By Bill Peckham
Miriam notes that The Renal Fellow Network (and Kidney Notes) highlight a table in the January issue of Kidney News (PDF link) a magazine published by the American Society of Nephrology. The table shows the bottom line revenue generated by the the three largest dialysis providers and the average per treatment revenue each dialysis provider derives. However, what people usually want to talk about is the margin, which is different then net income/corporate profit. Of the total per treatment revenue - what was the margin? What was left after direct expenses?
To figure that out you need to know the total segment revenue for the 3rd quarter and you need to know the reported operating margin - net revenue before accounting for taxes and debt service. For different reasons that is not easy to figure out for Fresenius Medical Care or Dialysis Clinic Inc., the number one and number three largest dialysis providers respectively, but it is straight forward to identify for DaVita the US's number two largest provider. DaVita's financials are comparatively straight forward and available, you need only to check their most recent SEC 10-Q filing. In the third quarter of 2009 their total revenue from Dialysis and Related Lab Services was $1,490,000,000 and their margin was $260,000,000.
From there you can calculate that on average they earned just about 17.4 cents on every dollar of dialysis related revenue. Therefor, their average per treatment revenue of $343 generated about $60 in margin. I think it is clarifying to put this in terms of per treatment. DaVita provided over 4.3 million treatments in the third quarter, that's going to add up to a lot of margin. The Renal Fellow Network calculates the yearly per patient average revenue, additionally, the average yearly per patient margin would be $9,360.
You can also calculate this based on their net, net margin. Their take home profit. This is the $110,000,000 Net Revenue figure Kidney News provides. That's $110 million 3rd quarter revenue after taxes and debt. Using their total corporate revenues of $1,573,910,000 you can calculate that on average they earned just about 7
cents profit on every dollar. Therefor, their average per treatment revenue of
$343 generated about $24 in per treatment profit. That makes the average yearly per patient profit $3,744.
Comments