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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
or
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
https://cdn.kscope.io/8981d8b331eb12aacdfc3b93fe3b36a1-dva-20210331_g1.jpg
DAVITA INC.
Delaware 51-0354549
(State of incorporation) (I.R.S. Employer Identification No.)
2000 16th Street
Denver,CO80202
Telephone number (720631-2100
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 DVANYSE
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 filerAccelerated 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, the number of shares of the Registrant’s common stock outstanding was approximately 106.2 million shares.



DAVITA INC.
INDEX

   Page No.
  PART I. FINANCIAL INFORMATION 
    
Item 1.  
  
  
  
  
  
  
Item 2. 
Item 3. 
Item 4. 
    
  PART II. OTHER INFORMATION 
Item 1. 
Item 1A. 
Item 2. 
Item 6. 
  
Note: Items 3, 4 and 5 of Part II are omitted because they are not applicable.
 
i



DAVITA INC.
CONSOLIDATED STATEMENTS OF INCOME
(unaudited)
(dollars and shares in thousands, except per share data)


Three months ended March 31,
 20212020
Dialysis patient service revenues$2,714,587 $2,713,281 
Other revenues105,414 127,956 
Total revenues2,820,001 2,841,237 
Operating expenses:  
Patient care costs1,938,330 1,975,449 
General and administrative281,426 263,576 
Depreciation and amortization165,701 154,679 
Equity investment income(8,058)(17,843)
Total operating expenses2,377,399 2,375,861 
Operating income442,602 465,376 
Debt expense(67,014)(88,603)
Debt refinancing charges (2,948)
Other income (loss), net1,168 (4,350)
Income from continuing operations before income taxes376,756 369,475 
Income tax expense85,211 91,560 
Net income from continuing operations291,545 277,915 
Net income from discontinued operations, net of tax 9,980 
Net income291,545 287,895 
Less: Net income attributable to noncontrolling interests(54,142)(48,302)
Net income attributable to DaVita Inc.$237,403 $239,593 
Earnings per share attributable to DaVita Inc.:  
Basic net income from continuing operations$2.18 $1.84 
Basic net income$2.18 $1.92 
Diluted net income from continuing operations$2.09 $1.81 
Diluted net income$2.09 $1.89 
Weighted average shares for earnings per share:
Basic shares109,014 124,902 
Diluted shares113,852 126,895 
Amounts attributable to DaVita Inc.:
Net income from continuing operations$237,403 $229,613 
Net income from discontinued operations 9,980 
Net income attributable to DaVita Inc.$237,403 $239,593 
See notes to condensed consolidated financial statements.
1


DAVITA INC.
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME
(unaudited)
(dollars in thousands)
Three months ended March 31,
 20212020
Net income$291,545 $287,895 
Other comprehensive loss, net of tax:  
Unrealized gains (losses) on interest rate cap agreements:  
Unrealized gains (losses)4,882 (13,018)
Reclassifications of net realized losses into net income1,033 1,623 
Unrealized losses on foreign currency translation(62,544)(81,632)
Other comprehensive loss(56,629)(93,027)
Total comprehensive income234,916 194,868 
Less: Comprehensive income attributable to noncontrolling interests(54,142)(48,302)
Comprehensive income attributable to DaVita Inc.$180,774 $146,566 
 See notes to condensed consolidated financial statements.

2


DAVITA INC.
CONSOLIDATED BALANCE SHEETS
(unaudited)
(dollars and shares in thousands, except per share data)
March 31, 2021December 31, 2020
ASSETS  
Cash and cash equivalents$884,205 $324,958 
Restricted cash and equivalents176,835 176,832 
Short-term investments11,060 20,101 
Accounts receivable2,040,813 1,824,282 
Inventories116,322 111,625 
Other receivables535,521 544,376 
Prepaid and other current assets73,765 76,387 
Income tax receivable28,160 70,163 
Total current assets3,866,681 3,148,724 
Property and equipment, net of accumulated depreciation of $4,622,798 and $4,480,429, respectively3,490,442 3,521,824 
Operating lease right-of-use assets2,868,292 2,863,089 
Intangible assets, net of accumulated amortization of $69,691 and $70,141, respectively150,706 166,585 
Equity method and other investments257,513 257,491 
Long-term investments31,891 32,193 
Other long-term assets90,534 79,501 
Goodwill6,891,209 6,919,109 
 $17,647,268 $16,988,516 
LIABILITIES AND EQUITY  
Accounts payable$348,105 $434,253 
Other liabilities846,710 810,529 
Accrued compensation and benefits550,671 685,555 
Current portion of operating lease liabilities372,737 369,497 
Current portion of long-term debt168,191 168,541 
Income tax payable28,310 7,768 
Total current liabilities2,314,724 2,476,143 
Long-term operating lease liabilities2,739,311 2,738,670 
Long-term debt8,829,765 7,917,263 
Other long-term liabilities150,724 150,060 
Deferred income taxes830,369 809,600 
Total liabilities14,864,893 14,091,736 
Commitments and contingencies
Noncontrolling interests subject to put provisions1,349,160 1,330,028 
Equity:  
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 
Additional paid-in capital603,172 597,073 
Retained earnings1,089,940 852,537 
Treasury stock (2,949 and zero shares, respectively)(322,333) 
Accumulated other comprehensive loss(122,783)(66,154)
Total DaVita Inc. shareholders' equity1,248,106 1,383,566 
Noncontrolling interests not subject to put provisions185,109 183,186 
Total equity1,433,215 1,566,752 
 $17,647,268 $16,988,516 
See notes to condensed consolidated financial statements.
3


DAVITA INC.
CONSOLIDATED STATEMENTS OF CASH FLOW
(unaudited)
(dollars in thousands)
Three months ended March 31,
 20212020
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 amortization165,701 154,679 
Debt refinancing charges 884 
Stock-based compensation expense23,595 19,870 
Deferred income taxes18,688 103,301 
Equity investment income, net(2,924)(9,482)
Other non-cash charges, net3,979 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 assets13,756 (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 liabilities26,970 3,982 
Income taxes62,719 (32,616)
Other long-term liabilities(11,793)709 
Net cash provided by operating activities154,304 360,381 
Cash flows from investing activities: 
Additions of property and equipment(144,913)(154,942)
Acquisitions(3,668)(34,107)
Proceeds from asset and business sales16,337 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-maturity5,349 5,049 
Proceeds from sale of other debt and equity investments11,879 3,268 
Purchase of equity method investments(3,200)(6,174)
Distributions from equity method investments978 445 
Net cash used in investing activities(124,366)(162,625)
Cash flows from financing activities:
Borrowings1,606,969 570,779 
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 interests10,689 9,387 
Purchases of noncontrolling interests(1,095)(700)
Net cash provided by financing activities537,278 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 cash559,250 279,770 
Less: Net increase in cash, cash equivalents and restricted cash from discontinued operations  
Net increase in cash, cash equivalents and restricted cash from continuing operations559,250 279,770 
Cash, cash equivalents and restricted cash of continuing operations at beginning of the year501,790 1,208,718 
Cash, cash equivalents and restricted cash of continuing operations at end of the period$1,061,040 $1,488,488 
See notes to condensed consolidated financial statements.
4


DAVITA INC.
CONSOLIDATED STATEMENTS OF EQUITY
(unaudited)
(dollars and shares in thousands)
Three months ended March 31, 2021
 Non-
controlling
interests
subject to
put provisions
DaVita Inc. Shareholders’ EquityNon-
controlling
interests not
subject to
put provisions
 Common stockAdditional
paid-in
capital
Retained
earnings
Treasury stockAccumulated
other
comprehensive
loss
 SharesAmountSharesAmountTotal
Balance at December 31, 2020$1,330,028 109,933 $110 $597,073 $852,537  $ $(66,154)$1,383,566 $183,186 
Comprehensive income:
Net income35,600 237,403 237,403 18,542 
Other comprehensive loss(56,629)(56,629)
Stock award plans94 (6,270)(6,270)
Stock-settled stock-based
 compensation expense
23,555 23,555 
Changes in noncontrolling
 interest from:
Distributions(34,259)(19,608)
Contributions7,695 2,994 
Partial purchases(201)(889)(889)(5)
Fair value remeasurements10,297 (10,297)(10,297)
Purchase of treasury stock(2,949)(322,333)(322,333)
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 

Three months ended March 31, 2020
 Non-
controlling
interests
subject to
put provisions
DaVita Inc. Shareholders’ EquityNon-
controlling
interests not
subject to
put provisions
 Common stockAdditional
paid-in
capital
Retained
earnings
Treasury stockAccumulated
other
comprehensive
loss
 
 SharesAmountSharesAmountTotal
Balance at December 31, 2019$1,180,376 125,843 $126 $749,043 $1,431,738  $ $(47,498)$2,133,409 $185,833 
Comprehensive income:
Net income32,176 239,593 239,593 16,126 
Other comprehensive loss(93,027)(93,027)
Stock award plan14 (320)(320)
Stock-settled stock-based
 compensation expense
19,797 19,797 
Changes in noncontrolling
 interest from:
Distributions(37,566)(20,565)
Contributions5,283 4,104 
Partial purchases(255)(445)(445)
Fair value remeasurements48,022 (48,022)(48,022)
Purchase of treasury stock(4,052)(303,139)(303,139)
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 

See notes to condensed consolidated financial statements
5


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, 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 10-K). Prior period classifications have been conformed 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, 2021Three months ended March 31, 2020
U.S. dialysisOther - Ancillary servicesConsolidatedU.S. dialysisOther - Ancillary servicesConsolidated
Dialysis patient service revenues:
Medicare and Medicare Advantage(1)
$1,480,297 $$1,480,297 $1,531,033 $$1,531,033 
Medicaid and Managed Medicaid187,243 187,243 171,467 171,467 
Other government(1)
80,184 106,830 187,014 83,099 94,574 177,673 
Commercial835,479 51,498 886,977 825,582 39,467 865,049 
Other revenues:
Medicare and Medicare Advantage85,595 85,595 98,478 98,478 
Medicaid and Managed Medicaid300 300 366 366 
Commercial6,034 6,034 10,521 10,521 
Other(2)
6,675 11,162 17,837 5,442 17,602 23,044 
Eliminations of intersegment revenues(27,003)(4,293)(31,296)(32,242)(4,152)(36,394)
Total$2,562,875 $257,126 $2,820,001 $2,584,381 $256,856 $2,841,237 
(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 consists of management service fees earned in the respective Company line of business as well as other revenue from the Company's ancillary services.
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. A usual and customary fee schedule is
6


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 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 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.
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,
 20212020
Net income attributable to DaVita Inc.:
Continuing operations$237,403 $229,613 
Discontinued operations 9,980 
Net income attributable to DaVita Inc.$237,403 $239,593 
Weighted average shares outstanding:
Basic shares109,014 124,902 
Assumed incremental from stock plans4,838 1,993 
Diluted shares113,852 126,895 
Basic net income attributable to DaVita Inc.:
Continuing operations per share$2.18 $1.84 
Discontinued operations per share 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 0.08 
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 
(1)Shares associated with stock awards excluded from the diluted denominator calculation because they were anti-dilutive under the treasury stock method.
7


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, 2021December 31, 2020
Debt
securities
Equity
securities
TotalDebt
securities
Equity
securities
Total
Certificates of deposit and other time deposits$8,221 $ $8,221 $8,217 $ $8,217 
Investments in mutual funds and common stock 34,730 34,730  44,077 44,077 
 $8,221 $34,730 $42,951 $8,217 $44,077 $52,294 
Short-term investments$8,221 $2,839 $11,060 $8,217 $11,884 $20,101 
Long-term investments 31,891 31,891  32,193 32,193 
 $8,221 $34,730 $42,951 $8,217 $44,077 $52,294 
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 and recorded at amortized cost, which approximated their fair values at March 31, 2021 and December 31, 2020.
Equity securities: The Company's 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.
5.     Goodwill
Changes in goodwill by reportable segments were as follows:
U.S. dialysisOther - Ancillary servicesConsolidated
Balance at December 31, 2019$6,287,100 $500,535 $6,787,635 
Acquisitions24,377 105,680 130,057 
Divestitures(1,549)(6,744)(8,293)
Foreign currency and other adjustments 9,710 9,710 
Balance at December 31, 2020$6,309,928 $609,181 $6,919,109 
Acquisitions 5,456 5,456 
Foreign currency and other adjustments (33,356)(33,356)
Balance at March 31, 2021$6,309,928 $581,281 $6,891,209 
Balance at March 31, 2021:
Goodwill$6,309,928 $711,854 $7,021,782 
Accumulated impairment charges (130,573)(130,573)
$6,309,928 $581,281 $6,891,209 
The Company did not recognize any goodwill impairment charges during the three months ended March 31, 2021 and 2020.
As dialysis treatments are an essential, life-sustaining service for patients who depend on them, the Company's operations have continued 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 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 impact on the chronic kidney disease (CKD) patient population and the Company's patient population, the availability, acceptance, impact and efficacy of COVID-19 vaccines and other treatments, or therapies, the pandemic’s continuing impact on the U.S. and global economies and unemployment, the responses of the Company's competitors to the pandemic and related changes in the marketplace, and the timing, scope and effectiveness of federal, state and local governmental responses. 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.
8


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. 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 10-K, none of the Company's various other reporting units were considered at risk of significant goodwill impairment as of March 31, 2021. 
6.     Long-term debt
Long-term debt was comprised of the following: 
As of March 31, 2021
March 31, 2021December 31, 2020Maturity dateInterest rate
Estimated fair value(1)
Senior Secured Credit Facilities:  
Term Loan A$1,662,500 $1,684,375 8/12/2024LIBOR + 1.50% $1,666,656 
Term Loan B-12,708,836 2,715,694 8/12/2026LIBOR + 1.75%$2,698,678 
Revolving line of credit 75,000 8/12/2024LIBOR + 1.50%
Senior Notes:
4.625% Senior Notes2,750,000 1,750,000 6/1/20304.625 %$2,801,150 
3.75% Senior Notes1,500,000 1,500,000 2/15/20313.750 %$1,436,220 
Acquisition obligations and other notes payable(2)
152,531 164,160 2021-20364.95 %$152,531 
Financing lease obligations(3)
289,324 274,292 2022-20384.83 %
Total debt principal outstanding9,063,191 8,163,521 
Discount, premium and deferred financing costs(4)
(65,235)(77,717)
 8,997,956 8,085,804 
Less current portion(168,191)(168,541)
 $8,829,765 $7,917,263 
(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 interest rate presented for acquisition obligations and other notes payable is their weighted average interest rate based on the current fixed and LIBOR interest rate components in effect as of March 31, 2021.
(3)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)As of March 31, 2021, the carrying amount of the Company's senior secured credit facilities includes a discount of $5,212 and deferred financing costs of $33,650 and the carrying amount of the Company's senior notes includes a premium of $(17,327) and deferred financing costs of $43,700. As 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.
During the first three months of 2021, 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
9


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, 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 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.
The following table summarizes the Company’s interest rate cap agreements outstanding as of March 31, 2021 and December 31, 2020, which are classified in "Other long-term assets" on its consolidated balance sheet: 
 Three months ended
March 31, 2021
Fair value
Notional amountLIBOR maximum rateEffective dateExpiration dateDebt expenseRecorded OCI gainMarch 31, 2021December 31, 2020
2019 cap agreements$3,500,000 2.00%6/30/20206/30/2024$1,377 $6,505 $9,176 $2,671 
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 and 2020.
The Company’s weighted average effective interest rate on its senior secured credit facilities at the end of the first quarter of 2021 was 1.97%, based on the current margins in effect for Term Loan A and Term Loan B-1 as of March 31, 2021, as described above.
The Company’s overall weighted average effective interest rate for the three months ended March 31, 2021 was 3.08% and as of March 31, 2021 was 3.18%.
As of March 31, 2021, the Company’s interest rates were fixed on approximately 51% of its total debt.
As of March 31, 2021, 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 there were no such letters of credit outstanding as of March 31, 2021. The Company also had approximately $64,650 of outstanding letters of credit under a separate bilateral secured letter of credit facility as of March 31, 2021.
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 and December 31, 2020, 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
10


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.
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. 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, 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 subpoena, as revised, requests 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
11


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 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, 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
Peace Officers’ Annuity and Benefit Fund of Georgia Securities Class Action Civil Suit: On February 1, 2017, the Peace Officers’ Annuity and Benefit Fund of Georgia filed a putative federal securities class action complaint in the U.S. District Court for the District of Colorado against the Company and certain executives. The complaint covers the time period of August 2015 to October 2016 and alleges, generally, that the Company 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 defendants filed a motion to dismiss. On March 28, 2019, the court denied the motion to dismiss. The Company answered the complaint on May 28, 2019. On January 31, 2020, the plaintiffs filed a motion for class certification and the Company filed its opposition 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. On April 13, 2021, the court granted final approval of the settlement.
In re DaVita Inc. Stockholder Derivative Litigation: On August 15, 2017, the U.S. District Court for the District of Delaware consolidated three previously disclosed shareholder derivative lawsuits: the Blackburn Shareholder action filed on February 10, 2017, the Gabilondo Shareholder action filed on May 30, 2017, 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 December 18, 2017, 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. The Company answered the complaint on May 28, 2019.
While the defendants continue to dispute the allegations, in July 2020, an agreement in principle was reached to resolve this matter without admitting to any liability. The Company’s Board of Directors (Board) approved the settlement on October
12


DAVITA INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS—(continued)
(unaudited)
(dollars and shares in thousands, except per share data)

20, 2020. The court approved the settlement 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.
Other Proceedings
In addition to the foregoing, 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, or otherwise harm the Company’s business, results of operations, financial condition, cash flows or reputation.
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.
8.    Shareholders' equity
Stock-based compensation
During the three months ended March 31, 2021, the Company granted 706 restricted and performance stock units with an aggregate grant-date fair value of $77,279 and a weighted-average expected life of approximately 3.5 years and 132 stock-settled stock appreciation rights with an aggregate grant-date fair value of $4,250 and a weighted-average expected life of approximately 4.5 years.
As of March 31, 2021, the Company had $230,270 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 and 2020:
Three months ended March 31, 2021Three months ended March 31, 2020
Shares repurchasedAmount paidAverage paid per shareShares repurchasedAmount paidAverage paid per share
Open market repurchases2,949 $322,333 $109.28 4,052 $303,139 $74.81 
The Company repurchased 991 shares of its common stock for $108,892 at an average cost of $109.91 per share subsequent to March 31, 2021 through April 28, 2021.
Effective on December 10, 2020, the Company's Board of Directors (Board) terminated all remaining prior share repurchase authorizations available to the Company and approved a new share repurchase authorization of $2,000,000. As of April 28, 2021, the Company had a total of $1,498,730 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.
13


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, 2021Three 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) (1,623)4,328  4,328 
 4,882 (62,544)(57,662)(13,018)(81,632)(94,650)
Reclassification into net income1,377  1,377 2,163  2,163 
Related income tax(344) (344)(540)