DaVita Inc. Reports 2nd Quarter 2002 Results
PRNewswire-FirstCall
TORRANCE, Calif.
DaVita Inc.
Net earnings for the three and six months ended June 30, 2002 were $8 million and $44 million, or $0.13 and $0.54 per share, respectively. Net earnings, excluding the following three items: cash recoveries, valuation gains of $2.4 million and a $29 million after-tax extraordinary loss related to the early extinguishment of debt, were $35 million and $70 million, or $0.41 and $0.79 per share, respectively.
Financial and operating highlights include:
-- For the rolling 12 months ended June 30, 2002 operating cash flow was
$248 million and free cash flow was $200 million; both exclude
recoveries and settlements. Operating cash flow for the quarter was
$61 million and free cash flow was $43 million.
-- Total continental U.S. treatments for the second quarter were
1,486,816. Both non-acquired and same center treatment growth were
4.5%.
-- Second quarter continental U.S. dialysis revenue per treatment
(excluding lab, management fees and other revenue) was essentially
flat from the first quarter at $291 and up 5.3% from the second quarter
of 2001.
-- The continental EBITDA margin was 21.0%, a 130 basis point decline from
the prior year quarter as a result of increased costs, primarily labor
and general and administrative expenses.
-- Continental U.S. DSO remained at 73 days.
-- Cash recoveries associated with accounts receivable reserved in 1999
for the three and six months ended June 30, 2002, were $2 million and
$4 million, respectively.
-- On April 26, 2002, we entered into a new senior credit facility. The
proceeds were used to pay off all amounts outstanding under the
existing credit facility, to complete a tender for the Company's
outstanding $225 million 9 1/4% senior subordinated notes, to purchase
16.7 million shares of the Company's common stock, through a modified
Dutch auction tender offer, at $24.00 per share, and to purchase shares
of the Company's common stock in the open market following the
completion of the tender.
-- At June 30, 2002 we operated 493 outpatient centers in the continental
U.S. serving approximately 44,000 patients. During the second quarter
we closed 1 under-performing center and opened 2 denovo centers.
Included in this patient and center count are approximately
3,300 patients in 30 centers under management. Effective June 1, 2002,
we completed the divestiture of our two remaining non-continental
units.
DaVita will hold a conference call to discuss its second quarter 2002 results on August 1, 2002 at 1:30 p.m. Eastern. The dial-in number is 800-399-4406. A replay of the conference call will be available on DaVita's official web page, http://www.davita.com/, for the following 30 days.
This release contains forward-looking statements. Factors which could impact future results include the uncertainties associated with governmental regulation, general economic and other market conditions, and the risk factors set forth in the Company's SEC filings, including its Form 10-Q for the quarter ended March 31, 2002. The forward-looking statements should be considered in light of these risks and uncertainties.
These risks include those relating to:
-- possible reductions in private and government reimbursement rates,
-- the concentration of profits generated from PPO and private indemnity
patients and from ancillary services including the administration of
pharmaceuticals,
-- changes in pharmaceutical practice patterns or reimbursement policies,
-- the ongoing review of the Company's Florida laboratory subsidiary by
its Medicare carrier and the Department of Justice,
-- the ongoing review by the US Attorney's Office and HHS Office of
Inspector General in Philadelphia and
-- the Company's ability to maintain contracts with physician medical
directors.
DAVITA INC.
CONSOLIDATED BALANCE SHEETS
(unaudited)
(dollars in thousands, except per share data)
June 30, December 31,
2002 2001
ASSETS
Cash and cash equivalents $137,020 $36,711
Accounts receivable,
less allowance of $54,765 and $52,475 347,064 333,546
Inventories 31,769 34,901
Other current assets 13,852 9,364
Deferred income taxes 61,607 60,142
Total current assets 591,312 474,664
Property and equipment, net 267,335 252,778
Amortizable intangibles, net 67,987 73,108
Investments in third-party dialysis businesses 3,449 4,346
Other long-term assets 1,876 2,027
Goodwill 852,691 855,760
$1,784,650 $1,662,683
LIABILITIES AND SHAREHOLDERS' EQUITY
Accounts payable $77,374 $74,630
Other liabilities 98,739 111,164
Accrued compensation and benefits 94,880 88,826
Current portion of long-term debt 8,299 9,034
Income taxes payable 11,036 15,027
Total current liabilities 290,328 298,681
Long-term debt 1,316,153 811,190
Other long-term liabilities 6,077 5,012
Deferred income taxes 37,045 23,441
Minority interests 21,613 20,722
Shareholders' equity:
Preferred stock ($0.001 par value;
5,000,000 shares authorized;
none issued or outstanding)
Common stock ($0.001 par value,
195,000,000 shares authorized;
88,033,939 and 85,409,037 shares issued) 88 85
Additional paid-in capital 507,788 467,904
Retained earnings 100,356 56,008
Treasury stock, at cost
(20,716,437 and 888,700 shares) (494,798) (20,360)
Total shareholders' equity 113,434 503,637
$1,784,650 $1,662,683
DAVITA INC.
CONSOLIDATED STATEMENTS OF INCOME
(unaudited)
(dollars in thousands, except per share data)
Three months ended Six months ended
June 30, June 30,
2002 2001 2002 2001
Net operating revenues $442,677 $400,640 $870,342 $786,857
Operating expenses:
Dialysis centers and labs 300,552 271,545 592,186 532,519
General and administrative 42,024 32,417 78,077 64,230
Depreciation
and amortization 15,698 26,624 31,503 52,772
Provision for
uncollectible accounts 5,882 (378) 11,137 (8,563)
Valuation adjustments (2,390) (2,390)
Total
operating expenses 361,766 330,208 710,513 640,958
Operating income 80,911 70,432 159,829 145,899
Other income, net 3,283 1,120 3,848 2,468
Debt expense 17,139 18,715 32,211 38,439
Minority interests in income
of consolidated subsidiaries (2,827) (2,269) (5,260) (4,726)
Income before income taxes
and extraordinary item 64,228 50,568 126,206 105,202
Income tax expense 26,500 22,000 52,500 45,700
Income before
extraordinary item 37,728 28,568 73,706 59,502
Extraordinary (loss)/gain
related to early
extinguishment of debt,
net of tax of $19,572 in 2002
and $652 in 2001 (29,358) 977 (29,358) 977
Net income $8,370 $29,545 $44,348 $60,479
Basic earnings per common share:
Income before
extraordinary item $0.47 $0.34 $0.91 $0.72
Extraordinary (loss)/
gain, net of tax (0.37) 0.01 (0.36) 0.01
Net income $0.10 $0.35 $0.55 $0.73
Diluted earnings per common share:
Income before
extraordinary item $0.43 $0.32 $0.83 $0.67
Extraordinary (loss)/
gain, net of tax (0.30) 0.01 (0.29) 0.01
Net income $0.13 $0.33 $0.54 $0.68
DAVITA INC.
SUPPLEMENTAL FINANCIAL DATA
Q2 2002 Q1 2002 Q2 2001 YTD 2002
Financial Results:
Net Earnings, excluding
extraordinary items,
recoveries, valuation
adjustments and goodwill
amortization (in 000's) (A) $35,100 $34,600 $29,500 $69,800
Basic EPS $0.44 $0.42 $0.35 $0.86
EPS assuming dilution $0.41 $0.39 $0.33 $0.79
EBITDA, excluding recoveries
and valuation adjustments
Consolidated (in 000's) $92,300 $92,500 $88,100 $184,800
Continental U.S. (in 000's) $92,700 $91,900 $88,500 $184,600
Continental EBITDA margin 21.0% 21.7% 22.3% 21.4%
Business Metrics (Continental U.S.):
Category #1 Volume
Treatments 1,486,816 1,433,803 1,409,320 2,920,618
Per day sequential increase 1.6% 0.8% 2.2% --
Per day year
over year increase 5.5% 6.2% 5.5% 5.8%
Same center growth 4.5% 4.2% 2.8% 4.4%
Non-acquired growth 4.5% 4.2% 2.8% 4.4%
Category #2 Revenue, excluding recoveries
Revenue (in 000's) $441,000 $424,000 $397,000 $864,000
Dialysis revenue
per treatment $290.52 $290.45 $275.87 $290.49
Per treatment increase
from previous quarter 0% 2.6% 0.6% --
Per treatment increase
from prior year 5.3% 5.9% -- 5.6%
Category #3 Expenses
A. Dialysis centers
and lab operating expenses
Percent of revenue 67.7% 68.0% 67.5% 67.8%
Per treatment $200.46 $201.02 $190.04 $200.73
Per treatment increase
(decrease) from
previous quarter (0.3%) 3.6% 1.0% --
B. General & administrative
Percent of revenue 9.5% 8.5% 8.2% 9.0%
Per treatment $28.26 $25.14 $23.00 $26.73
Per treatment increase
(decrease) from
previous quarter 12.4% 10.2% (1.2%) --
C. Bad debt expense
as a percent of revenue 1.8% 1.8% 2.0% 1.8%
D. Consolidated
effective tax rate 41.2% 42.0% 43.5% 41.6%
Category #4 Cash Flow (Consolidated, in 000's)
Operating cash flow $61,000 $85,000 $77,000 $146,000
Free cash flow (before
share repurchase,
acquisition and
development spending) $43,000 $77,000 $68,000 $119,000
Capital expenditures:
Development $9,300 $8,200 $3,200 $17,500
Routine
maintenance/IT/other $18,400 $8,400 $8,700 $26,800
Acquisition
expenditures, net -- $1,400 $500 $1,400
Category #5 Accounts Receivable
Net receivables (in 000's) $347,000 $337,000 $291,000 $347,000
DSO 73 73 68 --
Category #6 Debt/Capital Structure (Consolidated)
Total debt (in 000's) $1,324,000 $800,000 $951,000 $1,324,000
Net debt,
net of cash (in 000's) $1,187,000 $769,000 $865,000 $1,187,000
LTM leverage ratio 3.2x 2.1x 2.6x 3.2x
Shares repurchased (in 000's) 16,900 2,900 -- 19,800
Average repurchase price $24.08 $23.02 -- $23.93
Category #7 Clinical
Dialysis adequacy
- % of patients
with URR > 65 89% 88% -- --
Dialysis adequacy
- % of patients
with Kt/V > 1.2 92% 92% -- --
Anemia measure
- % of patients
with HCT > 33 80% 79% -- --
(A) Effective January 1, 2002 goodwill is no longer amortized in
accordance with new accounting standards. Second quarter 2001 net
earnings and per-share amounts, including goodwill amortization but
excluding extraordinary items and recoveries, were $23.2 million or
$0.28 basic EPS and $0.26 diluted EPS.
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SOURCE: DaVita Inc.
CONTACT: LeAnne Zumwalt, Investor Relations of DaVita Inc.,
+1-310-750-2072
Web site: http://www.davita.com/