Condensed consolidating financial statements

3 Months Ended

Mar. 31, 2020

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 its $5,500,000 senior secured credit agreement (the New Credit Agreement) on August 12, 2019 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 New Credit Agreement.

Condensed Consolidating Statements of Operations

For the three months ended March 31, 2020	DaVita Inc.			Guarantor subsidiaries			Non- Guarantor subsidiaries			Consolidating adjustments			Consolidated total
Patient service revenues	$	—		$	1,729,740		$	1,050,877		$	(67,336	)	$	2,713,281
Other revenues	197,283			156,860			41,428			(267,615		)	127,956
Total net revenues	197,283			1,886,600			1,092,305			(334,951		)	2,841,237
Operating expenses	154,651			1,640,821			915,340			(334,951		)	2,375,861
Operating income	42,632			245,779			176,965			—			465,376
Debt expense	(91,362		)	(59,093		)	(11,337		)	70,241			(91,551		)
Other income (loss), net	62,453			805			2,633			(70,241		)	(4,350		)
Income tax expense	3,424			80,975			7,161			—			91,560
Equity earnings in subsidiaries	229,294			98,795			—			(328,089		)	—
Net income from continuing operations	239,593			205,311			161,100			(328,089		)	277,915
Net income from discontinued operations, net of tax	—			—			9,980			—			9,980
Net income	239,593			205,311			171,080			(328,089		)	287,895
Less: Net income attributable to noncontrolling interests	—			—			—			(48,302		)	(48,302		)
Net income attributable to DaVita Inc.	$	239,593		$	205,311		$	171,080		$	(376,391	)	$	239,593

For the three months ended March 31, 2019	DaVita Inc.			Guarantor subsidiaries			Non- Guarantor subsidiaries			Consolidating adjustments			Consolidated total
Patient service revenues	$	—		$	1,706,593		$	986,373		$	(63,277	)	$	2,629,689
Other revenues	188,836			146,117			34,909			(256,439		)	113,423
Total net revenues	188,836			1,852,710			1,021,282			(319,716		)	2,743,112
Operating expenses and charges	143,659			1,634,285			944,377			(319,716		)	2,402,605
Operating income	45,177			218,425			76,905			—			340,507
Debt expense	(133,595		)	(50,650		)	(12,549		)	65,275			(131,519		)
Other income, net	110,198			648			11,060			(114,966		)	6,940
Income tax expense	7,026			44,027			5,693			—			56,746
Equity earnings in subsidiaries	134,535			64,375			—			(198,910		)	—
Net income from continuing operations	149,289			188,771			69,723			(248,601		)	159,182
Net (loss) income from discontinued operations, net of tax	—			—			(19,386		)	49,691			30,305
Net income	149,289			188,771			50,337			(198,910		)	189,487
Less: Net income attributable to noncontrolling interests	—			—			—			(40,198		)	(40,198		)
Net income attributable to DaVita Inc.	$	149,289		$	188,771		$	50,337		$	(239,108	)	$	149,289

Condensed Consolidating Statements of Comprehensive Income

For the three months ended March 31, 2020	DaVita Inc.			Guarantor subsidiaries		Non- Guarantor subsidiaries			Consolidating adjustments			Consolidated total
Net income	$	239,593		$	205,311	$	171,080		$	(328,089	)	$	287,895
Other comprehensive loss	(11,395		)	—		(81,632		)	—			(93,027		)
Total comprehensive income	228,198			205,311		89,448			(328,089		)	194,868
Less: Comprehensive income attributable to noncontrolling interest	—			—		—			(48,302		)	(48,302		)
Comprehensive income attributable to DaVita Inc.	$	228,198		$	205,311	$	89,448		$	(376,391	)	$	146,566

For the three months ended March 31, 2019	DaVita Inc.		Guarantor subsidiaries		Non- Guarantor subsidiaries			Consolidating adjustments			Consolidated total
Net income	$	149,289	$	188,771	$	50,337		$	(198,910	)	$	189,487
Other comprehensive income (loss)	1,026		—		(13,653		)	—			(12,627		)
Total comprehensive income	150,315		188,771		36,684			(198,910		)	176,860
Less: Comprehensive income attributable to noncontrolling interest	—		—		—			(40,198		)	(40,198		)
Comprehensive income attributable to DaVita Inc.	$	150,315	$	188,771	$	36,684		$	(239,108	)	$	136,662

Condensed Consolidating Balance Sheets

As of March 31, 2020	DaVita Inc.		Guarantor subsidiaries		Non- Guarantor subsidiaries		Consolidating adjustments			Consolidated total
Cash and cash equivalents	$	1,075,965	$	411	$	305,388	$	—		$	1,381,764
Restricted cash and equivalents	14,540		—		92,184		—			106,724
Accounts receivable, net	—		1,184,686		635,446		—			1,820,132
Other current assets	86,786		556,210		100,357		(28,034		)	715,319
Total current assets	1,177,291		1,741,307		1,133,375		(28,034		)	4,023,939
Property and equipment, net	555,409		1,555,662		1,336,966		(2,614		)	3,445,423
Operating lease right-of-use assets	107,620		1,643,765		1,114,378		(17,987		)	2,847,776
Intangible assets, net	340		28,766		88,847		—			117,953
Investments in and advances to affiliates, net	10,961,209		7,869,131		3,099,564		(21,929,904		)	—
Other long-term assets and investments	85,777		130,528		187,405		(20,524		)	383,186
Goodwill	—		4,812,207		1,965,816		—			6,778,023
Total assets	$	12,887,646	$	17,781,366	$	8,926,351	$	(21,999,063	)	$	17,596,300
Current liabilities	$	365,783	$	1,172,340	$	683,608	$	(985	)	$	2,220,746
Intercompany liabilities, net	1,534,892		3,099,564		2,693,572		(7,328,028		)	—
Long-term operating leases liabilities	133,926		1,554,717		1,062,852		(17,125		)	2,734,370
Long-term debt and other long-term liabilities	8,209,577		786,685		334,591		(51,049		)	9,279,804
Noncontrolling interests subject to put provisions	695,622		—		—		532,414			1,228,036
Total DaVita Inc. shareholders' equity	1,947,846		11,168,060		3,433,816		(14,601,876		)	1,947,846
Noncontrolling interests not subject to put provisions	—		—		717,912		(532,414		)	185,498
Total equity	1,947,846		11,168,060		4,151,728		(15,134,290		)	2,133,344
Total liabilities and equity	$	12,887,646	$	17,781,366	$	8,926,351	$	(21,999,063	)	$	17,596,300

As of December 31, 2019	DaVita Inc.		Guarantor subsidiaries		Non- Guarantor subsidiaries		Consolidating adjustments			Consolidated total
Cash and cash equivalents	$	758,241	$	532	$	343,599	$	—		$	1,102,372
Restricted cash and equivalents	14,499		—		91,847		—			106,346
Accounts receivable, net	—		1,189,301		606,297		—			1,795,598
Other current assets	76,787		548,553		102,410		(41,896		)	685,854
Total current assets	849,527		1,738,386		1,144,153		(41,896		)	3,690,170
Property and equipment, net	543,932		1,589,417		1,344,543		(4,508		)	3,473,384
Operating lease right-of-use assets	109,415		1,656,145		1,084,552		(20,065		)	2,830,047
Intangible assets, net	362		31,569		103,753		—			135,684
Investments in and advances to affiliates, net	10,813,991		7,611,402		3,051,208		(21,476,601		)	—
Other long-term assets and investments	102,779		133,698		176,315		(18,318		)	394,474
Goodwill	—		4,812,972		1,974,663		—			6,787,635
Total assets	$	12,420,006	$	17,573,589	$	8,879,187	$	(21,561,388	)	$	17,311,394
Current liabilities	$	379,286	$	1,327,378	$	666,470	$	(1,036	)	$	2,372,098
Intercompany payables	1,381,863		3,051,208		2,615,151		(7,048,222		)	—
Long-term operating lease liabilities	136,123		1,567,776		1,039,145		(19,244		)	2,723,800
Long-term debt and other long-term liabilities	7,741,725		674,558		364,102		(64,507		)	8,715,878
Noncontrolling interests subject to put provisions	647,600		—		—		532,776			1,180,376
Total DaVita Inc. shareholders' equity	2,133,409		10,952,669		3,475,710		(14,428,379		)	2,133,409
Noncontrolling interests not subject to put provisions	—		—		718,609		(532,776		)	185,833
Total equity	2,133,409		10,952,669		4,194,319		(14,961,155		)	2,319,242
Total liabilities and equity	$	12,420,006	$	17,573,589	$	8,879,187	$	(21,561,388	)	$	17,311,394

Condensed Consolidating Statements of Cash Flows

For the three months ended March 31, 2020	DaVita Inc.			Guarantor subsidiaries			Non- Guarantor subsidiaries			Consolidating adjustments			Consolidated total
Cash flows provided by operating activities:
Net income	$	239,593		$	205,311		$	171,080		$	(328,089	)	$	287,895
Changes in operating assets and liabilities and non-cash items included in net income	(182,332		)	(71,454		)	(1,817		)	328,089			72,486
Net cash provided by operating activities	57,261			133,857			169,263			—			360,381
Cash flows used in investing activities:
Additions of property and equipment	(52,714		)	(41,144		)	(61,084		)	—			(154,942		)
Acquisitions	—			(984		)	(33,123		)	—			(34,107		)
Proceeds from asset and business sales	—			4,180			27,338			—			31,518
Proceeds (purchases) from investment sales and other items, net	452			271			(5,817		)	—			(5,094		)
Net cash used in investing activities	(52,262		)	(37,677		)	(72,686		)	—			(162,625		)
Cash flows provided by (used in) financing activities:
Long-term debt and related financing costs, net	481,856			(2,462		)	(13,557		)	—			465,837
Intercompany borrowings (payments)	153,029			(95,857		)	(57,172		)	—			—
Other items	(322,119		)	2,018			(48,744		)	—			(368,845		)
Net cash provided by (used in) financing activities	312,766			(96,301		)	(119,473		)	—			96,992
Effect of exchange rate changes on cash, cash equivalents and restricted cash	—			—			(14,978		)	—			(14,978		)
Net increase (decrease) in cash, cash equivalents and restricted cash	317,765			(121		)	(37,874		)	—			279,770
Cash, cash equivalents and restricted cash of continuing operations at beginning of the year	772,740			532			435,446			—			1,208,718
Cash, cash equivalents and restricted cash of continuing operations at end of the period	$	1,090,505		$	411		$	397,572		$	—		$	1,488,488

For the three months ended March 31, 2019	DaVita Inc.			Guarantor subsidiaries			Non- Guarantor subsidiaries			Consolidating adjustments			Consolidated total
Cash flows provided by (used in) operating activities:
Net income	$	149,289		$	188,771		$	50,337		$	(198,910	)	$	189,487
Changes in operating assets and liabilities and non-cash items included in net income	(124,409		)	(289,332		)	166,648			198,910			(48,183		)
Net cash provided by (used in) operating activities	24,880			(100,561		)	216,985			—			141,304
Cash flows used in investing activities:
Additions of property and equipment	(38,942		)	(76,529		)	(83,407		)	—			(198,878		)
Acquisitions	—			—			(11,274		)	—			(11,274		)
Proceeds from asset and business sales	—			2,270			11,633			—			13,903
Proceeds (purchases) from investment sales and other items, net	1,804			(3,878		)	(2,035		)	—			(4,109		)
Net cash used in investing activities	(37,138		)	(78,137		)	(85,083		)	—			(200,358		)
Cash flows provided by financing activities:
Long-term debt and related financing costs, net	365,133			(2,364		)	(5,572		)	—			357,197
Intercompany (payments) borrowings	(220,697		)	188,870			31,827			—			—
Other items	1,517			(8,427		)	(25,336		)	—			(32,246		)
Net cash provided by financing activities	145,953			178,079			919			—			324,951
Effect of exchange rate changes on cash, cash equivalents and restricted cash	—			—			(921		)	—			(921		)
Net increase (decrease) in cash, cash equivalents and restricted cash	133,695			(619		)	131,900			—			264,976
Less: Net increase in cash, cash equivalents and restricted cash from discontinued operations	—			—			118,962			—			118,962
Net increase (decrease) in cash, cash equivalents and restricted cash from continuing operations	133,695			(619		)	12,938			—			146,014
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	$	195,353		$	12,661		$	353,420		$	—		$	561,434