Improving Health, Health Care and Quality of Life

DaVita Inc. Reports 2nd Quarter 2001 Results
PRNewswire
TORRANCE, Calif.

DaVita Inc. , today announced results for the period ended June 30, 2001. Net earnings for the second quarter and six months ended June 30, 2001 were $23.2 million or $0.26 per share and $44.6 million or $0.51 per share, respectively. Continental U.S. EBITDA (earnings before interest, taxes, depreciation and amortization) for the quarter was $88.5 million and $174.5 million for the six months ended June 30, 2001. These results exclude second quarter and year to date cash recoveries of $8.9 million and $24.9 million, respectively, associated with accounts receivable reserved in 1999. These results also exclude a second quarter extraordinary gain of $1 million, net of tax, related to our completed debt refinancing.

Net earnings for the quarter and six months ended June 30, 2001, including recoveries and the extraordinary gain, were $29.5 million or $0.33 per share and $60.5 million or $0.68 per share, respectively.

  Financial and operating highlights include:

  -- Continental U.S. dialysis revenue per treatment (excluding lab,
     management fees and other revenue) in the second quarter was $275.87 as
     compared to $274.22 in the first quarter, or a .6% sequential increase.
  -- Continental U.S. DSO at quarter end was 68 days compared to 71 days at
     the end of the first quarter.
  -- The continental U.S. EBITDA margin, excluding the cash recoveries, for
     the second quarter was 22.3% as compared to 22.5% for the first quarter
     of 2001.
  -- Operating cash flow for the three months and six months ended
     June 30, 2001 was $77 million and $135 million, respectively.
  -- Total continental U.S. treatments for the second quarter were
     1,409,320. Both non-acquired and same center treatment growth were
     2.8%.
  -- At June 30, 2001 we operated 488 outpatient centers in the continental
     U.S. serving 42,000 patients. During the quarter we closed one
     under-performing center and opened two de novo centers. Included in our
     continental patient and center count are 3,300 patients in 35 centers
     under management.

DaVita will hold a conference call to discuss its second quarter 2001 results on Thursday, August 2, 2001 at 10:30 a.m. Pacific time, 1:30 p.m. Eastern time. The dial-in number is +1-800-399-4406. A replay of the conference call will be available on DaVita's official web page, http://www.davita.com/ for the following 90 days.

This release 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/A for the year ended December 31, 2000. These risks include those relating to (1) possible reductions in private and government reimbursement rates, (2) the concentration of profits generated from PPO and private indemnity patients and from ancillary services including pharmaceuticals, (3) the ongoing payment suspension and review of the Company's Florida laboratory subsidiary by its Medicare carrier and the Department of Justice, (4) the ongoing review by the Civil Division of the US Attorney's Office for the Eastern District of Pennsylvania and (5) the Company's ability to maintain contracts with physician medical directors. The forward-looking statements should be considered in light of these risks and uncertainties.

                               DAVITA INC.

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

                                                  June 30,     December 31,
                                                     2001           2000
      ASSETS

  Cash and cash equivalents                        $85,258        $31,207
  Accounts receivable, less allowance
   of $53,551 and $61,619                          297,907        290,412
  Inventories                                       44,604         20,641
  Other current assets                              12,726         10,293
  Income taxes receivable                                           2,830
  Deferred income taxes                             42,846         42,492
      Total current assets                         483,341        397,875
  Property and equipment, net                      241,538        236,659
  Intangible assets, net                           945,821        921,623
  Investments in third-party dialysis businesses    11,206         34,194
  Other long-term assets                             2,117          1,979
  Deferred income taxes                                             4,302
                                                $1,684,023     $1,596,632

      LIABILITIES AND SHAREHOLDERS' EQUITY

  Accounts payable                                $ 79,227       $ 74,882
  Other current liabilities                        116,066        102,563
  Accrued compensation and benefits                 83,166         70,406
  Current portion of long-term debt                 15,419          1,676
  Income taxes payable                                 689
      Total current liabilities                    294,567        249,527
  Long-term debt                                   935,247        974,006
  Other long-term liabilities                        4,984          4,855
  Deferred taxes                                       521
  Minority interests                                21,125         18,876
  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;
     84,135,381 and 82,135,634 shares
     issued and outstanding)                            84             82
    Additional paid-in capital                     450,817        430,676
    Notes receivable from shareholders                               (83)
    Treasury stock, at cost (126,000 shares)       (2,494)
    Accumulated deficit                           (20,828)       (81,307)
      Total shareholders' equity                   427,579        349,368
                                                $1,684,023     $1,596,632


                               DAVITA INC.

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

Three months ended Six months ended

                                      June 30,                June 30,
                                   2001       2000        2001        2000

  Net operating revenues        $400,640   $378,908    $786,857   $751,021
  Operating expenses:
    Dialysis centers and labs    271,545    267,714     532,519    527,012
    General and administrative    32,417     31,619      64,230     63,540
    Depreciation and
     amortization                 26,624     29,670      52,772     57,388
    Provision for uncollectible
     accounts                      (378)     12,648     (8,563)     25,507
    Impairment and valuation
     adjustments                   4,414      4,414
      Total operating expenses   330,208    346,065     640,958    677,861
  Operating income                70,432     32,843     145,899     73,160
  Other income, net                1,120   (11,984)       2,468   (10,589)
  Debt expense                    18,715     34,482      38,439     67,647
  Minority interests in income
   of consolidated subsidiaries  (2,269)    (1,023)     (4,726)    (2,021)
  Income before income taxes      50,568   (14,646)     105,202    (7,097)
  Income tax expense              22,000        709      45,700      4,411
  Income (loss) before
   extraordinary item             28,568   (15,355)      59,502   (11,508)
  Extraordinary gain related
   to early extinguishment of
   debt, net of tax of $652          977                    977
  Net income (loss)              $29,545  $(15,355)     $60,479  $(11,508)

  Earnings (loss) per common
   share-basic:
    Income (loss) before
     extraordinary item            $0.34    $(0.19)       $0.72    $(0.14)
    Extraordinary gain, net of tax  0.01       0.01
    Net income (loss)              $0.35    $(0.19)       $0.73    $(0.14)

  Weighted average number
   of common shares
   outstanding                83,548,000 81,438,000  82,997,000 81,376,000

  Earnings (loss) per common
   share-assuming dilution:
    Income (loss) before
     extraordinary item            $0.32    $(0.19)       $0.67    $(0.14)
    Extraordinary gain, net of tax  0.01       0.01
    Net income (loss)              $0.33    $(0.19)       $0.68    $(0.14)

  Weighted average number
   of common shares outstanding
   - assuming dilution        92,693,000 81,438,000  92,262,000 81,376,000

  Supplemental information excluding recoveries, impairments and
  extraordinary item:

    Continental treatments     1,409,320  1,335,873   2,775,788  2,653,389
    Continental EBITDA           $88,510    $62,306    $174,539   $124,845
    Earnings per common
     share - assuming dilution     $0.26      $0.03       $0.51      $0.07

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SOURCE: DaVita, Inc.

Contact: LeAnne Zumwalt, Investor Relations of DaVita Inc.,
+1-310 750-2072


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