DENVER, Nov. 5, 2019 /PRNewswire/ -- DaVita Inc. (NYSE: DVA) today announced results for the quarter ended September 30, 2019.
Third quarter 2019 financial and operational highlights:
- Consolidated revenues of $2.904 billion.
- Operating income of $378 million and adjusted operating income of $462 million.
- Cash flows from continuing operations of $648 million.
- Entered into a new $5.5 billion senior secured credit agreement and redeemed our 5.75% senior notes.
- Repurchased 30,591,750 shares of our common stock at an average cost of $57.14 per share.
Three months ended | Nine months ended | |||||||||||||||
2019 | 2018 | 2019 | 2018 | |||||||||||||
Net income attributable to DaVita Inc.: | (dollars in millions, except per share data) | |||||||||||||||
Net income from continuing operations | $ | 150 | $ | 73 | $ | 465 | $ | 464 | ||||||||
Per share | $ | 0.99 | $ | 0.44 | $ | 2.87 | $ | 2.66 | ||||||||
Adjusted net income from continuing operations(1) | $ | 232 | $ | 93 | $ | 588 | $ | 467 | ||||||||
Per share adjusted(1) | $ | 1.53 | $ | 0.56 | $ | 3.64 | $ | 2.68 | ||||||||
Net income (loss) | $ | 143 | $ | (137) | $ | 566 | $ | 309 | ||||||||
Per share | $ | 0.95 | $ | (0.82) | $ | 3.50 | $ | 1.77 | ||||||||
Three months ended | Nine months ended | |||||||||||||||
2019 | 2018 | 2019 | 2018 | |||||||||||||
Operating income: | (dollars in millions) | |||||||||||||||
Operating income | $ | 378 | $ | 289 | $ | 1,181 | $ | 1,138 | ||||||||
Adjusted operating income(1) | $ | 462 | $ | 314 | $ | 1,306 | $ | 1,143 | ||||||||
________________________ | |
(1) | For the definitions of non-GAAP financial measures see the note titled "Note on Non-GAAP Financial Measures" and related reconciliations beginning at page 14. |
Certain items impacting the quarter:
Debt transactions: On August 12, 2019, we entered into a new $5.5 billion senior secured credit agreement consisting of a $1.75 billion senior secured Term Loan A facility with a delayed draw feature, a $2.75 billion senior secured Term Loan B facility and a $1.0 billion senior secured revolving line of credit. As of September 30, 2019, the new Term Loan A and Term Loan B were fully drawn and the new revolving line of credit remained undrawn. We used the proceeds from the new senior secured credit facilities to pay off the remaining balances outstanding on our previous senior secured credit facilities, redeem our 5.75% senior notes due 2022 and pay related redemption fees, and fund our modified "Dutch auction" tender offer (Tender Offer) to purchase shares of our common stock as further described below, as well as to repurchase additional shares of our common stock through open market transactions. The remaining debt borrowings added cash to our balance sheet for potential acquisitions, share repurchases and other general corporate purposes.
As a result of the debt transactions described above, we recorded debt refinancing and redemption charges of $21 million in the third quarter of 2019. These charges consist of write-offs of old debt discount and deferred financing costs, as well as the redemption premium associated with our 5.75% senior notes and professional fees.
Share repurchases: The following table summarizes repurchases of our common stock during the three and nine months ended September 30, 2019.
Three months ended September 30, 2019 | Nine months ended September 30, 2019 | ||||||||||||||||||||
Shares | Amount paid | Average | Shares | Amount paid | Average | ||||||||||||||||
Tender Offer(1) | 21,801,975 | $ | 1,234 | $ | 56.60 | 21,801,975 | $ | 1,234 | $ | 56.60 | |||||||||||
Open market repurchases | 8,789,775 | 514 | 58.49 | 10,849,751 | 626 | 57.72 | |||||||||||||||
30,591,750 | $ | 1,748 | $ | 57.14 | 32,651,726 | $ | 1,860 | $ | 56.97 | ||||||||||||
___________________ | |
(1) | The amount paid for shares repurchased associated with the Company's Tender Offer during the three and nine months ended September 30, 2019 includes the clearing price of $56.50 per share plus related fees and expenses of $2 million. |
In addition to the share repurchases described above, we have also repurchased 4,283,376 shares of our common stock for $246 million at an average cost of $57.32 per share from October 1, 2019 through November 4, 2019. Effective November 4, 2019, our Board of Directors terminated all remaining prior share repurchase authorizations available to us and approved a new share repurchase authorization of $2 billion.
Non-GAAP adjustments to operating income:
Goodwill impairment charge: During the quarter ended September 30, 2019, we recognized a non-cash goodwill impairment charge of $79 million in our Germany kidney care business as a result of continuing developments in the business and our expected timing and ability to mitigate them. This charge included a $17 million increase to the goodwill impairment charge due to the deferred tax assets that the impairment itself generated. The result was a $79 million goodwill impairment charge to operating income, a $17 million credit to tax expense, and a net $62 million impact on net income. We also recognized a $5 million goodwill impairment charge in our other German health operations.
Financial and operating metrics:
Three months ended | Twelve months ended | |||||||||||||||
2019 | 2018 | 2019 | 2018 | |||||||||||||
Cash flow: | (dollars in millions) | |||||||||||||||
Operating cash flow | $ | 641 | $ | 458 | $ | 1,781 | $ | 1,727 | ||||||||
Operating cash flow from continuing operations | $ | 648 | $ | 362 | $ | 1,602 | $ | 1,460 | ||||||||
Free cash flow from continuing operations(1) | $ | 437 | $ | 115 | $ | 722 | $ | 498 | ||||||||
___________________ | |
(1) | For the definitions of non-GAAP financial measures see the note titled "Note on Non-GAAP Financial Measures" and related reconciliations beginning at page 14. |
Volume: Total U.S. dialysis treatments for the third quarter of 2019 were 7,673,191, or an average of 97,129 treatments per day, representing a per day increase of 2.7% over the third quarter of 2018. Normalized non-acquired treatment growth in the third quarter of 2019 as compared to the third quarter of 2018 was 2.2%.
Effective income tax rate: Our effective income tax rate on income from continuing operations was 23.8% and 24.3% for the three and nine months ended September 30, 2019, respectively. This effective income tax rate was impacted by the amount of third party owners' income attributable to non-tax paying entities. The effective income tax rate on income from continuing operations attributable to DaVita Inc. was 30.3% and 29.8% for the three and nine months ended September 30, 2019, respectively.
Our effective income tax rate on income from continuing operations attributable to DaVita Inc. for the three and nine months ended September 30, 2019 was further impacted by the write-off of deferred financing costs, other debt costs and goodwill impairment charges. Excluding these items from the three and nine months ended September 30, 2019, our effective income tax rate on adjusted income from continuing operations attributable to DaVita Inc. would have been 27.6% and 28.4% for the three and nine months ended September 30, 2019, respectively.
Center activity: As of September 30, 2019, we provided dialysis services to a total of approximately 233,300 patients at 2,985 outpatient dialysis centers, of which 2,736 centers were located in the United States and 249 centers were located in nine countries outside of the United States. During the third quarter of 2019, we opened a total of 24 new dialysis centers, acquired two dialysis centers and closed 13 dialysis centers in the United States. In addition, we opened one new dialysis center, acquired two dialysis centers and closed two dialysis centers outside of the United States during the third quarter of 2019.
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 consolidated operating income, diluted net income from continuing operations per share attributable to DaVita Inc. or effective tax rate on income from continuing operations on a GAAP basis 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 goodwill impairment charges and 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 write-off of deferred financing costs, other debt costs and the amount of third party owners' income and related taxes attributable to non-tax paying entities.
Current 2019 guidance | Prior 2019 guidance | ||||||||||||||
Low | High | Low | High | ||||||||||||
(dollars in millions) | |||||||||||||||
Adjusted operating income | $ | 1,740 | $ | 1,770 | $ | 1,640 | $ | 1,700 | |||||||
Operating cash flow from continuing operations | $ | 1,525 | $ | 1,675 | $ | 1,450 | $ | 1,625 | |||||||
Capital expenditures from continuing operations | $ | 740 | $ | 780 | $ | 800 | $ | 840 | |||||||
Effective income tax rate on adjusted income from continuing operations attributable to DaVita Inc. | 28.5 | % | 29.5 | % | 28.5 | % | 29.5 | % | |||||||
Current 2020 guidance | Prior 2020 guidance | ||||||||||||||
Low | High | Low | High | ||||||||||||
(dollars in millions, except per share) | |||||||||||||||
Adjusted diluted net income from continuing operations per share attributable to DaVita Inc. | $ | 5.25 | $ | 5.75 | $ | 5.00 | $ | 5.50 | |||||||
Capital expenditures from continuing operations | $ | 700 | $ | 750 | $ | 700 | $ | 750 | |||||||
We will be holding a conference call to discuss our results for the third quarter ended September 30, 2019, on November 5, 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.
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, 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 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;
- 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.
Contact: | Jim Gustafson |
Investor Relations | |
DaVita Inc. | |
(310) 536-2585 |
DAVITA INC. | |||||||||||||||
CONSOLIDATED STATEMENTS OF INCOME | |||||||||||||||
(unaudited) | |||||||||||||||
(dollars in thousands, except per share data) | |||||||||||||||
Three months ended | Nine months ended | ||||||||||||||
2019 | 2018 | 2019 | 2018 | ||||||||||||
Dialysis and related lab patient service revenues | $ | 2,781,169 | $ | 2,670,701 | $ | 8,150,386 | $ | 7,980,178 | |||||||
Provision for uncollectible accounts | (3,977) | (11,977) | (19,689) | (35,838) | |||||||||||
Net dialysis and related lab patient service revenues | 2,777,192 | 2,658,724 | 8,130,697 | 7,944,340 | |||||||||||
Other revenues | 126,886 | 188,606 | 359,198 | 639,387 | |||||||||||
Total revenues | 2,904,078 | 2,847,330 | 8,489,895 | 8,583,727 | |||||||||||
Operating expenses and charges: | |||||||||||||||
Patient care costs | 1,991,172 | 2,063,770 | 5,913,860 | 6,168,444 | |||||||||||
General and administrative | 298,736 | 336,299 | 824,887 | 866,922 | |||||||||||
Depreciation and amortization | 155,915 | 146,000 | 456,685 | 435,878 | |||||||||||
Provision for uncollectible accounts | — | 800 | — | (7,300) | |||||||||||
Equity investment (income) loss | (3,936) | 3,824 | (11,158) | (6,126) | |||||||||||
Investment and other asset impairments | — | 6,093 | — | 17,338 | |||||||||||
Goodwill impairment charges | 83,855 | — | 124,892 | 3,106 | |||||||||||
Loss (gain) on changes in ownership interest, net | — | 1,506 | — | (32,451) | |||||||||||
Total operating expenses and charges | 2,525,742 | 2,558,292 | 7,309,166 | 7,445,811 | |||||||||||
Operating income | 378,336 | 289,038 | 1,180,729 | 1,137,916 | |||||||||||
Debt expense | (88,589) | (125,927) | (351,774) | (359,135) | |||||||||||
Debt prepayment, refinancing and redemption charges | (21,242) | — | (33,402) | — | |||||||||||
Other income, net | 5,280 | 4,007 | 17,863 | 10,583 | |||||||||||
Income from continuing operations before income taxes | 273,785 | 167,118 | 813,416 | 789,364 | |||||||||||
Income tax expense | 65,254 | 52,047 | 197,938 | 206,652 | |||||||||||
Net income from continuing operations | 208,531 | 115,071 | 615,478 | 582,712 | |||||||||||
Net (loss) income from discontinued operations, net of tax | (6,843) | (211,739) | 102,854 | (147,829) | |||||||||||
Net income (loss) | 201,688 | (96,668) | 718,332 | 434,883 | |||||||||||
Less: Net income attributable to noncontrolling interests | (58,418) | (40,128) | (152,222) | (125,717) | |||||||||||
Net income (loss) attributable to DaVita Inc. | $ | 143,270 | $ | (136,796) | $ | 566,110 | $ | 309,166 | |||||||
Earnings per share attributable to DaVita Inc.: | |||||||||||||||
Basic net income from continuing operations per share | $ | 1.00 | $ | 0.44 | $ | 2.88 | $ | 2.69 | |||||||
Basic net income (loss) per share | $ | 0.95 | $ | (0.82) | $ | 3.51 | $ | 1.79 | |||||||
Diluted net income from continuing operations per share | $ | 0.99 | $ | 0.44 | $ | 2.87 | $ | 2.66 | |||||||
Diluted net income (loss) per share | $ | 0.95 | $ | (0.82) | $ | 3.50 | $ | 1.77 | |||||||
Weighted average shares for earnings per share: | |||||||||||||||
Basic | 150,675,465 | 166,770,664 | 161,147,122 | 172,403,944 | |||||||||||
Diluted | 151,295,950 | 167,262,358 | 161,636,011 | 174,348,421 | |||||||||||
Amounts attributable to DaVita Inc.: | |||||||||||||||
Net income from continuing operations | $ | 150,113 | $ | 73,371 | $ | 464,590 | $ | 463,989 | |||||||
Net (loss) income from discontinued operations | (6,843) | (210,167) | 101,520 | (154,823) | |||||||||||
Net income (loss) attributable to DaVita Inc. | $ | 143,270 | $ | (136,796) | $ | 566,110 | $ | 309,166 | |||||||
DAVITA INC. | |||||||||||||||
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME | |||||||||||||||
(unaudited) | |||||||||||||||
(dollars in thousands) | |||||||||||||||
Three months ended September 30, | Nine months ended September 30, | ||||||||||||||
2019 | 2018 | 2019 | 2018 | ||||||||||||
Net income (loss) | $ | 201,688 | $ | (96,668) | $ | 718,332 | $ | 434,883 | |||||||
Other comprehensive income (loss), net of tax: | |||||||||||||||
Unrealized (losses) gains on interest rate cap agreements: | |||||||||||||||
Unrealized (losses) gains | (1,060) | 37 | (1,672) | 819 | |||||||||||
Reclassifications of net realized losses into net income (loss) | 1,569 | 1,606 | 4,782 | 4,680 | |||||||||||
Unrealized losses on foreign currency translation: | |||||||||||||||
Foreign currency translation adjustments | (44,502) | (8,827) | (45,790) | (39,475) | |||||||||||
Other comprehensive loss | (43,993) | (7,184) | (42,680) | (33,976) | |||||||||||
Total comprehensive income (loss) | 157,695 | (103,852) | 675,652 | 400,907 | |||||||||||
Less: Comprehensive income attributable to noncontrolling interests | (58,418) | (40,128) | (152,222) | (125,717) | |||||||||||
Comprehensive income (loss) attributable to DaVita Inc. | $ | 99,277 | $ | (143,980) | $ | 523,430 | $ | 275,190 | |||||||
DAVITA INC. | |||||||
CONSOLIDATED STATEMENTS OF CASH FLOWS | |||||||
(unaudited) | |||||||
(dollars in thousands) | |||||||
Nine months ended September 30, | |||||||
2019 | 2018 | ||||||
Cash flows from operating activities: | |||||||
Net income | $ | 718,332 | $ | 434,883 | |||
Adjustments to reconcile net income to net cash provided by operating activities: | |||||||
Depreciation and amortization | 456,685 | 435,878 | |||||
Impairment charges | 124,892 | 20,444 | |||||
Debt prepayment, refinancing and redemption charges | 33,402 | — | |||||
Stock-based compensation expense | 47,811 | 59,605 | |||||
Deferred income taxes | 72,590 | 200,056 | |||||
Equity investment loss, net | 5,131 | 8,611 | |||||
Gain (loss) on sales of business interests, net | 23,022 | (57,547) | |||||
Other non-cash charges, net | 24,291 | 164,856 | |||||
Changes in operating assets and liabilities, net of effect of acquisitions and divestitures: | |||||||
Accounts receivable | (182,684) | (74,622) | |||||
Inventories | 9,519 | 88,355 | |||||
Other receivables and other current assets | 51,319 | (757) | |||||
Other long-term assets | 2,324 | 2,142 | |||||
Accounts payable | (106,662) | (12,800) | |||||
Accrued compensation and benefits | (57,930) | 40,225 | |||||
Other current liabilities | 140,046 | 45,624 | |||||
Income taxes | 57,279 | 21,749 | |||||
Other long-term liabilities | (27,542) | 5,546 | |||||
Net cash provided by operating activities | 1,391,825 | 1,382,248 | |||||
Cash flows from investing activities: | |||||||
Additions of property and equipment | (547,183) | (705,659) | |||||
Acquisitions | (77,348) | (113,526) | |||||
Proceeds from asset and business sales | 3,863,619 | 135,268 | |||||
Purchase of other debt and equity investments | (5,160) | (5,791) | |||||
Purchase of investments held-to-maturity | (98,322) | (3,728) | |||||
Proceeds from sale of other debt and equity investments | 5,893 | 8,783 | |||||
Proceeds from investments held-to-maturity | — | 32,628 | |||||
Purchase of equity investments | (8,770) | (12,874) | |||||
Distributions received on equity investments | 1,296 | 3,580 | |||||
Net cash provided by (used in) investing activities | 3,134,025 | (661,319) | |||||
Cash flows from financing activities: | |||||||
Borrowings | 38,519,991 | 41,674,279 | |||||
Payments on long-term debt and other financing costs | (40,570,003) | (40,828,443) | |||||
Purchase of treasury stock | (1,837,022) | (1,161,511) | |||||
Distributions to noncontrolling interests | (157,170) | (139,673) | |||||
Stock award exercises and other share issuances, net | 7,333 | 8,803 | |||||
Contributions from noncontrolling interests | 44,095 | 43,179 | |||||
Proceeds from sales of additional noncontrolling interest | — | 15 | |||||
Purchases of noncontrolling interests | (10,988) | (19,988) | |||||
Net cash used in financing activities | (4,003,764) | (423,339) | |||||
Effect of exchange rate changes on cash, cash equivalents and restricted cash | (4,178) | (5,790) | |||||
Net increase in cash, cash equivalents and restricted cash | 517,908 | 291,800 | |||||
Less: Net (decrease) increase in cash, cash equivalents and restricted cash from discontinued operations | (423,813) | 270,565 | |||||
Net increase in cash, cash equivalents and restricted cash from continuing operations | 941,721 | 21,235 | |||||
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 period | $ | 1,357,141 | $ | 540,155 | |||
DAVITA INC. | |||||||
CONSOLIDATED BALANCE SHEETS | |||||||
(unaudited) | |||||||
(dollars in thousands, except share data) | |||||||
September 30, 2019 | December 31, 2018 | ||||||
ASSETS | |||||||
Cash and cash equivalents | $ | 1,253,256 | $ | 323,038 | |||
Restricted cash and equivalents | 103,885 | 92,382 | |||||
Short-term investments | 100,713 | 2,935 | |||||
Accounts receivable, net | 1,901,225 | 1,858,608 | |||||
Inventories | 98,641 | 107,381 | |||||
Other receivables | 474,145 | 469,796 | |||||
Income tax receivable | 16,236 | 68,614 | |||||
Prepaid and other current assets | 50,617 | 111,840 | |||||
Current assets held for sale, net | — | 5,389,565 | |||||
Total current assets | 3,998,718 | 8,424,159 | |||||
Property and equipment, net of accumulated depreciation of $3,792,683 and $3,524,098, respectively | 3,419,238 | 3,393,669 | |||||
Operating lease right-of-use assets | 2,781,288 | — | |||||
Intangible assets, net of accumulated amortization of $78,437 and $80,566, respectively | 117,666 | 118,846 | |||||
Equity method and other investments | 219,386 | 224,611 | |||||
Long-term investments | 35,041 | 35,424 | |||||
Other long-term assets | 114,834 | 71,583 | |||||
Goodwill | 6,765,659 | 6,841,960 | |||||
$ | 17,451,830 | $ | 19,110,252 | ||||
LIABILITIES AND EQUITY | |||||||
Accounts payable | $ | 332,136 | $ | 463,270 | |||
Other liabilities | 716,023 | 595,850 | |||||
Accrued compensation and benefits | 662,826 | 658,913 | |||||
Current portion of operating lease liabilities | 374,214 | — | |||||
Current portion of long-term debt | 121,441 | 1,929,369 | |||||
Current liabilities held for sale | — | 1,243,759 | |||||
Total current liabilities | 2,206,640 | 4,891,161 | |||||
Long-term operating lease liabilities | 2,682,125 | — | |||||
Long-term debt | 8,014,475 | 8,172,847 | |||||
Other long-term liabilities | 135,087 | 450,669 | |||||
Deferred income taxes | 604,921 | 562,536 | |||||
Total liabilities | 13,643,248 | 14,077,213 | |||||
Commitments and contingencies | |||||||
Noncontrolling interests subject to put provisions | 1,296,059 | 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; 166,540,590 and 166,387,307 shares issued and 133,888,864 and 166,387,307 shares outstanding, respectively) | 167 | 166 | |||||
Additional paid-in capital | 906,990 | 995,006 | |||||
Retained earnings | 3,349,180 | 2,743,194 | |||||
Treasury stock (32,651,726 and zero shares, respectively) | (1,860,157) | — | |||||
Accumulated other comprehensive loss | (77,604) | (34,924) | |||||
Total DaVita Inc. shareholders' equity | 2,318,576 | 3,703,442 | |||||
Noncontrolling interests not subject to put provisions | 193,947 | 204,956 | |||||
Total equity | 2,512,523 | 3,908,398 | |||||
$ | 17,451,830 | $ | 19,110,252 | ||||
DAVITA INC. | |||||||||||||||
SUPPLEMENTAL FINANCIAL DATA | |||||||||||||||
(unaudited) | |||||||||||||||
(dollars in millions, except for per share and per treatment data) | |||||||||||||||
Three months ended | Nine months | ||||||||||||||
September 30, 2019 | June 30, 2019 | September 30, 2018 | September 30, | ||||||||||||
1. Consolidated business metrics: | |||||||||||||||
Operating income margin | 13.0 | % | 16.2 | % | 10.2 | % | 13.9 | % | |||||||
Adjusted operating income margin excluding certain items(1)(5) | 15.9 | % | 16.2 | % | 11.0 | % | 15.4 | % | |||||||
General and administrative expenses as a percent of consolidated revenues(2) | 10.3 | % | 9.7 | % | 11.8 | % | 9.7 | % | |||||||
Effective income tax rate on income from continuing operations | 23.8 | % | 23.5 | % | 31.1 | % | 24.3 | % | |||||||
Effective income tax rate on income from continuing operations attributable to DaVita Inc.(1) | 30.3 | % | 28.0 | % | 41.4 | % | 29.8 | % | |||||||
Effective income tax rate on adjusted income from continuing operations attributable to DaVita Inc.(1) | 27.6 | % | 27.9 | % | 38.0 | % | 28.4 | % | |||||||
2. Summary of division financial results: | |||||||||||||||
Revenues | |||||||||||||||
U.S. net dialysis and related lab patient services and other | $ | 2,691 | $ | 2,637 | $ | 2,577 | $ | 7,876 | |||||||
Other—Ancillary services and strategic initiatives | |||||||||||||||
U.S. other | 118 | 114 | 191 | 341 | |||||||||||
International net dialysis patient service and other | 131 | 125 | 113 | 376 | |||||||||||
248 | 239 | 304 | 717 | ||||||||||||
Eliminations | (36) | (34) | (34) | (104) | |||||||||||
Total consolidated revenues | $ | 2,904 | $ | 2,843 | $ | 2,847 | $ | 8,490 | |||||||
Operating income (loss) | |||||||||||||||
U.S. dialysis and related lab services | $ | 501 | $ | 499 | $ | 390 | $ | 1,417 | |||||||
Other—Ancillary services and strategic initiatives | |||||||||||||||
U.S. | (15) | (16) | (50) | (45) | |||||||||||
International | (83) | 1 | (10) | (125) | |||||||||||
(98) | (15) | (60) | (170) | ||||||||||||
Corporate administrative support expenses | (25) | (22) | (41) | (66) | |||||||||||
Total consolidated operating income | $ | 378 | $ | 462 | $ | 289 | $ | 1,181 | |||||||
DAVITA INC. | |||||||||||||||
SUPPLEMENTAL FINANCIAL DATA - continued | |||||||||||||||
(unaudited) | |||||||||||||||
(dollars in millions, except for per share and per treatment data) | |||||||||||||||
Three months ended | Nine months | ||||||||||||||
September 30, 2019 | June 30, 2019 | September 30, 2018 | September 30, | ||||||||||||
3. Summary of reportable segment financial results: | |||||||||||||||
U.S. Dialysis and Related Lab Services | |||||||||||||||
Revenue: | |||||||||||||||
Net dialysis and related lab patient service revenues | $ | 2,681 | $ | 2,632 | $ | 2,572 | $ | 7,855 | |||||||
Other revenues | 10 | 6 | 5 | 21 | |||||||||||
Total operating revenues | 2,691 | 2,637 | 2,577 | 7,876 | |||||||||||
Operating expenses: | |||||||||||||||
Patient care costs | 1,813 | 1,785 | 1,819 | 5,396 | |||||||||||
General and administrative | 235 | 216 | 233 | 648 | |||||||||||
Depreciation and amortization | 148 | 145 | 139 | 433 | |||||||||||
Equity investment income | (5) | (7) | (4) | (17) | |||||||||||
Total operating expenses | 2,191 | 2,139 | 2,187 | 6,459 | |||||||||||
Segment operating income | $ | 501 | $ | 499 | $ | 390 | $ | 1,417 | |||||||
4. U.S. Dialysis and Related Lab Services Business metrics: | |||||||||||||||
Volume | |||||||||||||||
Treatments | 7,673,191 | 7,520,587 | 7,377,277 | 22,491,237 | |||||||||||
Number of treatment days | 79.0 | 78.0 | 78.0 | 233.6 | |||||||||||
Average treatments per day | 97,129 | 96,418 | 94,580 | 96,281 | |||||||||||
Per day year over year increase | 2.7 | % | 2.6 | % | 4.0 | % | 2.7 | % | |||||||
Normalized non-acquired treatment growth year over year | 2.2 | % | 2.1 | % | 3.3 | % | |||||||||
Operating net revenues | |||||||||||||||
Dialysis and related lab services net revenue per treatment | $ | 349.41 | $ | 349.97 | $ | 348.62 | $ | 349.26 | |||||||
Expenses | |||||||||||||||
Patient care costs per treatment | $ | 236.32 | $ | 237.34 | $ | 246.55 | $ | 239.90 | |||||||
General and administrative expenses per treatment | $ | 30.63 | $ | 28.68 | $ | 31.64 | $ | 28.80 | |||||||
Accounts receivable | |||||||||||||||
Net receivables | $ | 1,719 | $ | 1,816 | $ | 1,643 | |||||||||
DSO | 60 | 63 | 59 | ||||||||||||
5. Discontinued operations: | |||||||||||||||
Operating results | |||||||||||||||
Net revenues | $ | — | $ | 1,331 | $ | 1,253 | $ | 2,713 | |||||||
Expenses | 2 | 1,202 | 1,261 | 2,542 | |||||||||||
Valuation adjustment | — | — | 98 | — | |||||||||||
(Loss) income from operations of discontinued operations before taxes | (2) | 129 | (106) | 171 | |||||||||||
Loss on sale of discontinued operations, before taxes | — | (23) | — | (23) | |||||||||||
Income tax expense | 5 | 27 | 106 | 45 | |||||||||||
Net (loss) income from discontinued operations, net of tax | $ | (7) | $ | 79 | $ | (212) | $ | 103 | |||||||
DAVITA INC. | |||||||||||||||
SUPPLEMENTAL FINANCIAL DATA - continued | |||||||||||||||
(unaudited) | |||||||||||||||
(dollars in millions, except for per share and per treatment data) | |||||||||||||||
Three months ended | Nine months | ||||||||||||||
September 30, 2019 | June 30, 2019 | September 30, 2018 | September 30, | ||||||||||||
6. Cash Flow: | |||||||||||||||
Operating cash flow | $ | 641 | $ | 610 | $ | 458 | $ | 1,392 | |||||||
Operating cash flow from continuing operations | $ | 648 | $ | 574 | $ | 362 | $ | 1,295 | |||||||
Operating cash flow from continuing operations, last twelve months | $ | 1,602 | $ | 1,316 | $ | 1,460 | |||||||||
Free cash flow from continuing operations (new definition)(1) | $ | 437 | $ | 393 | $ | 115 | $ | 711 | |||||||
Free cash flow from continuing operations, last twelve months (new definition)(1) | $ | 722 | $ | 400 | $ | 498 | |||||||||
Capital expenditures from continuing operations: | |||||||||||||||
Routine maintenance/IT/other | $ | 84 | $ | 61 | $ | 90 | $ | 225 | |||||||
Development and relocations | $ | 90 | $ | 95 | $ | 130 | $ | 284 | |||||||
Acquisition expenditures | $ | 11 | $ | 54 | $ | 22 | $ | 75 | |||||||
Proceeds from sale of self-developed properties | $ | 12 | $ | 14 | $ | 7 | $ | 38 | |||||||
7. Debt and Capital Structure: | |||||||||||||||
Total debt(3)(4) | $ | 8,212 | $ | 9,004 | $ | 10,278 | |||||||||
Net debt, net of cash and cash equivalents(3)(4) | $ | 6,959 | $ | 5,428 | $ | 9,830 | |||||||||
Leverage ratio (see calculation on page 13) | 3.21x | 2.47x | 4.29x | ||||||||||||
Weighted average effective interest rate: | |||||||||||||||
During the quarter | 5.09 | % | 5.17 | % | 4.93 | % | |||||||||
At end of the quarter | 4.66 | % | 5.30 | % | 5.03 | % | |||||||||
On the senior secured credit facilities at end of the quarter | 4.30 | % | 5.31 | % | 4.80 | % | |||||||||
Debt with fixed and capped rates as a percentage of total debt: | |||||||||||||||
Debt with rates fixed by its terms | 44 | % | 54 | % | 47 | % | |||||||||
Debt with rates capped by cap agreements | 86 | % | 93 | % | 81 | % | |||||||||
Amount spent on share repurchases | $ | 1,748 | $ | 112 | $ | 344 | $ | 1,860 | |||||||
Number of shares repurchased | 30,591,750 | 2,059,976 | 4,849,051 | 32,651,726 | |||||||||||
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 September 30, 2019, June 30, 2019 and September 30, 2018, exclude $76.0 million, $34.5 million and $53.6 million, 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 is classified as held for sale liabilities as of September 30, 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 September 30, 2018. |
(5) | Adjusted operating income margin is a calculation of adjusted operating income divided by consolidated revenues. |
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" 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). For the periods ended June 30, 2019 and September 30, 2018, as allowed by our Prior Credit Agreement, the Company elected to calculate debt using GAAP in effect at the commencement of the Prior Credit Agreement; therefore, the Company did not adjust its debt balance to include the lease liabilities under ASC Topic 842. 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 | |||||||||||
September 30, 2019 | June 30, 2019 | September 30, 2018 | |||||||||
Net income attributable to DaVita Inc. | $ | 624,922 | $ | 548,180 | $ | 612,562 | |||||
Income taxes | 249,686 | 236,479 | (7,200) | ||||||||
Interest expense | 437,513 | 476,507 | 430,674 | ||||||||
Depreciation and amortization | 611,841 | 601,927 | 619,836 | ||||||||
Impairment charges | 124,892 | 47,130 | 300,510 | ||||||||
Noncontrolling interests and equity investment income, net | 210,641 | 194,434 | 175,470 | ||||||||
Stock-settled stock-based compensation | 56,784 | 77,766 | 66,057 | ||||||||
Debt prepayment charges | 33,402 | 12,160 | — | ||||||||
Gain on changes in ownership interest, net | (28,152) | (26,646) | (57,547) | ||||||||
Other | 24,088 | 56,176 | 125,583 | ||||||||
"Consolidated EBITDA" | $ | 2,345,617 | $ | 2,224,113 | $ | 2,265,945 | |||||
September 30, 2019 | June 30, 2019 | September 30, 2018 | |||||||||
Total debt, excluding debt discount and other deferred financing costs(1) | $ | 8,211,895 | $ | 9,003,631 | $ | 10,314,797 | |||||
Letters of credit issued | 72,777 | 72,763 | 37,187 | ||||||||
8,284,672 | 9,076,394 | 10,351,984 | |||||||||
Less: Cash and cash equivalents including short-term investments(2) | (750,000) | (3,578,751) | (625,427) | ||||||||
Consolidated net debt | $ | 7,534,672 | $ | 5,497,643 | $ | 9,726,557 | |||||
Last twelve months "Consolidated EBITDA" | $ | 2,345,617 | $ | 2,224,113 | $ | 2,265,945 | |||||
Leverage ratio | 3.21x | 2.47x | 4.29x | ||||||||
_________________ | |
(1) | The reported total debt amounts at September 30, 2019, June 30, 2019 and September 30, 2018, exclude $76.0 million, $34.5 million and $53.6 million, respectively, of debt discount associated with the Term Loan B and other deferred financing costs under the senior secured credit agreement in effect at that time. |
(2) | Excluding DMG's-physician owned entities' cash for the twelve months ended September 30, 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 million. |
Under the New Credit Agreement, the Company's leverage ratio is not permitted to exceed 5.00 to 1.00 as of September 30, 2019. At that date the Company's leverage ratio did not exceed 5.00 to 1.00.
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, we use 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 are useful to management, investors and analysts in evaluating our performance over time and relative to competitors, as well as in analyzing the underlying trends in our business. We also 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, and 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. We believe this non-GAAP measure is useful to management, investors and analysts as an adjunct to cash flows from operating activities from continuing operations and other measures under GAAP, since free cash flow from continuing operations is meaningful for assessing our ability to fund acquisition and meet our debt service obligations.
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.
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 | |||||||||||||||||||||||
September 30, 2019 | June 30, 2019 | September 30, 2018 | |||||||||||||||||||||
Dollars | Per share | Dollars | Per share | Dollars | Per share | ||||||||||||||||||
Net income from continuing operations attributable to DaVita Inc. | $ | 150,113 | $ | 0.99 | $ | 194,223 | $ | 1.16 | $ | 73,371 | $ | 0.44 | |||||||||||
Operating charges: | |||||||||||||||||||||||
Goodwill impairment charges | 83,855 | 0.55 | — | — | — | — | |||||||||||||||||
Impairment of other assets | — | — | — | — | 6,093 | 0.04 | |||||||||||||||||
Restructuring charges | — | — | — | — | 11,366 | 0.07 | |||||||||||||||||
Loss on changes in ownership interests, net | — | — | — | — | 1,506 | 0.01 | |||||||||||||||||
Equity investment loss: | |||||||||||||||||||||||
Loss due to impairments in the APAC JV | — | — | — | — | 5,995 | 0.04 | |||||||||||||||||
Debt prepayment, refinancing and redemption charges | 21,242 | 0.14 | 12,160 | 0.07 | — | — | |||||||||||||||||
Related income tax | (23,236) | (0.15) | (3,130) | (0.02) | (5,190) | (0.03) | |||||||||||||||||
Adjusted net income from continuing operations attributable to DaVita Inc. | $ | 231,974 | $ | 1.53 | $ | 203,253 | $ | 1.22 | $ | 93,141 | $ | 0.56 | |||||||||||
Nine months ended | |||||||||||||||
September 30, 2019 | September 30, 2018 | ||||||||||||||
Dollars | Per share | Dollars | Per share | ||||||||||||
Net income from continuing operations attributable to DaVita Inc. | $ | 464,590 | $ | 2.87 | $ | 463,989 | $ | 2.66 | |||||||
Operating charges: | |||||||||||||||
Goodwill impairment charges | 124,892 | 0.77 | 3,106 | 0.02 | |||||||||||
Impairment of other assets | — | — | 17,338 | 0.10 | |||||||||||
Restructuring charges | — | — | 11,366 | 0.07 | |||||||||||
Gain on changes in ownership interests, net | — | — | (32,451) | (0.19) | |||||||||||
Debt prepayment, refinancing and redemption charges | 33,402 | 0.21 | — | — | |||||||||||
Equity investment loss: | |||||||||||||||
Loss due to impairments in the APAC JV | — | — | 5,995 | 0.03 | |||||||||||
Related income tax | (35,231) | (0.22) | (2,538) | (0.01) | |||||||||||
Adjusted net income from continuing operations attributable to DaVita Inc. | $ | 587,653 | $ | 3.64 | $ | 466,805 | $ | 2.68 | |||||||
Certain columns or rows may not sum or recalculate due to the use of rounded numbers. |
DAVITA INC.
RECONCILIATIONS FOR NON-GAAP MEASURES - continued
(unaudited)
(dollars in thousands)
Note 3: Adjusted operating income
Three months ended | Nine months ended | ||||||||||||||||||
September 30, 2019 | June 30, 2019 | September 30, 2018 | September 30, 2019 | September 30, 2018 | |||||||||||||||
Consolidated: | |||||||||||||||||||
Operating income | $ | 378,336 | $ | 461,886 | $ | 289,038 | $ | 1,180,729 | $ | 1,137,916 | |||||||||
Operating charges: | |||||||||||||||||||
Goodwill impairment charges | 83,855 | — | — | 124,892 | 3,106 | ||||||||||||||
Impairment of other assets | — | — | 6,093 | — | 17,338 | ||||||||||||||
Restructuring charges | — | — | 11,366 | — | 11,366 | ||||||||||||||
Loss (gain) on changes in ownership interests, net | — | — | 1,506 | — | (32,451) | ||||||||||||||
Equity investment loss: | |||||||||||||||||||
Loss due to impairments in the APAC JV | — | — | 5,995 | — | 5,995 | ||||||||||||||
Adjusted operating income | $ | 462,191 | $ | 461,886 | $ | 313,998 | $ | 1,305,621 | $ | 1,143,270 | |||||||||
Three months ended | Nine months ended | ||||||||||||||||||
September 30, 2019 | June 30, 2019 | September 30, 2018 | September 30, 2019 | September 30, 2018 | |||||||||||||||
Consolidated: | |||||||||||||||||||
U.S. dialysis and related lab services: | |||||||||||||||||||
Segment operating income | $ | 500,742 | $ | 498,957 | $ | 390,006 | $ | 1,416,680 | $ | 1,272,828 | |||||||||
Other - Ancillary services and strategic initiatives: | |||||||||||||||||||
U.S. | |||||||||||||||||||
Segment operating loss | $ | (14,928) | $ | (15,652) | $ | (50,170) | $ | (45,498) | $ | (51,403) | |||||||||
Impairment of other assets | — | — | 6,093 | — | 17,338 | ||||||||||||||
Restructuring charges | — | — | 11,366 | — | 11,366 | ||||||||||||||
Loss (gain) on changes in ownership interests | — | — | 1,506 | — | (33,699) | ||||||||||||||
Adjusted operating loss | $ | (14,928) | $ | (15,652) | $ | (31,205) | $ | (45,498) | $ | (56,398) | |||||||||
International | |||||||||||||||||||
Segment operating (loss) income | $ | (82,797) | $ | 602 | $ | (9,963) | $ | (124,906) | $ | (12,904) | |||||||||
Operating charges: | |||||||||||||||||||
Goodwill impairment charges | 83,855 | — | — | 124,892 | 3,106 | ||||||||||||||
Loss on changes in ownership interests | — | — | — | — | 1,248 | ||||||||||||||
Equity investment loss: | |||||||||||||||||||
Loss due to impairments in the APAC JV | — | — | 5,995 | — | 5,995 | ||||||||||||||
Adjusted operating income (loss) | $ | 1,058 | $ | 602 | $ | (3,967) | $ | (14) | $ | (2,555) | |||||||||
Adjusted Other - Ancillary services and strategic initiatives operating loss | $ | (13,870) | $ | (15,050) | $ | (35,172) | $ | (45,513) | $ | (58,952) | |||||||||
Corporate administrative support expenses | $ | (24,681) | $ | (22,021) | $ | (40,836) | $ | (65,546) | $ | (70,605) | |||||||||
Adjusted operating income | $ | 462,191 | $ | 461,886 | $ | 313,998 | $ | 1,305,621 | $ | 1,143,270 | |||||||||
Certain columns or rows may not sum or recalculate due to the use of rounded numbers. |
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 | Nine months | ||||||||||||||
September 30, 2019 | June 30, 2019 | September 30, 2018 | September 30, | ||||||||||||
Income from continuing operations before income taxes | $ | 273,785 | $ | 323,703 | $ | 167,118 | $ | 813,416 | |||||||
Less: Noncontrolling owners' income primarily attributable to non-tax paying entities | (58,502) | (53,916) | (41,880) | (151,426) | |||||||||||
Income before income taxes attributable to DaVita Inc. | $ | 215,283 | $ | 269,787 | $ | 125,238 | $ | 661,990 | |||||||
Income tax expense | $ | 65,254 | $ | 75,938 | $ | 52,047 | $ | 197,938 | |||||||
Less: Income tax attributable to noncontrolling interests | (84) | (374) | (180) | (538) | |||||||||||
Income tax expense attributable to DaVita Inc. | $ | 65,170 | $ | 75,564 | $ | 51,867 | $ | 197,400 | |||||||
Effective income tax rate on income from continuing operations attributable to DaVita Inc. | 30.3 | % | 28.0 | % | 41.4 | % | 29.8 | % | |||||||
The effective income tax rate on adjusted income from continuing operations attributable to DaVita Inc. is computed as follows:
Three months ended | Nine months | ||||||||||||||
September 30, 2019 | June 30, 2019 | September 30, 2018 | September 30, | ||||||||||||
Income from continuing operations before income taxes | $ | 273,785 | $ | 323,703 | $ | 167,118 | $ | 813,416 | |||||||
Operating charges: | |||||||||||||||
Goodwill impairment charges | 83,855 | — | — | 124,892 | |||||||||||
Impairment of other assets | — | — | 6,093 | — | |||||||||||
Restructuring charges | — | — | 11,366 | — | |||||||||||
Loss on changes in ownership interests, net | — | — | 1,506 | — | |||||||||||
Debt prepayment, refinancing and redemption charges | 21,242 | 12,160 | — | 33,402 | |||||||||||
Equity investment loss: | |||||||||||||||
Loss due to impairments in the APAC JV | — | — | 5,995 | — | |||||||||||
Noncontrolling owners' income primarily attributable to non-tax paying entities | (58,502) | (53,916) | (41,880) | (151,426) | |||||||||||
Adjusted income from continuing operations before income taxes attributable to DaVita Inc. | $ | 320,380 | $ | 281,947 | $ | 150,198 | $ | 820,284 | |||||||
Income tax expense | $ | 65,254 | $ | 75,938 | $ | 52,047 | $ | 197,938 | |||||||
Add income tax related to: | |||||||||||||||
Operating charges: | |||||||||||||||
Goodwill impairment charges | 17,768 | — | — | 26,633 | |||||||||||
Impairment of other assets | — | — | 1,568 | — | |||||||||||
Restructuring charges | — | — | 2,926 | — | |||||||||||
Loss on changes in ownership interests, net | — | — | 388 | — | |||||||||||
Debt prepayment, refinancing and redemption charges | 5,468 | 3,130 | — | 8,598 | |||||||||||
Equity investment loss: | |||||||||||||||
Loss due to impairments in the APAC JV | — | — | 308 | — | |||||||||||
Less income tax related to: | |||||||||||||||
Noncontrolling interests | (84) | (374) | (180) | (538) | |||||||||||
Income tax on adjusted income from continuing operations attributable to DaVita Inc. | $ | 88,406 | $ | 78,694 | $ | 57,057 | $ | 232,631 | |||||||
Effective income tax rate on adjusted income from continuing operations attributable to DaVita Inc. | 27.6 | % | 27.9 | % | 38.0 | % | 28.4 | % | |||||||
Certain columns, rows or percentages may not sum or recalculate due to the use of rounded numbers. |
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 | Nine months | ||||||||||||||
September 30, 2019 | June 30, 2019 | September 30, 2018 | September 30, | ||||||||||||
Net cash provided by continuing operating activities | $ | 647,553 | $ | 574,203 | $ | 361,786 | $ | 1,294,820 | |||||||
Less: Distributions to noncontrolling interests | (61,456) | (51,484) | (45,667) | (157,170) | |||||||||||
Plus: Contributions to noncontrolling interests | 12,814 | 12,334 | 11,610 | 44,095 | |||||||||||
Cash provided by continuing operating activities attributable to DaVita Inc. | 598,911 | 535,053 | 327,729 | 1,181,745 | |||||||||||
Less: Expenditures for routine maintenance and information technology | (83,513) | (61,298) | (90,154) | (225,201) | |||||||||||
Less: Expenditures for development | (89,752) | (95,028) | (129,593) | (283,516) | |||||||||||
Plus: Proceeds from sale of self-developed properties | 11,616 | 14,392 | 6,921 | 38,452 | |||||||||||
Free cash flow from continuing operations (new definition) | $ | 437,262 | $ | 393,119 | $ | 114,903 | $ | 711,480 | |||||||
Rolling 12-Month Period | |||||||||||
September 30, 2019 | June 30, 2019 | September 30, 2018 | |||||||||
Net cash provided by continuing operating activities | $ | 1,602,098 | $ | 1,316,331 | $ | 1,460,394 | |||||
Less: Distributions to noncontrolling interests | (213,938) | (198,149) | (185,102) | ||||||||
Plus: Contributions to noncontrolling interests | 53,227 | 52,023 | 66,575 | ||||||||
Cash provided by continuing operating activities attributable to DaVita Inc. | 1,441,387 | 1,170,205 | 1,341,867 | ||||||||
Less: Expenditures for routine maintenance and information technology | (363,946) | (370,587) | (367,648) | ||||||||
Less: Expenditures for development | (406,309) | (446,150) | (515,962) | ||||||||
Plus: Proceeds from sale of self-developed properties | 51,058 | 46,363 | 39,736 | ||||||||
Free cash flow from continuing operations (new definition) | $ | 722,190 | $ | 399,831 | $ | 497,993 | |||||
Certain columns or rows may not sum or recalculate due to the use of rounded numbers. |
SOURCE DaVita Inc.
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