Delaware | 1-14106 | No. 51-0354549 |
(State or other jurisdiction of incorporation) | (Commission File Number) | (IRS Employer Identification No.) |
Exhibit Number | Description |
99.1 | Press Release dated May 2, 2017 announcing the registrant’s financial results for the quarter ended March 31, 2017. |
DAVITA HEALTHCARE PARTNERS INC. | ||
Date: May 2, 2017 | By: | /s/ James K. Hilger |
James K. Hilger | ||
Chief Accounting Officer |
Exhibit Number | Description |
99.1 | Press Release dated May 2, 2017, announcing the registrant’s financial results for the quarter ended March 31, 2017. |
• | Net income attributable to DaVita Inc. for the quarter ended March 31, 2017 was $448 million, or $2.29 per share. |
• | Adjusted net income attributable to DaVita Inc. for the quarter ended March 31, 2017 was $154 million, or $0.79 per share. |
• | Adjusted net income attributable to DaVita Inc., further adjusted to exclude amortization for the quarter ended March 31, 2017, was $182 million, or $0.93 per share. |
• | Net income attributable to DaVita Inc. for the quarter ended March 31, 2016 was $97 million, or $0.47 per share. |
• | Adjusted net income attributable to DaVita Inc. for the quarter ended March 31, 2016 was $190 million, or $0.92 per share. |
• | Adjusted net income attributable to DaVita Inc., further adjusted to exclude amortization for the quarter ended March 31, 2016 was $214 million, or $1.03 per share. |
• | We still expect our adjusted consolidated operating income guidance for 2017 to be in the range of $1.635 billion to $1.775 billion. |
• | We still expect our adjusted operating income guidance for Kidney Care for 2017 to be in the range of $1.525 billion to $1.625 billion. |
• | We still expect our operating income guidance for DMG for 2017 to be in the range of $110 million to $150 million. |
• | We still expect our consolidated operating cash flow for 2017 to be in the range of $1.750 billion to $1.950 billion, which includes the net benefit of the VA settlement. |
• | We still expect our 2017 adjusted effective tax rate attributable to DaVita Inc. to be approximately 39.5% to 40.5%. |
• | the concentration of profits generated by higher-paying commercial payor plans for which there is continued downward pressure on average realized payment rates, and a reduction in the number of patients under such plans, which may result in the loss of revenues or patients, and the extent to which the ongoing implementation of healthcare exchanges or changes in regulations or enforcement of regulations, including among other things those regarding the exchanges, results in a reduction in reimbursement rates for our services from and/or the number of patients enrolled in higher-paying commercial plans, |
• | a reduction in government payment rates under the Medicare End Stage Renal Disease program or other government-based programs, |
• | the impact of the Medicare Advantage benchmark structure, |
• | risks arising from potential federal and/or state legislation or regulation that could have an adverse effect on our operations and profitability, |
• | the impact of the 2016 Congressional and Presidential elections on the current health care marketplace and on our business, including with respect to the future of the Affordable Care Act, the exchanges and many other core aspects of the current health care marketplace, |
• | changes in pharmaceutical or anemia management practice patterns, payment policies, or pharmaceutical pricing, |
• | legal compliance risks, including our continued compliance with complex government regulations and the provisions of our current corporate integrity agreement and current or potential investigations by various government entities and related government or private-party proceedings, and restrictions on our business and operations required by our corporate integrity agreement and other settlement terms, and the financial impact thereof, |
• | continued increased competition from large- and medium-sized dialysis providers that compete directly with us, |
• | our ability to maintain contracts with physician medical directors, changing affiliation models for physicians, and the emergence of new models of care introduced by the government or private sector, that may erode our patient base and reimbursement rates, such as accountable care organizations, independent practice associations and integrated delivery systems, |
• | our ability to complete acquisitions, mergers or dispositions that we might be considering or announce, or to integrate and successfully operate any business we may acquire or have acquired, including DMG, or to expand our operations and services to markets outside the United States, or to businesses outside of dialysis and DMG’s business, |
• | the variability of our cash flows, |
• | the risk that we might invest material amounts of capital and incur significant costs in connection with the growth and development of our international operations, yet we might not be able to operate them profitably anytime soon, if at all, |
• | risks arising from the use of accounting estimates, judgments and interpretations in our financial statements, |
• | the risk that laws regulating the corporate practice of medicine could restrict the manner in which DMG conducts its business, |
• | the risk that the cost of providing services under DMG’s agreements may exceed our compensation, |
• | the risk that reductions in reimbursement rates, including Medicare Advantage rates, and future regulations may negatively impact DMG’s business, revenue and profitability, |
• | the risk that DMG may not be able to successfully establish a presence in new geographic regions or successfully address competitive threats that could reduce its profitability, |
• | the risk that a disruption in DMG’s healthcare provider networks could have an adverse effect on DMG’s business operations and profitability, |
• | the risk that reductions in the quality ratings of health maintenance organization plan customers of DMG could have an adverse effect on DMG’s business, or |
• | the risk that health plans that acquire health maintenance organizations may not be willing to contract with DMG or may be willing to contract only on less favorable terms. |
Three months ended March 31, | |||||||
2017 | 2016 | ||||||
Patient service revenues | $ | 2,601,378 | $ | 2,481,933 | |||
Less: Provision for uncollectible accounts | (112,983 | ) | (109,205 | ) | |||
Net patient service revenues | 2,488,395 | 2,372,728 | |||||
Capitated revenues | 918,036 | 887,047 | |||||
Other revenues | 290,852 | 321,361 | |||||
Total net revenues | 3,697,283 | 3,581,136 | |||||
Operating expenses and charges: | |||||||
Patient care costs and other costs | 2,722,820 | 2,582,333 | |||||
General and administrative | 391,780 | 386,429 | |||||
Depreciation and amortization | 190,206 | 169,355 | |||||
Provision for uncollectible accounts | 1,910 | 2,517 | |||||
Equity investment income | (3,935 | ) | (1,387 | ) | |||
Goodwill and asset impairment charges | 39,366 | 77,000 | |||||
Gain on changes in ownership interests | (6,273 | ) | — | ||||
Gain on settlement, net | (526,827 | ) | — | ||||
Total operating expenses and charges | 2,809,047 | 3,216,247 | |||||
Operating income | 888,236 | 364,889 | |||||
Debt expense | (104,429 | ) | (102,884 | ) | |||
Other income, net | 4,243 | 2,976 | |||||
Income before income taxes | 788,050 | 264,981 | |||||
Income tax expense | 287,765 | 126,822 | |||||
Net income | 500,285 | 138,159 | |||||
Less: Net income attributable to noncontrolling interests | (52,588 | ) | (40,725 | ) | |||
Net income attributable to DaVita Inc. | $ | 447,697 | $ | 97,434 | |||
Earnings per share: | |||||||
Basic net income per share attributable to DaVita Inc. | $ | 2.33 | $ | 0.48 | |||
Diluted net income per share attributable to DaVita Inc. | $ | 2.29 | $ | 0.47 | |||
Weighted average shares for earnings per share: | |||||||
Basic | 192,376,735 | 204,366,869 | |||||
Diluted | 195,281,014 | 207,928,096 |
Three months ended March 31, | |||||||
2017 | 2016 | ||||||
Net income | $ | 500,285 | $ | 138,159 | |||
Other comprehensive income (loss), net of tax: | |||||||
Unrealized losses on interest rate cap and swap agreements: | |||||||
Unrealized losses on interest rate cap and swap agreements | (3,188 | ) | (5,469 | ) | |||
Reclassifications of net rate cap and swap agreements realized losses into net income | 1,265 | 465 | |||||
Unrealized gains on investments: | |||||||
Unrealized gains on investments | 1,557 | 229 | |||||
Reclassification of net investment realized gains into net income | (140 | ) | (93 | ) | |||
Unrealized gains on foreign currency translation: | |||||||
Foreign currency translation adjustments | 13,261 | 11,181 | |||||
Other comprehensive income | 12,755 | 6,313 | |||||
Total comprehensive income | 513,040 | 144,472 | |||||
Less: Comprehensive income attributable to noncontrolling interests | (52,586 | ) | (40,725 | ) | |||
Comprehensive income attributable to DaVita Inc. | $ | 460,454 | $ | 103,747 |
Three months ended March 31, | |||||||
2017 | 2016 | ||||||
Cash flows from operating activities: | |||||||
Net income | $ | 500,285 | $ | 138,159 | |||
Adjustments to reconcile net income to net cash provided by operating activities: | |||||||
Depreciation and amortization | 190,206 | 169,355 | |||||
Goodwill and asset impairment charges | 39,366 | 77,000 | |||||
Stock-based compensation expense | 9,601 | 13,097 | |||||
Deferred income taxes | 20,091 | 47,519 | |||||
Equity investment income, net | 1,423 | 5,238 | |||||
Other non-cash charges | 9,467 | 11,507 | |||||
Changes in operating assets and liabilities, other than from acquisitions and divestitures: | |||||||
Accounts receivable | 16,168 | (78,097 | ) | ||||
Inventories | (8,909 | ) | (4,924 | ) | |||
Other receivables and other current assets | (84,511 | ) | (75,326 | ) | |||
Other long-term assets | (2,310 | ) | (965 | ) | |||
Accounts payable | (26,214 | ) | 7,782 | ||||
Accrued compensation and benefits | (62,825 | ) | (32,909 | ) | |||
Other current liabilities | (9,633 | ) | 55,673 | ||||
Income taxes | 258,490 | 76,685 | |||||
Other long-term liabilities | 14,479 | 19,208 | |||||
Net cash provided by operating activities | 865,174 | 429,002 | |||||
Cash flows from investing activities: | |||||||
Additions of property and equipment | (214,535 | ) | (173,187 | ) | |||
Acquisitions | (77,236 | ) | (405,154 | ) | |||
Proceeds from asset and business sales | 46,612 | 4,657 | |||||
Purchase of investments available for sale | (2,358 | ) | (4,435 | ) | |||
Purchase of investments held-to-maturity | (121,670 | ) | (228,198 | ) | |||
Proceeds from sale of investments available for sale | 4,025 | 5,155 | |||||
Proceeds from investments held-to-maturity | 116,285 | 252,701 | |||||
Purchase of equity investments | (1,135 | ) | (5,850 | ) | |||
Net cash used in investing activities | (250,012 | ) | (554,311 | ) | |||
Cash flows from financing activities: | |||||||
Borrowings | 12,803,015 | 13,098,553 | |||||
Payments on long-term debt and other financing costs | (12,839,156 | ) | (13,118,741 | ) | |||
Purchase of treasury stock | — | (274,926 | ) | ||||
Distributions to noncontrolling interests | (43,316 | ) | (50,409 | ) | |||
Stock award exercises and other share issuances, net | 3,330 | 3,167 | |||||
Contributions from noncontrolling interests | 17,989 | 10,190 | |||||
Proceeds from sales of additional noncontrolling interests | — | 3,557 | |||||
Purchase of noncontrolling interests | (799 | ) | (4,300 | ) | |||
Deferred financing costs | — | (188 | ) | ||||
Net cash used in financing activities | (58,937 | ) | (333,097 | ) | |||
Effect of exchange rate changes on cash and cash equivalents | 2,820 | 717 | |||||
Net increase (decrease) in cash and cash equivalents | 559,045 | (457,689 | ) | ||||
Cash and cash equivalents at beginning of the year | 913,187 | 1,499,116 | |||||
Cash and cash equivalents at end of the period | $ | 1,472,232 | $ | 1,041,427 |
March 31, 2017 | December 31, 2016 | ||||||
ASSETS | |||||||
Cash and cash equivalents | $ | 1,472,232 | $ | 913,187 | |||
Short-term investments | 313,265 | 310,198 | |||||
Accounts receivable, less allowance of $242,462 and $252,056 | 1,900,561 | 1,917,302 | |||||
Inventories | 174,159 | 164,858 | |||||
Other receivables | 539,656 | 453,483 | |||||
Prepaid and other current assets | 204,027 | 210,604 | |||||
Income taxes receivable | — | 10,596 | |||||
Total current assets | 4,603,900 | 3,980,228 | |||||
Property and equipment, net of accumulated depreciation of $2,954,237 and $2,832,160 | 3,171,199 | 3,175,367 | |||||
Intangible assets, net of accumulated amortization of $987,468 and $940,731 | 1,487,029 | 1,527,767 | |||||
Equity investments | 521,848 | 502,389 | |||||
Long-term investments | 108,368 | 103,679 | |||||
Other long-term assets | 43,450 | 44,510 | |||||
Goodwill | 9,452,470 | 9,407,317 | |||||
$ | 19,388,264 | $ | 18,741,257 | ||||
LIABILITIES AND EQUITY | |||||||
Accounts payable | $ | 464,790 | $ | 522,415 | |||
Other liabilities | 783,806 | 856,847 | |||||
Accrued compensation and benefits | 756,002 | 815,761 | |||||
Medical payables | 389,681 | 336,381 | |||||
Current portion of long-term debt | 170,217 | 165,041 | |||||
Income tax payable | 249,081 | — | |||||
Total current liabilities | 2,813,577 | 2,696,445 | |||||
Long-term debt | 8,918,878 | 8,947,327 | |||||
Other long-term liabilities | 504,380 | 465,358 | |||||
Deferred income taxes | 830,990 | 809,128 | |||||
Total liabilities | 13,067,825 | 12,918,258 | |||||
Commitments and contingencies: | |||||||
Noncontrolling interests subject to put provisions | 979,848 | 973,258 | |||||
Equity: | |||||||
Preferred stock ($0.001 par value, 5,000,000 shares authorized; none issued) | |||||||
Common stock ($0.001 par value, 450,000,000 shares authorized; 194,596,120 and 194,554,491 shares issued and outstanding, respectively) | 195 | 195 | |||||
Additional paid-in capital | 1,058,610 | 1,027,182 | |||||
Retained earnings | 4,158,010 | 3,710,313 | |||||
Accumulated other comprehensive loss | (76,886 | ) | (89,643 | ) | |||
Total DaVita Inc. shareholders’ equity | 5,139,929 | 4,648,047 | |||||
Noncontrolling interests not subject to put provisions | 200,662 | 201,694 | |||||
Total equity | 5,340,591 | 4,849,741 | |||||
$ | 19,388,264 | $ | 18,741,257 |
Three months ended | |||||||||||
March 31, 2017 | December 31, 2016 | March 31, 2016 | |||||||||
1. Consolidated Financial Results: | |||||||||||
Consolidated net revenues | $ | 3,697 | $ | 3,716 | $ | 3,581 | |||||
Operating income | $ | 888 | $ | 381 | $ | 365 | |||||
Adjusted operating income excluding certain items(1) | $ | 392 | $ | 445 | $ | 458 | |||||
Operating income margin | 24.0 | % | 10.3 | % | 10.2 | % | |||||
Adjusted operating income margin excluding certain items(1) (5) | 10.6 | % | 12.0 | % | 12.8 | % | |||||
Net income attributable to DaVita Inc. | $ | 448 | $ | 158 | $ | 97 | |||||
Adjusted net income attributable to DaVita Inc. excluding certain items(1) | $ | 154 | $ | 192 | $ | 190 | |||||
Diluted net income per share attributable to DaVita Inc. | $ | 2.29 | $ | 0.80 | $ | 0.47 | |||||
Adjusted diluted net income per share attributable to DaVita Inc. excluding certain items(1) | $ | 0.79 | $ | 0.98 | $ | 0.92 | |||||
2. Consolidated Business Metrics: | |||||||||||
Expenses | |||||||||||
General and administrative expenses as a percent of consolidated net revenues(2) | 10.6 | % | 11.1 | % | 10.8 | % | |||||
Consolidated effective tax rate | 36.5 | % | 32.3 | % | 47.9 | % | |||||
Consolidated effective tax rate attributable to DaVita Inc.(1) | 39.1 | % | 36.3 | % | 56.5 | % | |||||
Adjusted consolidated effective tax rate attributable to DaVita Inc.(1) | 40.0 | % | 36.5 | % | 40.0 | % | |||||
3. Summary of Division Financial Results: | |||||||||||
Net revenues | |||||||||||
Kidney Care: | |||||||||||
U.S. dialysis and related lab services | $ | 2,271 | $ | 2,323 | $ | 2,227 | |||||
Ancillary services and strategic initiatives, including international dialysis operations: | |||||||||||
U.S. ancillary services and strategic initiatives | 315 | 338 | 345 | ||||||||
International dialysis | 63 | 58 | 46 | ||||||||
378 | 396 | 391 | |||||||||
Elimination of intersegment | (39 | ) | (40 | ) | (26 | ) | |||||
Total Kidney Care | 2,610 | 2,679 | 2,592 | ||||||||
DMG | 1,087 | 1,037 | 989 | ||||||||
Total net consolidated revenues | $ | 3,697 | $ | 3,716 | $ | 3,581 | |||||
Operating income (loss) | |||||||||||
Kidney Care: | |||||||||||
U.S. Dialysis and related lab services | $ | 945 | $ | 436 | $ | 440 | |||||
Other - Ancillary services and strategic initiatives, including international dialysis operations: | |||||||||||
U.S. ancillary services and strategic initiatives | (53 | ) | (59 | ) | (1 | ) | |||||
International dialysis | (5 | ) | (14 | ) | (10 | ) | |||||
(58 | ) | (73 | ) | (11 | ) | ||||||
Corporate support and related long-term incentive compensation | (11 | ) | — | (7 | ) | ||||||
Reduction of a receivable associated with the DMG acquisition escrow provision | — | (4 | ) | — | |||||||
Total Kidney Care | 876 | 359 | 422 | ||||||||
DMG | 12 | 22 | (57 | ) | |||||||
Total consolidated operating income | $ | 888 | $ | 381 | $ | 365 |
Three months ended | |||||||||||
March 31, 2017 | December 31, 2016 | March 31, 2016 | |||||||||
4. Summary of Reportable Segment Financial Results: | |||||||||||
U.S. Dialysis and Related Lab Services | |||||||||||
Revenue: | |||||||||||
Patient services revenues | $ | 2,373 | $ | 2,427 | $ | 2,328 | |||||
Provision for uncollectible accounts | (107 | ) | (109 | ) | (105 | ) | |||||
Net patient service operating revenues | 2,266 | 2,318 | 2,223 | ||||||||
Other revenues | 5 | 5 | 4 | ||||||||
Total net operating revenues | 2,271 | 2,323 | 2,227 | ||||||||
Operating expenses: | |||||||||||
Patient care costs | 1,548 | 1,568 | 1,496 | ||||||||
General and administrative | 188 | 199 | 179 | ||||||||
Depreciation and amortization | 125 | 124 | 116 | ||||||||
Equity investment income | (8 | ) | (4 | ) | (4 | ) | |||||
Gain on settlement, net | (527 | ) | — | — | |||||||
Total operating expenses | 1,326 | 1,887 | 1,787 | ||||||||
Segment operating income | $ | 945 | $ | 436 | $ | 440 | |||||
Reconciliation for non-GAAP measure: | |||||||||||
Less: | |||||||||||
Gain on settlement, net | (527 | ) | — | — | |||||||
Equity investment income related to gain on settlement | (3 | ) | — | — | |||||||
Adjusted segment operating income(1) | $ | 415 | $ | 436 | $ | 440 | |||||
DMG | |||||||||||
Revenue: | |||||||||||
DMG capitated revenues | $ | 890 | $ | 845 | $ | 866 | |||||
Patient services revenues | 185 | 179 | 116 | ||||||||
Provision for uncollectible accounts | (6 | ) | (6 | ) | (4 | ) | |||||
Net patient service operating revenues | 179 | 173 | 112 | ||||||||
Other revenues | 18 | 19 | 11 | ||||||||
Total net operating revenues | $ | 1,087 | $ | 1,037 | $ | 989 | |||||
Operating expenses: | |||||||||||
Patient care costs | $ | 892 | $ | 834 | $ | 794 | |||||
General and administrative | 129 | 123 | 127 | ||||||||
Depreciation and amortization | 57 | 58 | 46 | ||||||||
Goodwill and asset impairment charges | — | — | 77 | ||||||||
Equity investment (income) loss | (3 | ) | — | 2 | |||||||
Total operating expenses | 1,075 | 1,015 | 1,046 | ||||||||
Segment operating income (loss) | $ | 12 | $ | 22 | $ | (57 | ) | ||||
Reconciliation for non-GAAP measure: | |||||||||||
Add: | |||||||||||
Goodwill impairment charge | — | — | 77 | ||||||||
Accrual for legal matters | — | — | 16 | ||||||||
Adjusted segment operating income(1) | $ | 12 | $ | 22 | $ | 36 |
Three months ended | |||||||||||
March 31, 2017 | December 31, 2016 | March 31, 2016 | |||||||||
5. U.S. Dialysis and Related Lab Services Business Metrics: | |||||||||||
Volume | |||||||||||
Treatments | 6,804,384 | 6,889,069 | 6,639,874 | ||||||||
Number of treatment days | 77.0 | 79.0 | 77.9 | ||||||||
Treatments per day | 88,369 | 87,203 | 85,236 | ||||||||
Per day year over year increase | 3.7 | % | 3.7 | % | 4.3 | % | |||||
Normalized non-acquired treatment growth year over year | 3.8 | % | 4.0 | % | 4.1 | % | |||||
Operating revenues before provision for uncollectible accounts | |||||||||||
Dialysis and related lab services revenue per treatment | $ | 348.70 | $ | 352.38 | $ | 350.60 | |||||
Per treatment (decrease) increase from previous quarter | (1.0 | )% | (0.1 | )% | 0.7 | % | |||||
Per treatment (decrease) increase from previous year | (0.5 | )% | 1.2 | % | 1.4 | % | |||||
Percent of consolidated net revenues | 60.8 | % | 61.9 | % | 61.8 | % | |||||
Expenses | |||||||||||
Patient care costs | |||||||||||
Percent of total segment operating net revenues | 68.1 | % | 67.5 | % | 67.2 | % | |||||
Per treatment | $ | 227.47 | $ | 227.68 | $ | 225.30 | |||||
Per treatment (decrease) increase from previous quarter | (0.1 | )% | 0.2 | % | 2.5 | % | |||||
Per treatment increase from previous year | 1.0 | % | 3.6 | % | 1.0 | % | |||||
General and administrative expenses | |||||||||||
Percent of total segment operating net revenues | 8.3 | % | 8.5 | % | 8.0 | % | |||||
Per treatment | $ | 27.65 | $ | 28.82 | $ | 26.97 | |||||
Per treatment (decrease) increase from previous quarter | (4.1 | )% | 5.3 | % | (0.9 | )% | |||||
Per treatment increase (decrease) from previous year | 2.5 | % | 5.9 | % | (7.8 | )% | |||||
Accounts receivable | |||||||||||
Net receivables | $ | 1,335 | $ | 1,358 | $ | 1,297 | |||||
DSO | 54 | 55 | 54 | ||||||||
Provision for uncollectible accounts as a percentage of revenues | 4.5 | % | 4.5 | % | 4.5 | % | |||||
6. DMG Business Metrics: | |||||||||||
Capitated membership | |||||||||||
Total members | 735,400 | 749,300 | 787,100 | ||||||||
Total member months | |||||||||||
Senior | 920,200 | 913,300 | 975,300 | ||||||||
Commercial | 995,900 | 1,018,400 | 1,048,600 | ||||||||
Medicaid | 305,200 | 318,800 | 342,500 | ||||||||
Total member months | 2,221,300 | 2,250,500 | 2,366,400 | ||||||||
Capitated revenues by sources | |||||||||||
Senior revenues | $ | 660 | $ | 617 | $ | 648 | |||||
Commercial revenues | 188 | 175 | 172 | ||||||||
Medicaid revenues | 42 | 53 | 46 | ||||||||
Total capitated revenues | $ | 890 | $ | 845 | $ | 866 |
Three months ended | |||||||||||
March 31, 2017 | December 31, 2016 | March 31, 2016 | |||||||||
6. DMG Business Metrics: (continued) | |||||||||||
Other | |||||||||||
Total care dollars under management(1) | $ | 1,342 | $ | 1,295 | $ | 1,272 | |||||
Ratio of operating income (loss) to total care dollars under management(1) | 0.9 | % | 1.7 | % | (4.5 | )% | |||||
Ratio of adjusted operating income to total care dollars under management(1)(6) | 0.9 | % | 1.7 | % | 2.8 | % | |||||
7. Cash Flow: | |||||||||||
Operating cash flow | $ | 865.2 | $ | 482.2 | $ | 429.0 | |||||
Operating cash flow, last twelve months | $ | 2,399.6 | $ | 1,963.4 | $ | 1,576.1 | |||||
Free cash flow(1) | $ | 733.7 | $ | 329.4 | $ | 305.3 | |||||
Free cash flow, last twelve months(1) | $ | 1,840.7 | $ | 1,412.3 | $ | 1,041.2 | |||||
Capital expenditures: | |||||||||||
Routine maintenance/IT/other | $ | 88.1 | $ | 105.4 | $ | 73.3 | |||||
Development and relocations | $ | 126.4 | $ | 148.5 | $ | 99.9 | |||||
Acquisition expenditures | $ | 77.2 | $ | 66.5 | $ | 405.2 | |||||
8. Debt and Capital Structure: | |||||||||||
Total debt(3) | $ | 9,165 | $ | 9,192 | $ | 9,210 | |||||
Net debt, net of cash and cash equivalents(3) | $ | 7,693 | $ | 8,279 | $ | 8,168 | |||||
Leverage ratio (see calculation on page 15) | 3.03x | 3.16x | 3.07x | ||||||||
Overall weighted average effective interest rate during the quarter | 4.55 | % | 4.49 | % | 4.40 | % | |||||
Overall weighted average effective interest rate at end of the quarter | 4.64 | % | 4.52 | % | 4.40 | % | |||||
Weighted average effective interest rate on the senior secured credit facilities at end of the quarter | 3.95 | % | 3.68 | % | 3.46 | % | |||||
Fixed and economically fixed interest rates as a percentage of our total debt | 53 | % | 53 | % | 60%(4) | ||||||
Fixed and economically fixed interest rates, including our interest rate cap agreements, as a percentage of our total debt | 91 | % | 91 | % | 90%(4) |
(1) | These are non-GAAP financial measures. For a reconciliation of these non-GAAP financial measures to their most comparable measure calculated and presented in accordance with GAAP, and for a definition of adjusted amounts, see attached reconciliation schedules. |
(2) | Consolidated percentages of revenues are comprised of the dialysis and related lab services business, DMG’s business and other ancillary services and strategic initiatives. General and administrative expenses includes certain corporate support and long-term incentive compensation, as well as an adjustment to reduce the receivable associated with the DMG acquisition escrow provision relating to an income tax item for the fourth quarter of 2016, and the estimated accruals for certain legal matters for the fourth quarter of 2016 and first quarter of 2016. |
(3) | The reported balance sheet amounts at March 31, 2017, December 31, 2016, and March 31, 2016, exclude $75.9 million, $79.9 million and $92.0 million, respectively, of a debt discount associated with our Term Loan A, Term Loan B and senior notes, and other deferred financing costs. |
(4) | The Term Loan B is subject to a LIBOR floor of 0.75%. At March 31, 2017, the actual LIBOR-based variable component of our interest rate exceeded 0.75% on the Term Loan B, and was subject to LIBOR-based interest rate volatility on the LIBOR variable component of our interest rate on all of the Term Loan B. However, we are limited to a maximum rate of 3.50% on the outstanding principal debt on the Term Loan B as a result of interest rate cap agreements. Actual LIBOR, for the three months ended March 31, 2016 was lower than the embedded LIBOR floor during such period and the interest rate on the Term Loan B was set at its floor during such period. The Term Loan A bears interest at LIBOR plus an interest margin of 2.00%. We are limited to a maximum rate of 3.50% on $96.3 million of the |
(5) | Adjusted operating income margin is a calculation of adjusted operating income divided by consolidated net revenues. |
(6) | Ratio of adjusted operating income to total care dollars under management is a calculation of adjusted operating income divided by total care dollars under management. |
Rolling twelve months ended March 31, 2017 | |||
Net income attributable to DaVita Inc. | $ | 1,230,137 | |
Income taxes | 616,756 | ||
Interest expense | 384,501 | ||
Depreciation and amortization | 741,104 | ||
Goodwill and other asset impairment charges | 258,774 | ||
Noncontrolling interests and equity investment income, net | 178,108 | ||
Stock-settled stock-based compensation | 34,682 | ||
Gain on changes in ownership interest, net | (410,438 | ) | |
Gain on settlement, net | (529,504 | ) | |
Other | (2,908 | ) | |
“Consolidated EBITDA” | $ | 2,501,212 | |
March 31, 2017 | |||
Total debt, excluding debt discount and other deferred financing costs of $75.9 million | $ | 9,164,957 | |
Letters of credit issued | 95,909 | ||
$ | 9,260,866 | ||
Less: Cash and cash equivalents including short-term investments (excluding DMG’s physician owned entities cash) | (1,675,454 | ) | |
Consolidated net debt | $ | 7,585,412 | |
Last twelve months “Consolidated EBITDA” | $ | 2,501,212 | |
Leverage ratio | 3.03x |
Three months ended | |||||||||||
March 31, 2017 | December 31, 2016 | March 31, 2016 | |||||||||
Net income attributable to DaVita Inc. | $ | 447,697 | $ | 157,726 | $ | 97,434 | |||||
Gain on settlement, net | (526,827 | ) | — | — | |||||||
Equity investment income related to gain on settlement | (2,677 | ) | — | — | |||||||
Gain on APAC JV ownership changes | (6,273 | ) | — | — | |||||||
Goodwill impairment charges | 24,198 | 28,415 | 77,000 | ||||||||
Impairment of assets | 15,168 | — | — | ||||||||
Impairment of minority equity investment | — | 14,993 | — | ||||||||
Accruals for legal matters | — | 15,770 | 16,000 | ||||||||
Reduction in the receivable associated with the DMG acquisition escrow provision | — | 3,894 | — | ||||||||
Noncontrolling interests associated with adjustments | |||||||||||
Goodwill impairment charges | (6,880 | ) | (8,078 | ) | — | ||||||
Gain on settlement, net | 24,029 | — | — | ||||||||
Related income tax | 185,162 | (20,686 | ) | — | |||||||
Adjusted net income attributable to DaVita Inc. | $ | 153,597 | $ | 192,034 | $ | 190,434 |
Three months ended | |||||||||||
March 31, 2017 | December 31, 2016 | March 31, 2016 | |||||||||
Diluted net income per share attributable to DaVita Inc. | $ | 2.29 | $ | 0.80 | $ | 0.47 | |||||
Gain on settlement, net | (2.70 | ) | — | — | |||||||
Equity investment income related to gain on settlement | (0.01 | ) | — | — | |||||||
Gain on APAC JV ownership changes | (0.03 | ) | — | — | |||||||
Goodwill impairment charges | 0.12 | 0.15 | 0.37 | ||||||||
Impairment of assets | 0.08 | — | — | ||||||||
Impairment of minority equity investment | — | 0.08 | — | ||||||||
Accruals for legal matters | — | 0.08 | 0.08 | ||||||||
Reduction in the receivable associated with the DMG acquisition escrow provision | — | 0.02 | — | ||||||||
Noncontrolling interests associated with adjustments | |||||||||||
Goodwill impairment charges | (0.03 | ) | (0.04 | ) | — | ||||||
Gain on settlement, net | 0.12 | — | — | ||||||||
Related income tax | 0.95 | (0.11 | ) | — | |||||||
Adjusted diluted net income per share attributable to DaVita Inc. | $ | 0.79 | $ | 0.98 | $ | 0.92 |
Three months ended | |||||||||||
March 31, 2017 | December 31, 2016 | March 31, 2016 | |||||||||
Adjusted net income attributable to DaVita Inc. | $ | 153,597 | $ | 192,034 | $ | 190,434 | |||||
Add: | |||||||||||
Amortization of intangible assets associated with acquisitions for the dialysis and ancillary operations | 3,725 | 3,480 | 3,809 | ||||||||
Amortization of intangible assets associated with acquisitions for the DMG operations | 43,955 | 44,290 | 36,078 | ||||||||
Less: Related income tax | (19,072 | ) | (17,436 | ) | (15,955 | ) | |||||
$ | 182,205 | $ | 222,368 | $ | 214,366 | ||||||
Adjusted diluted net income per share attributable to DaVita Inc. | $ | 0.79 | $ | 0.98 | $ | 0.92 | |||||
Add: | |||||||||||
Amortization of intangible assets per share associated with acquisitions for the dialysis and ancillary operations | 0.02 | 0.02 | 0.02 | ||||||||
Amortization of intangible assets per share associated with acquisitions for the DMG operations | 0.22 | 0.22 | 0.17 | ||||||||
Tax effect of adjustments | (0.10 | ) | (0.09 | ) | (0.08 | ) | |||||
$ | 0.93 | $ | 1.13 | $ | 1.03 |
Three months ended | |||||||||||
March 31, 2017 | December 31, 2016 | March 31, 2016 | |||||||||
Consolidated: | |||||||||||
Operating income | $ | 888,236 | $ | 381,428 | $ | 364,889 | |||||
Gain on settlement, net | (526,827 | ) | — | — | |||||||
Equity investment income related to gain on settlement | (2,677 | ) | — | — | |||||||
Gain on APAC JV ownership changes | (6,273 | ) | — | — | |||||||
Goodwill impairment charges | 24,198 | 28,415 | 77,000 | ||||||||
Impairment of assets | 15,168 | — | — | ||||||||
Impairment of minority equity investment | — | 14,993 | — | ||||||||
Accruals for legal matters | — | 15,770 | 16,000 | ||||||||
Reduction in the receivable associated with the DMG acquisition escrow provision | — | 3,894 | — | ||||||||
Adjusted operating income | $ | 391,825 | $ | 444,500 | $ | 457,889 |
Three months ended | |||||||||||
March 31, 2017 | December 31, 2016 | March 31, 2016 | |||||||||
Kidney Care: | |||||||||||
U.S. dialysis and related lab services: | |||||||||||
Segment operating income | $ | 944,740 | $ | 435,581 | $ | 440,055 | |||||
Less: | |||||||||||
Gain on settlement, net | (526,827 | ) | — | — | |||||||
Equity investment income related to gain on settlement | (2,677 | ) | — | — | |||||||
Adjusted operating income | $ | 415,236 | $ | 435,581 | $ | 440,055 | |||||
Other - Ancillary services and strategic initiatives: | |||||||||||
U.S. ancillary services and strategic initiatives | |||||||||||
Segment operating loss | $ | (53,027 | ) | $ | (58,562 | ) | $ | (1,354 | ) | ||
Add: | |||||||||||
Goodwill impairment charges | 24,198 | 28,415 | — | ||||||||
Impairment of assets | 15,168 | — | — | ||||||||
Accruals for legal matters | — | 15,770 | — | ||||||||
Adjusted operating loss | $ | (13,661 | ) | $ | (14,377 | ) | $ | (1,354 | ) | ||
International dialysis | |||||||||||
Segment operating loss | $ | (5,193 | ) | $ | (13,273 | ) | $ | (9,746 | ) | ||
Add: Impairment of minority equity investment | — | 14,993 | — | ||||||||
Less: Gain on APAC JV ownership changes | (6,273 | ) | — | — | |||||||
Adjusted operating (loss) income | $ | (11,466 | ) | $ | 1,720 | $ | (9,746 | ) | |||
Adjusted operating loss | $ | (25,127 | ) | $ | (12,657 | ) | $ | (11,100 | ) | ||
Corporate administrative support: | |||||||||||
Segment operating loss | $ | (10,592 | ) | $ | (4,195 | ) | $ | (6,921 | ) | ||
Add: Reduction in the receivable associated with the DMG acquisition escrow provision | — | 3,894 | — | ||||||||
Adjusted operating loss | $ | (10,592 | ) | $ | (301 | ) | $ | (6,921 | ) | ||
Kidney Care adjusted operating income | $ | 379,517 | $ | 422,623 | $ | 422,034 | |||||
DMG: | |||||||||||
Segment operating income (loss) | $ | 12,308 | $ | 21,877 | $ | (57,145 | ) | ||||
Add: | |||||||||||
Goodwill impairment charge | — | — | 77,000 | ||||||||
Accruals for legal matters | — | — | 16,000 | ||||||||
DMG adjusted operating income | $ | 12,308 | $ | 21,877 | $ | 35,855 | |||||
Consolidated adjusted operating income | $ | 391,825 | $ | 444,500 | $ | 457,889 |
Three months ended | |||||||||||
March 31, 2017 | December 31, 2016 | March 31, 2016 | |||||||||
Income before income taxes | $ | 788,050 | $ | 278,072 | $ | 264,981 | |||||
Income tax expense | $ | 287,765 | $ | 89,802 | $ | 126,822 | |||||
Effective income tax rate | 36.5 | % | 32.3 | % | 47.9 | % |
Three months ended | |||||||||||
March 31, 2017 | December 31, 2016 | March 31, 2016 | |||||||||
Income before income taxes | $ | 788,050 | $ | 278,072 | $ | 264,981 | |||||
Less: Noncontrolling owners’ income primarily attributable to non-tax paying entities | (52,653 | ) | (30,646 | ) | (40,797 | ) | |||||
Income before income taxes attributable to DaVita Inc. | $ | 735,397 | $ | 247,426 | $ | 224,184 | |||||
Income tax expense | $ | 287,765 | $ | 89,802 | $ | 126,822 | |||||
Less: Income tax attributable to noncontrolling interests | (65 | ) | (102 | ) | (72 | ) | |||||
Income tax expense attributable to DaVita Inc. | $ | 287,700 | $ | 89,700 | $ | 126,750 | |||||
Effective income tax rate attributable to DaVita Inc. | 39.1 | % | 36.3 | % | 56.5 | % |
Three months ended | |||||||||||
March 31, 2017 | December 31, 2016 | March 31, 2016 | |||||||||
Income before income taxes | $ | 788,050 | $ | 278,072 | $ | 264,981 | |||||
Goodwill impairment charges | 24,198 | 28,415 | 77,000 | ||||||||
Impairment of assets | 15,168 | — | — | ||||||||
Accruals for legal matters | — | 15,770 | 16,000 | ||||||||
Impairment of minority equity investment | — | 14,993 | — | ||||||||
Reduction in the receivable associated with the DMG acquisition escrow provision | — | 3,894 | — | ||||||||
Gain on settlement, net | (526,827 | ) | — | — | |||||||
Equity investment income related to gain on settlement | (2,677 | ) | — | — | |||||||
Gain on APAC JV ownership changes | (6,273 | ) | — | — | |||||||
Noncontrolling owners’ income primarily attributable to non-tax paying entities | (52,653 | ) | (30,646 | ) | (40,797 | ) | |||||
Noncontrolling interests associated with adjustments | |||||||||||
Goodwill impairment charges | (6,880 | ) | (8,078 | ) | — | ||||||
Gain on settlement, net | 24,029 | — | — | ||||||||
Adjusted income before income taxes attributable to DaVita Inc. | $ | 256,135 | $ | 302,420 | $ | 317,184 | |||||
Income tax expense | $ | 287,765 | $ | 89,802 | $ | 126,822 | |||||
Add income tax related to: | |||||||||||
Goodwill impairment charges | 6,568 | 7,342 | — | ||||||||
Impairment of assets | 5,752 | — | — | ||||||||
Reduction in receivable associated with the DMG acquisition escrow provision | — | 3,894 | — | ||||||||
Accruals for legal matters | — | 4,090 | — | ||||||||
Impairment of minority equity investment | — | 5,360 | — | ||||||||
Less income tax related to: | |||||||||||
Gain on settlement, net | (197,482 | ) | — | — | |||||||
Noncontrolling interests | (65 | ) | (102 | ) | (72 | ) | |||||
Adjusted income tax attributable to DaVita Inc. | $ | 102,538 | $ | 110,386 | $ | 126,750 | |||||
Adjusted effective income tax rate attributable to DaVita Inc. | 40.0 | % | 36.5 | % | 40.0 | % |
Three months ended | |||||||||||
March 31, 2017 | December 31, 2016 | March 31, 2016 | |||||||||
Cash provided by operating activities | $ | 865,174 | $ | 482,182 | $ | 429,002 | |||||
Less: Distributions to noncontrolling interests | (43,316 | ) | (47,329 | ) | (50,409 | ) | |||||
Cash provided by operating activities attributable to DaVita Inc. | 821,858 | 434,853 | 378,593 | ||||||||
Less: Expenditures for routine maintenance and information technology | (88,112 | ) | (105,441 | ) | (73,288 | ) | |||||
Free cash flow | $ | 733,746 | $ | 329,412 | $ | 305,305 |
Rolling 12-Month Period | |||||||||||
March 31, 2017 | December 31, 2016 | March 31, 2016 | |||||||||
Cash provided by operating activities | $ | 2,399,616 | $ | 1,963,444 | $ | 1,576,113 | |||||
Less: Distributions to noncontrolling interests | (185,308 | ) | (192,401 | ) | (183,545 | ) | |||||
Cash provided by operating activities attributable to DaVita Inc. | 2,214,308 | 1,771,043 | 1,392,568 | ||||||||
Less: Expenditures for routine maintenance and information technology | (373,563 | ) | (358,739 | ) | (351,357 | ) | |||||
Free cash flow | $ | 1,840,745 | $ | 1,412,304 | $ | 1,041,211 |
Three months ended | |||||||||||
March 31, 2017 | December 31, 2016 | March 31, 2016 | |||||||||
Medical revenues | $ | 1,068,703 | $ | 1,017,576 | $ | 978,523 | |||||
Less: Risk share revenue, net | (8,652 | ) | (37,243 | ) | (28,402 | ) | |||||
Add: Institutional capitation amounts | 281,899 | 315,033 | 321,776 | ||||||||
Total care dollars under management | $ | 1,341,950 | $ | 1,295,366 | $ | 1,271,897 |
Three months ended March 31, 2017 | Three months ended March 31, 2016 | ||||||||||||||||||||||
Consolidated | Kidney Care | DMG | Consolidated | Kidney Care | DMG | ||||||||||||||||||
Net income attributable to DaVita Inc. | $ | 447,697 | $ | 97,434 | |||||||||||||||||||
Noncontrolling interests | 52,588 | 40,725 | |||||||||||||||||||||
Income taxes | 287,765 | 126,822 | |||||||||||||||||||||
Other income | (4,243 | ) | (2,976 | ) | |||||||||||||||||||
Debt expense | 104,429 | 102,884 | |||||||||||||||||||||
Operating income | 888,236 | 875,928 | 12,308 | 364,889 | 422,033 | (57,145 | ) | ||||||||||||||||
Depreciation and amortization | 190,206 | 132,883 | 57,323 | 169,355 | 123,092 | 46,263 | |||||||||||||||||
EBITDA | $ | 1,078,442 | $ | 1,008,811 | $ | 69,631 | $ | 534,244 | $ | 545,125 | $ | (10,882 | ) |
Three months ended March 31, 2017 | Three months ended March 31, 2016 | ||||||||||||||||||||||
Consolidated | Kidney Care | DMG | Consolidated | Kidney Care | DMG | ||||||||||||||||||
Net income attributable to Davita Inc. | $ | 447,697 | $ | 97,434 | |||||||||||||||||||
Noncontrolling interests | 52,588 | 40,725 | |||||||||||||||||||||
Income taxes | 287,765 | 126,822 | |||||||||||||||||||||
Other income | (4,243 | ) | (2,976 | ) | |||||||||||||||||||
Debt expense | 104,429 | 102,884 | |||||||||||||||||||||
Operating income | 888,236 | 875,928 | 12,308 | 364,889 | 422,033 | (57,145 | ) | ||||||||||||||||
Gain on settlement, net | (526,827 | ) | (526,827 | ) | |||||||||||||||||||
Equity investment income related to gain on settlement | (2,677 | ) | (2,677 | ) | |||||||||||||||||||
Accruals for legal matters | 16,000 | 16,000 | |||||||||||||||||||||
Goodwill and asset impairment charges | 39,366 | 39,366 | 77,000 | 77,000 | |||||||||||||||||||
Gain on APAC JV ownership changes | (6,273 | ) | (6,273 | ) | |||||||||||||||||||
Adjusted operating income | 391,825 | 379,517 | 12,308 | 457,889 | 422,033 | 35,855 | |||||||||||||||||
Depreciation and amortization | 190,206 | 132,883 | 57,323 | 169,355 | 123,092 | 46,263 | |||||||||||||||||
Adjusted EBITDA | $ | 582,031 | $ | 512,400 | $ | 69,631 | $ | 627,244 | $ | 545,125 | $ | 82,118 |
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