Improving Health, Health Care and Quality of Life

DaVita 2nd Quarter 2007 Results
PRNewswire-FirstCall
EL SEGUNDO, Calif.

DaVita Inc. , today announced results for the quarter ended June 30, 2007. Income from continuing operations for the three and six months ended June 30, 2007 excluding the valuation gain on the Company's Product Supply Agreement with Gambro Renal Products, and excluding after-tax gains on the sale of investment securities was $88.7 million and $165.2 million, or $0.83 and $1.55 per share, respectively, as compared with $64.3 million and $122.1 million, or $0.61 and $1.16 per share, respectively, for the same periods of 2006.

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

Income from continuing operations for the three and six months ended June 30, 2007 including the valuation gain on the Product Supply Agreement and the gains on the sale of investment securities was $125.0 million and $201.6 million, or $1.17 and $1.89 per share, respectively.

  Financial and operating highlights include:
  *  Cash Flow:  For the rolling 12-months ended June 30, 2007 operating
     cash flow was $501 million and free cash flow was $389 million.  For
     the three months ended June 30, 2007, operating cash flow was
     $126 million and free cash flow was $102 million.
  *  Operating Income:  Operating income for the three and six months ended
     June 30, 2007 excluding the pre-tax valuation gain on the Product
     Supply Agreement of $55 million, was $206 million and $399 million,
     respectively.
  *  Volume:  Total treatments for the second quarter of 2007 were 3,792,419
     or 48,621 treatments per day, as compared to 3,602,567 or 46,187
     treatments per day for the second quarter of 2006. Non-acquired
     treatment growth in the quarter was 4.6% over the prior year's second
     quarter.
  *  Center Activity:  As of June 30, 2007, we operated or provided
     administrative services at 1,321 outpatient dialysis centers serving
     approximately 106,000 patients, which includes 32 third-party owned
     centers serving approximately 3,000 patients.  During the second
     quarter of 2007, we acquired 4 centers, opened 10 new centers, and
     divested one center.
  *  Effective Tax Rate: We still expect the annual effective tax rate for
     2007 to be in the range of 39.0% - 40.0%.

  Outlook

We are revising our 2007 operating income guidance: operating income is now expected to be in the $790-$820 million range. Our previous guidance was for operating income to be in the range of $740-$780 million. Our operating income guidance for 2008, excluding the impact of any potential Medicare legislation, is projected to be in the range of $790-$850 million. We are entering into a period of unusual earnings uncertainty. Therefore the guidance range for 2008 does not capture as high a percentage of the potential outcomes as usual. 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 second quarter ended June 30, 2007 on August 2, 2007 at 5PM 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 2007 and 2008 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-Q for the quarter ended March 31, 2007. 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 resolution of various investigations by
     the U.S. Attorney's Office for the Eastern District of New York, the
     U.S. Attorney's Office for the Eastern District of Missouri, the Office
     of the Inspector General's Office in Houston, Texas, 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's 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        Six months ended
                               June 30,                  June 30,
                          2007         2006          2007          2006
  Net operating
   revenues           $1,312,735   $1,207,816   $2,590,901   $2,371,004
  Operating expenses
   and charges:
    Patient care costs   891,013      842,973    1,772,598    1,660,746
    General and
     administrative      122,432      111,444      235,653      215,612
    Depreciation and
     amortization         47,058       41,717       92,848       83,608
    Provision for
     uncollectible
     accounts             33,944       31,230       67,579       61,310
    Minority interests
     and equity income,
     net                  12,346        8,700       22,964       15,901
    Valuation gain on
     Alliance and Product
     Supply Agreement    (55,275)          --      (55,275)          --
     Total operating
      expenses and
      charges          1,051,518    1,036,064    2,136,367    2,037,177

  Operating income       261,217      171,752      454,534      333,827

  Debt expense           (62,911)     (68,436)    (131,781)    (138,895)
  Other income             7,658        2,973       10,853        6,847
  Income from continuing
   operations before
   income taxes          205,964      106,289      333,606      201,779
  Income tax expense      80,940       41,960      132,000       79,670
     Income from
      continuing
      operations         125,024       64,329      201,606      122,109
  Discontinued operations
    Loss on disposal of
     discontinued
     operations, net
     of tax                   --       (1,092)          --       (1,403)
  Net income            $125,024      $63,237     $201,606     $120,706

  Earnings per share:
    Basic earnings per
     share from
     continuing
     operations            $1.19        $0.62        $1.92        $1.18
    Basic earnings per
     share                 $1.19        $0.61        $1.92        $1.17
    Diluted earnings per
     share from
     continuing
     operations            $1.17        $0.61        $1.89        $1.16
    Diluted earnings
     per share             $1.17        $0.60        $1.89        $1.14
    Weighted average
     shares for
     earnings per
     share:
      Basic          105,451,306  103,479,062  105,246,995  103,046,461
      Diluted        107,011,248  105,645,208  106,879,727  105,486,027


                                 DAVITA INC.
                    CONSOLIDATED STATEMENTS OF CASH FLOWS
                                 (unaudited)
                            (dollars in thousands)
                                                     Six months ended
                                                         June 30,
                                                     2007          2006
   Cash flows from operating activities:
   Net income                                     $201,606       $120,706
   Adjustments to reconcile net income to cash
    provided by operating activities:
    Depreciation and amortization                   92,848         83,608
    Valuation gain on Alliance and Product
     Supply Agreement                              (55,275)            --
    Stock-based compensation expense                16,326         11,455
    Tax benefits from stock award exercises         12,481         23,628
    Excess tax benefits from stock-based
     compensation                                  (10,516)       (22,054)
    Deferred income taxes                           27,458        (20,980)
    Minority interests in income of
     consolidated subsidiaries                      23,502         17,360
    Distributions to minority interests            (25,230)       (13,357)
    Equity investment income                          (538)        (1,459)
    (Gain) loss on disposal of
     discontinued operations and other
     dispositions                                   (1,866)           427
    Non-cash debt and non-cash rent charges          8,430          8,880
  Changes in operating assets and liabilities,
   net of effect of acquisitions and divestitures:
    Accounts receivable                            (27,427)        (2,555)
    Inventories                                     19,503        (23,282)
    Other receivables and other current assets     (33,793)       (15,522)
    Other long term assets                          (5,095)        (1,040)
    Accounts payable                               (31,146)       (20,997)
    Accrued compensation and benefits                 (701)        60,829
    Other current liabilities                       13,891         70,714
    Income taxes                                   (10,292)       (46,755)
    Other long-term liabilities                       (234)         2,920
     Net cash provided by operating activities     213,932        232,526
  Cash flows from investing activities:
    Purchase of investments                        (37,076)            --
    Additions of property and equipment, net      (104,999)      (115,362)
    Acquisitions and purchases of other
     ownership interests                            (6,262)       (69,578)
    Proceeds from divestitures and asset sales         622         21,098
    Proceeds from sale of investments               25,418             --
    Investments in and advances to affiliates, net  13,476          9,981
    Purchase of intangible assets                     (556)        (5,630)
     Net cash used in investing activities        (109,377)      (159,491)
  Cash flows from financing activities:
    Borrowings                                   8,227,417      2,925,838
    Payments on long-term debt                  (8,271,098)    (3,139,358)
    Deferred financing costs                        (4,228)            (2)
    Excess tax benefits from stock-based
     compensation                                   10,516         22,054
    Stock option exercises and other share
     issuances, net                                 19,538         25,941
     Net cash used in financing activities         (17,855)      (165,527)
  Net increase (decrease) in cash and cash
   equivalents                                      86,700        (92,492)
  Cash and cash equivalents at beginning
   of period                                       310,202        431,811
  Cash and cash equivalents at end of period      $396,902       $339,319


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


                                                  June 30,    December 31,
                                                    2007          2006
               ASSETS
  Cash and cash equivalents                       $396,902       $310,202
  Short-term investments                            21,947          4,734
  Accounts receivable, less allowance of
   $184,538 and $171,757                           959,812        932,385
  Inventories                                       69,860         89,119
  Other receivables                                172,299        148,842
  Other current assets                              33,326         25,124
  Deferred income taxes                            233,334        199,090
      Total current assets                       1,887,480      1,709,496
  Property and equipment, net                      866,370        849,966
  Amortizable intangibles, net                     186,968        203,721
  Investments in third-party dialysis businesses     1,984          1,813
  Long-term investments                             14,179         13,174
  Other long-term assets                            47,487         45,793
  Goodwill                                       3,666,914      3,667,853

                                                $6,671,382     $6,491,816

  LIABILITIES AND SHAREHOLDERS' EQUITY
  Accounts payable                                $220,540       $251,686
  Other liabilities                                484,238        473,219
  Accrued compensation and benefits                336,939        341,766
  Current portion of long-term debt                  9,564         20,871
  Income taxes payable                              22,188         24,630
      Total current liabilities                  1,073,469      1,112,172
  Long-term debt                                 3,698,403      3,730,380
  Other long-term liabilities                       57,887         50,076
  Alliance and product supply agreement             43,973        105,263
  Deferred income taxes                            163,293        125,642
  Minority interests                               133,701        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,
     450,000,000 shares authorized; 134,862,283
     shares issued; 105,646,605 and
     104,636,608 shares outstanding)                   135            135
    Additional paid-in capital                     661,703        630,091
    Retained earnings                            1,335,118      1,129,621
    Treasury stock, at cost
     (29,215,678 and 30,225,675 shares)           (509,313)      (526,920)
    Accumulated other comprehensive income          13,013         12,997
      Total shareholders' equity                 1,500,656      1,245,924

                                                $6,671,382     $6,491,816


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

                            Three months ended        Six months ended
                          June 30,    March 31,     June 30,     June 30,
                            2007         2007         2006         2007
  Financial Results
   excluding the valuation
   gain on the Product
   Supply Agreement and
   gains on sale of
   investment securities
   for the quarter and
   the six months ended
   June 30, 2007:
    Income from
     continuing
     operations (1)        $88.7        $76.6        $64.3       $165.2
    Net income (1)         $88.7        $76.6        $63.2       $165.2
    Diluted earnings per
     share from
     continuing operations $0.83        $0.72        $0.61        $1.55
    Diluted earnings
     per share             $0.83        $0.72        $0.60        $1.55
    Operating income (1)  $205.9       $193.3       $171.8       $399.3
     Operating income
      margin               15.7%        15.1%        14.2%        15.4%
    Other comprehensive
     income
     Unrealized (loss)
      gain on securities,
      net of tax benefit
      (expense) of $0.5,
      ($0.5), ($2.2)      $(0.8)         $0.8         $3.4          $--

  Business Metrics:
   Volume
    Treatments         3,792,419    3,700,271    3,602,567    7,492,690
    Number of
     treatment days         78.0         77.4         78.0        155.4
    Treatments per day    48,621       47,807       46,187       48,216
    Per day year over
     year increase          5.3%         5.1%        94.0%         5.2%
    Non-acquired growth
     year over year         4.6%         4.0%         4.1%         4.3%

  Revenue
    Total operating
     revenue              $1,313       $1,278       $1,208       $2,591
    Dialysis revenue
     per treatment,
     including the lab   $337.94      $337.84      $329.02      $337.89
    Per treatment
     increase from
     previous quarter      0.03%         1.0%         0.8%           --
    Per treatment increase
      from previous year    2.7%         3.5%         1.5%         3.1%

  Expenses
  A.  Patient care costs
      Percent of revenue   67.9%        69.0%        69.8%        68.4%
      Per treatment      $234.95      $238.25      $233.99      $236.58
      Per treatment
       (decrease)
       increase from
       previous quarter   (1.4%)         1.7%         0.2%           --
      Per treatment
       increase from
       previous year        0.4%         2.0%         5.1%         1.2%

  B.  General &
       administrative
       expenses
      Percent of revenue    9.3%         8.9%         9.2%         9.1%
      Per treatment       $32.28       $30.60      $ 30.93      $ 31.45
      Per treatment
       increase (decrease)
       from previous
       quarter              5.5%       (8.5%)         4.0%           --
      Per treatment
       increase (decrease)
       from previous year   4.4%         2.9%       (4.1%)         3.6%

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

  D.  Consolidated
       effective tax rate
       from continuing
       operations          39.3%        40.0%        39.5%        39.6%

  (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 millions, except for per share and per treatment data)

                                   Three months ended  Six months ended
                                  June 30, March 31, June 30,   June 30,
                                    2007      2007      2006       2007
  Cash Flow
    Operating cash flow            $125.9     $88.0    $256.1     $213.9
    Operating cash flow,
     last twelve months            $501.0    $631.2    $500.5        $--
    Operating cash flow
     excluding the income tax
     payment on divested centers
     last twelve months (1)        $501.0    $631.2    $585.8        $--
    Free cash flow (1)             $101.7     $61.4    $227.5     $163.2
    Free cash flow, last
     twelve months (1)             $389.5    $515.2    $410.7        $--
    Free cash flow excluding the
     income tax payment on
     divested centers last
     twelve months (1)             $389.5    $515.2    $496.1        $--
    Capital expenditures:
     Development and relocations    $30.8     $22.5     $37.3      $53.4
     Routine maintenance/IT/other   $24.7     $26.9     $30.1      $51.6
    Acquisition expenditures         $6.1        --     $46.7       $6.3

  Accounts Receivable
    Net receivables                  $960      $907      $859
    DSO                                69        66        67

  Debt/Capital Structure
    Total debt, excluding debt
     premium of $5 million         $3,703    $3,750    $3,944
    Net debt, net of cash,
     excluding debt premium of
     $5 million                    $3,306    $3,394    $3,605
    Leverage ratio (see Note 1)     3.23x     3.48x     4.07x

  Clinical (quarterly averages)
    Dialysis adequacy - % of
     patients with Kt/V > 1.2       93.4%     92.9%     93.1%
    Patients with albumin
     greater than or equal to 3.5   83.8%     83.1%     83.5%
    Patients with HCT greater
     than or equal to 33            83.8%     85.1%     85.1%

   (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 June 30, 2007
  Income from continuing operations                              $368,826
  Income taxes                                                    238,760
  Debt expense including the write-off of deferred
   financing costs                                                269,412
  Depreciation and amortization                                   182,535
  Minority interests and equity income, net                        42,896
  Valuation gain on Product Supply Agreement                      (93,243)
  Other                                                            (2,650)
  Stock-based compensation expense                                 31,261
    "Consolidated EBITDA"                                      $1,037,797

                                                                 June 30,
                                                                   2007
  Total debt, excluding debt premium of $5 million             $3,703,127
  Letters of credit issued                                         50,131
                                                                3,753,258
  Less: cash and cash equivalents                                (396,902)
  Consolidated net debt                                        $3,356,356
  Last twelve months "Consolidated EBITDA"                     $1,037,797
  Leverage ratio                                                    3.23x

  In accordance with the Company's Credit Agreement, the Company's leverage
  ratio cannot exceed 5.75 to 1.0  as of June 30, 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. Income from continuing operations and net income excluding the valuation gain on the Product Supply Agreement and gains on the sale of investment securities:

We believe that income from continuing operations and net income excluding the valuation gain on the Product Supply Agreement and gains on the sale of investment securities enhances a user's understanding of our normal income from continuing operations and net income for these periods by providing a measure that is more meaningful because it excludes a non- recurring non-cash item that resulted from the termination of our purchase obligation for dialysis machines from Gambro Renal Products Inc. under the Amended Product Supply Agreement and non-recurring gains on the sale of investment securities and accordingly is more comparable to prior periods and indicative of consistent income from continuing operations and net income. 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 income from continuing operations and net income.

                               Three months ended      Six months ended
                               June 30,    March 31,   June 30,   June 30,
                                 2007        2007        2006       2007
  Income from continuing
   operations                 $125,024     $76,582     $64,329   $201,606
  Less:  Valuation gain        (55,275)         --          --    (55,275)
         Gain on the sale of
          investment
          securities            (4,234)         --          --     (4,234)
  Add:   Related income tax     23,149          --          --    $23,149
                               $88,664     $76,582     $64,329   $165,246


  Net income                  $125,024     $76,582     $63,237   $201,606
  Less:  Valuation gain        (55,275)         --          --    (55,275)
         Gain on the sale of
          investment
          securities            (4,234)         --          --     (4,234)
  Add:   Related income tax     23,149          --          --     23,149
                               $88,664     $76,582     $63,237   $165,246

2. Operating income excluding the pre-tax valuation gain on the Product Supply Agreement:

We believe that operating income excluding the valuation gain on the Product Supply Agreement enhances a user's understanding of our normal operating income for these periods by providing a measure that is more meaningful because it excludes a non-recurring non-cash item that resulted from the termination of our purchase obligation for dialysis machines from Gambro Renal Products Inc. under the Amended Product Supply Agreement and accordingly is more comparable to prior periods and indicative of consistent operating income 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 operating income.

                          Three months ended          Six months ended
                        June 30,     March 31,    June 30,     June 30,
                          2007          2007         2006         2007
  Operating income      $261,217     $193,317     $171,752     $454,534
  Less:  Valuation gain  (55,275)          --           --      (55,275)
                        $205,942     $193,317     $171,752     $399,259


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

3. 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.

                                         Rolling 12-Month Period
                                 June 30,       March 31,      June 30,
                                   2007            2007          2006
  Cash provided by
   operating activities          $500,977        $631,166      $500,479
  Income tax payment on
   divested centers                    --              --        85,328
                                 $500,977        $631,166      $585,807


4. 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         Six months ended
                         June 30,     March 31,    June 30,     June 30,
                           2007         2007        2006         2007
  Cash provided by
   operating
   activities           $125,901      $88,031     $256,090     $213,932
  Less: Expenditures
   for routine
   maintenance and
   information
   technology            (24,157)     (26,589)     (28,640)     (50,746)
  Free cash flow        $101,744      $61,442     $227,450     $163,186


                                          Rolling 12-Month Period
                                June 30,       March 31,      June 30,
                                  2007            2007           2006
  Cash provided by operating
   activities                    $500,977        $631,166      $500,479
  Less: Expenditures for
   routine maintenance and
   information technology        (111,511)       (115,994)      (89,757)
  Free cash flow                 $389,466        $515,172      $410,722
  Income tax payment on
   divested centers                    --              --        85,328
                                 $389,466        $515,172      $496,050

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


Contact Investor Relations

For media inquiries, please contact:

Media Kit

Kate Stabrawa
2000 16th Street
Denver, CO 80202
(303) 876-7527