Leading Kidney Care Platform
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 performance
measures that exclude certain items such as impairment charges, (gain) loss on ownership changes, restructuring charges, accruals for legal matters
and debt prepayment and refinancing charges.
These non-GAAP or "adjusted" measures are presented because management believes these measures are useful adjuncts to GAAP results.
However, these non-GAAP measures should not be considered alternatives to the corresponding measures determined under GAAP.
Specifically, management uses adjusted operating income and adjusted net income from continuing operations attributable to DaVita Inc. to
compare and evaluate our performance period over period and relative to competitors, to analyze the underlying trends in our business, to
establish operational budgets and forecasts and for incentive compensation purposes. We believe these non-GAAP measures also are useful to
investors and analysts in evaluating our performance over time and relative to competitors, as well as in analyzing the underlying trends in our
business. Furthermore, we believe these presentations enhance a user's understanding of our normal consolidated results by excluding certain
items which we do not believe are indicative of our ordinary results of operations. As a result, adjusting for these amounts allows for comparison
to our normalized prior period results.
Free cash flow from continuing operating represents net cash provided by operating activities from continuing operations less distributions to
noncontrolling interests and all capital expenditures (including development capital expenditures, routine maintenance and information
technology); plus contributions from noncontrolling interests and proceeds from the sale of self-developed properties. Management uses this
measure to assess our ability to fund acquisitions and meet our debt service obligations and we believe this measure is equally useful to investors
and analysts as an adjunct to cash flows from operating activities from continuing operations and other measures under GAAP.
It is important to bear in mind that these non-GAAP "adjusted" measures are not measures of financial performance or liquidity under GAAP and
should not be considered in isolation from, nor as substitutes for, their most comparable GAAP measures.
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