DaVita Announces Estimate of Third Quarter 2011 Results
October 18 2011 - 3:00AM
Business Wire
DaVita Inc. (NYSE: DVA), (the “Company”) is announcing an
estimate of certain third quarter 2011 operating results in advance
of the announcement of its actual third quarter operating results,
which is expected to occur after market close on November 3, 2011.
Our estimate of operating results for the third quarter of 2011
includes:
- Operating income in the range of $314
million to $322 million.
- Diluted earnings per share from
continuing operations in the range of $1.43 to $1.48.
- Normalized non-acquired treatment
growth of approximately 4.6%.
- Continued deterioration in our mix of
treatments reimbursed by non-government payors as a percentage of
total treatments.
- Operating results of DSI beginning
September 1, 2011
Our estimate of third quarter operating performance is driven by
strong treatment volume growth and by decreased operating cost from
a decline in utilization of physician-prescribed pharmaceuticals
due to continued evolution of clinical practices and physicians
responding to the new FDA label for Epogen. These estimated results
exclude any unidentified unusual or nonrecurring material
charges.
We are also raising our operating income guidance for 2011 to
now be in the range of $1,125 million to $1,155 million. This
guidance excludes the non-cash goodwill impairment charge recorded
in the second quarter of 2011. Our previous operating income
guidance for 2011 was in the range of $1,080 million to $1,120
million. This 2011 full-year guidance reflects anticipated declines
in rates from the Veterans Administration and higher general and
administrative spending in the fourth quarter. The above
expectations regarding our results for the third quarter and
guidance for 2011 are solely management estimates and projections
based on currently available information. The quarter ended
September 30, 2011 has recently completed, and as a result, the
Company’s final results for the third quarter of 2011 are not yet
available.
We are also reiterating our operating income guidance range for
2012 of $1,200 million to $1,300 million, as previously provided.
This 2012 guidance reflects current and potential trends among a
number of swing factors, including:
- Commercial mix
- Commercial rates
- Government rates including Medicaid and
the Veterans Administration
- Uncertainty regarding utilization and
associated spend on physician-prescribed pharmaceuticals
- Additional investments in G&A,
including our international expansion
All these estimates and projections and the underlying
assumptions capture a majority of probabilistic outcomes but
involve significant risks and uncertainties. Actual results may
vary significantly from these projections. We will discuss these
results in further detail on our third quarter earnings call on
November 3, 2011.
The Company is also announcing that, as anticipated, we recently
received a subpoena for documents in the previously disclosed grand
jury investigation. The subpoena was expected as part of the
typical process in a healthcare investigation, and it is the first
request for information that the Company has received in this
matter. Consistent with our discussion on our last quarterly
earnings call, the scope of the document subpoena substantially
overlaps with the OIG Dallas matter and appears to be limited to
physician relationships. The investigation is still at an
early stage. We always take these matters seriously and intend
to continue cooperating with the government.
Our strong record of compliance has been well established in the
healthcare industry where retroactive investigation as opposed to
proactive clarification is an unfortunate feature of the oversight
system. Over the last twelve years, our overall business practices
have gone through extensive internal and external review. During
that same time, we have dealt very successfully and openly with
this highly public system.
We look forward to continuing to discuss these matters on our
upcoming earnings call.
This release contains forward-looking statements, within the
meaning of the federal securities laws, including statements
related to anticipated third quarter 2011 and fiscal year 2011 and
2012 operating income, third quarter earnings per share from
continuing operations and the third quarter normalized non-acquired
treatment growth. Factors which could impact future results include
the uncertainties associated with governmental regulations, general
economic and other market conditions, competition, accounting
estimates, the variability of our cash flows and the risk factors
set forth in our SEC filings, including our Annual Report on Form
10-K for the year ended December 31, 2010, our quarterly reports on
Form 10-Q for the first quarter ended March 31, 2011 and the second
quarter ended June 30, 2011 and subsequent quarterly reports filed
on Form 10-Q. The forward-looking statements should be considered
in light of these risks and uncertainties.
These risks and uncertainties include those relating to:
- the concentration of profits generated
from commercial payor plans,
- continued downward pressure on average
realized payment rates from commercial payors, which may result in
the loss of revenue or patients,
- a reduction in the number of patients
under 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 health care reform
legislation that was enacted in the United States in March
2010,
- changes in pharmaceutical or anemia
management practice patterns, payment policies, or pharmaceutical
pricing,
- our ability to maintain contracts with
physician medical directors,
- legal compliance risks, including our
continued compliance with complex government regulations,
- investigations by various governmental
entities and potential other related proceedings,
- continued increased competition from
large and medium-sized dialysis providers that compete directly
with us,
- our ability to complete any
acquisitions, mergers or dispositions that we might be considering
or announce, or integrate and successfully operate any business we
may acquire, and
- expansion of our operations and
services to markets outside the United States, or to businesses
outside of dialysis.
We base our forward-looking statements on information currently
available to us at the time of this release, and we undertake no
obligation to update or revise any forward-looking statements,
whether as a result of changes in underlying factors, new
information, future events or otherwise.
About DaVita
DaVita Inc., a Fortune 500® company, is a leading provider of
kidney care in the United States, delivering dialysis services and
education to patients with chronic kidney failure and end stage
renal disease. As of June 30, 2011, DaVita operated or provided
administrative services at 1,669 dialysis facilities, serving
approximately 131,000 patients. DaVita develops, participates in
and donates to numerous programs dedicated to transforming
communities and creating positive, sustainable change for children,
families and our environment. The company’s leadership development
initiatives and corporate social responsibility efforts have been
recognized by Fortune, Modern Healthcare, Newsweek and WorldBlu,
among others. For more information, please visit
www.davita.com.
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