DENVER, Nov. 7, 2023
/PRNewswire/ -- DaVita Inc. (NYSE: DVA) announced financial and
operating results for the quarter ended September 30, 2023.
"We delivered another strong quarter," said Javier Rodriguez, CEO of DaVita Inc. "We began
the year by making progress earlier than expected across many of
our key operating priorities, and that momentum has continued into
the third quarter. We have balanced a strong focus on near-term
operating discipline, while continuing to invest in future growth.
At the same time, we're creating a differentiated experience for
our teammates, and delivering the highest standard of care for our
patients."
Financial and operating highlights for the quarter ended
September 30, 2023:
- Consolidated revenues were $3.1
billion.
- Operating income was $496 million
and adjusted operating income was $525
million.
- Diluted earnings per share was $2.62 and adjusted diluted earnings per share was
$2.85.
- Operating cash flow was $661
million and free cash flow was $453
million.
|
Three months
ended
|
|
Nine months ended
September 30,
|
|
September 30,
2023
|
|
June 30,
2023
|
|
2023
|
|
2022
|
Net income
attributable to DaVita Inc.:
|
(dollars in
millions, except per share data)
|
Net income
|
$
247
|
|
$
179
|
|
$
541
|
|
$
492
|
Diluted per
share
|
$
2.62
|
|
$
1.91
|
|
$
5.80
|
|
$
5.07
|
Adjusted net
income(1)
|
$
268
|
|
$
194
|
|
$
608
|
|
$
530
|
Adjusted diluted per
share(1)
|
$
2.85
|
|
$
2.08
|
|
$
6.51
|
|
$
5.46
|
____________________
|
(1)
|
For definitions of
non-GAAP financial measures, see the note titled "Note on Non-GAAP
Financial Measures" and related reconciliations beginning on
page 16.
|
|
Three months
ended
|
|
Nine months ended
September 30,
|
|
September 30,
2023
|
|
June 30,
2023
|
|
2023
|
|
2022
|
|
Amount
|
|
Margin
|
|
Amount
|
|
Margin
|
|
Amount
|
|
Margin
|
|
Amount
|
|
Margin
|
Operating
income
|
(dollars in
millions)
|
Operating
income
|
$ 496
|
|
15.9 %
|
|
$ 405
|
|
13.5 %
|
|
$
1,213
|
|
13.5 %
|
|
$
1,083
|
|
12.5 %
|
Adjusted operating
income(1)(2)
|
$ 525
|
|
16.8 %
|
|
$ 432
|
|
14.4 %
|
|
$
1,308
|
|
14.5 %
|
|
$
1,133
|
|
13.0 %
|
____________________
|
(1)
|
For definitions of
non-GAAP financial measures, see the note titled "Note on Non-GAAP
Financial Measures" and related reconciliations beginning on page
16.
|
(2)
|
Adjusted operating
income margin is adjusted operating income divided by consolidated
revenues.
|
U.S. dialysis metrics:
Volume: Total U.S. dialysis treatments for the third
quarter of 2023 were 7,306,948, or an average of 92,493 treatments
per day, representing a per day decrease of (0.2)% compared to the
second quarter of 2023. Normalized non-acquired treatment growth in
the third quarter of 2023 compared to the third quarter of 2022 was
0.5%.
|
Three months
ended
|
|
Quarter
change
|
|
Nine months
ended
|
|
Year to
date
change
|
|
September
30,
2023
|
|
June 30,
2023
|
|
|
September
30,
2023
|
|
September
30,
2022
|
|
|
(dollars in
millions, except per treatment data)
|
Revenue per
treatment
|
$
380.33
|
|
$
376.73
|
|
$
3.60
|
|
$
374.46
|
|
$
364.89
|
|
$
9.57
|
Patient care costs per
treatment
|
$
250.08
|
|
$
252.57
|
|
$
(2.49)
|
|
$
253.30
|
|
$
251.88
|
|
$
1.42
|
General and
administrative
|
$
281
|
|
$
279
|
|
$
2
|
|
$
819
|
|
$
755
|
|
$
64
|
Primary drivers of the changes in the table above were as
follows:
Revenue: The quarter change was primarily due to
favorable changes in commercial and Medicare Advantage (MA) mix, a
net increase in average reimbursement rates and other normal
fluctuations. Our U.S. dialysis average patient service revenue per
treatment was negatively impacted by a decrease in hospital
inpatient revenues. The year to date change was primarily driven by
normal annual rate increases, favorable changes in commercial and
MA mix and a net increase in Medicare rate due to a base rate
increase in 2023, partially offset by the phased-in increase of
sequestration of 1% in April 2022 and
full 2% beginning July 1, 2022 and
thereafter. Other drivers of this change include improved cash
collections on previously reserved balances assumed to be
uncollectible.
Patient care costs: The quarter change was primarily due
to decreased minor equipment expense and utilities expense driven
by our virtual power purchase arrangements. Other drivers of this
change include decreases in pharmaceutical costs, professional
fees, medical supplies expense, contract wages and travel costs. In
addition, our fixed other direct operating expenses positively
impacted patient care costs per treatment due to increased
treatments in the third quarter of 2023. The quarter was also
impacted by increased compensation expenses including increased
wages and headcount, increased health benefit expense, as well as
increased insurance costs. The year to date change was primarily
due to increased compensation expenses including increased wage
rates and headcount, as well as increases in professional fees,
medical supplies expense, repairs and maintenance expense and
travel costs. Other drivers of this change include increased
utilities expense driven by our virtual power purchase arrangements
and increased center closure costs, as described below. In
addition, our fixed other direct operating expenses unfavorably
impacted patient care costs per treatment due to decreased
treatments in 2023. These increases were partially offset by
decreased pharmaceutical costs and contract wages.
General and administrative: The quarter change was
primarily due to increases in contributions to our charitable
foundation, management meeting costs and IT-related costs. These
increases were partially offset by decreased compensation expenses,
center closure costs, as described below, and long-term incentive
compensation. The year to date change was primarily due to
increases in compensation expenses including increased wage rates
and severance costs, as described below. Other drivers of this
change include gains recognized on the sale of our self-developed
properties in the second quarter of 2022, increased IT-related
costs and travel costs as well as increases in contributions to our
charitable foundation. These increases were partially offset by
decreased advocacy costs and decreased professional fees.
Certain items impacting the quarter:
Integrated kidney care (IKC). IKC revenues for the third
quarter of 2023 increased compared to the second quarter of 2023
due to a net increase in shared savings and increased revenues in
our special needs plans.
Closure costs. During the third quarter of 2023, we
continued the strategic review of our outpatient clinic
capacity requirements and utilization, which have been impacted
both by declines in our patient census in some markets due to the
COVID-19 pandemic, as well as by our initiatives toward, and
advances in, increasing the proportion of our home dialysis
patients. This continuing review, begun in the third quarter of
2022, has resulted in higher than normal charges for center
capacity closures over the last number of quarters. These capacity
closure costs include net losses on assets retired, lease costs,
asset impairments and accelerated depreciation and
amortization.
During the three months ended and nine months ended
September 30, 2023, we incurred charges for U.S. dialysis
center closures of approximately $24.0 million and $67.3 million, respectively. For a breakdown
of how these closure costs have impacted our income statement for
respective periods, see Note 3 in our Non-GAAP reconciliations that
follow.
Severance costs and other. During the fourth quarter of
2022, we committed to a plan to increase efficiencies and cost
savings in certain general and administrative support functions. As
a result of this plan, we recognized expenses related to
termination and other benefit commitments. This plan included
additional charges of $4.7 million during the third quarter of
2023 and $28.1 million during
the nine months ended September 30, 2023.
Financial and operating metrics:
|
Three months
ended
September
30,
|
|
Twelve months
ended
September
30,
|
|
2023
|
|
2022
|
|
2023
|
|
2022
|
Cash
flow:
|
(dollars in
millions)
|
Operating cash
flow
|
$
661
|
|
$
711
|
|
$
1,918
|
|
$
1,751
|
Free cash
flow(1)
|
$
453
|
|
$
500
|
|
$
1,054
|
|
$
1,032
|
___________________
|
(1)
|
For definitions of
non-GAAP financial measures, see the note titled "Note on Non-GAAP
Financial Measures" and related reconciliations beginning on page
16.
|
|
Three months
ended
September 30, 2023
|
|
Nine months
ended September 30,
2023
|
Effective income tax
rate on:
|
|
|
|
Income
|
18.2 %
|
|
18.2 %
|
Income attributable to
DaVita Inc.(1)
|
21.8 %
|
|
22.9 %
|
Adjusted income
attributable to DaVita Inc.(1)
|
22.1 %
|
|
23.2 %
|
___________________
|
(1)
|
For definitions of
non-GAAP financial measures, see the note titled "Note on Non-GAAP
Financial Measures" and related reconciliations beginning on page
16.
|
Center activity: As of September 30, 2023, we
provided dialysis services to a total of approximately 249,100
patients at 3,053 outpatient dialysis centers, of which 2,694
centers were located in the United
States and 359 centers were located in 11 countries outside
of the United States. During the
third quarter of 2023, we opened a total of five new dialysis
centers and closed 15 dialysis centers in the United States. We also acquired two
dialysis centers and opened four new dialysis centers outside of
the United States during the third
quarter of 2023.
IKC: As of September 30, 2023, we had approximately
59,000 patients in risk-based integrated care arrangements
representing approximately $4.8
billion in annualized medical spend. We also had an
additional 16,000 patients in other integrated care arrangements;
we do not include the medical spend for these patients in this
annualized medical spend estimate. For an additional description of
these metrics, see Note 2: Integrated Care Metrics.
Outlook:
The following forward-looking measures and the underlying
assumptions involve significant known and unknown risks and
uncertainties, including those described below, and actual results
may vary materially from these forward-looking measures. For
example, current macroeconomic and marketplace conditions, and
global events continue to generate significant risk and
uncertainty, and as a result, our future results could vary
materially from the guidance provided below. We do not provide
guidance for operating income or diluted net income per share
attributable to DaVita Inc. on a basis consistent with United States generally accepted accounting
principles (GAAP) nor a reconciliation of forward-looking non-GAAP
financial measures to the most directly comparable GAAP financial
measures on a forward-looking basis because we are unable to
predict certain items contained in the GAAP measures without
unreasonable efforts. These non-GAAP financial measures do not
include certain items, including capacity closure charges,
severance costs and foreign currency fluctuations, which may be
significant. The guidance for our effective income tax rate on
adjusted income attributable to DaVita Inc. also excludes the
amount of third-party owners' income and related taxes attributable
to non-tax paying entities.
|
Current 2023
guidance
|
|
Prior 2023
guidance
|
|
Low
|
|
High
|
|
Low
|
|
High
|
|
(dollars in
millions, except per share data)
|
Adjusted operating
income
|
$1,650
|
|
$1,725
|
|
$1,565
|
|
$1,675
|
Adjusted diluted net
income per share attributable to DaVita Inc.
|
$7.80
|
|
$8.30
|
|
$7.00
|
|
$7.80
|
Free cash
flow
|
$950
|
|
$1,150
|
|
$850
|
|
$1,100
|
We will be holding a conference call to discuss our results for
the third quarter ended September 30, 2023, on
November 7, 2023, at 5:00 p.m. Eastern
Time. To join the conference call, please dial (877)
918-6630 from the U.S. or (517) 308-9042 from outside the U.S., and
provide the operator the password "Earnings". This call is being
webcast and can be accessed at the DaVita Investor Relations
website investors.davita.com. A replay of the conference call will
also be available at investors.davita.com for the following 30
days.
Forward looking statements
DaVita Inc. and its representatives may from time to time
make written and oral forward-looking statements within the meaning
of the Private Securities Litigation Reform Act of 1995 (PSLRA),
including statements in this release, filings with the Securities
and Exchange Commission (SEC), reports to stockholders and in
meetings with investors and analysts. All statements in this
release, during the related presentation or other meetings, other
than statements of historical fact, are forward-looking statements
and as such are intended to be covered by the safe harbor for
"forward-looking statements" provided by the PSLRA. These
forward-looking statements could include, among other things,
including statements about our balance sheet and liquidity, our
expenses and expense offsets, revenues, billings and collections,
availability or cost of supplies, treatment volumes, mix
expectation, such as the percentage or number of patients under
commercial insurance, DaVita's response to and the continuing
impact of the coronavirus (COVID-19) pandemic, the continuing
impact of the COVID-19 pandemic on the U.S. and global economies,
labor market conditions, and overall impact on our patients and
teammates, as well as other statements regarding our future
operations, financial condition and prospects, expenses, strategic
initiatives, government and commercial payment rates, expectations
related to value-based care, integrated kidney care, and MA plan
enrollment, expectations regarding increased competition and
marketplace changes, including those related to new or potential
entrants in the dialysis and pre-dialysis marketplace and potential
impact of innovative technologies, drugs, or other treatments, and
our ongoing stock repurchase program, and statements related to our
guidance and expectations for future periods and the assumptions
underlying any such projections. All statements in this release,
other than statements of historical fact, are forward-looking
statements. Without limiting the foregoing, statements including
the words "expect," "intend," "will," "could," "plan,"
"anticipate," "believe," "forecast," "guidance," "outlook,"
"goals," and similar expressions are intended to identify
forward-looking statements. These forward-looking statements are
based on DaVita's current expectations and are based solely on
information available as of the date of this release. DaVita
undertakes no obligation to publicly update or revise any
forward-looking statements, whether as a result of changed
circumstances, new information, future events or otherwise, except
as may be required by law. Actual future events and results could
differ materially from any forward-looking statements due to
numerous factors that involve substantial known and unknown risks
and uncertainties. These risks and uncertainties include, among
other things:
- the current macroeconomic and marketplace conditions, and
global events, many of which are interrelated and which relate to,
among other things, inflation, rising interest rates, labor market
conditions, wage pressure, evolving monetary policies, and the
continuing impact of the COVID-19 pandemic on our patients,
teammates, physician partners, suppliers, business, operations,
reputation, financial condition and results of operations; further
spread or resurgence of the virus, including as a result of the
emergence of new strains of the virus; the continuing impact of the
pandemic on our revenues and non-acquired growth due to lower
treatment volumes; COVID-19's impact on the chronic kidney disease
(CKD) population and our patient population including on the
mortality of these patients; any potential negative impact on our
commercial mix or the number of our patients covered by commercial
insurance plans; the potential impact of new or potential entrants
in the dialysis and pre-dialysis marketplace and potential impact
of innovative technologies, drugs, or other treatments on our
patients and industry; our ability to successfully implement cost
savings initiatives; supply chain challenges and disruptions; and
elevated teammate turnover and training costs and higher salary and
wage expense, driven in part by persisting labor market conditions
and a high demand for our clinical personnel, any of which may also
have the effect of heightening many of the other risks and
uncertainties discussed below, and in many cases, the impact of the
pandemic and the aforementioned global economic conditions on our
business may persist even as the pandemic continues to
subside;
- the concentration of profits generated by higher-paying
commercial payor plans for which there is continued downward
pressure on average realized payment rates; a reduction in the
number or percentage of our patients under such plans, including,
without limitation, 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, as a result of our
making incorrect assumptions about how our patients will respond to
any change in financial assistance from charitable organizations,
or as a result of payors' implementing restrictive plan designs,
including, without limitation, actions taken in response to the
U.S. Supreme Court's decision in Marietta Memorial Hospital
Employee Health Benefit Plan, et al. v. DaVita Inc. et al.
(Marietta); how and whether regulators and legislators will respond
to the Marietta decision including, without limitation, whether
they will issue regulatory guidance or adopt new legislation; how
courts will interpret other anti-discriminatory provisions that may
apply to restrictive plan designs; whether there could be other
potential negative impacts of the Marietta decision; and the timing
of each of these items;
- the extent to which the ongoing implementation of healthcare
reform, or changes in or new legislation, regulations or guidance,
enforcement thereof or related litigation result in a reduction in
coverage or reimbursement rates for our services, a reduction in
the number of patients enrolled in or that select higher-paying
commercial plans, including for example MA plans or other material
impacts to our business or operations; or our making incorrect
assumptions about how our patients will respond to any such
developments;
- risks arising from potential changes in laws, regulations or
requirements applicable to us, such as potential and proposed
federal and/or state legislation, regulation, ballot, executive
action or other initiatives, including, without limitation, those
related to healthcare, antitrust matters, including, among others,
restrictive covenants, and/or labor matters;
- our ability to attract, retain and motivate teammates and
our ability to manage operating cost increases or productivity
decreases whether due to union organizing activities, which
continue to increase in the dialysis industry, legislative or other
changes, demand for labor, volatility and uncertainty in the labor
market, the current challenging and highly competitive labor market
conditions, or other reasons;
- Our ability to respond to challenging U.S. and global
economic and marketplace conditions, including among other things
our ability to successfully identify cost savings opportunities and
to implement cost savings initiatives such as ongoing initiatives
that increase our use of third-party service providers to perform
certain activities, initiatives that relate to clinic optimization
and capacity utilization improvement, and procurement
opportunities, among other things;
- our ability to successfully implement our strategies with
respect to integrated kidney care and value-based care initiatives
and home based dialysis in the desired time frame and in a complex,
dynamic and highly regulated environment, including, among other
things, maintaining our existing business; meeting growth
expectations; recovering our investments; entering into agreements
with payors, third party vendors and others on terms that are
competitive and, as appropriate, prove actuarially sound;
structuring operations, agreements and arrangements to comply with
evolving rules and regulations; finding, training and retaining
appropriate staff; and further developing our integrated care and
other capabilities to provide competitive programs at
scale;
- a reduction in government payment rates under the Medicare
End Stage Renal Disease program, state Medicaid or other
government-based programs and the impact of the Medicare Advantage
benchmark structure;
- noncompliance by us or our business associates with any
privacy or security laws or any security breach by us or a third
party involving the misappropriation, loss or other unauthorized
use or disclosure of confidential information;
- legal and compliance risks, such as our continued compliance
with complex, and at times, evolving government regulations and
requirements;
- the impact of the political environment and related
developments on the current healthcare marketplace and on our
business, including with respect to the Affordable Care Act, the
exchanges and many other core aspects of the current healthcare
marketplace, as well as the composition of the U.S. Supreme Court
and the current presidential administration and congressional
majority;
- changes in pharmaceutical practice patterns, reimbursement
and payment policies and processes, or pharmaceutical pricing,
including with respect to hypoxia inducible factors, among other
things;
- our ability to develop and maintain relationships with
physicians and hospitals, changing affiliation models for
physicians, and the emergence of new models of care or other
initiatives introduced by the government or private sector that,
among other things, may erode our patient base and impact
reimbursement rates;
- our ability to complete acquisitions, mergers, dispositions,
joint ventures or other strategic transactions that we might
announce or be considering, on terms favorable to us or at all, to
successfully integrate any acquired businesses, to successfully
operate any acquired businesses, joint ventures or other strategic
transactions, or to successfully expand our operations and services
in markets outside the United
States, or to businesses or products outside of dialysis
services;
- continued increased competition from dialysis providers and
others, and other potential marketplace changes, including without
limitation increased investment in and availability of funding to
new entrants in the dialysis and pre-dialysis marketplace;
- the variability of our cash flows, including without
limitation, any extended billing or collections cycles; the risk
that we may not be able to generate or access sufficient cash in
the future to service our indebtedness or to fund our other
liquidity needs; and the risk that we may not be able to refinance
our indebtedness as it becomes due, on terms favorable to us or at
all;
- factors that may impact our ability to repurchase stock
under our stock repurchase program and the timing of any such stock
repurchases, as well as our use of a considerable amount of
available funds to repurchase stock;
- risks arising from the use of accounting estimates,
judgments and interpretations in our financial statements;
- impairment of our goodwill, investments or other
assets;
- our aspirations, goals and disclosures related to
environmental, social and governance (ESG) matters, including,
among other things, evolving regulatory requirements affecting ESG
standards, measurements and reporting requirements; the
availability of suppliers that can meet our sustainability
standards; and our ability to recruit, develop and retain diverse
talent in our labor markets; and
- the other risk factors, trends and uncertainties set forth
in our Annual Report on Form 10-K for the year ended December 31, 2022 and Quarterly Reports on Form
10-Q for the quarters ended March 31,
2023 and June 30, 2023, and
the risks and uncertainties discussed in any subsequent reports
that we file or furnish with the SEC from time to time.
The financial information presented in this release is
unaudited and is subject to change as a result of subsequent events
or adjustments, if any, arising prior to the filing of the
Company's Quarterly Report on Form 10-Q for the quarter ended
September 30, 2023.
DAVITA
INC. CONSOLIDATED STATEMENTS OF
INCOME (unaudited) (dollars and shares in
thousands, except per share data)
|
|
|
Three months ended
September 30,
|
|
Nine months ended
September 30,
|
|
2023
|
|
2022
|
|
2023
|
|
2022
|
Dialysis patient
service revenues
|
$
2,951,950
|
|
$
2,846,494
|
|
$ 8,602,669
|
|
$ 8,372,874
|
Other
revenues
|
169,382
|
|
102,200
|
|
391,731
|
|
320,132
|
Total
revenues
|
3,121,332
|
|
2,948,694
|
|
8,994,400
|
|
8,693,006
|
Operating
expenses:
|
|
|
|
|
|
|
|
Patient care
costs
|
2,067,315
|
|
2,085,555
|
|
6,181,348
|
|
6,120,872
|
General and
administrative
|
376,883
|
|
365,447
|
|
1,072,513
|
|
975,486
|
Depreciation and
amortization
|
188,423
|
|
194,414
|
|
550,166
|
|
538,534
|
Equity investment
income, net
|
(7,228)
|
|
(8,509)
|
|
(22,502)
|
|
(24,696)
|
Total operating
expenses
|
2,625,393
|
|
2,636,907
|
|
7,781,525
|
|
7,610,196
|
Operating
income
|
495,939
|
|
311,787
|
|
1,212,875
|
|
1,082,810
|
Debt
expense
|
(98,080)
|
|
(99,680)
|
|
(302,361)
|
|
(256,057)
|
Debt extinguishment
and modification costs
|
—
|
|
—
|
|
(7,962)
|
|
—
|
Other loss,
net
|
(19,650)
|
|
(4,898)
|
|
(14,525)
|
|
(7,968)
|
Income before income
taxes
|
378,209
|
|
207,209
|
|
888,027
|
|
818,785
|
Income tax
expense
|
68,848
|
|
42,515
|
|
161,621
|
|
163,757
|
Net income
|
309,361
|
|
164,694
|
|
726,406
|
|
655,028
|
Less: Net income
attributable to noncontrolling interests
|
(62,729)
|
|
(59,328)
|
|
(185,536)
|
|
(162,731)
|
Net income attributable
to DaVita Inc.
|
$
246,632
|
|
$
105,366
|
|
$
540,870
|
|
$
492,297
|
|
|
|
|
|
|
|
|
Earnings per share
attributable to DaVita Inc.:
|
|
|
|
|
|
|
|
Basic net
income
|
$
2.70
|
|
$
1.16
|
|
$
5.95
|
|
$
5.24
|
Diluted net
income
|
$
2.62
|
|
$
1.13
|
|
$
5.80
|
|
$
5.07
|
|
|
|
|
|
|
|
|
Weighted average
shares for earnings per share:
|
|
|
|
|
|
|
|
Basic
shares
|
91,322
|
|
91,160
|
|
90,937
|
|
93,959
|
Diluted
shares
|
94,041
|
|
93,263
|
|
93,317
|
|
97,153
|
DAVITA
INC. CONSOLIDATED STATEMENTS OF COMPREHENSIVE
INCOME (unaudited) (dollars in
thousands)
|
|
|
Three months ended
September 30,
|
|
Nine months ended
September 30,
|
|
2023
|
|
2022
|
|
2023
|
|
2022
|
Net income
|
$
309,361
|
|
$
164,694
|
|
$
726,406
|
|
$
655,028
|
Other comprehensive
(loss) income, net of tax:
|
|
|
|
|
|
|
|
Unrealized gains on
interest rate cap agreements:
|
|
|
|
|
|
|
|
Unrealized
gains
|
6,996
|
|
41,312
|
|
28,305
|
|
95,660
|
Reclassifications of
net realized (gains) losses into net income
|
(21,198)
|
|
1,033
|
|
(55,895)
|
|
3,100
|
Unrealized (losses)
gains on foreign currency translation:
|
(47,644)
|
|
(66,100)
|
|
27,878
|
|
(95,064)
|
Other comprehensive
(loss) income
|
(61,846)
|
|
(23,755)
|
|
288
|
|
3,696
|
Total comprehensive
income
|
247,515
|
|
140,939
|
|
726,694
|
|
658,724
|
Less: Comprehensive
income attributable to noncontrolling interests
|
(62,729)
|
|
(59,328)
|
|
(185,536)
|
|
(162,731)
|
Comprehensive income
attributable to DaVita Inc.
|
$
184,786
|
|
$
81,611
|
|
$
541,158
|
|
$
495,993
|
DAVITA
INC. CONSOLIDATED STATEMENTS OF CASH
FLOW (unaudited) (dollars in
thousands)
|
|
|
Nine months ended
September 30,
|
|
2023
|
|
2022
|
Cash flows from
operating activities:
|
|
|
|
Net income
|
$
726,406
|
|
$
655,028
|
Adjustments to
reconcile net income to net cash provided by operating
activities:
|
|
|
|
Depreciation and
amortization
|
550,166
|
|
538,534
|
Loss on extinguishment
of debt
|
7,132
|
|
—
|
Stock-based
compensation expense
|
82,313
|
|
77,904
|
Deferred income
taxes
|
(17,767)
|
|
(35,637)
|
Equity investment loss
(income), net
|
40,121
|
|
(417)
|
Other non-cash
charges, net
|
1,633
|
|
16,035
|
Changes in operating
assets and liabilities, net of effect of acquisitions and
divestitures:
|
|
|
|
Accounts
receivable
|
118,148
|
|
(135,632)
|
Other current
assets
|
32,132
|
|
43,739
|
Other long-term
assets
|
1,101
|
|
(49,326)
|
Accounts
payable
|
(33,837)
|
|
38,870
|
Accrued compensation
and benefits
|
65,279
|
|
35,491
|
Other current
liabilities
|
10,822
|
|
87,248
|
Income
taxes
|
(1,878)
|
|
(37,770)
|
Other long-term
liabilities
|
(7,945)
|
|
(13,219)
|
Net cash provided by
operating activities
|
1,573,826
|
|
1,220,848
|
Cash flows from
investing activities:
|
|
|
|
Additions of property
and equipment
|
(409,011)
|
|
(409,391)
|
Acquisitions
|
(7,990)
|
|
(43,811)
|
Proceeds from asset
and business sales
|
24,907
|
|
116,088
|
Purchase of debt
investments held-to-maturity
|
(30,419)
|
|
(94,602)
|
Purchase of other debt
and equity investments
|
(6,693)
|
|
(3,322)
|
Proceeds from debt
investments held-to-maturity
|
94,414
|
|
40,660
|
Proceeds from sale of
other debt and equity investments
|
3,930
|
|
3,763
|
Other
|
—
|
|
(782)
|
Purchase of equity
method investments
|
(276,006)
|
|
(28,176)
|
Distributions from
equity method investments
|
3,364
|
|
2,490
|
Net cash used in
investing activities
|
(603,504)
|
|
(417,083)
|
Cash flows from
financing activities:
|
|
|
|
Borrowings
|
2,468,335
|
|
1,705,913
|
Payments on long-term
debt
|
(2,992,248)
|
|
(1,557,358)
|
Deferred and debt
related financing costs
|
(53,466)
|
|
—
|
Purchase of treasury
stock
|
—
|
|
(802,228)
|
Distributions to
noncontrolling interests
|
(203,381)
|
|
(188,592)
|
Net payments related
to stock purchases and awards
|
(41,155)
|
|
(42,248)
|
Contributions from
noncontrolling interests
|
11,579
|
|
11,382
|
Proceeds from sales of
additional noncontrolling interests
|
50,962
|
|
3,673
|
Purchases of
noncontrolling interests
|
(7,875)
|
|
(20,770)
|
Net cash used in
financing activities
|
(767,249)
|
|
(890,228)
|
Effect of exchange rate
changes on cash, cash equivalents and restricted cash
|
3,063
|
|
(6,283)
|
Net increase (decrease)
in cash, cash equivalents and restricted cash
|
206,136
|
|
(92,746)
|
Cash, cash equivalents
and restricted cash at beginning of the year
|
338,989
|
|
554,960
|
Cash, cash equivalents
and restricted cash at end of the period
|
$
545,125
|
|
$
462,214
|
DAVITA
INC. CONSOLIDATED BALANCE
SHEETS (unaudited) (dollars and shares in
thousands, except per share data)
|
|
|
September 30,
2023
|
|
December 31,
2022
|
ASSETS
|
|
|
|
Cash and cash
equivalents
|
$
449,458
|
|
$
244,086
|
Restricted cash and
equivalents
|
95,667
|
|
94,903
|
Short-term
investments
|
11,713
|
|
77,693
|
Accounts
receivable
|
2,024,827
|
|
2,132,070
|
Inventories
|
109,620
|
|
109,122
|
Other
receivables
|
352,965
|
|
413,976
|
Prepaid and other
current assets
|
91,109
|
|
78,839
|
Income tax
receivable
|
—
|
|
4,603
|
Total current
assets
|
3,135,359
|
|
3,155,292
|
Property and equipment,
net of accumulated depreciation of $5,650,912 and $5,265,372,
respectively
|
3,097,483
|
|
3,256,397
|
Operating lease
right-of-use assets
|
2,509,416
|
|
2,666,242
|
Intangible assets, net
of accumulated amortization of $37,738 and $49,772,
respectively
|
185,403
|
|
182,687
|
Equity method and other
investments
|
565,394
|
|
231,108
|
Long-term
investments
|
45,320
|
|
44,329
|
Other long-term
assets
|
302,142
|
|
315,587
|
Goodwill
|
7,088,223
|
|
7,076,610
|
|
$
16,928,740
|
|
$
16,928,252
|
LIABILITIES AND
EQUITY
|
|
|
|
Accounts
payable
|
$
435,417
|
|
$
479,780
|
Other
liabilities
|
808,000
|
|
802,469
|
Accrued compensation
and benefits
|
770,184
|
|
692,654
|
Current portion of
operating lease liabilities
|
393,440
|
|
395,401
|
Current portion of
long-term debt
|
108,558
|
|
231,404
|
Income tax
payable
|
22,331
|
|
18,039
|
Total current
liabilities
|
2,537,930
|
|
2,619,747
|
Long-term operating
lease liabilities
|
2,342,170
|
|
2,503,068
|
Long-term
debt
|
8,285,146
|
|
8,692,617
|
Other long-term
liabilities
|
184,944
|
|
105,233
|
Deferred income
taxes
|
753,871
|
|
782,787
|
Total
liabilities
|
14,104,061
|
|
14,703,452
|
Commitments and
contingencies
|
|
|
|
Noncontrolling
interests subject to put provisions
|
1,445,403
|
|
1,348,908
|
Equity:
|
|
|
|
Preferred stock
($0.001 par value, 5,000 shares authorized; none issued)
|
—
|
|
—
|
Common stock ($0.001
par value, 450,000 shares authorized; 91,348 and 90,411 shares
issued
and outstanding
at September 30, 2023 and December 31, 2022,
respectively)
|
91
|
|
90
|
Additional paid-in
capital
|
552,651
|
|
606,935
|
Retained
earnings
|
715,357
|
|
174,487
|
Accumulated other
comprehensive loss
|
(68,898)
|
|
(69,186)
|
Total DaVita Inc.
shareholders' equity
|
1,199,201
|
|
712,326
|
Noncontrolling
interests not subject to put provisions
|
180,075
|
|
163,566
|
Total
equity
|
1,379,276
|
|
875,892
|
|
$
16,928,740
|
|
$
16,928,252
|
DAVITA
INC. SUPPLEMENTAL FINANCIAL
DATA (unaudited)
(dollars in millions and shares in thousands, except per treatment
data)
|
|
|
Three months
ended
|
|
Nine months
ended
September 30,
2023
|
|
September
30,
2023
|
|
June 30,
2023
|
|
1. Consolidated
business metrics:
|
|
|
|
|
|
Operating
margin
|
15.9 %
|
|
13.5 %
|
|
13.5 %
|
Adjusted operating
margin excluding certain items(1)(2)
|
16.8 %
|
|
14.4 %
|
|
14.5 %
|
General and
administrative expenses as a percent of consolidated
revenues(3)
|
12.1 %
|
|
12.1 %
|
|
11.9 %
|
Effective income tax
rate on income
|
18.2 %
|
|
16.5 %
|
|
18.2 %
|
Effective income tax
rate on income attributable to DaVita Inc.(1)
|
21.8 %
|
|
21.3 %
|
|
22.9 %
|
Effective income tax
rate on adjusted income attributable to DaVita
Inc.(1)
|
22.1 %
|
|
21.6 %
|
|
23.2 %
|
|
|
|
|
|
|
2. Summary of
financial results:
|
|
|
|
|
|
Revenues:
|
|
|
|
|
|
U.S. dialysis patient
services and other
|
$ 2,785
|
|
$ 2,731
|
|
$ 8,128
|
Other—Ancillary
services
|
|
|
|
|
|
Integrated kidney
care
|
158
|
|
94
|
|
351
|
Other U.S.
ancillary
|
4
|
|
7
|
|
18
|
International dialysis
patient service and other
|
200
|
|
190
|
|
569
|
|
363
|
|
292
|
|
938
|
Eliminations
|
(27)
|
|
(22)
|
|
(72)
|
Total consolidated
revenues
|
$ 3,121
|
|
$ 3,000
|
|
$ 8,994
|
Operating income
(loss):
|
|
|
|
|
|
U.S.
dialysis
|
$
509
|
|
$
461
|
|
$ 1,331
|
Other—Ancillary
services
|
|
|
|
|
|
Integrated kidney
care
|
11
|
|
(39)
|
|
(66)
|
Other U.S.
ancillary
|
(2)
|
|
(2)
|
|
(7)
|
International(4)
|
19
|
|
20
|
|
54
|
|
28
|
|
(22)
|
|
(18)
|
Corporate
administrative support expenses
|
(41)
|
|
(34)
|
|
(100)
|
Total consolidated
operating income
|
$
496
|
|
$
405
|
|
$ 1,213
|
DAVITA
INC. SUPPLEMENTAL FINANCIAL DATA -
continued (unaudited) (dollars in millions and
shares in thousands, except per treatment data)
|
|
|
Three months
ended
|
|
Nine months
ended
September 30,
2023
|
|
September
30,
2023
|
|
June 30,
2023
|
|
3. Summary of
reportable segment financial results and metrics:
|
|
|
|
|
|
U.S.
dialysis
|
|
|
|
|
|
Financial
results
|
|
|
|
|
|
Revenue:
|
|
|
|
|
|
Dialysis patient
service revenues
|
$ 2,779
|
|
$ 2,724
|
|
$ 8,109
|
Other
revenues
|
6
|
|
6
|
|
19
|
Total operating
revenues
|
2,785
|
|
2,731
|
|
8,128
|
Operating
expenses:
|
|
|
|
|
|
Patient care
costs
|
1,827
|
|
1,826
|
|
5,485
|
General and
administrative
|
281
|
|
279
|
|
819
|
Depreciation and
amortization
|
176
|
|
172
|
|
515
|
Equity investment
income
|
(8)
|
|
(8)
|
|
(22)
|
Total operating
expenses
|
2,276
|
|
2,270
|
|
6,797
|
Segment operating
income
|
$
509
|
|
$
461
|
|
$ 1,331
|
Reconciliation
for non-GAAP measure:
|
|
|
|
|
|
Closure
charges
|
24
|
|
21
|
|
67
|
Severance and other
costs
|
4
|
|
5
|
|
26
|
Adjusted segment
operating income(1)
|
$
537
|
|
$
487
|
|
$ 1,425
|
Metrics
|
|
|
|
|
|
Volume:
|
|
|
|
|
|
Treatments
|
7,306,948
|
|
7,231,242
|
|
21,655,618
|
Number of treatment
days
|
79.0
|
|
78.0
|
|
234.0
|
Average treatments per
day
|
92,493
|
|
92,708
|
|
92,545
|
Per day year-over-year
(decrease) increase
|
(0.4) %
|
|
(0.5) %
|
|
(0.3) %
|
Normalized
year-over-year non-acquired treatment
growth(5)
|
0.5 %
|
|
(0.2) %
|
|
|
Operating net
revenues:
|
|
|
|
|
|
Average patient
service revenue per treatment
|
$
380.33
|
|
$
376.73
|
|
$
374.46
|
Expenses:
|
|
|
|
|
|
Patient care costs per
treatment
|
$
250.08
|
|
$
252.57
|
|
$
253.30
|
General and
administrative expenses per treatment
|
$ 38.40
|
|
$ 38.60
|
|
$ 37.81
|
Depreciation and
amortization expense per treatment
|
$ 24.08
|
|
$ 23.76
|
|
$ 23.77
|
Accounts
receivable:
|
|
|
|
|
|
Receivables
|
$ 1,708
|
|
$ 1,700
|
|
|
DSO
|
57
|
|
57
|
|
|
DAVITA
INC. SUPPLEMENTAL FINANCIAL DATA -
continued (unaudited) (dollars in millions and
shares in thousands, except per treatment data)
|
|
|
Three months
ended
|
|
Nine months
ended
September 30,
2023
|
|
September
30,
2023
|
|
June 30,
2023
|
|
4. Cash
flow:
|
|
|
|
|
|
Operating cash
flow
|
$
661
|
|
$
450
|
|
$
1,574
|
Operating cash flow,
last twelve months
|
$ 1,918
|
|
$ 1,967
|
|
|
Free cash
flow(1)
|
$
453
|
|
$
260
|
|
$
979
|
Free cash flow, last
twelve months(1)
|
$ 1,054
|
|
$ 1,100
|
|
|
Capital
expenditures:
|
|
|
|
|
|
Routine
maintenance/IT/other
|
$
93
|
|
$
86
|
|
$
287
|
Development and
relocations
|
$
44
|
|
$
39
|
|
$
122
|
Acquisition
expenditures
|
$
5
|
|
$
3
|
|
$
8
|
Proceeds from sale of
self-developed properties
|
$
4
|
|
$
2
|
|
$
5
|
|
|
|
|
|
|
5. Debt and capital
structure:
|
|
|
|
|
|
Total
debt(6)
|
$ 8,451
|
|
$ 8,760
|
|
|
Net debt, net of cash
and cash equivalents(6)
|
$ 8,002
|
|
$ 8,432
|
|
|
Leverage
ratio(7)
|
3.27x
|
|
3.69x
|
|
|
Weighted average
effective interest rate:
|
|
|
|
|
|
During the
quarter
|
4.61 %
|
|
4.67 %
|
|
|
At end of the
quarter
|
4.56 %
|
|
4.66 %
|
|
|
On the senior secured
credit facilities at end of the quarter
|
4.70 %
|
|
4.90 %
|
|
|
Debt with fixed and
capped rates as a percentage of total debt:
|
|
|
|
|
|
Debt with rates fixed
by its terms
|
54 %
|
|
52 %
|
|
|
Debt with rates fixed
by its terms or capped by cap agreements
|
95 %
|
|
92 %
|
|
|
|
Certain columns, rows
or percentages may not sum or recalculate due to the presentation
of rounded numbers.
|
_________________
|
(1)
|
These are non-GAAP
financial measures. For a reconciliation of these non-GAAP
financial measures to their most comparable measure calculated and
presented in accordance with GAAP, and for a definition of adjusted
amounts, see attached reconciliation schedules.
|
(2)
|
Adjusted operating
income margin is adjusted operating income divided by consolidated
revenues.
|
(3)
|
General and
administrative expenses include certain corporate support,
long-term incentive compensation and advocacy costs.
|
(4)
|
The reported operating
income for the three months ended September 30, 2023, and June 30,
2023 and for the nine months ended September 30, 2023 includes
foreign currency gains embedded in equity method income recognized
from our Asia Pacific joint venture of approximately $0.4, $1.2 and
$1.0, respectively.
|
(5)
|
Normalized non-acquired
treatment growth reflects year-over-year growth in treatment
volume, adjusted to exclude acquisitions and other similar
transactions, and further adjusted to normalize for the number and
mix of treatment days in a given quarter versus the prior year
quarter.
|
(6)
|
The debt amounts as of
September 30, 2023 and June 30, 2023 presented exclude
approximately $57.5 and $60.6, respectively, of debt discount,
premium and other deferred financing costs related to our senior
secured credit facilities and senior notes in effect or outstanding
at that time.
|
(7)
|
See Note 1: Calculation
of the Leverage Ratio on page 14.
|
DAVITA INC.
SUPPLEMENTAL FINANCIAL
DATA-continued
(unaudited)
(dollars in
millions)
Note 1: Calculation of the Leverage Ratio
Under our amended senior secured credit facilities (the Amended
Credit Agreement) dated April 28,
2023 the leverage ratio is defined as (a) all funded debt,
minus unrestricted cash and cash equivalents (including short-term
investments) not to exceed $750
divided by (b) "Consolidated EBITDA." The leverage ratio determines
the interest rate margin payable by the Company for its Term Loan
A-1 and new revolving line of credit under the Amended Credit
Agreement by establishing the margin over the base interest rate
(SOFR plus credit spread adjustment) that is applicable. The
calculation below is based on the last 12 months of "Consolidated
EBITDA" and "Consolidated net debt" at the end of each reported
period, each as defined in the credit agreement. The calculation of
"Consolidated EBITDA" below sets forth, among other things, certain
pro forma adjustments described in the Amended Credit Agreement,
including pro forma adjustments for acquisitions or divestitures
that occurred during the period and certain projected net cost
savings, expense reductions and cost synergies. These pro forma
adjustments are determined according to specified criteria set
forth in the Amended Credit Agreement, and as a result, the total
adjustments calculated may not be comparable to the Company's
estimates for other purposes, including as operating performance
measures. The Company's management believes the presentation of
"Consolidated EBITDA" is useful to investors to enhance their
understanding of the Company's leverage ratio under the Amended
Credit Agreement and should not be evaluated for any other
purpose. The leverage ratio calculated by the Company is
a non-GAAP measure and should not be considered a substitute for
the ratio of total debt to operating income, determined in
accordance with GAAP. The Company's calculation of its
leverage ratio might not be calculated in the same manner as, and
thus might not be comparable to, similarly titled measures of other
companies.
|
Twelve months
ended
|
|
September
30,
2023
|
|
June 30,
2023
|
Net income from
continuing operations attributable to DaVita Inc.
|
$
596
|
|
$
454
|
Income taxes
|
196
|
|
170
|
Interest
expense
|
362
|
|
367
|
Depreciation and
amortization
|
744
|
|
750
|
Net income attributable
to noncontrolling interests
|
244
|
|
241
|
Stock-settled
stock-based compensation
|
98
|
|
99
|
Debt extinguishment and
modification costs
|
8
|
|
8
|
Expected cost savings
and expense reductions
|
65
|
|
73
|
Severance and other
related costs
|
54
|
|
49
|
Other
|
81
|
|
71
|
"Consolidated
EBITDA"
|
$
2,447
|
|
$
2,281
|
|
|
|
|
|
September
30,
2023
|
|
June 30,
2023
|
Total debt, excluding
debt discount and other deferred financing
costs(1)
|
$
8,451
|
|
$
8,760
|
Less: Cash and cash
equivalents including short-term
investments(2)
|
(457)
|
|
(336)
|
Consolidated net
debt
|
$
7,994
|
|
$
8,424
|
Last twelve months
"Consolidated EBITDA"
|
$
2,447
|
|
$
2,281
|
Leverage
ratio
|
3.27x
|
|
3.69x
|
Maximum leverage ratio
permitted under the Credit Agreement
|
5.00x
|
|
5.00x
|
|
Certain columns or rows
may not sum or recalculate due to the presentation of rounded
numbers.
|
________________________
|
(1)
|
The debt amounts as of
September 30, 2023 and June 30, 2023 presented exclude
approximately $57.5 and $60.6, respectively, of debt discount,
premium and other deferred financing costs related to our senior
secured credit facilities and senior notes in effect or outstanding
at that time.
|
(2)
|
This excludes amounts
not readily convertible to cash related to the Company's
non-qualified deferred compensation plans for all periods
presented. The Amended Credit Agreement limits the amount deducted
for cash and cash equivalents, including short-term investments, to
the lesser of all unrestricted cash and cash equivalents, including
short-term investments of the Company or $750.
|
DAVITA INC.
INTEGRATED CARE
METRICS
(unaudited)
Note 2: Integrated Care Metrics
Our integrated kidney care (IKC) business is party to a variety
of risk-based integrated care and disease management arrangements,
including value-based care (VBC) contracts under which we assume
full or shared financial risk for the total medical cost of care
for patients below or above a benchmark.
The aggregate amount of medical spend associated with risk-based
integrated care arrangements that we disclose includes both medical
costs included in our reported expenses for certain risk-based
arrangements (such as our special needs plans), as well as the
aggregate estimated benchmark amount above or below which we will
incur profit or loss from VBC arrangements under which
third-party medical costs are not included in our reported results.
This metric is an annualization of our estimate of this amount for
the most recent quarter.
A number of our VBC contracts are subject to complex or novel
patient attribution mechanics and benchmark adjustments, some of
which are based on information not reported to us until periods
after we report our quarterly results. As a result, our estimates
of our patients under, and the dollar amount of, our value-based
contracts remain subject to estimation uncertainty.
DAVITA INC.
RECONCILIATIONS FOR
NON-GAAP MEASURES
(unaudited)
Note on Non-GAAP Financial Measures
As used in this press release, the term "adjusted" refers to
non-GAAP measures as follows, each as reconciled to its most
comparable GAAP measure as presented in the non-GAAP
reconciliations in the notes to this press release: (i) for income
and expense measures, the term "adjusted" refers to operating
performance measures that exclude certain items such as impairment
charges, (gain) loss on ownership changes, capacity closure
charges, restructuring charges, accruals for legal matters and debt
prepayment and refinancing charges; and (ii) the term "effective
income tax rate on adjusted income attributable to DaVita Inc."
represents the Company's effective tax rate excluding applicable
non-GAAP items and the tax associated with them as well as
noncontrolling owners' income, which primarily relates to non-tax
paying entities.
These non-GAAP or "adjusted" measures are presented because
management believes these measures are useful adjuncts to GAAP
results. However, these non-GAAP measures should not be considered
alternatives to the corresponding measures determined under
GAAP.
Specifically, management uses adjusted measures of operating
expenses for its U.S. dialysis business, adjusted U.S. dialysis
patient care costs per treatment, adjusted operating income,
adjusted net income attributable to DaVita Inc. and adjusted
diluted net income per share attributable to DaVita Inc. to compare
and evaluate our performance period over period and relative to
competitors, to analyze the underlying trends in our business, to
establish operational budgets and forecasts and for incentive
compensation purposes. We believe these non-GAAP measures also are
useful to investors and analysts in evaluating our performance over
time and relative to competitors, as well as in analyzing the
underlying trends in our business. Furthermore, we believe these
presentations enhance a user's understanding of our normal
consolidated results by excluding certain items which we do not
believe are indicative of our ordinary results of operations. As a
result, adjusting for these amounts allows for comparison to our
normalized prior period results.
The effective income tax rate on adjusted income attributable to
DaVita Inc. excludes noncontrolling owners' income and certain
non-deductible and other charges which we do not believe are
indicative of our ordinary results. Accordingly, we believe these
adjusted effective income tax rates are useful to management,
investors and analysts in evaluating our performance and
establishing expectations for income taxes incurred on our ordinary
results attributable to DaVita Inc.
Finally, free cash flow represents net cash provided by
operating activities less distributions to noncontrolling interests
and all capital expenditures (including development capital
expenditures, routine maintenance and information technology); plus
contributions from noncontrolling interests and proceeds from the
sale of self-developed properties. Management uses this measure to
assess our ability to fund acquisitions and meet our debt service
obligations and we believe this measure is equally useful to
investors and analysts as an adjunct to cash flows from operating
activities and other measures under GAAP.
It is important to bear in mind that these non-GAAP "adjusted"
measures are not measures of financial performance or liquidity
under GAAP and should not be considered in isolation from, nor as
substitutes for, their most comparable GAAP measures.
The following Notes 3 through 7 provide reconciliations of the
non-GAAP financial measures presented in this press release to
their most comparable GAAP measures.
DAVITA INC.
RECONCILIATIONS FOR
NON-GAAP MEASURES -
continued
(unaudited)
(dollars in millions,
except per share data)
Note 3: Adjusted net income and adjusted diluted
net income per share attributable to DaVita Inc.
|
Three months
ended
|
|
Nine months
ended
|
|
September
30,
2023
|
|
June 30,
2023
|
|
September
30,
2023
|
|
September
30,
2022
|
|
Dollars
|
|
Per
share
|
|
Dollars
|
|
Per
share
|
|
Dollars
|
|
Per
share
|
|
Dollars
|
|
Per
share
|
Consolidated:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income attributable
to DaVita Inc.
|
$ 247
|
|
$
2.62
|
|
$ 179
|
|
$
1.91
|
|
$ 541
|
|
$
5.80
|
|
$ 492
|
|
$
5.07
|
Closure charges
impacting:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Patient care
costs
|
4
|
|
0.05
|
|
6
|
|
0.06
|
|
23
|
|
0.24
|
|
15
|
|
0.16
|
General and
administrative:
|
3
|
|
0.04
|
|
8
|
|
0.08
|
|
16
|
|
0.17
|
|
14
|
|
0.15
|
Depreciation and
amortization
|
16
|
|
0.17
|
|
8
|
|
0.08
|
|
29
|
|
0.31
|
|
22
|
|
0.22
|
Total closure
charges
|
24
|
|
0.26
|
|
21
|
|
0.23
|
|
67
|
|
0.72
|
|
50
|
|
0.52
|
Severance and other
costs
|
5
|
|
0.05
|
|
5
|
|
0.06
|
|
28
|
|
0.30
|
|
—
|
|
—
|
Other income — Mozarc
gain
|
—
|
|
—
|
|
(14)
|
|
(0.15)
|
|
(14)
|
|
(0.15)
|
|
—
|
|
—
|
Debt extinguishment and
modification costs
|
—
|
|
—
|
|
8
|
|
0.09
|
|
8
|
|
0.09
|
|
—
|
|
—
|
Related income
tax
|
(7)
|
|
(0.08)
|
|
(5)
|
|
(0.05)
|
|
(22)
|
|
(0.24)
|
|
(13)
|
|
(0.13)
|
Adjusted net income
attributable to DaVita Inc.
|
$ 268
|
|
$
2.85
|
|
$ 194
|
|
$
2.08
|
|
$ 608
|
|
$
6.51
|
|
$ 530
|
|
$
5.46
|
|
Certain columns, rows
or percentages may not sum or recalculate due to the presentation
of rounded numbers.
|
DAVITA INC.
RECONCILIATIONS FOR
NON-GAAP MEASURES -
continued
(unaudited)
(dollars in millions,
except per share data)
Note 4: Adjusted operating income
|
Three months
ended
|
|
Nine months
ended
|
|
September
30,
2023
|
|
June 30,
2023
|
|
September
30,
2023
|
|
September
30,
2022
|
Consolidated:
|
|
|
|
|
|
|
|
Operating
income
|
$
496
|
|
$
405
|
|
$
1,213
|
|
$
1,083
|
Closure charges
impacting:
|
|
|
|
|
|
|
|
Patient care
costs
|
4
|
|
6
|
|
23
|
|
15
|
General and
administrative:
|
3
|
|
8
|
|
16
|
|
14
|
Depreciation and
amortization
|
16
|
|
8
|
|
29
|
|
22
|
Total closure
charges
|
24
|
|
21
|
|
67
|
|
50
|
Severance and other
costs
|
5
|
|
5
|
|
28
|
|
—
|
Adjusted operating
income
|
$
525
|
|
$
432
|
|
$
1,308
|
|
$
1,133
|
|
Three months
ended
|
|
Nine months
ended
|
|
September
30,
2023
|
|
June 30,
2023
|
|
September
30,
2023
|
|
September
30,
2022
|
Consolidated:
|
|
|
|
|
|
|
|
U.S.
dialysis:
|
|
|
|
|
|
|
|
Segment operating
income
|
$
509
|
|
$
461
|
|
$
1,331
|
|
$
1,231
|
Closure
charges
|
24
|
|
21
|
|
67
|
|
50
|
Severance and other
costs
|
4
|
|
5
|
|
26
|
|
—
|
Adjusted U.S. dialysis
operating income
|
537
|
|
487
|
|
1,425
|
|
1,281
|
Other - Ancillary
services:
|
|
|
|
|
|
|
|
U.S.
|
|
|
|
|
|
|
|
Integrated kidney
care
|
11
|
|
(39)
|
|
(66)
|
|
(90)
|
Other U.S.
ancillary
|
(2)
|
|
(2)
|
|
(7)
|
|
(8)
|
Segment operating
loss
|
9
|
|
(42)
|
|
(72)
|
|
(98)
|
Severance and other
costs
|
—
|
|
—
|
|
—
|
|
—
|
Adjusted operating
loss
|
9
|
|
(42)
|
|
(72)
|
|
(98)
|
International
|
|
|
|
|
|
|
|
Segment operating
income
|
19
|
|
20
|
|
54
|
|
41
|
Other - Ancillary
services operating loss
|
28
|
|
(22)
|
|
(18)
|
|
(57)
|
Corporate
administrative support expenses:
|
|
|
|
|
|
|
|
Segment
expenses
|
(41)
|
|
(34)
|
|
(100)
|
|
(91)
|
Severance and other
costs
|
—
|
|
—
|
|
1
|
|
—
|
Adjusted Corporate
administrative support expenses
|
(41)
|
|
(33)
|
|
(98)
|
|
(91)
|
Adjusted operating
income
|
$
525
|
|
$
432
|
|
$
1,308
|
|
$
1,133
|
|
Certain columns, rows
or percentages may not sum or recalculate due to the presentation
of rounded numbers.
|
DAVITA INC.
RECONCILIATIONS FOR
NON-GAAP MEASURES -
continued
(unaudited)
(dollars in millions,
except per share data)
Note 5: Adjusted U.S. dialysis expense
measures
|
Three months
ended
|
|
September 30,
2023
|
|
June 30,
2023
|
|
GAAP
|
|
Non-GAAP
adjustment
|
|
Adjusted
|
|
GAAP
|
|
Non-GAAP
adjustment
|
|
Adjusted
|
|
(dollars in
millions)
|
U.S.
dialysis
|
|
|
|
|
|
|
|
|
|
|
|
Treatments
|
7,306,948
|
|
|
|
7,306,948
|
|
7,231,242
|
|
|
|
7,231,242
|
Operating
expenses:
|
|
|
|
|
|
|
|
|
|
|
|
Patient care
costs
|
$ 1,827
|
|
$
(4)
|
|
$ 1,823
|
|
$ 1,826
|
|
$
(6)
|
|
$ 1,821
|
General and
administrative
|
281
|
|
(8)
|
|
273
|
|
279
|
|
(13)
|
|
266
|
Depreciation and
amortization
|
176
|
|
(16)
|
|
160
|
|
172
|
|
(8)
|
|
164
|
Equity investment
income
|
(8)
|
|
|
|
(8)
|
|
(8)
|
|
|
|
(8)
|
Total operating
expenses
|
$ 2,276
|
|
$
(28)
|
|
$ 2,248
|
|
$ 2,270
|
|
$
(26)
|
|
$ 2,244
|
Patient care costs per
treatment(1)
|
$
250.08
|
|
|
|
$
249.48
|
|
$
252.57
|
|
|
|
$
251.78
|
|
Certain columns, rows,
per treatment amounts or percentages may not sum or recalculate due
to the presentation of rounded numbers.
|
_______________________
|
(1)
|
Patient care costs per
treatment and adjusted patient care costs per treatment are patient
care costs or adjusted patient care costs divided by number of U.S.
dialysis treatments, respectively.
|
DAVITA INC.
RECONCILIATIONS FOR
NON-GAAP MEASURES -
continued
(unaudited)
(dollars in
millions)
Note 6: Effective income tax rates on income
attributable to DaVita Inc.
|
Three months
ended
|
|
Nine months
ended September
30, 2023
|
|
September
30,
2023
|
|
June 30,
2023
|
|
Income before income
taxes
|
$
378
|
|
$
295
|
|
$
888
|
Noncontrolling owners'
income primarily attributable to non-tax paying entities
|
(63)
|
|
(68)
|
|
(186)
|
Income before income
taxes attributable to DaVita Inc.
|
$
315
|
|
$
227
|
|
$
702
|
|
|
|
|
|
|
Income tax
expense
|
$
69
|
|
$
49
|
|
$
162
|
Income tax
attributable to noncontrolling interests
|
—
|
|
—
|
|
(1)
|
Income tax expense
attributable to DaVita Inc.
|
$
69
|
|
$
48
|
|
$
161
|
|
|
|
|
|
|
Effective income tax
rate on income attributable to DaVita Inc.
|
21.8 %
|
|
21.3 %
|
|
22.9 %
|
The effective income tax rate on adjusted income attributable to
DaVita Inc. is computed as follows:
|
Three months
ended
|
Nine months
ended September
30, 2023
|
September
30,
2023
|
|
June 30,
2023
|
|
Income before income
taxes
|
$
378
|
|
$
295
|
|
$
888
|
Closure charges
impacting:
|
|
|
|
|
|
Patient care
costs
|
4
|
|
6
|
|
23
|
General and
administrative:
|
3
|
|
8
|
|
16
|
Depreciation and
amortization
|
16
|
|
8
|
|
29
|
Severance and other
costs
|
5
|
|
5
|
|
28
|
Other income — Mozarc
gain
|
—
|
|
(14)
|
|
(14)
|
Debt extinguishment
and modification costs
|
—
|
|
8
|
|
8
|
Noncontrolling owners'
income primarily attributable to non-tax paying entities
|
(63)
|
|
(68)
|
|
(186)
|
Adjusted income before
income taxes attributable to DaVita Inc.
|
$
344
|
|
$
247
|
|
$
791
|
Income tax
expense
|
$
69
|
|
$
49
|
|
$
162
|
Plus income tax related
to:
|
|
|
|
|
|
Closure charges
impacting:
|
|
|
|
|
|
Patient care
costs
|
1
|
|
1
|
|
6
|
General and
administrative:
|
1
|
|
2
|
|
4
|
Depreciation and
amortization
|
4
|
|
2
|
|
7
|
Severance and other
costs
|
1
|
|
1
|
|
7
|
Other income — Mozarc
gain
|
—
|
|
(3)
|
|
(3)
|
Debt extinguishment
and modification costs
|
—
|
|
2
|
|
2
|
Less income tax related
to:
|
|
|
|
|
|
Noncontrolling
interests
|
—
|
|
—
|
|
(1)
|
Income tax on adjusted
income attributable to DaVita Inc.
|
$
76
|
|
$
53
|
|
$
183
|
Effective income tax
rate on adjusted income attributable to DaVita Inc.
|
22.1 %
|
|
21.6 %
|
|
23.2 %
|
|
Certain columns, rows
or percentages may not sum or recalculate due to the presentation
of rounded numbers.
|
DAVITA INC.
RECONCILIATIONS FOR
NON-GAAP MEASURES -
continued
(unaudited)
(dollars in millions,
except per share data)
Note 7: Free cash flow
|
Three months
ended
|
|
Nine months
ended September 30,
2023
|
|
September
30,
2023
|
|
June 30,
2023
|
|
September
30,
2022
|
|
Net cash provided by
operating activities
|
$
661
|
|
$
450
|
|
$
711
|
|
$
1,574
|
Adjustments to
reconcile net cash provided by operating activities to
free cash
flow:
|
|
|
|
|
|
|
|
Distributions to
noncontrolling interests
|
(79)
|
|
(69)
|
|
(70)
|
|
(203)
|
Contributions from
noncontrolling interests
|
5
|
|
2
|
|
2
|
|
12
|
Expenditures for
routine maintenance and information technology
|
(93)
|
|
(86)
|
|
(104)
|
|
(287)
|
Expenditures for
development and relocations
|
(44)
|
|
(39)
|
|
(40)
|
|
(122)
|
Proceeds from sale of
self-developed properties
|
4
|
|
2
|
|
1
|
|
5
|
Free cash
flow
|
$
453
|
|
$
260
|
|
$
500
|
|
$
979
|
|
Twelve months
ended
|
|
September
30,
2023
|
|
June 30,
2023
|
|
September
30,
2022
|
Net cash provided by
operating activities
|
$
1,918
|
|
$
1,967
|
|
$
1,751
|
Adjustments to
reconcile net cash provided by operating activities to free cash
flow:
|
|
|
|
|
|
Distributions to
noncontrolling interests
|
(283)
|
|
(274)
|
|
(255)
|
Contributions from
noncontrolling interests
|
15
|
|
13
|
|
15
|
Expenditures for
routine maintenance and information technology
|
(434)
|
|
(445)
|
|
(416)
|
Expenditures for
development and relocations
|
(169)
|
|
(165)
|
|
(182)
|
Proceeds from sale of
self-developed properties
|
7
|
|
4
|
|
120
|
Free cash
flow
|
$
1,054
|
|
$
1,100
|
|
$
1,032
|
|
Certain columns or rows
may not sum or recalculate due to the presentation of rounded
numbers.
|
Contact:
|
Investor
Relations
|
|
DaVita Inc.
|
|
ir@davita.com
|
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SOURCE DaVita