PR Newswire | Feb 11, 2021 04:06PM EST

02/11 15:06 CST

DaVita Inc. 4th Quarter 2020 Results DENVER, Feb. 11, 2021

DENVER, Feb. 11, 2021 /PRNewswire/ -- DaVita Inc. (NYSE: DVA) announced financial and operating results for the quarter and year ended December 31, 2020. For the full year diluted earnings per share from continuing operations was $6.39, an increase of 38.9% from the prior year, and adjusted diluted earnings per share from continuing operations was $7.26, an increase of 34.4% from the prior year. Fourth quarter diluted earnings per share from continuing operations of $1.67 was impacted by the challenges of responding to COVID-19, with an estimated net impact on operating income of approximately $(60) million. This impact was primarily driven by higher patient mortality, fewer offsets in the fourth quarter including higher health benefit expenses, and higher direct costs related to COVID-19.

"Throughout the pandemic, including the recent surge in the number of COVID-19 cases across the United States, our teammates continue to respond with a focus on the health and safety of 240,000 patients receiving high quality, life-sustaining care," said Javier Rodriguez, CEO of DaVita. "Over the past six weeks, we have begun providing vaccinations to our front-line caregivers, and we are now beginning the process of providing COVID-19 vaccinations to our patients."

Financial results for the quarter and year ended December 31, 2020:

* Consolidated revenues of $2.905 billion and $11.551 billion for the three months and year ended December 31, 2020, respectively. * Operating income of $382 million or 13.1% operating margin for the three months ended December 31, 2020. Operating income of $1.695 billion or 14.7% operating margin and adjusted operating income of $1.746 billion or 15.1% adjusted operating margin for the year ended December 31, 2020. * Diluted earnings per share from continuing operations of $1.67 for the three months ended December 31, 2020. Diluted earnings per share from continuing operations and adjusted diluted earnings per share from continuing operations of $6.39 and $7.26, respectively for the year ended December 31, 2020. * Operating cash flow and free cash flow, both from continuing operations, of $485 million and $210 million, respectively for the three months ended December 31, 2020. Operating cash flow and free cash flow, both from continuing operations, were $1.979 billion and $1.188 billion, respectively for the year ended December 31, 2020.

Three months ended December 31,Year ended December 31,

2020 2019 2020 2019

Net income attributable to (dollars in millions, except per share data) DaVita Inc.:

Net income from continuing $ 193 $242 $ 783 $ 707 operations

Diluted per share $ 1.67 $1.86 $ 6.39 $ 4.60

Adjusted net income from continuing $ 193 $242 $ 890 $ 830 operations^(1)

Diluted per share $ 1.67 $1.86 $ 7.26 $ 5.40 adjusted^(1)

Net income $ 174 $245 $ 774 $ 811

Diluted per share $ 1.50 $1.88 $ 6.31 $ 5.27

_____________________

For definitions of non-GAAP financial measures, see the note titled "Note(1) on Non-GAAP Financial Measures" and related reconciliations beginning on page 14.

Three months ended December 31,Year ended December 31,

2020 2019 2020 2019

AmountMarginAmountMargin Amount MarginAmount Margin

Operating (dollars in millions) income:

Operating$38213.1%$46316.0% $1,69514.7%$1,64314.4%income

Adjusted operating$38213.1%$46316.0% $1,74615.1%$1,76815.5%income^ (1)(2)

_____________________

For definitions of non-GAAP financial measures, see the note titled "Note(1) on Non-GAAP Financial Measures" and related reconciliations beginning on page 14.

(2) Adjusted operating margin is adjusted operating income divided by consolidated revenues.

U.S. dialysis metrics:

Volume: Total U.S. dialysis treatments for the fourth quarter of 2020 were 7,574,217, or an average of 95,876 treatments per day, representing a per day decline of (0.9)% compared to the fourth quarter of 2019. Normalized non-acquired treatment growth in the fourth quarter of 2020 compared to the fourth quarter of 2019 was (0.3)%.

Three months ended Year ended Quarter Annual December 31,September 30, December 31,December 31, change change 2020 2020 2020 2019

Per treatment metrics:

Revenue $ 351.78 $ 349.63 $2.15 $ 350.31 $ 349.02 $1.29

Patient care $ 245.06 $ 232.57 $12.49 $ 238.24 $ 239.27 $(1.03)costs

General and $ 31.80 $ 39.62 $(7.82)$ 31.62 $ 28.41 $3.21 administrative

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

Revenue:The quarter change was primarily due to increases in government revenue per treatment and in hospital inpatient dialysis services revenue due to normal seasonality and COVID-19, partially offset by a decline in calcimimetics revenue. The annual change was primarily due to an increase in Medicare rates due to a base rate increase in 2020, the temporary suspension of Medicare sequestration, as well as an increase in hospital inpatient dialysis services revenue per treatment, partially offset by a decline in calcimimetics reimbursement.

Patient care costs:The quarter change was primarily due to increases in COVID-19-related costs, including compensation expense, medical supplies and teammate reimbursement and benefit program expenses. In addition, there were increases in health benefit expenses, labor costs and other direct dialysis center operating expenses partially offset by a decrease in pharmaceutical intensity. The annual change was primarily due to decreases in pharmaceutical unit costs as well as travel expenses, partially offset by an increase in labor costs and COVID-19-related costs, including compensation expenses, medical supplies and teammate relief reimbursement and benefit program expenses.

General and administrative: The quarter change was primarily due to decreases in advocacy costs to counter union policy efforts, including a California ballot initiative and contributions to DaVita's charitable foundation partially offset by an increase in professional fees. The annual change was primarily due to increases in advocacy costs as described above, contributions to DaVita's charitable foundation, labor costs and COVID-19-related costs, including compensation expenses. These increases were partially offset by decreases in travel expenses and long-term incentive compensation expense.

Certain items impacting the quarter:

Share repurchases: During the three months ended December 31, 2020, we repurchased 4,193,401 shares for $417 million, at an average cost of $99.55 per share.

Subsequent to December 31, 2020 through February 10, 2021, the Company has repurchased 1,063,000 shares of our common stock for $123 million at an average cost of $115.98 per share.

Financial and operating metrics:

Three months endedYear ended December 31, December 31,

2020 2019 2020 2019

Cash flow: (dollars in millions)

Operating cash flow $ 485 $681 $1,979$2,072

Operating cash flow from continuing $ 485 $678 $1,979$1,973operations

Free cash flow from continuing $ 210 $415 $1,188$1,127operations ^(1)

___________________

For definitions of non-GAAP financial measures, see the note titled "Note(1) on Non-GAAP Financial Measures" and related reconciliations beginning on page 14.

Three months endedYear ended December 31, 2020 December 31, 2020

Effective income tax rate on:

Income from continuing operations 22.4 % 23.8 %

Income from continuing operations 27.5 % 28.6 % attributable to DaVita Inc.^(1)

Adjusted income from continuing operations attributable to DaVita Inc.27.5 % 28.0 % ^(1)

____________________

For definitions of non-GAAP financial measures, see the note titled "Note(1) on Non-GAAP Financial Measures" and related reconciliations beginning on page 14.

Center activity: As of December 31, 2020, we provided dialysis services to a total of approximately 240,400 patients at 3,137 outpatient dialysis centers, of which 2,816 centers were located in the United States and 321 centers were located in ten countries outside of the United States. During the fourth quarter of 2020, we opened a total of 14 new dialysis centers and closed seven dialysis centers in the United States. We also acquired 30 dialysis centers outside of the United States, including entering a new country, the United Kingdom, during the fourth quarter of 2020.

Outlook:

The following forward-looking measures and the underlying assumptions involve significant known and unknown risks and uncertainties, including those described below, and actual results may vary materially from these forward-looking measures. In particular, the widespread impact of the COVID-19 pandemic continues to generate significant risk and uncertainty, and as a result, our future results could vary materially from the guidance provided below. We do not provide guidance for operating income, diluted net income from continuing operations per share attributable to DaVita Inc., effective income 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, which may be significant. Our 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 2021 guidance

Low High

(dollars in millions, except per share data)

Adjusted operating income $1,675 $1,825

Adjusted diluted net income from continuing operations per share $7.75 $8.75 attributable to DaVita Inc.

Free cash flow from continuing operations$900 $1,150

We will be holding a conference call to discuss our results for the fourth quarter and year ended December 31, 2020, on February 11, 2021, 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.

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 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. These forward-looking statements could include, among other things, DaVita's response to and the expected future impacts of the novel coronavirus (COVID-19), including statements about our balance sheet and liquidity, our expenses and expense offsets, revenues, billings and collections, potential need, ability or willingness to use any funds under government relief programs, availability or cost of supplies, treatment volumes, mix expectation, such as the percentage or number of patients under commercial insurance, the availability and administration of COVID-19 vaccines, and overall impact on our patients and teammates, as well as other statements regarding our future operations, financial condition and prospects, expenses, strategic initiatives, government and commercial payment rates, expectations related to value-based care and Medicare Advantage plan enrollment and our ongoing stock repurchase program, and statements related to our guidance and expectations for future periods and the assumptions underlying any such projections. All statements in this release, other than statements of historical fact, are forward-looking statements. Without limiting the foregoing, statements including the words "expect," "intend," "will," "could," "plan," "anticipate," "believe," "forecast," "guidance," "outlook," "goals," and similar expressions are intended to identify forward-looking statements. These forward-looking statements are based on DaVita's current expectations and are based solely on information available as of the date of this release. DaVita undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of changed circumstances, new information, future events or otherwise, except as may be required by law. Actual future events and results 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 continuing impact of the dynamic and evolving COVID-19 pandemic, including, without limitation, on our patients, teammates, physician partners, suppliers, business, operations, reputation, financial condition and results of operations; the government's response to the COVID-19 pandemic; the availability, acceptance, impact and efficacy of COVID-19 treatments, therapies and vaccines; further spread or resurgence of the virus, including as a result of the emergence of new strains of the virus; the continuing impact of the pandemic on our revenue and non-acquired growth due to lower treatment volumes; the consequences of an extended economic downturn resulting from the impacts of COVID-19, such as a potential negative impact on our commercial mix, which may persist even after the pandemic subsides; and continuing COVID-19-related costs, such as costs to procure equipment and clinical supplies and higher salary and wage expense. The aforementioned risks and uncertainties may also have the effect of heightening many of the other risks and uncertainties discussed below; * 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 or percentage of our patients under such plans, including, without limitation, 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; * 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 extent to which the ongoing implementation of healthcare reform, or changes in or new legislation, regulations or guidance, enforcement thereof or related litigation 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 that are enrolled in or select Medicare Advantage plans or other material impacts to our business; or our making incorrect assumptions about how our patients will respond to any such developments; * 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 changes in laws, regulations or requirements applicable to us, such as potential and proposed federal and/or state legislation, regulation, ballot, executive action or other initiatives, including those related to healthcare and/or labor matters, such as AB 290 in California; * 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 healthcare marketplace, as well as the composition of the U.S. Supreme Court and the new presidential administration and congressional majority; * our ability to successfully implement our strategies with respect to home-based dialysis, value-based care and/or integrated kidney care, including maintaining our existing business and further developing our capabilities in a complex and highly regulated environment; * changes in pharmaceutical practice patterns, reimbursement and payment policies and processes, or pharmaceutical pricing, including with respect to hypoxia inducible factors; * 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; * the variability of our cash flows, including without limitation any extended billing or collections cycles; the risk that we may not be able to generate or access 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; * 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; and * uncertainties associated with the other risk factors set forth in Part I, Item 1A. of our Annual Report on Form 10-K for the year ended December 31, 2019, as updated by our Quarterly Reports on Form 10-Q for the quarters ended March 31, June 30 and September 30, 2020, and as may be further updated by the risks and uncertainties discussed in any subsequent reports that we file or furnish with the SEC from time to time.

The financial information presented in this release is unaudited and is subject to change as a result of subsequent events or adjustments, if any, arising prior to the filing of the Company's Annual Report on Form 10-K for the year ended December 31, 2020.

Contact: Jim Gustafson

Investor Relations

DaVita Inc.

(310) 536-2585

DAVITA INC.

CONSOLIDATED STATEMENTS OF INCOME

(unaudited)

(dollars and shares in thousands, except per share data)



Three months ended December 31,Year ended December 31,

2020 2019 2020 2019

Dialysis patient service$ 2,773,123$ 2,766,009 $11,026,251$10,896,706revenues

Other revenues 132,199 132,575 524,353 491,773

Total revenues 2,905,322 2,898,584 11,550,604 11,388,479

Operating expenses and charges:

Patient care 2,056,881 2,000,625 7,988,613 7,914,485 costs

General and 304,519 278,425 1,247,584 1,103,312 administrative

Depreciation and 161,486 158,467 630,435 615,152 amortization

Equity investment loss765 (1,521) (26,916) (12,679) (income)

Loss on changes in ownership - - 16,252 - interest, net

Goodwill impairment - - - 124,892 charges

Total operating expenses and 2,523,651 2,435,996 9,855,968 9,745,162 charges

Operating 381,671 462,588 1,694,636 1,643,317 income

Debt expense (60,469) (92,050) (304,111) (443,824)

Debt prepayment, refinancing and- - (89,022) (33,402) redemption charges

Other income, 6,169 11,485 16,759 29,348 net

Income from continuing operations 327,371 382,023 1,318,262 1,195,439 before income taxes

Income tax 73,368 81,690 313,932 279,628 expense

Net income from continuing 254,003 300,333 1,004,330 915,811 operations

Net (loss) income from discontinued (19,633) 2,629 (9,653) 105,483 operations, net of tax

Net income 234,370 302,962 994,677 1,021,294

Less: Net income attributable to(60,597) (58,091) (221,035) (210,313) noncontrolling interests

Net income attributable to$ 173,773 $ 244,871 $773,642 $810,981 DaVita Inc.



Earnings per share attributable to DaVita Inc.:

Basic net income from $ 1.73 $ 1.87 $6.54 $4.61 continuing operations

Basic net $ 1.56 $ 1.89 $6.46 $5.29 income

Diluted net income from $ 1.67 $ 1.86 $6.39 $4.60 continuing operations

Diluted net $ 1.50 $ 1.88 $6.31 $5.27 income



Weighted average shares for earnings per share:

Basic shares 111,690 129,447 119,797 153,181

Diluted shares 115,957 130,505 122,623 153,812



Amounts attributable to DaVita Inc.:

Net income from continuing $ 193,406 $ 242,242 $783,295 $706,832 operations

Net (loss) income from (19,633) 2,629 (9,653) 104,149 discontinued operations

Net income attributable to$ 173,773 $ 244,871 $773,642 $810,981 DaVita Inc.

DAVITA INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(unaudited)

(dollars in thousands)



Three months ended Year ended December 31, December 31,

2020 2019 2020 2019

Net income $234,370$302,962$994,677$1,021,294

Other comprehensive income (loss), net of tax:

Unrealized losses on interest rate cap agreements:

Unrealized gains (losses) 124 2,822 (16,346) 1,151

Reclassifications of net realized losses into net 1,033 1,595 5,313 6,377 income

Unrealized gains (losses) on foreign currency translation:

Foreign currency translation55,219 25,688 (7,623) (20,102) adjustments

Other comprehensive income 56,376 30,105 (18,656) (12,574) (loss)

Total comprehensive income 290,746 333,067 976,021 1,008,720

Less: Comprehensive income attributable to (60,597) (58,091) (221,035)(210,313) noncontrolling interests

Comprehensive income $230,149$274,976$754,986$798,407 attributable to DaVita Inc.

DAVITA INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited)

(dollars in thousands)



Year ended December 31,

2020 2019

Cash flows from operating activities:

Net income $994,677 $1,021,294

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

Depreciation and amortization 630,435 615,152

Debt prepayment, refinancing and redemption 86,957 33,402 charges

Impairment charges - 124,892

Stock-based compensation expense 91,458 67,850

Deferred income taxes 240,848 41,723

Equity investment income, net 13,830 8,582

Loss on sales of business interests, net 24,248 23,022

Other non-cash charges, net 747 49,579

Changes in operating assets and liabilities, net of effect of acquisitions and divestitures:

Accounts receivable (21,087) (79,957)

Inventories (12,349) 10,158

Other receivables and other current assets (79,277) 2,790

Other long-term assets (6,123) 6,965

Accounts payable 37,200 (84,539)

Accrued compensation and benefits (20,931) (14,697)

Other current liabilities 105,637 181,940

Income taxes (87,391) 95,645

Other long-term liabilities (19,851) (31,446)

Net cash provided by operating activities 1,979,028 2,072,355

Cash flows from investing activities:

Additions of property and equipment (674,541) (766,546)

Acquisitions (182,013) (100,861)

Proceeds from asset and business sales 50,139 3,877,392

Purchase of debt investments held-to-maturity (150,701) (101,462)

Purchase of other debt and equity investments (3,757) (5,458)

Proceeds from debt investments held-to-maturity 151,213 95,376

Proceeds from sale of other debt and equity 3,491 3,676 investments

Purchase of equity method investments (22,341) (9,366)

Distributions from equity method investments 3,139 2,589

Net cash (used in) provided by investing (825,371) 2,995,340 activities

Cash flows from financing activities:

Borrowings 4,046,775 38,525,850

Payments on long-term debt (4,110,304)(40,520,722)

Deferred financing and debt redemption costs (105,848) (85,319)

Purchase of treasury stock (1,458,442)(2,383,816)

Distributions to noncontrolling interests (253,118) (233,123)

Net (payments) receipts related to stock (975) 11,382 purchases and awards

Contributions from noncontrolling interests 42,966 57,317

Purchases of noncontrolling interests (7,831) (68,019)

Net cash used in financing activities (1,846,777)(4,696,450)

Effect of exchange rate changes on cash, cash (13,808) (1,760) equivalents and restricted cash

Net (decrease) increase in cash, cash equivalents(706,928) 369,485 and restricted cash

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

Net (decrease) increase in cash, cash equivalents(706,928) 793,298 and restricted cash from continuing operations

Cash, cash equivalents and restricted cash of 1,208,718 415,420 continuing operations at beginning of the year

Cash, cash equivalents and restricted cash of $501,790 $1,208,718 continuing operations at end of the period

DAVITA INC.

CONSOLIDATED BALANCE SHEETS

(unaudited)

(dollars and shares in thousands, except per share data)



December 31, December 31, 2020 2019

ASSETS

Cash and cash equivalents $324,958 $1,102,372

Restricted cash and equivalents 176,832 106,346

Short-term investments 20,101 11,572

Accounts receivable 1,824,282 1,795,598

Inventories 111,625 97,949

Other receivables 544,376 489,695

Prepaid and other current assets 76,387 66,866

Income tax receivable 70,163 19,772

Total current assets 3,148,724 3,690,170

Property and equipment, net of accumulated depreciation of $4,480,429 and $3,969,566, 3,521,824 3,473,384 respectively

Operating lease right-of-use assets 2,863,089 2,830,047

Intangible assets, net of accumulated amortization of $70,141 and $81,922, 166,585 135,684 respectively

Equity method and other investments 257,491 241,983

Long-term investments 32,193 36,519

Other long-term assets 79,501 115,972

Goodwill 6,919,109 6,787,635

$16,988,516$17,311,394

LIABILITIES AND EQUITY

Accounts payable $434,253 $403,840

Other liabilities 810,529 756,174

Accrued compensation and benefits 685,555 695,052

Current portion of operating lease liabilities 369,497 343,912

Current portion of long-term debt 168,541 130,708

Income tax payable 7,768 42,412

Total current liabilities 2,476,143 2,372,098

Long-term operating lease liabilities 2,738,670 2,723,800

Long-term debt 7,917,263 7,977,526

Other long-term liabilities 150,060 160,809

Deferred income taxes 809,600 577,543

Total liabilities 14,091,736 13,811,776

Commitments and contingencies

Noncontrolling interests subject to put 1,330,028 1,180,376 provisions

Equity:

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

Common stock ($0.001 par value, 450,000 shares authorized; 109,933 and 125,843 shares issued 110 126 and outstanding at December 31, 2020 and 2019, respectively)

Additional paid-in capital 597,073 749,043

Retained earnings 852,537 1,431,738

Accumulated other comprehensive loss (66,154) (47,498)

Total DaVita Inc. shareholders' equity 1,383,566 2,133,409

Noncontrolling interests not subject to put 183,186 185,833 provisions

Total equity 1,566,752 2,319,242

$16,988,516$17,311,394

DAVITA INC.

SUPPLEMENTAL FINANCIAL DATA

(unaudited)

(dollars in millions, except for per share and per treatment data)



Three months ended Year ended December 31,September 30,December 31,December 31, 2020 2020 2020 2019

1. Consolidated business metrics:

Operating margin 13.1 %15.0 %16.0 %14.7 %

Adjusted operating margin excluding 13.1 %15.0 %16.0 %15.1 %certain items^(1)(3)

General and administrative expenses as a percent10.5 %12.4 %9.6 %10.8 %of consolidated revenues^(2)

Effective income tax rate on income from 22.4 %23.2 %21.4 %23.8 %continuing operations

Effective income tax rate on income from continuing operations27.5 %29.2 %25.2 %28.6 %attributable to DaVita Inc.^(1)

Effective income tax rate on adjusted income from 27.5 %28.0 %25.2 %28.0 %continuing operations attributable to DaVita Inc.^(1)



2. Summary of financial results:

Revenues:

U.S. dialysis patient$2,674 $2,694 $2,687 $10,660 services and other

Other-Ancillary services

U.S. other 124 125 122 489

International dialysis patient 152 147 132 564 service and other

276 271 255 1,053

Eliminations (45) (41) (43) (162)

Total consolidated $2,905 $2,924 $2,899 $11,551 revenues

Operating income (loss):

U.S. dialysis $433 $471 $508 $1,918

Other-Ancillary services

U.S. (25) (14) (21) (99)

International^(4) (2) 7 2 23

(27) (7) (19) (76)

Corporate administrative (24) (26) (27) (147) support expenses

Total consolidated $382 $438 $463 $1,695 operating income

DAVITA INC.

SUPPLEMENTAL FINANCIAL DATA - continued

(unaudited)

(dollars in millions, except for per share and per treatment data)



Three months ended Year ended December 31,September 30,December 31,December 31, 2020 2020 2019 2020

3. Summary of reportable segment financial results:

U.S. dialysis

Revenue:

Dialysis patient $2,664 $2,677 $2,676 $10,619 service revenues

Other revenues 10 17 11 41

Total operating 2,674 2,694 2,687 10,660 revenues

Operating expenses:

Patient care costs 1,856 1,781 1,824 7,222

General and 241 303 209 958 administrative

Depreciation and 152 148 150 595 amortization

Equity investment (7) (9) (5) (33) income

Total operating 2,241 2,224 2,179 8,742 expenses

Segment operating $433 $471 $508 $1,918 income



4. U.S. dialysis business metrics:

Volume:

Treatments 7,574,217 7,656,173 7,681,462 30,314,619

Number of treatment 79.0 79.0 79.4 313.6 days

Average treatments 95,876 96,914 96,744 96,667 per day

Per day year-over-year (0.9) % (0.2) % 1.7 % 0.3 %(decrease) increase

Normalized year-over-year (0.3) % 0.6 % 2.1 % non-acquired treatment growth^(5)

Operating net revenues:

Average patient service revenue per $351.78 $349.63 $348.31 $350.31 treatment

Expenses:

Patient care costs $245.06 $232.57 $237.44 $238.24 per treatment

General and administrative $31.80 $39.62 $27.27 $31.62 expenses per treatment

Accounts receivable:

Receivables $1,681 $1,670 $1,671

DSO 59 58 58

DAVITA INC.

SUPPLEMENTAL FINANCIAL DATA - continued

(unaudited)

(dollars in millions, except for per share and per treatment data)



Three months ended Year ended December 31,September 30,December 31,December 31, 2020 2020 2019 2020

5. Cash flow:

Operating cash flow $485 $483 $681 $1,979

Operating cash flow from continuing $485 $483 $678 $1,979 operations

Operating cash flow from continuing $1,979 $2,172 $1,973 operations, last twelve months

Free cash flow from continuing operations$210 $287 $415 $1,188 ^(1)

Free cash flow from continuing $1,188 $1,393 $1,127 operations, last twelve months^(1)

Capital expenditures from continuing operations:

Routine maintenance/ $160 $84 $130 $399 IT/other

Development and $65 $75 $89 $275 relocations

Acquisition $69 $68 $24 $182 expenditures

Proceeds from sale of self-developed $14 $11 $19 $93 properties



6. Debt and capital structure:

Total debt^(6) $8,164 $8,111 $8,181

Net debt, net of cash and cash equivalents^$7,839 $7,401 $7,079 (6)

Leverage ratio (see calculation on page 3.21x 2.96x 3.08x 13)

Weighted average effective interest rate:

During the quarter 3.07 % 3.31 % 4.55 %

At end of the quarter3.06 % 3.11 % 4.46 %

On the senior secured credit facilities at 2.03 % 2.11 % 3.93 % end of the quarter

Debt with fixed and capped rates as a percentage of total debt:

Debt with rates fixed44 % 45 % 44 % by its terms

Debt with rates fixed by its terms or 87 % 88 % 87 % capped by cap agreements

Amount spent on share$417 $725 $542 $1,447 repurchases

Number of shares 4,193,401 8,231,679 8,368,506 16,477,378 repurchased

Certain columns, rows or percentages may not sum or recalculate due to thepresentation of rounded numbers.

_________________

These are non-GAAP financial measures. For a reconciliation of these(1) 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.

General and administrative expenses include certain corporate support,(2) long-term incentive compensation, accruals for legal matters, advocacy costs and charitable contributions.

(3) Adjusted operating margin is adjusted operating income divided by consolidated revenues.

The reported operating (loss) income for the three months ended(4) December 31, 2020, September 30, 2020 and December 31, 2019, includes foreign currency losses of approximately $6.0, $2.9 and $4.1, respectively, and approximately $2.9 for the year ended December 31, 2020.

Normalized non-acquired treatment growth reflects year-over-year growth in(5) treatment volume, adjusted to exclude acquisitions and other similar transactions, and further adjusted to normalize for the number and mix of treatment days in a given quarter versus the prior year quarter.

The debt amounts as of December 31, 2020, September 30, 2020 and December 31, 2019 presented exclude approximately $77.7, $80.9 and $72.8,(6) respectively, of debt discount and other deferred financing costs related to our senior secured credit facilities and senior notes in effect or outstanding at that time.

DAVITA INC.SUPPLEMENTAL FINANCIAL DATA-continued(unaudited)(dollars in millions)

Note 1: Calculation of the Leverage Ratio

Under our senior secured credit facilities (the Credit Agreement) dated August 12, 2019, the leverage ratio is defined as (a) all funded debt plus the face amount of all letters of credit issued, minus unrestricted cash and cash equivalents (including short-term investments) not to exceed $750 divided by (b) "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 calculation below is based on the last twelve months of "Consolidated EBITDA," as of the end of the reported period and pro forma for acquisitions or divestitures that occurred during the period, and "Consolidated net debt" at the end of the reported period, each as defined in the Credit Agreement. 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. The leverage ratio calculated by the Company is a non-GAAP measure and should not be considered a substitute for the ratio of total debt to operating income, determined in accordance with GAAP. 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 of other companies.

Rolling twelve months ended

December 31,September 30,December 31, 2020 2020 2019

Net income attributable to DaVita Inc. from continuing operations ^ $ 783 $ 832 $ 707 (1)

Income taxes 314 322 280

Interest expense 272 297 398

Depreciation and amortization 630 627 615

Impairment charges - - 125

Noncontrolling interests and equity235 226 223 investment income, net

Stock-settled stock-based 90 86 63 compensation

Debt prepayment, refinancing and 89 89 33 redemption charges

Loss on changes in ownership 16 16 - interest, net

Other 29 18 (12)

"Consolidated EBITDA" $ 2,460 $ 2,515$ 2,432



December 31,September 30,December 31, 2020 2020 2019

Total debt, excluding debt discount and other deferred financing costs^$ 8,164 $ 8,111$ 8,181 (2)

Letters of credit issued 65 65 73

8,228 8,176 8,254

Less: Cash and cash equivalents including short-term investments^ (333) (719) (750) (3)

Consolidated net debt $ 7,895 $ 7,457$ 7,504

Last twelve months "Consolidated $ 2,460 $ 2,515$ 2,432 EBITDA"

Leverage ratio 3.21x 2.96x 3.08x

Maximum leverage ratio permitted 5.00x 5.00x 5.00x under the Credit Agreement

Certain columns or rows may not sum or recalculate due to the presentation ofrounded numbers.

______________________

The net income measure presented is our net income from continuing operations attributable to DaVita Inc., since the Credit Agreement requires(1) divestitures to be reflected on a pro forma basis for our leverage ratio calculation, and this measure of net income already excludes our discontinued operations divested.

The debt amounts as of December 31, 2020, September 30, 2020 and December 31, 2019 presented exclude approximately $77.7, $80.9, and $72.8,(2) respectively, of debt discount and other deferred financing costs related to our senior secured credit facilities and senior notes in effect at that time.

This excludes amounts not readily convertible to cash related to the Company's non-qualified deferred compensation plans for all periods(3) presented. The Credit Agreement limits the amount deducted for cash and cash equivalents, including short-term investments, to the lesser of all unrestricted cash and cash equivalents of the Company or $750.

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, accruals for legal matters and debt prepayment and refinancing charges; 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, management uses 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 also are useful to investors and analysts in evaluating our performance over time and relative to competitors, as well as in analyzing the underlying trends in our business. Furthermore, we 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.

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, 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 proceeds from the sale of self-developed properties. Management uses this measure to assess our ability to fund acquisitions and meet our debt service obligations and we believe this measure is equally useful to investors and analysts as an adjunct to cash flows from operating activities from continuing operations and other measures under GAAP.

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.

DAVITA INC.

RECONCILIATIONS FOR NON-GAAP MEASURES - continued

(unaudited)

(dollars in millions, 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

December 31, 2020 September 30, 2020December 31, 2019

DollarsPer shareDollarsPer shareDollarsPer share

Net income from continuing operations $193 $1.67 $159 $1.28 $242 $1.86 attributable to DaVita Inc.

Debt prepayment, refinancing and - - 86 0.69 - - redemption charges

Related income tax- - (21) (0.17) - -

Adjusted net income from continuing $193 $1.67 $223 $1.80 $242 $1.86 operations attributable to DaVita Inc.

Certain columns or rows may not sum or recalculate due to the presentation ofrounded numbers.

Year ended

December 31, 2020 December 31, 2019

DollarsPer shareDollarsPer share

Net income from continuing operations $ 783$6.39 $ 707$4.60 attributable to DaVita Inc.

Operating charges:

Loss on changes in ownership 16 0.13 - - interests, net

Goodwill impairment charges - - 125 0.81

General and administrative:

Accruals for legal matters 35 0.29 - -

Debt prepayment, refinancing and 89 0.73 33 0.22 redemption charges

Related income tax (33) (0.27) (35) (0.23)

Adjusted net income from continuing $ 890$7.26 $ 830$5.40 operations attributable to DaVita Inc.

Certain columns or rows may not sum or recalculate due to the presentation ofrounded numbers.

DAVITA INC.

RECONCILIATIONS FOR NON-GAAP MEASURES - continued

(unaudited)

(dollars in millions, except for per share data)



Note 3: Adjusted operating income



Three months ended Year ended

December 31,September 30,December 31,December 31,December 31, 2020 2020 2019 2020 2019

Consolidated:

Operating $ 382 $438 $ 463 $ 1,695 $ 1,643 income

Operating charges:

Loss on changes in ownership - - - 16 - interests, net

Goodwill impairment - - - - 125 charges

General and administrative:

Accruals for - - - 35 - legal matters

Adjusted operating $ 382 $438 $ 463 $ 1,746 $ 1,768 income





Three months ended Year ended

December 31,September 30,December 31,December 31,December 31, 2020 2020 2019 2020 2019

Consolidated:

U.S. dialysis:

Segment operating $ 433 $471 $ 508 $ 1,918 $ 1,925 income

Other - Ancillary services:

U.S.

Segment (25) (14) (21) (99) (66) operating loss

Loss on changes in ownership - - - 16 - interests, net

Adjusted (25) (14) (21) (83) (66) operating loss

International

Segment operating (2) 7 2 23 (123) (loss) income

Goodwill impairment - - - - 125 charges

Adjusted operating (2) 7 2 23 2 (loss) income

Adjusted Other - Ancillary (27) (7) (19) (60) (64) services operating loss

Corporate administrative support expenses:

Segment (24) (26) (27) (147) (92) expenses

Accruals for - - - 35 - legal matters

Adjusted Corporate administrative (24) (26) (27) (112) (92) support expenses

Adjusted operating $ 382 $438 $ 463 $ 1,746 $ 1,768 income

Certain columns or rows may not sum or recalculate due to the presentation ofrounded numbers.

DAVITA INC.

RECONCILIATIONS FOR NON-GAAP MEASURES - continued

(unaudited)

(dollars in millions)



Note 4: Effective income tax rates on income from continuing operations attributable to DaVita Inc.



Three months ended Year ended December 31,September 30,December 31,December 31, 2020 2020 2019 2020

Income from continuing operations$ 327 $ 283 $ 382 $ 1,318 before income taxes

Less: Noncontrolling owners' income primarily (61) (59) (58) (222) attributable to non-tax paying entities

Income from continuing operations before income taxes $ 267 $ 224 $ 324 $ 1,097 attributable to DaVita Inc.



Income tax expense for continuing $ 73 $ 66 $ 82 $ 314 operations

Less: Income tax attributable to - - - (1) noncontrolling interests

Income tax expense from continuing operations $ 73 $ 65 $ 82 $ 313 attributable to DaVita Inc.



Effective income tax rate on income from continuing operations27.5 % 29.2 % 25.2 % 28.6 % attributable to DaVita Inc.





The effective income tax rate on adjusted income from continuing operations attributable to DaVita Inc. is computed as follows:



Three months ended Year ended December 31, December 31,September 30,December 31, 2020 2020 2020 2019

Income from continuing operations$ 327 $ 283 $ 382 $ 1,318 before income taxes

Operating charges:

Loss on changes in ownership interests, - - - 16 net

General and administrative:

Accruals for legal - - - 35 matters

Debt prepayment, refinancing and - 86 - 89 redemption charges

Noncontrolling owners' income primarily (61) (59) (58) (222) attributable to non-tax paying entities

Adjusted income from continuing operations before income taxes $ 267 $ 310 $ 324 $ 1,237 attributable to DaVita Inc.

Income tax expense $ 73 $ 66 $ 82 $ 314

Plus income tax related to:

Operating charges:

Loss on changes in ownership interests, - - - 2 net

General and administrative:

Accruals for legal - - - 9 matters

Debt prepayment, refinancing and - 21 - 22 redemption charges

Less income tax related to:

Noncontrolling - - - (1) interests

Income tax on adjusted income from continuing operations$ 73 $ 87 $ 82 $ 347 attributable to DaVita Inc.

Effective income tax rate on adjusted income from 27.5 % 28.0 % 25.2 % 28.0 % continuing operations attributable to DaVita Inc.

Certain columns, rows or percentages may not sum or recalculate due to thepresentation of rounded numbers.

DAVITA INC.

RECONCILIATIONS FOR NON-GAAP MEASURES - continued

(unaudited)

(dollars in millions)



Note 5: Free cash flow from continuing operations



Three months ended

December 31,September 30,December 31, 2020 2020 2019

Net cash provided by continuing $ 485 $ 483 $ 678 operating activities

Less: Distributions to (74) (61) (76) noncontrolling interests

Plus: Contributions from 10 12 13 noncontrolling interests

Cash provided by continuing operating activities attributable $ 421 $ 434 $ 615 to DaVita Inc.

Less: Expenditures for routine maintenance and information (160) (84) (130) technology

Less: Expenditures for development (65) (75) (89)

Plus: Proceeds from sale of 14 11 19 self-developed properties

Free cash flow from continuing $ 210 $ 287 $ 415 operations





Rolling twelve months ended

December 31,September 30,December 31, 2020 2020 2019

Net cash provided by continuing $ 1,979 $ 2,172$ 1,973 operating activities

Less: Distributions to (253) (255) (233) noncontrolling interests

Plus: Contributions from 43 46 57 noncontrolling interests

Cash provided by continuing operating activities attributable $ 1,769 $ 1,963$ 1,797 to DaVita Inc.

Less: Expenditures for routine maintenance and information (399) (370) (355) technology

Less: Expenditures for development (275) (300) (373)

Plus: Proceeds from sale of 93 99 58 self-developed properties

Free cash flow from continuing $ 1,188 $ 1,393$ 1,127 operations

Certain columns or rows may not sum or recalculate due to the presentation ofrounded numbers.

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SOURCE DaVita Inc.