DENVER, Feb. 13,
2024 /PRNewswire/ -- DaVita Inc. (NYSE: DVA)
announced financial and operating results for the quarter and year
ended December 31, 2023.
"As we reflect on the past year, our 2023 financial performance
highlighted the resilience of our business," said Javier Rodriguez, CEO of DaVita Inc. "The
external challenges of recent years ultimately made us stronger,
and with continued investment in our teammates, systems, and
capabilities, we believe that we are well positioned for the years
ahead. We enter 2024 with more confidence than we have had since
the start of COVID in 2020."
Financial and operating highlights for the quarter and year
ended December 31, 2023:
- Consolidated revenues were $3.146
billion and $12.140 billion
for the three months and year ended December
31, 2023, respectively.
- Operating income was $390 million
and adjusted operating income was $415
million for the three months ended December 31, 2023. Operating income was
$1,603 million and adjusted operating
income was $1,734 million for year
ended December 31, 2023.
- Diluted earnings per share from continuing operations was
$1.62 and adjusted diluted earnings
per share from continuing operations was $1.87 for three months ended December 31, 2023. Diluted earnings per share
from continuing operations was $7.42
and adjusted diluted earnings per share from continuing operations
was $8.47 for year ended December 31, 2023.
- Operating cash flow was $485
million and free cash flow was $258
million for the three months ended December 31, 2023. Operating cash flow was
$2,059 million and free cash flow was
$1,236 million for the year ended
December 31, 2023.
- Repurchased 2,903,832 shares of our common stock at an average
price paid of $97.82 per share.
|
Three months
ended
|
|
Year ended December
31,
|
|
December 31,
2023
|
|
September 30,
2023
|
|
2023
|
|
2022
|
Net income
attributable to DaVita Inc.:
|
(dollars in
millions, except per share data)
|
Net income from
continuing operations
|
$
151
|
|
$
247
|
|
$
692
|
|
$
547
|
Diluted per
share
|
$
1.62
|
|
$
2.62
|
|
$
7.42
|
|
$
5.71
|
Adjusted net income
from continuing operations(1)
|
$
173
|
|
$
276
|
|
$
789
|
|
$
632
|
Adjusted diluted per
share(1)
|
$
1.87
|
|
$
2.94
|
|
$
8.47
|
|
$
6.60
|
Net income
|
$
151
|
|
$
247
|
|
$
692
|
|
$
560
|
Diluted per
share
|
$
1.62
|
|
$
2.62
|
|
$
7.42
|
|
$
5.85
|
___________________
|
(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
|
|
Year ended December
31,
|
|
December 31,
2023
|
|
September 30,
2023
|
|
2023
|
|
2022
|
|
Amount
|
|
Margin
|
|
Amount
|
|
Margin
|
|
Amount
|
|
Margin
|
|
Amount
|
|
Margin
|
Operating
income
|
(dollars in
millions)
|
Operating
income
|
$ 390
|
|
12.4 %
|
|
$ 496
|
|
15.9 %
|
|
$
1,603
|
|
13.2 %
|
|
$
1,339
|
|
11.5 %
|
Adjusted operating
income(1)
|
$ 415
|
|
|
|
$ 536
|
|
|
|
$
1,734
|
|
|
|
$
1,450
|
|
|
___________________
|
(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.
|
U.S. dialysis metrics:
Volume: Total U.S. dialysis treatments for the
fourth quarter of 2023 were 7,254,559, or an average of 92,533
treatments per day, representing a per day increase of 0.04%
compared to the third quarter of 2023. Normalized non-acquired
treatment growth in the fourth quarter of 2023 compared to the
fourth quarter of 2022 was 0.7%.
|
Three months
ended
|
|
Quarter
change
|
|
Year
ended
|
|
Year to
date
change
|
|
December 31,
2023
|
|
September
30,
2023
|
|
|
December 31,
2023
|
|
December 31,
2022
|
|
|
(dollars in
millions, except per treatment data)
|
Revenue per
treatment
|
$
386.31
|
|
$
380.33
|
|
$
5.98
|
|
$
377.44
|
|
$
365.24
|
|
$
12.20
|
Patient care costs per
treatment
|
$
263.19
|
|
$
250.08
|
|
$
13.11
|
|
$
255.78
|
|
$
253.31
|
|
$
2.47
|
General and
administrative
|
$
283
|
|
$
281
|
|
$
2
|
|
$
1,102
|
|
$
1,038
|
|
$
64
|
Primary drivers of the changes in the table above were as
follows:
Revenue: The quarter change was primarily due to the
seasonal impact of increased hospital inpatient dialysis revenues
and flu vaccines, revenue cycle improvements and other
fluctuations. The year to date change was primarily driven by
normal annual rate increases, including a net increase in Medicare
rate, improved cash collections, and favorable changes in
commercial and MA mix.
Patient care costs: The quarter change was primarily due
to increases in other direct operating expenses associated with our
dialysis centers, contributions to charitable organizations, health
benefit expense, compensation expenses and pharmaceutical unit
costs. The year to date change was primarily due to increases in
compensation expenses, other direct operating expenses associated
with our dialysis centers, medical supply costs, routine repairs
and maintenance, health benefit expenses and professional fees, as
well as increases in travel costs and center closure costs, as
described below. These increases were partially offset by decreased
pharmaceutical costs and contract wages.
General and administrative: The quarter change was
primarily due to seasonal increases in purchased services and
health benefit expense, as well as increases in contributions to
our charitable foundation, professional fees, and long-term
incentive compensation. These increases were partially offset by
decreased compensation expenses. The year to date change was
primarily due to increases in compensation expenses, decreases in
gains recognized on the sale of our self-developed properties, as
well as increases in IT-related costs, contributions to our
charitable foundation, travel costs and long-term incentive
compensation. These increases were partially offset by decreased
advocacy costs and professional fees.
Certain items impacting the quarter and year:
Integrated kidney care (IKC). IKC revenues for the fourth
quarter of 2023 increased compared to the third quarter of 2023 due
to a net increase in shared savings recognized on our value-based
care arrangements, partially offset by decreased revenues in our
special needs plans. The increase in the fourth quarter of 2023 was
primarily due to the lifting of certain revenue recognition
constraints for some of our value-based care contracts with health
plans, allowing us to recognize approximately $55 million in
incremental shared savings revenues.
Closure costs. During 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,
which began 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 and twelve months ended December 31, 2023,
we incurred charges for U.S. dialysis center closures of
approximately $31.8 million and
$99.1 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 $0.4 million during the fourth quarter of
2023 and $28.5 million during
the twelve months ended December 31,
2023.
Goodwill impairment and related items. During the
quarter ended December 31, 2023, we
recognized a non-cash goodwill charge of $26.1 million in our transplant software
business. We also recognized a gain of $7.7 million due to a reduction in the
estimated value of earn-out obligations from our original
acquisition of this business.
Share repurchases. During the three months ended
December 31, 2023, we repurchased
2,903,832 shares for $286 million, at
an average price paid of $97.82 per
share.
Subsequent to December 31, 2023
through February 12, 2024, the
Company has repurchased 1,507,000 shares of our common stock for
$164 million at an average price paid
of $107.97 per share.
Financial and operating metrics:
|
Three months
ended
December
31,
|
|
Twelve months
ended
December
31,
|
|
2023
|
|
2022
|
|
2023
|
|
2022
|
Cash
flow:
|
(dollars in
millions)
|
Operating cash
flow
|
$
485
|
|
$
344
|
|
$
2,059
|
|
$
1,565
|
Free cash
flow(1)
|
$
258
|
|
$
75
|
|
$
1,236
|
|
$
817
|
___________________
|
(1)
|
For definitions of
non-GAAP financial measures, see the note titled "Note on Non-GAAP
Financial Measures" and related reconciliations beginning on page
16.
|
|
Three months
ended
December 31, 2023
|
|
Year
ended
December 31,
2023
|
Effective income tax
rate on:
|
|
|
|
Income from continuing
operations
|
20.2 %
|
|
18.7 %
|
Income from continuing
operations attributable to DaVita Inc.(1)
|
29.0 %
|
|
24.3 %
|
Adjusted income from
continuing operations attributable to DaVita
Inc.(1)
|
26.7 %
|
|
24.0 %
|
___________________
|
(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.
|
Center activity: As of December 31, 2023, we
provided dialysis services to a total of approximately 250,200
patients at 3,042 outpatient dialysis centers, of which 2,675
centers were located in the United
States and 367 centers were located in 11 countries outside
of the United States. During the
fourth quarter of 2023, we opened a total of two new dialysis
centers and closed 21 dialysis centers in the United States. We also acquired eight
dialysis centers and closed one dialysis center outside of
the United States during the
fourth quarter of 2023.
IKC: As of December 31, 2023, we had approximately
58,000 patients in risk-based integrated care arrangements
representing approximately $4.6
billion in annualized medical spend. We also had an
additional 17,000 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 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 2024
guidance
|
|
Low
|
|
High
|
|
(dollars in
millions, except per share data)
|
Adjusted operating
income
|
$1,825
|
|
$1,975
|
Adjusted diluted net
income per share attributable to DaVita Inc.
|
$8.70
|
|
$9.80
|
Free cash
flow
|
$900
|
|
$1,150
|
We will be holding a conference call to discuss our results for
the fourth quarter ended December 31, 2023, on
February 13, 2024, 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, revenues, billings and collections, availability or cost
of supplies, treatment volumes, mix expectation, such as the
percentage or number of patients under commercial insurance,
current macroeconomic, marketplace and, labor market conditions,
and overall impact on our patients and teammates, as well as other
statements regarding our future operations, financial condition and
prospects, expenses, strategic initiatives, government and
commercial payment rates, expectations related to value-based care,
integrated kidney care, and Medicare Advantage (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 the
potential impact of innovative technologies, drugs or other
treatments, expectations regarding the impact of our continuing
cost savings initiatives 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:
- current macroeconomic and marketplace conditions, global
events and domestic political or governmental volatility, many of
which are interrelated and which relate to, among other things,
inflation, potential interest rate volatility, 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; 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 continuing legislative efforts
to restrict or prohibit the use and/or availability of charitable
premium assistance, such as AB 290, 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 acquisition, merger, joint venture or
similar transactions 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 invest in and 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 or renewing
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 MA 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, and with additional laws that may apply to our
operations as we expand geographically or enter into new lines of
business, including through acquisitions or joint
ventures;
- 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 oral phosphate binders, 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, 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,
June 30, and September 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 Annual Report on Form 10-K for the quarter ended
December 31, 2023.
DAVITA
INC.
CONSOLIDATED
STATEMENTS OF INCOME
(unaudited)
(dollars and shares
in thousands, except per share data)
|
|
|
Three months ended
December 31,
|
|
Year ended December
31,
|
|
2023
|
|
2022
|
|
2023
|
|
2022
|
Dialysis patient
service revenues
|
$
2,972,272
|
|
$
2,803,590
|
|
$
11,574,941
|
|
$
11,176,464
|
Other
revenues
|
173,475
|
|
113,298
|
|
565,206
|
|
433,430
|
Total
revenues
|
3,145,747
|
|
2,916,888
|
|
12,140,147
|
|
11,609,894
|
Operating
expenses:
|
|
|
|
|
|
|
|
Patient care
costs
|
2,138,369
|
|
2,088,681
|
|
8,319,717
|
|
8,209,553
|
General and
administrative
|
401,471
|
|
379,711
|
|
1,473,984
|
|
1,355,197
|
Depreciation and
amortization
|
195,277
|
|
194,068
|
|
745,443
|
|
732,602
|
Equity investment
income, net
|
(5,362)
|
|
(1,824)
|
|
(27,864)
|
|
(26,520)
|
Goodwill impairment
charges
|
26,083
|
|
—
|
|
26,083
|
|
—
|
Total operating
expenses
|
2,755,838
|
|
2,660,636
|
|
10,537,363
|
|
10,270,832
|
Operating
income
|
389,909
|
|
256,252
|
|
1,602,784
|
|
1,339,062
|
Debt
expense
|
(96,190)
|
|
(100,962)
|
|
(398,551)
|
|
(357,019)
|
Debt extinguishment
and modification costs
|
—
|
|
—
|
|
(7,962)
|
|
—
|
Other loss,
net
|
(4,652)
|
|
(7,797)
|
|
(19,177)
|
|
(15,765)
|
Income from continuing
operations before income taxes
|
289,067
|
|
147,493
|
|
1,177,094
|
|
966,278
|
Income tax
expense
|
58,495
|
|
34,330
|
|
220,116
|
|
198,087
|
Net income from
continuing operations
|
230,572
|
|
113,163
|
|
956,978
|
|
768,191
|
Net income from
discontinued operations, net of tax
|
—
|
|
13,452
|
|
—
|
|
13,452
|
Net income
|
230,572
|
|
126,615
|
|
956,978
|
|
781,643
|
Less: Net income
attributable to noncontrolling interests
|
(79,907)
|
|
(58,512)
|
|
(265,443)
|
|
(221,243)
|
Net income attributable
to DaVita Inc.
|
$
150,665
|
|
$
68,103
|
|
$
691,535
|
|
$
560,400
|
|
|
|
|
|
|
|
|
Earnings per share
attributable to DaVita Inc.:
|
|
|
|
|
|
|
|
Basic net income from
continuing operations
|
$
1.67
|
|
$
0.61
|
|
$
7.62
|
|
$
5.88
|
Basic net
income
|
$
1.67
|
|
$
0.76
|
|
$
7.62
|
|
$
6.03
|
Diluted net income
from continuing operations
|
$
1.62
|
|
$
0.59
|
|
$
7.42
|
|
$
5.71
|
Diluted net
income
|
$
1.62
|
|
$
0.74
|
|
$
7.42
|
|
$
5.85
|
|
|
|
|
|
|
|
|
Weighted average
shares for earnings per share:
|
|
|
|
|
|
|
|
Basic
shares
|
90,353
|
|
90,122
|
|
90,790
|
|
92,992
|
Diluted
shares
|
92,782
|
|
91,910
|
|
93,182
|
|
95,834
|
|
|
|
|
|
|
|
|
Amounts attributable
to DaVita Inc.:
|
|
|
|
|
|
|
|
Net income from
continuing operations
|
$
150,665
|
|
$
54,651
|
|
$
691,535
|
|
$
546,948
|
Net income from
discontinued operations
|
—
|
|
13,452
|
|
—
|
|
13,452
|
Net income
attributable to DaVita Inc.
|
$
150,665
|
|
$
68,103
|
|
$
691,535
|
|
$
560,400
|
DAVITA
INC.
CONSOLIDATED
STATEMENTS OF COMPREHENSIVE INCOME
(unaudited)
(dollars in
thousands)
|
|
|
Three months ended
December 31,
|
|
Year ended December
31,
|
|
2023
|
|
2022
|
|
2023
|
|
2022
|
Net income
|
$
230,572
|
|
$
126,615
|
|
$
956,978
|
|
$
781,643
|
Other comprehensive
income, net of tax:
|
|
|
|
|
|
|
|
Unrealized (losses)
gains on interest rate cap agreements:
|
|
|
|
|
|
|
|
Unrealized (losses)
gains
|
(21,411)
|
|
13,008
|
|
6,895
|
|
108,669
|
Reclassifications of
net realized gains into net income
|
(21,831)
|
|
(11,905)
|
|
(77,727)
|
|
(8,806)
|
Unrealized gains
(losses) on foreign currency translation:
|
60,056
|
|
65,262
|
|
87,934
|
|
(29,802)
|
Other comprehensive
income
|
16,814
|
|
66,365
|
|
17,102
|
|
70,061
|
Total comprehensive
income
|
247,386
|
|
192,980
|
|
974,080
|
|
851,704
|
Less: Comprehensive
income attributable to noncontrolling interests
|
(79,907)
|
|
(58,512)
|
|
(265,443)
|
|
(221,243)
|
Comprehensive income
attributable to DaVita Inc.
|
$
167,479
|
|
$
134,468
|
|
$
708,637
|
|
$
630,461
|
DAVITA
INC.
CONSOLIDATED
STATEMENTS OF CASH FLOWS
(unaudited)
(dollars in
thousands)
|
|
|
Year ended December
31,
|
|
2023
|
|
2022
|
Cash flows from
operating activities:
|
|
|
|
Net income
|
$
956,978
|
|
$
781,643
|
Adjustments to
reconcile net income to net cash provided by operating
activities:
|
|
|
|
Depreciation and
amortization
|
745,443
|
|
732,602
|
Impairment
charges
|
26,083
|
|
—
|
Loss on extinguishment
of debt
|
7,132
|
|
—
|
Stock-based
compensation expense
|
112,375
|
|
95,427
|
Deferred income
taxes
|
(39,354)
|
|
(75,669)
|
Equity investment
loss, net
|
64,777
|
|
8,773
|
Other non-cash
charges, net
|
(8,938)
|
|
21,693
|
Changes in operating
assets and liabilities, net of effect of acquisitions and
divestitures:
|
|
|
|
Accounts
receivable
|
172,361
|
|
(148,394)
|
Inventories
|
(32,132)
|
|
(757)
|
Other current
assets
|
(43,437)
|
|
27,533
|
Other long-term
assets
|
(5,792)
|
|
(50,549)
|
Accounts
payable
|
26,890
|
|
87,481
|
Accrued compensation
and benefits
|
56,209
|
|
34,536
|
Other current
liabilities
|
27,082
|
|
89,955
|
Income
taxes
|
1,570
|
|
(24,103)
|
Other long-term
liabilities
|
(8,216)
|
|
(15,601)
|
Net cash provided by
operating activities
|
2,059,031
|
|
1,564,570
|
Cash flows from
investing activities:
|
|
|
|
Additions of property
and equipment
|
(567,985)
|
|
(603,429)
|
Acquisitions
|
(26,394)
|
|
(57,308)
|
Proceeds from asset
and business sales
|
30,610
|
|
117,582
|
Purchase of debt
investments held-to-maturity
|
(37,180)
|
|
(129,803)
|
Purchase of other debt
and equity investments
|
(9,566)
|
|
(3,590)
|
Proceeds from debt
investments held-to-maturity
|
99,639
|
|
71,125
|
Proceeds from sale of
other debt and equity investments
|
10,365
|
|
3,781
|
Purchase of equity
method investments
|
(276,202)
|
|
(31,885)
|
Distributions from
equity method investments
|
4,913
|
|
3,962
|
Other
|
—
|
|
(782)
|
Net cash used in
investing activities
|
(771,800)
|
|
(630,347)
|
Cash flows from
financing activities:
|
|
|
|
Borrowings
|
2,468,341
|
|
2,393,116
|
Payments on long-term
debt
|
(3,020,956)
|
|
(2,404,395)
|
Deferred and debt
related financing costs
|
(69,791)
|
|
(3)
|
Purchase of treasury
stock
|
(272,219)
|
|
(802,228)
|
Distributions to
noncontrolling interests
|
(280,938)
|
|
(267,946)
|
Net payments related
to stock purchases and awards
|
(48,112)
|
|
(37,367)
|
Contributions from
noncontrolling interests
|
14,773
|
|
14,797
|
Proceeds from sales of
additional noncontrolling interests
|
50,962
|
|
3,673
|
Purchases of
noncontrolling interests
|
(12,555)
|
|
(20,775)
|
Net cash used in
financing activities
|
(1,170,495)
|
|
(1,121,128)
|
Effect of exchange rate
changes on cash, cash equivalents and restricted cash
|
8,909
|
|
(29,066)
|
Net increase (decrease)
in cash, cash equivalents and restricted cash
|
125,645
|
|
(215,971)
|
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
|
$
464,634
|
|
$
338,989
|
DAVITA
INC.
CONSOLIDATED BALANCE
SHEETS
(unaudited)
(dollars and shares
in thousands, except per share data)
|
|
|
December 31,
2023
|
|
December 31,
2022
|
ASSETS
|
|
|
|
Cash and cash
equivalents
|
$
380,063
|
|
$
244,086
|
Restricted cash and
equivalents
|
84,571
|
|
94,903
|
Short-term
investments
|
11,610
|
|
77,693
|
Accounts
receivable
|
1,986,856
|
|
2,132,070
|
Inventories
|
143,105
|
|
109,122
|
Other
receivables
|
422,669
|
|
413,976
|
Prepaid and other
current assets
|
102,645
|
|
78,839
|
Income tax
receivable
|
6,387
|
|
4,603
|
Total current
assets
|
3,137,906
|
|
3,155,292
|
Property and equipment,
net of accumulated depreciation of $5,759,514 and $5,265,372,
respectively
|
3,073,533
|
|
3,256,397
|
Operating lease
right-of-use assets
|
2,501,364
|
|
2,666,242
|
Intangible assets, net
of accumulated amortization of $38,445 and $49,772,
respectively
|
203,224
|
|
182,687
|
Equity method and other
investments
|
545,848
|
|
231,108
|
Long-term
investments
|
47,890
|
|
44,329
|
Other long-term
assets
|
271,253
|
|
315,587
|
Goodwill
|
7,112,560
|
|
7,076,610
|
|
$
16,893,578
|
|
$
16,928,252
|
LIABILITIES AND
EQUITY
|
|
|
|
Accounts
payable
|
$
514,533
|
|
$
479,780
|
Other
liabilities
|
828,878
|
|
802,469
|
Accrued compensation
and benefits
|
752,598
|
|
692,654
|
Current portion of
operating lease liabilities
|
394,399
|
|
395,401
|
Current portion of
long-term debt
|
123,299
|
|
231,404
|
Income tax
payable
|
28,507
|
|
18,039
|
Total current
liabilities
|
2,642,214
|
|
2,619,747
|
Long-term operating
lease liabilities
|
2,330,389
|
|
2,503,068
|
Long-term
debt
|
8,268,334
|
|
8,692,617
|
Other long-term
liabilities
|
183,074
|
|
105,233
|
Deferred income
taxes
|
726,217
|
|
782,787
|
Total
liabilities
|
14,150,228
|
|
14,703,452
|
Commitments and
contingencies
|
|
|
|
Noncontrolling
interests subject to put provisions
|
1,499,288
|
|
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; 88,824 and 90,411 shares
issued
and outstanding
at December 31, 2023 and December 31, 2022,
respectively)
|
89
|
|
90
|
Additional paid-in
capital
|
509,804
|
|
606,935
|
Retained
earnings
|
598,288
|
|
174,487
|
Accumulated other
comprehensive loss
|
(52,084)
|
|
(69,186)
|
Total DaVita Inc.
shareholders' equity
|
1,056,097
|
|
712,326
|
Noncontrolling
interests not subject to put provisions
|
187,965
|
|
163,566
|
Total
equity
|
1,244,062
|
|
875,892
|
|
$
16,893,578
|
|
$
16,928,252
|
DAVITA
INC.
SUPPLEMENTAL
FINANCIAL DATA
(unaudited)
(dollars in millions and shares in thousands, except per treatment
data)
|
|
|
Three months
ended
|
|
Year ended
December 31,
2023
|
|
December 31,
2023
|
|
September
30,
2023
|
|
1. Consolidated
business metrics:
|
|
|
|
|
|
Operating
margin
|
12.4 %
|
|
15.9 %
|
|
13.2 %
|
General and
administrative expenses as a percent of consolidated
revenues(1)
|
12.8 %
|
|
12.1 %
|
|
12.1 %
|
Effective income tax
rate on income
|
20.2 %
|
|
18.2 %
|
|
18.7 %
|
Effective income tax
rate on income attributable to DaVita Inc.(2)
|
29.0 %
|
|
21.8 %
|
|
24.3 %
|
Effective income tax
rate on adjusted income attributable to DaVita
Inc.(2)
|
26.7 %
|
|
22.1 %
|
|
24.0 %
|
|
|
|
|
|
|
2. Summary of
financial results:
|
|
|
|
|
|
Revenues:
|
|
|
|
|
|
U.S. dialysis patient
services and other
|
$ 2,809
|
|
$ 2,785
|
|
$
10,937
|
Other—Ancillary
services
|
|
|
|
|
|
Integrated kidney
care
|
160
|
|
158
|
|
511
|
Other U.S.
ancillary
|
7
|
|
4
|
|
25
|
International dialysis
patient service and other
|
194
|
|
200
|
|
763
|
|
361
|
|
363
|
|
1,299
|
Eliminations
|
(24)
|
|
(27)
|
|
(96)
|
Total consolidated
revenues
|
$ 3,146
|
|
$ 3,121
|
|
$
12,140
|
Operating income
(loss):
|
|
|
|
|
|
U.S.
dialysis
|
$
444
|
|
$
509
|
|
$ 1,775
|
Other—Ancillary
services
|
|
|
|
|
|
Integrated kidney
care
|
27
|
|
11
|
|
(39)
|
Other U.S.
ancillary
|
(19)
|
|
(2)
|
|
(25)
|
International(3)
|
1
|
|
19
|
|
55
|
|
10
|
|
28
|
|
(9)
|
Corporate
administrative support expenses
|
(63)
|
|
(41)
|
|
(163)
|
Total consolidated
operating income
|
$
390
|
|
$
496
|
|
$ 1,603
|
DAVITA
INC.
SUPPLEMENTAL
FINANCIAL DATA - continued
(unaudited)
(dollars in millions
and shares in thousands, except per treatment data)
|
|
|
Three months
ended
|
|
Year ended
December 31,
2023
|
|
December 31,
2023
|
|
September
30,
2023
|
|
3. Summary of
reportable segment financial results and metrics:
|
|
|
|
|
|
U.S.
dialysis
|
|
|
|
|
|
Financial
results
|
|
|
|
|
|
Revenue:
|
|
|
|
|
|
Dialysis patient
service revenues
|
$ 2,802
|
|
$ 2,779
|
|
$
10,912
|
Other
revenues
|
6
|
|
6
|
|
25
|
Total operating
revenues
|
2,809
|
|
2,785
|
|
10,937
|
Operating
expenses:
|
|
|
|
|
|
Patient care
costs
|
1,909
|
|
1,827
|
|
7,395
|
General and
administrative
|
283
|
|
281
|
|
1,102
|
Depreciation and
amortization
|
181
|
|
176
|
|
696
|
Equity investment
income
|
(8)
|
|
(8)
|
|
(30)
|
Total operating
expenses
|
2,365
|
|
2,276
|
|
9,162
|
Segment operating
income
|
$
444
|
|
$
509
|
|
$ 1,775
|
Reconciliation
for non-GAAP measure:
|
|
|
|
|
|
Closure
charges
|
32
|
|
24
|
|
99
|
Severance and other
costs
|
—
|
|
4
|
|
27
|
Adjusted segment
operating income(2)
|
$
476
|
|
$
537
|
|
$ 1,900
|
Metrics
|
|
|
|
|
|
Volume:
|
|
|
|
|
|
Treatments
|
7,254,559
|
|
7,306,948
|
|
28,910,177
|
Number of treatment
days
|
78.4
|
|
79.0
|
|
312.4
|
Average treatments per
day
|
92,533
|
|
92,493
|
|
92,542
|
Per day year-over-year
increase (decrease)
|
1.0 %
|
|
(0.4) %
|
|
— %
|
Normalized
year-over-year non-acquired treatment
growth(4)
|
0.7 %
|
|
0.5 %
|
|
|
Operating net
revenues:
|
|
|
|
|
|
Average patient
service revenue per treatment
|
$
386.31
|
|
$
380.33
|
|
$
377.44
|
Expenses:
|
|
|
|
|
|
Patient care costs per
treatment
|
$
263.19
|
|
$
250.08
|
|
$
255.78
|
General and
administrative expenses per treatment
|
$ 39.06
|
|
$ 38.40
|
|
$ 38.12
|
Depreciation and
amortization expense per treatment
|
$ 24.94
|
|
$ 24.08
|
|
$ 24.06
|
Accounts
receivable:
|
|
|
|
|
|
Receivables
|
$ 1,632
|
|
$ 1,708
|
|
|
DSO
|
54
|
|
57
|
|
|
DAVITA
INC.
SUPPLEMENTAL
FINANCIAL DATA - continued
(unaudited)
(dollars in millions
and shares in thousands, except per treatment data)
|
|
|
Three months
ended
|
|
Year ended
December 31,
2023
|
|
December 31,
2023
|
|
September
30,
2023
|
|
4. Cash
flow:
|
|
|
|
|
|
Operating cash
flow
|
$
485
|
|
$
661
|
|
$
2,059
|
Operating cash flow,
last twelve months
|
$ 2,059
|
|
$ 1,918
|
|
|
Free cash
flow(2)
|
$
258
|
|
$
453
|
|
$
1,236
|
Free cash flow, last
twelve months(2)
|
$ 1,236
|
|
$ 1,054
|
|
|
Capital
expenditures:
|
|
|
|
|
|
Routine
maintenance/IT/other
|
$
119
|
|
$
93
|
|
$
406
|
Development and
relocations
|
$
40
|
|
$
44
|
|
$
162
|
Acquisition
expenditures
|
$
18
|
|
$
5
|
|
$
26
|
Proceeds from sale of
self-developed properties
|
$
6
|
|
$
4
|
|
$
11
|
|
|
|
|
|
|
5. Debt and capital
structure:
|
|
|
|
|
|
Total
debt(5)
|
$ 8,446
|
|
$ 8,451
|
|
|
Net debt, net of cash
and cash equivalents(5)
|
$ 8,066
|
|
$ 8,002
|
|
|
Leverage
ratio(6)
|
3.15x
|
|
3.27x
|
|
|
Weighted average
effective interest rate:
|
|
|
|
|
|
During the
quarter
|
4.45 %
|
|
4.61 %
|
|
|
At end of the
quarter
|
4.42 %
|
|
4.56 %
|
|
|
On the senior secured
credit facilities at end of the quarter
|
4.39 %
|
|
4.70 %
|
|
|
Debt with fixed and
capped rates as a percentage of total debt:
|
|
|
|
|
|
Debt with rates fixed
by its terms
|
54 %
|
|
54 %
|
|
|
Debt with rates fixed
by its terms or capped by cap agreements
|
96 %
|
|
95 %
|
|
|
Amount spent on share
repurchases
|
$
286
|
|
|
|
$
286
|
Number of shares
repurchased
|
2,904
|
|
|
|
2,904
|
|
Certain columns, rows
or percentages may not sum or recalculate due to the presentation
of rounded numbers.
|
_________________
|
(1)
|
General and
administrative expenses include certain corporate support,
long-term incentive compensation and advocacy costs.
|
(2)
|
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.
|
(3)
|
The reported operating
income for the three months ended December 31, 2023 and September
30, 2023 and for the twelve months ended December 31, 2023 includes
foreign currency (losses) gains embedded in equity method income
recognized from our Asia Pacific joint venture of approximately
$(2.5), $0.4 and $(1.6), respectively.
|
(4)
|
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.
|
(5)
|
The debt amounts as of
December 31, 2023 and September 30, 2023 presented exclude
approximately $54.3 and $57.5, 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.
|
(6)
|
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
|
|
December 31,
2023
|
|
September
30,
2023
|
Net income from
continuing operations attributable to DaVita Inc.
|
$
692
|
|
$
596
|
Income taxes
|
220
|
|
196
|
Interest
expense
|
355
|
|
362
|
Depreciation and
amortization
|
745
|
|
744
|
Impairment
charges
|
26
|
|
—
|
Net income attributable
to noncontrolling interests
|
265
|
|
244
|
Stock-settled
stock-based compensation
|
110
|
|
98
|
Debt extinguishment and
modification costs
|
8
|
|
8
|
Expected cost savings
and expense reductions
|
33
|
|
65
|
Severance and other
related costs
|
28
|
|
54
|
Other
|
72
|
|
81
|
"Consolidated
EBITDA"
|
$
2,555
|
|
$
2,447
|
|
|
|
|
|
December 31,
2023
|
|
September
30,
2023
|
Total debt, excluding
debt discount and other deferred financing
costs(1)
|
$
8,446
|
|
$
8,451
|
Less: Cash and cash
equivalents including short-term
investments(2)
|
(387)
|
|
(457)
|
Consolidated net
debt
|
$
8,059
|
|
$
7,994
|
Last twelve months
"Consolidated EBITDA"
|
$
2,555
|
|
$
2,447
|
Leverage
ratio
|
3.15x
|
|
3.27x
|
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
December 31, 2023 and September 30, 2023 presented exclude
approximately $54.3 and $57.5, 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, but not
limited to, impairment charges, (gain) loss on ownership changes,
capacity closure charges, restructuring charges, accruals for legal
matters, and debt extinguishment and modification costs; 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
|
|
Year
ended
|
|
December 31,
2023
|
|
September
30,
2023
|
|
December 31,
2023
|
|
December 31,
2022
|
|
Dollars
|
|
Per
share
|
|
Dollars
|
|
Per
share
|
|
Dollars
|
|
Per
share
|
|
Dollars
|
|
Per
share
|
Consolidated:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income from
continuing operations
attributable to
DaVita Inc.
|
$ 151
|
|
$
1.62
|
|
$ 247
|
|
$
2.62
|
|
$ 692
|
|
$
7.42
|
|
$ 547
|
|
$
5.71
|
IKC
adjustment
|
(55)
|
|
(0.59)
|
|
|
|
|
|
(55)
|
|
(0.59)
|
|
|
|
|
Goodwill
impairment
|
26
|
|
0.28
|
|
|
|
|
|
26
|
|
0.28
|
|
|
|
|
Earn-out
revaluation
|
(8)
|
|
(0.08)
|
|
|
|
|
|
(8)
|
|
(0.08)
|
|
|
|
|
Legal
accrual
|
29
|
|
0.31
|
|
11
|
|
0.12
|
|
40
|
|
0.43
|
|
|
|
|
Other income - Mozarc
gain
|
(1)
|
|
(0.01)
|
|
|
|
|
|
(15)
|
|
(0.16)
|
|
|
|
|
Debt extinguishment and
modification costs
|
|
|
|
|
|
|
|
|
8
|
|
0.09
|
|
|
|
|
Closure charges
impacting:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Patient care
costs
|
5
|
|
0.06
|
|
4
|
|
0.05
|
|
28
|
|
0.30
|
|
21
|
|
0.22
|
General and
administrative
|
5
|
|
0.05
|
|
3
|
|
0.04
|
|
21
|
|
0.22
|
|
22
|
|
0.23
|
Depreciation and
amortization
|
22
|
|
0.24
|
|
16
|
|
0.17
|
|
51
|
|
0.54
|
|
46
|
|
0.48
|
Total closure
charges
|
32
|
|
0.34
|
|
24
|
|
0.26
|
|
99
|
|
1.06
|
|
88
|
|
0.92
|
Severance and other
costs
|
—
|
|
—
|
|
5
|
|
0.05
|
|
28
|
|
0.31
|
|
23
|
|
0.24
|
Related income
tax
|
(2)
|
|
(0.02)
|
|
(10)
|
|
(0.11)
|
|
(27)
|
|
(0.29)
|
|
(26)
|
|
(0.27)
|
Adjusted net income
from continuing
operations
attributable to DaVita Inc.
|
$ 173
|
|
$
1.87
|
|
$ 276
|
|
$
2.94
|
|
$ 789
|
|
$
8.47
|
|
$ 632
|
|
$
6.60
|
|
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
December 31, 2023
|
|
U.S.
dialysis
|
|
Ancillary
services
|
|
Corporate
administration
|
|
|
|
|
U.S.
IKC
|
|
U.S.
Other
|
|
International
|
|
Total
|
|
|
Consolidated
|
Operating income
(loss)
|
$
444
|
|
$
27
|
|
$
(19)
|
|
$
1
|
|
$
10
|
|
$
(63)
|
|
$
390
|
Closure charges
impacting:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Patient care
costs
|
5
|
|
|
|
|
|
|
|
|
|
|
|
5
|
General and
administrative
|
5
|
|
|
|
|
|
|
|
|
|
|
|
5
|
Depreciation and
amortization
|
22
|
|
|
|
|
|
|
|
|
|
|
|
22
|
Total closure
charges
|
32
|
|
|
|
|
|
|
|
|
|
|
|
32
|
Severance and other
costs
|
—
|
|
|
|
|
|
|
|
|
|
|
|
—
|
Legal
accrual
|
|
|
|
|
|
|
|
|
|
|
29
|
|
29
|
IKC
adjustment
|
|
|
(55)
|
|
|
|
|
|
(55)
|
|
|
|
(55)
|
Earn-out
revaluation
|
|
|
|
|
(8)
|
|
|
|
(8)
|
|
|
|
(8)
|
Goodwill
impairment
|
|
|
|
|
26
|
|
|
|
26
|
|
|
|
26
|
Adjusted operating
income (loss)
|
$
476
|
|
$
(28)
|
|
$
—
|
|
$
1
|
|
$
(27)
|
|
$
(34)
|
|
$
415
|
|
Certain columns or rows
may not sum or recalculate due to the presentation of rounded
numbers.
|
|
Three months ended
September 30, 2023
|
|
U.S.
dialysis
|
|
Ancillary
services
|
|
Corporate
administration
|
|
|
|
|
U.S.
IKC
|
|
U.S.
Other
|
|
International
|
|
Total
|
|
|
Consolidated
|
Operating income
(loss)
|
$
509
|
|
$
11
|
|
$
(2)
|
|
$
19
|
|
$
28
|
|
$
(41)
|
|
$
496
|
Closure charges
impacting:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Patient care
costs
|
4
|
|
|
|
|
|
|
|
|
|
|
|
4
|
General and
administrative
|
3
|
|
|
|
|
|
|
|
|
|
|
|
3
|
Depreciation and
amortization
|
16
|
|
|
|
|
|
|
|
|
|
|
|
16
|
Total closure
charges
|
24
|
|
|
|
|
|
|
|
|
|
|
|
24
|
Severance and other
costs
|
4
|
|
|
|
|
|
|
|
|
|
—
|
|
5
|
Legal
accrual
|
|
|
|
|
|
|
|
|
|
|
11
|
|
11
|
Adjusted operating
income (loss)
|
$
537
|
|
$
11
|
|
$
(2)
|
|
$
19
|
|
$
28
|
|
$
(30)
|
|
$
536
|
|
Certain columns or rows
may not sum or recalculate due to the presentation of rounded
numbers.
|
DAVITA
INC.
RECONCILIATIONS FOR
NON-GAAP MEASURES - continued
(unaudited)
(dollars in
millions, except per share data)
|
|
|
Year ended December
31, 2023
|
|
U.S.
dialysis
|
|
Ancillary
services
|
|
Corporate
administration
|
|
|
|
|
U.S.
IKC
|
|
U.S.
Other
|
|
International
|
|
Total
|
|
|
Consolidated
|
Operating income
(loss)
|
$ 1,775
|
|
$
(39)
|
|
$
(25)
|
|
$
55
|
|
$
(9)
|
|
$
(163)
|
|
$
1,603
|
Closure charges
impacting:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Patient care
costs
|
28
|
|
|
|
|
|
|
|
|
|
|
|
28
|
General and
administrative
|
21
|
|
|
|
|
|
|
|
|
|
|
|
21
|
Depreciation and
amortization
|
51
|
|
|
|
|
|
|
|
|
|
|
|
51
|
Total closure
charges
|
99
|
|
|
|
|
|
|
|
|
|
|
|
99
|
Severance and other
costs
|
27
|
|
—
|
|
|
|
|
|
—
|
|
1
|
|
28
|
Legal
accrual
|
|
|
|
|
|
|
|
|
|
|
40
|
|
40
|
IKC
adjustment
|
|
|
(55)
|
|
|
|
|
|
(55)
|
|
|
|
(55)
|
Earn-out
revaluation
|
|
|
|
|
(8)
|
|
|
|
(8)
|
|
|
|
(8)
|
Goodwill
impairment
|
|
|
|
|
26
|
|
|
|
26
|
|
|
|
26
|
Adjusted operating
income (loss)
|
$ 1,900
|
|
$
(93)
|
|
$
(7)
|
|
$
55
|
|
$
(45)
|
|
$
(122)
|
|
$
1,734
|
|
Certain columns or rows
may not sum or recalculate due to the presentation of rounded
numbers.
|
|
Year ended December
31, 2022
|
|
U.S.
dialysis
|
|
Ancillary
services
|
|
Corporate
administration
|
|
|
|
|
U.S.
IKC
|
|
U.S.
Other
|
|
International
|
|
Total
|
|
|
Consolidated
|
Operating income
(loss)
|
$ 1,565
|
|
$
(125)
|
|
$
(9)
|
|
$
37
|
|
$
(97)
|
|
$
(130)
|
|
$
1,339
|
Closure charges
impacting:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Patient care
costs
|
21
|
|
|
|
|
|
|
|
|
|
|
|
21
|
General and
administrative
|
19
|
|
|
|
|
|
3
|
|
3
|
|
|
|
22
|
Depreciation and
amortization
|
46
|
|
|
|
|
|
|
|
|
|
|
|
46
|
Total closure
charges
|
86
|
|
|
|
|
|
3
|
|
3
|
|
|
|
88
|
Severance and other
costs
|
17
|
|
—
|
|
|
|
5
|
|
5
|
|
1
|
|
23
|
Adjusted operating
income (loss)
|
$ 1,668
|
|
$
(124)
|
|
$
(9)
|
|
$
44
|
|
$
(89)
|
|
$
(129)
|
|
$
1,450
|
|
Certain columns or rows
may not sum or recalculate due to the presentation of rounded
numbers.
|
DAVITA INC.
RECONCILIATIONS FOR
NON-GAAP MEASURES -
continued
(unaudited)
(dollars in millions,
except per share data)
Note 5: Adjusted U.S. dialysis expense
measures
|
Three months
ended
|
|
December 31,
2023
|
|
September 30,
2023
|
|
GAAP
|
|
Non-GAAP
adjustment
|
|
Adjusted
|
|
GAAP
|
|
Non-GAAP
adjustment
|
|
Adjusted
|
|
(dollars in
millions)
|
U.S.
dialysis
|
|
|
|
|
|
|
|
|
|
|
|
Treatments
|
7,254,559
|
|
|
|
7,254,559
|
|
7,306,948
|
|
|
|
7,306,948
|
Operating
expenses:
|
|
|
|
|
|
|
|
|
|
|
|
Patient care
costs
|
$ 1,909
|
|
$
(5)
|
|
$ 1,904
|
|
$ 1,827
|
|
$
(4)
|
|
$ 1,823
|
General and
administrative
|
283
|
|
(5)
|
|
278
|
|
281
|
|
(8)
|
|
273
|
Depreciation and
amortization
|
181
|
|
(22)
|
|
159
|
|
176
|
|
(16)
|
|
160
|
Equity investment
income
|
(8)
|
|
|
|
(8)
|
|
(8)
|
|
|
|
(8)
|
Total operating
expenses
|
$ 2,365
|
|
$
(32)
|
|
$ 2,333
|
|
$ 2,276
|
|
$
(28)
|
|
$ 2,248
|
Patient care costs per
treatment(1)
|
$
263.19
|
|
|
|
$
262.45
|
|
$
250.08
|
|
|
|
$
249.48
|
|
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
|
|
Year
ended
December 31,
2023
|
|
December 31,
2023
|
|
September
30,
2023
|
|
Income from continuing
operations before income taxes
|
$ 289
|
|
$ 378
|
|
$
1,177
|
Noncontrolling owners'
income primarily attributable to non-tax paying entities
|
(77)
|
|
(63)
|
|
(263)
|
Income from continuing
operations before income taxes attributable to DaVita
Inc.
|
$ 212
|
|
$ 315
|
|
$ 914
|
Income tax expense for
continuing operations
|
$
58
|
|
$
69
|
|
$ 220
|
Income tax
attributable to noncontrolling interests
|
3
|
|
—
|
|
2
|
Income tax expense for
continuing operations attributable to DaVita Inc.
|
$
61
|
|
$
69
|
|
$ 222
|
Effective income tax
rate on income from continuing operations attributable
to
DaVita
Inc.
|
29.0 %
|
|
21.8 %
|
|
24.3 %
|
The effective income tax rate on adjusted income attributable
to DaVita Inc. is computed as follows:
|
Three months
ended
|
Year
ended
December 31,
2023
|
December 31,
2023
|
|
September
30,
2023
|
|
Income before income
taxes
|
$ 289
|
|
$ 378
|
|
$
1,177
|
IKC
adjustment
|
(55)
|
|
|
|
(55)
|
Goodwill
impairment
|
26
|
|
|
|
26
|
Earn-out
revaluation
|
(8)
|
|
|
|
(8)
|
Legal
accrual
|
29
|
|
11
|
|
40
|
Other income - Mozarc
gain
|
(1)
|
|
|
|
(15)
|
Debt extinguishment and
modification costs
|
|
|
|
|
8
|
Closure
charges
|
32
|
|
24
|
|
99
|
Severance and other
costs
|
—
|
|
5
|
|
28
|
Noncontrolling owners'
income primarily attributable to non-tax paying entities
|
(77)
|
|
(63)
|
|
(263)
|
Adjusted income before
income taxes attributable to DaVita Inc.
|
$ 236
|
|
$ 355
|
|
$
1,038
|
Income tax
expense
|
$
58
|
|
$
69
|
|
$ 220
|
Plus income tax related
to:
|
|
|
|
|
|
IKC
adjustment
|
(14)
|
|
|
|
(14)
|
Goodwill
impairment
|
7
|
|
|
|
7
|
Earn-out
revaluation
|
(2)
|
|
|
|
(2)
|
Legal
accrual
|
3
|
|
3
|
|
6
|
Other income - Mozarc
gain
|
—
|
|
|
|
(4)
|
Debt extinguishment and
modification costs
|
|
|
|
|
2
|
Closure
charges
|
8
|
|
6
|
|
25
|
Severance and other
costs
|
—
|
|
1
|
|
7
|
Less income tax related
to:
|
|
|
|
|
|
Noncontrolling
interests
|
3
|
|
—
|
|
2
|
Income tax on adjusted
income attributable to DaVita Inc.
|
$
63
|
|
$
79
|
|
$ 249
|
Effective income tax
rate on adjusted income attributable to DaVita Inc.
|
26.7 %
|
|
22.1 %
|
|
24.0 %
|
|
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
|
|
December 31,
2023
|
|
September
30,
2023
|
|
December 31,
2022
|
Net cash provided by
operating activities
|
$
485
|
|
$
661
|
|
$
344
|
Adjustments to
reconcile net cash provided by operating activities to free cash
flow:
|
|
|
|
|
|
Distributions to
noncontrolling interests
|
(78)
|
|
(79)
|
|
(79)
|
Contributions from
noncontrolling interests
|
3
|
|
5
|
|
3
|
Expenditures for
routine maintenance and information technology
|
(119)
|
|
(93)
|
|
(147)
|
Expenditures for
development and relocations
|
(40)
|
|
(44)
|
|
(47)
|
Proceeds from sale of
self-developed properties
|
6
|
|
4
|
|
1
|
Free cash
flow
|
$
258
|
|
$
453
|
|
$
75
|
|
Twelve months
ended
|
|
December 31,
2023
|
|
September
30,
2023
|
|
December 31,
2022
|
Net cash provided by
operating activities
|
$
2,059
|
|
$
1,918
|
|
$
1,565
|
Adjustments to
reconcile net cash provided by operating activities to free cash
flow:
|
|
|
|
|
|
Distributions to
noncontrolling interests
|
(281)
|
|
(283)
|
|
(268)
|
Contributions from
noncontrolling interests
|
15
|
|
15
|
|
15
|
Expenditures for
routine maintenance and information technology
|
(406)
|
|
(434)
|
|
(431)
|
Expenditures for
development and relocations
|
(162)
|
|
(169)
|
|
(172)
|
Proceeds from sale of
self-developed properties
|
11
|
|
7
|
|
109
|
Free cash
flow
|
$
1,236
|
|
$
1,054
|
|
$
817
|
|
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