Improving Health, Health Care and Quality of Life

DaVita Inc. Reports 1st Quarter 2002 Results
PRNewswire-FirstCall
TORRANCE, Calif.

DaVita Inc. , today announced results for the quarter ended March 31, 2002. Continental U.S. EBITDA excluding accounts receivable recoveries was $91.9 million for the quarter. For the 12 months ended March 31, 2002 operating cash flow was $256 million and free cash flow was $219 million, both exclude recoveries and settlements.

Financial and operating highlights include:

Net earnings for the first quarter were $34.6 million or $0.39 per share. These results exclude first quarter cash recoveries of $2.3 million associated with accounts receivable reserved in 1999. Net earnings for the quarter, including these recoveries, were $36.0 million or $0.40 per share.

  -- Continental U.S. dialysis revenue per treatment (excluding lab,
     management fees and other revenue) in the first quarter was $290.45 as
     compared to $283.19 in the fourth quarter, or a 2.6% sequential
     increase.
  -- Total continental U.S. treatments for the first quarter were 1,433,803.
     Both non-acquired and same center treatment growth were 4.2%.
  -- Continental U.S. DSO at quarter end was 73 days.
  -- Operating cash flow was $85 million and free cash flow was $77 million
     for the quarter.
  -- At March 31, 2002 we operated 495 outpatient centers in the continental
     U.S. serving approximately 43,000 patients.  During the first quarter
     we closed 1 under-performing center, sold 1 center, opened 2 denovo
     centers and acquired 1 center.  Included in this patient and center
     count are approximately 3,400 patients in 33 centers under management.

DaVita will hold a conference call to discuss its first quarter 2002 results on May 10, 2002 at 10 a.m. Eastern. 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-K for the year ended December 31, 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 US Attorney's Office and HHS Office of Inspector General in Philadelphia and the Company's ability to maintain contracts with physician medical directors.

                               DAVITA INC.
                       CONSOLIDATED BALANCE SHEETS
                               (unaudited)
              (dollars in thousands, except per share data)

                                                   March 31,   December 31,
                                                     2002            2001
                          ASSETS

  Cash and cash equivalents                        $31,697         $36,711
  Accounts receivable, less allowance of
   $51,807 and $52,475                             344,238         333,546
  Inventories                                       28,179          34,901
  Other current assets                              12,192           9,364
  Deferred income taxes                             58,987          60,142
      Total current assets                         475,293         474,664
  Property and equipment, net                      256,046         252,778
  Amortizable intangible assets, net                70,189          73,108
  Investments in third-party dialysis businesses     4,145           4,346
  Other long-term assets                             2,027           2,027
  Goodwill                                         857,132         855,760
                                                $1,664,832      $1,662,683

             LIABILITIES AND SHAREHOLDERS' EQUITY

  Accounts payable                                 $83,559         $74,630
  Other liabilities                                126,153         111,164
  Accrued compensation and benefits                 86,213          88,826
  Current portion of long-term debt                  1,597           9,034
  Income taxes payable                              15,288          15,027
      Total current liabilities                    312,810         298,681
  Long-term debt                                   798,707         811,190
  Other long-term liabilities                        4,725           5,012
  Deferred income taxes                             30,147          23,441
  Minority interests                                21,423          20,722
  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; 87,017,029 and 85,409,037
     shares issued)                                     87              85
    Additional paid-in capital                     493,184         467,904
    Retained earnings                               91,986          56,008
    Treasury stock, at cost (3,834,400 and
     888,700 shares)                              (88,237)        (20,360)
      Total shareholders' equity                   497,020         503,637
                                                $1,664,832      $1,662,683


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

                                                      Three months ended
                                                          March 31,
                                                     2002            2001

  Net operating revenues                          $427,665        $386,217
  Operating expenses:
    Dialysis centers and labs                      291,634         260,974
    General and administrative                      36,053          31,813
    Depreciation and amortization                   15,805          26,148
    Provision for uncollectible accounts             5,255         (8,185)
      Total operating expenses                     348,747         310,750
  Operating income                                  78,918          75,467
  Other income                                         565           1,348
  Debt expense                                      15,072          19,724
  Minority interests in income of consolidated
   subsidiaries                                    (2,433)         (2,457)
  Income before income taxes                        61,978          54,634
  Income tax expense                                26,000          23,700
  Net income                                       $35,978         $30,934

  Comprehensive income                             $35,978         $30,934

  Basic earnings per common share                    $0.43           $0.37

  Diluted earnings per common share                  $0.40           $0.35


                               DAVITA INC.
                       SUPPLEMENTAL FINANCIAL DATA

  Financial Results:                       Q1 2002      Q4 2001    Q1 2001
    Net Earnings, excluding recoveries
     and goodwill amortization(A)          $34,600      $35,700    $27,700
      Basic EPS                              $0.42       $ 0.42      $0.34
      EPS assuming dilution                  $0.39       $ 0.39      $0.31

    EBITDA, excluding recoveries
      Consolidated (in 000's)              $92,500      $96,300    $85,600
      Continental U.S. (in 000's)          $91,900      $96,000    $86,000
      Continental EBITDA margin              21.7%        22.5%      22.5%

  Business Metrics (Continental U.S.):
    Category #1 Volume
      Treatments                         1,433,803    1,481,958  1,366,468
      Per day sequential increase             0.8%         1.4%       2.9%
      Per day year over year increase         6.2%         8.4%       4.7%

      Same center growth                      4.2%         4.6%       4.0%
      Non-acquired growth                     4.2%         4.6%       4.0%

    Category #2 Revenue, excluding
     recoveries
      Revenue (in 000's)                  $424,000     $426,000   $383,000

      Dialysis revenue per treatment       $290.45      $283.19    $274.22
      Per treatment increase from
       previous quarter                       2.6%         1.1%       2.9%

    Category #3 Expenses
      A.  Dialysis centers and lab
           operating expenses
          Percent of revenue                 68.0%        67.5%      67.2%
          Per treatment                    $201.02      $194.03    $188.13
          Per treatment increase
           from previous quarter              3.6%         1.5%       0.9%

      B.  General & Administrative
          Percent of revenue                  8.5%         7.9%       8.3%
          Per treatment                     $25.14       $22.82     $23.28
          Per treatment increase
           from previous quarter             10.2%         4.9%       4.3%

      C.  Bad debt expense as a
           percent of revenue                 1.8%         2.0%       2.0%

      D.  Consolidated effective
           tax rate                          42.0%        43.3%      43.4%

    Category #4 Cash Flow (Consolidated,
     in 000's)
      Operating cash flow                  $85,000      $26,000    $58,000
      Free cash flow (before share
       repurchase, acquisition and
       development spending)               $77,000      $12,000    $55,000
      Capital expenditures:
        Development                         $8,200       $8,300     $3,800
        Routine maintenance/other           $8,400      $13,600     $3,200
        Acquisition expenditures, net       $1,400           --    $50,700

    Category #5 Accounts Receivable
      Net receivables (in 000's)          $337,000     $325,000   $296,000
      DSO                                       73           72         71

    Category #6 Debt/Capital Structure
     (Consolidated)
      Total debt (in 000's)               $800,000     $820,000   $940,000
      Net debt, net of cash (in 000's)    $769,000     $784,000   $922,000
      LTM leverage ratio                      2.1x         2.1x       3.0x
      Shares repurchased (in 000's)          2,900          800         --
      Average repurchase price              $23.02       $23.41         --

    Category #7 Clinical
      Dialysis adequacy -- % of patients
       with URR > 65                           88%          87%         --
      Dialysis adequacy -- % of patients
       with Kt/V > 1.2                         92%          90%         --
      Anemia measure -- % of patients
       with HCT > 33                           79%          79%         --
      Gross mortality                        18.4%        18.2%         --

  (A)  Effective January 1, 2002 the Company discontinued the amortization
       of goodwill. As a result, previously reported quarterly amounts have
       been restated for consistent presentation.

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SOURCE: DaVita Inc.

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


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