DENVER, Nov. 7, 2017 /PRNewswire/ -- DaVita Inc. (NYSE:
DVA) today announced results for the quarter ended
September 30, 2017.
- Net loss attributable to DaVita Inc. for the quarter ended
September 30, 2017 was $(214) million, or $(1.14) per share, which included non-cash
goodwill impairment charges related to our DMG reportable segment,
and net income for the nine months ended September 30, 2017 was $360 million, or $1.86 per share.
- Adjusted net income attributable to DaVita Inc. for the quarter
ended September 30, 2017 was
$155 million, or $0.81 per share, and for the nine months ended
September 30, 2017 was $487 million, or $2.52 per share.
- Adjusted net income attributable to DaVita Inc., further
adjusted to exclude amortization for the quarter ended September 30, 2017, was $185 million, or $0.97 per share, and for the nine months ended
September 30, 2017, was $575 million, or $2.97 per share.
- Net income attributable to DaVita Inc. for the quarter ended
September 30, 2016 was $571 million, or $2.76 per share, and for the nine months ended
September 30, 2016 was $722 million, or $3.48 per share.
- Adjusted net income attributable to DaVita Inc. for the quarter
ended September 30, 2016 was
$197 million, or $0.95 per share, and for the nine months ended
September 30, 2016 was $597 million, or $2.88 per share.
- Adjusted net income attributable to DaVita Inc., further
adjusted to exclude amortization for the quarter ended September 30, 2016 was $223 million, or $1.08 per share, and for the nine months ended
September 30, 2016 was $675 million, or $3.25 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
September 30, 2017, operating cash flow was $2.047 billion and free cash flow was
$1.486 billion. For the three months
ended September 30, 2017, operating cash flow was $553 million and free cash flow was $405 million.
Operating (loss) income and adjusted operating
income: Operating loss for the three months ended
September 30, 2017 was $(193)
million, and adjusted operating income for the same period
was $399 million. Operating income
for the nine months ended September 30, 2017 was $1.074 billion, and adjusted operating income for
the same period was $1.227
billion.
Operating income for the three months ended September 30, 2016 was $819 million, and adjusted operating income for
the same period was $472 million.
Operating income for the nine months ended September 30, 2016 was $1.513 billion, and adjusted operating income for
the same period was $1.405
billion.
Volume: Total U.S. dialysis treatments for the
third quarter of 2017 were 7,186,280, or 90,966 treatments per day,
representing a per day increase of 4.3% over the third quarter of
2016. Normalized non-acquired treatment growth in the third quarter
of 2017 as compared to the third quarter of 2016 was 3.3%.
The number of member months for which DMG provided care during
the third quarter of 2017 was approximately 2.3 million, of which
approximately 1.0 million, 1.1 million and 0.3 million related to
senior, commercial and Medicaid members, respectively.
Goodwill impairment charges: During the quarter
ended September 30, 2017, we recognized non-cash goodwill
impairment charges of $601 million in
our DMG reportable segment. This charge relates predominantly to
our DMG California reporting unit and results primarily from
reimbursement pressures, continuing increases in medical costs, and
other market factors. This includes a $218
million increase to the goodwill impairment charge, and
reduction to deferred tax expense, for the deferred tax assets that
the impairment itself generates. As such, the effect of this is a
$601 million charge to operating
(loss) income and a $218 million
credit to tax expense, for a net $383
million impact on net (loss) income.
We also recognized a reduction in equity earnings of
$6 million as a result of goodwill
impairment charges recognized by our Asia
Pacific joint venture (APAC JV) in the third quarter of
2017.
Gain on changes in ownership interests: Effective
July 1, 2017, our DMG business
acquired Magan Medical Clinic, Inc. (Magan). As part of the Magan
acquisition, we acquired 100% ownership of a DMG-Magan joint
venture of which we previously owned only a noncontrolling 50%
interest. As a result, we recognized a non-cash gain of
$17 million on DMG's previously held
50% interest in this joint venture based on its fair value at the
time of the acquisition.
Restructuring charges: During the three and
nine months ended September 30, 2017, we recognized
restructuring charges of $12 million
related to our DMG and international businesses, of which
$11 million are included in general
and administrative expense and $1
million is included in equity investment losses as it
relates to our APAC JV. DMG recognized a restructuring charge of
$10 million due to a reduction in
force across all DMG markets and its corporate location. Our
international business recognized restructuring charges of
$2 million to reduce our global
general and administrative footprint.
Effective tax rate: Our effective tax rate was
42.2% and 36.0% for the three and nine months ended
September 30, 2017, respectively. The effective tax rate
attributable to DaVita Inc. was 37.0% and 43.3% for the three and
nine months ended September 30, 2017, respectively.
Our effective tax rate for the three and nine months ended
September 30, 2017 was impacted by the non-deductible portion
of goodwill impairment charges in our DMG reporting units and APAC
JV's reporting units, the non-cash gain associated with the Magan
acquisition, a state tax refund, reversal of 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 nine months ended September 30, 2017 was also impacted by an
adjustment to true-up the gain on the formation of our APAC JV.
The adjusted effective tax rate attributable to DaVita Inc. for
the three and nine months ended September 30, 2017, excluding
these items was 38.3% and 39.3%, respectively.
Center activity: As of September 30, 2017, we
provided dialysis services to a total of approximately 218,200
patients at 2,700 outpatient dialysis centers, of which 2,470
centers were located in the United
States and 230 centers were located in 11 countries outside
of the United States. During the
third quarter of 2017, we acquired one dialysis center, opened a
total of 34 new dialysis centers, and closed or merged ten centers
in the United States. We also
acquired eight dialysis centers, opened six new dialysis centers
and closed one dialysis center outside of the United States.
Share repurchases: As of November 7, 2017 we have repurchased a total of
11,446,307 shares of our common stock during the year for a total
of $702 million at an average price
of $61.30 per share. During the
quarter ended September 30, 2017, we repurchased a total of
1,982,250 shares of our common stock for approximately $117 million at an average price of $59.09 per share. During the nine months ended
September 30, 2017, we repurchased a
total of 5,556,823 shares of our common stock for $349 million at an average price of $62.77 per share. We have also repurchased
5,889,484 shares of our common stock for $353 million at an average price of $59.92 per share subsequent to September 30, 2017.
On October 10, 2017, our Board of
Directors approved an additional share repurchase authorization in
the amount of approximately $1.253
billion. This recently approved authorization was in
addition to the amounts remaining at that time under our Board of
Directors' prior share repurchase authorization announced in
July 2016. As of November 7, 2017, we have a total of
approximately $1.228 billion in
outstanding Board repurchase authorizations remaining under our
stock repurchase program. These share repurchase authorizations
have no expiration dates.
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, restructuring charges, accruals for legal
matters, and gains and charges associated with settlements; (ii)
the term "adjusted net income excluding amortization" represents
the Company's net income excluding the foregoing 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
applicable 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 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 at the end of this press release.
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 settlement with the U.S. Department of Veterans
Affairs (VA), goodwill and asset impairment charges, restructuring
charges, an adjustment to the accrual for legal matters, the gain
on the Magan acquisition and APAC JV ownership changes, and
currency fluctuations.
- We are updating our adjusted consolidated operating income
guidance for 2017 to be in the range of $1.620 billion to $1.685 billion.
Our previous adjusted consolidated operating income guidance for
2017 was in the range of $1.675 billion to
$1.775 billion.
- We are updating our adjusted operating income guidance for
Kidney Care for 2017 to be in the range of $1.570 billion to $1.600 billion.
Our previous adjusted operating income guidance for Kidney Care for
2017 was in the range of $1.565 billion to
$1.625 billion.
- We expect our operating income guidance for Kidney Care for
2018 to be in the range of $1.500 billion to
$1.600 billion.
- We are updating our adjusted consolidated operating income
guidance for DMG for 2017 to be in the range of $50 million to $85 million.
Our previous adjusted consolidated operating income guidance for
DMG for 2017 was in the range of $110
million to $150 million.
- 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 VA settlement.
- We still expect our 2017 guidance for adjusted effective tax
rate attributable to DaVita Inc. to be approximately 39.0% to
40.0%.
We will be holding a conference call to discuss our results for
the third quarter ended September 30, 2017 on November 7, 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, our 2018 Kidney Care 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 June 30,
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, including as a result of
restrictions or prohibitions on the use and/or availability of
charitable premium assistance, which may result in the loss of
revenues or patients, or our making incorrect assumptions about how
our patients will respond to any change in financial assistance
from charitable organizations;
- the extent to which the ongoing implementation of healthcare
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 changing political environment and related
developments 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,
including our ability to achieve anticipated savings from our
recent DMG restructuring;
- 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 OPERATIONS
(unaudited)
(dollars in
thousands, except per share data.)
|
|
|
Three
months ended
September 30,
|
|
Nine months
ended
September
30,
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
Patient service
revenues
|
$
|
2,746,257
|
|
|
$
|
2,643,194
|
|
|
$
|
8,030,102
|
|
|
$
|
7,708,641
|
|
Less: Provision for
uncollectible accounts
|
(123,760)
|
|
|
(115,555)
|
|
|
(352,228)
|
|
|
(336,188)
|
|
Net patient service
revenues
|
2,622,497
|
|
|
2,527,639
|
|
|
7,677,874
|
|
|
7,372,453
|
|
Capitated
revenues
|
1,016,365
|
|
|
872,538
|
|
|
2,956,479
|
|
|
2,660,532
|
|
Other
revenues
|
283,969
|
|
|
330,399
|
|
|
863,238
|
|
|
996,378
|
|
Total net
revenues
|
3,922,831
|
|
|
3,730,576
|
|
|
11,497,591
|
|
|
11,029,363
|
|
Operating expenses
and charges:
|
|
|
|
|
|
|
|
Patient care costs and other
costs
|
2,925,975
|
|
|
2,697,629
|
|
|
8,508,706
|
|
|
7,950,987
|
|
General and
administrative
|
400,018
|
|
|
406,890
|
|
|
1,174,113
|
|
|
1,180,214
|
|
Depreciation and
amortization
|
203,283
|
|
|
181,739
|
|
|
593,527
|
|
|
531,475
|
|
Provision for uncollectible
accounts
|
(2,685)
|
|
|
3,773
|
|
|
(1,381)
|
|
|
9,856
|
|
Equity investment loss
(income)
|
4,852
|
|
|
(4,237)
|
|
|
(2,697)
|
|
|
(5,119)
|
|
Goodwill and asset
impairment charges
|
601,040
|
|
|
—
|
|
|
701,523
|
|
|
253,000
|
|
Gain on changes in ownership
interests, net
|
(17,129)
|
|
|
(374,374)
|
|
|
(23,402)
|
|
|
(404,165)
|
|
Gain on settlement,
net
|
—
|
|
|
—
|
|
|
(526,827)
|
|
|
—
|
|
Total operating expenses and charges
|
4,115,354
|
|
|
2,911,420
|
|
|
10,423,562
|
|
|
9,516,248
|
|
Operating (loss)
income
|
(192,523)
|
|
|
819,156
|
|
|
1,074,029
|
|
|
1,513,115
|
|
Debt
expense
|
(109,623)
|
|
|
(104,581)
|
|
|
(322,014)
|
|
|
(310,359)
|
|
Other income,
net
|
4,370
|
|
|
1,876
|
|
|
13,866
|
|
|
8,067
|
|
(Loss) income before
income taxes
|
(297,776)
|
|
|
716,451
|
|
|
765,881
|
|
|
1,210,823
|
|
Income tax (benefit)
expense
|
(125,742)
|
|
|
104,301
|
|
|
276,005
|
|
|
366,011
|
|
Net (loss)
income
|
(172,034)
|
|
|
612,150
|
|
|
489,876
|
|
|
844,812
|
|
Less: Net income
attributable to noncontrolling interests
|
(42,442)
|
|
|
(40,818)
|
|
|
(129,654)
|
|
|
(122,664)
|
|
Net (loss) income
attributable to DaVita Inc.
|
$
|
(214,476)
|
|
|
$
|
571,332
|
|
|
$
|
360,222
|
|
|
$
|
722,148
|
|
Earnings per
share:
|
|
|
|
|
|
|
|
Basic net (loss)
income per share attributable to DaVita Inc.
|
$
|
(1.14)
|
|
|
$
|
2.80
|
|
|
$
|
1.89
|
|
|
$
|
3.54
|
|
Diluted net (loss)
income per share attributable to DaVita Inc.
|
$
|
(1.14)
|
|
|
$
|
2.76
|
|
|
$
|
1.86
|
|
|
$
|
3.48
|
|
Weighted average
shares for earnings per share:
|
|
|
|
|
|
|
|
Basic
|
188,883,922
|
|
|
203,761,433
|
|
|
190,770,165
|
|
|
204,206,979
|
|
Diluted
|
188,883,922
|
|
|
206,961,450
|
|
|
193,546,245
|
|
|
207,643,794
|
|
DAVITA
INC.
CONSOLIDATED
STATEMENTS OF COMPREHENSIVE INCOME
(unaudited)
(dollars in
thousands)
|
|
|
Three
months ended
September 30,
|
|
Nine
months ended
September 30,
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
Net (loss)
income
|
$
|
(172,034)
|
|
|
$
|
612,150
|
|
|
$
|
489,876
|
|
|
$
|
844,812
|
|
Other comprehensive
(loss) income, net of tax:
|
|
|
|
|
|
|
|
Unrealized losses on
interest rate cap and swap agreements:
|
|
|
|
|
|
|
|
Unrealized losses on
interest rate cap and swap agreements
|
(478)
|
|
|
(153)
|
|
|
(5,479)
|
|
|
(8,238)
|
|
Reclassifications of
net rate cap and swap agreements realized
losses into net (loss) income
|
1,265
|
|
|
388
|
|
|
3,793
|
|
|
1,301
|
|
Unrealized gains on
investments:
|
|
|
|
|
|
|
|
Unrealized gains on
investments
|
863
|
|
|
1,121
|
|
|
3,478
|
|
|
1,988
|
|
Reclassification of net
investment realized gains into net (loss) income
|
(9)
|
|
|
(50)
|
|
|
(221)
|
|
|
(143)
|
|
Unrealized gains on
foreign currency translation:
|
|
|
|
|
|
|
|
Foreign currency
translation adjustments
|
29,143
|
|
|
(951)
|
|
|
91,546
|
|
|
5,386
|
|
Reclassification of
foreign currency translation adjustment
realized loss into net (loss) income
|
—
|
|
|
7,513
|
|
|
—
|
|
|
7,513
|
|
Other comprehensive
income
|
30,784
|
|
|
7,868
|
|
|
93,117
|
|
|
7,807
|
|
Total comprehensive
(loss) income
|
(141,250)
|
|
|
620,018
|
|
|
582,993
|
|
|
852,619
|
|
Less: Comprehensive
income attributable to noncontrolling
interests
|
(42,442)
|
|
|
(40,876)
|
|
|
(129,652)
|
|
|
(122,871)
|
|
Comprehensive (loss)
income attributable to DaVita Inc.
|
$
|
(183,692)
|
|
|
$
|
579,142
|
|
|
$
|
453,341
|
|
|
$
|
729,748
|
|
DAVITA
INC.
CONSOLIDATED
STATEMENTS OF CASH FLOWS
(unaudited)
(dollars in
thousands)
|
|
|
Nine months ended
September 30,
|
|
2017
|
|
2016
|
Cash flows from
operating activities:
|
|
|
|
Net income
|
$
|
489,876
|
|
|
$
|
844,812
|
|
Adjustments to
reconcile net income to net cash provided by operating
activities:
|
|
|
|
Depreciation and
amortization
|
593,527
|
|
|
531,475
|
|
Goodwill and asset
impairment charges
|
701,523
|
|
|
253,000
|
|
Stock-based
compensation expense
|
28,478
|
|
|
29,817
|
|
Deferred income
taxes
|
(132,781)
|
|
|
48,778
|
|
Equity investment
income, net
|
19,071
|
|
|
16,825
|
|
Gain on changes in
ownership interests, net
|
(23,402)
|
|
|
(404,165)
|
|
Other non-cash
charges
|
41,709
|
|
|
9,163
|
|
Changes in operating
assets and liabilities, other than from acquisitions and
divestitures:
|
|
|
|
Accounts
receivable
|
(146,024)
|
|
|
(85,660)
|
|
Inventories
|
14,272
|
|
|
(13,045)
|
|
Other receivables and
other current assets
|
(47,173)
|
|
|
(1,616)
|
|
Other long-term
assets
|
(13,831)
|
|
|
31,081
|
|
Accounts
payable
|
18,595
|
|
|
(45,507)
|
|
Accrued compensation
and benefits
|
(60,063)
|
|
|
79,289
|
|
Other current
liabilities
|
39,445
|
|
|
119,549
|
|
Income
taxes
|
22,669
|
|
|
79,592
|
|
Other long-term
liabilities
|
18,648
|
|
|
(12,126)
|
|
Net cash provided by
operating activities
|
1,564,539
|
|
|
1,481,262
|
|
Cash flows from
investing activities:
|
|
|
|
Additions of property and
equipment
|
(639,829)
|
|
|
(575,243)
|
|
Acquisitions
|
(726,538)
|
|
|
(497,331)
|
|
Proceeds from asset and
business sales
|
92,529
|
|
|
18,991
|
|
Purchase of investments
available for sale
|
(9,882)
|
|
|
(9,041)
|
|
Purchase of investments
held-to-maturity
|
(225,166)
|
|
|
(976,411)
|
|
Proceeds from sale of
investments available for sale
|
5,822
|
|
|
8,636
|
|
Proceeds from investments
held-to-maturity
|
398,765
|
|
|
743,941
|
|
Purchase of intangible
assets
|
—
|
|
|
(75)
|
|
Purchase of equity
investments
|
(3,014)
|
|
|
(11,629)
|
|
Proceeds from sale of equity
investments
|
—
|
|
|
40,920
|
|
Distributions received on
equity investments
|
80
|
|
|
—
|
|
Net cash used in
investing activities
|
(1,107,233)
|
|
|
(1,257,242)
|
|
Cash flows from
financing activities:
|
|
|
|
Borrowings
|
38,160,821
|
|
|
39,102,302
|
|
Payments on long-term debt
and other financing costs
|
(38,269,284)
|
|
|
(39,201,204)
|
|
Purchase of treasury
stock
|
(321,411)
|
|
|
(620,898)
|
|
Distributions to
noncontrolling interests
|
(165,463)
|
|
|
(145,072)
|
|
Stock award exercises and
other share issuances, net
|
15,781
|
|
|
18,515
|
|
Contributions from
noncontrolling interests
|
51,156
|
|
|
35,524
|
|
Purchase of noncontrolling
interests
|
(1,432)
|
|
|
(9,727)
|
|
Other
|
—
|
|
|
12,584
|
|
Net cash used in
financing activities
|
(529,832)
|
|
|
(807,976)
|
|
Effect of exchange
rate changes on cash and cash equivalents
|
5,449
|
|
|
(1,664)
|
|
Net decrease in cash
and cash equivalents
|
(67,077)
|
|
|
(585,620)
|
|
Cash and cash
equivalents at beginning of the year
|
913,187
|
|
|
1,499,116
|
|
Cash and cash
equivalents at end of the period
|
$
|
846,110
|
|
|
$
|
913,496
|
|
DAVITA
INC.
CONSOLIDATED
BALANCE SHEETS
(unaudited)
(dollars in
thousands, except per share data)
|
|
|
September
30,
2017
|
|
December
31,
2016
|
ASSETS
|
|
|
|
Cash and cash
equivalents
|
$
|
846,110
|
|
|
$
|
913,187
|
|
Short-term
investments
|
137,358
|
|
|
310,198
|
|
Accounts receivable,
less allowance of $221,329 and $252,056
|
2,091,074
|
|
|
1,917,302
|
|
Inventories
|
154,422
|
|
|
164,858
|
|
Other
receivables
|
599,374
|
|
|
453,483
|
|
Prepaid and other
current assets
|
205,211
|
|
|
210,604
|
|
Income taxes
receivable
|
—
|
|
|
10,596
|
|
Total current
assets
|
4,033,549
|
|
|
3,980,228
|
|
Property and
equipment, net of accumulated depreciation of $3,151,402 and
$2,832,160
|
3,386,056
|
|
|
3,175,367
|
|
Intangible assets,
net of accumulated amortization of $1,084,682 and
$940,731
|
1,451,033
|
|
|
1,527,767
|
|
Equity method and
other investments
|
545,053
|
|
|
502,389
|
|
Long-term
investments
|
120,129
|
|
|
103,679
|
|
Other long-term
assets
|
61,642
|
|
|
44,510
|
|
Goodwill
|
9,415,877
|
|
|
9,407,317
|
|
|
$
|
19,013,339
|
|
|
$
|
18,741,257
|
|
LIABILITIES AND
EQUITY
|
|
|
|
Accounts
payable
|
$
|
566,918
|
|
|
$
|
522,415
|
|
Other
liabilities
|
928,123
|
|
|
856,847
|
|
Accrued compensation
and benefits
|
775,280
|
|
|
815,761
|
|
Medical
payables
|
400,259
|
|
|
336,381
|
|
Current portion of
long-term debt
|
189,822
|
|
|
165,041
|
|
Income tax
payable
|
14,391
|
|
|
—
|
|
Total current
liabilities
|
2,874,793
|
|
|
2,696,445
|
|
Long-term
debt
|
8,908,703
|
|
|
8,947,327
|
|
Other long-term
liabilities
|
548,226
|
|
|
465,358
|
|
Deferred income
taxes
|
685,598
|
|
|
809,128
|
|
Total
liabilities
|
13,017,320
|
|
|
12,918,258
|
|
Commitments and
contingencies
|
|
|
|
Noncontrolling
interests subject to put provisions
|
1,026,890
|
|
|
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; 194,788,516
and 194,554,491 shares issued and 189,231,693 and 194,554,491
shares outstanding, respectively)
|
195
|
|
|
195
|
|
Additional paid-in
capital
|
1,059,176
|
|
|
1,027,182
|
|
Retained
earnings
|
4,070,535
|
|
|
3,710,313
|
|
Treasury stock
(5,556,823 shares at September 30, 2017)
|
(348,801)
|
|
|
—
|
|
Accumulated other
comprehensive income (loss)
|
3,476
|
|
|
(89,643)
|
|
Total DaVita Inc.
shareholders' equity
|
4,784,581
|
|
|
4,648,047
|
|
Noncontrolling
interests not subject to put provisions
|
184,548
|
|
|
201,694
|
|
Total
equity
|
4,969,129
|
|
|
4,849,741
|
|
|
$
|
19,013,339
|
|
|
$
|
18,741,257
|
|
DAVITA
INC.
SUPPLEMENTAL
FINANCIAL DATA
(unaudited)
(dollars in
millions, except for per share and per treatment
data)
|
|
|
Three months
ended
|
|
Nine months
ended
September 30,
2017
|
|
September
30,
2017
|
|
June
30,
2017
|
|
September
30,
2016
|
|
1. Consolidated
Financial Results:
|
|
|
|
|
|
|
|
Consolidated net
revenues
|
$
|
3,923
|
|
|
$
|
3,877
|
|
|
$
|
3,731
|
|
|
$
|
11,498
|
|
Operating (loss)
income
|
$
|
(193)
|
|
|
$
|
378
|
|
|
$
|
819
|
|
|
$
|
1,074
|
|
Adjusted operating
income excluding certain items(1)
|
$
|
399
|
|
|
$
|
436
|
|
|
$
|
472
|
|
|
$
|
1,227
|
|
Operating (loss)
income margin
|
(4.9)
|
%
|
|
9.7
|
%
|
|
22.0
|
%
|
|
9.3
|
%
|
Adjusted operating
income margin excluding certain items(1) (5)
|
10.2
|
%
|
|
11.2
|
%
|
|
12.6
|
%
|
|
10.7
|
%
|
Net (loss) income
attributable to DaVita Inc.
|
$
|
(214)
|
|
|
$
|
127
|
|
|
$
|
571
|
|
|
$
|
360
|
|
Adjusted net income
attributable to DaVita Inc. excluding certain
items(1)
|
$
|
155
|
|
|
$
|
179
|
|
|
$
|
197
|
|
|
$
|
487
|
|
Diluted net (loss)
income per share attributable to DaVita Inc.
|
$
|
(1.14)
|
|
|
$
|
0.65
|
|
|
$
|
2.76
|
|
|
$
|
1.86
|
|
Adjusted diluted net
income per share attributable to DaVita Inc. excluding certain
items (1)
|
$
|
0.81
|
|
|
$
|
0.92
|
|
|
$
|
0.95
|
|
|
$
|
2.52
|
|
|
|
|
|
|
|
|
|
2. Consolidated
Business Metrics:
|
|
|
|
|
|
|
|
Expenses
|
|
|
|
|
|
|
|
General and
administrative expenses as a percent of consolidated
net revenues(2)
|
10.2
|
%
|
|
9.9
|
%
|
|
10.9
|
%
|
|
10.2
|
%
|
Consolidated effective
tax rate
|
42.2
|
%
|
|
41.4
|
%
|
|
14.6
|
%
|
|
36.0
|
%
|
Consolidated effective
tax rate attributable to DaVita Inc.(1)
|
37.0
|
%
|
|
47.2
|
%
|
|
15.4
|
%
|
|
43.3
|
%
|
Adjusted consolidated
effective tax rate attributable to DaVita
Inc.(1)
|
38.3
|
%
|
|
39.5
|
%
|
|
40.0
|
%
|
|
39.3
|
%
|
|
|
|
|
|
|
|
|
3. Summary of
Division Financial Results:
|
|
|
|
|
|
|
|
Net
revenues
|
|
|
|
|
|
|
|
Kidney
Care:
|
|
|
|
|
|
|
|
U.S. dialysis and
related lab services
|
$
|
2,370
|
|
|
$
|
2,325
|
|
|
$
|
2,324
|
|
|
$
|
6,967
|
|
Other—Ancillary
services and strategic initiatives
|
|
|
|
|
|
|
|
U.S. ancillary
services and strategic initiatives
|
323
|
|
|
314
|
|
|
359
|
|
|
952
|
|
International
|
91
|
|
|
79
|
|
|
53
|
|
|
233
|
|
|
414
|
|
|
394
|
|
|
412
|
|
|
1,186
|
|
Eliminations within
Kidney Care
|
(19)
|
|
|
(19)
|
|
|
(10)
|
|
|
(57)
|
|
Total Kidney
Care
|
2,765
|
|
|
2,699
|
|
|
2,725
|
|
|
8,096
|
|
DMG
|
1,178
|
|
|
1,196
|
|
|
1,028
|
|
|
3,461
|
|
Eliminations between
Kidney Care and DMG
|
(21)
|
|
|
(18)
|
|
|
(23)
|
|
|
(60)
|
|
Total net consolidated
revenues
|
$
|
3,923
|
|
|
$
|
3,877
|
|
|
$
|
3,731
|
|
|
$
|
11,498
|
|
Operating (loss)
income
|
|
|
|
|
|
|
|
Kidney
Care:
|
|
|
|
|
|
|
|
U.S. dialysis and
related lab services
|
$
|
443
|
|
|
$
|
450
|
|
|
$
|
452
|
|
|
$
|
1,838
|
|
Other—Ancillary
services and strategic initiatives
|
|
|
|
|
|
|
|
U.S. ancillary
services and strategic initiatives
|
(19)
|
|
|
(36)
|
|
|
(6)
|
|
|
(108)
|
|
International
|
(17)
|
|
|
(13)
|
|
|
368
|
|
|
(35)
|
|
|
(37)
|
|
|
(48)
|
|
|
362
|
|
|
(143)
|
|
Corporate
administrative support
|
(11)
|
|
|
(11)
|
|
|
(28)
|
|
|
(33)
|
|
Total Kidney
Care
|
395
|
|
|
391
|
|
|
786
|
|
|
1,662
|
|
DMG
|
(588)
|
|
|
(13)
|
|
|
33
|
|
|
(588)
|
|
Total consolidated operating (loss) income
|
$
|
(193)
|
|
|
$
|
378
|
|
|
$
|
819
|
|
|
$
|
1,074
|
|
DAVITA
INC.
SUPPLEMENTAL
FINANCIAL DATA - continued
(unaudited)
(dollars in
millions, except for per share and per treatment
data)
|
|
|
Three months
ended
|
|
Nine months
ended
September 30,
2017
|
|
September
30,
2017
|
|
June
30,
2017
|
|
September
30,
2016
|
|
4. Summary of
Reportable Segment Financial Results:
|
|
|
|
|
|
|
|
U.S. Dialysis
and Related Lab Services
|
|
|
|
|
|
|
|
Revenue:
|
|
|
|
|
|
|
|
Patient services
revenues
|
$
|
2,484
|
|
|
$
|
2,430
|
|
|
$
|
2,429
|
|
|
$
|
7,286
|
|
Provision for
uncollectible accounts
|
(118)
|
|
|
(109)
|
|
|
(109)
|
|
|
(334)
|
|
Net patient service
operating revenues
|
2,366
|
|
|
2,320
|
|
|
2,320
|
|
|
6,952
|
|
Other
revenues
|
5
|
|
|
5
|
|
|
4
|
|
|
15
|
|
Total net operating
revenues
|
2,370
|
|
|
2,325
|
|
|
2,324
|
|
|
6,967
|
|
Operating
expenses:
|
|
|
|
|
|
|
|
Patient care
costs
|
1,607
|
|
|
1,561
|
|
|
1,565
|
|
|
4,715
|
|
General and
administrative
|
197
|
|
|
189
|
|
|
188
|
|
|
574
|
|
Depreciation and
amortization
|
132
|
|
|
130
|
|
|
123
|
|
|
387
|
|
Equity investment
income
|
(8)
|
|
|
(5)
|
|
|
(4)
|
|
|
(20)
|
|
Gain on settlement,
net
|
—
|
|
|
—
|
|
|
—
|
|
|
(527)
|
|
Total operating
expenses
|
1,928
|
|
|
1,875
|
|
|
1,872
|
|
|
5,129
|
|
Segment operating
income
|
$
|
443
|
|
|
$
|
450
|
|
|
$
|
452
|
|
|
$
|
1,838
|
|
Reconciliation
for non-GAAP measure:
|
|
|
|
|
|
|
|
Gain on settlement,
net
|
—
|
|
|
—
|
|
|
—
|
|
|
(527)
|
|
Equity investment
income related to gain on
settlement
|
—
|
|
|
—
|
|
|
—
|
|
|
(3)
|
|
Adjusted segment
operating income(1)
|
$
|
443
|
|
|
$
|
450
|
|
|
$
|
452
|
|
|
$
|
1,308
|
|
|
|
|
|
|
|
|
|
DMG
|
|
|
|
|
|
|
|
Revenue:
|
|
|
|
|
|
|
|
DMG capitated
revenues
|
$
|
976
|
|
|
$
|
987
|
|
|
$
|
846
|
|
|
$
|
2,853
|
|
Patient services
revenues
|
192
|
|
|
195
|
|
|
173
|
|
|
572
|
|
Provision for
uncollectible accounts
|
(4)
|
|
|
(6)
|
|
|
(6)
|
|
|
(16)
|
|
Net patient service
operating revenues
|
188
|
|
|
190
|
|
|
167
|
|
|
556
|
|
Other
revenues
|
15
|
|
|
19
|
|
|
15
|
|
|
53
|
|
Total net operating
revenues
|
1,178
|
|
|
1,196
|
|
|
1,028
|
|
|
3,461
|
|
Operating
expenses:
|
|
|
|
|
|
|
|
Patient care
costs
|
995
|
|
|
983
|
|
|
824
|
|
|
2,870
|
|
General and
administrative
|
127
|
|
|
120
|
|
|
121
|
|
|
376
|
|
Depreciation and
amortization
|
61
|
|
|
60
|
|
|
53
|
|
|
178
|
|
Goodwill and asset
impairment charges
|
601
|
|
|
51
|
|
|
—
|
|
|
652
|
|
Gain on changes in
ownership interests, net
|
(17)
|
|
|
—
|
|
|
—
|
|
|
(17)
|
|
Equity investment
income
|
—
|
|
|
(4)
|
|
|
(3)
|
|
|
(8)
|
|
Total operating
expenses
|
1,766
|
|
|
1,209
|
|
|
995
|
|
|
4,050
|
|
Segment operating
(loss) income
|
$
|
(588)
|
|
|
$
|
(13)
|
|
|
$
|
33
|
|
|
$
|
(588)
|
|
Reconciliation
for non-GAAP measure:
|
|
|
|
|
|
|
|
Goodwill impairment
charges
|
601
|
|
|
51
|
|
|
—
|
|
|
652
|
|
Gain on Magan
acquisition
|
(17)
|
|
|
—
|
|
|
—
|
|
|
(17)
|
|
Restructuring
charges
|
10
|
|
|
—
|
|
|
—
|
|
|
10
|
|
Accruals for legal
matters
|
(11)
|
|
|
(4)
|
|
|
—
|
|
|
(15)
|
|
Adjusted segment
operating (loss) income(1)
|
$
|
(5)
|
|
|
$
|
34
|
|
|
$
|
33
|
|
|
$
|
41
|
|
DAVITA
INC.
SUPPLEMENTAL
FINANCIAL DATA - continued
(unaudited)
(dollars in
millions, except for per share and per treatment
data)
|
|
|
Three months
ended
|
|
Nine months
ended
September 30,
2017
|
|
September
30,
2017
|
|
June
30,
2017
|
|
September
30,
2016
|
|
5. U.S.
Dialysis and Related Lab Services Business
Metrics:
|
|
|
|
|
|
|
|
Volume
|
|
|
|
|
|
|
|
Treatments
|
7,186,280
|
|
|
7,035,894
|
|
|
6,887,992
|
|
|
21,026,558
|
|
Number of treatment
days
|
79.0
|
|
|
78.0
|
|
|
79.0
|
|
|
234.0
|
|
Treatments per
day
|
90,966
|
|
|
90,204
|
|
|
87,190
|
|
|
89,857
|
|
Per day year over year
increase
|
4.3
|
%
|
|
4.3
|
%
|
|
4.2
|
%
|
|
4.1
|
%
|
Normalized
non-acquired treatment growth year over year
|
3.3
|
%
|
|
3.6
|
%
|
|
4.4
|
%
|
|
3.5
|
%
|
Operating
revenues before provision for uncollectible
accounts
|
|
|
|
|
|
|
|
Dialysis and related
lab services revenue per treatment
|
$
|
345.61
|
|
|
$
|
345.32
|
|
|
$
|
352.62
|
|
|
$
|
346.51
|
|
Per treatment increase
(decrease) from previous quarter
|
0.1
|
%
|
|
(1.0)
|
%
|
|
0.5
|
%
|
|
|
Per treatment
(decrease) increase from previous year
|
(2.0)
|
%
|
|
(1.6)
|
%
|
|
1.3
|
%
|
|
(1.4)
|
%
|
Percent of
consolidated net revenues
|
59.8
|
%
|
|
59.3
|
%
|
|
61.9
|
%
|
|
59.9
|
%
|
Expenses
|
|
|
|
|
|
|
|
Patient care
costs
|
|
|
|
|
|
|
|
Percent of total
segment operating net revenues
|
67.8
|
%
|
|
67.1
|
%
|
|
67.3
|
%
|
|
67.7
|
%
|
Per
treatment
|
$
|
223.58
|
|
|
$
|
221.82
|
|
|
$
|
227.16
|
|
|
$
|
224.25
|
|
Per treatment increase
(decrease) from previous quarter
|
0.8
|
%
|
|
(2.5)
|
%
|
|
1.1
|
%
|
|
|
Per treatment
(decrease) increase from previous year
|
(1.6)
|
%
|
|
(1.3)
|
%
|
|
2.8
|
%
|
|
(0.7)
|
%
|
General and
administrative expenses
|
|
|
|
|
|
|
|
Percent of total
segment operating net revenues
|
8.3
|
%
|
|
8.1
|
%
|
|
8.1
|
%
|
|
8.2
|
%
|
Per
treatment
|
$
|
27.36
|
|
|
$
|
26.85
|
|
|
$
|
27.36
|
|
|
$
|
27.28
|
|
Per treatment increase
(decrease) from previous quarter
|
1.9
|
%
|
|
(2.9)
|
%
|
|
—
|
%
|
|
|
Per treatment
(decrease) increase from previous year
|
—
|
%
|
|
(1.9)
|
%
|
|
6.1
|
%
|
|
0.2
|
%
|
Accounts
receivable
|
|
|
|
|
|
|
|
Net
receivables
|
$
|
1,532
|
|
|
$
|
1,420
|
|
|
$
|
1,306
|
|
|
|
DSO
|
60
|
|
|
56
|
|
|
52
|
|
|
|
Provision for
uncollectible accounts as a percentage of revenues
|
4.75
|
%
|
|
4.50
|
%
|
|
4.50
|
%
|
|
4.59
|
%
|
|
|
|
|
|
|
|
|
6. DMG Business
Metrics:
|
|
|
|
|
|
|
|
Capitated
membership
|
|
|
|
|
|
|
|
Total
members
|
765,500
|
|
|
726,000
|
|
|
749,900
|
|
|
|
Total member
months
|
|
|
|
|
|
|
|
Senior
|
953,300
|
|
|
918,200
|
|
|
914,000
|
|
|
2,791,800
|
|
Commercial
|
1,059,200
|
|
|
983,000
|
|
|
1,026,300
|
|
|
3,038,100
|
|
Medicaid
|
287,100
|
|
|
291,200
|
|
|
326,500
|
|
|
883,400
|
|
Total member
months
|
2,299,600
|
|
|
2,192,400
|
|
|
2,266,800
|
|
|
6,713,300
|
|
Capitated
revenues by sources
|
|
|
|
|
|
|
|
Senior
revenues
|
$
|
738
|
|
|
$
|
753
|
|
|
$
|
634
|
|
|
$
|
2,151
|
|
Commercial
revenues
|
201
|
|
|
194
|
|
|
165
|
|
|
583
|
|
Medicaid
revenues
|
36
|
|
|
41
|
|
|
47
|
|
|
119
|
|
Total capitated
revenues
|
$
|
976
|
|
|
$
|
987
|
|
|
$
|
846
|
|
|
$
|
2,853
|
|
DAVITA
INC.
SUPPLEMENTAL
FINANCIAL DATA - continued
(unaudited)
(dollars in
millions, except for per share and per treatment
data)
|
|
|
Three months
ended
|
|
Nine
months
ended
September 30,
2017
|
|
September
30,
2017
|
|
June
30,
2017
|
|
September
30,
2016
|
|
6. DMG Business
Metrics: (continued)
|
|
|
|
|
|
|
|
Other
|
|
|
|
|
|
|
|
Total care dollars
under management(1)
|
$
|
1,355
|
|
|
$
|
1,355
|
|
|
$
|
1,311
|
|
|
$
|
4,064
|
|
Ratio of operating
(loss) income to total care dollars
under management(1)
|
(43.4)
|
%
|
|
(1.0)
|
%
|
|
2.5
|
%
|
|
(14.5)
|
%
|
Ratio of adjusted
operating (loss) income to total care dollars under
management(1)(6)
|
(0.4)
|
%
|
|
2.5
|
%
|
|
2.5
|
%
|
|
1.0
|
%
|
|
|
|
|
|
|
|
|
7. Cash
Flow:
|
|
|
|
|
|
|
|
Operating cash
flow
|
$
|
553.1
|
|
|
$
|
146.3
|
|
|
$
|
535.6
|
|
|
$
|
1,564.5
|
|
Operating cash flow,
last twelve months
|
$
|
2,046.7
|
|
|
$
|
2,029.2
|
|
|
$
|
1,917.9
|
|
|
|
Free cash
flow(1)
|
$
|
405.3
|
|
|
$
|
17.9
|
|
|
$
|
386.2
|
|
|
$
|
1,157.0
|
|
Free cash flow, last
twelve months(1)
|
$
|
1,486.4
|
|
|
$
|
1,467.3
|
|
|
$
|
1,339.1
|
|
|
|
Capital
expenditures:
|
|
|
|
|
|
|
|
Routine
maintenance/IT/other
|
$
|
98.4
|
|
|
$
|
55.6
|
|
|
$
|
98.5
|
|
|
$
|
242.1
|
|
Development and
relocations
|
$
|
142.5
|
|
|
$
|
128.8
|
|
|
$
|
118.1
|
|
|
$
|
397.7
|
|
Acquisition
expenditures
|
$
|
106.7
|
|
|
$
|
542.6
|
|
|
$
|
24.0
|
|
|
$
|
726.5
|
|
|
|
|
|
|
|
|
|
8. Debt and
Capital Structure:
|
|
|
|
|
|
|
|
Total
debt(3)
|
$
|
9,166
|
|
|
$
|
9,165
|
|
|
$
|
9,209
|
|
|
|
Net debt, net of cash
and cash equivalents(3)
|
$
|
8,320
|
|
|
$
|
8,453
|
|
|
$
|
8,295
|
|
|
|
Leverage ratio (see
calculation on page 16)
|
3.45x
|
|
|
3.38x
|
|
|
2.98x
|
|
|
|
Overall weighted
average effective interest rate during the quarter
|
4.77
|
%
|
|
4.69
|
%
|
|
4.42
|
%
|
|
|
Overall weighted
average effective interest rate at end of the quarter
|
4.78
|
%
|
|
4.76
|
%
|
|
4.49
|
%
|
|
|
Weighted average
effective interest rate on the senior secured credit facilities at
end of the quarter
|
4.22
|
%
|
|
4.20
|
%
|
|
3.61
|
%
|
|
|
Fixed and economically
fixed interest rates as a percentage of our total debt
|
54
|
%
|
|
53
|
%
|
|
53
|
%(4)
|
|
|
Fixed and economically
fixed interest rates, including our interest rate cap agreements,
as a percentage of our total debt
|
92
|
%
|
|
91
|
%
|
|
91
|
%(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 restructuring charges for the three and
nine months ended September 30, 2017, estimated accruals for
certain legal matters for the three months ended September 30,
2017 and June 30, 2017 and the nine months ended September 30,
2017, and an adjustment to reduce a receivable associated with the
DMG acquisition escrow provision relating to an income tax item for
the three months ended September 30, 2016.
|
|
|
(3)
|
The reported balance
sheet amounts at September 30, 2017, June 30, 2017, and
September 30, 2016, exclude $67.9 million, $71.9 million and
$83.9 million, respectively, of a debt discount associated with our
Term Loan B and other deferred financing costs.
|
|
|
(4)
|
The Term Loan B is
subject to a LIBOR floor of 0.75%. At September 30, 2017 and
June 30, 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
$113.8 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 $686.3
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
September 30, 2017
|
Net income
attributable to DaVita Inc.
|
$
|
517,949
|
|
Income
taxes
|
365,807
|
|
Interest
expense
|
391,181
|
|
Depreciation and
amortization
|
782,304
|
|
Goodwill and other
asset impairment charges
|
744,931
|
|
Noncontrolling
interests and equity investment income, net
|
180,449
|
|
Stock-settled
stock-based compensation
|
37,098
|
|
Gain on changes in
ownership interest, net
|
(23,402)
|
|
Gain on settlement,
net
|
(529,504)
|
|
Other
|
(16,186)
|
|
"Consolidated
EBITDA"
|
$
|
2,450,627
|
|
|
|
|
September 30,
2017
|
Total debt, excluding
debt discount and other deferred financing costs of $67.9
million
|
$
|
9,166,430
|
|
Letters of credit
issued
|
94,779
|
|
|
$
|
9,261,209
|
|
Less: Cash and cash
equivalents including short-term investments (excluding DMG's
physician owned entities cash)
|
(804,698)
|
|
Consolidated net
debt
|
$
|
8,456,511
|
|
Last twelve months
"Consolidated EBITDA"
|
$
|
2,450,627
|
|
Leverage
ratio
|
3.45x
|
|
In accordance with the Credit Agreement, the Company's
leverage ratio cannot exceed 4.50 to 1.00 as of September 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, restructuring charges, a net
settlement gain, gains on the Magan acquisition and the APAC JV
ownership changes, estimated accruals for certain legal matters, a
gain on the partial sale of Tandigm, a loss on the sale of DMG
Arizona, and a reduction in a receivable associated with the DMG
acquisition escrow provision related to an income tax item,
enhances a user's understanding of our normal net (loss) income
attributable to DaVita Inc. and diluted net (loss) 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 (loss) income attributable to DaVita Inc. and diluted
net (loss) 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 (loss) income
attributable to DaVita Inc. and diluted net (loss) income per share
attributable to DaVita Inc.
|
Three months
ended
|
|
Nine months
ended
|
|
September
30,
2017
|
|
June
30,
2017
|
|
September
30,
2016
|
|
September
30,
2017
|
|
September
30,
2016
|
Net (loss) income
attributable to DaVita Inc.
|
$
|
(214,476)
|
|
|
$
|
127,001
|
|
|
$
|
571,332
|
|
|
$
|
360,222
|
|
|
$
|
722,148
|
|
Goodwill impairment
charges
|
601,040
|
|
|
61,117
|
|
|
—
|
|
|
686,355
|
|
|
253,000
|
|
Equity investment
loss related to APAC JV goodwill impairment
|
6,293
|
|
|
—
|
|
|
—
|
|
|
6,293
|
|
|
—
|
|
Impairment of
assets
|
—
|
|
|
—
|
|
|
—
|
|
|
15,168
|
|
|
—
|
|
Restructuring
charges
|
11,269
|
|
|
—
|
|
|
—
|
|
|
11,269
|
|
|
—
|
|
Equity investment
loss related to restructuring charges
|
1,000
|
|
|
—
|
|
|
—
|
|
|
1,000
|
|
|
—
|
|
Gain on settlement,
net
|
—
|
|
|
—
|
|
|
—
|
|
|
(526,827)
|
|
|
—
|
|
Equity investment
income related to gain on settlement
|
—
|
|
|
—
|
|
|
—
|
|
|
(2,677)
|
|
|
—
|
|
Gain on Magan
acquisition
|
(17,129)
|
|
|
—
|
|
|
—
|
|
|
(17,129)
|
|
|
—
|
|
Gain on APAC JV
ownership changes
|
—
|
|
|
—
|
|
|
(374,374)
|
|
|
(6,273)
|
|
|
(374,374)
|
|
Accruals for legal
matters
|
(11,100)
|
|
|
(3,600)
|
|
|
—
|
|
|
(14,700)
|
|
|
16,000
|
|
Gain on sale of
Tandigm ownership interests
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(40,280)
|
|
Loss on sale of DMG
Arizona
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
10,489
|
|
Reduction in a
receivable associated with the DMG
acquisition escrow provision
|
—
|
|
|
—
|
|
|
27,040
|
|
|
—
|
|
|
27,040
|
|
Noncontrolling
interests associated with adjustments:
|
|
|
|
|
|
|
|
|
|
Goodwill impairment
charges
|
—
|
|
|
(2,985)
|
|
|
—
|
|
|
(9,865)
|
|
|
—
|
|
Gain on settlement,
net
|
—
|
|
|
—
|
|
|
—
|
|
|
24,029
|
|
|
—
|
|
Related income
tax
|
(221,839)
|
|
|
(2,850)
|
|
|
(27,040)
|
|
|
(39,527)
|
|
|
(16,626)
|
|
Adjusted net income
attributable to DaVita Inc.
|
$
|
155,058
|
|
|
$
|
178,683
|
|
|
$
|
196,958
|
|
|
$
|
487,338
|
|
|
$
|
597,397
|
|
|
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
|
|
Nine months
ended
|
|
September
30,
2017
|
|
June
30,
2017
|
|
September
30,
2016
|
|
September
30,
2017
|
|
September
30,
2016
|
Diluted net (loss)
income per share attributable to DaVita Inc.
|
$
|
(1.14)
|
|
|
$
|
0.65
|
|
|
$
|
2.76
|
|
|
$
|
1.86
|
|
|
$
|
3.48
|
|
Goodwill impairment
charges
|
3.18
|
|
|
0.32
|
|
|
—
|
|
|
3.55
|
|
|
1.22
|
|
Equity investment
loss related to APAC JV goodwill impairment
|
0.03
|
|
|
—
|
|
|
—
|
|
|
0.03
|
|
|
—
|
|
Impairment of
assets
|
—
|
|
|
—
|
|
|
—
|
|
|
0.08
|
|
|
—
|
|
Restructuring
charges
|
0.05
|
|
|
—
|
|
|
—
|
|
|
0.05
|
|
|
—
|
|
Equity investment
loss related to restructuring charges
|
0.01
|
|
|
—
|
|
|
—
|
|
|
0.01
|
|
|
—
|
|
Gain on settlement,
net
|
—
|
|
|
—
|
|
|
—
|
|
|
(2.72)
|
|
|
—
|
|
Equity investment
income related to gain on settlement
|
—
|
|
|
—
|
|
|
—
|
|
|
(0.01)
|
|
|
—
|
|
Gain on Magan
acquisition
|
(0.09)
|
|
|
—
|
|
|
—
|
|
|
(0.09)
|
|
|
—
|
|
Gain on APAC JV
ownership changes
|
—
|
|
|
—
|
|
|
(1.81)
|
|
|
(0.03)
|
|
|
(1.81)
|
|
Accruals for legal
matters
|
(0.06)
|
|
|
(0.02)
|
|
|
—
|
|
|
(0.08)
|
|
|
0.08
|
|
Gain on sale of
Tandigm ownership interests
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(0.19)
|
|
Loss on sale of DMG
Arizona
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
0.05
|
|
Reduction in a
receivable associated with the DMG acquisition escrow
provision
|
—
|
|
|
—
|
|
|
0.13
|
|
|
—
|
|
|
0.13
|
|
Noncontrolling
interests associated with adjustments
|
|
|
|
|
|
|
|
|
—
|
|
Goodwill impairment
charges
|
—
|
|
|
(0.02)
|
|
|
—
|
|
|
(0.05)
|
|
|
—
|
|
Gain on settlement,
net
|
—
|
|
|
—
|
|
|
—
|
|
|
0.12
|
|
|
—
|
|
Related income
tax
|
(1.17)
|
|
|
(0.01)
|
|
|
(0.13)
|
|
|
(0.20)
|
|
|
(0.08)
|
|
Adjusted diluted net
income per share attributable to DaVita Inc.
|
$
|
0.81
|
|
|
$
|
0.92
|
|
|
$
|
0.95
|
|
|
$
|
2.52
|
|
|
$
|
2.88
|
|
|
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 adjusted 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 (loss) income attributable to DaVita Inc. and
diluted net (loss) income per share attributable to DaVita Inc.
|
Three months
ended
|
|
Nine months
ended
|
|
September
30,
2017
|
|
June
30,
2017
|
|
September
30,
2016
|
|
September
30,
2017
|
|
September
30,
2016
|
Adjusted net income
per share attributable to DaVita Inc.
|
$
|
155,058
|
|
|
$
|
178,683
|
|
|
$
|
196,958
|
|
|
$
|
487,338
|
|
|
$
|
597,397
|
|
Add: Amortization of
intangible assets associated with acquisitions for:
|
|
|
|
|
|
|
|
|
|
Dialysis and
ancillary operations
|
4,408
|
|
|
3,818
|
|
|
3,588
|
|
|
11,951
|
|
|
11,071
|
|
DMG
operations
|
44,729
|
|
|
44,274
|
|
|
39,303
|
|
|
132,958
|
|
|
115,677
|
|
Less: Related income
tax
|
(18,795)
|
|
|
(18,996)
|
|
|
(17,156)
|
|
|
(56,863)
|
|
|
(49,380)
|
|
|
$
|
185,400
|
|
|
$
|
207,779
|
|
|
$
|
222,693
|
|
|
$
|
575,384
|
|
|
$
|
674,765
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted diluted net
income per share attributable to DaVita Inc.
|
$
|
0.81
|
|
|
$
|
0.92
|
|
|
$
|
0.95
|
|
|
$
|
2.52
|
|
|
$
|
2.88
|
|
Add: Amortization of
intangible assets per share associated with acquisitions
for:
|
|
|
|
|
|
|
|
|
|
Dialysis and
ancillary operations
|
0.02
|
|
|
0.02
|
|
|
0.02
|
|
|
0.06
|
|
|
0.05
|
|
DMG
operations
|
0.24
|
|
|
0.23
|
|
|
0.19
|
|
|
0.69
|
|
|
0.56
|
|
Tax effect of
adjustments
|
(0.10)
|
|
|
(0.10)
|
|
|
(0.08)
|
|
|
(0.30)
|
|
|
(0.24)
|
|
Adjusted net income
per share attributable to DaVita Inc.
|
$
|
0.97
|
|
|
$
|
1.07
|
|
|
$
|
1.08
|
|
|
$
|
2.97
|
|
|
$
|
3.25
|
|
|
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,
restructuring charges, a net settlement gain, gains on the Magan
acquisition and the APAC JV ownership changes, estimated accruals
for certain legal matters, a gain on the partial sale of Tandigm, a
loss on the sale of DMG Arizona, and a reduction in a receivable
associated with the DMG acquisition escrow provision related to an
income tax item.
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 (loss)
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 (loss)
income, net (loss) 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
|
|
Nine months
ended
|
|
September
30,
2017
|
|
June
30,
2017
|
|
September
30,
2016
|
|
September
30,
2017
|
|
September
30,
2016
|
Consolidated:
|
|
|
|
|
|
|
|
|
|
Operating (loss)
income
|
$
|
(192,523)
|
|
|
$
|
378,316
|
|
|
$
|
819,156
|
|
|
$
|
1,074,029
|
|
|
$
|
1,513,115
|
|
Goodwill impairment
charges
|
601,040
|
|
|
61,117
|
|
|
—
|
|
|
686,355
|
|
|
253,000
|
|
Equity investment
loss related to APAC JV goodwill impairment
|
6,293
|
|
|
—
|
|
|
—
|
|
|
6,293
|
|
|
—
|
|
Impairment of
assets
|
—
|
|
|
—
|
|
|
—
|
|
|
15,168
|
|
|
—
|
|
Restructuring
charges
|
11,269
|
|
|
—
|
|
|
—
|
|
|
11,269
|
|
|
—
|
|
Equity investment
loss related to restructuring charges
|
1,000
|
|
|
—
|
|
|
—
|
|
|
1,000
|
|
|
—
|
|
Gain on settlement,
net
|
—
|
|
|
—
|
|
|
—
|
|
|
(526,827)
|
|
|
—
|
|
Equity investment
income related to gain on settlement
|
—
|
|
|
—
|
|
|
—
|
|
|
(2,677)
|
|
|
—
|
|
Gain on Magan
acquisition
|
(17,129)
|
|
|
—
|
|
|
—
|
|
|
(17,129)
|
|
|
—
|
|
Gain on APAC JV
ownership changes
|
—
|
|
|
—
|
|
|
(374,374)
|
|
|
(6,273)
|
|
|
(374,374)
|
|
Accruals for legal
matters
|
(11,100)
|
|
|
(3,600)
|
|
|
—
|
|
|
(14,700)
|
|
|
16,000
|
|
Gain on sale of
Tandigm ownership interests
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(40,280)
|
|
Loss on sale of DMG
Arizona
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
10,489
|
|
Reduction in a
receivable associated with the DMG acquisition escrow
provision
|
—
|
|
|
—
|
|
|
27,040
|
|
|
—
|
|
|
27,040
|
|
Adjusted operating
income
|
$
|
398,850
|
|
|
$
|
435,833
|
|
|
$
|
471,822
|
|
|
$
|
1,226,508
|
|
|
$
|
1,404,990
|
|
|
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
|
|
Nine months
ended
|
|
September
30,
2017
|
|
June
30,
2017
|
|
September
30,
2016
|
|
September
30,
2017
|
|
September
30,
2016
|
Kidney
Care:
|
|
|
|
|
|
|
|
|
|
U.S. dialysis and
related lab services:
|
|
|
|
|
|
|
|
|
|
Segment operating
income
|
$
|
442,777
|
|
|
$
|
450,472
|
|
|
$
|
452,187
|
|
|
$
|
1,837,989
|
|
|
$
|
1,341,432
|
|
Gain on settlement,
net
|
—
|
|
|
—
|
|
|
—
|
|
|
(526,827)
|
|
|
—
|
|
Equity investment
income related to gain on settlement
|
—
|
|
|
—
|
|
|
—
|
|
|
(2,677)
|
|
|
—
|
|
Adjusted operating
income
|
442,777
|
|
|
450,472
|
|
|
452,187
|
|
|
1,308,485
|
|
|
1,341,432
|
|
Other - Ancillary
services and strategic initiatives:
|
|
|
|
|
|
|
|
|
|
U.S. ancillary
services and strategic initiatives
|
|
|
|
|
|
|
|
|
|
Segment operating
loss
|
(19,245)
|
|
|
(35,545)
|
|
|
(5,935)
|
|
|
(107,817)
|
|
|
(7,024)
|
|
Goodwill impairment
charges
|
—
|
|
|
10,498
|
|
|
—
|
|
|
34,696
|
|
|
—
|
|
Impairment of
assets
|
—
|
|
|
—
|
|
|
—
|
|
|
15,168
|
|
|
—
|
|
Adjusted operating
loss
|
(19,245)
|
|
|
(25,047)
|
|
|
(5,935)
|
|
|
(57,953)
|
|
|
(7,024)
|
|
International
dialysis
|
|
|
|
|
|
|
|
|
|
Segment operating
(loss) income
|
(17,273)
|
|
|
(12,700)
|
|
|
367,838
|
|
|
(35,166)
|
|
|
345,183
|
|
Equity investment
loss related to APAC JV goodwill impairment
|
6,293
|
|
|
—
|
|
|
—
|
|
|
6,293
|
|
|
—
|
|
Restructuring
charges
|
1,700
|
|
|
—
|
|
|
—
|
|
|
1,700
|
|
|
—
|
|
Equity investment
loss related to
restructuring charges
|
1,000
|
|
|
—
|
|
|
—
|
|
|
1,000
|
|
|
—
|
|
Gain on APAC JV
ownership changes
|
—
|
|
|
—
|
|
|
(374,374)
|
|
|
(6,273)
|
|
|
(374,374)
|
|
Adjusted operating
loss
|
(8,279)
|
|
|
(12,700)
|
|
|
(6,535)
|
|
|
(32,446)
|
|
|
(29,191)
|
|
Adjusted operating
loss
|
(27,524)
|
|
|
(37,747)
|
|
|
(12,471)
|
|
|
(90,399)
|
|
|
(36,215)
|
|
Corporate
administrative support:
|
|
|
|
|
|
|
|
|
|
Segment operating
loss
|
(10,965)
|
|
|
(11,031)
|
|
|
(28,028)
|
|
|
(32,587)
|
|
|
(40,366)
|
|
Reduction in a
receivable associated with the DMG acquisition escrow
provision
|
—
|
|
|
—
|
|
|
27,040
|
|
|
—
|
|
|
27,040
|
|
Adjusted operating
loss
|
(10,965)
|
|
|
(11,031)
|
|
|
(988)
|
|
|
(32,587)
|
|
|
(13,326)
|
|
Kidney Care adjusted
operating income
|
404,287
|
|
|
401,694
|
|
|
438,728
|
|
|
1,185,499
|
|
|
1,291,891
|
|
DMG:
|
|
|
|
|
|
|
|
|
|
Segment operating
(loss) income
|
(587,817)
|
|
|
(12,880)
|
|
|
33,094
|
|
|
(588,389)
|
|
|
(126,110)
|
|
Goodwill impairment
charges
|
601,040
|
|
|
50,619
|
|
|
—
|
|
|
651,659
|
|
|
253,000
|
|
Restructuring
charges
|
9,569
|
|
|
—
|
|
|
—
|
|
|
9,569
|
|
|
—
|
|
Gain on Magan
acquisition
|
(17,129)
|
|
|
—
|
|
|
—
|
|
|
(17,129)
|
|
|
—
|
|
Accruals for legal
matters
|
(11,100)
|
|
|
(3,600)
|
|
|
—
|
|
|
(14,700)
|
|
|
16,000
|
|
Gain on sale of
Tandigm ownership interests
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(40,280)
|
|
Loss on sale of DMG
Arizona
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
10,489
|
|
DMG adjusted
operating (loss) income
|
(5,438)
|
|
|
34,139
|
|
|
33,094
|
|
|
41,009
|
|
|
113,099
|
|
Consolidated adjusted
operating income
|
$
|
398,850
|
|
|
$
|
435,833
|
|
|
$
|
471,822
|
|
|
$
|
1,226,508
|
|
|
$
|
1,404,990
|
|
|
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, restructuring charges, a net
settlement gain, gains on the Magan acquisition and the APAC JV
ownership changes, estimated accruals for certain legal matters,
and a reduction in a receivable associated with the DMG acquisition
escrow provision related to an income tax item, 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
|
|
Nine months
ended
September 30,
2017
|
|
September
30,
2017
|
|
June
30,
2017
|
|
September
30,
2016
|
|
(Loss) income before
income taxes
|
$
|
(297,776)
|
|
|
$
|
275,607
|
|
|
$
|
716,451
|
|
|
$
|
765,881
|
|
Income tax (benefit)
expense
|
$
|
(125,742)
|
|
|
$
|
113,982
|
|
|
$
|
104,301
|
|
|
$
|
276,005
|
|
Effective income tax
rate
|
42.2
|
%
|
|
41.4
|
%
|
|
14.6
|
%
|
|
36.0
|
%
|
|
|
|
|
|
Three months
ended
|
|
Nine months
ended
September 30,
2017
|
|
September
30,
2017
|
|
June
30,
2017
|
|
September
30,
2016
|
|
(Loss) income before
income taxes
|
$
|
(297,776)
|
|
|
$
|
275,607
|
|
|
$
|
716,451
|
|
|
$
|
765,881
|
|
Less:
Noncontrolling owners' income primarily attributable to
non-tax paying entities
|
(42,484)
|
|
|
(34,906)
|
|
|
(40,909)
|
|
|
(130,043)
|
|
(Loss) income before
income taxes attributable to DaVita Inc.
|
$
|
(340,260)
|
|
|
$
|
240,701
|
|
|
$
|
675,542
|
|
|
$
|
635,838
|
|
|
|
|
|
|
|
|
|
Income tax (benefit)
expense
|
$
|
(125,742)
|
|
|
$
|
113,982
|
|
|
$
|
104,301
|
|
|
$
|
276,005
|
|
Less: Income tax
attributable to noncontrolling interests
|
(42)
|
|
|
(282)
|
|
|
(91)
|
|
|
(389)
|
|
Income tax (benefit)
expense attributable to DaVita Inc.
|
$
|
(125,784)
|
|
|
$
|
113,700
|
|
|
$
|
104,210
|
|
|
$
|
275,616
|
|
|
|
|
|
|
|
|
|
Effective income tax
rate attributable to DaVita Inc.
|
37.0
|
%
|
|
47.2
|
%
|
|
15.4
|
%
|
|
43.3
|
%
|
|
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
|
|
Nine months
ended
September 30,
2017
|
September
30,
2017
|
|
June
30,
2017
|
|
September
30,
2016
|
|
(Loss) income before
income taxes
|
$
|
(297,776)
|
|
|
$
|
275,607
|
|
|
$
|
716,451
|
|
|
$
|
765,881
|
|
Goodwill impairment
charges
|
601,040
|
|
|
61,117
|
|
|
—
|
|
|
686,355
|
|
Equity investment
loss related to APAC JV goodwill impairment
|
6,293
|
|
|
—
|
|
|
—
|
|
|
6,293
|
|
Impairment of
assets
|
—
|
|
|
—
|
|
|
—
|
|
|
15,168
|
|
Restructuring
charges
|
11,269
|
|
|
—
|
|
|
—
|
|
|
11,269
|
|
Equity investment
loss related to restructuring charges
|
1,000
|
|
|
—
|
|
|
—
|
|
|
1,000
|
|
Gain on settlement,
net
|
—
|
|
|
—
|
|
|
—
|
|
|
(526,827)
|
|
Equity investment
income related to gain on settlement
|
—
|
|
|
—
|
|
|
—
|
|
|
(2,677)
|
|
Gain on Magan
acquisition
|
(17,129)
|
|
|
—
|
|
|
—
|
|
|
(17,129)
|
|
Gain on APAC JV
ownership changes
|
—
|
|
|
—
|
|
|
(374,374)
|
|
|
(6,273)
|
|
Accrual for legal
matters
|
(11,100)
|
|
|
(3,600)
|
|
|
—
|
|
|
(14,700)
|
|
Reduction in a
receivable associated with the DMG acquisition escrow
provision
|
—
|
|
|
—
|
|
|
27,040
|
|
|
—
|
|
Noncontrolling
owners' income primarily attributable to non-tax
paying entities
|
(42,484)
|
|
|
(34,906)
|
|
|
(40,909)
|
|
|
(130,043)
|
|
Noncontrolling
interests associated with adjustments
|
|
|
|
|
|
|
|
Goodwill impairment
charges
|
—
|
|
|
(2,985)
|
|
|
—
|
|
|
(9,865)
|
|
Gain on settlement,
net
|
—
|
|
|
—
|
|
|
—
|
|
|
24,029
|
|
Adjusted income
before income taxes attributable to DaVita Inc.
|
$
|
251,113
|
|
|
$
|
295,233
|
|
|
$
|
328,208
|
|
|
$
|
802,481
|
|
Income tax (benefit)
expense
|
$
|
(125,742)
|
|
|
$
|
113,982
|
|
|
$
|
104,301
|
|
|
$
|
276,005
|
|
Add income tax
related to:
|
|
|
|
|
|
|
|
Goodwill impairment
charges
|
218,134
|
|
|
2,850
|
|
|
—
|
|
|
227,552
|
|
Impairment of
assets
|
—
|
|
|
—
|
|
|
—
|
|
|
5,752
|
|
Restructuring
charges
|
3,705
|
|
|
—
|
|
|
—
|
|
|
3,705
|
|
Reduction in a
receivable associated with the DMG acquisition escrow
provision
|
—
|
|
|
—
|
|
|
27,040
|
|
|
—
|
|
Less income tax
related to:
|
|
|
|
|
|
|
|
Gain on settlement,
net
|
—
|
|
|
—
|
|
|
—
|
|
|
(197,482)
|
|
Noncontrolling
interests
|
(42)
|
|
|
(282)
|
|
|
(91)
|
|
|
(389)
|
|
Adjusted income tax
attributable to DaVita Inc.
|
$
|
96,055
|
|
|
$
|
116,550
|
|
|
$
|
131,250
|
|
|
$
|
315,143
|
|
Adjusted effective
income tax rate attributable to DaVita Inc.
|
38.3
|
%
|
|
39.5
|
%
|
|
40.0
|
%
|
|
39.3
|
%
|
|
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
|
|
Nine months
ended
September 30,
2017
|
|
September
30,
2017
|
|
June
30,
2017
|
|
September
30,
2016
|
|
Cash provided by
operating activities
|
$
|
553,095
|
|
|
$
|
146,270
|
|
|
$
|
535,623
|
|
|
$
|
1,564,539
|
|
Less:
Distributions to noncontrolling interests
|
(49,388)
|
|
|
(72,759)
|
|
|
(50,919)
|
|
|
(165,463)
|
|
Cash provided by
operating activities attributable to DaVita Inc.
|
503,707
|
|
|
73,511
|
|
|
484,704
|
|
|
1,399,076
|
|
Less: Expenditures
for routine maintenance and information
technology
|
(98,433)
|
|
|
(55,577)
|
|
|
(98,464)
|
|
|
(242,122)
|
|
Free cash
flow
|
$
|
405,274
|
|
|
$
|
17,934
|
|
|
$
|
386,240
|
|
|
$
|
1,156,954
|
|
|
|
|
|
|
Rolling 12-Month
Period
|
|
September
30,
2017
|
|
June
30,
2017
|
|
September
30,
2016
|
Cash provided by
operating activities
|
$
|
2,046,721
|
|
|
$
|
2,029,249
|
|
|
$
|
1,917,935
|
|
Less:
Distributions to noncontrolling interests
|
(212,792)
|
|
|
(214,323)
|
|
|
(193,769)
|
|
Cash provided by
operating activities attributable to DaVita Inc.
|
1,833,929
|
|
|
1,814,926
|
|
|
1,724,166
|
|
Less: Expenditures
for routine maintenance and information technology
|
(347,563)
|
|
|
(347,594)
|
|
|
(385,067)
|
|
Free cash
flow
|
$
|
1,486,366
|
|
|
$
|
1,467,332
|
|
|
$
|
1,339,099
|
|
|
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
|
|
Nine months
ended
September 30,
2017
|
|
September
30,
2017
|
|
June
30,
2017
|
|
September
30,
2016
|
|
Medical
revenues
|
$
|
1,163,272
|
|
|
$
|
1,176,992
|
|
|
$
|
1,012,907
|
|
|
$
|
3,408,967
|
|
Less: Risk share
revenue, net
|
(16,018)
|
|
|
(36,117)
|
|
|
(26,125)
|
|
|
(60,786)
|
|
Add: Institutional
capitation amounts
|
208,057
|
|
|
213,887
|
|
|
324,699
|
|
|
715,779
|
|
Total care dollars
under management
|
$
|
1,355,311
|
|
|
$
|
1,354,762
|
|
|
$
|
1,311,481
|
|
|
$
|
4,063,960
|
|
|
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 (loss) income before depreciation
and amortization. Adjusted EBITDA is defined as operating (loss)
income before certain charges, including goodwill and other asset
impairment charges, restructuring charges, a net settlement gain,
gains on the Magan acquisition and 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 (loss) 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 (loss) income, net
(loss) 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
September 30, 2017
|
|
Nine months ended
September 30, 2017
|
|
Consolidated
|
|
Kidney
Care
|
|
DMG
|
|
Consolidated
|
|
Kidney
Care
|
|
DMG
|
Net (loss) income
attributable to DaVita Inc.
|
$
|
(214,476)
|
|
|
|
|
|
|
$
|
360,222
|
|
|
|
|
|
Noncontrolling
interests
|
42,442
|
|
|
|
|
|
|
129,654
|
|
|
|
|
|
Income tax (benefit)
expense
|
(125,742)
|
|
|
|
|
|
|
276,005
|
|
|
|
|
|
Other
income
|
(4,370)
|
|
|
|
|
|
|
(13,866)
|
|
|
|
|
|
Debt
expense
|
109,623
|
|
|
|
|
|
|
322,014
|
|
|
|
|
|
Operating (loss)
income
|
(192,523)
|
|
|
395,294
|
|
|
(587,817)
|
|
|
1,074,029
|
|
|
1,662,418
|
|
|
(588,389)
|
|
Depreciation and
amortization
|
203,283
|
|
|
142,634
|
|
|
60,649
|
|
|
593,527
|
|
|
415,544
|
|
|
177,983
|
|
EBITDA
|
$
|
10,760
|
|
|
$
|
537,928
|
|
|
$
|
(527,168)
|
|
|
$
|
1,667,556
|
|
|
$
|
2,077,962
|
|
|
$
|
(410,406)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Certain columns or
rows may not sum or recalculate due to the use of rounded
numbers.
|
Adjusted
EBITDA:
|
|
|
|
|
Three months ended
September 30, 2017
|
|
Nine months ended
September 30, 2017
|
|
Consolidated
|
|
Kidney
Care
|
|
DMG
|
|
Consolidated
|
|
Kidney
Care
|
|
DMG
|
Net (loss) income
attributable to DaVita Inc.
|
$
|
(214,476)
|
|
|
|
|
|
|
$
|
360,222
|
|
|
|
|
|
Noncontrolling
interests
|
42,442
|
|
|
|
|
|
|
129,654
|
|
|
|
|
|
Income tax (benefit)
expense
|
(125,742)
|
|
|
|
|
|
|
276,005
|
|
|
|
|
|
Other
income
|
(4,370)
|
|
|
|
|
|
|
(13,866)
|
|
|
|
|
|
Debt
expense
|
109,623
|
|
|
|
|
|
|
322,014
|
|
|
|
|
|
Operating (loss)
income
|
(192,523)
|
|
|
395,294
|
|
|
(587,817)
|
|
|
1,074,029
|
|
|
1,662,418
|
|
|
(588,389)
|
|
Goodwill impairment
charges
|
601,040
|
|
|
|
|
601,040
|
|
|
686,355
|
|
|
34,696
|
|
|
651,659
|
|
Equity investment
loss related to APAC JV goodwill impairment
|
6,293
|
|
|
6,293
|
|
|
|
|
6,293
|
|
|
6,293
|
|
|
|
Impairment of
assets
|
|
|
|
|
|
|
15,168
|
|
|
15,168
|
|
|
|
Restructuring
charges
|
11,269
|
|
|
1,700
|
|
|
9,569
|
|
|
11,269
|
|
|
1,700
|
|
|
9,569
|
|
Equity investment
loss related to restructuring charges
|
1,000
|
|
|
1,000
|
|
|
|
|
1,000
|
|
|
1,000
|
|
|
|
Gain on settlement,
net
|
|
|
|
|
|
|
(526,827)
|
|
|
(526,827)
|
|
|
|
Equity investment
income related to gain on settlement
|
|
|
|
|
|
|
(2,677)
|
|
|
(2,677)
|
|
|
|
Gain on Magan
acquisition
|
(17,129)
|
|
|
|
|
(17,129)
|
|
|
(17,129)
|
|
|
|
|
(17,129)
|
|
Gain on APAC JV
ownership changes
|
|
|
|
|
|
|
(6,273)
|
|
|
(6,273)
|
|
|
|
Accruals for legal
matters
|
(11,100)
|
|
|
|
|
(11,100)
|
|
|
(14,700)
|
|
|
|
|
(14,700)
|
|
Adjusted operating
income (loss)
|
398,850
|
|
|
404,287
|
|
|
(5,438)
|
|
|
1,226,508
|
|
|
1,185,499
|
|
|
41,009
|
|
Depreciation and
amortization
|
203,283
|
|
|
142,634
|
|
|
60,649
|
|
|
593,527
|
|
|
415,544
|
|
|
177,983
|
|
Adjusted
EBITDA
|
$
|
602,133
|
|
|
$
|
546,921
|
|
|
$
|
55,211
|
|
|
$
|
1,820,035
|
|
|
$
|
1,601,043
|
|
|
$
|
218,992
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Certain columns or
rows may not sum or recalculate due to the use of rounded
numbers.
|
View original content with
multimedia:http://www.prnewswire.com/news-releases/davita-inc-3rd-quarter-2017-results-300551335.html
SOURCE DaVita