by Jennifer Brown
Denver Post
A federal grand jury in Denver is looking into more than one partnership between DaVita Inc. and a group of kidney doctors, chief executive Kent Thiry said Thursday during an earnings call.
Thiry was responding to questions from stock analysts about a Denver Post story Wednesday that described the kidney dialysis giant's relationship with Denver Nephrology.
"We know that they are not limiting their inquiry into that one transaction," he said. "All we know is that they are looking at a small number, but it is not just one."
In 2008, DaVita sold 49 percent ownership in seven dialysis clinics to Denver Nephrology for $1.89 million. Those clinics generated estimated annual revenues of more than $28 million.
DaVita had offered 40 percent ownership to another group of Denver doctors for eight times the price 17 months earlier. DaVita says the value of the clinics dropped substantially by the time of the sale because a major dialysis competitor was coming to Denver.
Thiry said he could not comment in detail about the grand jury inquiry but said it is "common sense that the value of a business can change dramatically if the market and/or competitive conditions change."
Thiry and other executives said they looked forward to defending the company "vigorously" but that government investigations take several months.
"It's no fun waiting, but there is nothing we can do about it," Thiry said.
Federal law regarding relationships between doctors and dialysis clinics says dialysis companies must sell part-ownership of clinics at fair-market value. The point is to make sure a dialysis company is not buying off doctors in order to get patients.
DaVita, a Fortune 500 company, posted third-quarter income from continuing operations of $164.5 million, or $1.48 a share, compared with $143 million, or $1.16 a share, the same period a year earlier. Net profits rose 13 percent to $135.4 million, the company said.
DaVita shares closed at $73.52, up $3.38.
Jennifer Brown: 303-954-1593 or jenbrown@denverpost.com
http://www.denverpost.com/business/ci_19260157
