Improving Health, Health Care and Quality of Life

DaVita 1st Quarter 2009 Results
PRNewswire-FirstCall
EL SEGUNDO, Calif.

DaVita Inc. today announced results for the quarter ended March 31, 2009. Net income attributable to DaVita Inc. for the three months ended March 31, 2009 was $96.2 million, or $0.92 per share, as compared to $86.9 million, or $0.80 per share, for the same period of 2008.

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

  Financial and operating highlights include:
  --  Significant New Accounting Policies:  On January 1, 2009 we adopted
      SFAS No. 160 Noncontrolling Interests in Consolidated Financial
      Statements and implemented SEC Topic No. D-98 Classification and
      Measurement of Redeemable Securities. These standards changed the
      presentation and measurement of noncontrolling interests in our
      financial statements for all periods presented, which primarily
      affected the presentation of operating income, operating cash flows
      and the effective income tax rate. See reconciliations for non-GAAP
      measures beginning on page 10 of this release for further details of
      the impact on our financial statements of adopting these standards.
  --  Cash Flow:  For the rolling 12 months ended March 31, 2009 operating
      cash flow was $640 million and free cash flow was $468 million. For
      the three months ended March 31, 2009 operating cash flow was $134
      million and free cash flow was $90 million.
  --  Operating Income:  Operating income for the three months ended March
      31, 2009 was $221 million, as compared to $206 million for the same
      period of 2008.
  --  Volume:  Total treatments for the first quarter of 2009 were
      4,082,439, or 53,365 treatments per day, representing a per day
      increase of 5.0% over the first quarter of 2008. Non-acquired
      treatment growth in the quarter was 4.0% over the prior year's first
      quarter.
  --  Effective Tax Rate:  Our effective tax rate was 37.4% for the three
      months ended March 31, 2009. This effective tax rate is impacted by
      the amount of third parties owners' income attributable to non-tax
      paying entities. The effective tax rate attributable to DaVita Inc.
      was 40.2% for the three months ended March 31, 2009 which was in the
      range of our previous stated guidance. Our effective tax rate for 2009
      is projected to be in the range of 37.0% to 38.0% and our 2009
      effective tax rate attributable to DaVita Inc. is still projected to
      be in a range of 39.5% to 40.5%.
  --  Share Repurchases:  During the first quarter of 2009 we repurchased a
      total of 744,400 of our common stock for $32.0 million, or an average
      price of $43.01 per share, pursuant to previously announced Board
      authorizations. We have not repurchased any additional shares of our
      common stock subsequent to March 31, 2009.

  --  Center Activity:  As of March 31, 2009, we operated or provided
      administrative services at 1,475 outpatient dialysis centers serving
      approximately 114,000 patients, of which 1,446 centers are
      consolidated in our financial statements. During the first quarter of
      2009, we acquired seven centers, opened 18 new centers, merged one
      center and closed one center.


  Outlook

Our operating income guidance attributable to DaVita Inc. for 2009 remains unchanged at a range of $820-$880 million. However, as a result of adopting SFAS No. 160, the classification of noncontrolling interests was changed to no longer be deducted from our operating income as previously reported. Therefore, our operating income guidance based on the current presentation under SFAS No. 160 is projected to be in the range of $870-$930 million, even though the underlying fundamental economics of our business have not changed. In addition, our operating cash flow guidance is now projected to be in the range of $550-$600 million. See supplemental financial data on page 8 for further details. 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 three months ended March 31, 2009 on April 28, 2009 at 8:30 a.m. 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 2009 operating results and 2009 expected effective tax rate and the expected effective tax rate attributable to DaVita Inc. Factors which could impact future results include the uncertainties associated with governmental regulations, general economic and other market conditions, competition, accounting estimates and the risk factors set forth in our SEC filings, including our Form 10-K for the year ended December 31, 2008. 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,
  --  continued downward pressure on average realized payment rates from
      commercial  payors, which may result in the loss of revenue or
      patients,
  --  a  reduction in the number of patients under higher-paying commercial
      plans,
  --  a reduction in government payment rates or the structure of payments
      under the Medicare ESRD Program which result in lower reimbursement
      for services we provide to Medicare patients,
  --  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 compliance with the corporate
      integrity agreement applicable to the dialysis centers acquired from
      Gambro Healthcare and assumed in connection with such acquisition, and

  --  the resolution of ongoing investigations by various federal and state
      governmental agencies.


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,
                                                     2009           2008

  Net operating revenues                          $1,447,640     $1,344,724
  Operating expenses and charges:
    Patient care costs                             1,005,886        930,209
    General and administrative                       127,273        120,765
    Depreciation and amortization                     57,123         52,811
    Provision for uncollectible accounts              36,736         34,631
    Equity investment loss                                18            527
      Total operating expenses and charges         1,227,036      1,138,943

  Operating income                                   220,604        205,781
  Debt expense                                      (48,301)       (59,066)
  Other income                                           754          4,863
  Income before income taxes                         173,057        151,578
  Income tax expense                                  64,783         55,570
  Net income                                         108,274         96,008
    Less:  Net income attributable to
     noncontrolling interests                       (12,063)        (9,074)
  Net income attributable to DaVita Inc.             $96,211        $86,934

  Earnings per share:
    Basic earnings per share attributable
     to DaVita Inc.                                    $0.93          $0.81
    Diluted earnings per share attributable
     to DaVita Inc.                                    $0.92          $0.80
    Weighted average shares for earnings
     per share:
      Basic                                      103,878,417    107,367,356
      Diluted                                    104,409,026    108,239,360


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

                                                       Three months ended
                                                            March 31,
                                                         2009        2008
  Cash flows from operating activities:
  Net income attributable to DaVita Inc.              $ 96,211     $86,934
  Adjustments to reconcile net income to cash
   provided by operating activities:
     Depreciation and amortization                      57,123      52,811
     Stock-based compensation expense                   11,009       9,548
     Tax benefits from stock award exercises             2,161       2,618
     Excess tax benefits from stock award exercises       (779)     (1,411)
     Deferred income taxes                              16,430      (7,439)
     Net income attributable to noncontrolling
      interests                                         12,063       9,074
     Equity investment loss                                 18         527
     Loss on disposal of assets                          3,629       1,355
     Non-cash debt and non-cash rent charges             3,422       4,074
  Changes in operating assets and liabilities, other
   than from acquisitions and divestitures:
     Accounts receivable                               (13,757)    (33,168)
     Inventories                                        13,055       3,499
     Other receivables and other current assets         41,417      16,846
     Other long-term assets                              1,422        (537)
     Accounts payable                                  (65,411)    (39,217)
     Accrued compensation and benefits                 (21,403)    (47,571)
     Other current liabilities                         (54,116)     (6,500)
     Income taxes                                       40,339      56,653
     Other long-term liabilities                        (8,584)       (184)
       Net cash provided by operating activities       134,249     107,912
  Cash flows from investing activities:
     Additions of property and equipment, net          (73,203)    (64,673)
     Acquisitions                                      (39,828)     (5,671)
     Proceeds from asset sales                           4,199          23
     Purchase of investments available for sale           (514)       (839)
     Purchase of investments held-to-maturity               (6)       (109)
     Proceeds from sale of investments available
      for sale                                          10,669       4,955
     Proceeds from maturities of investments
      held-to-maturity                                      20          73
     Purchase of intangible assets and other                 -         (20)
     Net cash used in investing activities             (98,663)    (66,261)
  Cash flows from financing activities:
     Borrowings                                      2,619,540   4,050,363
     Payments on long-term debt                     (2,630,739) (4,052,066)
     Deferred financing costs                                -        (130)
     Purchase of treasury stock                        (32,016)     (7,144)
     Excess tax benefits from stock award exercises        779       1,411
     Stock award exercises and other share
      issuances, net                                     9,102       8,525
     Distributions to noncontrolling interests         (13,567)    (16,888)
     Contributions from noncontrolling interests         4,460       5,103
     Proceeds from sales of additional
      noncontrolling interests                           3,081       4,612
     Purchase of noncontrolling interests               (1,424)     (3,167)
       Net cash used in financing activities           (40,784)     (9,381)
  Net (decrease) increase in cash and cash
   equivalents                                          (5,198)     32,270
  Cash and cash equivalents at beginning of period     410,881     447,046
  Cash and cash equivalents at end of period          $405,683    $479,316


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

                    ASSETS                          March 31,   December 31,
                                                       2009          2008

  Cash and cash equivalents                          $405,683      $410,881
  Short-term investments                               25,413        35,532
  Accounts receivable, less allowance of
   $216,261 and $211,222                            1,088,584     1,075,457
  Inventories                                          71,353        84,174
  Other receivables                                   194,637       239,165
  Other current assets                                 32,454        33,761
  Income tax receivable                                     -        32,130
  Deferred income taxes                               213,339       217,196
      Total current assets                          2,031,463     2,128,296
  Property and equipment, net                       1,067,289     1,048,075
  Amortizable intangibles, net                        155,823       160,521
  Investments in third-party dialysis businesses       23,856        19,274
  Long-term investments                                 5,212         5,656
  Other long-term assets                               46,006        47,330
  Goodwill                                          3,905,762     3,876,931
                                                   $7,235,411    $7,286,083
                LIABILITIES AND EQUITY
  Accounts payable                                   $217,125      $282,883
  Other liabilities                                   441,124       495,239
  Accrued compensation and benefits                   276,851       312,216
  Current portion of long-term debt                    83,295        72,725
  Income taxes payable                                  8,211             -
      Total current liabilities                     1,026,606     1,163,063
  Long-term debt                                    3,600,233     3,622,421
  Other long-term liabilities                         100,085       101,442
  Alliance and product supply agreement, net           34,645        35,977
  Deferred income taxes                               260,101       244,884
      Total liabilities                             5,021,670     5,167,787
  Commitments and contingencies
  Noncontrolling interests subject to
   put provisions                                     289,592       291,397
  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;
     103,409,287 and 103,753,673 shares outstanding)      135           135
    Additional paid-in capital                        607,234       584,358
    Retained earnings                               1,985,661     1,889,450
    Treasury stock, at cost (31,452,996 and
     31,108,610 shares)                              (714,977)     (691,857)
    Accumulated other comprehensive loss              (12,111)      (14,339)
      Total DaVita Inc. shareholders' equity        1,865,942     1,767,747
  Noncontrolling interests not subject to
   put provisions                                      58,207        59,152
  Total equity                                      1,924,149     1,826,899
                                                   $7,235,411    $7,286,083

                                  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,
                                                2009      2008       2008
  1. Consolidated Financial Results:
     Revenues                                  $1,448    $1,461     $1,345
     Operating income                          $220.6    $223.1     $205.8
       Operating income margin                  15.2%     15.3%      15.3%
     Net income attributable to DaVita Inc.     $96.2     $98.4      $86.9
     Diluted earnings per share attributable
      to DaVita Inc.                            $0.92     $0.94      $0.80

  2. Consolidated Business Metrics:
     Expenses
       Patient care costs as a percent of
        consolidated revenue (3)                69.5%     69.2%       69.2%
       General and administrative expenses as
        a percent of consolidated revenue (3)    8.8%      9.1%        9.0%

       Bad debt expense as a percent of
        consolidated revenue                     2.5%      2.5%        2.6%

       Consolidated effective tax rate
        attributable to DaVita Inc.(1)          40.2%     37.7%       39.0%

  3. Segment Financial Results:
     (dollar amounts rounded to nearest million)
     Dialysis and related lab services
       Revenues                                $1,377    $1,389     $1,297
       Direct operating expenses                1,140     1,148      1,068
         Dialysis segment margin                 $237      $241       $229

     Other - Ancillary services and strategic
      initiatives
       Revenues                                   $71       $72        $48
       Direct operating expenses                   76        79         61
         Ancillary segment loss                   $(5)      $(7)      $(13)

     Total segment margin                        $232      $234       $216
       Reconciling items:
       Stock-based compensation                   (11)      (11)       (10)
       Equity investment loss                       -         -         (1)
         Consolidated operating income           $221      $223       $206



                                  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,
                                              2009      2008         2008

  4. Segment Business Metrics:
      Dialysis and related lab services:
        Volume
          Treatments                       4,082,439  4,172,468  3,934,777
          Number of treatment days              76.5       79.5       77.4
          Treatments per day                  53,365     52,484     50,837
          Per day year over year increase       5.0%       4.9%       6.3%
          Non-acquired growth year over year    4.0%       4.0%       5.0%

        Revenue
          Dialysis and related lab services
           revenue per treatment             $336.73    $332.61    $328.95
          Per treatment increase (decrease)
           from previous quarter                1.2%      (1.1%)      0.3%
          Per treatment increase (decrease)
           from previous year                   2.4%       1.4%      (2.6%)
          Percent of consolidated revenue      95.1%      95.1%      96.4%

        Expenses
         Patient care costs
          Percent of segment revenue           68.8%      68.6%      68.7%
          Per treatment                      $231.88    $228.29    $226.21
          Per treatment increase (decrease)
           from previous quarter                1.6%      (1.8%)      1.4%
          Per treatment increase (decrease)
           from previous year                   2.5%       2.3%      (2.5%)

         General and administrative expenses
          Percent of segment revenue            7.4%       7.6%       7.1%
          Per treatment                       $24.99     $25.36     $23.50
          Per treatment (decrease) increase
           from previous quarter               (1.5%)      2.8%     (12.5%)
          Per treatment increase (decrease)
           from previous year                   6.3%      (5.6%)     (6.6%)

  5. Cash  Flow
        Operating cash flow                   $134.2     $198.5     $107.9
        Operating cash flow last twelve
         months                               $640.0     $613.7     $590.8
        Free cash flow(1)                     $ 89.5     $144.8      $72.6
        Free cash flow, last twelve months(1) $467.7     $450.7     $432.5
        Capital expenditures:
          Development and relocations          $42.0      $54.7      $46.1
          Routine maintenance/IT other         $31.2      $39.4      $18.5
          Acquisition expenditures             $39.8      $24.8       $5.7

  6. Accounts Receivable
        Net receivables                       $1,089     $1,075       $960
        DSO                                       70         70         68


                                  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,
                                              2009       2008       2008
  7. Debt and Capital Structure
       Total debt(2)                          $3,680     $3,691     $3,701
       Net debt, net of cash(2)               $3,275     $3,281     $3,222
       Leverage ratio (see Note 1:
        Calculation of the Leverage Ratio)     2.83x      2.88x      2.94x
       Overall effective weighted average
        interest rate during the quarter       5.04%      5.77%      6.10%
       Overall effective weighted average
        interest rate at end of the quarter    5.04%      5.10%      5.79%
       Effective weighted average interest
        rate on the Senior Secured Credit
        Facilities at end of the quarter       3.36%      3.48%      4.80%
       Economically fixed interest rates as
        a percentage of our total debt           66%        69%        72%
       Share repurchases                       $32.0      $63.0      $32.5

  8. Clinical (quarterly averages)
      Dialysis adequacy -% of patients with
       Kt/V > 1.2                                95%        95%        95%
      90 day patients with Hb>=10 <=13           87%        86%          -
      Patients with arteriovenous
       fistulas placed                           62%        62%        60%


  (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.
  (2) This is a non-GAAP financial measure. It excludes $3.3 million, the
      unamortized balance of a debt premium associated with our senior
      notes that is not actually outstanding debt principal.
  (3) Consolidated percentages of revenue and per treatment amounts are
      comprised of the dialysis and related lab services business, other
      ancillary services and strategic initiatives, as well as stock-based
      compensation expenses.

  9. Reconciliations of operating income guidance and operating cash flow
      guidance to our previous reported amounts:
                                                   Projected Range 2009
       Consolidated operating income guidance:
         Operating income guidance range as
          previously reported                   $820          -       $880
         Add:  Reclassification of
          noncontrolling interests                50          -         50
         Operating income guidance range        $870          -       $930
       Consolidated operating cash flow
        guidance:
         Operating cash flow guidance range as
          previously reported                   $500          -       $550
         Add:  Income distributions to
          noncontrolling interests                50          -         50
         Operating cash flows guidance range    $550          -       $600


                                  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 the presentation of
  "Consolidated EBITDA" is useful to investors to enhance their
  understanding of the Company's leverage ratio under its Credit Agreement.


                                                             Rolling twelve
                                                              months ended
                                                             March 31, 2009

  Net income attributable to DaVita Inc.                         $383,437
  Income taxes                                                    244,684
  Debt expense                                                    213,951
  Depreciation and amortization                                   221,229
  Noncontrolling interests and equity investment loss, net         48,844
  Other                                                            21,636
  Stock-based compensation expense                                 42,696
    "Consolidated EBITDA"                                      $1,176,477

                                                             March 31, 2009

  Total debt, excluding debt premium of $3.3 million           $3,680,200
  Letters of credit issued                                         50,901
                                                                3,731,101
  Less: cash and cash equivalents                                (405,683)
  Consolidated net debt                                        $3,325,418
  Last twelve months "Consolidated EBITDA"                     $1,176,477
  Leverage ratio                                                    2.83x


  In accordance with the Company's Credit Agreement, the Company's leverage
  ratio cannot exceed 4.50 to 1.0 as of March 31, 2009. At that date the
  Company's leverage ratio did not exceed 4.50 to 1.0.


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

  On January 1, 2009 we adopted SFAS No. 160 Noncontrolling Interests in
  Consolidated Financial Statements and implemented the classification and
  measurement of minority interests (noncontrolling interests) according
  to SEC Topic No. D-98 Classification and Measurement of Redeemable
  Securities. Under the provisions of SFAS No. 160 we are required to
  separately report the amount of consolidated net income attributable to
  the parent and to the noncontrolling interests on the face of the
  consolidated statement of income instead of reporting noncontrolling
  interests as a reduction to operating income as we previously had
  reported. In addition, we are also required to treat noncontrolling
  interests as a separate component of equity; however, in accordance with
  SEC Topic No. D-98, we are required to classify securities with
  redemption features that are not solely within our control, such as our
  noncontrolling interests that are subject to put provisions outside of
  permanent equity and to measure these noncontrolling interests at fair
  value. The provisions of these standards have been applied
  retrospectively for all prior periods presented.

  The following tables reflect the adjustments made to our previously
  reported financial statement amounts as a result of implementing SFAS
  No. 160 and SEC Topic No. D-98.

  1. Consolidated Statements of Income:

  We believe that this reconciliation of reported operating income to
  operating income as previously reported enables a user of our financial
  statements to more fully understand the impact on our previously
  reported operating results of implementing SFAS No. 160. Operating
  income as previously reported is no longer 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
                                                   December 31,   March 31,
                                                        2008        2008

  Operating income as reported                        $223,109    $205,781
  Less:   Reclassification of noncontrolling interests(11,509)     (9,054)
  Operating income as previously reported             $211,600    $196,727


  2. Consolidated Balance Sheet:

  We believe that this reconciliation of certain reported balance sheets
  accounts to the same balance sheet accounts as previously reported
  enables a user of our financial statements to more fully understand the
  impact on our previously reported balance sheet of implementing SFAS No.
  160 and SEC Topic D-98. The balance sheet as previously reported is no
  longer a measure of financial position under United States generally
  accepted accounting principles and should not be considered as an
  alternative to financial position.

                                       Noncontrolling
                                          interests  Noncontrolling
                                             not       interests
                    Income                 subject      subject   Additional
                      tax      Minority    to put       to put      paid in
                  receivable   interest   provisions   provisions   capital




  Balances as
   previously
   reported as
   of December
   31, 2008        $32,138    $165,846          $-         $-      $769,069
  Net change
   due to
   implementation
   of SFAS No. 160
   and SEC
   Topic No.
   D-98                 (8)   (165,846)     59,152    291,397      (184,711)
  Balances as
   adjusted
   as of
   December 31,
   2008            $32,130          $-     $59,152   $291,397      $584,358


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

  3. Effective Income Tax Rates

  We believe that reporting the effective income tax rate attributable to
  DaVita Inc. enhances a user understanding of DaVita's effective income
  tax rate for the periods presented because it excludes noncontrolling
  owners' income that primarily relates to non-tax paying entities and
  accordingly is more comparable to prior periods presentations regarding
  DaVita's effective income tax rate and is more meaningful to a user to
  fully understand the related income tax effects on DaVita Inc. operating
  results. 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 the effective income tax rate.

  Effective income tax rate as compared to the effective income tax rate
  attributable to DaVita Inc. is as follows:

                                                Three months ended
                                         March 31,  December 31,  March 31,
                                             2009       2008        2008

  Income before income taxes              $173,057    $169,364    $151,578
  Income tax expense                       $64,783     $59,618     $55,570
  Effective income tax rate                  37.4%       35.2%       36.7%


                                                  Three months ended
                                         March 31,  December 31,   March 31,
                                            2009        2008        2008

  Income before income taxes              $173,057    $169,364    $151,578
  Less:  Noncontrolling owners'
   income primarily attributable to
   non-tax paying entities                 (12,156)    (11,509)     (9,054)
  Income before income taxes
   attributable to DaVita Inc.            $160,901    $157,855    $142,524

  Income tax expense                       $64,783     $59,618     $55,570
  Less income (tax) benefit
   attributable to noncontrolling interests    (93)       (128)         20
  Income tax attributable to DaVita Inc.   $64,690     $59,490     $55,590

  Effective income tax rate
   attributable to DaVita Inc.               40.2%       37.7%       39.0%

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

  4. Operating Cash Flow Net of Income Distributions to Noncontrolling
     Interests:

  We believe that operating cash flow net of income distributions to
  noncontrolling interests enhances a user's understanding of the impact
  to our cash flow statements of implementing SFAS No. 160 which requires
  us to report operating cash flows at an enterprise level. Operating cash
  flow net of income distributions to noncontrolling interests also
  provides a measure that is more meaningful because it relates to
  operating cash flows that are attributable to DaVita Inc. 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,
                                            2009        2008        2008

  Cash provided by operating activities   $134,249    $198,549    $107,912
  Less:  Income distributions to
    noncontrolling interests               (13,567)    (14,379)    (16,888)
  Cash provided by operating activities
    attributable to DaVita Inc.           $120,682    $184,170     $91,024

                                               Rolling 12-Month Period
                                          March 31, December 31,  March 31,
                                            2009        2008        2008

  Cash provided by operating activities   $640,038    $613,701    $590,840
  Less:  Income distributions to
   noncontrolling interests                (54,449)    (57,770)    (54,811)
  Cash provided by operating activities
   attributable to DaVita Inc.            $585,589    $555,931    $536,029


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

  5.  Free cash flow

  Free cash flow represents net cash provided by operating activities less
  income distributions to noncontrolling interests and capital
  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 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. In addition, free cash flow excluding income
  distributions to noncontrolling interests  also provides a user with an
  understanding of free cash flows that are attributable to DaVita Inc.
  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.


                                                 Three months ended
                                          March 31, December 31, March 31,
                                             2009        2008        2008

  Cash provided by operating
  activities                              $134,249    $198,549    $107,912
  Less:  Income distributions to
  noncontrolling interests                 (13,567)    (14,379)    (16,888)
  Cash provided by operating activities
  attributable to DaVita Inc.             $120,682    $184,170     $91,024
  Less: Expenditures for routine
   maintenance and information
  technology                               (31,155)    (39,412)    (18,451)
  Free cash flow                           $89,527    $144,758     $72,573


                                                Rolling 12-Month Period
                                           March 31, December 31, March 31,
                                            2009        2008         2008

  Cash provided by operating activities   $640,038    $613,701    $590,840
  Less:  Income distributions to
  noncontrolling interests                 (54,449)    (57,770)    (54,811)
  Cash provided by operating
  activities attributable to DaVita Inc.  $585,589    $555,931    $536,029
  Less: Expenditures for routine
  maintenance and information technology  (117,937)   (105,233)   (103,525)
  Free cash flow.                         $467,652    $450,698    $432,504

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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