Condensed consolidating financial statements

9 Months Ended

Sep. 30, 2019

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. Contemporaneously with the Company entering into the New Credit Agreement and pursuant to the indentures governing the Company’s senior notes, certain subsidiaries of the Company were released from their guarantees of the Company's senior notes such that, after that release, the remaining subsidiary guarantors of the senior notes were the same subsidiaries guaranteeing the New Credit Agreement. The following condensed consolidating financial statements have been prepared for all periods presented based on the current subsidiary guarantors and non-guarantors stipulated in the Company's New Credit Agreement.

Condensed Consolidating Statements of Operations

For the three months ended September 30, 2019	DaVita Inc.			Guarantor subsidiaries			Non- Guarantor subsidiaries			Consolidating adjustments			Consolidated total
Patient services revenues	$	—		$	1,761,235		$	1,087,531		$	(67,597	)	$	2,781,169
Provision for uncollectible accounts	—			(2,728		)	(1,249		)	—			(3,977		)
Net patient service revenues	—			1,758,507			1,086,282			(67,597		)	2,777,192
Other revenues	204,183			140,956			83,860			(302,113		)	126,886
Total net revenues	204,183			1,899,463			1,170,142			(369,710		)	2,904,078
Operating expenses	11,046			1,823,752			1,060,654			(369,710		)	2,525,742
Operating income	193,137			75,711			109,488			—			378,336
Debt expense	(110,712		)	(43,535		)	(14,206		)	58,622			(109,831		)
Other income, net	51,150			2,994			9,758			(58,622		)	5,280
Income tax expense	33,364			28,320			3,570			—			65,254
Equity earnings in subsidiaries	43,059			123,186			—			(166,245		)	—
Net income from continuing operations	143,270			130,036			101,470			(166,245		)	208,531
Net loss from discontinued operations, net of tax	—			—			(6,843		)	—			(6,843		)
Net income	143,270			130,036			94,627			(166,245		)	201,688
Less: Net income attributable to noncontrolling interests	—			—			—			(58,418		)	(58,418		)
Net income attributable to DaVita Inc.	$	143,270		$	130,036		$	94,627		$	(224,663	)	$	143,270

For the three months ended September 30, 2018	DaVita Inc.			Guarantor subsidiaries			Non- Guarantor subsidiaries			Consolidating adjustments			Consolidated total
Patient service revenues	$	—		$	1,699,109		$	1,028,548		$	(56,956	)	$	2,670,701
Provision for uncollectible accounts	—			(9,246		)	(2,731		)	—			(11,977		)
Net patient service revenues	—			1,689,863			1,025,817			(56,956		)	2,658,724
Other revenues	207,968			127,269			136,448			(283,079		)	188,606
Total net revenues	207,968			1,817,132			1,162,265			(340,035		)	2,847,330
Operating expenses and charges	205,324			1,649,128			1,043,875			(340,035		)	2,558,292
Operating income	2,644			168,004			118,390			—			289,038
Debt expense	(127,353		)	(50,254		)	(10,570		)	62,250			(125,927		)
Other income, net	106,148			603			7,719			(110,463		)	4,007
Income tax (benefit) expense	(3,536		)	43,583			12,000			—			52,047
Equity earnings in subsidiaries	(121,771		)	60,448			—			61,323			—
Net (loss) income from continuing operations	(136,796		)	135,218			103,539			13,110			115,071
Net loss from discontinued operations, net of tax	—			—			(259,952		)	48,213			(211,739		)
Net (loss) income	(136,796		)	135,218			(156,413		)	61,323			(96,668		)
Less: Net income attributable to noncontrolling interests	—			—			—			(40,128		)	(40,128		)
Net (loss) income attributable to DaVita Inc.	$	(136,796	)	$	135,218		$	(156,413	)	$	21,195		$	(136,796	)

For the nine months ended September 30, 2019	DaVita Inc.			Guarantor subsidiaries			Non- Guarantor subsidiaries			Consolidating adjustments			Consolidated total
Patient services revenues	$	—		$	5,181,017		$	3,164,726		$	(195,357	)	$	8,150,386
Provision for uncollectible accounts	—			(13,530		)	(6,159		)	—			(19,689		)
Net patient service revenues	—			5,167,487			3,158,567			(195,357		)	8,130,697
Other revenues	600,318			438,058			130,345			(809,523		)	359,198
Total net revenues	600,318			5,605,545			3,288,912			(1,004,880		)	8,489,895
Operating expenses and charges	315,169			5,106,307			2,892,570			(1,004,880		)	7,309,166
Operating income	285,149			499,238			396,342			—			1,180,729
Debt expense	(389,203		)	(145,110		)	(39,807		)	188,944			(385,176		)
Other income, net	263,407			4,332			31,800			(281,676		)	17,863
Income tax expense	41,017			122,633			34,288			—			197,938
Equity earnings in subsidiaries	447,774			318,431			—			(766,205		)	—
Net income from continuing operations	566,110			554,258			354,047			(858,937		)	615,478
Net income from discontinued operations, net of tax	—			—			10,122			92,732			102,854
Net income	566,110			554,258			364,169			(766,205		)	718,332
Less: Net income attributable to noncontrolling interests	—			—			—			(152,222		)	(152,222		)
Net income attributable to DaVita Inc.	$	566,110		$	554,258		$	364,169		$	(918,427	)	$	566,110

For the nine months ended September 30, 2018	DaVita Inc.			Guarantor subsidiaries			Non- Guarantor subsidiaries			Consolidating adjustments			Consolidated total
Patient services revenues	$	—		$	5,100,487		$	3,039,056		$	(159,365	)	$	7,980,178
Provision for uncollectible accounts	—			(26,430		)	(9,408		)	—			(35,838		)
Net patient service revenues	—			5,074,057			3,029,648			(159,365		)	7,944,340
Other revenues	608,850			355,055			512,025			(836,543		)	639,387
Total net revenues	608,850			5,429,112			3,541,673			(995,908		)	8,583,727
Operating expenses and charges	484,329			4,949,070			3,008,320			(995,908		)	7,445,811
Operating income	124,521			480,042			533,353			—			1,137,916
Debt expense	(362,501		)	(151,373		)	(30,660		)	185,399			(359,135		)
Other income, net	315,573			2,864			20,981			(328,835		)	10,583
Income tax expense	24,108			112,193			70,351			—			206,652
Equity earnings in subsidiaries	255,681			328,042			—			(583,723		)	—
Net income from continuing operations	309,166			547,382			453,323			(727,159		)	582,712
Net loss from discontinued operations, net of tax	—			—			(291,265		)	143,436			(147,829		)
Net income	309,166			547,382			162,058			(583,723		)	434,883
Less: Net income attributable to noncontrolling interests	—			—			—			(125,717		)	(125,717		)
Net income attributable to DaVita Inc.	$	309,166		$	547,382		$	162,058		$	(709,440	)	$	309,166

Condensed Consolidating Statements of Comprehensive Income

For the three months ended September 30, 2019	DaVita Inc.		Guarantor subsidiaries		Non- Guarantor subsidiaries			Consolidating adjustments			Consolidated total
Net income	$	143,270	$	130,036	$	94,627		$	(166,245	)	$	201,688
Other comprehensive income (loss)	509		—		(44,502		)	—			(43,993		)
Total comprehensive income	143,779		130,036		50,125			(166,245		)	157,695
Less: Comprehensive income attributable to noncontrolling interest	—		—		—			(58,418		)	(58,418		)
Comprehensive income attributable to DaVita Inc.	$	143,779	$	130,036	$	50,125		$	(224,663	)	$	99,277

For the three months ended September 30, 2018	DaVita Inc.			Guarantor subsidiaries		Non- Guarantor subsidiaries			Consolidating adjustments			Consolidated total
Net (loss) income	$	(136,796	)	$	135,218	$	(156,413	)	$	61,323		$	(96,668	)
Other comprehensive income (loss)	1,643			—		(8,827		)	—			(7,184		)
Total comprehensive (loss) income	(135,153		)	135,218		(165,240		)	61,323			(103,852		)
Less: Comprehensive income attributable to noncontrolling interest	—			—		—			(40,128		)	(40,128		)
Comprehensive (loss) income attributable to DaVita Inc.	$	(135,153	)	$	135,218	$	(165,240	)	$	21,195		$	(143,980	)

For the nine months ended September 30, 2019	DaVita Inc.		Guarantor subsidiaries		Non- Guarantor subsidiaries			Consolidating adjustments			Consolidated total
Net income	$	566,110	$	554,258	$	364,169		$	(766,205	)	$	718,332
Other comprehensive income (loss)	3,110		—		(45,790		)	—			(42,680		)
Total comprehensive income	569,220		554,258		318,379			(766,205		)	675,652
Less: Comprehensive income attributable to noncontrolling interest	—		—		—			(152,222		)	(152,222		)
Comprehensive income attributable to DaVita Inc.	$	569,220	$	554,258	$	318,379		$	(918,427	)	$	523,430

For the nine months ended September 30, 2018	DaVita Inc.		Guarantor subsidiaries		Non- Guarantor subsidiaries			Consolidating adjustments			Consolidated total
Net income	$	309,166	$	547,382	$	162,058		$	(583,723	)	$	434,883
Other comprehensive income (loss)	5,499		—		(39,475		)	—			(33,976		)
Total comprehensive income	314,665		547,382		122,583			(583,723		)	400,907
Less: Comprehensive income attributable to noncontrolling interest	—		—		—			(125,717		)	(125,717		)
Comprehensive income attributable to DaVita Inc.	$	314,665	$	547,382	$	122,583		$	(709,440	)	$	275,190

Condensed Consolidating Balance Sheets

As of September 30, 2019	DaVita Inc.		Guarantor subsidiaries		Non- Guarantor subsidiaries		Consolidating adjustments			Consolidated total
Cash and cash equivalents	$	831,514	$	213,635	$	208,107	$	—		$	1,253,256
Restricted cash and equivalents	—		14,444		89,441		—			103,885
Accounts receivable, net	—		1,221,169		680,056		—			1,901,225
Other current assets	161,548		455,616		123,188		—			740,352
Total current assets	993,062		1,904,864		1,100,792		—			3,998,718
Property and equipment, net	515,952		1,576,140		1,327,146		—			3,419,238
Operating lease right-of-use assets	103,621		1,592,472		1,085,195		—			2,781,288
Intangible assets, net	85		34,493		83,088		—			117,666
Investments in and advances to affiliates, net	10,465,104		7,110,581		3,074,784		(20,650,469		)	—
Other long-term assets and investments	96,953		91,115		181,193		—			369,261
Goodwill	—		4,818,001		1,947,658		—			6,765,659
Total assets	$	12,174,777	$	17,127,666	$	8,799,856	$	(20,650,469	)	$	17,451,830
Current liabilities	$	313,934	$	1,233,054	$	659,652	$	—		$	2,206,640
Intercompany liabilities, net	922,571		3,074,785		2,572,810		(6,570,166		)	—
Long-term operating leases liabilities	131,743		1,508,343		1,042,039		—			2,682,125
Long-term debt and other long-term liabilities	7,746,653		664,470		343,360		—			8,754,483
Noncontrolling interests subject to put provisions	741,300		—		—		554,759			1,296,059
Total DaVita Inc. shareholders' equity	2,318,576		10,647,014		3,433,289		(14,080,303		)	2,318,576
Noncontrolling interests not subject to put provisions	—		—		748,706		(554,759		)	193,947
Total equity	2,318,576		10,647,014		4,181,995		(14,635,062		)	2,512,523
Total liabilities and equity	$	12,174,777	$	17,127,666	$	8,799,856	$	(20,650,469	)	$	17,451,830

As of December 31, 2018	DaVita Inc.		Guarantor subsidiaries		Non- Guarantor subsidiaries		Consolidating adjustments			Consolidated total
Cash and cash equivalents	$	60,653	$	1,232	$	261,153	$	—		$	323,038
Restricted cash and equivalents	1,005		12,048		79,329		—			92,382
Accounts receivable, net	—		1,204,122		654,486		—			1,858,608
Other current assets	37,185		565,974		157,407		—			760,566
Current assets held for sale	—		—		5,389,565		—			5,389,565
Total current assets	98,843		1,783,376		6,541,940		—			8,424,159
Property and equipment, net	491,462		1,584,321		1,317,886		—			3,393,669
Intangible assets, net	153		42,896		75,797		—			118,846
Investments in and advances to affiliates, net	13,522,198		6,196,801		2,498,545		(22,217,544		)	—
Other long-term assets and investments	53,385		90,037		188,196		—			331,618
Goodwill	—		4,806,939		2,035,021		—			6,841,960
Total assets	$	14,166,041	$	14,504,370	$	12,657,385	$	(22,217,544	)	$	19,110,252
Current liabilities	$	1,945,943	$	1,217,526	$	483,933	$	—		$	3,647,402
Current liabilities held for sale	—		—		1,243,759		—			1,243,759
Intercompany liabilities, net	—		2,498,545		6,161,292		(8,659,837		)	—
Long-term debt and other long-term liabilities	7,918,581		687,443		580,028		—			9,186,052
Noncontrolling interests subject to put provisions	598,075		—		—		526,566			1,124,641
Total DaVita Inc. shareholders' equity	3,703,442		10,100,856		3,456,851		(13,557,707		)	3,703,442
Noncontrolling interests not subject to put provisions	—		—		731,522		(526,566		)	204,956
Total equity	3,703,442		10,100,856		4,188,373		(14,084,273		)	3,908,398
Total liabilities and equity	$	14,166,041	$	14,504,370	$	12,657,385	$	(22,217,544	)	$	19,110,252

Condensed Consolidating Statements of Cash Flows

For the nine months ended September 30, 2019	DaVita Inc.			Guarantor subsidiaries			Non- Guarantor subsidiaries			Consolidating adjustments			Consolidated total
Cash flows provided by operating activities:
Net income	$	566,110		$	554,258		$	364,169		$	(766,205	)	$	718,332
Changes in operating assets and liabilities and non-cash items included in net income	(336,223		)	(74,600		)	318,111			766,205			673,493
Net cash provided by operating activities	229,887			479,658			682,280			—			1,391,825
Cash flows provided by (used in) investing activities:
Additions of property and equipment	(106,476		)	(218,839		)	(221,868		)	—			(547,183		)
Acquisitions	—			(11,832		)	(65,516		)	—			(77,348		)
Proceeds (purchases) from asset and business sales	3,824,516			(244		)	39,347			—			3,863,619
purchases from investment sales and other items, net	(94,322		)	(7,474		)	(3,267		)	—			(105,063		)
Net cash provided by (used in) investing activities	3,623,718			(238,389		)	(251,304		)	—			3,134,025
Cash flows used in financing activities:
Long-term debt and related financing costs, net	(2,028,954		)	(8,025		)	(13,033		)	—			(2,050,012		)
Intercompany borrowings (payments)	785,450			(14,854		)	(770,596		)	—			—
Other items	(1,840,245		)	(3,591		)	(109,916		)	—			(1,953,752		)
Net cash used in financing activities	(3,083,749		)	(26,470		)	(893,545		)	—			(4,003,764		)
Effect of exchange rate changes on cash, cash equivalents and restricted cash	—			—			(4,178		)	—			(4,178		)
Net increase (decrease) in cash, cash equivalents and restricted cash	769,856			214,799			(466,747		)	—			517,908
Less: Net decrease in cash, cash equivalents and restricted cash from discontinued operations	—			—			(423,813		)	—			(423,813		)
Net increase (decrease) in cash, cash equivalents and restricted cash from continuing operations	769,856			214,799			(42,934		)	—			941,721
Cash, cash equivalents and restricted cash of continuing operations at beginning of the year	61,658			13,280			340,482			—			415,420
Cash, cash equivalents and restricted cash of continuing operations at end of the period	$	831,514		$	228,079		$	297,548		$	—		$	1,357,141

For the nine months ended September 30, 2018	DaVita Inc.			Guarantor subsidiaries			Non- Guarantor subsidiaries			Consolidating adjustments			Consolidated total
Cash flows provided by operating activities:
Net income	$	309,166		$	547,382		$	162,058		$	(583,723	)	$	434,883
Changes in operating assets and liabilities and non-cash items included in net income	(235,558		)	(104,179		)	703,379			583,723			947,365
Net cash provided by operating activities	73,608			443,203			865,437			—			1,382,248
Cash flows used in investing activities:
Additions of property and equipment	(124,585		)	(296,028		)	(285,046		)	—			(705,659		)
Acquisitions	—			(5,646		)	(107,880		)	—			(113,526		)
Proceeds from asset and business sales	—			55,035			80,233			—			135,268
Proceeds (purchases) from investment sales and other items, net	32,345			(2,295		)	(7,452		)	—			22,598
Net cash used in investing activities	(92,240		)	(248,934		)	(320,145		)	—			(661,319		)
Cash flows provided by (used in) financing activities:
Long-term debt and related financing costs, net	866,537			(8,601		)	(12,100		)	—			845,836
Intercompany borrowings (payments)	454,410			(174,148		)	(280,262		)	—			—
Other items	(1,154,921		)	(18,713		)	(95,541		)	—			(1,269,175		)
Net cash provided by (used in) financing activities	166,026			(201,462		)	(387,903		)	—			(423,339		)
Effect of exchange rate changes on cash, cash equivalents and restricted cash	—			—			(5,790		)	—			(5,790		)
Net increase (decrease) in cash, cash equivalents and restricted cash	147,394			(7,193		)	151,599			—			291,800
Less: Net increase in cash, cash equivalents and restricted cash from discontinued operations	—			—			270,565			—			270,565
Net increase (decrease) in cash, cash equivalents and restricted cash from continuing operations	147,394			(7,193		)	(118,966		)	—			21,235
Cash, cash equivalents and restricted cash of continuing operations at beginning of the year	150,307			19,963			348,650			—			518,920
Cash, cash equivalents and restricted cash of continuing operations at end of the period	$	297,701		$	12,770		$	229,684		$	—		$	540,155