DaVita Inc. reported $155 million, or $0.81 per share, in adjusted net income for the third quarter of 2017. Net loss for the quarter was $214 million, or $1.14 per share, which included non-cash goodwill impairment charges related to the DaVita Medical Group (DMG). Unadjusted net income attributable to DaVita Inc. for the quarter was $571 million, or $2.76 per share. Earnings declined almost 15% compared to the same quarter last year.
“We recognize that the business is not achieving our capital return expectations nor is it contributing to [operating income] growth,” Chief Financial Officer Joel Ackerman said during an earnings call. “We recognize the skepticism investors will have right now as a result, but we remain confident that the operational changes we are making will result in improved financial performance in the future.”
Ackerman said that the DMG loss was driven by higher than expected medical costs because of increased utilization and higher patient acuity. He also noted that the Centers for Medicare & Medicaid Services delayed the finalization of prior year Medicare Advantage payments that DaVita typically has received in the third quarter. Last year, the payments were worth $13 million.
“It is difficult at this point to find any words that are useful to the capital markets given our continuous failure to meet the expectations we have previously set,” CEO Kent Thiry said. “This reality is exacerbated by the fact we still believe in the value and potential of these assets and teams. Nonetheless, the results are the results. We are intensely focused on affecting a change in the burden that DMG performance is placing on the enterprise, your enterprise, through both strategic and operating initiatives.”
“Overall, we’re optimistic about our ability to drive increased revenue per member per month in 2018,” Ackerman said.
DaVita Kidney Care CEO Javier Rodriguez said the segments performance was “solid.” Adjusted operating income for the quarter was $404 million, a gain of approximately $3 million, or 1%, over the second quarter, primarily driven by an extra treatment day.
Hurricanes Harvey and Irma cost the Kidney Care segment approximately $14 million from higher costs, missed treatments, and uncollected revenue.
Total U.S. dialysis treatments for the third quarter of 2017 were 7,186,280, or 90,966 treatments per day, representing a per day increase of 4.3% over the third quarter of 2016. Normalized non-acquired treatment growth in the third quarter of 2017 as compared to the third quarter of 2016 was 3.3%.
As of Sept. 30, 2017, DaVita provided dialysis services to approximately 218,200 patients at 2,700 outpatient dialysis centers, of which 2,470 centers were located in the United States and 230 centers were located in 11 countries outside of the United States. During the third quarter of 2017, DaVita acquired one dialysis center, opened 34 new dialysis centers, and closed or merged ten centers in the United States. The company also acquired eight dialysis centers, opened six new dialysis centers and closed one dialysis center outside of the United States.