
|
$
|
419,170
|
|
DAVITA
INC.
|
CONSOLIDATED
STATEMENTS OF CASH FLOWS
|
(unaudited)
|
(dollars in
thousands)
|
|
|
Six
months ended June 30,
|
|
2019
|
|
2018
|
Cash flows from
operating activities:
|
|
|
|
Net income
|
$
|
516,644
|
|
|
$
|
531,551
|
|
Adjustments to
reconcile net income to net cash provided by operating
activities:
|
|
|
|
Depreciation and
amortization
|
300,770
|
|
|
289,878
|
|
Impairment
charges
|
41,037
|
|
|
14,351
|
|
Stock-based
compensation expense
|
29,045
|
|
|
19,861
|
|
Deferred income
taxes
|
60,706
|
|
|
56,882
|
|
Equity investment
income (loss), net
|
2,631
|
|
|
(434)
|
|
Loss (gain) on sales
of business interests, net
|
23,022
|
|
|
(59,053)
|
|
Other non-cash
charges, net
|
25,857
|
|
|
44,337
|
|
Changes in operating
assets and liabilities, net of effect of acquisitions and
divestitures:
|
|
|
|
Accounts
receivable
|
(288,437)
|
|
|
(101,746)
|
|
Inventories
|
11,542
|
|
|
71,632
|
|
Other receivables and
other current assets
|
(5,142)
|
|
|
(91,685)
|
|
Other long-term
assets
|
(410)
|
|
|
3,454
|
|
Accounts
payable
|
(68,887)
|
|
|
35,228
|
|
Accrued compensation
and benefits
|
(88,473)
|
|
|
23,818
|
|
Other current
liabilities
|
151,780
|
|
|
58,321
|
|
Income
taxes
|
57,551
|
|
|
24,356
|
|
Other long-term
liabilities
|
(18,121)
|
|
|
3,824
|
|
Net cash provided by
operating activities
|
751,115
|
|
|
924,575
|
|
Cash flows from
investing activities:
|
|
|
|
Additions of property
and equipment
|
(373,918)
|
|
|
(473,977)
|
|
Acquisitions
|
(65,970)
|
|
|
(89,465)
|
|
Proceeds from asset
and business sales
|
3,851,381
|
|
|
116,241
|
|
Purchase of other
debt and equity investments
|
(4,812)
|
|
|
(4,195)
|
|
Purchase of
investments held-to-maturity
|
(3,322)
|
|
|
(3,726)
|
|
Proceeds from sale of
other debt and equity investments
|
5,893
|
|
|
5,662
|
|
Proceeds from
investments held-to-maturity
|
ā
|
|
|
32,628
|
|
Purchase of equity
investments
|
(6,715)
|
|
|
(10,241)
|
|
Distributions
received on equity investments
|
155
|
|
|
3,009
|
|
Net cash provided by
(used in) investing activities
|
3,402,692
|
|
|
(424,064)
|
|
Cash flows from
financing activities:
|
|
|
|
Borrowings
|
32,367,300
|
|
|
28,128,131
|
|
Payments on long-term
debt and other financing costs
|
(33,531,409)
|
|
|
(27,556,348)
|
|
Purchase of treasury
stock
|
(73,078)
|
|
|
(805,179)
|
|
Distributions to
noncontrolling interests
|
(95,714)
|
|
|
(94,006)
|
|
Stock award exercises
and other share issuances, net
|
2,107
|
|
|
3,132
|
|
Contributions from
noncontrolling interests
|
31,281
|
|
|
31,569
|
|
Proceeds from sales
of additional noncontrolling interest
|
ā
|
|
|
15
|
|
Purchases of
noncontrolling interests
|
(11,040)
|
|
|
(13,223)
|
|
Net cash used in
financing activities
|
(1,310,553)
|
|
|
(305,909)
|
|
Effect of exchange
rate changes on cash, cash equivalents and restricted
cash
|
(77)
|
|
|
(3,473)
|
|
Net increase in cash,
cash equivalents and restricted cash
|
2,843,177
|
|
|
191,129
|
|
Less: Net (decrease)
increase in cash, cash equivalents and restricted cash from
discontinued operations
|
(423,813)
|
|
|
229,901
|
|
Net increase
(decrease) in cash, cash equivalents and restricted cash from
continuing operations
|
3,266,990
|
|
|
(38,772)
|
|
Cash, cash
equivalents and restricted cash of continuing operations at
beginning of the year
|
415,420
|
|
|
518,920
|
|
Cash, cash
equivalents and restricted cash of continuing operations at end of
the period
|
$
|
3,682,410
|
|
|
$
|
480,148
|
|
DAVITA
INC.
|
CONSOLIDATED
BALANCE SHEETS
|
(unaudited)
|
(dollars in
thousands, except share data)
|
|
|
June 30,
2019
|
|
December 31,
2018
|
ASSETS
|
|
|
|
Cash and cash
equivalents
|
$
|
3,575,638
|
|
|
$
|
323,038
|
|
Restricted cash and
equivalents
|
106,772
|
|
|
92,382
|
|
Short-term
investments
|
5,213
|
|
|
2,935
|
|
Accounts receivable,
net
|
2,010,801
|
|
|
1,858,608
|
|
Inventories
|
96,819
|
|
|
107,381
|
|
Other
receivables
|
525,004
|
|
|
469,796
|
|
Income tax
receivable
|
15,783
|
|
|
68,614
|
|
Prepaid and other
current assets
|
54,599
|
|
|
111,840
|
|
Current assets held
for sale, net
|
ā
|
|
|
5,389,565
|
|
Total current
assets
|
6,390,629
|
|
|
8,424,159
|
|
Property and
equipment, net of accumulated depreciation of $3,649,978 and
$3,524,098
|
3,405,315
|
|
|
3,393,669
|
|
Operating lease
right-of-use assets
|
2,790,885
|
|
|
ā
|
|
Intangible assets,
net of accumulated amortization of $75,283 and $80,566
|
120,574
|
|
|
118,846
|
|
Equity method and
other investments
|
225,677
|
|
|
224,611
|
|
Long-term
investments
|
35,051
|
|
|
35,424
|
|
Other long-term
assets
|
97,443
|
|
|
71,583
|
|
Goodwill
|
6,865,386
|
|
|
6,841,960
|
|
|
$
|
19,930,960
|
|
|
$
|
19,110,252
|
|
LIABILITIES AND
EQUITY
|
|
|
|
Accounts
payable
|
$
|
388,955
|
|
|
$
|
463,270
|
|
Other
liabilities
|
726,011
|
|
|
595,850
|
|
Accrued compensation
and benefits
|
628,022
|
|
|
658,913
|
|
Current portion of
operating lease liabilities
|
372,625
|
|
|
ā
|
|
Current portion of
long-term debt
|
3,591,331
|
|
|
1,929,369
|
|
Current liabilities
held for sale
|
ā
|
|
|
1,243,759
|
|
Total current
liabilities
|
5,706,944
|
|
|
4,891,161
|
|
Long-term operating
lease liabilities
|
2,689,249
|
|
|
ā
|
|
Long-term
debt
|
5,377,798
|
|
|
8,172,847
|
|
Other long-term
liabilities
|
134,605
|
|
|
450,669
|
|
Deferred income
taxes
|
593,562
|
|
|
562,536
|
|
Total
liabilities
|
14,502,158
|
|
|
14,077,213
|
|
Commitments and
contingencies
|
|
|
|
Noncontrolling
interests subject to put provisions
|
1,185,733
|
|
|
1,124,641
|
|
Equity:
|
|
|
|
Preferred stock
($0.001 par value, 5,000,000 shares authorized; none
issued)
|
ā
|
|
|
ā
|
|
Common stock ($0.001
par value, 450,000,000 shares authorized; 166,532,889 and
166,387,307 shares issued and 164,472,913 and 166,387,307 shares
outstanding, respectively)
|
167
|
|
|
166
|
|
Additional paid-in
capital
|
989,021
|
|
|
995,006
|
|
Retained
earnings
|
3,205,910
|
|
|
2,743,194
|
|
Treasury stock
(2,059,976 and zero shares, respectively)
|
(112,189)
|
|
|
ā
|
|
Accumulated other
comprehensive loss
|
(33,611)
|
|
|
(34,924)
|
|
Total DaVita Inc.
shareholders' equity
|
4,049,298
|
|
|
3,703,442
|
|
Noncontrolling
interests not subject to put provisions
|
193,771
|
|
|
204,956
|
|
Total
equity
|
4,243,069
|
|
|
3,908,398
|
|
|
$
|
19,930,960
|
|
|
$
|
19,110,252
|
|
DAVITA
INC.
|
SUPPLEMENTAL
FINANCIAL DATA
|
(unaudited)
|
(dollars in
millions, except for per share and per treatment
data)
|
|
|
Three months
ended
|
|
Six months
ended
June 30, 2019
|
|
June 30,
2019
|
|
March 31,
2019
|
|
June 30,
2018
|
|
1. Consolidated
business metrics:
|
|
|
|
|
|
|
|
Operating income
margin
|
16.2
|
%
|
|
12.4
|
%
|
|
15.2
|
%
|
|
14.4
|
%
|
Adjusted operating
income margin excluding certain items(1)(5)
|
16.2
|
%
|
|
13.9
|
%
|
|
14.5
|
%
|
|
15.1
|
%
|
General and
administrative expenses as a percent of consolidated
revenues(2)
|
9.7
|
%
|
|
9.1
|
%
|
|
9.1
|
%
|
|
9.4
|
%
|
Effective income tax
rate on income from continuing operations
|
23.5
|
%
|
|
26.3
|
%
|
|
26.2
|
%
|
|
24.6
|
%
|
Effective income tax
rate on income from continuing operations attributable to DaVita
Inc.(1)
|
28.0
|
%
|
|
32.0
|
%
|
|
29.5
|
%
|
|
29.6
|
%
|
Effective income tax
rate on adjusted income from continuing operations attributable to
DaVita Inc.(1)
|
27.9
|
%
|
|
30.1
|
%
|
|
30.7
|
%
|
|
28.9
|
%
|
|
|
|
|
|
|
|
|
2. Summary of
division financial results:
|
|
|
|
|
|
|
|
Revenues
|
|
|
|
|
|
|
|
U.S. net dialysis and
related lab patient services and other
|
$
|
2,637
|
|
|
$
|
2,547
|
|
|
$
|
2,588
|
|
|
$
|
5,185
|
|
OtherāAncillary
services and strategic initiatives
|
|
|
|
|
|
|
|
U.S. other
|
114
|
|
|
109
|
|
|
221
|
|
|
224
|
|
International net
dialysis patient service and other
|
125
|
|
|
120
|
|
|
107
|
|
|
245
|
|
|
239
|
|
|
230
|
|
|
328
|
|
|
469
|
|
Eliminations
|
(34)
|
|
|
(34)
|
|
|
(29)
|
|
|
(68)
|
|
Total consolidated
revenues
|
$
|
2,843
|
|
|
$
|
2,743
|
|
|
$
|
2,887
|
|
|
$
|
5,586
|
|
Operating income
(loss)
|
|
|
|
|
|
|
|
U.S. dialysis and
related lab services
|
$
|
499
|
|
|
$
|
417
|
|
|
$
|
449
|
|
|
$
|
916
|
|
OtherāAncillary
services and strategic initiatives
|
|
|
|
|
|
|
|
U.S.
|
(16)
|
|
|
(15)
|
|
|
4
|
|
|
(31)
|
|
International
|
1
|
|
|
(43)
|
|
|
(1)
|
|
|
(42)
|
|
|
(15)
|
|
|
(58)
|
|
|
3
|
|
|
(73)
|
|
Corporate
administrative support expenses
|
(22)
|
|
|
(19)
|
|
|
(14)
|
|
|
(41)
|
|
Total consolidated
operating income
|
$
|
462
|
|
|
$
|
341
|
|
|
$
|
438
|
|
|
$
|
802
|
|
DAVITA
INC.
|
SUPPLEMENTAL
FINANCIAL DATA - continued
|
(unaudited)
|
(dollars in
millions, except for per share and per treatment
data)
|
|
|
Three months
ended
|
|
Six months
ended
June 30, 2019
|
|
June 30,
2019
|
|
March 31,
2019
|
|
June 30,
2018
|
|
3. Summary of
reportable segment financial results:
|
|
|
|
|
|
|
|
U.S. Dialysis
and Related Lab Services
|
|
|
|
|
|
|
|
Revenue:
|
|
|
|
|
|
|
|
Net dialysis and
related lab patient service revenues
|
$
|
2,632
|
|
|
$
|
2,542
|
|
|
$
|
2,583
|
|
|
$
|
5,174
|
|
Other
revenues
|
6
|
|
|
5
|
|
|
5
|
|
|
10
|
|
Total operating
revenues
|
2,637
|
|
|
2,547
|
|
|
2,588
|
|
|
5,185
|
|
Operating
expenses:
|
|
|
|
|
|
|
|
Patient care
costs
|
1,785
|
|
|
1,797
|
|
|
1,810
|
|
|
3,582
|
|
General and
administrative
|
216
|
|
|
197
|
|
|
196
|
|
|
413
|
|
Depreciation and
amortization
|
145
|
|
|
141
|
|
|
138
|
|
|
285
|
|
Equity investment
income
|
(7)
|
|
|
(5)
|
|
|
(6)
|
|
|
(12)
|
|
Total operating
expenses
|
2,139
|
|
|
2,130
|
|
|
2,139
|
|
|
4,269
|
|
Segment operating
income
|
$
|
499
|
|
|
$
|
417
|
|
|
$
|
449
|
|
|
$
|
916
|
|
|
|
|
|
|
|
|
|
4. U.S.
Dialysis and Related Lab Services Business
metrics:
|
|
|
|
|
|
|
|
Volume
|
|
|
|
|
|
|
|
Treatments
|
7,520,587
|
|
|
7,297,460
|
|
|
7,331,590
|
|
|
14,818,046
|
|
Number of treatment
days
|
78.0
|
|
|
76.6
|
|
|
78.0
|
|
|
154.6
|
|
Average treatments per
day
|
96,418
|
|
|
95,267
|
|
|
93,995
|
|
|
95,848
|
|
Per day year over year
increase
|
2.6
|
%
|
|
2.9
|
%
|
|
4.2
|
%
|
|
2.7
|
%
|
Normalized
non-acquired treatment growth year over year
|
2.1
|
%
|
|
2.4
|
%
|
|
3.4
|
%
|
|
|
Operating net
revenues
|
|
|
|
|
|
|
|
Dialysis and related
lab services net revenue per treatment
|
$
|
349.97
|
|
|
$
|
348.37
|
|
|
$
|
352.37
|
|
|
$
|
349.18
|
|
Expenses
|
|
|
|
|
|
|
|
Patient care costs per
treatment
|
$
|
237.34
|
|
|
$
|
246.29
|
|
|
$
|
246.90
|
|
|
$
|
241.75
|
|
General and
administrative expenses per treatment
|
$
|
28.68
|
|
|
$
|
27.00
|
|
|
$
|
26.80
|
|
|
$
|
27.85
|
|
Accounts
receivable
|
|
|
|
|
|
|
|
Net
receivables
|
$
|
1,816
|
|
|
$
|
1,794
|
|
|
$
|
1,646
|
|
|
|
DSO
|
63
|
|
|
64
|
|
|
59
|
|
|
|
|
|
|
|
|
|
|
|
5. Discontinued
operations:
|
|
|
|
|
|
|
|
Operating
results
|
|
|
|
|
|
|
|
Net
revenues
|
$
|
1,331
|
|
|
$
|
1,382
|
|
|
$
|
1,252
|
|
|
$
|
2,713
|
|
Expenses
|
1,202
|
|
|
1,338
|
|
|
1,193
|
|
|
2,540
|
|
Income from
operations of discontinued operations before taxes
|
129
|
|
|
44
|
|
|
60
|
|
|
173
|
|
Loss on sale of
discontinued operations, before taxes
|
(23)
|
|
|
ā
|
|
|
ā
|
|
|
(23)
|
|
Income tax expense
(benefit)
|
27
|
|
|
14
|
|
|
(10)
|
|
|
41
|
|
Net income from
discontinued operations, net of tax
|
$
|
79
|
|
|
$
|
30
|
|
|
$
|
70
|
|
|
$
|
110
|
|
DAVITA
INC.
|
SUPPLEMENTAL
FINANCIAL DATA - continued
|
(unaudited)
|
(dollars in
millions, except for per share and per treatment
data)
|
|
|
Three months
ended
|
|
Six months
ended
June 30, 2019
|
|
June 30,
2019
|
|
March 31,
2019
|
|
June 30,
2018
|
|
6. Cash
Flow:
|
|
|
|
|
|
|
|
Operating cash
flow
|
$
|
610
|
|
|
$
|
141
|
|
|
$
|
562
|
|
|
$
|
751
|
|
Operating cash flow
from continuing operations
|
$
|
574
|
|
|
$
|
73
|
|
|
$
|
606
|
|
|
$
|
647
|
|
Operating cash flow
from continuing operations, last twelve months
|
$
|
1,316
|
|
|
$
|
1,348
|
|
|
$
|
1,454
|
|
|
|
Free cash flow from
continuing operations(1)
|
$
|
461
|
|
|
$
|
(52)
|
|
|
$
|
470
|
|
|
$
|
410
|
|
Free cash flow from
continuing operations, last
twelve months(1)
|
$
|
748
|
|
|
$
|
756
|
|
|
$
|
902
|
|
|
|
Capital expenditures
from continuing operations:
|
|
|
|
|
|
|
|
Routine
maintenance/IT/other
|
$
|
61
|
|
|
$
|
80
|
|
|
$
|
87
|
|
|
$
|
142
|
|
Development and
relocations
|
$
|
95
|
|
|
$
|
99
|
|
|
$
|
132
|
|
|
$
|
194
|
|
Acquisition
expenditures
|
$
|
54
|
|
|
$
|
10
|
|
|
$
|
73
|
|
|
$
|
64
|
|
Proceeds from sale of
self-developed properties
|
$
|
14
|
|
|
$
|
12
|
|
|
$
|
8
|
|
|
$
|
27
|
|
|
|
|
|
|
|
|
|
7. Debt and
Capital Structure:
|
|
|
|
|
|
|
|
Total
debt(3)(4)
|
$
|
9,004
|
|
|
$
|
10,512
|
|
|
$
|
10,002
|
|
|
|
Net debt, net of cash
and cash equivalents(3)(4)
|
$
|
5,428
|
|
|
$
|
10,053
|
|
|
$
|
9,613
|
|
|
|
Leverage ratio (see
calculation on page 13)
|
2.47x
|
|
4.62x
|
|
3.99x
|
|
|
Weighted average
effective interest rate:
|
|
|
|
|
|
|
|
During the
quarter
|
5.17
|
%
|
|
5.16
|
%
|
|
4.91
|
%
|
|
|
At end of the
quarter
|
5.30
|
%
|
|
5.14
|
%
|
|
4.99
|
%
|
|
|
On the senior secured
credit facilities at end of the quarter
|
5.31
|
%
|
|
5.00
|
%
|
|
4.72
|
%
|
|
|
Debt with fixed and
capped rates as a percentage of total debt:
|
|
|
|
|
|
|
|
Debt with rates fixed
by its terms
|
54
|
%
|
|
46
|
%
|
|
49
|
%
|
|
|
Debt with rates fixed
or capped by cap agreements
|
93
|
%
|
|
79
|
%
|
|
84
|
%
|
|
|
Share
repurchases
|
$
|
112
|
|
|
$
|
ā
|
|
|
$
|
512
|
|
|
$
|
112
|
|
Number of shares
repurchased
|
2,059,976
|
|
|
ā
|
|
|
7,797,712
|
|
|
2,059,976
|
|
|
|
Certain columns, rows
or percentages may not sum or recalculate due to the use of rounded
numbers.
|
|
|
|
|
|
|
|
|
(1)
|
These are non-GAAP
financial measures. For a reconciliation of these non-GAAP
financial measures to their most comparable measure calculated and
presented in accordance with GAAP, and for a definition of adjusted
amounts, see attached reconciliation schedules.
|
(2)
|
General and
administrative expenses includes certain corporate support,
long-term incentive compensation and advocacy costs.
|
(3)
|
The reported balance
sheet amounts at June 30, 2019, March 31, 2019 and
June 30, 2018, exclude $34.5 million, $48.5 million and $57.9
million, respectively, of a debt discount associated with our Term
Loan B and other deferred financing costs. The reported balance
sheet amounts exclude DMG debt which is classified as held for sale
liabilities for March 31, 2019 and June 30, 2018.
|
(4)
|
The reported total
debt and net debt, net of cash and cash equivalents, excludes DMG
cash and debt classified as held for sale assets and liabilities,
respectively, as of March 31, 2019 and June 30, 2018.
|
(5)
|
Adjusted operating
income margin is a calculation of adjusted operating income divided
by consolidated revenues.
|
DAVITA INC.
SUPPLEMENTAL FINANCIAL DATA-continued
(unaudited)
(dollars in thousands)
Note 1: Calculation of the Leverage Ratio
Under the senior secured credit facilities (Credit Agreement),
the leverage ratio is defined as all funded debt plus the face
amount of all letters of credit issued, minus cash and cash
equivalents, including short-term investments, divided by
"Consolidated EBITDA". The leverage ratio determines the interest
rate margin payable by the Company for its Term Loan A and
revolving line of credit under the Credit Agreement by establishing
the margin over the base interest rate (LIBOR) that is applicable.
The following leverage ratio was calculated using "Consolidated
EBITDA" as defined in the Credit Agreement. The calculation below
is based on the last twelve months of "Consolidated EBITDA", pro
forma for routine acquisitions that occurred during the period. The
Company's management believes the presentation of "Consolidated
EBITDA" is useful to users to enhance their understanding of the
Company's leverage ratio under its Credit Agreement. The leverage
ratio calculated by the Company is a non-GAAP measure and should
not be considered a substitute for debt to net income attributable
to DaVita Inc., net income attributable to DaVita Inc. or total
debt as determined in accordance with United States generally accepted accounting
principles (GAAP). As allowed by the Credit Agreement, the
Company has elected to calculate debt using the existing GAAP in
place at the commencement of the Credit Agreement; therefore, the
Company has not adjusted its debt balance to include the lease
liabilities under ASC Topic 842. The Company's calculation of its
leverage ratio might not be calculated in the same manner as, and
thus might not be comparable to, similarly titled measures by other
companies.
|
Rolling twelve
months ended
|
|
June 30,
2019
|
|
March 31,
2019
|
|
June 30,
2018
|
Net income
attributable to DaVita Inc.
|
$
|
548,180
|
|
|
$
|
129,997
|
|
|
$
|
534,882
|
|
Income
taxes
|
236,479
|
|
|
350,689
|
|
|
(290,623)
|
|
Interest
expense
|
476,507
|
|
|
462,877
|
|
|
416,933
|
|
Depreciation and
amortization
|
601,927
|
|
|
596,764
|
|
|
677,119
|
|
Impairment
charges
|
47,130
|
|
|
103,018
|
|
|
895,457
|
|
Noncontrolling
interests and equity investment income, net
|
194,434
|
|
|
173,609
|
|
|
184,438
|
|
Stock-settled
stock-based compensation
|
77,766
|
|
|
75,489
|
|
|
37,346
|
|
Debt prepayment
charges
|
12,160
|
|
|
ā
|
|
|
ā
|
|
Gain on changes in
ownership interest, net
|
(26,646)
|
|
|
(85,699)
|
|
|
(76,182)
|
|
Valuation adjustment
on disposal group
|
ā
|
|
|
316,840
|
|
|
ā
|
|
Other
|
56,176
|
|
|
22,712
|
|
|
14,957
|
|
"Consolidated
EBITDA"
|
$
|
2,224,113
|
|
|
$
|
2,146,296
|
|
|
$
|
2,394,327
|
|
|
|
|
|
|
|
|
June 30,
2019
|
|
March 31,
2019
|
|
June 30,
2018
|
Total debt, excluding
debt discount and other deferred financing
costs(1)
|
$
|
9,003,631
|
|
|
$
|
10,548,104
|
|
|
$
|
10,038,699
|
|
Letters of credit
issued
|
72,763
|
|
|
79,099
|
|
|
36,917
|
|
|
9,076,394
|
|
|
10,627,203
|
|
|
10,075,616
|
|
Less: Cash and cash
equivalents including short-term
investments(2)
|
(3,578,751)
|
|
|
(710,603)
|
|
|
(526,819)
|
|
Consolidated net
debt
|
$
|
5,497,643
|
|
|
$
|
9,916,600
|
|
|
$
|
9,548,797
|
|
Last twelve months
"Consolidated EBITDA"
|
$
|
2,224,113
|
|
|
$
|
2,146,296
|
|
|
$
|
2,394,327
|
|
Leverage
ratio
|
2.47x
|
|
|
4.62x
|
|
|
3.99x
|
|
|
|
|
|
|
|
|
|
(1)
|
The reported total
debt amounts at June 30, 2019, March 31, 2019 and
June 30, 2018, exclude $34.5 million, $48.5 million and $57.9
million, respectively, of a debt discount associated with our Term
Loan B and other deferred financing costs.
|
(2)
|
Excluding DMG's
physician owned entities cash for the twelve months ended March 31,
2019 and June 30, 2018 and amounts not readily convertible to cash
related to the Company's non-qualified deferred compensation plans
for all periods presented.
|
In accordance with the Credit Agreement, the Company's
leverage ratio cannot exceed 4.50 to 1.00 as of June 30, 2019.
At that date the Company's leverage ratio did not exceed 4.50 to
1.00.
DAVITA INC.
RECONCILIATIONS FOR NON-GAAP MEASURES
(unaudited)
Note on Non-GAAP Financial Measures
As used in this press release, the term "adjusted" refers to
non-GAAP measures as follows, each as reconciled to its most
comparable GAAP measure as presented in the non-GAAP
reconciliations in the notes to this press release: (i) for income
measures, the term "adjusted" refers to operating performance
measures that exclude certain items such as impairment charges,
(gain) loss on ownership changes, restructuring charges, debt
prepayment charges and gains and charges associated with
settlements; and (ii) the term "effective income tax rate on
adjusted income from continuing operations attributable to DaVita
Inc." represents the Company's effective tax rate excluding
applicable non-GAAP items and noncontrolling owners' income, which
primarily relates to non-tax paying entities.
These non-GAAP or "adjusted" measures are presented because
management believes these measures are useful adjuncts to GAAP
results. However, these non-GAAP measures should not be considered
alternatives to the corresponding measures determined under
GAAP.
Specifically, we use adjusted operating income, adjusted net
income from continuing operations attributable to DaVita Inc. and
adjusted diluted net income from continuing operations per share
attributable to DaVita Inc. to compare and evaluate our performance
period over period and relative to competitors, to analyze the
underlying trends in our business, to establish operational budgets
and forecasts and for incentive compensation purposes. We believe
these non-GAAP measures are useful to management, investors and
analysts in evaluating our performance over time and relative to
competitors, as well as in analyzing the underlying trends in our
business. We also believe these presentations enhance a user's
understanding of our normal consolidated operating income by
excluding certain items which we do not believe are indicative of
our ordinary results of operations. As a result, adjusting for
these amounts allows for comparison to our normalized prior period
results.
In addition, the effective income tax rate on income from
continuing operations attributable to DaVita Inc. excludes
noncontrolling owners' income, which primarily relates to non-tax
paying entities, and the effective income tax rate on adjusted
income from continuing operations attributable to DaVita Inc.
excludes noncontrolling owners' income and certain non-deductible
and other charges which we do not believe are indicative of our
ordinary results. Accordingly, we believe these adjusted effective
income tax rates are useful to management, investors and analysts
in evaluating our performance and establishing expectations for
income taxes incurred on our ordinary results attributable to
DaVita Inc.
Finally, free cash flow from continuing operations represents
net cash provided by operating activities from continuing
operations less distributions to noncontrolling interests and
capital expenditures for routine maintenance and information
technology from continuing operations. We believe this non-GAAP
measure is useful to management, investors and analysts as an
adjunct to cash flows from operating activities from continuing
operations and other measures under GAAP, since free cash flow from
continuing operations is meaningful for assessing our ability to
fund acquisition and development activities and meet our debt
service obligations.
It is important to bear in mind that these non-GAAP "adjusted"
measures are not measures of financial performance or liquidity
under GAAP and should not be considered in isolation from, nor as
substitutes for, their most comparable GAAP measures.
The following Notes 2 through 5 provide reconciliations of the
non-GAAP financial measures presented in this press release to
their most comparable GAAP measures.
DAVITA INC.
RECONCILIATIONS FOR NON-GAAP MEASURES - continued
(unaudited)
(dollars in thousands, except for per share data)
Note 2: Adjusted net income from continuing
operations and adjusted diluted net income from continuing
operations per share attributable to DaVita Inc.
|
Three months
ended
|
|
June 30,
2019
|
|
March 31,
2019
|
|
June 30,
2018
|
|
Dollars
|
|
Per
share
|
|
Dollars
|
|
Per
share
|
|
Dollars
|
|
Per
share
|
Net income from
continuing operations attributable to DaVita Inc.
|
$
|
194,223
|
|
|
$
|
1.16
|
|
|
$
|
120,254
|
|
|
$
|
0.72
|
|
|
$
|
199,603
|
|
|
$
|
1.15
|
|
Operating
charges:
|
|
|
|
|
|
|
|
|
|
|
|
Goodwill impairment
charges
|
ā
|
|
|
ā
|
|
|
41,037
|
|
|
0.25
|
|
|
3,106
|
|
|
0.02
|
|
Impairment of other
assets
|
ā
|
|
|
ā
|
|
|
ā
|
|
|
ā
|
|
|
11,245
|
|
|
0.06
|
|
Gain on changes in
ownership interests, net
|
ā
|
|
|
ā
|
|
|
ā
|
|
|
ā
|
|
|
(33,957)
|
|
|
(0.20)
|
|
Debt prepayment
charges
|
12,160
|
|
|
0.07
|
|
|
ā
|
|
|
ā
|
|
|
ā
|
|
|
ā
|
|
Related income
tax
|
(3,130)
|
|
|
(0.02)
|
|
|
(8,865)
|
|
|
(0.05)
|
|
|
2,652
|
|
|
0.02
|
|
Adjusted net income
from continuing operations attributable to DaVita Inc.
|
$
|
203,253
|
|
|
$
|
1.22
|
|
|
$
|
152,426
|
|
|
$
|
0.91
|
|
|
$
|
182,649
|
|
|
$
|
1.05
|
|
|
Six months
ended
|
|
June 30,
2019
|
|
June 30,
2018
|
|
Dollars
|
|
Per
share
|
|
Dollars
|
|
Per
share
|
Net income from
continuing operations attributable to DaVita Inc.
|
$
|
314,477
|
|
|
$
|
1.89
|
|
|
$
|
390,618
|
|
|
$
|
2.19
|
|
Operating
charges:
|
|
|
|
|
|
|
|
Goodwill impairment
charges
|
41,037
|
|
|
0.25
|
|
|
3,106
|
|
|
0.02
|
|
Impairment of other
assets
|
ā
|
|
|
ā
|
|
|
11,245
|
|
|
0.06
|
|
Gain on changes in
ownership interests, net
|
ā
|
|
|
ā
|
|
|
(33,957)
|
|
|
(0.19)
|
|
Debt prepayment
charges
|
12,160
|
|
|
0.07
|
|
|
ā
|
|
|
ā
|
|
Related income
tax
|
(11,995)
|
|
|
(0.07)
|
|
|
2,652
|
|
|
0.01
|
|
Adjusted net income
from continuing operations attributable to DaVita Inc.
|
$
|
355,679
|
|
|
$
|
2.13
|
|
|
$
|
373,664
|
|
|
$
|
2.10
|
|
|
Certain columns or
rows may not sum or recalculate due to the use of rounded
numbers.
|
DAVITA INC.
RECONCILIATIONS FOR NON-GAAP MEASURES - continued
(unaudited)
(dollars in thousands)
Note 3: Adjusted operating
income
|
Three months
ended
|
|
Six months
ended
|
|
June 30,
2019
|
|
March 31,
2019
|
|
June 30,
2018
|
|
June 30,
2019
|
|
June 30,
2018
|
Consolidated:
|
|
|
|
|
|
|
|
|
|
Operating
income
|
$
|
461,886
|
|
|
$
|
340,507
|
|
|
$
|
438,192
|
|
|
$
|
802,393
|
|
|
$
|
848,878
|
|
Goodwill impairment
charges
|
ā
|
|
|
41,037
|
|
|
3,106
|
|
|
41,037
|
|
|
3,106
|
|
Impairment of other
assets
|
ā
|
|
|
ā
|
|
|
11,245
|
|
|
ā
|
|
|
11,245
|
|
Gain on changes in
ownership interests, net
|
ā
|
|
|
ā
|
|
|
(33,957)
|
|
|
ā
|
|
|
(33,957)
|
|
Adjusted operating
income
|
$
|
461,886
|
|
|
$
|
381,544
|
|
|
$
|
418,586
|
|
|
$
|
843,430
|
|
|
$
|
829,272
|
|
|
|
|
|
|
|
|
|
|
Three months
ended
|
|
Six months
ended
|
|
June 30,
2019
|
|
March 31,
2019
|
|
June 30,
2018
|
|
June 30,
2019
|
|
June 30,
2018
|
Consolidated:
|
|
|
|
|
|
|
|
|
|
U.S. dialysis and
related lab services:
|
|
|
|
|
|
|
|
|
|
Segment operating
income
|
$
|
498,957
|
|
|
$
|
416,981
|
|
|
$
|
449,443
|
|
|
$
|
915,939
|
|
|
$
|
882,822
|
|
Other - Ancillary
services and strategic initiatives:
|
|
|
|
|
|
|
|
|
|
U.S.
|
|
|
|
|
|
|
|
|
|
Segment operating
(loss) income
|
$
|
(15,652)
|
|
|
$
|
(14,918)
|
|
|
$
|
3,953
|
|
|
$
|
(30,570)
|
|
|
$
|
(1,233)
|
|
Impairment of other
assets
|
ā
|
|
|
ā
|
|
|
11,245
|
|
|
ā
|
|
|
11,245
|
|
Gain on changes in
ownership interests
|
ā
|
|
|
ā
|
|
|
(35,205)
|
|
|
ā
|
|
|
(35,205)
|
|
Adjusted operating
loss
|
$
|
(15,652)
|
|
|
$
|
(14,918)
|
|
|
$
|
(20,007)
|
|
|
$
|
(30,570)
|
|
|
$
|
(25,193)
|
|
International
|
|
|
|
|
|
|
|
|
|
Segment operating
income (loss)
|
$
|
602
|
|
|
$
|
(42,712)
|
|
|
$
|
(1,138)
|
|
|
$
|
(42,110)
|
|
|
$
|
(2,942)
|
|
Goodwill impairment
charge
|
ā
|
|
|
41,037
|
|
|
3,106
|
|
|
41,037
|
|
|
3,106
|
|
Loss on changes in
ownership interests
|
ā
|
|
|
ā
|
|
|
1,248
|
|
|
ā
|
|
|
1,248
|
|
Adjusted operating
income (loss)
|
$
|
602
|
|
|
$
|
(1,675)
|
|
|
$
|
3,216
|
|
|
$
|
(1,073)
|
|
|
$
|
1,412
|
|
Adjusted Other -
Ancillary services and strategic initiatives operating
loss
|
$
|
(15,050)
|
|
|
$
|
(16,593)
|
|
|
$
|
(16,791)
|
|
|
$
|
(31,643)
|
|
|
$
|
(23,781)
|
|
Corporate
administrative support expenses
|
$
|
(22,021)
|
|
|
$
|
(18,844)
|
|
|
$
|
(14,066)
|
|
|
$
|
(40,866)
|
|
|
$
|
(29,769)
|
|
Adjusted operating
income
|
$
|
461,886
|
|
|
$
|
381,544
|
|
|
$
|
418,586
|
|
|
$
|
843,430
|
|
|
$
|
829,272
|
|
|
Certain columns or
rows may not sum or recalculate due to the use of rounded
numbers.
|
DAVITA INC.
RECONCILIATIONS FOR NON-GAAP MEASURES - continued
(unaudited)
(dollars in thousands)
Note 4: Effective income tax rates on income
from continuing operations attributable to DaVita Inc.
|
Three months
ended
|
|
Six months
ended
June 30, 2019
|
|
June 30,
2019
|
|
March 31,
2019
|
|
June 30,
2018
|
|
Income from
continuing operations before income taxes
|
$
|
323,703
|
|
|
$
|
215,928
|
|
|
$
|
320,494
|
|
|
$
|
539,631
|
|
Less: Noncontrolling
owners' income primarily attributable to non-tax paying
entities
|
(53,916)
|
|
|
(39,008)
|
|
|
(37,374)
|
|
|
(92,924)
|
|
Income before income
taxes attributable to DaVita Inc.
|
$
|
269,787
|
|
|
$
|
176,920
|
|
|
$
|
283,120
|
|
|
$
|
446,707
|
|
|
|
|
|
|
|
|
|
Income tax
expense
|
$
|
75,938
|
|
|
$
|
56,746
|
|
|
$
|
83,868
|
|
|
$
|
132,684
|
|
Less: Income tax
attributable to noncontrolling interests
|
(374)
|
|
|
(80)
|
|
|
(351)
|
|
|
(454)
|
|
Income tax expense
attributable to DaVita Inc.
|
$
|
75,564
|
|
|
$
|
56,666
|
|
|
$
|
83,517
|
|
|
$
|
132,230
|
|
|
|
|
|
|
|
|
|
Effective income tax
rate on income from continuing operations attributable to DaVita
Inc.
|
28.0
|
%
|
|
32.0
|
%
|
|
29.5
|
%
|
|
29.6
|
%
|
The effective income tax rate on adjusted income from continuing
operations attributable to DaVita Inc. is computed as follows:
|
Three months
ended
|
|
Six months
ended
June 30, 2019
|
June 30,
2019
|
|
March 31,
2019
|
|
June 30,
2018
|
|
Income from
continuing operations before income taxes
|
$
|
323,703
|
|
|
$
|
215,928
|
|
|
$
|
320,494
|
|
|
$
|
539,631
|
|
Operating
charges:
|
|
|
|
|
|
|
|
Goodwill impairment
charges
|
ā
|
|
|
41,037
|
|
|
3,106
|
|
|
41,037
|
|
Impairment of other
assets
|
ā
|
|
|
ā
|
|
|
11,245
|
|
|
ā
|
|
Gain on changes in
ownership interests, net
|
ā
|
|
|
ā
|
|
|
(33,957)
|
|
|
ā
|
|
Debt prepayment
charges
|
12,160
|
|
|
ā
|
|
|
ā
|
|
|
12,160
|
|
Noncontrolling
owners' income primarily attributable to non-tax paying
entities
|
(53,916)
|
|
|
(39,008)
|
|
|
(37,374)
|
|
|
(92,924)
|
|
Adjusted income from
continuing operations before income taxes attributable to DaVita
Inc.
|
$
|
281,947
|
|
|
$
|
217,957
|
|
|
$
|
263,514
|
|
|
$
|
499,904
|
|
Income tax
expense
|
$
|
75,938
|
|
|
$
|
56,746
|
|
|
$
|
83,868
|
|
|
$
|
132,684
|
|
Add income tax
related to:
|
|
|
|
|
|
|
|
Goodwill impairment
charges
|
ā
|
|
|
8,865
|
|
|
598
|
|
|
8,865
|
|
Impairment of other
assets
|
ā
|
|
|
ā
|
|
|
2,895
|
|
|
ā
|
|
Gain on changes in
ownership interests, net
|
ā
|
|
|
ā
|
|
|
(6,145)
|
|
|
ā
|
|
Debt prepayment
charges
|
3,130
|
|
|
ā
|
|
|
ā
|
|
|
3,130
|
|
Less income tax
related to:
|
|
|
|
|
|
|
|
Noncontrolling
interests
|
(374)
|
|
|
(80)
|
|
|
(351)
|
|
|
(454)
|
|
Income tax on
adjusted income from continuing operations attributable to DaVita
Inc.
|
$
|
78,694
|
|
|
$
|
65,531
|
|
|
$
|
80,865
|
|
|
$
|
144,225
|
|
Effective income tax
rate on adjusted income from continuing operations attributable to
DaVita Inc.
|
27.9
|
%
|
|
30.1
|
%
|
|
30.7
|
%
|
|
28.9
|
%
|
|
Certain columns, rows
or percentages may not sum or recalculate due to the use of rounded
numbers.
|
DAVITA INC.
RECONCILIATIONS FOR NON-GAAP MEASURES - continued
(unaudited)
(dollars in thousands)
Note 5: Free cash flow from continuing
operations
|
Three months
ended
|
|
Six months
ended
June 30, 2019
|
|
June 30,
2019
|
|
March 31,
2019
|
|
June 30,
2018
|
|
Net cash provided by
continuing operating activities
|
$
|
574,203
|
|
|
$
|
73,064
|
|
|
$
|
605,601
|
|
|
$
|
647,267
|
|
Less: Distributions
to noncontrolling interests
|
(51,484)
|
|
|
(44,230)
|
|
|
(48,539)
|
|
|
(95,714)
|
|
Cash provided by
continuing operating activities attributable to DaVita
Inc.
|
522,719
|
|
|
28,834
|
|
|
557,062
|
|
|
551,553
|
|
Less: Expenditures
for routine maintenance and information technology
|
(61,298)
|
|
|
(80,390)
|
|
|
(86,871)
|
|
|
(141,688)
|
|
Free cash flow from
continuing operations
|
$
|
461,421
|
|
|
$
|
(51,556)
|
|
|
$
|
470,191
|
|
|
$
|
409,865
|
|
|
Rolling 12-Month
Period
|
|
June 30,
2019
|
|
March 31,
2019
|
|
June 30,
2018
|
Net cash provided by
continuing operating activities
|
$
|
1,316,331
|
|
|
$
|
1,347,729
|
|
|
$
|
1,453,942
|
|
Less: Distributions
to noncontrolling interests
|
(198,149)
|
|
|
(195,204)
|
|
|
(188,823)
|
|
Cash provided by
continuing operating activities attributable to DaVita
Inc.
|
1,118,182
|
|
|
1,152,525
|
|
|
1,265,119
|
|
Less: Expenditures
for routine maintenance and information technology
|
(370,587)
|
|
|
(396,160)
|
|
|
(362,883)
|
|
Free cash flow from
continuing operations
|
$
|
747,595
|
|
|
$
|
756,365
|
|
|
$
|
902,236
|
|
|
Certain columns or
rows may not sum or recalculate due to the use of rounded
numbers.
|
View original content to download
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SOURCE DaVita Inc.