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Davita Inc. Reports Operating Results (10-Q)

October 31, 2012 | About:
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10qk

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Davita Inc. (DVA) filed Quarterly Report for the period ended 2012-09-30.

Davita Inc has a market cap of $10.5 billion; its shares were traded at around $112.17 with a P/E ratio of 18.6 and P/S ratio of 1.5. Davita Inc had an annual average earning growth of 17.8% over the past 10 years. GuruFocus rated Davita Inc the business predictability rank of 3.5-star.

Highlight of Business Operations:

Consolidated operating revenues for the third quarter of 2012 increased by approximately $39 million, or approximately 2.0%, as compared to the second quarter of 2012. The increase in consolidated operating revenues was primarily due to an increase in dialysis and related lab services operating revenues of approximately $29 million, principally due to volume growth from additional treatments from non-acquired growth and acquisitions, partially offset by a decline in our average dialysis revenue per treatment of approximately $1 in the third quarter of 2012 as compared to the second quarter of 2012. The increase in the consolidated operating revenues was also due to an increase of approximately $10 million in the ancillary services and strategic initiatives revenues primarily from growth in our pharmacy services.

Consolidated operating revenues for the third quarter of 2012 increased by approximately $215 million, or approximately 11.9%, as compared to the third quarter of 2011. The increase in consolidated operating revenues was primarily due to an increase in dialysis and related lab services operating revenues of approximately $170 million, principally due to strong volume growth from additional treatments from non-acquired treatment growth in existing and new centers and growth through acquisitions, even with one fewer treatment day in the third quarter of 2012, partially offset by a decrease in the average dialysis revenue per treatment of approximately $2. The increase in consolidated operating revenues was also due to an increase of approximately $48 million in the ancillary services and strategic initiatives revenues primarily from growth in our pharmacy services.

Consolidated operating revenues for the nine months ended September 30, 2012 increased by approximately $807 million, or approximately 15.8%, as compared to the same period in 2011. The increase in consolidated operating revenues was primarily due to an increase in dialysis and related lab services operating revenues of approximately $666 million, principally due to strong volume growth from additional treatments from non-acquired treatment growth in existing and new centers and growth through acquisitions. The increase in consolidated operating revenues was also due to an increase of approximately $1 in the average dialysis revenue per treatment and from an increase of approximately $149 million in the ancillary services and strategic initiatives revenues primarily from growth in our pharmacy services.

Consolidated operating income for the nine months ended September 30, 2012 increased by approximately $108 million, or approximately 13.5%, as compared to the same period in 2011, including the legal proceeding contingency accrual and related expenses of $78 million for the nine months ended September 30, 2012 and the $24 million goodwill impairment charge for the nine months ended September 30, 2011. Excluding these items from their respective periods, adjusted consolidated operating income would have increased by $162 million. The increase in adjusted operating income was primarily due to strong volume growth from additional treatments as a result of non-acquired growth in existing and new centers, growth through acquisitions as well as from an increase in the average dialysis revenue per treatment of approximately $1, as described below. In addition, consolidated operating income also increased as a result of overall lower pharmaceutical costs mainly from a decline in the intensities of physician-prescribed pharmaceuticals, improvements in productivity and lower transaction and integration costs associated with the acquisition of DSI. Consolidated operating income for the nine months ended September 30, 2012 was negatively impacted by higher labor and related payroll taxes, higher benefit costs, an increase in our professional fees for legal and compliance matters, an increase in our other direct operating expenses associated with our dialysis centers, an increase in acquisition-related transaction expenses related to the proposed acquisition of HCP and an increase in the operating losses associated with our ancillary services and strategic initiatives.

Cash flow from operations during the nine months ended September 30, 2012 was $901 million, compared to $1,029 million for the nine months ended September 30, 2011. Cash flows from operations in 2012 decreased as a result of the timing of certain working capital items and an increase in income tax payments, partially offset by improvements in cash earnings. Non-operating cash outflows for the nine months ended September 30, 2012 included capital asset expenditures of $379 million, including $193 million for new center developments and relocations and $186 million for maintenance and information technology. In addition, we spent $419 million for acquisitions. We paid distributions to noncontrolling interests of $82 million. Non-operating cash outflows for the first nine months of 2011 included capital asset expenditures of $252 million, including $113 million for new center developments and relocations and $139 million for maintenance and information technology. In addition, we spent $927 million for acquisitions. We paid distributions to noncontrolling interests of $67 million and we repurchased 3.8 million shares of our common stock for approximately $323 million.

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