Skip to main content

Analysis

Though Volumes Ticked Up, DaVita's Net and Operating Incomes Slide

By Jack O'Brien  
   July 31, 2020

In late May, the dialysis provider commenced with a $1.75 billion offering of senior notes due 2030.

Though volumes inched up slightly, DaVita Inc.'s net income and operating income both experienced year-over-year declines, according to the company's Q2 2020 earnings report released Thursday afternoon.

DaVita recorded a net income of just over $200 million, a decline of more than $70 million year-over-year, while its operating income of $410 million marked a $52 million decline over the same period. 

The company's patient care costs per treatment also rose quarter-to-quarter, which was attributed to the increase in costs related to the coronavirus disease 2019 (COVID-19) outbreak.

On a positive note, the Denver-based dialysis provider's consolidated revenues reached $2.88 billion, its operating cash flow rose to $651 million, and free cash flow from continuing operations was $507 million, an increase of more than $100 million.

C-suite perspective: 

"The continued efforts of our 65,000 teammates in the face of this crisis while caring for our patients and for each other is truly inspiring," Javier Rodriguez, CEO of DaVita, said in a statement. "They are working tirelessly to embody the DaVita name 'to give life' to over 236,000 patients worldwide."

DaVita is maintaining its revenue guidance in a range of $11.5 billion to $11.7 billion, along with capital expenditures from continuing operations to be between $700 million to $750 million.

The company's adjusted diluted net income from continuing operations per share is projected to be between $6.25 to $6.75.

Related: DaVita Maintains Revenue Guidance Amid Coronavirus Outbreak  

S&P Global Ratings issued a note after DaVita released its earnings report, stating that the ratings agency was "positively surprised" by an improved operating margin despite COVID costs.

S&P cited volume pressure as a concern, though not a rating-mover at this point, and that it will maintain its 'negative' rating outlook due to concerns about the company's financial policy and a potential payor mix shift due to high unemployment.

One major development for the company came in late May, when the dialysis provider commenced with a $1.75 billion offering of senior notes due 2030.

DaVita stated that the net proceeds would be used to redeem "all $1.75 billion aggregate principal amount outstanding of the 2024 notes," along with fees and expenses related to the offering.

Related: DaVita Commences With $1.75B Debt Offering

For complete financial information, review DaVita's filing with the SEC.

Jack O'Brien is the finance editor at HealthLeaders, a Simplify Compliance brand.

Photo credit: St. Joseph, Missouri / United States of America - March 26 2019: Davita Kidney Care in downtown St. Joseph. - Image / Editorial credit: APN Photography / Shutterstock.com


Get the latest on healthcare leadership in your inbox.