DENVER, Aug. 1, 2017 /PRNewswire/ -- DaVita Inc. (NYSE:
DVA) today announced results for the quarter ended June 30,
2017.
- Net income attributable to DaVita Inc. for the quarter ended
June 30, 2017 was $127 million, or $0.65 per share, and for the six months ended
June 30, 2017 was $575 million, or $2.95 per share.
- Adjusted net income attributable to DaVita Inc. for the quarter
ended June 30, 2017 was $179 million, or $0.92 per share, and for the six months ended
June 30, 2017 was $332 million, or $1.71 per share.
- Adjusted net income attributable to DaVita Inc., further
adjusted to exclude amortization for the quarter ended June 30, 2017, was $208
million, or $1.07 per share,
and for the six months ended June 30,
2017, was $390 million, or
$2.00 per share.
- Net income attributable to DaVita Inc. for the quarter ended
June 30, 2016 was $53 million, or $0.26 per share, and for the six months ended
June 30, 2016 was $151 million, or $0.73 per share.
- Adjusted net income attributable to DaVita Inc. for the quarter
ended June 30, 2016 was $210 million, or $1.01 per share, and for the six months ended
June 30, 2016 was $400 million, or $1.93 per share.
- Adjusted net income attributable to DaVita Inc., further
adjusted to exclude amortization for the quarter ended June 30, 2016 was $238
million, or $1.14 per share,
and for the six months ended June 30,
2016 was $452 million, or
$2.17 per share.
For the definitions of non-GAAP financial measures such as
adjusted net income attributable to DaVita Inc. and adjusted net
income attributable to DaVita Inc., as further adjusted to exclude
amortization, see the note titled "Note on Non-GAAP Financial
Measures" below.
Financial and operating highlights include:
Cash flow: For the rolling twelve months ended
June 30, 2017, operating cash flow was $2.029 billion and free cash flow was
$1.467 billion. For the three months
ended June 30, 2017, operating cash flow was $146 million and free cash flow was $18 million.
Operating income and adjusted operating income:
Operating income for the three months ended June 30, 2017 was
$378 million, and adjusted operating
income for the same period was $436
million. Operating income for the six months ended
June 30, 2017 was $1.267
billion, and adjusted operating income for the same period
was $828 million.
Operating income for the three months ended June 30, 2016 was $329
million, and adjusted operating income for the same period
was $475 million. Operating income
for the six months ended June 30,
2016 was $694 million, and
adjusted operating income for the same period was $933 million.
Volume: Total U.S. dialysis treatments for the
second quarter of 2017 were 7,035,894, or 90,204 treatments per
day, representing a per day increase of 4.3% over the second
quarter of 2016. Normalized non-acquired treatment growth in the
second quarter of 2017 as compared to the second quarter of 2016
was 3.6%.
The number of member months for which DMG provided care during
the second quarter of 2017 was approximately 2.2 million, of which
approximately 0.9 million, 1.0 million and 0.3 million related to
senior, commercial and Medicaid members, respectively.
Goodwill impairment charges: During the quarter ended
June 30, 2017, we recognized goodwill impairment charges of
$51 million in our DMG reporting
units as a result of a reduction in expected future government
reimbursement rates (including the effect of Medicare Advantage
final benchmark payment rates for 2018 announced on April 3, 2017) and our expected ability to
mitigate them, as well as increasing medical costs.
We also recognized an additional goodwill impairment charge of
$10 million related to our vascular
access reporting unit, of which $3
million was attributed to noncontrolling interests, as a
result of continuing adjustments to its business model in light of
recent Medicare reimbursement changes.
Effective tax rate: Our effective tax rate was
41.4% and 37.8% for the three and six months ended June 30,
2017, respectively. The effective tax rate attributable to DaVita
Inc. was 47.2% and 41.1% for the three and six months ended
June 30, 2017, respectively.
Our effective tax rate for the three and six months ended
June 30, 2017 was impacted by the non-deductible goodwill
impairment charges in our DMG reporting units, non-deductible
estimated accruals for legal matters and the amount of third-party
owners' income attributable to non-tax paying entities. The
effective tax rate for the six months ended June 30, 2017 was also impacted by an adjustment
to true-up the gain on the formation of the Asia Pacific joint venture (APAC JV).
The adjusted effective tax rate attributable to DaVita Inc. for
the three and six months ended June 30, 2017, excluding these
items was 39.5% and 39.7%, respectively.
Center activity: As of June 30, 2017, we
provided dialysis services to a total of approximately 214,700
patients at 2,662 outpatient dialysis centers, of which 2,445
centers were located in the United
States and 217 centers were located in 11 countries outside
of the United States. During the
second quarter of 2017, we acquired 44 dialysis centers, including
the dialysis centers acquired from Renal Ventures, opened a total
of 27 new dialysis centers, closed two centers and divested six
centers in the United States. We
also opened four new dialysis centers and acquired 52 dialysis
centers outside of the United
States.
Share repurchases: During the quarter ended
June 30, 2017, we repurchased a total of 3,574,573 shares of
our common stock for $232 million, or
an average price of $64.81 per share.
We have not repurchased any shares of our common stock subsequent
to June 30, 2017. As a result of these transactions we have a
total of approximately $445 million
in outstanding Board repurchase authorizations.
Note on Non-GAAP Financial Measures
As used in this press release the term "adjusted" refers to
non-GAAP measures as follows, each as reconciled to the most
comparable GAAP measure in the non-GAAP reconciliations in the
notes to this press release: (i) for income measures, the term
"adjusted" refers to operating performance measures that exclude
certain items such as impairment charges, gains (losses) on
ownership changes, and gains and charges associated with
settlements; (ii) the term "adjusted net income excluding
amortization" represents the Company's net income excluding certain
items as well as amortization of intangibles associated with
acquisitions; and (iii) the term "adjusted effective income tax
rate attributable to DaVita Inc." represents the Company's
effective tax rate excluding certain non-GAAP items and
noncontrolling owners' income that primarily relates to non-tax
paying entities.
These non-GAAP or "adjusted" measures are presented because
management believes these measures are useful adjuncts to GAAP
results. Non-GAAP or "adjusted" measures should not be
considered as an alternative to the corresponding measures
determined under GAAP. Management uses these non-GAAP measures
to compare and evaluate our performance period over period and
relative to competitors, to analyze the underlying trends in our
business, to establish operational budgets and forecasts and for
incentive compensation purposes. We believe that these non-GAAP
measures are useful to investors and analysts in evaluating our
performance over time and relative to competitors, as well as in
analyzing the underlying trends in our business.
The Company's adjusted net income attributable to DaVita Inc.,
adjusted diluted net income per share, adjusted net income
attributable to DaVita Inc. excluding amortization, adjusted
diluted net income per share excluding amortization, adjusted
operating income, adjusted effective income tax rate attributable
to DaVita Inc., and free cash flow discussed in this press release
are reconciled to their most comparable GAAP measures at Notes 2,
3, 4, and 5.
Outlook
The following forward-looking measures and the underlying
assumptions involve significant risks and uncertainties, including
those described below, and actual results may vary significantly
from these current forward-looking measures. We do not provide
guidance for consolidated operating income, Kidney Care operating
income, DMG operating income or effective tax rate attributable to
DaVita Inc. on a GAAP basis nor a reconciliation of those
forward-looking non-GAAP financial measures to the most directly
comparable GAAP financial measures on a forward-looking basis
because we are unable to predict certain items contained in the
GAAP measures without unreasonable efforts. These non-GAAP
financial measures do not include certain items, including the gain
related to the VA settlement, goodwill and asset impairment
charges, an adjustment to the accrual for legal matters, the gain
on the APAC JV ownership changes and currency fluctuations.
- We are updating our adjusted consolidated operating income
guidance for 2017 to be in the range of $1.675 billion to $1.775 billion.
Our previous adjusted consolidated
operating income guidance for 2017 was in the range of $1.635 billion to $1.775 billion.
- We are updating our adjusted operating income guidance for
Kidney Care for 2017 to be in the range of $1.565 billion to $1.625 billion.
Our previous adjusted operating
income guidance for Kidney Care for 2017 was in the range of
$1.525 billion to $1.625 billion.
- We still expect our adjusted operating income guidance for DMG
for 2017 to be in the range of $110 million
to $150 million, and we still expect it is more likely than
not to be in the lower half of the range.
- We still expect our consolidated operating cash flow guidance
for 2017 to be in the range of $1.750
billion to $1.950 billion, which includes the net benefit of
the settlement with the U.S. Department of Veterans Affairs (VA) in
the first quarter of 2017.
- We are updating our 2017 guidance for adjusted effective tax
rate attributable to DaVita Inc. to be approximately 39.0% to
40.0%.
Our previous 2017 adjusted
effective tax rate attributable to DaVita Inc. guidance was 39.5%
to 40.5%.
We will be holding a conference call to discuss our results for
the second quarter ended June 30, 2017 on August 1, 2017 at 5:00
p.m. Eastern Time. To join the conference call, please dial
(877) 918-6630 from the U.S. or (517) 308-9087 from outside the
U.S. A replay of the conference call will be available on our
website at investors.davita.com, for the following 30 days.
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,"
"will," "plan," "anticipate," "believe," "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 on information available to us on the date
of this presentation. We undertake no obligation to publicly update
or revise any of our guidance, the assessment of the underlying
assumptions or other forward-looking statements, whether as a
result of changed circumstances, new information, future events or
otherwise.
These forward-looking statements could include but are not
limited to statements related to our guidance and expectations for
our 2017 adjusted consolidated operating income, our 2017 Kidney
Care adjusted operating income, DMG's 2017 adjusted operating
income, our 2017 consolidated operating cash flows and our 2017
adjusted effective tax rate attributable to DaVita Inc. and
uncertainties associated with the other risk factors set forth in
our most recent quarterly report on Form 10-Q for the quarter ended
March 31, 2017, and the other risks
discussed in our subsequent periodic and current reports filed with
the SEC from time to time.
Our actual 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, and are qualified in
their entirety by reference to the full text of those risk factors
in our SEC filings relating to:
- the concentration of profits generated by higher-paying
commercial payor plans for which there is continued downward
pressure on average realized payment rates, and a reduction in the
number of patients under such plans, which may result in the loss
of revenues or patients;
- the extent to which the ongoing implementation of healthcare
exchanges or changes in or new legislation, regulations or
guidance, or enforcement thereof, including among other things
those regarding the exchanges, results in a reduction in
reimbursement rates for our services from and/or the number of
patients enrolled in higher-paying commercial plans;
- a reduction in government payment rates under the Medicare
End Stage Renal Disease program or other government-based
programs;
- the impact of the Medicare Advantage benchmark
structure;
- risks arising from potential and proposed federal and/or
state legislation or regulation, including healthcare-related and
labor-related legislation or regulation, that could have a material
adverse effect on our operations and profitability;
- the impact of the 2016 Congressional and Presidential
elections and subsequent developments in 2017 on the current health
care marketplace and on our business, including with respect to the
future of the Affordable Care Act, the exchanges and many other
core aspects of the current health care marketplace;
- changes in pharmaceutical or anemia management practice
patterns, payment policies, or pharmaceutical pricing;
- legal compliance risks, including our continued compliance
with complex government regulations and the provisions of our
current corporate integrity agreement and current or potential
investigations by various government entities and related
government or private-party proceedings, and restrictions on our
business and operations required by our corporate integrity
agreement and other current or potential settlement terms, and the
financial impact thereof and our ability to recover any losses
related to such legal matters from third parties;
- continued increased competition from large- and medium-sized
dialysis providers that compete directly with us;
- our ability to reduce administrative expenses while
maintaining targeted levels of service and operating
performance;
- our ability to maintain contracts with physician medical
directors, changing affiliation models for physicians, and the
emergence of new models of care introduced by the government or
private sector that may erode our patient base and reimbursement
rates, such as accountable care organizations, independent practice
associations and integrated delivery systems;
- our ability to complete acquisitions, mergers or
dispositions that we might be considering or announce, or to
integrate and successfully operate any business we may acquire or
have acquired, including DMG, or to successfully expand our
operations and services to markets outside the United States, or to businesses outside of
dialysis and DMG's business;
- noncompliance by us or our business associates with any
privacy laws or any security breach involving the misappropriation,
loss or other unauthorized use or disclosure of confidential
information;
- the variability of our cash flows;
- the risk that we might invest material amounts of capital
and incur significant costs in connection with the growth and
development of our international operations, yet we might not be
able to operate them profitably anytime soon, if at all;
- risks arising from the use of accounting estimates,
judgments and interpretations in our financial statements;
- impairment of our goodwill or other intangible
assets;
- the risk that laws regulating the corporate practice of
medicine could restrict the manner in which DMG conducts its
business;
- the risk that the cost of providing services under DMG's
agreements may exceed our compensation;
- the risk that reductions in reimbursement rates, including
Medicare Advantage rates, and future regulations may negatively
impact DMG's business, revenue and profitability;
- the risk that DMG may not be able to successfully establish
a presence in new geographic regions or successfully address
competitive threats that could reduce its profitability;
- the risk that a disruption in DMG's healthcare provider
networks could have an adverse effect on DMG's business operations
and profitability;
- the risk that reductions in the quality ratings of health
maintenance organization plan customers of DMG could have an
adverse effect on DMG's business; and
- the risk that health plans that acquire health maintenance
organizations may not be willing to contract with DMG or may be
willing to contract only on less favorable terms.
Contact:
|
Jim
Gustafson
|
|
Investor
Relations
|
|
DaVita
Inc.
|
|
(310)
536-2585
|
DAVITA
INC.
|
CONSOLIDATED
STATEMENTS OF INCOME
|
(unaudited)
|
(dollars in
thousands, except per share data.)
|
|
|
Three
months ended
June 30,
|
|
Six months
ended
June
30,
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
Patient service
revenues
|
$
|
2,682,467
|
|
|
$
|
2,583,514
|
|
|
$
|
5,283,845
|
|
|
$
|
5,065,448
|
|
Less: Provision for
uncollectible accounts
|
(115,485)
|
|
|
(111,428)
|
|
|
(228,468)
|
|
|
(220,633)
|
|
Net patient service
revenues
|
2,566,982
|
|
|
2,472,086
|
|
|
5,055,377
|
|
|
4,844,815
|
|
Capitated
revenues
|
1,022,078
|
|
|
899,985
|
|
|
1,940,114
|
|
|
1,787,993
|
|
Other
revenues
|
288,417
|
|
|
345,580
|
|
|
579,269
|
|
|
665,979
|
|
Total net
revenues
|
3,877,477
|
|
|
3,717,651
|
|
|
7,574,760
|
|
|
7,298,787
|
|
Operating expenses
and charges:
|
|
|
|
|
|
|
|
Patient care costs and other
costs
|
2,859,911
|
|
|
2,671,025
|
|
|
5,582,731
|
|
|
5,253,358
|
|
General and
administrative
|
382,315
|
|
|
386,895
|
|
|
774,095
|
|
|
773,324
|
|
Depreciation and
amortization
|
200,038
|
|
|
180,381
|
|
|
390,244
|
|
|
349,736
|
|
Provision for uncollectible
accounts
|
(606)
|
|
|
3,566
|
|
|
1,304
|
|
|
6,083
|
|
Equity investment (income)
loss
|
(3,614)
|
|
|
505
|
|
|
(7,549)
|
|
|
(882)
|
|
Goodwill and asset
impairment charges
|
61,117
|
|
|
176,000
|
|
|
100,483
|
|
|
253,000
|
|
Gain on changes in ownership
interests, net
|
ā
|
|
|
(29,791)
|
|
|
(6,273)
|
|
|
(29,791)
|
|
Gain on settlement,
net
|
ā
|
|
|
ā
|
|
|
(526,827)
|
|
|
ā
|
|
Total operating expenses and charges
|
3,499,161
|
|
|
3,388,581
|
|
|
6,308,208
|
|
|
6,604,828
|
|
Operating
income
|
378,316
|
|
|
329,070
|
|
|
1,266,552
|
|
|
693,959
|
|
Debt
expense
|
(107,962)
|
|
|
(102,894)
|
|
|
(212,391)
|
|
|
(205,778)
|
|
Other income,
net
|
5,253
|
|
|
3,215
|
|
|
9,496
|
|
|
6,191
|
|
Income before income
taxes
|
275,607
|
|
|
229,391
|
|
|
1,063,657
|
|
|
494,372
|
|
Income tax
expense
|
113,982
|
|
|
134,888
|
|
|
401,747
|
|
|
261,710
|
|
Net income
|
161,625
|
|
|
94,503
|
|
|
661,910
|
|
|
232,662
|
|
Less: Net income
attributable to noncontrolling interests
|
(34,624)
|
|
|
(41,121)
|
|
|
(87,212)
|
|
|
(81,846)
|
|
Net income
attributable to DaVita Inc.
|
$
|
127,001
|
|
|
$
|
53,382
|
|
|
$
|
574,698
|
|
|
$
|
150,816
|
|
Earnings per
share:
|
|
|
|
|
|
|
|
Basic net income per share
attributable to DaVita Inc.
|
$
|
0.66
|
|
|
$
|
0.26
|
|
|
$
|
3.00
|
|
|
$
|
0.74
|
|
Diluted net income per share
attributable to DaVita Inc.
|
$
|
0.65
|
|
|
$
|
0.26
|
|
|
$
|
2.95
|
|
|
$
|
0.73
|
|
Weighted average
shares for earnings per share:
|
|
|
|
|
|
|
|
Basic
|
191,088,216
|
|
|
204,497,970
|
|
|
191,728,913
|
|
|
204,432,315
|
|
Diluted
|
193,987,983
|
|
|
208,047,172
|
|
|
194,630,936
|
|
|
207,987,530
|
|
DAVITA
INC.
|
CONSOLIDATED
STATEMENTS OF COMPREHENSIVE INCOME
|
(unaudited)
|
(dollars in
thousands)
|
|
|
Three
months ended
June 30,
|
|
Six
months ended
June 30,
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
Net income
|
161,625
|
|
|
94,503
|
|
|
661,910
|
|
|
232,662
|
|
Other comprehensive
income (loss), net of tax:
|
|
|
|
|
|
|
|
Unrealized losses on
interest rate cap and swap agreements:
|
|
|
|
|
|
|
|
Unrealized losses on
interest rate cap and swap agreements
|
(1,815)
|
|
|
(2,616)
|
|
|
(5,002)
|
|
|
(8,085)
|
|
Reclassifications of
net rate cap and swap agreements realized
losses into net income
|
1,265
|
|
|
448
|
|
|
2,529
|
|
|
913
|
|
Unrealized gains on
investments:
|
|
|
|
|
|
|
|
Unrealized gains on
investments
|
1,057
|
|
|
638
|
|
|
2,614
|
|
|
867
|
|
Reclassification of
net investment realized gains into net income
|
(71)
|
|
|
ā
|
|
|
(211)
|
|
|
(93)
|
|
Unrealized gains on
foreign currency translation:
|
|
|
|
|
|
|
|
Foreign currency
translation adjustments
|
49,142
|
|
|
(4,844)
|
|
|
62,403
|
|
|
6,337
|
|
Other comprehensive
income (loss)
|
49,578
|
|
|
(6,374)
|
|
|
62,333
|
|
|
(61)
|
|
Total comprehensive
income
|
211,203
|
|
|
88,129
|
|
|
724,243
|
|
|
232,601
|
|
Less: Comprehensive
income attributable to noncontrolling
interests
|
(34,624)
|
|
|
(41,270)
|
|
|
(87,210)
|
|
|
(81,995)
|
|
Comprehensive income
attributable to DaVita Inc.
|
$
|
176,579
|
|
|
$
|
46,859
|
|
|
$
|
637,033
|
|
|
$
|
150,606
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
DAVITA
INC.
|
CONSOLIDATED
STATEMENTS OF CASH FLOWS
|
(unaudited)
|
(dollars in
thousands)
|
|
|
Six months ended June 30,
|
|
2017
|
|
2016
|
Cash flows from
operating activities:
|
|
|
|
Net income
|
$
|
661,910
|
|
|
$
|
232,662
|
|
Adjustments to
reconcile net income to net cash provided by operating
activities:
|
|
|
|
Depreciation and
amortization
|
390,244
|
|
|
349,736
|
|
Goodwill and asset
impairment charges
|
100,483
|
|
|
253,000
|
|
Stock-based
compensation expense
|
17,504
|
|
|
23,717
|
|
Deferred income
taxes
|
40,938
|
|
|
19,952
|
|
Equity investment
income, net
|
9,367
|
|
|
14,275
|
|
Gain on sales of
business interests, net
|
(6,273)
|
|
|
(29,791)
|
|
Other non-cash
charges
|
28,615
|
|
|
23,120
|
|
Changes in operating
assets and liabilities, other than from acquisitions and
divestitures:
|
|
|
|
Accounts
receivable
|
(113,208)
|
|
|
(104,005)
|
|
Inventories
|
(31,067)
|
|
|
(9,213)
|
|
Other receivables and
other current assets
|
(112,469)
|
|
|
(107,610)
|
|
Other long-term
assets
|
(12,124)
|
|
|
(431)
|
|
Accounts
payable
|
(55,897)
|
|
|
22,809
|
|
Accrued compensation
and benefits
|
(63,727)
|
|
|
41,098
|
|
Other current
liabilities
|
13,991
|
|
|
112,825
|
|
Income
taxes
|
123,637
|
|
|
135,026
|
|
Other long-term
liabilities
|
19,520
|
|
|
(31,531)
|
|
Net cash provided by
operating activities
|
1,011,444
|
|
|
945,639
|
|
Cash flows from
investing activities:
|
|
|
|
Additions of property and
equipment
|
(398,940)
|
|
|
(358,627)
|
|
Acquisitions
|
(619,839)
|
|
|
(473,314)
|
|
Proceeds from asset and
business sales
|
70,236
|
|
|
17,393
|
|
Purchase of investments
available for sale
|
(6,812)
|
|
|
(7,873)
|
|
Purchase of investments
held-to-maturity
|
(220,632)
|
|
|
(518,965)
|
|
Proceeds from sale of
investments available for sale
|
5,049
|
|
|
5,337
|
|
Proceeds from investments
held-to-maturity
|
320,484
|
|
|
545,685
|
|
Purchase of equity
investments
|
(1,194)
|
|
|
(8,785)
|
|
Proceeds from sale of equity
investments
|
ā
|
|
|
40,920
|
|
Net cash used in
investing activities
|
(851,648)
|
|
|
(758,229)
|
|
Cash flows from
financing activities:
|
|
|
|
Borrowings
|
25,529,555
|
|
|
26,134,952
|
|
Payments on long-term debt
and other financing costs
|
(25,593,587)
|
|
|
(26,196,373)
|
|
Purchase of treasury
stock
|
(231,674)
|
|
|
(274,926)
|
|
Distributions to
noncontrolling interests
|
(116,075)
|
|
|
(94,153)
|
|
Stock award exercises and
other share issuances, net
|
8,163
|
|
|
9,465
|
|
Contributions from
noncontrolling interests
|
39,872
|
|
|
13,117
|
|
Purchase of noncontrolling
interests
|
(1,432)
|
|
|
(6,240)
|
|
Other
|
ā
|
|
|
10,604
|
|
Net cash used in
financing activities
|
(365,178)
|
|
|
(403,554)
|
|
Effect of exchange
rate changes on cash and cash equivalents
|
4,192
|
|
|
444
|
|
Net decrease in cash
and cash equivalents
|
(201,190)
|
|
|
(215,700)
|
|
Cash and cash
equivalents at beginning of the year
|
913,187
|
|
|
1,499,116
|
|
Cash and cash
equivalents at end of the period
|
$
|
711,997
|
|
|
$
|
1,283,416
|
|
DAVITA
INC.
|
CONSOLIDATED
BALANCE SHEETS
|
(unaudited)
|
(dollars in
thousands, except per share data)
|
|
|
June
30,
2017
|
|
December
31,
2016
|
ASSETS
|
|
|
|
Cash and cash
equivalents
|
$
|
711,997
|
|
|
$
|
913,187
|
|
Short-term
investments
|
211,436
|
|
|
310,198
|
|
Accounts receivable,
less allowance of $240,918 and $252,056
|
2,053,812
|
|
|
1,917,302
|
|
Inventories
|
199,304
|
|
|
164,858
|
|
Other
receivables
|
644,755
|
|
|
453,483
|
|
Prepaid and other
current assets
|
202,464
|
|
|
210,604
|
|
Income taxes
receivable
|
ā
|
|
|
10,596
|
|
Total current
assets
|
4,023,768
|
|
|
3,980,228
|
|
Property and
equipment, net of accumulated depreciation of $3,130,797 and
$2,832,160
|
3,248,030
|
|
|
3,175,367
|
|
Intangible assets,
net of accumulated amortization of $1,035,664 and
$940,731
|
1,462,894
|
|
|
1,527,767
|
|
Equity method and
other investments
|
542,468
|
|
|
502,389
|
|
Long-term
investments
|
114,693
|
|
|
103,679
|
|
Other long-term
assets
|
60,140
|
|
|
44,510
|
|
Goodwill
|
9,889,791
|
|
|
9,407,317
|
|
|
$
|
19,341,784
|
|
|
$
|
18,741,257
|
|
LIABILITIES AND
EQUITY
|
|
|
|
Accounts
payable
|
$
|
439,741
|
|
|
$
|
522,415
|
|
Other
liabilities
|
885,274
|
|
|
856,847
|
|
Accrued compensation
and benefits
|
760,284
|
|
|
815,761
|
|
Medical
payables
|
390,387
|
|
|
336,381
|
|
Current portion of
long-term debt
|
182,323
|
|
|
165,041
|
|
Income tax
payable
|
115,316
|
|
|
ā
|
|
Total current
liabilities
|
2,773,325
|
|
|
2,696,445
|
|
Long-term
debt
|
8,910,814
|
|
|
8,947,327
|
|
Other long-term
liabilities
|
520,886
|
|
|
465,358
|
|
Deferred income
taxes
|
855,159
|
|
|
809,128
|
|
Total
liabilities
|
13,060,184
|
|
|
12,918,258
|
|
Commitments and
contingencies:
|
|
|
|
Noncontrolling
interests subject to put provisions
|
1,009,704
|
|
|
973,258
|
|
Equity:
|
|
|
|
Preferred stock
($0.001 par value, 5,000,000 shares authorized; none
issued)
|
|
|
|
Common stock ($0.001
par value, 450,000,000 shares authorized; 194,774,810 and
194,554,491 shares issued and 191,200,237 and 194,554,491 shares
outstanding, respectively)
|
195
|
|
|
195
|
|
Additional paid-in
capital
|
1,058,090
|
|
|
1,027,182
|
|
Retained
earnings
|
4,285,011
|
|
|
3,710,313
|
|
Treasury stock
(3,574,573 shares at June 30, 2017)
|
(231,674)
|
|
|
ā
|
|
Accumulated other
comprehensive loss
|
(27,308)
|
|
|
(89,643)
|
|
Total DaVita Inc.
shareholders' equity
|
5,084,314
|
|
|
4,648,047
|
|
Noncontrolling
interests not subject to put provisions
|
187,582
|
|
|
201,694
|
|
Total
equity
|
5,271,896
|
|
|
4,849,741
|
|
|
$
|
19,341,784
|
|
|
$
|
18,741,257
|
|
DAVITA
INC.
|
SUPPLEMENTAL
FINANCIAL DATA
|
(unaudited)
|
(dollars in
millions, except for per share and per treatment
data)
|
|
|
Three months
ended
|
|
Six months
ended
June 30,
2017
|
|
June
30,
2017
|
|
March
31,
2017
|
|
June
30,
2016
|
|
1. Consolidated
Financial Results:
|
|
|
|
|
|
|
|
Consolidated net
revenues
|
$
|
3,877
|
|
|
$
|
3,697
|
|
|
$
|
3,718
|
|
|
$
|
7,575
|
|
Operating
income
|
$
|
378
|
|
|
$
|
888
|
|
|
$
|
329
|
|
|
$
|
1,267
|
|
Adjusted operating
income excluding certain items(1)
|
$
|
436
|
|
|
$
|
392
|
|
|
$
|
475
|
|
|
$
|
828
|
|
Operating income
margin
|
9.7
|
%
|
|
24.0
|
%
|
|
8.8
|
%
|
|
16.7
|
%
|
Adjusted operating
income margin excluding certain items(1) (5)
|
11.2
|
%
|
|
10.6
|
%
|
|
12.8
|
%
|
|
10.9
|
%
|
Net income
attributable to DaVita Inc.
|
$
|
127
|
|
|
$
|
448
|
|
|
$
|
53
|
|
|
$
|
575
|
|
Adjusted net income
attributable to DaVita Inc. excluding certain
items(1)
|
$
|
179
|
|
|
$
|
154
|
|
|
$
|
210
|
|
|
$
|
332
|
|
Diluted net income
per share attributable to DaVita Inc.
|
$
|
0.65
|
|
|
$
|
2.29
|
|
|
$
|
0.26
|
|
|
$
|
2.95
|
|
Adjusted diluted net
income per share attributable to DaVita Inc. excluding certain
items (1)
|
$
|
0.92
|
|
|
$
|
0.79
|
|
|
$
|
1.01
|
|
|
$
|
1.71
|
|
|
|
|
|
|
|
|
|
2. Consolidated
Business Metrics:
|
|
|
|
|
|
|
|
Expenses
|
|
|
|
|
|
|
|
General and
administrative expenses as a percent of consolidated net
revenues(2)
|
9.9
|
%
|
|
10.6
|
%
|
|
10.4
|
%
|
|
10.2
|
%
|
Consolidated effective
tax rate
|
41.4
|
%
|
|
36.5
|
%
|
|
58.8
|
%
|
|
37.8
|
%
|
Consolidated effective
tax rate attributable to DaVita Inc.(1)
|
47.2
|
%
|
|
39.1
|
%
|
|
71.6
|
%
|
|
41.1
|
%
|
Adjusted consolidated
effective tax rate attributable to DaVita
Inc.(1)
|
39.5
|
%
|
|
40.0
|
%
|
|
37.2
|
%
|
|
39.7
|
%
|
|
|
|
|
|
|
|
|
3. Summary of
Division Financial Results:
|
|
|
|
|
|
|
|
Net
revenues
|
|
|
|
|
|
|
|
Kidney
Care:
|
|
|
|
|
|
|
|
U.S. dialysis and
related lab services
|
$
|
2,325
|
|
|
$
|
2,271
|
|
|
$
|
2,264
|
|
|
$
|
4,596
|
|
OtherāAncillary
services and strategic initiatives
|
|
|
|
|
|
|
|
U.S. ancillary
services and strategic initiatives
|
314
|
|
|
315
|
|
|
372
|
|
|
630
|
|
International
|
79
|
|
|
63
|
|
|
51
|
|
|
142
|
|
|
394
|
|
|
378
|
|
|
423
|
|
|
772
|
|
Eliminations within
Kidney Care
|
(19)
|
|
|
(18)
|
|
|
(12)
|
|
|
(38)
|
|
Total Kidney
Care
|
2,699
|
|
|
2,631
|
|
|
2,675
|
|
|
5,331
|
|
DMG
|
1,196
|
|
|
1,087
|
|
|
1,060
|
|
|
2,283
|
|
Eliminations between
Kidney Care and DMG
|
(18)
|
|
|
(21)
|
|
|
(17)
|
|
|
(39)
|
|
Total net consolidated
revenues
|
$
|
3,877
|
|
|
$
|
3,697
|
|
|
$
|
3,718
|
|
|
$
|
7,575
|
|
Operating income
(loss)
|
|
|
|
|
|
|
|
Kidney
Care:
|
|
|
|
|
|
|
|
U.S. dialysis and
related lab services
|
$
|
450
|
|
|
$
|
945
|
|
|
$
|
449
|
|
|
$
|
1,395
|
|
OtherāAncillary
services and strategic initiatives
|
|
|
|
|
|
|
|
U.S. ancillary
services and strategic initiatives
|
(36)
|
|
|
(53)
|
|
|
ā
|
|
|
(89)
|
|
International
|
(13)
|
|
|
(5)
|
|
|
(13)
|
|
|
(18)
|
|
|
(48)
|
|
|
(58)
|
|
|
(13)
|
|
|
(106)
|
|
Corporate
administrative support
|
(11)
|
|
|
(11)
|
|
|
(5)
|
|
|
(22)
|
|
Total Kidney
Care
|
391
|
|
|
876
|
|
|
431
|
|
|
1,267
|
|
DMG
|
(13)
|
|
|
12
|
|
|
(102)
|
|
|
(1)
|
|
Total consolidated operating income
|
$
|
378
|
|
|
$
|
888
|
|
|
$
|
329
|
|
|
$
|
1,267
|
|
DAVITA
INC.
|
SUPPLEMENTAL
FINANCIAL DATA-continued
|
(unaudited)
|
(dollars in
millions, except for per share and per treatment
data)
|
|
|
Three months
ended
|
|
Six months
ended
June 30, 2017
|
|
June
30,
2017
|
|
March
31,
2017
|
|
June
30,
2016
|
|
4. Summary of
Reportable Segment Financial Results:
|
|
|
|
|
|
|
|
U.S. Dialysis
and Related Lab Services
|
|
|
|
|
|
|
|
Revenue:
|
|
|
|
|
|
|
|
Patient services
revenues
|
$
|
2,430
|
|
|
$
|
2,373
|
|
|
$
|
2,367
|
|
|
$
|
4,802
|
|
Provision for
uncollectible accounts
|
(109)
|
|
|
(107)
|
|
|
(107)
|
|
|
(216)
|
|
Net patient service
operating revenues
|
2,320
|
|
|
2,266
|
|
|
2,260
|
|
|
4,586
|
|
Other
revenues
|
5
|
|
|
5
|
|
|
4
|
|
|
10
|
|
Total net operating
revenues
|
2,325
|
|
|
2,271
|
|
|
2,264
|
|
|
4,596
|
|
Operating
expenses:
|
|
|
|
|
|
|
|
Patient care
costs
|
1,561
|
|
|
1,548
|
|
|
1,515
|
|
|
3,109
|
|
General and
administrative
|
189
|
|
|
188
|
|
|
185
|
|
|
377
|
|
Depreciation and
amortization
|
130
|
|
|
125
|
|
|
119
|
|
|
255
|
|
Equity investment
income
|
(5)
|
|
|
(8)
|
|
|
(4)
|
|
|
(13)
|
|
Gain on settlement,
net
|
ā
|
|
|
(527)
|
|
|
ā
|
|
|
(527)
|
|
Total operating
expenses
|
1,875
|
|
|
1,326
|
|
|
1,815
|
|
|
3,201
|
|
Segment operating
income
|
$
|
450
|
|
|
$
|
945
|
|
|
$
|
449
|
|
|
$
|
1,395
|
|
Reconciliation
for non-GAAP measure:
|
|
|
|
|
|
|
|
Gain on settlement,
net
|
ā
|
|
|
(527)
|
|
|
ā
|
|
|
(527)
|
|
Equity investment
income related to gain on settlement
|
ā
|
|
|
(3)
|
|
|
ā
|
|
|
(3)
|
|
Adjusted segment
operating income(1)
|
$
|
450
|
|
|
$
|
415
|
|
|
$
|
449
|
|
|
$
|
865
|
|
|
|
|
|
|
|
|
|
DMG
|
|
|
|
|
|
|
|
Revenue:
|
|
|
|
|
|
|
|
DMG capitated
revenues
|
$
|
987
|
|
|
$
|
890
|
|
|
$
|
874
|
|
|
$
|
1,877
|
|
Patient services
revenues
|
195
|
|
|
185
|
|
|
174
|
|
|
380
|
|
Provision for
uncollectible accounts
|
(6)
|
|
|
(6)
|
|
|
(4)
|
|
|
(12)
|
|
Net patient service
operating revenues
|
190
|
|
|
179
|
|
|
169
|
|
|
369
|
|
Other
revenues
|
19
|
|
|
18
|
|
|
17
|
|
|
37
|
|
Total net operating
revenues
|
1,196
|
|
|
1,087
|
|
|
1,060
|
|
|
2,283
|
|
Operating
expenses:
|
|
|
|
|
|
|
|
Patient care
costs
|
983
|
|
|
892
|
|
|
840
|
|
|
1,875
|
|
General and
administrative
|
120
|
|
|
129
|
|
|
118
|
|
|
248
|
|
Depreciation and
amortization
|
60
|
|
|
57
|
|
|
54
|
|
|
117
|
|
Goodwill and asset
impairment charges
|
51
|
|
|
ā
|
|
|
176
|
|
|
51
|
|
Gain on sales of
business interests, net
|
ā
|
|
|
ā
|
|
|
(30)
|
|
|
ā
|
|
Equity investment
(income) loss
|
(4)
|
|
|
(3)
|
|
|
4
|
|
|
(8)
|
|
Total operating
expenses
|
1,209
|
|
|
1,075
|
|
|
1,162
|
|
|
2,284
|
|
Segment operating
(loss) income
|
$
|
(13)
|
|
|
$
|
12
|
|
|
$
|
(102)
|
|
|
$
|
(1)
|
|
Reconciliation
for non-GAAP measure:
|
|
|
|
|
|
|
|
Goodwill impairment
charge
|
51
|
|
|
ā
|
|
|
176
|
|
|
51
|
|
Accruals for legal
matters
|
(4)
|
|
|
ā
|
|
|
ā
|
|
|
(4)
|
|
Gain on sale of
Tandigm ownership interests
|
ā
|
|
|
ā
|
|
|
(40)
|
|
|
ā
|
|
Loss on sale of DMG
Arizona
|
ā
|
|
|
ā
|
|
|
10
|
|
|
ā
|
|
Adjusted segment
operating income(1)
|
$
|
34
|
|
|
$
|
12
|
|
|
$
|
44
|
|
|
$
|
46
|
|
DAVITA
INC.
|
SUPPLEMENTAL
FINANCIAL DATA-continued
|
(unaudited)
|
(dollars in
millions, except for per share and per treatment
data)
|
|
|
Three months
ended
|
|
Six months
ended
June 30, 2017
|
|
June
30,
2017
|
|
March
31,
2017
|
|
June
30,
2016
|
|
5. U.S.
Dialysis and Related Lab Services Business
Metrics:
|
|
|
|
|
|
|
|
Volume
|
|
|
|
|
|
|
|
Treatments
|
7,035,894
|
|
|
6,804,384
|
|
|
6,745,610
|
|
|
13,840,278
|
|
Number of treatment
days
|
78.0
|
|
|
77.0
|
|
|
78.0
|
|
|
155.0
|
|
Treatments per
day
|
90,204
|
|
|
88,369
|
|
|
86,482
|
|
|
89,292
|
|
Per day year over year
increase
|
4.3
|
%
|
|
3.7
|
%
|
|
4.4
|
%
|
|
4.0
|
%
|
Normalized
non-acquired treatment growth year over year
|
3.6
|
%
|
|
3.8
|
%
|
|
4.3
|
%
|
|
3.7
|
%
|
Operating
revenues before provision for uncollectible
accounts
|
|
|
|
|
|
|
|
Dialysis and related
lab services revenue per treatment
|
$
|
345.32
|
|
|
$
|
348.70
|
|
|
$
|
350.90
|
|
|
$
|
346.98
|
|
Per treatment
(decrease) increase from previous quarter
|
(1.0)
|
%
|
|
(1.0)
|
%
|
|
0.1
|
%
|
|
|
Per treatment
(decrease) increase from previous year
|
(1.6)
|
%
|
|
(0.5)
|
%
|
|
0.7
|
%
|
|
(1.1)
|
%
|
Percent of
consolidated net revenues
|
59.3
|
%
|
|
60.8
|
%
|
|
60.5
|
%
|
|
60.0
|
%
|
Expenses
|
|
|
|
|
|
|
|
Patient care
costs
|
|
|
|
|
|
|
|
Percent of total
segment operating net revenues
|
67.1
|
%
|
|
68.1
|
%
|
|
66.9
|
%
|
|
67.6
|
%
|
Per
treatment
|
$
|
221.82
|
|
|
$
|
227.47
|
|
|
$
|
224.75
|
|
|
$
|
224.60
|
|
Per treatment
(decrease) increase from previous quarter
|
(2.5)
|
%
|
|
(0.1)
|
%
|
|
(0.2)
|
%
|
|
|
Per treatment
(decrease) increase from previous year
|
(1.3)
|
%
|
|
1.0
|
%
|
|
1.2
|
%
|
|
(0.2)
|
%
|
General and
administrative expenses
|
|
|
|
|
|
|
|
Percent of total
segment operating net revenues
|
8.1
|
%
|
|
8.3
|
%
|
|
8.2
|
%
|
|
8.2
|
%
|
Per
treatment
|
$
|
26.85
|
|
|
$
|
27.65
|
|
|
$
|
27.37
|
|
|
$
|
27.24
|
|
Per treatment
(decrease) increase from previous quarter
|
(2.9)
|
%
|
|
(4.1)
|
%
|
|
1.5
|
%
|
|
|
Per treatment
(decrease) increase from previous year
|
(1.9)
|
%
|
|
2.5
|
%
|
|
1.4
|
%
|
|
0.3
|
%
|
Accounts
receivable
|
|
|
|
|
|
|
|
Net
receivables
|
$
|
1,420
|
|
|
$
|
1,335
|
|
|
$
|
1,273
|
|
|
|
DSO
|
56
|
|
|
54
|
|
|
52
|
|
|
|
Provision for
uncollectible accounts as a percentage of
revenues
|
4.5
|
%
|
|
4.5
|
%
|
|
4.5
|
%
|
|
4.5
|
%
|
|
|
|
|
|
|
|
|
6. DMG Business
Metrics:
|
|
|
|
|
|
|
|
Capitated
membership
|
|
|
|
|
|
|
|
Total
members
|
726,000
|
|
|
735,400
|
|
|
761,400
|
|
|
|
Total member
months
|
|
|
|
|
|
|
|
Senior
|
918,200
|
|
|
920,200
|
|
|
957,400
|
|
|
1,838,500
|
|
Commercial
|
983,000
|
|
|
995,900
|
|
|
1,037,500
|
|
|
1,978,900
|
|
Medicaid
|
291,200
|
|
|
305,200
|
|
|
333,000
|
|
|
596,300
|
|
Total member
months
|
2,192,400
|
|
|
2,221,300
|
|
|
2,327,900
|
|
|
4,413,700
|
|
Capitated
revenues by sources
|
|
|
|
|
|
|
|
Senior
revenues
|
$
|
753
|
|
|
$
|
660
|
|
|
$
|
638
|
|
|
$
|
1,413
|
|
Commercial
revenues
|
194
|
|
|
188
|
|
|
189
|
|
|
381
|
|
Medicaid
revenues
|
41
|
|
|
42
|
|
|
47
|
|
|
83
|
|
Total capitated
revenues
|
$
|
987
|
|
|
$
|
890
|
|
|
$
|
874
|
|
|
$
|
1,877
|
|
DAVITA
INC.
|
SUPPLEMENTAL
FINANCIAL DATA-continued
|
(unaudited)
|
(dollars in
millions, except for per share and per treatment
data)
|
|
|
Three months
ended
|
|
Six months
ended
June 30, 2017
|
|
June
30,
2017
|
|
March
31,
2017
|
|
June
30,
2016
|
|
6. DMG Business
Metrics: (continued)
|
|
|
|
|
|
|
|
Other
|
|
|
|
|
|
|
|
Total care dollars
under management(1)
|
$
|
1,355
|
|
|
$
|
1,354
|
|
|
$
|
1,348
|
|
|
$
|
2,709
|
|
Ratio of operating
(loss) income to total care dollars under
management(1)
|
(1.0)
|
%
|
|
0.9
|
%
|
|
(7.6)
|
%
|
|
ā
|
%
|
Ratio of adjusted
operating income to total care dollars under
management(1)(6)
|
2.5
|
%
|
|
0.9
|
%
|
|
3.3
|
%
|
|
1.7
|
%
|
|
|
|
|
|
|
|
|
7. Cash
Flow:
|
|
|
|
|
|
|
|
Operating cash
flow
|
$
|
146.3
|
|
|
$
|
865.2
|
|
|
$
|
516.6
|
|
|
$
|
1,011.4
|
|
Operating cash flow,
last twelve months
|
$
|
2,029.2
|
|
|
$
|
2,399.6
|
|
|
$
|
2,061.3
|
|
|
|
Free cash
flow(1)
|
$
|
17.9
|
|
|
$
|
733.7
|
|
|
$
|
391.3
|
|
|
$
|
751.7
|
|
Free cash flow, last
twelve months(1)
|
$
|
1,467.3
|
|
|
$
|
1,840.7
|
|
|
$
|
1,509.4
|
|
|
|
Capital
expenditures:
|
|
|
|
|
|
|
|
Routine
maintenance/IT/other
|
$
|
55.6
|
|
|
$
|
88.1
|
|
|
$
|
81.5
|
|
|
$
|
143.7
|
|
Development and
relocations
|
$
|
128.8
|
|
|
$
|
126.4
|
|
|
$
|
103.9
|
|
|
$
|
255.3
|
|
Acquisition
expenditures
|
$
|
542.6
|
|
|
$
|
77.2
|
|
|
$
|
68.2
|
|
|
$
|
619.8
|
|
|
|
|
|
|
|
|
|
8. Debt and
Capital Structure:
|
|
|
|
|
|
|
|
Total
debt(3)
|
$
|
9,165
|
|
|
$
|
9,165
|
|
|
$
|
9,189
|
|
|
|
Net debt, net of cash
and cash equivalents(3)
|
$
|
8,453
|
|
|
$
|
7,693
|
|
|
$
|
7,906
|
|
|
|
Leverage ratio (see
calculation on page 15)
|
3.38x
|
|
|
3.03x
|
|
|
2.93x
|
|
|
|
Overall weighted
average effective interest rate during the
quarter
|
4.69
|
%
|
|
4.55
|
%
|
|
4.42
|
%
|
|
|
Overall weighted
average effective interest rate at end of the
quarter
|
4.76
|
%
|
|
4.64
|
%
|
|
4.43
|
%
|
|
|
Weighted average
effective interest rate on the senior secured
credit facilities at end of the quarter
|
4.20
|
%
|
|
3.95
|
%
|
|
3.52
|
%
|
|
|
Fixed and economically
fixed interest rates as a percentage of
our total debt
|
53
|
%
|
|
53
|
%
|
|
60
|
%(4)
|
|
|
Fixed and economically
fixed interest rates, including our
interest rate cap agreements, as a percentage of our total
debt
|
91
|
%
|
|
91
|
%
|
|
90
|
%(4)
|
|
|
|
Certain columns, rows
or percentages may not 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)
|
Consolidated
percentages of revenues are comprised of the dialysis and related
lab services business, DMG's business and other ancillary services
and strategic initiatives. General and administrative expenses
includes certain corporate support and long-term incentive
compensation, as well as estimated accruals for certain legal
matters for the three and six months ended June 30,
2017.
|
(3)
|
The reported balance
sheet amounts at June 30, 2017, March 31, 2017, and
June 30, 2016, exclude $71.9 million, $75.9 million and $87.9
million, respectively, of a debt discount associated with our Term
Loan A, Term Loan B and senior notes, and other deferred financing
costs.
|
(4)
|
The Term Loan B is
subject to a LIBOR floor of 0.75%. At June 30, 2017 and March
31, 2017, the actual LIBOR-based variable component of our interest
rate exceeded 0.75% on the Term Loan B, and was subject to
LIBOR-based interest rate volatility on the LIBOR variable
component of our interest rate on all of the Term Loan B. However,
we are limited to a maximum rate of 3.50% on the outstanding
principal debt on the Term Loan B as a result of interest rate cap
agreements. Actual LIBOR, for the three months ended June 30, 2016
was lower than the embedded LIBOR floor during such period and the
interest rate on the Term Loan B was set at its floor during such
period. The Term Loan A bears interest at LIBOR plus an interest
margin of 2.00%. We are limited to a maximum rate of 3.50% on
$105.0 million of the Term Loan A as a result of interest rate cap
agreements. In addition, the uncapped portion of the Term Loan A,
which is subject to the variability of LIBOR, is $720.0
million.
|
(5)
|
Adjusted operating
income margin is a calculation of adjusted operating income divided
by consolidated net revenues.
|
(6)
|
Ratio of adjusted
operating income to total care dollars under management is a
calculation of adjusted operating income divided by total care
dollars under management.
|
DAVITA INC.
SUPPLEMENTAL FINANCIAL
DATA-continued
(unaudited)
(dollars in
thousands)
Note 1: Calculation of the Leverage Ratio
Under the senior secured credit facilities (Credit Agreement),
the leverage ratio is defined as all funded debt plus the face
amount of all letters of credit issued, minus cash and cash
equivalents, including short-term investments, divided by
"Consolidated EBITDA". The leverage ratio determines the interest
rate margin payable by the Company for its Term Loan A and
revolving line of credit under the Credit Agreement by establishing
the margin over the base interest rate (LIBOR) that is applicable.
The following leverage ratio was calculated using "Consolidated
EBITDA" as defined in the Credit Agreement. The calculation below
is based on the last twelve months of "Consolidated EBITDA", pro
forma for routine acquisitions that occurred during the period. The
Company's management believes the presentation of "Consolidated
EBITDA" is useful to users to enhance their understanding of the
Company's leverage ratio under its Credit Agreement. The leverage
ratio calculated by the Company is a non-GAAP measure and should
not be considered a substitute for debt to net income attributable
to DaVita Inc., net income attributable to DaVita Inc. or total
debt as determined in accordance with United States generally accepted accounting
principles (GAAP). The Company's calculation of its leverage
ratio might not be calculated in the same manner as, and thus might
not be comparable to, similarly titled measures by other
companies.
|
Rolling twelve
months
ended
June 30, 2017
|
Net income
attributable to DaVita Inc.
|
$
|
1,303,758
|
|
Income
taxes
|
595,850
|
|
Interest
expense
|
386,841
|
|
Depreciation and
amortization
|
760,760
|
|
Goodwill and other
asset impairment charges
|
143,891
|
|
Noncontrolling
interests and equity investment income, net
|
172,836
|
|
Stock-settled
stock-based compensation
|
32,243
|
|
Gain on changes in
ownership interest, net
|
(380,647)
|
|
Gain on settlement,
net
|
(529,504)
|
|
Other
|
19,966
|
|
"Consolidated
EBITDA"
|
$
|
2,505,994
|
|
|
|
|
June 30,
2017
|
Total debt, excluding
debt discount and other deferred financing costs of $71.9
million
|
$
|
9,165,014
|
|
Letters of credit
issued
|
95,909
|
|
|
$
|
9,260,923
|
|
Less: Cash and cash
equivalents including short-term investments (excluding DMG's
physician owned entities cash)
|
(801,611)
|
|
Consolidated net
debt
|
$
|
8,459,312
|
|
Last twelve months
"Consolidated EBITDA"
|
$
|
2,505,994
|
|
Leverage
ratio
|
3.38x
|
|
In accordance with the Credit Agreement, the Company's
leverage ratio cannot exceed 4.50 to 1.00 as of June 30, 2017.
At that date the Company's leverage ratio did not exceed 4.50 to
1.00.
DAVITA INC.
RECONCILIATIONS FOR
NON-GAAP MEASURES
(unaudited)
(dollars in
thousands except for per share data)
Note 2: Adjusted net income and adjusted
diluted net income per share attributable to DaVita Inc.
We believe that adjusted net income and adjusted diluted net
income per share attributable to DaVita Inc., excluding goodwill
and other asset impairment charges, a net settlement gain, a gain
on the APAC JV ownership changes, estimated accruals for certain
legal matters, a gain on the partial sale of Tandigm, and a loss on
the sale of DMG Arizona, enhances a user's understanding of our
normal net income attributable to DaVita Inc. and diluted net
income per share attributable to DaVita Inc. for these periods by
providing a measure that is meaningful because it excludes certain
items which we do not believe are indicative of our ordinary
results, and accordingly, is comparable to prior periods and
indicative of normal net income attributable to DaVita Inc. and
diluted net income per share attributable to DaVita Inc. These
measures are not measures of financial performance under GAAP and
should not be considered as an alternative to net income
attributable to DaVita Inc. and diluted net income per share
attributable to DaVita Inc.
|
Three months
ended
|
|
Six months
ended
|
|
June
30,
2017
|
|
March
31,
2017
|
|
June
30,
2016
|
|
June
30,
2017
|
|
June
30,
2016
|
Net income
attributable to DaVita Inc.
|
$
|
127,001
|
|
|
$
|
447,697
|
|
|
$
|
53,382
|
|
|
$
|
574,698
|
|
|
$
|
150,816
|
|
Goodwill impairment
charges
|
61,117
|
|
|
24,198
|
|
|
176,000
|
|
|
85,315
|
|
|
253,000
|
|
Impairment of
assets
|
ā
|
|
|
15,168
|
|
|
ā
|
|
|
15,168
|
|
|
ā
|
|
Gain on settlement,
net
|
ā
|
|
|
(526,827)
|
|
|
ā
|
|
|
(526,827)
|
|
|
ā
|
|
Equity investment
income related to gain on settlement
|
ā
|
|
|
(2,677)
|
|
|
ā
|
|
|
(2,677)
|
|
|
ā
|
|
Gain on APAC JV
ownership changes
|
ā
|
|
|
(6,273)
|
|
|
ā
|
|
|
(6,273)
|
|
|
ā
|
|
Accruals for legal
matters
|
(3,600)
|
|
|
ā
|
|
|
ā
|
|
|
(3,600)
|
|
|
16,000
|
|
Gain on sale of
Tandigm ownership interests
|
ā
|
|
|
ā
|
|
|
(40,280)
|
|
|
ā
|
|
|
(40,280)
|
|
Loss on sale of DMG
Arizona
|
ā
|
|
|
ā
|
|
|
10,489
|
|
|
ā
|
|
|
10,489
|
|
Noncontrolling
interests associated with adjustments:
|
|
|
|
|
|
|
|
|
|
Goodwill impairment
charges
|
(2,985)
|
|
|
(6,880)
|
|
|
ā
|
|
|
(9,865)
|
|
|
ā
|
|
Gain on settlement,
net
|
ā
|
|
|
24,029
|
|
|
ā
|
|
|
24,029
|
|
|
ā
|
|
Related income
tax
|
(2,850)
|
|
|
185,162
|
|
|
10,414
|
|
|
182,312
|
|
|
10,414
|
|
Adjusted net income
attributable to DaVita Inc.
|
$
|
178,683
|
|
|
$
|
153,597
|
|
|
$
|
210,005
|
|
|
$
|
332,280
|
|
|
$
|
400,439
|
|
|
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 except for per share data)
|
|
|
Three months
ended
|
|
Six months
ended
|
|
June
30,
2017
|
|
March
31,
2017
|
|
June
30,
2016
|
|
June
30,
2017
|
|
June
30,
2016
|
Diluted net income
per share attributable to DaVita Inc.
|
$
|
0.65
|
|
|
$
|
2.29
|
|
|
$
|
0.26
|
|
|
$
|
2.95
|
|
|
$
|
0.73
|
|
Goodwill impairment
charges
|
0.32
|
|
|
0.12
|
|
|
0.84
|
|
|
0.44
|
|
|
1.21
|
|
Impairment of
assets
|
ā
|
|
|
0.08
|
|
|
ā
|
|
|
0.08
|
|
|
ā
|
|
Gain on settlement,
net
|
ā
|
|
|
(2.70)
|
|
|
ā
|
|
|
(2.70)
|
|
|
ā
|
|
Equity investment
income related to gain on settlement
|
ā
|
|
|
(0.01)
|
|
|
ā
|
|
|
(0.01)
|
|
|
ā
|
|
Gain on APAC JV
ownership changes
|
ā
|
|
|
(0.03)
|
|
|
ā
|
|
|
(0.03)
|
|
|
ā
|
|
Accruals for legal
matters
|
(0.02)
|
|
|
ā
|
|
|
ā
|
|
|
(0.02)
|
|
|
0.08
|
|
Gain on sale of
Tandigm ownership interests
|
ā
|
|
|
ā
|
|
|
(0.19)
|
|
|
ā
|
|
|
(0.19)
|
|
Loss on sale of DMG
Arizona
|
ā
|
|
|
ā
|
|
|
0.05
|
|
|
ā
|
|
|
0.05
|
|
Noncontrolling
interests associated with adjustments
|
|
|
|
|
|
|
|
|
ā
|
|
Goodwill impairment
charges
|
(0.02)
|
|
|
(0.03)
|
|
|
ā
|
|
|
(0.05)
|
|
|
ā
|
|
Gain on settlement,
net
|
ā
|
|
|
0.12
|
|
|
ā
|
|
|
0.12
|
|
|
ā
|
|
Related income
tax
|
(0.01)
|
|
|
0.95
|
|
|
0.05
|
|
|
0.94
|
|
|
0.05
|
|
Adjusted diluted net
income per share attributable to DaVita Inc.
|
$
|
0.92
|
|
|
$
|
0.79
|
|
|
$
|
1.01
|
|
|
$
|
1.71
|
|
|
$
|
1.93
|
|
|
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
except for per share data)
In addition, we have excluded amortization of intangible assets
associated with acquisitions from our adjusted net income
attributable to DaVita Inc., net of tax, and from our adjusted
diluted net income per share attributable to DaVita Inc. as we
believe this presentation enhances a user's understanding of our
operating results for these periods by providing a different
reflection of the Company's operating performance since it excludes
the amortization of intangible assets that relate to the fair value
measurement of acquired intangible assets associated with our
acquisitions, and accordingly is indicative of consistent adjusted
net income excluding amortization of acquired intangibles,
attributable to DaVita Inc. and diluted net income per share
attributable to DaVita Inc. These measures are not measures of
financial performance under GAAP and should not be considered as an
alternative to net income attributable to DaVita Inc. and diluted
net income per share attributable to DaVita Inc.
|
Three months
ended
|
|
Six months
ended
|
|
June
30,
2017
|
|
March
31,
2017
|
|
June
30,
2016
|
|
June
30,
2017
|
|
June
30,
2016
|
Adjusted net income
per share attributable to DaVita Inc.
|
$
|
178,683
|
|
|
$
|
153,597
|
|
|
$
|
210,005
|
|
|
$
|
332,280
|
|
|
$
|
400,439
|
|
Add: Amortization of
intangible assets associated with acquisitions for:
|
|
|
|
|
|
|
|
|
|
Dialysis and
ancillary operations
|
3,818
|
|
|
3,725
|
|
|
3,674
|
|
|
7,543
|
|
|
7,483
|
|
DMG
operations
|
44,274
|
|
|
43,955
|
|
|
40,296
|
|
|
88,229
|
|
|
76,374
|
|
Less: Related income
tax
|
(18,996)
|
|
|
(19,072)
|
|
|
(16,269)
|
|
|
(38,068)
|
|
|
(32,224)
|
|
|
$
|
207,779
|
|
|
$
|
182,205
|
|
|
$
|
237,706
|
|
|
$
|
389,984
|
|
|
$
|
452,072
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted diluted net
income per share attributable to DaVita Inc.
|
$
|
0.92
|
|
|
$
|
0.79
|
|
|
$
|
1.01
|
|
|
$
|
1.71
|
|
|
$
|
1.93
|
|
Add: Amortization of
intangible assets per share associated with acquisitions
for:
|
|
|
|
|
|
|
|
|
|
Dialysis and
ancillary operations
|
0.02
|
|
|
0.02
|
|
|
0.02
|
|
|
0.04
|
|
|
0.04
|
|
DMG
operations
|
0.23
|
|
|
0.22
|
|
|
0.19
|
|
|
0.45
|
|
|
0.36
|
|
Tax effect of
adjustments
|
(0.10)
|
|
|
(0.10)
|
|
|
(0.08)
|
|
|
(0.20)
|
|
|
(0.16)
|
|
Adjusted net income
per share attributable to DaVita Inc.
|
$
|
1.07
|
|
|
$
|
0.93
|
|
|
$
|
1.14
|
|
|
$
|
2.00
|
|
|
$
|
2.17
|
|
|
Certain columns or
rows may not sum or recalculate due to the use of rounded
numbers.
|
DAVITA INC.
RECONCILIATIONS FOR
NON-GAAP MEASURES
(unaudited)
(dollars in
thousands)
Note 3: Adjusted operating income.
Adjusted operating income is defined as operating income before
certain items we do not believe are indicative of ordinary results,
including goodwill and other asset impairment charges, a net
settlement gain, a gain on the APAC JV ownership changes, estimated
accruals for certain legal matters, a gain on the partial sale of
Tandigm, and a loss on the sale of DMG Arizona.
We use adjusted operating income as a measure to assess
operating and financial performance. We believe that this measure
enhances a user's understanding of the normal operating income and
of our consolidated enterprise and of our individual reportable
segments.
Adjusted operating income is not a measure of financial
performance computed in accordance with GAAP and should not be
considered in isolation nor as a substitute for operating income,
net income, cash flows from operations, or other statement of
operations or cash flow data prepared in conformity with GAAP, or
as a measure of profitability or liquidity. In addition, the
calculation of adjusted operating income is susceptible to varying
interpretations and calculations, and the amounts presented may not
be comparable to similarly titled measures of other companies.
Adjusted operating income may not be indicative of historical
operating results, and we do not intend these calculations to be
predictive of future results of operations or cash flows.
|
Three months
ended
|
|
Six months
ended
|
|
June
30,
2017
|
|
March
31,
2017
|
|
June
30,
2016
|
|
June
30,
2017
|
|
June
30,
2016
|
Consolidated:
|
|
|
|
|
|
|
|
|
|
Operating
income
|
$
|
378,316
|
|
|
$
|
888,236
|
|
|
$
|
329,070
|
|
|
$
|
1,266,552
|
|
|
$
|
693,959
|
|
Goodwill impairment
charges
|
61,117
|
|
|
24,198
|
|
|
176,000
|
|
|
85,315
|
|
|
253,000
|
|
Impairment of
assets
|
ā
|
|
|
15,168
|
|
|
ā
|
|
|
15,168
|
|
|
ā
|
|
Gain on settlement,
net
|
ā
|
|
|
(526,827)
|
|
|
ā
|
|
|
(526,827)
|
|
|
ā
|
|
Equity investment
income related to gain on settlement
|
ā
|
|
|
(2,677)
|
|
|
ā
|
|
|
(2,677)
|
|
|
ā
|
|
Gain on APAC JV
ownership changes
|
ā
|
|
|
(6,273)
|
|
|
ā
|
|
|
(6,273)
|
|
|
ā
|
|
Accruals for legal
matters
|
(3,600)
|
|
|
ā
|
|
|
ā
|
|
|
(3,600)
|
|
|
16,000
|
|
Gain on sale of
Tandigm ownership interests
|
ā
|
|
|
ā
|
|
|
(40,280)
|
|
|
ā
|
|
|
(40,280)
|
|
Loss on sale of DMG
Arizona
|
ā
|
|
|
ā
|
|
|
10,489
|
|
|
ā
|
|
|
10,489
|
|
Adjusted operating
income
|
$
|
435,833
|
|
|
$
|
391,825
|
|
|
$
|
475,279
|
|
|
$
|
827,658
|
|
|
$
|
933,168
|
|
|
Certain columns or
rows may not sum or recalculate due to the use of rounded
numbers.
|
DAVITA
INC.
|
RECONCILIATIONS
FOR NON-GAAP MEASURES
|
(unaudited)
|
(dollars in
thousands)
|
|
|
Three months
ended
|
|
Six months
ended
|
|
June
30,
2017
|
|
March
31,
2017
|
|
June
30,
2016
|
|
June
30,
2017
|
|
June
30,
2016
|
Kidney
Care:
|
|
|
|
|
|
|
|
|
|
U.S. dialysis and
related lab services:
|
|
|
|
|
|
|
|
|
|
Segment operating
income
|
$
|
450,472
|
|
|
$
|
944,740
|
|
|
$
|
449,190
|
|
|
$
|
1,395,212
|
|
|
$
|
889,245
|
|
Gain on settlement,
net
|
ā
|
|
|
(526,827)
|
|
|
ā
|
|
|
(526,827)
|
|
|
ā
|
|
Equity investment
income related to gain on settlement
|
ā
|
|
|
(2,677)
|
|
|
ā
|
|
|
(2,677)
|
|
|
ā
|
|
Adjusted operating
income
|
450,472
|
|
|
415,236
|
|
|
449,190
|
|
|
865,708
|
|
|
889,245
|
|
Other - Ancillary
services and strategic initiatives:
|
|
|
|
|
|
|
|
|
|
U.S.
ancillary services and strategic initiatives
|
|
|
|
|
|
|
|
|
|
Segment operating
(loss) income
|
(35,545)
|
|
|
(53,027)
|
|
|
265
|
|
|
(88,572)
|
|
|
(1,089)
|
|
Goodwill impairment
charges
|
10,498
|
|
|
24,198
|
|
|
ā
|
|
|
34,696
|
|
|
ā
|
|
Impairment of
assets
|
ā
|
|
|
15,168
|
|
|
ā
|
|
|
15,168
|
|
|
ā
|
|
Adjusted operating
(loss) income
|
(25,047)
|
|
|
(13,661)
|
|
|
265
|
|
|
(38,708)
|
|
|
(1,089)
|
|
International
dialysis
|
|
|
|
|
|
|
|
|
|
Segment operating
loss
|
(12,700)
|
|
|
(5,193)
|
|
|
(12,909)
|
|
|
(17,893)
|
|
|
(22,656)
|
|
Gain on APAC JV
ownership changes
|
ā
|
|
|
(6,273)
|
|
|
ā
|
|
|
(6,273)
|
|
|
ā
|
|
Adjusted operating
loss
|
(12,700)
|
|
|
(11,466)
|
|
|
(12,909)
|
|
|
(24,166)
|
|
|
(22,656)
|
|
Adjusted operating
loss
|
(37,747)
|
|
|
(25,127)
|
|
|
(12,644)
|
|
|
(62,874)
|
|
|
(23,745)
|
|
Corporate
administrative support:
|
|
|
|
|
|
|
|
|
|
Segment operating
loss
|
(11,031)
|
|
|
(10,592)
|
|
|
(5,417)
|
|
|
(21,623)
|
|
|
(12,337)
|
|
Kidney Care adjusted
operating income
|
401,694
|
|
|
379,517
|
|
|
431,129
|
|
|
781,211
|
|
|
853,163
|
|
DMG:
|
|
|
|
|
|
|
|
|
|
Segment operating
(loss) income
|
(12,880)
|
|
|
12,308
|
|
|
(102,059)
|
|
|
(572)
|
|
|
(159,204)
|
|
Goodwill impairment
charge
|
50,619
|
|
|
ā
|
|
|
176,000
|
|
|
50,619
|
|
|
253,000
|
|
Accruals for legal
matters
|
(3,600)
|
|
|
ā
|
|
|
ā
|
|
|
(3,600)
|
|
|
16,000
|
|
Gain on sale of
Tandigm ownership interests
|
ā
|
|
|
ā
|
|
|
(40,280)
|
|
|
ā
|
|
|
(40,280)
|
|
Loss on sale of DMG
Arizona
|
ā
|
|
|
ā
|
|
|
10,489
|
|
|
ā
|
|
|
10,489
|
|
DMG adjusted
operating income
|
34,139
|
|
|
12,308
|
|
|
44,150
|
|
|
46,447
|
|
|
80,005
|
|
Consolidated adjusted
operating income
|
$
|
435,833
|
|
|
$
|
391,825
|
|
|
$
|
475,279
|
|
|
$
|
827,658
|
|
|
$
|
933,168
|
|
|
Certain columns or
rows may not sum or recalculate due to the use of rounded
numbers.
|
DAVITA INC.
RECONCILIATIONS FOR
NON-GAAP MEASURES
(unaudited)
(dollars in
thousands)
Note 4: Effective income tax rates and
adjusted effective income tax rates.
We believe that reporting the effective income tax rate
attributable to DaVita Inc. as well as the adjusted effective
income tax rate attributable to DaVita Inc., excluding goodwill and
other asset impairment charges, a net settlement gain, a gain on
the APAC JV ownership changes, estimated accruals for certain legal
matters, a gain on the partial sale of Tandigm, and a loss on the
sale of DMG Arizona, net of tax, enhances a user's understanding of
DaVita Inc.'s effective income tax rate and DaVita Inc.'s adjusted
effective income tax rate for the periods presented because it
excludes noncontrolling owners' income that primarily relates to
non-tax paying entities and certain non-deductible charges which we
do not believe are indicative of our ordinary results, and,
therefore, these adjusted measures are meaningful to a user to
fully understand the related income tax effects on DaVita Inc.'s
operating results. These are not measures under GAAP and should not
be considered as an alternative to the effective income tax rate
calculated in accordance with GAAP.
Effective income tax rate as compared to the effective income
tax rate attributable to DaVita Inc. is as follows:
|
Three months
ended
|
|
Six months
ended
June 30, 2017
|
|
June
30,
2017
|
|
March
31,
2017
|
|
June
30,
2016
|
|
Income before income
taxes
|
$
|
275,607
|
|
|
$
|
788,050
|
|
|
$
|
229,391
|
|
|
$
|
1,063,657
|
|
Income tax
expense
|
$
|
113,982
|
|
|
$
|
287,765
|
|
|
$
|
134,888
|
|
|
$
|
401,747
|
|
Effective income tax
rate
|
41.4
|
%
|
|
36.5
|
%
|
|
58.8
|
%
|
|
37.8
|
%
|
|
Three months
ended
|
|
Six months
ended
June 30, 2017
|
|
June
30,
2017
|
|
March
31,
2017
|
|
June
30,
2016
|
|
Income before income
taxes
|
$
|
275,607
|
|
|
$
|
788,050
|
|
|
$
|
229,391
|
|
|
$
|
1,063,657
|
|
Less:
Noncontrolling owners' income primarily attributable to non-tax
paying entities
|
(34,906)
|
|
|
(52,653)
|
|
|
(41,289)
|
|
|
(87,559)
|
|
Income before income
taxes attributable to DaVita Inc.
|
$
|
240,701
|
|
|
$
|
735,397
|
|
|
$
|
188,102
|
|
|
$
|
976,098
|
|
|
|
|
|
|
|
|
|
Income tax
expense
|
$
|
113,982
|
|
|
$
|
287,765
|
|
|
$
|
134,888
|
|
|
$
|
401,747
|
|
Less: Income tax
attributable to noncontrolling interests
|
(282)
|
|
|
(65)
|
|
|
(168)
|
|
|
(347)
|
|
Income tax expense
attributable to DaVita Inc.
|
$
|
113,700
|
|
|
$
|
287,700
|
|
|
$
|
134,720
|
|
|
$
|
401,400
|
|
|
|
|
|
|
|
|
|
Effective income tax
rate attributable to DaVita Inc.
|
47.2
|
%
|
|
39.1
|
%
|
|
71.6
|
%
|
|
41.1
|
%
|
|
Certain columns, rows
or percentages may not sum or recalculate due to the use of rounded
numbers.
|
DAVITA INC.
RECONCILIATIONS FOR
NON-GAAP MEASURES
(unaudited)
(dollars in
thousands)
Adjusted effective income tax rate as compared to the adjusted
effective income tax rate attributable to DaVita Inc. is as
follows:
|
Three months
ended
|
|
Six months
ended
June 30, 2017
|
June
30,
2017
|
|
March
31,
2017
|
|
June
30,
2016
|
|
Income before income
taxes
|
$
|
275,607
|
|
|
$
|
788,050
|
|
|
$
|
229,391
|
|
|
$
|
1,063,657
|
|
Goodwill impairment
charges
|
61,117
|
|
|
24,198
|
|
|
176,000
|
|
|
85,315
|
|
Impairment of
assets
|
ā
|
|
|
15,168
|
|
|
ā
|
|
|
15,168
|
|
Gain on settlement,
net
|
ā
|
|
|
(526,827)
|
|
|
ā
|
|
|
(526,827)
|
|
Equity investment
income related to gain on settlement
|
ā
|
|
|
(2,677)
|
|
|
ā
|
|
|
(2,677)
|
|
Gain on APAC JV
ownership changes
|
ā
|
|
|
(6,273)
|
|
|
ā
|
|
|
(6,273)
|
|
Accrual for legal
matters
|
(3,600)
|
|
|
ā
|
|
|
ā
|
|
|
(3,600)
|
|
Gain on sale of
Tandigm ownership interests
|
ā
|
|
|
ā
|
|
|
(40,280)
|
|
|
ā
|
|
Loss on sale of DMG
Arizona
|
ā
|
|
|
ā
|
|
|
10,489
|
|
|
ā
|
|
Noncontrolling
owners' income primarily attributable to non-tax
paying entities
|
(34,906)
|
|
|
(52,653)
|
|
|
(41,289)
|
|
|
(87,559)
|
|
Noncontrolling
interests associated with adjustments
|
|
|
|
|
|
|
|
Goodwill impairment
charges
|
(2,985)
|
|
|
(6,880)
|
|
|
ā
|
|
|
(9,865)
|
|
Gain on settlement,
net
|
ā
|
|
|
24,029
|
|
|
ā
|
|
|
24,029
|
|
Adjusted income
before income taxes attributable to DaVita Inc.
|
$
|
295,233
|
|
|
$
|
256,135
|
|
|
$
|
334,311
|
|
|
$
|
551,368
|
|
Income tax
expense
|
$
|
113,982
|
|
|
$
|
287,765
|
|
|
$
|
134,888
|
|
|
$
|
401,747
|
|
Add income tax
related to:
|
|
|
|
|
|
|
|
Goodwill impairment
charges
|
2,850
|
|
|
6,568
|
|
|
ā
|
|
|
9,418
|
|
Impairment of
assets
|
ā
|
|
|
5,752
|
|
|
ā
|
|
|
5,752
|
|
Loss on sale of DMG
Arizona
|
ā
|
|
|
ā
|
|
|
4,490
|
|
|
ā
|
|
Less income tax
related to:
|
|
|
|
|
|
|
|
Gain on settlement,
net
|
ā
|
|
|
(197,482)
|
|
|
ā
|
|
|
(197,482)
|
|
Gain on sale of
Tandigm ownership interests
|
ā
|
|
|
ā
|
|
|
(14,904)
|
|
|
ā
|
|
Noncontrolling
interests
|
(282)
|
|
|
(65)
|
|
|
(168)
|
|
|
(347)
|
|
Adjusted income tax
attributable to DaVita Inc.
|
$
|
116,550
|
|
|
$
|
102,538
|
|
|
$
|
124,306
|
|
|
$
|
219,088
|
|
Adjusted effective
income tax rate attributable to DaVita Inc.
|
39.5
|
%
|
|
40.0
|
%
|
|
37.2
|
%
|
|
39.7
|
%
|
|
Certain columns, rows
or percentages may not sum or recalculate due to the use of rounded
numbers.
|
DAVITA INC.
RECONCILIATIONS FOR
NON-GAAP MEASURES
(unaudited)
(dollars in
thousands)
Note 5: Free cash flow.
Free cash flow represents net cash provided by operating
activities less distributions to noncontrolling interests and
capital expenditures for routine maintenance and information
technology. We believe free cash flow is a useful adjunct to cash
flow from operating activities and other measurements under GAAP,
since free cash flow is a meaningful measure of our ability to fund
acquisitions and development activities and meet our debt service
requirements. In addition, free cash flow excluding distributions
to noncontrolling interests provides a user with an understanding
of free cash flows that are attributable to DaVita Inc. Free cash
flow is not a measure of financial performance under GAAP and
should not be considered as an alternative to cash flows from
operating, investing or financing activities, as an indicator of
cash flows or as a measure of liquidity.
|
Three months
ended
|
|
Six months
ended
June 30, 2017
|
|
June
30,
2017
|
|
March
31,
2017
|
|
June
30,
2016
|
|
Cash provided by
operating activities
|
$
|
146,270
|
|
|
$
|
865,174
|
|
|
$
|
516,637
|
|
|
$
|
1,011,444
|
|
Less:
Distributions to noncontrolling interests
|
(72,759)
|
|
|
(43,316)
|
|
|
(43,744)
|
|
|
(116,075)
|
|
Cash provided by
operating activities attributable to DaVita Inc.
|
73,511
|
|
|
821,858
|
|
|
472,893
|
|
|
895,369
|
|
Less: Expenditures
for routine maintenance and information
technology
|
(55,577)
|
|
|
(88,112)
|
|
|
(81,546)
|
|
|
(143,689)
|
|
Free cash
flow
|
$
|
17,934
|
|
|
$
|
733,746
|
|
|
$
|
391,347
|
|
|
$
|
751,680
|
|
|
Rolling 12-Month
Period
|
|
June
30,
2017
|
|
March
31,
2017
|
|
June
30,
2016
|
Cash provided by
operating activities
|
$
|
2,029,249
|
|
|
$
|
2,399,616
|
|
|
$
|
2,061,308
|
|
Less:
Distributions to noncontrolling interests
|
(214,323)
|
|
|
(185,308)
|
|
|
(189,748)
|
|
Cash provided by
operating activities attributable to DaVita Inc.
|
1,814,926
|
|
|
2,214,308
|
|
|
1,871,560
|
|
Less: Expenditures
for routine maintenance and information
technology
|
(347,594)
|
|
|
(373,563)
|
|
|
(362,146)
|
|
Free cash
flow
|
$
|
1,467,332
|
|
|
$
|
1,840,745
|
|
|
$
|
1,509,414
|
|
|
Certain columns or
rows may not sum or recalculate due to the use of rounded
numbers.
|
DAVITA INC.
RECONCILIATIONS FOR
NON-GAAP MEASURES
(unaudited)
(dollars in
thousands)
Note 6: Total care dollars under
management.
In California, as a result of
our managed care administrative services agreements with hospitals
and health plans, DMG does not assume the direct financial risk for
institutional (hospital) services in most cases, but is responsible
for managing the care dollars associated with both the professional
(physician) and institutional services being provided for the Per
Member Per Month (PMPM) fee attributable to both professional and
institutional services. In cases where DMG does not assume the
direct financial risk, DMG recognizes the surplus of institutional
revenue less institutional expense as DMG net revenue recorded as
capitated revenues. In addition to revenues recognized for
financial reporting purposes, DMG measures its total care dollars
under management, which includes the PMPM fee payable to third
parties for institutional services where DMG manages the care
provided to its members by the hospitals and other institutions,
which are not included in GAAP revenues. DMG uses total care
dollars under management as a supplement to GAAP revenues as it
allows DMG to measure profit margins on a comparable basis across
both the global capitation model (where DMG assumes the full
financial risk for all services, including institutional services)
and the risk sharing models (where DMG operates under managed care
administrative services agreements where DMG does not assume the
full risk). DMG believes that presenting amounts in this manner is
useful because it presents its operations on a unified basis
without the complication caused by models that DMG has adopted in
its California market as a result
of various regulations related to the assumption of institutional
risk. Total care dollars under management is not a measure of
financial performance computed in accordance with GAAP and should
not be considered in isolation or as a substitute for revenues
calculated in accordance with GAAP. Total care dollars under
management includes PMPM payments received from third parties that
are recorded net of expenses in our accounting records. The
following table reconciles total care dollars under management to
medical revenues for the periods indicated.
|
Three months
ended
|
|
Six months
ended
June 30, 2017
|
|
June
30,
2017
|
|
March
31,
2017
|
|
June
30,
2016
|
|
Medical
revenues
|
$
|
1,176,992
|
|
|
$
|
1,068,703
|
|
|
$
|
1,043,330
|
|
|
$
|
2,245,695
|
|
Less: Risk share
revenue, net
|
(36,117)
|
|
|
(8,652)
|
|
|
(50,369)
|
|
|
(44,769)
|
|
Add: Institutional
capitation amounts
|
213,887
|
|
|
293,835
|
|
|
355,459
|
|
|
507,722
|
|
Total care dollars
under management
|
$
|
1,354,762
|
|
|
$
|
1,353,886
|
|
|
$
|
1,348,420
|
|
|
$
|
2,708,648
|
|
|
Certain columns or
rows may not sum or recalculate due to the use of rounded
numbers.
|
DAVITA INC.
RECONCILIATIONS FOR
NON-GAAP MEASURES
(unaudited)
(dollars in
thousands)
Note 7: EBITDA and adjusted
EBITDA.
EBITDA is defined as operating income before depreciation and
amortization. Adjusted EBITDA is defined as operating income before
certain charges, including goodwill and other asset impairment
charges, a net settlement gain, a gain on the APAC JV ownership
changes, and estimated accruals for certain legal matters, further
adjusted to exclude depreciation and amortization.
We use EBITDA and adjusted EBITDA as measures to assess
operating and financial performance. We believe that these measures
enhance a user's understanding of normal operating income excluding
certain charges, depreciation and amortization.
Neither EBITDA nor adjusted EBITDA is a measure of financial
performance computed in accordance with GAAP and should not be
considered in isolation nor as a substitute for operating income,
net income, cash flows from operations, or other statement of
operations or cash flow data prepared in conformity with GAAP, or
as a measure of profitability or liquidity. In addition, the
calculation of EBITDA and adjusted EBITDA is susceptible to varying
interpretations and calculations, and the amounts presented may not
be comparable to similarly titled measures of other companies.
EBITDA and adjusted EBITDA may not be indicative of historical
operating results, and we do not intend these measures to be
predictive of future results of operations.
EBITDA:
|
Three months ended
June 30, 2017
|
|
Six months ended
June 30, 2017
|
|
Consolidated
|
|
Kidney
Care
|
|
DMG
|
|
Consolidated
|
|
Kidney
Care
|
|
DMG
|
Net income
attributable to DaVita Inc.
|
$
|
127,001
|
|
|
|
|
|
|
$
|
574,698
|
|
|
|
|
|
Noncontrolling
interests
|
34,624
|
|
|
|
|
|
|
87,212
|
|
|
|
|
|
Income
taxes
|
113,982
|
|
|
|
|
|
|
401,747
|
|
|
|
|
|
Other
income
|
(5,253)
|
|
|
|
|
|
|
(9,496)
|
|
|
|
|
|
Debt
expense
|
107,962
|
|
|
|
|
|
|
212,391
|
|
|
|
|
|
Operating income
(loss)
|
378,316
|
|
|
391,196
|
|
|
(12,880)
|
|
|
1,266,552
|
|
|
1,267,124
|
|
|
(572)
|
|
Depreciation and
amortization
|
200,038
|
|
|
140,026
|
|
|
60,011
|
|
|
390,244
|
|
|
272,910
|
|
|
117,334
|
|
EBITDA
|
$
|
578,354
|
|
|
$
|
531,222
|
|
|
$
|
47,131
|
|
|
$
|
1,656,796
|
|
|
$
|
1,540,034
|
|
|
$
|
116,762
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Certain columns or
rows may not sum or recalculate due to the use of rounded
numbers.
|
Adjusted EBITDA:
|
Three months ended
June 30, 2017
|
|
Six months ended
June 30, 2017
|
|
Consolidated
|
|
Kidney
Care
|
|
DMG
|
|
Consolidated
|
|
Kidney
Care
|
|
DMG
|
Net income
attributable to DaVita Inc.
|
$
|
127,001
|
|
|
|
|
|
|
$
|
574,698
|
|
|
|
|
|
Noncontrolling
interests
|
34,624
|
|
|
|
|
|
|
87,212
|
|
|
|
|
|
Income
taxes
|
113,982
|
|
|
|
|
|
|
401,747
|
|
|
|
|
|
Other
income
|
(5,253)
|
|
|
|
|
|
|
(9,496)
|
|
|
|
|
|
Debt
expense
|
107,962
|
|
|
|
|
|
|
212,391
|
|
|
|
|
|
Operating income
(loss)
|
378,316
|
|
|
391,196
|
|
|
(12,880)
|
|
|
1,266,552
|
|
|
1,267,124
|
|
|
(572)
|
|
Goodwill impairment
charges
|
61,117
|
|
|
10,498
|
|
|
50,619
|
|
|
85,315
|
|
|
34,696
|
|
|
50,619
|
|
Impairment of
assets
|
ā
|
|
|
ā
|
|
|
ā
|
|
|
15,168
|
|
|
15,168
|
|
|
ā
|
|
Gain on settlement,
net
|
ā
|
|
|
ā
|
|
|
ā
|
|
|
(526,827)
|
|
|
(526,827)
|
|
|
ā
|
|
Equity investment
income related
to gain on settlement
|
ā
|
|
|
ā
|
|
|
ā
|
|
|
(2,677)
|
|
|
(2,677)
|
|
|
ā
|
|
Gain on APAC JV
ownership changes
|
ā
|
|
|
ā
|
|
|
ā
|
|
|
(6,273)
|
|
|
(6,273)
|
|
|
ā
|
|
Accruals for legal
matters
|
(3,600)
|
|
|
ā
|
|
|
(3,600)
|
|
|
(3,600)
|
|
|
ā
|
|
|
(3,600)
|
|
Adjusted operating
income
|
435,833
|
|
|
401,694
|
|
|
34,139
|
|
|
827,658
|
|
|
781,211
|
|
|
46,447
|
|
Depreciation and
amortization
|
200,038
|
|
|
140,026
|
|
|
60,011
|
|
|
390,244
|
|
|
272,910
|
|
|
117,334
|
|
Adjusted
EBITDA
|
$
|
635,871
|
|
|
$
|
541,720
|
|
|
$
|
94,150
|
|
|
$
|
1,217,902
|
|
|
$
|
1,054,121
|
|
|
$
|
163,781
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Certain columns or
rows may not sum or recalculate due to the use of rounded
numbers.
|
View original
content:http://www.prnewswire.com/news-releases/davita-inc-2nd-quarter-2017-results-300497783.html
SOURCE DaVita Inc.