DENVER, Feb. 10, 2020 /PRNewswire/ -- DaVita Inc.
(NYSE: DVA) today announced results for the quarter and year ended
December 31, 2019.
Fourth quarter 2019 highlights:
- Consolidated revenues of $2.899
billion.
- Operating income of $463 million
or 16.0% operating margin.
- Diluted earnings per share from continuing operations of
$1.86.
- Operating cash flow from continuing operations of $678 million and free cash flow from continuing
operations of $415 million.
- Repurchased 8,368,506 shares of our common stock at an average
cost of $64.80 per share.
|
Three months
ended
December 31,
|
|
Year ended
December 31,
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
Net income
attributable to DaVita Inc.:
|
(dollars in
millions, except per share data)
|
|
Net income from
continuing operations
|
$
|
242
|
|
|
$
|
160
|
|
|
$
|
707
|
|
|
$
|
624
|
|
|
Per share
|
$
|
1.86
|
|
|
$
|
0.96
|
|
|
$
|
4.60
|
|
|
$
|
3.62
|
|
|
Adjusted net income
from continuing operations(1)
|
$
|
242
|
|
|
$
|
149
|
|
|
$
|
830
|
|
|
$
|
616
|
|
|
Per share
adjusted(1)
|
$
|
1.86
|
|
|
$
|
0.90
|
|
|
$
|
5.40
|
|
|
$
|
3.57
|
|
|
Net income
(loss)
|
$
|
245
|
|
|
$
|
(150)
|
|
|
$
|
811
|
|
|
$
|
159
|
|
|
Per share
|
$
|
1.88
|
|
|
$
|
(0.90)
|
|
|
$
|
5.27
|
|
|
$
|
0.92
|
|
|
Three months
ended
December
31,
|
|
Year ended
December 31,
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
Operating
income:
|
(dollars in
millions)
|
|
Operating
income
|
$
|
463
|
|
|
$
|
388
|
|
|
$
|
1,643
|
|
|
$
|
1,526
|
|
|
Adjusted operating
income(1)
|
$
|
463
|
|
|
$
|
370
|
|
|
$
|
1,768
|
|
|
$
|
1,513
|
|
|
|
|
|
|
(1)
|
For the definitions
of non-GAAP financial measures see the note titled "Note on
Non-GAAP Financial Measures" and related reconciliations beginning
on page 15.
|
U.S. dialysis metrics:
Volume: Total U.S. dialysis treatments for the
fourth quarter of 2019 were 7,681,462, or an average of 96,744
treatments per day, representing a per day increase of 1.7% over
the fourth quarter of 2018. Normalized non-acquired treatment
growth in the fourth quarter of 2019 as compared to the fourth
quarter of 2018 was 2.1%.
|
Three months
ended
|
|
|
|
Year
ended
|
|
|
|
December 31,
2019
|
|
September 30,
2019
|
|
Quarter change
|
|
December 31,
2019
|
|
December 31,
2018
|
|
Annual
change
|
Per treatment
metrics:
|
|
|
|
|
|
|
|
|
|
|
|
Revenue
|
$
|
348.31
|
|
|
$
|
349.41
|
|
|
$
|
(1.10)
|
|
|
$
|
349.02
|
|
|
$
|
350.47
|
|
|
$
|
(1.45)
|
|
Patient care
costs
|
$
|
237.44
|
|
|
$
|
236.32
|
|
|
$
|
1.12
|
|
|
$
|
239.27
|
|
|
$
|
247.32
|
|
|
$
|
(8.05)
|
|
General and
administrative
|
$
|
27.27
|
|
|
$
|
30.63
|
|
|
$
|
(3.36)
|
|
|
$
|
28.41
|
|
|
$
|
28.40
|
|
|
$
|
0.01
|
|
Primary drivers of the changes in the table above are as
follows:
Revenue: The quarter change was primarily due to lower
calcimimetics revenue. The annual change was primarily due to lower
calcimimetics revenue and was also negatively impacted by
additional Medicare bad debt revenue recognized in 2018, partially
offset by an increase in Medicare rates.
Patient care costs: The quarter change was primarily due
to higher direct center operating expenses and medical supply
costs, partially offset by lower pharmaceutical costs. The annual
change was primarily due to lower pharmaceutical costs, partially
offset by higher benefit costs and direct center operating
expenses.
General and administrative: The quarter change was
primarily due to lower compensation expense. The annual change was
primarily due to higher compensation expenses, partially offset by
lower advocacy costs.
Certain items impacting the quarter and year:
Share repurchases: The following table summarizes
repurchases of our common stock during the quarter and year ended
December 31, 2019:
|
Three months ended
December 31, 2019
|
|
Year ended
December 31, 2019
|
|
Shares
repurchased
|
|
Amount paid
(in millions)
|
|
Paid per
share
|
|
Shares
repurchased
|
|
Amount paid
(in millions)
|
|
Paid per
share
|
Tender
offer(1)
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
21,801,975
|
|
|
$
|
1,234
|
|
|
$
|
56.60
|
|
Open market
repurchases
|
8,368,506
|
|
|
542
|
|
|
64.80
|
|
|
19,218,257
|
|
|
1,168
|
|
|
60.79
|
|
|
8,368,506
|
|
|
$
|
542
|
|
|
$
|
64.80
|
|
|
41,020,232
|
|
|
$
|
2,402
|
|
|
$
|
58.57
|
|
|
|
|
|
|
(1)
|
The amount paid for
shares repurchased associated with our modified "Dutch auction"
tender offer during the year ended December 31, 2019 includes
the clearing price of $56.50 per share plus related fees and
expenses of approximately $2 million.
|
Subsequent to December 31, 2019 through February 7,
2020, we have repurchased 290,904 shares of our common
stock for $22 million at an
average cost of $74.92 per share. As
of February 7, 2020, we have a total of $1.682 billion available for additional share
repurchases under our current repurchase authorization. Although
this share repurchase authorization does not have an expiration
date, we remain subject to share repurchase limitations, including
under the terms of our senior secured credit facilities and the
indentures governing our senior notes.
Financial and operating metrics:
|
Three months
ended
December 31,
|
|
Year ended
December 31,
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
Cash
flow:
|
(dollars in
millions)
|
|
Operating cash
flow
|
$
|
681
|
|
|
$
|
389
|
|
|
$
|
2,072
|
|
|
$
|
1,772
|
|
|
Operating cash flow
from continuing operations
|
$
|
678
|
|
|
$
|
307
|
|
|
$
|
1,973
|
|
|
$
|
1,481
|
|
|
Free cash flow from
continuing operations (new
definition)(1)
|
$
|
415
|
|
|
$
|
11
|
|
|
$
|
1,127
|
|
|
$
|
480
|
|
|
|
|
|
|
(1)
|
For the definitions
of non-GAAP financial measures see the note titled "Note on
Non-GAAP Financial Measures" and related reconciliations beginning
on page 15.
|
|
Three months
ended
December 31, 2019
|
|
Year ended
December 31, 2019
|
Effective income
tax rate on:
|
|
|
Income from
continuing operations
|
21.4
|
%
|
|
23.4
|
%
|
|
Income from
continuing operations attributable to DaVita Inc.
|
25.2
|
%
|
|
28.3
|
%
|
|
Adjusted income from
continuing operations attributable to
DaVita
Inc.(1)
|
25.2
|
%
|
|
27.5
|
%
|
|
|
|
|
|
(1)
|
For the definitions
of non-GAAP financial measures see the note titled "Note on
Non-GAAP Financial Measures" and related reconciliations beginning
on page 15.
|
Our effective tax rate for the fourth quarter and year ended
December 31, 2019 benefited from a
decrease in our estimated state tax rate.
Center activity: As of December 31, 2019, we
provided dialysis services to a total of approximately 235,500
patients at 3,012 outpatient dialysis centers, of which 2,753
centers were located in the United
States and 259 centers were located in ten countries outside
of the United States. During the
fourth quarter of 2019, we opened a total of 31 new dialysis
centers and closed 14 dialysis centers in the United States. In addition, we opened
three new dialysis centers and acquired seven dialysis centers
outside of the United States
during the fourth quarter of 2019.
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 diluted net income from continuing operations per
share attributable to DaVita Inc., effective tax rate on income
from continuing operations or free cash flow from continuing
operations on a basis consistent with United States generally accepted accounting
principles (GAAP) 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 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.
|
Current 2020
guidance
|
|
Prior 2020
guidance
|
|
Low
|
|
High
|
|
Low
|
|
High
|
|
(dollars in
millions, except per share data)
|
Revenue
|
$
|
11,500
|
|
|
$
|
11,700
|
|
|
—
|
|
|
—
|
|
Operating income
margin
|
13.0
|
%
|
|
14.0
|
%
|
|
—
|
|
|
—
|
|
Effective income tax
rate on adjusted income from
continuing
operations attributable to DaVita Inc.
|
28.0
|
%
|
|
29.5
|
%
|
|
—
|
|
|
—
|
|
Adjusted diluted net
income from continuing
operations per
share attributable to DaVita Inc.
|
$
|
5.75
|
|
|
$
|
6.25
|
|
|
$
|
5.25
|
|
|
$
|
5.75
|
|
Capital expenditures
from continuing operations
|
$
|
700
|
|
|
$
|
750
|
|
|
$
|
700
|
|
|
$
|
750
|
|
Free cash flow from
continuing operations
|
$
|
600
|
|
|
$
|
800
|
|
|
—
|
|
|
—
|
|
We will be holding a conference call to discuss our results for
the fourth quarter ended December 31, 2019, on
February 10, 2020, 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
future periods and the assumptions underlying any such
projections.
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; 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; or our making incorrect assumptions about
how our patients will respond to any such developments;
- 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 and ballot, executive action or other
initiatives, including such initiatives related to healthcare
and/or labor matters;
- the impact of the 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;
- 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;
- uncertainties related to potential payments and/or
adjustments under certain provisions of the equity purchase
agreement for the sale of our DaVita Medical Group business, such
as post-closing adjustments and indemnification
obligations;
- 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 and the timing of any such stock
repurchases, as well as our use of a considerable amount of
available funds to repurchase stock;
- 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
DaVita Medical Group 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 Quarterly Report on Form 10-Q for the quarter ended
June 30, 2019 as updated by our
Quarterly Report on Form 10-Q for the quarter ended September 30, 2019, and the other risks and
uncertainties discussed in any subsequent reports that we file or
furnish with SEC from time to time.
The financial information presented in this release is
unaudited and is subject to change as a result of subsequent events
or adjustments, if any, arising prior to the filing of the
Company's Annual Report on Form 10-K for the year ended
December 31, 2019.
DAVITA
INC.
|
CONSOLIDATED
STATEMENTS OF OPERATIONS
|
(unaudited)
|
(dollars in
thousands, except per share data)
|
|
|
Three months
ended
December 31,
|
|
Year ended
December 31,
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
Dialysis patient
service revenues
|
$
|
2,768,035
|
|
|
$
|
2,729,803
|
|
|
$
|
10,918,421
|
|
|
$
|
10,709,981
|
|
Provision for
uncollectible accounts
|
(2,026)
|
|
|
(13,749)
|
|
|
(21,715)
|
|
|
(49,587)
|
|
Net dialysis patient
service revenues
|
2,766,009
|
|
|
2,716,054
|
|
|
10,896,706
|
|
|
10,660,394
|
|
Other
revenues
|
132,575
|
|
|
105,070
|
|
|
491,773
|
|
|
744,457
|
|
Total
revenues
|
2,898,584
|
|
|
2,821,124
|
|
|
11,388,479
|
|
|
11,404,851
|
|
Operating expenses
and charges:
|
|
|
|
|
|
|
|
Patient care
costs
|
2,000,625
|
|
|
2,027,069
|
|
|
7,914,485
|
|
|
8,195,513
|
|
General and
administrative
|
278,425
|
|
|
268,532
|
|
|
1,103,312
|
|
|
1,135,454
|
|
Depreciation and
amortization
|
158,467
|
|
|
155,157
|
|
|
615,152
|
|
|
591,035
|
|
Provision for
uncollectible accounts
|
—
|
|
|
—
|
|
|
—
|
|
|
(7,300)
|
|
Equity investment
(income) loss
|
(1,521)
|
|
|
10,610
|
|
|
(12,679)
|
|
|
4,484
|
|
Investment and other
asset impairments
|
—
|
|
|
—
|
|
|
—
|
|
|
17,338
|
|
Goodwill impairment
charges
|
—
|
|
|
—
|
|
|
124,892
|
|
|
3,106
|
|
Gain on changes in
ownership interest, net
|
—
|
|
|
(28,152)
|
|
|
—
|
|
|
(60,603)
|
|
Total operating
expenses and charges
|
2,435,996
|
|
|
2,433,216
|
|
|
9,745,162
|
|
|
9,879,027
|
|
Operating
income
|
462,588
|
|
|
387,908
|
|
|
1,643,317
|
|
|
1,525,824
|
|
Debt
expense
|
(92,050)
|
|
|
(128,300)
|
|
|
(443,824)
|
|
|
(487,435)
|
|
Debt prepayment,
refinancing and redemption charges
|
—
|
|
|
—
|
|
|
(33,402)
|
|
|
—
|
|
Other income (loss),
net
|
11,485
|
|
|
(494)
|
|
|
29,348
|
|
|
10,089
|
|
Income from
continuing operations before income taxes
|
382,023
|
|
|
259,114
|
|
|
1,195,439
|
|
|
1,048,478
|
|
Income tax
expense
|
81,690
|
|
|
51,748
|
|
|
279,628
|
|
|
258,400
|
|
Net income from
continuing operations
|
300,333
|
|
|
207,366
|
|
|
915,811
|
|
|
790,078
|
|
Net income (loss)
from discontinued operations, net of tax
|
2,629
|
|
|
(309,209)
|
|
|
105,483
|
|
|
(457,038)
|
|
Net income
(loss)
|
302,962
|
|
|
(101,843)
|
|
|
1,021,294
|
|
|
333,040
|
|
Less: Net income
attributable to noncontrolling interests
|
(58,091)
|
|
|
(47,929)
|
|
|
(210,313)
|
|
|
(173,646)
|
|
Net income (loss)
attributable to DaVita Inc.
|
$
|
244,871
|
|
|
$
|
(149,772)
|
|
|
$
|
810,981
|
|
|
$
|
159,394
|
|
Earnings per share
attributable to DaVita Inc.:
|
|
|
|
|
|
|
|
Basic net income from
continuing operations per share
|
$
|
1.87
|
|
|
$
|
0.97
|
|
|
$
|
4.61
|
|
|
$
|
3.66
|
|
Basic net income
(loss) per share
|
$
|
1.89
|
|
|
$
|
(0.90)
|
|
|
$
|
5.29
|
|
|
$
|
0.93
|
|
Diluted net income
from continuing operations per share
|
$
|
1.86
|
|
|
$
|
0.96
|
|
|
$
|
4.60
|
|
|
$
|
3.62
|
|
Diluted net income
(loss) per share
|
$
|
1.88
|
|
|
$
|
(0.90)
|
|
|
$
|
5.27
|
|
|
$
|
0.92
|
|
Weighted average
shares for earnings per share:
|
|
|
|
|
|
|
|
Basic
|
129,446,558
|
|
|
165,984,925
|
|
|
153,180,908
|
|
|
170,785,999
|
|
Diluted
|
130,504,514
|
|
|
166,477,914
|
|
|
153,812,064
|
|
|
172,364,581
|
|
Amounts
attributable to DaVita Inc.:
|
|
|
|
|
|
|
|
Net income from
continuing operations
|
$
|
242,242
|
|
|
$
|
160,332
|
|
|
$
|
706,832
|
|
|
$
|
624,321
|
|
Net income (loss)
from discontinued operations
|
2,629
|
|
|
(310,104)
|
|
|
104,149
|
|
|
(464,927)
|
|
Net income (loss)
attributable to DaVita Inc.
|
$
|
244,871
|
|
|
$
|
(149,772)
|
|
|
$
|
810,981
|
|
|
$
|
159,394
|
|
DAVITA
INC.
|
CONSOLIDATED
STATEMENTS OF COMPREHENSIVE INCOME
|
(unaudited)
|
(dollars in
thousands)
|
|
|
Three months
ended
December 31,
|
|
Year ended
December 31,
|
|
2019
|
|
2018
|
|
2019
|
|
2018
|
Net income
(loss)
|
$
|
302,962
|
|
|
$
|
(101,843)
|
|
|
$
|
1,021,294
|
|
|
$
|
333,040
|
|
Other comprehensive
income (loss), net of tax:
|
|
|
|
|
|
|
|
Unrealized gains
(losses) on interest rate cap agreements:
|
|
|
|
|
|
|
|
Unrealized gains
(losses)
|
2,822
|
|
|
(953)
|
|
|
1,151
|
|
|
(133)
|
|
Reclassifications
into net income (loss)
|
1,595
|
|
|
1,606
|
|
|
6,377
|
|
|
6,286
|
|
Unrealized gains
(losses) on foreign currency translation:
|
|
|
|
|
|
|
|
Foreign currency
translation adjustments
|
25,688
|
|
|
(6,469)
|
|
|
(20,102)
|
|
|
(45,944)
|
|
Other comprehensive
income (loss)
|
30,105
|
|
|
(5,816)
|
|
|
(12,574)
|
|
|
(39,791)
|
|
Total comprehensive
income (loss)
|
333,067
|
|
|
(107,659)
|
|
|
1,008,720
|
|
|
293,249
|
|
Less: Comprehensive
income attributable to noncontrolling interests
|
(58,091)
|
|
|
(47,929)
|
|
|
(210,313)
|
|
|
(173,646)
|
|
Comprehensive income
(loss) attributable to DaVita Inc.
|
$
|
274,976
|
|
|
$
|
(155,588)
|
|
|
$
|
798,407
|
|
|
$
|
119,603
|
|
DAVITA
INC.
|
CONSOLIDATED
STATEMENTS OF CASH FLOWS
|
(unaudited)
|
(dollars in
thousands)
|
|
|
Year ended
December 31,
|
|
2019
|
|
2018
|
Cash flows from
operating activities:
|
|
|
|
Net income
|
$
|
1,021,294
|
|
|
$
|
333,040
|
|
Adjustments to
reconcile net income to net cash provided by operating
activities:
|
|
|
|
Depreciation and
amortization
|
615,152
|
|
|
591,035
|
|
Impairment
charges
|
124,892
|
|
|
61,981
|
|
Valuation adjustment
on disposal group
|
—
|
|
|
316,840
|
|
Debt prepayment,
refinancing and redemption charges
|
33,402
|
|
|
—
|
|
Stock-based
compensation expense
|
67,850
|
|
|
73,061
|
|
Deferred income
taxes
|
41,723
|
|
|
273,660
|
|
Equity investment
income, net
|
8,582
|
|
|
26,449
|
|
Gain (loss) on sales
of business interests, net
|
23,022
|
|
|
(85,699)
|
|
Other non-cash
charges, net
|
49,579
|
|
|
82,374
|
|
Changes in operating
assets and liabilities, net of effect of acquisitions and
divestitures:
|
|
|
|
Accounts
receivable
|
(79,957)
|
|
|
(81,176)
|
|
Inventories
|
10,158
|
|
|
73,505
|
|
Other receivables and
other current assets
|
2,790
|
|
|
236,995
|
|
Other long-term
assets
|
6,965
|
|
|
3,497
|
|
Accounts
payable
|
(84,539)
|
|
|
(35,959)
|
|
Accrued compensation
and benefits
|
(14,697)
|
|
|
84,165
|
|
Other current
liabilities
|
181,940
|
|
|
(157,462)
|
|
Income
taxes
|
95,645
|
|
|
(23,635)
|
|
Other long-term
liabilities
|
(31,446)
|
|
|
(1,031)
|
|
Net cash provided by
operating activities
|
2,072,355
|
|
|
1,771,640
|
|
Cash flows from
investing activities:
|
|
|
|
Additions of property
and equipment
|
(766,546)
|
|
|
(987,138)
|
|
Acquisitions
|
(100,861)
|
|
|
(183,156)
|
|
Proceeds from asset
and business sales
|
3,877,392
|
|
|
150,205
|
|
Purchase of other
debt and equity investments
|
(5,458)
|
|
|
(8,448)
|
|
Purchase of
investments held-to-maturity
|
(101,462)
|
|
|
(5,963)
|
|
Proceeds from sale of
other debt and equity investments
|
3,676
|
|
|
9,526
|
|
Proceeds from
investments held-to-maturity
|
95,376
|
|
|
34,862
|
|
Purchase of equity
investments
|
(9,366)
|
|
|
(19,177)
|
|
Distributions
received on equity investments
|
2,589
|
|
|
3,646
|
|
Net cash provided by
(used in) investing activities
|
2,995,340
|
|
|
(1,005,643)
|
|
Cash flows from
financing activities:
|
|
|
|
Borrowings
|
38,525,850
|
|
|
59,934,750
|
|
Payments on long-term
debt and other financing costs
|
(40,606,041)
|
|
|
(59,239,973)
|
|
Purchase of treasury
stock
|
(2,383,816)
|
|
|
(1,161,511)
|
|
Distributions to
noncontrolling interests
|
(233,123)
|
|
|
(196,441)
|
|
Stock award exercises
and other share issuances, net
|
11,382
|
|
|
13,577
|
|
Contributions from
noncontrolling interests
|
57,317
|
|
|
52,311
|
|
Proceeds from sales
of additional noncontrolling interest
|
—
|
|
|
15
|
|
Purchases of
noncontrolling interests
|
(68,019)
|
|
|
(28,082)
|
|
Net cash used in
financing activities
|
(4,696,450)
|
|
|
(625,354)
|
|
Effect of exchange
rate changes on cash, cash equivalents and restricted
cash
|
(1,760)
|
|
|
(3,350)
|
|
Net increase in cash,
cash equivalents and restricted cash
|
369,485
|
|
|
137,293
|
|
Less: Net (decrease)
increase in cash, cash equivalents and restricted cash from
discontinued operations
|
(423,813)
|
|
|
240,793
|
|
Net increase
(decrease) in cash, cash equivalents and restricted cash from
continuing operations
|
793,298
|
|
|
(103,500)
|
|
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 year
|
$
|
1,208,718
|
|
|
$
|
415,420
|
|
DAVITA
INC.
|
CONSOLIDATED
BALANCE SHEETS
|
(unaudited)
|
(dollars in
thousands, except share data)
|
|
|
December 31,
2019
|
|
December 31,
2018
|
ASSETS
|
|
|
|
Cash and cash
equivalents
|
$
|
1,102,372
|
|
|
$
|
323,038
|
|
Restricted cash and
equivalents
|
106,346
|
|
|
92,382
|
|
Short-term
investments
|
11,572
|
|
|
2,935
|
|
Accounts receivable,
net
|
1,795,598
|
|
|
1,858,608
|
|
Inventories
|
97,949
|
|
|
107,381
|
|
Other
receivables
|
489,695
|
|
|
469,796
|
|
Prepaid and other
current assets
|
66,866
|
|
|
111,840
|
|
Income tax
receivable
|
19,772
|
|
|
68,614
|
|
Current assets held
for sale, net
|
—
|
|
|
5,389,565
|
|
Total current
assets
|
3,690,170
|
|
|
8,424,159
|
|
Property and
equipment, net
|
3,473,384
|
|
|
3,393,669
|
|
Operating lease
right-of-use assets
|
2,830,047
|
|
|
—
|
|
Intangible assets,
net
|
135,684
|
|
|
118,846
|
|
Equity method and
other investments
|
241,983
|
|
|
224,611
|
|
Long-term
investments
|
36,519
|
|
|
35,424
|
|
Other long-term
assets
|
115,972
|
|
|
71,583
|
|
Goodwill
|
6,787,635
|
|
|
6,841,960
|
|
|
$
|
17,311,394
|
|
|
$
|
19,110,252
|
|
LIABILITIES AND
EQUITY
|
|
|
|
Accounts
payable
|
$
|
403,840
|
|
|
$
|
463,270
|
|
Other
liabilities
|
756,174
|
|
|
595,850
|
|
Accrued compensation
and benefits
|
695,052
|
|
|
658,913
|
|
Current portion of
operating lease liabilities
|
343,912
|
|
|
—
|
|
Current portion of
long-term debt
|
130,708
|
|
|
1,929,369
|
|
Income tax
payable
|
42,412
|
|
|
—
|
|
Current liabilities
held for sale
|
—
|
|
|
1,243,759
|
|
Total current
liabilities
|
2,372,098
|
|
|
4,891,161
|
|
Long-term operating
lease liabilities
|
2,723,800
|
|
|
—
|
|
Long-term
debt
|
7,977,526
|
|
|
8,172,847
|
|
Other long-term
liabilities
|
160,809
|
|
|
450,669
|
|
Deferred income
taxes
|
577,543
|
|
|
562,536
|
|
Total
liabilities
|
13,811,776
|
|
|
14,077,213
|
|
Commitments and
contingencies
|
|
|
|
Noncontrolling
interests subject to put provisions
|
1,180,376
|
|
|
1,124,641
|
|
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; 125,842,853 and
166,387,307 shares issued and outstanding, respectively)
|
126
|
|
|
166
|
|
Additional paid-in
capital
|
749,043
|
|
|
995,006
|
|
Retained
earnings
|
1,431,738
|
|
|
2,743,194
|
|
Accumulated other
comprehensive loss
|
(47,498)
|
|
|
(34,924)
|
|
Total DaVita Inc.
shareholders' equity
|
2,133,409
|
|
|
3,703,442
|
|
Noncontrolling
interests not subject to put provisions
|
185,833
|
|
|
204,956
|
|
Total
equity
|
2,319,242
|
|
|
3,908,398
|
|
|
$
|
17,311,394
|
|
|
$
|
19,110,252
|
|
DAVITA
INC.
|
SUPPLEMENTAL
FINANCIAL DATA
|
(unaudited)
|
(dollars in
millions, except for per share and per treatment
data)
|
|
|
Three months
ended
|
|
Year
ended
|
|
December 31,
2019
|
|
September 30,
2019
|
|
December 31,
2018
|
|
December 31,
2019
|
1. Consolidated
business metrics:
|
|
|
|
|
|
|
|
Operating income
margin
|
16.0
|
%
|
|
13.0
|
%
|
|
13.8
|
%
|
|
14.4
|
%
|
Adjusted operating
income margin excluding certain items(1)(5)
|
16.0
|
%
|
|
15.9
|
%
|
|
13.1
|
%
|
|
15.5
|
%
|
General and
administrative expenses as a percent of consolidated
revenues(2)
|
9.6
|
%
|
|
10.3
|
%
|
|
9.5
|
%
|
|
9.7
|
%
|
Effective income tax
rate on income from continuing operations
|
21.4
|
%
|
|
23.8
|
%
|
|
20.0
|
%
|
|
23.4
|
%
|
Effective income tax
rate on income from continuing operations attributable to
DaVita Inc.(1)
|
25.2
|
%
|
|
30.3
|
%
|
|
24.3
|
%
|
|
28.3
|
%
|
Effective income tax
rate on adjusted income from continuing operations
attributable to DaVita Inc.(1)
|
25.2
|
%
|
|
27.6
|
%
|
|
23.1
|
%
|
|
27.5
|
%
|
|
|
|
|
|
|
|
|
2. Summary of
financial results:
|
|
|
|
|
|
|
|
Revenues:
|
|
|
|
|
|
|
|
U.S. net dialysis
patient services and other
|
$
|
2,687
|
|
|
$
|
2,691
|
|
|
$
|
2,633
|
|
|
$
|
10,563
|
|
Other—Ancillary
services
|
|
122
|
|
|
|
118
|
|
|
|
100
|
|
|
|
464
|
|
U.S. other
|
|
|
|
|
|
|
|
|
|
|
|
International net
dialysis patient service and other
|
132
|
|
|
131
|
|
|
124
|
|
|
508
|
|
|
255
|
|
|
248
|
|
|
224
|
|
|
972
|
|
Eliminations
|
(43)
|
|
|
(36)
|
|
|
(35)
|
|
|
(146)
|
|
Total consolidated
revenues
|
$
|
2,899
|
|
|
$
|
2,904
|
|
|
$
|
2,821
|
|
|
$
|
11,388
|
|
Operating income
(loss):
|
|
|
|
|
|
|
|
U.S.
dialysis
|
$
|
508
|
|
|
$
|
501
|
|
|
$
|
437
|
|
|
$
|
1,925
|
|
Other—Ancillary
services
|
|
(21)
|
|
|
|
(15)
|
|
|
|
(19)
|
|
|
|
(66)
|
|
U.S.
|
|
|
|
|
|
|
|
|
|
|
|
International
|
2
|
|
|
(83)
|
|
|
(10)
|
|
|
(123)
|
|
|
(19)
|
|
|
(98)
|
|
|
(29)
|
|
|
(189)
|
|
Corporate
administrative support expenses
|
(27)
|
|
|
(25)
|
|
|
(20)
|
|
|
(92)
|
|
Total consolidated
operating income
|
$
|
463
|
|
|
$
|
378
|
|
|
$
|
388
|
|
|
$
|
1,643
|
|
DAVITA
INC.
|
SUPPLEMENTAL
FINANCIAL DATA - continued
|
(unaudited)
|
(dollars in
millions, except for per share and per treatment
data)
|
|
|
Three months
ended
|
|
Year
ended
|
|
December 31,
2019
|
|
September 30,
2019
|
|
December 31,
2018
|
|
December 31,
2019
|
3. Summary of
reportable segment financial results:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
U.S.
dialysis
|
|
|
|
|
|
|
|
Revenue:
|
|
|
|
|
|
|
|
Net dialysis patient
service revenues
|
$
|
2,676
|
|
|
$
|
2,681
|
|
|
$
|
2,628
|
|
|
$
|
10,531
|
|
Other
revenues
|
11
|
|
|
10
|
|
|
5
|
|
|
32
|
|
Total operating
revenues
|
2,687
|
|
|
2,691
|
|
|
2,633
|
|
|
10,563
|
|
Operating
expenses:
|
|
|
|
|
|
|
|
Patient care
costs
|
1,824
|
|
|
1,813
|
|
|
1,872
|
|
|
7,219
|
|
General and
administrative
|
209
|
|
|
235
|
|
|
210
|
|
|
857
|
|
Depreciation and
amortization
|
150
|
|
|
148
|
|
|
147
|
|
|
583
|
|
Equity investment
income
|
(5)
|
|
|
(5)
|
|
|
(5)
|
|
|
(22)
|
|
Gain on changes in
ownership interests, net
|
—
|
|
|
—
|
|
|
(28)
|
|
|
—
|
|
Total operating
expenses
|
2,179
|
|
|
2,191
|
|
|
2,196
|
|
|
8,638
|
|
Segment operating
income
|
$
|
508
|
|
|
$
|
501
|
|
|
$
|
437
|
|
|
$
|
1,925
|
|
Reconciliation for
non-GAAP measure:
|
|
|
|
|
|
|
|
Gain on changes in
ownership interests, net
|
—
|
|
|
—
|
|
|
(28)
|
|
|
—
|
|
Adjusted segment
operating income(1)
|
$
|
508
|
|
|
$
|
501
|
|
|
$
|
409
|
|
|
$
|
1,925
|
|
|
|
|
|
|
|
|
|
4. U.S. dialysis
business metrics:
|
|
|
|
|
|
|
|
Volume:
|
|
|
|
|
|
|
|
Treatments
|
7,681,462
|
|
|
7,673,191
|
|
|
7,552,412
|
|
|
30,172,699
|
|
Number of treatment
days
|
79.4
|
|
|
79.0
|
|
|
79.4
|
|
|
313.0
|
|
Average treatments per
day
|
96,744
|
|
|
97,129
|
|
|
95,119
|
|
|
96,398
|
|
Per day year over year
increase
|
1.7
|
%
|
|
2.7
|
%
|
|
3.1
|
%
|
|
2.5
|
%
|
Normalized non-acquired
treatment growth year over year
|
2.1
|
%
|
|
2.2
|
%
|
|
2.6
|
%
|
|
|
Operating net
revenues:
|
|
|
|
|
|
|
|
U.S. dialysis services
net revenue per treatment
|
$
|
348.31
|
|
|
$
|
349.41
|
|
|
$
|
347.97
|
|
|
$
|
349.02
|
|
Expenses:
|
|
|
|
|
|
|
|
Patient care costs per
treatment
|
$
|
237.44
|
|
|
$
|
236.32
|
|
|
$
|
247.81
|
|
|
$
|
239.27
|
|
General and
administrative expenses per treatment
|
$
|
27.27
|
|
|
$
|
30.63
|
|
|
$
|
27.86
|
|
|
$
|
28.41
|
|
Accounts
receivable:
|
|
|
|
|
|
|
|
Net
receivables
|
$
|
1,671
|
|
|
$
|
1,719
|
|
|
$
|
1,703
|
|
|
|
DSO
|
58
|
|
|
60
|
|
|
60
|
|
|
|
|
|
|
|
|
|
|
|
5. Discontinued
operations
|
|
|
|
|
|
|
|
Operating
results:
|
|
|
|
|
|
|
|
Net
revenues
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
1,231
|
|
|
$
|
2,713
|
|
Expenses
|
2
|
|
|
2
|
|
|
1,282
|
|
|
2,544
|
|
Valuation
adjustment
|
—
|
|
|
—
|
|
|
219
|
|
|
—
|
|
Goodwill impairment
charges
|
—
|
|
|
—
|
|
|
42
|
|
|
—
|
|
(Loss) income from
discontinued operations before taxes
|
(2)
|
|
|
(2)
|
|
|
(313)
|
|
|
169
|
|
Loss on sale of
discontinued operations, before taxes
|
—
|
|
|
—
|
|
|
—
|
|
|
(23)
|
|
Income tax (benefit)
expense
|
(5)
|
|
|
5
|
|
|
(3)
|
|
|
41
|
|
Net income (loss)
from discontinued operations, net of tax
|
$
|
3
|
|
|
$
|
(7)
|
|
|
$
|
(309)
|
|
|
$
|
105
|
|
DAVITA
INC.
|
SUPPLEMENTAL
FINANCIAL DATA - continued
|
(unaudited)
|
(dollars in
millions, except for per share and per treatment
data)
|
|
|
Three months
ended
|
|
Year
ended
|
|
December 31,
2019
|
|
September 30,
2019
|
|
December 31,
2018
|
|
December 31,
2019
|
6. Cash
flow:
|
|
|
|
|
|
|
|
Operating cash
flow
|
$
|
681
|
|
|
$
|
641
|
|
|
$
|
389
|
|
|
$
|
2,072
|
|
Operating cash flow
from continuing operations
|
$
|
678
|
|
|
$
|
648
|
|
|
$
|
307
|
|
|
$
|
1,973
|
|
Operating cash flow
from continuing operations, last twelve months
|
$
|
1,973
|
|
|
$
|
1,602
|
|
|
$
|
1,481
|
|
|
|
Free cash flow from
continuing operations (new
definition)(1)
|
$
|
415
|
|
|
$
|
437
|
|
|
$
|
11
|
|
|
$
|
1,127
|
|
Free cash flow from
continuing operations, last twelve months (new
definition)(1)
|
$
|
1,127
|
|
|
$
|
722
|
|
|
$
|
480
|
|
|
|
Capital expenditures
from continuing operations:
|
|
|
|
|
|
|
|
Routine
maintenance/IT/other
|
$
|
130
|
|
|
$
|
84
|
|
|
$
|
139
|
|
|
$
|
355
|
|
Development and
relocations
|
$
|
89
|
|
|
$
|
90
|
|
|
$
|
123
|
|
|
$
|
373
|
|
Acquisition
expenditures
|
$
|
24
|
|
|
$
|
11
|
|
|
$
|
65
|
|
|
$
|
99
|
|
Proceeds from sale of
self-developed properties
|
$
|
19
|
|
|
$
|
12
|
|
|
$
|
13
|
|
|
$
|
58
|
|
|
|
|
|
|
|
|
|
7. Debt and
capital structure:
|
|
|
|
|
|
|
|
Total
debt(3)(4)
|
$
|
8,181
|
|
|
$
|
8,212
|
|
|
$
|
10,154
|
|
|
|
Net debt, net of cash
and cash equivalents(3)(4)
|
$
|
7,079
|
|
|
$
|
6,959
|
|
|
$
|
9,831
|
|
|
|
Leverage ratio (see
calculation on page 14)
|
3.08x
|
|
|
3.21x
|
|
|
4.52x
|
|
|
|
Weighted average
effective interest rate:
|
|
|
|
|
|
|
|
During the
quarter
|
4.55
|
%
|
|
5.09
|
%
|
|
5.07
|
%
|
|
|
At end of the
quarter
|
4.46
|
%
|
|
4.66
|
%
|
|
5.19
|
%
|
|
|
On the senior secured
credit facilities at end of the quarter
|
3.93
|
%
|
|
4.30
|
%
|
|
5.11
|
%
|
|
|
Debt with fixed and
capped rates as a percentage of total debt:
|
|
|
|
|
|
|
|
Debt with rates fixed
by its terms
|
44
|
%
|
|
44
|
%
|
|
48
|
%
|
|
|
Debt with rates capped
by cap agreements
|
87
|
%
|
|
86
|
%
|
|
82
|
%
|
|
|
Amount spent on share
repurchases
|
$
|
542
|
|
|
$
|
1,748
|
|
|
$
|
—
|
|
|
$
|
2,402
|
|
Number of shares
repurchased
|
8,368,506
|
|
|
30,591,750
|
|
|
—
|
|
|
41,020,232
|
|
|
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 December 31, 2019, September 30,
2019 and December 31, 2018, exclude approximately $72.8,
$76.0 and $52.0, respectively, of debt discount associated
with the Term Loan B and other deferred financing costs related to
our senior secured credit facilities and senior notes in effect at
that time. The reported balance sheet amounts exclude DMG debt
which was classified as held for sale liabilities as of
December 31, 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 December 31, 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 our new senior secured credit facilities (the New Credit
Agreement) dated August 12, 2019 and
our prior senior secured credit facilities (the Prior 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, not to exceed certain limits under the New Credit
Agreement, including short-term investments, divided by
"Consolidated EBITDA". The leverage ratio determines the interest
rate margin payable by the Company for its new Term Loan A and new
revolving line of credit under the New Credit Agreement by
establishing the margin over the base interest rate (LIBOR) that is
applicable. The following leverage ratios were calculated using
"Consolidated EBITDA" and "Consolidated net debt" as defined in the
credit agreement that was in effect at the end of each period. The
calculation below is based on the last twelve months of
"Consolidated EBITDA", as of the end of the reported period and 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 in effect at
that time. 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
|
|
December 31,
2019
|
|
September 30,
2019
|
|
December 31,
2018
|
Net
income(1)
|
$
|
706,832
|
|
|
$
|
624,922
|
|
|
$
|
159,394
|
|
Income
taxes
|
279,628
|
|
|
249,686
|
|
|
358,168
|
|
Interest
expense
|
397,934
|
|
|
437,513
|
|
|
451,251
|
|
Depreciation and
amortization
|
615,151
|
|
|
611,841
|
|
|
591,035
|
|
Impairment
charges
|
124,892
|
|
|
124,892
|
|
|
61,981
|
|
Noncontrolling
interests and equity investment income, net
|
223,175
|
|
|
210,641
|
|
|
183,855
|
|
Stock-settled
stock-based compensation
|
63,404
|
|
|
56,784
|
|
|
73,081
|
|
Debt prepayment,
refinancing and redemption charges
|
33,402
|
|
|
33,402
|
|
|
—
|
|
Gain on changes in
ownership interest, net
|
—
|
|
|
(28,152)
|
|
|
(85,699)
|
|
Valuation
adjustment
|
—
|
|
|
—
|
|
|
316,840
|
|
Other
|
(12,025)
|
|
|
24,088
|
|
|
41,084
|
|
"Consolidated
EBITDA"
|
$
|
2,432,393
|
|
|
$
|
2,345,617
|
|
|
$
|
2,150,990
|
|
|
|
|
|
|
|
|
December 31,
2019
|
|
September 30,
2019
|
|
December 31,
2018
|
Total debt, excluding
debt discount and other deferred financing
costs(2)
|
$
|
8,181,074
|
|
|
$
|
8,211,895
|
|
|
$
|
10,190,763
|
|
Letters of credit
issued
|
72,759
|
|
|
72,777
|
|
|
36,987
|
|
|
8,253,833
|
|
|
8,284,672
|
|
|
10,227,750
|
|
Less: Cash and cash
equivalents including short-term
investments(3)
|
(750,000)
|
|
|
(750,000)
|
|
|
(501,695)
|
|
Consolidated net
debt
|
$
|
7,503,833
|
|
|
$
|
7,534,672
|
|
|
$
|
9,726,055
|
|
Last twelve months
"Consolidated EBITDA"
|
$
|
2,432,393
|
|
|
$
|
2,345,617
|
|
|
$
|
2,150,990
|
|
Leverage
ratio
|
3.08x
|
|
|
3.21x
|
|
|
4.52x
|
|
Maximum leverage
ratio permitted under New and Prior Credit Agreement
|
5.00x
|
|
|
5.00x
|
|
|
5.00x
|
|
|
|
|
|
|
(1)
|
The reported net
income for December 31, 2019 and September 30, 2019 is
our reported net income from continuing operations attributable to
DaVita Inc. as the New Credit Agreement requires divestitures to be
reflected on a proforma basis, as such DMG is excluded from our
leverage ratio calculation. The reported net income for
December 31, 2018 is our reported net income attributable to
DaVita Inc.
|
(2)
|
The reported total
debt amounts at December 31, 2019, September 30, 2019 and
December 31, 2018, exclude $72,840, $75,979 and $52,000,
respectively, of debt discount associated with the Term Loan B and
other deferred financing costs.
|
(3)
|
Excluding
DMG's-physician owned entities' cash for the twelve months ended
December 31, 2018 and amounts not readily convertible to cash
related to the Company's non-qualified deferred compensation plans
for all periods presented. The Company's New Credit Agreement
limits the amount deducted for cash and cash equivalents to the
lesser of all unrestricted cash and cash equivalents of the Company
or $750,000.
|
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, management uses 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 also 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. Furthermore, we 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.
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, under our new definition, free cash flow from
continuing operations represents net cash provided by operating
activities from continuing operations less distributions to
noncontrolling interests and all capital expenditures (including
development capital expenditures, routine maintenance and
information technology); plus contributions from noncontrolling
interests and sale leaseback proceeds. Management uses this measure
to assess our ability to fund acquisitions and meet our debt
service obligations and we believe this measure is equally useful
to investors and analysts as an adjunct to cash flows from
operating activities from continuing operations and other measures
under GAAP.
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
|
|
December 31,
2019
|
|
September 30,
2019
|
|
December 31,
2018
|
|
Dollars
|
|
Per
share
|
|
Dollars
|
|
Per
share
|
|
Dollars
|
|
Per
share
|
Net income from
continuing operations attributable to
DaVita Inc.
|
$
|
242,242
|
|
|
$
|
1.86
|
|
|
$
|
150,113
|
|
|
$
|
0.99
|
|
|
$
|
160,332
|
|
|
$
|
0.96
|
|
Operating
charges:
|
|
|
|
|
|
|
|
|
|
|
|
Goodwill impairment
charges
|
—
|
|
|
—
|
|
|
83,855
|
|
|
0.55
|
|
|
—
|
|
|
—
|
|
Gain on changes in
ownership interests, net
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(28,152)
|
|
|
(0.17)
|
|
Equity
investment:
|
|
|
|
|
|
|
|
|
|
|
|
Loss due to business
sale in APAC JV
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
8,715
|
|
|
0.05
|
|
Loss due to
impairments in the APAC JV
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,530
|
|
|
0.01
|
|
Debt prepayment,
refinancing and redemption charges
|
—
|
|
|
—
|
|
|
21,242
|
|
|
0.14
|
|
|
—
|
|
|
—
|
|
Related income
tax
|
—
|
|
|
—
|
|
|
(23,236)
|
|
|
(0.15)
|
|
|
6,719
|
|
|
0.04
|
|
Adjusted net income
from continuing operations attributable to DaVita
Inc.
|
$
|
242,242
|
|
|
$
|
1.86
|
|
|
$
|
231,974
|
|
|
$
|
1.53
|
|
|
$
|
149,144
|
|
|
$
|
0.90
|
|
|
Year
ended
|
|
December 31,
2019
|
|
December 31,
2018
|
|
Dollars
|
|
Per
share
|
|
Dollars
|
|
Per
share
|
Net income from
continuing operations attributable to DaVita Inc.
|
$
|
706,832
|
|
|
$
|
4.60
|
|
|
$
|
624,321
|
|
|
$
|
3.62
|
|
Operating
charges:
|
|
|
|
|
|
|
|
Goodwill impairment
charges
|
124,892
|
|
|
0.81
|
|
|
3,106
|
|
|
0.02
|
|
Impairment of other
assets
|
—
|
|
|
—
|
|
|
17,338
|
|
|
0.10
|
|
Gain on changes in
ownership interests, net
|
—
|
|
|
—
|
|
|
(60,603)
|
|
|
(0.35)
|
|
Equity
investment:
|
|
|
|
|
|
|
|
Loss due to business
sale in APAC JV
|
—
|
|
|
—
|
|
|
8,715
|
|
|
0.05
|
|
Loss due to
impairments in the APAC JV
|
—
|
|
|
—
|
|
|
7,525
|
|
|
0.04
|
|
General and
administrative:
|
|
|
|
|
|
|
|
Restructuring
charges
|
—
|
|
|
—
|
|
|
11,366
|
|
|
0.07
|
|
Debt prepayment,
refinancing and redemption charges
|
33,402
|
|
|
0.22
|
|
|
—
|
|
|
—
|
|
Related income
tax
|
(35,231)
|
|
|
(0.23)
|
|
|
4,181
|
|
|
0.02
|
|
Adjusted net income
from continuing operations attributable to DaVita Inc.
|
$
|
829,895
|
|
|
$
|
5.40
|
|
|
$
|
615,949
|
|
|
$
|
3.57
|
|
|
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
|
|
Year
ended
|
|
December 31,
2019
|
|
September 30,
2019
|
|
December 31,
2018
|
|
December 31,
2019
|
|
December 31,
2018
|
Consolidated:
|
|
|
|
|
|
|
|
|
|
Operating
income
|
$
|
462,588
|
|
|
$
|
378,336
|
|
|
$
|
387,908
|
|
|
$
|
1,643,317
|
|
|
$
|
1,525,824
|
|
Operating
charges:
|
|
|
|
|
|
|
|
|
|
Goodwill impairment
charges
|
—
|
|
|
83,855
|
|
|
—
|
|
|
124,892
|
|
|
3,106
|
|
Impairment of other
assets
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
17,338
|
|
Gain on changes in
ownership interests, net
|
—
|
|
|
—
|
|
|
(28,152)
|
|
|
—
|
|
|
(60,603)
|
|
Equity
investment:
|
|
|
|
|
|
|
|
|
|
Loss due to business
sale in APAC JV
|
—
|
|
|
—
|
|
|
8,715
|
|
|
—
|
|
|
8,715
|
|
Loss due to
impairments in the APAC JV
|
—
|
|
|
—
|
|
|
1,530
|
|
|
—
|
|
|
7,525
|
|
General and
administrative:
|
|
|
|
|
|
|
|
|
|
Restructuring
charges
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
11,366
|
|
Adjusted operating
income
|
$
|
462,588
|
|
|
$
|
462,191
|
|
|
$
|
370,001
|
|
|
$
|
1,768,209
|
|
|
$
|
1,513,271
|
|
|
Three months
ended
|
|
Year
ended
|
|
December 31,
2019
|
|
September 30,
2019
|
|
December 31,
2018
|
|
December 31,
2019
|
|
December 31,
2018
|
Consolidated:
|
|
|
|
|
|
|
|
|
|
U.S.
dialysis:
|
|
|
|
|
|
|
|
|
|
Segment operating
income
|
$
|
508,146
|
|
|
$
|
500,742
|
|
|
$
|
436,893
|
|
|
$
|
1,924,826
|
|
|
$
|
1,709,721
|
|
Gain on changes in
ownership interests, net
|
—
|
|
|
—
|
|
|
(28,152)
|
|
|
—
|
|
|
(28,152)
|
|
Adjusted U.S.
dialysis operating income
|
$
|
508,146
|
|
|
$
|
500,742
|
|
|
$
|
408,742
|
|
|
$
|
1,924,826
|
|
|
$
|
1,681,570
|
|
Other - Ancillary
services:
|
|
|
|
|
|
|
|
|
|
U.S.
|
|
|
|
|
|
|
|
|
|
Segment operating
loss
|
$
|
(20,878)
|
|
|
$
|
(14,928)
|
|
|
$
|
(18,993)
|
|
|
$
|
(66,377)
|
|
|
$
|
(70,396)
|
|
Impairment of other
assets
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
17,338
|
|
Restructuring
charges
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
11,366
|
|
Gain on changes in
ownership interests
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(33,699)
|
|
Adjusted operating
loss
|
$
|
(20,878)
|
|
|
$
|
(14,928)
|
|
|
$
|
(18,993)
|
|
|
$
|
(66,377)
|
|
|
$
|
(75,390)
|
|
International
|
|
|
|
|
|
|
|
|
|
Segment operating
income (loss)
|
$
|
2,109
|
|
|
$
|
(82,797)
|
|
|
$
|
(10,489)
|
|
|
$
|
(122,797)
|
|
|
$
|
(23,394)
|
|
Goodwill impairment
charges
|
—
|
|
|
83,855
|
|
|
—
|
|
|
124,892
|
|
|
3,106
|
|
Loss on changes in
ownership interests
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,248
|
|
Equity
investment:
|
|
|
|
|
|
|
|
|
|
Loss due to business
sale in the APAC JV
|
—
|
|
|
—
|
|
|
8,715
|
|
|
—
|
|
|
8,715
|
|
Loss due to impairments
in the APAC JV
|
—
|
|
|
—
|
|
|
1,530
|
|
|
—
|
|
|
7,525
|
|
Adjusted operating
income (loss)
|
$
|
2,109
|
|
|
$
|
1,058
|
|
|
$
|
(245)
|
|
|
$
|
2,095
|
|
|
$
|
(2,800)
|
|
Adjusted Other -
Ancillary services operating loss
|
$
|
(18,770)
|
|
|
$
|
(13,870)
|
|
|
$
|
(19,238)
|
|
|
$
|
(64,282)
|
|
|
$
|
(78,190)
|
|
Corporate
administrative support expenses
|
$
|
(26,788)
|
|
|
$
|
(24,681)
|
|
|
$
|
(19,502)
|
|
|
$
|
(92,335)
|
|
|
$
|
(90,108)
|
|
Adjusted operating
income
|
$
|
462,588
|
|
|
$
|
462,191
|
|
|
$
|
370,001
|
|
|
$
|
1,768,209
|
|
|
$
|
1,513,271
|
|
|
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
|
|
Year
ended
|
|
December 31,
2019
|
|
September 30,
2019
|
|
December 31,
2018
|
|
December 31,
2019
|
Income
from continuing operations before income taxes
|
$
|
382,023
|
|
|
$
|
273,785
|
|
|
$
|
259,114
|
|
|
$
|
1,195,439
|
|
Less: Noncontrolling
owners' income primarily attributable to non-tax paying
entities
|
(58,118)
|
|
|
(58,502)
|
|
|
(47,203)
|
|
|
(209,544)
|
|
Income from
continuing operations before income taxes attributable to DaVita
Inc.
|
$
|
323,905
|
|
|
$
|
215,283
|
|
|
$
|
211,911
|
|
|
$
|
985,895
|
|
|
|
|
|
|
|
|
|
Income tax expense
for continuing operations
|
$
|
81,690
|
|
|
$
|
65,254
|
|
|
$
|
51,748
|
|
|
$
|
279,628
|
|
Less: Income tax
attributable to noncontrolling interests
|
(27)
|
|
|
(84)
|
|
|
(169)
|
|
|
(565)
|
|
Income tax expense
from continuing operations attributable to DaVita Inc.
|
$
|
81,663
|
|
|
$
|
65,170
|
|
|
$
|
51,579
|
|
|
$
|
279,063
|
|
|
|
|
|
|
|
|
|
Effective income tax
rate on income from continuing operations attributable to DaVita
Inc.
|
25.2
|
%
|
|
30.3
|
%
|
|
24.3
|
%
|
|
28.3
|
%
|
The effective income tax rate on adjusted income from continuing
operations attributable to DaVita Inc. is computed as follows:
|
Three months
ended
|
|
Year
ended
|
December 31,
2019
|
|
September 30,
2019
|
|
December 31,
2018
|
|
December 31,
2019
|
Income from
continuing operations before income taxes
|
$
|
382,023
|
|
|
$
|
273,785
|
|
|
$
|
259,114
|
|
|
$
|
1,195,439
|
|
Operating
charges:
|
|
|
|
|
|
|
|
Goodwill impairment
charges
|
—
|
|
|
83,855
|
|
|
—
|
|
|
124,892
|
|
Gain on changes in
ownership interests, net
|
—
|
|
|
—
|
|
|
(28,152)
|
|
|
—
|
|
Equity
investment:
|
|
|
|
|
|
|
|
Loss due to business
sale in APAC JV
|
—
|
|
|
—
|
|
|
8,715
|
|
|
—
|
|
Loss due to
impairments in the APAC JV
|
—
|
|
|
—
|
|
|
1,530
|
|
|
—
|
|
Debt prepayment,
refinancing and redemption charges
|
—
|
|
|
21,242
|
|
|
—
|
|
|
33,402
|
|
Noncontrolling
owners' income primarily attributable to non-tax paying
entities
|
(58,118)
|
|
|
(58,502)
|
|
|
(47,203)
|
|
|
(209,544)
|
|
Adjusted income from
continuing operations before income taxes attributable to DaVita
Inc.
|
$
|
323,905
|
|
|
$
|
320,380
|
|
|
$
|
194,004
|
|
|
$
|
1,144,189
|
|
Income tax
expense
|
$
|
81,690
|
|
|
$
|
65,254
|
|
|
$
|
51,748
|
|
|
$
|
279,628
|
|
Add income tax
related to:
|
|
|
|
|
|
|
|
Operating
charges:
|
|
|
|
|
|
|
|
Goodwill impairment
charges
|
—
|
|
|
17,768
|
|
|
—
|
|
|
26,633
|
|
Gain on changes in
ownership interests, net
|
—
|
|
|
—
|
|
|
(7,247)
|
|
|
—
|
|
Equity
investment:
|
|
|
|
|
|
|
|
Loss due to business
sale in APAC JV
|
—
|
|
|
—
|
|
|
449
|
|
|
—
|
|
Loss due to
impairments in the APAC JV
|
—
|
|
|
—
|
|
|
79
|
|
|
—
|
|
Debt prepayment,
refinancing and redemption charges
|
—
|
|
|
5,468
|
|
|
—
|
|
|
8,598
|
|
Less income tax
related to:
|
|
|
|
|
|
|
|
Noncontrolling
interests
|
(27)
|
|
|
(84)
|
|
|
(169)
|
|
|
(565)
|
|
Income tax on
adjusted income from continuing operations attributable to
DaVita Inc.
|
$
|
81,663
|
|
|
$
|
88,406
|
|
|
$
|
44,860
|
|
|
$
|
314,294
|
|
Effective income tax
rate on adjusted income from continuing operations
attributable to DaVita Inc.
|
25.2
|
%
|
|
27.6
|
%
|
|
23.1
|
%
|
|
27.5
|
%
|
|
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 (new definition)
|
Three months
ended
|
|
December 31,
2019
|
|
September 30,
2019
|
|
December 31,
2018
|
Net cash provided by
continuing operating activities
|
$
|
677,901
|
|
|
$
|
647,553
|
|
|
$
|
307,278
|
|
Less: Distributions
to noncontrolling interests
|
(75,953)
|
|
|
(61,456)
|
|
|
(56,768)
|
|
Plus: Contributions
to noncontrolling interests
|
13,222
|
|
|
12,814
|
|
|
9,132
|
|
Cash provided by
continuing operating activities attributable to DaVita
Inc.
|
615,170
|
|
|
598,911
|
|
|
259,642
|
|
Less: Expenditures
for routine maintenance and information technology
|
(130,243)
|
|
|
(83,513)
|
|
|
(138,745)
|
|
Less: Expenditures
for development
|
(89,120)
|
|
|
(89,752)
|
|
|
(122,793)
|
|
Plus: Proceeds from
sale of self-developed properties
|
19,365
|
|
|
11,616
|
|
|
12,606
|
|
Free cash flow from
continuing operations (new definition)
|
$
|
415,172
|
|
|
$
|
437,262
|
|
|
$
|
10,710
|
|
|
Rolling twelve
months ended
|
|
December 31,
2019
|
|
September 30,
2019
|
|
December 31,
2018
|
Net cash provided by
continuing operating activities
|
$
|
1,972,721
|
|
|
$
|
1,602,098
|
|
|
$
|
1,480,956
|
|
Less: Distributions
to noncontrolling interests
|
(233,123)
|
|
|
(213,938)
|
|
|
(196,441)
|
|
Plus: Contributions
to noncontrolling interests
|
57,317
|
|
|
53,227
|
|
|
52,311
|
|
Cash provided by
continuing operating activities attributable to DaVita
Inc.
|
1,796,915
|
|
|
1,441,387
|
|
|
1,336,826
|
|
Less: Expenditures
for routine maintenance and information technology
|
(355,444)
|
|
|
(363,946)
|
|
|
(415,038)
|
|
Less: Expenditures
for development
|
(372,636)
|
|
|
(406,309)
|
|
|
(486,877)
|
|
Plus: Proceeds from
sale of self-developed properties
|
57,817
|
|
|
51,058
|
|
|
45,314
|
|
Free cash flow from
continuing operations (new definition)
|
$
|
1,126,652
|
|
|
$
|
722,190
|
|
|
$
|
480,225
|
|
|
Certain columns or
rows may not sum or recalculate due to the use of rounded
numbers.
|
Contact:
|
Jim
Gustafson
|
|
Investor
Relations
|
|
DaVita
Inc.
|
|
(310)
536-2585
|
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SOURCE DaVita Inc.