Slide 1: Investor Presentation
Investor Presentation November 16, 2021 1 © 2021©DaVita 2021 DaVita Inc. AllInc. rights Allreserved. rights reserved.
Slide 2: Context, Non-GAAP Measures and Forward-Looking Statements
Context, Non-GAAP Measures and Forward-Looking Statements Context. DaVita is a Fortune 500® health care provider focused on transforming care delivery to improve quality of life for patients. We are committed to patient-centric care and achieving strong clinical outcomes for our patients. This is a
Slide 3: Who we are / Where we're going / Key Financial Drivers
Who we are Where we’re going Key Financial Drivers / Outlook 3 © 2021 DaVita Inc. All rights reserved.
Slide 4: Recognizing our heroes
Recognizing our heroes 4 © 2021 DaVita Inc. All rights reserved.
Slide 5: Longstanding focus on improving outcomes
Longstanding focus on improving outcomes From 2017-2019: reduction in 7% Hospitalizations reduction in 4% Mortality 5 © 2021 DaVita Inc. All rights reserved.
Slide 6: Consistent leadership on publicly reported data
Consistent leadership on publicly reported data Note: CMS did not report for 2021 due to COVID 6 © 2021 DaVita Inc. A Allll rights reserved.
Slide 7: Expanding access to quality care across our global footprint
Expanding access to quality care across our global footprint International clinical outcomes show consistent improvement under DaVita operation: • Serving 38,000+ patients in 10 countries • Hospital admissions declined 17% since 20181 • Patient mortality declined 14% since 20181 1) 2018 to 2020 7 ©
Slide 8: Our commitment to ESG
Our commitment to ESG Teammate Environmental Patient Care Engagement Stewardship Healthy Leading with Communities Integrity and Accountability For more information: DaVita.com/communitycare 8 © 2021 DaVita Inc. All rights reserved.
Slide 9: Leading Kidney Platform
Leading Kidney Platform 65,000+ 241,000+ 3,100+ teammates patients globally clinics 35M 60M+ 1,750+ life-saving Lab results Home programs treatments per year Track record of clinical focus, quality, cost management Note: All data 2021F 9 © 2021 DaVita Inc. All rights reserved.
Slide 10: Delivering on our commitments
Delivering on our commitments 2019 Capital Markets Message Results Treatments declined due to COVID-related 1 Growing patient demand mortality Adjusted margins remained stable despite 2 Strong operators and cost management impact from COVID Reduction in CapEx and continued strong 3 Declining capital
Slide 11: Who we are / Where we're going / Key Financial Drivers
Who we are Where we’re going Key Financial Drivers / Outlook 11 © 2021 DaVita Inc. All rights reserved.
Slide 12: 2021-2025 Outlook (CAGR)
2021-2025 Outlook (CAGR) Adjusted OI1 Adjusted EPS1 3-7% CAGR 8-14% CAGR 1) From the midpoint of 2021 and 2025 adjusted guidance 12 © 2021 DaVita Inc. All rights reserved.
Slide 13: He is a 25-year-old man who loves cross-country running
He is a 25-year-old man who loves cross-country running. He shares in his family’s love for soccer. 13 © 2021 DaVita Inc. All rights reserved.
Slide 14: Fragmented patient experience
Fragmented patient experience Not under 12-15 hrs/week Don’t feel sick Nephrologist care at dialysis End Stage Chronic Kidney Kidney Disease Disease (CKD) (ESKD) >4 >50% crash 19+ 11 hospital co-morbidities into dialysis pills/day days/year 14 © 2021 DaVita Inc. All rights reserved.
Slide 15: We support patients across their entire kidney care journey
We support patients across their entire kidney care journey Prevention Transition Treatment Transplant 15 © 2021 DaVita Inc. All rights reserved.
Slide 16: Leading Kidney Care Platform
Where we’re going Leading Kidney Care Platform Clinical Right Site of Care Integrated Care Technology 16 © 2021 DaVita Inc. All rights reserved.
Slide 17: Leading Kidney Care Platform
Where we’re going Leading Kidney Care Platform Clinical Right Site of Care Integrated Care Technology 17 © 2021 DaVita Inc. All rights reserved.
Slide 18: Next-generation predictive analytics
Next-generation predictive analytics Clinical Data Ingestion: Suite of predictive models Undiagnosed CKD patients Clinical CKD Risk of transition to ESKD Claims Risk of hospitalization Medication Patient segmentation ESKD Risk of high-cost events Remote Monitoring Patients eligible for Home Health I
Slide 19: Example models
Example models Clinical Risk of Hospitalization Transition Risk to ESKD 19 © 2021 DaVita Inc. All rights reserved.
Slide 20: Leading Kidney Care Platform
Where we’re going Leading Kidney Care Platform Clinical Right Site of Care Integrated Care Technology 20 © 2021 DaVita Inc. All rights reserved.
Slide 21: Significant movement between sites of care
Significant movement between sites of care Right Site of Care Back to dialysis In-center dialysis (ICHD) if transplant fails Conversion Return to in- to Home center ESKD treatment Home dialysis modalities Hospital Discharge admission Hospital dialysis Discharge Readmission Post-acute dialysis Transp
Slide 22: Where do our patients receive care?
Where do our patients receive care? Right Site of Care 85% 82% 80% In-center dialysis 10% 13% 15% Home dialysis 5% 5% 5% Hospital dialysis 2009 2019 2021F 22 © 2021 DaVita Inc. All rights reserved.
Slide 23: Continued Home growth
Continued Home growth1 Right Site of Care Home Home penetration penetration 15% 13% Patients leaving Home new starts ICHD to Home Home therapy conversions (1) Modality selections and decisions related to a patient’s care are always made by the attending nephrologist and patient, and provided pursuan
Slide 24: Building the leading home dialysis program
Building the leading home dialysis program Right Site of Care Convenient Confident Connected Note: Modality selections and decisions related to a patient’s care are always made by the attending nephrologist and patient, and provided pursuant to a physician’s order 24 © 2021 DaVita Inc. All rights re
Slide 25: Innovation in transplant care
Innovation in transplant care Right Site of Care Investment in startup to Investment in innovative lab create fully transplantable to predict transplant failure to bioartificial human kidneys enable intervention 25 © 2021 DaVita Inc. All rights reserved.
Slide 26: Leading Kidney Care Platform
Where we’re going Leading Kidney Care Platform Clinical Right Site of Care Integrated Care Technology 26 © 2021 DaVita Inc. All rights reserved.
Slide 27: What is Integrated Care?
What is Integrated Care? 27 © 2021 DaVita Inc. All rights reserved.
Slide 28: Focus on reducing total medical cost across the Kidney continuum
Focus on reducing total medical cost Integrated Care across the Kidney continuum Population Total cost per year1 Early-stage CKD 91% $22K Late-Stage CKD 7% $31K ESKD – Dialysis 2% $91K ESKD – Transplant 1% $24K2 1) 2020 USRDS Annual Data Report 2) Excluding costs associated with transplant surgery 2
Slide 29: Two main types of programs
Two main types of programs Integrated Care Government Payor Partnerships Innovation Models 29 © 2021 DaVita Inc. All rights reserved.
Slide 30: Uniquely positioned to deliver Integrated Care
Uniquely positioned to deliver Integrated Care Access Data Technology Relationships 500 200K 4500 1000 hours ESKD nephrologists hospitals 30 © 2021 DaVita Inc. All rights reserved.
Slide 31: Demonstrated, industry-leading performance
Demonstrated, industry-leading performance Integrated Care ESCO Non-dialysis Savings Rate – ESCO Non-dialysis Savings Rate – Cumulative PY1-PY4 2019 (PY4) 12.1% 10.6% 4.6% 2.6% DaVita Non-DaVita DaVita Non-DaVita DaVita achieved >2X per patient savings vs. rest of industry Consistent performance wit
Slide 32: Where are we on our journey?
Where are we on our journey? Integrated Care 2015-2020 2021-2022 2023+ Establishing the model Rapid growth Tipping point 32 © 2021 DaVita Inc. All rights reserved.
Slide 33: Single ESKD patient economics
Single ESKD patient economics Integrated Care Illustrative steady state IKC economics, $ per patient per year $100-115K $8-13K $2-4K Benchmark Medical Costs Total Savings Payor Share Partner Share Model of DaVita Share Care Costs of Net Savings 33 © 2021 DaVita Inc. All rights reserved.
Slide 34: What could this look like?
What could this look like? Integrated Care 2025 Long-term 90,000-140,000 200,000-300,000 Patients Patients ($50M)-$50M $150M-300M Annual Adjusted OI Annual Adjusted OI 34 © 2021 DaVita Inc. All rights reserved.
Slide 35: Success factors
Success factors1 Volume Revenue Cost Continued CMMI Payor engagement Clinical support for IKC performance Program funding Payor adoption levels Physician engagement Patient enrollment (1) List not exhaustive. For more information about the risks and uncertainties associated with our integrated care
Slide 36: Leading Kidney Care Platform
Where we’re going Leading Kidney Care Platform Clinical Right Site of Care Integrated Care Technology 36 © 2021 DaVita Inc. All rights reserved.
Slide 37: Lack of information connectivity
Lack of information connectivity Technology Integrated Care Teams Mobile Patient Engagement Tools 37 © 2021 DaVita Inc. A Allll rights reserved.
Slide 38: Purpose built for Kidney Care
Purpose built for Kidney Care Technology Clinical workflows Outpatient scale 38 © 2021 DaVita Inc. All rights reserved.
Slide 39: Leading Kidney Care Platform
Where we’re going Leading Kidney Care Platform Clinical Right Site of Care Integrated Care Technology 39 © 2021 DaVita Inc. All rights reserved.
Slide 40: Who we are / Where we're going / Key Financial Drivers
Who we are Where we’re going Key Financial Drivers / Outlook 40 © 2021 DaVita Inc. All rights reserved.
Slide 41: Who we are / Where we're going / Key Financial Drivers
Who we are Where we’re going Key Financial Drivers / Outlook 41 © 2021 DaVita Inc. All rights reserved.
Slide 42: Components of Long Term Forecast
Components of Long Term Forecast1 Consistent operating COVID recovery income growth Anticipated growth in IKC Capital discipline 1) 2021-2025 adjusted guidance 42 © 2021 DaVita Inc. All rights reserved.
Slide 43: Improving volume outlook
Improving volume outlook Illustrative Pre-COVID NAG NAG COVID Impact NAG (%) 2019 2020 2021F 2022F 2023F 2024F 2025F Expect higher growth relative to pre-COVID level 43 © 2021 DaVita Inc. All rights reserved.
Slide 44: Revenue per treatment dynamics expected in the future
Revenue per treatment (RPT) dynamics expected in the future Typical Dynamics Other Dynamics Annual rate increases Sequestration Aging population reducing commercial mix Expected mix normalization post-COVID Accelerated MA penetration ? Inflation RPT Outlook: 0.5% - 1.5%1 1) From the midpoint of 2021
Slide 45: Expect continued cost management strength
Expect continued cost management strength Typical Dynamics Other Dynamics Facility cost management Technology implementation Expected net COVID impact Inflation (incl. wage rate) (PPE, T&E, capacity utilization) Home growth CPT Outlook: 1.0% - 2.0%1 1) From the midpoint of 2021 and 2025 adjusted gui
Slide 46: International continues to deliver adjusted OI growth
International continues to deliver adjusted OI1 growth $34 $ in millions $23 Expect continued $2 adjusted operating -$3 income growth of $10-20M per year2 -$46 2017 2018 2019 2020 9/30/2021 LTM 1) Non-GAAP measure. See appendix for reconciliation of this non-GAAP measure to the most comparable GAAP
Slide 47: Illustrative IKC program economics by year
Illustrative IKC program economics by year Pre-G&A Operating Income No Revenue recognized in year 1 Year 1 Year 2 Year 3 Year 4 Year 5 Pre-G&A Operating Income Revenue Model of Care costs 47 © 2021 DaVita Inc. All rights reserved.
Slide 48: Supported by fixed costs
Supported by fixed costs IT/Analytics 50% Expected annual run- rate IKC fixed costs Nephrologist Engagement 20% $100 – 125M R&D/Innovations 15% Overhead 15% 48 © 2021 DaVita Inc. All rights reserved.
Slide 49: Illustrative US Ancillary adjusted operating income bridge
Illustrative US Ancillary1 adjusted operating income bridge $0 ($100) 2021F PY cohorts New 2022F PY cohorts New 2023F membership membership (1) Including IKC 49 © 2021 DaVita Inc. All rights reserved.
Slide 50: What could this look like?
What could this look like? 2025 Long-term 90,000-140,000 200,000-300,000 Patients Patients ($50M)-$50M $150M-300M Annual Adjusted OI Annual Adjusted OI 50 © 2021 DaVita Inc. All rights reserved.
Slide 51: 2021-2025 adjusted OI outlook (CAGR)
2021-2025 adjusted OI outlook (CAGR) Low High US Dialysis1,2 2% 4% International2 0% 1% US Ancillary (including IKC)2 1% 2% Overall 3% 7% 1) Includes the estimated impact of COVID 2) From the midpoint of 2021 and 2025 adjusted guidance 51 © 2021 DaVita Inc. All rights reserved.
Slide 52: 2021 to 2023 adjusted operating income bridge
2021 to 2023 adjusted operating income bridge 3% - 7% CAGR $1,785M Ballot Labor IKC COVID Impact $1,857M Adjusted Operating Income IT Depreciation $1,635M Ballot COVID Impact Sequestration IKC 2021F 1 Core performance Other 2022F Core performance Other 2023F 1 1) From midpoint of 2021 and 2023 adjus
Slide 53: 2021-2025 outlook on other items
2021-2025 outlook on other items Non-controlling Debt Expense Tax Rate Share Repurchases Other Income/ Interest (Loss) Higher rates due to Assumed effective Consistent standards Expected to grow – expect continued increasing tax rate of 25% No net impact with US Dialysis use of a significant benchma
Slide 54: CapEx
CapEx CapEx, $ in millions $987 Maintenance Development $677 Expect CapEx to be stable through 2025 2018 9/30/2021 LTM 54 © 2021 DaVita Inc. All rights reserved.
Slide 55: Free cash flow (FCF)
Free cash flow1 (FCF) FCF as a proportion of Adjusted Net Income1,2 136% 133% 107% 2019 2020 9/30/2021 YTD FCF expected to remain above Adjusted Net Income1 with difference contracting over time3 1) Free cash flow and adjusted net income are non-GAAP measures. See appendix for reconciliation of thes
Slide 56: M&A
M&A1 Disciplined approach Investing in strategic to acquisitions and innovation and growth capital allocation in kidney 1) Includes minority investments 56 © 2021 DaVita Inc. All rights reserved.
Slide 57: Commitment to Prudent Leverage
Commitment to Prudent Leverage DMG divestiture2 4.5x Healthcare Partners acquisition1 3.5x 3.6x 3.3x 3.5x 3.1x 3.2x 3.1x 3.2x 3.0x 3.0x 3.0x 2.7x 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 9/30/2021 Note: Leverage Ratio as defined in Credit Agreement, which is a non-GAAP measure, and is based
Slide 58: Debt Maturity Schedule
Debt Maturity Schedule Credit Agreement and Bond Debt outstanding, $ in millions Term Loan A Revolver1 Term Loan B 4.625% Sr. Notes 3.750% Sr. Notes 9/30/21 LTM Consolidated EBITDA2 $2,750 $2,558 $2,579 $2,384 $1,500 $126 $170 $29 $27 2021 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 Note: Excl
Slide 59: Share repurchase program
Share repurchase program Ending share count, in millions -43% -9% 182 -24% 166 Consistent standards - -13% expect continued 126 -6% 110 use of a significant 103 portion of FCF for share repurchases 2017 2018 2019 2020 9/30/2021 59 © 2021 DaVita Inc. All rights reserved.
Slide 60: 2021-2025 Outlook (CAGR)
2021-2025 Outlook (CAGR) Adjusted OI1 Adjusted EPS1 3-7% CAGR 8-14% CAGR 1) From the midpoint of 2021 and 2025 adjusted guidance 60 © 2021 DaVita Inc. All rights reserved.
Slide 61: Closing
Closing 61 © 2021 DaVita Inc. All All rights reserved.
Slide 62: Non-GAAP Financial Measures
Non-GAAP Financial Measures As used in this presentation, the term “adjusted” refers to non-GAAP measures as follows, each as reconciled to its most comparable GAAP measure as presented in the non-GAAP reconciliations in this appendix. For income measures, the term “adjusted” refers to operating per
Slide 63: Adjusted net income from continuing operations attributable to DaVita Inc.
Adjusted net income from continuing operations attributable to DaVita Inc. Nine months ended (in millions) 2019 2020 September 30, 2021 Net income from continuing operations attributable to DaVita Inc. $ 707 $ 783 $ 791 Operating charges: — Goodwill impairment charges — 16 — Loss on changes in owner
Slide 64: Free cash flow from continuing operations
Free cash flow from continuing operations Nine months ended (in millions) 2019 2020 September 30, 2021 Net cash provided by continuing operating activities $ 1,973 $ 1,979 $ 1,401 Less: Distributions to noncontrolling interests (233) (253) (177) Plus: Contributions to noncontrolling interests 57 43
Slide 65: International adjusted operating income
International adjusted operating income Rolling twelve months ended (in millions) 2017 2018 2019 2020 September 30, 2021 Operating (loss) income from continuing operations $ (329.2) $ (23.4) $ (122.8) $ 23.2 $ 34.4 Goodwill and other asset impairment charges 3.1 124.9 Impairment of investment 280.1
Slide 66: Leverage ratio
Leverage ratio Under our new senior secured credit facilities (the New Credit Agreement) dated August 12, 2019 and our prior senior secured credit facilities (the Prior Credit Agreement), the leverage ratio is defined as all funded debt plus the face amount of all letters of credit issued, minus cas