DENVER, May 2, 2017 /PRNewswire/ -- DaVita Inc.
(NYSE: DVA) today announced results for the quarter ended
March 31, 2017.
- Net income attributable to DaVita Inc. for the quarter ended
March 31, 2017 was $448 million, or $2.29 per share.
- Adjusted net income attributable to DaVita Inc. for the quarter
ended March 31, 2017 was $154 million, or $0.79 per share.
- Adjusted net income attributable to DaVita Inc., further
adjusted to exclude amortization for the quarter ended March 31, 2017, was $182
million, or $0.93 per
share.
- Net income attributable to DaVita Inc. for the quarter ended
March 31, 2016 was $97 million, or $0.47 per share.
- Adjusted net income attributable to DaVita Inc. for the quarter
ended March 31, 2016 was $190 million, or $0.92 per share.
- Adjusted net income attributable to DaVita Inc., further
adjusted to exclude amortization for the quarter ended March 31, 2016 was $214
million, or $1.03 per
share.
For the definitions of non-GAAP financial measures such as
adjusted net income attributable to DaVita Inc. and adjusted net
income attributable to DaVita Inc., further adjusted to exclude
amortization, see the note titled "Note on non-GAAP Financial
Measures" below.
Financial and operating highlights include:
Cash flow: For the rolling twelve months ended
March 31, 2017, operating cash flow
was $2.400 billion and free cash flow
was $1.841 billion. For the quarter
ended March 31, 2017, operating cash
flow was $865 million and free cash
flow was $734 million.
Operating income and adjusted operating income:
Operating income for the quarter ended March
31, 2017 was $888 million, and
adjusted operating income for the quarter was $392 million.
Operating income for the quarter ended March 31, 2016 was $365
million, and adjusted operating income for the quarter was
$458 million.
Volume: Total U.S. dialysis treatments for the
first quarter of 2017 were 6,804,384, or 88,369 treatments per day,
representing a per day increase of 3.7% over the first quarter of
2016. Normalized non-acquired treatment growth in the first quarter
of 2017 as compared to the first quarter of 2016 was 3.8%.
The number of member months for which DMG provided care during
the first quarter of 2017 was approximately 2.2 million, of which
approximately 0.9 million, 1.0 million and 0.3 million related to
senior, commercial and Medicaid members, respectively.
Goodwill and asset impairment charges: During the
quarter ended March 31, 2017, we
recognized an additional goodwill impairment charge related to our
vascular access business of $24
million, of which $7 million
was attributed to noncontrolling interests. This additional charge
resulted primarily from changes in our expectations as our partners
and operators evaluate reimbursement model alternatives as a result
of recent changes in the Medicare reimbursement structure for these
services.
We also recognized an asset impairment charge of $15 million related to the restructuring of our
pharmacy business.
Gain on Changes in Ownership Interests: During the
quarter ended March 31, 2017, we
recorded a $6 million adjustment to
true up the non-cash gain related to the formation of the Asia
Pacific Joint Venture (APAC JV).
Settlement: In the first quarter of 2017, we
received a payment of $538 million
related to the settlement with the U.S. Department of Veterans
Affairs (VA). Our consolidated entities recognized a net gain
of $527 million on this settlement,
of which $24 million was attributable
to noncontrolling interests. Our nonconsolidated and managed
entities recognized a gain of $9
million, of which our equity investment share was
$3 million. The net effect was a
net increase of $530 million to
DaVita's operating income, which was subject to income taxes of
$197 million.
Effective tax rate: Our effective tax rate was
36.5% for the quarter ended March 31,
2017. The effective tax rate attributable to DaVita Inc. was
39.1% for the quarter ended March 31,
2017.
Our effective tax rate for the quarter ended March 31, 2017 was impacted by an adjustment to
true-up the gain on the formation of the APAC JV ownership changes
and the amount of third-party owners' income attributable to
non-tax paying entities.
The adjusted effective tax rate attributable to DaVita Inc. for
the quarter ended March 31, 2017,
excluding these items was 40.0%.
Center activity: As of March
31, 2017, we provided dialysis services to a total of
approximately 205,900 patients at 2,544 outpatient dialysis
centers, of which 2,382 centers were located in the United States and 162 centers were located
in 11 countries outside of the United
States. During the first quarter of 2017, we opened a total
of 24 new dialysis centers and acquired 12 dialysis centers in
the United States. We also opened
five new dialysis centers and acquired three dialysis centers
outside of the United States.
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 the most
comparable GAAP measure 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, gains (losses) on
ownership changes, and gains and charges associated with
settlements; (ii) the term "adjusted net income excluding
amortization" represents the Company's net income excluding certain
items as well as amortization of intangibles associated with
acquisitions; and (iii) the term "adjusted effective income tax
rate attributable to DaVita Inc." represents the Company's
effective tax rate excluding certain non-GAAP items and
noncontrolling owners' income that 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. Non-GAAP or "adjusted" measures should not be
considered as an alternative to the corresponding measures
determined under GAAP. Management uses these non-GAAP measures
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 that these non-GAAP
measures are useful to investors and analysts in evaluating our
performance over time and relative to competitors, as well as in
analyzing the underlying trends in our business.
The Company's adjusted net income attributable to DaVita Inc.,
adjusted diluted net income per share, adjusted net income
attributable to DaVita Inc. excluding amortization, adjusted
diluted net income per share excluding amortization, adjusted
operating income, adjusted effective income tax rate attributable
to DaVita Inc., and free cash flow discussed in this press release
are reconciled to their most comparable GAAP measures at Notes 2,
3, 4, and 5.
Outlook
The following forward-looking measures and the 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, Kidney Care operating
income or effective tax rate attributable to DaVita Inc. on a GAAP
basis nor a reconciliation of those 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 the gain related to the VA
settlement, goodwill and asset impairment charges, and the gain on
the APAC JV ownership changes.
- We still expect our adjusted consolidated operating income
guidance for 2017 to be in the range of $1.635 billion to $1.775 billion.
- We still expect our adjusted operating income guidance for
Kidney Care for 2017 to be in the range of $1.525 billion to $1.625 billion.
- We still expect our operating income guidance for DMG for 2017
to be in the range of $110 million to $150
million.
- We still expect our consolidated operating cash flow for 2017
to be in the range of $1.750 billion to
$1.950 billion, which includes the net benefit of the VA
settlement.
- We still expect our 2017 adjusted effective tax rate
attributable to DaVita Inc. to be approximately 39.5% to
40.5%.
We will be holding a conference call to discuss our results for
the first quarter ended March 31,
2017 on May 2, 2017 at
5:00 p.m. Eastern Time. To join the
conference call, please dial (877) 918-6630 from the U.S. or (517)
308-9087 from outside the U.S. A replay of the conference call will
be available on our website at investors.davita.com, for the
following 30 days.
This release contains forward-looking statements within the
meaning of the federal securities laws, including without
limitation statements related to our guidance and expectations for
our 2017 consolidated operating income, our 2017 Kidney Care
operating income, DMG's 2017 operating income, our 2017
consolidated operating cash flows and our 2017 effective tax rate
attributable to DaVita Inc. Factors that could impact future
results include the uncertainties associated with the risk factors
set forth in our SEC filings, including our annual report on Form
10-K for the year ended December 31,
2016, our subsequent quarterly and annual reports, and our
current reports on Form 8-K. The forward-looking statements should
be considered in light of these risks and uncertainties.
These risks and uncertainties include, among other things,
and are qualified in their entirety by reference to the full text
of those risk factors in our SEC filings relating
to:
- 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, which may result in the loss
of revenues or patients, and the extent to which the ongoing
implementation of healthcare exchanges or changes in regulations or
enforcement of regulations, including among other things those
regarding the exchanges, results in a reduction in reimbursement
rates for our services from and/or the number of patients enrolled
in higher-paying commercial plans,
- a reduction in government payment rates under the Medicare
End Stage Renal Disease program or other government-based
programs,
- the impact of the Medicare Advantage benchmark
structure,
- risks arising from potential federal and/or state
legislation or regulation that could have an adverse effect on our
operations and profitability,
- the impact of the 2016 Congressional and Presidential
elections on the current health care 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 or anemia management practice
patterns, payment policies, or pharmaceutical pricing,
- legal compliance risks, including our continued compliance
with complex government regulations and the provisions of our
current corporate integrity agreement and current or potential
investigations by various government entities and related
government or private-party proceedings, and restrictions on our
business and operations required by our corporate integrity
agreement and other settlement terms, and the financial impact
thereof,
- continued increased competition from large- and medium-sized
dialysis providers that compete directly with us,
- 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 be considering or announce, or to
integrate and successfully operate any business we may acquire or
have acquired, including DMG, or to expand our operations and
services to markets outside the United
States, or to businesses outside of dialysis and DMG's
business,
- the variability of our cash flows,
- the risk that we might invest material amounts of capital
and incur significant costs in connection with the growth and
development of our international operations, yet we might not be
able to operate them profitably anytime soon, if at all,
- risks arising from the use of accounting estimates,
judgments and interpretations in our financial statements,
- the risk that laws regulating the corporate practice of
medicine could restrict the manner in which DMG conducts its
business,
- the risk that the cost of providing services under DMG's
agreements may exceed our compensation,
- the risk that reductions in reimbursement rates, including
Medicare Advantage rates, and future regulations may negatively
impact DMG's business, revenue and profitability,
- the risk that DMG may not be able to successfully establish
a presence in new geographic regions or successfully address
competitive threats that could reduce its profitability,
- the risk that a disruption in DMG's healthcare provider
networks could have an adverse effect on DMG's business operations
and profitability,
- the risk that reductions in the quality ratings of health
maintenance organization plan customers of DMG could have an
adverse effect on DMG's business, or
- the risk that health plans that acquire health maintenance
organizations may not be willing to contract with DMG or may be
willing to contract only on less favorable terms.
We base our forward-looking statements on information
currently available to us at the time of this release, and we
undertake no obligation to update or revise any forward-looking
statements, whether as a result of changes in underlying factors,
new information, future events or otherwise.
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 March
31,
|
|
2017
|
|
2016
|
Patient service
revenues
|
$
|
2,601,378
|
|
|
$
|
2,481,933
|
|
Less: Provision for
uncollectible accounts
|
(112,983)
|
|
|
(109,205)
|
|
Net patient service
revenues
|
2,488,395
|
|
|
2,372,728
|
|
Capitated
revenues
|
918,036
|
|
|
887,047
|
|
Other
revenues
|
290,852
|
|
|
321,361
|
|
Total net
revenues
|
3,697,283
|
|
|
3,581,136
|
|
Operating expenses
and charges:
|
|
|
|
Patient care costs and other
costs
|
2,722,820
|
|
|
2,582,333
|
|
General and
administrative
|
391,780
|
|
|
386,429
|
|
Depreciation and
amortization
|
190,206
|
|
|
169,355
|
|
Provision for uncollectible
accounts
|
1,910
|
|
|
2,517
|
|
Equity investment
income
|
(3,935)
|
|
|
(1,387)
|
|
Goodwill and asset
impairment charges
|
39,366
|
|
|
77,000
|
|
Gain on changes in ownership
interests
|
(6,273)
|
|
|
—
|
|
Gain on settlement,
net
|
(526,827)
|
|
|
—
|
|
Total operating expenses and charges
|
2,809,047
|
|
|
3,216,247
|
|
Operating
income
|
888,236
|
|
|
364,889
|
|
Debt
expense
|
(104,429)
|
|
|
(102,884)
|
|
Other income,
net
|
4,243
|
|
|
2,976
|
|
Income before income
taxes
|
788,050
|
|
|
264,981
|
|
Income tax
expense
|
287,765
|
|
|
126,822
|
|
Net income
|
500,285
|
|
|
138,159
|
|
Less: Net income
attributable to noncontrolling interests
|
(52,588)
|
|
|
(40,725)
|
|
Net income
attributable to DaVita Inc.
|
$
|
447,697
|
|
|
$
|
97,434
|
|
Earnings per
share:
|
|
|
|
Basic net income per share
attributable to DaVita Inc.
|
$
|
2.33
|
|
|
$
|
0.48
|
|
Diluted net income per share
attributable to DaVita Inc.
|
$
|
2.29
|
|
|
$
|
0.47
|
|
Weighted average
shares for earnings per share:
|
|
|
|
Basic
|
192,376,735
|
|
|
204,366,869
|
|
Diluted
|
195,281,014
|
|
|
207,928,096
|
|
DAVITA
INC.
CONSOLIDATED
STATEMENTS OF COMPREHENSIVE INCOME
(unaudited)
(dollars in
thousands)
|
|
|
Three
months ended March
31,
|
|
2017
|
|
2016
|
Net income
|
$
|
500,285
|
|
|
$
|
138,159
|
|
Other comprehensive
income (loss), net of tax:
|
|
|
|
Unrealized losses on
interest rate cap and swap agreements:
|
|
|
|
Unrealized losses on
interest rate cap and swap agreements
|
(3,188)
|
|
|
(5,469)
|
|
Reclassifications of
net rate cap and swap agreements realized losses into net
income
|
1,265
|
|
|
465
|
|
Unrealized gains on
investments:
|
|
|
|
Unrealized gains on
investments
|
1,557
|
|
|
229
|
|
Reclassification of
net investment realized gains into net income
|
(140)
|
|
|
(93)
|
|
Unrealized gains on
foreign currency translation:
|
|
|
|
Foreign currency
translation adjustments
|
13,261
|
|
|
11,181
|
|
Other comprehensive
income
|
12,755
|
|
|
6,313
|
|
Total comprehensive
income
|
513,040
|
|
|
144,472
|
|
Less: Comprehensive
income attributable to noncontrolling interests
|
(52,586)
|
|
|
(40,725)
|
|
Comprehensive income
attributable to DaVita Inc.
|
$
|
460,454
|
|
|
$
|
103,747
|
|
DAVITA
INC.
CONSOLIDATED
STATEMENTS OF CASH FLOWS
(unaudited)
(dollars in
thousands)
|
|
|
|
Three months ended March
31,
|
|
2017
|
|
2016
|
Cash flows from
operating activities:
|
|
|
|
Net income
|
$
|
500,285
|
|
|
$
|
138,159
|
|
Adjustments to
reconcile net income to net cash provided by operating
activities:
|
|
|
|
Depreciation and
amortization
|
190,206
|
|
|
169,355
|
|
Goodwill and asset
impairment charges
|
39,366
|
|
|
77,000
|
|
Stock-based
compensation expense
|
9,601
|
|
|
13,097
|
|
Deferred income
taxes
|
20,091
|
|
|
47,519
|
|
Equity investment
income, net
|
1,423
|
|
|
5,238
|
|
Other non-cash
charges
|
9,467
|
|
|
11,507
|
|
Changes in operating
assets and liabilities, other than from acquisitions and
divestitures:
|
|
|
|
Accounts
receivable
|
16,168
|
|
|
(78,097)
|
|
Inventories
|
(8,909)
|
|
|
(4,924)
|
|
Other receivables and
other current assets
|
(84,511)
|
|
|
(75,326)
|
|
Other long-term
assets
|
(2,310)
|
|
|
(965)
|
|
Accounts
payable
|
(26,214)
|
|
|
7,782
|
|
Accrued compensation
and benefits
|
(62,825)
|
|
|
(32,909)
|
|
Other current
liabilities
|
(9,633)
|
|
|
55,673
|
|
Income
taxes
|
258,490
|
|
|
76,685
|
|
Other long-term
liabilities
|
14,479
|
|
|
19,208
|
|
Net cash provided by
operating activities
|
865,174
|
|
|
429,002
|
|
Cash flows from
investing activities:
|
|
|
|
Additions of property and
equipment
|
(214,535)
|
|
|
(173,187)
|
|
Acquisitions
|
(77,236)
|
|
|
(405,154)
|
|
Proceeds from asset and
business sales
|
46,612
|
|
|
4,657
|
|
Purchase of investments
available for sale
|
(2,358)
|
|
|
(4,435)
|
|
Purchase of investments
held-to-maturity
|
(121,670)
|
|
|
(228,198)
|
|
Proceeds from sale of
investments available for sale
|
4,025
|
|
|
5,155
|
|
Proceeds from investments
held-to-maturity
|
116,285
|
|
|
252,701
|
|
Purchase of equity
investments
|
(1,135)
|
|
|
(5,850)
|
|
Net cash used in
investing activities
|
(250,012)
|
|
|
(554,311)
|
|
Cash flows from
financing activities:
|
|
|
|
Borrowings
|
12,803,015
|
|
|
13,098,553
|
|
Payments on long-term debt
and other financing costs
|
(12,839,156)
|
|
|
(13,118,741)
|
|
Purchase of treasury
stock
|
—
|
|
|
(274,926)
|
|
Distributions to
noncontrolling interests
|
(43,316)
|
|
|
(50,409)
|
|
Stock award exercises and
other share issuances, net
|
3,330
|
|
|
3,167
|
|
Contributions from
noncontrolling interests
|
17,989
|
|
|
10,190
|
|
Proceeds from sales of
additional noncontrolling interests
|
—
|
|
|
3,557
|
|
Purchase of noncontrolling
interests
|
(799)
|
|
|
(4,300)
|
|
Deferred financing
costs
|
—
|
|
|
(188)
|
|
Net cash used in
financing activities
|
(58,937)
|
|
|
(333,097)
|
|
Effect of exchange
rate changes on cash and cash equivalents
|
2,820
|
|
|
717
|
|
Net increase
(decrease) in cash and cash equivalents
|
559,045
|
|
|
(457,689)
|
|
Cash and cash
equivalents at beginning of the year
|
913,187
|
|
|
1,499,116
|
|
Cash and cash
equivalents at end of the period
|
$
|
1,472,232
|
|
|
$
|
1,041,427
|
|
DAVITA
INC.
CONSOLIDATED
BALANCE SHEETS
(unaudited)
(dollars in
thousands, except per share data)
|
|
|
|
|
|
March 31,
2017
|
|
December 31,
2016
|
ASSETS
|
|
|
|
Cash and cash
equivalents
|
$
|
1,472,232
|
|
|
$
|
913,187
|
|
Short-term
investments
|
313,265
|
|
|
310,198
|
|
Accounts receivable,
less allowance of $242,462 and $252,056
|
1,900,561
|
|
|
1,917,302
|
|
Inventories
|
174,159
|
|
|
164,858
|
|
Other
receivables
|
539,656
|
|
|
453,483
|
|
Prepaid and other
current assets
|
204,027
|
|
|
210,604
|
|
Income taxes
receivable
|
—
|
|
|
10,596
|
|
Total current
assets
|
4,603,900
|
|
|
3,980,228
|
|
Property and
equipment, net of accumulated depreciation of $2,954,237 and
$2,832,160
|
3,171,199
|
|
|
3,175,367
|
|
Intangible assets,
net of accumulated amortization of $987,468 and $940,731
|
1,487,029
|
|
|
1,527,767
|
|
Equity
investments
|
521,848
|
|
|
502,389
|
|
Long-term
investments
|
108,368
|
|
|
103,679
|
|
Other long-term
assets
|
43,450
|
|
|
44,510
|
|
Goodwill
|
9,452,470
|
|
|
9,407,317
|
|
|
$
|
19,388,264
|
|
|
$
|
18,741,257
|
|
LIABILITIES AND
EQUITY
|
|
|
|
Accounts
payable
|
$
|
464,790
|
|
|
$
|
522,415
|
|
Other
liabilities
|
783,806
|
|
|
856,847
|
|
Accrued compensation
and benefits
|
756,002
|
|
|
815,761
|
|
Medical
payables
|
389,681
|
|
|
336,381
|
|
Current portion of
long-term debt
|
170,217
|
|
|
165,041
|
|
Income tax
payable
|
249,081
|
|
|
—
|
|
Total current
liabilities
|
2,813,577
|
|
|
2,696,445
|
|
Long-term
debt
|
8,918,878
|
|
|
8,947,327
|
|
Other long-term
liabilities
|
504,380
|
|
|
465,358
|
|
Deferred income
taxes
|
830,990
|
|
|
809,128
|
|
Total
liabilities
|
13,067,825
|
|
|
12,918,258
|
|
Commitments and
contingencies:
|
|
|
|
Noncontrolling
interests subject to put provisions
|
979,848
|
|
|
973,258
|
|
Equity:
|
|
|
|
Preferred stock
($0.001 par value, 5,000,000 shares authorized; none
issued)
|
|
|
|
Common stock ($0.001
par value, 450,000,000 shares authorized; 194,596,120
and 194,554,491 shares issued and
outstanding, respectively)
|
195
|
|
|
195
|
|
Additional paid-in
capital
|
1,058,610
|
|
|
1,027,182
|
|
Retained
earnings
|
4,158,010
|
|
|
3,710,313
|
|
Accumulated other
comprehensive loss
|
(76,886)
|
|
|
(89,643)
|
|
Total DaVita Inc.
shareholders' equity
|
5,139,929
|
|
|
4,648,047
|
|
Noncontrolling
interests not subject to put provisions
|
200,662
|
|
|
201,694
|
|
Total
equity
|
5,340,591
|
|
|
4,849,741
|
|
|
$
|
19,388,264
|
|
|
$
|
18,741,257
|
|
DAVITA
INC.
SUPPLEMENTAL
FINANCIAL DATA
(unaudited)
(dollars in
millions, except for per share and per treatment
data)
|
|
|
|
Three months
ended
|
|
March 31,
2017
|
|
December 31,
2016
|
|
March 31,
2016
|
1. Consolidated
Financial Results:
|
|
|
|
|
|
Consolidated net
revenues
|
$
|
3,697
|
|
|
$
|
3,716
|
|
|
$
|
3,581
|
|
Operating
income
|
$
|
888
|
|
|
$
|
381
|
|
|
$
|
365
|
|
Adjusted operating
income excluding certain items(1)
|
$
|
392
|
|
|
$
|
445
|
|
|
$
|
458
|
|
Operating income
margin
|
24.0
|
%
|
|
10.3
|
%
|
|
10.2
|
%
|
Adjusted operating
income margin excluding certain items(1) (5)
|
10.6
|
%
|
|
12.0
|
%
|
|
12.8
|
%
|
Net income
attributable to DaVita Inc.
|
$
|
448
|
|
|
$
|
158
|
|
|
$
|
97
|
|
Adjusted net income
attributable to DaVita Inc. excluding certain
items(1)
|
$
|
154
|
|
|
$
|
192
|
|
|
$
|
190
|
|
Diluted net income per
share attributable to DaVita Inc.
|
$
|
2.29
|
|
|
$
|
0.80
|
|
|
$
|
0.47
|
|
Adjusted diluted net
income per share attributable to DaVita Inc. excluding certain
items(1)
|
$
|
0.79
|
|
|
$
|
0.98
|
|
|
$
|
0.92
|
|
|
|
|
|
|
|
2. Consolidated
Business Metrics:
|
|
|
|
|
|
Expenses
|
|
|
|
|
|
General and
administrative expenses as a percent of consolidated net
revenues(2)
|
10.6
|
%
|
|
11.1
|
%
|
|
10.8
|
%
|
Consolidated effective
tax rate
|
36.5
|
%
|
|
32.3
|
%
|
|
47.9
|
%
|
Consolidated effective
tax rate attributable to DaVita Inc.(1)
|
39.1
|
%
|
|
36.3
|
%
|
|
56.5
|
%
|
Adjusted consolidated
effective tax rate attributable to DaVita
Inc.(1)
|
40.0
|
%
|
|
36.5
|
%
|
|
40.0
|
%
|
|
|
|
|
|
|
3. Summary of
Division Financial Results:
|
|
|
|
|
|
Net
revenues
|
|
|
|
|
|
Kidney
Care:
|
|
|
|
|
|
U.S. dialysis and
related lab services
|
$
|
2,271
|
|
|
$
|
2,323
|
|
|
$
|
2,227
|
|
Ancillary services and
strategic initiatives, including international dialysis operations:
|
|
|
|
|
|
U.S. ancillary
services and strategic initiatives
|
315
|
|
|
338
|
|
|
345
|
|
International
dialysis
|
63
|
|
|
58
|
|
|
46
|
|
|
378
|
|
|
396
|
|
|
391
|
|
Elimination of
intersegment
|
(39)
|
|
|
(40)
|
|
|
(26)
|
|
Total Kidney
Care
|
2,610
|
|
|
2,679
|
|
|
2,592
|
|
DMG
|
1,087
|
|
|
1,037
|
|
|
989
|
|
Total net consolidated
revenues
|
$
|
3,697
|
|
|
$
|
3,716
|
|
|
$
|
3,581
|
|
Operating income
(loss)
|
|
|
|
|
|
Kidney
Care:
|
|
|
|
|
|
U.S. Dialysis and
related lab services
|
$
|
945
|
|
|
$
|
436
|
|
|
$
|
440
|
|
Other - Ancillary
services and strategic initiatives, including international dialysis
operations:
|
|
|
|
|
|
U.S. ancillary
services and strategic initiatives
|
(53)
|
|
|
(59)
|
|
|
(1)
|
|
International
dialysis
|
(5)
|
|
|
(14)
|
|
|
(10)
|
|
|
(58)
|
|
|
(73)
|
|
|
(11)
|
|
Corporate support and
related long-term incentive compensation
|
(11)
|
|
|
—
|
|
|
(7)
|
|
Reduction of a
receivable associated with the DMG acquisition escrow provision
|
—
|
|
|
(4)
|
|
|
—
|
|
Total Kidney
Care
|
876
|
|
|
359
|
|
|
422
|
|
DMG
|
12
|
|
|
22
|
|
|
(57)
|
|
Total consolidated
operating income
|
$
|
888
|
|
|
$
|
381
|
|
|
$
|
365
|
|
DAVITA
INC.
SUPPLEMENTAL
FINANCIAL DATA-continued
(unaudited)
(dollars in
millions, except for per share and per treatment
data)
|
|
|
|
Three months
ended
|
|
March 31,
2017
|
|
December 31,
2016
|
|
March 31,
2016
|
4. Summary of
Reportable Segment Financial Results:
|
|
|
|
|
|
U.S. Dialysis
and Related Lab Services
|
|
|
|
|
|
Revenue:
|
|
|
|
|
|
Patient services
revenues
|
$
|
2,373
|
|
|
$
|
2,427
|
|
|
$
|
2,328
|
|
Provision for
uncollectible accounts
|
(107)
|
|
|
(109)
|
|
|
(105)
|
|
Net patient service
operating revenues
|
2,266
|
|
|
2,318
|
|
|
2,223
|
|
Other
revenues
|
5
|
|
|
5
|
|
|
4
|
|
Total net operating
revenues
|
2,271
|
|
|
2,323
|
|
|
2,227
|
|
Operating
expenses:
|
|
|
|
|
|
Patient care
costs
|
1,548
|
|
|
1,568
|
|
|
1,496
|
|
General and
administrative
|
188
|
|
|
199
|
|
|
179
|
|
Depreciation and
amortization
|
125
|
|
|
124
|
|
|
116
|
|
Equity investment
income
|
(8)
|
|
|
(4)
|
|
|
(4)
|
|
Gain on settlement,
net
|
(527)
|
|
|
—
|
|
|
—
|
|
Total operating
expenses
|
1,326
|
|
|
1,887
|
|
|
1,787
|
|
Segment operating
income
|
$
|
945
|
|
|
$
|
436
|
|
|
$
|
440
|
|
Reconciliation
for non-GAAP measure:
|
|
|
|
|
|
Less:
|
|
|
|
|
|
Gain on settlement,
net
|
(527)
|
|
|
—
|
|
|
—
|
|
Equity investment
income related to gain on settlement
|
(3)
|
|
|
—
|
|
|
—
|
|
Adjusted segment
operating income(1)
|
$
|
415
|
|
|
$
|
436
|
|
|
$
|
440
|
|
|
|
|
|
|
|
DMG
|
|
|
|
|
|
Revenue:
|
|
|
|
|
|
DMG capitated
revenues
|
$
|
890
|
|
|
$
|
845
|
|
|
$
|
866
|
|
Patient services
revenues
|
185
|
|
|
179
|
|
|
116
|
|
Provision for
uncollectible accounts
|
(6)
|
|
|
(6)
|
|
|
(4)
|
|
Net patient service
operating revenues
|
179
|
|
|
173
|
|
|
112
|
|
Other
revenues
|
18
|
|
|
19
|
|
|
11
|
|
Total net operating
revenues
|
$
|
1,087
|
|
|
$
|
1,037
|
|
|
$
|
989
|
|
Operating
expenses:
|
|
|
|
|
|
Patient care
costs
|
$
|
892
|
|
|
$
|
834
|
|
|
$
|
794
|
|
General and
administrative
|
129
|
|
|
123
|
|
|
127
|
|
Depreciation and
amortization
|
57
|
|
|
58
|
|
|
46
|
|
Goodwill and asset
impairment charges
|
—
|
|
|
—
|
|
|
77
|
|
Equity investment
(income) loss
|
(3)
|
|
|
—
|
|
|
2
|
|
Total operating
expenses
|
1,075
|
|
|
1,015
|
|
|
1,046
|
|
Segment operating
income (loss)
|
$
|
12
|
|
|
$
|
22
|
|
|
$
|
(57)
|
|
Reconciliation
for non-GAAP measure:
|
|
|
|
|
|
Add:
|
|
|
|
|
|
Goodwill impairment
charge
|
—
|
|
|
—
|
|
|
77
|
|
Accrual for legal
matters
|
—
|
|
|
—
|
|
|
16
|
|
Adjusted segment
operating income(1)
|
$
|
12
|
|
|
$
|
22
|
|
|
$
|
36
|
|
DAVITA
INC.
SUPPLEMENTAL
FINANCIAL DATA-continued
(unaudited)
(dollars in
millions, except for per share and per treatment
data)
|
|
|
|
Three months
ended
|
|
March 31,
2017
|
|
December 31,
2016
|
|
March 31,
2016
|
5. U.S.
Dialysis and Related Lab Services Business
Metrics:
|
|
|
|
|
|
Volume
|
|
|
|
|
|
Treatments
|
6,804,384
|
|
|
6,889,069
|
|
|
6,639,874
|
|
Number of treatment
days
|
77.0
|
|
|
79.0
|
|
|
77.9
|
|
Treatments per
day
|
88,369
|
|
|
87,203
|
|
|
85,236
|
|
Per day year over year
increase
|
3.7
|
%
|
|
3.7
|
%
|
|
4.3
|
%
|
Normalized
non-acquired treatment growth year over year
|
3.8
|
%
|
|
4.0
|
%
|
|
4.1
|
%
|
Operating
revenues before provision for uncollectible
accounts
|
|
|
|
|
|
Dialysis and related
lab services revenue per treatment
|
$
|
348.70
|
|
|
$
|
352.38
|
|
|
$
|
350.60
|
|
Per treatment
(decrease) increase from previous quarter
|
(1.0)
|
%
|
|
(0.1)
|
%
|
|
0.7
|
%
|
Per treatment
(decrease) increase from previous year
|
(0.5)
|
%
|
|
1.2
|
%
|
|
1.4
|
%
|
Percent of
consolidated net revenues
|
60.8
|
%
|
|
61.9
|
%
|
|
61.8
|
%
|
Expenses
|
|
|
|
|
|
Patient care
costs
|
|
|
|
|
|
Percent of total
segment operating net revenues
|
68.1
|
%
|
|
67.5
|
%
|
|
67.2
|
%
|
Per
treatment
|
$
|
227.47
|
|
|
$
|
227.68
|
|
|
$
|
225.30
|
|
Per treatment
(decrease) increase from previous quarter
|
(0.1)%
|
|
|
0.2
|
%
|
|
2.5
|
%
|
Per treatment increase
from previous year
|
1.0
|
%
|
|
3.6
|
%
|
|
1.0
|
%
|
General and
administrative expenses
|
|
|
|
|
|
Percent of total
segment operating net revenues
|
8.3
|
%
|
|
8.5
|
%
|
|
8.0
|
%
|
Per
treatment
|
$
|
27.65
|
|
|
$
|
28.82
|
|
|
$
|
26.97
|
|
Per treatment
(decrease) increase from previous quarter
|
(4.1)
|
%
|
|
5.3
|
%
|
|
(0.9)
|
%
|
Per treatment increase
(decrease) from previous year
|
2.5
|
%
|
|
5.9
|
%
|
|
(7.8)
|
%
|
Accounts
receivable
|
|
|
|
|
|
Net
receivables
|
$
|
1,335
|
|
|
$
|
1,358
|
|
|
$
|
1,297
|
|
DSO
|
54
|
|
|
55
|
|
|
54
|
|
Provision for
uncollectible accounts as a percentage of revenues
|
4.5
|
%
|
|
4.5
|
%
|
|
4.5
|
%
|
|
|
|
|
|
|
6. DMG Business
Metrics:
|
|
|
|
|
|
Capitated
membership
|
|
|
|
|
|
Total
members
|
735,400
|
|
|
749,300
|
|
|
787,100
|
|
Total member
months
|
|
|
|
|
|
Senior
|
920,200
|
|
|
913,300
|
|
|
975,300
|
|
Commercial
|
995,900
|
|
|
1,018,400
|
|
|
1,048,600
|
|
Medicaid
|
305,200
|
|
|
318,800
|
|
|
342,500
|
|
Total member
months
|
2,221,300
|
|
|
2,250,500
|
|
|
2,366,400
|
|
Capitated
revenues by sources
|
|
|
|
|
|
Senior
revenues
|
$
|
660
|
|
|
$
|
617
|
|
|
$
|
648
|
|
Commercial
revenues
|
188
|
|
|
175
|
|
|
172
|
|
Medicaid
revenues
|
42
|
|
|
53
|
|
|
46
|
|
Total capitated
revenues
|
$
|
890
|
|
|
$
|
845
|
|
|
$
|
866
|
|
DAVITA
INC.
SUPPLEMENTAL
FINANCIAL DATA-continued
(unaudited)
(dollars in
millions, except for per share and per treatment
data)
|
|
|
|
Three months
ended
|
|
March 31,
2017
|
|
December 31,
2016
|
|
March 31,
2016
|
6. DMG Business
Metrics: (continued)
|
|
|
|
|
|
Other
|
|
|
|
|
|
Total care dollars
under management(1)
|
$
|
1,342
|
|
|
$
|
1,295
|
|
|
$
|
1,272
|
|
Ratio of operating
income (loss) to total care dollars under management(1)
|
0.9
|
%
|
|
1.7
|
%
|
|
(4.5)
|
%
|
Ratio of adjusted
operating income to total care dollars under management(1)(6)
|
0.9
|
%
|
|
1.7
|
%
|
|
2.8
|
%
|
|
|
|
|
|
|
7. Cash
Flow:
|
|
|
|
|
|
Operating cash
flow
|
$
|
865.2
|
|
|
$
|
482.2
|
|
|
$
|
429.0
|
|
Operating cash flow,
last twelve months
|
$
|
2,399.6
|
|
|
$
|
1,963.4
|
|
|
$
|
1,576.1
|
|
Free cash
flow(1)
|
$
|
733.7
|
|
|
$
|
329.4
|
|
|
$
|
305.3
|
|
Free cash flow, last
twelve months(1)
|
$
|
1,840.7
|
|
|
$
|
1,412.3
|
|
|
$
|
1,041.2
|
|
Capital
expenditures:
|
|
|
|
|
|
Routine
maintenance/IT/other
|
$
|
88.1
|
|
|
$
|
105.4
|
|
|
$
|
73.3
|
|
Development and
relocations
|
$
|
126.4
|
|
|
$
|
148.5
|
|
|
$
|
99.9
|
|
Acquisition
expenditures
|
$
|
77.2
|
|
|
$
|
66.5
|
|
|
$
|
405.2
|
|
|
|
|
|
|
|
8. Debt and
Capital Structure:
|
|
|
|
|
|
Total
debt(3)
|
$
|
9,165
|
|
|
$
|
9,192
|
|
|
$
|
9,210
|
|
Net debt, net of cash
and cash equivalents(3)
|
$
|
7,693
|
|
|
$
|
8,279
|
|
|
$
|
8,168
|
|
Leverage ratio (see
calculation on page 15)
|
3.03x
|
|
|
3.16x
|
|
|
3.07x
|
|
Overall weighted
average effective interest rate during the quarter
|
4.55
|
%
|
|
4.49
|
%
|
|
4.40
|
%
|
Overall weighted
average effective interest rate at end of the quarter
|
4.64
|
%
|
|
4.52
|
%
|
|
4.40
|
%
|
Weighted average
effective interest rate on the senior secured credit facilities at end of the
quarter
|
3.95
|
%
|
|
3.68
|
%
|
|
3.46
|
%
|
Fixed and economically
fixed interest rates as a percentage of our total debt
|
53
|
%
|
|
53
|
%
|
|
60
|
%(4)
|
Fixed and economically
fixed interest rates, including our interest rate cap agreements, as a percentage of our total
debt
|
91
|
%
|
|
91
|
%
|
|
90
|
%(4)
|
Certain columns, rows
or percentages may not add 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)
|
Consolidated
percentages of revenues are comprised of the dialysis and related
lab services business, DMG's business and other ancillary services
and strategic initiatives. General and administrative expenses
includes certain corporate support and long-term incentive
compensation, as well as an adjustment to reduce the receivable
associated with the DMG acquisition escrow provision relating to an
income tax item for the fourth quarter of 2016, and the estimated
accruals for certain legal matters for the fourth quarter of 2016
and first quarter of 2016.
|
|
|
(3)
|
The reported balance
sheet amounts at March 31, 2017, December 31, 2016, and March 31,
2016, exclude $75.9 million, $79.9 million and $92.0 million,
respectively, of a debt discount associated with our Term Loan A,
Term Loan B and senior notes, and other deferred financing
costs.
|
|
|
(4)
|
The Term Loan B is
subject to a LIBOR floor of 0.75%. At March 31, 2017, the actual
LIBOR-based variable component of our interest rate exceeded 0.75%
on the Term Loan B, and was subject to LIBOR-based interest rate
volatility on the LIBOR variable component of our interest rate on
all of the Term Loan B. However, we are limited to a maximum rate
of 3.50% on the outstanding principal debt on the Term Loan B as a
result of interest rate cap agreements. Actual LIBOR, for the three
months ended March 31, 2016 was lower than the embedded LIBOR floor
during such period and the interest rate on the Term Loan B was set
at its floor during such period. The Term Loan A bears interest at
LIBOR plus an interest margin of 2.00%. We are limited to a maximum
rate of 3.50% on $96.3 million of the Term Loan A as a result of
interest rate cap agreements. In addition, the uncapped portion of
the Term Loan A, which is subject to the variability of LIBOR, is
$747.5 million.
|
|
|
(5)
|
Adjusted operating
income margin is a calculation of adjusted operating income divided
by consolidated net revenues.
|
|
|
(6)
|
Ratio of adjusted
operating income to total care dollars under management is a
calculation of adjusted operating income divided by total care
dollars under management.
|
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). 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 March 31,
2017
|
Net income
attributable to DaVita Inc.
|
$
|
1,230,137
|
|
Income
taxes
|
616,756
|
|
Interest
expense
|
384,501
|
|
Depreciation and
amortization
|
741,104
|
|
Goodwill and other
asset impairment charges
|
258,774
|
|
Noncontrolling
interests and equity investment income, net
|
178,108
|
|
Stock-settled
stock-based compensation
|
34,682
|
|
Gain on changes in
ownership interest, net
|
(410,438)
|
|
Gain on settlement,
net
|
(529,504)
|
|
Other
|
(2,908)
|
|
"Consolidated
EBITDA"
|
$
|
2,501,212
|
|
|
|
|
March 31,
2017
|
Total debt, excluding
debt discount and other deferred financing costs of $75.9
million
|
$
|
9,164,957
|
|
Letters of credit
issued
|
95,909
|
|
|
$
|
9,260,866
|
|
Less: Cash and cash
equivalents including short-term investments (excluding
DMG's physician owned entities
cash)
|
(1,675,454)
|
|
Consolidated net
debt
|
$
|
7,585,412
|
|
Last twelve months
"Consolidated EBITDA"
|
$
|
2,501,212
|
|
Leverage
ratio
|
3.03x
|
|
Certain columns, rows
or percentages may not add or recalculate due to the use of rounded
numbers.
|
In accordance with the Credit Agreement, the Company's
leverage ratio cannot exceed 4.50 to 1.00 as of March 31, 2017. At that date the Company's
leverage ratio did not exceed 4.50 to 1.00.
DAVITA INC.
RECONCILIATIONS FOR
NON-GAAP MEASURES
(unaudited)
(dollars in
thousands except for per share data)
Note 2: Adjusted net income and adjusted
diluted net income per share attributable to DaVita Inc.
We believe that adjusted net income and adjusted diluted net
income per share attributable to DaVita Inc., excluding a net
settlement gain, a gain on the APAC JV ownership changes, goodwill
and other asset impairment charges, an adjustment to reduce a
receivable associated with the DMG acquisition escrow provision
relating to an income tax item, and estimated accruals for certain
legal matters, enhances a user's understanding of our normal net
income attributable to DaVita Inc. and diluted net income per share
attributable to DaVita Inc. for these periods by providing a
measure that is meaningful because it excludes certain items which
we do not believe are indicative of our ordinary results, and
accordingly, is comparable to prior periods and indicative of
normal net income attributable to DaVita Inc. and diluted net
income per share attributable to DaVita Inc. These measures are not
measures of financial performance under GAAP and should not be
considered as an alternative to net income attributable to DaVita
Inc. and diluted net income per share attributable to DaVita
Inc.
|
Three months
ended
|
|
March 31,
2017
|
|
December 31,
2016
|
|
March 31,
2016
|
Net income
attributable to DaVita Inc.
|
$
|
447,697
|
|
|
$
|
157,726
|
|
|
$
|
97,434
|
|
Gain on settlement,
net
|
(526,827)
|
|
|
—
|
|
|
—
|
|
Equity investment
income related to gain on settlement
|
(2,677)
|
|
|
—
|
|
|
—
|
|
Gain on APAC JV
ownership changes
|
(6,273)
|
|
|
—
|
|
|
—
|
|
Goodwill impairment
charges
|
24,198
|
|
|
28,415
|
|
|
77,000
|
|
Impairment of
assets
|
15,168
|
|
|
—
|
|
|
—
|
|
Impairment of minority
equity investment
|
—
|
|
|
14,993
|
|
|
—
|
|
Accruals for legal
matters
|
—
|
|
|
15,770
|
|
|
16,000
|
|
Reduction in the
receivable associated with the DMG acquisition escrow provision
|
—
|
|
|
3,894
|
|
|
—
|
|
Noncontrolling
interests associated with adjustments
|
|
|
|
|
|
Goodwill impairment
charges
|
(6,880)
|
|
|
(8,078)
|
|
|
—
|
|
Gain on settlement,
net
|
24,029
|
|
|
—
|
|
|
—
|
|
Related income
tax
|
185,162
|
|
|
(20,686)
|
|
|
—
|
|
Adjusted net income
attributable to DaVita Inc.
|
$
|
153,597
|
|
|
$
|
192,034
|
|
|
$
|
190,434
|
|
Certain columns, rows
or percentages may not add or recalculate due to the use of rounded
numbers.
|
DAVITA
INC.
RECONCILIATIONS
FOR NON-GAAP MEASURES - (continued)
(unaudited)
(dollars in
thousands except for per share data)
|
|
|
|
Three months
ended
|
|
March 31,
2017
|
|
December 31,
2016
|
|
March 31,
2016
|
Diluted net income
per share attributable to DaVita Inc.
|
$
|
2.29
|
|
|
$
|
0.80
|
|
|
$
|
0.47
|
|
Gain on settlement,
net
|
(2.70)
|
|
|
—
|
|
|
—
|
|
Equity investment
income related to gain on settlement
|
(0.01)
|
|
|
—
|
|
|
—
|
|
Gain on APAC JV
ownership changes
|
(0.03)
|
|
|
—
|
|
|
—
|
|
Goodwill impairment
charges
|
0.12
|
|
|
0.15
|
|
|
0.37
|
|
Impairment of
assets
|
0.08
|
|
|
—
|
|
|
—
|
|
Impairment of minority
equity investment
|
—
|
|
|
0.08
|
|
|
—
|
|
Accruals for legal
matters
|
—
|
|
|
0.08
|
|
|
0.08
|
|
Reduction in the
receivable associated with the DMG acquisition escrow provision
|
—
|
|
|
0.02
|
|
|
—
|
|
Noncontrolling
interests associated with adjustments
|
|
|
|
|
|
Goodwill impairment
charges
|
(0.03)
|
|
|
(0.04)
|
|
|
—
|
|
Gain on settlement,
net
|
0.12
|
|
|
—
|
|
|
—
|
|
Related income
tax
|
0.95
|
|
|
(0.11)
|
|
|
—
|
|
Adjusted diluted net
income per share attributable to DaVita Inc.
|
$
|
0.79
|
|
|
$
|
0.98
|
|
|
$
|
0.92
|
|
Certain columns, rows
or percentages may not add or recalculate due to the use of rounded
numbers.
|
DAVITA INC.
RECONCILIATIONS FOR
NON-GAAP MEASURES -
(continued)
(unaudited)
(dollars in thousands
except for per share data)
In addition, we have excluded amortization of intangible assets
associated with acquisitions from our adjusted net income
attributable to DaVita Inc., net of tax, and from our adjusted
diluted net income per share attributable to DaVita Inc. as we
believe this presentation enhances a user's understanding of our
operating results for these periods by providing a different
reflection of the Company's operating performance since it excludes
the amortization of intangible assets that relate to the fair value
measurement of acquired intangible assets associated with our
acquisitions, and accordingly is indicative of consistent adjusted
net income excluding amortization of acquired intangibles,
attributable to DaVita Inc. and diluted net income per share
attributable to DaVita Inc. These measures are not measures of
financial performance under GAAP and should not be considered as an
alternative to net income attributable to DaVita Inc. and diluted
net income per share attributable to DaVita Inc.
|
Three months
ended
|
|
March 31,
2017
|
|
December 31,
2016
|
|
March 31,
2016
|
Adjusted net income
attributable to DaVita Inc.
|
$
|
153,597
|
|
|
$
|
192,034
|
|
|
$
|
190,434
|
|
Add:
|
|
|
|
|
|
Amortization of intangible assets associated with acquisitions
for the dialysis and ancillary
operations
|
3,725
|
|
|
3,480
|
|
|
3,809
|
|
Amortization of intangible assets associated with acquisitions
for the DMG operations
|
43,955
|
|
|
44,290
|
|
|
36,078
|
|
Less: Related income
tax
|
(19,072)
|
|
|
(17,436)
|
|
|
(15,955)
|
|
|
$
|
182,205
|
|
|
$
|
222,368
|
|
|
$
|
214,366
|
|
|
|
|
|
|
|
Adjusted diluted net
income per share attributable to DaVita Inc.
|
$
|
0.79
|
|
|
$
|
0.98
|
|
|
$
|
0.92
|
|
Add:
|
|
|
|
|
|
Amortization of
intangible assets per share associated with acquisitions for the dialysis and ancillary
operations
|
0.02
|
|
|
0.02
|
|
|
0.02
|
|
Amortization of
intangible assets per share associated with acquisitions for the DMG
operations
|
0.22
|
|
|
0.22
|
|
|
0.17
|
|
Tax effect of
adjustments
|
(0.10)
|
|
|
(0.09)
|
|
|
(0.08)
|
|
|
$
|
0.93
|
|
|
$
|
1.13
|
|
|
$
|
1.03
|
|
Certain columns, rows
or percentages may not add or recalculate due to the use of rounded
numbers.
|
DAVITA INC.
RECONCILIATIONS FOR
NON-GAAP MEASURES
(unaudited)
(dollars in
thousands)
Note 3: Adjusted operating income.
Adjusted operating income is defined as operating income before
certain items we do not believe are indicative of ordinary results,
including a net settlement gain, a gain on the APAC JV
ownership changes, goodwill and other asset impairment charges, an
adjustment to reduce a receivable associated with the DMG
acquisition escrow provision relating to an income tax item, and
estimated accruals for certain legal matters.
We use adjusted operating income as a measure to assess
operating and financial performance. We believe that this measure
enhances a user's understanding of the normal operating income and
of our consolidated enterprise and of our individual reportable
segments.
Adjusted operating income is not a measure of financial
performance computed in accordance with GAAP and should not be
considered in isolation nor as a substitute for operating income,
net income, cash flows from operations, or other statement of
operations or cash flow data prepared in conformity with GAAP, or
as a measure of profitability or liquidity. In addition, the
calculation of adjusted operating income is susceptible to varying
interpretations and calculations, and the amounts presented may not
be comparable to similarly titled measures of other companies.
Adjusted operating income may not be indicative of historical
operating results, and we do not intend these calculations to be
predictive of future results of operations or cash flows.
|
Three months
ended
|
|
March 31,
2017
|
|
December 31,
2016
|
|
March 31,
2016
|
Consolidated:
|
|
|
|
|
|
Operating
income
|
$
|
888,236
|
|
|
$
|
381,428
|
|
|
$
|
364,889
|
|
Gain on settlement,
net
|
(526,827)
|
|
|
—
|
|
|
—
|
|
Equity investment
income related to gain on settlement
|
(2,677)
|
|
|
—
|
|
|
—
|
|
Gain on APAC JV
ownership changes
|
(6,273)
|
|
|
—
|
|
|
—
|
|
Goodwill impairment
charges
|
24,198
|
|
|
28,415
|
|
|
77,000
|
|
Impairment of
assets
|
15,168
|
|
|
—
|
|
|
—
|
|
Impairment of minority
equity investment
|
—
|
|
|
14,993
|
|
|
—
|
|
Accruals for legal
matters
|
—
|
|
|
15,770
|
|
|
16,000
|
|
Reduction in the
receivable associated with the DMG acquisition escrow provision
|
—
|
|
|
3,894
|
|
|
—
|
|
Adjusted operating
income
|
$
|
391,825
|
|
|
$
|
444,500
|
|
|
$
|
457,889
|
|
Certain columns, rows
or percentages may not add or recalculate due to the use of rounded
numbers.
|
DAVITA
INC.
RECONCILIATIONS
FOR NON-GAAP MEASURES
(unaudited)
(dollars in
thousands)
|
|
|
|
Three months
ended
|
|
March 31,
2017
|
|
December 31,
2016
|
|
March 31,
2016
|
Kidney
Care:
|
|
|
|
|
|
U.S. dialysis and
related lab services:
|
|
|
|
|
|
Segment operating
income
|
$
|
944,740
|
|
|
$
|
435,581
|
|
|
$
|
440,055
|
|
Less:
|
|
|
|
|
|
Gain on settlement,
net
|
(526,827)
|
|
|
—
|
|
|
—
|
|
Equity investment
income related to gain on settlement
|
(2,677)
|
|
|
—
|
|
|
—
|
|
Adjusted operating
income
|
$
|
415,236
|
|
|
$
|
435,581
|
|
|
$
|
440,055
|
|
Other - Ancillary
services and strategic initiatives:
|
|
|
|
|
|
U.S. ancillary
services and strategic initiatives
|
|
|
|
|
|
Segment operating
loss
|
$
|
(53,027)
|
|
|
$
|
(58,562)
|
|
|
$
|
(1,354)
|
|
Add:
|
|
|
|
|
|
Goodwill impairment
charges
|
24,198
|
|
|
28,415
|
|
|
—
|
|
Impairment of
assets
|
15,168
|
|
|
—
|
|
|
—
|
|
Accruals for legal
matters
|
—
|
|
|
15,770
|
|
|
—
|
|
Adjusted operating
loss
|
$
|
(13,661)
|
|
|
$
|
(14,377)
|
|
|
$
|
(1,354)
|
|
International
dialysis
|
|
|
|
|
|
Segment operating
loss
|
$
|
(5,193)
|
|
|
$
|
(13,273)
|
|
|
$
|
(9,746)
|
|
Add: Impairment of
minority equity investment
|
—
|
|
|
14,993
|
|
|
—
|
|
Less: Gain on APAC JV
ownership changes
|
(6,273)
|
|
|
—
|
|
|
—
|
|
Adjusted operating
(loss) income
|
$
|
(11,466)
|
|
|
$
|
1,720
|
|
|
$
|
(9,746)
|
|
Adjusted operating
loss
|
$
|
(25,127)
|
|
|
$
|
(12,657)
|
|
|
$
|
(11,100)
|
|
Corporate
administrative support:
|
|
|
|
|
|
Segment operating
loss
|
$
|
(10,592)
|
|
|
$
|
(4,195)
|
|
|
$
|
(6,921)
|
|
Add: Reduction in the
receivable associated with the DMG
acquisition escrow provision
|
—
|
|
|
3,894
|
|
|
—
|
|
Adjusted operating
loss
|
$
|
(10,592)
|
|
|
$
|
(301)
|
|
|
$
|
(6,921)
|
|
Kidney Care adjusted
operating income
|
$
|
379,517
|
|
|
$
|
422,623
|
|
|
$
|
422,034
|
|
DMG:
|
|
|
|
|
|
Segment operating
income (loss)
|
$
|
12,308
|
|
|
$
|
21,877
|
|
|
$
|
(57,145)
|
|
Add:
|
|
|
|
|
|
Goodwill impairment
charges
|
—
|
|
|
—
|
|
|
77,000
|
|
Accruals for legal
matters
|
—
|
|
|
—
|
|
|
16,000
|
|
DMG adjusted operating
income
|
$
|
12,308
|
|
|
$
|
21,877
|
|
|
$
|
35,855
|
|
Consolidated adjusted
operating income
|
$
|
391,825
|
|
|
$
|
444,500
|
|
|
$
|
457,889
|
|
Certain columns, rows
or percentages may not add or recalculate due to the use of rounded
numbers.
|
DAVITA INC.
RECONCILIATIONS FOR
NON-GAAP MEASURES
(unaudited)
(dollars in
thousands)
Note 4: Effective income tax rates and
adjusted effective income tax rates.
We believe that reporting the effective income tax rate
attributable to DaVita Inc. as well as the adjusted effective
income tax rate attributable to DaVita Inc., excluding a net
settlement gain, a gain on the APAC JV ownership changes, goodwill
and other asset impairment charges, an adjustment to reduce a
receivable associated with the DMG acquisition escrow provision
relating to an income tax item, and estimated accruals for certain
legal matters, net of tax, enhances a user's understanding of
DaVita Inc.'s effective income tax rate and DaVita Inc.'s adjusted
effective income tax rate for the periods presented because it
excludes noncontrolling owners' income that primarily relates to
non-tax paying entities and certain non-deductible charges which we
do not believe are indicative of our ordinary results, and,
therefore, these adjusted measures are meaningful to a user to
fully understand the related income tax effects on DaVita Inc.'s
operating results. These are not measures under GAAP and should not
be considered as an alternative to the effective income tax rate
calculated in accordance with GAAP.
Effective income tax rate as compared to the effective income
tax rate attributable to DaVita Inc. is as follows:
|
Three months
ended
|
|
March 31,
2017
|
|
December 31,
2016
|
|
March 31,
2016
|
Income before income
taxes
|
$
|
788,050
|
|
|
$
|
278,072
|
|
|
$
|
264,981
|
|
Income tax
expense
|
$
|
287,765
|
|
|
$
|
89,802
|
|
|
$
|
126,822
|
|
Effective income tax
rate
|
36.5
|
%
|
|
32.3
|
%
|
|
47.9
|
%
|
|
|
|
|
|
Three months
ended
|
|
March 31,
2017
|
|
December 31,
2016
|
|
March 31,
2016
|
Income before income
taxes
|
$
|
788,050
|
|
|
$
|
278,072
|
|
|
$
|
264,981
|
|
Less:
Noncontrolling owners' income primarily attributable to non-tax paying entities
|
(52,653)
|
|
|
(30,646)
|
|
|
(40,797)
|
|
Income before income
taxes attributable to DaVita Inc.
|
$
|
735,397
|
|
|
$
|
247,426
|
|
|
$
|
224,184
|
|
|
|
|
|
|
|
Income tax
expense
|
$
|
287,765
|
|
|
$
|
89,802
|
|
|
$
|
126,822
|
|
Less: Income tax
attributable to noncontrolling interests
|
(65)
|
|
|
(102)
|
|
|
(72)
|
|
Income tax expense
attributable to DaVita Inc.
|
$
|
287,700
|
|
|
$
|
89,700
|
|
|
$
|
126,750
|
|
|
|
|
|
|
|
Effective income tax
rate attributable to DaVita Inc.
|
39.1
|
%
|
|
36.3
|
%
|
|
56.5
|
%
|
Certain columns, rows
or percentages may not add or recalculate due to the use of rounded
numbers.
|
DAVITA INC.
RECONCILIATIONS FOR
NON-GAAP MEASURES
(unaudited)
(dollars in
thousands)
Adjusted effective income tax rate as compared to the adjusted
effective income tax rate attributable to DaVita Inc. is as
follows:
|
Three months
ended
|
March 31,
2017
|
|
December 31,
2016
|
|
March 31,
2016
|
Income before income
taxes
|
$
|
788,050
|
|
|
$
|
278,072
|
|
|
$
|
264,981
|
|
Goodwill impairment
charges
|
24,198
|
|
|
28,415
|
|
|
77,000
|
|
Impairment of
assets
|
15,168
|
|
|
—
|
|
|
—
|
|
Accruals for legal
matters
|
—
|
|
|
15,770
|
|
|
16,000
|
|
Impairment of minority
equity investment
|
—
|
|
|
14,993
|
|
|
—
|
|
Reduction in the
receivable associated with the DMG
acquisition escrow provision
|
—
|
|
|
3,894
|
|
|
—
|
|
Gain on settlement,
net
|
(526,827)
|
|
|
—
|
|
|
—
|
|
Equity investment
income related to gain on settlement
|
(2,677)
|
|
|
—
|
|
|
—
|
|
Gain on APAC JV
ownership changes
|
(6,273)
|
|
|
—
|
|
|
—
|
|
Noncontrolling
owners' income primarily attributable to non-tax
paying
entities
|
(52,653)
|
|
|
(30,646)
|
|
|
(40,797)
|
|
Noncontrolling
interests associated with adjustments
|
|
|
|
|
|
Goodwill impairment
charges
|
(6,880)
|
|
|
(8,078)
|
|
|
—
|
|
Gain on settlement,
net
|
24,029
|
|
|
—
|
|
|
—
|
|
Adjusted income
before income taxes attributable to DaVita Inc.
|
$
|
256,135
|
|
|
$
|
302,420
|
|
|
$
|
317,184
|
|
|
|
|
|
|
|
Income tax
expense
|
$
|
287,765
|
|
|
$
|
89,802
|
|
|
$
|
126,822
|
|
Add income tax
related to:
|
|
|
|
|
|
Goodwill impairment
charges
|
6,568
|
|
|
7,342
|
|
|
—
|
|
Impairment of
assets
|
5,752
|
|
|
—
|
|
|
—
|
|
Reduction in
receivable associated with the DMG acquisition escrow provision
|
—
|
|
|
3,894
|
|
|
—
|
|
Accruals for legal
matters
|
—
|
|
|
4,090
|
|
|
—
|
|
Impairment of minority
equity investment
|
—
|
|
|
5,360
|
|
|
—
|
|
Less income tax
related to:
|
|
|
|
|
|
Gain on settlement,
net
|
(197,482)
|
|
|
—
|
|
|
—
|
|
Noncontrolling
interests
|
(65)
|
|
|
(102)
|
|
|
(72)
|
|
Adjusted income tax
attributable to DaVita Inc.
|
$
|
102,538
|
|
|
$
|
110,386
|
|
|
$
|
126,750
|
|
Adjusted effective
income tax rate attributable to DaVita Inc.
|
40.0
|
%
|
|
36.5
|
%
|
|
40.0
|
%
|
Certain columns, rows
or percentages may not add or recalculate due to the use of rounded
numbers.
|
DAVITA INC.
RECONCILIATIONS FOR
NON-GAAP MEASURES
(unaudited)
(dollars in
thousands)
Note 5: Free cash flow.
Free cash flow represents net cash provided by operating
activities less distributions to noncontrolling interests and
capital expenditures for routine maintenance and information
technology. We believe free cash flow is a useful adjunct to cash
flow from operating activities and other measurements under GAAP,
since free cash flow is a meaningful measure of our ability to fund
acquisitions and development activities and meet our debt service
requirements. In addition, free cash flow excluding distributions
to noncontrolling interests provides a user with an understanding
of free cash flows that are attributable to DaVita Inc. Free cash
flow is not a measure of financial performance under GAAP and
should not be considered as an alternative to cash flows from
operating, investing or financing activities, as an indicator of
cash flows or as a measure of liquidity.
|
Three months
ended
|
|
March 31,
2017
|
|
December 31,
2016
|
|
March 31,
2016
|
Cash provided by
operating activities
|
$
|
865,174
|
|
|
$
|
482,182
|
|
|
$
|
429,002
|
|
Less:
Distributions to noncontrolling interests
|
(43,316)
|
|
|
(47,329)
|
|
|
(50,409)
|
|
Cash provided by
operating activities attributable to DaVita Inc.
|
821,858
|
|
|
434,853
|
|
|
378,593
|
|
Less: Expenditures
for routine maintenance and information
technology
|
(88,112)
|
|
|
(105,441)
|
|
|
(73,288)
|
|
Free cash
flow
|
$
|
733,746
|
|
|
$
|
329,412
|
|
|
$
|
305,305
|
|
|
|
|
|
|
Rolling 12-Month
Period
|
|
March 31,
2017
|
|
December 31,
2016
|
|
March 31,
2016
|
Cash provided by
operating activities
|
$
|
2,399,616
|
|
|
$
|
1,963,444
|
|
|
$
|
1,576,113
|
|
Less:
Distributions to noncontrolling interests
|
(185,308)
|
|
|
(192,401)
|
|
|
(183,545)
|
|
Cash provided by
operating activities attributable to DaVita Inc.
|
2,214,308
|
|
|
1,771,043
|
|
|
1,392,568
|
|
Less: Expenditures
for routine maintenance and information
technology
|
(373,563)
|
|
|
(358,739)
|
|
|
(351,357)
|
|
Free cash
flow
|
$
|
1,840,745
|
|
|
$
|
1,412,304
|
|
|
$
|
1,041,211
|
|
Certain columns, rows
or percentages may not add or recalculate due to the use of rounded
numbers.
|
DAVITA INC.
RECONCILIATIONS FOR
NON-GAAP MEASURES
(unaudited)
(dollars in
thousands)
Note 6: Total care dollars under
management.
In California, as a result of
our managed care administrative services agreements with hospitals
and health plans, DMG does not assume the direct financial risk for
institutional (hospital) services in most cases, but is responsible
for managing the care dollars associated with both the professional
(physician) and institutional services being provided for the Per
Member Per Month (PMPM) fee attributable to both professional and
institutional services. In cases where DMG does not assume the
direct financial risk, DMG recognizes the surplus of institutional
revenue less institutional expense as DMG net revenue recorded as
capitated revenues. In addition to revenues recognized for
financial reporting purposes, DMG measures its total care dollars
under management, which includes the PMPM fee payable to third
parties for institutional services where DMG manages the care
provided to its members by the hospitals and other institutions,
which are not included in GAAP revenues. DMG uses total care
dollars under management as a supplement to GAAP revenues as it
allows DMG to measure profit margins on a comparable basis across
both the global capitation model (where DMG assumes the full
financial risk for all services, including institutional services)
and the risk sharing models (where DMG operates under managed care
administrative services agreements where DMG does not assume the
full risk). DMG believes that presenting amounts in this manner is
useful because it presents its operations on a unified basis
without the complication caused by models that DMG has adopted in
its California market as a result
of various regulations related to the assumption of institutional
risk. Total care dollars under management is not a measure of
financial performance computed in accordance with GAAP and should
not be considered in isolation or as a substitute for revenues
calculated in accordance with GAAP. Total care dollars under
management includes PMPM payments received from third parties that
are recorded net of expenses in our accounting records. The
following table reconciles total care dollars under management to
medical revenues for the periods indicated.
|
Three months
ended
|
|
March 31,
2017
|
|
December 31,
2016
|
|
March 31,
2016
|
Medical
revenues
|
$
|
1,068,703
|
|
|
$
|
1,017,576
|
|
|
$
|
978,523
|
|
Less: Risk share
revenue, net
|
(8,652)
|
|
|
(37,243)
|
|
|
(28,402)
|
|
Add: Institutional
capitation amounts
|
281,899
|
|
|
315,033
|
|
|
321,776
|
|
Total care dollars
under management
|
$
|
1,341,950
|
|
|
$
|
1,295,366
|
|
|
$
|
1,271,897
|
|
Certain columns, rows
or percentages may not add or recalculate due to the use of rounded
numbers.
|
DAVITA INC.
RECONCILIATIONS FOR
NON-GAAP MEASURES
(unaudited)
(dollars in
thousands)
Note 7: EBITDA and adjusted
EBITDA.
EBITDA is defined as operating income before depreciation and
amortization. Adjusted EBITDA is defined as operating income before
certain charges, including a net settlement gain, estimated
accruals for certain legal matters, goodwill and other asset
impairment charges, and a gain on the APAC JV ownership changes,
further adjusted to exclude depreciation and amortization.
We use EBITDA and adjusted EBITDA as measures to assess
operating and financial performance. We believe that these measures
enhance a user's understanding of normal operating income excluding
certain charges, depreciation and amortization. Neither EBITDA nor
adjusted EBITDA is a measure of financial performance computed in
accordance with GAAP and should not be considered in isolation nor
as a substitute for operating income, net income, cash flows from
operations, or other statement of operations or cash flow data
prepared in conformity with GAAP, or as a measure of profitability
or liquidity. In addition, the calculation of EBITDA and adjusted
EBITDA is susceptible to varying interpretations and calculations,
and the amounts presented may not be comparable to similarly titled
measures of other companies. EBITDA and adjusted EBITDA may not be
indicative of historical operating results, and we do not intend
these measures to be predictive of future results of
operations.
EBITDA:
|
Three months ended
March 31, 2017
|
|
Three months ended
March 31, 2016
|
|
Consolidated
|
|
Kidney
Care
|
|
DMG
|
|
Consolidated
|
|
Kidney
Care
|
|
DMG
|
Net income
attributable to DaVita Inc.
|
$
|
447,697
|
|
|
|
|
|
|
$
|
97,434
|
|
|
|
|
|
Noncontrolling
interests
|
52,588
|
|
|
|
|
|
|
40,725
|
|
|
|
|
|
Income
taxes
|
287,765
|
|
|
|
|
|
|
126,822
|
|
|
|
|
|
Other
income
|
(4,243)
|
|
|
|
|
|
|
(2,976)
|
|
|
|
|
|
Debt
expense
|
104,429
|
|
|
|
|
|
|
102,884
|
|
|
|
|
|
Operating
income
|
888,236
|
|
|
875,928
|
|
|
12,308
|
|
|
364,889
|
|
|
422,033
|
|
|
(57,145)
|
|
Depreciation and
amortization
|
190,206
|
|
|
132,883
|
|
|
57,323
|
|
|
169,355
|
|
|
123,092
|
|
|
46,263
|
|
EBITDA
|
$
|
1,078,442
|
|
|
$
|
1,008,811
|
|
|
$
|
69,631
|
|
|
$
|
534,244
|
|
|
$
|
545,125
|
|
|
$
|
(10,882)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted EBITDA:
|
Three months ended
March 31, 2017
|
|
Three months ended
March 31, 2016
|
|
Consolidated
|
|
Kidney
Care
|
|
DMG
|
|
Consolidated
|
|
Kidney
Care
|
|
DMG
|
Net income
attributable to Davita Inc.
|
$
|
447,697
|
|
|
|
|
|
|
$
|
97,434
|
|
|
|
|
|
Noncontrolling
interests
|
52,588
|
|
|
|
|
|
|
40,725
|
|
|
|
|
|
Income
taxes
|
287,765
|
|
|
|
|
|
|
126,822
|
|
|
|
|
|
Other
income
|
(4,243)
|
|
|
|
|
|
|
(2,976)
|
|
|
|
|
|
Debt
expense
|
104,429
|
|
|
|
|
|
|
102,884
|
|
|
|
|
|
Operating
income
|
888,236
|
|
|
875,928
|
|
|
12,308
|
|
|
364,889
|
|
|
422,033
|
|
|
(57,145)
|
|
Gain on settlement,
net
|
(526,827)
|
|
|
(526,827)
|
|
|
|
|
|
|
|
|
|
Equity investment
income related to gain on settlement
|
(2,677)
|
|
|
(2,677)
|
|
|
|
|
|
|
|
|
|
Accruals for legal
matters
|
|
|
|
|
|
|
16,000
|
|
|
|
|
16,000
|
|
Goodwill and asset
impairment charges
|
39,366
|
|
|
39,366
|
|
|
|
|
77,000
|
|
|
|
|
77,000
|
|
Gain on APAC JV
ownership changes
|
(6,273)
|
|
|
(6,273)
|
|
|
|
|
|
|
|
|
|
Adjusted operating
income
|
391,825
|
|
|
379,517
|
|
|
12,308
|
|
|
457,889
|
|
|
422,033
|
|
|
35,855
|
|
Depreciation and
amortization
|
190,206
|
|
|
132,883
|
|
|
57,323
|
|
|
169,355
|
|
|
123,092
|
|
|
46,263
|
|
Adjusted
EBITDA
|
$
|
582,031
|
|
|
$
|
512,400
|
|
|
$
|
69,631
|
|
|
$
|
627,244
|
|
|
$
|
545,125
|
|
|
$
|
82,118
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Certain columns, rows
or percentages may not add or recalculate due to the use of rounded
numbers.
|
To view the original version on PR Newswire,
visit:http://www.prnewswire.com/news-releases/davita-inc-1st-quarter-2017-results-300449957.html
SOURCE DaVita Inc.