Item 2.02.
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Results of Operations and Financial Condition.
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On July 22, 2019, DaVita Inc. (the Company) issued a press release announcing certain preliminary financial and operating
results for the quarter ended June 30, 2019. A copy of the press release is attached hereto as Exhibit 99.1 and is incorporated into this Item 2.02 by reference. The information included and incorporated by reference in this Item 2.02, and the
press release attached as Exhibit 99.1 hereto, are being furnished under Item 2.02 of Form
8-K
and shall not be deemed filed for purposes of Section 18 of the Securities Exchange
Act of 1934, as amended (the Exchange Act), and are not incorporated by reference into any of the Companys filings, whether made before or after the date hereof, regardless of any general incorporation language in any such filing.
On July 22, 2019, DaVita Inc. (the Company, DaVita, we, our, and us) announced
preliminary financial and operating results for the quarter ended June 30, 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:
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$1.0 billion secured revolving loan facility;
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$1.75 billion secured term loan A facility with a delayed draw feature; and
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$2.5 billion secured term loan B facility.
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The Company expects to use proceeds from the bank financing to repay amounts outstanding under the Companys current credit facility,
call the Companys 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. The
foregoing sentence 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
The Company expects operating income for the second quarter of 2019 to be between $460 million and $465 million. Included in this
operating income is the Companys expectation of approximately $40 million in operating income attributable to calcimimetics.
In the Companys U.S. dialysis and related lab services segment, the Company expects to report:
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Second quarter
non-acquired
treatment growth of 2.1%, with 7,520,587
treatments during the quarter;
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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; and
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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.
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From the date of the
Companys 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 Companys 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.
Forward-Looking Statements; Preliminary Nature of Second Quarter Results
The estimated second quarter financial and operating results and other forward-looking information in this Item 8.01 (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 will not differ, perhaps substantially, from the preliminary financial and operating results 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.