Condensed consolidating financial statements

6 Months Ended

Jun. 30, 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 June 30, 2020	DaVita Inc.			Guarantor subsidiaries			Non- Guarantor subsidiaries			Consolidating adjustments			Consolidated total
Patient service revenues	$	—		$	1,715,449		$	1,120,072		$	(77,324	)	$	2,758,197
Other revenues	211,996			163,738			30,625			(284,577		)	121,782
Total net revenues	211,996			1,879,187			1,150,697			(361,901		)	2,879,979
Operating expenses	250,311			1,663,321			918,328			(361,901		)	2,470,059
Operating (loss) income	(38,315		)	215,866			232,369			—			409,920
Debt expense	(79,578		)	(52,604		)	(11,199		)	62,000			(81,381		)
Other income, net	59,980			658			10,907			(62,000		)	9,545
Income tax (benefit) expense	(14,449		)	81,644			16,017			—			83,212
Equity earnings in subsidiaries	245,066			159,325			—			(404,391		)	—
Net income from continuing operations	201,602			241,601			216,060			(404,391		)	254,872
Net income from discontinued operations, net of tax	—			—			—			—			—
Net income	201,602			241,601			216,060			(404,391		)	254,872
Less: Net income attributable to noncontrolling interests	—			—			—			(53,270		)	(53,270		)
Net income attributable to DaVita Inc.	$	201,602		$	241,601		$	216,060		$	(457,661	)	$	201,602

For the three months ended June 30, 2019	DaVita Inc.			Guarantor subsidiaries			Non- Guarantor subsidiaries			Consolidating adjustments			Consolidated total
Patient service revenues	$	—		$	1,702,387		$	1,085,912		$	(64,483	)	$	2,723,816
Other revenues	207,299			150,985			39,395			(278,790		)	118,889
Total net revenues	207,299			1,853,372			1,125,307			(343,273		)	2,842,705
Operating expenses and charges	160,464			1,648,270			915,358			(343,273		)	2,380,819
Operating income	46,835			205,102			209,949			—			461,886
Debt expense	(144,896		)	(50,925		)	(13,052		)	65,047			(143,826		)
Other income, net	102,059			690			10,982			(108,088		)	5,643
Income tax expense	627			59,097			16,214			—			75,938
Equity earnings in subsidiaries	270,180			139,681			—			(409,861		)	—
Net income from continuing operations	273,551			235,451			191,665			(452,902		)	247,765
Net income from discontinued operations, net of tax	—			—			36,351			43,041			79,392
Net income	273,551			235,451			228,016			(409,861		)	327,157
Less: Net income attributable to noncontrolling interests	—			—			—			(53,606		)	(53,606		)
Net income attributable to DaVita Inc.	$	273,551		$	235,451		$	228,016		$	(463,467	)	$	273,551

For the six months ended June 30, 2020	DaVita Inc.			Guarantor subsidiaries			Non-Guarantor subsidiaries			Consolidating adjustments			Consolidated total
Net patient service revenues	$	—		$	3,445,189		$	2,170,949		$	(144,660	)	$	5,471,478
Other revenues	409,279			320,598			72,053			(552,192		)	249,738
Total net revenues	409,279			3,765,787			2,243,002			(696,852		)	5,721,216
Operating expenses	404,962			3,304,142			1,833,668			(696,852		)	4,845,920
Operating income	4,317			461,645			409,334			—			875,296
Debt expense	(170,940		)	(111,697		)	(22,536		)	132,241			(172,932		)
Other income, net	122,433			1,463			13,540			(132,241		)	5,195
Income tax (benefit) expense	(11,025		)	162,619			23,178			—			174,772
Equity earnings in subsidiaries	474,360			258,120			—			(732,480		)	—
Net income from continuing operations	441,195			446,912			377,160			(732,480		)	532,787
Net income from discontinued operations, net of tax	—			—			9,980			—			9,980
Net income	441,195			446,912			387,140			(732,480		)	542,767
Less: Net income attributable to noncontrolling interests	—			—			—			(101,572		)	(101,572		)
Net income attributable to DaVita Inc.	$	441,195		$	446,912		$	387,140		$	(834,052	)	$	441,195

For the six months ended June 30, 2019	DaVita Inc.			Guarantor subsidiaries			Non-Guarantor subsidiaries			Consolidating adjustments			Consolidated total
Net patient service revenues	$	—		$	3,408,980		$	2,072,285		$	(127,760	)	$	5,353,505
Other revenues	396,135			297,102			74,304			(535,229		)	232,312
Total net revenues	396,135			3,706,082			2,146,589			(662,989		)	5,585,817
Operating expenses	304,123			3,282,555			1,859,735			(662,989		)	4,783,424
Operating income	92,012			423,527			286,854			—			802,393
Debt expense	(278,491		)	(101,575		)	(25,601		)	130,322			(275,345		)
Other income, net	212,257			1,338			22,042			(223,054		)	12,583
Income tax expense	7,653			103,124			21,907			—			132,684
Equity earnings in subsidiaries	404,715			204,056			—			(608,771		)	—
Net income from continuing operations	422,840			424,222			261,388			(701,503		)	406,947
Net income from discontinued operations, net of tax	—			—			16,965			92,732			109,697
Net income	422,840			424,222			278,353			(608,771		)	516,644
Less: Net income attributable to noncontrolling interests	—			—			—			(93,804		)	(93,804		)
Net income attributable to DaVita Inc.	$	422,840		$	424,222		$	278,353		$	(702,575	)	$	422,840

Condensed Consolidating Statements of Comprehensive Income

For the three months ended June 30, 2020	DaVita Inc.			Guarantor subsidiaries		Non- Guarantor subsidiaries		Consolidating adjustments			Consolidated total
Net income	$	201,602		$	241,601	$	216,060	$	(404,391	)	$	254,872
Other comprehensive (loss) income	(201		)	—		5,619		—			5,418
Total comprehensive income	201,401			241,601		221,679		(404,391		)	260,290
Less: Comprehensive income attributable to noncontrolling interest	—			—		—		(53,270		)	(53,270		)
Comprehensive income attributable to DaVita Inc.	$	201,401		$	241,601	$	221,679	$	(457,661	)	$	207,020

For the three months ended June 30, 2019	DaVita Inc.		Guarantor subsidiaries		Non- Guarantor subsidiaries		Consolidating adjustments			Consolidated total
Net income	$	273,551	$	235,451	$	228,016	$	(409,861	)	$	327,157
Other comprehensive income	1,575		—		12,365		—			13,940
Total comprehensive income	275,126		235,451		240,381		(409,861		)	341,097
Less: Comprehensive income attributable to noncontrolling interest	—		—		—		(53,606		)	(53,606		)
Comprehensive income attributable to DaVita Inc.	$	275,126	$	235,451	$	240,381	$	(463,467	)	$	287,491

For the six months ended June 30, 2020	DaVita Inc.			Guarantor subsidiaries		Non-Guarantor subsidiaries			Consolidating adjustments			Consolidated total
Net income	$	441,195		$	446,912	$	387,140		$	(732,480	)	$	542,767
Other comprehensive loss	(11,596		)	—		(76,013		)	—			(87,609		)
Total comprehensive income	429,599			446,912		311,127			(732,480		)	455,158
Less: Comprehensive income attributable to noncontrolling interest	—			—		—			(101,572		)	(101,572		)
Comprehensive income attributable to DaVita Inc.	$	429,599		$	446,912	$	311,127		$	(834,052	)	$	353,586

For the six months ended June 30, 2019	DaVita Inc.		Guarantor subsidiaries		Non-Guarantor subsidiaries			Consolidating adjustments			Consolidated total
Net income	$	422,840	$	424,222	$	278,353		$	(608,771	)	$	516,644
Other comprehensive income (loss)	2,601		—		(1,288		)	—			1,313
Total comprehensive income	425,441		424,222		277,065			(608,771		)	517,957
Less: Comprehensive income attributable to noncontrolling interest	—		—		—			(93,804		)	(93,804		)
Comprehensive income attributable to DaVita Inc.	$	425,441	$	424,222	$	277,065		$	(702,575	)	$	424,153

Condensed Consolidating Balance Sheets

As of June 30, 2020	DaVita Inc.		Guarantor subsidiaries		Non- Guarantor subsidiaries		Consolidating adjustments			Consolidated total
Cash and cash equivalents	$	2,719,413	$	247	$	209,250	$	—		$	2,928,910
Restricted cash and equivalents	14,543		—		92,266		—			106,809
Accounts receivable, net	—		1,170,426		601,833		—			1,772,259
Other current assets	343,732		515,207		122,656		(9,743		)	971,852
Total current assets	3,077,688		1,685,880		1,026,005		(9,743		)	5,779,830
Property and equipment, net	568,053		1,550,132		1,307,385		(7,652		)	3,417,918
Operating lease right-of-use assets	105,783		1,620,214		1,118,064		(17,441		)	2,826,620
Intangible assets, net	317		26,004		87,058		—			113,379
Investments in and advances to affiliates, net	11,216,535		8,467,107		3,203,408		(22,887,050		)	—
Other long-term assets and investments	78,135		130,986		189,356		(21,739		)	376,738
Goodwill	—		4,812,208		1,978,398		—			6,790,606
Total assets	$	15,046,511	$	18,292,531	$	8,909,674	$	(22,943,625	)	$	19,305,091
Current liabilities	$	2,254,858	$	1,345,482	$	670,742	$	3,481		$	4,274,563
Intercompany liabilities, net	2,118,906		3,203,408		2,645,387		(7,967,701		)	—
Long-term operating leases liabilities	131,709		1,530,117		1,064,328		(16,585		)	2,709,569
Long-term debt and other long-term liabilities	7,671,918		798,494		318,264		(43,471		)	8,745,205
Noncontrolling interests subject to put provisions	715,205		—		—		526,732			1,241,937
Total DaVita Inc. shareholders' equity	2,153,915		11,415,030		3,504,319		(14,919,349		)	2,153,915
Noncontrolling interests not subject to put provisions	—		—		706,634		(526,732		)	179,902
Total equity	2,153,915		11,415,030		4,210,953		(15,446,081		)	2,333,817
Total liabilities and equity	$	15,046,511	$	18,292,531	$	8,909,674	$	(22,943,625	)	$	19,305,091

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 six months ended June 30, 2020	DaVita Inc.			Guarantor subsidiaries			Non- Guarantor subsidiaries			Consolidating adjustments			Consolidated total
Cash flows provided by operating activities:
Net income	$	441,195		$	446,912		$	387,140		$	(732,480	)	$	542,767
Changes in operating assets and liabilities and non-cash items included in net income	(357,763		)	87,552			6,467			732,480			468,736
Net cash provided by operating activities	83,432			534,464			393,607			—			1,011,503
Cash flows used in investing activities:
Additions of property and equipment	(89,785		)	(93,331		)	(108,551		)	—			(291,667		)
Acquisitions	—			(984		)	(43,283		)	—			(44,267		)
Proceeds from asset and business sales	2			2,991			67,622			—			70,615
(Purchases) proceeds from investment sales and other items, net	(134,674		)	661			(7,807		)	—			(141,820		)
Net cash used in investing activities	(224,457		)	(90,663		)	(92,019		)	—			(407,139		)
Cash flows provided by (used in) financing activities:
Long-term debt and related financing costs, net	1,694,037			(5,468		)	(20,339		)	—			1,668,230
Intercompany borrowings (payments)	738,213			(439,037		)	(299,176		)	—			—
Other items	(330,009		)	419			(99,067		)	—			(428,657		)
Net cash provided by (used in) financing activities	2,102,241			(444,086		)	(418,582		)	—			1,239,573
Effect of exchange rate changes on cash, cash equivalents and restricted cash	—			—			(16,936		)	—			(16,936		)
Net increase (decrease) in cash, cash equivalents and restricted cash	1,961,216			(285		)	(133,930		)	—			1,827,001
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	$	2,733,956		$	247		$	301,516		$	—		$	3,035,719

For the six months ended June 30, 2019	DaVita Inc.			Guarantor subsidiaries			Non- Guarantor subsidiaries			Consolidating adjustments			Consolidated total
Cash flows provided by operating activities:
Net income	$	422,840		$	424,222		$	278,353		$	(608,771	)	$	516,644
Changes in operating assets and liabilities and non-cash items included in net income	(292,988		)	(198,192		)	116,880			608,771			234,471
Net cash provided by operating activities	129,852			226,030			395,233			—			751,115
Cash flows provided by (used in) investing activities:
Additions of property and equipment	(63,037		)	(148,050		)	(162,831		)	—			(373,918		)
Acquisitions	—			(8,974		)	(56,996		)	—			(65,970		)
Proceeds from asset and business sales	3,824,509			1,194			25,678			—			3,851,381
Proceeds (purchases) from investment sales and other items, net	729			(6,492		)	(3,038		)	—			(8,801		)
Net cash provided by (used in) investing activities	3,762,201			(162,322		)	(197,187		)	—			3,402,692
Cash flows provided by financing activities:
Long-term debt and related financing costs, net	(1,152,510		)	(6,611		)	(4,988		)	—			(1,164,109		)
Intercompany borrowings (payments)	656,704			(58,208		)	(598,496		)	—			—
Other items	(82,011		)	86			(64,519		)	—			(146,444		)
Net cash used in financing activities	(577,817		)	(64,733		)	(668,003		)	—			(1,310,553		)
Effect of exchange rate changes on cash, cash equivalents and restricted cash	—			—			(77		)	—			(77		)
Net increase (decrease) in cash, cash equivalents and restricted cash	3,314,236			(1,025		)	(470,034		)	—			2,843,177
Less: Net increase 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	3,314,236			(1,025		)	(46,221		)	—			3,266,990
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	$	3,375,894		$	12,255		$	294,261		$	—		$	3,682,410