Davita HealthCare Partners released 1st
quarter 2013 results on May 7, 13. Adjusted income from continuing operations
for the three months ended March 31, 2013 was $196.9 million, or $1.84 per
share. HCP's performance was solid in the quarter with operating
income of $110 million. Total capitated HCP members grew 5.8% sequentially, of
which 2.1% was acquisition-related. Year-on-year, member months grew 20.3%, of
which 16.2% was acquisition-related. For the rolling twelve months ended March
31, 2013, operating cash flow was $1,148 million and free cash flow was $764
million. For the three months ended March 31, 2013, operating cash flow was
$379 million and free cash flow was $299 million. Adjusted operating income for
the three months ended March 31, 2013 was $467 million, excluding a pre-tax
loss contingency reserve of $300 million, as further discussed below. Operating
income for the three months ended March 31, 2013 including this item was $167
million.
Davita took a 300 million contingency
reserve—relating to the two physician relationship investigations—that is part
of a comprehensive offer to settle all the related civil administrative and
criminal matters. DaVita may not reach a final settlement the 300 million
figure was just an estimate. The investigation is solely about
physician relationships. It primarily relates to their physician joint
ventures, which are subject to complex regulations under both anti-kickback and
other loss. There have been no allegations concerning: the quality of care
Davita provides, the cost of the government or the utilization of medical
services.
Davita showed strong growth in the U.S.
dialysis treatments with 5,628,799, or 73,579 treatments per day, representing
a per day increase of 8% over the first quarter of 2012. Non-acquired treatment
growth in the quarter was 4.3% over the prior years first quarter. Normalized non-acquired treatment growth in
the quarter was 4.4% over the prior years first quarter. U.S.
dialysis revenue per treatment increased $10.28 from the prior quarter.
Management updated guidance for 2013. They
have increased their consolidated operating income guidance to now be in the
range of $1,800 million to $1,900 million. In addition, they updated their
operating income guidance for dialysis services and related ancillary
businesses for 2013 to be in the range of $1,400 million to $1,450 million.
Their previous dialysis service and related ancillary businesses guidance was
in the range of $1,350 million to $1,450
million. Operating income guidance for
HCP for 2013 is still expected to be in the range of $400 million to $450
million and consolidated operating cash flows for 2013 are still expected to be
in the range of $1,350 million to $1,500 million. Also as a result of
sequestration there is a 2% cut in Medicare rates, which is about $20 million
per quarter reduction in dialysis Medicare revenue.
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