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DaVita HealthCare Partners Inc. 4th Quarter 2012 Results

DaVita HealthCare Partners Inc. (NYSE: DVA) today announced results for the quarter and year ended December 31, 2012. Adjusted net income attributable to DaVita HealthCare Partners Inc. for the quarter ended December 31, 2012 was $173.3 million, or $1.68 per share, excluding transaction expenses associated with the acquisition of HealthCare Partners Holdings, LLC (HCP), debt refinancing charges and expenses associated with a legal settlement, which net of related tax impacts totaled $17.5 million, or $0.17 per share. Net income attributable to DaVita HealthCare Partners Inc. for the quarter ended December 31, 2012 including these items was $155.8 million, or $1.51 per share.

Adjusted net income attributable to DaVita HealthCare Partners Inc. for the year ended December 31, 2012 was $612.4 million, or $6.25 per share, excluding transaction expenses associated with the acquisition of HCP, debt refinancing charges and a legal settlement and related expenses, which net of related tax impacts totaled $76.4 million, or $0.78 per share. Net income attributable to DaVita HealthCare Partners Inc. for the year ended December 31, 2012 including these items was $536.0 million, or $5.47 per share.

Net income attributable to DaVita HealthCare Partners Inc. for the quarter and year ended December 31, 2011 was $148.1 million and $492.4 million, or $1.56 per share and $5.11 per share, respectively, for which the year ended December 31, 2011 amounts exclude an after-tax non-cash goodwill impairment charge totaling approximately $14.4 million, or $0.15 per share. Net income attributable to DaVita HealthCare Partners Inc. for the year ended December 31, 2011 including this item was $478.0 million, or $4.96 per share.

Financial and operating highlights include:

  • Cash Flow: For the year ended December 31, 2012, operating cash flow was $1,101 million and free cash flow was $715 million. For the three months ended December 31, 2012, operating cash flow was $200 million and free cash flow was $83 million. For a definition of free cash flow see Note 4 to the reconciliations of non-GAAP measures.
  • Operating Income: Adjusted operating income for the quarter ended December 31, 2012 was $408 million, excluding the transaction expenses associated with the acquisition of HCP of $13 million and expenses associated with a legal settlement of $7 million. Operating income for the quarter ended December 31, 2012 including these items was $388 million.Adjusted operating income for the year ended December 31, 2012 was $1,414 million, excluding transactions expenses associated with the acquisition of HCP of $31 million and a legal settlement and related expenses of $86 million. Operating income for the year ended December 31, 2012 including these items was $1,297 million.Operating income for the quarter and year ended December 31, 2011 was $330 million and $1,155 million, respectively.
  • Adjusted Diluted Net Income Per Share: Adjusted diluted net income per share attributable to DaVita HealthCare Partners Inc. for the quarter ended December 31, 2012, excluding transaction expenses associated with the acquisition of HCP, debt refinancing charges, expenses associated with a legal settlement and amortization of intangible assets associated with acquisitions, which net of related tax impacts totaled $35.0 million, was $1.85 per share.Adjusted diluted net income per share attributable to DaVita HealthCare Partners Inc. for the year ended December 31, 2012, excluding transaction expenses associated with the acquisition of HCP, debt refinancing charges, a legal settlement and related expenses, and the amortization of intangible assets associated with acquisitions, which net of related tax impacts totaled $105.4 million, was $6.55 per share.Adjusted diluted net income per share attributable to DaVita HealthCare Partners Inc. for the quarter ended December 31, 2011, excluding after-tax amortization of intangible assets associated with acquisitions totaling $3.7 million, was $1.60 per share.Adjusted diluted net income per share attributable to DaVita HealthCare Partners Inc. for the year ended December 31, 2011, excluding a goodwill impairment charge and the amortization of intangible assets associated with acquisitions, which net of related tax impacts totaled $28.2 million, was $5.25 per share.
  • Volume: Total U.S. dialysis treatments for the fourth quarter of 2012 were 5,736,776, or 72,161 treatments per day, representing a per day increase of 9.1% over the fourth quarter of 2011. Non-acquired treatment growth in the quarter was 4.7% over the prior year’s fourth quarter. Our normalized non-acquired treatment growth in the quarter was 4.4% over the prior year’s fourth quarter.
  • Effective Tax Rate: Our effective tax rate was 34.7% and 35.9% for the quarter and year ended December 31, 2012, 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 38.5% and 40.1% for the quarter and year ended December 31, 2012, respectively. We expect our 2013 effective tax rate attributable to DaVita HealthCare Partners Inc. to be in the range of 39.5% to 40.5%.
  • Acquisition: On November 1, 2012 we completed our acquisition of HCP pursuant to an Agreement and Plan of Merger dated May 20, 2012, as amended, whereby HCP became a wholly-owned subsidiary of DaVita Inc. For further details regarding this transaction, see our report on Form 8-K filed with the SEC on November 1, 2012. The operating results of HCP are included in our consolidated financial results from November 1, 2012.
  • Debt Transactions: In conjunction with the acquisition of HCP, on November 1, 2012, we borrowed an additional $3,000 million under an amended Credit Agreement. The amended Credit Agreement consist of a new five year Term Loan A-3 facility in an aggregate principal amount of $1,350 million and a new seven year Term Loan B-2 facility in an aggregate principal amount of $1,650 million. The new Term Loan A-3 initially bears interest at LIBOR plus an interest rate margin of 2.50% subject to adjustment depending upon our leverage ratio and can range from 2.00% to 2.50%. The Term Loan A-3 matures in 2017. The Term Loan B-2 bears interest at LIBOR (floor at 1.00%) plus an interest rate margin of 3.00% and matures in 2019. In addition, we amended certain financial covenants and various other provisions of our Credit Agreement to provide operating and financial flexibility.On August 28, 2012, we also issued $1,250 million of New Senior Notes. The New Senior Notes will pay interest on February 15 and August 15 of each year, beginning February 15, 2013. The New Senior Notes are unsecured senior obligations and rank equally to other unsecured senior indebtedness and are guaranteed by certain domestic subsidiaries of DaVita HealthCare Partners Inc.We received total proceeds of $4,250 million from these additional borrowings, $3,000 million from the borrowings on the new Term Loan A-3 and new Term Loan B-2, and an additional $1,250 million from the New Senior Notes. We used a portion of the proceeds to finance the merger of HCP, pay-off the existing Term Loan A-2 outstanding principal balance and to pay-off a portion of HCP’s existing debt as well as to pay fees and expenses of approximately $71.8 million.
  • Dialysis Center Activity: As of December 31, 2012, we operated or provided administrative services at 1,954 outpatient dialysis centers located in the United States serving approximately 153,000 patients and 36 outpatient dialysis centers serving approximately 2,200 patients that are located in eight countries outside of the United States. During the fourth quarter of 2012, we acquired 22 dialysis centers and opened a total of 22 dialysis centers located in the United States. We also acquired 10 dialysis centers and opened two dialysis centers outside of the United States.

Outlook

Our consolidated operating income guidance for 2013 is still expected to be in the range of $1,750 million to $1,900 million including the operating results of HCP. Our operating income guidance for 2013 for our dialysis services and related ancillary businesses is expected to be in the range of $1,350 million to $1,450 million and our operating income guidance for 2013 for HCP is expected to be in the range of $400 million to $450 million. We also expect our consolidated operating cash flows for 2013 to be in the range of $1,350 million to $1,500 million. These projections and the underlying assumptions involve significant risks and uncertainties, including those described below, and actual results may vary significantly from these current projections.

Stock quotes in this article: DVA 

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