Improving Health, Health Care and Quality of Life

DaVita Inc. Reports 3rd Quarter Results
PRNewswire
TORRANCE, Calif.

DaVita Inc., formerly Total Renal Care Holdings, Inc. , today announced results for the quarter ended September 30, 2000. Net earnings were $13.2 million, or $0.16 per share, excluding the previously announced extraordinary loss relating to the restructuring of our term loan. Continental U.S. EBITDA, earnings before interest, taxes, depreciation and amortization for the third quarter was $76.7 million.

  Quarterly financial highlights include:

  -- Continental U.S. dialysis revenue per treatment (excluding lab,
  management fees and other revenue) in the third quarter was $260.41 as
  compared to $249.23 in the second quarter, or a 4.5% increase.
  Continental U.S. DSO at quarter end was 77 days, including Florida
  Medicare laboratory receivables.  This represents a 3-day improvement from
  the second quarter.
  -- The continental U.S. EBITDA margin for the third quarter was 21.4%.
  Net cash provided by operations for the three and nine months ended
  September 30, 2000 was $84 million and $195 million, respectively.
  -- As of the date of this release our leverage ratio (the ratio of net
  debt to EBITDA) is 3.2x, down from 5.5x at the beginning of the year.
  Total continental U.S. treatments for the third quarter were 1,347,970.
  Non-acquired treatment growth was 5.7%, which included same center
  treatment growth of 4.8%.
  -- At September 30, 2000 we operated 487 outpatient centers in the
  continental U.S. serving over 41,000 patients.  During the quarter we sold
  1 center and closed 1 under-performing center.  Included in our
  continental patient and facility count are 4,700 patients in 55 centers
  under management. We also provide acute hemodialysis services to
  inpatients at approximately
  290 hospitals.

Kent Thiry, Chairman and CEO stated, "The DaVita team worked hard to meet, and in several cases exceed, the expectations of each of our stakeholders. Although we still have a material number of poor contracts and an extensive need to build fundamental infrastructure, our team is relentlessly pursuing operational excellence."

  Specifics of the third quarter charges and other developments:

  -- As a result of the restructuring of our revolving and term loan credit
  facilities in July 2000, we wrote-off certain financing costs reflected in
  the third quarter financial statements as a $3.5 million extraordinary
  loss, net of tax, and additional debt expense of $1.2 million pre-tax, or
  $0.01 per share after-tax.
  -- In the third quarter we have ceased recognizing Medicare revenue from
  services provided at our Florida laboratory.  This policy does not reflect
  a change in our determination that the tests performed are medically
  justified and should ultimately be reimbursed. Our decision is based
  solely on the fact that we have not been paid for services rendered in
  over two years and we are uncertain when we will achieve resolution of
  this matter.
  -- In October the United States District Court entered a Final Judgment
  approving the Stipulation of Settlement that DaVita previously entered
  into with the plaintiffs in the consolidated securities class actions that
  were filed against Total Renal Care and several of its former officers in
  February 1999.  As a result of the Final Judgment, the class actions are
  dismissed and the litigation is over. DaVita's portion of the settlement
  was funded and recorded in the second quarter of 2000.

This release contains forward-looking statements regarding the Company's expected third quarter results and ability to sustain those results. Actual results could differ materially from these forward-looking statements. Factors which could cause or contribute to such differences 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-Q for the quarter ended June 30, 2000. These risks include (1) possible changes in private and government reimbursement rates, (2) the concentration of profits generated from private indemnity patients, (3) the ongoing payment suspension and review of the Company's Florida laboratory subsidiary by its Medicare carrier and the Department of Justice, (4) its ability to maintain contracts with physician medical directors and (5) the risks relating to the large amount and terms of the Company's outstanding debt. The forward-looking statements should be considered in light of these risks and uncertainties.

                               DAVITA INC.

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


                                 Three months ended      Nine months ended
                                   September 30,           September 30,
                                  2000       1999        2000        1999

  Net operating revenues        $362,535   $367,168  $1,113,556 $1,072,231
  Operating expenses
    Dialysis and lab facilities  248,734    250,433     775,746    730,621
    General and administrative    29,920     32,725      93,460     85,892
    Depreciation and
     amortization                 26,927     28,956      84,315     82,104
    Provision for uncollectible
     accounts                      7,048     17,002      32,555     63,187
    Impairments and valuation
     adjustments                              2,945       4,414     19,545
      Total operating expenses   312,629    332,061     990,490    981,349
  Operating income                49,906     35,107     123,066     90,882
  Other income (loss)              1,418      1,241     (9,171)      4,505
  Debt expense                    26,370     30,184      94,017     78,391
  Minority interests in income
   of consolidated subsidiaries  (1,147)    (1,586)     (3,168)    (6,425)
  Income before income taxes      23,807      4,578      16,710     10,571
  Income tax expense              10,657      2,319      15,068      7,163
  Income before extraordinary
   item                           13,150      2,259       1,642      3,408
  Extraordinary loss related
   to early extinguishment of
   debt, net of tax of $2,222      3,490                  3,490
  Net income (loss)              $ 9,660     $2,259    $(1,848)     $3,408

  Earnings (loss)
   per common share:
    Income before
     extraordinary item            $0.16      $0.03       $0.02      $0.04
    Extraordinary loss,
     net of tax                   (0.04)                 (0.04)
    Net income (loss)              $0.12      $0.03     $(0.02)      $0.04

  Earnings (loss) per common
   share-assuming dilution:
    Income before
     extraordinary item            $0.16      $0.03       $0.02      $0.04
    Extraordinary loss,
     net of tax                   (0.04)                 (0.04)
    Net income (loss)              $0.12      $0.03     $(0.02)      $0.04

  Supplemental Information:

  Earnings pre common share
  - assuming dilution and
   excluding the financing
   costs write-off                 $0.17


                               DAVITA INC.

                       CONSOLIDATED BALANCE SHEETS
                   (in thousands except per share data)

                                              September 30,    December 31,
                                                     2000           1999
                   ASSETS

  Cash and cash equivalents                        $38,574       $107,981
  Accounts receivable                              302,640        390,329
  Inventories                                       37,425         32,916
  Other current assets                              17,090         32,082
  Income tax receivable                                            45,645
  Deferred income taxes                             53,433         45,795
      Total current assets                         449,162        654,748
  Property and equipment, net                      241,381        285,449
  Intangible assets, net                           940,083      1,069,672
  Investments in third-party
   dialysis businesses                              32,988         35,552
  Deferred income taxes                              5,495          6,553
  Other long-term assets                             2,174          4,744
                                                $1,671,283     $2,056,718

         LIABILITIES AND SHAREHOLDERS' EQUITY

  Accounts payable                                 $69,488       $121,561
  Accrued compensation and benefits                 64,465         47,647
  Other liabilities                                 97,024         77,141
  Current portion of long-term debt                 48,907         26,585
  Income taxes payable                               5,320
  Long-term debt potentially callable
   under covenant provisions                                    1,425,610
  Total current liabilities                        285,204      1,698,544
  Long-term debt, less $0 and $1,425,610
   potentially callable classified as current    1,033,635          5,696
  Other long-term liabilities                        4,960          3,497
  Minority interests                                16,801         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;
       81,722,612 and 81,193,011 shares
       issued and outstanding)                          82             81
      Additional paid-in capital                   427,404        426,025
      Notes receivable from shareholders             (163)          (192)
      Accumulated other comprehensive loss                        (4,718)
      Accumulated deficit                         (96,640)       (94,792)
          Total shareholders' equity               330,683        326,404
                                                $1,671,283     $2,056,718

SOURCE: DaVita Inc

Contact: LeAnne Zumwalt, Investor Relations of DaVita Inc.,
310-750-2072


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