DaVita HealthCare Partners announces financial results for fourth quarter 2014

Feb 13 2015

DaVita HealthCare Partners Inc. (NYSE: DVA) today announced results for the quarter and year ended December 31, 2014. Income from continuing operations attributable to DaVita HealthCare Partners Inc. for the quarter and year ended December 31, 2014 was $208 million and $723 million, or $0.96 and $3.33 per share, respectively. Adjusted income from continuing operations attributable to DaVita HealthCare Partners Inc. for the year ended December 31, 2014, excluding a loss contingency reserve and debt refinancing charges, was $792 million, or $3.64 per share.

Income from continuing operations attributable to DaVita HealthCare Partners Inc. for the quarter and year ended December 31, 2013 was $212 million and $620 million, or $0.99 and $2.89 per share, respectively. Adjusted income from continuing operations attributable to DaVita HealthCare Partners Inc. for the year ended December 31, 2013, excluding a loss contingency reserve and a contingent earn-out obligation adjustment, was $818 million, or $3.81 per share.

Financial and operating highlights include:

• Cash Flow: For the year ended December 31, 2014, operating cash flow was $1.459 billion and free cash flow was $1.045 billion. For the three months ended December 31, 2014, operating cash flow was $(70) million and free cash flow was $(197) million. Operating cash flow and free cash flow for the quarter and year ended December 31, 2014 was negatively impacted by approximately $269 million of after-tax payments made in connection with the settlement of the 2010 and 2011 U.S. Attorney Physician Relationship Investigations.
   
• Operating Income / Adjusted: Operating income for the quarter and year ended December 31, 2014 was $452 million and $1.815 billion, respectively. Adjusted operating income for the year ended December 31, 2014, excluding a loss contingency reserve, was $1.832 billion. The quarter and year ended December 31, 2014 benefited from a $29 million net favorable impact resulting from the revenue recognition of certain California Medicaid payments received in prior periods, as discussed below.
  
  Operating income for the quarter and year ended December 31, 2013 was $484 million and $1.550 billion, respectively. Adjusted operating income for the year ended December 31, 2013, excluding a loss contingency reserve, an adjustment to reduce a tax asset associated with the HCP acquisition escrow provisions and a contingent earn-out obligation adjustment, was $1.898 billion.
   
• Adjusted Diluted Income from Continuing Operations Per Share: Adjusted income from continuing operations attributable to DaVita HealthCare Partners Inc. for the quarter and year ended December 31, 2014, excluding the amortization of intangible assets associated with acquisitions, net of tax impacts, was $236 million and $896 million, respectively, and adjusted diluted income from continuing operations per share was $1.09 and $4.13, respectively. In addition, adjusted income from continuing operations and adjusted diluted income from continuing operations per share for the year ended December 31, 2014 excluded a loss contingency reserve and debt refinancing charges.
  
  Adjusted income from continuing operations attributable to DaVita HealthCare Partners Inc. for the quarter and year ended December 31, 2013, excluding the amortization of intangible assets associated with acquisitions, net of tax impacts, was $237 million and $915 million, respectively, and adjusted diluted income from continuing operations per share was $1.10 and $4.26, respectively. In addition, adjusted income from continuing operations and adjusted diluted income from continuing operations per share for the year ended December 31, 2013 excluded a loss contingency reserve and a contingent earn-out obligation adjustment.
   
• California Medicaid Revenue: The quarter and year ended December 31, 2014 benefited from revenue recognition of $35 million related to the resolution of dialysis payments received in prior periods from the California Medicaid program. The increase in revenue was reduced by certain related expenses resulting in a net increase in operating income of approximately $29 million and resulted in a non-recurring increase in net income attributable to DaVita HealthCare Partners Inc. of approximately $14 million.
   
• Volume: Total U.S. dialysis treatments for the fourth quarter of 2014 were 6,465,826, or 81,434 treatments per day, representing a per day increase of 6.2% over the fourth quarter of 2013. Non-acquired treatment growth in the fourth quarter of 2014 increased 5.2% over the fourth quarter of 2013 and normalized non-acquired treatment growth in the fourth quarter of 2014 increased by 4.6% over the fourth quarter of 2013.
  
  The number of member months for which HCP provided capitated care during the fourth quarter of 2014 was approximately 2.5 million representing an increase of 9.4% as compared to the fourth quarter of 2013, inclusive of growth contributed from acquisitions.
   
• Effective Tax Rate: Our effective tax rate was 29.3% and 34.1% for the quarter and year ended December 31, 2014, respectively. This effective tax rate is impacted by the amount of third party owners' income attributable to non-tax paying entities. The effective tax rate attributable to DaVita HealthCare Partners Inc. was 33.3% and 38.1% for the quarter and year ended December 31, 2014, respectively. Our effective tax rate for the quarter and year ended December 31, 2014 decreased due to the reinstatement of federal and state credits and a reduction in our tax reserves.
  
  We currently expect our 2015 effective tax rate attributable to DaVita HealthCare Partners Inc. to be approximately 39.5% to 40.5%.
   
• Center Activity: As of December 31, 2014, we provided dialysis services to a total of approximately 180,000 patients at 2,270 outpatient dialysis centers, of which 2,179 centers are located in the United States and 91 centers are located in ten countries outside of the United States. During the fourth quarter of 2014, we opened a total of 30 new dialysis centers, acquired two dialysis centers, and closed five dialysis centers in the United States. We also acquired three dialysis centers and opened one new dialysis centers outside of the United States.

Outlook

• We still expect our consolidated operating income for 2015 to be in the range of $1.750 billion to $1.900 billion.
   
• We still expect our operating income for Kidney Care for 2015 to be in the range of $1.525 billion to $1.625 billion.
   
• We still expect our operating income for HCP for 2015 to be in the range of $225 million to $275 million.
   
• We still expect our consolidated operating cash flow for 2015 to be in the range of $1.500 billion to $1.700 billion.

SOURCE DaVita HealthCare Partners Inc.