Noncontrolling Interests Subject to Put Provisions

12 Months Ended

Dec. 31, 2019

Temporary Equity Disclosure [Abstract]

Noncontrolling Interests Subject to Put Provisions

The Company is party to agreements which contain put provisions which require the Company to purchase a portion or all of the noncontrolling interests held by third parties in certain of its consolidated subsidiaries. These put provisions are exercisable at the third-party owners’ discretion either within specified periods or, in certain cases, upon the occurrence of specific events, including the sale of all or substantially all of the Company’s assets, closure of the clinic, change of control, departure of key executives, third-party members’ death, disability, bankruptcy, retirement, or if third-party members are dissolved and other events, which could accelerate vesting of the put. The Company has evaluated the applicable terms and determined that none of the put rights are mandatorily redeemable. Some of these put rights accelerated as a result of the Company’s IPO, of which some were exercised during the year ended December 31, 2019. If the remaining unexercised put rights were exercised, the Company would be required to purchase all or a portion of the third-party owners’ noncontrolling interests at the estimated fair value as defined within the put provisions. The majority of the noncontrolling interests subject to put provisions is reported at the greater of the carrying value or estimated fair value for accounting purposes, while some of the noncontrolling interests subject to put provisions is stated at the contractual estimated fair value, as outlined in each specific put provision (“redemption value”). The put rights of such noncontrolling interest holders were determined based on inputs that are not readily available in public markets or able to be derived from information available in publicly quoted markets. As such, the Company categorized the put options of the noncontrolling interest holders as Level 3.

The fair value of the noncontrolling interests subject to these put provisions is estimated using the Income, Market and Asset Based Approaches. The fair value derived from the methods used is evaluated and weighted, as appropriate, considering the reasonableness of the range of values indicated. Under the income approach, fair value may be determined by utilizing a Weighted Average Cost of Capital (14.00% - 19.50%) to discount the expected cash flows to a single present value amount using current expectations about those future amounts. Under the market approach, fair value may be determined by reference to multiples of market-comparable companies or transactions, including revenue and earnings before interest, taxes, depreciation and amortization (“EBITDA”). The estimated fair values of the interests subject to these put provisions can fluctuate, and the implicit multiples at which these obligations may be settled may vary depending upon market conditions and access to the credit and capital markets, which can impact the level of competition for dialysis and non-dialysis related businesses and the economic performance of these businesses.

As of December 31, 2019 and 2018, the Company’s potential obligations under time‑based put provisions totaled approximately $111,793 and $101,115, respectively. As of December 31, 2019 and 2018, the Company’s potential additional obligations under event‑based put provisions were approximately $14,690 and $27,984, respectively. The Company’s potential obligations for all of these put provisions are included in noncontrolling interests subject to put provisions in the accompanying Consolidated Balance Sheets.

The Company’s computation of the difference between the redemption value and estimated fair value for accounting purposes of the related noncontrolling interests as of December 31, 2019 and 2018 is set forth below.



	December 31, 2019		December 31, 2018
Redemption value	$	17,303	$	11,221
Estimated fair values for accounting purposes	1,647		2,672
Difference between the redemption value and estimated fair value for accounting purposes of the related noncontrolling interests	$	15,656	$	8,549

In addition, the tables below set forth a reconciliation of noncontrolling interests subject to put provisions.



	December 31, 2019		December 31, 2018
Noncontrolling interests subject to put provisions stated at estimated fair values for accounting purposes	$	110,827	$	120,550
Difference between the redemption value and estimated fair value for accounting purposes of the related noncontrolling interests	15,656		8,549
Noncontrolling interests subject to put provisions stated at maximum redemption value	$	126,483	$	129,099



	Year Ended December 31, 2019			Year Ended December 31, 2018
Change in estimated fair values for accounting purposes	$	(2,000	)	$	(9,963	)
Change in the difference between the redemption value and estimated fair value for accounting purposes of the related noncontrolling interests	7,999			2,566
Total change in fair value of noncontrolling interests subject to put provisions stated at maximum redemption	$	5,999		$	(7,397	)