DENVER, Feb. 22,
2023 /PRNewswire/ -- DaVita Inc. (NYSE: DVA)
announced financial and operating results for the quarter and year
ended December 31, 2022.
"We continue to have excitement and conviction in our long-term
capabilities and strategy to differentiate DaVita as a healthcare
provider and employer of choice," said Javier Rodriguez, CEO of DaVita Inc. "I am
encouraged by the operating progress we have made in recent months,
and we will be closely monitoring volume and the labor environment
which remain challenges in 2023."
Financial and operating highlights for the
quarter and year ended December 31, 2022:
- Consolidated revenues were $2.917
billion and $11.610 billion
for the three months and year ended December
31, 2022, respectively.
- Operating income was $256 million
and adjusted operating income was $317
million for the three months ended December 31, 2022. Operating income was
$1,339 million and adjusted operating
income was $1,450 million for year
ended December 31, 2022.
- Diluted earnings per share from continuing operations was
$0.59 and adjusted diluted earnings
per share from continuing operations $1.11 for three months ended December 31, 2022. Diluted earnings per share
from continuing operations was $5.71
and adjusted diluted earnings per share from continuing operations
was $6.60 for year ended December 31, 2022.
- Operating cash flow was $344
million and free cash flow was $75
million for three months ended December 31, 2022. Operating cash flow was
$1,565 million and free cash flow was
$817 million for the year ended
December 31, 2022.
|
Three months
ended
|
|
Year ended December
31,
|
|
December 31,
2022
|
|
September 30,
2022
|
|
2022
|
|
2021
|
Net income
attributable to DaVita Inc.:
|
(dollars in
millions, except per share data)
|
Net income from
continuing operations
|
$
55
|
|
$
105
|
|
$
547
|
|
$
978
|
Diluted per
share
|
$
0.59
|
|
$
1.13
|
|
$
5.71
|
|
$
8.90
|
Adjusted net income
from continuing operations(1)
|
$
102
|
|
$
135
|
|
$
632
|
|
$
1,016
|
Adjusted diluted per
share(1)
|
$
1.11
|
|
$
1.45
|
|
$
6.60
|
|
$
9.24
|
Net income
|
$
68
|
|
$
105
|
|
$
560
|
|
$
978
|
Diluted per
share
|
$
0.74
|
|
$
1.13
|
|
$
5.85
|
|
$
8.90
|
|
|
|
|
|
|
(1)
|
For definitions of
non-GAAP financial measures, see the note titled "Note on Non-GAAP
Financial Measures" and related reconciliations beginning on page
16.
|
|
Three months
ended
|
Year ended December
31,
|
|
December 31,
2022
|
|
September 30,
2022
|
|
2022
|
|
2021
|
|
Amount
|
|
Margin
|
|
Amount
|
|
Margin
|
|
Amount
|
|
Margin
|
|
Amount
|
|
Margin
|
Operating
income
|
(dollars in
millions)
|
Operating
income
|
$ 256
|
|
8.8 %
|
|
$ 312
|
|
10.6 %
|
|
$
1,339
|
|
11.5 %
|
|
$
1,797
|
|
15.5 %
|
Adjusted operating
income(1)(2)
|
$ 317
|
|
10.9 %
|
|
$ 351
|
|
11.9 %
|
|
$
1,450
|
|
12.5 %
|
|
$
1,815
|
|
15.6 %
|
|
|
|
|
|
|
(1)
|
For definitions of
non-GAAP financial measures, see the note titled "Note on Non-GAAP
Financial Measures" and related reconciliations beginning on page
16.
|
(2)
|
Adjusted operating
income margin is adjusted operating income divided by consolidated
revenues.
|
U.S. dialysis metrics:
Volume: Total U.S. dialysis treatments for the
fourth quarter of 2022 were 7,239,660, or an average of 91,641
treatments per day, representing a per day decrease of (1.3)%
compared to the third quarter of 2022. Normalized non-acquired
treatment growth in the fourth quarter of 2022 compared to the
fourth quarter of 2021 was (2.1)%.
|
Three months ended
|
|
Quarter change
|
|
Year ended
|
|
Annual
change
|
|
December
31, 2022
|
|
September
30, 2022
|
|
|
December
31, 2022
|
|
December
31, 2021
|
|
|
(dollars in
millions, except per treatment data)
|
Revenue per
treatment
|
$
366.30
|
|
$
367.67
|
|
$
(1.37)
|
|
$
365.24
|
|
$
359.24
|
|
$
6.00
|
Patient care costs per
treatment
|
$
257.60
|
|
$
255.86
|
|
$
1.74
|
|
$
253.31
|
|
$
241.47
|
|
$
11.84
|
General and
administrative
|
$
283
|
|
$
297
|
|
$
(14)
|
|
$
1,038
|
|
$
926
|
|
$
112
|
Primary drivers of the changes in the table above were as
follows:
Revenue: The quarter change was primarily due to
non-recurring favorable adjustments in the third quarter. These
changes were partially offset by increased hospital inpatient
dialysis revenues, favorable changes in government rate driven by
administration of influenza vaccines, favorable changes in
commercial mix and the continued migration to Medicare Advantage
plans. The annual change was primarily driven by an increase in
commercial mix and rate, an increase in the Medicare base rate in
2022 and the continued shift to Medicare Advantage plans, partially
offset by the reinstatement of 1% Medicare sequestration beginning
April 1, 2022 through June 30, 2022 and 2% Medicare sequestration
beginning July 1, 2022 and
thereafter.
Patient care costs: The quarter change was primarily due
to increased other direct operating expenses associated with our
dialysis centers, including increases in utilities expense
partially due to lower expense in the third quarter related to
our virtual power purchase arrangements. Other drivers of the
increase include increases in health benefit expenses,
pharmaceutical costs and professional fees. These increases were
partially offset by decreases in compensation costs primarily due
to a decrease in contract labor costs and improved productivity,
and medical supply expense. The annual change was primarily due to
increases in compensation expenses, other direct operating expenses
associated with our dialysis centers, including increases in
utilities expense, as well as closure costs, insurance expenses and
costs related to travel. In addition, our fixed other direct
operating expenses negatively impacted patient care costs per
treatment due to decreased treatments in 2022. These annual
increases were partially offset by decreases in pharmaceutical unit
costs, health benefit expenses and medical supply costs.
General and administrative: The quarter change was
primarily due to decreases in advocacy costs to counter union
policy efforts and long-term incentive compensation expense. These
quarterly changes were partially offset by increased compensation
including severance costs, as described below, health benefit
expenses, professional fees and other purchased services. The
annual change was primarily due to increases in advocacy costs to
counter union policy efforts, compensation expenses, including
severance costs, as described below, travel costs, center closure
costs, as described below, and higher information technology
related costs. These annual increases were partially offset by
gains recognized on the sale of our self-developed properties,
decreased professional fees and fewer contributions to our
charitable foundation.
Financial and operating metrics:
|
Three months
ended
December
31,
|
|
Twelve months
ended
December
31,
|
|
2022
|
|
2021
|
|
2022
|
|
2021
|
Cash
flow:
|
(dollars in
millions)
|
Operating cash
flow
|
$
344
|
|
$
530
|
|
$
1,565
|
|
$
1,931
|
Free cash
flow(1)
|
$
75
|
|
$
290
|
|
$
817
|
|
$
1,133
|
|
|
|
|
|
|
(1)
|
For definitions of
non-GAAP financial measures, see the note titled "Note on Non-GAAP
Financial Measures" and related reconciliations beginning on page
16.
|
|
Three months
ended
December 31, 2022
|
|
Year
ended December 31,
2022
|
Effective income tax
rate on:
|
|
|
|
Income from continuing
operations
|
23.3 %
|
|
20.5 %
|
Income from continuing
operations attributable to DaVita Inc.(1)
|
38.5 %
|
|
26.5 %
|
Adjusted income from
continuing operations attributable to DaVita
Inc.(1)
|
31.7 %
|
|
26.1 %
|
|
|
|
|
|
|
(1)
|
For definitions of
non-GAAP financial measures, see the note titled "Note on Non-GAAP
Financial Measures" and related reconciliations beginning on page
16.
|
Center activity: As of December 31, 2022, we
provided dialysis services to a total of approximately 245,000
patients at 3,074 outpatient dialysis centers, of which 2,724
centers were located in the United
States and 350 centers were located in 11 countries outside
of the United States. During the
fourth quarter of 2022, we opened a total of six new dialysis
centers and closed 58 dialysis centers in the United States. We also acquired three
dialysis centers, opened three dialysis centers and closed eight
dialysis centers outside of the United
States during the fourth quarter of 2022.
Integrated kidney care (IKC): As of
December 31, 2022, we had approximately 42,000 patients
in risk-based integrated care arrangements representing
approximately $3.5 billion in
annualized medical spend. We also had an additional 15,000 patients
in other integrated care arrangements; we do not include the
medical spend for these patients in this annualized medical spend
estimate. See additional description of these metrics at Note
2.
Certain items impacting operating results:
Closure costs. During 2022, we incurred higher than
normal charges for center capacity closures. These closures are the
result of a strategic review of our outpatient clinic capacity
requirements and utilization, which have been impacted both by
declines in our patient census in some markets due to the COVID-19
pandemic, as well as by our initiatives toward, and advances in,
increasing the proportion of our home dialysis patients.
Our fourth quarter charges for U.S. dialysis center closures
were approximately $35 million, which
increased our patient care costs by $6
million, our general and administrative expenses by
$5 million and our depreciation and
amortization expense by $24 million.
During the year ended December 31,
2022, charges for U.S. dialysis center closures were
approximately $86 million, which
increased our patient care costs by $21
million, our general and administrative expenses by
$19 million and our depreciation and
amortization expense by $46 million.
These capacity closures costs included net losses on assets
retired, lease costs, asset impairments and accelerated
depreciation and amortization.
Severance costs and other. During the fourth quarter
of 2022, we committed to a plan to increase efficiencies and cost
savings in certain general and administrative support
functions. As a result of this plan, we recognized expenses
related to termination and other benefit commitments in our U.S.
dialysis business, IKC business and corporate administration
support function of $17.0 million, $0.5
million and $0.6 million,
respectively.
International. During the fourth quarter of 2022, we
also committed to a plan to increase efficiencies and cost savings
in our international business, which resulted in recognition of
expenses related to termination benefits and other charges of
$7.5 million.
Advocacy costs. During the year ended December 31, 2022, we incurred advocacy costs of
approximately $51 million to counter
union policy efforts, including a California ballot initiative. These costs are
included in the U.S. dialysis segment's general and administrative
expense.
Outlook:
The following forward-looking measures and the underlying
assumptions involve significant known and unknown risks and
uncertainties, including those described below, and actual results
may vary materially from these forward-looking measures. For
example, the widespread impact of the COVID-19 pandemic continues
to generate significant risk and uncertainty, and as a result, our
future results could vary materially from the guidance provided
below. We do not provide guidance for operating income or diluted
net income per share attributable to DaVita Inc. 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 capacity closure charges, severance costs and foreign
currency fluctuations, which may be significant. The guidance for
our effective income tax rate on adjusted income attributable to
DaVita Inc. also excludes the amount of third-party owners' income
and related taxes attributable to non-tax paying entities.
|
2023 expected
guidance
|
|
Low
|
|
High
|
|
(dollars in
millions, except per share data)
|
Adjusted operating
income from continuing operations
|
$1,400
|
|
$1,600
|
Adjusted diluted net
income from continuing operations per
share
attributable to DaVita Inc.
|
$5.45
|
|
$6.95
|
Free cash
flow
|
$650
|
|
$900
|
We will be holding a conference call to discuss our results for
the fourth quarter ended December 31, 2022, on
February 22, 2023, 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'. This call is being
webcast and can be accessed at the DaVita Investor Relations
website investors.davita.com. A replay of the conference call will
also be available at investors.davita.com for the following 30
days.
Forward looking statements
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 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. These
forward-looking statements could include, among other things,
DaVita's response to and the expected future impacts of the
coronavirus (COVID-19), including statements about our balance
sheet and liquidity, our expenses and expense offsets, revenues,
billings and collections, availability or cost of supplies,
treatment volumes, mix expectation, such as the percentage or
number of patients under commercial insurance, the availability,
acceptance, impact, administration and efficacy of COVID-19
vaccines, treatments and therapies, the continuing impact on the
U.S. and global economies, labor market conditions, and overall
impact on our patients and teammates, as well as other statements
regarding our future operations, financial condition and prospects,
expenses, strategic initiatives, government and commercial payment
rates, expectations related to value-based care, integrated kidney
care, and Medicare Advantage (MA) plan enrollment and our ongoing
stock repurchase program, and statements related to our guidance
and expectations for future periods and the assumptions underlying
any such projections. All statements in this release, other than
statements of historical fact, are forward-looking statements.
Without limiting the foregoing, statements including the words
"expect," "intend," "will," "could," "plan," "anticipate,"
"believe," "forecast," "guidance," "outlook," "goals," and similar
expressions are intended to identify forward-looking statements.
These forward-looking statements are based on DaVita's current
expectations and are based solely on information available as of
the date of this release. DaVita undertakes no obligation to
publicly update or revise any forward-looking statements, whether
as a result of changed circumstances, new information, future
events or otherwise, except as may be required by law. Actual
future events and results 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 continuing impact of the COVID-19 pandemic, current
macroeconomic and marketplace conditions, and global events, many
of which are interrelated and which relate to, among other things,
the impact of the COVID-19 pandemic on our patients, teammates,
physician partners, suppliers, business, operations, reputation,
financial condition and results of operations; the government's
response to the ongoing pandemic, the pandemic's continuing impact
on the U.S. and global economies, labor market conditions, interest
rates, inflation and evolving monetary policies; the availability,
acceptance, impact and efficacy of COVID-19 vaccines, treatments
and therapies; further spread or resurgence of the virus, including
as a result of the emergence of new strains of the virus; the
continuing impact of the pandemic on our revenues and non-acquired
growth due to lower treatment volumes; COVID-19's impact on the
chronic kidney disease (CKD) population and our patient population
including on the mortality of these patients; any potential
negative impact on our commercial mix or the number of our patients
covered by commercial insurance plans; continued increased
COVID-19-related costs; our ability to successfully implement cost
savings initiatives; supply chain challenges and disruptions; and
elevated teammate turnover and training costs and higher salary and
wage expense, including, among other things, increased contract
wages, driven in part by persisting labor market conditions and a
high demand for our clinical personnel, any of which may also have
the effect of heightening many of the other risks and uncertainties
discussed below, and in many cases, the impact of the pandemic and
the aforementioned global economic conditions on our business may
persist even after the pandemic subsides;
- the extent to which the ongoing implementation of healthcare
reform, or changes in or new legislation, regulations or guidance,
enforcement thereof or related litigation result in a reduction in
coverage or reimbursement rates for our services, a reduction in
the number of patients enrolled in or that select higher-paying
commercial plans, including for example MA plans or other material
impacts to our business or operations; or our making incorrect
assumptions about how our patients will respond to any such
developments;
- risks arising from potential changes in laws, regulations or
requirements applicable to us, such as potential and proposed
federal and/or state legislation, regulation, ballot, executive
action or other initiatives, including, without limitation, those
related to healthcare and/or labor matters;
- the concentration of profits generated by higher-paying
commercial payor plans for which there is continued downward
pressure on average realized payment rates; a reduction in the
number or percentage of our patients under such plans, including,
without limitation, 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, as a result of our
making incorrect assumptions about how our patients will respond to
any change in financial assistance from charitable organizations,
or as a result of payors' implementing restrictive plan designs,
including, without limitation, actions taken in response to the
U.S. Supreme Court's decision in Marietta Memorial Hospital
Employee Health Benefit Plan, et al. v. DaVita Inc. et al.
("Marietta"); how and whether regulators and legislators will
respond to the Marietta decision including, without limitation,
whether they will issue regulatory guidance or adopt new
legislation; how courts will interpret other anti-discriminatory
provisions that may apply to restrictive plan designs; whether
there could be other potential negative impacts of the Marietta
decision; and the timing of each of these items;
- our ability to attract, retain and motivate teammates and
our ability to manage operating cost increases or productivity
decreases whether due to union organizing activities, legislative
or other changes, demand for labor, volatility and uncertainty in
the labor market, the current challenging and highly competitive
labor market conditions, or other reasons;
- U.S. and global economic and marketplace conditions,
interest rates, inflation, unemployment, labor market conditions,
and evolving monetary policies, and our ability to respond to these
challenging conditions, including among other things our ability to
successfully identify cost savings opportunities and to implement
cost savings initiatives such as ongoing initiatives that increase
our use of third party service providers to perform certain
activities, initiatives that relate to clinic optimization and
capacity utilization improvement, and procurement opportunities,
among other things;
- our ability to successfully implement our strategies with
respect to integrated kidney care and value-based care initiatives
and home based dialysis in the desired time frame and in a complex,
dynamic and highly regulated environment, including, among other
things, maintaining our existing business; meeting growth
expectations; recovering our investments; entering into agreements
with payors, third party vendors and others on terms that are
competitive and, as appropriate, prove actuarially sound;
structuring operations, agreements and arrangements to comply with
evolving rules and regulations; finding, training and retaining
appropriate staff; and further developing our integrated care and
other capabilities to provide competitive programs at
scale;
- a reduction in government payment rates under the Medicare
End Stage Renal Disease program, state Medicaid or other
government-based programs and the impact of the Medicare Advantage
benchmark structure;
- 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;
- legal and compliance risks, such as our continued compliance
with complex, and at times, evolving government regulations and
requirements;
- the impact of the political environment and related
developments on the current healthcare marketplace and on our
business, including with respect to the Affordable Care Act, the
exchanges and many other core aspects of the current healthcare
marketplace, as well as the composition of the U.S. Supreme Court
and the current presidential administration and congressional
majority;
- changes in pharmaceutical practice patterns, reimbursement
and payment policies and processes, or pharmaceutical pricing,
including with respect to hypoxia inducible factors, among other
things;
- our ability to develop and maintain relationships with
physicians and hospitals, changing affiliation models for
physicians, and the emergence of new models of care or other
initiatives introduced by the government or private sector that,
among other things, may erode our patient base and impact
reimbursement rates;
- our ability to complete acquisitions, mergers, dispositions,
joint ventures or other strategic transactions that we might
announce or be considering, on terms favorable to us or at all, or
to successfully integrate any acquired businesses, or to
successfully operate any acquired businesses, joint ventures or
other strategic transactions, or to successfully expand our
operations and services in markets outside the United States, or to businesses or
products outside of dialysis services;
- continued increased competition from dialysis providers and
others, and other potential marketplace changes, including without
limitation increased investment in and availability of funding to
new entrants in the dialysis and pre-dialysis marketplace;
- the variability of our cash flows, including without
limitation any extended billing or collections cycles; the risk
that we may not be able to generate or access 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;
- our aspirations, goals and disclosures related to
environmental, social and governance (ESG) matters, including,
among other things, evolving regulatory requirements affecting ESG
standards, measurements and reporting requirements; the
availability of suppliers that can meet our sustainability
standards; and our ability to recruit, develop and retain diverse
talent in our labor markets; and
- the other risk factors, trends and uncertainties set forth
in our Annual Report on Form 10-K for the year ended December 31, 2021 and Quarterly Reports on Form
10-Q for the quarters ended March 31,
June 30 and September 30, 2022, and the risks and
uncertainties discussed in any subsequent reports that we file or
furnish with the 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, 2022.
DAVITA
INC.
|
CONSOLIDATED
STATEMENTS OF INCOME
|
(unaudited)
|
(dollars and shares
in thousands, except per share data)
|
|
|
Three months ended
December 31,
|
|
Year ended December
31,
|
|
2022
|
|
2021
|
|
2022
|
|
2021
|
Dialysis patient
service revenues
|
$
2,803,590
|
|
$
2,843,031
|
|
$
11,176,464
|
|
$
11,213,515
|
Other
revenues
|
113,298
|
|
100,936
|
|
433,430
|
|
405,282
|
Total
revenues
|
2,916,888
|
|
2,943,967
|
|
11,609,894
|
|
11,618,797
|
Operating
expenses:
|
|
|
|
|
|
|
|
Patient care
costs
|
2,088,681
|
|
2,060,218
|
|
8,209,553
|
|
7,972,414
|
General and
administrative
|
379,711
|
|
322,723
|
|
1,355,197
|
|
1,195,335
|
Depreciation and
amortization
|
194,068
|
|
174,763
|
|
732,602
|
|
680,615
|
Equity investment
income, net
|
(1,824)
|
|
(3,152)
|
|
(26,520)
|
|
(26,937)
|
Total operating
expenses
|
2,660,636
|
|
2,554,552
|
|
10,270,832
|
|
9,821,427
|
Operating
income
|
256,252
|
|
389,415
|
|
1,339,062
|
|
1,797,370
|
Debt
expense
|
(100,962)
|
|
(72,087)
|
|
(357,019)
|
|
(285,254)
|
Other (loss) income,
net
|
(7,797)
|
|
(2,388)
|
|
(15,765)
|
|
6,378
|
Income from continuing
operations before income taxes
|
147,493
|
|
314,940
|
|
966,278
|
|
1,518,494
|
Income tax
expense
|
34,330
|
|
65,508
|
|
198,087
|
|
306,732
|
Net income from
continuing operations
|
113,163
|
|
249,432
|
|
768,191
|
|
1,211,762
|
Net income from
discontinued operations, net of tax
|
13,452
|
|
—
|
|
13,452
|
|
—
|
Net income
|
126,615
|
|
249,432
|
|
781,643
|
|
1,211,762
|
Less: Net income
attributable to noncontrolling interests
|
(58,512)
|
|
(61,959)
|
|
(221,243)
|
|
(233,312)
|
Net income attributable
to DaVita Inc.
|
$
68,103
|
|
$
187,473
|
|
$
560,400
|
|
$
978,450
|
|
|
|
|
|
|
|
|
Earnings per share
attributable to DaVita Inc.:
|
|
|
|
|
|
|
|
Basic net income from
continuing operations
|
$
0.61
|
|
$
1.86
|
|
$
5.88
|
|
$
9.30
|
Basic net
income
|
$
0.76
|
|
$
1.86
|
|
$
6.03
|
|
$
9.30
|
Diluted net income
from continuing operations
|
$
0.59
|
|
$
1.79
|
|
$
5.71
|
|
$
8.90
|
Diluted net
income
|
$
0.74
|
|
$
1.79
|
|
$
5.85
|
|
$
8.90
|
|
|
|
|
|
|
|
|
Weighted average
shares for earnings per share:
|
|
|
|
|
|
|
|
Basic
shares
|
90,122
|
|
100,913
|
|
92,992
|
|
105,230
|
Diluted
shares
|
91,910
|
|
104,842
|
|
95,834
|
|
109,948
|
|
|
|
|
|
|
|
|
Amounts attributable
to DaVita Inc.:
|
|
|
|
|
|
|
|
Net income from
continuing operations
|
$
54,651
|
|
$
187,473
|
|
$
546,948
|
|
$
978,450
|
Net income from
discontinued operations
|
13,452
|
|
—
|
|
13,452
|
|
—
|
Net income
attributable to DaVita Inc.
|
$
68,103
|
|
$
187,473
|
|
$
560,400
|
|
$
978,450
|
DAVITA
INC.
|
CONSOLIDATED
STATEMENTS OF COMPREHENSIVE INCOME
|
(unaudited)
|
(dollars in
thousands)
|
|
|
Three months ended
December 31,
|
|
Year ended December
31,
|
|
2022
|
|
2021
|
|
2022
|
|
2021
|
Net income
|
$
126,615
|
|
$
249,432
|
|
$
781,643
|
|
$ 1,211,762
|
Other comprehensive
income (loss), net of tax:
|
|
|
|
|
|
|
|
Unrealized gains on
interest rate cap agreements:
|
|
|
|
|
|
|
|
Unrealized
gains
|
13,008
|
|
4,689
|
|
108,669
|
|
7,155
|
Reclassifications of
net realized (gains) losses into net income
|
(11,905)
|
|
1,034
|
|
(8,806)
|
|
4,133
|
Unrealized gains
(losses) on foreign currency translation:
|
65,262
|
|
(25,218)
|
|
(29,802)
|
|
(84,381)
|
Other comprehensive
income (loss)
|
66,365
|
|
(19,495)
|
|
70,061
|
|
(73,093)
|
Total comprehensive
income
|
192,980
|
|
229,937
|
|
851,704
|
|
1,138,669
|
Less: Comprehensive
income attributable to
noncontrolling
interests
|
(58,512)
|
|
(61,959)
|
|
(221,243)
|
|
(233,312)
|
Comprehensive income
attributable to DaVita Inc.
|
$
134,468
|
|
$
167,978
|
|
$
630,461
|
|
$
905,357
|
DAVITA
INC.
|
CONSOLIDATED
STATEMENTS OF CASH FLOW
|
(unaudited)
|
(dollars in
thousands)
|
|
|
Year ended December
31,
|
|
2022
|
|
2021
|
Cash flows from
operating activities:
|
|
|
|
Net income
|
$
781,643
|
|
$ 1,211,762
|
Adjustments to
reconcile net income to net cash provided by operating
activities:
|
|
|
|
Depreciation and
amortization
|
732,602
|
|
680,615
|
Stock-based
compensation expense
|
95,427
|
|
102,209
|
Deferred income
taxes
|
(75,669)
|
|
60,483
|
Equity investment
income, net
|
8,773
|
|
5,215
|
Other non-cash
charges, net
|
21,693
|
|
11,231
|
Changes in operating
assets and liabilities, net of effect of acquisitions and
divestitures:
|
|
|
|
Accounts
receivable
|
(148,394)
|
|
(138,140)
|
Inventories
|
(757)
|
|
5,720
|
Other receivables and
prepaid and other current assets
|
27,533
|
|
128,661
|
Other long-term
assets
|
(50,549)
|
|
(26,387)
|
Accounts
payable
|
87,481
|
|
(30,320)
|
Accrued compensation
and benefits
|
34,536
|
|
(16,717)
|
Other current
liabilities
|
89,955
|
|
(93,645)
|
Income
taxes
|
(24,103)
|
|
36,921
|
Other long-term
liabilities
|
(15,601)
|
|
(6,732)
|
Net cash provided by
operating activities
|
1,564,570
|
|
1,930,876
|
Cash flows from
investing activities:
|
|
|
|
Additions of property
and equipment
|
(603,429)
|
|
(641,465)
|
Acquisitions
|
(57,308)
|
|
(187,050)
|
Proceeds from asset
and business sales
|
117,582
|
|
61,464
|
Purchase of debt
investments held-to-maturity
|
(129,803)
|
|
(30,849)
|
Purchase of other debt
and equity investments
|
(3,590)
|
|
(2,987)
|
Proceeds from debt
investments held-to-maturity
|
71,125
|
|
15,849
|
Proceeds from sale of
other debt and equity investments
|
3,781
|
|
12,030
|
Purchase of equity
method investments
|
(31,885)
|
|
(13,924)
|
Distributions from
equity method investments
|
3,962
|
|
2,944
|
Other
|
(782)
|
|
(745)
|
Net cash used in
investing activities
|
(630,347)
|
|
(784,733)
|
Cash flows from
financing activities:
|
|
|
|
Borrowings
|
2,393,116
|
|
1,615,370
|
Payments on long-term
debt
|
(2,404,395)
|
|
(861,115)
|
Deferred financing and
debt redemption costs
|
(3)
|
|
(9,091)
|
Purchase of treasury
stock
|
(802,228)
|
|
(1,538,626)
|
Distributions to
noncontrolling interests
|
(267,946)
|
|
(244,033)
|
Net payments related
to stock purchases and awards
|
(37,367)
|
|
(60,001)
|
Contributions from
noncontrolling interests
|
14,797
|
|
31,754
|
Proceeds from sales of
additional noncontrolling interests
|
3,673
|
|
2,880
|
Purchases of
noncontrolling interests
|
(20,775)
|
|
(20,104)
|
Net cash used in
financing activities
|
(1,121,128)
|
|
(1,082,966)
|
Effect of exchange rate
changes on cash, cash equivalents and restricted cash
|
(29,066)
|
|
(10,007)
|
Net (decrease) increase
in cash, cash equivalents and restricted cash
|
(215,971)
|
|
53,170
|
Cash, cash equivalents
and restricted cash at beginning of the year
|
554,960
|
|
501,790
|
Cash, cash equivalents
and restricted cash at end of the period
|
$
338,989
|
|
$
554,960
|
DAVITA
INC.
|
CONSOLIDATED BALANCE
SHEETS
|
(unaudited)
|
(dollars and shares
in thousands, except per share data)
|
|
|
December 31,
2022
|
|
December 31,
2021
|
ASSETS
|
|
|
|
Cash and cash
equivalents
|
$
244,086
|
|
$
461,900
|
Restricted cash and
equivalents
|
94,903
|
|
93,060
|
Short-term
investments
|
77,693
|
|
22,310
|
Accounts
receivable
|
2,132,070
|
|
1,957,583
|
Inventories
|
109,122
|
|
107,428
|
Other
receivables
|
413,976
|
|
427,321
|
Prepaid and other
current assets
|
78,839
|
|
72,517
|
Income tax
receivable
|
4,603
|
|
25,604
|
Total current
assets
|
3,155,292
|
|
3,167,723
|
Property and equipment,
net of accumulated depreciation of $5,265,372 and $4,763,135,
respectively
|
3,256,397
|
|
3,479,972
|
Operating lease
right-of-use assets
|
2,666,242
|
|
2,824,787
|
Intangible assets, net
of accumulated amortization of $49,772 and $60,730,
respectively
|
182,687
|
|
177,693
|
Equity method and other
investments
|
231,108
|
|
238,881
|
Long-term
investments
|
44,329
|
|
49,514
|
Other long-term
assets
|
315,587
|
|
136,677
|
Goodwill
|
7,076,610
|
|
7,046,241
|
|
$
16,928,252
|
|
$
17,121,488
|
LIABILITIES AND
EQUITY
|
|
|
|
Accounts
payable
|
$
479,780
|
|
$
402,049
|
Other
liabilities
|
802,469
|
|
709,345
|
Accrued compensation
and benefits
|
692,654
|
|
659,960
|
Current portion of
operating lease liabilities
|
395,401
|
|
394,357
|
Current portion of
long-term debt
|
231,404
|
|
179,030
|
Income tax
payable
|
18,039
|
|
53,792
|
Total current
liabilities
|
2,619,747
|
|
2,398,533
|
Long-term operating
lease liabilities
|
2,503,068
|
|
2,672,713
|
Long-term
debt
|
8,692,617
|
|
8,729,150
|
Other long-term
liabilities
|
105,233
|
|
119,158
|
Deferred income
taxes
|
782,787
|
|
830,954
|
Total
liabilities
|
14,703,452
|
|
14,750,508
|
Commitments and
contingencies
|
|
|
|
Noncontrolling
interests subject to put provisions
|
1,348,908
|
|
1,434,832
|
Equity:
|
|
|
|
Preferred stock
($0.001 par value, 5,000 shares authorized; none issued)
|
—
|
|
—
|
Common stock ($0.001
par value, 450,000 shares authorized; 90,411 and 97,289 shares
issued
and outstanding at December 31, 2022, and 2021,
respectively)
|
90
|
|
97
|
Additional paid-in
capital
|
606,935
|
|
540,321
|
Retained
earnings
|
174,487
|
|
354,337
|
Accumulated other
comprehensive loss
|
(69,186)
|
|
(139,247)
|
Total DaVita Inc.
shareholders' equity
|
712,326
|
|
755,508
|
Noncontrolling
interests not subject to put provisions
|
163,566
|
|
180,640
|
Total
equity
|
875,892
|
|
936,148
|
|
$
16,928,252
|
|
$
17,121,488
|
DAVITA
INC.
|
SUPPLEMENTAL
FINANCIAL DATA
|
(unaudited)
|
(dollars in millions
and shares in thousands, except per treatment data)
|
|
|
Three months
ended
|
|
Year ended
December 31,
2022
|
|
December 31,
2022
|
|
September
30,
2022
|
|
1. Consolidated
business metrics:
|
|
|
|
|
|
Operating
margin
|
8.8 %
|
|
10.6 %
|
|
11.5 %
|
Adjusted operating
margin excluding certain items(1)(2)
|
10.9 %
|
|
11.9 %
|
|
12.5 %
|
General and
administrative expenses as a percent of consolidated
revenues(3)
|
13.0 %
|
|
12.4 %
|
|
11.7 %
|
Effective income tax
rate on income from continuing operations
|
23.3 %
|
|
20.5 %
|
|
20.5 %
|
Effective income tax
rate on income from continuing operations
attributable to
DaVita Inc.(1)
|
38.5 %
|
|
28.7 %
|
|
26.5 %
|
Effective income tax
rate on adjusted income from continuing operations
attributable to
DaVita Inc.(1)
|
31.7 %
|
|
27.9 %
|
|
26.1 %
|
|
|
|
|
|
|
2. Summary of
financial results:
|
|
|
|
|
|
Revenues:
|
|
|
|
|
|
U.S. dialysis patient
services and other
|
$ 2,658
|
|
$ 2,703
|
|
$
10,600
|
Other—Ancillary
services
|
|
|
|
|
|
Integrated kidney
care
|
102
|
|
87
|
|
378
|
Other U.S.
ancillary
|
7
|
|
7
|
|
23
|
International dialysis
patient service and other
|
177
|
|
175
|
|
700
|
|
285
|
|
268
|
|
1,101
|
Eliminations
|
(27)
|
|
(23)
|
|
(91)
|
Total consolidated
revenues
|
$ 2,917
|
|
$ 2,949
|
|
$
11,610
|
Operating income
(loss):
|
|
|
|
|
|
U.S.
dialysis
|
$
335
|
|
$
351
|
|
$ 1,565
|
Other—Ancillary
services
|
|
|
|
|
|
Integrated kidney
care
|
(34)
|
|
(32)
|
|
(125)
|
Other U.S.
ancillary
|
(1)
|
|
(2)
|
|
(9)
|
International(4)
|
(4)
|
|
18
|
|
37
|
|
(40)
|
|
(15)
|
|
(97)
|
Corporate
administrative support expenses
|
(38)
|
|
(24)
|
|
(130)
|
Total consolidated
operating income
|
$
256
|
|
$
312
|
|
$ 1,339
|
DAVITA
INC.
|
SUPPLEMENTAL
FINANCIAL DATA - continued
|
(unaudited)
|
(dollars in millions
and shares in thousands, except per treatment data)
|
|
|
Three months
ended
|
|
Year ended
December 31,
2022
|
|
December 31,
2022
|
|
September
30,
2022
|
|
3. Summary of
reportable segment financial results and metrics:
|
|
|
|
|
|
U.S.
dialysis
|
|
|
|
|
|
Financial
results
|
|
|
|
|
|
Revenue:
|
|
|
|
|
|
Dialysis patient
service revenues
|
$ 2,652
|
|
$ 2,697
|
|
$
10,575
|
Other
revenues
|
6
|
|
6
|
|
24
|
Total operating
revenues
|
2,658
|
|
2,703
|
|
10,600
|
Operating
expenses:
|
|
|
|
|
|
Patient care
costs
|
1,865
|
|
1,877
|
|
7,334
|
General and
administrative
|
283
|
|
297
|
|
1,038
|
Depreciation and
amortization
|
184
|
|
185
|
|
691
|
Equity investment
income
|
(8)
|
|
(7)
|
|
(28)
|
Total operating
expenses
|
2,324
|
|
2,352
|
|
9,034
|
Segment operating
income
|
$
335
|
|
$
351
|
|
$ 1,565
|
Reconciliation
for non-GAAP measure:
|
|
|
|
|
|
Closure
charges
|
35
|
|
40
|
|
86
|
Severance and other
costs
|
17
|
|
—
|
|
17
|
Adjusted segment
operating income(1)
|
$
387
|
|
$
391
|
|
$ 1,668
|
Metrics
|
|
|
|
|
|
Volume:
|
|
|
|
|
|
Treatments
|
7,239,660
|
|
7,335,825
|
|
28,954,433
|
Number of treatment
days
|
79.0
|
|
79.0
|
|
313.0
|
Average treatments per
day
|
91,641
|
|
92,859
|
|
92,506
|
Per day year-over-year
decrease
|
(2.9) %
|
|
(1.7) %
|
|
(2.3) %
|
Normalized
year-over-year non-acquired treatment
growth(5)
|
(2.1) %
|
|
(2.1) %
|
|
|
Operating net
revenues:
|
|
|
|
|
|
Average patient
service revenue per treatment
|
$
366.30
|
|
$
367.67
|
|
$
365.24
|
Expenses:
|
|
|
|
|
|
Patient care costs per
treatment
|
$
257.60
|
|
$
255.86
|
|
$
253.31
|
General and
administrative expenses per treatment
|
$ 39.07
|
|
$ 40.52
|
|
$ 35.83
|
Depreciation and
amortization expense per treatment
|
$ 25.36
|
|
$ 25.18
|
|
$ 23.86
|
Accounts
receivable:
|
|
|
|
|
|
Receivables
|
$ 1,899
|
|
$ 1,886
|
|
|
DSO
|
66
|
|
65
|
|
|
DAVITA
INC.
|
SUPPLEMENTAL
FINANCIAL DATA - continued
|
(unaudited)
|
(dollars in millions
and shares in thousands, except per treatment data)
|
|
|
Three months
ended
|
|
Year ended
December 31,
2022
|
|
December 31,
2022
|
|
September
30,
2022
|
|
4. Cash
flow:
|
|
|
|
|
|
Operating cash
flow
|
$
344
|
|
$
711
|
|
$
1,565
|
Operating cash flow,
last twelve months
|
$ 1,565
|
|
$ 1,751
|
|
|
Free cash
flow(1)
|
$
75
|
|
$
500
|
|
$
817
|
Free cash flow, last
twelve months(1)
|
$
817
|
|
$ 1,032
|
|
|
Capital
expenditures:
|
|
|
|
|
|
Routine
maintenance/IT/other
|
$
147
|
|
$
104
|
|
$
431
|
Development and
relocations
|
$
47
|
|
$
40
|
|
$
172
|
Acquisition
expenditures
|
$
13
|
|
$
34
|
|
$
57
|
Proceeds from sale of
self-developed properties
|
$
1
|
|
$
1
|
|
$
109
|
|
|
|
|
|
|
5. Debt and capital
structure:
|
|
|
|
|
|
Total
debt(6)
|
$ 8,969
|
|
$ 9,129
|
|
|
Net debt, net of cash
and cash equivalents(6)
|
$ 8,724
|
|
$ 8,761
|
|
|
Leverage
ratio(7)
|
4.03x
|
|
3.89x
|
|
|
Weighted average
effective interest rate:
|
|
|
|
|
|
During the
quarter
|
4.49 %
|
|
4.28 %
|
|
|
At end of the
quarter
|
4.52 %
|
|
4.39 %
|
|
|
On the senior secured
credit facilities at end of the quarter
|
4.59 %
|
|
4.34 %
|
|
|
Debt with fixed and
capped rates as a percentage of total debt:
|
|
|
|
|
|
Debt with rates fixed
by its terms
|
51 %
|
|
50 %
|
|
|
Debt with rates fixed
by its terms or capped by cap agreements
|
90 %
|
|
89 %
|
|
|
Amount spent on share
repurchases
|
$
—
|
|
$
185
|
|
$
788
|
Number of shares
repurchased
|
—
|
|
2,122
|
|
8,095
|
|
Certain columns, rows
or percentages may not sum or recalculate due to the presentation
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)
|
Adjusted operating
income margin is adjusted operating income divided by consolidated
revenues.
|
(3)
|
General and
administrative expenses include certain corporate support,
long-term incentive compensation and advocacy costs.
|
(4)
|
The reported operating
income for the three months ended December 31, 2022 and September
30, 2022 and the year ended December 31, 2022 includes foreign
currency (losses) gains embedded in equity method income recognized
from our Asia Pacific joint venture of approximately $(5.0), $2.3
and $(0.3), respectively.
|
(5)
|
Normalized non-acquired
treatment growth reflects year-over-year growth in treatment
volume, adjusted to exclude acquisitions and other similar
transactions, and further adjusted to normalize for the number and
mix of treatment days in a given quarter versus the prior year
quarter.
|
(6)
|
The debt amounts as of
December 31, 2022 and September 30, 2022 presented exclude
approximately $44.5 and $47.5, respectively, of debt discount,
premium and other deferred financing costs related to our senior
secured credit facilities and senior notes in effect or outstanding
at that time.
|
(7)
|
See Note 1: Calculation
of the Leverage Ratio on page 14.
|
DAVITA INC.
SUPPLEMENTAL FINANCIAL
DATA-continued
(unaudited)
(dollars in
millions)
Note 1: Calculation of the Leverage Ratio
Under our senior secured credit facilities (the Credit
Agreement) dated August 12, 2019, the
leverage ratio is defined as (a) all funded debt plus the face
amount of all letters of credit issued, minus unrestricted cash and
cash equivalents (including short-term investments) not to exceed
$750 divided by (b) "Consolidated
EBITDA." The leverage ratio determines the interest rate margin
payable by the Company for its Term Loan A and revolving line of
credit under the Credit Agreement by establishing the margin over
the base interest rate (LIBOR) that is applicable. The
calculation below is based on the last twelve months of
"Consolidated EBITDA," as of the end of the reported period and pro
forma for acquisitions or divestitures that occurred during the
period, and "Consolidated net debt" at the end of the reported
period, each as defined in the Credit Agreement. The Company's
management believes the presentation of "Consolidated EBITDA" is
useful to investors to enhance their understanding of the Company's
leverage ratio under its Credit Agreement. The leverage
ratio calculated by the Company is a non-GAAP measure and
should not be considered a substitute for the ratio of total debt
to operating income, determined in accordance with 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 of other companies.
|
Twelve months
ended
|
|
December 31,
2022
|
|
September
30,
2022
|
Net income from
continuing operations attributable to DaVita Inc.
|
$
547
|
|
$
680
|
Income taxes
|
198
|
|
229
|
Interest
expense
|
326
|
|
301
|
Depreciation and
amortization
|
733
|
|
713
|
Noncontrolling
interests and equity investment income, net
|
221
|
|
225
|
Stock-settled
stock-based compensation
|
95
|
|
104
|
Other
|
55
|
|
11
|
"Consolidated
EBITDA"
|
$
2,175
|
|
$
2,263
|
|
|
|
|
|
December 31,
2022
|
|
September
30,
2022
|
Total debt, excluding
debt discount and other deferred financing
costs(1)
|
$
8,969
|
|
$
9,129
|
Letters of credit
issued
|
109
|
|
108
|
|
9,077
|
|
9,237
|
Less: Cash and cash
equivalents including short-term
investments(2)
|
(318)
|
|
(439)
|
Consolidated net
debt
|
$
8,759
|
|
$
8,798
|
Last twelve months
"Consolidated EBITDA"
|
$
2,175
|
|
$
2,263
|
Leverage
ratio
|
4.03x
|
|
3.89x
|
Maximum leverage ratio
permitted under the Credit Agreement
|
5.00x
|
|
5.00x
|
|
Certain columns or rows
may not sum or recalculate due to the presentation of rounded
numbers.
|
|
|
|
|
|
|
(1)
|
The debt amounts as of
December 31, 2022 and September 30, 2022 presented exclude
approximately $44.5 and $47.5, respectively, of debt discount,
premium and other deferred financing costs related to our senior
secured credit facilities and senior notes in effect at that
time.
|
(2)
|
This excludes amounts
not readily convertible to cash related to the Company's
non-qualified deferred compensation plans for all periods
presented. The Credit Agreement limits the amount deducted for cash
and cash equivalents, including short-term investments, to the
lesser of all unrestricted cash and cash equivalents, including
short-term investments of the Company or $750.
|
DAVITA INC.
INTEGRATED CARE
METRICS
(unaudited)
Note 2: Integrated Care Metrics
Our integrated kidney care (IKC) business is party to a variety
of risk-based integrated care and disease management arrangements,
including value-based care (VBC) contracts under which we assume
full or shared financial risk for the total medical cost of care
for patients below or above a benchmark.
The aggregate amount of medical spend associated with risk-based
integrated care arrangements that we disclose includes both medical
costs included in our reported expenses for certain risk-based
arrangements (such as its special needs plans), as well as the
aggregate estimated benchmark amount above or below which we will
incur profit or loss on for VBC arrangements under which
third-party medical costs are not included in our reported results.
This metric is an annualization of our estimate of this amount for
the most recent quarter.
A number of our VBC contracts are subject to complex or novel
patient attribution mechanics and benchmark adjustments, some of
which are based on information not reported to us until periods
after we report our quarterly results. As a result, our estimates
of our patients under, and the dollar amount of, our value-based
contracts remain subject to estimation uncertainty.
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
and expense measures, the term "adjusted" refers to operating
performance measures that exclude certain items such as impairment
charges, (gain) loss on ownership changes, capacity closure
charges, restructuring charges, accruals for legal matters and debt
prepayment and refinancing charges; 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 the tax associated
with them as well as noncontrolling owners' income, which primarily
relates to non-tax paying entities. Note that the non-GAAP measures
presented for prior periods below have been conformed to the
non-GAAP measures presented for the current period.
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 measures of operating
expenses for its U.S. dialysis business, adjusted U.S. dialysis
patient care costs per treatment, adjusted operating income,
adjusted net income from continuing operations attributable to
DaVita Inc. and adjusted diluted net income per share from
continuing operations 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 results 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.
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, free cash flow represents net cash provided by
operating activities less distributions to noncontrolling interests
and all capital expenditures (including development capital
expenditures, routine maintenance and information technology); plus
contributions from noncontrolling interests and proceeds from the
sale of self-developed properties. 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 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 3 through 7 provide reconciliations of
the non-GAAP financial measures presented in this press release to
their most comparable GAAP measures.
DAVITA INC.
RECONCILIATIONS FOR
NON-GAAP MEASURES
(unaudited)
(dollars in
millions, except per share data)
Note 3: Adjusted net income from continuing
operations and adjusted diluted net income from continuing
operations per share attributable to DaVita Inc.
|
Three months
ended
|
|
Year
ended
|
|
December 31,
2022
|
|
September
30,
2022
|
|
December 31,
2022
|
|
December 31,
2021
|
|
Dollars
|
|
Per
share
|
|
Dollars
|
|
Per
share
|
|
Dollars
|
|
Per
share
|
|
Dollars
|
|
Per
share
|
Consolidated:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net income from
continuing operations
attributable to
DaVita Inc.
|
$ 55
|
|
$
0.59
|
|
$
105
|
|
$
1.13
|
|
$
547
|
|
$
5.71
|
|
$
978
|
|
$
8.90
|
Closure charges
impacting:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Patient care
costs
|
6
|
|
0.07
|
|
7
|
|
0.07
|
|
21
|
|
0.22
|
|
2
|
|
0.02
|
General and
administrative:
|
8
|
|
0.09
|
|
12
|
|
0.13
|
|
22
|
|
0.23
|
|
3
|
|
0.03
|
Depreciation and
amortization
|
24
|
|
0.26
|
|
21
|
|
0.22
|
|
46
|
|
0.48
|
|
12
|
|
0.11
|
Total closure
charges
|
38
|
|
0.42
|
|
40
|
|
0.42
|
|
88
|
|
0.92
|
|
18
|
|
0.16
|
Severance and other
costs
|
23
|
|
0.25
|
|
—
|
|
—
|
|
23
|
|
0.24
|
|
—
|
|
—
|
Related income
tax
|
(13)
|
|
(0.15)
|
|
(10)
|
|
(0.11)
|
|
(26)
|
|
(0.27)
|
|
(4)
|
|
(0.04)
|
Income tax impact
related to prior legal settlement
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
—
|
|
25
|
|
0.23
|
Adjusted net income
from continuing
operations
attributable to DaVita Inc.
|
$
102
|
|
$
1.11
|
|
$
135
|
|
$
1.45
|
|
$
632
|
|
$
6.60
|
|
$ 1,016
|
|
$
9.24
|
|
Certain columns, rows
or percentages may not sum or recalculate due to the presentation
of rounded numbers.
|
Note 4: Adjusted operating income
|
Three months
ended
|
|
Year
ended
|
|
December 31,
2022
|
|
September
30,
2022
|
|
December 31,
2022
|
|
December 31,
2021
|
Consolidated:
|
|
|
|
|
|
|
|
Operating
income
|
$
256
|
|
$
312
|
|
$
1,339
|
|
$
1,797
|
Closure charges
impacting:
|
|
|
|
|
|
|
|
Patient care
costs
|
6
|
|
7
|
|
21
|
|
2
|
General and
administrative:
|
8
|
|
12
|
|
22
|
|
3
|
Depreciation and
amortization
|
24
|
|
21
|
|
46
|
|
12
|
Total closure
charges
|
38
|
|
40
|
|
88
|
|
18
|
Severance and other
costs
|
23
|
|
—
|
|
23
|
|
—
|
Adjusted operating
income
|
$
317
|
|
$
351
|
|
$
1,450
|
|
$
1,815
|
|
|
Three months
ended
|
|
Year
ended
|
|
December 31,
2022
|
|
September
30,
2022
|
|
December 31,
2022
|
|
December 31,
2021
|
Consolidated:
|
|
|
|
|
|
|
|
U.S.
dialysis:
|
|
|
|
|
|
|
|
Segment operating
income
|
$
335
|
|
$
351
|
|
$
1,565
|
|
$
1,975
|
Closure
charges
|
35
|
|
40
|
|
86
|
|
18
|
Severance and other
costs
|
17
|
|
—
|
|
17
|
|
—
|
Adjusted U.S. dialysis
operating income
|
387
|
|
391
|
|
1,668
|
|
1,993
|
Other - Ancillary
services:
|
|
|
|
|
|
|
|
U.S.
|
|
|
|
|
|
|
|
Integrated kidney
care
|
(34)
|
|
(32)
|
|
(125)
|
|
(111)
|
Other U.S.
ancillary
|
(1)
|
|
(2)
|
|
(9)
|
|
3
|
Segment operating
loss
|
(36)
|
|
(34)
|
|
(134)
|
|
(108)
|
Severance and other
costs
|
—
|
|
—
|
|
—
|
|
—
|
Adjusted operating
loss
|
(35)
|
|
(34)
|
|
(133)
|
|
(108)
|
International
|
|
|
|
|
|
|
|
Segment operating
income
|
(4)
|
|
18
|
|
37
|
|
42
|
Closure
charges
|
3
|
|
—
|
|
3
|
|
—
|
Severance and other
costs
|
5
|
|
—
|
|
5
|
|
—
|
Adjusted operating
income
|
3
|
|
18
|
|
44
|
|
42
|
Other - Ancillary
services operating loss
|
(32)
|
|
(15)
|
|
(89)
|
|
(66)
|
Corporate
administrative support expenses:
|
|
|
|
|
|
|
|
Segment
expenses
|
(38)
|
|
(24)
|
|
(130)
|
|
(112)
|
Severance and other
costs
|
1
|
|
—
|
|
1
|
|
—
|
Adjusted Corporate
administrative support expenses
|
(38)
|
|
(24)
|
|
(129)
|
|
(112)
|
Adjusted operating
income
|
$
317
|
|
$
351
|
|
$
1,450
|
|
$
1,815
|
|
Certain columns, rows
or percentages may not sum or recalculate due to the presentation
of rounded numbers.
|
Note 5: Adjusted U.S. dialysis expense
measures
|
Three months
ended
|
|
December 31,
2022
|
|
September 30,
2022
|
|
GAAP
|
|
Non-GAAP
adjustment
|
|
Adjusted
|
|
GAAP
|
|
Non-GAAP
adjustment
|
|
Adjusted
|
|
(dollars in
millions)
|
U.S.
dialysis
|
|
|
|
|
|
|
|
|
|
|
|
Treatments
|
7,239,660
|
|
—
|
|
7,239,660
|
|
7,335,825
|
|
—
|
|
7,335,825
|
Operating
expenses:
|
|
|
|
|
|
|
|
|
|
|
|
Patient care
costs
|
$ 1,865
|
|
$
(6)
|
|
$ 1,859
|
|
$ 1,877
|
|
$
(7)
|
|
$ 1,870
|
General and
administrative
|
283
|
|
(22)
|
|
261
|
|
297
|
|
(12)
|
|
285
|
Depreciation and
amortization
|
184
|
|
(24)
|
|
160
|
|
185
|
|
(21)
|
|
164
|
Equity investment
income
|
(8)
|
|
—
|
|
(8)
|
|
(7)
|
|
—
|
|
(7)
|
Total operating
expenses
|
$ 2,324
|
|
$
(52)
|
|
$ 2,271
|
|
$ 2,352
|
|
$
(40)
|
|
$ 2,312
|
Patient care costs per
treatment
|
$
257.60
|
|
|
|
$
256.74
|
|
$
255.86
|
|
|
|
$
254.96
|
|
Certain columns, rows,
per treatment amounts or percentages may not sum or recalculate due
to the presentation of rounded numbers.
|
|
|
|
|
|
|
(1)
|
Patient care costs per
treatment and adjusted patient care costs per treatment are patient
care costs or adjusted patient care costs divided by number of U.S.
dialysis treatments, respectively.
|
DAVITA INC.
RECONCILIATIONS FOR
NON-GAAP MEASURES -
continued
(unaudited)
(dollars in
millions)
Note 6: Effective income tax rates on income from
continuing operations attributable to DaVita Inc.
|
Three months
ended
|
|
Year ended
December 31,
2022
|
|
December 31,
2022
|
|
September
30,
2022
|
|
Income from continuing
operations before income taxes
|
$ 147
|
|
$ 207
|
|
$ 966
|
Noncontrolling owners'
income primarily attributable to non-tax paying entities
|
(59)
|
|
(59)
|
|
(222)
|
Income from continuing
operations before income taxes attributable to DaVita
Inc.
|
$
89
|
|
$ 148
|
|
$ 744
|
|
|
|
|
|
|
Income tax expense for
continuing operations
|
$
34
|
|
$
43
|
|
$ 198
|
Income tax
attributable to noncontrolling interests
|
—
|
|
—
|
|
(1)
|
Income tax expense for
continuing operations attributable to DaVita Inc.
|
$
34
|
|
$
42
|
|
$ 197
|
|
|
|
|
|
|
Effective income tax
rate on income from continuing operations attributable
to
DaVita
Inc.
|
38.5 %
|
|
28.7 %
|
|
26.5 %
|
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,
2022
|
December 31,
2022
|
|
September
30,
2022
|
|
Income from continuing
operations before income taxes
|
$ 147
|
|
$ 207
|
|
$ 966
|
Closure charges
impacting:
|
|
|
|
|
|
Patient care
costs
|
6
|
|
7
|
|
21
|
General and
administrative:
|
8
|
|
12
|
|
22
|
Depreciation and
amortization
|
24
|
|
21
|
|
46
|
Severance and other
costs
|
23
|
|
—
|
|
23
|
Noncontrolling owners'
income primarily attributable to non-tax paying entities
|
(59)
|
|
(59)
|
|
(222)
|
Adjusted income from
continuing operations before income taxes attributable
to
DaVita
Inc.
|
$ 150
|
|
$ 187
|
|
$ 855
|
Income tax
expense
|
$
34
|
|
$
43
|
|
$ 198
|
Plus income tax related
to:
|
|
|
|
|
|
Closure charges
impacting:
|
|
|
|
|
|
Patient care
costs
|
2
|
|
2
|
|
5
|
General and
administrative:
|
1
|
|
3
|
|
5
|
Depreciation and
amortization
|
6
|
|
5
|
|
11
|
Severance and other
costs
|
5
|
|
—
|
|
5
|
Less income tax related
to:
|
|
|
|
|
|
Noncontrolling
interests
|
—
|
|
—
|
|
(1)
|
Income tax on adjusted
income from continuing operations attributable to DaVita
Inc.
|
$
48
|
|
$
52
|
|
$ 223
|
Effective income tax
rate on adjusted income from continuing operations
attributable
to DaVita
Inc.
|
31.7 %
|
|
27.9 %
|
|
26.1 %
|
|
Certain columns, rows
or percentages may not sum or recalculate due to the presentation
of rounded numbers.
|
Note 7: Free cash flow
|
Three months
ended
|
|
December 31,
2022
|
|
September
30,
2022
|
|
December 31,
2021
|
Net cash provided by
operating activities
|
$
344
|
|
$
711
|
|
$
530
|
Adjustments to
reconcile net cash provided by operating activities to free cash
flow:
|
|
|
|
|
|
Distributions to
noncontrolling interests
|
(79)
|
|
(70)
|
|
(67)
|
Contributions from
noncontrolling interests
|
3
|
|
2
|
|
3
|
Expenditures for
routine maintenance and information technology
|
(147)
|
|
(104)
|
|
(132)
|
Expenditures for
development and relocations
|
(47)
|
|
(40)
|
|
(58)
|
Proceeds from sale of
self-developed properties
|
1
|
|
1
|
|
13
|
Free cash
flow
|
$
75
|
|
$
500
|
|
$
290
|
|
|
Twelve months
ended
|
|
December 31,
2022
|
|
September
30,
2022
|
|
December 31,
2021
|
Net cash provided by
operating activities
|
$
1,565
|
|
$
1,751
|
|
$
1,931
|
Adjustments to
reconcile net cash provided by operating activities to free cash
flow:
|
|
|
|
|
|
Distributions to
noncontrolling interests
|
(268)
|
|
(255)
|
|
(244)
|
Contributions from
noncontrolling interests
|
15
|
|
15
|
|
32
|
Expenditures for
routine maintenance and information technology
|
(431)
|
|
(416)
|
|
(421)
|
Expenditures for
development and relocations
|
(172)
|
|
(182)
|
|
(220)
|
Proceeds from sale of
self-developed properties
|
109
|
|
120
|
|
56
|
Free cash
flow
|
$
817
|
|
$
1,032
|
|
$
1,133
|
|
Certain columns or rows
may not sum or recalculate due to the presentation of rounded
numbers.
|
Contact:
|
Investor
Relations
|
|
DaVita Inc.
|
|
ir@davita.com
|
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SOURCE DaVita