DENVER, July 22, 2019 /PRNewswire/ -- DaVita Inc.
(NYSE: DVA) ("DaVita" or "Company"), today announced preliminary
second quarter 2019 financial and operating results and updated
guidance for fiscal year 2019.
The Company is releasing this information to provide investors
with updated financial information in conjunction with its
anticipated modified "Dutch auction" tender offer for up to
$1.2 billion of its common stock at a
price per share not less than $53.50
nor greater than $61.50. The tender
offer will commence today and will expire at 12:00 midnight,
New York City time, at the end of
the day on August 16, 2019, unless extended by the Company or
otherwise terminated, and will be conditioned upon successful
completion of a bank financing on terms reasonably satisfactory to
the Company as well as certain other conditions detailed in the
tender offer documents to be filed with the Securities and Exchange
Commission ("SEC") today.
The aforementioned bank financing is expected to consist of the
following:
- $1.0 billion secured revolving
loan facility;
- $1.75 billion secured term loan A
facility with a delayed draw feature; and
- $2.5 billion secured term loan B
facility.
The Company expects to use proceeds from the bank financing to
repay amounts outstanding under the Company's current credit
facility, call the Company's outstanding 5.75% Senior Notes due
2022 (the "Senior Notes"), fund the tender offer, and add cash to
the balance sheet for potential future share repurchases,
acquisitions, and other general corporate purposes. This press
release does not constitute a call notice for the Senior
Notes. The Company expects the call notice for the Senior
Notes to be issued following completion of the bank financing.
Preliminary Second Quarter Financial and Operating
Results
DaVita expects operating income for the second quarter of 2019
to be between $460 million and
$465 million. Included in this
operating income is the Company's expectation of approximately
$40 million in operating income
attributable to calcimimetics.
In the Company's U.S. dialysis and related lab services segment,
the Company expects to report:
- Second quarter non-acquired treatment growth of 2.1%, with
7,520,587 treatments during the quarter.
- Revenue per treatment of approximately $350, an increase of approximately $1.60 from the first quarter of 2019 driven by
fluctuations in quarterly revenue, partially offset by a decline in
revenue from calcimimetics.
- Cost per treatment decrease of approximately $9 from the first quarter of 2019, driven
primarily by reduced calcimimetics expense and reduced labor and
benefit expense due to strong productivity.
From the date of the Company's last earnings call on
May 7, 2019, through July 17, 2019, the Company repurchased a total of
6,274,181 shares of its common stock for approximately $350 million at an average cost of $55.78 per share. Effective as of
July 17, 2019, the Company's Board of
Directors terminated the remaining share repurchase authorization
and approved a new share repurchase authorization of $2.0 billion. This new share repurchase
authorization has no expiration date.
Updated 2019 Outlook
The Company is updating its adjusted operating income (a
non-GAAP financial measure) guidance for fiscal year 2019 to a
range of $1.64 billion to
$1.70 billion. The Company's
prior guidance for adjusted operating income for fiscal year 2019
was $1.54 billion to $1.64 billion.
The substantial majority of the increase in the adjusted
operating income guidance is a result of the Company's improved
expectation of profit from calcimimetics, which is not expected to
recur in 2020, and the remainder is from the ongoing operating
performance.
We do not provide guidance for consolidated operating income on
a GAAP basis nor a reconciliation of this forward-looking non-GAAP
financial measure to the most directly comparable GAAP financial
measure on a forward-looking basis because we are unable to predict
certain items contained in the GAAP measure without unreasonable
efforts. This non-GAAP financial measure does not include certain
items, including goodwill impairment charges and foreign currency
fluctuations, any of which may be significant.
Forward-Looking Statements; Preliminary Nature of Second
Quarter Results
The preceding guidance, estimated second quarter financial and
operating results and other forward-looking information
(collectively, "forward-looking statements") and the underlying
assumptions involve significant risks and uncertainties, including
those described below, and actual results may vary significantly
from these forward-looking statements. Among other things, we
cannot assure you that our actual second-quarter financial and
operating results or our full-year 2019 financial results will not
differ, perhaps substantially, from the preliminary financial and
operating results and guidance set forth above. Likewise, we cannot
assure you that the proposed tender offer, bank financing,
redemption of our Senior Notes and other transactions discussed
above will occur on the terms currently contemplated, or at
all.
In addition, we have not completed our second quarter 2019
closing and review process and, as noted above, the final results
for the second quarter 2019 may differ, perhaps substantially, from
the statements made in this press release. During the course
of preparing our financial statements and during our review
process, we may identify items that would require us to make
adjustments which may be material to the amounts described
above. Detailed commentary on our final second quarter
financial results will be provided as part of our second quarter
earnings release and conference call scheduled on August 1, 2019, 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.
This announcement is for informational purposes only and is
neither an offer to purchase nor a solicitation of an offer to sell
shares of the Company's common stock. The tender offer for the
outstanding shares of our common stock described in this news
release has not commenced. At the time the tender offer is
commenced, the Company will file a Tender Offer Statement on
Schedule TO with the SEC related to the tender offer. The Tender
Offer Statement (including an Offer to Purchase, a related Letter
of Transmittal and other tender offer documents) will contain
important information, including the terms and conditions of the
tender offer, that should be read carefully before any decision is
made with respect to the tender offer. Those materials will be made
available to our shareholders at no expense to them upon written or
oral request directed to Georgeson, LLC, our information agent at
1290 Avenue of the Americas, 9th Floor, New York, NY 10104, or (888) 206-5896. In
addition, all of those materials (and all other offer documents
filed with the SEC) will be available at no charge on the SEC's
website at www.sec.gov.
About DaVita Inc.
DaVita (DVA) is a Fortune 500® health care provider focused on
transforming care delivery to improve quality of life for patients
around the globe. The company is the largest provider of kidney
care services in the U.S. and has been a leader in clinical quality
and innovation for 20 years. Through DaVita Kidney Care, the
company treats patients with chronic kidney failure and end stage
renal disease. DaVita is committed to bold, patient-centric care
models, implementing the latest technologies and moving toward
integrated care offerings for all. As of March 31, 2019,
DaVita served approximately 203,000 patients at 2,689 outpatient
dialysis centers in the United
States. The company also operated 243 outpatient dialysis
centers in nine countries across the world. DaVita has reduced
hospitalizations, improved mortality, and worked collaboratively to
propel the kidney care industry to adopt an equitable and
high-quality standard of care for all patients, everywhere. To
learn more about how DaVita is leading the health care
evolution, please, visit DaVita.com/About.
Contact Information
Investors:
Jim Gustafson
Jim.Gustafson@davita.com
(310) 536-2585
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 SEC, reports
to stockholders and in meetings with investors and analysts. All
such statements in this release, 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," "forecast," "guidance," "outlook,"
"goals," and similar expressions are intended to identify
forward-looking statements.
These forward-looking statements include but are not limited
to statements related to our estimated second quarter 2019
financial and operating results, our fiscal year 2019 guidance, our
expectations regarding the tender offer, the proposed bank
financing and the use of proceeds therefrom, and the proposed
redemption of our Senior Notes.
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, and 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;
- 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, ballot, executive action or other
initiatives, including such initiatives related to healthcare
and/or labor matters;
- the impact of the changing 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 and the provisions of our
current corporate integrity agreement;
- continued increased competition from dialysis providers and
others, and other potential marketplace changes;
- our ability to reduce administrative expenses while
maintaining targeted levels of service and operating
performance;
- 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; and our ability to complete the tender offer, new bank
financing and redemption of our Senior Notes as described above on
the terms currently contemplated or at all;
- 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;
- 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 (including the tender offer
described above) and the timing of any such stock
repurchases;
- 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
DMG 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 most recent quarterly report on Form 10-Q, and the
other risks and uncertainties discussed in any subsequent
reports that we file or furnish to the SEC from time to
time.
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 estimated second quarter 2019 operating or
financial results, 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.
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SOURCE DaVita Inc.