Condensed consolidating financial statements

9 Months Ended

Sep. 30, 2018

Organization, Consolidation and Presentation of Financial Statements [Abstract]

Condensed consolidating financial statements

Condensed consolidating financial statements

The following information is presented in accordance with Rule 3-10 of Regulation S-X. The operating and investing activities of the separate legal entities included in the Company’s condensed consolidated financial statements are fully interdependent and integrated. Revenues and operating expenses of the separate legal entities include intercompany charges for management and other administrative services. The Company’s senior notes are guaranteed by a substantial majority of its domestic subsidiaries as measured by revenue, income and assets. The subsidiary guarantors have guaranteed the senior notes on a joint and several basis. However, a subsidiary guarantor will be released from its obligations under its guarantee of the senior notes and the indentures governing the senior notes if, in general, there is a sale or other disposition of all or substantially all of the assets of such subsidiary guarantor, including by merger or consolidation, or a sale or other disposition of all of the equity interests in such subsidiary guarantor held by the Company and its restricted subsidiaries, as defined in the indentures; such subsidiary guarantor is designated by the Company as an unrestricted subsidiary, as defined in the indentures, or otherwise ceases to be a restricted subsidiary of the Company, in each case in accordance with the indentures; or such subsidiary guarantor no longer guarantees any other indebtedness, as defined in the indentures, of the Company or any of its restricted subsidiaries, except for guarantees that are contemporaneously released. The senior notes are not guaranteed by certain of the Company’s domestic subsidiaries, any of the Company’s foreign subsidiaries, or any entities that do not constitute subsidiaries within the meaning of the indentures, such as corporations in which the Company holds capital stock with less than a majority of the voting power, joint ventures and partnerships in which the Company holds less than a majority of the equity or voting interests, non-owned entities and third parties.

Condensed Consolidating Statements of Operations

	DaVita Inc.			Guarantor subsidiaries			Non- Guarantor subsidiaries			Consolidating adjustments			Consolidated total
For the three months ended September 30, 2018
Patient services revenues	$	—		$	1,810,009		$	914,623		$	(53,931	)	$	2,670,701
Provision for uncollectible accounts	—			(8,899		)	(3,078		)	—			(11,977		)
Net patient service revenues	—			1,801,110			911,545			(53,931		)	2,658,724
Other revenues	207,968			192,467			36,508			(248,337		)	188,606
Total net revenues	207,968			1,993,577			948,053			(302,268		)	2,847,330
Operating expenses and charges	205,324			1,817,851			837,385			(302,268		)	2,558,292
Operating income	2,644			175,726			110,668			—			289,038
Debt expense	(127,353		)	(52,011		)	(8,812		)	62,249			(125,927		)
Other income, net	106,148			2,339			5,982			(110,462		)	4,007
Income tax (benefit) expense	(3,536		)	47,977			7,606			—			52,047
Equity earnings in subsidiaries	(121,771		)	46,972			—			74,799			—
Net (loss) income from continuing operations	(136,796		)	125,049			100,232			26,586			115,071
Net loss from discontinued operations, net of tax	—			(246,820		)	(13,132		)	48,213			(211,739		)
Net (loss) income	(136,796		)	(121,771		)	87,100			74,799			(96,668		)
Less: Net income attributable to noncontrolling interests	—			—			—			(40,128		)	(40,128		)
Net (loss) income attributable to DaVita Inc.	$	(136,796	)	$	(121,771	)	$	87,100		$	34,671		$	(136,796	)

				Guarantor subsidiaries			Non- Guarantor subsidiaries			Consolidating adjustments			Consolidated total
For the three months ended September 30, 2017	DaVita Inc.
Patient service revenues	$	—		$	1,710,708		$	914,753		$	(63,918	)	$	2,561,543
Provision for uncollectible accounts	—			(82,807		)	(42,649		)	6,135			(119,321		)
Net patient service revenues	—			1,627,901			872,104			(57,783		)	2,442,222
Other revenues	189,275			302,193			11,483			(180,102		)	322,849
Total net revenues	189,275			1,930,094			883,587			(237,885		)	2,765,071
Operating expenses	128,488			1,718,444			760,730			(237,885		)	2,369,777
Operating income	60,787			211,650			122,857			—			395,294
Debt expense	(108,453		)	(48,622		)	(13,017		)	60,786			(109,306		)
Other income	104,250			819			5,941			(107,614		)	3,396
Income tax expense (benefit)	21,199			82,780			(13,433		)	—			90,546
Equity earnings in subsidiaries	(249,861		)	89,048			—			160,813			—
Net (loss) income from continuing operations	(214,476		)	170,115			129,214			113,985			198,838
Net (loss) income from discontinued operations, net of tax	—			(419,976		)	2,276			46,828			(370,872		)
Net (loss) income	(214,476		)	(249,861		)	131,490			160,813			(172,034		)
Less: Net income attributable to noncontrolling interests	—			—			—			(42,442		)	(42,442		)
Net (loss) income attributable to DaVita Inc.	$	(214,476	)	$	(249,861	)	$	131,490		$	118,371		$	(214,476	)

	DaVita Inc.			Guarantor subsidiaries			Non- Guarantor subsidiaries			Consolidating adjustments			Consolidated total
For the nine months ended September 30, 2018
Patient service revenues	$	—		$	5,431,742		$	2,699,670		$	(151,234	)	$	7,980,178
Provision for uncollectible accounts	—			(26,430		)	(9,408		)	—			(35,838		)
Net patient service revenues	—			5,405,312			2,690,262			(151,234		)	7,944,340
Other revenues	608,850			611,693			150,578			(731,734		)	639,387
Total net revenues	608,850			6,017,005			2,840,840			(882,968		)	8,583,727
Operating expenses	484,329			5,459,322			2,385,128			(882,968		)	7,445,811
Operating income	124,521			557,683			455,712			—			1,137,916
Debt expense	(362,501		)	(156,571		)	(25,461		)	185,398			(359,135		)
Other income	315,573			7,718			16,126			(328,834		)	10,583
Income tax expense	24,108			136,939			45,605			—			206,652
Equity earnings in subsidiaries	255,681			305,823			—			(561,504		)	—
Net income from continuing operations	309,166			577,714			400,772			(704,940		)	582,712
Net (loss) income from discontinued operations, net of tax	—			(322,033		)	30,768			143,436			(147,829		)
Net income	309,166			255,681			431,540			(561,504		)	434,883
Less: Net income attributable to noncontrolling interests	—			—			—			(125,717		)	(125,717		)
Net income attributable to DaVita Inc.	$	309,166		$	255,681		$	431,540		$	(687,221	)	$	309,166

	DaVita Inc.			Guarantor subsidiaries			Non- Guarantor subsidiaries			Consolidating adjustments			Consolidated total
For the nine months ended September 30, 2017
Patient service revenues	$	—		$	4,895,864		$	2,723,764		$	(140,690	)	$	7,478,938
Provision for uncollectible accounts	—			(216,705		)	(125,409		)	6,135			(335,979		)
Net patient service revenues	—			4,679,159			2,598,355			(134,555		)	7,142,959
Other revenues	604,246			913,130			43,408			(608,022		)	952,762
Total net revenues	604,246			5,592,289			2,641,763			(742,577		)	8,095,721
Operating expenses	398,502			4,609,747			2,167,631			(742,577		)	6,433,303
Operating income	205,744			982,542			474,132			—			1,662,418
Debt expense	(317,276		)	(144,382		)	(38,287		)	178,308			(321,637		)
Other income	306,886			4,991			15,524			(315,221		)	12,180
Income tax expense	75,680			389,945			8,501			—			474,126
Equity earnings in subsidiaries	240,548			337,213			—			(577,761		)	—
Net income from continuing operations	360,222			790,419			442,868			(714,674		)	878,835
Net (loss) income from discontinued operations, net of tax	—			(549,871		)	23,999			136,913			(388,959		)
Net income	360,222			240,548			466,867			(577,761		)	489,876
Less: Net income attributable to noncontrolling interests	—			—			—			(129,654		)	(129,654		)
Net income attributable to DaVita Inc.	$	360,222		$	240,548		$	466,867		$	(707,415	)	$	360,222

Condensed Consolidating Statements of Comprehensive Income

				Guarantor subsidiaries			Non- Guarantor subsidiaries			Consolidating adjustments			Consolidated total
For the three months ended September 30, 2018	DaVita Inc.
Net (loss) income	$	(136,796	)	$	(121,771	)	$	87,100		$	74,799		$	(96,668	)
Other comprehensive income (loss)	1,643			—			(8,827		)	—			(7,184		)
Total comprehensive (loss) income	(135,153		)	(121,771		)	78,273			74,799			(103,852		)
Less: Comprehensive income attributable to noncontrolling interest	—			—			—			(40,128		)	(40,128		)
Comprehensive (loss) income attributable to DaVita Inc.	$	(135,153	)	$	(121,771	)	$	78,273		$	34,671		$	(143,980	)

				Guarantor subsidiaries			Non- Guarantor subsidiaries		Consolidating adjustments			Consolidated total
For the three months ended September 30, 2017	DaVita Inc.
Net (loss) income	$	(214,476	)	$	(249,861	)	$	131,490	$	160,813		$	(172,034	)
Other comprehensive income	1,641			—			29,143		—			30,784
Total comprehensive (loss) income	(212,835		)	(249,861		)	160,633		160,813			(141,250		)
Less: Comprehensive income attributable to noncontrolling interest	—			—			—		(42,442		)	(42,442		)
Comprehensive (loss) income attributable to DaVita Inc.	$	(212,835	)	$	(249,861	)	$	160,633	$	118,371		$	(183,692	)

			Guarantor subsidiaries		Non- Guarantor subsidiaries			Consolidating adjustments			Consolidated total
For the nine months ended September 30, 2018	DaVita Inc.
Net income	$	309,166	$	255,681	$	431,540		$	(561,504	)	$	434,883
Other comprehensive income (loss)	5,499		—		(39,475		)	—			(33,976		)
Total comprehensive income	314,665		255,681		392,065			(561,504		)	400,907
Less: Comprehensive income attributable to noncontrolling interest	—		—		—			(125,717		)	(125,717		)
Comprehensive income attributable to DaVita Inc.	$	314,665	$	255,681	$	392,065		$	(687,221	)	$	275,190

			Guarantor subsidiaries		Non- Guarantor subsidiaries		Consolidating adjustments			Consolidated total
For the nine months ended September 30, 2017	DaVita Inc.
Net income	$	360,222	$	240,548	$	466,867	$	(577,761	)	$	489,876
Other comprehensive income	1,571		—		91,546		—			93,117
Total comprehensive income	361,793		240,548		558,413		(577,761		)	582,993
Less: Comprehensive income attributable to noncontrolling interest	—		—		—		(129,652		)	(129,652		)
Comprehensive income attributable to DaVita Inc.	$	361,793	$	240,548	$	558,413	$	(707,413	)	$	453,341

Condensed Consolidating Balance Sheets

			Guarantor subsidiaries		Non- Guarantor subsidiaries		Consolidating adjustments			Consolidated total
As of September 30, 2018	DaVita Inc.
Cash and cash equivalents	$	296,697	$	—	$	151,518	$	—		$	448,215
Restricted cash and equivalents	1,004		11,985		78,951		—			91,940
Accounts receivable, net	—		1,241,147		605,939		—			1,847,086
Other current assets	37,185		467,669		89,620		—			594,474
Current assets held for sale, net	—		4,999,748		948,038		—			5,947,786
Total current assets	334,886		6,720,549		1,874,066		—			8,929,501
Property and equipment, net	466,162		1,563,552		1,245,922		—			3,275,636
Intangible assets, net	176		43,704		53,729		—			97,609
Investments in subsidiaries	10,071,347		3,164,083		—		(13,235,430		)	—
Intercompany receivables	3,496,240		—		1,478,557		(4,974,797		)	—
Other long-term assets and investments	54,853		86,821		210,710		—			352,384
Goodwill	—		4,778,542		1,924,117		—			6,702,659
Total assets	$	14,423,664	$	16,357,251	$	6,787,101	$	(18,210,227	)	$	19,357,789
Current liabilities	$	1,815,234	$	1,149,518	$	470,731	$	—		$	3,435,483
Current liabilities held for sale	—		892,548		527,073		—			1,419,621
Intercompany payables	—		3,485,322		1,489,475		(4,974,797		)	—
Long-term debt and other long-term liabilities	8,186,683		758,516		463,812		—			9,409,011
Noncontrolling interests subject to put provisions	597,098		—		—		467,314			1,064,412
Total DaVita Inc. shareholders' equity	3,824,649		10,071,347		3,164,083		(13,235,430		)	3,824,649
Noncontrolling interests not subject to put provisions	—		—		671,927		(467,314		)	204,613
Total equity	3,824,649		10,071,347		3,836,010		(13,702,744		)	4,029,262
Total liabilities and equity	$	14,423,664	$	16,357,251	$	6,787,101	$	(18,210,227	)	$	19,357,789

			Guarantor subsidiaries		Non- Guarantor subsidiaries		Consolidating adjustments			Consolidated total
As of December 31, 2017	DaVita Inc.
Cash and cash equivalents	$	149,305	$	—	$	358,929	$	—		$	508,234
Restricted cash and equivalents	1,002		9,384		300		—			10,686
Accounts receivable, net	—		1,208,715		506,035		—			1,714,750
Other current assets	67,025		595,066		86,955		—			749,046
Current assets held for sale	—		4,992,067		769,575		—			5,761,642
Total current assets	217,332		6,805,232		1,721,794		—			8,744,358
Property and equipment, net	408,010		1,560,390		1,180,813		—			3,149,213
Intangible assets, net	250		50,971		62,606		—			113,827
Investments in subsidiaries	10,009,874		3,085,722		—		(13,095,596		)	—
Intercompany receivables	3,677,947		—		1,313,213		(4,991,160		)	—
Other long-term assets and investments	47,297		68,344		214,875		—			330,516
Goodwill	—		4,732,320		1,877,959		—			6,610,279
Total assets	$	14,360,710	$	16,302,979	$	6,371,260	$	(18,086,756	)	$	18,948,193
Current liabilities	$	238,706	$	1,181,139	$	436,262	$	—		$	1,856,107
Current liabilities held for sale	—		739,294		445,776		—			1,185,070
Intercompany payables	—		3,690,042		1,301,118		(4,991,160		)	—
Long-term debt and other long-term liabilities	8,857,373		682,630		469,587		—			10,009,590
Noncontrolling interests subject to put provisions	574,602		—		—		436,758			1,011,360
Total DaVita Inc. shareholders' equity	4,690,029		10,009,874		3,085,722		(13,095,596		)	4,690,029
Noncontrolling interests not subject to put provisions	—		—		632,795		(436,758		)	196,037
Total equity	4,690,029		10,009,874		3,718,517		(13,532,354		)	4,886,066
Total liabilities and equity	$	14,360,710	$	16,302,979	$	6,371,260	$	(18,086,756	)	$	18,948,193

Condensed Consolidating Statements of Cash Flows

				Guarantor subsidiaries			Non- Guarantor subsidiaries			Consolidating adjustments			Consolidated total
For the nine months ended September 30, 2018	DaVita Inc.
Cash flows from operating activities:
Net income	$	309,166		$	255,681		$	431,540		$	(561,504	)	$	434,883
Changes in operating assets and liabilities and non-cash items included in net income	(235,558		)	469,008			152,411			561,504			947,365
Net cash provided by operating activities	73,608			724,689			583,951			—			1,382,248
Cash flows from investing activities:
Additions of property and equipment	(124,585		)	(385,765		)	(195,309		)	—			(705,659		)
Acquisitions	—			(18,549		)	(94,977		)	—			(113,526		)
Proceeds from asset and business sales	—			47,025			88,243			—			135,268
Proceeds (purchases) from investment sales and other items, net	32,345			(9,746		)	(1		)	—			22,598
Net cash used in investing activities	(92,240		)	(367,035		)	(202,044		)	—			(661,319		)
Cash flows from financing activities:
Long-term debt and related financing costs, net	866,537			(9,135		)	(11,566		)	—			845,836
Intercompany borrowing (payments)	454,410			(217,518		)	(236,892		)	—			—
Other items	(1,154,921		)	(94,281		)	(19,973		)	—			(1,269,175		)
Net cash provided by (used in) financing activities	166,026			(320,934		)	(268,431		)	—			(423,339		)
Effect of exchange rate changes on cash, cash equivalents and restricted cash	—			—			(5,790		)	—			(5,790		)
Net increase in cash, cash equivalents and restricted cash	147,394			36,720			107,686			—			291,800
Less: Net increase in cash, cash equivalents and restricted cash from discontinued operations	—			34,119			236,446			—			270,565
Net increase (decrease) in cash, cash equivalents and restricted cash from continuing operations	147,394			2,601			(128,760		)	—			21,235
Cash, cash equivalents and restricted cash of continuing operations at beginning of the year	150,307			9,384			359,229			—			518,920
Cash, cash equivalents and restricted cash of continuing operations at end of the period	$	297,701		$	11,985		$	230,469		$	—		$	540,155

				Guarantor subsidiaries			Non- Guarantor subsidiaries			Consolidating adjustments			Consolidated total
For the nine months ended September 30, 2017	DaVita Inc.
Cash flows from operating activities:
Net income	$	360,222		$	240,548		$	466,867		$	(577,761	)	$	489,876
Changes in operating assets and liabilities and non-cash items included in net income	(282,651		)	585,836			197,328			577,761			1,078,274
Net cash provided by operating activities	77,571			826,384			664,195			—			1,568,150
Cash flows from investing activities:
Additions of property and equipment	(94,385		)	(305,261		)	(240,183		)	—			(639,829		)
Acquisitions	—			(627,324		)	(99,214		)	—			(726,538		)
Proceeds from asset and business sales	—			90,533			1,996			—			92,529
Proceeds (purchases) from investment sales and other items, net	123,894			(4,788		)	49,183			—			168,289
Net cash provided by (used in) investing activities	29,509			(846,840		)	(288,218		)	—			(1,105,549		)
Cash flows from financing activities:
Long-term debt and related financing costs, net	(92,721		)	(10,394		)	(5,348		)	—			(108,463		)
Intercompany borrowing (payments)	188,977			(7,968		)	(181,009		)	—			—
Other items	(305,630		)	(1,432		)	(114,307		)	—			(421,369		)
Net cash used in financing activities	(209,374		)	(19,794		)	(300,664		)	—			(529,832		)
Effect of exchange rate changes on cash, cash equivalents and restricted cash	—			—			5,449			—			5,449
Net decrease in cash, cash equivalents and restricted cash	(102,294		)	(40,250		)	80,762			—			(61,782		)
Less: Net increase (decrease) in cash, cash equivalents and restricted cash from discontinued operations	—			(41,934		)	124,628			—			82,694
Net increase (decrease) in cash, cash equivalents and restricted cash from continuing operations	(102,294		)	1,684			(43,866		)	—			(144,476		)
Cash, cash equivalents and restricted cash of continuing operations at beginning of the year	549,921			8,687			124,855			—			683,463
Cash, cash equivalents and restricted cash of continuing operations at end of the period	$	447,627		$	10,371		$	80,989		$	—		$	538,987