DaVita, El Segundo, Calif., agreed to purchase the 565 dialysis clinics from Gambro Healthcare U.S., Lakewood, Colo., and the company's 200 U.S. hospital service contracts in a $3.1 billion deal targeted for closure in the first half of 2005. The transaction, which also involves the companies entering preferred-supplier and research-and-development partnerships, is expected to draw antitrust scrutiny. DaVita would likely become the nation's largest dialysis provider, surpassing Germany-based Fresenius Medical Care.
The deal would nearly double DaVita's number of dialysis patients to about 96,000 -- roughly one-third to one-fourth of all U.S. dialysis patients, a Gambro U.S. spokesman said. Piper Jaffray analyst Darren Lehrich said according to his analysis Gambro would represent about $1.95 billion of projected 2005 DaVita revenue of about $4.5 billion and based on 2003 data would give DaVita entry into seven new states. Gambro U.S. has facilities in 29 of the 37 states in which DaVita currently operates. The deal does not include the 142 foreign clinics owned by Gambro, the Sweden-based parent of Gambro U.S.
Gambro U.S. officials said the company would become DaVita's preferred supplier of renal products for at least 10 years under the deal and would focus on developing blood- and cell-based therapy products for dialysis and other markets, retaining about half its revenue. The officials said Gambro U.S. was strong financially despite a $350 million fraud settlement announced last week with the federal government. The settlement includes a five-year corporate integrity agreement. DaVita Chief Executive Officer Kent Thiry said the company already practices some the agreement's requirements and expects to have only small additional expenses because of the agreement. -- by Joseph Mantone