DENVER, Feb. 10, 2022
/PRNewswire/ -- DaVita Inc. (NYSE: DVA) announced financial
and operating results for the quarter and year ended
December 31, 2021.
"COVID continues to evolve and have a direct impact on our
world, especially on the healthcare system", said Javier Rodriguez, CEO of DaVita. "I am
especially appreciative of our teammates across the DaVita Village
– from our direct patient caregivers to our corporate teammates –
who continue to provide high-quality care to our patients, respond
quickly to the rapidly changing environment, and show incredible
compassion and support for our patients throughout all the
challenges of this pandemic. Despite these ongoing challenges, we
delivered strong financial performance for full year 2021."
For the full year diluted earnings per share from continuing
operations was $8.90, an increase of
39.3% from the prior year, and adjusted diluted earnings per share
from continuing operations was $9.13,
an increase of 25.8% from the prior year. Fourth quarter diluted
earnings per share from continuing operations was $1.79, an increase of 7.2% from the prior year,
and adjusted diluted earnings per share from continuing operations
was $2.02, an increase of 21.0% from
the prior year.
Financial and operating highlights for the quarter and year
ended December 31, 2021:
- Consolidated revenues of $2.944
billion and $11.619 billion
for the three months and year ended December
31, 2021, respectively.
- Operating income of $389 million
and $1,797 million for the three
months and year ended December 31,
2021, respectively.
- Diluted earnings per share and adjusted diluted earnings per
share, both from continuing operations of $1.79 and $2.02,
respectively, for the three months ended December 31, 2021. Diluted earnings per share and
adjusted diluted earnings per share, both from continuing
operations of $8.90 and $9.13, respectively, for the year ended
December 31, 2021.
- Operating cash flow and free cash flow, both from continuing
operations, of $530 million and
$290 million, respectively, for the
three months ended December 31, 2021.
Operating cash flow and free cash flow, both from continuing
operations, of $1,931 million and
$1,133 million, respectively, for the
year ended December 31, 2021.
- Repurchased 6,127,556 shares of our common stock at an average
cost of $105.52 per share in the
three months ended December 31, 2021.
Repurchased 13,877,193 shares of our common stock at an average
cost of $111.41 per share in the year
ended December 31, 2021.
|
Three months ended
December 31,
|
|
Year ended
December 31,
|
|
2021
|
|
2020
|
|
2021
|
|
2020
|
Net income
attributable to DaVita Inc.:
|
(dollars in
millions, except per share data)
|
Net income from
continuing operations
|
$
187
|
|
$
193
|
|
$
978
|
|
$
783
|
Diluted per
share
|
$
1.79
|
|
$
1.67
|
|
$
8.90
|
|
$
6.39
|
Adjusted net income
from continuing operations(1)
|
$
212
|
|
$
193
|
|
$
1,003
|
|
$
890
|
Diluted per share
adjusted(1)
|
$
2.02
|
|
$
1.67
|
|
$
9.13
|
|
$
7.26
|
Net income
|
$
187
|
|
$
174
|
|
$
978
|
|
$
774
|
Diluted per
share
|
$
1.79
|
|
$
1.50
|
|
$
8.90
|
|
$
6.31
|
___________________
|
(1)
|
For definitions of
non-GAAP financial measures, see the note titled "Note on Non-GAAP
Financial Measures" and related reconciliations beginning on page
16.
|
|
Three months ended
December 31,
|
|
Year ended
December 31,
|
|
2021
|
|
2020
|
|
2021
|
|
2020
|
|
Amount
|
|
Margin
|
|
Amount
|
|
Margin
|
|
Amount
|
|
Margin
|
|
Amount
|
|
Margin
|
Operating
income:
|
(dollars in
millions)
|
Operating
income
|
$
389
|
|
13.2 %
|
|
$
382
|
|
13.1 %
|
|
$
1,797
|
|
15.5 %
|
|
$
1,695
|
|
14.7 %
|
Adjusted operating
income(1)(2)
|
$
389
|
|
13.2 %
|
|
$
382
|
|
13.1 %
|
|
$
1,797
|
|
15.5 %
|
|
$
1,746
|
|
15.1 %
|
______________________
|
(1)
|
For definitions of
non-GAAP financial measures, see the note titled "Note on Non-GAAP
Financial Measures" and related reconciliations beginning on page
16.
|
(2)
|
Adjusted operating
income margin is adjusted operating income divided by consolidated
revenues.
|
U.S. dialysis metrics:
Volume: Total U.S. dialysis treatments for the
fourth quarter of 2021 were 7,455,560, or an average of 94,374
treatments per day, representing a per day change of (0.1)% and
(1.6)% compared to the third quarter of 2021 and fourth quarter of
2020, respectively. Normalized non-acquired treatment growth in the
fourth quarter of 2021 compared to the fourth quarter of 2020 was
(1.8)%.
|
Three months
ended
|
|
Quarter
change
|
|
Year
ended
|
|
Annual
change
|
|
December 31,
2021
|
|
September
30,
2021
|
|
|
December 31,
2021
|
|
December 31,
2020
|
|
Per treatment
metrics:
|
|
|
|
|
|
|
|
|
|
|
|
Revenue
|
$
361.70
|
|
$
360.54
|
|
$
1.16
|
|
$
359.24
|
|
$
350.31
|
|
$
8.93
|
Patient care
costs
|
$
248.12
|
|
$
242.09
|
|
$
6.03
|
|
$
241.47
|
|
$
238.24
|
|
$
3.23
|
General and
administrative
|
$
32.53
|
|
$
30.49
|
|
$
2.04
|
|
$
31.27
|
|
$
31.62
|
|
$
(0.35)
|
Primary drivers of the changes in the table above were as
follows:
Revenue: The quarter change was primarily due to
favorable changes in government rate driven by administration of
influenza vaccines and increased commercial mix. The annual change
was primarily due to favorable changes in government mix due to
shifts to Medicare Advantage plans, favorable changes in government
rate related to increased Medicare base rates in 2021 and the
temporary suspension of Medicare sequestration, as well as an
increase in commercial mix and hospital inpatient dialysis services
revenue per treatment.
Patient care costs: The quarter change was primarily due
to an increase in compensation expenses driven by increased wage
rates and health benefit expenses, as well as increases in other
direct operating expenses associated with our dialysis centers,
insurance expense and pharmaceutical costs driven by influenza
vaccines. These increases were partially offset by decreases in
utilities expense resulting from seasonality. The annual change was
primarily due to increases in compensation expenses related to
increased wages and health benefit expenses due to lower than
normal claims volume in 2020 due to COVID-19, other direct
operating expenses associated with our dialysis centers, medical
supply expense and insurance expense. These increases were
partially offset by decreases in pharmaceutical unit costs and
intensity, COVID-19-related compensation expenses, utilities
expense driven by our virtual power purchase arrangements and
professional fees.
General and administrative: The quarter change was
due to increases in compensation expense, office supplies and other
purchased services, as well as increases in long-term incentive
compensation, partially offset by a decrease in professional fees.
The annual change was primarily due to decreases in advocacy costs
and contributions to our charitable foundation, partially offset by
increases in compensation expenses related to labor costs, health
benefit expenses and payroll taxes, as well as increases in
professional fees and long-term incentive compensation.
Certain items impacting the quarter:
Share repurchases: During the three months ended
December 31, 2021, we repurchased 6,127,556 shares of our
common stock for $647 million, at an
average cost of $105.52 per
share.
Subsequent to December 31, 2021 through February 9,
2022, we repurchased 1,437,107 shares of our common stock for
$159 million, at an average cost of
$110.73 per share.
Non-GAAP adjustments to net income:
Income tax impact related to prior legal
settlement: During the three months ended
December 31, 2021, we recognized additional tax expense of
$25 million related to an uncertain
tax position for a portion of a prior legal matter.
Financial and operating metrics:
|
Three months
ended
December
31,
|
|
Year
ended
December
31,
|
|
2021
|
|
2020
|
|
2021
|
|
2020
|
Cash
flow:
|
(dollars in
millions)
|
Operating cash
flow
|
$
530
|
|
$
485
|
|
$
1,931
|
|
$
1,979
|
Operating cash flow
from continuing operations
|
$
530
|
|
$
485
|
|
$
1,931
|
|
$
1,979
|
Free cash flow from
continuing operations (1)
|
$
290
|
|
$
210
|
|
$
1,133
|
|
$
1,188
|
___________________
|
(1)
|
For definitions of
non-GAAP financial measures, see the note titled "Note on Non-GAAP
Financial Measures" and related reconciliations beginning on page
16.
|
|
Three months
ended
December 31, 2021
|
|
Year
ended
December 31,
2021
|
Effective income
tax rate on:
|
|
Income from continuing
operations
|
20.8 %
|
|
20.2 %
|
Income from continuing
operations attributable to DaVita Inc.(1)
|
25.8 %
|
|
23.8 %
|
Adjusted income from
continuing operations attributable to DaVita
Inc.(1)
|
16.0 %
|
|
21.9 %
|
___________________
|
(1)
|
For definitions of
non-GAAP financial measures, see the note titled "Note on Non-GAAP
Financial Measures" and related reconciliations beginning on page
16.
|
Center activity: As of December 31, 2021, we
provided dialysis services to a total of approximately 243,000
patients at 3,154 outpatient dialysis centers, of which 2,815
centers were located in the United
States and 339 centers were located in ten countries outside
of the United States. During the
fourth quarter of 2021, we acquired 17 dialysis centers, opened a
total of two new dialysis centers and closed 30 dialysis centers in
the United States. We also
acquired seven dialysis centers, opened two dialysis centers and
closed three dialysis centers outside of the United States during the fourth quarter of
2021.
DaVita IKC: As of December 31, 2021, we have
approximately 16,000 patients in risk-based integrated care
arrangements representing approximately $1.8
billion in annualized medical spend. We have an additional
7,000 patients in other integrated care arrangements; we do not
include the medical spend of these patients in this annualized
medical spend estimate. See additional description of these metrics
at Note 2.
Outlook:
The following forward-looking measures and the underlying
assumptions involve significant known and unknown risks and
uncertainties, including those described below, and actual results
may vary materially from these forward-looking measures. For
example, the widespread impact of the COVID-19 pandemic continues
to generate significant risk and uncertainty, and as a result, our
future results could vary materially from the guidance provided
below. We do not provide guidance for operating income or diluted
net income from continuing operations per share attributable to
DaVita Inc. 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,
which may be significant. The guidance for our 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.
|
2022
guidance
|
|
Low
|
|
High
|
|
(dollars in
millions, except per share data)
|
Adjusted operating
income
|
$
1,525
|
|
$
1,675
|
Adjusted diluted net
income from continuing
operations per
share attributable to DaVita Inc.
|
$
7.50
|
|
$
8.50
|
Free cash flow from
continuing operations
|
$
850
|
|
$
1,100
|
We will be holding a conference call to discuss our results for
the fourth quarter and year ended December 31, 2021, on
February 10, 2022, 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.
Forward looking statements
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 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. These
forward-looking statements could include, among other things,
DaVita's response to and the expected future impacts of the novel
coronavirus (COVID-19), including statements about our balance
sheet and liquidity, our expenses and expense offsets, revenues,
billings and collections, potential need, ability or willingness to
use any funds under government relief programs, availability or
cost of supplies, treatment volumes, mix expectation, such as the
percentage or number of patients under commercial insurance, the
availability, acceptance, impact, administration and efficacy of
COVID-19 vaccines, treatments and therapies, the continuing impact
on the U.S. and global economies, unemployment and labor market
conditions, and overall impact on our patients and teammates, as
well as other statements regarding our future operations, financial
condition and prospects, expenses, strategic initiatives,
government and commercial payment rates, expectations related to
value-based care, integrated kidney care, and Medicare Advantage
plan enrollment and our ongoing stock repurchase program, and
statements related to our guidance and expectations for future
periods and the assumptions underlying any such projections. All
statements in this release, other than statements of historical
fact, are forward-looking statements. Without limiting the
foregoing, statements including the words "expect," "intend,"
"will," "could," "plan," "anticipate," "believe," "forecast,"
"guidance," "outlook," "goals," and similar expressions are
intended to identify forward-looking statements. These
forward-looking statements are based on DaVita's current
expectations and are based solely on information available as of
the date of this release. DaVita undertakes no obligation to
publicly update or revise any forward-looking statements, whether
as a result of changed circumstances, new information, future
events or otherwise, except as may be required by law. Actual
future events and results 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 continuing impact of the dynamic and evolving COVID-19
pandemic, including, without limitation, on our patients,
teammates, physician partners, suppliers, business, operations,
reputation, financial condition and results of operations; the
government's response to the COVID-19 pandemic, including, among
other things, federal, state and local vaccine mandates or
surveillance testing requirements and the extent to which they may
ultimately be applicable to us; the pandemic's continuing impact on
the U.S. and global economies, unemployment, labor market
conditions, inflation and evolving monetary policies; the
availability, acceptance, impact and efficacy of COVID-19 vaccines,
treatments and therapies; further spread or resurgence of the
virus, including as a result of the emergence of new strains of the
virus, such as the Delta and Omicron variants; the continuing
impact of the pandemic on our revenue and non-acquired growth due
to lower treatment volumes; COVID-19's impact on the chronic kidney
disease (CKD) population and our patient population including on
the mortality of these patients; any potential negative impact on
our commercial mix or the number of our patients covered by
commercial insurance plans; continued increased COVID-19-related
costs; supply chain challenges and disruptions, including with
respect to our clinical supplies; and higher salary and wage
expense driven in part by labor market conditions and a high demand
for our clinical personnel, any of which may also have the effect
of heightening many of the other risks and uncertainties discussed
below, and in many cases, lead to impacts that persist even after
the pandemic subsides;
- the extent to which the ongoing implementation of healthcare
reform, or changes in or new legislation, regulations or guidance,
enforcement thereof or related litigation 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 that are enrolled in or select Medicare Advantage plans or other
material impacts to our business or operations; or our making
incorrect assumptions about how our patients will respond to any
such developments;
- risks arising from potential changes in laws, regulations or
requirements applicable to us, such as potential and proposed
federal and/or state legislation, regulation, ballot, executive
action or other initiatives, including without limitation those
related to healthcare and/or labor matters, such as AB 290 in
California;
- the impact of the political environment and related
developments on the current healthcare marketplace and on our
business, including with respect to the Affordable Care Act, the
exchanges and many other core aspects of the current healthcare
marketplace, as well as the composition of the U.S. Supreme Court
and the current presidential administration and congressional
majority;
- legal and compliance risks, such as our continued compliance
with complex, and at times, evolving government regulations and
requirements;
- 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 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 or percentage of our patients under such plans, including,
without limitation, as a result of restrictive plan designs,
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;
- our ability to successfully implement our strategies with
respect to integrated kidney care and value-based care initiatives
and home based dialysis in the desired time frame and in a complex,
dynamic and highly regulated environment, including, among other
things, maintaining our existing business; meeting growth
expectations; recovering our investments; entering into agreements
with payors, third party vendors and others on terms that are
competitive and, as appropriate, prove actuarially sound;
structuring operations, agreements and arrangements to comply with
evolving rules and regulations; finding, training and retaining
appropriate staff; and further developing our integrated care and
other capabilities to provide competitive programs at
scale;
- a reduction in government payment rates under the Medicare
End Stage Renal Disease program, state Medicaid or other
government-based programs and the impact of the Medicare Advantage
benchmark structure;
- changes in pharmaceutical practice patterns, reimbursement
and payment policies and processes, or pharmaceutical pricing,
including with respect to hypoxia inducible factors, among other
things;
- our ability to develop and maintain relationships with
physicians and hospitals, changing affiliation models for
physicians, and the emergence of new models of care or other
initiatives introduced by the government or private sector that,
among other things, may erode our patient base and impact
reimbursement rates;
- our ability to complete acquisitions, mergers, dispositions,
joint ventures or other strategic transactions 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;
- our ability to attract, retain and motivate teammates and
our ability to manage operating cost increases or productivity
decreases whether due to union organizing activities, legislative
or other changes, demand for labor, volatility and uncertainty in
the labor market, the current challenging labor market conditions,
or other reasons;
- our aspirations, goals and disclosures related to
environmental, social and governance (ESG) matters, including
evolving regulatory requirements affecting ESG standards,
measurements and reporting requirements; the availability of
suppliers that can meet our sustainability standards; and our
ability to recruit, develop and retain diverse talent in our labor
markets;
- continued increased competition from dialysis providers and
others, and other potential marketplace changes, including
increased investment in and availability of funding to new entrants
in the dialysis and pre-dialysis marketplace;
- the variability of our cash flows, including without
limitation any extended billing or collections cycles; the risk
that we may not be able to generate or access 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;
and
- the other risk factors, trends and uncertainties set forth
in our Annual Report on Form 10-K for the year ended December 31, 2020 and Quarterly Reports on Form
10-Q for the quarters ended March 31,
June 30 and September 30,2021, and the risks and
uncertainties discussed in any subsequent reports that we file or
furnish with the 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, 2021.
DAVITA
INC. CONSOLIDATED STATEMENTS OF
INCOME (unaudited) (dollars and shares in
thousands, except per share data)
|
|
|
Three months ended
December 31,
|
|
Year ended
December 31,
|
|
2021
|
|
2020
|
|
2021
|
|
2020
|
Dialysis patient
service revenues
|
$
2,843,031
|
|
$
2,773,123
|
|
$
11,213,515
|
|
$
11,026,251
|
Other
revenues
|
100,936
|
|
132,199
|
|
405,282
|
|
524,353
|
Total
revenues
|
2,943,967
|
|
2,905,322
|
|
11,618,797
|
|
11,550,604
|
Operating
expenses:
|
|
|
|
|
|
|
|
Patient care
costs
|
2,060,218
|
|
2,056,881
|
|
7,972,414
|
|
7,988,613
|
General and
administrative
|
322,723
|
|
304,519
|
|
1,195,335
|
|
1,247,584
|
Depreciation and
amortization
|
174,763
|
|
161,486
|
|
680,615
|
|
630,435
|
Equity investment
(income) loss, net
|
(3,152)
|
|
765
|
|
(26,937)
|
|
(26,916)
|
Loss on changes in
ownership interest, net
|
—
|
|
—
|
|
—
|
|
16,252
|
Total operating
expenses
|
2,554,552
|
|
2,523,651
|
|
9,821,427
|
|
9,855,968
|
Operating
income
|
389,415
|
|
381,671
|
|
1,797,370
|
|
1,694,636
|
Debt
expense
|
(72,087)
|
|
(60,469)
|
|
(285,254)
|
|
(304,111)
|
Debt prepayment,
refinancing and redemption charges
|
—
|
|
—
|
|
—
|
|
(89,022)
|
Other (loss) income,
net
|
(2,388)
|
|
6,169
|
|
6,378
|
|
16,759
|
Income from
continuing operations before income taxes
|
314,940
|
|
327,371
|
|
1,518,494
|
|
1,318,262
|
Income tax
expense
|
65,508
|
|
73,368
|
|
306,732
|
|
313,932
|
Net income from
continuing operations
|
249,432
|
|
254,003
|
|
1,211,762
|
|
1,004,330
|
Net loss from
discontinued operations, net of tax
|
—
|
|
(19,633)
|
|
—
|
|
(9,653)
|
Net income
|
249,432
|
|
234,370
|
|
1,211,762
|
|
994,677
|
Less: Net income
attributable to noncontrolling interests
|
(61,959)
|
|
(60,597)
|
|
(233,312)
|
|
(221,035)
|
Net income
attributable to DaVita Inc.
|
$
187,473
|
|
$
173,773
|
|
$
978,450
|
|
$
773,642
|
|
|
|
|
|
|
|
|
Earnings per share
attributable to DaVita Inc.:
|
|
|
|
|
|
|
|
Basic net income from
continuing operations
|
$
1.86
|
|
$
1.73
|
|
$
9.30
|
|
$
6.54
|
Basic net
income
|
$
1.86
|
|
$
1.56
|
|
$
9.30
|
|
$
6.46
|
Diluted net income
from continuing operations
|
$
1.79
|
|
$
1.67
|
|
$
8.90
|
|
$
6.39
|
Diluted net
income
|
$
1.79
|
|
$
1.50
|
|
$
8.90
|
|
$
6.31
|
|
|
|
|
|
|
|
|
Weighted average
shares for earnings per share:
|
|
|
|
|
|
|
|
Basic
shares
|
100,913
|
|
111,690
|
|
105,230
|
|
119,797
|
Diluted
shares
|
104,842
|
|
115,957
|
|
109,948
|
|
122,623
|
|
|
|
|
|
|
|
|
Amounts
attributable to DaVita Inc.:
|
|
|
|
|
|
|
|
Net income from
continuing operations
|
$
187,473
|
|
$
193,406
|
|
$
978,450
|
|
$
783,295
|
Net loss from
discontinued operations
|
—
|
|
(19,633)
|
|
—
|
|
(9,653)
|
Net income
attributable to DaVita Inc.
|
$
187,473
|
|
$
173,773
|
|
$
978,450
|
|
$
773,642
|
DAVITA
INC. CONSOLIDATED STATEMENTS OF COMPREHENSIVE
INCOME (unaudited) (dollars in
thousands)
|
|
|
Three months ended
December 31,
|
|
Year ended
December 31,
|
|
2021
|
|
2020
|
|
2021
|
|
2020
|
Net income
|
$
249,432
|
|
$
234,370
|
|
$
1,211,762
|
|
$
994,677
|
Other comprehensive
(loss) income, net of tax:
|
|
|
|
|
|
|
|
Unrealized gains
(losses) on interest rate cap agreements:
|
|
|
|
|
|
|
|
Unrealized gains
(losses)
|
4,689
|
|
124
|
|
7,155
|
|
(16,346)
|
Reclassifications of
net realized losses into net income
|
1,034
|
|
1,033
|
|
4,133
|
|
5,313
|
Unrealized (losses)
gains on foreign currency translation:
|
(25,218)
|
|
55,219
|
|
(84,381)
|
|
(7,623)
|
Other comprehensive
(loss) income
|
(19,495)
|
|
56,376
|
|
(73,093)
|
|
(18,656)
|
Total comprehensive
income
|
229,937
|
|
290,746
|
|
1,138,669
|
|
976,021
|
Less: Comprehensive
income attributable to noncontrolling interests
|
(61,959)
|
|
(60,597)
|
|
(233,312)
|
|
(221,035)
|
Comprehensive income
attributable to DaVita Inc.
|
$
167,978
|
|
$
230,149
|
|
$
905,357
|
|
$
754,986
|
DAVITA
INC. CONSOLIDATED STATEMENTS OF CASH
FLOW (unaudited) (dollars in
thousands)
|
|
|
Year ended
December 31,
|
|
2021
|
|
2020
|
Cash flows from
operating activities:
|
|
|
|
Net income
|
$
1,211,762
|
|
$
994,677
|
Adjustments to
reconcile net income to net cash provided by operating
activities:
|
|
|
|
Depreciation and
amortization
|
680,615
|
|
630,435
|
Debt prepayment,
refinancing and redemption charges
|
—
|
|
86,957
|
Stock-based
compensation expense
|
102,209
|
|
91,458
|
Deferred income
taxes
|
60,483
|
|
240,848
|
Equity investment
loss, net
|
5,215
|
|
13,830
|
Loss on sales of
business interests, net
|
—
|
|
24,248
|
Other non-cash
charges, net
|
11,231
|
|
747
|
Changes in operating
assets and liabilities, net of effect of acquisitions and
divestitures:
|
|
|
|
Accounts
receivable
|
(138,140)
|
|
(21,087)
|
Inventories
|
5,720
|
|
(12,349)
|
Other receivables and
prepaid and other current assets
|
128,661
|
|
(79,277)
|
Other long-term
assets
|
(26,387)
|
|
(6,123)
|
Accounts
payable
|
(30,320)
|
|
37,200
|
Accrued compensation
and benefits
|
(16,717)
|
|
(20,931)
|
Other current
liabilities
|
(93,645)
|
|
105,637
|
Income
taxes
|
36,921
|
|
(87,391)
|
Other long-term
liabilities
|
(6,732)
|
|
(19,851)
|
Net cash provided by
operating activities
|
1,930,876
|
|
1,979,028
|
Cash flows from
investing activities:
|
|
|
|
Additions of property
and equipment
|
(641,465)
|
|
(674,541)
|
Acquisitions
|
(187,050)
|
|
(182,013)
|
Proceeds from asset
and business sales
|
61,464
|
|
50,139
|
Purchase of debt
investments held-to-maturity
|
(30,849)
|
|
(150,701)
|
Purchase of other debt
and equity investments
|
(2,987)
|
|
(3,757)
|
Proceeds from debt
investments held-to-maturity
|
15,849
|
|
151,213
|
Proceeds from sale of
other debt and equity investments
|
12,030
|
|
3,491
|
Purchase of equity
method investments
|
(13,924)
|
|
(22,341)
|
Distributions from
equity method investments
|
2,944
|
|
3,139
|
Other
|
(745)
|
|
—
|
Net cash used in
investing activities
|
(784,733)
|
|
(825,371)
|
Cash flows from
financing activities:
|
|
|
|
Borrowings
|
1,615,370
|
|
4,046,775
|
Payments on long-term
debt
|
(861,115)
|
|
(4,110,304)
|
Deferred financing and
debt redemption costs
|
(9,091)
|
|
(105,848)
|
Purchase of treasury
stock
|
(1,538,626)
|
|
(1,458,442)
|
Distributions to
noncontrolling interests
|
(244,033)
|
|
(253,118)
|
Net payments related
to stock purchases and awards
|
(60,001)
|
|
(975)
|
Contributions from
noncontrolling interests
|
31,754
|
|
42,966
|
Proceeds from sales of
additional noncontrolling interest
|
2,880
|
|
—
|
Purchases of
noncontrolling interests
|
(20,104)
|
|
(7,831)
|
Net cash used in
financing activities
|
(1,082,966)
|
|
(1,846,777)
|
Effect of exchange
rate changes on cash, cash equivalents and restricted
cash
|
(10,007)
|
|
(13,808)
|
Net increase
(decrease) in cash, cash equivalents and restricted cash from
continuing operations
|
53,170
|
|
(706,928)
|
Cash, cash
equivalents and restricted cash of continuing operations at
beginning of the year
|
501,790
|
|
1,208,718
|
Cash, cash
equivalents and restricted cash of continuing operations at end of
the year
|
$
554,960
|
|
$
501,790
|
DAVITA
INC. CONSOLIDATED BALANCE
SHEETS (unaudited) (dollars and shares in
thousands, except per share data)
|
|
|
December 31,
2021
|
|
December 31,
2020
|
ASSETS
|
|
|
|
Cash and cash
equivalents
|
$
461,900
|
|
$
324,958
|
Restricted cash and
equivalents
|
93,060
|
|
176,832
|
Short-term
investments
|
22,310
|
|
20,101
|
Accounts
receivable
|
1,957,583
|
|
1,824,282
|
Inventories
|
107,428
|
|
111,625
|
Other
receivables
|
427,321
|
|
544,376
|
Prepaid and other
current assets
|
72,517
|
|
76,387
|
Income tax
receivable
|
25,604
|
|
70,163
|
Total current
assets
|
3,167,723
|
|
3,148,724
|
Property and
equipment, net of accumulated depreciation of $4,763,135 and
$4,480,429, respectively
|
3,479,972
|
|
3,521,824
|
Operating lease
right-of-use assets
|
2,824,787
|
|
2,863,089
|
Intangible assets,
net of accumulated amortization of $60,730 and $70,141,
respectively
|
177,693
|
|
166,585
|
Equity method and
other investments
|
238,881
|
|
257,491
|
Long-term
investments
|
49,514
|
|
32,193
|
Other long-term
assets
|
136,677
|
|
79,501
|
Goodwill
|
7,046,241
|
|
6,919,109
|
|
$
17,121,488
|
|
$
16,988,516
|
LIABILITIES AND
EQUITY
|
|
|
|
Accounts
payable
|
$
402,049
|
|
$
434,253
|
Other
liabilities
|
709,345
|
|
810,529
|
Accrued compensation
and benefits
|
659,960
|
|
685,555
|
Current portion of
operating lease liabilities
|
394,357
|
|
369,497
|
Current portion of
long-term debt
|
179,030
|
|
168,541
|
Income tax
payable
|
53,792
|
|
7,768
|
Total current
liabilities
|
2,398,533
|
|
2,476,143
|
Long-term operating
lease liabilities
|
2,672,713
|
|
2,738,670
|
Long-term
debt
|
8,729,150
|
|
7,917,263
|
Other long-term
liabilities
|
119,158
|
|
150,060
|
Deferred income
taxes
|
830,954
|
|
809,600
|
Total
liabilities
|
14,750,508
|
|
14,091,736
|
Commitments and
contingencies
|
|
|
|
Noncontrolling
interests subject to put provisions
|
1,434,832
|
|
1,330,028
|
Equity:
|
|
|
|
Preferred stock
($0.001 par value, 5,000 shares authorized; none issued)
|
—
|
|
—
|
Common stock ($0.001
par value, 450,000 shares authorized; 97,289 and 109,933 shares
issued
and outstanding at
December 31, 2021 and December 31, 2020,
respectively)
|
97
|
|
110
|
Additional paid-in
capital
|
540,321
|
|
597,073
|
Retained
earnings
|
354,337
|
|
852,537
|
Accumulated other
comprehensive loss
|
(139,247)
|
|
(66,154)
|
Total DaVita Inc.
shareholders' equity
|
755,508
|
|
1,383,566
|
Noncontrolling
interests not subject to put provisions
|
180,640
|
|
183,186
|
Total
equity
|
936,148
|
|
1,566,752
|
|
$
17,121,488
|
|
$
16,988,516
|
DAVITA
INC. SUPPLEMENTAL FINANCIAL
DATA (unaudited)
(dollars in millions and shares in thousands, except per share and
per treatment data)
|
|
|
Three months
ended
|
|
Year
ended
December 31,
2021
|
|
December
31,
2021
|
|
September
30,
2021
|
|
December
31,
2020
|
|
1. Consolidated
business metrics:
|
|
|
|
|
|
|
|
Operating
margin
|
13.2 %
|
|
16.2 %
|
|
13.1 %
|
|
15.5 %
|
Adjusted operating
margin excluding certain items(1)(2)
|
13.2 %
|
|
16.2 %
|
|
13.1 %
|
|
15.5 %
|
General and
administrative expenses as a percent of consolidated revenues(3)
|
11.0 %
|
|
10.0 %
|
|
10.5 %
|
|
10.3 %
|
Effective income tax
rate on income from continuing operations
|
20.8 %
|
|
18.9 %
|
|
22.4 %
|
|
20.2 %
|
Effective income tax
rate on income from continuing operations attributable to DaVita
Inc.(1)
|
25.8 %
|
|
22.3 %
|
|
27.5 %
|
|
23.8 %
|
Effective income tax
rate on adjusted income from continuing operations attributable to DaVita
Inc.(1)
|
16.0 %
|
|
22.3 %
|
|
27.5 %
|
|
21.9 %
|
|
|
|
|
|
|
|
|
2. Summary of
financial results:
|
|
|
|
|
|
|
|
Revenues:
|
|
|
|
|
|
|
|
U.S. dialysis patient
services and other
|
$
2,703
|
|
$
2,698
|
|
$
2,674
|
|
$
10,667
|
Other—Ancillary
services
|
|
|
|
|
|
|
|
U.S. other
|
92
|
|
92
|
|
124
|
|
371
|
International dialysis
patient service and other
|
170
|
|
171
|
|
152
|
|
676
|
|
262
|
|
262
|
|
276
|
|
1,047
|
Eliminations
|
(20)
|
|
(22)
|
|
(45)
|
|
(95)
|
Total consolidated
revenues
|
$
2,944
|
|
$
2,938
|
|
$
2,905
|
|
$
11,619
|
Operating income
(loss):
|
|
|
|
|
|
|
|
U.S.
dialysis
|
$
451
|
|
$
510
|
|
$
433
|
|
$
1,975
|
Other—Ancillary
services
|
|
|
|
|
|
|
|
U.S.
|
(35)
|
|
(20)
|
|
(25)
|
|
(108)
|
International(4)
|
6
|
|
13
|
|
(2)
|
|
42
|
|
(29)
|
|
(7)
|
|
(27)
|
|
(66)
|
Corporate
administrative support expenses
|
(33)
|
|
(28)
|
|
(24)
|
|
(112)
|
Total consolidated
operating income
|
$
389
|
|
$
475
|
|
$
382
|
|
$
1,797
|
DAVITA
INC. SUPPLEMENTAL FINANCIAL DATA -
continued (unaudited) (dollars in millions and
shares in thousands, except per share and per treatment
data)
|
|
|
Three months
ended
|
|
Year
ended
December 31,
2021
|
|
December
31,
2021
|
|
September
30,
2021
|
|
December
31,
2020
|
|
3. Summary of
reportable segment financial results and
metrics:
|
|
|
|
|
|
|
|
U.S.
dialysis
|
|
|
|
|
|
|
|
Financial
results
|
|
|
|
|
|
|
|
Revenue:
|
|
|
|
|
|
|
|
Dialysis patient
service revenues
|
$
2,697
|
|
$
2,692
|
|
$
2,664
|
|
$
10,642
|
Other
revenues
|
6
|
|
6
|
|
10
|
|
25
|
Total operating
revenues
|
2,703
|
|
2,698
|
|
2,674
|
|
10,667
|
Operating
expenses:
|
|
|
|
|
|
|
|
Patient care
costs
|
1,850
|
|
1,808
|
|
1,856
|
|
7,153
|
General and
administrative
|
243
|
|
228
|
|
241
|
|
926
|
Depreciation and
amortization
|
166
|
|
161
|
|
152
|
|
643
|
Equity investment
income
|
(7)
|
|
(8)
|
|
(7)
|
|
(30)
|
Total operating
expenses
|
2,251
|
|
2,188
|
|
2,241
|
|
8,692
|
Segment operating
income
|
$
451
|
|
$
510
|
|
$
433
|
|
$
1,975
|
Metrics
|
|
|
|
|
|
|
|
Volume:
|
|
|
|
|
|
|
|
Treatments
|
7,455,560
|
|
7,466,197
|
|
7,574,217
|
|
29,622,188
|
Number of treatment
days
|
79.0
|
|
79.0
|
|
79.0
|
|
313.0
|
Average treatments per
day
|
94,374
|
|
94,509
|
|
95,876
|
|
94,640
|
Per day year-over-year
decrease
|
(1.6) %
|
|
(2.5) %
|
|
(0.9) %
|
|
(2.1) %
|
Normalized
year-over-year non-acquired treatment
growth(5)
|
(1.8) %
|
|
(1.7) %
|
|
(0.3) %
|
|
|
Operating net
revenues:
|
|
|
|
|
|
|
|
Average patient
service revenue per treatment
|
$
361.70
|
|
$
360.54
|
|
$
351.78
|
|
$
359.24
|
Expenses:
|
|
|
|
|
|
|
|
Patient care costs per
treatment
|
$
248.12
|
|
$
242.09
|
|
$
245.06
|
|
$
241.47
|
General and
administrative expenses per treatment
|
$
32.53
|
|
$
30.49
|
|
$
31.80
|
|
$
31.27
|
Accounts
receivable:
|
|
|
|
|
|
|
|
Receivables
|
$
1,781
|
|
$
1,853
|
|
$
1,681
|
|
|
DSO
|
61
|
|
64
|
|
59
|
|
|
DAVITA
INC. SUPPLEMENTAL FINANCIAL DATA -
continued (unaudited) (dollars in millions and
shares in thousands, except per share and per treatment
data)
|
|
|
Three months
ended
|
|
Year
ended
December 31,
2021
|
|
December
31,
2021
|
|
September
30,
2021
|
|
December
31,
2020
|
|
4. Cash
flow:
|
|
|
|
|
|
|
|
Operating cash
flow
|
$
530
|
|
$
567
|
|
$
485
|
|
$
1,931
|
Operating cash flow
from continuing operations
|
$
530
|
|
$
567
|
|
$
485
|
|
$
1,931
|
Operating cash flow
from continuing operations, last twelve months
|
$
1,931
|
|
$
1,886
|
|
$
1,979
|
|
|
Free cash flow from
continuing operations(1)
|
$
290
|
|
$
358
|
|
$
210
|
|
$
1,133
|
Free cash flow from
continuing operations, last twelve months(1)
|
$
1,133
|
|
$
1,054
|
|
$
1,188
|
|
|
Capital expenditures
from continuing operations:
|
|
|
|
|
|
|
|
Routine
maintenance/IT/other
|
$
132
|
|
$
108
|
|
$
160
|
|
$
421
|
Development and
relocations
|
$
58
|
|
$
50
|
|
$
65
|
|
$
220
|
Acquisition
expenditures
|
$
142
|
|
$
21
|
|
$
69
|
|
$
187
|
Proceeds from sale of
self-developed properties
|
$
13
|
|
$
14
|
|
$
14
|
|
$
56
|
|
|
|
|
|
|
|
|
5. Debt and
capital structure:
|
|
|
|
|
|
|
|
Total
debt(6)
|
$
8,965
|
|
$
8,997
|
|
$
8,164
|
|
|
Net debt, net of cash
and cash equivalents(6)
|
$
8,503
|
|
$
7,951
|
|
$
7,839
|
|
|
Leverage ratio (see
calculation on page 14)
|
3.32x
|
|
3.25x
|
|
3.21x
|
|
|
Weighted average
effective interest rate:
|
|
|
|
|
|
|
|
During the
quarter
|
3.34 %
|
|
3.34 %
|
|
3.07 %
|
|
|
At end of the
quarter
|
3.35 %
|
|
3.34 %
|
|
3.06 %
|
|
|
On the senior secured
credit facilities at end of the quarter
|
2.18 %
|
|
2.16 %
|
|
2.03 %
|
|
|
Debt with fixed and
capped rates as a percentage of total debt:
|
|
|
|
|
|
|
|
Debt with rates fixed
by its terms
|
52 %
|
|
51 %
|
|
44 %
|
|
|
Debt with rates fixed
by its terms or capped by cap agreements
|
91 %
|
|
90 %
|
|
87 %
|
|
|
Amount spent on share
repurchases
|
$
647
|
|
$
336
|
|
$
417
|
|
$
1,546
|
Number of shares
repurchased
|
6,128
|
|
2,731
|
|
4,193
|
|
13,877
|
|
Certain columns, rows
or percentages may not sum or recalculate due to the presentation
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)
|
Adjusted operating
income margin is adjusted operating income divided by consolidated
revenues.
|
(3)
|
General and
administrative expenses include certain corporate support,
long-term incentive compensation, advocacy costs and charitable
contributions.
|
(4)
|
The reported
operating income for the three months ended December 31, 2021,
September 30, 2021 and December 31, 2020 and the year
ended December 31, 2021 includes foreign currency (losses)
gains embedded in equity method income recognized from our Asia
Pacific joint venture of approximately $(1.0), $1.8, $(6.0) and
$3.3 respectively.
|
(5)
|
Normalized
non-acquired treatment growth reflects year-over-year growth in
treatment volume, adjusted to exclude acquisitions and other
similar transactions, and further adjusted to normalize for the
number and mix of treatment days in a given quarter versus the
prior year quarter.
|
(6)
|
The debt amounts as
of December 31, 2021, September 30, 2021, and
December 31, 2020 presented exclude approximately $56.7, $59.8
and $77.7, respectively, of debt discount, premium and other
deferred financing costs related to our senior secured credit
facilities and senior notes in effect or outstanding at that
time.
|
DAVITA INC.
SUPPLEMENTAL FINANCIAL
DATA-continued
(unaudited)
(dollars in
millions)
Note 1: Calculation of the Leverage Ratio
Under our senior secured credit facilities (the Credit
Agreement) dated August 12, 2019, the
leverage ratio is defined as (a) all funded debt plus the face
amount of all letters of credit issued, minus unrestricted cash and
cash equivalents (including short-term investments) not to exceed
$750 divided by (b) "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
calculation below is based on the last twelve months of
"Consolidated EBITDA," as of the end of the reported period and pro
forma for acquisitions or divestitures that occurred during the
period, and "Consolidated net debt" at the end of the reported
period, each as defined in the Credit Agreement. The Company's
management believes the presentation of "Consolidated EBITDA" is
useful to investors 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 the ratio of total debt
to operating income, determined in accordance with 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 of other companies.
|
Twelve months
ended
|
|
December
31,
2021
|
|
September
30,
2021
|
|
December
31,
2020
|
Net income
attributable to DaVita Inc. from continuing operations
(1)
|
$
978
|
|
$
984
|
|
$
783
|
Income
taxes
|
307
|
|
315
|
|
314
|
Interest
expense
|
261
|
|
250
|
|
272
|
Depreciation and
amortization
|
681
|
|
667
|
|
630
|
Noncontrolling
interests and equity investment income, net
|
233
|
|
241
|
|
235
|
Stock-settled
stock-based compensation
|
101
|
|
98
|
|
90
|
Debt prepayment,
refinancing and redemption charges
|
—
|
|
—
|
|
89
|
Loss on changes in
ownership interest, net
|
—
|
|
—
|
|
16
|
Other
|
13
|
|
2
|
|
29
|
"Consolidated
EBITDA"
|
$
2,574
|
|
$
2,558
|
|
$
2,460
|
|
|
|
|
|
|
|
December
31,
2021
|
|
September
30,
2021
|
|
December
31,
2020
|
Total debt, excluding
debt discount and other deferred financing
costs(2)
|
$
8,965
|
|
$
8,997
|
|
$
8,164
|
Letters of credit
issued
|
69
|
|
69
|
|
65
|
|
9,034
|
|
9,067
|
|
8,228
|
Less: Cash and cash
equivalents including short-term
investments(3)
|
(481)
|
|
(750)
|
|
(333)
|
Consolidated net
debt
|
$
8,554
|
|
$
8,317
|
|
$
7,895
|
Last twelve months
"Consolidated EBITDA"
|
$
2,574
|
|
$
2,558
|
|
$
2,460
|
Leverage
ratio
|
3.32x
|
|
3.25x
|
|
3.21x
|
Maximum leverage
ratio permitted under the Credit Agreement
|
5.00x
|
|
5.00x
|
|
5.00x
|
|
Certain columns or
rows may not sum or recalculate due to the presentation of rounded
numbers.
|
________________
|
(1)
|
The net income
measure presented is our net income from continuing operations
attributable to DaVita Inc., since the Credit Agreement requires
divestitures to be reflected on a pro forma basis for our leverage
ratio calculation, and this measure of net income already excludes
our discontinued operations divested.
|
(2)
|
The debt amounts as
of December 31, 2021, September 30, 2021, and
December 31, 2020 presented exclude approximately $56.7,
$59.8, and $77.7, respectively, of debt discount, premium and other
deferred financing costs related to our senior secured credit
facilities and senior notes in effect at that time.
|
(3)
|
This excludes amounts
not readily convertible to cash related to the Company's
non-qualified deferred compensation plans for all periods
presented. The Credit Agreement limits the amount deducted for cash
and cash equivalents, including short-term investments, to the
lesser of all unrestricted cash and cash equivalents, including
short-term investments of the Company or $750.
|
DAVITA INC.
INTEGRATED CARE
METRICS
(unaudited)
Note 2: Integrated Care Metrics
Our Integrated Kidney Care (IKC) business is party to a variety
of risk-based integrated care and disease management arrangements,
including value-based care (VBC) contracts under which we assume
full or shared financial risk for the total medical cost of care
for patients below or above a benchmark.
The aggregate amount of medical spend associated with risk-based
integrated care arrangements that we disclose includes both medical
costs included in our reported expenses for certain risk-based
arrangements (such as its special needs plans), as well as the
aggregate estimated benchmark amount above or below which we will
incur profit or loss on for VBC arrangements under which
third-party medical costs are not included in our reported results.
This metric is an annualization of our estimate of this amount for
the most recent quarter.
A number of our VBC contracts are subject to complex or novel
patient attribution mechanics and benchmark adjustments, some of
which are based on information not reported to us until periods
after we report our quarterly results. As a result, our estimates
of our patients under, and the dollar amount of, our value-based
contracts remain subject to estimation uncertainty.
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, accruals
for legal matters and debt prepayment and refinancing charges; 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 the tax associated with them as well as 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 results 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, free cash flow from continuing operating 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 proceeds from the sale of
self-developed properties. 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 3 through 6 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 millions,
except per share data)
|
|
Note
3: 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,
2021
|
|
September 30,
2021
|
|
December 31,
2020
|
|
Dollars
|
|
Per
share
|
|
Dollars
|
|
Per
share
|
|
Dollars
|
|
Per
share
|
Net income from
continuing operations attributable to
DaVita
Inc.
|
$
187
|
|
$
1.79
|
|
$
260
|
|
$
2.36
|
|
$
193
|
|
$
1.67
|
Income tax impact
related to prior legal settlement
|
25
|
|
0.24
|
|
—
|
|
—
|
|
—
|
|
—
|
Adjusted net income
from continuing operations
attributable to
DaVita Inc.
|
$
212
|
|
$
2.02
|
|
$
260
|
|
$
2.36
|
|
$
193
|
|
$
1.67
|
|
Certain columns or
rows may not sum or recalculate due to the presentation of rounded
numbers.
|
|
|
|
Year
ended
|
|
December 31,
2021
|
|
December 31,
2020
|
|
Dollars
|
|
Per
share
|
|
Dollars
|
|
Per
share
|
Net income from
continuing operations attributable to DaVita Inc.
|
$
978
|
|
$
8.90
|
|
$
783
|
|
$
6.39
|
Operating
charges:
|
|
|
|
|
|
|
|
Loss on changes in
ownership interests, net
|
—
|
|
—
|
|
16
|
|
0.13
|
General and
administrative:
|
|
|
|
|
|
|
|
Accruals for legal
matters
|
—
|
|
—
|
|
35
|
|
0.29
|
Debt refinancing
charges
|
—
|
|
—
|
|
89
|
|
0.73
|
Related income
tax
|
—
|
|
—
|
|
(33)
|
|
(0.27)
|
Income tax impact
related to prior legal settlement
|
25
|
|
0.23
|
|
—
|
|
—
|
Adjusted net income
from continuing operations
attributable to
DaVita Inc.
|
$
1,003
|
|
$
9.13
|
|
$
890
|
|
$
7.26
|
|
Certain columns or
rows may not sum or recalculate due to the presentation of rounded
numbers.
|
DAVITA
INC. RECONCILIATIONS FOR NON-GAAP MEASURES -
continued (unaudited) (dollars in millions,
except per share data)
|
|
Note
4: Adjusted operating income
|
|
|
Three months
ended
|
|
Year
ended
|
|
December 31,
2021
|
|
September
30, 2021
|
|
December 31,
2020
|
|
December 31,
2021
|
|
December 31,
2020
|
Consolidated:
|
|
|
|
|
|
|
|
|
|
Operating
income
|
$
|
389
|
|
$
|
475
|
|
$
|
382
|
|
$
|
1,797
|
|
$
|
1,695
|
Operating
charges:
|
|
|
|
|
|
|
|
|
|
Loss on changes in
ownership interests, net
|
—
|
|
—
|
|
—
|
|
—
|
|
16
|
General and
administrative:
|
|
|
|
|
|
|
|
|
|
Accruals for legal
matters
|
—
|
|
—
|
|
—
|
|
—
|
|
35
|
Adjusted operating
income
|
$
|
389
|
|
$
|
475
|
|
$
|
382
|
|
$
|
1,797
|
|
$
|
1,746
|
|
|
|
|
|
|
|
Three months
ended
|
|
Year
ended
|
|
December 31,
2021
|
|
September
30,
2021
|
|
December 31,
2020
|
|
December 31,
2021
|
|
December 31,
2020
|
Consolidated:
|
|
|
|
|
|
|
|
|
|
U.S.
dialysis:
|
|
|
|
|
|
|
|
|
|
Segment operating
income
|
451
|
|
510
|
|
433
|
|
1,975
|
|
1,918
|
Other - Ancillary
services:
|
|
|
|
|
|
|
|
|
|
U.S.
|
|
|
|
|
|
|
|
|
|
Segment operating
loss
|
(35)
|
|
(20)
|
|
(25)
|
|
(108)
|
|
(99)
|
Loss on changes in
ownership interests, net
|
—
|
|
—
|
|
—
|
|
—
|
|
16
|
Adjusted operating
loss
|
(35)
|
|
(20)
|
|
(25)
|
|
(108)
|
|
(83)
|
International
|
|
|
|
|
|
|
|
|
|
Segment operating
income (loss)
|
$
|
6
|
|
$
|
13
|
|
$
|
(2)
|
|
$
|
42
|
|
$
|
23
|
Adjusted Other -
Ancillary services operating loss
|
$
|
(29)
|
|
$
|
(7)
|
|
$
|
(27)
|
|
$
|
(66)
|
|
$
|
(60)
|
Corporate
administrative support expenses:
|
|
|
|
|
|
|
|
|
|
|
Segment
expenses
|
$
|
(33)
|
|
$
|
(28)
|
|
$
|
(24)
|
|
$
|
(112)
|
|
$
|
(147)
|
Accruals for legal
matters
|
$
|
—
|
|
$
|
—
|
|
$
|
—
|
|
$
|
—
|
|
$
|
35
|
Adjusted Corporate
administrative support expenses
|
$
|
(33)
|
|
$
|
(28)
|
|
$
|
(24)
|
|
$
|
(112)
|
|
$
|
(112)
|
Adjusted operating
income
|
$
|
389
|
|
$
|
475
|
|
$
|
382
|
|
$
|
1,797
|
|
$
|
1,746
|
|
Certain columns or
rows may not sum or recalculate due to the presentation of rounded
numbers.
|
DAVITA
INC. RECONCILIATIONS FOR NON-GAAP MEASURES -
continued (unaudited) (dollars in millions,
except per share data)
|
|
Note
5: Effective income tax rates on income from
continuing operations attributable to DaVita Inc.
|
|
|
Three months
ended
|
|
Year ended
December 31,
2021
|
|
December
31,
2021
|
|
September
30,
2021
|
|
December
31,
2020
|
|
Income from
continuing operations before income taxes
|
$
315
|
|
$
394
|
|
$
327
|
|
$
1,518
|
Noncontrolling
owners' income primarily attributable to non-tax
paying
entities
|
(62)
|
|
(60)
|
|
(61)
|
|
(234)
|
Income from
continuing operations before income taxes
attributable to
DaVita Inc.
|
$
253
|
|
$
334
|
|
$
267
|
|
$
1,284
|
|
|
|
|
|
|
|
|
Income tax expense
for continuing operations
|
$
66
|
|
$
75
|
|
$
73
|
|
$
307
|
Income tax
attributable to noncontrolling interests
|
—
|
|
—
|
|
—
|
|
(1)
|
Income tax expense
from continuing operations attributable to
DaVita
Inc.
|
$
65
|
|
$
75
|
|
$
73
|
|
$
306
|
|
|
|
|
|
|
|
|
Effective income tax
rate on income from continuing operations
attributable to
DaVita Inc.
|
25.8 %
|
|
22.3 %
|
|
27.5 %
|
|
23.8 %
|
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,
2021
|
December
31,
2021
|
|
September
30,
2021
|
|
December
31,
2020
|
|
Income from
continuing operations before income taxes
|
$
315
|
|
$
394
|
|
$
327
|
|
$
1,518
|
Noncontrolling
owners' income primarily attributable to non-tax
paying
entities
|
(62)
|
|
(60)
|
|
(61)
|
|
(234)
|
Income from
continuing operations before income taxes
attributable to
DaVita Inc.
|
$
253
|
|
$
334
|
|
$
267
|
|
$
1,284
|
Income tax
expense
|
$
66
|
|
$
75
|
|
$
73
|
|
$
307
|
Less income tax
related to:
|
|
|
|
|
|
|
|
Prior legal
settlement
|
(25)
|
|
—
|
|
—
|
|
(25)
|
Noncontrolling
interests
|
—
|
|
—
|
|
—
|
|
(1)
|
Income tax on
adjusted income from continuing operations
attributable to
DaVita Inc.
|
$
41
|
|
$
75
|
|
$
73
|
|
$
281
|
Effective income tax
rate on adjusted income from continuing
operations
attributable to DaVita Inc.
|
16.0 %
|
|
22.3 %
|
|
27.5
%
|
|
21.9 %
|
|
Certain columns, rows
or percentages may not sum or recalculate due to the presentation
of rounded numbers.
|
DAVITA
INC. RECONCILIATIONS FOR NON-GAAP MEASURES -
continued (unaudited) (dollars in
millions)
|
|
Note
6: Free cash flow from continuing
operations
|
|
|
Three months
ended
|
|
December
31,
2021
|
|
September
30,
2021
|
|
December
31,
2020
|
Net cash provided by
continuing operating activities
|
$
530
|
|
$
567
|
|
$
485
|
Adjustments to
reconcile net cash provided by continuing operating
activities to free cash flow
from continuing operations:
|
|
|
|
|
|
Distributions to
noncontrolling interests
|
(67)
|
|
(78)
|
|
(74)
|
Contributions from
noncontrolling interests
|
3
|
|
12
|
|
10
|
Expenditures for
routine maintenance and information technology
|
(132)
|
|
(108)
|
|
(160)
|
Expenditures for
development
|
(58)
|
|
(50)
|
|
(65)
|
Proceeds from sale of
self-developed properties
|
13
|
|
14
|
|
14
|
Free cash flow from
continuing operations
|
$
290
|
|
$
358
|
|
$
210
|
|
|
|
Twelve months
ended
|
|
December
31,
2021
|
|
September
30,
2021
|
|
December
31,
2020
|
Net cash provided by
operating activities from continuing operations
|
$
1,931
|
|
$
1,886
|
|
$
1,979
|
Adjustments to
reconcile net cash provided by continuing operating
activities to free cash flow
from continuing operations:
|
|
|
|
|
|
Distributions to
noncontrolling interests
|
(244)
|
|
(251)
|
|
(253)
|
Contributions from
noncontrolling interests
|
32
|
|
38
|
|
43
|
Expenditures for
routine maintenance and information technology
|
(421)
|
|
(449)
|
|
(399)
|
Expenditures for
development
|
(220)
|
|
(227)
|
|
(275)
|
Proceeds from sale of
self-developed properties
|
56
|
|
57
|
|
93
|
Free cash flow from
continuing operations
|
$
1,133
|
|
$
1,054
|
|
$
1,188
|
|
Certain columns or
rows may not sum or recalculate due to the presentation of rounded
numbers.
|
Contact:
|
Jim
Gustafson
|
|
Investor
Relations
|
|
DaVita
Inc.
|
|
(310)
536-2585
|
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SOURCE DaVita