Davita Inc. · NYSE:DVA

Davita — Investor Day (May 2016)

122 slides from Davita's investor day presentation, May 18, 2016

Slide 2: Forward-looking statements
This presentation contains forward-looking statements within the meaning of the federal securities laws. All statements in this presentation, other than statements of historical fact, are forward-looking statements and include, among other things, statements about our expectations, beliefs, intentio
Slide 6: 2016-2019 OI Outlook
OI Outlook 2016-2019 OI Outlook DMG 5 – 9%1 U.S. KC 2 – 7% Int’l Breakeven by 2018 Enterprise 3 – 8%1 1. 2016 CAGR guidance excludes non-recurring items, including a goodwill impairment charge and an estimated accrual associated with the HCP hospice business. © 2016 DaVita HealthCare Partners Inc. A
Slide 7: Cash generation and uses 2016-2019
Cash generation and uses 2016-2019 $M 8,000 7,400 7,000 650 6,000 1,400 5,350 5,000 1,500 4,000 1,150 3,000 2,700 2,000 1,000 0 OCF NCI Maintenance FCF Development Acquisition Cash Available CapEx © 2016 DaVita HealthCare Partners Inc. All rights reserved. 7
Slide 8: EPS scenario
EPS scenario • Consolidated OI Growth 3% - 8% + Financial Leverage • Net Income/EPS Growth 4% - 10% + Share Repurchase/Acq’s EPS Growth 5% - 12% © 2016 DaVita HealthCare Partners Inc. All rights reserved. 8
Slide 9: Bad news / good news
Bad news / good news Bad news Good news • Rate risk • Clinical excellence • DMG is WIP • Stable demand & cash flow • Compliance risk • Market leadership • Population health capability • Distinctive platform © 2016 DaVita HealthCare Partners Inc. All rights reserved. 9
Slide 11: DaVita Medical Group
DaVita Medical Group • Attractive segment • Strong platform/asset • Steady progress despite headwinds – Rate cuts – Capabilities – Relationships • 2016-2019 Operating Income: 5-9% CAGR1 – $1.0B cumulative net cash flow2 • Leading Independent Medical Group in America 1. 2016 guidance excludes non-rec
Slide 12: Components
Components • Moderate – Patient growth – Rate increases – Conversion to Value – Per member medical cost • Substantial – G&A savings – Capability investment • No new market entries © 2016 DaVita HealthCare Partners Inc. All rights reserved. 12
Slide 13: 2013-2016 OI
2013 - 2016 OI $M 500 400 385 300 -200 2001 200 -80 94 100 0 2013 OI Rate cuts Investment Operating 2016 performance guidance midpoint 1. 2016 guidance excludes non-recurring items, including a goodwill impairment charge of $77M and a $16M estimated accrual associated with NV hospice © 2016 DaVita H
Slide 14: 2016 EBITDA
2016 EBITDA $M 500 400 385 370 300 -200 D&A2 200 -80 94 100 2001 0 2013 OI Rate cuts Investment Operating 2016 performance guidance midpoint 1. 2016 guidance excludes non-recurring items, including a goodwill impairment charge of $77M and a $16M estimated accrual associated with NV hospice 2. Assume
Slide 15: 2016 tax-adjusted EBITDA
2016 tax-adjusted EBITDA $M 537 500 Tax step-up3 400 385 300 -200 D&A2 200 -80 94 100 2001 0 2013 OI Rate cuts Investment Operating 2016 performance guidance midpoint 1. 2016 guidance excludes non-recurring items, including a goodwill impairment charge of $77M and a $16M estimated accrual associated
Slide 16: Our journey
Our journey 2013 2014 2015 2016-17 Change Transform Drive to Learn senior mgmt team excellence Legacy 32 of 40 Colorado Begin to Bad deals Fix deals Springs grow/shift New mix R&D Everett © 2016 DaVita HealthCare Partners Inc. All rights reserved. 16
Slide 18: DaVita Medical Group outlook
DaVita Medical Group • What is our outlook? • How reasonable is the outlook? • Why do we like this business? © 2016 DaVita HealthCare Partners Inc. All rights reserved. 18
Slide 19: DaVita Medical Group
DaVita Medical Group • 1,600 team clinicians • 12K affiliate physicians • 1.5M+ total patients • 800K PHM lives • 250 clinics © 2016 DaVita HealthCare Partners Inc. All rights reserved. 19
Slide 20: DaVita Medical Group
DaVita Medical Group • $5.0B Care dollars under management1 • $3.9B Revenue1 • 2016 Operating Income: $175-225M2 • 2016 EBITDA: $370M (midpoint)2 • 2016 Tax Adj EBITDA: $537M (midpoint)2 1. LTM 3/31/2016 2. 2016 guidance excludes non-recurring items, including a goodwill impairment charge of $77M an
Slide 21: Outperforming MA benchmarks
Outperforming MA benchmarks DMG MA Nat’l STAR Measure avg avg Body mass index (BMI) 4 4 Colorectal cancer 5 3 Diabetes: Blood sugar 5 4 Diabetes: Nephropathy 5 3 Diabetes: Eye exam 4 3 Osteoporosis 4 3 Rheumatoid arthritis 3 3 Breast cancer 5 4 Blood pressure 4 3 Note: Preliminary data as of May 201
Slide 22: Consistent across geographies
Consistent across geographies DMG STAR Measure avg CA FL NV NM CO WA Body mass index (BMI) 4 4 5 5 3 5 5 Colorectal cancer 5 5 5 4 5 5 5 Diabetes: Blood sugar 5 5 5 5 5 5 5 Diabetes: Nephropathy 5 5 5 5 4 4 4 Diabetes: Eye exam 4 4 4 4 4 4 3 Osteoporosis 4 4 4 3 4 5 3 Rheumatoid arthritis 3 3 3 2 5
Slide 24: 5-9% OI CAGR
2016-2019 Rate Unit Mix Cost growth Legacy New market MA growth conversion to Value 5-9% OI CAGR1 1. 2016 guidance excludes non-recurring items, including a goodwill impairment charge and an estimated accrual associated with NV hospice © 2016 DaVita HealthCare Partners Inc. All rights reserved. 24
Slide 25: DaVita Medical Group outlook
DaVita Medical Group • What is our outlook? • How reasonable is the outlook? • Why do we like this business? © 2016 DaVita HealthCare Partners Inc. All rights reserved. 25
Slide 28: 2016-2019 OI outlook
2016-2019 OI outlook $M 250 200 -25 150 100 2001 50 0 2016 Rate 1. Mid-point of guidance, excludes non-recurring items, including a goodwill impairment charge of $77M and an estimated accrual associated with NV hospice of $16M © 2016 DaVita HealthCare Partners Inc. All rights reserved. 28
Slide 30: Medicare Advantage growing
Medicare Advantage growing Members (M) 6.9% 20 7.7% 15 21.0 22.0 23.0 10 19.0 15.7 16.8 17.6 13.1 14.4 5 0 2012 2013 2014 2015 2016 2017 2018 2019 2020 Projected Note: Includes cost and demonstration plans, and enrollees in Special Needs Plans as well as other Medicare Advantage plans Source: Kaiser
Slide 31: 4% Legacy MA patient growth
4% Legacy MA patient growth • Our geography projected at 4-6% per year • Significant investments ‒ Growing physician network ‒ Physician and patient experience © 2016 DaVita HealthCare Partners Inc. All rights reserved. 31
Slide 32: Building capacity
Building capacity Legacy geographies only Providers 1,200 +6%/yr 800 1,000 400 900 0 2013 2016 Note: As of Mar 31 of each year. Includes employed PCPs, specialists, hospitalists, and advanced care practitioners © 2016 DaVita HealthCare Partners Inc. All rights reserved. 32
Slide 33: Legacy Medicare growth
Legacy Medicare growth CAGR Patients (K) Total +9% 400 375 Medicare 306 84 FFS1 +4% 300 77 200 Medicare 291 Advantage +11% 100 228 0 Dec 2013 Mar 2016 1. Unique Medicare fee-for-service patients (i.e., not covered by a capitation arrangement) seen in 12 months ending in labeled quarter, e.g., “Dec 2
Slide 34: 2016-2019 OI outlook
2016-2019 OI outlook $M 250 200 40 -25 150 100 2001 50 0 2016 Rate Legacy MA growth 1. Mid-point of guidance, excludes non-recurring items, including a goodwill impairment charge of $77M and an estimated accrual associated with NV hospice of $16M © 2016 DaVita HealthCare Partners Inc. All rights res
Slide 36: Why value-based contracts?
Why value-based contracts? Illustrative example: One Medicare patient for a year Fee for Service Value $600 revenue $10,000 revenue © 2016 DaVita HealthCare Partners Inc. All rights reserved. 36
Slide 37: Quality care = better economics
Quality care = better economics Right Appropriate risk adjustment diagnosis Right care Quality bonus Right process Appropriate utilization © 2016 DaVita HealthCare Partners Inc. All rights reserved. 37
Slide 38: Why value-based contracts?
Why value-based contracts? Illustrative example: One Medicare patient for a year Fee for Service Value $600 revenue $10,000 revenue ~$30 variable contribution ~$500 variable contribution © 2016 DaVita HealthCare Partners Inc. All rights reserved. 38
Slide 39: Value takes time & money
“Value” takes time & money Blinded example OI Contract FFS margin signed Value margin Investment Year -1 Year 0 Year 1 Year 2 Year 3 © 2016 DaVita HealthCare Partners Inc. All rights reserved. 39
Slide 40: Conversion in new geographies
Conversion in new geographies • Washington, New Mexico, Colorado • 60K MA patients in non-full-risk contracts • Most payors want to move • Outlook ‒ 50% conversion ‒ 30% of average contribution © 2016 DaVita HealthCare Partners Inc. All rights reserved. 40
Slide 41: 2016-2019 OI outlook
2016-2019 OI outlook $M 250 25 200 40 -25 150 100 2001 50 0 2016 Rate Legacy New MA growth market conversion 1. Mid-point of guidance, excludes non-recurring items, including a goodwill impairment charge of $77M and an estimated accrual associated with NV hospice of $16M © 2016 DaVita HealthCare Par
Slide 44: Building platform: examples
Building platform: examples Catch-up Next generation • Oracle • Care management • Security • Predictive analytics • Compliance • JVs • Business development • Innovation © 2016 DaVita HealthCare Partners Inc. All rights reserved. 44
Slide 46: Dragon dictation
Dragon 360 dictation “Macro knee exam left” “Left knee full range of motion, ballottement normal, grind test normal, anterior drawer negative posterior drawer negative, MCL intact, LCL intact” © 2016 DaVita HealthCare Partners Inc. All rights reserved. 46
Slide 47: Improving patient experience
Improving patient experience Patient referral processing time Phone call abandonment rate 30% 60% improvement improvement 2013 2015 2013 2015 © 2016 DaVita HealthCare Partners Inc. All rights reserved. 47
Slide 50: Hospital alignment example
Hospital alignment example • Access highest quality hospital in region Patients • Improved care coordination DMG • $5-15M / year savings Hospital • Average daily census: from 48 to 76 © 2016 DaVita HealthCare Partners Inc. All rights reserved. 50
Slide 51: Improving utilization
Improving utilization For continuity, only legacy geographies shown Senior acute admits per 1000 200 237 225 100 0 2013 2015 © 2016 DaVita HealthCare Partners Inc. All rights reserved. 51
Slide 52: Costs
Costs % 100 80 External 69 medical cost Tracks with rates 60 40 20 19 Clinical team $50M savings off trend (3%) 12 Support $40M investment 0 © 2016 DaVita HealthCare Partners Inc. All rights reserved. 52
Slide 53: 2016-2019 OI outlook
2016-2019 $M 10 250 25 200 40 -25 150 100 2001 50 0 2016 Rate Legacy New Ops MA growth market savings, 1. Mid-point of guidance, excludes non-recurring items, including a goodwill conversion invest- impairment charge of $77M and an estimated accrual associated with NV hospice of $16M ments © 2016 Da
Slide 54: 2016-2019: 5-9% OI CAGR
2016-2019: 5-9% OI CAGR $M 10 250 25 200 40 -25 150 250 100 2001 50 0 2016 Rate Legacy New Ops 2019 MA growth market savings, 1. Mid-point of guidance, excludes non-recurring items, including a goodwill conversion invest- impairment charge of $77M and an estimated accrual associated with NV hospice
Slide 55: Other opportunities
Other opportunities • Commercial (included branded product) • Medicaid / Dual-Eligibles • Specialty drug management • Post-acute management © 2016 DaVita HealthCare Partners Inc. All rights reserved. 55
Slide 56: DaVita Medical Group outlook
DaVita Medical Group • What is our outlook? • How reasonable is the outlook? • Why do we like this business? © 2016 DaVita HealthCare Partners Inc. All rights reserved. 56
Slide 58: DaVita Medical Group
DaVita Medical Group • Attractive segment • Strong platform/asset • Steady progress despite headwinds – Rate cuts – Capabilities – Relationships • 2016-2019 Operating Income: 5-9% CAGR1 – $1.0B cumulative net cash flow2 • Leading Independent Medical Group in America 1. 2016 guidance excludes non-rec
Slide 60: Strategic premise
Strategic premise • Large and growing market • Increasing pressure on governments • Transferable competence and brand • Potential platform for other services © 2016 DaVita HealthCare Partners Inc. All rights reserved. 60
Slide 61: Footprint
Footprint Poland China Germany Portugal Taiwan Malaysia India Saudi Singapore Colombia Brazil Arabia 124 clinics, 11 countries outside the U.S. Caring for 10,000+ patients © 2016 DaVita HealthCare Partners Inc. All rights reserved. 61
Slide 62: International growth
International growth Clinics Patients 12,000 124 118 120 10,000 91 100 8,000 73 80 6,000 60 10,000 10,700 4,000 36 7,200 40 5,400 2,000 11 20 2,200 0 600 0 2011 2012 2013 2014 2015 Q1’16 © 2016 DaVita HealthCare Partners Inc. All rights reserved. 62
Slide 63: Achieving scale
Achieving scale ($ in Millions) Year Total revenue Revenue / country 2012 $15 $2 2013 67 7 2014 109 11 2015 140 13 2016E ~275 25 © 2016 DaVita HealthCare Partners Inc. All rights reserved. 63
Slide 64: Clinical progress in Malaysia
Clinical progress in Malaysia % 60 -35% July 2013 Feb 2016 50 -63% Goal 40 30 52 +13% 20 41 -93% 34 10 15 16 18 15 1 0 Hb Kt/V CVC Alb Clinical <30% <15% <10% <10% metric goal Note: Restricted to patients >90 days on dialysis; n = 24 centers © 2016 DaVita HealthCare Partners Inc. All rights reserved
Slide 65: Clinical progress in Germany
Clinical progress in Germany July 2015 Feb 2016 % -3% 40 Goal 30 -19% -17% 20 -13% 38 37 10 21 18 15 17 15 13 0 Clinical Alb Kt/V CVC Phosphor. metric goal ≤ 20% ≤ 20% ≤ 15% ≤ 40% © 2016 DaVita HealthCare Partners Inc. All rights reserved. 65
Slide 66: Clinical progress in Saudi Arabia
Clinical progress in Saudi Arabia 100% 100% 80% 80% KT/V >= 1.2 Hgb >= 10 g/dl 60% 60% 40% 40% 20% 20% 0% 0% Initial Period Followup (6th Initial Period Followup (6th (day 1 at DVA) month at DVA) (day 1 at DVA) month at DVA) © 2016 DaVita HealthCare Partners Inc. All rights reserved. 66
Slide 69: Asia Kidney Care joint venture
Asia Kidney Care joint venture Partners DVA APAC • Strong partners • Shared vision 40% 60% Asia $300M investment 40% stake © 2016 DaVita HealthCare Partners Inc. All rights reserved. 69
Slide 73: Typical dialysis center
Typical dialysis center • 80 patients • 17 teammates – 5 nurses – 8 techs – 4 other • Medical Director • 18 machines and chairs • $4M revenue © 2016 DaVita HealthCare Partners Inc. All rights reserved. 73
Slide 74: Industry overview
Industry overview • Stable demand growth • Strong cash flow generation • Significant government engagement • Private payors subsidize government • Dynamic payor landscape and ESA marketplace © 2016 DaVita HealthCare Partners Inc. All rights reserved. 74
Slide 75: Stable demand growth
Stable demand growth U.S. dialysis patients (000s) • Steady industry demand - Life-sustaining care 500 2000-2013 CAGR: 3.8% - Limited therapeutic 400 alternatives 300 - Not cyclical or 200 seasonal 100 - Strong center loyalty 0 '00 '01 '02 '03 '04 '05 '06 '07 '08 '09 '10 '11 '12 '13 Source: USRDS 20
Slide 76: ESRD population growth profile
ESRD population growth profile Impact on Industry dynamic ESRD growth 65+ age population growing Growing Hispanic population at higher risk Historical improvement in mortality slowing Management of diabetes and hypertension © 2016 DaVita HealthCare Partners Inc. All rights reserved. 76
Slide 77: Significant government engagement
Significant government engagement • Dialysis represents ~1% of Medicare patients, but ~7% of total Medicare budget – Fragile patient population • ~90% of DaVita’s patients funded by government payors – Transparent economics © 2016 DaVita HealthCare Partners Inc. All rights reserved. 77
Slide 78: Private payors subsidize government
Private payors subsidize government ~10% Private 30-40% Private 110-115% ~90% Gov't Private 60-70% Gov't (10-15%) Gov't Treatments Revenue Profit © 2016 DaVita HealthCare Partners Inc. All rights reserved. 78
Slide 79: Dynamic payor landscape
Dynamic payor landscape • Constant rate pressure – Seeking comprehensive solutions – Narrow networks • Payor consolidation • Healthcare exchanges (double-edged sword) © 2016 DaVita HealthCare Partners Inc. All rights reserved. 79
Slide 80: DaVita Kidney Care
DaVita Kidney Care • Industry Overview • Company Overview • Clinical Outcomes • Integrated Kidney Care • Financial Trilogy • Outlook © 2016 DaVita HealthCare Partners Inc. All rights reserved. 80
Slide 81: Kidney Care at a glance
Kidney Care at a glance • U.S. Facilities1 2,278 • U.S. Patients1 182k • Kidney Care Teammates1 52k • LTM Treatments (U.S.)2 26.4M • Kidney Care LTM Revenue2 $10.2B • Kidney Care LTM Adjusted OI2,3 $1.7B 1. As of March 31, 2016 2. LTM as of March 31, 2016 3. Non-GAAP measure, excludes certain one-ti
Slide 82: Continued outperformance in QIP
Continued outperformance in QIP 2016 QIP Penalty Facilities 5x more penalties Note: Figures reflect performance in calendar year 2014 and CMS' account of facility ownership as of December 2014 © 2016 DaVita HealthCare Partners Inc. All rights reserved. 82
Slide 83: DVA continues to lead in Five-Star
DVA continues to lead in Five-Star 7x fewer 1 Star facilities 2x more 5-Star facilities Note: 2016 star ratings © 2016 DaVita HealthCare Partners Inc. All rights reserved. 83
Slide 85: Need for care coordination
Need for care coordination Uncoordinated Unnecessary Poorly Overwhelmed/ Care Utilization Managed Confused Pts. Adapt to 12 hospital days/yr significant Angelica lifestyle 50%+ crash into changes dialysis Dietary restrictions  specific kidney diet >3 Co-morbidities 12+ Medications; (diabetes, 21+ p
Slide 86: Building coordinated care since 2003
Building coordinated care since 2003 CKD SNP Demo Partnership 2003 2005 2006 2007 2010 2013 2015 Today 3 ESCOs ESRD 5 ESRD Demo Partnerships © 2016 DaVita HealthCare Partners Inc. All rights reserved. 86
Slide 87: Success with coordinated care
Success with coordinated care Hospitalization Catheter 2 40% 1 20% 0 0% National VillageHealth National VillageHealth ESRD Avg. SNP ESRD Avg. SNP 20% 75% Better Better Sources: 2015 USRDS Annual Report, ESRD National Coordinating Center (“Fistula First Catheter Last” Dashboard data) © 2016 DaVita He
Slide 88: Clinical differentiation from Rx
Clinical differentiation from Rx Hospital days Survival ratio (per patient per year) (% of patients still living) Control Rx 1.0 15 DaVita Rx patients 0.9 10 0.8 Control patients 0.7 5 0.6 0 0.5 1-6 7 - 12 13 - 18 19 - 24 25- 30 1 3 6 9 15 18 21 24 27 30 Months since index Months since index 15% few
Slide 90: Financial trilogy: steady growth
Financial trilogy # of Treatments x Revenue / Tx - Expense / Tx • 4.5% - 6.0% growth Steady Growth © 2016 DaVita HealthCare Partners Inc. All rights reserved. 90
Slide 93: Census of acquired centers
Census of acquired centers 1 1. Calculated using 2014 census data for acquisitions completed in 2015 Note: excludes mergers in excess of 1,000 patients © 2016 DaVita HealthCare Partners Inc. All rights reserved. 93
Slide 94: Financial trilogy: normal dynamics
Financial trilogy # of Treatments x Revenue / Tx - Expense / Tx • 0.0% - 1.5% growth Normal Dynamics (other than Exchanges) © 2016 DaVita HealthCare Partners Inc. All rights reserved. 94
Slide 95: Medicare reimbursement outlook
Medicare reimbursement outlook • 2017: Market basket minus 1.25% • 2018: Market basket minus 1.00% • 2019+: Market basket © 2016 DaVita HealthCare Partners Inc. All rights reserved. 95
Slide 96: Drivers of commercial volume
Drivers of commercial volume Impact on Industry dynamic payor mix Improving employment rate Affordable Care Act / Exchanges Incidence rate of ESRD © 2016 DaVita HealthCare Partners Inc. All rights reserved. 96
Slide 97: Financial trilogy: normal dynamics
Financial trilogy # of Treatments x Revenue / Tx - Expense / Tx • 0.5% - 2.0% growth Normal Dynamics (other than ESAs) © 2016 DaVita HealthCare Partners Inc. All rights reserved. 97
Slide 98: Cost per treatment
Cost per treatment Component Historical • Teammate costs • ~2%/yr • Pharma and supplies • Dynamic • Other center-level costs • ~2%/yr • G&A and other corporate • ~in-line with tx © 2016 DaVita HealthCare Partners Inc. All rights reserved. 98
Slide 99: Dynamic ESA marketplace
Dynamic ESA marketplace Today 2017 2018 2019+ Amgen Hospira Sandoz (Epogen) (Retacrit) (Binocrit) Amgen (Aranesp) DVA/AMGN Roche agreement expires (Mircera) © 2016 DaVita HealthCare Partners Inc. All rights reserved. 99
Slide 101: Outlook
Outlook # of Treatments x Revenue / Tx - Expense / Tx • 4.5% - 6.0% • 0.0% - 1.5% • 0.5% - 2.0% growth growth growth 2% – 7% OI Growth © 2016 DaVita HealthCare Partners Inc. All rights reserved. 101
Slide 102: U.S. Kidney Care summary
U.S. Kidney Care summary What is the same? What is more dynamic? • Clinical excellence • ESAs • Capital-efficient treatment growth • Exchanges • Commercial mix/rate dynamic • Payor evolution • Few acquisition opportunities • Population health © 2016 DaVita HealthCare Partners Inc. All rights reserve
Slide 106: Leverage ratio
Leverage ratio 5 4.5x1 4 3.7x 3.6x2 3.0x 2.9x 3.1x 3.0x 3.0x 3.1x 3 2.6x 2.7x 2.7x 2.1x 2 1 0 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 Q1’16 Note: Leverage ratio as defined in Credit Agreement 1. Gambro Healthcare acquisition – October 2005; 5.2x leverage pro forma for transaction
Slide 107: Debt structure
Debt structure As of 3/31/2016 $ millions Total Debt: $9,210 Other – $359 5¾% Notes - $1,250 Sr. Notes 5⅛% Notes - $1,750 $4,500 5% Notes - $1,500 Tranche B - $3,439 Term Loans $4,351 Tranche A - $912 Note: Excludes the debt discount associated with the company’s Term Loan B and other deferred finan
Slide 108: Debt maturities
Debt maturities $ millions Term Loan A Term Loan B 5.125% Sr. Notes 5.75% Sr. Notes 5.00% Sr. Notes $3,273 3/31/16 LTM EBITDA1 $2,611 $1,750 $1,500 $1,250 $710 $35 $675 $123 $35 $35 $76 $26 $135 $35 $50 $88 $100 2 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025 1. Excludes adjustments for certain
Slide 110: Balanced cash deployment
Balanced cash deployment $B 2001-15 4 3 2 3.6 3.6 3.1 2.8 2.7 1 0.6 0 Development Gambro HCP Other Share Optional acquisitions repurchases debt repayment © 2016 DaVita HealthCare Partners Inc. All rights reserved. 110
Slide 111: Balanced cash deployment
Balanced cash deployment $B 2008-15 4 3 2 3.6 2.8 1 2.1 1.9 0.2 0 Development HCP Other Share Optional debt acquisitions repurchases repayment © 2016 DaVita HealthCare Partners Inc. All rights reserved. 111
Slide 113: Strong cash flows
Strong cash flows $M Operating Cash Flow 2,500 Free Cash Flow 2,000 1,773 1,861 1,728 1,500 1,180 1,101 1,000 840 1,366 1,314 1,359 500 855 600 715 0 2010 2011 2012 2013 20141 20152 Diluted share count (M) 206 193 196 215 217 216 1. Excludes the ~$269M after-tax impact of 2010 and 2011 US Attorney P
Slide 115: Cash generation and uses 2016-2019
Cash generation and uses 2016-2019 $M 8,000 7,400 7,000 650 6,000 1,400 5,350 5,000 1,500 4,000 1,150 3,000 2,700 2,000 1,000 0 OCF NCI Maintenance FCF Development Acquisition Cash Available CapEx © 2016 DaVita HealthCare Partners Inc. All rights reserved. 115
Slide 116: EPS scenario
EPS scenario • Consolidated OI Growth 3% - 8% + Financial Leverage • Net Income/EPS Growth 4% - 10% + Share Repurchase/Acq’s EPS Growth 5% - 12% © 2016 DaVita HealthCare Partners Inc. All rights reserved. 116
Slide 117: Bad news / good news
Bad news / good news Bad news Good news • Rate risk • Clinical excellence • DMG is WIP • Stable demand & cash flow • Compliance risk • Market leadership • Population health capability • Distinctive platform © 2016 DaVita HealthCare Partners Inc. All rights reserved. 117

DaVita — Investor Day (May 2016) on 6ix

Davita — Investor Day (May 2016)

Slide 1: Capital Markets Day May 18, 2016

Slide 2: Forward-looking statements

Slide 3: Kent Thiry

Slide 4: DaVita Medical Group, International, Kidney Care

Slide 5: Introduction

Slide 6: 2016-2019 OI Outlook

Slide 7: Cash generation and uses 2016-2019

Slide 8: EPS scenario

Slide 9: Bad news / good news

Slide 10: Introduction: DaVita Medical Group

Slide 11: DaVita Medical Group

Slide 12: Components

Slide 13: 2013-2016 OI

Slide 14: 2016 EBITDA

Slide 15: 2016 tax-adjusted EBITDA

Slide 16: Our journey

Slide 17: Jim Rechtin

Slide 18: DaVita Medical Group outlook

Slide 19: DaVita Medical Group

Slide 20: DaVita Medical Group

Slide 21: Outperforming MA benchmarks

Slide 22: Consistent across geographies

Slide 23: 2016-2019 drivers

Slide 24: 5-9% OI CAGR

Slide 25: DaVita Medical Group outlook

Slide 26: Rate

Slide 27: Rate

Slide 28: 2016-2019 OI outlook

Slide 29: Legacy MA growth

Slide 30: Medicare Advantage growing

Slide 31: 4% Legacy MA patient growth

Slide 32: Building capacity

Slide 33: Legacy Medicare growth

Slide 34: 2016-2019 OI outlook

Slide 35: New market conversion to value

Slide 36: Why value-based contracts?

Slide 37: Quality care = better economics

Slide 38: Why value-based contracts?

Slide 39: Value takes time & money

Slide 40: Conversion in new geographies

Slide 41: 2016-2019 OI outlook

Slide 42: Costs

Slide 43: Costs

Slide 44: Building platform: examples

Slide 45: Google Glass

Slide 46: Dragon dictation

Slide 47: Improving patient experience

Slide 48: Remote monitoring and action

Slide 49: Telepsychiatry

Slide 50: Hospital alignment example

Slide 51: Improving utilization

Slide 52: Costs

Slide 53: 2016-2019 OI outlook

Slide 54: 2016-2019: 5-9% OI CAGR

Slide 55: Other opportunities

Slide 56: DaVita Medical Group outlook

Slide 57: Why do we like this business?

Slide 58: DaVita Medical Group

Slide 59: Introduction: International

Slide 60: Strategic premise

Slide 61: Footprint

Slide 62: International growth

Slide 63: Achieving scale

Slide 64: Clinical progress in Malaysia

Slide 65: Clinical progress in Germany

Slide 66: Clinical progress in Saudi Arabia

Slide 67: One Company

Slide 68: Financial outlook

Slide 69: Asia Kidney Care joint venture

Slide 70: Introduction: Kidney Care

Slide 71: Javier Rodriguez

Slide 72: DaVita Kidney Care

Slide 73: Typical dialysis center

Slide 74: Industry overview

Slide 75: Stable demand growth

Slide 76: ESRD population growth profile

Slide 77: Significant government engagement

Slide 78: Private payors subsidize government

Slide 79: Dynamic payor landscape