EPS Forecast
Revenue Forecast
EX-99.1
2
dva-123119ex991.htm
EXHIBIT 99.1
Exhibit
Contact: Jim Gustafson
Investor Relations
DaVita Inc.
(310) 536-2585
DaVita Inc. 4th Quarter 2019 Results
Denver, Colorado, February 10, 2020 — DaVita Inc. (NYSE: DVA) today announced results for the quarter and year ended December 31, 2019.
Fourth quarter 2019 highlights:
• | Consolidated revenues of $2.899 billion. |
• | Operating income of $463 million or 16.0% operating margin. |
• | Diluted earnings per share from continuing operations of $1.86. |
• | Operating cash flow from continuing operations of $678 million and free cash flow from continuing operations of $415 million. |
• | Repurchased 8,368,506 shares of our common stock at an average cost of $64.80 per share. |
Three months ended December 31, | Year ended December 31, | |||||||||||||||
2019 | 2018 | 2019 | 2018 | |||||||||||||
Net income attributable to DaVita Inc.: | (dollars in millions, except per share data) | |||||||||||||||
Net income from continuing operations | $ | 242 | $ | 160 | $ | 707 | $ | 624 | ||||||||
Per share | $ | 1.86 | $ | 0.96 | $ | 4.60 | $ | 3.62 | ||||||||
Adjusted net income from continuing operations(1) | $ | 242 | $ | 149 | $ | 830 | $ | 616 | ||||||||
Per share adjusted(1) | $ | 1.86 | $ | 0.90 | $ | 5.40 | $ | 3.57 | ||||||||
Net income (loss) | $ | 245 | $ | (150 | ) | $ | 811 | $ | 159 | |||||||
Per share | $ | 1.88 | $ | (0.90 | ) | $ | 5.27 | $ | 0.92 | |||||||
Three months ended December 31, | Year ended December 31, | |||||||||||||||
2019 | 2018 | 2019 | 2018 | |||||||||||||
Operating income: | (dollars in millions) | |||||||||||||||
Operating income | $ | 463 | $ | 388 | $ | 1,643 | $ | 1,526 | ||||||||
Adjusted operating income(1) | $ | 463 | $ | 370 | $ | 1,768 | $ | 1,513 | ||||||||
(1) | For the definitions of non-GAAP financial measures see the note titled “Note on Non-GAAP Financial Measures” and related reconciliations beginning on page 15. |
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U.S. dialysis metrics:
Volume: Total U.S. dialysis treatments for the fourth quarter of 2019 were 7,681,462, or an average of 96,744 treatments per day, representing a per day increase of 1.7% over the fourth quarter of 2018. Normalized non-acquired treatment growth in the fourth quarter of 2019 as compared to the fourth quarter of 2018 was 2.1%.
Three months ended | Quarter change | Year ended | Annual change | ||||||||||||||||||||
December 31, 2019 | September 30, 2019 | December 31, 2019 | December 31, 2018 | ||||||||||||||||||||
Per treatment metrics: | |||||||||||||||||||||||
Revenue | $ | 348.31 | $ | 349.41 | $ | (1.10 | ) | $ | 349.02 | $ | 350.47 | $ | (1.45 | ) | |||||||||
Patient care costs | $ | 237.44 | $ | 236.32 | $ | 1.12 | $ | 239.27 | $ | 247.32 | $ | (8.05 | ) | ||||||||||
General and administrative | $ | 27.27 | $ | 30.63 | $ | (3.36 | ) | $ | 28.41 | $ | 28.40 | $ | 0.01 | ||||||||||
Primary drivers of the changes in the table above are as follows:
Revenue: The quarter change was primarily due to lower calcimimetics revenue. The annual change was primarily due to lower calcimimetics revenue and was also negatively impacted by additional Medicare bad debt revenue recognized in 2018, partially offset by an increase in Medicare rates.
Patient care costs: The quarter change was primarily due to higher direct center operating expenses and medical supply costs, partially offset by lower pharmaceutical costs. The annual change was primarily due to lower pharmaceutical costs, partially offset by higher benefit costs and direct center operating expenses.
General and administrative: The quarter change was primarily due to lower compensation expense. The annual change was primarily due to higher compensation expenses, partially offset by lower advocacy costs.
Certain items impacting the quarter and year:
Share repurchases: The following table summarizes repurchases of our common stock during the quarter and year ended December 31, 2019:
Three months ended December 31, 2019 | Year ended December 31, 2019 | ||||||||||||||||||||
Shares repurchased | Amount paid (in millions) | Paid per share | Shares repurchased | Amount paid (in millions) | Paid per share | ||||||||||||||||
Tender offer(1) | — | $ | — | $ | — | 21,801,975 | $ | 1,234 | $ | 56.60 | |||||||||||
Open market repurchases | 8,368,506 | 542 | 64.80 | 19,218,257 | 1,168 | 60.79 | |||||||||||||||
8,368,506 | $ | 542 | $ | 64.80 | 41,020,232 | $ | 2,402 | $ | 58.57 | ||||||||||||
(1) | The amount paid for shares repurchased associated with our modified "Dutch auction" tender offer during the year ended December 31, 2019 includes the clearing price of $56.50 per share plus related fees and expenses of approximately $2 million. |
Subsequent to December 31, 2019 through February 7, 2020, we have repurchased 290,904 shares of our common stock for $22 million at an average cost of $74.92 per share. As of February 7, 2020, we have a total of $1.682 billion available for additional share repurchases under our current repurchase authorization. Although this share repurchase authorization does not have an expiration date, we remain subject to share repurchase limitations, including under the terms of our senior secured credit facilities and the indentures governing our senior notes.
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Financial and operating metrics:
Three months ended December 31, | Year ended December 31, | |||||||||||||||
2019 | 2018 | 2019 | 2018 | |||||||||||||
Cash flow: | (dollars in millions) | |||||||||||||||
Operating cash flow | $ | 681 | $ | 389 | $ | 2,072 | $ | 1,772 | ||||||||
Operating cash flow from continuing operations | $ | 678 | $ | 307 | $ | 1,973 | $ | 1,481 | ||||||||
Free cash flow from continuing operations (new definition)(1) | $ | 415 | $ | 11 | $ | 1,127 | $ | 480 | ||||||||
(1) | For the definitions of non-GAAP financial measures see the note titled “Note on Non-GAAP Financial Measures” and related reconciliations beginning on page 15. |
Three months ended December 31, 2019 | Year ended December 31, 2019 | |||||
Effective income tax rate on: | ||||||
Income from continuing operations | 21.4 | % | 23.4 | % | ||
Income from continuing operations attributable to DaVita Inc. | 25.2 | % | 28.3 | % | ||
Adjusted income from continuing operations attributable to DaVita Inc.(1) | 25.2 | % | 27.5 | % | ||
(1) | For the definitions of non-GAAP financial measures see the note titled “Note on Non-GAAP Financial Measures” and related reconciliations beginning on page 15. |
Our effective tax rate for the fourth quarter and year ended December 31, 2019 benefited from a decrease in our estimated state tax rate.
Center activity: As of December 31, 2019, we provided dialysis services to a total of approximately 235,500 patients at 3,012 outpatient dialysis centers, of which 2,753 centers were located in the United States and 259 centers were located in ten countries outside of the United States. During the fourth quarter of 2019, we opened a total of 31 new dialysis centers and closed 14 dialysis centers in the United States. In addition, we opened three new dialysis centers and acquired seven dialysis centers outside of the United States during the fourth quarter of 2019.
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Outlook:
The following forward-looking measures and the underlying assumptions involve significant risks and uncertainties, including those described below, and actual results may vary significantly from these current forward-looking measures. We do not provide guidance for diluted net income from continuing operations per share attributable to DaVita Inc., effective tax rate on income from continuing operations or free cash flow from continuing operations 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 foreign currency fluctuations, any of which may be significant. The guidance for effective income tax rate on adjusted income from continuing operations attributable to DaVita Inc. also excludes the amount of third party owners' income and related taxes attributable to non-tax paying entities.
Current 2020 guidance | Prior 2020 guidance | ||||||||||||||
Low | High | Low | High | ||||||||||||
(dollars in millions, except per share data) | |||||||||||||||
Revenue | $ | 11,500 | $ | 11,700 | — | — | |||||||||
Operating income margin | 13.0 | % | 14.0 | % | — | — | |||||||||
Effective income tax rate on adjusted income from continuing operations attributable to DaVita Inc. | 28.0 | % | 29.5 | % | — | — | |||||||||
Adjusted diluted net income from continuing operations per share attributable to DaVita Inc. | $ | 5.75 | $ | 6.25 | $ | 5.25 | $ | 5.75 | |||||||
Capital expenditures from continuing operations | $ | 700 | $ | 750 | $ | 700 | $ | 750 | |||||||
Free cash flow from continuing operations | $ | 600 | $ | 800 | — | — | |||||||||
We will be holding a conference call to discuss our results for the fourth quarter ended December 31, 2019, on February 10, 2020, 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'. A replay of the conference call will be available on our website at investors.davita.com for the following 30 days.
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DaVita Inc. and its representatives may from time to time make written and oral forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 (“PSLRA”), including statements in this release, filings with the Securities and Exchange Commission (“SEC”), reports to stockholders and in meetings with investors and analysts. All such statements in this release, during the related presentation or other meetings, other than statements of historical fact, are forward-looking statements and as such are intended to be covered by the safe harbor for “forward-looking statements” provided by the PSLRA. Without limiting the foregoing, statements including the words “expect,” “intend,” “will,” “plan,” “anticipate,” “believe,” “we are confident that,” “forecast,” “guidance,” “outlook,” “goals,” and similar expressions are intended to identify forward-looking statements.
The forward-looking statements should be considered in light of these risks and uncertainties. All forward-looking statements in this release are based solely on information available to us on the date of this release. We undertake no obligation to publicly update or revise any of our guidance, the assessment of the underlying assumptions or other forward-looking statements, whether as a result of changed circumstances, new information, future events or otherwise.
These forward-looking statements could include but are not limited to statements related to our guidance and expectations for future periods and the assumptions underlying any such projections.
Our actual results and other events could differ materially from any forward-looking statements due to numerous factors that involve substantial known and unknown risks and uncertainties. These risks and uncertainties include, among other things:
• | the concentration of profits generated by higher-paying commercial payor plans for which there is continued downward pressure on average realized payment rates, and a reduction in the number of patients under such plans, including as a result of restrictions or prohibitions on the use and/or availability of charitable premium assistance, which may result in the loss of revenues or patients, or our making incorrect assumptions about how our patients will respond to any change in financial assistance from charitable organizations; |
• | the extent to which the ongoing implementation of healthcare reform, or changes in or new legislation, regulations or guidance, enforcement thereof or related litigation; the extent to which such developments result in a reduction in coverage or reimbursement rates for our services, a reduction in the number of patients enrolled in higher-paying commercial plans, or other material impacts to our business; or our making incorrect assumptions about how our patients will respond to any such developments; |
• | a reduction in government payment rates under the Medicare End Stage Renal Disease program or other government-based programs and the impact of the Medicare Advantage benchmark structure; |
• | risks arising from potential and proposed federal and/or state legislation, regulation and ballot, executive action or other initiatives, including such initiatives related to healthcare and/or labor matters; |
• | the impact of the political environment and related developments on the current healthcare 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 practice patterns, reimbursement and payment policies and processes, or pharmaceutical pricing, including with respect to calcimimetics; |
• | legal and compliance risks, such as our continued compliance with complex government regulations; |
• | continued increased competition from dialysis providers and others, and other potential marketplace changes; |
• | 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 announce or be considering, on terms favorable to us or at all, or to integrate and successfully operate any business we may acquire or have acquired, or to successfully expand our operations and services in markets outside the United States, or to businesses outside of dialysis; |
• | uncertainties related to potential payments and/or adjustments under certain provisions of the equity purchase agreement for the sale of our DaVita Medical Group business, such as post-closing adjustments and indemnification obligations; |
• | 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; |
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• | the variability of our cash flows; the risk that we may not be able to generate 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; |
• | uncertainties related to our use of the proceeds from the DaVita Medical Group sale transaction and other available funds, including external financing and cash flow from operations, which may be or have been used in ways that we cannot assure will improve our results of operations or enhance the value of our common stock; and |
• | uncertainties associated with the other risk factors set forth in our Quarterly Report on Form 10-Q for the quarter ended June 30, 2019 as updated by our Quarterly Report on Form 10-Q for the quarter ended September 30, 2019, and the other risks and uncertainties discussed in any subsequent reports that we file or furnish with 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 year ended December 31, 2019.
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DAVITA INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)
(dollars in thousands, except per share data)
Three months ended December 31, | Year ended December 31, | ||||||||||||||
2019 | 2018 | 2019 | 2018 | ||||||||||||
Dialysis patient service revenues | $ | 2,768,035 | $ | 2,729,803 | $ | 10,918,421 | $ | 10,709,981 | |||||||
Provision for uncollectible accounts | (2,026 | ) | (13,749 | ) | (21,715 | ) | (49,587 | ) | |||||||
Net dialysis patient service revenues | 2,766,009 | 2,716,054 | 10,896,706 | 10,660,394 | |||||||||||
Other revenues | 132,575 | 105,070 | 491,773 | 744,457 | |||||||||||
Total revenues | 2,898,584 | 2,821,124 | 11,388,479 | 11,404,851 | |||||||||||
Operating expenses and charges: | |||||||||||||||
Patient care costs | 2,000,625 | 2,027,069 | 7,914,485 | 8,195,513 | |||||||||||
General and administrative | 278,425 | 268,532 | 1,103,312 | 1,135,454 | |||||||||||
Depreciation and amortization | 158,467 | 155,157 | 615,152 | 591,035 | |||||||||||
Provision for uncollectible accounts | — | — | — | (7,300 | ) | ||||||||||
Equity investment (income) loss | (1,521 | ) | 10,610 | (12,679 | ) | 4,484 | |||||||||
Investment and other asset impairments | — | — | — | 17,338 | |||||||||||
Goodwill impairment charges | — | — | 124,892 | 3,106 | |||||||||||
Gain on changes in ownership interest, net | — | (28,152 | ) | — | (60,603 | ) | |||||||||
Total operating expenses and charges | 2,435,996 | 2,433,216 | 9,745,162 | 9,879,027 | |||||||||||
Operating income | 462,588 | 387,908 | 1,643,317 | 1,525,824 | |||||||||||
Debt expense | (92,050 | ) | (128,300 | ) | (443,824 | ) | (487,435 | ) | |||||||
Debt prepayment, refinancing and redemption charges | — | — | (33,402 | ) | — | ||||||||||
Other income (loss), net | 11,485 | (494 | ) | 29,348 | 10,089 | ||||||||||
Income from continuing operations before income taxes | 382,023 | 259,114 | 1,195,439 | 1,048,478 | |||||||||||
Income tax expense | 81,690 | 51,748 | 279,628 | 258,400 | |||||||||||
Net income from continuing operations | 300,333 | 207,366 | 915,811 | 790,078 | |||||||||||
Net income (loss) from discontinued operations, net of tax | 2,629 | (309,209 | ) | 105,483 | (457,038 | ) | |||||||||
Net income (loss) | 302,962 | (101,843 | ) | 1,021,294 | 333,040 | ||||||||||
Less: Net income attributable to noncontrolling interests | (58,091 | ) | (47,929 | ) | (210,313 | ) | (173,646 | ) | |||||||
Net income (loss) attributable to DaVita Inc. | $ | 244,871 | $ | (149,772 | ) | $ | 810,981 | $ | 159,394 | ||||||
Earnings per share attributable to DaVita Inc.: | |||||||||||||||
Basic net income from continuing operations per share | $ | 1.87 | $ | 0.97 | $ | 4.61 | $ | 3.66 | |||||||
Basic net income (loss) per share | $ | 1.89 | $ | (0.90 | ) | $ | 5.29 | $ | 0.93 | ||||||
Diluted net income from continuing operations per share | $ | 1.86 | $ | 0.96 | $ | 4.60 | $ | 3.62 | |||||||
Diluted net income (loss) per share | $ | 1.88 | $ | (0.90 | ) | $ | 5.27 | $ | 0.92 | ||||||
Weighted average shares for earnings per share: | |||||||||||||||
Basic | 129,446,558 | 165,984,925 | 153,180,908 | 170,785,999 | |||||||||||
Diluted | 130,504,514 | 166,477,914 | 153,812,064 | 172,364,581 | |||||||||||
Amounts attributable to DaVita Inc.: | |||||||||||||||
Net income from continuing operations | $ | 242,242 | $ | 160,332 | $ | 706,832 | $ | 624,321 | |||||||
Net income (loss) from discontinued operations | 2,629 | (310,104 | ) | 104,149 | (464,927 | ) | |||||||||
Net income (loss) attributable to DaVita Inc. | $ | 244,871 | $ | (149,772 | ) | $ | 810,981 | $ | 159,394 | ||||||
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DAVITA INC.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(unaudited)
(dollars in thousands)
Three months ended December 31, | Year ended December 31, | ||||||||||||||
2019 | 2018 | 2019 | 2018 | ||||||||||||
Net income (loss) | $ | 302,962 | $ | (101,843 | ) | $ | 1,021,294 | $ | 333,040 | ||||||
Other comprehensive income (loss), net of tax: | |||||||||||||||
Unrealized gains (losses) on interest rate cap agreements: | |||||||||||||||
Unrealized gains (losses) | 2,822 | (953 | ) | 1,151 | (133 | ) | |||||||||
Reclassifications into net income (loss) | 1,595 | 1,606 | 6,377 | 6,286 | |||||||||||
Unrealized gains (losses) on foreign currency translation: | |||||||||||||||
Foreign currency translation adjustments | 25,688 | (6,469 | ) | (20,102 | ) | (45,944 | ) | ||||||||
Other comprehensive income (loss) | 30,105 | (5,816 | ) | (12,574 | ) | (39,791 | ) | ||||||||
Total comprehensive income (loss) | 333,067 | (107,659 | ) | 1,008,720 | 293,249 | ||||||||||
Less: Comprehensive income attributable to noncontrolling interests | (58,091 | ) | (47,929 | ) | (210,313 | ) | (173,646 | ) | |||||||
Comprehensive income (loss) attributable to DaVita Inc. | $ | 274,976 | $ | (155,588 | ) | $ | 798,407 | $ | 119,603 | ||||||
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DAVITA INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
(dollars in thousands)
Year ended December 31, | |||||||
2019 | 2018 | ||||||
Cash flows from operating activities: | |||||||
Net income | $ | 1,021,294 | $ | 333,040 | |||
Adjustments to reconcile net income to net cash provided by operating activities: | |||||||
Depreciation and amortization | 615,152 | 591,035 | |||||
Impairment charges | 124,892 | 61,981 | |||||
Valuation adjustment on disposal group | — | 316,840 | |||||
Debt prepayment, refinancing and redemption charges | 33,402 | — | |||||
Stock-based compensation expense | 67,850 | 73,061 | |||||
Deferred income taxes | 41,723 | 273,660 | |||||
Equity investment income, net | 8,582 | 26,449 | |||||
Gain (loss) on sales of business interests, net | 23,022 | (85,699 | ) | ||||
Other non-cash charges, net | 49,579 | 82,374 | |||||
Changes in operating assets and liabilities, net of effect of acquisitions and divestitures: | |||||||
Accounts receivable | (79,957 | ) | (81,176 | ) | |||
Inventories | 10,158 | 73,505 | |||||
Other receivables and other current assets | 2,790 | 236,995 | |||||
Other long-term assets | 6,965 | 3,497 | |||||
Accounts payable | (84,539 | ) | (35,959 | ) | |||
Accrued compensation and benefits | (14,697 | ) | 84,165 | ||||
Other current liabilities | 181,940 | (157,462 | ) | ||||
Income taxes | 95,645 | (23,635 | ) | ||||
Other long-term liabilities | (31,446 | ) | (1,031 | ) | |||
Net cash provided by operating activities | 2,072,355 | 1,771,640 | |||||
Cash flows from investing activities: | |||||||
Additions of property and equipment | (766,546 | ) | (987,138 | ) | |||
Acquisitions | (100,861 | ) | (183,156 | ) | |||
Proceeds from asset and business sales | 3,877,392 | 150,205 | |||||
Purchase of other debt and equity investments | (5,458 | ) | (8,448 | ) | |||
Purchase of investments held-to-maturity | (101,462 | ) | (5,963 | ) | |||
Proceeds from sale of other debt and equity investments | 3,676 | 9,526 | |||||
Proceeds from investments held-to-maturity | 95,376 | 34,862 | |||||
Purchase of equity investments | (9,366 | ) | (19,177 | ) | |||
Distributions received on equity investments | 2,589 | 3,646 | |||||
Net cash provided by (used in) investing activities | 2,995,340 | (1,005,643 | ) | ||||
Cash flows from financing activities: | |||||||
Borrowings | 38,525,850 | 59,934,750 | |||||
Payments on long-term debt and other financing costs | (40,606,041 | ) | (59,239,973 | ) | |||
Purchase of treasury stock | (2,383,816 | ) | (1,161,511 | ) | |||
Distributions to noncontrolling interests | (233,123 | ) | (196,441 | ) | |||
Stock award exercises and other share issuances, net | 11,382 | 13,577 | |||||
Contributions from noncontrolling interests | 57,317 | 52,311 | |||||
Proceeds from sales of additional noncontrolling interest | — | 15 | |||||
Purchases of noncontrolling interests | (68,019 | ) | (28,082 | ) | |||
Net cash used in financing activities | (4,696,450 | ) | (625,354 | ) | |||
Effect of exchange rate changes on cash, cash equivalents and restricted cash | (1,760 | ) | (3,350 | ) | |||
Net increase in cash, cash equivalents and restricted cash | 369,485 | 137,293 | |||||
Less: Net (decrease) increase in cash, cash equivalents and restricted cash from discontinued operations | (423,813 | ) | 240,793 | ||||
Net increase (decrease) in cash, cash equivalents and restricted cash from continuing operations | 793,298 | (103,500 | ) | ||||
Cash, cash equivalents and restricted cash of continuing operations at beginning of the year | 415,420 | 518,920 | |||||
Cash, cash equivalents and restricted cash of continuing operations at end of the year | $ | 1,208,718 | $ | 415,420 | |||
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DAVITA INC.
CONSOLIDATED BALANCE SHEETS
(unaudited)
(dollars in thousands, except share data)
December 31, 2019 | December 31, 2018 | ||||||
ASSETS | |||||||
Cash and cash equivalents | $ | 1,102,372 | $ | 323,038 | |||
Restricted cash and equivalents | 106,346 | 92,382 | |||||
Short-term investments | 11,572 | 2,935 | |||||
Accounts receivable, net | 1,795,598 | 1,858,608 | |||||
Inventories | 97,949 | 107,381 | |||||
Other receivables | 489,695 | 469,796 | |||||
Prepaid and other current assets | 66,866 | 111,840 | |||||
Income tax receivable | 19,772 | 68,614 | |||||
Current assets held for sale, net | — | 5,389,565 | |||||
Total current assets | 3,690,170 | 8,424,159 | |||||
Property and equipment, net | 3,473,384 | 3,393,669 | |||||
Operating lease right-of-use assets | 2,830,047 | — | |||||
Intangible assets, net | 135,684 | 118,846 | |||||
Equity method and other investments | 241,983 | 224,611 | |||||
Long-term investments | 36,519 | 35,424 | |||||
Other long-term assets | 115,972 | 71,583 | |||||
Goodwill | 6,787,635 | 6,841,960 | |||||
$ | 17,311,394 | $ | 19,110,252 | ||||
LIABILITIES AND EQUITY | |||||||
Accounts payable | $ | 403,840 | $ | 463,270 | |||
Other liabilities | 756,174 | 595,850 | |||||
Accrued compensation and benefits | 695,052 | 658,913 | |||||
Current portion of operating lease liabilities | 343,912 | — | |||||
Current portion of long-term debt | 130,708 | 1,929,369 | |||||
Income tax payable | 42,412 | — | |||||
Current liabilities held for sale | — | 1,243,759 | |||||
Total current liabilities | 2,372,098 | 4,891,161 | |||||
Long-term operating lease liabilities | 2,723,800 | — | |||||
Long-term debt | 7,977,526 | 8,172,847 | |||||
Other long-term liabilities | 160,809 | 450,669 | |||||
Deferred income taxes | 577,543 | 562,536 | |||||
Total liabilities | 13,811,776 | 14,077,213 | |||||
Commitments and contingencies | |||||||
Noncontrolling interests subject to put provisions | 1,180,376 | 1,124,641 | |||||
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; 125,842,853 and 166,387,307 shares issued and outstanding, respectively) | 126 | 166 | |||||
Additional paid-in capital | 749,043 | 995,006 | |||||
Retained earnings | 1,431,738 | 2,743,194 | |||||
Accumulated other comprehensive loss | (47,498 | ) | (34,924 | ) | |||
Total DaVita Inc. shareholders' equity | 2,133,409 | 3,703,442 | |||||
Noncontrolling interests not subject to put provisions | 185,833 | 204,956 | |||||
Total equity | 2,319,242 | 3,908,398 | |||||
$ | 17,311,394 | $ | 19,110,252 | ||||
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DAVITA INC.
SUPPLEMENTAL FINANCIAL DATA
(unaudited)
(dollars in millions, except for per share and per treatment data)
Three months ended | Year ended December 31, 2019 | ||||||||||||||
December 31, 2019 | September 30, 2019 | December 31, 2018 | |||||||||||||
1. Consolidated business metrics: | |||||||||||||||
Operating income margin | 16.0 | % | 13.0 | % | 13.8 | % | 14.4 | % | |||||||
Adjusted operating income margin excluding certain items(1)(5) | 16.0 | % | 15.9 | % | 13.1 | % | 15.5 | % | |||||||
General and administrative expenses as a percent of consolidated revenues(2) | 9.6 | % | 10.3 | % | 9.5 | % | 9.7 | % | |||||||
Effective income tax rate on income from continuing operations | 21.4 | % | 23.8 | % | 20.0 | % | 23.4 | % | |||||||
Effective income tax rate on income from continuing operations attributable to DaVita Inc.(1) | 25.2 | % | 30.3 | % | 24.3 | % | 28.3 | % | |||||||
Effective income tax rate on adjusted income from continuing operations attributable to DaVita Inc.(1) | 25.2 | % | 27.6 | % | 23.1 | % | 27.5 | % | |||||||
2. Summary of financial results: | |||||||||||||||
Revenues: | |||||||||||||||
U.S. net dialysis patient services and other | $ | 2,687 | $ | 2,691 | $ | 2,633 | $ | 10,563 | |||||||
Other—Ancillary services | |||||||||||||||
U.S. other | 122 | 118 | 100 | 464 | |||||||||||
International net dialysis patient service and other | 132 | 131 | 124 | 508 | |||||||||||
255 | 248 | 224 | 972 | ||||||||||||
Eliminations | (43 | ) | (36 | ) | (35 | ) | (146 | ) | |||||||
Total consolidated revenues | $ | 2,899 | $ | 2,904 | $ | 2,821 | $ | 11,388 | |||||||
Operating income (loss): | |||||||||||||||
U.S. dialysis | $ | 508 | $ | 501 | $ | 437 | $ | 1,925 | |||||||
Other—Ancillary services | |||||||||||||||
U.S. | (21 | ) | (15 | ) | (19 | ) | (66 | ) | |||||||
International | 2 | (83 | ) | (10 | ) | (123 | ) | ||||||||
(19 | ) | (98 | ) | (29 | ) | (189 | ) | ||||||||
Corporate administrative support expenses | (27 | ) | (25 | ) | (20 | ) | (92 | ) | |||||||
Total consolidated operating income | $ | 463 | $ | 378 | $ | 388 | $ | 1,643 | |||||||
11
DAVITA INC.
SUPPLEMENTAL FINANCIAL DATA - continued
(unaudited)
(dollars in millions, except for per share and per treatment data)
Three months ended | Year ended December 31, 2019 | ||||||||||||||
December 31, 2019 | September 30, 2019 | December 31, 2018 | |||||||||||||
3. Summary of reportable segment financial results: | |||||||||||||||
U.S. dialysis | |||||||||||||||
Revenue: | |||||||||||||||
Net dialysis patient service revenues | $ | 2,676 | $ | 2,681 | $ | 2,628 | $ | 10,531 | |||||||
Other revenues | 11 | 10 | 5 | 32 | |||||||||||
Total operating revenues | 2,687 | 2,691 | 2,633 | 10,563 | |||||||||||
Operating expenses: | |||||||||||||||
Patient care costs | 1,824 | 1,813 | 1,872 | 7,219 | |||||||||||
General and administrative | 209 | 235 | 210 | 857 | |||||||||||
Depreciation and amortization | 150 | 148 | 147 | 583 | |||||||||||
Equity investment income | (5 | ) | (5 | ) | (5 | ) | (22 | ) | |||||||
Gain on changes in ownership interests, net | — | — | (28 | ) | — | ||||||||||
Total operating expenses | 2,179 | 2,191 | 2,196 | 8,638 | |||||||||||
Segment operating income | $ | 508 | $ | 501 | $ | 437 | $ | 1,925 | |||||||
Reconciliation for non-GAAP measure: | |||||||||||||||
Gain on changes in ownership interests, net | — | — | (28 | ) | — | ||||||||||
Adjusted segment operating income(1) | $ | 508 | $ | 501 | $ | 409 | $ | 1,925 | |||||||
4. U.S. dialysis business metrics: | |||||||||||||||
Volume: | |||||||||||||||
Treatments | 7,681,462 | 7,673,191 | 7,552,412 | 30,172,699 | |||||||||||
Number of treatment days | 79.4 | 79.0 | 79.4 | 313.0 | |||||||||||
Average treatments per day | 96,744 | 97,129 | 95,119 | 96,398 | |||||||||||
Per day year over year increase | 1.7 | % | 2.7 | % | 3.1 | % | 2.5 | % | |||||||
Normalized non-acquired treatment growth year over year | 2.1 | % | 2.2 | % | 2.6 | % | |||||||||
Operating net revenues: | |||||||||||||||
U.S. dialysis services net revenue per treatment | $ | 348.31 | $ | 349.41 | $ | 347.97 | $ | 349.02 | |||||||
Expenses: | |||||||||||||||
Patient care costs per treatment | $ | 237.44 | $ | 236.32 | $ | 247.81 | $ | 239.27 | |||||||
General and administrative expenses per treatment | $ | 27.27 | $ | 30.63 | $ | 27.86 | $ | 28.41 | |||||||
Accounts receivable: | |||||||||||||||
Net receivables | $ | 1,671 | $ | 1,719 | $ | 1,703 | |||||||||
DSO | 58 | 60 | 60 | ||||||||||||
5. Discontinued operations | |||||||||||||||
Operating results: | |||||||||||||||
Net revenues | $ | — | $ | — | $ | 1,231 | $ | 2,713 | |||||||
Expenses | 2 | 2 | 1,282 | 2,544 | |||||||||||
Valuation adjustment | — | — | 219 | — | |||||||||||
Goodwill impairment charges | — | — | 42 | — | |||||||||||
(Loss) income from discontinued operations before taxes | (2 | ) | (2 | ) | (313 | ) | 169 | ||||||||
Loss on sale of discontinued operations, before taxes | — | — | — | (23 | ) | ||||||||||
Income tax (benefit) expense | (5 | ) | 5 | (3 | ) | 41 | |||||||||
Net income (loss) from discontinued operations, net of tax | $ | 3 | $ | (7 | ) | $ | (309 | ) | $ | 105 | |||||
12
DAVITA INC.
SUPPLEMENTAL FINANCIAL DATA - continued
(unaudited)
(dollars in millions, except for per share and per treatment data)
Three months ended | Year ended December 31, 2019 | ||||||||||||||
December 31, 2019 | September 30, 2019 | December 31, 2018 | |||||||||||||
6. Cash flow: | |||||||||||||||
Operating cash flow | $ | 681 | $ | 641 | $ | 389 | $ | 2,072 | |||||||
Operating cash flow from continuing operations | $ | 678 | $ | 648 | $ | 307 | $ | 1,973 | |||||||
Operating cash flow from continuing operations, last twelve months | $ | 1,973 | $ | 1,602 | $ | 1,481 | |||||||||
Free cash flow from continuing operations (new definition)(1) | $ | 415 | $ | 437 | $ | 11 | $ | 1,127 | |||||||
Free cash flow from continuing operations, last twelve months (new definition)(1) | $ | 1,127 | $ | 722 | $ | 480 | |||||||||
Capital expenditures from continuing operations: | |||||||||||||||
Routine maintenance/IT/other | $ | 130 | $ | 84 | $ | 139 | $ | 355 | |||||||
Development and relocations | $ | 89 | $ | 90 | $ | 123 | $ | 373 | |||||||
Acquisition expenditures | $ | 24 | $ | 11 | $ | 65 | $ | 99 | |||||||
Proceeds from sale of self-developed properties | $ | 19 | $ | 12 | $ | 13 | $ | 58 | |||||||
7. Debt and capital structure: | |||||||||||||||
Total debt(3)(4) | $ | 8,181 | $ | 8,212 | $ | 10,154 | |||||||||
Net debt, net of cash and cash equivalents(3)(4) | $ | 7,079 | $ | 6,959 | $ | 9,831 | |||||||||
Leverage ratio (see calculation on page 14) | 3.08x | 3.21x | 4.52x | ||||||||||||
Weighted average effective interest rate: | |||||||||||||||
During the quarter | 4.55 | % | 5.09 | % | 5.07 | % | |||||||||
At end of the quarter | 4.46 | % | 4.66 | % | 5.19 | % | |||||||||
On the senior secured credit facilities at end of the quarter | 3.93 | % | 4.30 | % | 5.11 | % | |||||||||
Debt with fixed and capped rates as a percentage of total debt: | |||||||||||||||
Debt with rates fixed by its terms | 44 | % | 44 | % | 48 | % | |||||||||
Debt with rates capped by cap agreements | 87 | % | 86 | % | 82 | % | |||||||||
Amount spent on share repurchases | $ | 542 | $ | 1,748 | $ | — | $ | 2,402 | |||||||
Number of shares repurchased | 8,368,506 | 30,591,750 | — | 41,020,232 | |||||||||||
Certain columns, rows or percentages may not sum or recalculate due to the use of rounded numbers.
_________________
(1) | These are non-GAAP financial measures. For a reconciliation of these non-GAAP financial measures to their most comparable measure calculated and presented in accordance with GAAP, and for a definition of adjusted amounts, see attached reconciliation schedules. |
(2) | General and administrative expenses includes certain corporate support, long-term incentive compensation and advocacy costs. |
(3) | The reported balance sheet amounts at December 31, 2019, September 30, 2019 and December 31, 2018, exclude approximately $72.8, $76.0 and $52.0, respectively, of debt discount associated with the Term Loan B and other deferred financing costs related to our senior secured credit facilities and senior notes in effect at that time. The reported balance sheet amounts exclude DMG debt which was classified as held for sale liabilities as of December 31, 2018. |
(4) | The reported total debt and net debt, net of cash and cash equivalents, excludes DMG cash and debt classified as held for sale assets and liabilities, respectively, as of December 31, 2018. |
(5) | Adjusted operating income margin is a calculation of adjusted operating income divided by consolidated revenues. |
13
DAVITA INC.
SUPPLEMENTAL FINANCIAL DATA-continued
(unaudited)
(dollars in thousands)
Note 1: Calculation of the Leverage Ratio
Under our new senior secured credit facilities (the New Credit Agreement) dated August 12, 2019 and our prior senior secured credit facilities (the Prior 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, not to exceed certain limits under the New Credit Agreement, including short-term investments, divided by “Consolidated EBITDA”. The leverage ratio determines the interest rate margin payable by the Company for its new Term Loan A and new revolving line of credit under the New Credit Agreement by establishing the margin over the base interest rate (LIBOR) that is applicable. The following leverage ratios were calculated using "Consolidated EBITDA" and "Consolidated net debt" as defined in the credit agreement that was in effect at the end of each period. The calculation below is based on the last twelve months of “Consolidated EBITDA”, as of the end of the reported period and pro forma for routine acquisitions that occurred during the period. The Company’s management believes the presentation of "Consolidated EBITDA" is useful to users to enhance their understanding of the Company’s leverage ratio under its credit agreement in effect at that time. The leverage ratio calculated by the Company is a non-GAAP measure and should not be considered a substitute for debt to net income attributable to DaVita Inc., net income attributable to DaVita Inc. or total debt as determined in accordance with United States generally accepted accounting principles (GAAP). The Company’s calculation of its leverage ratio might not be calculated in the same manner as, and thus might not be comparable to, similarly titled measures by other companies.
Rolling twelve months ended | |||||||||||
December 31, 2019 | September 30, 2019 | December 31, 2018 | |||||||||
Net income(1) | $ | 706,832 | $ | 624,922 | $ | 159,394 | |||||
Income taxes | 279,628 | 249,686 | 358,168 | ||||||||
Interest expense | 397,934 | 437,513 | 451,251 | ||||||||
Depreciation and amortization | 615,151 | 611,841 | 591,035 | ||||||||
Impairment charges | 124,892 | 124,892 | 61,981 | ||||||||
Noncontrolling interests and equity investment income, net | 223,175 | 210,641 | 183,855 | ||||||||
Stock-settled stock-based compensation | 63,404 | 56,784 | 73,081 | ||||||||
Debt prepayment, refinancing and redemption charges | 33,402 | 33,402 | — | ||||||||
Gain on changes in ownership interest, net | — | (28,152 | ) | (85,699 | ) | ||||||
Valuation adjustment | — | — | 316,840 | ||||||||
Other | (12,025 | ) | 24,088 | 41,084 | |||||||
“Consolidated EBITDA” | $ | 2,432,393 | $ | 2,345,617 | $ | 2,150,990 | |||||
December 31, 2019 | September 30, 2019 | December 31, 2018 | |||||||||
Total debt, excluding debt discount and other deferred financing costs(2) | $ | 8,181,074 | $ | 8,211,895 | $ | 10,190,763 | |||||
Letters of credit issued | 72,759 | 72,777 | 36,987 | ||||||||
8,253,833 | 8,284,672 | 10,227,750 | |||||||||
Less: Cash and cash equivalents including short-term investments(3) | (750,000 | ) | (750,000 | ) | (501,695 | ) | |||||
Consolidated net debt | $ | 7,503,833 | $ | 7,534,672 | $ | 9,726,055 | |||||
Last twelve months “Consolidated EBITDA” | $ | 2,432,393 | $ | 2,345,617 | $ | 2,150,990 | |||||
Leverage ratio | 3.08x | 3.21x | 4.52x | ||||||||
Maximum leverage ratio permitted under New and Prior Credit Agreement | 5.00x | 5.00x | 5.00x | ||||||||
(1) | The reported net income for December 31, 2019 and September 30, 2019 is our reported net income from continuing operations attributable to DaVita Inc. as the New Credit Agreement requires divestitures to be reflected on a proforma basis, as such DMG is excluded from our leverage ratio calculation. The reported net income for December 31, 2018 is our reported net income attributable to DaVita Inc. |
(2) | The reported total debt amounts at December 31, 2019, September 30, 2019 and December 31, 2018, exclude $72,840, $75,979 and $52,000, respectively, of debt discount associated with the Term Loan B and other deferred financing costs. |
(3) | Excluding DMG’s-physician owned entities' cash for the twelve months ended December 31, 2018 and amounts not readily convertible to cash related to the Company's non-qualified deferred compensation plans for all periods presented. The Company's New Credit Agreement limits the amount deducted for cash and cash equivalents to the lesser of all unrestricted cash and cash equivalents of the Company or $750,000. |
14
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 measures, the term “adjusted” refers to operating performance measures that exclude certain items such as impairment charges, (gain) loss on ownership changes, restructuring charges, debt prepayment charges and gains and charges associated with settlements; and (ii) the term “effective income tax rate on adjusted income from continuing operations attributable to DaVita Inc.” represents the Company’s effective tax rate excluding applicable non-GAAP items and 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 operating income, adjusted net income from continuing operations attributable to DaVita Inc. and adjusted diluted net income from continuing operations 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 operating income 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.
In addition, the effective income tax rate on income from continuing operations attributable to DaVita Inc. excludes noncontrolling owners' income, which primarily relates to non-tax paying entities.
The effective income tax rate on adjusted income from continuing operations 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, under our new definition, free cash flow from continuing operations represents net cash provided by operating activities from continuing operations less distributions to noncontrolling interests and all capital expenditures (including development capital expenditures, routine maintenance and information technology); plus contributions from noncontrolling interests and sale leaseback proceeds. 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 from continuing operations 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 2 through 5 provide reconciliations of the non-GAAP financial measures presented in this press release to their most comparable GAAP measures.
15
DAVITA INC.
RECONCILIATIONS FOR NON-GAAP MEASURES - continued
(unaudited)
(dollars in thousands, except for per share data)
Note 2: | Adjusted net income from continuing operations and adjusted diluted net income from continuing operations per share attributable to DaVita Inc. |
Three months ended | |||||||||||||||||||||||
December 31, 2019 | September 30, 2019 | December 31, 2018 | |||||||||||||||||||||
Dollars | Per share | Dollars | Per share | Dollars | Per share | ||||||||||||||||||
Net income from continuing operations attributable to DaVita Inc. | $ | 242,242 | $ | 1.86 | $ | 150,113 | $ | 0.99 | $ | 160,332 | $ | 0.96 | |||||||||||
Operating charges: | |||||||||||||||||||||||
Goodwill impairment charges | — | — | 83,855 | 0.55 | — | — | |||||||||||||||||
Gain on changes in ownership interests, net | — | — | — | — | (28,152 | ) | (0.17 | ) | |||||||||||||||
Equity investment: | |||||||||||||||||||||||
Loss due to business sale in APAC JV | — | — | — | — | 8,715 | 0.05 | |||||||||||||||||
Loss due to impairments in the APAC JV | — | — | — | — | 1,530 | 0.01 | |||||||||||||||||
Debt prepayment, refinancing and redemption charges | — | — | 21,242 | 0.14 | — | — | |||||||||||||||||
Related income tax | — | — | (23,236 | ) | (0.15 | ) | 6,719 | 0.04 | |||||||||||||||
Adjusted net income from continuing operations attributable to DaVita Inc. | $ | 242,242 | $ | 1.86 | $ | 231,974 | $ | 1.53 | $ | 149,144 | $ | 0.90 | |||||||||||
Year ended | |||||||||||||||
December 31, 2019 | December 31, 2018 | ||||||||||||||
Dollars | Per share | Dollars | Per share | ||||||||||||
Net income from continuing operations attributable to DaVita Inc. | $ | 706,832 | $ | 4.60 | $ | 624,321 | $ | 3.62 | |||||||
Operating charges: | |||||||||||||||
Goodwill impairment charges | 124,892 | 0.81 | 3,106 | 0.02 | |||||||||||
Impairment of other assets | — | — | 17,338 | 0.10 | |||||||||||
Gain on changes in ownership interests, net | — | — | (60,603 | ) | (0.35 | ) | |||||||||
Equity investment: | |||||||||||||||
Loss due to business sale in APAC JV | — | — | 8,715 | 0.05 | |||||||||||
Loss due to impairments in the APAC JV | — | — | 7,525 | 0.04 | |||||||||||
General and administrative: | |||||||||||||||
Restructuring charges | — | — | 11,366 | 0.07 | |||||||||||
Debt prepayment, refinancing and redemption charges | 33,402 | 0.22 | — | — | |||||||||||
Related income tax | (35,231 | ) | (0.23 | ) | 4,181 | 0.02 | |||||||||
Adjusted net income from continuing operations attributable to DaVita Inc. | $ | 829,895 | $ | 5.40 | $ | 615,949 | $ | 3.57 | |||||||
Certain columns or rows may not sum or recalculate due to the use of rounded numbers.
16
DAVITA INC.
RECONCILIATIONS FOR NON-GAAP MEASURES - continued
(unaudited)
(dollars in thousands)
Note 3: Adjusted operating income
Three months ended | Year ended | ||||||||||||||||||
December 31, 2019 | September 30, 2019 | December 31, 2018 | December 31, 2019 | December 31, 2018 | |||||||||||||||
Consolidated: | |||||||||||||||||||
Operating income | $ | 462,588 | $ | 378,336 | $ | 387,908 | $ | 1,643,317 | $ | 1,525,824 | |||||||||
Operating charges: | |||||||||||||||||||
Goodwill impairment charges | — | 83,855 | — | 124,892 | 3,106 | ||||||||||||||
Impairment of other assets | — | — | — | — | 17,338 | ||||||||||||||
Gain on changes in ownership interests, net | — | — | (28,152 | ) | — | (60,603 | ) | ||||||||||||
Equity investment: | |||||||||||||||||||
Loss due to business sale in APAC JV | — | — | 8,715 | — | 8,715 | ||||||||||||||
Loss due to impairments in the APAC JV | — | — | 1,530 | — | 7,525 | ||||||||||||||
General and administrative: | |||||||||||||||||||
Restructuring charges | — | — | — | — | 11,366 | ||||||||||||||
Adjusted operating income | $ | 462,588 | $ | 462,191 | $ | 370,001 | $ | 1,768,209 | $ | 1,513,271 | |||||||||
Three months ended | Year ended | ||||||||||||||||||
December 31, 2019 | September 30, 2019 | December 31, 2018 | December 31, 2019 | December 31, 2018 | |||||||||||||||
Consolidated: | |||||||||||||||||||
U.S. dialysis: | |||||||||||||||||||
Segment operating income | $ | 508,146 | $ | 500,742 | $ | 436,893 | $ | 1,924,826 | $ | 1,709,721 | |||||||||
Gain on changes in ownership interests, net | — | — | (28,152 | ) | — | (28,152 | ) | ||||||||||||
Adjusted U.S. dialysis operating income | $ | 508,146 | $ | 500,742 | $ | 408,742 | $ | 1,924,826 | $ | 1,681,570 | |||||||||
Other - Ancillary services: | |||||||||||||||||||
U.S. | |||||||||||||||||||
Segment operating loss | $ | (20,878 | ) | $ | (14,928 | ) | $ | (18,993 | ) | $ | (66,377 | ) | $ | (70,396 | ) | ||||
Impairment of other assets | — | — | — | — | 17,338 | ||||||||||||||
Restructuring charges | — | — | — | — | 11,366 | ||||||||||||||
Gain on changes in ownership interests | — | — | — | — | (33,699 | ) | |||||||||||||
Adjusted operating loss | $ | (20,878 | ) | $ | (14,928 | ) | $ | (18,993 | ) | $ | (66,377 | ) | $ | (75,390 | ) | ||||
International | |||||||||||||||||||
Segment operating income (loss) | $ | 2,109 | $ | (82,797 | ) | $ | (10,489 | ) | $ | (122,797 | ) | $ | (23,394 | ) | |||||
Goodwill impairment charges | — | 83,855 | — | 124,892 | 3,106 | ||||||||||||||
Loss on changes in ownership interests | — | — | — | — | 1,248 | ||||||||||||||
Equity investment: | |||||||||||||||||||
Loss due to business sale in the APAC JV | — | — | 8,715 | — | 8,715 | ||||||||||||||
Loss due to impairments in the APAC JV | — | — | 1,530 | — | 7,525 | ||||||||||||||
Adjusted operating income (loss) | $ | 2,109 | $ | 1,058 | $ | (245 | ) | $ | 2,095 | $ | (2,800 | ) | |||||||
Adjusted Other - Ancillary services operating loss | $ | (18,770 | ) | $ | (13,870 | ) | $ | (19,238 | ) | $ | (64,282 | ) | $ | (78,190 | ) | ||||
Corporate administrative support expenses | $ | (26,788 | ) | $ | (24,681 | ) | $ | (19,502 | ) | $ | (92,335 | ) | $ | (90,108 | ) | ||||
Adjusted operating income | $ | 462,588 | $ | 462,191 | $ | 370,001 | $ | 1,768,209 | $ | 1,513,271 | |||||||||
Certain columns or rows may not sum or recalculate due to the use of rounded numbers.
17
DAVITA INC.
RECONCILIATIONS FOR NON-GAAP MEASURES - continued
(unaudited)
(dollars in thousands)
Note 4: Effective income tax rates on income from continuing operations attributable to DaVita Inc.
Three months ended | Year ended December 31, 2019 | ||||||||||||||
December 31, 2019 | September 30, 2019 | December 31, 2018 | |||||||||||||
Income from continuing operations before income taxes | $ | 382,023 | $ | 273,785 | $ | 259,114 | $ | 1,195,439 | |||||||
Less: Noncontrolling owners’ income primarily attributable to non-tax paying entities | (58,118 | ) | (58,502 | ) | (47,203 | ) | (209,544 | ) | |||||||
Income from continuing operations before income taxes attributable to DaVita Inc. | $ | 323,905 | $ | 215,283 | $ | 211,911 | $ | 985,895 | |||||||
Income tax expense for continuing operations | $ | 81,690 | $ | 65,254 | $ | 51,748 | $ | 279,628 | |||||||
Less: Income tax attributable to noncontrolling interests | (27 | ) | (84 | ) | (169 | ) | (565 | ) | |||||||
Income tax expense from continuing operations attributable to DaVita Inc. | $ | 81,663 | $ | 65,170 | $ | 51,579 | $ | 279,063 | |||||||
Effective income tax rate on income from continuing operations attributable to DaVita Inc. | 25.2 | % | 30.3 | % | 24.3 | % | 28.3 | % | |||||||
The effective income tax rate on adjusted income from continuing operations attributable to DaVita Inc. is computed as follows:
Three months ended | Year ended December 31, 2019 | ||||||||||||||
December 31, 2019 | September 30, 2019 | December 31, 2018 | |||||||||||||
Income from continuing operations before income taxes | $ | 382,023 | $ | 273,785 | $ | 259,114 | $ | 1,195,439 | |||||||
Operating charges: | |||||||||||||||
Goodwill impairment charges | — | 83,855 | — | 124,892 | |||||||||||
Gain on changes in ownership interests, net | — | — | (28,152 | ) | — | ||||||||||
Equity investment: | |||||||||||||||
Loss due to business sale in APAC JV | — | — | 8,715 | — | |||||||||||
Loss due to impairments in the APAC JV | — | — | 1,530 | — | |||||||||||
Debt prepayment, refinancing and redemption charges | — | 21,242 | — | 33,402 | |||||||||||
Noncontrolling owners’ income primarily attributable to non-tax paying entities | (58,118 | ) | (58,502 | ) | (47,203 | ) | (209,544 | ) | |||||||
Adjusted income from continuing operations before income taxes attributable to DaVita Inc. | $ | 323,905 | $ | 320,380 | $ | 194,004 | $ | 1,144,189 | |||||||
Income tax expense | $ | 81,690 | $ | 65,254 | $ | 51,748 | $ | 279,628 | |||||||
Add income tax related to: | |||||||||||||||
Operating charges: | |||||||||||||||
Goodwill impairment charges | — | 17,768 | — | 26,633 | |||||||||||
Gain on changes in ownership interests, net | — | — | (7,247 | ) | — | ||||||||||
Equity investment: | |||||||||||||||
Loss due to business sale in APAC JV | — | — | 449 | — | |||||||||||
Loss due to impairments in the APAC JV | — | — | 79 | — | |||||||||||
Debt prepayment, refinancing and redemption charges | — | 5,468 | — | 8,598 | |||||||||||
Less income tax related to: | |||||||||||||||
Noncontrolling interests | (27 | ) | (84 | ) | (169 | ) | (565 | ) | |||||||
Income tax on adjusted income from continuing operations attributable to DaVita Inc. | $ | 81,663 | $ | 88,406 | $ | 44,860 | $ | 314,294 | |||||||
Effective income tax rate on adjusted income from continuing operations attributable to DaVita Inc. | 25.2 | % | 27.6 | % | 23.1 | % | 27.5 | % | |||||||
Certain columns, rows or percentages may not sum or recalculate due to the use of rounded numbers.
18
DAVITA INC.
RECONCILIATIONS FOR NON-GAAP MEASURES - continued
(unaudited)
(dollars in thousands)
Note 5: Free cash flow from continuing operations (new definition)
Three months ended | |||||||||||
December 31, 2019 | September 30, 2019 | December 31, 2018 | |||||||||
Net cash provided by continuing operating activities | $ | 677,901 | $ | 647,553 | $ | 307,278 | |||||
Less: Distributions to noncontrolling interests | (75,953 | ) | (61,456 | ) | (56,768 | ) | |||||
Plus: Contributions to noncontrolling interests | 13,222 | 12,814 | 9,132 | ||||||||
Cash provided by continuing operating activities attributable to DaVita Inc. | 615,170 | 598,911 | 259,642 | ||||||||
Less: Expenditures for routine maintenance and information technology | (130,243 | ) | (83,513 | ) | (138,745 | ) | |||||
Less: Expenditures for development | (89,120 | ) | (89,752 | ) | (122,793 | ) | |||||
Plus: Proceeds from sale of self-developed properties | 19,365 | 11,616 | 12,606 | ||||||||
Free cash flow from continuing operations (new definition) | $ | 415,172 | $ | 437,262 | $ | 10,710 | |||||
Rolling twelve months ended | |||||||||||
December 31, 2019 | September 30, 2019 | December 31, 2018 | |||||||||
Net cash provided by continuing operating activities | $ | 1,972,721 | $ | 1,602,098 | $ | 1,480,956 | |||||
Less: Distributions to noncontrolling interests | (233,123 | ) | (213,938 | ) | (196,441 | ) | |||||
Plus: Contributions to noncontrolling interests | 57,317 | 53,227 | 52,311 | ||||||||
Cash provided by continuing operating activities attributable to DaVita Inc. | 1,796,915 | 1,441,387 | 1,336,826 | ||||||||
Less: Expenditures for routine maintenance and information technology | (355,444 | ) | (363,946 | ) | (415,038 | ) | |||||
Less: Expenditures for development | (372,636 | ) | (406,309 | ) | (486,877 | ) | |||||
Plus: Proceeds from sale of self-developed properties | 57,817 | 51,058 | 45,314 | ||||||||
Free cash flow from continuing operations (new definition) | $ | 1,126,652 | $ | 722,190 | $ | 480,225 | |||||
Certain columns or rows may not sum or recalculate due to the use of rounded numbers.
19