UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q


☒			QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Quarterly Period Ended March 31, ~~2021~~2022


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from ___________ to ___________

Commission File Number: 1-14106

DAVITA INC.


Delaware						51-0354549
(State of incorporation)						(I.R.S. Employer Identification No.)


2000 16th Street
Denver,	CO	80202

Telephone number (720) 631-2100

Securities registered pursuant to Section 12(b) of the Act:

Title of each class:

Trading symbol(s):

Name of each exchange on which registered:

Common Stock, $0.001 par value

DVA

NYSE

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of "large accelerated filer", "accelerated filer", "smaller reporting company" and "emerging growth company" in Rule 12b-2 of the Exchange Act.


Large accelerated filer	☒	Accelerated filer	☐

Non-accelerated filer	☐	Smaller reporting company	☐

Emerging growth company	☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act) Yes ☐ No ☒

As of April ~~26, 2021,~~29, 2022, the number of shares of the ~~Registrant’s~~registrant’s common stock outstanding was approximately ~~106.2~~94.6 million shares.

DAVITA INC.

INDEX

Page No.

PART I. FINANCIAL INFORMATION

Item 1.

Condensed Consolidated Financial Statements:

Consolidated Statements of Income for the three months ended March 31, ~~2021~~2022 and March 31, ~~2020~~2021

Consolidated Statements of Comprehensive Income for the three months ended March 31, ~~2021~~2022 and March 31, ~~2020~~2021

Consolidated Balance Sheets as of March 31, ~~2021~~2022 and December 31, ~~2020~~2021

Consolidated Statements of Cash Flow for the three months ended March 31, ~~2021~~2022 and March 31, ~~2020~~2021

Consolidated Statements of Equity for the three months ended March 31, ~~2021~~2022 and March 31, ~~2020~~2021

Notes to Condensed Consolidated Financial Statements

Item 2.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

1918

Item 3.

Quantitative and Qualitative Disclosures about Market Risk

3234

Item 4.

Controls and Procedures

3234

PART II. OTHER INFORMATION

Item 1.

Item 1A.

Item 2.

Unregistered Sales of Equity Securities and Use of Proceeds

Item 6.

Note: Items 3, 4 and 5 of Part II are omitted because they are not applicable.

DAVITA INC.

CONSOLIDATED STATEMENTS OF INCOME

(unaudited)

(dollars and shares in thousands, except per share data)


		Three months ended March 31,					Three months ended March 31,
		2021		2020			2022		2021
Dialysis patient service revenues	Dialysis patient service revenues	$	2,714,587	$	2,713,281	Dialysis patient service revenues	$	2,716,281	$	2,714,587
Other revenues	Other revenues	105,414		127,956		Other revenues	101,274		105,414
Total revenues	Total revenues	2,820,001		2,841,237		Total revenues	2,817,555		2,820,001
Operating expenses:	Operating expenses:					Operating expenses:
Patient care costs	Patient care costs	1,938,330		1,975,449		Patient care costs	2,018,529		1,938,330
General and administrative	General and administrative	281,426		263,576		General and administrative	294,820		281,426
Depreciation and amortization	Depreciation and amortization	165,701		154,679		Depreciation and amortization	172,944		165,701
Equity investment income		(8,058)		(17,843)
Equity investment income, net						Equity investment income, net	(7,046)		(8,058)

Total operating expenses	Total operating expenses	2,377,399		2,375,861		Total operating expenses	2,479,247		2,377,399
Operating income	Operating income	442,602		465,376		Operating income	338,308		442,602
Debt expense	Debt expense	(67,014)		(88,603)		Debt expense	(73,791)		(67,014)
Debt refinancing charges		0		(2,948)
Other income (loss), net		1,168		(4,350)
Income from continuing operations before income taxes		376,756		369,475

Other (loss) income, net						Other (loss) income, net	(1,786)		1,168
Income before income taxes						Income before income taxes	262,731		376,756
Income tax expense	Income tax expense	85,211		91,560		Income tax expense	57,013		85,211
Net income from continuing operations		291,545		277,915
Net income from discontinued operations, net of tax		0		9,980

Net income	Net income	291,545		287,895		Net income	205,718		291,545
Less: Net income attributable to noncontrolling interests	Less: Net income attributable to noncontrolling interests	(54,142)		(48,302)		Less: Net income attributable to noncontrolling interests	(43,596)		(54,142)
Net income attributable to DaVita Inc.	Net income attributable to DaVita Inc.	$	237,403	$	239,593	Net income attributable to DaVita Inc.	$	162,122	$	237,403

Earnings per share attributable to DaVita Inc.:	Earnings per share attributable to DaVita Inc.:					Earnings per share attributable to DaVita Inc.:
Basic net income from continuing operations		$	2.18	$	1.84

Basic net income	Basic net income	$	2.18	$	1.92	Basic net income	$	1.68	$	2.18
Diluted net income from continuing operations		$	2.09	$	1.81

Diluted net income	Diluted net income	$	2.09	$	1.89	Diluted net income	$	1.61	$	2.09

Weighted average shares for earnings per share:	Weighted average shares for earnings per share:					Weighted average shares for earnings per share:
Basic shares	Basic shares	109,014		124,902		Basic shares	96,342		109,014
Diluted shares	Diluted shares	113,852		126,895		Diluted shares	100,503		113,852

Amounts attributable to DaVita Inc.:
Net income from continuing operations		$	237,403	$	229,613
Net income from discontinued operations		0		9,980
Net income attributable to DaVita Inc.		$	237,403	$	239,593

See notes to condensed consolidated financial statements.

DAVITA INC.

CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME

(unaudited)

(dollars in thousands)


		Three months ended March 31,					Three months ended March 31,
		2021		2020			2022		2021
Net income	Net income	$	291,545	$	287,895	Net income	$	205,718	$	291,545
Other comprehensive loss, net of tax:
Unrealized gains (losses) on interest rate cap agreements:
Unrealized gains (losses)		4,882		(13,018)
Other comprehensive income (loss), net of tax:						Other comprehensive income (loss), net of tax:
Unrealized gains on interest rate cap agreements:						Unrealized gains on interest rate cap agreements:
Unrealized gains						Unrealized gains	41,132		4,882
Reclassifications of net realized losses into net income	Reclassifications of net realized losses into net income	1,033		1,623		Reclassifications of net realized losses into net income	1,033		1,033
Unrealized losses on foreign currency translation		(62,544)		(81,632)
Other comprehensive loss		(56,629)		(93,027)
Unrealized gains (losses) on foreign currency translation:						Unrealized gains (losses) on foreign currency translation:	62,212		(62,544)
Other comprehensive income (loss)						Other comprehensive income (loss)	104,377		(56,629)
Total comprehensive income	Total comprehensive income	234,916		194,868		Total comprehensive income	310,095		234,916
Less: Comprehensive income attributable to noncontrolling interests	Less: Comprehensive income attributable to noncontrolling interests	(54,142)		(48,302)		Less: Comprehensive income attributable to noncontrolling interests	(43,596)		(54,142)
Comprehensive income attributable to DaVita Inc.	Comprehensive income attributable to DaVita Inc.	$	180,774	$	146,566	Comprehensive income attributable to DaVita Inc.	$	266,499	$	180,774

See notes to condensed consolidated financial statements.

DAVITA INC.

CONSOLIDATED BALANCE SHEETS

(unaudited)

(dollars and shares in thousands, except per share data)


		March 31, 2021		December 31, 2020			March 31, 2022		December 31, 2021
ASSETS	ASSETS					ASSETS
Cash and cash equivalents	Cash and cash equivalents	$	884,205	$	324,958	Cash and cash equivalents	$	327,502	$	461,900
Restricted cash and equivalents	Restricted cash and equivalents	176,835		176,832		Restricted cash and equivalents	93,079		93,060
Short-term investments	Short-term investments	11,060		20,101		Short-term investments	19,407		22,310
Accounts receivable	Accounts receivable	2,040,813		1,824,282		Accounts receivable	2,044,346		1,957,583
Inventories	Inventories	116,322		111,625		Inventories	107,722		107,428
Other receivables	Other receivables	535,521		544,376		Other receivables	441,363		427,321
Prepaid and other current assets	Prepaid and other current assets	73,765		76,387		Prepaid and other current assets	79,261		72,517
Income tax receivable	Income tax receivable	28,160		70,163		Income tax receivable	16,034		25,604
Total current assets	Total current assets	3,866,681		3,148,724		Total current assets	3,128,714		3,167,723
Property and equipment, net of accumulated depreciation of $4,622,798 and $4,480,429, respectively		3,490,442		3,521,824
Property and equipment, net of accumulated depreciation of $4,866,988 and $4,763,135, respectively						Property and equipment, net of accumulated depreciation of $4,866,988 and $4,763,135, respectively	3,439,337		3,479,972
Operating lease right-of-use assets	Operating lease right-of-use assets	2,868,292		2,863,089		Operating lease right-of-use assets	2,784,140		2,824,787
Intangible assets, net of accumulated amortization of $69,691 and $70,141, respectively		150,706		166,585
Intangible assets, net of accumulated amortization of $64,525 and $60,730, respectively						Intangible assets, net of accumulated amortization of $64,525 and $60,730, respectively	191,096		177,693
Equity method and other investments	Equity method and other investments	257,513		257,491		Equity method and other investments	237,788		238,881
Long-term investments	Long-term investments	31,891		32,193		Long-term investments	47,866		49,514
Other long-term assets	Other long-term assets	90,534		79,501		Other long-term assets	185,166		136,677
Goodwill	Goodwill	6,891,209		6,919,109		Goodwill	7,072,903		7,046,241
		$	17,647,268	$	16,988,516		$	17,087,010	$	17,121,488
LIABILITIES AND EQUITY	LIABILITIES AND EQUITY					LIABILITIES AND EQUITY
Accounts payable	Accounts payable	$	348,105	$	434,253	Accounts payable	$	433,137	$	402,049
Other liabilities	Other liabilities	846,710		810,529		Other liabilities	737,160		709,345
Accrued compensation and benefits	Accrued compensation and benefits	550,671		685,555		Accrued compensation and benefits	565,458		659,960
Current portion of operating lease liabilities	Current portion of operating lease liabilities	372,737		369,497		Current portion of operating lease liabilities	399,101		394,357
Current portion of long-term debt	Current portion of long-term debt	168,191		168,541		Current portion of long-term debt	185,728		179,030
Income tax payable	Income tax payable	28,310		7,768		Income tax payable	99,863		53,792
Total current liabilities	Total current liabilities	2,314,724		2,476,143		Total current liabilities	2,420,447		2,398,533
Long-term operating lease liabilities	Long-term operating lease liabilities	2,739,311		2,738,670		Long-term operating lease liabilities	2,622,039		2,672,713
Long-term debt	Long-term debt	8,829,765		7,917,263		Long-term debt	8,687,487		8,729,150
Other long-term liabilities	Other long-term liabilities	150,724		150,060		Other long-term liabilities	108,954		119,158
Deferred income taxes	Deferred income taxes	830,369		809,600		Deferred income taxes	839,003		830,954
Total liabilities	Total liabilities	14,864,893		14,091,736		Total liabilities	14,677,930		14,750,508
Commitments and contingencies	Commitments and contingencies					Commitments and contingencies
Noncontrolling interests subject to put provisions	Noncontrolling interests subject to put provisions	1,349,160		1,330,028		Noncontrolling interests subject to put provisions	1,390,757		1,434,832
Equity:	Equity:					Equity:
Preferred stock ($0.001 par value, 5,000 shares authorized; none issued)	Preferred stock ($0.001 par value, 5,000 shares authorized; none issued)	0		0		Preferred stock ($0.001 par value, 5,000 shares authorized; none issued)	—		—
Common stock ($0.001 par value, 450,000 shares authorized; 110,027 and 107,078 shares issued and outstanding at March 31, 2021, respectively, and 109,933 shares issued and outstanding at December 31, 2020)		110		110
Common stock ($0.001 par value, 450,000 shares authorized; 97,342 and 95,238 shares issued and outstanding at March 31, 2022, respectively, and 97,289 shares issued and outstanding at December 31, 2021)						Common stock ($0.001 par value, 450,000 shares authorized; 97,342 and 95,238 shares issued and outstanding at March 31, 2022, respectively, and 97,289 shares issued and outstanding at December 31, 2021)	97		97
Additional paid-in capital	Additional paid-in capital	603,172		597,073		Additional paid-in capital	595,403		540,321
Retained earnings	Retained earnings	1,089,940		852,537		Retained earnings	516,459		354,337
Treasury stock (2,949 and zero shares, respectively)		(322,333)		0
Treasury stock (2,104 and zero shares, respectively)						Treasury stock (2,104 and zero shares, respectively)	(233,318)		—
Accumulated other comprehensive loss	Accumulated other comprehensive loss	(122,783)		(66,154)		Accumulated other comprehensive loss	(34,870)		(139,247)
Total DaVita Inc. shareholders' equity	Total DaVita Inc. shareholders' equity	1,248,106		1,383,566		Total DaVita Inc. shareholders' equity	843,771		755,508
Noncontrolling interests not subject to put provisions	Noncontrolling interests not subject to put provisions	185,109		183,186		Noncontrolling interests not subject to put provisions	174,552		180,640
Total equity	Total equity	1,433,215		1,566,752		Total equity	1,018,323		936,148
		$	17,647,268	$	16,988,516		$	17,087,010	$	17,121,488

See notes to condensed consolidated financial statements.

DAVITA INC.

CONSOLIDATED STATEMENTS OF CASH FLOW

(unaudited)

(dollars in thousands)
Three months ended March 31,
2021 2020
Cash flows from operating activities:
Net income $ 291,545 $ 287,895
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization 165,701 154,679
Debt refinancing charges 0 884
Stock-based compensation expense 23,595 19,870
Deferred income taxes 18,688 103,301
Equity investment income, net (2,924) (9,482)
Other non-cash charges, net 3,979 5,055
Changes in operating assets and liabilities, net of effect of acquisitions and divestitures:
Accounts receivable (224,274) (32,966)
Inventories (5,303) 1,835
Other receivables and prepaid and other current assets 13,756 (24,965)
Other long-term assets (6,521) 2,673
Accounts payable (75,504) (24,045)
Accrued compensation and benefits (126,330) (96,428)
Other current liabilities 26,970 3,982
Income taxes 62,719 (32,616)
Other long-term liabilities (11,793) 709
Net cash provided by operating activities 154,304 360,381
Cash flows from investing activities:
Additions of property and equipment (144,913) (154,942)
Acquisitions (3,668) (34,107)
Proceeds from asset and business sales 16,337 31,518
Purchase of debt investments held-to-maturity (5,349) (5,049)
Purchase of other debt and equity investments (1,779) (2,633)
Proceeds from debt investments held-to-maturity 5,349 5,049
Proceeds from sale of other debt and equity investments 11,879 3,268
Purchase of equity method investments (3,200) (6,174)
Distributions from equity method investments 978 445
Net cash used in investing activities (124,366) (162,625)
Cash flows from financing activities:
Borrowings 1,606,969 570,779
Payments on long-term debt (698,298) (104,592)
Deferred financing costs (8,346) (350)
Purchase of treasury stock (316,250) (321,798)
Distributions to noncontrolling interests (53,867) (58,131)
Net (payments) receipts related to stock purchases and awards (2,524) 2,397
Contributions from noncontrolling interests 10,689 9,387
Purchases of noncontrolling interests (1,095) (700)
Net cash provided by financing activities 537,278 96,992
Effect of exchange rate changes on cash, cash equivalents and restricted cash (7,966) (14,978)
Net increase in cash, cash equivalents and restricted cash 559,250 279,770
Less: Net increase in cash, cash equivalents and restricted cash from discontinued operations 0 0
Net increase in cash, cash equivalents and restricted cash from continuing operations 559,250 279,770
Cash, cash equivalents and restricted cash of continuing operations at beginning of the year 501,790 1,208,718
Cash, cash equivalents and restricted cash of continuing operations at end of the period $ 1,061,040 $ 1,488,488


	Three months ended March 31,
	2022		2021
Cash flows from operating activities:
Net income	$	205,718	$	291,545
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	172,944		165,701


Stock-based compensation expense	24,904		23,595
Deferred income taxes	(41)		18,688
Equity investment loss (income), net	664		(2,924)

Other non-cash charges, net	4,714		3,979
Changes in operating assets and liabilities, net of effect of acquisitions and divestitures:
Accounts receivable	(66,270)		(224,274)
Inventories	849		(5,303)
Other receivables and prepaid and other current assets	(17,966)		13,756
Other long-term assets	3,520		(6,521)
Accounts payable	21,402		(75,504)
Accrued compensation and benefits	(95,927)		(126,330)
Other current liabilities	26,912		26,970
Income taxes	52,473		62,719
Other long-term liabilities	(11,701)		(11,793)
Net cash provided by operating activities	322,195		154,304
Cash flows from investing activities:
Additions of property and equipment	(123,108)		(144,913)
Acquisitions	(5,166)		(3,668)
Proceeds from asset and business sales	11,353		16,337
Purchase of debt investments held-to-maturity	(5,070)		(5,349)
Purchase of other debt and equity investments	(2,726)		(1,779)
Proceeds from debt investments held-to-maturity	5,070		5,349
Proceeds from sale of other debt and equity investments	3,773		11,879

Purchase of equity method investments	(2,962)		(3,200)
Distributions from equity method investments	470		978
Net cash used in investing activities	(118,366)		(124,366)
Cash flows from financing activities:
Borrowings	354,285		1,606,969
Payments on long-term debt	(398,990)		(698,298)
Deferred financing and debt redemption costs	—		(8,346)
Purchase of treasury stock	(236,232)		(316,250)
Distributions to noncontrolling interests	(65,452)		(53,867)
Net payments related to stock purchases and awards	(501)		(2,524)
Contributions from noncontrolling interests	4,929		10,689
Proceeds from sales of additional noncontrolling interests	3,673		—
Purchases of noncontrolling interests	(3,283)		(1,095)
Net cash (used in) provided by financing activities	(341,571)		537,278
Effect of exchange rate changes on cash, cash equivalents and restricted cash	3,363		(7,966)
Net (decrease) increase in cash, cash equivalents and restricted cash	(134,379)		559,250
Cash, cash equivalents and restricted cash at beginning of the year	554,960		501,790
Cash, cash equivalents and restricted cash at end of the period	$	420,581	$	1,061,040

See notes to condensed consolidated financial statements.

DAVITA INC.

CONSOLIDATED STATEMENTS OF EQUITY

(unaudited)

(dollars and shares in thousands)


		Three months ended March 31, 2021																																											Three months ended March 31, 2022
		Non- controlling interests subject to put provisions				DaVita Inc. Shareholders’ Equity																																			Non- controlling interests not subject to put provisions				Non- controlling interests subject to put provisions				DaVita Inc. Shareholders’ Equity																															Non- controlling interests not subject to put provisions

										Common stock									Additional paid-in capital				Retained earnings					Treasury stock										Accumulated other comprehensive loss														Common stock								Additional paid-in capital				Retained earnings				Treasury stock								Accumulated other comprehensive loss
						Shares		Amount									Shares								Amount								Total															Shares			Amount								Shares								Amount					Total
Balance at December 31, 2020				$	1,330,028		109,933				$	110			$	597,073				$	852,537			0					$	0				$	(66,154)				$	1,383,566						$	183,186
Balance at December 31, 2021																																											Balance at December 31, 2021			$	1,434,832			97,289				$	97		$	540,321				$	354,337			—				$	—			$	(139,247)			$	755,508			$	180,640
Comprehensive income:	Comprehensive income:																																										Comprehensive income:
Net income	Net income	35,600															237,403																				237,403					18,542		Net income		28,381																162,122																162,122			15,215
Other comprehensive loss																															(56,629)					(56,629)
Stock award plans						94							(6,270)																							(6,270)
Other comprehensive income																																											Other comprehensive income																														104,377				104,377
Stock award plan																																											Stock award plan						53							(3,488)																					(3,488)
Stock-settled stock-based compensation expense	Stock-settled stock-based compensation expense												23,555																							23,555							Stock-settled stock-based compensation expense													24,626																					24,626
Changes in noncontrolling interest from:	Changes in noncontrolling interest from:																																										Changes in noncontrolling interest from:
Distributions	Distributions	(34,259)																																								(19,608)		Distributions		(42,881)																																			(22,571)
Contributions	Contributions	7,695																																							2,994		Contributions		3,197																																				1,732

Acquisitions and divestitures																																											Acquisitions and divestitures		2,421											883																					883
Partial purchases	Partial purchases	(201)											(889)																							(889)					(5)		Partial purchases		(822)											(1,774)																					(1,774)
Fair value remeasurements	Fair value remeasurements	10,297											(10,297)																							(10,297)							Fair value remeasurements		(34,835)											34,835																					34,835
Other																																											Other		464																																			(464)
Purchase of treasury stock	Purchase of treasury stock																					(2,949)				(322,333)										(322,333)							Purchase of treasury stock																						(2,104)				(233,318)								(233,318)
Balance at March 31, 2021		$	1,349,160			110,027		$	110				$	603,172			$	1,089,940				(2,949)				$	(322,333)				$	(122,783)				$	1,248,106				$	185,109
Balance at March 31, 2022																																											Balance at March 31, 2022		$	1,390,757			97,342				$	97		$	595,403				$	516,459			(2,104)				$	(233,318)			$	(34,870)			$	843,771		$	174,552


		Three months ended March 31, 2020																																											Three months ended March 31, 2021
		Non- controlling interests subject to put provisions				DaVita Inc. Shareholders’ Equity																																			Non- controlling interests not subject to put provisions				Non- controlling interests subject to put provisions				DaVita Inc. Shareholders’ Equity																															Non- controlling interests not subject to put provisions

										Common stock									Additional paid-in capital				Retained earnings					Treasury stock										Accumulated other comprehensive loss														Common stock								Additional paid-in capital				Retained earnings				Treasury stock								Accumulated other comprehensive loss
						Shares		Amount									Shares								Amount								Total															Shares			Amount								Shares								Amount					Total
Balance at December 31, 2019				$	1,180,376		125,843				$	126			$	749,043				$	1,431,738			0					$	0				$	(47,498)				$	2,133,409						$	185,833
Balance at December 31, 2020																																											Balance at December 31, 2020			$	1,330,028			109,933				$	110		$	597,073				$	852,537			—				$	—			$	(66,154)			$	1,383,566			$	183,186
Comprehensive income:	Comprehensive income:																																										Comprehensive income:
Net income	Net income	32,176															239,593																				239,593					16,126		Net income		35,600																237,403																237,403			18,542
Other comprehensive loss	Other comprehensive loss																														(93,027)					(93,027)							Other comprehensive loss																														(56,629)				(56,629)
Stock award plan						14							(320)																							(320)
Stock award plans																																											Stock award plans						94							(6,270)																					(6,270)
Stock-settled stock-based compensation expense	Stock-settled stock-based compensation expense												19,797																							19,797							Stock-settled stock-based compensation expense													23,555																					23,555
Changes in noncontrolling interest from:	Changes in noncontrolling interest from:																																										Changes in noncontrolling interest from:
Distributions	Distributions	(37,566)																																								(20,565)		Distributions		(34,259)																																			(19,608)
Contributions	Contributions	5,283																																							4,104		Contributions		7,695																																				2,994

Partial purchases	Partial purchases	(255)											(445)																							(445)							Partial purchases		(201)											(889)																					(889)			(5)
Fair value remeasurements	Fair value remeasurements	48,022											(48,022)																							(48,022)							Fair value remeasurements		10,297											(10,297)																					(10,297)
Purchase of treasury stock	Purchase of treasury stock																					(4,052)				(303,139)										(303,139)							Purchase of treasury stock																						(2,949)				(322,333)								(322,333)
Balance at March 31, 2020		$	1,228,036			125,857		$	126				$	720,053			$	1,671,331				(4,052)				$	(303,139)				$	(140,525)				$	1,947,846				$	185,498
Balance at March 31, 2021																																											Balance at March 31, 2021		$	1,349,160			110,027				$	110		$	603,172				$	1,089,940			(2,949)				$	(322,333)			$	(122,783)			$	1,248,106		$	185,109

See notes to condensed consolidated financial ~~statements~~statements.

DAVITA INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(unaudited)

(dollars and shares in thousands, except per share data)

Unless otherwise indicated in this Quarterly Report on Form 10-Q, "the Company", "we", "us", "our" and similar terms refer to DaVita Inc. and its consolidated subsidiaries.

1. Condensed consolidated interim financial statements

The unaudited condensed consolidated interim financial statements included in this report are prepared by the Company. In the opinion of management, all adjustments necessary for a fair presentation of the results of operations are reflected in these condensed consolidated interim financial statements. All significant intercompany accounts and transactions have been eliminated. The preparation of these financial statements requires management to make estimates and assumptions that affect the reported amounts of revenues, expenses, assets, liabilities, contingencies and noncontrolling interests subject to put provisions. The most significant estimates and assumptions underlying these financial statements and accompanying notes generally involve revenue recognition and accounts receivable, ~~impairments of goodwill,~~certain fair value estimates, accounting for income taxes ~~certain fair value estimates~~ and loss contingencies. The results of operations reflected in these interim financial statements may not necessarily be indicative of annual operating results. These condensed consolidated interim financial statements should be read in conjunction with the audited consolidated financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, ~~2020 (2020~~2021 (2021 10-K). Prior period classifications ~~have been conformed~~conform to the current period presentation. The Company has evaluated subsequent events through the date these condensed consolidated interim financial statements were issued and has included all necessary adjustments and disclosures.

2. Revenue recognition

The following table summarizes the Company's segment revenues by primary payor source:


		Three months ended March 31, 2021						Three months ended March 31, 2020							Three months ended March 31, 2022						Three months ended March 31, 2021
		U.S. dialysis		Other - Ancillary services		Consolidated		U.S. dialysis		Other - Ancillary services		Consolidated			U.S. dialysis		Other — Ancillary services		Consolidated		U.S. dialysis		Other — Ancillary services		Consolidated
Dialysis patient service revenues:	Dialysis patient service revenues:													Dialysis patient service revenues:
Medicare and Medicare Advantage~~(1)~~	Medicare and Medicare Advantage~~(1)~~	$	1,480,297	$		$	1,480,297	$	1,531,033	$		$	1,531,033	Medicare and Medicare Advantage~~(1)~~	$	1,464,086	$		$	1,464,086	$	1,480,297	$		$	1,480,297
Medicaid and Managed Medicaid	Medicaid and Managed Medicaid	187,243				187,243		171,467				171,467		Medicaid and Managed Medicaid	189,655				189,655		187,243				187,243
Other government~~(1)~~	Other government~~(1)~~	80,184		106,830		187,014		83,099		94,574		177,673		Other government~~(1)~~	80,800		116,895		197,695		80,184		106,830		187,014
Commercial	Commercial	835,479		51,498		886,977		825,582		39,467		865,049		Commercial	834,579		52,425		887,004		835,479		51,498		886,977
Other revenues:	Other revenues:													Other revenues:
Medicare and Medicare Advantage	Medicare and Medicare Advantage			85,595		85,595				98,478		98,478		Medicare and Medicare Advantage			83,596		83,596				85,595		85,595
Medicaid and Managed Medicaid	Medicaid and Managed Medicaid			300		300				366		366		Medicaid and Managed Medicaid			538		538				300		300
Commercial	Commercial			6,034		6,034				10,521		10,521		Commercial			1,338		1,338				6,034		6,034
Other~~(2)~~(1)	Other~~(2)~~(1)	6,675		11,162		17,837		5,442		17,602		23,044		Other~~(2)~~(1)	5,976		9,836		15,812		6,675		11,162		17,837
Eliminations of intersegment revenues	Eliminations of intersegment revenues	(27,003)		(4,293)		(31,296)		(32,242)		(4,152)		(36,394)		Eliminations of intersegment revenues	(22,169)		0		(22,169)		(27,003)		(4,293)		(31,296)
Total	Total	$	2,562,875	$	257,126	$	2,820,001	$	2,584,381	$	256,856	$	2,841,237	Total	$	2,552,927	$	264,628	$	2,817,555	$	2,562,875	$	257,126	$	2,820,001

(1)During the first quarter of 2021, the Company realigned the classification of revenue previously disclosed in the “Other government” category to the “Medicare and Medicare Advantage” category for certain government-reimbursed plans which have structure and payment characteristics similar to traditional Medicare Advantage plans. The classification of revenue for these plans for the three months ended March 31, 2020 has also been recast to conform to the current period presentation.

~~(2)~~Other primarily consists of management service fees earned in the respective Company line of business as well as other non-patient service revenue from the Company's U.S. ancillary ~~services.~~services and international operations.

There are significant uncertainties associated with estimating revenue, which generally take several years to resolve. These estimates are subject to ongoing insurance coverage changes, geographic coverage differences, differing interpretations of contract coverage and other payor issues, as well as patient issues, including determination of applicable primary and secondary coverage, changes in patient insurance coverage and coordination of benefits. As these estimates are refined over time, both positive and negative adjustments to revenue are recognized in the current period.

Dialysis patient service revenues. Revenues are recognized based on the Company’s estimate of the transaction price the Company expects to collect as a result of satisfying its performance obligations. Dialysis patient service revenues are recognized in the period services are provided based on these estimates. Revenues consist primarily of payments from government and commercial health plans for dialysis services provided to patients. AThe Company maintains a usual and customary fee schedule for its dialysis treatments and related lab services; however, actual collectible revenue is normally recognized at a discount from the fee schedule.

DAVITA INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(continued)

(unaudited)

(dollars and shares in thousands, except per share data)

~~maintained for the Company’s dialysis treatments and related lab services; however, actual collectible revenue is normally recognized at a discount from the fee schedule.~~

Other revenues.Other revenues consist of revenues earned by the Company's non-dialysis ancillary services as well as fees for management and administrative ~~support~~ services ~~provided~~ to outpatient dialysis businesses that the Company does not ~~own or in which the Company owns a noncontrolling interest as well as~~consolidate. Other revenues associated with the Company's non-dialysis ancillary services. Revenues associated with dialysis management services, integrated care services, clinical research programs, physician services, and end stage renal disease (ESRD) seamless care organizations are estimated ~~and recognized~~ in the period services are provided. The Company's U.S. ancillary service revenues include revenues earned under risk-based arrangements in the Company's integrated kidney care (IKC) business, including value-based care (VBC) arrangements. Under its VBC arrangements, the Company assumes full or shared financial risk for the total medical cost of care for patients below or above a benchmark. The benchmarks against which the Company incurs profit or loss on these contracts are typically based on the underlying premiums paid to the insuring entity (our counterparty), with adjustments where applicable, or on trended or adjusted medical cost targets.

3. Earnings per share

Basic earnings per share is calculated by dividing net income attributable to the Company by the weighted average number of common shares outstanding. Weighted average common shares outstanding include restricted stock unit awards that are no longer subject to forfeiture because the recipients have satisfied either the explicit vesting terms or retirement eligibility requirements.

Diluted earnings per share includes the dilutive effect of outstanding stock-settled stock appreciation rights and unvested stock units as computed under the treasury stock method.

The reconciliations of the numerators and denominators used to calculate basic and diluted earnings per share were as follows:

Three months ended
March 31,
2021 2020
Net income attributable to DaVita Inc.:
Continuing operations $ 237,403 $ 229,613
Discontinued operations 0 9,980
Net income attributable to DaVita Inc. $ 237,403 $ 239,593
Weighted average shares outstanding:
Basic shares 109,014 124,902
Assumed incremental from stock plans 4,838 1,993
Diluted shares 113,852 126,895
Basic net income attributable to DaVita Inc.:
Continuing operations per share $ 2.18 $ 1.84
Discontinued operations per share 0 0.08
Basic net income per share attributable to DaVita Inc. $ 2.18 $ 1.92
Diluted net income attributable to DaVita Inc.:
Continuing operations per share $ 2.09 $ 1.81
Discontinued operations per share 0 0.08
Diluted net income per share attributable to DaVita Inc. $ 2.09 $ 1.89
Anti-dilutive stock-settled awards excluded from calculation(1)
27 3,207


	Three months ended March 31,
	2022		2021


Net income attributable to DaVita Inc.	$	162,122	$	237,403

Weighted average shares outstanding:
Basic shares	96,342		109,014
Assumed incremental from stock plans	4,161		4,838
Diluted shares	100,503		113,852



Basic net income per share attributable to DaVita Inc.	$	1.68	$	2.18



Diluted net income per share attributable to DaVita Inc.	$	1.61	$	2.09

Anti-dilutive stock-settled awards excluded from calculation(1)	171		27

(1)Shares associated with stock awards excluded from the diluted denominator calculation because they were anti-dilutive under the treasury stock method.

~~DAVITA INC.~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(continued)~~

~~(unaudited)~~

~~(dollars and shares in thousands, except per share data)~~

4. Short-term and long-term investments

The Company’s short-term and long-term debt and equity investments, consisting of debt instruments classified as held-to-maturity and equity investments with readily determinable fair values or redemption values, were as follows:


		March 31, 2021						December 31, 2020							March 31, 2022						December 31, 2021
		Debt securities		Equity securities		Total		Debt securities		Equity securities		Total			Debt securities		Equity securities		Total		Debt securities		Equity securities		Total
Certificates of deposit and other time deposits	Certificates of deposit and other time deposits	$	8,221	$	0	$	8,221	$	8,217	$	0	$	8,217	Certificates of deposit and other time deposits	$	23,230	$	—	$	23,230	$	23,226	$	—	$	23,226
Investments in mutual funds and common stock		0		34,730		34,730		0		44,077		44,077
Investments in mutual funds and common stocks														Investments in mutual funds and common stocks	—		44,043		44,043		—		48,598		48,598
		$	8,221	$	34,730	$	42,951	$	8,217	$	44,077	$	52,294		$	23,230	$	44,043	$	67,273	$	23,226	$	48,598	$	71,824
Short-term investments	Short-term investments	$	8,221	$	2,839	$	11,060	$	8,217	$	11,884	$	20,101	Short-term investments	$	8,228	$	11,179	$	19,407	$	8,227	$	14,083	$	22,310
Long-term investments	Long-term investments	0		31,891		31,891		0		32,193		32,193		Long-term investments	15,002		32,864		47,866		14,999		34,515		49,514
		$	8,221	$	34,730	$	42,951	$	8,217	$	44,077	$	52,294		$	23,230	$	44,043	$	67,273	$	23,226	$	48,598	$	71,824

DAVITA INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(continued)

(unaudited)

(dollars and shares in thousands, except per share data)

Debt securities: The Company's short-term debt investments are principally bank certificates of deposit with contractual maturities longer than three months but shorter than one year. These debt securities are accounted for as ~~held to maturity~~held-to-maturity and recorded at amortized cost, which approximated their fair values at March 31, ~~2021~~2022 and December 31, ~~2020.~~2021.

Equity ~~securities:~~securities: The Company holds certain equity investments that have a readily determinable fair value from public markets. The Company's remaining short-term and long-term equity investments ~~in mutual funds and common stock~~ are held within a trust to fund existing obligations associated with ~~several of~~ the Company’s non-qualified deferred compensation plans. During the three months ended March 31, 2022, the Company recognized pre-tax net losses of $3,553 in other income associated with changes in the fair value of these equity securities, comprised of pre-tax realized gains of $435 and a net increase in unrealized losses of $3,988.

5. Goodwill

Changes in goodwill by reportable segments were as follows:


		U.S. dialysis		Other - Ancillary services		Consolidated			U.S. dialysis		Other — Ancillary services		Consolidated
Balance at December 31, 2019		$	6,287,100	$	500,535	$	6,787,635
Balance at December 31, 2020								Balance at December 31, 2020	$	6,309,928	$	609,181	$	6,919,109
Acquisitions	Acquisitions	24,377		105,680		130,057		Acquisitions	91,979		81,265		173,244
Divestitures	Divestitures	(1,549)		(6,744)		(8,293)		Divestitures	(1,745)		—		(1,745)
Foreign currency and other adjustments	Foreign currency and other adjustments	0		9,710		9,710		Foreign currency and other adjustments	—		(44,367)		(44,367)
Balance at December 31, 2020		$	6,309,928	$	609,181	$	6,919,109
Balance at December 31, 2021								Balance at December 31, 2021	$	6,400,162	$	646,079	$	7,046,241
Acquisitions	Acquisitions	0		5,456		5,456		Acquisitions	—		4,442		4,442
Divestitures								Divestitures	—		—		—
Foreign currency and other adjustments	Foreign currency and other adjustments	0		(33,356)		(33,356)		Foreign currency and other adjustments	—		22,220		22,220
Balance at March 31, 2021		$	6,309,928	$	581,281	$	6,891,209
Balance at March 31, 2022								Balance at March 31, 2022	$	6,400,162	$	672,741	$	7,072,903

Balance at March 31, 2021:
Balance at March 31, 2022:								Balance at March 31, 2022:
Goodwill	Goodwill	$	6,309,928	$	711,854	$	7,021,782	Goodwill	$	6,400,162	$	796,684	$	7,196,846
Accumulated impairment charges	Accumulated impairment charges	0		(130,573)		(130,573)		Accumulated impairment charges	—		(123,943)		(123,943)
		$	6,309,928	$	581,281	$	6,891,209		$	6,400,162	$	672,741	$	7,072,903

The Company did not recognize any goodwill impairment charges during the three months ended March 31, ~~2021~~2022 and ~~2020.~~2021.

As dialysis treatments are an essential, life-sustaining service for patients who depend on them, the Company's operations have continued and are currently expected to continue throughout the novel coronavirus (COVID-19) pandemic. However, the ultimate impact of the dynamic and evolving COVID-19 pandemic on the Company will depend on future developments that are highly uncertain and difficult to predict, including among ~~other things~~others the ultimate severity and duration of the ~~pandemic,~~pandemic; further spread or resurgence of the virus, ~~(including~~including as a result of the emergence of new strains of the ~~virus), its~~virus such as the Omicron variant or Omicron BA2 subvariant; COVID-19's impact on the chronic kidney disease (CKD) patient population and the Company's patient population, including on the mortality of these patients; the availability, acceptance, impact and efficacy of COVID-19 vaccines, treatments, and ~~other treatments, or therapies,~~therapies; the ~~pandemic’s~~pandemic's continuing impact on the Company's revenue and non-acquired growth due to lower treatment volumes, the U.S. and global economies, unemployment, labor market conditions, inflation and ~~unemployment,~~monetary policies; the potential negative impact on the Company's commercial mix or the number of patients covered by commercial insurance plans; continued increased COVID-19-related costs; supply chain challenges and disruptions; the responses of the Company's competitors to the pandemic and related changes in the ~~marketplace, and~~marketplace; the timing, scope and effectiveness of federal, state and local ~~governmental responses.~~government responses to the continuing pandemic; and any potential changes to the extensive set of federal, state and local laws, regulations and requirements that govern the Company's business. While the Company does not currently expect a material adverse impact to its business as a result of this public health crisis, there can be no assurance that the COVID-19 pandemic will not have a material adverse impact on one or more of the Company's businesses.

~~DAVITA INC.~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(continued)~~

~~(unaudited)~~

~~(dollars and shares in thousands, except per share data)~~

Developments, events, changes in operating performance and other changes in circumstances since the dates of the Company’s last annual goodwill impairment assessments have not caused management to believe it is more likely than not that the fair values of any of the Company's reporting units would be less than their respective carrying amounts as of March 31, ~~2021.~~

DAVITA INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(continued)

(unaudited)

(dollars and shares in thousands, except per share data)

2022. Except for the Company's Germany kidney care reporting unit as described further in Note 10 to the Company's consolidated financial statements included in the ~~2020~~2021 10-K, ~~NaN~~none of the Company's various other reporting units were considered at risk of significant goodwill impairment as of March 31, ~~2021.~~2022.

6. Long-term debt

Long-term debt was comprised of the following:


							As of March 31, 2021										As of March 31, 2022
		March 31, 2021		December 31, 2020		Maturity date	Interest rate		Estimated fair value(1)			March 31, 2022		December 31, 2021		Maturity date	Interest rate		Estimated fair value(1)
Senior Secured Credit Facilities:	Senior Secured Credit Facilities:										Senior Secured Credit Facilities:
Term Loan A(2)	Term Loan A(2)	$	1,662,500	$	1,684,375	8/12/2024	LIBOR + 1.50%		$	1,666,656	Term Loan A(2)	$	1,575,000	$	1,596,875	8/12/2024	LIBOR+1.50%		$	1,578,938
Term Loan B-1	Term Loan B-1	2,708,836		2,715,694		8/12/2026	LIBOR + 1.75%		$	2,698,678	Term Loan B-1	2,681,405		2,688,263		8/12/2026	LIBOR+1.75%		$	2,671,349
Revolving line of credit(2)	Revolving line of credit(2)	0		75,000		8/12/2024	LIBOR + 1.50%				Revolving line of credit(2)	—		—		8/12/2024	LIBOR+1.50%
Senior Notes:	Senior Notes:										Senior Notes:
4.625% Senior Notes	4.625% Senior Notes	2,750,000		1,750,000		6/1/2030	4.625	%	$	2,801,150	4.625% Senior Notes	2,750,000		2,750,000		6/1/2030	4.625	%	$	2,571,250
3.75% Senior Notes	3.75% Senior Notes	1,500,000		1,500,000		2/15/2031	3.750	%	$	1,436,220	3.75% Senior Notes	1,500,000		1,500,000		2/15/2031	3.75	%	$	1,320,000
Acquisition obligations and other notes payable~~(2)~~(3)	Acquisition obligations and other notes payable~~(2)~~(3)	152,531		164,160		2021-2036	4.95	%	$	152,531	Acquisition obligations and other notes payable~~(2)~~(3)	128,476		130,599		2022-2036	4.87	%	$	128,476
Financing lease obligations~~(3)~~(4)	Financing lease obligations~~(3)~~(4)	289,324		274,292		2022-2038	4.83	%			Financing lease obligations~~(3)~~(4)	291,949		299,128		2023-2038	4.55	%
Total debt principal outstanding	Total debt principal outstanding	9,063,191		8,163,521							Total debt principal outstanding	8,926,830		8,964,865
Discount, premium and deferred financing costs~~(4)~~(5)	Discount, premium and deferred financing costs~~(4)~~(5)	(65,235)		(77,717)							Discount, premium and deferred financing costs~~(4)~~(5)	(53,615)		(56,685)
		8,997,956		8,085,804								8,873,215		8,908,180
Less current portion	Less current portion	(168,191)		(168,541)							Less current portion	(185,728)		(179,030)
		$	8,829,765	$	7,917,263							$	8,687,487	$	8,729,150

(1)For the Company's senior secured credit facilities and senior notes, fair value estimates are based upon bid and ask quotes, typically a level 2 input. For acquisition obligations and other notes payable, the carrying values presented approximate their estimated fair values, based on estimates of their present values using level 2 interest rate inputs.

(2)The Company's interest rate on its Term Loan A and revolving line of credit is subject to adjustment depending upon the Company's leverage ratio under the credit agreement governing its senior secured credit facilities. Based on the Company's leverage ratio as of March 31, 2022, the Company’s interest rate effective in the second quarter of 2022 will be LIBOR plus 1.75% for its Term Loan A and revolving line of credit.

(3)The interest rate presented for acquisition obligations and other notes payable is their weighted average interest rate based on the current fixed and ~~LIBOR~~variable interest rate components in effect as of March 31, ~~2021.~~2022.

~~(3)~~(4)Financing lease obligations are measured at their approximate present values at inception. The interest rate presented is the weighted average discount rate embedded in financing leases outstanding. ~~The term of one ground lease runs to 2070, in addition to the other lease maturity dates presented in the table above.~~

~~(4)~~(5)As of March 31, 2022, the carrying amount of the Company's senior secured credit facilities have been reduced by a discount of $4,228 and deferred financing costs of $25,088, and the carrying amount of the Company's senior notes have been reduced by deferred financing costs of $39,736 and increased by a debt premium of $15,437. As of December 31, 2021, the carrying amount of the Company's senior secured credit facilities ~~includes~~were reduced by a discount of ~~$5,212~~$4,473 and deferred financing costs of ~~$33,650~~$27,207, and the carrying amount of the Company's senior notes ~~includes a premium of $(17,327) and~~were reduced by deferred financing costs of ~~$43,700. As~~$40,914 and increased by a debt premium of December 31, 2020, the carrying amount of the Company's senior secured credit facilities included a discount of $5,461 and deferred financing costs of $35,825, and the carrying amount of the Company's senior notes included deferred financing costs of $36,431.$15,909.

During the first three months of ~~2021,~~2022, the Company made regularly scheduled mandatory principal payments under its senior secured credit facilities totaling $21,875 on Term Loan A and $6,858 on Term Loan B-1.

On February 26, 2021, the Company completed an unregistered add-on offering of $1,000,000 aggregate principal amount to the existing 4.625% senior notes due June 1, 2030 (the Additional 2030 Notes) pursuant to Rule 144A and Regulation S under the Securities Act of 1933, as amended. The Additional 2030 Notes were issued at an offering price of 101.750% of face amount, plus an interest payment advance to the Company for interest that would have accrued from December 1, 2020 (the last interest payment date) through the closing date. These Additional 2030 Notes will then bear full six months' semi-annual coupon interest payments beginning June 1, 2021. The terms of the Additional 2030 Notes, other than their issue date, offering price and first interest payment date, are identical to the terms of the $1,750,000 principal amount of the Company’s 4.625% Senior Notes due June 1, 2030 previously issued by the Company on June 9, 2020. The Additional 2030 Notes are unsecured senior obligations and rank equally in right of payment with the Company's existing and future unsecured senior indebtedness. During the three months ended March 31, 2021, the Company incurred $8,346 in fees and other professional expenses associated with this transaction, which were capitalized and will amortize over the term of the Additional

~~DAVITA INC.~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(continued)~~

~~(unaudited)~~

~~(dollars and shares in thousands, except per share data)~~

~~2030 Notes.~~

As of March 31, ~~2021,~~2022, the Company's 2019 interest rate cap agreements have the economic effect of capping the Company's maximum exposure to LIBOR variable interest rate changes on equivalent amounts of the Company's floating rate debt, including all of Term Loan B-1 and a portion of Term Loan A. The remaining ~~$871,336~~$756,405 outstanding principal balance of Term Loan A is subject to LIBOR-based interest rate volatility. These cap agreements are designated as cash flow hedges and, as a result, changes in the fair values of the cap agreements are reported in other comprehensive income. The original premiums paid for the caps are amortized to debt expense on a straight-line basis over the term of each cap agreement starting from its effective date. These cap agreements do not contain credit risk-contingent features.

DAVITA INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(continued)

(unaudited)

(dollars and shares in thousands, except per share data)

The following table summarizes the Company’s interest rate cap agreements outstanding as of March 31, ~~2021~~2022 and December 31, ~~2020,~~2021, which are classified in "Other long-term assets" on its consolidated balance sheet:

Three months ended
March 31, 2021 Fair value
Notional amount LIBOR maximum rate Effective date Expiration date Debt expense Recorded OCI gain March 31, 2021 December 31, 2020
2019 cap agreements $ 3,500,000 2.00% 6/30/2020 6/30/2024 $ 1,377 $ 6,505 $ 9,176 $ 2,671


						Three months ended March 31, 2022				Fair value
	Notional amount		LIBOR maximum rate	Effective date	Expiration date	Debt expense		Recorded OCI gain		March 31, 2022		December 31, 2021
2019 cap agreements	$	3,500,000	2.00%	6/30/2020	6/30/2024	$	1,377	$	54,806	$	67,009	$	12,203

See Note 9 for further details on amounts reclassified from accumulated other comprehensive loss and recorded as debt expense related to the Company’s interest rate cap agreements for the three months ended March 31, ~~2021~~2022 and ~~2020.~~2021.

The Company’s weighted average effective interest rate on its senior secured credit facilities at the end of the first quarter of ~~2021~~2022 was ~~1.97%~~2.54%, based on the current margins in effect for ~~Term Loan A and Term Loan B-1~~its senior secured credit facilities as of March 31, ~~2021,~~2022, as described above.

The Company’s overall weighted average effective interest rate for the three months ended March 31, ~~2021~~2022 was ~~3.08%~~3.35%, and as of March 31, ~~2021~~2022 was ~~3.18%~~3.52%.

As of March 31, ~~2021,~~2022, the Company’s interest rates were fixed on approximately ~~51%~~52% of its total debt.

As of March 31, ~~2021,~~2022, the Company had an undrawn $1,000,000 revolving line of credit under its senior secured credit facilities. Credit available under this facility is reduced by the amount of any letters of credit outstanding under this facility, ~~but~~of which there were ~~0 such letters of credit outstanding~~none as of March 31, ~~2021.~~2022. The Company also had approximately ~~$64,650 of outstanding~~$108,095 in letters of credit outstanding under a separate bilateral secured letter of credit facility as of March 31, ~~2021.~~2022.

7. Commitments and contingencies

The majority of the Company’s revenues are from government programs and may be subject to adjustment as a result of: (i) examination by government agencies or contractors, for which the resolution of any matters raised may take extended periods of time to finalize; (ii) differing interpretations of government regulations by different Medicare contractors or regulatory authorities; (iii) differing opinions regarding a patient’s medical diagnosis or the medical necessity of services provided; and (iv) retroactive applications or interpretations of governmental requirements. In addition, the Company’s revenues from commercial payors may be subject to adjustment as a result of potential claims for refunds, as a result of government actions or as a result of other claims by commercial payors.

The Company operates in a highly regulated industry and is a party to various lawsuits, demands, claims, qui tam suits, governmental investigations (which frequently arise from qui tam suits) and audits (including, without limitation, investigations or other actions resulting from its obligation to self-report suspected violations of law) and other legal proceedings, including, without limitation, those described below. The Company records accruals for certain legal proceedings and regulatory matters to the extent that the Company determines an unfavorable outcome is probable and the amount of the loss can be reasonably estimated. As of March 31, ~~2021~~2022 and December 31, ~~2020,~~2021, the Company’s total recorded accruals with respect to legal proceedings and regulatory matters, net of anticipated third party recoveries, were immaterial. While these accruals reflect the Company’s best estimate of the probable loss for those matters as of the dates of those accruals, the recorded amounts may differ materially from the actual amount of the losses for those matters, and any anticipated third party recoveries for any such losses may not ultimately be recoverable. Additionally, in some cases, no estimate of the possible loss or range of loss in excess of amounts accrued, if any, can be made because of the inherently unpredictable nature of legal proceedings and regulatory matters, which also may be impacted by various factors, including, without limitation, that they may involve indeterminate

~~DAVITA INC.~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(continued)~~

~~(unaudited)~~

~~(dollars and shares in thousands, except per share data)~~

claims for monetary damages or may involve fines, penalties or non-monetary remedies; present novel legal theories or legal uncertainties; involve disputed facts; represent a shift in regulatory policy; are in the early stages of the proceedings; or may result in a change of business practices. Further, there may be various levels of judicial review available to the Company in connection with any such proceeding.

The following is a description of certain lawsuits, claims, governmental investigations and audits and other legal proceedings to which the Company is subject.

DAVITA INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(continued)

(unaudited)

(dollars and shares in thousands, except per share data)

Certain Governmental Inquiries and Related Proceedings

2016 U.S. Attorney Texas Investigation: In February 2016, DaVita Rx, LLC (DaVita Rx), a wholly-owned subsidiary of the Company, received a Civil Investigative Demand (CID) from the U.S. Attorney’s Office, Northern District of Texas. The government is conducting a federal False Claims Act (FCA) investigation concerning allegations that DaVita Rx presented or caused to be presented false claims for payment to the government for prescription medications, as well as an investigation into the Company’s relationships with pharmaceutical manufacturers. The government’s investigation covers the period from January 1, 2006 through December 31, 2018. In December 2017, the Company finalized and executed a settlement agreement that resolved certain of the issues in the government’s investigation and that included total monetary consideration of $63,700, as previously disclosed, of which $41,500 was an incremental cash payment and $22,200 was for amounts previously refunded, and all of which was previously accrued. The government’s investigation is ongoing with respect to issues related to DaVita Rx’s historic relationships with certain pharmaceutical manufacturers, and in July 2018 the Office of Inspector General (OIG) served the Company with a subpoena seeking additional documents and information relating to those relationships. On September 15, 2021, the U.S. Attorney’s Office notified the U.S. District Court, Northern District of Texas, of its decision and the decision of 31 states not to elect to intervene at this time in the matter of U.S. ex rel. Doe v. DaVita Inc., et al. The court then unsealed the complaint, which alleges violations of the FCA, by order dated September 17, 2021. The complaint was not served on the Company. In December 2021, the private party relator filed a notice of voluntary dismissal of all claims and the court entered an order dismissing the claims without prejudice. The Company is continuing to cooperate with the government in this investigation.

2017 U.S. Attorney Colorado Investigation: In November 2017, the U.S. Attorney’s Office, District of Colorado informed the Company of an investigation it was conducting into possible federal healthcare offenses involving DaVita Kidney Care, as well as several of the Company’s wholly-owned subsidiaries. In addition to DaVita Kidney Care, the matter currently includes an investigation into DaVita Rx, DaVita Laboratory Services, Inc. (DaVita Labs), and RMS Lifeline Inc. (Lifeline). In each of August 2018, ~~and~~ May 2019, and July 2021, the Company received a CID pursuant to the FCA from the U.S. Attorney's Office relating to this investigation. In May 2020, the Company sold its interest in Lifeline, but the Company retained certain liabilities of the Lifeline business, including those related to this investigation. The Company is continuing to cooperate with the government in this investigation.

~~2018 U.S. Attorney Florida Investigation~~: In March 2018, DaVita Labs received two CIDs from the U.S. Attorney’s Office, Middle District of Florida that were identical in nature but directed to the two different labs. According to the face of the CIDs, the U.S. Attorney’s Office is conducting an investigation as to whether the Company’s subsidiary submitted claims for blood, urine, and fecal testing, where there were insufficient test validation or stability studies to ensure accurate results, in violation of the FCA. In October 2018, DaVita Labs received a subpoena from the OIG in connection with this matter requesting certain patient records linked to clinical laboratory tests. On September 30, 2019, the U.S. Attorney’s Office notified the U.S. District Court, Middle District of Florida, of its decision not to elect to intervene at this time in the matter of ~~U.S. ex rel. Lorne Holland, et al. v. DaVita Healthcare Partners, Inc., et al~~. The court then unsealed the complaint, which alleges violations of the FCA, by order dated the same day. In January 2020, the private party relators served the Company and DaVita Labs with an amended complaint. On February 24, 2020, the Company and DaVita Labs filed a motion to dismiss the amended complaint. On June 25, 2020, the court denied the motion to dismiss. The Company and DaVita Labs answered the complaint on July 23, 2020. The Company and DaVita Labs dispute these allegations and intend to defend this action accordingly.

2020 U.S. Attorney New Jersey Investigation: In March 2020, the U.S. Attorney’s Office, District of New Jersey served the Company with a subpoena and a CID relating to an investigation being conducted by that office and the U.S. Attorney’s Office, Eastern District of Pennsylvania. The subpoena and CID request information on several topics, including certain of the Company’s joint venture arrangements with physicians and physician groups, medical director agreements, and compliance with its five-year Corporate Integrity Agreement, the term of which expired October 22, 2019. The Company is cooperating with the government in this investigation.

2020 California Department of Insurance Investigation: In April 2020, the California Department of Insurance (CDI) sent the Company an Investigative Subpoena relating to an investigation being conducted by that office. CDI issued a superseding subpoena in September ~~2020. The~~2020 and an additional subpoena ~~as revised, requests~~in September 2021. Those subpoenas request information on a number of topics, including but not limited to the Company’s communications with patients about insurance plans and financial assistance from the American

~~DAVITA INC.~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(continued)~~

~~(unaudited)~~

~~(dollars and shares in thousands, except per share data)~~

Kidney Fund (AKF), analyses of the potential impact of patients’ decisions to change insurance providers, and documents relating to donations or contributions to the AKF. The Company is cooperating with CDI in this investigation.

2020 Department of Justice Investigation: In October 2020, the Company received a CID from the Department of Justice pursuant to a False Claims Act investigation concerning allegations that DaVita Medical Group (DMG) may have submitted undocumented or unsupported diagnosis codes in connection with Medicare Advantage beneficiaries. The CID covers the period from January 1, 2015 through June 19, 2019, the date the Company completed the divestiture of DMG to Collaborative Care Holdings, LLC. The Company is cooperating with the government in this investigation.

* * *

Although the Company cannot predict whether or when proceedings might be initiated or when these matters may be resolved (other than as may be described above), it is not unusual for inquiries such as these to continue for a considerable period of time through the various phases of document and witness requests and on-going discussions with regulators and to develop over the course of time. In addition to the inquiries and proceedings specifically identified above, the Company

DAVITA INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(continued)

(unaudited)

(dollars and shares in thousands, except per share data)

frequently is subject to other inquiries by state or federal government agencies, many of which relate to qui tam complaints filed by relators. Negative findings or terms and conditions that the Company might agree to accept as part of a negotiated resolution of pending or future government inquiries or relator proceedings could result in, among other things, substantial financial penalties or awards against the Company, substantial payments made by the Company, harm to the Company’s reputation, required changes to the Company’s business practices, an impact on the Company's various relationships and/or contracts related to the Company's business, exclusion from future participation in the Medicare, Medicaid and other federal health care programs and, if criminal proceedings were initiated against the Company, members of its board of directors or management, possible criminal penalties, any of which could have a material adverse effect on the Company.

~~Shareholder and Derivative Claims~~Other Proceedings

~~Peace Officers’ Annuity~~2021 Antitrust Indictment and ~~Benefit Fund of Georgia Securities~~Putative Class Action ~~Civil~~ Suit: On ~~February 1, 2017, the Peace Officers’ Annuity and Benefit Fund of Georgia filed~~July 14, 2021, an indictment was returned by a ~~putative federal securities class action complaint~~grand jury in the U.S. District Court, ~~for the~~ District of Colorado against the Company and ~~certain executives.~~its former chief executive officer in the matter of U.S. v. DaVita Inc., et al. The ~~complaint covers~~two count indictment alleged that purported agreements entered into by DaVita's former chief executive officer not to solicit senior-level employees violate Section 1 of the ~~time period of August 2015 to October 2016 and alleges, generally, that the Company~~Sherman Act. On September 14, 2021, DaVita and its ~~executives violated~~federal securities laws concerning the Company’s financial results and revenue derived from patients who received charitable premium assistance from an industry-funded non-profit organization. The complaint further alleges that the process by which patients obtained commercial insurance and received charitable premium assistance was improper and "created a false impression of DaVita’s business and operational status and future growth prospects." In November 2017, the court appointed the lead plaintiff and an amended complaint was filed on January 12, 2018. On March 27, 2018, the Company and various individual defendantsformer chief executive officer filed a motion to ~~dismiss.~~dismiss the indictment. On ~~March~~November 3, 2021, a superseding indictment was returned in U.S. v. DaVita Inc., et al. that included an additional count alleging a third violation of the Sherman Act. On November 10, 2021, DaVita and its former chief executive officer filed a renewed motion to dismiss the superseding indictment. On January 28, ~~2019,~~2022, the court denied the motion to dismiss. ~~The Company answered~~On April 15, 2022, a jury returned a verdict in the ~~complaint on May 28, 2019. On January 31, 2020, the plaintiffs filed a motion for class certification and~~Company’s favor, acquitting both the Company ~~filed~~and its ~~opposition~~former chief executive officer on ~~June 29, 2020.~~

While the Company continues to dispute the allegations, in July 2020, it reached an agreement in principle to resolve this matter without admitting to any liability. Settlement of this matter was covered primarily with insurance proceeds. The Company contributed an amount that did not have a material impact on the Company’s consolidated financial position, results of operations or cash flows.all counts. On April ~~13, 2021,~~20, 2022, the court ~~granted final approval~~entered judgments of acquittal and closed the ~~settlement.~~

case. On August 9, 2021, DaVita was named as defendant in a consolidated putative class action complaint in the matter of In re ~~DaVita Inc. Stockholder Derivative~~Outpatient Medical Center Employee Antitrust Litigation~~: On August 15, 2017,~~ in the U.S. District Court, ~~for the~~Northern District of ~~Delaware consolidated 3 previously disclosed shareholder derivative lawsuits:~~Illinois. This class action complaint seeks to bring an action on behalf of certain groups of individuals employed by the ~~Blackburn Shareholder action filed on~~Company between February ~~10, 2017, the Gabilondo Shareholder action filed on May 30, 2017,~~1, 2012 and the City of Warren Police and Fire Retirement System Shareholder action filed on June 9, 2017. The complaint covers the time period from 2015 to present and alleges, generally, breach of fiduciary duty, unjust enrichment, abuse of control, gross mismanagement, corporate waste, and misrepresentations and/or failures to disclose certain information in violation of the federal securities laws in connection with an alleged practice to direct patients with government-subsidized health insurance into private health insurance plans to maximize the Company’s profits. An amended complaint was filed in September 2017, and on DecemberJanuary 5, 2021. On October 18, ~~2017,~~2021, the Company filed a motion to dismiss ~~and a motion to stay proceedings in~~ the ~~alternative. On April 25, 2019, the court denied the Company's motion to dismiss.~~class action complaint. The Company ~~answered the complaint on May 28, 2019.~~

~~While the defendants continue to dispute~~disputes the allegations in ~~July 2020,~~the class action complaint, as well as the asserted violations of the Sherman Act, and intends to defend this action accordingly.

Marietta Memorial Hospital Employee Health Benefit Plan, et al. v. DaVita Inc. et al. No. 20-1641: On November 5, 2021 the United States Supreme Court granted certiorari of an ~~agreement~~appeal by an employer group health plan, the plan sponsor, and the plan’s advisor of the U.S. Court of Appeals for the Sixth Circuit (Sixth Circuit) decision in ~~principle was reached~~the Company's favor. The questions presented involve whether the health plan violates the Medicare Secondary Payor Act by "taking into account" that plan beneficiaries are eligible for Medicare and/or by "differentiating" between the benefits that the plan offers to ~~resolve this matter without admitting~~patients with dialysis versus others. On December 23, 2021, the Solicitor General on behalf of the United States filed an amicus brief supporting the petitioners' request to ~~any liability. The Company’s Board~~overturn the Sixth Circuit decision. On January 19, 2022, the Company filed its brief in support of ~~Directors (Board) approved~~ the ~~settlement on October~~

~~DAVITA INC.~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(continued)~~

~~(unaudited)~~

~~(dollars~~Sixth Circuit decision, and ~~shares in thousands, except per share data)~~

~~20, 2020.~~the Company intends to defend against the appeal accordingly. The court ~~approved the settlement~~heard oral arguments on ~~January 29, 2021. As part of the settlement, the Company agreed to certain corporate governance policies, but did not make any financial contribution towards the settlement.~~March 1, 2022.

~~Other Proceedings~~

~~In addition to the foregoing,~~Additionally, from time to time the Company is subject to other lawsuits, demands, claims, governmental investigations and audits and legal proceedings that arise due to the nature of its business, including, without limitation, contractual disputes, such as with payors, suppliers and others, employee-related matters and professional and general liability claims. From time to time, the Company also initiates litigation or other legal proceedings as a plaintiff arising out of contracts or other matters.

* * *

Other than as may be described above, the Company cannot predict the ultimate outcomes of the various legal proceedings and regulatory matters to which the Company is or may be subject from time to time, including those described in this Note 7, or the timing of their resolution or the ultimate losses or impact of developments in those matters, which could have a material adverse effect on the Company’s revenues, earnings and cash flows. Further, any legal proceedings or regulatory matters involving the Company, whether meritorious or not, are time consuming, and often require management’s attention and result in significant legal expense, and may result in the diversion of significant operational resources, may impact the Company's various relationships and/or contracts related to the Company's business or otherwise harm the Company’s business, results of operations, financial condition, cash flows or reputation.

* * *

DAVITA INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(continued)

(unaudited)

(dollars and shares in thousands, except per share data)

Other Commitments

The Company also has certain potential commitments to provide working capital funding, if necessary, to certain nonconsolidated outpatient dialysis businesses that the Company manages and in which the Company owns a noncontrolling equity interest or which are wholly-owned by third parties of approximately ~~$8,449.~~$13,027.

8. Shareholders' equity

Stock-based compensation

During the three months ended March 31, ~~2021,~~2022, the Company granted ~~706~~981 restricted and performance stock units with an aggregate grant-date fair value of ~~$77,279~~$109,177 and a weighted-average expected life of approximately 3.5 years and ~~132~~130 stock-settled stock appreciation rights with an aggregate grant-date fair value of ~~$4,250~~$4,573 and a weighted-average expected life of approximately 4.5 years.

As of March 31, ~~2021,~~2022, the Company had ~~$230,270~~$221,010 in total estimated but unrecognized stock-based compensation expense under the Company's equity compensation and employee stock purchase plans. The Company expects to recognize this expense over a weighted average remaining period of 1.5 years.

Share repurchases

The following table summarizes the Company's common stock repurchases during the three months ended March 31, ~~2021~~2022 and ~~2020:~~2021:

Three months ended March 31, 2021 Three months ended March 31, 2020
Shares repurchased Amount paid Average paid per share Shares repurchased Amount paid Average paid per share
Open market repurchases 2,949 $ 322,333 $ 109.28 4,052 $ 303,139 $ 74.81


	Three months ended March 31, 2022					Three months ended March 31, 2021
	Shares repurchased	Amount paid		Average paid per share		Shares repurchased	Amount paid		Average paid per share
Open market repurchases:	2,104	$	233,318	$	110.90	2,949	$	322,333	$	109.28

The Company repurchased ~~991~~798 shares of its common stock for ~~$108,892~~$87,994 at an average cost of ~~$109.91~~$110.28 per share subsequent to March 31, ~~2021~~2022 through ~~April 28, 2021.~~May 4, 2022.

Effective on December ~~10, 2020,~~17, 2021, the Company's Board of Directors (Board) ~~terminated all remaining prior~~increased the Company's existing authorization by $2,000,000. The Company is authorized to make purchases from time to time in the open market or in privately negotiated transactions, including without limitation, through accelerated share repurchase ~~authorizations available to~~transactions, derivative transactions, tender offers, Rule 10b5-1 plans or any combination of the ~~Company~~foregoing, depending upon market conditions and ~~approved a new share repurchase authorization of $2,000,000.~~ other considerations.

As of ~~April 28, 2021,~~May 4, 2022, the Company had a total of ~~$1,498,730~~$2,062,627 available under the current authorization for additional share repurchases. Although this share repurchase authorization does not have an expiration date, the Company remains subject to share repurchase limitations including under the terms of its current senior secured credit facilities.

9. Accumulated other comprehensive loss


	Three months ended March 31, 2022						Three months ended March 31, 2021
	Interest rate cap agreements		Foreign currency translation adjustments		Accumulated other comprehensive loss		Interest rate cap agreements		Foreign currency translation adjustments		Accumulated other comprehensive loss
Beginning balance	$	(1,178)	$	(138,069)	$	(139,247)	$	(12,466)	$	(53,688)	$	(66,154)
Unrealized gains (losses)	54,806		62,212		117,018		6,505		(62,544)		(56,039)
Related income tax	(13,674)		—		(13,674)		(1,623)		—		(1,623)
	41,132		62,212		103,344		4,882		(62,544)		(57,662)
Reclassification into net income	1,377		—		1,377		1,377		—		1,377
Related income tax	(344)		—		(344)		(344)		—		(344)
	1,033		—		1,033		1,033		—		1,033
Ending balance	$	40,987	$	(75,857)	$	(34,870)	$	(6,551)	$	(116,232)	$	(122,783)

DAVITA INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(continued)

(unaudited)

(dollars and shares in thousands, except per share data)

~~9. Accumulated other comprehensive loss~~

Three months ended March 31, 2021 Three months ended March 31, 2020
Interest
rate cap
agreements Foreign
currency
translation
adjustments Accumulated
other
comprehensive
loss Interest
rate cap
agreements Foreign
currency
translation
adjustments Accumulated
other
comprehensive
loss
Beginning balance $ (12,466) $ (53,688) $ (66,154) $ (1,433) $ (46,065) $ (47,498)
Unrealized gains (losses) 6,505 (62,544) (56,039) (17,346) (81,632) (98,978)
Related income tax (1,623) 0 (1,623) 4,328 0 4,328
4,882 (62,544) (57,662) (13,018) (81,632) (94,650)
Reclassification into net income 1,377 0 1,377 2,163 0 2,163
Related income tax (344) 0 (344) (540) 0 (540)
1,033 0 1,033 1,623 0 1,623
Ending balance $ (6,551) $ (116,232) $ (122,783) $ (12,828) $ (127,697) $ (140,525)

The interest rate cap agreement net realized losses reclassified into net income are recorded as debt expense in the corresponding consolidated statements of income. See Note 6 for further details.

10. Acquisitions and divestitures

Routine acquisitions

During the three months ended March 31, ~~2021,~~2022, the Company acquired dialysis businesses consisting of 23 dialysis centers located outside the U.S. for a total ~~of $3,668 in~~ net cash of $5,166, contingent earn-out obligations of ~~$538~~$245 and deferred purchase price and liabilities assumed of ~~$1,094.~~$2,251. The assets and liabilities for these acquisitions were recorded at their estimated fair values at the dates of the acquisitions and are included in the Company’s condensed consolidated financial statements, as are their operating results, from the designated effective dates of the acquisitions.

The initial purchase price allocations ~~for these transactions~~ have been recorded at estimated fair values based on information available to management and will be finalized when certain information arranged to be obtained has been received. In particular, certain income tax amounts are pending final evaluation and quantification of any pre-acquisition tax contingencies. In addition, valuation of intangibles, leases and certain other working capital items relating to ~~several of~~ these acquisitions are pending final quantification.

Goodwill deductible for tax purposes associated with acquisitions completed during the three months ended March 31, ~~2021~~2022 was ~~$5,456.~~$4,442.

Contingent earn-out obligations

The Company has several contingent earn-out obligations associated with acquisitions that could result in the Company paying the former owners of acquired ~~companies~~businesses a total of up to approximately ~~$40,173~~$71,645 if certain performance targets or quality margins are met over the next one year to five years.

Contingent earn-out obligations are remeasured to fair value at each reporting date until the contingencies are resolved with changes in the liability due to the remeasurement recognized in earnings. As of March 31, ~~2021,~~2022, the Company estimated the fair value of these contingent earn-out obligations to be ~~$28,225,~~$34,193, of which ~~$11,613~~$9,238 is included in other current liabilities and the remaining ~~$16,612~~$24,955 is included in other long-term liabilities in the Company’s consolidated balance sheet.

~~DAVITA INC.~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(continued)~~

~~(unaudited)~~

~~(dollars and shares in thousands, except per share data)~~

The following is a reconciliation of changes in contingent earn-out ~~obligations for the three months ended March 31, 2021:~~obligations:


	Three months ended March 31, ~~2021~~2022
Beginning balance	$	~~30,248~~33,600
Acquisitions	~~538~~245
Foreign currency translation	~~(2,080)~~3,248
Fair value remeasurements	~~(214)~~21
Payments	~~(267)~~(2,921)
Ending balance	$	~~28,225~~34,193

~~Discontinued operations~~

On June 19, 2019, the Company completed the sale of its DaVita Medical Group (DMG) business to Collaborative Care Holdings, LLC (Optum), a subsidiary of UnitedHealth Group Inc. At close of the DMG sale, the Company's ultimate net sale proceeds remained subject to resolution of certain post-closing purchase price adjustments described in the equity purchase agreement, which adjustments were finalized in the fourth quarter of 2020. In the first quarter of 2020, the Company recognized $9,980 in additional tax benefits under the Coronavirus Aid, Relief, and Economic Security Act related to its period of DMG ownership, which were recognized as an adjustment to the Company's loss on sale of the DMG business.

11. Variable interest entities (VIEs)

At March 31, ~~2021,~~2022, these condensed consolidated financial statements include total assets of VIEs of ~~$300,849~~$302,469 and total liabilities and noncontrolling interests of VIEs to third parties of ~~$207,527.~~$205,173. There have been no material changes in the nature of the Company's arrangements with VIEs or its judgments concerning them from those described in Note 23 to the Company's consolidated financial statements included in the ~~2020~~2021 10-K.

12. Fair values of financial instruments

The Company measures the fair value of certain assets, liabilities and noncontrolling interests subject to put provisions (redeemable equity interests classified as temporary equity) based upon certain valuation techniques that include observable or unobservable inputs and assumptions that market participants would use in pricing these assets, liabilities, temporary equity and

DAVITA INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(continued)

(unaudited)

(dollars and shares in thousands, except per share data)

commitments. The Company has also classified assets, liabilities and temporary equities that are measured at fair value on a recurring basis into the appropriate fair value hierarchy levels as defined by the Financial Accounting Standards Board (FASB).

The following table summarizes the Company’s assets, liabilities and temporary equities measured at fair value on a recurring basis as of March 31, ~~2021:~~2022:


		Total		Quoted prices in active markets for identical assets (Level 1)		Significant other observable inputs (Level 2)		Significant unobservable inputs (Level 3)			Total		Quoted prices in active markets for identical assets (Level 1)		Significant other observable inputs (Level 2)		Significant unobservable inputs (Level 3)
Assets	Assets									Assets
Investments in equity securities	Investments in equity securities	$	34,730	$	34,730	$	0	$	0	Investments in equity securities	$	44,043	$	44,043	$	—	$	—
Interest rate cap agreements	Interest rate cap agreements	$	9,176	$	0	$	9,176	$	0	Interest rate cap agreements	$	67,009	$	—	$	67,009	$	—
Liabilities	Liabilities									Liabilities
Contingent earn-out obligations	Contingent earn-out obligations	$	28,225	$	0	$	0	$	28,225	Contingent earn-out obligations	$	34,193	$	—	$	—	$	34,193
Temporary equity	Temporary equity									Temporary equity
Noncontrolling interests subject to put provisions	Noncontrolling interests subject to put provisions	$	1,349,160	$	0	$	0	$	1,349,160	Noncontrolling interests subject to put provisions	$	1,390,757	$	—	$	—	$	1,390,757

For reconciliations of changes in contingent earn-out obligations and noncontrolling interests subject to put provisions during the three months ended March 31, ~~2021,~~2022, see Note 10 and the consolidated statement of equity, respectively.

Investments in equity securities represent investments in various open-ended registered investment companies (mutual funds) and common ~~stock which are held within a trust to fund existing obligations associated with several of the Company's non-qualified deferred compensation plans. These investments~~stocks and are recorded at fair value estimated based on reported market prices or redemption prices, as applicable. See Note 4 for further discussion.

~~DAVITA INC.~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(continued)~~

~~(unaudited)~~

~~(dollars and shares in thousands, except per share data)~~

Interest rate cap agreements are recorded at fair value estimated from valuation models utilizing the income approach and commonly accepted valuation techniques that use inputs from closing prices for similar assets and liabilities in active markets as well as other relevant observable market inputs at quoted intervals such as current interest rates, forward yield curves, implied volatility and credit default swap pricing. The Company does not believe the ultimate amount that could be realized upon settlement of these interest rate cap agreements would be materially different from the fair value estimates currently reported. See Note 6 for further discussion.

The estimated fair value measurements of contingent earn-out obligations are primarily based on unobservable inputs, including projected earnings before interest, taxes, depreciation, and amortization (EBITDA), revenue and ~~revenue.~~certain operating metrics. The estimated fair values of these contingent earn-out obligations are remeasured as of each reporting date and could fluctuate based upon any significant changes in key assumptions, such as changes in the Company's credit risk adjusted rate that is used to discount obligations to present value. See Note 10 for further discussion.

The estimated fair value of noncontrolling interests subject to put provisions is based principally on the higher of either estimated liquidation value of net assets or a multiple of earnings for each subject dialysis partnership, based on historical earnings, revenue mix, and other performance indicators that can affect future results. The multiples used for these valuations are derived from observed ownership transactions for dialysis businesses between unrelated parties in the U.S. in recent years, and the specific valuation multiple applied to each dialysis partnership is principally determined by its recent and expected revenue mix and contribution margin. As of March 31, ~~2021,~~2022, an increase or decrease in the weighted average multiple used in these valuations of one times EBITDA would change the estimated fair value of these noncontrolling interests by approximately ~~$170,000.~~$175,000. See ~~Note~~Notes 17 and ~~Note~~ 24 to the Company's consolidated financial statements included in the ~~2020~~2021 10-K for further discussion of the Company’s methodology for estimating the fair value of noncontrolling interests subject to put obligations.

The Company's fair value estimates for its senior secured credit facilities and senior notes are based upon bid and ask quotes for these instruments, typically a level 2 input. See Note 6 for further discussion of the Company's debt.

Other financial instruments consist primarily of cash and cash equivalents, restricted cash and cash equivalents, accounts receivable, accounts payable, other accrued liabilities, lease liabilities and debt. The balances of financial instruments other than debt and lease liabilities are presented in these condensed consolidated financial statements at March 31, ~~2021~~2022 at their approximate fair values due to the short-term nature of their settlements.

DAVITA INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(continued)

(unaudited)

(dollars and shares in thousands, except per share data)

13. Segment reporting

The Company’s ~~operations~~operating divisions are comprised of its U.S. dialysis and related lab services business (its U.S. dialysis business), its ~~various~~U.S. integrated kidney care business, its U.S. other ancillary services ~~including~~and its international operations (collectively, its ancillary services), ~~and~~as well as its corporate administrative support.

The Company’s separate operating segments include its U.S. dialysis and related lab services business, ~~each of~~ its U.S. integrated kidney care business, its U.S. other ancillary services, its kidney care operations in each foreign sovereign jurisdiction, its other health operations in each foreign sovereign jurisdiction, and its equity method investment in the Asia Pacific joint venture (APAC JV). The U.S. dialysis and related lab services business qualifies as a separately reportable segment, and all other ~~ancillary services operating segments, including the international~~ operating segments have been combined and disclosed in the other segments category. See Note 25 to the Company's consolidated financial statements included in the ~~2020~~2021 10-K for further description of how the Company determines and measures results for its operating segments.

~~DAVITA INC.~~

~~NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(continued)~~

~~(unaudited)~~

~~(dollars and shares in thousands, except per share data)~~

The following is a summary of segment net revenues, segment operating ~~income~~margin (loss), and a reconciliation of segment operating ~~income (loss)~~margin to consolidated income before income taxes:

Three months ended
March 31,
2021 2020
Segment revenues:
U.S. dialysis
Dialysis patient service revenues:
External sources $ 2,556,259 $ 2,579,240
Intersegment revenues 26,944 31,941
U.S. dialysis patient service revenues 2,583,203 2,611,181
Other revenues(1):
External sources 6,616 5,141
Intersegment revenues 59 301
Total U.S. dialysis revenues 2,589,878 2,616,623
Other—Ancillary services
Dialysis patient service revenues 158,328 134,041
Other external sources 98,798 122,815
Intersegment revenues 4,293 4,152
Total ancillary services revenues 261,419 261,008
Total net segment revenues 2,851,297 2,877,631
Elimination of intersegment revenues (31,296) (36,394)
Consolidated revenues $ 2,820,001 $ 2,841,237
Segment operating income (loss):
U.S. dialysis $ 479,906 $ 491,607
Other—Ancillary services (11,860) (2,646)
Total segment operating income 468,046 488,961
Reconciliation of segment operating income to consolidated income from continuing
operations before income taxes:
Corporate administrative support (25,444) (23,585)
Consolidated operating income 442,602 465,376
Debt expense (67,014) (88,603)
Debt refinancing charges 0 (2,948)
Other income (loss), net 1,168 (4,350)
Consolidated income from continuing operations before income taxes $ 376,756 $ 369,475

~~(1)~~Includes management fee revenue from providing management and administrative services to dialysis ventures in which the Company owns a noncontrolling equity investment or which are wholly-owned by third parties.


	Three months ended March 31,
	2022		2021
Segment revenues:
U.S. dialysis
Dialysis patient service revenues:
External sources	$	2,546,961	$	2,556,259
Intersegment revenues	22,159		26,944


U.S. dialysis patient service revenues	2,569,120		2,583,203
Other revenues:
External sources	5,966		6,616
Intersegment revenues	10		59
Total U.S. dialysis revenues	2,575,096		2,589,878
Other—Ancillary services
Dialysis patient service revenues	169,320		158,328
Other external sources	95,308		98,798
Intersegment revenues	0		4,293
Total ancillary services revenues	264,628		261,419
Total net segment revenues	2,839,724		2,851,297
Elimination of intersegment revenues	(22,169)		(31,296)
Consolidated revenues	$	2,817,555	$	2,820,001
Segment operating margin (loss):
U.S. dialysis	$	406,440	$	479,906
Other—Ancillary services	(32,305)		(11,860)
Total segment operating margin	374,135		468,046
Reconciliation of segment operating income to consolidated income before income taxes:
Corporate administrative support	(35,827)		(25,444)
Consolidated operating income	338,308		442,602
Debt expense	(73,791)		(67,014)

Other (loss) income, net	(1,786)		1,168
Consolidated income before income taxes	$	262,731	$	376,756

1716

DAVITA INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(continued)

(unaudited)

(dollars and shares in thousands, except per share data)

Depreciation and amortization expense by reportable segment was as follows:

Three months ended March 31,
2021 2020
U.S. dialysis $ 155,946 $ 146,300
Other—Ancillary services 9,755 8,379
$ 165,701 $ 154,679

~~A summary of assets by reportable segment was as follows:~~


							Three months ended March 31,
		March 31, 2021		December 31, 2020			2022		2021
U.S. dialysis	U.S. dialysis	$	16,036,940	$	15,344,647	U.S. dialysis	$	162,019	$	155,946
Other—Ancillary services	Other—Ancillary services	1,610,328		1,643,869		Other—Ancillary services	10,925		9,755
Consolidated assets		$	17,647,268	$	16,988,516
							$	172,944	$	165,701

Expenditures for property and equipment by reportable segment were as follows:


		Three months ended March 31,					Three months ended March 31,
		2021		2020			2022		2021
U.S. dialysis	U.S. dialysis	$	133,804	$	148,763	U.S. dialysis	$	107,513	$	133,804
Other—Ancillary services	Other—Ancillary services	11,109		6,179		Other—Ancillary services	15,595		11,109
							$	123,108	$	144,913
		$	144,913	$	154,942

A summary of assets by reportable segment were as follows:


	March 31, 2022		December 31, 2021
U.S. dialysis	$	15,227,817	$	15,375,000
Other—Ancillary services	1,859,193		1,746,488
Consolidated assets	$	17,087,010	$	17,121,488

14. New accounting standards

~~New standards recently adopted~~

~~In December 2019, the FASB issued Accounting Standards Update (ASU) No. 2019-12, Income Taxes (Topic 740): Simplifying the Accounting for Income Taxes~~. ASU No. 2019-12 attempts to simplify aspects of accounting for franchise taxes and enacted changes in tax laws or rates, and clarifies the accounting for transactions that result in a step-up in the tax basis of goodwill. ASU No. 2019-12 is effective for public business entities for fiscal years beginning after December 15, 2020, including interim periods within that fiscal year. Early adoption is permitted for all entities. The adoption of ASU No. 2019-12 did not have a material impact on the Company's consolidated financial statements.

New standards not yet adopted

In March 2020, the FASB issued ASU No. 2020-04, Reference Rate Reform (Topic 848): Facilitation of the Effects of Reference Rate Reform on Financial Reporting. ASU No. 2020-04 provides optional expedients and exceptions for applying U.S. generally accepted accounting principles to contract modifications and hedging relationships, subject to ~~meeting~~ certain criteria, that reference LIBOR or another rate that is expected to be discontinued. The amendments in this ASU were effective beginning on March 12, 2020, and the Company may elect to apply the amendments prospectively through December 31, 2022. Effective January 1, 2022 certain LIBOR tenors that do not affect the Company, including the one-week and two-month U.S. dollar LIBOR rate, ceased or became non-representative. The remaining U.S. dollar LIBOR tenors will cease or become non-representative effective July 1, 2023. This change will have no impact on the Company's ability to borrow. The Company is currently assessing the other effects this guidance may have on its consolidated financial statements.

In October 2021, the FASB issued ASU No. 2021-08, Business Combinations (Topic 805): Accounting for Acquired Contract Assets and Contract Liabilities. ASU 2021-08 requires application of ASC 606, Revenue from Contracts with Customers, to recognize and measure assets and liabilities from contracts with customers acquired in a business combination. This ASU creates an exception to the general recognition and measurement principle in ASC 805 and will result in recognition of contract assets and contract liabilities consistent with those recorded by the acquiree immediately before the acquisition date. ASU 2021-08 is effective for fiscal years beginning after December 15, 2022, including interim periods within those fiscal years. Early adoption is permitted for all entities. The Company is currently assessing the effect this guidance may have on its consolidated financial statements.

1817

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

Forward-looking statements

This Quarterly Report on Form 10-Q, including this Management’s Discussion and Analysis of Financial Condition and Results of Operations, contains statements that are forward-looking statements within the meaning of the federal securities laws and as such are intended to be covered by the safe harbor for "forward-looking statements" provided by the Private Securities Litigation Reform Act of 1995. These forward-looking statements could include, among other things, DaVita's response to and the expected future impacts of the novel coronavirus (COVID-19), including statements about our balance sheet and liquidity, our expenses and expense offsets, revenues, ~~potential need, ability or willingness to use any funds under government relief programs,~~billings and collections, availability or cost of supplies, treatment volumes, mix expectation, such as the percentage or number of patients under commercial insurance, the availability, acceptance, impact, administration and ~~administration~~efficacy of COVID-19 vaccines, treatments and ~~other treatments or~~ therapies, the continuing impact on the U.S. and global economies, unemployment and labor market conditions, and overall impact on our patients and teammates, as well as other statements regarding our future operations, financial condition and prospects, expenses, strategic initiatives, government and commercial payment rates, expectations related to value-based care, integrated kidney care and Medicare Advantage plan enrollment, and our ongoing stock repurchase program. All statements in this report, other than statements of historical fact, are forward-looking statements. Without limiting the foregoing, statements including the words "expect," "intend," "will," “could,” "plan," "anticipate," "believe" and similar expressions are intended to identify forward-looking statements. These forward-looking statements are based on DaVita's current expectations and are based solely on information available as of the date of this report. DaVita undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of changed circumstances, new information, future events or otherwise, except as may be required by law. Actual future events and results could differ materially from any forward-looking statements due to numerous factors that involve substantial known and unknown risks and uncertainties. These risks and uncertainties include, among other things:

•the continuing impact of the dynamic and evolving COVID-19 pandemic, including, without limitation, on our patients, teammates, physician partners, suppliers, business, operations, reputation, financial condition and results of operations; the government’s response to the COVID-19 ~~pandemic;~~pandemic, including, among other things, federal, state and local vaccine mandates or surveillance testing requirements and the extent to which they may ultimately be applicable to us; the pandemic's continuing impact on the U.S. and global economies, unemployment, labor market conditions, inflation and evolving monetary policies; the availability, acceptance, impact and efficacy of COVID-19 vaccines, ~~and other~~ treatments orand therapies; further spread or resurgence of the virus, including as a result of the emergence of new strains of the ~~virus;~~virus, such as the Omicron variant or Omicron BA2 subvariant; the continuing impact of the pandemic on our revenue and non-acquired growth due to lower treatment volumes;COVID-19's impact on the ~~consequences~~chronic kidney disease (CKD) population and our patient population including on the mortality of ~~an extended economic downturn resulting from the impacts of COVID-19, such as a~~these patients; any potential negative impact on our commercial mix ~~which may persist even after~~or the ~~pandemic subsides;~~number of our patients covered by commercial insurance plans; continued increased COVID-19-related costs; supply chain challenges and ~~continuing COVID-19-related costs, such as costs~~disruptions, including with respect to ~~procure equipment and~~our clinical ~~supplies~~supplies; and higher salary and wage expense driven in part by labor market conditions and a high demand for our clinical personnel, any of which may also have the effect of heightening many of the other risks and uncertainties discussed ~~below;~~

•below, and in many cases, the ~~concentration~~impact of ~~profits generated by higher-paying commercial payor plans for which there is continued downward pressure~~the pandemic and the aforementioned global economic conditions on average realized payment rates, and a reduction in the number or percentage of our patients under such plans, including, without limitation, as a result of restrictions or prohibitions on the use and/or availability of charitable premium assistance, which may result in the loss of revenues or patients, or our making incorrect assumptions about how our patients will respond to any change in financial assistance from charitable organizations;

•~~noncompliance by us or~~ our business ~~associates with any privacy or security laws or any security breach by us or a third party involving~~may persist after the ~~misappropriation, loss or other unauthorized use or disclosure of confidential information;~~pandemic subsides;

•the extent to which the ongoing implementation of healthcare reform, or changes in or new legislation, regulations or guidance, enforcement thereof or related litigation result in a reduction in coverage or reimbursement rates for our services, a reduction in the number of patients enrolled in higher-paying commercial plans or that are enrolled in or select Medicare Advantage plans or other material impacts to our ~~business;~~business or operations; or our making incorrect assumptions about how our patients will respond to any such developments;

•~~a reduction in government payment rates under the Medicare End Stage Renal Disease program or other government-based programs and the impact of the Medicare Advantage benchmark structure;~~

•risks arising from potential changes in laws, regulations or requirements applicable to us, such as potential and proposed federal and/or state legislation, regulation, ballot, executive action or other initiatives, including, without limitation, those related to healthcare and/or labor matters, such as AB 290 in California;

•the concentration of profits generated by higher-paying commercial payor plans for which there is continued downward pressure on average realized payment rates, and ~~AB 650~~a reduction in ~~California~~the number or percentage of our patients under such plans, including, without limitation, as a result of restrictive plan designs, restrictions or prohibitions on the use and/or availability of charitable premium assistance, which may result in the loss of revenues or patients, or our making incorrect assumptions about how our patients will respond to any change in financial assistance from charitable organizations;

•our ability to successfully implement our strategies with respect to integrated kidney care and ~~HB 2322~~value-based care initiatives and home based dialysis in ~~Oregon;~~the desired time frame and in a complex, dynamic and highly regulated environment, including, among other things, maintaining our existing business; meeting growth expectations;

recovering our investments; entering into agreements with payors, third party vendors and others on terms that are competitive and, as appropriate, prove actuarially sound; structuring operations, agreements and arrangements to comply with evolving rules and regulations; finding, training and retaining appropriate staff; and further developing our integrated care and other capabilities to provide competitive programs at scale;

•a reduction in government payment rates under the Medicare End Stage Renal Disease program, state Medicaid or other government-based programs and the impact of the Medicare Advantage benchmark structure;

•our ability to attract, retain and motivate teammates and our ability to manage operating cost increases or productivity decreases whether due to union organizing activities, legislative or other changes, demand for labor, volatility and uncertainty in the labor market, the current challenging labor market conditions, or other reasons;

•U.S. and global economic and marketplace conditions, inflation, unemployment, labor market conditions, and evolving monetary policies, and our ability to respond to these changing conditions, including our ability to successfully implement cost savings innovations in response;

•noncompliance by us or our business associates with any privacy or security laws or any security breach by us or a third party involving the misappropriation, loss or other unauthorized use or disclosure of confidential information;

•legal and compliance risks, such as our continued compliance with complex, and at times, evolving government regulations and requirements;

•the impact of the political environment and related developments on the current healthcare marketplace and on our business, including with respect to ~~the future of~~ the Affordable Care Act, the exchanges and many other core aspects of the current healthcare marketplace, as well as the composition of the U.S. Supreme Court and the ~~new~~current presidential administration and congressional majority;

•our ability to successfully implement our strategies with respect to home-based dialysis, value-based care and/or integrated kidney care, including maintaining our existing business and further developing our capabilities in a complex and highly regulated environment;

•changes in pharmaceutical practice patterns, reimbursement and payment policies and processes, or pharmaceutical pricing, including with respect to hypoxia inducible ~~factors;~~

•~~legal and compliance risks, such as our continued compliance with complex government regulations;~~

•~~continued increased competition from dialysis providers and others, and~~factors, among other ~~potential marketplace changes;~~things;

•our ability to develop and maintain ~~contracts~~relationships with ~~physician medical directors,~~physicians and hospitals, changing affiliation models for physicians, and the emergence of new models of care or other initiatives introduced by the government or private sector that, among other things, may erode our patient base and impact reimbursement ~~rates, such as accountable care organizations, independent practice associations and integrated delivery systems;~~rates;

•our ability to complete acquisitions, mergers, dispositions, joint ventures or ~~dispositions~~other strategic transactions that we might announce or be considering, on terms favorable to us or at all, or to successfully integrate ~~and~~any acquired businesses, or to successfully operate any ~~business we may acquire~~acquired businesses, joint ventures or ~~have acquired,~~other strategic transactions, or to successfully expand our operations and services in markets outside the United States, or to businesses or products outside of ~~dialysis;~~dialysis services;

•continued increased competition from dialysis providers and others, and other potential marketplace changes, including without limitation increased investment in and availability of funding to new entrants in the dialysis and pre-dialysis marketplace;

•the variability of our cash flows, including without limitation any extended billing or collections cycles; the risk that we may not be able to generate or access sufficient cash in the future to service our indebtedness or to fund our other liquidity needs; and the risk that we may not be able to refinance our indebtedness as it becomes due, on terms favorable to us or at all;

•factors that may impact our ability to repurchase stock under our stock repurchase program and the timing of any such stock repurchases, as well as our use of a considerable amount of available funds to repurchase stock;

•risks arising from the use of accounting estimates, judgments and interpretations in our financial statements;

•impairment of our goodwill, investments or other assets;

•our aspirations, goals and disclosures related to environmental, social and governance (ESG) matters, including evolving regulatory requirements affecting ESG standards, measurements and reporting requirements; the availability of suppliers that can meet our sustainability standards; and our ability to recruit, develop and retain diverse talent in our labor markets; and

•~~uncertainties associated with~~ the other risk factors, trends and uncertainties set forth in our Annual Report on Form 10-K for the year ended December 31, ~~2020 (2020~~2021 (2021 10-K) and this Quarterly Report on Form 10-Q, and the risks and uncertainties discussed in any subsequent reports that we ~~have filed~~file or ~~furnished~~furnish with the Securities and Exchange Commission (SEC) from time to time.

The following should be read in conjunction with our condensed consolidated financial statements.

2019

Company Overview

Our principal business is to provide dialysis and related lab services to patients in the United States, which we refer to as our U.S. dialysis business. We also operate ~~various~~our U.S. integrated kidney care (IKC) business, our other U.S. ancillary services, ~~including~~and our international operations, which we collectively refer to as our ancillary services, as well as our corporate administrative support. Our U.S. dialysis business is a leading provider of kidney dialysis services in the U.S. for patients suffering from chronic kidney failure, also known as end stage renal disease (ESRD) or end stage kidney disease (ESKD).

On June 19, 2019, we completed the sale of our DaVita Medical Group (DMG) business to Optum, a subsidiary of UnitedHealth Group Inc. As a result of this transaction, DMG's results of operations have been reported as discontinued operations for all periods presented and DMG is not included below in this Management's Discussion and Analysis.

COVID-19 and ~~its impact on our business~~General Economic and Marketplace Conditions

~~We expect that~~The COVID-19 ~~will continue~~pandemic continues to impact our business and ~~financial performance during 2021 and~~operations. In addition, we continue to ~~closely monitor~~be impacted by general conditions in the global economy, including challenges with respect to supply chains, inflation and wage pressure, among other things. Certain of these ~~various~~ impacts could be further intensified by concurrent global events such as potential COVID-19 lockdowns in portions of China or the ongoing conflict between Russia and Ukraine, the latter of which has resulted in increasing levels of sociopolitical and economic uncertainty and volatility in Europe and across the globe.

Operational and Financial Impacts

As part of our continued focus on the health, safety and well-being of our patients, teammates and physician partners, ~~suppliers, vendors, business partners~~we have continued to dedicate substantial resources in response to COVID-19, including the implementation of additional protocols and initiatives to help safely maintain continuity of care for our patients and help protect our caregivers. The significant increase in cases resulting from the ~~economic~~Omicron variant surge required us to continue to implement dedicated care shifts for patients with confirmed or suspected COVID-19 and ~~political environment.~~other enhanced clinical practices, including procuring additional equipment and clinical supplies, such as personal protective equipment (PPE).

During the first quarter of 2022, these ongoing clinical measures placed additional pressure on staffing in an already challenging labor market. Additionally, as a result of these ongoing COVID-19-related clinical measures, in combination with general labor and inflationary pressures, we have incurred higher incentive pay, increased utilization of contract labor, and inefficient productivity. In addition, during 2022, we have and expect to continue to experience higher than usual wage increases for our teammates. The cumulative impact of the foregoing will continue to put additional pressure on our cost structure, some of which is expected to abate with the decline of the impact of COVID-19. Potential staffing shortages or disruptions, if material, could ultimately lead to the unplanned closures of certain centers or adversely impact clinical operations, and may otherwise have a material adverse impact on our ability to provide dialysis services or the cost of providing those services, among other things. Prolonged volatility, uncertainty, labor supply shortages and other challenging labor market conditions, including, among other things, due to inflationary pressures or evolving monetary policies that may be independent of the pandemic, could also have an adverse impact on our ability to execute on our strategic initiatives and a material adverse impact on our labor costs. These inflationary pressures or evolving monetary policies could more broadly impact our supply and other costs as noted below, and may drive certain increased expenses, including interest expense. While we continue to identify and implement cost savings opportunities to help mitigate these pressures, including cost savings associated with certain pharmaceutical supplies, and potential cost savings related to G&A efficiencies, capacity utilization improvement, clinic operations optimization and improvement and procurement improvement, there is no assurance that these initiatives will succeed in offsetting the impact of these challenging conditions, which ultimately could have a material adverse impact on our results of operations, financial condition and cash flows.

We also continued to experience significant cost inflation during the first quarter, including with respect to PPE and other medical supplies, among other things. We believe that the cost of PPE and other medical supplies will remain elevated and as our COVID-19 response continues, we expect to continue to incur extended and significant additional costs for these supplies, and we expect that certain of these increased costs may persist due to the overall challenges and disruptions of global supply chains. Ongoing global supply chain challenges have impacted the availability of certain of our equipment and clinical supplies. Prolonged strain on global supply chains may result in additional equipment and clinical supply shortages, disruptions, delays or associated price increases that could materially impact our ability to provide dialysis services or the cost of providing those services, among other things. On the other hand, our COVID-19 response has continued to reduce certain other expenses, such as those related to teammate travel, though it remains uncertain how much of these reductions, if any, will persist as our teammates return to their respective office locations.

In the first quarter, treatment volumes reflected continued pressure primarily driven by the ongoing impact of COVID-19 on mortality rates for dialysis patients which has had a negative impact on our patient census. The latest Omicron variant surge led to a significant increase in COVID-19 cases in our patient population. While the mortality rate associated with this latest surge preliminarily appears to be lower than in prior surges, the magnitude of the case increase resulted in an increased level of excess patient mortalities in the first quarter as compared to the prior quarter. We expect that the impact of COVID-19 is likely

to continue to negatively impact our revenue and non-acquired growth for a period of time even as the pandemic subsides due to the compounding impact of mortalities, among other things. Depending on the ultimate severity and duration of the pandemic, the magnitude of these cumulative impacts ~~remains~~could have a material adverse impact on our results of operations, financial condition and cash flows. In light of the cumulative impact of these excess mortalities and these other marketplace dynamics that have been intensified by the pandemic, we are seeking to identify and implement cost savings opportunities, and any failure on our part to appropriately adjust our business and operations could have a material adverse effect on our business, results of operations, financial condition and cash flows and could materially harm our reputation.

Federal, State and Local Government Response

Federal COVID-19 relief legislation suspended the 2% Medicare sequestration from May 1, 2020 through December 31, 2021. The Protecting Medicare and American Farmers from Sequester Cuts Act, signed into law on December 10, 2021, extended the suspension of the 2% Medicare sequestration from December 31, 2021 through March 31, 2022, with 1% Medicare sequestration beginning April 1, 2022 through June 30, 2022 and 2% Medicare sequestration beginning July 1, 2022. While in effect, the suspension of sequestration has significantly increased, and will continue to significantly increase, our revenues.

We believe the ultimate impact of this public health crisis on the Company will depend on future developments that are highly uncertain and difficult to predict, ~~and subject to significant uncertainty due to a number of factors,~~ including among others the ultimate severity and duration of the pandemic; further spread or resurgence of the virus, including as a result of the emergence of new strains of the ~~virus; its~~virus, such as the Omicron variant or Omicron BA2 subvariant; COVID-19's impact on the chronic kidney disease (CKD) patient population and our patient ~~population;~~population, including on the mortality of these patients; the availability, acceptance, impact and efficacy of COVID-19 vaccines, ~~and other~~ treatments orand therapies; the ~~pandemics'~~pandemic’s continuing impact on our revenue and non-acquired growth due to lower treatment volumes, the U.S. and global economies, unemployment, labor market conditions, inflation and ~~unemployment;~~monetary policies; the potential negative impact on our commercial mix or the number of patients covered by commercial insurance plans; continued increased COVID-19-related costs; supply chain challenges and disruptions; the responses of our competitors to the pandemic and related changes in the marketplace; ~~and~~ the timing, scope and effectiveness of federal, state and local government responses. The continued impacts and disruptions to our business as a result of the COVID-19 pandemic could have a material adverse impact on our patients, teammates, physician partners, suppliers, business, operations, reputation, financial condition, results of operations, cash flows and/or liquidity.

~~Operational and Financial Impacts~~

In the first quarter of 2021, treatment volumes reflected continued pressure primarily driven by the ongoing impact of COVID-19 on mortality rates for dialysis patients that has had a negative impact on our patient census. Because ESRD patients may be older and generally have comorbidities, several of which are risk factors for COVID-19, we believe the mortality rate of infected patients is, and will continue to be, higher in the dialysis population than in the general population, and COVID-19 also could impact the CKD population differently. COVID-19 case counts and new infections within our dialysis population have significantly declined from the peak prevalence rates experienced during the winter surge in late 2020 and early 2021. Over the longer term, we believe that changes in mortality in both the CKD and ESRD populations due to COVID-19 will depend primarily on the infection rate, case fatality rate, the age and health status of affected patients, the access to and efficacy of vaccinations as well as willingness to be vaccinated. We expect that these changes are likely to continue to negatively impact our revenue and non-acquired growth even as the pandemic subsides. However, determining the extent to which these impacts should be directly attributable to COVID-19 is difficult due to testing and reporting limitations, and other factors that may drive treatment volumes and new admissions over time, such as the number of transplants or deferred admissions. The magnitude of these cumulative impacts has been substantial, and depending on the ultimate severity and duration of the pandemic, could be material.

~~We continued to experience increased costs in the first quarter of 2021 due in part~~responses to the ~~protocols~~continuing pandemic; and initiatives we implemented in response to COVID-19 to help us safely maintain continuity of care for patients. Among other things, we continued to incur higher salary and wage expense and experienced significant cost inflation on PPE in the first quarter of 2021, though certain of these costs have decreased as a whole since the peak of the most recent COVID-19 surge in the fourth quarter of 2020. We believe that the cost of these medical supplies will remain elevated at least through the end of the year due to limited supply and high demand. In addition, as we have done in prior periods, we may provide substantial financial support associated with relief reimbursement to our teammates in the future. As our COVID-19 response continues, we expect to continue to incur extended and significant additional costs. On the other hand, our COVID-19 response has reduced certain other expenses, such as those related to teammate travel, though it remains uncertain how much of these reductions, if any, will persist after the pandemic subsides.

In addition, the COVID-19 pandemic and efforts to contain the virus have led to global economic deterioration and rapid and sharp increases in unemployment levels, which ultimately could result in a materially reduced share of our patients being covered by commercial insurance plans, with more patients being covered by lower-paying government insurance programs or being uninsured. These effects may persist after the pandemic subsides as, among other things, our patients could experience permanent changes in their insurance coverage as a result of changes to their employment status. In the event such a material reduction occurs in the share of our patients covered by commercial insurance plans, it would have a material adverse impact on

our business, results of operations, financial condition and cash flows. Despite the broader economic conditions in the U.S. in the three months ended March 31, 2021, our commercial mix in the first quarter of 2021 was slightly improved as compared to our commercial mix in the first quarter of 2020, which we believe was largely due to the fact that older, higher-risk patients who tend to disproportionately have government health insurance coverage, have been more adversely impacted by COVID-19 to date. The ultimate impact of COVID-19 on our commercial mix will depend on future developments that are highly uncertain and difficult to predict.

~~Federal, State and Local Government Response~~

The government response to COVID-19 has been wide-ranging and will continue to develop over time, particularly in light of the new federal administration. As a result, we may not be able to accurately predict the nature, timing or extent of the impact of such changes on the markets in which we conduct business or on the other participants that operate in those markets, or any potential changes to the extensive set of federal, state and local laws, regulations and requirements that govern our business. ~~We have worked with certain government agencies to respond to~~In many cases, the ~~COVID-19~~impact of the pandemic and ~~in certain cases have sought waivers of regulatory requirements. We also have contracted with~~ the ~~federal government for direct administration of COVID-19 vaccines to our patients~~aforementioned global economic and teammates at our clinics. These vaccines are currently available under emergency use authorizations, and there can be no assurance that our patients and caregivers will choose to receive a COVID-19 vaccine or that the vaccines will prove to be as safe and effective as currently understood by the scientific community. In addition, we may encounter difficulties with the availability and storage of the vaccines, or experience other complications related to administering the vaccines, some of which have multiple dose requirements. We operate in a complex and highly regulated environment, and the novel nature of our COVID-19 response, including, for example, with respect to regulatory waivers and our administration of the newly developed COVID-19 vaccines, may increase our exposure to legal, regulatory and clinical risks.

Federal COVID-19 relief legislation suspended the 2% Medicare sequestration from May 1, 2020 through March 31, 2021, and in the three months ended March 31, 2021 our revenues increased due to this suspension as further described below. The Medicare Sequester Relief Act, signed into law on April 14, 2021, extended the suspension of the 2% Medicare sequestration from March 31, 2021 until December 31, 2021. While in effect, the suspension of sequestration has significantly increased, and will continue to significantly increase our revenues. At the state government level, a bill was recently introduced in California in connection with the ongoing COVID-19 state of emergency that would require health care employers with more than 100 employees to pay all non-executive employees a recognition bonus each quarter in 2022, with the amounts specified by employee status (i.e., full-time, part-time, per diem). The bill, AB 650, which was sponsored by the Service Employees International Union-United Healthcare Workers West, remains subject to change through the course of the legislative process. Additionally, though not directly related to COVID-19, another bill, HB 2322, was recently introduced in Oregon that specifically targets the dialysis industry and would impose a rate cap on private pay reimbursement for dialysis. If signed into law and implemented in substantially their current forms, these bills could have a significant adverse impactmarketplace conditions on our business ~~results of operations, financial condition and cash flows.~~may persist after the pandemic subsidies.

For additional discussion of the COVID-19 pandemic and our response, including its impact on us and related risks and uncertainties, please see the discussion in Part I Item ~~1 "Business"~~1. Business of the ~~2020~~2021 10-K under the headings, "COVID-19 and its impact on our business" and "Human Capital ~~Managemen~~Management,~~t",~~" as well as the risk factor in Part I Item 1A. Risk Factors of the ~~2020~~2021 10-K under the heading “"We face various risks related to the dynamic and evolving novel coronavirus pandemic, ~~any~~many of which may have a material adverse impact on us.”"

Financial Results

The discussion below includes analysis of our financial condition and results of operations for the quarter ended periods for the three months ended March 31, ~~2021~~2022 compared to the ~~quarters~~three months ended December 31, ~~2020~~2021, and the year to date periods for three months ended March 31, ~~2020.~~2022 compared to the three months ended March 31, 2021. The SEC amended its guidance on Management's Discussion and Analysis of Financial Condition and Results of Operations to permit companies to compare their most recently completed quarter to either the corresponding quarter of the prior year or to the immediately preceding sequential quarter to allow for flexibility in comparison of interim periods reported to help companies provide a more tailored and meaningful analysis relevant to their business cycles. Beginning with the first quarter of 2022, our Management’s Discussion and Analysis of Financial Condition and Results of Operations will present our results of operations for the most recently completed fiscal year to date period to the corresponding year to date period of the prior year, as well as the most recently completed quarter compared to the immediately preceding sequential quarter, and will otherwise exclude comparisons of the most recently completed quarter and the corresponding quarter of the prior year.

2221

Consolidated results of operations

The following ~~table summarizes~~tables summarize our revenues and operating income by line of business. See the discussion of our results for each line of business following ~~this table:~~the tables. When multiple drivers are identified in the following discussion of results, they are listed in order of magnitude:


		Three months ended						Q1 2021 vs. Q4 2020				Q1 2021 vs. Q1 2020					Three months ended				Q1 2022 vs. Q4 2021
		March 31, 2021		December 31, 2020		March 31, 2020		Amount		Percent		Amount		Percent			March 31, 2022		December 31, 2021		Amount		Percent
		(dollars in millions)															(dollars in millions)
Revenues:	Revenues:															Revenues:
U.S. dialysis	U.S. dialysis	$	2,590	$	2,674	$	2,617	$	(84)	(3.1)	%	$	(27)	(1.0)	%	U.S. dialysis	$	2,575	$	2,703	$	(128)	(4.7)	%
Other - ancillary services		261		276		261		(15)		(5.4)	%	—		—	%
Other — Ancillary services																Other — Ancillary services	265		262		3		1.1	%
Elimination of intersegment revenues	Elimination of intersegment revenues	(31)		(45)		(36)		14		31.1	%	5		13.9	%	Elimination of intersegment revenues	(22)		(20)		(2)		(10.0)	%
Total consolidated revenues	Total consolidated revenues	$	2,820	$	2,905	$	2,841	$	(85)	(2.9)	%	$	(21)	(0.7)	%	Total consolidated revenues	$	2,818	$	2,944	$	(126)	(4.3)	%

Operating income (loss):	Operating income (loss):															Operating income (loss):
U.S. dialysis	U.S. dialysis	$	480	$	433	$	492	$	47	10.9	%	$	(12)	(2.4)	%	U.S. dialysis	$	406	$	451	$	(45)	(10.0)	%
Other - ancillary services		(12)		(27)		(3)		15		55.6	%	(9)		(300.0)	%
Other — Ancillary services																Other — Ancillary services	(32)		(29)		(3)		(10.3)	%
Corporate administrative support	Corporate administrative support	(25)		(24)		(24)		(1)		(4.2)	%	(1)		(4.2)	%	Corporate administrative support	(36)		(33)		(3)		(9.1)	%
Operating income	Operating income	$	443	$	382	$	465	$	61	16.0	%	$	(22)	(4.7)	%	Operating income	$	338	$	389	$	(51)	(13.1)	%

Certain columns, rows or percentages may not sum due to the presentation of rounded numbers.


	Three months ended				YTD Q1 2022 vs. YTD Q1 2021
	March 31, 2022		March 31, 2021		Amount		Percent
	(dollars in millions)
Revenues:
U.S. dialysis	$	2,575	$	2,590	$	(15)	(0.6)	%
Other — Ancillary services	265		261		4		1.5	%
Elimination of intersegment revenues	(22)		(31)		9		29.0	%
Total consolidated revenues	$	2,818	$	2,820	$	(2)	(0.1)	%

Operating income (loss):
U.S. dialysis	$	406	$	480	$	(74)	(15.4)	%
Other — Ancillary services	(32)		(12)		(20)		(166.7)	%
Corporate administrative support	(36)		(25)		(11)		(44.0)	%
Operating income	$	338	$	443	$	(105)	(23.7)	%

Certain columns, rows or percentages may not sum due to the presentation of rounded numbers.

U.S. dialysis results of operations

~~Revenues:~~Treatment Volume:


		Three months ended									Q1 2021 vs. Q4 2020				Q1 2021 vs. Q1 2020					Three months ended				Q1 2022 vs. Q4 2021
		March 31, 2021			December 31, 2020			March 31, 2020			Amount		Percent		Amount		Percent			March 31, 2022		December 31, 2021		Amount	Percent
		(dollars in millions, except per treatment data)
Total revenues		$	2,590		$	2,674		$	2,617		$	(84)	(3.1)	%	$	(27)	(1.0)	%
Dialysis treatments	Dialysis treatments	7,286,934			7,574,217			7,513,321			(287,283)		(3.8)	%	(226,387)		(3.0)	%	Dialysis treatments	7,109,788		7,455,560		(345,772)	(4.6)	%
Average treatments per day	Average treatments per day	94,636			95,876			96,821			(1,240)		(1.3)	%	(2,185)		(2.3)	%	Average treatments per day	92,335		94,374		(2,039)	(2.2)	%
Treatment days	Treatment days	77.0			79.0			77.6			(2.0)		(2.5)	%	(0.6)		(0.8)	%	Treatment days	77.0		79.0		(2.0)	(2.5)	%
Average patient service revenue per treatment		$	354.50		$	351.78		$	347.54		$	2.72	0.8	%	$	6.96	2.0	%
Normalized non-acquired treatment growth(1)	Normalized non-acquired treatment growth(1)	(2.2)		%	(0.3)		%	2.3		%			(1.9)	%			(4.5)	%	Normalized non-acquired treatment growth(1)	(1.9)	%	(1.8)	%		(0.1)	%

Certain columns, rows or percentages may not sum due to the presentation of rounded numbers.

(1)Normalized non-acquired treatment growth reflects year over year growth in treatment volume, adjusted to exclude acquisitions and other similar transactions, and further adjusted to normalize for the number and mix of treatment days in a given quarter versus the prior year quarter.


	Three months ended				YTD Q1 2022 vs. YTD Q1 2021
	March 31, 2022		March 31, 2021		Amount	Percent
Dialysis treatments	7,109,788		7,286,934		(177,146)	(2.4)	%
Average treatments per day	92,335		94,636		(2,301)	(2.4)	%
Treatment days	77.0		77.0		—	—	%
Normalized non-acquired treatment growth(1)	(1.9)	%	(2.2)	%		0.3	%

Certain columns, rows or percentages may not sum due to the presentation of rounded numbers.

Our U.S. dialysis treatment volume is directly correlated with our operating revenues for the first quarter of 2021 decreased from the fourth quarter of 2020 primarily due to a decrease in dialysis treatments, partially offset by an increase in our average patient service revenue per treatment.and expenses. The decrease in our U.S. dialysis treatments for the first quarter of 2022 from the fourth quarter of 2021 was primarily driven by two fewer treatment days, ~~higher~~increased mortality and higher missed ~~treatments caused by the winter storms in the first quarter of 2021.~~treatments. We believe the increased mortality is largely attributable to the impact of COVID-19 on our patient population. Our U.S. dialysis average patient service revenue per treatment was positively impacted by favorable changes in government rates related to an increase in the Medicare base rate in 2021 and the inclusion of calcimimetics in the Medicare bundle, favorable changes in government mix due to shifts to Medicare Advantage plans, as well as favorable changes in commercial mix and increased hospital inpatient dialysis revenue driven by COVID-19, partially offset by a seasonal decline from co-insurance and deductibles.

~~U.S. dialysis revenues for the first quarter of 2021 decreased from the first quarter of 2020 primarily due to a~~The decrease in ~~dialysis treatments, partially offset by an increase in~~ our ~~average patient service revenue per treatment. Our~~ U.S. dialysis treatments decreased primarily due to a decline in non-acquired dialysis treatments due to higher mortality, and a decrease in treatment days. Our U.S. dialysis average patient service revenue per treatment increasedfor the three months ended March 31, 2022 from the three months ended March 31, 2021 was primarily driven by ~~favorable changes in government rates related~~the impact of increased mortality over recent periods on our patient population, slightly offset by acquisition-related growth. We believe the increased mortality is largely attributable to ~~an increase in Medicare base rate in 2021 and~~ the ~~temporary suspension~~impact of ~~Medicare sequestration, as well as favorable changes in government mix~~COVID-19 on our patient population.

Revenues:


	Three months ended				Q1 2022 vs. Q4 2021
	March 31, 2022		December 31, 2021		Amount		Percent
	(dollars in millions, except per treatment data)
Total revenues	$	2,575	$	2,703	$	(128)	(4.7)	%
Average patient service revenue per treatment	$	361.35	$	361.70	$	(0.35)	(0.1)	%

Certain columns, rows or percentages may not sum due to ~~shifts to Medicare Advantage plans and favorable changes in commercial mix.~~the presentation of rounded numbers.

~~Operating expenses:~~

Three months ended Q1 2021 vs. Q4 2020 Q1 2021 vs. Q1 2020
March 31,
2021 December 31,
2020 March 31,
2020 Amount Percent Amount Percent
(dollars in millions, except per treatment data)
Patient care costs $ 1,739 $ 1,856 $ 1,783 $ (117) (6.3) % $ (44) (2.5) %
General and administrative 221 241 204 (20) (8.3) % 17 8.3 %
Depreciation and amortization 156 152 146 4 2.6 % 10 6.8 %
Equity investment income (6) (7) (9) 1 14.3 % 3 33.3 %
Total operating expenses and charges $ 2,110 $ 2,241 $ 2,125 $ (131) (5.8) % $ (15) (0.7) %
Patient care costs per treatment $ 238.69 $ 245.06 $ 237.35 $ (6.37) (2.6) % $ 1.34 0.6 %


	Three months ended				YTD Q1 2022 vs. YTD Q1 2021
	March 31, 2022		March 31, 2021		Amount		Percent
	(dollars in millions, except per treatment data)
Total revenues	$	2,575	$	2,590	$	(15)	(0.6)	%
Average patient service revenue per treatment	$	361.35	$	354.50	$	6.85	1.9	%

Certain columns, rows or percentages may not sum due to the presentation of rounded numbers.

U.S. dialysis average patient service revenue per treatment for the first quarter of 2022 compared to the fourth quarter of 2021 decreased, driven by a seasonal decline from co-insurance and deductibles, partially offset by an increase in the Medicare base rate in 2022, increases in commercial rate and mix, favorable changes due to the continued shift to Medicare Advantage plans and a seasonal increase from hospital inpatient dialysis treatments.

U.S. dialysis average patient service revenue per treatment for the three months ended March 31, 2022 compared to the three months ended March 31, 2021 increased, primarily driven by increases in the Medicare base rate in 2022 and commercial mix, as well as favorable changes due to the continued shift to Medicare Advantage plans.

Operating expenses:


	Three months ended				Q1 2022 vs. Q4 2021
	March 31, 2022		December 31, 2021		Amount		Percent
	(dollars in millions, except per treatment data)
Patient care costs	$	1,796	$	1,850	$	(54)	(2.9)	%
General and administrative	217		243		(26)		(10.7)	%
Depreciation and amortization	162		166		(4)		(2.4)	%
Equity investment income	(6)		(7)		1		14.3	%
Total operating expenses and charges	$	2,169	$	2,251	$	(82)	(3.6)	%
Patient care costs per treatment	$	252.61	$	248.12	$	4.49	1.8	%

Certain columns, rows or percentages may not sum or recalculate due to the presentation of rounded numbers.


	Three months ended				YTD Q1 2022 vs. YTD Q1 2021
	March 31, 2022		March 31, 2021		Amount		Percent
	(dollars in millions, except per treatment data)
Patient care costs	$	1,796	$	1,739	$	57	3.3	%
General and administrative	217		221		(4)		(1.8)	%
Depreciation and amortization	162		156		6		3.8	%
Equity investment income	(6)		(6)		—		—	%
Total operating expenses and charges	$	2,169	$	2,110	$	59	2.8	%
Patient care costs per treatment	$	252.61	$	238.69	$	13.92	5.8	%

Certain columns, rows or percentages may not sum or recalculate due to the presentation of rounded numbers.

Patient care costs. U.S. dialysis patient care costs ~~are those costs directly associated with~~per treatment for the first quarter of 2022 increased from the fourth quarter of 2021 primarily due to compensation expenses driven by increased wage rates and seasonal increases in payroll taxes. In addition, our fixed other direct operating ~~and supporting~~expenses in our dialysis centers ~~and consist principally~~negatively impacted patient care costs per treatment due to fewer number of ~~compensation~~treatments in the first quarter of 2022. These increases were partially offset by decreased health benefit expenses, ~~including labor~~pharmaceutical unit costs and ~~benefits, pharmaceuticals,~~ medical supplies ~~and other operating costs of our dialysis centers.~~expense.

U.S. dialysis patient care costs per treatment for the ~~first quarter of 2021 decreased~~three months ended March 31, 2022 increased from the ~~fourth quarter of 2020~~three months ended March 31, 2021 primarily due to ~~a decrease in COVID-19-related~~compensation expenses ~~including a decrease in compensation and medical supply expenses that had been driven higher in the fourth quarter of 2020 by the winter COVID-19 surge, a decrease in utilities expense~~ driven by ~~our virtual power purchase arrangements,~~increased wage rates, as well as ~~decreases~~increases in ~~health benefit expenses, pharmaceutical unit costs and~~fixed other direct operating expenses associated with our dialysis ~~centers. These decreases were partially offset by an increase~~centers, as described above. Other drivers of this change include increases in ~~labor costs due to~~utilities expense resulting from lower ~~productivity levels at our dialysis centers and a seasonal increase~~expense in ~~payroll taxes.~~

~~U.S. dialysis patient care costs per treatment for~~ the first quarter of 2021 ~~increased from the first quarter of 2020 primarily due~~related to ~~an increase in labor~~our virtual power purchase arrangements, medical supplies expense, costs driven by lower productivity levels at our dialysis centers, an increase in COVID-19-related expenses, including an increase in medical supply expense, as well as higher other direct operating expenses associated with our dialysis centers.related to management meetings and insurance expense. These increases were partially offset by ~~a decrease in~~decreased pharmaceutical unit costs and ~~intensity, a decrease in utilities expense driven by our virtual power purchase arrangements, decreased health benefit expenses due to reduced claims volume and a decline in travel expense.~~professional fees.

General and administrative expenses. U.S. dialysis general and administrative expenses in the first quarter of ~~2021~~2022 decreased from the fourth quarter of ~~2020~~2021 primarily due to ~~decreases in costs related to COVID-19, including a decrease~~declines in compensation ~~expenses, as well as decreases in contributions to our charitable foundation~~expense, professional fees, office supplies, other purchased services and ~~professional fees.~~health benefit expenses.

U.S. dialysis general and administrative expenses for the ~~first quarter of 2021 increased~~three months ended March 31, 2022 decreased from the ~~first quarter of 2020~~three months ended March 31, 2021 primarily due to ~~an increase~~a decline in ~~labor~~professional fees, partially offset by increased costs related to ~~increased headcount and labor rates, and increased professional fees. These increases were partially offset by decreases in travel expenses.~~management meetings.

Depreciation and amortization. ~~Depreciation and amortization expense is directly impacted by the number of dialysis centers we develop and acquire.~~ U.S. dialysis depreciation and amortization expenses for the quarter ended March 31, ~~2021~~2022 compared to the ~~quarters~~quarter ended December 31, ~~2020 and March 31, 2020 increased~~2021 decreased primarily due to ~~growth~~a decline in accelerated depreciation for expected center closures, partially offset by increased depreciation and amortization related to hardware associated with our clinical system and other corporate technology projects.

U.S. dialysis depreciation and amortization expenses for the ~~number~~three months ended March 31, 2022 compared to the three months ended March 31, 2021 increased primarily related to increased depreciation and amortization related to hardware associated with our clinical system and other corporate technology projects, as well as the development of ~~dialysis centers we operated in~~new centers. We expect depreciation and amortization to increase going forward as a result of the ~~first quarter~~expected rollout of ~~2021.~~our new clinical system.

Equity investment income. U.S. dialysis equity investment income was relatively flat for the first quarter of ~~2021 decreased from~~2022 compared to the fourth quarter of ~~2020~~2021 and ~~from~~ the ~~first quarter of 2020 primarily due~~three months ended March 31, 2022 compared to ~~a decrease in profitability at our nonconsolidated joint ventures.~~the three months ended March 31, 2021.

Operating income:

Three months ended Q1 2021 vs. Q4 2020 Q1 2021 vs. Q1 2020
March 31,
2021 December 31,
2020 March 31,
2020 Amount Percent Amount Percent
(dollars in millions)
Operating income $ 480 $ 433 $ 492 $ 47 10.9 % $ (12) (2.4) %


	Three months ended				Q1 2022 vs. Q4 2021
	March 31, 2022		December 31, 2021		Amount		Percent
	(dollars in millions)
Operating income	$	406	$	451	$	(45)	(10.0)	%


	Three months ended				YTD Q1 2022 vs. YTD Q1 2021
	March 31, 2022		March 31, 2021		Amount		Percent
	(dollars in millions)
Operating income	$	406	$	480	$	(74)	(15.4)	%

U.S. dialysis operating income for the first quarter of ~~2021 increased~~2022 decreased from the fourth quarter of ~~2020~~2021 primarily due to ~~an increase~~a decrease in dialysis treatments, a decrease in our average patient service revenue per treatment and increases in compensation expenses, as described ~~above, as well as~~above. Operating income was positively impacted by decreases in ~~COVID-19-related~~health benefit expenses, ~~health benefits expense, utilities expense,~~ pharmaceutical unit costs, medical supplies expense and professional fees.

U.S. dialysis operating income for the three months ended March 31, 2022 decreased from the three months ended March 31, 2021 primarily due to a decrease in dialysis treatments and increases in compensation expenses and fixed other direct operating expenses associated with our dialysis centers, as described ~~above.~~above, as well as increases in costs related to management meetings and medical supplies expense. Operating income was ~~negatively~~positively impacted ~~by a decrease in dialysis treatments, and increases in labor costs and payroll taxes, as described above.~~

U.S. dialysis operating income for the first quarter of 2021 decreased from the first quarter of 2020 primarily due to a decrease in dialysis treatments, as described above, and increases in labor costs, COVID-19-related expenses and other direct operating expenses associated with our dialysis centers, as described above. These decreases to operating income were partially offset by an increase in our average patient service revenue per treatment, as described above, and ~~decreases~~a decrease in professional fees and pharmaceutical unit ~~costs and intensity, utilities expense, health benefit expenses and travel expense, as described above.~~costs.

Other—Ancillary services

Our other operations include ancillary services that are primarily aligned with our core business of providing dialysis services to our network of patients. As of March 31, ~~2021,~~2022, these consisted ~~primarily~~principally of our U.S. integrated kidney care ~~and disease management, ESRD seamless care organizations (ESCOs)~~business (IKC), certain U.S. other ancillary businesses (including our clinical research programs, transplant software business, and ~~physician services, as well as~~venture investment group), and our international operations.

These ancillary services ~~including our international operations,~~ generated revenues of approximately ~~$261~~$265 million in the ~~three months ended March 31, 2021,~~first quarter of 2022, representing approximately 9% of our consolidated ~~revenues for~~revenues. As part of our growth strategy, we have invested, and expect to continue to invest, significant resources in the ~~period.~~further development of our integrated care business and value-based care initiatives. There can be no assurances that we will be able to successfully implement our strategies with respect to value-based care and integrated kidney care in the desired time frame and in a complex, dynamic and highly regulated environment, and we face risks including, among other things, those related to maintaining our existing business, recovering our investments, entering into agreements with payors, physicians, third party vendors and others on terms that are competitive, and as appropriate, that

prove actuarially sound; structuring these agreements and arrangements to comply with evolving rules and regulations, including, among other things, rules and regulations related to the use of protected health information; and further developing our operational, IT and other capabilities to enable us to provide competitive programs at scale. If our value-based care and integrated kidney care programs are unsuccessful, it could result in a loss of our investments and have a material adverse effect on our growth strategy, and could have an adverse impact on our business, results of operations, financial condition and cash flows.

Furthermore, if any of our other ancillary services, such as our international operations, are unsuccessful, itthis could have a negative impact on our business, results of operations, financial condition and cash flows, and we may determine to exit that line of business, which could result in significant termination ~~costs.~~costs or loss of investment. In addition, we have in the past and may in the future incur material restructuring, write-off or impairment charges on our investment in one or more of these ancillary services, including goodwill.

We expect to add additional service offerings or product lines to our business and to pursue ~~other ancillary service~~opportunities. While these opportunities ~~in the future as circumstances warrant, which~~ could include, among other things, healthcare services not related to ~~dialysis.~~dialysis, we have focused our ongoing efforts on opportunities with strong strategic links to kidney care, dialysis or integrated kidney care.

As of March 31, ~~2021,~~2022, our international dialysis operations provided dialysis and administrative services through a total of ~~323~~346 outpatient dialysis centers located in ~~ten~~11 countries outside of the United States.

Ancillary services results of operations


		Three months ended						Q1 2021 vs. Q4 2020				Q1 2021 vs. Q1 2020					Three months ended				Q1 2022 vs. Q4 2021
		March 31, 2021		December 31, 2020		March 31, 2020		Amount		Percent		Amount		Percent			March 31, 2022		December 31, 2021		Amount		Percent
		(dollars in millions)															(dollars in millions)
Revenues:	Revenues:															Revenues:
U.S. ancillary		$	99	$	124	$	124	$	(25)	(20.2)	%	$	(25)	(20.2)	%
Integrated kidney care																Integrated kidney care	$	87	$	86	$	1	1.2	%
Other U.S. ancillary																Other U.S. ancillary	5		6		(1)		(16.7)	%
International	International	162		152		137		10		6.6	%	25		18.2	%	International	173		170		3		1.8	%
Total ancillary services revenues	Total ancillary services revenues	$	261	$	276	$	261	$	(15)	(5.4)	%	$	—	—	%	Total ancillary services revenues	$	265	$	262	$	3	1.1	%

Operating (loss) income:	Operating (loss) income:															Operating (loss) income:
U.S. ancillary		$	(25)	$	(25)	$	(19)	$	—	—	%	$	(6)	(31.6)	%
Integrated kidney care																Integrated kidney care	$	(37)	$	(39)	$	2	5.1	%
Other U.S. ancillary																Other U.S. ancillary	(3)		4		(7)		(175.0)	%
International(1)	International(1)	13		(2)		17		15		750.0	%	(4)		(23.5)	%	International(1)	8		6		2		33.3	%
Total ancillary services operating loss	Total ancillary services operating loss	$	(12)	$	(27)	$	(3)	$	15	55.6	%	$	(9)	(300.0)	%	Total ancillary services operating loss	$	(32)	$	(29)	$	(3)	(10.3)	%

Certain columns, rows or percentages may not sum due to the presentation of rounded numbers.

(1)The reported operating income ~~(loss)~~ for the three months ended March 31, ~~2021,~~2022 and December 31, ~~2020 and March 31, 2020,~~2021 includes foreign currency gains (losses) embedded in equity method income recognized from our APAC ~~joint venture~~JV of approximately ~~$3 million, $(6)~~$0.3 million and ~~$10~~$(1.0) million, respectively.


	Three months ended				YTD Q1 2022 vs. YTD Q1 2021
	March 31, 2022		March 31, 2021		Amount		Percent
	(dollars in millions)
Revenues:
Integrated kidney care	$	87	$	93	$	(6)	(6.5)	%
Other U.S. ancillary	5		6		(1)		(16.7)	%
International	173		162		11		6.8	%
Total ancillary services revenues	$	265	$	261	$	4	1.5	%

Operating (loss) income:
Integrated kidney care	$	(37)	$	(27)	$	(10)	(37.0)	%
Other U.S. ancillary	(3)		1		(4)		(400.0)	%
International(1)	8		13		(5)		(38.5)	%
Total ancillary services operating loss	$	(32)	$	(12)	$	(20)	(166.7)	%

Certain columns, rows or percentages may not sum due to the presentation of rounded numbers.

(1)The reported operating income for the three months ended March 31, 2022 and March 31, 2021 includes foreign currency gains embedded in equity method income recognized from our APAC JV of approximately $0.3 million and $2.7 million, respectively.

Revenues:

~~U.S. ancillary services~~IKC revenues for the first quarter of ~~2021 decreased from~~2022 increased compared to the fourth quarter of ~~2020~~2021 due to ~~a decrease in~~the recognition of shared savings from our ESRD seamless care organizations (ESCOs) and increased revenue ~~in our integrated care and disease management business primarily~~ related to ~~the reduction in members in~~ our special needs plans, ~~and the recognition of certain revenue~~partially offset by a decrease in ~~the fourth quarter of 2020 in~~revenues related to our ~~ESCO joint ventures that did not recur in the first quarter of 2021. International~~value based care arrangements. Other U.S. ancillary revenues for the first quarter of ~~2021 increased from~~2022 compared to the fourth quarter of ~~2020 primarily~~2021 decreased due to ~~acquisition-related growth, partially offset by higher mortality driven by COVID-19.~~

U.S. ancillary services revenues for the first quarter of 2021 decreased from the first quarter of 2020 due to a decrease in revenues in our integrated care and disease management business primarily related to the reduction in members in our special needs plans, as well as a decrease in revenues in our clinical research programs, ~~and~~slightly offset by increased revenues related to our ~~vascular access business due to the sale of RMS Lifeline, Inc., our vascular access business, effective May 1, 2020. Our international~~transplant software business. International revenues for the first quarter of ~~2021~~2022 increased from the fourth quarter of 2021 primarily due to acquisition-related growth.

IKC revenues for the three months ended March 31, 2022 decreased from the three months ended March 31, 2021 due to a reduction in members in our special needs plans, slightly offset by the recognition of ESCO shared savings in the first quarter of ~~2020~~2022. Other U.S. ancillary services revenues for the three months ended March 31, 2022 decreased compared to the three months ended March 31, 2021 for the same reasons stated above. Our international revenues for the three months ended March 31, 2022 increased from the three months ended March 31, 2021 primarily due to acquisition-related ~~growth, partially offset by higher mortality driven by COVID-19.~~growth.

Operating loss:

~~U.S. ancillary services~~IKC operating loss for the first quarter of ~~2021 were relatively flat from~~2022 compared to the fourth quarter of ~~2020 which was~~2021 decreased driven by ~~a decrease in operating loss~~decreased professional fees, partially offset by continued investments in our integrated care ~~and disease management business offset by an increase in operating loss in our ESCO joint ventures. International~~support functions. Other U.S. ancillary services operating results for the first quarter of 2022 compared to the fourth quarter of 2021 were impacted by a non-recurring benefit received in the fourth quarter of 2021. International operating income for the first quarter of 2022 increased from the fourth quarter of ~~2020~~2021 primarily ~~driven by~~due to an increase in equity income resulting from fluctuations in foreign currency at our APAC ~~JV and acquisition-related growth~~JV.

IKC operating loss for the three months ended March 31, 2022 compared to the three months ended March 31, 2021 increased primarily related to continued investments in our ~~international business.~~

integrated care support functions. Other U.S. ancillary services operating ~~loss~~results for the three months ended March 31, 2022 compared to the three months ended March 31, 2021 decreased due to a non-recurring benefit received in first quarter of ~~2021 increased~~2021. International operating results for the three months ended March 31, 2022 decreased from the ~~first quarter of 2020,~~three months ended March 31, 2021 primarily due to a decrease in operating results at our integrated care and disease management business, as described above. International operating results for the first quarter of 2021 decreased from the first quarter of 2020 primarily due to a decline in equity income resulting from fluctuations in foreign currency at our APAC ~~JV, partially offset by acquisition-related growth in our international business.~~JV.

Corporate administrative support


	Three months ended				Q1 2022 vs. Q4 2021
	March 31, 2022		December 31, 2021		Amount		Percent
	(dollars in millions)
Corporate administrative support	$	(36)	$	(33)	$	(3)	(9.1)	%

~~Corporate administrative support consists primarily of~~labor, benefits and long-term incentive compensation expense, as well as professional fees for departments which provide support to all of our various operating lines of business. Corporate administrative support expenses are included in general and administrative expenses on our consolidated income statement.

Three months ended Q1 2021 vs. Q4 2020 Q1 2021 vs. Q1 2020
March 31, 2021 December 31, 2020 March 31, 2020 Amount Percent Amount Percent
(dollars in millions)
Corporate administrative support $ (25) $ (24) $ (24) $ (1) (4.2) % $ (1) (4.2) %


	Three months ended				YTD Q1 2022 vs. YTD Q1 2021
	March 31, 2022		March 31, 2021		Amount		Percent
	(dollars in millions)
Corporate administrative support	$	(36)	$	(25)	$	(11)	(44.0)	%

Corporate administrative support expenses for the quarter ended March 31, ~~2021~~2022 compared to the quarter ended December 31, ~~2020 were impacted by an increase in professional fees. Corporate administrative support expenses for~~2021 and the ~~first quarter of~~three months ended March 31, 2022 compared to the three months ended March 31, 2021 increased ~~from the first quarter of 2020~~ primarily due to an increase in ~~insurance expense.~~legal fees.

Corporate-level charges


		Three months ended									Q1 2021 vs. Q4 2020				Q1 2021 vs. Q1 2020					Three months ended						Q1 2022 vs. Q4 2021
		March 31, 2021			December 31, 2020			March 31, 2020			Amount		Percent		Amount		Percent			March 31, 2022			December 31, 2021			Amount		Percent
		(dollars in millions)																		(dollars in millions)
Debt expense	Debt expense	$	67		$	60		$	89		$	7	11.7	%	$	(22)	(24.7)	%	Debt expense	$	74		$	72		$	2	2.8	%
Debt refinancing charges		$	—		$	—		$	3		$	—			$	(3)	(100.0)	%
Other income (loss)		$	1		$	6		$	(4)		$	(5)	(83.3)	%	$	5	125.0	%

Other (loss) income, net																			Other (loss) income, net	$	(2)		$	(2)		$	—	—	%
Effective income tax rate	Effective income tax rate	22.6		%	22.4		%	24.8		%			0.2	%			(2.2)	%	Effective income tax rate	21.7		%	20.8		%			0.9	%
Effective income tax rate from continuing operations attributable to DaVita Inc.(1)		26.4		%	27.5		%	28.5		%			(1.1)	%			(2.1)	%
Effective income tax rate attributable to DaVita Inc.(1)																			Effective income tax rate attributable to DaVita Inc.(1)	26.0		%	25.8		%			0.2	%
Net income attributable to noncontrolling interests	Net income attributable to noncontrolling interests	$	54		$	61		$	48		$	(7)	(11.5)	%	$	6	12.5	%	Net income attributable to noncontrolling interests	$	44		$	62		$	(18)	(29.0)	%

(1)For a reconciliation of our effective income tax rate ~~from continuing operations~~attributable to DaVita Inc., see "Reconciliations of Non-GAAP measures" section below.


	Three months ended						YTD Q1 2022 vs. YTD Q1 2021
	March 31, 2022			March 31, 2021			Amount		Percent
	(dollars in millions)
Debt expense	$	74		$	67		$	7	10.4	%

Other (loss) income, net	$	(2)		$	1		$	(3)	(300.0)	%
Effective income tax rate	21.7		%	22.6		%			(0.9)	%
Effective income tax rate attributable to DaVita Inc.(1)	26.0		%	26.4		%			(0.4)	%
Net income attributable to noncontrolling interests	$	44		$	54		$	(10)	(18.5)	%

(1)For a reconciliation of our effective income tax rate attributable to DaVita Inc., see "Reconciliations of Non-GAAP measures" section below.

Debt expense

Debt expense for the first quarter of ~~2021~~2022 increased ~~from~~compared to the fourth quarter of ~~2020 as a result of completing an unregistered add-on offering of $1.0 billion aggregate principal amount~~2021 and the three months ended March 31, 2022 compared to ~~our existing 4.625% senior notes due June 1, 2030 (the Additional 2030 Notes) and higher average borrowings under~~ the ~~revolving line of credit, which increased interest expense for the quarter.~~

~~Debt expense for the first quarter of~~three months ended March 31, 2021 ~~decreased from the first quarter of 2020~~ primarily due to ~~a decrease~~an increase in our ~~overall~~ weighted average effective interest rate and weighted average outstanding debt balance, which included draws on our ~~debt, including as a result~~revolving line of ~~refinancing our 5.125% senior notes and 5.0% senior notes with lower cost debt, a reduction~~credit in the ~~LIBOR component~~first quarter of ~~the interest rate on debt under our senior secured credit facilities~~2022 and ~~a repricing~~subsequent repayment in full as of ~~the interest rate margin applicable to the Term Loan B component of our senior secured credit facilities.~~quarter-end.

Our overall weighted average effective interest rate for the ~~first quarter of 2021~~three months ended March 31, 2022 was ~~3.08%~~3.35% compared to ~~3.07%~~3.34% for the ~~fourth quarter of 2020~~three months ended December 31, 2021 and ~~4.35%~~3.08% for the ~~first quarter of 2020.~~three months ended March 31, 2021. See Note 6 to the condensed consolidated financial statements for further information on the components of our debt.

~~Debt refinancing charges~~

~~The three months ended~~ ~~March 31, 2020~~ ~~include $3 million of refinancing charges comprised partially of fees incurred on the repricing of our Term Loan B and partially of deferred financing costs written off~~Other (loss) income, net

Other loss was relatively flat for the ~~portion of this debt considered extinguished and reborrowed.~~

~~Other income (loss)~~

~~Other income (loss) consists primarily of interest income on cash and cash equivalents and short- and long-term investments, realized and unrealized gains and~~first quarter 2022 from the fourth quarter 2021 due to a decrease in losses recognized on investments and foreign currency ~~transaction gains and losses.~~

~~Other~~transactions offset by a reduction in interest income. The net recognized loss for the three months ended March 31, 2022 when compared to the net recognized income for the ~~first quarter of~~three months ended March 31, 2021 ~~decreased from~~was principally driven by losses on investments in the ~~fourth quarter of 2020 primarily due to~~current period partially offset by a decrease in ~~gains recognized on investments in addition to recognized losses on~~ foreign currency ~~transactions~~transaction losses and an increase in the first quarter of 2021 compared to recognized gains in the fourth quarter of 2020. Other income for the first quarter of 2021 increased from the first quarter of 2020 due to recognized gains on investment in the first quarter of 2021 compared to recognized losses in the first quarter of 2020 in addition to a decrease in losses recognized on foreign currency transactions.interest income.

Effective income tax rate

The effective income tax rate and the effective tax rate attributable to DaVita Inc. increased for the first quarter of ~~2021 was relatively flat from~~2022 compared to the fourth quarter of ~~2020. The effective income tax rate from continuing operations attributable to DaVita Inc. for the first quarter of~~ 2021 ~~decreased from the fourth quarter of 2020~~ primarily due to ~~a reduction~~an increase in ~~nondeductible~~forecasted non-deductible advocacy spend in ~~2021.~~2022 partially offset by a change in the portion of earnings attributable to our non-controlling interests.

The effective income tax rate and the effective ~~income~~ tax rate ~~from continuing operations~~ attributable to DaVita Inc. for the ~~first quarter of 2021~~three months ended March 31, 2022 decreased from the ~~first quarter of 2020 primarily~~three months ended March 31, 2021 due to a ~~reduction~~decrease in our foreign provision expense and a change in the portion of earnings attributable to our non-controlling interests, partially offset by an increase in estimated nondeductible advocacy spend ~~and an increase~~ in ~~equity compensation deductions recognized in the first quarter of 2021.~~2022.

Net income attributable to noncontrolling interests

The decrease in net income attributable to noncontrolling interests for the first quarter of ~~2021~~2022 from the fourth quarter of ~~2020~~2021 and for the three months ended March 31, 2022 from the three months ended March 31, 2021 was primarily due to decreased earnings at certain U.S. dialysis partnerships. The increase in net income attributable to noncontrolling interests for the first quarter of 2021 from the first quarter of 2020 was primarily due to improvedreduced earnings at certain U.S. dialysis partnerships ~~and reimbursements we made to certain of our U.S. dialysis partnerships for certain COVID-19-related expenses.~~driven by lower treatment volumes.

Accounts receivable

Our consolidated accounts receivable balances at March 31, ~~2021~~2022 and December 31, ~~2020~~2021 were ~~$2.041~~$2.044 billion and ~~$1.824~~$1.958 billion, respectively, representing approximately 66 and 5962 days sales outstanding (DSO), ~~respectively, net of allowances for uncollectible accounts.~~respectively. Consolidated DSO increased primarily due to temporary billing holds ~~related to winter storms~~ and ~~changes in calcimimetics reimbursement.~~timing of collections. Our DSO calculation is based on the current quarter’s average revenues per day. There were no significant changes ~~in the first quarter of 2021~~ from the fourth quarter of ~~2020~~2021 to the first quarter of 2022 in the carrying amount of ~~unreserved~~ accounts receivable outstanding over one year ~~old or in the amounts pending approval from third-party payors.~~old.

2729

Liquidity and capital resources

The following table shows the summary of our major sources and uses of cash, cash equivalents and restricted cash:


			Three months ended March 31,	Q1 2021 vs. Q1 2020					Three Months Ended March 31,						Q1 2022 vs. Q1 2021
				2021			2020			Amount		Percent			2022		2021		Amount		Percent
		(dollars in millions and shares in thousands)				(dollars in millions and shares in thousands)
Net cash provided by operating activities:	Net cash provided by operating activities:													Net cash provided by operating activities:
Net income	Net income			$	292		$	288		$	4	1.4	%	Net income	$	206	$	292	$	(86)	(29.5)	%
Non-cash items in net income	Non-cash items in net income			209			274			(65)		(23.7)	%	Non-cash items in net income	203		209		(6)		(2.9)	%
Other working capital changes	Other working capital changes			(328)			(205)			(123)		60.0	%	Other working capital changes	(79)		(328)		249		75.9	%
Other	Other			(18)			3			(21)		(700.0)	%	Other	(8)		(18)		10		55.6	%
				$	154		$	360		$	(206)	(57.2)	%		$	322	$	154	$	168	109.1	%

Net cash (used in) provided by investing activities:
Net cash used in investing activities:														Net cash used in investing activities:
Capital expenditures:	Capital expenditures:													Capital expenditures:
Routine maintenance/IT/other				$	(90)		$	(82)		$	(8)	9.8	%
Routine maintenance/information technology/other														Routine maintenance/information technology/other	$	(84)	$	(90)	$	6	6.7	%
Development and relocations	Development and relocations			(55)			(73)			18		(24.7)	%	Development and relocations	(39)		(55)		16		29.1	%
Acquisition expenditures	Acquisition expenditures			(4)			(34)			30		(88.2)	%	Acquisition expenditures	(5)		(4)		(1)		(25.0)	%
Proceeds from sale of self-developed properties	Proceeds from sale of self-developed properties			16			27			(11)		(40.7)	%	Proceeds from sale of self-developed properties	8		16		(8)		(50.0)	%

Other	Other			8			(1)			9		(900.0)	%	Other	1		8		(7)		87.5	%
				$	(124)		$	(163)		$	39	(23.9)	%		$	(118)	$	(124)	$	6	4.8	%

Net cash provided by (used in) financing activities:
Debt issuances net of (payments) and financing costs				$	900		$	466		$	434	93.1	%
Distributions to noncontrolling interest				(54)			(58)			4		(6.9)	%
Contributions from noncontrolling interest				11			9			2		22.2	%
Net cash (used in) provided by financing activities:														Net cash (used in) provided by financing activities:
Debt (payments) issuances, net														Debt (payments) issuances, net	$	(45)	$	900	$	(945)	(105.0)	%
Distributions to noncontrolling interests														Distributions to noncontrolling interests	(65)		(54)		(11)		(20.4)	%
Contributions from noncontrolling interests														Contributions from noncontrolling interests	5		11		(6)		(54.5)	%
Share repurchases	Share repurchases			(316)			(322)			6		(1.9)	%	Share repurchases	(236)		(316)		80		(25.3)	%
Other	Other			(4)			2			(6)		(300.0)	%	Other	—		(4)		4		100.0	%
				$	537		$	97		$	440	453.6	%		$	(342)	$	537	$	(879)	(163.7)	%

Total number of shares repurchased	Total number of shares repurchased			2,949			4,052			(1,103)		(27.2)	%	Total number of shares repurchased	2,104		2,949		(845)		(28.7)	%

Free cash flow(1)	Free cash flow(1)			$	(17)		$	184		$	(201)	(109.2)	%	Free cash flow(1)	$	147	$	(17)	$	164	964.7	%

Certain columns or rows may not sum due to the presentation of rounded numbers.

(1)For a reconciliation of our free cash flow, see "Reconciliations of Non-GAAP measures" section below.

Consolidated cash flows

Consolidated cash flows from operating activities during the three months ended March 31, ~~2021~~2022 were ~~$154~~$322 million, compared to consolidated operating cash flows for the three months ended March 31, ~~2020~~2021 of ~~$360 million~~.$154 million. The ~~decrease~~increase in operating cash flows was primarily driven by ~~an increase~~changes in total DSO ~~of seven~~which increased approximately four days ~~for the~~ ~~three months ended March 31, 2021 compared an increase of one day~~ for the three months ended March 31, ~~2020, in addition~~2022 compared to ~~timing~~an increase of seven days for the three months ended March 31, 2021 as well as other working capital ~~items.~~items, partially offset by a decrease in operating results.

Free cash flow during the three months ended March 31, ~~2021 decreased~~2022 increased from the three months ended March 31, ~~2020~~2021 primarily due to ~~a decrease~~an increase in net cash provided by operating activities as described above.

Other ~~significant sources~~net debt payments during the three months ended March 31, 2022 primarily consisted of regularly scheduled mandatory principal payments under our senior secured credit facilities totaling approximately $22 million on Term Loan A and $7 million on Term Loan B-1, draws on our revolving line of credit in the first quarter of 2022 and subsequent repayment in full as of quarter-end, as well as additional required payments under other debt arrangements. In addition, during the three months ended March 31, 2022 we used cash to repurchase 2,103,905 shares of our common stock.

By comparison, the same period in 2021 included ~~proceeds from~~ the issuance of $1.0 billion in aggregate principal amount ofto the ~~Additional 2030 Notes as an add-on offering to our~~existing 4.625% senior notes due 2030 ~~that were issued at an offering price of 101.750% of face amount, and other significant uses of cash included the repayment~~ in ~~full of borrowings under our revolving line of credit during the first quarter of~~February 2021. Other net debt payments during the three months ended March 31,

2021 primarily consisted of the repayment in full of $75 million of borrowings under our revolving line of credit, net payments of regularly scheduled mandatory principal payments under our senior secured credit facilities totaling approximately $22 million on Term Loan A and $7 million on Term Loan B-1 and additional required ~~principal~~ payments under other debt arrangements. In addition, we incurred bond issuance costs of approximately $8 million in cash. ~~See further discussion in Note 6 to the condensed consolidated financial statements related to our debt financing activities.~~ For the three months ended March 31, 2021 we used cash to repurchase ~~2,949,482 shares of our common stock.~~

By comparison, the same period in 2020 included a net draw on our revolving line of credit of $500 million. Net debt payments during the first quarter of 2020 primarily consisted of regularly scheduled mandatory principal payments under our senior secured credit facilities totaling approximately $11 million on Term Loan A and $7 million on Term Loan B-1 as well as additional required principal payments under other debt arrangements. In addition, we incurred refinancing costs related to the repricing of our Term Loan B-1 of approximately $3 million. For the three months ended March 31, 2020 we used cash to repurchase 4,052,2982,949,842 shares of our common stock.

Dialysis center footprint and growth

The table below shows the growth in our dialysis operations by number of dialysis centers owned or operated:


		U.S.			International				U.S.		International
		Three months ended March 31,		Three months ended March 31,			Three months ended March 31,		Three months ended March 31,
		2021	2020		2021	2020			2022	2021	2022	2021
Number of centers operated at beginning of period	Number of centers operated at beginning of period	2,816	2,753		321	259		Number of centers operated at beginning of period	2,815	2,816	339	321
Acquired centers	Acquired centers	—	2		2	22		Acquired centers	—	—	3	2
Developed centers	Developed centers	18	22		2	2		Developed centers	9	18	1	2
Net change in non-owned managed or administered centers(1)	Net change in non-owned managed or administered centers(1)	—	—		1	1		Net change in non-owned managed or administered centers(1)	—	—	3	1
Sold and closed centers(2)	Sold and closed centers(2)	(1)	(2)		(3)	—		Sold and closed centers(2)	(5)	(1)	—	(3)
Closed centers(3)	Closed centers(3)	(6)	(3)		—	(2)		Closed centers(3)	(10)	(6)	—	—
Number of centers operated at end of period	Number of centers operated at end of period	2,827	2,772		323	282		Number of centers operated at end of period	2,809	2,827	346	323

(1)Represents dialysis centers which we manage or provide administrative services to but in which we own a noncontrolling equity interest or which are wholly-owned by third parties, including our ~~Asia Pacific joint venture~~APAC JV centers.

(2)Represents dialysis centers that were sold and/or closed for which the majority of patients were not retained.

(3)Represents dialysis centers that were closed for which the majority of patients were retained and transferred to one of our other existing outpatient dialysis centers.

Stock repurchases

The following table summarizes our common stock repurchases during the three months ended March 31, ~~2021~~2022 and ~~2020:~~2021:

Three months ended March 31, 2021 Three months ended March 31, 2020
Shares repurchased Amount paid (in millions) Average paid per share Shares repurchased Amount paid (in millions) Average paid per share
Open market repurchases 2,949,482 $ 322 $ 109.28 4,052,298 $ 303 $ 74.81


	Three months ended March 31, 2022					Three months ended March 31, 2021
	Shares repurchased	Amount paid (in millions)		Average paid per share		Shares repurchased	Amount paid (in millions)		Average paid per share
Open market repurchases:	2,103,905	$	233	$	110.90	2,949,482	$	322	$	109.28

See further discussion of our stock repurchases in Note 8 to the condensed consolidated financial statements.

Available liquidity

As of March 31, ~~2021,~~2022, we had an undrawn $1.0 billion revolving line of credit under our senior secured credit facilities. Credit available under this revolving line of credit is reduced by the amount of any letters of credit outstanding thereunder, ~~but~~of which there ~~are currently no~~were none as of March 31, 2022. We separately had approximately $108 million in letters of credit outstanding ~~under this facility. We separately have approximately $65 million of outstanding letters of credit~~ under a separate bilateral secured letter of credit facility.

See Note 6 to the condensed consolidated financial statements for components of our long-term debt and their interest rates. We may from time to time seek to obtain funds or refinance existing debt through additional debt financings or other capital alternatives.

The COVID-19 pandemic, ~~and~~ efforts to prevent its spread, and other government actions intended to support those efforts have dramatically ~~reduced~~impacted global economic activity and driven increased volatility in the financial markets. We have maintained business process continuity during the COVID-19 pandemic by enabling most back office teammates to work remotely, and as of the date of this report, we have not experienced material deterioration in our liquidity position as a result of the COVID-19 crisis. In addition, we elected not to accept approximately $250 million in funds available to us through the CARES Act Provider Relief Fund and returned the funds we received in May 2020. There can be no assurance that we will be able to continue to forgo the receipt of financial or other assistance under the CARES Act or similar subsequent legislation or that similar assistance will be available from the

~~government if we have a need for such assistance in the future.~~ The ultimate impact of the pandemic will depend on future developments that are highly uncertain and difficult to predict.

We believe that our cash flow from operations and other sources of liquidity, including from amounts available under our senior secured credit facilities and our access to the capital markets, will be sufficient to fund our scheduled debt service under

the terms of our debt agreements and other obligations for the foreseeable future, including the next 12 months. Our primary recurrent sources of liquidity are cash from operations and cash from borrowings, which are subject to general, economic, financial, competitive, regulatory and other factors that are beyond our control, as described in Item 1A Risk Factors of our ~~2020~~2021 10-K.

Reconciliations of non-GAAP measures

The following tables provide reconciliations of our effective income tax rate on income ~~from continuing operations~~ attributable to DaVita Inc. excluding noncontrolling owners' income, which primarily relates to non-tax paying entities. We believe this adjusted effective income tax rate is useful to management, investors and analysts in evaluating our performance and establishing expectations for income taxes incurred on our ordinary results attributable to DaVita Inc.

In addition, our free cash flow represents net cash provided by operating activities less distributions to noncontrolling interests and all capital expenditures (including development capital expenditures, routine maintenance and information technology), plus contributions from noncontrolling interests and proceeds from the sale of self-developed properties. Management uses this measure to assess our ability to fund acquisitions and meet our debt service obligations and we believe this measure is equally useful to investors and analysts as an adjunct to cash flows from operating activities and other measures under U.S. generally accepted accounting principles (GAAP).

~~These non-GAAP or “adjusted” measures are presented because management believes these measures are useful adjuncts to our GAAP results.~~ It is important to bear in mind that these non-GAAP “adjusted” measures are not measures of financial performance under GAAP and should not be considered in isolation from, nor as substitutes for, their most comparable GAAP measures.

Three months ended
March 31,
2021 December 31,
2020 March 31,
2020
(dollars in millions)
Income from continuing operations before income taxes $ 377 $ 327 $ 369
Less: Noncontrolling owners' income primarily attributable to non-tax paying entities (54) (61) (48)
Income from continuing operations before income taxes attributable to DaVita Inc. $ 323 $ 267 $ 321
Income tax expense for continuing operations $ 85 $ 73 $ 92
Less: Income tax attributable to noncontrolling interests — — —
Income tax expense from continuing operations attributable to DaVita Inc. $ 85 $ 73 $ 91
Effective income tax rate on income from continuing operations attributable
to DaVita Inc. 26.4 % 27.5 % 28.5 %


	Three months ended
	March 31, 2022			December 31, 2021
	(dollars in millions)
Income before income taxes	$	263		$	315
Less: Noncontrolling owners' income primarily attributable to non-tax paying entities	(44)			(62)
Income before income taxes attributable to DaVita Inc.	$	219		$	253
Income tax expense	$	57		$	66
Less: Income tax attributable to noncontrolling interests	—			—
Income tax expense attributable to DaVita Inc.	$	57		$	65
Effective income tax rate on income attributable to DaVita Inc.	26.0		%	25.8		%

Certain columns or rows may not sum or recalculate due to the presentation of rounded numbers.

Three months ended
March 31, 2021 March 31, 2020
(dollars in millions)
Net cash provided by operating activities $ 154 $ 360
Less: Distributions to noncontrolling interests (54) (58)
Plus: Contributions from noncontrolling interests 11 9
Cash provided by operating activities attributable to DaVita Inc. 111 312
Less: Expenditures for routine maintenance and information technology (90) (82)
Less: Expenditures for development (55) (73)
Plus: Proceeds from sale of self-developed properties 16 27
Free cash flow $ (17) $ 184


	Three months ended
	March 31, 2022			March 31, 2021
	(dollars in millions)
Income before income taxes	$	263		$	377
Less: Noncontrolling owners' income primarily attributable to non-tax paying entities	(44)			(54)
Income before income taxes attributable to DaVita Inc.	$	219		$	323
Income tax expense	$	57		$	85
Less: Income tax attributable to noncontrolling interests	—			—
Income tax expense attributable to DaVita Inc.	$	57		$	85
Effective income tax rate on income attributable to DaVita Inc.	26.0		%	26.4		%

Certain columns or rows may not sum or recalculate due to the presentation of rounded numbers.


	Three months ended
	March 31, 2022		March 31, 2021
	(dollars in millions)
Net cash provided by operating activities	$	322	$	154
Adjustments to reconcile net cash provided by operating activities to free cash flow:
Distributions to noncontrolling interests	(65)		(54)
Contributions from noncontrolling interests	5		11
Expenditures for routine maintenance and information technology	(84)		(90)
Expenditures for development	(39)		(55)
Proceeds from sale of self-developed properties	8		16
Free cash flow	$	147	$	(17)

Certain columns or rows may not sum due to the presentation of rounded numbers.

Off-balance sheet arrangements and aggregate contractual obligations

In addition to the debt obligations and operating lease liabilities reflected on our balance sheet, we have commitments associated with letters of credit, as well as certain working capital funding obligations associated with our equity investments in nonconsolidated dialysis ventures that we manage and some that we manage which are wholly-owned by third parties.

We also have potential obligations to purchase the noncontrolling interests held by third parties in many of our majority-owned dialysis partnerships and other nonconsolidated entities. These obligations are in the form of put provisions that are exercisable at the third-party owners’ discretion within specified periods as outlined in each specific put provision. For additional information on these obligations and how we measure and report them, see Note 12 to the condensed consolidated financial statements and ~~Note~~Notes 17 and ~~Note~~ 24 to the consolidated financial statements included in our ~~2020~~2021 10-K.

~~The following is a summary of these off-balance sheet contractual obligations and commitments as of March 31, 2021:~~

Remainder of 2021 2022-2024 2025-2026 After
5 years Total
(dollars in millions)
Potential cash requirements under other commitments:
Letters of credit $ 65 $ — $ — $ — $ 65
Noncontrolling interests subject to put provisions 1,015 156 106 72 1,349
Non-owned and minority owned put provisions 109 5 — — 114
Operating capital advances 1 3 1 3 8
Purchase commitments 395 817 — — 1,212
$ 1,585 $ 981 $ 107 $ 75 $ 2,748

For information on the maturities and other terms of our long term debt, see Note 6 to the condensed consolidated financial statements.

As of March 31, 2022, we have outstanding letters of credit in the aggregate amount of $108 million under a separate bilateral secured letter of credit facility.

In addition to the commitments listed above, in 2017 we entered into a sourcing and supply agreement with Amgen USA Inc. (Amgen) that expires on December 31, 2022. Under the terms of this agreement, we will purchase EPO from Amgen in amounts necessary to meet no less than 90% of our requirements for erythropoiesis-stimulating agents (ESAs) through the expiration of the contract. The actual amount of EPO that we will purchase will depend upon the amount of EPO administered during dialysis as prescribed by physicians and the overall number of patients that we serve.

~~The~~As of March 31, 2022, we have outstanding purchase ~~commitments in the table above represent our~~ agreements with various suppliers to purchase set amounts of dialysis equipment, parts, and supplies. If we fail to meet the minimum purchase commitments under these contracts during any year, we are required to pay the difference to the ~~supplier.~~supplier, as described further in Note 17 to the Company's consolidated financial statements included in the 2021 10-K.

~~Settlements~~We also have certain potential commitments to provide working capital funding, if necessary, to certain nonconsolidated dialysis businesses that we manage and in which we own a noncontrolling equity interest or which are wholly-owned by third parties. For additional information see Note 7 to the condensed consolidated financial statements.

In addition, we have approximately $96 million of existing income tax liabilities for unrecognized tax benefits, ~~of approximately $90 million,~~ including interest, penalties and other long-term tax ~~liabilities, are excluded from~~liabilities. We expect a significant portion of these settlements to be paid in the ~~table above as reasonably reliable estimates of their timing cannot be made.~~current year.

New Accounting Standards

See discussion of new accounting standards in Note 14 to the condensed consolidated financial statements.

3133

Item 3. Quantitative and Qualitative Disclosures about Market Risk

Interest rate and foreign currency sensitivity

There has been no material change in the nature of the Company's interest rate risks or foreign currency exchange risks from those described in Part II Item 7A of our Annual Report on Form 10-K for the year ended December 31, ~~2020.~~2021.

The tables below provide information about our financial instruments that are sensitive to changes in interest rates as of March 31, ~~2021.~~2022. For further information on the components of the Company's long-term debt and their interest rates, see Note 6 to the condensed consolidated interim financial statements included in this Quarterly Report on Form 10-Q at Part I Item 1.


		Expected maturity date																Average interest rate			Fair Value(1)			Expected maturity date																	Average interest rate		Fair value(1)
		2021		2022		2023		2024		2025		2026		Thereafter		Total				2022					2023			2024		2025		2026		2027		Thereafter		Total
		(dollars in millions)																						(dollars in millions)
Long term debt:	Long term debt:																									Long term debt:
Fixed rate	Fixed rate	$	24	$	36	$	47	$	30	$	30	$	41	$	4,423	$	4,631	4.33	%		$	4,329	Fixed rate	$	25		$	42	$	32	$	32	$	43	$	30	$	4,415	$	4,619	4.43	%	$	3,968
Variable rate	Variable rate	$	105	$	135	$	179	$	1,393	$	36	$	2,583	$	1	$	4,432	1.99	%		$	4,426	Variable rate	$	111		$	178	$	1,394	$	37	$	2,584	$	3	$	1	$	4,308	2.55	%	$	4,302

(1)Represents the fair value of the Company’s long-term debt excluding financing leases. See Note 6 to the condensed consolidated financial statements for further details.

Notional Amount Contract maturity date Fair
Value
2021 2022 2023 2024 2025 2026 Thereafter Receive variable
(dollars in millions)
2019 cap agreements $ 3,500 $ — $ — $ — $ 3,500 $ — $ — $ — LIBOR above 2% $ 9.2


	Notional amount		Contract maturity date															Fair value
			2022		2023		2024		2025		2026		2027		Thereafter		Receive variable
	(dollars in millions)
2019 cap agreements	$	3,500	$	—	$	—	$	3,500	$	—	$	—	$	—	$	—	LIBOR above 2%	$	67.0

Item 4. Controls and Procedures

Management has established and maintains disclosure controls and procedures designed to ensure that information required to be disclosed in the reports that it files or submits pursuant to the Securities Exchange Act of 1934 (Exchange Act) as amended is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission’s rules and forms, and that such information is accumulated and communicated to the Company’s management, including its Chief Executive Officer (CEO) and Chief Financial Officer (CFO) as appropriate to allow for timely decisions regarding required disclosures.

At the end of the period covered by this report, we carried out an evaluation, under the supervision and with the participation of the Company’s CEO and CFO, of the effectiveness of the design and operation of our disclosure controls and procedures in accordance with the Exchange Act requirements as of March 31, ~~2021.~~2022. Based upon that evaluation, the CEO and CFO concluded that the Company’s disclosure controls and procedures were effective as required by the Exchange Act as of such date for our Exchange Act reports, including this report. Management recognizes that these controls and procedures can provide only reasonable assurance of desired outcomes, and that estimates and judgments are still inherent in the process of maintaining effective controls and procedures.

There was no change in the Company's internal control over financial reporting that was identified during the evaluation that occurred during the fiscal quarter covered by this report that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.

3234

PART II.

OTHER INFORMATION

Item 1. Legal Proceedings

The information required by this Part II, Item 1 is incorporated herein by reference to the information set forth under the caption “Commitments and ~~Contingencies”~~contingencies” in Note 7 to the condensed consolidated financial statements included in this report.

Item 1A. Risk Factors

There have been no material changes to the risk factors previously disclosed in Part I, Item 1A of our Annual Report on Form 10-K ~~(2020~~(2021 10-K) for the year ended December 31, ~~2020~~2021 filed with Securities and Exchange Commission. You should carefully consider the risks included in our ~~2020~~2021 10-K, together with all the other information in this Quarterly Report on Form 10-Q, including the forward-looking statements in Part I, Item 2 of this Quarterly Report on Form 10-Q under the heading "Management's Discussion and Analysis of Financial Condition and Results of Operations."

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

Share repurchases

The following table summarizes our repurchases of our common stock during the first quarter of ~~2021:~~2022:

Period Total number
of shares
purchased Average price
paid per share Total number
of shares
purchased as
part of publicly
announced
plans or programs Approximate dollar
value of shares that
may yet be
purchased under the
plans or programs
(dollars and shares in thousands, except per share data)
January 1-31, 2021 578 $ 119.94 578 $ 1,860,629
February 1-28, 2021 1,085 106.01 1,085 $ 1,745,611
March 1-31, 2021 1,286 107.26 1,286 $ 1,607,622
2,949 $ 109.28 2,949


Period	Total number of shares purchased	Average price paid per share		Total number of shares purchased as part of publicly announced plans or programs	Approximate dollar value of shares that may yet be purchased under the plans or programs
	(dollars and shares in thousands, except per share data)
January 1-31, 2022	1,031	$	111.04	1,031	$	2,269,501
February 1-28, 2022	406	109.95		406	$	2,224,806
March 1-31, 2022	667	111.26		667	$	2,150,621
	2,104	$	110.90	2,104

Effective on December ~~10, 2020,~~17, 2021, the Company's Board ~~terminated all remaining prior share repurchase authorizations available to us and approved a new share repurchase~~increased the Company's existing authorization ofby $2.0 billion. ~~We are~~The Company is authorized to make purchases from time to time in the open market or in privately negotiated transactions, including without limitation, through accelerated share repurchase transactions, derivative transactions, tender offers, Rule 10b5-1 plans or any combination of the foregoing, depending upon market conditions and other considerations.

As of ~~April 28, 2021,~~May 4, 2022, we had a total of ~~$1.499~~$2.063 billion available under the current authorization for additional share repurchases. Although this share repurchase authorization does not have an expiration date, we remain subject to share repurchase limitations including under our current senior secured credit facilities.

Items 3, 4 and 5 are not applicable

3436

Item 6. Exhibits


Exhibit
Number

31.1						Certification of the Chief Executive Officer, dated ~~April 29, 2021,~~May 5, 2022, pursuant to Rule 13a-14(a) or 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. ü

31.2						Certification of the Chief Financial Officer, dated ~~April 29, 2021,~~May 5, 2022, pursuant to Rule 13a-14(a) or 15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. ü

32.1						Certification of the Chief Executive Officer, dated ~~April 29, 2021,~~May 5, 2022, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. ü

32.2						Certification of the Chief Financial Officer, dated ~~April 29, 2021,~~May 5, 2022, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. ü

101.INS						XBRL Instance Document - the Instance Document does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document. ü

101.SCH						Inline XBRL Taxonomy Extension Schema Document. ü

101.CAL						Inline XBRL Taxonomy Extension Calculation Linkbase Document. ü

101.DEF						Inline XBRL Taxonomy Extension Definition Linkbase Document. ü

101.LAB						Inline XBRL Taxonomy Extension Label Linkbase Document. ü

101.PRE						Inline XBRL Taxonomy Extension Presentation, Linkbase Document. ü

104						Cover Page Interactive Data File (formatted as Inline XBRL and contained in Exhibit 101). ü


ü			Filed or furnished herewith.

3537

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.


			DAVITA INC.

			BY:						/s/ JOHN D. WINSTEL
									John D. Winstel
									Chief Accounting Officer*

Date: ~~April 29, 2021~~May 5, 2022


*			Mr. Winstel has signed both on behalf of the Registrant as a duly authorized officer and as the Registrant’s principal accounting officer.

3638


						Three months ended March 31, 2021				Fair value
	Notional amount		LIBOR maximum rate	Effective date	Expiration date	Debt expense		Recorded OCI gain		March 31, 2021		December 31, 2020
2019 cap agreements	$	3,500,000	2.00%	6/30/2020	6/30/2024	$	1,377	$	6,505	$	9,176	$	2,671


	Remainder of 2021		2022-2024		2025-2026		After 5 years		Total
	(dollars in millions)
Potential cash requirements under other commitments:
Letters of credit	$	65	$	—	$	—	$	—	$	65
Noncontrolling interests subject to put provisions	1,015		156		106		72		1,349
Non-owned and minority owned put provisions	109		5		—		—		114
Operating capital advances	1		3		1		3		8
Purchase commitments	395		817		—		—		1,212
	$	1,585	$	981	$	107	$	75	$	2,748