Improving Health, Health Care and Quality of Life

DaVita Inc. Reports 1st Quarter 2004 Results
PRNewswire-FirstCall
EL SEGUNDO, Calif.

DaVita Inc. , today announced results for the quarter ended March 31, 2004. Net income for the three months ended March 31, 2004 was $52.9 million or $0.77 per share, compared with $36.4 million or $0.52 per share for the same period of 2003.

  (Logo:  http://www.newscom.com/cgi-bin/prnh/20020729/DAVITALOGO )

  Financial and operating highlights include:
   -- Cash Flow:  Operating cash flow for the quarter ended March 31, 2004
      was $115 million and free cash flow was $109 million.  For the rolling
      12 months ended March 31, 2004 operating cash flow was $328 million
      and free cash flow was $287 million.  These cash flow numbers exclude
      after-tax prior period Medicare lab recoveries of $12 million.
   -- Operating Income:  Operating income for the quarter was $96.8 million.
   -- Volume:  Total treatments for the first quarter were 1,657,055 or
      21,381 treatments per day, an increase of 8.7% per day compared to the
      first quarter of last year.  Non-acquired treatment growth was 4.1%.
   -- Center Activity:  As of March 31, 2004, we operated or provided
      administrative services at 571 outpatient centers serving
      approximately 48,400 patients.  During the first quarter we acquired 5
      centers and opened 5 de novo centers.  We also closed 2 centers and
      discontinued providing administrative services at 3 centers.

  Outlook

We are increasing our 2004 operating income target to $370 to $390 million.

DaVita will be holding a conference call to discuss its first quarter 2004 results on May 3, 2004, at 12:00 PM Eastern Time. The dial in number is 800 399-4406. A replay of the conference call will be available on DaVita's official web page, www.davita.com, for the following 30 days.

This press release includes non-GAAP financial measures, which we believe provide useful information to investors by excluding certain nonrecurring charges and prior period recoveries and by allowing consistency and comparability in our financial reporting to prior periods for which these non-GAAP measures were previously reported. These measures should be considered in addition to results prepared in accordance with GAAP, but are not a substitute for or superior to GAAP results. Included in this press release is a reconciliation of these non-GAAP measures to the most comparable GAAP financial measures.

This release also contains forward-looking statements. Factors which could impact future results include the uncertainties associated with governmental regulation, general economic and other market conditions, and the risk factors set forth in the Company's SEC filings, including its Form 10-K for the year ended December 31, 2003. The forward-looking statements should be considered in light of these risks and uncertainties. These risks include those relating to:

   -- the concentration of profits generated from PPO and private indemnity
      patients and from the administration of pharmaceuticals,
   -- possible reductions in private and government reimbursement rates,
   -- changes in pharmaceutical practice patterns or reimbursement policies,
   -- the Company's ability to maintain contracts with physician medical
      directors, and
   -- legal compliance risks, such as the ongoing review by the U.S.
      Attorney's Office and HHS Office of the Inspector General in
      Philadelphia.

The Company undertakes no obligation to update any forward-looking statements, whether as a result of new information, future events or otherwise.

                               DAVITA INC.

                    CONSOLIDATED STATEMENTS OF INCOME
                               (unaudited)
              (dollars in thousands, except per share data)



                                                     Three months ended
                                                           March 31,
                                                      2004           2003
  Net operating revenues                          $535,431       $459,807
  Operating expenses and charges:
     Patient care costs                            363,429        316,710
     General and administrative                     42,604         36,787
     Depreciation and amortization                  20,270         17,445
     Provision for uncollectible accounts            9,577          8,237
     Minority interests and equity income, net       2,718          1,294
        Total operating expenses and charges       438,598        380,473

  Operating income                                  96,833         79,334

  Debt expense                                      11,636         19,456
  Other income                                       1,443            785

  Income before income taxes                        86,640         60,663
  Income tax expense                                33,775         24,250

     Net income                                    $52,865        $36,413


  Earnings per share:
     Basic                                           $0.81          $0.60

     Diluted                                         $0.77          $0.52

  Weighted average shares for earnings per share:
     Basic                                      65,399,651     60,905,056

     Diluted                                    68,588,969     78,772,410



                               DAVITA INC.

                  CONSOLIDATED STATEMENTS OF CASH FLOWS
                               (unaudited)
                          (dollars in thousands)

                                                     Three months ended
                                                           March 31,
                                                      2004           2003

  Cash flows from operating activities:
  Net income                                       $52,865        $36,413
  Adjustments to reconcile net income to cash
   provided by operating activities:
       Depreciation and amortization                20,270         17,445
       (Gain) loss on divestitures                    (628)           119
       Deferred income taxes                        (1,016)         4,841
       Non-cash debt expense                           484            840
       Stock option expense and tax benefits        14,389          1,378
       Equity investment income                       (442)          (519)
       Minority interests in income of
        consolidated subsidiaries                    3,160          1,813
       Distributions to minority interests          (2,082)        (2,465)
  Changes in operating assets and liabilities, net
   of effect of acquisitions and divestitures:
       Accounts receivable                         (12,511)          (676)
       Medicare lab recoveries                      19,000
       Inventories                                   6,818          9,543
       Other current assets                            697          4,721
       Other long-term assets                        1,592         (2,457)
       Accounts payable                              8,843         (6,674)
       Accrued compensation and benefits             2,393        (13,075)
       Other current liabilities                     1,779         11,952
       Income taxes                                  5,315         16,641
       Other long-term liabilities                   5,190            809
          Net cash provided by operating
           activities                              126,116         80,649

  Cash flows from investing activities:
       Additions of property and equipment, net    (24,681)       (21,708)
       Acquisitions and divestitures, net          (17,088)          (718)
       Investments in and advances to
        affiliates, net                              2,191          1,931
       Intangible assets                              (360)          (300)
          Net cash used in investing activities    (39,938)       (20,795)

  Cash flows from financing activities:
       Borrowings                                  774,534        623,822
       Payments on long-term debt                 (786,791)      (478,659)
       Net proceeds from issuance of common stock   17,578          3,502
          Net cash provided by financing activities  5,321        148,665

  Net increase in cash and cash equivalents         91,499        208,519
  Cash and cash equivalents at beginning of period  61,657         96,475
  Cash and cash equivalents at end of period      $153,156      $ 304,994


                               DAVITA INC.

                       CONSOLIDATED BALANCE SHEETS
                               (unaudited)
              (dollars in thousands, except per share data)

                                                  March 31,     December 31,
                                                    2004            2003

  ASSETS
  Cash and cash equivalents                       $153,156        $61,657
  Accounts receivable, less allowance
   of $54,391 and $52,554                          400,444        387,933
  Medicare lab recoveries                                          19,000
  Inventories                                       26,187         32,853
  Other current assets                              43,178         43,875
  Deferred income taxes                             66,530         59,740
        Total current assets                       689,495        605,058
  Property and equipment, net                      349,868        342,447
  Amortizable intangibles, net                      50,570         49,971
  Investments in third-party dialysis businesses     3,348          3,095
  Other long-term assets                             9,179         10,771
  Goodwill                                         947,894        934,188
                                                $2,050,354     $1,945,530

  LIABILITIES AND SHAREHOLDERS' EQUITY
  Accounts payable                                 $80,711        $71,868
  Other liabilities                                118,643        112,654
  Accrued compensation and benefits                101,652        100,909
  Current portion of long-term debt                 50,025         50,557
  Income taxes payable                              30,506         26,832
        Total current liabilities                  381,537        362,820
  Long-term debt                                 1,105,277      1,117,002
  Other long-term liabilities                       24,500         19,310
  Deferred income taxes                            112,014        106,240
  Minority interests                                36,200         33,287
  Commitments and contingencies
  Shareholders' equity:
      Preferred stock ($0.001 par value,
       5,000,000 shares authorized; none issued)
      Common stock ($0.001 par value, 195,000,000
       shares authorized; 89,908,189 and 89,870,803
       shares issued)                                   90             90
      Additional paid-in capital                   538,877        539,575
      Retained earnings                            441,993        389,128
      Treasury stock, at cost (23,964,510
       and 25,368,019 shares)                     (586,641)      (620,998)
      Accumulated comprehensive income valuations   (3,493)          (924)
         Total shareholders' equity                390,826        306,871
                                                $2,050,354     $1,945,530


                               DAVITA INC.

                       SUPPLEMENTAL FINANCIAL DATA
                               (unaudited)
    (dollars in millions, except for per share and per treatment data)

                                  Q1 2004         Q4 2003       Q1 2003

  Financial Results:
     Net earnings excluding
      refinancing charges and
      Medicare lab recoveries for
      prior years' services         $52.9           $53.9         $36.4
         Basic EPS                  $0.81           $0.84         $0.60
         EPS assuming dilution      $0.77           $0.79*        $0.52

     Operating income, excluding
      Medicare lab recoveries       $96.8           $97.2         $79.3
        Operating income margin      18.1%           18.4%         17.3%

     Other comprehensive income
      Unrealized loss on securities,
       net of tax of $1,641
       and $590                   $(2,569)          $(924)

  Business Metrics:
     Volume
        Treatments              1,657,055       1,666,225     1,503,031
        Number of treatment days     77.5            79.5          76.4
        Treatments per day         21,381          20,959        19,673
        Per day year over year
         increase                     8.7%            8.5%          4.8%
        Non-acquired growth           4.1%            4.3%          3.3%

     Revenue
        Total revenue                $535            $553          $460
        Less Medicare lab recoveries
         for prior years' services                   $(24)
        Revenue excluding Medicare
         lab recoveries              $535            $529          $460

        Dialysis revenue per
         treatment                $311.02         $306.36       $296.31
        Per treatment increase
         from previous quarter        1.5%            0.0%          1.8%
        Per treatment increase from
         prior year                   5.0%            5.3%          2.0%

     Expenses
     A. Patient care costs
        Percent of revenue           67.9%           68.0%         68.9%
        Per treatment             $219.32         $216.04       $210.71
        Per treatment increase
         from previous quarter        1.5%            0.9%          2.2%

     B. General & administrative
         expenses
        Percent of revenue            8.0%            7.6%          8.0%
        Per treatment              $25.71          $24.21        $24.48
        Per treatment increase
         (decrease) from previous
          quarter                     6.2%           (1.5%)        (8.9%)

     C. Bad debt expense as a percent
         of current-period revenue    1.8%            1.8%          1.8%

     D. Consolidated effective tax
         rate                        39.0%           37.5%         40.0%

   * The fourth quarter benefited from a year-to-date reduction in the
     annualized effective tax rate that added $0.02 to fourth quarter
     earnings per share.


                               DAVITA INC.

                  SUPPLEMENTAL FINANCIAL DATA, CONTINUED
                               (unaudited)
    (dollars in millions, except for per share and per treatment data)

                                  Q1 2004         Q4 2003       Q1 2003
  Cash Flow
    Operating cash flow, excluding
     Medicare lab recoveries       $114.5           $34.6         $80.6
    Free cash flow, excluding
     Medicare lab recoveries       $108.7           $19.2         $70.1
    Capital expenditures:
       Development                  $19.2           $22.7         $11.9
       Routine maintenance/IT/other  $5.8           $15.4         $10.5
    Acquisition expenditures, net   $17.1           $30.4          $0.7

  Accounts Receivable
    Net receivables                  $400            $388          $346
    DSO                                70              69            69

  Debt/Capital Structure
    Total debt                     $1,155          $1,168        $1,464
    Net debt, net of cash          $1,002          $1,106        $1,159
    Leverage ratio - last quarter
     annualized (see Note 1)         2.1x            2.3x          3.0x
    Shares repurchased (in millions)    -             0.7             -
    Average repurchase price            -          $34.20             -

  Clinical (quarterly averages)
    Dialysis adequacy - % of patients
     with Kt/V > 1.2                   94%             93%           92%
    Anemia measure - % of patients
     with HCT > 33                     85%             85%           83%

   Note 1. Leverage ratio is defined as net debt (total debt net of cash) to
   operating income excluding depreciation, amortization, minority interests
   and prior period Medicare lab revenue.  The operating income
   reconciliation is provided below.


                               DAVITA INC.

                  RECONCILIATIONS FOR NON-GAAP MEASURES
                               (unaudited)
                          (dollars in thousands)

  1. Net earnings excluding refinancing charges and Medicare lab recoveries:

                                  Q1 2004         Q4 2003       Q1 2003

  Net earnings                    $52,865         $62,798       $36,413
  Add back: Refinancing charges                     9,261
  Less: Medicare lab recoveries
   for prior years' services                      (24,000)
        Related income tax expense                  5,837
                                  $52,865         $53,896       $36,413

  2. Operating income excluding Medicare lab recoveries, and excluding
      depreciation, amortization, and minority interests:

                                  Q1 2004         Q4 2003       Q1 2003
  Operating income                $96,833        $121,190       $79,334
  Less: Medicare lab recoveries
   for prior years' services                      (24,000)
                                  $96,833         $97,190       $79,334
  Add back: Depreciation and
             amortization          20,270          19,985        17,445
            Minority interests and
              equity income, net    2,718           2,499         1,294
                                 $119,821        $119,674       $98,073

  3. Operating cash flow, excluding Medicare lab recoveries collected in the
       period:

                                                                 Rolling
                                                                12-Month
                                                                 Period
                                                                 ended Q1
                                 Q1 2004    Q4 2003    Q1 2003      2004

  Cash provided by operating
   activities                   $126,116    $34,576    $80,649  $339,115
  Less: Medicare lab recoveries
        collected in the period  (19,000)                        (19,000)
       Related income tax expense  7,410                           7,410
                                $114,526    $34,576    $80,649  $327,525

  4. Free cash flow, excluding Medicare lab recoveries collected in the
      period:
     Free cash flow represents net cash provided by operating activities
     less non-development capital expenditures. We believe free cash flow is
     a useful adjunct to cash flow from operating activities and other
     measurements under generally accepted accounting principles in the
     United States since it is a meaningful measure of our ability to fund
     acquisition and development activities and meet our debt service
     requirements. Free cash flow is not a measure of financial performance
     under generally accepted accounting principles in the United States 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.

                                                                 Rolling
                                                                 12-Month
                                                                  Period
                                                                 ended Q1
                                 Q1 2004    Q4 2003    Q1 2003      2004

  Cash provided by operating
   activities                   $126,116    $34,576    $80,649  $339,115
  Less: Expenditures for routine
   maintenance and information
   technology                     (5,816)   (15,362)   (10,490)  (40,193)
        Medicare lab recoveries
         collected in the period (19,000)                        (19,000)
        Related income tax expense 7,410                           7,410
                                $108,710    $19,214    $70,159  $287,332
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SOURCE: DaVita Inc.

CONTACT: LeAnne Zumwalt, Investor Relations, DaVita Inc.,
+1-310-536-2420


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