U.S. markets closed

DaVita Inc. 4th Quarter 2019 Results

DaVita Logo (PRNewsfoto/DaVita)

DENVER , Feb. 10, 2020 /PRNewswire/ -- DaVita Inc. (NYSE: DVA) today announced results for the quarter and year ended December 31, 2019.

Fourth quarter 2019 highlights:

  • Consolidated revenues of $2.899 billion .
  • Operating income of $463 million or 16.0% operating margin.
  • Diluted earnings per share from continuing operations of $1.86 .
  • Operating cash flow from continuing operations of $678 million and free cash flow from continuing operations of $415 million .
  • Repurchased 8,368,506 shares of our common stock at an average cost of $64.80 per share.

 


Three months ended
December 31,


Year ended
December 31,


2019


2018


2019


2018

Net income attributable to DaVita Inc.:

(dollars in millions, except per share data)


Net income from continuing operations

$

242



$

160



$

707



$

624



Per share

$

1.86



$

0.96



$

4.60



$

3.62



Adjusted net income from continuing operations (1)

$

242



$

149



$

830



$

616



Per share adjusted (1)

$

1.86



$

0.90



$

5.40



$

3.57



Net income (loss)

$

245



$

(150)



$

811



$

159



Per share

$

1.88



$

(0.90)



$

5.27



$

0.92


 


Three months ended

December 31,


Year ended
December 31,


2019


2018


2019


2018

Operating income:

(dollars in millions)


Operating income

$

463



$

388



$

1,643



$

1,526



Adjusted operating income (1)

$

463



$

370



$

1,768



$

1,513







(1)

For the definitions of non-GAAP financial measures see the note titled "Note on Non-GAAP Financial Measures" and related reconciliations beginning on page 15.

U.S. dialysis metrics:

Volume:   Total U.S. dialysis treatments for the fourth quarter of 2019 were 7,681,462, or an average of 96,744 treatments per day, representing a per day increase of 1.7% over the fourth quarter of 2018. Normalized non-acquired treatment growth in the fourth quarter of 2019 as compared to the fourth quarter of 2018 was 2.1%.


Three months ended




Year ended




December 31,
2019


September 30,
2019


Quarter
change


December 31,
2019


December 31,
2018


Annual

change

Per treatment metrics:












Revenue

$

348.31



$

349.41



$

(1.10)



$

349.02



$

350.47



$

(1.45)


Patient care costs

$

237.44



$

236.32



$

1.12



$

239.27



$

247.32



$

(8.05)


General and administrative

$

27.27



$

30.63



$

(3.36)



$

28.41



$

28.40



$

0.01


Primary drivers of the changes in the table above are as follows:

Revenue: The quarter change was primarily due to lower calcimimetics revenue. The annual change was primarily due to lower calcimimetics revenue and was also negatively impacted by additional Medicare bad debt revenue recognized in 2018, partially offset by an increase in Medicare rates.

Patient care costs: The quarter change was primarily due to higher direct center operating expenses and medical supply costs, partially offset by lower pharmaceutical costs. The annual change was primarily due to lower pharmaceutical costs, partially offset by higher benefit costs and direct center operating expenses.

General and administrative:  The quarter change was primarily due to lower compensation expense. The annual change was primarily due to higher compensation expenses, partially offset by lower advocacy costs.

Certain items impacting the quarter and year:

Share repurchases: The following table summarizes repurchases of our common stock during the quarter and year ended December 31, 2019:


Three months ended December 31, 2019


Year ended December 31, 2019


Shares
repurchased


Amount paid
(in millions)


Paid per
share


Shares
repurchased


Amount paid
(in millions)


Paid per
share

Tender offer (1)



$



$



21,801,975



$

1,234



$

56.60


Open market repurchases

8,368,506



542



64.80



19,218,257



1,168



60.79



8,368,506



$

542



$

64.80



41,020,232



$

2,402



$

58.57







(1)

The amount paid for shares repurchased associated with our modified "Dutch auction" tender offer during the year ended December 31, 2019 includes the clearing price of $56.50 per share plus related fees and expenses of approximately $2 million.

Subsequent to December 31, 2019 through February 7, 2020, we have repurchased 290,904 shares of our common stock for $22 million at an average cost of $74.92 per share. As of February 7, 2020, we have a total of $1.682 billion available for additional share repurchases under our current repurchase authorization. Although this share repurchase authorization does not have an expiration date, we remain subject to share repurchase limitations, including under the terms of our senior secured credit facilities and the indentures governing our senior notes.

Financial and operating metrics:


Three months ended
December 31,


Year ended
December 31,


2019


2018


2019


2018

Cash flow:

(dollars in millions)


Operating cash flow

$

681



$

389



$

2,072



$

1,772



Operating cash flow from continuing operations

$

678



$

307



$

1,973



$

1,481



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

$

415



$

11



$

1,127



$

480







(1)

For the definitions of non-GAAP financial measures see the note titled "Note on Non-GAAP Financial Measures" and related reconciliations beginning on page 15.

 


Three months ended
December 31, 2019


Year ended
December 31, 2019

Effective income tax rate on:



Income from continuing operations

21.4

%


23.4

%


Income from continuing operations attributable to DaVita Inc.

25.2

%


28.3

%


Adjusted income from continuing operations attributable to
 
DaVita Inc. (1)

25.2

%


27.5

%






(1)

For the definitions of non-GAAP financial measures see the note titled "Note on Non-GAAP Financial Measures" and related reconciliations beginning on page 15.

Our effective tax rate for the fourth quarter and year ended December 31, 2019 benefited from a decrease in our estimated state tax rate.

Center activity:   As of December 31, 2019, we provided dialysis services to a total of approximately 235,500 patients at 3,012 outpatient dialysis centers, of which 2,753 centers were located in the United States and 259 centers were located in ten countries outside of the United States . During the fourth quarter of 2019, we opened a total of 31 new dialysis centers and closed 14 dialysis centers in the United States . In addition, we opened three new dialysis centers and acquired seven dialysis centers outside of the United States during the fourth 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 diluted net income from continuing operations per share attributable to DaVita Inc., effective tax rate on income from continuing operations or free cash flow from continuing operations on a basis consistent with United States generally accepted accounting principles (GAAP) 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 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 amount of third party owners' income and related taxes attributable to non-tax paying entities.

...

Current 2020 guidance


Prior 2020 guidance


Low


High


Low


High


(dollars in millions, except per share data)

Revenue

$

11,500



$

11,700






Operating income margin

13.0

%


14.0

%





Effective income tax rate on adjusted income from

 continuing operations attributable to DaVita Inc.

28.0

%


29.5

%





Adjusted diluted net income from continuing

 operations per share attributable to DaVita Inc.

$

5.75



$

6.25



$

5.25



$

5.75


Capital expenditures from continuing operations

$

700



$

750



$

700



$

750


Free cash flow from continuing operations

$

600



$

800