8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the

Securities Exchange Act of 1934

Date of Report (date of earliest event reported): April 29, 2008

DAVITA INC.

(Exact name of registrant as specified in its charter)

Delaware	1-14106	No. 51-0354549
(State or other jurisdiction of incorporation)	(Commission File Number)	(IRS Employer Identification No.)

601 Hawaii Street

El Segundo, CA 90245

(Address of principal executive offices including Zip Code)

(310) 536-2400

(Registrant’s telephone number, including area code)

Not applicable

(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 2.02  Results of Operations and Financial Condition.

On April 29, 2008, DaVita Inc. issued a press release announcing its financial results for the quarter ended March 31, 2008. A copy of the press release is furnished as Exhibit 99.1 to this report.

The information contained in this Form 8-K (including Exhibit 99.1 attached hereto) is being furnished and shall not be deemed to be “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section and shall not be incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such filing.

Item 9.01.  Financial Statements and Exhibits.

(d) Exhibits.

Exhibit Number	Description
99.1	Press Release dated April 29, 2008, announcing the registrant’s financial results for the quarter ended March 31, 2008.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	DAVITA INC.
Date: April 29, 2008	By:	/s/ James K. Hilger
		James K. Hilger
		Vice President and Controller

EXHIBIT INDEX

Exhibit Number	Description
99.1	Press Release dated April 29, 2008, announcing the registrant’s financial results for the quarter ended March 31, 2008.

EX-99.1

Exhibit 99.1

Contact:	LeAnne Zumwalt
	Investor Relations
	DaVita Inc.
	(650) 696-8910

DAVITA 1st QUARTER 2008 RESULTS

El Segundo, California, April 29, 2008 – DaVita Inc. (NYSE: DVA) today announced results for the quarter ended March 31, 2008. Net income for the three months ended March 31, 2008 was $86.9 million, or $0.80 per share, as compared to $76.6 million, or $0.72 per share, for the same period of 2007.

Financial and operating highlights include:

• Cash Flow: For the rolling 12-months ended March 31, 2008 operating cash flow was $536 million and free cash flow was $433 million. For the three months ended March 31, 2008 operating cash flow was $91 million and free cash flow was $73 million.

• Operating Income: Operating income for the three months ended March 31, 2008 was $197 million, as compared to $193 million for the same period of 2007.

• Volume: Total treatments for the first quarter of 2008 were 3,934,777 or 50,837 treatments per day, as compared to 3,700,271 or 47,807 treatments per day for the first quarter of 2007. Non-acquired treatment growth in the quarter was 5.0% over the prior year’s first quarter.

• Effective Tax Rate: The effective tax rate for the first quarter of 2008 was 39.0% and we currently project our annual effective tax rate for 2008 to be in the range of 39.0% to 40.0%.

• Shares Repurchases: During the first quarter of 2008, we repurchased a total of 682,500 shares of our common stock for $32.5 million, or an average price of $47.66 per share, pursuant to previously announced Board authorizations. From the period April 1, 2008 to April 28, 2008, we repurchased an additional 2,120,977 shares of our common stock for a total of approximately $103.7 million, or an average price of $48.89 per share.

• Center Activity: As of March 31, 2008, we operated or provided administrative services at 1,390 outpatient dialysis centers serving approximately 107,000 patients, of which 1,366 centers are consolidated in our financial statements. During the first quarter of 2008, we acquired 4 centers, opened 27 new centers, closed one center, and provided administrative services to one additional center.

Outlook

Our operating income guidance for 2008 is still projected to be in the range of $790-850 million. We continue to believe that operating income is more likely to be in the lower end of the range. These projections and the underlying assumptions involve significant risks and uncertainties, including those described below and actual results may vary significantly from these current projections.

DaVita will be holding a conference call to discuss its results for the first quarter ended March 31, 2008 on April 29, 2008 at 4:30 p.m. Eastern Time. The dial in number is (800) 399-4406. A replay of the conference call will be available on DaVita’s official web page, www.davita.com, for the following 30 days.

This release contains forward–looking statements, including statements related to our 2008 operating results. Factors which could impact future results include the uncertainties associated with governmental regulations, general economic and other market conditions, competition, accounting estimates and the risk factors set forth in the Company’s SEC filings, including its Form 10-K for the year ended December 31, 2007. The forward-looking statements should be considered in light of these risks and uncertainties.

These risks and uncertainties include those relating to:

• the concentration of profits generated from commercial payor plans,

• continued downward pressure on average realized payment rates from commercial payors and possible reductions in government payment rates,

• changes in the structure of and payment rates under the Medicare ESRD Program which may further reduce Medicare payment rates,

• changes in pharmaceutical or anemia management practice patterns, payment policies, or pharmaceutical pricing,

• our ability to maintain contracts with physician medical directors,

• legal compliance risks, including our continued compliance with complex government regulations and compliance with the corporate integrity agreement applicable to the dialysis centers acquired from Gambro Healthcare and assumed in connection with such acquisition, and

• the resolution of ongoing investigations by various federal and state governmental agencies.

We undertake no obligation to update or revise any forward-looking statements, whether as a result of changes in underlying factors, new information, future events or otherwise.

This release contains non-GAAP financial measures. For reconciliations of these non-GAAP financial measures to their most comparable measure calculated and presented in accordance with GAAP, see the attached reconciliation schedules.

DAVITA INC.

CONSOLIDATED STATEMENTS OF INCOME

(unaudited)

(dollars in thousands, except per share data)

	Three months ended March 31,
	2008			2007
Net operating revenues	$	1,344,724		$	1,278,166
Operating expenses and charges:
Patient care costs		930,209			881,585
General and administrative		120,765			113,221
Depreciation and amortization		52,811			45,790
Provision for uncollectible accounts		34,631			33,635
Minority interests and equity income, net		9,581			10,618
Total operating expenses and charges		1,147,997			1,084,849
Operating income		196,727			193,317
Debt expense		(59,066	)		(68,870	)
Other income		4,863			3,195
Income before income taxes		142,524			127,642
Income tax expense		55,590			51,060
Net income	$	86,934		$	76,582
Earnings per share:
Basic earnings per share	$	0.81		$	0.73
Diluted earnings per share	$	0.80		$	0.72
Weighted average shares for earnings per share:
Basic		107,367,000			105,013,000
Diluted		108,239,000			106,739,000

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DAVITA INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited)

(dollars in thousands)

	Three months ended March 31,
	2008			2007
Cash flows from operating activities:
Net income	$	86,934		$	76,582
Adjustments to reconcile net income to cash provided by operating activities:
Depreciation and amortization		52,811			45,790
Stock-based compensation expense		9,548			7,702
Tax benefits from stock award exercises		2,618			6,307
Excess tax benefits from stock award exercises		(1,411	)		(5,426	)
Deferred income taxes		(7,439	)		(2,194	)
Minority interests in income of consolidated subsidiaries		9,054			10,828
Distributions to minority interests		(16,888	)		(10,106	)
Equity investment losses (income)		527			(210	)
Loss on disposal of assets		1,355			1,552
Non-cash debt and non-cash rent charges		4,074			6,946
Changes in operating assets and liabilities, net of effect of acquisitions and divestitures:
Accounts receivable		(33,168	)		25,875
Inventories		3,499			19,667
Other receivables and other current assets		16,846			(4,471	)
Other long term assets		(537	)		(1,873	)
Accounts payable		(39,217	)		(46,387	)
Accrued compensation and benefits		(47,571	)		(33,988	)
Other current liabilities		(6,500	)		(31,636	)
Income taxes		56,673			26,389
Other long-term liabilities		(184	)		(3,316	)
Net cash provided by operating activities		91,024			88,031
Cash flows from investing activities:
Additions of property and equipment, net		(64,673	)		(49,444	)
Acquisitions and purchases of other ownership interests		(8,838	)		(189	)
Proceeds from divestitures and asset sales		23			98
Purchase of investments available-for-sale		(839	)		(20,960	)
Purchase of investments held-to-maturity		(109	)		(15	)
Proceeds from sale of investments available-for-sale		4,955			6,236
Proceeds from maturities of investments held-to-maturity		73			—
Contributions from minority owners		9,759			4,650
Purchase of intangible assets		(64	)		(55	)
Net cash used in investing activities		(59,713	)		(59,679	)
Cash flows from financing activities:
Borrowings		4,050,363			3,898,955
Payments on long-term debt		(4,052,066	)		(3,894,640	)
Deferred financing costs		(130	)		(4,048	)
Purchase of treasury stock		(7,144	)		—
Excess tax benefits from stock award exercises		1,411			5,426
Stock award exercises and other share issuances, net		8,525			12,137
Net cash provided by financing activities		959			17,830
Net increase in cash and cash equivalents		32,270			46,182
Cash and cash equivalents at beginning of period		447,046			310,202
Cash and cash equivalents at end of period	$	479,316		$	356,384

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DAVITA INC.

CONSOLIDATED BALANCE SHEETS

(unaudited)

(dollars in thousands, except per share data)

	March 31, 2008			December 31, 2007
ASSETS
Cash and cash equivalents	$	479,316		$	447,046
Short-term investments		45,859			40,278
Accounts receivable, less allowance of $205,528 and $195,953		959,837			927,949
Inventories		76,807			80,173
Other receivables		185,238			198,744
Other current assets		29,604			34,482
Deferred income taxes		241,816			247,578
Total current assets		2,018,477			1,976,250
Property and equipment, net		954,858			939,326
Amortizable intangibles, net		175,161			183,042
Investments in third-party dialysis businesses		18,568			19,446
Long-term investments		12,524			22,562
Other long-term assets		35,938			35,401
Goodwill		3,774,906			3,767,933
	$	6,990,432		$	6,943,960
LIABILITIES AND SHAREHOLDERS’ EQUITY
Accounts payable	$	211,600		$	225,461
Other liabilities		479,651			486,151
Accrued compensation and benefits		288,559			334,961
Current portion of long-term debt		35,626			23,431
Income taxes payable		55,298			16,492
Total current liabilities		1,070,734			1,086,496
Long-term debt		3,669,809			3,683,887
Other long-term liabilities		98,286			83,448
Alliance and product supply agreement, net		39,975			41,307
Deferred income taxes		164,026			166,055
Minority interests (fair value of potential put obligations - $316,000 and $330,000)		149,276			150,517
Commitments and contingencies
Shareholders’ equity:
Preferred stock ($0.001 par value, 5,000,000 shares authorized; none issued) Common stock ($0.001 par value, 450,000,000 shares authorized; 134,862,283 shares issued; 106,806,458 and 107,130,127 shares outstanding)		135			135
Additional paid-in capital		723,565			707,080
Retained earnings		1,602,224			1,515,290
Treasury stock, at cost (28,055,825 and 27,732,156 shares)		(513,958	)		(487,744	)
Accumulated other comprehensive loss		(13,640	)		(2,511	)
Total shareholders’ equity		1,798,326			1,732,250
	$	6,990,432		$	6,943,960

5

DAVITA INC.

SUPPLEMENTAL FINANCIAL DATA

(unaudited)

(dollars in millions, except for per share and per treatment data)

	Three months ended
	March 31, 2008			December 31, 2007			March 31, 2007
Financial Results:
Net income	$	86.9		$	85.7		$	76.6
Diluted earnings per share	$	0.80		$	0.79		$	0.72
Operating income	$	196.7		$	195.3		$	193.3
Operating income margin		14.6	%		14.4	%		15.1	%
Other comprehensive income
Unrealized (loss) gain on securities, net of tax benefits (expense) of $7.1, $4.8, and ($0.5)	$	(11.1	)	$	(7.5	)	$	0.8
Business Metrics:
Volume
Treatments		3,934,777			3,983,542			3,700,271
Number of treatment days		77.4			79.6			77.4
Treatments per day		50,837			50,045			47,807
Per day year over year increase		6.3	%		5.6	%		5.1	%
Non-acquired growth year over year		5.0	%		4.6	%		4.0	%
Revenue
Total operating revenue	$	1,345		$	1,355		$	1,278
Dialysis revenue per treatment, including the lab	$	328.95		$	328.11		$	337.84
Per treatment increase (decrease) from previous quarter		0.3	%		(1.6	%)		1.0	%
Per treatment (decrease) increase from previous year		(2.6	%)		(1.9	%)		3.5	%
Expenses
A.     Patient care costs
Percent of revenue		69.2	%		68.5	%		69.0	%
Per treatment	$	236.41		$	232.83		$	238.25
Per treatment increase from previous quarter		1.5	%		0.5	%		1.7	%
Per treatment (decrease) increase from previous year		(0.8	%)		(0.7	%)		2.0	%
B.     General & administrative expenses
Percent of revenue		9.0	%		10.0	%		8.9	%
Per treatment	$	30.69		$	33.89		$	30.60
Per treatment (decrease) increase from previous quarter		(9.4	%)		8.0	%		(8.5	%)
Per treatment increase from previous year		0.3	%		1.4	%		2.9	%
C.     Bad debt expense as a percent of current-period revenue		2.6	%		2.6	%		2.6	%
D.     Consolidated effective tax rate		39.0	%		37.9	%		40.0	%

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DAVITA INC.

SUPPLEMENTAL FINANCIAL DATA—continued

(unaudited)

(dollars in millions, except for per share and per treatment data)

	Three months ended
	March 31, 2008			December 31, 2007			March 31, 2007
Cash Flow
Operating cash flow	$	91.0		$	223.3		$	88.0
Operating cash flow, last twelve months	$	536.0		$	533.0		$	631.2
Free cash flow (1)	$	73.2		$	184.6		$	61.4
Free cash flow, last twelve months (1)	$	433.1		$	421.4		$	515.2
Capital expenditures:
Development and relocations	$	46.1		$	60.4		$	21.3
Routine maintenance/IT/other	$	18.5		$	39.7		$	28.1
Acquisition expenditures	$	8.8		$	45.3			—
Accounts Receivable
Net receivables	$	960		$	928		$	907
DSO		68			66			66
Debt/Capital Structure
Total debt, excluding debt premium of $4.3 million	$	3,701		$	3,703		$	3,750
Net debt, net of cash, excluding debt premium of $4.3 million	$	3,222		$	3,256		$	3,394
Leverage ratio (see Note 1)		2.94x			2.99x			3.48x
Clinical (quarterly averages)
Dialysis adequacy - % of patients with Kt/V > 1.2		95	%		94	%		93	%
Patients with albumin ³ 3.5		82	%		84	%		83	%
Patients with HCT ³ 33		80	%		82	%		85	%

(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, see attached reconciliation schedules.

7

DAVITA INC.

SUPPLEMENTAL FINANCIAL DATA—continued

(unaudited)

(dollars in thousands)

Note 1: Calculation of the Leverage Ratio

Under the Company’s current Senior Secured Credit Facilities (Credit Agreement), the leverage ratio is defined as all funded debt plus the face amount of all letters of credit issued, minus cash and cash equivalents, divided by “Consolidated EBITDA”. The leverage ratio determines the interest rate margin payable by the Company for its term loan A and revolving line of credit under the Credit Agreement by establishing the margin over the base interest rate (LIBOR) that is applicable. The following leverage ratio was calculated using “Consolidated EBITDA” as defined in the Credit Agreement. The calculation below is based on the last twelve months of “Consolidated EBITDA”, pro forma for the routine acquisitions that occurred during the period. The Company’s management believes that the presentation of “Consolidated EBITDA” is useful to investors to enhance their understanding of the Company’s leverage ratio under its Credit Agreement.

	Rolling 12-months ended March 31, 2008
Net income	$	392,130
Income taxes		250,274
Debt expense including the write-off of deferred financing costs		247,343
Depreciation and amortization		200,491
Minority interests and equity income, net		44,448
Valuation gain on Product Supply Agreement		(55,275	)
Other		(4,743	)
Stock-based compensation expense		35,995
“Consolidated EBITDA”	$	1,110,663
	March 31, 2008
Total debt, excluding debt premium of $4.3 million	$	3,701,137
Letters of credit issued		41,002
		3,742,139
Less: cash and cash equivalents		(479,316	)
Consolidated net debt	$	3,262,823
Last twelve months “Consolidated EBITDA”	$	1,110,663
Leverage ratio		2.94x

In accordance with the Company’s Credit Agreement, the Company’s leverage ratio cannot exceed 5.00 to 1.0 as of March 31, 2008. At that date, the Company’s leverage ratio did not exceed 5.00 to 1.0.

8

RECONCILIATIONS FOR NON-GAAP MEASURES

(unaudited)

(dollars in thousands)

1. Free cash flow

Free cash flow represents net cash provided by operating activities less capital expenditures for routine maintenance and information technology. We believe free cash flow is a useful adjunct to cash flow from operating activities and other measurements under United States generally accepted accounting principles, since free cash flow is a meaningful measure of our ability to fund acquisition and development activities and meet our debt service requirements. Free cash flow is not a measure of financial performance under United States generally accepted accounting principles and should not be considered as an alternative to cash flows from operating, investing or financing activities, as an indicator of cash flows or as a measure of liquidity.

	Three months ended
	March 31, 2008			December 31, 2007			March 31, 2007
Cash provided by operating activities	$	91,024		$	223,326		$	88,031
Less: Expenditures for routine maintenance and information technology		(17,827	)		(38,688	)		(26,589	)
Free cash flow	$	73,197		$	184,638		$	61,442

	Rolling 12-Month Period
	March 31, 2008			December 31, 2007			March 31, 2007
Cash provided by operating activities	$	536,029		$	533,036		$	631,166
Less: Expenditures for routine maintenance and information technology		(102,901	)		(111,663	)		(115,994	)
Free cash flow	$	433,128		$	421,373		$	515,172

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