DENVER, Aug. 4, 2015 /PRNewswire/ -- DaVita HealthCare
Partners Inc. (NYSE: DVA) today announced results for the quarter
ended June 30, 2015. Adjusted net
income attributable to DaVita HealthCare Partners Inc. for the
three months ended June 30, 2015 was
$207 million, or $0.95 per share, excluding after-tax debt
redemption charges of approximately $29
million, or $0.13 per share,
and a tax adjustment related to the settlement of the Vainer
private civil suit (the Vainer suit) of approximately $8 million, or $0.04 per share. Net income attributable to
DaVita HealthCare Partners Inc. for the three months ended
June 30, 2015 including these items
was $170 million, or $0.78 per share.
Adjusted net income attributable to DaVita HealthCare Partners
Inc. for the six months ended June 30,
2015 was $394 million, or
$1.81 per share, excluding after-tax
debt redemption charges as stated above and an after-tax settlement
charge of $305 million, or
$1.41 per share, related to the
Vainer suit, which has been further updated for a tax adjustment
related to the settlement of the Vainer suit of approximately
$8 million, or $0.04 per share, in the second quarter of 2015.
Net income attributable to DaVita HealthCare Partners Inc. for the
six months ended June 30, 2015
including these items was $60
million, or $0.27 per
share.
Adjusted net income attributable to DaVita HealthCare Partners
Inc. for the three and six months ended June
30, 2014 was $206 million and
$389 million, or $0.95 and $1.80 per
share, respectively, excluding after-tax debt redemption and
refinancing charges of $58 million,
or $0.27 per share. Net income
attributable to DaVita HealthCare Partners Inc. for the three and
six months ended June 30, 2014
including this item was $148 million
and $331 million, or $0.68 and $1.53 per
share, respectively.
Financial and operating highlights include:
- Cash Flow: For the rolling twelve months ended
June 30, 2015, operating cash flow
was $1.219 billion and free cash flow
was $786 million. For the three
months ended June 30, 2015, operating
cash flow was $31 million and free
cash flow was $(77) million.
Operating cash flow and free cash flow for the three and six months
ended and rolling twelve months ended June
30, 2015 were negatively impacted by approximately
$304 million of after-tax payments
made during the second quarter of 2015 in connection with the
settlement of the Vainer suit. In addition, the rolling
twelve months ended June 30, 2015 was
negatively impacted by approximately $269
million of after-tax payments made in connection with the
settlement of the 2010 and 2011 U.S. Attorney physician
relationship investigations. Excluding these items, operating cash
flow for the rolling twelve months ended June 30, 2015 would have been $1.792 billion.
- Operating Income and Adjusted Operating
Income: Operating income for the three months
ended June 30, 2015 was $481 million. Adjusted operating income for the
six months ended June 30, 2015 was
$911 million, excluding a settlement
charge of $495 million related to the
Vainer suit. Operating income for the six months ended June 30, 2015, including this item was
$416 million.
Operating income for the three and six months ended June 30, 2014 was $484
million and $926 million,
respectively.
- Adjusted Diluted Net Income Per Share:
Adjusted net income attributable to DaVita HealthCare Partners Inc.
for the three months ended June 30,
2015, excluding the amortization of intangible assets
associated with acquisitions and debt redemption charges, net of
tax, and a tax adjustment related the settlement of the Vainer suit
as stated above, was $233 million and
adjusted diluted net income per share was $1.07. Adjusted net income attributable to
DaVita HealthCare Partners Inc. for the six months ended
June 30, 2015, excluding the
amortization of intangible assets associated with acquisitions, the
Vainer suit settlement charge, debt redemption charges, net of tax,
a tax adjustment related to the settlement of the Vainer suit as
stated above, was $446 million and
adjusted diluted net income per share was $2.05.
Adjusted net income attributable to DaVita HealthCare Partners Inc.
for the three and six months ended June 30,
2014, excluding the amortization of intangible assets
associated with acquisitions and debt redemption and refinancing
charges, net of tax, was $231 million
and $439 million, respectively, and
adjusted diluted net income per share was $1.06 and $2.03,
respectively.
- Volume: Total U.S. dialysis treatments for the
second quarter of 2015 were 6,463,058, or 82,860 treatments per
day, representing a per day increase of 4.3% over the second
quarter of 2014. Non-acquired treatment growth and normalized
non-acquired treatment growth in the second quarter of 2015 were
both 3.7% over the second quarter of 2014.
The number of member months for which HCP provided capitated care
during the second quarter of 2015 specifically related to its
legacy markets was approximately 2.4 million representing an
increase of 2.8% as compared to the second quarter of 2014,
inclusive of growth contributed from acquisitions.
- Effective Tax Rate: Our effective tax rate was
37.1% and 21.9% for the three and six months ended June 30, 2015, respectively. This effective tax
rate is impacted by the amount of third party owners' income
attributable to non-tax paying entities. The effective tax rate
attributable to DaVita HealthCare Partners Inc. was 41.8% and 37.8%
for the three and six months ended June 30,
2015, respectively. The adjusted effective tax rate
attributable to DaVita HealthCare Partners Inc. excluding the
Vainer suit settlement charge was 39.2% and 38.3% for the three and
six months ended June 30, 2015,
respectively, which was further updated for the tax adjustment as
stated above.
We currently expect our 2015 effective tax rate attributable to
DaVita HealthCare Partners Inc. to be approximately 39.0% to 40.0%,
excluding the Vainer suit settlement charge.
- Center Activity: As of June 30, 2015, we provided dialysis services to a
total of approximately 184,000 patients at 2,306 outpatient
dialysis centers, of which 2,210 centers are located in
the United States and 96 centers
are located in ten countries outside of the United States. During the second quarter
of 2015, we opened a total of 13 new dialysis centers in
the United States. We also
acquired one and opened two new dialysis centers outside of
the United States.
- Share Repurchases: During the first six months of
2015, we repurchased a total of 1,067,139 shares of our common
stock for $84 million, or an average
price of $78.82 per share. During the
three months ended June 30, 2015, we
repurchased 175,710 shares of our common stock for $14 million, or an average price of $79.96 per share. We have not repurchased any
additional shares of our common stock subsequent to June 30, 2015.
- Issuance of New Senior Notes: In April 2015, we issued $1.500 billion of 5.0% Senior Notes due 2025 (the
5.0% Senior Notes). The proceeds from the 5.0% Senior Notes were
used to repurchase all of the outstanding principal balances of the
$775 million of 6 ⅝% Senior Notes due
2020 (the 6 ⅝% Senior Notes) through a combination of a tender
offer and a redemption process, to pay fees and expenses, and the
remaining proceeds may be used for general corporate purposes,
future acquisitions and share repurchases. As a result, we incurred
$48 million of pre-tax debt
redemption charges consisting of tender and redemption fees and the
write-off of deferred financing fees associated with the repurchase
of the 6 ⅝% Senior Notes.
Outlook
- We are updating the low end of our consolidated operating
income for 2015 to now be in the range of $1.825 billion to $1.925 billion.
Our previous consolidated operating income guidance for 2015 was in
the range of $1.800 billion to $1.925
billion.
- We are also updating the low end of our operating income for
Kidney Care for 2015 to now be in the range of $1.600 billion to $1.650 billion.
Our previous operating income guidance for Kidney Care for 2015 was
in the range of $1.575 billion to $1.650
billion.
- We still expect our operating income for HCP for 2015 to be in
the range of $225 million to $275
million.
- We are updating our consolidated operating cash flow for 2015
to now be in the range of $1.600 billion to
$1.750 billion.
Our previous consolidated operating cash flow for 2015 was in the
range of $1.500 billion to $1.700
billion.
The above projected ranges exclude the Vainer suit settlement
charge and the corresponding settlement payments made in 2015.
These projections and the underlying assumptions involve
significant risks and uncertainties, including those described
below, and actual results may vary significantly from these current
projections.
We will be holding a conference call to discuss our results for
the second quarter ended June 30,
2015 on August 4, 2015 at
5:00 p.m. Eastern Time. To join the
conference call, please dial (888) 282-0359 from the U.S. or (312)
470-7167 from outside the U.S. A replay of the conference call will
be available on DaVita's official web page,
www.davitahealthcarepartners.com, for the following 30 days.
This release contains forward-looking statements within the
meaning of the federal securities laws, including statements
related to our guidance and expectations for our 2015 consolidated
operating income, our 2015 Kidney Care operating income, HCP's 2015
operating income, our 2015 consolidated operating cash flows and
our 2015 effective tax rate attributable to DaVita HealthCare
Partners Inc. Factors that could impact future results include the
uncertainties associated with the risk factors set forth in our SEC
filings, including our annual report on Form 10-K for the year
ended December 31, 2014, our
subsequent quarterly and annual reports, and our current reports on
Form 8-K. The forward-looking statements should be considered in
light of these risks and uncertainties.
These risks and uncertainties include, but are not limited
to, and are qualified in their entirety by reference to the full
text of those risk factors in our SEC filings relating
to:
- 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, which may result in the loss
of revenues or patients,
- a reduction in government payment rates under the Medicare
End Stage Renal Disease program or other government-based
programs,
- the impact of the Center for Medicare and Medicaid Services
(CMS) 2015 Medicare Advantage benchmark structure,
- risks arising from potential federal and/or state
legislation that could have an adverse effect on our operations and
profitability,
- changes in pharmaceutical or anemia management practice
patterns, payment policies, or pharmaceutical
pricing,
- legal compliance risks, including our continued compliance
with complex government regulations and including compliance with
the provisions of our current corporate integrity agreement and
current or potential investigations by various government entities
and related government or private-party proceedings, and
restrictions on our business and operations required by our
corporate integrity agreement and other settlement terms, and the
financial impact thereof,
- continued increased competition from large- and medium-sized
dialysis providers that compete directly with us,
- 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, or to businesses
outside of dialysis and HealthCare Partners' (HCP)
business,
- our ability to complete acquisitions, mergers or
dispositions that we might be considering or announce, or to
integrate and successfully operate any business we may acquire or
have acquired, including HCP, or to expand our operations and
services to markets outside the United
States,
- the variability of our cash flows,
- the risk that we might invest material amounts of capital
and incur significant costs in connection with the growth and
development of our international operations, yet we might not be
able to operate them profitably anytime soon, if at
all,
- risks arising from the use of accounting estimates,
judgments and interpretations in our financial
statements,
- loss of key HCP employees, potential disruption from the HCP
transaction making it more difficult to maintain business and
operational relationships with customers, partners, associated
physicians and physician groups, hospitals and others,
- the risk that laws regulating the corporate practice of
medicine could restrict the manner in which HCP conducts its
business,
- the risk that the cost of providing services under HCP's
agreements may exceed our compensation,
- the risk that reductions in reimbursement rates, including
Medicare Advantage rates, and future regulations may negatively
impact HCP's business, revenue and profitability,
- the risk that HCP may not be able to successfully establish
a presence in new geographic regions or successfully address
competitive threats that could reduce its
profitability,
- the risk that a disruption in HCP's healthcare provider
networks could have an adverse effect on HCP's business operations
and profitability,
- the risk that reductions in the quality ratings of health
maintenance organization plan customers of HCP could have an
adverse effect on HCP's business, or
- the risk that health plans that acquire health maintenance
organizations may not be willing to contract with HCP or may be
willing to contract only on less favorable terms.
We base our forward-looking statements on information currently
available to us at the time of this release, and except as required
by law we undertake no obligation to update or revise any
forward-looking statements, whether as a result of changes in
underlying factors, new information, future events or
otherwise.
This release contains non-GAAP financial measures. For
reconciliations of these non-GAAP financial measures to their most
comparable measure calculated and presented in accordance with
GAAP, see the attached reconciliation schedules. For the reasons
stated in the reconciliation schedules, we believe our presentation
of non-GAAP financial measures provides useful supplemental
information for investors.
|
Contact:
|
Jim
Gustafson
|
|
Investor
Relations
|
|
DaVita HealthCare
Partners Inc.
|
|
(310)
536-2585
|
|
DAVITA HEALTHCARE
PARTNERS INC.
CONSOLIDATED STATEMENTS OF INCOME
(unaudited)
(dollars in thousands, except per share
data)
|
|
|
Three
months ended
June 30,
|
Six
months ended
June 30,
|
|
2015
|
2014
|
2015
|
2014
|
|
Patient service
revenues
|
$ 2,363,579
|
$ 2,187,249
|
$ 4,635,394
|
$ 4,301,347
|
|
Less: Provision for
uncollectible accounts
|
(105,965 )
|
(88,052 )
|
(205,129 )
|
(171,249 )
|
|
Net patient service
revenues
|
2,257,614
|
2,099,197
|
4,430,265
|
4,130,098
|
|
Capitated
revenues
|
866,190
|
799,369
|
1,716,705
|
1,586,934
|
|
Other
revenues
|
310,814
|
273,923
|
575,613
|
498,233
|
|
Total net
revenues
|
3,434,618
|
3,172,489
|
6,722,583
|
6,215,265
|
|
Operating expenses
and charges:
|
|
|
|
|
|
Patient care costs and
other costs
|
2,446,076
|
2,246,538
|
4,808,688
|
4,426,310
|
|
General and
administrative
|
352,025
|
298,636
|
693,826
|
582,697
|
|
Depreciation and
amortization
|
158,843
|
145,907
|
312,632
|
288,486
|
|
Provision for
uncollectible accounts
|
2,159
|
3,208
|
3,986
|
5,719
|
|
Equity investment
income
|
(5,033 )
|
(6,095 )
|
(7,941 )
|
(13,467 )
|
|
Settlement
charge
|
─
|
─
|
495,000
|
─
|
|
Total operating
expenses and charges
|
2,954,070
|
2,688,194
|
6,306,191
|
5,289,745
|
|
Operating
income
|
480,548
|
484,295
|
416,392
|
925,520
|
|
Debt
expense
|
(104,248 )
|
(106,132 )
|
(201,640 )
|
(212,467 )
|
|
Debt redemption and
refinancing charges
|
(48,072 )
|
(97,548 )
|
(48,072 )
|
(97,548 )
|
|
Other income,
net
|
2,311
|
1,693
|
1,778
|
3,391
|
|
Income before income
taxes
|
330,539
|
282,308
|
168,458
|
618,896
|
|
Income tax
expense
|
122,762
|
100,887
|
36,829
|
225,738
|
|
Net income
|
207,777
|
181,421
|
131,629
|
393,158
|
|
Less: Net income
attributable to noncontrolling interests
|
(37,300 )
|
(33,738 )
|
(71,769 )
|
(62,186 )
|
|
Net income
attributable to DaVita HealthCare Partners Inc.
|
$
170,477
|
$ 147,683
|
$ 59,860
|
$
330,972
|
|
Earnings per
share:
|
|
|
|
|
|
Basic net income per
share attributable to DaVita HealthCare Partners Inc.
|
$
0.80
|
$
0.70
|
$
0.28
|
$
1.56
|
|
Diluted net income per
share attributable to DaVita HealthCare Partners Inc.
|
$
0.78
|
$
0.68
|
$
0.27
|
$
1.53
|
|
Weighted average
shares for earnings per share:
|
|
|
|
|
|
Basic
|
212,991,606
|
212,258,994
|
213,188,268
|
211,817,893
|
|
Diluted
|
217,606,198
|
216,720,944
|
217,790,617
|
216,420,713
|
|
DAVITA HEALTHCARE
PARTNERS INC.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE
INCOME
(unaudited)
(dollars in
thousands)
|
|
|
|
|
Three months
ended
June
30,
|
Six months
ended
June
30,
|
|
2015
|
2014
|
2015
|
2014
|
|
Net income
|
$ 207,777
|
$ 181,421
|
$ 131,629
|
$ 393,158
|
|
Other comprehensive
(loss) income, net of tax:
|
|
|
|
|
|
Unrealized losses on
interest rate swap and cap agreements:
|
|
|
|
|
|
Unrealized loss on
interest rate swap and cap agreements
|
(2,453)
|
(5,209)
|
(8,213)
|
(7,714)
|
|
Reclassifications of
net swap and cap agreements realized loss into net
income
|
789
|
4,997
|
1,601
|
8,356
|
|
Unrealized (losses)
gains on investments:
|
|
|
|
|
|
Unrealized (losses)
gains on investments
|
(99)
|
578
|
283
|
909
|
|
Reclassification of
net investment realized gains into net income
|
(16)
|
─
|
(173)
|
(207)
|
|
Foreign currency
translation adjustments
|
5,025
|
1,939
|
(12,860)
|
1,967
|
|
Other comprehensive
income (loss)
|
3,246
|
2,305
|
(19,362)
|
3,311
|
|
Total comprehensive
income
|
211,023
|
183,726
|
112,267
|
396,469
|
|
Less: Comprehensive
income attributable to noncontrolling interests.
|
(37,300)
|
(33,738)
|
(71,769 )
|
(62,186 )
|
|
Comprehensive income
attributable to DaVita HealthCare Partners Inc.
|
$ 173,723
|
$ 149,988
|
$ 40,498
|
$ 334,283
|
|
DAVITA HEALTHCARE
PARTNERS INC.
CONSOLIDATED STATEMENTS OF CASH
FLOWS
(unaudited)
(dollars in
thousands)
|
|
|
|
Six months
ended
June 30,
|
|
2015
|
2014
|
|
Cash flows from
operating activities:
|
|
|
|
Net income
|
$
131,629
|
$
393,158
|
|
Adjustments to
reconcile net income to cash provided by operating
activities:
|
|
|
|
Settlement
charge
|
495,000
|
─
|
|
Settlement
payments
|
(493,775 )
|
─
|
|
Depreciation and
amortization
|
312,632
|
288,470
|
|
Debt redemption and
refinancing charges
|
48,072
|
97,548
|
|
Stock-based
compensation expense
|
28,299
|
29,699
|
|
Tax benefits from
stock award exercises
|
28,040
|
42,110
|
|
Excess tax benefits
from stock award exercises
|
(16,913 )
|
(30,238)
|
|
Deferred income
taxes
|
4,418
|
13,826
|
|
Equity investment
income, net
|
5,257
|
2,257
|
|
Other non-cash charges
and loss on disposal of assets
|
24,718
|
22,861
|
|
Changes in operating
assets and liabilities, other than from acquisitions and
divestitures:
|
|
|
|
Accounts
receivable
|
(142,950 )
|
(65,079)
|
|
Inventories
|
(22,780 )
|
(10,731)
|
|
Other receivables and
other current assets
|
(50,362 )
|
(95,580)
|
|
Other long-term
assets
|
378
|
2,158
|
|
Accounts
payable
|
50,823
|
(46,022)
|
|
Accrued compensation
and benefits
|
(26,316 )
|
19,912
|
|
Other current
liabilities
|
177,733
|
31,970
|
|
Income
taxes
|
(109,460 )
|
2,886
|
|
Other long-term
liabilities
|
(2,912 )
|
(17,707)
|
|
Net cash provided by
operating activities
|
441,531
|
681,498
|
|
Cash flows from
investing activities:
|
|
|
|
Additions of property
and equipment
|
(290,873 )
|
(278,593)
|
|
Acquisitions
|
(45,059 )
|
(98,442)
|
|
Proceeds from asset
and business sales
|
3,415
|
215
|
|
Purchase of
investments available for sale
|
(3,872 )
|
(6,117)
|
|
Purchase of
investments held-to-maturity
|
(1,039,632 )
|
(121,333)
|
|
Proceeds from sale of
investments available for sale
|
1,550
|
1,277
|
|
Proceeds from
investments held-to-maturity
|
434,684
|
64,561
|
|
Purchase of intangible
assets
|
─
|
(10)
|
|
Purchase of equity
investments
|
(7,550 )
|
(4,750)
|
|
Distributions received
on equity investments
|
─
|
337
|
|
Net cash used in
investing activities
|
(947,337 )
|
(442,855)
|
|
Cash flows from
financing activities:
|
|
|
|
Borrowings
|
28,144,986
|
33,136,743
|
|
Payments on long-term
debt and other financing costs
|
(27,476,994 )
|
(32,788,307)
|
|
Deferred financing
costs and debt redemption and refinancing costs
|
(58,539 )
|
(106,937)
|
|
Purchase of treasury
stock
|
(84,113 )
|
─
|
|
Distributions to
noncontrolling interests
|
(79,040 )
|
(65,818)
|
|
Stock award exercises
and other share issuances, net
|
4,680
|
7,274
|
|
Excess tax benefits
from stock award exercises
|
16,913
|
30,238
|
|
Contributions from
noncontrolling interests
|
18,040
|
28,265
|
|
Proceeds from sales of
additional noncontrolling interests
|
─
|
933
|
|
Purchase of
noncontrolling interests
|
(10,840 )
|
(5,743)
|
|
Net cash provided by
financing activities
|
475,093
|
236,648
|
|
Effect of exchange
rate changes on cash and cash equivalents
|
(793 )
|
(567)
|
|
Net (decrease)
increase in cash and cash equivalents
|
(31,506 )
|
474,724
|
|
Cash and cash
equivalents at beginning of the year
|
965,241
|
946,249
|
|
Cash and cash
equivalents at end of the period
|
$
933,735
|
$
1,420,973
|
|
DAVITA HEALTHCARE
PARTNERS INC.
CONSOLIDATED BALANCE SHEETS
(unaudited)
(dollars in thousands, except per share
data)
|
|
|
|
|
June
30, 2015
|
December
31, 2014
|
|
ASSETS
|
|
|
|
Cash and cash
equivalents
|
$
933,735
|
$
965,241
|
|
Short-term
investments
|
942,141
|
337,399
|
|
Accounts receivable,
less allowance of $265,797 and $242,674
|
1,666,969
|
1,525,849
|
|
Inventories
|
159,353
|
136,085
|
|
Other
receivables
|
456,502
|
400,916
|
|
Other current
assets
|
189,528
|
186,842
|
|
Income tax
receivable
|
193,681
|
83,839
|
|
Deferred income
taxes
|
239,012
|
240,626
|
|
Total current
assets
|
4,780,921
|
3,876,797
|
|
Property and
equipment, net of accumulated depreciation of $2,207,320 and
$2,029,506
|
2,564,708
|
2,469,099
|
|
Intangibles, net of
accumulated amortization of $706,413 and $621,891
|
1,868,432
|
1,949,498
|
|
Equity
investments
|
67,173
|
65,637
|
|
Long-term
investments
|
92,864
|
89,389
|
|
Other long-term
assets
|
121,774
|
77,000
|
|
Goodwill
|
9,450,946
|
9,415,295
|
|
$ 18,946,818
|
$ 17,942,715
|
|
LIABILITIES AND
EQUITY
|
|
|
|
Accounts
payable
|
$
490,460
|
$
445,453
|
|
Other
liabilities
|
716,250
|
510,223
|
|
Accrued compensation
and benefits
|
678,853
|
698,475
|
|
Medical
payables
|
339,932
|
314,347
|
|
Current portion of
long-term debt
|
108,795
|
120,154
|
|
Total current
liabilities
|
2,334,290
|
2,088,652
|
|
Long-term
debt
|
9,101,052
|
8,383,280
|
|
Other long-term
liabilities
|
400,475
|
389,806
|
|
Deferred income
taxes
|
900,959
|
890,701
|
|
Total
liabilities
|
12,736,776
|
11,752,439
|
|
Commitments and
contingencies:
|
|
|
|
Noncontrolling
interests subject to put provisions
|
863,126
|
829,965
|
|
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; 216,533,208 and
215,640,968 shares issued and 215,466,069 and 215,640,968 shares
outstanding, respectively)
|
217
|
216
|
|
Additional paid-in
capital
|
1,128,161
|
1,108,211
|
|
Retained
earnings
|
4,146,963
|
4,087,103
|
|
Treasury stock
(1,067,139 shares)
|
(84,113)
|
─
|
|
Accumulated other
comprehensive loss
|
(44,379)
|
(25,017)
|
|
Total DaVita
HealthCare Partners Inc. shareholders' equity
|
5,146,849
|
5,170,513
|
|
Noncontrolling
interests not subject to put provisions
|
200,067
|
189,798
|
|
Total
equity
|
5,346,916
|
5,360,311
|
|
$ 18,946,818
|
$ 17,942,715
|
|
DAVITA HEALTHCARE
PARTNERS INC.
SUPPLEMENTAL FINANCIAL DATA
(unaudited)
(dollars in millions, except for per
share and per treatment data)
|
|
|
|
|
Three months
ended
|
Six
months
ended June
30,
2015
|
|
June
30,
2015
|
March
31,
2015
|
June
30,
2014
|
|
1. Consolidated
Financial Results:
|
|
|
|
|
|
Consolidated net
revenues
|
$ 3,435
|
$ 3,288
|
$ 3,172
|
$ 6,723
|
|
Operating income
(loss)
|
$ 481
|
$ (64)
|
$ 484
|
$ 416
|
|
Adjusted operating
income excluding a settlement charge (1)
|
$ 481
|
$ 431
|
$ 484
|
$ 911
|
|
Operating income
(loss) margin
|
14.0%
|
(2.0%)
|
15.3%
|
6.2%
|
|
Adjusted operating
income margin excluding a settlement charge
(1)
|
14.0%
|
13.1%
|
15.3%
|
13.6%
|
|
Net income (loss)
attributable to DaVita HealthCare Partners Inc.
|
$ 170
|
$ (111)
|
$ 148
|
$
60
|
|
Adjusted net income
attributable to DaVita HealthCare Partners Inc. excluding debt
redemption and refinancing charges and a settlement charge and the
related tax adjustment(1)
|
$ 207
|
$ 187
|
$ 206
|
$ 394
|
|
Diluted net income
(loss) per share attributable to DaVita HealthCare Partners
Inc.
|
$ 0.78
|
$ (0.52)
|
$ 0.68
|
$ 0.27
|
|
Adjusted diluted net
income per share attributable to DaVita HealthCare Partners Inc.
excluding debt redemption and refinancing charges and a settlement
charge and the related tax adjustment(1)
|
$ 0.95
|
$ 0.86
|
$ 0.95
|
$ 1.81
|
|
|
|
|
|
|
2. Consolidated
Business Metrics:
|
|
|
|
|
|
Expenses
|
|
|
|
|
|
General and
administrative expenses as a percent of consolidated net
revenues(2)
|
10.2%
|
10.4%
|
9.4%
|
10.3%
|
|
Consolidated effective
tax rate
|
37.1%
|
53.0%
|
35.7%
|
21.9%
|
|
Consolidated effective
tax rate attributable to DaVita HealthCare Partners
Inc.(1)
|
41.8%
|
43.7%
|
40.5%
|
37.8%
|
|
Adjusted consolidated
effective tax rate attributable to DaVita HealthCare Partners
Inc.(1)
|
39.2%
|
37.5%
|
40.5%
|
38.3%
|
|
|
|
|
|
|
3. Summary of
Division Financial Results:
|
|
|
|
|
|
Net
revenues
|
|
|
|
|
|
Kidney
Care:
|
|
|
|
|
|
Net dialysis and
related lab services revenues
|
$ 2,154
|
$ 2,072
|
$ 2,025
|
$ 4,226
|
|
Net ancillary services
and strategic initiatives revenues, including international
dialysis operations
|
334
|
305
|
274
|
639
|
|
Elimination of
intersegment revenues
|
(19)
|
(17)
|
(14)
|
(36)
|
|
Total Kidney Care net
revenues
|
2,469
|
2,360
|
2,285
|
4,829
|
|
Net HCP
revenues
|
966
|
928
|
887
|
1,894
|
|
Total net consolidated
revenues
|
$ 3,435
|
$ 3,288
|
$ 3,172
|
$ 6,723
|
|
Operating income
(loss)
|
|
|
|
|
|
Kidney
Care:
|
|
|
|
|
|
Dialysis and related
lab services operating income (loss)
|
$
438
|
$ (104)
|
$ 408
|
$ 333
|
|
Other – Ancillary
services and strategic initiatives, including international
dialysis operations operating loss
|
(26)
|
(14)
|
(2)
|
(40)
|
|
Corporate support and
related long-term incentive compensation
|
(3)
|
(6)
|
(4)
|
(10)
|
|
Total Kidney Care
operating income (loss)
|
409
|
(124)
|
402
|
283
|
|
HCP operating
income
|
72
|
60
|
82
|
133
|
|
Total consolidated
operating income (loss)
|
$ 481
|
$ (64)
|
$ 484
|
$ 416
|
|
DAVITA HEALTHCARE
PARTNERS INC.
SUPPLEMENTAL FINANCIAL DATA—continued
(unaudited)
(dollars in millions, except for per share and per treatment
data)
|
|
|
|
|
Three months
ended
|
Six
months
ended June
30,
2015
|
|
June
30,
2015
|
March
31,
2015
|
June
30,
2014
|
|
4. Summary of
Reportable Segment Financial Results:
|
|
|
|
|
|
Dialysis and
Related Lab Services
|
|
|
|
|
|
Revenue:
|
|
|
|
|
|
Patient services
revenues
|
$ 2,252
|
$ 2,166
|
$ 2,106
|
$ 4,418
|
|
Provision for
uncollectible accounts
|
(101)
|
(97)
|
(84)
|
(199)
|
|
Net patient service
operating revenues
|
2,151
|
2,069
|
2,022
|
4,219
|
|
Other
revenues
|
3
|
3
|
3
|
7
|
|
Total net operating
revenues
|
$ 2,154
|
$ 2,072
|
$ 2,025
|
$ 4,226
|
|
Operating
expenses:
|
|
|
|
|
|
Patient care
costs
|
$ 1,436
|
$ 1,396
|
$ 1,358
|
$ 2,833
|
|
General and
administrative
|
174
|
183
|
164
|
358
|
|
Depreciation and
amortization
|
110
|
105
|
99
|
215
|
|
Equity investment
income
|
(4)
|
(3)
|
(4)
|
(8)
|
|
Settlement
charge
|
─
|
495
|
─
|
495
|
|
Total operating
expenses
|
1,716
|
2,176
|
1,617
|
3,893
|
|
Segment operating
income (loss)
|
$
438
|
$ (104)
|
$
408
|
$
333
|
|
HCP
|
|
|
|
|
|
Revenue:
|
|
|
|
|
|
HCP capitated
revenues
|
$
848
|
$ 833
|
$ 783
|
$ 1,681
|
|
Patient services
revenues
|
86
|
81
|
62
|
168
|
|
Provision for
uncollectible accounts
|
(4)
|
(1)
|
(4)
|
(6)
|
|
Net patient service
operating revenues
|
82
|
80
|
58
|
162
|
|
Other
revenues
|
36
|
15
|
46
|
51
|
|
Total net operating
revenues
|
$ 966
|
$ 928
|
$ 887
|
$ 1,894
|
|
Operating
expenses:
|
|
|
|
|
|
Patient care
costs
|
$ 750
|
$ 733
|
$ 688
|
$ 1,482
|
|
General and
administrative
|
102
|
92
|
77
|
194
|
|
Depreciation and
amortization
|
43
|
43
|
42
|
86
|
|
Equity investment
income
|
(1)
|
─
|
(2)
|
(1)
|
|
Total operating
expenses
|
894
|
868
|
805
|
1,761
|
|
Segment operating
income
|
$
72
|
$
60
|
$
82
|
$
133
|
|
|
|
|
|
|
5. Dialysis and
Related Lab Services Business Metrics:
|
|
|
|
|
|
Volume
|
|
|
|
|
|
Treatments
|
6,463,058
|
6,262,635
|
6,196,394
|
12,725,693
|
|
Number of treatment
days
|
78
|
76.6
|
78.0
|
154.6
|
|
Treatments per
day
|
82,860
|
81,758
|
79,441
|
82,314
|
|
Per day year over year
increase
|
4.3%
|
4.5%
|
5.6%
|
4.4%
|
|
Non-acquired growth
year over year
|
3.7%
|
3.9%
|
5.0%
|
3.8%
|
|
Normalized
non-acquired growth year over year
|
3.7%
|
4.5%
|
5.0%
|
4.1%
|
|
Operating
revenues before provision for uncollectible
accounts
|
|
|
|
|
|
Dialysis and related
lab services revenue per treatment
|
$ 348.32
|
$ 345.88
|
$ 339.82
|
$ 347.12
|
|
Per treatment increase
(decrease) from previous quarter
|
0.7%
|
(0.3%)
|
(0.3%)
|
|
|
Per treatment increase
from previous year
|
2.5%
|
1.5%
|
0.3%
|
2.0%
|
|
Percent of net
consolidated revenues
|
62.3%
|
62.7%
|
63.5%
|
62.5%
|
|
DAVITA HEALTHCARE
PARTNERS INC.
SUPPLEMENTAL FINANCIAL
DATA—continued
(unaudited)
(dollars in
millions, except for per share and per treatment
data)
|
|
|
|
|
Three months
ended
|
Six
months
ended June
30,
2015
|
|
June
30,
2015
|
March
31,
2015
|
June
30,
2014
|
|
5. Dialysis and
Related Lab Services Business Metrics:
(continued)
|
|
|
|
|
|
Expenses
|
|
|
|
|
|
Patient care
costs
|
|
|
|
|
|
Percent of total
segment operating revenues
|
66.7%
|
67.4%
|
67.1%
|
67.0%
|
|
Per
treatment
|
$ 222.17
|
$ 222.99
|
$ 219.16
|
$ 222.57
|
|
Per treatment
(decrease) increase from previous quarter
|
(0.4%)
|
1.9%
|
(1.0%)
|
|
|
Per treatment increase
from previous year
|
1.4%
|
0.8%
|
1.6%
|
1.1%
|
|
General and
administrative expenses
|
|
|
|
|
|
Percent of total
segment operating revenues
|
8.1%
|
8.8%
|
8.1%
|
8.5%
|
|
Per
treatment
|
$ 26.99
|
$ 29.25
|
$ 26.47
|
$ 28.10
|
|
Per treatment
(decrease) increase from previous quarter
|
(7.7%)
|
(1.7%)
|
1.8%
|
|
|
Per treatment increase
(decrease) from previous year
|
2.0%
|
12.5%
|
(8.3%)
|
7.1%
|
|
Accounts
receivable
|
|
|
|
|
|
Net
receivables
|
$ 1,227
|
$ 1,261
|
$ 1,148
|
─
|
|
DSO
|
53
|
56
|
53
|
─
|
|
Provision for
uncollectible accounts as a percentage of revenues
|
4.5%
|
4.5%
|
4.0%
|
4.5%
|
|
|
|
|
|
|
6. HCP Business
Metrics:
|
|
|
|
|
|
Capitated
membership
|
|
|
|
|
|
Total
|
826,500
|
830,400
|
820,400
|
─
|
|
Member
months
|
2,472,400
|
2,482,500
|
2,430,300
|
4,954,800
|
|
Capitated revenues
by sources
|
|
|
|
|
|
Commercial
revenues
|
$ 177
|
$ 185
|
$
177
|
$
362
|
|
Senior
revenues
|
623
|
602
|
576
|
1,225
|
|
Medicaid
revenues
|
48
|
46
|
30
|
94
|
|
Total capitated
revenues
|
$ 848
|
$ 833
|
$
783
|
$ 1,681
|
|
Other
|
|
|
|
|
|
Total care dollars
under management(1)
|
$ 1,245
|
$ 1,233
|
$ 1,125
|
$ 2,478
|
|
Ratio of operating
income to total care dollars under
management(1)
|
5.8%
|
4.9%
|
7.3%
|
5.4%
|
|
Full time
clinicians
|
1,272
|
1,299
|
1,134
|
─
|
|
IPA primary care
physicians
|
2,732
|
2,829
|
3,340
|
─
|
|
|
|
|
|
|
7. Cash
Flow:
|
|
|
|
|
|
Operating cash
flow
|
$ 31.4
|
$ 410.1
|
$ 262.4
|
$ 441.5
|
|
Operating cash flow,
last twelve months
|
$ 1,219.4
|
$ 1,450.4
|
$ 1,768.8
|
─
|
|
Free cash
flow(1)
|
$ (76.9)
|
$ 319.6
|
$ 165.2
|
$ 242.7
|
|
Free cash flow, last
twelve months(1)
|
$ 786.0
|
$ 1,028.1
|
$ 1,350.2
|
─
|
|
Capital
expenditures:
|
|
|
|
|
|
Routine
maintenance/IT/other
|
$ 70.8
|
$ 49.0
|
$ 64.5
|
$ 119.8
|
|
Development and
relocations
|
$ 98.7
|
$ 72.4
|
$ 87.5
|
$ 171.1
|
|
Acquisition
expenditures
|
$
4.4
|
$ 40.7
|
$ 30.6
|
$ 45.1
|
|
DAVITA HEALTHCARE
PARTNERS INC.
SUPPLEMENTAL FINANCIAL
DATA—continued
(unaudited)
(dollars in
millions, except for per share and per treatment
data)
|
|
|
|
|
Three months
ended
|
|
|
June
30,
2015
|
March
31,
2015
|
June
30,
2014
|
|
8. Debt and
Capital Structure:
|
|
|
|
|
|
Total
debt(3)
|
$ 9,225
|
$ 8,513
|
$ 8,817
|
|
|
Net debt, net of cash
and cash equivalents(3)
|
$ 8,291
|
$ 7,502
|
$ 7,396
|
|
|
Leverage ratio (see
calculation on page 14)
|
3.03x
|
2.94x
|
2.98x
|
|
|
Overall weighted
average effective interest rate during the quarter
|
4.42%
|
4.48%
|
4.85%
|
|
|
Overall weighted
average effective interest rate at end of the quarter
|
4.38%
|
4.47%
|
4.56%
|
|
|
Weighted average
effective interest rate on the Senior Secured Credit Facilities at
end of the quarter
|
3.44%
|
3.44%
|
3.51%
|
|
|
Fixed and economically
fixed interest rates as a percentage of our total debt
|
61%(4)
|
58%(4)
|
59%
|
|
|
Fixed and economically
fixed interest rates, including our interest rate cap agreements,
as a percentage of our total debt
|
90%(4)
|
90%(4)
|
90%
|
|
|
|
|
|
|
|
9. Clinical:
(quarterly averages)
|
|
|
|
|
|
Dialysis adequacy -%
of patients with Kt/V > 1.2 at the end of the quarter
|
98%
|
98%
|
98%
|
|
|
Dialysis patients with
arteriovenous fistulas placed
|
73%
|
73%
|
73%
|
|
|
_________________
|
|
(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, see attached reconciliation
schedules.
|
|
|
(2) Consolidated
percentages of revenues are comprised of the dialysis and related
lab services business, HCP's business and other ancillary services
and strategic initiatives. General and administrative expenses
includes certain corporate support and related long-term incentive
compensation.
|
|
|
(3) The reported
balance sheet amounts at June 30, 2015, March 31, 2015 and June 30,
2014, excludes $14.9 million, $15.6 million and $17.5 million,
respectively, of a debt discount associated with our Term Loan
B.
|
|
|
(4) The Term Loan B
is subject to a LIBOR floor of 0.75%. Because actual LIBOR, for all
periods presented above, was lower than this embedded LIBOR floor,
the interest rate on the Term Loan B is set at its respective
floor. At such time as the actual LIBOR-based variable component of
our interest rate exceeds 0.75% on the Term Loan B, we will then be
subject to LIBOR-based interest rate volatility on the LIBOR
variable component of our interest rate on all of the Term Loan B.
However, we are limited to a maximum rate of 2.50% on $2.75 billion
of outstanding principal debt on the Term Loan B as a result of
interest rate cap agreements. The remaining $730 million
outstanding principal balance of the Term Loan B is subject to
LIBOR-based interest rate volatility above a floor of
0.75%.
|
|
DAVITA HEALTHCARE
PARTNERS INC.
SUPPLEMENTAL FINANCIAL
DATA—continued
(unaudited)
(dollars in
thousands)
|
|
|
Note 1:
Calculation of the Leverage Ratio
|
|
|
Under the Senior
Secured Credit Facilities (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, including
short-term investments, divided by "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 following leverage ratio was
calculated using "Consolidated EBITDA" as defined in the Credit
Agreement. The calculation below is based on the last twelve months
of "Consolidated EBITDA", pro forma for routine acquisitions that
occurred during the period. 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.
|
|
|
Rolling twelve
months ended
June 30,
2015
|
|
Net income
attributable to DaVita HealthCare Partners Inc.
|
$
452,002
|
|
Income
taxes
|
257,434
|
|
Interest
expense
|
375,777
|
|
Depreciation and
amortization
|
615,081
|
|
Settlement
charge
|
512,000
|
|
Noncontrolling
interests and equity investment income, net
|
163,768
|
|
Stock-settled
stock-based compensation
|
55,511
|
|
Debt redemption
charges
|
48,072
|
|
Other
|
9,953
|
|
"Consolidated
EBITDA"
|
$
2,489,598
|
|
|
|
June 30,
2015
|
|
Total debt, excluding
debt discount of $14.9 million
|
$
9,224,769
|
|
Letters of credit
issued
|
96,424
|
|
9,321,193
|
|
Less: Cash and cash
equivalents including short-term investments (excluding HCP's
physician owned entities cash)
|
(1,776,069)
|
|
Consolidated net
debt
|
$
7,545,124
|
|
Last twelve months
"Consolidated EBITDA"
|
$
2,489,598
|
|
Leverage
ratio
|
3.03x
|
|
|
|
In accordance with
the Credit Agreement, the Company's leverage ratio cannot exceed
5.00 to 1.00 as of June 30, 2015. At that date the Company's
leverage ratio did not exceed 5.00 to 1.00.
|
|
DAVITA HEALTHCARE
PARTNERS INC.
RECONCILIATIONS FOR NON-GAAP
MEASURES
(unaudited)
(dollars in thousands
except for per share data)
|
|
|
1. Adjusted net
income and diluted net income per share attributable to DaVita
HealthCare Partners Inc. excluding debt redemption and refinancing
charges, a settlement charge and a tax adjustment related to
the settlement of the Vainer suit.
|
|
|
We believe that
adjusted net income attributable to DaVita HealthCare Partners Inc.
excluding debt redemption and refinancing charges, a settlement
charge, net of related tax, and a tax adjustment related to the
settlement of the Vainer suit, enhances a user's understanding of
our normal net income attributable to DaVita HealthCare Partners
Inc. and adjusted diluted net income per share attributable to
DaVita HealthCare Partners Inc. for these periods by providing a
measure that is meaningful because it excludes unusual amounts
related to the debt redemption charges that resulted from the
redemption of the $775 million 6 ⅝% Senior Notes due 2020, debt
refinancing charges that resulted from the refinancing of our
Secured Credit Facilities, the redemption of the $775 million 6 ⅜%
Senior Notes due 2018, as well as the termination of certain
interest rate swap agreements, and a settlement charge and a tax
adjustment related to the settlement of the Vainer suit, and
accordingly, is comparable to prior periods and indicative of
normal net income attributable to DaVita HealthCare Partners Inc.
and diluted net income per share attributable to DaVita HealthCare
Partners Inc. These measures are not measures of financial
performance under United States generally accepted accounting
principles (GAAP) and should not be considered as an alternative to
net income attributable to DaVita HealthCare Partners Inc. and
diluted net income per share attributable to DaVita HealthCare
Partners Inc.
|
|
|
Adjusted net
income attributable to DaVita HealthCare Partners Inc. excluding
debt redemption and refinancing charges, a settlement charge and a
related tax adjustment related to the settlement of the Vainer
suit:
|
Three months
ended
|
Six months
ended
|
|
June
30,
2015
|
March
31,
2015(1)
|
June
30,
2014
|
June
30,
2015
|
June
30,
2014
|
|
Net income (loss)
attributable to DaVita HealthCare Partners Inc.
|
$ 170,477
|
$ (110,617)
|
$ 147,683
|
$ 59,860
|
$ 330,972
|
|
Add:
|
|
|
|
|
|
|
Debt redemption and
refinancing charges
|
48,072
|
─
|
97,548
|
48,072
|
97,548
|
|
Settlement
charge
|
─
|
495,000
|
─
|
495,000
|
─
|
|
Tax adjustment
related to the settlement of the Vainer suit
|
7,501
|
─
|
─
|
7,501
|
─
|
|
Less: Related
income tax
|
(18,892)
|
(197,747)
|
(39,507)
|
(216,639)
|
(39,507)
|
|
$ 207,158
|
$ 186,636
|
$ 205,724
|
$ 393,794
|
$ 389,013
|
|
DAVITA HEALTHCARE
PARTNERS INC.
RECONCILIATIONS FOR NON-GAAP
MEASURES
(unaudited)
(dollars in thousands
except for per share data)
|
|
|
Adjusted diluted
net income per share attributable to DaVita HealthCare Partners
Inc. excluding debt redemption and refinancing charges, a
settlement charge and a tax adjustment related to the settlement of
the Vainer suit:
|
Three months
ended
|
Six months
ended
|
|
June
30,
2015
|
March
31,
2015(1)
|
June
30,
2014
|
June
30,
2015
|
June
30,
2014
|
|
Diluted net income
(loss) per share attributable to DaVita HealthCare Partners
Inc.
|
$ 0.78
|
$ (0.52)
|
$ 0.68
|
$ 0.27
|
$ 1.53
|
|
Add:
|
|
|
|
|
|
|
Debt redemption and
refinancing charges
|
0.13
|
─
|
0.27
|
0.13
|
0.27
|
|
Settlement charge
including the effects of diluted net loss per share attributable to
DaVita HealthCare Partners Inc.
|
─
|
1.38
|
─
|
1.37
|
─
|
|
Tax adjustment related
to the settlement of the Vainer suit
|
0.04
|
─
|
─
|
0.04
|
─
|
|
$ 0.95
|
$ 0.86
|
$ 0.95
|
$ 1.81
|
$ 1.80
|
|
______________
|
|
|
(1) Adjusted diluted
net income per share attributable to DaVita HealthCare Partners
Inc. for the three months ended March 31, 2015 is calculated using
217,977,358 shares, which includes shares that would be dilutive
based on adjusted net income attributable to DaVita HealthCare
Partners Inc. of $186,636 excluding a settlement charge.
|
|
DAVITA HEALTHCARE
PARTNERS INC.
RECONCILIATIONS FOR NON-GAAP MEASURES –
(continued)
(unaudited)
(dollars in thousands
except for per share data)
|
|
|
In addition, we have
excluded amortization of intangible assets associated with
acquisitions from our adjusted net income attributable to DaVita
HealthCare Partners Inc. and from our adjusted diluted net income
per share attributable to DaVita HealthCare Partners Inc. as we
believe this presentation enhances a user's understanding of our
operating results for these periods by providing a different
reflection of the Company's operating performance since it excludes
the amortization of intangible assets that relate to the fair value
measurement of acquired intangible assets associated with our
acquisitions to fair value, and accordingly is indicative of
consistent net income excluding amortization of acquired
intangibles, attributable to DaVita HealthCare Partners Inc. and
diluted net income per share attributable to DaVita HealthCare
Partners Inc. These measures are not measures of financial
performance under GAAP and should not be considered as an
alternative to net income attributable to DaVita HealthCare
Partners Inc. and diluted net income per share attributable to
DaVita HealthCare Partners Inc.
|
|
|
|
|
Adjusted net
income and adjusted diluted net income per share attributable to
DaVita HealthCare Partners Inc., further adjusted to exclude the
amortization of intangible assets associated with
acquisitions:
|
Three months
ended
|
Six months
ended
|
|
June
30,
2015
|
March
31,
2015
|
June
30,
2014
|
June
30,
2015
|
June
30,
2014
|
|
Adjusted net income
attributable to DaVita HealthCare Partners Inc.
|
$ 207,158
|
$ 186,636
|
$ 205,724
|
$ 393,794
|
$ 389,013
|
|
Add:
|
|
|
|
|
|
|
Amortization of
intangible assets associated with acquisitions for the dialysis and
ancillary operations
|
6,384
|
6,524
|
6,713
|
12,908
|
13,580
|
|
Amortization of
intangible assets associated with acquisitions for the HCP
operations
|
35,838
|
35,878
|
35,298
|
71,716
|
70,150
|
|
Less: Related income
tax
|
(16,593)
|
(15,901)
|
(17,014)
|
(32,494)
|
(33,910)
|
|
$ 232,787
|
$ 213,137
|
$ 230,721
|
$ 445,924
|
$ 438,833
|
|
|
|
|
|
|
|
Adjusted diluted net
income per share attributable to DaVita HealthCare Partners
Inc.
|
$ 0.95
|
$ 0.86
|
$ 0.95
|
$ 1.81
|
$ 1.80
|
|
Add:
|
|
|
|
|
|
|
Amortization of
intangible assets per share associated with acquisitions for the
dialysis and ancillary operations, net of tax
|
0.02
|
0.02
|
0.02
|
0.04
|
0.04
|
|
Amortization of
intangible assets per share associated with acquisitions for the
HCP operations, net of tax
|
0.10
|
0.10
|
0.09
|
0.20
|
0.19
|
|
$ 1.07
|
$ 0.98
|
$ 1.06
|
$ 2.05
|
$ 2.03
|
|
DAVITA HEALTHCARE
PARTNERS INC.
RECONCILIATIONS FOR NON-GAAP
MEASURES
(unaudited)
(dollars in
thousands)
|
|
|
2. Adjusted
operating income excluding a pre-tax settlement
charge
|
|
|
We believe that
adjusted operating income excluding a pre-tax settlement charge
enhances a user's understanding of our normal operating income for
these periods by providing a measure that is meaningful because it
excludes an unusual amount that was incurred for a settlement
charge related to the Vainer suit and accordingly, is comparable to
prior periods and indicative of consistent operating income. This
measure is not a measure of financial performance under GAAP and
should not be considered as an alternative to operating
income.
|
|
|
Adjusted operating
income excluding a pre-tax settlement charge:
|
Three months
ended
|
Six months
ended
|
|
June
30,
2015
|
March
31,
2015
|
June
30,
2014
|
June
30,
2015
|
June
30,
2014
|
|
Operating income
(loss)
|
$ 480,548
|
$ (64,156)
|
$ 484,295
|
$ 416,392
|
$ 925,520
|
|
Add:
|
|
|
|
|
|
|
Settlement
charge
|
─
|
495,000
|
─
|
495,000
|
─
|
|
Adjusted operating
income
|
$ 480,548
|
$ 430,844
|
$ 484,295
|
$ 911,392
|
$ 925,520
|
|
DAVITA HEALTHCARE
PARTNERS INC.
RECONCILIATIONS FOR NON-GAAP
MEASURES
(unaudited)
(dollars in
thousands)
|
|
|
3. Effective
income tax rates and adjusted effective income tax
rates
|
|
|
We believe that
reporting the effective income tax rate attributable to DaVita
HealthCare Partners Inc. as well as the adjusted effective income
tax rate attributable to DaVita HealthCare Partners Inc., excluding
a settlement charge and a tax adjustment related to the settlement
of the Vainer suit, enhances an investor's understanding of DaVita
HealthCare Partners Inc.'s effective income tax rate and DaVita
HealthCare Partners Inc.'s adjusted effective income tax rate for
the periods presented because it excludes noncontrolling owners'
income that primarily relates to non-tax paying entities and
unusual amounts that include a settlement charge and a tax
adjustment related to the settlement of the Vainer suit, and,
therefore, is meaningful to an investor to fully understand the
related income tax effects on DaVita HealthCare Partners Inc.'s
operating results. These are not measures under GAAP and should not
be considered as an alternative to the effective income tax rate
calculated in accordance with GAAP.
|
|
|
Effective income tax
rate as compared to the effective income tax rate attributable to
DaVita HealthCare Partners Inc. is as follows:
|
|
|
Three months
ended
|
Six
months
ended
June 30,
2015
|
|
June
30,
2015
|
March
31,
2015
|
June
30,
2014
|
|
Income (loss) from
continuing operations before income taxes
|
$ 330,539
|
$ (162,081)
|
$ 282,308
|
$ 168,458
|
|
Income tax expense
(benefit)
|
$ 122,762
|
$ (85,933)
|
$ 100,887
|
$ 36,829
|
|
Effective income tax
rate
|
37.1%
|
53.0%
|
35.7%
|
21.9%
|
|
Three months
ended
|
Six months
ended
June 30,
2015
|
|
June
30,
2015
|
March
31,
2015
|
June
30,
2014
|
|
Income (loss) from
continuing operations before income taxes
|
$ 330,539
|
$ (162,081)
|
$ 282,308
|
$ 168,458
|
|
Less:
Noncontrolling owners' income primarily attributable to non-tax
paying entities
|
(37,622)
|
(34,536)
|
(34,105)
|
(72,158)
|
|
Income (loss) before
income taxes attributable to DaVita HealthCare Partners
Inc.
|
$ 292,917
|
$ (196,617)
|
$ 248,203
|
$ 96,300
|
|
|
|
|
|
|
Income tax expense
(benefit)
|
122,762
|
(85,933)
|
$ 100,887
|
$ 36,829
|
|
Less: Income tax
attributable to noncontrolling interests
|
(322)
|
(67)
|
(367)
|
(389)
|
|
Income tax expense
(benefit) attributable to DaVita HealthCare Partners
Inc.
|
$ 122,440
|
$ (86,000)
|
$ 100,520
|
$ 36,440
|
|
|
|
|
|
|
Effective income tax
rate attributable to DaVita HealthCare Partners Inc.
|
41.8%
|
43.7%
|
40.5%
|
37.8%
|
|
DAVITA HEALTHCARE
PARTNERS INC.
RECONCILIATIONS FOR NON-GAAP
MEASURES
(unaudited)
(dollars in
thousands)
|
|
|
|
|
Three months
ended
|
Six months
ended
June 30,
2015
|
|
Adjusted effective
income tax rates attributable to DaVita HealthCare Partners Inc.
excluding a settlement charge and a tax adjustment related to the
settlement of the Vainer suit:
|
June
30,
2015
|
March
31,
2015
|
June
30,
2014
|
|
Income (loss) from
continuing operations before income taxes
|
$ 330,539
|
$ (162,081)
|
$ 282,308
|
$ 168,458
|
|
Add:
Settlement charge
|
─
|
495,000
|
─
|
495,000
|
|
330,539
|
332,919
|
282,308
|
663,458
|
|
Less:
Noncontrolling owners' income primarily attributable to non-
tax paying entities
|
(37,622)
|
(34,536)
|
(34,105)
|
(72,158)
|
|
Adjusted income
before income taxes attributable to DaVita HealthCare Partners
Inc.
|
$ 292,917
|
$ 298,383
|
$ 248,203
|
$ 591,300
|
|
Income tax expense
(benefit)
|
$ 122,762
|
$ (85,933)
|
$ 100,887
|
$ 36,829
|
|
Add:
Income taxes attributable to the settlement charge
|
─
|
197,747
|
─
|
197,747
|
|
Tax adjustment
related to the settlement of the Vainer suit
|
(7,501)
|
─
|
─
|
(7,501)
|
|
Less: Income tax
attributable to noncontrolling interests
|
(322)
|
(67)
|
(367)
|
(389)
|
|
Adjusted income tax
attributable to DaVita HealthCare Partners Inc.
|
$ 114,939
|
$ 111,747
|
$ 100,520
|
$ 226,686
|
|
Adjusted effective
income tax rate attributable to DaVita HealthCare Partners
Inc.
|
39.2%
|
37.5%
|
40.5%
|
38.3%
|
|
DAVITA HEALTHCARE
PARTNERS INC.
RECONCILIATIONS FOR NON-GAAP
MEASURES
(unaudited)
(dollars in
thousands)
|
|
|
4. Free cash flow
and adjusted operating cash flow
|
|
|
Free cash flow
represents net cash provided by operating activities less
distributions to noncontrolling interests and capital expenditures
for routine maintenance and information technology. We believe free
cash flow is a useful adjunct to cash flow from operating
activities and other measurements under GAAP, since free cash flow
is a meaningful measure of our ability to fund acquisition and
development activities and meet our debt service requirements. In
addition, free cash flow excluding distributions to noncontrolling
interests provides an investor with an understanding of free cash
flows that are attributable to DaVita HealthCare Partners Inc. We
have also presented adjusted operating cash flow excluding the
payments made in the second quarter of 2015 related to the
settlement of the Vainer suit and in the fourth quarter of 2014
related to the settlement of the 2010 and 2011 U.S. Attorney
physician relationship investigations, net of tax. We believe this
measure is meaningful to investors to understand our operating cash
flows that were generated excluding these unusual payments that
were part of the settlements. Free cash flow and adjusted operating
cash flow are not measures of financial performance under GAAP and
should not be considered as an alternative to cash flows from
operating, investing or financing activities, as an indicator of
cash flows or as a measure of liquidity.
|
|
|
Three months
ended
|
Six months
ended
June 30,
2015
|
|
June
30,
2015
|
March
31,
2015
|
June
30,
2014
|
|
Cash provided by
operating activities
|
$ 31,442
|
$ 410,089
|
$ 262,391
|
$ 441,531
|
|
Less:
Distributions to noncontrolling interests
|
(37,541)
|
(41,499)
|
(32,671)
|
(79,040)
|
|
Cash (used in)
provided by operating activities attributable to DaVita HealthCare
Partners Inc.
|
(6,099)
|
368,590
|
229,720
|
362,491
|
|
Less: Expenditures
for routine maintenance and information technology
|
(70,757)
|
(49,010)
|
(64,549)
|
(119,767)
|
|
Free cash
flow
|
$ (76,856)
|
$ 319,580
|
$ 165,171
|
$ 242,724
|
|
Rolling 12-Month
Period
|
|
June
30,
2015
|
March
31,
2015
|
June
30,
2014
|
|
Cash provided by
operating activities
|
$ 1,219,440
|
$ 1,450,389
|
$ 1,768,813
|
|
Less:
Distributions to noncontrolling interests
|
(162,561)
|
(157,691)
|
(139,938)
|
|
Cash provided by
operating activities attributable to DaVita HealthCare Partners
Inc.
|
1,056,879
|
1,292,698
|
1,628,875
|
|
Less: Expenditures
for routine maintenance and information technology
|
(270,841)
|
(264,633)
|
(278,707)
|
|
Free cash
flow
|
786,038
|
$ 1,028,065
|
$ 1,350,168
|
|
June 30,
2015
|
|
Three months
ended
|
Six months
ended
|
Rolling twelve
months ended
|
|
Cash provided by
operating activities
|
$ 31,442
|
$ 441,531
|
$ 1,219,440
|
|
Payment in connection
with the settlement of the Vainer suit
|
493,775
|
493,775
|
493,775
|
|
Payment in connection
with the settlement of the 2010 and 2011 U.S. Attorney physician
relationship investigations
|
─
|
─
|
410,356
|
|
Related tax
benefit
|
(190,246)
|
(190,246)
|
(331,733)
|
|
Adjusted operating
cash flow
|
$ 334,971
|
$ 745,060
|
$ 1,791,838
|
|
DAVITA HEALTHCARE
PARTNERS INC.
RECONCILIATIONS FOR NON-GAAP
MEASURES
(unaudited)
(dollars in
thousands)
|
|
|
5. Total care
dollars under management
|
|
|
In California, as a
result of our managed care administrative services agreements with
hospitals, HCP does not assume the direct financial risk for
institutional (hospital) services in most cases, but is responsible
for managing the care dollars associated with both the professional
(physician) and institutional services being provided for the Per
Member Per Month (PMPM) fee attributable to both professional and
institutional services. In cases where HCP does not assume the
direct financial risk, HCP recognizes the surplus of institutional
revenue less institutional expense as HCP net revenue. In addition
to revenues recognized for financial reporting purposes, HCP
measures its total care dollars under management, which includes
the PMPM fee payable to third parties for institutional (hospital)
services where HCP manages the care provided to its members by the
hospitals and other institutions, which are not included in GAAP
revenues. HCP uses total care dollars under management as a
supplement to GAAP revenues as it allows HCP to measure profit
margins on a comparable basis across both the global capitation
model (where HCP assumes the full financial risk for all services,
including institutional services) and the risk sharing models
(where HCP operates under managed care administrative services
agreements where HCP does not assume the full risk). HCP believes
that presenting amounts in this manner is useful because it
presents its operations on a unified basis without the complication
caused by models that HCP has adopted in its California market as a
result of various regulations related to the assumption of
institutional risk. Total care dollars under management is not a
measure of financial performance computed in accordance with GAAP
and should not be considered in isolation or as a substitute for
revenues calculated in accordance with GAAP. Total care dollars
under management includes PMPM payments received from third parties
that are recorded net of expenses in our accounting records. The
following table reconciles total care dollars under management to
medical revenues to the periods indicated.
|
|
|
Three months
ended
|
Six months
ended
June 30,
2015
|
|
June
30,
2015
|
March
31,
2015
|
June
30,
2014
|
|
Medical
revenues
|
$ 930,878
|
$ 912,588
|
$ 839,877
|
$ 1,843,466
|
|
Less: Risk share
revenue, net
|
(18,127)
|
(12,956)
|
(8,924)
|
(31,083)
|
|
Add: Institutional
capitation amounts
|
332,456
|
333,108
|
294,244
|
665,564
|
|
Total care dollars
under management
|
$ 1,245,207
|
$ 1,232,740
|
$ 1,125,197
|
$ 2,477,947
|
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SOURCE DaVita HealthCare Partners Inc.