DAVITA INC. DENVER, May 4, 2016 /PRNewswire/ -- DaVita HealthCare Partners Inc. (NYSE: DVA) today announced results for the quarter ended March 31, 2016. Adjusted net income attributable to DaVita HealthCare Partners Inc. for the quarter ended March 31, 2016 was $190 million, or $0.92 per share, excluding a goodwill impairment charge, as discussed below, and an estimated accrual for damages and liabilities associated with our HCP Nevada hospice business, all net of tax. Net income attributable to DaVita HealthCare Partners Inc. for the quarter ended March 31, 2016 including these items was $97 million, or $0.47 per share.
Adjusted net income attributable to DaVita HealthCare Partners Inc. for the quarter ended March 31, 2015 was $187 million, or $0.86 per share, excluding a settlement charge related to a private civil suit, net of tax. Net loss attributable to DaVita HealthCare Partners Inc. for the quarter ended March 31, 2015 including this item was $(111) million, or $(0.52) per share.
See schedules of reconciliations of non-GAAP measures.
Financial and operating highlights include:
-- Adjusted Diluted Net Income Per Share: Adjusted net income attributable
to DaVita HealthCare Partners Inc. for the three months ended March 31,
2016, excluding the amortization of intangible assets associated with
acquisitions, the goodwill impairment charge and the estimated HCP
Nevada hospice accrual, net of tax, was $214 million, or $1.03 per
share. Adjusted net income attributable to DaVita HealthCare Partners
Inc. for the three months ended March 31, 2015, excluding the
amortization of intangible assets associated with acquisitions and a
settlement charge, net of tax impacts, was $213 million, or $0.98 per
share.See schedules of reconciliations of non-GAAP measures.
-- Cash Flow: For the rolling twelve months ended March 31, 2016,
operating cash flow was $1,576 million and free cash flow was $1,041
million. For the three months ended March 31, 2016, operating cash flow
was $429 million and free cash flow was $305 million. Operating cash
flow and free cash flow for the rolling twelve months ended March 31,
2016 were negatively impacted by approximately $304 million of after-tax
payments made during the second quarter of 2015 in connection with the
settlement of a private civil suit. Excluding these items, adjusted
operating cash flow for the twelve months ended March 31, 2016 would
have been $1,880 million.
-- Adjusted Operating Income and Operating Income (Loss): Adjusted
operating income for the three months ended March 31, 2016 was $458
million, excluding a goodwill impairment charge and the estimated HCP
Nevada hospice accrual. Operating income for the three months ended
March 31, 2016 including these items was $365 million. Adjusted
operating income for the three months ended March 31, 2015 was $431
million, excluding a settlement charge related to a private civil suit.
Operating loss for the three months ended March 31, 2015 including this
item was $(64) million.
-- Goodwill Impairment Charge: During the quarter ended March 31, 2016 we
concluded our fourth quarter 2015 impairment assessment work on certain
HCP reporting units with no material change. As a result of continued
underperformance in recent quarters and further analyses performed
during the first quarter, we have recognized an additional goodwill
impairment charge of $77 million for one of our HCP reporting units in
the quarter ended March 31, 2016.
-- Volume: Total U.S. dialysis treatments for the first quarter of 2016
were 6,639,874, or 85,236 treatments per day, representing a per day
increase of 4.3% over the first quarter of 2015. Normalized non-acquired
treatment growth in the first quarter of 2016 as compared to the first
quarter of 2015 was 4.1%. The number of member months for which HCP
provided care during the first quarter of 2016 was approximately 2.4
million, of which 1.0 million, 1.1 million and 0.3 million related to
Medicare, commercial and Medicaid members, respectively.
-- Effective Tax Rate: Our effective tax rate was 47.9% for the three
months ended March 31, 2016. The effective tax rate attributable to
DaVita HealthCare Partners Inc. was 56.5% for the three months ended
March 31, 2016. Our effective tax rate is impacted by the non-deductible
goodwill impairment charge, the non-deductible HCP Nevada hospice
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
March 31, 2016, excluding the goodwill impairment charge and the
estimated HCP Nevada hospice accrual, was 40.0%.We are updating our
estimate of 2016 effective tax rate attributable to DaVita HealthCare
Partners Inc. to now be approximately 39.5% to 40.5% excluding the
goodwill impairment charge and the estimated HCP Nevada hospice accrual.
Our previous expected 2016 effective tax rate attributable to DaVita
HealthCare Partners Inc. was 40.0% to 41.0%.
-- Center Activity: As of March 31, 2016, we provided dialysis services to
a total of approximately 192,000 patients at 2,402 outpatient dialysis
centers, of which 2,278 centers are located in the United States and 124
centers are located in ten countries outside of the United States.
During the first quarter of 2016, we opened a total of 30 new dialysis
centers and closed four dialysis centers in the United States. We also
acquired one dialysis center and opened five new dialysis center outside
of the United States.
-- Share Repurchases: During the first quarter of 2016, we repurchased a
total of 3,689,738 shares of our common stock for $249 million, or an
average price of $67.61 per share. As a result of these transactions we
now have approximately $259 million remaining under our current board
authorization for share repurchases.
-- Acquisition: On March 1, 2016 we completed our acquisition of The
Everett Clinic Medical Group (TEC) pursuant to an Agreement and Plan of
Merger dated November 23, 2015, as amended, whereby TEC became a 100%
consolidated subsidiary of HCP. The operating results of TEC and its
subsidiaries are included in our consolidated financial results from
March 1, 2016.
Outlook
-- We still expect our consolidated operating income for 2016 to be in the
range of $1.800 billion to $1.950 billion.
-- We still expect our operating income for Kidney Care for 2016 to be in
the range of $1.625 billion to $1.725 billion.
-- We still expect our operating income for HCP for 2016 to be in the range
of $175 million to $225 million.
-- We still expect our consolidated operating cash flow 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, including the goodwill impairment charge and the estimated accrual associated with the HCP Nevada hospice business, and actual results may vary significantly from these current projections.
We will be holding a conference call to discuss our results for the first quarter ended March 31, 2016 on May 4, 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. 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, 2015, 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 the risk of a reduction in the number of patients
under such plans, which may result in the loss of revenues or patients,
and the extent to which the ongoing implementation of healthcare
exchanges or changes in regulations or enforcement of regulations
regarding the exchanges results in a reduction in reimbursement rates
for our services from and/or the number of patients enrolled in
higher-paying commercial plans,
-- 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 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 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
March 31,
---------
2016 2015
---- ----
Patient service revenues............................................................................................................................................................................................................... $2,477,738 $2,271,815
Less: Provision for uncollectible accounts................................................................................................................................................................................ (109,205) (99,164)
-------- -------
Net patient service revenues............................................................................................................................................................................................. 2,368,533 2,172,651
Capitated revenues....................................................................................................................................................................................................................... 887,047 850,515
Other revenues............................................................................................................................................................................................................................... 325,556 264,799
------- -------
Total net revenues.............................................................................................................................................................................................................. 3,581,136 3,287,965
--------- ---------
Operating expenses and charges:
Patient care costs and other costs.................................................................................................................................................................................... 2,582,333 2,362,612
General and administrative............................................................................................................................................................................................... 386,429 341,801
Depreciation and amortization........................................................................................................................................................................................ 169,355 153,789
Provision for uncollectible accounts................................................................................................................................................................................ 2,517 1,827
Equity investment income................................................................................................................................................................................................ (1,387) (2,908)
Goodwill impairment charge............................................................................................................................................................................................. 77,000 -
Settlement charge............................................................................................................................................................................................................... - 495,000
--- -------
Total operating expenses and charges................................................................................................................................................................. 3,216,247 3,352,121
--------- ---------
Operating income (loss)................................................................................................................................................................................................................ 364,889 (64,156)
Debt expense.................................................................................................................................................................................................................................. (102,884 ) (97,392)
Other income (loss), net................................................................................................................................................................................................................ 2,976 (533)
----- ----
Income (loss) before income taxes............................................................................................................................................................................................ 264,981 (162,081)
Income tax expense (benefit)..................................................................................................................................................................................................... 126,822 (85,933)
------- -------
Net income (loss)........................................................................................................................................................................................................................... 138,159 (76,148)
Less: Net income attributable to noncontrolling interests........................................................................................................................................... (40,725) (34,469)
------- -------
Net income (loss) attributable to DaVita HealthCare Partners Inc...................................................................................................................................... $97,434 $(110,617)
======= =========
Earnings per share:
Basic net income (loss) per share attributable to DaVita HealthCare Partners Inc................................................................................................ $0.48 $(0.52)
===== ======
Diluted net income (loss) per share attributable to DaVita HealthCare Partners Inc............................................................................................. $0.47 $(0.52)
===== ======
Weighted average shares for earnings per share:
Basic...................................................................................................................................................................................................................................... 204,366,869 213,387,253
=========== ===========
Diluted................................................................................................................................................................................................................................... 207,928,096 213,387,253
=========== ===========
DAVITA HEALTHCARE PARTNERS INC.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(unaudited)
(dollars in thousands)
Three months ended
March 31,
---------
2016 2015
---- ----
Net income (loss)...................................................................................................................................................... $138,159 $(76,148)
-------- --------
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................................................................. (5,469) (5,760)
Reclassifications of net swap and cap agreements realized losses into net income.......................... 465 812
Unrealized gains (losses) on investments:
Unrealized gains on investments................................................................................................................. 229 382
Reclassification of net investment realized gains into net income....................................................... (93) (157)
Foreign currency translation adjustments............................................................................................................ 11,181 (17,885)
------ -------
Other comprehensive income (loss)............................................................................................................ 6,313 (22,608)
----- -------
Total comprehensive income (loss)....................................................................................................................... 144,472 (98,756)
Less: Comprehensive income attributable to noncontrolling interests................................................ (40,725) (34,469)
------- -------
Comprehensive income (loss) attributable to DaVita HealthCare Partners Inc........................................... $103,747 $(133,225)
======== =========
DAVITA HEALTHCARE PARTNERS INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
(dollars in thousands)
Three months ended
March 31,
---------
2016 2015
---- ----
Cash flows from operating activities:
Net income (loss)................................................................................................................................................ $138,159 $(76,148)
Adjustments to reconcile net income to net cash provided by operating activities:
Settlement charge..................................................................................................................................... - 495,000
Depreciation and amortization.................................................................................................................. 169,355 153,789
Goodwill impairment charge.................................................................................................................... 77,000 -
Stock-based compensation expense......................................................................................................... 13,097 12,762
Tax benefits from stock award exercises.................................................................................................. 8,668 9,366
Excess tax benefits from stock award exercises....................................................................................... (4,383) (7,584)
Deferred income taxes.............................................................................................................................. 47,519 (203,940)
Equity investment income, net.................................................................................................................. 5,238 2,539
Other non-cash charges............................................................................................................................ 11,507 7,865
Changes in operating assets and liabilities, other than from acquisitions and divestitures:
Accounts receivable................................................................................................................................. (78,097) (151,743)
Inventories............................................................................................................................................... (4,924) (9,193)
Other receivables and other current assets................................................................................................ (75,326) (18,619)
Other long-term assets............................................................................................................................. (965) 153
Accounts payable..................................................................................................................................... 7,782 (10,933)
Accrued compensation and benefits......................................................................................................... (32,909) 30,638
Other current liabilities............................................................................................................................. 55,673 60,772
Income taxes............................................................................................................................................ 72,400 106,970
Other long-term liabilities......................................................................................................................... 19,208 8,395
------ -----
Net cash provided by operating activities...................................................................................... 429,002 410,089
------- -------
Cash flows from investing activities:
Additions of property and equipment....................................................................................................... (173,187) (121,421)
Acquisitions............................................................................................................................................. (405,154) (40,650)
Proceeds from asset and business sales................................................................................................... 4,657 2,565
Purchase of investments available for sale............................................................................................... (4,435) (1,448)
Purchase of investments held-to-maturity................................................................................................ (228,198) (290,774)
Proceeds from sale of investments available for sale................................................................................ 5,155 1,217
Proceeds from investments held-to-maturity............................................................................................ 252,701 205,650
Purchase of equity investments................................................................................................................ (5,850) (7,426)
------ ------
Net cash used in investing activities.............................................................................................. (554,311) (252,287)
-------- --------
Cash flows from financing activities:
Borrowings.............................................................................................................................................. 13,098,553 13,353,767
Payments on long-term debt and other financing costs............................................................................ (13,123,124) (13,382,203)
Purchase of treasury stock....................................................................................................................... (274,926) (70,063)
Distributions to noncontrolling interests.................................................................................................. (50,409) (41,499)
Stock award exercises and other share issuances, net.............................................................................. 3,167 5,648
Excess tax benefits from stock award exercises....................................................................................... 4,383 7,584
Contributions from noncontrolling interests............................................................................................. 10,190 15,898
Proceeds from sales of additional noncontrolling interests....................................................................... 3,557 -
Purchase of noncontrolling interests........................................................................................................ (4,300) -
Deferred financing costs.......................................................................................................................... (188) -
---- ---
Net cash used in financing activities.............................................................................................. (333,097) (110,868)
Effect of exchange rate changes on cash and cash equivalents............................................................................ 717 (904)
--- ----
Net (decrease) increase in cash and cash equivalents.......................................................................................... (457,689) 46,030
Cash and cash equivalents at beginning of the year............................................................................................ 1,499,116 965,241
--------- -------
Cash and cash equivalents at end of the period................................................................................................... $1,041,427 $1,011,271
========== ==========
DAVITA HEALTHCARE PARTNERS INC.
CONSOLIDATED BALANCE SHEETS
(unaudited)
(dollars in thousands, except per share data)
March 31, December 31,
2016 2015
---- ----
ASSETS
Cash and cash equivalents................................................................................................................................. $1,041,427 $1,499,116
Short-term investments....................................................................................................................................... 396,468 408,084
Accounts receivable, less allowance of $280,988 and $264,144............................................................... 1,855,285 1,724,228
Inventories............................................................................................................................................................. 192,689 185,575
Other receivables.................................................................................................................................................. 525,548 435,885
Other current assets.............................................................................................................................................. 187,287 190,322
Income taxes receivable..................................................................................................................................... 856 60,070
Total current assets................................................................................................................................... 4,199,560 4,503,280
Property and equipment, net.............................................................................................................................. 2,911,205 2,788,740
Intangible assets, net........................................................................................................................................... 1,678,707 1,687,326
Equity investments.............................................................................................................................................. 75,059 73,368
Long-term investments....................................................................................................................................... 97,770 94,122
Other long-term assets......................................................................................................................................... 66,269 73,560
Goodwill................................................................................................................................................................. 9,485,628 9,294,479
--------- ---------
$18,514,198 $18,514,875
=========== ===========
LIABILITIES AND EQUITY
Accounts payable................................................................................................................................................ $480,288 $513,950
Other liabilities...................................................................................................................................................... 779,141 682,123
Accrued compensation and benefits................................................................................................................ 728,476 741,926
Medical payables................................................................................................................................................. 317,747 332,102
Current portion of long-term debt..................................................................................................................... 137,966 129,037
------- -------
Total current liabilities.............................................................................................................................. 2,443,618 2,399,138
Long-term debt..................................................................................................................................................... 8,979,855 9,001,308
Other long-term liabilities.................................................................................................................................... 464,250 439,229
Deferred income taxes........................................................................................................................................ 792,038 726,962
------- -------
Total liabilities............................................................................................................................................ 12,679,761 12,566,637
Commitments and contingencies:
Noncontrolling interests subject to put provisions............................................................................... 912,705 864,066
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; 217,338,629 and 217 217
217,120,346 shares issued and 206,392,776 and 209,754,247 shares outstanding,
respectively)..........................................................................................................................................
Additional paid-in capital........................................................................................................................ 1,089,305 1,118,326
Retained earnings...................................................................................................................................... 4,454,269 4,356,835
Treasury stock (10,945,853 and 7,366,099 shares, respectively).................................................... (786,352) (544,772)
Accumulated other comprehensive loss................................................................................................ (53,513) (59,826)
------- -------
Total DaVita HealthCare Partners Inc. shareholders' equity................................................. 4,703,926 4,870,780
Noncontrolling interests not subject to put provisions........................................................................ 217,806 213,392
------- -------
Total equity................................................................................................................................................ 4,921,732 5,084,172
--------- ---------
$18,514,198 $18,514,875
=========== ===========
DAVITA HEALTHCARE PARTNERS INC.
SUPPLEMENTAL FINANCIAL DATA
(unaudited)
(dollars in millions, except for per share and per treatment data)
Three months ended
------------------
March 31, December 31, March 31,
2016 2015 2015
---- ---- ----
1. Consolidated Financial Results:
Consolidated net revenues.............................................................................................. $3,581 $3,534 $3,288
Operating income (loss).................................................................................................. $365 $245 $(64)
Adjusted operating income excluding certain items (1).................................................... $458 $474 $431
Operating income (loss) margin...................................................................................... 10.2% 6.9% (2.0%)
Adjusted operating income margin excluding certain items (1) (5).................................... 12.8% 13.4% 13.1%
Net income (loss) attributable to DaVita HealthCare Partners Inc. ................................ $97 $(6) $(111)
Adjusted net income attributable to DaVita HealthCare Partners Inc. excluding certain items
(1)...................................................................................................................... $190 $214 $187
Diluted net income (loss) per share attributable to DaVita HealthCare Partners Inc. ..... $0.47 $(0.03) $(0.52)
Adjusted diluted net income per share attributable to DaVita HealthCare Partners $0.92 $1.01 $0.86
Inc. excluding certain items (1)........................................................................................
2. Consolidated Business Metrics:
Expenses
General and administrative expenses as a percent of consolidated net revenues(2) ... 10.8% 11.6% 10.4%
Consolidated effective tax rate ................................................................................. 47.9% 76.4% 53.0%
Consolidated effective tax rate attributable to DaVita HealthCare Partners Inc.(1) ... 56.5% 105.7% 43.7%
Adjusted consolidated effective tax rate attributable to DaVita HealthCare 40.0% 36.0% 37.5%
Partners Inc.(1)...................................................................................................................
3. Summary of Division Financial Results:
Net revenues
Kidney Care:
Net dialysis and related lab services revenues....................................................... $2,227 $2,216 $2,072
Net ancillary services and strategic initiatives revenues, including international dialysis
operations............................................................................................ 391 398 305
Elimination of intersegment revenues.................................................................... (26) (22) (17)
--- --- ---
Total Kidney Care net revenues..................................................................... 2,592 2,592 2,360
Net HCP revenues.................................................................................................... 989 942 928
--- --- ---
Total net consolidated revenues..................................................................... $3,581 $3,534 $3,288
====== ====== ======
Operating income
Kidney Care:
Dialysis and related lab services operating income (loss)...................................... $440 $464 $(104)
Other - Ancillary services and strategic initiatives, including international (11) (34) (14)
dialysis operations operating loss.....................................................................
Corporate support and related long-term incentive compensation.......................... (7) (4) (6)
--- --- ---
Total Kidney Care operating income (loss).................................................... 422 426 (124)
HCP operating (loss) income.................................................................................... (57) (181) 60
--- ---- ---
Total consolidated operating income (loss)................................................... $365 $245 $(64)
==== ==== ====
DAVITA HEALTHCARE PARTNERS INC.
SUPPLEMENTAL FINANCIAL DATA-continued
(unaudited)
(dollars in millions, except for per share and per treatment data)
Three months ended
------------------
March 31, December 31, March 31,
2016 2015 2015
---- ---- ----
4. Summary of Reportable Segment Financial Results:
Dialysis and Related Lab Services
Revenue:
Patient services revenues................................................................................ $2,328 $2,316 $2,166
Provision for uncollectible accounts............................................................. (105) (104) (97)
---- ---- ---
Net patient service operating revenues................................................ 2,223 2,212 2,069
Other revenues.................................................................................................. 4 4 3
--- --- ---
Total net operating revenues................................................................. $2,227 $2,216 $2,072
------ ------ ------
Operating expenses:
Patient care costs............................................................................................. $1,496 $1,462 $1,396
General and administrative............................................................................ 179 181 183
Depreciation and amortization..................................................................... 116 112 105
Equity investment income............................................................................. (4) (3) (3)
Settlement charge............................................................................................ - - 495
--- --- ---
Total operating expenses........................................................................ 1,787 1,752 2,176
----- ----- -----
Segment operating income (loss).................................................................. 440 464 (104)
--- --- ----
Reconciliation for non-GAAP measure:
Add: Settlement charge............................................................................. .... - - 495
--- --- ---
Adjusted segment operating income(1)......................................................... $440 $464 $391
==== ==== ====
HCP
Revenue:
HCP capitated revenues................................................................................. $866 $850 $833
---- ---- ----
Patient services revenues................................................................................ 112 80 81
Provision for uncollectible accounts............................................................. (4) (4) (1)
--- --- ---
Net patient service operating revenues................................................ 108 76 80
--- --- ---
Other revenues.................................................................................................. 15 16 15
--- --- ---
Total net operating revenues................................................................. $989 $942 $928
---- ---- ----
Operating expenses:
Patient care costs............................................................................................. $794 $757 $733
General and administrative............................................................................ 127 121 92
Depreciation and amortization..................................................................... 46 44 43
Goodwill and other intangible asset impairment charges......................... 77 206 -
Equity investment (income) loss................................................................... 2 (5) -
--- --- ---
Total operating expenses........................................................................ 1,046 1,123 868
----- ----- ---
Segment operating (loss) income.................................................................. (57) (181) 60
--- ---- ---
Reconciliation for non-GAAP measure:
Add:
Goodwill and other intangible asset impairment charges.................. 77 206 -
Hospice accrual......................................................................................... 16 - -
--- --- ---
Adjusted segment operating income(1)......................................................... $36 $25 $60
=== === ===
DAVITA HEALTHCARE PARTNERS INC.
SUPPLEMENTAL FINANCIAL DATA-continued
(unaudited)
(dollars in millions, except for per share and per treatment data)
Three months ended
------------------
March 31, December 31, March 31,
2016 2015 2015
---- ---- ----
5. Dialysis and Related Lab Services Business Metrics:
Volume
Treatments............................................................................................................................. 6,639,874 6,649,227 6,262,635
Number of treatment days..................................................................................................... 77.9 79.1 76.6
Treatments per day............................................................................................................... 85,236 84,061 81,758
Per day year over year increase.......................................................................................... 4.3% 3.2% 4.5%
Normalized non-acquired growth year over year............................................................ 4.1% 3.7% 4.5%
Operating revenues before provision for uncollectible accounts
Dialysis and related lab services revenue per treatment.............................................. $350.60 $348.26 $345.88
Per treatment increase (decrease) from previous quarter............................................ 0.7% 0.1% (0.3%)
Per treatment increase from previous year.................................................................... 1.4% 0.4% 1.5%
Percent of net consolidated revenues............................................................................. 61.8% 62.3% 62.7%
Expenses
Patient care costs
Percent of total segment operating net revenues.......................................................... 67.2% 66.0% 67.4%
Per treatment....................................................................................................................... $225.30 $219.86 $222.99
Per treatment increase (decrease) from previous quarter............................................ 2.5% (0.5%) 1.9%
Per treatment increase from previous year.................................................................... 1.0% 0.5% 0.8%
General and administrative expenses
Percent of total segment operating net revenues.......................................................... 8.0% 8.2% 8.8%
Per treatment....................................................................................................................... $26.97 $27.21 $29.25
Per treatment (decrease) increase from previous quarter............................................ (0.9%) 5.5% (1.7%)
Per treatment (decrease) increase from previous year................................................. (7.8%) (8.5%) 12.5%
Accounts receivable
Net receivables................................................................................................................... $1,297 $1,255 $1,261
DSO.................................................................................................................................... 54 53 56
Provision for uncollectible accounts as a percentage of revenues............................ 4.5% 4.5% 4.5%
6. HCP Business Metrics:
Capitated membership
Total members....................................................................................................................... 787,100 807,400 830,400
Total member months
Medicare................................................................................................................................. 975,300 951,500 930,800
Commercial............................................................................................................................ 1,048,600 1,109,900 1,132,900
Medicaid................................................................................................................................. 342,500 367,100 418,800
------- ------- -------
Total member months.................................................................................................... 2,366,400 2,428,500 2,482,500
========= ========= =========
Capitated revenues by sources
Senior revenues...................................................................................................................... $648 $607 $602
Commercial revenues........................................................................................................... 172 184 185
Medicaid revenues................................................................................................................ 46 59 46
--- --- ---
Total capitated revenues............................................................................................... $866 $850 $833
==== ==== ====
Other
Total care dollars under management(1)........................................................................... $1,268 $1,213 $1,233
Ratio of operating (loss) income to total care dollars under management(1)............. (4.5%) (14.9%) 4.9%
Ratio of adjusted operating income to total care dollars under management(1)(6).......... 2.8% 2.1% 4.9%
Full time clinicians................................................................................................................. 1,652 1,315 1,299
IPA primary care physicians............................................................................................... 2,877 2,937 2,829
DAVITA HEALTHCARE PARTNERS INC.
SUPPLEMENTAL FINANCIAL DATA-continued
(unaudited)
(dollars in millions, except for per share and per treatment data)
Three months ended
------------------
March 31, December 31, March 31,
2016 2015 2015
---- ---- ----
7. Cash Flow:
Operating cash flow................................................................................................. $429.0 $436.7 $410.1
Operating cash flow, last twelve months............................................................. $1,576.1 $1,557.2 $1,450.4
Free cash flow(1)....................................................................................................... $305.3 $256.2 $319.6
Free cash flow, last twelve months(1).................................................................... $1,041.2 $1,055.5 $1,028.1
Capital expenditures:
Routine maintenance/IT/other....................................................................... $73.3 $131.8 $49.0
Development and relocations......................................................................... $99.9 $114.0 $72.4
Acquisition expenditures.................................................................................. $405.2 $5.8 $40.7
8. Debt and Capital Structure:
Total debt(3)............................................................................................................... $9,210 $9,226 $8,513
Net debt, net of cash and cash equivalents(3)..................................................... $8,168 $7,727 $7,502
Leverage ratio (see calculation on page 13)....................................................... 3.07x 2.95x 2.94x
Overall weighted average effective interest rate during the quarter............... 4.40% 4.40% 4.48%
Overall weighted average effective interest rate at end of the quarter.......... 4.40% 4.39% 4.47%
Weighted average effective interest rate on the Senior Secured Credit 3.46% 3.46% 3.44%
Facilities at end of the quarter..........................................................................
Fixed and economically fixed interest rates as a percentage of our total 60%(4) 61%(4) 58%(4)
debt.......................................................................................................................
Fixed and economically fixed interest rates, including our interest rate 90%(4) 90%(4) 90%(4)
cap agreements, as a percentage of our total debt..............................................
9. Clinical: (quarterly averages)
Dialysis adequacy -% of patients with Kt/V > 1.2 at the end of the quarter 98% 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 hospice and pharmacy accruals for the three months ended March 31, 2016 and December 31, 2015, respectively.
(3) The reported balance sheet amounts at March 31, 2016, December 31, 2015 and March 31, 2015, excludes $92.0 million, $96.0 million and $96.9 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 $2.735 billion of outstanding principal debt on the Term Loan B as a result of interest rate cap agreements. The remaining $704 million outstanding principal balance of the Term Loan B is subject to LIBOR-based interest rate volatility above a floor of 0.75%.
(5) Adjusted operating income margin is a calculation of adjusted operating income divided by consolidated net revenues.
(6) Ratio of adjusted operating income to total care dollars under management is a calculation of adjusted operating income divided by total care dollars under management.
DAVITA HEALTHCARE PARTNERS INC.
SUPPLEMENTAL FINANCIAL DATA--continued
(unaudited)
(dollars in thousands)
Note 1: Calculation of the Leverage Ratio
Under the Senior Secured Credit Facilities (Credit Agreement), the leverage ratio is defined as all funded debt plus the face amount of all letters of credit issued, minus cash and cash equivalents, including short-term investments, divided by "Consolidated EBITDA". The leverage ratio determines the interest rate margin payable by the Company for its Term Loan A and revolving line of credit under the Credit Agreement by establishing the margin over the base interest rate (LIBOR) that is applicable. The following leverage ratio was calculated using "Consolidated EBITDA" as defined in the Credit Agreement. The calculation below is based on the last twelve months of "Consolidated EBITDA", pro forma for routine acquisitions that occurred during the period. The Company's management believes the presentation of "Consolidated EBITDA" is useful to investors to enhance their understanding of the Company's leverage ratio under its Credit Agreement.
Rolling twelve
months ended
March 31, 2016
--------------
Net income attributable to DaVita HealthCare Partners Inc............................................................ $477,783
Income taxes.............................................................................................................................................. 508,481
Interest expense......................................................................................................................................... 386,546
Depreciation and amortization............................................................................................................... 653,590
Goodwill and other intangible asset impairment charges................................................................... 287,234
Noncontrolling interests and equity investment income, net............................................................. 182,794
Stock-settled stock-based compensation.............................................................................................. 56,586
Debt redemption charges......................................................................................................................... 48,072
Other ........................................................................................................................................................... 9,604
-----
"Consolidated EBITDA"................................................................................................................. $2,610,690
==========
March 31, 2016
--------------
Total debt, excluding debt discount and other deferred financing costs of $92.0 million........... $9,209,771
Letters of credit issued.............................................................................................................................. 92,464
------
9,302,235
Less: Cash and cash equivalents including short-term investments (excluding HCP's physician owned entities
cash).......................................................................................................... (1,291,696)
----------
Consolidated net debt............................................................................................................................... $8,010,539
==========
Last twelve months "Consolidated EBITDA"..................................................................................... $2,610,690
==========
Leverage ratio............................................................................................................................................ 3.07x
-----
In accordance with the Credit Agreement, the Company's leverage ratio cannot exceed 5.00 to 1.00 as of March 31, 2016. 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 adjusted diluted net income per share attributable to DaVita HealthCare Partners Inc. excluding goodwill and other intangible asset impairment charges, estimated accruals for our HCP Nevada hospice business and our pharmacy business, and a settlement charge, net of related tax.
We believe that adjusted net income attributable to DaVita HealthCare Partners Inc., excluding goodwill and other intangible asset impairment charges, primarily related to certain HCP reporting units, estimated accruals for damages and liabilities associated with our HCP Nevada hospice business and our pharmacy business, and a settlement charge related to a private civil suit, 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 these unusual amounts, 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 goodwill and other intangible asset impairment
charges, estimated accruals for damages and liabilities associated with our HCP Nevada hospice business and our pharmacy
business, and a settlement charge related to a private civil suit, net of related tax:
Three months ended
------------------
March 31, December 31, March 31,
2016 2015 2015
---- ---- ----
Net income (loss) attributable to DaVita HealthCare Partners Inc.
............................................................................................................... $97,434 $(6,000) $(110,617)
Add:
Goodwill and other intangible asset impairment charges......... 77,000 206,169 -
HCP hospice accrual....................................................................... 16,000 - -
Pharmacy accrual........................................................................... - 22,530
Settlement charge............................................................................ - - 495,000
Less: Related income tax...................................................................... - (8,643) (197,747)
--- ------ --------
$190,434 $214,056 $186,636
======== ======== ========
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 goodwill and other intangible asset impairment
charges, estimated accruals for damages and liabilities associated with our HCP Nevada hospice business and our pharmacy business, and a settlement
charge related to a private civil suit:
Three months ended
------------------
March 31, December 31, March 31,
2016 2015 (1) 2015 (1)
---- ------- -------
Diluted net income (loss) per share attributable to DaVita HealthCare Partners
Inc................................................................... $0.47 $(0.03) $(0.52)
Add:
Goodwill and other intangible asset impairment charges.......... 0.37 0.94 -
HCP hospice accrual........................................................................ 0.08 - -
Pharmacy accrual............................................................................. - 0.10 -
Settlement charge.............................................................................. - - 1.38
--- --- ----
$0.92 $1.01 $0.86
===== ===== =====
(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 goodwill and other intangible asset impairment charges and an estimated accrual for damages and liabilities associated with our pharmacy business. Adjusted diluted net income per share attributable to DaVita HealthCare Partners Inc. for the three months ended March 31, 2015 is calculated using 217,977,358 shares, which includes shares that would be dilutive based on adjusted net income attributable to DaVita HealthCare Partners Inc. of $186,636 excluding a settlement charge.
DAVITA HEALTHCARE PARTNERS INC.
RECONCILIATIONS FOR NON-GAAP MEASURES - (continued)
(unaudited)
(dollars in thousands except for per share data)
In addition, we have excluded amortization of intangible assets, net of tax, 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, net of tax, 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
------------------
March 31, December 31, March 31,
2016 2015 2015
---- ---- ----
Adjusted net income attributable to DaVita HealthCare Partners Inc.
................................................................................. $190,434 $214,056 $186,636
Add:
Amortization of intangible assets associated with acquisitions for the dialysis and
ancillary operations..... 3,809 3,992 6,524
Amortization of intangible assets associated with acquisitions for the HCP
operations.................................. 36,078 35,727 35,878
Less: Related income tax................................................................. (15,955) (14,418) (15,901)
------- ------- -------
$214,366 $239,357 $213,137
======== ======== ========
Adjusted diluted net income per share attributable to DaVita HealthCare Partners
Inc............................................................. $0.92 $1.01 $0.86
Add:
Amortization of intangible assets per share associated with acquisitions for the dialysis
and ancillary operations, net of
tax............................................................ 0.01 0.01 0.02
Amortization of intangible assets per share associated with acquisitions for the HCP
operations, net of tax...... 0.10 0.10 0.10
---- ---- ----
$1.03 $1.12 $0.98
===== ===== =====
DAVITA HEALTHCARE PARTNERS INC.
RECONCILIATIONS FOR NON-GAAP MEASURES
(unaudited)
(dollars in thousands)
2. Adjusted operating income and adjusted EBITDA.
Adjusted operating income is defined as operating income before unusual charges, including where applicable goodwill and other intangible asset impairment charges, estimated accruals for damages and liabilities associated with our HCP Nevada hospice business and our pharmacy business, and a settlement charge related to a private civil suit. Adjusted EBITDA is defined as adjusted operating income excluding depreciation and amortization.
We use adjusted operating income and adjusted EBITDA as measures to assess operating and financial performance. We believe that these measures enhance a user's understanding of the normal operating income and normal operating income excluding depreciation and amortization of our consolidated enterprise and of our individual reportable segments.
Adjusted operating income and adjusted EBITDA are not measures of financial performance computed in accordance with GAAP and should not be considered in isolation nor as a substitute for operating income, net income, cash flows from operations, or other statement of operations or cash flow data prepared in conformity with GAAP, or as measures of profitability or liquidity. In addition, the calculation of adjusted operating income and adjusted EBITDA is susceptible to varying interpretations and calculations, and the amounts presented may not be comparable to similarly titled measures of other companies. Adjusted operating income and adjusted EBITDA may not be indicative of historical operating results, and we do not intend them to be predictive of future results of operations or cash flows.
Three months ended
------------------
March 31, December 31, March 31,
2016 2015 2015
---- ---- ----
Consolidated:
Operating income (loss).............................................................................. $364,889 $244,935 $(64,156)
Add:
Goodwill and other intangible asset impairment charges...................... 77,000 206,169 -
Hospice accrual.................................................................................... 16,000 - -
Pharmacy accrual................................................................................. - 22,530 -
Settlement charge................................................................................. - - 495,000
--- --- -------
Adjusted operating income......................................................................... $457,889 $473,634 $430,844
======== ======== ========
U.S. dialysis and related lab services reportable segment:
Segment operating income (loss)................................................................ $440,055 $464,378 $(104,489)
Add: Settlement charge............................................................................... - - 495,000
--- --- -------
Adjusted operating income......................................................................... $440,055 $464,378 $390,511
======== ======== ========
HCP reportable segment:
Segment operating (loss) income................................................................ $(57,145) $(181,263) $60,294
Add:
Hospice accrual.................................................................................... 16,000 - -
Goodwill and other intangible asset impairment charges...................... 77,000 206,169 -
------ ------- ---
Adjusted operating income......................................................................... $35,855 $24,906 $60,294
Depreciation and amortization..................................................................... 46,263 44,229 43,279
------ ------ ------
Adjusted EBITDA...................................................................................... $82,118 $69,135 $103,573
======= ======= ========
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 goodwill and other intangible asset impairment charges, primarily related to certain HCP reporting units, estimated accruals for damages and liabilities associated with our HCP Nevada hospice business and our pharmacy business, and a settlement charge related to a private civil 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 these unusual amounts, 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
------------------
March 31, December 31, March 31,
2016 2015 2015
---- ---- ----
Income (loss) before income taxes......................................................... $264,981 $146,307 $(162,081)
======== ======== =========
Income tax expense (benefit).................................................................. $126,822 $111,833 $(85,933)
======== ======== ========
Effective income tax rate......................................................................... 47.9% 76.4% 53.0%
==== ==== ====
Three months ended
------------------
March 31, December 31, March 31,
2016 2015 2015
---- ---- ----
$264,981 $146,307
Income (loss) before income taxes......................................................... $(162,081)
Less: Noncontrolling owners' income primarily attributable to (40,797) (40,587) (34,536)
non-tax paying entities.................................................................
Income (loss) before income taxes attributable to DaVita $224,184 $105,720 $(196,617)
HealthCare Partners Inc......................................................................
Income tax expense (benefit).................................................................. $126,822 $111,833 $(85,933)
Less: Income tax attributable to noncontrolling interests.................. (72) (113) (67)
--- ---- ---
Income tax expense (benefit) attributable to DaVita HealthCare $126,750 $111,720 $(86,000)
Partners Inc.
..........................................................................................
Effective income tax rate attributable to DaVita HealthCare 56.5% 105.7% 43.7%
Partners Inc.
..........................................................................................
DAVITA HEALTHCARE PARTNERS INC.
RECONCILIATIONS FOR NON-GAAP MEASURES
(unaudited)
(dollars in thousands)
Adjusted effective income tax rates attributable to DaVita HealthCare Partners Inc. excluding goodwill and other intangible
asset impairment charges, estimated accruals for damages and liabilities associated with our HCP Nevada hospice business
and our pharmacy business, and a settlement charge related to a private civil suit: Three months ended
------------------
March 31, December 31, March 31,
2016 2015 2015
---- ---- ----
Income (loss) before income taxes.............................................................. $264,981 $146,307 $(162,081)
Add:
Goodwill and other intangible asset impairment charges........... 77,000 206,169 -
Hospice accrual.................................................................................. 16,000 - -
Pharmacy accrual.............................................................................. - 22,530 -
Settlement charge.............................................................................. - - 495,000
Less: Noncontrolling owners' income primarily attributable to non-tax paying
entities............................................................................ (40,797) (40,587) (34,536)
------- ------- -------
Adjusted income before income taxes attributable to DaVita HealthCare Partners
Inc........................................................................... $317,184 $334,419 $298,383
======== ======== ========
Income tax expense (benefit)....................................................................... $126,822 $111,833 $(85,933)
Add:
Income taxes attributable to the goodwill and other intangible asset impairment
charges.................................................... - 6,647 -
Income taxes attributable to the pharmacy accrual................... - 1,996 -
Income taxes attributable to the settlement charge.................... - - 197,747
Less: Income tax attributable to noncontrolling interests....................... (72) (113) (67)
--- ---- ---
Adjusted income tax attributable to DaVita HealthCare Partners Inc. $126,750 $120,363 $111,747
======== ======== ========
Adjusted effective income tax rate attributable to DaVita HealthCare Partners
Inc........................................................................... 40.0% 36.0% 37.5%
==== ==== ====
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 a private civil 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
------------------
March 31, December 31, March 31,
2016 2015 2015
---- ---- ----
Cash provided by operating activities............................................................... $429,002 $436,673 $410,089
Less: Distributions to noncontrolling interests................................................. (50,409) (48,697) (41,499)
------- ------- -------
Cash provided by operating activities attributable to DaVita HealthCare Partners
Inc...................................................................................................... 378,593 387,976 368,590
Less: Expenditures for routine maintenance and information technology (73,288) (131,769) (49,010)
------- -------- -------
Free cash flow........................................................................................................ $305,305 $256,207 $319,580
======== ======== ========
Rolling 12-Month Period
-----------------------
March 31, December 31, March 31,
2016 2015 2015
---- ---- ----
Cash provided by operating activities.............................................................. $1,576,113 $1,557,200 $1,450,389
Less: Distributions to noncontrolling interests................................................ (183,545) (174,635) (157,691)
-------- -------- --------
Cash provided by operating activities attributable to DaVita HealthCare Partners
Inc...................................................................................................... 1,392,568 1,382,565 1,292,698
Less: Expenditures for routine maintenance and information technology.... (351,357) (327,079) (264,633)
-------- -------- --------
Free cash flow....................................................................................................... $1,041,211 $1,055,486 $1,028,065
========== ========== ==========
Rolling 12-Months ended
-----------------------
March 31, December 31, March 31,
2016 2015 2015
---- ---- ----
Cash provided by operating activities....................................................................................... $1,576,113 $1,557,200 $1,450,389
Payment in connection with the settlement of a private civil suit....................................... 493,775 493,775 -
Payment in connection with the settlement of the 2010 and 2011 U.S. Attorney physician relationship
investigations................................................................................... - - 410,356
Related tax benefit....................................................................................................................... (190,246) (190,246) (141,487)
-------- -------- --------
Adjusted operating cash flow..................................................................................................... $1,879,642 $1,860,729 $1,719,258
========== ========== ==========
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
------------------
March 31, December 31, March 31,
2016 2015 2015
---- ---- ----
Medical revenues................................................................................................... $974,328 $925,764 $912,588
Less: Risk share revenue, net............................................................................... (28,402) (44,134) (12,956)
Add: Institutional capitation amounts............................................................... 321,776 331,736 333,108
------- ------- -------
Total care dollars under management............................................................... $1,267,702 $1,213,366 $1,232,740
========== ========== ==========
Contact:
Jim Gustafson
Investor Relations
DaVita HealthCare Partners Inc.
(310) 536-2585
https://photos.prnewswire.com/prnvar/20140318/DC85712LOGO
Logo - http://photos.prnewswire.com/prnh/20140318/DC85712LOGO
To view the original version on PR Newswire, visit:http://www.prnewswire.com/news-releases/davita-healthcare-partners-inc-1st-quarter-2016-results-300262961.html
SOURCE DaVita HealthCare Partners Inc.
