DAVITA INC. (NYSE:DVA) Files An 8-K Entry into a Material Definitive Agreement
Item1.01.
| Entry into a Material Definitive Agreement |
On January6, 2017, DaVita Inc. (the Company) entered into a
six-year Sourcing and Supply Agreement (the Agreement) with Amgen
USA Inc. (Amgen), a wholly-owned subsidiary of Amgen Inc. The
Agreement sets forth the terms under which the Company, and
certain of its affiliates and facilities managed by the Company
or its affiliates, will purchase Epoetin alfa (Epogen) and
darbepoetin alfa (Aranesp) in amounts necessary to meet a minimum
percentage of the Companys and its affiliates requirements for
erythropoiesis stimulating agents in the United States, but in no
year is less than 90% of its requirements. The Agreement replaces
in its entirety the Sourcing and Supply Agreement No.00053958,
effective January1, 2012, as amended, between the Company and
Amgen that expires by its terms on December31, 2018 (the Material
Terminating Agreement) and the Dialysis Organization Agreement
No.00104122, effective January1, 2015, as amended, between the
Company and Amgen. The term of the Agreement commences January6,
2017 and ends December31, 2022.
The Agreement, among other things, provides for discount pricing
and rebates for Epogen and Aranesp. Some of the rebates are
subject to various conditions and data submission by DaVita.
The Agreement allows for termination by either party before
expiration of its term in the event of certain breaches of the
Agreement, and allows for modification or renegotiation in the
event of a change in law or regulation.
The foregoing description of the Agreement is qualified in its
entirety by reference to the actual text of the Agreement, a copy
of which the Company expects to file as an exhibit to a future
periodic report to be filed by the Company with the Securities
and Exchange Commission.
Item1.02 |
Termination of a Material Definitive Agreement |
As described above in Item 1.01, in connection with entering in
the Agreement, Amgen and the Company terminated the Material
Terminating Agreement on January 6, 2017.
Item7.01 |
Regulation FD Disclosure |
Now that the Company has entered into the Agreement and taken
into account its financial impact, the Company expects its 2017
operating income for its Kidney Care segment to be between $1.525
billion and $1.625 billion, and expects its 2017 operating income
in its DaVita Medical Group segment to be roughly flat with 2016
adjusted operating income. The Company intends to provide its
complete 2017 operating income guidance in its fourth quarter
2016 earnings announcement.
The information contained in Item7.01 of this Form 8-K is being
furnished and shall not be deemed to be filed for the purposes of
Section18 of the Securities Exchange Act of 1934, as amended (the
Exchange Act), or otherwise subject to the liabilities of that
section and shall not be incorporated by reference in any filing
under the Securities Act of 1933, as amended, or the Exchange
Act, except as shall be expressly set forth by specific reference
in such filing.
Cautionary Statement
This report on Form 8-K contains forward-looking statements
within the meaning of the federal securities laws. These
forward-looking statements are not guarantees of future
performance and are subject to risks, uncertainties, and
assumptions, including, among other things, the uncertainties
associated with the risk factors set forth in our SEC filings,
including our annual report on Form 10-K for the year ended
December 31, 2015, and our subsequent quarterly and annual
reports and our current reports on Form 8-K. The forward-looking
statements should be considered in light of these risks and
uncertainties.
These risks and uncertainties include, but are not limited to,
and are qualified in their entirety by reference to the full text
of those risk factors in our SEC filings relating to risks
resulting from the concentration of profits generated by
higher-paying commercial payor plans for which there is continued
downward pressure on average realized payment rates, and a
reduction in the number of patients under such plans, which may
result in the loss of revenues or patients, and the extent to
which the ongoing implementation of healthcare exchanges or
changes in regulations or enforcement of regulations regarding
the exchanges results in a reduction in reimbursement rates for
our services from and/or the number of patients enrolled in
higher-paying commercial plans, a reduction in government payment
rates under the Medicare ESRD program or other government-based
programs, the impact of the CMS Medicare Advantage benchmark
structure, risks arising from potential federal and/or state
legislation that could have an adverse effect on our operations
and profitability, changes in pharmaceutical or anemia management
practice patterns, payment policies, or pharmaceutical pricing,
legal compliance risks, including our continued compliance with
complex government regulations and the provisions of our current
Corporate Integrity Agreement (CIA), and current or potential
investigations by various government entities and related
government or private-party proceedings, the restrictions on our
business and operations required by the CIA and other settlement
terms, and the financial impact thereof, continued increased
competition from large- and medium-sized dialysis providers that
compete directly with us, our ability to maintain contracts with
physician medical directors, changing affiliation models for
physicians, and the emergence of new models of care introduced by
the government or private sector that may erode our patient base
and reimbursement rates such as Accountable Care Organizations
(ACOs), independent practice associations (IPAs) and integrated
delivery systems, our ability to complete acquisitions, mergers
or dispositions that we might be considering or announce, or to
integrate and successfully operate any business we may acquire or
have acquired, including DaVita Medical Group (DMG), or to expand
our operations and services to markets outside the U.S., or to
businesses outside of dialysis and DMGs business, the variability
of our cash flows, the risk that we might invest material amounts
of capital and incur significant costs in connection with the
growth and development of our international operations, yet we
might not be able to operate them profitably anytime soon, if at
all, risks arising from the use of accounting estimates,
judgments and interpretations in our financial statements, the
risk that laws regulating the corporate practice of medicine
could restrict the manner in which DMG conducts its business, the
risk that the cost of providing services under DMGs agreements
may exceed our compensation, the risk that reductions in
reimbursement rates, including Medicare Advantage rates, and
future regulations may negatively impact DMGs business, revenue
and profitability, the risk that DMG may not be able to
successfully establish a presence in new geographic regions or
successfully address competitive threats that could reduce its
profitability, the risk that a disruption in DMGs healthcare
provider networks could have an adverse effect on DMGs business
operations and profitability, the risk that reductions in the
quality ratings of health maintenance organization plan customers
of DMG could have an adverse effect on DMGs business, or the risk
that health plans that acquire health maintenance organizations
may not be willing to contract with DMG or may be willing to
contract only on less favorable terms. We base our
forward-looking statements on information currently available to
us at the time of this release. Except as required by law, we
undertake no obligation to update or revise any forward-looking
statements, whether as a result of changes in underlying factors,
new information, future events or otherwise.
About DAVITA INC. (NYSE:DVA)
DaVita Inc., formerly DaVita HealthCare Partners Inc., is a provider of kidney care services. The Company operates Kidney Care division and HealthCare Partners (HCP) division. The Company’s segments include U.S. dialysis and related lab services, HCP and Other-Ancillary services and strategic initiatives. The Company’s Kidney Care division is a provider of dialysis services in the United States, treating patients with chronic kidney failure and end stage renal disease (ESRD). HCP division is a patient and physician-focused integrated health care delivery and management company. DAVITA INC. (NYSE:DVA) Recent Trading Information
DAVITA INC. (NYSE:DVA) closed its last trading session up +0.08 at 65.79 with 647,638 shares trading hands.