Contact: LeAnne Zumwalt
Investor Relations
DaVita, Inc.
310-792-2600 ext. 2072 |
TORRANCE, Calif., February 13, 2002 --
DaVita Inc. (NYSE: DVA), today announced results for the quarter and year
ended December 31, 2002. EBITDA, excluding impairments, prior period Medicare
laboratory receipts and accounts receivable recoveries, was $97 million for
the quarter. Our fourth quarter EBITDA guidance was $95 million to
$100 million. EBITDA for the twelve months ended December 31, 2002 was
$392 million, again excluding cash recoveries and impairments.
Net earnings for the three months ended December 31, 2002 were
$59 million, or $0.81 per share. Net earnings for the quarter excluding
impairments and lab and accounts receivable recoveries related to prior years'
services, representing a total of $24 million of additional after-tax income,
were $35 million or $0.50 per share.
Net earnings for the full year ended December 31, 2002 were $157 million,
or $1.96 per share. Net earnings for the year before the extraordinary loss
of $29 million for early extinguishment of debt, and excluding impairments and
lab and accounts receivable recoveries related to prior years' services
totaling $39 million of additional after-tax income, were $148 million or
$1.85 per share.
Financial and operating highlights include:
-- For the 12 months ended December 31, 2002 operating cash flow was $303
million and free cash flow was $247 million. Operating cash flow for
the quarter was $42 million and free cash flow was $25 million. The
fourth quarter and full year cash flow numbers exclude lab and accounts
receivable recoveries related to prior years' services.
-- Total treatments for the fourth quarter were 1,537,821. Non-acquired
same center treatment growth was 2.9%.
-- Fourth quarter dialysis revenue per treatment (excluding lab,
management fees and other revenue) was essentially flat from the third
quarter at $291 and up 2.8% from the fourth quarter of 2001.
-- DSO for the fourth quarter remained steady at 70 days.
-- Fourth quarter prior-period recoveries included $42 million associated
with Medicare lab claims.
-- As of December 31, 2002, we operated 515 outpatient centers serving
approximately 45,000 patients. During the fourth quarter we acquired
four centers and opened eight de novo centers. We also closed one
center, that did not have enough private patients to cover the Medicare
reimbursement deficit. Included in this patient and center count are
approximately 3,400 patients in 30 centers under management.
Our 2003 EBITDA guidance remains at $380 million to $400 million.
DaVita will be holding a conference call to discuss its fourth quarter and
year end 2002 results on February 14, 2003, at 1:30 Eastern Standard Time.
The dial in number is 800 399-4406. A replay of the conference call will be
available on DaVita's official web page, http://www.davita.com, for the following
30 days.
This release contains forward-looking statements. Factors which could
impact future results include the uncertainties associated with governmental
regulation, general economic and other market conditions, and the risk factors
set forth in the Company's SEC filings, including its Form 10-Q for the
quarter ended September 30, 2002. The forward-looking statements should be
considered in light of these risks and uncertainties.
These risks include those relating to:
-- possible reductions in private mix and private and government
reimbursement rates,
-- the concentration of profits generated from PPO and private indemnity
patients and from ancillary services including the administration of
pharmaceuticals,
-- changes in pharmaceutical practice patterns or reimbursement policies,
-- the ongoing review of the Company's Florida laboratory subsidiary by
its Medicare carrier and the Department of Justice,
-- the ongoing review by the US Attorney's Office and HHS Office of
Inspector General in Philadelphia and
-- the Company's ability to maintain contracts with physician medical
directors.
DAVITA INC.
CONSOLIDATED BALANCE SHEETS
(dollars in thousands, except per share data)
December 31,
2002 2001
ASSETS
Cash and cash equivalents $96,475 $36,711
Accounts receivable, less allowance
of $48,927 and $52,475 344,292 333,546
Inventories 34,929 34,901
Other current assets 28,667 9,364
Deferred income taxes 40,163 60,142
Total current assets 544,526 474,664
Property and equipment, net 298,475 252,778
Amortizable intangibles, net 63,159 73,108
Investments in third-party dialysis businesses 3,227 4,346
Other long-term assets 1,520 2,027
Goodwill 864,786 855,760
$1,775,693 $1,662,683
LIABILITIES AND SHAREHOLDERS' EQUITY
Accounts payable $77,890 $74,630
Other liabilities 101,389 111,164
Accrued compensation and benefits 95,435 88,826
Current portion of long-term debt 7,978 9,034
Income taxes payable 9,909 15,027
Total current liabilities 292,601 298,681
Long-term debt 1,311,252 811,190
Other long-term liabilities 9,417 5,012
Deferred income taxes 65,930 23,441
Minority interests 26,229 20,722
Commitments and contingencies
Shareholders' equity:
Preferred stock ($0.001 par value, 5,000,000
shares authorized; none issued)
Common stock ($0.001 par value, 195,000,000
shares authorized; 88,874,896 and
85,409,037 shares issued) 89 85
Additional paid-in capital 519,369 467,904
Retained earnings 213,337 56,008
Treasury stock, at cost (28,216,177 and
888,700 shares) (662,531) (20,360)
Total shareholders' equity 70,264 503,637
$1,775,693 $1,662,683
DAVITA INC.
CONSOLIDATED STATEMENTS OF INCOME
(dollars in thousands, except per share data)
Three months ended Years ended
December 31, December 31,
2002 2001 2002 2001
Net operating
revenues $503,096 $429,657 $ 1,854,632 $1,650,753
Operating expenses:
Dialysis centers
and labs 317,061 290,881 1,217,685 1,100,652
General and
administrative 39,328 33,814 154,453 129,194
Depreciation and
amortization 16,895 26,156 64,665 105,209
Provision for
uncollectible
accounts 7,623 3,580 26,877 (2,294)
Impairments and
valuation adjustments 2,010 (380)
Total operating
expenses 382,917 354,431 1,463,300 1,332,761
Operating income 120,179 75,226 391,332 317,992
Other income, net 818 320 5,790 4,644
Debt expense 19,458 15,680 71,636 72,438
Minority interests
in income of
consolidated
subsidiaries (2,128) (2,408) (9,299) (9,260)
Income before income
taxes and
extraordinary
items 99,411 57,458 316,187 240,938
Income tax expense 40,600 24,900 129,500 104,600
Income before
extraordinary items 58,811 32,558 186,687 136,338
Extraordinary (loss)
gain related to
early extinguishments
of debt, net of tax
of $19,572 in 2002 and
$(652) in 2001 (29,358) 977
Net income $58,811 $32,558 $157,329 $137,315
Basic earnings per
common share:
Income before
extraordinary items $0.97 $0.38 $2.60 $1.63
Extraordinary (loss)
gain, net of tax (0.41) 0.01
Net income $0.97 $0.38 $2.19 $1.64
Diluted earnings per common share:
Income before
extraordinary items $0.81 $0.36 $2.28 $1.51
Extraordinary (loss)
gain, net of tax (0.32) 0.01
Net income $0.81 $0.36 $1.96 $1.52
DAVITA INC.
SUPPLEMENTAL FINANCIAL DATA
Q4 2002 Q3 2002 Q4 2001 YE 2002
Financial Results:
Net earnings, excluding
prior period Medicare lab
revenue, extraordinary
items, recoveries, valuation
adjustments and goodwill
amortization
(in 000's) (A) $34,600 $37,400 $35,700 $147,700
Basic EPS $0.57 $0.58 $0.42 $2.06
EPS assuming dilution $0.50 $0.51 $0.39 $1.85
EBITDA, excluding prior
period Medicare lab
revenue, recoveries and
valuation adjustments
Consolidated
(in 000's) $97,000 $99,800 $96,300 $391,600
Continental U.S.
(in 000's). $97,000 $99,800 $96,000 $391,500
Continental EBITDA
margin 21.0% 22.0% 22.5% 21.9%
Business Metrics (Continental U.S.):
Category #1 Volume
Treatments 1,537,821 1,516,840 1,481,958 5,975,280
Number of treatment
days 79.6 79 79.6 313
Treatments per day 19,319 19,201 18,618 19,090
Per day year over
year increase 3.8% 4.6% 8.4% 5.0%
Same center growth
(year over year) 2.9% 3.7% 4.6% 3.9%
Non-acquired growth
(year over year) 2.9% 3.8% 4.6% 3.9%
Category #2 Revenue,
excluding prior period
Medicare lab revenue
and recoveries
Revenue (in 000's) $462,000 $454,000 $426,000 $1,790,000
Dialysis revenue
per treatment $291.02 $290.92 $283.19 $290.73
Per treatment
increase from
previous quarter 0.0% 0.1% 1.1% --
Per treatment
increase from
prior year 2.8% 3.8% 6.3% 4.4%
Category #3 Expenses
A. Dialysis centers
and lab operating
expenses
Percent of revenue 68.7% 67.9% 67.5% 67.7%
Per treatment $206.17 $203.34 $194.03 $202.79
Per treatment
increase (decrease)
from previous
quarter 1.4% 1.4% 1.5% --
B. General &
administrative
expenses
Percent of revenue 8.5% 8.2% 7.9% 8.6%
Per treatment $25.57 $24.42 $22.82 $25.85
Per treatment
increase (decrease)
from previous
quarter 4.7% (13.6%) 4.9% --
C. Bad debt expense
as a percent of
current-period
revenue 1.8% 1.9% 2.0% 1.8%
D. Consolidated
effective tax rate 40.8% 40.0% 43.3% 41.0%
Category #4, Cash Flow
(Consolidated, including
prior period recoveries,
in 000's)
Operating cash flow $66,000 $134,000 $23,000 $342,000
Free cash flow (before
share repurchase,
acquisition and
development
spending) $49,000 $124,000 $9,000 $286,000
Capital expenditures:
Development $19,600 $11,700 $7,400 $47,000
Routine
maintenance/IT/
other $16,700 $10,500 $14,500 $55,900
Acquisition
expenditures, net $6,500 $10,600 -- $18,500
Category #5 Accounts Receivable
Net receivables
(in 000's) $344,000 $340,000 $325,000 $344,000
DSO 70 70 72 70
Category #6 Debt/Capital
Structure (Consolidated)
Total debt
(in 000's) $1,319,000 $1,322,000 $820,000 $1,319,000
Net debt, net of
cash (in 000's) $1,223,000 $1,207,000 $784,000 $1,223,000
LTM net leverage
ratio 3.1x 3.2x 3.2x 3.1x
Shares repurchased
(in 000's) 1,900 5,600 800 27,300
Average repurchase
price $23.80 $21.88 $23.43 $23.50
Category #7 Clinical
Dialysis adequacy - %
of patients with
URR > 65 88% 88% 87%
Dialysis adequacy - %
of patients with
Kt/V > 1.2 92% 91% 90%
Anemia measure - %
of patients with
HCT > 33 83% 81% 79%
(A) Effective January 1, 2002 goodwill is no longer amortized in
accordance with new accounting standards. Fourth quarter 2001 net
earnings and per-share amounts, including goodwill amortization but
excluding extraordinary items and recoveries, were $30 million or
$0.35 basic EPS and $0.33 diluted EPS.
DAVITA INC.
RECONCILIATIONS FOR NON-GAAP MEASURES
Q4 2002 YE 2002
(dollars in thousands)
EBITDA, excluding impairments, prior period
lab receipts and accounts receivable
recoveries:
Operating income $120,179 $391,332
Depreciation and amortization 16,895 64,665
EBITDA 137,074 455,997
Other exclusions:
Prior period lab receipts (41,555) (58,778)
Impairments and valuations adjustments 2,010 (380)
Accounts receivable recoveries (510) (5,192)
(40,055) (64,350)
$97,019 $391,647
Net income, excluding impairments, prior
period lab receipts and accounts
receivable recoveries:
Net income $58,811 $157,329
Extraordinary loss - extinguishment of debt
Other exclusions:
Prior period lab receipts (41,555) (58,778)
Impairments and valuations adjustments 2,010 (380)
Accounts receivable recoveries (510) (5,192)
(40,055) (64,350)
Income tax expense 15,842 25,405
Other exclusions, net of tax (24,213) (38,945)
$34,598 $147,742
Operating cash flow excluding lab and accounts
receivable related to prior years' services
and free cash flow:
Cash provided by operating activities $66,318 $341,995
Less other exclusions, net of tax (24,213) (38,945)
Operating cash flow excluding lab and accounts
receivable related to prior years' services 42,105 303,050
Less expenditures for routine maintenance and
information technology (16,706) (55,936)
Free cash flow $25,399 $247,114
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