Improving Health, Health Care and Quality of Life

Total Renal Care Reports 2nd Quarter Results
PRNewswire
TORRANCE, Calif.

DaVita (Total Renal Care Holdings, Inc.) , today announced results for the quarter ended June 30, 2000. Net earnings after tax were $2.3 million, or $0.03 per share, excluding previously announced after-tax charges totaling $17.7 million. For continental U.S. operations, second quarter earnings before interest, taxes, depreciation and amortization (EBITDA), excluding these charges, were $62.3 million. The charges and expenses relate to the divestiture of our non-continental operations, the settlement of a shareholder class action lawsuit and the write-off of a deferred tax asset associated with medical director stock options that have been cancelled. The consolidated net loss including the charges was $15.4 million, or $0.19 per share.

  Quarterly financial highlights include:

  -- Continental U.S. dialysis revenue per treatment (excluding lab,
     pharmacy and other revenue) in the second quarter was $249.23 as
     compared to $247.01 in the first quarter, or a 1% increase.
  -- Continental U.S. DSO at quarter end was 80 days.  This represents a
     three-day improvement from the first quarter.  Excluding the suspended
     Florida laboratory Medicare receivables of $38 million, DSO was 71 days
     or a four-day improvement during the quarter.
  -- Net cash provided by operations was $49 million in the second quarter,
     after the payment of $11 million for the shareholder litigation
     settlement.  Routine capital asset purchases and growth capital
     expenditures were approximately $8 million.
  -- Consolidated revenues for the three and six months ended June 30, 2000
     were $379 million and  $751 million, respectively.  Revenues from the
     continental U.S. were $344 million and $684 million, respectively.
     Revenues from the non-continental operations were $35 million and
     $67 million, respectively.
  -- Total continental U.S. treatments for the second quarter were
     1,335,873.  Non-acquired treatment growth was 6.4%, which included same
     center treatment growth of 5.0%.
  -- Application of the proceeds of the sale of the Company's
     non-continental operations and outpatient pharmacy business reduced the
     Company's outstanding debt obligations by approximately $128 million.
     Net debt (total debt less cash) was reduced by approximately
     $174 million, or 13%, from $1.29 billion to $1.12 billion as of the end
     of the quarter.
  -- In July 2000, DaVita completed a restructuring of its revolving and
     term loan credit facilities.  The Company is now in compliance with all
     credit facility covenants.  Accordingly, the Company's credit facility
     debt and subordinated notes have been reclassified from current to
     long-term, except for the current portion.  Interest rates related to
     these obligations have returned to the pre-default rates that are based
     on LIBOR plus an applicable margin.
  -- At June 30, 2000 we operated 489 outpatient centers in the continental
     U.S. serving over 40,000 patients.  During the quarter, we opened
     5 de novo dialysis facilities, added 4 managed units and closed
     4 under-performing centers.  Included in our continental patient and
     facility count are 4,500 patients in 55 centers under management. We
     also provide acute hemodialysis services to inpatients at
     301 continental U.S. hospitals.

  Specifics of the second quarter charges are as follows:

  -- $4.4 million non-cash impairment and valuation adjustments primarily
     related to the divestiture of our non-continental operations,
  -- $10.8 million cash charge related to the settlement of our shareholder
     class action lawsuit,
  -- $4.7 million non-cash write-off of a cumulative foreign currency
     translation loss from our non-continental business, and
  -- $2.7 million non-cash charge, included in tax expense, for the
     write-off of a deferred tax asset associated with medical director
     stock options that have been cancelled.

These previously disclosed charges total $17.7 million on an after tax basis.

As a result of the restructuring of our revolving and term loan credit facilities in July 2000, our third quarter results will include the write-off of certain related financing costs. These write-offs will be reflected principally as an extraordinary loss of $3.5 million, net of tax. Additionally, there will be $1.2 million of pre-tax costs written-off which will be included in debt expense. Other previously disclosed potential future charges and expenses include potential charges related to the unwinding of poor performing contracts, partnerships or investments in dialysis related companies, and any potential losses related to unfavorable resolution of the ongoing payment suspension of Medicare claims for our Florida laboratory.

Kent Thiry, Chairman and CEO observed, "The DaVita team continues to demonstrate great resolve in our quest to meet the expectations of each of our constituencies. Our near-term prospects for sustaining our march to achieving operating excellence are good. However, we still advise caution with respect to long-term industry margins, in particular because, rate reductions in the higher pay segments would be difficult to offset."

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 our 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 relating to the large amount and terms of the Company's outstanding debt, (2) possible changes in Medicare, Medicaid and private reimbursement rates, and (3) the high concentration of profits generated from private indemnity patients, which represent a small percentage of our total patients. The forward-looking statements should be considered in light of these risks and uncertainties.

                                  DAVITA
                    (TOTAL RENAL CARE HOLDINGS, INC.)

                       CONSOLIDATED BALANCE SHEETS
                   (in thousands except per share data)

                                                  June 30,     December 31,
                                                      2000           1999
                                  ASSETS

  Cash and cash equivalents                       $190,672       $107,981
  Accounts receivable, less
    allowance of $62,828,
    and $67,315, respectively                      303,355        390,329
  Inventories                                       19,865         32,916
  Other current assets                              21,700         32,082
  Income tax receivable                             25,856         45,645
  Deferred income taxes                             44,861         45,795
      Total current assets                         606,309        654,748
  Property and equipment, net                      248,033        285,449
  Intangible assets, net                           957,322      1,069,672
  Investments in third-party
    dialysis businesses                             35,814         35,552
  Deferred taxes                                     5,407          6,553
  Other long-term assets                             2,264          4,744
                                                $1,855,149     $2,056,718

                   LIABILITIES AND SHAREHOLDERS' EQUITY

  Accounts payable                                 $72,888       $121,561
  Accrued compensation and benefits                 50,104         47,647
  Other liabilities                                 81,420         77,141
  Current portion of long-term debt                121,237         26,585
  Long-term debt potentially callable
    under covenant provisions                           --      1,425,610
      Total current liabilities                    325,649      1,698,544
  Long-term debt, less $0, and $1,425,610
    potentially callable classified
    as current                                   1,188,134          5,696
  Other long-term liabilities                        3,921          3,497
  Minority interests                                17,395         22,577
  Shareholders' equity
    Preferred stock ($0.001 par value;
      5,000,000 shares authorized;
      none issued or outstanding)
    Common stock ($0.001 par value,
      195,000,000 shares authorized;
      81,565,215 and 81,193,011 shares
      issued and outstanding)                           82             81
    Additional paid-in capital.                    426,428        426,025
    Notes receivable from shareholders.              (160)          (192)
    Accumulated other comprehensive loss                --        (4,718)
    Accumulated deficit                          (106,300)       (94,792)
      Total shareholders' equity                   320,050        326,404
                                                $1,855,149     $2,056,718


                                  DAVITA
                    (TOTAL RENAL CARE HOLDINGS, INC.)

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

                  Three months ended June 30,   Six months ended June 30,
                            2000        1999           2000          1999
  Net operating
    revenues            $378,908    $352,819       $751,021      $705,063
  Operating expenses
    Dialysis and lab
      facilities.        267,714     250,548        527,012       480,188
    General and
      administrative.     31,619      29,559         63,540        53,167
    Depreciation and
      amortization.       29,670      26,758         57,388        53,148
    Provision for
      uncollectible
      accounts.           12,648      35,707         25,507        46,185
    Impairments and
      valuation
      adjustments          4,414      16,600          4,414        16,600
      Total operating
        expenses         346,065     359,172        677,861       649,288
  Operating income
    (loss)                32,843      (6,353)        73,160        55,775
  Other income (loss)    (11,984)      1,934        (10,589)        3,264
  Debt expense            34,482      24,905         67,647        48,208
  Minority interests
    in income of
    consolidated
    subsidiaries          (1,023)     (2,521)        (2,021)      (4,839)
  Income (loss) before
    income taxes.        (14,646)    (31,845)        (7,097)        5,992
  Income tax expense
    (benefit)                709      (9,786)         4,411         4,844
  Net income (loss)     $(15,355)   $(22,059)      $(11,508)      $ 1,148

  Earnings (loss)
    per share.            $(0.19)     $(0.27)        $(0.14)        $0.01

  Earnings (loss)
    per share-assuming
     dilution             $(0.19)     $(0.27)        $(0.14)        $0.01


                         SUPPLEMENTAL INFORMATION

                                  DAVITA
                    (TOTAL RENAL CARE HOLDINGS, INC.)

          CONTINENTAL U.S. OPERATING INCOME AND EARNINGS BEFORE
              INTEREST, TAXES, DEPRECIATION AND AMORTIZATION

                     THREE MONTHS ENDED JUNE 30, 2000
                              (in thousands)

  Net operating revenues                $344,331
  Operating expenses
    Dialysis and lab facilities          240,385
    General and administrative            29,815
    Depreciation and amortization         25,700
    Provision for uncollectible
      accounts.                           11,825
    Impairments and valuation
      adjustments                          4,414
      Total operating expenses.          312,139
  Operating income                       $32,192

  EBITDA pre-impairment                  $62,306

  Owned Centers                              434
  Treatments                           1,335,873
  Revenue per treatment
    (excludes lab,
    management fees
    and other revenue)                   $249.23

SOURCE: Total Renal Care Holdings, Inc.

Contact: LeAnne Zumwalt, Investor Relations of Total Renal Care, Inc.,
310-750-2072


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