Improving Health, Health Care and Quality of Life

Total Renal Care Reports 3rd Quarter and 9 Months Earnings

TORRANCE, Calif., Nov. 10 /PRNewswire/ -- Total Renal Care Holdings, Inc. (NYSE: TRL), the second-largest (and largest independent) worldwide provider of integrated dialysis services, today announced revenues, earnings and earnings per share for the third quarter and nine months ended September 30, 1999.

On a normalized basis, before the unusual items described below, the Company's revenues were $371 million for the third quarter and $1,087 million for the nine months. Normalized net income and earnings per share were $11.4 million and $0.14 for the third quarter, respectively.

The Company recognized $17.1 million in aggregate unusual items in the third quarter:

-- An $8.0 million charge to accounts receivable relating to the Minnesota

       Laboratory that includes a $4.1 million increase to the allowance for
       doubtful accounts and a $3.9 million increase in contractual
       allowances.
    -- $3.6 million for severance and related payments for departed senior
       executives, for certain employees in the Company's Argentina operations
       and certain costs for a retention program for current employees.
    -- A $3.3 million charge relating to the now-divested corporate jet,
       including $2.6 million of non-cash costs recognized as "other gains
       (losses)" on the income statement.
    -- A $1.1 million charge arising from obtaining the amendments and waiver
       from our bank syndicate in August 1999.
    -- An additional $1.1 million relating to closing of a dialysis facility
       as well as a settlement of an old Renal Treatment Centers lawsuit.

Kent J. Thiry, who joined the Company as Chairman of the Board and CEO on October 18, said, "We are now focused on a total review and evaluation of the company, in order to restore its value for shareholders while preserving its strength in the marketplace. We continue to work through the infrastructure and financial challenges that were created by the historical rapid growth of the Company and plan to complete this comprehensive review prior to releasing our year-end 1999 financial statements. In addition, we have retained Donaldson, Lufkin & Jenrette to advise the Company on refinancing options, which include raising capital. We are also separately exploring the sale of selected assets outside the continental United States, in order to pay down some of our debt."

George B. DeHuff, III, TRL's President and Chief Operating Officer, said, "The charges taken during the quarter include certain unusual expenses arising from our continuing review of all our billing and accounting systems as well as our expense structure. Our ongoing review of the accounts receivable, reserves and billing and collection practices will include but not be limited to our Tacoma billing office, Florida laboratory and international operations, during the fourth quarter. We will complete this review prior to releasing our year-end 1999 financial statements and it may result in increased allowances. Our collection efforts continue to be strong in Berwyn and we have seen improvement through the third quarter and during October in the Tacoma billing office."

During the third quarter of 1999, the Company slowed its acquisition program and has added approximately 600 patients and 9 dialysis centers, including approximately 550 patients in 8 domestic facilities and approximately 50 patients in 1 center internationally. The Company does not plan to complete any acquisitions during the fourth quarter of 1999 and into early 2000 except for one small transaction that it is contractually obligated to complete.

Additionally, the Company has opened 20 new owned or managed facilities in 1999 and expects to complete approximately 5 additional facilities by the end of this year. The Company's same-store treatment growth for the third quarter was 7.0% and was 6.5% for the nine months of 1999. The Company's Days Sales Outstanding for the third quarter were 115 days, which is flat in relation to second quarter.

The Company also announced that its lenders have agreed to a waiver of certain covenants in its credit facilities with which the Company would not have been in compliance.

                                Quarter End     Quarter End      Year End
                                  Sept. 30,        Dec. 31,      Dec. 31,
                                       1998            1998          1998
    Treatments                    1,284,000       1,342,000     4,912,000
    Patients                         36,400          39,500        39,500
    Centers                             477             508           508
    Normalized Revenue/Treatment       $248            $253          $245


                                Quarter End     Quarter End   Quarter End
                                  March 31,        June 30,     Sept. 30,
                                       1999            1999          1999
    Treatments                    1,391,000       1,467,000     1,510,000
    Patients                         42,100          44,000        45,000
    Centers                             541             564           569
    Normalized Revenue/Treatment       $253            $248          $246

Total Renal Care Holdings, Inc, based in Torrance, California, is the second-largest (and largest independent) worldwide provider of integrated dialysis services for patients suffering from chronic kidney failure. The Company owns and operates high-quality, free-standing kidney dialysis centers and home peritoneal dialysis programs in 34 states, as well as Washington, D.C., Puerto Rico, Guam, Argentina and several European countries. It also provides high quality acute hemodialysis services to inpatients at approximately 320 hospitals. As of October 15, 1999, Total Renal Care operated 570 outpatient dialysis facilities serving approximately 45,000 patients, including more than 4,000 patients in 51 centers under Total Renal Care management. Total Renal Care also operates ESRD laboratory and pharmacy facilities, as well as vascular access management, transplant services and ESRD clinical research programs.

This release contains forward-looking statements which are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements include statements regarding potential strengthening of operations and financial performance and involve risks and uncertainties that could cause actual results to differ materially from the forward-looking statements. Factors which could cause or contribute to such differences include, but are not limited to, the uncertainties associated with governmental regulation, general economic and other market conditions, and the "risk factors" set forth in the Company's filings with the Securities and Exchange Commission, including but not limited to (1) the risks inherent in the Company's growth strategy, (2) possible changes in Medicare and Medicaid reimbursement rates, (3) dependence on physician referrals, (4) risks associated with operations outside the United States, and (5) the amount of leverage the Company has obligations to pay. The forward-looking statements should be considered in light of these risks and uncertainties.

                       TOTAL RENAL CARE HOLDINGS, INC.
                         NORMALIZED INCOME STATEMENT
                          ADJUSTED FOR UNUSUAL ITEMS

                    THREE MONTHS ENDED SEPTEMBER 30, 1999
                         (in 000's, except EPS data)

                                     Actual     Adjustments    Normalized
    Net operating revenues         $366,968      $3,900 (a)      $370,868

    Operating expenses:
      Facilities                    250,765        (857)(b)       249,908
      General and administrative     32,725      (4,069)(c)        28,656
      Provision for doubtful
       accounts                      17,002      (4,100)(a)        12,902
      Depreciation & amortization    29,175                        29,175

      Total operating expenses      329,667                       320,641

    Operating income                 37,301                        50,227

    Interest expense                (28,862)        434 (d)       (28,428)
    Other financing costs              (629)        629 (e)             0
    Interest income                   1,241                         1,241
    Other gains (losses)             (3,320)      3,152 (f)          (168)
    Pre-tax income                    5,731                        22,872

    Income taxes                      2,285                         9,900
    Minority interest                 1,586                         1,586

    Net income                        1,860                        11,386

    Earnings per share                $0.02                         $0.14

    Shares outstanding               81,561                        81,561

    (a) $3,900 increase in contractual allowances relating to revenues at the
        Company's Minneapolis Laboratory and a $4,100 increase in provision
        for doubtful accounts relating to the Minnesota Laboratory.
    (b) Employee severance costs associated with the restructuring of the
        Company's Argentina operations.
    (c) Includes $1,719 of executive severance, $729 in cash expense
        associated with the now divested corporate jet, $540 for RTC
        litigation settlement, and $1,081 for employee retention program
        costs, primarily for stock option amendments, of which $955 was a
        non-cash charge.

(d) $434 of penalty interest expense in connection with the August waiver.

(e) $629 for expense related to August bank credit amendments.

(f) Includes a $2,577 non-cash loss on the disposition of the corporate

        jet and $575 in costs associated with the closing of a dialysis
        facility.

                       TOTAL RENAL CARE HOLDINGS, INC.
                 CONDENSED CONSOLIDATED STATEMENTS OF INCOME
        Three months and Nine months ended September 30, 1999 and 1998

                                                Three Months
                                         1999                   1998
    STATEMENTS OF INCOME
    Net operating revenues          $366,968,000            $318,585,000
    Operating expenses:
     Facilities                      250,765,000             200,925,000
     General and administrative       32,725,000              18,274,000
     Provision for doubtful accounts  17,002,000               8,997,000
     Depreciation and amortization    29,175,000              24,205,000
     Write-off of investments
      and loans                               --                      --
     Merger and related costs                 --                      --
      Total operating expenses       329,667,000             252,401,000
     Operating income                 37,301,000              66,184,000
    Interest expense, net of
     capitalized interest            (28,862,000)            (19,805,000)
    Other financing costs               (629,000)                     --
    Interest income and other          1,241,000                 963,000
    Other gains (losses)              (3,320,000)                     --
    Income before income taxes,
     minority interests,
     extraordinary item  and
     cumulative effect of change
     in accounting principle           5,731,000              47,342,000
    Income taxes                       2,285,000              18,102,000
     Income before minority
      interests, extraordinary
      item and cumulative effect
      of change in accounting
      principle                        3,446,000              29,240,000
    Minority interests in income
     of consolidated subsidiaries      1,586,000               1,859,000
     Income (loss) before
      extraordinary item and
      cumulative effect of change in
      accounting principle             1,860,000              27,381,000

    Extraordinary loss, net of
     tax of $ 7,668,000                      --                       --
    Cumulative effect of change in
     accounting principle, net of
     tax of $4,300,000                       --                       --
    Net income (loss)                $1,860,000              $27,381,000

    Earnings (loss) per common
     share:
     Income (loss) before
      extraordinary item and
      cumulative effect of change in
      accounting principle                $ 0.02                   $0.34
     Extraordinary loss, net of tax
     Cumulative effect of change
      in accounting principle, net of
      tax

    Net income (loss)                      $0.02                   $0.34

    Weighted average number of
     common shares outstanding        81,165,000              80,858,000

    Earnings (loss) per common
     share-assuming dilution:
     Income (loss) before
      extraordinary item and
      cumulative effect of change in
      accounting principle                 $0.02                  $ 0.33
     Extraordinary loss, net of tax
     Cumulative effect of change in
      accounting principle, net of tax
    Net income (loss)                      $0.02                   $0.33
    Weighted average number of common
     shares and equivalents
     outstanding -- assuming
     dilution                         81,561,000              87,052,000


                                                Nine Months
                                       1999                      1998
    STATEMENTS OF INCOME
    Net operating revenues        $1,072,405,000            $865,684,000
    Operating expenses:
     Facilities                      734,528,000             551,244,000
     General and administrative       86,003,000              52,789,000
     Provision for doubtful
      accounts                        63,187,000              23,539,000
     Depreciation and
      amortization                    83,592,000              66,604,000
     Write-off of investments
      and loans                       16,600,000                      --
     Merger and related costs                --               79,435,000
       Total operating expenses     983,910,000              773,611,000
     Operating income                88,495,000               92,073,000
    Interest expense, net of
     capitalized interest           (75,999,000)             (50,866,000)
    Other financing costs              (629,000)              (9,823,000)
    Interest income and other         4,505,000                3,627,000
    Other gains (losses)             (3,520,000)                      --
     Income before income taxes,
      minority interests,
      extraordinary item and
      cumulative effect of
      change in accounting
      principle                      12,852,000               35,011,000
    Income taxes                      5,608,000               31,062,000
     Income before minority
     interests, extraordinary
     item and cumulative effect
     of change in accounting
     principle  of change in
     accounting principle             7,244,000                3,949,000
    Minority interests in income
     of consolidated subsidiaries     6,425,000                4,817,000
     Income (loss) before
      extraordinary item and
      cumulative effect of change
      in accounting principle           819,000                 (868,000)
    Extraordinary loss, net
     of tax of $ 7,668,000                   --               12,744,000
    Cumulative effect of change
     in accounting principle, net
     of tax of $4,300,000                    --                6,896,000
    Net income (loss)                  $819,000            $ (20,508,000)

    Earnings (loss) per common share:
     Income (loss) before
      extraordinary item and
      cumulative effect of change in
      accounting principle               $ 0.01                   $(0.01)
     Extraordinary loss, net of tax                                (0.16)
     Cumulative effect of change
      in accounting principle, net
      of tax                                                       (0.09)
     Net income (loss)                    $0.01                   $(0.26)
    Weighted average number of
     common shares outstanding       81,148,000               79,982,000

    Earnings (loss) per common
     share-assuming dilution:
     Income (loss) before
      extraordinary item and
      cumulative effect of
      change in accounting
      principle                           $0.01                   $(0.01)
     Extraordinary loss, net
      of tax                                                       (0.16)
     Cumulative effect of change
      in accounting principle,
      net of tax                                                   (0.09)
     Net income (loss)                    $0.01                    (0.26)
    Weighted average number of
     common shares and equivalents
     outstanding
     - assuming dilution             81,600,000               79,982,000

SOURCE  Total Renal Care Holdings, Inc.

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