Improving Health, Health Care and Quality of Life

DaVita 1st Quarter 2006 Results
PRNewswire-FirstCall
EL SEGUNDO, Calif.

DaVita Inc. , today announced results for the quarter ended March 31, 2006. Net income for the three months ended March 31, 2006, was $57.5 million or $0.55 per share.

(Logo: http://www.newscom.com/cgi-bin/prnh/20020729/DAVITALOGO )

Net income for the three months ended March 31, 2006 included after-tax stock-based compensation expense of $2.8 million or $0.025 per share as a result of implementing SFAS No. 123®.

  Financial and operating highlights include:

   --  Cash Flow:  For the rolling 12-months ended March 31, 2006 operating
       cash flow was $412 million and free cash flow was $336 million, in
       each case excluding the tax benefit from stock option exercises and
       an $85 million income tax payment associated with the divestiture of
       centers in conjunction with the Gambro Healthcare acquisition.
       Operating cash flow for the three months ended March 31, 2006 was
       $61 million and free cash flow was $41 million, in each case
       excluding the tax benefit from stock option exercises and the $85
       million income tax payment.
   --  Operating Income:  Operating income for the three months ended
       March 31, 2006, was $162 million, as compared to $159 million for the
       fourth quarter of 2005.
   --  Volume:  Total treatments for the three months ended March 31, 2006
       were 3,501,032 or 45,468 treatments per day, as compared to 3,498,231
       or 44,281 treatments per day for the fourth quarter of 2005.
       Non-acquired treatment growth in the quarter was 4.6%.
   --  Center Activity:  As of March 31, 2006, we operated or provided
       administrative services at 1,241 outpatient centers serving
       approximately 98,000 patients.  During the first quarter of 2006 we
       acquired 6 centers, opened 6 new centers, and provided administrative
       services to 2 additional centers. We also completed the divestiture
       of 3 centers related to the Gambro Healthcare acquisition and closed
       3 centers.

  Outlook

Our operating income guidance for 2006 is projected to be in the $600-680 million range after the impact of FASB No. 123R related to stock option expensing. These projections and the underlying assumptions involve significant risks and uncertainties, including those described below and actual results may vary significantly from these current projections.

DaVita will be holding a conference call to discuss its results for the first quarter ended March 31, 2006 on May 3, 2006 at 10:00 AM 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, www.davita.com, for the following 30 days.

This release contains forward-looking statements, including statements related to our 2006 operating results. Factors which could impact future results include the uncertainties associated with governmental regulations, general economic and other market conditions, acquisitions and the risk factors set forth in the Company's SEC filings, including its Form 10-K for the year ended December 31, 2005. The forward-looking statements should be considered in light of these risks and uncertainties.

  These risks and uncertainties include those relating to:

   --  the concentration of profits generated from preferred provider
       organizations and private indemnity patients,
   --  possible reductions in private and government payment rates,
   --  changes in pharmaceutical practice patterns, payment policies, or
       pharmaceutical pricing,
   --  our ability to maintain contracts with physician medical directors,
       legal compliance risks, including our continued compliance with
       complex government regulations and the ongoing review by the U.S.
       Attorney's Office for the Eastern District of Pennsylvania and the
       OIG, the subpoena from the U.S. Attorney's Office for the Eastern
       District of New York, the subpoenas from the U.S. Attorney's Office
       for the Eastern District of Missouri and DVA Renal Healthcare's
       (formerly known as Gambro Healthcare, Inc.) compliance with its
       corporate integrity agreement,
   --  our ability to complete and integrate acquisitions of businesses, and
   --  the successful integration of DVA Renal Healthcare, including its
       billing and collection operations.

We undertake no obligation to update or revise any forward-looking statements, whether as a result of changes in underlying factors, new information, future events or otherwise.

This release contains non-GAAP financial measures. For reconciliations of these non-GAAP financial measures to their most comparable measure calculated and presented in accordance with GAAP, see the attached reconciliation schedules.

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

                                                    Three months ended
                                                         March 31,
                                                    2006           2005
  Net operating revenues                        $1,163,188       $578,626
  Operating expenses and charges:
      Patient care costs                           817,773        387,515
      General and administrative                   104,168         54,263
      Depreciation and amortization                 41,891         23,845
      Provision for uncollectible accounts          30,080         10,325
      Minority interests and equity income, net      7,201          3,818
        Total operating expenses and charges     1,001,113        479,766

  Operating income                                 162,075         98,860

  Debt expense                                     (70,459)       (17,531)
  Swap valuation gain                                               8,392
  Refinancing charges                                              (6,872)
  Other income, net                                  3,874          1,617
  Income from continuing operations
   before income taxes                              95,490         84,466
  Income tax expense                                37,710         32,496
        Income from continuing operations           57,780         51,970

  Discontinued operations
        Income from operations of
         discontinued operations, net of tax                        4,364
        Loss on disposal of discontinued
         operations, net of tax                       (311)
  Net income                                       $57,469        $56,334


  Earnings per share:
        Basic earnings per share from
         continuing operations                       $0.56          $0.52
        Basic earnings per share                     $0.56          $0.57

        Diluted earnings per share from
         continuing operations                       $0.55          $0.50
        Diluted earnings per share                   $0.55          $0.55

        Weighted average shares for
         earnings per share:
          Basic                                102,581,455     99,399,612
          Diluted                              105,388,419    103,150,299


                               DAVITA INC.
                  CONSOLIDATED STATEMENTS OF CASH FLOWS
                               (unaudited)
                          (dollars in thousands)

                                                       Three months ended
                                                            March  31,
                                                       2006           2005
  Cash flows from operating activities:
  Net income                                         $57,469        $56,334
  Adjustments to reconcile net income to cash
  (used in) provided by operating activities:
     Depreciation and amortization                    41,891         24,848
     Stock-based compensation expense                  5,692            841
     Tax benefits from stock option exercises            983         15,093
     Deferred income taxes                            (2,425)        (5,814)
     Minority interests in
      income of consolidated subsidiaries              8,104          4,410
     Distributions to minority interests              (5,180)        (3,518)
     Equity investment income                           (903)          (394)
     Loss (gain) on other divestitures                   298           (193)
     Gain on disposal of discontinued operations        (961)            --
     Non-cash debt and other expenses                  5,321            625
     Refinancing charges                                  --          6,872
     Swap valuation gain                                  --         (8,392)
  Changes in operating assets and liabilities,
   net of effect of acquisitions and divestitures:
     Accounts receivable                              (5,558)       (10,188)
     Inventories                                     (18,911)        (2,820)
     Other receivables and other current assets      (17,850)          (989)
     Other long term assets                           (1,210)           385
     Accounts payable                                (32,723)        (4,865)
     Accrued compensation and benefits                 5,223          5,421
     Other current liabilities                        (1,350)         9,088
     Income taxes                                    (63,828)        28,500
     Other long-term liabilities                       2,354         (3,838)
       Net cash (used in) provided by
        operating activities                         (23,564)       111,406
  Cash flows from investing activities:
     Additions of property and equipment, net        (47,991)       (25,625)
     Acquisitions                                    (22,845)        (4,798)
     Proceeds from divestitures                       17,734          2,297
     Investments in and advances to affiliates, net    2,635          2,677
     Intangible assets                                (5,015)          (395)
        Net cash used in investing activities        (55,482)       (25,844)
  Cash flows from financing activities:
     Borrowings                                      785,231      1,741,183
     Payments on long-term debt                     (898,443)    (1,748,663)
     Deferred financing costs                             (2)       (29,213)
     Excess tax benefits from stock-based
      compensation                                    18,532             --
     Stock option exercises and other share
      issuances, net                                  21,063         17,031
        Net cash used in financing activities        (73,619)       (19,662)
  Net (decrease) increase in cash and
   cash equivalents                                 (152,665)        65,900
  Cash and cash equivalents at beginning
   of period                                         431,811        251,979
  Cash and cash equivalents at end of period        $279,146       $317,879


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

                                                  March 31,    December 31,
                                                    2006           2005
  ASSETS
  Cash and cash equivalents                       $279,146       $431,811
  Accounts receivable, less
   allowance of $144,968 and $138,598              859,138        853,560
  Inventories                                       88,255         69,130
  Other receivables                                135,974        116,620
  Other current assets                              22,622         38,463
  Deferred income taxes                            152,304        144,824
       Total current assets                      1,537,439      1,654,408
  Property and equipment, net                      759,853        750,078
  Amortizable intangibles, net                     230,981        235,944
  Investments in third-party dialysis
   businesses                                        3,028          3,181
  Other long-term assets                            52,752         41,768
  Goodwill                                       3,605,401      3,594,383
                                                $6,189,454     $6,279,762

       LIABILITIES AND SHAREHOLDERS' EQUITY
  Accounts payable                                $178,298       $212,049
  Other liabilities                                381,193        381,964
  Accrued compensation and benefits                236,266        231,994
  Current portion of long-term debt                  5,237         71,767
  Income taxes payable                              28,131         91,959
       Total current liabilities                   829,125        989,733
  Long-term debt                                 4,039,333      4,085,435
  Other long-term liabilities                       26,367         26,416
  Alliance and product supply agreement
   and other intangibles, net                      153,995        163,431
  Deferred income taxes                             84,500         75,499
  Minority interests                                93,602         88,639
  Commitments and contingencies
  Shareholders' equity:
     Preferred stock ($0.001 par value,
      5,000,000 shares authorized;
      none issued)
     Common stock ($0.001 par value,
      195,000,000 shares authorized;
      134,862,283 shares issued)                       135            135

    Additional paid-in capital                     594,285        569,751
    Retained earnings                              897,399        839,930
    Treasury stock, at cost
    (31,566,292 and 32,927,026 shares)            (550,291)      (574,013)
    Accumulated comprehensive income
     valuations                                     21,004         14,806

       Total shareholders' equity                  962,532        850,609
                                                $6,189,454     $6,279,762


                               DAVITA INC.
                       SUPPLEMENTAL FINANCIAL DATA
                               (unaudited)
    (dollars in millions, except for per share and per treatment data)


                                               Three months ended
                                  March 31,      December 31,   March 31,
                                    2006            2005          2005
  Financial Results:
    Net income                        $57.5           $64.1         $56.3
    Income from continuing
     operations                       $57.8           $56.4         $52.0
    Diluted earnings per share        $0.55           $0.61         $0.55
    Diluted earnings per share
     from continuing operations       $0.55           $0.54         $0.50

    Operating income                 $162.1          $158.8         $98.9
      Operating income margin          13.9%           14.0%         17.1%

    Other comprehensive income
      Unrealized gain on
       securities, net of tax
       expense of $3.9, $2.4,
       and $6.9
                                       $6.2            $3.8         $10.9

  Business Metrics:
    Volume
      Treatments                  3,501,032       3,498,231     1,761,530
      Number of treatment
       days                            77.0            79.0          77.0
      Treatments per day             45,468          44,281        22,877
      Per day year over
       year increase                   98.7%           95.8%         13.6%
      Non-acquired growth               4.6%            2.8%          5.6%

  Revenue
      Total operating revenue        $1,163          $1,133          $579
      Dialysis revenue per
       treatment                    $316.70         $310.62       $312.14
      Per treatment increase
       (decrease) from previous
       quarter                          2.0%           (2.0%)          --
      Per treatment increase
       (decrease) from previous
       year                             1.5%           (0.6%)         0.2%

  Expenses
  A.  Patient care costs
      Percent of revenue               70.3%           70.5%         67.0%
      Per treatment                 $233.58         $228.48       $219.99
      Per treatment increase
       (decrease) from previous
       quarter                          2.2%            1.3%         (0.9%)
      Per treatment increase from
       previous year                    6.2%            2.9%          0.1%

  B.  General & administrative
       expenses
      Percent of revenue                9.0%            8.6%          9.4%
      Per treatment                  $29.75          $27.88        $30.80
      Per treatment increase
       (decrease) from previous
       quarter                          6.7%          (11.6%)         3.5%
      Per treatment (decrease)
       increase from previous year     (3.4%)          (6.3%)        12.8%

  C.  Bad debt expense as a percent
       of current-period revenue        2.6%            2.6%          1.8%

  D.  Consolidated effective tax
       rate from continuing
       operations                      39.5%           35.7%          38.5%


                               DAVITA INC.
                  SUPPLEMENTAL FINANCIAL DATA-continued
                               (unaudited)
    (dollars in millions, except for per share and per treatment data)

                                                Three months ended
                                        March 31,  December 31,  March 31,
                                           2006        2005         2005

  Cash Flow
     Operating cash flow                $(23.6)       $183.3       $111.4
     Operating cash flow, excluding
      tax benefit from stock option
      exercises and the income tax
      payment on divested centers         $60.8       $179.3        $96.3
     Free cash flow                      $(43.3)      $151.6       $103.8
     Free cash flow, excluding tax
      benefit from stock option
      exercises and the income tax
      payment on divested centers         $41.1       $147.5        $88.7
     Capital expenditures:
      Development                         $26.3        $27.8        $18.1
      Routine maintenance/IT/other        $21.7        $32.3         $7.6
     Acquisition expenditures             $22.8     $3,072.3         $4.8

  Accounts Receivable
     Net receivables                       $859         $854         $464
     DSO                                     69           71           71

  Debt/Capital Structure
     Total debt                          $4,045       $4,157       $1,368
     Net debt, net of cash and
      cash equivalents                   $3,765       $3,725       $1,050
     Leverage ratio - (see Note 1)        4.29x        4.45x           --


  Clinical (quarterly averages)
     Dialysis adequacy - % of
      patients with Kt/V > 1.2              93%          94%          94%
     Patients with arteriovenous fistulas   49%          45%          43%


                               DAVITA INC.
                  SUPPLEMENTAL FINANCIAL DATA-continued
                               (unaudited)
                          (dollars in thousands)

  Note 1: Calculation of the Leverage Ratio

Under the Company's current credit agreement (Credit Agreement), the leverage ratio is defined as all funded debt plus the face amount of all letters of credit issued, minus cash and cash equivalents, divided by "Consolidated EBITDA". The leverage ratio determines the interest rate margin payable by the Company under the Credit Agreement by establishing the margin over the base interest rate (LIBOR) that is applicable. The following leverage ratio was calculated using "Consolidated EBITDA" as defined in the Credit Agreement, except that pro forma incremental "EBITDA" relating to routine acquisitions that occurred during the current quarter, which is included in the calculation of "EBITDA" under the Credit Agreement, is excluded from the calculation below. The calculation below is based on the last twelve-months of Consolidated "EBITDA", pro forma for the DVA Renal Healthcare acquisition and related divestitures. The Company's management believes that the presentation of "Consolidated EBITDA" is useful to investors to enhance their understanding of the Company's leverage ratio under its Credit Agreement.

                                                   Rolling 12-months ended
                                                       March 31, 2006
  Income from continuing operations                       $242,118
  Income taxes                                             154,341
  Debt expense                                             278,671
  Depreciation and amortization                            171,781
   Minority interests and equity income, net                28,030
   Swap valuation losses                                     3,896
  Refinancing charges                                        2,276
  Other                                                      1,298
  Stock-based compensation expense                           7,497
      "Consolidated EBITDA" calculated
       as described above                                 $889,908

                                                         March 31,
                                                           2006
  Total debt                                            $4,044,570
  Letters of credit issued                                  50,345
                                                         4,094,915
  Less: cash and cash equivalents                         (279,146)

  Consolidated net debt                                 $3,815,769

  Last twelve months "Consolidated EBITDA"
   calculated as described above                          $889,908
  Leverage ratio                                             4.29x

In accordance with the Company's Credit Agreement, the Company's leverage ratio can not exceed 6.25 to 1.0 as of March 31, 2006. At that date, the Company's leverage ratio did not exceed 6.25 to 1.0.

                               DAVITA INC.
                  RECONCILIATIONS FOR NON-GAAP MEASURES
                               (unaudited)
                          (dollars in thousands)



  1. Operating cash flow, excluding tax benefit from stock option exercises
  and income tax payment on divested centers:
  We believe that operating cash flow excluding tax benefit from stock
  option exercises and income tax payment on divested centers enhances a
  user's understanding of our normal operating cash flows for these periods
  by providing a measure that is more meaningful because it is comparable to
  prior periods and indicative of consistent operating cash flow items, and
  because it excludes non-recurring transactions that can cause unusual
  fluctuations in our operating cash flows. This measure is not a measure of
  financial performance under United States generally accepted accounting
  principles and should not be considered as an alternative to cash flows
  from operating, investing or financing activities as an indicator of cash
  flows or as a measure of liquidity.

                                                                 Rolling
                                                                12-months
                                      Three months ended          ended
                               March 31, December 31, March 31,  March 31,
                                 2006       2005       2005        2006



  Cash (used in) provided
   by operating activities    $(23,564)  $183,344   $111,406   $350,584
  Less: Tax benefit from
   stock option exercises         (983)    (4,064)   (15,093)   (24,374)
   Income tax payment on
   divested centers             85,328                           85,328
                               $60,781   $179,280    $96,313   $411,538



   2. Free cash flow and free cash flow, excluding tax benefit from stock
  option exercises and income tax on divested centers:
  Free cash flow represents net cash provided by operating activities less

expenditures for routine maintenance and information technology. We believe

  free cash flow is a useful adjunct to cash flow from operating activities
  and other measurements under generally accepted accounting principles in
  the United States since it is a meaningful measure of our ability to fund
  acquisition and development activities and meet our debt service
  requirements.Free cash flow is not a measure of financial performance
  under United States generally accepted accounting principles and should
  not be considered as an alternative to cash flows from operating,
  investing or financing activities as an indicator of cash flows or as a
  measure of liquidity.

                                                                 Rolling
                                                                12-months
                                      Three months ended          ended
                               March 31, December 31, March 31,  March 31,
                                 2006      2005        2005       2006
  Cash (used in) provided
   by operating activities     $(23,564)  $183,344   $111,406   $350,584
  Less: Expenditures for
   routine maintenance
   and information technology   (19,726)   (31,735)    (7,634)   (75,731)

  Free cash flow                (43,290)   151,609    103,772    274,853
  Less: Tax benefit from
   stock option exercises          (983)    (4,064)   (15,093)   (24,374)
  Income tax payments on
   divested centers              85,328                           85,328
                                $41,055   $147,545    $88,679   $335,807
Photo: NewsCom: http://www.newscom.com/cgi-bin/prnh/20020729/DAVITALOGO
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SOURCE: DaVita Inc.

CONTACT: LeAnne Zumwalt, Investor Relations of DaVita Inc.,
+1-650-696-8910


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