Improving Health, Health Care and Quality of Life

DaVita 1st Quarter 2007 Results
PRNewswire-FirstCall
EL SEGUNDO, Calif.

DaVita Inc. , today announced results for the quarter ended March 31, 2007. Net income for the three months ended March 31, 2007 was $76.6 million, or $0.72 per share, as compared with $57.5 million, or $0.55 per share, for the same period of 2006.

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

  Financial and operating highlights include:
  * Cash Flow:  For the rolling 12-months ended March 31, 2007 operating
    cash flow was $631 million and free cash flow was $515 million.  For the
    three months ended March 31, 2007, operating cash flow was $88 million
    and free cash flow was $61 million.
  * Operating Income:  Operating income for the three months ended March 31,
    2007 was $193 million.
  * Volume:  Total treatments for the first quarter of 2007 were 3,700,271
    or 47,807 treatments per day. Non-acquired treatment growth in the
    quarter was 4.0% over the prior year's first quarter.
  * Center Activity:  As of March 31, 2007, we operated or provided
    administrative services at 1,308 outpatient dialysis centers serving
    approximately 104,000 patients, which includes 32 third-party owned
    centers serving approximately 2,800 patients.  During the first quarter
    of 2007 we opened 11 new centers, discontinued providing administrative
    services to two third-party owned centers and closed one center.
  * Effective Tax Rate: We currently expect the annual effective tax rate
    for 2007 to be in the range of 39.0% - 40.0%.
  * Debt Transactions:  During the first quarter of 2007, we issued $400
    million of 6-5/8% senior notes due 2013, and used the proceeds to pay
    down our term loan B.  In addition, we amended and restated our existing
    senior secured credit facilities to, among other things, reduce the
    interest rate margin on our term loan B by 0.50%, and change certain
    financial covenants.  The new term loan B bears interest at LIBOR plus
    1.50%.  In connection with these transactions, we wrote-off deferred
    financing costs and other costs totaling approximately $4.4 million,
    which is included in debt expense, representing an after-tax amount of
    $2.7 million, or $0.02 per share.

  Outlook

We are revising our 2007 operating income guidance: Operating income is now projected to be in the range of $740-$780 million. Our previous guidance was for operating income to be in the range of $700-$760 million. Operating cash flow for 2007 is currently projected to be in the range of $460-$510 million. 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, 2007 on April 30, 2007 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, including statements related to our 2007 operating results. Factors which could impact future results include the uncertainties associated with governmental regulations, general economic and other market conditions, accounting estimates and the risk factors set forth in the Company's SEC filings, including its Form 10-K for the year ended December 31, 2006. 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 commercial payor plans,
  * possible reductions in private and government payment rates,
  * changes in pharmaceutical or anemia management 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 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 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,
                                                      2007           2006
  Net operating revenues                        $1,278,166     $1,163,188
  Operating expenses and charges:
    Patient care costs                             881,585        817,773
    General and administrative                     113,221        104,168
    Depreciation and amortization                   45,790         41,891
    Provision for uncollectible accounts            33,635         30,080
    Minority interests and equity income, net       10,618          7,201
     Total operating expenses and charges        1,084,849      1,001,113

  Operating income                                 193,317        162,075

  Debt expense                                     (68,870)       (70,459)
  Other income                                       3,195          3,874
  Income from continuing operations before
   income taxes                                    127,642         95,490
  Income tax expense                                51,060         37,710
     Income from continuing operations              76,582         57,780
  Discontinued operations
     Loss on disposal of discontinued operations,
      net of tax                                         -           (311)
  Net income                                       $76,582        $57,469

  Earnings per share:
    Basic earnings per share from continuing
     operations                                      $0.73          $0.56
    Basic earnings per share                         $0.73          $0.56
    Diluted earnings per share from continuing
     operations                                      $0.72          $0.55
    Diluted earnings per share                      $ 0.72          $0.55
    Weighted average shares for earnings per
     share:
      Basic                                    105,013,000    102,581,000

      Diluted                                  106,739,000    105,388,000



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

                                                     Three months ended
                                                           March 31,
                                                      2007           2006
  Cash flows from operating activities:
  Net income                                       $76,582        $57,469
  Adjustments to reconcile net income to cash
   provided by (used in)operating activities:
    Depreciation and amortization                   45,790         41,891
    Stock-based compensation expense                 7,702          5,692
    Tax benefits from stock award exercises          6,307         19,515
    Excess tax benefits from stock-based
     compensation                                   (5,426)       (18,532)
    Deferred income taxes                           (2,194)        (2,425)
    Minority interests in income of consolidated
     subsidiaries                                   10,828          8,104
    Distributions to minority interests            (10,106)        (5,180)
    Equity investment income                          (210)          (903)
    Loss (gain) on disposal of discontinued
     operations and other dispositions               1,552           (663)
    Non-cash debt and non-cash rent charges          6,946          5,321
  Changes in operating assets and liabilities,
   net of effect of acquisitions and divestitures:
    Accounts receivable                             25,875         (5,558)
    Inventories                                     19,667        (18,911)
    Other receivables and other current assets      (4,471)       (17,850)
    Other long term assets                          (1,873)        (1,210)
    Accounts payable                               (46,387)       (32,723)
    Accrued compensation and benefits              (33,988)         5,223
    Other current liabilities                      (31,636)        (1,350)
    Income taxes                                    26,389        (63,828)
    Other long-term liabilities                     (3,316)         2,354
     Net cash provided by (used in) operating
      activities                                    88,031        (23,564)
  Cash flows from investing activities:
    Purchase of investments                        (20,975)             -
    Additions of property and equipment, net       (49,444)       (47,991)
    Acquisitions and purchases of other ownership
     interests                                        (189)       (22,845)
    Proceeds from divestitures and asset sales          98         17,734
    Proceeds from sale of investments                6,236              -
    Investments in and advances to affiliates, net   4,650          2,635
    Purchase of intangible assets                      (55)        (5,015)
    Net cash used in investing activities          (59,679)       (55,482)
  Cash flows from financing activities:
    Borrowings                                   3,898,955        785,231
    Payments on long-term debt                  (3,894,640)      (898,443)
    Deferred financing costs                        (4,048)            (2)
    Excess tax benefits from stock-based
     compensation                                    5,426         18,532
    Stock option exercises and other share
     issuances, net                                 12,137         21,063
    Net cash provided by (used in) provided by
     financing activities                           17,830        (73,619)
  Net increase (decrease) in cash and cash
   equivalents                                      46,182       (152,665)
  Cash and cash equivalents at beginning of
   period                                          310,202        431,811
  Cash and cash equivalents at end of period      $356,384       $279,146



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

                                                  March 31,   December 31,
                                                      2007           2006
  ASSETS
  Cash and cash equivalents                       $356,384       $310,202
  Short-term investments                             5,815          4,734
  Accounts receivable, less allowance
   of $177,458 and $171,757                        906,510        932,385
  Inventories                                       69,452         89,119
  Other receivables                                146,180        148,842
  Other current assets                              28,500         25,124
  Deferred income taxes                            235,191        199,090
     Total current assets                        1,748,032      1,709,496
  Property and equipment, net                      854,797        849,966

  Amortizable intangibles, net                     194,741        203,721
  Investments in third-party dialysis businesses     1,823          1,813
  Long-term investments                             33,778         13,174
  Other long-term assets                            41,735         45,793
  Goodwill                                       3,663,091      3,667,853
                                                $6,537,997     $6,491,816


                   LIABILITIES AND SHAREHOLDERS' EQUITY

  Accounts payable                                $205,299       $251,686
  Other liabilities                                441,583        473,219
  Accrued compensation and benefits                302,689        341,766
  Current portion of long-term debt                 34,133         20,871
  Income taxes payable                              59,342         24,630
     Total current liabilities                   1,043,046      1,112,172
  Long-term debt                                 3,721,373      3,730,380
  Other long-term liabilities                       54,398         50,076
  Alliance and product supply agreement, net       102,255        105,263
  Deferred income taxes                            135,286        125,642
  Minority interests                               127,496        122,359
  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;
     105,200,346 and 104,636,608 shares
     outstanding)                                      135            135
    Additional paid-in capital                     647,240        630,091
    Retained earnings                            1,210,094      1,129,621
    Treasury stock, at cost (29,661,937 and
     30,225,675 shares)                           (517,093)      (526,920)
    Accumulated other comprehensive income          13,767         12,997
     Total shareholders' equity                  1,354,143      1,245,924
                                                $6,537,997     $6,491,816



                               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,
                                            2007          2006       2006
  Financial Results:
    Income from continuing operations      $76.6         $74.1      $57.8
    Net income                             $76.6         $74.1      $57.5
    Diluted earnings per share from
     continuing operations                 $0.72         $0.70      $0.55
    Diluted earnings per share             $0.72         $0.70      $0.55
    Operating income                      $193.3        $188.5     $162.1
     Operating income margin                15.1%         14.8%      13.9%
    Other comprehensive income
     Unrealized gain (loss) on securities,
      net of tax (expense) benefit of
      ($0.5), $0.7, and ($3.9)              $0.8         ($1.1)      $6.2

  Business Metrics:
    Volume
     Treatments                        3,700,271     3,723,198  3,501,032
     Number of treatment days               77.4          78.6       77.0
     Treatments per day                   47,807        47,369     45,468
     Per day year-over-year increase         5.1%          7.0%      98.7%
     Non-acquired growth year-over-year      4.0%          5.5%       4.6%

    Revenue
     Total operating revenue              $1,278        $1,273     $1,163
     Dialysis revenue per treatment,
      including the lab                  $337.84       $334.45    $326.52
     Per treatment increase from
      previous quarter                       1.0%          0.9%       2.0%
     Per treatment increase from
      previous year                          3.5%          4.5%       1.5%

    Expenses
    A. Patient care costs
       Percent of revenue                   69.0%         68.6%      70.3%
       Per treatment                     $238.25       $234.36    $233.58
       Per treatment increase from
        previous quarter                     1.7%          0.3%       2.2%
       Per treatment increase from
        previous year                        2.0%          2.6%       6.2%

    B. General & administrative expenses
       Percent of revenue                    8.9%          9.8%       9.0%
       Per treatment                      $30.60        $33.43     $29.75
       Per treatment (decrease) increase
        from previous quarter               (8.5%)         8.1%       6.7%
       Per treatment increase (decrease)
        from previous year                   2.9%         19.9%      (3.4%)

    C. Bad debt expense as a percent of
        total operating revenue              2.6%          2.6%       2.6%

    D. Consolidated effective tax rate
        from continuing operations          40.0%         39.0%      39.5%



                               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,
                                            2007          2006       2006
  Cash Flow
    Operating cash flow                    $88.0        $190.1     $(23.6)
    Operating cash flow, excluding the
     income tax payment on divested
     centers (1)                           $88.0        $190.1      $61.8
    Operating cash flow last twelve
     months                               $631.2        $519.6     $350.6
    Operating cash flow, excluding the
     income tax payment on divested
     centers last twelve months (1)       $631.2        $604.9     $435.9

    Free cash flow (1)                     $61.4        $158.9     $(43.3)
    Free cash flow, excluding the income
     tax payment on divested centers (1)   $61.4        $158.9      $42.0
    Free cash flow last twelve months (1) $515.2        $410.4     $274.9
    Free cash flow, excluding the income
     tax payment on divested centers last
     twelve months (1)                    $515.2        $495.8     $360.2

    Capital expenditures:
     Development and relocations           $21.3         $44.5      $26.3
     Routine maintenance/IT/other          $28.1         $32.5      $21.7
     Acquisition expenditures                  -         $10.9      $22.8

  Accounts Receivable
    Net receivables                         $907          $932       $859
    DSO                                       66            70         69

  Debt/Capital Structure
    Total debt, excluding debt premium    $3,750        $3,751     $4,045
    Net debt, net of cash                 $3,394        $3,441     $3,765
    Leverage ratio (see Note 1)             3.48x         3.66x      4.29x

  Clinical (quarterly averages)
    Dialysis adequacy % of patients
     with Kt/V > 1.2                          93%           93%        93%
    Patients with albumin greater than
     or equal to 3.5                          83%           84%        83%

(1) These are non-GAAP financial measures. For a reconciliation of these non-GAAP financial measures to their most comparable measure calculated and presented in accordance with GAAP, see attached reconciliation schedules.

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

  Note 1: Calculation of the Leverage Ratio

Under the Company's current Senior Secured Credit Facilities (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 for its term loan A and revolving line of credit 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. The calculation below is based on the last twelve months of "Consolidated EBITDA," pro forma for the routine acquisitions that occurred during the period. 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, 2007
  Income from continuing operations                  $308,131
  Income taxes                                        199,780
  Debt expense including the write off of
   deferred financing costs                           274,937
  Depreciation and amortization                       177,194
  Minority interests and equity income, net            39,250
  Valuation gain on Product Supply Agreement          (37,968)
  Other                                                    (8)
  Stock-based compensation expense                     28,399
    "Consolidated EBITDA"                            $989,715

                                                     March 31,
                                                         2007
  Total debt, excluding debt premium               $3,750,486
  Letters of credit issued                             50,131
                                                    3,800,617
  Less: cash and cash equivalents                    (356,384)
  Consolidated net debt                            $3,444,233
  Last twelve months "Consolidated EBITDA"           $989,715
  Leverage ratio                                         3.48x

In accordance with the Company's Credit Agreement, the Company's leverage ratio cannot exceed 5.75 to 1.0 as of March 31, 2007. At that date, the Company's leverage ratio did not exceed 5.75 to 1.0.

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

  1. Operating cash flow, excluding the income tax payment on divested
     centers:

We believe that operating cash flow excluding the 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 excludes non-recurring transactions that can cause unusual fluctuations in our operating cash flows and accordingly is more comparable to prior periods and indicative of consistent operating cash flow items. 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.

                                                 Three months ended
                                        March 31,   December 31,   March 31,
                                            2007           2006        2006
  Cash provided by operating activities  $88,031       $190,108    $(23,564)
  Income tax payment on divested centers
    -              -      85,328
                                         $88,031       $190,108     $61,764



                                             Rolling 12-Month Period
                                        March 31,   December 31,   March 31,
                                            2007           2006        2006
  Cash provided by operating activities $631,166       $519,571    $350,584
  Income tax payment on divested
   centers                                     -         85,328      85,328
                                        $631,166       $604,899    $435,912



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

  2.  Free cash flow and free cash flow, excluding the income tax payment on
      divested centers:

Free cash flow represents net cash provided by operating activities less capital expenditures for routine maintenance and information technology. We believe free cash flow and free cash flow excluding the income tax payment on divested centers are useful adjuncts to cash flow from operating activities and other measurements under United States generally accepted accounting principles, since free cash flow is a meaningful measure of our ability to fund acquisition and development activities and meet our debt service requirements and because free cash flow excluding the income tax payment on divested centers excludes a non-recurring transaction that can cause unusual fluctuations in our free cash flows and accordingly is more comparable to prior periods and indicative of consistent free cash items. Free cash flow and free cash flow excluding the income tax payment on divested centers are not measures 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.

                                                Three months ended
                                        March 31,   December 31,   March 31,
                                            2007           2006        2006
  Cash provided by operating activities  $88,031      $ 190,108    $(23,564)
  Less: Expenditures for routine
   maintenance and information
   technology                            (26,589)       (31,214)    (19,726)
  Free cash flow                        $ 61,442      $ 158,894    $(43,290)
   Income tax payment on divested
    centers                                    -              -      85,328
                                        $ 61,442      $ 158,894     $42,038



                                               Rolling 12-Month Period
                                        March 31,   December 31,   March 31,
                                            2007           2006        2006
  Cash provided by operating activities $631,166       $519,571    $350,584
  Less: Expenditures for routine
   maintenance and information
   technology                           (115,994)      (109,131)    (75,731)
  Free cash flow                        $515,172       $410,440    $274,853
   Income tax payment on divested
    centers                                    -         85,328      85,328
                                        $515,172       $495,768    $360,181

First Call Analyst:
FCMN Contact: LeAnne.Zumwalt@davita.com

Photo: NewsCom: http://www.newscom.com/cgi-bin/prnh/20020729/DAVITALOGO
AP Archive: http://photoarchive.ap.org/
PRN Photo Desk, photodesk@prnewswire.com

SOURCE: DaVita Inc.

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


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