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Analysis

Net Income Falls $30M for DaVita During Difficult Q1

By Jack O'Brien  
   May 07, 2019

The Denver-based dialysis company slid in several important financial metrics to start 2019.

DaVita Inc. produced a net income of $149 million in Q1 2019, down $30 million year-over-year, according to the company's latest earnings report released Tuesday afternoon.

The company did produce total revenues of $2.7 billion during the quarter, though those were also down just over $100 million compared to Q1 2018.

Most notably, DaVita's operating and adjusted income fell from $411 million this time last year to $341 million and $382 million in Q1, respectively. 

Related: DaVita Finishes Q4 With $150M Net Loss  

The dialysis provider also saw its cash flows reduced across the board, with a negative free cash flow from continuing operations of $52 million. 

This was particularly pronounced after DaVita recorded $112 million in the same category during the last quarter. 

As was the case in Q4 2018, focus remains on the still-pending sale of DaVita Medical Group to OptumHealth, a subsidiary of UnitedHealth Group.

In mid-December, United reduced its purchase price from $4.9 billion to $4.4 billion, citing "underlying business performance" as well as a desire to further advance the deal through its regulatory phases as reasons for the move. 

There are no mentions of the transactions in either DaVita's filing with the Securities and Exchange Commission of earnings report press release.

DaVita's incoming CEO Javier J. Rodriguez, who will replace longtime CEO Kent Thiry effective June 1, will likely be in charge of completing the deal that was first announced in late 2017. Rodriguez is well-versed on the company's dialysis business, taking over as CEO of DaVita Kidney Care in 2014. 

Related: New DaVita CEO Announced as Thiry Transitions to Executive Chairman  

Per day dialysis treatments were a lone bright spot for DaVita, increasing by 2.9% year-over-year. 

As it did following DaVita's Q4 2018 earnings report, the company's stock price dropped in after hours trading by more than 2%.  

ADDITIONAL Davita Q1 EARNINGS REPORT HIGHLIGHTS:  

  • Looking ahead, DaVita projects adjusted consolidated operating income in a range between $1.5 billion and $1.6 billion for the rest of 2019.
  • During Q1, DaVita opened 27 new dialysis centers, acquired two new centers, and closed three in the U.S.
  • Overseas, DaVita acquired two international dialysis centers.

For complete financial information, review DaVita's filing with the Securities and Exchange Commission.

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

Photo credit: 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


KEY TAKEAWAYS

DaVita Inc. produced a net income of $149 million in Q1 2019, down $30 million year-over-year

The company did produce total revenues of $2.7 billion during the quarter, though those were also down just over $100 million compared to Q1 2018.

The dialysis provider also saw its cash flows reduced across the board, with a negative free cash flow from continuing operations of $52 million.


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