Improving Health, Health Care and Quality of Life

DaVita Inc. Reports 3rd Quarter 2001 Results
PRNewswire
TORRANCE, Calif.

DaVita Inc. today announced results for the period ended September 30, 2001. Continental U.S. EBITDA (earnings before interest, taxes, depreciation and amortization) for the third quarter was $95.6 million. Net earnings were $28 million or $0.31 per share. These results exclude cash settlements and recoveries related to prior years.

Including the recoveries, net earnings for the quarter were $44.3 million or $0.47 per share.

  Financial and operating highlights include:

  -- Continental U.S. dialysis revenue per treatment (excluding lab,
     management fees and other revenue) in the third quarter was
     $280.16 compared to $275.87 in the second quarter, a 1.6% increase.
  -- Operating cash flow for the three months and nine months ended
     September 30, 2001 was $112 million and $247 million, respectively.
  -- Continental U.S. DSO at quarter end was 71 days compared to 68 days at
     the end of the second quarter.
  -- Total continental U.S. treatments for the third quarter were 1,432,453.
     Both non-acquired and same center treatment growth were 4.1%.
  -- Third quarter cash settlements and recoveries for 2000 net revenue were
     $22 million.
     Third quarter cash recoveries associated with accounts receivable
     reserved in 1999 were $5.2 million. The third quarter cash recoveries
     associated with prior years' services reflect collections in excess of
     prior estimates due to continued improvements in the Company's billing
     and collecting operations.
  -- At September 30, 2001 we operated 492 outpatient centers in the
     continental U.S. serving 42,000 patients. During the quarter we closed
     one under-performing center, opened two de novo centers and acquired
     eight centers. We previously managed five of the acquired centers.
     Included in our continental patient and center count are 3,200 patients
     in 30 centers under management.

DaVita will hold a conference call to discuss its third quarter 2001 results on Monday, November 5, 2001 at noon 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, http://www.davita.com/, for the following 30 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-Q for the quarter ended June 30, 2001. These risks include those relating to possible reductions in private and government reimbursement rates, the concentration of profits generated from PPO and private indemnity patients and from ancillary services including the administration of pharmaceuticals, the ongoing payment suspension and review of the Company's Florida laboratory subsidiary by its Medicare carrier and the Department of Justice, the ongoing review by the Civil Division of the US Attorney's Office for the Eastern District of Pennsylvania and 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
                               (unaudited)
              (dollars in thousands, except per share data)

                                                September 30,  December 31,
                                                    2001           2000

             ASSETS

  Cash and cash equivalents                        $45,255        $31,207
  Accounts receivable, less allowance of
   $48,757 and $61,619                             318,035        290,412
  Inventories                                       33,173         20,641
  Other current assets                               7,852         10,293
  Income taxes receivable                                           2,830
  Deferred income taxes                             51,789         42,492
           Total current assets                    456,104        397,875
  Property and equipment, net                      246,031        236,659
  Intangible assets, net                           943,558        921,623
  Investments in third-party dialysis businesses     5,093         34,194
  Other long-term assets                             2,307          1,979
  Deferred income taxes                                             4,302
                                                $1,653,093     $1,596,632

       LIABILITIES AND SHAREHOLDERS' EQUITY

  Accounts payable                                 $80,325        $74,882
  Other current liabilities                        121,666        102,563
  Accrued compensation and benefits                 85,732         70,406
  Current portion of long-term debt                  6,432          1,676
  Income taxes payable                              19,485
           Total current liabilities               313,640        249,527
  Long-term debt                                   813,977        974,006
  Other long-term liabilities                        5,212          4,855
  Deferred income taxes                             21,509
  Minority interests                                21,121         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;
       84,577,090 and 82,135,634 shares
       issued and outstanding)                          85             82
      Additional paid-in capital                   456,593        430,676
      Notes receivable from shareholders                             (83)
      Treasury stock, at cost (126,000 shares)     (2,494)
      Retained earnings (deficit)                   23,450       (81,307)
          Total shareholders' equity               477,634        349,368
                                                $1,653,093     $1,596,632


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

                          Three months ended         Nine months ended
                             September 30,             September 30,
                            2001        2000        2001          2000

  Net operating revenues:
       Current period
        services        $412,239     $ 362,535   $1,199,096    $1,113,556
       Prior period
        services          22,000                     22,000
  Operating expenses:
       Dialysis centers
        and labs         277,252       248,734      809,771       775,746
       General and
        administrative    31,150        29,920       95,380        93,460
       Depreciation and
        amortization      26,281        26,927       79,053        84,315
       Provision for
        uncollectible
        accounts           2,689         7,048      (5,874)        32,555
        Impairment and
         valuation
         adjustments                                                4,414
            Total
             operating
             expenses    337,372       312,629      978,330       990,490
  Operating income        96,867        49,906      242,766       123,066
  Other income (loss),
   net                     1,856         1,418        4,324       (9,171)
  Debt expense            18,319        26,370       56,758        94,017
  Minority interests in
   income of
   consolidated
   subsidiaries          (2,126)       (1,147)      (6,852)       (3,168)
  Income before
   income taxes
   and extraordinary
   item                   78,278        23,807      183,480        16,710
  Income tax expense      34,000        10,657       79,700        15,068
  Income before
   extraordinary item     44,278        13,150      103,780         1,642
  Extraordinary gain
   (loss) related to
   early extinguishment
   of debt, net of tax of
   $(652) in 2001 and
   $2,222 in 2000,
   respectively                        (3,490)          977       (3,490)
            Net income
             (loss)      $44,278        $9,660     $104,757      $(1,848)

  Earnings (loss) per
   common share - basic:
      Income before
       extraordinary
       item               $ 0.52        $ 0.16       $ 1.25        $ 0.02
      Extraordinary gain
      (loss), net of tax                (0.04)         0.01        (0.04)
           Net income
           (loss)         $ 0.52        $ 0.12       $ 1.26      $ (0.02)

  Weighted average
   number of common
   shares outstanding 84,354,000    81,649,000   83,411,000    81,469,000

  Earnings (loss)
   per common
   share-assuming
   dilution:
      Income before
       extraordinary
       item               $ 0.47        $ 0.16       $ 1.15        $ 0.02
      Extraordinary
       gain (loss),
       net of tax                       (0.04)         0.01        (0.04)
           Net income
           (loss)         $ 0.47        $ 0.12       $ 1.16      $ (0.02)

  Weighted average
   number of common
   shares outstanding
   - assuming
   dilution          104,026,000    83,847,000  103,157,000    82,564,000

      Supplemental information excluding impairments, prior period
  recoveries and extraordinary items:

  Continental
   treatments          1,432,453     1,347,970    4,208,241     4,001,359
  Continental EBITDA    $ 95,627      $ 76,740    $ 270,166     $ 201,585
  Continental EBITDA
   margin                  23.4%         21.4%        22.7%         19.3%
  Earnings per common
   share - assuming
   dilution               $ 0.31        $ 0.16       $ 0.82        $ 0.05

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SOURCE: DaVita, Inc.

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


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