DENVER, Feb. 11, 2016 /PRNewswire/ -- DaVita HealthCare
Partners Inc. (NYSE: DVA) today announced results for the quarter
and year ended December 31, 2015.
Adjusted net income attributable to DaVita HealthCare Partners Inc.
for the quarter ended December 31,
2015 was $214 million, or
$1.01 per share, excluding estimated
non-cash goodwill and other intangible asset impairment charges, as
discussed below, and an estimated accrual for damages and
liabilities associated with our pharmacy business, all after-tax.
Net loss attributable to DaVita HealthCare Partners Inc. for the
quarter ended December 31, 2015
including these items was $(6)
million, or $(0.03) per
share.
Adjusted net income attributable to DaVita HealthCare Partners
Inc. for the year ended December 31,
2015 was $828 million, or
$3.83 per share, excluding estimated
non-cash goodwill and other intangible asset impairment charges, an
estimated accrual for damages and liabilities associated with our
pharmacy business, debt redemption charges and a settlement charge
related to the Vainer private civil suit, all after-tax. Net income
attributable to DaVita HealthCare Partners Inc. for the year ended
December 31, 2015 including these
items was $270 million, or
$1.25 per share.
Net income attributable to DaVita HealthCare Partners Inc. for
the quarter ended December 31, 2014
was $208 million, or $0.96 per share. Adjusted net income attributable
to DaVita HealthCare Partners Inc. for the year ended December 31, 2014 was $792
million, or $3.64 per share,
excluding debt redemption and refinancing charges, and a loss
contingency accrual related to the 2010 and 2011 U.S. Attorney
physician relationship investigations, all after-tax. Net income
attributable to DaVita HealthCare Partners Inc. for the year ended
December 31, 2014 including these
items was $723 million, or
$3.33 per share.
See schedules of reconciliations of non-GAAP measures.
Financial and operating highlights include:
- Cash Flow: For the quarter and year ended
December 31, 2015, operating cash
flow was $437 million and
$1.6 billion, respectively, and free
cash flow was $256 million and
$1.1 billion, respectively. Operating
cash flow and free cash flow for the year ended December 31, 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. Excluding
this item, adjusted operating cash flow for the year ended
December 31, 2015 would have been
$1.9 billion.
- Operating Income and Adjusted Operating
Income: Adjusted operating income for the quarter
ended December 31, 2015 was
$474 million, excluding estimated
non-cash goodwill and other intangible asset impairment charges and
an estimated accrual for damages and liabilities associated with
our pharmacy business. Operating income for the quarter ended
December 31, 2015 including these
items was $245 million. Adjusted
operating income for the year ended December
31, 2015 was $1.9 billion,
excluding estimated non-cash goodwill and other intangible asset
impairment charges, an estimated accrual for damages and
liabilities associated with our pharmacy business, and a settlement
charge related to the Vainer suit. Operating income for the year
ended December 31, 2015 including
these items was $1.2 billion.
Operating income for the quarter and year ended December 31, 2014 was $452
million and $1.8 billion,
respectively. Adjusted operating income for the year ended
December 31, 2014, excluding a loss
contingency accrual related to the 2010 and 2011 U.S. Attorney
physician relationship investigations was $1.8 billion.
- Goodwill and Other Intangible Asset Impairment Charges:
During the quarter ended December 31,
2015, we determined that circumstances indicated it had
become more likely than not that the non-cash goodwill and an
indefinite-lived intangible asset of certain HealthCare Partners
reporting units had become impaired. These circumstances
included underperformance of the business in recent quarters, as
well as changes in other market conditions, including government
reimbursement cuts and our expected ability to mitigate them. We
are performing the required valuation of certain HCP reporting
units and have estimated the fair value of their net assets and
implied goodwill with the assistance of a third-party valuation
firm. Based on the current assessments, we recorded an
estimated $206 million in non-cash
goodwill and other intangible asset impairment charges of certain
HCP reporting units. The final amount of these impairment charges
will depend upon the final outcome of this valuation work, which we
expect will be completed in the first quarter of 2016.
- Adjusted Diluted Net Income Per Share:
Adjusted net income attributable to DaVita HealthCare Partners Inc.
for the quarter ended December 31,
2015, excluding the amortization of intangible assets
associated with acquisitions, net of tax, and certain other
additional non-GAAP measures, was $239
million and adjusted diluted net income per share was
$1.12. Adjusted net income
attributable to DaVita HealthCare Partners Inc. for the year ended
December 31, 2015, excluding the
amortization of intangible assets and certain other additional
non-GAAP measures was $930 million,
and adjusted diluted net income per share was $4.30.
Adjusted net income attributable to DaVita HealthCare Partners Inc.
for the quarter ended December 31,
2014, excluding the amortization of intangible assets
associated with acquisitions, net of tax, was $236 million, and adjusted diluted net income per
share was $1.09. Adjusted net
income attributable to DaVita HealthCare Partners Inc. for the year
ended December 31, 2014, excluding
the amortization of intangible assets and additional certain other
non-GAAP measures was $896 million,
and adjusted diluted net income per share was $4.13.
See schedules of reconciliations of non-GAAP measures.
- Volume: Total U.S. dialysis treatments for the
fourth quarter of 2015 were 6,649,227, or 84,061 treatments per
day, representing a per day increase of 3.2% over the fourth
quarter of 2014. Normalized non-acquired treatment growth in the
fourth quarter of 2015 as compared to the fourth quarter of 2014
was 3.7%.
The number of member months for which HCP provided care during the
fourth quarter of 2015 was approximately 2.4 million, of which 0.9
million, 1.1 million and 0.4 million related to Medicare,
commercial and Medicaid members, respectively.
- Effective Tax Rate: Our effective tax rate was
76.4% and 40.9% for the quarter and year ended December 31, 2015, respectively. The effective
tax rate attributable to DaVita HealthCare Partners Inc. was 105.7%
and 52.2% for the quarter and year ended December 31, 2015, respectively. This effective
tax rate is impacted by non-deductible non-cash goodwill impairment
charges, the non-deductible portion of the estimated pharmacy
accrual, as well as, the amount of third-party owners' income
attributable to non-tax paying entities.
The adjusted effective tax rate attributable to DaVita HealthCare
Partners Inc. for the quarter ended December
31, 2015, excluding estimated non-cash goodwill and other
intangible asset impairment charges and an estimated accrual for
damages and liabilities associated with our pharmacy business, was
36.0%. In addition, the adjusted effective tax rate attributable to
DaVita HealthCare Partners Inc. for the year ended December 31, 2015, further excluding a settlement
charge related to the Vainer private civil suit, was 38.2%.
We currently expect our 2016 effective tax rate attributable to
DaVita HealthCare Partners Inc. to be approximately 40.0% to
41.0%.
- Center Activity: As of December 31, 2015, we provided dialysis services
to a total of approximately 190,000 patients at 2,369 outpatient
dialysis centers, of which 2,251 centers are located in
the United States and 118 centers
are located in ten countries outside of the United States. During the fourth quarter
of 2015, we opened a total of 26 new dialysis centers and sold one
dialysis center in the United
States. We also acquired 14 dialysis centers and opened one
new dialysis center outside of the United
States.
- Share Repurchases: During the quarter ended
December 31, 2015, we repurchased a
total of 2,156,951 shares of our common stock for $151 million, or an average price of $69.86 per share. During the year ended
December 31, 2015, we repurchased
7,779,958 shares of our common stock for $575 million, at an average price of $73.96 per share.
In addition, we also repurchased 3,689,738 shares of our common
stock for $249 million, at an average
price of $67.61 per share, during
January 2016. As a result of these
transactions we now have approximately $259
million remaining under our current board authorization for
share repurchases.
Outlook
- We expect our consolidated operating income for 2016 to be in
the range of $1.800 billion to $1.950
billion.
- We expect our operating income for Kidney Care for 2016 to be
in the range of $1.625 billion to $1.725
billion.
- We expect our operating income for HCP for 2016 to be in the
range of $175 million to $225
million.
- We expect our consolidated operating cash flows for 2016 to be
in the range of $1.550 billion to $1.750
billion.
These projections and the underlying assumptions involve
significant risks and uncertainties, including those described
below, and do not give effect to potential non-recurring items, and
actual results may vary significantly from these current
projections.
We will be holding a conference call to discuss our results for
the fourth quarter ended December 31,
2015 on February 11, 2016 at
5:00 p.m. Eastern Time. To join the
conference call, please dial (877) 918-6630 from the U.S. or (212)
547-0235 from outside the U.S. A replay of the conference call will
be available on our website at
investors.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 2016 consolidated
operating income, our 2016 Kidney Care operating income, HCP's 2016
operating income, our 2016 consolidated operating cash flows, our
2016 effective tax rate attributable to DaVita HealthCare Partners
Inc. and our estimated charges and accruals and anticipated timing
of the completion of the valuation of certain HCP reporting units.
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 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,
- risks of losing 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.
|
|
DAVITA HEALTHCARE
PARTNERS INC.
|
|
CONSOLIDATED
STATEMENTS OF OPERATIONS
|
|
(unaudited)
|
|
(dollars in
thousands, except per share data)
|
|
|
|
|
Three
months ended
December 31,
|
Year ended
December 31,
|
|
2015
|
2014
|
2015
|
2014
|
|
Patient service
revenues.........................................................................................................................
|
$ 2,430,851
|
$ 2,324,458
|
$ 9,480,279
|
$ 8,868,338
|
|
Less: Provision for
uncollectible
accounts..............................................................................................
|
(113,279)
|
(96,664)
|
(427,860)
|
(366,884)
|
|
Net patient service
revenues........................................................................................................
|
2,317,572
|
2,227,794
|
9,052,419
|
8,501,454
|
|
Capitated
revenues..................................................................................................................................
|
865,543
|
825,808
|
3,509,095
|
3,261,288
|
|
Other
revenues........................................................................................................................................
|
350,474
|
274,415
|
1,220,323
|
1,032,364
|
|
Total net
revenues.........................................................................................................................
|
3,533,589
|
3,328,017
|
13,781,837
|
12,795,106
|
|
Operating expenses
and charges:
|
|
|
|
|
|
Patient care costs and
other
costs................................................................................................
|
2,515,131
|
2,366,461
|
9,824,834
|
9,119,305
|
|
General and
administrative.............................................................................................................
|
408,882
|
355,987
|
1,452,135
|
1,261,506
|
|
Depreciation and
amortization........................................................................................................
|
163,330
|
153,253
|
638,024
|
590,935
|
|
Provision for
uncollectible
accounts...............................................................................................
|
2,743
|
4,773
|
9,240
|
14,453
|
|
Equity investment
income................................................................................................................
|
(7,601)
|
(4,542)
|
(18,325)
|
(23,234)
|
|
Goodwill and other
intangible asset impairment charges
|
206,169
|
—
|
210,234
|
—
|
|
Settlement charge and
loss contingency
accrual...........................................................................
|
—
|
—
|
495,000
|
17,000
|
|
Total operating
expenses and
charges................................................................................
|
3,288,654
|
2,875,932
|
12,611,142
|
10,979,965
|
|
Operating
income.......................................................................................................................................
|
244,935
|
452,085
|
1,170,695
|
1,815,141
|
|
Debt
expense............................................................................................................................................
|
(103,259)
|
(97,949)
|
(408,380)
|
(410,294)
|
|
Debt redemption and
refinancing
charges.................................................................................................
|
—
|
—
|
(48,072)
|
(97,548)
|
|
Other income,
net......................................................................................................................................
|
4,631
|
229
|
8,893
|
2,374
|
|
Income before income
taxes......................................................................................................................
|
146,307
|
354,365
|
723,136
|
1,309,673
|
|
Income tax
expense...................................................................................................................................
|
111,833
|
103,977
|
295,726
|
446,343
|
|
Net
income.................................................................................................................................................
|
34,474
|
250,388
|
427,410
|
863,330
|
|
Less: Net income
attributable to noncontrolling
interests................................................................
|
(40,474)
|
(42,368)
|
(157,678)
|
(140,216)
|
|
Net (loss) income
attributable to DaVita HealthCare Partners
Inc.............................................................
|
$
(6,000)
|
$ 208,020
|
$ 269,732
|
$
723,114
|
|
Earnings per
share:
|
|
|
|
|
|
Basic net (loss)
income per share attributable to DaVita
HealthCare Partners
Inc..................................................................................................................
|
$
(0.03)
|
$
0.98
|
$
1.27
|
$
3.41
|
|
Diluted net (loss)
income per share attributable to DaVita
HealthCare Partners
Inc..................................................................................................................
|
$
(0.03)
|
$
0.96
|
$
1.25
|
$
3.33
|
|
Weighted average
shares for earnings per share:
|
|
|
|
|
|
Basic................................................................................................................................................
|
208,762,717
|
212,941,850
|
211,867,714
|
212,301,827
|
|
Diluted..............................................................................................................................................
|
208,762,717
|
217,620,369
|
216,251,807
|
216,927,681
|
|
|
|
DAVITA HEALTHCARE
PARTNERS INC.
|
|
CONSOLIDATED
STATEMENTS OF COMPREHENSIVE INCOME
|
|
(unaudited)
|
|
(dollars in
thousands)
|
|
|
|
|
Three months
ended
December
31,
|
Year
ended
December
31,
|
|
2015
|
2014
|
2015
|
2014
|
|
Net
income.......................................................................................................................................................................
|
$ 34,474
|
$ 250,388
|
$ 427,410
|
$ 863,330
|
|
Other comprehensive
(loss) income, net of tax:
|
|
|
|
|
|
Unrealized losses on
interest rate swap and cap agreements:
|
|
|
|
|
|
Unrealized losses on
interest rate swap and cap
agreements.......................................................................
|
(2,177)
|
(2,882)
|
(12,241)
|
(10,059)
|
|
Reclassifications of
net swap and cap agreements realized losses into net
income.................................
|
739
|
849
|
3,111
|
10,608
|
|
Unrealized (losses)
gains on investments:
|
|
|
|
|
|
Unrealized (losses)
gains on
investments.......................................................................................................
|
(45)
|
(279)
|
(1,413)
|
238
|
|
Reclassification of
net investment realized losses into net
income.............................................................
|
(1)
|
─
|
(377)
|
(207)
|
|
Foreign currency
translation
adjustments..................................................................................................................
|
(4,007)
|
(11,081)
|
(23,889)
|
(22,952)
|
|
Other comprehensive
loss..................................................................................................................................
|
(5,491)
|
(13,393)
|
(34,809)
|
(22,372)
|
|
Total comprehensive
income........................................................................................................................................
|
28,983
|
236,995
|
392,601
|
840,958
|
|
Less: Comprehensive
income attributable to noncontrolling
interests.......................................................
|
(40,474)
|
(42,368)
|
(157,678)
|
(140,216)
|
|
Comprehensive (loss)
income attributable to DaVita HealthCare Partners
Inc....................................................
|
$ (11,491)
|
$ 194,627
|
$ 234,923
|
$ 700,742
|
|
|
DAVITA HEALTHCARE
PARTNERS INC.
|
|
CONSOLIDATED
STATEMENTS OF CASH FLOWS
|
|
(unaudited)
|
|
(dollars in
thousands)
|
|
|
|
Year ended
December 31,
|
|
2015
|
2014
|
|
Cash flows from
operating activities:
|
|
|
|
Net
income.........................................................................................................................................................
|
$
427,410
|
$
863,330
|
|
Adjustments to
reconcile net income to cash provided by operating
activities:
|
|
|
|
Settlement charge and
loss contingency
accrual......................................................................................
|
495,000
|
17,000
|
|
Depreciation and
amortization................................................................................................................
|
638,024
|
590,935
|
|
Goodwill and other
intangible asset impairment
charges........................................................................
|
210,234
|
—
|
|
Debt redemption and
refinancing
charges................................................................................................
|
48,072
|
97,548
|
|
Stock-based
compensation
expense........................................................................................................
|
56,664
|
56,743
|
|
Tax benefits from
stock award
exercises.................................................................................................
|
45,749
|
59,119
|
|
Excess tax benefits
from stock award
exercises.......................................................................................
|
(28,157)
|
(45,271)
|
|
Deferred income
taxes.............................................................................................................................
|
61,744
|
210,955
|
|
Equity investment
income,
net................................................................................................................
|
9,293
|
10,125
|
|
Other non-cash
charges...........................................................................................................................
|
44,691
|
39,274
|
|
Changes in operating
assets and liabilities, other than from acquisitions and
divestitures:
|
|
|
|
Accounts
receivable.................................................................................................................................
|
(202,867)
|
(40,676)
|
|
Inventories...............................................................................................................................................
|
(48,313)
|
(46,398)
|
|
Other receivables and
other current
assets..............................................................................................
|
32,761
|
(61,674 )
|
|
Other long-term
assets............................................................................................................................
|
3,723
|
2,916
|
|
Accounts
payable....................................................................................................................................
|
30,998
|
(2,956)
|
|
Accrued compensation
and
benefits........................................................................................................
|
54,950
|
97,261
|
|
Other current
liabilities............................................................................................................................
|
113,470
|
83,590
|
|
Settlement
payments...............................................................................................................................
|
(493,775)
|
(410,356)
|
|
Income
taxes............................................................................................................................................
|
24,175
|
(60,475)
|
|
Other long-term
liabilities........................................................................................................................
|
33,354
|
(1,583)
|
|
Net cash provided by
operating
activities....................................................................................
|
1,557,200
|
1,459,407
|
|
Cash flows from
investing activities:
|
|
|
|
Additions of property
and
equipment....................................................................................................
|
(707,998)
|
(641,330)
|
|
Acquisitions............................................................................................................................................
|
(96,469)
|
(272,094)
|
|
Proceeds from asset
and business
sales...................................................................................................
|
19,715
|
8,791
|
|
Purchase of
investments available for
sale..............................................................................................
|
(8,783)
|
(8,440)
|
|
Purchase of
investments
held-to-maturity..............................................................................................
|
(1,709,883 )
|
(472,628)
|
|
Proceeds from sale of
investments available for
sale...............................................................................
|
2,058
|
2,475
|
|
Proceeds from
investments
held-to-maturity..........................................................................................
|
1,637,358
|
141,072
|
|
Purchase of intangible
assets...................................................................................................................
|
─
|
(1,018)
|
|
Purchase of equity
investments..............................................................................................................
|
(17,911)
|
(35,382)
|
|
Distributions received
on equity
investments.........................................................................................
|
129
|
825
|
|
Net cash used in
investing
activities.............................................................................................
|
(881,784)
|
(1,277,729)
|
|
Cash flows from
financing activities:
|
|
|
|
Borrowings..............................................................................................................................................
|
54,541,988
|
60,038,508
|
|
Payments on long-term
debt and other financing
costs...........................................................................
|
(53,922,290)
|
(60,046,487)
|
|
Deferred financing
costs and debt redemption and refinancing
costs......................................................
|
(76,672)
|
(122,988)
|
|
Purchase of treasury
stock......................................................................................................................
|
(549,935)
|
—
|
|
Distributions to
noncontrolling
interests................................................................................................
|
(174,635)
|
(149,339)
|
|
Stock award exercises
and other share issuances,
net..............................................................................
|
26,155
|
19,500
|
|
Excess tax benefits
from stock award
exercises.......................................................................................
|
28,157
|
45,271
|
|
Contributions from
noncontrolling
interests...........................................................................................
|
54,644
|
64,655
|
|
Proceeds from sales of
additional noncontrolling
interests.....................................................................
|
─
|
3,777
|
|
Purchase of
noncontrolling
interests.......................................................................................................
|
(66,382)
|
(17,876)
|
|
Net cash used in
financing
activities.............................................................................................
|
(138,970)
|
(164,979)
|
|
Effect of exchange
rate changes on cash and cash
equivalents...........................................................................
|
(2,571)
|
2,293
|
|
Net increase in cash
and cash
equivalents..........................................................................................................
|
533,875
|
18,992
|
|
Cash and cash
equivalents at beginning of the
year...........................................................................................
|
965,241
|
946,249
|
|
Cash and cash
equivalents at end of the
period.................................................................................................
|
$
1,499,116
|
$
965,241
|
|
|
DAVITA HEALTHCARE
PARTNERS INC.
|
|
CONSOLIDATED
BALANCE SHEETS
|
|
(unaudited)
|
|
(dollars in
thousands, except per share data)
|
|
|
|
|
December
31,
2015
|
December
31,
2014
|
|
ASSETS
|
|
|
|
Cash and cash
equivalents.................................................................................................................................
|
$
1,499,116
|
$
965,241
|
|
Short-term
investments.......................................................................................................................................
|
408,084
|
337,399
|
|
Accounts receivable,
less allowance of $264,144 and
$242,674....................................................................
|
1,724,228
|
1,525,849
|
|
Inventories............................................................................................................................................................
|
185,575
|
136,084
|
|
Other
receivables..................................................................................................................................................
|
412,285
|
400,916
|
|
Other current
assets.............................................................................................................................................
|
190,322
|
186,842
|
|
Income tax
receivable...........................................................................................................................................
|
60,070
|
83,839
|
|
Total current
assets...................................................................................................................................
|
4,479,680
|
3,636,170
|
|
Property and
equipment,
net..............................................................................................................................
|
2,779,778
|
2,469,099
|
|
Intangibles,
net.....................................................................................................................................................
|
1,687,326
|
1,864,842
|
|
Equity
investments..............................................................................................................................................
|
73,368
|
65,637
|
|
Long-term
investments........................................................................................................................................
|
94,122
|
89,389
|
|
Other long-term
assets........................................................................................................................................
|
73,560
|
77,000
|
|
Goodwill.................................................................................................................................................................
|
9,294,479
|
9,415,295
|
|
$ 18,482,313
|
$ 17,617,432
|
|
LIABILITIES AND
EQUITY
|
|
|
|
Accounts
payable................................................................................................................................................
|
$
504,988
|
$
445,453
|
|
Other
liabilities......................................................................................................................................................
|
658,523
|
510,223
|
|
Accrued compensation
and
benefits................................................................................................................
|
741,926
|
698,475
|
|
Medical
payables.................................................................................................................................................
|
332,102
|
314,346
|
|
Current portion of
long-term
debt......................................................................................................................
|
129,037
|
120,154
|
|
Total current
liabilities..............................................................................................................................
|
2,366,576
|
2,088,651
|
|
Long-term
debt.....................................................................................................................................................
|
9,001,308
|
8,298,624
|
|
Other long-term
liabilities....................................................................................................................................
|
439,229
|
389,806
|
|
Deferred income
taxes..........................................................................................................................................
|
726,962
|
650,075
|
|
Total
liabilities............................................................................................................................................
|
12,534,075
|
11,427,156
|
|
Commitments and
contingencies:
|
|
|
|
Noncontrolling
interests subject to put
provisions.............................................................................
|
864,066
|
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; 217,120,346 and
215,640,968 shares issued and 209,754,247 and 215,640,968 shares
outstanding, respectively)...................
|
217
|
216
|
|
Additional paid-in
capital.........................................................................................................................
|
1,118,326
|
1,108,211
|
|
Retained
earnings......................................................................................................................................
|
4,356,835
|
4,087,103
|
|
Treasury stock
(7,366,099
shares)...........................................................................................................
|
(544,772)
|
—
|
|
Accumulated other
comprehensive
loss................................................................................................
|
(59,826)
|
(25,017)
|
|
Total DaVita
HealthCare Partners Inc. shareholders'
equity...................................................
|
4,870,780
|
5,170,513
|
|
Noncontrolling
interests not subject to put
provisions......................................................................
|
213,392
|
189,798
|
|
Total
equity................................................................................................................................................
|
5,084,172
|
5,360,311
|
|
$ 18,482,313
|
$ 17,617,432
|
|
|
DAVITA HEALTHCARE
PARTNERS INC.
|
|
SUPPLEMENTAL
FINANCIAL DATA
|
|
(unaudited)
|
|
(dollars in
millions, except for per share and per treatment
data)
|
|
|
|
|
Three months
ended
|
Year
ended
December
31,
2015
|
|
|
|
|
|
December
31,
2015
|
September
30,
2015
|
December
31,
2014
|
|
1. Consolidated
Financial Results:
|
|
|
|
|
|
Consolidated net
revenues................................................................................................
|
$ 3,534
|
$ 3,526
|
$ 3,328
|
$ 13,782
|
|
Operating
income..............................................................................................................
|
$ 245
|
$ 509
|
$ 452
|
$ 1,171
|
|
Adjusted operating
income excluding certain items
(1)......................................................
|
$ 474
|
$ 509
|
$ 452
|
$ 1,898
|
|
Operating income
margin..................................................................................................
|
6.9%
|
14.4%
|
13.6%
|
8.5%
|
|
Adjusted operating
income margin excluding certain items
(1)..........................................
|
13.4%
|
14.4%
|
13.6%
|
13.8%
|
|
Net (loss) income
attributable to DaVita HealthCare Partners Inc.
...................................
|
$
(6)
|
$ 216
|
$ 208
|
$ 270
|
|
Adjusted net income
attributable to DaVita HealthCare Partners Inc.
excluding
certain
items(1)..........................................................................................
|
$ 214
|
$ 216
|
$ 208
|
$ 828
|
|
Diluted net (loss)
income per share attributable to DaVita HealthCare
Partners
Inc.
.............................................................................................................
|
$ (0.03)
|
$ 1.00
|
$ 0.96
|
$ 1.25
|
|
Adjusted diluted net
income per share attributable to DaVita HealthCare Partners
Inc.
excluding
certain items
(1).........................................................................................
|
$ 1.01
|
$ 1.00
|
$ 0.96
|
$ 3.83
|
|
|
|
|
|
|
2. Consolidated
Business Metrics:
|
|
|
|
|
|
Expenses
|
|
|
|
|
|
General and
administrative expenses as a percent of consolidated net
revenues (including
the $23 million pharmacy accrual)(2)
....................................
|
11.6%
|
10.0%
|
10.7%
|
10.5%
|
|
Consolidated effective
tax rate
...................................................................................
|
76.4%
|
36.0%
|
29.3%
|
40.9%
|
|
Consolidated effective
tax rate attributable to DaVita HealthCare
Partners
Inc.(1)
.....................................................................................................
|
105.7%
|
40.5%
|
33.3%
|
52.2%
|
|
Adjusted consolidated
effective tax rate attributable to DaVita HealthCare
Partners
Inc.(1).......................................................................................................
|
36.0%
|
40.5%
|
33.3%
|
38.2%
|
|
|
|
|
|
|
3. Summary of
Division Financial Results:
|
|
|
|
|
|
Net
revenues
|
|
|
|
|
|
Kidney
Care:
|
|
|
|
|
|
Net dialysis and
related lab services
revenues.........................................................
|
$ 2,216
|
$ 2,201
|
$ 2,151
|
$ 8,642
|
|
Net ancillary services
and strategic initiatives revenues, including
international dialysis
operations............................................................................
|
398
|
345
|
309
|
1,382
|
|
Elimination of
intersegment
revenues......................................................................
|
(22)
|
(21)
|
(14)
|
(79)
|
|
Total Kidney Care net
revenues......................................................................
|
2,592
|
2,525
|
2,446
|
9,945
|
|
Net HCP
revenues......................................................................................................
|
942
|
1,001
|
882
|
3,837
|
|
Total net consolidated
revenues......................................................................
|
$ 3,534
|
$ 3,526
|
$ 3,328
|
$ 13,782
|
|
Operating
income
|
|
|
|
|
|
Kidney
Care:
|
|
|
|
|
|
Dialysis and related
lab services operating
income.................................................
|
$
464
|
$
462
|
$ 443
|
$ 1,260
|
|
Other – Ancillary
services and strategic initiatives, including
international dialysis
operations operating
loss.................................................
|
(34)
|
(30)
|
(19)
|
(104)
|
|
Corporate support and
related long-term incentive
compensation.........................
|
(4)
|
(6)
|
(5)
|
(19)
|
|
Total Kidney Care
operating
income..............................................................
|
426
|
426
|
419
|
1,137
|
|
HCP operating (loss)
income......................................................................................
|
(181)
|
83
|
33
|
34
|
|
Total consolidated
operating
income..............................................................
|
$ 245
|
$ 509
|
$ 452
|
$ 1,171
|
|
|
|
|
DAVITA HEALTHCARE
PARTNERS INC.
|
|
SUPPLEMENTAL
FINANCIAL DATA—continued
|
|
(unaudited)
|
|
(dollars in
millions, except for per share and per treatment
data)
|
|
|
|
|
Three months
ended
|
Year
ended
December
31,
2015
|
|
|
|
|
|
December
31,
2015
|
September 30,
2015
|
December
31,
2014
|
|
4. Summary of
Reportable Segment Financial Results:
|
|
|
|
|
|
Dialysis and
Related Lab Services
|
|
|
|
|
|
Revenue:
|
|
|
|
|
|
Patient services
revenues.........................................................................................
|
$ 2,316
|
$ 2,301
|
$ 2,243
|
$ 9,034
|
|
Provision for
uncollectible
accounts.......................................................................
|
(104)
|
(103)
|
(95)
|
(406)
|
|
Net patient service
operating
revenues..........................................................
|
2,212
|
2,198
|
2,148
|
8,628
|
|
Other
revenues...........................................................................................................
|
4
|
3
|
3
|
14
|
|
Total net operating
revenues...........................................................................
|
$ 2,216
|
$ 2,201
|
$ 2,151
|
$ 8,642
|
|
Operating
expenses:
|
|
|
|
|
|
Patient care
costs.......................................................................................................
|
$ 1,462
|
$ 1,461
|
$ 1,415
|
$ 5,755
|
|
General and
administrative........................................................................................
|
181
|
170
|
192
|
709
|
|
Depreciation and
amortization..................................................................................
|
112
|
112
|
105
|
438
|
|
Equity investment
income.........................................................................................
|
(3)
|
(4)
|
(4)
|
(15)
|
|
Settlement
charge.......................................................................................................
|
─
|
─
|
─
|
495
|
|
Total operating
expenses..................................................................................
|
1,752
|
1,739
|
1,708
|
7,382
|
|
Segment operating
income........................................................................................
|
464
|
462
|
443
|
1, 260
|
|
Reconciliation
for non-GAAP measure:
|
|
|
|
|
|
Add: Settlement
charge.........................................................................................
|
─
|
─
|
─
|
495
|
|
Adjusted segment
operating
income......................................................................
|
$
464
|
$ 462
|
$ 443
|
$ 1,755
|
|
|
|
|
|
|
HCP
|
|
|
|
|
|
Revenue:
|
|
|
|
|
|
HCP capitated
revenues............................................................................................
|
$
850
|
$ 907
|
$ 808
|
$ 3,437
|
|
Patient services
revenues.........................................................................................
|
80
|
84
|
56
|
333
|
|
Provision for
uncollectible
accounts.......................................................................
|
(4)
|
(5)
|
(1)
|
(15)
|
|
Net patient service
operating
revenues..........................................................
|
76
|
79
|
55
|
318
|
|
Other
revenues...........................................................................................................
|
16
|
15
|
19
|
82
|
|
Total net operating
revenues...........................................................................
|
$
942
|
$ 1,001
|
$ 882
|
$ 3,837
|
|
Operating
expenses:
|
|
|
|
|
|
Patient care
costs.......................................................................................................
|
$ 757
|
$ 768
|
$ 717
|
$ 3,006
|
|
General and
administrative........................................................................................
|
121
|
106
|
90
|
421
|
|
Depreciation and
amortization..................................................................................
|
44
|
43
|
43
|
174
|
|
Goodwill and other
intangible asset impairment
charges.....................................
|
206
|
—
|
—
|
206
|
|
Equity investment
(income)
loss..............................................................................
|
(5)
|
1
|
(1)
|
(4)
|
|
Total operating
expenses..................................................................................
|
1,123
|
918
|
849
|
3,803
|
|
Segment operating
(loss)
income.............................................................................
|
(181)
|
83
|
33
|
34
|
|
Reconciliation
for non-GAAP measure:
|
|
|
|
|
|
Add: Goodwill and
other intangible asset impairment charges.........................
….
|
206
|
─
|
─
|
206
|
|
Adjusted segment
operating
income......................................................................
|
$
25
|
$
83
|
$
33
|
$ 240
|
|
|
DAVITA HEALTHCARE
PARTNERS INC.
|
|
SUPPLEMENTAL
FINANCIAL DATA—continued
|
|
(unaudited)
|
|
(dollars in
millions, except for per share and per treatment
data)
|
|
|
|
|
Three months
ended
|
Year
ended
December
31,
2015
|
|
December
31,
2015
|
September
30,
2015
|
December
31,
2014
|
|
5. Dialysis and
Related Lab Services Business Metrics:
|
|
|
|
|
|
Volume
|
|
|
|
|
|
Treatments..........................................................................................................................
|
6,649,227
|
6,611,799
|
6,465,826
|
25,986,719
|
|
Number of treatment
days..................................................................................................
|
79.1
|
79.0
|
79.4
|
312.7
|
|
Treatments per
day............................................................................................................
|
84,061
|
83,694
|
81,434
|
83,104
|
|
Per day year over year
increase.......................................................................................
|
3.2%
|
4.2%
|
6.2%
|
4.1%
|
|
Normalized
non-acquired growth year over
year..........................................................
|
3.7%
|
3.5%
|
4.6%
|
3.9%
|
|
Operating
revenues before provision for uncollectible
accounts
|
|
|
|
|
|
Dialysis and related
lab services revenue per
treatment..........................................
|
$ 348.26
|
$ 348.01
|
$ 346.95
|
$ 347.64
|
|
Per treatment increase
(decrease) from previous
quarter.........................................
|
0.1%
|
(0.1%)
|
1.7%
|
|
|
Per treatment increase
from previous
year.................................................................
|
0.4%
|
2.0%
|
2.0%
|
1.6%
|
|
Percent of net
consolidated
revenues.........................................................................
|
62.3%
|
62.0%
|
64.4%
|
62.3%
|
|
Expenses
|
|
|
|
|
|
Patient care
costs
|
|
|
|
|
|
Percent of total
segment operating net
revenues......................................................
|
66.0%
|
66.4%
|
65.8%
|
66.6%
|
|
Per
treatment...................................................................................................................
|
$ 219.86
|
$ 220.92
|
$ 218.81
|
$ 221.46
|
|
Per treatment decrease
from previous
quarter...........................................................
|
(0.5%)
|
(0.6%)
|
(0.1%)
|
|
|
Per treatment increase
from previous
year.................................................................
|
0.5%
|
0.8%
|
0.9%
|
0.9%
|
|
General and
administrative expenses
|
|
|
|
|
|
Percent of total
segment operating net
revenues......................................................
|
8.2%
|
7.7%
|
8.9%
|
8.2%
|
|
Per
treatment...................................................................................................................
|
$ 27.21
|
$ 25.78
|
$ 29.75
|
$ 27.28
|
|
Per treatment increase
(decrease) from previous
quarter.........................................
|
5.5%
|
(4.5%)
|
10.8%
|
|
|
Per treatment decrease
from previous
year................................................................
|
(8.5%)
|
(4.0%)
|
(1.5%)
|
(0.1%)
|
|
Accounts
receivable
|
|
|
|
|
|
Net
receivables...............................................................................................................
|
$ 1,255
|
$ 1,243
|
$ 1,157
|
|
|
DSO..................................................................................................................................
|
53
|
51
|
50
|
|
|
Provision for
uncollectible accounts as a percentage of
revenues........................
|
4.5%
|
4.5%
|
4.25%
|
4.5%
|
|
|
|
|
|
|
6. HCP Business
Metrics:
|
|
|
|
|
|
Capitated
membership
|
|
|
|
|
|
Total
members....................................................................................................................
|
807,400
|
808,300
|
837,000
|
|
|
Total member
months
|
|
|
|
|
|
Medicare.............................................................................................................................
|
951,500
|
950,100
|
928,400
|
3,774,300
|
|
Commercial..........................................................................................................................
|
1,109,900
|
1,120,600
|
1,165,700
|
4,497,900
|
|
Medicaid.............................................................................................................................
|
367,100
|
374,600
|
408,700
|
1,556,400
|
|
Total member
months.................................................................................................
|
2,428,500
|
2,445,300
|
2,502,800
|
9,828,600
|
|
Capitated
revenues by sources
|
|
|
|
|
|
Commercial
revenues........................................................................................................
|
$ 184
|
$ 181
|
$
174
|
$
727
|
|
Senior
revenues.................................................................................................................
|
607
|
641
|
573
|
2,473
|
|
Medicaid
revenues............................................................................................................
|
59
|
85
|
61
|
237
|
|
Total capitated
revenues...........................................................................................
|
$ 850
|
$ 907
|
$
808
|
$ 3,437
|
|
Other
|
|
|
|
|
|
Total care dollars
under
management(1).........................................................................
|
$ 1,213
|
$ 1,260
|
$ 1,165
|
$ 4,952
|
|
Ratio of operating
(loss) income to total care dollars under
management(1)............
|
(14.9%)
|
6.6%
|
2.8%
|
0.7%
|
|
Full time
clinicians.............................................................................................................
|
1,315
|
1,311
|
1,156
|
|
|
IPA primary care
physicians............................................................................................
|
2,937
|
2,935
|
3,331
|
|
|
|
DAVITA HEALTHCARE
PARTNERS INC.
|
|
SUPPLEMENTAL
FINANCIAL DATA—continued
|
|
(unaudited)
|
|
(dollars in
millions, except for per share and per treatment
data)
|
|
|
|
|
Three months
ended
|
Year
ended
December
31,
2015
|
|
|
|
|
|
December
31,
2015
|
September
30,
2015
|
December
31,
2014
|
|
7. Cash
Flow:
|
|
|
|
|
|
Operating cash
flow.........................................................................................................
|
$ 436.7
|
$ 679.0
|
$ (70.0)
|
$ 1,557.2
|
|
Operating cash flow,
last twelve
months.....................................................................
|
$ 1,557.2
|
$ 1,050.5
|
$ 1,459.4
|
|
|
Free cash
flow(1)...............................................................................................................
|
$ 256.2
|
$ 556.6
|
$ (197.0)
|
$ 1,055.5
|
|
Free cash flow, last
twelve
months(1)............................................................................
|
$ 1,055.5
|
$ 602.3
|
$ 1,045.1
|
|
|
Capital
expenditures:
|
|
|
|
|
|
Routine
maintenance/IT/other................................................................................
|
$ 131.8
|
$ 75.5
|
$ 82.8
|
$ 327.1
|
|
Development and
relocations..................................................................................
|
$ 114.0
|
$ 95.8
|
$ 115.0
|
$ 380.9
|
|
Acquisition
expenditures.........................................................................................
|
$
5.8
|
$ 45.7
|
$ 54.0
|
$ 96.5
|
|
|
|
|
|
|
8. Debt and
Capital Structure:
|
|
|
|
|
|
Total
debt(3).......................................................................................................................
|
$ 9,226
|
$ 9,211
|
$ 8,520
|
|
|
Net debt, net of cash
and cash
equivalents(3).............................................................
|
$ 7,727
|
$ 8,164
|
$ 7,555
|
|
|
Leverage ratio (see
calculation on page
14).................................................................
|
2.95x
|
2.93x
|
2.97x
|
|
|
Overall weighted
average effective interest rate during the
quarter........................
|
4.40%
|
4.40%
|
4.46%
|
|
|
Overall weighted
average effective interest rate at end of the
quarter....................
|
4.39%
|
4.40%
|
4.46%
|
|
|
Weighted average
effective interest rate on the Senior Secured
Credit Facilities at
end of the
quarter........................................................................
|
3.50%
|
3.50%
|
3.43%
|
|
|
Fixed and economically
fixed interest rates as a percentage of
our total
debt.............................................................................................................
|
61%(4)
|
61%(4)
|
58%(4)
|
|
|
Fixed and economically
fixed interest rates, including our
interest rate cap
agreements, as a percentage of our total
debt.............................
|
90%(4)
|
90%(4)
|
90%(4)
|
|
|
|
|
|
|
|
9. Clinical:
(quarterly averages)
|
|
|
|
|
|
Dialysis adequacy -%
of patients with Kt/V > 1.2 at the end of the
quarter...........
|
97%
|
97%
|
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, and for a definition of adjusted
amounts, 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, long-term incentive compensation, as well as the
estimated pharmacy accrual.
|
|
|
(3) The reported balance
sheet amounts at December 31, 2015, September 30, 2015 and December
31, 2014, excludes $96.0 million, $100.0 million and $100.9
million, respectively, of a debt discount associated with our Term
Loan B and other deferred financing costs.
(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 $713 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.
|
Year
ended
December 31,
2015
|
|
Net income
attributable to DaVita HealthCare Partners
Inc................................................................
|
$
269,732
|
|
Income
taxes...............................................................................................................................................
|
295,726
|
|
Interest
expense.........................................................................................................................................
|
382,522
|
|
Depreciation and
amortization.................................................................................................................
|
638,024
|
|
Settlement
charge......................................................................................................................................
|
495,000
|
|
Goodwill and other
intangible asset impairment
charges....................................................................
|
210,234
|
|
Noncontrolling
interests and equity investment income,
net.............................................................
|
172,525
|
|
Stock-settled
stock-based
compensation..............................................................................................
|
56,899
|
|
Debt redemption
charges.........................................................................................................................
|
48,072
|
|
Other
...........................................................................................................................................................
|
(28,600)
|
|
"Consolidated
EBITDA"..................................................................................................................
|
$
2,540,134
|
|
|
|
December 31,
2015
|
|
Total debt, excluding
debt discount and other deferred financing costs of $96.0
million..............
|
$
9,226,330
|
|
Letters of credit
issued.............................................................................................................................
|
93,524
|
|
9,319,854
|
|
Less: Cash and cash
equivalents including short-term investments (excluding HCP's
physician owned entities
cash)..........................................................................................................
|
(1,816,709)
|
|
Consolidated net
debt...............................................................................................................................
|
$
7,503,145
|
|
Last twelve months
"Consolidated
EBITDA"......................................................................................
|
$
2,540,134
|
|
Leverage
ratio.............................................................................................................................................
|
2.95x
|
In accordance with the Credit Agreement, the Company's
leverage ratio cannot exceed 5.00 to 1.00 as of December 31, 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
estimated non-cash goodwill and other intangible asset impairment
charges, an estimated pharmacy accrual, debt redemption and
refinancing charges, a loss contingency accrual and a
settlement charge, net of related tax.
We believe that adjusted net income attributable to DaVita
HealthCare Partners Inc. excluding estimated non-cash goodwill and
other intangible asset impairment charges, an estimated accrual for
damages and liabilities associated with our pharmacy business, debt
redemption and refinancing charges, a loss contingency accrual and
settlement charge, net of related tax, 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 estimated non-cash goodwill and other
intangible asset impairment charges, primarily related to certain
HCP reporting units, an estimated accrual for damages and
liabilities associated with our pharmacy business, 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, a loss contingency accrual related to the 2010 and 2011
U.S. Attorney physician relationship investigations, and a
settlement charge related to the Vainer private civil suit, net of
related tax, 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
estimated non-cash goodwill and other intangible asset
impairment charges, an estimated accrual for damages and
liabilities associated with our pharmacy business, debt
redemption and refinancing charges, a loss contingency accrual
related to the 2010 and 2011 U.S. Attorney physician relationship
investigations, and a settlement charge related to the Vainer suit,
net of related tax:
|
Three months
ended
|
Year
ended
|
|
December
31,
2015
|
September
30,
2015
|
December
31,
2014
|
December
31,
2015
|
December
31,
2014
|
|
Net (loss) income
attributable to DaVita HealthCare Partners Inc. .....
|
$ (6,000)
|
$ 215,872
|
$ 208,020
|
$ 269,732
|
$ 723,114
|
|
Add:
|
|
|
|
|
|
|
Goodwill and other
intangible asset impairment charges..............
|
206,169
|
─
|
─
|
210,234
|
─
|
|
Pharmacy
accrual.................................................................................
|
22,530
|
─
|
─
|
22,530
|
─
|
|
Debt redemption and
refinancing
charges.......................................
|
─
|
─
|
─
|
48,072
|
97,548
|
|
Loss contingency
accrual..................................................................
|
─
|
─
|
─
|
─
|
17,000
|
|
Settlement
charge................................................................................
|
─
|
─
|
─
|
495,000
|
─
|
|
Less: Related
income
tax............................................................................
|
(8,643)
|
─
|
─
|
(217,781)
|
(46,095)
|
|
$ 214,056
|
$ 215,872
|
$ 208,020
|
$ 827,787
|
$ 791,567
|
|
|
|
|
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 estimated non-cash goodwill and other intangible
asset impairment charges, an estimated accrual for damages and
liabilities associated with our pharmacy business, debt redemption
and refinancing charges, a loss contingency accrual related to the
2010 and 2011 U.S. Attorney physician relationship investigations,
and a settlement charge related to the Vainer suit:
|
Three months
ended
|
Year
ended
|
|
December
31,
2015
(1)
|
September
30,
2015
|
December
31,
2014
|
December
31,
2015
|
December
31,
2014
|
|
Diluted net (loss)
income per share attributable to
DaVita HealthCare Partners
Inc.......................................
|
$ (0.03)
|
$ 1.00
|
$ 0.96
|
$ 1.25
|
$ 3.33
|
|
Add:
|
|
|
|
|
|
|
Goodwill and other
intangible asset impairment charges..............
|
0.94
|
─
|
─
|
0.94
|
─
|
|
Pharmacy
accrual.................................................................................
|
0.10
|
─
|
─
|
0.10
|
─
|
|
Debt redemption and
refinancing
charges.......................................
|
─
|
─
|
─
|
0.13
|
0.26
|
|
Loss contingency
accrual..................................................................
|
─
|
─
|
─
|
─
|
0.05
|
|
Settlement
charge................................................................................
|
─
|
─
|
─
|
1.41
|
─
|
|
$ 1.01
|
$ 1.00
|
$ 0.96
|
$ 3.83
|
$ 3.64
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) Adjusted diluted net
income per share attributable to DaVita HealthCare Partners Inc.
for the three months ended December 31, 2015 is calculated using
212,777,826 shares, which includes shares that would be dilutive
based on adjusted net income attributable to DaVita HealthCare
Partners Inc. of $214,056, excluding estimated non-cash goodwill
and other intangible asset impairment charges and an estimated
accrual for damages and liabilities associated with our pharmacy
business.
|
|
|
|
|
|
|
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, and accordingly is
indicative of consistent adjusted 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, net
of tax:
|
Three months
ended
|
Year
ended
|
|
December
31,
2015
|
September
30,
2015
|
December
31,
2014
|
December
31,
2015
|
December
31,
2014
|
|
Adjusted net income
attributable to DaVita HealthCare Partners Inc.
.......................................................................
|
$ 214,056
|
$ 215,872
|
$ 208,020
|
$ 827,787
|
$ 791,567
|
|
Add:
|
|
|
|
|
|
|
Amortization of
intangible assets associated with acquisitions for the dialysis and
ancillary operations.............
|
3,992
|
6,285
|
6,468
|
23,185
|
26,721
|
|
Amortization of
intangible assets associated with acquisitions for the HCP
operations........................
|
35,727
|
35,911
|
35,792
|
143,354
|
141,218
|
|
Less: Related income
tax........................................................
|
(14,418)
|
(17,089)
|
(14,073)
|
(64,001)
|
(63,985)
|
|
$ 239,357
|
$ 240,979
|
$ 236,207
|
$ 930,325
|
$ 895,521
|
|
|
|
|
|
|
|
Adjusted diluted net
income per share attributable to DaVita HealthCare Partners
Inc.......................................
|
$ 1.01
|
$ 1.00
|
$ 0.96
|
$ 3.83
|
$ 3.64
|
|
Add:
|
|
|
|
|
|
|
Amortization of
intangible assets per share associated with acquisitions for the
dialysis and ancillary operations, net of
tax..................................
|
0.01
|
0.02
|
0.02
|
0.06
|
0.08
|
|
Amortization of
intangible assets per share associated with acquisitions for the
HCP operations, net of
tax..................................................
|
0.10
|
0.10
|
0.11
|
0.41
|
0.41
|
|
$ 1.12
|
$ 1.12
|
$ 1.09
|
$ 4.30
|
$ 4.13
|
DAVITA HEALTHCARE PARTNERS
INC.
RECONCILIATIONS FOR NON-GAAP
MEASURES
(unaudited)
(dollars in
thousands)
2. Adjusted operating income excluding estimated
non-cash goodwill and other intangible asset impairment charges, an
estimated pharmacy accrual, a loss contingency accrual and a
settlement charge.
We believe that adjusted operating income excluding estimated
non-cash goodwill and other intangible asset impairment charges, an
estimated accrual for damages and liabilities associated with our
pharmacy business, a loss contingency accrual and a 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 unusual amounts related to estimated non-cash
goodwill and other intangible asset impairment charges primarily
related to certain HCP reporting units, an estimated accrual
for damages and liabilities associated with our pharmacy business,
a loss contingency accrual related to the 2010 and 2011 U.S.
Attorney physician relationship investigations, as well as a
settlement charge related to the Vainer private civil suit and
accordingly, are comparable to prior periods and indicative of
consistent operating income. We have also presented adjusted
operating income by reportable segment excluding a settlement
charge related to the Vainer private civil suit, a loss contingency
accrual related to the 2010 and 2011 U.S. Attorney physician
relationship investigations, and estimated non-cash goodwill and
other intangible asset impairment charges. In addition, we have
also presented adjusted operating income of the Kidney Care
division excluding the settlement charge, a goodwill impairment
charge and the pharmacy accrual. We believe these measures enhance
a user's understanding of our normal operating income by reportable
segment for these periods by providing a measure that is meaningful
because it excludes unusual amounts related to the settlement
charge, a loss contingency accrual, and the non-cash goodwill and
other intangible asset impairment charges, primarily related to
certain HCP reporting units. These measures are not measures of
financial performance under GAAP and should not be considered as an
alternative to operating income.
|
Adjusted operating
income excluding estimated non-cash goodwill and other intangible
asset impairment charges, an estimated accrual for damages and
liabilities associated with our pharmacy business, a loss
contingency accrual related to the 2010 and 2011 U.S. Attorney
physician relationship investigations, and a settlement charge
related to the Vainer suit:
|
Three months
ended
|
Year
ended
|
|
December
31,
2015
|
September
30,
2015
|
December
31,
2014
|
December
31,
2015
|
December
31,
2014
|
|
Operating
income.......................................................................................
|
$ 244,935
|
$ 509,368
|
$ 452,085
|
$ 1,170,695
|
$ 1,815,141
|
|
Add:
|
|
|
|
|
|
|
Goodwill and other
intangible asset impairment charges..............
|
206,169
|
─
|
─
|
210,234
|
─
|
|
Pharmacy
accrual.................................................................................
|
22,530
|
─
|
─
|
22,530
|
─
|
|
Loss contingency
accrual..................................................................
|
─
|
─
|
─
|
─
|
17,000
|
|
Settlement
charge................................................................................
|
─
|
─
|
─
|
495,000
|
─
|
|
Adjusted operating
income......................................................................
|
$ 473,634
|
$ 509,368
|
$ 452,085
|
$ 1,898,459
|
$ 1,832,141
|
|
|
DAVITA HEALTHCARE
PARTNERS INC.
|
|
RECONCILIATIONS
FOR NON-GAAP MEASURES
|
|
(unaudited)
|
|
(dollars in
thousands)
|
|
|
|
|
Adjusted operating
income by reportable segment excluding a settlement charge related
to the Vainer suit, a loss contingency accrual related to the 2010
and 2011 U.S. Attorney physician relationship investigations, and
estimated non-cash goodwill and other intangible asset impairment
charges:
|
Three months
ended
|
Year
ended
|
|
December
31,
2015
|
September
30,
2015
|
December
31,
2014
|
December
31,
2015
|
December
31,
2014
|
|
Dialysis and
related lab services reportable segment:
|
|
|
|
|
|
|
Segment operating
income................................................................................
|
$ 464,378
|
$ 461,899
|
$ 442,752
|
$ 1,259,632
|
$ 1,637,626
|
|
Add:
|
|
|
|
|
|
|
Settlement
charge................................................................................
|
—
|
—
|
—
|
495,000
|
—
|
|
Loss contingency
accrual..................................................................
|
—
|
—
|
—
|
—
|
17,000
|
|
Adjusted operating
income...............................................................................
|
$ 464,378
|
$ 461,899
|
$ 442,752
|
$ 1,754,632
|
$ 1,654,626
|
|
HCP reportable
segment:
|
|
|
|
|
|
|
Segment operating
(loss)
income.....................................................................
|
$ (181,263)
|
$ 82,562
|
$ 32,642
|
$ 33,929
|
$ 214,983
|
|
Add: Goodwill and
other intangible asset impairment charges...........
|
206,169
|
—
|
—
|
206,169
|
—
|
|
Adjusted operating
income...............................................................................
|
$ 24,906
|
$ 82,562
|
$ 32,642
|
$ 240,098
|
$ 214,983
|
|
|
|
|
DAVITA HEALTHCARE
PARTNERS INC.
|
|
RECONCILIATIONS
FOR NON-GAAP MEASURES
|
|
(unaudited)
|
|
(dollars in
thousands)
|
|
|
|
|
Adjusted operating
income of the Kidney Care division and its related components
excluding a settlement charge related to the Vainer suit, an
estimated accrual for damages and liabilities associated with our
pharmacy business, and a non-cash goodwill impairment
charge:
|
|
Year
ended
December
31,
2015
|
|
Kidney
Care:
|
|
|
Dialysis and
related lab services
|
|
|
Dialysis and related
lab services operating
income.....................................................................................................
|
$1,259,632
|
|
Add: Settlement
charge....................................................................................................................................
|
495,000
|
|
Adjusted dialysis and
related lab operating
income.........................................................................................
|
1,754,632
|
|
Other ancillary
services and strategic initiatives and international
operations
|
|
|
Other ancillary
services and strategic initiatives operating
losses..............................................................................
|
(44,991)
|
|
Add:
Pharmacy
accrual...................................................................................................................................
|
22,530
|
|
Adjusted other
ancillary services and strategic initiatives operating
losses.....................................................
|
(22,461)
|
|
International
operating
losses.....................................................................................................................................
|
(58,910)
|
|
Add: Goodwill
impairment
charge..................................................................................................................
|
4,066
|
|
Adjusted international
operating
losses...........................................................................................................
|
(54,844)
|
|
Adjusted total other
ancillary services and strategic initiatives operating
losses...............................
|
(77,305)
|
|
Corporate support
costs
|
|
|
Corporate
support......................................................................................................................................................
|
(18,966)
|
|
Adjusted total Kidney
Care operating
income............................................................................................................................
|
$1,658,361
|
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 estimated non-cash goodwill and
other intangible asset impairment charges, an estimated accrual for
damages and liabilities associated with our pharmacy business, and
a settlement charge related to 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
estimated non-cash goodwill and other intangible asset impairment
charges primarily related to certain HCP reporting units, an
estimated accrual for damages and liabilities associated with our
pharmacy business and a settlement charge related to the Vainer
suit, and, therefore, are 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
|
Year
ended
December
31,
2015
|
|
|
|
|
|
December
31,
2015
|
September
30,
2015
|
December
31,
2014
|
|
Income before income
taxes.................................................................
|
$ 146,307
|
$ 408,371
|
$ 354,365
|
$ 723,136
|
|
Income tax
expense................................................................................
|
$ 111,833
|
$ 147,064
|
$ 103,977
|
$ 295,726
|
|
Effective income tax
rate.......................................................................
|
76.4%
|
36.0%
|
29.3%
|
40.9%
|
|
Three months
ended
|
Year
ended
December
31,
2015
|
|
|
|
|
|
December
31,
2015
|
September
30,
2015
|
December
31,
2014
|
|
Income before income
taxes.................................................................
|
$ 146,307
|
$ 408,371
|
$ 354,365
|
$ 723,136
|
|
Less:
Noncontrolling owners' income primarily attributable to
non-tax paying
entities.............................................................
|
(40,587)
|
(45,559)
|
(42,495)
|
(158,304)
|
|
Income before income
taxes attributable to DaVita HealthCare
Partners
Inc...................................................................................
|
$ 105,720
|
$ 362,812
|
$ 311,870
|
$ 564,832
|
|
|
|
|
|
|
Income tax
expense.............................................................................
|
$ 111,833
|
$ 147,064
|
$ 103,977
|
$ 295,726
|
|
Less: Income tax
attributable to noncontrolling interests...............
|
(113)
|
(124)
|
(127)
|
(626)
|
|
Income tax expense
attributable to DaVita HealthCare Partners
Inc.
..........................................................................................
|
$ 111,720
|
$ 146,940
|
$ 103,850
|
$ 295,100
|
|
|
|
|
|
|
Effective income tax
rate attributable to DaVita HealthCare
Partners Inc.
............................................................................
|
105.7%
|
40.5%
|
33.3%
|
52.2%
|
|
|
DAVITA HEALTHCARE
PARTNERS INC.
|
|
RECONCILIATIONS
FOR NON-GAAP MEASURES
|
|
(unaudited)
|
|
(dollars in
thousands)
|
|
Year
ended
December
31,
2015
|
|
|
|
Adjusted effective
income tax rates attributable to DaVita HealthCare Partners Inc.
excluding estimated non-cash goodwill and other intangible asset
impairment charges, an estimated accrual for damages and
liabilities associated with our pharmacy business, and a
settlement charge related to the Vainer suit:
|
Three months
ended
|
|
December
31,
2015
|
September
30,
2015
|
December
31,
2014
|
|
Income before income
taxes............................................................................
|
$ 146,307
|
$ 408,371
|
$ 354,365
|
$ 723,136
|
|
Add:
|
|
|
|
|
|
Goodwill and other
intangible asset impairment charges..............
|
206,169
|
─
|
─
|
210,234
|
|
Pharmacy
accrual.................................................................................
|
22,530
|
─
|
─
|
22,530
|
|
Settlement
charge................................................................................
|
─
|
─
|
─
|
495,000
|
|
375,006
|
408,371
|
354,365
|
1,450,900
|
|
Less:
Noncontrolling owners' income primarily attributable to non-tax
paying
entities....................................................................................
|
(40,587)
|
(45,559)
|
(42,495)
|
(158,304)
|
|
Adjusted income
before income taxes attributable to DaVita HealthCare Partners
Inc..................................................................................................
|
$ 334,419
|
$ 362,812
|
$ 311,870
|
$1,292,596
|
|
|
|
|
|
|
Income tax
expense..........................................................................................
|
$ 111,833
|
$ 147,064
|
$ 103,977
|
$ 295,726
|
|
Add:
|
|
|
|
|
|
Income taxes
attributable to the goodwill and other intangible asset impairment
charges......................................................
|
6,647
|
─
|
─
|
6,647
|
|
Income taxes
attributable to the pharmacy
accrual........................
|
1,996
|
─
|
─
|
1,996
|
|
Income taxes
attributable to the settlement
charge........................
|
─
|
─
|
─
|
190,246
|
|
Less: Income tax
attributable to noncontrolling
interests..........................
|
(113)
|
(124)
|
(127)
|
(626)
|
|
Adjusted income tax
attributable to DaVita HealthCare Partners Inc......
|
$ 120,363
|
$ 146,940
|
$ 103,850
|
$ 493,989
|
|
Adjusted effective
income tax rate attributable to DaVita HealthCare Partners
Inc..................................................................................................
|
36.0%
|
40.5%
|
33.3%
|
38.2%
|
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
acquisitions 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, in each
case. 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
|
Year
ended
December
31,
2015
|
|
|
|
|
|
December
31,
2015
|
September
30,
2015
|
December
31,
2014
|
|
Cash provided by
operating
activities..................................................
|
$ 436,673
|
$ 678,996
|
$ (69,991)
|
$ 1,557,200
|
|
Less:
Distributions to noncontrolling
interests.................................
|
(48,697)
|
(46,898)
|
(44,196)
|
(174,635)
|
|
Cash provided by
(used in) operating activities attributable to DaVita HealthCare
Partners Inc.
......................................................
|
387,976
|
632,098
|
(114,187)
|
1,382,565
|
|
Less: Expenditures
for routine maintenance and information
technology..................................................................................
|
(131,769)
|
(75,543)
|
(82,811)
|
(327,079)
|
|
Free cash
flow...........................................................................................
|
$ 256,207
|
$ 556,555
|
$ (196,998)
|
$ 1,055,486
|
|
Rolling 12-Month
Period
|
|
December
31,
2015
|
September
30,
2015
|
December
31,
2014
|
|
Cash provided by
operating
activities..................................................................
|
$ 1,557,200
|
$ 1,050,536
|
$ 1,459,407
|
|
Less:
Distributions to noncontrolling
interests.................................................
|
(174,635)
|
(170,134)
|
(149,339)
|
|
Cash provided by
operating activities attributable to DaVita HealthCare Partners
Inc..........................................................................................................
|
1,382,565
|
880,402
|
1,310,068
|
|
Less: Expenditures
for routine maintenance and information technology......
|
(327,079)
|
(278,121)
|
(264,972)
|
|
Free cash
flow...........................................................................................................
|
$ 1,055,486
|
$ 602,281
|
$ 1,045,096
|
|
Three months
ended
|
Year
ended
December
31,
2015
|
|
|
|
|
December
31,
2015
|
December
31,
2014
|
|
Cash provided by
(used in) operating
activities.................................................
|
$ 436,673
|
$ (69,991)
|
$ 1,557,200
|
|
Payment in connection
with the settlement of the Vainer
suit..........................
|
—
|
—
|
493,775
|
|
Payment in connection
with the settlement of the 2010 and 2011 U.S. Attorney physician
relationship
investigations............................................
|
—
|
410,356
|
—
|
|
Related tax
benefit....................................................................................................
|
—
|
(141,487)
|
(190,246)
|
|
Adjusted operating
cash
flow................................................................................
|
$ 436,673
|
$ 198,878
|
$ 1,860,729
|
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
and health plans, 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 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 for the periods indicated.
|
Three months
ended
|
Year
ended
December
31,
2015
|
|
|
|
|
|
December
31,
2015
|
September
30,
2015
|
December
31,
2014
|
|
Medical
revenues.......................................................................
|
$ 925,764
|
$ 985,483
|
$ 863,555
|
$ 3,754,713
|
|
Less: Risk share
revenue,
net...................................................
|
(44,134)
|
(70,752)
|
(12,805)
|
(145,968)
|
|
Add: Institutional
capitation amounts....................................
|
331,736
|
345,550
|
314,100
|
1,342,849
|
|
Total care dollars
under management......................................
|
$ 1,213,366
|
$ 1,260,281
|
$ 1,164,850
|
$ 4,951,594
|
Contact:
Jim Gustafson
Investor Relations
DaVita HealthCare Partners Inc.
(310) 536-2585
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SOURCE DaVita HealthCare Partners Inc.