Improving Health, Health Care and Quality of Life

DaVita Inc. Reports 4th Quarter 2001 Results
PRNewswire-FirstCall
TORRANCE, Calif.

DaVita Inc. today announced results for the period ended December 31, 2001. Continental U.S. EBITDA (earnings before interest, taxes, depreciation and amortization) for the fourth quarter was $96 million. Net earnings were $29.5 million or $0.33 per share. These results exclude cash recoveries associated with accounts receivable reserved in 1999. Including the recoveries, consolidated net earnings for the quarter were $32.6 million or $0.36 per share.

Continental U.S. EBITDA for the twelve months ended December 31, 2001 was $366 million. Net earnings were $102 million or $1.14 per share. These results exclude cash settlements and recoveries related to prior years and an extraordinary gain. Including the settlements and recoveries and extraordinary gain, consolidated net earnings for the year were $137 million or $1.52 per share.

  Financial and operating highlights include:
  -- Continental U.S. dialysis revenue per treatment (excluding lab,
     management fees and other revenue) in the fourth quarter was
     $283.19 compared to $280.16 in the third quarter, a 1.1% increase.
  -- Operating cash flow for the quarter was $26 million, reflecting changes
     in working capital that included a $17 million reduction in current
     liabilities and an increase in accounts receivable of $16 million. For
     the twelve months ended December 31, 2001 operating cash flow was
     $273 million.
  -- Continental U.S. DSO at quarter end was 72 days.
  -- Total continental U.S. treatments for the fourth quarter were
     1,481,958.  Both non-acquired and same center treatment growth were
     4.6%.
  -- Fourth quarter cash recoveries associated with accounts receivable
     reserved in 1999 were $5.1 million.
  -- At December 31, 2001 we operated 493 outpatient centers in the
     continental U.S. serving 43,000 patients.  During the quarter we closed
     three under-performing centers and opened two de novo centers.
     Included in our continental patient and center count are 3,300 patients
     in 32 centers under management.

DaVita will hold a conference call to discuss its fourth quarter 2001 results on Wednesday, February 27, 2002 at 12:30 p.m. Eastern Time. We have included supplemental information as an attachment to this release, which we will refer to in our call. The dial-in number is 800-399-4406. A replay of the conference call will be available on DaVita's official web site, 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 September 30, 2001. The forward-looking statements should be considered in light of these risks and uncertainties. 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.

                               DAVITA INC.

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


                                                         December 31,
                                                    2001           2000
                      ASSETS

  Cash and cash equivalents                        $36,711        $31,207
  Accounts receivable, less allowance
   of $52,475 and $61,619                          333,546        290,412
  Inventories                                       34,901         20,641
  Other current assets                               9,364         10,293
  Income taxes receivable                                           2,830
  Deferred income taxes                             60,142         42,492
       Total current assets                        474,664        397,875
  Property and equipment, net                      252,778        236,659
  Intangible assets, net                           928,868        921,623
  Investments in third-party dialysis businesses     4,346         34,194
  Other long-term assets                             2,027          1,979
  Deferred income taxes                                             4,302
                                                $1,662,683     $1,596,632

          LIABILITIES AND SHAREHOLDERS' EQUITY

  Accounts payable                                 $74,630        $74,882
  Other liabilities                                111,164        102,563
  Accrued compensation and benefits                 88,826         70,406
  Current portion of long-term debt                  9,034          1,676
  Income taxes payable                              15,027
       Total current liabilities                   298,681        249,527
  Long-term debt                                   811,190        974,006
  Other long-term liabilities                        5,012          4,855
  Deferred income taxes                             23,441
  Minority interests                                20,722         18,876
  Commitments and contingencies
  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; 85,409,037 and
      82,135,634 shares issued)                         85             82
     Additional paid-in capital                    467,904        430,676
     Notes receivable from shareholders                              (83)
     Retained earnings (deficit)                    56,008       (81,307)
     Treasury stock, at cost (888,700 shares)     (20,360)
       Total shareholders' equity                  503,637        349,368
                                                $1,662,683     $1,596,632


                               DAVITA INC.

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


                         For the quarters ended     For the years ended
                              December 31,              December 31,
                           2001         2000          2001         2000
  Net revenues:
   Current period
    services            $429,657      $372,746   $1,628,753    $1,486,302
   Prior period
    services                                         22,000
  Operating expenses:
   Dialysis centers
    and labs             290,881       256,407    1,100,652     1,032,153
   General and
    administrative        33,814        30,164      129,194       123,624
   Depreciation and
    amortization          26,156        27,290      105,209       111,605
   Provision for
    uncollectible
    accounts               3,580         7,094      (2,294)        39,649
   Impairments and
    valuation adjustments                  142                      4,556
     Total operating
      expenses           354,431       321,097    1,332,761     1,311,587
  Operating income        75,226        51,649      317,992       174,715
  Other income (loss),
   net                       320         1,970        4,644        (7,201)
  Debt expense            15,680        22,620       72,438       116,637
  Minority interests in
   income of consolidated
   subsidiaries           (2,408)       (2,774)      (9,260)       (5,942)
   Income before income
    taxes and
    extraordinary items   57,458        28,225      240,938        44,935
  Income tax expense      24,900        12,892      104,600        27,960
   Income before
   extraordinary items    32,558        15,333      136,338        16,975
  Extraordinary gain
   (loss) related to
   early extinguishments
   of debt, net of
   tax of $(652) and
   $2,222                                               977        (3,490)
   Net income            $32,558       $15,333     $137,315       $13,485

  Basic earnings per
   common share:
   Income before
    extraordinary
    items                  $0.38         $0.19        $1.63         $0.21
   Extraordinary gain
    (loss), net of tax                                 0.01         (0.04)
   Net income              $0.38         $0.19        $1.64         $0.17
  Weighted average number
   of common shares
   outstanding            84,650        81,858       83,768        81,581

  Diluted earnings per
   common share:
   Income before
    extraordinary
    items                  $0.36         $0.18        $1.51         $0.20
   Extraordinary gain
   (loss), net of tax                                  0.01         (0.04)
   Net income              $0.36         $0.18        $1.52         $0.16
  Weighted average number
   of common and
   incremental shares
   outstanding            93,634        85,625      103,454        83,157


                               DAVITA INC.

                       SUPPLEMENTAL FINANCIAL DATA


  Q4 and YTD Results:    Q4 2001       Q3 2001      Q4 2000       YE 2001
   Net Earnings, before
    recoveries and
    extraordinary
    item (in 000's)      $29,500       $28,000      $15,300      $102,100
    Basic EPS              $0.35        $ 0.33       $ 0.19         $1.22
    EPS assuming
     dilution              $0.33        $ 0.31       $ 0.18         $1.14

   EBITDA, before recoveries
    Consolidated
     (in 000's)          $96,300       $96,000      $79,000      $366,000
    Continental U.S
     (in 000's).         $96,000       $95,600      $79,500      $366,200
    Operating margin       22.5%         23.4%        21.5%         22.7%

  Business Metrics
   (Continental U.S.):
   Category #1 Volume
    Treatments         1,481,958     1,432,453    1,352,277     5,690,199
    Per day
     sequential
     increase               1.4%          1.6%         0.7%            --
    Per day year
     over year
     increase               8.4%          7.6%         4.2%          6.6%

    Same center
     growth                 4.6%          4.1%         3.4%          3.7%
    Non-acquired
     growth                 4.6%          4.1%         3.5%          3.9%

   Category #2 Revenue,
    excluding recoveries
    Continental revenue
     (in 000's)         $426,000      $408,000     $369,000    $1,613,000

    Per treatment        $283.19       $280.16      $266.51       $278.46
    Per treatment
     increase from
     previous quarter       1.1%          1.6%         2.3%            --

   Category #3 Expenses
    A. Operating expenses
        Percent of
         revenue           67.5%         67.1%        68.4%         67.3%
        Per treatment    $194.03       $191.13      $186.46       $190.90
        Per treatment
         increase from
         previous
         quarter            1.5%          0.6%         2.3%            --

    B. General & Administrative
        Percent of
         revenue            7.9%          7.6%         8.2%          8.0%
        Per treatment     $22.82        $21.75       $22.31        $22.70
        Per treatment
         increase from
         previous
         quarter            4.9%        (5.4%)         0.5%            --

    C. Bad debt expense
        as a percent
        of revenue          2.0%          1.9%         1.9%          2.0%

    D. Effective tax
        rate               43.3%         43.4%        45.7%         43.4%

   Category #4 Cash Flow
   (Consolidated, in 000's)
    Operating cash
     flow                $26,000      $112,000     $113,000      $273,000
    Free cash flow
     (before acquisition
     and development
     spending)           $12,000      $105,000     $109,000      $240,000
    Capital expenditures:
     Development          $8,300        $4,800       $7,800       $20,100
     Routine maintenance/
      other              $13,600        $7,100       $4,400       $32,700
     Acquisition
      expenditures, net       --       $12,100      $12,700       $36,300

   Category #5 Accounts
    Receivable
    Net receivables
     (in 000's)         $325,000      $309,000     $283,000
    DSO                       72            71           73

   Category #6 Debt/Capital
    Structure (Consolidated)
    Total debt
     (in 000's)         $820,000      $820,000     $976,000
    Net debt, net of
     cash (in 000's)    $784,000      $775,000     $944,000
    LQA leverage ratio      2.0x          2.0x         3.0x

   Category #7 Clinical
    Dialysis adequacy
     - % of patients
     with URR>65             87%           86%          88%
    Dialysis adequacy
     - % of patients
     with Kt/V > 1.2         90%           N/A          N/A
    Anemia measure
     - % of patients
     with HCT > 33           79%           78%          78%
    Gross mortality        18.2%           N/A          N/A

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SOURCE: DaVita Inc.

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


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