DaVita Inc. Reports 1st Quarter 2001 Results

DaVita Inc. , today announced results for the quarter ended March 31, 2001. Net earnings for the first quarter were $21.3 million or $0.24 per share. Continental U.S. EBITDA (earnings before interest, taxes, depreciation and amortization) for the quarter was $86 million. These results exclude first quarter cash recoveries of $16 million associated with accounts receivable reserved in 1999. Net earnings for the quarter, including the $16 million of recoveries, were $30.9 million or $0.35 per share.

  Financial and operating highlights include:
  -- Continental U.S. dialysis revenue per treatment (excluding lab,
     management fees and other revenue) in the first quarter was $274.22 as
     compared to $266.51 in the fourth quarter, or a 2.9% sequential
  -- Continental U.S. DSO at quarter end was 71 days.  This represents a
     2-day improvement from the end of the fourth quarter of 2000.
  -- The continental U.S. EBITDA margin for the first quarter was 22.5% as
     compared to 21.5% for the fourth quarter of 2000.
  -- Operating cash flow for the three months ended March 31, 2001 was
     $58 million, in line with our 2001 forecast of $200-$260 million.
  -- Total continental U.S. treatments for the first quarter were
     1,366,468.  Both non-acquired and same center treatment growth were
  -- At March 31, 2001 we operated 486 outpatient centers in the continental
     U.S. serving 41,000 patients.  During the first quarter we closed
     1 under-performing center and acquired 13 previously managed centers.
     Included in our continental patient and center count are 3,300 patients
     in 34 centers under management.

  Other developments:
  -- In April the Company completed the sale of $225 million of its
     9 1/4% Senior Subordinated Notes.  The net proceeds of this offering
     were used to pay down amounts outstanding under the Company's senior
     credit facilities. Additionally on May 4, the Company completed a
     refinancing of its existing senior credit facilities.  The new credit
     facilities include $250 million of term loan borrowings and a revolving
     credit facility with $150 million of unused availability.

DaVita will hold a conference call to discuss its first quarter 2001 results and revised financial outlook on Monday, May 7, 2001 at noon Pacific time, 3 PM Eastern time. The dial-in number is 800-399-4406. A replay of the conference call will be available on DaVita's official web page, http://www.davita.com/, for the following 90 days.

This release contains forward-looking statements. Factors which could impact future results include the uncertainties associated with governmental regulation, general economic and other market conditions, and the risk factors set forth in the Company's SEC filings, including its Form 10-K for the year ended December 31, 2000. These risks include those relating to (1) possible reductions in private and government reimbursement rates, (2) the concentration of profits generated from private indemnity patients, (3) the ongoing payment suspension and review of the Company's Florida laboratory subsidiary by its Medicare carrier and the Department of Justice, (4) the ongoing review by the Civil Division of the US Attorney's Office for the Eastern District of Pennsylvania and (5) the Company's ability to maintain contracts with physician medical directors. The forward-looking statements should be considered in light of these risks and uncertainties.

                               DAVITA INC.

                       CONSOLIDATED BALANCE SHEETS
                          (dollars in thousands)

                                                  March 31,    December 31,
                                                    2001           2000

  Cash and cash equivalents                        $17,443        $31,207
  Accounts receivable, less allowance of
   $60,790 and $61,619                             299,424        290,412
  Inventories                                       45,566         20,641
  Other current assets                              14,259         10,293
  Income taxes receivable                                           2,830
  Deferred income taxes                             42,265         42,492
    Total current assets                           418,957        397,875
  Property and equipment, net                      242,797        236,659
  Intangible assets, net                           947,946        921,623
  Investments in third-party dialysis
   businesses                                       12,203         34,194
  Other long-term assets                             2,205          1,979
  Deferred taxes                                     1,629          4,302
                                                $1,625,737     $1,596,632


  Accounts payable                                 $77,345        $74,882
  Other liabilities                                106,781        102,563
  Accrued compensation and benefits                 72,484         70,406
  Current portion of long-term debt                  7,580          1,676
  Income taxes payable                              15,503
     Total current liabilities                     279,693        249,527
  Long-term debt                                   932,025        974,006
  Other long-term liabilities                        4,755          4,855
  Minority interests                                21,045         18,876

  Shareholders' equity
    Preferred stock ($0.001 par value; 5,000,000
     shares authorized; none issued or
    Common stock ($0.001 par value, 195,000,000
     shares authorized; 82,943,817 and 82,135,634
     shares issued and outstanding)                     83             82
    Additional paid-in capital                     438,509        430,676
    Notes receivable from shareholders                               (83)
    Accumulated deficit                           (50,373)       (81,307)
     Total shareholders' equity                    388,219        349,368
                                                $1,625,737     $1,596,632

                               DAVITA INC.

                          (dollars in thousands)

                                                        Three months ended
                                                             March 31,

  Net operating revenues                                     $386,217
  Operating expenses:
   Dialysis centers and labs                                  260,974
   General and administrative                                  31,813
   Depreciation and amortization                               26,148
   Provision for uncollectible accounts                       (8,185)
    Total operating expenses                                  310,750
  Operating income                                             75,467
  Other income                                                  1,348
  Debt expense                                                 19,724
  Minority interests in income of consolidated
   subsidiaries                                               (2,457)
  Income before income taxes                                   54,634
  Income tax expense                                           23,700
  Net income                                                   30,934

  Earnings per share-basic                                      $0.37

  Earnings per share-assuming dilution                          $0.35

  Diluted weighted average and incremental shares         102,200,931

  Supplemental information:

  Continental treatments                                    1,366,468
  Continental EBITDA, excluding recoveries                $86 million
  Operating cash flow                                     $58 million
  Diluted earnings per share, excluding accounts
   receivable recoveries                                        $0.24


SOURCE: DaVita Inc.

Contact: LeAnne Zumwalt, Investor Relations of DaVita Inc.,