Document
false0000927066 0000927066 2019-11-05 2019-11-05

 
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

 Form 8-K 

 CURRENT REPORT
 Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
 
Date of Report (date of earliest event reported): November 5, 2019
 

 
DAVITA INC.
(Exact name of registrant as specified in its charter)
 
DE
1-14106
51-0354549
(State or other jurisdiction
of incorporation)
(Commission File Number)
(IRS Employer
Identification No.)
 
2000 16th Street
Denver,
CO
80202
(Address of principal executive offices including Zip Code)
 
(720) 631-2100
(Registrant’s telephone number, including area code)
 
Not applicable
(Former name or former address, if changed since last report)

 
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 240.425)
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Securities registered pursuant to Section 12(b) of the Act:
Title of each class:
 
Trading symbol(s):
 
Name of each exchange on which registered:
Common Stock, $0.001 par value
 
DVA
 
New York Stock Exchange
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐






Item 2.02. Results of Operations and Financial Condition.
 
On November 5, 2019, DaVita Inc. (the "Company") issued a press release announcing its financial results for the three and nine months ended September 30, 2019. A copy of the press release is furnished as Exhibit 99.1 to this report.
 
The information contained in this Item 2.02 (including Exhibit 99.1 attached hereto) is being furnished and shall not be deemed to be “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section and shall not be incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such filing.
 
Item 5.02. Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
    
On November 5, 2019, Peter Grauer, a member of the Board of Directors (the “Board”) of the Company since 1994 and the Company’s lead independent director since 2003, notified the Board that he plans to retire from the Board and therefore will not stand for re-election at the Company’s 2020 Annual Meeting of Stockholders (the “2020 Annual Meeting”). Mr. Grauer conveyed that he believes it is an appropriate time for him to retire from the Board in light of the Company’s completion of its Chief Executive Officer transition effective June 1, 2019, and the sale of its DaVita Medical Group division on June 19, 2019. Mr. Grauer has indicated his intention to continue to serve as a director of the Company until the expiration of his current term at the 2020 Annual Meeting and that his decision not to stand for re-election at the Annual Meeting was not due to any disagreement with the Company.

Item 9.01. Financial Statements and Exhibits.
 
(d) Exhibits.
 
 
 
Exhibit
Number
Description
Press Release dated November 5, 2019 announcing the registrant’s financial results for the three and nine months ended September 30, 2019.
104.0
Cover Page Interactive Data File - the cover page XBRL tags are embedded within the Inline XBRL document.





SIGNATURES
 
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
 
 
DAVITA INC.
 
 
 
Date: November 5, 2019
By:
/s/ James K. Hilger
 
 
James K. Hilger
 
 
Chief Accounting Officer




Exhibit


https://cdn.kscope.io/586ccbe8e1c13896f7da406340239c56-davitalogorgbfa59.jpg


Contact:        Jim Gustafson
Investor Relations                    
DaVita Inc.
(310) 536-2585

DaVita Inc. 3rd Quarter 2019 Results
Denver, Colorado, November 5, 2019 — DaVita Inc. (NYSE: DVA) today announced results for the quarter ended September 30, 2019.
Third quarter 2019 financial and operational highlights:
Consolidated revenues of $2.904 billion.
Operating income of $378 million and adjusted operating income of $462 million.
Cash flows from continuing operations of $648 million.
Entered into a new $5.5 billion senior secured credit agreement and redeemed our 5.75% senior notes.
Repurchased 30,591,750 shares of our common stock at an average cost of $57.14 per share.

 
Three months ended
September 30,
 
Nine months ended
September 30,
 
2019
 
2018
 
2019
 
2018
Net income attributable to DaVita Inc.:
(dollars in millions, except per share data)
 
Net income from continuing operations
$
150

 
$
73

 
$
465

 
$
464

 
Per share
$
0.99

 
$
0.44

 
$
2.87

 
$
2.66

 
Adjusted net income from continuing operations(1)
$
232

 
$
93

 
$
588

 
$
467

 
Per share adjusted(1)
$
1.53

 
$
0.56

 
$
3.64

 
$
2.68

 
Net income (loss)
$
143

 
$
(137
)
 
$
566

 
$
309

 
Per share
$
0.95

 
$
(0.82
)
 
$
3.50

 
$
1.77

 
Three months ended
September 30,
 
Nine months ended
September 30,
 
2019
 
2018
 
2019
 
2018
Operating income:
(dollars in millions)
 
Operating income
$
378

 
$
289

 
$
1,181

 
$
1,138

 
Adjusted operating income(1)
$
462

 
$
314

 
$
1,306

 
$
1,143

 
(1) 
For the definitions of non-GAAP financial measures see the note titled “Note on Non-GAAP Financial Measures” and related reconciliations beginning at page 14.
Certain items impacting the quarter:
Debt transactions: On August 12, 2019, we entered into a new $5.5 billion senior secured credit agreement consisting of a $1.75 billion senior secured Term Loan A facility with a delayed draw feature, a $2.75 billion senior secured Term Loan B facility and a $1.0 billion senior secured revolving line of credit. As of September 30, 2019, the new Term Loan A and Term Loan B were fully drawn and the new revolving line of credit remained undrawn. We used the proceeds from the new

1



senior secured credit facilities to pay off the remaining balances outstanding on our previous senior secured credit facilities, redeem our 5.75% senior notes due 2022 and pay related redemption fees, and fund our modified "Dutch auction" tender offer (Tender Offer) to purchase shares of our common stock as further described below, as well as to repurchase additional shares of our common stock through open market transactions. The remaining debt borrowings added cash to our balance sheet for potential acquisitions, share repurchases and other general corporate purposes.
As a result of the debt transactions described above, we recorded debt refinancing and redemption charges of $21 million in the third quarter of 2019. These charges consist of write-offs of old debt discount and deferred financing costs, as well as the redemption premium associated with our 5.75% senior notes and professional fees.
Share repurchases: The following table summarizes repurchases of our common stock during the three and nine months ended September 30, 2019.
 
Three months ended September 30, 2019
 
Nine months ended September 30, 2019
 
Shares repurchased
 
Amount paid
(in millions)
 
Average amount
 
Shares repurchased
 
Amount paid
(in millions)
 
Average amount
Tender Offer(1)
21,801,975

 
$
1,234

 
$
56.60

 
21,801,975

 
$
1,234

 
$
56.60

Open market repurchases
8,789,775

 
514

 
58.49

 
10,849,751

 
626

 
57.72

 
30,591,750

 
$
1,748

 
$
57.14

 
32,651,726

 
$
1,860

 
$
56.97

 
(1)
The amount paid for shares repurchased associated with the Company's Tender Offer during the three and nine months ended September 30, 2019 includes the clearing price of $56.50 per share plus related fees and expenses of $2 million.
In addition to the share repurchases described above, we have also repurchased 4,283,376 shares of our common stock for $246 million at an average cost of $57.32 per share from October 1, 2019 through November 4, 2019. Effective November 4, 2019, our Board of Directors terminated all remaining prior share repurchase authorizations available to us and approved a new share repurchase authorization of $2 billion.
Non-GAAP adjustments to operating income:
Goodwill impairment charge: During the quarter ended September 30, 2019, we recognized a non-cash goodwill impairment charge of $79 million in our Germany kidney care business as a result of continuing developments in the business and our expected timing and ability to mitigate them. This charge included a $17 million increase to the goodwill impairment charge due to the deferred tax assets that the impairment itself generated. The result was a $79 million goodwill impairment charge to operating income, a $17 million credit to tax expense, and a net $62 million impact on net income. We also recognized a $5 million goodwill impairment charge in our other German health operations.
Financial and operating metrics:
 
Three months ended
September 30,
 
Twelve months ended
September 30,
 
2019
 
2018
 
2019
 
2018
Cash flow:
(dollars in millions)
 
Operating cash flow
$
641

 
$
458

 
$
1,781

 
$
1,727

 
Operating cash flow from continuing operations
$
648

 
$
362

 
$
1,602

 
$
1,460

 
Free cash flow from continuing operations(1)
$
437

 
$
115

 
$
722

 
$
498

 
(1) 
For the definitions of non-GAAP financial measures see the note titled “Note on Non-GAAP Financial Measures” and related reconciliations beginning at page 14.
Volume: Total U.S. dialysis treatments for the third quarter of 2019 were 7,673,191, or an average of 97,129 treatments per day, representing a per day increase of 2.7% over the third quarter of 2018. Normalized non-acquired treatment growth in the third quarter of 2019 as compared to the third quarter of 2018 was 2.2%.
Effective income tax rate: Our effective income tax rate on income from continuing operations was 23.8% and 24.3% for the three and nine months ended September 30, 2019, respectively. This effective income tax rate was impacted by the amount of third party owners' income attributable to non-tax paying entities. The effective income tax rate on income from

2



continuing operations attributable to DaVita Inc. was 30.3% and 29.8% for the three and nine months ended September 30, 2019, respectively.
Our effective income tax rate on income from continuing operations attributable to DaVita Inc. for the three and nine months ended September 30, 2019 was further impacted by the write-off of deferred financing costs, other debt costs and goodwill impairment charges. Excluding these items from the three and nine months ended September 30, 2019, our effective income tax rate on adjusted income from continuing operations attributable to DaVita Inc. would have been 27.6% and 28.4% for the three and nine months ended September 30, 2019, respectively.
Center activity: As of September 30, 2019, we provided dialysis services to a total of approximately 233,300 patients at 2,985 outpatient dialysis centers, of which 2,736 centers were located in the United States and 249 centers were located in nine countries outside of the United States. During the third quarter of 2019, we opened a total of 24 new dialysis centers, acquired two dialysis centers and closed 13 dialysis centers in the United States. In addition, we opened one new dialysis center, acquired two dialysis centers and closed two dialysis centers outside of the United States during the third quarter of 2019.
Outlook:
The following forward-looking measures and the underlying assumptions involve significant risks and uncertainties, including those described below, and actual results may vary significantly from these current forward-looking measures. We do not provide guidance for consolidated operating income, diluted net income from continuing operations per share attributable to DaVita Inc. or effective tax rate on income from continuing operations on a GAAP basis nor a reconciliation of forward-looking non-GAAP financial measures to the most directly comparable GAAP financial measures on a forward-looking basis because we are unable to predict certain items contained in the GAAP measures without unreasonable efforts. These non-GAAP financial measures do not include certain items, including goodwill impairment charges and foreign currency fluctuations, any of which may be significant. The guidance for effective income tax rate on adjusted income from continuing operations attributable to DaVita Inc. also excludes the write-off of deferred financing costs, other debt costs and the amount of third party owners' income and related taxes attributable to non-tax paying entities.
 
Current 2019 guidance
 
Prior 2019 guidance
 
Low
 
High
 
Low
 
High
 
(dollars in millions)
Adjusted operating income
$
1,740

 
$
1,770

 
$
1,640

 
$
1,700

Operating cash flow from continuing operations
$
1,525

 
$
1,675

 
$
1,450

 
$
1,625

Capital expenditures from continuing operations
$
740

 
$
780

 
$
800

 
$
840

Effective income tax rate on adjusted income from
 continuing operations attributable to DaVita Inc.
28.5
%
 
29.5
%
 
28.5
%
 
29.5
%

 
Current 2020 guidance
 
Prior 2020 guidance
 
Low
 
High
 
Low
 
High
 
(dollars in millions, except per share)
Adjusted diluted net income from continuing
 operations per share attributable to DaVita Inc.
$
5.25

 
$
5.75

 
$
5.00

 
$
5.50

Capital expenditures from continuing operations
$
700

 
$
750

 
$
700

 
$
750


We will be holding a conference call to discuss our results for the third quarter ended September 30, 2019, on November 5, 2019, at 5:00 p.m. Eastern Time. To join the conference call, please dial (877) 918-6630 from the U.S. or (517) 308-9042 from outside the U.S., and provide the operator the password 'Earnings'. A replay of the conference call will be available on our website at investors.davita.com for the following 30 days.

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DaVita Inc. and its representatives may from time to time make written and oral forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995 (“PSLRA”), including statements in this release, filings with the Securities and Exchange Commission (“SEC”), reports to stockholders and in meetings with investors and analysts. All such statements in this release, during the related presentation or other meetings, other than statements of historical fact, are forward-looking statements and as such are intended to be covered by the safe harbor for “forward-looking statements” provided by the PSLRA. Without limiting the foregoing, statements including the words “expect,” “intend,” “will,” “plan,” “anticipate,” “believe,” “we are confident that,” “forecast,” “guidance,” “outlook,” “goals,” and similar expressions are intended to identify forward-looking statements.
The forward-looking statements should be considered in light of these risks and uncertainties. All forward-looking statements in this release are based solely on information available to us on the date of this release. We undertake no obligation to publicly update or revise any of our guidance, the assessment of the underlying assumptions or other forward-looking statements, whether as a result of changed circumstances, new information, future events or otherwise.
These forward-looking statements could include but are not limited to statements related to our guidance and expectations for future periods and the assumptions underlying any such projections.
Our actual results and other events could differ materially from any forward-looking statements due to numerous factors that involve substantial known and unknown risks and uncertainties. These risks and uncertainties include, among other things:
the concentration of profits generated by higher-paying commercial payor plans for which there is continued downward pressure on average realized payment rates, and a reduction in the number of patients under such plans, including as a result of restrictions or prohibitions on the use and/or availability of charitable premium assistance, which may result in the loss of revenues or patients, or our making incorrect assumptions about how our patients will respond to any change in financial assistance from charitable organizations;
the extent to which the ongoing implementation of healthcare reform, or changes in or new legislation, regulations or guidance, enforcement thereof or related litigation, and the extent to which such developments result in a reduction in coverage or reimbursement rates for our services, a reduction in the number of patients enrolled in higher-paying commercial plans, or other material impacts to our business;
a reduction in government payment rates under the Medicare End Stage Renal Disease program or other government-based programs and the impact of the Medicare Advantage benchmark structure;
risks arising from potential and proposed federal and/or state legislation, regulation, ballot, executive action or other initiatives, including such initiatives related to healthcare and/or labor matters;
the impact of the political environment and related developments on the current healthcare marketplace and on our business, including with respect to the future of the Affordable Care Act, the exchanges and many other core aspects of the current health care marketplace;
changes in pharmaceutical practice patterns, reimbursement and payment policies and processes, or pharmaceutical pricing, including with respect to calcimimetics;
legal and compliance risks, such as our continued compliance with complex government regulations;
continued increased competition from dialysis providers and others, and other potential marketplace changes;
our ability to maintain contracts with physician medical directors, changing affiliation models for physicians, and the emergence of new models of care introduced by the government or private sector that may erode our patient base and reimbursement rates, such as accountable care organizations, independent practice associations and integrated delivery systems;
our ability to complete acquisitions, mergers or dispositions that we might announce or be considering, on terms favorable to us or at all, or to integrate and successfully operate any business we may acquire or have acquired, or to successfully expand our operations and services in markets outside the United States, or to businesses outside of dialysis;
uncertainties related to potential payments and/or adjustments under certain provisions of the equity purchase agreement for the sale of our DaVita Medical Group business, such as post-closing adjustments and indemnification obligations;
noncompliance by us or our business associates with any privacy or security laws or any security breach by us or a third party involving the misappropriation, loss or other unauthorized use or disclosure of confidential information;
the variability of our cash flows; the risk that we may not be able to generate sufficient cash in the future to service our indebtedness or to fund our other liquidity needs; and the risk that we may not be able to refinance our indebtedness as it becomes due, on terms favorable to us or at all;

4



factors that may impact our ability to repurchase stock under our stock repurchase program and the timing of any such stock repurchases, as well as our use of a considerable amount of available funds to repurchase stock;
risks arising from the use of accounting estimates, judgments and interpretations in our financial statements;
impairment of our goodwill, investments or other assets;
uncertainties related to our use of the proceeds from the DaVita Medical Group sale transaction and other available funds, including external financing and cash flow from operations, which may be or have been used in ways that we cannot assure will improve our results of operations or enhance the value of our common stock; and
uncertainties associated with the other risk factors set forth in our Quarterly Report on Form 10-Q for the quarter ended June 30, 2019 as updated by our Quarterly Report on Form 10-Q for the quarter ended September 30, 2019, and the other risks and uncertainties discussed in any subsequent reports that we file or furnish with SEC from time to time.

5



DAVITA INC.
CONSOLIDATED STATEMENTS OF INCOME
(unaudited)
(dollars in thousands, except per share data)
 
Three months ended
September 30,
 
Nine months ended
September 30,
 
2019
 
2018
 
2019
 
2018
Dialysis and related lab patient service revenues
$
2,781,169

 
$
2,670,701

 
$
8,150,386

 
$
7,980,178

Provision for uncollectible accounts
(3,977
)
 
(11,977
)
 
(19,689
)
 
(35,838
)
Net dialysis and related lab patient service revenues
2,777,192

 
2,658,724

 
8,130,697

 
7,944,340

Other revenues
126,886

 
188,606

 
359,198

 
639,387

Total revenues
2,904,078

 
2,847,330

 
8,489,895

 
8,583,727

Operating expenses and charges:
 

 
 

 
 

 
 

Patient care costs
1,991,172

 
2,063,770

 
5,913,860

 
6,168,444

General and administrative
298,736

 
336,299

 
824,887

 
866,922

Depreciation and amortization
155,915

 
146,000

 
456,685

 
435,878

Provision for uncollectible accounts

 
800

 

 
(7,300
)
Equity investment (income) loss
(3,936
)
 
3,824

 
(11,158
)
 
(6,126
)
Investment and other asset impairments

 
6,093

 

 
17,338

Goodwill impairment charges
83,855

 

 
124,892

 
3,106

Loss (gain) on changes in ownership interest, net

 
1,506

 

 
(32,451
)
Total operating expenses and charges
2,525,742

 
2,558,292

 
7,309,166

 
7,445,811

Operating income
378,336

 
289,038

 
1,180,729

 
1,137,916

Debt expense
(88,589
)
 
(125,927
)
 
(351,774
)
 
(359,135
)
Debt prepayment, refinancing and redemption charges
(21,242
)
 

 
(33,402
)
 

Other income, net
5,280

 
4,007

 
17,863

 
10,583

Income from continuing operations before income taxes
273,785

 
167,118

 
813,416

 
789,364

Income tax expense
65,254

 
52,047

 
197,938

 
206,652

Net income from continuing operations
208,531

 
115,071

 
615,478

 
582,712

Net (loss) income from discontinued operations, net of tax
(6,843
)
 
(211,739
)
 
102,854

 
(147,829
)
Net income (loss)
201,688

 
(96,668
)
 
718,332

 
434,883

Less: Net income attributable to noncontrolling interests
(58,418
)
 
(40,128
)
 
(152,222
)
 
(125,717
)
Net income (loss) attributable to DaVita Inc.
$
143,270

 
$
(136,796
)
 
$
566,110

 
$
309,166

Earnings per share attributable to DaVita Inc.:
 

 
 

 
 

 
 

Basic net income from continuing operations per share
$
1.00

 
$
0.44

 
$
2.88

 
$
2.69

Basic net income (loss) per share
$
0.95

 
$
(0.82
)
 
$
3.51

 
$
1.79

Diluted net income from continuing operations per share
$
0.99

 
$
0.44

 
$
2.87

 
$
2.66

Diluted net income (loss) per share
$
0.95

 
$
(0.82
)
 
$
3.50

 
$
1.77

Weighted average shares for earnings per share:
 
 
 
 
 

 
 

Basic
150,675,465

 
166,770,664

 
161,147,122

 
172,403,944

Diluted
151,295,950

 
167,262,358

 
161,636,011

 
174,348,421

Amounts attributable to DaVita Inc.:
 
 
 
 
 
 
 
Net income from continuing operations
$
150,113

 
$
73,371

 
$
464,590

 
$
463,989

Net (loss) income from discontinued operations
(6,843
)
 
(210,167
)
 
101,520

 
(154,823
)
Net income (loss) attributable to DaVita Inc.
$
143,270

 
$
(136,796
)
 
$
566,110

 
$
309,166


6



DAVITA INC.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(unaudited)
(dollars in thousands)
 
 
Three months ended
September 30,
 
Nine months ended
September 30,
 
2019
 
2018
 
2019
 
2018
Net income (loss)
$
201,688

 
$
(96,668
)
 
$
718,332

 
$
434,883

Other comprehensive income (loss), net of tax:
 

 
 

 
 

 
 

Unrealized (losses) gains on interest rate cap agreements:
 

 
 

 
 

 
 

Unrealized (losses) gains
(1,060
)
 
37

 
(1,672
)
 
819

Reclassifications of net realized losses into net income (loss)
1,569

 
1,606

 
4,782

 
4,680

Unrealized losses on foreign currency translation:
 
 
 

 
 
 
 

Foreign currency translation adjustments
(44,502
)
 
(8,827
)
 
(45,790
)
 
(39,475
)
Other comprehensive loss
(43,993
)
 
(7,184
)
 
(42,680
)
 
(33,976
)
Total comprehensive income (loss)
157,695

 
(103,852
)
 
675,652

 
400,907

Less: Comprehensive income attributable to noncontrolling interests
(58,418
)
 
(40,128
)
 
(152,222
)
 
(125,717
)
Comprehensive income (loss) attributable to DaVita Inc.
$
99,277

 
$
(143,980
)
 
$
523,430

 
$
275,190


7



DAVITA INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
(dollars in thousands)
 
Nine months ended September 30,
 
2019
 
2018
Cash flows from operating activities:
 
 
 

Net income
$
718,332

 
$
434,883

Adjustments to reconcile net income to net cash provided by operating activities:
 
 
 

Depreciation and amortization
456,685

 
435,878

Impairment charges
124,892

 
20,444

Debt prepayment, refinancing and redemption charges
33,402

 

Stock-based compensation expense
47,811

 
59,605

Deferred income taxes
72,590

 
200,056

Equity investment loss, net
5,131

 
8,611

Gain (loss) on sales of business interests, net
23,022

 
(57,547
)
Other non-cash charges, net
24,291

 
164,856

Changes in operating assets and liabilities, net of effect of acquisitions and divestitures:
 
 
 
Accounts receivable
(182,684
)
 
(74,622
)
Inventories
9,519

 
88,355

Other receivables and other current assets
51,319

 
(757
)
Other long-term assets
2,324

 
2,142

Accounts payable
(106,662
)
 
(12,800
)
Accrued compensation and benefits
(57,930
)
 
40,225

Other current liabilities
140,046

 
45,624

Income taxes
57,279

 
21,749

Other long-term liabilities
(27,542
)
 
5,546

Net cash provided by operating activities
1,391,825

 
1,382,248

Cash flows from investing activities:
 
 
 

Additions of property and equipment
(547,183
)
 
(705,659
)
Acquisitions
(77,348
)
 
(113,526
)
Proceeds from asset and business sales
3,863,619

 
135,268

Purchase of other debt and equity investments
(5,160
)
 
(5,791
)
Purchase of investments held-to-maturity
(98,322
)
 
(3,728
)
Proceeds from sale of other debt and equity investments
5,893

 
8,783

Proceeds from investments held-to-maturity

 
32,628

Purchase of equity investments
(8,770
)
 
(12,874
)
Distributions received on equity investments
1,296

 
3,580

Net cash provided by (used in) investing activities
3,134,025

 
(661,319
)
Cash flows from financing activities:
 
 
 
Borrowings
38,519,991

 
41,674,279

Payments on long-term debt and other financing costs
(40,570,003
)
 
(40,828,443
)
Purchase of treasury stock
(1,837,022
)
 
(1,161,511
)
Distributions to noncontrolling interests
(157,170
)
 
(139,673
)
Stock award exercises and other share issuances, net
7,333

 
8,803

Contributions from noncontrolling interests
44,095

 
43,179

Proceeds from sales of additional noncontrolling interest

 
15

Purchases of noncontrolling interests
(10,988
)
 
(19,988
)
Net cash used in financing activities
(4,003,764
)
 
(423,339
)
Effect of exchange rate changes on cash, cash equivalents and restricted cash
(4,178
)
 
(5,790
)
Net increase in cash, cash equivalents and restricted cash
517,908

 
291,800

Less: Net (decrease) increase in cash, cash equivalents and restricted cash from discontinued operations
(423,813
)
 
270,565

Net increase in cash, cash equivalents and restricted cash from continuing operations
941,721

 
21,235

Cash, cash equivalents and restricted cash of continuing operations at beginning of the year
415,420

 
518,920

Cash, cash equivalents and restricted cash of continuing operations at end of the period
$
1,357,141

 
$
540,155


8



DAVITA INC.
CONSOLIDATED BALANCE SHEETS
(unaudited)
(dollars in thousands, except share data)
 
September 30, 2019
 
December 31, 2018
ASSETS
 

 
 

Cash and cash equivalents
$
1,253,256

 
$
323,038

Restricted cash and equivalents
103,885

 
92,382

Short-term investments
100,713

 
2,935

Accounts receivable, net
1,901,225

 
1,858,608

Inventories
98,641

 
107,381

Other receivables
474,145

 
469,796

Income tax receivable
16,236

 
68,614

Prepaid and other current assets
50,617

 
111,840

Current assets held for sale, net

 
5,389,565

Total current assets
3,998,718

 
8,424,159

Property and equipment, net of accumulated depreciation of $3,792,683 and $3,524,098, respectively
3,419,238

 
3,393,669

Operating lease right-of-use assets
2,781,288

 

Intangible assets, net of accumulated amortization of $78,437 and $80,566, respectively
117,666

 
118,846

Equity method and other investments
219,386

 
224,611

Long-term investments
35,041

 
35,424

Other long-term assets
114,834

 
71,583

Goodwill
6,765,659

 
6,841,960

 
$
17,451,830

 
$
19,110,252

LIABILITIES AND EQUITY
 

 
 

Accounts payable
$
332,136

 
$
463,270

Other liabilities
716,023

 
595,850

Accrued compensation and benefits
662,826

 
658,913

Current portion of operating lease liabilities
374,214

 

Current portion of long-term debt
121,441

 
1,929,369

Current liabilities held for sale

 
1,243,759

Total current liabilities
2,206,640

 
4,891,161

Long-term operating lease liabilities
2,682,125

 

Long-term debt
8,014,475

 
8,172,847

Other long-term liabilities
135,087

 
450,669

Deferred income taxes
604,921

 
562,536

Total liabilities
13,643,248

 
14,077,213

Commitments and contingencies
 
 
 
Noncontrolling interests subject to put provisions
1,296,059

 
1,124,641

Equity:
 

 
 

Preferred stock ($0.001 par value, 5,000,000 shares authorized; none issued)

 

Common stock ($0.001 par value, 450,000,000 shares authorized; 166,540,590 and
166,387,307 shares issued and 133,888,864 and 166,387,307 shares outstanding, respectively)
167

 
166

Additional paid-in capital
906,990

 
995,006

Retained earnings
3,349,180

 
2,743,194

Treasury stock (32,651,726 and zero shares, respectively)
(1,860,157
)
 

Accumulated other comprehensive loss
(77,604
)
 
(34,924
)
Total DaVita Inc. shareholders' equity
2,318,576

 
3,703,442

Noncontrolling interests not subject to put provisions
193,947

 
204,956

Total equity
2,512,523

 
3,908,398

 
$
17,451,830

 
$
19,110,252


9



DAVITA INC.
SUPPLEMENTAL FINANCIAL DATA
(unaudited)
(dollars in millions, except for per share and per treatment data)
 
Three months ended
 
Nine months ended September 30, 2019
 
September 30,
2019
 
June 30,
2019
 
September 30,
2018
 
1. Consolidated business metrics:
 
 
 
 
 
 
 
Operating income margin
13.0
%
 
16.2
%
 
10.2
%
 
13.9
%
Adjusted operating income margin excluding certain items(1)(5)
15.9
%
 
16.2
%
 
11.0
%
 
15.4
%
General and administrative expenses as a percent of
consolidated revenues
(2) 
10.3
%
 
9.7
%
 
11.8
%
 
9.7
%
Effective income tax rate on income from continuing
operations
23.8
%
 
23.5
%
 
31.1
%
 
24.3
%
Effective income tax rate on income from continuing
operations attributable to DaVita Inc.
(1) 
30.3
%
 
28.0
%
 
41.4
%
 
29.8
%
Effective income tax rate on adjusted income from continuing
operations attributable to DaVita Inc.
(1)
27.6
%
 
27.9
%
 
38.0
%
 
28.4
%
 
 
 
 
 
 
 
 
2. Summary of division financial results:
 
 
 
 
 
 
 
Revenues
 
 
 
 
 
 
 
U.S. net dialysis and related lab patient services and other
$
2,691

 
$
2,637

 
$
2,577

 
$
7,876

Other—Ancillary services and strategic initiatives
 
 
 
 
 
 
 
U.S. other
118

 
114

 
191

 
341

International net dialysis patient service and other
131

 
125

 
113

 
376

 
248

 
239

 
304

 
717

Eliminations
(36
)
 
(34
)
 
(34
)
 
(104
)
Total consolidated revenues
$
2,904

 
$
2,843

 
$
2,847

 
$
8,490

Operating income (loss)
 
 
 
 
 
 
 
U.S. dialysis and related lab services
$
501

 
$
499

 
$
390

 
$
1,417

Other—Ancillary services and strategic initiatives
 
 
 
 
 
 
 
U.S.
(15
)
 
(16
)
 
(50
)
 
(45
)
International
(83
)
 
1

 
(10
)
 
(125
)
 
(98
)
 
(15
)
 
(60
)
 
(170
)
Corporate administrative support expenses
(25
)
 
(22
)
 
(41
)
 
(66
)
Total consolidated operating income
$
378

 
$
462

 
$
289

 
$
1,181



10



DAVITA INC.
SUPPLEMENTAL FINANCIAL DATA - continued
(unaudited)
(dollars in millions, except for per share and per treatment data)
 
Three months ended
 
Nine months ended September 30, 2019
 
September 30,
2019
 
June 30,
2019
 
September 30,
2018
 
3. Summary of reportable segment financial results:
 
 
 
 
 
 
 
U.S. Dialysis and Related Lab Services
 
 
 
 
 
 
 
Revenue:
 
 
 
 
 
 
 
Net dialysis and related lab patient service revenues
$
2,681

 
$
2,632

 
$
2,572

 
$
7,855

Other revenues
10

 
6

 
5

 
21

Total operating revenues
2,691

 
2,637

 
2,577

 
7,876

Operating expenses:
 
 
 
 
 
 
 
Patient care costs
1,813

 
1,785

 
1,819

 
5,396

General and administrative
235

 
216

 
233

 
648

Depreciation and amortization
148

 
145

 
139

 
433

Equity investment income
(5
)
 
(7
)
 
(4
)
 
(17
)
Total operating expenses
2,191

 
2,139

 
2,187

 
6,459

Segment operating income
$
501

 
$
499

 
$
390

 
$
1,417

 
 
 
 
 
 
 
 
4. U.S. Dialysis and Related Lab Services Business metrics:
 
 
 
 
 
 
 
Volume
 
 
 
 
 
 
 
Treatments
7,673,191

 
7,520,587

 
7,377,277

 
22,491,237

Number of treatment days
79.0

 
78.0

 
78.0

 
233.6

Average treatments per day
97,129

 
96,418

 
94,580

 
96,281

Per day year over year increase
2.7
%
 
2.6
%
 
4.0
%
 
2.7
%
Normalized non-acquired treatment growth year over year
2.2
%
 
2.1
%
 
3.3
%
 
 
Operating net revenues
 
 
 
 
 
 
 
Dialysis and related lab services net revenue per
treatment
$
349.41

 
$
349.97

 
$
348.62

 
$
349.26

Expenses
 
 
 
 
 
 
 
Patient care costs per treatment
$
236.32

 
$
237.34

 
$
246.55

 
$
239.90

General and administrative expenses per treatment
$
30.63

 
$
28.68

 
$
31.64

 
$
28.80

Accounts receivable
 
 
 
 
 
 
 
Net receivables
$
1,719

 
$
1,816

 
$
1,643

 
 
DSO
60

 
63

 
59

 
 
 
 
 
 
 
 
 
 
5. Discontinued operations:
 
 
 
 
 
 
 
Operating results
 
 
 
 
 
 
 
Net revenues
$

 
$
1,331

 
$
1,253

 
$
2,713

Expenses
2

 
1,202

 
1,261

 
2,542

Valuation adjustment

 

 
98

 

(Loss) income from operations of discontinued operations before taxes
(2
)
 
129

 
(106
)
 
171

Loss on sale of discontinued operations, before taxes

 
(23
)
 

 
(23
)
Income tax expense
5

 
27

 
106

 
45

Net (loss) income from discontinued operations, net of tax
$
(7
)
 
$
79

 
$
(212
)
 
$
103


11



DAVITA INC.
SUPPLEMENTAL FINANCIAL DATA - continued
(unaudited)
(dollars in millions, except for per share and per treatment data)
 
Three months ended
 
Nine months ended September 30, 2019
 
September 30,
2019
 
June 30,
2019
 
September 30,
2018
 
6. Cash Flow:
 
 
 
 
 
 
 
Operating cash flow
$
641

 
$
610

 
$
458

 
$
1,392

Operating cash flow from continuing operations
$
648

 
$
574

 
$
362

 
$
1,295

Operating cash flow from continuing operations, last twelve
months
$
1,602

 
$
1,316

 
$
1,460

 
 
Free cash flow from continuing operations (new definition)(1)
$
437

 
$
393

 
$
115

 
$
711

Free cash flow from continuing operations, last twelve
months
(new definition)(1)
$
722

 
$
400

 
$
498

 
 
Capital expenditures from continuing operations:
 
 
 
 
 
 
 
Routine maintenance/IT/other
$
84

 
$
61

 
$
90

 
$
225

Development and relocations
$
90

 
$
95

 
$
130

 
$
284

Acquisition expenditures
$
11

 
$
54

 
$
22

 
$
75

Proceeds from sale of self-developed properties
$
12

 
$
14

 
$
7

 
$
38

 
 
 
 
 
 
 
 
7. Debt and Capital Structure:
 
 
 
 
 
 
 
Total debt(3)(4)
$
8,212

 
$
9,004

 
$
10,278

 
 
Net debt, net of cash and cash equivalents(3)(4)
$
6,959

 
$
5,428

 
$
9,830

 
 
Leverage ratio (see calculation on page 13)
3.21x

 
2.47x

 
4.29x

 
 
Weighted average effective interest rate:
 
 
 
 
 
 
 
During the quarter
5.09
%
 
5.17
%
 
4.93
%
 
 
At end of the quarter
4.66
%
 
5.30
%
 
5.03
%
 
 
On the senior secured credit facilities at end of the quarter
4.30
%
 
5.31
%
 
4.80
%
 
 
Debt with fixed and capped rates as a percentage of total
 debt:
 
 
 
 
 
 
 
Debt with rates fixed by its terms
44
%
 
54
%
 
47
%
 
 
Debt with rates capped by cap agreements
86
%
 
93
%
 
81
%
 
 
Amount spent on share repurchases
$
1,748

 
$
112

 
$
344

 
$
1,860

Number of shares repurchased
30,591,750

 
2,059,976

 
4,849,051

 
32,651,726

Certain columns, rows or percentages may not sum or recalculate due to the use of rounded numbers.
_________________
(1)
These are non-GAAP financial measures. For a reconciliation of these non-GAAP financial measures to their most comparable measure calculated and presented in accordance with GAAP, and for a definition of adjusted amounts, see attached reconciliation schedules.
(2)
General and administrative expenses includes certain corporate support, long-term incentive compensation and advocacy costs.
(3)
The reported balance sheet amounts at September 30, 2019, June 30, 2019 and September 30, 2018, exclude $76.0 million, $34.5 million and $53.6 million, respectively, of debt discount associated with the Term Loan B and other deferred financing costs related to our senior secured credit facilities and senior notes in effect at that time. The reported balance sheet amounts exclude DMG debt which is classified as held for sale liabilities as of September 30, 2018.
(4)
The reported total debt and net debt, net of cash and cash equivalents, excludes DMG cash and debt classified as held for sale assets and liabilities, respectively, as of September 30, 2018.
(5)
Adjusted operating income margin is a calculation of adjusted operating income divided by consolidated revenues.

12



DAVITA INC.
SUPPLEMENTAL FINANCIAL DATA-continued
(unaudited)
(dollars in thousands)
Note 1: Calculation of the Leverage Ratio
Under our new senior secured credit facilities (the New Credit Agreement) dated August 12, 2019 and our prior senior secured credit facilities (the Prior Credit Agreement), the leverage ratio is defined as all funded debt plus the face amount of all letters of credit issued, minus cash and cash equivalents, not to exceed certain limits under the New Credit Agreement, including short-term investments, divided by “Consolidated EBITDA”. The leverage ratio determines the interest rate margin payable by the Company for its new Term Loan A and new revolving line of credit under the New Credit Agreement by establishing the margin over the base interest rate (LIBOR) that is applicable. The following leverage ratios were calculated using “Consolidated EBITDA” as defined in the credit agreement that was in effect at the end of each period. The calculation below is based on the last twelve months of “Consolidated EBITDA”, as of the end of the reported period and pro forma for routine acquisitions that occurred during the period. The Company’s management believes the presentation of “Consolidated EBITDA” is useful to users to enhance their understanding of the Company’s leverage ratio under its credit agreement in effect at that time. The leverage ratio calculated by the Company is a non-GAAP measure and should not be considered a substitute for debt to net income attributable to DaVita Inc., net income attributable to DaVita Inc. or total debt as determined in accordance with United States generally accepted accounting principles (GAAP). For the periods ended June 30, 2019 and September 30, 2018, as allowed by our Prior Credit Agreement, the Company elected to calculate debt using GAAP in effect at the commencement of the Prior Credit Agreement; therefore, the Company did not adjust its debt balance to include the lease liabilities under ASC Topic 842. The Company’s calculation of its leverage ratio might not be calculated in the same manner as, and thus might not be comparable to, similarly titled measures by other companies.
 
Rolling twelve months ended
 
September 30,
2019
 
June 30,
2019
 
September 30,
2018
Net income attributable to DaVita Inc.
$
624,922

 
$
548,180

 
$
612,562

Income taxes
249,686

 
236,479

 
(7,200
)
Interest expense
437,513

 
476,507

 
430,674

Depreciation and amortization
611,841

 
601,927

 
619,836

Impairment charges
124,892

 
47,130

 
300,510

Noncontrolling interests and equity investment income, net
210,641

 
194,434

 
175,470

Stock-settled stock-based compensation
56,784

 
77,766

 
66,057

Debt prepayment charges
33,402

 
12,160

 

Gain on changes in ownership interest, net
(28,152
)
 
(26,646
)
 
(57,547
)
Other
24,088

 
56,176

 
125,583

“Consolidated EBITDA”
$
2,345,617

 
$
2,224,113

 
$
2,265,945

 
 
 
 
 
 
 
September 30,
2019
 
June 30,
2019
 
September 30,
2018
Total debt, excluding debt discount and other deferred financing costs(1)
$
8,211,895

 
$
9,003,631

 
$
10,314,797

Letters of credit issued
72,777

 
72,763

 
37,187

 
8,284,672

 
9,076,394

 
10,351,984

Less: Cash and cash equivalents including short-term investments(2)
(750,000
)
 
(3,578,751
)
 
(625,427
)
Consolidated net debt
$
7,534,672

 
$
5,497,643

 
$
9,726,557

Last twelve months “Consolidated EBITDA”
$
2,345,617

 
$
2,224,113

 
$
2,265,945

Leverage ratio
3.21x

 
2.47x

 
4.29x

_________________
(1)
The reported total debt amounts at September 30, 2019, June 30, 2019 and September 30, 2018, exclude $76.0 million, $34.5 million and $53.6 million, respectively, of debt discount associated with the Term Loan B and other deferred financing costs under the senior secured credit agreement in effect at that time.
(2)
Excluding DMG’s-physician owned entities' cash for the twelve months ended September 30, 2018 and amounts not readily convertible to cash related to the Company's non-qualified deferred compensation plans for all periods presented. The Company's New Credit Agreement limits the amount deducted for cash and cash equivalents to the lesser of all unrestricted cash and cash equivalents of the Company or $750 million.
Under the New Credit Agreement, the Company’s leverage ratio is not permitted to exceed 5.00 to 1.00 as of September 30, 2019. At that date the Company’s leverage ratio did not exceed 5.00 to 1.00.

13



DAVITA INC.
RECONCILIATIONS FOR NON-GAAP MEASURES
(unaudited)
Note on Non-GAAP Financial Measures
As used in this press release, the term “adjusted” refers to non-GAAP measures as follows, each as reconciled to its most comparable GAAP measure as presented in the non-GAAP reconciliations in the notes to this press release: (i) for income measures, the term “adjusted” refers to operating performance measures that exclude certain items such as impairment charges, (gain) loss on ownership changes, restructuring charges, debt prepayment charges and gains and charges associated with settlements; and (ii) the term “effective income tax rate on adjusted income from continuing operations attributable to DaVita Inc.” represents the Company’s effective tax rate excluding applicable non-GAAP items and noncontrolling owners’ income, which primarily relates to non-tax paying entities.
These non-GAAP or “adjusted” measures are presented because management believes these measures are useful adjuncts to GAAP results. However, these non-GAAP measures should not be considered alternatives to the corresponding measures determined under GAAP. 
Specifically, we use adjusted operating income, adjusted net income from continuing operations attributable to DaVita Inc. and adjusted diluted net income from continuing operations per share attributable to DaVita Inc. to compare and evaluate our performance period over period and relative to competitors, to analyze the underlying trends in our business, to establish operational budgets and forecasts and for incentive compensation purposes. We believe these non-GAAP measures are useful to management, investors and analysts in evaluating our performance over time and relative to competitors, as well as in analyzing the underlying trends in our business. We also believe these presentations enhance a user's understanding of our normal consolidated operating income by excluding certain items which we do not believe are indicative of our ordinary results of operations. As a result, adjusting for these amounts allows for comparison to our normalized prior period results.
In addition, the effective income tax rate on income from continuing operations attributable to DaVita Inc. excludes noncontrolling owners' income, which primarily relates to non-tax paying entities, and the effective income tax rate on adjusted income from continuing operations attributable to DaVita Inc. excludes noncontrolling owners' income and certain non-deductible and other charges which we do not believe are indicative of our ordinary results. Accordingly, we believe these adjusted effective income tax rates are useful to management, investors and analysts in evaluating our performance and establishing expectations for income taxes incurred on our ordinary results attributable to DaVita Inc.
Finally, under our new definition, free cash flow from continuing operations represents net cash provided by operating activities from continuing operations less distributions to noncontrolling interests and all capital expenditures (including development capital expenditures, routine maintenance and information technology); plus contributions from noncontrolling interests and sale leaseback proceeds. We believe this non-GAAP measure is useful to management, investors and analysts as an adjunct to cash flows from operating activities from continuing operations and other measures under GAAP, since free cash flow from continuing operations is meaningful for assessing our ability to fund acquisition and meet our debt service obligations.
It is important to bear in mind that these non-GAAP "adjusted" measures are not measures of financial performance or liquidity under GAAP and should not be considered in isolation from, nor as substitutes for, their most comparable GAAP measures.
The following Notes 2 through 5 provide reconciliations of the non-GAAP financial measures presented in this press release to their most comparable GAAP measures.

14



DAVITA INC.
RECONCILIATIONS FOR NON-GAAP MEASURES - continued
(unaudited)
(dollars in thousands, except for per share data)
Note 2:
Adjusted net income from continuing operations and adjusted diluted net income from continuing operations per share attributable to DaVita Inc.
 
Three months ended
 
September 30, 2019
 
June 30, 2019
 
September 30, 2018
 
Dollars
 
Per share
 
Dollars
 
Per share
 
Dollars
 
Per share
Net income from continuing operations attributable to
DaVita Inc.
$
150,113

 
$
0.99

 
$
194,223

 
$
1.16

 
$
73,371

 
$
0.44

Operating charges:
 
 
 
 
 
 
 
 
 
 
 
Goodwill impairment charges
83,855

 
0.55

 

 

 

 

Impairment of other assets

 

 

 

 
6,093

 
0.04

Restructuring charges

 

 

 

 
11,366

 
0.07

Loss on changes in ownership interests, net

 

 

 

 
1,506

 
0.01

Equity investment loss:
 
 
 
 
 
 
 
 
 
 
 
Loss due to impairments in the APAC JV

 

 

 

 
5,995

 
0.04

Debt prepayment, refinancing and redemption charges
21,242

 
0.14

 
12,160

 
0.07

 

 

Related income tax
(23,236
)
 
(0.15
)
 
(3,130
)
 
(0.02
)
 
(5,190
)
 
(0.03
)
Adjusted net income from continuing operations attributable
to DaVita Inc.
$
231,974

 
$
1.53

 
$
203,253

 
$
1.22

 
$
93,141

 
$
0.56

 
Nine months ended
 
September 30, 2019
 
September 30, 2018
 
Dollars
 
Per share
 
Dollars
 
Per share
Net income from continuing operations attributable to
DaVita Inc.
$
464,590

 
$
2.87

 
$
463,989

 
$
2.66

Operating charges:
 
 
 
 
 
 
 
Goodwill impairment charges
124,892

 
0.77

 
3,106

 
0.02

Impairment of other assets

 

 
17,338

 
0.10

Restructuring charges

 

 
11,366

 
0.07

Gain on changes in ownership interests, net

 

 
(32,451
)
 
(0.19
)
Debt prepayment, refinancing and redemption charges
33,402

 
0.21

 

 

Equity investment loss:
 
 
 
 
 
 
 
Loss due to impairments in the APAC JV

 

 
5,995

 
0.03

Related income tax
(35,231
)
 
(0.22
)
 
(2,538
)
 
(0.01
)
Adjusted net income from continuing operations attributable to DaVita Inc.
$
587,653

 
$
3.64

 
$
466,805

 
$
2.68

Certain columns or rows may not sum or recalculate due to the use of rounded numbers.

15



DAVITA INC.
RECONCILIATIONS FOR NON-GAAP MEASURES - continued
(unaudited)
(dollars in thousands)

Note 3:    Adjusted operating income
 
Three months ended
 
Nine months ended
 
September 30,
2019
 
June 30,
2019
 
September 30,
2018
 
September 30,
2019
 
September 30,
2018
Consolidated:
 
 
 
 
 
 
 
 
 
Operating income
$
378,336

 
$
461,886

 
$
289,038

 
$
1,180,729

 
$
1,137,916

Operating charges:
 
 
 
 
 
 
 
 
 
Goodwill impairment charges
83,855

 

 

 
124,892

 
3,106

Impairment of other assets

 

 
6,093

 

 
17,338

Restructuring charges

 

 
11,366

 

 
11,366

Loss (gain) on changes in ownership interests, net

 

 
1,506

 

 
(32,451
)
Equity investment loss:
 
 
 
 
 
 
 
 
 
Loss due to impairments in the APAC JV

 

 
5,995

 

 
5,995

Adjusted operating income
$
462,191

 
$
461,886

 
$
313,998

 
$
1,305,621

 
$
1,143,270

 
Three months ended
 
Nine months ended
 
September 30,
2019
 
June 30,
2019
 
September 30,
2018
 
September 30,
2019
 
September 30,
2018
Consolidated:
 
 
 
 
 
 
 
 
 
U.S. dialysis and related lab services:
 
 
 
 
 
 
 
 
 
Segment operating income
$
500,742

 
$
498,957

 
$
390,006

 
$
1,416,680

 
$
1,272,828

Other - Ancillary services and strategic initiatives:
 
 
 
 
 
 
 
 
 
U.S.
 
 
 
 
 
 
 
 
 
Segment operating loss
$
(14,928
)
 
$
(15,652
)
 
$
(50,170
)
 
$
(45,498
)
 
$
(51,403
)
Impairment of other assets

 

 
6,093

 

 
17,338

Restructuring charges

 

 
11,366

 

 
11,366

Loss (gain) on changes in ownership interests

 

 
1,506

 

 
(33,699
)
Adjusted operating loss
$
(14,928
)
 
$
(15,652
)
 
$
(31,205
)
 
$
(45,498
)
 
$
(56,398
)
International
 
 
 
 
 
 
 
 
 
Segment operating (loss) income
$
(82,797
)
 
$
602

 
$
(9,963
)
 
$
(124,906
)
 
$
(12,904
)
Operating charges:
 
 
 
 
 
 
 
 
 
Goodwill impairment charges
83,855

 

 

 
124,892

 
3,106

Loss on changes in ownership interests

 

 

 

 
1,248

Equity investment loss:
 
 
 
 
 
 
 
 
 
Loss due to impairments in the APAC JV

 

 
5,995

 

 
5,995

Adjusted operating income (loss)
$
1,058

 
$
602

 
$
(3,967
)
 
$
(14
)
 
$
(2,555
)
Adjusted Other - Ancillary services and strategic
initiatives
operating loss
$
(13,870
)
 
$
(15,050
)
 
$
(35,172
)
 
$
(45,513
)
 
$
(58,952
)
Corporate administrative support expenses
$
(24,681
)
 
$
(22,021
)
 
$
(40,836
)
 
$
(65,546
)
 
$
(70,605
)
Adjusted operating income
$
462,191

 
$
461,886

 
$
313,998

 
$
1,305,621

 
$
1,143,270

Certain columns or rows may not sum or recalculate due to the use of rounded numbers.

16



DAVITA INC.
RECONCILIATIONS FOR NON-GAAP MEASURES - continued
(unaudited)
(dollars in thousands)
Note 4:    Effective income tax rates on income from continuing operations attributable to DaVita Inc.
 
Three months ended
 
Nine months ended September 30, 2019
 
September 30,
2019
 
June 30,
2019
 
September 30,
2018
 
Income from continuing operations before income taxes
$
273,785

 
$
323,703

 
$
167,118

 
$
813,416

Less: Noncontrolling owners’ income primarily attributable to
non-tax paying entities
(58,502
)
 
(53,916
)
 
(41,880
)
 
(151,426
)
Income before income taxes attributable to DaVita Inc.
$
215,283

 
$
269,787

 
$
125,238

 
$
661,990

 
 
 
 
 
 
 
 
Income tax expense
$
65,254

 
$
75,938

 
$
52,047

 
$
197,938

Less: Income tax attributable to noncontrolling interests
(84
)
 
(374
)
 
(180
)
 
(538
)
Income tax expense attributable to DaVita Inc.
$
65,170

 
$
75,564

 
$
51,867

 
$
197,400

 
 
 
 
 
 
 
 
Effective income tax rate on income from continuing operations
attributable to DaVita Inc.
30.3
%
 
28.0